(finrupll ICauj ^rlynnl ICibrary Cornell University Library KF 385.L42 V.1 Rights, remedies, and practice, at iaw. 3 1924 018 772 081 The original of tiiis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924018772081 EIGHTS, EEMEDIE8, AM) PRACTICE. RIGHTS, REMEDIES, AND PRACTICE, AT LAW, IN EQUITY, AND UNDEE THE CODES. A XEEATISE ON AMERIOAJST LAW IN CIVIL CAUSES; WITH A DIGEST OF ILLUSTRATIVE CASES, BY JOHN D. LAWSON, AUTHOR OP WOUKS ON PRESUMPTIVE ISVTIMeNCE, EXPERT EYIDENCE, CAEEIEES, USAGES AND CUSTOMS, DEFENSES TO CRIME, ETC. IN SEVEN VOLUMES. Vol. L SAN FEANCISCO: BANCROFT-WHITNEY COMPANY. IiAW PCBLISEilBS AND LAW BOOKSKLLEBS. 1889. Entered according to Act of Congress in the yeax 1889, By JOHN D. LAWSON, In the (ME.oe of tli^ Libraj-iau of Congress, at WasMngton. Stereotyped by fllmee-eollins electrotype company, San FEAKCiBoa PBEFACE. The work which I now offer to the consideration and judgment of the profession is a somewhat ambitious at- tempt to present a complete view of American case law on every species of right and remedy, of action and defense, both at law and in equity, within the compass of a single work, and under the direction of one hand. It aims to cover the entire field of jutispcudenc^e, except criminal law, logically, methodically, thoroughly, and yet without such diffuseness as to unduly extend the work. It is not only a digest of points decided, but a treatise showing all the various branches of the civil law as a whole, and their bearing on and relations to eacli other; and it includes also all the practical features of a digest. Preserving the scientific arrangement of a text-book, it adds to this a full collection of the actual results of decided cases on their facts, as illustrations of the principles of the text. What, it may be asked here by the reader, — what of the law-books already on our shelves? Do they not suffi- ciently cover the field? The answer to this very per- tinent query is, that the development of our American law, with its thousands of volumes of reported cases, has rendered the commentaries of its early days insufficient for the present needs of the profession, while the hun- dreds of text-books and digests upon distinct titles and VI PREFACE. subdivisions of titles liave failed to fill the place which the commentary then occupied. The statement of gen- eral principles in the commentary is now too meager, and requires too much of historical explanation, while the treatise upon a special topic is too detailed. In the firm belief that there is abundant room for an intermediate work, which shall state full enough for all practical purposes the principles of the law as estab- lished bj'^the judicial decisions and the statutes, and shall at the same time give ample illustrations of the applica- tions of those principles to the facts of the particular cases, this work, the labor of many years, is submitted to the judgment of the profession. I ask the critic not to lose sight of this idea, viz.: that it is first of all a work for the practitioner, prepared on the theory that the law- yer of the present day needs in his daily practice some work which treats all the important titles of the law. Its endeavor is to present a substitute for a complete collec- tion of text-books; to be in itself a working library. No space is wasted in showing the development of our common law, its history, or what it has been, but the law is given as it exists to-day in the American reports and statutes, with the important advantage of bringing all of its topics down to the present time, to the last judi- cial decision and the latest legislative law. The work covers the field of law, equity, and American code law. Whatever difference of opinion there may be as to the propriety or utility of citing all the decided cases on a given point in a text-book on a single subject, it is clear that in a work so extensive as this, such a tiling is out of the question. Nevertheless, the citation of authorities PREFACE. VU is very full, and none of the leading or best comsidered cases have been omitted, —none of such cases as have been and are being preserved in the American Decisions, the American Keports, and American State Reports. The work is arranged in four divisions, viz.: — Division I. Persons and Personal Rights. — Un- der this division are the subjects of principal and agent; attorney and client; auctioneers, brokers, and factors; master and servant; corporations in general; different classes of corporations; banks; railroads; gas companies; building and loan associations; voluntary associations; clubs and societies; religious societies and corporations; charitable associations; partnership; husband and wife; parent and child^ guardian and ward; executors and ad- ministrators. Division H. Personal Rights and REJSfEDiES. — "Un- der this division are personal wrongs and torts; conspir- acy; assault and battery; false arrest and imprisonment; malicious prosecution; torts in domestic relations; seduc- tion; crim. con.; negligence; slander and libel. Division III. Proferty Rights and Remedies. — Under this division are personal property; gifts; ani- mals; copyright; trade-marks; patents; negotiable instru- ments; ships and shipping; bailments; pledges; innkeep- ers; carriers; railroads; telegraph companies; physicians and surgeons; contracts; liens; mortgages; insurance; real property; waters and watercourses; easements; licenses; landlord and tenant; fixtures; trusts and trustees; nui- sances. Division IV. Public Rights and Rejiedies. — Un- der this division are constitutional law; taxation; emi- Vlll PREFACE. nent domain; municipal corporations; public offices and officers; schools; elections; conflict of laws. And each division contains a statement of the remedies for the breach of each particular right, and the forms of procedure and practice in obtaining the relief or in re- sisting the action. The American text-books on the different branches of the law are very numerous. Yet it will be found that while on some of these branches the writers have been very diligent, others have been all but neglected. There are what I may term favorite topics upon which nearly every writer has tried his hand; there are others, again, on which none has cared to venture, or if he has essayed them at all, he has by no means attempted to exhaust them. In preparing the different titles of my work, where I have discovered that the text-books could give me very little assistance or none at all, I have gone into the re- ports more fully than in other cases, and as a resvilt, these titles in my book will be found, I think, of peculiar value. A sufficient index for the purpose of reference is at the end of each volume. But at the completion of the work there will be issued a comprehensive index to every point contained in any of the volumes. J. D. L. San Feancisco, October. 1889. TABLE OF DIYISIONS. Division I.— PERSONS AND PERSONAL RELATIONS. II.— PERSONAL RIGHTS AND REMEDIES. ILL— PROPERTY RIGHTS AND REMEDIES. rV". — PUBLIC RIGHTS AND REMEDIES TABLE OF CONTENTS OF VOLUME I. Title I. — PRINCIPAI. AND AGENT. Paet I. — Liw OF AoEiioy in Geneeai, 1-125 1. The contract of agency 1-55 2. The authority conferred 56-76 3. Duties and liabilities arising out of the contract 77-175 IL — Attorney and Client 126-111 ni. — Auctioneers 212-221 IV. — Brokers and Factors 2£2-230 V. — Master aud Sejivajut , 231-331 Part I. — LAW OF AGENCY IN GENEEAL. CHAPTER I. DEFINITIONS AND DIVISIONS. § 1. Agency defined and dividend?. § 2. Different classes of agents. CHAPTER II. PAKTIES TO THE CONTRACT. § 3. All person sui Juris may be principals. § 4. Idiots, lunatics, infants, married women. § 5. Alien enemies, convicts. § 6. All persons may be agents. § 7. Persons having adverse interests. § 8. Doing of unlawful acts- — Personal acta. CHAPTER III. THE APPOINTMJElSrT OF AGENTS. § 9. AuthoMty essential to agency. § 10. May be conferred by parol. XU TABLE OF CONTKNTS. § 11. Or implied from acts. § 12. Declarations of agent. § 13. Authority to execute instrument under seal. § 14. Same — Principal present. § 15. Unsealed writings. § 16. Statute of frauds. § 17. Agents of corporatians. CHAPTER rV. JOINT PRINCIPALS AND AjGENTS. § 18, Joint principals not agents for each other. § 19. Unless they be partners. § 20. Rights and liabilities of joint principals, § 21. Joint agents must act together. § 22. Agency for public purpose. § 23. Liability of joint agents. CHAPITER V. DELEGATION OF AUTHORITY. § 24. Delegation of original and delegated authority. § 2.1. Delegation of original authority. § 26. Delegation of delegated authority. § 27. Same — When not permitted. § 28, Same — When permitted. CHAPITER VI. RATIFICATION. § 29. Unauthorized act of agent may be 1-atifi.ed. § 30. But cannot divest vested rights. § 31. Act must not be illegal or void. § 32. Must have been done on behalf of principal § 33. Principal must be in existence. § 34. Ratification nmst be made with full knowledga -of facts. § 33. And is then irrevocable. § 36. Ratifieaiion absolves agent and shifts liability. § 37. Appointment of subagent. § 38. Ratification must be in toio. § 39. Acts incapable of ratification. § 40. Form of ratification. § 41. Acts and conduct TABLE OF CONTENTS. XUl CHAPTER Vn. DKTEEMINATION OR DISSOLUTION OV AUTHORITY. § 42. Modes of dissolTJug agency. § 43. Performance of object — Lapse of time. § 44. Revocation by act of principal. § 45. Revocation by act of agent. § 46. Revocation by death of principal. § 47. Revocation by death of agent. § 48. Revocation by bankruptcy of principal. § 49. Revocation by bankruptcy of agent. § 50. Revocation by marriage of principal. § 51. Revocation by insanity of principaL § 52. Revocation by insanity of agent. § 53. Revocation by destruction of subject-matter. § 54. Eevocatien by war. § 55. When revocaiion takes effect. CHAPTEE Vm. THE NATURE AND EXTENT OF THE AUTHORITY. § 50. General and special agency. § 57. Authority may be implied. § 58. Authority is restricted to character in which it is given. § 59. Acts must be for principal's benefit. § 60. Construction of agent's authority in general. § 61 . What acts are or are not within particular phrases — "Accountable '' — "All matters"' — "Attend to business"' — "Borrow" — "Business and financial agent" — "Buy and sell" — "Canvass" — '"Coat" — " Cite and appear " — " Claims and effects.'' § 6Z Parrioular powers (continued) — "Collect" — ■ "Deliver" — "deposit" — "Draw, indorse, and accept bills" — "Execute" — "Give dis- charges " — " Hire " — " Indoree. '' § 63. Pcrticiilar powers (continued) — "Invest" — "Lands"''— "Lay out" — "Loan " — " Make deeds and sales " — " Manage " — " Mortgage" — ' ' Obtain securities " — " Place " — " Procure a pui-ohaser. " § 64.' Particular powers (continued) — "Purchase" — "Rent and care for" — " Receive checks " — " Release." §65. Particular powers (continued) — "Sell" — "Selland convey" — "Sell at retail." § 66. Particular powers (continued) — '" Settle " — " Ship " — " Sign name " — " Solicit " — "Subscribe" — "Sue" — "Take care of" — " Transact." § 67. What powers implied under particular circumstances — Advertising — Admissions — Arbitrate — Assign — Auction — Board at hotel — Borrow — Cancel — Compromise — Collect — Confess judgment. XIV TABLE Of COlffTENTS. § 68. What powers implied (continued) — Employing agents — Employing counsel — Exchange or barter — Deliver — Foreclose mortgage. §69. Whai powers implied (continued) — Give credit — Guaranty — Hiring horses — Indorsing — Lease — Legacy — License — Loan. § 70. What powers implied (continued) — Making accommodation notes — Or deed — Negotiable paper — Mortgage — Pledge — Purchase. § 71, What powers implied (continued) — Receive payment. § 72. What powers implied (continued) — Renting store — Rescind contract. § 73. What powers implied (continued) — To sell — Settle — Suretyship — Tender — Transfer — Voluntary conveyance. § 74. What powers implied (continued) — Waiver — Warranty. § 75. Carrier's agents; § 76. Railroad servants. CHAPTER DL DUTIES AKD LLA.BILITIES OF AGENT TO PRXNGIPAL. § 77. Duties of agent. § 78. To act as agent. § 79. To perform duties in person. § 80. To give notice to principal. § 81. To obey instructions and orders. § 82. To act in good faith and in principal^'s interest. § 83. To use reasonable skill and -diligence. % 84. Deputies. § 85. Profits belong to principal. § 86. Losses must be borne by principal. § 87. Keeping and deposit of money — M ode, § 88. Remittance by agent — Mode. § 89. To keep accounts — Account for money. § 90. Cannot dispute principal's title. § 91. Mixing property. § 92. Agent making profits. § 93. Purchasing and selling property, § 94. Agent of both parties. CHAPTER X. DUTIES AND LIABILITIES OF PRINCIPAL TO AGENT. § 95. Right of agent to compensation from principal. § 96. When agent cannot recover compensation. § 97. Right of agent to reimbursement from principal; § 98, When agent cannot ask reimbursement. .TAfiLE OF CONTENTS. XV' CHAPTER XI DUTIES AND LIABILITIES OF AGENTS AND PKXNCIPALS TO THIRD ■PERSONS. L AGEfTTS. -- (a) On Contracts; (J) For Torts. (a) On Contracts. , § 99. Agent to bind principal mist execute aajthority in his name. § 100. Instruments under seal. § 101. Instruments not under seal. § 102. Illustrations. § 103, When agent personally bound — Descriptio perscmcE. § 104. Agent not personally liable, § 105. Foreign principal. § 106. Irresponsible principal. § 107. Agent liable where principal not disclosed. § 108. Agent may bind himself personally. § 109. Notice to agent not to pay over money to principal. § 110. Liability of agent acting without authority. (J) For Torts. § 111. Agent not liable personally for torts, § 112. Exceptions, 2. PRnrciPALS. §113. Liability of principal on agent's contracts — Law already discussed. § 114. Liability of principal for agent's torts. CHAPTER XII. DUTIES AND LIABILITIES OF THIRD PERSONS TO PRINCrPALS AND AGENTS. § 115. Rights of principal against third persons, § 116. Principal may enforce agent's contracts. § 117. Subject to frauds and misrepresentationSv §118. And equities. §119. Contracts under seal. § 120. Exclusive credit given to agent. § 121. Principal may recover money wrongfully paid by agent. § 122. May sue for torts to his property in agent's hands. § 123. Agent ordinarily cannot sue on his contracts. § 124. Exceptions — When agent may sue. § 125. Agent's right to sue controllable by principal. XVI TABLE OP CONTENTS. Pakt II. — ATTORNEY AND CLIENT. CHAPTER Xni. THE ADMISSION AND KEMOVAl. OP AITOENEYS. § 126. Attorneys defined. § 127. Admission to the bar — License essential to practice. § 128. Office of attorney — Nature of the office, § 129. Power of court to disbar attorneys. § 130. Causes good grounds for disbarment. § 131. Causes not grounds for disbarment. § 132. Suspension for a time. § 133. Previous conviction not necessary. § 134. Practice on disbarment proceeding — Proof — Appeal, § 135. Mandamus to restore attorney. § 136. Beadmission after disbarment. CHAPTER XIV. PRIVILEGES, DISABIUTIES, AND LIABILITIES OP AITOENEYS TO THIRD PERSONS. § 137. Privileges and exemptions of attorneysL. § 138. Exemption from arrest. § 139. Privilege of suing. § 140. Exemption from civil duties. § 141 . Exemption from responsibilty for xvorda speken, § 142. Disabilities of attorneys. § 143. To act in diverse capacities. § 144. To act for both parties, or on both sides, § 145. To purchase demands for suit. ^ § 146. Communications between attorney and oUent. § 147. Privileged communications — Exoeptiona to the rule. § 148. To become surety for client. § 149. To be witness in cause. § 150. Liability to third persons. § 151. Liability for acting without authority; § 152. Liability to third persons on impUed coatracta. § 153. Liability for costs and fees. § 154. Liability for trespass. § 155. Liability for malicious prosecution. TABLE OF CONTENTS. XVll CHAPTER XV. AUTHORITY AND POWERS OF ATTORNEY. § 156. Authority evidenced by retainer. § 157. Authority to appear presumed. § 158. Court may order authority to be produced. § 159. Appearance for several persons. § 160. Appearance by attorney binds party, though unauthorized. § 161. Delegation of authority. § 162. Law partnerships. § 163. Law clerks. § 164. Tormiuation of authority — By dissolution of partnership. § 165. Termination of authority — By act of parties. § 166. Termination of authority — By termination of suit. § 167. Termination of authority — By death. § 168. Termination of authority — Other cases. § 169. Implied powers of attorneys. § 170. Implied powers of attorneys (continued) — Admissions — Affidavits — Altering securities — Appeal — Arbitration — Arrest — Assignment — Attachment. § 171. Implied powers of attorneys (continued) — Compromise — Continuance — Contract- — Discharge — Discontinuance ^ Employing counsel — Error — • Executing bonds — Execution — Guaranty. § 172. Implied powers of attorneys (continued) — Judgment — Payment. §173. Implied powers of attorneys (continued) — Process — Purchase — Re- lease — Sell — Set-off — Sue — Supplementary Pro jeedings — Waiv- ers and releases. § 174. Extent of authority as to time. § 175. Ratification of unauthorized acts. CHAPTER XVI. LIABILITY OF ATTORNEY TO CLIENT. § 176. Duty of attorney to client — Dealings between attorney and client § 177. Duty to render accounts — Mixing money. § 178. Duty to notify client of collection of money. § 179. Duty to pay over money. § 180. Skill required of attorney in his profession — Liable for negligence. § 181. Negligence a question of fact. § 182. Liability of attorney for mistakes of law. § 183. Mistakes in drawing papers and pleadings. § 184. Mistakes in prosecution of suit, § 185. Mistakes in giving advice. § 186. Measure of damages. § 187. Attorney must follow client's instructions. b XViil TABLE OF CONTENTS. § 188. Liability of attorney for mistakes or frauds of agents or associates. § 189. Liability for acting without authority. § 190. Liability for acting in excess of authority. § 191. Not liable as to matters outside his profession. § 192. Remedy is against attorney alone — Proceedings not affected. § 193. Summary jurisdiction as to attorneys. § 194. When summary jurisdiction will and will not be exercised. § 195. For what acts summary jurisdiction will be exercised. CHAPTER XVII. LIABILITY OF CLIENT TO ATTORNEY. § 196. Attorney and counsel may sue for services. § 197. Contract implied to pay for attorney's services. § 198. How basis of compensation is arrived at. § 199. What compensation allowed where no express contract. § 200. Attorney may deduct fees from client's funds. § 201. Compensation out of fund in court. § 202. Retainer must be proved. § 203. And that services were renderea. § 204. In appellate courts. § 205. Attorney cannot recover compensation, when. § 206. Attorney may make special contract for compensa.tion. § 207. Special contracts for compensation sustained. § 208. Special contracts for compensation not sustained. § 209. Special contract for complete service — Completion of service inter- rupted. § 210. Special contract for complete service — By withdrawal from case. § 211. Special contract for complete service — By dismissal of or from case. Paet in. — auctioneees. CHAPTER XVIIL AUCTIONEERS. § 212. Nature and effect of sales by auction, § 213. Auctioneer defined, etc § 214. Duties of auctioneer. § 215. Powers possessed by auctioneer. § 216. Auctioneer as agent of both — Statute of frauds. § 217. Powers not possessed by auctioneer. § 218. Liabilities of auctioneers. § 219. Liabilities and rights of bidders. § 220. Fictitious bids — ' ' Puffers " — Agreements not to compete. § 221. The auctioneer's compensation. table of contents, xix Pajit 1Y.— BROKEES AOT) FAjCTORS. CHAPTEK XIX. BROKERS AND FACTORS, § 222. Different classes of brokers, and authority. § 223. What authority implied to brokers generally. § 224. What authority not implied to brokers generally. § 225. Broker's authority a limited one — Hia duties and liabilities. § 226. Broker's compensation. § 227. Factors and del credere agents. § 228. Authority implied to factor. § 229. Authority not implied to factor. § 230. What factor bound to do — Hia duties cUid liabilities. Part V,— MASTER AND SERVANT. CHAPTER XX. SCOPE OF THIS PART. § 231. Who are servaata. CHAPTER XXL APPRENTICES. § 232. Who are apprentices — How bound. § 233. Contract is personal — Assignment — Bemoral out of state. § 234. Duties of master to apprentice. § 235. Right of master to discharge apprentice. § 236. Right of master to apprentice's earnings— Csceptioii. § 237. Riights of parent or guardian. § 238. Liabilities of parent or guardian. § 239. What is, and what will excuse, breach of covenant for faitbinl service. CHAPTER XXn. CONTRACTS BETWEEN AND RIGHTS AND DUTIES OF MASTER AND SERVANT. § 240. Contract of service — Need not be in writing. § 241. Services rendered — When promise to pay impliei XX TABLE op CONTENTS. § 242. Services of intruder ■without request. § 243. Services rendered through duress or fT*^i § 244. Illegal or immoral service. § 245. Eequest implies promise to pay. § 246. Exceptions — Request without benefit to party. § 247. Services rendered in expectation of bequest or legacy. § 248. Presumption that services are for hire. § 249. Exception — Ne£|,r relatives. § 250. Contract for certain term, or certain thing, an entire contract, § 251. Abandonment of contract — No recovery for time served. § 252. Exceptions — Where qvantum nieruii recoverable, g 253. Hours of labor. g 254. Extra hours — Compensation not recoverable for working extra hours — Exceptions. § 255. Work performed on Sunday, ■§ 256. Right to order servant to dififerent employment — Compensation. § 257. Increased duties — Extra compensation. § 258. Contract is personal — Delegation. § 259. Lost time. § 260. General hiring — Prima facie for what term. ' § 261. Continuance of service after expiration of term — Presumption. § 262. Regulations of master. S 263. Duty to keep master's secrets, § 264. Master must provide work. I 265. Board of servant. § 266. Compensation of servant — Measure; § 267. Master may recoup damages. § 268. Right of master to servant's earnings, g 269. Right to discharge servant — By contract. i 270. Right to discharge servant — By law in absence of special contract. I 271. Valid grounds for dismissal. § 272. Involuntary breaches by servant. § 273. Discharged servant must leave peaceably. § 274. Servant may recover wages to time of dismissal. § 275. Servant occupying master's house — When and when liot tenant. § 276. Wrongful discharge of servant — Remedies. § 277. Setvaut bound to seek other employment. § 278. Waiver by servant of wrongful discharge. § 279. Waiver by master of breach or forfeiture. § 280. Causes which will justify servant in abandoning service. § 281. Dissolution of contract — By expiration of time or consent of parties. § 282. Dissolution of contract — When service may be dissolved by either party. § 283. Dissolution of contract — Dissolution of partnership. § 284. Dissolution of contract — Bankruptcy of master. § 285. Dissolution of contract — Abandonment of servant, § 286. Dissolution of contract — Dismissal by master. TABLE OF CONTENTS. SXl § 287. Dissolution of contract — By death or disability. § 288. Rights of master — Injuries to servant by third person. § 289. Enticing servant from employment. § 290, Combinations among workmen. CHAPTER XXIII. LIABILITIES OF MASTER AKD SERVANT. § 291. Master is liable for torts of servant. § 292. Willful and malicious eicts of servant. § 293. Trespasses of servant. § 294. Who are "servants " within previous sections. § 295. Master not liable for acts of independent contractor. § 296. Exceptions — Where work is a nuisance or dangerous per se, § 297. Exceptions — Where duty is imposed by contract. § 298. Exceptions — Where duty is imposSd by law. § 299. Exceptions — Where employer interferes with or directs work. §300. Exceptions — Other cases where employer is liable. § 301. Master not liable for injury to servant. § 302. Exceptions — Defective machinery, buildings, or appliances. § 303. Exceptions — Latent defects and dangers. § 304. Duty of railroad companies to servants employed. § 305. Knowledge by master of defect necessary. § 306. Direct negligence of master. § 307. Concurrent negligence of master and fellow servant. § .308. Unsuitable or incompetent fellow -servants. § 309. Where servant is an infant or minor. § 310. Statutory provisions as to liability of master to servant. S 3 11 . Servant waives defect by entering or remaining in service knowing of it. § 312. AUter where he complains and master promises to remedy. § 313. Contributory negUgence of servant — Failing to notify master of defect. § 314. Contributory negligence of servant — Going into dangerous situation by command of master. § 315. Contributory negligence of servant — Other cases of contributery neg- ligence. § 316. Contributory negligence of servant — What not contributory negligence in servant. 5 317. Doctrine of "comparative negligence.'' § 318. Contracts between master and servant as to injuries. § 319. Who are "fellow-servants" — Common employment the test. § 320. Who are not "fellow-servants." § 321. Superior servant having control of inferiors a vice-principal. § 322. Servant having charge of construction or repair of machinery used by other servants. § 323. Servants of different masters. § 324. When relation of master and servant does not sub^st — Time. ■XXll TABLE OF CONTENTS. § 325. Volunteer assisting servant. § 326. Evidence o{ incompetence of fellow-servant. § 327. Evidence of negligence in selecting and maintaining machinery and appliances — Cases where it was held sufficiently shown. § 328. Same — Cases where it was held not sufficiently shown. § 329. Liability of servant to third person. § 330. Liability of servant to master. § 331. Liability of servant to fellow-servant. Title II. — COEPOEATIONS.^ Paet L — CoRPORAirioNS IN General ^_ 332-508 IL —Banks 509-537 III. — Raileoad CoMPANiEa 538-569 IV. —Gas Companies 570-579 V. — Building and Loan Associations 580-593 VI. — VOLUNTABT ASSOCIATIONS 594-607 VII. — Religious Societies and Coeporations 608-621 VUI. — Ceariiablb Associations and Charities 622-634 Part I. — CORPORATIONS IN GENERAL. CHAPTER XXIV. THE FORMATION OF CORPORATIONS. i 332. Definition of corporation — The different classes ot coTporations. i 333. Corporation is created by state, i 334'. Power ot Congress to charter corporations. i 335. Delegation of power to create corporations. i 336. Form of grant of corporate franchises. i 337. Ratification by state of unauthorized corporation. i 338. Franchise must be accepted, i 339. Form of acceptance of grant. i 340. Incorporation under general laws — Procedure — Couditionsprecedent. i 341. Conditions precedent to grant — Performance, when necessary, i 342. Corporations by prescription, i 343. Who may be corporators, i 344. Proof of incorporation, how made. i 345. Proof of performance of conditions precedent, how made. i 346. Foreign corporations — ^Grantof franchise cannot extend beyond limits of state. ' Parts II. to Vin. will be found in the Becond volume. TABLE OF CONTENTS, XXlll § 347. Foreign corporations — But by comity foreign corporations are per- mitted to do business. § 348. Foreign corporations — Subject to local laws. § 349. Foreign corporations — Citizenship of corporations within federal laws. § 350. Foreign corporations — Foreign corporations may be sued. § 351. Foreign corporations — Service of process on foreign corporations. CHAPTER XXV. THE POWERS OF COEPORATIONS Am) THE VALmiTy OF COR- PORATE ACTS. § 352. Powers of corporation are only those conferred by charter. § 353. Acts or contracts of corporations in violation of rules of law. § 354. Acts or contracts of corporations in violation of statutes. § 355. Acts or contracts of corporations in violation of charter. § 356. Statutory prohibition against exercising powers not granted by charter. § 357. Prohibitions in charter — If legislative intent be that prohibited act shall be void, courts will so hold. § 358. Prohibitions in charter — AUter where prohibition is merely for benefit, of share-holders. § 359. Prohibitions of charter — Formalities prescribed by charter. § 360. Acta of majority of corporators bind corporation. § 361. But only where act is authorized by charter. § 362, Contracts ultra vires — May he voided if unexecuted. § 363. Defense of ultra vires— Not good against person without notice. § 364. Transfers of property — Valid thougli ultra vires. § 365. Executed contracts — Valid though ultra vires. §366, Contracts unenforceable because ultra vires — Benefits received must> be repaid. § 367. Corporations liable for torts. § 368. Corporation liable for torts committed in ultra vires transaction. §369. De facto corporation — Validity of acts of. § 370. Fraud in obtaining charter — Misuser or non-user no defense in collatr- eral proceeding. § 371. Corporation must be in existence dejure or defaeto. § 372. Proof of existence of corporation. § 373. Powers of corporation are only those given by charter. § 374. Or those implied from nature of business. § 375. Grants of special privileges to corporations strictly construed. § 376. What are franchises. § 377. Franchises cannot be transferred nor mortgaged. § 378. Consolidation of corporations. § 379. Implied powers of corporations — To purchase and hold property. , § 380. Implied powers of corporations — To transfer and sell property. § 381. Implied powers of corporations — To bold property in trust. § 382. Implied powers of corporations — To take by devise. XXIV TABLE OF CONTENTS. § 383. Implied powers of corporations — To borrow money and make debts. § 384. Implied powers of corporations — To mortgage property. § 385. Implied powers of corporations — To issne negotiable paper. § 386. Implied powers of corporations — To sue and be sued. § 387. Implied powers of corporations — Other acts. § 388. Implied powers of corporations — Power of expulsion of members. § 389. Implied powers of corporations — Remedies for wrongful expulsion — Restoration. § 390. Corporation may do business in foreign State. § 391. May employ its surplus or property to best advantage. § 392. May alter its business to suit changes of time and circumstances. § 393. Power to issue preferred stock. § 394. Power to issue perf erred stock — Rights to perferred stockholders. § 395. Power to alter charter. §396. Power to alter charter — What not "alterations'* — Grant of addi- tional franchises — Discharge of obligations to state. § 397. Effect of alteration on stockholder's liability. § 398. Cannot engage in diflferent business than that which it was chartered to engage in. § 399. Authority to wind up business. § 400. No implied power to enter into partnership. § 401. No implied power to deal in shares of other corporations. § 402. No implied power to alter amount of capital stock, or purchase its own shares. § 403. No implied power to give away properly gratuitionsly. § 404. The corporation name. § 405. The corporation seal. CHAPTER XXVL THE POWERS AND LIABILITIES OP OFFICERS AND AGENTS OF CORPORATIONS. § 406. Powers of agents of corporations generally. § 407. Liability of corporations for acts of promoters. § 408. The board of directors have all powers of the corporation. § 409. The board of directors cannot make radical changes. § 410. The board of directors cannot wind up corporation. § 411. Directors are trustees for corporation. § 412. The board of directors must not have conflicting interests. § 413. Liability of directors for fraud. § 414. Liability of directors for neglect. § 415. Liability of directors for mistakes made in gdod faith. § 416. Directors must act as board — Majority govern. § 417. Directors' meetings. § 418. Implied authority to appoint inferior agents and delegate authority, § 419. Powers of secretary and treasurer. TABLE OF CONTENTS. XXV i 420. Pressident of corporation '^ Powers of. i 421. Removal of officers. ) 422. Corporation bound by acts of agents -within their authority. i 423. Acts beyond powers of corporation not binding. I 424. Acts of agent not in form required by statute not binding. i 425. Agent with general powers — Third parties not presumed to know -^ Limitations of his power. i 426. Third persons presumed to know limitations in charter. i 427. But not by-laws or regulations of company. I 428. Liability of corporations for fraudulent representations of agent. i 429. Unauthorized act of agent may be ratified by corporationi ![430. Unauthorized act of agent may be ratified by superior agent. ! 431. Ratification inferred from conduct. S 432. Act beyond authority of agent cannot be ratified by majority of stock- holders. ) 433. Implied ratification by stockholders from conduct. ) 434. What acts cannot be ratified. CHAPTER XXVn. RIGHTS AND LIABILITIES OF STOCKHOLDERS - CREDITORS OP THE COPuPORATION. § 435. The contract of membership — How created. § 436. Statutory method of becoming a stockholder mnst be followed. § 437. De facto corporation — Subscriber for shares not liable until corpora- tion legally organized. § 438. Corporator cannot avoid his contract because corporation not duly or- ganized. § 439. Subscribers not stockholders until all shares have been taken. § 440. Agreements to form corporation — Inchoate corporation. § 441. Mutual assent necessary to contract of membership. § 442. Preliminary deposit with subscription — When a condition precedent. § 443. Proof of contract of subscription. § 444. Liability of stockholder to contribute his share of capital stock. § 445. Liability of subscriber — Capital agreed must be subscribed. § 446. Other conditions precedent. § 447. Assessments and calls — Who may make. § 448. Notice of time and place of payment, when requisite, and how given. § 449. Liability of subscriber after abandonment of enterprise. § 450. Subscriptions upon conditions. § 451. Subscriptions upon conditions — Wten subscriber held nnoondltion. ally. § 452. Subscriptions obtained by fraud, when voidable. § 453. When not voidable. § 454. Laches of subscriber. § 455. Stockholder cannot rescind contract. XXVI TABLE OF CONTENTS. § 456. Violation of charter no gi-onnd for rescission. § 457. Forfeiture of shares for non-payment of assessments. § 458. Right to transfer shares. § 459. When stockholder liable notwithstanding transfer. § 460. Effect of transfer of shares. § 461 . Formalities in transfer required by charter must be observed. § 462. Equitable assignments. § 463. Assignment by indorsement of certificate. §464. Effect of assignment of certifixjate by indorsement — Eights of pur- chaser. § 465. Lien of corporation on shares. § 466. Remedies against corporation for refusing to allow transfer. § 467. Liability of corporation for making or permitting unauthorized transfers. § 468. Status of shares as property. §469. What are "profits." § 470. Dividends and interest can only be paid out of profits. § 471. Distribution of profits — Discretion of directors. § 472. Stock dividends. § 473. Issuing new stock — Increasing the capital stock. § 474. Payment of dividends. § 475. Right to examine books — Other rights of stockholders. § 476. Stockholders' meetings — Kotice of time and place essential. § 477. Who may call meetings.. §478. General and special meetings — Distinction. § 479. Adjourned meetings. § 480. Wlio has right to vote. § 481. Election of officers. § 482. Power of majority to make by-laws. § 483. By-laws held valid. § 484. By-laws held invalid. § 485. Individual stockholders cannot sue for injury to corporation. § 486. When stockholders entitled to relief. § 487. Discretionary powers of officers will not be interfered with at suit of stockholders. § 488. Stockholders' bill — Who may or must be complainants, § 489. Who may or must be defendants. § 490. Stockholders not personally liable on corporate contracts. § 491. Nor for debts of corporation. § 492. Capital stock a trust fund for creditors. § 493. Shares must be paid for in money or property. § 494. When property cannot be taken in payment of shares. § 495. Rights of a creditor to unpaid assessments. § 496. Personal liabUity of stockholders by statute. § 497. Construction of such statutes. § 498. Nature of personal liability. § 499. Personal UaMlity for wages of employees and laborers. TABLE OF CONTENTS. XXVil 5 500. Rights of a bona fide holder of shares apparently paid up. 5 501. Rights of creditors — To interfere in management of corporation. S 502. To prevent dissolution or alteration in charter. CHAPTER XXVIIl DISSOLUTION OF CORPORATIONS. )503. Dissolution of corporation — By expiration of time or happening of contingency. ) 504. By surrender of charter. 5 505. Other cases. 5 '506. By forfeiture at suit of state for non-user or misuser of franchise 5 507. Effect of dissolution. § 508. Revivor of corporation. DIVISION I. PEESONS MD PERSONAL EELATIONS. TITLE I. PRmCTPAL ANB AGENT. Part I.— LAW OP AGENCY IN GENERAL, §§ 1-125. 1. The Contract of Aqenct, §§ 1-55. 2. The Authoeity Conpekeed, §§ 56-76. 3. Duties akd Liabilities, §§ 77-125. Part IL— ATTORNEY AND CLIENT, §§ 126-211. Part III.— AUCTIONEERS, §§ 212-221. Part IV. — BROKERS AND FACTORS, §§ 222-230. Part V.— MASTER AND SERVANT, §§ 231-331. TITLE I. PRINCIPAL AND AGENT. Part I.— LAW OF AGENCY IN GENERAL 1. The Contract of Agency. CHAPTER I. DEFINITIONS AND DIVISIONS. § 1. Agency defined and divided. § 2. Different claases of agents. § 1. Agency Defined and Divided. — An agent is one who, being legally qualified to so act, is duly authorized to act on behalf of another in a future legal matter, or whose unauthorized act has been duly ratified. The per- son from whom the authority is derived is called the principal. To constitute a valid agency, where property is its subject, it is not essential that the principal should hold the legal or equitable title, or more than a naked claim of title. It may be created for the acquisition of title, either legal or equitable, or for the protection of an asserted title.' An agency is either general or special. A general agent is one who is authorized to transact all the business of his principal, or all his business of a par- ticular kind; a special agent is one who is authorized to ' Hardenbergh v. Bacon, 33 Cal. 356. Vol. I.-1 § 2 PRINCIPAL AND AGENT. 2 act only in a particular transaction.* But "the only dif- ference in doctrine arising out of this distinction is, that all the restrictions upon the authority of the special agent take effect; while in the case of a general agent, all acts embraced in the delegation are valid as to third parties, though directly opposed to private instructions."^ The rights and liabilities of principal and third persons as to the acts of general and special agents respectively are discussed in a succeeding chapter.' § 2. Different Classes of Agents. — The principal classes of agents are Attorneys, Auctioneers, Brokers, Fac- tors, and Partners. An attorney is either in fact or in law. An agent is broadly one who is employed to do any act in pais for another, or by authority of deed. It may be said to be a generic name, including all classes of agents. Attorneys in fact act under special power created by deed; the term "agent" including all classes of agents, an agent is not necessarily an attorney in fact, though an attorney in fact is an agent.^ An attorney in law — or better, at law — is a person empowered with the management of suits or controversies in courts of law." An auctioneer is a person authorized to sell goods or mer- chandise at public sale.* A broker is an agent employed to make bargains and contracts between other persons in matters of trade or commerce.^ A factor or a commission * "A special agency properly exists a general agent in that trade, business, when there is a delegation of author- or employment ": Story on Agency, ity to do a single act. A general sec. 17. agency properly exists where there is ^ Farmers' Bank v. Butchers' Bank, a delegation to do all acts connected 16 N. Y. 148; 69 Am. Dec. 678. with a particular trade, business, or ^ Chapter VIII., on the Authority employment. Thus a person who is of the Agent. authorized by his principal to execute * Porter v. Hermann, 8 Cal. 619. a particular deed, or to sign a partic- * Sec Part II., Attorneys, post. nlar contract, or to purchase a par- * See Part III., Auctioneers, post. ticular parcel of merchandise, is a ' See Part IV., Brokers and Factors, special agent. But a person who is post. "A broker," says Tindal, C. J., authorized by his principal to execute "is one who makes a bargain for an- all deeds, sign all contracts, or pur- other, and receives a commission for chase all goods required in a partiou- so doing": Pott v. Turner, 6 Bing. lar trade, business, or employment is 702. 8 DEFINITIONS AND DIVISIONS. § 2 merchant — the terms are synonymous* — is an agent em- ployed to sell goods consigned or delivered to hira.^ A del credere agent is one — usually a factor — who guarantees the responsibility and engagements of those to whom he sells.* Partners are agents of each other in the partner- ship business.* ' Perkins v. State, 50 Ala. 154. ' See Part IV., Brokers and Factors, ^ See Part IV., Brokers and Factors, 'post, jpoat. * See Title III., Partnership, 'post. §§ 3, 4 PRINCIPAL AND AGENT. CHAPTER II. PARTIES TO THE CONTRACT. § 3. All persons sui juris may be principals. § 4. Idiots, lunatics, infants, married women. § 5. Alien enemies, convicts. § 6. All persons may be agents. §7. Persons having adverse interests. (See ■post, Part I., Chapter IX. § 8. Doing of unlawful acts — Personal acts. (See 'post, Part I., Chapter V.) § 3. All Persons Sui Juris may be Principals. — What- ever, as a general rule, a person may legally do himself he may legally do by the hand of another,' and therefore only those under a legal disability are incapable of being principals.^ Infants, idiots, lunatics, and married women are to some extent under legal disability, and constitute an important exception to the general rule. § 4. Idiots, Lunatics, Infants, Married Women. — Idi- ots, lunatics, and persons non compos mentis are wholly incapable of appointing agents.' An infant cannot legally appoint an agent,^ except, it seems, where the business to be done is to the infant's interest.® By the common law, ' A county offers a reward for the taken of him: Moltou v. Camroux, 4 apprehension of a thief. B employs Ex. 17; and see Evans on Agency, 11. another person to pursue and capture * Bennett v. Davis, 6 Cow. 393; Fet- the thief, paying all the expenses, and row v. Wiseman, 40 Ind. 148; Vaughan the thief is apprehended by him. The v. Parr, 20 Ark. 60S; Lawrence v. Mc- county is liable to B for the reward: Arthur, 10 Ohio, 37; Ferguson v. Bell, Montgomery County v. Robinson, 85 17 Mo. 351; Cummings v. Powell, 8 111. 174, and see Sherley v. Riggs, 11 Tex. 90; Whitaey v. Dutch, 14 Mass. Humph. 53. The maker of a note can 462; 7 'Am. Dec. 229; Chapin v. Sha- authorize another to sign his name to fer, 49 N. Y. 412; Hiested v. Kuns, 8 it: Coy V. Stiner, 53 Mich. 42; Wea- Blackf. 345; 46 Am. Dec. 481; Fonda ver V. Carnall, 35 Ark. 198; 37 Am. v. Van Home, 15 Wend. 631; 30 Am. Hep. 22. ^ Dec. 77. An infant, it has been held, ^ Coombe's Case, 9 Coke, 756; Lee cannot ratify what he cannot author- V. Bringier, 19 La. Ann. 197. ize: Armitage v. Widoe, 30 Mich. 124. '^ Story on Agency, sec. 6. In But see Ward v. Steamboat, 8 Mo. 358. England, by recent decisions, if the ^ Wharton on Agency, sec. 812; principal's unsoundness of mind be Evans on Agency, 13; Story on Agen- unknown to the other party, the dis- cy, sec. 6. Where the power given is ability will not void the contract one coupled with an interest, it is void- where it has been partly or wholly able only, and not void: Duval v. executed, and no advantage has been Graves, 7 Bush, 461. 5 PARTIES TO THE CONTRACT. §§ 5, 6 a married woman could not make a valid business con- tract, and therefore could not appoint an agent. ^ But in modern times, by statute, femes covert have been given power to contract in their own names, and whatever they now may do by themselves, it must be conceded they may appoint another to do for them.^ §5. Alien Enemies, Convicts. —And alien enemies^ and convicts ^ seem to be incapable of appointing agents. § 6. All Persons may be Agents. — On the other hai:\d, as a rule any one may be an agent, and the incapacities to being principals do not extend to being appointed agents.^ "The reason given for this distinction between principals and agents is, that the execution of a naked authority can be attended with no manner of prejudice to the persons under such incapacities or disabilities as are involved in infancy and the rest, or to any other person who by law may claim any interest of such disabled persons after their death." " Therefore an infant may be an agent,' and so maj' a married woman be the agent of a third person,' or of her husband;' a husband may be the agent of his wife;'" in slavery times, a slave might be his master's ' Marshall v. Eutton, 8 Term Rep. coupled with au interest: Hearle v. 545; Lewis v. Lee, 3 Barn. & C. 291; Greenbank, 3 Atk. 695. ButseeBrad- Suyder v. Sponable, 1 Hill, 567. ish v. Gibbs, 3 Johns. Ch. 525. ^ Wharton on Agency, sec. 811, ' Follows -o. Emerson, 16 Vt. 653; note. Cantwell v. Calwell, 3 Head, 471; 3 Evans on Agency, 16. Pickering v. Pickering, N. li. 124; * Evans on Agency, 16. Mackinley v. McGregor, 3 Whart. 369; ^ Lyon V. Kent, 45 Ala. 656. 31 Am. Dec. 522; Edgerton v. Thom- ^ Evans on Agency, 17. A princi- as, 9 N. Y. 40; Hopkins v. Mollineux, pal who knowingly acts through an 4 Wend. 465; Singleton v. Mann, 3 incompetent agent, and is sued, can- Mo. 465; Marsclis v. Seaman, 21 Barb, not set lip the invalidity of tho ageu- 319; Lang v. Waters, 47 Ala. 624; Stall cy in an action on the case, though he «. Meek, 70 Pa. St. 181; Benjamin v. night to a suit brought on a void con- Benjamin, 15 Conn. 347; 39 Am. Dec. tract of agency: Wharton on Agency, 385. sec. 17. '" Readw. Bragg, 1 Head, 511; Row- ' Talbot V. Bowen, 1 A. K. Marsh, ell v. Klein, 44 Ind. 291; 15 Am. Rep. 436; 10 Am. Deo. 747; Brown v. Hart- 235; McLaren v. Hall, 26 Iowa, 297; ford Ins. Co., 117 Mass. 479. Knapp v. S.mith, 27 N. Y. 277; Wood- ' Story on Agency, sec. 7. Infants worth v. Sweet, 51 N. Y. 8; Buckley or femes covert cannot be attorneys to v. Wells, 33 N. Y. 518. prosecute suits, nor to execute a power § 7 PKINCIPAL AND AGENT. 6 agent;* a corporation may be the agent of an individual;'' a father may be his son's agent,' or a son may be his father's.* An alien enemy may be an agent^ for the pur- pose of attending to the property of his absent principal when a war comes on. Thus it was held that an agent intrusted with the management of real'estate in New Or- leans, belonging to a resident of the North before the war, continued to be his agent during the time of the war.® But during the existence of a war between two countries or states, no agent can be appointed by a citizen of one government to act in the territory of the other. " There is no power to appoint an agent for any purpose after hostilities have actually commenced.'" § 7. Persons having Adverse Interests. — A person having an adverse interest cannot act as an agent in the transaction. * Therefore one person cannot be the agent of both parties," the interests being adverse or incom- patible. This is the limit to the rule. " The authority of agents may, when no law is violated, be as large as their employers choose to make it. There are multitudes of cases where the same person acts under powers from different principals in their mutual transactions. Every partnership involves such double relations. Every sur- vey of boundaries by a surveyor jointly agreed upon ' Chastain v. Bowman, 1 Hill (S. C), 579; Montgomery v. United States, 5 270; Governor v. Daily, 14 Ala. 4G9. Ct. of CI. 648; Stoddard v. United 2 Mo Williams v. Detroit Mills Co., States, 6 Ct. of CI. 340; Mousseux v. 31 Mich. 274. Urquhart, 19 La. Ann. 482; Lyon v. ^ Reeves v. Kelly, 30 Midi. 132. . Kent, 45 Ala. (556. Other cases hold * Chase v. Snow, 52 Vt. 525; Com- that war revokes an agent's authority: monwealth v. Holmes, 119 Mass. 195. Howell v. Gordon, 40 Ga. 302; Couley " Sands V. Ins. Co., 59 Barb. 556; v. Benson, 1 Heisk. 145. Conn V. Penn, 1 Pet. C. C. 523; Den- « Mousseux v. Urquhart, 19 La. niston v. Imbrie, 3 Wash. C. C. 396; Ann. 482; amd see Manhattan Ins. Griswold V. Waddington, 16 Johns. Co. v. Warwick, 20 Gratt. 614; 3 Am. 486; Hale v. Wall, 22 Gratt. 424; Yea- Rep. 218. ton V. Bemey, 62 111. 61; Bank v. ' United States v. Grossmayer, 9 Matthews, 49 N. Y. 12; Ward v. Wall. 72; Hubbard v. Matthews, 54 Smith, 7 Wall. 447; University v. N. Y. 43; 13 Am. Rep. 562. Finch, 18 Wall. 106; Robinson v. Ins. « Bain v. Brown, 56 N. Y. 285. Co., 42 N. Y. 54; 1 Am. Rep. 490; " Hinckley «. Arey, 27 Me. 362. Furman v. United States, 5 Ct. of CL 7 PARTIES TO THE CONTRACT. § 7 ■would come within similar difficulties. It is only where the agent has personal interests conflicting with those of his principal that the law requires peculiar safeguards against his acts."* When, therefore, the double agency- is with the consent of the principals it is valid.'' In mak- ing a contract for the composition of a debt, while the same person cannot be the agent of both parties, yet when the composition is agreed upon with the creditor by the agent of the debtor, he can become the agent of the creditor for another and distinct purpose, as holding the money for the use of the creditor.' A contract made by an agent for both parties is not void, — it is simply voidable at the election of the principal;^ and in coming into court to avoid it, he is not obliged to show injury or an improper advantage gained over him, — it is his op- tion to repudiate it irrespective of proof of actual fraud.^ An agent cannot in the same transaction act both for himself and for his principal.® One of the parties to a contract cannot be the agent of the other for the purpose of signing it." Thus the seller of land cannot act as agent for the purchaser so as to bind him by any mem- orandum he may make and sign himself.* Illustrations. — A employed C, who was depot agent of the R. railroad, to purchase cotton for him, and hold and ship it. Some of the cotton was damaged on the R. railroad. In an 1 Adams Miniug Co. v. Senter, 26 69 N. Y. 389. An agent cannot bind Micli. 73; Col well v. Keystone Iron his principal to the receipt of money Co., 36 Mich. 51. due from himself by a mere acknowl- ^ See post, Duties and Liabilities of edgmeut signed by himself as agent Agents. that he had received it: NeuendorfF ?». '' Hinckley n. Arey, 27 Me. 362. World Life Ins. Co., 69 N. Y. 389. * Greenwood v. Spring, 54 Barb. A bank president given power to cer- 375. An agent employed to sell land tify checks cannot certify his own may recover compensation from his checks: Titus v. Great Western Turn- employer, although, with the knowl- pike Road, 5 Lans. 250; Now York edge of the latter, he has aiExed the etc. E. R. Co. v. Schuyler, 34 N. Y. purchaser's name to the contract of 64; Claflin v. Farmers' Bank, 25 N. Y. sale: Barry o. Schmidt, 57 Wis. 172; 293. 46 Am. Rep. 3.^. ' Wright v. Dannah, 2 Camp. 203. * Greenwood v. Spring, 54 Barb. 375; ^ Adams v. Scales, 57 Tenn. 337; 25 Gillett V. Peppercome, 3 Beav. 78. Am. Rep. 772. See post, Duties and ° NeuendorS v. World Life Ins. Co., Liabilities of Agents. § 8 PKINCIPAL AND AGENT. 8 action for damages, held, that C, in the transaction, could only be A's agent, and the railroad could not be liable for his acts or bound by them: Sumner v. Charlotte etc. R. R. Co., 78 N. C. 289. A person stands in the position of agent for both A and B. He cannot execute a mortgage as attorney for A for the benefit of B: Greenwood v. Spring, 54 Barb. 375. A stock-broker em- ployed to buy canal shares purchased the shares from his own trustee. Held, void: Gillett v. Peppercorne, 3 Beav. 78. § 8. Doing of Unlawful Acts — Personal Acts. — An agent cannot be appointed to do an unlawful or prohib- ited act,' or an act personal in its nature.'^ 1 Heugh V. Abergavenny, 23 Week, parte Agra Bank, L. R. 6 Ch. 206. See Eep. 40. Chapter V., Delegation of Authority, ^ Coombe's Case, 9 Coke, 766; Ex post. THE APPOINTMENT OF AGENTS. § 9 CHAPTER III. THE APPOINTMENT OP AGENTS.^ § 9. Authority essential to agency. § 10. May be conferred by parol. § 11. Or implied from acts. § 12. Declarations of agent. § 13. Authority to execute instrument under seaL §14. Same — Principal present. § 15. Unsealed writings. § 16. Statute of frauds. § 17. Agents of corporations. See Title II., Corporations. § 9. Authority Essential to Agency. — One cannot be- come another's agent except by his authority, express or implied.^ The relation of principal and agent cannot be established by evidence of dealings between the alleged agent and a third person which the alleged principal has neither authorized nor ratified, but which he expressly repudiates. Testimony of such transactions is irrelevant.' A denial by an alleged principal of the existence of any agency operates to destroy the effect of previous circum- stances to establish any agency existing by implication prior to the inquiry eliciting such denial. Such circum- stances are then admissible only to explain the import of his answer.* An interpreter is not necessarily an agent of the parties, so that what he said can be given in evi- dence if the party sought to be charged by his declarations had no knowledge of the language in which they were made, unless accompanied with proof that the interpreter correctly interpreted the language of the party.^ To make a letter to an agent evidence in a case, the agency must ' As to appointment of agents of cor- 52 N. Y. 612; Bercich v. Marye, 9 poralious, see Title II., Corporations. Nev. 312. ^ Stringham v. St. Nicholas Ins. Co., ^ North v. Metz, 57 Mich. 612. 4 Abb. App. 315; Pole v. Leask, 8 * Norton v. Richmond, 93 111. 367. L. T. Rep. 645; McGoldrick ti. Willits, ^ Diener v. Schley, 5 Wis. 483. § 9 PEINCIPAL AND AGENT. 10 first be established.' One who buys exchange for a prin- cipal is the agent of that principal, and not of the seller of the exchange.^ Illustrations. — Without proof of agency, a warranty of a grass-cutting machine, signed "A B, agent," was offered and re- ceived in evidence in an action upon the warranty. Held, that this was erroneous: Gray v. Gillilan, 15 111. 453. The plaintiff having sold and delivered to the defendants granite blocks, which they refused to accept, on the ground that the blocks were of dimensions different from those for which they had contracted, and a dispute having thus arisen, the plaintiff wrote to the defendants a letter containing the following passage: "I have Been E., and he has consented to see you on the subject of the granite, and I have authorized him to do so, and if possible come to some amicable arrangement in the matter." Shortly afterwards E. went to the defendants, and, on behalf of the plaintiffs, agreed with them that on payment of fifty pounds the granite should be theirs, and no further claim in respect of it made by the plaintiff. The plaintiff repudiated the agree- ment made by E., and sued the defendants for the price of the granite. Held, that the plaintiff's letter to the defendants con- stituted E. his agent, with power to make the agreement which in fact he did make, and that the plaintiff was therefore bound by it: Trichett v. Tomlinson, 13 Com. B., N. S., 663; 7 L. T., N. S., 678. B employed C to raise money, and C procured one hundred and sixty pounds from A, which he handed to B, from whom he took a check for that sum, payable to him (C) or bearer. C subsequently applied to B for payment of the check. In an action by A against B on the check, held, that C was clearly B's agent, and that delivery to him sup- ported the averment in the declaration of a delivery to A: Samuel v. Green, 10 Q. B. 262; 11 Jur. 607; 16 L. J. Q. B. 239. A, being aware that B wished to obtain shares in a certain company, represented to B that he. A, could procure a certain number of shares at three pounds a share. B agreed to pur- chase at that price, and the shares were thereupon transferred, in part to him and in part to his nominees, and he paid to A three pounds a share. He afterwards discovered that A was in fact the owner of the shares, having just bought them for two pounds a share. Held, that on the facts A was an agent for B, and A was ordered to pay back to B the difference between the prices of the shares: Kimher v. Barber, L. R. 8 Ch. App. 56; 27 L. T., N. S., 526; 21 Week. Rep. 65. A was to acquire an ' Brown v. Bank of Missouri, 2 Mo. ^ Horstmann v. Baltzer, 38 Him, 191; Brown v. Harrison, 17 Ala. 774. 367. 11 THE APPOINTMENT OF AGENTS. §§ 10, 11 interest in a vessel when she should be built. Held, that the builder had no implied authority to purchase an outfit on A's credit: De Wolf v. Tupper, 24 Fed. Rep. 289. § 10. May be Conferred by Parol. — The authority may be expressed in writing, either by deed or unsealed instru- ment; it may be given orally.^ Formerly it was said that an authority to act as one's agent should be given by deed or other instrument under seal, so that the proof of the authority would be clear and indisputable in every case.^ But such a rule would be clearly absurd in an age like the present, where the multifarious business of commerce must be carried on with speed and without circumlocu- tion; and so it is now well settled that no such formality is essential to the formation of the contract of agency. A parol (verbal) authority is sufficient to authorize an agent to contract for the sale of land;^ to confess judgment;'' to enter on land;^ to contract for the sale of a mining claim;® to tender money to redeem land sold for taxes ;^ to exe- cute a lease for a year, not requiring a seal.* An author- ity from a mortgagor of land to a third person to deliver possession to the mortgagee in order to foreclose need not be in writing.* § 11. Or Implied from Acts. — Or the appointment may be implied from the relations and actions of the parties," — from the recognition of the principal, or his acquiescence in the acts of the agent." Where one man ' Story on Agency, sec. 46; Long v. " Skinner v. Brewer, 4 Pick. 468. Colburn, 11 Mas3. 97; 6 Am. Dec. 160; " Story on Agoncy, sees. 54, 55; Howe Machine Co. v. Clark, 15 Kan. Wharton on Agency, sees. 40-44; Gil- 492; Paris v. Lewis, 85 111. 597. braith v. Linoberger, 69 N. C. 145. ' Evans on Agency, 16. i' Mechanics' B'k v. Butchers' B'k, ^ Ledbetter v. Walker, 31 Ala. 175; 16 N. Y. 145; 69 Am. Dec. 678; Amer- contra, Wallace v. Brown, 10 N. J. Eq. ican Ins. Co. v. Oakley, 9 Paige, 496; 308. 38 Am. Dec. 561; Pickett v. Pearsons, * Dial V. Farrow, 1 Spears, 114. 17 Vt. 470; Milligan v. Davis, 49 Iowa, * Miles V. Cook, 1 Grant Cas. 58. 126; Chidsey v. Porter, 21 Pa. St. 390; ^ Patterson v. Keystone etc. Co., 30 Dows v. Green, 16 Barb. 72; Gulick v. Cal. 360. Grover, 33 N. J. L. 463; 97 Am. Dec. ' Gracie v. White, 18 Ark. 17. 728; Kiley v. Forsee, 57 Mo. 390; Wea- » State V. Watts, 44 N. J. L. 126. ver v. Ogletree, 39 Ga. 586; Kelsey v. § 11 PRINCIPAL AND AGENT. 12 acts openly and avowedly for another in leasing or con- trolling his property, this is suflScient, as against third persons, to show that the property is that of the person recognized by the agent as owner; and the possession of the agent is the possession of the principal, who can maintain forcible and unlawful entry and detainer against such third persons, whether the agent had any written authority or not.' The consent of the owner to a disposi- tion of his property may be inferred from acts as well as given in direct terms. It may be inferred when he gives such evidence of the authority of disposal as usually ac- companies such authority, according to the custom of trade and the general understanding of business men.^ Sending a conveyance containing a receipt for the con- sideration to a person for the purpose of completing a sale of the land described in the deed, and calling on the grantee to settle with such person, constitute the latter the grantor's agent.* Where one bids off property at a sheriff's sale, in pursuance of an agreement previously made with another, by which the latter is to receive a portion of the property at a certain price, the relation between the two is that of principal and agent, and not of vendor and vendee.^ An agreement by a purchaser that a third person shall have a lien by mortgage or otherwise, after a certain time, for a debt due him from the vendor, does not constitute the vendor the agent of the purchaser to execute such mortgage.* An astronomer who assists con- tracting engineers in their survey, and is paid with their money, but who is not appointed by them, and cannot be discharged by them, and who is not responsible to them. National Bank, 69 Pa. St. 426; St. Louis ' Mintura v. Burr, 16 Cal. 107. etc. Packet Co. v. Parker, 59 111. 23; ^ Wright v. Soloman, 19 Cal. 64; 79 Summerville v. Hannibal etc. R. R. Am. Doc. 196. Co., 62 Mo. 391;Morgan«. Diirrali, 39 ^ Pope v. Chafee, 14 Rich. Eq. Tex. 171; Commercial Bank v. War- 69. ren, 15 N. Y. 577; Komitz v. Price, 40 * Wright v. Calhoun, 19 Tex. 412. Miss. 341; Bank of Kentucky v. Brook- ^ Hyde v. Boston and Barro Co., 21 ing, 2 L tt. 41 ; Sweetzer v. French, 2 Pick 90. Gush. LOJ; 48 Ain. Dec. 666. 13 THE APPOINTMENT OF AGENTS § 11 is not their agent.* But where the agent is appointed by- writing, the writing must be produced or accounted for.^ An agent's authority to execute a sealed instrument can- not be shown by a parol acknowledgment of the principal that a sealed authority had been given.^ Illustrations. — There was an agreement between A and B that A should purchase property at a sale for the benefit of B's creditors, and allow it to remain with B, to resell and reim- burse A, and retain the surplus, if any. Held, that this did not make A the agent of B: Haynes v. Crutchfield, 7 Ala. 189; Cravens v. Cravens, 1 Morris, 285. A agrees with B, his debtor, that he will permit his note to be renewed, if it ^s indorsed by C. Held, that this does not constitute B the agent of A; nor is A liable for any fraud of B in procuring the indorse- ment of C: Harris v. Bradley, 7 Yerg. 310. H. applied to W. for a loan of one thousand dollars. W. told him if he would meet him on a certain day, with a bond and mortgage made out to one C, and would assign also to said C. a certain other bond and mortgage as collateral, he should have the money; they met, and W. telling H. that he had only six hundred dollars, which he would pay him as soon as he could raise it, if he would deliver to him the bonds and mortgages, H. de- livered the papers. Held, that thereby H. made W. his agent to deliver them to C, and to receive the money from him: Cooper V. Headley, 12 N. J. Eq. 48. The question is, whether an agent (not having, by the papers which created him such agent and defined his powers, any authority to alter a policy which had been issued by his principal), "was permitted to alter policies in respect to days of sailing, from time to time, so that that became the customary usage and course of business." Held, that the evidence must show, in order to bind the principal, at least several cases in which the agent, without asking the sanc- tion of his acts by the principal, had made alterations of a like nature on which the principal had acted, and in which he had acquiesced when such alterations came to his knowledge; or it must tend to prove that, although communicated by the agent, they were acquiesced in, as acts which he was competent to perform, and as binding on his principal; or that he was held out to the public as authorized to do such acts: Bunten v. Orient etc. Ins. Co., 4 Bosw. 254. A son had been for years in the habit of signing his father's name as indorser upon promis- 1 Jones V. United States, 1 Ct. of CI. ' Blood v. Goodrich, 9 Wend. 68; 24 383. Am. Dec. 121; Paine v. Tucker, 21 Me. " Neal 0. Patten, 40 Ga. 363; Raw- 138; 38 Am. Deo. 255. son V. Curtis, 19 111. 456. § 11 PRINCIPAL AND AGENT. 14 sory notes made by himself, and the father knew the fact, .but took no steps to prevent such use of his name, and gave no no- tice, etc. Held, that a presumption was created that the son had authority to sign his father's name, and the father was liable upon such notes: Weaver v. Ogletree, 39 Ga. 586. In an action for suing the plaintiff in the name of a third person, without authority, evidence that the third person had suffered a default, and that execution had issued against him to recover for ser- vices rendered in prosecuting the suit so brought without his authority, held, inadmissible to show that the defendant was authorized to bring the previous suit in his name: Foster \. Dow, 29 Me. 442. Upon a sale of grain in store, the vendor handed the order on the storekeeper for the delivery of the corn to a lighter-man, and employed him to carry it away, instead of leaving that to be done by the purchasers, as was customary, but the latter paid the lighterage. Held, that the lighter-man was to be considered as the agent of the latter for the trans- portation of the grain, of which there had been a delivery to the purchasers according to the custom, while it was yet in store: McCready v. Wright, 5 Duer, 571. A bank delivered to A certain notes, with a request that he would pass them away for the benefit of the bank, or, if he could not do that, to return them, which he agreed to do. Held, A, quoad hoc, is the servant of the bank: Towson v. Havre De Grace Bank, 6 Har. & J. 47; Bridenbecker v. Lowell, 32 Barb. 9. W., an agent for A., sold but did not transfer stock to C, and promised C. to "be account- able for such dividends as he or his agent should receive before transfer." Held, that be thereby became C.'s agent to receive such dividends: Cropper v. Adams, 8 Pick. 40. Where a per- son, acting ostensibly as the agent of the defendants, was at the time of the transaction in question, and for years had been, a clerk in their store, and had as their agent done business in many instances with the plaintififs. Held, that these facts established his general agency: Eagle Bank v. Smith, 5 Conn. 71; 13 Am. Dec. 37. A received of B a note, and agreed to indorse it on another note in favor of C. Held, in a suit against A, that proof of such act and agreement alone did not conduce to prove that A in such transaction was the authorized agent of B: Plant v. McEwen, 4 Conn. 544. Defendant sent to a builder, whom he had employed to build and finish his house, a note requesting him to procure mantel-pieces like some which another person had purchased from plaintiffs. This note the builder showed to plaintifis without comment, and ordered some mantel-pieces from them. Held, that defendant was not liable to plaintifi's for the price. The circumstance did not warrant plaintiflFs in assuming that the builder made the purchase as agent: Murphy 15 THE APPOINTMENT OP AGENTS. § 12, 13 V. Winchester, 35 Barb. 616. The master of a barge finds a per- son apparently in charge of a wharf, and moors his barge where this person directs, presuming him to be the agent of the wharf- owner. Held, that he may hold the owner liable if the barge sustains injury by the place of mooring being an unsafe one: Pennsylvania E. R. Co. v. Atha, 22 Fed. Rep. 920. A ticket- agent in the employ of the L. R. R. Co. sold the tickets of the P. R. R. Co. He was directed to do so by the L. Co., which was compensated by the P. Co. under a contract between them. The agent, after selling the P. Co.'s tickets, as well as those of the L. Co., for two years, left the employment of the L. Co., and brought suit against the P. Co. for services in selling its tickets. There was no proof of a contract or of an express promise. Held, that he could not recover: Pennsylvania E. E. Co. v. Flanigan, 112 Pa. St. 558. § 12. Declarations of Agent. — The authority of the agent to bind the principal cannot be proved by the agent's statements as to the extent of his authority;' nor can an agent give himself authority to bind his principal by false statements to those with whom he deals as to the extent of his authority;^ nor can a special agent enlarge his authority by such statements.' Statements by an agent, before he received authority to act, or after it had been withdrawn, or not within the scope of his agency, do not bind his principal.'' § 13. Authority to Execute Instrument under Seal. — Yet where the agent is to execute his authority by deed, his appointment is required to be under seal also.° But ' Howe Machine Oo. v. Clark, 15 may be proved by the agent himself: Kan. 492; Reynolds v. Continent Ins. Thayer v. Meeker, 86 111. 470. Co., 36 Mich. 131; Maxey «. Hecke- ^ Stringham v. St. Nicholas Ins. thorn, 44 111. 438; Rawson v. Curtis, Co., 4 Abb. App. 315; Grover and 19 111. 474; Brigham v. Peters, 1 Gray, Baker Co. v. Polhemus, 34 Mich. 247. 139; Peck v. Ritchey, 66 Mo. 114; ' StoUenwerckw. Thacher, 115 Mass. Streeter v. Poor, 4 Kan. 412; Chicago 224. etc. R. R. Co. V. Fox, 41 111. 106; Har- * Clark v. Baker, 2 Whart. 340. ker V. Dement, 9 Gill, 7; 52 Am. Dec. * Rowe v. Ware, 30 Ga. 278; Wheel- 670; Perkins v. Stebbins, 29 Barb. 523; er v. Nevins, 34 Me. 54; Hanford v. McDougald v. Dawson, 30 Ala. 553; McNair, 9 Wend. 54; Blood v. Good- Scarborough «. Reynolds, 12 Ala. 252; rich, 9 Wend. 68; 24 Am. Dec. 121; Stringham v. Ins. Co., 4 Abb. App. 12 Wend. 525; Despatch Line v. Bel- 315; 37 How. Pr. 375; Whiting v. lamy Mfg. Co., 12 N. H. 205; ,37 Am. Lake, 91 Pa. St. 349. But an agency Dec. 203; Worrall v. Mvmn, 5 N. Y. §13 PRINCIPAL AND AGENT. 16 a deed of land by an agent, authorized simply by a power not under seal, though inoperative to convey the legal title, will in equity be evidence of a contract to convey, to sustain a suit for specific performance against the prin- cipal.^ If an agent, not properly authorized to execute a contract under seal, execute a contract under seal which does not require this formality, it will be held valid and binding on the principal as a simple contract.^ " It is a maxim of the common law, that an authority to execute a deed or instrument under seal must be conferred by an instrument of equal dignity and solemnity, — that is, by one under seal. This rule is purely technical. A disposition has been manifested by most of the American courts to 229; Preston v. Hull, 23 Gratt. 600; 14 Am. Rep. 153; Scheutze v. Bailey, 40 Mo. 69; Cooper v. Rankin, 5 Binn. 613; McNaughten v. Partridge, 11 Ohio, 223; 38 Am. Dec. 731; Cummins V. Cassely, 5 B. Mon. 75; Emerson v. Pror. Hat Co., 12 Mass. 240; 7 Am. Dec. 6S; Harshaw v. McKesson, 65 N. C. 688; Mans v. Worthing, 3 Scam. 26; Adams v. Power, 52 Miss. 828; Da- mon V. Granby, 2 Pick. 345; Banorgee V. Hovey, 5 Mass. 11; 4 Am. Dec. 17; Reed v. Van Ostrand, 1 Wend. 424; 19 Am. Deo. 529; Gordon v. Biilkley, 14 Serg. & R. 331; Wells v. Evans, 20 Wend. 251; Van Home v. Frick, 6 Serg. & R. 90; Lawrence v. Taylor, 5 Hill, 113; Dclais v. Cawthorne, 2 Dev. 90; Davenport v. Sleight, 2 Dev. & B. 381; 31 Am. Dec. 420; Drumright v. Phiipot, 16 Ga. 424; 60 Am. Dec. 738; Blackwell v. Parish, 6 Jones Eq. 72; Phelps V. Call, 7 Ired. 264; 47 Am. Dec. 327; Tuberville v. Ryan, 1 Humph. 113; 34 Am. Dec. 622; Williams v. Gillies, 75 N. Y. 202. But see Peine V. Weber, 47 111. 44; Hefner v. Palmer, 67111. 161; Cadyt). Shepherd, 11 Pick. 400; 22 Am. Dec. 379; Humphreys v. Finch, 97 N. C. 303; 2 Am. St. Rep. 293. The acknowledgment of a power of attorney to convey lands is not necessary to admit it in evidence: Val- entine V. Piper, 22 Pick. 85; 33 Am. Dec. 715. ' Groff». Ramsey, ]9Minn. 44; Law- rence V. Taylor, 5 Hill, 107; Baum v. Dubois, 43 Pa. St. 260; Pringle v. Spaulding, 53 Barb. 17; Scheutze v. Bailey, 40 Mo. 69; Irvine v. Thomp- son, 4 Bibb, 296; Stackpole v. Arnold, 11 Mass. 27; 6 Am. Dec. 150; Johnson V. McGruder, 15 Mo. 365; Blood v. Hardv, 15 Me. 61; Morrow o. Hig- gins, 29 Ala. 450; Ledbetter v. Walk- er, 31 Ala. 176; Newton v. Bronson, 13 N. Y. 593; 67 Am. Dec. 89; Jack- son V. Murray, 5 T. B. Mon. 184; 17 Am. Dec. 53; Jones v. Marks, 47 Cal. 242. ^ Dickerman v. Ashton, 21 Minn. 538; State v. Spartenbnrg R. R. Co., 8 S. C. 129; Despatch Line v. Ballamy, 12 N. H. 205; 37 Am. Deo. 203: Law- rence V. Taylor, 5 Hill, 107; Worrall V. Munn, 5 N. Y. 229; 55 Am. Dec. 330; Longi;. Hartwell, 34 N. J. L. 116; Cooper V. Rankin, 5 Binn. 013; Led- better V. Walker, 31 Ala. 175; Drum- right V. Phiipot, 16 Ga. 424; 60 Am. Dec. 738; Tapley w. Butterfield, 1 Met. 515; 35 Am. Dec. 374; Love v. Sierra Nevada Co., 32 Cal. 054; 91 Am. Doc. 602; Ingraham v. Edwards, 64 111. 528; Deanr. Roesler, 1 Hilt. 421; Haight v. Sabler, 3D Barb. 223; Wood v. Auburn etc. R. R. Co., 8 N. Y. 107; Ford v. Williams, 13 N. Y. 585; 07 Am. Deo. 83; Bellinger v. Bentley, 4 Thomp. & C. 74. But see Baker v. Freeman, 35 Me. 485; FuUam v. West Brookfield, 9 Allen, 6. Yet if it be declared on as a contract under seal, there can be no recovery against the principal: Ingra- ham V. Edwards, 64 111. 526. 17 THE APPOINTMENT OE AGENTS. § 14 relax its strictness, especially in its application to partner- ship and commercial transactions. I think the doctrine as it now prevails may be stated as follows, viz.: If a con- veyance or any act is required to be by deed, the authority of the attorney or agent to execute it must be conferred by deed; but if the instrument or act would be effectual with- out a seal, the addition of a seal will uot render an author- ity under seal necessary, and if executed under a parol authority, or subsequently ratified or adopted hy parol, the instrument or act will be valid and binding on the principal." ^ Illustrations. — A deed was executed by the grantor, a blank being left for the name of the grantee, who afterwards, by parol, authorized an agent to fill in his name. The deed was held void: Hibhlewhite v. McMorine, 6 Mees. & W. 200; Graham v. Holt, 3 Ired. 300; 40 Am. Dec. 408; Williams v. Crutcher, 5 How. (Miss.) 71; 35 Am. Dec. 422; Davenport v. Sleight, 2 Dev. & B. 381. § 14. Same— Principal Present. — Unless the deed be made in his presence. In this case, if the principal be present, and verbally or impliedly authorize the agent to execute a deed for him, it is binding on him.^ Illustrations. — A, by B's authority, and in his presence,, signed B's name to a recognizance of bail for the stay of exe- cution. Held, binding on B: Cray v. BusenbarJc, 72 Ind. 48. A authorized B to borrow money of C, and sign his name to a note for it. B borrowed the money, and at his request and in his presence D signed A's name to the note, thus, "A by D." Held, that this was the act of B, and in legal effect the act of A; and that A was bound: Weaver v. Carnall, 35 Ark. 198; 37 Am. Rep. 22. A marriage settlement was brought to the door of a room where the bride was preparing for the wedding ceremony,, and she requested the bearer in the presence of a witness to sign it for her. He withdrew to the yard adjoining and signed it there. Held, a good execution: Reinhart v. Miller, 22 Ga. 402;. 68 Am. Dec. 506. A daughter testified that a servant of H. brought a bond to her father signed by H. and containing a seal for another name, with a request from H. to her father to- ' Paige, J., in Worrall v. Munn, 5 ^ Gardner v. Gardner, 5 Gush. 483; N. Y. 229; 55 Am. Deo. 330. MoMurtry v. Brown, 6 Neb. 3o8. Vol. L— 2 § 15 PRINCIPAL AND AGENT. IS sign it. Her father by reason of infirmity could not write, and directed her to sign it for him; for that purpose he laid the paper on a table, and then went out of the house. She signed his name as she had often done before, and delivered it to H.'s servant. The father made no objection afterwards. Held, not to be such a signing in his presence as would bind the father: Kime v. Brooks, 9 Ired. 218. One partner read and approved an arbitration bond, and consented that his copartner should execute it. Held, that such execution in the name of the firm by the copartner, his partner being in the store at the time although not in his immediate presence, was good: Mackay v. Bloodgood, 9 Johns. 285. A married woman requested her daughter to sign her name to a mortgage, which was done in her presence. Held, as valid as if it had been written by her- ,self: Jansen v. McCahill, 22 Cal. 563; 83 Am. Dec. 84. A hus- band at his wife's request signed her name to a deed several days after his own had been signed, and in her absence. It also appeared that she had subsequently stated several times "that he did so at her request. Held, sufficient to bar her dower: Frost V. Deering, 21 Me. 156. An illiterate son conveyed his lands to his father, and executed the deed by orally authorizing .another person to sign it in his presence, afterwards duly ac- knowledging it. Held, to be a valid conveyance: Bird v. Decker, 64 Me. 550. One witness who was present at the trans- .action testified that a married woman executed a deed by a ithird person taking hold of her hand and signing her name, -which deed was then duly acknowledged. Held, to constitute :a good signing: Pierce v. Hakes, 23 Pa. St. 231. A written lease was shown and read to a woman who took a pencil to sign it, but found that her name had been already written by her brother, who had himself signed as surety for the rent. She thereupon delivered the lease, stating that she supposed he had "written her name, and it was all right. Held, in the absence of fraud, that there was a sufiicient execution to bind her: Speckels -v. Sax, 1 E. D. Smith, 253. § 15. Unsealed Writings. — Yet the law does not require that an authority to an agent to sign an unsealed instru- ment or writing should likewise be in writing.* Thus an agent may be verbally authorized to sign or indorse ^ McWhorter v. McMahan, 10 Paige, Taylor, 5 Hill, 107; Riley v. Minor 29 386; Worrall v. Mann, 5 N. Y. 229; Mo. 439; Curtis v. Blair, 26 Miss. 309; 55 Am. Dec. 330; Newton v. Bronson, 59 Am. Dec. 257; Shaw u. Nudd 8 13 N. Y. 587; 67 Am. Deo. 89; Baum Pick. 9. ' V. Dubois, 43 Pa. St. 260; Lawrence v. 19 THE APPOINTMENT OF AGENTS. §§ 16, 17 notes for another/ though it has been held that an au- thority to sell lands is not good by parol.^ On the other hand, it has been held that the authority of an agent to make a contract for the sale of real estate need not be under seal,"'' or even in writing.* But the proof of the agent's authority must be clearly shown by the party seeking to enforce the contract made by him.^ Illustrations. — A principal wrote to his general agent to sell his lands in Minnesota. Held, that the agent was thereby authorized to contract to convey, though he had no authority under seal which was necessary for an actual conveyance: Mi- nor V. Willoughby, 3 Minn. 225. § 16. Statute of Frauds. — The authority of an agent to make a contract for the sale of lands, under the fourth or seventeenth sections of the statutes of frauds, is not re- quired to be in writing.® § 17. Agents of Corporations. — The agents of corpora- tions, originally at common law required to be authorized by the seal of the corporation in almost every case, are now appointed without seal, as by vote of the directors, or even by recognition of their acts.' , 7 ' Rawaon v. Curtis, 19 HI. 456. Ashton, 21 Minn. 538; Brown v. Eaton, = Vanhomet;. Friok, 6Serg. &R. 90. 21 Minn. 409; McWhorter v. McMa- ' Baum V. Dubois, 43 Pa. St. 260; ban, 10 Paige, 386; Moody v. Smith, Riley V. Minor, 29 Mo. 439; Rottman 70 N. Y. 598; Jackson v. Murray, 5 V. Wasson, 5 Kan. 552; Evans on T. B. Mon. 184; 17 Am. Deo. 53; Wor- Agency, 27. rail v. Munn, 5 N. Y. 229; 55 Am. *Diokerman v. Ashton, 21 Minn. Deo. 330; Doty?.. Wilder, 15 111. 411; 538; Brown v. Eaton, 21 Minn. 409. 60 Am. Deo. 755; Squier v. Norris, 1 ' Proudfoot B.Wightman, 78 111. 553; Lans. 284; Henry v. Root, 33 N. Y. Duffy V. Hobson, 40 Cal. 240; 6 Am. 550; Haydock v. Stone, 40 N. Y. 368; Rep. 617; Treat j7. De Cells, 41 Cal. 202. Briggs o. Partridge, 64 N. Y. 364; 21 'Lawrence v. Taylor, 5 Hill, 107; Am. Rep. 617. Rule changed in somi? Mortimer v. Cornwell, 1 Hoff. Ch. 351; states by statute: See Bissell v. Terry, Riley v. Minor, 29 Mo. 439; Rottman 69 111. 184. V. Wasson, 5 Kan. 552; Long v. Hart- ' This subject is considered nnder well, 34 N. J. L. 116; Diekerman v. Title II., Corporations, post. §§ 18, 19 PEINCIPAL AND AGENT. 20 CHAPTER IV. JOINT PRINCIPALS AND AGENTS. § 18. Joint principals not agents for each other. § 19. Unless they be partners. § 20. Rights and liabilities of joint principals. § 21. Joint agents must act together. § 22. Agency for public purpose. § 23. Liability of joint agents. § 18. Joint Principals not Agents for Each Other. — One of two or more joint tenants or owners or tenants or owners in common cannot appoint an agent to act for and bind the interest of the other or others without theif assent.' Illustrations. — A, the owner of a parcel of cloth, and B, the owner of another parcel of cloth, by a joint instrument consign the two parcels to C to sell. The parcels are subject to sepa- rate instructions, and C cannot sell B's parcel on instructions by A, or vice versa: Cooper v. Eyre, 1 H. Black. 37; Story on Agency, sec. 38; Wharton on Agency, sec. 54; Johnson v. O'Hara, 5 Leigh, 456. One of two tenants in common repre- sents himself as the agent of the other, and sells the land of both. The title to his co-tenants' land will not pass: Sewell v. Holland, 61 Ga. 608. § 19. Unless They be Partners. — But if they be part- ners the rule is diiTerent, for one partner is the agent of the others for all the purposes of the partnership busi- ness.^ Therefore, where two railroad companies do busi- ness together, sharing the profits with a common office under the charge of a general agent, they are jointly liable ^ Story on Agency, sec. 38; Wharton joint tenants, see Evans on Agency, on Agency, sec. 54; United States Ins. 26; Chemung Canal B'k v. Bradner, 44 Co. V. Scott, 1 Johns. 108; Evans on N. Y. 680. But the agent of a part- Agency, 26. nership is the agent of the firm, and ^ Story on Agency, sec. 39. As to not of the individuals: Johnston v. notice to (juit given by one of several Brown, 18 La. Ann. 330. 21 JOINT PEINCIPAL9 AND AGENTS. §§ 20, 21 on a contract made with a shipper by such agent/ And so of part owners of ships.* § 20. Rights and Liabilities of Joint Principals. — On the sale of several parcels of goods by a factor, belonging to different principals, on a credit, taking one note from the purchaser for the whole, payable to himself, the right of each principal to his remedy for his share is not extin- guished.^ And one principal can sue another to recover money belonging to him paid by the agent to the wrong party.'' But where a number of persons appoint a com- mon agent for a common purpose, no one of them has a right to compel a separate account to himself.^ Where one of several claimants to a fund appoints an agent to collect it, and account to him, he becomes a trustee for the others, and an action may be brought in his name against the agent to recover the fund." Where the same agent was appointed by two different mines in the same place, and it became necessary for one to deal with the other, it was held that he had the same power to act for both that two agents acting separately would have had.^ So several principals may employ the same agent without incurring a joint liability.^ § 21. Joint Agents must Act Together. -^ Where au- thority is given to two or more persons to do an act, all must concur in its execution.* One of two private agents ' Barrett v. Indianapolis etc. R. R. ' Peter v. Beverly, 10 Pet. 532; De- Co., 14 Am. Law Rev. 602. spatch Line v. Bellamy Mfg. Co., 12 2 Story on Agency, sec. 40; Reimau N. H. 205; 37 Am. Dec. 203; Towns V. Hamilton, 111 Masa. 245. v. Jacquith, 6 Mass. 46; 4 Am. Dec. ' Corlies v. Cumming, 6 Cow. 181. 84; Kupfer v. Inhabitants, 12 Mass. *Hathaway«. Cinoinnatus, 62N. Y. 185; Low v. Perkins, 10 Vt. 532; 33 434. Am. Dee. 217; Heard v. March, 12 ^ Louisiana Trustees v. Dupuy, 31 Cush. 580; Green v. Miller, 6 Johns. La. Ann. .305. 39; 5 Am. Dec. 184; Cedar Rapids R.R. ^ Noe V. Christie, 51 N. Y. 270. Co. v. Stewart, 35 Iowa, 115; Osgood w. ' Adams Mining Co. v. Senter, 26 Franklin, 2 Johns. Ch. 1 ; 7 Am. Dec. Mich. 73. 513; Franklin v. Osgood, 14 Johns. ^ Evans on Agency, 26; Cooper v. 527; -Johnston v. Bingham, 9 Watts & Eyre, 1 H. Black. 37. S. 56; Commissioners v. Lecky, 6 Serg. § 21 PRINCIPAL AND AGENT. 22 under a joint power of attorney cannot delegate his power to the other.^ In like manner, where a firm is employed as agents, one of the partners cannot act after the death of the other. ''It is a general rule of the common law that an au- thority by a principal to two persons to do an act is joint, and the act must be concurred in by both. Where a firm is appointed to an agency, this rule would necessarily be void, to the extent that either member of a firm could do any act within the scope of the agency, the same as he could per- form any other partnership act. By appointing a part- nership firm, it would be implied that the authority was joint and several; but upon a dissolution of the firm, such an agency would cease. This is the necessary result of the principles alluded to. The principal would not be bound by the act of a surviving member of a firm, be- cause he had never appointed him to act nor agreed to be responsible for his acts, and the latter could incur no obligation against the deceased member or his repre- sentatives."^ The power, however, may be given in such terms as to authorize a several execution, or an execution by a less number than the whole.^ Usage of trade may change this rule,— as where it is the custom of business for one of several joint factors to act for the common principal.* The authority to receive money on a debt due to their assignor may be exercised by one of several assignees.® And so where the power is coupled with an & B. 166; 9 Am. Deo. 418; In re Turn- ' Loeb v. Drakeford, 75 Ala. 464. pike Road, 5 Binn. 481; Hawley v. ^^ Martine «. International Lite Ins. Keeler, 53 N. Y. 114; Sinclair v. Jack- Co., 53 N. Y. 339; 13 Am. Rep. 529. son, 8 Cow. 543; Hartford Fire Ins. ' Cedar Rapids etc. R. E. Co. m. Stew- Co. V. Wilcox, 57 111. 180; Floyd v. art, 25 Iowa, 115; French v. Price, 24 Johnson, 2Litt. 115; 13 Am. Dec. 255; Pick. 13; Hawley v. Keeler, 53 N. Y. Rollins V. Phelps, 5 Minn. 463; Union 114; 62 Barb. 231; Gas Co. v. Wheel- Bank ». Beirne, 1 Gratt. 226; luhabi- ing, 8 W. Va. 321; Phippen v. Stick- tants V. Cole, 3 Pick. 232; Damon v. ney, 3 Met. 384. Inhabitants, 2 Pick. 345; Woolsey v. * Story on Agency, sec. 44; Whar- Tompkins, 23 Wend. 324; White v. ton on Agency, sec. 141. Davidson, 8 Md. 169; 63 Am. Dec. * Heard v. Lodge, 20 Pick. 53; 32 699; Damon v. Granby, 2 Pick. 345; Am. Deo. 197. Sutton Parish v. Cole, 3 Pick. 232. 23 JOINT PRINCIPALS AND AGENTS. § 21 interest, it may be executed by the survivor/ Where two agents are appointed by separate instruments, to act with equal authority for the principal, the right to act is not exclusive in either; but any act done by one within the authority granted will be binding ou the other.* One of several assignees of a chose in action, with power to col- lect debts, may make a demand for it.* Illustrations. — A gives B and C jointly power to sell his property. A sale by either B or C alone will not bind A: Cope- land V. Insurance Co., 6 Pick. 198. Two persons are appointed agents jointly to take charge of their principal's business. One of them becomes incapacitated. The business cannot be con- ducted by the other alone: Salisbury v. Brisbane, 61 N. Y. 617; Hartford Fire Ins. Co. v. Wilcox, 57 111. 180. Authority is given to A and B to use their principal's name as an indorser. This authority can only be used by A and B jointly: Union Banh v. Beirne, 1 Gratt. 226. L. entered into a contract with five indi- viduals, as agent or trustee of an association for building a church, to erect it on certain terms. In an action against them for the work, L. attempted to show that by an agreement be- tween him and two of them, the special contract was aban- doned and he was to be paid a quantum meruit. Held, inad- missible: Low V. Perkins, 10 Vt. 532; 33 Am. Dec. 217.* A note was given by defendants to three persons, who were to arbitrate the difference between defendant and plaintiff, and indorse it over to plaintiff if they thought him entitled to it. It was indorsed over to plaintiff by two of them, the other refusing to join. Held, that the power was not properly executed, and the plaintiff could not recover on the note: Patterson v. Leavitt, 4 Conn. 50; 10 Am. Dec. 98. A power of attorney was given by a party to fifteen persons named, "jointly and separately, for him and in his name to sign and underwrite all such policies as they, his said attorneys, or any of them," should jointly think proper. Held, that a policy made by four of the fifteen was binding on the principal: Guthrie V.Armstrong, 5 Barn. & Aid. 628. Authority is given to A and B, or either of them. Held, that a joint or several execution will be valid: Cedar Rapids etc. R. E. Co. Y.Stewart, 25 Iowa, 115. > Peter v. Beverly, 10 Pet. 532; O3- * "The court,"said Phelps, X, "did good V. Franklin, 2 Johns. Ch. 1; 7 right in rejecting the testimony. Am. Deo. 513; Franklin v. Osgood, 14 Where several individuals are assooi- Johns. 527. ated in a public trust, it is competent ^ Cushman v. Glover, 11 HI. 600; 52 for a majority to act and to bind their Am. Dec. 461. principals; but in the case of a private 'Heard v. Lodge, 20 Pick. 53; 32 trustoragency, the rule is different, and Am. Dec. 197. the concurrence of all is necessary." §§ 22, 23 PRINCIPAL AND AGENT. 24 § 22. Agency for Public Purpose. — And where the joint authority is given, not by the act of the principal, but by the act of the law,^ or is for a public purpose,^ the rule is different. Thus in the execution of trusts for public purposes (as, for example, boards of public works, boards of charity, boards of corporations), unless the power is otherwise limited by the act of incorporation, or the act creating the board, the acts of the majority are binding.^ "In all matters of public concern, the voice of the majority must govern. Whether the statute ex- pressly authorize a majority to act or is silent, the prin- ciple to be extracted from the numerous cases on this head is, that where a number of persons are intrusted with power, not of mere private confidence, but in some respect of a general nature, and all of them are assembled, the majority will conclude the minority."^ But a majority must act, and therefore if the board be composed of only two, one cannot exercise the powers alone," and though a majority may decide, all must meet and deliberate.® § 23. Liability of Joint Agents. — Joint agents are jointly liable each for the other's acts and receipts, and it is no defense that one wholly transacted the business without the knowledge of the other.' 1 Caldwell v. Harrison, 11 Ala. 735; Watts, 128; Downing v. Eugar, 21 Scott u. Detroit Soc, 1 Doug. (Mich.) Wend. 178; 34 Am. Dec. 223. 119; Jewett v. Alton, 7 N. H. 253. "> In re State Road, CO Pa. St. 330; 2 Worcester v. E,. R. Co., 113 Mass. Downing v. Rugar, nupra; Schuyler v. 161; Solus K. Racine, 10 Wis. 271. Marsh, 37 Barb. 355, and note" in 34 ' Id. ; Despatch Line w. Bellamy Mfg. Am. Deo. 228; Crocker t;. Crane, 21 Co., 12 N. H. 205; 37 Am. Dec. 203; Wend. 211; 34 Am. Dec. 228. And Grindley v. Barker, 1 Bos. & P. 229; so where a majority of arbitrators are County Commissioners v. Lecky, 6 authorized to make an award, the rai- Serg. & R. 170; 9 Am. Dec. 418; nority must be present at the hearing, Commissioners v. Canal Commission- or at least must have been notified of ers, 9 Watts, 470; In re State Road, it: Blin v. Hay, 2 Tyler, 304; 4 Am. 60 Pa. St. 330; Patterson v. Leavitt, Dec. 738; Moore v. Ewing, 1 N. J. L. 4 Conn. 50; 10 Am. Dec. 98; McCoy 195; 1 Am. Deo. 195. V. Curtice, 9 Wend. 17; 24 Am. Dec. ' Snelling v. Howard, 51 N. Y. 373; 113; coriiro, Jeter w. Commissioners, 1 Mcllreath v. Margctson, 4 Doug. Bay, 354; 1 A:n. Dec. G21. 278; Wharton on Agency, see. 142; * McC'roady z). Guardians of the Poor, Cushmau v. Glover, 11 111. 600; 52 9Serg. & R. 94; 11 Am. Dec. 607. Am. Dec. 461. See Division III., *■ Cooper V. Lampeter Township, 8 Trustees, post. 25 DELEGATION OP AUTHORITY. §§ 24, 25 CHAPTER V. DELEGATION OF AUTHORITY. § 24. Delegation of original and delegated authority. § 25. Delegation of original authority. § 26. Delegation of delegated authority. § 27. Same — When not permitted. § 28. Same — When permitted. § 24. Delegation of Original and Delegated Authority. — An authority or power is either original or delegated. Thus I may make an offer to another either in my own right or on account of authority given to me by some one else. But the general principle of the common law is as to these two conditions quite different. I may, with very few exceptions, do by another what I can do in my own right. On the other hand, I may not, except in some special cases, do by another what some one else has authorized me alone to do for him. § 25. Delegation of Original Authority. — Whatever a man may do himself he may do by a legal agent. To this general rule there appear to be only two exceptions: 1. The power to do an illegal act cannot be delegated to another; ^ and 2. The power to do a purely personal act cannot be delegated to another. For example, a man could not appoint an agent to marry a woman for him, or to make a will for him;^ nor can, it seems, a married woman make a deed (required by statute to be done with certain 'Elmore v. Brooks, 6 Heisk. 45; an order: Chicago etc. B. R. Co. «. Bay- Brown V. Howard, 14 Johns. 120; Da- field, 37 Mich. 205. vis V. Barger, 57 Ind. 54; WTiarton on '' So at common law a man could not Agency, sec. 25; State v. Mathis, 1 do homage or fealty by attorney, for the Hill (S. C. ) 37. The authority of an service was personal; and though a lord agent to do an illegal act will not be might beat his villein without cause, presumed: Gokey v. Knapp, 44 Iowa, he could not authorize another to beat 32. The authority is presumed legal, him without cause: 9 Coke, 76 a, 76 b; and a servant has the burden of show- and see Ex parte Ugra Bank, L. R. 6 ing a lawful reason for refusing to obey Ch. 206. § 26 PRINCIPAL AND AGENT. 26 formalities, as to privy examination, etc.) by an attorney.' The power of an executor or administrator over the estate is not a delegated power, for he is himself an owner in auter droit; and therefore he may make an attorney to transfer stock belonging to the estate.^ A covenant un- der seal to do a particular thing requiring skill and judg- ment cannot be performed by an agent.* A bailment of property with a power of sale is a personal trust to the bailee which he cannot delegate.^ § 26. Delegation of Delegated Authority. — An author- ity or power received from another cannot be delegated,* except in the instances hereafter stated. The maxim of the law is, Delegata potestas non potest delegari; the reason for the rule being that one who selects another to do an act for him relies on the skill and integrity of the person selected, and cannot be presumed to intend that another not selected by him should exercise the authority con- ferred on the man of his choice. Where an agent is ap- pointed to sell property, a sale made in his absence, and when he could not control the sale and its terms, by one pretending to represent him, is not the act of the agent, and does not bind either him or his principal.® A broker who sells on the order of a broker in another city is the agent of the latter, and has no claim against the original principal.^ ' Story on Agency, sec. 12, note. v. Jerome, 26 Wend. 485; 37 Am. Dec. 2 Hutchins o. State Bank, 12 Met. 271; Locke's Appeal, 72 Pa. St. 491; 421, 427. 13 Am. Rep. 716; Ex parte Wiasor, 2 2 Paul V. Edwards, 1 Mo. 30. Story, 41 1 ; Lewis v. IngersoU, 3 Abb. * Hunt V. Douglass, 22 Vt. 128. App. 55; 1 Keyes, 347; Barretij. Rhem, * Bocock V. Pavey, 8 Ohio St. 270; 6 Bush, 466; McCormick v. Bush, 38 Warner v. Martin, 11 How. 209; Tib- Tex. 314; Hicka v. Dorn, 9 Abb. Pr., bets V. Walker, 4 Mass. 597; Com- N. S., 53; 42N. Y. 51; Whitow. David- mercial Bank v. Norton, 1 Hill, 501; son, 8 Md. 169; C3 Am. Dec. 699; Lynn v. Burgoyne, 13 B. Mon. 400; Wright v. Boynton, 37 N. H. 9; 72 Bissell V. Roden, 34 Miss. 63; 84 Am. Am. Dec. 319. Dec. 71; Smith v. Sublett, 28 Tex. ■= Barret «. Rhem, 6 Bush, 466. 163; Loomis v. Simpson, 13 Iowa, 532; ' Hill v. Morris, 15 Mo. App. 322. Hawley v. James, 5 Paige, 323; Lyou 27 DELEGATION OF AUTHORITY. §27 §27. Same — When not Permitted. — The following have been held not to have the right to delegate their au- thority: An agent appointed by the owner of an estate to sell it;^ or an executor with power to sell;^ or a broker au- thorized to sign a contract for his principal;^ or an agent authorized to give a note or do other acts;* a general agent of an insurance company;^ arbitrators appointed to decide a question;" a judge;' a keeper appointed by a sheriff;* the governing body of a municipal corporation, to an inferior body or agent;* an attorney at law;"" a corporation au- thorized to levy assessments on its members;" directors of a corporation authorized to execute a lease for the cor- poration;^^ a committee appointed to repair dams and fishways;^^ canal commissioners having authoritj' by stat- ute to enter upon lands and take and use property "as they may think proper."" An agent employed to drive * Bocook V. Pavey, 8 Ohio St. 270. 2 Story on Agency, sec. 1.3. * Evans on Agency, sec. 40. * Brewster v. Hobart, 15 Pick. 302; Emerson v. Providence Hat Co., 12 Mass. 237; 7 Am. Dec. 66; Crozier v. Eevis, 4 111. App. 564. ^ McCluro V. Mississippi Valley Ins. Co., 4 Mo. App. 148. ^ Haven v. Winnisimmet Co., 11 Allen, 377; 87 Am. Deo. 723; Little v. Newton, 2 Soott N. R. 509. Such pow- ers are judicial, and are clearly not to be delegated. They may, however, it seems, delegate purely ministerial acts: Moore v. Barnet, 17 Ind. 349. And though they agree to be bound by the opinion of a third person, if they afterwards disregard it, the award will not be void: Haff v. Blossom, 5 Bosw. 559. ' Winchester v. Ayres, 4 G. Greene, 104. 8 Connor v. Parker, 114 Mass. 331. ' State V. Jersey City, 25 K. J. L. 309; 26 N. J. L. 444; V^Tiite v. Mayor, 2 Swan, 364; Thompson v. Sohermer- horn, 6 N. Y. 92; 55 Am. Dec. 385; Sheehan v. Gleason, 46 Mo. 100; Bug- gies V. Collier, 43 Mo. 359; Richardson V. Heydenteldt, 46 Oal. 68; East St. Louis V. Wehnung, 50 111. 28; Foss v. Chicago, 56 111. 354. '" Connor v. Arnold, 53 Ind. 203; Weeks on Attorneys, sec. 246. " Ex parte Winsor, 3 Story, 411. " Gillis V. Bailey, 21 N. H. 149. " Stoughton V. Baker, 4 Mass. 622; 3 Am. Deo. 236. " St. Peter v. Denison, 58 N. Y. 421 ; 17 Am. Rep. 258; Curtiss v. Leavitt, 15 N. Y. 190; The California, 1 Saw. 603; Lyon v. Jerome, 26 Wend. 485'; 37 Am. Dec. 271. In this case it was said; "In all cases of delegated au- thority, where the delegation indicates any personal trust or confidence re- posed in the agent, and especially where such personal trust is implied by making the exercise and applica- tion of the power subject to the judg- ment or discretion of the agent or at- torney, the general rule is, that these are purely personal authorities, incapa- ble of being again delegated to another, unless a special power of substitution be added. Prom an early period o£ our law, this rule has been laid down as to powers given by will or deed to executors, trustees, and attorneys, to sell lands, make leases, etc. ; and mod- ern decisions have extended the prin- PRINCIPAL AND AGENT. 28 cattle, to whom the possession thereof is intrusted by the principal, cannot deliver such possession to a subagent appointed by himself.' Illusteations. — M. gave J. a power of attorney to sell lands, with power of substitution ; J. executed a power to C. to sell them in J.'s name, and signed it with his own name, not referring to his principal, M. C. made a deed as attorney of M. Held, in- valid, as C. was not appointed M.'s attorney: Stinchcomb v. Marsh, 15 Gratt. 202. P., a sheriff, by a writing directed to one by name, "or bearer," appointed him keeper of attached property. He, with P.'s knowledge, transferred his ofl&ce and the writing to another, who, without the sheriff's knowledge, transferred them to C. Held, that an action by C. to recover pay as keeper could not be maintained, because the assignor could not dele- gate his authority; but, if the authority could be delegated, evidence that C.'s assignor had agreed to act without pay was admissible, because the plaintiff must take the authority on the terms on which the assignor held it: Connor v. Parker, 114 Mass. 331. § 28. Delegation of Delegated Authority, when Per- mitted. — But an agent may appoint a subagent and delegate his authority to him, where he is authorized to ciple to the less formal appointments cretion whatever by the commission- of factors, brokers, and other commer- ers; there was merely such a general cial agents. How ranch more strongly, reliance on the supervision and judg- then, must the reason and policy of the ment of the engineer as might amount rule apply to the delegation of author- to an implied delegation of authority, ity by the state, to its high public had the commissioner been authorized officers, made with the solemnity of a by law to make such a substitution, legislative act? The language of the But, as the circuit judges before whom statute, as well as the nature of the the case was tried well stated it, ' it trust itself, shows that this is an au- is the judgment cf the commissioners, thority confided to the judgment and or one of them, which is to determine discretion of the commissioners thera- the propriety of the entry, and not selves, for the impartial discharge of that of the agents,' etc. 'Such is the ■which they are responsible to the state, obvious construction of the statute. In this instance, as in similar cases of A contrary construction would be un- authority to represent private Individ- reasonable and extravagant. The uals, the person thus intrusted may power conferred is one of the most have occasion to depend upon scientific important character; nothing less than or professional advice for the guidance taking of the property of a citizen of his own judgment. He may even without his consent. Yet, by the con- in matters out of the scope of his own structioa contended for, this is con- information rely entirely upon the ferred upon any and every engineer, authority of his adviser or assistant, superintendent, and agent whom the Yet he is still bound to form a judg- commissioners may employ, down to ment for himself, and to assume its the chain -bearers. ' " responsibility. In this case there was ^ Underwood v. Birdsell, 6 Mont, no exercise of any judgment or dis- 142. 29 DELEGATION OF AUTHORITY. § 28 do SO by statute or by contract,* and in the following other cases: The delegation of authority by an agent is legal where authorized by custom or the usages of trade.^ The legal maxim that an agent cannot delegate his au- thority to a subagent is not of universal application to factors and commission merchants, and can only be in- voked by the principal when sought to be charged by the act of the subagent/'' It is likewise legal where the act delegated is a purely ministerial one,* and does not require the exercise of judgment or discretion.^ Thus an authority to receive and pay over money for removing buildings may be delegated bj' an agent to another.* And where the object of the agency can be best accom- plished or can only be accomplished through a subagent, the delegation of authority is proper and legal.'' Thus trustees may employ agents where there is a necessity for il^ Bank directors may delegate authority to a commit- tee of their number to convey the real estate of the bank." Where a draft payable at a distant place is left at a bank for collection, the bank has authority to transmit it to a subagent at such place.'" And the delegation is legal where the principal is aware that the agent will appoint ' Furnas v. Frankman, 6 Neb. 429. ' Grinnell v. Buchanan, 1 Daly, ^ Lawson on Usages and Customs, 538. see. 145. ' Johnson v. Cunningham, 1 Ala.. " Harralson v. Stein, 50 Ala. 347. 249; Dorchester etc. Bank v. New * Bodine a. Exchange Fire Ins. Co., England Bank, 1 Gush. 177. "When 51 N. Y. 117; 10 Am. Rep. 566; Vfil- the power given by a person is of such liams V. Woods, 16 Md. 220; Commer- a nature as to require its execution by cial Bank ». Norton, 1 Hill, 501 ; Grady a deputy, the attorney may appoint V. American Cent. Ins. Co., 60 Mo. such deputy": Quebec etc. R. R. Co. 116. V. Quinn, 12 Moore P. C. C. 265; ^ A painter, for example, engaged to Laussatt v. Lippiucott, 6 Serg. & R. paint a portrait could not hand it over 38G; 9 Am. Dec. 440. A corporation, to another to do for him. But where for example, can only act through an agent is authorized to sell certain agents: Story on Agency, sec. 16. , land, exercising his discretion as to ' See Division III. , Trustees, posi. price and terms, he may properly em- ' Burrell v. Nahant Bank, 2 Met. ploy a subagent: Renwick v. Ban- 163; 35 Am. Dec. 395, croft, 56 Iowa, 527. It has been held '" Dorchester etc. Bank v. New Eng- that a sexton may delegate the per- land Bank, 1 Cush. 177; Planters' formance of his duties to another: etc. Bank v. First Nat. Bank, 75 N. C. Burial Board v. Thompson, L. E. 6 534; Appleton Bank v. McGilvray, 4 Com. P. 445. Gray, 518; 64 Am. Dec. 92. § 28 PRINCIPAL AND AGENT. 30 a deputy/ or the delegation is directly or indirectly au- thorized by him.^ Illustrations. — An insurance policy is signed by a sub- agent for the regular agent and delivered by the latter, who receives the premium. This is valid: Grady v. American Gent. Ins. Go., 60 Mo. 1 16. A is authorized by B to sign his name to a subscription paper. C signs A's name to the paper at B's request in his presence. Held, valid: Norwich, University v. Denny, 47 Vt. 13. A broker may authorize his clerk to make and sign a memorandum of contract in his presence, the clerk simply acting ministerially and exercising no discretion: Wil- liams v. Woods, 16 Md. 220. A authorized B to borrow money for him of C, and sign his (A's) name to a note therefor. B borrowed the money, and in his presence and at his request D signed the note, "A by D." Held, that the note was valid against A: Weaver v. Garnall, 35 Ark. 198; 37 Am. Rep. 22.* A draft left with a bank for collection is payable at a distant city. Held, that it must be presumed that it is intended for transmission to a subagent at that place, and not that the bank shall employ its own officers to proceed there and obtain pay- ment: Dorchester and Milton Bank v. New England Bank, 1 Cush. 177. A commission merchant is employed to buy goods in a distant market, and the custom of that market is for com- mission merchants to employ brokers to make such purchases, and this custom is understood by the principal. Held, that the commission merchant may properly employ a broker of experi- ence and good reputation to make the purchases, and if he does so, he will not be liable for such broker's errors or misconduct: Darling v. Stanwood, 14 Allen, 604. The principal of a line of stages, by letter to one acting as his agent in such business, wrote: " You will do better by getting new drivers, and agents, and horses." The agent employed a subagent, and subse- quently the principal was informed of such employment and made no objection. In an action for the wages of the subagent, held, that the facts were sufficient to authorize the jury to find the fact of authority in the agent to employ the plaintiff: Mc- Connell v. McCormick, 12 Cal. 142. • Van Schoick v. Niagara Ins. Co., portion of his power requiring the 68 N. Y. 434. exercise o£ discretion or judgment; * Gray v. Murray, 3 Johns. Ch. 167. otherwise, however, as to powers and ' "An agent," said English, C. J., duties merely mechanical in their in this case, "cannot delegate any nature." 31 RATIFICATION. § 29 CHAPTER VI. RATIFICATION. § 29. Unauthorized act of agent may be ratified. § 30. But cannot divest vested rights. § 31. Act must not be illegal or void. § 32. Must have been done on behalf of principal. § 33. Principal must be in existence. § 34. Ratification must be made with full knowledge of facta. § 35. And is then irrevocable. § 36. Ratification absolves agent and shifts liability. § 37. Appointment of snbagent. § 38. Ratification must be in toio. § 39. Acts incapable of ratification. § 40. Form of ratification. § 41. Acts and conduct show ratification. § 29. Unauthorized Act of Agent may be Ratified. — The unauthorized act of a professed agent may be ratified by the party for whom he pretends to act. After ratifica- tion the principal is bound by the act, whether it be for his advantage or detriment, and whether it be founded on a tort or a contract, to the same extent and with all the consequences which would follow the same act done under his previous instructions,' and whether he be a natural person or a corporation. For example: If A professes to enter into a contract on my behalf without my authority, and I afterwards ratify it, my ratification relates back so as to have the same effect as if I had authorized A to enter into the contract.'' The term " ratified," when used • Evans on Agency, 49. rence v. Taylor, 5 Hill, 107; Forsyth » Mound City Ins. Co. v. Huth, 49 v. Day, 46 Me. 176; Hawkins v. Baker, Ala. 530; Palmer v. Cheney, 35 Iowa, 46 N. Y. 666; Chapman v. Lee, 47 281; Kelsey v. Nat. Bank, 69 Pa. St. Ala. 143; St. Louis Packet Co. v. 426; Fleckner v. V. S. B'k, 8 Wheat. Parker, 59 111. 23; Rich v. State B"k, 7 363; Drakely v. Gregg, 8 Wall. 242; Neb. 201; 23 Am. Rep. 382; Despatch Hawley v. Keeler, 53 N. Y. 114; Gu- Line v. Bellamy Mfg. Co., 12 N. H. lioku. Grover, 33 N. J. L. 463; 97 Am. 205; 37 Am. Dec. 203; Planters' Bank Dec. 728; Keeler w. Salisbury, 33 N. Y. v. Sharp, 4 Smedes & M. 75; 43 Am. 648; Grant v. Beard, 50 N. H. 129; Dec. 470; Everett v. U. S., 6 Port. Lowry v. Harris, 12 Minn. 255; Lau- 166;_ 30 Am. Dec. 584; Leggett v. New 29 PRINCIPAL AND AGENT. 32 m reference to a contract, is applicable only to contracts made by a party acting or assuming to act for another. The latter may then adopt or ratify the act of the former, however unauthorized. To adoption and ratification there must be some relation, actual or assumed, of principal and agent.-^ Yet persons who deal with a subagent as one hav- ing authority have no right as against the principal to set up that he had no authority.^ A party may ratify the acts of an agent whose name is unknown to him.' The rule that a principal cannot be permitted to enjoy the fruits of a bargain, without adopting the instrumentalities of the agent in consummating it, has never been applied where the cause of action was not created by the agent's unauthorized act. If a principal sue upon a security bought without authority, or sue upon a substituted se- curity given for one canceled without authority, he rati- fies the agent's act by which the securities were obtained. Jersey Mfg. Co., 1 N. J. Eq. 541; 23 Am. Dec. 728; Clealand v. Walker, 11 Ala. 1058; 46 Ani. Dec. 238; Gilmore V. Wilbur, 12 Pick. 120; 22 Am. Dec. 410; Starks v. Sikea, 8 Gray, 609; 69 Am. Dec. 270; Vincent v. Rather, 31 Tex. 77; 98 Am. Dec. 516; Carcw v. LiUienthal, 50 Ala. 44; Pike v. Doug- lass, 28 Ark. 59; Whitehead v. Wells, 28 Ark. 99; E,oby v. Cosset, 78 111. 638; Abbot V. May, 50 Ala. 97; Gold Min- ing Co. 0. Nat. Bank, 96 U. S. 640; Ogden V. Marchand, 29 La. Ann. 61; Sentell v. Kennedy, 29 Id. 679; Francis V. Kerker, 85 111. 190; Chamberlain v. Callison, 45 Iowa, 429; Harrod v. Mc- Daniels, 126 Mass. 413; Gibson v. Sav- ings Bank, 69 Me. 579; Curry v. Hall, 15 W. Va. 867; Woods v. Eocchi, 32 La. Ann. 210; Whildea v. Merchant's Bank, 64 Ala. 1; 38 Am. Rep. 1; Mc- Dowell V. McKenzie, 65 Ga. 630; Hart V. Dixon, 5 Lea, 336; Sheldon Hat Co. V. Eschmeyer Hat Co., 90 N. Y. 607; Jones v. Atkinson, 68 Ala. 167; Pollock V. Gantt, 69 Ala. 373; 44 Am. Rep. 519; Brooks v. Fletcher, 56 Vt. 624; Myers v. Mut. Ins. Co., 32 Hun, 321; Davis v. Krum, 12 Mo. App. 279; Wallace v. Lawyer, 90 Ind. 499; Breed V. Central City Bank, 6 Col. 235; Mc- Intyre v. Peek, 11 Gray, 102; 71 Am. Dec. 690; Hamilton o. Phoenix Ins. Co., 106 Mass. 395; Grogan v. San Francisco, 18 Cal. 590; Bell v. Byer- son, 11 Iowa, 142; 77 Am Dec. 142; Taylor v. Connor, 41 Mass. 722; 97 Am. Deo. 419; Culver v. Warren, 36 Kan. 391; Sax v. Drake, 69 Iowa, 760; Gallager v. Railroad Co., 67 Wis. 529; Goss V. Stevens, S2 Minn. 472. As to time to which ratiScatiou of entry by agent relates, see Campbell v. Wallace, 12 N. H. 362; 37 Am. Dec. 219. An extension of the power of the agent without a ratification of the act done will not legalize it: Moore v. Lookett, 2 Bibb, 67; 4 Am. Dec. 683. A con-, tract made in a foreign country by an agent without authority, if ratified by the principal, will be considered as made in the country where the princi- pal resides: Dord v. Bonnaifee, 6 La. Ann. 563; 54 Am. Dec. 573. 1 Ellison K. Jackson W. Co., 12 Cal. 542. 2 Mayer v. McLure, 36 Miss. 389; 72 Am. Dec. 190. * Foster v. Bates, Dan. & LI. 400; 12 Mees. & W. 226; 7 Jur. 1093: 13 L. J. Ex. 88. S3 EATIFICATION. § 29 But where the contract was made by the principal, its performance entitles the principal to payment; and in such case payment to an unauthorized agent cannot be ratified by the principal's bringing action upon the contract; he claims nothing by reason of such payment; he repudiates it entirely.* Where an agent authorized to sign notes delegates his power, a ratification by the principal of such note will make it valid , but not a rati- fication by the agent.'' If the court finds as a fact that one person executed a written instrument for another as his attorney in fact, without any power to do so, but that the constituent afterwards expressly ratified the act, the presumption will be that the ratification was in some legal and sufiicient mode.* If a principal ratifies his agent's acts, even for a moment, he is bound by them.^ A prin- cipal incurs liability in tort as well as in contract by rati- fying the acts of his as;ent.^ Illusteations. — One obtains an insurance of the property of another in his possession without instructions so to do. Held, that the owner may adopt the policy at any time before or within a reasonable time after a loss: Watkins v. Durand, 1 Port. 251. An agent A does a large business with a firm B. A loss is sus- tained, and on account of A's large and liberal dealings B com- promises with him at one fourth. The principal upon whose goods the loss was sustained is entitled to settle with A, upon the same terms, his portion of the loss: Owsley v. Woolhopter, 14 Ga. 124. Some of a number of bondsmen employed an attor- ney for a certain fee to settle suits pending against all, and the others with knowledge of the contract enjoyed the fruits of the compromise. Held, that the latter thereby ratified the con- tract, and were liable with the others for the fee: Hauss v. Nib- lack, 80 Ind. 407. A. sold his bankrupt stock in trade to P., agreeing in writing to "do business" in the same shop as agent for F., and not buy on credit without an order in writing from F., who was to take possession when dissatisfied, etc. A., with- out such order, bought on credit goods of S., who was ignorant of the relation between F. and A.; and F. soon afte^ took pos ' Coyle V. City of Brooklyn, 53 Barb. * Silverman v. Bush, 16 III. App. 41. 437. 2 Brewster ». Hobart, 15 Pick. 302. ^Morehouse v. Northrop, 33 Conn.. ' Racouillat v. Sansevain, 32 Cal.376. 380; 89 Am. Dec. 211. Vol. I. — 3 § 29 PRINCIPAL AND AGENT. 34 session of all the goods, including these, and sold them as his own. Held, that this ratified the agent's purchase of S., who could recover the price from F.: Sartwell v. Frost, 122 Mass. 184. An agent to sell ordered the purchaser to ship produce in part payment to a third person for sale. Held, that the principal after notice could recover the proceeds of the purchase from the third person, as against the creditors of the agent: Kelley v. Munson, 7 Mass. 319; 5 Am. Dec. 47. An agent to get a note discounted indorsed it and presented it for discount as his own; the bank discounted it and passed the proceeds to his credit. Held, that the bank was responsible to the principal therefor after notice: Merrill v. Bank of Norfolk, 19 Pick. 32. An executor sold growing wheat belonging to a widow, supposing it to be his own, and took a note for the price, with an oral agreement for measurement and correction. The widow, with notice that the purchaser claimed that the sale was subject to measurement, ac- cepted the note from the executor and sued it. Held, that she was bound by the agreement for measurement. By consenting to adopt the sale, she became bound by its terms: Garter v. Ham- ilton, Seld. Notes, 251; reversing 11 Barb. 147. An agent with- out authority submitted a claim of his principal to arbitration, and took an award in his own name. The principal accepted an assignment of the award from him, and assigned it again to a third person. Held, that he had thereby ratified the agent's acts: Lowenstein v. Mcintosh, 37 Barb. 251. W. contracted with defendant to put up certain machinery, and ordered a large portion of it from plaintiffs in W.'s name and as his agent. Plaintiffs wrote to defendant for explanations of the order, and defendant answered, declining to interfere with W.'s order, but not in terms repudiating it. Plaintiffs also sent the bill of lading and the articles to defendant, who never returned any of them. Held, that upon this evidence the jury might have found that defendant had ratified W.'s order; and the question of ratification ought to have been submitted to them : Cooper v. Schwartz, 40 Wis. 54. The defendants' agent pledged their credit to the plaintiffs for goods to be delivered to K., their subcon- tractor; and the defendants agreed to pay therefor if they had sufficient funds in their hands belonging to K., which they had; K. examined his account with the plaintiffs at the defendant's jequest, and the defendants delivered a statement thereof to said agent, who proceeded to pay a part of the account. Held, that although said agent might have exceeded his authority, the defendants had adopted and ratified his act, and were bound by his promise: Burgess v. Harris, 47 Vt. 322. Several persons agreed in writing to take an interest in a voyage, and appointed P. and C. to make purchases; they made them sepa- 35 EATIli-ICATION. § 30 rately on credit, and the parties accepted and shipped the goods purchased. Held, that the separate purchases were ratified, and that subsequent signers of the contract were bound as ratifying the purchases: French v. Price, 24 Pick. 13. H. embezzled cer- tain bonds belonging to W., and pledged them to M. to secure payment of borrowed money. After W. was informed that the bonds had been so pledged, he took H.'s note for them, and afterwards obtained judgment against him on the note. In a suit by W. against M. to recover the bonds, held, that by his previous acts W. had ratified the pledge and could not recover- Warneken v. Marchand, 18 La. Ann. 147. P., acting without authority from H., sells land of H., receiving a promissory note for the price thereof, and H. receives the note and indorses it to a third party. Held, that such action of H. is a ratification of the acts of P., and makes the contract binding upon H., and he is estopped from denying the original authority or ratifica- tion: Moore v. Pendleton, 16 Ind. 481. M. stored corn in the warehouse of P., who, as M. alleged, sold it without authority. All of the purchase-money except the amount of a purchase made by S. was tendered to M. by P., and at the same time M. was informed that all the corn had been sold; no special men- tion, however, was made of the sale to S. M. accepted the money tendered. Held, a ratification of all the sales, including that to S.: Seago v. Martin, 6 Heisk. 308. § 30. But cannot Divest Vested Rights. — But a ratifi- cation of an unauthorized act cannot divest rights acquired by third persons, or subject them to losses.^ "Although the general rule is that the ratification relates back to the time of the inception of the transaction, and has a com- plete retroactive efiicacy, or as .the maxim is, Omnis rati- habitio retrotiahitur, yet this doctrine is not universally applicable. Thus, if third persons acquire rights after the act is done and before it has received the sanction of the principal, the ratification cannot operate retrospectively so as to overreach and defeat those rights."^ A ratifica- tion cannot change the character of the instrument upon which it is indorsed to the extent of supplying a title where 1 Stoddard v. U. S., 4 Ct. of CI. 511; Bellmer, 57 Cal. 12; Fowler v. Pcarce, McMahani). McMahan, 13 Pa. St. 376; 49 111. 59; Pollock v. Cohen, 32 Ohio 53 Am. Dec. 481. St. 514; contra. Persons v. MoKibben, 2 Wood V. McCain, 7 Ala. fOO; 42 5 Ind. 261; 61 Am. Deo. 85. Am. Dec. 612; and see Wittenlrook v. § 31 PRINCIPAL AND AGENT. 36 there is none in fact.* Thus a mortgage by a married woman of goods of which she avouches herself therein to be the owner, but which really belong to her husband, passes no such title as to enable the mortgagee to replevy them from a third person, although the husband has in- dorsed on the mortgage that he formally sanctions and ratifies his wife's action, " she having been my agent for the transaction of business." ^ So where goods have been intrusted to an agent for a special purpose, and have been wrongfully sold by him, their owner cannot by ratifying his act maintain an action by contract against the pur- chaser for goods sold and delivered, but must sue in tort.' Illustrations. — A person in possession of the property of another, without the knowledge of the owner, exchanged it for other property, and gave his individual note for the difference without disclosing the real ownership. The owner afterwards received the property so taken in exchange. Held, that if the payee of the note, after learning the fact that the maker acted as agent in the transaction, failed to notify the principal that he should look to him for the payment of the note until after the principal had settled with the agent, and in such settle- ment had paid the agent the amount of the note, the principal was thereby discharged from any liahility to the payee: Fowler V. Pearce, 49 111. 59. § 31. Act must not be Illegal or Void. — The act must not be illegal or void.* Thus where an officer without authority undertook to appoint an appraiser for creditors without first levying on the land of the debtor, the levy was void, and it was held not made good by the creditors' ' Lewis V. Buttrick, 102 Mass. 412. no rights and created no liabilities of ^ Lewis V. Buitrick, 102 ilass. 412. any sort, could not, I imagine, be ' Berkshire Glass Co. v. Wolcott, 2 adopted by any one so as to make it Allen, 227; 79 Am. Dec. 781. valid and binding." The act of direc- * Story on Agency, sec. 240; Evans tors of a corporation going beyond on Agency, 50; Sceery v. SprayflelJ, their powers cannot be ratified by the 112 Mass. 512; O'Connell v. Arnold, 53 stockholders: Ashbury & Co. v. Riche, Ind. 205; Armitage v. Widoo, 3(1 Mich. L. R. 7 H. L. 653; Price v. Grand Rap- 124; Board of Supervisors v. Arrighi, ids E. R. Co., 13 Ind. 58; McCracken 54 Miss. 668; Newsom v. Hart, 14 v. City of San Francisco, 16 Cal. 591. Mich. 237. In Mason v. Caldwell, 5 But aliter, where the directors act ir- Gilm. 196, 48 Am. Dec. 330, Caton, J., regularly, but within their powers: said: "A contract which was absolutely State i). Tormus, 26 Minn. I. void as to all parties, which conferred 87 RATIFICATION. § 32 acceptance of seisin.* So where a committee were empow- ered to sell a school-house, a sale on credit instead of cash was held void, and not ratified by lapse of time or the re- moval of the school-house.^ So a sheriff cannot legally be a purchaser at his own sale either for himself or for another, and his act in doing so cannot be ratified.^ It is held in England that a person cannot ratify a forgery of his name;* while in the United States in a number of decisions it is laid down that he can.^ And the govern- m.ent has been held liable for the illegal acts of its ofl&cers which it adopts.* § 32. Must have been Done on Behalf of Principal. — The act must have been done by the agent on behalf of the person who ratifies it. This principle is as old as the Year- books,^ where this is put: " If a bailiff take a heriot, claiming property in it himself, the subsequent assent of the lord would not amount to a ratification; but if he takes it as the bailiff of the lord, the subsequent assent amounts to a ratification of the bailiff's act."^ Thus, where suit was brought against the general agent of a sewing-machine company for a forcible trespass committed by employees, while removing a machine by his direction, and in com- ' Riehardsou v. Payne, 114 Mass. Charles River B'k ». Davis, 100 Mass. 429. 413; Casco Bank v. Keene, 53 Me. 103. ' '' School District v. .i^tna Life Ins. But aliter, Shesler v. Vandyke, 92 Pa. Co., 62 Me. 330; Fitzpatrick v. School St. 447; 37 Am. Rep. 702, and note Commissioners, 7 Humph. 224; 46 Am. p. 704. Dee. 76. " Wiggins v. United States, 3 Ct. of ^ Harrison v. McHenry, 9 Ga. 164; CI. 412. 52 Am. Dec. 435. ' 7 Hen. IV., 35. « Brook V. Hook, L. R. 6 Ex. 79; ^ Vanderbilt v. Turnpike Co., 2 McKenzie v. British Linen Co., 6 App. N. Y. 479; 51 Am. Deo. 315; Braiaerd Cas. 82. V. Dunning, 30 N. Y. 211; AUdred o. ' Thome j-. Bell, Lalor, 430; Howard Bray, 41 Mo. 484; Collins W.Waggoner, V. Duncan, 3 Lans. 174; Forsyth v. Breese, 26; Bevenoge v. Rawson, 5i Day, 46 Me. 176; Fitzpatrick v. Com- 111. 504; Grund v. Van Vleck, 69 111. missioners, 7 Humph. 224; 46 Am. 479; Condit v. Baldwin, 21 N. Y. 219; Deo. 76; Union B'k v. Middlebrook, 78 Am. Dec. 137; Farmers' Loan etc. 33 Conn. 95; Garrett v. Goater, 42 Co. v. Walworth, 1 N. Y. 433; Com- Pa. St. 143; Livings v. Wiler, 32 111. mercial Bank v. Jones, 18 Tex. 811; 387; Wellington v. Jackson, 121 Mass. Collins v. Swan, 7 Robt. 623; Richard- 157; Turner v. Keller, 66 N. Y. 66; son v. Payne, 114 Mass. 429. §§ 33, 34 PRINCIPAL AND AGENT. 38 pliance with the orders of the company, from the prem- ises of one who held it under a sewing-machine lease, which had been forfeited, it was held that he was not lia- ble, although he afterwards ratified the acts of the em- ployees.' There is no rule that one of two joint agents is deemed to ratify the separate, unauthorized act of the other, so as to render both liable for it, by mere failure to repudiate it.^ § 33. Principal must be in Existence. — But it is not a ratification where the principal is not in existence when the unauthorized transaction took place.^ Where a per- son enters into a contract as promoter or trustee on be- half of a corporation not yet formed, and the company, when formed, adopts his acts, this is making a new contract, and not ratifying the existing one.^ Yet if the company has received the full benefit of a contract made before incorporation by its individual members, it will be bound by it.^ Where A does an act as agent for B with- out any communication with C, C cannot, by afterwards adopting that act, make A his agent, and thereby incur any liability, or take any benefit under the act of A." § 34. Ratification must be Made 'with Full Knowledge of Facts. — And the ratification is binding only when 1 Smith V. Lozo, 42 Mich. 6. (A ratification of an unauthorized con- ^ Penu v. Evans, 28 La. Ann. 576. tract of reinsurance or double iusur- ' Watson V. Swan, 11 Com. B., ance must be made before the loss has N. S., 771. occurred: Alliance Ins. Co. v. Louis- 'Melhadot). PortoAlegroCo.,L.R. 9 iana Ins. Co., 8 La. Ij 28 Am. Dec. Com. P. 503; In re Empress Engineer- 117.) ing Co., 16 Ch. Div. 125; Kelner v. * Edwards v. Grand Junction R. R. Baxter, L. R. 2 Com. P. 174; Mar- Co., 1 Mylne&O. 650; Bell's Gap R. R. chant V. Loan Ass'n, 26 La. Ann. 389; Co. v. Christy, 79 Pa. St. 54; 21 Am. Stainsby v. Frazer's Life Boat Co., 3 Rep. 39; Grape Sugar Mfg. Co. v. Baly, 98; Rockfordetc. R, R. Co. v. St. Small, 40 Md. 395; Bell v. McAboy, 3 Louis R. R. Co., 65 111. 328; Western Brewst. 81. Screw Co. v. Cousley, 72 111. 531. But « Wilson v. Turamon, 6 Scott N. R. see Frankfort etc. Co. v. Churchill, 6 894; 1 Dowl. & L. 513. T. B. Mon. 427; 17 Am. Dec. 159. 39 RATIFICATION. § 34 made with a full knowledge of all the material circum- stances.* Illustrations. — Agents of an insurance company receive money for insuring iron, which they transmit to the company, by whom it is accepted. Held, not a ratification of an unau- thorized contract made by the agents for the company, unless the company knew on what account the money was received, and the terms of the contract: ^tna Ins. Co. v. North Western Iron Co., 21 Wis. 458. An agent for the sale of real estate exceeded his instructions in selling a part of the property in regard to which he was authorized only to negotiate for a sale, and his principal afterwards impliedly ratified all his acts by receiving the money for the sale of all the land, but it appeared that he did not know that the portion in question had been sold. Held, that the agreement of the agent was neither author- ized nor ratified: Lester v. Kinne, 37 Conn. 9. A landlord au- thorized bailiflfa to distrain for rent due to him from his tenant of a farm, directing them not to take anything except on the demised premises. The bailiffs distrained cattle of another per- son (supposing them to be the tenant's) beyond the boundary of the farm ; the cattle were sold, and the landlord received the proceeds. Held, that the landlord was not liable for the value of the cattle, unless he ratified the act of the bailiffs with knowledge of the irregularity, or that he chose, without inquiry, to take the risk upon himself, and to adopt the whole of their acts: Lewis v. Read, 13 Mees. & W. 834; 14 L. J. Ex. 295. H. and W., the agents of a railroad company, represented to a land- ' Bank of Owensboro v. Western 77 Am. Dec. 328; Adams Exp. Co. v. Bank, 13 Bash, 52G; 28 Am. Ilep. Trego, 3o Mi 419; Maxey v. Heek- 211; Spooner v. Thompson, 48 Vt. thorn, 44 111. 437; Rsynolils «. Feeroe, 259; Pittsburg etc. R. E. Co. v. Gaz- 86 111. 570; Miller v. Board of EJuca- zam, 32 Pa. St. 340; Humphreys tion, 44 Cal. 166; Banuou v. Warfiold, V. Havens, 12 Minn. 298; Combs v. 43 Md, 42; Bosseau v. O'Brien, 4 Biss. Scott, 12 Allen, 493; Manning r. Gash- 395; Thompson v. Craig, 16 Abb. Pr., arie, 27 Ind. 399; Dodge v. McDonald, N. S., 29; Kerr v. Sharp, 83 111. 199; 14 Wis. 535; ..^tna Ins. Co. v. Iron Stein v. Kendall, 1 Brad. (111.) 103; Co., 21 Wis. 458; Hardeman v. Ford, Snow v. Grace, 29 Ark. 131; Hunt v. 12 Ga. 205; Mapp v. Phillips, 32 Ga. Marple, 2 Brad. (111.) 402; Foucli v. 72; Billings v. Morrow, 7 Cal. 171; 68 Wilson, 59 Ind. 93; Rich v. Smitt, 82 Am. Dec. 235; Williams v. Storm, 6 N. Y. 627; Hoflfman v. Livingston, 46 Cold. 303; Tedrick v. Rice, 13 Iowa, N. Y. Sup. Ct. 552; Dean v. Bassett, 214; Bell V. Cunningham, 3 Pet. 69; 57 Cal. 640; Roberts v. Rumley, 58 Owings V. Hall, 9 Pet. 607; Holder- Iowa, 301; Hovey d. Brown, 59 N. H. ness ». Baker, 44]^. H. 414; Copeland 114; Herring v. Skaggs, 73 Ala. 446; V. Ins. Co., 6 Pick. 202; Dickinson v. Gulick v. Grover, 33 N. J. L. 463; 97 Conway, 487; Day v. Holmes, 103 Am. Dec. 728; Vincent v. Rather, 31 Mass. 306; Lester v. Kinne, 37 Conn. Tex. 77; 98 Am. Dec. 516; Bohart v. 8; Hankin v. Baker, 46 N. Y. 660; Obeme, 30 Kan. 284. Walters v. Munroe, 17 Md. 150; §§ 35, 36 PRINCIPAL AND AGKNT. 40 owner that the company, in consideration of the conveyance of the right of vray, would construct a crossing over their embank- ment. Held, that the company by accepting the deed ratified what was done by H. and W. in their behalf; and although it is true that no one is bound by his ratification of what has been done in his behalf unless he is informed of all the circum- stances, yet he cannot avail himself of the benefit of the act ex- cept cuvi onere: Morris and Essex R. R. Co. v. Green, 15 N. J. Eq. 470. An agent, without the knowledge of the principal, loans his principal's money to a third person, and afterwards makes a note in the principal's name, without his knowledge, for a larger sum, which is discounted for the accommodation of such third person, and out of the proceeds of such discount the agent is repaid the sum so loaned, and applies it to the princi- pal's benefit. Held, that if the principal, immediately on being notified of the use of his name to such accommodation paper, disavows the act of the agent, he is not to be held to have rati- fied the act of the agent because he does not voluntarily offer to restore the money which was paid to the agent out of the proceeds of such discount in payment of such unauthorized loan: Gulick v. Grover, 38 N. J. L. 464; 97 Am. Dec. 728. § 35. And is then Irrevocable. — And a ratification once thus made cannot bo revoked by the principal.' There is, as lias been well said, no locus poenitentise? § 36. Ratification Absolves Agent, and Shifts Liability. — The ratification by the principal absolves the agent from all liability, and estops the principal from claiming damages against the agent for his unlawful iiiterfereuee.'* So, too, the principal becomes solely liable for the act as though he had originally authorized it, for all the re- sponsibilities are shifted from the agent to the principal,^ and the principal may, in like manner, bring suit on the '■ Clark V. Van Riemsdyk, 9 Cranch, v. Godfrey, 3 Greenl. 429; Towle v. 153; Ball v. Byersoa, 11 Iowa, 233; Johnson, 1 Johns. Gas. 110; Farwell 77 Am. Dec. 142; Hazletoa v. Batohel- v. Meyer, 35 111. 41; Bray v. Gunn, 53 der, 44 N. Y. 40; Breck v. Jones. 16 Ga. 144; Woodward v. Suydam, 11 Tex. 441 ; Beall v. January, 62 Mo. Ohio, 360; Meyer v. Morgan, 51 Miss. 4.S4; Andrews v. JEtaa. Ins. Co., 92 21; 24 Am. Rep. 017. N. Y. 596. 4 Ballon v. Talbot, 16 Mass. 4G1; ■-' Evans on Agency, 65. 8 Am. Dec. 146; Lncas v. Barrett, 1 3 Moehan v. Forrester, 52 N. Y. 277; G. Greene, 511; Lent v. Padelford, 10 McCracken v. San Francisco, 16 Cal. Mass. 230; 6 Am. Deo. 119; Rogers v. 691 ; Cairnes v. Bleecker, 12 Johns. 300; Kneeland, 10 VVend. 218; Clark v. Van Owing V. HuU, 9 Pet. 607; ihorndike Rennsdyk, 9 Cranch, 153; Roby u. 41 RATIFICATION. §§ 37, 38 contract,^ and the agent becomes entitled to the same rights and compensation as if his act had been originally authorized.^ When, however, the principal, to prevent greater loss to himself, is forced to assume the agent'a act, it will not prevent his remedy against the agent. Therefore, where an agent to collect money was instructed to remit by express, and, instead, bought a check on New York, which the principal forwarded to New York for payment, but before it reached there the drawers became insolvent, and the check was dishonored, it was held that sending the check to New York was not a ratification of tlie act of the agent in buying the check, and he was liable for the loss incurred.^ And where an agent to loan money takes insufficient security, the principal may keep the security, and hold the agent liable for any deficiency.* § 37. Appointment of Suba^ent. — If an agent improp- erly appoints a subagent, the ratification of the acts of the subagent by the principal will bind him in the same manner as though he had originally given the agent au- thority to delegate the execution of his orders.^ But it will create no liability on the principal's part to pay for the services of the subagent.* § 38. Ratification must be in Toto. — The ratification must be entire; the principal cannot ratify part of the agent's acts and reject part.^ If he ratifies what is to his interest, he must also assume that which is against his Cossetfc, 78 III. 638; Bray v. Gunn, 35 ' Walker v. Walker, 5 Heisk. 425. Ga. 141; Palmer v. Stephens, 1 Denio, * Bank of Owensboro v. Western 472; Mason v. Caldwell, 5 Gilm. 196; Bank, 13 Bush, 526; 23 Am. Eep. 211. 48 Am. Deo. 330; Violet v. Powell, 10 ^ Strickland v. Hudson, 55 Miss. B. Mon. 347; 52 Am. Dee. 548; contra: 235. r^03siter v. Rossiter, 8 Wend. 494, 24 ^ Homan v. Brooklyn Ins. Co. , 7 Am. Deo. G2, to the effect that after Mo. App. 22. the ratification the agent will still be ' Bennett v. Judson, 21 N. Y. 238; liable to tlio party with whom he con- Ewell v. Chamberlain, 31 N. Y. 611; tracted. Crans v. Hunter, 28 N. Y. 389; Farm- ' Story on Agency, sec. 244. ers' Loan Co. v. Walworth, 1 N. Y. 2 Hopkins v. Mollineux, 4 Wend. 433; Benedict v. Smith, 10 Paige, 126; 465. Newell v. Hurlburt, 2 Vt. 351; Cole- § 38 PRINCIPAL AND AGENT. 42 interest.* The law does not permit a principal to adopt an agent's unauthorized act, so far as it is beneficial, and reject the residue. By adopting a part he becomes bound by the whole.* The fact that a person receives from a broker the profits of a transaction in buying and selling stocks upon a margin does not amount to a ratification of another transaction in the purchase and sale of stocks be- tween the same parties which has resulted in a loss.' If the ratification is made under a mistake or in ignorance of the full range of the agent's act, it is voidable to the extent of the mistake.* Illustrations. — A sells to B two mules belonging to C. C ratifies the sale by accepting the purchase price. C is bound by the agent's warranty of the soundness of the mules: Cochran V. Chitwood, 59 111. 53. A stored corn with B, who sold it with- out authority, but handed over the purchase-money to A, except the amount due for one lot sold to C. A accepted the money. Held, that be thereby ratified all the sales, including the one to C: Seago v. Martin, 6 Heisk. 308. An agent authorized to loan his principal's money contracted for usurious interest. Held, that the principal could not afiirm the contract for the legal interest only: Joslin v. Miller, 14 Neb. 91. man v. Stark, 1 Or. 1]5; Henderson v. v. Hunter, 28 N. Y. 389. A principal Cummiugs, 44 111. 325; Cochran v. cannotsaythathe will ratify the act "if Chitwooil, 59 111. 53; Southern Exp. he receive no harm thereby "; he must Co. V. Palmer, 48 Ga. 85; Widner v. repudiate absolutely, or be bound abso- Lane, 14 Mich. 124; Knox r. Western lately: Fort d. Coker, 11 Heisk. 579. College, 31 Iowa, 547; Menkinsu. Wat- ^Farmers' Loan and Trust Co. v. son, 27 Mo. 163; Billings v. Morrow, Walworth, 1 N. Y. 433, reviewing 4 7 Cal. 171; 68 Am. Deo. 235; Harde- Sand. Ch. 51; Dexter v. Adams, 1 man v. Ford, 12 Ga. 205; Drennan v. How. App. Cas. 771, 793; Cobb v. Walker, 21 Ark. 539; Fowler v. Gold Dows, ION. Y. 335; Story on Agency, Exchange, C7 N. Y. 138; Babcock v. sec. 250; Bell v. Shibley, 33 Barb. 610; De Ford, 14 Kan. 408; Taylor v. Ferguson v. Hamilton, 35 Barb. 427; Conner, 4 Miss. 722; 97 Am. Dec. 419. N. Y- & N. H. R. R. Co. v. Schuyler, 1 Odiorne v. Maxey, 13 Mass. 182; 34 N. Y. 30, 88; 38 Barb. 534; Mo- New England Ins. Co. v. De Wolf, 8 Clure v. Briggs, 58 Vt. 52; 56 Am. Rep. Pick. 63; Skinner t). Dayton, 19 Johns. 557; Rudasill v. Falls, 92 N. C. 222. 554; 10 Am. Dec. 286; Fowler v. Trull, 3 Todd v. Bishop, 136 Mass. 386. 1 Htin, 409; Cochran v. Chitwood, 59 * Smith v. Tracy, 36 N. Y. 79; Bald- Ill. 53; Bennett v. Judson, 21 N. Y. win v. Barrows, 47 N. Y. 199; Lester 238; MundorfftJ. Wickersham, 63 Pa. v. Kinne, 37 Conn. 9. Thus if a per- St. 87; Romozetti v. Bowring, 7 Com. son pays on behalf of another more B., N. S., 851. A debtor cannot have than he was authorized to do, a ratifi- the benefit of a compromise made by an cation of his act made under a misap- ageut with his creditors without adopt- prehension will bo relieved against p}-o ing all the representations made by the tanto: Miller v. Board of Education, agent in negotiating the same: Crans 44 Cal. 166. 43 RATIFICATION. §§ 39, 40 § 39. Acts Incapable of Eatification. — " Where an act is beneficial to the principal, and does not create an im- mediate right to have some other act or duty performed by a third person, but amounts simply to the assertion of a right on the part of the principal, there the rule [that the principal may ratify an unauthorized act] seems generally applicable On the other hand, if the act done by such person would, if authorized, create a right to have some act or duty performed by a third person so as to sub- ject him to damages or losses for the non-performance of that act or duty, or would defeat a right or estate already vested in the latter, there the subsequent ratification or adoption of the unauthorized act by the principal will not give validity to it so as to bind such third person to the consequences."^ The cases cited in illustration of this rule by Story are the case of a lease containing a condi- tion for determination by either party on six months' no- tice, such notice being given by an unauthorized agent ;^ the case of a demand by one without authority on a debtor for a debt;^ a notice of dishonor of a note;* and others. The ground upon which this is put is, that in these cases the advantage is all with the principal; he may play fast and loose; he may adopt the agent's acts, if he subse- quently thinks it beneficial to him, and repudiate them if otherwise. So it has been held in Louisiana that the ratification of an unauthorized contract of reinsurance or double insurance must be made before the loss occurs, or it will be of no avail.® § 40. Form of Ratification.— As to the form in which the ratification is made, it may be express or implied. But if the act of the agent is done by an instrument which is ^ Story on Agency, sees. 245, 246. man v. Boynton, 7 Mass. 483. ■ 2 Bason v. Denman, 2 Ex. 167; Ly- * Tinda.lt). Brown, 1 Term Rep. 167; ster V. Groldwin, 2 Ad. & E., N. S., Stanton d. Blossom, 14 Mass. 116. 143. , ^ Allianc3 Ass. Co. v. State Ins. Co., » Coore V. Callaway, 1 Bsp. 83; Free- 8 La. 1; 28 Am. Dec. 117. §41 PKINCIPAL AND AGENT. 44 required by law to be under seal, then the principal's ratification must be under seal also.* But if the agent unnecessarily affix a seal, and, as we have seen, it operates as an unsealed instrument, the ratification need not be under seal." I 41. Acts and Conduct. — From the acts and con- duct of the principal, a ratification may be shown. It is not essential that the principal should declare the act confirmed by him in so many words.^ The acts and con- duct of the principal are always construed liberally in favor of the agent.* Where the acts and conduct of the principal are quite inconsistent with anything else but a ratification, the presumption of ratification is almost con- clusive.' When the unauthorized act of an agent is done of a partnership or of an individual may be ratified by parol ": Holbrook V. Chamberlain, 116 Mass. 155; 17 Am. Rep. 146. ^ See ante, chapter 3, and Ledbetter V. Walker, 31 Ala. 175; Bates v. Best, 13 B. Men. 215. But an action of covenant would not lie on such an instrument: Hanford v. McNair, 9 Wend. 54. ' Lovejoy v. Middlesex E. R. Co., 128 Mass. 480; Hawkins v. Lange, 22 Minn. 557; Codwise v. Hacker, 1 Caiues, 526; Cooper v. Schwartz, 40 Wis. 54; Leaving v. Butler, 69 111. 575; Wardw. Williams, 26 III. 447; 79 Am. Dec. 385; Szymanski v. Plassan, 20 La. Ann. 90; 96 Am. Dec. 382. * Codwise v. Hacker, 1 Caines, 526; Loraine v. Cartwright, 3 Wash. 0. C. 151; Terrill v. Flower, 6 Mart. 584; Bryne v. Doughty, 13 Ga. 46; Cairo etc. E. E. Co. V. Mahoney, 82 111. 73; 25 Am. Eep. 299. ^ Pennsylvania etc. Nav. Co. v. Dan- dridge, 8 Gill & J. 248; 29 Am. Dec. 543; Horton v. Townes, 6 Leigh, 47; Crocker v. Appleton, 25 Me. 131; Bar- nard V. Wheeler, 24 Me. 412; Bryant V. Moore, 26 Me. 84; 45 Am. Dec. 96; and so where it is manifestly for the principal's benefit: Flamming v. Ma- rine Ins. Co., 4 Whart. 59; 33 Am. Deo. 33. > Blood V. Goodrich, 9 Wend. 68; 24 Am. Deo. 121; 12 Wend. 565; 27 Am. Dec. 152; Hanford v. McNair, 9 Wend. 57; Spofiford v. Hobbs, 29 Me. 148; 48 Am. Dec. 521; Eeese v. Medlock, 27 Tex. 120; 81 Am. Dec. 611; Boyd V. Dobson, 5 Humph. 37; Worrall v. Munn, 5 N. Y. 229: 55 Am. Dec. 330; Skinner v. Dayton, 19 Johns. 513; 10 Am. Deo. 286; Despatch Line v. Bellamy Mfg. Co., 12 N. H. 205; 37 Am. Dec. 203; Taylor v. Eobinson, 14 Cal. 400; Peterson v. Mayor, 4 E. D. Smith, 417; Vanderbilt v. Peisse, 3 E. D. Smith, 430; McDowell v. Simp- son, 3 Watts, 129; 29 Am. Dec. 338; Bellas V. Hays, 5 Serg. & E. 427; 9 Am. Deo. 385; Stetson v. Patten, 2 Greenl. 358; 11 Am. Dec. 111. An antedated power of attorney is a good ratification of a bond executed by a. professed agent: Millikin v. Coombs, 1 Greenl. 343; 10 Am. Dec. 70; contra: Cady V. Shepherd, 11 Pick. 400; 22 Am. Dec. 379; McNaughton v. Par- tridge, 11 Ohio, 223; 38 Am. Dec. 371. And in partnership transactions — that is, where one member, without author- ity, attempts to bind the firm by deed — it seems that a parol ratification will do: See cases cited in 27 Am. Dec. 313. In a late case in Massachusetts it is said to be " settled in this com- monwealth that the unauthorized exe- cution of a deed iii the nature either 45 EATIFICATION. §41 in the execution of a power conferred, in a mode not sanctioned by its terms, and in excess or misuse of the authority given, ratification by the principal is more readily implied from slight acts of confirmation. The duty to disaffirm at once, on knowledge of the act, is said to be more imperative in such cases, because the confi- dence of the principal in the fitness and fidelity of the person he has selected as an agent is shown by the rela- tions already established between them.' Silence may raise the presumption of a ratification. A principal who knows of an unauthorized act having been done by his agent must give notice of his dissent within a reasonable time, or his assent to and ratification of the act will be pre- sumed.^ He need not disavow the act the instant he has notice of it,' but he must do so as soon as he reasonably can.* So accepting the benefits of the act of an authorized agent is a ratification of his authority,® provided, of course. ' Harrod v. MoDaniels, 126 Mass. 413, 415. 2 Erick 0. Johnson, 6 Mass. 193; Amory «. Hamilton, 17 Mass. 103; Kingsland v. Kincaid, 1 Wash. C. C. 454; Courcier v. Ritter, 4 Wash. C. C. , 549; Towle v. Stevenson, 1 Johns. Gas. 110; Armstrong v. Gilchrist, 2 Johns. Cas. 424; Forrestier v. Boardman, 1 Story, 43; Maddux v. Beavan, 39 Md. 485; Cairnes v. Bleecker, 12 Johns. 300; Law v. Cross, 1 Black, 533; John- son V. Wingate, 29 Me. 404; Fainell v. Howard, 26 Iowa, 381; Williams v. Merritt, 23 111. 623; Jervis v. Hoyt, 2 Hun, 637; Pickett v. Pearson, 17 Vt. .470; Hammond v. Hoyt, 52 Tex. 63; Smith V. Sheehy, 12 Wall. 358; State V. Smith, 48 Vt. 266; Lee v. Fontaine, 10 Ala. 755; 44 Am. Dec. 505; PhUi- delphia etc. R. R. Co. v. CowcU, 28 Pa. St. 329; 70 Am. Dec. 128; contra: Bosseau v. O'Brien, 4 Biss. 395; Ward V. Williams, 26 111. 477; 79 Am. Dec. 385; White v. Langdon, 30 Vt. 599; Ladd V. Hildebrandt, 27 Wis. 135; 9 Am. Rep. 445. ' • Miller V. Excelsior Stone Co., 1 111. App. 773; Robinson v. Chapline, 9 Iowa, 91; Walters v. Munroe, 17 Md. 150; 77 Am. Dec. 328; Dupont v. Wetherman, 10 Cal. 354. * Peck V. Ritchey, 66 Mo. 1 14; Walk- er V. Walker, 7 Baxt. 260; Western etc. R. R. Co. V. MoElwee, 6 Heisk. 208; Richmond Mfg. Co. v. Stark, 4 Mason, 206; Vianna v. Barclay, 3 Cow. 281; Curry v. Hale, 15 W. Va. 367; Bredin w. Dubarry, 14 Serg. & R. 30; Bonneali v. Poydras, 2 Robt. 1; Lar- tingue V. Peet, 5 Robt. 91. Of course he must have knowledge of the act: Walters v. Munroe, 17 Md. 150; 77 Am. Dec. 328. * Gibson v. Norway Savings Bank, 69 Me. 579; Woodbury v. Learned, 5 Minn. 339; Ketohum v. Verdell, 42 Ga. 534; Hall v. Harper, 17 111. 82; Ballston Spa Bank v. Marine Bank, 16 Wis. 120; Williams v. Stone, 6 Cold. 203; Richmond Mfg. Co. v. Starks, 4 Mason, 296; Lyndeborongh Glass Co. V. Glass Mfg. Co., Ill Mass. 315; Wilkins v. HoUingsworth, 6 Wheat. '241; Forrestier v. Boardman, 1 Story, 43; Edie v. Ashbaugh, 44 Iowa, 519; Gold Mining Co. v. Nat. Bank, 96 U. S. 640; Walnutt Bank v. Farmers' Co., 16 Wis. 629; Darst v. Gale, 83 HI. 136; Brown v. La Crosse § 41 • PRINCIPAL AND AGENT. 46 the principal is aware of all the material facts of the case.^ In Bryant v. Moore,^ it is said: "There is no doubt that if one person knows that another has acted as his agent without authority, or has exceeded his authority as agent, and with such knowledge accepts money, property, or security, or avails himself of advantages derived from the act, he will be regarded as having ratified it. This will not be the case when the knowledge that the person has exceeded his authority is not received by the em- ployer so early as to enable him, before a material change of circumstances, to repudiate the whole transaction with- out essential injury. If, for instance, a merchant should authorize a broker by a written memorandum to purchase certain goods at a price named, and the broker should exhibit it to the seller, and yet should exceed the price, and this should be made known to the merchant when he received the goods, if he should retain or sell them, he would ratify the bargain made by the broker, and be obliged to pay the agreed price. But if he had received the goods without knowledge that they had been pur- chased at an advanced price, he would not be obliged to restore them or pay such advanced price if he could not, when informed of it, repudiate the bargain without suffer- ing loss. In such case he would not be in fault. The seller would be, and he should bear the loss. When the plaintiff in this case was first informed that his agent had exceeded his authority, he had lost the services of the oxen for two months and a half; and the agent was pres- ent and denied that he had made the warranty. The defendant appears to have been sensible that the plaintiff City Gas Co., 21 Wis. 51; Mundorff dridge, 8 Gill & J. 248; 29 Am. Deo. V. Wiokersham, 63 Pa. St. 87; 3 Am. 543; Adams Express Co. v. 'irego, 35 Rep. 531; Perry v. Mulligan, 58 Ga. Mil. 69; Busby w. North American Ins. 479; Pike v. Douglass, 28 Ark. 69; Co., 40 Md. 588; 17 Am. Rep. 634; Sartwell v. Frost, 122 Mass. 184; Og- Thacher v. Pray, 113 Mass. 291; 18 den V. Marchand, 29 La. Ann. 61; Am. Rep. 480; Smith v. Kidd, 68 Gulick v. Grover, 33 N. J. L. 463; 97 N. Y. 130; 23 Am. Rep. 137. Am. Dec. 728. a 26 Me. 84; 45 Am. Dec. 96. 1 Pennsylvania etc. R. R. Co. v. Dan- 47 EATIPICATION, § 41 ■would then suffer loss by a rescission of the contract, and to have offered compensation therefor. Whether the of- fer was a reasonable one or not is immaterial, for the plaintiff under such circumstances was not obliged to rescind. He does not appear to have made any move- ment in the first instance to effect the exchange, or to have desired it, or to have been in fault, when first in- formed of the warranty. The defendant could not at that time prescribe the terms upon which the contract should be rescinded, or insist upon it." Accepting a guaranty of a premium note by a person who had become assignee of the policy, with the consent of the company signified by the signature of the secretary only, is a ratification of his authority to signify their assent.^ One who uses a carriage, hired in his name by another without previous authority or subsequent ratification, without reasonable cause to believe that the carriage was hired on his ac- count, or that he was looked to for pay for its use, is not liable for its use, although the owner had no notice that the hirer procured it on his own account.^ Suing the purchaser, for example, for the debt or on the contract,* ijOr suing the agent for the money received,* or defending ' a suit brought to recover land acquired through the agent,^ is a ratification. Bringing a writ of entry is a ratification of a previous entry on the land made by only one of two agents appointed for that purpose.^ An * New England Ins. Co. v. De Wolf, swer in chancery: Stoney v. Shultz, 8 Pick. 56. 1 Hill Ch. 4G5; 27 Am. Dec. 429. ^ Adams v. Bourne, 9 Gray, 100. But see Cooley v. Perrinc, 41 N. J. L. 3 Copeland v. Ins. Co., 6 Pick. 198; 322; Carew v. Lillenthal, 50 Ala. 44; Dodge V. Lambert, 2 Bosw. 570; Ham Peters v. Ballister, 3 Pick. 495. V. Boody, 20 N. H. 411; 51 Am. Dec. * Story on Agency, sec. 259; Zinot;. 235; Partridge v. White, 56 Me. 5G4; Verdelle, 9 La. 51; Bank of Beloit v. Drennan v. Walker, 21 Ark. 539; Beale, 43 N. Y. 473; Frank u. Jenkins, Harris v. Miner, 21 Ark. 539; Payne 22 Ohio St. 526; Shiras v. Morris, 3 V. Smith, 12 N. H. 34; Beidman v. Cow. 60; President v. Barry, 17 Mass. Godell, 56 Iowa, 592; or adopting an 97; Keyserv. Wells, 60Ind. 261. But action founded on the agent's act: see Lee w. West, 47 Ga. 311. Town of Grafton v. Fallansbee, 16 ^ Lathrop v. Commercial Eankj 8 N. H. 450; 41 Am. Dec. 736; so it may Dana, 113; 33 Am. Dec. 481. be ratified by an admission in an an- ' Sutton Parish v. Cole, 3 Pick. 232. § 41 PRINCIPAL AND AGENT. 48 action of assumpsit for the proceeds of an unauthorized sale, which was discontinued before trial because the rem- edy was erroneous, was held no ratification of the sale, to bar an action of trover for the same cause.^ Where a principal expressly repudiates the unauthorized act of his agent, delay in bringing a necessary suit- cannot be deemed a ratification.^ Illustrations. — Cases in Which Ratification was Im- plied. — A husband, to secure a debt of his own, mortgaged his wife's property. The mortgagee, in the presence of the wife, threatened to foreclose, and demanded fresh security. The wife replied: "What more do you want? You have a mortgage on all the personal property already." Held, a rati- fication of the husband's act: Merrill v. Parker, 112 Mass. 250. A principal, on being informed of a purchase by his agent, com- plained of the manner in which it had been made, but did not deny the agent's authority. Held, that he had admitted it: John- son V. Jones, 4 Barb. 369. The parties named in a submission to arbitration signed by attorneys appeared and testified. Held, that this was a ratification by them of the submission: Blakely V. Graham, 111 Mass. 8. An attorney without authority re- ceived a bond in settlement of a debt. The subsequent silence of the client raises a presumption of his ratification: Maddux v. Beaven, 39 Md. 485. An agent without authority compromises a debt due his principal. The principal, knowing of the fact, says nothing. He will be bound by the agent's act: Armstrong V. Gilchrist, 2 Johns. Cas. 424. An agent sells his priao^i-pal's goods to his own firm. This is beyond his authority, but the principal by acquiescing in it will be held to have ratified it: Francis v. Kerlcer, 85 111. 190. F. sold S.'s hops to P., pretend- ing he had authority. P. soon after told S. of it, when S., in- stead of disavowing F.'s authority, requested P. to help him to recover the money P. had paid him. Held, that this was a ratification of F.'s act: Pitts v. Shubert, 11 La. 286; 30 Am. Dec. 718." An under-agent of a mining company leased a right to mine in a certain range. The company afterwards accepted the rents. This was a ratification of the agent's un- ^ Peters v. Ballistier, 3 Pick. 495. No principle is better settled than ' McClure v. Evartson, 14 Leigh, 495. that he who is notified that a contract ' "If the plaintiff intended to dis- has been made for him, and subject to avow the sale by F. , he ought to have his ratification, by a person who pre- doue so immediately on his arrival, tended to have authority for that pur- He ought not to have played fast and pose is presumed to ratify it, unless loose, and induced the defendant to immediately on being informed thereof forego the immediate pursuit of F. he repudiates it." 49 RATIFICATION. § 41 authorized act: Chamherlin v. Collinson, 45 Iowa, 429; Cham- berlin v. Robertson, 31 Iowa, 408. A release of a mortgage was made by an agent without authority. The principal afterwards accepted the consideration. The release was held binding on him: Tooker v. Sloan, 30 N. J. Eq. 394. An agent sold notes without authority, but the principal afterwards settled with him and took his note. Held, a ratification of his act: Turner v. Wil- cox, 54 Ga. 593; Beall v. January, 62 Mo. 434; Cushman v. Loher, 2 Mass. 106. A lease of laud was made in an agent's name. It was occupied by the corporation for which he pro- fessed to act. Held, a ratification: Clarh v. Gordon, 121 Mass. 330. Goods were purchased by the president of a gas company and used in the construction of the works. In an action for a mechanic's lien the company set up that the president had no authority to make the purchase. It was held that they had rati- fied the act by using the goods: Brown v. La Crosse City Gas Co., 21 Wis. 61. A lease of lands was made by an unauthorized agent. The owner accepted the rent as it became due. Held, a ratification: McDowell v. Simpson, 3 Watts, 129; 27 Am. Dec. 338. W.'s agent in procuring M.'s note signed a receipt in the name of W. containing an undertaking that the note should be paid at maturity. He was not authorized to sign such a receipt, but W. used the note in his business, and M. had to pay it at maturity. Held, that W. was liable on the contract contained in the receipt: Mundorff v. Wickersham, 63 Pa. St. 37; 3 Am. Rep. 531. M. shipped cotton to his factor, with instructions not to sell it at less than a certain price. The factor sold it at less, and imme- diately informed M., who made no objection but drew the pro- ceeds. Held, that M. had ratified the act of the factor, and could not sue him for the loss: Meyer v. Morgan, 51 Miss. 21; 24 Am. Rep. 617. C, as agent of N., executed an agreement, required to be in writing by the statute of frauds, and took back a counterpart signed by the other party. An acceptance of this counterpart by N. from C. without objection was held to be a ratification of C.'s acts, and N. was bound by the contract: Shaw v. Nudd, 8 Pick. 9. A, the agent of an insurance company to solicit risks, obtained for B a policy of insurance from said company, paying for it a cash premium, and executing and depositing a premium note in the name of B. The policy recited that B had paid a cash premium and given a deposit note of like amount; B re- ceived the policy without reading it, and had no knowledge of the execution of the note by the agent. Held, that the acceptance of the policy by B. was a ratification of the act of the agent in executing the note; and that the fact known to B, that the agent was the agent of the company to solicit risks, would not prevent his acting for B in executing the premium notes: Monitor Ins. Co. v. Buffum, 115 Mass. 343. A, in a foreign Vol. I. -4 § 41 PEINCIPAL AND AGENT. 50 port, sold property belonging to B without authority, and wrote to B what he had done, and that C, the bearer of the letter, would settle with him by paying him the amount of the sales. C, on arriving, wrote to B that he would pay when in receipt of expected funds. B replied that although the sale was unau- thorized, yet he was not disposed to make difiBculty on the sub- ject, but expected immediate payment, and drew bills on C, which were, however, protested for non-payment. Held, that the sale was ratified, and that B could not maintain replevin against the purchaser for the goods: Clement v. Jones, 12 Mass. 60. An agreement in writing, not sealed, whereby P., A., and two others, " a building committee," in consideration that M. would construct a building for a medical college by a time specified and furnish materials therefor, agreed to pay him certain amounts according to the monthly estimates of an archi- tect named, was signed by all the parties in person, except P., whose name in his absence, but by his authority, was signed by A., without adding anything to show that it was not afiixed by P.'s own hand. P., on being told what had been done, said all was right, and afterwards did all he could to insure the com- pletion of the building. After M. had commenced an action against the four members of the committee to recover for work done and materials furnished under this agreement, all the parties executed a second agreement, under seal, reciting that they had made the first, and that a third person had agreed to advance a sum of money, to be secured by mortgage on the building, for the purpose of insuring its completion, and stipu- lating that M. should do certain additional work on the build- ing, and have it finished by a certain time; that the sum so advanced should be applied, first, to pay for work thereafter done by M. on the building, and the remainder, if any, to pay for work and materials already furnished; and that nothing contained in this agreement should release or discharge the defendants from any debt already incurred under the original agreement, or be in any respect a waiver of that agreement. Held, that P.'s conduct, subsequent to the afifixing of his name by A. to the first agreement, was a ratification or adoption of A.'s act, and also rendered him liable as a party to the agree- ment, on the ground of an estoppel in pais: Merrifield v. Par- ritt, 11 Cush. 590. The cashier of a bank who paid a check to D., and four days afterwards discovered reason to believe that' it was forged, caused it to be presented by a messenger, with a demand for indemnity, at D.'s office, where a clerk received it in D.'s absence, and filled out and gave in exchange for it a check of like amount, left signed in blank by D. When the messen- ger returned and delivered this check to the cashier, D. was present, conversed on the subject, took the check into his 51 RATIFICATION. § 41 hands, said something about the other check, and expressed no dissent or objection to what was being done, supposing that his check was issued by his brother, who had authority to issue checks for him in his absence. Later in the same day D. de- nied his clerk's authority, tendered back the other check, stopped the payment of his own, and demanded its return, which was refused. In an action by the bank against him on this check, held, that the surrender of the other check was a sufScient consideration for the issue of the check in suit; that it was competent for the jury to find, on the evidence, that D., at the interview with the cashier, understood the transaction, and ratified the issue of his check, and that on such a finding' it was incompetent for him to revoke the ratification, and im- material whether he supposed that his check was issued by one person or another: Charles River Bank v. Davis, 100 Mass. 413. K. supplied glass for a meeting-house by the order of V., and charged it to "N., one of the committee for building the meet- ing-house," of whom there were three. V. paid for it by hia private note, and took a receipted bill made out to himself, and rendered an account to the parish, charging the sum as paid by him, and exhibiting the receipt as a voucher, which account was allovred. The note not being paid, K. sued the parish for the glass. Held, that the jury might properly find that the parish had not ratified the act of V. in purchasing on their credit: Kupfer v. Augusta Parish, 12 Mass. 185. A minor son exchanged his father's horse for another against his father's ex- press commands; the father, however, kept and used the horse some weeks, and met the defendant without saying anything in disapproval of the exchange. Held, that he had ratified it, and could not recover back the other horse: Hall v. Harper, 17 111. 82. An agent borrows money for his principal without authority, but the money goes to the use of the principal, who afterwards rec- ognizes the loan by telling the agent that he would pay it. Held, that the principal is liable to the lender: Shiras v. Morris, 8 Cow. 60. After notice of all that the indorser, to whom notes had been intrusted by a bank for collection, did in the premises, the bank accepted part of the proceeds from him. Held, that it thereby ratified his acts and became bound by them: Briden- becker v. Lowell, 32 Barb. 9. M. by mistake sold wheat belong- ing to 0., together with other wheat belonging to P., and re- mitted the proceeds of both lots to P. as his property, and O., with knowledge of the facts, afterwards took part of the money from P., and P.'s agreement to pay the balance. Held, that 0. thereby ratified the sale: Pierce v. O'Keefe, 11 Wis. 180. A per- son, assuming to act as agent for another, exchanged a horse belonging to the latter for another horse, and the owner refused to sanction the exchange^ but before reclaiming his horse, § 41 PRINCIPAL AND AGENT. 52 participated in the purchase of the horse received in exchange from the party who had thus obtained possession of him. Held, that it amounted to a ratification: Hatch v. Taylor, 10 N. H. 538. An unincorporated company made assessments for carry- ing into effect a contract made by an officer of the company on behalf of the company, and afterwards appointed an agent to negotiate an alteration of the contract with the other party. Held, that they thereby ratified the contract, and could not deny the officer's authority to bind the company by contract: Skinner v. Dayton, 19 Johns. 513; 10 Am. Rep. 286. A partner, on being shown a note, executed in the partnership name by a clerk, corrects the date, saying it is all right and that he will have to pay it. Held, that he ratifies its execution and admits his liability: Harper v. Devene, 10 La. Ann. 724. A real estate agent rented certain premises for two years at a fixed annual rental, although he had no authority from his principal to rent them for more than one year. The tenant retained possession for the two years, and paid the rent agreed on, which was re- ceived by the landlord. Held, that the jury were at liberty to infer, under the circumstances, that the agent's contract had been ratified by his principal: Reynolds v. Davison, 84 Md. 662. A debtor gave his creditor to understand that the latter might have a third party's note in payment of the debt, but not as col- lateral. In the debtor's absence the creditor made an arrange- ment, in good faith, with the debtor's book-keeper, to take the note as collateral. Held, that the debtor would be bound by this arrangement, although the book-keeper was unauthorized to make it, unless the debtor, upon being fully informed of what the book-keeper had done, manifested to the creditor his dis- satisfaction within a reasonable time: Burlington etc. Co. v. Greene, 22 Iowa, 508. A factor was authorized to sell goods at a limited price, and he afterwards sold them below that price, and sent an account to his principal of the sales and prices, and authorized him to draw for the balance of account; and the principal received the account and drew for the balance, and made no objection, in his letters or otherwise, to the conduct of the factor in the sales. Held, that his conduct amounted to a ratification of the factor's proceedings: Richmond Mfg. Co. v. Starks, 4 Mason, 296. An agent employed to buy goods, to be paid for at a future day, paid for them out of his own money, for the purpose of obtaining the discount allowed by the seller. The principal, with knowledge of these facts, directed the agent to clear the goods at the custom-house, which, in the ordinary course of business, would be done after payment of the price by the agent for his principal. Held, a ratification or an adoption of the previous payment of the price, and that the agent might sue the principal for the price as money paid to his use at his request: 53 KATIPICATION. § 4l Hawlcyy. Sentance, 11 Week. Rep. 311; 7 L. T., N. S., 745 (C. P.). In plaintiff's absence, his clerk received of his debtor a draft, and accepted the same, to be applied, when paid, on the debt- or's account, and after the draft fell due the plaintiff wrote the debtor respecting it, not repudiating the act of the clerk, and on subsequently seeing the debtor, offered to return the unpaid draft. Held, that these facts furnished evidence from which a jury might infer a ratification by plaintiff of the act of the clerk: Jennison v. Parker, 7 Mich. 355. The owner of a vessel, on being informed by a broker, at his place of residence, that he had procured such vessel to be chartered at certain rates in a distant city, did not disaffirm the contract, either to such broker, or the charterer. Held, that the jury might find a rati- fication: Saveland v. Green, 40 Wis. 431. A horse was left with a servant for safe-keeping. The servant exchanged the horse for a mare; and the master, knowing all the circum- stances connected with the transaction, took the mare, and kept and used her for some time. Held, to amount to a rati- fication of the act of the servant: Evans v. Buckner, 1 Heisk. 291. An agent sold land without authority, but the principal made no objection for four years, during which time the pur- chasers had improved the land, and during three years of which the agent had resided in the same town with his princi- pal, when he, at length, absconded without having paid his principal any of the purchase-money. Held, that there was a ratification of the sale: Alexander v. Jones, 64 Iowa, 207. Illustrations Continued. — Cases in Which Ratification WAS NOT Implied. — A presented to the officers of a bank for payment bills of the bank from a genuine plate, but with one forged signature. They hesitated for some time whether to re- ceive them, but before A left, returned them to him, being still in doubt whether they were counterfeit or not. Held, that there was no ratification of the forged signature, so as to make the bank liable: Salem Bank v. Gloucester Bank, 17 Mass. 1; 9 Am. Dec. 111. One without authority sold the plaintiff's horse to the defendant, receiving in payment a bank check, which he indorsed and gave the plaintiff in payment of a debt he owed him. The plaintiff, in ignorance of the sale, collected the check, and applied the proceeds to the payment of that debt. In an action to recover the value of the horse, held, that the plaintiff's receipt and collection of the check were not a ratifi- cation of the sale, and that he had a right to appropriate the check to the extinguishment of the debt, in payment of which it was given him: Thacher v. Pray, 113 Mass. 291; 18 Am. Rep. 480. B. subscribed, for stock in the testator's name during the life of the latter, but without his authority. Held, that the tes- tator's declaration that he had stock of the kind and amount § 41 PRINCIPAL AND AGENT. 54 subscribed for did not amount to a ratification of B.'s act: RuU land R. R. Co. v. Lincoln, 29 Vt. 206. A surveyor of highways in repairing a road exceeded the authority legally conferred upon him by the town, and the town, without knowledge of the excess of authority, accepted an order drawn upon them for the whole amount of the work. Held, that this did not constitute a ratification of the unauthorized acts of the surveyor: Morrell V. Dixfield, 30 Me. 157. A makes an unauthorized sale of B's goods. Held, that the receipt of money by B from A on account of such goods will not be a ratification of the sale, provided B ■would have the right without ratifying the sale to receive the money: White v. Sanders, 32 Me. 188. An agent was sent by A with a note in her favor against B, with authority only to receive a sum of money thereon, and return the note. He received the money, and made an arrangement with B, in pur- suance of which he gave up the note and received certain other papers, and carried the money and papers to A, who " took the money and was displeased with the papers, saying she was cheated out of her money." Held, that this was not a ratifica- tion of the acts of the agent: Crooker v. Appleton, 25 Me. 181. The holder of a note to which A's brother had forged A's name asked A whether he had authorized the signature. A answered evasively, intimating, however, that he had not, but assuring the holder that the note would be paid. Held, not a ratification: Smith V. Tramel, 68 Iowa, 488. 65 DETERMINATION OF AUTHORITY. § 42 CHAPTER VII. DETERMrNATION OR DISSOLUTION OP AUTHORITY. § 42. Modes of dissolving agency. § 43. Performance of object — Lapse of time. § 44. Revocation by act of principal. § 45. Revocation by act of agent. § 46, Revocation by death of principal. § 47. Revocation by death of agent. § 48. Revocation by bankruptcy of principal. § 49. Revocation by bankruptcy of agent. § 50. Revocation by marriage of principal. § 51. Revocation by insanity of principal. § 52. Revocation by insanity of agent. 8 53. Revocation by destruction of subject-matter. § 54. Revocation by war. § 55. When revocation takes effect. § 42. Modes of Dissolving Agency. — The agency may be terminated in three ways: 1. By agreement of the parties; 2. By the act of one party; 3. By operation of law. The dissolution by agreement may be (a) by per- formance of the object of the agency, or by (b) efflux of time. The dissolution by the act of a party may be (c) by revocation by the principal, or (d) by renunciation by the agent. The dissolution by operation of law may be (e) by the death of the principal, (/) by the death of the agent, (g) by the bankruptcy of the principal, (h) by the bank- ruptcy of the agent, (i) by marriage, (j) by the insanity of the principal, (k) by the insanity of the agent, (I) by the destruction of the subject-matter of the agency. An agent of a partnership is not justified in continuing to perform his duties as such, after being notified of a change in the firm by the admission of new partners, without a renewed authority from the new firm,' 1 Callanan v. Van Vleok, 36 Barb. 324. I 43 PRINCIPAL AND AGENT. 66 § 43. Performance of Object — Lapse of Time. — Where by an express agreement the agency is limited to a defi- nite object or for a definite time, the performance of the object or the expiration of the time dissolves the agency in due course.^ A power of attorney from a bank will not be invalidated by the expiration of the term of oflSce of the directors who executed it.^ Where an agent is em- ployed to secure a debt of his principal, which he does by obtaining from the debtor notes payable to said debtor, and with his indorsement on them, his agency does not cease while he still holds the notes, and his acts have not been approved by his principal.' The parting by a prin- cipal with his right in the subject-matter of the agency, before the attorney in fact has exercised the power, is, in law, a revocation of the power conferred.^ A land-owner may employ several different agents to act for him in the sale of the same tract, and a sale by one will operate as a revocation of the authority of the others.^ A power con- ferred upon an agent to negotiate bonds of the principal, if silent as to a like power previously given, does not oper- ate as a revocation of the earlier power. Two persons may be employed separately to negotiate the sale or hypothecation of bonds, and either may thus dispose of them. If a disposition be made by one, of course the other will be unable to exercise the power with which he was clothed; but until a sale or hypothecation is made, either may make it.* 1 Blackburn v. Scholes, 2 Camp. 343; death of the principal, applies to mere Moore v. Stone, 40 Iowa, 259; Walker naked powers over which the principal V. Derby, 5 Biss. 134; Burton v. Great has absolute control, and not to powers Northern K. R. Co., 9 Ex. 507; Asp- coupled with an interest, or such as are din V. Aspdin, 5 Q. B. 671; Reid v. made upon sufficient consideration or Latham, 40 Conn. 454; Sohlater v. for the mutual benefit of the parties ": Winpenny, 75 Pa. St. 321; Moore v. Wassell v. Reardon, 11 Ark. 705; 54 Stone, 40 Iowa, 259; Bradford v. Bush, Am. Dec. 245. 10 Ala. 386; Smith v. Rice, 1 Bail. ^ Northampton Bank v. Pepoon, 11 648; Foster v. Calhoun, Dud. (S. C.) Mass. 288. 75. "Lapse of time at most only fur- ' Wallace v. Goold, 91 111. 15. nishes presumptive evidence of a revo- ' Gilbert v. Holmes, 64 111. 548. cation by the agent of his power by * Ahern v. Baker, 34 Minn. 98. renunciation; but this, like all other " Hatch t. Coddington, 95 U. S. 48. modes of revocation, except that of the 57 DETERMINATION OF AUTHOEITT. § 44 Illustrations. — A appointed B his agent to sell machines for him, the agreement providing that A would furnish B such number of machines as A might be able to sell as his agent prior to October 1, 1867. Held, that the agency continued only to October 1st: Gundlach v. Ficher, 59 111. 172. The agent of the owner of a play to effect a sale thereof, held, to have no power to sell after a sale of the play to a person by his subagent: Wallack V. Daly, 1 N. Y. Week. Dig. 198. A power of attorney was executed to A by B's widow and heirs, empowering A to complete a contract made by B. Held, that it was not re- voked by a grant of administration to her two days afterwards: Jones v. Commercial Bank, 78 Ky. 413. S. employed M. to sell a tract of land, agreeing, if M. would find a purchaser at a fixed price, to pay him five hundred dollars, which M. did. Held, that as soon as the agent procured the purchaser his agency ceased, and his taking a retainer from the purchaser to see that the papers were properly prepared and executed pre- sented no ground for defeating a recovery of the price agreed to be paid to him: Short v. Millard, 68 111. 292. An interlocutory decree against an insurance company appointing a receiver with power to continue the business of the company in the re- ceipt of premiums and the payment of the necessary expenses of the business, and enjoining the company, its oflicers and agents from receiving and disposing of the property of the company, except to deliver it to the receiver, held, not to re- voke or annul the authority of an agent of the company to receive payment of a premium on a policy issued by the com- pany; and a person who pays a premium to such agent after the issuing of the decree, but before either of them knew of it, cannot maintain an action against him to recover it back upon a declaration alleging that, at the time of such payment, the de- fendant had no authority to receive it: Rice v. Barnard, 127 Mass. 241. § 44. Revocation by Act of Principal. — In general, the principal may at any time before its performance re- voke the authority of his agent at his pleasure.' A power of attorney which does not specify the time at which the ^ Peacock v. Cummings, 46 Pa. St. shire v. Voucaimon, 6 Ired. 231 ; 434; Coffin v. Landis, 46 Pa. St. 426; Brown v. Pforr, 38 Cal. 550; Lewia v. Blackstone v. Buttermore, 53 Pa. St. Sawyer, 44 Me. 332; Simonton v. 2GG; Welb v. Hatch, 43 N. H. 247; Minneapoli3Bank,24Minn. 216; Gates Trust V. Repoor, 15 How. Pr. 570; v. Davenport, 29 Barb. 190; Evans v. Pickler v. State, 18 Ind. 266; Gib- Feame, 16 Ala. 689; 50 Am. Dec. 197; bons V. Gibbons, 4 Harr. 105; Jacobs Phillips w. Howell, 60 Ga. 411; Walker V. Warfield, 23 La. Ann. 395; Brook- v. Dennison, 80 111. 142. § 44 PEINCIPAL AND AGENT. 58 agency is to terminate leaves it discretionary with the principal to discharge the agent at pleasure. The agent cannot, therefore, maintain an action against his princi- pal in damages for a breach of contract in having dis- charged him at any particular time, if good cause is shown.^ A contract to employ an agent for a year, if he " could fill the place satisfactorily," may be terminated by the employer when, in his judgment, the agent fails to meet that requirement of the contract.^ An agent's author- ity to collect money for his principal is not revoked by the mere appointment of another agent with like authority, and a payment by the debtor to the first agent, after receiv- ing notice of the appointment of the second, will discharge the debt, if there is no other evidence of a revocation of the first agent's authority.* The demand of a note sent to a bank, as a,gent, for collection, terminates the agency, and a refusal to return it will be evidence of a conver- sion.'' On delivery of money by a debtor to a third per- son, to be paid to his creditor, such person becomes the agent of the debtor, who may revoke his direction at any time before the creditor assents to it. Any disposition by the debtor inconsistent with the appropriation first in- tended, such as an assignment for the benefit of creditors, will be a revocation. The creditor's assent to the deposit with the agent may be presumed from his knowledge, but his knowledge will not be presumed.® A transfer of the authority of one court to another by statute will not re- voke an authority given by the first court to a committee to make a highway.* After revocation of an agent's au- thority, the principal is not bound, as between himself and the agent, to notify the latter of his dissent from acts done by such agent in pursuance of the original authority.' ' Jacobs D.Warfield, 23 La. Ann. 395. ' Simonton v. Minneapolis Bank, 24 2 Tyler v. Ames, 6 Lans. 280. Minn. 216. " Davpl V. Quimby, 11 Allen, 208. « Brown v. Somerset, 11 Mass. 221. * Potter V. Merchants' Bank, 28 ' KeEy v. Phelps, 57 Wis. 425. N. Y. 641; 86 Am. Dec. 273. 59 DETERMINATION OF AUTHORITY. § 44 But the authority is not revocable when the authority is coupled with an interest/ For instance, "a factor for sale has an authority as such, in the absence of all special orders, to sell; and when he afterwards comes under ad- vances he thereby acquires an interest, and having thus an authority and an interest, the authority becomes there- by irrevocable Where an agreement is entered into on a sufficient consideration, whereby an authority is given for the purpose of securing some benefit to the donee of the authority, such an authority is irrevocable. That is what is usually meant by an authority coupled with an interest, and which is commonly said to be ir- revocable."^ Or if the power has been given for a valuable consideration,' the consideration failing, the power be- comes revo able.* And the consideration or interest must be something beyond the mere compensation out of the proceeds or for the services to be rendered.^ A power of attorney to collect a debt, to secure previous advances by the agent, is irrevocable, but, so far as the agent is concerned, only to the amount of those advances." A power of attorney to confess a judgment is not revoca- I Hartley's Appeal, 53 Pa. St. 212; v. Bagaley, 12 Pa. St. 164; 51 Am. 82 Am. Dec. 758; Smyth -o. Craig, 3 Dec. 595. As to revocation of as- Watts & S. 14; Walker v. Dennison, signment for benefit of creditors, see 80 111. 142; Bonney v. Smith, 17 111. Oakley v. Hcbbard, 1 Pinn. 674; 44 S31; Gilbert v. Holmes, 61 111. 549; Am. Dec. 425, and note 427; Scull j). Mansfield v. Mansfield, 6 Conn. 559; Reeves, 3 N. J. Eq. 8; 29 Am. Dec. 16 Am. Dec. 76; Goodman v. Bowden, 703. A power to confess judgment 54 Me. 424; Hutchins v. Hebbard, 34 given by defendant to plaintiff's attor- N. Y. 24; Hunt v. Rousmanier, 8 ney is not revocable: Wassell v. Rear- Wheat. 174 (see Tharp v. Brenneman, don, 11 Ark. 705; 54 Am. Dec. 245. 41 Iowa, 251, as to what is not such am ^ Hunt v. Rousmanier, 8 Wheat, interest); Knapp v. Alvord, 10 Paige, 174. 205; 40 Am. Deo. 241; Boecher v. * Ex parte Smither, 1 Dea. 413. Bennett, 11 Barb. 380. 'ihat the par- ^Blackstonew.Buttermore, 53Pa. St. ties aro partners does not raise the 203; Walker v. Dennison, 88 111. 142; inference of an interest within the Barr v. Schroeder, 32 Cal. 609; Hart- above rule: Travers v. Crane, 15 Cal. ley's Appeal, 53 Pa. St. 312; 82 Am. 12; Creager v. Link, 7 Md. 267. Dec. 758; Darrow v. St. George, 8 Col. ■' Wilde, C. J., in Smart v. Sanders, 592; State v. Walker, 88 Mo. 279; 5 Com. B. 895. A power of attorney contra, Merry v. Lynch, 68 Mo. 94. to collect and distribute money is not ^ Marziou v. Pioohe, 8 Cal. 522; revocable after its part execution of United States v. Jarvis, Dav. 274; the collection of the money: Watson Spear v. Gardner, 16 La. Ann. 383. § 44 PEINCIPAL AND AGENT. 60 ble by the act of the party giving it.* Equity will restrain the revocation of a power of attorney, coupled with an interest, upon unequivocal proofs, and enable the attorney to execute the trusts.^ A power to sell and receive the proceeds above a certain sum by way of commission is not a power coupled with an interest which cannot be re- voked.^ And even if the appointment states that it is irrevocable, this does not prevent its revocation by the principal, unless it is founded on a consideration, or the agent has an interest in its execution.* And though the agent is appointed under seal, his authority may be revoked by parol.^ And even without a formal declara- tion, the revocation of the authority of the agent may be implied from circumstances;® as for example, appointing another person to do the same act." But giving an addi- tional power to one of two agents does not revoke the authority of the other.* Illustrations. — A gives B an order, but countermands it before it is acted on. Held, that he is not responsible for what B does under it: Tucker v. Lawrence, 56 Vt. 467. The owner of land containing iron ore authorized an agent in writing to sell the land, the agent agreeing to transport specimens of the ore to England, and to receive as compensation "'an undivided one fourth in the proceeds of sale, when sold as aforesaid." Held, that the agent's authority was not coupled with an interest, ' Kindig v. March, 15 Ind. 248. 74; 47 Am. Deo. 341; PicHer v. State, 2 Posten V. Kasotte, 5 Cal. 467; Hyn- 18 Ind. 266. son V. Noland, 14 Ark. 710; Barr v. « Wallace v. Goold, 91 111. 15; Reid Schroeder, 32 C:.l. 609; Bonney v. v. Latham, 40 Conn. 452; Copeland v. Smith, 17 111. 531; Hutchins v. Heb- Mercantile Ins. Co., 6 Pick. 108. bard, 34 N. Y. 24; Brookshire v. Von- ' Morgan v. Stell, 5 Binn. 305; Cope- cannon, 6 Ired. 231; Wheeler v. land v. Ins. Co., 6 Pick. 19f; contra, Knaggs, 8 Ohio, 169; Hartley's Ap- Davol v. Quimhy, 11 Allen, 208. peal, 53 Pa. St. 212; 82 Am. Dec. 758; « Cushman v. Glover, 11 111. 600; 52 Blaokstone v. Buttermore, 53 Pa. St. Am. Dec. 461. A person sends to a 266. bank a note for collection. He after- ' Simpson v. Carson, 11 Or. 361. wards demands it back. This is a * Knapp V. Alvord, 10 Paige, 205; revocation: Potter v. Merchants' B'k, 40 Am. Deo. 241 : Marfield v. Douglas, 28 N. Y. 641; 86 Am. Dec. 273. An 1 Sand. 360; McGregor v. .Gardner, agent is employed to sell some prop- 14 Iowa, 326; Blackstone v. Butter- erty. He afterwards sells it himself, more, 53 Pa. St. 266; Walker v. Den- This is a revocation: Torre v. Thiele, nison, 86 lU. 142. 25 La. Ann. 418. * Brookshire u. Brookshire, 8 Ired. 61 DETERMINATION OF AUTHORITY. § 44 and was revocable at any time before sale: Chambers v. Seny, 73 Ala. 37'2. A person who had promised an agent a certain sum, if he found a purchaser for his land within a month, revoked the agent's authority. Before the expiration of the month, but after the revocation, the agent found a purchaser. Held, that he could not recover the sum promised: Brown v. Pfoor, 38 Cal. 550. B. delivered his note, with S. as security, to his creditor, who had demanded payment, to get it discounted and pay him- self from the proceeds; the creditor took the note, and said he would get it discounted if he could, but refused to promise not to sue. Held, that the creditor took a power coupled with an interest which could not be revoked: Wheeler v. Slocumb, 16 Pick. 52. One's appointment as general agent of a life insur- ance company, held, to import a revocation of his special agency thereof: Rapier v. La. Equit. Life Ins. Co., 57 Ala. 101. Money is paid by A into the hands of B to remain at the dis- posal of C. Held, that the right to that money continues in A until B gives and C takes credit for it, or B actually pays it to C; up to this period B is the agent of A only, and A may countermand the authority to make payment: Howard College V. Pace, 15 Ga. 486. A power to sell a vessel is given to P. Afterwards tlie principal gives a letter to P. and A., committing the vessel and cargo to their care, and adding, "we wish the vessel to be sold if it can be done at such price as you think reasonable." Held, that P. cannot sell without A.'s concurrence: Copeland v. Mercantile Ins. Co., 6 Pick. 198. A person puts his property in the hands of two or more brokers to sell. lie noti- fies one of them of his change of purpose, and proceeds to im- prove his property in a manner inconsistent with a desire to sell. Held, not a revocation of authority as to the others: Lloyd v. Mathews, 51 N. Y. 124. In a suit for specific performance, it ap- peared that A, as agent of B, sold land to C, and took his notes. Afterwards B appointed D his agent to sell the land; C there- upon agreed to give up his first contract, and buy of D for a larger sum, and afterwards C paid the original notes to A in whose hands they had remained. Held, that C had notice of the revocation of the first agency by the creation of the second,, and that the payment to A, which never came to the' vendor, did not entitle the vendee to maintain the suit: Clark v. Mul- lenix, 11 Ind. 532. A and B agreed, "in consideration of the services and payments to be mutually rendered." that for seven years, or as long as A should continue to carry on business at the town of Liverpool, A should be the sole agent there for the sale of B's coals, and that B would not employ any other agent there for that purpose. There were stipulations in the agreement, that B should have the entire control over the prices for which, . and the credits at which, the coals were to be sold; and that, if" § 45 PRINCIPAL AND AGENT. 62 A could not sell a certain amount per year, or B could not sup- ply a certain amount per year, either party might, on notice, put an end to the agreement. At the end of four years B sold the colliery itself. In an action by A for damages for breach of the agreement thereby occasioned, held, that the _ action •was not maintainable; for that the agreement did not bind the colliery owner to keep his colliery, or to do more than employ the agent in the sale of such coals as he sent to Liverpool: Rhodes V. Forwood, 1 L. R. App. Cas. 256; 24 Week. Rep. 1078; 34 L. T., N. S., 890 (II. L.); reversing 33 L. T., N. S., 314; 31 L. T., N. S., 61. § 45. By Act of Agent. — An agency may be dissolved by the renunciation of the agent.' But if the agency has been undertaken for a valuable consideration, the agent ■will be liable for such damages as the principal may suffer thereby;^ and the same is true of a gratuitous under- taking which has been partly performed.* An agent who is wanting in fidelity forfeits his right to his place, what- ever may be the nature of his default, and whether it is or is not a source of injury to his principal.'* The change of the name of a firm does not operate to annul an agency conferred upon the same persons under another name.^ An agent had authority to sell and tried to sell a slave, but failed, and then attempted to run off, dispose of, and conceal the negro. Held, to be an absolute abandonment and renun- ciation of his agency: Case v. Jennings, 17 Tex. 661. An agent, tinder a contract as a book canvasser, wrote to his principal that he had determined to sell out and give up the business, and that if the principal wanted it, to come or send. Held, that the principal, after having made a fair attempt to settle, and having reason to suspect the agent's good faith, was justi- fied in treating the agency as abandoned, and in appointing 'Case V. Jennings, 17 Tex. 661; Lans. 5; Benden ti. Manning, 2 N. H. Barrows v. Cushway, 37 Mich. 481; 289; Thorno f. Deas, 4 Johns. 84; Bar- Conrey t). Brandegee, 2 La. Ann. 132; rows v. Cushway, 37 Mich. 481; that Coffin V. Landis, 5 Phila. 17G. So the the agent must give the principal rea- misconJuct of the agent may dissolve sonable notice: United States i;. Jarvis, the agency: Henderson v. Hydraulic Davies, 274. Works, 9 Phila. 100; Wharton on ' Evans on Agency, 86. Agancv, sec. 108. * Henderson v. Hydraulic Works, 9 ^ Giil V. Middleton, 105 Mass. 479; Phila. 100. 7 Am. Rep. 548; White v. Smith, 6 "* Billingsley ti. Dawson, 27 Iowa, 210. 63 DETERMINATION OF AUTHORITY. §46 another agent, and that a sale of the list of suhscribers after- wards by the former agent, or an attempt on his part to release them, was invalid: Stoddart v. Key, 62 How. Pr. 137. § 46. By Death of Principal.— The death of the prin- cipal revokes the agent's authority^ unless the power is coupled Math an interest.^ But a power even coupled with an interest, if expressly conditioned to be executed during the principal's life, ceases at his death.* The au- thority of a subagent, where it emanates from the prin- cipal, is not affected by the death of the agent, from whom he received the appointment.'' An authority dele- gated to an attorney, from three trustees having a power coupled with an interest, and from the survivors and sur- vivor of them, to sell and convey lands, is not revoked by the death of one of the trustees. Such delegation being joini and several, the attorney is invested with the full ' liinooln v. Emerson, 108 Mass. 87; Davis V. Windsor Savings Bank, 46 Vt. 728; Hunt v. Rousmanier, 8 Wheat. 174; Lewis v. Kerr, 17 Iowa, 83; Primm v. Stewart, 7 Tex. 178; Gale V. Tappan, 12 N. H. 145; 37 Am. Dec. 195; Cleveland v. Williams, 29 Tex. 204; 94 Am. Deo. 274; Coney v. Saunders, 28 Ga. 511; Saltmarsh v. Smith, 32 Ala. 407; Salt v. Galloway. 4 Pet. 335; Yerrington v. Greene, 7 E. I. 589; 84 Am. Dec. 678; Jenkins V. Atkins, 1 Humph. 294; 34 Am. Dec. 649; Huston v. Cantrel, 1 1 Leigh, 136; Michigan Ins. Co. v. Leavenworth, 30 Vt. 11; McDonald v. Black, 20 Ohio, 185; 55 Am. Dec. 448; Eastou?;. Ellis, 1 Handy, 70; Wilson v. Edmonds, 24 N. H. 517; Boone v. Clark, 3 Cranch C. C. 389; Bank of Washington v. Pierson, 2 Wash. C. C. 685; Scruggs V. Drover, 31 Ala. 274; MoGriff v. Porter, 5 Fla. 373; Smith v. Smith, 1 Jones, 135; 59 Am. Dec. 581; Clay- ton V. Merritt, 52 Miss. 353. The rule is the same where the death is not certainly known, but is presumed from long absence: Primm v. Stew- art, 7 Tex. 178. ^ Merry v. Lynch, 68 Me. 94; Bon- n'y V. Smith, 17 111. 531; Knapp v. Alvord, 10 Paige, 205; 40 Am. Dec. 241; Gilbert v. Holmes, 64 111. 548; Hunt V. Rousmanier, 8 Wheat. 171; Hockett V. Jones, 70 Ind. 227; Leavitt V. Fisher, 4 Duer, 1; Houghtaling v. Marvin, 7 Barb. 412; Wilson v. Stew- art, 5 Pa. L. J. 450; Bergin v. Ben- nett, 1 Caines Cas. 1; 2 Am. Dec. 281; Yates V. Prow, 11 Ark. 68; Cleveland V. Williams, 29 Xex. 204; 94 Am. Dec. 274. ' Staples V. Bradbury, 8 GreenL 181; 23 Am. Deo. 494. The rule that the death of an agent acting under a let- ter of attorney, containing a power of substitution, acts as a revocation of the authority of an agent substituted by him ilnder the power, — applied in case of the death of one empowered to buy and sell stocks who had substi- tuted his son to act for him: Lehigh Coal etc. Co. v. Mohr, S3 Pa. St. 228; 24 Am. Rep. 101. ' Smith V. White, 5 Dana, 376. In Carriger v. Whittingtou, 26 Mo. 311, 72 Am. Dec. 212, the representatives of a deceased principal were held en- titled to recover of an agent purchase- money received by him on an author- ized sale made by him, but after the ■ principal's death unknown to him. § 46 PRINCIPAL AND AGENT. 64 powers of the surviving trustees, so as to pass both the beneficial and the legal estates.* The rule that the acts of an agent, after the death of his principal, are void, only applies to acts which must be done in the name of the principal, and not to those which the agent may do in his own name. Thus the executor of A cannot recover from B money received by the latter, in discharge of notes given by C, the agent of A to secure advances made by B to C, as such agent, A's death having taken place unknown to both parties, before the advances were made.^ And where, by indorsement for collection, authority is given to an agent to sue in his own name on negotiable paper, the legal title in trust is transferred, and the au- thority to collect is not revoked by the death of the prin- cipal and owner.* So the dissolution of a partnership revokes an agency,* but not a mere change in the firm Illustrations. — Defendant was given certain notes to collect, which did not mature till after the giver's death. Held, that his authority terminated with the death, and that he was not liable for failure to collect, though during the delay the makers became insolvent: Darr v. Darr, 59 Iowa, 81. The power of an agent, under an agreement to sell a lot of bricks, pay a certain lien for making, etc., and certain notes he held against the princi- pal, and return him the overplus of the proceeds, held, not to be extinguished by the death of the principal, and to entitle the agent to pay his own notes in full, although other creditors of the estate received only a percentage: Merry v. Lynch, 68 Me. 94. A retainer under a contract to endeavor to sell goods on behalf of the owner, on the terms of receiving a stipulated sum in the event of the sale, but nothing in the case of failure, held, revocable by the employer before sale, even after en- deavors have been made, and is revoked in law by his death after such endeavors; so that even if his personal representative confirms the sale under such contract, he will not (unless he knows of and confirms the terms of the contract), be liable to pay the stipulated sum: Campanari v. Woodburn, 15 Com. B. 400. 1 Wilsom). Stewart, 5 Pa. L. J. 450. * Schlater v. Winpenny, 75 Pa. St. 2 Dick V. Page, 17 Mo. 234; 57 Am. 321. Dec. 267. ^ Billingsley <;. Dawson, 27 Iowa, » Moore v. Hall, 48 Mich. 143. 210. 65 DETERMINATION OF AUTHORITY. § 47 R. B., having been stabbed by L., requested his brother E. B. to employ counsel and prosecute L. for the offense, and told him that, whether he lived or died, he should be paid. R. B. died; and after his death E. B. employed counsel and prose- cuted L., and paid therefor $175, to recover which sum he brought his action against R. B.'s administrator. Held, that R. B. dying before E. B. had acted on his request, the request was revoked by his death: Jones v. Beall, 19 Ga. 171. A de- livered a note to B and C, attorneys, for collection, taking their receipt therefor. After B's death, the note was collected by C, the surviving partner. Suit against C and the administra- tor of B to recover the money collected. Held, that the re- lation between the parties, which was that of principal and agent, was terminated on tlie death of B, and his estate cannot be charged for the subsequent misconduct of C: Johnson v. Wilcox, 25 Ind. 182. A, wishing to go abroad for his health, gives B control of his property, with a power of attorney au- thorizing him to take the entire management of the business, and if necessary sell the property to pay certain notes indorsed by B. Held, that the power of sale being coupled with B's in- terest as indorser may be exercised after A's death: Knapp v. Alvord, 10 Paige, 205; 40 Am. Dec. 241. § 47. By Death of Agent. — And the death of the agent terminates the agency,^ but does not affect the authority of a subagent.^ But the death of an agent acLing under a power of attorney giving a right of substitution re- vokes the authority of a subagent appointed under such power." And where the agent is a partnership, the death of one partner terminates the agency;^ the rule being that where a power is given to two the death of one re- vokes it.^ Where a commission vests power in two with- out words of survivorship, and one of them dies, unless there is a subsequent recognition by the principal of the survivor as agent his acts will not bind the principal.^ 1 Merrick's Estate, 8 Watts & S. nena, 3 Watt? & S. 79; "Watt v. Watt, 402; Page v. Allison, 1 Brev. 405; 2 2 Barb. Ch. 371. Am. Dec. 632; City Council v. Dun- * Martine v. International Fire Ins. can, 3 Brev. 386; Jackson Ins. Co. v. Co., 5:! N. Y. 337; 13 Am. Rep. 529. Partee, 9 Heisk. 296; Judson v. Love, ^ Hartford Ina. Co. v. Wilcox, 57 111. 35 Cal. 463. 180. 2 Smith V. White, 5 Dana, 376. ^ Hartford Fire Ina. Co. v. Wil«ox, ■ ' Lehigh Coal Co. v. Mohr, 83 Pa. St. 57 111. 180. 228; 24 Am. Rep. 101; Peries v. Ayci- VOL. I.— 5 §§ 48,-50 PRINCIPAL AKD AGKNT. 66 Illustrations. — One member of a firm , who were agents of an insurance company, died. Held, that the agency was thereby terminated, and that receipts subsequently given to the insured, signed by the survivor as survivor, were notice to him of the termination, so that subsequent payments on such receipts were not made to the company's agent: Marline v. International Life Assur. Soc, 62 Barb. 181; 53 N. Y. 339; 13 Am. Rep. 539. By a contract between a planter and a factor or commission mer- chant, the latter binds himself to furnish supplies for the work- ing of the plantation and to receive and sell the products of the place for the benefit of the planter. Held, a contract of agency; and terminated by the death of the agent: Shiff v. Lesseps, 22, La. Ann. 185. § 48. By Bankruptcy of Principal. — The authority of the agent ceases on the bankruptcy of the principal; he has no authority after that to receive or pay the princi- pal's money.* It is otherwise, however, as to property or rights which do not pass from the bankrupt by the bank- ruptcy, but continue to remain in him;^ and also where the power is coupled with an interest.* § 49. By Bankruptcy of Agent. — And likewise the bankruptcy of the agent dissolves the agency,'* except as to the execution of formal acts which pass no interest.^ § 50. By Marriage of Principal. — The marriage of the principal revokes the agency;* but the marriage of the agent does not.' Where a woman retains the right to administer her paraphernal property without her hus- band's assistance, her marriage will not revoke the pow- ' Evans on Agency, 89; In re Dan- ney by a single man to sell his home. 'ola, 1.3 Nat. Bank. Reg. 46; Parker v. It was held revoked by his marriage: ?' - '- 16 East, 382; Ogden v. Gilliug- McCan v. O'Ferrall, 8 Clark & F. 30; 3^Jl bi. 38. Charnley v. Winstanl:;y, 5 East, 266; ^ -u^j^i-genoy, see. 482; Whar- Wamhale v. Foote, 2 Dak. 1. These tonon.ff|Bfti ,eg 98 ^^^^ ^^^^ pf authorities given by btory on Ag^. ,,_ «so5483. femes sole. But vrhere the power is o/w ■^■'IJ^®;?'''^'! "• _^ette«^8 l^en, coupled with an interest, the marriage dlK; lludsoa V. (jrranger, 5 KSi^-& jjt the principal (feme sok) does not ■^f- f'- . - revoke it: Eneu v. Clark, 2 Pa. St. Story on Agency, sec. 486; Evans 234;'^ Am. Dec. 191. on Agency, 92. ' Stl'y on Agency, sec.-,WJMft- « Henderson v. Ford, 46 Tex. 628. ton on/Agency, sec. 109. This was the pase of a power of attor- 67 DETERMINATION OP AUTHORITY. §§ 51,-53 ers of an agent previously intrusted with its adminis- tration.* § 51. By Insanity of Principal. — The insanity of the principal, preventing him from making a valid contract, will operate as a revocation of the agency.'' It must clearly appear, however, that the insanity was of this kind before an agency will be judicially declared revoked for this cause. And as to persons who have dealt with the agent in ignorance of the principal's insanity, the transactions will be upheld.' Also where the power is coupled with an interest it will not be revoked by the principal's insanity.^ §52. By Insanity of Agent. — The insanity of the agent must revoke the authority, as it cannot be pre- sumed that the principal intended to be represented by one unable even to contract for himself.* § 53. By Destruction of Subject-matter. — The au- thority of the agent is determined whenever the subject- matter of the agency or the principal's power over it . is at an end.* A guardian, for example, may appoint an agent to act for his ward; but on the coming of age of the ward the authority would be revoked.^ And thus, " if the agent is commissioned to sell a ship which is subsequently destroyed by fire, or a race-horse which dies, in all these cases his authority is at an end." * An assignment of a judgment is a revocation of the authority of the plaintiff's attorney to control it.' 'Reynolds V.Rowley, 2 La. Ann. 890. •Gilbert v. Holmes, 64 111. 548; == Motley V. Head, 43 Vt. 633; Willis Walker v. Dennison, 86 III. 142; Bis- V. Manhattan Co., 2 Hall, 495; Davis sell v. Terry, 69 111. 184. The inabil- V. Lane, 40 N. H. 156; Matthiessen v. ity of a corporation to continue in MoMahon, 38 N. J. L. 637; Hill . Smith, 356; 63 Am. Dec. 424; Thomas v. At- 41 Ind. 288; Graiins v. Land Co., 3 kinson, 38 Ind. 256; Holcraft v. Hol- Phila. 447; Loudon etc. Co. v. Hagers- bert, 16 Ind. 258; Dozier v. Freeman, town Bank, 36 Pa. St. 503; 78 Am. 47 Miss. 647; Craycraft v. Selvage, 10 Dec. 390; Daylight Burner Co. v. Od- Bush, 696; Weise's Appeal, 72 Pa. St. lin, 51 N. H. 56; 12 Am. Rep. 45; 351; Berry v. Barnes, 23 Ark. 414; Merchants' Bank v. Griswold, 72 N. Y. Whiteside v. United States, 93 U. S. 472; 28 Am. Rep. 159; Eilenberger v. 147; Lewis v. Commissioners, 12 Kan. Insurance Co., 89 Pa. St. 464; City 286; Bryant v. Moore, 26 Me. 84; 45 Bank v. Kent, 57 Ga. 283; Commercial Am. Dec. 96; Floyd Acceptance Cases, Bank v. Cortright, 22 Wend. 348; 34 7 Wall. 666; Silliman v. Fredericksburg Am. Dec. 317; Malloy v. Barrett, 1 R. R. Co., 27 Gratt. 120; Callender v. E. D. Smith, 243; Rossiter v. Rossiter, Golson, 37 La. Ann. 311; Munn v. Com- 8 Wend. 494; 24 Am. Deo. 62; Topham mission Co., 15 Johns. 44; 8 Am. Dec. V. Roche, 2 Hill, 307; 27 Am. Dec. 387; 219; Thompson v. Stewart, 3 Conn. Scott V. McGrath, 7 Barb. 55; Chase v. 171; 8 Am. Dec. 108; Bealsi;. Allen, 18 New York Cent. R. R. Co., 26 N. Y. Johns. 363; 9 Am. Dec. 221; Godloe v. 528; Ayer v. Tilden, 15 Gray, 182; 77 Godley, 13 Smedes & M. 233; 51 Am. Am. Dec. 355; McClure v. Richardson, Dec. 159; McCoy v. McKoweu, 26 Rice, 215; 33 Am. Deo. 105; Hackney Miss. 487; 59 Am. Dec. 264; Spragna V. Insurance Co., 4 Pa. St. 187; Bry- ■;;. Iram, 34 Vt. 155. ant V. Moore, 26 Me. 84; 45 Am. Dec. * Id. ; Lumpkin v. Wilson, 5 Heisk. 96; Barber v. Hall, 26 Vt. 112; 60 555; Thornton v. Bryden, 31 111. 200; Am. Dec. 301; Choteau v. Leech, 18 Schenmelpenich v. Bayard, 1 Pet. 264; Pa. St. 224; 57 Am. Dec. 602; Kinealy Thacher v. Kancher, 2 Cal. 698; Bell V. Burd, 9 Mo. 359; Carmichael v. v. Offutt, 10 Bush, 632; Earp v. Rich. 75 NATURE AND EXTENT OF AUTHORITY. § 56 But what is a special authority as between principal and agent may have all the effects of a general authority as to third persons, the rule being that while the princi- pal is not bound by the act of a special agent beyond his authority, — third persons, in dealing with such an agent, being bound to ascertain the limits of his authority, — yet where he has held out the agent as having a larger author- ity than he really possesses, he will be estopped from set- ting up the actual terms of his authority.* Partners who have authorized their agent by written power of attorney to draw bills of exchange against them, and paid such bills when drawn, thus inducing the public to believe him their agent, cannot avoid payment of a bill drawn by him on the ground that it was unauthorized by them.^ Although a private agent may bind his principal by acts in violation of his special instructions, if they are within the scope of a general authority, the rule is otherwise when applied to the acts of an officer of a public corpora- tion, the reason being that in the former case the extent of the authority is necessarily known only to the principal and agent, while in the latter it is a matter of record in the books of the corporation or the public laws.* Where the authority purports to be derived from a written in- strument, or the contract is expressly made "as agent," it devolves upon the other party to see that the agent has ardson, 81 N. C. 5; Baxter v. Lamont, grove «. Ogden, 49 N. Y. 255; 10 Am. 60 111. 237; Reed v. V7elsh, 5 Heisk. Rep. 361; Morton w. Scull, 23 Ark. 289; 555; Snow v. Perrv, 9 Pick. 542; Lob- Cruzan v. Smith, 41 Ind. 288; Nelson ji. dell V. Baker, 1 Met. 193; 35 Am. Doc. Cowing, 6 Hill, 336; Hunter v. Jame- 358; New York Iron Mine v. Bank, son, 6 ired. 252; Gallup v. Ledner, 1 39 Mich. G44; Stewart v. Woodward, Hun, 282; Kerslaker. Schoonmaker, 1 50 Vt. 78; 23 Am. Rep. 488; Williams Fun, 436; St. Louia etc. R. R. Co. r. V. Birbeck, Hoff. Ch. 364; Harrison v. Parker, 59 111. 39; Nixon v. Brown, 57 Fire Ins. Co., 9 Allen, 233; Brown v. N. H. 34; Merchants' Bank ti. Central Johnson, 12 Smedes & M. 398; 51 Am. Bank, 1 Ga. 418; 44 Am. Dec. 665; Dec. IIS; Baring D. Pierce, 5 Watts & Towle v. Leavitt, 23 N. H. 360; 55 S. 548; 40 Am. Dec. 5.34; Briggs v. Am. Dec. 195; Lister v. Alien, 31 Md. Large, 30 Pa. St. 291; Reitz v. Martin, 543; 100 Am. Dec. 78. 12 Ind. 308; 74 Am. Dec. 215. ^ Caldwell v. Neil, 21 La. Ann. 342; 1 Golding T. Merchant, 43 Ala. 705; 99 Am. Deo. 738. Cocke u. Campbell, 13 Ala. 286; Kellvw. ^ Mayor of Baltimore v. Reynolds, Tall Brook Coal Co., 4 Hun, 201; Cos- 20 Md. 1; 83 Am. Dec. 535. § 56 PRINCIPAL AND AGENT. 76 not transcended his written instructions.-' But aliter, as to private instructions given by the principal to the agent.^ A stranger to a contract, executed upon one part by an agent, cannot impeach it on the ground that the agent exceeded his authority. The contract is not void for that reason.^ Thus where an owner of land gave a power of attorney to lay it out in lots, and to sell it for the best price, so that no lot should sell for less than a pro- portionate share of twelve hundred pounds for the whole tract, and the agent sold the whole tract for twelve hun- dred pounds, it was held that a stranger could not inval- idate the sale.^ A contract having been made by an agent who had full authority is not affected by his inaccurate report of its terms to his principal.^ Illustrations. — By the rules of a railroad (unknown to the passenger), a baggage-master is forbidden to take articles of merchandise on passenger trains. A baggage-master takes a car- pet on a train. The railroad is bound: Minter v. Railroad Co., ' Atwood 1'. Munnings, 7 Bam. & C and must abide by the consequences, 278; Towle v. Leavitt, 23 N. H. 860; 55 if the agent acted without or in excess Am. Dec, 195; Schemnelfenich v. Bay- of hia authority": Craighead i'. Peter- ard, 1 Pet. •2G4; Andrews w. Kneeland, 6 son, 72 N. Y. 279; 23 Am. Eep. 150. Oow. 354; North River Banks'. Aymar, ^ Allen v. Ogden, 1 Wash. C. C. 174; 3 Hill, tHi-2; Munn v. Commission Co., Gibson v. Colt, 7 Johns. 393; White v. 15 John;. 44; 8 Am. Dec. 219; Beach FuUer, 67 Barb. 2G7; Rourkev. Story, V. Vandirrwater, 1 Sand. 265; Dozier 4 E. D. Smith, 54; Beals v. Allen, 18 V. Freeman, 47 Miss. 647; Payne v. Johns. 303; 9 Am. Dec. 221; Johnson Potter, 9 Iowa, 549; Morris v. Wat- v. Jones, 4 Barb. 369; Bryant v. Moore, sou, 15 Mian. 212; Hunt r. Chapin, 6 26 Me. 84; 45 Am. Dec. 96; Cross v. La 13. 139; Baxter v. Lament, 60 111. Haskins, 13 Vt. 536; Hunter v. Jame- 237; Staiuback v. Read, 11 Gratt. 281; son, 6 Ired. 252; Bradford v. Bush, 62 Am. Dec. 64S; De Voss v. City of 10 Ala. 386; Hatch v. Taylor, 10 Richmond, 18 Gratt. 363; 98 Am. N. H. 538; Cruzan v. Smith, 41 Ind. Deo. 647. "The plaintiff's testator 288; Munn v. Commission Co., 15 taking the notes in suit made by an Johns. 44; 8 Am. Dec. 219; Wither- agent, professing to represent the de- ington v. Herring, 5 Bing. 442; Lob- fendant a.; his principal, is presumed dell -a. Baker, 1 Met. 193; 35 Am. to have known the terms of the power Deo. 358; Robbina v. Magee, 70 Ind. under which the agent assumed to 381; Higgins t;. Armstrong, 9 Col. 38. act. He was bound to ascertain and But see Peters v. Ballister, 3 Pick, know the character and extent of the 495. agency, and the words of the instru- ' Jackson i/. Van Dalfsen, 5 Johns. ment by which it was created, before 43. giving credit to the agent. If the * Jackson v. Van Dalfsen, 5 Johns. testator dealt with the agent without 43. learning the extent of the powers dele- * Greeley-Burnham Co.' v. Capen, 23 gated to him, he did so at his peril, Mo. App. 301. 77 NATURE AND EXTENT OF AUTHORITY. § 56 41 Mo. 503; 97 Am. Dec. 288. A general agent purchased a larger quantity of goods than the principal authorized. The latter is bound: Palmer v. Cheney, 35 Iowa, 281. The proprietor of a stage-coach had an agent in a certain town to attend to all the business of transporting passengers. The agent had secret instructions to forward no goods except baggage or at the risk of the owner. A person who sent goods in ignorance of this instruction could not be affected by it: Walker v. Skipwith^ Meigs, 502; 33 Am. Dec. 161.' A live-stock broker is authorized by letter from A to buy two thousand hogs of a certain descrip- tion and price, to be delivered at a certain day and place'. The broker is a special agent, and has authority only to bind his principal as specified in the letter. Bell v. Offutt, 10 Bush, 632. B, expecting to be absent for a time, gave his clerk a power of attorney to draw checks in his name on his bank for fifteen days. The power of attorney was deposited with the bank. After the fifteen days the clerk drew and was paid checks. Held, that the bank could not charge them to B: Manvfacturers' Nat. Bank v. Barnes, 65 111. 69; 16 Am. Rep. 576. A au- thorizes B to sign his name to a note for a certain sum. He signs it for a larger sum. A is not bound: Blackwell v. Ket- chum, 53 Ind. 184. An agent for stage company is authorized to obtain surgical aid for an injured passenger. Held, that the obtaining of such aid for an injured employee is beyond his authority: Shriver v. Stevens, 12 Pa. St. 258. Plaintiffs, having received a check of a third person payable to their order, indorsed it to the order of the cashier of the defendant's bank, put it in an envelope, and sent it by a messenger for de- posit. The messenger opened the en%'elope and presented it at the bank for payment, stating that the plaintiffs desired the money. The bank paid the messenger, and he absconded with the money. Held, that the bank was liable: Bristol Knife ^ " It will be seen from this defini- known to the party dealing with him: tion of a general agency," said the Paley on Agency, 163. It is not there- court, " that if a stage contractor puts fore a limitation, by private instruo- a man in his place to transact all his tions to the agent, that constitutes a business of a particular kind, as to re- special agency. That is a matter be- ceive and forward passengers and bag- tween the principal and agent alone, gage in the stage, and to receive pay- unless it be disclosed to the party msnt therefor, at any particular stand dealing with the agent. If the agent or stage-ofEce, such person is the has not acted in conformity to his general agent of the contractor or commission, he is responsible to his owner of the stage. In such case, principal. By placing the party in though the owner of the stage may the situation of a general agent, the limit the agent by a private order or principal has been instrumental in pro- direction, still he is bound for all his ducing the injury through his agent's, agent's acts, though not conformable misconduct, and he ought to suffer for to. his direction, if within the scope of it, rather than a stranger who is.. his employment, unless this limita- equally innocent with himself. " tion upon the power of the agent be §56 PRINCIPAL AND AGENT. 78 Co. V. First Nat. Banl; 41 Conn. 421; 19 Am. Rep. 519.' An employee in a store employed, with the knowledge of the firm, an expressman to make deliveries. Held, that the firm was liable for his services: Pardridge v. La Pries, 84 111. 51. ' " The whole case, " saidLoomis, J., ' ' resolves itself into a mere question of agency. Had the messenger who de- livered the check at the bank authority from the plaintiffs to receive money thereon? It is conceded that there was no authority in fact. The only authority of the messenger, in fact, was to deliver to the bank the sealed envelope containing the check and deposit ticket, have the check cred- ited to the plaintiffs, and get the bank-book. He was not in any sense a general agent, he had never done any business for the plaintiffs of any kind, and was an entire stranger to the officers of the bank. He was only a. special agent, and that, too, of ex- ceedingly limited authority, and here the familiar and elementary rule of law applies, ' that an agent constituted for a particular purpose, and under a lim- ited power, cannot bind his principal if he exceeds that power. Whoever deals with an agent constituted for a special purpose, deals at his peril when the agent passes the precise limits of his power. We would not, however, adhere so closely to the literal terms of this rule as to do injustice to inno- cent third parties, who have acted on the confidence of an apparent author- ity for which the principal is justly responsible. But in order to bind the principal, he must, by his words or acts, have fully authorized the third party to believe that the agent had authority; and in applying this rule to business transactions, care must be used to distinguish clearly between the act of the principal and the mere act of the agent. If the agent by his act assumes an appearance of author- ity which induces a third party to be- lieve he has, in fact, authority, it is not sufficient. It is the principal's own act only that gives to the agent an appearance of authority which be- comes binding on him. If, then, we look at the act of the plaintiffs, with- out reference to what the messenger wrongfully assumed, we find that all the plaintiffs did was to indorse the check payable to the order of the cash- ier, and put it, together with a deposit ticket, in a sealed envelope and hand it to the messenger to carry to the bank. These acts of the plaintiffs do not, it seems to us, imply any author- ity in the messenger to collect the money on the check. It the sealed envelope, containing the check and deposit ticket, had been presented to the bank in the same shape as delivered to the messenger, it would have been clear that only a deposit was intended. It may be suggested that the presen- tation by the messenger of the naked check at the bank ought to be consid- ered as authorized by the principal for the purpose of fixing the liability. We do not so regard it. Suppose the envelope had inclosed a written re- quest, relative to the matter, intended for presentation to the cashier, and the messenger had broken the seal and destroyed the writing, and had pre- sented the check by itself, would wo judge the principal in such case simply by the fact that the special agent was authorized to present the check? If so, there would be no safety in em- ploying a messenger to do the simplest errand. But if we concede, for the sake of argument, that the authority given to the messenger was to present the check by itself to the bank, we do not think an authority to receive the money can fairly be implied under the circumstances of this case. The cir- cumstances here do not enlarge the apparent scope of the agent's author- ity, but greatly contract it. The form of indorsement, 'Pay to the order of the cashier,' was unnatural, if the plaintiffs intended to have the bank pay the money to the messenger. The object of this special indorsement was, undoubtedly, to prevent the bank from paying the check to any one ex- cept the plaintiffs, and everybody ex- cept the bank itself would be pre- cluded from collecting it in that form; and, under such circumstances, we think the presentation of this check at the bank by a perfect stranger, who called for the currency on it, ought to have aroused suspicion." 79 NATURE AND EXTENT OP AUTHORITY. § 5& The owner of property permits his agent in possession to repre- sent himself as the owner of it, whereby he obtains credit and makes debts, to satisfy which a levy is made on the property. Held, that the owner is estopped to deny the liability of the property: White v. Morgan, 42 Iowa, 113. A mortgaged his farm and crops to secure advances, and placed an agent in charge tb make the crop and to purchase supplies, to whom he gave a power of attorney to mortgage farm-stock to a certain amount, to procure provision, seed, etc. The agent, finding it impossi- ble to make the crop without more money, and being unable to obtain any from his principal, gave a second mortgage on the crop, to which, instead of the first, he applied the proceeds of the crop. Held, that the agent acted without authority through- out: Skaggs v. Murchison, 63 Tex. 348. The chief engineer of a railroad company assuming to act for the company employed A to render engineering services. A was ignorant of any lim- itations on the engineer's powers. Held, that the company was liable: Gillis v. Railroad Co., 34 Minn. 301. A hotel steward furnished with money by his employer to buy supplies kept back part of the money. The seller gave credit, not to the steward, but to his employer. Held, that the employer must bear the loss: Qoelet v. Meares, 13 Daly, 30. A resolution of a corporation manufacturing pig-iron stated that "A B of Chicago be and is hereby appointed and employed by this company as its sole agent for the consignment and sale of its entire product, he to receive a commission." Held, that A B was entitled as general agent, not only to sell iron when ready for the market, but also to contract for the sale and future delivery of iron to be produced: National Furnace Co. v. Keystone Mfg. Co., 110 111. 427. A father authorized his son to accept for him three thou- sand dollars at not less than thirty days' sight, to enable him to go into partnership with S. The son accepted S.'s draft in favor of N. for four hundred dollars at ninety days, in payment of a debt due from S. to N. Held, that the draft was unauthor- ized: Nixonv. Palmer,8'N.Y.S9S. Defendant, negotiating with A for the purchase of a store, said that he should need a clerk, and authorized A to hire one at eleven dollars a week. A hired a clerk at that rate for six months. Held, that in hiring for that time he exceeded his authority: Pasco v. Smith, 49 Conn. 676. The defendants sent an agent to employ the plaintiff, who was a physician, to visit a boy who was injured, and directed him to tell the plaintiff that they would pay for the first visit. The agent neglected this, and employed the plaintiff generally. The plaintiff attended the boy on the defendant's credit till he recovered. Held, that the defendants were liable to the plain- tiff for his services: Barber v. Britton, 26 Vt. 112. The plain- tiff sold certain goods to the defendants through F., their general § 56 PRINCIPAL AND AGENT. 80 agent, who was fully authorized to make the purchase. After- wards, upon the representation of F. to the plaintiff that it was necessary to send a receipted bill to the defendants in order to obtain payment of it, the plaintiff receipted the bill of the goods and delivered it to F. F. presented the bill thus receipted to the defendants, who paid the amount to him, they having no knowl- edge of the circumstances under which the receipt was given. The money so received by F. was never paid to the plaintiff. Held, in an action of assumpsit brought against the defendants for the amount of the bill, that the plaintiff was entitled to re- cover. F. being the general agent of the defendants and au- thorized to purchase the goods, he was acting in the whole matter within the scope of his authority, and his acts and declarations were to be considered as the acts and declarations of the defendants, and his knowledge of the circumstances under which the receipt was given as their knowledge. It could not be inferred from the facts that the plaintiff had made F. bis own agent in the matter: Willard v. Buckingham, 36 Conn. 395. A engaged B to lease a certain piece of land for him at a certain rent or at any rent. B effected the lease, but the lessor, being unwilling to give credit to A, trusted B, and B paid the rent. Held, that this was a case of general agency, that the payment by B was within the object of the agency, and that A was liable to an action to recover the money paid without demand: Irions v. Cook, 11 Ired. 203. M. & Co., in Boston, wrote letters to B., in New Orleans, as fol- lows: 1. "You may have opportunities to make advances on cotton shipped to this port, and we should be willing to accept against shipments to us the necessary papers accompanying the bills for such sums as in your judgment may be safely ad- vanced." 2. "We do not want cotton under limits. Your advances ought not to exceed three quarters the value. Under these restrictions you may go on, and your bills shall be duly honored, accompanied by bills of lading and orders for insur- ance." B. showed these letters to C, and sold to him bills drawn on M. & Co. in favor of C.'s principals, and paid, with the money received from C, for cotton, which he shipped to M. & Co. in his own name. No bills of lading or orders for insur- ance accompanied these bills, and M. & Co. refused to accept or pay them. Held, in suits by the payees against M. & Co. as acceptors of the bills, and on their promise to accept and pay them, that they were not liable; that B.'s authority was limited and special, and that he had exceeded it, by drawing the bills without accompanying them with bills of lading and orders for insurance; and that C, the payee's agent, knowing the con- tents of M. & Co.'s letters to B., took the bills on his personal confidence in B., and not on the obligation of M. & Co. to honor 81 NATURE AND EXTENT OF AUTHORITY. § 50 them: Murdoch v. Mills, 11 Met. 5. An insurance company appoints an agent in another city, and agrees that he shall receive ten per cent on all premiums for insurance effected by him on their behalf, and also on all moneys received for sales of shares of the stock of the company, made by him, the agency to be revocable at pleasure. Held, no implied au- thority to the agent to bind the company for the rent of an office leased by him: Brander v. Columbia Ins. Co., 2 Grant Cas. 470. An agent for an insurance company was empowered merely to receive written applications for insurance, to transmit them to the company, and if they decided to take the risk, to receive the policy executed by them, and to issue it to the ap- plicant upon receipt from him of the premium. Held, not the agent of the company for the making of applications; and if employed by the applicant, or permitted to act for him in draw- ing up the application, he is his agent, for whose mistakes of fact committed in the statements or answers to interrogatories in the applications he is responsible: Wilson v. Conway Fire Ins. Co., 4 R. I.' 141. Three tenants in common were erecting a building according to a plan; one gave a power of attorney to his agent, authorizing him to " represent the principal's interest in the prop- erty, to vote as to the administration and improvement, and to do all acts relating to said interest, except the sale or hypotheca- tion thereof." Held, that the attorney had power to agree to a change in the plan: Hastings v. HallecTc, 13 Cal. 203. Under a power authorizing the attorney "to superintend my real and personal estate, to make contracts, and generally to do all things that concern my interest in any way, real or personal, whatever," etc. Held, that the attorney was empowered to make a contract to convey real estate, and therefore to make a lease with a right to purchase: De Rutte v. Muldrow, 16 Cal. 505. A person having engaged an architect to perform the usual labor of architects, and a contractor who was to do the work and furnish the materials, placed the money for the contrac- tor's pay in the hands of the architect, to be paid over on the contractor's order. Held, that new coutractors for materials, dealing with the architect, could not hold the principal: Dodge V. McDonnell, 14 Wis. 553. A power of attorney gave authority to the agent to sell certain lands " for the purpose of making actual settlements thereon," and " to sign, seal, and deliver suf- ficient deeds, conveying the land in fee-simple, with the several covenants and a general warranty." Held, to leave it to the judgment of the attorney to determine whether the purchasers buy for the purpose specified in the power, and if there is no evidence of fraud on the part of the purchaser or of the attorney, the conveyance made under the power will be valid, although it should afterwards appear that the land was purchased, not for Vol. I. — 6 § 57 PEINCIPAL AND AGENT. 82 the purpose of settlement, but on speculation: Spofford v. Hobbs, 29 Me. 148; 48 Am. Dec. 521. A and B, partners, gave notice of an intended dissolution on a certain day, and A and C gave notice that after that day the business would be continued by them. In the mean time S. sent to A and C a draft drawn by C, payable to S., directing them to place it to his credit, and remit the proceeds. A and B received the letter, and placed the amount to the credit of S. C had at that time a place of business in A and B's counting-room, and probably had access to their books. C wrote to S. that the intended partnership wtis deferred to enable A and B to settle their concerns, " and tliat the same attention will be paid to business as would have been by the intended firm." Soon after A and B failed, having made no remittances to S. Held, that C was not thereby made the agent of S. to see that A and B made such remittance, and that he was not liable to S. for omitting to do so: Savage v. Merle, 5 Pick. 83. An insurance company appointed a person their agent, and gave him authority to receive risks, take applications and premiums, and premium notes. Held, that this constituted him general agent of the company, for the transaction of that class of business, and that his fraudulent representations relat- ing to procuring insurance and premium notes bound the com- pany: Devendorf v. Beardsley, 23 Barb. 656. The owner of a line of stage-coaches made a lease of the coaches, horses, and stage property for a term of years, the lessee undertaking to carry on the business at his own risk and for his ov/n account, to keep all the property in repair, and to replace all articles worn out, by purchasing others in the name of the lessor. The lessee accordingly bought harnesses for use on the line, on his own credit. Held, that the lessor was not liable for the price: Stiles V. Emerson, 17 Pick. 326. A sent B to do work for C, and A's book-keeper, after the completion of the work, made out, in accordance with his duty, the bill therefor on one of A's printed billheads, which he placed in the hands of B, who de- manded and received payment for the work from C. Upon the billhead was printed in fine type, "All moneys to be paid to the treasurer, and bills to be receipted by him." Held, in an action by A against C to recover for" the work, that, in the ab- sence of evidence that C saw these words, there was evidence of payment to go to the jury: Kinsman v. Kershaw, 119 Mass. 140. § 57. Authority may be Implied. — Therefore — as to third persons — ^the authority of the agent need not be express, but may be implied from the performance with the knowledge of the principal of acts of a similar char- 83 NATURE AND EXTENT OF AUTHORITY. § 57 acter.* The presumption is, that one known to be an agent is acting within the scope of his authority.^ But the im- plied agency extends no further than the acts of a like nature to those acquiesced in by the principal.' An agent's authority to draw checks for his principal will be presumed in the absence of counter-evidence, where the proof shows that the agent was in the habit of signing his principal's name to checks, which was permitted by his principal.* Where a person permits another to assume the apparent ownership or right of disposing of property, it will be presumed that the apparent authority is the real authority. "And therefore, it may be laid down as a general rule that when a commodity is sent in such away and to such a place as to exhibit an apparent purpose of sale, the principal will be bound and the purchaser will be safe, although the agent may have acted wrongfully and against his orders or duty, if the purchaser has no knowledge thereof."^ Evidence of frequent sales by one person, of the property of another, which were known and not objected to, is competent as tending to show that they were made by the permission of the owner, and his knowl- edge of such sales may, in the absence of direct evidence, be inferred from their frequency and amount, coupled 1 Friedlander v. Cornell, 45 Tex. 5S5; ' Brett v. Bassett, 63 Iowa, 340. Hazeltine v. Miller, 44 Me. 177; Ed- ^ Chidsey v. Porter, 21 Pa. St. 390; wards f. Thomas, 66 Mo. 468; Cox v. Commercial Bank u. Norton, 1 Hill, Hoffman, 4 Dev. & B. 180; Thompson 501; Striugham». Ins. Co.,4Abb. App. V. Blanchard, 4 N. Y. 303; Edgerton 315; Philadelphia etc. R. E. v. Weaver, V. Thomas, 9 N. Y. 40. "If a par- 34Md. 431; Salem Bank w. Gloucester tioular mode is not prescribed by the Bank, 17 Mass. 1; 9 Am. Deo. Ill; original power, that which the agent Wood v. McCain, 7 Ala. 800; 42 Am. may adopt the principal may, by ap- Dec. 612. One who has sold his ex- proving, sanctify, and give to it equal press business cannot be held an:;wer- validity asif it had made a partof the able for the default of an employee original authority. If, in consequence trusted under the belief that he was of a notorious agency, the agent is in acting for such former owner: Rich v. the habit of drawing bills, and the Crandall, 142 Mass. 117. principal in the habit of paying them, * Cross v. People, 47 111. 152; 95 this is such an affirmance of his power Am. Dec. 474. to draw that a purchaser of his bills ' Story on Agency, sec. 94; Haze- has a right to expect payment of them well V. Coursen, 45 N. Y. 22; White by the principal, and, if refused, he v. Morgan, 42 Iowa, 113; Doubledayu. may coerce it": Hooe v. Oxley, 1 Cress, 60 Barb. 181; Pursley v. Mor- Wash. (Va.) 19; 1 Am. Deo. 425. risen, 7 Ind. 356; 63 Am. Dec. 424. §§ 58, 59 PRINCIPAL AND AGENT. 84 with proof of ample means of knowledge.^ In an action against a bailee of goods for not delivering them, to which the defense is, that he sent them to the plaintiff's wife, the fact that the plaintiff calls his wife to testify that she never asked that they might be sent to her does not authorize the inference that she was the plaintiff's agent.'' Illustrations. — Action for wood sold to A. The plaintifi sold the wood in question to B, who was then engaged in man- ufacturing bricks for A under a written agreement, by which A was to furnish all necessary materials for making the bricks, except the clay; the wood was delivered at the brick-yard oc- cupied by B, and there used by him in making the bricks for A; A frequently visited the yard while the wood was being so used, and in fact sold a part of the bricks after they had been manufactured. Held, that this evidence would justify a finding for the plaintiff: Emerson v. Patch, 123 Mass. 541. The plain- tiff entered the office of a company owning a line of foreign steamers and dealing in foreign drafts, and gave a sum of money in bills to be exchanged for gold to a person there, who, deposit- ing it in a drawer of a safe that contained other bills and also gold, and making an entry in a book, gave a receipt for the money as money to be exchanged for gold. Held, evidence sufficient to be submitted to the jury upon account for money had and received to the plaintiff's use: Newman v. British and North American Steamship Co., 113 Mass. 362. § 58. Authority is Restricted to Character in Which It is Given. — The authority is always restricted to the character in which it is given. Thus an authority to bind another in his representative character gives no authority to bind him personally;^ a power generally gives only authority to act in the separate individual business of the principal.^ § 59. Acts must be for Principal's Benefit. — A general agent has no authority to do acts not for the benefit of the principal.^ ' Bragg V. Boston and Worcester R. * Stainback v. Read, 11 Gratt. 281; R., 9 Allen, 54. 62 Am. Dec. 648. 2 Jenkins r. Bacon, 111 Mass. 337; * StaineruTysen, 3Hill, 279; Stain- 15 Am. Rep. 33. back v. Read, 11 Gratt. 281; 62 Am. ^ Evans on Agency, 111. Deo. 648; Debouchet v. Goldsmith, 5 85 NATURE AND EXTENT OF AUTHORITY. § 60 Illustrations. — A general superintendent of an express company had general authority to employ and discharge agents, to make contracts, and exercise a general supervision over the business of the company. Held, that he had no authority to license another to carry on a business in competition with and injurious to the express company: Adams's Express Co. v. Trego, 35 Md. 47. § 60. Construction of Agent's Authority — In General. — As to the construction of an agent's authority where it is conferred by a formal instrument, two rules have been laid down by Mr. Evans '■ as important: 1. The meaning of general words in an instrument will be restricted by the context and construed accordingly;^ 2. The authority will be construed strictly so as to exclude the exercise of any power not warranted by the actual terms thereof or as a necessary means of executing the authority with effect.^ A written authority given to an agent, which is ambiguous and capable of different meanings, will be construed in favor of innocent third parties dealing with the agent on their interpretation of the authority.* But Ve3. 211; Stewart v. Woodward, 50 ' Evans on Agency, 204. Vt. 78; 23 Am. Rep. 488; Wheeler and ^ See Geger v. Bolles, 1 Thomp. & C. Wihon Mfg. Co. V. Swan, 65 Mo. 89; 129; Billings v. Morrow, 7 Cal. 171; Lombard v. Winslow, 1 Kerr, 327; 68 Am. Deo. 235; Holstinger v. Nat. Doan V. King, 22 Ohio St. 119; Cal- Bank, 6 Abb. Pr., N. S., 298; Taylor houn V. Thompson, 56 Ala. 166; 28 u. Harlow, 11 Barb. 235. Am. Rep. 754. An authority to ' See De Rutte v. MulJrow, 16 Cal. draw, indorse, and accept bills, and 505; Berry v. Harriage, 39 Tex. 638; malio and indorse notes, does not Nash v. Mitchell, 71 N. Y. 199;. 27 authorize the agent to draw a bill for Am. Rep. 38; Mills v. Carnly, I Bosw. his benofit in the principal's name: 164; Wood w. Goodridge, 6 Cush. 117; North River Bank v. Aymer, 3 Hill, 52 Am. Dec. 771. Thus a power to 2G2. Nor does such an authority represent the principal's interests in a authorize the agent to draw and certain locality gives no right to the indorse accommodation notes for the agent to embark in a new and different banefit of third persons: Wallace v. business: Campbell v. Hastings, 29 Branch Bank, 1 Ala. 565; Gulick v. Ark. 512. But a power to "bargain Grover, 33 N. J. L. 463; 97 Am. Dec. and sell, grant, release, and convey," 72S; North River Bank v. Aymer, silent as to what property, will be 3 Hill, 262. An authority to sell per- construed to authorize the agent to sonal property does not authorize the sell and convey whatever estate the agent to sell or pledge it to his own grantor then owned: Marr v. Given, creditor for his own debt: Stewart v. 23 Me. 55; 39 Am. Dec. 600. Woodward, 60 Vt. 78; 28 Am. Rep. * De Tastal v. Cronsillet, 2 Wash. 488; Parsons v. Webb, 8 Me. 38; 22 C. C. 132; Loraine v. Cartwright, 3 Am. Dec. 220; Holton v. Smith, 7 Wash. C. C. 151; Canoier v. Ritter, 4 N. H. 446; Victor Machine Co. v. Wash. C. C. 551; Mattocks v. Young, Heller. 44 Wis. 265. 66 Me. 459. §60 PRINCIPAL AND AGENT. 86 where the instructions are clear, the agent cannot depart from them.^ Where the authority is conferred by an in- formal writing or arises by implication, the rules are,^— 1. The writing will be construed so as to give authority to do only such acts as are within the scope of the matter to which it refers; 2. When the authority is implied, it will include all the necessary and usual means of executing it, and all the means justified by the usages of trade.* The power to employ all the usual and necessary means to execute the authority with effect is an incident of every agency.* The authority of the agent may be enlarged or ' Cameron v. Durkheim, 55 N. Y. 425; Corbett v. Underwood, 83 111. 324; 25 Am. Rep. 392; Marfield v. Douglas, 1 Sand. 360; Bertram v. God- frey, 1 Knapp, 381; Wanlesa v. Mc- Candless, 38 Iowa, 20; Stollenwerck V. Thacher, 115 Mass. 224; Bliss v. Clark, 16 Gray, 60; Bostock v. Jar- dine, 3 Hurl. & 0. 700; Baxter v. La- ment, 60111. 237; Craighead v. Peter- son, 72 N. y. 279; 28 Am. Rep. 150. Thus an agent employed to bid for one tract of land has no authority to bid for another and different tract: Brown V. Johnson, 12 Smedes & M. 398; 51 Am. Dec. 118. An agent authorized to draw a bill of exchange in his own name cannot draw in the name of his principal: Bank of Deer Lodge «. Hope Mining Co., 3 Mont. 146; 35 Am. Rep. 458. ^ Evans on Agency, 215. ' Benjamin v. Benjamin, 15 Conn. 347; 39 Am. Dec. 385; Lawson on Usages and Customs, sees. 143 et seq. * Story V. Stewart, 9 Heisk. 137; Franklin v. Ezell, 1 Sneed, 497; Mo- Alpin V. Cassidy, 17 Tex. 449; Farrar V. Duncan, 29 La. Ann. 126; Merrick f. Wagner, 44111. 266; Brickenbecker ». Lowell, 32 Barb. 9; Minor v. Mechan- ics' Bank, 1 Pet. 46; Ahem v. Good- speed, 72 N. Y. 108; McBean v. Fox, 1 Bradf. 177; Peck?;. Harriott, 6 Serg. & R. 146; 9 Am. Dec. 415; Sprague v. Gulett, 9 Met. 91; Fowler v. Bledsoe, 8 Humph. 509; Barns v. City of Han- nibal, 71 Mo. 449; Lovejoy t>. Middlesex R. R. Co., 128 Mass. 480; Parkhill v. Imlay, 15 Wend. 431 ; Leolard v. Graves, 3 Caines, 226; Drummondi'. Words, 2 Caiues, 360; Forrester v. Boardman, 1 Story, 43; Harter v. Blanchard, 64 Barb. 617; Williams v. Getty, 31 Pa. St. 461; 72 Am. Dec. 757; Dawson V. Granby, 2 Pick. 345; Anderson v. Coonely, 21 Wend. 279; Williams v. Seltz, 31 Pa. St. 464; 72 Am. Dec. 757; Tucker v. Woolsey, 64 Barb. 142. An authority given to an agent to transact business for him in a for- eign country empowers him to transact it according to the forms and laws of that country: O wings v. Hull, 9 Pet. 607. An agent to travel and sell steam- engines has implied authority to hire horses: Huntlev v. Mathias, 90 N. C. 101; 42 Am. Rep. 517. A traveling salesman and collective agent of a city house hired horses and carriages in the country for use in his employers' busi- ness, upon their credit. He neglected to pay for them, although he was pro- vided with money to do so. Held, that the principals were liable: Bent- ley V. Doggett, 51 Wis. 224; 37 Am. Rep. 827. "There can be no ques- tion," said Taylor, J., "that from the nature of the business required to be done by their agent, the defendants held out to those who might have oc- casion to deal with him that he had the right to contract for the use of teams and carriages necessary and con- venient for doing such business, in the name of his principals, if he saw fit, in the way such service is usually con- tracted for; and we may perhaps take judicial notice that such service is usu- 87 NATURE AND EXTENT OF AUTHORITY. §61 narrowed by the custom of the country, or the usages of the particular trade or business in which he acts.* An agent may be justified under extraordinary circumstances in as- suming extraordinary powers, and his ac^s, fairly done, will bind his principal.* § 61. What Acts are or are not within Particular Phrases — "Accountable"— "All Matters" — "Attend to ally contracted for, payment to be made afber the service is performed. It would seem to follow that, as the agent had the power to bind his prin- cipal by a contract for such service, to be paid for in the usual way, if he ne- glects or refuses to pay for the same after the service is performed the principals must pay. The fault of the agent, in not paying out of the money of his principals in his hands, cannot deprive the party furnishing the ser- vice of the right to enforce the contract against them, he being ignorant of the restricted authority of the agent. If the party furnishing the service knew that the agent had been furnished by his principal with the money to pay for the service, and had been forbidden to pledge the credit of his principals for such service, he would be in a dif- ferent position. Under such circum- stances, if he furnished the service to the agent, he would be held to have furnished it upon the sole credit of the agent, and he would be compelled to look to the agent alone for his pay. We think the rule above stated as governing the case is fully sustained by the fundamental principles of law, which govern and limit the powers of agents to bind their principals when dealing with third persons. Judge Story in his work on agency, section 127, says: ' The principal is bound by all acts of his agent within the scope of the authority which he holds him out to the world to possess, although he may have given him more limited, private instructions unknown to the persons dealing with him.' In section 133, he says: 'So far as an agent, whether he is a general or special agent, is in any case held out to the public at large, or to third persons dealing with him, as competent to con- tract for and bind the principal, the latter will be bound by the acts of the agent, notwithstanding he may have deviated from his secret instructions.' And again, in section 73, in speaking of the power of an agent acting under a written authority, he says: ' In each case the agent- is apparently clothed with full authority to use all such usual and appropriate means, unless npon the face of the instrument a more restrictive authority is given, or must be inferred to exist. In each case, therefore, as to third persons innocently dealing with his agent, the principal ought equally to ba bound by acts of the agent executing such authority by any of those means, although he may have given to the agent separate, private, and secret in- structions of a more limited nature, or the agent may be secretly acting in violation of his duty. ' In the case of Pickering v. Busk, 15 East, 38, 43, Lord ElTenborough, speaking of the power of an agent to bind his princi- pal, says: 'It is clear that he may bind his principal, within the limits of the authority with which he has been apparently clothed by the principal in respect to the subject-matter, and there would be no safety in mercantile transactions if he could not.' Those general principles have been illustrated and applied by this and other courts in the following cases: Young v. Wright, 4 Wis. 144; 65 Am. Dec. 303; Whitney V. State Bank, 7 Wis. 620; Long a Ful- ler, 21 Wis. 121; Houghton v. First National Bank, 26 Wis. 663; 7 Am. R-p. 107; Kassoa v. Noltner, 43 Wis. 646; Smith v. Tracy, 36 N. Y. 79; Andrews v. Kneeland, 6 Cow. 354." ' Lawson on Usages and Customs, sees. 143 ct seq. 2 Foster v. Smith, 2 Cold. 474; 88 Am. Dec. 604. § GX PKINCIPAL AND AGENT. 88 Business" — "Borrow" — "Business and Financial Agent"— "Buy and Sell"— "Canvass "—"Cost"— "Cite and Appear" — "Claims and Effects." — Where W., as agent for A., sold, but did not transfer, bank stock to C, and promised 0. to "be accountable for such dividends as he or his agent should receive" before transfer, it was held that he thereby became C.'s agent to receive such divi- dends.^ Where the owners of a certain tannery appointed an agent to act for them in "all matters and business relat- ing to the tannery," it was held that he was not thereby authorized to bind his principals as receiptors to an officer for horses, etc., used in the tannery, which had been attached as the property of a third person.^ Power to "attend to business" of the principal does not authorize the agent to sell real or personal property, except to carry on the principal's business;'" nor does a power to "act in all my business as if I were present."^ An authority to "borrow" includes authority to give the lender securities for the sum borrowed.* An authority to act as the "business and financial agent" of a corporation does not authorize the execution by him of a mortgage on a loco- motive belonging to the corporation." Where a person authorized another to "buy and sell" negroes for him, it was held that this was a general authority, and that the agent had a right to buy for cash or on credit, at his dis- cretion.' Authority to "canvass" for the sale of sewing- machines does not per se confer on the agent power to bind his principal by buying or hiring a horse to aid in carrying on the business. Nor would a ratification by the principal be presumed from his acceptance of the profits of the services, unless he had knowledge of the sources and circumstances thereof.* An authority to ^ Cropper v. Adams, 8 Pick. 40. * Lusei;. Isthmus Transit R. R. Co., 2 Weston V. Alley, 49 Me. 94. 6 Or. 125; 25 Am. Rep. 506. = Coquillard v. French, 19 Ind. 274. ' Ruffin v. Mebane, 6 Ired. Eq. 507. * Ashley V. Bird, 1 Mo. 640; 14 ^ Howe Machine Co. v. Ashley, 60 Am. Dec. 313. Ala. 496. * Hatch V. Coddington, 95 U. S. 48. 89 NATUEE. AND EXTENT OF AUTHORITY. § 62 sell for "cash" means that the money must be paid when the title passes.* An authority to buy for cash will not sustain a purchase on credit.^ A power of attorney which gives the agent the authority "to cite and appear" must be construed as conferring upon the agent the power to prosecute and defend suits which may be brought by or against his principal. A sale of property under a judicial proceeding carried on contradictorily with the agent who holds such a power of attorney is not therefore void for want of authority in the agent to represent his prin- cipal in the litigation.^ A power to sell "claims and effects" does not include lands.* § 62. Particular Powers (Continued) — "Collect" — "Deliver"— "Deposit" — ^"Draw, Indorse, and Accept Bills" — "Execute" — ^"Give Discharges" — "Hire" — "Indorse." — A power to "collect debts" gives authority to sue, issue execution, and direct the seizure of property;^ but it gives no authority to release them without payment." He may attach the debtor's property," or (where imprisonment for debt is permitted) arrest him.* An agent to collect a note has no authority to sell it,' or barter the note for negotiable paper or real property." A power to collect a debt gives no right to accept negotiable paper in payment or as collateral security,*' nor to extend the time of pay- ' A authorized B to sell property for v. Sohenck, 88 111. 357; Chilton v. cash. B on the sale took a check pay- WiUf ord, 2 Wis. 1 ; 60 Am. Dec. 399. able the next day. Held, not within ' Trenton Banking Go. v. Haver- his authority: Hall v. Btorrs, 7 Wis. stick, 11 N. J. L. 171; Fairbanks v. 253. Stanley, 18 Me. 296. - Stoddard v. Mollwain, 7 Rich. 525. » See Stewart v. Biddlecom, 2 N. Y. ' Miller u. Marmiohe, 24 La. Ann. 30. 103; Gorham v. Gale, 7 Cow. 739; 17 * Cordova v. Knowles, 37 Tex. 19. Am. Deo. 549; Erwin v. Blake, 8 Pet. * Joyce V. Duplessis, 15 La. Ann. 18. 242; 77 Am. Dec. 185; Boyd v. Cor- « Rodgers v. Bass, 46 Tex. 505; Hays bott, 37 Mich. 52; Bush v. Miller, 13 u. Lynn, 7 Watts, 524. Barb. 481; McMinn v. Richtmeyer, 3 " Smith v. Johnson, 71 Mo. 382. Hill, 233; Hushfield v. Landman, 3 " Wiley u. Manhood, 10 W. Va. 206; E. D. Smith, 208; Scott v. Elendorff, McCuUoch v. McKce, 16 Pa. St. 289; 12 Johns. 317. Matthews v. Hamilton, 23 111. 470; " Melvin v. Lamar Ins. Co., 80 111. Corning v. Strong, 1 Ind. 327; Hazel- 443; 22 Am. Rep. 199; Hening v. tine v. Miller, 44 Me. 117; Scoby v. Hottendorf, 74 N. C. 588; McHany Branch, 59 Tenn. 66. § 62 PRINCIPAL AND AGENT. 90 ment,' nor to take property instead of money .^ An agent who has authority to collect for his principal a note pay- able in money cannot, by taking without authority notes or claims on a third party in payment, discharge the debtor.^ An authority to carry on mills for the owner, to permit parties to cut timber on his land and to "col- lect" the stumpage therefor, and to claim indemnity from trespassers, does not imply an authority in the agent to embark his principal in lumbering operations, by which he would be obligated to pay large sums of money .^ Au- thority to an agent in general terms to collect or secure a claim of the principal is not an authority to purchase for the principal the property of the debtor to secure the claim. Such purchase is not the natural or usual means of secur- ing the debt.' Securities being placed in the hands of the agent of the complainants for collection merely, he has no authority to bind the complainants by a contract to as- sign the securities to their own prejudice, or to the preju- dice of their assignors, who have guaranteed the payment of the mortgage debt.^ An attorney holding a note for collection cannot confer title by indorsement in the own- er's name, and delivery without the owner's consent, even to an innocent purchaser/ One who employs a firm of collecting agents in response to an advertising card, in which they announce that they will treat his debtors "with delicacy, so as not to offend them, or with such severity as to show that no trifling is intended," giving iRitch V. Smith, 82 N. Y. 627; 129, where it was said: "We know of Hutchiug3 V. Hunger, 41 N. Y. 155. no law which authorized the collector 2 Eirnhart v. Robinson, 10 Ind. 8; o£ the Uniteil States to commute, for Taylor v. Robinson, 14 Cal. 393; Ward whisky, obligations to secure its reve- V. Evans, 2 Ld. Raym. 928; Kirk v. nue." Heiith, 2 Ind. 322; Graydon v. Pat- ' Spence v. Rose, 28 W. Va. 333. erson, 13 Iowa, 256; 81 Am. Dec. 432; * Hazeltine v. Miller, 44 Me. 177. Aulturan v. Lee, 43 Iowa, 404 (but * Taylor v. Robinson, 14 Cal. 396. see Oliver v. Sterling, 20 Ohio St. 391); * Stonington Savings Bank v. Dayis, Ward V. Smith, 7 Wall. 451 ; Rodgera 14 N. J. Eq. 286. V. Bass, 43 Tex. 505; Lumpkin v. Wil- ' Quigley t'. Mexican Southern Bank, son, 5 Heisk. 555; Martin v. United 80 Mo. 289; 50 Am. Rep. 503. States, 2 T. B. Mon. 89; 15 Am. Dec. 91 NATURE AND EXTENT OF AUTHORITY, § 62 no special instructions, authorizes them to use such means as they see fit to adopt in the prosecution of his business for his benefit, and is responsible therefor.* Where books and accounts are placed in the agent's hands "for settlement," he has no right to assign them to a surety of the principal for his indemnity," nor has an agent authorized to collect a debt.' An authority to "col- lect interest" gives no authority to collect the principal.* The employment of an agent to "deliver all freights" necessarily includes the authority to make terms in re- gard to the delivery.^ An agent to "deposit" money for another in a savings bank is not authorized to receive a debt due the depositor.^ An authority to "draw, indorse, and accept" bills, and to make and indorse notes nego- tiable at a particular bank in the name of the principal, does not authorize the agent to draw a bill in the joint name of himself and his principal,' nor to draw a bill in the name of his principal on a person having no funds of the principal in his hands,* or to overdraw his principal's account at a bank.' An authority given by several to in- dorse their names on a bill drawn in favor of one does not warrant several and successive indorsements, but only a joint indorsement of and for them all." Where a com- pany authorized an agent to "execute a bond and bind their real estate," it was held that this did not authorize him to pledge personalty." A power of attorney to an agent "to grant, bargain, and sell land, or any part or parcel thereof, for such sum or price and on such terms 1 Caswell V. Cross, 120 Mass. 545. ^ Biitman v. Bacon, 8 Allen, 25. » Wood V. McCain, 7 Ala. 800; 42 ' Stainback v. Kead, 11 Gratt. 251; Am. Dec. 612. 62 Am. Dec. 648. ^ Texada v. Beaman, 6 La. 84; 25 ^ Stainback v. Read, 1 1 Gratt. 281 ; Am. Dec. 204. 62 Am. Dec. 048; Cragnead v. Peter- ' Smith V. Kidd, 68 N. Y. 130; 23 son, 10 Hun, 596. Am. Rep. 157; Doubeday v. Kress, " Union Bank v. Mott, 39 Barb. 59 :N. Y. 410; 10 Am. Rep. 502; Brew- 180. ster V. Carnes, 103 N. Y. 556. "> Bank of United States v. Beirne, 1 * Michigan S. etc. R. R. Co. v. Day, Gratt. 234; 42 Am. Dec. 551. 20 III. 375; 71 Am. Dec. 278. " Ravenel v. Lyles, Spear Eq. 281. § 63 PRINCIPAL AND AGENT. 92 as to him shall seem meet, and for me and in my name to make, execute, acknowledge, and deliver good and suffi- cient deeds and conveyances for the same with or with- out covenants and warranty," authorizes him to sell on reasonable credit, to receive the purchase-money, to sell for other consideration than money, and to sell an undi- vided interest.^ But one empowering him, among other things, "to buy and sell real estate, and in my name to re- ceive and execute all necessary contracts and conveyances therefor," does not authorize such attorney to sell and con- vey lands to which, as the proper record shows, the prin- cipal has acquired title before the execution of the power.* An attorney authorized, upon the receipt of certain debts secured by a mortgage, to "give discharges," can give such acquittances only upon the receipt of the sum due; he cannot enter into any speculations by which the value of the security may perhaps be enhanced.'' Authority given by a father to a son to "hire" a farm-laborer authorizes a contract for a term of two months.^ A power of attorney to one to sign and "indorse" notes for him and in his name at a bank gives the latter authority to sign and in- dorse any note payable at and due to that bank, and no other.^ §63. Particular Powers (Continued) — "Invest" — "Lands"— "lay out " — " Loan "—" Make Deeds and Sales " — " Manage" — "Mortgage " — " Obtain Securi- ties" — "Place " — "Procure a Purchaser." — A power to "invest" money and look after one's business does not authorize an agent to sell a principal's property." Where a power of attorney to invest money authorizes the agent to use the principal's signature and seal, when proper, in 1 Carson v. Smith, 5 Minn. 78; 77 * Decker v. Hassel, 26 How. Pr. Am. Deo. 539. 528. 2 Greve v. Co&n, 14 Minn. 345; 100 ^ Morrison v. Taylor, 6 T. B. Mon. Am. Dec. 230. 82. 3 Chilton V. WiUford, 2 Wis. 1; 60 ^ Smith v. Stephenson, 45 Iowa, Am. Dec. 399. 645. 93 NATURE AND EXTENT OF ATTTHOKITY. § 63 transacting the principal's business, the agent may, on payment of a loan of his principal's money, reassign a bond assigned as collateral security therefor.* A power to convey "lands" has been construed to relate to after-acquired lands? Where the principal agent of a company was prima- rily employed " to lay out the grounds of a company in order to dispose of them," it was held that he had authority to lay out and dedicate for highways laud of the company.' Where a woman made her husband her agent to lease her lands, it was held that she was not bound by his at- tempt to subject the rents to a lien for agricultural sup- plies advanced to the tenant, the lienor believing the land to belong to the husband, but she having done noth- ing to foster the belief.^ An authority to make a "loan" gives no authority to receive payment of the note given for the money loaned,^ or to collect generally." An agent having a principal's money, to "loan, manage, and collect" as he deems best, has authority to make an agreement for the extension of the time of payment.'^ An authority sim- ply to loan money, and take security for the payment, does not imply a power to collect.^ A power of attorney to make "all such deeds of conveyance and of partition to such lands as I am entitled to " authorizes a deed of sale as well as a deed of partition.' A power to "make and execute conveyances" authorizes the agent to sign a deed." An authority to "make notes" in the name of the principal does no* authorize the agent to make accommo- dation notes." A salesman authorized to "make sales," and selling on credit, is not authorized subsequently to collect the price in the name of his principal, and a pay- 1 Feldman v. Beier, 78 N. Y. 293. » Cooley v. Willard. 34 111. 68; 85 » Berkey v. Judd, 22 Minn. 288. Am. Deo. 296. 'State v. Atherton, 16 N. H. 'Jackson v. Hodges, 2 Tenn. Ch. 203. 276; see also Execute Papers and * Loftin V. Crossland, 94 N. C. 76. Deeds, supra. * Austin V. Thorp, 30 Iowa, 376. '» Hunter v. Watson, 12 Cal. 363; 73 « Cooley V. WUlard, 34 111. 69; 85 Am. Deo. 543. Am. Dec. 276. " Gulick v. Grover, 33 N. J. L. 463; ' Kurd V. Maple, 2 Bradw. 402. 97 Am. Deo. 728. § 64 PRINCIPAL AND AGENT. 94 ment to him will not discharge the purchaser, unless he can show some authoritj' in the agent to collect, beyond that necessarily implied in a mere power to make sales.^ A power of attorney to "manage" all the lands of the principal embraces after-acquired lands.^ A general au- thority given to "manage" a person's property cannot be considered as an authority to employ counsel in a case concerning property belonging to another person.* An agent to "manage" a hotel has no implied power to bind his principal for the safekeeping and return of carriages furnished by a livery -stable keeper for guests of the hotel.'' A power to "mortgage" land does not authorize the giv- ing of the principal's note with the mortgage, so as to make him personally liable.® A general power to mort- gage A's property will not sustain a mortgage for the benefit of B.® Where an agent was directed to " obtain securities " for the payment of protested notes, and to hand them over, when obtained, to certain creditors of the principal, and the agent, not obtaining new securi- ties, gave the notes to the creditors after the death of his principal, it was held that their title to the notes was good.' Where a principal wrote to his agent that he pro- posed to "place" his goods at a certain price, it was held that this gave the agent no authority to warrant that his principal would not sell for a less price.* An authority to "procure a purchaser" for property does not give power to enter into a contract of sale.* §64. Particular Powers (Continued) — "Purchase" — "Rent and Care for" — "Receive Checks" — "Release." — An authority to "purchase" — the agent not being fur- nished with funds — permits him to purchase on credit, 1 Law V. Stokes, 3 Vt. 249. » Mylius v. Cope, 23 Kan. 617. " Berkey v. Judd, 22 Minn. 287. « Greenwood v. Spring, 54 Barb. 376. ' Perry v. Jones, 18 Kan. 552. ' Nicolet v. Pillot, 24 Wend. 240. * Brook way v. MuUin, 46 N. J. L. ' Anderson v. BruDer, 112 Mass. 14. 448; 50 Am. Rep. 442. » Hamer v. Sharp, L. R. 19 Eq. 108. 95 NATURE AND EXTENT OP AUTHORITY. § 64 and give the principal's note,* but ordinarily a mere author- ity to purchase gives no power to purchase on credit,'^ or to give the principal's note,' or to buy a larger or a smaller quantity than ordered,^ or to sell or exchange the property.* "Where an agent for the purchase of lumber receives in- structions by letter to " purchase " certain quantities of lumber for sale, he is only bound to a substantial com- pliance with his instructions as to quantity, and a slight difference in that respect will not be considered a viola- tion of his authority, such as to entitle his principal to reject the purchase.® A clerk employed under a written agreement to " purchase goods," and conduct a mercan- tile house in a certain place, "upon the cash system," with a certain sum of money put in his hands for that purpose, cannot bind his principal for goods purchased for the house on credit.' A general authority to pur- chase grain gives the agent no power to contract to take all the grain the seller can deliver, especially if the con- tract does not bind the seller to deliver any.' An agent of a commission house, authorized to purchase hides, etc., and to pay for them with his principal's money, may not make advances or guarantee payment of unsettled ac- counts received in satisfaction of unauthorized advances.' An authority to the manager of a farm to purchase mules, implements, and supplies for the farm, gives no authority ' Sprague v. Gillett, 9 Met. 91; Bank ' Emerson v. Hat Co., 12 Mass. 237; V. Bugby, 1 Abb. App. 86; Perrotiu v. 7 Am. Deo. 66; Savage v. Bix, 9 CucuUu, 6 La. 587; Fatman v. Leet, N. H. 263; Gould i). Nor folk Lead Co., 41Ind. 133. So aa to the general man- 9 Cush. 338; 57 Am. Deo. 50; Taber ager of a hotel as to supplies for it: v. Cannon, 8 Met. 456; Paige v. Stone, Beecher v. Venn, 35 Mich. 466. So, 10 Met. 160; 43 Am. Dee. 420; Torr- where giving the note is indispensable ley v. Dustin Mon. Ass'n, 5 Allen, to the carrying on of the business: 327; Denison v. Tyson, 17 Vt. 549; Temple v. Pomroy, 4 Gray, 128; and Hazeltine v. Miller, 44 Me. 177; Bank see Adams ». Boies, 24 Iowa, 96. An v. Bugbee, 1 Abb. App. 86. authority to "purchase" wheat in- * Olyphant «. McNair, 41 Barb. 446. eludes authority to give directions as ' Todd v. Benedict, 15 Iowa, 591. to its delivery: Owen v. Brockschmidt, ' Merriman v. Fulton, 29 Tex. 97. 54 Mo. 285. ' Stoddard w. Mcllwain, 7 Rich. 525. ■' Berry D.Barnes, 23 Ark. 411; Stod- * Hartwell v. Walker, 4 La. Ann. dard v. Mcllwain, 7 Rich. 525; Stub- 457; 50 Am. Dec. 577. bings V. Heintz, 1 Feake, 66. ' Bohart v. Oberne, 36 Kan. 284. § 65 PEINCIPAL AND AGENT. 96 to buy goods for the laborers.' An authority to purchase a town site, and lay out a town, gives power to dedicate land for the use of a street.^ The general agent of a non- resident merchant has power to authorize a clerk to apply to the gas company to let on gas to the principal's counting- room.' Where an agent was appointed by the owner to " rent and care for " real estate, he was held not author- ized to sue in his own name to recover possession of the property from a claimant under a tax deed.* An authority to " receive checks " in payment does not authorize the agent to indorse or collect them.' A power to " release " an absolute debt includes authority to release a contin- gent liability.® § 65. Particular Powers (Continued)— "Sell"— "Sell and Convey" — "Sell at Retail." — A power to sell land gives the agent power to execute a deed and convey with a covenant of seisin.^ A verbal authority to "sell" realty 'Carter v. Burnham, 31 Ark. 212; it appears that the term "to sell "is and see Meyer v. Baldwin, 52 Miss, used in the ordinary sense, and the 26.3. general tenor of the instrument is to '' Barteau v. West, 23 Wis. 416. confer a power of disposal, the author- ^ Shepherd v. Milwaukee Gas etc. ity to execute the proper conveyance Co., 11 Wis. 234. is necessarily incident, although the * McHenry v. Painter, 58 Iowa, term "to convey " is not used: Fam- 365. ham v. Thompson, 34 Minn. 330. But ^ Graham v. U. S. Savings Inst., 46 see Force ti. Dntcher, 18 N. J. Eq. 401; Mo. 186. Nixon v. Hyserott, 5 Johns. 58; Lyon « Shaw ». Berry, 35 Me, 279; 58 v. Pollock, 99 U. S. 668. In Valen- Am. Dec. 702. tine v. Piper, 22 Pick. 85, 33 Am. Dec. ' Le Roy 1). Beard, 8 How. 451 ; Tag- 715, it was said: " Some objection was gart V. Stanbery, 2 McLean, 543; taken to the legal effect of this instru- Valentine v. Piper, 22 Pick. 85; 33 ment. It purported to authorize the Am. Dec. 715; Hemstreet v. Burdick, attorney to make sale of the real es- 90111. 444; Jackson u Hodges, 2 Tenn. tate of the constituent, as therein Ch. 276; People v. Boring, 8 Cal. 407; described, but there were no express Fogarty v. Sawyer, 17 Cal. 591; Yale words authorizing the attorney to exe- V. Eames, 1 Met. 488; Alexander v. cute a deed or deeds. But the court Walter, 8 Gill, 239; 50 Am. Dec. 688; are of opinion that the instrument is Inhabitants v. Clark, 68 Me. 87; 28 not open to this exception. Where Am. Rep. 22. A power of attorney the term ' sale ' is used in its ordinary to sell one's real estate held to author- sense, and the general tenor and effect ize a. quitclaim deed of land which of the instrument is to confer on the may not have been owned by the per- attorney a power to dispose of real son giving the power: Alexander v. estate, the authority to execute the Goodwin, 20 Neb. 216. Where, in a proper instruments required by law, to power of attorney to sell real estate, carry such sale into effect, is neces- 97 NATURE AND EXTENT OP AUTHOKITY. 65 is insufficient to authorize the execution of a contract or the making of a deed.^ Authority to agents, not under seal, to "sell" land empowers them to make an executory contract to sell.'' An agent with a restricted power to sell a tract of land at a given price has no power to bind his principal by any representation as to the quantity or quality of the land.* A power authorizing the attorney sarily incident. It is in pursuance of a general maxim that an authority to accomplish a definite end carries with it an authority, so far as the constitu- ent can confer it, to execute the usual legal and appropriate measures proper to accomplish the object proposed. A power of attorney might be so drawn as to authorize the attorney to make sale of an estate, where it might be apparent that it was the intention of the constituent to authorize the attor- ney to negotiate for a sale, leaving it to the constituent afterwards to ratify it and to execute deeds. Should it ap- pear either from the restricted words used, or from the tenor of the whole instrument, that such was the intent, it ought to be construed as conferring such a restricted power only. In the present case, we think it was the in- tent of the constituent to confer on the attorney an authority to transfer the estate." ' Duflfy V. Hobson, "post; Treat v. De Celis, 41 Cal. 202; Force v. Dutcher, 18 N. J. Eq. 401 ; Pringle v. Spaulding, 53 Barb. 17. "This," to simply find a purchaser, it is said in Duffy v. Hob- son, 40 Cal. 240, 6 Am. Rep. 617, "is the settled construction put upon the employment of professional brokers 'to sell 'or 'to close a bargain ' concerning real estate, and we know of no reason why the same language employed to ex- press the authority of any other agent ' to sell ' should have a more extended meaning. Besides, a sale of real es- tate involves the adjustment of many matters in addition to fixing the price at which the property is to be sold. The deed of conveyance may be one with full covenants of seisin and war- ranty, or only those covenants im- ported by the use of the words ' grant, bargain, and sell ' under our statute, or it may be by quitclaim merely. Vol. I. -7 The vendor may be unwilling to deal with a particular proposed purchaser on any terms. He may consider him pecuniarily unable to comply with t'-ie contract, even if the title prove satis- factory, and he may decline to bind himself to convey to such a purchaser at the end of the time necessary to- examine the title, because he might. thereby in the mean time lose an op- portunity to sell to some other perscn- who might desire to purchase, and in whose good faith and ability to pay he reposed entire confidence. All these and many other like considerations might, and usually do, arise in the mind of the vendor. Now, a mere authority ' to sell ' can hardly confer power upon the agent to determine all these matters for his principal, so as to bind him by his determination. And yet, unless the agent do have such power, he cannot make a defini- tive contract, or one that could be said to have the certainty requisite to deprive the principal of his option to ultimately decline to make the sale. To give to the mere word ' to sell ' such a broad signification as that would be to invest the agent with powers of that ample and discretionary character usually only conferred with caution, and by means of a general letter of at- torney, where the terms are distinctly expressed. While it is true that a power to sign the name of a principal to a contract of sale maybe given ver-- bally, we think that the words used for the purpose should be distinct and clear in their meaning and import, and should, with the requisite degree of certainty, manifest the intention of. the principal to do something more than merely to employ a broker. " 2 Jackson v. Badger, 35 Minn. 52. " National Iron Co. v. Bruner, 19. N. J. Eq. 331. § 65 PRINCIPAL AND AGENT. 98 in fact to sell "the one half" of a lot of land, without specifying which, or whether an undivided half, empowers him to sell one half in severalty, exercising his own dis- cretion as to which half.* Where a letter of attorney authorizes an agent to sell all the land of the pnincipal, which the latter had not previously conveyed, the agent may convey what his principal had previously sold but not conveyed.^ An agent empowered to sell and convey land conveyed to A, who paid part in cash, and, in pur- suance of an agreement for a loan from B, mortgaged to the agent, who immediately assigned the mortgage and indorsed the notes to B, who thereupon handed him the amount of the loan. It was held that the transaction was a sale for cash within the agent's authority, and not a barter or a sale on time.' Under a general power to sell property, real or personal, the agent may make a contract of sale.^ An agent in- trusted with personal property to sell may make a condi- tional sale on trial, or a contract to take effect as a sale in case the article on trial works satisfactorily.® An agent authorized to sell has authority to take all the usual steps to effect a sale;* but not to agree to pay a commission to another for making sales.'' An agent to sell goods and collect the price has authority to make any deduction from the price that the principal could have made.* Au- thority to an agent to sell goods is no authority to barter nor to exchange,* nor to rescind the sale, or materially modify its terms, after it has become an executed con- 1 Alemany v. Daly, 36 Cal. 90. from the principal, allowed the deed ^ Mitchell V. Maupin, 3 T. B. Mon. and purchase notes to be placed in the 185. hands of a third person until an alleged ' Plummer v. Buck, 16 Neb. 322. lien should be removed. Held, not * Haydock v. Stow, 40 N. Y. 363. within their authority: Taylor v. ^ Oster V. Mickley, 35 Minn. 245. White, 44 Iowa, 295. « Fay V. Richmond, 43 Vt. 25; Peters ' Atlee v. Fink, 75 Mo. 100; 42 Am. V. Farnsworth, 15 Vt. 155; 40 Am. Eep. 385. Deo. 671; Bryant v. Moore, 26 Me. 84; ^ Taylor v. Nussbaum, 2 Duer, 302. 45 Am. Dec. 96; Haydock v. Stow, ' Taylor v. Starkey, 59 N. H. 142; 40 N. Y. 363. Agents were author- Reese v. Medlook, 27 Tex. 120; 84 ized to sell land on certain conditions. Am. Dec. 611; Trudo v. Anderson, 10 They, on receiying an executed deed Mich. 357; 81 Am. Dec. 795. 99 NATURE AND EXTENT OP AUTHORITY. § 66 tract.* An agent who is only authorized to sell notes can- not bind his principal by a guaranty of their payment.^ Instructions to sell a vessel for "fourteen thousand dol- lars cash, free of all charges whatsoever," mean charges of sale, not expenses on account of a previous voyage, such as wages and provisions.* One authorized to sell on credit has no authority to foreclose a mortgage which he has taken as security, nor to buy in for the principal at the sale.'' Where a principal authorizes his agent to " sell upon credit," a reasonable credit is meant, which reason- ableness is a question to be determined by the evidence.* An agent to sell land on credit has no implied authority to receive payment therefor, nor to receive payment before due, or in anything but money.® An agent author- ized to sell his principal's sherry, when manufactured, is not authorized to sell it before it is manufactured.'' The mortgagee of a stock of goods signed at the foot of the mortgage a memorandum whereby he appointed the mort- gagor his agent to sell and dispose of and replace the stock. This was held not to make the mortgagor an agent of the mortgagee for the purchase and sale of goods, but merely a waiver of the right to take possession.* One authorized to " sell and convey " property has uo right to make a voluntary conveyance to an agent to enable him to control and protect the property,' nor to make partition of the land."* An authority to sell at retail does not au- thorize a clerk to sell at wholesale to satisfy a debt due to the purchaser from the principal." §66. Particular Powers (Continued)— "Settle " — " Ship" — " Sign Name " — " Solicit " — " Subscribe " — ' Adrian v. Lane, 13 S. C. 183. ' Merriam „. De Turk, 66 Cal. 2 Granl v. Strntzel, 53 Iowa, 712. 649. = Dusar V. Perit, 4 Binn. 361. » Barrett v. Franklin, 14 R. I. 241. * Aultman v. Jones, 1 Woolw. 99. ' Dupont v. Wertheman, 10 Cal. * Brown V. Central Land Co., 42 354. Cal. 257. i» Borel v. Rollins, 30 Cal. 408. « Mann v. Robinson, 19 W. Va. 49; " Hampton v. Matthews, 14 Pa. St. 42 Am. Rep. 771. 105; Lee v. Tinges, 7 Md. 235. § 66 PRINCIPAL AND AGENT. 100 "Sue" — " Take Care of" — "Transact." — A power to settle up a mercantile business gives no authority to purchase real estate or to give a note for the purchase price.' An attorney authorized by salvors to "settle" their claims against the vessel saved has authority to receive the money, but not to afterwards distribute it upon his own judgment among the salvors, or to pay charges against the fund.^ Where a physician leaving home temporarily made R. his agent, by verbal appointment, to transact all business for him in Alabama, and left with him his books of account for services "for settlement," it was held that E. had no authority to assign the books to a surety of his principal as security for his suretyship.^ A clerk in a store authorized to settle a claim against a carrier for the loss of certain goods cannot give a discharge without re- ceiving any consideration. His mere agreement to receive other goods in place of those lost will not operate as a release of the carrier's liability.* A power to settle busi- ness and collect claims gives an agent a right to execute a replevin bond.^ An agent employed to settle attach- ment suits against the principal has authority to raise money to settle by executing a note.* Authority given to an agent to ship property carries with it authority to accept a bill of lading, or to make a contract containing exemptions from liability.' Authority to ship cotton and ^Fisher v. Salmon, 1 Cal. 413; 54 ton ii. Merchants' Dispatch Trans. Co. , Am. Dec. 297. A sent overdue county 36 N. Y. Sup. Ct. 527; 59 K Y. 2o8; bonds to B, requesting him to treat Robinson v. Merchants' Dispatch them as his own, and do the best to Trans. Co., 45 Iowa, 470; Meyer v. settle them. Held, this did not au- Harnden's Ex. Co., 24 How. Pr. 290; thorize B to sell the bonds to D, or to Bean v. Green, 12 Me. 422; Fillebrown empower C to do so: Hannon v. Hous- v. Grand Trunk R. R. Co., 55 Me. 462; ton, 18 Kan. 561. 92 Am. Dec. 606; Levy v. Southern ' Hawkins u Avery, 32 Barb. 551. Ex. Co., 4 S. C. 234. "Tliat the = Wood V. McCain, 7 Ala. 800; 42 plaintiff herself never read the paper Am. Dec. 612. [a bill of lading containing conditions] * Patterson v. Moore, 34 Pa. St. 69. is of no moment. The arrangement ^ Merrick v. Wagner, 44 111. 266. was made by her agent, who must be ^ Tanner v. Hastings, 2 Bradw. 283. presumed to have acquainted herself ' Moriarty v. Harnden's Ex. , 1 Daly, with the terms of the engagement 227; Christenson w. American Ex. Co. , which the defendant assented to": 15 Minn. 270; 2 Am. Rep. 122; Shel; Steers v. Liverpool Steamship Co., 57 ( ,, j 101 NATURE AND EXTENT OE AUTHORITY. ^^' § 66:. forward the bills of lading to the consignee does not im- ply authority to receive advances from the consignee; and ■while authority to ship and sell may imply authority to receive the proceeds, it does not confer authority to appro- priate the proceeds to payment of the agent's individual debts/ But a mere agent to deliver the property has no authority to make a contract with exemptions from lia- bility, as, for instance, a drayman.^ To "use and sign my name," for the purpose of obtaining accommodation at a bank, gives an agent power to sign a note.^ A per- son, whether he can himself write or not, may authorize another by parol to sign his name to an instrument.* A power "to solicit and take contracts" does not carry with it the power to collect; and a payment to such an agent by one who knew that orders were sent to the principal for his approval does not release from liability to the principal.*^ An authority to subscribe for stock upon the location and erection of certain railroad improvements does not authorize a subscription payable on the location of such improvements.* An authority to sue for a debt, and to do all in the premises that the principal could do, gives power to attach.' An agent appointed to "take care of" personal property, and to give notice of any lien upon it, has no authority to make an agreement with a third person to purchase the property of his principal, at a sale to which it is exposed, to satisfy rent under a distress warrant, and therefore the principal cannot maintain an N. Y. 1; 15 Am. Eop. 453; Squire t7. 63 Mo. 33; 21 Am. Rep. 430. Author- N. Y. Cent. R. R. Co., 98 Mass. 239; ity to sign a principal's name to a 93 Am. Dec. 162; New Jersey Steam note for a specified sum is special, and Nav. Co. V. Merchants' Bank, 6 How. if he signs a note for more it is a for- 344. gery, and the principal is not liable: ' Hill V. Helton, 80 Ala. 628. King v. Sparks, 77 Ga. 285; 4 Am. St. ^ Southern Ex. Co. v. Armstead, 50 Rep. 85. Ala. 350;' Nelson v. R. R. Co., 48 * Handyside «. Cameron, 21111. 588; N. Y. 498; Buckland v. Adams Ex. 74 Am. Dec. 119. Co., 97 Mass. 124; 93 Am. Dec. 68; ^Greenhood v. Keator, 9 HI. App. contra, Robinson v. Merchants' Trans. 183. Co. , 45 Iowa, 470. * Drover v. Evans, 59 Ind. 454. ' But not an instrument not a nego- ' De Poret v. Gasman, 30 La. Ann. tiable note: First Nat. Bank v. Gay, 930. I 67 PRINCIPAL AND AGENT. 102 action of trover upon this agreement against such third person, unless he ratifies the act of his agent before trial.' Authority to an agent "to trade off said mule if he could get anything that suited him" does not empower him to exchange the mule for another, and bind his principal to pay a sum of money as the estimated difference in value.^ A person "with full authority to transact any business, to employ men, purchase logs, sell timber, or to perform any other business connected " with his principal, has a general authority, and may transfer lumber in payment to men employed by him.' The owners of a tavern, by an instrument in which they recited that they had engaged E.. to keep said tavern, empowered him for them, and in their names, and for their use and benefit, " to transact all business pertaining to said tavern, which in his judg- ment might promote their interest, and to purchase, use, and vend all necessary provisions for said house," and "to act for us as fully and effectually as we could do" if present. It was held that R. was authorized to purchase spirituous liquors, wine, and sugar on the credit of the owners, to be used at the bar of said tavern.* § 67. What Powers Implied under Particular Circum- stances — Advertising — Admissions — Arbitrate — Assign — Auction — Board at Hotel — Borrow — Cancel — Com- promise — Collect — Confess Judgment. — A general agent of a patent-medicine manufacturer has no authority to make contracts for advertising in foreign countries.* What an agent says while acting within the scope of his authority is admissible against his principal, as part of the res gestse, but not statements or representations made by him at any other time. And declarations made by the officers of corporations rest upon the same principles ' Brisbane v. Adams, 3 N. Y. 129. * Cumminga v. Sargent, 9 Met. 2 Mcilillan v. Wooteu, 80 Ala. 263. 172. ' Taylor v. Labeauine, 14 Mo. 572; * HoUoway v. Stephens, 2 Thomp. 17 Mo. 338; Tappau v. Bailey, 4 Met. & C. 502. 529. 103 NATUEE AND EXTENT OP AUTHORITY. § 67 as apply to other agents/ An agent has no power, with- out express authoritj'^, to refer disputes to arbitration.^ An authority to "settle" does not authorize the agent to submit the disputes to arbitration.^ But the power may be implied from an authority to "act on the principal's behalf in dissolving the partnership, and appoint any other person as he may think fit";^ or from an authority to prosecute a suit^ or to " compromise or compound " a claim.® A power to sell or lease lands, to take charge of them and to prosecute suits, receive money, etc., does not authorize the agent to assign a cause of action for a tres- pass on the lands ;^ nor does a power to enforce in every way a claim confer authority to assign it to a third per- son.^ A simple power to sell does not include a sale at auction." An agent employed to sell goods has no im- plied authority to obtain board at a hotel on the credit of his principal.'" An agent to buy and sell at the prin- cipal's store has no authority to borrow money." The authority of an agent who travels to solicit orders for a commercial house does not embrace power to cancel his contracts, and receive back goods shipped to and not satisfactory to a customer. ^^ A power to pay debts gives authority to compromise a disputed claim." Where A and B went to a store, and each purchased a bill of goods, and A guaranteed the payment of B's bill, and subse- quently both bills were sent by mail to A, who presented ' Penn. R. R. Co. v. Books, 57 Pa. * Bucklaud v. Conway, 16 Mass. 396. St. 339; 98 Am. Dec. 229. = Wilks v. Back, 2 East, 142; SchoSf * Michigau Cent. R. R. Co. v. Gou- v. BlooitifiolJ, 8 Vt. 472. gar, 55 111. 503; Trout v. Emmons, 29 ' Geiger v. BoUes, 1 W. Y. Sup. Ct. 111. 433; 81 Am. Dec. 326; Alexandria 129. Canal Co. v. Swann, 5 How. 83; Car- ^ Garrigue v. Loescher, 3 Bosw. 578. noohan v. Gould, 1 Bail. 179; 19 Am. « Towle v. Leavitt, 23 N. H. 360; 55 Dec. 668; McPlierson v. Cox, 88 N. Y. Am. Dec. 195. 472; and see Goodson v. Brooke, 4 '" Sampson v. Singer Mfg. Co., 5 Camp. 163. S. C. 465. ' Scarborough v. Reynolds, 12 Ala. '' Spooner v. Thompson, 48 Vt. 259. 252; Huber v. Zimmerman, 21 Ala. '^ Diversy ti. Kellogg, 44 111. 114; 92 488; 56 Am. Deo. 255. See Hine v. Am. Dec. 154. Stephens, 33 Conn. 504. '3 Bergenthal «. Fiebrantz, 48 Wis. * Henley v. Soper, 8 Barn. & C. 16. 435. § 68 PRINCIPAL AND AGENT. 104 B's bill to him, representing that he had authority to collect it, whereupon B paid it, it was held that the mere delivery of the bill by the creditor to A through the post-office did not constitute A the creditor's agent for the collection of the debt, nor was it any evidence of authority to collect it.^ A general agent, without express authority, cannot confess judgment for his principal.^ § 68. What Powers Implied (Continued) — Employing Agents — Employing Counsel — Exchange or Barter — Deliver — Foreclose Mortgage. — An agent of a stage com- pany authorized to obtain surgical aid for a passenger injured by the upsetting, of the coach is not therefore authorized to employ a physician to attend to one who had acted as coachman without the consent or knowl- edge of the company, and who had also been injured by the same accident.^ Where a principal wrote to his general agent, "You will do better by getting new agents," etc., it was held that the agent thereby received authority to employ a new subagent.^ A general author- ity to manage property for another does not give power to employ counsel in a case between third persons, but which may indirectly affect the principal's property.^ A general agent has no authority to employ counsel to pros- ecute a suit for a servant of the principal injured through the negligence of a third person." An agent to sell land must sell for money; he cannot exchange it for merchan- dise.'' So one authorized to sell goods cannot exchange them in barter.* And an authority to "sell, transfer, and convey" lands gives no authority to exchange them for ^ Dutcher v. Beckwith, 45 HI. 460; ' Lumpkin v. Wilson, 5 Heisk. 555; 92 Am. Deo. 232. Wheeler and Wilson Co. v. Givan, 65 2 Howell V. Cordon, 40 Ga. 302. Mo. 89; Victor Sewing Machine Co. v. 3 Shriver v. Stevens, 12 Pa. St. 258. Heller, 44 Wis. 265; Trudo v. Ander- * McConnell v. McCormick, 12 Cal. son, 10 Mich. 357; 81 Am. Deo. 795; 142. Kent v. Bornstein, 12 Allen, 342. ° Perry v. Jones, 18 Kan. 552. * Guerreiero v. Peile, 3 Barn. & Aid. ^ Cochran v. Newton, 5 Denio, 482. 616. 105 NATURE AND EXTENT OF AUTHORITY. § 69 other lands.^ So one employed to sell has no authority to exchange the money he receives with a third person.'' Where an agent managing real estate for his principal sold it and took a note and mortgage back, which were left with him for collection, it was held that he was not authorized to exchange them for the unsecured note of another party and to release the mortgage.^ A teamster employed by a mill-owner to deliver flour to a railroad company for transportation has no power, by virtue of his employment, to direct the delivery of the flour by the company to a third person; and the agents of the company are bound to know this, and if they so deliver the flour the company is liable as for a conversion.* An agent authorized to sell on credit has no power to foreclose a mortgage which he had taken to secure payment, nor to buy in the prop- erty for his principal on the sale.* § 69. What Powers Implied (Continued) — Give Credit — Guaranty — Hiring Horses — Indorsing — Lease — Leg- acy — License — Loan. — An ordinary authority to sell gives no authority to sell on credit,^ but the authority may be construed to allow it.'' A book-keeper has no power, by virtue of his position, to bind his employer for the debt of a third person.' A traveling salesman and collector has authority to hire horses and carriages in the country,* and so has an agent employed to sell steam-engines.'" A * Reese v. Medlock, 27 Tex. 120; 84 a reasonable credit: Brown v. Central Am. Dec. 611. Land Co., 42 Cal. 257. 2 Kent V. Bornstein, 12 Allen, ' Van Alen v. Vanderpool, 6 Johns. 342. 69; 5 Am. Dec. 192; Greely v. Bartlett, 2 Hakes v. Myrick, 69 Iowa, 189. 1 Greeul. 172. As where the agent * Sawyer v. Eailroad Co., 22 Wis. was to sell "for the best price he could 402; 99 Am. Dec. 49. get and return the proceeds": May v. * Aultman v. Jones, 1 Woolw. 99. Mitchell, 5 Humph. 365; where he " School District v. .^Etna Ins. Co., was to sell "to the best advantage'': 62 Me. 330; State v. Delafield, 8 Paige, Ruffin v. Mebane, 6 Ired. Eq. 507. 527; Seiple v. Irwin, 30 Pa. St. 513; ^ Ruppe v. Edwards, 52 Mich. 411. Law V. Stokes, 32 N. J. L. 249; 90 » Bentley v. Doggett, 51 Wis. 224; Am. Dec. 655; Burks v. Hubbard, 69 37 Am. Rep. 827. Ala. 379; Falls v. Gaither, 9 Port. 605. i» Huntley v. Mathias, 90 N. C. 101; An authority to sell " on credit " means 47 Am. Rep. 517. § 70 PRINCIPAL AND AGENT. 106 cashier of a firm which is in the habit of taking commer- cial paper in the course of business has authority to in- dorse such paper,' and so has an agent employed to dis- count a note.^ But a collector authorized to receive checks in payment of bills held by him for collection has no authority to indorse and collect the checks.^ A general authority to transact business, and receive and discharge debts, gives no power to accept or indorse bills.'' Posses- sion of a note not indorsed raises no presumption that the holder has a right to transfer it.° A power to sell land authorizes the leasing of it.* A clerk authorized to receive payment is not authorized to receive a legacy due his master.' A power to sell land will not give an agent au- thority to license the purchaser, before the conveyance, to enter and cut timber on the land.* Authority in a hired man from his employer to lend property attached and in the custody of the sheriff cannot be inferred from his having exercised such authority before attachment, when the property was in the ordinary use of his employer." § 70. What Powers Implied (Continued) — Making Ac- commodation Notes — or Deed — Negotiable Paper — Mort- gage — Pledge — Purchase. — A general agency for the transaction of the principal's business will not authorize the agent to make accommodation notes in his name." A power to make " all such deeds of conveyance and partition to such land as I am entitled to " authorizes a deed of sale as well as of partition." A power to " ask, demand, recover, or receive the i^rincipal's share of an estate, to give dis- » Etlwsrds V. Thomas, 66 Mo. 468. « Williams w.Woodard, 2 Wend. 487. ^ Morchaats' Bank v. Central Bank, ' Sanderson v. Bell, 2 Cromp. & M. 1 Ga. 41S; 44 Am. Dec. 665; Stain- 313; Day v. Boyd, 6 Heisk. 458. back V. Read, 11 Gratt. 281; 62 Am. « Hubbard v. Elmer, 7 Wend. 446; Dec. 648. 22 Am. Dec. 590. " Graham v. United States Savings ' Briggs v. Taylor, 35 Vt. 57. Inst., 46 Mo. 18G. "i Gulick v. Grover, 33 N. J. L. 463; * Sewanee Mining Co. v. McCall, 3 97 Am. Deo. 728; Bank of Hamburg Head, 619. v. Johnson, 3 Rich. 42; Wallace v. * Hardesty v. Newby, 28 Mo. 567; Branch Bank, 1 Ala. 505. 75 Am. Dec. 137. " Jackson iJ.Hodges, 2 Tenn. Ch. 276. 107 NATURE- AND EXTENT OP AUTHORITY. § 70 charges and acquittances therefor," does not confer power to convey his real estate/ The authority of an agent to exe- cute a deed for his principal maybe presumed from proof that tlie principal received the purchase-money, and that the vendee went into possession under the deed, which on its face purports to have been executed by such agent, and has held such possession for twenty years.^ An authority to bind the principal by making negotiable paper must be express or implied from the nature of the agency.' A general authority to transact business, and to receive and discharge debts, does not authorize the accepting or in- dorsing of bills, or the making of accommodation paper,* nor does merely acting as clerk give authority to sign notes in the principal's absence.^ An agent authorized to transact a particular aifair may execute a note jointly with others who have a common interest in the subject- matter, to pay the necessary expenses for the accomplish- ment of a common end." A principal clerk, having the general management of a store, and accustomed to give due- bills in the name of his employers with their knowledge and consent, who buys goods in the usual course of busi- ness, has authority, upon such purchase, to take up due- bills given for former purchases, and give a note therefor, in the name of his employers, including therein the amount of his last purchase.' A committee of a town appointed to lay out a sum of money voted for repair of highways has no power to give 1 Hay V. Mayer, 8 Watts, 203; 34 612; City Bank v. Kent, 57 Ga. 2S3; Am. Dee. 453. Pollock v. Cohen, 32 Ohio St. 514; 2 Bias V. Cookrum, 37 Miss. 509; 75 Feldman v. Beier, 78 N. Y. 293; Tem- Am. Deo. 476. pie v. Pomroy, 4 Gray, 128. 3 Webber v. Williams College, 23 * Hazeltine v. Miller, 44 Me. 177; Pick. 302; Rossiter v. Rosaiter, 8 Lawrence v. Gebhard, 41 Barb. 575; Wend. 496; 24 Am. Deo. 62; Sew- Gulick v. Grover, 33 N. J. L. 463; 97 anee Mining Co. v. McCall, 3 Head, Am. Dec. 728; Bank of Hamburg v. 619; James v. Lewis, i;6 La. Ann. 664; Johnson, 3 Rich. 42. Hills V. Upton, 24 La. Ann. 427; Tay- ^ Terry v. Fargo, 10 Johns. 114; lor V. Robinson, 14 Cal. 399; Heffer- Smith v. Gibson, 6 Blackf. 309. nan v. Addams, 7 Watts, 116; Wood ° Layet w. Gano, 17 Ohio, 466. V. McCain, 7 Ala. 800; 42 Am. Dec. ' Chidsey v. Porter, 21 Pa. St. 390. § 70 PRINCIPAL AND AGENT. 108 a promissory note.* A clerk in a store has no power to give a note for money borrowed by him;^ nor has an agent employed in the manufacture of carriages power to give notes for labor and materials.' A person who signs or in- dorses a note with blanks, and gives it to another to use, impliedly gives him authority to fill the blanks;* and such paper in the hands of a bona fide holder will be valid, even though the blanks have been filled by the agent for unauthorized sums.^ A special authority conferred upon an agent in the management of a plantation, and the interests connected with it, to demand'and sue for all moneys, etc., " subjecting myself to be sued through him, in the same manner as if I was personally present," was held not to give the agent power to execute a note in the name of the principal, or to submit matters in dispute to arbitration before a suit was brought.* Authority not under seal, " to sign any note or other instrument of writing," does not authorize the agent to execute a bill single.' Authority to bind a corporation, by giving a " company note," authorizes a bill of exchange on a person who had no funds.* A power to sell and con- vey land gives no power to mortgage it;* and so of a power to sell personal property.'" An agreement by a purchaser of goods, that a third person shall have a lien, by mortgage or otherwise, after a certain time, for a debt due him from the vendor, does not constitute the vendor agent of the purchaser to execute such mortgage." One who hires a boiler, and is given the power to sell it, has 1 Savage v. Rix, 9 N. H. 263. ' Alder v. Buckley, 1 Swan, 69. 2 Keru V. Piper, 4 Watts, 222. ^ Tripp v. Swanzey Paper Co., 13 ' Paige r. Stone, 10 Met. 160; 43 Am. Pick. 291. Dec. 421; Denisonj;. Tyson, 17 Vt. 549. "Morris t;. Watson, 15 Minn. 212; ' Gillaspio v. Kelley, 41 Ind. 158; 13 Gaylord v. Stebbins, 4 Kan. 42; Wood Am. Rep. 318; Holland v. Hatch, 11 v. Goodridge, 6 Cush. 117; 52 Am. Ind. 497; Spitler v. James, 32 Ind. Dec. 771; Jeffrey v. Hursh, 49 Mich. 202; 2 Am. Rep. 334; Blackwell v. 31. Ketcham, 53 Ind. 184; Abbott v. Rose, " Switzer v. Wilvers, 24 Kan. 384; 62 Me. 194; 16 Am. Rep. 427. 36 Am. Rep. 259. 5 Id. " Hyde v. Boston and Barre Co.,21 ^ Scarborough v. Reynolds, 12 Ala. Pick. 90. 252. 109 NATUEE AND EXTENT OF AUTHORITY. § 70 no authority to mortgage it, and if he does so, the owner may maintain replevin against the mortgagee.* An au- thority to sell goods does not give power to pledge them;^ nor does an authority to receive payment authorize the pledging of a note received for the debt;^ nor does author- ity to carry on a manufacturing business give power to pledge or mortgage its machinery or buildings.* A clerk of a merchant, to do out-door business, negotiate pur- chases and charter-parties, and present bills of lading for signature on shipping property of the merchant, has no authority as such clerk to pledge such bills of lading or to receive advances thereon.^ A verbal authority from an absconding debtor to assist him " in the settlement of his affairs " will not authorize a pledge of his furniture as security to one of his creditors." In a New York case an agent was sent to a city for the purpose of hurrying for- ward certain rails in all possible ways, and to see that there were no delays, as it was important for the princi- pal to have them at once. It was held that the agent could bind the principal to pay a sum for which the rails were held under a claim of lien.'' In another, the defend- ants sent their teamster with a note to the plaintiff to get some rye, saying that they would pay for it later. Plain- tiff gave the rye to the teamster, saying that he would not take less than seventy-five cents per bushel for it, and telling him to inform defendants. The teamster called the next day for another load, falsely telling plaintiff that he had told of his price, and that defendants were satisfied with it; whereupon plaintiff gave him another load. In an action by plaintiff to recover the seventy-five ' Stevens v. Cunningham, 3 Allen, ' Jones v. Farley, C Greenl. 226; 491. Hays v. Lynn, 7 Watts, 524. 2 Wheeler and Wilson Sewing Ma- * Despatch Line v. Bellamy Mfg. chine Co. v. Givan, 65 Mo. 89; Voss v. Co., 12 N. H. 205; 37 Ain. Deo. Robertson, 46 Ala. 483; Parsons v. 203. Webb, 8 Me. 38; 22 Am. Dec. 220; Vic- * Zachrisson v. Ahman, 2 Sand. 68. tor Sewing Machine Co. v. Heller, 44 " Swett v. Brown, 5 Pick. 178. Wis. 265; Miller v. Schneider, 19 La. ' Robinson v. Springfield Iron Co., Ann. 300; 92 Am. Deo. 535. 39 Hun, 634. § 71 PRINCIPAL AND AGENT. 110 cents per bushel, it was held that the teamster's agency was only manual, and that he could not bind his em- ployers by assenting to the price; that consequently the parties had never agreed upon a price, and that only the market value could be recovered.^ § 71. What Powers Implied (Continued) — Receive Payment. — An authority to sell chattels gives authority to receive payment,^ and authority to receive payment of a debt includes authority to receive part of it.' An agent to sell goods on credit has implied authority to receive pay- ment,* but not an ordinary agent to solicit orders.^ A traveling agent to sell goods, who has not the possession of the goods, may still receive payment so as to bind his principal, where such is the general and known usage, and it has been recognized by the principal.* An ordi- nary authority to make or conclude a contract gives no au- thority to receive payments due under it.^ An agent to sell land on credit has no implied authority to receive payment.* An agent authorized to receive payment of a debt must receive payment in money.* He has no au- i Booth V. Bierce, 38 N. Y. 463; 98 Pa. St. 513; hawv. Stokes, 32 N. J. L. Am. Dec. 73. 249; 90 Am. Dec. 655; Butler v. Dor- 2 Rice V. Groflfmann, 56 Mo. 434; man, 68 Mo. 298; 30 Am. Rep. 795. Bioknell v. Buck, 58 Ind. 354; Collins « Meyer v. Stone, 46 Ark. 210; 55 V. Newton, 7 Baxt. 269; Hoskins v. Am. Rep. 577. Johnson, 5 Sneed, 469. A soa who ' Williams v. Walker, 2 Sand. Ch. keeps his father's books and accounts, 425; Doubleday v. Kress, 40 N. Y. and figures interest on notes, has no 410; 10 Am. Rep. 502; Komemann ». authority to collect or settle such Monaghan, 24 Mich. 36. notes: Reynolds v. Ferree, 86 111. 570; " Mann v. Robinson, 19 W. Va. 49; and see Bowen v. School District, 36 42 Am. Rep. 771. Mich. 149; Harris i^. Simmerman, 81 ° Padfield v. Green, 85 HI. 529; 111. 413. Woodbury v. Lamed, 5 Minn. 339; 2 Whelan v. Reilly, 61 Mo. 565. Scobey v. Woods, 3 Baxt. 66; Stewart * And the fact that the words "pay- v. Woodward, 50 Vt. 78; 28 Am. Deo. able at ofBce"' are on the bill rendered 488; Sweeting v. Pearce, 7 Com. B., does not charge the buyer with notice N. S., 449; Mann v. Robinson, 19 W. to the contrary: Putnam v. French, Va. 49; 42 Am. Rep. 771. Bank bills 53 Vt. 402; 38 Am. Rep. 682. But or other current funds are sufficient: the words "agents not authorized to Rodgerst'. Bass, 46 Tex. 505; Coleman collect," in large print on the bill, is v. Wingfield, 4 Heisk. 133; Dillard «. constructive notice: Mo Kindly u. Dun- Clements, 2 Baxt. 137; but not con- ham, 55 Wis. 515; 42 Am. Rep. 740. federate nfites: Mangum v. Ball, 43 'McKindlyi;. Dunham, 55 Wis. 515; Miss. 288; 5 Am. Rep. 488; Webster 42 Am. Rep. 740; Seiple v. Irwin, 30 v. Whitworth, 49 Ala. 210. Ill NATURE AND EXTENT OP AUTHORITY. § 71 thority to take property in exchange,* or negotiable paper of or from the debtor,'' or to extend the time of paj'ment in whole or in part;' nor to receive the debt before it is due,'' or only part of it for the whole.^ In the absence of special instructions to an agent to collect in gold or silver currency, a payment to the agent in bank bills, or other currency generally taken and used in the payment of debts, and current in business trans- actions as money, satisfies the debt.® A salesman author- ized to make sales on credit has no authority to collect subsequently the price/ An authority to make a contract for the sale of land gives authority to receive so much of the purchase-money as is paid down;* but an authority to sell property does not include authority to receive pay- ment,* nor does an authority to negotiate a bargain.*" Un- less a principal has held his selling agent out to the buyer as having authority to collect, a payment to the agent is not good." A canvassing agent for the sale of subscrip- tion books has no authority to receive payment for books sold but not delivered by him.*^ A debtor whose debt is evidenced by a written security must see that the person ' Kirk V. Hiatt, 2 Ind. 322; Ault- 357; Patterson v. Moore, 34 Pa. St. man v. Lee, 43 Iowa, 404. Authority 69. to an agent to receive payment of a * Rodgers v. Bass, 46 Tex. 505. debt for his principal does not author- ' Seiple v. Irwin, 30 Pa. St. 515; Law ize the agent to receive a part in mer- v. Stokes, .S2 N. J. L. 249; 90 Am. chandise: Rhine t). Blake, 59 Tex. 240. Dec. 655. An agent for the collection of a note * Yerby v. Grigsby, 9 Leigh, 387; is confined to the taking of money in Peek v. Harriott, 6 Serg. & R. 145; payment, and has no power imless Goodale v. Wheeler, 11 N. H. 424; special authority is given to take Hoskins v. Johnson, 5 Sneed, 469; goods in payment: Mudgett v. Day, Rice v. Goffmann, 56 Mo. 434; Johnson 12Cal. 139. V. McGruder, 15 Mo. 365; Higgins '' Drain v. Doggett, 41 Iowa, 682; v. Moore, 6 Bosw. 344. Power to col- McCuUoch V. McKee, 16 Pa. St. 289; leet a note given for balance of pur- Hall V. Storrs, 7 Wis. 253; Bertholf v. chase-money may be inferred from Quinlan, 68 111. 297. authority to sell land and take note in ' Hutohiags v. Munger, 41 N. Y. 158; payment: Rodgers v. Bass, 46 Tex. 505. Chappel V. Raymond, 20 La. Ann. ' Higgins v. Moore, 34 N. Y. 417; 277; Gerrish v. Maher, 70 111. 470. Catterall v. Hindle, L. R. 1 C. P. 186. * Smith V. Kidd, 68 N. Y. 130; 23 '" Doubleday v. Kress, 50 N. Y. 410; Am. Rep. 157; Mann v. Robinson, 19 10 Am. Rep. 502; Austin v. Thorp, 30 W. Va. 49; 42 Am. Rep. 771. Iowa, 376. * Pratt V. United States, 3 Nott & " Clark v. Smith, 88 111. 298. H. 106; McHany v. Scheuk, 83 111. " Chambers v. Short, 79 Mo. 204, § 71 PRINCIPAL AND AGENT. 112 to whom he pays the debt, as agent of the principal, has the written security in his possession/ The presumption of authority of the agent to collect a security for a debt in his custody ceases when the security is withdrawn by the principal from his custody;^ so one authorized to sell property, and take a note in payment in the principal's name, after he has delivered the note to the principal, has no authority to receive payment thereof.' Delivering a note, unindorsed, to another for collection, will author- ize him to receive payment and deliver it to the maker, but will not authorize him to sue on it for his own use.* Illustrations. — Plaintiff's traveling salesman sold a bill of goods to defendant on credit. Plaintiff forwarded the goods to the latter, together with a letter and bill of items, upon the top of which was printed a provision that payment must be made to the principal, and that salesmen were not authorized to collect. Defendant's book-keeper received the bill, but the printed stipulation was not read, and afterwards defendant, at his own place of business, paid the agent for the goods. Held, that this did not discharge the debt to plaintiff: Law v. Stokes, 32 N. J. L. 249; 90 Am. Dec. 655. A writ was issued in the name of A as plaintiff, and at the time of issuing it A indorsed thereon that the suit was brought to the use of B. Held, that A thereby made B his agent to receive and collect the amount of the debt sued for, and that as it was for his own use, B might receive anything he thought profjer for the debt: Clark V. Shields, 3 Hawks, 461. An agent was employed for the pur- pose of superintending the sale of stoves and hollow-ware for his principal in a given section of country, and authorized to re- ceive payment therefor in different articles of the produce of the country. Held, not authorized to execute a note payable in such wares at a future day, and thus bind his principal by his acknowledgment of value received: Denison v. Tyson, 17 Vt. 549. Defendant bought ale of B. & Co., who professed to act 1 Tappan v. Morseman, 18 Iowa, 499; ^ Guilford v. Stacer, 53 Ga. 618; Smitli V. Kidd, 68 N. Y. 130; 23 Am. Haines v. Pohlmann, 25 N. J. Eq. 179. Rep. 157. But it has been held that And this is so even where the debt has the possession by an assumed agent of been contracted or negotiated through a promissory note payable to the or- the agent: Haines v. Pohlmann, 25 der of the payee, and not indorsed by N. J. Eq. 129; Smith v. Kidd, 68 N. Y. him, was not alone sufficient evidence 130; 23 Am. Rep. 157. of his authority to authorize a pay- ^ Draper v. Rice, 56 Iowa, 114; 41 ment thereof to himt Doubleday v. Am. Rep. 88. Kress, 50 N. Y. 410; 10 Am. Rep. 502. ^ Padfield v. Green, 85 lU. 529. 113 NATURE AND EXTENT OF AUTHORITY. §§ 72, 73 on their own account. The ale belonged to plaintiff, and was delivered to defendant upon an order for it obtained by B. & Co. from plaintiff. Defendant paid B. & Co. for the ale, and had no knowledge of plaintiff's interest until after the ale was re- ceived and paid for. Held, that plaintiff cannot sue the defend- ant for the purchase-money; that the fact that the order of delivery came from plaintiff was not sufiBcient to give defend- ant notice of plaintiff's right, and that the transaction comes under the doctrines applicable to agents of an undisclosed prin- cipal contracting in their own names, who, when empowered to sell, may receive payment: Lumley v. Corbett, 18 Cal. 494. On a bill presented by an agent was printed in red ink, in small type, a direction to pay at the principal's office, or by check to his order. The employment of the agent was to sell by sample. Held, that a purchaser who had paid, in good faith, the bill to the agent was released from liability to the principal: Trainer V. Morison, 78 Me. 160; 57 Am. Rep. 790. §72. What Powers Implied (Continued) — Renting Store — Rescind Contract. — A principal is liable for the rent of a store occupied by his agent in carrying on his business.' An authority to make a contract gives no au- thority to cancel or rescind it.^ An agent to carry out a contract already made cannot change the contract or make a new oue.^ An authority to sell gives no power to rescind the sale and adjust damages for a breach of war- ranty.* § 73. What Powers Implied (Continued) — To Sell — Settle — Suretyship — Tender — Transfer — Voluntary- Conveyance. — A power to conduct and control the prin- cipal's affairs in his absence does not authorize the sale of his land,** nor a power to locate land.'' To make another " his general and special agent to do and transact all man- ner of business " does not authorize him to sell stocks or other property of the principal.' One employed to drive » Tucker v. Woolsey, 64 Barb. 142; » Gerrish v. Maher, 70 111. 470. 6 Lans. 482. « Bradford v. Bush. 10 Ala. 386. 2 Stoddard v. Warren, 7 Rep. 517; * Watson v. Hopkins, 27 Tex. 637. Diversyv. Kellogg, 44111. 114; 92 Am. « Moore v. Lockett, 2 Bibb, 67; 4. Dec. 154; Stilwell v. Mut. Ins. Co., 72 Am. Dec. 683. N. Y. 385. ^ Hodge ». Combs, 1 Black, 192. Vol. I.— 8 § 74 PRINCIPAL AND AGENT. 114 stock from one town to another has no authority to sell any animal that becomes foot-sore, and his sale passes no title.^ A request in a letter to put certain accompanying lottery-tickets into such hands as he shall think safe will not authorize a sale by him on credit.^ Where one au- thorized his debtor to leave a note or the money with his son, it was held that no authority could be implied from this for the son to sell the note to a stranger.* There is, ordinarily, no implied authority on the part of a commer- cial traveler to sell the samples intrusted to him.* A tele- graph operator cannot settle claims against the company.^ One cannot bind his principal as surety unless specially authorized.® A tender to an agent authorized to receive payment binds the principal.^ A transfer is valid where the owner of bank stock delivers a certificate thereof with an indefinite power of disposition in blank to his agent,' who, representing it as his own, transfers the certificate and power to a purchaser in the course of business as payment for a loan.' A power to sell realty for such price and on such terms as might seem meet will not authorize a conveyance in consideration of natural love and affec- tion,' or for a nominal consideration only." § 74. What Powers Implied (Continued) — Waiver — Warranty. — An agent to sell and deliver thrashing-ma- chines, the purchaser to return the machine within a certain time if it does not work well, has authority to waive such return." An agent to receive articles cannot dispense with their delivery.^^ The authority to make iReitz V. Martin, 12 Ind. 306; 74 Manhattan Ina. Co. ■». Le Pert, 52 Tex. Am. Deo. 215. 504. 2 Brown V. Bull, 3 Mass. 211. » State Bank v. Cox, 11 Rich. Eq. ' Ames V. Drew, 31 N. H., 475. 344; 78 Am. Dec. 459. * Kolm V. Washer, 64 Tex. 131; » Mott v. Smith, 16 Cal. 536. 53 Am. Rep. 745. " Meade v. Brothers, 28 Wis. 689. " Western Union Telegraph Com- " Pitsinowsky v. Beardsley, 37 Iowa, pany v. Rains, 63 Tex. 27. 9; and see Zaleski v. Clark, 44 Conn. « State V. Daspit, 30 La. Ann. 1112; 318, 26 Am. Rep. 446, as to power to Bank of Hamburg v. Johnson, 3 Rich, make condition that article may be 42. returned if not satisfactory. ' Moffatt V. Parsons, 5 Taunt. 307; " Boyett v. Braswell, 72 N. 0. 260, 115 NATUEB AND EXTENT OF AUTHORITY. § 74 contracts for the purchase of grain gives authority to modify or waive such contract.* Authority in a son to keep his father's books and accounts, and to compute the interest due on notes, does not show authority in the son to settle a note by agreeing to take a quantity of corn in full satisfaction.^ An agent of an insurance company, to receive premiums and applications for insurance and transmit policies, has no authority to waive notice of an assignment of a policy.* Where a general agent was au- thorized by an insurance company "to receive applica- tions for insurance and reinsurance, to be submitted for approval," and he was "authorized to make applications binding until disapproval," it was held that an agree- ment made by him to extend a policy not disapproved was valid.* A general authority to sell carries with it an authority to warrant,* but a special authoritjr to sell a particular thing does not.® But there is no authority to warrant as to the future condition of the goods," nor to make an unusual warranty,' ^ Anderson v. Coonley, 21 Wend. Campbell, 13 Ala. 286; Peters v. 279; Owen v. Brockschmidt, 54 Mo. Farubworth, 15 Vt. 155; 40 Am. Dec. 285. 671; Taggart v. Stanbery, 2 McLean, ^ Reynolds v. Ferree, 86 HI. 570. 543; Andrews v. Kneelaud, 6 Cow. ^ Tate V. Citizens' etc. Ins. Co., 13 354; Ferguson v. Hamilton, 35 Barb. Gray, 79. 427; Milburn v. Belloui, 34 Barb. 607; * Leeds v. Mechanics' Ins. Co., 8 MoCormiuk v. Kelly, 28 Minn. 135. N. Y. 357. If it is the custom of the particular * Schuchardt v. Allen, 1 Wall. 359; trade: Pickert v. Marston, 68 Wis. Tice ». Gallup, 2 Hun, 446; Nelson «. 465; 60 Am. Rep. 877; Scott v. Cowing, 6 Hill, 337, overruling Gib- McGrath, 7 Barb. 53; Lipscomb v. son V. Colt, 7 Johns. 390; Sandford v. Kitrell, 11 Humph. 256. Handy, 23 Wend. 260; Bryant v. " Cooley v. Perriue, 41 N. J. L. Moore, 26 Me. 84; 45 Am. Dec. 96; 322; 32 Am. Rep. 210; Brady v. Todd, Randall v. Kehlor, 60 Me. 37; 11 Am. 9 Com. B., N. S., 592. Rep. 169; Gaines v. Mcliinley, 1 Ala. ' lUustrations: A was authorized 446; Bradford v. Bush, 10 Ala. 386; by B to sell flour. Held, that A had Ezel V. Franklin, 2 Sneed, 236; Frank- no authority to warrant that the flour lin V. Ezell, 1 Sneed, 497; Hunter would keep sweet during a sea-voyage: V. Jameson, 6 Ired. 252; Boothby v. Upton u. Suffolk Mills, II Cush. 586; Scales, 27 Wis. 626; Woodford v. 59 Am. Deo. 163. B's agent takes McClenahan, 4 Gilm. 85; Murray v. goodi of C to sell on commission. Brooks, 41 Iowa, 45; Fay v. Rich- He has no authority to guarantee mond, 43 Vt. 25; Palmer v. Hatch, 46 the price they will bring: Quinn v. Mo. 585; Morris v. Bowen, 52 N. H. Carr, 6 Thomp. & C. 402; 4 Hun, 416; Croomv. Shaw, 1 Fla. 211; Skin- 259. ner v. Gunn, 9 Port. 305; Cooke v. « Palmer v. Hatch, 46 Mo. 585. § 75 PRINCIPAL AND AGENT. 116 nor to warrant goods not usually sold with a warranty.* A buyer who knows the kind of warranty which the agent is authorized to give cannot take from him an unauthor- ized warranty and hold the principal on it.^ A power to sell land authorizes a conveyance with a general war- ranty.' A general agent for the sale of safes has no au- thority to warrant them burglar-proof in the absence of a general custom, presumably known to buyer and seller, to do so.* A power given by a seller of certain sacks of wool to a third person, to weigh the same and deliver them to the buyer, does not authorize the agent to make any war- ranty on the part of the seller as to the quality of the wool.^ Illustrations. — A made a warranty that whisky which he was authorized to sell by B would not be seized for a prior vio- lation of the revenue laws. Held, not binding on B: Palmer v. Hatch, 46 Mo. 585. C wrote to his agent that he proposed to " place " his goods at a certain price. Held, that the agent had no authority to warrant that his principal would not sell for a less price: Anderson v. Bruner, 112 Mass. 14. § 75. Carrier's Agents. — A contract for the carriage of goods, made with an agent of the carrier, is the same as if made with the carrier himself.* A general freight agent can bind the railroad company by a contract with a shipper to furnish a certain number of cars at. a certain place on a certain day.^ The agents of an express com- pany cannot bind their principal for goods received out- side the ofSce.* ' An agent employed to sell bank * Richmond Trading and Mfg. Co. stock has no authority to -warrant it: v. Farquar, 8 Blackf. 89. Smith V. Tracy, 36 N. Y. 79. " Mayall v. Boston etc. R. R. Co., 19 '' Wood Mowing and Reaping Ma- N. H. 122; Reynolds v. Toppan, 15 chine Co. v. Crow, 70 Iowa, 340. Mass. 370; 8 Am. Deo. 110; Goodrich s Vanda v. Hopkins, 1 J. J. Marsh, v. Thompson, 4 Rob. 75; 44 N. Y. 285; 19 Am. Dec. 92; Peters v. Farns- 324. worth, 15 Vt. 155; 40 Am. Dec. 671. ' Baker v. Kansas City, St. Joseph, See Bronson v. Coflan, 118 Mass. 156. etc. R. R. Co., 91 Mo. 152. * Herring v. Skaggs, 73 Ala. 446; 34 » Cronkite v. Wells, 32 N. Y. 247. Am. Rep. 4. 117 NATURE AND EXTENT OF AUTHORITY. § 76 § 76. Railroad Servants. — A foreman porter, in charge of a station in the absence of the station-master, has no im- plied authority to give in charge a person whom he suspects of stealing the company's property ;* a ticket clerk has no authority to do a similar thing ;^ the agents of a railroad have no authority to make contracts to carry beyond its route f a railroad yard-master has no authority to employ a surgeon for an employee injured by the cars;* nor has a superintendent of a railroad,^ or a station-master,* au- thority to employ a surgeon to attend an injured passen- ger or other person. A station agent has no authority to sign bills of lading for goods not received;'' but he has implied authority to contract to furnish a certain number of cattle-cars at his station on a certain day.' A physician, in the employ of a railroad, with authority to buy medi- cines, has no implied power to contract for board, lodging, and nursing of a person injured by the cars.* The surgeon of a railroad company has no implied authority to bind the company by an agreement to pay for services and meals furnished nurses and others in attendance upon an ' Edwards ?;. London etc. B. R. Co., court in this case, "that a station L. R. 5 Com. P. 445. agent, clothed with the power and ^ Allen V. London etc. R. R. Co., whose duty it is to receive and forward L. R. 6 Q. B. 65. freight, who makes a contract within ^ Wait V. Railroad Co., 5 Lans. 475; the scope of his apparent authority, Burroughs v. Railroad Co., 100 Mass. thereby binds the company he rep- 26; 1 Am. R'ep. 78; Grover Machine resents, although in making such a Co. V. Railroad Co., 70 Mo. 672; 35 contract he may have exceeded hia Am. Rep. 444. authority; and when such company * Marquette R. R. Co. v. Taft, 28 seeks to absolve itself from liability Mich. 289; Cairo etc. R. R. Co. v. arising under such contract, on the Mahoney, 82 111. 73. In England a ground that the agent, although ap- general manager has such authority: parently authorized to make it, in fact Walker v. Railroad Co., L. R. 2 Ex. had no such authority, it must show 228. that the party with whom the contract ° Stephenson w. Railroad Co., 2 Duer, was made had knowledge of the fact 341. that the agent was acting beyond his " Cox y. Raiboad Co., 3 Ex. 268. authority. To show that an agent of ' Baltimore etc. R. R. Co. v. Wil- a railroad company settled for stock kens, 44 Md. 11; 22 Am. Rep. 26. injured does not tend to show his au- But see Armour v. Michigan Central thority to act in regard to the road- R. R. Co., 65 N. Y. Ill; 22 Am. Rep. bed, ditches, or drainage: Drake v. 603. Chicago, Rook Island, etc., R. R. Co., ^ Harrison v. Missouri Pacific R. R. 70 Iowa, 59. Co., 74 Mo. 364; 41 Am. Rep. 318. » Maybery v. Chicago etc. R. R. "It may be safely aifirmed," said the Co., 75 Mo. 492. § 76 PEINCIPAL AND AGENT. 118 employee injured by an accident on the road, and under the surgeon's treatment.* A station agent may bind the carrier by a contract beyond its legal duties and in con- flict with its regulations; he may agree to carry to a place or at a time other than the rules of the company permit.^ The agent of a railroad company for the sale of tickets has authority to make a contract with a passenger which is at variance with the printed conditions of the ticket;' but in the absence of evidence, the presumption is, that a ticket agent at a way-station has no authority to change or modify contracts between the company and its through- passengers.* But an agent employed for the sole purpose of soliciting passengers to patronize the road of the com- pany, and who is not held out by the company as their agent for any other purpose, has no power to bind the company by a contract to receive freight from another road and transport it to the depot of, and ship it on, the road for which he is such agent.* An engineer in the service of a railroad company has no power, with- out special authority, to bind the company by his con- tracts.' Authority to an assistant superintendent to employ a station agent includes the authority to agree on his compensation.* Where a manager of a railroad is authorized, in case of accident, to clear the road, he acts within the general scope of his authority in putting a lot of swine, let loose by an accident, into a farmer's yard." ' Bushnell v. Chicago and North- * MoClure v. Philadelphia etc. R. western R'y Co., 69 Iowa, 620. R. Co., 34 Md. 532; 6 Am. Rep. ^ Piekford v. Railroad Co., 12 Mees. 345. & W. 766; Wilson v. Railroad Co., 18 * Taylor v. Chicago etc. R. R. Co., Eng. L. & Eq. 557; Strohn v. Detroit 74 111. 86. etc. R. R. Co., 23 Wis. 126; Deming ' Gardner v. Boston and Maine R. V. Grand Trunk R. R. Co., 48 N. H. R. Co., 70 Me. 181. 455; Lackawanna R. R. Co. v. Chene- * Alabama Great Southern R. R. Co. with, 52 Pa. St. 382; 91 Am. Dec. 168. v. Hill, 76 Ala. 303. » Burnham v. Grand Trunk R. R. » Hawks v. Locke, 139 Mass. 205; Co., 63 Me. 298; 18 Am. Rep. 220. 52 Am. Eep. 702. 119 DUTIES AND LIABILITIES OP AGENT. § 77 3. Duties and Liabilities Arising- out of the Con- tract OP Agency. CHAPTER IX. DUTIES and liabilities OF AGENT TO PRINCIPAL. § 77. Duties of agent. § 78. To act as agent. § 79. To perform duties in person. § 80. To give notice to principal. § 81. To obey instructions and orders — When excused. § 82. To act in good faith and in principal's interest. § 83. To use reasonable skill and diligence. § 84. Deputies. § 85. Profits belong to principal. § 86. Losses must be borne by principal. § 87. Keeping and deposit of money — Mode. § 88. Remittance by agent — Mode. § 89. To keep accounts. § 90. Cannot dispute principal's title. § 91. Mixing property. § 92. Agent making profits. § 93. Purchasing and selling property. § 94. Agent of both parties. § 77. Duties of Agents. — There are certain duties which the agent owes to his principal, and which the principal has a right to expect of his agent. For a viola- tion of such duties the agent is responsible for all the damages which are the natural result thereof.* And an agent who has become responsible to his principal for the misconduct of his own subagent may recover from such subagent what he has been compelled to pay the princi- pal.^' ' Wita V. Morrill, 66 Barb. 511; Wade, 68 Tenn. 480; Dodge v. Tillot- Price V. Keyes, 62 N. Y. 378; Bell v. son, 12 Pick. 328. Cunningham, 3 Pet. 69; Johnson v. ' Pownall v. Bair, 78 Pa. St. 403. §78 PRINCIPAL AND AGENT. 120 § 78. To Act as Agent. — A paid agent must perform the duties of his office, and if he neglects to enter upon the performance of what he has undertaken to do, he will be liable to the principal.^ A gratuitous agent is not liable for refusing to undertake or for the duties of the agency;^ but once undertaken, he is liable for disre- garding instructions whereby a loss occurs to the princi- pal.' If it is the usage of a place that a mercentile agency should be executed in a particular way, the parties who authorize and agree to exercise this agency impliedly ^ Evans on Agency, 309. ^ Evans on Agency, 325; Elsee w. Gtal- ■ward, 5 Term Rep. 143; Balfet). West, 13 Com. B. 466. In Morrisons. Orr, 3 Stew. & P. 49, 23 Am. Deo. 319, it was held that the non-feasance of a gratuitous undertaking created no lia- bility. In this case Orr placed in the hands of Morrison the exemplification of a judgment rendered against a third person, for which Morrison gave a re- ceipt, in which it was said: "I am to endeavor to collect said amount and pay it over to said Orr." Morrison failed to do anything, and was sued tor damages. The judge instructed the jury that they were bound to infer, in the absence of any evidence on the subject, that Morrison was to receive compensation for his agency, and that he was therefore bound to greater dili- gence than he had exercised, and was liable. On appeal this was held erro- neous. "If," said the court, "Mor- rison had been an attorney, whose business and employment was the col- lection of debts, there is no doubt that the inference drawn by the judge would have been correct. If one re- ceives business within the line of his profession or occupation, and promises attention to it, — or if he does not make an express promise, one would be im- plied, — the law would create a pre- sumption that he was to receive the ordinary compensation, although not a word had been said about compensa- tion. But it seems to me that the presumption rests entirely on the ground that it is in the proper line of the business of the person so under- taking it; and, if not accustomed to such agencies for hire, that the law, so far from presuming that a compensa- tion was to be received, would infer that it was a mere naked agency, or mandatory, in which compensation is not an ingredient in the undertaking. It is one of those friendly offices that, in our relations with society, daily oc- cur, without either party ever thinking of compensation. This distinction is recognized by Chief Justice Kent in Thorne v. Deas, 4 Johns. 84. If, then, it was a voluntary and gratuitous agency, without reward, the agent was not liable for a non-feasance; he might perforin his undertaking or not, as suited his convenience. It is true, by the civil law, he would be liable to the mandator for all damages that en- sued from his failure to perform his promise; but quite a different rule pre- vails at common law. By the latter such contracts are held to be of im- perfect obligation, and not to be en- forced at law for want of a sufHcient consideration. In a case where one joint owner of a ship promised tlie other joint owner to have an insurance effected, and failed to do so, on the ship being lost, a suit was brought, and the promise was held to be nudum pactum: Thorne v. Deas, 4 Johns. 84. It should, at any rate, have been mat- ter of proofs before the jury, whether Morrison was to receive compensation or not." s Williams v. Higgins, 30 Md. 404; Benden v. Manning, 2 N. H. 289; Pas- sano V. Acosta, 4 La. 26; 23 Am. Dec. 470. 121 DUTIES AND LIABILITIES OF: AGENT. §§ 79, 80 incorporate this usage into their contract.* "Whatever acts are usually done by such classes of agents, 'whatever rights are usually exercised by them, and whatever duties are usually attached to them, all such acts, rights, and duties are deemed to be incidents of the authority con- fided to them in their particular business, employment, or character. These, indeed, are in some cases so well known and so well defined in the common negotiations of commerce, and by the frequent recognition of courts of justice, as to become matters of legal intendment and inference, and not to be open for inquiry or controversy. In other cases, indeed, they may be fairly open as mat- ters of fact, to be established by suitable proofs."^ § 79. To Perform his Duty in Person. — An agent, as we have seen,* cannot delegate his authority to another. But one who has reason to expect the arrival of a draft at his ofiBce for the benefit of his principal is bound, if he leaves the ofi&ce for several days together, to leave au- thority with some one to open letters, and present the draft in case of its arrival during his absence.* § 80. To Give Notice to Principal. — It is the duty of an agent to give his principal notice of every fact which it is to the interest of the principal to know for his guid- ' Lawson on Usages and Customs, Buckingham, 36 Conn. 395; Daylight- sec. 142; Wharton on Agency, sec. Burner Gas Co. v. Odlin, 51 N. H. 56; 134; Young v. Cole, 3 Bing. N. C. 724; MoKinstry v. Pearsall, 3 Johns. 319; Sutton V. Tatham, 10 Ad. & E. 27; Smith o. Tracy, 36 N. Y. 79; Rosen- Bayliffe v. Butterworth, 1 Ex. 445; stock v. Tormey, 32 Md. 169; 3 Am. Graves v. Legg, 2 Hurl. & N. 210; Eep. 125; American Central Insur- Piokering v. Buck, 15 East, 38; ance Co. v. McLanathan, 11 Kan. Brady v. Todd, 9 Com. B., N. S., 533. And see Russell v. Hankey, 6 592; Frank w. Jenkins, 22 Ohio St. Term Rep. 12; Belcher v. Parsons, 577; Schuchardt ». Allen, 1 Wall. Amb. 219; Caffrey v. Darby, 6 Ves. 359; Greely v. Bartlett, 1 Greenl. 496; Maasey v. Banner, 1 Jacob & W. 172; 10 Am. Dec. 54; Randall v. 241. Kehlor, 60 Me. 37; 11 Am. Rep. 169; ' Story on Agency, sec. 106. Goodeuow v. Tyler, 7 Mass. 36; 5 ' Ante, Chapter V., Delegation of Am. Dec. 22; Upton v. Suffolk Mills, Authority. 11 Cush. 586; 59 Am. Dec. 163; Day * Brady v. Little Miami R. R. Co., V. Holmes, 103 Mass. 306; Willard v. 34 Barb. 249. § 81 PEINCIPAL AND AGENT. 122 ance,* and to notify him immediately of his receipt of money .^ The knowledge of an agent in the course of his agency is the knowledge of the principal.* And so is knowledge acquired by him while not acting as agent, if he had it in mind when he was afterwards acting for his principal.* § 81. To Obey his Instructions and Orders. — An agent must follow strictly the instructions and orders of his principal, and will be liable for not doing so.° A disre- gard of instructions cannot be excused on the ground of usage." If the agent disobeys his orders he is liable to the principal, even though he acts in good faith,^ or his deviation was advantageous to the principal,* or he in- tended to benefit his principal.® And if, in violating his instructions, he obtains a profit, it belongs to the princi- pal.'" A violation by an agent of the positive instructions of his principal is gross negligence, and renders him liable 1 Clark V. Bank of Wheeling, 17 Pa. 66 Barb. 511; Eobinson Machine Co. St. 324; Moore v. Thompson, 9 Phila. v. Vorse, 52 Iowa, 207; Stearine etc. 164; Brown ii. Arrott, 6 V^'atts & S. Co. v. Heintzman, 17 Com. B., N. S., 416; Porrestier v. Bordman, 1 Story, 56; Thompsons. Stewart, 3 Conn. 171; 44; Dodge v. Perkins, 9 Pick. 368; and 8 Am. Dec. 168; Szymanski v. Plas- see Callar «. Ford, 45 Iowa, 331. san, 20 La. Ann. 90; 96 Am. Dec. 2 Lyle c Murray, 4 Sand. 590; Mo- 382. Mahan v. Franklin, 38 Mo. 548. ^ Lawson on Usages and Customs, s Hunter v. Watson, 12 Cal. 363; 73 sec. 153; Day v. Holmes, 103 Mass. Am. Deo. 543. 306; Cropper v. Cook, L. R. 3 Com. P. * Wilson V. Minn. etc. Ins. Co., 36 194; Pickerings. Demerritt, 100 Mass. Minn. 112; 1 Am. St. Rep. 659; and 406; Rosenstock v. Tormey, 32 Md. see pos*, Division 4, Notice. 169; Parsons w. Martin, 11 Gray, 112; s Clark V. Roberts, 26 Mich. 506; Strong v. Bliss, 6 Met. 393; Barksdale Wilson V. Wilson, 26 Pa. St. 393; Fol- t). Brown, 1 Nott & McC. 517; 9 Am. lansbee v. Parker, 70 111. 11; Smith v. Dec. 720; Hall v. Storrs, 7 Wis. 253. Lascelles, 2 Term Rep. 187; Park v. ' Laverty v. Snethen, 68 N. Y. 522; Hammond, 4 Camp. 344; Scott v. 23 Am. Rep. 184; Bank of Owensboro Rogers, 31 N. Y. 676; Courcier v. Rit- v. Western Bank, 13 Bush, 526; 26 ter, 4 Wash. C. C. 551; Hall v. Storrs, Am. Rep. 211; Williams v. Littlefield, 7 Wis. 253; Williams v. Higgins, 30 12 Wend. 362. See Price v. Keyes, Md. 404; Brown v. McGran, 14 Pet. 62 N. Y. 378. 479; Blot V. Boiceau, 3 N. Y. 78; 51 ^ McDermid v. Cotton, 2 Bradw. Am. Dec. 345; 1 Sand. Ill; Xenos v. 297; Shipherd «. Field, 70111. 438. Wickham, L. R. 2 H. L. 296; Bundle » Scott v. Rogers, 31 N. Y. 676; V. Moore, 3 Johns. Cas. 36; Marfield Evans v. Root, 7 N. Y. 186; 57 Am. V. Douglass, 1 Sand. 361; Johnson v. Deo. 512; Rechtsoherd v. Bank, 47 Railroad Co., 31 Barb. 198; Ure v. Mo. 181. Curell, 16 Mart. 502; Wilts v. Morrell, " Story on Agency, sec. 192. 123 DUTIES AND LIABILITIES OP AGENT. § 81 for such loss or damage as may result from it, and in such case every doubtful circumstance is construed against him.' But he is not obliged to perform an immoral or an illegal act, even though required by the principal.^ But an agent sued by his principal for profits or money paid to him cannot set up that the transaction was ille- gal.^ A deviation from or failure to carry out his orders, caused by necessity or an extraordinary emergency, will be justifiable.* The acceptance of bills by an agent, to avoid the suspension of work of great importance to the principal, does not fall within that class of cases of ex- traordinary emergency or overruling necessity in which, from the very necessities of the ease, an agent is justi- fied in deviating from the authority conferred on him.' And an agent will not be responsible for not following strictly the instructions of the principal where such in- structions are ambiguous or doubtful as to their mean- ing.* If a principal gives his agent instructions capable of two constructions, the agent is protected if he acts in good faith on either.' One who is authorized to draw drafts on another " at ten or twelve days," with nothing to indicate whether ten or twelve days after date or after sight is meant, may exercise his own discretion, and con- ' Adams v. Kobinson, 65 Ala. 586. 1 Story, 43; Gould v. Eich, 7 Met. ' Evans ou Agency, 293; Story on 556; Lawler v. Keaquick, 1 Johns. Agency, sec. 195; Wharton on Agency, Caa. 175; Judson v. bturges, 5 Day, sec. 249; Le Guen v. Gouvernenr, 1 556; Wharton on Agency, sec. 388; Johns. Cas. 436; 1 Ara. Dec. 121; Bernard v. Maury, 20 Gratt. 434; Curran v. Downs, 7 Mo. .'329; Cannan Weakley v. Pearce, 5 Heisk. 401; V. Bryce, 3 Barn. & Aid. 179; Webster Shaw v. Stone, 1 Cush. 228. V. De Tastet, 7 Term Rep. 157; Arm- ' Sewanee Mining Co. v. McCall, 3 strong V. Toller, 11 Wheat. 258. Head, 619. ' Pointer v. Smith, 7 Heisk. 137; * De Tastel v. Cronisallat, 2 Wash. Brooks V. Martin, 2 Wall. 70; Baldwin 0. (J. 132; Marsh v. Whitmore, 21 V. Potter, 46 Vt. 402; Murray v. Van- Wall. 178; Vianna v. Barclay, 3 Cow, derbilt, 39 Barb. 140; Daniels v. Bar- 281; Jervis «. Hoyt, 2 Hun, 637; Fos- ney, 22 Ind. 207; Mayor v. Draper, 23 ter v. Rockwell, 104 Mass. 167; Bes Barb. 425. sent v. Harris, 63 N. C. 542; Long v, * Jervis v. Hoyt, 2 Hun, 637; Catlin Pool, €8 N. C. 479; Ireland v. Living V. Bell, 4 Camp. 183; Greenleaf v. ston, L. R. 5 H. L. Cas. 395; Me- Moody, 13 Allen, 363; Liotard v. chanics' Bank v. Merchants' Bank, 6 Graves, 3 Cainea, 226; Dusar v. Perit, Met. 13. 4 Binu. 361; Williams v. Shackleford, ' Minnesota Linseed Oil v. Monta- 16 Ala. 318; Forrestier i). Bordman, gue, 65 Iowa, 67. 81 PRINCIPAL AND AGENT. 124 suit his own convenience in that particular.* And so a slight and unimportant deviation from his instructions will not render the agent liable to the principal.'' Illustrations. — W. gave a draft to an express company to collect, with instructions to return it at once if not paid. On their presenting it to the drawee, he asked them to wait until he had received certain explanations from W., which they agreed to do. Afterwards, and before the draft was again pre- sented to him, the drawee became insolvent. Held, that the company was responsible for the loss: Whitney v. Merchants' Ex- press Co., 104 Mass. 152; 6 Am. Rep. 207.' A principal directed his agent to remit him three hundred dollars in bills of fifty dol- lars or one hundred dollars each; the agent sent the amount in bills of five dollars, ten dollars, and twenty dollars. The sum was lost or stolen in transitu. Held, that the agent was liable: Wilson V. Wilson, 26 Pa. St. 393.* An owner directed his agent to ' Barney v. Newcomb, 9 Cush. 46. ^ Evans on Agency, 309. ^ "It is the first duty of an agent," said the court, "whose authority is limited, to adhere faithfully to his in- structions in all cases to which they can be properly applied. If he ex- ceeds or violates or neglects them, he is responsible for all losses which are the natural consequences of his act " : Whitney v. Merchant^' Exchange Co., 104 Mass. 152; 6 Am. Eep. 207. * "The primary obligation of an agent," said the court in this case, "whose authority is limited by in- structions, is to adhere faithfully to those instructions in all cases to which they ought properly to apply: Story on Agency, sec. 192. He is in general bound to obey the orders of his prin- cipal exactly, if they be imperative, and not discretionary; and, in order to make it the duty of a factor to obey an order, it is not necessary that it should be given in the form of a com- mand. The expression of a wish by the consignor may fairly be presumed to be an order: Story on Contracts, sec. 359; Brown v. McGran, 14 Pet. 494. It is true that instructions may be disregarded in cases of extreme ne- cessity, arising from unforeseen emer- gencies, or if performance becomes impossible, or if they require a breach of law or morals: Story on Agency, sec. 194. These are, however, excep- tional cases. There may, perhaps, be others which have been sanctioned by adjudications, founded on the princi- ple that the departure complained of was not material. But the general rule is as indicated in what has been said, and the case before the court was not brought within any of the excep- tions. To justify a departure from instructions, where a loss has resulted from such deviation, the case must be brought within some of the recognized exceptions. It is not sufficient that the deviation was not material, if it appear that the party giving the in- structions regarded them as material, unless it be shown affirmatively that the deviation in no manner contributed to the loss. This may be a difficult task in a case like the present; but the defendant voluntarily assumed it when he substituted his own plan for that prescribed by the plaintiff. To force a man to perform an executory con- , tract after substituting for the consid- eration other terms than those provided for in the bargain is to deprive him of the right to manage his own busi- ness in his own way. To do this on the ground that the departure is not material, when it is manifest that the party considered it otherwise, is a vio- lation of private right, which leads to uncertainty and litigation without ne- cessity or excuse. In Nesbit v. Burry, 25 Pa. St. 210, this court refused to com- 125 DUTIES AND LIABILITIES OP AGENT. § 81 procure insurance on a vessel to sail as soon as certain frigates, "calculating to take advantage of their protection." She sailed ■without them, and was captured. Held, that the agent was not liable for not having effected insurance, as it would have been of no avail: Alsop v. Coit, 12 Mass. 40. An agent ap- pointed by creditors to settle certain claims received from the debtor promissory notes, which before maturity he sold for less than the face thereof, without informing his principals. On being called upon to account, he denied that he had received anything on the notes for which he was liable to account. Held, that the sale was without authority, and the principals could recover from the agent the full amount of the notes: Allen V. Brown, 44 N. Y. 228; affirming 57 Barb. 86. An owner instructed his agent in Liverpool to hold flour until an expected act of Parliament had produced its effect upon the market, and then to sell. Held, that it was left to the agent's judgment to determine when the effect was produced, and that he was not liable for an error in judgment, if he acted in good faith and with reasonable prudence: Milbanh v. Dennistoun, 21 N. Y. 386. The principal instructed his agent to buy goods, and draw upon W., his banker, having funds, for thirty and sixty days, for the price. The agent drew at four months, and about three weeks before the bill fell due the banker failed. Held, that the principal was not bound to take up the bill, as against the agent: Potter v. Everett, 2 Hall, 252. An agent, having received money of the principal, was directed to remit it by purchasing a bill of exchange. He purchased the bill upon his own credit, using the funds of his principal as his pel a man to give up his oxen, although adopted by the vendor, he as3umea he had sold them and received part the risk in case of loss, unless it be of the purchase-money, because it was shown that his deviation in no way a part of the contract that they were contributed to the loss. Where the sold by weight, and the weight was to goods are stolen, how can this be be ascertained by 'the scales at Mount shown? In sending bank notes by Jackson.' The scales designated were mail, it is manifest that while a large so out of repair that the weight could package would attract the attention not be ascertained by them, and it was and care of honest agents on the route, held that no others could be substi- it might tempt the cupidity of dishon- tuted against his consent, so as to di- est ones. The party who proposes to vest his right of property. Whether take the risk of this method of remit- an action for damages coulyd have been tauce has a right to weigh the advan- Bustained was not the question there; tages and disadvantages of the various nor is it the question here. As be- methods of inclosing the notes; and if tween vendor and vendee, the right of he directs the money to be remitted property,and the consequent risk, vests in notes of one hundred dollars or fifty on delivery of the goods purchased by dollars, the debtor has no right to in- the designated carrier, packed, and crease the size of the package by re- directed according to usage or instruc- mitting in notes of ten dollars and five tiona. But if a different method of dollars. There was error in permitting packing and directing, or a different the jury to find that the departure earner than the one designated, be from instructions was immaterial." § 82 PRINCIPAL AND AGENT. 126 own. Held, that such a purchase was not authorized; that the agent remained liable for the money: Stone v. Hayes, 3 Denio, 575. An agent to buy and ship wheat to Nashville shipped a quantity to Sanders's Ferry, on the Cumberland River. The boat containing it sank when near its destination, and the agent sold the wheat to the carrier. Held, that the emergency did not authorize this. Foster v. Smith, 2 Cold. 474; 88 Am. Dec. 604. An agent was directed to forward a claim to a certain person for collection, but forwarded it to another. Held, liable for any loss resulting thereby: Butts v. Phelps, 79 Mo. 302. A principal authorized his agent to sell, on condition that pay- ment was secured by paper " unquestionably good." The pur- chasers were notoriously insolvent, and their notes were not collectible. Held, that the principal had a valid claim against the estate of his agent, who had died intestate: Robinson Ma- chine Works V. Vorse, 52 Iowa, 207. An agent employed to subscribe for stock in a railroad company for his principal, and in his principal's name, subscribed and paid calls in his own name, and afterwards procured a certificate, and tendered a transfer to the principal, who refused to take and pay for them. Held, that the agent could not recover. He should have sub- scribed in the principal's name : Shrack v. McKnight, 84 Pa. St. 26. Plaintiff employed defendant to take two horses to Richmond, Virginia, to exhibit at the fair, and to sell for the best price he could get, for which he was to be paid for his services and trav- eling expenses. He sold one horse, but was unable to sell the other. He then received a letter from plaintiff, directing him to see some men in Petersburg, who might direct him to a pur- chaser. He went there, saw them, but effected no sale. He then, without instructions, but in good faith, took the horse to various places in North and South Carolina. In the latter he finally sold him, but not until his expenses had amounted to a considerable sum. Held, that the agent, after he left Peters- burg, exceeded his instructions, and was not entitled to pay or traveling expenses after that time: Fuller v. Ellis, 39 Vt. 345'; 94 Am. Dec. 327. § 82. To Act in Good Faith and in Interest of Princi- pal. — The agent's position being one of trust, he must act in good faith and to the principal's interest.' The relations between an attorney in fact, who undertakes to care for and protect the^land of his principal, and nego- tiate sales of the same, and the principal, are of a fiduciary nature, and the agent must not put himself, during his ' Holladay v. Davis, 5 Or. 49. 127 DUTIES AND LIABILITIES OF AGENT. § 83 agency, in a position which is adverse to that of the prin- cipal.^ If one acts as agent of another, and uses his money in making a purchase of land at sheriff's sale, but buys in his own name, the interest he acquires by the purchase vests in equity in his principal.^ Illustrations. — A was indebted upon a note and mortgage to B, in the sum of forty thousand dollars. B assigned the note and mortgage to C, and received from him his notes in lieu thereof. Afterwards A mortgaged to C, together with other property, the property previously mortgaged to B, subject to first mortgage, for which C was to advance to A, from time to time, sums of money, not to exceed twelve thousand dollars, to enable A to pay his debts. By this mortgage C was authorized to receive the rents of the mortgaged premises, and apply them to the payment of the twelve thousand dollars and interest, and in case the rents should not be sufficient for that purpose, and A should not pay within two months after request, then C was to sell, and out of the proceeds to pay the amount and interest so advanced. C at various times advanced to A nearly twelve thousand dollars, and collected rents to the amount of twenty- eight thousand dollars. Subsequently C died, and then his executor collected the rents. Held, in an action by A against C's administrator, that C acted in the purchase of the note and mortgage of B as an agent of A, and that A was entitled to the trust fund: Gunter v. Janes, 9 Cal. 643. In an action to fore- close a mortgage where K. defended as a subsequent purchaser of the mortgaged property, the lower court having found as a fact that K. was the agent of plaintiff, and acted as such in procuring the note and mortgage, and receiving interest upon the note, but without stating more particularly the duties de- volving upon him as agent, the appellate court refused to infer from this that his duties as agent were of a character which prevented him from contracting in relation to the property on which the debt was secured: McCarthy v. White, 21 Cal. 495. § 83. To Use Reasonable Skill and Diligence.— The agent in the execution of the principal's orders must use reasonable skill and diligence, and will be liable to him for the consequences of his negligence.' By reasonable > Rubidoex v. Parka, 48 Cal. 215. field v. Davis, 6 Conn. 442; Levericb " Green v. Clark, 31 Cal. 591; see v. Meigs, 1 Cow. 645; Shiells v. Blaok- post, Division 4, Trustees. burne, 1 H. Black. 158; Moore v. Ghol- ' Myles V. Myles, 6 Bush, 237; K«d- son, 34 Miss. 372. § 83 PRINCIPAL AND AGENT. 128 skill and diligence is meant that ordinarily possessed by persons in the same trade or business, and generally used by persons of common capacity in their own affairs/ And an agent will never be permitted to profit by his negligence towards his principal.^ But for mere errors of judgment the agent is not responsible.^ In a leading English case it is laid down that if A, a general merchant, undertakes voluntarily, without reward, to enter a parcel of goods for B, together with a parcel of his own of the same sort, at the custom-house for exportation, but makes the entry under a wrong denomination, whereby both parcels are seized, A having taken the same care of the goods of B as of his own, not having received any reward, and not being of a profession or an employment which necessarily implied skill in what he had undertaken, is not liable to an action for the loss occasioned to B.'' Where one sends money to a commission merchant with which to buy wheat, telling him to buy sound wheat, if the agent exercises reasonable care and skill he is not liable if the wheat is damp.^ Illustrations. — On the 30th of March, an agent to sell for cash took a promissory note in part payment, when he might have had cash, and on the 28th of May, in answer to a demand for the proceeds, said he knew nothing of the matter. Held, that the jury were warranted in finding an unreasonable delay to settle, although the note had not then been paid : Hemenway V. Hemenway, 5 Pick. 389. A master of a ship, with orders to sell the cargo at a foreign port, held not liable for leaving it there with a merchant for sale, he not having been able to effect a sale himself: Day v. Noble, 2 Pick. 615; 13 Am. Dec. 463. ■ Chapman v. Walton, 10 Bing. 57; tins v. Scudder, 71 111. 86, to the e£- Howard v. Grover, 28 Me. 97; Me- feet that an agent to insure is not a Oandless v. McWha, 22 Pa. St. 261. guarantor of the solvency of the com- A principal who knowingly employs panies in which he places the insur- an incompetent agent cannot be heard ance. to complain: Wakeman v. Hazleton, 3 * Shiells v. Blackburne, 1 H. Black. Barb. Ch. 148. 158. 2 Mitchell V. Aten, 37 Kan. 33; 1 ' Lake City Flouring Mill Co. v. Am. St. Eep. 231. McVeam, 32 Minn. 301. 3 Page V. Wells, 37 Mich. 415; Get- 129 DUTIES AND LIABILITIES OF AGENT. §§ 84, 85 § 84. Deputies. — An agent who has authority to ap- point deputies is liable for negligence in appointing them, but not for their negligent acts.' An agent is liable to his principal for the neglect of a subagent employed by the agent, with the principal's knowledge, but upon the agent's account.* § 85. Profits Belong to Principal. — All profits directly or indirectly made by an agent in the course of or in con- nection with his employment, whether in performance of or in violation of his duty, belong to the principal." Where an agent acts for an agreed salary, or where there is no express contract in reference to his compensation, he will not be allowed to retain profits incidentally obtained in the execution of his duty, any usage to the contrary notwithstanding; and all profits and advantages over and. above the agent's ordinary compensation belong to the principal.^ So a trustee or guardian who speculates with trust funds is liable for the profits made by him.* There is nothing, however, to prevent both parties from agreeing that the benefit of certain profits shall belong to the agent," or the principal may ratify the agent's conduct.' 1 Warren Bank v. Suffolk Bank, 10 Jeffries v. Wiester, 2 Saw. 135; Oliver Cush. 5S5; Campbell v. Reeves, 3 v. Piatt, 3 How. 333; Judevine v. Head, 226; Bath v. Oaton, 37 Mich. Hardwick, 49 Vt. 180; Leake v. Suth- 199; Tiernan v. Commercial Bank, 7 erland, 25 Ark. 219; Clark v. Ander- How. (Miss.) 648; 40 Am. Dec. 83; son, 10 Bush, 99; Krutz v. Fisher, 8 Commercial Bank v. Martin, 1 La. Kan. 90; Moiuett v. Day, 1 Baxt. Ann. 344; 45 Am. Dec. 87. But see 431; Bell v. Bell, 3 W. Va. 183; Jlor- Morgan v. Tener, 83 Pa. St. 305. isou v. Thompson, L. R. 9 Q. B. 483; 2 Barnard v. Coffin, 141 Mass. 37; 55 Barber v. Dennis, 6 Mod. 69; Diplock Am. Rep. 443. v. Blackburn, 3 Camp. 43; Wiley's ^ Evans on Agency, 333; Bain v. Appeal, 8 Watts & S. 244; Marvin v. Brown, 56 N. Y. 285; Dutton v. Will- Buchanan, 62 Barb. 468; White v. ner, 52 N. Y. 312; Brown v. Post, 1 Ward, 26 Ai-k. 445; Rhea v. Puryear, . Han, 303; Dodd v. Wakeman, 26 N. 26 Ark. 344. J. Eq. 414; Campbell v. Ins. Co., 2 *. Jacques u. Edgell, 40 Mo. 76. Whart. 64; Barthnlemew v. Leech, 7 ^ Norris's Appeal, 71 Pa. St. 106; Watts, 472; Norris's Appeal, 71 Pa. St. Bond v. Lockwood, 33 111. 212; see 106; Coursin's Appeal, 79 Pa. St. 220; Division 3, Trustees. Laffertyt). Jelley, 22Ind. 471; Acken- "Anderson v. Weiser, 24 Iowa, burgh V. McCool, 36 Ind. 473; Barton 428. V. Moss, 32 111. 50; Mason ». Bauman, ' Great Western Ins. Co. v. Cun- 62 111. 76; Ely v. Hanford, 65 111. liffe, L. R. 9 Ch. 525; Redfield v: 267; Stoner v. Weiser, 24 Iowa, 434; Tegg, 38 N. Y. 212. Vol. L— 9 § 86 PRINCIPAL AND AGENT. 130 Illustrations. — An agent is employed to sell property at a certain price. He sells for a greater price. lie must account to the principal for the excess: Kerfoot v. Hyman, 52 III. 512; Mcrryman v. David, 31 111. 403. (But he is not liable to the purchaser: Id.) An apprentice was impressed by the gov- ernment as a sailor and earned certain money. Held, that it belonged to the master: Barber v. Dennis, 6 Mod. 69. A gave B $80 to bay him a horse, for which service B was to receive $1. B obtained the horse for $72.50. Held, that A was entitled to recover from B the sum of $6.50: Bunker V. Mliles, 30 Me. 431; 50 Am. Dec. 632.' A employed a broker to purchase a particular ship on the basis of an oft'er of £9,000, or as cheaply as he could. The ship was purchased for £9,250. Prior to the sale, the vendor had arranged with B that if B could sell the ship for more than £8,500 he might retain the excess, and B had agreed with the broker, without the knowledge of A, that if the sale was consummated, the broker should receive part of the excess over £8,500. After the sale, £225 was paid by B to the broker. Held, that A was entitled to recover this sum from the broker: Morrison v. Thompson, L. R. 9 Q. B. 480.'^ R. cm- ployed W. to compromise with his creditors, and authorized him to offer fifty cents on the dollar. W., while acting as such agent, purchased several notes of R. at that rate, upon his own account, and afterwards sold such notes to J. for the whole nominal amount, after they became due. Held, that J. could not be permitted to recover more than fifty per cent upon the amount of such notes: Reed v. Warner, 5 Paige, 650. A special agent of a company preserved copies of his correspondence with the gen- era] agent. Held, that they belonged to the agent instead of the company: Evans v. Van Hall, 1 Clarke Ch. 22. § 86. Losses must be Borne by Principal. — And as to the priucipal belong the gains, so it is the principal that must bear the losses which may occur in the course of the agency.' ' "If the defendant made a valid ^ "Indeed," Baid Cookbum, C. J., contract with the plaintifFto do the ser- "it may be laid down as a general vice requested as an agent, and did do principle that in all cases where a per- it as was agreed, he was not at liberty son is either actually or constructively to make a profit to himself in the an agent for other persons, all profits transaction in which he was acting as and advantages made by him in the the agent; and whatever sum re- business beyond his ordinary compen- mained in his hands after paying the sation are to be for the benefit of his price of the horse, deducting the com- employers," — indorsing this statement pensatiou to be made to him, was the of the law in Story on Agency, see. money of the plaintiflf, for which the 211; Morison v. O-hompson, L. R. 9 equitable action of money had and re- Q. B. Cas. 480. ceived could be maintained ": Bunker ' D'Arcy v. Lyle, 5 Binn. 441; Kich- V. Miles, 30 Me. 431; 50 Am. Dec. 632. aidsou v. FutreU, 42 Miss. 525. 131 DUTIES AND LIABILITIES OF AGENT. §§ 87, 88 § 87. Keeping and Deposit of Money by Agent — Mode. — If an agent deposit his principal's money in a bank or other depository, using reasonable prudence and care iu its selection, he will not be responsible for the loss of the money caused by its becoming insolvent.^ § 88. Remittances by Agent — Mode. — If an agent re- mits money according to the orders or usage of the prin- cipal, he will not be liable if it is lost in transit. If the agent is instructed to "forward" money, he discharges his duty by sending it in a letter, by mail, and if it is lost, the loss is the principal's.^ An agent to collect money is bound to immediate payment.^ On the other hand, if the agent remits money in an unauthorized mode, the risk is his.* Illustrations. — A authorized B to transmit a sum of money to him, as he, B, might think best. B sent the money by mail, and it was taken from the post-ofSce, and appropri- ated to his own use, by a person authorized by A to take his letters from the oflSce. Held, that A must, as agent of B, suffer the loss: Lamb v. Trogden, 2 Dev. & B. Eq. 190. Defendants were directed to place certain money to plaintiff's credit in the Exchange Bank of Denver, and in order to comply, were obliged to transmit the money from Kansas City, Missouri, to Denver. Held, that defendants had the right to transmit the money by some usual and ordinary method recognized among business men as proper for that purpose; and where there were several methods of transmitting money between those points, equally used by business men, and safe and economical, they might choose either: Earnest v. Stoller, 2 McCrary, 380. A local railroad agent was instructed to remit daily to the headquarters of the company all sums of money received over ten dollars. Held, that he would be allowed a reasonable time, in view of his other duties, to make the remittance, and was not liable for money stolen from him which he did not receive in time to remit as instructed: Robinsonv. Illinois etc.. E. R. Co., 30 Iowa, 401. 1 Knight V. Plymouth, 3 Atk. 480; Rawls, 21 Ga. 289; Lyle v. Murray, 4 Hammon v. Cottle, 6 Serg. & R. 290. Sand. 590. ' Buell V. Chapin, 99 Mass. 594; 97 ' Ferris v. Paris, 10 Johns. 285; Am. Deo. 58. Kerr v. Catton, 23 Tex. 411; Burr v. ' Merchants' Bank of Macon v. Sickles, 17 Ark. 428; 65 Am. Deo. 437. § 89 PRINCIPAL AND AGKNT. 132 § 89. To Keep Accounts — Account for Money. — So it is the duty of the agent to keep regular accounts,' and to account to his principal for money received, goods sold, and orders obtained,^ and even though sucli sales, as be- tween the principal and the purchaser, are illegal.* An agent cannot keep monej- of his principal on the plea that it was given him for an unlawful purpose.* Gross misman- agement by a financial agent, consisting of failure to keep accounts and vouchers, is a defense to his action for salary.^ Money deposited in bank by an agent as an ordinary de- posit, the agent stating that it was his principal's money, but desiring the officer to place it to his credit on the books of the bank, alleging that he might have occasion to use it for the benefit of his principal, may be followed in a court of equity by the principal." A demand by the principal on the agent for moneys received by him is necessary before bringing suit,'' unless so long a time has elapsed since the collection as to raise the presumption that the agent has appropriated the money to his own use,* or unless he has refused or neglected to render an account,' or denies the agency;"* or where a claim is set up exceeding the amount collected, or where the agent in his answer disputes his liability .■"' An agent is liable to the principal for interest on monej' in his hands, where he 'White V. Lincoln, 8 Vea. 363; 1 Ark. 381; 44 Am. Deo. 519; Switzer Wharton on Agency, sec. 299. v. Skiles, 3 Gilm. 529; 44 Am. Deo. ^ Evans on Agency, 339. >23; hut see Leake v. Sutherland, 25 ^ Baldwin v. Potter, 46 Vt. 402. Ark. 210. A mere collecting agent is * Souhegan Bank v. Wallace, 61 N. liable for money collected and not E. 24. paid over without any previous de- <* Smith V. Crews, 2 Mo. App. 269. niand: Little v. Hoyb, 5 Hill, 395; 40 « Whitley v. f oy, 6 Jones Eq. 34; Am. Dec. 360; Sickok v. Hickok, 13 78 Am. Dec. 236. Barb. 633; Schroeppel v. Corning, 6 'Bedell 17. Janney, 4 Gilm. 193; Hed- N. Y. 117. deusw. Younglove, 46Iud. 212; White- ® Bedell v. Janney, 4 Gilm. 193, and head v. Wells, 29 Ark. 99; Haas v. cases cited in last section. Damon, 9 Iowa. 589; Armstrong v. 'Haas v. Damon, 9 Iowa, 589; Smith, 3 Blackf. 251; Jett v. Hemp- Hemenway i>. Hemenway, 5 Pick. stead, 25 Ark. 462; Walrath «. Thomp- 389; Brown v. Arnott, 6 Watts & S. son, 6 Hill, 450; Judah v. Dyoit, 3 402. Blackf. 324; 25 Am. Dec. 113; Baird "> Tillotson r. McCrUlis, 11 Vt. 477; V. Walker, 12 Barb. 301; Walden v. Wiley w. Logan, 95 N. C. 358. Crafts, 2 Abb. Pr. 304; Colvin v. Hoi- " Wiley v. Logan, 95 N. C. 358; brook, 2 N. Y. 130; Taylor v. Spears, Tillotson v. McCrillis, II Vt. 477. 133 DUTIES AND LIABILITIES OF AGENT. § 90 retains it after the period when he should, of right, have turned it over to the principal,* or where he otherwise improperly withholds it from the principal,* or where he has employed it for the purpose of gain for himself.^ An agent who, having received money of his principal to per- form a certain trust, wholly omits to perform his duty, and converts the money to his private use, thereby renders him- self liable to an action ex delicto, or to an action of assumpsit for money had and received to the use of the plaintifif. But where he actually enters upon and performs the duties of the trust, neither of such actions will lie against him for the recovery of an alleged balance of money so intrusted to him. The remedy against him is by action of account render, or by bill in equity.* Where the agent keeps the monej' by him to pay it over when the principal calls for it,® he is not liable for interest. The agent is only called upon to account to his principal. Thus if the principal is the trustee of another, he is not obliged to account to that other,* and a subagent must account to the agent, and not to the principal.^ Illustrations. — A principal drew an order directing his agent to deposit the proceeds of certain lumber to the credit of a third person. The next day he demanded of the agent an account of the proceeds, who replied that he had nothing to do with him, and referred him to such third person. Held, that this did not constitute an unreasonable refusal to account: Torrev V. Bryant, 16 Pick. 628. § 90. Cannot Dispute Principal's Title.— An agent is not allowed to dispute the title of his principal." Thus ' Dodge V. Perkins, 9 Pick. 368. « Attorney-General v. Chesterfield, 2 Anderson v. State, 2 Ga. 370; 18 Beav. 596; but see Turner o Bedell v. Janney, 4 Gilm. 193. Turner, 36 Tex. 41. ^ Williams v. Storrs, 6 Johns. Ch. ' Stevens v. Badcock, 3 Barn & 353; 10 Am. Dec. 340. Adol. 354; Cartwright v. Hately, 1 J f^^^]^^ "• Reeside, 49 Pa. St. 322; Ves. Jr. 292; Cleaves v. Stockwell, 33 88 ^'"■, Dec. 603. Me. 341; see Louisville etc. R. R. Co. Williams V. Storrs, 6 Johns. Ch. v. Blair, 4 Baxt. 407. 353; 10 Am. Dee. 340; Salisbury v. » Aubery v. Piske, 36 N. Y. 47- Wilkmsou, cited in Chedworth v. Ed- Barnabo v. Kabbe, 54 N. Y. 516- wards, 8 Ves. 47. Hancock v. Gomez, 58 Barb. 490; § 91 PRINCIPAL AND AGENT. 134 an agent who has collected money cannot interplead his principal and a third party who claims it.^ An agent who has collected money cannot deny the right of the princi- pal to receive it; e. g., a collector of taxes cannot deny the right of the county thereto because illegally levied.'' But if A verbally employs B as his agent to purchase a house for him, and B makes the purchase, takes the deed in his own name, and pays his own money for it, A cannot compel B to convey.^ Illustbations. — The plaintiflF's agent sold a vessel, and paid the proceeds to the defendant for the plaintiff. Held, the former could not resist the claim of the latter for such money on the ground that the plaintiff did not own the vessel when sold: Jenks v. Manson, 53 Me. 209. § 91. Mixing Property. — He must not mix his own property with that of his principal.^ If the agent seeks to make his principal liable for losses, — as, for instance, by depreciation or theft, — he must keep his principal's money separate and distinct from his own.® Thus where an agent deposits the money of a principal in a bank in his own name, he is liable for the loss if the bank fail." Where an agent mingles his principal's money with his own so that it cannot be followed, the principal cannot recover it specifically. But the agent does not by so doing con- vert himself into a mere debtor; the principal may claim from the admixture the sum which belonged to him.^ Marvin v. El wood, 11 Paige, 365; ^ School District r. First Nat. Bank, Holbrook v. Wight, 24 Wend. 169; 35 102 Mass. 174; Webster v. Pearce, 35 Am. Dec. 607; Collins v. Tillou, 26 111. 159; Bartlett v. Hamilton, 46 Me. Conn. 368; 68 Am. Deo. 398; Reed 435; Massachusetts Ins. Co_. v. Car- V. Dougan, 54 Ind. 306; Firestone v. penter, 2 Sweeny, 734; Marine Bank Firestone, 48 Ala. 128; Bain v. Clark, v. Fulton Bank, 2 Wall. 252. 30 Mo. 252; McNamee v. Keif, 52 Miss. « Hammon v. Cottle, 6 Serg. & R. 426; Betteley v. Reed, 4 Q. B. 411. 290; Case v. Abeel, 1 Paige, 393; In 1 Snodgrass v. Butler, 54 Miss. 45. re Stafford, 11 Barb. 353; Cartmellw. 2 Placer County v. Astin, 8 Cal. 303; Allard, 7 Bush, 482; Massachusetts Clark V. Moody, 17 Mass. 145, 148; Ins. Co. v. Carpenter, 2 Sweeny, 734; Hammond«.Christie,5Rcb.(N.Y.)160. Greene v. Haskell, 5 R. I. 447; Sear- 3 Wallace «. Brown, ION. J. Eq. 308. gent v. Downey, 49 Wis. 524. * Rogers v. Boehm, 2 Esp. 702; ' Farmers' etc. Bank v. Kiug, 57 Pa. Wharton on Agency, sec. 243; Drake St. 202; 98 Am. Dec. 215. V. Martin, 1 Beav. 525. 135 DUTIES AND LIABILITIES OF AGENT. § 92 § 92. Agent Making Profits.— An agent is employed to further the interest of his principal; it is his duty to give to the principal's affairs his care and skill, and to act in all things for his interest. Therefore, it is an old principle of law that an agent shall not be permitted to make a secret profit or advantage out of his agency.' The principle is, that an agent must not use his fiduciary powers for his own benefit.^ He cannot take advantage of information which he has acquired through his posi- tion to use it for his own benefit.' Illusteations. — An agent intrusted with a mortgage for sale was offered four thousand eight hundred dollars for it, but concealed the offer from his principal and purchased it him- self from him for four thousand five hundred dollars. Held, that he must account to the principal for any profit made by him out of the sale: Mason v. Bauman, 62 111. 76. A broker is employed to buy a ship as cheaply as possible. In making the purchase he receives from the vendor a commission. The principal is entitled to it: Morison v. Thompson, L. R. 9 Q. B. 480. A bank president has authority to certify checks. He v/ill not be permitted to certify his own checks: Claflin v. Banl, 25 N.Y. 293. An agent abroad is authorized to sell a cargo for bills on Eng- land to be placed subject to his principal's order. The agent invests them in goods on his own account. He is liable for the profits to the principal; Thompson v. Stewart, 3 Conn. 171 ; 8 Am. Dec. 168. A railroad company, on the application of one of its station agents, agreed to furnish an excursion train for a third party. There was no such third party; but the agent was get- ting up the excursion for his own profit. Discovering this after- wards, the company refused to furnish the train. Held, that .the agent had no right of action: Pegram v. Charlotte etc.. R. R. Co., 84 N. C. 696; 37 Am. Rep. 639.* A warehouseman who was 1 Bain v. Brown, 50 JST. Y. 285; Raiman, £5 Pa. St. 354; 64 Am. Deo. Moore v. Mandlebaum, 8 Mich. 433; 703; Gardner v. Ogilen, 22 N. Y. 327; Cool V. Phillips, GO 111. 217; Coursin's 78 Am. Eec. 102; Norri-Ji;. Taylce. 49 Appeal, 79 Pa. St. 220; Wilson v. 111. 17; 95 Am. Dec. 508. Wilson, 4 Abb. App. 621; 0e *" The plaintiff could not, from his Bussche V. Alt, L. R. 8 Ch. Div. 286; fiduciary relations towards the com- Grumley v. Webb, 44 Mo. 444; 100 pany, enter into a binding contract Am. Deo. 304; Simons v. Vulcan Oil with it. The law, in harmony with Co., 61 Pa. St. 202; 100 Am. Dec. 628; sound morals, refuses its sanction to Miller v. L. & N. R. R. Co., 83 Ala. any measure, though assuming the 274; 3 Am. St. Rep. 722. form of contract, procured by a fidu- 2 Eshelman v. Lewis, 49 Pa. St. 410. clary from his principal ia violation of 2 Rmgo V. Binns, 10 Pet. 269; Reed the trusts reposed in him, and to the V. Norris, 2 Mylne & C. 374; Henry v. injury of the latter, at least unless §92 PRINCIPAL AND AGENT. 136 occupying premises under a lease about to expire was negotiat- ing for a renewal. His clerk, who had access to his books and such principal is fully advised of all the circumstances, aud knows at the time that he is dealing with one then divested of his agency, and acting in an adversary and independent capa- city": Pegram 17. Charlotte etc. E.. R. Co., 84 N. C. 696; 37 Am. Rep. 639. An employee of a lessee of a theater, shortly before his lease expired, se- cretly procured a lease of the premises for a new term to himself at an ad- vanced rent. Held, that he held the new lease as a trustee for his employer: Davis V. Hamlin, 108 lU. 39; 48 Am . Rep. 541. "The obtaining of the lease by Davis," said the court, "amounted to a virtual destruction of his employer's whole business at the termination of the old lease, under which the latter was holding. By some ten years of labor, Hamlin had built up a business of a very profitable character. There was a. good -will at- tached to it, which was valuabla Hamlin was intending to make it a lifetime business. Sustaining this lease to Davis, at the end of Hamlin's lease, April 18, 1883, all this business would come to an end, and pass, good- will and all, from Hamlin, the em- ployer, into the hands of Davis, the employee. And this would have been accomplished by the means of a. re- newal lease obtained by a coniidential agent in violation of the duty of his relation, and acquired, presumably, because of peculiar means of knowl- edge of the profitableness of the busi- ness, afforded him by the confidential position in which he was employed. A personal benefit thus obtained by an agent ec^uity will hold to inure for the benefit of the principal. Public policy, wethink, must condemn such a transaction as that in question. To sanction it would hold out a tempta- tion to the agent to speculate off from his principal to the latter's detriment. Davis very well knew that his em- ployer would be willing to pay a much higher rent than that at which he ob- tained the lease, and that he could dis- pose of the lease to Hamlin at a large profit to himself, and such means of knowledge was derived from his posi- tion as agent. If a manager of a busi- ness were allowed to obtain such a. lease for himself, there would be laid before him the inducement to produce in t'-ie mind of his principal an under- estimate cf the value of the lease, and to that end, maybe, to mismanage so as to reduce profits, in order that ho might more easily acquire the lease for him- self. It is contended by appellant's counsel that the rule we apply, which holds an agent to be a trustee for his principal, has no application to the case at bar, because Davis was not an agent to obtain a renewal of the lease, aud was not charged with any duty in re- gard thereto; that his was but the spe- cific employment to engage amuse- ments for the theater, and that he was an agent only within the scope of that employment; that Hamlin, having a lease which would expire April 16, 1883, had no right or interest in the property thereafter; and that Davis, in negotiating for the lease, did not deal with any property wherein Ham- lin had any interest, and that such property was not the subject-matter of any trust between them. Although there was here no right of renewal of the lease in the tenant, he had a rea- sonable expectation of its renewal, which courts of equity have recog- nized as an interest of value, secretly to interfere with which, and disap- point, by an agent in the management of the lessee's business, we regard as inconsistent with the fidelity which the agent owes to the business of his principaL There was the good-will of the business, which belonged to the business as a portion of it, and this the agent got for himself. It is fur- ther argued that the relation here be- tween Hamlin and Davis was that of master and servant, or employer and employee, and that the rule has never been applied to that relation as a class, and that the classes coming within that doctrine are embraced within the list of defined confidential relations, such as trustee and beneficiary, guardian aud ward, etc. The subject is not comprehended within any such nar- rowness of view as is presented on ap- pellant's part. And applying the rule it is the nature of the relation which is to be regarded, and not the desig- nation of the one filling the relation." 137 DUTIES AND LIABILITIES OF AGENT. § 93 papers, and knew his business pending that negotiation, secretly obtained a lease to himself and another. Held, that they would be compelled to transfer th* lease to the master: Gower v. A.idrcw, 59 Cal. 119; 43 Am. Kep. 242.' A, being financially em- barrassed, called on B to assist him, and agreed to pay B liber- ally for his time and expenses. B accordingly purchased A's outstanding draft, and A gave notes to B in payment therefor. Held, that B was A's agent in purchasing the draft; and that the discount at which he secured it must inure to A's benefit: Noyea v. Landon, 59 Vt. 569. An agent by false and fraudulent representation sold goods from his principal to himself so as to realize from a rise in value. Held, that he was liable for ex- emplary damages: Peckham Iron Co. v. Harper, 41 Ohio St. 100. A principal agreed to pay his agent a certain commission on the amount for which land was sold if the agent furnished a buyer within a certain time at not less than a certain price, and the agent furnished a purchaser at more than that price. Held, that the agent was not entitled to any surplus above the fixed price: Blanchard w. Jones, 101 Ind. 542. § 93. Purchasing and Selling Property. — Therefore an agent is not allowed to purchase his principal's property, which is in his hands to manage and direct.^ An agent ' " We understand it to he the duty be said that he was, by virtue of his of the employee," said the court, " to employmeut, charged with the duty of dovotb his entire acts, so far as his furthering their interests, and with the acta may affect the business of his em- duty of not using the information ob- ployer, to the interests and service of tained by him as their employee to the employer; that he can engage in their detriment. It seems to us that no business detrimental to the busi- if Andrew desired to engage in the nes3 of the employer; and that he same business as his employers, on his should in no case be permitted to do own account, a very plain and very for his own benefit that which would proper course was open to him, viz., to have the effect of destroying the busi- state to them all the facts, and ask ness to sustain and carry on which them to determine whether they de- his services have been secured. An sired a renewal. By pursuing the agent should not, any more than a course which ho did, he gave to Hop- trustee, adopt a course that will oper- kins an inducement not only not to ate as an inducement to postpone the give plaintiffs a renewal at a decreased principal's interest to his own. An rental, but also an inducement not to agent or subagent who uses the in- renew at the then rental, and he com- f ormation he has obtained in the course pelled plaintiffs to have an unknown of his agency as a means of buying for competitor who based his action upon himself will be compelled to convey knowledge acquired by him while in to the principal: Elliott v. Merryman, their employ. We do not think that 1 Lead. Cas. Eq. 91. It may be said this is equity or good conscience." that Andrew was not the agent of ' The clerk of an agent to sell lands plaintiffs so far as concerns the obtain- who is employed or concerned in the ing of a renewal of the lease; that he affairs of the seller relating to the was not charged with the duty of ob- lands is alike with his principal pro- taiuing a renewal; it must, however, hibited from' purchasing, and if he § 93 PKINCIPAL AND AGENT. 138 employed to purchase property for his principal cannot purchase it for himself/ Where a debtor employs an agent to effect a compromise with his creditors, such agent cannot purchase a debt against his principal, for his own benefit; and though the principal neglects to re- imburse the agent for the amount paid by him in pur- chasing the debts of the principal, such agent is entitled to hold the claims so purchased only for the amount paid, and a reasonable compensation for his services.^ Nor can he purchase his own property for his principal.' A.n agent cannot fill an order by selling his own stock, even with the most honest intentions and at a fair market price, unless he discloses to his principal the ownership of the stock; if he does so fill it, the principal may repudiate the transaction, return the stock, though after it has become worthless in the market, and recover back the considera- tion.^ So an agent employed to purchase will not be per- mitted to sell to his principal for a higher price than he paid himself.' But the rule that he who undertakes to act for another must not act for his own benefit, and to the detriment of his principal, does not apply where the principal has authorized the agent to do so." An agent cannot, without the principal's consent, be- come the purchaser of property which he is employed by does so, the seller may compel him to ^ Eeed v. Warner, 5 Paige, 650. reconvey the lands, or account for ^ Dorris v. French, 4 Hun, 292; their proceeds: Gardner v. Ogden, 22 Conkey v. Bond, 36 N. Y. 427; Tewks- N. Y. 327; 78 Am. Dec. 193. bury v. Spruance, 75 111. 187; Ely v. 1 Ringo V. Biuns, 10 Pet. 269; Dob- Hanford, 65 111. 267; Gould v. Gould, son?'. Racey, 3Saad. Ch. 61; VanEpps 36 Barb. 270; Taussig -o. Hart, 58 V. Van Epps, 9 Paige, 237; Torrey v. N. Y. 425; Bentley v. Craven, 18 Bank of New Orleans, 9 Paige, 649; Q. B. 720; Sharman v. Brandt, L. R. Voorheeg o. Presbyterian Church, 8 6 Beav. 75. But the principal may Barb. 130; E.shleman v. Lewis, 49 Pa. ratify it; and if he does so in part he St. 410; Smith v. Brotherline, 62 Pa. ioes so in toto: Ely v. Hanford, 65 111. St. 461; Wolford v. Herrington, 74 267. Pa. St. 311; 15 Am. Rep. 548; Von • Conkey w. Bond, 34 Barb. 276. Hurter v. Spengeman, 17 N. J. Eq. ^ Taussig v. Hart, 58 N. Y. 425; 185; Fisher v. Krutz, 9 Kan. 501; Cottom t;. HoUiday, 59 111. 176; Ely w. Armstrong v. Elliott, 29 Mich. 485; Hanford, 65 111. 267; Collins v. Case, Pinnock v. Clough, 16 Vt. 500; 42 23 Wis. 230. Am. Dec. 521; FoUansbe v. Kilbreth, ' Moody «. Smith, 70 N. Y. 598. 17 111. 522; 65 Am. Dec. 691. 139 DUTIES AND LIABILITIES OF AGENT. § 93 the principal to sell for hira,' nor can he sell to a firm of which he is a member,^ or to a third person for the benefit of that person and himself jointly.^ An agent in charge of real estate cannot acquire a tax title thereto adverse to his principal, who has failed to furnish him with the means to pay the taxes; the burden is on the agent to show that his agency had terminated when he acquired the title.* Such a purchase or sale, however, is not void; as between the agent and third persons it is good, but it may be set aside at the suit of the principal within a reasonable time,^ or he may ratify it and make it valid.^ But an agent may lawfully purchase his principal's property, where the principal is fully advised and there is no fraud in the transaction,' but the burden is on the agent to show this.* And "it is not enough," said Jessel, M. R, in Dunne V. English^ "for an agent to tell the principal that he is going to have an interest in the purchase, or to have a part in the purchase. He must tell him all the material facts. He must make a full disclosure." Hence, where - Bain V. Brown, 56 N. Y. 2S5; Cam- Wiester, 2 Saw. 135; Ingle v. Hart- berlaiid Coal Co. v. Sherman, 30 Barb, man, 37 Iowa, 274; Gardner v. Ogden, 553; Scott V. Mann, 36 Tex. 157; 22 N. Y. 327; 78 Am. Deo. 192; Mose- Enckman v. Bergholz, 37 N. J. L. 437; lev v. Back, 3 Munf. 232; 5 Am. Dee. Marsh v. Whitmore, 21 Wall. 178; 508. Copeland v. Mercantile Ins. Co., 6 '' Francis v. Kerker, 85 111. 190; Pick. 198; Tynes v. Grimstead, 1 Teun. Reimers v. Eidner, 2 Rob. (N. Y.) 11. Ch. 508; Clute v. Barron, 2 Mich. 192; ^ Hughes v. Washington, 72 111. 84. Dwight V. Blackmar, 2 Mich. 330; 57 * Bowman v. Officer, 53 Iowa, 640. Am. Dec. 130; Ames v. Port Huron ^ Wadsworth d. Gay, 118 Mass. 44- Log Co., 11 Mich. 139; 83 Am. Doc. TJhlioh o. Muhlke, 61 111. 499; Green- 731; Kerfoot v. Hyman, 52 111. 512; wood v. Spring, 54 Barb. 375; Leach Mason v. Bauman, 62 111. 76; Parker v. v. Fowler, 22 Ark. 143; Estes v Vose, 45 Me. 54; White v. Ward, 26 Boothe, 20 Ark. 583; Eastern Bank v Ark. 445; Stewart v. Mather, 32 Wis. Taylor, 41 Ala. 93; Taussig v Plart 344; Eldridge v. Walker, 60 111. 230; 49 N. Y. 301; Cleveland Ins. Co v Cleveland Ins. Co. v. Reed, 1 Biss. 180; Reed, 1 Biss. 183. But the sale or Bartholemew v. Leech, 7 Watts, 472; purchase is voidable as to third parties Gramley v. Webb, 44 Mo. 444; 100 who have notice: Norris v. Tayloe, 49 Am. Deo. 304; Walker v. Palmer, 24 111. 18; 95 Am. Deo. 568. Ala. 358; Blount v. Robeson, 3 Jones « Walworth v. Bank, 16 Wis. 629 .S-; '^' Ai'^strong V. Elliott, 29 Mich. ' Fisher's Appeal, 34 Pa. St. 29: 485; Gaines v. Allen, 58 Mo. 541; Col- Brown v. Post, 1 Hun, 303; Condit v. 1ms V. Case 23 Wis. 230. The rule is Elackwell, 22 N. J. Eq. 481; Comstock the same where he is authorized to sell v. Comstock, 57 Barb 453 at a stipulated price: Ruckman v. « Wharton on Agency, sec. 232; Bergholz, 37 N. J. L. 437; Tate v. Murphy u O'Shea, 2 Jones & L. 422. Wiliiamaon, 2 L. R. Ch. 55; Jefiries v. » L. R. 18 Eq 524 § 93 PRINCIPAL AND AGENT. 140 an agent represented to his principal that he could sell the latter's mining property to one P. for one hundred thousand dollars, concealing the fact that he had already contracted to sell it to him for two hundred thousand dollars, it was held that on discovery of the fraud the princi- pal might recover of the agent to whom he sold the prop- erty the difference between the price paid by the agent and the sum received by him on the sale to P.* An agent selling at auction may bid on behalf of a third person.^ After an agent or trustee has fully discharged his duty in the sale of property, he may make an independent pur- chase of it from the owner under his sale.' If one who is clearly an agent for another to purchase property repudi- ates the agency and acts for himself, using his own funds, he cannot be declared a trustee for his principal, although the latter may have been misled by his conduct.^ Illustrations. — A is employed by B to manage his prop- erty and pay his taxes. B's property is sold at a tax sale. A cannot become a purchaser: Curts v. Cissna, 7 Biss. 260; Franks v. Morris, 9 W. Va. 664; Fountain Coal Co. v. Phelps, 95 Ind. 271. An agent is employed to collect the rents and to exercise control over the principal's property in his absence. Tlie agent cannot purchase the property at an execution sale: Grumley v. Webh, 44 Mo. 444; 100 Am. Dec. 304. An agent employed to collect and foreclose a mortgage took a convey- ance of the equity of redemption to himself. Held, that he took the title as trustee for his principal: Giddings v. Eastman, 5 Paige, 561. An agent employed to take up an outstanding mortgage took an assignment to himself. Held, that he held it as trustee for his principal: Case v. Carroll, 35 N. Y. 385. The agent for the owner of land purchased a tax certificate, and afterwards took the tax deed to himself. Held, that he would be held a trustee for the owner, and liable for the rents and profits: Collins v. Rainey, 42 Ark. 531. An agent makes a purchase outside the actual purview of his agency. At the time it was made he assumed to act for his principal and purchased for his benefit. Held, that the transaction as against the agent will inure to the benefit of the principal: Watson v. Union Iron and Steel Co., 15 111. App. 509. An agent furnished with • Brown V. Post, 1 Hun, 303. « Walker v. Carrington, 74 111. 446. 2 Scott V. Mann, 36 Tex. 157. ' First Banku. Bissell, 2 McCrary , 73. 141 DUTIES ANB LIABILITIES OF AGENT. § 94 money to pay off all encumbrances on certain land fraudu- lently purchased a tax deed thereon. Held, to acquire no title thereunder: Woodman v. Davis, 32 Kan. 344. A employed B to purchase land on commis'sion. B had previously negotiated for a purchase on his own account. This he completed, and sold to A at an advance, not disclosing the fact that he was the owner. Held, that A on discovering this could not retain the property and recover the advance paid: Sunderland v. Kilhourn, 3 Mackey, 506. A stock-broker is employed to pur- chase stock for a customer. He cannot buy of hitnself to fill the order: Taussig v. Hart, 68 N. Y. 425. A commission merchant has an order from a principal to purchase cotton for him. He cannot fill the order with his own cotton or with cotton he has to sell: Seal v. McKiernan, 6 La. 407. A broker was authorized by his principal to buy for him in the market two hundred tons of hemp. He drew up and forwarded to the principal a broker's note, there being no seller but himself. Held, that the principal was not bound: Sharman v. Brandt, L. R. 6 Q. B. 720.' § 94. Agent of Both Parties. — One cannot act secretly as agent for both the parties to a contract where the matter requires the exercise of discretion and judgment.^ Such a contract may be repudiated by either party.' "The principle on which rests the well-settled doctrine that a man cannot become the purchaser of property for his own use and benefit, which is intrusted to him to sell, is equally applicable when the same person, without the authority or consent of the parties interested, undertakes to act as the agent of both vendor and purchaser. The law does not allow a man to assume relations so essen- tially inconsistent and repugnant to each other. The duty of an agent for a vendor is to sell the property at the highest price; of the agent for the purchaser, to buy it 1"T '"If a man employ another as broker em Ins. Co. v. Cuuliffe, 10 Eng. Rep. to go into the market and purchase 561; Rupp v. Sampson, 16 Gray, 398; goods for him at a certain price, the 77 Am. Dec. 416; BoUman v. Loomis, other could not under such authority 41 Conn. 581 ; Morison v. Thompson, make himself a principal in the con- L. R. 9 Q. B. 480; Stewarts. Mather,' tract of sale and purchase ": Sharman 32 Wis. 344; Grant v. Hardy, 33 Wis. V. Bandt L. R. 6 Q. B. 720. 6G8; In re Taylor Orphan Asylum, 36 ' Copeland v. Ins. Co., 6 Pick. 204; Wis. 534. Utica Ins. Co. v. Toledo Ins. Co., 17 ' Mercantile Ins. Co. v. Hope Ins. Barb. 132; New York Ins. Co. v. Na- Co., 8 Mo. App. 408. tionalIn3.Co.,14]Sr.Y. 85; Great West- § 94 PRINCIPAL AND AGENT. 142 for the lovrest. These duties are so utterly irreconcilable and conflicting, that they cannot be performed by the same person without great danger that the rights of one principal will be sacrificed to prosecute the interests of the other, or that neither of them will enjoy the benefit of a discreet and faithful exercise of the trust reposed in the agent. As it cannot be supposed that the vendor and purchaser would employ the same person to act as their agent to buy and sell the same property, it is clear that it operates as a surprise on both parties, and is a breach of the trust and confidence intended to be reposed in the agent by them respectively, if his intent to act as agent of both in the same transaction is concealed from them.'" Nor can he earn and receive compensation from both.'' The rule is, that one cannot take up an adverse interest to that which he is engaged to perform. But it is obvi- ous that a double agency may be undertaken with the consent of the principal, and in certain cases it is cus- tomary to do so. Thus brokers,* or a middle-man in an exchange,* may act for both parties, and receive compen- sation from each;® and so, of course, where each party 'Bigelow, C J., in Farnsworth v. Am. Rep. 541; Smith v. Townaend, Hemmer, 1 Allen, 494; 79 Am. Dec. 109 Mass. 500; Bell v. McConnell, 37 756. Ohio St. 396; 41 Am. Eep. 528. Illus- ' Lloyd V. Calston, 5 Bush, 587; trations: A broker was employed by Watkins v. Cousall, 1 E. D. Smith, A to sell his farm. He exchanged it 65; Dunlopi). Richards, 2 E. D. Smith, for lands of B, receiving a commission 181; Pugsley v. Murray, 4 E. D. from A for hia services. Held, that Smith, 245; Farnsworth v. Hemmer, 1 he could not recover a commission Allen, 494; 79 Am. Dec. 756; Walker from B; also, even on proof of a prom- V. Osgood, 98 Mass. 348; 93 Am. Dec. ise by B to pay him a commission: 168; Everhart v. Searle, 71 Pa. St. Raisin v. Clark, 41 Md. 158; 20 Am. 256; Place v. Greenman, 6 N. Y. Rep. 66. Sup. Ct. 681; Meyer v. Hanchett, 39 ' Rowe v. Stevens, 3 Jones & S. 189; Wis. 419; Lynch v. Fallon, 11 R. I. Spyer v. Fisher, 5 Jones & S. 93. 311; 23 Am. Rep. 458; Schwartze v. * Mullen v. Keetzleb, 7 Bush, 253; Yearly, 31 Md. 270. (In Rice w. Vi'^ood, Rupp v. Sampson, 16 Gray, 398; 77 . 113 Mass. 133, 18 Am. Rep. 459, it Am. Deo. 416; Siegel v. Gould, 7 Lans. was held that a broker acting for both 177; Orton v. Schofield, 61 Wis. 382; parties in effecting an exchange of Green v. Robertson, 64 Cal. 75. property can recover compensation * Alexander v. University, 57 Ind. from neither if his double employment 466; Lynch v. Fallon, 11 R. I. 311; 23 is not known or assented to by both.) Am. Ilep. 458; Meyer v. Hanchett, 39 Scribner v. Collar, 40 Mich. 375; 29 Wis. 419. 143 DUTIES AND LIABILITIES OF AGENT. § 94 has notice that he is acting for both, and each agrees to pay him a commission.' A contract made by a person as agent of both parties is not void, but only voidable, and must be repudiated within a reasonable time,^ for it may be ratified and made valid by either party.' A person who voluntarily employs the agent of another cannot take advantage of the rule of law forbidding double agencies,'' nor can such an agent set it up for the purpose of shielding himself from liability to one of the parties.^ An agent, or servant, on a fixed salary, who sells articles to his employers, under a contract with the owner of such articles, for a remuneration, his employers knowing of his interest, can claim his remuneration from such owner." 'Eowe V. Stevens, 53 N. Y. 621. Mass. 500; White v. Ward, 26 Ark. "The general rule is not applicable to 445. a case in which a man is acting as the * "Two parties may always, by mu- agent of both the vendor and pur- tual consent, no matter how diverse chaser, with the authority and consent their interests, make a third their of the parties interested": Alexander agent. It is true that if A have an V. Northwestern etc. Co., 57 Ind. 406; agent, that agent cannot, without A's Bell V. McConnell, 37 Ohio St. 396; consent, act as agent of B in a matter 41 Am. Rep. 528; .Toslin v. Oowee, in which A's interest conilicts with 56 N. Y. 626; Pugsley v. Murray, 4 B's. But B, who selects the agent E. D. Smith, 245; Rolling Stock Co. knowing that he is the agent of A, tj. Railroad Co., 34 Ohio St. 450; Adams cannot object to take advantage of Mining Co. v. Seuter, 26 Mich. 73; his own wrong in giving knowingly to Capener v. Hogan, 40 Ohio St. 203. the agent a trust conflicting with his ••' Greenwood v. Spring, 54 Barb. 375; duty to A": Fitzsimmons v. Southern Bruce v. Davenport, 1 Abb. App. 233. Express Co., 40 Ga. 330; 2 Am. Ren = Walworth D. Farmers' L. &T. Co., 577. 16 Wis. 629; Stewart v. Mather, 32 ^ Cottom v. HoUiday, 59 111. 176. Wis. 345; Smith v. Townseud, 109 <> Wright v. Welch, 3 McAr. 479. §95 PKINCIPAL AND AGEKT. 144 CHAPTER X. DUTIES AND LIABILITIES OP PRINCIPAL TO AGENT. § 95. Right of agent to compensation from principal. § 96. When agent cannot recover compensation. § 97. Right of agent to reimbursement from principal. § 98. When agent cannot ask reimburaement. § 95. Right of Agent to Compensation from Principal. — An agent performing services for a principal is entitled to compensation from him therefor,* unless he is agratui- 1 Mangum v. Ball, 43 Miss. 288; 5 Am. Rep. 488; Briggs v. Boyd, 56 N. Y. 289. See pout. Part IV., Brokers. In Guild V. Guild, 15 Pick. 130, Shaw, C. J., said: "Some of the court are of opinion that as it is the ordinary presumption, between strangers, that upon tlie performance of useful and valuable services in the family of an- other, it is upon an implied promise to pay as mucli as such services are reason- ably worth, so, after the legal period of emancipation, the law raises a simi- lar implied promise from a father to a daughter. Other members of the cou rt are of opinion (confining the opinion to the case of daughters, and expressing no opinion as to the case of sons labor- ing on a farm or otherwise in the ser- vice of a father) that the prolonged residence of a daughter in her father's family after twenty-one, performing her share in the ordinary labors of the family, and receiving the protec- tion and supplies contemplated in the supposed case, may well be accounted for upon considerations of mutual kind- ness and good-will, and mutual com- fort and convenience, without presum- ing that there was any understanding or any expectation that pecuniary com- pensation was to be made; that proof of these facts alone, therefore, does not raise an implied promise to make any pecuniary compensation for such services, or throw on the defendant the burden of proof to show, affirma- tively, that the daughter performed the services gratuitously, and without any expectation of receiving wages or pecuniary compensation, but with a view to the share she might hope to receive in her father's estate, or other- wise. But the court are all of opinion that practically the question is of much less importance than at first view it would appear. Those who think that the law raises no implied promise of pecuniary compensation from the mere performance of useful and valuable ser- vices, under the circumstances sup- posed, are nevertheless of opinion that it would be quite competent for the jury to infer a promise from all the circumstances of the case; and that although the burden of proof is upon the plaintff, as in other cases, to show an implied promise, the jury ought to be instructed that if, under all the cir- cumstances of the case, the services were of such a nature as to lead to a reasonable belief that it was the un- derstanding of the parties that pecuni- ary compensation should be made for them, then the jury should find an im- Elied promise and a quantum meruit; ut if otherwise, then they should find that there was no implied promise. The conclusion that the question is of less practical importance than might at first appear is founded upon the ob- vious consideration that it is scarcely possible that a case can be loft to stand upon the mere naked presumption aris- ing from the fact of the prolonged resi- dence of a daughter in the family of 145 DUTIES AND LIABILITIES OF PKINCIPAL. §9E tous agent/ or unless the nature of the service performed or the express or implied understanding between the par- ties show that no claim for pay was intended.^ The man- her father, and the performance of services. There must of necessity be a great diversity of circumstances dis- tinguishing one case essentially from another. Such a continued residence of a daughter may — indeed must — be regarded under one of these three as- pects: she may be a servant or house- keeper, expecting pecuniary compensa- tion for services; or a boarder, expect- ing to pay a pecuniary compensation for accommodations and subsistence; or she may be a visitor, expecting neither to make nor pay any compensation. Perhaps it might be safe to consider the latter predicament as embracing the larger number of cases. Now, the circumstances under which the parties continue to reside together, and which must almost necessarily be disclosed in the progress of each trial, will go very far to show in which of these relations the daughter stood. Such considera- tions as the following, among many others, would arise: What 13 the state and condition of the family as to afflu- ence? was the father carrying on a business or engaged in an employment usually requiring the aid of hired females ? had he been accustomed to employ such before the daughter came of age ? did he employ such afterwards ? had the father a wife living ? was she capable of managing her family, or was he a widower ? did the daughter act as housekeeper? had the father been accustomed to employ a house- keeper on wages ? did he cease doing BO ? were there one or two or more daughters similarly situated ? did they share in the labors of the family, or did the plaintifif exclusively devote herself to service of the family? had the daughter property or means of her own to support herself, or had she been employed on wages in other fam- ilies? Many other considerations of a- like kind might be suggested, some and probably many of which must pre- sent themselves in each case, and all of which it would be proper for a jury to take into consideration in deciding the question of an implied promise of pecu- niary compensation upon either side." Vol. L— lOj ' Bartholomew v. Jackson, 20 Johns. 28; 11 Am. Dec. 237. One who under- takes, as a mere act of friendship, to receive a note from another, and to deliver it for collection into the hands of an attorney, cannot, after the death of the person from whom he received it, maintain a claim against his estate for services voluntarily rendered in the prosecution of the suit for the collec- tion of the note: Morrow v. Allison, 39 Ala. 70; Hill v. Williams, 6 Jones Eq. 242. ^ "In respect to gratuitous agents or mandataries, the consideration of their rights properly belongs to a trea- tise on bailments, and need not be touched in a treatise on agency. In respect to agents or attorneys in fact merely to sign a deed or to do some other single ministerial act for an- other, it is not usual either to pay or to stipulate for pay for the execu- tion of such fugitive acts. They are ordinarily treated as acts of friendship or benevolence, and are performed from a mere sense of duty or from per- sonal regard, and are wholly of a gra- tuitous nature": Story on Agency, sec. 324; Hinds v. Henry, 36 N. J. L. 328; Hill v. Williams, 6 Jones Eq. 242; Eaton?). Benton, 2 Hill, 578; Morrison V. Orr, 3 Stew. & P. 49; 23 Am. Dec. 319. A renders services to B in the hope of a legacy from B, and relying, solely on B's generosity. B dies leav- ing A nothing. A has no action against B for his services, but, aliter if it was understood between A and B that B should recompense him by will, and he does not: Robinson i/. Raynor, 28 N. Y. 494; Martin v. Wright, 13 Wend. 460; 28 Am. Deo. 468. In the last case it was said: "A reference to some of the cases will show the cir- cumstances under which services ren- dered shall be considered gratuitous. The case of Osborn v. Governors of Guy's Hospital, 2 Strange, 728, is often referred to on this point, though it was only a nisi p)-ius decision, 'ihat was. an action for services rendered to Mr. Guy in his stock affairs. It appeared, as if Osborn did not expect to be paid,. §95 PRINCIPAL AND AGENT. 146 aging agent of a steamboat company, who acts as captain of one of its boats, has, in the absence of contract, a right to coinjDensation for his services as such.* So also a stock- holder in a joint-stock company, who acts as trustee and agent of the company.^ A tenant in common of lands, employed as agent by special agreement between himself and co-tenant to take charge of the land, make sales thereof at certain prices, receiving a commission of five per cent on sales, may sue his co-tenant for the services rendered, in respect to the land, outside of selling it.' One who employs an agent to negotiate a contract, and afterwards, as towards the other contracting party, ratifies the con- but to be considered for it in the will of Guy; and the chief justice directed the jury that if such was the case, they could not find for the plaintiff, though nothing was given him; that they should consider how it was under- stood by the parties at the time of doing the business, and that a man who expects to be made amends by a legacy cannot afterwards resort to his action. So in the case of Le Sage v. Coussmaker, 1 Esp. 189, Lord Kenyon said that the law was well settled that if the plaintiff had performed the ser- vices without any view to reward but to a legacy, that a demand for services could not be sustained; of that the jury were to judge. In the case of Jacobson v. Executors of Le Grange, 3 Johns. 199, the plaintiff lived with his uncle, the testator, at his request eleven years; and the uncle said the plaintiff should be one of his heirs, and proposed to plaintiff's mother- in-law to give him three hundred and fifty pounds in land as a compensa- tion for his services. The plaintiff had never made any claim upon the testa- tor. The jury found a verdict for the plaintiff. Van Ness, J., in giving the opinion of the court, intimates that the plaintiff could not recover if the services were rendered without any view to compensation other than such as the testator chose to make by his last will and testament; but he also says that the services having been per- formed for the benefit of the testator, with his knowledge and approbation. the law implies a promise to pay, un- less it can be shown that payment was never intended. In Patterson v. Pat- terson, 13 Johns. 379, 380, the same learned judge says that the plaintiff is entitled to a reward for his services, unless they were to be performed gra- tuitously. He cites the cases 1 have above referred to in Strange and Es- pinasse, and intimates that if the under- standing of both parties was that the services should be paid for by a provis- ion in the will, a right of action would accrue, provided no provision should be made. So, too, in Little v. Dawson, 4 Dall. Ill, the rule is said to be that if the services were rendered merely in expectation of a legacy, without any contract, express aud implied, but re- lying solely on the testator's generos- ity, no action can be maintained; but in that case the testator had said he meant to provide for plaintiff as a child ; which was left, as a matter of fact, for the jury to decide whether the services were gratuitous. These cases surely go far enough in favor of the defend- ants. It was a question for the referees in this case to decide whether the ser- vices were intended to be paid for. They have found that compensation was expected and intended at the time they were rendered, and the evidence fully sustains their finding. " ' New Orleans Packet Company v. Brown, 36 La. Ann. 138; 51 Am. Eep. 5. « Spenoe v. Whitaker, 3 Port. 297. > Thompson v. Salmon, 18 Cal. 632. 147 DUTIES AND LIABILITIES OF PRINCIPAL. § 95 tract which the agent obtains, cannot be heard, in a subsequent action by the agent for the compensation promised for his services, to dispute that the latter suc- ceeded in negotiating a valid contract as desired/ If a person acts as an agent without authority, and his acts are ratified, he is entitled to the same compensation and remedy as if he had been duly authorized.^ An allow- ance for commissions will not be made to an agent who continued to manage the property of a testator with the expectation of a legacy.'' That a principal recognized a subagent and accepted his services does not necessarily prove an agreement to pay for said services.^ Where an agent informed his principal that he should charge no commissions for his services, he was held to be precluded from charging commissions during the life of the prin- cipal, though the principal had recognized the agent's right to commissions.* Where an agent complains to his principal that the terms of the contract are too onerous upon him, and seeks and procures a modification render- ing it more favorable to him, the utmost good faith is required from him in such negotiation; and, upon any misrepresentation shown, the courts will hold the modifi- cation void, and settle the accounts and dealings of the agency according to the original contract." A general • agent for an insurance company, discharged for failure to account according to his contract, has no interest in pre- miums thereafter to be collected on policies issued through his agency.' One employed to find a customer for stock at a certain price is entitled to his commission, although the principal sell to the customer found at a lower price, the agent having nothing to do with the reduction.* 1 Winpenny v. French, 18 Ohio St. » Higginson v. Fabre, 3 Desaus. Eq. 469. 89. I Wilson V. Dame, 58 N. H. 392. « Nelson v. Bowman, 29 Gratt. = Grandm v. Reading, 10 N. J. Eq. 732. 370- ' Phcenix Mut. Life Ins. Co. v. Hol- * ^°™^ "■ Brooklyn Life Ins. Co., loway, 51 Coun. 311. 7 Mo. App. 22. B Doxter v. Campbell, 137 Mass. 198. § 95 PRINCIPAL AND AGENT. 148 Where the agent has agreed to leave the amount of his compensation to his principal's discretion or generosity, he cannot recover more than the principal chooses to allow him.' But if the agreement is that he is to be al- lowed a reasonable compensation, to be fixed by his em- ployer, he may sue for a reasonable compensation if the employer refuses or neglects to fix it.^ Where the prin- cipal, having an agent in his employ, confers upon him additional powers which involve greater duties, with no stipulation for additional compensation, the agent cannot recover extra wages for such additional service.' In the absence of an express contract as to the agent's compen- sation, it will be settled by proof of usage.^ But a usage giving an agent the profits of a transaction on the princi- pal's behalf is invalid.^ So is a custom among insurance agents that they are entitled to all dividends declared by mutual companies, in lieu of other compensation, for effecting the insurance.* And so is a custom allowing an agent to charge commission to both vendor and pur- chaser.'' Where A had agreed to pay B "twenty per cent upon all original or first-year premiums collected and paid in by him," B was not permitted to show that by the usage of the business premiums were treated as "col- lected and paid in," although, for the convenience of the assured, they were payable in subsequent installments.*' A custom, when goods are consigned to merchants for sale, and again consigned by them to others to sell, for each house to charge a commission of two and a half per ' An agent performs work for a com- * Lawson on Usages and Customs, mittee under a resolution as follows: sec. 151; Brown v. Harrison, 17 Ala. " That any service to be performed by 774; Halsey v. Brown, 3 Bay, 346. him shall be taken into consideration, * Diplock v. Blackburn, 3 Camp, and such remuneration be made as 43. shall be deemed right." Held, that * Mim. Cent. R. R. Co. v. Morgan, no action would lie for compensation 52 Barb. 217. against the committee: Taylor v. ' Raisin v. Clark, 41 Md. 158; 20 Brewer, 1 Mau. & S. 290. Am. Rep. 66; Farnsworth v. Hemmer, 2 Story on Agency, sec. .S25. 1 Allen. 494; 79 Am. Dec. 756. ' Moreau v. Dumagene, 20 La. Ann. * Kimball v. Brawner, 47 Mo. 398. 230. 149 DUTIES AND LIABILITIES OF PEINCIPAL. § 95 cent, the usual commission for selling goods, is void as against common reason and justice.* So is a custom of factors to charge both commissions and interest on ad- vances.^ A well-established custom among life insurance companies and their agents as to the kind and extent of property the agents may possess in the lists of policies they procure is admissible to explain a contract between them.* A usage by which the seller of property is held liable to pay a commission to a broker whose services he has accepted, and who has introduced him to and brought him into negotiation with an ultimate buyer, and who is ready to continue his services until a sale is effected, is a reasonable one, in allowing a recovery for services ac- cepted and rendered, even though the sale is finally ef- fected by another broker.^ In an action on a promise to pay commissions to an insurance agent, evidence of a usage of the trade to pay commissions only on premiums actually collected is admissible.^ In the absence of any contract, the court in fixing the compensation of an agent will have regard to the extraordinary services and per- sonal sacrifices of the agent, as well as the benefits re- ceived by the principal.' An agent's commission, where he "agrees and obliges himself to manage a vessel, to the best advantage, according to his judgment, for the owner," does not depend upon the profitable result of the adven- ture, if he discharges his duty faithfully.' An agent au- thorized to draw upon his employer for moneys becoming due to him — e. g., expenses — may maintain an action against the employer for maliciously refusing to honor drafts drawn accordingly.* ' Spear v. Newell, 23 Vt. 159; Bur- post. Part IV., Brokers and Factors. ton V. Blin, 23 Vt. 151. As to construction of contracts of ser- ' Smetz V. Kennedy, Riley, 218. vice as to compensation or salary, see ' Ensworth v. New York etc. Ins. post. Part V., Master and Servant. Co., 7 Am. Law Reg. 332. '■ West New Jersey Society v. Mor- * Loud V. Hall, 106 Mass. 404. ris, Pet. C. C. 59. * Miller V. Insurance Co. , 1 Abb. ' Stewart v. Rogers, 19 Md. 98. N. C. 470. As to the right of brokers * Levy v. Curtiss, 1 Abb. N. C. to compensation and commissions, see 189. § 95 PRINCIPAL AND AGENT. 150 Illustrations. — A loan was effected by an agent, who charged a commission for the service, and for becoming secu- rity for the repayment. Held, that a further commission was not chargeble for paying over the money to his principal, or on his orders: Colton v. Dunham, 2 Paige, 267. An agent acting under a power of attorney, duly recorded, which pro- vided for the payment of the costs of the litigation arising in the transaction of the business,- ft-eJd entitled to a compensa- tion for his services; and his claim is superior to that of one to whom the principal has assigned the fruits of the litigation: Lane v. Coleman, 8 B. Mon. 569. A commission merchant in Philadelphia, who was to receive five per cent for sale and guaranty, sent, without direction to do so, some of the goods to New York and Boston for sale, and paid five per cent for sale and guaranty. Held, that a charge by him of two and a half per cent in addition was inadmissible: Van Dyke v. Brown, 8 N. J. Eq. 657. Several joint owners of a cargo appoint one of their number as their agent to receive and sell the cargo and distribute the proceeds.. Held, that he is entitled, under such special agency, to a commission or compensation for his ser- vices, as a factor or agent, in the same manner as a stranger: Bradford v. Kimberley, 3 Johns. Ch. 431. D. was entitled to a commission for every machine sold by the firm of A. & B., through his exertions, and after he had begun negotiations for the sale of a machine to G., the firm dissolved, and A. assumed for his sole benefit the performance of all existing copartner- ship engagements, and subsequently took in C. as partner, and the firm of A. & C. sold a machine to G., as the result of D.'s original negotiation. Held, that D. was entitled to his commission, and could maintain an action against A. therefor, who was liable to the same extent as if he had gone on alone in the business: Sinclair y. Galland, 8 Daly, 5u8. A marine insurance company in New York employed merchants in England as their agents, to settle claims and grant insur- ances, and also to effect reinsurances. A percentage was paid by the company on the first two classes of business, but the agents were remunerated as to the reinsurances by the broker- age allowed to them by the underwriters. They charged the company the full amount of the premiums, but were allowed by the underwriters, first, five per cent on the premiums; and secondly, twelve per cent on the balance (if any), payable by them to the underwriters on the account for the year, crediting the underwriters with the premiums (less the five per cent), and debiting losses. This was according to the usual custom on the credit system, as between brokers and underwriters, but the twelve per cent allowance was for some time unknown to the company. Held, that the agents were entitled to both the 151 DUTIES AND LIABILITIES OF PRINCIPAL. § 96 percentages: Great Western Ins. Co. of N. Y. v. Cunliff, 43 L. J. Ch. 741; L. R. 9 Ch. 525; 31 L. T., N. S., 661. § 96. When Agent cannot Recover Compensation. — There are cases in which an agent is prohibited from re- covering the price of his services. They are, first, where the service was an illega^ one;' second, where he has been guilty of gross negligence or unfaithfulness in the performance of his duties,'' or neglects to keep accounts,' or violates his instructions.* If an agent for the perform- ance of certain services for which a salary or yearly sum is to be allowed him neglect to keep an account of moneys received by him in his agency, and several annual ac- counts are settled between him and his principal, in which considerable amounts of money previously received by him are omitted to be credited to the principal, and the omission is not supplied until the principal, in conse- quence of information received from others, makes inquiry of the agent in reference thereto, the salary or yearly sum for the years in which such omission occurred should be disallowed.' Illustrations. — A is employed by B as a "lobbyist" to procure the passage by Congress of a bill to pay B a claim he holds against the government. A cannot recover pay from B 1 McBratney v. Chandler, 22 Kan. Stark. 113; Vennum v. Gregory, 21 692; Crane v. Whittemore, 4 Mo. Iowa, 32G; ClevclauJ etc. R. R. Co. v. App. 510; Fareira v. Gabell, 89 Pa. Patti.on, 15 Ind. 70; Porter «. Silvers, St. 89; Paine v. France, 26 Md. 46; 35 Ind. 295; Sumner v. Eeicheniker, Smith V. Bouvier, 70 Pa. St. 331; 9 Kan. 320; Segar v. Parrish, 20 Marshall v. Baltimore etc. R. R. Co., Gratt. 672; Presoott v. White, 18 111. 16 How. 314; Gray v. Hook, 4 N. Y. 322. 449; Fuller v. Dame, 18 Pick. 472; ^ gmith v. Crews, 2 Mo. App. 269. Clippinger v. Hepbaugh, 5 Watts & S. But see Sampson v. Somerset Iron 315; 40 Am. Dec. 519 (but see Ormes Works, 6 Gray, 120; Brannan v. V. Dauchy, 45 N. Y. Sup. Ct. 85); Strauss, 75 111. 234; Gallup ii. Merrill, Harris v. Roof, 10 Barb. 489; Rose v. 40 Vt. 133. Truax, 21 Barb. 361. * Jonea v. Hoyt, 25 Conn. 386; Hoyt 2 Sea V. Carpenter, 16 Ohio, 412; v. Shipherd, 70 111. 309; Myers v. Smith V. Crews, 2 Mo. App. 269; Walker, 31 111. 354; Fraser v. Wyck- Snwyerv. Mayhew, 51 Me. 398; Tyrrell off, 63 N. Y. 445. Unless the prir.ci- V. Bank of London, 10 H. L. 26; In re pal ratifies his conduct: Beall v. Janu- Owens, 7 I. R. Eq. 235; Brannan v. ary, 62 Mo. 434. Strauss, 75 111. 235; Short v. Millard, ^ Ridgway v. Ludlam, 7 N. J. Eq. 68 111. 292; White v. Chapman, I 123. § 97 PRINCIPAL AND AGENT. 152 for this service: Trist v. Child, 21 Wall. 441. A broker sues his customer for commissions for services in stock-gambling for him. He cannot recover: Fareira v. Gabell, 89 Pa. St. 89. An attorney in the conduct of a salt makes a blunder by which all his previous work becomes useless. He cannot recover from his client for what he has done: Bracey v. Carter, 12 Ad. & E. 373. A broker in negotiating an exchange of real estate neglected to inform one of the parties, until the time limited for the exchange had expired, that the other refused to accept one of the lots be- cause the taxes were unpaid. Held, that he could not recover commission for his services: Fisher v. Dynes, 62 Ind. 348. A steamboat captain kept his accounts so negligently that it could not be seen whether he or the owners were debtor to the other. Held, that he had forfeited his right to compensation: Smith v. Crews, 2 Mo. App. 269. A vessel was bought by an association of persons, and a conveyance taken in the name of certain others, as their agents. Compensation was refused to such agents, be- cause of their misconduct: The Taranto, 1 Sprague, 170. A was employed by a railroad company to procure subscriptions to stock, and in the exercise of such agency, without the knowl- edge of the company, received reward from persons subscrib- ing lands for stock, for procuring their lands to be taken by the company. Held, that the agency in behalf of the subscribers was inconsistent with the agency for the company, was an act of bad faith, and worked a forfeiture of all right to compensation from the company: Cleveland etc. R. R. Co. v. Pattison, 15 Ind. 70. § 97. Right of Agent to Reimbursement from Princi- pal. — An agent is entitled to be reimbursed by his prin- cipal for all expenses legally and properly incurred in his behalf.^ In equity the liability of a principal to indemnify ^ Ramsay?). Gardner, 11 Johns. 439; affairs, or in consequence of such man- Child V. Morley, 8 Term Rep. 610; agement, are to bu borne by the prin- Maddick «. Marshall, 16 Com. B., N. cipal. It was admitted that where an S., 387; Wolff v. Horucastle, 1 Bos. agent on a journey on business of his & P. 323; Robinson v. Norris, 51 How. principal was robbed of his own money Pr. 442; Ruffner v. Hewitt, 7 W. Va. the principal would not be answerable, 585; White v. National Bank, 102 because carrying his own money was U. S. 658; Beach v. Branch, 57 Ga. not necessarily connected with the 362; Searing v. Butler, 69 111. 575; business of his principal. So if he Elliott V. Walker, 1 Rawle, 126; Col- received a wound the principal is not ley V. Merrill, 6 Me. 50; Wynkoop v. bound to pay the expense of the cure, Seal, 64 Pa. St. 361 ; Mears v. Adreon, for it was the personal risk of the 31 Md. 229; McCroskey v. Mabry, 45 agent. The distinction appears to be Ga. 327; Hamilton v. Cook Co., 4 between those cases which arise natu- Scam. 519. In Powell v. Trustees of rally out of the agency, and such as Newburgh, 19 Johns. 284, Spencer, are casual or oblique, not proceeding C. J., said: " Damages incurred by an directly from the execution of the agent, or in the course of a principal's mandate. " 153 DUTIES AND LIABILITIES OF PRINCIPAL. §97 his agent is not confined to actual losses, but extends to all the U abilities of the agent incurred on behalf of the principal.' Judgment against the principal and agent in favor of the owner of chattels tortiously taken by the agent under command of the principal is conclusive upon the principal as to the ownership of the property, in an action by the agent against the principal upon the im- plied promise of indemnity.^ The agent has a claim against his principal for the costs of defending his princi- pal's property against a lawsuit,' or other peril,^ for claims against him as an agent for which he was personally liable ^ for acts done by him in the course of his agency, in which he has undertaken a liability or sustained a damage." A party acting as agent or employee for a ^ Lacey v. Hill, Crowley's Claim, 43 L. J. Ch. 551; 22 Week. Rep. 586; L. R. 18 Eq. 182. 2 Moore v. Appleton, 34 Ala. 147; 73 Am. Dec. 448. '' Powell V. Trustees of Newburgh, 19 Johns. 284; D'Arcy v. Lyle, 5 Binn. 441; Hill v. Packard, 5 Wend. 375; Delaware Ins. Co. v. Delaunie, 3 Binn. 295; Frixione v. Tagliaferro, 10 Moore P. C. 175. * v\fol£F V. Horncastle, 1 Bos. & P. 323. ^ Power V. Butcher, 10 Barn. & C. 329; Turner v. Jones, 1 Lans. 147. Oae who, acting as agent, insures his principal's property in a company for which he is also agent, is entitled to he reimbursed the amount of pre- miums paid out by him: Rochester v. Levering, 104 Ind. 562. " Marlaud v. Stan wood, 101 Mass. 470; Ramsay v. Gardner, 11 Johns. 4.39; Hill ^,. Packard, 5 Wend. 375; Coventry v. Barton, 17 Johns. 142; 8 Am. Dec. 376; Allaire v. Ouland, 2 Johns. Cas. 54; Avery v. Halsey, 14 Pick. 174; Moore v. Appleton, 26 Ala. 633; Drummond v. Humphreys, 39 Me. 347; Howard v. Clark, 43 Mo. 344; Tarr v. Northy, 17 Me. 113; 35 Am. Dec. 232; Nelson v. Cook, 17 111. 443; Grace v. Mitchell, 31 Wis. 533; 11 Am. Rep. 613; Yeatman v. Corder, 38 Mo. 337; Levy v. Curtis, 1 Abb. N. C. 189; Savelandu. Green, 36 Wis. 612. In Greene v. Goddard, 9 Met. 222, it is said: "Where an agent, in pursu- ing the instructions of his principal, and acting within the scope of his au- thority, becomes personally liable for the performance of the contract he makes for his principal, and without which personal liability the orders of the principal cannot be executed at all, or not so well executed, and this is known by the principal at the time of giving his instructions and creating the agency, if a loss occur to the agent, it is most clear that he can look to the principal for indemnity for the damage sustained by him. And this rests upon those sound principles of common sense and mutual justice in the transaction of business upon which the law merchant, in its various branches, is founded; and which law, as it regulates and prescribes the rights and duties of principal and agent, alike furnishes protection to the agent when he suffers loss though fidelity to his employers, and gives redress to the principal who sustains an injury from the breach of orders or neglect of duty by the agent. In Ramsay v. Gardner, 11 Johns. 439, the plaintiff indorsed a bill drawn by the defendant. The indorsement was made by the plaintiff, as agent for the defendant. The bill was returned, § 97 PRINCIPAL AND AGENT. 154 number of heirs in the prosecution of a laud claim, under an agreement and contract, may withhold the payment of so much of the proceeds of the sale of the land which he has received for them as will be necessary to cover possible liabilities, on account of suits brought by settlers for improvements made on the land, unless the heirs give satisfactory security against loss resulting from such suits.' Under an agreement to collect debts and apply the pro- ceeds to the payment of a debt due from the principal to the agent, such agent is entitled to deduct from the pro- ceeds the rate of exchange between the place of collection and the place where the debt due him from the principal is payable, expenses of collection by suit or otherwise, and his reasonable commissions.^ Where an agent has a general authority to receive and sell goods, and out of the proceeds to repay himself his advances, charges, and commission, the costs of an action, with a reference thereof, against a wrong-doer who withholds the posses- sion of the goods, bona fide incurred for the recovery of and the plaintiflF, a3 iadoraer, paid it, Rep. 610. So in Rigg3 v. Lindsay, witli the postages, protests, and twenty 7 Cranch, 500, where Kiggs gave an per cent damages. He brought his order to Lindsay to purchase for his action to recover the sums so paid; account a quantity of salt, and to and the court held that as he had draw as directed for payment, and acted as the agent of the defendant, the drawees refused to accept the bills and without benefit to himself, the which Lindsay drew, and he, in con- money which he had paid was paid sequence of the non-acceptance, was for his principal, and that he was obliged to take them up and pay entitled to recover. So in Stocking v. damages thereon, it was hold to be a Sage, 1 Conn. 522, the court held payment of the debt of Riggs, who that an agent who, in acting faithfully gave the order, and that there was no for his principal, is subjected to ex- good reason for distinguishing between pense, is to be reimbursed; and that, the damages and the principal sum. if he is sued on a contract made pur- This, then, is a case of principal and suant to his authority, the law im- agent, and the agents allege that in plies a promise by the principal to the faithful discharge of their duty indemnify him. So in D'Arcy v. Lyle, they have sustained a. direct loss, as 5 Binn. 441, the court approved the well through the failure of the accep- doctriue of the civil law, that where tors of the bills to pay them at matu- damages are incurred by an agent in rity, as through the neglect of the the management of the business of defendant to place funds in the hands his principal, or in consequence of it, of the acceptors to provide for their the principal is responsible to him for payment, agreeably to his promise." the damages so incurred. See also '■ Bastable u. Denegre, 22 La. Ann. Powell V. Trustees of Newburgh, 19 124. Johns. 284; ChUd v. Morley, 8 Term ' Howe v. Wade, 4 McLean. 319. 155 DUTIES AND LIABILITIES OF PEINCIPAL. § 97 the goods, are legal charges upon the goods, and may be set off by the agent in an action brought against him by his principal for the balance of the proceeds of the goods.'- An agent entitled to charge for expenses may recover the fair worth of his board, even though he actually paid nothing for it.'' Illustrations. — A employs B to buy stock for him. B buys the stock and pays for it. B is entitled to recover what he has paid from A: Durant v. Burt, 98 Mass. 161; Giddings v. /Sears, 103 Mass. 311; Brown v. Phelps, 103 Mass. 813. An agent innocently sells void bonds without disclosing his prin- cipal. He can recover from him all damages incurred by him in making the sale: Maitland v. Martin, 86 Pa. St. 120. An agent is compelled to make allowance to vendees of cotton on account of defective packing. He may recover what he paid from his principal: Beach v. Branch, 57 Ga. 362. A railroad conductor was instructed by the company not to receive for fare a certain class of tickets. A passenger presented such a ticket, but the conductor refused to receive it and ejected the passenger. The latter brought an action against him and re- covered judgment. Held, that the conductor had a right to recover against the company the amount of the judgment and the damage sustained by him: Howe v. Buffalo etc. R. R. Co., 37 N. Y. 298.^ R. was authorized by A. to make bets for A. in the name of R., and having jjaid the moneys, sued A. to recover the same. Held, that though the bets were not recoverable at law against R., and were revoked before paid, yet, having paid them to save himself from being excluded from the ring, R. was entitled to indemnity from A: Read v. Anderson, 21 Cent. L. J. 173. Defendant applied to plaintiff to know how he ' Curtis V. Barclay, 7 Dowl. & R. If it was right, the defendants should 539; 5 Barn. & C. 141. have paid it without exposing him to ^ Moore v. Remineton, 34 Barb. 427. imprisonment for an act done in good ' "The plaintiff," said the court, faith, in the interest and by the or- " acted in good faith, and in obedi- ders of the company. If it was wrong, ence to the defendant's instructions, the error should have been corrected He supposed the company to possess by a review of the jitdgment. The the authority it assumed, and he found appellants chose to abandon the de- himself involved in a serious liability fense and permit him to be the suf- by fidelity in discharge of a duty im- ferer. The court below was right in posed by his principal, where he was . holding that the plaintiff was entitled wholly free from intentional wrong, to redress. There is an implied obli- Under these circumstances, the com- gatiou on the part of the principal to pany very properly assumed the bur- indemnify an innocent agent for obey- den of defending his act. Whether ing his orders, where the act would the judgment reeovered against him have been lawful in respect to both was right or wrong is a question which if the principal really had the author- does not arise on the present appeal, ity which he claimed." § 98 PRINCIPAL AND AGENT. 156 should draw money from Scotland. Plaintiff advised him to draw a bill and send it to plaintiff to be forwarded. Defend- ant did so, and plaintiff indorsed and negotiated the bill; which, however, was returned protested, and plaintiff had to pay twenty per cent damages. Held, that plaintiflF, having acted as the agent of defendant in good faith, and without ex- pectation of profit, was entitled to recover back this loss from defendant: Ramsay v. Gardner, 11 Johns. 439. An agent pur- chased property for his principal, and was sued and arrested for the price which he was compelled to pay. Held, that his principal was bound to reimburse him for the amount paid, and costs and attorney's fees: Clarlc v. Jones, 16 Lea, 351. § 98. When Agent cannot Ask Reimbursement. — The disbursements or expenses, however, must not have been made without cause, or beyond the agent's authority or instructions,^ or after his authority has been revoked;^ nor must the agent have been guilty of negligence or unfaithfulness in his agency.' If the money advanced by the agent, or the liability incurred by him, were ad- vanced or incurred for an illegal or immoral purpose, no suit will lie by the agent against the principal for reim- bursement,* unless the agent had no knowledge of the illegality of the transaction, or his act was not a part of it.' Illusteationb. — A committee of a town to build a road ex- ceeded their authority, by building a better road than they were authorized to build. Held, that the town was not bound to reimburse to them the cost of such road: Keyes v. Westford, 17 Pick. 273. ' Pickering v. Demerritt, 100 Mass. the cargo had been lost: Storer v. 415; Day v. Holmes, 103 Mass. 307; Eaton, 50 Me. 219; 79 Am. Dec. 611. Van Dyke I). Brown, 8 N. J. Eq. 657; * Armstrong v. Toler, 11 Wheat. Schrack v. McKnight, 84 Pa. St. 30; 258; Kennett v. Chambers, 14 How. Corbin v. American Mills, 27 Conn. 38; Callagan v. Hallett, 1 Caines, 104; 274; 71 Am. Dec. 63; Williams v. Lit- Graves v. Delaplaine, 14 Johns, 146; tlefield, 12 Wend. 362; Howard v. Fareira v. Gabell, 89 Pa. St. 89; Ward Tneker, 1 Barn. & Ad. 772; Saveland v. Van Duzer, 2 Hall, 182; Stebbins V. Green, 36 Wis. 612. v. Leowolf, 3 Cush. 137; Trustees v. 2 Story on Agency, sec. 349. Galatian, 4 Cow. 340; St. John v. St. 3 Dodge V. Tileson, 12 Pick. 333; John's Church, 15 Barb. 346. Montriou v. Jefferys, 2 Car. & P. 113. * Armstrong v. Toler, 11 Wheat. An agent who neglects to insure cargo 258; Greenwood v. Curtis, 6 Mass, shipped to him as directed by the 358; 4 Am. Dec. 145; Rosewarne v. owner cannot maintain an action for Billing, 15 C. B., N. S., 316; Moore a premium of insurance, although he v. Appleton, 26 Ala. 633; Drummond would have been liable to the owner v. Humphreys, 39 Me. 347; Warren in damages for neglect of duty in case v. Hewitt, 45 Ga. 501. 157 DUTIES AND LIABILITIES TO THIED PERSONS. § 100 CHAPTER XI. DUTIES AND LIABILITIES OF AGENTS AND PRINCIPALS TO THIRD PERSONS. 1. Agents. — (a) On Contracts; (6) For Torts, (a) On Contracts. § 99. Agent to bind principal must execute authority in his name. § 100. Instruments under seal. § 101. Instruments not under seal. § 102. Illustrations. § 103. When agent personally bound — Descriptio personoe. § 104. Agent not personally liable. § 105. Foreign principal. § 106. Irresponsible principal. § 107. Agent liable where principal not disclosed. § 108. Agent may bind himself personally. § 109. Notice to agent not to pay over money to principal. § 110. Liability of agent acting without authority. (i) For Torts. % 111. Agent not liable personally for torts. § 112. Exceptions. 2. Principals. § 113. Liability of principal on agent's contracts — Law already discussed. § 114. Liability of principal for agent's torts. § 99. Agent to Bind Principal must Execute Authority in his Name. — An agent must execute his authority in the name of his principal, and not in his own.^ This is an old rule, which, most strictly applied to the execution of sealed instruments, has in modern times been greatly relaxed even as to them. § 100. Instruments under Seal. — As to instruments under seal, in order to bind the principal the instrument must purport to be made and sealed in the name of the * Staokpole v. Arnold, 11 Mass. 27; 87; Taylor v. Agricultural Soc, 68 6 Am. Deo. 150; Dennison v. Story, 1 Ala. 229. Or. 272; Spencer v. Field, 10 Wend. 100 PRINCIPAL AND AGENT, 158 principal.' In equity, however, if the agent, having au- thority to sign a sealed instrument for another, does so in his own name, and the principal receives the considera- tion, he will be bound to make good his implied promise.^ The deed need not be signed with the name of the attorney at all; the name of the principal alone is sufficient to con- stitute a proper execution by an attornej' or agent.' Where the deed purports to be made and sealed by the agent, he will be personally liable, even though he is described as agent.* But, on the other hand, where the deed purports to be the deed of the principal, executed by the agent as such, the agent is not bound, though through informality of execution or want of authority the principal is not bound.^ To bind the principal, no exact form of words * Inhabitants of Noblebon v. Clark, 68 Mo. 87; 28 Am. Rep. 22; New Eng- land Ins. Co. V. De Wolf, 8 Pick. 56; Stackpole v. Arnold, 11 Mass. 27; 6 Am. Dec. 1.50; Echols v. Cheney, 28 Cal. 157; Morrison u. 'Bowman, 29 Cal. 337; Brinley v. Mann, 2 Cash. 337; 48 Am. Dec. 669; ElweU v. Shaw, 16 Mass. 42; 8 Am. Dec. 126; Fullam v. West Brookfield, 9 Allen, 1; Stone v. Wood, 7 Cow. 452; 17 Am. Deo. 529; Townsend v. Corning, 23 Wend. 435; Briggs V. Partridge, 64 N. Y. 358; 21 Am. Hep. 617; Lutz v. Linthicum, 8 Pet. 165; Stinchfield v. Little, 1 Greenl. 231; 10 Am. Dec. 65; Hop- kins V. Mehaffy, 11 Serg. & R. 126; Hancock «. Yunker, 83 111. 208; Ein- stein V. Holt, 52 Mo. 340; Grubbs v. Wiley, 17 Miss. 29; Webster w. Brown, 2 Rich. 428; City of Providence v. Miller, 11 R. I. 272; Townsend «. Hub- bard, 4 Hill, 351; Clarke v. Courtney, 5 Pet. 319; Martin v. Flowers, 8 Leigh, 158; Skinner v. Gunn, 9 Port. 305; Fire Ins. Co. v. Doll, 35 Md. 89; Reed V. Latham, 40 Conn. 452; Andrews V. Estes, 11 Me. 267; 26 Am. Dec. 521; Harper v. Hampton, 1 Har. & J. 622; Heffernan v. Addams, 7 Watts, 121; Mears v. Morrison, 1 111. 223; Sheldon V. Dunlap, 16 N. J. L. 245; Wood v. Goodridge, 6 Cush. 117; 52 Am. Dec. 771; Savage v. Rix, 9 N. H. 263; Morse V. Green, 13 N. H. 32; 38 Am. Dec. 471; Peck v. Gardner. 9 Hun, 704. ^ Dubois V. Delaware etc. Co., 4 Wend. 285; Butlerw. Kaulback, 8Kan. 668; Robbinsw. Butler, 24 111. 387; De- vinney v. Reynolds, 1 Watts & S. 328; Lovejoy v. Richardson, 68 Me. 386; Emory v. Joice, 70 Mo. 537; Fouch V. Wilson, 59 Ind. 93; Clements v. Macheboeuf, 92 U. S. 418; Yerby v. Grigsby, 9 Leigh, 387; McNaughten v. Partridge, 11 Ohio, 223; 38 Am. Dec. 731. s Forsyth v. Day, 41 Me. 382; Hun- ter V. Giddings, 97 Mass. 41; 93 Am. Dec. 54; Devinney w. Reynolds, 1 Watts & S. 328; Berkey v. Judd, 22 Minn. 287. But see Wood v. Goodridge, 6 Cush. 117; 52 Am. Deo. 771. * Lutz V. Linthicum, 8 Pet. 165; Duvall V. Craig, 2 Wheat. 45; Fullam V. West Brookfield, 9 Allen, 1; Tippets V. Walker, 4 Mass. 595; Taft v. Brews- ter, 9 Johns. 334; Stone v. Wood, 7 Cow. 453; 17 Am. Dec. 529; White v. Skinner, 13 Johns. 307; 7 Am. Dec. 381; Kiersted v. Orange Co., 69 N. Y. 343; Doming V. Bullitt, 1 Blackf. 241; Quigley v. De Haas, 82 Pa. St. 267; Hancock v. Yunker, 83 111. 208; Hut- ton V. Bulloch, L. R. 9 Q. B. 572. * Hopkins v. Mehaffy, 11 Serg. & R. 126; Taylor v. Shelton, 30 Conn. 122; Ellis V. Pulsifer, 4 Allen, 1(55. C signed his name to a sealed instru- ment as agent, the body of the deed being in the name of the principal (a corporation), "by their agent." Held, 159 DUTIES AND LIABILITIES TO THIED PERSONS. § 100 has been declared necessary. What is necessary is, that it should appear that the agent and attorney sign as that C was not personally liable; Ab- bey V. Chase, 6 Cuah. 54. "It does not appear, " said Metcalf , J. , " whether the defendant had authority to bind the Hadley Falls Company, by deed or otherwise. But in the view which we take of the case, that question is immaterial. We deem it very mani- fest, on inspection of the instrument in suit, that it was the intention of the defendant to bind the company, and not to bind himself; and that the plaintiff must have so understood the contract. And if this had been a simple contract, executed by an au- thorized agent, the law would have given effect to that intention. The company, and not the defendant, would have been bound. The author- ities on this point are numerous and decisive: Northampton Bank v. Pe- poon, 11 Mass. 288; Andrews v. Es- tes, 11 Me. 270; 26 Am. Dec. 521; New England Ins. Co. v. De Wolf, 8 Pick. 56; Rice v. Gove, 22 Pick. 158; 33 Am. Deo. 724; Bayley on Bills, 2d Am. ed., 72, 73. But when a sealed instrument is executed by an agent or attorney, fcr the principal, the strict technical rule of the common law, which has never been relaxed in Eng- land or in this commonwealth, requires that it be executed in the name of the principal, in order to make it his deed: Brinley v. Mann, 2 Cush. 337; 4S Am. Dec. 669. ' In such cases, ' says Story, J. , ' the law looks not to the interest alone, but to the fact whether that intent has been executed in such a manner as to possess a legal validity ': Clarke v. Courtney, 5 Pet. 350; see also Locke V. Alexander, 1 Hawks, 416. The plaintiff's counsel, in applying this strict rule to the instrument in suit, contends that it does not bind the Hadley Falls Company, and that, as the defendant has not bound the company, he has bound himself. But in deciding whether the defendant has or has not bound himself, we need not decide whether he has or has not bound the company. For it does not necessarily follow that a contract made by an authorized agent, which does not bind the principal, becomes the agent's contract, and makes him answerable if it is not performed. This depends upon the legal effect of the terms of the contract. If the agent employs such terms as legally import an undertaking by the princi- pal only, the contract is the princi- pal's, and he alone is bound by it. But if the terms of the contract legally import a personal undertaking of the agent, and not of the prin- cipal, then it is the contract of the agent, and he alone is answerable for a breach of it. So when one who has no authority to act as another's agent assumes so to act, and makes either a deed or a simple contract in the name of the other, he is not personally liable on the covenants in the deed, or on the promise in the simple contract, unless it contains apt words to bind him personally: Stetson V. Patten, 2 Greenl. 358; 11 Am. Doc. Ill; Ballou V. Talbot, 16 Mass. 401; 8 Am. Dec. 146. Delius v. Cawthorn, 2 Dev. 90. The only remedy against him in this commonwealth is an action on the case for falsely assuming au- thority to act as agent. See also 13 Ad. & E., N. R., 744. These princi- ples lead us to the conclusion that the ruling at the trial of this case was wrong, and that the defendant is not chargeable in the present action. The instrument sued on purports to be, and was intended to be, a deed inter partes, namely, the Hadley Falls Com- pany and the plaintiff. The defend- ant, as agent of the company, signed his own name, merely adding thereto the word 'agent,' and affixed his own seal; the plaintiff signed his name, and affixed his seal; and these acts were done as the acts of the parties before named. It seems to us impos- sible to charge the defendant, on this instrument, as on a contract made by him with the plaintiff. If any words had been inserted in the instrument expressing the defendant's personal undertaking to fulfill the contract on behalf of the company, he would have been personally bound, although the instrument was prepared as a deed inter partes: Salter v. Kidgly, Carth. 76; Holt, 210. But no such words are found in the instrument. " § 100 PRINCIPAL AND AGENT. 160 agent or attorney for his principal.' The most proper mode — and one open to no attack — would be to sign the principal's name, adding, "by his agent, A B." But other forms have in adjudged cases been declared suf- ficient to bind the principal; e. g., "For A B" (prin- cipal), "C D" (agent).^ "Know that I, M., for myself, and as attorney for B, by his duly authorized letters of attorney." ^ " In witness, the said association, by J. S., its president, has hereunto set its seal, and the said J. S., president as aforesaid, has hereunto set his hand." Signed, " J. S., President."^ So it has been held that a deed signed in the name alone of the attorney does not bind the principal, although in the body of the instru- ment it is stated that it is the agreement of the principal, by A B, his agent, and that A B, as attorney of the prin- cipal, has set his hand and seal.^ And a deed which in the granting part uses the name of the agent is not made the principal's by being signed " C D," attorney to "A B." * And the same general rule applies where a deed is to be made to another through an agent. The deed must be made to and in the name of the principal. If the conveyance be made simply to the agent, the princi- pal will take nothing; though in equity he would be held a trustee for the principal.' Illustrations. — A deed was in form: "I, H., for myself, and as attorney for T., and G., wife of T., by their letters of at- torney under their hands and seals, in consideration of $1,850 to us paid by L., do sell and convey to L. and his heirs forever the following," etc. "And we, the said T. and G., do covenant with said L. that we are rightfully seised," etc. " In witness ^ Hunter v. Miller, 6 B. Mon. 612; " Squier v. Norris, 1 Lans. 282; Martin v. Almond, 25 Mo. 313; Mus- Copeland v. Insurance Co., 6 Pick, sey V. Scott, 7 Gush. 216; 54 Am. Dec. 198; Martin v. Flowers, 8 Leigh, 158; 719; Wilburut). Larkin, 3 Blackf. 55. Bogart i>. De Bussy, 6 Johns. 94; Tip- ^ Wharton on Agency, sec. 289, pets v. Walker, 4 Mass. 595; but see citing cases. Tidd v. Bines, 26 Minn. 201. ^ McClure V. Herring, post. ' Story on Agency, sec. 151, citing ' Murphy v. Welch, 128 Mass. 489. Clarke v. Courtney, 5 Pet. 319; Fox v. » Townsend v. Coming, 23 Wend. Frith, 10 Mees. & W. 131. 435; Fowler v. Shearer, 7 Mass. 19. 161 DUTIES AND LIABILITIES TO THIRD PERSONS. § 102 whereof, I, H., in my own right, have hereunto set my hand and seal, and as attorney for said T. and G., have hereunto set their hands and seals." To this deed were subscribed the names of H., and of T. and G. by H., their attorney in fact, with seals severally affixed to all the names. Held, that the deed was sufficient in form as the deed of T. and G. : McClure V. Herring, 70 Mo. 18; 35 Am. Rep. 404. § 101. Instruments not under Seal. — As to writings not under seal, the rule is less strict, and it may be laid down that if the name of the principal appears in such an instrument, and the intention on the whole is to bind him,, he will be bound though the agent sign only his own name; * especially is this the case as to commercial con- tracts, negotiable paper, and the like, the modern rule as to these being, that if from the whole instrument it can be collected that the intention was to bind the principal, this construction will be adopted, though the agent may not Lave used apt words to do so." § 102. Illustrations. — Thus negotiable paper in the following form has been held binding on the principal,, e. g.: "I promise to pay J. S. or order," signed "pro C D,, A B."^ "We jointly and severally promise," signed "A and B for C."* A note signed "A B," agent for "C D."'*- • New England Ins. Co. v. De Wolf, Rice v. Gove, 22 Pick. 158; 33 Am. 8 Pick. 56; Robertson tJ. Pope, 1 Rich. Dec. 724; King v. Handy, 2 III. App.. 501; 44 Am. Dec. 2G7; Farmers' Bank 212; Harkins v. Edwards, 1 Iowa, 429;. V. City Bank, 1 Doug. (Mich.) 458; Means v. Swormstedt, 32 Ind. 87; 2. Andrews v. Estes, 11 Me. 267; 2C Am. Rep. 3,30; Babcock v. Beman, 11 Am. Dec. 521; Townsends;. Hubbard, N. Y. 200; Key v. Parnham, 6 Har. 4 Hill, 351; Pinokney v. Hagadorn, 1 & J. 418; Lacy v. Dubuque Co., 43 ■ Duer, 89; 14 N. Y. 590; Evans v. Iowa, 510; Mott v. Hicks, 1 Cow. 513; Wells, 22 Wend. 324; Northwestern 13 Am. Dec. 550; Merchants' Bank. u. Distilling Co. V. Brant, 69 111. 658; 18 Hayes, 7 Hun, 530; Roberts?;. Button, Am. Rsp. 631; Douglass v. Branch 14Vt. 195; Mann u. Cliandler, 9 Ma,ss. . Bank of Mobile, 19 Ala. 659; Sayre v. 335; Andrews «. Estes, 11 Me. 267; 2Gv Nichols, 7 Cal. 635; 68 Am. Deo. 280. Am. Dec. 521; Davis v. Henderson, In Webb v. Burke, 5 B. Mon. 51, it is 25 Miss. 549; 59 Am. Dec. 229; Haile.- said to be well settled that if in the v. Peirce, 32 Md. 327; 3 Am. Rep. body of a writing A B as agent binds 139. C D, and then signs it" A B, agent for 'Long v. Colburn, 11 Mass. 97;; 6' G D," the writing will bind C D. Am. Dec. 160. 2 Mechanics' Bank v. Bank of Co- * Rice v. Gove, 22 Pick. 158; 33. lumbia, 5 Wheat. 326; Pentz v. Stan- Am. Dec. 724. ton, 10 Wend. 271; 25 Am. Deo. = Ballou v. Talbot, 16 Mass. 461j:8' 568; Stanton v. Camp, 4 Barb. 274; Am. Dec. 146. Vol. I.— 11 §102 PKINCIPAL AND AGENT. 162 " By authority from B, I hereby guarantee the payment of this note," signed by the agent in his own name.^ " I undertake on behalf of Messrs. E. & Co. to pay."^ "S. W. P. for A. and R."' " W. S. for himself and G. Jj."* "11. M. Moore, P. D. L. Co."» "T. M., agent for P. M."" "We promise to pay," signed " S., secy.," and sealed with a corporate seal.' " A. B., agent of Co."^ A bank-check with "^tna Mills" printed on the margin, and signed " F., treasurer."' A note with, in the body, the words, " We promise," and signed " V., for N. B. & Co."^" A note drawn to " C. W. Smith, treasurer of the Indianapolis Brick Co."" a draft concluding, 'and charge the same to account of proprietors Pem- broke Iron Works, your humble ser- vant, Joseph Barrel!,' without other- wise naming a principal or disclosing the signer's agency, was held to bind him only, it was said by the court that in Fuller v. Hooper the words ' Pomp- ton Iron Works, ' in the margin of the draft, fully disclosed the principal, and that the draft was drawn on his be- half. So in Slawson v. Loring, 5 Al- len, 340, 343, in which a draft having the words, ' Office of Portage Lake Manufacturing Company, Hancock, Michigan,' printed at the top, was signed 'I. R. Jackson, agent,' Chief Justice Bigelow, said: 'No one can doubt that on bills thus dra\/n the agent fully discloses his principal, and that the drawer could not be personally chargeable thereon. ' The instrument in question, therefore, binds the cor- poration, and not its treasurer per- sonally." '» Cook V. Sanford, 3 Dana, 237. " Vater v. Lewis, 36 Ind. 288; 10 Am. Rep. 29. In this case the court hu- morously observed: "To say that the contract was not with the company, but with Smith individually, and that his designation as treasurer was merely a description of him, so that he, being one only of all the great family of Smiths, might be known and identi- fied as the payee of the note, would he a perversion of the evident intent of tlie parties." And see Babcook v. Beaman, 1 E. t). Smith. 593. 1 New England Ins. Co. v. De Wolf, 8 Pick. 56. 2 Pownman v. Jones, 7 Q. B. 103. 3 King V. Handy, 2 111. App. 212. * Olcott V. Little, 9 N. H. 259. ^ Lacy V. Dubuque Lumber Co., 43 Iowa, 510. ° Hill V. Miller, 76 N. Y. 32. ' Means v. Swormstedt, 32 Ind. 87; 2 Am. Rep. 330; Houghton v. First National Bank, 26 Wis. 663; 7 Am. Rep. 107. 8 Hovey V. Magill, 2 Conn. 680. ' Carpenter v. Farnsworth, 106 Mass. 561; 8 Am. Rep. 360. In this case the court said: "Tlie case is not dis- tinguished from those in which similar instruments have been held by this court to be the contracts of the prin- cipal only. The court has always laid hold of any indication on the face of the paper, however informally ex- pressed, to enable it to carry out the intentions of the parties. In Tripp v. Swanzey Paper Co., 13 Pick. 291, a draft not naming the principal other- wise than by concluding, ' and charge the same to the Swanzey Paper Com- pany, yours respectfully, Joseph Hooper, agent,' was held to be the draft of the company. In Fuller v. Hooper, 3 Gray, 334, a draft with the words, 'Pompton Iron Works,' printed in the margin, and concluding, ' which place to the account of Pomp- ton Iron Works, W. Burtt, agent,' was held to bind the proprietor of the Pompton Iron Works; and in Bank of British North America v. Hooper, 5 Gray, 567, 06 Am. Dec. 390, in which 163 DUTIES AND LIABILITIES TO THIUD TEnSONS. § 102 Illustrations. — A note was in this form: "$23.00. Lee, April 26, 1858. On demand, I, as treasurer of the Congrega- tional Society, or my successors in office, promise to pay A. B., or order, twenty-three dollars, value received, with interest. S. S. R., treasurer." Held, the note of the society: Barlow v. Lee Gong. Soc, 8 Allen, 460. A promissory note purporting to be made by the inhabitants of School District No. 5, in a town, was signed "A. B., treasurer of District No. 5." Held, the promise of the district: Whitney v. Stow, 111 Mass. 368. A bill of ex- change, stamped in the margin, "Pompton Iron Works," and concluded thus, "Which place to account of Pompton Iron Works, W. Burtt, agent." Held, the bill of the Pompton Iron Works, and is binding on the person carrying on business in that name, if Burtt was his authorized agent: Fuller v. Hooper, 3 Gray, 334. A draft was headed "New England Agency of the Pennsylvania Fire Insurance Company," having the words "Foster and Cole, General Agents for the New England States," printed in the margin, and appearing on its face to be drawn upon said insurance company in payment of a claim against it. Held, the draft of the company, and not of Foster and Cole, although it is signed by them in their own names: Chipman v. Foster, 119 Mass. 189. A written agreement purporting to be between T., agent of the steamship A., of the one part, and G. of the other part, and signed by "T., agent," and G., provided that the party of the first part let to the party of the second part a certain space on the steamship for the conveyance of cattle; that the steamship should put on board a condenser capable of supplying the cattle with water; that the captain was to allow his officers and crew to render assistance in case of emergency, without liability to the ship-owner; that the attendants of the cattle were to have passages free of charge, but without liability to the ship-owner; and that the steamship was to have a lien on the cattle for the freight. Held, that the agreement was the contract of the steamship and her owners, and not of T. per- sonally: Goodenough v. Thayer, 132 Mass. 152. The following agreement, "I have, this ninth day of January, 1817, hired of A the following slaves for the use of B, and agree, on behalf of said B., to give eighty dollars as wages for each of the said ne- groes," etc., and signed "C." Held, not to bind C personally: Key V. Parnham, 6 Har. & J. 418. Articles were purchased for a manufacturing company, of which A was the agent, who gave a due-bill in this form: "Due E. M., seventy-eight dollars, value received. A, agent for the manufacturing company." Held, that A was not personally liable thereon: McCall v. Clayton, Busb. 422. A contracted with B for grain, and the price of the grain was to be paid by C, who signed the agreement for A thus: "A, by his agent C." Held, that it was the contract of'' § 102 PRINCIPAL AND AGENT. 164 the principal: Thompson v. Chouteau, 12 Mo. 488. A bond was signed "A B, for C D," and the name of A B was not mentioned in the body of the bond, which only purported to bind C D. Held, in an action of covenant on the bond against A B, that he executed the bond as agent only, and that the plaintiff could not recover: Grubbs v. Wiley, 9 Smedes & M. 29. H. contracted, in writing, as the agent of K., for the purchase of goods to be delivered at a future time to him or to his principal. It was expressly stated in the contract that H. was contracting as an agent, the name of hiy principal was disclosed, and there was an acknowledgment of the receipt of one dollar to bind the princi- pal. K. refused to receive the goods when tendered. Held, that H. was not personally liable to the vendor upon the con- tract: McClcrnan v. Hall, 33 Md. 293. A. bill of exchange was headed with the Bame of a banking office, and when paid was to be charged to that office, and was signed by a person as agent. Held, that the agent was not personally responsible thereon: Sayre v. Nichols, 7 Cal. 535. A bill of exchange headed, "Office of the A B Co., and concluding, "Charge same to account of A B Co., X, Pres't, Y, Sec'y, held to be the bill of the com- pany: Hitchcock v. Buchanan, 105 U. S. 416. A lease recites that it is made by "M., agent of D.," and is signed in the same way. Held, that D., and not M., is bound: Avery v. Dough- erty, 102 Ind. 443; 52 Am. Kep. 680. A check signed by A, '•V. Pres't," and by C, "Sec'y," was given to a party who knew it to be a check of the corporation of which A and C were re- spectively vice-president and secretary. Held, not to bind A and C personally: Metcalfv. Williams, 104 U. S. 93. An order drawn upon E., treasurer of the N. & N. W. R. R. Co., with a direction "to change to February estimates," was accepted by his writing upon it, "Accepted, payable on return of March esti- mates. E., Treas." Held, that E. was not personally liable: Amison v. Ewing, 2 Cold. 366. James Harter and S. M. Stran- ahan were sued as joint makers with the Ocean Mining Com- pany of a note, set forth in the complaint, in the following form: "Three months after date, the Ocean Mining Company promise to pay to W. G. Bright, or order, one thousand dollars, for value received, with interest at the rate of two per cent per month. (Signed) James Harter, trustee, S. N. Stranahan." Judgment by default was rendered against the company and H. and S. Held, that this judgment was erroneous; that the instrument itself showed the intention of H. and S. to bind the company, and not themselves, and that they were not personally liable: Shaver v. Ocean M. Co., 21 Cal. 45. Three persons hold- ing land as trustees of an association composed of themselves and several other persons, called "the B. Company," entered into two contracts with the plaintiff, which by the articles of 165 DUTIES AND LIABILITIES TO THIRD PERSONS. § 103 the trust they were authorized to make on behalf of the share- holders. Both of these contracts stated on their face that they were made by the trustees "as trustees of the B. Company," and were both signed by these persons "as trustees of the same company." By the first contract the plaintiff was to construct a wharf "for said company on their land," on the line of a dock or canal, "to be excavated for said company" ; and " payments shall be made" at stated times. The second contract recited that the plaintiff agreed to construct a canal or dock "for said company on the company's land"; and the provision as to payments was substantially like that in the first contract. Held, that it was intended by these contracts to bind the com- pany, and not the trustees personally, and that they were suffi- cient in form for that purpose, and that the addition of seals, being unnecessary, might be disregarded as surplusage: Cook v. Gray. 13.3 Mass. 106. § 103. When Agent Personally Bound — Descriptio Fersonse. — But there are cases which hold that where in the body of the instrument there is nothing to show an intention to bind a principal, the mere signing "as agent" for a described principal will not prevent it from being a personal contract of the agent.' And where no idea of agency appears on the face of the instrument, — the con- tract being signed bj' the agent, in his own name, and the principal not being mentioned, — the principal is not bound, and the agent is.* And the agent is bound even ' Quigley V. De Haas, 82 Pa. St. 267; treasurer of Mechanics' Falls Dairying Robinson v. Bank, 44 Ohio St. 441; Ass'n." Held, that it bound G. M.: Hoffiier V. Brownell, 70 Iowa, 691; Mellen v. Moore, 68 Me. 390; 28 Am. Williams v. Robbins, 16 Gray, 77; 77 Rep. 77. In this case the court held Am. Deo. 396; Bickford v. Bank, 42 that there was no difference between 111. 238; 89 Am. Dec. 436; McClure the words " I promise " and " we prom- V. Livermore, 78 Me. 390; Exchange ise,"in the body of an instrument, so Bank v. Lewis Co., 28 W. Va. 273. far as a personal liability was con- An agent signed a bill of exchange, cerned. In the body of a bond the lan- "T. R. T., agent for S. T." There guage used was " I promise to pay, " no was nothing in the body of the bill name being mentioned; and it was which hinted at a principal. Held, signed "H. S. L., for C. C., president that the agent was bound: Taunatt v. of the Chester Mica and Porcelain Co. " Rocky Mountain Bank, 1 Col. 278; 9 Held, that the agent was individually Am. Rep. 156. A note was signed liable: Bryson v. Lucas, 84 N. C. 680; " For B. Ayres, W. B. Ayres." Held, 37 Am. Rep. 635. that W. B. Ayres was bound: OflFutt ». ^ -Wood i;. Goodridge, 6 Cush. 117; Ayres, 7 T. B. Mon. 356. A promis- 52 Am. Dec. 771; Bartlett v. Tucker, sory note in the body read " we prom- 104 Mass. 336; 6 Am. Rep. 240; Squier ise to pay," and was signed "G. M., v. Norris, 1 Lans. 282; Galusha v. 103 PRINCIPAL AND AGENT. 166 though he is described in the contract as agent, if he makes the contract in his own name.' And this is so even where a note is signed as " agent," but for whom is not shown. The word "agent" in such cases is regarded as mere descriptio personse.^ The courts think it better that the contract should be enforced as it reads, than to per- mit evidence to be given that somebody not mentioned at all was really bound. "When a man has deliberately said in writing, 'I promise to pay,' and a valid consideration for the promise is shown, right and justice are not very likely to be the gainers by allowing him to retract and undertake to prove that he did not actually mean 'I prom- ise,' but that he meant, and the other party understood that he meant, that some third party, whose promise the writing does not purport to be, undertook the payment. It is better that a careless or ignorant agent should some- Hitchcock, 29 Barb. 193; Minard v. Mead, 7 Wend. 68; Bank of British North America ?;. Hooper, 5 Gray. 567; C3 Am. Dec. 390; Andertou v. Shoup, 17 Ohio St. 128; Williams v. Bobbins, 16 Gray, 77; 77 Am. Dec. 396; De Witt V. Walton, 9 N. Y. 571; Taber v. Cannon, 8 Met. 456; Snelling v. How- ard, 51 N. Y. 373; Einstein v. Holt, 52 Mo. 340; Bradlee v. Boston Mfg. Co., 16 Pick. 347; Bank of Rochester V. Mouteath, 1 Denio, 402; 43 Am. Deo. 681. 1 Stone V. Wood, 7 Cow. 453; 17 Am. Dee. 529; Hancock v. Fairfield, 30 Me. 299; Hall v. Bradbury, 40 Conn. 32; Graham v. Campbell, 56 Ga. 258; Toledo Agricultural Works v. Heisser, 51 Mo. 128; Kenyou v. Williams, 19 Ind. 45; Arnold v. Sprague, 34 Vt. 409; Anderson v. Pearce, 3S Ark. 293; 38 Am. Rep. 39; Sturdivant v. Hull, 69 Me. 172; 8 Am. Rep. 409; Hender- son V. Martin, 19 Ark. 447; 70 Am. Dec. 606. 2 Pentz V. Stanton, 10 Wend. 271; 25 Am. Dec. 558; Collins f. Buckeye Ins. Co., 17 Ohio St. 215; 93 Am. Dec. 612; Woodbury w. Blair, 18 Iowa, 572; Bick- ford V. Bank, 42 111. 238; 89 Am. Dec. 436; Rathbun I). Budlong, 15 Johns. 1; lUnd V. Hale, 3 W. Va. 495; 100 Am. Dec. 761; Tucker Mfg. Co. v. Fair- banks, 98 Mass. 101; Merchants' Bank W.Hayes, 7 Hun, 530; Hills t;. Bannister, 8 Cow. 31; Fisk v. Eldridge, 12 Gray, 474; Slawson v. Loring, 5 Allen, 340; 81 Am. Dec. 750; Towne v. Rice, 122 Mass. 67; Winsor v. Griggs, 5 Cush. 210; Hall v. Bradbury, 40 Conn. 32; Price V. Taylor, 5 Hurl. & N. 540; City of Detroit v. Jackson, 1 Dong. (Mich.) 115; Powers v. BHggs, 79 111. 493; 22 Am. Rep. 175; Burlingamo v. Brewster, 79 111. 515; 22 Am. Rep. 177; Chadsey v. McCreery, 27 111. 253; Drake v. Flewellen, 33 Ala. 106; Fow- ler V. Atkinson, 6 Minn. 578. A. C. makes a promissory note which he signs "A. C, agent." This binds A. C. only: WillLp-ms v. Robbins, 10 Gray, 77; 77 Am»Dec. 396. H. signs a note "D. H., agent for the churchman." H, and not the churchman, is bond: De Witt V. Walton, 9 N. Y. 571. But see Mott v. Hicks, 1 Cow. 513; Green V. Skeel, 2 Hun, 487; Bank of Gen- nesee v. Patchin Bank, 19 N. Y. 317. And aliter where the agent has been in the habit of signing notes which liave been regularly paid by the prin- cipal: Hovey v. Magill, 2 Conn. 680; see 15 Alb. L. J. 409; 16 Alb. L. J. 117, 345. 167 DUTIES AND LIABILITIES TO THIRD PERSONS. § 103 times pay for his principal than to subject the construc- tion of valid written contracts to the manifold perversions, misapprehensions, and uncertainties of oral testimony.'" The word "agent" after the name of the drawer of a hill of exchange does not necessarily relieve him from per- sonal liability, when there is nothing in the bill to indi- cate his principal.^ The addition, "Vestryman, Grace Church," to each of the names attached to a note does not make it anything but the note of the individuals signing it, if it does not purport to bind the corporation.' Illustrations. — A promissory note was indorsed, "L. R., re- ceiver." Held, to bind L. R. personally: Towne v. Rice, 122 Mass. 67. A lease was to " C, treasurer of the Eagle Lodge," and signed by him, "C, treas." Held, to bind C. personally: Seaver v. Goburn, 10 Cush. 324. A submission to arbitration was signed "G. G., agent." Held, to bind G. G. to perform the award; the name of the principal not being known to the other party: Winsor v. Griggs, 5 Cush. 210. In a promissory note no principal is mentioned, and it is signed "A B, agt." Held, to bind A B only: Williams v. Eohbins, 16 Gray, 77; 77 Am. Dec. 396. A note was in this form: "We, the prudential com- mittee for and in behalf of the Baptist Church in Lee," etc., signed by the makers, without addition to their names. Held, to bind the signers personally: Morell v. Godding, 4 Allen, 403. A contract signed by G. and C. individually, employing G. as treasurer of the I. Company, and reciting that it was an "un- derstanding had with G. as between himself and C, president and representing the I. Company." Held, to bind C. personally: Guernsey v. Gook, 117 Mass. 548. In an action upon the note, "Sixty days after date, we promise to pay to the order of B. $342.25, at S. B. of P., value received," (signed) "W. S., president Blannerhassett Oil Co.," (indorsed) "W. II. H, treas- urer," — held, that S. and H. were personally liable thereon: Scott V. Baker, 3 W. Va. 285. A paper acknowledging receipt of five hundred dollars, to be used to buy Spencer rifles for Company I, Forty-ninth Regiment, Missouri Volunteers, said money to be returned as soon as the county bounty is paid to said company," and signed by B, "Captain Forty-ninth Regi- ment, Missouri Volunteers, Commanding Post," held, to create a liability personal, and not as agent, an irresponsible principal » Sturdivant v. HuU, 59 Me. 172; 8 ' Tilden v. Barnard, 43 Mich. 376; Am. Rep. 409. 38 Am. Rep. 197. => Bank V. Cook, 38 Ohio St. 442. § 104 PKINCIPAL ANO AGENT. 168!^ being disclosed in such military company, and not to be ex-' plainable by parol evidence: Blakely v. Bennecke, 59 Mo. 193. A promissory note in form, "We promise to pay," given by trustees of an incorporated lodge for the debt of the lodge, and signed "A, B, C, Trustees Perry Lodge," held, the individual note of the signers, and not the note of the lodge, and it cannot be shown by parol that it was intended to be the note of the lodge:' Williams v. Lafayette Bank, 83 Ind. 237. § 104. Agent not Personally Liable. — An agent act- ing within his authority, and making a contract in the name of bis principal, binds the latter, and incurs no per- sonal liability.^ If in the body of a note it appear that the note is the note of the principal, or made by the signer for and as agent of the principal, it is the note of the latter, even though tfie words " agent for," or the like, are not added to the signature.* Where one contracts ■with or sells goods to an agent of a known principal, the principal, and not the agent, is liable on the contract for the price,^ unless it is clear that the vendor sold upon the credit of the agent alone.* Where an agent does not dis- ' A promissory note signed by A as sued npon contracts made by him on president of a certain named corpora- behalf of his principal if the name of tion, andbyBas "secretaryp;'OfcOT.," his principal is disclosed and made is the note of tlie corporation, althongh known to the person contracted with initsbodyitsays"wopromise topay," at the time of entering into the etc. : Farmers' and Mechanics' Bank contract " : Rathbon v. Budlong, 15 V. Colby, 64 Cal. 352. An instrument Johns. 1. signed "B, agent, "may be deemed the * Haskell tr. Cornish, 13 Cal. 45. contract of the principal, when, from ' Meeker v. Claghorn, 44 N. Y. 349. the body of the instrument, such con- H., being insolvent, carried on busi- struction can fairly be put npon it: ness in the name of C. K., who had Bradstreet v. Baker, 14 K. I. 546. no interest in the profits, but allowed 2 Owen V. Gooch, 2 Esp. 567; Tiller his name to be used. F. sold to H. t>. Spradley, 39 Ga. 35; McCIernaa v. goods, the purchase being made in the Hall, 33 Md. 293; Story on Agency, name of 0. K., and the bill was made sec. 261; Oelricks v. Ford, 23 How. out in his name. Held, that 0. K., 49; Pitman v. Kintner, 5 Blackf. 250; and not H., was liable: Ferris v. Kil- 33 Am. Dec. 469; Simonds v. Heard, mer, 48 N. Y. 302. 23 Pick. 120; 34 Am. Dec. 41; Hallr. * Ferris v. Kilmer, 48 N. Y. 303; Huntoon, 17 Vt. 244; 44 Am. Dec. Butler v. Evening Mail Ass'u, 61 N. 332; Davis v. Burnett, 4 Jones, 71; C7 Y. 634; Meeker v. Claghorn, 44 N. Y. Am. Dec. 263; Whitney v. Wyman, 349. "No rule of law is better ascer- 101 U. S. 392; Maury v. Banger, 38 tained, or stands upon a stronger foun- La. Ann. 485; 58 Am. Kep. 197; dation, than this: tliat where an agent Piercy v. Hedriek, 2 W. Va. 458; 98 names his principal, the principal is Am. Dec. 774. "The general princi- responsible, not the agent. But for pie is, that an agent is not liable to be the application of that rule the agent 169 DUTIES AND LIABILITIES TO THIRD PERSONS. § 104 close his character or his principal, but the other party actually knows both at the time, the agent is not bound by the contract, unless the contract is such as would bind him at all events.^ Where one acting professedly as the agent of B contracts with C for his services, C cannot re- cover, in an action against the agent, without showing prima facie a want of authority in the agent to bind B. In such case the onus lies on C to show the want of au- thority in the agent.^ A railroad freight agent cannot be made a defendant in an action for his refusal to deliver up freight until certain charges have been paid, he not claiming to control the property except as the agent of the company.^ A contract is void when it is not binding upon the principal for want of authority in the agent to. make it, and not binding on the agent for want of apt words to charge him personally.* Illustrations. — R., having a possessory interest in certain premises which had been sold under a foreclosure decree, em- ployed M. to manage the property and receive all its proceeds, and pay them over in certain fixed proportions to R. and S. Held, that M. was a mere agent of R., and not a " tenant in pos- session," and therefore not liable to the purchaser at the sale for the rents and profits: Shores v. Scott River Co., 21 Cal. 135. Agents were employed by importers to pass goods through the custom-house; they were known by the officers of the customs to be agents; they removed certain goods reported to be free of duty and sent them to their principals; afterwards it was dis- covered that they were liable to duty, and an action for the must name his principal as the person employed by him. The client has to be responsible. In the common nothing to do with the stationer if case of an upholsterer employed to the attorney becomes insolvent. The furnish a house, dealing himself in client pays the attorney. ' The sta- only one branch of business, he applies tioner therefore has no remedy against to other persons to furnish those arti- the client ": Lord Erskiue, in Ex parte cles in which he does not deal. Those Hartop, 12 Ves. 352. persons know the house is mine. That 'Chase v. Debolt, 7 111. .371; War- is expressly stated to them. But it ren «. Dickson, 27 111. 115; Robeson ti. does not foUow that I, though the per- Chapman, 6 Ind. 352. son to have the enjoyment of the arti- * Plumb v. Milk, 19 Barb. 74. cles furnished, am responsible. Sup- ^ McDougall v. Travis, 24 Hun, pose another case: A person instructs 590. an attorney to bring an action, who * Hall v. Crandall, 29 Cal. 567; 89 employs his o^vu stationer, generally Am. Deo. 64. § 105 PRINCIPAL AND AGENT. 170 duty was brought against the agents. Held, that they were not liable: United States v. Bevan, Crabbe, 324. A commercial firm publishes a notice in a newspaper that a certain person will act as their agent. Such person advertises for the purchase of cot- ton in the name of the firm. Held, that it will be presumed that his purchases are made for the firm: Hamilton v. Eimer, 20 La. Ann. 391. A, as the attorney in fact of B, receives money in which C has the beneficiary interest. C cannot maintain an action against A for the money so received, but must sue B, the principal: Stephens v. Baker, 7 N. J. L. 1. Defendant took a telegram to the plaintiff, a surgeon in the city of New York, from the family physician of the defendant's brother in Con- necticut, in pursuance of which telegram the plain tifi" went to Connecticut and performed a surgical operation upon the de- fendant's brother, the defendant accompanying the plaintiff to Connecticut and paying his railroad fares, but not saying or doing anything beyond the duties of an agent. Held, not liable for the services performed by the plaintiff for his brother: Buch V. Amidon, 41 How. Pr. 370. § 105. Foreign Principal. — In England, in the case of an agent of a foreign principal, the rule was that the credit was presumed to be given to the agent even where the principal was known.' The American courts, after some hesitancy, refused to apply this principle when the principal was simply a "foreigner" in the sense of resid- ing in another state of the Union. ^ And the well-estab- lished doctrine at the present day, both in England^ and America, is, that the agent of a foreign principal is not, as matter of law, personally liable, but it is a question of fact for the jury, to be decided on the terms of the con- tract and the surrounding circumstances.' 1 Thomson v. Davenport, 9 Barn. & Stainer, 22 Wend. 254; Vawter v. C. 78; Story on Agency, sec. 268; Baker, 23 Intl. 63. New Castle Mfg. Co. v. Red River * Green v. Kopke, 18 Com. B. 549; R. R. Co., 1 Rob. (La.) 145; 36 Am. Armstrong v. Stokes, L. R. 7 Q. B. Dec. 68G; McKenzie v. Nevius, 22 603; Mahony v. Kekule, 14 Com. B. Me. 13S; 38 Am. Deo. 291; except 390. where the contract provided that the * Oelrioks v. Ford, 23 How. 49; agent should not be bound: Ogleby Rogers v. March, 33 Me. 106; Gold- V. Yglesias, 1 El. B. & E. 930; Peder- smith v. Manheim, 109 Masa. 187. A sou V. Lotinga, 28 L. T. Rep. 267. contract was entered into in New York ^ Taintor v. Prendergast, 3 Hill, 72; for the sale of stone by the agent of 38 Am. Dec. 618; Kirkpatrick v. A. F., who lived in New Brunswick. 171 DUTIES AND LIABILITIES TC THIRD PERSONS. § 106 § 106. Irresponsible Principal. — Where the agent acts for an irresponsible principal, — that is to say, a It was signed "A. F., by K., agent." Held, that K. was not bound: Bray v. Kettell, 1 Allen, 80. The opinion of Bigelow, C. J. , in this case, contains a full statement of the present accepted law as to foreign principals. "'±his action 13 brought to recover damages for a breach cf a written contract of affreightment entered into by the de- fendants in behalf of one Charles D. Archibald, doing business under the name and style of the Albert Free- stone Quarries, and executed by sign- ing the same with the business name of their principal by themselves as agents. The only question in the case is, whether the defendants can be held liable on this contract. The plaintiff does not controvert the general rule of law, that an agent is not personally responsible upon an instrument exe- cuted in the name of his principal. But ho rests his claim against the de- fendants upon the ground that the present case falls within a recognized exception to the rule, because the de- fendants acted, in making the con- tract, in behalf of a foreign principal, resident 'beyond seas.' It is cer- tainly true that some of the earlier English cases seem to sanction the doctrine that where an agent acts for a foreign principal, the presumption is that credit is given exclusively to the agent, and he only is liable on contracts entered into in the name and on behalf of his principal: Gonzales v. Sladen, Bull. N. P. 130; De Gaillon V. L'Aigle, 1 Bos. & P. 368; Thomson V. Davenport, 9 Barn. & C. 84; Smyth V. Anderson, 7 Com. B. 21. The same doctrine is stated in Paley on Agency, 4th Am. ed., 248, 2 Livermore on Agency, 249, and especially in Story on Agency, sees. 268, 290, where it is enunciated as a general rule, that agents acting for merchants residing in a foreign country are held person- ally liable on all contracts made by them for their employers, and this without any distinction whether they describe themselves in the contract as agents or not. We are inclined to think that a careful examination of the cases which are cited in support of this supposed rule will show that this statement is altogether too broad and comprehensive. Certain it is, that if it ever was received as a correct exposition of the law, it has been es- sentially modified by the more recently adjudged cases. It doubtless had its origin in a custom or usage of trade existing in England, by which the do- mestic factor or agent was deemed to be the contracting party to whom credit was exclusively given; and it was confined to cases where the claim against the agent was for goods sold, and was not extended to written in- struments. Bat it is going quite too far to say that this usage or custom is so ingrafted into the common law as to become a fixed and established rule, creating a presumption in all cases that the agent is exclusively liable, to the entire exoneration of his employer. The more reasonable and correct doc- trine is, that when goods are sold to a domestic agent, or a contract is made by him, the fact that he acts for a for- eign principal is evidence only that the agent, and not the principal, is lia- ble. It is in reality in all cases a question to whom credit was in fact given. Where goods are sold, it is certainly reasonable to suppose that the vendor trusted to the credit of a person residing in the same country with himself, subject to laws with which he is familiar, and to process for the immediate enforcement of debt, rather than to a principal residing abroad, under a different system of laws, and beyond the jurisdiction of the domestic forum. But even in such a case, the fact that the principal is resident in a foreign country is only one circumstance entering into the question of credit, and is liable to be controlled by other facts. So in the case of a written contract: it depends on the intention of the parties. But this, as in all other cases of written in- struments, must be determined mainly by the terms of the contract. There may be cases where the language of the contract is ambiguous, and it is doubtful to whom the parties intended to give credit, in which the circum- §107 PEINCIPAL AND AGENT. 172 principal against whom the creditor cannot legally proceed, — the agent will be personally liable, even though he contract as agent for a known and described principal.* § 107. Agent Liable where Principal not Disclosed. — An agent who does not disclose the fact that he is acting for another is liable personally on contracts he makes stance that the principal is resident abroad may be taken into consider- ation in determining the question of the liability of the agent. But where the terms of the contract are clear and unambiguous, it must be deemed the final repository of the in- tention of the parties; and its con- struction and legal effect cannot be varied or changed by any reference to facts or circumstances affecting the convenience of the parties, or the rea- sonableness of the contract into which they have entered. In such a case, therefore, it makes no difference whether the principal is a foreigner or not. If by the language of the contract the agent, and not the princi- pal, is bound, such must be its con- struction; and, on the other hand, if it clearly binds the principal, and is in form a contract with him only, the agent must be exonerated without re- gard to the fact that the principal is resident in a foreign country. This rule can work no hardship, because parties can in all cases make their contracts in such form as to bind those to whom they intended to give credit: Mahony v. Kekul^, 14 Com. B. 390; Green v. Kopke, 18 Com. B. 549; Len- nard v. Robinson, 5 El. & B. 125; Kirkpatriok v. Stainer, 22 Wend. 244; 2 Kent's Com., 6th ed., 631, note; Paley on Agency, 4th Am. ed., 248, note. These principles are decisive of the case at bar. The written con- tract on which the plaintiff relies con- tains no words from which any intent to bind the defendants can be inferred. On the contrary, it is executed in the precise form required by law to bind the principal only and to exonerate tiie agent. The name under which the principal conducted his business is signed by the defendants as his agents. It would have been open to nrore question if the defendants had signed their own names for their prin- cipal; but the contract is executed by the agents in the precise and technical form in which, by the strictest rule of law, it should be signed in order to bind the principal only: Story on Agency, sec. 153. There can be no doubt that if the principal resided in this country he alone could have been sued on the contract. In like manner, he only is responsible, although a foreigner, be- cause he is the sole party to it, and there is nothing to control the intent manifested by this mode of executing the contract. The defendants are in no sense parties to it, and are not lia- ble in this action for damages occa- sioned by the neglect of their principal to comply with its terms. " On a con- tract of affreightment executed by a foreign agent, but disclosing the fact of the agency and the name of the principal, the agent is not personally liable: Maury v. Kanger, 38 Aa. Ann. 485; 58 Am. Rep. 197. 1 Story on Agency, sec. 280-290; Thacher v. Dinsmorc, 5 Mass. 299; 4 Am. Dec. 61; Sumner v. Williams, 8 Mass. 162; 5 Am. Deo. 83; Roberts V. Button, 14 Vt. 195; Blakely v. Ben- necke, 59 Mo. 193; Tassey v. Church, 4 Watts & S. 141; 39 Am. Dec. 65. A signed a note "as guardian of B." Held, that A was personally liable. "As an administrator, " said the court, " cannot by his promise bind the estate of the intestate, so neither can the guar- dian by his contract bind the person or estate of his ward. Unless, therefore, the defendant is liable to pay this no^'e, the plaintiff has no remedy"; Forster V. Fuller, 6 Mass. 59; 4 Am. Dec. 87. 173 DUTIES AND LIABILITIES TO THIRD PERSONS. § 107 ■with others.* When one purchases propertj', he binds himself, unless he discloses a principal whom he can and does bind.'' The duty is upon the agent, if he would avoid personal liability, to disclose his agency, not upon others to discover it.' And the agent is liable, although the person he deals with knows he is an agent, but does not know who his principal is."" An agent of an unincorpo- rated company is not discharged from his liability to pay for work done for him by one whom he has employed without disclosing his agency, by the fact that after the work was performed the laborer was informed by another person of the agency, and thereupon altered the entry in his book of accounts by substituting the name of the company for that of the agent, if he never attempted to enforce his claim against the company, and did not know of what individuals it was composed, and before the com- mencement of his action against the agent replaced the name of the agent in his books as his debtor.^ Where a person contracts with another, who is in fact the agent of an undisclosed principal, he may, on discovering who the principal is, resort to him or to the agent with whom 1 Taintor ». Prendergast, 3 Hill, 72; Miller, 81 Ala. 307; Bridges v. Bid- 38 Am. Deo. 618; Welch v. Goodwin, well, 20 Neb. 185. 123 Mass. 71; 25 Am. Rep. 24; Mc- ^ Button „, Winslow, 53 Vt. 430. Clellan v. Parker, 27 Mo. 102; Wheeler ' Baldwin v. Leonard, 39 Vt. 260; 94 V. Reed, 36 111. 182; Rushing v. Sobree, Am. Deo. 324. 12 Bush, 198; Winsor v. Griggs, 5 * Paterson v. Gandasequi, 15 East, Cush. 210; Cotton v. HoUiday, 59 111. 62; Thomson v. Davenport, 9 Barn. & 176; Mauri v. Heffenan, 13 Johns. 58; 0. 78; Winsor v. Griggs, 5 Cush. 210; Baldwin v. Leonard, 39 Vt. 260; 94 Falkner v. Clark, 11 E. I. 278. And Am. Deo. 324; Farrell v. Campbell, 3 the means of ascertaining the principal Ben. 8; Nixon v. Downey, 49 Iowa, is not suflEcient, there must be actual 166; Jones v. Ins. Co., 14 Conn. 501; knowledge: Cobb v. Knapp, 71 N. Y. Hall V. Bradbury, 40 Conn. 32; Yough- 348; 27 Am. Rep. 51. As, for instance, iogheny Iron Co. v. Smith, 66 Pa. St. the ease of an auctioneer; from the 340; York Co. Bank v. Stein, 24 Md. nature of the trade it is known that 477; Wolfley v. Rising, 8 Kan. 297; he is merely an agent, yet he is person- Pentz V. Stanton, 10 Wend. 271; 25 ally bound where he does not disclose Am. Dec. 558; Newhall v. Dunlap, 14 his principal; Story on Agency, sec. Me. 180; 31 Am. Dec. 45; Bank of 267. British North America i/- Hooper, 5 * Hutchinson v. Wheeler, 3 Allen, Gray, 567; 66 Am. Dec. 390; Chand- 577. leiy. Ooe, 54 N. H. 567; Brent v. §107 PRINCIPAL AND AGENT. 174 he has dealt, at his election/ provided nothing has oc- curred in the mean time to alter the relations of the parties, or the creditor has not been guilty of laches.'' But if after knowing all the facts he elects to hold the agent, he cannot afterwards proceed against the principal.' Where the vendor at the time of the sale knows the principal, and that the buyer is a mere agent, and gives credit to the agent, he cannot afterwards resort to the principal.'' There must, however, be actual knowledge by the vendor who the principal is; merely having the means of ascer- taining him is not enough;^ nor is it sufficient that the seller knew that the buyer was an agent, if he did not know who the principal was." Evidence of a usage of ' Kingsley v. Davis, 104 Mass. 178; Upton V. Gray, 2 Me. 373; Raymond V. Crown Mills, 2 Met. 324; Clea- land V. Walker, 11 Ala. 1059; Green V. Skeel, 2 Hun, 485; Carney v. Dennison, 15 Vt. 400; Coleman v. First National Bank, 53 N. Y. 388; Meeker v. Claghom, 44 N. Y. 349; Paterson a. Gandasequi, 15 East, 62; French v. Price, 24 Pick. 13; Lovell V. Williams, 125 Mass. 439; Carroll v. St. Johns Soc, 125 Mabs. 565; Hyde t). Wolf, 4 La. 234; 23 Am. Deo. 484; Beebee v. Robert, 12 Wend. 413; 27 Am. Dec. 132; Episcopal Church v. Wiley, 2 Hill Ch. 584; 30 Am. Dec. 386; Merrill v. Kenyon, 48 Conn. 314; 40 Am. Rep. 174. As to what is an election is a question for the jury: Gardner v. Bean, 124 Mass. 347. And see Perkins v. Cady, 111 Mass. 318; Beymer v. Bonsall, 79 Pa. St. 298; Coleman v. First National Bank, 53 N. Y. 388; Cobb v. Knapp, 71 N. Y. 348; 27 Am. Rep. 51. li: he proceeds against the agent knowing all the facts, he cannot afterwards resort to the prin- cipal: Jones «. .^tnalns. Co., 14 Conn. 501; Kingsley v. Davis, 104 Mass. 178. ^ Rathbone v. Tucker, 15 Wend. 488; Thomas v. Atkinson, 38 Ind. 248; Hooper v. Robinson, 98 U. S. 528; Story on Agency, sec. 449. ' Kingsley v. Davis, 104 Mass. 178; Cobb V. Knapp, 71 N. Y. .348; 27 Am. Rep. 51. * Paterson v. Gandasequi, 15 East, 62; Raymond v. Crown Mills, 2 Met. 324; Paige v. Stone, 10 Met. 160; Hyde v. Paige, 9 Barb. 151; Mary- land Coal Co. V. Edwards, 4 Hun, 434. * Raymond v. Crown and Eagle Mills, 2 Met. 324; contra, Lyon v. Williams, 5 Gray, 557. * Thomson v. Davenport, 9 Bam. & C. 78. In this leading case Lord Ten- terden said: "I take it to be a gen- eral rule that if a person sells goods (supposing at the time of the contract he is dealing with a principal), but afterwards discovers that the person with whom he has been dealing is not the principal in the transaction, but agent for a third person, though he may in the mean time have debited the agent with it, he may afterwards recover the amount from the real principal, subject, however, to this qualification: that the state of the ac- count between the principal and the agent is not altered to the prejudice of the principal. On the other hand, if, at the time of the sale, the seller knows not only that the person who is nom- inally dealing with him is not princi- pal, but agent, and also knows who the principal really is, and notwithstand- ing all that knowledge, chooses to make the agent his debtor, dealing with him, and him alone, then, according to the cases of Addison v. Gandasequi, and Patterson v. Gandasequi, the seller can- not afterwards, on the failure of the agent, turn round and charge the prin- 175 DUTIES AND LIABILITIES TO THIRD PERSONS. § 107 trade that a person purchasing for an undisclosed prin- cipal is personally liable is admissible.' But a usage to exonerate an agent signing a contract in bis own name from liability is inadmissible.* cipal, having once made his election at the time ho had the power of choosing between the one and the other. The present is a middle case. At the time of the dealing for the goods the plain- tiffs were informed that McKune, who came to them to buy the goods, was dealing for another, — that is, that he was an agent, — ^but they were not in- formed who the principal was. They had not, therefore, at that time the means of making their election. It is true that they might, perhaps, have obtained those means if they had made further inquiry; but they made no fur- ther inquiry. Not knowing who the principal really was, they had not the power at that instant of making their election. That being so, it seems to mo that this middle case falls, in sub- stance and effect, within the first propo- sition which X have mentioned, — the case of a person not known to be an agent; and not within the second, where the buyer is not merely known to be agent, but the name of his prin- cipal is also known . " Mr. Justice Bay- leyadded: " Where a purchase is made by an agent, the agent does not of ne- cessity so contract as to make himself personally liable; but he may do so. If he does make himself personally liable, it does not follow that the prin- cipal may not be liable also, subject to this qualification; that the principal shall not be prejudiced by being made personally liable if the justice of the case is that he should not be person- ally liable. If the plaintiff has paid the agent, or if the state of accounts between the agent here and the prin- cipal would make it unjust that the seller should call on the principal, the fact of payment or such a state of ac- counts would be an answer to the action brought by the seller where he had looked to the responsibility of the agent. But the seller who knows who the principal is, and instead of debit- ing the principal debits the agent, is considered, according to the author- ities which have been referred to, as consenting to look to the agent only, and i j thereby precluded from looking to tho principal. But there are cases wliich e^tablidi this position, that, al- though ho debits the agent who has contracted in such a way as to make himself personally liable, yet, unless tlie seller does eoraething to exonerate tho principal, and to say that ho will look to the agent only, he is at liberty to look to the principal when that prin- cipal is discovered. In the present case tho seller knew that there was a principal; but there is no authority to show that mere knowledge that there is a principal destroys the right of the seller to look to that principal as soon as he knows who that principal is, pro- vided ho did not know wlio he was at the time when the purchase was origi- nally made. It is said that the seller ought to have asked the name of the principal, and charged him with the price of the goods. By omitting to do so, he might have lost his right to claim payment from the principal, had the latter paid the agent, or had the state of the accounts between the prin- cipal and the agent been such as to make it unjust that the former should be called upon to make the payment. But i:i a case circumstanced as this case is, where it does not appear but that the man who has had the goods has not paid for them, what is the justice of the case? That he should pay for them to the seller, or to the solvent agent, or to the estate of the insolvent agent who has made no paj^- ment in respect of these goods. The justice of the case is, as it seems to me, all on one side; namely, that the seller shall be paid, and that the buyer (the principal) shall be the person to pay him, provided ho has not paid any- body else. " ' Humfrey v. Dale, 7 El. & B. 26G; Fleet y. Murton, L. R. 7 Q. B. li^G; Hutchinson v. Tatham, L. R. 8 Com. P. 482. ^ Magee v. Atkinson, 2 Mees. & W. 440; Trueman v. Loder, 1 1 Ad. & E. 589. § 108 PRINCIPAL AND AGENT. 176 Illustrations. — One whose name appears on a store sign in the name of a firm, in buying goods, does not disclose the fact that he is only an agent, and the seller supposes him to be a part- ner. Held, that he is liable for the price of the goods: Bartlett v. Raymond, 139 Mass. 275. In an action by R. against D. for the keeping of a horse, which was defended on the ground that the horse belonged to T., who was to pay for his keeping, the judge instructed the jury that if R.'s servant, with whom the horse was originally left, " understood that the horse was there for T. as T.'s horse, and at his charge, and that T. was to pay for the keeping, R. could not recover"; and declined to instruct them that ''if D., by himself or his agent, left the horse at R.'s stable, R. could recover unless D. notified him to look to T. for pay, and R. agreed to look to T. for pay." Held, that R. had no ground of exception: Randall v. Doane, 9 Gray, 408. An authorized agent makes a promissory note in form, " I promiso to pay," etc., and signs as agent without mentioning his prin- cipal. Held, he is liable as maker of the note, notwithstanding the fact that the payee knew he was acting as such agent at the time: Collins v. Ins. Co., 17 Ohio St. 215; 93 Am. Dec. 612. A man called upon one of several partners to purchase hay, say- ing that he was purchasing as agent for another. The partner told him he was not ready to sell or contract hay at that time; that it was not all cut. The agent left, saying that he would call again. He called again, four weeks later, when the first- mentioned partner was absent, and purchased the hay from an- other partner without disclosing his agency. Held, that he was personally liable, and that his former conversation with the first partner, being no part of the negotiation, was not notice to the firm: Baldwin v. Leonard, 39 Vt. 260; 94 Am. Dec. 324. § 108. Agent may Bind Eimself Personally. — But an agent may bind himself personally; as, by an express warranty that a note of his principal is genuine,^ or by a failure to disclose that be is acting as an agent.^ " There ' Wilder v. Cowles, 100 Mass. 487. afterwards compelled to pay the ^ Farrell v. Campbell, 3 Ben. 8; amount to the payee. It was held Welch V. Goodwin, 123 Mass. 71; 25 that H. was entitled to recover what Am. Rep. 24; Bickford v. Ban!:, 42 ho had paid from the express corn- Ill. 238; 89 Am. Dec. 436. In Holt pany, becaus& it had not disclosed V. Ross, 54 N. y. 472, 13 Am. its agency. " The express company," Rep. 615, an express company re- said Earl, C, "when it presented the ceived a draft for collection, drawn draft to tho plaintiffs for payment, upon H., and presented and collected and received payment, did not dis- it without disclosing to H. that it was close its agency; therefore it is liable, acting as agent. The payee's indorse- as if actually principal in the tranaac- ment Lad been forged, and H. was tion. It was so decided in Canal 177 DUTIES AND LIABILITIES TO THIRD PERSONS. § 108 is one rule," says Shaw, C. J., " well established by the authorities, and defined with a good deal of certainty. It is this, that although an agent is duly authorized, and although he might avoid personal liability by acting in the name and behalf of his principal, still if by the terms of his contract he binds himself personally, and engages expressly in his own name to pay or perform other obli- gations, he is responsible, although he describe himself as agent." ^ The rule is well stated by Bramwell, J., in a late English case:" " A person who is acting for another, and known by him with whom he deals to be so acting, may and will be personally liable if he contracts as a prin- cipal, and that whether he contracts by word of mouth or in writing. The difference is, that if the contract is by word of mouth, it is not possible to say, from the agent using the words 'I' and 'me,' that he meant to bind himself personally; whereas if the contract is in writing, signed in his own name, and speaking of himself as con- tracting, the natural meaning of the words is, that he binds himself personally, and accordingly he is taken to do so. It is well settled that an agent is responsible, though Bank v. Bank of Albany, 1 Hill, 287. was not enough; and it was not the It was not sufficient that the defend- duty of the plaintifia to inquire, before ant acted as agent; to shield itself from paying, whether the defendant was liability, it should have disclosed its acting as principal or agent. It was agency. Such is the rule as to all the duty of defendant, if it desired to agents. To shield themselves from be protected as agent, to have given liability for their acts, they- must give notice of its agency. " the names of their principals. Such ' Simonds v. Heard, 23 Pick. 125; is the rule in reference to the transfer 34 Am. Dec. 41 ; Barker v. Mechanics' of negotiable paper. If the transferrer Ins. Co., 3 Wend. 94; Collins ii. Butts, be only an agent, if he did not at the 10 Wend. 399; Chandler v. Coo, 54 time disclose the name of his princi- N. H. 561; Mills v. Hunt, 20 Wend. pal, and the bill or note proves to be 431 ; Towle v. Hatch, 43 N. H. 270; a forgery, he is personally liable for Southard ?;. Sturtevant, 109 Mass. 390. the consideration received: Gurney "The fact that the contract is in form' V. Womersley, 4 El. & B. 133; Morri- the personal promise of C. is very son ». Currie, 4 Duer, 79; 2 Parsons strong, if not conclusive, evidence that . on Notes, sec. 38. It matters not that it was entered that he should be the general business of the express bound by it": Guernsey n. Cook, 117 company was to act as agent for Mass. 548; FuUam v. Inhabitants, 9' others. It could have owned this Allen, 1; Morell v. Codding, 4 Allen, draft, and have collected it as princi- 403; Fisher v. Haggerty, 36 111. 128. pal. Knowledge in plaintiffs that de- ^ Williamson v. Barton, 31 L. J.. feudant might have acted as agent Exch., N. S., 174. Vox,. I.-i.- §109 PRINCIPAL AND AGENT. 178 known by the other party to be an agent, if by the terms of the contract he makes himself the contracting party." So an agent who receives freight consigned to him is personally liable for the charges, — on the broad principle that he who accepts a thing which he knows is subject to a duty or charge impliedly contracts to take the duty and charge on himself.' But it is otherwise where his agency is known, and there is no stipulation in the bill of lading that the consignee shall pay freight." Illustrations. — The treasurer of a club agreed to rent from the plaintiff a piece of ground for the use of the club, and by an agreement in writing bound himself to pay the rent. Held, that he was personally liable: McWilliams v. Willis, 1 Wash. (Va.) 199. H. was working for F. and Sons at a stipulated price per diem, and was employed by their clerk and agent to continue working after hours for extra compensation. Held, ' Story on Agency, sec. 274; Boston etc. R. R. Co. V. Witcher, 1 Allen, 497; Falkenberg ■.. Clark, H R. I. 278. ^ Boston etc. R. R. Co. v. Witcher, 1 Allen, 497, where the law is thus stated by Blgelow, C. J.: "The cases in which an agent has been held liable to pay the freight of goods consigned to him proceed on the ground that, by the terms of bills of lading, as usually drawn, especially in cases of transportation by water, the consignee is to pay the freight. In other words, the carrier undertakes to deliver the property to the consignee, 'he pay- ing freight for the same.' Whoever accepts delivery under such a bill of lading, contracts, by implication, to pay the freight due on them; and if the name of the agent only is inserted in the bill, without any designation of the character or capacity as agent for another in which he receives the goods, he is liable individually for the freight, because he thereby becomes an origi- nal contractor to pay therefor. These cases rest on the principle that he who accepts a thing which he knows to be subject to a duty or charge, for which he is expected to pay, thereby con- tracts by implication to take the duty or charge on himself: Cock v. Taylor, 13 East, 399; Wilson v. Kymer, 1 Mau. & S. 157; Dougal v. Kemble, 3 Bing. 383; Amos v. Temperly, 8 Mcos. & W. 798. Bat no case can be found which goes the length of holding that an agent is liable for the freight of goods sent to and received by him, when his agency is known to the car- rier at the time of the delivery of the goods, and when there ia no stipula- tion in the contract of transportation by which the consignee is to pay the freight. In such a case, the essential elements of a contract are wanting. There is nothing from which an intent on the part of the shipper or carrier to charge the agent, or an agreement by the agent to pay the freight, can be inferred. A mere naked consignmtot to an agent does not make him liable for the freight, where the agency is known, and there is no stipulation that the consignee shall pay freight. In the case at bar, there is nothing to show that there was any way-bill or other document by which the defend- ant, as consignee, was to pay freight on the granite which the plaintiffs transported. It was carried by them for a principal whom they knew, and it was delivered to the defendant with a full knowledge that he received it only as agent, and without any implied agreement that he would be personally liable therefor." 179 DUTIES AND LIABILITIES TO THIRD PERSONS. § 109 that the promise to pay extra was an express undertaking on the part of the agent; and that the suit was properly brought against him to recover it: Fisher v. Haggerty, 36 111. 128. The defendant, who was the agent of one S., the general agent of a steamship company, sold to the plaintiff a passage ticket, disclosing the name of his principal. By its terms the ticket was good for one year. It was further agreed that if the ticket should be returned unused within that time, the money paid therefor should be refunded. Before the expiration of the year the plaintiff told the defendant that the ticket could not be used until a certain time after the expiration of the year, and asked if it would hold good until then. The defendant said that it should, and that if it was not then used he would refund the money. The ticket was not used within the time, and was afterwards returned to the defendant, who promised to refund the money, but did not do so. Held, in an action for money had and received, that the above facts warranted a finding that the defendant personally promised to refund the money; and that the return of the ticket was a sufficient con- sideration for such a promise: Coggins v. Murphy, 121 Mass. 166. § 109. Notice to Agent not to Pay over Money to Prin- cipal. — An agent who receives money from his principal may be notified by the payor not to turn it over; and if such notice is given before he pays it over he will be per- sonally liable.* On the other hand, if before the notice he has in good faith paid over the money to his principal he will not be liable.'' It is necessary, however, that the payor should have a legal right to recall the money,* and that the state of accounts between principal and agent shall not in the mean time have changed.* J- BuUer v. Harrison, 1 Cowp. 566; v. Underwood, 55 lU 475. But aliier Mowatt V. MoLelan, 1 Wend. 173; if the money has been obtained by tha Hearsay v. Fruyn, 7 Johns. 179; La agent illegally by compulsion or ex- Farge v. Kneeland, 7 Cow. 456; Gar- tortion: Frye v. Lockwood, 4 Cow. land V. Salem Badt, 9 Mass. 408; 6 456; Elliott v. Swartwout, 10 Pet. 187. Am. Dec. 86; Duffy v. Buchannan, 1 Or his authority to receive it was void, Paige, 453; White ». Coleman, 127 and he knew it to be so: Story bn Mass. 34; Elliott v. Swartwout, 10 Agency, sec. 301. Pet. 137. °Bank of United States v. Bank oJ ' Laugley v. Warner, 1 Sand. 209; Washington, 6 Pet. 8; Mowatt v. Mc- Mowatt V. McLelan, 1 Wend. 173; Lelan, 1 Wend. 173; Colvia v. Hol- Elhott V. Swartwout, 10 Pet. 137; Mo- brook, 2 N. Y. 126. Donald v. Napier, 14 Ga. 89; Upchurch * Story on Aeency, sec. 300. V. Norsworthy, 15 Ala. 705; Shipherd §110 PRINCIPAL AND AGENT. 180 § 110. Liability of Agent Acting without Authority. — An agent acting without authority — as, for example, mak- ing a contract as the agent of his principal, which is not binding on his principal because he was not authorized — is liable in damages to the person dealing with him on the faith that he possessed the authority assumed.^ There ci'o decisions which hold the agent personally bound by the contract which he makes without authority in the name of another.^ But the correct view is, that the agent's liability is upon the implied warranty of authority or a bpecial action on the case.* By any other rule,* "courts would often make contracts for parties which neither in- tended nor would have consented to make. The contract, if binding upon one party, must be binding upon both, 1 Baltzen v. Nicolay, 53 N. Y. 467; CoUen W.Wright, 8E1. & B. 647; White V. Madison, 26 N. Y. 117; Jefts v. York, 4Cu3h. 371; 50 Am. Deo. 791; Johnson v. Smith, 21 Conn. 627; Noyes v. Loring, 55 Me. 408; McOurdy v. Rogers, 21 Wis. 197; Bartlett v. Tucker, 104 Mass. 336; 6 Am. Rep. 240; Randell v. Trimen, 18 Com. B. 786; Downman v. Jones, 9 Jur. 454; Pitman v. Kitner, 5 Blackf. 250; 33 Am. Dec. 469; SiUiman v. Fredericks- burg R. R. Co., 27 Gratt. 119; Palmer V. Stephens, 1 Denio, 471; Lander v. Castro, 43 Cal. 497; Ballon v. Talbot, 16 Mass. 431; 8 Am. Dec. 146; San- born V. Neal, 4 Minn. 126; 77 Am. Dec. 502. But atiter as to a public agent: McCurdy v. Rogers, 21 Wis. 197 ; Sanborn v. Neal, supra. ' ' In our opinion, the weight of authority is de- cided by that one who, without author- ity, executes an instrument in the name of another, whose name he puts to it, and adds his name only as agent for that other, cannot be treated as a party to that instrument and be sued upon it, unless it be shown that he was the real principal An action in the nature of an action on the case lay against defendant for falsely assuming authority to act as agent ": Sheffield v. Ladue, 16 Minn. 388; 10 Am. Rep. 145. 2 Weareii. Gove, 44 N. H. 196; Graf- ton Bank v. Flanders, 4 N. H. 239; UnderhUl v. Gibson, 2 N. H. 352; 9 Am. Dec. 88; Mitchell v. Hazen, 4 Conn. 495; 10 Am. Dee. 169; Hampton V. Speckenagle, 9 Serg. & R, 212; 11 Am. Deo. 705; Gillaspie v. Wesson, 7 Port. 454; 31 Am. Deo. 715; Brown ii. Johnson, 12 Smedes & M. 398; 51 Am. Deo. 118; Keimer v. Harrod, 2 Md. 63; 56 Am. Deo. 70S. To this effect were several early Now York cases: Dusen- bury V. Ellis, 3 Johns. Cas. 70; 2 Am. Deo. 144; White v. Skinner, 13 Johns. 307; 7 Am. Deo. 381; Rossiterj;. Rossi- ter, 8 Wend. 494; 24 Am. Deo. 62; Collins t). Allen, 12 Wend. 356; 27 Am. Deo. 130; and other oases cited in White V. Madison, 26 N. Y. 117. But these early cases are now overruled: See Walker v. State Bank, 9 N. Y. 582, and Brightley'a note 585; Dung V. Parker, 52 N. Y. 499; Baltzen v. Nioolay, 53 N. Y. 467. * Cases ante; Polhill v. Walter, 3 Bam. & Adol. 114; Abbey v. Chase, 6 Cush. 54; Bush v. Cole, 28 N. Y. 261; 84 Am. Dec. 343; Harper v. Little, 2 Greenl. 14; 11 Am. Deo. 25; Stetson V. Patten, 2 Greenl. 358; 11 Am. Deo. Ill; Long V. Colbnru, 11 Mass. 97; 6 Am. Dec. 160; Trowbridge v. Soudder, 11 Cush. 87; Draper v. Msissachusetta Co., 5 Allen, 339; Sherman v. Fitch, 98 Mass. 63; Duncan v. Niles, .32 111. 532; 83 Am. Deo. 293; Sheffield v. Ladue, 16 Minn. 388; 10 Am. Rep. 145. * Selden, J., in White v. Madison, 26 N. Y. 117. 181 DUTIES AND LIABILITIES TO THIRD PERSONS. § 110 and wHere burdensome conditions precedent w^ere to be performed by the party contracting with the assumed agent, before performance could be demanded of the other party, or where the agent should undertake to sell, lease, or mortgage the property of the assumed principal, or where credit should be given which the responsibility of the agent would not justify, great injustice might result from such a rule. In those cases, and I think in all cases where one pretending to be an agent has contracted as such without authority from the principal, the party contracted with, on learning the facts, must have the right to repu- diate the contract, and to hold the assumed agent im- mediately responsible for damages, without waiting for the time when an action might be maintained on the contract itself; and the damages must be measured, not by the contract, but by the injury resulting from the agent's want of power. Whenever a person enters into a contract as agent for another, he warrants his own author- ity, unless very special circumstances or express agree- ment relieve him from that responsibility.' An action upon such warranty must always be appropriate where personal liability attaches to an agent in consequence of his contracting without authority. In such action the plaintiff would be relieved from the necessity of showing performance of conditions precedent, and from the delay which the terms of the contract might require, if the remedy were limited to an action on the contract; and if special damages should be incurred in consequence of the agent's failure to bind his principal, such as the costs of an unsuccessful action against the principal to enforce the contract, they might be recovered."^ And he is liable, ' Smont V. Ilbery, 10 Mees. & W. 9, tract in the name of the latter, is not 10; Polhill V. Walter, 3 Barn. & Adol. personally liable on the covenants in 114; Jenkins v. Hutchinson, 13 Ad. & the deed or on the promise in the sim- E., N. S., 744; Jeftss. York, lOCush. pie contract, unless it contain apt 395; 9 N. Y. 585; Story on Agency, words to bind him personally, and the ^^2 rJ oiily remedy against him is an action One who, without authority, as- on the case for falsely assuming author- sumes to act as agent of another, and ity to act as agent: Duncan v. Niles, makes either a deed or a simple con- 32 ILL 532; 83 Am. Dec. 293. Ji. §110 PEINCIPAL AND AGENT. 182 even though he bona fide believed at the time that he had authoritj'.* This statement, though found in many of the cases, is too broad. The better test, according to a late author,^ is, whether the agent has stated as true what he did not know to be true, omitting at the same time to give such information to the other contracting party as would enable him equally with himself to judge as to the author- ity under which he proposed to act.^ Therefore where the authority of the agent has been revoked by the death of his principal, unknown to both parties, the agent is not liable.* And to render the agent liable, the unauthorized contract must have been such a one as could have been enforced against the principal had it been authorized by him.^ Where he acts under a public statute, the person with whom he deals will be held to a knowledge of the powers it confers, and consequently is presumed to know ' CoUen V. Wright, 8 El. & B. 647, and cases cit^d ante; Story on Agency, sec. 264; Smout v. Ilbery, 10 Mees. & W. 1; Jefts V. York, 10 Cush. 392; Bank of Hamburg v- Wray, 4 Strob. 87; 51 Am. Dec. 659; Dale v. Donald- Bou Lumber Co., 48 Ark. 188; 3 Am. St. Rep. 224. 2 Evans on Agency, 303. ' " One assuming to act as agent for anotber without authority does not necessarily render himself liable. It is when he knowingly or carelessly as- sumes to act without being authorized, or conceals the true state of his au- thority, and falsely leads the party with whom he thus contracts to repose in his authority, that he may be liable. If he enters into the contract in the name and as the agent of another, and does it honestly, fully disclosing all the facts touching the authority under which he acts, so that the one con- tracted with, from such information or otherwise, is fully informed of the au- thority possessed or claimed by him, he is not liable on the ground of deceit or for misleading the other party. It is material in such cases that the party complaining of a want of authority in the agent should be ignorant of the truth touching the agency. If he has a, full knowledge of the facts, or it such facts as fairly and fully put him upon inquiry for them, and he fails to avail himself of such knowledge or the meaps of knowledge reasonably accessible to him, he cannot say tha,t he was misled, simply on the ground that the party assumed to act as agent, without authority in the absence of fraud ": Newman v. Sylvester, 42 Ind. 106; Aspinwall v. Torrance, 1 Lans, 381; TiUer v. Spradley, 39 Ga. 35; Carriger v. Whittington, 26 Mo. 311; 72 Am. Dec. 212; McCubbin v. Gra- ham, 4 Kan. 397; Ogdenu. Raymond, 22 Conn. 379; 58 Am. Dec. 429. * Smout V. Ilbery, 10 Mees. & W. 1. ^ Baltzen v. Nicolay, 53 N. Y. 467; Dung V. Parker, 52 N. Y. 494. A, falsely representing himself as author- ized by B, made a parol contract for the leasing of B's store to C for the term of two years. C thereupon in- curred expense in procuring fixtures for the store, ffeld, that the contract, being void by the statute of frauds, was not enforceable against B if A had the authority, and A was not liable in domages: Dung v. Parker, 52 N. Y. 494; Bozza v. Rowe, 30 111. 198; 83 Am. Dec. 184; McKubin v. Clarkson, 5 Minn. 247. 183 DUTIES AND LIABILITIES TO THIED PERSONS. § 110 that the agent was exceeding his authority/ And if the principal is liable, notwithstanding the agent's want of authority, no action will lie against the agent." Thus, for example, if the principal afterwards ratify his unauthor- ized act. " If his employers ratify his unauthorized act in signing their name, the signature becomes theirs, and the note becomes theirs when executed, for the ratification relates back to the execution. The plaintiffs have got what they bargained for, and have no longer any cause of action for damages against the agent. This would not hold good of course in cases in which such suit for dam- ages had been brought before ratification, nor in any cases in which injury had resulted to plaintiffs from defendant's act before ratification, or in which the effect of making the ratification thus relate back would be to put the plaintiffs in a worse position than they would otherwise have been in in consequence of such unauthorized act of defendant."" So one who induces another to exceed his authority can- not hold him personally liable on the unauthorized con- tract.'* ' McCnrdy v. Rogers, 21 Wis. 197; 91 Am. Dec. 468. 2 Landon v. Proctor, 39 Vt. 78. An agent of a corporation was authorized to sign "all notes and business paper of the corporation." He gave accom- modation notes for other purposes in the corporation's name, which passed into the hands of a hoyiafidii holder for value. Held, notwithstanding his want of authority, the corporation was liable on the notes, and the agent could not be sued: Bird v. Daggett, 97 Mass. 494 "Tlie plaintiflF," said the court, " as a honajide holder tor value of notes taken before maturity, can re- cover against the corporation, notwith- standing any want of authority of the agent to execute these particular notes for the purposes for which they were given. For the defendant was ex- pressly authorized 'to sign all notes and business paper of the company.' The plaintiff, therefore, in valid notes against the corporation, has all that he expected to obtain, and all that the defendant undertook to give. What injury, then, has he sustained? The notes cannot be at once binding upon the corporation and tlie agent. The representation of the agent's authority to give them for the company, whether made expressly or merely implied from the mode of signature, was conse- quently immaterial. The tort of an agent who has falsely assumed au- tlaority whiAh he did not have ' is a proper subject for speciul action, in which damages will be recovered ac- cording to the injury sustained ': Ballon V. Talbot, 10 M.is3. 461; 8 Am. Deo. 146. The measure of damages is not necessarily the precise amount of the notes. Where, as in the present case, the plaintlil has suffered uotliing, he can recover notliing." 3 Sheffield v. Ladue, IG Minn. 388; 10 Am. Rep. 145. ' Aspinwall v. Torrance, 1 Lans. 381. § 111 PRINCIPAL AND AGENT. 184 § 111. Agent not Liable Personally for Torts. — An agent who, in the discharge of his duties, is guilty of an act of negligent omission, whereby another person is in- jured, is not personally responsible. "The maxim respon- deat superior prevails; the principal is liable for the injury, and the agent is then liable to the principal for damages which the latter may have sustained."* An agent or servant who, acting by his master's direction, and without knowing of any wrong, or being guilty of gross negligence in not knowing of it, assists the master in disposing of property which the latter has no right to dispose of, is not thereby rendered liable for a conversion of the property.^ And an agent is not personally liable for the negligence or misfeasance of those whom he has retained for the service of his principal by his consent or authority; unless, indeed, the particular acts are done by the orders or directions of the agent.* Illustrations. — An agent of a factor fails to transmit the orders of a third person to his principal, as to the sale of cot- ton consigned by such third person to his principal. He is not liable personally to the third person: Reid v. Humber, 49 Ga. 207. An agent having the care of real estate for a non-resident owner neglected to keep the floor of one of his buildings in re- pair, whereby a person rightly there was injured. Held, that ^ Wharton on Agency, sec. 535. is also settled, if anything can be es- "I£ third persons are injured by the tablished as authority, that an agent neglect of a known agent, the rule is is not liable to third persons for an respondeat superior, and generally the omission or neglect of duty in the action must be brought against the matter of his agency, but that the principal: Denny v. Manhattan Co., principal is alone responsible": Colvin 2r>emo, 116; 5Denio, 115. The rule, v. Holbrook, 2 N. Y. 129; Hall «. it is believed, is universal that a Lauderdale, 46 N. Y. 70; Henshaw v. known agent is not responsible to Noble, 7 Ohio St. 231; Montgomery third persons for acts done by him in Bank v. Albany Bank, 7 N. Y. 459; pursuance of an authority rightfully Brown Paper Co. v. Dean, 123 Mass. conferred on him. The very notion 267; Dayton v. Pease, 4 Ohio St. 80; of an agency proceeds upon the sup- Nussbaum v. Heilbron, 63 Ga. 312; position that what a man may law- Brown v. Lent, 20 Vt. 533; Labadia fully do by a substitute, when per- v. Hawley, 61 i'ex. 177; 48 Am. Rep. formed, is done by himself, and the 278. individuality of the agent, so far, is ' Leuthold v. Fairchild, 35 Minn. 99. merged in that of the principal. It ' Story on Agency, sec. 313. 185 DUTIES AND LIABILITIES TO THIRD PERSONS. § 112 the agent was not personally liable: La. Ann. 1123; 44 Am. Rep. 456.' Delaney v. Rochereau, 34 § 112. Exceptions. — But to this rule there are excep- tions: 1. Where the agent is not merely acting as the hand of the principal, but is invested with authority to act in the matter according to his discretion.^ The sale of stolen property of another by an agent for the benefit of his principal evidences conversion; and to make the agent liable, it is not necessary that he use the proceeds for his own benefit.' 2. Where the agent's act is one of negli- ' "The theory,'' said the court, "on which the suit rests is, that agents are liable to third parties injured for thoir non-feasance. In support of that doctrine, both the common and tlie civil law are invoked. At com- mon law, an agent is personally re- sponsible to third parties for doing something which he ought not to have done, but not for not doing something which he ought to have done, the agent in the latter case being liable to his principal only. For non-feasance, or mere neglect in the performance of duty, the respon- sibility therefor must arise from some express or implied obligation between particular parties standing in privity of law or contract with each other. No man is bound to answer for such violation of duty or obligation except to those to whom he has become directly bound or amenable for his conduct. Every one, whether he is principal or agent, is responsible di- rectly to persons injured by his own negligence iu fulfilling obligations resting upon him in his individual character, and which the law imposes upon him, independent of contract. No man increases or diminishes his obligations to strangers by becoming an agent. If, in the course of his agency, he comes in contact with the person or property of a stranger, he is liable for any injury he may do to either, by his negligence, in respect to duties imposed by law upon him iu common with all other men. An agent is not responsible to third per- sona for any negligence in the per- formance of duties devolving upon him purely from his agency, since he cannot, as agent, be subject to any obligations toward third persons other than those of his principal. Those duties are not imposed upon him by law. He has agreed with no one, except his principal, to perform them. In failing to do so, he wrongs no one but his principal, who alone can hold him responsible. The whole doctrine on that subject culminates in the proposition, that wherever the agent's negligence, consisting in his own wrong-doing, therefore in an act, di- rectly injures a stranger, then such stranger can recover from the agent damages for the injury: Story on Agency, 308, 309; Story on Bailments, 165; Shearman and Redfield on Negli- gence, 111, 112, ed. 1874; Evans on Agency, notes by Ewell, 437, 438; Wharton on Negligence, 78, 83, 535, 780. It is an error to suppose that the principle of the civil law on the liability of agents to third persons is different from those of the common law. It is certainly not broader. " ^ Harriman v. Stowe, 57 Mo. 93; Bliss V. Schaub, 48 Barb. 339; Blake V. Ferris, 5 N. Y. 48; Hilliard v. Rich- ardson, 3 Gray, 349; 63 Am. Deo. 743; Milligan v. Wedge, 4 Ad. & E. 737. Bell V. Josslyn, 3 Gray, 309, 63 Am. Dec. 741, cited under the next exception, is considered by Mr. Wharton (Wharton on Agency, sec. 537) to properly fall under this excep- tion. ' Koch V. Branch, 44 Mo. 542; 100 Am. Deo. 324. § 112 PRINCIPAL AND AGENT. 186 gent commission; a misfeasance as distinguished from a non-feasance. In the words of Lord Holt in a much quoted case:^ "For a neglect in him, they can have no remedj'' against him, for they must consider him only as a servant, and then his neglect is only chargeable on his master or principal; for a servant or deputy quatenus such cannot be charged for neglect, but the principal only shall be charged for it; but for a misfeasance an action will lie against a servant or deputy, but not quate- nus a deputy or servant, but as a wrong-doer."^ 3. Where the agent acts willfully or maliciously,* even if he be a vol- untary and gratuitous agent.* 4. Where the agent acts fraudulently .° Thus an agent is personally liable for de- ceit and false representations made by him.* One falsely and fraudulently asserting that he is authorized to act as the agent of another, or knowingly and fraudulently ex- ceeding his authority, is liable to those dealing with him on the faith of his representations for the damages which they may suffer thereby.' The remedy is not against the professing agent on the contract, but is by an action against him for the fraud and deceit.' If a party, falsely assuming the character of agent, sells property and re- ceives the consideration, the purchaser may recover back • Lane v. Cotton, 12 Mod. 488. » Spraights v. Hawley, 39 N. Y. ■' Horner v. Lawrence, 37 N. J. L. 441; 100 Am. Dec. 452; Reed». Peter- 46; Campbell v. Portland Sugar Co., son, 91 111. 207. 62 Me. 552; 16 Am. Eep. 503; Nowell "Wharton on Agency, sec. 641; V. Wright, 3 Allen, 166; Gilmore v. Hedden v. Griffin, 136 Mass. 229; 49 Driscoll, 122 Mass. 208; 23 Am. Rep. Am. Rep. 25. 312; Parsons (>. Winehell, 5 Cush. ' Godwin v. Francis, L. R. 5 Com. 592; L2 Am. Dec. 745; Osborne v. P. 295; Jefts v. York, 4 Cush. 371; Morgan, 130 Mass. 102; 39 Am. Rep. 50 Am. Deo. 791; 10 Cush. 392; El- 437; overruling Albro v. Jaquith, 4 more v. Brooks, 6 Heisk. 45; Richard- Gray, 99. son V. Kimball, 28 Me. 463; Wright ' Wharton on Agency, sec. 541; v. Eaton, 7 Wis. 595. Wright V. Wilcox, 19 Wend. 343; « Abbey v. Chase, 6 Cush. 54; Jefts Vanderbilt t). Richmond Turnpike Co. , v. York, 10 Cush. 392; Noyes v. Lor- 2 N. Y. 478, 480; 51 Am. Deo. 315; ing, 55 Me. 408; McCurdy v. Rogers, Isaacs V. Third Av. R. R. Co., 47 N. Y. 21 Wis. 197; 91 Am. Dec. 468; Bart- 122; 7 Am. Rep. 418; Horner v. Law- lett v. Tucker, 104 Mass. 336; 6 Am. rence, 37 N. J. L. 46; Johnson v. Bar- Rep. 240; contra. Palmer v. Stephens, ber, 5 Gilm. 425; 50 Am. Dec. 416. 1 Denio, 471 ; Grafton Bank v, Flan- « Hammond v. Hussey, 51 N. H. 40; ders, 4 N. H. 239. 12 Am. Rep. 41. 187 DUTIES AND LIABILITIES TO THIRD PERSONS. § 112 the money.^ 5. An agent doing an illegal act cannot defend himself by showing that what he did was in ac- cordance with the orders of his principal, or solely for his principal. He has no right to obey illegal orders, or to do illegal acts for others.^ Illusteations. — An agent having the general management of a house owned by another negligently directed water to be let into the house, the pipes of which were out of repair, whereby damage ensued to the tenant. Held, that he was personally liable: Bell v. Josselyn, 3 Gray, 309; 63 Am. Dec. 741.^ A carpenter while at work in a wire factory of a company putting up partitions was injured by a tackle-block and chain falling on him, which had been placed there by the superin- tendent of the factory, and not properly secured and protected. Held, that the superintendent was liable in damages: Osborne V. Morgan, 130 Mass. 102; 39 Am. Rep. 437.* An agent fraud- ' Long V. Hickingbottom, 28 Miss. 772; 64 Am. Dec. 118. ''Thorp V. Burling, 11 Johns. 285; Richardson v. Kimball, 28 Me. 463; Brown V. Howard, 14 Johns. 120; Edgerly v. Whalan, 106 Mass. 307; McPartland v. Read, 11 Allen, 231; Burnap v. Marsh, 13 111. 535; John- son V. Barber, 5 Gilm. 425; 50 Am. Dec. 416; Josselyn v. McAllister, 22 Mich. 300; Gaines v. Briggs, 9 Ark. 46; Elmore v. Brooks, 6 Heisk. 45; Perminter v. Kelly, 18 Ala. 716; 54 Am. Dec. 177; Crane v. Onderdonk, 67 Barb. 47; Kimball v. Billings, 55 Me. 147; 92 Am. Dec. 581; Baker v. Wasson, 53 Tex. 157; Lee v. Mathews, 10 Ala. 682; 44 Am. Dec. 498. " "Assuming that he was a mere agent, "said the court, "yet the in- jury for which this action is brought was not caused by his non-feasance, but by his misfeasance. Non-fesisance is the omission of an act which a per- son ought to do; misfeasance is the im- proper doing of an act which a person might lawfully do; and malfeasance is the doing of an act which a, person ought not to do at all: 2 Inst. Cler. 107; 2 Dane Abr. 482; 1 Chittv's Pleadings, 6th Am. ed., 151; IChitty's General Practice, 9. The defendant's omission to examine the state of the pipes in the house before causing the water to be let on was a non-feasance. But if he had not caused the water to be let on, that non-feasance would not have injured the plaintiff. If he had examined the pipes and left them in a proper condition, and then caused the letting on of the water, there would have been neither non-f easanee nor mis- feasance. As the facts are, the non- feasance caused the act done to be a misfeasance. But from which did the plaintiff suffer ? Clearly from the act done, which was no less a misfeasance by reason of its being preceded by a non-feasance." In a New York case this doctrine was applied to a case where an agent intrusted with the control of stock for a specific purpose misapplied it: Crane v. Onderdonk, 67 Barb. 47. * " It is often said in the books, " said Gray, C. J., in this case, "that an agent is responsible to third persems for a misfeasance only, and not for non-feasance. And it is doubtless true that if an agent never does anything towards carrying out his contract with his principal, but wholly omits and neglects to do so, the principal is the only person who can maintain any action against liim for the non-f esLsance. But if the agent once actually under- takes and enters upon the execution of a particular work, it is his duty to use reasonable care in the manner of executing it, so as not to cause any injury to third persons which may be the natural consequence of his acts; §112 PRINCIPAL AND AGENT. 188 ulently represented that the title to his principal's property was absolute when he knew it was only a life interest. The agent was held personally liable: Campbell v. Hillman, 15 B. Men. 508; 61 Am. Dec. 195. An insurance agent represented to plaintiff when he was taking a policy on his house that the clause prohibiting the keeping of petroleum would not affect the policy. The plaintiff sustained a loss, and could not recover on account of the clause as to petroleurft. Held, that the agent was personally liable in damages for the misrepresentation: Kroeger V. Pitcairn, 101 Pa. St. 311; 47 Am. Rep. 718.' A, the president and he cannot, by abandoning its exe- cution midway and leaving things in a dangerous condition, exempt him- self from liability to any person who Buffers injury by reason of his having so left them without proper safeguards. This is not non-feasance, or doing noth- ing; but it is misfeasance, doingimprop- erly: Ulpiau, in Dig. 9, 2, 27, 9; Parsons V. Winchell, 5 Cush. 592; 52 Am. Dec. 745; Bell v. Josselyn, 3 Gray, 309; 63 Am. Deo. 741; Nowell v. Wright, 3 Allen, 166; 80 Am. Deo. 62; Horner V. Lawrence, 37 N. J. L. 46. Negli- gence and unskillfulness in the man- agement of inflammable gas, by reason of which it escapes and causes injury, can no more be considered as mere non- feasance within the meaning of the rule relied on than negligence in the con- trol of fire, as in the case in the Pan- dects; or of water, as in Bell v. Josse- lyn; or of a drawbridge, as in Nowell V. Wright; or of domestic animals, as in Parsons v. Winchell, and the case in New Jersey. In the case at bar, the negligent hanging and keeping by the defendants of the block and chains in such a place and manner as to be in danger of falling upon persona underneath was a misfeasance, or im- proper dealing with instruments in the defendant a actual use or control, for which they are responsible to any person lawfully in the room and in- jured by the fall, and who is not pre- vented by his relation to the defend- ants from maintaining the action. " ' Kroeger v. Pitcairn, 101 Pa. St. 311; 47 Am. Rep. 718. "It was not," said the court, "until after the prop- erty was destroyed that he waa unde- ceived. He then discovered that in consequence of defendant having ex- ceeded his authority he was without remedy against the company. Has be any remedy against the defendant, by whose unauthorized act he was placed in this false position? We think he has. If the president or any one duly authorized to represent the company had acted as defendant did, there could be no doubt as to its liabil- ity. Why should not the defendant be person ally jesponsible, in like man- ner, for the consequences, if he, assum- ing to act for the company, overstepped the boundary of his authority, and thereby misled the plaintiff to his in- jury, whether intentionally or not? The only difference is, that in the latter the autjbiority is self-assumed, while in the former it is actual; but that can- not be urged as a suflScient reason why plaintiff, who is blameless in both cases, should bear the loss in one and not in the other. As a general rule, 'whenever a party undertakes to do any act as the agent of another, if he does not possess any authority from the principal therefor, or if he exceeds the authority delegated to him, he will be personally liable to the person with whom he is dealing for or on account of hia principal': Story oa Agency, sec. 264. The same principle is recognised in Evans on Agency, 301; Wharton on Agency,sec. 524; 2 Smith's Lead. Caa. 380, note; 1 Parsons on Contract, 67; and in numerous adjudi- cated caaes, among which are: Hamp- ton V. Speckenagle, 9 Serg. & E. 212, 222; 11 Am. Dec. 704; Layngw. Stew- art, 1 Watts & S. 222, 220; McConn v. Lady, 10 Week. Not. Cas. 493; JeitBV. York, 10 Cush. 392; Baltzen v. Nico- lay, 53 N. Y. 467. In the latter case it is said, the reason why an agent is liable in damages to the person with whom he contracts, when he exceeds his authority, ia that the party dealing with him is deprived of any remedy upon the contract against the princi- pal. The contract, though in form 189 DUTIES AND LIABILITIES TO THIRD PERSONS. § 112 of a political club, managed a display of fire-works in the street, the cost of which was raised by a subscription being paid by him. One of the fire-works exploded and injured B. Held, that A was personally liable: Jenne v. Sutton, 43 N. J. L. 257; 39 Am. Rep. 578.' Forsyth, the owner of a strip of woodland through which a railroad ran, having procured the wood to be cut, employed Horner to haul it. Horner, in order to reach said woodland, obtained permission from Lamb, the owner of an ad- joining field, where the hogs of Lawrence were being pastured, to pass through the field, and to open a gap in the fence at a certain place, with directions to close it up after he went in and after he came out, as the hogs and cattle in the field might get through on the railroad and get killed. Horner passed through with his teams, leaving the gap open while the wagons were being loaded, but closing it when he went out; the hogs escaped through the gap, and one was killed and the other in- jured on the railroad. Held, that the leaving down the bars by Horner Was an intentional and willful violation of his authority, and a misfeasance for which, as a servant or agent for Forsyth, he cannot claim exemption against the party injured: Horner V. Lawrence, 37 N. J. L. 46. that of the principal, is not his in fact, and it is but just that the loss occa- sioned by there being no valid contract with him should be borne by the agent who contracted for him without au- thority. In Layng v. Stewart, 1 .Watts & S. 222, 226, Mr. Justice Hus- ton says: 'It is not worth while to be learned on very plain matters. Ihe cases cited show that if an agent goes beyond his authority and employs a person, his principal is not bound, and in such case the agent is bound.' The plaintiff in error, in McConn v. Lady, supra, made a contract, believing he had authority to do so, and not in- tending to bind himself personally. The jury found he had no authority to make the contract as agent, and this court, in affirming the judgment, said; ' It was a question of fact submitted to the jury whether the plaintiff in error had authority from the school board to make the contract as their agent. They found he had not. He was personaUy liable, whether he made the contract in his own name or in the name of his alleged principal. It is a mistake to suppose that the only rem- edy was an action against him for the wrong. The party can elect to treat the agent as a principal in the con- *'•""'• The cases in which agents tract. have been adjudged liable personally have sometimes been classified as fol- lows, viz.: 1. Where the agent makes a false representation of his authority with intent to deceive; 2. Where, with knowledge of his want of author- ity, but without intending any fraud, he assumes to act as though he were fully authorized; and 3. Where he undertakes to act hona fide, believing he has authority, but in fact has none, as in the case of an agent acting under a forged power of attorney. As to cases fairly brought within either of the first two classes there cannot be any doubt as to the personal liability of the self-constituted agent, and his liability may be enforced either by an action on the case for deceit, or by electing to treat him as principal. While the liability of agents in cases belonging to the third class has some- times been doubted, the weight of authority appears to be that they are also liable. " ' "It can signify nothing,'' said the court, "that he was acting in his offi- cial capacity as the presidentof this cor- poration, for all the participants in the creation of a public nuisance are liable to answer for its ill effects, without re- gard to the fact that they in such affair were but the agents of other persons." § 113 PRINCIPAL AND AGENT. 190 § 113. Liability of Principal on Agent's Contracts- Law Already Discussed. — A principal is bound by the acts of his agent done within the scope of his real or apparent authority. The persons dealing with an agent have therefore the same right against the principal -^-sub- ject to the qualification in the first sentence — that they would have had had they dealt with him personally. The questions to be determined are simply these: Had the agent a real authority to make the contract? If not, had he an apparent authority? Was he held out by the principal as having such authority? Did the principal afterwards ratify the agent's act and accept its benefits? The answer to these questions determines the principal's liability to third persons, and the law as to them has been already discussed in the previous chapters on authority to agent' and ratification.^ A principal may also be liable on contracts made by an agent, though he is not known at the time by the other party to be an agent. This liability has been treated in a former section of this chapter relating to the liability of an agent of an undis- closed principal.' A principal who has executed a con- tract for the sale of lands, and authorized an agent to receive an installment of purchase-money under the con- tract, and given the purchaser to understand that the balance was to be paid to such agent, cannot repudiate the agency and refuse to execute the deed because the agent, to whom the purchaser has paid the whole of the purchase-money, is unable to pay it over to the princi- pal.'' That a person knew when he entered into a con- tract in writing not under seal, purporting on its face to be made on the other part by A and signed by "A, agent," that A was in fact contracting as agent for B, will not prevent him from maintaining an action against B on the contract.^ ' Amte, p. 25. * Hands. Jacobus, 25 N. J. Ecj.^154. ' Anti, p. 31. ' Byington v. Siffipaon, 134 » Ante, § 107. 169; 45 Am. Rep. 314. 191 DUTIES AND LIABILITIES TO THIED PEESONS. § 114 § 114. Liability of Principal for Agent's Torts. — A principal is liable civilly for the frauds and deceits of his agent in the course of his employment, whether author- ized or known, or not.* So also a principal is bound by the false representations of an agent inducing a purchase ' Durst V. Burton, 47 N. Y. 167; 7 Am. Rep. 428; Lobdell v. Baker, 1 Met. 202; 35 Am. Deo. 358; Bennett V. Judaon, 21 N. Y. 238; New York etc. R. R. Co. V. Schuyler, 34 N. Y. 30; Concord Bank v. Gregg, 14 N. H. 331; Crump v. U. S. Mining Co., 7 Gratt. 352; 56 Am. Dec. 116; Mun- dorff V. Wiokersham, 63 Pa. St. 87; 3 Am. Rep. 531; Udell v. Atherton, 7 Hurl. & N. 172; Swift V. Winterbot- tom, L. R. 8 Q. B. 244; Mackay v. Commercial Bank, 30 L. T., N. S., 180; Reeves v. State Bank, 8 Ohio St. 405; Jeffrey v. Bigelow, 13 Wend. 518; 28 Am. Deo. 476; Sandford v. Handy, 23 Wend. 260; Wliite v. Saw- yer, 16 Gray, 586; Brokaw v. New Jer- sey R. R. Co., 32 N. J. L. 328; 90 Am. Dec. 659; Peebles v. Patapsco Guano Co., 77 N. C. 233; 24 Am. Rep. 447; Rlioda V. Annis, 75 Me. 17; 46 Am. Rep. 354; Reynolds v. Witte, 13 S. C. 5; 36 Am. Rep. 678; Erie City Iron Works V. Barber, 100 Pa. St. 125; 51 Am. Rep. 508; Gerbardt v. Boatman's Sav. Inst., 38 Mo. 60; 90 Am. Deo. 407. He is not liable criminal' y, how- ever, as to be arrested for a fraudulent debt made by the agent; Hathaway v. Johnson, 55 N. Y. 93; 14 Am. Rep. 186. An agent of a firm sold a quan- tity of meal which he fraudulently as- serted to be linseed meal. JBeld, the firm was liable in an action of deceit: liOcke V. Stearns, 1 Met. 560; 35 Am. Dec. 382. ' ' The deceit, " said Shaw, C. J. , " was done for the defendant's bene- fit, by their agent acting under their orders in the conduct of their general business, and responsible to them; and when one party must suffer by the wrong and misconduct of another, it is more reasonable that he Should sustain the loss who reposes the con- fidence in the agent, than he who has given no such confidence: Hem v. Nichols, 1 Salk. 289. The point is well illustrated by the law m insur- ance, where the party is always held responsible civiUtei; for the fraudulent misrepresentation or other deceit, or for the negligence, of his agent: Fitz- herbert v. Mather, 1 Term Rep. 12. But the rule is not confined to cases of insurance, in relation to which a somewhat stricter morality, perhaps, is held to prevail; but it is laid down as a general rule of the common law, that the principal is civilly responsi- ble for tlie acts of his agent: Doe v. Martin, 4 Term Rep. 66. In a late ease, in whicli it was held that a mas- ter was liable for the acts of his ser- vant in a case quasi criminal, — as for penalties incurred by a violation of the revenue laws, — it was taken for granted, on all sides, that for deceit in articles sold by a servant in" the shop of his master, or for acts done in the manufacture of articles in the manufactory usually carried on by the master, the latter is answerable: Attorney-General v. Siddon, I Tyrw. 41; 1 Cromp. & J. 220. The rule proceeds upon the ground that the servant is acting within the scope of his authority, actual or constructive. The case of a sheriif who is liable civiUter even in an action of trespass, for the misconduct of his deputy, is another familiar application of the same rule: Grinnellt). Phillips, 1 Mass. 530. The rule is laid down generally, _ in a ifecent compilation of good au- thority, that though a principal, in general, is not liable criminally for the act of his agent, yet he is civilly liable for the neglect, fraud, deceit, or other wrongful act of his agent in the course of his employment, though in fact the principal did not authorize the practice of such acts; but the Wrongful or unlawful acts must bo committed in the course of the agent's employment: 3 Chitty on Law of Commerce and Manulacturers, 209, 210." § 114 PRINCIPAL AND AGENT. 192 or sale.' "Where the agent, ou behalf of bis principal, performs an unauthorized act, yet if the principal has put the agent in a position to mislead innocent parties, he is responsible to them.'' A principal who employs an agent to do an illegal act is responsible for any injury done, whether the agent acts ignorantly or knowingly.' The owner of a yacht does not, by giving the master of the yacht the control of a gun and ammunition, become responsible for their careless use, it not being part of the master's duty to discharge the gun.* A principal is like- wise liable for the negligence of his agent.* Illustrations. — A principal directed his agent to get a team of horses, intending that he should first obtain the owner's per- mission, which he, through a misunderstanding, failed to do, but took them without leave, and in using them killed one. Held, that the principal was liable for the value of the horse: Moir V. Hopkins, 16 111. 313; 63 Am. Dec. 312. An agent authorized to sell a flock of sheep sells a portion of it with knowledge that the sheep are diseased, and does not commu- nicate the fact to the purchaser. The principals, though they have no actual notice of the fraud, are responsible in a civil action for damages to the purchaser: Jeffrey v. Bigelow, 13 Wend. 518; 28 Am. Dec. 476. The plaintifi's mare jumped over the defendant's fence into his field. The defendant being away from home, his wife requested a relative to turn the mare out. After trying in vain to catch the mare, he threw a stone at her and broke her leg. Held, that the defendant was not liable for the injury; the act of violence by which the loss was occa- ' Sandford v. Handy, 23 Wend. 260; berger v. Mut. Ins. Co., 89 Pa. St. 464; North River Bank v. Aymar, 3 Hill, Veazie v. Williams, 8 How. 134; ' 262; Bennett v. Judson, 21 N. Y. 238; Hunter v. Hudson River Iron Co., 20 New York etc. R. R. Co. v. Schuyler, Barb. 507; Tome v. Parkershurg etc. 34 N. Y. 30; Law v. Grant, 37 Wis. R. R. Co., 39 Md. 30; 17 Am. Rep. 548; Graves v. Spier, 58 Barb. 349; 540; Henderson v. San Antonio K. R. Elwell V. Chamberliu, 31 N. Y. 611; Co., 17 Tex. 500; 67 Am. Doc. 675; Haskit V. Eliott, 58 Ind. 493; Bowers Wright v. Calhoun, 19 Tex. 420. V. Johnson, 18 Miss. 169; Lawrence v. '' Davidson v. Dallas, 8 Cal. 227. Hand, 23 Miss. 103; Mundorflf v. ' Hynes v. Jungren, 8 Kan. 391: Wiokersham, 63 Pa. St. 87; 3 Am. Enos v. Hamilton, 24 Wis. 658. Rep. 531; National Life Ins. Co. v. * Haack v. Fearing, 5 Rob. (N. Y.) Minch, 5 Thomp. & C. 545; Fogg v. 528. Griffin, 2 Allen, 1; Upton v. Tribil- * Kline v. R. R. Co. 37 Cal. 400; 99 cock, 91 U. S. 45; Reynolds v. Witte, Am. Dec. 282. See Part V., Master 13 S. C. 5; 36 Am. Rep. 678; Tagg v. and Servant, post, and Divison IIL, Tennessee Bank, 9 Heisk. 479; Eilen- Bailments. 193 DUTIES AND LIABILITIES TO THIRD PERSONS. § 114 sioned not being done in the execution of the authority given by the wife: Cantrell v. Colwell, 3 Head, 471. Defendant wrote to his clerk authorizing him to draw for $75. The clerk al- tered the $75 to $175, showed the letter thus altered to plaintiff, who thereupon indorsed the clerk's draft for $150. Plaintiff had to pay. Held, that he could recover $75 of defendant: Wilson V. Beardsley, 20 Neb. 449. The owner of a farm, bound under the statute to build a divison fence, intrusted the work to the occupant, who did it so improperly that horses on the adjoining farm were injured by the fence. Held, that the owner was liable: Roney v. Aldrich, 44 Hun, 320. Vol. I.— 13 115, 116 PRINCIPAL AND AGENT. 194 CHAPTER XII. DUTIES AND LIABILITIES OF THIRD PERSONS TO PRINCIPAIS AND AGENTS. § 115. Rights of principal against third persona. § 116. Principal may enforce agent's contracts. § 117. Subject to frauds and misrepresentations, § 1 18. And equities. §119. Contracts under seal. § 120. Exclusive credit given to agent. § 121. Principal may recover money wrongfully paid by agent. § 122. May sue for torts to his property in agent's hands, § 123. Agent ordinarily cannot sue on his contracts. § 124. Exceptions — When agent may sue. § 125. Agent's right to sue controllable by principal, § 115. Eights of Principal against Third Persons.— The rights of the principal against third persons may be considered under four heads, viz.: 1. His right to sue upon contracts of the agent; 2. His right to recover money wrongfully paid or applied; 3. His right to fol- low property wrongfully conveyed; 4, His right to sue for torts generally. § 116. Principal may Enforce Agent's Contracts.— The acts or contracts of an agent which bind his prin- cipal impose ujjon third parties corresponding obliga- tions; and therefore the principal, whether disclosed or undisclosed, is entitled to the rights and benefits arising from such acts or contracts, and may enforce those rights by action against such third parties.^ As soon as an 1 Miller v. 'Lea, 35 Md. 396; 6 Am. 398; Brewster v. Saul, 8 La. 296j Gra- Rep. 417; Lamson Mfg. Co. v. Russell, ham v. Duckwall, 8 Bush, 12; Win- 112 Mass. 387; Taintor «. Prendergast, Chester v. Howard, 97 Mass, 303; 93 3 Hill, 72; 38 Am. Dec. 618; Beards- Am. Dec. 93; Hunter v. Giddings, 97 \eyv. Duntley, 69 N. Y. 577; Frazier Mass. 41; 93 Am. Deo. 54; Culver v. V. Erie Bank, 8 Watts & S. 18; Conk- Bigelow, 43 Vt. 249; Foster v. Smith, lin v. Leeds, 58 111. 178; Barker v. 2 Cold. 474; 88 Am. Dec. 604; Wood- Garvey, 83111. 184; Bassettj7.Lederer, ruff v. McGehee, 30 Ga. 1.58; Small 1 Hun, 274; Barry v. Page, 10 Gray, v. Attwood, 1 Younge, 407; State v. 195 DUTIES AND LIABILITIES OF THIRD PERSONS. § llfr agent has closed a contract and paid for property with his principal's money, the principal has the right to main- tain an action in his own name on matters growing out of the transaction.' A principal's right to sue upon his agent's contract is established if the agent notifies the other party that he must account to the principal; such a notification operates as an equitable assignment of the agent's interest in the contract.^ Notes payable to the order of an agent, and mortgages accompanying them, are transferable by the principal.^ Upon the sale of personal property by parol, the title may vest in an un- disclosed principal for whom the apparent purchaser is negotiating as agent, and the principal, though unknown to the seller, may vindicate by suit in his own name his rights in the property.'' When an agent, duly authorized, sells property belonging to his principal, and gives the purchaser a receipt in his own name, without stating his agency, acknowledging the payment of part of the price, and promising to deliver the property at certain times, Torinus, 26 Minn. 1; 37 Am. Rep. for his benefit, bnt payable to his 395; De Voss v. Richmond, 18 Gratt. agent: National Life Ins. Co. v. Allen, 338; 98 Am. Dec. 647; Willard v. 116 Mass. 398. A note made to one Buckingham, 36 Conn. 395; Machias as agent upon a consideration advanced Hotel Co. D. Coyle, 35 Me. 405; Wil- by the principal may be sued on by son V. Codman, 3 Cranch, 204; Kelley the principal: Bank of Genesee v. V. Munson, 7 Mass. 319; Braden v. Patchin, 19 N. Y. 312; Alston v. Louisiana Ins. Co., 1 La. 220; 20 Am. Heartman, 2 Ala. 699; Garten v. Union Dec. 277; Earle v. De Witt, 6 Allen, City Bank, 34 Mich. 279; Pratt v. 531. (See Weed u. Saratoga R. R. Co., Topeka Bank, 12 Kan. 570; and see 19 Wend. 534. ) An agent in Boston note to Arlington v. Hinds, 1 D. Chip, of a principal in Maine sold goods to 431, in 12 Am. Deo. 704, where all the a person in Boston, disclosing his prin- cases are reviewed; Newport Mochan- cipal. The purchaser became insol- ios' Mfg. Co. v. Starbird, 10 N. H. 123; vent, and was given a discharge under 34 Am. Dec. 145. the state laws. Beld, that this was ' Odessa Bank v. Jennings, 18 Mo. no bar to an action by the principal App. 651. The right of the principal to for the price of the goods: Ilsley v. assert his ownership in notes taken by Merriara, 7 Cuah. 242; 5t Am. Deo. his agent in disregard of instructions 721. An agent makes proof of his cannot be questioned, there being no principal's claim against the estate of intervening rights affected: South a decedent. It is afterwards attached Bend Iron Works v. Cottrell, 31 Fed. by a creditor of the agent. The prin- Rep. 254. cipal can come in and prove his right '■' Dustin v. Radford, 57 Mich. 163. to the claim as against a creditor: Gage * Caldwell v. Meshew, 44 Ark, V. Stimson, 26Minn. 64. Thusaprinci- 564. pal may sue in his own name on a non- ' Tainter o. Lombard, 53 Me. 369; negotiable note made in bis behalf and 87 Am. Dec. 552. §116 PRINCIPAL AND AGENT. 196 places, and prices specified, the principal, on proving, by parol, his property and the authority of the agent, may maintain an action in his own name for the balance of the price, subject to any equities which the purchaser may have against the agent.^ Such right is not afifecte'd by the fact that the agent also is entitled to sue,^ or that the principal was unknown or undisclosed when the con- tract was made,^ or that the agent acts under a commission del credere} * Huntington v. Knox, 7 Cush. 371. ' Evans on Agency, 396; Story on Agency, sec. 420; Beebe v. Robert, 12 Wend. 413; 27 Am. Deo. 132; New Jersey Steam Nav. Co. v. Merchants' Bank, 6 How. 381; Elkins v. Boston etc. E. R. Co., 19 N. H. 342; 51 Am. Deo. 184. The owner of goods which have been intrusted to an agent for a special purpose, and have been wrongfully sold by him, cannot maintaiu an ac- tion of contract against the purchaser for goods sold and delivered: Berkshire Glass Co. V. Wolcott, 2 Allen, 227; 79 Am. Dec. 781. " Evans on Agency, 396; Taintor v. Prendergast, 3 Hill, 72; 38 Am. Dec. 618; Ilsley v. Merriara, 7 Cush. 242; 54 Am. Dec. 723; Small v. Attwood, 1 Younge, 407; Bryant v. Wells, 56 N. H. 153; Walter v. Ross, 2 Wash. C. C. 283; Hicks v. Whitmore, 12 Wend. ."548; Tutt v. Brown, 5 Litt. 1; 15 Am. Dec. 33; Gilpin v. Howell, 5 Pa. St. 41; 45 Am. Dec. 720. In a lease for a year not under seal, after the name of the lessor were the words " agents as landlords." Held, that the real owners of the premises for whose benefit the lease was made might sue for the rent: NicoU v. Burke, 78 N. Y. 580. "The principle is well settled that if the agent possess due authority to make a written contract not under seal, and he makes it in his own name, whether he describes himself- as agent or not, or whether the principal be known or unknown, his principal may be made liable, and will be enti tied to sue thereon in all cases, and the instru- ment may be resorted to for the pur- pose of ascertaining the terms of the agreement. This doctrine is fully sus- tained in. Brigga «. Partridge, 64 N. Y. 357, 362, 364, -21 Am. Rep. 617, where the authorities bearing on the subject are cited and considered. See also Story on Agency, sec. 160, A differ- ent rule prevails as to sealed instru- ments; but where the contract is in writing or by parol, not under seal, in the name of the agent, and within his authority, the principal can enforce the same, and is liable thereon. The contract for the letting of the prem- ises in question from year to year was not required to be in writing. The defendant understood that tlie agents were acting for others, and were lia- ble to the principals. The particular phraseology used in the lease, describ- ing the agents ' ' as landlords, " does not change the rule, or prevent its applica- tion to contracts not under seal. In fact, tlie counterpart of the lease not being produced, and it being no doubt in tlie defendant's possession, and it not appearing in what manner it was exe- cuted by the lessors, and the iJroof show- ing that the plaintiffs were the land- lords and entitled to the rents, it was reasonable to assume tliat it was exe- cuted by their agents for their benefit and on their account. The cases cited by the learned counsel for the defend- ant to establish the doctrine that the lease, as it was, could only be enforced by the agents, do not sustain the prin- ciple contended for. Most of them re- late to instruments under seal, and none of them hold that the principal cannot recover where the contract is made by the agent within his author- ity, either written or parol, when not under seal." * Evans on Agency, 396; Story on Agency, see. 420; Leverick v. Meigs^ 1 Cow. 645. 197 DUTIES AND LIABILITIES OP THIRD PERSONS. § 117 Illustrations. — Lumber is purchased and paid for by an agent in his own name by drafts on his principal, without dis- closing his agency, and it falls short in quahty. The principal may maintain an action in his own name for the over-payment made therefor: Cushing v. Rice, 46 Me. 303; 71 Am. Dec. 579. An agent purchased property on credit in the name and for the use of his principal, but the vendor, declining to give credit to the principal, took the agent's individual note for the property, which note was afterwards paid with the money of the princi- pal. Held, that the principal might maintain an action in his own name against the vendor for a breach of warranty in the sale of the property: White v. Owen, 12 Vt. 361. An agent de- posited money in bank as an ordinary deposit, stating at the time that it was the money of his principal, but desired the offi- cer to place the money to his credit on the books of the bank, alleging that he might have occasion to use it for the benefit of his principal, and the agent died shortly afterwards insolvent. Held, that the principal was entitled to the fund, and might fol- low the same in a court of equity: Whitley v. Fov, 6 Jones Eq. 34; 78 Am. Dec. 236. J if y, H § 117. Subject to Frauds and Misrepresentations. — But this right is subject to the qualifications,— first, that it may be affected or modified by the declarations, mis- representations, concealments, and fraud of the agent, whether authorized by or known to the principal, or not.' 1 Evans on Agency, 396; Demer- Ohio St. 283. In Veazie t,. Williams, ntt V. Meserve 39 N. H. 521; Bar- 8 How. 134, it was said: "If a princi- ber V. Britton, 26 \t "2; Crump v. pal ratify a sale by his agent and take US. Mining Co 7 Gratt 352; 56 the benefit of it, and it afterwards tit ?sq M / '*."" S- l™i^' ^^ ^"™ °''' ^^'■^ f'-^^'i <"• '"intake ex- W » 1 '<5 «""" t\^^ ?;,^?V''- ''^^^ '"■ ^^^ ^^l*^' t>i« letter may be hv,l Rl.ff7'r "•' P ^°'^- *5I' ^r ^'^"'^"'^'i.and the parties placed «L«« 264, Elwell V Chamberlin 31 N. Y. money are divisible, be at times re- 61I;Sandford«.Handy 23Wend.260; lieved to the extent of the injury North River Bank v. Aymar, 3 Hill, The principal in such ease is profiting 262; Bennett «. Judson, 21 N. Y. 238; by the acts of the agent, and is hencS UmlZ ^Fm^^^^' f^' I'^^'^f answerable civiUter for the acts of ?1 e Southern Ex. Co. v. Palmer, 48 Ga. any intent to defraud The test 8o. But see Lamm «. Port Deposit is, Was the purchaser deceived? and is frAl\;^Kf^\f ^- ^- ^- ^y^^'^^P^^on and received the benefits 268, d9 Am. Rep 581; Thompson v. of it? For if so, he takes the sale with Phffinix Las Co., 75 Me. 55; 46 Am. aU its burdens." Bep. 357; .Ex parte Hill, 11 L. J., N. S., Kepler, 41 Ind. 341; Slammer v. 329; Anonymous, 2 Barn. & Adol. 766; Wright, 54 Iowa, 164; In re Buchan- In re Lowenthal, 61 Cal. 122. an, 28 Mo. App. 230. 2 Penobscot v. Kimball, 64 Me. 140; '^ In re Bowman, 8 Cent. L. J. 250. State V. Winton, 11 Or. 456; 50 Am. See Oackson v. State, 21 Tex. C68. An Hep. 486; People v. Ford, 54 111. 520. accusation that respondent urged a ' Ex parte Brown, 2 Miss. 503. prosecution for libel and promised to * People V. Pearson, 55 Cal. 472. secure satisfactory evidence of the ^ Ex parte Cole, 1 McCrary, 405. guilt of the defendant, and alleged " Ex parte Burr, 2 Cranch C. C. that the statute of limitations had not 379. run, and at the examination appeared ' People V. Murphy, 119 111. 159. for defendant and set up the statute of * In re Percy, 36 N. Y. 651. limitations and procured a writ of pro- » State V. Holding, 1 McCord, 379; hibition and defendant's discharge In re Eldridge, 82 N. Y. 161; 37 Am. thereon, shows good ground for dis- Rep. 558. barment. In re Stephens, Cal. (1888). "People V. Leary, 84 HI. 190. " Bradley v. Fisher, 13 WaU. 335; " Weeks on Attorney, sec. 81; Beene v. State, 22 Ark. 149. People V. Cole, 84 111. 327; People v. " Turner w. St. John, 3 Cold. 376. Palmer, 61 111. 255; Klingensmith v. '^ In re Bowman, 8 Cent. L. J. 25a 215 ADMISSION AND REMOVAL OP ATTORNEYS. § 131 mitted, encouraged his hallucination, and procured money on the strength of it. Held, that the attorney should be disbarred: In re Snyder, 24 Fed. Rep. 910. Pending a writ of error in the United States supreme court in a capital case, the prisoner's attorney induced a United States commissioner to believe that he had power to issue a writ of habeas corpus, and admit the prisoner to bail, whereby he got away. Held, that the attorney should be dismissed from the bar: State v. Burr, 19 Neb. 593. An attorney in whose hands a note had been placed for collec- tion agreed with the maker, without authority, that if she would board his law partner he would indorse the amount on the note. His client repudiated this agreement, and collected the full amount of the note from the maker. The attorney never ac- counted to his client for the amount indorsed, and never repaid it to the maker. Held, that this was willful professional mis- conduct: In re Temple, 33 Minn. 343. § 131. Causes not Grounds for Disbarment. — Thecourts have refused to disbar an attorney for the following alleged acts: extorting from a candidate for the position of re- ceiver (as the price of consent to his appointment) that he would employ a certain person named by the attor- ney;^ ignorance of the law;^ disclosing information re- ceived;* mere moral delinquencies;^ drawing a check on a bank in which he had no money;^ misconduct of a part- ner; ° neglecting to obey a subpoena;^ the publication over the signature of several members of the bar, of a letter in a newspaper, stating that the judge bad lost the confidence of the public, and had better resign;* refusing in an insulting manner to answer questions put by the judge in court; ° making an affidavit and representations ' Ex parte Cole, 1 McCrary, iO."). having no knowledge thereof, nor even ' Bryant's Case, 24 N. II. 149. of the receipt of the claim for coUec- ° People V. Barker, 5G 111. £99. tion, while liable for the amount, is * Starr v. Vanderheyden, 9 Johns, not liable for the statutory penalty, 253; 6 Am. Dec. 275; In ro Mills, nor to be dismissed from the bar: 1 Mich. 392; State v. Chapman, 1 Porter v. Vance, 14 Lea, 629. Munf. 581 ; Baker v. Commonwealth, ' Commonwealth v. Newton, 1 Grant 10 Bush, 592. Gas. 453. "^Bank v. Stryker, 1 Wheel. C. C. « Case of Austin, 5 Rawle, 191; 28 330. Am. Dec. 657. And see Ex parte ' If a claim is sent to a firm of attor- Cole, 1 McCrary, 405. neys for collection, and one collects and ' Ex parte Robinson, 19 Wall, misappropriates the amount, the other, 505. §131 PRINCIPAL AND AGENT. 216 for the purpose of deceiving the court, where it is not clear that he intended to state a falsehood; ' the delinquen- cies of a partner;^ taking notes instead of money in satis- faction of a fieri facias; ' that the grounds of a motion made by the attorney are not supported by the facts;* applying abusive epithets to a judge in vacation is not a "contempt involving fraudulent or dishonorable conduct or malprac- tice";^ and the courts have refused to disbar an attorney for discreditable acts not connected with his profession,* as participating in an exhibition in which pretended gifts were made to draw full houses;' or attacking the court in a newspaper, not as an officer and attorney, but in the character of editor;* or being guilty of fornica- 1 In re Houghton, 67 Cal. 511. ' Klingensmith v, Kepler, 41 Ind. 341; 50 Ind. 434. 'Banks v. Cage, 1 How. (Miss.) 293. * Fletcher v. Daingerfield, 20 Cal. 430. * Jackson v. State, 21 Tex. 668. «2Dowl. Pr. 110. ' Dickens's Case, 67 Pa. St. 109; 5 Am. Rep. 420, the court saying: ' ' The doetine of Austin's Case, 5 Rawie, 191, 28 Am. I)eo. 657, is that the power of the court may be exer- cised against attorneys at law, either for a contempt which is an offense against the court itself, or for un- fitness which disqualifies the attor- ney from filling the ofiSce properly. In the present case, no contempt was committed, and the expulsion rests upon the charge of unfitness to exer- cise the office of an attorney. If an attorney should by a series of unpro- fessional acts, disgraceful to him as a man, form a character which unfits him for association with the fair and honorable men of the profession, and disqualifies him from receiving the confidence of men of integrity, bring- ing reproach upon himself and upon the profession to which he belongs, we will not say such unfitness, the result of habitual practices, cannot be made the subject of inquiry by the court and expulsion from the bar. But certainly an act merely discredit- able, but not infamous, such as a participation in making pretended gifts as a means of giving notoriety to an exhibition, innocent in itself, while it would lose a member of the bar the favor and countenance of the high-minded men of the profession, cannot of itself give jurisdiction to the court to take judicial cognizance of it, and expel him from his office. To admit such a power would expose the members of the bar to the whims, caprice, peculiar views, and prejudices of judges. The office of an attorney is too important to him, to those de- pendent on his efforts, and to the public, to be thus at the mercy of any one. The preparation of years to enable one to practice, and the pros- pects of a lifetime, ought not to be in the power of men, however upright, to blast, who, from peculiarity of dis- position or habits of thought, may exercise the power unjustly." 8 Ex parte Biggs, 64 N. C. 204; con- tra, Ex parte Greevy, 4 Week. Not. Cas. 308; and see State v. Anderson, 40 Iowa, 207; Ex parte Steinman, 95 Pa. St. 220; 40 Am. Rep. 637. In Case of Austin, supra, it was said: "Even a battery might be committed by an attorney on a judge consistently with the official relation, if provoked in matters of social intercourse." In In re Wallace, L. R. 1 P. C. 283, an at- 217 ADMISSION AND REMOVAL OF ATTORNEYS. 131 tion;' or attempting to "fix up" a prosecution against himself not growing out of his professional position;^ or for unfaithful conduct as an ordinary trustee.^ But it is otherwise as to offenses which are evidence of a criminal character in the offender.'' Thus an attorney has been disbarred for appropriating money collected by him, in another capacity, to his own use.° torney and barrister of the supreme court of Nova Scotia addressed "a most reprehensible letter " to the chief justice, severely reflecting on the judges and their general administration of jus- tice, on account of their disposition of certain causes in which he was a suitor. He was suspended from prac- tice by the court, but that order was reversed by the privy council. Lord Westbury said: "This letter was a contempt of court It was an oSfenso [which] had no connection whatever with his professional char- acter, or anything done by him pro- fessionally If an advocate, for example, were found guilty of crime, there is no doubt that the court would suspend him. If an attorney be found guilty of moral delinquency in his pri- vate character, there is no doubt that he may be struck oflf the roll When aa offense was committed, which might have been adequately corrected by that punishment, and the offense was not one which subjected the individual committing it to anything like gen- eral infamy, or an imputation of bad character, so as to render his remain- ing in the court as a practitioner im- proper, we think it was not competent to the court to inflict upon him a pro- fessional punishment for an act which was not done professionally, and which act, per se, did not render him improper to remain as a practitioner of the court." ' In re Trumbore, 42 Am. Rep. 557 (Pa.). ^d. ^ Peopie V. Appleton, 105 HI. 474; 44 Am. Rep. 812; People v. Allison, 68 111. 151. * In State v. Winton, 11 Or. 456, 50 Am. Rep. 486, the court said: "The question which has presented the most difBculty, and out of which there has grown some difference of opinion, is where the facts charged against the attorney are indictable, but are in no wise connected with his professional employment, — acts done in his private but not in his profes- sional capacity. In such cases, it has been held by some courts that where the misconduct alleged, though done in his private capacity merely, and not in his offlcial capacity, is of such gross character as to gravely affect his standing as an attorney, they will ex- ercise the power of removal or disbar- ment. This seems to be an exception to the general rule as held by other courts, which confines the exercise of such summary jurisdiction over an attorney to cases where the miscon- duct was committed in his professional character, or was in some way, or in some matter, so connected with his professional character as to be the direct result of it. Courts, adhering to this rule, when the misconduct al- leged constitutes an indictable oftense not growing out of or in any way con- nected with his professional employ- ment or duties, refuse to proceed in this summary manner, but leave the party injured to obtain relief by a prosecution in the proper court, or the matter to be prosecuted by a public officer, upon whom the law devolves the duty of prosecuting criminal offenses. But there is no doubt much authority for extending the rule to misconduct for acts which are indictable and committed outside of the professional relation, when the misconduct alleged against the attor- ney is so gross as to seriously impugn his standing and integrity. " ^ Delano's Case, 58 N. H. 5; 42 Am. Rep. 505. § 131 PKINOIPAL AND AGENT. 218 Illustrations. — An attorney accepted a deed of trust, not as a result of his professional advice, but simply as a friendly office, and afterwards appropriated money arising from his wrongful mortgage and sale of the property to his own use. Held, that this was not professional misconduct justifying sum- mary disbarment: People v. Appleton, 105 111. 474; 44 Am. Rep. 812. On January 7, 1885, the supreme court made an order referring the settlement of a bill of exceptions to a certain judge. Subsequently, the attorneys for the parties interested of whom the respondent was one, entered into a stipulation for the continuance of the hearing of the settlement of the bill of exceptions. Thereafter a motion was made in the supreme court to set aside the order of reference of January 7, 1885. That motion was contested by the respondent, who filed an af- fidavit in which he stated that it had been stipulated that the bill of exceptions should be settled by the judge. On the argu- ment of the motion, the respondent, in reply to a suggestion that the stipulation was, or might have been, a stipulation merely to continue the hearing, replied: " No; the stipulation is as stated in the affidavit." Held, that the evidence did not show that the respondent intentionally made a false statement for the purpose of misleading the court, and that consequently he ought not to be disbarred: In re Houghton, 67 Gal. 511. Certain attorneys were notified that the deposition of a witness for whom they had sought would be taken by the adverse party. Being desirous of knowing to what he would testify, they sent an agent to see him, with instruction3 to try to incline him as favorably towards their client as possible. Their agent induced the witness to keep out of the way, making him drunk for the purpose, and got him to come to the city where one of the attorneys was, and have a consultation with the latter at his office. There was no evidence that the attorneys directed the witness to be made drunk or to be kept out of the way, nor that he should be bribed or intimidated. Held, not a sufficient ground for disbarment: In re Thomas, 36 Fed. Rep. 242. A candidate for the office of district judge refused an offer of money for campaign purposes made on condition that he ap- point the party making it clerk of the court in case of his elec- tion, but, upon consultation with friends, who advised him that such party would do him much injury if he did not aecept, executed a written promise to make such appointment, and gave it to a friend to deliver, charging him not to accept any money. The money was, however, tendered, and still acting upon the suggestion that the party had it in his power to injure him, he accepted it, but returned it after the election. Heli, that the transaction did not warrant the disbarment of the can- didate after his election: People v. Goddard, Col. (1888). 219 ADMISSION AND REMOVAL OF ATTORNEYS. §132 § 132. Saspension for a Time. — Disbarment is an ex- treme remedy, and should not be decreed when any pun- ishment less severe — such as a reprimand, temporary suspension, or fine — would accomplish the desired end.* Thus in some cases the court has adjudged it a sufficient punishment that the attorney should be suspended from practice for a time only ;^ e. g., for twelve months for using indecorous language to the court in a petition for rehear- ing, suggesting that the court was disposed to punish him for publishing certain articles;' until he paid the costs of an action he had brought without authority;* until he paid a fine of fifty dollars for addressing a letter to a judga in which he stated that an injunction issued by him "was against the law as everybody knows it";^ a fine of two ' Bradley v. Fisher, 13 Wall. 335; all matters and things nndor review Paul V. Purcell, 1 Browne, 348. and in evidence. But with this privi- " Ex parte Burr, 9 Wheat. 529; 2 lege goes the corresponding ohliga- Cranch C. C. 379. tion of constant courtesy and respect ^ De Anna's Case, 10 Mart. 123. toward the tribunal in which the pro- ♦ Anonymous, 2 Cow. 590. ceedings are pending. And the fact "In re Pryor, 18 Kan. 72; 26 Am. ■ B«p. 747. "An attorney," said the court, "is under special obligations to be considerate and respectful in his con- duct and communications to a judge. He is an officer of the court, and it is therefore his duty to uphold its honor and dignity. Certain privileges attach to him by reason of such official posi- tion. He may in the trial of cases use language concerning witnesses aud parties, and all matters and things in issue, which elsewhere and under other circumstances would be libelous. By virtue of this privilege, we often hear from the lips of counsel in argu- ment, or read in the briefs filed in pro- ceedings in error in this court, the most severe animadversion and criti- cism upon the conduct and mlings of the coviits from which the proceedings are brought. They have the same right of criticising the ruling and con- duct of those courts in proceedings pending here that they have in those courts of criticising the actions and conduct under review there. In other words, the independence of the pro- fession carries with it the right freely to challenge, criticise, and condemn that the tribunul is an inferior one, and its rulings not final and without appeal, does not diminish in the slight- est degree this obligation of courtesy and respect. A justice of the peace, before whom the most trifling matter ia being litigated, is entitled to receive from every attorney in the case cour- teous and respectful treatment. He is pro hac vice the representative of the law, as fully as the chief justice of the United States in the most important case pending before him. A failure to extend this courteous and respect- ful treatment is a failure of duty; and it may be so gross a dereliction as to warrant the exercise of the power to punish for contempt. Now, as we have said, the language of the letter is insulting. It would be so regarded outside of judicial proceedings, and in the intercourse of gentlemen. To charge another with knowingly doing an illegal act would always be re- garded as an imputation to be resented. Change the circumstances a little: suppose in a public trial in the court- house, after a ruling had been made, an attorney in the case should say to the court: 'That ruling ia not the § 132 PRINCIPAL AND AGENT. 220 hundred and fifty dollars for writing a letter to the trial judge, intimating that he was prejudiced against the pris- oner, and had better not sit;^ for six months, for knowingly- antedating the jurat to an official oath, and the acknowl- edgment of an official bond, taken before himself as a notary public, no excuse, explanation, or justification of the false dating being offered or attempted;'' for six months for having abstracted from the files a receipt attached to a fieri facias;^ and not accounting to a client or paying the proceeds of a note collected;* for one year for concealing, in moving for the admission of a person to the bar, that he had previously been rejected;^ for five years for receiving money for a client to apply to certain purposes, and not doing so;° for three months for drawing an indictment as district attorney, and afterwards appear- ing for the defendant;' for two years, and until the pay- ment of a certain judgment obtained against him by a client;* for five years for converting money received in a professional capacity to his own use;' or the imposition of a fine, as for instituting a groundless motion to disbar law, and your honor knows it. ' Who rity free from stain, or to punish for would doubt that the court might contempt any mere criticism or an- rightly treat such language as con- imadversion thereon, no matter how tempt, and punish it accordingly? Yet severe or unjust. Nor do we wish to practically that is the case. The fact be understood as expressing any opin- that in the case supposed others are ion as to the power to punish others listening, and hear the words, and in than attorneys and officers of the this the language reaches the judge court, for language or conduct even alone, does not change the quality of while the matter is pending and uu- the act. It will be borne in mind that determined. Whether the same rules the remarks we have made apply only and considerations apply to them or while the matters which give rise to not, we do not care to inquire. Such the words or acts of the attorney are is not the case before us, and to this pending and undetermined. Other case alone do our remarks apply." considerations apply after the matters ' People v. Tweed, 26 Am. Rep. 752, have finally been determined, the or- note. ders signed, or the judgment entered. ^ In re Arctander, 26 Minn. 25. For no judge, and no court, high or ^ In re Gates, 1 Pa. Sup. Ct. Dig. low, is beyond the reach of public and 3. individual criticism. After a case is * In re Temple, 33 Minn. 343. disposed of, a court or judge has no ' In re Deringer, 12 Phila. 217. power to compel the public, or any ^ In re Moore, 72 Cal. 359. individual thereof, attorney or other- ' People v. Spencer, 61 Cal. 128. wise, to consider his rulings correct, ^ In re Tyler, 71 Cal. 353. his conduct proper, or even his integ- ' In re Moore, 72 CaL 359. 221 ADMISSION AND REMOVAL CF ATTORNEYS. § 133 anotTier attorney with aa improper motive, the costs were imposed on the mover.^ Where a statute gives the court power to remove or suspend, the latter will be the judg- ment entered only where mitigating circumstances are shown.^ iLLtrsTEATiONS. — An attorney moved that a person be ad- mitted to the bar, against whose application the board of exam- iners had reported. The attorney knew this fact, but concealed it. Held, that he was properly suspended: In re Deringer, 12 Phila. 217. A, in 1874, as district attorney, drew an indictment which the grand jury returned as a true bill. In 1881 A ap- peared as attorney for the defendant in the indictment. Held, that he was thus guilty of a "violation of his duty as attorney," and properly punished — no harm, apparently having been intended — by three months' suspension from practice: People V. Spencer, 61 Cal. 128. § 133. Previous Conviction not Necessary. — It is not necessary that the attorney should have been first con- victed of a criminal charge by indictment, where the misconduct took place in his official character.^ As to criminal acts of the attorney not done in his official char- acter, there is a difference of opinion; some courts hold- ing that there must have been a regular indictment and conviction before the court will strike his name from the roll;* others that such a previous conviction is not neces- 1 Ex parte Kelly, 62 N. Y. 198. v. Haywood, 66 N. 0. 1; Ex parte 2 In re Buchanan, 28 Mo. App. Schenck, 65 N. C. 353. An attorney 230. convicted of crime forfeits his rights ^ Ex parte "Wall, 107 V. S. 265; In as such without an order of the su- re Peterson, 3 Paige, 510; Ex parte preme court rem )ving him: In re Brown, 1 How. (Miss.) 303; Dickens's NUes, 5 Daly, 465; In re E., 65 Case, 67 Pa. St. 169; 5 Am. Rep. 420; How. Pr. 171. Ex parte Mills, 1 Mich. 392; In re * State v. Chapman, 11 Ohio, 430; Hirst, 9 Phila. 216; Baker v. Common- Ex parte Steinman, 95 Pa. St. 229; wealth, 10 Bush, 592; Penobscot Bar Anonymous, 7 N. J. L. 162; State V. Kimball, 64 Me. 140; In re Wood, v. Foreman, 3 Mo. 412; Fisher's Case, 36 Mich. 299; People v. Goodrich, 79 6 Leigh, 619; Beene v. State, 22 Ark. III. 148; Ex parte Walls, 64 Ind. 461; 149; Willson v. Wilbon, 5 N. J. L. 796. Delano's Case, 58 N. H. 5; 42 Am. Pending an appeal from the judgment Rep. 555; In re Percy, 36 N. Y. 651; of a justice's court convicting an at- State V. Wintou, 11 Or. 456; 50 Am. toruey of embezzlement, proceedings Rep. 486; In re Treadwell, 66 Cal. for his disbarment are premature: 400. Contra, in North Carolina, Kane People v. Treadwell, 66 Cal. 400. §134 PRINCIPAL AND AGENT. 222 sary.* The withdrawal of a crimiual charge by a client against an attorney does not prevent his disbarment for that act,^ § 134. Practice in Disbarment Proceedings^ Proof — Appeal. — The proper practice in cases of disbarment is for the court, on the charges being presented supported by affidavit, to issue a rule on the attorney to show cause why he should not be removed.' If the offense was com- mitted in the presence or within the personal knowledge of the court, the judge may proceed on his own motion.* The state need not commence the prosecution; it is the right and duty of the bar or the court to do so.° It is mind of the jury, and many other causes wUch might be suggested; and yet, all the time the ofifender may bo so covered with guilt, perhaps glory- ing in it, that it would be a disgrace to the court to be obliged to receive him as one of its officers, clothed with all the prestige of its confidence and authority. It seems to us that the cir- cumstances of the case, and not any iron rule on the subject, must deter- mine whether and when it is proper to dispense with a prelimiuaiy convic- tion. If, as Lord Chief Justice Cook- burn said, the evidence is confiictiag, and any doubt of the party's guilt ex- ists, no court would presume to proceed summarily, but would leave the case to be determined by a jury. But where the case is clear and the denial is evasive, there is no fixed rule ot law to prevent the court from exercising its authority." 2 In re Davies, 93 Pa. St. 116; 39 Am. Eep. 729. » In re Bowman, 8 Cent. L. J. 250; In re Percy, 36 N. Y. 651; Perry i), State, 3 Iowa, 550; State v. Holding, 1 McCord, 379; Baker v. Common- wealth, 10 Bush, 592; Ohio v. Chap- man, 11 Ohio, 430; Ex parte Burr, 9 Wheat. 529; State v. Kirke, 12 Fla. 278; 95 Am. Dec. 314. * Weeks on Attorneys, sec. 83. ' In re Bowman, 8 Cent. L. J. 250; In re Percy, 36 N. Y. 651; aliter in Kentucky by statute: Turner v. Com- monwealth. 2 Met. (Ky.) 619. > Ex parte Burr,l Wheel. C. 0. 503; 2 Cranch 0. C. 379; Smith v. State, 1 Yerg. 228; Perry v. Iowa, 3G. Greene, 550; In re Percy, 36 N. Y. 651; Penob- scot V. Kimball, 64 Me. 140; Delano's Case, 58 N. H. 5; 42 Am. Rep. 555; In re Wool, 36 Mich. 299; People v. Ap- pleton, 105 HI. 474; 44 Am. Rep. 812; Ex parte Wall, 107 U. S. 265; Ex parte Walls, 64 Ind. 461; Watson v. Citizens' Savings Bank, 5 S. C. 159. In Ex parte Wall, 107 U. S. 265, the court say: "It is apparent that whilst it may be the general rule that a previ- ous conviction should be had before striking an attorney off the roll, for an indictable offense committed by him when not acting in his character of an attorney, yet, that the rule is not an inflexible one. Cases may occur in which such a requirement would result in allowing persons to practice as at- torneys who ought, on every ground of propriety and respect for the admin- istration of the law, to be excluded from such practice. A criminal pros- ecution may fail, by the absence of a witness, or by reason of a flaw in the indictment, or some irregularity in the proceedings; and in such cases, even in England, the proceeding to strike from the roll may be had. But other causes may operate to shield a gross offender from a conviction of crime, however clear and notorious his guilt may be; a prevailing popular excite- ment, powerful influences brought to bear on the public mind or on the 223 ADMISSION AND REMOVAL OF ATTORNEYS. § 134 not necessary that proceedings against attorneys for mal- practice or any unprofessional conduct should be founded upon formal allegations against them. Such proceedings are often instituted upon information developed in the progress of a cause, or from what the court learns of the conduct of the attorney from his own observation. Some- times they are moved by third parties upon affidavit, and sometimes they are taken by the court upon its own mo- tion. All that is requisite to their validity is, that when not taken for matters occurring in open court in the pres- ence of the judge, notice should be given to the attorney of the charges made, and opportunity afforded him for ex- planation and defense. The manner in which the proceed- ing shall be conducted so that it be without oppression or unfairness is a matter of judicial regulation.' The charges should be presented by affidavit, but want of an affidavit does not render the proceeding void.'' Except where the matter occurs in open court, the summary power of dis- barment should not be exercised without notice to the offending attorney of the grounds of complaint, and an opportunity for explanation or defense.' Tn Kentucky, if an attorney has been prosecuted by an indictment or information, and his guilt confessed or found by a jury, the courts in which he practiced have the power, upon his guilt thus appearing, to strike his name from the roll of attorneys, and thereby disable him from practicing in the court inflicting the punishment. But in a sum- mary proceeding for malpractice the fact must be known 1 Randall ». Brigham, 7 Wall. 523. = Bradley v. Fisher, 13 Wall. 335; 2 Ex parte Wall, 107 U. S. 2G5. In Saxton v. Stowell, 11 Paige, 526; Ex Florida, a proceeding to disbar an at- parte Heyfron, 7 How. (Miss.) 127; torney is special, of a summary charac- Beene v. State, 22 Ark. 149; Ex parte ter. The pleadings are not controlled Eobinson, 19 Wall. 505; People r. by common-law rules. A replication Turner, 1 Cal. 143; 52 Am. Dec. 295; to the answer is unnecessary. After Fletcher v. Daingerfield, 20 Cal. 427; the filing of the answer, upon counter- Jackson v. State, 21 Tex. 668; Fisher's motions to make the rule absolute and Case, 6 Leigh, 619; Peyton's Appeal, to discharge it, testimony is admissi- 12 Kan. 405; In re Brewster, 12 Hun, ble without further pleading: State v. 109; Dickinson v. Dustin, 21 Mich. MaxweU, 19 Fla. 31. 561; Randall v. Brigham, 7 Wall. 523. § 134 PRINCIPAL AND AGENT. 224 to the court by having occurred in its presence.* Where a suit in equity against an attorney and solicitor charging him with fraud under circumstances implicating him ia a gross abuse of confidence has been before the court on the facts, and the court has decreed against him, an order to show cause why he should not be struck from the rolls may properly be based on the decree, or be incorporated in the decree itself.^ The charges should be definite and certain, and state with particularity the offenses alleged against the attorney.' As such a proceeding is penal in its nature, the evidence to sustain it should be free from doubt.'' In Kansas, in a proceeding to disbar an attorney at law on the ground that he fraudulently procured his admis- sion to the bar, the defendant is entitled to a change of venue or to a trial before a judge pro tern, if it appears that the judge then sitting is prejudiced against him.' In Iowa a proceeding upon charges preferred by a private prosecutor to disbar an attorney is a special proceeding, wherein a change of venue on account of prejudice of the judge may be granted upon the same conditions and upon compliance with the same rules as in ordinary civil actions.® The power to disbar is exercised with caution and discretion,' and the court should be satisfied of the guilt of the attorney before disbarring or even suspending him.* He is not entitled to a jury trial," except in some states where it is given by statute,*" nor, except where re- quired by statute, need the prosecution be in the name of > Walker v. Commonwealth, 8 Bush, People v. Barker, 56 111. 299; In re 86. Baluss, 28 Mich. 507. 2 In re "Wool, 36 Mich. 299. * Matter of Peyton, 12 Kan. 398. 3 People V. Allison, 68 111. 151; « State u. Clark, 46 Iowa, 155. Fletcher v. Daingerfield, 20 Cal. 427; ' Rice v. Commonwealth, 18 B. Mon. Ex parte Smith, 28 Ind. 47; Walker 472; Ex parte Eobinson, 19 Wall. 505. V. Commonwealth, 8 Bush, 86; Florida ^ In re Houghton, 67 Cal. 511; In V. Kirke, 12 Fla. 278; 95 Am. Dee. re Lowenthal, 66 Cal. 122; People v. 314; Reilly v. Cavanaugh, 32 Ind. 214; Barker, 56 111. 299; In re , 1 In re MUls, 1 Mich. 392; People v. Hun, 321. Tryon, 4 Mich. 665. ' Smith v. State, 1 Yerg. 228. 'In re Attorney, 1 Hun, 321; i" Reilly «. Cavanaugh, 32 Ind. 214; Fletcher v. Daingerfield. 20 Cal. 427; In re Bowman, 8 Cent. L. J. 250. 225 ADMISSION AND REMOVAL OF ATTORNEYS. § 136 the state.^ The judgment should specify the particular charge or charges on which he is found guilty.^ It can- not adjudge the attorney " infamous." ^ The court has a discretion in the matter which will not, except for great injustice, be reversed on appeal.* In most states, how- ever, an appeal lies.° An appeal in such a case does not restore the attorney to the right to practice pending its determination." The law does not favor informations against attorneys at law after a lapse of a great length of time from the commission of the acts complained of. In analogy to the limitation of prosecutions for misdemean- ors, there ought to be a limit to the time for filing such informations.'' § 135. Mandamus to Restore Attorney. — Where the court has exceeded its jurisdiction in disbarring an attor- ney, mandamus is the proper remedy to restore him.* §136. Eeadmlssion after Disbarment. — An attorney may be readmitted after being disbarred,* but a pajrdon » In re Bowman, 8 Cent. L. J. 250. shown: Matter of Wool, 36 Mich. 299. ^ Perry v. State, 3 G. Greene, 550; Where the attorney is disbarred by State V. Watkins, 3 Mo. 388. the supreme court, a motion for a new ^ Fletcher v. Daingerfield, 20 Cal. trial is not a proper proceeding for a 430. rehearing: In re Tyler, 71 Cal. 353. * Ex parte Secombe, 19 How. 9; Ex " Walls v. Palmer, 64 Ind. 493. parteBurr, 9 Wheat. 529; InreDavies, ' People v. Allison, 68 111. 151. 93 Pa. St. IIG; 39 Am. Rep. 729; Rice * Ex parte Robinson, 19 Wall. 505; V. Commonwealth, 18 B. Men. 472; People v. Turner, 1 Cal. 143; 52 Am. Commonwealth v. Judges, 5 Watts & Dec. 29.'i; Ex parte Garland, 4 Wall. S. 272; State v. Tunstall, 51 Tex. 81. 378; Fletcher v. Daingerfield, 20 Cal. * Winkelman v. People, 50 111. 449; 430; Withers v. State, 30 Ala. 252; Turner v. Commonwealth, 2 Met. Ex parte Bradley, 7 Wall. 364; Ex (Ky.) 619; In re Bowman, 8 Cent. L. parte Burr, 9 Wheat. 530; Ex parte J. 250; Commonwealth v. McLaughlin, Heyfron, 7 How. (Miss.) 127; Rice v. 5 Watts & S. 272; State v. Sbart, 7 Commonwealth, 18 B. Mon. 472; State Iowa, 499; 74 Am. Dec. 278; Rice v. v. Start, 7 Iowa, 499; 74 Am. Dec. 278; Commonwealth, 18 B. Mon. 472; Dil- People v. .Justices, 1 Johns. Cas. 182; Ion V. State, 6 Tex. 55; Jackson v. Statew.Kirke, 12Fla. 278; 95Am. Dec. State, 21 Tex. 668; Ex parte Smith, 314. As to when mandamus will not 28 Ind. 47 ; Ex parte Trippe, 66 Ind. lie though proceedings were irregular, 531. In Michigan the appellate court see Ex parte Randall, 11 Allen, 473. will not refuse to review a decision of It is held in some states that manda- the court below disbarring an attor- mus will not lie to compel the admis- ney, upon the facts and merits, as well sions of an attorney : Commonwealth as upon questions of power, regularity, ?>. Judges, 1 Serg. & R. 187. etc., though they will not reverse on ' Rex v. Greenwood, 1 W. Black, the evidence unless a plain case is 222; Ex parte Frost, 1 Chit. 558, note. Vol. I. — 15 § 136 ' PRINCIPAL AND AGENT. 226 granted for the crime for which he was disbarred does not restore his office of attorney.^ Under the Indiana statute, when an attorney who has been disbarred applies for readmission, it is within the power of the court to secure a petition against his readmission, and to appoint certain of the petitioners to resist his application.' Where an attorney is disbarred for misappropriating his client's money, if he seeks to be readmitted it will be a condition precedent that he make all the restitution in his power.* 1 In re Attorney, 86 N. Y. 563; ^ Ex parte Walla, 73 Ind. 95. Penobscot Bar v. Kimball, 64 Me. 140. ' In re Poole, L. R. 4 Com. P. 350. 227 PRIVILEGES AND LIABILITIES OP ATTORNEYS. § 138 CHAPTER XIV. PRIVILEGES, DISABILITIES, AISTD LIABILITIES OP ATTORNEYS TO THIRD PEKSONS. § 137. Privileges and exemptions of attorneys. § 138. Exemption from arrest. § 139. Privilege of suing. § 140. Exemption from civil duties. § 141. Exemption from responsibility for words spoken. § 142. Disabilities of attorneys. § 143. To act in diverse capacities. § 144. To act for both parties, or on both sides. § 145. To purchase demands for suit. § 146. Communications between attorney and client. § 147. Privileged communications — Exceptions to the rule. § 148. To become surety for client. § 149. To be witness in cause. § 150. Liability to third persons. § 151. Liability for acting without authority. § 152. Liability to third persons on implied contracts. § 153. Liability for costs and fees. § 154. Liability for trespass. § 155. Liability for malicious prosecution. § 137. Privileges and Exemptions of Attorneys. — From an early day the ofBce of attorney has had attached to it certain privileges and exemptions which have been granted, " not for the sake of the individual, but of the suitors, and of the administration of justice."^ They are: 1. A privilege from arrest; 2. A privilege in suing and being sued; 3. An exemption from civil duties; 4. An exemption from liability for words spoken in argument.^ § 138. Exemption from Arrest. — He is privileged from arrest in civil suits,^ but only while in necessary ' In re Bliss, 9 Johns. 347. There- don v. Hughes, 5 N. J. L. 718; Gibbs tore he cannot waive them: Scott v. v. Loomis, 10 Johns. 463; Secor o. Van Alstyne, 9 Johns. 216. Bell, 18 Johns. 55; Corey v. Russell, 4 ^ An attorney has likewise a right Wend. 204; Commonwealth v. Ron- at aU times to visit his client in per- aid, 4 Call, 97; Sperry v. Willard, 1 son: Ex parte McClellan, 1 Wheel. Wend. 32; Humphrey v. Gumming, C. C. 303. 5 Wend. 90; Bohanau v. Peterson, 9 2 Emmet's Case, 2 Gaines, 387; Og- Wend. 503. §§ 139-141 PEINCIPAL AND AGENT. 228 attendance on the court,^ and while he is practicing his profession,^ and not when sued jointly with others.' § 139. Privilege of Suing. — There was an ancient privilege of attorneys in England of suing or being sued in the court in which they were enrolled. This privilege never had much footing in our courts, and is certainly now obsolete.'' § 140. Exemption from Civil Duties. — An attorney is exempt from serving as a juror,^ or as overseer of the poor, or supervisor of public roads;* but he is not exempt from military duty, which is a great national service to which all men are equally liable.' § 141. Exemption from Responsibility for Words Spoken. — Words spoken by an advocate in the course of judicial proceedings, though they are such as impute crime to another, and therefore, if spoken elsewhere, would import malice and be actionable in themselves, are not actionable if they are applicable and pertinent to the subject of inquiry.* The reasons for this exception * Gibbs V. Loomis, 10 Johns. 463; Commonwealth v. Culver, 1 Pa. L. J. Corey v. Eussell, 4 Wend. 204; Cole 361. As early as the reign of James V. McLellan, 4 Hill, 59; Foster v. I., it was laid down in England "that Garnsey, 1 3 Johns. 465. a counselor hath a privilege to enforce ^ Brooks V. Patterson, 2 Johns. Cas. anything which is informed unto him 102; Colt V. Gregory, 3 Cow. 22. for his client, and to give it in evi- ^ Tiifany v. Driggs, 1 3 Johns. 252. dence, it being pertinent to the mat- * See Allare v. Ouland, 2 Johns, ter iu question, and not to examine Cas. 52; Bennington Iron Co. v. whether it be true or false " : Brook Rutherford, 18 N. J. L. 105, 158; 35 v. Montague, Cro. Jac. 90. Later, in Am. Deo. 528; Kingw. Burr, 20 Johns. Wood v. Gunston, Styles, 462, decided 274. in 1655, it is said that "if a counsel * In re Swett, 20 Pick. 1. Even speak scandalous words against one in though he may not be in active prac- defending his client's cause, an action tioe, or may have retired. The test lies not against him for so doing; for is, Has he a right to practice if he de- it is his duty to speak for his client, sires to? and it shall be intended to be spoken ^ R. V. Fisher, 1 Yeates, 350. according to his client's instructions." ' R. V. Fisher, 1 Yeates, 350; In re BuUer, J., in Weatherstonv. Hawkins, Bliss, 9 Johns. 347. 1 Term Rep. 110, says: "In actions ' Hoar V. Wood, 3 Met. 193; Brad- of this kind, unless he can prove the ley ». Heath, 12 Pick. 163; 22 Am. words to be malicious, as well as false, Dec. 418; Stackpole v. Hennen, 6 they are not actionable " ; and Lord Mart., N. S., 481; 17 Am. Deo. 187; Mansfield, in Edmonson u. Stephenson, 229 PRIVILEGES AND LIABILITIES OP ATTOENEYS. § 141 to the general rules of the law of slander are these: the counsel for a person is the legal substitute for the party himself; so far as respects the subject before the court, he is presumed to be invested with the whole person and case of his client. Whatever, therefore, law or reason would allow to a man pleading his own cause, whether in statement or in the expression of natural feelings, be- longs, to the same extent, to the counsel who represeats him.^ A defamatory statement contained in the declara- tion in an action signed by counsel, if not pertinent or material to the issue, is not privileged; and in an action of libel against the counsel, he cannot justify by showing Ball. N. P. 8: "The gist of it must be malice, which is not implied from the occasion of speaking, but should be di- rectly proved. But if without ground, and purely to defame, an action would lie " : Hargrave v. Le Breton, 4 Burr. 2422; Rogers v. Clifton, 3 Bos. & P. 587. The ci.se of Hodgson v. Scarlett, 1 Barn. & Aid. 233, is the leading Eng- lish case on this subject. The de- fendant, one of the leaders of the bar, and afterwards known as chief baron of the court of exchequer, under the name of Lord Abinger, was sued for having used the following words while acting as counsel in the trial of a cause: "Some actions are founded in folly, some in knavery, some in both, some in folly of the attorney, some in the knavery of the attorney, some in the folly and knavery of the parties them- selves. Hodgson was the attorney of the parties, drew the promissory note, fraudulently got Bowman to pay into his hands 150 pounds for the benefit of the plaintiff. This was one of the most profligate things I ever knew done by a professional man. Mr. Hodgson is a fraudulent and wicked attorney." The court unanimously agreed that the action would not lie. EUenborough, C. J.: "A counsel intrusted with the interests of others, and speaking from their information, for the sake of pub- lic convenience, is privileged in com- tnenting fairly and hoim, fide on the circumstances of the case, and in mak- ing observations on the parties con- cerned, and their instruments or agents in bringing the case into court. The defendant says that he is a fraud- ulent and wicked attorney. These were words not used at random and unnecessary, but were a comment upon the plaintiff's conduct as attor- ney. Perhaps they were too strong; it may have been too much to say that he was guilty of fraud as between man and man, and of wickedness in foro divino. The expression in the exercise of a candor fit to be adopted might have been spared. But still a counsel might bona fide think such an expres- sion justifiable under the circum- stances. It appears to me that the words spoken were uttered in the original cause, and were relevant and pertinent to it, and consequently that this action is not maintainable." Abbott, J.: "They were spoken in a course of judicial inquiry, and were relevant to the matter in issue. I ara therefore of opinion that no action can be maintained, unless it can be shown that the counsel availed himself of his situation maliciously to utter words wholly unjustifiable. It would be impossible that justice could be well administered if counsel were to be questioned for the too great strength of their expressions; here the words were pertinent, and there is no pre- tense for saying that the defendant maliciously availed himself of his situ- ation to utter them. " And see Lewis V. Higgins, 62 L. T. 98. ' See article, "The privilege of an advocate," 4 Cent. L. J. 76. § 141 PEINCIPAL AND AGENT. 230 his belief that it was true, the sources of his information, or his instructions/ This privilege extends not merely to regular courts of justice, but to all inquiries before magistrates, referees, municipal, and ecclesiastical bodies,^ subject, however, to the restriction that they shall be made in good faith to courts or tribunals having juris- diction of the subject, and power to hear and decide the matter of complaint or accusation.' It is immaterial if the words are uttered in the course of a trial, whether in form they are addressed to the Vitness or to the court or jury. The remarks addressed to a witness in the form of putting a question reminding him of his duty or recur- ring to what he had before stated, indicating a contra- diction in different parts of his testimony or calling upon him to show how he can reconcile them, though in form directed to the witness, are made in the hearing of the court or magistrate, and may constitute a part of that comment upon the evidence which has a bearing on the result.* The privilege, however, is subject to the limit that a counsel shall not avail himself of his situation to gratify private malice by uttering slanderous expressions, either against a party, witness, or third person, which have no relation to the cause or subject-matter of the in- quiry. Words charging a witness with perjury uttered by a party or his counsel in the course of a trial may or may not be actionable, according as they were or were not spoken maliciously, were or were not pertinent to the issue, as there was or was not color for making the imputation, or as they were or were not spoken with a design to slander the witness.* And a defamatory statc- ^ McLaughlin v. Cowley, 131 Maaa. McGovem, 23 Wend. 26; Hastings v. 70. Lusk, 22 Wend. 410; 34 Am. Dee. 2 Hoar V. Wood, 3 Met. 193; York 330; Fawcett v. Charles, 13 Wend. V. Pease, 2 Gray, 282; Famsworth v. 473; Milam v. Bumsides, 1 Brev. 295. Storrs, 5 Cush. 417; Holt v. Parsons, * Shaw, C. J., in Hoar v. Wood, 3 23 Tex. 9; 76 Am. Dec. 49. Met. 193. 2 Hosmer r. Loveland, 19 Barb. Ill; ^ Ring v. Wheeler, 7 Cow. 725; Bur- Howard V. Thompson, 21 Wend. 319; lingame v. Burlingame, 8 Cow. 141; 34 Am. Deo. 238; O'Donaghue v. Hastings v. Lusk, 22 Wend. 410; 34 231 PEIVILEGES AND LIABILITIES OP ATTORNEYS. § l43 ment contained in a pleading filed in a cause to be priv- ileged must be pertinent and material to the issue.^ The privilege is a personal one, the subsequent publication of a speech made by counsel in a cause, containing libelous matter, being unlawful because it extends beyond what is required for the administration of justice.^ § 142. Disabilities of Attorneys. — But there are dis- abilities as well as privileges attaching to the office of attorney, as will be seen from the succeeding sections. Thus an attorney is bound, if ordered by the court, to de- fend a destitute person without charge,^ and can make no claim for his compensation on the public* § 143. To Act in Diverse Capacities. — A solicitor in a cause has been held disabled from acting as a special mas- ter to execute the decree;* an attorney from acting as administrator of an estate, and at the same time as attor- ney to collect a debt of the intestate;^ a constable de facto from acting as attorney in the case whose summons he served;^ an attorney for the plaintiff from issuing a writ as justice.* Counsel who represent private interests can- not be retained to assist in criminal prosecutions growing Am. Dec. 330; Mower v. Watson, 11 19 III. 78; Bacon v. Wayne Oo., 1 Vt. 536; 34 Am. Deo. 704; McMillan Mich. 461; House v. Whitis, 5 Baxt. i'. Birch, 1 Binn. 178; 2 Am. Dec. 426; 690. But see Carpenter v. Dane Co., Gilbert v. People, 1 Denio, 41; 43 Am. 9 Wis. 277; Webb v. Baird, Ind. 13; Deo. 646; Coffin v. Coffin, 4 Mass. 1; 3 Hall v. Washington Co., 2 G. Greene, Am. Dec. 189; Wyatt v. Buell, 47 Cal. 473. 624; Gray?). Peutland, 2Serg. &R. 23. * Dismukes v. Supervisors, 58 Miss. 1 McLaughlin v. Cowley, 127 Mass. 612; 38 Am. Rep. 339; Wayne Co. v. 316; 131 Mass. 70. Waller, 90 Pa. St. 99; 35 Am. Rep. 2 Rex V. Abingdon, 1 E.3p. 226; Rex 636; Lament v. Solano Co., 49 Cal. V. Creevey, 1 Maule & S. 273; Flmt v. 158; Rowe v. Yuba Co., 17 Cal. 61; Pike, 6 Dowl. & B. 528; Edsall v. Elam v. Johnson, 48 Ga. 348; Arkan- Brooks, 17 Abb. Pr. 221; R. v. Os- sas Co. v. Freeman, 31 Ark. 266; Pco- wald, 1 Dall. 319; Commonwealth v. pie v. Supervisors, 78 N. Y. 622; Case Blanding, 3 Pick. 304; 15 Am. Dec d. Commissioners, 4 Kan. 441; 96 Am. 214; King v. Root, 4 Wend. 113; 21 Deo. 190. And see chap. 17. Am. Deo. 102; Sanford v. Bennett, 24 * White v. Huffmaker, 27 HI. 349. N. Y. 20. And see post, Division 2, ^ Spinka v. Davis, 32 Miss. 152. Slander and Libel. ' Wilkinson v. Vorce, 41 Barb. 370; * People V. Supervisors of Erie, 1 Knight v. Odell, 18 How. Pr. 279. Sheld. 517; Vise v. Hamilton Co., « Ingraham v. Leland, 19 Vt. 304. § 143 PRINCIPAL AND AGENT. 232 out of such interests.^ Where an attorney receives a large sum of money from his client as payment for services to be rendered to her in and about the settlement of the estate of her deceased husband, he is bound at all times to hold himself in readiness to render them, disembar- rassed from all complication with others, and to take no position against her, and not to appear as attorney and counsel for parties litigating with her, in relation to her rights or claims under the will, upon the estate of her husband.^ The fact that an attorney for clients having different interests is enjoined for one does not restrain his professional action for others.' An attorney may act as commissioner to take a deposition in the cause.^ The attorney for the mortgagee in a foreclosure suit may prop- erly appear also as attorney for a purchaser of the equity of redemption." One who acts as counsel for a corpora- tion does not commit a breach of trust if he afterwards acts as counsel in a proceeding against a director to re- cover money which the corporation has lost through a breach of the director's official trust.^ A commissioner to examine and allow claims against an insolvent savings bank is not disqualified from acting as attorney for the assignee.^ The fact that an attorney is employed as an agent to negotiate loans does not preclude him from ren- dering professional services to his principal.^ ^ People V. Hurst, 41 Mich. 328. Deo. 670. See Gibson v. Zan^sville, 2 Qiiinn u. Van Pelt, 36 N. Y. Sup. 31 Ohio St. 184; Powers v. Deoa- Ct. 279. tur, 54 Ala. 214. But in Viu. Abr., ' Slater v. Merritt, 75 N. Y. 268. Attorney, K, it is said that, ia an ac- ' Taylor v. Branch Bank, 14 Ala. tion by the commonalty of a town, one 633. of the commonalty cannot appear as ' Wallace v. Furber, 62 Ind. 103. attorney for the commonalty, for he * Bent V. Priest, 10 Mo. App. 543. is party to the action. A statute pro- ' Hall V. Brackett, 60 N. H. 215. hibitiug a director of a bank to appear ^ Union Mut. Life Lis. Co. v. Bu- as its attorney was deemed constitu- chanan, 100 Ind. 63. In a note to tional: West Feliciana R. R. Co. v. Flaacke v. Jersey City, 33 N. J. Eq. Johnson, 5 How. (Miss. ) 273. Sobrok- 60, Mr. Stewart in his excellent way ers who were also attorneys were held has collected the following decisions: not entitled to charge counsel fees for the mayor of a city has been held services about the business of their competent to act as its attorney: employer in relation to lands in their Niles w. Muzzy, 33 Mich. 61; 20 Am. hands as such brokers: Walker v. 233 PRIVILEGES AND LIABILITIES OP ATTOENBYS. § 144 Illustrations. — A lawyer was employed to and did per- form certain services for a railroad company in which he was a stockholder, in procuring the release of a mortgage upon its property, the surrender of certain of its bonds, the release of its liability on a contract, and the extension of a land grant, and in taking care of the surrendered bonds, etc. Held, that the fact that he was a stockholder did not preclude him from sustaining the relation of attorney to the railroad company, being retained and recovering for the services in question: Barker v. Cairo etc. R. R. Co., 3 Thomp. & C. 329. § 144. To Act for Both Parties, or on Both Sides. — All attorney cannot serve professionally both parties to a suit.* An attorney will not be permitted to represent both parties to a controversy, a county, for instance, and the commissioners against whom, at the county's in- stance, a writ of mandate is asked.* But the fact that a contract is drawn up by and under the advice of one who is the counsel for both parties does not invalidate it in the absence of fraud, and where the relation of the attor- Amerioan Nat. Bank, 49 N. Y. 659; poration wag held entitled to costs: Dyer v. Sutherland, 75 HI. 583; nor Christie v. Sawyer, 44 N. H. 298; aa can a receiver act as his own conn- to a stockholder sustaining such rela- sel so as to charge the estate for tion, see Spence v. Whitaker, 3 Port, his services: Bank of Niagara Case, 297. 6 Paige, 213; McGourkey v. Downs, ' Sherwood o. Saratoga R. R. Co., MS., N. J. Eq., May term, 1880; see 15 Barb. 650; Herrick v. Catley, 30 Adams ti. Woods, 8 Cal. 321; 68 Am. How. Pr. 208; 1 Daly, 512; Price v. Dec. 313; nor can one member of a Grand Rapids R. R. Co., 18 Ind. 137; partnership who is am attorney charge Branch v. Harrington, 49 How. Pr. the others for professional services 196; Warren v. Sprague, 4 Edw. Ch. about the firm's affairs, either before 416; Valentine ». Stewart, 15 Cal. 887; or after dissolution: MUbum v. Codd, De Celis v. Branson, 53 Cal. 372. An 7 Barn. & C. 419; Van Duzer v. Mo- attorney representing one party in a Millan, 37 Ga. 299; McCrary v. Rud- negotiation will not be allowed to re- dick, 33 Iowa, 521; nor can an attor- ceive compensation from the otlier ney who is a mortgagee recover his party: De Celis v. Branson, 53 Cal. costs on his own foreclosure: Solaterc. 372; Orrti. Tanner, 12 R. I. 94. The Cottam, 3 Jur., N. S., 630; Patterson rule precluding an attorney from re- V. Donner, 48 Cal. 369; nor can a so- covering for legal services rendered by licitor who has an interest in attend- him, both to the plaintiff and defend- ing to a cause charge for his services ant in a suit, was applied in one's ac- without an express agreement: Martin tion on a note given him by a husband V. Campbell, 11 Rich. Eq. 205; see for services to both parties to a di- Deire v. Robinson, 7 Hartij 283; but he vorce suit; the payee, while attorney would be liable for costs: Voorhees v. for the wife, having at his request McCartney, 51 N. Y. 387; Common- persuaded her to dismiss the action: wealth V. Donaldson, 47 Pa. St. 363; a Macdouald v. Wagner, 5 Mo. App. 56. director of a corporation who brought ^ Clarke County v. Clarke County suit as an attorney against such cor- Commissioners, 1 Wash. Ter. 250. §144 PRINCIPAL AND AGENT. 234 ney was known to both.^ And where the attorney to col- lect a note was appointed by the defendant his attorney to confess judgment on it, he having full knowledge of the attorney's position, it was held not illegal.'^ So an attor- ney after once acting as such in a suit cannot abandon his client's case and go over to the other side.^ He can- not make use of the information he has gained as such, for the benefit of the opposite party, but if in the course of other business he has become acquainted with the secrets of another, he will not thereby be prevented from acting against him.* The solicitor who files a bill for the appointment of a receiver ought not to act as solici- tor for the receiver; but if the defendant appears by the same solicitor in the suit by the receiver, as he did in ' Joslin V. Cowee, 56 N. Y. 626. ^ Wassell «;. Reardon, 11 Ark. 705; 54 Am. Deo. 245. The court said: "As a general rule, it ia true that agents cannot act so as to bind their principals, "where they have or repre- sent interests adverse to the princi- pals'. This rule is founded upon the consideration that the principal bar- gains for the skill and vigilant atten- tion of the agent to the subject-matter intrusted to him; and the policy of the law will not tolerate the existence of an adverse interest in the agent to that of his principal, for fear it may influence his conduct to the prejudice of interests of the principal. This well-recognized rule is particularly applicable to buying and selling agents, where the principal contracts for the services of an agent at a time when he has no interest in the subject in- trusted to him, but subsequently, by his own act, acquires interest in it ad- verse to that of the principal. In the case before us, the attorney bad no interest in the matter of his agency unless it should arise from his claim to compensation as a collector, which may or may not have been otherwise settled; nor had the plaintiff any in- terest whatever in the act to be done of which the principal, at the time he instituted him agent, was not fully advised; and if such disqualification existed, he, by his own act, expressly waived it by conferring upon the agent such power, with a knowledge of the facts. When it is remembered that the whole ground upon which this rule is based rests upon the fraudulent advantage which such an interest may stimulate the agent to take to the prejudice of his principal's rights, it will scarcely be contended that the circumstances of this case bring it within the reason and spirit of the rule. The principal was informed of the nature and extent of the interest which the payee in the note had in the act to be performed by the agent. The facts disclosed in the instrument itself prove this; and that^it was in- tended that the act to be performed should inure to the mutual benefit of both the payor and payee: to the first, by saving him the expense incident to a suit in the usual form; to the other, by facilitating and making certain a recovery. " How far an attorney au- thorized by a defendant's warrant to confess jCidgment may act for the plaintiff, see Sipes v. Whitney, 30 Ohio St. 69. 5 Valentine v. Stewart, 15 Cal. 387; Commonwealth v. Gibbs, 4 Gray, 146; Gaulden v. State, 11 Ga. 47; Hatch v. Fogerty, 10 Abb. Pr., N. S., 147; 40 How. Pr. 492. * Price V. Grand Rapids K. R. Co., 18 Ind. 137. 235 PRIVILEGES AND LIABILITIES OP ATTORNEYS. § 145 the original suit, such appearance amounts to a waiver of all objections.^ An attorney employed to attend to certain specified litigation, "and to all other litigations," concerning certain lands, under a contract, who accepts and prosecutes an action for another party whose inter- ests are adverse to those of his employer, concerning the same land, if discharged by the latter, is not entitled to a specific performance of his contract with him.^ But the fact that plaintiff's attorney officially, as an officer of the government, at a former time held a different view of the law of the case from that afterwards advocated by him as such attorney, need not of itself disqualify him from accepting plaintiff's retainer, or affect his right to compensation for services rendered to plaintiff.^ The trial court has power, and it is its duty, when satisfied that on a former trial the attorney has acted for one party, to prohibit him from acting on the second trial for an opposite party.* Illustrations. — Defendant in a prosecution filed an affidavit that he had engaged one P., a lawyer, to defend him, that he had disclosed to him the facts of his case, and his evidence, etc. F. filed an affidavit admitting the retainer, but denying that he had learned anything from defendant as to bis grounds or means of defense. Held, that F. should not be allowed to assist in the prosecution, as it would be a defeating of the ends of justice: Wilson v. State, 16 Ind. 392. § 145. To Purchase Demands for Suit. — An attorney is not at liberty to buy the matters in suit or choses in action,' and this in New York has been declared a crime;" and while the relation of attorney and client continues, or even after it has been dissolved, purchases made by the attorney will be regarded by the court with suspicion, and ' Warren w. . prague,4Edw. Ch. 416. * Weeks on Attorneys, sec. 121; 2 McArthur v. Fry, 10 Kan. 233. Cunningham v. Jones, 37 Kan. 177. ' Smith V. Chicago and Northwest- " See Van Rensselaer v. Sheriff, 1 ern R'y Co., 60 Iowa, 515. Cow. 443; Baldwin v. Latson, 2 Barb. *Weidekind v. Water Co., 74 Cal. Ch. 308; Mann v. Faircnild, 14 Barb. 386; State v. Halstead, C3 Iowa, 376. ,548. § 146 PRINCIPAL AND AGENT. 236 the attorney, if there be any circumstances of fraud or inadequacy of price, will be held a trustee for the client of the property so purchased.' Illustrations. — An attorney bought a right of action from a receiver, for the benefit of his client; but the latter objected to accept the purchase, and the attorney retained the chose in action himself, and paid for it with his own money, with intent to sue upon it. Held, that this purchase, although at a re- ceiver's sale, and originally in the name of another person, was a violation of 2 N. Y. Rev. Stats. 288, sec. 71, which forbids at- torneys to buy things in action for the purpose of suing thereon: Mann v. FaircMld, 3 Abb. App. 152. § 146. Communicatioiis between Attorney and Client. — An attorney, counsel, or solicitor will not be permitted, and cannot be compelled, to disclose communications, either oral or written, made to him in his professional capacity.^ This privilege extends to oral communications or letters, or knowledge gained from books or papers, shown to him or placed in his hands by the client.' "An attorney or counselor cannot, without the consent of his client, be compelled to disclose any fact which may have been communicated to him by his client, solely for the purpose of obtaining his professional assistance and ad- vice. In the complicated affairs and relations of life, the counsel and assistance of those learned in the law often 1 See post, Division 3, Trustees. 136; Crawford v. MoKissaok, 1 Port. = Landsberger !'. Gorham, 5 Cal. 455; 433; Riley v. Johnston, 13 Ga. 260; Mitchell V. Bromberger, 2 Nev. 345; Jenkinson v. State. 5 Blackf. 465; 90 Am. Deo. 550; Gallagher v. Wil- Holmes v. Barbin, 15 La. Ann. 553; liamson, 23Cal. 331;83 Am. Dec. 114; King v. Barrett, 11 Ohio St. 261; Riggs V. Denniston, 3 Johns. Gas. 198; Chew v. Farmers' Bank, 2 Md. Ch. 2 Am. Dec. 145; Coveney v. Tanna- 231; March v. Ludlum, 3 Sand. Ch. hill, 1 Hill, 33; 37 Am. Dec. 287; 35; Childs v. Delaney, 1 Thomp. & Crosby v. Berger, 11 Paige, 377; 42 C. 506; Pearsall v. Elmer, 5 Redf. Am. Dec. 117; McLellant;. Longfellow, 181. 32 Me. 494; 54 Am. Deo. 599; Hunter " Crosby v. Berger, 11 Paige, 377; 42 V. Watson, 12 Cal. 363; 73 Am. Dec. Am. Dec. 117; Peoples Benjamin, 9 543; Rochester etc. Bank v. Suydam, How. Pr. 419; Anonymous, 8 Mass. 5 How. Pr. 254; Rhoadea v. Selin, 4 370; Lynde v. Judd, 3 Day, 499; Eel- Wash. 718; Heistert). Davis, 3 Yeates, logg t). Kellogg, 6 Barb. 116; Jackson 4; Yordan v. Hess, 13 Johns. 492: v. Burtia, 14 Johns; 391; Wilson v. Chirac u. Reinicker, 11 Wheat. 280; Troup, 7 Johns. Ch. 25: Nealu Patten, Parker v. Carter, 4 Munf. 273; 6 Am. 47 Ga. 73; Doverw. Harrell, 58Ga. 572; Deo. 513; Rogers v. Dare, Wright, Fire Ass'n v. Fleming, 78 Ga. 738. 237 PRIVILEGES AND LIABILITIES OF ATTORNEYS. § 146 becomes necessary, and to obtain it men are frequently- forced to make disclosures which their welfare and some- times their lives make it necessary to be kept secret. Hence, for the benefit and protection of the client, the law places the seal of secrecy upon all communications made to the attorney in the coarse of his professional employment, and the courts are expressly prohibited from examining him as a witness upon any facts which may have come to his knowledge through the medium of such employment."* To entitle the communication to ' Mitchell v. Bromberger, 2 Nev. 345; 90 Am. Deo. 550. Where a client has placed in his attorney's hands a lease, the latter cannot be compelled to produce it in evidence against the client in a criminal prose- cution: Commonwealth v. Moyer, 15 Phila. 397. But the production of documents in the hands of counsel can be resisted only when a controversy exists, or is anticipated between par- ties, in relation to (ie subject on which communications were made to counsel, on the documents intrusted to him. It is not enough that they were made or delivered in the general course of professional business: Peck V. Williams, 13 Abb. Pr. 6S. The privilege does not extend to a com- bination between them to prevent the court from compelling the prodaction of important papers at the trial: Peo- ple V. Sheriff of New York, 29 Barb. 622; 7 Abb. Pr. 9G. A bill in chan- cery, sworn to by a party, but never filed, and which is prepared by his attorney on the client's statement of the facts, is to be regarded as a privi- leged communication in the hands of the attorney : Burnham v. Roberts, 70 111. 19. ■ The correspondence between a district attorney, representing the United States, and the attorney-gen- eral, is confidential in its nature and cannot be cited by third persons: United States v. Six Lots of Ground, 1 Woods, 234. In an action for falsely and maliciously representing to the treasury department of the United States that the plaintiff was intending to defraud the revenue, the plaintiff filed interrogatories requiring the de- fendant to answer whether he did not inform the department that he knew or believed that the plaintiff was in- tending to commit a fraud upon the- revenue. It was held that any com- munications of the kind to the depart- ment were privileged in the sense that their disclosure will not be compelled or permitted without the assent of the- government, and tliat defendant would not be compelled to answer the inter- rogatories: Worthington v. Scribnor, 109 Mass. 487; 12 Am. Rep. 736. By- statute in some states, a physician is forbidden to disclose anj"- information received from a patient in his pro- fessional capacity: See Edinijton v. Mutual Life Ins. Co., 67 N. Y. 185; Edington v. .(Etna Life Ins. Co., 77 N. Y. 564; Dilleber v. Home Ins. Co., 69 N. Y. 256; 25 Am. Rep. 182; Grattan v. Metropolitan Ins. Co., 92 N. Y. 274; 44 Am. Rep. 372; Scuffs V. Foster, 41 Mich. 742; Fraser v. Jennison, 42 Mich. 225; note to Campau v. North, 39 Mich. 606, in 33 Am. Rep. 433, 435. The inhi- bition is not confined to communi- cations made by the patient to the' physician, but protects with the veil of privilege wliatever, in order to en- able the physician to prescribe, was disclosed to any of his senses, and which in any way was brought to his knowledge for that purpose: Briggs V. Briggs, 20 Mich. 34. "The statute covers information acquired by observation while in attendance upon his patient, as well as communi- cations made by the patient to him; but the rule it establishes is one of. privilege for the protection of the pa- ■ § 148 PRINCIPAL AND AGENT. 238 the privilege, it is not necessary that it should have been made under any special injunction of secrecy, or that the client sliould have understood the extent of the privilege.* The communication cannot be revealed, even after the termination of the suit or proceeding in which it was made,- or after the relation of attorney and client has ter- minated' with the leave of the court,^ or after the death of the client.^ Where an attorney acts for two clients, his communications with them are not privileged in a subsequent suit between their representatives,^ and con- versations between a prosecuting witness and an attorney voluntarily assisting the state's attorney are not privileged in a subsequent action against such witness for malicious prosecution/ An attorney who drew a will may testify, on its probate, to what transpired between the testator and himself in the process of its preparation and publica- tion.* And where he accepts a retainer to oppose its pro- bate, he cannot claim exemption from testifying as to the preparation of the will, on the ground of his attorney's privilege.® He may testify to communications received in the course of his professional employment, when he is called to testify by the executor, who alone could object; that parties contesting the will object to his testifying is irrelevant.'" tient; and he may waive it if he sees ' Hatton v. Robinson, 14 Pick. 416; fit, and what he may do in his life- 25 Am. Dec. 415. time those who represent him after * Andrews v. Thompson, 1 Houst. his death may also do for the protec- 522. tion of the interests they claim under ^ Bennett's Estate, 13 Phila. 331. him ": Fraser v. Jennison, 42 Mich. The privilege ceases with the client's 225. The burden is on the party seek- death when the solicitor is made his ing to exclude the testimony to show executor and residuary legatee: Crosby not only that it was acquired by the v. Berger, 4 Edw. Ch. 254. physician in attending the patient in a ° Sherman v. Scott, 27 Hun, 331. professional capacity, but that it was ' Meysenberg u. Engelke, 18 Mo. necessary to enable him to act in tliat App. 346. capacity: Peoples. Schuyler, 106N. Y. * In re Austin, 42 Hun, 516. 298. 9 Sheridan v. Houghton, 6 Abb. N. 1 McLellan v. Longfellow, 32 Me. C. 2,34; 16 Hun, 628. 494; 54 Am. Dec. 599. " Whelpley v. Loder, 1 Demarest, ■^ Chase's Case, 1 Bland Ch. 206; 17 368. Am. Deo. 277. 239 PRIVILEGES AND LIABILITIES OP ATTORNEYS. § 146 The rule of privilege is not confined to communications made in contemplation of or in the progress of an action or judicial proceeding, but extends to those made in refer- ence to any matter which is the proper subject of profes- sional employment/ It is not limited to advice given or opinions stated; it extends to facts communicated by the client, to all that passes between client and attorney, in the course and for the purpose of the business.'' But the privilege is confined to such communications as are made in strictly professional intercourse.'' An attorney may be required to disclose any information, pertinent to the cause, which has no necessary connection with his professional character, and which he did not acquire by reason of the confidence reposed in him, on account of that character, or to matters which did not relate to the subject-matter of the communication.'' Nor can the client be compelled to testify as to communica- tions made by him to his attorney.'^ But if he makes himself a witness, he may be cross-examined, and cannot refuse to answer on the ground of the matter being a communication which he had made to his attorney." 1 Root V. Wright, 84 N. Y. 72; 38 Cas. 198; 2 Am. Dec. 145. A sheriff is Am. Rep. 495; Britton v. Lorenz, 45 entitled to the same privilege, in hia K. Y. 57; Parker v. Carter, 4 Munf. communications with his attorney, as 273; 6 Am. Deo. 513; Foster v. Hall, other persons: Paxton v. Steckel, 2 12 Pick. 89; 22 Am. Dec. 400; Beltz- Pa. St. 93. hoover v. Blackstock, 3 Watts, 20; 27 ' Lengsfield v. Richardson, 52 Miss. Am. Dec. 330; Moore v. Bray, 10 Pa. 443; Kant «. Kessler, 114 Pa. St. 603. St. 524;_Clark v. Richards, 3 E. D. ^ Granger v. Warrington, 8111. 299; Smith, 95; Graham v. People, 63 Barb. Pierson v. Steortz, 1 Morris, 136; 482; March v. Lndlum, 3 Sand. Ch. Milan v. State, 24 Ark. 346; Riggs v. 46;Bankof Utieat;. Mersereau, 3Barb. Deuuiston, 3 Johns. Cas. 198; 2 Am. Ch. 528; 49 Am. Dec. 189; McLellan Deo. 145; Rochester City Bank v. V. Longfellow, 32 Me. 494; 54 Am. Suydam, 5 How. Pr. 264; Romberg v. Dec. 599; Bobo v. Bryson, 21 Ark. 387; Hughes, 18 Neb. 579. 76 Am. Deo. 407; Parker v. Carter, 4 * Chew v. Farmers' Bank of Mary- Munf. 273; 6 Am. Dec. 513; Bigler v. land, 2Md. Ch. 231; Beeson v. Beeson, Reyber, 43 Ind. 112; Caines v. Piatt, 9 Pa. St. 279; Carroll v. Sprague, 59 15Abb.Pr.,N. S.,337. Some cases hold Cal. 655; Oliver v. Cameron, 4 McAr. that the communication, to be privi- 237; State v. Mewherter, 46 Iowa, 88. leged, must have relation to some suit * Bobo v. Brysor, 21 Ark. 387 ; 76 or other judicial proceeding, either Am. Dec. 406; State v. White, 19 existing or contemplated: Whiting v. Kan. 445; 27 Am. Rep. 137. Barney, 30 N. Y. 330; 86 Am. Deo. « Inhabitants of Woburu v. Hen- 385; In re O'Douohue, 3 Nat. Bank, shaw, 101 Masa. 193; 3 Am. Rep. Reg. 245; Riggs v. Denniston, 3 Johns. 333. § 146 PRINCIPAL AND AGENT. 240 The communication is privileged, though the attorney did not consider himself as acting for the party, if the lat- ter was under the impression that he was.* The privilege extends only to the attorney or counsel himself, and to those whose intervention is strictly necessary to enable the client to communicate with him.^ The following are therefore within the rule: a clerk of the attorney,' or an interpreter.^ The privilege does not extend to a student at law in a lawyer's ofRce;^ nor to one not licensed as attorney;^ nor to a mere conveyancer not a lawyer;^ nor to one whom the party supposed to be an attorney, and whom he employed as such, but who, although doing business as a member of the bar, was not in fact admitted at that time;' nor to a witness who had been employed to assist him in a trial, but who was not an attorney, counselor, or solicitor;' nor to third persons present when the com- munication is made." It has been held that the attorney cannot be compelled to testify whether or not a note placed in his hands by a client was indorsed, or had writing on its back, or not;" or as to the condition and appearance of a deed of trust and notes, at the time they were placed in his hands for foreclosure;*^ or as to a communication made in refer- ' Alderman v. People, 4 Mich. 414; practicing before justices of the peace, 69 Am. Dec. 321. waa held privileged: Benedict v. State, ■i Hatton D. Robinson, 14 Pick. 416; 44 Ohio St. 679. 25 Am. Dec. 415. ' Matthews's Estate, 1 Phila. 292. ^ Landsberger v. Gorham, 5 Cal. 455; * Sample v. Frost, 10 Iowa, 266. Jackson v. French, 3 Wend. 337; 20 "Braytonu. Chase, 3 Wis. 456. Am. Dec. 699; Sibley v. Waffle, 16 " Jackson v. French, 3 Wend. 337; N. y. 183. 20 Am. Dec. 699; Weinstein v. Reid, * Jackson v. French, 3 Wend. 337; 25 Mo. App. 41. But in a Texas case 20 Am. Dec. 699. an attorney's mother-in-law, being * Andrews v. Solomon, Pet. C. C. present at a time when professional 356; Barnes v. Harris, 7 Cush. 576; 54 communications were made to the at- Am. Deo. 734. torney, overheard them; it was held '' McLaughlin v. Gilmore, 1 111. App. that she could be required to testify 563; aliter, as to one licensed to prac- concerning them: Walker v. State, 19 tice before a Justice of the peace or in Tex. App. 176. See next section, the county court: Scales v. Kelly, 2 " Dietrich v. Mitchell, 43 111. 40; 92 Lea, 706. And in Oliio, communica- Am. Dec. 99. tions made to one not an attorney of '^ Gray v. Fox, 43 Mo. 570; 97 Am. the courts of record, but whoso rcgu- Deo. 416. lar business had long been that of 241 PRIVILEGES AND LIABILITIES OF ATTORNEYS. § 146 ence to personal estate, on retaining him to draw an affidavit for the reduction of the assessment on the estate;' nor that while attorney of plaintiff he furnished the de- fendant's agent with a specification of plaintiff's claim, which was different from that now presented;^ nor as to what claim or title he was employed to maintain;' nor (in a prosecution for stealing silver coin) that his retaining fee was paid in silver;* nor statements made to him in regard to the preparation of a will;^ or made at the time that he drafted for the client an affidavit on which perjury was assigned;" nor as to what his client, the assignor, said at the time of his drawing it, with refer- ence to his intent or purpose in making the assignment;' or as to communications made to him in his professional capacity, by an owner of property, respecting a transfer of it;' or as to any facts which came to his knowledge, as such, when objecting or consenting to the examination of his client as a witness;® or to communications made to a prosecuting attorney relative to criminals or suspected persons;'" or as to communications made to an attornej' employed simply to draw up a contract or conveyance." An attorney retained by tlie husband to aid in having land, bought by the husband at chancery sale, conveyed to the wife, cannot disclose any communication made- pending the relation touching the purposes of the con- ' Williams v. Fitch, 18 N. Y. 546. v. State, 65 Ga. 525; Vogel v. Gruaz, 2 Hicks V. Blanchard, 60 Vt. 673. 110 U. S. 311. ^Chirac v. Ueinicker, 11 Wheat. " Parker w. Carter, 4 Munf. 273; 6 280; Stephens v. Mattox, 37 Ga. Am. Dec. 513; Bank v. Meraereau, 3 289. Barb. Ch. 528; 49 Am. Dec. 189; Getz- « State V. Dawson, 90 Mo. 149. laff v. Seliger, 43 Wis. 297; Crane v. * Bennett's Estate, 13 Phila. 331. Barkdoll, 59 Md. 534; Linthicmn v. ^ Hernandez v. State, 18 Tex. App. Remington, 5 Cranch 0. C. 546; Moore 134. V. Bray, 10 Pa. St. 519; CMtra, De ' HoUenback v. Todd, 119 111. 543. Wolf v. Strader, 26 111. 225; 79 Am. 8 Foster v. Hall, 12 Pick. 89; 22 Deo. 371; Smith v. Long, 106 III Am. Deo. 400; Beltzhoover v. Black- 488; Hebbard v. Haughian, 70 N. Y. stock, 3 Watts, 20; 27 Am. Dec. 61; Hatton v. Robinson, 14 Pick. 416; 330. 25 Am. Dec. 415; Borum v. Fonts, 15 "Hodges V. MuUikin, 1 Bland, Ind. 50; Randal v. Yates, 48 Mass. 503. 685; Machette v. Wanless, 2 Col. 169;, »» Oliver v. Pate, 43 Ind. 132; Young Todd v. Munson, 53 Conn. 579. Vol. I.— 16 § 147 PRINCIPAL AND AGENT. 242 veyance.' The burden lies on him who seeks to exclude communications as privileged, to show facts constituting the privilege.^ But the rule should be enforced by the court, of its own motion.' The opinion of the attorney that the communications are privileged is entitled to great weight.* But an attorney who is called as a wit- ness in a proceeding in bankruptcy is not entitled to add to the oath which he takes a reservation of a right to refuse to answer any question on the ground of privilege as the attorney or counsel of the bankrupt.^ Illustrations.' — ^A practicing attorney also carried on a liquor store. R., one of his clients, called on him there, and in presence of several others put a supposed case to him, and asked him, if such a case existed, would there be any liability. The attorney gave his opinion, and asked if the case put was a certain real transaction, and R. said it was. No such case was then pending. R. paid no fee, there was no general retainer, and the attorney was never engaged in the real case. The sup- posed case afterward arising, the attorney testified on the trial to the interview, and that he did not consider that R. was ad- vising with him as counsel at that time. Held, improper: Bacon V. Frisbie, 80 N. Y. 394; 36 Am. Rep. 627. A, one of two plain- tiffs, called upon B, an attorney, to employ him to bring a suit on an ofiScial bond of a justice of the peace. No fee was paid, and circumstances prevented B from bringing the suit; but, at the time, A made statements in regard to the subject-matter of said suit, which the defendant in the present case proposed to prove against A. Held, that the circumstances were privileged: Eeed v. Smith, 2 Ind. 160. A foreigner, about to sue a debt, employed one X. to act as interpreter in stating the case to her attorneys. The action was brought, and X. swore to an admis- sion by the debtor of the indebtedness. The defendant offered to show, by the attorneys of the plaintiff, that X. had said to them in his statement of the case to them that he never heard such admission. Held, that the evidence was inadmissible: Maas V. Block, 7 Ind. 202. In order to show assent by the original parties to the alteration of a note, evidence was offered of their having proposed to the plaintiff's counsel to confess judgment on the note if he thought they could do it with safety. Held, a professional consultation and inadmissible: 1 Lockhard v. Brodie, 1 Teun. Ch. * People v. Atkinson, 40 Cal. 284. 384. * Orton v. McCord, 33 Wis. 205. 2 Earle v. Grout, 46 Vt. 113. ^ Matter of Adams, 6 Ben. 56. 243 PKIVILEGES AND LIABILITIES OF ATTORNEYS. § 147 Bowers v. Briggs, 20 Ind. 139. A consulted B, an attorney at law, to draw a conveyance of his property to C, and at the same time made communications to B in regard to the object of the conveyance, and B declined the employment. Held, made to B in his professional character, and inadmissible: CrislerY. Garland, 11 Smedes & M. 136; 49 Am. Dec. 49. A solicitor employed to foreclose a mortgage, being examined as witness, was asked whether he had received any written instruc- tions from his client, in relation to the sale and the amount to be bid by him. Held, inadmissible, being a matter of profes- sional confidence: Stuyvesant v. Peckham, 3 Edw. Ch. 579. In an action on a promissory note the plaintiff's attorney was called as a witness to prove that the note was not the property of the plaintiff. He declined to state any communications made to him by his client. Held, that they were privileged: 3Iiller V. Weeks, 22 Pa. St. 89. By the admissions of a party, a cham- pertous contract was established between him and his attorney. Held, that such attorney was not a competent witness to prove the falsity of his client's statements, and that no such contract was entered into: Dowell v. Dowell, 3 Head, 502. In an action against the grantees in a deed, upon a covenant therein that they would assume and pay certain specified encumbrances, as portions of the purchase-money, an attorney and counselor who drew the deed was asked whether the deed was read over to the grantees after it was drawn; and whether the question was raised, then, as to whether the grantees would be personally liable on the deed. Held, inadmissible, as calling for privileged communications between attorney and client: Rogers v. Lyon, 64 Barb. 378. M. told his attorney, who assisted him in the confession of a judgment against himself in favor of a creditor, that he did it that he might have his piano sold on execution so his other creditors could not attach it. The court allowed the attorney to determine whether he would disclose the com- munication, and he refused. Held, that the communication was privileged, and that the fact that the court allowed the attorney to determine whether he would testify or not was not material: Maxham v. Place, 46 Vt. 434. An attorney testified that he had advised a client seeking to collect a claim for intoxicating liquors to get a promissory note signed by the debtor, and to indorse it for value before it was due to an innocent third per- son. Held, in an action on the note, a violation of the rule ex- cluding privileged communications: Higbee v. Dresser, 103 Mass. 523. § 147. Privileged Communications — Exceptions to the Rule. — But the rule is not enforced to the prejudice of § 147 PKINCIPAL AND AGENT. 244 the attorney, or where it will deprive him from obtaining or defending his rights. Hence in a suit between attor- ney and client, the former may disclose communica- tions made to him when such disclosure is essential to his rights.^ In a suit against an attorney for disobedi- ence of instructions, he may, as a witness, disclose confi- dential communications with the client." A letter from a client to an attorney, complaining that the latter has betrayed his trust in certain matters, and stating that these facts have been communicated to another lawyer for the purpose of obtaining a settlement with the dis- honest attorney, is not privileged;' and the communica- tion is not privileged when made in the presence of the other party to the suit or proceeding;^ or where made to third persons present at the time, or by other persons to each other or to the client,^ or to the attorney;^ or where they are overheard by a third person;' or a communi- cation made by a party to a suit to an attorney, to be communicated to the adverse party;^ nor where the at- torney is himself a party to the transaction;'^ nor where the communications are made by the client to the attor- ' Mitchell V. Bromberger, 2 Nev. 172; House v. House, 61 Mich. 69; 1 345; 90 Am. Dec. 55C; Rochester etc. Am. St. Rep. 570; Mobile etc. R. R. Bank v. Suydam, 5 How. Pr. 254. Co. v. Yeates, 67 Ala. 1G4. 2 Nave V. Baird, 12 Ind. 318. « Hatton v. Robinson, 14 Pick. 416; 3 Laflin v. Herrington, 1 Black, 326. 25 Am. Dec. 415; Perkins v. Guy, 55 * Whiting w. Barney, 30 N. Y. 3.30; Miss. 153; 30 Am. Rep. 510; Ran- 86 Am. Dee. 385; Britton v. Lorenz, dolph v. Quidnick Co., 23 Fed. Rep. 45 N. Y. 57; Parish ii. Gates, 29 Ala. 278; Althouse v. Wells, 40 Hun, 336. 254; Can- v. Weld, 18 N. J. Eq. 41. ' In this case the third person may But where communications are made be compelled to testify as to them: to an attorney by either of two or Hoy v. Morris, 13 Gray, 519; 74 Am. more parties in the presence of the Dec. 650. others, while he is employed as their ^ Henderson v. Terry, 62 Tox. 281. common attorney in matters in which ^ Thus where an attorney was sum- they are mutually interested, and in moned as garnishee in an attachment which their interests are adverse, such suit, it was held that he was bound to communications are privileged in a answer interrogatories as to whether suit between them, or either of them, he had received from his client a sum and a third person: Root v. Wright, of money in trust to pay a certain per- 84 N. Y. 72; 38 Am. Rsp. 495. centage to such of his creditors as * Gallagher v. Williamson, 23 Cal. would accept the same in full satisfac- 331; 83 Am. Dec. 115; Jackson v. tion of their respective debts: Joanea French, 3 Wend. 337; 20 Am. Dec. v. Fridenberg, 3 Pa. L. J. 199; Wil- 699; Goddard o. Gardner, 28 Conn, liams v. Young, 46 Iowa, 140. 245 PRIVILEGES AND LIABILITIES OP ATTORNEYS. § 147 ney of the other party;* nor where they are made to an attorney who is acting for both parties;^ nor where it is made for criminal or unlawful purposes,* except where it is not in any manner necessarily connected with the perpetration of the crime, and cannot in any way aid in the commission of any fraud or crime;* nor where made to satisfy the attorney's scruples as to the transaction, and without any view of obtaining his professional ad- vice or opinion;* nor where no retainer was paid, and there "was nothing to show that the plaintiffs sought the advice with any view to regulate his future conduct in regard to a pending or expected litigation";* nor when it is as to collateral facts, as, for example, the hand- writing of the client;' or that a bond was lodged with the client by way of indemnity, and that he expressed himself satisfied with certain security;' or the terms of a compromise offered by him to the client's credi- ' McLean v. Clark, 47 Ga. 73; Mayer ■u. HcTmann, 10 Blatchf. 256. 2 Gulick V. Gulick, 39 N. J. Eq. 516. Where two persona employ an attor- ney in the same business, communi- cations made by them in pursuance of such common retainer are not privi- leged inter se: Gulick v. Gulick, 39 N. J. Eq. 516; Cady v. Walker, 62 Mich. 157; 4 Am. St. Rep. 834; Han- Ion V. Doherty, 109 Ind. 37; Goodwin Gas Stove Co.'s Appeal, 117 Pa. St. 514; 2 Am. St. Rep. 696. Where an attorney acts for several parties in the same transaction, he cannot testify as to what took place between them and a third person unless all of his clients consent, but as between the parties themselves, he can tell what was said and done; Michael v. Foil, 100 N. C. 179; Goodwin Gas Stove etc. Oo.'s Ap- peal, 117 Pa. St. 314; 2 Am. St. Rep. 696. 3 People t>. Blakeley, 4 Park. Cr. 176; Coveuey v. Tannahill, 1 Hill, 33; 37 Am. Dec. 289; Orman v. State, 22 Tex. App. 604; 58 Am. Rep. 663; Dudley V. Bock, 3 Wis. 274; People v. Mahon, 1 Utah, 205; People v. Van Alstine, 57 Mich. 69; State v. McChesney, 16 Mo. App. 259. Defendant, on trial for murder, had consulted an attorney to know what the law was if he should kill deceased, from whom he had re- ceived great provocation. The com- munication was held not privileged: Orman v. State, 22 Tex. App. 634; 58 Am. Rep. 662. Where the object is simply fraud, the communication is privileged: Bank •«. Mersereau, 3 Barb. Ch. 528; 49 Am. Dec. 189. * Graham v. People, 63 Barb. 468. * Hatton V. Robinson, 14 Pick. 416; 25 Am Dec 415 « Thompson v. Kilborne, 28 Vt. 750;*" 67 Am. Dec. 742. But to constitute the relation so as to render the com- munication privileged, it is not es- sential that the attorney shall have re- , ceived a retainer or fee; Crisler v. Gar- land, 11 Smedes & M. 136; 49 Am. Deo. 49; March v. Ludlum, 3 Sand. Ch. 3; McMannusi). State, 2 Head, 213; Cross V. Rigging, 50 Mo. 335; Andrews v. Simms, 33 Ark. 771. It is privileged, although the advice was given upon a hypothetical statement of the facts, and the attorney had no general re- tainer: Bacon v. Frisbie, 15 Hun, 26. ' Johnson v. Daverne, 19 Johns. 134; 10 Am. Dec. 198. ^ Heister v. Davis, 3 Yeates, 4. § 147 PRINCIPAL AND AGENT. 246 tors;' or the contents of a lost will drawn up by him;^ nor as to the existence of a paper,^ or the execution of a deed; its date, whether it has been altered, and the date of its delivery;^ nor by whom he was employed,* or the fact of his employment,* or the names of the persons who intrusted him with papers and their purpose;' nor to the fact that he brought suit for a certain person, recovered judgment, and paid it over to a third person on the order of his client;* nor as to the contents of receipts in his possession which the client could be compelled to produce;* nor as to the fact that the attorney appeared for the party without authority;^" nor to the fact that the client was too imbecile to make communications to his counsel;" nor to the fact that the client called himself b)' a certain name;'^ nor as to how he obtained possession of a paper which is the basis of his client's suit;" nor as to the amount of an attorney's fee, and the terms on which it was paid;" nor to facts which the attorney might have known without being such attorney;^'' nor to knowledge acquired from other sources, and not from the client;^* nor to a com- munication (the prosecuting attorney being the witness) made by the party before the grand jury;" nor as to any agreement made with the opposite party at the request of his own client;^^ nor that he had once been employed by ' MoTavish v. Denning, Anth. 155. ' Andrews v. Railroad Co., 11 Ind. 2 Graham v. O'Fallon, 4 Mo. 338. 169; Ex parte Maulsby, 13 Md. 625. 3 Coveney v. Tannahill, 1 Hill, 32; i" Cox v. Hill, 3 Ohio, 411. 37 Am. Dec. 287; Mitchell's Case, 12 " Daniel v. Daniel, 39 Pa. St. 191. Abb. Pr. 259; nor as to ita ownership: '^ Commonwealth v. Bacon, 135 De Witt V. Perkins, 22 Wis. 473. Mass. 521. * Bank V. Meraereau, 3 Barb. Ch. " j^Hen v. Root, 39 Tex. 589. 528; 49 Am. Dec. 189; Ruudle v. Fos- " Smithwiek v. Evans, 24 Ga. 461; ter, 3 Tenn. Ch. 658. Shaughneasy v. Fogg, 15 La. Ann. 330. '^ Chirac v. Reinioker, 11 Wheat. i* Stoney t). McNeil, Harp. 557; 18 280; Satterlee v. Bliss, 36 Cal. 489; Am. Dec. 666. Martin «. Anderson, 21 Ga. 301 ; Brown "^Crosby v. Berger, 11 Paige, 379; V. Payson, 6 N. H. 443; Gower v. 42 Am. Dec. 117; Hunter v. Watson, Emery, 18 Me. 79; Mulford v. MuUer, 12 Cal. 363; 73 Am. Dec. 543; Chirac 3 Abb. App. 330. v. Reinioker, 11 Wheat. 280; Rhoades "Brighamti. McDowell, 19 Neb. 407. v. Selin, 4 Wash. 715; Bogert v. Bo- ' Reynolds v. Rowley, 3 Rob. 201; gert, 2 Edw. Ch. 399; Rogers v. Dare, 38 Am. Deo. 233. Wright, 136. 8 Fulton V. Maccracken, 18 Md. 528; " State v. Van Buskirk, 59 Ind. 384. 81 Am. Deo. 620. ^° Thayer v. MoEweu, 4111. App.4i6. 247 PRIVILEGES AND LIABILITIES OF ATTORNEYS. § 147 certain parties to bring some suits for them as a firm;' nor for an attorney who prepares a bill in equity signed and sworn to by his client, and filed in court, to testifj'' where his client was described in said bill as residing;" nor to facts learned from the opposite party, who told them to the counsel, desiring to retain him, but after he had been retained by his present client;" nor to informa- tion received from the party by one in the character of a friend, and not as counsel;^ nor to information received when not acting as attorney, though he manages the gen- eral affairs of the party;^ nor to an alleged admission of payment, made by his client after judgment recovered, and before execution was issued, while the attorney's au- thority to issue execution and satisfy the judgment con- tinued;" nor where one has been tried and acquitted, and no other proceedings in relation to the indictment, its trial, or the offense charged in it appear to have been in contemplation, and the party tried has afterwards a con- versation with the person who acted as his counsel in the proceedings, but upon a matter unconnected with them;' nor where the statement was not made with the object of obtaining professional advice;* nor to communications made by one who is only a nominal party to the suit, and has no interest in it;* nor to acts done in his presence, as the execution of a writing or the signing of a deed, etc;^" nor to prove the execution of a power to himself where he appears under a power;" nor to prove matters which occurred on the trial in open court, against his • Waldo «i. Beckwith, 1 K. Mex. 182. derman v. People, 4 Mich. 414; C9 ■■^ Alden v. Goddard, 73 Me. 345. Am. Dec. 321; Flack v. Neill, 2l5 Tex. = Thompson V. Wilson, 29 Ga. 539. 273; McMannus v. State, 2 Head, 213; * Goltra V. Wolcott, 14 111. 89; Hoff- Coon v. Swau. 30 Vt. G; Lynde v. man v. Smith, 1 Cainea, 157. McGregor, 13 Allen, 182; 90 Am. Deo. = Wilson V. Godlove, 34 Mo. 337. 188. « Clark V. Richards, 3 E. D. Smith, » Allen v. Harrison, 30 Vt. 219; 73 89. Am. Deo. 303. ' Mandeville v. Guernsey, 38 Barb. '^ Coveney v. Tannahill, 1 Hill, 33; 225. 37 Am. Deo. 287; Patten v. Moor, 29 8 Marsh v. Howe, 36 Barb. 649; N. H. 163. Brandon u. Gowing, 7 Rich. 459; Al- " Caniff w. Myers, 15 Johns. 245. § 147 PRINCIPAL AND AGENT. 248 client, as, for instance, what title was in question therein;^ nor when he acted as the agent of the lender, in negotiating a mortgage, as to what passed between him and the borrower with relation to alleged usury.^ On a question of marriage and legitimacy, an attorney who drew a will for the alleged husband now deceased, in which the children of the connection set up as wedlock are described as the "natural children" of the testator, may, without violating professional confidence, testify what was said by the testator about the character of the children and his relations to their mother, in interviews between the testator and himself preceding and connected with the preparation of the will.''* An attorney for a de- fendant on a criminal charge before a magistrate, who subsequently withdraws from the case, may be required to testify at the subsequent trial to the testimony given by a witness at such examination, although he states that he can only do so by refreshing his recollection by his minutes taken at the examination, which are not full, and that he may not be able to give the testimony with entire accuracy.* Where the surety for a county official sues his principal for money paid to his use in satisfying his bond to the public, the testimony of the prosecuting attorney is not privileged if he obtained his information as the law officer of the county, and as a member of a committee appointed to obtain a surrender of the princi- pal's property in settlement of his liabilities to the public.^ No privilege can be claimed by a trustee, as against his- cestui que trust, for letters passing between the trustee and his solicitor relating to the trust before action brought.* The privilege is the privilege of the client, and may be waived by him;'' but such waiver must be distinct and 1 Levers v. Van Buskirk, 4 Pa. St. "• Lange v. Perley, 47 Mich. 352. 309. " Mason v. Cattley, 48 L. T., N. S., ■' Woodruff J). Hurson, 32 Barb. 557. 631. 3 Blackburn v. C'rawfords, 3 WaU. ' Chase's Case, 1 Bland Ch. 206; 17 175. Am. Dec. 277; Hatton v. Robin.«on, 14 * Commonwealth v. Groddard, 14 Pick. 416; 25 Am. Dec. 415; McLellan Gray, 402. v. Longfellow, 32 Me. 494; 54 Am. Dec. 249 PRIVILEGES AND LIABILITIES OF ATTORNEYS. § 147 unconditioQal.^ It is waived by the client offering him- self as a vvitness,^ or by his calling upon the attorney to testify." The fact that an attorney's client accused of a crime turns state evidence does not entitle the attorney to testify concerning confidential communications.^ If, after the relation of attorney and client has ceased, the client voluntarily repeats to the attorney what he had communicated while that relation existed, the attorney is a competent witness as to this communication.^ Where the privileged communication is made by or affects sev- eral clients, a majority of them cannot waive the privilege against the wish of the others, though the dissentients are not parties to the suit in which the attorney is called to testify.* The common attorney of two or more parties adverse in interest cannot testify in a suit between one of them and a third person to communications made be- tween them in his presence, before suit, while he was act- ing as such attorney in respect to the matter in question.^ Illustrations. — A client wrote to his attorney to bring a suit for divorce at once, so that his wife might have time to think of the matter, and perhaps consent to a quiet separation without public scandal. He also orally instructed him to with- draw the suit if a jury trial could not be avoided. Held, that in an action by the attorney for services in that suit, evidence of those instructions was proper: Snow v. Gould, 74 Me. 540; 43 Am. Rep. 604. One, by profession an attorney, was endeav- oring, merely as a neighbor, and without any suit in court, to procure from an insurance company the allowance of a claim in favor of another, without anything being said by either party in regard to his being engaged in the matter or paid for his services, and with no intention or expectation on his part to 599; Passmore v. Passmore, 50 Mich. C. C. 464; Fossler v. Sehriber, 38 111. 026; 45 Am. Kep. 62; Rowland v. 172; Riddles v. Aikin, 29 Mo. 453; Plummer, 50 Ala. 182; Sleeper v. Ab- Benjamin v. Coventry, 19 Wend. 353. bott, 60 N. H. 162. * Sutton v. State, 16 Tex. App. ' Tate V. Tate, 75 Va. 522. 490. 2 Inhabitants «. Heushaw, 101 Mass. ^ Yordan v. Hess, 13 Johns. 492. 193; 3 Am. Rep. 333; King v. Birrett, "Bank of Uticau. Mersereau, 3 Barb. 11 OhioSt.261; Oliver ». Pate, 43 Ind. Ch. 528; 49 Am. Dec. 189. 132; contra, Duttenhofer v. State, 34 ' Root v. Wright, 84 N. Y. 72; 38 Ohio St. 91. Am. Rep. 495; Hull v. Lyon, 27 Mo. ' Crittenden v. Strother, 2 Cranoh 570. § 148 PRINCIPAL AND AGENT. 250 charge anything therefor. Held, that admissions made to him hy the claimant, while assisting him in this way, in regard to the nature of his claim, were not privileged: Coon v. Swan, 30 Vt. 6. An attorney for a trust estate was employed to draw a deed from the trustee to the cestui and a mortgage hack. Held, that statements, made in his presence by one to the other were not privileged: Moffatt v. Hardin, 22 S. C. 9. An attorney who was a witness in his client's favor was compelled by subpoena duces tecum to produce a written agreement with his client which showed that his fees were partly contingent upon the result of the suit. Held, proper: Moats v. Rymer, 18 W. Va. 642; 41 Am. Rep. 703. A and B called on an attorney and re- quested him to make a bill of sale from A to B. The attorney refused, telling them that he was engaged on the other side of the business. Held, on the issue of the bona fides of a similar bill of sale, that the attorney was competent to testify to the above: Tuclcer v. Finch, 66 Wis. 17. An attorney examined as a witness in bankruptcy proceedings, and questioned concern- ing a certain conveyance made to him by the bankrupt and wife, and a subsequent conveyance to him by the wife, refused to testify thereon as matter within the privilege of confidential communications between attorney and client. Held, that the questions were not within such privilege: In re Bellis, 3 Ben. 386. A bill of particulars in a suit pending was prepared for the plaintiff under his direction, by a person not an attorney at law, and by the latter handed to plaintiff's attorney, who made no use of it, as the case was settled. The paper afterwards came into the hands of the executor of the other party, and be- came important evidence in favor of the. estate upon a claim presented by the former plaintiff against it. Held, that it was not a privileged communication: Pulford's Appeal, 48 Conn. 247. § 148. To Become Surety for Client. — In England at- torneys have always — on grounds of public policy — been prevented from becoming bail or surety for their clients,* or in the courts in which they practice.'' This rule has been adhered to in the United States;^ sometimes by statute, sometimes by rule of court or judicial decision.* ' Weeks on Attorneys, sec. 119. * Uader the Wisconsin statutes, an ' Weeks on Attorneys, see. 119. attorney at law practicing in any ' Coster V. Watson, 15 Johns. 535; county in the state is absolutely dis- Love V. Sheffelin, 7 Fla. 40; Massie v. qualified from being surety in an un- Mann, 17 Iowa, 131; Miles v. Clarke, dertaking in any action, and not 4 Bosw. 632; Gilbank v. Stephenson, merely in one in which he ia profes- 30 Wis. 155; Branger v. Buttrick, 30 sionally interested: Gilbank v. Ste- Wis. 153. phenson, 30 Wis. 155; Branger v. 251 PRIVILEGES AND LIABILITIES OF ATTORNEYS. § 149 In some courts, however, attorneys have been permitted to become sureties for their clients.' An attorney who undertakes to obtain bail for his client will be held re- sponsible for any fraud or deception ou the court in ob- taining and justifying the bail.'' § 149. To be Witness in Cause. — An attorney is not disqualified from being a witness in his client's case,* though such a practice has been frequently discouraged by courts.^ The case of a counsel who examines the other witnesses, and addresses the jury, appearing him- self as a witness in the cause, seems still stronger. But there seems to be no satisfactory adjudication in this country except those maintaining his competency,® though Butbriok, 30 Wis. 153. A rule of cpurt that no attorney shall be a surety except with the consent of the court is directory, and his act in be- coming one is neither void nor void- able: Kohn V. Washer, C9 Tex. 67. ' Walker v. Holmes, 22 Wend. 614; Church V. Drummond, 7 Ind. 17; Ryck- man v. Coleman, 13 Abb. Pr. 398; Dillon V. Watkins, 2 Spears, i45; Will- mont V. Meserole, 48 How. Pr. 430; Sigourney v. Wail die, 9 Paige, 381; Micklethwaite v. Rhodes, 4 Sandf. Ch. 434. 2 In re Hirst, 9 Phila. 216. ^ Robinson v. Dauchy, 3 Barb. 20; Little V. McKeon, 1 Sand. 607; Reed V. Colcock, 1 Nott & McC. 592; Hall V. Renfro, 3 Met. (Ky.) 51; Newman V. Bradley, 1 Dall. 240; Phillips v. Bridge, 11 Mass. 246; Freari). Drinker, 8 Pa. St. 520; FoUey v, Smith, 12 N. J. L. 139; Boulden v. Hebel, 17 Serg. & R. 312. "An attorney can recover ordinary witness fees when he offers himself as a witness in his own case; Leaver v. Whalley, 2 Dowl. 80; Taaks v. Schmidt, 25 How. Pr. 340; or is called in another's case during his regular attendance at that term: Parks V. Brewer, 14 Pick. 192; Mar- shall V. Parsons, 4 Jur. 1017; Ab- bott V. Johnson, 47 Wis. 239; but fees when so in attendance were re- fused in McWilliama v. Hopkins, 1 Whart. 276; Crummer v. Huff, 1 Wend. 25; Jones v. Botsford, 1 Pug. 6 Bur. 581; see Reynolds «;. Wallcer, 7 Hill, 144. Where the cause "was conducted by one member of a firm of attorneys, the fees of another member called as a witness were allowed: But- ler ?;. Hobson, 5 Bing. N. C. 128; 1 Am. 434. Qucere, whether au attor- ney who calls himself as a witness can now recover his fees, since other par- ties calling themselves cannot: Grinnell V. Dennison, 12 Wis. 402; Hale v. Merrill, 27 Vt. 738; Nichols t'. Bruns- wick, 3 Cliff. 88; Parker v. Martin, 3 Pitts. 166; Grub v. Simpson, 6 Heisk. 92; Delcomyn v. Chamberlain, 48 How. Pr. 409; Stratton v. Upton, 36 N. H. 581; see Howes w. Barber, 18 Q. B. 588." Mr. Stewart's note to Flaacke v. Jersey City, 33 N. J. Eq. 60. * See Spencer v. Kinnard, 12 Tex. 180; Stratton v. Henderson, 26 111. (18; Little v. MeKeon, 1 Sand. 607; State V. Woodside, 9 Ired. 496; Frear V. Drinker, 8 Pa. St. 520; and see Churchill v. Corker, 25 Ga. 479. '' Potter u. Inhabitants, 1 Cush. 519. In FoUansbee v. Walker, 72 Pa. St. 230, 13 Am. Rep. 671, the law was reviewed by Read, J., as follows: "On the trial of this case, A., S. Foster, Eaq., was offered as a witness, on the part ot the defense, objected to by the plaintiff's counsel, and rejected by the court for the following reason: ' Mr. Foster ia 150 PRINCIPAL AND AGENT. 252 it has beeu otherwise ruled in England, and Mr. Wharton seems not to favor the practice.^ In California it is said that there is no rule of law which prohibits an attorney of record, who is a witness in a case, from summing it up before the court or jury. If a rule of the court prohibits such attorney from arguing a case without permission of the court, the court may give such permission.^ § 150. Liability to Third Persons. — The members of a firm of attorneys are liable for the acts of each other in attorney for the defendant FoUansbee, opened the case for him to the jury, and examined the witnesses for said defendant, and the court, on this ground, excludes him as a witness.' This is assigned for error. In Frear V. Drinker, 8 Pa. St. 521, Mr. Justice Rogers says: ' It is also contended an attorney is not a oompetent witness for his client. In England it has beenlately ruled that an attorney is not to give evidence under certain circumstances.' He cites two cases before Mr. Justice Patteson and Mr. Justice Erie, and he says: 'The furthest the court has yet gone is to discourage the practice of acting in the double capacity of attor- ney and witness, but there is nothing to prohibit an attorney from being a witness for his client when he does not address the jury It is said and I agree that it is a highly indecent practice for an attorney to cross-ex- amine witnesses, address the jury, and give evidence himself to contra- dict the witnesses. It is a, practice, which, as far as possible, should be discountenanced by courts and coun- sel. But these cases are not open to this objection, because it appears negatively that the counsel did not address the jury. It is sometimes in- dispensable that an attorney, to pre- vent injustice, should give evidence for his client.' In the earlier cases in Pennsylvania, the objection to the examination of the attorney in the cause was his interest in it, as in the case of the late Judge Baldwin in Miles V. O'Hara, 1 Serg. & R. 32, in 1S14. In the first case, Newman v. Bradley, 1 Dall. 240, in the year 1788, tlowell, who was of counsel for the plaintiff, gave the chief evidence to support the action, and he and Tod argued the cause before the jury, and there was a verdict for the plaintiff. 'When Howell offered himself as a witness, Levy objected that he was interested, inasmuch as his judgment fee depended on his success in the cause. Bat the objection was over- ruled by the court.' The two Eng- lish cases cited by Judgt Rogers have since been overruled. Pitt Taylor, in the second volume of his treatise on the law of evidence, page 1170, section 1240, fourth edition, thus states the law: 'The judges at nisi prius were at one time inclined to regard as in- competent to testify all persons, whether counsel, attorneys, or parties, who be- ing engaged in a cause had actually addressed the jury on behalf of that side on which they were afterwards called upon to give evidence. Fur- ther investigation of the subject, however, ha-i led to a judicial ao- Ijnowledgment that no such practice exists.' The authority for this, Cor- bett V. Hudson, 22 L. J. Q. B. 11, 1852, the judgment of the court (of which Mr. Justice Erie was one), be- ing delivered by Lord Campbell, C. J. The question may therefore be consid- ered as settled in England and Penn- sylvania, and also in Massachusetts: Potter V. Inhabitants of Ware, 1 Cush. 519. There was therefore error in holding Mr. Foster was not a com- petent witness." ' Wharton on Evidence, sec. 420. 2 Branson v. Caruthers, 49 Cal. 374. 253 PRIVILEGES AND LIABILITIES OP ATTORNEYS. § 152 the firm business.^ An attorney, like any other agent, is liable to a third person for money collected by him which he pays over after notice of his claim.^ Attorneys in the exercise of their proper functions as such are not liable for their acts when performed in good faith, and for the honest purpose of protecting the interests of their clients.^ An attorney who, by his representations and promised indorsement, indnces a party to take an assignment of a debt placed in his hands for collection by way of pay- ment of a note against his client, thereby becomes per- sonally responsible to the assignee for its collection.* Illustrations. — An attorney collects money for and pays it over to his client. A third person shows himself entitled to the money. Held, that he cannot recover it from the attorney: Wilmerdings v. Fowler, 55 N. Y. 641. § 151. Liability for Acting without Authority. — An attorney is liable to a third person for acting for him and in his name without authority.® § 152. Liability to Third Persons on Implied Contracts. — He is liable for work done in his client's affairs by another at his request when it is done as assistance to himself personally in matters properly devolving upon himself; but he is not liable, where it is for his client's advantage, and not his own, even though he expressly request it.* But he is liable for money advanced by a third person to prosecute the action, the credit of the client not being pledged to repay it.'' He is not liable for the charges of a person employed to examine partnership books for the purposes of the trial.* 1 Green v. Milbank, 3 Abb. N. C. v. Gibbs, Pet. C. C. 155; Coit v. Shel- 138; Smyth v. Harria, 31 111. 62; 83 don, 1 Tyler, 304; Muunikuyson v. Am. Dec. 202. Dorsett, 2 Har. & G. 374; People v. " Sims V. Brown, 6 Thomp. & C. 5; Bradt, 6 Johns. 318; Bradt v. Wal- 64 N. Y. 660. ton, 8 Johns. 298; Spaulding v. Swift, 3 Campbell v. Brown, 2 Woods, 349. 18 Vt. 214; Adams v. Robinson, 1 * Hazelrigg v. Brenton, 2 Duvall, Pick. 461. 525. ^ Weeks on Attorneys, sec. 127. * Smith V. Bowditch, 7 Pick. 138; ' Bell v. Mason, 10 Vt. 509. Jones V. Wolcott, 2 Allen, 247; Field « Oovell v. Hart, 14 Hun, 252. § 153 PRINCIPAL AND AGENT. 254 Illustrations. — A, an attorney employed to conduct a suit, employed B, another attorney, to assist him, but did not pro- fess to employ him on behalf of his client, nor did it appear that he had authority so to do, and he was the only person who did employ B. Held, that A was personally responsible without proof of an express promise: Scott v. Hoxsie, 13 Vt. 5D. § 153. Liability for Costs and Fees. — The attorney may be made liable personally for the costs of the cause, "where he is guilty of gross negligence or misbehavior,' as where lie draws up and signs an impertinent pleading,^ or makes unnecessary and frivolous motions.' Where the opposite party to the suit has been forced to pay costs through the ignorance or misbehavior of the attorney, the latter will be ordered to reimburse him instead of his client.* All attorney who brings an action in the name of another, in which he is beneficially interested by virtue of an agreement, that he shall have a portion of the re- covery as compensation for his services, is liable, the same as the plaintiff, for defendant's costs.' An attorney will be personally liable for the costs of a disbarment proceeding instituted in bad faith.* The attorney is per- sonally liable to the sheriff for his fees for serving or exe- cuting process which he has delivered to him,^ and for reasonable disbursements made by the ofi&cer in taking care of the property.' But he is not personally liable for ' Brown v. Brown, 4 Ind. 627; Love- ' Adams v. Hopkins, 5 Johns. 252; land V. Jones, 4 Ind. 184; Ex parte Campbell o. Cothran, 56 N. Y. 279; Bobbins, 6-3 N. C. 309; MoVey v. Trustees v. Cowen, 5 Paige, 510; Cantrell, 8 Hun, 522; 70 N. Y. 295; Camp v. Garr, 6 Wend. 535; Ouster- 26 Am. Eep. 605. hout v. Day, 9 Johns. 114; Towle v. 2 Powell V. Kane, 5 Paige, 265; 2 Hatch. 43 N. H. 270; Birbeck v. Staf- Edw. Ch. 450; Cushman v. Brown, 6 ford, 14 Abb. Pr. 285; 23 How. Pr. Paige, 539. 230; Tilton v. Wright, 74 Me. 214; 43 'Jordan w. National Shoe Bank, 13 Am. Rep. 578; Heath w. Bates, 49 Conn. Jones & S. 423; In re Kelly, 6 Thomp. 342; 44 Am. Rep. 234; Van Kirk v. & C. 117. Sedgwick, 23 Hun, 37; con/.m, Wires * Weeks on Attorneys, sec. 128; v. Briggs, 5 Vt. 101; Preston v. Pres- Kane v. Van Vranken, 5 Paige, 62; ton, 1 Uoug. 292. Kespass v. Morton, Hardin, 226. * Tarbell v. Dickinson, 3 Cush. 346. * Voorhees v. McCartney, 51 N. Y. In a New York case it is said that 387. there is no relation between an attor- " In re Kelly, 59 N. Y. 595; 62 N. ney employed to prosecute a cause, Y. 198. and other officers of court, whose ser- 255 PRIVILEGES AND LIABILITIES OP ATTORNEYS. 153 the fees of a referee;' nor of commissioners in part^.ion;* or a stenographer;' nor for witness' fees/ In some states, by statute, an attorney is personally liable for costs, as, for example, where he institutes a suit for a non-resident plaintiff,^ or indorses the writ.* He is liable for fees gen- erally where he has a personal interest in the suit.'' vices become necessary in the course of it, which can give such officer the right to an attabhnient against the at- torney to compel payment of his' foes; not even where the attorney has col- lected the fees with the costs: Lamo- reux V. Morris, 4 How. Pr. 245. ' Howell V. Kinney, 1 How. Pr. 105; Moore v. Porter, 13 Serg. & R. 100; aliter. Trustees v. Ccjwen, 5 Paige, 510; Judson v. Gray, 11 N. Y. 410, Selden, J., saying: " It is a well-settled rule of the common law that where one person contracts, as the agent of another, and the fact of his agency is known to the person with whom he contracts, the principal alone, and not the agent, is responsible. This rule is directly applicable to the case of attorney and client, and has been so applied whenever the question has arisen, except in New York state. It was thus applied in England, in the cases of Hartop v. Juekes, 1 Maule & S. 709; Robius v. Bridge, 3 Moes. & W. 114; and Maybery v. Mansfield, 9 Ad. & E., N. S., 758; in Vermont, in the cases of Sargent v. Pettibone, 1 Aiken, 355, and Wires v. Briggs, 5 Vt. 101 ; in Maryland, in the case of Mad- dock V. Cranch, 4 Har. & McH. 343; in Pennsylvania, in Moore v. Porter, 13 Serg. & R. 100; and in Michigan, in Preston v. Preston, 1 Doug. 292. The decisions in all these cases were based upon the general' rule to which I have referred. In the case of' Rob- bins V. Bridge, Lord Abinger says: ' The attorney is known merely as the agent, the attorney of the principal, and is directed by the principal him- self. The agent, acting for and on the part of the principal, does not bind himself, unless he offers to do so by express words.' So in Wires v. Briggs, the court say: 'No rule of law, it has been said, is better ascer- tained, or stands upon a stronger foundation, than this: that where an agent names his principal, the principal is responsible, and not the agent'; and in Preston v. Preston, the language of Pelch, J., is: 'In conducting the suit, so far as third persons are concerned, the attorney is simply the agent of his client. The rule of law is well settled, that an agent does not become person- ally liable, unless his principal is unknown, or there is no responsible principal, or the agent exceeds his power, or becomes liable by an under- taking in his own name. ' " '' Lamoreux v. Morris, 4 How. Pr. 245. ' Bonynge v. Field, 12 Jones & S. 581; Bonynge v. Waterbury, 12 Hun, 534; Sheridan v. Genet, 12 Hun, 660. A request by an attorney to court officers, stenographers, etc., for per- formance of services incidental to a cause, does not raise an implied liabil- ity of the attorney to pay. Presum- ably the liability is upon the client; Bonynge v. Waterbury, 12 Hun, 534; S. P., Sheridan v. Genet, 19 N. Y. Sup. Ct. 660. * Sargent v. Pettibone, 1 Aiken, 355. ° Jones V. Savage, 10 Wend. 621; Wright V. Black, 2 Wend. 258; People V. Marsh, 3 Cow. 334; Waring v. Barot, 2 Cow. 460; Carmichael v. Pendleton, Dud. (Ga.) 173; Alexander v. Carpen- ter, 3 Denio, 266; Ross v. Harvey, 32 Ga. 388; Christmas d. Russell, 2 Met. (Ky.) 112; Boyce v. Bates, 8 How. Pr. 495; Benson v. Whitfield, 4 McCord, 149; Willmont v. Meserole, 16 Abb. Pr., N. S., 308. "Davis V. McArthur, 3 Me. 27; Chapman t). Phillips, 8 Pick. 25; Weeks on Attorneys, see. 129. ' Cone V. Donaldson, 47 Pa. St. 363; Voorhees v. McCartney, 51 N. Y. 387. § 154 PRINCIPAL AND AGENT. 256 Illustrations. — A, not having any interest in the land, per- mits B to use his name as a lessor of the plaintifif in ejectment, on condition that he shall not be at any further expense. B employs an attorney to bring the suit in the name of A, without informing him of the condition annexed to the authority, and A is compelled to pay costs. Held, that he has a remedy, not only against B, but against the attorney; although 'the latter was ignorant of the condition: Bradt v. Walton, 8 Johns. 298. A custom of the attorneys of a county to hold tliemselves responsi- ble for sheriff's fees, in cases wherein they were employed, held, not to subject an attorney to liability therefor, in the absence of an express agreement, or of proof that the attorneys were ac- customed to pay for such services, regardless of the responsibility of their clients: Doughty v. Paige, 48 Iowa, 483. § 154. Liability for Trespass. — So the attorney is per- sonally liable for trespass where the process is irregular or illegal,^ and he is liable for procuring or advising a judicial officer to act beyond his jurisdiction.^ An attor- ney who uses the law to enforce his client's demands, however groundless, is not liable so long as he acts merely as attorney, but he is liable when he steps beyond that and actively aids his client's purpose.^ He is liable personally for illegally issuing a fieri facias.^ He is not liable when he merely communicates to the sheriff his client's instructions to make a levy on property which turns out to belong to another.® Thus where he, obey- ing his client's instructions, orders the seizure of prop- erty, he is not liable to its owner, if such owner is other than the attachment defendant.^ Nor is he liable for the trespass of a constable having charge of the execution.'' An attorney is not liable for any illegal seizures that may be made under a warrant which he may happen to pre- pare. But if he also send his clerk to assist in the levy under the warrant, he is liable for any illegal seizure ^ People V. Montgomery, 18 Wend. * Newberry v. Lee, 3 Hill, 523. 633; Griswold v. Sedgwick, 6 Cow. " Ford v. Williams, 13 N. Y. 577; 456; Newberry v. Lee, 3 Hill, 523. 67 Am. Deo. 83; aliter, if he directs it 2 Revill V. Pettit, 3 Met. (Ky.) 314. personally: Id. * Sohalk V. Kingsley, 42 N. J. L. " Dawson v. Buford, 70 Iowa, 127. 32. ' Seaton v. Cordray, Wright, 102. 257 PRIVILEGES AND LIABILITIES OF ATTORNEYS. § 154 made.* So if he specially advises an illegal seizure of property, and assists at the sale, he is liable.^ The law is summed up in a recent case thus:' "An attorney is not liable with his client, in a joint action of trespass, unless it can be shown that he has gone beyond the strict line of his duty. So long as he acts strictly in the execution of the duties of his profession, and does not actually par- ticipate in the commission of the trespass, he is not liable. But -when he steps beyond that line, and actively aids his client in the execution of his purpose, he is not shielded from responsibility.'* While he acts merely in his char- acter of attorney, making use of the process of the law to enforce his client's demand, however groundless and vexatious it may be, he is not amenable to suit.® In the latter case it was conceded that the attorney would have made himself liable if he had done something be- yond the mere delivery of the writ; as, by going with the officer to assist in its execution, or giving some direction, independent of that in the writ, to execute it in an un- authorized mode. The distinction is clearly drawn in Hardy v. Keeler,^ where it is held that an attorney is not liable for any illegal seizure that may be made under a writ issued by him; but where, in addition to issuing the writ, he sent his clerk to assist in the levy thereof, the plea that he is an attorney will not avail as a defense. In this case the attorney employed the workmen, in- structed them to commit the wrong complained of, and paid them for it. Under these circumstances, he cannot claim that he was acting in the legitimate sphere of an attorney at law, and is not entitled to immunity." The attorney is not liable for having mistaken his remedy.'' 1 Hardy v. Keeler, 56 111. 152. Williams, 13 N. Y. 577; 67 Am. Dec. ^Peckiubaugh v. Quillin, 12 Neb. 83, 586. s Oakley v. Davis, 16 East, 82; Low- 2 SchaJk V. Kingsley, 42 K. J. L. ell v. Champion, 6 Ad. & E. 407. 32. 8 56 111. 152. * Hunter v. Burtis, 10 Wend. 358; ' Poucher v. Blanchard, 13 Week. Green v. Elgie, 5 Q. B. 99; Ford v. Dig. 5. Vol. I. -17 §155 PRINCIPAL AND AGENT. 258 An attorney of one party to an action referred under a rule of court is liable to an action by the other party for conspiring with one of the arbitrators to obtain an unjust award upon which judgment is entered, although such judgment remains unreversed.* § 155. Liability for Malicious Prosecution. — And the attorney is personally liable for maliciously prosecuting a suit he knows to be groundless, and maliciously arresting the defendant thereunder, or attaching his property.^ So he is liable for arresting a person on an execution when he knows it to be not authorized by law.' To render him ' Hoosao Tnrmel Dock etc. Co. v. O'Brien, 137 Mass. 424; 50 Am. Rep. 323. ^Burnap v. Marsh, 13 111. 535; Wigg V. Simonton, 12 Rich. 583; Wood V. Wier, 5 B. Mon. 544; War- field V. Camphell, 24 N. Y. 359. The act must be malicious: Lynch v. Com- monwealth, 16 Serg. & R. 368; 16 Am. Dec. 582; Hardy v. Keeler, 56 111. 152; Bicknell v. Dorion, 16 Pick. 490, Shaw, C. J., saying: "We think, in general, it is true that an action can- not be maintained against an attorney on the ground of his instrumentality in bringing a civil action against the plaintifif, unless where he has com- menced such suit without the author- ity of the party in whose name he sues, or unless there be a conspiracy to bring a groundless suit, knowing and under- standing it to be groundless, and with- out any intent or expectation of main- taining the suit. The former case is precluded here, not only by the whole course of the proof, but by the form of the action. The attorney and client in the action complained of are both made defendants in this suit; of course, therefore, by the plaintiff 's own show- ing the suit was commenced by the attorney upon the retainer, and by the authority of the client. The case of bringing the suit without the au- thority of the plaintiff in that suit is therefore out of the question. Upon the other ground, I am not prepared to say that if ii. person applies to an attorney, wishing to have a groundless suit commenced for the purpose of de- taining the property or person of an- other under the forms of legal process, and the attorney yields to such a re- quest, that they would not render themselves liable to an action at the suit of the party thus injured. It would be very different from the case where the client represents an action to be brought on his responsibility, however groundless the attorney him- self may think it to be, and though he explicitly declares to the client that he cannot maintain the action. 'Know- ing,' 'believing,' or 'supposing' it groundless are only expressions indi- cating different degrees of the attor- ney's belief; the party may have grounds for proceedmg not known to the attorney, and he has a right to judge tor himself. Take the case put in 1 Mod. 200: The attorney himself drew the release, and therefore knew that the client had no cause of action. He may know that that release was obtained by gross fraud, and there- fore no bar to an action. In order, therefore, to charge an attorney upon this ground, it must not only appear that there was an agreement to bring an action which was in fact ground- less, and which the attorney supposed to be groundless, but that it was agreed to bring an action understood by both parties to be groundless, and brought as such." ^ Sullivan v. Jones, 2 Gray, 570; Deyo B. Van Valkenberg, 5 Hill, 242. 259 PRIVILEGES AND LIABILITIES OF ATTORNEYS. § 155 liable for a malicious prosecution by his client, it must appear that he knew that the prosecution was both mali- cious and without cause/ He is not personally liable for ordering a levy if he acts bona fide and with good cause.^ From the mere fact that he acts for the client an attorney is not to be charged with his evil motives and intentions.' Illustrations. — An attorney procured A's commitment for contempt in not paying certain referee's fees. A court of com- petent jurisdiction adjudged A to be guilty of the contempt charged, its determination being based upon an erroneous con- struction of the law. The order of commitment was subsequently reversed by the appellate court. Then A sued the attorney for false imprisonment. Held, that the action could not be main- tained, the order, though erroneous, being within the jurisdic- tion of the court making it, and that the attorney was not liable because, before the reversal, he had opposed a motion for A's discharge: Fischer v. Langbein, 103 N. Y. 84. 1 Peck V. Chouteau, 91 Mo. 140; 60 ' Hunt v. Printup, 28 Ga. 297. Am. Rep. 236. » McKinney v. Curtiss, GO Mich. 611. § 156 PRINCIPAL AND AGENT. 260 CHAPTER XV. AUTHORITY AND POWERS OF ATTORNEY. § 156. Authority evidenced bj' retainer. § 157. Authority to appear presumed. § 158. Court may order authority to be produced. § 159. Appearance for several persons. § 160. Appearance by attorney binds party, though unauthorized. § 161. Delegation of authority. § 162. Law partnerships. § 163. Law clerks. § 164. Termination of authority — By dissolution of partneTsbip. § 165. Termination of authority ^ By act of parties. § 1 06. Termination of authority — By termination of suit. § 167. Termination of authority — -By death. § 168. Termination of authority — Other cases. § 169. Implied powers of attorneys. § 170. Implied powers of attorneys (continued) — Admissions — Affidavits — Altering securities ■ — Appeal — Arbitration — Arrest — Assignment — Attachment. § 171. Implied powers of attorneys (continued) — Compromise — Continuance — Contract — Discharge — Discretion — Employing counsel ■ — Error — Executing bonds — Execution — Guaranty. § 172. Implied powers of attorneys (continued) — Judgment — Payment. § 173. Implied powers of attorneys (continued) — Process — Purchase — Re- lease — Sell — Set-off — Sue — Supplementary Proceedings — Waiv- ers and releases. § 174. Extent of authority as to time. § 175. Ratification of unauthorized. acts. § 156. Authority Evidenced by Retainer. — The rela- tion of attorney and client is established by the " retainer"; that is, the act of the client by which he engages a law- yer to manage his cause.^ A written retainer, though ' Bouv. Law Diet. ; De Wolf v. Stra- it when he is plaintiff, or defending it der, 26 111. 225; 79 Am. Dec. 371. when he is defendant; the retaining Blackman v. Webb, 38 Kan. 668, the fee': Bouvier's Law Diet., tit. Re- ^ourt saying; "The word 'retainer,' tainer. 'The act of employing or when used in the place where we engaging an advocate, barrister, attor- are now using it, is defined as fol- ney, counselor, solicitor, or proctor, to lows: ' The act of a client by which appear and prosecute or defend. T'he be engages an attorney or counselor to word is also used for the notice served manage a cause, either by prosecuting by an attorney, etc., on the opposite 261 AUTHORITY AND POWERS OF ATTORNEY. §156 better for both parties/ is not essential, a parol retainer being sufficient.^ The attorney of the plaintiff controls party or attorney, that he has been retained, in which use it is by elision for notice of retainer; and for the fee paid to a lawyer upon his undertaking a cause, in which use it is by elision for a retaining fee': Abbott's Law Diet., tit. Retainer. It will be seen that the word 'retainer,' as used in cases of this kind, means, — 1. The act of the client in employing his attorney or counsel; 2. The notice of the re- tainer served upon the opposite party or his attorney; 3. The retaining fee. .... When an attorney is engaged to prosecute or defend in an action, his entire services in that action are engaged for his client, and he cannot perform services for the adverse party. He is retained by his client for that entire action; and whether his client may ever call upon him to perform services or not, he cannot perform ser- vices in that action for the adverse party, nor can he receive any fee or compensation from the adverse party. All his skill and ability for that case is at the command of his client. A retainer of an attorney at law is pre- sumably worth something to the client, and presumably a loss to the attorney; and whether the attorney is ever called upon to perform any services or not, in that case he may, when the case is terminated, recover for whatever the evidence shows the retainer was worth. Whether he may in any case recover a retaining fee and also an additional amount for his services, we are not now called upon to determine. And neither are we called upon to determine whether he could in any case recover as a retaining fee more than his entire services would be worth if he should devote his services to the entire case, and through all its stages, from the beginning to the end. All that we are now required to determine is, whether he can recover a retaining fee at all, in a case where no such fee was expressly and specifically con- tracted for, but only a general con- tract of employment was made. We hold that he can recover." An agent by retaining an attorney for his principal does not create the rela- tion of attorney and client between himself (the agent) and the attorney: Porter v. Peckham, 44 Cal. 204. ' In Owen v. Ord, 3 Car. & P. 349, Lord Teuterden, C. J., said "that a formal written retainer is better for the attorney because it gets rid of all difficulty about proving his retainer, and it would also be better for some clients, as it would put them on their guard and prevent them from being drawn into lawsuits without their express direction. " See McAlexander V. Wright, 3 T. B. Mon. 189; 16 Am. Dec. 93. ^ Manchester Bank v. Fellows, 28 N. H. 302; Hardin v. Ho-Yo-Po- Nubby, 27 Miss. 567; Hirshfield v. Landman, 3 E. D. Smith, 208. In Hardin v. Ho-Yo-Po-Nubby, the court say: "An attorney is an oflScer of court, and responsible to the court for the propriety of his professional con- duct, and the proper use of the privi- leges he has as such. No warrant of attorney is required by our laws or practice to enable him to appear for and to represent a party in court. He is permitted, by almost universal prac- tice in this country, to do so under verbal retainer, and it is only in cases of clear want of authority, or abuse o£ his privilege, that he is held to be in- competent to institute a suit or . to represent a party in court. The pre- sumption is in favor of his authority, and though he may be required to show it, yet if he acts in good faith, and the want of authority is not mani- fest, he will not be held to have acted without authority, because it is not shown according to strictly legal rules. If this were not so, the greatest incon- venience in practice would continually occur, both to clients and attorneys; for suits are frequently instituted by attorneys, under the authority of let- ters from their clients, who are stran- gers, and whose handwriting is un- known to them, and could not be proved without great trouble and delay. If required, in such a case, to produce his authority, the production of the letter, though he might be un- able to prove the handwriting, would be sufficient; and so of a letter written by a party purporting to be the agent § 156 PRINCIPAL AND AGENT. 262 the prosecution of the action as against the defendant, and the court will deny a motion to dismiss it, founded on a written consent of the plaintiff personally, if the attorney for the plaintiff refuses his consent. If the de- fendant has obtained any right to have the action dis- missed, he should set it up by pleading, as a defense.^ If a party who has an undivided interest in a tract of land, which is the subject of a partition suit, employs an attor- ney to act for him in relation to his interest therein, the relation of attorney and client does not exist between the employer and attorney, as to the interest of the party for whom the employer acted as agent.^ An authority may be implied as well as shown by proof of an express retainer.' When an attorney is employed by a party, the law implies a contract between them; and before a new partner of such attorney can be made a party to the contract, there must be some agreement or understanding to place the latter in a position which would entitle him to make a claim against the client who did not originally employ him.'' The authority of the attorney to appear may be inferred from circumstances; as, that he was the general attorney of the defendant, and the defendant though knowing of it did not object to his appearance." It is in the discretion of the court to hear an attorney as amicus curix, concerning a proceeding in which he is not coun- sel." An amicus curise is heard only by the leave and for the assistance of the court, and upon a case already before of the plaintiff. All tbat is required Humph. 480. Held, insufficient in to he shown in such cases, in the first Day v. Adams, 63 N. C. 254. One instance, is, that the attorney has acted who has contracted to act as attorney in good faith, and under an authority, for a partnership cannot claim to be appearing to be genuine, though in- employed by it in a contest among formal. It then devolves upon the the beneficiaries of a trust, in which party impeaching the authority to contest the firm is incidentally in- show by positive proof that it is in- volved in the capacity of trustee: valid and insuflScient in substance." Cutcheou v. Loud, Mich. (1888). ' McCounell v. Brown, 40 Ind. * Davis v. Peck, 54 Barb. 425. 384. * Bogardus v. Livingston, 2 Hilt. 2 Porter v. Peckham, 44 Cal. 204. 23G. ' Tally V. Eeynolds, 1 Ark. 99; 31 " State v. Jefferson Iron Co., 60 Tex. Am. Dec. 737; Rogers v. Park, 4 312. 263 AUTHORITY AND POWERS OP ATTORNEY. § 157 it. He has no control over the suit, and no right to in- stitute any proceeding therein, or to bring the case from one court to another, or from a single judge to the full court, by exceptions, appeal, or writ of error."^ Illustrations. — B, being indebted to A, mortgaged a tract of land to him as security. C, a creditor of B, obtained judg- ment against him, which was levied on the mortgaged prem- ises, and purchased by C. A obtained a rule on C to show cause why an injunction to stay waste should not be granted, and why service of the subpoena upon the attorney of C, who was the plaintiff at law, in an action against A for slandering the title of C to the land, should not be considered as service on C. Held, that the two actions were wholly unconnected, and the attorney of C could not be considered as representing him in the latter suit: Hitner v. Sucldy, 2 Wash. C. C. 465. § 157. Authority of Attorney to Appear Presumed. — Where an attorney appears for a person, his authority to do so is presumed,^ both in the trial and in the appellate court.' An attorney appearing for an infant will be pre- sumed to have been authorized by his next friend.* The right of an attorney of record to control and manage the action cannot be questioned by the opposite party while he remains such attorney.^ A party to an action may ap- pear in his own proper person or by attorney, but he can- not do both. If he appears by attorney, he must be heard > Martin v. Tapley, 119 Mass. 116. Am. Dec. 656; Field v. Proprietors, 1 2 Brown v. Nichols, 42 N. Y. 30; Cnsh. 11; Gaul v. Groat, 1 Cow. 113; Hamilton v. Wright, 37 N. Y. 502; Tally v. Reynolds, 1 Ark. 99; 31 Am. Jackson v. Stewart, 6 Johns. 34; Os- Dec. 737; Leslie v. Fischer, 62 III. born V. Bank, 9 Wheat. 738; Claik v. 118; Rogers v. Park, 4 Humph. 480; Willett, 35 Cal. 540; Lawson on Pre- Bunton v. Lyford, 37 N. H. 512; 75 Bumptire Evidence, 50, 52; Cartwell Am. Dec. 144; Harshey v. Blackmarr, V. Menifee, 2 Ark. 35C; Lester v. Wat- 20 Iowa, 161; 89 Am. Dec. 520; Nor- kins, 41 Miss. 647; Weeks on Attor- bergs. Heineman, 59 Mich. 210; Schlitz neys, sec. 196; Hill v. Mendenhall, 21 v. Meyer, 61 Wis. 418. Wall. 453; Martin v. Walker, 1 Abb. = Ricketson v. Compton, 23 Cal. 037; Adm. 579;Turner«. Caruthers, 17 Cal. Frost v. Lawler, 34 iiich. 235; Noble 431; Silkman v. Boiger, 4 E. D. Smith, v. Bank of Kentucky, 3 A. K. Marjh. 236; Henck v. Todhunter, 7 Har. & J. 263; Shroudenbeck v. PhoBnix Fire 275; 16 Am. Deo. 301; Manchester Ins. Co., 15 Wis. 632. Bank v. Fellows, 28 N. H. 302; Bridg- * Hilliard v. Carr, 6 Ala. 557. ton V. Bennett, 23 Me. 420; Penobscot ^ Commissioners v. Youn^^er, 29 Cal. Boom Corp. v. Lamson, 16 Me. 224; 33 147; 87 Am. Dec. 164. § 168 PRINCIPAL AND AGENT. 264 through him, and cannot himself assume control of the § 158. Court may Order Authority to be Produced. — But the attorney may be compelled by the court to show his authority to appear for a party whom he pretends to be authorized to represent, and this may be required at the instance of the opposite party as well as of the party for whom he appears.^ To invoke, however, this power-, the opposite party must show facts tending to prove that the attorney had no such authority.* An affidavit that the affi- ant is informed and believes that the attorney is not au- thorized is insufficient.^ Where a party denies, under oath, that a plea filed in his name by an attorney was filed with his authority, and the allegation is borne out by the proof, the act of the attorney is not binding.* In Ken- tucky, the adverse party can demand the attorney's author- ity only where he shows his rights are jeopardized without it, or that he was disturbed by being brought into litiga- tion without the consent of the other party.® One cannot ' Commissioners v. Younger, 29 Cal. and file it with the clerk: Stevens v. 147; 87 Am. Dec. 164. Fuller, .55 N. H. 443. '' People i: Mariposa County, 39 Cal. ^ People v. Mariposa County, 39 683; Commissioner v. Purdy, 36 Barb. Cal. 683; McKiernaa v. Patrick, 4 266; Rogers v. Park, 4 Humph. 480; How. (Miss.) 333; Ninety -nine Plain- West V. Houston, 3 Harr. (Del.) 15; tiflfs v. Vanderbilfc, 4 Duer, 632; Silkman v. Boiger, 4 E. D. Smith, Thomas v. Steele, 22 Wis. 207; 236; Knowlton v. Plantation, 14 Me. Turner «. Caruthers, 17 Cal. 431; 20; Clark v. Willett, 35 Cal. 5.34; Penobscot Corp. v. Lamson, 16 Me. King of Spain v. Oliver, 2 Wash. 0. C. 224; 33 Am. Deo. 656; Bridgtonr. Ben- 429; Standifer v. Dowlen, Hemp. 209; nett, 23 Me. 420; Manchester Bank v. Ex parte Gillespie, 3 Yerg. 325. Fellows, 28 N. H. 312; Allen w. Green, Where an attorney sues out a writ of 1 Bail. 448; Tally v. Reynolds, 1 Ark. error without the sanction of the plain- 99; 31 Am. Dec. 737; Belt v. Wilson, tiflf named in the writ, the same will 6 J. J. Marsh. 495; 22 Am. Dec. 88. be dismissed on motion at the attor- * People r. Mariposa County, 39 Cal. ney's cost: Anonymous, 11 HI. 488; 683; Cartwell v. Menifee, 2 Ark. 356. Frye v. Calhoun County, 14 HI. 132; As to what was considered sufficient Powell V. Spaulding, 3 G. Greene, 443; authority, see Savery v. Savery, 8 Bell». Usury, 4 Litt. 334; Critchfield Iowa, 217; Bush v. Miller, 13 Barb. V. Porter, 3 Ohio, 518. When a per- 481; Hughes v. Osborn, 42 Ind. 450; son who has not been admitted to Grignou v. Schmitz, 18 Wis. 620. practice as an attorney is employed ' Decuir w. Lejeune, 1 5 La. Ann. 569. to prosecute or defend a suit, he must, " McAlexander u. Wright, 3 T. B. if his authority is questioned, produce Mon. 194. 265 AUTHORITY AND POWERS OF ATTORNEY. § 158 prove his authority to appear as attorney for a party in a suit before a justice, by producing a letter from a third person asking him to appear; nor will the fact that a third person is himself a lawyer be sufficient to give authority, if it does not distinctly appear that he is attorney for the party.' If an attorney, who is ruled to produce his au- thority to bring a suit, files the affida,vit of the plaintiff's agent that he was directed by the plaintiff to cause suit to be brought, and that he employed said attorney in pursu- ance of such direction, the showing of authority is suffi- cient.^ If not objected to in the lower it cannot be inquired into in the appellate court.' An objection to the right of counsel to appear in defense of an action cannot be made after the term at which the appear- ance is first made.* A motion for a rule on the plain- tiff to file his warrant of attorney must be made before plea.* Illustrations. — On a rule for an attorney to show his au- thority to prosecute a suit, on affidavit of defendant that he believed the attorney had not communicated directly with plaintiff by letter, and that the authority was derived from some person or persons who had not sufficient authority from plaintiff, who, defendant beUeved, did not know of the suit, held, not sufficient to show want of authority: Low v. Settle, 22 W. Va. 387. A party addressed a letter to his wife, say- ing, " I would rather give what I am worth to some honest person, as to suffer the defendant to have one dollar. So as you have employed lawyer N. to assist you, I hope you will obtain justice; you are doing just what I intended doing"; and afterwards wrote to his brother in regard to the case, " Go on with it, and do the best you can": Held, that there was no authority given to the wife or brother, as agent, to employ an authority, and that the letters were not a sufficient compliance with the act requiring an attorney in a cause to file a power of attorney to act for the party: Day v. Adams, 63 N. C. 254. In ' Westbrook v. Blood, 50 Mich. A. K. Marsh. 263; Shroudenbeck v. 443. Insurance Co., 15 W^is. 632. ■ Hughes V. Osborn, 42 lud. 450. * Knowlton v. Plantation No. 4, 14 ^ State V. CarotherSj 1 G. Greene, Me. 20. 404; Dunman v. Hartwell, 9 Tex. 495; * Mercier v. Mercier, 2 Dall. 142; 60 Am. Dec. 176; Noble v. Bank, 3 Sutton v. Cole, 3 Pick. 232. § 159 PRINCIPAL AND AGENT. 266 an action on a promissory note, the defendant obtained a rule on the attorney of the plaintiff to show the authority under which he appeared to prosecute the action, which rule was based upon an afEdavit alleging that the plaintiff (the indorsee) and the payee of the note resided in Rome, in the state of New York; that the plaintiff, some time in the year 1855, told the afBant that the payee of the note had simply transferred to him the note sued on, as collateral security, and upon the express understanding and condition between them that he should not bring suit on the same against the defendant; the attorney answered the rule under oath, stating that in July, 1855, he received a letter from D. and L., of Rome, New York, whom he believed to be the attorneys at law of that place, in- closing the note sued on, stating that the note was the property of the plaintiff, and instructing him to put it at once in process of collection, which showing the court held sufficient: Held, the affidavit filed on the part of defendant did not make out a prima facie case, that the court might well have refused the rule in the first instance, and that the showing made by the attor- ney was sufficient: Savery v. Savery, 8 Iowa, 217. § 159. Appearance for Several Persons. — Where a counsel appears expressly for certain defendants, his sig- nature to papers in the cause subsequently as " attorney for defendants " will be construed as limited to those for whom he expressly appeared.' Where several defendants appear, each by his own attorney, the attorney of one can- not give or accept notices for the others.^ An appearance in a suit where there are several defendants, for the de- fendants generally, is prima facie an appearance for all.' The entry of an appearance by an attorney for the defend- ants in an action against a partnership will be construed as an appearance for them as partners, and not for them individually.* One co-defendant may employ an attorney for the other co-defendants, and his appearance for all will bind all.* 1 Spanagel v. Bellinger, 42 Cal. 148. * Phelpa v. Brewer, 9 Cush. 390; 57 2 Hobbs V. Dn£f, 43 Oal. 485. Am. Deo. 56. = Kenyon v. Schreok, 52 111. 382; ^ Abbott v. Duttou, 44 Vt. 546; 8 American Ins. Co. v. Oakley, 9 Paige, Am. Bep. 394. 496; 38 Am. Deo. 561. 267 AUTHORITY AND POWERS OF ATTORNEY. §160 Illxjsteations. — Plaintiff's attorney entered the suit to the use of a third person. Held, on defendant's objection, that the authority of the attorney would be presumed: Hager v. Cochran, 66 Md. 253. § 160. Appearance by Attorney Binds Party though Unauthorized. — In general, an appearance by an attor- ney binds the party for whom he appears, whether the attorney was employed by him or not.^ The remedy is against the attorney/ though upon direct application to the court relief will be granted to the party .^ He must make application at once,^ and in the same suit in which the unauthorized appearance was made.^ A person in • St. Albans v. Bush, 4 Vt. 58; 23 Am. Dec. 246; Spaulding v. Swift, 18 Vt. 214; Newcomb v. Peck, 17 Vt. 302; Abbott V. Dutton, 44 Vt. 546; 8 Am. Rep. 394; Ferguson v. Craw- ford, 7 Hun, 25; Bunton v. Lyford, 37 N. H. 512; 75 Am. Dec. 144; and see note to this case in 75 Am. Dec. 146- 151. In Hamilton v. Wright, 37 N. Y. 502, it is said: "Receiving their au- thority from the court, they are deemed its officers. Their commis- sions declare them entitled to confi- dence, and in a just sense their license is au assurance not only of their com- petency, but of their character and title to confidence. The direct con- trol of the courts over them as officers, by way of summary discipline and punishment, to compel the perform- ance of their duty, or to suspend or degrade them, is retained and exer- cised as a guaranty of tlieir fidelity. It is no denial of the rule that where there are special circumstances calling for its relaxation, the courts may and do relieve from its rigid application. The exception arising from such spe- cial circumstances strengthens, as well as recognizes, the rule itself. Hence, when an appearance is entered by an attorney without an authority, the in- quiry whether such attorney is of suffi- cient responsibility to answer for his unauthorized conduct to the party in- jured thereby, is entertained. And it may be proper always to inquire whether the injury to the party is irremediable,' unless such appearance be set aside, and the proceedings founded thereon vacated. In exer- cise of their general equitable control over their own judgments, the court may and should consider whether they can relieve the party for whom an un- authorized appearance is made, with- out undue prejudice to the party v/ho has in good faith relied upon such ap- pearance, and the official character of the attorney who appears." ^Cyphert v. McClune, 22 Pa. St. 195; Spaulding v. Swift, 18 Vt. 214; Governor v. Leissiter, 83 N. 0. S8; Bunton v. Lyford, 37 N. H. 512; 75 Am. Dec. 144. ^ Ellsworth V. Campbell, 31 Barb. 135; Dentoa v. Noyes, 6 Johns. 298; 5 Am. Dec. 237; Decuir v. Le Jeuue, 15 La. Ann. 569. ■■' Cypher* u. McClune, 22 Pa. St. 195. ^ Abbott V. Dutton, 44 Vt. 546; 8 Am. Rep. 394. In Brown v. Nichols, 42 N. Y. 30, lugalls, J., says: "The law, as settled in this state, rests upon principle as well as authority. The attorney is an officer of the court act- ing under oath, and liable to be dis- graced and punished for such gross violation of duty as to fraudulently appear in an action without authority; and I apprehend the instances are rare indeed when it has occurred. Again, a contrary rule would, it seems to me, be impracticable, as the title to real property depends to a great extent upon the records of the courts; it would be a great liardship to compel 161 PRINCIPAL AND AGENT. 268 whose name an attorney has prosecuted an unauthorized and unsuccessful ejectment suit is liable to the defendant for the costs.-^ A judgment obtained upon the unauthor- ized appearance of an attorney cannot be attacked collat- erally.^ § 161. Delegation of Authority. — The attorney has no authority to delegate his powers to others; i. e., to employ a substitute;' for the relation of attorney and client is one of trust and confidence, and implies a per- sonal execution of the duties which it confers.^ He can- not delegate his authority to make a collection to another attorney, so that the client will be liable for costs incurred in the attempt to collect;^ therefore, the attorney has no implied authority to employ associate or assistant counsel,® unless the case requires it, and the client is absent and parties in tracing titles acquired through such records, in every in- stance wliere a judgment has been entered, to inquire into the particu- lar authority which an attorney had to appear in such actions. Indeed, the effect of such a rule would be to create positive distrust as to the sound- ness and regularity of such titles. I think the objections on the grounds of hardship and danger urged against upholding such appearance by an at- torney rest more in theory than prac- tice. If a party will omit to apply to the court for relief against an unauthorized appearance of an attor- ney, he should not be allowed to at- tack proceedings collaterally upon such ground." 1 Hamilton v. Wright, 37 N. Y. 502. 2 Brown v. Nichols, 42 N. Y. 30. ^ Weeks on Attorneys, sec. 246; In re Bleakley, 5 Paige, 311; Johnson v. Cunningham, 1 Ala. 249; Batclifif v. Baird, 14 Tex. 43; Kellogg v. Norris, 10 Ark. 18; Dickson v. Wright, 52 Miss. 585; 24 Am. Bep. 677; Smalley V. Greene, 52 Iowa, 241; 35 Am. Rep. 267; Danley v. Crawl, 28 Ark. 95. * Hitchcock w. McGehee, 7 Port. 556; Kellogg V. Norris, 10 Ark. 18; Pollard fc. Rowland, 2 Blackf. 22; Cornelius V. Wash, Breese, 98; 12 Am. Dec. 145. An attorney may employ an agent to receive money for him in his profes- sional business, and his acts will bind the client: MoEwen v. Mazyok, 3 Rich. 210. * Antrobus v. Sherman, 65 Iowa, 230; 54 Am. Rep. 7. « Paddock v. Colby, 18 Vt. 485; Gil- lespie's Case, 3 Yerg. 325. An attor- ney has no right to retain another attorney at the client's expense; and that the client sees such latter attor- ney in court assisting in the trial, and does not object, does not render the client liable: Young v. Crawford, 23 Mo. App. 432. An attorney can- not recover from his client fees of as- sociate counsel without proving that, at his client's request, he has either paid or become responsible therefor: Cook V. Rither, 4 E. D. Smith, 253. Where an attorney enters into a con- tract with a client to prosecute an action to final judgment for a stipu- lated sum, and such attorney employs a second one to assist him in the case, the client will not be liable for fees for such second attorney unless he in some manner requests his employment or retention in the case: Sedgwick v. Bliss, Neb. Sup. Ct., 1888. 269 AUTHORITY AND POWERS OF ATTORNEY. § 161 cannot be consulted;^ or the client knows of the substitu- tion and accepts the services;^ or the attorney, having prepared the case, is taken sick, and employs a substitute to argue it.' An attorney is not authorized merely by virtue of the intrusting to him, by a client, of a note for collection, without special instructions to delegate to an- other the right to receive payment of such claim; and if the debtor make payment of the note to an agent of the attorney, known to him to be such, and who has not at the time the note or other evidence of indebtedness in possession, such payment is no defense as against the owner of the note.* The wife of an attorney has no au- thority to receive payments of claims put into his hands for collection.^ By the death of the attorney the powers of his substitute cease.^ An agreement by one lawyer to turn over to another notes which he has in his hands for collection cannot be enforced.'^ Illustrations. — An attorney who received a note for col- lection sent it to another attorney, who collected the amount and failed to pay it over. Held, that the first attorney had no right of action in his own name against the second, unless he could show some special property or lien in or upon the amount, as a claim for commissions, or an indorsement of the note in blank for collection: Herron v. Bullitt, 3 Sneed, 497. One at- torney confided a note to another for collection, and took his receipt therefor, but without giving instructions with respect to the ownership. After the money was collected, it was remitted to the payee of the note, whose name, however, was indorsed on the note. Held, that this remittance (the payee not being the owner) did not discharge the collecting attorney from liability to his immediate principal; and that the action of the latter for the money would not be defeated by proof that he was him- ' Briggs V. Georgia, 10 Vt. 68. scind the contract: Fenno v. English, , 2 Smith V. Lipscomb, 13 Tex. 532. 22 Ark. 170. An attorney employed to defend a ^ Rust v. Lirue, 4 Litt. 412; 14 Am. suit, who is compelled by circumstan- Dec. 172. ces to engage a substitute to perform * Dickson v. Wright, 52 Miss. 585; the duty, may maintain an action for 24 Am. Rep. 677. the -whole services rendered. The cli- * Day v. Boyd, 6 Heisk. 458. ent, if dissatisfied with the substitu- * Peries v. Aycinena, 3 Watts & S. 64. tion, should tender compensation for ' Smalley v. Greene, 52 Iowa, 241 j; the services already rendered, and re- 35 Am. Rep. 267. § 162 PRINCIPAL AND AGENT. 270 self the agent of the indorsee, unless the indorsee had asserted his right to the money as against his agent; Lewis v. Peck, 10 Ala. 142. Defendants residing in New York, and having a claim against O., who lived in Nebraska, gave it to a law and collecting agency in New York, with instructions to collect. The claim was forwarded by the agency to attorneys in Ne- braska, who obtained judgment by confession, and, upon exe- cution issued thereon, a portion of the judgment was collected; this was forwarded to the agency in New York, but no part was paid over to defendants, and they were ignorant of the collection. At the time the judgment was obtained, 0. was in- solvent, and this was known to said attorneys. In an action by the assignee in bankruptcy of 0, held, that there was no relation of attorney and client between defendants and the at- torneys in Nebraska, and as they neither authorized any act violative of the bankrupt act, nor ratified it, they were not responsible therefor, and plaintiff was not entitled to recover: Hoover v. Greenbaum, 61 N. Y. 305. An attorney residing in a particular county brought an action in the district court of an- other county, and after the filing of the petition wrote to a firm of attorneys in the county where the action was brought, re- questing them to file the proper pleadings to make up the issues and informed them that to enable them to do so his client would call upon them to state necessary facts, and saying: "I will see you paid for your trouble." The client thereupon called upon the attorneys a number of times, and they filed the necessary papers to make up the issues, and assisted in the trial of the case, and in procuring a decree for the client, nothing being said by her to them about the contract made by her with the attorney who filed the petition, and they had no knowledge of such contract. Held, that the client was liable for the fees of the attorneys employed to assist in the case: Sedgwick v. Bliss, Neb. Sup. Ct., 1888. § 162. Law Partnerships. — A law partnership does not confer on each member of the firm the ordinary and extensive powers of mercantile partners.^ A person re- ' Weeks on Attorneys, sec. 244. An 37 Wis. 285; 19 Am. Rep. 757. " We action was brought against a firm of gather from all the authorities, " said attorneys on a note given by one of the court, "that the distinction be- them for a firm debt. Held, that the tween a trading and a non-trading burden was on the plaintiff to prove partnership, in respect to the power of that the other partner had authorized a partner to bind his copartner by the giving of the note, or that it was negotiable instruments, is not limited necessary to the carrying on of the to a mere presumption of such author- firm business, or that it was usual in ity in one case and the absence of such similar partnerships: Smith v. Sloan, presumption in the other, as the 271 AUTHORITY AND POWERS OF ATTORNEY. § 162 taining a firm of lawyers is entitled to their joint services, and none of them can leave his service and go on the other side of the case.' One member of the firm may sue for a demand due the firm,^ but there may be a set-off against the firm.* While a client is entitled to the per- sonal services of the attorney he retains, yet if he retains a firm, either member can perform the service; and if it is performed with the client's assent by a person in their employ, the client cannot resist paying a fair compensa- tion on the ground that it was not personally rendered.* If attorneys, who are copartners, accept a retainer, it is a joint contract, continuing to the termination of the suit, and neither can be released from the obligations they have assumed, so far as their clients are concerned, by a dissolution of their firm, or any other act or agreement between themselves.® An attorney cannot bind his part- ner by a promise to indemnify an officer for committing one to jail; but the partnership may warrant the inference that he acted for both, and a subsequent ratification by the partner binds him.* One member of the firm receiv- ing notes for collection is responsible for the acts of another who attends to the collecting,' and one partner is liable for the negligence and unskillfulness of the other.* learned counsel for the plaintiff ar- partnership fnnds; and perhaps, also, gued; but we think, and, must so hold, to transfer notes belonging to the firm that one partner in a non-trading part- by indorsement. In actions involving nership cannot bind his copartner by a questions of the validity of such bills, bill or note drawn, aecepted, or in- checks, or indorsements as against the dorsed by him in the name of the firm, other partners, the party asserting not even for a debt which the firm their validity would be bound to es- owes, unless he have express authority tablish it in the manner above indi- theref or from his copartner, or unless cated. " the giving of such instruments is ne- ' Id. ; Walker v. Goodrich, 16 111. cessary to the carrying on of the firm 341; Morgan v. Roberts, 38 111. C5. business, or is usual in similar part- '' Piatt v. Hulen, 23 Wend. 456. nerships; and that the burden is upon ^ Piatt v. Hulen, 23 Wend. 436. the holder of the note who sues upon ■* Egglestonw. Boardman,37Mich.l4. it to prove such authority, necessity, ^ VN'alker v. Goodrich, 10 111. 341; or usage. It may be proper to remark S. P., Morgan v. Roberts, 38 111. 65. in this connection, by way of illustra- ^ Marsh «. Gold, 2 Pick. 285. tion, that it is probably a usual prac- - Mardis v. Shackleford, 4 Ala. 493; tice for one party in a firm of attor- Dwight v. Simon, 4 La. Ann. 490; neys to draw bills in the firm name Poole v. Gist, 4 McCord, 259. upon clients for services and disburse- ^ Warner v. Griswold, 8 Wend. 665; meats; also checks upon banks for Livingston v. Cox, 6 Pa. St. 360. §§ 163, 164 PRINCIPAL AND AGENT. 272 Illustrations. — A, an attorney at law associated with B, received from C a demand for collection. A retired fi-om prac- tice and left the claim with B, who became copartner with D; and B and D brought suit and recovered judgment on the de- mand, and the sheriff collected the money on execution, and paid it over to D. Held, in an action by C against A to recover the money collected on execution, that the sheriff was justified in paying the money to D, and that A was liable therefor: Wilkinson v. Griswold, 12 Smedes & M. 669. A law firm was employed to assist in the prosecution of a suit in the state court, and the fee was contingent on success; the plaintiff, without consent of his counsel, dismissed his suit before trial, paid his attorneys for their services up to date, and employed one' of them, after the dissolution of the partnership, to bring suit in the circuit court of the United States for the same purpose. Held, that this was a separate and distinct suit, and the old firm was not entitled to any of the fees earned in the new suit: Tomlinson \. Polsley, W. Va., 1888. § 163. Law Clerks. — A clerk may represent the lawyer in the ordinary business of the office,* but, unlike a part- ner, he is not prohibited from commencing business him- self, and acting against his master's former clients.'* But the clerk has no authority to discontinue an action,' nor bind a client by a discharge without satisfaction.* § 164. Termination of Authority — By Dissolution of Partnership. — A dissolution of a partnership existing between attorneys does not affect engagements already made.* In the absence of any showing to the contrary, a law firm will be presumed to have completed its contract of retainer even after dissolution. But the new firm, al- though succeeding to the old one, cannot recover on the original contract.^ The liability of each member of a partnership of attorneys to collect money recovered by judgment continues after the dissolution of the partner- ' Power r. Kent, 1 Cow. 211; Cooper 'Irvine v. Spring, 7 Robt. (N. Y.) V. Carr, 8 Johns. 360; Jackson v. Yale, 293. 1 Cow. 215; Birkbeck v. Stafford, 14 * Carters. Talcott, 10 Vt. 471. Abb. Pr. 285. ^ Weeks on Attorneys, see. 191; 2 Breben v. Thorp, 1 Jacob, 300; Walker v. Goodrich, 16 111. 341. Corning v. Cooper, 7 Paige, 587. * Moshier v. Kitchell, 87 111. 18. 273 AUTHORITY AND POWERS OF ATTORNEY. §165 ship, notwithstanding such dissolution may have taken place before the business intrusted to them was completed, and the only way that such liability can be released is by notice of the dissolution. In the absence of such notice, as the client intrusted his business to the firm, he has a right to look to each member thereof for its faithful per- formance.^ § 165. Termination of Authority — By Act of Parties. — The client may determine the authority by expressly re- voking it,^ but not without first paying his charges,' and as to third parties, not without notice to them.* A party has a general right to change his attorney, and will always be allowed to do so where the attorney has in his •Smyth V. Harvie, 31 111. 62; 83 Am. Dec. 202. 2 Bathgate v. Haskin, 59 N. Y. 533; Langdon v. Castleton, 30 Vt. 285; Hazlett V. Gill, 5 Robt. 611; Wells v. Hatch, 43 N. H. 246; Ogden v. Devlin, 45 N. Y. Sup. Ct. 631; Eliot v. Law- ton, 7 Allen, 274; 83 Am. Deo. 683. An attorney cannot defend his client's suit without his consent, and such consent may be withdrawn at any time. It is immaterial that the inter- ests of another client of the attorney requires that the suit should be de- fended: Yoakley v. Hawley, 5 Lea, 670. ^ Weeks on Attorneys, sec. 248; Board v. Brodhead, 44 How. Pr. 441; Parker v. Williamsburgh, 13 How. Pr. 250; Hoffman v. Van Nostrand, 14 Abb. Pr. 336; Wilkinson v. Tilden, 14 Fed. Rep. 778; Greenfield v. New York, 28 Hun, 320; Carver v. United States, 7 Ct. of CI. 499. Plaintiff's attorney may continue suit against defendant to recover amount of his fee after plaintiff has dismissed: Jones V. Morgan, 39 Ga. 310; 99 Am. Dec. 458. * Comfort V. Stockbridge, 38 Mich. 342. Payment of judgment or decree to an attorney of record, who obtained it, before his authority is revoked, and due notice of such revocation given to the defendant, is valid and binding on VOL. L— 18 the plaintiff, so far. at least, as the de- fendant is concerned: Yoakum v. Til- den, 3 W. Va. 167; 100 Am. Dec. 738; Lewis V. Sumner, 13 Met. 269, Shaw, C. J., saying: "Nothing is more im- portant in a litigation in court than for a party to know who is his ad- versary's accredited agent, and with whom he may safely deal in that capacity. Hence, the great need in all courts of setting apart oiBoers recognized as attorneys, and deter- mining their qualifications, rights, and powers. When, therefore, an appear- ance is entered for a party by a regu- lar attorney, all parties have a right prima Jacie to regard him as the ac- credited representative of such party. It would be a great misdemeanor in an attorney rendering him liable to censure and punishment, as well as to an action for damages in a proper case, if lie were to enter an appearance with- out an authority: Smith v. Bowditch, 7 Pick. 137; Field v. Gibbs, Pet. C. C. 158. It follows from this, that when once an attorney has been recognized as the representative of a party on the record, he shall be presumed so to continue until his authority is re- voked, and his appearance withdrawn and due notice thereof given; and the- court of common pleas and this court have rules prohibiting the change of attorneys without notice." § 165 PRINCIPAL AND AGENT. 274 liands security for his charges and disbursements.' But if the attorney has been unfaithful to his trust, he may be ordered to deliver up such securities.^ A client can- not substitute in an action one attorney for another, without showing some reason other than his mere M'ill to make a change, except on payment of the costs and coun- sel fees earned. The attorney is not bound to consent to a substitution, or to deliver the papers on which he has a lien, until the amount of his just demands is ascertained by the court or a referee, and paid to him.' An attorney once admitted to represent a party cannot be discharged unless with the consent of the court until the suit is ended. While his name continues on the record, the adverse party has the right to treat him as the authorized attorney, and a service of notice on him is as valid as if served on the party himself.^ The attorney may terminate the relation by withdrawing from the suit at any stage of the proceedings,' but he is as a rule bound to 1 In re Paschal. 10 Wall. 483; Mun- & J. 232; Creswell v. Byron, 14 Ves. ford V. Murray, Hopk. 369. 272; NichoUs v. VPilson, 2 Dowl., N. S., 2 Sloo V. Law, 4 Blatchf. 268. 1032; Harris v. Osbourn, 2 Car. & M. ^ Supervisors v. Brodhead, 44 How. 629; Whitehead v. Lord, 11 Eng. L. Pr. 411; compare Supervisors v. Bred- & Eq. 589; Davis v. Smith, 48 Vt. 54; head, 44 How. Pr. 426. Bathgate v. Haskin, 59 ST. Y. 535; * Walton V. Sugg, PhiU. 98; 93 Am. 2 Greenl. Ev., sec. 142; Weeks on At- Dec. .580. torneys, sees. 255, 316; CorderyonLaw ' In Tenney v. Berger, 93 N. Y. 524, of Solicitors, 62. If an attorney, with- 45 Am. Rep. 263, 48 N. Y. Sup. Ct. 11, out just cause, abandons his client the emijloyment of counsel by the client before the proceeding for which he was with whom the attorney could not cor- retained has been conducted to its dially co-operate, for personal reasons, termination, be forfeits all right to was held a gobd ground for the attor- payment for any services which he has ney's withdrawal, and that he might rendered. The contract being entire, recover for the services already ren- he must perform it entirely, in order dered. Said the court: "The rule of to earn his compensation, and he is in law undoubtedly is, as claimed by the the same position as any person who is defendant, that an attorney who is engaged in rendering an entire service, retained generally to conduct a legal who must show full performance be- procecding enters into an entire con- fore he can recover the stipulated tract to conduct the proceeding to its compensation. While the attorney is termination, and that he cannot aban- thus bound to entire performance, and don the service of his client without the contract as to him is treated as an justifiable cause and reasonable notice, entire contract, it is a singular feature This rule has been laid down in many of the law that it should not be treated authorities: Meuzies v. Rodrigues, 1 as an entire contract upon the other Price, 92; Stokes ». Trumper, 2 Kay side; for it is held that a client may 275 AUTHORITY AND POWKES OP ATTOENEY. § 165 give reasonable notice,' though Parke, B., in one case said: "There might be instances where he would be at liberty to do so without notice, because a case might occur so plain as not to require notice.'"' An attorney is not justified in withdrawing from a case merely because his client refuses to pay some demand pertaining to another proceeding.^ An attorney who refuses to go on with his client's case because the client fails to furnish money must be deemed to assent to the substitution of another attorney; and it is within the discretion of the court to determine upon what terms the substitution shall be made, and as to whether the judgment, when obtained, shall be chargeable with the fees of the attorney first employed.'' The Mich- discharge his attorney, arbitrarily, without any cause at any time, and be liable to pay him only for the services which he has rendered up to the time of his discharge: Ogden v. Devlin, 45 N. y. Sup. Ct. 631; Trust v. Repoor, 15 How. Pr. 570; Gustine v. Stoddard, 23 Hun, 99. What shall be a sufficient cause to justify an attorney in aban- doning a case in which he has been retained has not been laid down in any general rule, and cannot be. If the client refuses to advance money to pay the expenses of the litigation, or if be unreasonably refuses to advance money during the progress of a long litigation to his attorney to apply upon his compensation, sufficient cause may thus be furnished to justify the attor- ney in withdrawing from the service of his client. So any conduct on the part of the client, during the ra-ogress of the litigation, which wouldiaend to degrade or humiliate the attorney, such as attempting to sustain his case by the subornation of witnesses or any other unjustifiable means, would furnish sufficient cause. The attorney is always interested to know with whom he is to be associated in the trial of a cause. The counsel is supposed to be his superior, and is usually employed on account of his superior ability, ex- perience, reputation, or professional standing; and after an attorney has engaged in a cause, it would seem to be quite proper that he should be consulted as to the person who is to bear the important relation to him of counsel. The client would certainly have no right, against the protest of the attorney, to introduce as ccunsel in the case a person of bad character, or of much inferior standing and learn- ing, — one not capable of giving discreet or able advice. It would humiliate an attorney to sit down to the trial of a cause, and see his case ruined by the mismanagement of counsel. The re- lations between attorney and counsel, too, are of a delicate and confidential nature. They should have faith in each other, and their relations should be such that they can cordially co- operate. While a client has the un- doubted right to employ any counsel he chooses, yet it is fair and proper, and professional etiquette requires, that he should consult the attorney, and other counsel in the case, so that they can withdraw, if, for any reason, they do not desire to be associated with them." 1 Bathgate v. Haskin, 59 N. Y. 533; Hoby V. BuQt, 3 Barn. & Adol. 350; Love V. Hall, 3 Yerg. 408. 2 Nicholls V. Wilson, 11 Mees. & W. 107. ' Cairo etc. R. R. Co. v. Koerner,. 3 111. App. 248. ' In re H., 93 N. Y. 381. § 166 PRINCIPAL AND AGENT. 276 igan statute providing for a stay of proceedings in the cause, for the appointment hy tlie client of another attor- ney or solicitor in case "any attorney or solicitor shall die, be removed, or suspended, or cease to act as such," does not apply to a case where a practicing attorney for any reason declines to go on with a particular case while still continuing in practice, but is intended to provide for those cases only in which the attorney or solicitor, by reason of death, disability, or other cause, has ceased to practice in the court.' Illustbations. — An attorney, receiving a claim for collection, stated in his receipt therefor that the money, when collected, was to be paid to a third person. Held, this was merely an authority to the attorney to dispose of the proceeds of the claim in that manner, and such authority could at any time be re- voked: Swartz V. Earls, 53 111. 237. An attorney residing in Washington removed therefrom, and gave up the management of a case in the court of claims to another attorney without the knowledge of his client. Held, a voluntary withdrawal from the case, and the client was entitled to have an attorney of her own choosing substituted: Jones v. United States, 15 Ct. of CI. 204. § 166. Termination of Authority — By Termination of Suit. — The general authority of the attorney ceases with the entry of judgment, or at least the issue of execution within the year.^ So a party may sue out a writ of execution, scire facias, or attachment on an award or writ of error, by a different attorney, without giving notice of the change,^ or commence garnishment proceed- ings.'' So after judgment the attorney has no authority to revive or reverse the judgment." The authority con- ' Coon V. Plymouth Plank Road Co., ton, 8 S. C. 100. After judgment in 32 Mich. 248. a justice's court, there is an implied 2 Jackson w. Bartlett, 8 Johns. 361; authority to the attorney to receive Kellogg V. Gilbert, 10 Johns. 220; 6 service in subsequent proceedings: Am. Dec. 335; Gorhamw. Gale, 7 Cow. Clark v. McGregor, 55 Mich. 412. 739; 17 Am. Dec. 549; McLain v. ^ Thorp v. Kowler, 5 Cow. 446; Watkins, 43 111. 24. Assignment of a State v. Gnlick, 17 N. J. L. 4;i5; Mc- judgment by the plaintiff puts an end Lareu v. Charrier, 5 Paige, 530; Bur- to the authority of his attorney in the gess v. Abbott, 6 Hill, 135. cause; if, indeed, the entry of judg- * Hiukley v. Company, 9 Minn. 55. ment does not: Mordecai v. Charles- " Richardson v. Talbot, 2 Bibb, 382. 277 AUTHOEITY AND POWERS OF ATTORNEY. §§ 167, 168 tinues, unless expressly revoked, for a time for the purpose of enforcing the judgment.* In some states, moreover, it is held that the authority is not terminated until judg- ment is satisfied.^ § 167. Termination of Authority — By Death. — The authority of the attorney is revoked by the death of the client,* and he has no authority, without a new retainer, to appear for the client's executor or administrator.* Where a party litigant dies after verdict, the authority of his attorney to act for him is thereby determined, and he can neither give nor receive notice of motion for new trial or of appeal.® So the authority will be determined by the death of the attorney.* Contracts for the service of attorneys who are partners in business, calling for professional skill, entitle the client to the service of each partner, and are determined by the death of either part- ner.' It seems that, in the absence of any special agree- ment therefor, it is not the duty of a survivor of a firm of lawyers, dissolved by death, to carry on pending litiga- tion, without charge, for the benefit of the estate of the deceased.' § 168. Termination of Authority — Other Cases. — The authority is terminated by the removal or suspension '■ Lusk V. Hastings, 1 Hill, 656; (except in extraordinary eases, see Adams v. Bank, 23 How. Pr. 45; Booth v. Steer, 7 Jur. 678); Hamers Langdont). Castleton, 30Vt. 285;Gray v. State, 57 Ind. 1; Clark v. Parish, V. Wass, I Me. 257; Flanders w. Sher- 1 Bibb, 547; Campbell v. Kincaid, 3 man, 18 Wis. 575; Dearborn u. Dear- T. B. Mon. 68; Adams v. Nellia, 59 born, 15 Mass. 316. How. Pr. 385; Wilson v. Smith, 22 2 Gray v. Wass, 1 Me. 257; Nichols Gratt. 493; Amore v. La Mothe, 5 V. Dennis, R. M. Charlt. 188; Flan- Abb. N. C. 146; Doty v. Dexter, 61 ders V. Sherman, 18 Wis. 575. Mich. 348. 3 Gleason v. Dodd, 4 Met. 333; Wood * Gleason v. Dodd, 4 Met. 333. V. Hopkins, 3 N. J. L. 689; Putnam * Judson v. Love, 35 Cal. 463. V. Van Buren, 7 How. Pr. 31; Austin * Weeks on Attorneys, sees. 248, r. Monroe, 4 Lans. 67; Judson W.Love, 256; Hildreth v. Harvey, 3 Johns. 35 Cal. 463; Risley v. Fellows, 10 111. Cas. 300. 531; Beach v. Gregory, 2 Abb. Pr. ' McGiU «. McGill, 2 Met. (Ky. ) 258. 206; Balbi v. Duvet, 3 Edw. Ch. 418 » Sterne v. Goep, 20 Hun, 396. §169 PEINCIPAL AND AGENT. 278 from oflBce of the attorney/ or his ceasing to act as attor- ney, or his removal from the state,^ or by war.' § 169. Implied Powers of Attorneys. — The retainer to prosecute or defend a suit confers on the attorney very large powers. A client who puts his case into the hands of an attorney impliedly authorizes such action as the latter, with his superior knowledge of the law, decides to be legal, necessary, and proper in the prosecution or de- fense of the suit.* Agreements made by attorneys in a cause, as to the manner of conducting it, will bind the clients, and be enforced by the courts, even though they are not strictly legal contracts. But they must be just and equitable.^ The client, as in the case of other kinds of agency, is bound by all the acts of the attorney within the scope of his authority.' As between the client and ^ Weeks on Attorneys, see. 248. " Chautauque Co. Bank v. Kisley, 6 HUl, 375. ^Blackwell v. Willard, 65 K. C. 555; 6 Am. Rep. 749. ♦Foster v. Wiley, 27 Mich. 244; Lacoste v. Robert, 11 La. Ann. 33; Union Bank v. Geary, 5 Pet. 98; Farmers' Bank v. Ketchum, 4 McLean, 120; Hart v. Spalding, 1 Gal. 213; Gorham v. Gale, 7 Cow. 739; Lawson t. Bettison, 12 Ark. 401; Commis- sioners V. Younger, 29 Cal. 147; 87 Am. Dec. 164. "A client has no right to interfere with the attorney in the due and orderly conduct of the suit, and certainly cannot olaim to re- tain a judgment obtained, and an exe- cution issued fraudulently ": Read v. French, 28 N. Y. 293. * Lookwood V. Black Hawk Co., 34 Iowa, 235; McCanu v. McLennan, 3 Neb. 25. In Howe v. Lawrence, 22 N. J. L. 99, the court say: "Justice requires that agreements fairly nade between attorneys or parties in the progress of a cause, relating to the conduct of suit, should be fairly and faithfully enforced, not because they arc technically contracts, and legally binding upon the parties, but because the administration of justice is thereby facilitated. An agreement to waive an irregularity, to postpone or delay a trial, to take short notice of argu- ment, to permit a cause to be brought to hearing summarily, these, and ar- rangements like them, do not partake of the essence of legal contracts. They are founded upon no consider- ation; they require no mutuality; if violated, no action lies for their breach. The court may refuse to enforce them, unless reduced to writing and hied, or they may enforce them in whole or in part, at their discretion. In short, they are regarded as a part of the machinery for the conduct of the cause entirely under the control of the court, and they will be enforced, or not, as the substantial rights of the parties and the ends of justice may require. And undoubtedly, in the exercise of this discretion, courts will see that if a mutual agreement be made, or a consent be given, or a waiver of right be made upon one side in consideration of a consent or a waiver of right upon the other, that it shall not be partially enforced, to the prejudice of the rights of either." ' Weeks on Attorneys, sec. 216; Russell V. Lane, 1 Barb. 519; Cham- bers V. Hodges, 23 Tex. 104; Fairbanks 279 AUTHORITY AND POWEES OF ATTORNEY. § 170 the opposite party, the former is bound by every act which the attorney does in the regular course of practice, and without fraud or collusion, however injudicious the act may be.^ The client may be bound bj' stipulations of his attorney, made before a suit is instituted.'^ The attorney of a party has the exclusive control of the con- duct and management of a suit, and neither the party nor his agent or attorney in fact has authority to sign a stipulation for a continuance.' Where a party to an ac- tion has an attorney of record, a stipulation signed by the party in person, granting time to file a statement, will be disregarded. The attorney has the exclusive manage- ment and control of the case; and his temporary absence from the county does not affect the rule.'' Illustrations. — The plaintiffs in a suit instructed their attor- ney to settle on certain terms, coupled with a certain condition, and afterwards spoke to the defendants of the terms as terms of settlement, without saying anything about the condition; and the attorney never mentioned the condition, but settled upon the other terms proposed, and the defendants believed that the attor- ney had authority to settle as he did. Held, that the plaintiffs were bound by the settlement: Peru Steel etc. Co. v. Whipple File etc. Co., 109 Mass. 464. A mortgagee directed his attorney to foreclose by publication. This the attorney did, and then without orders from the mortgagee brought suit on the mort- gage. Held, that the proceedings by publication were waived, the suit being within the scope of the attorney's authority: Burgess v. Stevens, 76 Me. 559. § 170. Implied Powers of Attorneys (Oontinued) — Ad- missions — Affidavits — Altering Securities — Appeal — Arbitration — Arrest — Assignment — Attachment. — The attorney has authority to make admissions and represen- V. Stanley, 18 Me. 296; Rice v. Wil- ' Weeka on Attorneys, sec. 222. kins, 21 Me. 558; Sampson v. Ohleyer, 2 Hefiferman v. Burt, 7 Iowa, 320; 71 22 Cal. 200; Lawson v. Betti-son, 12 Am. Dec. 445. Ark. 401; Bethel «. Carmack, 2M(l. Ch. ^ Nightingale v. Oregon Central R. 143; Nave v. Baird, 12 Ind. 318; North R. Co., 2 Saw. 338. Mo. R. R. Co. V. Stephens, 36 Mo. * Mott v. Foster, 45 Cal. 72. 150; 88 Am. Dec. 138. §170 PRINCIPAL AND AGENT. 280 tations of fact either in court or out of it.* The admis- sions of an attorney, to bind his client must be distinct and formal, and made for the express purpose of dispens- ing with formal proof of a fact at the trial.^ But if made long after a case has been tried, and his employment is ended, they are not binding,' and his admissions alone cannot prove his employment.* Where counsel for the plaintiff admitted that he could not recover on a count, and the question was one of law, it was held that as coun- sel could not make the law, his admission would not be binding on his client.* He may make oath to a petition in insolvency,' may verify papers by affidavit,' may sub- stitute one security for another,* may bind his client on a recognizance for appeal,' and of course (and it is his » Pike V. Emerson, 5 N. H. 393; 22 Am. Dec. 468; Talbot v. McGee, 4 T. B. Men. 377; Farmers' Bank ji. Sprigg, 11 Md. 389; Smith v. Dixon, 3 Met. (Ky.) 438; Starke v. Keenan, 11 Ala. 819; Wenans w. Lindsey, 1 How. (Miss.) 577; Gilkeson v. Snyder, 8 Watts & S. 200; Rogers v. Green- wood, 14 Minn. 333; Harvey v. Thorpe, 28 Ala. 250; 65 Am. Deo. 344; Bosenbaum v. Stote, 33 Ala. 362; Central Branch R. R. Co. v. Shoup, 28 Kan. 394; 42 Am. Rep. 163; Wil- son V. Spring, 64 111. 14. In Lewis v. Sumner, 13 Met. 272, Shaw, C. J., said: "The importance of upholding agreements and concessions like the present, between attorneys and coun- sel of litigating parties, is greater than it might seem at first blush, and is enhanced by our present prac- tice. In most cases of controverted facts, many facts are embraced in the issue which are not really in dispute between the parties; but each must be prepared to prove all the facts necessary to his own case, unless he can previously obtain a concession from the adverse party, in a form which he can rely upon at the trial. It is therefore a wise, useful, and ben- eficial practice, resorted to by those who are most careful in preparing causes for trial, and a practice well deserving to be encouraged by the courts, for the parties, by their attor- neys, to obtain and give mutual con- cessions, in writing, of all the material facts, not intended to be controverted, and so narrow the litigation to the precise matters in controversy. It saves expense, avoids surprise and delay, and often prevents the loss of a good cause by an unexpected call for proof, which could easily have been obtained, if it had been antici- pated that such fact would be called in question. This practice of admit- ting facts is the more necessary, since the disuse of special pleadings, which was designed, and to some extent had the effect, to narrow the issue on record to some one or a few questions of fact." '' Treadway v. Sioux City etc. R. R. Co., 40 Iowa, 526. » Walden v. Bolton, 55 Mo. 405. * Weeks on Attorneys, sec. 225. * Mitchell V. Gotten, 3 Fla. 136. Hasty, inconsiderate admissions made by the attorney in the course of a trial do not bind the client, though he was present and did not dissent: Davidson V. Gifford, 100 N. C. 18. « O'Neil V. Glover, 5 Gray, 144. ' Wright V. Parks, 10 Iowa, 342; Bates V, Pike, 9 Wis. 224. ^ Monson v. Hawley, 30 Conn. 51; 79 Am. Deo. 233. ' Adams v. Robinson, 1 Pick. 461 ; Ricketson v. Compton, 23 Cal. 636; aliier, Holbrook's Case, 5 Cow. 35. 281 AUTHORITY AND POWERS OP ATTORNEY. § 170 duty to do so in a proper case) may take an appeal/ but may not agree that no appeal will be taken.^ An attor- ney who tried a cause below is not authorized to appear in the appellate court without a new retainer.' A con- tract with an attorney to attend to a suit in the district court alone does not authorize him, without further au- thority, to take the cause to the supreme court; nor can he recover compensation for services in the supreme court without showing that he was employed to render the service, or was in some way recognized by his client as attoriiey in the suit.'' An attorney cannot prosecute an appeal after his client has settled the suit, although, under a contract between the attorney and client the former was to have as his compensation part of the land recovered, there being no question of an attorney's lien in the case.^ He may refer the cause to arbitration,* but the client may revoke the submission before it is acted on.^ The attorney cannot change the terms of a submis- sion entered into by his client.^ Formerly it was held that there must be a case pending to authorize an attor- ^ Grosvenor v. Dauforth, 16 Mass. Stephens, 17 Ala. 701; Bates u.Vischer, 74; Richardson v. Talbot, 2 Bibb, 382; 2 Cal. 355; Wade v. Powell, 31 Ga. ] ; Bach V. Ballard, 13 La. Ann. 487. A White v. Davidson, 8 Md. 169; 63 Am. city attorney has power to take an Dec. 699; Pike v. Emerson, .5 N. H. appeal in behalf of the city: Couuett 393; 22 Am. Dec. 468; Wilson v. V. Chicago, 114 JU. 233. Young, 9 Pa. St. 101; Jones v. Hor- 2 People V. Mayor, 11 Abb. Pr. 66; sey, 4 Md. 306; 59 Am. Dec. 81; Til- aliter. Pike v. Emerson, 5 N. H. 393; ton v. U. S. Life Ins. Co., 8 Daly, 84; 22 Am. Dec. 468. Williams v. Tracy, 95 Pa. St. 308; » Covin V. Phy, 24 111. 37. Evars v. Kamphans, 59 Pa. St. 379; * Hopkins v. Mallard, 1 G. Greene, North Whitehall v. Keller, 100 Pa. St. 117. 105; 45 Am. Kep. 361 ; North Mo. R. R. ^ Lavender v. Atkins, 20 Neb. 206. Co. v. Stephens, 36 Mo. 150; 88 Am. " Buckland !). Conway, 16 Mass. 396; Dec. 138; aliier, Haynes v. Wright, 4 Stokcly V. Robinson, 34 Pa. St. 315; Hayw. (Tenn.) 313. In McGinnis v. Morris v. Grier, 76 N. C. 410; Lee v. Curry, 13 W. Va. 29, it is held that Grimes, 4 Col. 185; Talbot «. McGee, an attorney cannot make an agreement 4 T. B. Mon. 377; Scarborough v. Rey- in 'pais to refer his client's cause to nolds, 12 Ala. 252; Coleman v. Grubb, arbitration, though he may give such 23 Pa. St. 393; Brooks v. Durham, 55 consent in open court. N. H. 559; Jenkins v. Gillespie, 10 ' Colemaa v. Grubb, 23 Pa. St. Smedes & M. 31; 48 Am. Deo. 732; 393. Cahill V. Benn, 6 Binn. 99; Smith v. * Jenkins v. Gillespie, 10 Smedea BoBsard, 2 McCord, 406; Beverly v. & M. 31; 48 Am. Dec. 732, § 171 PRINCIPAL AND AGENT. 282 ney to refer,' but that is probably not now required.* An attorney retained to make a motion to change the place of trial has authority to consent to a reference of the action.* He may issue a capias ad satisfaciendum, and arrest the defendant;* may sue out scire facias against bail.* He has no authority to assign or transfer to a third person a note in his hands for collection,® nor a judgment obtained by his client.' An attorney to whom a creditor confides a discretionary power to collect a debt may bind his client by assenting to an assignment of the debtor's prop- erty for the benefit of his creditors.* He may direct an attachment of property, or on mesne process," or discharge property from such attachment.^" § 171. Implied Powers of Attorneys (Continued) — Com- promise — Continuance — Contract — Discharge — Discon- tinuance — Employing Counsel — Error — Executing Bonds — Execution — Guaranty. — Whether an attorney or coun- sel has a right to compromise a cause, from his ordinary retainer, is a question on which the decisions differ. In England, after some hesitation," the right has been al- lowed.^ In America, some courts hold that an attorney has an implied authority to compromise a suit;" others ^ Kyd on Awards, sec. 45; Jenkins Am. Deo. 641 ; Mayer v. Blease, 4 S. 0. V. Gillespie, 10 Smedes & M. 31; 48 10; Maxwell v. Owen, 7 Coldw. 630; Am. Deo. 732. Fassitt v. Middleton, 47 Pa. St. 214; 2 See note to Hutchins v. Johnson, 86 Am. Dec. 535. 30 Am. Dec. 629. » Gordon v. Coolidge, 1 Sum. 537. » Tiffany v. Lord, 40 How. Pr. 481. " Jenney i;. Delesderuier, 20 Me. 183; * Hyams v. Michel, 3 Rich. 303. Fairbank v. Stanley, 18 Me. 296; Kirk- ^ Dearborn v. Dearborn, 15 Mass. sey v. Jones, 7 Ala. 622. 316. " Moulton v. Bowker, 115 Mass. .36; ^ Goodfellow V. Landis, 36 Mo. 168; 15 Am. Rep. 72; Monson v. Hawley, Annely v. De Saussure, 12 S. C. 4S8; 30 Conn. 51; 79 Am. Dec. 233; Benson Card V. Walbridge, 18 Ohio, 411; v. Carr, 73 Me. 76. Penniman v. Patchin, 5 Vt. 346; Ter- " Swinfen v. Swiufen, 24 Beav. 549; hune V. Colton, 10 N. J. Eq. 21; Rus- 2 De Gex & J. 381. sell V. Drummond, 6 Ind. 216; White '^ Strauss v. Francis, L. R. 1 Q. B. V. Hildreth, 13 N. H. 104. 379; Thomas v. Harris, 27 L. J. Ex. ' Head v. Gervais, Walk. (Miss.) 35ii; Ex parte Wenham, 21 Week. 431; 12 Am. Deo. 577; Boreu v. Mc- Rep. 104. Gehee, 6 Port. 432; 31 Am. Dec. 695; " Wieland v. White, 109 Mass. 392; Wilson V. Wadleigh, 36 Me. 496; Doon w. Donaher, 113 Mass. 151; Pot- Campbell's Appeal, 29 Pa. St. 401; 72 ter v. Parsons, 14 Iowa, 286: Levy v. 283 ATJTHOKITY AND PQ-WEKS OF ATTORNEY. §171 that he has not;* and in any event the power cannot exist after judgment^ or award,' or against the consent of the Brown, 56 Misa. 83; Bonney v. Mor- Ti'-l, 57 Me. 386; People v. Quick, 92 111. 580; Jeffries v. New York Mut. Life Ins, Co., 110 U. S. 305. la De Louis V. Meek, 2 G. Greene, 55, 50 Am. Dec. 491, it is said that equity is dis- inclined to disturb a compromise made by an attorney unless it works injus- tice, and is injurious to his client. In Whipple V. Whitman, 13 R. I. 512, 43 Am. Rep. 42, a fair compromise made ■with the assent of the party in inter- est, though without the knowledge of the plaintiff of record, was upheld, though the court ruled that an at- torney had no implied authority to compromise. "The decisions," said Duriee, C. J., "on the power of an attorney to compromise are contradic- tory. In England, however, the doc- trine established by the later cases, after some vacillation, is, that the attor- ney has power by virtue of his retainer » Smith V. Dickson, 3 Met. (Ky.) 438; Mandeville v. Reynolds, 68 N. Y. 528; Vail v. Jackson, 15 Vt. 314; Der- wort 0. Loouier, 21 Conn. 245; Pick- ett V. Merchants' Bank, 32 Ark. 346; Holker v. Parker, 7 Cranch, 452; Hus- ton V. Mitchell, 14 Serg. & R. 307; 16 Am. Dec. 506; Stokely v. Robinson, 34 Pa. St. 315; Preston v. Hill, 50 Cal. 43; 19 Am. Rep. 647; Fitch v. Scott, 3 How. (Miss.) 314; 34 Am. Deo. 86; Granger v. Batchelder, 54 Vt. 248; 41 Am. Rep. 846; Black v. Rogers, 75 Mo. 441; Moye v. Cogdell, 69 N. C. 93; Adams v. Roller, 35 Tax. 711; Maddux v. Be van, 39 Md. 485; Walden v. Bolton, 55 Mo. 405; Spears v. Ledergerber, 56 Mo. 465; Wadhams v. Gay, 73 111. 415; Am- brose V. McDonald, 53 Cal. 28; House- nick V. Miller, 93 Pa. St. 514; Isaacs V. Zugsmith, 103 Pa. St. 77; Whipple V. Whitman, 13 R. I. 512; 43 Am. Rep. 42; Mackey v. Adair, 99 Pa. St. 143; North Whitehall v. Keller, 100 Pa. St. 105; 45 Am. Rep. 361; Robin- son V. Murphy, 09 Ala, 543; Miller v. Lane, 13 111. App. 648; Whittingtou V. Ross, 8 111. App. 234; De Louis v. Meek, 2 G. Greene, 55; 50 Am. Dec. 491; Stuck v. Reese, 15 Iowa, 122; to compromise the action in which he is retained, provided he acts hona ftde and reasonably, and does not violate the positive instructions of his client, and that the compromise will bind the client, even if he does violate instruc- tions, unless the violation is known to tho adverse party: Swinfen v. Swin- fen, 18 Com. B. 485; Swinfen v. Lord Chelmsford, 5 Hurl. & N. 890; Cham- bers V. Mason, 5 Com. B., N. S., 59; Chown V. Parrott, 14 Com. B., N. S., 74; Brest wich v. Poley, 18 Com. B., N. S., 806; Fray v. Voules, 1 El. & E. 839; Butler v. Knight, L. R. 2 Ex. 109; Thomas v. Harris, 27 L. J., N. S., Ex. 353; In re Wood, Ex parte Wen- ham, 21 Week. Rep. 104.. The reason is, the attorney, within the scope of his retainer, is considered the general agent of the client. And it is strongly argued in support of the power that it ought to be upheld, both as a matter Fritchey v. Bosley, 56 Md. 94; David- son V. Rozier, 23 Mo. 387; Shaw v. Kidder, 2 How. Pr, 244; Barrett v. Railroad Co., 45 N. Y. 628; Hamrick V. Coombs, 14 Neb. 381; Filby v. Mil- ler, 25 Pa. St. 264; Treasurers v. Mc- Dowell, 1 Hill (S. C), 184; 26 Am. Dec. 166; Pierce v. Brown, 8 Biss. 534; North Missouri R. R. Co. v. Ste- phens, 36 Mo. 150; 88 Am. Dec. 138; Wetherbee v. Fitch, 117 111. 67; Eaton V. Knowlea, 61 Mich. 626. In Texas, it is said that although strictly an attorney has not authority, as such, to compromise a claim, yet the court will only interfere where the com- promise was clearly unreasonable, and the client entirely blameless and free from laches: Roller w.Wooldridge, 46 Tex. 485. The same view is taken in Holker v. Parker, 7 Cranch, 436. ^ Weeks on Attorneys, sec. 231, cit- ing Jones V. Ransom, 3 In J. 327; Jen- kins V. Gillespie, 10 Smedes & M. 31; 48 Am. Dec. 732; Pendexter v. Ver- non, 9 Humph. 84; Wilson v. Jennings, 3 Ohio St. 528. ^ Township of North Whitehall v. Keller, 100 Pa. St. 105; 45 Am. Rep. 361. §171 PRINCIPAL AND AGENT. 284 client.^ In Indiana it is said that in extraordinary cases where delay might prove injurious, and there is no oppor- tunity for communication between an attorney and his cli- ent, the former may compromise a claim without special authority.^ In a number of cases the courts, while recog- nizing the principle that the attorney has no implied au- thority to compromise, have refused to set aside such compromises when fair and judicious, and not to the in- of public policy and for the good of the client, inasmuch as the attorney generally knows vastly better than the client whether it is better to risk the trial of the suit or to compromise it, and is often called upon to do the one or the other suddenly in the absence of the client: See Wharton on Agency, sec. 590. The English doctrine finds support in a few American cases: Wielaud v. White, 109 Mass. 392; Potter V. Parsons, 14 Iowa, 286; Holmes?). Rodgers, 13 Cal. 191; North Missouri R. R. Co. v. Stephens, 36 Mo. 150; 88 Am. Dec. 138; Reinholdt V. Alberti, 1 Binn. 469; but the main current of decision in this county runs powerfully against it: Weeks on At- torneys at Law, sec. 228; Ambrose v. McDonald, 53 Cal. 28; Preston v. Hill, 50 Cal. 43; 19 Am. Rep. 647; Levy v. Brown, 56 Miss. 83; Picket v. Mer- chants' Nat. Bank of Memphis, 32 Ark. 346; Walden v. Bolton, 55 Mo. 405; Mandevillev. Reynolds, 68 N. Y. 528; Wadhams v. Gay, 73 111. 415; People V. Quick, 92 lU. 580. The American courts, however, show a leaning in favor of such compromises, when fairly made, and readily uphold them if they can find grounds on which to do so. 'Although,' says Chief Justice Marshall, in Holker v. Parker, 7 Crauch, 436, 452, ' an attor- ney at law merely as such has, strictly speaking, no right to make a com- promise, yet a court would be disin- clined to disturb one which was not so unreasonable in itself as to be ex- claimed against by all, and to create an impression that the judgment of the attorney has been imposed on or not fairly exercised.' See also Roller v. Wooldridge, 46 Tex. 485; Potter v. Parsons, 14 Iowa, 286. In the case at bar there are several reasons why the court should not disturb the com- promise. The compromise was in itself fair and reasonable, if not emi- nently advantageous. We mention this rather as a favorable feature than as an absolute reason for upholding the compromise, since a party who prefers litigation to settlement is gen- erally entitled to enjoy his preference: Fray v. Voules, 1 El. & E. 839. The case here, however, was peculiar in its circumstances. The plaintiff was suing, not for himself, but as trustee for his wife. She was the real owner, so to speak, of the lawsuit. Under our statute (Gen. Stat. R. I., c. 152, sec. 6), she might, for aught we can see, have assigned for valuable considera- tion her equitable or beneficial interest in the suit, or in the debt sued for, absolutely an5 without joinder with her husband, to some third person, or even to the defendant himself. But if she had the right to do this, we do not see why she had not also the right, in the absence of her husband, acting under the advice of trustworthy friends, to enter into a fair and rea- sonable compromise of the suit. To hold that the husband might arbi- trarily reject a compromise which she desired, would be to put her com- pletely at his mercy. It seems to us that the most which he could require, considering his purely titular relation to the suit, would be indemnity for his costs and expenses as trustee, which, in the case here, he seems to have substantially got in the settle- ment." 1 Preston v. Hill, 50 Cal. 43; 19 Am. Rep. 647. '' Union Mut. Life Ins. Co. v. Bu- chanan, 100 Ind. 63. 285 AUTHOEITY AND POWERS OF ATTORNEY. § 171 jury of the client/ Ah attorney employed to obtain pos- session of real estate by legal proceedings cannot bind bis principal by an agreement to pay a sum of money for the possession.^ If orders be given by the creditor to an attorney, "to obtain immediate security" for a demand, the whole manner of doing it is left in the discretion of the attorney, and the creditor is bound by his acts.' An attorney who is a director in a railroad company, and is openly employed to prosecute a suit against the road, may compromise the suit and recover his fees for legal services in the case.^ Where an attorney compromises his client's claim without express authority, the client may ignore such settlement and recover from the adverse party the full amount of his demand.^ He has authority to agree to a continuance." He cannot contract for the sale of land,' nor to refund money overpaid,* nor can he contract generally as to the subject of the litigation." An attor- ney has no authority, by virtue of his employinent as such, to instruct a sheriff to conduct a business, such as a restaurant, upon which an attachment has been levied, and thereby bind his client for the expenses incurred.*" He cannot discharge the debt without satisfaction." He may dismiss or discontinue an action;^ or agree to a non- suit." He has no authority to enter a retratix}*^ In an ' Whipple V. WhitmaB, 13 R. I. 512; '" Alexander v. Deuaveaux, 53 Cal. 43 Am. Rep. 42; Williams v. Nolan, 663. 58 Tex. 708; Black v. Rogers, 75 Mo. " Kellogg v. Gilbert, 10 Johns. 220; 441. 6 Am. Dec. 335; Simontou v. Barrell, 2 Stuck V. Reese, 15 Iowa, 122. 21 Wend. 362. ' Rice V. Wilkins, 21 Me. 558. i" GaUard v. Smart, 6 Cow. 385; * Christie v. Sawyer, 44 N. H. 298. McLeran v. McNamara, 55 Cal. 508; * Jones V. Inness, 32 Kan. 177. Paxtou v. Cobb, 2 La. 137; Rogers v. ^ Weeks on Attorneys, sec. 236; but Greenwood, 14 Minn. 333. An attor- not to agree with other attorneys not ney for the defendant in an action in to try causes during a particular time: ejectment has authority to bind his Robert v. Commercial Bank, 13 La. client by a stipulation to dismiss a de- 528; 33 Am. Dec. 570. mand by defendant, under ( he statute, ' Burkhardt v. Schmidt, 10 Phila. for a second trial: Bray v. Dobeney, 118. Minn., 1888. " Ireland v. Todd, 36 Me. 149. " Lynch v. Cowell, 12 L. T. 548. 9 Annely v. De Saussure, 12 S. C. " Lambert v. Saadford, 2 Blackf. 488. 137; 18 Am. Dec. 149. § 172 PRINCIPAL AND AGENT. 286 action against a married woman, the court will not sanc- tion an order of discontinuance, entered on the plaintiff's consent, without the knowledge of the defendant's coun- sel; for the court is called upon to protect her and her counsel and attorney from, such consent.' He cannot employ counsel,^ nor pledge his client's credit for fees.* He may order briefs printed at the client's expense.'* He has power to bring a writ of error to revise a judgment.® He may execute a recognizance on appeal.* But it has been held that he has no authority to indemnify a person who becomes a surety on an injunction bond," or to execute a replevin bond.® He may sue out an execution or an alias execution,® and control the execution.*" He has no authority to stay an execution." An attorney who is em- ployed to prosecute a suit for the collection of a claim has implied authority to sign, in his client's name, an agreement to indemnify the sheriff for a levy on exe- cution."^ An attorney, though authorized, is not bound to receive money collected for his client on execution.'* He may give an ofiBcer indemnity for serving an execu- tion." He may not bind his client to indemnify a third party who has become his security in an injunction suit.'' He cannot indorse a note left with him for collection.'* §172. Implied Powers of Attorney (Continued) — Judgment — Payment. — He may confess or agree to con- ' McKenzie v. Rhodes, 13 Abb. Pr. ' Narragangua Prop. v. Wentworth, 337; 21 How. Pr. 467. 36 Me. 339. 2 Unless the client be absent: Briggs ' Cheever v. Mirrick, 2 N. H. 376. V. Georgia, 10 Vt. 68; but see Rogers i» Read v. French, 28 N. Y. 293. V. McKenzie, 81 N. 0. 164. " Reynolds v. IngersoU, 11 Smedes " Mostyu V. Mostyn, L. R. 5 Ch. & M. 249; 49 Am. Deo. 57; contra, 457. Albertson v. Goldsby, 28 Ala. 711; 65 * Weisae v. New Orleans, 10 La. Am. Dec. 380. Ann. 46; Williamson-Stewart Paper '* Schoregge v. Gordon, 29 Minn. 367. Co. V. Bosbyshell, 14 Mo. App. 534. " pg^i^ ^ Gjgt^ 4 McCord, 259. * Grosvenor v. Danforth, 16 Mass. " Clark v. RandaU, 9 Wis. 135; 76 74. Am. Dec. 252. 6 Adams v. Robinson, 1 Pick. 462; ^^ White v. Davidson, 8 Md. 169; 63 but see Ex parte Holbrook, 5 Cow. 35j Am. Dec. 699. Clark V. Couraer, 29 N. H. 170. " Child v. Eureka Powder Works, ' White V. Davidson, 8 Md. 169; 63 44 N. H. 354; White v. Hildreth, 13 Am. Dec. 699. N. H. 104. 287 AUTHORITY AND POWERS OP ATTORNEY. § 172 fess judgment.* Where one was arrested on a charge of violating a city ordinance, gave an invalid recog- nizance in three hundred dollars to appear for trial, but failed to appear, and money to that amount, taken from him by the arresting officer, was placed in the hands of the city attorney, it was held that an attorney merely re- tained in the defense had no authority to direct that the money be paid into the city treasury.^ He may receive payment of a judgment,' or give a receipt for money due;* receive payment of a debt due the client,^ or receive part payment.® The employment of an attorney at law to examine the title to lands on which a mortgage loan is about to be made does not authorize him to receive, as agent of the proposed lender, his employer, money from the borrower, to be used in satisfying prior liens. His duty extends only to ascertaining and reporting the liens. If the borrower furnishes him with money to pay them, and he misapplies it, the employer is not liable.' A so- licitor or agent who is employed to procure the assign- ment of a bond and mortgage, or to invest money upon * Denton v. Noyea, 6 Johns. 298; 5 Scott, 21 Ark. 396; Erwin v. Blake, 8 Am. Dec. 237; Lyon v. Williama, 42 Pet. 17; Yoakum v. Tiltlen, 3 W. Va. Ga. 168; Thompson v. Pershing, 86 167; 100 Am. Deo. 738; Harper v. Ind. 303; Potter v. Parsons, 14 Iowa, Harvey, 4 W. Va. 539. 286; Farmers' Bank v. Sprigg, 11 Md. * Yoakum v. Tilden, 3 W. Va. 167; 389; Holmes v. Rogers, 13 Cal. 191; 100 Am. Deo. 738; Miller v. Scott, 21 Jones V. Williamson, 5 Cold. 371; Ark. 396. contra, Edwards v. Edwards, 29 La. * Yates v. Freckleton, 2 Doug. 623; Ann. 597; People v. Lamborn, 2 111. Langdonw. Potter, 13 Mass. 319; Ely 123; Wadhams v. Gay, 73 111. 415; v. Harvey, 6 Bush, 620; Carroll Co. v. Pfister V. Wade, 69 Cal. 133. Cheatham, 48 Mo. 385; Ruckman v. 2 Bloomingtonw. Heiland, 67 III. 278. Allwood, 44 111. 183; Miller v. Scott, » Johnson v. Gibbons, 27 Gratt. 632; 21 Ark. 396; McCarver v. Nealey, 1 G. Frazier v. Parks, 56 Ala. 363; Langdon Greene, 360; Gray v. Wass, 1 Me. 257; V. Potter, 13 Mass. 320; Wilson v. Branch w. Burnley, 1 Call, 147; Megary Stokes, 4 Munf. 455; Brackett v. Nor- v. Funtia, 5 Sand. 376; Ducett v. Gun- ton, 4 Conn. 517; 10 Am. Dee. 179; ningham, 39 Me. 386; Erwin v. Blake, Carroll Co. v. Cheatham, 48 Mo. 385; 8 Pet. 18; Patten v. FuUerton, 27 Me. Conway Co. v. Little Rock R. R. Co., 58; State ». Hawkins, 28 Mo. 3C0; 39 Ark. 50; Wycoff v. Bergen, 1 N. Varley v. Garrad, 2 Dowl. Pr. 490; J. L. 214; McCarver ». Nealey, 1 G. Hudson v. Johnson, 1 Wash. (Va.) 9; Greene, 360; State v. Hawkins, 28 Carroll Co. v. Cheatham, 48 Mo. 385; Mo. 366; Ely v. Harvey, 6 Bush, 620; Jackson v. Mayor, 78 Ga. 343. McDonald v. Todd, 1 Grant Cas. 17; " Pickett v. Batea, 3 La. Ann. 627. Branch v. Burnley, 1 Call, 147; Rogers ' Joaephthal v. Hey man, 2 Abb. N. V. MoKenzie, 81 N. C. 164; Miller v. C. 22. §172 PRINCIPAL AND AGENT. 288 such securities, is not thereby authorized to receive either the principal or interest, where his client or constituent takes and retains the possession of the securities.* He may not receive payment in anything but lawful money.* He cannot take depreciated money;^ as confederate notes.^ He cannot take real estate,^ nor other securities,® nor a bond,' nor county warrants,® nor notes of third per- sons,® nor a draft on a third person,'" nor an assignment of another judgment." Although, as a general rule, where a note has been left with an attorney with authority to receive payment thereof, payments made to such attor- 1 Williams v. Walker, 2 Sand. Ch. 325. 2 Kent V. Ricards, 3 Md. Ch. 392; Campbell v. Bagley, 19 La. Ann. 172; Wright V. Daily, 26 Tex. 730; Clark v. Kingsland, 1 Smedes & M. 248; Nolan V. Jackson, 16 111. 272; Lawson v. Bet- tisoE, 12 Ark. 408; Walker v. Scott, 13 Ark.644; West^). Ball, 12 Ala. 340; Mil- iar V. Edmonston, 8 Blaokf. 291 ; Com- missioners V. Rose, 1 Desaus. Eq. 409; Huston V. Mitchell. 14 Serg. & R. 307; 16 Am. Dec. 506; Wilkinson v. Hollo- way, 7 Leigh, 277; Givens v. Briscoe, 3 J. J. Marsh. 529; Trumbull v. Nich- olson, 27 111. 149; Maddux v. Bevan, 39 Md. 493; Moye v. Cogdell, 69 N. C. 93; Wiley v. Mahood, 10 W. Va. 206; Kent V. Chapman, 18 W. Va. 485; Mc- Carver v. Nealey, 1 G. Greene, 360; Perkins v. Grant, 2 La. Ann. 328; Lord V. Burbank, 18 Me. 178; Baldwin V. Merrill, 8 Humph. 132; Lewis v. Woodruff, 15 How. Pr. 539; Pendexter V. Vernon, 9 Humph. 84; Bigley v. Toy, 68 Iowa, 687. (In Livingston v. Ridoliff, 6 Barb. 201, it was held that he might take part in money and part in a, good short note.) Herriman v. Shomon, 24 Kan. 387; 36 Am. Rep. 261. An attorney employed to collect a note has no implied authority to ac- cept wood in payment thereof: Pitkin ■,j. Harris, 23 Mich. 617. 8 Trumbull v. Nicholson, 27 111. 149; West V. Ball, 12 Ala. 340; ('hapman v. Cowles, 41 Ala. 103; 91 Am. Deo. 508; Davis V. Lee, 20 La. Ann. 248; Law- son V. Bettison, 12 Ark. 401. * Harper v. Harvey, 4 W. Va. 539; Alspaugh V. Jones, 64 N. 0. 29; Railey V. Bagley, 19 La. Ann. 172; Davis v. Lee, 20 La. Ann. 248. Unless from the situation of the parties assent to the receipt of such money may be pre- sumed: Ellis V. Heptinstall, 8 W. Va. 388 * Huston V. Mitchell, 14 Serg. & R. 307; 16 Am. Dec. 506; Stackhouse v. O'Hara, 14 Pa. St. 88, the court say- ing: " The limitations as to his author- ity imposed on him by the law relate generally to compromises, such as sub- stituting one thing for another, as land for money, or to acts after judgment. These are without the range of that professional learning and skill which constituted in fact the groundwork of the relation of counsel aud client." « Walker v. Scott, 13 Ark. 634. ' Maddux v. Bevan, 39 Md. 485j Smock V. Dade, 5 Rand. 639; 16 Am. Dec. 780; Kirk v. Glover, 5 Stew. & P. 340. ^ Herriman v. Shomon, 24 Kan. 387; 36 Am. Rep. 261. ' Jones V. Ransom, 3 Ind. 327; Jeter V. Haviland, 24 6a. 252; Cook u. Bloodgood, 7 Ala. 683; Langdon v. Potter, 13 Mass. 319; Garvin v. Low- rey, 7 Smedes & M. 24; Miller v. Ed- monston, 8 Blackf. 291. '» Moye». Cogdell, 69N.C. 93; Drain V. Doggett, 41 Iowa, 682; Graydou v. Patterson, 12 Iowa, 256. He may ac- cept as payment a check which is duly paid by a bank on which it is drawn: Harbach v. Colvin, 73 Iowa, 638. '- Clark V. Kingslajid, 1 Smedes & M. 248. 289 AUTHORITY AND POWERS OF ATTORNEY. § 172 ney in specific articles, instead of money, would not be good payments and binding on the principal, yet if one of such payments, so made to the attorney, is received by the principal, and the note is still suffered to remain in the hands of the attorney, and no objection is made either to the attorney or to the debtor, such payments would go in discharge of the note in the same way as if they had been made in money.* He may not receive payment after the relation of attorney and client has ceased,^ or after notice by the client to the debtor not to pay him.' A solicitor in chancery has no authority by virtue of his position to assign a decree obtained for his client for less than the full amount.* A fraudulent re- ceipt for the amount of a judgment in favor of his client is not binding on the latter.' Under a general authority to collect debts by suit, and to appear in and defend actions, he may not bid for his principal at a sheriff's sale of land mortgaged to the principal.' He is merely agent of his client, and the title to the property which he collects is in the client, and not in him.' Illustrations. — An order of condemnation of a water right was rendered, conditioned upon the payment within a year of the damages found. Held, that a payment to the attorney who conducted the proceedings did not bind the client, the attor- ney's authority ending with the termination of the proceedings: Test v. Larsh, 98 Ind. 301. A person places a note in the hands of an attorney for collection, and takes from him a receipt for it in his own name, but does not claim it as his own, nor any lien upon it, and the note itself is payable to a third person, and not indorsed. Held, that a payment by the attorney of the proceeds of the note to the payee will discharge him from all liability to the person who placed the note in his hands: Perk V. Wallace, 19 Ala. 219. A warrant for the payrpent of public money is properly issued to A, or his attorney, and the attorney sells it to one who buys it in good faith. Held, that such buyer ' Patten v. FuUerton, 27 Me. 58; " Chalfants v. Martin, 25 W. Va.. see Baldwin v. Morrill, 8 Humph. 132. 394. ■' Ruckman v. Alwood, 44 111. 183. « Fife v. Bohlen, 22 Fed. Rep. 878. ' Weist V. Lee, 3 Yeates, 47. ' Cotton v. Sharpstein, 14 Wis. 226;: * Rice V. Troup, 62 Miss. 186. 80 Am. Dec. 774. Vol. L — 19 § 173 PRINCIPAL AND AGENT. 290 is not liable to A: McCloshey v. Sutro, 64 Cal. 485. An attor- ney recovered judgment on his principal's claim given him to collect. Held, that he couJd not, without express authority, waive his client's judgment lien by filing the claim in proceed- ings for a distribution of the proceeds of a sale of the debtor's property under a deed of trust: Horsey v. Chew, 65 Md. 555. § 173. Implied Powers of Attorneys (Continued) — Process — Purchase — Release — Sell — Set-off — Sue — Sup- plementary Proceedings — Waivers and Releases. — He cannot direct a levy of goods upon process/ or accept service of a summons on his client." He hi^s no author- ity to admit service of the original summons which com- mences the action.' Ho may buy iu his client's property at a sheriff's sale.* He has no power, virtute officii, to pur- chase for his client at a judicial sale land sold under a mortgage held by the client.^ An attorney to collect a ■demand has no authority to release a surety ihereou with- out satisfaction,* nor the indorser of a note.'' He has no power to release or discharge his client's claim, or a judg- ment obtained by him, without payment.* He cannot sell or assign a judgment of his client,' or sell notes left with him for collection,"' or other claims," or transfer notes left ^ Averill v. Williams, 4 Denio, 295; 7 Watts, 63; Tankersley v. Anderson, 47 Am. Deo. 252; and indemnify the 4 Desaus. Eq. 44; Beers v. Hendrick- 'Officer making it therefor: Clark v. son, 45 N. Y. 665; Mandeville v. Rey- Eandall, 9 Wis. 135; 76 Am. Deo. 252. nolds, 68 N. Y. 528; Carstens v. Barn- •' Reed v. Reed, 19 S. C. 548; Starr storf, 11 Abb. Pr., N. S., 442; GiUiland „. Hall, 87 N. C. 381. v. Gasque, 6 S. C. 406. ^ Mastersou v. Le Claire, 4 Minn. ' Maxwell v. Owen, 7 Cold. 630; 163; Starr v. Hall, 87 N. C. 381; Reed Baldwin v. Merrill, 8 Humph. 139; ■V. Reed, 19 S. C. 548. Campbell's Appeal, 29 Pa. St. 401; 72 ' Fabell v. Boyken, 55 Ala. 383; Am. Deo. 641; Rowland •«. State, 58 contra, Beardsley v. Root, 11 Johns. Pa. St. 196; Mayer v. Blease, 4 Rioh. 464; 6 Am. Dec. 386; Averill v. Wil- 10; Head v. Gervais, Walk. (Miss.) liams, 4 Denio, 295; 47 Am. Deo. 253. 431; 12 Am. Dec. 577; Fassitt v. Mid- * Savery v. Sypher, 6 Wall. 157. dleton, 47 Pa. St. 214; 86 Am. Deo. * Givens v. Briscoe, 3 J. J. Marsh. 535; Clark v. Kingsland, 1 Smedes & 529; Savings Inst. v. Chinn, 7 Bush, M. 256; Wilson v. Wadleigh, 36 Me. 539; Stoll V. Sheldon, 13 Neb. 207. 496; Boreu v. McGehee, 6 Port. 432; ' Varnumw. Bellamy, 4 McLean, 87; 31 Am. Dec. 695. East River Bank v. Kennedy, 9 Bosw. '" Goodtellow v. Laudis, 36 Mo. 168. 643. " Card v. Walbridge, 18 Ohio, 411; 8 Harrow v. Farrow, 7 B. Men. 126; Penniman v. Patchia, 5 Vt. 346; Row- 45 Am. Deo. 60; Chambers v. Miller, land v. State, 58 Pa. St. 196. 291 AUTHORITY AND POWERS OF ATTORNEY. § 173 with him for collection.^ He cannot set off a debt due to his client against a debt due from him to the debtor.^ He may bring a new suit after being nonsuited,' or restore an action after a non pros.* He has power to institute supplementary proceedings, and procure the appointment of a receiver,^ but not to commence an action in the name of a receiver against a third person to set aside a convey- ance from the judgment debtor.® He cannot begin supple- mentary proceedings in the name of a deceased plaintiff, for whom, in his lifetime, he recovered judgment.^ He may waive objections to the form o^ a writ,* agree to postpone execution on his judgment,* waive objections to evidence,"* waive notices and give extensions of time to file papers," waive verification of papers by afiBdavit,^^ objections to interrogatories," informalities, and irregu- larities generally." He may release, before judgment, an attachment of real estate.** He cannot release a judgment on payment of a less sum than it is entered for," nor re- lease sureties upon the claim of his client," nor give up his client's securities without payment," nor release the ' Rus3ell V. Drummond, 6 Ind. 216; '° Lewis v. Gamage, 1 Pick. 347; Whiter. Hildreth, 13 N. H. 104; Child Lewis v. Woodruff, 15 How. Pr. 539; V. Eureka etc. Works, 44 N. H. 354; Wilsoa v. Wadleigh, 36 Me. 496; Har- Terhune v. Colton, 10 N. J. Eq. 21. row v. Farrow, 7 B. Mon. 126; 45 Am. ' Wiley V. Mahood, 10 W. Va. 206; Dec. 60; Chambers v. Miller, 7 Watts, Cost V. Genctte, 1 Port. 212; Child v. 63; Beers v. Hendrickson, 45 N. Y. Dwight, 1 Dev. & B. Eq. 171. 665; Kirk's Appeal, 87 Pa. St. 243; * Scott V. Elmendorf, 12 Johns. 317. 30 Am. Rep. 357; Carsteus v. Barn- *Reinholdtj;. Alberti, 1 Binn. 469. storf, 11 Abb. Pr., N. S., 442; Pierce » Ward V. Roy, 69 N. Y. 96. v. Brown, 8 Biss. 534; Miller v. Lane, « Ward B. Roy, 69 N. Y. 96. 13 111. App. 648; Robinsons. Murphy, ' Amoret). Lamotte,5Abb.N.C. 146. 69 Ala. 543; Hamrick ». Combs, 14 * Alton V. Gilmanton, 2 N. H. 520. Neb. 381; see Hampton v. Boy Ian, 46 ' Union Bank v. Geary, 5 Pet. 99; Hun, 151. Wieland v. White, 109 Mass. 392. " Union Bank v. Govan, 10 Smedes '» Alton V. Gilmanton, 2 N. H. 520. & M. 333; Givens v. Briscoe, 3 J. J. " Pike V. Emerson, 5 N. H. 393; 22 Marsh. 532; Savings Inst. v. Ohinn, 7 Am. Deo. 468; Bank v. Geary, 5 Pet. Bush, 539; East River Ban^ v. Ken- 99; Talbot i;.Mc6ee, 4 T. B. Mon. 377. nedy, 9 Bosw. 543; StoU v. Sheldon, '^ Hefiferman v. Burt, 7 Iowa, 320. 13 Neb. 207; nor upon an undertaking '' Roberts v. Harris, 32 Ga. 542. on appeal: Quinn v. Lloyd, 36 How. " Hanson v. Hoitt, 14 N. H. 56. Pr. 378. ^* Moulton V. Bowker, 115 Mass. 36; " Tankersly v. Anderson, 4 De^aus. 15 Am. Rep. 72; Benson v. Carr, 73 Eq. 45; Terhune v. Colton, 10 N. J. Me. 76. Eq. 21. § 173 PRINCIPAL AND AGENT. 292 defendant's property from the lien of an execution,* nor extend time on a debt due,^ nor release a debt due,' nor discharge an indorser upon a note due to his client/ nor accept a deed for mortgaged land in satisfaction of a judgment of foreclosure/ nor sell the evidence of indebt- edness," nor release a party in interest,'' nor a witness,' nor a defendant in custody on a capiq,s ad satisfaciendum.^ And an attorney may not waive any substantial right of the client as to the form of the proceedings in the cause.*" An agreement between counsel, without author- ity from their clients, that the dismissal of an action shall be a bar to an action for malicious prosecution, is void." But an agreement by the attorneys in several suits which are precisely similar, and in which the same de- fense is made, that they would abide the final judgment which should be rendered in one of them, binds the par- ties.*^ He cannot discharge a trustee," nor waive a right of inquisition," nor agree to suspend proceedings upon a judgment."^ He has no implied power to stipulate for additional time for the justice to render and docket his judgment." Illustrations. — An attorney was several times appealed to by his client for money on a mortgage note intrusted to him for collection, and in one letter was informed, "I am very much in want of funds, and you must sell." Held, that the attorney was authorized either to collect the amount or sell the security: ' Banks V. Evans, 10 Sinedes & M. » Marshall v. Nagel, 1 BaU. 308; 35; 48 Am. Dec. 734; Phillips v. Dob- Bowno v. Hyde, G Barb. 392. bins, 5G Ga. 617; Benedict v. Smith, "Kellogg v. Gilbert, 10 Johns. 220; 10 Paige, 162; Willson v. Jennings, 3 6 A;n. Dec. 335; Treasurers v. Mo- Oliio St. 528; Dollar Savings Bank v. DowcU, 1 Hill (S. C), 184; 26 Am. Kobb, 4 Brewst. 106. Dec. 166. ^Lockhart v. Wyatt, 10 Ala. 231; " Howe w. Lawrence, 22 N. J. L. 99. 44 Am. Dec. 481. " Marbourg w. Smith, 11 Kan. 554. = Gilliland v. Gasque, 6 Rich. 406. "North Missouri R. R. Co. v. Ste- * East River Bank -). Kennedy, 9 pheus, 36 Mo. 150; Ohlquest v. Far- Bosw. 543; Bowne v. Hyde, 6 Barb, well, 71 Iowa, 231. 392; Varnum v. Bellamy, 4 McLean, " Quarles v. Porter, 12 Mo. 76. 87. " Hadden v. Clarke, 2 Grant Cas. ^ Brown v. Kiene, 72 Iowa, 342. 107. ' Harieck v. Colvin, 73 Iowa, 638. '^ Pendexterti. Vernon, 9 Humph. 84. ' In re Weigel, 18 La, Ann. 49. ^^ Flynn v. Hancock, 46 Hun, 368. 293 AUTHORITY AND POWERS OF ATTORNEY. § 174 Ward V. Beals, 14 Neb. 114. In an action to recover money tne complaint alleges and the answer denies that it was payable in gold coin. The attorney for the defendant cannot bind his client by a verbal stipulation made during the progress of the trial, and not entered on the minutes, to allow the plaintiff, if he recover, to have judgment in gold coin: Merritt v. Wil- cox, 52 Cal. 238. An attorney of record in an action, which had been sent to a referee by order of court, signed an agreement in writing that the report of the referee should be final, and the agreement was entitled as of the term of the circuit court to which the report was to be made. Held, that his client was bound by such agreement: Brooks v. New Durham, 55 N. H. 559. An attorney at law released a judgment lien which he had procured in favor of his client in a suit prosecuted by him. The client denied having authorized or ratified the release. The attorney's testimony upon the point was clear and explicit, and strongly fortified by circumstances, to which the client opposed a bare denial, unaccompanied by explanation of the circumstances. Hdd, that the authority must be presumed, although without the scope of the attorney's general employ- ment: Fritchey v. Bosley, 56 Md. 94. A's note being in the hands of attorneys for collection, they received from him cer- tain collaterals, consisting of claims on other parties, to be col- lected by them, and the proceeds applied to the note; and they gave to A their receipt, stipulating that he should not be sued on his note unless the collaterals could not be collected, and reciting that he guaranteed the payment of the collaterals. Suit being brought against A on his note, he pleaded the re- ceipt as a defense, alleging want of diligence on the part of the attorneys in respect of the collection of the collaterals. Held, that the attorney's receipt could afiord to A no defense to the action; if there was any breach of their contract with him, he had his remedy against them for damages: Bradford v. Arnold, 33 Tex. 412. § 174. Extent of Authority of Attorney as to Time. — The contract of an attorney to carry ou or defend a suit, or to do any other business, is an entire contract to con- duct the suit or business to its termination.' The ap- pointment of a person as "permanent solicitor" does not mean an appointment for life.^ The appointment of an 1 2 Greeul. Ev., sec. 142; Bathgate 90; Langdou v. Castleton, 30 Vt. V. Haskin, 59 N. Y. 533; Mygatt v. 285. Wilcox, 45 N. Y. 306; 6 Am. Rep. 2 Weeks on Attorneys, sec. 188. § 175 PRINCIPAL AND AGENT. 294 attorney under an agreement that lie ia to receive a stated amount per year for his services is a contract for a year at least.' The authority continues until judgment or other termination of the suit.* § 175. Ratification of Unauthorized Acts. — As in other cases of agency, the client may ratify the unauthorized acts of the attorney.' Where an action is commenced by an attorney at law, without the knowledge or consent of the plaintiff, the plaintiff may afterward ratify the same, and thereafter be entitled to all its benefits.^ So a defect in the employment of an attorney to bring a suit for a town may be cured by a subsequent ratification.^ An unauthorized appearance by an attorney in a case where there has been no personal service on the defendant may be so ratified by payment to the attorney of compensation for his services as to confirm the jurisdiction and validate the judgment.* But the ratification must be made on knowledge of all the facts.'' A ratification of an unauthor- ' Weeks on Attorneys, sec. 188. accomplished. No right of action ac- - Jackson v. Bartlett, 8 Johns. 362; crues for each successive service ia the Love V. Hall, 3 Yerg. 408; Kellogg v. progress of the cause, and the statute Gilbert, 10 Johns. 220; 6 Am. Dec. does not begin to run against his claim 335; Lusk v. Hastings, 1 Hill, 656; for compensation until his relation as Hillegass v. Bender, 78 Ind. 225. The attorney in tlie suit has terminated, attorney's functions are terminated by The client may terminate it at his the entry of judgment, though void; pleasure, or the attorney may do so and the employment of a new attorney after reasonable notice; but in the to enforce the judgment, and his issu- absence of proof to the contrary, the iug execution, is a complete substitu- presumption is that it continues until tion, so that service of papers for a the litigation has ended." stay is properly made on him: Ward ' Agency, Chapter VI., anfe; Taylor ■<■. Sands, 10 Abb. N. C. 60. In Bath- v. Sutton, 6 La. Ann. 709; Mason u. gate V. Haskin, 59 N. Y. 533, An- Stewart, 6 La. Ann. 736; Brooks v. drews, J., said: "The authority of an Poirier, 10 La. Ann. 512; Narraguagus attorney who is employ ed to prosecute v. Wentworth, 36 Me. 339; Mayer v. or defend a suit, in the absence of Foulkrod, 4 Wash. 511; Johnson v. special circumstances, continues, by Cunningham, 1 Ala. 249; King?). Pope, virtue of his original retainer, until it 28 Ala. 601 ; MarshaU v. Moore, 36 111. is finally determined. The contract 321. of the attorney is entire, and the ser- * Dresser v. Wood, 15 Kan. 344. vice he is to render ia essentially single, "Lisbon v. Holton, 51 N. H. although it may require distinct steps 209. and proceedings on his part before the ' Ryan v. Doyle, 31 Iowa, 53. purpose of the employment is fully ' Williama v. Keed, 3 Mason, 405. 295 AUTHORITY AND POWERS OP ATTORNEY. § 175 ized agreement is not proved by the entry of such agree- ment on the minutes of the court, in a cause to which it relates, in the presence of the party's attorney.' Illustrations. — After judgment on a marine poHcy recov- ered in the name of E. T., owner of a one-eighth interest, W. T., owner of the other seven eighths, settled with E. T.'s attorney, received the money collected, and promised to pay the assignee in bankruptcy of E. T. his share thereof. Held, that W. T. thereby ratified the action of the attorney, and that assumpsit for money had and received would lie upon such special prom- ise: Vose V. Treat, 58 Me. 378. 1 Bevis V. Wallace, 2 Heisk. 658. § 176 PRINCIPAL AND AGENT. 296 CHAPTER XVI. LIABILITY OF ATTORNEY TO CLIENT. § 176. Duty of attorney to client — Dealings between attorney and client. § 177. Duty to render accounts — Mixing money. § 178. Duty to notify client of collection of money. § 179. Duty to pay over money. § 180. Skill required of attorney ia his profession — Liable for negligence. § 181. Negligence a question of fact. § 182. Liability of attorney for mistakes of law. § 183. Mistakes in drawing papers and pleadings. § 184. Mistakes in prosecution of suit. § 185. Mistakes in giving advice. § 186. Measure of damages. § 187. Attorney must follow client's instmotiona. § 188. Liability of attorney for mistakes or frauds of agents or associates. § 189. Liability for acting without authority. § 190. Liability for acting in excess of authority. § 191. Not liable as to matters outside his profession. § 192. Remedy is against attorney alone — Proceedings not affected. § 193. Summary jurisdiction as to attorneys. § 194. When summary jurisdiction will and will not be exercised. § 195. For what acts summary jurisdiction will be exercised. § 176. Duty of Attorney to Client — Dealings between Attorney and Client. — The highest degree of good faith is required of an attorney towards his client. "The court, from general principles of policy and equity, will always look into the dealings between attorney and client, and guard the latter from any undue consequences resulting from a situation in which he may be supposed to stand unequal." * The rule applicable to transactions between attorney and client is, that the attorney who bargains with his client in a matter of advantage to himself is ' Starr w. Vanderheyden, 9 Johns, liams t>. Reed, 3 Mason, 405; Tancre?;. 253; Millsw. Mills, 26 Conn. 213; Bibb Reynolds, 35 Minn. 476. The juris- 17. Smith, 1 Dana, 582; Miles v. Ervin, diction of charges of fraudulent deal- 1 McCord Ch. 524; 16 Am. Dec. 623; ings between attorney and client is in Jenniags V. McConnel, 17 111. 148; equity: Broyles v. Arnold, 11 Heisk. Gray v. Emmons, 7 Mich. 533; Wil- 484. 297 LIABILITY OF ATTypNEY TO CLIENT. 177 bound to show that the transaction is fair and equitable, and that the client was fully informed of his rights and interests in the subject-matter of the transaction, and the nature and effect of the transaction itself, and was so placed as to be able to deal with the attorney at arms' length.* He cannot be allowed to purchase the subject- matter of the suit; the client may set aside such a pur- chase on discovering it.^ Nor can he purchase from the client or take gifts from him.* § 177. Duty to Render Accounts — Mixing Money. — It is the duty of an attorney to render correct accounts to his client,'' and he is liable for any loss he may sustain from not paying over his client's money, but mixing it 1 Kisling 11. Shaw, 33 Cal. 423; 91 Am. Deo. 644; Bingham v. Salenc, 15 Or. 203; 3 Am. St. Hep. 152. 'Smith V. Brotherline, 62 Pa. St. 461 ; Brotherson v. Consalus, 26 How. Pr. 117. A purchase is void which is of an interest in property adverse to a client for whom he is then acting: Cun- ningham w. Jones, 37 Kan. 477; 1 Am. St. Rep. 257. In Valentine u. Stewart, 15 Cal. 387, the court say: "The true rule is, that an attorney when acting for his client is bound to the most scrupu- lous faith, to uberrima fides. His own interests, for wise reasons, are not al- lowed to bo brought in collision with the interests o£ his client. There can be no antagonism between these par- ties as to the matters of this delicate agency; the attorney is simply the representative of his client, — not his rival or competitor, — acting for the principal, not for himself. Very little knowledge of human nature is re- quired to convince us that if the law allowed the attorney to deal with the principal as he might with a stranger, these responsible trusts, upon which the interests of society so much de- pend, would be turned into means of the grossest fraud and oppression. The law has, therefore, prescribed strict rules of restraint upon the ac- tion of the attorney, and will never permit him to take advantage of his position to speculate upon the inter- ests which are intrusted to him. Even in the case of a purchase of the sub- ject of the suit by the attorney, the client may set it aside at his pleasure, unless the attorney show by clear and conclusive proof that no advantage was taken, that everything was ex- plained to the client, and that the price was fair and reasonable. But no case has come to our knowledge where an attorney has been permitted, after once acting as such in the prosecution of a suit, and having opportunities for knowing the facts of his client's case, to go over and render assistanco to the adverse side, and enforce in a court of equity the contract based on such acts or the agreement to do them. " ^ Weeks on Attorneys, sees. 273, 281. An attorney at law is bound to ob- serve the utmost good faith towards his client on purchasingpropertyfi-omhim, and to draught all papers pertaining to the transaction, with such caro and skill that they shall express the real understanding of the parties: Payne v. Avery, 21 Mich. 524. To sustain a gift from a client to his attorney, the burden is upon the latter to show, not only that it is voluntary, but also that it is made with full knowledge of all material facts known to him, and with- out undue influence: Whipple v. Bar- ton, G3 N. H. G13. * Weeks on Attorneys, sees 202, 282; Scott v. Wickli£fe, 1 B. Mou. S53. §§ 178, 179 PRINCIPAL AND AGENT. 298 with his own.* If important papers, upon which the client's liberty depends, are intrusted to an attorney, he should not only return them when the relation of attor- ney and client ceases, but should not willfully do any- thing by which another can gain information concerning such papers, to be used to the client's injury. If the client discharges the attorney without paying him, and employs another, that does not alter the case." Persons depositing notes with attorneys for collection have a right to demand and have an accounting, to know the condi- tion of the claims, and to receive the amounts collected, subject only to just exceptions.' Illusteations. — A complaint alleged that the plaintiff, to- gether with another party, had placed in the hands of the de- fendant, for collection, a large amount of claims; that these claims were all collectible, but were unaccounted for by the defendant, who had refused to render any account thereof to the plaintiff upon his demand. Held, that the plaintiff could not recover of the attorney the value of the notes, or the notes themselves, but that he was entitled to an accounting, and to receive any money that had been collected : Bougher v. Scobey, 23 Ind. 583. A woman employed an attorney to collect the interest on a third mortgage for $8,000. The mortgagor failed. The woman sold the mortgage to the attorney for $975, and on her expressing dissatisfaction afterwards, he gave her $900 more, she first having unsuccessfully tried, with his consent, to find another purchaser. He. afterwards realized $2,325 on the mortgage. Held, that he should be required to account to her for this amount: Dunn v. Dunn, 42 N. J. Eq. 431. § 178. Duty to Notify Client of Collection of Money. — It is the duty of the attorney to immediately notify the client when money has been collected by him, and await the client's instructions.'' § 179. Duty to Pay over Money. — Likewise it is the attorney's duty to at once pay over to the client money ' Robinson v. Ward, 1 Ryan & M. ' Bougher v. Snobey, 23 Ind. 583. 274. * Weeks on Attorneys, sec. 263; ■' In re Hahn, 11 Abb. N. 0. 423. Denton v. Embury, 10 Ark. 228. 299 LIABILITY OF ATTORNEY TO CLIENT. 179 received for him.' If he has notified the client of the receipt of the money, the latter has no cause of action against him for the sum, until after a demand and re- fusal.'^ Declarations of the attorney that he intends to retain money collected hy him, to indemnify himself for a fraud committed on him by the plaintiflF, do not dis- pense with the necessity of a demand, unless made to the plaintiff's agent, or brought to his knowledge before suit commenced.^ But an engagement to pay it over, when collected, to a third party,- and a failure to do so, dis- penses with demand.* An attorney who has collected money is not liable to the nominal claimant, if the claim were handed by him to the actual client, and the attorney has paid it over to him without notice.^ The promise of an attorney at law, who has received a debt for collection. ^ Weeks on Attorney, sees. 264, 308. 2 Mardis v. Shaokleford, 4 Ala. 493; Jett V. Hempstead, 25 Ark. 462; Bathbun v. Ingala, 7 Wend. 320; Taylor v. Bates, 5 Cow. 376; Cummins V. McLain, 2 Ark. 402; Denton v. Embury, 10 Ark. 228; Blacks. Hersch, ISInd. 342; 81 Am. Dec. 362; Beards- ley V. Boyd, 37 Me. 180; Satterlee v. Frazer, 2 Sand. 141; Walradt w. May- nard, 3 Barb. 584; Voss v. Bachop, 5 Kan. 59; Roberts v. Armstrong, 1 Bush, 263; 89 Am. Dec. 624; Krause V. Dorrance, 10 Pa. St. 462; 51 Am. Dec. 496, the court saying: "An attor- ney ia not liable to suit for money col- lected for another, till demand or direction to remit. As is said in one of the cases, he is not considered in default until he receives orders from his principal. This principle seems to be well settled in several states, in- cluding New York, Virginia, Alabama, and Arkansas, as may be seen from the following cases: Taylor v. Bates, 5 Cow. 376; Ex parte Ferguson, G Cow. 596; Rathbun v. lugals, 7 Wend. 323; Taylor v. Armstead, 3 Call, 200; Cummins v. McLain, 2 Ark. 402; and Mardis u. Shackleford, 4 Ala. 493. In Maine it has been ruled by the same judge in both ways: Staples v. Staples, 4 Greenl. 532; and Coffin v. Coffin, 7 Greenl. 298. This is a case of the first impression in this state, but we feci disposed to follow the current of decisions, for we agree that for a client to sue his attorney for money col- lected, without notice, woul.l be very harsh, if not reprehensible, conduct; and for this reason it is that this is the first time the point has arisen in this state, for no counsel would be so unconscientious to a brother as to sue him without demand. It is, perhaps, but an act of justice to the attorney to state, that, although not proved, yet he alleges notice was given before the commencement of the suit. The point is not of much practical importance, as the case will seldom arise, and never unless there are some improper feelings to gatity. But although the general rule be as stated, it is not without exception, for circumstances may exist which will dispense with the necessity of a demand; as, when the attorney has been guilty of fraud or malpractice, or of culpable negli- gence in not giving notice of the re- ceipt of the money in a reasonable time; or when he puts in a sham plea for delay; or when he exhibits a mani- fest desire to bafde the plaintiff, and withhold from him his just demand." 3 Rathbun v. In';alb, 7 Wend. 320. * Mardis v. Shac'kloiord, 4 Ala. 403. * Penny v. Caldwell, 1 Bail. 345. § 179 PRINCIPAL AND A.GENT. 300 to pay the amount of his debt upon his ultimate failure to collect it, if supported by a suflBcietit consideration, is valid and binding; but the mere confidence in the advice of the attorney, or acquiescence in the course he wished to pursue in the matter, would not be sufficient to sup- port an action upon the promise; but if the client should agree not to withdraw the business from the hands of the attorney, or consent, on the faith of such promise, to waive a proceeding which otherwise he would have taken, and by reason of which his debt would have been secured, it would be otherwise/ An attorney is liable as garnishee of his principal, after the money is collected, though it has not been demanded.^ Where an attorney deposits' his client's moneys in a solvent bank in his own name in a separate account, but with no indication of the trust, he is liable for loss by the subsequent insolvency of the bank, notwithstanding he was prevented from transmit- ting the moneys by garnishment proceedings against him.^ Illustrations. — An attorney, in whose hands a note was placed for collection, received part payment thereof, after action commenced, and nevertheless took judgment for the whole amount of the note, on default of the promisor. Held, that the latter might recover of the attorney the money so paid, though the attorney had paid it over to the creditor: Fowler v. Shearer, 7 Mass. 14. An attorney collected money for the defendant, and remitted the amount by the draft of one bank on another, payable to the attorney's order, and indorsed by him. The defendant received the money, and directed the attorney " to send the balance in the same way." The attor- ney sent another sum in the same manner. The draft was re- ceived by the defendant, but before it could be collected the drawer failed, and it was not paid. Held, that the attorney was not Hable as indorser: Kimmell v. Bittner, 62 Pa. St. 203. An attorney, having collected a claim, deducted his fees, and deposited the balance in a bank, which was then solvent and in good standing, to the credit, not of his private account, but » Morrill v. Graham, 27 Tex. 646. » Naltner v. Dolan, 108 Ind. 500; 58 2 Staples V. Staples, 4 Me. 533; Am, B«p. 61. Thayer v. Sherman, 12 Mass. 441. 801 LIABILITY OP ATTORNEY TO CLIENT. § 180 of an account called the collection aceoufit, to the credit of ■which he was in the habit of depositing all moneys collected for clients. The name of the client for whose benefit the de- posit was made was entered in the bank-book Opposite the entry of the deposit. The client neglected to call for his money for some years, and until after the bank had become insolvent. Held, that the attorney was not liable for the money so de- posited and lost: Pidgeon v. Williams, 21 Gratt. 251. § 180. Skill Required of Attorney in his Profession — Liable for Negligence. — An attorney is responsible to his client for the want of ordinary skill and care, and reason- able diligence, in the management of his affairs.^ The want of ordinary care and skill, it is said, is gross negli- gence,^ and therefore it is held that an attorney is liable only for gross ignorance or gross negligence in the perform- ance of his professional duties.' The authorities seem to agree that where a client has suffered damage through the gross negligence or gross ignorance of his attorney, he has a right of action against him for the damages sustained.* '■ Montriou v. Jefferys, 2 Car. & P. general, that an attorney is liable for 113; Wilson v. Russ, 20 Me. 421; the consequences of ignorance or non- Weimer v. Sloame, C McLean, 259; Ex observance of the rules of practice of parte Giberson, 4 Craneh C. C. 503; this court; for want of care in the Cox V. Sullivan, 7 Ga. 144; 50 Am. preparation of the cause for trial, or Dec. 386; O'Barr v. Alexander, 37 Ga. of attendance thereon with his wit- 195; Holmes v. Peck, 1 R. I. 242; nesses; and for the mismanagement of Wilcox V. Plummer, 4 Pet. 173; Wynn so much of tKo conduct of a cause as is V. Wilson, Hemp. 698; Bowman v. usually and ordinarily allotted to his Tallman, 27 How. Pr. 212; Gambert department of the profession. But, on V. Hart, 44 Cal. 542; Gallaher v. the other hand, he is not answerable for Thompson, Wright, 466; Stevens v. error in judgment, upon points of now Walker, 55 111. 151; Watson v. Muir- occurrence, or of nice and doubtful con- iead, 57 Pa. St. 161; 98 Am. Dec. 213. struction, or of such as are usually in- In Godefroy v. Dalton, 6 Bing. 467, 4 trusted to men in the higher branch of Moore & P. 149, Tindal, C J., ex- the profession of the law." plained the rule of an attorney's lia- ' Weeks on Attorneys, sec. 285; bilitywith much clearness: "It would Pennington u. Yell, 11 Ark. 212; 52 be extremely difficult to define the ex- Am. Dec. 262. act limit by which the skill and dili- * Pennington i'. Yell, 11 Ark. 212; gence which an attorney undertakes 52 Am. Dec. 262; Evans v. Watrous, to furnish in the conduct of a cause is 2 Port. 205. bounded; or to trace precisely the * Hopping v. Quin, 12 Wend. 517; dividing line between that reasonable Estate of A. B,, 1 Tuck. 247; Hatch skill and diligence which appears to v. Fogerty, 10 Abb. Pr., N. S., 147; satisfy his undertaking, and that Eggleston v. Boardman, 37 Mich. 14; crassa negligentia, or lata culpa, men- Morrill v. Graham, 27 Tex. 647 ; Sevier tioned in some of the cases, for which u. Holliday, 2 Ark. 512; Palmer v. he is undoubtedly responsible. The Ashley, 3 Ark. 75; Wilson v. Russ, 20 cases, however, appear to establish, in Me. 421; Evans v. Watrous, 2 Port. § 180 PRINCIPAL AND AGENT. 302 The undertaking implied by the law, from a person's en- gaging in the business of searching the public records, examining titles to real estate, and making abstracts thereof, for compensation, is, that he possesses the requi- site knowledge and skill, and will use due and ordinary- care in the performance of the duty. For a failure in either of these respects, resulting in damages, the party injured is entitled to recover.' An attorney employed to examine a land title cannot set up, in defense to an ac- tion for damages for his negligence in overlooking a lien on such lands, that such lien was erroneous or of doubtful validity.^ An attorney employed to record a mortgage, but who neglects to do so until after other subsequent en- cumbrances have been recorded, is liable immediately to the mortgagee for all the damages which are likely to be sustained by his default.' If the attorney of a judgment defendant receives money to pay the judgment, and pays it over to the clerk of the court, he is not liable for the insolvency of the clerk;* that the plaintiff continued to employ him after knowing of such negligent conduct is relevant on the question of damages.^ A contract by an attorney to save his client harmless from all responsibility in a suit pending against him, or to refund his fee, con- 205; CBarr v. Alexander, 37 Ga. 195; tained by a court of last resort Caverley v. McOwen, 123 Mass. 574; He only undertakes to avoi4 errors Gleason v. Clark, 9 Cow. 58; Wilson -which no member of his profession of V. Coffin, 2 Cush. 316; Hastings v. ordinary prudence, diligence, and skill Halleck, 13 Cal. 203; Nisbet v. Law- would commit It is not enough son, 1 Ga. 275; Cox v. Sullivan, 7 Ga. that doubts may be raised of the 144; 50 Am. Dec. 386; Holmes v. soundness of his opinion or correct- Peck, 1 R. I. 242; Suydam v. Vance, ness of his course, unless they are 2McLean, 99; Reillyw. Kavanaugh, 29 accompanied by the absence of all Ind. 435; Mardis v. Shaokleford, 4 Ala. reasonable doubts of the propriety of 493; Walkeri;. Scott, 13 Ark. 644; Ste- an opposite course or opinion in the vens V. Walker, 55 111. 151; Chase v. mind of every member of his profes- Heaney, 70 111. 268. In Bowman v. sion of ordinary skill, sagacity, and Tallmann, 27 How. Pr. 274, it is said: prudence, caused by a decisiveness of "There is no implied agreement in reason and authority in its favor." the relation of counsel and client, or ^ Chase v. Heaney, 70 111. 265; Ran- in the employment of the former by kin v. Schaeffer, 4 Mo. App. 108. the latter, that the former will guar- ^ Gilman v. Hovey, 26 Mo. 280. antee the success of his proceedings in ' Miller v. Wilson, 24 Pa. St. 114. a suit, or the soundness of his opinions, • Hillegass v. Bender, 78 Ind. 225. or that they will be ultimately sus- ' Derrickson v. Cady, 7 Pa. St. 27. 303 LIABILITY OP ATTORNEY TO CLIENT. §§ 181, 182 ceding it to be valid, extends only to such liabilities as the law would recognize or enforce; and if the client suffers a judgment to be rendered against him in favor of another attornej'' whom he never had employed, for professional services in the same suit, he cannot resort to his contract of indemnity.* In England, while attorneys are respon- sible to their clients for negligence, counsel or barristers are not. In the United States this distinction does not exist.^ The negligence of the client does not affect the liability of the attorney.' Illustrations. — Plaintiff handed to certain attorneys claims against a bankrupt, " to file against the estate, and to obtain any dividend that may be allowed on the same." Held, that this did not show a special contract to resist the bankrupt's dis- charge, and that the attorneys were entitled to use their dis- cretion in withdrawing such resistence: Bennett v. Phillips, 57 Iowa, 174. A person having title papers to land placed in his hands as agent and attorney, with authority to effect a sale of the land, intrusted the papers to a third person for examination, and with a view of making a sale to him. The party so in- trusted with the papers, being charged with some crime, ab- sconded and took the papers with him. Held, that this act of the agent, which resulted in a loss of the papers, was not negli- gence on his part so as to impose any liability on him therefor: Stanberry v. Moore, 56 111. 472. § 181. Negligence a Question of Fact. — Whether the conduct of the attorney in a particular case is or is not gross negligence, is a question to be determined in each case by the jury on the evidence.* In California, how- ever, the facts being ascertained, the question of negli- gence is one of law for the court.* § 182. Liability of Attorney for Mistakes of Law. — An attorney is not liable for a mistake in a point of law which * Lindsey v. Jones, 23 Ala. 835. nington v. Yell, 11 Ark. 212; 52 Am. ^ Weeks on Attorneys, sec. 289. Dec. 262; Dearborn v. Dearborn, 15 » Cox V. Sullivan, 7 Ga. 144; 50 Am. Mass. 315; Walpolew. Carlisle, 32 Ind. Deo. 386. 415. ♦ Walker v. Goodman, 21 Ala. 647; * Gambert v. Hart, 44 Cal. 542. Evans v. Watrous, 2 Fort. 205; Pen- § 182 PRINCIPAL AND AGENT. 304 is in doubt, or for a wrong construction of a doubtful statute.' So, as observed in the supreme court of the United States, an attorney cannot be charged with negU- gence when he accepts, as a correct exposition of the law, a solemn decision of the supreme court of the state.^ An error of judgment upon a doubtful question of the con- struction of a statute is not evidence of a want of skill or of negligence.^ Where a father, whose minor son has received injuries through the negligence of a third party, employs counsel to sue him for damages, no legal obliga- tion is, in the absence of an express understanding, im- posed on said counsel to bring suit in the name of the father as well as in that of the son. Particularly so, where the right of recovery is uncertain, and where the father, after the suit in the son's name is brought, makes no complaint of the omission to sue in his name also.* An attorney employed to draw a building contract is not delinquent in the performance of his duty if he does not file the contract so as to prevent liens from attaching, especially if he is an attorney of another state than that where the building is to be erected.^ And a conveyancer is not liable for passing a title with an encumbrance when in his opinion the encumbrance was not legally a lien, though it turns out otherwise." An attorney is liable ' Morrill v. Graham, 27 Tex. 646; quaintance with the general principles Crosbie v. Murphy, 8 I. R. C. L. 30 1 ; of the law of real property, and a large Elkingtoa v. Holland, 9 Mees. & W. amount of practical knowledge, which 658; Buhner v. Gilman, 4 Man. & G. can only he derived from experience. 108. In England, it has been pursued by ■■' Marsh v. Whitmore, 21 Wall. 178; lawyers of the greatest eminence. As Hastings v. Halleck, 13 Cal. 203. our titles become more complex with ^ Caverly v. McOwen, 123 Mass. the increase of wealth, and the de- 574; Bulmer o. Gilman, 4 Man. & G. sires which always accompany it to 108. continue it in our name and family as * Youngman v. Miller, 98 Pa. St. long as the law will permit, it will 196. become more and more necessary that ' Fenaille v. Coudert, 44 N. J. L. gentlemen prepared by a coarse of 286. liberal education and previous study ' Watson V. Muirhead, 57 Pa. St. should devote themselves to it. There 161; 98 Am. Dec. 213. In this case it have been and still are such among us. was said: " The business of a convey- The rule of liability for errors of judg- ancer is one of great importance and ment as applied to them ought to be responsibility. It requires an ac- the same as in the case of gentlemen 305 LIABILITY OP ATTORNEY TO CLIENT. 183 for mistaues of well-known principles and rules of law;' as, that a note is not due until the expiration of the three days of grace, and cannot be sued on before that.^ So the disregard of a plain statutory provision is negligence for which the attorney is liable.^ § 183. Mistakes in Drawing Papers and Pleadings. — He is liable for mistakes negligently made in drawing papers and pleadings;* as, for suing for twelve dollars in- stead of twelve hundred.* But he cannot be held liable for his mistake in misdescribing land on which he was employed to enforce his client's lien, if, notwithstand- ing, it does not appear that his client has sustained damage.® in the practice of law or medicine. It is not a mere art, but a science. 'That part of the profession,' said Lord Mansfield, 'which is carried on by attorneys is liberal and reputable, as well as useful to the public, when they conduct themselves with honor and integrity; and they ought to be protected, when they act to the best of their skill and knowledge. But every man is liable to error; and I should be very sorry that it should be taken for granted that an attorney is answer- able for every error or mistake A counsel may mistake as well as an attorney. Yet no one will say that a counsel who has been mistaken shall be charged Not only counsel, but judges, may dififer, or doubt, or take time to consider. Therefore an attorney ought not to be liable in case of a reasonable doubt ': Pitt v. Yalden, 4 Burr. 2060. The rule declared by Lord Mansfield has been followed in all the subsequent cases. ' No attor- ney,' said Abbott, C J., 'is bound to know all the law; God forbid it that should be imagined that an attorney, or a counsel, or even a judge, is bound to know all the law; or that an attor- ney is to lo.se his fair recompense on account of an error, being such an error as a cautious man might fall into': Montriou v. Jefierys, 2 Car. & P. 113; and see Godefroy v. Dalton, 6 Vol. I.— 20 Bing. 460; Kemp v. Burt, 4 Barn. & Adol. 424; Gilbert v. Williams, 8 Mass. 51; 5 Am. Dec. 77." ' Goodman v. Walker, 30 Ala. 4S2; 68 Am. Dec. 134; Morrill t. Graham, 27 Tex. 646. ^ Hopping V. Quin, 12 Wend. 518. In Goodman v. Walker, supra. Stone, J., said: "I lay down the rule, then, for the determination of this case as follows: If the law governing the bringing of this suit was well and clearly defined, both in the text-bookd and in our own decisions, and if the rule had existed and been published long enough to justify the belief that it was known to the profession, then a disregard of such rule by an attorney at law renders him accountable for the losses caused by such negligence or want of skill: negligence, if knowing the rule he disregarded it; want of skill, if he was ignorant of the rule." * C'averley v. McOwen, 123 Mass. 575; Estate of A. B., 1 Tuck. 236. * Varnum v. Martin, 15 Pick. 440; Rootes V. Stone, 2 Leigh, 650; Reilly V. Kavanaugh, 29 Ind. 435; Oldham V. Sparks, 28 Tex. 425; Fitch v. Scott, 3 How. (Miss.) 314; 34 Am. Dec. 86. See Watson v. Muirhead, 57 Pa. St. 161, 98 Am. Dec. 213, as to convey- ancers. ^ Varnum v. Martin, 15 Pick. 440. ' Joy V. Morgan, 35 Minn. 184. §184 PRINCIPAL AND AGKNT. 306 Illustrations. — An attorney, who was also a notary public, was held liable for neglect in not recording a mortgage which he had drawn for his client, and agreed to deliver to the record- ing officer: Stott v. Harrison, 73 Ind. 17. § 184. Mistakes in Prosecution of Suit. — It is negli- gence in an attorney to bring an action too soon,^ or to neglect to bring it until too late to recover,^ or to bring it in a wrong county,^ or in a court which has not juris- diction of the suit/ or to improperly dismiss a suit.^ He is liable for neglect in prosecuting a motion for a new trial, whereby it is not finally awarded to his client." It is the duty of the attorney employed to collect a debt to sue out all the necessary process to enforce the claim, and for a failure to do so he is liable to the client.' Thus he ' Hopping V. Quin, 12 Wend. 518. '' Smedes v. Elmendorf, .3 Johna. 185; Oldham v. Sparks, 28 Tex. 425; Walsh V. Shumway, 65 111. 471; Ste- vens V. Walker, 55 111. 151. To sup- port an action against an attorney for the amount of bills left with him for collection, where nothing heis been collected on them, it ia necessary to show culpable negligence in collecting: Palmer v. Ashley, 3 Ark. 75. ' Kemp V. Burt, 4 Barn. & Adol. 424. * Williams v. Gibbs, 5 Ad. & E. 208. * Evans v. Watrous, 2 Port. 205; Coopwood V. Baldwin, 25 Miss. 129; Walpole V. Carlisle, 32 Ind. 415. ^ Drais v. Hogan, 50 Cal. 121. ' Crocker v. Hutchinson, 2 D, Chip. 117; McWilliams «. Hopkins, 4 Rawle, 382; Fitch v. Scott, 3 How. (Miss.) 314; 34 Am. Dec. 86; Hogg v. Martin, Riley, 156; Wright v. Ligon, Harp. Eq. 137; Stevens v. Walker, 55 111. 151; Smallwood v. Norton, 20 Me. 83; 37 Am. Dec. 39; Cox v. Sullivan, 7 Ga. 144; 50 Am. Dec. 386. In Pen- nington u. Yell, 11 Ark. 212, 52 Am. Deo. 262, a leading case on the liability of the attorney, the court say: "As authority and duty in the relation of client and attorney are correlative terms, in the same sense that right and obligation are so, in a general sense, it results from the law as it now stands, that when an attorney undertakes the collection of a debt, it becomes his duty to sue out all process, both mesne and final, ne- cessary to effect that object; and con- sequently, that he must not only sue out the first process of execution, but all such that may become necessary. This undoubtedly is the true general doctrine on this subject, qualified, however, as will be presently seen, by a pervading principle that fairly grows out of the peculiar character of the attorney's functions. But although it ia his duty thus to pursue his client's cause through all its stages, he is not imperiously bound to institute new collateral suits, without special in- structions to do so; aa, actions against the sheriff or clerk for the failure of their duty in the issuance or service of proceas. He should puraue bail, how- ever, and thoae who may have become bound with the defendant, either be- fore or after judgment, in the progress of the suit. Nor is he bound to at- tend in person to the levy of an exe- cution, or to search out for property out of which to make the debt, this is the business of the sheriff. Nor ia he liable for any of the shortcomings of that officer. But in reference to all these professional duties, the courts have recognized a principle to which We have already alluded, that does 307 LIABILITY OF ATTORNEY TO CLIENT. § 184 is liable for a failure to seasonably sue out a scire facias where the execution has been returned 7ion est inventus,^ for not delivering an execution to the officer within thirty- days after judgment, if an attachment is lost thereby.^ He is not liable for the loss of papers stolen from him without negligence on his part.^ He is not guilty of neg- ligence in forbearing to bring a suit where the parties had agreed to leave one of the matters in dispute to arbi- tration, the decision of which would render an action unnecessary;^ nor in failing to pursue the extraordinary remedy of attachment, the owner of the claim having neither made affidavit nor given bond;' nor for omitting to defend a suit, if he be not instructed in the defense;® nor is he liable for a failure to file a note which he has received for collection by suit; as, a claim against the estate of the maker upon the deatla and declaration of the insolvency of the estate of the latter, when such facts occurred after he received the note, and without his knowledge.' Where an attorney is directed to collect a note containing no waiver of the appraisement laws, and obtains a judgment with such waiver, the client cannot complain, although the debtor's property sold for much not by any meana move the line reetly out of the peculiar character of between reasonable diligence and the functions of an attorney at law, crassa negUgentia, and thus in fact and to be founded on sound public place the attorney farther from re- policy; for in the nature of things sponaibility to his client; but so far these duties cannot in general be per- as its operation is in any sort to his formed in a manner to subserve the protection, it is so only by its infln- true interest of the client, if limited ence upon the determination of the to that strict line of routine conduct question of fact, whether or not the which is chalked out by the law as act or omission complained of did the pathway for ordinary agents, and really amount to that degree of crassi- it is therefore inevitable that in the tude for which the law holds him discharge of these duties tSey must liable. This principle is, that the at- be intrusted with a large and liberal torney will always be justified in ceas- share of discretion." ing to proceed with his client's cause ' Dearborn v. Dearborn, 15 Mass. (unless specially instructed to go on) 316. whenever he shall be bona Jide in- ^ Phillips «. Bridge, H Mass. 246. fluenoed to this course by a prudent ' Hill v. Barney, 18 N. H. 607. regard for the interest of his client: * Hogg v. Martin, Riley, 156. Crookerv. Hutchinson, 2 D. Chip. 117; ' Foulks v. Falls, 91 Ind. 315. 2 Greenl. Ev., 2d ed., sec. 145, p. 140. « Benton v. Craig, 2 Mo. 198. This principle would seem to grow di- ' Stubbs v. Beene, 37 Ala. 627. §§ 185, 186 PRINCIPAL AND AGENT. 308 less than its value, and the whole amouot of the judg- ment was not realized.^ Illustrations. — A demand against persons known to be in- solvent was left with an attorney, with instructions to do the best he could with it. He received the notes of third persons for the debt, but in consequences of the fraud of the debtors, such notes were not collected. Held, that the attorney was not responsible for the loss, and a judgment obtained against him at law was restrained by injunction: Wright v. Ligon, 1 Harp. Eq. 166. An attorney employed to prosecute a suit for the recovery of valuable land, when a jury had returned a verdict in his favor, took the same, and by his n(3gligence and unskill- fulness altered the verdict so as to include only a worthless piece of the property sought to be recovered; and at his request the jury accepted the same as their verdict, to the plaintiff's damage. Held, that the attorney is liable: Skillen v. Wallace, 36 Ind. 319. An attorney is employed to conduct a case in the district court, and a judgment is rendered against his client, and he is entitled to a new trial and obtains one, but conducts the proceedings in obtaining the new trial so care- lessly and negligently that the order granting the same is reversed in the supreme court: Held, that he is liable to the client for the loss sustained thereby, and his liability is not destroyed by the fact that his client employed other counsel in the supreme court: Drais v. Hogan, 50 Cal. 121. § 185. Mistakes in Giving Advice. — The attorney is liable where be gives to the client plainly erroneous advice, from which the client, by following, is damaged.^ § 186. Measure of Damages. — The client must have suffered an injury, or he cannot maintain an action even for nominal damages.^ " Two things are to be shown in order to subject an attorney to an action: 1. Gross or unreasonable negligence or ignorance; and 2. A conse- quent loss to his client."'' The measure of damages is the actual loss sustained,* and not necessarily the amount » Nicklesa v. Pearson, 81 Ind. 427. * Fitch v. Scott, 3 How. (Miss.) 314; 2 Gihon V. Albert, 7 Paige, 278. 34 Am. Deo. 86. ' Grayson v. Wtlkerson, 13 Miss. ° Pennington v. Yell, 11 Ark. 212; 268; Suydam v. Vance, 2 McLean, 99; 52 Am. Dec. 262; Stevens v. "Walker, Harter v. Morris, 18 Ohio St. 492; 53111. 151; Rootes v. Stone, 2 Leigh, Arnold V. Robertson, 3 Daly, 298; 050; Crookeru Hutchinson, 2D. Chip. Bruce v. Baxter, 7 Lea, 477. 117; Kisbeit). Lawson, 1 Ga. 275; Cox 309 LIABILITY OF ATTOTINEY TO CLIENT. § 187 of the claim which was not recovered, through the negli- gence of the attorney.* The client must show that he had a valid claim.^ An attorney is liable to his client onlj?^ for the proximate results of neglect in making col- lections. If, after the client took the business from the hands of the attorney, loss resulted from further delay of the client, or of another attorney into whose hands the collections were given, the first attorney cannot be held responsible for such loss.* An attorney, liable for a debt lost by his negligence, is not liable for the loss of the evi- dence of the debt; and in a suit against him for such loss, he may show that the plaintiff had another remedy, which he had successfully pursued.^ The amount of damages is a question for the jury.^ Illusteations. — A places certain demands in the hands of an attorney, who agrees to collect the amount, and pay over the proceeds to creditors of A, such creditors being no party to the agreement. Held, that A may maintain an action against the attorney for a failure to collect and pay over the amount of the debts: Mardis v. Shackleford, 6 Ala. 433. § 187. Attorney must Follow Client's Instructions. — The attorney must follow the instructions of his client. "Whenever an attorney disobeys the lawful instructions of his client, and a loss ensues, for that loss the attorney is responsible."* As to the general conduct of the suit, V. Sullivan, 7 Ga. 144; 50 Am. Dec. out of the injury, even up to the day 386; Mai-dis v. Shackleford, 4 Ala. 493; of the verdict. " Eccles V. Stephenson, 3 Bibb, 517; Ar- ' Ecclea v. Stephenson, 3 Bibb, 517; nold 0. Robertson, 3 Daly, 298; Suy- Crooker«. Hutchinson, 2D. Chip. 117; dam !). Vance. 2 McLean, 99; Grayson «. Cox v. Sullivan, 7 Ga. 144, 50 Am. Wilkinson, 5 Smedea & M. 268; Lang- Dec. 386. made v. Glenn, 57 Ga. 528. In Wil- '' Spiller v. Davidson, 4 La. Ann. cox V. Plummer, 4 Pet. 172, it is said: 171; Pennington v. Yell, 11 Ark. 212; " When the attorney was chargeable 52 Am. Dec. 262. with negligeiice or unskillfulness, his ' Read v. Patterson, 11 Lea, 430. contract was violated, and the action * Huntington v. Rumnill, 3 Day, might have been sustained imme- 390. diately. Perhaps, in that event, no ^ Godefroy v. Jay, 5 Moore & P. 284; more than nominal damages may be Crocker i). Hutchinson, 2D. Chip. 117; proved, and no more recovered; but, on Bocles v. Stephenson, 3 Bibb, 517. the other hand, it is perfectly clear ^ Gilbert v. Williams, 8 Mass. 51; 5 that the proof of actual damage may Am. Dec. 77; Kave v. Baird, 12 Ind. extend to facts that Occur, and grow 318; Wilejx v. Plummer, 4 Pet. 172; § 188 PRINCIPAL AND AGENT. 310 the attorney acts according to his judgment and discre- tion. In these matters the client has no right to control him; he may do what he thinks is proper, even though against the wishes of the client.^ Illustrations. — The holder of a note places it in the hands of an attorney, and instructs him to bring suit on it. The attorney, honestly believing that it would be better not to sue then, omits to do so, and the money is lost by the maker's sub- sequent insolvency. The attorney is liable to an action by the client: Cox v. Livingston, 2 Watts & S. 103; 37 Am. Dec. 486. § 188. Liability of Attorney for Mistakes or Frauds of Agents or Associates. — An attorney is liable for the negli- gence or fraud of another attorney whom he employs as his agent.^ So each partner in a firm of attorneys is lia- ble for the want of skill or negligence of the others.* For like reasons, a mercantile collecting agency receiving a note "for collection" is liable for the negligence of attor- neys or agents employed by them in other parts of the country.* An attorney who has collected money for his Cox V. Livingston, 2 Watts & S. 103; ence, and giving the necessary infor- 37 Am. Dec. 486; Armstrong v. Craig, mation to the plaintiffs; or in briefer 18 Barb. 387. terms, that the attorney in Memphis ' Anonymous, 1 Wend. 108; Eead was not their agent for the collection, V. French, 28 N. Y. 292. but that of the plaintiffs only. The '■' Weeks on Attorney, see. 288; Rid- current of decision, however, is other- die V. Poorman, 3 Penr. & W. 224; wise as to attorneys at law sending Poole V. Gist, 4 McCord, 259; Walker claims to correspondents for collection, V. Stevens, 79 111. 193; Small wood v. and the reasons for applying the same Norton, 20 Me. 83; 37 Am. Deo. 39; rule to collection agencies are even Pollard V. Rowland, 2 Blackf. 22; stronger. They have their selected Grayson v. Wilkinson, 5 Smedes & M. agents in every part of the country. 268; Birkbeck v. Stafford, 14 Abb. Pr. From the nature of such ramified in- 285; Cummins v. Heald, 24 Kan. 600; stitutions, we must conclude that the 36 Am. Rep. 264. public impression will be that the ' Livinsgton v. Cox, 6 Pa. St. 360; agency invited customers on the very Dwight V. Simon, 4 La. Ann. 490; ground of its facilities for making Poole V. Gist, 4 McCord, 259; Wilkin- distant collections. It must be pre- Eon V. Griswold, 12 Smedes & M. 669. sumed from its business connections * Bradstreet v. Everson, 72 Pa. St. at remote points, and its knowledge 124, 13 Am. Rep. 665, Aguew, J., say- of the agents chosen, the agency in- ing: "It is argued, notwithstanding tends to undertake the performance of the express receipt 'for collection,' the service which the individual cus- that the defendants did not under- tomer is unable to perform for him- take for themselves to collect, but self. There is good reason, therefore, only to remit to a proper and respon- to hold that such an agency is liable Bible attorney, and made themselves for collections made by its own agents liable only for diligence in correspond- when it uodertakes the collectlaa by 311 LIABILITY OF ATTORNEY TO CLIENT. §§ 189, 190 client will, if he deliver it to a third person to carry- to his client, without authority or directions from the client so to do, be liable to his client for the sum thus collected if the same be stolen from such third person while on his way with the money, even though such per- son were trustworthy, and took the same care of the money that he did of his own/ Illustrations. — An attorney, directed by a mortgagee of cer- tain horses and harnesses to take possession of them under the mortgage, went with an officer to the stable where they were, and took possession of them. The stable was then leased from the mortgagor, and a custodian selected by the mortgagee was placed in charge of the property. Held, thatN the attorney was not liable for the custodian's neglect in permitting the property to be afterwards seized under an execution: Gaines v. Becker, 7 111. App. 315. § 189. Liability for Acting without Authority. — If an attorney commence or defend an action or suit without authority, he is liable to the principal for damages.^ An action for money had and received will lie against an at- torney who, having a debt to collect, receives in payment debts of himself or of others, without authorit.y from his principal.^ § 190. Liability for Acting in Excess of Authority. — So the attorney is liable to his client for damages arising the express terms of the receipt. If of losses by reason of insurrection or it does not so intend, it has it in its war.' The limitation of the liability of power to limit responsibility by the Bullitt and Fairthoru by Mr. Bullitt, terms of the receipt. An example of himself a good lawyer, is evidence of this limited liability is found in the his belief that a greater liability would case of Bullitt v. Baird, decided at arise without the restriction." Philadelphia in 1870, the only case in ' Grayson v. Wilkinson, 13 Miss. this state upon the subject of such 2b8. agencies. There the receipt read, 'For ^ Weeks on Attorneys, sec. 308: collection according to our direction, Cyphert v. McClune, 22 Pa. St. 195 and proceeds, when received by us, O'Hara v. Brophy, 24 How. Pr. 379 to be paid over to King and Baird.' Piggott v. Addicka, 3 G. Greene, 427, Across the face of the receipt was 56 Am. Deo. 547; Marvel v. Man- printed these words: 'N. B. The ouvrier, 14 La. Ann. 3; 74 Am. Dec. owner of the within mentioned tak- 424; Dorsey v. Kyle, 30 Md. 512; 96 iug all the risks of the mail, of losses Am. Deo. 617. by failure of agents to remit, and alao '' Houx v. Russell, 10 Mo. 246. §§ 191, 192 PRINCIPAL AND AGENT, 312 to the latter through his acting in excess of his authority.* An attorney entering satisfaction of a judgment without full payment is personally liable to his client for the un- paid balance.^ Illustrations. — Attorneys collected and transmitted to their clients funds in depreciated bank paper, which the clients re- fused to receive, and sent back with an order to return to them, and a request to make up the difiFerence. The attorneys declined to do anything about it. Held, that the clients had a right to sell the paper and recover the deficiency from the attorneys: West V. Ball, 12 Ala. 240. § 191. Not Liable as to Matters outside his Profession. — An attorney is not liable for not acting as to matters not implied in the business of an attorney, or not vi^ithin the scope of the profession; as, for example, demanding payment of a note and giving notice to the indorser.' § 192. Remedy is against Attorney Alone — Proceed- ings not Affected. — The remedy of the client is against ' Weeks on Attorneys, sec. 305. a notary, without some special en- 2 People w. Cole, 84 111. ,327. gageineut, unless there be proof of * Odlin V. Stetson, 17 Me. 244; 35 a combination of these employments, Am. Dec. 248; Hughes u. Boyce, 2 or of a course of business authorizing La. Ann. 803. In Odlin ». Stetson, 17 those employing hifti to expect that he Me. 244, 35 Am. Dec. 248, the court will do so. The case finds that the said: "When a person offers his ser- defendants were not notaries; and it vices to the public in any business, does not appear that they had so con- trade, or profession, there is an implied ducted their business as to authorize engagement with those who employ any one to expect them to act in any him that he will perform the business other character or manner than is usual intrusted to him faithfully, diligently, for attorneys. The court must under- and skillfully. And if he fails to do stand from the law, and from the cus- so, he is answerable for the damages ternary course of business as exhibited suffered bj' reason of such neglect, in cases coming before them, that This engagement is limited, however, negotiable paper is placed in the by the nature of the business, and hands of a notary or special agent often also by its being carried on only to have the necessary presentmeat in a particular place. Thus an insur- made and notices given. Cases may ance or ship broker resident in a cer- and do occur, where an attorney tain city would not be expected to acts also as a notary, and where also effect insurance or obtain a freight an attorney is called upon for advice in a distant city, unless such were respecting the manner of performing proved to be his usual course of busi- these duties; and he may in such ness, without a special undertaking and probably in , other cases under- to do it. So a notary cannot be take to have them properly done, expected to perform the duties of and in such cases he will be reapon- an attorney, or an attorney those of sible," 313 LIABILITY OF ATTORNEY TO CLIENT. § 193 the attorney alone. His negligence or ignorance, whereby the client fails in his suit, cannot, as a rule, be made a ground for setting aside the judgment or decree.^ In New York it has been held that a judgment obtained by default through the neglect of the defendant's attorney will be set aside, where it appears that. the attorney is insolvent, and the client otherwise would be remediless.^ § 193. Summary Jurisdiction as to Attorneys. — As officers of the court, attorneys are peculiarly subject to its jurisdiction. The tribunals in which they practice exercise a summary authority over them, whenever it is discovered that they have been guilty of bad faith or want of honesty in their dealings with either court or client. This summary jurisdiction extends not merely to cases in which the attorney is actually employed, but "whenever the employment is so connected with their professional character as to afford a presumption that their character formed the ground of their employment.' This summary jurisdiction consists in compelling the attorney to do what he should do, or in suspending him for a time from the exercise of his profession, or in strik- ing his name from the roll of attorneys, and annulling his license to practice.* The motion against attorneys given by statute is a substitute for the more tedious remedy by action of debt or assumpsit, and the attorney, ^ People V. Rains, 23 Cal. 128; suit cannot plead the neglect of liia Quinn V. Wetherbee, 41 Cal. 247; counsel as an excuse for his own negli- Dibble V. Truluck, 12 Fla. 185; Burton gence, where he is capable of acting V. Wiley, 2G Vt. 430; Farmers' Co. v. in the matter for himself and by him- Walworth Bank, 23 Wis. 249; Burton self: Being v- Raleigh and Gaston V. Hynson, 14 Ark. 32; Austin v. Nel- R. R. Co., 88 N. C. 62. son, II Mo. 192; Kerby v, Chadwell, ^ Meacham v. Dudley, 6 Wend. 514; 10 Mo. 392; Gehrke v. Jodd, 59 Mo. Elston v. Schilling, 7 Robt. 74; Sharp 522; Biebinger v. Taylor, 64 Mo. 63; v. Mayor, 31 Barb. 578; and see Griel Spaulding v. Thompson, 12 Ind. 477; v. Vernon, 65 N. C. 76. 74 Am. Dec. 221; Merritt v. Putnam, ' Weeks on Attorneys, sec. 77; Starr 7 Minn. 493; Babcook v. Brown, 25 v. Vanderheyden, 9 Johns. 253; 6 Am. Vt. 550; 60 Am. Dec. 290; Jones v. Deo. 275; Anderson v. Bosworth, 15 Leech, 46 Iowa, 186; Matthis v. Cam- R. I. 443; 2 Am. St. Kep. 910. eron, 62 Mo. 504; Niagara Ins. Co. v. * As to the two latter methods, see Rodecker, 47 Iowa, 162. A party to a ante, Chapter XIII. § 194 PRINCIPAL AND AGENT. 314 when proceeded against under the statute, may insist upon a set-oflF, or any other defense which it would be competent for him to make to au action, if that form of remedy had been adopted.^ § 194. When Summary Jurisdiction will and will not be Exercised. — -The summary jurisdiction will not, how- ever, be exercised where he is not an attorney of that court,^ or the cause did not arise in whole or in part out of a case before that court,^ or was not connected with his official employment,'* nor where the client has obtained a judgment for his money against the attorney, and has thus changed their relation to that of debtor and cred- itor.^ In a proceeding by motion against an attorney for refusing to pay over the client's money when de- manded, he is only chargeable with the amounts actually collected, — not with a deficit in the recovery of a judg- ment, arising from malfeasance or non-feasance." The Kentucky act, giving a summary remedy against attor- neys who fail to pay over money collected for their cli- ents, applies only to attorneys of the state, and to money collected by them officially, not to attorneys of the fed- eral courts, nor to collections made under their process.' Summary proceedings cannot be had to compel an attor- ney to pay over money received by him, on a bond and mortgage, as a land agent, not as an attorney.* The stat- ute of Mississippi gives the remedy, by motion, against attorneys, only when money has actually been collected by them, and they have refused to pay it over. It does not lie where they have taken notes, etc., in satisfaction ' Jones V. Miller, 1 Swan, 151. diction will not be applied where the 2 In re Philips, 3 Jur. 479; In re money was not received in a profes- Lord, 2 Scott, 131. sional capacity, or where it is with- ' Thompson v. Gordon, 15 Mees. & held in good faith: In re Kennedy, W. 610. 120 Pa. St. 497. * Alexander v. Anderdon, 6 Beay. ^ Croft v. Hicks, 26 Tex. 383. 405. ' Thomas v. Roberts, 5 Dana, ^ Windsor v. Brown, 15 R. I. 182; 189. 2 Am. St. Hep. 892. Summary juris- ' In re Dakin, 4 Hill, 42. ■ 315 LIABILITY OF ATTORNEY TO CLIENT. § 195 of an execution.^ A summary application to compel an attorney to pay over money received in his professional capacity is only entertained on motion of the client, and is not extended to assignees of clients.^ One who has been an attorney is liable for conduct during that time, though he has since ceased to be an attorney;' but the court will not generally interfere where the misconduct took place before the attorney was admitted.^ § 195. For What Acts Summary Jurisdiction will be Exercised. — The court will summarily compel an attor- ney to perform his undertaking to pay money," and his obligation to pay over money collected for his client,® or an excessive fee which he has retained for his services.^ An attorney who has received money in payment of costs awarded to his client by an erroneous order which has been reversed may be ordered to restore it.* Where an attorney in an action is in contempt for the vio- ' Banks v. Cage, 2 Miss. 293. summary jurisdiction exercised by the ^ Hess V. Joseph, 7 Robt. 609. courts for the purpose of compelling ' Scott V. Van Alstyne, 9 Johns, attorneys to perform their duty to 216. clients is not only just in itself, but it * In re Page, 1 Bing. 160; Anony- exerts a wholesome influence upon the mous, 2 Barn. & Adol. 766. whole body of the legal profession. ^ In re Hilliard, 2 Dowl. & L. 919; If the client were driven to the dila- Weeks on Attorney, sec. 78; Hatha- tory and sometimes inefficient remedy way V. Brady, 26 Cal. 581; Dunn v. by action, when the attorney im- Hannerson, 7 How. (Miss.) 579; In re properly neglects to pay over money, Bleakley, 5 Paige, 311; In re Silver- a few unworthy members of the nail, 45 Hun, 575. bar would bring odium upon all the "People V. Smith, 3 Caines, 222; rest." In re Dakin, 4 Hill, 42. But Saxtou ?). Wyckoff, 6 Paige, 182; In re the ground for this summary proceed- Bleakley, 5 Paige, 311; Foster v. ing is happily stated by Peckham, J. , Townshend, 68 N. Y. 203; Kuhne v. in Bowling Green Savings Bank v. Dailey, 23 Hun, 282; In re Steinert, Todd, 52 N. Y. 489, thus: "The law 24 Hun, 246; People v. Wilson, 5 is not guilty of the absurdity of hold- Johns. 368; Bowling Green Savings ing that after a client has spent years Bank V. Todd, 52 N. Y. 489; In re in collecting through his attorney a H , 87 N. Y. 521; People w. Smith, lawful demand, he shall be put to 1 Cole. & C. Cas. 497; Bohanau v. spending as many more to collect it Peterson, 9 Wend. 503; Hess w. Joseph, from the attorney, and if that attor- 7 Robt. 609; Hynman v. Washington, ney should not pay, then try the same 2 McCord, 493; Merritt v. Lambert, track again." 10 Paige, 352; Wilmerdings v. Fowler, ' Bums v. Allen, 15 R. I. 32; 2 14 Abb. Pr., N. S,, 249; Grant's Case, Am. St. Rep. 844. 8 Abb. Pr. 357; Ex parte Statts, 4 Cow. ^ Porstman v. Schulting, 108 N. Y. 76; In re Mertian, 29 Hun, 459. "The 110. §195 PRINCIPAL AND AGENT. 316 lation of an injunction therein, or for any act incon- sistent with his relation to the court, and suitors have sustained damage, the remedy is by summary proceed- ings, not by action.^ He will be summarily ordered to pay over money collected, although when the suit result- ing in the collection was brought, he had a partner, the partnership having been dissolved before the collection was made. And it makes no difference that there were unsettled matters between the attorney and his partner, and that it is possible that the partner may have been instrumental in inducing the client to make the demand.'^ This summary jurisdiction, however, will only be exer- cised where the money has come into the hands of the attorney in his professional capacity,* and •as an attorney of the court in which the application is made.^ Money borrowed by one from a client who had sought his advice as to investing it, he delivering to her mortgages to secure 1 Foster II. Townshend, 68 N. Y. 203. 2 Jeffries v. Laurie, 23 Fed. Rep. 786. ^ In re Dakin, 4 Hill, 42; Grant's Case, 8 Abb. Pr. 357; In re Haskin, 18 Hun, 42; Wilmerdings v. Fowler, 55 N. Y. 641 ; In re Husson, 26 Han, 130; 89 N. Y. 618. ■• Ex parte Ketcham, 4 Hill, 565, ■where it is said: ' ' The power to deter- mine that dispute on motion belongs, I think, exclusively to the'superior court, as an attorney of which K. was acting. It was in consequence of his retainer as an attorney of that court, and the confidence reposed in him as such by Humbert, or his agent, that he was enabled to obtain the money. It makes no difference that he is also an attorney licensed by this court. The imputed default did not arise in the course of his practice here, or as a consequence of his license here. We cannot see that such license furnished any reason for the retainer, beyond that of the superior court. I admit there may be cases where an attorney of this and other courts, receiving money under an agency having no particular reference to a suit here, might be attached by this court for non-payment, on the principle that he was retained in respect to his profes- sional character. That would, leave room for inferring that had he not been an attorney of this court, he would not have been so retained. But such an inference is excluded where the retainer was in a suit already brought, and pending in another court. It is impossible, then, to say that he is in default as an attorney of this court, which I take it we must see before wo have authority to punish him by at- tachment. We might about as well attempt to punish a man for profes- sional misbehavior in conducting a suit or defense in the court of a neigh- boring state as to interfere on this mo- tion. Suppose the attorney of a county court be guilty of the plainest miscon- duct, — the mutilation of a record, for instance, — no one would suppose that we could issue process of contempt because he happened at the same time to be an attorney of this court. To warrant a rule against a person, the dis- obedience to which would be a con- tempt, he must not only be a party or officer of the court, but he must be so in respect to the particular wrong which he is ordered by the rule to re- pair." 817 LIABILITY OF ATTORNEY TO .CLIENT. § 195 its repayment, one of which he afterwards induced her to surrender and satisfy to enable him to sell the property, he stating that he would replace it by another just as good, which he failed to do, is not received by him in his professional character.* Where an attorney, under order of court, has paid into court all the naoney collected to which his client is entitled, the court has no further juris- diction to summarily compel him to pay a further sum for other persons claiming a share in the fees retained by him.^ But it is not necessary that the attorney should have received the money in any suit or legal proceeding, or that he sho\ild have been employed or instructed to com- mence legal proceedings. It is enough that the money was received in his character of attorney; as, for exam- ple, where a demand is left with him to collect or obtain better security, but without any directions to sue.' The mode is by attachment usually, and it is no defense that the attorney retains the money in good faith.* But payment of money collected by an attorney will not be enforced by order and attachment, where it appears to have been withheld under a bona fide claim for compensation. Such a case must go to a jury.' The power of a court to com- pel, by summary motion, an attorney to pay over money collected extends to ordering a reference to determine the amount due to the attorney, or any counterclaim he may interpose for his services. He is not entitled to a jury trial of that question.^ The responsibility for the insertion of irrelevant and scandalous matter in plead- ings rests with the attorney preparing the same, and the costs of a motion to have such matter stricken out should be charged to him." A demand, however, must precede > In re Husaon, 26 Hun, 130. Todd, 52 N. Y. 489; Balsbaugh v. ' Baldwin v. Foas, 16 Neb. 80. Prazer, 19 Pa. St. 99. ' In re Dakin, 4 Hill, 42; Ex parte ^ In re Harvey, 14 Phila. 287. Statts, 4 Cow. 76; Grant's ^ase, 8 « In re Fincke, 6 Daly, 111. Abb. Pr. 357. ' McVey v. Cantrell, 8 Hun, 622. • Bowling Green Savings Bank v. § 195 KlINCrPAL AND AGENT. 318 the motion for attachment.* And the court will summa- rily compel him to keep his promises and undertakings as attorney;'' as, for instance, his undertaking as attorney to enter appearance,' or refer to arbitration.^ Bringing an action without authority will make the attorney liable, and the court will order him to pay the costs.* '■ Cottrell V. Finlayson, 4 How. Pr. 36; Mould v. Roberts, 4 Dowl. & R. 242; Ex parte Ferguson, 6 Cow. 596; 719. Taylor v. Bates, 5 Cow. 376; Rath- * Ex parte Hughes, 5 Barn. & Aid. bun V. Ingals, 7 Wend. 320. 482. 2 Strike's Case, 1 Bland, 57; In re ^ Hubbart v. Phillips, 2 Dowl. & L. Gee, 10 Jur. 694. 707; Bayley?;. Buckland, 5 Dowl. & L. ' Anonymous, 1 Chit. 129; 2 Chit. 115. 319 LIABILITY OF CLIEKT TO ATTORNEY. § 196 CHAPTER XVII. LIABILITY OF CLIENT TO ATTORNEY. § 196. Attorney and counsel may sue for services. § 197. Contract implied to pay for attorney's services. § 198. HoTV basis of compensation is arrived at. § 199. What compensation allowed where no express contract. § 200. Attorney may deduct fees from client's funds. § 201. Compensation out of fund in court. § 202. Retainer must be proved. § 203. And that services were rendered. § 204. In appellate courts. § 205. Attorney cannot recover compensation, when. § 206. Attorney may make special contract for compensation. § 207. Special contracts for compensation sustained. § 208. Special contracts for compensation not sustained. § 209. Special contract for complete service — Completion of service inter- rupted. § 210. Special contract for complete service — By withdrawal from case. § 211. Special contract for complete service — By dismissal of or from case. § 196. Attorney and Counsel may Sue for Services. — In England, while an attorney can bring an action for the value of his services, a barrister or counsel cannot.' This distinction was at an early day recognized in Pennsylvania,^ but was subsequently rejected;' and has likewise obtained in New Jersey.^ With this exception, however, it is now universally held in the United States that counsel as well as attorneys may recover compen- sation for their services.® Even in those jurisdictions ' Weeks on Attorneys, sec. 333. an agreement has been made to pay a ' Mooney v. Lloyd, 5 Serg. & R. specific sum for services as counsel: 411. Zabriskie v. Woodruff, 48 N. J. L. 610. » Foster v. Jack, 4 Watts, 334; * Balsbaugh v. Frazer, 19 Pa. St. ^o; Balsbaugh v. Frazer, 19 Pa. St. 95; Smith v. Davis, 45 N. H. 506; Nichols Lynch v. Commonwealth, 16 Serg. & v. Scott, 12 Vt. 47; Miller v. Beal, 26 R. 368; 16 Am. Dec. 582. Ind. 234; Webb v. Browning, 14 Mo. *Seeley v. Crane, 15 N. J. L. 35; 354; Stevens t;. Monges, 1 Harr. (Del.) Shaver v. Norris, 3 N. J. L. 663; Van 127; Brackett v. Sears, 15 Mich. 244; Attat). McKinney, 16N. J. L. 235; Hop- Wylie v. Coxe, 15 How. 416; Baird v. per V. Ludlum, 41 N. J. L. 182. Counsel Ratcliff, 10 Tex. 81 ; Carter v. Bennett, fees can be recovered by action where 6 Fla. 214; Duncan v. Breithaupt, 1 §196 PRINCIPAL AND AGENT. 320 wliere a counsel cannot collect his fees by process of law an action will lie on a bill of exchange or note given in McCord, 149; Rust v. Larue, 4 Litt. • 411: Vilas v. Downer, 21 Vt. 419; Cald- •well e. Shepherd, 6 T. B. Mon. 389; Newnan v. Washington, Mart. & Y. 79; Merritt v. Lambert, 10 Paige, 352; Wallisw. Loubat, 2 Denio, 607; Wilson V. Burr, 25 Wend. 386; Stevens v. Adams, 23 Wend. 57; Bucklandw. Con- way, 16 Mass. 376; Thurston v. Perci- val, 1 Pick. 415; Brigham v. Foster, 7 Allen, 419. Adams v. Stevens, 26 Wend. 451, contains a full history of the law on this subject from the earliest time. ' ' The question, "said tlie court, "is, whether by tlie laws of this state a counselor who is employed to argue a cause for his client, under an agree- ment to pay him a greater compensa- tion for his services than tlie nominal counsel fee mentioned in the statute, can sustain an action to recover that compensation. Blackstone lays it down as the established law of Eng- land, that a counselor cannot sustain a suit for his fees; and he cites for this purpose the case of Moor v. Row, 1 Rep. in Ch. 38, in the time of Lord Coventry, 1629, where a demurrer was allowed to a bill brought by a counselor against a solicitor for counsel fees, which the latter had agreed to ac- count for periodically. He also refers to the decree of the Emperor Clan-, dius, mentioned by Tacitus, limiting the amount of gratuity which the ad- vocate should be permitted to receive. It has also more recently been decided in England, that the practice of physio is a mere honorary employment; and that the medical practitioner cannot by suit recover a compensation for his services, but must be content to take such compensation only as is volun- tarily offered: Chorley v. Bolcot, 4 Term Rep. 317; Lispecombew. Holmes, 2 Camp. N. P. 441. I am not aware of any case in which it has been definitely decided, even in England, that a bar- rister cannot recover upon an express contract to pay him a specific sum for his services as counsel; but in the case of Turner v. Phillips, 1 Peake, 123, in which Lord Kenyon expressed the opinion that money paid to a bar- rister for his services could not be re- covered back, he mentioned it as the general opinion of the profession, that the fees of barristers and physicians were as a present from the client or patient, and not a payment or com- pensation for services. It was upon this principle, I presume, that he de- cided the case of Fell v. Brown, 1 Peake, 96, where he held that an ac- tion would not lie against a barrister for gross negligence in conducting the cause of his client. This rule of con- sidering the services of barristers and physicians as gratuitous merely, and as not entitling them to any legal claim to compensation, is supposed to have been derived from the civil law. But, as I understand that law, the advocate might recover upon an ex- press promise to pay his honorary fee, although there was no implied prom- ise arising merely from the relation of advocate and client. Among the early institutions of Rome, when the rela- tion of patron and client existed be- tween the patrician and the plebeian, the patron, who had accepted the promise of fidelity from the client, was bound to render him advice and as- sistance, and to sustain him in his litigations, without any other fee or reward than that which the client was bound to render him at all times, in virtue of his general relation of client. The relation which existed between them was similar to that of parent and child, or rather that of master and slave. But in the progress of society, when the relations of patron and client toward each other had totally changed, — when the business of advocating causes in the courts had become a profession, and before the credit sys- tem pervaded all the relations of life, — the client paid his advocate a fee in advance for his services, which was called a gratuity or present. As this was a mere honorary recompense, the client was under no legal obliga- tion to pay it. But the result neces- sarily was, that if the usual present was not given, the advocate did not consider himself bound in honor to undertake the advocation of the cause before the courts. Afterward, Marcua 321 LIABILITY OP CLIENT TO ATTORNEY. §1% consideration of his services.' In Indiana it has been held that a statute requiring attorneys to prosecute or Cincius Alimentus, the tribune of the people, proourerl the passage of the law known as the Cincian law, pro- hibiting the patron or advocate from receiving any money or other present for any cause; and annulling all gra- tuities or presents made by the client to the patron or advocate. But as no penalty was prescribed for the breach of this law, it of course became a dead letter. The Emperor Augustus after- wards re-enacted the Cincian law, and prescribed penalties for its breach. But towards the end of his reign the advocates were again authorized to receive fees or presents from their clients. The Emperor Tiberius also permitted them to receive such forced gratuities. This led to the abuse re- ferred to by Tacitus, and induced the senate to assist upon the enforcement, or rather the re-enactment, of the Cincian law, or rather the law limit- ing the amount of the fees of advocates, as referred to by Blackstone: 3 Bla. Com. 29, note. 12. Nero revoked the law of Claudius; which was subse- quently re-enacted by the Emperor Trajan, with the additional restric- tion that the advocate should not be permitted to receive his fee or gratuity until the cause was de- cided: 1 Dupin, aine 39. The younger Pliny mentions a law not referred to by Dupin, which authorized the advocate, after the pleadings in the cause had been made and the judg- ment had been given, to receive the fee which might be voluntarily offered by the client, either in money or a promise to pay; See Merlin, art. Hono- raires. Erskine, in his Institutes of the Law of Scotland, understands the law in the Digest De Extraordinarils Cognitionihus as authorizing a suit for the fee of a physician or advocate, without a previous agreement for a specified sum: 2 Ersk. Inst., by Mac- Allen, 695. Whatever may have been the case in Rome itself, it is settled by the law of Scotland, where the civil law prevails, that an action may be sustained on a promise to compensate an advocate or a physician for his ser- vices: See Stair, Inst., by Brodie, b. I., tit. 12, art. 6, and n. b.; 2 Bell, Law Diet., tit. Fees; Ersk. Inst., b. III., tit. 3, art. 32; McKenzie v. Burn- tisland, Mor. Die. of Decis. 11421. But in relation to the fees of physi- cians, the legal presumption there is, that they were settled at the time, ex- cept the fees for attending the patient in his last sickness; or where an agreement for a credit is proved; or where, by the custom of the place where the services are performed, the services of the physician are not paid for until the termination of the sick- ness of the patient: Johnson v. Bell,. Mor. Die. of Decis. 11418; Hamiltou V. Gibson, and Flint v. Alexancter, Mor. Die. of Decis. 11422. It appears also- to be the law of France, that the ad- vocate may recover for his fees by suit. Sirey Eeaiel Generale de Lois, torn. 22, pt. 2, p. 141. But it appears to be considered dishonorable by the Pari- sian bar to bring suits for counsel fees; and those who should attempt to do it would be immediately stricken from the roll of advocates: 1 Dupin, aine, Prof. D'Avocat, 110, G98. Whatever may be the practice of other countries, however, the principle never has been- adopted in this state that the profes- sions of physicians and counselors are merely honorary, and that they are not of right entitled to demand and receive a fair compensation for their services; especially where there is an agreement to pay thorn a fixed compensation, or such a reasonable re- muneration for their services as those services shall be deemed to be worth. The distinctions of patron and client, which formed one of the fundamental . laws of ancient Eome, ceased in tliis. state when slavery was abolished; and it is wholly inconsistent with all our ideas of ec[uality to suppose that the business or profession by which any one earns the daily bread of him- self or of his family is so much more honorable than tlie business of other members of the community as to prer- Voi,. I.-21 ' Mowat V. Brown, 19 Fed. Rep. 87. § 197 PRINCIPAL AND AGENT. 322 defend certain cases without fee in effect imposes a tax to that extent upon such class, and is in violation of the constitutional provision for an equal rate of assessment and taxation upon all citizens.* A person performing services as attorney may recover their value, even though he has not been admitted to practice; provided there ex- ists no prohibitory statute or rule of court on the subject.^ So an attorney may recover for services, though not hav- ing a license required by law.' But where a statute enacts, for the purpose of securing a more effectual compliance with its requirements in respect to the licensing of cer- tain occupations, that no one shall engage in or carry on any such occupation until he shall have obtained a license as provided by the statute, it is an express prohibition with- out more particular words. Hence a lawyer who has not obtained a license, as was required by the internal revenue act of Congress, could not recover for professional services Tendered while the act was in force; and a contract made by liim to render such services was absolutely void.^ Where an attorney at law brought a suit in his own name as principal and owner, it was held that he could not re- cover counsel fees as the agent of another. He cannot, in the same proceeding, claim to be the owner and the agent of the owner of the same thing.' An attorney individually engaged outside the county to which the business of the firm of which he was a member was con- fined may sue alone for his services.* § 197. Contract Implied to Pay for Attorney's Services. — The attorney or counsel, then, is entitled to compensa- vent him from recovering a fair com- ' Webb v. Baird, 6 Ind. 13; Blythe pensation for his services on that ae- v. State, 4 Ind. 525. count. I have no doubt, therefore, that * Harland u. Lilienthal, 53 K. Y. by the law of this state, as it has always 438; Ames v. Oilman, 10 Met, existed from the time of its first settle- 239. ment, the lawyer as well as the physi- ' Yates v. Robertson, 80 Va. 475. cian was entitled to recover a compen- * Hall v. Bishop, 3 Daly, 109. sation for his services; and that such * Ealer v. McAllister, 19 La. Ann. services were never considered here as 21. gratuitous and honorary merely." ' Moshierj). Frost, 110 111. 206. 323 LIABILITY CP CLIENT TO ATTORNEY. § 197 tion for all services rendered to the client in good faith and in a proper manner.* He may recover from those who employ him whatever sum his services are reason- ably worth, and the performance of such services at the instance or with the consent of the person about whose business they were rendered implies a promise to pay for them quantum meruit.' An attorney at law, guardian of minors, can lawfully charge his wards for professional services in conducting litigation for their benefit.' An attorney who is also a public administrator is not allowed, in addition to his compensation of office, fees as attorney in the administration of the estates.* Where neither the duties nor the compensation of a city solicitor are pre- scribed, it is his duty, unless otherwise instructed, to perform such services as the interests of the city may require, and he may recover therefor what they are rea- sonably worth.* The attorney is not necessarily pre- vented from recovering his fees because the litigation was unsuccessful, the non-success not being the result of his neglect or ignorance.* An attorney's right of com- pensation is not lost because his services may have been of no benefit to his client, if they have been faithfully and intelligently rendered.' Where parties take upon themselves the defense of a suit, after notifying the real defendant of the pendency of the action, they must pay their attorneys' fees.* If the rate of compensation is fixed by statute, the law implies a promise to pay at least that rate, and the burden of proving that the attorney agreed to do the work for less rests on the client.' If one attorney renders services for another, there is an im- » Hallett V. Oakea, 1 Cuah. 296. ' Bills v. Polk, 4 Lea, 494. 2 Balsbaugh v. Frazer, 19 Pa. St. 99; . s Gaines v. Poor, 3 Met. 503; 79 Am. In re Paschal, 10 Wall. 483; Stow v. Dec. 559. Hamlin, 11 How. Pr. 452. » Brady v. Mayor, 1 Sand. 569. In ' Mumma's Account, 5 Pa. L. J. New York, in the absence of an agree- 424. ment, the taxable costs are not neces- * Loague v. Brenn?,n, 86 Tenn. 634. sarily the measure of the attorney's ' Kinnie v. Waverly, 42 Iowa, 486. compensation; Staiin ^^. Mayor, 106 « Brackett v. Sears, 15 Mich. 244. N. Y. 82. § 198 PRINCIPAL AND AGENT. 324 plied right to compensation, although such services are sometimes rendered gratuitously from courtesy.^ It is fraud tipon counsel for a client to settle a suit without his knowledge, to withhold fees, and then set up the statute of limitations.^ A custom for attorneys to charge a client with a term fee at each term, excepting at the term at which the case is argued, when an arguing fee is taxed instead, and in addition thereto, when the defendant pre- vails, to charge the client with the taxable costs, exclusive of witnesses' fees and money advanced by the client, is reasonable and valid.' So retainers are chargeable by custom, without a special contract;* and attorneys may, by custom, become responsible for a sheriff's fees in the stead of the client.^ Illustrations. — The local attorney of a railroad company, in good faith and under circumstances which seemed to estab- lish his authority, appeared for his company in a suit brought against it. Held, that he was entitled to compensation, though he acted without authority: Boyd v. Railroad Co., 84 Mo. 615. The plaintiff, who was an attorney at law, was employed to accomplish the sale of an undivided estate, and for that pur- pose instituted proceedings, which were subsequently judicially declared to be invalid. Held, that he might nevertheless re- cover compensation for his services if it did not appear that he was incompetent or negligent: Bowman v. Tollman, 2 Robt. 385. § 198. How Basis of Compensation is Arrived at. — On a quantum meruit for services as attorney, the profes- sional standing of the attorney is to be taken into con- sideration, and the amount of his professional business,* ' Graydon v. Stokes, 24 S. 0. 483. just in all cases, nor can the court- ^ Lichty V. Hugus, 55 Pa. St. 434. The services of men of skill and ex- ^ Bodfish V. Fox, 23 Me. 90; 39 Am. perience in their professions are not to Dec. 611; Codman v. Armstrong, 28 be rated like those of day-laborers. Me. 91. It is a question of great delicacy for * Eggleston v. Boardman, 37 Mich, the court to be called upon to judge 14. what is a proper compensation for * Doughty V. Page, 48 Iowa, 483. them. The facts of the case, from * Phelps V. Hunt, 40 Conn. 97. In their character, cannot be sufficiently Lombard v. Bayard, 1 Wall. Jr. 207, brought, or very sufiSciently discussed, the court said: "The law could not before the court, nor the compensation ■well fit a, standard, which would be tested by any certain rule; and this 325 LIABILITY OF CLIENT TO ATTOENEY. §198 and the nature and importance of the controversy in which the services were rendered.* In fixing the amount of a reasonable fee, regard should be had to what is cus- tomary for such legal services. The inquiry should be, not what the attorney thinks is reasonable, but what is the usual charge.* In short, the reasonable compensation recoverable by an attorney for his services in a cause is determined, not merely by the length of time engrossed, but by all the circumstances, including the professional skill and standing of the attorney, his experience, the nature and character of the question raised, and the result attained.* No regular measure of value can be fixed for the services of counsel in trying a difficult case, or investigating intricate questions of law.* Coun- sel should be allowed for their services what those ser- vices could have been obtained for by a contract made in advance.® In a New York case it is said that it is proper last point must generally be submitted to the candor and judgment of the members of a profession eminent among all others for honor and in- tegrity Every gentleman of the bar well knows that there cannot be any one rule of charges in the nature of a horizontal tariff for all causes. Often where the parties are poor and the matters in contest small, counsel receive but very inadequate compensation for their exertion of mind and body; and for myself, I know that some of the most severe labors of my professional life have been the least well paid. In other cases, where the parties are wealthy, and the sum in controversy large, they will receive a tenfold greater compen- sation for a tithe of the same labor. In seme oases the whole sum in dispute would be poor compensation; in oth- ers, five per cent of it will be very liberal. Hence in all cases profes- sional compensation is gauged, not so much by the amount of the labor as by the amount in controversy, the ability of the party, and the result of the effort." ■ Weeks on Attorneys, sec. 338; Garfield v. Kirk, 65 Barb. 464; Vilas V. Downer, 21 Vt. 419; Duncan v. Breithaupt, 1 McCord, 149; Darby ■I,. Knapp, 2 Mo. App. 486; Campbell V. Goddard, 17 111. App. 385. In esti- mating the value of an attorney's ser- vices in soliciting a pardon of a fugitive from justice, in order to obtain him as a witness, the amount of the claim in the case in which he was wished to testify is proper for the consideration of the jury: Kentucky Bank v. Combs, 7 Pa. St. 543. When the means of a succession are limited, the fees of counsel will be reduced in a corre- sponding degree : Succession of Virgin, 18 La. Ann. 42. ^ Weeks on Attorneys, sec. 343, cit- ing Eeynolds v. McMillan, 63 111. 46; Webb V. Browning, 14 Mo. 354; Garr V. Mairet, 1 Hilt. 498; Smith v. Davis, 45 N. H. 566; Thompson v. Boyle, 85 Pa. St. 477. * Eggleston v. Boardman, 37 Mich. 14. * People V. Bond Street Savings Bank, 10 Abb. N. C. 15. * Middletonu. Bankers' etc. Tel. Co., 32 Fed. Rep. 524. In Colorado attor- neys' fees are not taxable; they are a matter of contract between attorney and client: Fillmore v. Wells, 10 Col. 228. § 198 PEINCIPAL AND AGENT. 326 to consider the amount, the questions of law, the labor and responsibility, and the interests (or the relative importance to the client of success or failure) involved, the result of the service, and the learning, tact, integrity, and assiduity of the counsel.' Two considerations, it is said in Louisiana, determine the judgment of the court in fixing a lawyer's compensation; namely, the amount and character of the work done, and the debtor's ability to pay.^ The jury may take into consideration the amount the defendant had settled for with other persons charged in the same indictment, and for whom the same services were ren- dered.^ The amount an attorney receives in a case for his services is no criterion of the value of the services of another attorney in the same case, in the absence of any showing that the services were similar, the skill equal and the time spent the same.^ "Where attorneys are em- ployed to leave the state in which they reside to render professional services in another state, their compensa- tion will be governed by the value of the services in the state in which they reside, rather than in the state where they were performed.^ An attorney who conducts a suit for A is entitled to reasonable compensation, without re- gard to what he received from B for conducting a suit depending on a similar state of facts, B's suit having been stayed by agreement, to await the determination of A's suit, which was finally determined in A's favor." An attorney cannot rightfully claim half the amount recov- ered, because the debt was desperate; he should prove his services, and may recover the usual compensation there- for.^ Where there was neither intricacy nor litigation in the administration of a succession valued at ten thou- sand dollars, the debts of which, principally for medical ' People V. Bond Street Savings 14 Kan. 159; Ottawa University v. Bank, 10 Abb. N. C. 15. Welsh, 14 Kan. 1G4. ^ Breaux v. Fraucke, 30 La. Ann., ^ Stanberry v. Dickerson, 35 Iowa, part 1, 336. 493. s Cunning v. Kemp, 22 Wis. 509. « Bruce v. Dickey, 116 111. 527. * Ottawa University v. Parkinson, ' Christy v. Douglas, Wright, 485. 827 LIABILITY OP CLIENT TO ATTORNEY. § 198 services and funeral expenses, did not exceed one thousand dollars, two hundred dollars was considered a fair allow- ance to the attorney who settled the succession.^ Twenty- five dollars is not an unreasonable attorney's fee for foreclosing a mortgage for eleven thousand dollars.^ A fee of seven hundred dollars for the services of counsel in maintaining a will which controlled the disposition of an estate of sixteen thousand dollars is not excessive.* The value of the services may be shown by the opinions of other lawyers testifying as experts.* The question as to the value of services by an attorney is not one of science or skill for the testimony of experts. Any one who knows what the customary and usual charges of lawyers are can testify; but it is proper to exclude testimony as to the value of such services, when it is not shown that the wit- ness has any knowledge as to the usual amount charged for attorney's fees.^ In a suit against a railroad for pro- fessional fees, proof that the services of a good attorney at the place where plaintiff was were reasonably worth so much per month is improper. The attention of the wit- ness should be called to the particular services rendered, and his opinion predicated thereon.® On an issue between attorney and client, as to the value of the former's services in a suit in which the latter was plaintiff, and which was settled without a trial, the opinion of the counsel of the defendant in such suit that the plaintiff therein had no case is competent evidence.' In Louisiana the supreme court will not be implicitly governed, in regard to ques- tions relating to the value of professional services rendered ' Uzee V. Biron, 6 La. Ann. 565. 21 La. Ann. 687; Barker v. Company, 2 Hitchcock V. Merrick, 15 Wis. .522. 3 Thomp. & C. 328; Rose v. Spies, 44 5 Roth's Succession, 33 La. Ann. Mo. 20; Bodfish v. Fox, 23 Me. 90; 39 540. As to -what is a fair compensa- Am. Dec. 611. And the report of a tion for the services of an attorney in referee founded on such testimony will defending persons indicted for larceny, not be disturbed: Fillmore v. Wells, 10 see Fraatz v. Garrison, 83 111. 60. Col. 228; 3 Am. St. Rep. 567. * Harland v. Lilienthal, 53 N. Y. ° McNiel v. Davidson, 37 Ind. 336. 438; Garfield v. Kirk, 65 Barb. 464; « Southgate v. Atlantic and Pacific Brewer t). Cook, 11 La. Ann. 637; Vilas R. R. Co., 61 Mo. 89. ■u. Downer, 21 Vt. 419; CuUomu. Mock, ' Aldrich v. Brown, 103 Mass. 527. § 198 PRINCIPAL AND AGENT. 328 their clients by attorneys at law, by the opinions of legal men taken in evidence, but will be guided by a conscien- tious estimate of the value of the services performed, and will, of itself, fix the amount without reference to the opinions of witnesses.-' But in determining the money value of the services of an attorney in settling up the affairs of a succession, the court, in the absence of sufficient other evidence, will be guided by the opinion of the local bar to which he belongs.^ In Illinois it is said, that, in fixing an attorney's fees, the chancellor should exercise his own judgment as to what is the usual charge, and not be wholly governed by the opinions of attorneys.' Illustrations. — A charge of two hundred dollars per year held, under the circumstanceB of the case, a moderate compen- sation for services rendered by an attorney as agent for a cor- poration for eleven years, independentof his fees and commissions as attorney or counsel, in suits brought by or against the com- pany, or in which they were interested, and his traveling expenses and other disbursements: Farmers' Loan etc. Co. v. Mann, 4 Robt. 356. Ten per cent of a sum obtained for the corporation, from the assets of a bank, by his services, whereby an allowance to a rival creditor thereof of seventy-six thousand dollars had been reduced to less than three tenths of the amount reported, held not an unreasonable compensation therefor, aside from said two hundred dollars per year: Farmers' Loan etc. Co. V. Mann, 4 Robt. 356. In assessing damages on dis- solution of an injunction, proof that the services of the defend- ant's counsel were reasonably worth two thousand five hundred dollars, held to be insufficient for a recovery thereof, without showing how much they had become liable to pay their counsel, and what were the customary fees in such cases: Rees v. Peltzer, 1 111. App. 315. In a proceeding for partition, an attorney's fee of five hundred dollars, held to be unreasonable, testimony of lawyers to the contrary notwithstanding: Dorsey v. Corn, 2 111. App. 533. Plaintiff, an attorney, sued to recover compen- sation for services in a matter involving upward of a million dollars. Held, that it was error to instruct the jury that the magnitude of the controversy and the great value of the prop- erty should not be considered in determining what compensation plaintiff was entitled to recover: Smith v. Chicago and North- western R'y Co., 60 Iowa, 515. 1 IUmrlolph«.Carroll,27La.Ann.467. 'Dorsey v. 'Corn, 2 111. App. ^ Jackson's Succession, 30 La. Ann., 533. part 1, 463. 329 LIABILITY OF CLIENT TO ATTORNEY. § 199 § 199. What Compensation Allowed where No Express Contract. — A solicitor is entitled to charge for attendance, if he actually attends the hearing, though he does not hear the whole argument or take any part in it.* The fact that other counsel were engaged will not deprive him of his fee. But where several suits are to depend on the argu- ment in one, the charges must not be multiplied at the full rate.^ Counsel who have prepared for hearing are not deprived of the right to a full counsel fee by the fact merely that the case was disposed of on grounds not raised in the argument.' An attorney retained in a case is entitled to a reasonable retaining fee without any spe- cial contract therefor.'' A demand on the client for a certain sum as his compensation does not, if refused, re- strict the attorney from recovering only that sum.^ The attorney is not called on to look to the collection of the demand for his fee, nor to wait for it until it be collected." He is entitled to his retaining fee in advance.' It is not usual to charge more than one retaining fee in the same case, and if he charges more than one, he will not be allowed to recover such extra charge in a suit for his ser- vices.' The right to an appearance fee depends upon a contract, either express or implied, with the party against whom it is charged.' In the absence of a special agree- ment, or of proof that the client employed the attorney, with knowledge of and implied assent to the bar rules, a client is not necessarily bound to pay for the services of an attorney or counselor according to rates which may have been prescribed for such services by the general regulations of an association of the bar, but is liable only for a quantum meruit. Regulations adopted by members ' Wendell v. Lewis, 8 Paige, 613. ^ Miller v. Beal, 26 Ind. 234. 2 Brackett v. Sears, 15 Mich. 244. ^ Nichols v. Scott, 12 Vt. 47. 5 Bates V. Desenberg, 47 Mich. ' Cavillaud v. Yale, 3 Cal. 108. 643. 8 Schnell v. Schlernitzauer, 82 111. * Aldnch V. Brown, 103 Mass. 527. 439. But see McLellan v. Hayford, 72 Me. ' Neighbors o. Maulsby, 41 Md. 410. 478. § 199 PRINCIPAL AND AGENT. 330 of the bar can operate only as between those who assent to them. As between attorney and client, the right to recover for services must be determined by the general law, and not by rules of the bar.' An attorney who acts as broker for his client, in negotiating the sale or pledge of personal property, is entitled to be paid as such; but he cannot also charge a counsel fee for conversations with his employer in relation to the same transaction, unless by express contract.^ An attorney who is employed by an assignee for the benefit of creditors, as the assignee's general adviser, cannot charge retainers in suits that he is compelled to try.^ An attorney for an executor cannot, under a general retainer, charge bis client for answering the inquiries of creditors respecting their claims.^ An attorney at law, under a charge of commission on money collected, may recover a fair compensation for services rendered, not included in his specific charges, although the client personally makes the collection; and the time of making such charge is immaterial.^ If a solicitor has neglected to furnish his client with a statement of his extra expenses in the suit beyond the amount recovered of the adverse party, the amount so recovered will be presumed to be all he has any right to claim.® As be- tween attorney and client, costs are to be taxed according to the fee bill in existence when the respective services were rendered.^ An attorney representing a junior exe- cution on which nothing is realized from the fund levied on is not entitled to fees from it.* Five thousand dollars may be a fair and reasonable fee for services rendered by an attorney to an assignee in bankruptcy, which, after protracted litigation, resulted in saving thirty thousand dollars for the estate." 1 Boylan v. Holt, 45 Miss. 277. " Matter of Bleakley, 5 Paige, 311. 2 Walker v. American Nat. Bank, ' Brooklyn Bank v. Willoughby, 1 49 N. Y. G59. Sand. 669. 3 In re Schaller, 10 Daly, 57. * Mitchell v. Atkins, 71 Ga. 680. * In re Knapp, 8 Abb. N. C. 308. » In re Treadwell, 23 Fed. Rep. 442; 6 Pierce v. Parker, 121 Mass. 403. 9 Saw. 29. 33i LIABILITY OF CLIENT TO ATTORNEY. § 200 rtLUSTEATiONS. — Three members of the bar entered their appearance for a defendant, having been employed generally to appear, and no warrant of attorney was given to either. Hdd, that the attorney's fee was to be equally divided between them: Hurst v. Durnell, 1 Wash. 438. Through the advice of the counsel of the receiver of an insolvent corpo- ration, whose assets were uncertain, twenty suits were begun, in eleven of which compensation was claimed, and the services were instrumental in saving over $115,000. Held, that the fact that the trust was successfully administered might be con- sidered, and a charge of $22,646 was not necessarily excessive: People V. Bond Street Savings Bank, 10 Abb. N. C. 15. It was the duty of an attorney employed by a corporation engaged in loaning money, in Oregon, to give it counsel generally (where- for no compensation was expressly provided), and to examine titles, wherefor he was permitted to charge borrowers' specific fees, and for some years he rendered no bill. Held, that he was entitled to recover for his services as counselor merely a rea- sonable annual retainer: Hughes v. Dundee Mortgage and Trust Investment Co., 21 Fed. Rep. 169. A local attorney defended one hundred and sixty-four infringement suits in the New England circuits against dentists, whose defense was in charge of the corporation employing the attorney. The suits were dis- posed of in defendants' favor, after the disposition of a test case. The attorney charged his client, the corporation, six thousand dollars, and collected costs amounting to four thousand six hundred dollars, which he credited on the six thousand dol- lars. Held, a reasonable charge: Celluloid Mfg. Co. v. Chand- ler, 27 Fed. Rep. 9. § 200. Attorney may Deduct Fees from Client's Funds. — An attorney who has money in his hands which he has recovered for his client may deduct his fees from the amount, and payment of the balance will discharge him.' ' Union Mut. Life Ins. Co. v. Bu- than an honest compensation, the rule chanan, 100 Ind. 63. In Balsbaugh v. will be dismissed, and the client re- Frazer, 91 Pa. St. 99, the rule is stated mitted to a jury trial. If, upon the thus: " If the client is dissatisfied with trial, the jury finds that the attorney the sum retained, he may either bring claimed no larger fee than he was suit against the attorney, or take a rule justly entitled to, and in other re- upon him. In the latter case the court spects behaved faithfully and well will compel immediate justice, or in- about his client's business, he should flict summary punishment on the at- be allowed his demand and a verdict torney, if the sum retained be such as rendered in his favor, if he has paid to show a fraudulent intent. But if the balance; or a verdict against him the answer to the rule convinces the only for the balance, if he has not paid court that it was held back in good it; or a certificate, as in this case, for faith, and believed not to be more what may still be coming to him. But § 201 PRINCIPAL AND AGENT. 332 The fact that a client has sued his attorney for money collected on a debt due to him does not prevent the attor- ney from retaining from said money his fees for collec- tion.^ But the attorney cannot retain his fees out of money left him by the client as a special deposit for a special purpose.^ Illustrations. ■ — An attorney receives one hundred and fifty dollars from a thief for services to be rendered, and after having rendered services to the value of ninety dollars is notified by the person from whom the money was stolen that it belongs to him. The attorney cannot hold the remaining sixty dollars for services rendered after the notice: Wheeler v. King, 35 Hun, 101. I 201. Compensation out of Fund in Court. — Where the compensation of an attorney for professional services in securing a fund in the hands of a receiver for distribu- tion is, by the rules governing courts of equity, a proper charge upon the fund, application for such compensation out of the fund should be made in the action in which the receiver was appointed.' The Illinois statute which permits the apportionment of solicitors' fees among those interested in the settlement of an estate in the probate court applies only to amicable proceedings, not to suits where parties employ counsel to protect their special adverse interests.'' A counsel is not entitled to commis- sions on a fund raised and brought into court, if his client's claim is postponed to older liens.^ The counsel of certain creditors who unsuccessfully seek relief on be- if he has not acted in good faith; if he pensation whatever, and the verdict has attempted to defraud his client, or should be in favor of the client for all connived at the fraud of others; if the money collected, allowing no de- he has received money without giving ductions for anything but actual pay- notice to the client within a reason- ments. A party must not be put to able time; if he has refused or ne- two suits to recover the same debt." glected to pay it promptly upon de- ' Foster v. Jackson, 8 Baxt. 433. mand; if he has denied that he had it ' Anderson v. Bosworth, 15 R. I. when questioned by one entitled to 443; 2 Am. St. Rep. 910. know; or if he has fraudulently ^ Olds v. Tucker, 35 Ohio St. 381. claimed the right to retain out of it * Cowdrey v. Hitchcock, 103 III. a larger fee than the jury find to be 262. just, — he forfeits all claim to any com- ^ Waters v. Greenway s, 17 Ga. 592. 333 LIABILITY OF CLIENT TO ATTORNEY. § 202 half of themselves and of all other creditors against the officers of an insolvent corporation cannot charge their compensation against a fund belonging to the corpora- tion. They must look to the creditors employing them.* Illustrations. — Under the Mississippi code, providing that " in all cases of the partition or sale of property for division of proceeds the courts may allow a reasonable solicitor's fee to the solicitor of the complainant," held, that a solicitor of a de- fendant and cross-complainant was not entitled to a fee, though the cross-bill asked for partition: Potts v. Gray, 60 Miss. 57. An agreement that an attorney should be compensated out of the fund recovered, held to create an equitable lien, having priority over that of an attachment issued under a judgment recovered against the client: Williams v. Ingersoll, 23 Hun, 284. The trustee of an idiot, for whom a charge of two thousand dol- lars was made upon land for her support, obtained a decree for the sale of the land, and the setting apart of two thousand dol- lars of the proceeds, the interest of which was to be appropriated to the support of the idiot. Held, that two hundred dollars should be allowed out of the two thousand dollars, as a fee for the trustee's attorney: Nimmons v. Stewart, 13 S. C. 445. Plain- tiff, being employed as solicitor for a certain sum to look after defendant's interest in an estate, instituted proceedings in chan- cery, which resulted in the settlement of the estate, and neces- sarily involved the interests of other persons. The court made an allowance out of the estate to the different solicitors em- ployed. 'Held, that the whole amount thus received by plaintiff should be credited upon his contract with defendant: Shreve v. Freeman, 44 N. J. L. 78. § 202. Retainer must be Proved. — In order to recover, the attorney must first prove a retainer by the defendant.* It is not enough that services were performed in man- aging a cause, and that they were beneficial to the party.' ' Humeij. Commercial Bank, 13 Lea, 11 La. Ann. 596; Smith v. Lyford, 24 496. Me. 147; Burghartt;. Gardner, 3 Barb. '' Weeks on Attorneys, seoa. 336, 64; Jones v. Woods, 76 Pa. St. 408; 338. Wailes v. Brown, 27 La. Ann. 411. 'Tnmer v. Myers, 23 Iowa, 391; In Turner v. Myers, 23 Iowa, 391, a Webb V. Browning, 14 Mo. 354; Chi- son brought a replevin suit in his own cago etc. R. R. Co. v. Lamed, 26 111. right for a horse, executing a, bond 218; Campbell v. Kincaid, 3 Mon. 68; upon which his mother was surety. Roselius V. Delaohaise, 5 La. Ann. The case was appealed to the district 481; 52 Am. Dec. 597; Cooley v. Ce- court, and an attorney was tliere em- cile, 8 La. Ann. 51; Michon v. Gravier, ployed by the son to assist in the § 202 PRINCIPAL AND AGENT. 334 But the retainer need not be in writing, or by an express parol contract; it may be established by circumstances;* as, for example, by the party accepting the services on the understanding that he was to pay for them,^ or by his recognition of the attorney as his attorney.' " In the absence of an express retainer, an attorney may prove that the person sought to be charged conferred with him in regard to the suit; executed his directions in connec- tion therewith; makes affidavit to the truth of the answer which the attorney has drawn; was present at the trial which the attorney was managing in the client's behalf without making any objection; intrusts to the attorney papers necessary to the successful prosecution of the suit; or that the client acknowledged or in some manner recog- nized the attorney in the presence of third persons; — all these things are evidences of a retainer, and will be strengthened bv the fact that the attorney was acknowl- trial. Judgment being there rendered against the plaintiff and his mother as surety on the bond, he employed the attorney to commence a suit in equity in his own and his mother's name to restrain the collection of the judgment, in which plaintiffs failed; whereupon they appealed to the supreme court. It appeared that the attorney had never seen the mother; that she never personally requested him to perform any services for her; but that she knew of the proceedings. The attorney sought to charge her with the payment of his fees, which the court disallowed, saying: "When it appears that an attorney commenced a suit in the name of the principal and surety, .... without being requested bj' such surety to perform any services for her, the single fact that she knew of his proceedings will not make her liable for his services The ex- press contract with the son and his primary liability, in the absence of other proof, .... justify the conclu- sion that the son, and not the mother, was the one to whom the attorney was to look for his pay It was the attorney's duty to prove his retainer by the person sought to be charged. This he might do by showing that the defendant called upon him in re- gard to the business; that she exe- cuted his directions in connection therewith; that she was present at the trial while he was Inanaging it on her behalf; or that she spoke of or recognized him in some manner as her attorney ": Hubbard v. Camper- donn Mills, 25 S. C. 496; Ex parte Lynch, 25 S. 0. 193; Safford v. Vt. etc. R. R. Co., 60 Vt. 185. ' Graves v. Lockwood, 30 Conn. 276; Hood V. Ware, 34 Ga. 328; Fore v. Chandler, 24 Tex. 146; Perry v. Lord, 111 Mass. 504. Where an attorney is called on for legal advice and gives a. professional opinion, the relation of attorney and client so exists as to ren- der the attorney liable for negligence: Ryan v. Long, 35 Minn. 394. '' Savings Bank o. Benton, 2 Met. (Ky. ) 240; Bogardus v. Livingston, 7 Abb. Pr. 428. * Hotchkiss V. Le Roy, 9 Johns. 142; Goodall V. Bedel, 20 N. H. 205; Fore ■0. Chandler, 24 Tex. 146; Cooper v. Hamilton, 52 HI. 119; Yergerw. Aiken, 7 Baxt. 539. 335 LIABILITY OF CLIENT TO ATTORNEY. § 202 edged as such by the counsel of the opposite side. If an attorney having in his hands papers necessary to be used in the defense of a suit enter upon that defense in the presence of the party for whom he appears, and re- tains the papers without objections, such facts are evi- dence of a retainer and promise to pay for his services, as well upon the particular occasion of the first appear- ance as afterwards."^ A parol employment by the board of county commissioners, at a legal session, of an attorney to defend a suit brought against the county is valid, and such attorney, having rendered the service involved in his employment, may recover compensation therefor." Where a party, by his acts, induces an attorney to sup- pose that his services are desired, and avails himself of them without objection, the law implies a promise on his part to pay the attorney what such services are reasonably worth.* A party to a suit in which the employment of senior counsel is necessary is liable for the reasonable value of the services of a counselor at law who acts as senior counsel at the trial, in his presence, in consultation with him, and without objection from him, under a re- tainer for that purpose by the attorney of record, although there was a secret agreement between him and the attor- ney of record that such services should be paid for by the latter.'' The presence of a prosecutor, while an attorney was engaged in rendering professional service on the part of the government in a criminal proceeding, raises no presumption that the prosecutor promised to pay him for such service.^ One who has emnloved a lawver who after- wards takes a partner, who assists in the case, does not become liable to the firm for the fee agreed to be paid to the one contracted with before the partnership, by simply consulting with such partner about the case, and to that ' Weeks on Attorneys, sees. 339, ' Ector v. Wiggins, 30 Tex. 55. citing Goodall v. Bedell, 20 N. H. 203. * Brigham v. Foster, 7 Allen, * MoCabe v. Commissioners of Foun- 419. tain County, 46 Ind. 380. ' Millett v. Hayford, 1 Wis. 401. § 202 PRINCIPAL AND AGENT. 336 extent recognizing him as his attorney.^ Evidence that one who had a claim which he intended to prosecute at law sent for an attorney and employed him to assist him as counsel through the whole case, and that the attorney agreed so to do, and gave him advice several times, will warrant a finding for the attorney in an action by him for a retainer.'' If an assignee of a chose in action, that is in suit, accepts from the defendant a specific sum in lieu of damages and costs, he becomes liable to the attorney who prosecuted the suit for the taxable costs.* When a bill is filed by a debtor as trustee for his children to enjoin judgment creditors, some of whom have levied and others are about to levy upon his property, and a fund is brought into court for equitable distribution, counsel for the trustees who filed the bill are not entitled to fees to be jDaid out of the general fund raised. The interest to rep- resent which such counsel were employed is antagonistic to the general creditors, whose judgments have been en- joined.^ A retainer by a wife to obtain a divorce will not be presumed to have been at her husband's request, so as to render him liable to pay the attorney.* Illustrations. — In an action against A and his sureties, B and C, an attorney was employed by A. Held, that the fact that B and C knew that he was representing the whole case, and the services were for their benefit and accepted by them, does not require that they, in order to avoid liability to pay for the services, should have notified the attorney that they would not be liable: Simms v. Floyd, 65 Ga. 719. It was attempted by one representing himself as agent for a ship-owner, and by the consul of the nation to which she belonged, to remove the master from the command. The latter employed counsel to maintain his right thereto. Held, that the owner, if his in- terests conflicted with the course pursued by the master, would not be liable for fees of counsel employed by him: Barker v. York, 3 La. Ann. 90. B is employed by one defendant to a suit to act as counsel for him,- and also for another defendant, of which the latter was apprised, but who had counsel of his ' Carr v. Wilkins, 44 Tex. 424. * Ball v. "Vason, 56 Ga. 264. ' Perry v. Lord, 111 Mass. 504. * Dorsey v. Groodenow, Wright, s Ward V. Lee, 13 Weud. 41. 120. 337 LIABILITY OP CLIENT TO ATTORNEY. § 202 own employment, and had not employed B. Held, that al- though the services of B may have heen beneficial to such other defendant, and received and accepted by him, yet he would not thereby incur any liability to pay for them; otherwise, if he was apprised that he was looked to by B for compensation for his services, and afterwards received them without informing him that he would not pay for them: Savings Bank etc. v. Benton, 2 Met. (Ky.) 240. In an action to recover for professional services rendered to the defendant in a divorce case, it appeared that he adopted the papers prepared by the plaintiffs, and that they were recognized by the libelant's counsel as counsel for the defendant. Held, that the employment of the plaintiffs was es- tablished: Hood V. IVare, 34 Ga. 828. An attorney employed to defend a suit signed as bail for an appeal taken by his client therein. Subsequently an action was brought upon the recog- nizance against both principal and surety, and the latter, the attorney, without express authority, appeared for both, and pleaded, as the only defense, a tender which had been made by him without any request by his principal. Held, that he couM not recover in any action of book-account for his profes- sional services in defending the suit on the recognizance, al- though the principal knew that he was defending the suit and made no objection: Smith v. Dougherty, 37 Vt. 530. An attor- ney who was employed by his client in the prosecution and defense of many suits gave a voluntary appearance for him in a new suit brought against him upon a subject connected with suits then pending. About the time of serving this appearance the attorney told him that he had appeared for him, and he expressed no dissent. Held, that the attorney's appearance was not unauthorized, but under such facts he might well as- sume a retainer: Bogardus v. Livingston, 7 Abb. Pr. 428. Proof that an attorney was employed by one having a claim at law to assist him in its prosecution, agreed to do so, and gave him advice several times, held, to warrant a finding for a retainer: Perry v. Lord, 111 Mass. 504. A, an attorney, having no au- thority from his client B to employ additional counsel, em- ployed C, an attorney in another county, to attend to a case in that county pending against B. At the trial of the case, C, with B's knowledge, though not at his request, assisted in im- paneling the jury in taking evidence, and in consultation re- garding the defense. Held, that C was entitled to recover from B for his services: Hogate v. Edwards, 65 Ind. 372. Attorneys acting without any employment under seal, but at the request of the town council, addressed a meeting of the citizens, ex- plaining the terms upon which the holders of bonds of the town proposed to cancel them. The proposal was accepted by the- VOL. I.— 22 § 203 PRINCIPAL AND AGRNT. 338 meeting, and the attorneys were directed to prepare an ordi- nance for the purpose of consummating the settlement. They did so, and the town council afterwards adopted the ordinance, and the bonds were taken up in pursuance thereof, and the whole matter adjusted with the assistance of the attorneys. Held, that they were entitled to recover pay from the town for their services: New Athens v. Thomas, 82 111. 259. An attorney who had conducted a suit in which L. was plaintiff charged his fees to L. and \V. jointly, and brought an action against both to recover them. L. and W. had called on the attorney, W. being the father-in-law of L., and together stated the case, which was a claim of L. for damages for a personal injury; W. saying: "We have a case that we want to lay before you, and have you prosecute if you think best"; and in the course of the conversation also saying: "If you think the case a good one we want you to go through with it"; but nothing was said directly by either party as to whether W. would be responsible for the attorney's fees, and W. did not intend to be under- stood as agreeing to be responsible, though the attorney, sup- posed he was to be so, and charged his fees to them both. On these facts the auditor submitted the question to the court as a question of law whether W. was liable. Held, that the question whether W. employed the attorney was a question of fact which should have been decided by the auditor, and that the facts as found presented no question which the court could decide as a question of law: Graves v. Lockwood, 30 Conn. 276. An attor- ney brought an action in the district court of an adjoining county, and after the filing of the petition wrote to a firm of attorneys there requesting them to file the proper pleadings, informing them that his client would call to state necessary facts, and saying: " I will see you paid for your trcuble." The client called on said attorneys a number of times, and they filed the necessary papers, and assisted in the trial of the case, and in procuring a decree, nothing being said by her to them about the contract made by her with the attorney who filed the peti- tion, and they had no knowledge of euch contract. Held, that the client was liable for their fees: Sedgwick v. Bliss, 23 Neb. 617. § 203. And that Services were Rendered. — Evidence alone that the attorney was emploj'ed is not enough; he must show also that he has performed the service. The law will not presume from the mere proof of the under- taking that the party has performed any valuable service 339 LIABILITY OF CLIENT TO ATTORlSrEy. § 204 under it.' "Where a solicitor sought by a creditor's bill to obtain payment for professional services out of an estate, the remainder in fee of which was in certain infants, on the ground that the services were necessary to preserve the inheritance to those who were entitled to it, and failed to prove that his services were necessary or had produced that effect, his bill was dismissed, and he was admitted pro rata with other creditors to share the pro- ceeds of the estate which were in the hands or in the possession of a trustee.^ Illustrations. — M. rendered valuable services in a suit at the request of and as assistant attorney to G., a defendant with whom the co-defendants had contracted that he, G., should, for a stipulated sum, defend the suit and employ and pay assistant counsel. Held, that M., not being informed of such special con- tract, might recover his compensation against all the defend- ants: McCrary v. Ruddich, 33 Iowa, 521. One attorney agreed to recover a certain claim by suit; he agreed with another at- torney that the latter should prosecute the suit referred to for half the pay and costs; the latter brought a suit and lost it; the former then filed a bill and recovered the claim, the latter not offering to aid in the prosecution. Held, that the latter had done no work in the successful suit, and was net entitled to do any under his agreement, and therefore could recover no pay under his agreement: English v. McConnell, 23 111. 613. § 204. In Appellate Courts. — A retainer to conduct a suit in the lower courts does not necessarily imply a retainer to carry the case up to the court of last resort. But where a case is intrusted to an attorney for appeal to a higher court, he is not responsible for the merits or demerits of the appeal, but is entitled to payment for his services in any event.' Where there is a general em- ployment of an attorney for an agreed sum, the employ- ment extends until the final termination of the case in the court of last resort, so that no additional sum can be »Stow«. Hamlin, 11 How. Pr. 452. * Weeks on Attorneys, citing Case 2 Warner v. HofFmaii, 4 Edw. Ch. v. Hotchkiss, 3 Keyes, 834: 3 Abb. 381. Pr., N. S., 38L § 205 PRINCIPAL AND AGENT. 340 charged for services rendered, unless there is an express agreement to pay for the same.' Illusteations. — An attorney, on his own motion, after knowledge that the cause was settled, procured a transcript to be filed in the supreme court, and a judgment of afSrmance rendered. Held, that he could not recover for such services: Ellwood V. Wilson, 21 Iowa, 523. A client signed an agree- ment with his attorney, running substantially thus: H. is to argue my case before the supreme court, and if he succeeds, I am to pay him one thousand dollars; and if it shall be neces- sary to contest the case in the court of appeals, he is to have further just compensation. If I settle the case with the other parties without his approval, I am to be liable for his full com- pensation, as herein provided. H. was unsuccessful in the supreme court, and by direction of his client appealed to the court of appeals. Soon after, his client, without consulting H., settled the case. Held, that the agreement to pay the one thousand dollars was conditional on H.'s success in the su- preme court, and that the settlement of the case, after the fail- ure there, did not resuscitate H.'s claim: Hitchings v. Van Brunt, 38 N. Y. 335. § 205. Attorney cannot Recover Compensation, when. — The attorney cannot recover compensation ■when the services were of no avail, because of his fraud, negligence, and want of skill.^ He is not necessarily precluded from , ' Bartholomew v. Langsdale, 35 Ind. to set out his proofs in his pleading. 278. Facts, and not the evidence of facts, ^ Maynard v. Briggs, 26 Vt. 94; are required to be pleaded. What- Nixon V. Phelps, 29 Vt. 198; Pearson ever, therefore, had a legal tendency V. Darrino;toQ, 32 Ala. 227; Brackett to prove that these services were worth V. Norton, 4 Conn. 517; 10 Am. Dec. the sum was competent for plaintiffs, 179; Gleason v. Clark, 9 Cow. 57; as the nature of the suit, its difficulty, Runyau v. Nichols, 11 Johns. 547; the amount involved, the skill re- Bowman V. Tallman, 40 How. Pr. 1; quired, the skill employed, and the Bridges w. Paige, 13 Cal. 641, the court like. So the defense had a right to saying: "The plaintiffs aver that the prove these same general matters, or defendant is indebted to them in the the negation of them, as, for example, sum of say fifteen hundred dollars, that this was a plain case, requiring for services rendered; that he is in- but little labor or skill, learning or debted to this amount because this time; or if it required skill and atten- was the value of these services. The tion, that these were not bestowed, defendant denies that he is indebted The value of a lawyer's services de- at all, and denies, further, that the pends upon his skill and learning, and services were of the value charged, the attention he gives to the business He proposes to show that they were of the client. It is evident, therefore, not of this value. He can do this by that proof of his skillful conduct of any legal proof, and; he is not bound his case, or of his negligent and nn- 341 LIABILITY OP CLIENT TO ATTORNEY. 205 recovering compensation for services in a suit, where the adverse decision rendered was anticipated by him, not- withstanding the services may have been of no value."- He may explain his reason for delay in instituting an ac- tion for his client, when his claim for fees is contested on the ground of unreasonable delay .^ An attorney under general employment can enforce no claim for services until final termination of the suit, unless the relation of attorney and client changes before that time.^ He cannot recover against his client the costs of a suit in which judgment i^set aside for irregularity committed by himself, nor the costs of opposing the motion to set aside the proceed- ings; nor can he recover for money paid for his client, if it were paid to satisfy costs of a judgment of discontinu- ance suffered by his ignorance or neglect.'* So if an attorney, after having obtained final judgment and exe- cution, prevents the collection of the execution by fraudu- skillful treatment of it, is an impor- tant inquiry. It does not follow, by any means, that because a trial results in a verdict for the client, there has been no negligence in the attorney. In consequence of the negligence, the client may have been put to great trouble and expense, though, by acci- dent or otherwise, he happened to gain the case; and though the court below may have decided on the trial of a case that errors negligently com- mitted were not fatal, yet the defend- ant might show, when sued for fees by the attorney, that the judge was mis- taken in thus holding. Besides, a case may be negligently conducted even when it is not eventually lost by neglect. It may put the client to great trouble, expense, and delay to get rid of blunders of his lawyer. If, for example, an attorney should, by his neglect, consent to a bill of excep- tions full of errors and misstatements, and raising unnecessarily many diffi- cult and embarrassing questions of law for revision in the appellate court, which questions, as the case, in fact, was presented below, did not arise, no one would pretend that though the cause was, after long delay and much loss, gained in the supreme court, the attorney would not be amenable to the charge of neglect; or if the attor- ney Buffered testimony to be intro- duced plainly inadmissible, and the client was put to the expense and trouble of summoning many wit- nesses to counteract it, though he at length did so successfully, the same objection would lie; and in both these instances the attorneys would be held entitled to a less sum on quantum meruit than if a contrary course had been pursued." In New York it is said that the law does not tolerate pre- varication in the service of an attor- ney, or permit him to use his position as such to the prejudice of the party for whom he professes to act. Such conduct deprives him of the right to claim a fee: Andrews v. Tyng, 94 N. Y. IG. ' Murphey v. Shepardson, 60 Wis. 412. « Union Mut. Life Ins. Co. v. Bu- chanan, 100 Ind. 63. " Eliot V. Lawton, 7 Allen, 274; 83 Am- Deo. 683. ' Hopping V. Quin, 12 Wend. 517. § 205 PRINCIPAL AND AGENT. 342 lent conduct, this will be in violation of his duty as attorney, and will deprive him of all legal claim for his services in procuring such judgment and execution.' His fraud or unfaithfulness in one matter intrusted to him will not deprive him of his right to compensation for other independent services which were duly performed.* An act of impropriety or neglect on the part of an attor- ney in transacting his client's business, if condoned, will not defeat the right to recover for retainer and services.* The Massachusetts statute relating to the removal and punishment of attorneys at law for deceit, malpractice, or other gross misconduct, and to their liability in damages to parties injured thereby, does not prevent the defend- ant, in an action by an attorney at law for services ren- dered, from showing that they were of no value.* He cannot recover where he has collected money, and has refused or neglected to pay it over to his client after demand .and until sued for it;* nor where his services ^ Brackett v. Norton, 4 Conn. 517; 10 Am. Dec. 179. 2 Currie v. Oowles, 6 Bosw. 452. s Gleason v. Kellogg, 52 Vt. 14. * Caverly v. McOwen, 126 Mass. 222. ^ Wills V. Kane, 2 Grant Gas. 60; Fisher v. Knox, 13 Pa. St. 622; 53 Am. Dec. 503; Gray v. Conyers, 70 Ga. 349. In Bredin o. Kingland, 4 AVatts, 420, the court say: "The third objection is, that the court erred in charging the jury that where an attorney receives money for his client, and neglects or refuses for a length of time to render an account of it, and his client is compelled to have recourse to » suit to recover his money, such attorney forfeits all right to claim any deduction as compensation for his ser- vices. In this direction we perceive no error; for why should the defend- ant receive compensation when he has performed no service ? It amounts to nothing more nor less than the substi- tution of one debtor for another. The debt is not nearer collection than be- fore; and it is apparent that if the plaintiff should be equally unfortunate in the selection of agents, the whole amount will be consumed under pre- tense of collection. The retention of money by an attorney is a flagrant breach of trust, for which he renders himself liable to attachment, and in some cases, to have his name stricken from the roll. In the case of Leonard EUmaker's Estate, 4 Watts, 35, the court ruled that an administrator was not entitled to commissions where he had been guilty of fraud. The same principle was decided in Brackett v. Norton, 4 Conn. 518; 10 Am. Dec. 179. It was there ruled that if an attorney, after having obtained final judgment and execution, prevent the collection of the execution by fraudu- lent conduct, this will be a violation of his duty as attorney, and will de- prive him of all legal claim for his ser- vices in procuring such judgment and execution. It is the duty of an attor- ney, in a reasonable time, to inform his client of the receipt of money, and either transmit it to him or hold it subject to his order. A neglect or refusal to do so, or to render an ac- count, is such fraudulent conduct as deprives him of all right to claim com- pensation for his services. " 343 LIABILITY OF CLIENT TO ATTORNEY. § 205 were, in the eye of the law, illegal or immoral;' nor where the services were absolutely useless;^ nor where they are rendered in a litigation about officers' fees which grew out of the suit in which he was employed, the client not being interested in such litigation;' nor where he has violated his instructions.* Illusteations. — C, an attorney at law, agreed, for a stated compensation, to conduct the contest of a will. Against the consent of his clients, and without leave from them, he released, as their attorney, pending the suit, certain tracts of land, and received from other parties money for so executing the release. In a suit brought by C. to recover the compensation agreed upon, held, that evidence of the above facts was admissible, and showed a complete defense to C.'s claim under the con- tract: Ghatfield v. Simonson, 92 N. Y. 209. The plaintiff, a counselor at law, instigated the defendant, with others, to en- by the defendant, and after this he had thought proper to invest the plaintiS with authority to bring the suit in question, I should not consider his services as invalidated by the ante- cedent fraud. But the suppression of the truth, in this important particular, if such were the fact, was itself a fraud, and contaminated all the sub- sequent acts of the plaintiff. On the supposition assumed, the plaintiff knew that by fraud he had prevented the collection of the execution, and that a recovery against the sheriff was im- possible. With this knowledge not communicated to the defendant, but confined in his own breast, he com- menced a hopeless suit, which, as he must have anticipated, was determined against his client. Having violated his duty by the perpetration of a fraud, and by this act occasioned to the defendant the loss of his debt, he now demands remuneration for his faithless services. The ground of a mere precedent, if it existed, must be unquestionable to sanction the reward of such misconduct, and miioh more to authorize the establishment of a principle that will protect and invite results so flagrantly unjust. " » Burns v. Allen, 15 it. I. 32; 2 Am. St. Rep. 844. ' U. S. Mortgage Co. v. Henderson, 111 Ind. 24. iTrist V. Child, 21 Wall. 441; Ar- rington v. Sneed, 18 Tex. 1.35; Good- enough V. Spencer, 46 How. Pr. 347; Treat v. -Jones, 28 Conn. 334; Jones v. Blaoklidge, 9 Kan. 562; 12 Am. Rep. 503. Thus an attorney cannot recover for such advice to a clieiit as would enable, if not induce, him to elude the process of the law, nor for advice to the officer serving the process, calcu- lated to induce him to violate his duty: Arrington v. Sneed, 18 Tex. 135. '' Weeks on Attorneys, sec. 335. In Brackett v. Norton, 4 Conn. 517, 10 Am. Dec. 179, the court say: "I will assume the facts to be as they were suggested in the argument, and as I understood, not contradicted; that having fraudulently defeated the col- lection of the executioa, and having omitted to give any information of this fact to the defendant, the plaintiff was requested to bring a suit against the sheriff, which, by reason of the culpable act of the plaintiff, was de- feated. To recover for his services in the action aforesaid is one object of the present suit. I do not admit that any authority except what was origi- nally given to pursue the requisite measures for collecting the defendant's debt was legally necessary; but the consideration of this subject, as being of no importance in this case, I shall waive. Had the fact been fully known § 206 PRINCIPAL AND AGENT. 344 gage in a riot, and promised to defend them if they were prose- cuted. The defendant was prosecuted, and employed the plaintiff to defend him. The plaintiff afterwards sued him for his services and disbursements in defending him. Held, that he could not recover: Treat v. Jones, 28 Conn. 334. § 206. Attorney may Make Special Contract for Com- pensation. — Even where a fee bill is provided hj law, an attorney may make an express and special contract with his client for extra compensation.' But the courts scru- tinize such agreements with great care, and the burden is on the attorney to show that the contract was just and fair, and that the client has not been taken advantage of,^ Therefore, every special agreement for compensation be- tween attorney and client is not good. As said in a Ten- nessee case,^ it is essential that "the means used to obtain the contract be free, not only of fraud, actual or construc- tive, but also of any other inequitable consideration; that every material circumstance or fact connected with the execution of the contract, and calculated to inform the client of his rights and resposibilities, be declared to him without reservation; that the attorney inform himself of all such facts and circumstances which would reasonably come within the knowledge of, and which would likely prevent the execution of the contract by, the client; that he does not contract for a greater benefit than his ser- vices are reasonably worth, with reference to the trouble and difficulties of the particular case, amount involved, iWallis V. Loubat, 2 Denio, 607; ford, 59 Ala. 581; 31 Am. Rep. 23; Leoatt V. Sallee, 3 Port. 115; 29 Am. Allison v. Scheeper, 9 Daly, 365; Ches- Dec. 249; Lender v. Caldwell, 4 Kan. ter Co. v. Barber, 97 Pa. St. 455; Gru- 339; Easton v. Smith, 1 E. D. Smith, by v. Smith, 13 111. App. 43; Yonge v. 318; Jenkins v. Williams, 2 How. Pr. Hooper, 73 Ala. 119. Nothing in the 261; McElrath v. Dupny, 2 La. Ann. law of Texas prohibits an attorney from 521; Porter v. Parmly, 39 N. Y. Sup. contracting in good faith for a contin- Ct. 219; Blaisdell v. Ahem, 144 Mass. gent fee: Stewartw. Houston and Texas 393; 59 Am. Rep. 99. Central R'y Co., 62 Tex. 246; Water- 2 Haight f. Moore, 5 Jones & S. 161; bury v. Laredo, 68 Tex. 565. See McMahan v. Smith, 6 Heisk. 167; Ma- title Contracts, Champerty and Main- son V. Ring, 3 Abb. App. 210; Ford v. tenance. Harrington, 16 N. Y. 285; Evans v. ' Planters' Bank v. Homberger, 4 Ellis, 5 Denio, 640; Dickinson v. Brad- Cold. 531. 345 LIABILITY OF CLIENT TO ATTORNEY. § 206 either of a pecuniary character or reputation personally, etc.; that the onus shall devolve on the attorney to show that the contract was free from all fraud, undue influence, and exorbitancy of demand; that the attorney, having per- formed his part of the contract reasonably, and with due skill and diligence, without regard to the result of the liti- gation, shall be entitled to recover the amount specified, provided he brings the contract within the foregoing prin- ciples. In the absence of a contract, the attorney is en- titled to recover on a quantum meruit for such labor as he shall have performed." An attorney cannot stipulate for a compensation incommensurate with the services to be performed. The onus is upon him to show his con- tract for compensation to be just and reasonable.* In New York an attorney is not prohibited from taking in advance a mortgage to secure payment of his costs yet to be earned in a suit.^ An attorney who has made a spe- cial contract with his client to prosecute a case to its final termination cannot recover for his services on a quantum meruit. The parties must be governed by their contract, and it is for the jury to say whether there was a special contract or not.' He cannot recover more than he agreed to receive by proof that his services were worth more.* The power of the court to reform contracts be- tween attorney and client is limited to the duty of protect- ing the latter against the undue influence of the former. It cannot, therefore, increase the amount of compensation agreed on by special contract as the value of the attorney's services.^ A contract to render services for a contingent fee may be valid, although it is understood that the attor- ney will be, as in fact he was, an indispensable witness on the trial of his client's case.® An attorney who is by agreement to receive a certain per cent on recovery is not ' Newman v. Davenport, 9 Baxt. * Coopwood v. Wallace, 12 Ala. 790. 538; McMahan v. Smith, 6 Heisk. 167. * Lewis v. Yale, 4 Fla. 418. ■' Hall V. Grouse, 13 Hun, 557. « Perry v. Dicken, 105 Pa. St. 83: 3 BuU V. St. Johns, 39 Ga. 78. 51 Am. Eep. 181. § 206 PRINCIPAL AND AGENT. 346 a necessary party plaintiff, and need not be joined as such.* Where he has agreed to attend to all of a person's legal busi- ness without charge, in consideration of being furnished ■with offices without charge, and he is called upon to bid in land for such client, which he does, and assists in leasing the same, even if the services do not strictly fall within his contract, he will have no right to have their value estimated upon the basis of commissions.^ So where he takes a writte^i power of attorney to transact and manage certain business for his client, which fixes his compensa- tion for his services and trouble at twenty-five per cent of the net sum realized by him, if, instead of attending to the business himself, he employs other attorneys, he will have no right to charge their fee to his client in addition to his commissions, and he will have no right to charge a fee for his legal services above the compensation provided in the contract.' And where he argues a case for an agreed sum at one term, and charges more for a second argument of the same case, it is a question of fact whether he is en- titled to the same or other compensation.* Under a con- tract to pay an attorney one third of the property to be recovered by way of compensation, the fees of counsel employed, not by him, but by a third person, are not chargeable to the attorney's share.'^ On the question whether litigation has been successful, so that an attor- ney has earned a contingent fee, substantial, not absolute, success may in some circumstances entitle the attorney to his fee.* Illustrations. — A mortgage stipulated that "in the event of foreclosure, sixty dollars attorney's fees shall be by the court also taxed and included in the decree and foreclosure." Held, that the mere commencement of foreclosure proceedings did not entitle plaintiff to collect the attorney's fees, and that if, before decree, defendant tenders to plaintiff the amount of the > McDonald v. R. R. Co., 26 Iowa, * Strong v. McConnel, 5 Vt. 338. 124; 96 Am. Deo. 114. ^ I^ ^g Hynes, 105 N. Y. 560. 2 Dyer v. Sutherland, 75 III. 583. « Cole v. Richmond Mining Co., IS ' Hughes w.-Zeigler, 69 111. 38. Nev. 120. 347 LIABILITY OF CLIENT fO ATTORNEY. § 207 mortgage and costs accrued, he is discharged from all further liability: Schmidt v. Potter, 35 Iowa, 426. On an agreement to pay a law firm for defending a suit in the United States cir- cuit court, and if necessary in the United States supreme court, for one thousand dollars in cash, and such further sum "as may be fair, reasonable, and just under all the circumstances," held, that no action lay before the time for suing out a writ of error had expired: Holly Springs v. Manning, 55 Miss. 380. M. being indicted for counterfeiting, his brother gave R., an attorney, six hundred dollars cash, and a note for four hundred dollars, under an agreement that R. should procure M.'s acquit- tal and discharge at a specified term of court; but M. failed to appear thereat and answer. Held, that the contingency not having occurred, R. could not recover on the note; but R. could retain of the money sufficient to compensate him for his ser- vices in good faith rendered under the agreement before ascer- taining that its performance had become impossible: Moore v. Robinson, 92 111. 491. An attorney received about sixty thou- sand dollars' worth of claims for collection. The rate of com- pensation agreed upon when the claims were given to him was five per cent upon the amount collected. After collecting most of the claims the contract was abandoned by mutual consent. The attorney claimed, in addition to his percentage upon the amount of claims collected, the value of services actually ren- dered in connection with the uncollected claims: Held, that he •was entitled to nothing on account of these claims: Bruce v. Baxter, 7 Lea, 477. An attorney agreed with a county, against which mandamus was pending to compel the issue of certain bonds, to defend the suits relating thereto for a stipulated fee, and for a further sum to be paid " in the event the county shall not be obliged to issue said bonds," or in the event of a com- promise without the attorney's consent, and to be paid when "the validity of the bonds is determined in favor of said county." A suit was pending concerning similar bonds already issued, and the supreme court decided these bonds to be invalid. The attorney thereupon claimed his contingent fee to have been earned. Held, that to declare bonds already issued invalid was a different thing from preventing their issuance, and that the contingency had not arrived when the attorney could claim that his fee was earned : Richland v. Millard, 9 111. App. 396. § 207. Special Contracts for Compensation Sustained. —Tested by the principles in the last section, the follow- ing agreements between attorney and client have been held good: an agreement that the attorney shall have a § 207 PRINCIPAL AND AGENT. 348 percentage on the amount recovered in the suit;^ that the attorney shall be first paid out of the sum recovered;^ that the costs recovered in the suit shall belong to the attorney;' an agreement, after judgment recovered, that the attorney shall have half of it when collected;* a parol assignment of a cause, by a plaintiff to his attorney, in consideration of the attorney's former services and advancements;* an agreement by an attorney to commence and conduct and pay all the espenses of a suit, and give the plaintiff a certain share of the proceeds.'' An attorney at law may stipulate to prosecute a claim against the United States for a contin- gent fee, and a contingent fee of fifty per cent may, under certain circumstances, be not an exorbitant fee.'' A defendant has a right to assign to his attorney the prospective costs against his adversary, in consideration of the services to be rendered by the attorney in earning such costs, and where such transfer has been made, in case the defense is successful, the claim of the attorney to a judgment for the costs cannot be defeated by setting off against the same a prior judgment in favor of the plain- tiff against the defendant.* An agreement made by an attorney with a client to render his professional services, "in the courts of this state," in actions to test the validity of the client's title to certain real estate, in consideration of 1 Benedict v. Stuart, 23 Barb. 420; ' Christie v. Sawyer, 44 N. H. 248. Regan 1'. Martin, 18 Wis. 672; Wilhite In New Jersey where there are no V. Roberts, 4 Dana, 172; Mayor v. laws against champerty and mainte- Gibson, 1 Pat. & H. 48; Ex parte Plitt, nance, an attorney assigned to assist a 2 Wall. Jr. 453; Bayard v. McLane, 3 poor woman in recovering one thousand Harr. (Del.) 139; Tapley v. CoflBn, 12 dollars, and three hundred dollars in- Gray, 420; Ogdeu v. Des Arts, 4Duer, terest due on a policy, may stipulate 275; Evans r. Bell, 6 Dana, 479; Sohomp for one half the amount in case of aSchenck, 40N. J. L. 195;29Am. Rep. success, he to have nothing other- 219; McDonald v. Chicago etc. R. R. wise: Hassell v. Van Houten, 39 N. J. Co., 29 Iowa, 170; Hoffman v. Vallejo, Eq. 105. 45 Cal. 564; Moses v. Bagley, 55 Ga. » Ely v. Cooke, 28 N. Y. 365. 283; contra, Holloway v. Lowe, 7 * Floyd v. Goodwin, 8 Yerg. 484; 29 Port. 480; Satterlee v. Frazer, 2 Sand. Am. Dec. 130. 141; Elliott V. McClelland, 17 Ala. * Jordan ». Gillen, 44 N. H. 424. 206; Dumas v. Smith, 17 Ala. 305; « Fogerty v. Jordan, 2 Robt. 319. Boardman v. Thompson, 25 Iowa, ' Taylor i;. Bemiss, 110 U. S. 42. 427. 8 Perry v. Chester, 53 N. Y. 240. 349 LIABILITY OF CLIENT TO ATTORNEY. § 208 a conveyance by the client to the attorney of a portion of the land, does not bind the attorney to render his ser- vices in an action brought to test the validity of the same title in the circuit court of the United States of that state.* An attorney cannot recover on an agreement by his client to pay him for services when the agreement was brought about by his fraudulent misrepresentations as to the amount which would be recovered in a suit, and by threatening to withhold and destroy valuable papers relating to suits in which he was acting for his client.^ Under a contract to pay an attorney a percentage "on all amounts collected," the attorney is entitled to his percent- age, although the claim is paid without his interference.' Illustrations. — It was agreed that an attorney should take Buch legal proceedings as to him should seem fit to vacate cer- tain assessments. He took proceedings to vacate some of them, but not all, rightly believing that in the case of the others pro- ceedings would be unavailing. Held, that he was entitled to the compensation agreed on: Deering v. McCahill, 51 N. Y. Sup. Ct. 263. § 208. Special Contracts for Compensation not Sus- tained. — But the following have been held invalid: an agreement between attorney and client that the former shall defend the suit in consideration of the rents and profits of the land in question during the litigation;^ an agreement after the attorney had been employed, by which greater compensation is given to him.^ A written contract between a county and an individual, which shows upon its face that it was made by the county for the professional services of the individual as an attorney, which services are such as the law requires to be performed by the county attorney, is prima facie void.^ ' Mahoney v. Bergin, 41 Cal. 423. * Lecatt v. Sallee, 3 Port. 115; 29 ^ Judah V. Vincennea University, Am. Deo. 249. 23 Ind. 273. « Clough v. Hart, 8 Kan. 487. In a ^ Jacks V. Thweatt, 39 Ark. 340. New York ease an attorney at law * Merritt v. Lambert, 10 Paige, 352. acquired knowledge of an unclaimed See title Contracts, Champerty. savings bank deposit. He. induced A, § 209 PRINCIPAL AND AGENT. 350 § 209. Special Contract for Complete Service — Com- pletion of Service Interrupted. — Where there is a special contract between attorney and client for a stipulated fee for prosecuting the suit to its termination, and the attor- ney, after rendering part of the services, is prevented by a cause not within his control from completing his con- tract, he is entitled to be paid the reasonable value of his services.* Thus, if he becomes incapable of acting further on account of being elected to the bench, he may recover for what he has already done.^ A note given for a fee may be collected though the cause be compromised before the payee has performed all the services he was expected to render.* So where, under the circumstances, the at- torney dies before the cause is determined, his adminis- trator may recover a quantum meruit.* A contract with an attorney to present a claim against a foreign govern- ment, for a stipulated proportion of the amount recovered, is not dissolved by the death of the claimant after services have been rendered, but creates a lien on the money, when subsequently recovered, which is a foundation for juris- diction in equity.® The retainer of an attorney in a criminal case makes it his duty to render all his profes- sional services up to final judgment and the end of the case. Where a note is given for the fee, the death of the maker at the hands of a mob before trial constitutes a partial failure of consideration.* Illustrations. — Indictments were found and drawn up during the term of a circuit attorney, and he performed all the one of the next of kin of the deceased * Morgan v. Roberts, 38 111. 65; depositor, to procure himself to be Major v. MoLeater, 4 Ind. 591. appointed administrator, and to agree ^ Baird v. Ratcliff, 10 Tex. 81. to give the attorney one half of the ' McLain v. Williams, 8 Yerg. deposit as compensation for the attor- 230. ney's services in securing it. A after- * Coe v. Smith, 4 Ind. 79; 58 Am. wards refused to carry out the agree- Dec. 618; Baylor v. Morrison, 2 Bibb, ment. It was held that the attorney 103; Clendinen v. Black, 2 Bail. 488; ■was not entitled to a judgment against 23 Am. Deo. 149. A, who was insolvent, to be paid out * Wylie v. Ooxe, 15 How. 416. of the estate: Murphy v. Banderet, 13 • Agnew v. Walden, 84 Ala. 42. Daly, 385. 351 LIABILITY OP CLIENT TO ATTORNEY. §§ 210, 211 actual services which were rendered, and the cases were con- tinued and not brought to trial, and no services were rendered in them by his successor. Held, that the fees thus accruing belonged to the former: Vastine v. Voullaire, 45 Mo. 504. A law firm began the defense of an equity suit, receiving their entire fee in advance, and one of the firm dying, the surviving partner conducted the suit to its conclusion. Held, that he could not claim additional compensation in the absence of a new contract: Dowd v. Troup, 57 Miss. 204. W., an attorney, was engaged by the city of Detroit to prosecute a particular cause for the city, and was to be paid the value of his services. While the cause was pending he was elected city counselor, under ordinances which required the cit}' counselor to prosecute all the city law business, and gave a stated salary therefor. Held, that his Salary must be deemed to cover all services ren- dered after his becoming city counselor. His election to and acceptance of that ofl&ce terminated, by implication, the previous engagement, and his right to recover for services under it: City of Detroit v. Whittemore, 27 Mich. 281. § 210. By Withdrawal from Case. — If an attorney with- draws from a case with the consent of his client, he does not lose his right to compensation for services already rendered.^ If he aliandons the case he cannot recover on his special contract, though he may on a quantum meruit. If the client employ a certain firm or association of law- yers, one cannot abandon the case, and the others carry out the contract.^ The attorney is justified in withdraw- ing by the client's failure to supply him with funds to carry on the litigation.' § 211. By Dismissal of or from Case. — If the attorney is dismissed by his client without cause, he may recover for the services rendered, and perhaps the stipulated fee for the whole case.^ If a client prevents his attorney from ' Coopwood V. Wallace, 12 Ala. * Myers v. Crockett, 14 Tex. 259. 790. Where an attorney at law is employed ^ Morgan v. Roberta, 38 111. 65. In to defend a suit at an agreed compen- Simon v. Braahear, 9 Rob. (La.) 59, sation, and fully perforins his agree- 41 Am. Dec. 321, it was said that ment until discharged without cause, business intrusted to two professional the measure of his damages is the men may be attended to by either. compensation named in the contract: ' Weeks on Attorneys, sec. 365. Webb v. Trescony, Cal. 1888. § 211 PRINCIPAL AND AGENT. 352 completing the services contracted for, the attorney may recover as though he had fully performed them.' A client cannot, at his own option, by the employment of additional counsel, reduce the amount of the compensa- tion or fee which he had stipulated to pay to the original attorney.^ An attorney at law is entitled to claim com- missions upon judgments obtained through his agency, as well as upon moneys actually collected on executions, and a(?counted for to his clients, although he be super- seded by the appointment of another attorney.' If the client dismisses the suit without the attorney's consent, thereby preventing him from completing his contract to the end, it is held by some courts that he may, and by others that he may not, recover the stipulated fee for the full service.'' But such a contract gives him no right which can prevent or affect the settlement or compromise of the suit by the client.^ If the fees of an attorney are contingent on success, and the client settles the suit without the attorney's consent, the attorney can recover what his services were worth. ^ If, by compromise be- tween the plaintiff and defendant, after judgment, the defendant agrees to pay the counsel fees of plaintiff in the case, such agreement is not binding on the attor- ney, and he may, notwithstanding the agreement, recover from his client a fair compensation for his services.' ' Kersey v. Garton, 77 Mo. 645. to compensation. On a settlement so 2 Randall v. Archer, 5 Fla. 438; made, the attorney is at least entitled Morgan v. Brown, 12 La. Ann. to be paid in proportion to the sum 159. -received by the client in settlement ' Morel V. New Orleans, 12 La. Ann. of the action: Marsh v. Holbrook, 3 485; Commandeur v. CarroUton, 15 La. Abb. App. 176. Ann. 7. * Kusterer v. City of Beaver Dam, 56 ^ Hill V. Cunningham, 25 Tex. 25; Wis. 471; 43 Am. Eep. 725; Lament Hunt V. Test, 8 Ala. 16; Polsley v. v. Washington etc. R. R. Co., 2 Mao- Anderson, 7 W. Va. 202; 23 Am. Rep. key, 502; 47 Am. Rep. 268; Miller v. 613. Where an attorney has agreed Newell, 20 S. C. 122; 47 Am. Rep. to prosecute an action, for a compon- 833; Roberts v. Doty, 31 Hun, 128. sation to be contingent on success, and * Quint v. Opbir etc. Mining Co., 4 is diligently prosecuting it, the client Nev. 304. cannot, by settling the action without ' SafTord v. Carroll, 23 La. Ann. his consent, deprive him of hia right 382. 353 LIABILITY OF CLIENT TO ATTORNEY. § 211 Illustrations. — An attorney had a special contract with his client to perform certain services, but was wrongfully prevented by the client from completing them, the attorney having at all times continued ready to serve. Held, that he could claim the entire amount agreed upon, less such expenses as he would have incurred, but not charged to his client, had he completed his task according to agreement: Brodie v. Woikins, 3'3 Ark. 545; 34 Am. Rep. 49. An attorney was appointed by a bank for the term of two years, with an agreement that he should receive a certain commission upon all collections made by him. Held, entitled to such commission on the amount of a judgment, on which execution issued before his term expired, but which was not received by him till after the expiration of his ofHce: State V. Hawkins, 28 Mo. 366. An attorney received notes for collec- tion, on an agreement to charge nothing until they were col- lected, and then to have eight per cent. He prosecuted the notes to judgment, but did no more. Seven years afterwards, the client, with this attorney's consent, employed another attor- ney, who collected the indebtedness. Held, that the first attor- ney was not entitled to any compensation: Rosaeau v. Marrion- eaux, 28 La. Ann. 293. A employed B, an attorney, to collect a decree rendered in his favor, and agreed in writing to give him a certain sum when he should collect it. Before B had collected the whole of the decree, A became dissatisfied, and employed another attorney to collect the balance, and brought suit against B for the amount he had collected. Held, recover- able on the ground that if the contract was in force, the stipu- lated compensation could not be claimed by B, as he had not collected the whole amount decreed, and if the contract was broken and rescinded, he was entitled only to a reasonable compensation for his services, and perhaps damages for the breach of the contract, which amount could not be set off against A's claim, as he had filed neither special plea, notice, nor counterclaim: Scobey v. Ross, 5 Ind. 445. A creditor left a claim with a lawyer for collection, and among other things agreed that in case he should himself " settle, compromise, or receive, or in any way dispose of the claim," the attorney should be allowed twenty-five per cent. Held, that the mere taking by the creditor of the debtor's note, without security or payment, did not entitle the attorney to his commission: Mills v. Fox, 4 E. D. Smith, 220. An attorney was employed to de- fend a party on a criminal charge, for a fixed price, to be paid after the services were rendered. He tendered his services, which were refused, the defendant saying that his wife had employed other counsel. The attorney told defendant he was ready to comply with his contract, and would make him do so, Vol. L— 23 § 211 PEINCIPAL AND AGENT. 354 but afterwards volunteered in the prosecution, and conducted the case against defendant. Held, that this action was an abandonment of the contract, and that the plaintiff, the attor- ney, could not recover in an action for the fee: Cantrel v. Chism, 5 Sneed, 116. An attorney agreed with a father to institute proceedings for the division and sale of land held by the father and his daughter in common, and the father agreed to pay for such services five hundred dollars when the land should be sold and the purchase-money become due, or the usual fee in case the attorney should fail to procure the divis- ion. The father died after an order for the sale had been entered by the court, but before the sale had taken place; and the guardian of the daughter had the suit dismissed. Held, that the attorney was only entitled to the usual fee for his ser- vices: Bunn V. Prather, 21 111. 217. An action was brought for the specific performance of a contract for the sale of real prop- erty, and after issue, but before trial, the parties made a settle- ment of the subject of the action, notwithstanding which the defendant's attorney insisted upon proceeding with the action unless his costs were paid. The plaintiff thereupon moved for a dismissal of the action. Held, that as in fact there was no longer a controversy between the parties, the action should not be continued at their expense, either for the profit or emolu- ment of others, and that the motion for discontinuance should be granted: Sullivan v. O'Keefe, 53 How. Pr. 426. After action brought and sent to referee for trial, the parties settled, and plaintifi" gave a release to defendant, who agreed to pay all costs. Defendant moved for a discontinuance, and an order was entered, directing discontinuance on payment of plaintiff's taxable costs. Plaintiff's attorney showed, upon the motion, that the agreement between him and his client was, that he should not charge the plaintiff personally for services or dis- bursements, but that he should be paid out of the amount col- lected a fee contingent on recovery; but it did not appear, as matter of fact, that any amount beyond taxable costs and dis- bursements was due to him. Held, that upon these facts the court should not have held, as matter of law, that the attorney for the plaintiff was entitled to an allowance for compensation beyond the taxable costs and disbursements: Wright v. Wright, 41 N. Y. Sup. Ct. 432. An attorney agreed with his client to bring a suit for him against a railroad company, for a personal injury, in consideration of one half the damages recovered, the attorney to pay the expenses of the litigation. When the sum- mons was served upon one of the directors of the company, he was notified of this arrangement, and forbidden to settle with the client. Notwithstanding, the company compromised the 355 LIABILITY OF CLIENT TO ATTORNEY. § 211 matter with the client, and took a release from him, which they Bet up in their answer, as a defense to the suit. Held, that although such release should not be set aside, it was void as against the attorney; and that the referee before whom the case was tried should have gone on and assessed plaintiffs' damages, and given judgment against defendant for one half the amount of such damages:' Coughlin v. N. Y. Central etc. R. R. Co., 8 Hun, 136. An attorney was employed to prosecute a claim before the treasury department for one half the sum to be recovered. After filing the papers, etc.. he was disbarred from further practice in the department. Held, that the contract fell to the ground, but that, for services in fact rendered, he was entitled to a reasonable compensation, and that it made no difference that after his disbarment, and the employment of other counsel, the order of disbarment was re- voked: Mayers v. Graham, 15 Lea, 57. 'Otherwise, where defendant had Walsh tj. Flatbush etc. R. R. Co., H no notice of the attorney's rights, and Hun, 190, made the settlement in good faith: § 212 •principal and agent. 356 Part III.— AUCTIONEERS. CHAPTER XVIII. AUCTIONEERS. § 212. Nature and effect of sales by auction. § 213. Auctioneer defined, etc. § 214. Duties of auctioneer. § 215. Powers possessed by auctioneer. § 216. Auctioneer as agent of both — Statute of franda. § 217. Powers not possessed by auctioneer. § 218. Liabilities of auctioneers. § 219. Liabilities and rights of bidders. § 220. Fictitious bids — ' ' Puffers " — Agreements not to compete. § 221. The auctioneer's compensation. § 212. Nature and Effect of Sales by Auction. — ^An auction is a public sale of property to the highest bidder.* The bidding at an auction is an offer by the bidder which is not binding on either side until assented to, which as- sent is signified on the part, of the seller by knocking down the hammer. Therefore a bid may be retracted before the hammer goes down.^ Putting up goods pub- licly for sale at a certain high price, and then gradually lowering the price till some one accepts it as a buyer, is a sale at auction.^ By advertising that the property is to be sold "without reserve," one contracts with the high- est bona fide bidder that the sale shall be without reserve; and the contract is broken if during the auction a bid is made by or on behalf of the owner of the property sold, and in such case the auctioneer is liable to an action at 'Rex V. Taylor, 13 Price, 636; 3 Term Rep. 148; Warloww. Harrison, Campbells Swan, 48 Barb. 109; Cran- 1 El. & E. 295; Ives v. Tregent, 29 dall V. State, 28 Ohio St. 479; Walker Mich. 390. V. Advocate, 1 Dow, 111. * Deposit v. Pitts, 18 Hun, 475. * 2 Kent's Com. 537; Payne v. Cave, 357 AUCTIONEERS. * § 212 the suit of the highest bona fide bidder.^ When property- is advertised to be sold "without reserve," such advertise- ment is understood to exclude any interference by the vendor, either direct or indirect, which can under any possible circumstances affect the right of the highest bidder, whatever may be the amount of his bidding, to be declared the purchaser.'' Therefore any arrangement by him with others, the result of which will be to prevent a sale under a fixed sum, will operate to avoid the sale.' But the owner may cause the auctioneer to publicly an- nounce that no bids less than five cents will be received; and after such notice a person who bids only one cent in advance of a previous bid, although the previous bid was one left by an absentee, acquires no title to the article upon which he bid.* A bid may likewise be retracted or with- drawn by the auctioneer withdrawing the article bid on and passing to something else,® or adjourning the sale.* If the description of the property sold be substantially true, and the purchaser gets what he bargained for, with only slight defects, he will generally be held to abide by the purchase, with an allowance from the price by way of compensation.'' Where the owner advertises a lot of very valuable property to be sold at auction, and only offers for sale articles of very little value, this fraud has no effect upon any particular sale effected at the auction.* But if while the auctioneer is selling goods of one man another procures him to sell his goods, without informing him whose they are, it is a fraud, both on the auctioneer and on the bidders, such as would entitle him to whom the goods were sold to repudiate the sale upon the dis- ' Warlow V. Harrison, 29 L. J. Q. B. * Farr v. John, 23 Iowa, 286; 92 Am. 14; 6 Jur., N. S., 66; 1 El. & E. 295; Dec. 426. in Exchequer, 5 Jur., N. S., 313; 28 ^ Donaldson v. Kerr, 6 Pa. St. 486. L. J. Q. B. 7. " Wharton on Agency, sec. 640. 2 Robinson v. Wall, 2 Phill. Ch. '2 Kent's Com. 537; Ashcom v. 372; 11 Jur. 577; 16 L. J. Ch. Smith, 2 Pfnr. & W. 211; 21 Am. 401. Dec. 437. ' Davis V. Petway, 3 Head, 667; 75 » Farr v. John, 23 Iowa, 286; 92 Am. Deo. 789. Am. Dec. 426. § 212 PRINCIPAL AND AGENT. 358 covery of the fraud.* The advertisement is no part of the conditions of sale, and does not bind the vendor unless expressly made so.^ Conditions of sale read before the biddings commenced, but not annexed to the cata- logue on which the purchasers' names were entered or referred to therein, cannot supply the terms of sale omitted from the catalogue.^ As between the seller and the purchaser of the goods at auction, evidence is admis- sible to vary the conditions of the sale publicly stated.^ But the printed conditions upon which a sale by auction proceeds cannot be varied or contradicted by parol evi- dence of the verbal statements of the auctioneer made at the time of the sale, except for the purpose of showing fraud. Hence parol evidence that is not repugnant to the printed terms of sale, but consistent with and explanatory of them, is admissible. Thus where the wrecks of vessels lying in a river are sold by name as lying at certain localities, evidence is admissible to show that the mate- rials were lying in the river at the localities named, and that the names were wrongly given, the wrecks being incapable of identification by their names, and being masses of rubbish rather than specific chattels.^ Specific performance of a sale by auction may be decreed." An action on the case lies for the disturbance of a sale by ' Thomas v. Kerr, 3 Bush, 619; 96 listed by parol or in writing. Where, Am. Dec. 262. indeed, the advertisement is referred ^ In Ashcom ii. Smith, 2 Peur. & to as containing the conditions, it will W. 211, 21 Am. Dec. 437, it is said: no doubt answer the purpose; but it "Tlie office of an advertisement, is not pretended here that the land both here and in England, is to was sold by the advertisement, or in give notice of the fact that a sale gross, or as containing a definite quan- 13 intended, and the object of the tity, or any other way than by the description is to attract bidders, leav- acre. " ing the terms to be settled on the ^ Johnson v. Buck, 35 N. J. L. 338; ground. Even were the conditions 10 Am. Rep. 243. published beforehand, the vendor * Mitchell v. Zimmerman, 109 Pa. would not be precluded from chan- St. 183; 58 Am. Rep. 715. ging them, as he may sell on his own * Chouteau v. Goddin, 39 Mo. 229; terms, or not at all. The conditions 90 Am. Dec. 462. are, therefore, superadded as a distinct " King v. Bardeau, 6 Johns. Ch. 38; matter by the auctioneer, and pub- 10 Am. Deo. 312. 359 AUCTIONEERS. § 213 auction.* A sale of a number of articles or pieces of property constitutes but one contract, though they are separately struck off at different prices.^ A lease of real estate for five j'ears, by auction, to the highest bidder is not a " sale of real estate" within a Massachusetts statute.^ Illustrations. — A testator ordered that his estate should he sold by "auction." It was advertised for sale on a certain day, but before that time a person, by letter, offered a certain price for it. On the day named the estate was put up, but no one bidding as much as the offer by letter, it was withdrawn and conveyed to the writer. Held, that this was a sale by auction; Tyree v. Williams, 3 Bibb, 365; 6 Am. Dec. 663. A municipal ordinance provides that certain property shall be sold at public auction, and that the city reserves the right to reject any bid not deemed satisfactory and for the best inter- ests of the city. Held, that this does not reserve any greater right than the city would have had without the ordinance, and a bid cannot be rejected after the hammer is brought down: Kerr v. City, 1 Leg. Gaz. Rep. 254. At the sale of premises, the vendor invited each bidder to put down two sums on a slip of paper, and upon collating such biddings, he whose paper con- tained the highest bidding was to be declared the purchaser at the lowest of the two sums, if that exceeded the highest of any bidder. Held^ that this was a sale by "auction," and that the vendor incurred the penalty as an auctioneer without being licensed, although the purchase was never completed: Rex v. Taylor, McClel. 362; 13 Price, 636. A., on the sale of a barge by auction, imder an executiou, addressed the company, stat- ing that he had built it for a person against whom the exe- cution was issued, who had not paid him for it; on which no person bid against him, the auctioneer refused to knock it down to him at his first bidding, when a friend of his made another bidding. A. advanced one shilling more, and paid a deposit as part of the purchase-money. Held, that he did not acquire anv property in the barge under such sale: Fuller v. Abrahams, 6 Moore, 316; 3 Ball & B. 116. § 213. Auctioneer Defined, etc. — An auctioneer is one who is authorized to sell goods or merchandise at public • Furnesa v. Anderson, 1 Pa. L. J. Wend. 3.33; Jenness v. Wendell, 51 324; and see Like v. McKinstry, 3 N. H. 63; 12 Am. Rep. 48; covtra, Abb. App. 62. Messer v. Woodman, 22 N. H. 172; 53 2 Coffmau w. Hampton, 2 Watts & S. Am. Deo. 241; Van Epa v. Schenec- 377; 37 Am. Dec. 511; Dykes i;. Blake, tady, 12 Johns. 436; 7 Am. Dec. 330. 4 Biug. N. C. 463; MUls v. Hunt, 17 = Sewall v. Jones, 9 Pick. 412. § 214 PRINCIPAL AND AGENT. 360 auction or sale for a commission. He usually acts under a license from the state, under regulation — as a license, the giving of bond, etc. — prescribed by statute.^ He may be verbally authorized to sell lands,^ and his author- ity is revocable by his principal.^ A shopkeeper who, in selling goods, adheres to his fixed retail price is not amenable to the charge of violating a statute prohibiting sales at auction without a license, by reason that he em- ploys outcries and loud offers of the goods, to all persons present, in manner like that of auctioneers. The essen- tial feature of an auction, within such a statute, is the endeavor to increase the ptice by means of competition among bidders.* A note for goods previously bought at a sale by an unlicensed auctioneer, and delivered to the purchaser, is valid.^ An auction sale by one not licensed as an auctioneer will not avoid the conveyance to an in- nocent purchaser without knowledge that the auctioneer was not licensed, although it may render the seller liable to a penalty.® § 214. Duties of Auctioneer. — The duties of an auc- tioneer are to use reasonable skill and diligence in his business;' to keep the goods intrusted to his care as a 1 Brown o. State, 12 Wheat. 443; * Crandall v. State, 28 Ohio St. 479. State D. Conkling, 19 Cal. 501; Clark ^ Gunnaldson v. Nyhus, 27 Minn. V. Cushman, 5 Mass. 605: State v, 440. Bucker, 24 Mo. 557; Hunt v. Phila- " Williston v. Morse, 10 Met. 17. delphia, 35 Pa. St. 277; City Council ' "I pay an auctioneer," said Lord V. Paterson, ? Bailey, 165; Davis v. EUenborough, in Denew v. Daverell, 3 Commonwealth, 3 Watts, 297; Girard Camp. 451, "as I do any other pro- V. Taggart, 5 Serg. & B. 19; 9^m. fessional man, for the exercise of skill Dec. 327; Jordan v. Smith, 19 Pick, on my behalf which I do not myself 287; State v. Poulterer, 16 Cal. 514; possess, and I have a right to the ex- Fretwell v. Troy, 18 Kan. 271; Water- eroise of such skill as is ordinarily pos- house V. Dorr, 4 Me. 333;, Sewall v. sessed by men of that profession or Jones, 9 Pick. 412; McMechen v. business. If from his ignorance or Mayor, 3 Har. & J. 534; Commission- carelessness he leads me into mischief, ers ?i. HoUoway, 3 Hawks, 234. he cannot ask for a recompense, al- 2 Yourt V. Hopkins, 24 111. 326; though from a misplaced confidence I Cossitt V. Hobbs, 56 111. 233; Doty v. followed his advice without remon- Wilder, 15 111.407; 60 Am. Dec. 756. strance or suspicion." In Hicks v. ^Taplin v. Florence, 10 Com. B. Mintum, 19 Wend. 550, it is said: 744. "Like other professional men or 361 AUCTIONEERS. § 215 prudent man would keep his own;* to account to his em- ployer;* to obey the instructions of his principals;* to sell for cash when instructed to do so, and not to takf^ a check.'' Doubts about the identity of the property or its title will justify the auctioneer in postponing the sale.^ Paying over the proceeds of an auction sale to the person for whom he sells is one of the ofiBcial duties of an auctioneer. Hence, neglect so to pay over constitutes breach of a bond conditioned simply that the auctioneer shall well and faithfully perform all the duties of said office during his continuance therein.* Where auctioneers, who were not authorized to sell a house and lot for less than $2,800, struck the same off to the plaintiff for $2,250, it was held that the contract was not binding upon the owner, but that the auctioneers were personally bound by it.^ § 215. Powers Possessed by Auctioneer. — He may sue for the property or the price in his own name,* or in the agents, auctioneers assume upon them- maintain replevin: Tyler v. Freeman, selves an obligation to their employers 3 Cush. 261; Hase v. Young, 16 to perform the service confided to Johns. 1; Minturn v. Main, 7 N. Y. them with ordinary care and skill, and 220; Bleeeker v. Franklin, 2 E. D. becomeresponsibleindefault of either; Smith, 93; Seller v. Black, 19 Ark. in other words, they are responsible 566; Johnson o. Buck, 35 N. J. L. for loss arising from gross negligence 338; 10 Am. Rep. 243; Bogart v. or ignorance. Beyond this their du- O'Regan, 1 E. D. Smith, 590. But ties or liabilities do not extend." see Grice v. Kenrick, L. R. 5 Q. B. ' Evans on Agency, 217; Maltby v. 340; Dickenson v. Naul, 4 Barn. & Christie, 1 Esp. .S40. Adol. 638. In Thompson v. Kelly, '' Harington v. Hoggart, 1 Bam. & 101 Mass'. 291, 3 Am. Rep. 353, it is Aid. 577. said: "In case of personal property,* ' Evans on Agency, 218; Wilkinson an auctioneer employed to sell may V. Campbell, 1 Bay, 169; Bush v. Cole, ordinarily maintain an action for the 28 N. Y. 261 ; 84 Am. Dec. 343; Steele price, or for the property itself: u. Ellmaker, 11 Serg. & E. 86; Wolfe Chitty on Contracts, 10th Am. ed., 252; V. Luyster, 1 Hall, 161; Williams v. 1 Chitty on Pleadings, 6th ed., 7, 8; Poor, 3 Cranch C. C. 251; Townes v. Story on Agency, sees. 27, 107, 397; Birchett, 12 Leigh, 173. Tyler tJ. Freeman, 3 Cush. 261. This ' Broughton v. Silloway, 114 Mass. doctrine stands upon the right of the 71; 19 Am. Rep. 312. auctioneer to receive, and his respon- * Roberts v. Jloberts, 13 Gratt. 639; sibility to his principal for the price 70 Am. Dec. 435. of the property sold, and his lien ' Tripp V. Barton, 13 R. I. 1.30. thereon for his commissions, which ' Bush V. Cole, 28 N. Y. 261; 84 give him a special property in the Am. Deo. 343. goods intrusted to him for sale, and * Robinson v. Rutter, 4 El. & B. an interest in the proceeds. In case 954; Beller v. Block, 19 Ark. 566; or of real estate, he can have no such § 215 PRINCIPAL AND AGENT. 362 name of his principal/ "An auctioneer has a possession coupled with an interest in goods which he is employed to sell, not a bare custody, like a servant or shopman. There is no difference whether the sale be on the prem- ises of the owner or at a public auction-room; for on the premises of the owner an actual possession is given to the auctioner and his servants by the owner, not merely an authority to sell."^ So the principal may sue.' An auctioneer can maintain a suit in his own. name for goods sold and delivered by him, whereon he holds a lien for his charges.^ Being in possession of goods and chattels which he sells, he is authorized to receive payment.® He has authority to prescribe the rules of bidding and terms of sale.* Printed terms of sale cannot be varied by parol declarations of the autioneer.'' But an advertisement of a sale of property by an auctioneer may be explained at the time of sale.* Where is it provided by the terms of an auction sale that a proportion of the purchase-money shall be paid within a given time, and the auctioneer is authorized to receive it, his authority is not revoked im- mediately upon the expiration of the time limited, with- out further orders from his principal, prohibiting the subsequent reception of such money.* Illusteations. — A licensed auctioneer sells goods on credit. The buyer refuses to take them. The owner may bring an epecial property, and would not or- separate from the other purchase- dinarily be held entitled to receive money, may become necessary. " the price. But when the terms of his ' Girard v. Taggart, 5 Serg. & E. 19: employment, and of the authorized 9 Am. Dec. 327. sale, contemplate the payment of a ^Loughborough, C J., in Williams w. deposit into his hands at the time Millington, 1 H. Black. 84. of the auction, and before the com- ^ Girard v. Taggart, 5 Serg. & R. 19; pletion of the sale by the delivery 9 Am. Dec. 327. of the deed, he stands, in relation to * Flanigan v. CruU, 53 111. 352. such deposit, in the same position as ^ Capel v. Thornton, 3 Car. & P. 352; he does to the price of personal prop- yourt v. Hopkins, 24 111. 326. erty sold and delivered by him. He " Story on Agency, sec. 107; Paley may receive and receipt for the de- on Agency, sec. 257; Menson v. Al- posit; his lieu for commissions will dridge, 3 Esp. 271. attach to it; and we see no reason why ' Wright v. Deklyne, Pet. C. C. 199. he may not sue for it in his own name, ^ Rankin v. Matthews, 7 Ired. 286, whenever an action for the deposit, ° Pinckney v. Hagadom, 1 Duer, 89. 363 AUCTIONEERS. §216 action for damages in his own name before the expiration of the credit. But he cannot sue for the price until the credit expires: Girard v. Taggart, 5 Serg. & R. 19; 9 Am. Dec. 327. § 216. Auctioneer as Agent of Both — Statute of Frauds. — An auctioneer is primarily the agent for the seller, but he is, for certain purposes, the agent of the buyer also.' He may bind both seller and purchaser by his memorandum of sale and purchase,^ and his writing the name of the purchaser on the memorandum immedi- ately on his knocking the thing down is a sufficient sign- ing within the statute of frauds, as to both real and personal property,* auction sales being within the statute of frauds.'' "He is the agent of the vendor by virtue of his employ- * Story on Agency, sec. 27. In Williams v. Millington, 1 H. Black. 85, Heath, J., said: "Though he is an agent to some purposes, he is not so to all. He is an agent for each party in different things, but not in the same thing. When he prescribes the rules of bidding, and the terms of the sale, he is the agent of the seller. But when he puts down the name of the buyer, he is agent for him only." •' Story on Agency, sees. 27, 107; Smith V. Jones, 7 Leigh, 165; 30 Am. Deo. 498. " Cleaves v. Foss, 4 Me. 1; McComb V. Wright, 4 Johns. Ch. 659; Alna v. Plummer, 4 Me. 258; Jenkins v. Hogg, 2 Tread. Con'it. 821; Pike v. Balch, 38 Me. 302; 61 Am. Dec. 248; Smith V. Arnold, 5 Mason, 414; Johnson v. Buck, 35 N. J. L. 338; 10 Am. Rep. 243; Pugh v. Chesseldine, 11 Ohio, 109; 37 Am. Dec. 414; Hart v. Woods, 7 Blackf. 568; Burke v. Haley, 7 lU. 614; White v. Crew, 16 Ga. 416; Adams v. McMillan, 7 Port. 73; Gill V. Hewitt, 7 Bash, 10; Walker v. Her- ring, 21 Gratt. 678; 8 Am. Rep. 616; Singstack v. Harding, 4 Har. & J. 186; 7 Am. Dee. 669; Davis v. Robert- son, 1 Mill Const. 71; 12 Am. Dec. 611; Episcopal Church v. Wiley, 2 Hill Ch. 584; 30 Am. Dec. 386; Doty V. Wilder, 15 111. 410; 60 Am. Dec. 756; Smith v. Jones, 7 Leigh, 165; 30 Am. Dec. 498; Craig V. Godfrey, 1 Cal. 415; 54 Am. Dec. 299; Lake v. Campbell, 18 111. 109; Lewis V. Wells, 50 Ali. 198; Black- wood V. Leman, Harp. 219; Arden v. Brown, 4 Cranch O. C. 121; Thomaa B. Kerr, 3 Bush, 619; 96 Am. Dec. 262. In Morton v. Dean, 13 Met. 388, it is said: " A sale by auction is within the statute of frauds, and the auctioneer who makes the sale is the agent of both parties, and his memo- randum will take the case out of the statute as well when lands as when chattels are sold. But the memoran- dum of sale must refer to the condi- tions of sale, or the case will be within the statute. Where the connection between the memorandum and the conditioiis is to be proved entirely by parol evidence, it is within the mis- chief intended to be prevented by the statute. The terms of the agreement which are material must be stated in writing." * Arden v. Brown, 4 Cranch C. C. 121; Talman v. Franklin, 3 Duer, 395; Burke v. Haley, 7 111. 614; Pike v. Balch, 38 Me. 302; 61 Am. Deo. 248; O'Donnell v. Leeman, 43 Me. 158; 69 Am. Dec. 54; Brent v. Green, 6 Leigh. 16; Davis v. Rowell, 2 Pick. 64; 13 Am. Dec. 398; Morton v. Dean, 13 Met. 388; People v. White, 6 Cal. 75; Davis V. Robertson, supra; Bailey v. Ogden, 3 Johns. 399; 3 Am. Dec. 609; Meadows v. Meadows, 3 McCord, 458; 15 Am. Dec. 645. § 216 PRINCIPAL AND AGENT. 364 ment to make the sale, and he is made the agent of the vendee by the act of the latter in giving him his bid, and receiving from him, without objection, the an- nouncement that the property sold is knocked ofF to him as purchaser."^ The true reason probably is, it is said,^ " that a sale by auction, being open and visible, and in the presence of witnesses, either competitors or persons pres- ent, and closely watching the proceeding, there is less danger of fraud or perjury in proving the making and terms of the contract, and so the main reason for requir- ing a memorandum in writing does not exist. The tech- nical ground is, that the purchaser, by the very act of bidding, connected with the" usage and practice of auc- tion sales, loudly and notoriously calls on the auctioneer or his clerk to put down his name as a bidder, and thus confers an authority on the auctioneer or clerk to sign his name, and this is the whole extent of the authority." The memorandum, however, must refer to the conditions of sale;' it must be in writing,* and contain the names of the parties, the property sold, and the price,^ but not necessarily the terms of payment.® It is sufficient if made by the auctioneer's clerk;' but neither of the con- tracting parties can be agent of the other to make the memorandum;* nor is it good if the auctioneer is himself 1 Bent V. Cobb, 9 Gray, 397; 69 Am. « Smith v. Jones, 7 Leigh, 165; 30 Dec. 295. Am. Dee. 498. 2 Gill V. Bicknell, 2 Gush. 358. ' Jenkins v. Hogg, 2 Tread. Const. » Morton V. Dean, 13 Met. 385; 821; Johnson v. Buck, .35 N. J. L. Price r. Durin, 56 Barb. 647; Gowen 338; 10 Am. Rep. 243; Harvey v. V. Klous, 101 Mass. 449; Adams v. Stevens, 43 Vt. 653; Alna w. Plnmmer, Scales, 1 Baxt. 337; 25 Am. Rep. 775. 4 Me. 258; Pope v. Chafee, 14 Rich. * Baltzen v. Nicolay, 53 N. Y. 470; Eq. 69; Baptist Church v. Bigelow, Gill V. Bicknell, 'Z Gush. 358. 16 Wend. 28; Norris v. Blair, 39 Ind. ^ Johnson v. Buck. 35 N. J. L. 338; 90; 10 Am. Rep. 135; Cathcart v. Keir- 10 Am. Rep. 243; Potter v. DuflBeld, naghan, 5 Strob. 129; contra. Meadows L. R. 18 Eq. 47; Norris v. Blair, 39 v. Meadows, supra. Ind. 90; 10 Am. Rep. 135; Meadows « Johnson o. Buck, 35 N. J. L. 338; V. Meadows, 3 McCord, 458; 15 Am. 10 Am. Rep. 243; Wright t). Dannah, Dec. 645; Doty v. Wilder, 15 111. 407; 2 Camp. 205; Thomas v. Trustees, 3 60 Am. Dec. 756; Ridgway v. Ingram, A. K. Marsh. 298; 13 Am. Deo. 165; 50 Ind. 145; 19 Am. Rep. 706; Gwath- Rayner v. Linthorn, 2 Car. & P. uey V. CasoD, 74 N. C. 5; 21 Am. Rep. 124; Sherman v. Brandt, L. K. 6 484. Q. B. 720. "The chief reason," it is 865 AUCTIONEERS. §216 the vendor,* or it is a private and not a public sale;^ nor is it sufficient if the owner is present directing the sale, and the auctioneer simply cries the bids and knocks off the property;* nor is it sufficient if the sale has really been made before the auction,^ or if the memorandum was made after the sale was adjourned.^ Only the parties can take advantage of the defects in the memorandum.* A trustee who, at an auction sale under a deed of trust, acts as his own auctioneer, cannot bind his purchaser by a memorandum of the sale made by himself, because such memorandum is not executed by the "party to be charged therewith, or some other person by him thereto lawfully authorized," as required by the Missouri statute of frauds.' A parol agreement of the purchaser at a public sale, that another shall be regarded as a joint purchaser, is void, under the statute of frauds.' A general memorandum entered in a book by the auctioneer at the commence- said in Bent v. Cobb, 9 Gray, .397, 69 Am. Deo. 295, " in support of the rule that an auctioneer acting solely as such may be the agent of both parties to bind them by his memorandum is, that he is supposed to be a disinter- ested person, having no motive to misstate the bargain, and entitled equally to the conHdenoe of both par- ties. But this reason fails when he is the party to the contract and the party in interest also. " ^ As, for instance, a guardian selling by auction laud of his ward: Bent v. Cobb, 9 Gray, 397; 69 Am. Dec. 295; TuU V. David, 45 Mo. 444; 100 Am. Dec. 383; Adams v. Scales, 1 Baxt. 337; 25 Am. Rep. 775. 2 Mews V. Carr, 1 Hurl. & N. 484. » Adams v. Scales, 1 Baxt. 337; 25 Am. Rep. 775. * Wharton on Agency, see. 656, citing Bartlett v. Purnell, 4 Ad. & E. 792. * Wharton on Agency, sec. 656, cit- ing Horton V. McCartey, 53 Me. 394; Mews V. Carr, 1 Hurl. & N. 484; Mo- Comb t;. Wright, 4 Johns. Ch, 659; Gill V. Bioknell, 2 Cush. 355; Walker v. Herring, 21 Gratt. 678; 8 Am. Rep. 616 (Craig V. Godfrey, 1 Cal. 415; 54 Am. Dec. 299, even on the same day); Hicks V. Whitmore, 12 Wend. 548; Smith V. Arnold, 5 Mason, 414; Gwathney v. Cason, 74 N. C. 5; 21 Am. Rep. 484. A memorandum made in pencil at the time of the sale, and entered upon the books as soon as practicable, is suflBicient: Epis- copal Church V. Wiley, 1 Riley Ch. 156; 2 Hill Ch. 583; 30 Am. Deo. 386. In Horton v. McCarty, supra, it is said: "The law, in allowing the auctioneer to act in the nearly un- precedented relation of agent of both parties, imposes a qualiticatiou not applied to the usual cases of agency, and requires that the single act which almost from necessity he is authorized to perform for the buyer shall be done at the time of sale, and before the termination of the proceedings." In Gill V. Bicknell, 2 Cush. 355, Shaw, C. J., said: "The name of the bidder must be entered by the auctioneer or by his clerk, under his direction, on the spot." « Lewis V. Wells, 50 Ala. 198. ' Tullu. David, 45 Mo. 444; 100 Am. Dec. 385. ^ Arden v. Brown, 4 Cranch C. C- 121. § 216 PRINCIPAL AND AGENT. 366 ment of an auction sale, showing the name of the person on whose account the sale is made, the nature of the property, the terms of payment, referring to entries fol- lowing for the names of purchasers and lots struck off to each, and signed by the auctioneer, under which he enters the name of each purchaser, the description of the goods sold, and the price, is a sufficient memorandum of each sale within the statute of frauds. It is not necessary that such general memorandum should be made as often as a parcel of goods is sold; even though the sale is adjourned to and continues on the second day without any repetition of the memorandum.^ Illustrations.- — At a public sale of town lots a lot was struck off to a person for a certain sum, and a memorandum of the purchase was made at the time, by the clerk of the sale, in the sale-book. Held, that the sale was valid under the statute of frauds: Hart v. Woods, 7 Blackf. 568. At a sale, at auction of a house and blacksmith's shop, with a leasehold interest in the lot on which they stood, the auctioneer wrote with a pencil, on the back of the lease, "$200. . . . $350. . . . Richard Burke." Held, that this was not sufficient to bind the purchaser, Burke: Burke v. Haley, 7 III. 614. At an auction sale of real estate the property was knocked down to C. No memorandum was signed, but the auctioneer went into his office, two hundred yards from the sale, and in C.'s absence began to draw a deed, before he had finished which he was informed that C. refused to complete the purchase. Held, that the sale was invalid under the statute of frauds: Gwathney v. Cason, 74 N. C. 5; 21 Am. Rep. 484. W. and H. agreed to purchase property jointly at auction. In pursuance thereof W. bid on the property, and W.'s name was written in the auctioneer's book as purchaser. The next day a partner of W. added H.'s name as purchaser. A loss having occurred by a resale in an action by W. against H. to recover his share of the loss, held, that the memorandum did not take the case out of the statute of frauds, and that H. was not liable: Walker v. Herring, 21 Gratt. 678; 8 Am. Rep. 616. The terms of sale at a public auction were a credit of nine months on notes with approved security, waiving valuation and appraisement laws. The auctioneer's memorandum did not state these terms. Held, that the sale was void* under the .statute of frauds: Norris v. Blair, 39 Ind. 90; 10 Am. Rep. 135. ' Price V. Durin, 56 Barb. 647. 367 AUCTIONEERS. ^ § 216 A trustee offered lands at auction, being present and directing the sale, but employing a crier to receive and announce the bids and knock down the property. The trustee made a mem- orandum of the sale to S. Held, that this was not sufficient to bind S. within the statute of frauds: Adams v. Scales, 1 Baxt. 337; 25 Am. Rep. 772. In an auctioneer's book was the follow- ing entry: " The tract of land to William Meadows, Jr., at five dollars and forty-eight cents." Held, an insufficient memoran- dum within the statute of frauds: Meadoivs v. Meadows, 3 Mc- Cord, 458; 15 Am. Dec. 645. A memorandum of sale made by the clerk of an- auctioneer in his book was as follows: "Fox tract of land, four dollars and ten cents per acre; purchaser, W. Smith." ifeid, sufficient within the statute of frauds: Smith y. Jones, 7 Leigh, 165; 30 Am. Dec. 498. An auctioneer, on sell- ing real estate to S. D. at auction, after reading or exhibiting written conditions of sale, made this memorandum in writing: " Sale on account of Messrs. Morton and Dean, assignees of the Taunton Iron Company, of the real estate, nail-works, water privilege, buildings, and machinery, agreeable to the plans and schedule herewith. Sale to Silas Dean for $30,800. April 5, 1843," Held, that as this memorandum did not contain nor refer to the conditions of sale, it did not take the case out of the statute of frauds: Morton v. Dean, 13 Met. 385. In as- sumpsit against M. for $112.50, the price of a pew, the plain- tiff proved the following entry in the auctioneer's book of sales: " Sale of pew in B. church for account, S. F. [the plaintiff], Monday, March 24, 1845. Pew No. 18, B. M., $112.50. Charges, advertising, and commission, $5." Held, a sufficient mem- orandum within the statute, if made at the time and place of sale by the auctioneer or under, his direction; the omission of the middle letter of defendant's name not being fatal, if it could be shown by parol that he was the person intended, or that he was known by one name as well as the other: Fessenden v. Mussey, 11 Cush. 127. A memorandum in writing of an auction sale of land signed by the auctioneer, authorized by the vendor to conduct the sale, contained a description of the premises sold, the names of both parties to the agreement, the price agreed upon, an acknowledgment of the receipt of a sum of money in part payment, and a clause in which the auctioneer agreed that " the vendor shall in all respects fulfill the condi=- tions of sale," but did not set forth what were these " conditions of sale." Held, that this was not a sufficient memorandum within the statute of frauds: Riley v. Farnsworth, 116 Mass. 223. The auctioneer's clerk made a memorandum as follows: " Rayner tract to James S. Long, at forty dollars per acre," by order of the auctioneer, and it was shown that " Rayner tract " 217 PEIKCIPAL AND AGENT. 368 was a well-known designation. Held, that under the circum- stances, the memorandum was sufficient within the statute of frauds: Cherry v. Long, Phill. (N. C.) 466. G., the auctioneer at an auction sale of the property of H., caused to be entered by his clerk, as the sales were made, the articles sold, the names of the buyers, and the prices at which the articles were sold, in a book headed, on the inside of the front cover, " John Harvey's auction sale book." Held, that this memorandum was sufficient to satisfy the requirements of the statute of frauds, and therefore bound the parties upon a contract of sale made iDy the auctioneer: Harvey v. Stevens, 43 Vt. 653. § 217. Powers not Possessed by Auctioneer. — An auc- ctioneer has no authority to purchase (he is to sell, not to buy);^ nor to sell in private;^ nor to give a warranty as to the goods sold;* nor to sell on credit;* nor to bind his principal by verbal declarations at the sale inconsistent with the printed or published particulars of the sale;* nor to delegate his authority by employing another person to sell the property intrusted to him to sell;* nor to receive ' Story on Agency, sec. 27; Brock v. Rice, 27 Gratt. 812. ^ Wilkes V. Ellis, 2 H. Black. 555; Daniel v. Adams, Amb. 495; Jones v. Nanney, 13 Price, 76; Marsh v. Jelf, 3 Fost. & F. 234. ^ ' ' Sales at auction in the usual mode are never understood to be ac- companied by a warranty. Auction- eers are special agents, and have only authority to sell, and not to warrant, unless specially instructed so to do ": The Monte Allegre, 9 Wheat. 645. ' ' We doubt whether, in an ordinary sale of goods by auction, an auctioneer virtiite officii has any right or authority to warrant goods sold by him in the absence of any express authority from his principal to do so, and without proof of some known and established usage of trade from which an authority can be implied However this may be, we are clear that he has no such authority in a case like this where he acts as agent for an administrator in selling the goods of his intestate": Blood V. French, 9 Gray, 197. * Story on Agency, sec. 107; Wil- liams V. Evans, L. R. 1 Q. B. 352. Nor to receive a check where the terms were cash: Broughton v. Silloway, 114 Mass. 71; 19 Am. Rep. 312; Bridges V. Garrett, L. R. 4 Com. P. 580; Townes V. Birchett, 12 Leigh, 173. But see Pinckney v. Hagadorn, 1 Duer, 90. ^ Story on Agency, sec. 107; Gunnis V. Erhart, 1 H. Black. 289; Wright v. Deklyne, Pet. C. C. 199; Poree v. Bonneval, 6 La. Ann. 386; Lay ton v. Hennen, 3 La. Ann. 1. But see Ran- kin V. Matthews, 7 Ired. 280; Satter- field V. Smith, 11 Ired. CO. If the purchaser gets substantially what he bargained for, he may generally he held to abide by the purchase, with the allowance of some deduction from the price by way of compensation for any small deficiency in the value by reason of the variation between the description and the article sold: Whar- ton on Agency, sec. 646, citing 2 Kent's Com, 537. "Coles V. Trecothick, 9 Ves. 234; Blore V. Sutton, 3 Mer. 237; Stone v. State, 12 Mo. 400; Poree v. Bonneval, 6 La. Ann. .386. In Commonwealth v. Harnden, 19 Pick. 482, the court say: " Special trust and confidence is placed in an auctioneer which he cannot del- egate. Yet this does not require that 369 AUCTIONEERS. §217 the purchase price of real property sold by him.' His authority ceases when the sale is made, and he has no power tlierefore to subsequently deal with the purchaser as to terms,^ or to rescind the contract.' He cannot act for himself or any other person as a purchaser.* he should make all the sales in person. He may employ all necessary and proper clerks and servants. And in the course of a protracted sale, he may undoubtedly, without a violation of law, relieve himself hy employing others to use the hammer and make the outcry. But this should be done under his immediate direction and supervision. We do not mean, how- ever, by this that he must be actually present during the whole time of the sale. An occasional absence would not subject his servant or substitute to the penalties of the statute. If the auctioneer really conducted the auc- tion and made the sales, he might, within his authority, call to his aid such assistance as might be needed to transact the business in a convenient and proper manner; but he clearly could not appoint deputies to make sales at- different places and times in his absence. This would be inconsis- tent wibh his duty to manage his auc- tions fairly, and to render under oath a true account of his sales. It would, too, enable him to employ those to carry on the business who mighk not be deemed, by the proper authorities, suitable persons to be intrusted with the power." 1 Sykes V. Giles, 5 Mees. & W. 645. It soems he may receive the deposit required, but not the whole purchase price: Myrn v. Joliffe, 1 Moody & E. 32G. 2 Seton V. Slade, 7 Ves. 276; Pinck- ncy V. Haga, orn, 1 Cuct, 89; Boinest V. Leiguoz, 2 Rich. 404; Nelson v. Allridge, 2 Stark. 4S5. "Nelson r. Aldril;c, 2 Stark. 435; Boinest v. Leif nez, 2 Rich. 464. * Brock V. li.ce, 27 Gratt. 812; Tate V. Williamson, L. R. 2 Ch. 55. In Vcazie V. Williams, 8 How. 134, it is said: "It is very questionable whether in point of law or equity an Vol. I.— 24 auctioneer can be allowed to bid off for himself the very property he is selling. It has been laid down that, he cannot: Hughes's Case, 6 Ves. 617;. Oliver et al. v. Court et al. , 8 Price, 126; 9 Ves. 234; 8 Ves. 337; Long on Sales, 228; Babington on Auctions, 164. The principles against it are stronger, if possible, and certainly were enforced earlier in courts of equity than of law. An opposite course would give to an auctioneer many undue advantages. It would tend, also, to weaken his fidelity in the execution of his duties for the owner. He would be allowed to act in double and inconsistent capacitioc, as agent for the seller and as buyer also; and the precedents arc numerous holding such sales voidable, if not void, and at all events unlawful, as opposed to the soundest public policy: See Michoudt'. Girod, 4 How. 554; 15 Pick. 30; 1 Mason, 344; 2 Johns. Ch. 51; Tufts V. Tufts, Mass. Dist., 1843, and cases there cited; Long on Sales, £28; 9 Paige, 663; 1 Story's Eq. Jur., aec. 315; 3 Story, G25. That an auctioneer is a general agent for the owner usu- ally, though questioned in the argu- ment, cannot be doiibtful: See How- ard V. Braithwaite, 1 Ves. & B. £09; Story on Agency, sees. 27, 28; 4 Burr. 1921; 1 H. Black. 85. He is so till the sale is completed: Long on Sales, 231; Setont). Slade, 7 Ves. 270; Br.b. ington on Auctions, 90; 20 Wend. 43. And though he may be agent of the buyer after the sale for some pur- poses, such as to take the case out of the statute of frauds: Williams v. Millington, 1 H. Black. 84; 3 Tprni Rep. 148; Cowp. 395; Long on Sales, 60, 63, £28; Emerson v. Heeli-j, 2 Taunt. 38; 1 Esp. 101; yet this does not affect the other principle, that till the sale, and before it, he acts for the- vendor alone." § 218 PEINCIPAL AND AGENT. 370 § 218. Liabilities of Auctioneers. — The auctioneer ig personally liable if he does not disclose the name of his principal at or before the sale.^ Where the name of the owner of the chattel sold is not disclosed, and it is after- wards claimed by a superior title, the purchaser may, in an action for money had and received, recover the pur- chase-monej' of the auctioneer.'^ An auctioneer is liable for the state's charges, whether he collects them from the vendor or not. The law makes no exception in cases of succession, bankruptcy, and judicial sales. The charges are due, however, only upon actual complete sales.' An auctioneer selling realty for a less sum than he is author- ized to do, and at such sale signing the contract as agent of an undisclosed principal, does not thereby bind the owner of the property, but becomes personally liable un- der the contract to refund to the purchaser the amount of any deposit he may make and auctioneers' fees, with in- terest; and if he knew that he was not authorized so to sell, will also be held liable for what the premises were worth over and above the price he was to pay therefor.* An auctioneer who innocently sells stolen goods is liable to the true owner, even where the proceeds have been paid over to the thief without notice of the felony.* An auctioneer who sells goods which are claimed by a third person is liable to him if he pay over the proceeds after notice.^ If the purchaser of land at auction deposits with the auctioneer a sum of money, in compliance with the terms of sale, and the sale is afterwai-ds abandoned by ' Mills V. Hunt, 17 Wend. 333; 20 * Bush v. Cole, 28 N. Y. 261; 84 Am. Wend. 431; Hanson v. Roberdeau, Dec. 343. Peake, 120; Franklyn v. Lamond, 4 ^ Hoffman v. Carow, 20 Wend. 21; Com. B. 637; SchcU v. Stephens, 50 22 Wend. 285; Chambess v. McCor- Mo. 375. The bidder may repudiate miok, 4 N. Y. Leg. Obs. 342; Allen v. his bid if the actioneer refuses to dis- Brown, 5 Mo. 323; Dent v. McGrath, close the principal: Thomas v. Kerr, 3 3 Bush, 174; Rogers v. lime, 1 Cal. Bush, 619; 96 Am. Deo. 262. 429; 54 Am. Deo. 300; contra, Ja- ^ SeemuUer v. Fuchs, 64 Md. 217; cobs's Case, 2 Bay, 84; Rogers u Huie, 54 Am. R(ip. 766. 2 Cal. 571; 56 Am. Dec. 303. ^ State V. Girardey, 34 La. Ann. ' Hardacre v. Stewart, 5 Esp. 103; 620. Jacobs's Case, 2 Bay, 84. 371 AUCTIONEEKS. § 218 mutual consent of the parties, and the purchaser there- upon forbids the auctioneer to pay over the money to the vendor, and thus prevents him from doing so, the latter is not responsible to the purchaser for its return.^ But if the sale is not completed, through the fault of the ven- dor, the latter is responsible to the purchaser for the return of the monej-, although he has never personally received the same.^ In an action against an auctioneer to recover the price of property sold by the auctioneer, the plaintiff must prove such a property in the articles sold as will entitle him to the proceeds of sale. It is not sufiBcient to show merely that he delivered them to the auctioneer.' An auctioneer who sells the property of an estate under an order of court, and receives the price therefor, is not a depositary for the purchaser. He can- not, therefore, be held liable to the purchaser for the re- turn of the purchase-money, in case the latter fails to receive the goods purchased, unless it is shown that the purchase-money is still in the hands of the auctioneer, and is not claimed by any one else.'* The mere fact that auctioneers acted as such in making the sale is not of itself notice that they were not selling their own goods. They must be deemed vendors, and responsible as such for the title of the goods sold, unless they disclose at the time of the sale the name of the principal. And the joint signature of the bill of sale by the auctioneer with the principal will raise a presumption that the auctioneer acted also as principal, which cannot be contradicted by parol evidence that he did not sell or intend to hold him- self responsible as principal,* As to sales made without reserve, an auctioneer who ad- vertises to sell "without reserve," but who knocks the goods down to an illusory bidder, is liable to an action at ' Kobinson v. Trofitter, 11 Allen, ' Allen v. Brown, 5 Mo. 323. 339. *.Lara v. Nash, 24 La. Aim. 310. 2 Tea£Ee v. Simmons, 11 Allen, 342. ' Sohell v. Stephens, eo Mo. 375. § 218 PRINCIPAL AND AGENT. 372 the suit of tlie highest bona fide bidder/ The last bona fide bidder at an auction, which is advertised as a peremptory- sale, has no remedy against the auctioneer for knockiiig the property down to a subsequent bid by the vendor's agent.^ An action does not lie against an auctioneer for selling a horse at the highest price bid for him, contrary to the owner's express directions not to let him go under a larger sum named.^ A sheriff, selling property at auc- tion, is uot obliged to attend to the bid of an insufficient purchaser/ An auctioneer by advertising that the sale of certain goods would take place on a certain day does not so bind himself to sell them then as to make himself liable to persons who went to expense in order to attend the sale/ A statement by an auctioneer, made as an in- ducement to purchase, that a building is suited for tene- ment purposes, and could be removed for that purpose, but not shown to be made or understood to vary the terms of a printed advertisement, is a statement of opinion only, and cannot be construed as an implied guaranty that the proper authorities would grant a permit to remove the ' Warlow V. Harrison, 1 El. & E. that the auctioneer who puts up prop- 309. In tbis case Martin, B., said: "In erty for sale upon such a condition a sale by auction there are three par- pledges himself that the sale shr.ll be ties; namely, the owner of the prop- without reserve, cr in other words, erty to be sold, the auctioneer, and contracts that it shall be to, and that the portion of the public who intend this contract is made with the highest to bid, which includes, of course, the &o«aJ((Zc bidder; and in case of a breach highest bidder. In this, as in most of it, he has a right of action against the cases of auction, the owner's name was auctioneer Vv^o entertaia no not disclosed; ho was a concealed doubt that the owner may at any principal. The names o£ the auction- time before the contract io legally eers, of whom the defendant was one, complete interfere and revoke the alone were published, and the sale was auctioneer's authority; but he docs bo announced by them to be ' v^ithout re- at his own peril; and if the auctioneer serve.' This, according to all the has contracted any liability in conse- cases, both in law and in equity, means quence of his employment and the that neither the vendor nor any per- subsequent revocation or conduct of son in his behalf may bid at the auc- the owner, he is entitled to be indom- tion, and that the property be sold to nified." the highest bidder, whether the sum ^ Mainprice v. Westley, 6 Best & S. be equivalent to the real value or not. 420; 13 L. T., N. S., 5G0; 34 L.J. .... Upon the same principle, it Q. B. 229; 14 Week. Rep. 9. seems to us that the highest bona fide ^ Bexwell r. Christie, Cowp. 395. bidder at an auction may sue the auc- * Den v. Zellers, 7 N. J. L. 153. ticneer as upon a contract that the sale ^ Harris v. Nickerson, L. R. S Q. B. shall be without reserve. We think 286. 373 AUCTIONEERS. § 219 building through the public streets.* An auctioneer em- ployed under an agreement that he shall be paid expenses of printing advertisements of the sale cannot charge for ordinary rates if the printer has allowed him any dis- count therefrom. Whether he were allowed the discount under an arrangement with the printer embracing all his advertising, or only under a special agreement for the advertisement of his employer, the discount would be no part of the expense of advertising. And, independently of the special authority, the agent would be bound to procure advertising on the best terms he could for his principal.* Illustrations. — The persons present at an auction sale, being distrustful of the title of W., the reputed owner of the article to be sold, the auctioneer announced that he " knew W. well, and he was all right, and he, C, the auctioneer, would warrant that his title was good." Held, that this amounted to a warranty: Dent v. McGrath, 3 Bush, 174. An auctioneer accepted a bid for a horse, but did not call for the name of the buyer. The buyer was asked by the auctioneer to come to the desk, but did not do eo. Later the auctioneer put up the horse again, and sold him for a less sum. Held, that the auctioneer was liable to the owner for the sum first bid: Townsend v. Van Tassel, 8 Daly, 261. § 219. Liabilities and Rights of Bidders. — One who bids for another at an auction, without disclosing his agency, will be personally liable as purchaser;' so of one who stands by and allows his name to be put down as purchaser, though he did not bid.* A bidder of a "choice" from a lot must make his election at once.' Where the purchaser at a public sale fails to comply with the conditions, and the property is resold, he can be held liable for a deficiency only when the conditions of the second sale are the same, or are not more onerous than '■ Woodwards. Boston, 115 Mass. 81. * Jenkins v. Hogg, 2 Tread. Const. ^ Union Refining etc. Co. v. Pente- 821. cost, 79 Pa. St. 491. » Coflfman v. Hampton, 2 Watts & S. ^ McComb V. Wright, 4 Johns. Ch. 377: 37 Am. Dec. 511. 659. § 219 PRINCIPAL AND AGENT. 374 those of the first sale.' Where A offers property for sale at public auction, and the property is knocked off to B, the contract is binding upon A, although he before told B that his bid should not be received, unless he directed the auctioneer not to receive the bid of B.^ One who sells chattels at auction on credit, to a purchaser who fails to comply with the terms of the sale within the time for which the credit was given, may, after the expiration of that time, sue for the price without a delivery of or an offer to deliver such chattels to the purchaser.^ A mistake by the auctioneer in entering the vendor's name will be corrected in equity.^ By being knocked down to a bid- der, the property does not vest if a higher bid was made and recognized, and the sale was reopened.* The auc- tioneer should reopen the sale where it is affirmed, and he has good reason to believe, that there was a higher bid made.® The bidder to whom land is knocked down is not bound to pay the purchase-money and accept the deed tendered, and leave the seller to clear up defects in the title afterwards with the aid of the purchase-money.^ Where a tract of land divided into city lots is put up and sold at auction in separate and independent parcels, a defect in the title to one parcel, or to a lot included therein, will not avoid or affect the sale of another parcel; but a defect in the title to any one of several lots put up and sold as one parcel avoids the sale of the whole parcel.* A bidder may repudiate a purchase of goods knocked down to him, if the auctioneer refuses to disclose the owner.^ An agent for complainants in a foreclosure suit may bid upon the property for his principals without giving notice to other bidders that he is not bidding for ' Weast 0. Derrick, 100 Pa. St. ^ Pike v. Balch, 38 Me. 302; 61 Am. 509. Dec. 248. 2 Eicks V. Battle, 7 Ired. 269. * Pike v. Balch, su'pra. s Wade V. Moflfett, 21 lU. 110; 74 ' Gormley v. Kyle, 137 Mass. 189. Am. Dec. 79. « Mott v. Mott, 68 N. Y. 246. ^ Pugh V. Chesseldine, 11 Ohio, 109; » Thomas v. Kerr, 3 Bush, 619; 96 37 Am. Deo. 414. Am. Deo. 262. 375 AUCTIONEERS. § 219 himself, but for the complainants. But if such agent bids off the property, without disclosing his principal, in his own name, he will be responsible for the comple- tion of the purchase.' If the terms of sale of land are, that the buj'er shall, within thirty days, give his notes, with good indorsers, and if he shall fail so to do, then the land to be resold on his account, the vendor cannot main- tain an action for breach of the contract until the deficit is ascertained by a resale.^ When an auctioneer sells a balance of goods without specifying their quantity, he has a reasonable time to ascertain it; when this is done, and a bill of particulars is made out and delivered to the purchaser, who pays the purchase-money, or a portion of it, the contract becomes executed, and the auctioneer will not afterwards be permitted to allege a mistake as to the iquantity.^ It is illegal to concert with an auctioneer a private signal denoting a bid at a sale of property by public auction. Such a contrivance g^ves an advantage to one person over the other fair and open bidders at the sale.* Illustrations. — At a mortgage sale the auctioneer ofiRjred the property freeof encumbrances, and the defendant purchased with that understanding, at the full valueof the property. IJcld, that the defendant could not be compelled to accept the title when the property was encumbered with prior mortgages: Mayer v. Adrian, 77 N. C. 83. Plaintiff bid off a carriage at auction sale, for which secured notes were to be given, which he did not give, but left the carriage with the understanding that it was not to be taken away until paid for, and did not call for it for four months. Held, that he had no title to it: Mat- thews V. McElroy, 79 Mo. 202. In an action by an auctioneer to recover the price of an article under Lhe value of ten pounds, which was described in the written catalogue of sale as being of silver, held, that evidence was receivable to show that be- fore the article was put up for sale, the auctioneer, without making any alteration in the catalogue, stated publicly from his box, in the hearing of the defendant, that the catalogue was ' National Fire Ins. Co. v. Looaiis, ' Burgoyne v. Middleton, 4 Cal. 64. 11 Paige, 431. i Conover v. WaUiug, 15 N. J. Eq. ' Webater v. Hoban, 7 Cranch, 399. 173. § 219 PRINCIPAL AND AGENT. 376 incorrect, and that the article ■would only be sold as plated, subsequently to which the defendant bid for it: Eden v. Liaise, 13 Mees. & W. 614; 9 Jur. 213; 14 L. J. Ex. 194. A put goods up at auction, one of the conditions of the sale being that the goods should be taken away at the buyer's expense within four- teen days, in default of which the deposit to be forfeited, the goods to be resold, and the loss to be made good by the pur- chaser at the auction. B bought the goods, and a bought-note "was then entered into with this clause, ''fourteen days for re- ceiving and delivery." Held, that the meaning of the two con- tracts (the conditions of sale and tho bought-note) was, that the fourteen days should be allowed to the purchaser only; and that the vendor should have been always ready to deliver them on request: Hagedon v. Laing, 1 Marsh. 514; 6 Taunt. 162. Land was sold under a power in a mortgage for a sum more than BufEcient to pay the mortgage debt, and the mortgagee refused to execute a deed to the purchaser, on the ground that the purchaser had not paid down fifty dollars in cash as re- quired by the terms of sale. It appeared that the purchaser, when he bid off the estate, did not have the sum, but that the auctioneer agreed to advance it, and told the mortgagee that the purchaser had paid it, and that the money was ready for him. Held, that this being so, and the auctioneer being ready to pay, the effect was the same as if the sum had been paid in fact by the purchaser to the auctioneer: Muhlig v. Fisix, 131 Mass. 110. A offered at public outcry to rent a tract of land in separate parcels, and B bid off two fields which the crier represented as containing seventy acres, but which probably contained much less. After the biddings were over, A and B made a contract for the rent of the whole tract, and B gave to A his note for the sum agreed on. Held, that this was a new and independent contract, unaffected by the representations of the crier: Davis v. Winsmith, 5 S. C. 332. By the terms of an auction sale of coal, the coal was to be taken away by the pur- chaser in October; and if he failed to do so, defenclants had the option to discontinue further delivery, and to retain the earnest- money, or to resell on account of the purchaser. Plaintiff did not demand the coal until February, when defendant's stock of coal was exhausted and they refused to deliver, and plain- tiff sued to recover therefor. Held, that the stipulation as to time was to be deemed of the essence of the contract, and a condition precedent, which must be observed by plaintiff to enable him to enforce it; and that defendants were not limited to the remedies prescribed, but had the right to hold them- selves absolved from the contract upon the failure of plaintiff to perform: Higgins v. Delaware etc. R. R. Co., 60 N. Y. 553. 377 AUCTIONEERS. § 219 A map prepared by defendant, and produced at an auction sale of lots in New York City, of which he was the owner, repre- sented a strip of land at One Hundred and Thirty-fifth Street, and the auctioneer sold lots as laid out on the strip, and a boulevard shown by the map which crossed it, stating that they were corner lots. Held, — 1. That plaintiff, who purchased the lots at the sale, and who before bidding had seen the map, was entitled to all which he might properly have understood from the map and auctioneer's language; viz., to a conveyance de- scribing the lots as being bounded by One Hundred and Thirty- fifth Street; 2. That a conveyance stating that they were bounded by " the line of a certain strip of land designated and laid out as One Hundred and Thirty-fifth Street on the map or plan of the city of New York," was not in compliance with the contract of sale; 3. That evidence ofiered by defendant in an action for specific performance to prove what he intended to sell was properly rejected: Phillips v. Higgins, 7 Lans. 314. A house fitted only with cold water was advertised in the news- papers to be sold by auction as fitted with ''hot and cold water," and subject to examination at any time before the sale, the keys, terms, and further particulars to be obtained on applica- tion to the auctioneer. At the auction the auctioneer read from a paper the terms of sale; announced that there was an error in the advertisement, as the house was not fitted with hot water; and then ofiered the house for bids, when it was bid in by a person who, having read the advertisement in the newspapers, but not examined the house, nor applied to the auctioneer, had come to the sale, but arrived after the announcement. The auc- tioneer then presented to the buyer the paper from which the terms of sale had been read, and the buyer signed it without fully reading it. At the top of this paper was posted a copy of the advertisement cut out of a newspaper, from which the words "hot and" were erased, but the buyer did not notice the erasure. By the same paper the buyer agreed to comply with the conditions of sale, and to deposit two hundred dollars, to be forfeited to the vendor if he should fail so to comply. After signing the paper he examined the house, and finding that it was not fitted with hot water, refused to take it, or to pay the two hundred dollars, whereupon the auctioneer advertised the house for sale "on the account of" said buyer, and sold it for thirty dollars more than the amount of his bid. Held, that in the absence of fraud the first buyer was bound by his contract. Held, also, that the auctioneer might maintain in his own name an action for the two hundred dollars without regard to the extent of his lien thereon, and without deduction on account of the surplus of thirty dollars realized at the second sale: Tkovip- § 220 PRINCIPAL AND AGENT. 378 son V. Kelly, 101 Mass. 291; 3 Am. Rep. 353. A master and commissioners in partition parted a decedent's land, and laid out a street bounding on the line of an adjoining land-bolder. Afterwards, but before the petition was put upon record or the street opened, the latter laid out a town plat, which was litho- graphed. It exhibited the street, with streets on his own plat opening into it, but the seller gave no information that the first- named street was on his neighbor's land. He sold lots at auc- tion according to the plat which was exhibited on the day of sale. The plat of the commissioners was afterwards set aside, and the street vacated. Held, that the vendor was liable for damages to a vendee of lots for a diminution in the valize thereof caused by the non-existence of the vacated street: McCall v. Davis, 56 Pa. St. 481; 94 Am. Dec, 92. § 220. FictitiousBids— "Puffers"— Agreements not to Compete. — The best statement of the state of the English law as to illusory bids and puffing at auctions, up to the year 1850, will be found in the preamble of Lord St. Leonards's act, passed in that year. It recited that " whereas there is at present a conflict between her majesty's courts of law and equity in respect to the validity of sales by auction of land where a puffer has bid, although no right of bidding on behalf of the owner was reserved, the courts of law holding that all such sales are absolutely illegal, and the courts of equity under some circumstances giv- ing effect to them, but even in courts of equity the rule is unsettled." The statute then declared invalid sales of land by auction where a puffer was employed; that at sales "without reserve" the seller nor any one for him should bid; that at sales subject to the right of the seller to bid, it should be lawful for the seller or anj^ one person to bid.' In the American courts, raising the price at an ' 30 & ,31 Vict., u. 48; and see Jacob & W. 389; K. v. Marsh, 3 Warlow V. Harrison, 1 El. & E. Younge v. J. 331 ; Meadows v. Tanner, 309; Bexwell v. Christie, 1 Cowp. 20; 5 Madd. 34; Twining v. Morrice, 2 Howard v. Castle, G Term Rep. 642; Brown Ch. 326; Mason v. Armitage, Crowder v. Austin, 3 Bing. 368; Green 13 Ves. 25; Fuller v. Abrahams, 6 V. Baverstock, 14 Com. B., N. S., 204; Moore, 316; Flint v. Woodin, 9 Hare, Conolly V. Parsons, 3 Ves. 625; 618; Mortimer?;. Bell, 11 Jur., N. S., Bramley v. Alt, 3 Ves. 624; Smith v. 897; Icely v. Grew, 6 Car. & P. 671; Clarke, 12 Ves. 477; Bowles v. Round, GiUiat v. Gilliat, L. R. 9 Eq. 60; Par- 5 Ves. 508; Jervoise v. Clarke, 1 fitt «. Jepson, 46 L. J. Com. P. Div, 629. 379 AUCTIONEERS. 220 auction sale by fictitious bids or "puffers" is a fraud on the buyer, for which the sale will be set aside on his ap- plication.^ At a sale of several lots at auction, evidence ' MTieeler v. Collier, 1 VPood. & M. 125; Moncrieff v. Goldsborough, 4Har. & McH. 282; 1 Am. Deo. 407; Trough- ton V. Johnston, 2 Hayw. 328; 2 Am. Dec. 626; Steele v. EUmaker, II Serg. & E. 86; Trust v. Delaplaine, 3 E. D. Smith, 219; Fisher v. Hersey, 17 Hun, 370; Towle v. Leavitt, 23 N. H. 360; 55 Am. Dee. 195; Baham v. Bach, 13 La, 287; 33 Am. Deo. 561; Hinde v. Pendleton, Wythe, 144; Morehead v. Hunt, 1 Dev. Eq. 65; Smith v. Green- leo, 2 Dev. 126; 18 Am. Dec. 564; Don- aldson V. McRoy, 1 Browne, 346; Bank of Metropolis v. Sprague, 20 K. J. Eq. 159; Pennock's Appeal, 14 Pa. St. 446; 53 Am. Deo. 561; Bailey V. Morgan, Busb. 352; Whitaker v. Bond, 63 N. C. 290; Staines v. Shore, 16 Pa. St. 200; 55 Am. Dec. 492; Curtis V. Aspinwall, 114 Mass. 187; 19 Am. Rep. 332; Peck v. List, 23 W. Va. 338; 48 Am. Bep. 398; Mc- Donnell V. Sims, Ired. Eq. 278; Eeynclda v. Dechamus, 24 Tex. 174; 76 Am. Deo. 101; Woods v. Hall, 1 Dev. Eq. 411; Martin v. Eanlett, 5 Eich. 541; Davis v. Petway, 3 Head, 657; 75 Am. Dec. 789; Miller v. Bay- nard, 2 Houst. 559; 83 Am. Dec. 168. The owner of property instructed the auctioneer to take fourteen thousand five hundred dollars for it. At the sale the real biddings stopped at twenty thousand dollars, but the auc- tioneer by fictitious bids ran the price up to forty thousand dollars, at which it was knocked down to F. Held, that this was a fraud upon F. which the court would relieve: Veazie?:. WJ- liams, 8 How. 135. In this case the court said: "By-bidding or pufBng by the owner, or caused by the owner, or ratified by him, has often been held to be a fraud, and avoids the sale: Cowp. 395; 6 B. Hon. 630; 11 Serg. & R. 86; 4 Har. & McH. 282; Babing- ton on Auctions, 45; 3 Bing. 368; 2 Car. & P. 208; 6 Term Rep. 642; Rex V. Marsh, 3 Younge & J. 331; 11 Moore, 283. He may fix a minimum price, or give notice of by-bids, and thus escape censure: Eoss on Sales, 311; Howard v. Castle, 6 Term Rep. 642. But this shows that, without such notice, it is bad to resort to them: Crowder v. Austin, 3 Bing. 338; 3 Younge & J. 331. 'The act itself is fraudulent,' says Lord Tenterden: Wheeler?). Collier, 1 Moody & M. 126. The by-bidding deceives, and involves a falsehood, and is therefore bad. It violates, too, a leading condition of the contract of sales at auction, which is, that the article shall be knocked oflf to the highest real bidder, without puffing: 2 Kent's Com. 538, 539. It does not answer to apologize and say that by-bidding is common. For, observed Lord Mansfield, 'gaming, stock-jobbing, and swindling are fre- quent; but the law forbids them all ': Cowp. 397. In Bexwell v. Christie, Cowp. 396, the pole-star on this whole subject, it is said; "Tlie basis of all dealings ought to be good faith. So more especially in these transactions, where the public are brought together in a confidence that the articles set up for sale will be disposed of to the highest real bidder.' Even in a court of law. Lord Kenyon has, with true regard to what is honorable and just, said: ' All laws stand on the best and broadest bas,is, which go to enforce moral and social duties': Pasly v. Freeman, 3 Term Rep. 64; see also Bruce v. Ruler, 2 Man. & E. 3. And in Howard v. Castle, 6 Term Rep. C12, he held that Lord Mansfield's doctrine, that all sham bidding at auctions is a fraud, was a doctrine founded 'oa the noblest principles of morality and justice.' Nor does it lessen the in- jury or the fraud if the by-bidding be by the auctioneer himself. He, being agent of the owner, is equally with him forbidden by sound principle to conduct clandestinely and falsely on this subject: Cowp. 397. All chould be fair, — above board. Indeed, in point of principle, any fraud by auc- tioneer is more dangerous than by owners themselves. The sales through the former extend to many millions annually, and are distributed over the whole country, and the acts accom- panying them are more confided in as § 220 PRINCIPAL AND AGENT. 380 that puffers were employed to bid upon some of the lots is admissible to show that their bids upon another lot honest and true than acts or state- ments made by owners themselves in their own behalf, and to advance their owu iaterests. Great care is therefore proper to preserve them unsullied, and to diocourage and repress the smallest deviations in them from rec- titude. Here the auctioneer virtually said to hi3 hearers, when he made a fictitious bid: 'I have been offered so much more for this property.' But he said it falsely, and said it with a view to induce the hearers to offer still more. He averred it as a fact, and not an opinion; and as a fact pecu- liarly within his knowledge. Now if, under such an untruo and fraudnlent assertion, persons were persuaded to give more, — relying, as they had a right to, on the truth of what was thus more within the personal knowl- edge of the auctioneer, and was pub- licly and expresiily alleged by him, and being of course more willing to give higher for what others had offered more, who probably were acquainted with such property and had means to pay for it, — they were imposed on and iujured by the falsehood. It is said: 'A naked, willful lie, or the as- eertion of a. faUehood knowingly, is certainly evidence of fraud': 2 Mill Const. 8. The following authorities support the views hero laid down: 3 Ycunge & J. 331; Moody & M. 123; 2 Car. & P. 208; Box well v. Christie, Cowp. S95; Howard v. Castle, G Term Kop. 042; I Hall, 146; 1 Dev. 35; 6 Clark & F. 329, 411. Some cases and some reasoning found in them at- tempt to sanction a contrary doctrine, if the by-bidj were made merely to prevent a sacrifice of the property, — a ' defensive precaution ' — but not otherwise: Connolly v. Parsons, 3 Ves. 625, note; Smith v- Clarke, 12 Ves. 477; Steele v. EUmaker, 11 Serg. & R. 86; Woodward v. Miller, 1 Coll. C. C. 279; 5 Madd. 34. These exceptions still concede that the by-bidding, when an artifice to mislead the judg- ment and inflame the zeal of others, — ' to screw up and enhance the price,' in the language of Sir William Grant, — is fraudulent, and makes the sale void: 12 Ves. 483; 2 Kent's Com. 537. Some cases hold, too, that the by-bidding will not vitiate, it real bids besides those of the vendee occurred after: 3 Ves. 620. But neither of these excuses or apologies existed here. These by-bids were made after some thousand of dollars had been offered over the value of the mills, as estimated by the owners themselves, and were palpably made 'to screw up ' or enhance the price. Any other excuses, which have ever availed, either are anomalies, or rest on a false analogy. Ihus at one time in Eng- land duties on auctions were remitted, if the property was bought in by the owner: 3 Ves. Jr. 17, 621; 1 Fonb. Eq. 226. This, however, was founded on the theory that no sale had taken place, and hence no duty should be paid, rather than that a sale under such circumstances wasvalid. It there- fore strengthens rather than impairs the view taken of the present case. " In Staines v. Shore, 16 Pa. St. 200, 55 Am. Dec. 493, it was held that the sale was vitiated by the employment of puf- fers, whether the buyer got the worth of his money or not. Gibson, C. J., said: " We held in Pennook's Appeal, 14 Pa. St. 449, 53 Am. Deo. 501, that the employment of even a single puffer vitiates the sale. In the present case the ruling judge instructed the jury that if the horse was actually worth the sum to be paid for him, the buyer got the value of his money and could not have been defrauded. The fallacy of the principle is in assuming that there is a standard of value indepen- dent of the wishes and wants of the bidders, and that every man is willing to buy by it. A man proposes to sell his horse for a fair price to another, who declines, because he has no use for him, and does not choose to take the risk of getting less for him than he gave, with a certainty of losing his trouble and the expense of keepmg in the mean time; but the case would be different did the owner make it worth his while to purchase with a view to profit on a resale. What is the worth of anything? The apothegm of Hudi- bras answers truly, 'Just so much money as 't will bring. ' A man is de- 381 AUCTIONEERS. 220 were mala fide? But it is not illegal to place a limit on the price below which the property must not be sold, and to withdraw it if it does not reach that figure,^ frauded whenever he is incited by artful means to bid more than he otherwise would. He has a right to buy at an undervalue where the ne- cessities of the owner compel him to sell; and whenever the price is ever so little enhanced by a secret contrivance he is cheated. A sale by auction pre- supposes a sacrifice, or at least a will- ingness to sell for what can be had; but should the vendor stick for the last penny, it would bo idle to set the property up, because his price could be as readily obtained at private sale. Should he, however, see fit to make the experiment, his object could be attained by directing the auctirneer not to let the property go for less than his estimate of its market value; or if he propose to sell without reservation as to price, let him openly reserve a right to bid. For no fair purpose is the employment of a puffer necessary; but it must vitiate every sale in which recourse is had to it." In Curtis v. Aspinwall, 114 Mass. 187, 19 Am. Eep. 332, the court say: "There is some diversity in the decisions as to the circumstances under which by- bidding will invalidate a sale at auc- tion. But it is clear, both upon principle and the weight of author- ities, that when the sale is advertised or stated to be without reserve, the secret employment by the seller of puffers or by-bidders renders the sale voidable by the buyer: Phippen v. Stiokney, 3 Met. 384, and cases cited; Towlej). Leavitt,23 N. H. SCO; 55 Am. Dec. 195; Veazie v, Williams, 8 How. 134; Thornett v. Haines, 15 Mces. & W. 367. The offer of property at auction, without reserve, is an im- plied guaranty that it is to bo sold to the highest bidder, and each bidder has the right to assume that all pre- vious bids are genuine. The seller in substance so assures him, and the se- cret employment by the seller of an agent to make fictitious bids is equiv- alent to a false representation by him as to a matter in which he is bound to speak the truth and act in good faith. The real bidder is deceived, and the price is enhanced, by artifice and false pretenses. In the case at bar the seller stated in his advertisement that 'the sale will be positive.' This is equivalent to stating that it would be without reserve, and we think that the evidence offered by the buyer of by-bidding at the auction sale should have been admitted. Though his offer was to show by-bidding upon the other lots embraced in the sale, and not upon the lots bid off by him, the principle is the same. The sale was of a large piece of land cut up into small lots. The sales of all the lots were on the same day and were parts of the same transaction. Any artifice or fraud used to deceive the bidders and to enhance the price of the lots first sold would tend to fix the appar- ent value of all the lots, and to mislead the judgment of the real bidders upon the lots afterwards sold. As the pur- chase by the buyer in this case was of the last lots sold, it was competent for him to show that the seller secretly procured fictitious bids to be made upon the lots previously sold, and that he was deceived and misled thereby. There must, therefore, be a new trial ia both the suits. If the buyer succeeds in proving his allega- tion of the seller's fraud by employing by-bidders, the seller cannot maintain his action against him, and he i3 en- titled to recover back the deposit paid to the auctioneer." One who acts simply as auctioneer or crier for an oflicor, and in his presence, at a sale of iJroperty tinder a writ, has a right to bid at the sale; but if the crier was himself conducting the sab, then he would have no svich right: Swires w. Brotherline, 41 Pa. St. 135; 80 Am. Dec. COl. 1 Yorkes v. Wilson, 81* Pa. St. 9. 2 Tov/le V. Leavitt, 23 N. H. 360; 55 Am. Deo. 195; Wolfe v. Lyster, 1 Hall, 146; Hazul v. Dunham, 1 Hall, 655; Williams v. Poor, 3 Cranch C. C. 221; Steele t). Ellmakcr, 11 Serg. & R. 86. In Baham v. Bach, 13 La. 287, 33 Am. Pec. 561, it was said: " In the case of Corryolles v. Mossy, 2 La. 504, § 220 PRINCIPAL AND AGENT. 382 nor to make fictitious bids, or employ a person to do so, for the sole purpose of preventing a sacrifice of the property offered for sale/ A sale where ficti- tious bids have been made, or "puffers " employed, will not be set aside where the purchaser has acquiesced for a time, and the price is not, after all, exorbitant,^ or the purchaser after knowledge of the fact confirms the sale.' As soon as the purchaser finds out that there has been by-bidding, he must make his election to rescind or abide by the contract. Thus where, at a sale by auction of land (sold as containing a gold mine), a by-bidder was secretly employed by the vendors to run up the land, and the vendees did not bring their bill for a rescission of the contract until twelve months or more after they had knowledge of that fact, and in the mean time, or a portion thereof, continued to work and explore the land, it was held that this was too long a delay in notifying the ven- dors of their wish to annul the contract.^ The purchaser must return the property when he discovers the fraud.' A by-bidder who, by agreement with the owner, runs up the supreme court of this state held nolds v. Deohamus, 24 Tex. 174; 76 that an owner might vpithdraw his Am. Deo. 101; Steele v. Ellmaker, 11 property before the highest bid was Serg. & R. 86; Millar v. Campbell, 3 accepted by the auctioneer. But this A. K. Marsh. 526; Lee v. Lee, 19 Mo. gives the owner no right to bid, unless 420; Davis v. Petway, 3 Head, 667; he publicly reserves to himself that 75 Am. Dec. 789; Miller v. Baynard, right; still less can he bid through the 2 Houst. 559; 83 Am. Deo. 168. auctioneer. The duty of the auction- ^ Backenstoss v. Stabler, 33 Pa. St. eer is to sell the property, and to re- 251; 75 Am. Dec. 592; Lathams. Mor- ceive the bids offered, not to make row, 6 B. Mon. 630; Tomlinaon v. them. We do not censure the con- Savage, 6 Ired. Eq. 430. See Mo- duct of the auctioneer in this instance, Dowell v. Simms, Busb. Eq. 130; 57 because we are aware it is the general Am. Dec. 595, where the setting aside usage to conduct sales at auction in of the sale on the ground of by -bidding this manner; but it is a usage which was not asked for a year and a half we can neither justify nor recognize after its discovery, in the administration of justice. It is ' Backenstoss v. Stabler, 33 Pa. St. equally repugnant to public policy, 251 ; 75 Am. Dec. 592. and to that fairness which ought to * McDowell v. Simms, Busb. Eq. exist, and which people have a right 130; 57 Am. Dec. 595. to expect in a sale of property avow- ' Staines v. Shore, 16 Pa. St. 200; edly offered to the highest bidder. " 55 Am. Dec. 492; McDowell v. 1 Wolfe V. Lyster, 1 Hall, 146; Jen- Simms, Busb. Eq. 130; 57 Am, Dec. kins V. Hogg, 2 Tread. Const. 821 ; Key- 595. 38c AUCTIONEERS. 220 the property at an auction, and it is knocked down to him, may hold the property against such owner.' Combinations and agreements between parties not to bid against each other at a public auction sale are illegal.^ An agreement between two persons, who desire to pur- chase articles at a sale, that they will not bid against each other, but that one shall purchase them and divide them, is illegal arid void.' Where two persons are bid- ding as agents for a third, an agreement between them that one shall not bid does not vitiate the sale.'* So an agreement of several to unite and bid for their joint benefit is not illegal if honest.' So an attempt to prevent bidding is not effectual unless successful." An associa- tion formed for the purpose of bidding at an auction sale is lawful, and may become the purchaser, unless formed for the purpose of preventing competition.' So where ' Troughton v. Johnston, 2 Hayw. 328; 2 Am. Bee. 626. '' Jones V. Caswell, 3 Johns. Cas. 29; 2 Am. Dec. 134; Hook v. Turner, 22 Mo.333;Thompsonj;. Pavies, 13Johna. 112; Brisbane v. Adams, 3 N. Y. ISO; Towlo V. Leavitt, 23 N. H. 360; 55 Am. Deo. 195; Gardiner v. Morse, 25 Me. 140; Troup v. Sherwood, 4 Johns. Ch. 228; Guliokt; Ward, ION. J.L. 87; 18 Am. Deo. 389; Slingluff v. Eckel, 24 Pa. St. 472; Dick v. Lindsay, 2 Grant Cas. 431; Loyd ti. Malone, 23 lU. 43; 74 Am. Deo. 179; Hook v. Turner, 22 Miss. 333; Goode v. Hawkins, 2 Dev. Eq. 393; Dudleys. Little, 2 Ohio, 504; 15 Am. Doc. 575; Hamilton o. Hamilton,2Rich. Eq. 355; 46 Am. Dec. 58; Carrington v. Caller, 2 Stew. 175; Piatt V. Oliver, 1 McLean, 295; and cannot be ratified: Wheelerp. Wheeler, 5 Lans. 355. ' Doolin V. Ward, 6 Johns. 194; Wooton V. Hinkle, 20 Mo. 290; Loyd V. Malone, 23 111. 43; 74 Am. Dec. 179; Wilbur V. How, 8 Johns. 444; Martin V. Ranlett, 5 Kich. 541 ; 57 Am. Doc. 770; Hawley v. Cramer, 4 Cow. 718. • Allen V. Stephanus, 18 Tex. 658. * James v. Fulcrod, 5 Tenn. 512; 55 Am. Dec. 743; Goode o. Hawkins, 2 Dev. Eq. 397; SmuU v. Jones, 6 Wcitts, & S. 122; Piatt v. Oliver, 1 McLean, 301 ; Hunt v. Elliott, 80 lud. 253; 41 Am. Rep. 794; Switzer v. Skiles, 8 111. 529; 44 Am. Dec. 723. " Eaynes v. Orutchfiold, 7 Ala. 189; Buckley V. Briggs, 30 Mo. 452. ' Smith V. Greenlee, 2 Dev. 126; 18 Am. Deo. 564; Kearney v. Taylor, 15 How. 494, Mr. Justice Nelson saying: ' ' There are some cases deriving their principles from the severe doctrines of Bexwell v. Christie, Cowp. 396, and Howard v. Castle, 6 Term Rep. 642, to be found in books of high authority in this country, that would carry us the length of avoiding this sale, sim- ply on the ground of this association having been formed for the purpose of bidding off the premises, for the reason that all such associations tend to pre- vent competition, and thereby to a sacrifice of the property: 3 Johns. Cas. 29; 6 Johns. 194; 8 Johns. 444; 13 Johns. 112; 2 Ham. £05; 10 N. J. L. 87; 2 Kent's Com. 539; 1 Story's Eq. Jur., sec. 293. Later case3, however, have qualified this doctrine by taking a more practical view of the subject and principles involved, and have placed it upon ground more advantageous to all persons interested in the property, while at the same time affording ail § 220 PRINCIPAL AND AGENT. 384 the intention of such an agreement is to permit the par- ties to obtain small quantities of the property which tliey desire, the lot offered being larger than any one of them desires or is able to purchase, there is no illegality in it.' proper protection against combinations to prevent competition: 2 Dev. 120; 3 Mot. 384; 25 Me. 140; 2 Tread. Const. 821; 3 Ves. 025; 12 Ves. 477; 11 Serg. & R. 86. It is true that in every association formed to bid at the sale, and who appoint one of their number to bid in buhalf of the company, there is an agreement, express or implied, that no other member will participate in the bidding; and hence, in one sense, it may be said to have the effect to prevent competition. But it by no means necessarily follows that if the association had not been formed, and each member left to bid on his own ac- count, that the competition at the sale would be as strong and efficient as it would by reason of the joint bid for the benefit and upon the responsibility of all. The property at stake might be be- yond the means of the individual, or might absorb more of them than he would desire to invest in the article, or be of a description that a mere capital- ist, without practical men as associates, would not wish to encumber himself with. Much of the property of the country i3 in the hands of incorporated or joint-stock companies; the business in which they are engaged being of a magnitude requiring an outlay of capi- tal tliat can be mot only by associated wealth. Railroads, canals, ship-chan- nels, manufacturing establishments, the erection of towns, and improve- ment of harbors are but >•■ few of the instances of private enterprise illus- trating the truth of our remark. It is apparent that if, for any cause, any one of these, or of similar masses of property, should be brought to the stake, competition at the sales could be maintained only by the bidders representing similar companies, or as- sociations of individuals of competent means. Property of this description cannot be divided, or separated into fragments and parcels, so as to bring the sale within the means of individual bidders. Ihe value consists in its en- tirety, and in the use of it for the pur- poses of its original erection; and the capital necessary for its successful en- joyment must be equal not only to purchase the structures, establish- ments, or works, but sufficient to em- ploy them for the uses and purpo3es for which they were originally de- signed. These observations are suffi- cient to show that the doctrine which would prohibit associations of individ- uals to bid at the legal public sales of property, as preventing competition, however specious in theory, is too narrow and limited for the practical business of life, and would oftentimes lead inevitably to the evil consequences it was intended to avoid. Instead of encouraging competition, it would de- stroy it. And sales, in many instances, could be effected only after a sacrifice of the value, until reduced within the reach of the means of the individual bidders. We must, therefore, look beyond the mere fact of an association of persons formed for the purpose of bidding at this sale, as it may be not only unobjectionable, but oftentimes meritorious, if not necessary, and ex- amine into the object and purposes of it, and if, upon such examination, it is found that the object and purpose are not to prevent competition, but to enable, or as an inducement to, the persons composing it to partici- pate in the biddings, the sale should be upheld; otherwise, if for the pur- pose of shutting out the competition, and depressing the sale, so as to ob- tain the property at a sacrifice. Each case must depend upon its own cir- cumstances." 1 Smith V. Greenlee, 2 Dev. 126; 18 Am. Dec. 564; Switzer v. Skilcs, 8 m. 529; 44 Am. Dec. 723; Snmll v. Jones, 1 WattSv & S. 129; Jenkins v. Frink, 30 Cal. 586; 89 Am. Dec. 134; National Bank v. Sprague, 20 N. J. Eq. 159; Phippen v. Stickney, 3 Met. 388, the court saying: "It seems to us, after some consideration of this ques- tion, and an examination of the ad- judged cases bearing' upon it, that we 385 AUCTIONEERS. §220 An agreement by a guardian or administrator to oflfer the real estate of his ward or intestate for sale by auction, and to sell it to a person at an agreed price, provided no higher sum is bid, is not invalid.^ A sale under process of law, by auction, cannot be set aside for mere inade- quacy of price: fraud also must be shown.^ In an action against a married woman for breach of a written agreement for the purchase of land sold to her by auction, parol evidence that the plaintiif requested her to bid on the property as an under-bidder, and told her that she would not be bound to take the property, but might, if her husband desired; and that she did not read the agree- cannot judicially declare that every contract between two or more indi- viduals, in which it may be stipulated that one ia to be the purchaser for the joint benefit of himself and another, and that the other is not to interfere with his bidding, shall, when at- tempted to be enforced for the benefit of the associates, be held void as a fraud upon the rights of the vendor, and as against public policy, merely because he who seeks to enforce the contract may have been thereby in- duced to abstain from bidding. Cases may readily be imagined, and indeed, are of frequent occurrence in sales of large magnitude, where two or more persons do thus unite, and are thereby enabled to become purchasers, when neither of them could otherwise have participated in the bidding. By such an association as is just supposed, the interest of the vendor, as well as that of the vendees, would be directly ad- vanced. The extent to which the doctrine of invalidating such contracts can be safely carried would rather seem to embrace within the rule all cases of fraudulent acts, and all com- binations having for their object to stifle fair fcompetition at the biddings, with the design of becoming the pur- chasers at a price less than the fair value of the property. Beyond this the application of the principle con- tended for may be found productive of mischief, and an unwarrantable interference with the course of business Vol. I.— 25 in auction sales. We are therefore of opinion that an agreement between A and B, that A will permit B to become the purchaser of certain property about to be offered at sale at public auction, and that A shall participate with B in the benefits of the purchase, will or will not be fraudulent as the circumstances of the case show inno- cence of intention or a fraudulent pur- pose in making such agreement; that where such arrangement is made for the purpose and with the view of pre- venting fair competition, and by rea- son of want of bidders to depress the price of the article offered for sale be- low the fair market value, it will be illegal, and may be avoided as between the parties as a fraud upon the rights of the vendor. But, on the other hand, if the arrangement is entered into for no such fraudulent purpose, but for the mutual convenience of the parties, as with the view of enabling them to become purchasers, each being de- sirous of purchasing a part of the property offered for sale, and not an entire lot, or induced by any other reasonable and honest purpose, such agreement will be valid and binding. ' Aliter if the agreement is to sell at a fixed price, disregarding other bids: Hunt v. Frost, 4 Cush. 54. 2 White V. Damon, 7 Ves. Jr. 34: Burrows v. Locke, 10 Ves. Jr. 474 Livingston v. Byrne, 11 Johns. 555: Den V. Zellers, 7 N. J. L. 153; Stock- dale V. Yongue, Rice Eq. 3. § 221 PEINCIPAL AND AGENT. 386 ment or know its contents when she signed it, does not show any fraud practiced on third persons, or any illegal contract between the plaintiff and defendant, and is ad- missible to control her written agreement.^ Illustrations. — A parcel of land owned by a company to which A and B both belonged was sold at auction to A, and part of the price was paid by him to B, and a bond and mort- gage given for the remainder. On a bill filed by A, alleging that the sale was fraudulent, on the ground that there had been under-bidding on behalf of B, to inflate the price of the prop- erty, held, that as A was one of the owners of the land, there could have been no under-bidding without his own authority; and that he should have proved that it was done by a secret contrivance, without his knowledge: Small v. Boudinot, 9 N. J. Eq. 381. A party at an auction sale of slaves was known to in- tend purchasing certain slaves who had been for many years in his family, and to whom he had supposed he had a good title, at any price, and a by-bidder was employed, by reason of which the plaintifiF bought the slaves at an enormous price. Held, that the plaintiff was entitled to relief against such illegal by-bid- ding, and that he should have the slaves at a fair price, to be determined by commissioners: Hinde v. Pendleton, Wythe, 144. Where an auctioneer used fraud to enhance the price of property sold at auction, held, that in an equity suit by the pur- chaser for relief against the sale, it was not necessary to make the auctioneer a party: Veazie v. Williams, 8 How. 134. A piece of land was advertised for sale. Two adjoining land- owners were desirous of purchasing it; they agreed that one alone should attend the sale, and purchase, if it should be sold, for a sum not exceeding a sum named. If the land was pur- chased, terms were arranged, and it was to be divided between them. Held, that the agreement between the purchasers was not contrary to equity, and that it did not vitiate the contract: In re Carew, 26 Beav. 187; 28 L. J. Ch. 218; Gallon v. Emuss, 8 Jur. 507; 13 L. J. Ch. 388. § 221. The Auctioneer's Compensation. — The general rules as to the compensation of agents^ ^.pply to the com- pensation of the auctioneer; e. g., that the amount of his compensation is fixed in a particular case by what others in the business doing the same work are accustomed to > Fauoett v. Currier, 109 Mass. 79. ' See Part L, Agency. 387 AUCTIONEERS. § 221 receive;* that he is entitled to be reimbursed his expenses and disbursements,^ and such damages as he has sustained in executing his commission;' that he is not entitled to compensation where he has been guilty of negligence or fraud.'' The rule is well established that where an auc- tioneer intrusted with the sale of an estate is the causa causans of the sale (as by advertising and putting up the estate for sale by auction, which the purchaser afterward attended), he is entitled to his commission, even though before the actual sale the vendor withdrew the property from sale by him.' Where the conditions of an auction sale expressly stipulate that an auctioneer's fees of a special sum shall be paid to the auctioneer on the day of sale, he may sue the purchaser in his own name to re- cover such sum; but his right to recover will depend on the validity of the contract to purchase as between buyer and seller." One representing himself to be the owner of real estate, who employs an auctioneer to sell the same under an agreement that in event of a sale the auctioneer shall receive for his services a percentage on the amount bid, cannot, after a sale by the auctioneer, avoid paying him for his services -because the purchaser refuses to take the property, owing to a real or alleged defect in the title.' Where he sells a number of lots for one owner severally, he is entitled to a distinct commission upon each sale.* Under the New York statute prohibiting an auctioneer from demanding more than two and one half per cent commission "unless by a previous agreement in writing between him and the owner," the agreement is sufficient 1 See Part I., Agency. * Green v. Bartlett, 14 Com. B., N. 2 Id.; Robinson v. Green, 3 Met. S., 681; 32 L. J. Com. P. 261; 11 159. Week. Rep. 834; 8 L. J., N. S., 503. ' Id.; Russell v. Miner, 5 Lans. 537. " Johnson v. Buck, 35 N. J. L. 338; * Id. If an auctioneer employed to 10 Am. Rep. 243. sell an estate is guilty of negligence, ' Middleton v. Findla, 25 Cal. 76. whereby the sale becomes nugatory, * Wells v. Day, 124 Mass. 38. Un- he is not entitled to recover any com- less, of course, he contracted with the pensation for his services from the owner for an entire sum for the whole vendor: Denew v. Daverell, 3 Camp, service: Robinson v. Green, 3 Met. 451. 159. § 221 PRINCIPAL AND AGENT. 888 if signed by the owner, though not signed by the auction- eer.* The statute of New York which fixes the amount of an auctioneer's fees, in the absence of an agreement in writing, refers only to his services as auctioneer. He is entitled, in addition, to his disbursements and expenses, and reasonable compensation for extraordinary services beyond the mere selling in public to the highest bidder.^ He is not entitled to commissions on a bid not complied' with,^ nor has he a right to charge a fee for an adjourn- ment of a sale;* nor can he recover commissions on sales made where he has no license to sell.^ Illustrations. — A lease of real estate for fifteen years was sold by auction. The written terms of the lease were "the lessee will pay the auctioneer his fee of $10 per year, being . $150 in cash, this day." At the foot of these terms was a writ- ing signed by the purchaser at the time of the sale, stating that he had leased the real estate at a certain sum per annum, and agreed to comply with the above terms. The lease was made and accepted by the purchaser. Held, that the auctioneer might maintain an action in his own name for the fees: Muller V. Maxwell, 2 Bosw. 355. 1 Carpenter v. Le Count, 93 N. Y. = Girardey v. Stone, 24 La. Ann. 286; 562. Cochran v. Jolinson, 2 McCord, 21. 2 Russell V. Miner, 5 Lana. 537; 61 * Ward v. James, 8 Hun, 526. Barb. 534. ^ Eobinson v. Green, 3 Met. 159. 389 BROKERS AND FACTORS. § 222 Part IV.— BROKERS AND FACTORS. CHAPTER XIX. BROKERS AND FACTORS. ' § 222. Different classes of brokers and authority. § 223. What authority implied to brokers generally. § 224. What authority not implied to brokers generally. § 225. Broker's authority a limited one — His duties and liabilities. § 226. Broker's compensation. § 227. factors and del credere agents. § 228. Authority implied to factor. § 229. Authority not implied to factor. § 230. What factor bound to do — His duties and liabilities. § 222. Different Classes of Brokers and Authority. — A broker is an agent employed to make bargains and contracts between other persons in matters of trade or commerce.' The business must relate to property or money. An agent who negotiates a personal contract for work and labor is not a broker.^ A broker is a mere ne- gotiator between the parties; he is not intrusted with the possession of the property, and is not authorized to buy or sell in his own name.* A salaried agent who does not act for a fee or rate per cent is not a broker.^ Of the differ- ent classes of brokers may be mentioned, as the most frequent, bill-brokers, stock-brokers, ship and insurance brokers, pawn-brokers, real estate brokers, and brokers simply so called, i. e., those who negotiate sales of goods ' Evans on Agency, 4; Story on broker cannot recover compensation Agency, sec. 28. "A broker is one for services: Johnson v. Hulings, 103 who makes a bargain for another and Pa. St. 498; 49 Am. Rep. 131. receives a commission for so doing, as, '' Milford v. Hughes, 16 Meea. & W. for instance, a stock-broker": Pott v. 174. But see Scott v. Cousins, L. R. Turner, 6 Bing. 706, per Tiudal, C. J.; 4 Com. P. 177; Ex parte Cooke, L. R. Higgius V. Moore, 34 N. Y. 417. See 4 Ch. Div. 123. cases cited in Laveson's Concordance, ^ Baring v. Corrie, 2 Barn. & Aid. tit. Broker; Portland v. O'Neill, 1 137; Hinckley v. Arey, 27 Me. Or. 218; Holt v. Green, 73 Pa. St. 198; 362. 13 Am. Rep. 737. An unlicensed * Portland v. O'Neill, 1 Or. 218. § 222 PEINCIPAL AND AGENT. 390 and merchandise of diflferent kinds. Bill-brokers pro- pose and conclude bargains between merchants and others in matters of bills and exchange; in other words, they negotiate the purchase and sale of negotiable paper; also called exchange brokers when they deal in foreign bills of exchange; Insurance Brokers are those who effect insurance for their employers, and act as middle-men between the insurer and insured; Merchandise Brokers' resemble factors, except that they do not have the posses- sion or control of the goods as factors do; Pawn-brokers are lenders of money in small sums on the security of personal property left with them in pawn or pledge, and they receive a higher rate of interest than is usually al- lowed for the use of money; Real Estate Brokers are those who negotiate between the buyer and seller of real property, either finding a purchaser for one desirous to sell, or vice versa; they also manage estates, lease or let property, collect rents, and negotiate loans on bond and mortgage; Ship-brokers attend to the freighting of ships, and to their sale and transfer; Stock-brokers are those whose business it is to purchase or sell, on their client's order or request, the shares of stock of railroad companies and other corporations, and the bonds of such companies, or of governments, either national, state, or municipal. They use their own money (except that a "margin" or percentage of the price is required from the purchaser to secure the broker against loss by sudden fluctuation of the market), and buy in their own names, in which re- spect they differ from other classes of brokers. A bill-broker cannot be held liable for bills sold by him which turn out to be worthless;^ he is not answerable either for the insolvency of a purchaser.^ Being intrusted with ' Buddecke v. Alexander, 20 La. real estate, for loss of a loan negotiated Ann. 563. by the broker upon a mortgage which * Buddecke v. Alexander, 20 La. proved insufficient security in conse- Ann. 563. In an Illinois case a loan- queuce of prior encumbrances: Ship- broker was held liable to a lender on herd v. Field, 70 111. 438. 391 BROKERS AND FACTORS. § 222 the possession of the bills, he may receive payment of the purchase-money.^ But a hill-broker who sells a note without disclosing his principal, which turns out to be forged, is liable for the sum paid by the purchaser, even though he has paid it over to his principal.^ A bill- broker is not a person known to the law with certain du- ties, but his employment is one which depends entirely . . upon the course of dealing; his duties may vary in differ- ent parts of the countr}', and their extent is a question of fact to be determined by the usage and course of dealing in the particular place.^ Note-brokers are liable as principals to persons dealing with them, and knowing them to be engaged in such agency, where it does not otherwise ap- pear that they are acting as agents, or if they are, that they disclosed the name of their principal, or that credit was given to the principal.* An insurance broker has authority to adjust losses, and to receive payment of them;^ to abandon in case of a loss;® to arbitrate a dis- puted loss;" to make the contract of insurance in his own name and sue upon it.' But an insurance broker, em- ' Lentilhon v. Vorwerck, Hill Sc T>. Am. Dee. 446; Herrick v. Wliitney, 443.' 15 Johns. 240; Shaver v. Ehle, 16 ^Morrison v. Currie, 4 Duer, 79; Johns. 201; Murray t;. Judah, 6 Cow. Canal Bank v. Bank of Albany, 1 Hill, 484; Canal Bank v. Bank of Albany, 287; Bella. Cafferty, 21 Ind. 411; Du- 1 Hill, 287. It is so held in Rhode mont V. Williamson, 18 Ohio St. 515; Island: Aldrich v. Jackson, 5 R. I. 98 Am. Dec. 186; see note in 50 Am. 218; also in Vermont: Thrall v. New- Dec. 606; Merriam v. Walcott, 3 ell, 19 Vt. 202; 47 Am. Dec. 6S2." As Allen, 258, 80 Am. Deo. 69, where it is to the rights, duties, and liabilities of a said: " The first question presented by bill-broker, in cases depending upon this case is, whether a person who pur- particular facts, see Arnold v. Clark, chases a note of a broker for cash, and 1 Sand. 491; Clark v. Merchants' takes the note by delivery, can re- Bank, 1 Sand. 498. cover back the money paid, if the * Foster v. Pearsun, 1 Cromp. M. & maker's signature turns out to be R. 849; 5 Tyrw. 255. forged. The text-books state the law * Thompson v. McCuUough, 31 Mo. to be, that he can recover it back on 224; 77 Am. Deo. 644. the ground of an implied warranty * Richardson v. Anderson, 1 Camp, that the note is in reality what it pur- 43; note Bousfield v. Cress well, 2 ports to be: Bayley on Bills, 148; Camp. 545. Chitty on Bills, 10th Am. ed., 245. " Chesapeake Ins. Co. v. Stark, 6 The English cases are referred to in Cranch, 268. these treatises. The recent case of ' Goodsou v. Brooke, 4 Camp. 163. Gurney v. W^omersley, 4 El. & B. 132, * Baring v. Corrie, 2 Barn. & Aid. asserts the same doctrine. It has been 137; Rogers v. Traders' Ins. Co., 6 repeatedly so held in New York: Paige, 583. See Freeman v. Fultoa Maikle v. Hatfield, 2 Johns. 455; 3 Ins. Co., 14 Abb. Pr. 398. § 222 PRINCIPAL AND AGENT. 392 ployed by the insurer, has no authority to pay losses to the insured on behalf of the insurer.^ A real estate broker has ordinarily power only to find a purchaser or negotiate a purchase, and not to sign a contract.^ But he may be given power by parol to make a contract within the stat- ute of frauds,' but not a deed.'' His agency ceases when the transaction is concluded.^ A stock-broker who pur- chases stock on an order from a customer must hold it a reasonable time, and not sell without notice to him;* he is entitled to recover from his customer what he has paid,' but he has no right to buy in stock to cover a sale.' A stock-broker, a member of an exchange, is authorized to purchase according to the usages of the board." The engagement of a stock-broker, under an agreement with a customer to buy and carry stock, is not to procure and furnish stock when required, but to purchase and hold the number of shares ordered, subject to the payment of the purchase price." A broker who disposes of bank stock for another is the agent of both the owner and the purchaser." Stock-brokers cannot revoke their general agreement to buy, hold, and sell stocks for a commission without notice, and if they do so revoke, they are liable for damages sustained by their employers by reason of such revocation.'^ Where a speculator in stocks is in debt to his broker for advances, and is in poor credit, the ' Bell V. AuMjo, 4 Doug. 48. « White v. Smith, 54 N. Y. 522. As ^ Rutenberg v. Main, 47 Cal. 213; to the duties of a stock -broker, when Rowe V. Stevens, 35 N. Y. Sup. Ct. he is entitled to his commissions, and 189; Glentworfh ij. Luther, 21 Barb, the rights of his employer as to notice, 145; BuSyv. Hobson, 40 Cal. 240; 6 see Durant v. Burt, 98 Mass. 161; Am. Rep. <317; Ryou v. McGee, 2 Nourse v. Prime, 4 Johns. Ch. 490; Mackey, 17. Brass v. Worth, 40 Barb. 648; Sterling * Rutenberg v. Main, 47 Cal. 213; v. Jaudon, 48 Barb. 459; Knowlton v. Pringle v. Spaulding, 53 Barb. 21. Fitch, 48 Barb. 593. * Blood V. Goodrich, 12 Wend. 525; ' Hortou v. Morgan, 19 N. Y. 170; 27 Am. Dec. 152. 75 Am. Dec. 311. See note in 75 Am. * Walker v. Derby, 5 Biss. 134. Deo. 313-316, as to the rights, duties, ^ Rosenstock v. Tormey, 32 Md. 169; and liabilities of stock-brokers. 3 Am. Rep. 125; Markham v. Jaudon, "> Taussig v. Hart, 58 N. Y. 425. 41 N. Y. 235; Cameron v. Durkheim, " Colvin v. Williams, 3 Har. & J. 55 N. Y. 425; Baker «. Drake, 66 N. Y. 38; 5 Am. Dec. 417. 518; 23 Am. Rep. 80. '2 White v. Smith. 6 Lans. 5; 54 I Durant v. Burt, 98 Mass. 161. N. Y. 522. 393 BROKERS AND FACTORS. § 223 broker may refuse to obey an order to sell and convert the proceeds into other stocks thought by him less safe, and, even though such stocks go up afterwards, the broker is not liable to his principal for refusing to obey his order.^ § 223. What Authority Implied to Brokers Generally. — A broker in general has an implied authority to sign the bought and sold notes and bind both parties;^ or to sell by sample or with warranty/ if such be the custom as to the thing sold;* to bind his principal to any price at which he buys or sells;' to guarantee the payment of a security sold;" to adjust a policy;' to pledge stock which he has bought for his principal with money advanced by himself.^ When a contract for the purchase or sale of shares has been entered into between individuals through their respective brokers, or with the intervention, as pur- chasers or sellers, of jobbers, members of the stock ex- change, the lawful usages and rules of the stock exchange are incorporated into and become part and parcel of all such contracts, and the rights and liabilities of individu- als, parties to any such contracts, are determined by the operation upon the contracts of these rules and usages.^ 1 Jones V. Gallagher, 3 Utah, 54. ' Richardson v. Anderson, 1 Camp. 2 Saladin v. Mitchell, 45 111. 79; 43; note Hartford Ins. Co. v. Smith, 3 Coddington v. Goddard, 16 Gray, 436; Col. 422. Partou V. Crofts, 16 Com. B., N. S., 11. » Wood v. Hayes, 15 Gray, 375. A broker who is the agent of both • Lawson on Usages and Customs, parties m ."signing bought and sold sec. 144; Young v. Cole, 3 Bing. N. C. notes is in all other respects the agent 724; Child v. Morley, 8 Term Rep. of the party who first employed him: 610; Bayliffe v. Butterworth, 1 Ex. Schlesinger v. R. R. Co., 13 Mo. App. 426; Taylor v. Story, 2 Com. B., K. S., 471. 175; Sutton v. Tatham, 10 Ad. & E. " Andrews «. Kneeland, 6 Cow. 354; 27; Greaves v. Legg, 11 Ex. 642; 2 Boorman v. Jenkins, 12j Wend. 566; Hurl. & N. 210; Evans on Agency, c. 27 Am. Dec. 158; Waring v. Mason, 2, sec. 2; Robinson v. MoUett, L. R. 18 V/end. 425. 7 H. L. 802; Maxted v. Paine, L. R. 4 * Upton V. Suffolk Co. Mills, 11 Ex. 210; Taylor v. Stray, 2 Com. B., Cush. 586; 59 Am. Dec. 163; Smith v. IS. S., 175; Smith v. Lindo, 5 Com. B., Tracy, 36 N. Y. 79; Brady v. Todd, 9 N. S., 587; Pidgeon v. Burslem, 3 Ex. Com. B., N. S., 592. 465; Rosewarne v. Billing, 15 Com. * Wilkinson v. Churchill, 114 Mass. B., N. S., 316; Jessopp v. Lutwyche, 184. 10 Ex. 614; Knight v. Chambers, 15 « Erevan v. Fitch, 5 Whart. 325; 34 Com. B. 562; Beeston v. Beeston, 1 L. Am. Dec. 558. R. Ex. Div. 13; Bowring v. Shepherd, § 224 PRINCIPAL AND AGENT. ' 394 Illdsteations. — B, a broker, advised A to sell certain un- registered bonds, and buy certain other bonds. A, in reply, by letter, said: "I am most anxious to get my money in registered bonds," authorized B to sell the bonds then held by B for him, "and invest the amount in the best paying and surest bonds that you know of. .... As these bonds are all I possess, I am naturally always anxious about them, for the reason that if lost or stolen I could recover nothing. You will please invest the results of the sale in the I. bonds (the ones recommended), or any sure road. I want registered bonds, of which I will have no trouble in drawing the interest I shall feel under many obligations if you will kindly make such sale and pur- chases of bonds as your good sense dictates." It was agreed that the bonds referred to by B were first-mortgage bonds. B in fact bought some first-mortgage and some second-mortgage bonds, all of which were unregistered. Held, that if he acted in good faith, it was within the scope of the authority conferred upon him by the letter of A: Matthews v. Fuller, 123 Mass. 446. § 224. What Authority not Implied to Brokers Gen- erally. — A broker has no implied authority to buy and sell in his own name,^ or on credit;^ to receive pay- ment,'' unless the principal has clothed the broker with the possession or the apparent title of the things sold;* L. R. 6 Q. B. 309; Grissell v. Bristowe, * Clarke v. Meigs, 10 Bosw. 337; L. R. 4 Com. B. 36; Coles v. Bristowe, Bassett v. Lederer, 1 Hun, 274; Len- L. R. 4 Ch. 3; Duncan v. Hill, L. K. tilhonw. Vowerck, Hill & D. 443; Mo- 6 Ex. 255; L. R. 8 Ex. 242. Neil v. Tenth Nat. Bank, 46 N. Y. 'Gallup V. Lederer, 1 Hun, 282; 325, where it is said: " The true point Graham v. Duokwall, 8 Bush, 12; of inquiry in this case is, whether the Saladin v. Mitchell, 45 111. 79; Baring plaintiff did confer upon his brokers ■o. Corrie, 2 Barn. & Aid. 143. such an apparent title to or power of ^ Henderson v. Barnewell, 1 Yonnge disposition over the shares in question & J. 387; Boorman v. Brown, 3 Q. B. as will thus estop him from asserting 511; Wiltshire 47. Sims, 1 Camp. 258. his own title, as against parties who ' Bassett v. Lederer, 1 Hun, 274; took bona fide through the brokers. Higgius V. Moore, 34 N. Y. 417; Simply intrusting the possession of a Evans v. Wain, 71 Pa. St. 69; Bar- chattel to another, as depositary, ing V. Corrie, 2 Barn. & Aid. 137; pledgee, or other bailee, or even un- Butler V. Donnan, 68 Mo. 298; 30 der a conditional executory contract of Am. Rep. 795; Doubleday v. Kress, sale, is clearly insufficient to preclude 50 N. Y. 410; 10 Am. Rep. 502; Sei- the real owner from reclaiming his pie V. Irwin, 30 Pa. St. 513; Morris property, in case of an unauthorized V. Ruddy, 20 N. J. Eq. 236; Bryce disposition of it by the person so in- V. Brooks, 26 Wend. 367; Dunn v. trusted: Ballard v. Burgett, 40 N. Y. Wright, 51 Barb. 244; Railroad Co. 314. ' The mere possession of chattels, V. Roberts, 4 Phila. 110; Graham v. by whatever means acquired, if there Duckwall, 8 Bush, 12; Parsons v. Mar- be no other evidence of property, or au- tin, 11 Gray, 111; Deane v. Internat. thority tonell, from the true owner, will Title Co., 47 Hun, 319. not enable the possessor to give a 395 EEOKEES AND FACTORS. § 224. to delegate his authority;' to rescind the sale;^ to submit disputes to arbitration;' to act for both parties,^ except to sign a contract within the statute of frauds;^ to sell to himself.® A broker who has bought stock for another with money advanced by himself, and holds it in his own name, may, so long as he has not been paid or ten- dered the amount of his advances, pledge it as a security for his own debt to a third person, without making him- self liable to an action by his employer.^ The order of a customer to a broker to buy stock " on a sixty-days' buy- er's option" does not authorize the broker to buy the stock himself, and hold it on his customer's account fur sixty days.* An authority to a broker to buy and load upon a vessel a cargo of produce does not, by implica- tion, and in the absence of any sufficient custom, give to the agent the power to borrow, upon the .credit of the principal, the money with which to make the purchase." Evidence that a parcel of land has doubled in value from May 1, 1871, to May 1, 1872, has no tendency to prove that a broker was not, in October, 1871, given authority under which he could, on May 20, 1872, sell the land for the smaller value." If a broker contracts, under the good title': Per Denio, J., in Covill ^ See ante, Chapter VI., Delegation V. Hill, 4 Denio, 323. But i£ the of Authority; Henderson v. Barnwall, owner intrusts to another not merely 1 Younge & J. 357; Locke's Appeal, 72 the possession of the property, but Pa. St. 491; 13 Am. Rep. 716; Cock- also written evidence, over his own ran v. Irlam, 2 Maule & S. 301. signature, of title thereto, and of an ^ Saladin v. Mitchell, 45 111. 79. unconditional power of disposition ' Ingraham v. Whitmore, 75 111. over it, the case is vastly different. 24. There can be no occasion for the de- * See posi as to broker's compeusa- livery of such documents, unless it is tion. intended that they shall be used, ^ Evans v. Wain, 71 Pa. St. 69; either at the pleasure of depositary, Hinckley •«. Arey, 27 Me. 362; Cod- er under contingencies to arise. If dington v. Goddard, 16 Gray, 442. the conditions upon which this appar- " Tower o. O'Neil, 66 Pa. St. 332; rent right of control is to be exercised Solomons v. Pender, 34 L. J., N. S., are not expressed on the face of the 95. instrument, but remain in confidence ' Wood v. Hayes, 15 Gray, 375. between the owner and the deposi- * Pickering v. Demerritt, 100 Mass. tary, the case cannot be distinguished 416. in principle from that of an agent who " Bank of the State v. Bugbee, 1 receives secret instructions qualifying Abb. App. 86. or restricting an apparently absolute '" Wilkinson v. Churchill, 114 Mass. power." 184. § 225 PRINCIPAL AND AGENT. 396 rules of the board of trade, for future deliveries of pork and lard for his principal, and then cancels the contract without authority, he cannot retain the margins ad- vanced.^ A broker cannot sell out cotton before the ma- turity of his principal's contract, merely because the latter does not comply with a demand for more margin, and re- cover from the principal for the loss sustained by the sale; at least, in the absence of proof of knowledge on the principal's part of a custom so authorizing.^ Illustrations. — A broker makes a contract for A to sell and deliver to B a certain quantity of wheat, at any time, during a year named, which A may select, at a fixed price, and agrees that if, by a rise in the price of wheat, more margin shall be required, he will not sell the wheat, but will draw upon A for such an amount as is necessary to carry the wheat. Held, that the broker has no right to close the contract without drawing upon A, although A at the time is out of the state, and has made no provision for the payment of the draft, of which fact the broker has knowledge: Foote v. Smith, 136 Mass. 92. § 225. Broker's Authority a Limited One — His Duties and Liabilities. — A broker, from the very nature of his employment, has only a limited authority. When he ap- plies to a vendor to negotiate a sale, he is not his agent. He does not become so until the vendor enters into the agreement of sale. It is from this agreement that he de- rives his authority, and it must necessarily be limited by its terms and conditions. He is then the special agent of the vendor to act in conformity with the contract to which his principal has agreed, but no further, and he cannot be regarded as his agent, unless he complies with the terms of his special authority as derived from the contract. In short, a broker is authorized to sign only that contract into which the vendor has entered, not an- other and different contract. If he omits to include in the memorandum special exceptions and conditions to ' Higgina v. McCrea, 23 Fed. Rep. * Blakemore v. Heyman, 23 Fed. 782. Rep. 648. 397 BROKERS AND FACTORS. § 225 the bargain, he signs a contract which he has no author- ity to make, and the party relying upon it must fail, be- cause it is shown that the broker was not the agent of the vendor to make the contract.' The principal may give the agent a more extensive power than that of a mere broker, and if he does, his acts will be enforced by the court.^ He must obey his principal's orders.* If the orders are ambiguous, he may adopt that construction which he bona fide believes to be the correct one.^ It is the duty of the broker to keep accounts of his dealings with his principal.' A broker is a mere " go-between," and is not liable for a premium of insurance, unless he acts un- der a del credere commission.® A contract for the pur- chase of stocks to be delivered within a specified time, made by a broker in pursuance of an order of a customer who deposits with the broker a part of the price of the stocks as a "margin," and who is to pay or receive any difference between the contract price and the market price of the stocks on the day the contract matures, if closed by the broker, is not illegal.^ When a stock-broker fills an order for the purchase of stocks, and his principal makes default, and he thereupon resells the stocks at a loss, it is necessary for him, in order that he may recover the amount of such loss from his principal, to show that the stock was actually purchased by himself, or by an agent under his direction, at its fair market price, on the day of purchase, and that he actually paid the purchase- money therefor; that he notified his principal of the pur- chase, and requested him to receive the stock and pay the • Bigelow, 0. J., in Coddington v. contract: Cothram v. Ellis, 107 111. Goddard, IGGray, 436. 41.3. ■•^ Rutenberg v. Main, 47 Cal. 213. * Ireland v. Livingston, L. B. 5 H. 'Nesbitt ti. Helser, 49 Mo. 383; L. Cas. 395; Bessent v. Harris, 03 Clark V. Gumming, 77 Ga. 64; 4 Am. N. C. 542. St. Rep. 72. A broker purchasing ^ Clark v. Moody, 17 Mass. 145; . grain for future delivery in his own Haas v. Damon, 9 Iowa, 589. lame, for a customer, ia bound to obey *■ Touro v. Gassin, 1 Nott &, McC. . the latter's orders to sell, or to termi- 173; 9 Am. Dec. 680. nate the agency by transferring the ' Jones v. Ames, 135 Mass. 431. § 225 PRINCIPAL AND AGENT. 398 price paid for it with reasonable commissions; that at the time of this notice, he was in condition to deliver the stock, by having the stock or other proper indicia of title actually in hand, or in the hands of his agent; that, on the failure of the principal to receive the stock, he, after a reasonable time, and notice to that effect to the principal, directed it to be sold; and that it was sold by his agent, either at public sale in market overt, or at a sale publicly and fairly made at the stock exchange or a stock board, or a board of brokers where such stocks are usually sold, at a fair market value, on the day of sale/ Illustrations. — A manufacturer in the interior of Massa- chusetts gave an order to brokers in Boston: "Send me twenty- five bags saltpeter at your earliest convenience." The order could not be filled in Boston at that time, and the brokers bought the saltpeter in New York, directing it to be delivered there to a common carrier for transportation, consigned to them- selves to a town near the factory, and advised their employer of what they had done by a letter, to which he made no reply. They had bought like merchandise for him before on similar orders, but always in Boston, and had forwarded it to him from Boston. But the merchant from whom they bought the saltpeter had no knowledge of this course of dealing. He delivered it to the carrier as he was directed, and it was lost in course of trans- portation. On being advised of the loss, the manufacturer de- nied the brokers' authority to make the purchase in New York. Held, that the merchant might recover from the manufacturer the price of the saltpeter: Foster v. Rockwell, 104 Mass. 167. During the war of 1861-1865, the plaintiff requested a broker, who had funds in his hands belonging to plaintiff, to invest in certain bonds. A small amount was invested, when the bonds began to advance in price with great rapidity, and the broker did not invest the balance. He wrote to the plaintiff frequently, asking instructions, but received no reply. The money, which was confederate treasury notes, remained in the broker's hands until, at the close of the war, it became worthless. Held, that he was not liable to plaintiff for the loss: Bernard v. Maury, 20 Gratt. 434. A employed a broker to purchase certain shares of stock upon a margin, and to carry them for him. The broker reported that he had made the purchase. On a decline in value, A instructed the broker to sell the shares; the broker afterwards 1 EosenstookD.Tormey, 32 Md. 1C9; 3 Am. Eep. 125. 399 BROKERS AND FACTORS. § 226 reported that he had done so, and A paid him the difference between the purchase price and the sale price, together with interest and commissions. Held, that if no purchase or sale was in fact made, and the broker simply assumed the contract himself, A was entitled to recover from the broker the money- paid him, unless he made the payment with knowledge of the facts: Todd v. Bishop, 136 Mass. 386. The owner of land em- ploys a broker to sell it, and the broker employs an agent in the place where the land is, and the broker honestly believes an offer made by the agent to be a good one, and so states to the owner, who accepts the offer in reliance on what is told him. Held, that the broker is not liable if the offer turns out to be a poor one, he having used reasonable care in the matter: Barnard v. Coffin, 138 Mass. 37. § 226. Broker's Compensation. — A broker's compen- sation in a particular case is ascertained by the amount usually paid brokers for such services.* To entitle the broker to his commission on the sale of property, he must show an employment.^ A real estate broker cannot claim compensation for introducing vendor and vendee, unless his character was known at the time.' He is not entitled to his commission for the purchase of an estate until a contract for the purchase, binding upon all parties, is executed, or until the title is actually transferred.* If he undertakes to find a purchaser for some town lots within a "short time," he becomes entitled to commissions if he finds a purchaser in two weeks, although during the time the price enhances, the broker not having been notified by his principal of a withdrawal or of a change of terms.* ' Rnckman v. Bergholz, 38 N. J. L. sufficient contract of employment: 531; Sinclair v. Galland, 8 Daly, 508; Long v. Herr, 10 Col. 380. "Corn- Glenn V. Salter, 50 Ga. 170. mission " means a compensation for '' Sussdorf V. Schmidt, 55 N. Y. 320; services in making a sale: Wooley v. Pierce v. Thomas, 4 E. D. Smith, 354; Jones, 84 Ala. 88. Goodspeed v. Robinson, 1 Hilt. 423; ^ Keener v. Harrod, 2 Md. 63; 56 Keys V. Johnson, 68 Pa. St. 42; Har- Am. Dec. 706. Merely putting a per V. Goodall, 10 Abb. N. C. 161; 62 purchaser on the track of property is How. Pr. 288; Twelfth Street Market not equivalent to presenting him to' Co. V. Jackson, 102 Pa. St. 269; Earp the seller so as to entitle the broker to V. Cummins, 64 Pa. St. 394; 93 Am. commissions: Sievers v. Griffin, 14 Dec. 718; Jarvisw. Schaefer, 105 N. Y. 111. App. 63. 289. Leaving with the broker a de- * Kerfoot v. Steele, 113 111. 610. scription of the property, with a re- ' Smith v. Fairohild, 7 Col. 510. quest to sell on certain terms, is a § 226 PRINCIPAL AND AGENT. 400 It is sufficient that the sale or contract was made through his efforts or agency/ even though the owner negotiates it himself.^ "His commission is earned by finding a sufficient purchaser, ready and willing to enter into a valid contract for the purchase upon the terms fixed by the owner, and having introduced such a one to the owner as a purchaser, he is not deprived of his right to commis- sion by the owner negotiating the contract himself."^ A real estate broker may recover his commissions if he first brings the property to the purchaser's notice, though he does not conduct the negotiation.^ So where two brokers are employed, the one who brings the minds of the par- ties together is entitled to commissions, though the other may have assisted or actually negotiated the sale.^ Where two brokers are employed separately, and each calls the attention of the same purchaser to the property, only the one who afterwards succeeds in effecting the sale is en- titled to commissions.* An agent who is promised a commission for finding a purchaser does not lose his right to it because another agent meanwhile eff'ects a sale.'' If an agent or broker is the means of bringing the parties together, although the offer which is accepted be made by the purchaser to the principal in person, and the agent » Sussdorf V. Schmidt, 55 N. Y. 321; v. Henry, 36 N. J. L. 328; Eedfield v. Lloyd V. Matthews, 51 N. Y. 124; Tegg, 38 N. Y. 212; Bell v. Kaiser, 50 Jacobs V. Kolff, 2 Hilt. 133; Ihornal Mo. 150; Lyoa v. Mitchell, 36 N. Y. V. Pitt, 58 N. Y. 683; Veazie v. 235; Barnard v. Monnot, 3 Keyes, Parker, 72 Me. 443. 203; Moses v. Bierling, 31 N. Y. 462; 2 Sussdorf V. Schmidt, 55 N. Y. 321; Jones v. Adler, 34 Md. 440; Durkeej). Martin v. Silliman, 53 N. Y. 615; Vermont Cent. R. R. Co.; 29 Vt. 127; Bash V. Hill, 62 111. 216; Morgan v. Watson v. Brooks, 8 Saw. 316; Mason, 4 E. D. Smith, 636; Chilton Harrell v. Zimpleman, 66 Tex. 292; V. Butler, 1 E. D. Smith, 150; Tyler Hanna?;. Collins, 09 Iowa, 51; Wilson V. Parr, 52 Mo. 249. v. Sturgis, 71 Cal. 226; Buckingham »McClave v. Paine, 49 N. Y. 561; v. Harris, 10 Col. 445; Williams v. 10 Am. Rep. 431; Timberman v. Leslie, 111 Ind. 70. Craddoek, 70 Mo. 638; Cavender o. * Royster v. Mageveney, 9 Lea, Waddingham, 2 Mo. App. 551; Grant 148. V. Hardy, 33 Wis. 668; Lane v. Al- " Smith v. McGovem, 65 N. Y. 574; bright, 49 Ind. 275; Short v. Millard, Winans v. Jaaues, 10 Daly, 487. 68 111. 292; Leete v. Norton, 43 Conn. <> Dreyer v. Ranch, 42 How. Pr. 22; 219; Arrington v. Cary, 5 Baxt. 609; Maracella !>. Odell, 3 Daly, 123. Haines v. Bequer, 9 PhUa. 51; Hinds ' Fox v. Rouse, 47 Mich. 558. 401 BROKERS AND FACTORS. § 226 afterwards draws tlie writings and receives the purchase- money, he is entitled to his commissions.* Where a per- son desiring a loan makes an application in writing, vipon which is an indorsement authorizing a single broker to procure the loan, and the broker leaves copies of such application with a number of persons, one of whom, in- duced by such application, without the broker's knowl- edge, lends the money, the broker is entitled to his commissions.^ Where the owner of real estate employs several brokers to effect a sale, he is bound to pay the one who does in fact effect the sale, and cannot exercise his option.' Where a single broker is employed to sell real property, through whom a buyer is introduced, which is followed by a negotiation resulting in a sale, the owner and buyer cannot, by any arrangement between them,, disappoint the claim of such agent for remuneration.. But where several brokers are openly employed, the en- tire duty of the seller is performed by remaining neutral between them, and he has the right to make the sale to a buyer produced by any of them, without being called upon to decide between these several agents as to which of them was the primary cause of the purchase.'' A real' estate broker cannot recover commissions where he re- ports an offer for property to his principal, without stat- ing who makes it, and the same property is afterwards sold to another broker, to whom a commission is paid, for the same price and to the same purchaser, unless it appears in evidence that the seller knew who the pur- chaser was, and of the sale to him, or that notice of these facts was given him by the plaintiff before the comple- tion of the contract with and payment of commission, to the second broker.' In general, if a broker introduces a purchaser, and such introduction is the foundation upon. 1 Shepherdu. Hedden,29N. J. L.334. ♦ Vreeland v. Vetterlein, 33 N. J. L. ' Derriokson v. Quimby, 43 N. J. L. 249. 373. s Tinges v. Moale, 25 Md. 480; 90» » Eggleston v. Austin, 27 Kan. 245. Am. Deo. 73. Vol. I. -26 § 226 PRINCIPAL AND AGENT. 402 which the negotiations are conducted and the sale made, the broker will be entitled to his commissions. If, however, by special contract the broker is not to receive any com- pensation unless the property is sold at a stated price, he is not entitled to commissions unless the property is sold at that price, or unless he introduces a purchaser who is willing to buy, and was prevented from making the sale by the fault of the principal.' If a real estate broker communicate information regarding property in his hands to one who reports it to a friend, who subsequently pur- chases it from the owner directly, the broker must be regarded as the procuring cause of the sale, and therefore entitled to his commission, even though he may have had no personal intercourse or dealing with the purchaser.'' The owner is not liable to commissions to the broker (in the absence of a special contract), though he tries to get a purchaser, if he nevertheless fails.* A person may employ a broker, and then independently of him and without his assistance effect a sale. The broker in such case will not be entitled to commissions." But his com- » Schwartze v. Yearly, 31 Md. 270. * McClave v. Paine, 49 N. Y. 561; ''Lincoln u. McClatchie, 36 Conn. 10 Am. Eep. 431; Hungerford v. 13G. Hicks, 39 Conn. 259; Wylie v. Marine » Susadorf v. Schmidt, 55 N. Y. 321; Mut. Bank, 61 N. Y. 415; Chandler McClave v. Paine, 49 N. Y. 561; 10 v. Sutton, 5 Daly, 112; Bennett v. Am. Eep. 431; Tombs v. Alexander, Kidder, 5 Daly, 512; Lane i). Albright, 101 Mass. 255; 3 Am. Rep. 350; Gott- 49 Ind. 275; Vreeland v. Vetterlein, schalk V. Jennings, 1 La. Ann. 5; 45 33 N. J. L. 247; Schwartze v. Yearly, Am. Dec. 70, where it is said: "The 31 Md. 270; White v. Twitchings, 26 general rule of law as to commissions Hun, 503; Stewart v. Murray, 92 Ind. is, that the whole service or duty must 543; 47 Am. Rep. 167; Dolan v. Scan- be performed before the right to any Ian, 57 Cal. 261 ; Darrow v. Harlow, commission attaches; for an agent 21 Wis. 302; 94 Am. Deo. 541. When must complete the thing required of a broker opens negotiations, but fail- him before he is entitled to charge for ing to bring the customer to terms it": Kimberly v. Lupton, 29 Md. 512; abandons them, and the owner after- Richards V. Jackson, 31 Md. 250; 1 wards sells the property to the same Am. Rep. 49; Walker v. Tirrel, 101 customer, the broker cannot claim Mass. 257; 3 Am. Rep. 352; Earp v. commissions: Lipe v. Ludewick, 14 Cummins, 54 Pa. St. 394; 93 Am. 111. App. 372. One who has put land Dec. 718. A broker is not entitled to into a broker's hands to sell may sell commissions where he aflfects a mere it himself without necessarily making parol contract for the sale of land himself liable to the broker for com- whioh is repudiated without the ven- missions, if the broker had nothing to dor's fault before being reduced to writ- do with the sale so made: Doonan v. ing: Gilchrist j;. Martin, 86 Tenn. 583. Ives, 73 Ga. 295. A broker's commis- 403 BROKEES AND FACTOES. § 226 mission is earned if he produce a purchaser ready and willing to take the property on the terms fixed by his principal, although through the latter's act no sale is completed.* And it is not affected by a change made in the contract as to the terms of payment between the buyer and seller.'' So, if he find a purchaser who enters into a binding contract with the principal, but afterwards refuses to carry it out.* So if the broker is unable to complete the bargain, through the principal taking it out of his sions are not defeated by the failure of the purchaser to perform his con- tract, nor by the failure of the vendor to compel him to do so: Parker v. Walker, 86 Teun. 566. 1 Moouey v. Elder, 56 N. Y. 240; Doty V. Miller, 43 Barb. 529; Cole- man V. Meade, 13 Bush, 358 (see Rock- well V. Newton, 44 Conn. 333); Pearson V. Mason, 120 Mass. 53; Love v. Mil- ler, 53 Ind. 294; 21 Am. Rep. 192; Lara v. Hill, 15 Com. B., N. S., 45; Lockwood V. Levick, 8 Com. B. 603; Stewart v. Mather, 32 Wis. 344; Bailey V. Chapman, 41 Mo. 536; Journeay v. TaUman, 40 N. Y. Sup. Ct. 436; Hart V. Hoffman, 44 How. Pr. 168; Hague V. O'Connor, 41 How. Pr. 287; Glent- worth V. Luthen, 21 Barb. 145; Beebe V. Ranger, 35 N. Y. Sup. Ct. 452; Bach V. Emerich, 35 N. Y. Sup. Ct. 548; MoGavock ■». Woodlief, 20 How. 221; Holly v. •Gosling, 3 E. D. Smith, 262; Van Lien v. Byrnes, 1 Hilt. 134; Moses V. Bierling, 31 N. Y. 462; Phe- lan V. Gardner, 43 Cal. 306; Pratt v. Hotchkiss, 10 111. App. 603; Finnerty V. Fritz, 5 Col. 174; Fischer v. Bell, 91 Ind. 243; Fisk v. Henarie, 13 Or. 156. "Where the vendor is satis- fied with the terms made by himself, through the broker to the purchaser, and na valid objection can be stated in any form to the contract, it would seem to be clear that the commis- sion of the agent was due and ought to be paid. It would be a novel principle if the vendor might capri- ciously defeat his own contract with his agent, by refusing to pay him when he had done all he was bound to do. The agent might well undertake to procure the purchaser, but this being done, his labors and expense could not avail him, as he could not coerce a willingness to pay the com- mission which the vendor had agreed to pay. Such a state of things could only arise from an express understand- ing that the vendor was to pay noth- ing, unless he should choose to make the sale": Kock v. Emmerling, 22 How. 69, per Mr. Justice McLean; Gottsohalk v. Jennings, 1 La. Ann. 5; 45 Am. Dec. 70; Vinton v. Baldwin, 88 Ind. 104; 45 Am. Uep. 447. ihe owner of land who has agreed to pay a broker commissions for finding a purchaser cannot escape liability by giving the land to a son pending the trade, it being finally consummated by the son under his father's direc- tion: Fox 17. Byrnes, 52 N. Y. Sup. Ct. 1.50. * Lawrence v. Atwood, 1 111. App. 217; Bash v. Hill, 62 111. 216; Green V. Read, 3 Fost. & F. 226; Reynolds V. Tompkins, 23 W. Va. 229; Gorman V. SohoUe, 13 Daly, 511. ' "When the broker has effected a bargain and sale by a contract which is mutually obligatory on the vendor and vendee, he is entitled to his com- mission, whether his employer chooses to comply with or enforce the contract or not": Love v. Miller, 53 Ind. 294; 21 Am. Rep. 192. If the owner of land agrees to pay a broker a commis- sion, not for finding a purchaser alone, but for making an actual sale, the broker cannot claim his commission until the sale is made: Hyams v. Mil- ler, 71 Ga. 608; nor on a contract of sale which, because of its incomplete- ness, cannot be enforced: Bradford v. Menard, 35 Minn. 197. § 226 PRINCIPAL AND AGENT. 404 bands, he is entitled to a pro rata commission for the work he has done.^ A broker employed to sell goods to arrive becomes entitled to his commission by negotiating a contract for the purchase of the goods, notwithstanding the sale is never consummated by reason of the non- arrival of the goods. He is not bound to show a special custom existing, which would entitle him to brokerage under such circumstances. He is entitled to his compen- sation, because he has done all he agreed to do.^ The purchaser obtained by the broker must, however, be such a one as the vendor is bound to accept,' and who is ready to accede to the principal's terms;^ nor can the broker recover where the transaction is illegal.^ A broker for the sale of personal property cannot recover commissions until the sale is completed * Defects in the vendor's title are irrelevant;^ the broker is entitled to his commissions, though the purchaser is relieved from his purchase by the court on account of a defect of title;* or the vendor cannot make a perfect title.' The broker must act only for his employer, and if he is employed by both, without the knowledge of either, he ' Martin v. Silliman, 53 N. Y. 615; to a general agreement: Wyckoff v. Priokett v. Badger, 1 Com. B., N. S., Bliss, 12 Daly, 324. One who is prom- 296; Durkee v. Vermont Cent. R. R. ised compensation if he will procure Co., 29 Vt. 127; Chapin v. Bridges, a purchaser for property on certain 116 Mass. 105; Turner v. Webster, 24 terms cannot claim compensation for Kan. 38; 36 Am. Rep. 251. One effecting a sale on lower terms, he employed to find a customer for land having, moreover, acted in part in the does not lose his right to a commis- buyer's interest: Williams v. McGraw, sion because his principal refuses to 52 Mich. 480. consummate the contract: Goss v. * Augusta Bank v. Cunningham, 75 Stevens, 32 Minn. 472. Ga. 366. A broker who knowingly ^ Paulsen v. Dallett, 2 Daly, 40. acts for parties who make mere bets ' Coleman v. Meade, 13 Bush, 358. or wagers on the future state of the * Fraser v. Wyckoff, 63 N. Y. 445; market cannot recover his losses in Barnard v. Monnot, 3 Keyes, 203; such transactions: McLean v. Stuve, McGavock v. Woodlief, 20 How. 221; 15 Mo. App. 317. Darrow v. Harlow, 21 Wis. 302; 94 « Thomas v. Lincoln, 71 Ind. 41. Am. Dec. 541; Hayden v. Grille, 26 ' Allen «. James, 7 Daly, 13. Mo. App. 289; Cassady v. Seeley, 69 * Smith v. Mooney, 14 Week. Dig. Iowa, 509; Fisk v. Henarie, 13 Or. 237; Doty v. Miller, 43 Barb. 529. 156. But he does not lose his right ' Knap'p v. Wallace, 41 N. Y. 477; to his commission merely because the Holly v. Gosling, 3 E. D. Smith, 263; prinqipals cannot be brought to terms Gonzales v. Broad, 57 Cal. 224; Ham- on a particular point, if they come lin v. Schulte, 34 Minn. 534. 405 BEOKERS AND FACTORS. § 226 has undertaken an inconsistent employment, and can re- cover commissions for his services from neither,^ unless he is a mere middle-man to bring them together;^ or his double employment was known and assented to by both parties.^ The intentional concealment from his principal, by a broker employed to sell real estate, of important and 1 Rice V. Wood, 113 Mass. 133; 18 Am. Rep. 459; Pugsley v. Murray, 4 E. D. Saiith, 24-5; Scribner v. Collar, 40 Mich. 375; 29 Am. Rep. 541; Cope- land V. Mercantile Ins. Co., 6 Pick. 198; Fairbrother v. Simmons, 5 Barn. & Aid. 333; Siegel v. Gould, 7 Laus. 177; VV'alker v. Osgood, 98 Mass. 348; 93 Am. Dec. 168; Coleman v. Gar- riguei, 18 Barb. 60; Glentworth v. Luther, 21 Barb. 145; Raisin v. Clark, 41 Md. 158; 20 Am. Rep. 66; Lynch V. FaUon, 11 R. I. 311; 23 Am. Rep. 458; Bennett v. Kidder, 5 Daly, 512; Bell V. McConnell, 37 Ohio St. 400; 41 Am. Rep. 529; Meyer v. Han- chett, 39 Wis. 423. In Farnsworth V. Hemmer, 1 Allen, 494, 79 Am. Dec. 7C;6, the rule is thus stated: "The principle on -which rests the well-settled doctrine that a man can- not become the purchaser of property for his own use and benefit which is iatru::ted to him to sell is equally ap- plicable when the same person, with- out the authority or consent of the parties interested, undertakes to act as the agent of both vendor and pur- chaser. The law does not allow a man to assume relations so essentially in- consistent and repugnant to each other. The duty of aa agent for a vendor is to sell the property at the highest price; of the agent of the purchaser to buy it for the lowest. These duties are so utterly irreconcilable and con- flicting that they cannot be performed by the same person without great danger that the rights of one principal will be sacrificed to promote the inter- ests of the other, or that neither of them will enjoy the benefit of a dis- creet and faithful exercise of the trust reposed in the agent. As it cannot be supposed that a vendor and purchaser would employ the same person to act as their agent to buy and sell the same property, it is clear that it operates as a surprise on both parties, and is a breach of the trust and confidence in- tended to be reposed in the agent by them respectively, if his intent to act as agent of both in the same transac- tion is concealed from them. It is of the essence of his contract that he will use his best skill and judgment to promote the interest of his employer. This he cannot do where he acts for two persons whose interests are essen- tially adverse. He is therefore guilty of a breach of his contract. Nor is this all. He commits a fraud on his principals in undertaking, without their assent or knowledge, to act as their mutual agent, because he con- ceals from them an essential fact, en- tirely within his own knowledge, which he was bound in the exercise oit good faith to disclose to them. " 2 Rupp V. Sampson, 16 Gray, 401; 77 Am. Dec. 416, where it was said: ' ' The interests of buyer and seller are neces- sarily adverse, and it would operate as a surprise on the confidence of both parties, and essentially affect their re- spective interests, if one person should, without their knowledge, act as the agent of both. But the plaintiff did not act in any such capacity. He was not an agent to buy or sell, but only acted as a middle-man to bring the parties to- gether in order to enable them to make their own contracts. He stood entirely indifferent between them, and held no such relation in consequence of his agency as to render his action adverse to the interests of either party ": Fritz V. Finnerty, 14 Am. Law Rev. 598; Sie- gel V. Gould, 7 Lans. 177; Balheimer v. Reichardt, 55 How. Pr. 414; Herman V. Martinean, 1 Wis. 151; 60 Am. Dec. 368; Stewart v. Mather, 32 Wis. 355. 8 Rowe V. Stevens, 53 N. Y. 621; 35 N. Y. Sup. Ct. 189; Siegel v. Gould, 7 Lans. 177; Bell v. McConnell, 37 Ohio St. 396; 41 Am. Eep. 529. § 226 PRINCIPAL AND AGENT. 406 material facts, will deprive him of his right to a commis- sion, and this although there was no fraudulent purpose.* An agreement by a person desiring to purchase land, to convey a part of it to the seller's broker, cannot be enforced by the broker, one of the considerations of the agreement being that he would put such person in communication with the seller.^ The fact that the agent had taken out no license under the internal revenue laws of the Uaited States will not affect his right to recover.' Illustrations. — Brokees' Claims to Commissions Sus- tained. — A person seeing by a card on a house that it was for sale went to the agent and got an order to examine the place, but concluded the price was too high. He had no further communications with the agent, but subsequently renewed negotiations with a friend of the owner, and purchased at a less price. Held, that there was evidence that the purchase was made through the agent's intervention, and that be was enti- tled to commissions: Mansell v. Clements, L. R. 9 C. P. 139. Defendants purchased certain real estate through the instru- mentality of plaintiff, who acted as broker for the seller. He claimed commissions, which they declined to pay, but prom- ised him part of the profits when they sold. He advised as to the best mode of sale, procured maps of the property, which he displayed, also signs, and advertised it. A purchaser, attracted by the advertisements and signs, opened negotiations with de- fendants, who notified the plaintiff to do nothing further, and that they would pay him a commission if the sale was effected. The sale was effected. Held, that plaintiff was entitled to commissions: Sussdorf v. Schmidt, 55 N. Y. 321. A broker had been employed to procure a loan; he found a party with the money ready, who consented to loan upon approval of the security proposed. Such lender, on examination, found the property encumbered, and refused to consummate the transac- tion. Held, that the broker was entitled to his commissions: Holly V. Gosling, 3 E. D. Smith, 262. A agreed to pay B a certain sum to find him a tenant for his farm. C agreed with the same B to pay him a certain sum to find a farm, which he, C, could hire, and by the mediation of B, A and C were brought together, and consummated a bargain for the letting and hiring of a farm. Held, that the fact that B had acted for C as well as A in the transaction constituted no bar to a > Pratt V. Patterson, 12 Phila. 460. ' Ruckman v. Bergholz, 37 N. J. L. 2 Smith V. Towuaend, 109 Masa. 500. 437. 407 BROKEES AND FACTORS. § 226 recovery by B of the amount agreed to be paid by A: Herman V. Martineau, 1 Wis. 151; 60 Am. Dec. 368. A agreed with B that if B would find anybody that would trade with A for cer- tain land owned by him, he would pay B five hundred dollars. B accordingly introduced to A a person with whom A made a written agreement for the sale of the property. Held, that upon the execution of this agreement B became entitled to his commission, though the sale was never completed: Pearson v. Mason, 120 Mass. 53. By the terms of a contract, a broker was to receive ten per cent of the price if he should dispose of certain steamers at prices and conditions to be agreed on. His action in the matter directed the attention of the purchasers to the vessels he had for sale, and led to the negotiations which re- sulted in the purchase of the vessel, but he did not actually make the sale and transfer. Held, that he was entitled to his commission: Lyon v. Mitchell, 36 N. Y. 235; 93 Am. Dec. 502. A land agent advertised a farm at his own expense, and a neighbor, seeing the advertisement, directed a buyer to the farm. Held, that the sale was really secured by the agent: Anderson V. Cox, 16 Neb. 10. A broker was employed to surrender stock and interest scrip, and procure bonds for them, and in so doing expended time and money. Held, that it was to be presumed, from the fact of the employment, that the bonds were more valuable to the owner than the stock: Chappell v. Cady, 10 Wis. 111. A agreed to pay to B, a real estate broker, a certain sum to sell his mine for a certain price within a certain time. B found a man willing and ready to purchase, but A refused to sign an agreement of sale required by the purchaser, where- upon the purchaser withdrew. Held, that A's refusal to sign the agreement was equivalent to a refusal to sell, and that B was entitled to his commission: Neilson v. Lee, 60 Cal. 555. An agent employed to "find a purchaser" for land found one who said he would take the land, but the principal had then sold to another. Lleld, that the agent, in order to recover for his services, must show that his purchaser was financially re- sponsible: Iselin V. Griffith, 62 Iowa, 668. A gives B until a certain time to "close out" A's land, or to find a customer, offering him a certain sum if he performs the service. B may recover the compensation if he produces the customer before that date, although not in time for the preparation of the papers and completion of the sale before the date named: 0^ Connor v. Semple, 57 Wis. 243. A real estate broker, having contracted with the owner of a farm to sell it at a specified commission, procured a buyer and brought him to the farm. The latter objecting to the quantity of land ofifered, the owner agreed to reserve a portion and sell him only the remainder, whereupon § 226 PRINCIPAL AND AGENT. 408 the parties repaired to the oflQce of the broker, who drew up the papers, and did other things in aid of the vendor, and the sale was consummated. Held, that the broker was entitled to his commissions on the land actually sold: Woods v. Stephens, 46 Mo. 555. In an action to recover a commission on the sale of a house to the defendant, there was evidence that the plaintiff, who was not a real estate broker, said to the defendant, who was seeking a house, ''If I find you a house, you must pay me a commission," and the defendant replied, "I would as soon pay you as any other person"; that the plaintiff did not see the defendant again, but that, in consequence of information furnished by the plaintiff, a third person called on the defend- ant and sold him a house. Held, that this evidence would support a verdict for the plaintiff, although the usage of brokers is, that, in the absence of special agreement, the seller, and not the purchaser, pays the commission, and although the plaintiff had not taken out an internal revenue license from the United States as a real estate agent: Pope v. Beals, 108 Mass. 561. A employed B to find purchasers for a certain number of shares of stock at a price named, and agreed to pay him a commission of a certain per cent on the sale. B negotiated with C for the purchase of the stock, and D was subsequently consulted with by C, and later by B, as to joining in the purchase. D sug- gested E as an associate, and afterwards called his attention to the matter. While these negotiations for a sale were pending, A informed B that he had sold the stock to other persons, and could not sell to C and his associates; but afterwards, at the request of B and C, A transferred the shares to C, D, and E, as a sale in one "block," and at a lower price than that originally fixed by him, though B had nothing to do with such reduction in price. Held, in an action by B against A, that B was enti- tled to recover a commission on the shares so sold: Dexter v. Campbell, 137 Mass. 198. A bond was given by A to convey a lot of land at a price named per square foot. The bend was assigned to B, who employed C to find a purchaser for the land, agreeing to pay him all he could get over the price named in the bond. C sold the land at a higher price to D, to whom A, at the request of B, conveyed the land. In a suit brought by C against B to recover the excess over the price named in the bond, B offered to show that C, at the time of his employment as agent, was interested in the land as owner or part-owner, and did not disclose this fact to him, and contended that this con- cealment was a fraud upon him. Held, that the question of such ownership was immaterial: Durgin v. Somers, 117 Mass. 55. A, a real estate agent, was applied to by B, an owner of land, to sell it for him. B gave to A a written description of 409 BROKERS AND FACTORS. § 226 the land, and stated the price at two thousand and fifty dollars, fifty dollars of which sum was to be the perquisite of A for effecting a sale. C ob);ained from the agent a copy of the de- scription, called on B, and asked him what he would take for the land. B replied two thousand dollars, which C gave, and received a conveyance. Held, that the owner was responsible to the agent for the perquisite of fifty dollars: Alexander v. Breeden, 14 B. Mon. 125. A employed B, a broker, to sell cer- tain property. B communicated to him the name of C, who offered to purchase, but at a price less than A asked. A re- jected the offer, and discharged the broker, but shortly after, through another agent, sold the property to C for the price originally offered by C. Held, that B was entitled to his com- pensation as broker: Gottschalk v. Jennings, 1 La. Ann. 5; 45 Am. Dec. 70. W. employed C. to purchase a lot for him upon certain terms, stipulating that the compensation of the latter was to be deducted from the purchase-money going to the vendor, and was in no event to be paid by W. Held, that W. would be liable, nevertheless, to C for his proper fee, in case of a violation of the contract by W. in refusing to take the prop- erty: Cavender v. Waddingham, 2 Mo. App. 551. Illusteations (Continued). — Beokers' Claims not Sus- tained. — ■ A agreed to pay B fifteen hundred dollars, pro- vided he efiected a sale, or obtained a customer who would pay seventeen thousand five hundred dollars for the unsold territory of certain patents, and ten per cent on any less sum which A might agree to take. B procured H. & S. to enter into a partnership agreement with A for the selling of the patent rights, the firm agreeing to pay A fifteen thousand dollars for his interest out of the profits of the concern. Held, that B could not recover, as he had not procured any absolute pur- chaser: Eraser v. Wyckoff, 63 N. Y. 445. A broker employed by A to sell his house effects a trade by which A's house is bought by B, who sells his house to C, the purchase price being dependent in each case on each other, and the purchase-money of C, which is the same as that of B, is paid directly to A, who pays the broker a commission for selling his house. Held, that he cannot recover likewise of C, even though he was employed by C to buy a house for him: Follansbee v. O'Reilly, 135 Mass. 80. A person employed a broker to find a purchaser for certain land, promising that if he found one within a month able and willing to buy at a certain figure he would pay the broker a certain sum. The broker found a purchaser within the month, but before they found him the principal revoked the agency: Held, that the broker could not recover: Brown v. § 226 PRINCIPAL AND AGENT. 410 PJoor, 38 Cal. 550. The defendant, being owner of three par- cels of land, employed plaintifif, a real estate broker, to nego- tiate sales thereof at a specified price for each. Plaintiff found a purchaser for one, and the sale was efi'ected, upon which plaintifif received his commission. Subsequently defendant informed the purchaser of his desire to sell one of the other parcels, and a contract was made between them, plaintiff tak- ing no part in this afifair. Held, that he was not entitled to a commission on the sale: McClave v. Paine, 49 N. Y. 561, 10 Am. Rep. 431. H., a real estate agent, having heard that K. desired to sell certain property, went to the ofi&ce of K. and told him that in case he should succeed in negotiating a sale, he should expect the usual commission of two and a half per cent. Afterwards H. brought K. and J. together, and certain papers were executed, whereby they contracted for the sale of the property, with a stipulation that if either party should fail to comply with the contract, a forfeiture of one thousand dollars should be paid by the party in default. Afterwards J., having failed to comply with the contract, gave his note for the forfeit money. Held, that H. was not entitled to any commissions: Kimherly v. Henderson, 29 Md. 512. An agreement to sell real estate on commission was made by a broker with an owner. On a day fixed the broker stated that he could do nothing with the lots, but subsequently informed another broker that the property was for sale, and through the latter a sale was effected. Held, that the employment was at an end, when the information of inability to procure a purchaser was given: Holley v. Townsend, 2 Hilt. 34. An agent agreed to sell a farm for two per cent commission on a certain amount, and thirty per cent on all received in excess of that amount. Held, that he was not en- titled to commission on the value of part of the crop, which he knew belonged to another, and which was deducted from the gross amount received: Barrett v. Johnson, 64 Pa. St. 223. An action is brought by a broker for services in procuring a pur- chaser for a lot of land at a certain price. Held, that evidence that he found a purchaser who agreed to take the land at a price, provided that the defendant would then lease the same for three years and give security for the rent, and that an agree- ment was drawn up to that effect and signed by the defendant, but that the purchaser refused to sign unless the defendant would first take a lease and give security, failed to show that he procured a purchaser who agreed to buy at any price: Mas- ten V. Griffing, 33 Cal. 111. Plaintifif, a real estate broker, without any express contract of employment with defendant, introduced to him a person who purchased of him a piece of land. Plaintifif was present during the negotiation between the 411 BROKERS AND FACTORS. ,§ 226 parties, and spoke disparagingly of the value of the property, and suggested that the price asked was too large. He also was present with the parties at the consummation of the contract and the delivery of the deed. The sale was brought about by means of plaintiff, and but for him the parties would not have come together; but during the whole transaction defendant supposed plaintiff was acting as the agent of the purchaser, and never intended to employ him for himself. In an action to recover a commission on the sale, held, that no contract of employment was implied from the facts in the case, and that plaintiff was not entitled to recover: Atwater v. Lochwood, 39 Conn. 45. At the time of making the sale the seller told the broker who had negotiated the sale that he must get his commissions from the buyer, and there was no evidence that the seller ever employed the broker. Held, that the seller was not bound to pay the broker, as he had not employed him: Goodspeed v. Robinson, 1 Hilt. 423. A contracted with brokers to find a purchaser for his land, agreeing to give them as com- mission all that the land brought above one thousand dollars. Without their consent he sold it for twelve hundred dollars to a purchaser found by himself Held, that they were not entitled to any commission: Stewart v. Murray, 92 Ind. 543; 47 Am. Kep. 167. A broker whom A employed to sell land for a com- mission, and advised of his title to it, and that he "could give a warranty deed of the same," introduced B as a person desirous of buying the land; and B then bargained with A for its pur- chase at a fixed price, but before completing a valid contract discovered a defect in A's title. A thereupon agreed with B to sell the land at public auction under a power by the due exe- cution of which a valid title could be conveyed; and B agreed to buy it at the auction, but did not do so, and it was bought at the auction by C for a price larger than that fixed between A and B. Held, that A was not liable to the broker for commissions or services: Tombs v. Alexander, 101 Mass. 255; 3 Am. Kep. 349. A employed B, a broker, to sell a house. B procured of C an offer of five thousand dollars, which B advised A not to accept. A afterwards negotiated a sale thereof to C at five thousand three hundred dollars. Held, that B was not entitled to any commissions on the sale, A being the procuring cause: White v. Twitchings, 26 Hun, 508. D. employed several brokers in Baltimore to effect for him a loan of ten thousand dollars for three years at eight per cent, to be secured by a mortgage on certain real estate. One of these, G., discovered a person able and willing to make the loan, and notified D., who declined to accept, stating that he had already perfected a loan of that amount on the same prop- § 226 PRINCIPAL AND AGENT. 412 erty, and at the same rate, for one year, through one of the other agents whom he had employed, and had paid him his full commissions. It was a usage among the brokers in Balti- more, that when two or more are employed to negotiate the same transaction, the broker who first succeeded in making such negotiation was entitled to full commissions, and the others were not entitled to any. Held, that G. was not entitled to recover any commissions: Glenn v. Davidson, 37 Md. 365. The defendant employed a broker to sell his country place, and the broker introduced R., who had a mine he proposed to exchange for it. The proposition was rejected. A year and a half after, R. bought the place of defendant as agent for his wife. Held, that defendant was not liable for commissions to the broker: Harris v. Burtnett, 2 Daly, 189. W., owning cer- tain stock, offered to pay G. "a liberal commission" if G. would sell it, but named no price, and directed G. to inform him if any offer was received for it. G. procured an offer, but W. refused it, naming a higher price. G. then found another party, R., conversed with him about buying the stock, and advised W. to meet R. at a certain time and place therefor. W. met R., and sold him the stock at the higher price. Held, that proof of these facts would not support an action by G. against W. for the commission: Gillespie v. Wilder, 99 Mass. 170. The owners of real estate expressly refuse to employ the plaintiff, a broker, in selling their property. Held, that the mere fact that the plaintiff, having ascertained the price charged for the property, sent a purchaser, to whom a sale was effected, did not entitle him to recover commissions: Pierce V. Thomas, 4 E. D. Smith, 354. A broker not employed by the owner, the defendant, offered to sell to one whose attention had been attracted by the owner's advertisement, but the customer said he would see the owner; afterwards the broker was em- ployed to sell, but the customer, without again seeing him, bought of the owner. Held, that the broker had earned no commission: Cushman v. Gori, 1 Hilt. 356. K. employed a broker to sell land. It was agreed that if K. should sell without the broker's assistance the latter should have nothing. After the broker had found a customer, K. reported that he had made a proposition to S., and was awaiting an answer. The broker agreed to wait. S. accepted K.'s proposition. Held, that the broker was not entitled to a commission: Robinson v. Kindley, 36 Kan. 157. A broker, hearing that a company was about to advertise for bids for piles, procured from each of several deal- ers in piles a promise that if he secured a sale he should have a commission, he offering, as an inducement, to act for each, and saying nothing about the company or the bidding. Bids 413 BROKERS AND FACTORS. § 226 were advertised for, and one secured a contract. Held, that he owed the broker nothing: Murray v. Beard, 102 N. Y. 505. A broker got from a manufacturer an agreement to sell certain goods at prices to cover commissions. The transaction fell through, the broker's customer making default. Held, that the broker had no claim on the manufacturer for commissions: Colwell V. Springfield Iron Co., 24 Fed. Rep. 631. Defendant employed plaintiff to sell the Old South Church property. Plaintiff talked with P. about buying it for his own purposes, but P. abandoned the idea. Afterwards, a society was formed for the purpose of preserving the property, and there not being money enough subscribed, it became necessary to get some responsible person to sign a mortgage note, and this P. did, taking a conveyance to himself^ and then giving a note and mortgage, and making a declaration of trust. Held, that P. was not a purchaser so as to make defendant liable to plaintiff for commissions: Viaux v. Old South Society, 133 Mass. 1. A promises B a certain sum if he will produce a purchaser of A's property at a specified price. Held, that B cannot recover on such promise without producing a person able and willing to pay such price. The stipulation as to price is not waived by A's selling the property for a less price than a person produced by B, unless he does so with knowledge that such person is able and willing to pay the price stipulated in the contract between A and B: McArthur v. Slauson, 53 Wis. 41. A is employed as a broker to sell B's house, on the agreement that he will inform B if he sends a purchaser, and A and C then agree that if C will procure a purchaser, he shall share with A in the commission. C, on going to look at the house, tells B that no broker has anything to do with the trade, and a price is named on that understanding, and the house is bought by a purchaser procured by C. A and C are partners in the business of effecting a sale of B's house to such purchaser. Held, that C's fraud, though not participated in by A, will bar an action by A against B for the commission, prosecuted for the joint benefit and at the joint expense of A and C: Thwing v. Clif- ford, 136 Mass. 482. S. met R., a real estate broker, on the street, and upon inquiry by the latter in regard to a certain house owned by S., said that he would sell it so as to net him- self twenty thousand dollars, and that if R. could sell it for twenty thousand five hundred dollars, he might have the five hundred dollars. Some months afterwards S. sold the prop- erty to G. for nineteen thousand five hundred dollars, who came from R., from whom he had learned the property was for sale. Held, that R. was not entitled to any commissions: Rees V. Spruance, 45 111. 308. A broker was appointed to sell land § 227 PRINCIPAL AND AGENT. 414 on certain terms. He showed the land to a person who nego- tiated wholly with the owner, and bought on lower terms, the owner not knowing that the buyer had had any communica- tion with the broker, and the owner, when the negotiations began, having notified the broker that his authority was sus- pended. Held, that the broker could not recover commissions: Blodgett v. Railroad Co., 63 Iowa, 606. A agrees to give B a commission to effect a sale of A's land within a specified time, and on the last day B produces one who will buy if he can have a reasonable time to investigate the title, which time A refuses to allow, whereby the sale falls through. Held, that B cannot claim commissions, as time is of the essence of the contract: Watson V. Brooks, 11 Or. 271. Defendant agreed to pay plain- tiffs a certain commission for selling his property at a certain price. H., the purchaser, refused, in the first place, to pay the required price, but afterwards instructed an agent to buy, and give the full price if he could not get it for less. The agent bought the property for less of another broker, plaintiffs having omitted to inform defendant that H. would pay the full price. Held, that plaintiffs did not act in good faith by such omission, and were not entitled to a commission for effecting a sale: Hen- derson V. Vincent, 84 Ala. 99. § 227. Factors and Del Cfredere Agents. — A factor is an agent for the sale of goods in his possession or con- signed to him.* The distinction between a broker and a ' WhaTtou on Agency, sec. 735; Brandt, 11 Mart. (La.) 331, 13 Am. Evana on Agency, 3; Story on Agency, Dec. ,S52, itissaid: " Factors are those sec. 33; Burton v. Goodspeed, 69 who are appointed to transact a par- Ill. 237; Whitfield v. Brand, 16 ticular business in the name of an- Mees. & W. 288; Edgerton v. Michels, other, and not in their own: Cm-ia 66 Wis. 124. "The diflFerenoe be- P/dlipica, Comerdoterrestre, lib. 1, ea.'p, tween a factor or commission merchant 4, n. 1. Commission business is tran- and a broker is stated by all the books sacted in this city, not in the name of to be this: A factor may buy and sell the principal, but in the name of the in his own name, and he has the goods house to whom the property is trans- in his possession, while a broker as mitted for sale. They dispose of it such cannot ordinarily buy or sell in as their own, take bills payable to his own name, and has no possession themselves for the price, and when of the goods sold. The plaintiffs made they purchase, it is they who state the sales themselves, in their own themselves buyers, not the house in names, at their own store, and on Philadelphia, London, or Paris, who commission, and had possession of the may have commissioned them. The goods as soon as the sales were made, different members of the sentence, and delivered or shipped them to taken together, convince us that the their customers. This course of busi- intention of the parties was to estab- ness clearly constituted them commis- lish a commission house in this city of sion merchants as contradistinguished the ordinary kind. The expression from mere brokers or agents": Slack 'as factors' does not prove anything V. Tucker, 23 Wall. 321. In Ward v. else was contemplated; for the mean- 415 BEOKERS AND FACTORS. § 227 factor was early pointed out by the judges in the English case of Baring v. Corrie} Here Chief Justice Abbott said: "The distinction between a broker and a factor is not merely nominal, for they differ in many important par- ticulars. A factor is a person to whom goods are con- signed for sale by a merchant residing abroad, or at a distance from the place of sale, and he usually sells in his own name, without disclosing that of his principal. The latter, therefore, with full knowledge of these circum- stances, trusts him with the actual possession of the goods, and gives him authority to sell in his own name. But the broker is in a different situation, — he is not trusted with the possession of the goods, and he ought not to sell in his own name." To the same effect Mr. Justice Hol- royd observed in the same case, that a factor "is a person to whom goods are sent or consigned, and he has not only the possession, but, in consequence of its being usual to advance money upon them, he has also a special property in them, and a general lien upon them. When, therefore, he sells in his own name, it is within the scope of his authority, and it may be right, therefore, that the principal should be bound by the consequences of such sale, — amongst which the right of setting off a debt due from the factor is one. But the case of a broker is different; he has not the possession of the goods, and so the vendee cannot be deceived by that circumstance; and besides, the employing of a person to sell goods as a broker does not authorize him to sell in his own name. If, there- fore, he sells in his own name, he acts beyond the scope of his authority, and his principal is not bound." An agent for collecting debts merely is not a factor within ing attached to the word ' factor ' in Commission merchants who have a common parlance is quite consistent house established in New Orleans, and with the other terms of the sentence who live by buying and selling those as we understand them. Our law de- objects which form the commerce of fines merchants those persons who buy this place, come within the letter of and sell merchandise to make profit by the definition just given." it; Curia Philipica, lib. 1, cap. 1, n. 3. '2 Barn. & Aid. 143. § 227 PRINCIPAL AND AGENT. 416 the Virginia statute of limitations.' Where a person em- ploys another to sell goods and wares at a distant place, and agrees that the employee shall receive a certain sum yearly, and a stipulated portion of the profits for his ser- vices; and the employee is to select and rent a business house, and employ clerks, and conduct the business; and all rents and expenses are to be paid out of the proceeds if sufficient, but if not, then by the employer, — the per- son conducting the business is a factor.^ A "commission merchant," as the term is used in the Alabama revenue law, is synonymous with "factor," and means one who re- ceives goods, chattels, or merchandise for sale, exchange, or other disposition, and who is to receive a compensa- tion for his services, to be paid by the owner, or derived from the sale, etc., of the goods. One who "shipped cot- ton for different parties, or for about ten or twelve differ- ent persons, to a firm in Boston, and received a return commission on the cotton so shipped," is only a shipping and forwarding agent, and cannot be said to be carrying on the business of a commission merchant.' When, generally for an additional commission, he guar- antees to his principal the payment of the buyer's debt, he is said to be a del credere agent.* Whether a del credere agent is responsible to his principal in the first instance, or only as a guarantor, is a question upon which there is much conflict of opinion. Mr. Evans says he " is not responsible to his principal in the first instance, though a contrary opinion at one time prevailed."^ And Judge Story* treats him as "liable to the principal, if the buyer ' Hopkirk v. Bell, 4 Cranoh, 164; 3 N. Y. 579; 5 Sand. 397; Field v. Cranch, 454. Syms, 2 Roi)t. 35; Johnson v. O'Hara, •' Wiune v. Hammond, 37 111. 99. 5 Leigh, 456. 2 Perkins v. State, .TO Ala. 154. As * Story on Agency, sec. 33; In re to the rights, duties, and liabilities of Nevill, L. E. 6 Ch. App. 397. See commission merchants, in cases de- Sharp v. Emmet, 5 Whart. 288; 34 pending upon peculiar and unusual Am. Dec. 554. circumstances, see Ansley v. Anderson, * Citing Hornby v. Lacy, 6 Maule 35 Ga. 8; Smith v. Faulkner, 12 Gray, & S. 166. 251; Valle v. Cerre, 36 Mo. 575; 88 ^ Story on Agency, sec. 33, citing Am. Dec. 161; Dodge v. Wilbur, 10 Thompson v. Perkins, 3 Mason, 232. 417 BROKEES AND FACTORS. §227 fails to pay, or is incapable of paying; but he is not per- sonally the debtor." But Mr. Freeman, in his note in 58 Am. Dec. 171, says: "The American cases, however, follow the early English decisions, and consider him as absolutely liable to pay the price when the credit has ex- pired," which seems' to be a better statement of the weight of authority.' A del credere commission is not demand- ' Wolff V. Koppel, 2 Denio, 368; 43 Am. Dec. 751; Cartwright v. Greene, 47 Barb. 9; Swan v. Nesmith, 7 Pick. 220; 19 Am. Dec. 282; Sherwood v. Stone, 14 N. Y. 267; Leverick v. Meigs, 1 Cow. 645; Blakely v. Jacob- son, 9 Bosw. 140; Heubach v. MoU- mann, 2 Duer, 227; Milliken v. Byerly, 6 How. Pr. 214. His agreement to guarantee may be proved by pa- rol, not being within the statute of frauds: Swan v. Nesmith, supra; Sher- wood V. Stone, supra. The American editor of Evans on Agency, page 3, cites Thompson v. Perkins, 3 Mason, 236, and Bradley v. Richardson, 23 Vt. 720, as supporting the modern English rule. The authorities are exhaustively reviewed in Lewis v. Brehme, 33 Md. 412, 3 Am. Rep. 190, per Alvey, J., as follows: "When- ever an agent, in considerat'on of additional commission, such aa was agreed to be allowed in this case, guarantees to his principal the pay- ment of debts that become due through his agency, he is said to act under a. del credere commission. What, then, is the nature and extent of this guaranty ? In Grove v. Dubois, 1 Term Rep. 112, a case of a policy- broker. Lord Mansfield answered this question in very plain and unquali- fied terms when he said: 'It is an absolute engagement to the principal from the broker, and makes him lia- ble in the first instance. There is no occasion for the principal to commu- nicate with the underwriter, though the law allows the principal, /cr his hermfit, to resort to him as collateral security. But the broker is liable at all events. ' In this Mr. J ustice Buller concurred, and said that he had known many actions to have been brought against brokers with commission del credere, and that he had never heard Vol. L— 27 any inquiry made in such cases, whether there had been a previous demand upon the underwriter, and refusal; and he declared that such was not the practice, — thus showing, according to the opinions of these- great judges, that the obligation of." such undertaking was primary and. absolute in its character, and that the agent was regarded as standina in the ■ relation to his principal of an original debtor. Ten years after the case of Grove V. Dubois, the case of Macken- zie V. Scott, 6 Brown Pari. C 280, oc- curred in the house of lords on an. appeal from the court of sessions in Scotland. That case was very analo- gous in its circumstances to the one before us. There a factor, under a. commission del credere, sold goods and took accepted bills from the pur- chasers, which he indorsed to a- banker at the place of sale, and re- ceived the banker's bill for the amount, payable to his (the factor's) own order, on a house in London. This banker's bill the factor indorsed and transmitted to his principal, who got the same accepted. The accep- tors and drawer having failed before payment, it was held, according to the head-note of the case, that the factor was answerable for the amount of the bill, being personally liable,, under his commission del credere, to satisfy his principal the price of the goods sold. It was insisted in that case, as it has been in this, that the- del credere obligation extended only to guaranteeing the payment of the price of the goods by the vendee, aui that the remittance of the money by the factor was a transaction entirely different and distinct. But if the uniform interpretation of that case be correct (there being no reasons as- signed for the judgment, given), the. 227 PRINCIPAL AND AGENT. 418 able when the sale is made on credit, but is nevertheless paid for in cash in consideration of a deduction of a cer- argument in that respect did not avail; and in view of the law as it had been announced in Grove v. Du- bois, it is not difficult to perceive upon what ground that decision was based; and afterward, in 1S03, the same general proposition was again pointedly asserted as the law of England, in the case of Houghton v. Matthews, 3 Bos. & P. 489. By these decisions; the law was regarded as settled in England, until about the year 1816; and all the text-writers and authors of elementary treatises upon the subject of commercial con- tracts before that time, laid it down as the unquestionable law that an agent, acting under a commission del credere, was bound to his principal in the first instance, and as an original debtor. The law will be found so stated by Livermore, in his work on Agency, 409, 410; Paley on Agency, 40; Comyn on Contracts, vol. 1, 253; and Chitty in his work on common law, vol. 3, 222. But it is said that tho cases to which we have referred do not now announce the law as ac- cepted in England, and we are re- ferred to the case of Morris v. Cleasby, 4 Maule & S. 56G, decided in ISlti, and the cases following on its authority, to show how the rule has been qualified, if not entirely changed. It is true, in the case of Morris v. Cleasby, Lord EUenborough did express a decided dissent from the principle announced in the previ- ous decisions, both as to the nature and scope of the del credere obliga- tion. He said that the guarantor, in consideration of the commission, ia only to answer for the solvency of the vendee, and to pay the money if the vendee does not; and that, on the failure of the vendee, the agent is to stand in his place and make his de- fault good, thus clearly placing the agent in the position of mere surety to the purchaser of the goods. And if such be the true nature and charac- ter of the contract, seeing that it is entirely collateral and secondary, it is difficult to perceive how it can escape the operation of the statute of frauds. Be that, however, as it may, the de- cision of Lord EUenborough was sanc- tioned by the case of Peele v. North- cote, 7 Taunt. 478, and also iaipliedly sanctioned by the case of Gall v. Comber, 7 Taunt. 558, in tlie common pleas. And from the time of these last decisions until very recently, all the treatises on commercial contracts have stated the law in accordance with the opinion of Lord EUenborough, taking the doctrine of Lord Mansfield to have been overruled. It is so stated in Chitty on Contracts, Rus- sell on the Law Kelating to Factors and Brokers, Smith's Commercial Law, and in other works treating of the subject. Nor has there been uni- formity of decision on the subject in the courts of this country, though we think the decided weight of authority is in support of the doctrine an- nounced in Grove v. Dubois. In the case of Thompson v. Perkins, 3 Ma- son, 232, before Judge Story, in 1823, the principle of Grove v. Dubois was repudiated as being incorrect, and that of Morris v. Cleasby sanc- tioned, though the facts of the case do not appear to have required a dis- tinct ruling upon the particular ques- tion now presented. It was an action of assumpsit by the principal against the assignee of the factor del credere who had sold the goods of his princi- pal and taken negotiable notes, pay- al^le on time, in his own name, for the amount of sales; and afterward, and before the notes became due, the fac- tor failed, and assigned the notes to his assignee for the benefit of his creditors, and the assignee afterwards receiving the money due on the notes, it was held that the principal was on- titled to recover the money so received from the assignee, subject to a deduc- tion of the amount of the lien of the factor for his commissions and charges. Upon such state of facts, it is clear the right to recover was equally the result of the doctrine of Lord Mans- field as that of Lord EUenborough. All the oases concede it to be the right of the principal to forbid payment to the agent, and to maintain an action himself against the buyer to recover the price of the goods, or to pursue his 419 BROKERS AND FACTORS. §227 tain percentage.* A factor under a del credere commission becomes liable to his principal when the purchase-money goods, or the notes taken from them, into the hands of third parties, pre- cisely as if no del credere contract existed. And though such right in the principal would seem to consist only with a collateral undertaking by the agent, yet, in the contract del credere, being sui generis, it is held in no wise to change the original and in- dependent character of the agent's undertaking to his principal. In the case of Swan v. Nesmith, 7 Pick. 220, 19 Am. Deo. 232, occurring a few years after the case in 3 Mason, the supreme court of Massachusetts de- cided that the legal efifeot of a com- mission del credere was to make the agent liable at all events for the pro- ceeds of the sale, so that he might be charged in indebitatus assumpsit, as for goods sold to him. There the con- tract was admitted to be original, and not collateral, and therefore not within the statute of frauds; and the neces- sary conclusion is, that the court in- tended fully to sanction the principle of Grove v. Dubois, to which, and the case of Mackenzie v. Scott, they refer for the definition of the nature of the commission del credere. And so in New York the same principle is es- tablished, as will be seen by reference to Wolf V. Koppel, 5 Hill, 458, and same case on appeal, 2 Denio, 368, and Sherwood v. Stone, 14 K Y. 267. The two last cases, being in the court of last resort, fully approve and adopt, as far as we can discover from the opinions delivered, the principle of the cases of Grove v. Dubois, and Mackenzie v. Scott. Judge Story, however, in his work on agency, sec- ti(JJi 215, adopting his own view of the law as found in Thompson v. Per- kins, supported by Morris v. Cleasby, and the cases in the common pleas, says that the true engagement of the agent del credere is merely to pay the debt, if it is not punctually discharged by the buyer; that, in legal effect, he warrants or guarantees the debt, and thus he stands more in the character of a surety for the debt than as a debtor. And the principle is so stated in other American treatises. But with all due deference to the high authority of Judge Story, we think the decided weight of authority is against his position. In England, the question has been recently under dis- cussion and re-examination, the re- sult of which is quite at variance with the doctrine laid down in Morris v. Cleasby. In Coutourier v. Hastie, 8 Ex. 39, the action was brought by the principal against his factor, who, on commission del credere, had sold a cargo of corn, and the purchaser re- fusing to comply with the contract on insufficient grounds, and afterward becoming bankrupt, the question was, whether the factor was liable for the non-fulfillment of the contract, by reason of his del credere commission, there being no guaranty in writing; and the court held the factor liable, not regarding the undertaking as one simply to pay the debt of another, within the fourth section of the stat- ute of frauds; and the decision in Wolf V. Koppel, 5 Hill, 458, was re- ferred to and adopted as containing sound law upon the subject. And in the more recent case of Wickham v. Wickham, 2 Kay & J. 478, Sir Wil- liam Page Wood, then the vice-chan- cellor, and at present the lord chan- cellor of England, in referring to the case of Coutourier v. Hastie as author- ity, said: ' When I look at the whole of that case, and consider the reasons given by the judges in delivering their judgments, though given very cau- tiously and guardedly, I cannot but conclude that they considered that an agent, entering into contract in the nature of a del credere agency, en- tered in effect into a new substantial agreement with the persons whose agency he undertook; that the agree- ment so entered into by him was not a simple guaranty, but a distinct and positive undertaking on his part, on toklch he would become primarily liable. Otherwise, I cannot see how the learned judges could arrive at the conclusion that the undertaking was not within the statute of frauds.' ' Kingston v. Wilson, 4 Wash. 310. § 228 PRINCIPAL AND AGENT. 420 is due; as between him and his principal, he then, in effect, becomes the purchaser, or is substituted for the purchaser, and is bound to pay, not conditionally, but absolutely, in the first instance.^ Illxjsteations. — A cotton broker solicited orders for a firm of cotton buyers, receiving a commission of a iixed sum per bale from them, and looked to them, and not to the cotton, for its payment; each party paid its own expenses. In pursu- ance of an order procured by the broker, the firm obtained cotton, and sent the invoices thereof to the purchaser, and the bills of lading, with drafts attached, to the broker, with instruc- tions not to deliver the bills of lading until the drafts were paid. Held, that the broker was not the partner, nor the general agent or factor, of the firm intrusted with the goods for sale within the statute: Stollenwerck v. Thatcher, 115 Mass. 224. § 228. Authority Implied to Factor. — A factor has im- plied authority to sell or buy in his own name,^ and upon Supposing tliis to be the correct oon- clusioa deducible from the present state of the authorities, of which we have no doubt, the contract being dis- tinct and positive, rendering the agent primarily liable, it necessarily follows that the agent stands in no such rela- tion to his principal as that of mere surety for the price of the goods sold. His relation to his principal is that of debtor as well as agent, and being so, the legal consequences of the debtor relation must follow. Indeed, it was conceded in the case of Leverick v. Meigs, 1 Cow. 645, where the liability of such an agent was attempted to be restricted, that if by the engagement the agent became a debtor absolutely, as if he were himself the purchaser, he would be bound for the remittaace of the money, as well as for its pay- ment by the buyer. ' This arises from the general principle that the debtor is bound to make payment to his creditor, and consequently, if he re- mits a bill, which turns out of no avail, it is no payment. It does not discharge a, precedent debt, unless it be so expressly agreed between the parties': 1 Salk. 124; 2 Johns. Cas. 441; Glenn v. Smith, 2 Gill & J. 493; 20 Am. Dec. 452; or, unless the creditor parts, with the bill, or is guilty of laches, to the prejudice of the debtor, in not presenting it for acceptance or payment in due time. Of ccnrse the agent, acting under a commission del credere, where the goods have been sold on an authorized credit, cannot be required to account to his principal before the expiration of the credit given to the buyer. And if the money which comes into his hands be remitted under special instruction from the principal, then it will be at the risk of the lat- ter, provided the instructions are ob- served with proper caution and dili- gence on the part of the agent. But in this case it is not pretended that there were any special instructions in regard to the manner of remitting the money received by defendant. The remittance, therefore, was at bis risk, as it would be of any other debtor remitting funds to discharge a debt due by him. " ' Cartwright v. Greene, 47 Barb. 9. 2 Graham v. Duckwall, 8 Bush, 12; Joslin V. Cowee, 52 N. Y. 90; Story on Equity, sec. 33; Toland v. Murray, 18 Johns. 24; Murray v. Toland, 3 Johns. Oh. 569; White v. Chouteau, 10 Barb. 202; Girard v. Taggart, 5 Serg. & B. 19; 9 Am. Deo. 327; Ladd v. ArkeU, 37 N. Y. Sup. Ct. 35. He must 421 BROKEES AND FACTORS. §229 a reasonable credit,^ unless such sale is contrary to usage or instructions,^ to give a warranty/' to receive payment,* to insure the goods of the principal,^ and he may sue iu his own name.^ § 229. Authority not Implied to Factor. — A factor has no implied authority to barter his principal's goods,' or to pledge them,* or delegate his authority,' or to receive follow, however, the orders of his prin- cipal: Cotton V. Hiller, 52 Miss. 7; Van Alan ». Vanderpool, 6 Johns. 70; 5 Am. Deo. 192; except where he has drawn against the consignment first: Cotton V. Hiller, 52 Miss. 7; Weed V. Adams, 37 Conn. 378; Brown v. McGrau, 14 Pet. 479. A factor who has made advances to his consignor may proceed to sell, notwithstanding the service of an attachment sued out by a creditor of the consignor. The attaching creditor cannot arrest a sale without tendering to the factor the amount of his advances: Baugh v. Kirkpatrick, 54 Pa. St. 84; 93 Am. Deo. 075. Where a factor sells his principal's goods under a del credere commission, the title to the unpaid purchase-money is iu the principal, not ia the factor: Moore v. Hillabrand, 37 Hun, 491. ' Goodenow v. Tyler, 7 Mass. 36; 5 Am. Dec. 22; Leland v. Douglass, 1 Wend. 490; Robertson v. Livingston, 5 Cow. 473; Van Alen v. Vanderpool, 6 Johns. 70; 5 Am. Dec. 192; Clark V. Van Northwick, 1 Pick. 343; Hap- good V. Batcheller, 4 Met. 576; Day- light Burner Co. v. Odlin, 51 N. H. 59; 12 Am. Rep. 45; Greely v. Bart- lett, 1 Me. 178; 10 Am. Dec. 54; But- ton V. Goodspeed, 69 HI. 238; Byrne V. Schway, 6 B. Mou. 201; James v. MoCredie, 1 Bay, 294; 1 Am. Dec. 617; Forrestier v. Bordmau, 1 Story, 43; Foster v. Waller, 75 111. 414; Ernest v. StoUer, 5 Dill. 438; Mc- Conuico V. Curzen, 2 Call, 358; 1 Am. Dec. 541. 2 Pinkham v. Crocker, 77 Me. 563. But see Durant v. Fish, 40 Iowa, 559. ? Schuchardt v. Allen, 1 Wall. 359. ' Evans on Agency, 175; White v. Chouteau, 10 Barb. 202; Thompson v. Fargo, 63 N. Y. 479; Ladd v. Arkell, 37 N. Y. Sup. Ct. 35; Graham v. Duckwall, 8 Bush, 12. ^ Johnson v. Campbell, 120 Mass. 449; De Forest v. Fulton Ins. Co., 1 Hall, 84; Lee v. Adsit, 37 N. Y. 78; Shoenfeld v. Fleisher, 73 111. 404. But not in a mutual company; White V. Madison, 26 N. Y. 117. * Wharton on Agency, sec. 755; To- land V. Murray, 18 Johns. 24; Girard v. Taggart, 5 Serg. & R. 27; 9 Am. Dec. 327; Ladd v. Arkell, 39 N. Y. Sup. Ct. 35; Considerant v. Brisbane, 22 N. Y. 389; Gorum v. Carey, 1 Abb. Pr. 285; Dows V. Rush, 28 Barb. 157; Ilsley v. Merriam, 9 Cush. 242; 54 Am. Dec. 721; Groover v. Warfield, 50 Ga. 644; Grinnell v. Schmidt, 2 Sand. 706. ' Evans on Agency, 176; Wheeler etc. R. R. Co. V. Givan, 65 Mo. 89; GuerrieroM. Peile, 3 Barn. & Aid. 610; Potter V. Dennisou, 10 111. 590; Victor etc. Co. V. Heller, 44 Wis. 265. 8 Wright V. Solomon, 19 Cal. 64; 79 Am. Dec. 196; Bott v. McCoy, 20 Ala. 578; 56 Am. Dec. 223; Bonito v. Mos- quera, 2 Bosw. 401 ; Rodriguez v. Heife- man, 5 Johns. Ch. 429; Urquhart v. Mclver, 4 Johns. 103; Van Amringe V. Peabody, 1 Mason, 440; Kelly v. Smith, 1 Blackf. 290; Voss v. Robert- son, 46 Ala. 483; Evans v. Potter, 2 Gall. 13; McCreary v. Gaines, 55 Tex. 485; 40 Am. Rep. 818; Kinder?;. Shaw, 2 Mass. 398; Gray v. Agnew, 14 Am. Law Rev. 457; Bowie v. Napier, 1 McCord, 1; 10 Am. Dec. 641; Kennedy V. Strong, 14 Johns. 128; Macky v. Dillinger, 73 Pa. St. 85; Laussatt v. Lippiucott, 6 Serg. & R. 386; 9 Am. Dec. 440. Allowed now in some states by statute: See Macky v. Dillinger, ' Anie, Chapter VI., Delegation of Authority. § 230 PRINCIPAL AND AGENT. 422 payment except in the usual mode,* or to compound or discharge the debt,^ or to accept or indorse bills on behalf of his principal,* or to extend the credit,^ or to submit a dis- pute to arbitration.* A sale by a factor creates a contract between the purchaser and the principal, and the former may pay the latter, even against the factor's wishes.® " The general rule is,' that a factor's sale creates a contract be- tween the owner and the buyer; and where, a factor hav- ing sold upon credit, the owner or principal gives notice of his interest and claim to the buyer before payment, and requires him not to pay the factor, the buyer will not be justified in afterwards paying the factor. And this rule applies whether the factor has or has not named his principal at the time of the sale.* There are exceptions to this rule, as where the factor sells in his own name, being himself responsible for the price of the goods sold, whether collected or not; or where he sells them to his own creditor, where there are mutual dealings. The prin- cipal cannot, in those cases, interfere to the prejudice of the party dealing with the factor, without any knowledge of his agency; and only the balance, if any be due to the factor, may be reclaimed by the principal." § 230. What Factor Bound to do — His Duties and Liabilities. — A factor is bound to obey the instructions 73 Pa. St. 85; Hutchinson v. Boura, 6 * Evans on Agency, 176; Wharton Cal. 385; Jennings v. Merrill, 20 on Agency, sec. 741. Wend. 1; Cartwright v. Wilmerding, ^ Evans on Agency, 176. 24 N. Y. 521. Seenotein58Am. Dec. ^ Evans on Agency, 176. 165. Under the Missouri statutes a * Myers v. Entriken, 6 Watts & S. factor is not authorized to pledge the 44; 40 Am. Dec. 538; Douglass v. Ber- consignor's goods for an amount be- nard, Anth. 278. But lie may alter yond the sum of the advances and the form of the security, provided it charges thereon: Steiger v. Third does not extend or impair the credit: Bank, 2 McCrary, 494. Where a Corliesu. Gumming, 6 Cow. 181. consignor draws a sight draft upon ° Carnochan v. Gould, 1 Bail. 179; 19 his consignee before the latter has sold Am. Dec. 669. the goods consigned, a. pledge by the * Golden v. Levy, 1 Car. Law Rep. consignee of the consignment, to secure 527; 6 Am. Dec. 555. a loan with which to meet the draft, ' Kelley v. Munsou, 7 Mass. 319; 5 is valid: Boyce v. Commerce Bank, 22 Am. Dec. 47. Fed. Rep. 53. ^ Bull. N. P. 130. 423 BROKERS AND FACTORS. § 230 of his principal as to the terms on which he maj'' sell,' or other matters.^ If, however, a certain thing is left to the discretion of the factor, it is not a breach of orders to dis- regard a mere wish or desire expressed by the principal.* If the factor is given discretion in the matter, he is not responsible for a loss arising from an error of judgment.* through mistake or design, disobeyed their instructions, they are uadoubt- edly responsible.' So in Parkist v. Alexander, 1 Johns. Ch. 394, it is laid down that 'if an agent departs from the instructions of his principal, he does it at his peril.' In Courcier v. Ritter, 4 Wash. C. C. 549, it was held that it was the duty of an agent who was instructed to make sale of the article consigned for sale, ' immedialdy on arrival^ to sell immediately on ar- rival, no matter at what loss.' See also, to the same effect, Bell v. Palmer, 6 Cow. 128, where an agent, under similar instructions, was held liable for refusing the first offer, although under the market price. And this is a rea- sonable doctrine, for if a loss occur by reason of an implicit obedience to the instructions of the owner, such loss falls on him. Considering the lateness of the season, and the probability of a rapid decline in prices, we can well see why the plaintiff would desire an immediate sale of the flour, and be willing to take the consequencea of such deduction from the market price as might bo necessary to effect a sale, rather than incur the danger of delay. The supreme court, in reiusing a new trial, placed their decision upon the uncertain nature of the inatructions. But it seems to us that a direction 'to sell OQ arrival ' is an explicit instruc- tion; and the defendant seems to have so understood it, in his letter of the 25th of August. It is substantially like the instruction in the cases i i the sixth volume of Cowen, and in Wash- ington's circuit court reports." ^ Shoenfield v. Fleisher, 73 111. 404; De Tastett n. Crousillat, 2 Waah. 132. 3 Harpers Kean, 11 Serg. & R. 280; Vianna v. Barclay, 3 Cow. 281; La Farge v. Kneel md, 7 Cow. 456. * Milbank v. Deunistoun, 21 N. Y. 386. ' Mann v. Laws, 117 Mass. 293; Scott V. Rogers, 31 N. Y. 676; Run- die V. Moore, 3 Johns. Cas. 36; Wil- liams V. Littleiield, 12 Wend. 363; Copes V. Phelps, 24 La. Ann. 562; Day V. Crawford, 13 Ga. 508; Atkinson v. Burton, 4 Bush, 299; Phillips v. Scott, 43 Mo. 86; 97 Am. Deo. 369; Gray v. Bass, 42 Ga. 270; Blot v. Boiceau, 3 N. Y. 78; 61 Am. Dec. 345; Marfield V. Goodhue, 3 N. Y. 62; Le Guen v. Gouverueur, 1 Johns. Cas. 437; 1 Am. Doc. 121; Urquhart v. Mclver, 4 Johns. 103; Weeds. Adams, 37 Conn. 378; Milbank v. Deunistoun, 21 N. Y. 386; Bessent v. Harris, 63 N. C. 542; Courcier v. Ritter, 4 Wash. C. C. 549; Jervis v. Hoyt, 2 Hun, 637; Wilson V. Wilson, 26 Pa. St. 394; Howatt V. Davis, 5 Munf. 34; 7 Am. Dec. 681; Bliss v. Arnold, 8 Vt. 252; 30 Am. Dec. 467; Johnson v. Wade, 2 Baxt. 480; Strong v. Stewart, 9 Heisk. 137; Maxwell v. Audinwood, 15 Hun, 111; Marshall v. Williams, 2 Biss. 255; Hall V. Storrs, 7 Wis. 253; Barksdale V. Brown, 1 Nott & McC. 517; 9 Am. Dec. 720; Durant v. Fish, 40 Iowa, 559. See George v. McNeill, 7 La. 124; 26 Am. Dec. 498. Goods were con- signed to a factor, with instructions to sell them "on arrival." The factor did not sell them on their arrival, and the market afterwards declined. HeUl, that he was liable for damages: Evans V. Root, 7 N. Y. 187; 57 Am. Dec. 512. Said the court: " It is laid down in Paley on Agency, edition of 1822, page 4, that the primary obligation of an agent whose authority is limited by instructions is to adhere faithfully to those instructions, for if he unneces- sarily exceed his commission or risk his principal's effects, without author- ity, he renders himself responsible for the consequence of his act. In Run- die V. Moore, 3 Johns. Cas. 36, it is said that 'if the defendants have, as the agents or factors of the plaintiffs, § 230 PRINCIPAL AND AGENT. 424 If no instructions are given him as to tlie terms or time of sale, he is at liberty to sell at such time and on such terms as his best discretion prompts.' But if factors have made advances on the goods in their hands, the princi- pal's orders may be disobeyed, and they may sell at a time or on terms which they may deem best to indemnify themselves.^ Thus a factor who has made advances on goods may sell them below the price limited, if the con- signor has after notice refused to repay the advances.' The rule is stated at length by Mr. Justice Story in a lead- ing case.^ " We understand," says he, " the true doctrine on the subject to be this: Whenever a consignment is made to a factor for sale, the consignor has a right, gen- erally, to control the sale thereof, according to his own pleasure, from time to time, if no advances have been made, or liabilities incurred on account thereof, and the factor is bound to obey his orders. This arises from the ordinary relation of principal and agent. If, however, the factor makes advances or incurs liabilities on account of the consignment, by which he acquires a special prop- erty therein, then the factor has a right to sell so much of the consignment as may be necessary to reimburse such advances, or meet such liabilities, unless there is some existing agreement between himself and the con- signor, which controls or varies this right. Thus, for example, if contemporaneous with the consignment, and advances or liabilities, there are orders given by the con- signor which are assented to by the factor, that the goods shall not be sold until a fixed time, in such a case the consignment is presumed to be received by the factor subject to such orders; and he is not at liberty to sell the ' Marfield v. Goodhue, 3 N. Y. 62; where he has made advances upon Given V. Lemoiue, 35 Mo. 110. consignments, and the disposal thereof ^ Brown v. McGrau, 14 Pet. 479; becomes necessary to protect himself Feild V. Farrington, 10 Wall. 141. against loss: Phillips ?). Scott, 43 Mo. He has entire discretion as to time, 86; 97 Am. Dec. 369. price, and place of sale, and is not ' Parker v. Branoker, 22 Pick. 40. even limited by positive instructions * Brown v. McGrau, 14 Pet. 479. 425 BROKERS AND FACTORS. § 230 goods to reimburse his advances or liabilities until after that time has elapsed. The same rule will apply to orders not to sell below a fixed price, unless, indeed, the con- signor shall, after due notice and request, refuse to pro- vide any other means to reimburse the factors. And in no case will the factor be at liberty to sell the consign- ment contrary to the orders of the consignor, although he has made advances or incurred liabilities thereon, if the consignor stands ready and offers to reimburse and dis- charge such advances and liabilities. On the other hand, where the consignment is made generallj^, without any specific orders as to the time or mode of sale, and the factor makes advances or incurs liabilities on the footing of such consignment, there the legal presumption is, that the factor is intended to be clothed with the ordinary rights of factors to sell, in the exercise of a sound discre- tion, at such time and in such mode as the usage of trade and his general duty require; and to reimburse himself for his advances and liabilities out of the proceeds of the sale; and the consignor has no right, by any subsequent orders given after advances have been made or liabilities incurred by the factor, to suspend or control this right of sale, except so far as respects the surplus of the con- signment not necessary for the reimbursement of such advances or liabilities. Of course this right of the factor to sell to reimburse himself for his advances and liabilities applies with stronger force to cases where the consignor is insolvent, and where., therefore, the consignment constitutes the only fund for indemnity." The principal cannot revoke the factor's authority to sell the goods in his hands, after advances have been made by him, except as to the surplus of goods in his hands after liquidating the advances.* In New York and 'Howard v. Smith, 56 Mo. 314; etc. K Co., 2 111. App. 180; Benny t;. Bellj). Hannah, 3Baxt. 47; Mooneyw. Rhodes, 18 Mo. 147; 59 Am. Ueo. Musser, 45 Ind. 115; Nelson v. Chicago 293. § 230 PRINCIPAL AND AGENT. 426 some other states the rule in the federal courts has been thought too lax, and it is held that the factor must obey the principal's orders, although he has made subsequent advances, unless the principal, after a reasonable notice, fails to repay the advances.^ And the factor may dis- regard instructions as to time or terms of sale, where an emergency has arisen which requires that they be sold at once or there will be a great loss, or where the goods are of a perishable nature, and not iu a condition longer to keep.^ J Marfield v. G-oodhue, 3 N. Y. 62; Blot V. Boiceau, 3 N. Y. 78; 51 Am. Deo. 345; Wilson v. Little, 2 N. Y. 443; 51 Am. Deo. 307; Hinde?;. Smith, GLans. 464; Whelanti. Lynch, 65 Barb. 327; Upham v. Lafavour, 11 Met. 174; Frothingham o. Everton, 12 N. H. 239; Weed v. Adams, 37 Conn. 378; Stall V. Meek, 70 Pa. St. 181; Whit- ney V. Wyman, 24 Md. 131; Ward v. Bledsoe, 32 Tex. 251; Mooney v. Mus- ser, 45 Ind. 115. ^ McCollough's Commercial Diction- ary, tit. Factors; Wharton on Agency, sec. 759. See Foster v. Smith, 2 Cold. 474; 88 Am. Dec. 604; Chapman v. Walton, 10 Bing. 57; Forrestier v. Bordman, 1 Story, 43; Ward v. Bled- soe, 32 Tex. 251; Weed v. Adams, 37 Conn. 378; Howlandii. Davis, 40Mioh. 545; Butterfield v. Stephens, 59 Iowa, 596; Blair v. Childs, 10 Heisk, 199; Joslin V. Cowee, 52 N. Y. 95, where it is said; "It is the duty of a factor to do his utmost to protect his principal from loss, and in extraordinary emer- gencies he is authorized to assume ex- traordinary powers, even to the extent of deviating from the general instruc- tions of his principal. " In Greenleaf v. Moody, 13 Allen, 363, the court said: ' ' The ordinary rule is clear, that fac- tors must obey the instructions of their principal; that they may not compromise debts without authority; that they must, under a change of circumstances, advise the consignor, and await his directions; and that they must conform to the usages of trade presumed to be known to both parties, or to the course pursued by them and approved by the owner in former instances. But what is their duty in novel, critical, aud unforeseen emergencies? To answer this ques- tion, we may refer to an opinion of Mr. Justice Story in a suit relative to the conduct of a supercargo who had totally departed from the instructions of the shipper, which is so apposite that we adopt its principles and the substance of its language. In circum- stances of necessity or great urgency, it is only necess^-ry that the agent should act bona fide and with reason- able discretion. ' What, then, was it the duty of the supercargo to do in such a case of unexpected occurrence, not within the contemplation of the instructions?' 'Now, I take it to be clear, that if, by some sudden emer- gency, or supervening necessity, or other unexpected event, it becomes impossible for the supercargo to com- ply with the exact terms of his instruc- tions, or a literal compliance therewith would frustrate the objects of the owner and sacrifice his interests, it becomes the duty of the supercargo, under such circumstances, to do the best he can, in the exercise of a sound discretion.' 'He becomes, in such a case, an agent from necessity for the owner.' 'In all voyages of this sort there is an implied authority to act for the interest and benefit of the owner in all cases of unforeseen necessity and emergency, created by operation and intendment of law ': Forrestier v. Bordman, 1 Story, 43, 51. A justi- fication founded upon necessary de- parture from the ordinary customs of trade or from actual instructions must undoubtedly be construed with 427 BROKERS AND FACTORS. 230 The factor must use diligence to ascertain the pur- chaser's solvency/ and must sell within a reasonable time where no limit has been set;^ he is bound to accouiit' and to remit to his princ'pal when instructed to do so;* he is bound to sell at the best price he can obtain,' and to use the best diligence generally." He must act in good faith towards his principal.'^ He cannot become the pur- chaser of his principal's goods for himself/ or act as agent for both seller and buyer." If a factor has orders to sell for cash, and sells and delivers to a person in good credit, and the next day sends in his bill, which the purchaser does not pay, having in the mean time become insane, the factor does not thereby become liable to the princi- considerable strictness. The agent cannot be allowed lightly or unad- visedly to assume a latitude of dis- cretion not conferred upon him by express authority, or by those usages of trade which both parties are pre- sumed to have known and contem- plated. But the interests of commerce require, and the enlightened principles of commercial law bestow, a discretion which enables the factor to protect his principal from the irreparable in- jury which would be liable to arise in the absence of authority to act under critical circumstances, unexpectedly occurring, which do not admit of de- lay, for the purposes of communication and consultation. And the factor, so placed, who acts prudently and in good faith, as the owner himself, be- ing a wise man, would have been likely to do if personally present, finds his protection in the sincerity and sound discretion of his conduct, and is not answerable for oonsequenoea. although subsequent events may demonstrate that his principal would have been the gainer by a different course from the cue he has conscientiously and dis- creetly adopted. " ' Van Alen v. Vanderpool, 6 Johns. 69; 5 Am. Deo. 192. « Porter v. Blood, 5 Pick. 54. ' Clark V. Moody, 17 Mass. 145; Ter- ■williger v. Beals, 6 Lans. 403; Keigh- ler V. Savage Mfg. Co., 12 Md. 383; 71 Am. Dec. 600. * Clark D. Moody, 17 Mass. 145; For- dyce V. Peper, 16 Fed. Rep. 516. If a factor in Alabama neglects for two years to render to his principal here an account of sales, he is liable for the neglect, although no demand was ever made: Langley v. Sturtevant, 7 Pick. 214. If a factor at New Or- leans adjust his accounts in Boston, and promise to pay the balance as soon as he can negotiate exchange on New Orleans, he thereby waives the privilege, if he had any, of paying it in New Orleans: Jellison v. Lafonta, 19 Pick. 244. ' ^ Merle w. Hasoall, 10 Mo. 406; Ward V. Bledsoe, 32 Tex. 251; Bigelow v. Walker, 24 Vt. 149; 58 Am. Deo. 156. 8 Folsom V. Mussey, 8 Me. 400; 23 Am. Deo. 522; Atkinson v. Burton, 4 Bush, 299; Leverick v. Meigs, 1 Cow. 645; Phillips v. Moir, 69 111. 155; Ernest v. StoUer, 5 Dill. 438; Mc- Cants V. Wells, 3 S. C. 569; Francis V. Castleman, 4 Bibb, 282; Deshler v. Beers, 32 111. 368; 83 Am. Deo. 274; Chandler v. Hogle, o8 111. 46; Foster V. Waller, 75 111. 464. ' Baboock u, Orbison, 25 Ind. 75; Clarke v. Tipping, 9 Beav. 284; Evans V. Potter, 2 Gall. 12. * The principal may repudiate or affirm such a transaction at his elec- tion: Wadsworth v. Gay, 118 Mass. 44. ^ Bensley v. Moon, 7 111. App. 415. § 230 PRINCIPAL AND AGENT. 428 pal, his course being according to the usage of commis- sion merchants.' A factor is only required to act with reasonable diligence and care in his employment. The known usages of trade and business enter into his em- ployment, and if he conducts his business according to such usages, he will be exonerated from all responsibility.^ A factor or other agent who is guilty of fraud or gross negligence in the conduct of his principal's business for- feits all claim to commission or other compensation for his services.^ In Greely v. Bartlett* the rules regarding the duties of factors were stated by Mellen, C. J., thus: "The relation subsisting between principal and factor is such as necessarily to require great confidence on one part, and great care, attention, and fidelity on the other. Without all these it is impossible that the extensive con- cerns of the commercial part of the world can be managed with advantage, or even preserved from confusion. Hence the importance of continuing in their full force those legal principles which have been established for the protection of the rights of both parties, and of third persons who may be engaged with such factor in the transaction of commercial business. Some of these general principles may be stated. By the law merchant a factor may sell the goods of his principal on a reasonable credit, unless he is restrained from so doing either by his instructions or by the use of the trade to which the transaction re- lates. A sale made under such circumstances is at the risk of the principal, and if a loss happens he must bear it. But he is not authorized to give credit except to such persons as prudent people would trust with their own property. He may receive securities in his own name for goods sold without subjecting himself to liability merely by so doing. But he must deliver such securi- ' Clark V. Van Northwick, 1 Pick. ' Fordyce i;. Peper, 16 Fed. Bep. 343. 516. 2 PhHlipa V. Moir, 69 lU. 155. * 1 Me. 172; 10 Am. Dec. 54. 429 BROKERS AND FACTORS. § 230 ties to his principal if lie demand them, or in case of loss he will be answerable as for a breach of trust, though in such case the principal should pay him his usual commis- sions. If through carelessness or want of proper exam- ination and inquiry he give credit to a man who is insolvent, should a loss happen he must indemnify the principal. And if a debt be lost by the inattention of the factor in omitting to collect it when in his power to do so, he will be liable for it. He must be honest and faithful, and must give his principal all necessary or use- ful information respecting the concerns of his agency." A factor who takes notes in his own name for goods of his principal sold, and uses them himself, will be liable to the principal for their sum if the purchaser becomes insolvent before they are paid.^ So a broker or factor cannot dispute his principal's title.^ He is not bound to insure unless so instructed.' Illustrations. — A debtor delivered merchandise to his cred- itor to sell, and appropriate the proceeds to his debt. The creditor did not sell for nearly six years, during which time the goods were much depreciated in value. Held, that the creditor was liable, as a factor, for negligence in not selling before: Por- ter v. Blood, 5 Pick. 54. A factor agreed with his principal to purchase for him fifty thousand bushels of wheat, in con- sideration that the latter would immediately forward to him by express ten thousand dollars, and the residue to pay for such purchase in four or five days, and the principal wholly failed to forward the money, though the factor had im- mediately purchased twenty thousand bushels of the wheat. Held, that the factor was under no obligation to purchase the residue of the fifty thousand bushels: Rice v. Montgomery, 4 Biss. 75. Commission merchants, to whom a manufacturing company sent goods in their brown state to be sold, sent them to a printing establishment, had them printed, and then sold them. Held, that if the printing was advantageous to the * Myers v. Entriken, 6 Watts & S. Ogilby, 9 Price, 269; Ross v. Curtiss, 44; 40 Am. Dec. 538; Morris v. Wal- 31 N. Y. 606; Kieran v. Sandars, 6 laoe, 3 Pa. St. 319; 45 Am. Dec. 642. Ad. & E. 515. ' Marvin z). Ellwood, 11 Paige, 365; » ^^t^a, i^^ Qq .„_ Jackson, 16 B. Barnard*. Kobbe, 54N. Y. 516; Jonea Mou. 242; Schaeffer v. Kirk, 49 111. V. Dwyer, 15 East, 21; Roberts v. 251 ; Crosbie v. McDoual, 13 Ves. 148. § 230 PRINCIPAL AND AGENT. 430 manufacturing company, they should have the benefit; but if the printing caused a loss, the manufacturing company should be credited with the value of the goods in their brown state: Vandyke v. Brown, 8 N. J. Eq. 657. A factor having sold cotton of his principal contrary to instructions, and being di- rected to ship to L., concealed the fact of the sale, and procured other cotton of a similar quality, which he shipped in the name of his principal to L., where it was sold and the proceeds re- ceived by the planter. Held, that the principal was entitled to recover the difference between the price in L. and the price his cotton was sold at: Austill v. Crawford, 7 Ala. 335. H., a com- mission merchant in Chicago, under instructions from S., in Osceola, sold for S. five thousand bushels of oats upon a time contract, and negligently failed to require a margin in accord- ance with the rules of the board of trade, or to notify S. of his right to demand such margin, and also neglected to advise S. that he had sold the oats to parties who were operating a cor- ner, which, to be successful, required to be maintained for thirty- two days longer. Held, that, upon the failure of the buyers, whereby S. lost the benefit of the contract, he was entitled to recover from H. the amount of such loss: Howe v. Sutherland, 39 Iowa, 484. A., having property consigned to him for sale on commission, placed it in the hands of W. for storage, but after- wards sold it to N. Held, that W. could not thereupon retain the property as security for a debt due to him from A.: Wesling V. Noonan, 31 Miss. 599. B. consigned to H., as his factor, a certain number of barrels of flour, and drew on him for the amount due. The draft was discounted by a bank on the faith of the bill of lading issued upon the shipment of the flour. This bill was annexed to the draft, as a collateral security, and was thus transferred to the bank, but was not indorsed or formally assigned, H. having refused to accept the draft. Held, that IT. was not at liberty to appropriate the flour or its proceeds to his own use. They were the property of the bank for the purpose of meeting the dishonored draft: Davenport Nat. Bank v. Ho- meyer, 45 Mo. 145; 100 Am. Dec. 363. A factor receives cotton without specific instructions with regard to the time of sale, and advances thereon, and sells at a profit of ten per cent, to the consignor. The factor is not liable in damages to the con- signor on a subsequent rise in the market, though some time after the first instructions he had received orders from his consignor not to sell, and replied, "Your wishes with regard to the cotton are noted": Brown v. McGrau, 14 Pet. 479. A authorized a factor to purchase goods on a particular credit, which he did. Held, that A was liable directly to the vendor of the goods for the purchase-money: Edwards v. Benham, 2 431 BROKERS AND FACTORS. § 230 Stew. & p. 147. The commission merchant of a general owner, having a certain amount of wheat under the care of a warehouseman, innocently gives an order for the delivery of a larger quantity of wheat to a vendee, which order was filled by the warehouseman from a different lot of wheat belonging to another person. Held, that by accepting the money for such wheat, the commission merchant adopted as his own the act of the warehouseman, and was liable to the person whose wheat was used for the price of the same in an action for money had and received t6 his use: Cohh v. Dows, 10 N. Y. 335. A factor sold goods to J. F. on a credit of six months, taking a note payable to himself, including in it a debt owing to himself, and afterwards released to J. F., and came in under the assign- ment. Held, that by these acts he made the debt his own: Brown v. Arrott, 6 Watts & S. 402. The owner of hay in Maine consigned it to New Orleans to be sold during the Rebellion. The military authorities of the United States bought a portion, agreeing to pay for it in cash, and seized the remainder; and afterwards refused to pay for any of it except in government certificates of indebtedness, bearing interest, to be taken at par. The consignees, acting in good faith and according to their best judgment and the usual custom of factors at New Orleans at that time, but without notice to the owner, accepted these cer- tificates of indebtedness, and shortly afterwards sold the same at ninety-three cents on the dollar, which was then their market value there. The owner was ignorant of this custom. Held, that the factors were not liable to the owner for the discount of seven per cent made in selling the certificates of indebtedness: Greenleaf v. Moody, 13 Allen, 363. A commission merchant wrote to a manufacturer of goods requesting a consignment of his goods invoiced at the lowest rates, stating what the charges would be, promising to pay the return freight, if satisfactory prices could not be obtained, and to be responsible for any neglect by him to deal with the goods according to the manufac- turer's orders. The manufacturer replied, in a letter accom- panying the shipment of goods, that he had invoiced the goods at the lowest selling prices, and that the small shipment "then made will be duplicated if prices obtained warrant." The in- voice contained no direction to sell the goods at the invoiced prices. The consignee sold for a less price. The consignor wrote him that the price obtained was not satisfactory, but made no claim that any order had been violated, and afterwards brought an action to recover the difference between the invoice price and that for which the goods were sold, in which the dec- laration contained no averment that the consignee had acted unfaithfully or injudiciously. Held, that the action could not § 230 PRINCIPAL AND AGENT. 432 be maintained: Mann v. Laws, 117 Mass. 293. A agreed to take B's sewing-machines on consignment to sell, to make prompt returns, to remit cash for all disposed of except on lease or on monthly installments, and to pay for those in three, six, and nine months, by note, secured, if required, by the leases or in- stallment accounts. The agreement stated that A did not ex- pect the privilege of returning machines. Held, that A became personally liable for all machines received: Wheeler and Wilson Mfg. Co. V. Laus, 62 Wis. 685. 433 SCOPE OF THIS PART. § 231 Part V.— MASTER AND SERVANT. CHAPTER XX. SCOPE OP THIS PAHT. § 231. Who are servants, § 231. Scope of This Part — Who are Servants. — In a general sense, a servant is one who is' by contract or by operation of law subject to the authority or control of an- other. Tested by this definition, the title of this division of agency might properly be the main title of the general title, for in this broad sense all employees of every kind, all persons employed by another, — attorneys, brokers, commission merchants, factors, special and general agents of every kind, — might and ought to be considered under this head. But in the previous chapters of this title most of these relations have been treated of, and the present and subsequent chapters are restricted to servants of a different kind, that is to say, in the nomenclature of the older writers, menial servants, or better perhaps in this day and country, domestic or hired servants.^ This will include apprentices, domestic servants, and workmen and laborers of every kind and description.^ Prima facie, one found doing service for another is in his employ. If the fact is otherwise, it must be made to appear.' ' See Ex parte Meason, 5 Binn. kinds of agents and employees are dia- 174; Boniface v. Scott, 3 Serg. & R. cussed in the title Agency, and this 352; Burgess v. Carpenter, 2 S. C. 7; includes the master's liability for his 16 Am. Rep. 643. servants' contracts. ' The general rules relating to all ^ Perry v. Ford, 17 Mo. App. 212, Vol. I.— 28 § 232 PRINCIPAL AND AGENT. 434 CHAPTER XXI. APPRENTICES. § 232. Who are apprentices — How bound. § 233. Contract is personal — Assignment — Kemoval out of state. § 234. Duties of master to apprentice. § 235. Right of master to discharge apprentice. § 236. Right of master to apprentice's earnings — Exception. § 237. Rights of parent or guardian. § 238. Liabilities of parent or guardian. § 239. What is, and what will excuse, breach of covenant for faithful service, § 232. Who are Apprentices — How Bound. — An ap- prentice is a person — usually a minor — who is bound to another for a fixed period to learn a trade or calling.' The apprentice, being an infant, must be bound by his parent or guardian.^ Any person who is legally compe- tent to carry on a trade or business may take an appren- tice.' The contract of apprenticeship must be in writing, and if certain forms are prescribed by statute those forms must be followed.* A deed of indenture is, if defective, in some states void; ' in others only voidable." The in- ' In Georgia, indentures of ap- may bind himself: Woodruff v. Logan, Erentioeship during minority do not 6 Ark. 276; 42 Am. Deo. 695; and see ecome void on arrival of the female Harney v. Owen, 4 Blackf. 337; 30 apprentice at eighteen years of age, as Am. Deo. 662; Walker v. Chambers being in restraint of her right of mar- 5 Harr. (Del.) 311. riage at that age; her majority under ^ WoodonMasterandServant,sec.40. the law being at twenty-one: Dent v. ' In re McDowle, 8 Johns. 328; Cock, 65 Ga. 400. But a person over Peters v. Lord, 18 Conn. 337; Hall v. twenty-one may bind himself as an Rowley, 2 Root, 161; Squire w. Whip- apprentice: Commonwealth v. Stur- pie, 1 Vt. 69; Huntington v. Oxford, geon, 2 Browne, 208. 4 Day, 189; Reidell v. Morse, 19 Pick. 2 In re McDowle, 8 Johns. 328; 358; Whitmore v. Whitcomb, 43 Me. Handy v. Brown, 1 Cranch C. C. 610; 458; Tague v. Hayward, 25 Ind. 427; Phelps V. Culver, 6 Vt. 430; Peters v. Morrill v. Kennedy, 22 Ark. 324; Lord, 18 Conn. 337; Blunt v. Melcher, Bolton v. Miller, 6 Ind. 262; People v. 2 Mass. 228; Bull v. FoUett, 5 Cow. Gates, 39 How. Pr. 74. 170; Mead v. Billings, 10 Johns. 99. " Guthrie v. Murphy, 4 Watts, 80; Not by the mother, if the father be Austin v. McCluney, 5 Strob. 104; living: Commonwealth v. Crommie, 8 Chaudett). Stone, 4 Bush, 210; Butler Watts & S. 339; but aliter, if father v. Hubbard, 5 Pick. 250. be dead or incapable: People v. Gates, ° Hamilton v. Eaton, 6 Cow. 658; 43N. Y. 40. CoMiTO, that the infant Luby «. Cox, 2Harr (Del.) 184, 435 APPRENTICES. §§ 233, 234 fant must join in the indenture, else he will not be bound after he reaches the age of fourteen;^ and if his joining in the indenture is required by statute, he will not be bound at all if he does not so join;'^ and the assent of the infant to the contract must be clearly shown.^ § 233. Contract is Personal — Assignment — Removal out of State. — The contract is personal, and cannot be transferred by the master to another,* except with the consent of the infant.® An apprentice cannot be bound to more than one person at once;" nor is the apprentice bound to go with the master and serve him in another state or country.' But if he goes willingly, the service § 234. Duties of Master to Apprentice. — The master is bound to perform the obligations he has assumed in the indenture. He is bound to teach him the trade or calling to learn which the apprentice has been bound,' to treat him humanely,'" to supply him with proper food and clothing." He has no right to make the apprentice work on Sunday." The master may show that by the contract the duty of supplying the apprentice with food > Hudson V. Worden, 39 Vt. 382; « Lob^eU „. Allen, 9 Gray, 377; R. V. Keppele, 2 Dall. 197. Olney v. Myers, 3 111. 311; Burden v. 2 Ivina V. Norcross, 3 N. J. L. 977. Skinner, 3 Day, 126. See Nickerson ' Harper v. Gilbert, 5 Gush. 417. v. Easton, 12 Pick. 110. * Campbell v. Cooper, 34 N. H. 49; " Wood on Master and Servant, sec. Tucker v. Magee, 18 Ala. 99; Ayer v. 49; R. v. Peck, 1 Salk. 66. Chase, 19 Pick. 556; Versailles v. " McGrath v. Hemdon, 4 T. B. Hall, 5 La. 281; 25 Am. Dec. 178. Mon. 480. ^ Williams v. Finch, 2 Barb. 208; '' Wood on Master and Servant, sec. Nickerson v. Howard, 19 Johns. 113; 49. A master having notice of the Lobdell V. Allen, 9 Gray, 377. sickness of his apprentice at the house * Thorpe v. Rankin, 19 N. J. L. 36; of a brother of the latter, held, to be 38 Am. Dee. 531. liable for the brother's necessary ex- ' Negro Gusty v. Diggs, 2 Cranch penses and trouble incurred thereby, C. C. 210; Coffin v. Bassett, 2 Pick, although a removal would have been 357; Dyeri). Hunt, 5 N. H. 401; Vick- hazardous: Rice v. Breheny, 2 Houst. eree v. Pierce, 12 Me. 315; Randall v. 74. Eotch, 12 Pick. 107; Walters v. Mor- ^^ Commonwealth v. St. Germans, row, 1 Houst. 527. 1 Browne, 24. §§ 235, 236 PRINCIPAL AND AGENT. 436 and clothing has been assumed by the father or guardian;* or that the apprentice cannot or will not learn. ^ The apprentice cannot recover for extra work, even where the work was done upon the master's express promise to pay for it.' The master may recover against a third person who has negligently injured the apprentice.* § 235. Right of Master to Discharge Apprentice. — He has no right to dismiss the apprentice for misconduct,^ or dishonesty,' or because he has become incapacited for labor by accident, sickness, or disease " § 236. Right of Master to Apprentice's Earnings — Exception. — All the earnings of the apprentice during the term belong to the master.* To this rule, however, there * WoodonMa3teraudServant,Bec.49. * Raymond n. Minton, L. E. 1 Ex. 244; Wright v. Brown, 5 Md. 37; Clancy v. Overman, 1 Dev. & B. 402; Barger v. Caldwell, 2 Dana, 131. » Bailey -o. King, 1 Whart. 113; 29 Am. Dec. 43. * Ames 0. Union R. R. Co., 117 Mass. 541; 19 Am. Rep. 426. » Phillips V. Olift, 4 Hurl. & N. 168; Wise V. Wilson, 1 Car. & K. 662, Lord Denman, C. J., saying: "A per- son has a. right to dismiss a servant for misconduct, but he has no right to turn away an apprentice because he misbehaves." ' Powers V. Ware, 2 Pick. 452. ' Wood on Master and Servant, sec. 49; R. V. Owen, 1 Strange, 99. * James v. Le Roy, 6 Johns. 274; Bowes -0. Tibbets, 7 Me. 457; Munsey V. Goodwin, 3 N. H. 272; Bailey v. King, 1 Whart. 113; 29 Am. Deo. 42. If a master would recover from a third person the value of services ren- dered him by the master's apprentice, a valid contract of apprenticeship must be shown: Barton v. Ford, 35 Hun, 32. In Bardwell v. Purrington, 107 Moss. 427, the court say: "With regard to the defendant's offer to prove that he had paid the boy for his labor, we think that at that stage of the case it was rightfully rejected. It was not offered in connection, as we understand the report, with any evidence tending to show that the plaintiff had aban- doned any of his rights, or had been, wanting in due and reasonable exer- tion and diligence to reclaim the ap- prentice. It he had not lost his right to the services of the apprentice by any fault of his own, the fact that a stranger, who bad the benefit of them, had paid a party who had no right to the payment, would be immaterial. There might be circumstances from which the jury might very properly infer that the plaintiff had abandoned the right to hold the apprentice. The propriety of such an inference would depend on what the plaintiff knew, or had the means on reasonable inquiry of knowing, as to where the apprentice was and what he was doing. If the plaintiff knowingly suffered the ap- prentice to make and perform con- tracts for service, or if the plaintiff knowing wliere he could be found made no efforts or neglected opportu- nities to reclaim him and hold him to his service, he could not maintain his action; in other words, his relinquish- ment of all right to hold the appren- tice under the indenture could be proved by circumstantial evidence. Mere payment by the defendant to the apprentice without the knowledge or default of the plaintiff, would not affect the question. 437 APPRENTICES. §§ 237-239 are two exceptions, viz.: 1. Where the earnings are with the consent of the master and contrary or inconsis- tent with the covenants of the indenture;^ 2. Where the earnings are of an extraordinary character, and have not interfered with the master's rights.* § 237. Rights of Parent or Guardian. — The parent or guardian may sue for any breach of covenants in the indenture.' § 238. Liabilities of Parent or Guardian. — The parent or guardian is bound personally to the covenants made by him in the indenture.^ Strict proof, however, of an intention to bind the parent or guardian must be shown.' § 239. What is, and What will Excuse, Breach of Covenant for Faithful Service. — It is a breach of the cove- nant for faithful service for the apprentice to absent him- self from the service, unless the absence is a trifling or temporary one.® The following will excuse a breach of the covenant for faithful service by justifying the appren- tice leaving; viz., that the term has expired by effluxion of time, or by consent of the parties;' that the masters being partners, the partnership has been dissolved,* or one of the partners has died;® that the master behaved to the apprentice immorally or cruelly;'" that the master has ' Bardwell v. Pumngton, 107 Mass. ^ Cuming v. Hill, 3 Barn. & Aid. 427; Kelly v. Sprout, 97 Maas. 169; 59. Manchester v. Smith, 12 Pick. 115; ' Hooks v. Perkins, Bush. 21; Pow- RandaU v. Eotch, 12 Pick. 107. era v. Ware, 2 Pick. 451. ' Mason v. The Blaireau, 2 Oranch, ^ Hiatt v. Gilmer, 6 Ired. 450. 240. 9 R. V. Peck, 1 Salk. 66; Baxter v. = Lobdell V. Allen, 9 Gray, 381; Burfield, 2 Strange, 1266. Balch V. Smith, 12 N. H. 437. '" Commonwealth v. St. Germans, 1 * Wood on Master and Servant, sec. Browne, 24; Warner v. Smith, 8 52. Conn. 14; Cannon v. Davis, 1 Cranch ' Blunt V. Melcher, 2 Mass. 228; C. C. 457; McGrath v. Herndon, 4 T. Berry v. Wallace, Wright, 657; Wood- B. Mon. 480; Coffin v. Bassett, 2 Pick. raSv. Corry, 3N. J. L. 540; Holbrook 357; Commonwealth v. Conrow, 2 Pa. e. Bttllard, 10 Pick. 68. St. 402. § 239 PEINCIPAL AND AGENT. 438 changed his business,' or has become physically or men- tally incompetent to conduct it any longer, or has died." A master who takes an apprentice for the purpose of in- structing him in any particular act or trade has no right to require services from him as a menial or house-ser- vant.* Illusteations. — A apprenticed himself to B to learn a cer- tain trade, but also to do " such other chores and labor when required, as would become necessary to B." Held, that a re- quest by B that A should go into the cellar under the shop, and open and repair a drain that the water might run off, was rea- sonable under the contract: McPeck v. Moore, 51 Vt. 269. * Wood on Master and Servant, sec. 52; Hennessey v, Deland, 110 Mass. 52; Ellen v. Topp, 6 Ex. 424. 145. ' Wood on Master and Servant, sec. ' Com. v. Hemperly, 4 Pa. L. J. 440. 439 CONTRACTS BETWEEN MASTEK AND SERVANT. § 240 CHAPTER XXII. CONTRACTS BETWEEN, AND EIGHTS AND DUTIES OF, MASTER AND SERVANT. § 240. Contract of service — Need not be in writing. § 241. Services rendered — When promise to pay implied. § 242. Services of intruder without request. § 243. Services rendered through duress or fraud. § 244. Illegal or immoral service. § 245. Re-^uest implies promise to pay. § 246. Exceptions — Request without benefit to party. § 247. Services rendered in expectation of bequest or legacy. § 248. Presumption that services are for hire, § 249. Exception — Near relatives. § 250. Contract for certain term, or certain thing, an entire contract. § 251. Abandonment of contract — No recovery for time served. § 252. Exceptions — Where qiiantum meruit recoverable. § 253. Hours of labor. § 254. Extra hours — Compensation not recoverable for working extra hours — Exceptions. § 255. Work performed on Sunday. § 256. Right to order servant to different employment — Compensation, § 257. Increased duties — Extra compensation, § 258. Contract is personal — Delegation. § 259. Lost time. § 260. General hiring — Prima fade for what term. § 261. Continuance of service after expiration of term — Presumption. § 262. Regulations of master. § 263. Duty to keep master's secrets. § 264. Master must provide work. § 265. Board of servant. § 266. Compensation of servant — Measure. § 267. Master may recoup damages. § 268. Right of master to servant's earnings. § 269. Right to discharge servant — By contract. § 270. Right to discharge servant — By law in absence of special contract. § 271. Valid grounds for dismissal. § 272. Involuntary breaches by servant. § 273. Discharged servant must leave peaceably. § 274. Servant may recover wages to time of dismissal. § 275. Servant occupying master's house — When and when not tenant. § 276. Wrongful discharge of servant — Remedies. § 277, Servant bound to seek other employment. §§ 240, 241 PRINCIPAL AND AGENT. 440 § 278. Waiver by servant of ■wrongful discharge. , § 279. Waiver by master of breach or forfeiture. § 280. Causes which will justify servant in abandoning service. § 281. Dissolution of contract — By expiration of time or consent of parties. § 282. Dissolution of contract — When service may be dissolved by either party. § 283. Dissolution of contract — Dissolution of partnership. § 284. Dissolution of contract — Bankruptcy of master. § 285. Dissolution of contract — Abandonment of servant § 286. Dissolution of contract — Dismissal by master, § 287. Dissolution of contract — By death or disability. § 288. Rights of master — Injuries to servant by third person, § 289. Enticing servant from employment. § 290. Combinations among workmen. § 240. Contract of Service — Need not be in Writing. — To constitute the relation of master and servant the contract need not be in writing, except where required to be by the statute of frauds. An infant's contract to serve a railroad company as employee is valid as between himself and the company; and want of the previous con- sent of the parent does not avoid it. It remains good until either the parent or his minor child puts an end to it.i § 241. Services Rendered — When Promise to Pay Im- plied. — The mere fact that services are rendered for an- other does not raise an implied promise by the latter to pay for them.^ The test always is. Did the plaintiff ex- pect pay for them, and did the defendant expect to pay for them?' If the services are rendered without any expec- tation of compensation, and are accepted with that under- standing, no promise to pay can be implied.* Where one has employed another to manufacture articles at an agreed ' Nashville etc. R. R. Co. v. Elliott, man, 2 Denio, 149; Angulo v. Sunol, 1 Cold. 611; 78 Am. Dec. 506. 14 Cal. 402; Fraylor v. Sonora M. Co., 2 Wood on Master and Servant, sec. 17 Cal. 594; Palmer v. Haverhill, 98 62; Ryan v. Lynch, 9 Mo. App. 18. Mass. 487; Ryan v. Dayton, 25 Conn. » Nimmo v. Walker, 14 La. Ann. 188; 65 Am. Dec. 560. 581; Sprague v. Waldo, 38 Vt. 139; * Morris v. Barnes, 35 Mo, 412; Chiuiquy v. Delierfe, 37 111. 237; Wat- James v. O'Driscoll, 2 Bay, 101; 1 Am. kins V. Richmond OoUege, 41 Mo. 302; Deo. 632; Hertzog v. Hertzog, 29 Pa, Morris v. Barnes, 35 Mo. 412; Hart v. St. 465; Zerrahn v. Ditson, 117 Mass. Hess, 41 Mo. 441; Robinson v. Cush- 553. 441 CONTRACTS BETWEEN MASTER AND SERVANT. § 242 price, out of materials to be furnished by the former, the fact that he himself, without request, assists in the manu- facture, will not raise an implied promise on the part of the other party to pay for such services.^ "If the person for whom the services are rendered has reason to expect or to believe that the person expects to be paid for his labor, and does nothing to disabuse him of this expecta- tion, but allows him to go on rendering important ser- vices for him, the law will imply a promise to pay him what Buch services are reasonably worth."^ A promise to pay reasonable expenses of keeping and repairing a boat found adrift on the water is implied when the owner of the boat takes it from, the person who found it.^ Illtistkations. — B., while a minor, entered the service of S. as a member of his family, with the understanding that she was not to have pay for such service; but subsequently she ex- pressed dissatisfaction to S. that she was not receiving pay for her services, whereupon S. told her " he would pay her for her work." Held, that this constituted an understanding or agreement of hiring, and that B. was entitled to recover the reasonable value of services thereafter rendered, notwithstand- ing the agreement under which the services were originally be- gun: Bennett v. Stephens, 8 Or. 444. § 242. Services of Intruder without Request. — Ser- vices rendered by an intruder and without his request cannot be recovered for.* If one voluntarily puts repairs to the house or fences of another, without consulting the owner, he cannot afterwards charge him therefor.^ So a workman employed to do a particular job, who adds extra 1 Lange v. Kaiser, 34 Mich. 317. Eneas, 2 Mill Const. 348; 12 Am. Dec; ' Wood on Master and Servant, see. 681; Pinohon v. Delaney, 2 Yeates, 22. 62; Trustees o. Allen, 14 Mass. 175; Allen v. Richmond College, 41 Mo. Cbiniquy i'. Delierfe, 37 111. 237; 302; Levee Commissioners v. Harris, Handy v. Clark, 4 Houst. 16; Christie 20 La. Ann. 201; Watson v. Ledoux, 8 V. Sawyer, 44 N. H. 298; De Wolf v. La. Ann. 68; Dunbar v. Williams, 10 Chicago, 26 111. 443; Goodwin v. Johns. 249; Fox v. Sloo, 10 La. Ann. Union Screw Co., 34 N. H. 378; Low 11; Morris v. Barnes, 35 Mo. 412; V. R. R. Co., 45 N. H. 370. Hazlip v. Leggett, 6 Smedes & M. 3 Chase v. Corcoran, 106 Mass. 286. 326. * Bartholomew v. Jackson, 20 Johns. '' Caldwell v. Eneas, 2 Mill Const. 28; 11 Am. Deo. 237; CaldweU v. 348; 12 Am. Deo. 681. § 243 PEINCIPAL AND AGENT. 442 work without consulting his employer, cannot recover therefor.' But where A, supposing himself entitled to an estate of which possession had been taken under an in- quisition of escheat, proceeded to an investigation, in the course of which he proved the title of B, who had taken no steps in the matter, and that his own claim was defect- ive, it was held that A should be reimbursed for his expenses in the investigation, and that he be allowed for his services ten per cent on the amount of the estate re- covered.^ § 243. Services Rendered through Duress or Fraud. — Where one is induced to render services to another either by duress' or fraud,^ he may recover their value, though when he rendered them there was no intention to pay for them. If either servant or master is induced to enter the contract by the fraud or misrepresentation of the other, — the falsity of the representation not being ascer- tainable by the exercise of ordinary prudence, — he is not bound.* But if he proceeds after discovering it, he waives the fraud, and is bound to perform.® Where a con- tract was made that A should serve in the army two years as substitute for B, and the substitute was accepted and the service actually performed, it was held no defense in a suit brought for the service money to set up that the substitute deceived the officers of government as to his name, age, etc., by misrepresentation.^ Illustrations. — A, fraudulently representing himself to be owner of land, induced B to labor on it in expectation of be- coming a joint owner. Held, that on discovering the fraud he might sue for and recover pay for his labor: Richard v. Stanton, 16 Wend. 25. A was the lessee of a state prison, and employed ' Hort V. Norton, 1 McCord, 22. * Rickard v. Stanton, 16 Wend. 25. ^ City Council v. Hagermeyer, Riley ^ Selway v. Fogg, 5 Mees. & W. 83; Ch. 117. Hupe V. Phelps, 2 Stark. 480. ' Peter v. Steel, 3 Yeates, 250; Jar- « Campbell v. Fleming, 1 Ad. & E. rot V. Jarrot, 2 Gilm. 20; Black v. 40; Selway v. Fogg, 5 Mees. & W. 83. Meaux, 4 Dana, 188. ' Servis v. Cooper, 33 N. J. L. 68. 443 CONTRACTS BETWEEN MASTER AND SERVANT. § 244 the prisoners to work for him, under a contract with the state, among them B. After his release B proved that he had been illegally committed to prison, and sued A for the value of his services. Held, that he could recover: Patterson v. Crawford, 12 Ind. 241. A induced a woman to marry him. She lived with him until she found that he was already married, and then left him and brought an action for her services. Held, that she could recover: Higgins v. Breen, 9 Mo. 497. A woman had lived with a man as his wife, both believing such relation to exist, and upon his death it appeared that the marriage be- tween them was void. Held, that there was no implied promise raised entitling her to recover for her services: Cropsey v. Sweeney, 27 Barb. 310; 7 Abb. Pr. 129. § 244. Illegal or Immoral Service. — No action lies for services rendered in peddling goods for another without license, in violation of law.' A recovery for services per- formed in aid of prostitution, as mistress of a brothel, is not permissible.^ A marker at an illicit billiard-table, who keeps the games and receives the money betted by the players, is not entitled to recover wages from the owner of the table, the contract being unlawful.^ One cannot recover for his personal services, portions of which were rendered in an employment of selling liquors unlaw- fully, the contract of service being an entirety; but he is not prevented from recovering for his services contracted to be rendered in a lawful employment, merely because, during the term of his employment, he occasionally as- sisted his employer in such unlawful business gratuitously, not expecting or seeking any compensation therefor.* A party who sues to recover for services rendered under an unconstitutional law cannot recover.^ But the legislature may ratify such service,* and authorize the payment of a claim created under an unconstitutional law, though by the constitution it has no power to authorize the payment of any claim created without express authority of law.' '■ Stewartson v. Lothrop, 12 Gray, * Meagher v. Storey County, 5 Nev. 52. 244. 2 Williams v. Guarde, 34 Mich. 82. « Id. ' Badgley v. Beale, 3 Watts, 263. ' Miller v. Dunn, 72 Gal. 462; 1 Am. * Goodwin v. Clark, 65 Me. 280. St. Rep. 67. §§ 245-247 PRINCIPAL AND AGENT. 444 § 245. Request Implies Promise to Pay. — A request by one of another to do anything for him implies an agreement to pay him what the services are reasonably worth.* § 246. Exceptions — Request without Benefit to Party. — But a naked request is not sufficient to make a liability if the service is not for his benefit,^ or there is no legal liability on him to have the labor performed. But of course if the terms of the request imply a promise to pay, the liability attaches.' § 247. Services Rendered in Expectation of Bequest or Legacy. — Where a party renders services for another in the hope of a legacy, and in sole reliance upon the per- son's generosity, without any contract, express or implied, that compensation should be provided for him by will or otherwise, and the party for whom the services were ren- dered dies without making such provision, no action lies. But where from the circumstances of the case it is mani- fest that it was understood by both parties that compen- sation should be made by will, and none is made, an action lies to recover the value of such services.^ Services in the way of assiduous nursing and attention to a boarder, if performed with the intention of charging additionally for them, furnish a ground of action. But it is otherwise if they were rendered without any such intention, and 1 Van Arman v. Byington, 38 111. 443; board, and clothing. Held, that a Weeks?;. Holmes, 12 Cush. 215; James promise to pay what her services V. Bixby, 11 Mass. 34; Dougherty v. were reasonably worth was implied: Whitehead, 31 Mo. 255; Lewis v. McMillan v. Page, 71 Wis. 655. Trickey, 20 Barb. 387; Weston v. •■' Smith ?;. Watson, 14 Vt. 332; Wil- Davis, 24 Me. 374; Beall v. Van Bib- liams«. Briokell, 37 Miss. 682; 75 Am. ber, 19 La. Ann. 434. A, when a Dec. 88; Norris v. Dodge, 23 Ind. 190; young girl, entered B's home, a stran- Boyd v, Sappington, 4 Watts, 247; ger to her, as a servant for a fixed Batchelder v. McKenney, 36 Me. 553. period. For several years after the ' White v. Mastin, 38 Ala. 147. expiration of that period she contin- * Wood on Master and Servant, sec. ued to work for B without receiving 72; Martin v. Wright, 13 Wend. 460; other compensation than a home, 28 Am. Dec. 468. 445 CONTRACTS BETWEEN MASTER AND SERVANT. § 249 merely with the hope and expectation of being rewarded for them in the boarder's will.^ § 248. Presumption that Services are for Hire. — Ser- vices rendered by one person for another are presumed to have been for hire, and not gratuitous, and this presump- tion can only be rebutted by evidence of a contrary ex- press or implied understanding.^ Where a person serves in the capacity of a domestic servant, and no demand for payment of wages is made by him for a considerable period after such service has terminated, the presumption is either that the wages have been paid, or that the ser- vice was gratuitous. This is a presumption of fact, and may be rebutted.' § 249. Exception — Near Relatives. — An exception to this rule arises where the parties are members of the same family or near relatives.* In this case the law will not imply a promise to pay for services rendered, even though there may be a moral obligation to pay; but clear and satisfactory evidence must be given of an actual ' Kennard v. Whitson, 1 Houst. 36. arise that the person for whom he ' Lawson on Presumptive Evidence, labors will pay him the value of his 74. But where a service for the bene- services. It is a conclusion to which fit of the public is required by law, the mind readily comes from a knowl- and no provision for its payment is edge of the circumstances of the par- made, it is regarded as gratuitous, and ticular case and the ordinary dealings no claim for compensation can be en- between man and man. But where forced; Anderson v. Board of Commis- the services are rendered between, sioners, 25 Ohio St. 13. members of the same family, no such * McConnell's Appeal, 97 Pa. St. presumption 'will arise. We find 31. other motives than the desire of gain ^ Lawson on Presumptive Evidence, which may prompt the exchange of 74; In re Scott, 1 Redf . 234; Williams mutual benefits between them, and V. Hutchinson, 3 N. Y. 312; 53 Am. hence no right of action will accrue to Dec. 301; Boweu i). Bowen, 2 Bradf. either party, although the services or 336; Houck v. Houck, 99 Pa. St. 552; benefits received may be very valuable. Carpenter v. Weller, 15 Hun, 134; And this does not so much depend Adams v. Adams, 23 Ind. 50. In Wil- upon an implied contract that the ser- liams V. Hutchinson, 3 N. Y. 312, 53 vices are to be gratuitous, as upon the Am. Dec. 301, the court say: "Aeon- absence of any contract or promise tract or promise to pay as a matter of that a reward should be paid. So far, fact requires affirmative proof to es- then, as it depends upon any presump- tablish it. Under certain circum- tion of fact, the difficulty is as great or stances, when one man labors for greater in the case of an infant than, another, a presumption of fact will an adult." § 249 PRINCIPAL AND AGENT. 446 promise by the defendant to pay for such services, or that the circumstances are so strong as to show an intention on his part to do so.' Thus a daughter who continues to reside in her father's family after coming of age may recover what her services to him are reasonably worth, if there is a mutual understanding that she shall be paid for such services.^ The relationship of father-in-law and son- in-law is not of itself sufficient to rebut the presumption of liability for services rendered by one to the other.^ Illtjstkations. — A mother, being ill, sent for her daughter, who had a family, to come and care for her. The daughter left her home and lived with and took care of her mother for more than three years, deceased frequently remarking that she should be well rewarded. Held, that plaintiff could recover the value of her services: Markey v. Brewster, 17 Hun, 16. The plaintiff, after he came of age, lived with and worked for his father, the defendant, who said he would reward him well and provide for him in his will. Held, that the plaintiff could not recover compensation for his services during the lifetime of his father: Patterson v. Patterson, 13 Johns. 379. A sister re- sided in her brother's family, performed the usual duties of a housekeeper, and in return received clothing and a home for eight years. No account was kept, and no agreement was made that she should receive wages. Held, that the law would not imply a contract for services rendered: Ayres v. Hull, 5 Kan. 419. A girl, upon the death of her mother, was turned away from home by her father at the age of fourteen, and at the sug- gestion of her aunt and her grandmother, she went to live with an uncle and aunt, with whom she remained until she was twenty-five years of age, when she married. She subsequently brought suit against the uncle for work and labor. No express contract to pay her was asserted, and it appeared that she was kindly treated and provided for in a better manner than she would have been if she had merely received ordinary wages. Held, that she was not entitled to recover for her services: Hayi V. McConnell, 42 Ind. 285. A laborer, hired for a certain time and for a certain price, intermarried with his employer's daugh- ter, who was a member of her father's family, and continued to work for his wife's father for several years, the wife in the 1 Duffey V. Duffey, 44 Pa. St. 399; Guild, 15 Pick. 129; Fitch v. Peok- Baah v. Bash, 9 Pa. St. 260; Andrus ham, 16 Vt. 150. V. Foster, 17 Vt. 556; Ridgway v. " Green v. Koberts, 47 Barb. 521. English, 22 N. J. L. 409; Guild v. » Amey's Appeal, 49 Pa. St. 126. 447 CONTRACTS BETWEEN MASTEK AND SERVANT. § 250 meanwhile remaining with her father and rendering services for him, and he furnishing her and the children who were the issue of her marriage with food and clothing. There was no agreement made in regard to the services of the daughter, or the food and clothing of herself and her children, or the ser- vices of her husband. Held, that the father was not liable for the services of his daughter; that he could not claim compensa- tion for the food and clothing of herself and children, and that he was bound to pay her husband what his services were rea- sonably worth after the time for which he had been engaged had expired: Oonger v. Van Aernum, 43 Barb. 602. A woman of twenty-five years of age lives for six years with her step- mother, from whom her father had been divorced, working as a dressmaker, and giving some of her earnings to her step-mother, and doing some of the household work. Held, that she cannot recover from her step-mother for services rendered: Feirtag v. Feirtag, Mich., 1889. § 250. Contract for Certain Term or Certain Thing an Entire Contract. — A contract to work a certain termi or to do a certain thing for a certain sum, either payable in block or in installments, is an entire contract, and unless the full term is served or the thing is completed, the ser- vant can recover nothing.^ A contract to teach a school for ten months at a given rate per month is entire, and no part of the consideration is payable, or can be recov- ered, before the end of the term.* An artist who has agreed to paint likenesses for a certain price cannot recover till he has completed them.' But this is a mere presump- tion which may be rebutted by any evidence showing a different arrangement between the parties.* Where the ' Jennings v. Lyon, 39 Wis. 553; 20 for any definite time, and at a fixed Am. Kep. 57; Kohn v. Fandel, 29 price, the complete performance of Minn. 470; Difenback v. Stark, 56 which is a, condition precedent to a Wis. 462; 43 Am. Rep. 719; Hansell right to compensation. It is but a V. Erickson, 28 111. 257; Union Bank v. stipulation of the rates at which the Hemyard, 15 S. C. 296; Thayer v. employee is to be compensated for the Wadsworth, 19 Pick. 349; Earp v. services performed. He is not bound Tyler, 73 Mo. 617; Reab i>. Moor, 19 to serve for any definite time to en- Johns. 337; Freeman v. Galbraith, title him to compensation: Hancy 9. Wright, 591; Isaacs v. McAndrew, 1 Caldwell, 35 Ark. 156. Mont. 437; Larkin v. Buck, 11 Ohio = Turner*. Baker, 30 Ark. 188. St. 561; Stein v. Rose, 17 Ohio St. ' Freeman v. Galbraith, Wright, 471. A contract for service, "at a 581. salary of two thousand five hundred * Thayer w. Wadsworth, 19 Pick, dollars per annum," is not a contract 553; Hoai v. Clute, 15 Johns. 224. § 251 PRINCIPAL AND AGENT. 448 servant's whole time is not due under the contract but he is only required to serve when called on, he may, if he holds himself in readiness to perform during the term, recover the agreed compensation for the entire period.* Illustrations. — J. agreed that he and wife would work for L. for a year for a gross sum. Four months after the wife, being about to be confined, left the service, and J. was discharged. Held, that J. could recover nothing, as his wife's sickness might have been foreseen by him when he made the contract: Jennings V. Lyons, 39 Wis. 553; 20 Am. Rep. 67. A brick-layer under- took to lay the brick of a house at two dollars and fifty cents per thousand, kiln count. Held, that the compensation was not due until the house was completed; and that the loss aris- ing from the accidental destruction of a part of the work during the progress thereof fell on him: Shanlcs v. Griffin, 14 B. Mon. 153. A carpenter agreed to do the carpenter's work on a house, and was to receive a certain sum on the completion of the work, his employer furnishing the materials; and the house and materials were destroyed by fire without the fault of the carpenter, the house being in possession of the employer. Held, that the carpenter could not recover a pro rata compensation for the work actually done: Brumby v. Smith, 3 Ala. 123. The plaintiff agreed to work for the defendant ten and a half months, and spin yarn "at three cents per run." Held, that the contract was entire, and must be performed before the plaintiff could recover for the price of labor; and that, if he left the service of the defendant before the expiration of the time, he could not recover for spinning a certain number of runs of yarn: McMillan v. Vanderlip, 12 Johns. 165. An agreement was made that the plaintiff was to work for the de- fendant " for eight months, for which the defendant was to pay him $104, or $13 per month." Held, that the contract was entire, and that the plaintiff could not sue for his pay until he had served out the whole time: Beab v. Moor, 19 Johns. 337. § 251. Abandonment of Contract — No Recovery for Time Served. — A servant employed for a term under an entire contract, who abandons and refuses to complete it without legal cause, can recover nothing for what he has done. This rule is laid down in a multitude of decided cases both in this country and in England.'' On the 1 Thompson v. Society, 5 Pick. 469; » Smith v. Brady, 17 N. Y. 173; 72 Jones V. Graham, 21 Ala. 654; Brom- Am. Dee. 442; Lantry v. Parks, 8 Cow. ley V. School District, 47 Vt. 381. 63; Olmatead v. Beale, 19 Pick. 528; 449 CONTRACTS BETWEEN MASTER AND SERVANT. 251 other hand, in the case of Britton v. Turner,^ which arose in New Hampshire in 1834, it was held that the default- ing servant may recover from the master the value of his services for the time served, less the damages sustained by the master by reason of the partial non-completion of the contract. This doctrine, though since criticised in the court in which it was announced,^ remains the law of New Hampshire,^ and has been followed in Iowa,'' Kansas,^ Davis V. Maxwell, 12 Met. 290; Brown V. Fitch, 33 N. J. L. 418; Bragg v. Bradford, 33 Vt. 35; Eldridge v. Rowe, 2 Gilm. 91; 43 Am. Dec. 41; Wolfe V. Howes, 20 N. Y. 197; 75 Am. Dec. 388; Hogan v. Titlow, 14 Cal. 255; Angle v. Hanua, 22 111. 429; 74 Am. Dec. 161; and see cases cited in Wood on Master and Servant, sec. 147, note 1 ; Webb v. Duckingfield, 13 Johns. 389; 7 Am. Deo. 388; Martin V. Schoenberger, 8 Watts & S. 367; Givhan v. DaUey, 4 Ala. 336; Gillis V. Space, 63 Barb. 177; Larkin v. Buck, 11 Ohio St. 561; Hutchinson v. Wet- more, 2 Cal. 310; 56 Am. Dec. 337; Earp V. Tyler, 73 Mo. 617; McMillan V. Vanderlip, 12 Johns. 165; 7 Am. Dec. 299; Tipton v. Feitner, 20 N. Y. 429; Cunningham «. Morrell, 10 Johns. 203; 6 Am. Dec. 332; Jennings v. Camp. 13 Johns. 94; 7 Am. Dec. 367; Morrillr. Bemis, 4 Denio, 121; Mort- main V. Lefaux, 6 Mart. (La.) 654; 12 Am. Deo. 485; Byrd v. Boyd, 4 Mc- Cord, 246; 17 Am. Dec. 740; Wright V. Turner, 1 Stew. 29; 18 Am. Deo. 33; Posey v. Garth, 7 Mo. 94; 37 Am. Deo. 183; Henson v. Hampton, 32 Mo. 410; Sohnerr v. Lemp, 19 Mo. 42; MiUar v. Goddard, 34 Me. 102; 56 Am. Deo. 638; Swanzey v. Moore, 22 111. 63; 74 Am. Dec. 134; Nelicbka v. Es- terly, 29 Minn. 146. 1 6 N. H. 481; 26 Am. Dec. 713. 2 Davis V. Barrington, 30 N. H. 517. 3 Davis V. Harrington, 30 N. N. 517. *McClay v. Hedge, 18 Iowa, 66; Pixler V. Nichols, 8 Iowa, 106; 74 Am. Deo. 298; Byerlee v. Mendel, 39 Iowa, 382. ^ Duncan v. Baker, 21 Kan. 107. In this case the court say: ' ' The weight of authority at the present time we think is unquestionably against the doctrine that where a contract is entire, and Vol. I. -29 consequently not apportionable, and has been only partially performed, the failing party is not entitled to re- cover or receive anything for what he has actually done. It will, perhaps, be admitted that such doctrine has been overturned with respect to all contracts except those for personal services; and if so, then there is not much of the doctrine left. But if the doctrine is to be abandoned with refer- ence to all contracts except those for personal services, then why not aban- don the doctrine altogether? The reason usually given is, that the em- ployer in contracts for personal ser- vices has no choice, except to accept, receive, and retain the services already performed; while in other contracts he may refuse to accept, or may return the proceeds of the partially performed contract if he chooses. But this is not always nor even generally true with re- spect to other contracts. Suppose- a miller purchase a thousand bushels of wheat for a thousand dollars, the wheat to be delivered within one month; lie receives the wheat as it is delivered and grinds it into flour; when tlie vendor has delivered five hundred bushels thereof he refuses to deliver any more; what choice has the miller then except to retain what he has al- ready received ? This kind of suppo- sition will also apply to the purchase and sale of all other kinds of articles where the purchaser on receiving them changes their character or sells them,, so that he cannot return them. Or suppose that an owner of real estate employs a man to build or repair some structure thereon for a gross but defi- nite sum, the owner of the real estate to furnish the materials or a portion thereof in case of building, and either party to furnish them in case of re- § 252 PRINCIPAL AND AGENT. 450 Nebraska,' and several more states, as will be seen by the cases cited below.^ § 252. Exceptions — When Quantum Meruit Recover- able. — And there are certain cases where a quantum meruit may be recovered before the end of the term. These cases are: 1. Where before the end of the term the master abandons the business;^ 2. Where before the end of the term the servant is wrongfully dismissed;* 3. Where complete performance is prevented by the act of God — as sickness or death' — or by the act of the pairing, and the job is only half fin- ished, what choice haa the owner of the real estate with reference to re- taining or returning the proceeds of the workman's labor? This kind of supposition will also apply to all kinds of work done on real estate, and will often apply to work done on personal property. Of course in all cases where the employer can refuse to accept the work, and does refuse to accept it, or returns it, he is not bound to pay for it, unless it exactly corresponds with the contract. But where he receives it and retains it, whether he retains it from choice or from necessity, he is bound to pay for the same what it is reasonably worth, less any damage that he may sustain by reason of the partial non-fulfillment of the contract. Of course he is not bound to pay any- thing unless the work is worth some- thing, unless he receives or may receive some actual benefit therefrom; and where he receives or may receive some actual benefit therefrom, he is bound to pay for such benefit, and only for such benefit, within the lim- itations hereinbefore mentioned. " 1 McMillan v. Malloy, 10 Cent. L. J. 447; Purcell v. McComber, 11 Neb. 209; 38 Am. Kep. 366. 2 Coe V. Smith, 4 Ind. 79; 58 Am. Dec. 618; Wolcott v. Yeager, 11 Ind. 84; Carroll v. VFelch, 26 Tex. 147; Riggs V. Horde, 25 Tex. Supp. 456; 78 Am. Dec. £84; Chamblee v. Baker, 95 N. C. 98; Hollia v. Chapman, 36 Tex. 1. 3 Fuller V. Rowe, 59 Barb. 344. * Hilli;. Green, 4 Pick. 114; Brinkley V. Swicegood, 65 N. C. 626; Byrd v. Boyd, 4 McCord, 246; 17 Am. Deo. 740; Swift V. Harriman, 30 Vt. 607; Libhart v. Wood, 1 Watts & S. 265; 37 Am. Dec. 461 ; Henderson v. Stiles, 14 Ga. 135; Ryan v. Dayton, 25 Conn. 188; 65 Am. Dec. 560. * Wolfe V. Hawes, 20 2S^. ¥. 197; 75 Am. Dec. 388; Clark v. Gilbert, 26 N. Y. 279; 84 Am. Dec. 189; Jarrell V. Farris, 6 Mo. 159; Lewington v. Greene, 7 R. I. 589; Cuckson v. Stones, 28 L. J. Q. B. 25; Ryan v. Dayton, 25 Conn. 188; 65 Am. Dec. 560; Lake- man V. Pollard, 43 Me. 463; 69 Am. Dec. 77. In K. v. Raschen, 38 L. T., N. S., 38, the plaintiff was engaged by the defendants as a clerk at a yearly salary, and was to have one months notice of dismissal. He served under the contract from the 2d to the 30th of July, when, being unwell, he ob- tained defendants' permission to ab- sent himself until the 6th of August. He remained away, however, until the first week in September, when he re- turned and tendered his services, which the defendants refused; and they had, moreover, in the mean time, namely, on the 20th of August, given him a notice by letter of that date, terminating the employment. They refused to pay him the amount claimed by him for wages during his absence, on the ground that he had, by his own misconduct, rendered himself incapa- ble of performing his duties, and therefore was not entitled to any remuneration. The illness under which the plaintiff was suffering arose from venereal disease. He thereupon 451 CONTRACTS BETWEEN MASTER AND SERVANT. § 252 law.* So a master waives forfeiture of wages for services performed by a servant who voluntarily leaves before the brought an action for his wages from the 1st of August to the 1st of Sep- tember, but was nonsuited in the court below. On appeal the nonsuit was set aside and a verdict entered for the plaintiff. Cleasby, B., said: "I think prima fade illness is to be attributed to the act of God, and we are not jus- tified in going back for any length of time, and entering into an investiga- tion as to what may have been the cause of it. We ought not, I think, to extend the effect of disability aris- ing from illness. The illness which rendered him unable to perform the duties for a time came upon him un- expectedly, and we cannot go back to tho first causes and into the question of how it arose. The maxim, Causa proxima non renwta spectatur, is appli- cable here. As to how precisely the disease arose, there may be various different opinions, and there might be the greatest uncertainty as to the cause or matter which originally brought it about. It was a misfortune which could not have been foreseen at the time the contract was made, and I think the plaintiff is entitled to say that it is a reasonable excuse for his duties." Hawkins, J: "I am of the same opinion. If the plaintiff had been aware, at the time of the making of the contract, that he would be in- capacitated by illness from performing his duties, I am not prepared to say that he could recover in this action. But there is nothing to show that he knew anything of the illness which he subsequently suffered from until after the agreement had been entered into. There was no cross-examination on that point, and no question was put to get out of him, and there was no evidence to show, that he had any suspicion of the misfortune which sub- sequently overtook him, or that he was aware that the seeds of the disease existed in him at that time. Now, I base my opinion upon that fact, and I think, under these circumstances, that he is entitled to the amount claimed. The misconduct alleged in the pleadings is his staying away with- out a reasonable excuse. How can it be called misconduct if a man stays away, on the advice of a doctor, in order to get himself cured? Now, in the present case, the plaintiff did not voluntarily and willfully refuse to serve, but was compelled to absent himself by an illness which came upon him during the time of service, and which was not the result of any mis- conduct that occurred after the agree- ment was made. As a matter of fact, I conclude that the malady was con- tracted before he entered into the defendants' service, and he did not improperly obtain admission there. At the time that he entered into the contract, which he did honestly, he neither believed nor knew that he would not be able to fulfill it. " Dis- ability occasioned by temporary sick- ness will not disentitle a servant to wages, if the contract be treated as sub- sisting throughout: Cuokson v. Stones, 1 El. & E. 248; 28 L. J. Q. B. 25; 32 L. T. 242. Of course, it is one thing as regards wages accruing up to the time of the sickness, and another as regards wages for the period during or subsequent to the sickness; and as to the latter period, it is important to bear in mind the proviso italicized above. The Scotch law on this branch of the subject seems in some particu- lars more favorable to servants than our own. If the sickness be caused by a hurt sustained while engaged in the master's service, — e. g., by a kick from his horse, or the bursting of his fowl- ing-piece, — the servant is entitled to full wages; and if he lived in th» fam- ily, to board wages up to the period of the termination of the contract: Bell's Commentaries, 179; Lorimer's Institutes, see. 564. If the master offer to maintain the servant in his own house, the servant in the general case is not entitled to leave and claim board wages; but if it be found neces- sary for his recovery that he should be removed, the master must pay board wages: 2 Hutch. Just. 167; Fraser on Master and Servant, 51. If the ser- vant's sickness has arisen from over- 1 Jones V. Judd, 4 N. Y. 411. § 253 PRINCIPAL AND AGENT. 452 term of service has expired, and is liable therefor at the rate stipulated by the contract only, but without deduction of damages sustained by the leaving, where he offers to pay the servant at the contract price, and tenders ])ayment, although by mistake he tenders less than the amount due at that rate, and although he insists at the tiiue that he did not admit his liability.^ § 253. Hours of Labor. — A servant hired by the month or year cannot be compelled to work an unrea- sonable number of hours each day; but what is or is not reasonable depends upon the nature of the business, the custom of the trade and the regulations of the employer, and the understanding of the parties when the contract was made.'^ Where a party contracts to work by the week, knowing the nature of the employment to be such as will occupy all his waking hours, he cannot claim com- pensation for as many days' work as the number of hours of labor performed by him would have amounted to, in- dependent of the contract.' The fact that a charge for a certain number of hours' services for the first year is assented to by the employer does not create an implied obligation on his part to pay twice as much the second year because the number of hours are doubled in the tasking, the same principles are appli- any other class of servants, if their cable: Lorimer's Institutes, see. 565. engagement be liable to come to an If, however, the sickness be referable end at a moment's notice; but it is said to no cause which the master could that where mechanics or artisans are possibly have controlled, the rule is, engaged for a lengthened period, they that wages and board wages wUl be will probably be found to have the due only where the illness is of mod- same claim to wages (not, of course, to erate duration; and a deduction from board wages) during sickness of mod- these will be made if the length of the erate duration as domestic servants: sickness be very great, considered in Fraser on Master and Servant, 54; relation to the length of the engage- Lorimer's Institutes, sees. 572, 573. ment: 2 Hutch. Just. 166; Bell's Com- See article on Inability of Servants mentaries, 180; Fraser on Master and to Fulfill Contracts with Masters, re- Servant, 51. Workmen earning weekly printed in 9 Cent. L. J. 174. wages, and not residing in the mas- ' Patnote v. Sanders, 41 Vt. 66; 98 ter's house, have no claim against the Am. Bee. 564 . master if they have been disabled by ^WoodonMaBterandServant,8ee.86. sickness from discharging duty; and ^ Luske v. Hotchkiss, 37 Conn. 219; neither does such exist in the case of 9 Am. Rep. 314. 453 CONTRACTS BETWEEN MASTER AND SERVANT. § 254 latter.* But if by statute a certain number of bours are fixed as a day's work, a servant may lawfully refuse to work beyond tliat time.^ Because tbe compensation for performing the duties of a certain office is fixed at a cer- tain price per day, it is not dependent upon tbe perform- ance of work on each day.* § 254. Extra Hours — Compensation not Recoverable for Working Extra Hours — Exceptions, — But unless there is an express promise to pay him, a servant employed for a term cannot recover for working extra hours.'* His remedy, it is said, is to refuse to work the extra time." Even where a statute declares that a certain number of hours shall constitute a day's work, a servant who works over that time cannot recover extra compensation.® But a servant may recover for extra services performed at the request of the master,^ provided the service is one the servant is under no legal obligation to perform.^ Where a person contracts to serve half the time and to receive but half pay, he may show that he served all the time, and recover at the rate stipulated for in the writing.' Illustrations.- — W. was employed by D. as a man-of-all- work, at a fixed weekly stipend; during the sickness of the latter he took care of him alternate nights and alternate Sun- days, receiving pay for his services upon Sunday, but none for those rendered at night, nor was there any agreement respect- ing them. W. having recovered for the extra services at night in the court below, held, that the verdict should not be dis- turbed: Wilford V. Devin, 43 Iowa, 559. ' Miller v. Hooper, 7 Hun, 200. cannot claim extra compensation be- ^ McCarthy v. Mayor, 90 N. Y. 1; yond that called for by hia contract 48 Am. Rep. 601. with his employer. ' Abbott ti. Georgia and North Caro- ^ McCarthy ». Mayor, 96 N. Y. 1; lina R. R. Co., 90 N. 0. 462. 48 Am. Rep. 601; Luske v. Hotchkiss, * Fraser v. United States, 16 Ct. of 37 Conn. 219; 9 Am. Rep. 314; United CI. 187; Guthrie v. Merrill, 4 Kan. States v. Martin, 94 U. S. 400. 157; Luske v. Hotchkiss, 37 Conn. ' Railroad Co. v. Clarkson, 7 Ind. 219; 9 Am. Rep. 314. 595; Dvmcanw. Commissioners, 19 Ind. * Wood on Master and Servant, seo- 154; Clutterbuck v. Coffin, 20 L. J. 86; Koplitz V. Powell, 56 Wis. 671, Com. P. 65. holding that if a servant voluntarily ^ Harris v. Carter, 3 El. & B. 559. works during unseasonable hours, he ' Edrington v. Leach, 34 Tex. 285. §250 PRINCIPAL AND AGENT. 454 § 255. Work Performed on Sunday. — As we have seen, a servant is not obliged to work on Sunday/ but if he does so, he is not entitled to extra pay,^ unless the work is "necessary," and the master requested him to work on that day, and promised to pay him extra compensation.' Where one is employed at a certain price per month to work on a farm, and his employment contemplates certain work to be done by him on Sunday, and he afterwards makes a final settlement without claiming additional pay for his Sunday work, he cannot then recover for such work.* § 236. Right to Order Servant to Different Employ- ment — Compensation. — A servant hired for one service may refuse to labor at another and different service.' But the test always is. Is the new service such a one as may fairly be contemplated to have been within the intention of the hiring.^ "If," says Mr. Wood,^ ''a farm laborer should refuse to carry mortar for brick-layers construct- ing a building for the master, he might properly be dis- missed therefor, for the nature of the service is general.' But if the same service was required of a clerk, a book- keeper, lawyer's clerk, and others specially employed, he might properly refuse to perform it. Thus a lady's maid cannot be required to milk cows,* a journeyman saddler cannot be required to cook,*" nor a cook to act as market- woman," nor a farm laborer as a household servant.*'' But 1 Commonwealth v. St. Germain, 1 ' Wood on Master and Servant, eeo. Browne, 24, cited ante. A contract 89. to pay a demurrage will, in the ab- ® Angle v. Hanna, 22 111. 429; 74 senoe of any proof to the contrary, Am. Dec. 161; Fraser on Master and be deemed to intend to mean demur- Servant, 68. ,: rage for working days, and to exclude ^ Bell's Commentaries, 117. Sundays: Rigney w. White, 4 Daly, 400. '" Peter v. Terrol, 2 Mur. 28. 2 Guthrie v. Merrill, 4 Kan. 187. " Gunn v. Ramsay, Hume, 384. 8 Whitcomb v. Gilman, 35 Vt. 297. '- Stuart v. Richardson, Hume, 390. * Lowe V. Marlow, 4 111. App. 420. A director of a theater cannot require a ^ Baron v. Placidfe, 7 La. Ann. 229. dancing-girl, engaged as premidre se- "Angle V. Hanna, 22 111. 429; 74 conrfe rfansewse, to appear in any dances Am. Dec. 161; Burton v. Pinkertoa, which do not enter into employment L. R. 2 Ex. 340. according to the usages of the thea- 455 CONTEACTS BETWEEN MASTER AND SERVANT. § 257 in all cases this question, as to whether certain special service outside of the contract can be reasonably required of the servant, must depend upon the contract and the character of the service contemplated thereby, and the particular necessities of the master." One agreeing to render service as "salesman," or in any other capacity, may show by the usages of this trade what services he was to render, where his work was to be done, what goods he was to sell, and how many hours a day he was to be employed.^ Thus, engaged as a "lace buyer," he might show that an order from his employer to fold some lace on cards was not within his contract, and that his refusal to do so would not justify his dismissal;^ or engaged as a traveling salesman, and agreeing not to go over "the same ground" for any other house, these words ought to be properly explained by parol evidence of usage;^ and usage may explain what. is included in "ship-carpenters' work," as these words are used in a contract.* But the master may call for his assistance outside of his ordinary engagement in a case of great emergency.* § 257. Increased Duties — Extra Compensation. — So a person, employed at a salary to perform certain duties, cannot recover extra pay because his duties have been in- creased beyond what he expected." An action does not lie ter. And where he dismisses her for ^ Fraser v. United States, 16 Ct. of refusing to dance a parlor-dance in CI. 3.37; Turnell's Sr.ccesaion, Si L.i. parlor-dress with the ficjuranies of the Ann. 8SS; Hair v. Bell, G Vt. 35; Kop- theater, he will be liable to her in litz v. Powell, C6 Wis. 671; Hodges v. damages: Baron w. Placid^, 7 La. Ann. Railroad Co., 29 Vt. 220; Pew v. 229. National Bank, 130 Mass. 3i'4. "A - Hagan v. Domestic Sewing Ma- person employed as the secretary of a chine Co. , 9 Hnn, 73; Sweet v. 'Lee, 3 private corporation, at a fixed rate of Man. & G. 452; Price v. Mouat, 11 compensation, cannot demand extra Com. B., N. S., 509; Hosley v. Black, pay for services in that capacity which 28 N. Y. 438. were not anticipated at thj time of his * Price V. Mouat, H Com. B., N. S., appointment, or which were not enu- 509. meratedinthecharterorby-laws. The ^ Mumford v. Gething, 7 Com. B., fair construction of his contract is, tliat N. S., 305. he will do whatever his employers may *■ Cillyer v. Collins, 17 Abb. Pr. 467. have occasion to employ a secretary ^ Wood on Master and Servant, sec. about" : Black, J. , in Carr v. Chartiers 89. Coal Co., 25 Pa. St. 337. In Voorhees §257 PRINCIPAL AND AGENT. 456 on a promise to pay for services which it was the plain- tiff's duty to perform without pay.^ But a person employed on a particular service, or by the month or year, may have a right to compensation for services rendered on request, out of the range of such employment, even without express V. Combs, 33 N. J. L. 494, a domestic servant was employed by one V*'^., r.t a stipulated monthly wage. After W. 'a death she claimed an increased com- pensation, on the ground that her labors had been increased by his sickness. It was held that she could not re- cover. ' ' The presumption of law, " said the court, "is, that for all services rendered by her to her employer, wliich are in the line of her regular duties, or of a similar nature, whether ordinary or extraordinary, she is sat- isfied by the payment of her fixed sal.iry. Tlie object of an express con- tract is to guard the parties against uncertainty as to its term, or exaction in its performance. But an express contract will furnish slender protection indeed to the master, if for every ad- ditional or extra service he may be subjected to the payment of such sum as a jury may award. Such a rule would give the servant a valid claim for increased pay whenever the master entertained an unexpected guest, and enable the clerk at a fixed salary to demand an increase of wages with every increase of the merchant's busi- ness. No reason can be perceived why the master might not, with equal pro- priety, upon the mere diminution of the servant's labor, reduce the remun- eration. The doctrine upon which the plaintiff rests her case is contrary to the well-settled rule that an express contract excludes an implied one. An implied contract cannot exist when there is an existing express contract about the identical subject. The par- ties are bound by their agreement, and there is no ground for implying a promise. It is only when the parties do not agree that the law interposes and raises a promise. Where an ex- press contract exists, there must be a rescission of it before the parties will be remitted to the contract which the law implies, in the absence of that agreement v/hich they make for them- selves: Walker v. Browu, £8 111. 27S; 81 Am. Doc. 2ST; Cutler v. Powell, 6 Term Rep. 324; Hart r. L-iuman, ^9 Barb. 410. In the case of Hart v. Lan- man, Hart agreed to make a certain excavation of earth for a special price. After he entered oa the work, he, un- expectedly to both parties, encountered hard-pan, and gave notice to Lauman that he must abandon the work unbsa Lauman would allow him more than the contract price. Lauman told Hart to quit the work until some arrange- ment could be made, and he did quit it for about two weeks, when it was resumed under a new agreement, by whicli he was to have reasonable com- pensation for the work. It was held in this case that Hart could not re- cover under the new agreement, unless what took place between the parties in effect rescinded the original contract as to that portion of the work which had been abandoned, and that the par- ties were not in a situation to make a new contract binding upon them until such rescission. In other words, that where work was entered upon with an express stipulation as to price, a sub- sequent express promise to pay a greater sum on account of unforeseen difficulties in the undertaking, would be void for want of consideration to support it, unless it was accompanied by a virtual rescission of the original bargain. The extra services of the plaintiff were not rendered in an em- ployment different from that for which she engaged, but were more burden- some by reason of the testator's illness. In the absence of the express agree- ment to pay for the extra services, no recovery can be had. This view is supported by Carey v. Halleck, 9 Cal. 198; Haymore v. Moore, 8 Ohio, 239; Smith on Master and Servant, 101, and Hart V. Lauman, before cited. " ' Sweany v. Hunter, 1 Murph. 181. 457 CONTRACTS BETWEEN MASTER AND SERVANT. § 257 agreement that such services shall be paid for.' Where a person employs an architect to prepare working drawings for a house, and the architect changes the plan, if the owner directs the work to be altered to conform to the original plan, he must pay the workman for such altera- tion.^ Where extra labor performed is of the same char- acter as other labor agreed for, and the price specified, it will be inferred that the additional work is to be paid for at the same rate.^ Usage is admissible to settle a question as to the proper performance of the duties of a particular service.* Where the plaintiffs, who were booksellers, em- ployed the defendant, a printer, to print for them an edition of one thousand copies of a book called "Taylor's Holy Living," but the latter printed fifteen hundred copies, delivering them one thousand and disposing of the remainder to his own use, it was held, in an action brought by them for damage caused by the market being thus overstocked, that it was a proper subject of testimony to show that, according to the usage among printers and booksellers, a printer contracting to print for a bookseller a certain number of copies of any work is not at liberty to print from, the same type, while standing, an extra number for his own disposal.^ So, also, it is competent to prove a custom that the employment of an architect to make plans and designs for a building carries with it an employment to superintend its construction.* A custom for authors having a book to write to employ others to aid them in compiling it, and that such fact being known would not damage their reputation, is admissible.' Illustrations. — The supervising architect of the treasury department was suspended pending the trial of an indictment ' Cincmnati etc. R. B. Co. v. Clark- Hunt v. Carlisle, I Gray, 257 ; Martin son, 7 Ind. 595. v. Hilton, 9 Met. 371; Hunt v. Mickey, 2 Guerin v. Rodwell, 37 N. J. L. 71. 12 Met. 349. ' Chicago etc. R. R. Co. v. Vosburgh, * Williams v. Gilman, 3 Me. 276. 45 111. 311. 5 Wilson v. Bauman, SO 111. 493. * Holcroft V. Barber, I Car. & K. 4; ' Reade v. Sweetzer, 6 Abb. Pr., N. Vaughn V. Gardner, 7 B. Men. 326; S., 9. §§ 258, 259 PRINCIPAL AND AGENT. 458 against him, and A, who was then superintending the construc- tion of a new building for the department, and who was under pay at the rate of eight dollars per day, was directed to take charge of the office. The supervising architect afterwards re- turned to duty, and received the amount of his salary during the period of his absence. Held, that A was entitled to no pay for his services beyond his eight dollars per day; Eraser v. United States, 16 Ct. of CI. 507. The plaintiff entered into a contract with defendant to draw, for the latter, plans of a house. The contract was afterwards changed so that plaintiff was to furnish plans for a house of greater value than the first, and no specific sum was named for the plans. Held, that the plaintiff might prove the value of the plans furnished, and that other services rendered were not included in furnishing the plans, and the value of such additional services: Marcotte v. Beaupre, 15 Minn. 152. The contractor of a lake tunnel employed another at certain stipulated wages to plan a crib and other means of accomplishing certain difficult parts of the work, and afterwards employed him to superintend the putting down of the crib and otherwise apply his plans to the execution of the work, which he did, inventing and applying thereto "screw-anchors," etc. Held, that he might recover of the contractor additional com- pensation for the latter services, although receiving wages for the time he was therein employed: Dull v. Bramhall, 49 111. 364. § 258. Contract is Personal — Delegation. — The con- tract of service is personal. The master cannot turn over the servant to another master/ nor can the servant sub- stitute another in his place and stead,^ except, of course, by the consent of the master and servant respectively.^ § 259. Lost Time. — The term of the service being ended, the servant cannot be compelled to continue serv- ing to make up lost time; nor can the master bo com- pelled to receive the extra labor of the servant to make it up, but he has a right to deduct for the lost time.* Illustrations. — Privates on the capitol police remained absent without leave and without reasonable cause. They were not dismissed, but substitutes were employed, who were paid, 1 McGuire v. O'Hallaran, Hill & D. * Prentiss v. Ledyard, 28 Wis. 131; 85. Bast V. Byrne, 51 Wis. 531; 37 Am. ^Fenton v. Qark, 11 Vt. 557; Rep. 841; Nichols ■„. Coolahan, 10 Campbell v. Price, 9 Ses. Cas. S. 264. Met. 449; McDonald o. Montague, 30 3 Cummings v. BlaisdeU, 43 Vt. 382. Vt. 357. 459 CONTRACTS BETWEElir MASTER AND SERVANT. § 260 the names of the absentees being stricken from the pay-roll. They were afterwards restored, and sought to recover their pay during the time of their absence, on the ground that they had not been dismissed. Held, that they could not maintain their claim: Thwing v. United States, 16 Ct. of CI. 13. A clerk in the office of the board of education of New York City wrote to the secretary that an operation was about to be performed on his eyes, and asking leave of absence until his sight was restored. Such leave was granted by the board. Before his return a sec- ond operation was undergone, which necessitated a departure to Europe. Held, that he was not entitled to any salary during the period of his absence in Europe, he not having obtained distinct formal leave of the board therefor. Mere permission of members thereof was insufficient: O'Leary v. New York Board of Education, 9 Daly, 161. § 260. General Hiring — Prima Facie for What Term. — In England a general hiring — that is, a hiring where no term is fixed — is a hiring for a year. This rule ap- plies to all kinds of servants, domestic or others, except where there is a different general custom proved, or the intention of the parties is shown to have been different, either by their agreement or the circumstances of the case.' In the United States, on the contrary, a general and indefinite hiring is prima facie a hiring at will, though the servant is to be paid by the day, week, month, or year, as the case may be.^ Unlimited con- ' Wood on Master and Servant, sec. charged at a month's notice, but that 136. is not a matter of law: it is a custom ^ De Briar v. Minturn, 1 Cal. 450; that might be put on the record as a Tatterson v. Mfg. Co., 106 Mass. 56; fact, and the jury would find that it Franklin etc. Co. v. Harris, 24 Mich, existed.' And in that case the court 115; Haney v. Caldwell, 35 Ark. 156; held that the month's notice was not Orr V. Ward, 73 111. 318; Kansas Pac. applicable to a reporter for a news- R. R. Co. V. Roberson, 3 Col. 142; paper, no such custom being proved Boogher v. Ins. Co., 8 Mo. App. 533. applicable to reporters. And in Faw- In Hathaway v. Bennett, 10 N. Y. cett v. Cash, 5 Barn. & Adol. 904, the 108, 61 Am. Dec. 739, the court say: court held it was not applicable to a "The plaintiff's counsel has referred warehouseman who was dismissed from us to the English law, by which a ser- his employment; andinBeestonv. CoU- vant is entitled to one month's notice yer, 4 Bing. 309, it was held not to be before he is discharged; but that rule applicable to clerks or servants in rests entirely upon custom. Little- husbandry. All these decisions were dale, J., said in Williams v. Byrne, 2 made on the ground that no custom as Nev. & P. 139: 'The case of a menial to such classes of persons had been servant has been put, who may be dis- proved." § 260 PRINCIPAL AND AGENT. 460 tracts for personal service may be terminated by either party upon reasonable notice.^ A servant employed at will may be discharged at any time.- "The reservation of wages, paj-able monthly or weekly, will not control the contract so as to destroy its entirety when the parties have expressly agreed for a specified time, as a year. But if the payment of monthly or weekly wages is the only circumstance from which the duration of the con- tract is to be inferred, it will be taken to be a hiring for a month or a week.'" A general engagement of a ser- vant "at a salary of fifteen hundred dollars a year, payable weekly," unaffected by any other considerations growing out of the custom of the place, the conduct of the parties, or other extraneous evidence, disclosing a contrary inten- tion, constitutes a contract of hiring for the year.^ A gen- eral hiring to be terminated by three months' notice is a hiring by the year.* Where one is hired by the week, and is paid weekly, the burden is on him to show a change in the contract as to the term of service." On the ques- tion as to the term for which a servant is hired, evidence of the terms for which other employees of the same mas- ter were hired is irrelevant.' Under an ordinary con- tract of hiring by the day, the person hired is not bound to prolong his services in order to complete any particu- lar piece of work on which he may happen to be em- ployed.* By the common and legal construction of a contract for the labor of an individual at a monthly compensation, such compensation is payable at the end of each month.'' Usage may regulate the conditions of 1 Ward V. Ruckman, 34 Barb. 419. * Bleeker v. Johnson, 51 How. Pr. 2 Parka v. Atlanta, 76 Ga. 828. 380. 3 Beach V. Mullin, 34 N. J. L. 343. ' * Heidleberg v. Lynn, 5 Whart. 430; The fact that the rate of compensation 34 Am. Deo. 566. agreed upon is a certain sum per month ^ State v. Fisher Varnish Co., 43 N. or per year does not, in the absence of J. L. 151. other evidence, fix the period of hiring ' Lakeman v. Pollard, 43 Me. 463; at one month or one year: Evans «. St. 69 Am. Dec. 77. Louis, Iron Mountain etc. R'y Co., 24 ^ Wyngert v. Norton, 4 Mich. 286. Mo. App. 114. » Heim v. Wolf, 1 E. D. Smith, 70. 461 CONTRACTS BETWEEN MASTER AND SERVANT. § 260 the employee's service. Thus it may be admissible to show the length of a hiring* when there is no express agreement as to the time the servant is to work.^ A. usage is admissible between the printers and proprietors of newspapers that the latter should give to the former four weeks' notice of taking the work from them, or pay them four weeks' wages.^ In an action for a wrongful dismissal, evidence of a custom among dry goods jobbers in Baltimore that when a clerk or salesman begins a sea- son without a special contract he cannot be dismissed till the end of it, and that the seasons are two, — one from January 1st to July 1st, and the other from July 1st to January 1st, — was admitted.^ A custom allowing em- ployees to work for themselves after certain hours is rea- sonable;® so is a usage on the part of business houses to furnish each other's clerks with goods and charge them to each other.* Illustrations. — One was under monthly employment, and told his employer that he wished it more permanent, and an amount per year was agreed upon, payable semi-monthly. Held, that a hiring for a year might be inferred: Bascovi v. Shillito, 37 Ohio St. 43] . A. was employed by M. & C. as a traveling sales- man at eighteen hundred dollars "per year," and notified M. that he would make no engagement for less than a year. Dur- ing the year M. bought out C.'s interest in the partnership. A. served one year satisfactorily. A few months later he was dis- charged without cause. Held^ that the contract was a continu- ing one, to be terminated at the end of each year by the wish of either party, and that A. could recover the entire salary for the second year: Alba v. Moriarty, 36 La. Ann. 680. A agreed to work for B for a year, and for a second year at an advanced rate if B should continue in the business. Held, that if B con- tinued with a partner he continued in business within the mean- ing of the contract: Collett v. Smith, 143 Mass. 473. An offer by letter to appoint plaintiff superintendent of defendant's ships at a certain sum per month said, "And if you give me satisfac- ' The Swallow, Olcott (Admiralty), ' Cunningham v. Fonblanque, 6 Car. 334; Harris v. Nicholas, 5 Munf. & P. 44. 483. * Given v. Charron, 15 Md. 502. ' Gleason v. Walsh, 43 Me. 397; * Barnes v. Ingalls, 39 Ala. 193. Holcroft V. Barber, 1 Car. & E. 4. ^ Cameron?;. Blackman, 39 Mich. 108, §§261, 262 PRINCIPAL AND AGENT. 462 tion at the end of the first year, I will increase your salary ac- cordingly." Held, a contract of hiring for a year: Morton v. Cowell, 65 Md. 359; 57 Am. Rep. 331. § 261. Continuance of Service after Expiration of Term — Presumption. — Where without any new contract the servant continues after the expiration of the term, the presumption is, that it is continued on the same terms,^ but the employment it seems must be in the same business,^ and it has been held that where a party enters another's service without any agreement as to the rate of compensation, but subsequently the rate for a term is fixed by agreement, his continuing to serve after that time will not raise a presumption that the compensation is to continue at the same rate.' Illustrations. — Plaintiff, as a physician, was employed for a year at a fixed salary, to render professional services for a county, and at the end of the year, no successor being then appointed, no new contract being made with fcim, and no notice given by him that he should demand a different rate of com- pensation, he continued to render the same kind of services for several months, and until another physician had been ap- pointed and qualified as his successor. Held, that he could recover for such additional period of service only at the rate of compensation fixed by his contract of the previous year: Weise v. Milwaukee County Supervisors, 51 Wis. 564. § 262. Regulations of Master. — Regulations of the master as to the conditions of the service are binding on the servant, if reasonable,^ and if known to him.^ But such regulations are not binding on a minor.* Such regulations as the following have been bad valid, viz.: » Nicholson v. Patohin, 5 Cal. 474; 35 Me. 447; 58 Am. Deo. 718. A Huntingdon v. Claflin, 38 N. Y. 182; regulation or a contract by which the Weise v. Supervisors, 51 Wis. 564; employee releases the master from all Iron Co. -v. Biohardson, 5 N. H. 294; liability for damage resulting from Wallace v. Floyd, 29 Pa. St. 184; 72 the employee's negligence is void: Am. Dec. 620; Ranck v. Albright, 36 Roesner v. Herman, 10 Biss. 486. Pa. St. 371; Grover etc. R. R. Co. v. * Stevens v. Reeves, 9 Pick. 198; Bulkley, 48 HI. 189. Collins v. Iron Co., 115 Mass. 23; 2 Ranck v. Albright, 36 Pa. St. 367. Bradly v. Mfg. Co., N. H. 487. » Smith V. Velie, 60 N. Y. 106. » Deroeher v. Continental Mills, 58 « Harmon v. Salmon FaUa Mfg. Co., Me. 217; 4 Am. Rep. 286. 463 CONTRACTS BETWEEN MASTER AND SERVANT. § 263 that an employee must give notice of his intention to leave, or forfeit the wages earned.' But sickness or the act of the law will excuse the notice,^ unless he has expressly agreed to give notice in such case.* A mere temporary absence is not an abandonment.* And an employee who overstaj's his leave of absence does not abandon his place.^ Illustrations. — The wages of workmen were ascertained on Thursday, but not paid until Saturday; a workman worked from Thursday to Thursday, and left on Friday. Held, that he forfeited his wages for the week: Walsh v. Walley, L. R. 9 Q. B. 367. An employer was authorized to keep back part of the servant's wages until the work was performed to his " entire satisfaction." The master wrongfully discharged him. Held, that no part of his wages could be withheld under the pretense that his work was not satisfactory: Sloan v. Hayden, 110 Mass. 141. § 263. Duty to Keep Master's Secrets. — When a party who has a secret in trade employs persons under a con- tract express or implied, or under a duty express or im- plied, those persons cannot gain the secret and then set it up against the employer.* The servant may be re- ' Harmon v. Salmon Falls Mfg. Co., 'Noon v. Salisbury JMills, 3 Allen, 35 Me. 447; 58 Am. Dec. 718; Hunt 340. V. Otis, 4 Met. 464; Pottsville Iron and * " A man does not quit the service Steel Co. V. Good, 116 Pa. St. 385; 2 of another when he merely takes a Am. St. Rep. 614. A master who noti- holiday without the other's consent; fies his servant that on the next day still less does he quit the service if he he shall cut down his wages, where- only breaks ofif work for a day because upon the servant leaves at once, can- he is sick Aman does not know not avail himself of a rule that ser- a fortnight beforehand when he is going vants leaving without giving two to want a day on account of sickness, weeks' notice forfeit their wages: or even for recreation, and therefore Schietenger v. Bridgeport Knife Co., it is not to be supposed that the par- 54 Conn. 64. The amount of forfeit- ties could have had any such transient ure must not be excessive: Richardson intermission of service in mind when V. Woehler, 26 Mich. 90. A clause in they stipulated for the fortnight's no- a contract that on the failure to give tice": Heber v. U. S. Flax Co., 13 two weeks' notice of intention to quit R. I. 303. he shall forfeit " whatever may be * Taylor v. Carr, 30 L. J. M. C. due at the time of leaving " is void for 201. nnreasonableness: Schimpf v. Tennes- ^ Cranworth, lord chancellor, in see Mfg. Co., 86 Tenn. 219. Morison v. Moat, 21 L. J., N. S., Ch. « Fuller V. Brown, 11 Met. 440; 248; Peabody v. Norfolk, 98 Mass. Hughes V. Wamautta Mills, 11 AUen, 457; 96 Am. Dec. 664. 201, §§ 264, 265 PRINCIPAL AND AGENT. 464 strained by injunction from making use of knowledge of his master's affairs acquired in his service, to engage in a business enterprise, during the continuance of the con- tract of service, which may antagonize the interests of the master.^ § 264. Master must Provide Work. — The master is bound to provide the servant with work during the term, and it is no answer to his claim for wages that he had no work for him to do.^ Illustrations. — The physician of the state penitentiary, which was leased to an individual, was appointed by the in- spectors, removable by them only, and his salary was to be paid by the lessee. The lessee refused to permit the physician to enter the penitentiary, and thereupon the latter brought an action against the former for his salary. Held, that he was entitled to recover, although he did not perform the duties: Jones V. Graham, 21 Ala. 654. The plaintiff agreed to spin at the defendant's factory, at a certain rate per yard, and for a certain time, upon the defendant's furnishing the materials. Held, that the defendant must furnish a reasonable supply of work, but that the plaintiff waived his right to terminate the contract if be remained such a length of time in the defend- ant's service as would lead a jury to infer a waiver, and then left it without stating that be left on account of the want of a supply of work: Thayer v. Wadsworth, 19 Pick. 349. § 265. Board of Servant. — Where by the contract the master is to board the servant, the master cannot charge him for board while he is idle by sickness or without his fault,' but he cannot charge the master with his bonrd if he boards elsewhere.'' In a Georgia case a master under- took to board a servant, and wrongfully dismissed him, and it appeared in a suit by the servant that he was boarded by his new employers. The court held that, as he was re-employed directly after his dismissal, he could 1 Gower v. Andrew, 14 Cent. L. J. 595; Whittle v. Frankland, 2 Best & 50; 59 Gal. 119; 43 Am. E,ep. 242. S. 49. 2 Bromley v. School District, 47 Vt. ' Nichols v. Coolahan, 10 Met. 430. 381; Cook v. Sherwood, 11 Week. Rep. * Griffin v. Tyson, 17 Vt. 35. 465 CONTRACTS BETWEEN MASTER AND SERVANT. § 266 not recover for board, there being no suggestion that the board furnished by his new employer was inferior to that furnished by defendant.' A railroad company is liable if it agrees to provide suitable lodging for a laborer, and sends him to a high mountain pass to sleep on frozen ground, with only damp spruce branches for a bed, whereby he becomes sick and paralyzed, and his health is shattered.^ Illustrations. — A and B entered into an agreement by which A was to labor for B, and be boarded by him in a par- ticular way, or at a certain place. Held, that A had no right to procure his board in a different way, or at a place not desig- nated between them, and charge B therefor, without showing some failure of performance on the part of B: Griffin v. Tyson, 17 Vt. 35. In an action for wages as hotel porter, plaintiff claimed that he was to have twenty-five dollars per month, and that the perquisites of the place were not considered in fixing that price, and that his wife and child were to room and board at the hotel for a sum per month equal to one third of twenty- five dollars. Defendant claimed that the perquisites were considered in fixing the price, and that plaintiff was to pay a reasonable price for the room and board of his wife and child. Held, that defendant might show what sums plaintiff received as porter from the guests of the house, as bearing upon the ques- tion of whether he was to pay such reasonable price: Bennett V. Stacy, 48 Vt. 163. § 266. Compensation of Servant — Measure of. — Where no agreement is made as to price, the servant is entitled to demand what his services are reasonably worth, judged by the price paid for similar services at the time and place.^ A tradesman removing from one place to another, and there doing work without any agreement about tlie price, can claim only at the rate of the latter, ai^d not of the former, place.^ Where a company contracts to pay an ' Ansley v. Jordan, 61 Ga. 482. 127. Where nothing is said of wages, ^ Clifford V. Denver etc. R. R. Co., 9 the master is held to contract for the Col. 333. current wages: Lawson v. Perry, » Jones V. School District, 8 Kan. Wright, 242. 362; Nauman v. Zoerhlant, 21 Wis. * Gracy v. Bailee, 16 Serg. & R. 466; Baum v. Winston, 3 Met. (Ky.) 126. VOL. L— 30 § 266 PRINCIPAL AND AGENT. 466 employee " the same wages as shall be paid to other men in the employ of the company filling similar positions," and the laborer sues for compensation, and there is no showing that the company had other employees in sim- ilar positions, he is entitled to prove what his services were worth.^ Where the parties agree as to the com- pensation, but not as to the term, the servant may re- cover for the time served at the agreed rate." Where one performs services to be paid for in a particular way, and they are not so paid for, he may recover their value in money .^ Even where the agreement is that the master is to pay what he thinks the services are worth, he is bound to pay what they are reasonably worth.* The plaintiff may show that the defendant expected to pay very liberally for his services.^ Where the contract is that the servant may charge whatever he sees fit, he may nevertheless not recover more than is reasonable." The measure of compensation for professional services ren- dered for an infant having property should ordinarily be determined by the same considerations which regulate similar services on behalf of an adult in like circum- stances.'' There is no rule of law that a person who per- forms a service with skill is entitled to less compensation than another of more learning and skill who could perform the same services no better.® One who has received the ' Kent Furniture Mfg. Co. v. Ean- instructed ' that the plaintiff was en- som, 46 Mich. 416. titled to recover for the service a snm " Griffin v. Domas, 22 111. App. 203. commensurate with the labor per- ' Shane v. Smith, 37 Kan. 55. formed, the skill exhibited, and the * Millar V. Cuddy, 43 Mich. 273; 38 responsibility incurred by him in the Am. Rep. 181; but see, contra, Butler matter.' These were proper subjects V. Winona Mill Co., 28 Minn. 205; 41 for consideration by the jury while Am. Rep. 277. they were determining what would be ' Chiles V. Craig, 4 Dana, 544. a reasonable compensation for the pro- ' Van Arman v. Bynington, 38 111. fessional services performed. The law 443. allows a reasonable compensation, and ' Bowling ?;. Scales, 1 Tenn. Ch. 618. permits the jury to take into consid- ^ In Stockbridge v. Crocker, 34 Me. eration all the facts. The same rule 349, 56 Am. Deo. 662, a surgeon sued of law decides the compensation to be for the value of his services in per- made for services, whether performed forming a surgical operation. On ap- by a day-laborer, or by a mechanic, or peal the court said: "The jury were by a surgeon. It does not enter into 467 CONTRACTS BETWEEN MASTER AND SERVANT. § 266 compensation prescribed for his services in a special con- tract can recover no more, although they were worth more/ A person who is employed to do work such as is done by an expert book-keeper may be entitled to an expert book-keeper's salary, though the word "expert" was not used in the contract of hire." Under a contract by which a salesman is to receive for his services a share of the " net profits " of the business, the interest on capi- tal invested by the principal in the business is not an expense to be deducted in ascertaining the net profits.^ A salesman who is to receive a commission on sales, with the privilege of drawing twenty-five dollars per week, to be deducted from his commissions, is entitled to the weekly payment, though he has not earned commissions to that amount.^ It does not preclude a larger recovery that the servant ofi"ered to work for others at a lower price ;^ or that he presented a bill for a less amount.® A present by the master to the servant is not to be deducted from his wages.'' Where the contract is to pay in a par- ticular manner, that mode must be pursued, and there is no implied contract to pay in a different manner.* distinctions so nice as to determine, as in such case to prove how much skill matte? of law, that a mechanic who had been exhibited, and how great re- performs his services faithfully and sponsibility had been incurred. It with competent skill is not entitled to would often be difficult it not impos- receive as much compensation therefor sible to receive such testimony in such eia another would be who had acquired a manner that a jury could safely act much greater skill and had performed upon it. The rule stated would tend like services no better. Or that a sur- to greatly impair uniformity of com- geon who had performed an operation pensation for professional and mechan- skillfuUy and faithfully would not be ical services of the same description, entitled to receive the same compensa- and to introduce a different rule of tion as one more learned and skillful compensation for like services when who could perform the same operation performed by different individuals. " no better. While the law does not ' Bradbury v. Helms, 92 111. 35. act upon such distinctions, it permits ' Von Kaas v. Hamilton, 63 Wis. jurors to take into consideration the 132. exhausting studies, the time con- ' Paine v. Howells, 90 N. Y. 660. sumed, and the expenses incurred, to * Weinberg v. Blum, 13 Daly, 399. acquire great professional knowledge ^ Roles v. Mintzer, 27 Minn. 31. and distinction, or great mechanical ° AUis v. Day, 14 Minn. 516; Com- er other skill. If the law made the missioners v. Brewer, 9 Kan. 308. compensation for services performed ' Neal v. Gilmore, 79 Pa. St. 421. commensurate with the skill exhibited ' Smith v. Bowler, 1 Disn. 520; and the responsibility incurred, it Stone v. Stone, 43 Vt. 130; Murray v. would be necessary to Eulmit testimony Baker, 6 Hun, 264. § 266 PRINCIPAL AND AGENT. 468 A servant entitled to be paid by the month may call for his wages at any time after one month, and his right to monthly payments is not waived by neglecting to demand them monthly.^ The wages of one employed by the day or month become due at the close of each day or month, there being no contrary understanding? If the employer has an established place where he pays his servants, the latter are bound to go there for their pay.' A railroad employee discharged from service is entitled to immediate payment of his wages, and may maintain an action for their recovery, the evidence failing to show a general cus- tom among railroads to defer payment, or notice to the plaintiff of a regulation or usage of his employer to do so.'' The master has no right to reduce the wages of a ser- vant during the term for which he has been hired, and the servant waives nothing by remaining in the service after he has been notified that he will not be paid more than a certain 'sum.^ But if the hiring has not been for a fixed term, or if the term has expired, then the servant by con- tinuing in the service after notice that he will be paid less is held to have assented to the change.® It is no de- fense to an action for day-wages that the work was un- skillfuUy done.' But where one undertakes to do a piece of work in a workmanlike manner, and " as well as any other mechanic could," and the work when completed will not answer the purpose for which it was designed, he can- not recover the price.* Usage may regulate an employee's wages." Thus the mode of paying the crews of vessels,'" the proper charges of a veterinary surgeon," and the right of a local agent employed to sell glass-ware in a certain territory to claim commissions both upon goods ordered 1 White V. Atkins, 8 Ciish. 367. ' Clark v. Fensky, 3 Kan. 389. 2 De Lappe v. Sullivan, 7 Col. 182. » Leflore v. Justice, 1 Smedes & M. 3 Dockham v. Smith, 113 Mass. 320; 381. 18 Am. Eep. 495. » Sewell v. Corp, 1 Car. & P. 392. * Thompson v. Minneapolis and St. i" Eldridge v. Smith, 13 Allen, 140. Louis R'y Co., 35 Minn. 428. But not if unreasonable: Metoalf v. s Hackman v. Flory, 16 Pa. St. 196. Weld, 15 Gray, 210. * Spier V. Earl, 41 Mich. 191. '' Sewell v. Corp, supra. 469 CONTRACTS BETWEEN MASTER AND SERVANT. § 266 directly through him and upon goods ordered by buyers living in the territory of the agent, directly from the manufacturer/ have been shown by evidence of custom. So if there be any general custom in a particular business under which payment becomes due weekly, monthly, or otherwise, the parties will be presumed to have contracted with reference thereto, and payment must be made in ac- cordance therewith;^ and so on the question of the proper charges of physicians, lawyers, and mechanics, evidence of usage is admissible.^ The proper criterion in the as- sessment of a quantum meruit is the usual and reasonable price which others have received for similar services.^ A custom of paying for a whole quarter even when the chil- dren are at school only a part of it is valid.^ A custom among printers of books that they are not entitled to any thing until the whole work is printed is admissible;* so is a custom that an advertisement given without instruc- tions is kept in a newspaper until ordered to be discon- tinued.'' Illustrations. — An employee of the fire department of the city of New York was appointed to a certain position, to which was attached a certain salary. Subsequently, by an order, he was directed to perform the duties of an inferior position for less pay. Held, that by obeying the order and performing the du- ties of the inferior place for two years, he estopped himself from claiming the pay attached to his original position: O'Brien v. New York, 28 Hun, 250; MIonroe v. New York, 28 Hun, 258. A general actuary of a bank agreed to serve for five years, for " such sums from the net profits of the institution as such pro- fits, after paying all incidental expenses, may warrant, not to exceed one thousand dollars per annum." Held, that if no • Lyon V. George, 44 Md. 205. " Pursell v. McQueen, 9 Ala. 380; 2 Thayer v. Wadsworth, 19 Pick. Hayeaw. Moynihan, 60111.409; Ewing 349; Dodge v. Favor, 15 Gray, 82. v. Beauchamp, 4 Bibb, 496; Johnson And see Hunt v. Otis Co., 4 Met. 464; v. De Peyster, 50 N. Y. 466. Nay lor v. Fall River Iron Works, 118 * Murray v. Ware, 1 Bibb, 325; 4 Mass. 317; Baxter v. Nurse, 6 Man. & Am. Deo. 637. But see Sennett v. G. 935; 1 Car. & K. 10; Fairman v. Pierce, 1 Mart., N. S., 192. Oakford, 5 Hurl. & N. 635; Cutter v. * Keckeley v. Cummins, Harp. 268. Powell, 2 Smith's Lead. Cas. 21; Gray « Gillett v. Mawman, 1 Taunt. 138. «/. Murray, 3 Johns. Ch. 167. • Thomas w. 0'Hara,l MaiCoust.303. § 267 PEINCIPAL AND AGENT. 470 profits were made in one year, defendant could not claim com- pensation for the services of that from the profits of a subsequent year: Jenyiery v. Olmstead, 90 N. Y. 363. § 267. Master may Recoup Damages. — In an action for wages, the master may recoup damages which he has suffered through the servant's neglect or failure to work as agreed.^ Thus where the plaintiff sues for labor on a building contract, the defendant may recoup damages for the work not being according to contract,^ or not done within the time specified in the contract.' In an action for wages for service in a family, the employer may recoup damages for the seduction of his daughter by the servant.* If the servant spoil material used by him, he is not liable for its first value, but only its depreciated value.^ One who employs an unskillful artisan or tyro, knowing his deficiencies, is liable to him for his usual prices, however inferior the performance may be, especially when the work has been received.* And it is no defense to an action for wages that the employee had, by negligently injuring a third person, exposed the employer to liability for damages, unless the employer has actually paid, or has been adjudged liable to pay, damages.^ A contract allowing stipulated damages for the breach of a me- chanic's contract of service, to be valid, must provide for some fixed and reasonable sum of forfeiture, which is not 1 Stoddard t). Treadwell, 26 Cal. 294; 270; Elliot v. Heath, 14 N. H. Pixler V. Nichols, 8 Iowa, 106; Still v. 131. Hall, 20 Wend. 51; Blodgett v. Ber- = Cooke v. Preble, 80 111. 381; Ab- lin Mills Co., 52 N. H. 215; Field v. bott v. Catch, 13 Md. 314; 71 Am. Ringo, 7 Ark. 435; Brunson v. Mar- Dec. 635; Wagner i). Corkhill, 40 Barb. tin, 17 Ark. 270; Lee v. Clements, 48 175; Duckworth v. Allison, 1 Mees. & Ga. 128; Phelps v. Paris, 39 Vt. 511; W. 412; Barber v. Rose, 5 Hill, 76; De Witt V. CuUings, 32 Wis. 298; Front etc. R. R. Co. v. Butler, 50 Cal. Campbell v. Somerville, 114 Mass. 574. 334; Allaire Works v. Guion, 10 * Bixby v. Parsons, 49 Conn. 483; 44 Barb. 55; Newman v. Reagan, 63 Ga. Am. Rep. 246. 755. * Hillyardi). Crabtree, 11 Tex. 264; 2 Adlard v. Muldoon, 45 111. 193; 62 Am. Dec. 475. Queen v. Doolan, 55 111. 526; Estep v. " Peters v. Craig, 6 Dana, 307. Fenton, 66 lU. 467; Cooke v. Preble, ' Merlette v. North and East River 80 111. 381; Haysler v. Owen, 61 Mo. Steamboat Co., 13 Daly, 114. 471 CONTRACTS BETWEEN MASTER AND SERVANT. § 268 oppressive or unequal in its effect on the parties. One simply forfeiting all wages due at the time of leaving will not be enforced. A forfeiture of thirty days' wages by the employer, for his default, is too vague and indeter- minate as a consideration to sustain a forfeiture of wages against a workman engaged in piece-work, and is void for want of mutuality.'' Illustrations. — Goods intrusted to a common carrier were injured by the negligence of the carrier's servant. The carrier paid the damages to the owner. Held, that he could recover the amount from his servant: Smith v. Foran, 43 Conn. 244; 21 Am. Rep. 647. A railroad conductor sues the company for wages. The latter may set o£F and recover damages which it has sustained by the conductor's negligence in performing his duties: Mobile R. R. Co. v. Clanton, 59 Ala. 392; 31 Am. Rep. 15. An employee might have finished work for his employer at a certain time, but failing to do so, it was yet accepted by the employer when afterward finished. Held, that the employer could not afterward avoid liability on the ground of its not being finished in time, but that he had a counterclaim or recoupment to the extent of his loss by such delay: Rogers v. Beard, 36 Barb. 31. § 268. Right of Master to Servant's Earnings. — If a servant, other than an apprentice, engages in other em- ployment which does not infringe on the time to which the master is entitled, the latter has no claim to his earn- ings; but if he takes other employment during the time that the master is entitled to his services, the master is entitled to his earnings as against the servant, but not against the person employing him, unless the latter knew when he so employed him that the master was entitled to his time, and was paying him therefor.^ On a con- tract for services for a fixed compensation as agent in settling claims, the master is prima facie entitled to no- tary's fees earned by the servant in the employment.* 1 Eichardsonti.Woehler, 26 Mich. 90. traoted in his service: Wennall v. Ad- * Wood on Master and Servant, sec. ney, 3 Bos. & P. 247. 101. The master is not liable for the " Leach v. R. R. Co., 86 Mo. 27: 56 expenses of the servant's siokuess con- Am. Rep. 408. § 269 PEINCIPAL AND AGENT. 472 That an employee, after his discharge, has engaged in business for himself in competition with, his late employer, is no defense to the former's action for a breach \of hir- ing.' A mechanic hired for the purpose of perfecting cer- tain machinery, and bound to devote his sk'Yl and labor to the interest of those for whom the machinery is being worked, is not, by that fact, under any obligation to ab- stain from applying for a patent in his own name for such machinery, if otherwise entitled thereto.'^ Illustrations. — The defendant was in the employ of the plaintiff under a written agreement to work for the interest of plaintiff in the manufacture of shellers and powers, and to give the latter any improvements he might make. Held, that he was not bound to assign to plaintiff his interest in an in- vention in check-rowers, although the plaintiff had added the manufacture of check-rowers to its other business, and defend- ant employed his time in perfecting his invention by the con- sent of the plaintiff, and with the assistance of its agents and employees: Joliet Mfg. Co. v. Dice, 105 111. 649; Dice v. Joliet Mfg. Co., 11 111. App. 109. § 269. Eight to Discharge Servant — By Contract.— The contract may give the master a right to discharge the servant without his assigning any reason, or it may give him a right to do so for certain specified reasons, in which case, to justify a discharge, those reasons must be shown to exist. Where the contract under which a ball-player is employed provides that the club is to be the sole judge of the sufficiency of the reasons for discharging him, he may not be discharged without a reason or the allegation of a reason.^ A corporation cannot discharge a servant at any time without sufficient cause, by virtue of a gen- eral power of removal of employees, contained in its charter, if it makes a specific contract with him for a fixed time.* Under an agreement for the employment of • Stone V. Vimont, 7 Mo. App. ' Winship v. Portland League Base 277. Ball etc. Assoc, 78 Me. 571. " Green t;. Willard Barrel Co., 1 Mo. * Soldiers' Orphans' Home v. Shaffer, App. 202. 63 HI. 243. 473 CONTRACTS BETWEEN MASTER AND SERVANT. § 269 a clerk at a commission on all business done by him, a monthly allowance to be paid to him on account of it, and the balance not to be paid until the end of the year, he agreeing to forfeit such balance if he should not re- main till then, the employer has a right to discontinue his services during the year, and thus prevent him from being entitled to the balance of commissions, provided a sufficient cause therefor arises, such as his intoxication, unfitting him for his duties.^ Where a person who con- tracts to render certain personal services in consideration of a share in the profits of the business in which he is to engage, and who agrees to abstain from the use of intox- icating drinks while engaged in the business of his employment, subsequently unfits himself for the proper transaction of such business by habits of intemperance, he cannot in equity recover the specified share of the profits for the time he kept his contract, but will be al- lowed a reasonable compensation for his services during that period.^ Where there is a provision in a contract for personal services that the employee may leave in case of a disagreement, the fact of a bona fide disagreement is all that is necessary to entitle either party to put an end to the contract.* Illustrations. — A was to labor for B for a specified time, and at stipulated wages, "if they could agree." Held, that either party might terminate the contract at pleasure, and without showing any reasonable cause of disagreement: Durgin v. Raker, 32 Me. 273. D. was employed by S. for a week, and if she suited to continue during the summer months. Before the end of the week, S. declared that D. suited, and D. said: "Then as long as I suit you, there is no fear for the summer months"; to which S. replied affirmatively. Held, that the emploi'^ment remained conditional on D.'s continuing to suit S.: Daveny v. Shaitucl, 9 Daly, 66. One agrees to work for a year for a stipulated sum, payable weekly, provided his services are satisfactory to his employers, in case of disagreement, installments to be paid to the time of disagreement, unless an amicable settlement can ' Huntington v. Claflin, 10 Bosw. ^ poater v. Watson, 16 B. Men. 377. 262. ' Gates v. Davenport, 29 Barb. IGO. § 270 PRINCIPAL AND AGENT. 474 be arranged. Held, that the employer may discharge at any time without assigning a reason: Spring v. Ansonia Clock Co., 24 Hun, 175. § 270. Right to Discharge Servant — By Law in Ab- sence of Special Contract. — But in the absence of a contract, there are many things which may furnish the master with a legal right to discharge the servant, — the doing or leaving undone certain things being considered by the law as breaches of the implied contract of the ser- vant to serve the master faithfully. If a good ground exists at the time of the discharge, it is not necessary that the master should have known it at that time,* or that at the time he gave another and different reason.^ The mis- conduct, to justify a discharge, must be misconduct while in the service, unless it is of such a character, that its exist- ence does an actual injury to the master's business, or is in the nature of a continuing misconduct.* An employer is the sole judge of the competency of those whom he chooses to employ; and so long as the employee is on trial, the employer has the right to determine for himself whether he possesses the proper Qualifications and habits for his business.* Illdstbations. — The master discovers that the servant, pre- vious to his hiring him, has been convicted of a crime. Held, not per se a good ground for discharge: Wood on Master and Servant, sec. 110. A master discharged a governess on discov- ering that she had previously been delivered of a bastard child. Held, not a good ground: Degroesberg's Case, cited in Wood on Master and Servant, sec. 110. A master discharged a gov- erness on learning that she had concealed the fact that she had been divorced. Held, not a good ground: Fletcher v. Knell, 42 L. J. Q. B. 58. A employed B for one year as overseer at a fixed salary. B went to A drunk, and A refused to receive him. Held, that A was justified, although B was not in the habit of getting drunk: Johnson v. Gorman, 30 Ga. 612. 1 Harrington v. Bank, 1 Thomp. & = Strauss v. Meertief, 64 Ala. 299; 38 C. 361; Eidgway v. Market Co., 3 Am. Rep. 8. Ad. & E. 171; Mercer v. Whall, 5 Q. ^ Illustrations post. B. 447. * Quirk v. Haskins, 15 La. Ann. 65b. 475 CONTRACTS BETWEEN MASTER AND SERVANT. § 271 § 271. Valid Grounds for Dismissal. — The following have been held good causes, viz.: Absenting himself with- out leave;' conduct prejudicial to the master's interests generally;^ creating dissatisfaction among his fellow-ser- vants;^ defrauding or attempting to defraud the master;* engaging in business for himself or another;^ false repre- sentations as to his capacity;^ immoral conduct;^ inso- lence to the master,' for there is an obligation implied on the part of the servant to treat him respectfully;" intoxi- cation, where it is habitual and it interferes with the dis- charge of the servant's duties,'" but not an occasional over-indulgence in liquor;" unfitness to perform his duty by reason of the use of opiates, and by reason of unsound mental condition;'^ making false representations to his 1 Ford V. Danks, 16 La. Ann. 119. But a short absence which does not injuriously affect the interests of the master has been held not sufiicient to justify a discharge: Fillieul v. Arm- strong, 7 Ad. & E. 557. An employer may not discharge an employee from his factory for a single act of disobe- dience, in absenting himself for a day, not involving any serious conse- quences, and not unreasonable in it- self: Shaver v. Ingham, 68 Mich. 649; S5 Am. Rep. 712. ^ Singer v. McCormick, 4 Watts & S. 266; Newman v. Reagan, 65 Ga. 512; Brink v. Fay, 7 Daly, 562; Jones V. Trinity Parish Vestry, 19 Fed. Rep. 59; Read v. Dunsmore, 9 Car. & P. 588; Dieringer v. Meyer, 42 Wis. 311; 24 Am. Rep. 415. ' Lacy V. Osbaldiston, 8 Car. & P. 80; Weaver v. Halsey, 1 111. App. 558. * Wood on Master and Servant, see. 115. * Stoney v. Trans. Co., 17 Hun, 679; Adams Exp. Co. v. Trego, 35 Md. 47; Dieringer v. Meyer, 5 Cent. L. J. 291; 42 Wis. 311; 24 Am. Rep. 415. It is no defense to a suit for wages that the services were rendered while the plain- tiff was an employee of a third person in another line of business, and both during and outside the business hours of such third person: Wallace v. De Young, 98 111. 638; 38 Am. Rep. 108. A traveling commercial agent commits no violation of duty by taking, gratui- tously, orders for goods upon a house in whose service he has formerly been employed, if without prejudice to the interests of his employers; Geiger v. Harris, 19 Mich. 209. « Anstee v. Ober, 26 Mo. App. 665. ' Atkin V. Acton, 4 Car. & P. 208; Weaver v. Halsey, 1 111. App. 558. 6 Beach v. MuUin, 34 N. J. L. 243. » Baillie v. Kell, 4 Bing. N. C. 638. '^0 Huntington v. Claflin, 10 Bosw. 262; McCormick v. Demary, 10 Neb. 515; Gonsolis v. Gearheart, 31 Mo. 585. A foreman of a tailor's siiop who goes on a spree has no cause of action for future wages if he is discharged or reprimanded so that he leaves: Physioo V. Shea, 75 Ga. 466. If one who has hired a servant ascertains that he is a drunkard before the term of service begins, the contract may be repudi- ated: Nolan V. Thompson, 11 Daly, 314. " Id. ; Wood on Master and Servant, sec. 113. A master may discharge his servant for public drunkenness and disorderly conduct, although it was only on one occasion, and did not in- capacitate the servant, or cause him to fail in the performance of his work: Bass Furnace Co. o. Glasscock, 82 Ala. 452; 60 Am. Rep. 748. " Lyon V. Pollard, 20 Wall. 403. §271 PEINCIPAL AND AGENT. 476 employer;' negligence or unskillfulness in the discharge of his duties,^ whether arising from lack of skill, without his fault, or willful carelessness or neglect,* for there is an implied obligation on the part of the servant to serve the master diligently and faithfully,* and that he is possessed of the requisite skill in the business in which he is en- gaged to do so,^ but the master will be estopped where he knew the qualifications and habits of the servant when 1 Horton V. McMurtry, 5 Hurl. & N. 674; Jones v. Trinity Parisli Vestry, 19 Fed. Rep. 59. In an action to re- cover damages for a wrongful dis- charge from service, under a contract providing for a certain salary in con- sideration of plaintiflf 's exclusive time and services, the defendant may show, on cross-examination of plaintiff, that when plaintiff was employed he made false representations to defendant; that he afterwards refused to obey instruc- tions; that he did not do work enough to earn his salary; that he received pay from other parties during the term of the contract; and also by direct evi- dence the amount of goods sold by plaintiff, and that they were sold contrary to instructions; that he sold scarcely any goods, when he might have sold large quantities; and that his work was not done according to contract, and on that account was worthless: Child v. Detroit Mfg. Co., Mich., 1888. ^ Wood on Master and Servant, see. 120; Stanton u. Bell, 2 Hawks, 145; 11 Am. Dec. 744; Eaton v. Woolly, 28 Wis. 628; Morris v. Redfield, 23 Vt. 295. Inaccuracies and discrepancies in the books of a merchant are suffi- cient cause for the . discharge of a book-keeper by his employer: Griffin 11. Haynes, 24 La. Ann. 480. 3 Griffin V. Haynes, 24 La. Ann. 480. In Lyon v. Pollard, 20 Wall. 403, Mr. Justice Miller said: "We do not agree with counsel that for the insanity of plaintiff, or her mental incapacity to perform her part of the contract, whether from natural infirmities or from the use of opium, the only remedy of the defendant is an action against her on the contract. The plaintiff was employed to perform important and specific duties. Her compensation for this was to be one fifth of the net pro- ceeds of the business which she had agreed to superintend. If she ren- dered herself, or otherwise became, incapable of performing these duties, that of itself authorized defendant to rescind or terminate the contract. He was not bound to continue as the super- intendent of a large hotel a person who was a lunatic, or who was so stupid under the influence of narcotics that her presence was a danger and an in- jury, and who could render no reason- able service. The contract on her part required some capability of performing the duties she had assumed, of render- ing some service. If she could render none, defendant was not bound to con- tinue it even for the thirty days which the termination of it by notice required." * McCracken v. Hair, 2 Spear, 256; Mercer v. Whall, 5 Q. B. 447; Waugh V. Shuuk, 20 Pa. St. 130. That the fact that his efforts to make sales did not prove more successful, and that an- pther person who was afterwards em- ployed in the same capacity had suc- ceeded in making larger sales, was no evidence that he did not serve the firm faithfully and to the best of his ability: Hamill v. Foute, 51 Md. 419. * Harmer v. Cornelius, 5 Com. B., N. S., 236; Goslin v. Hodson, 24 Vt. 140; McDonald v. Simpson, 4 Ark. 523; 38 Am. Dec. 45. Where a sales- man sues to recover a salary dependent on the amount of his sales, his lack of diligence may be shown by his em- ployer; and the employers expres- sions of confidence, based upon the saleman's reports, while admissible in evidence, do not preclude the em- ployer from showing a lack of dili- gence: Alberts v. Stearns, 50 Mich. 349. 477 CONTEACTS BETWEEN MASTER AND SERVANT. § 271 he hired him;* not accounting for goods received or money collected;^ obscene language used by the ser- vant;' refusing to obey the master's orders, provided they are reasonable/ for the servant is not bound to obey an unlawful command, as to do a fraudulent, immoral, or criminal act,® but there is an implied obligation on the part of the servant to obey his reasonable orders and commands;^ slandering his employer;'' stealing from the master or embezzling his money;' substituting another in his place or stead;' suing the master repeatedly for wages not due;" taking bribes from workmen to favor them." Illustrations. — A servant aided a fellow-servant in leaving, and told him to take his wages from the till. Held, a good ground: Turner v. Robinson, 6 Car. & P. 16. A clerk of a railroad company was discharged for disclosing to a person connected with another company the accounts of the company. Held, proper: Railroad Co. v. Lythgoe, 2 Lowd. M. & P. 221. A clerk quarreled with another clerk in the store, and drew a revolver in the presence of customers. Held, to justify his dis- charge: Kearney v. Holmes, 6 La. Ann. 373. The plaintiff was ' Felt V. School District, 24 Vt. 297; and obscenity of langnage and con- Peters V. Craig, 6 Dana, 307. duct. If wanting in any of these re- ^ Blenkam v. Hodge, 16 L. T., N, S., quirements, it would be grounds for 608. discharging a salesman in a store from ' Wood on Master and Servant, sec. his employment. " 112. In Hamblin v. Race, 78 111. 422, * Wood on Master and Servant, sec. the court said: "It was contended 119; Jacquot u. Bourra, 7 Dowl. Pr. that the appellee was insolent to his 348; Spain v. Arnott, 2 Stark. 256; employers, and coarse and vulgar in Turner v. Mason, 14 Mees. & W. 112; his conduct, to such an extent as fully Callo v. Brouncker, 4 Car. & P. 518; justified appellants in discharging Still v. Hall, 20 Wend. 51; Mitchell v. him. This was a question of fact for Toale, 25 S. C. 238; 60 Am. Eep. the determination of the jury. All 502. will at once concede that an employee * CuUen v. Thomson, 4 Macq. 424; must be respectful and obedient to all R. v. Mutters, 34 L. J. 54. reasonable commands of his employers ^ Harrington v. Bank, 1 Thomp. & and those having control of the busi- 0. 361; Lawrence v. G-ullifer, 38 Me. ness in which he is employed, and no 532. one wiU dispute that a person so em- ' Brink v. Pay, 7 Daly, 562. ployed, when engaged in the discharge ^ Trotman v. Dunn, 4 Camp. 211; of his business, and in his intercourse Libhart v. Wood, 1 Watts So S. 265; with customers and person.^ transact- 37 Am. Dec. 461. ing business with the house and with • Stanton v. Bell, 2 Hawks, 145; H his employers and those having charge Am. Dec. 744. of the business, must be respectful, '" Brink v. Fay, 7 Daly, 562. and must abstain from all vulgarity " Engel v. Schoolherr, 12 Daly, 417t § 271 PEINCIPAL AND AGENT. 478 a salesman in defendant's store. Without the latter's knowl- edge he sold goods to a firm in which he was a partner. Held, a good cause for his discharge: McDonald v. Lord, 26 How. Pr. 404. A female servant during her term of service becomes enceinte. Held, a good ground for discharge: Rex v. Brampton, Cald. 11. A servant attempted to ravish a female fellow-servant. Held, a good ground for discharge: Atlcin v. Acton, 4 Car. & P. 208. Bladders were bought from one person, and the servant represented to the master that another person was the seller. Held, a good ground for discharge: Horton v. McMurty, 5 Hurl. & N. 667. A servant appropriated in pay- ment of his salary $150 sent to him by his master for business purposes. Held, a valid ground for discharge: Smith v. Thomp- eon, 8 Com. E. 44. A book-keeper made errors in his master's books. flVW, a valid ground for his discharge: Griffin y. Haynes, 24 La. Ann. 480. A traveling salesman was instructed by his employers to remit at once. He sold wine to a brothel-keeper, and did not remit. Held, a good ground: Blenlcem v. Hodge, 16 L. T., N. S., 608. A bank teller who often remained at work after hours left the iron shutters of the windows open, and was remonstrated with by the cashier, but replied that he would do as he pleased. On another occasion this was repeated. Held, to justify his discharge: Harrington v. Bank, 1 Thomp. & C. 361. A domestic servant being ill, her master gave her some medi- cine, and directed her not to go to church. She disobeyed and went to church. Held, a good ground for discharge: Hamilton V. McLean, 3 Shaw & D. 379. A servant refused to go to bed when so commanded by the master. Held, a good ground for discharge: Wheatly v. White, 12 Sol. Jour. 812. A nurse-girl who had been ordered not to take the master's child into the house of a stranger did so. Held, a good ground: Gibson v. Pentland, cited in Wood on Master and Servant, sec. 119. An express company employed as messenger a conductor on a rail- road. Held, that they must have contracted with him with ref- erence to his prior obligations to the railroad company, and that he was not liable to them for a neglect caused by his attend- ing to his duties as conductor: Southern Express Co. v. Frinh, 67 Ga. 201. In an action upon a contract to employ the plain- tiff as overseer of a plantation at a certain salary, it appeared ' that the defendant had refused to receive the plaintiff into his service because he came to him drunk. Held, that the refusal was justifiable, although it was proved that the overseer was not a common drunkard: Johnson v. Gorman, 30 Ga. 612. A clerk of a partnership, under a contract for a fixed salary the first year, and an increase of salary afterwards, secretly over- drew, on the faith of such increase, but on being applied to by 479 CONTRACTS BETWEEN MASTER AND SERVANT. § 272 one of the partners, disclosed the facts. Held, that he had not thereby forfeited his right to an increase of salary, a majority of the partners having continued him in the service of the firm, under the conviction that no fraud was intended: Kirh v. Hodgson, 3 Johns. Ch. 400. § 272. Involuntary Breaches by Servant. — Where the breach of the contract or regulations of the master is in- voluntary on the part of the servant, he will not suffer;* as, where the cause is the act of God,^ or of the law,^ or something beyond his control.* ' He may recover his wages for the time he has served: Vide cases in next note. M. was employed to serve T. as a clerk in his store for the term of one year, at forty dollars per month. During the term, M. was discharged for embezzlement, indicted for the crime, and acquitted. It was held that M. might maintain an action against T. to recover what his services were reasonably worth during the tinie of his employment, not exceed- ing the rate of compensation stipulated: Massey v. Taylor, 5 Cold. 447; 98 Am. Dec. 429. But he cannot recover damages for the refusal of the master to take him back. Thus in Leopold V. Salkey, 89 111. 412, 31 Am. Rep. 93, A, a salesman, contracted with B, a clothing manufacturer, to work for him for a term of three years, at a stated salary. Shortly afrer A en- tered upon his work, he was arrested and put in jail for two weeks during the busiest season of B. It was held that the arrest of A, though without his fault, and his failure to work, ne- cessitating the employment of another in his place, was an abandonment of the contract, and precluded him from recovering damages for B's refusal to take him back. And if his sickness put the master to greater expense than what is due him, in obtaining another to take his place, he can recover noth- ing: Patrick v. Putnam, 27 Vt. 759; and see Clark v. Gilbert, 26 N. Y. 279; 84 Am. Dec. 189. 2 Clark V. Gilbert, 26 N. Y. 279; 84 Am. Dec. 189; Fuller v. Brown, 11 Met. 440; K.. v. Raschen, 38 L. T., N. S., 38. Although a sickness in- capacitating an overseer from work for half a mouth is not alone sufficient cause for discharging him, this, com- bined with such repeated failures correctly to keep the time of the plantation hands as causes discontent endangering their continuance at work, may constitute such cause: Miller v. Gidiere, 36 La. Ann. 201. ' In Hughes v. Wamsutta Mills, 11 Allen, 201, the master in an action for wages set up that by a regulation known to the servant, two weeks' no- tice of leaving the service was required, which the plaintiff before leaving had not given. It appeared that the ser- vant had been arrested on a charge of adultery, and was in jail. The plain- tiff had judgment, Bigelow, C. J., saying: "The stipulation clearly had reference only to a voluntary aban- donment of the defendant's employ- ment, and not one caused vi majore, whether by the visitation of God or other controlling circumstances. Clearly the abandonment must have been such that the plaintiff could have foreseen it; he could give notice only of such departure as he could antici- pate, and the stipulation that he was to have the privilege of leaving, after giving two weeks' notice, without for- feiting his wages, implied that the forfeiture was to take place only when it would be within his power to give the requisite notice. It certainly can- ♦ As in Millot v. Lovett, 2 Dane signed, was captured by the enemy, Abr. 461, where a seaman, before com- it was held that he'could recover bis pleting a voyage for which he was wages. §§ 273, 274 PRINCIPAL AND AGENT. 480 § 273. Discharged Servant must Leavo Peaceably — Ejection. — When a servant is discharged he must leave peaceably. The master may order him out of the house and from the premises, and if he refuses to go, may use force.' § 274. Servant may Recover Wages to Time of Dis- missal. — Where a servant is dismissed for a legal cause, he may nevertheless recover the agreed wages up to the time of the dismissal, subject to any legal set-off by the master.^ But it has been held that where there is an en- not be contended that the stipulation was absolute; that he was to receive no wages in case of leaving without notice, whatever may have been the cause of his abandonment of the ser- vice. It is settled that absence from sickness, or other visitation of God, would not work a forfeiture of wages under such a contract: Fuller v. Brown, 11 Met. 440. Pari ratione, any aban- donment caused by unforeseen circum- stances or events, and which at the time of their occurrence the person employed could not control or prevent from operating to terminate his em- ployment, ought not to cause a forfeit- ure of wages. It may be said that in the case at bar the omission of the offense for which the plaintiff was arrested was his voluntary act, and that the consequences which followed after it, and led to his compulsory de- parture from the defendant's service, are therefore to be regarded as bring- ing the case within the category of a voluntary abandonment of his employ- ment. But the difficulty with this argument is, that it confounds remote with proximate causes. The same argument might be used in case of in- ability to continue in service, occa- sioned by sickness or severe bodily injury. It might be shown in such a case that some voluntary act of im- prudence or carelessness led directly to the physical consequences which disabled a party from continuing his service under a contract. The true and reasonable rule of interpretation to be applied to such contracts is this: To work a forfeiture of wages, the abandonment of the employer's ser- vice must be the direct, voluntary act, or the natural and necessary conse- quence of some voluntary act, of the person employed, or the result of some act committed by him with a design to terminate the contract or employment, or render its further prosecution impossible. But a forfeit- ure of wages is not incurred where the abandonment is immediately caused by acts of occurrences not fore- seen or anticipated, over which the person employed had no control; and the natural and necessary consequence of which was not to cause the termi- nation of the employment of -i party under a contract for services or labor. ' - De Briar v. Minturn, 1 Oal. 450; Haywood v. Miller, 3 Hill, 00. ^ Murdock v. Phillips Academy, 12 Pick. 244; Du Quoin Co. v. Thorwell, 3 111. App. 204; Jenkins v. Long, 8 Md. 132; Byrd v. Boyd, 4 McCord, 246; 17 Am. Dec. 740; Newman o. Reagan, 63 Ga. 755; Foster v. Watson, 16 B. Mon. 377; Lawrence v. GuUifer, 38 Me. 532; Sugg v. Blow, 17 Mo. 359; Jones V. Jones, 2 Swan, 605; Massey V. Taylor, 5 Cold. 447; 98 Am. Dec, 429. " In Taylor v. Paterson, 9 La. Ann. 251, it was held that a servant rightfully discharged before the end of the term may recover the wages ac- tually earned, subject to deductions for his torts, and for the inconvenience the master is put to through being compelled to hire another in his place. Contra, and that the servant cannot recover his wages: Libhart v. Wood, 1 Watts & S. 235; 37 Am. Dec. 463; 481 CONTRACTS BETWEEN MASTER AND SERVANT. § 275 tire contract to serve for a certain time, and during the term the servant commit a criminal offense, although not injurious either to the person or property of the master, the servant cannot recover any part of his wages/ Illustrations. — A sued B to recover money due under a contract of service as a farm laborer, the contract also impopiug upon A the duty of selling the farm produce for B. Acts of dishonesty and peculation on A's part were proved, and B therefore claimed that A was entitled to nothing. Held, that B's position was untenable, but that B might set off against A's claim all amounts that he could show that A had improperly retained: Turner v. Kouwenhoven, 29 Hun, 232. § 275. Servant Occupying Master's House — When and when not Tenant. — A servant occupying a dwelling-house or premises belonging to the master, and as accessory to his employment, does not become a tenant of tlie master.^ Therefore the master is not a trespasser if he ejects the tenant after dismissing him, even if he has been dis- missed illegally and without cause.' After the service is at an end, however, the master must resume control of Singer v. MoCormiok, 4 Watts & S. while the employer is bound by hia 267; Beach v. Mullin, 34 N. J. L. 343. contract to retain the servant, al- In Posey v. Garth, 7 Mo. 94, 37 Am. though it may bo against his inclina- Dec. 183, it is said: " If a person retain tion, for the whole period of his service, a servant for a year at wages, the per- or pay lum the whole wages, the ser- fbrmance of the service is a condition vant, by his misconduct, may compel precedent to the payment of wages, his employer, for his own security, and the servant cannot recover them to discharge him, and then recover before he has performed the year's wages for the term ho has served. So service. If he is prevented by his while the contract is binding on the employer from fulfilling his contract, employer, the servant is bound or not, and is wantonly and without sufficient at his option. Such a construction of cause discharged before the expiration the contract would encourage fraud of the period for which he was hired, and wickedness in servants, and in- he in entitled to the wages for the duce them, whenever their inclination whole period he was to serve; but if prompts, to be guilty of such cnormi- there is any fault or misconduct in ties as will compel their discharge." him towards his employer sufficient to ' Libhart v. Wood, 1 Watts & S. warrant his discharge, and in conse- 265; 37 Am. Dec. 463. quence thereof he is driven from the '' Haywood v. Mdler, 3 Hill, 90; service of the person by whom he is Hughes v. Chatham, 5 Man. & G. 54; hired, he is not entitled to any wages. People v. Annis, 45 Barb. 304. Reciprocal justice requires that such ' Haywood v. Miller, 3 Hill, 90^ should be the law of contracts of this Kerrains v. People, 60 N. Y. 221; 19' character; if it were otherwise, then Am. Bep. 158. Vol. L — 31 § 276 PRINCIPAL AND AGENT. 482 the premises within a reasonable time; otherwise the ser- vant will become a tenant at will.* § 276. Wrongful Discharge of Servant — Remedies. — A servant wrongfully discharged has two remedies, either of which he may pursue at his election, viz.: 1. He may treat the contract as rescinded, and sue the master on a quantum meruit for the services rendered; 2. He may treat the contract as continuing, and sue the master for damages for the breach.^ The remedies are the same where the master has contracted to employ the servant for a term, but refuses to receive or employ him.' For- merly it was held that the servant could recover the entire wages for the whole term on simply showing that he was ready at all times to perform his contract, a doctrine of " constructive service " being invoked in the servant's behalf.^ But in later times this doctrine is criticised as unwise and unfair, and as encouraging idleness by per- mitting the servant to sit down with his arms folded and receive the wages of a worker;^ and it is now universally 1 Kerrains v. People, CO N. Y. 225; 638; Jones v. Jones, 2 Swan, 605; Col- 19 Am. Rep. 158; Doyle v. Gibbs, 6 burn v. Woodworth, 31 Barb. 381; Laus. 180. Heim v. Wolf, 1 E. D. Smith, 70; ^ "These remedies are independent Webster v. Wade, 19 Cal. 291; 79 Am. of and additional to his right to sue for Deo. 218. ■wages for sums actually earned and ^ Davis v. Ayres, 9 Ala. 292; Hoch- due by the terms of the contract, 'ster v. De la Tour, 2 El. & B. 678; This last amount he recovers because Crist v. Armour, 34 Barb. 378; Utter he has completed either in full or in a v. Chapman, 38 Cal. 659; Howard v. specified part the stipulations between Daly, 61 N. Y. 362; 19 Am. Rep. 285; the parties. The first two remedies Petitt v. Turner, 2 Thomp. & 0. 608. pointed out are appropriate to a * Gandell v. Pontiguy, 4 Camp. 375; wrongful discharge": Howard «. Daly, Aspdin u. Austin, 5 Q. B. 671;Decamp 61 N. Y. 370; 19 Am. Rep. 285; Smith v. Hewitt, 11 Rob. (La.) 290; 43 Am. on Master and Servant, p. 96; Rich- Dec. 204. ardson v. Eagle Machine Works, 78 '• Thus in Howard v. Daly, 61 N. Y. Ind. 422; 41 Am. Rep. 584; Powers 363, 19 Am. Rep. 285, the court say: ■V. Wilson, 47 Iowa, 666; Bradshaw " This doctrine is, however, so opposed V. Branan, 5 Rich. 465; McDaniel v. to principle, so clearly hostile to the Parks, 19 Ark. 671; Gardeuhire v. great mass of the authorities, and eo Smith, 39 Ark. 280; Cox v. Adams, wholly irreconcilable to that great and 1 Nott & McC. 284; Walworth v. beneficent rule of law that a person Pool, 9 Ark. 394; Rogers v. Parham, discharged from service must not re- 8 Ga. 190; Britt v. Hays, 21 Ga. 157; main idle, but must accept employ- Fowler V. Armour, 24 Ala. 194; Miller ment elsewhere if ofifered, that we V. Goddard, 34 Me. 102; 56 Am. Dec. cannot accept it. If a person dis- 483 CONTRACTS BETWEEN MASTER AND SERVANT. § 276 held that the measure of the servant's recovery is the sum he was to receive during the term, less such sums as he may have earned or could have earned by reasonable diligence in obtaining other employment.' Where the charged from service may recover wages or treat the contract as still subsisting, then he must remain idle in order to be always ready to perform the service. How absurd it would be that one rule of law should call upon him to accept other employment, while another rule required him to remain idle in order that he may recover full wages ! The doctrine of ' constructive service ' is not only at war with prin- ciple, but with the rules of political economy, as it encourages idleness, and gives compensation to men who fold their arms and decline service equal to those who perform with willing hands their stipulated amount of labor. Though the master has com- mitted a wrong, the servant is not for one moment released from the rule that he should labor, and no rule can be sound which gives him full wages while living in voluntary idleness." 1 Wolf V. Studobaker, 65 Pa. St. 459; Spencer v. Halstead, 1 Denio, 606; Heckscher v. McCrea, 24 Wend. 309; Wilson V. Martin, 1 Denio, 602; Hood V. Raines, 19 Tex. 400; Lindley c. Dempsey, 45 Ind. 246; Miller v. Mar- iners Church, 7 Me. 51; 20 Am. Dec. 341; Walworth v. Pool, 9 Ark. 394; Chamberlin v. McCalister, 6 Dana, 352; Shannon v. Comstock, 21 Wend. 457; 34 Am. Dec. 262; Ream v. Wat- kins, 27 Mo. 516; 72 Am. Dec. 283. In Byrd v. Boyd, 4 McCord, 246, 17 Am. Dec. 740, it is said: "The Eng- lish cases go very far in establishing that contracts, particularly with ser- vants and seamen, cannot be appor- tioned, and that the performance of the service is a condition precedent to the payment of wages, and they result in the rule that when they are pre- vented from performing it by the mis- conduct of the master, they are entitled to the stipulated wages for the whole time, and e converso, they are entitled to nothing if they abandon service voluntarily. And yet the rule has been so far relaxed as to entitle the master to a deduction of any sum which a seaman may have earned in another vessel in the mean time: Abbot, 392; 1 Comyn on Contracts, 362. This rule is evidently the result of expediency,, especially as applied to seamen; and it becomes a question of some importance how far it is applicable to the subject under consideration. The relation of employer and overseer is one which the state of the country renders almost indispensably necessary to every planter; and collisions do and must necessarily arise, and it is fit that there should be some settled rule on the subject. Where the employer wantonly and without cause turns o£E his overseer at a season of the year when it would be impracticable to get employment elsewhere, and his time is wholly lost, I should feel no hesitation in enforcing the rule rigidly, not only as a punishment, but as a just remu- neration to the overseer; and so when the overseer abandons the employer without cause, or by his neglect in- flicts a loss on him commensurate with the services which he has performed, he clearly deserves no compensation. There is, however, a. third class o£ cases for which it is necessary to pro- vide, and which are perhaps of the most common occurrence. They are those where the employer reaps the full benefit of the services which have been rendered, but some circumstance occurs which renders his discharging the overseer necessary and justifiable, and that perhaps not immediately con- nected with the contract, as in the present case. It happens frequently, too, that it becomes a question of great difficulty to ascertain with whom the first wrong commenced. I cannot reconcile it to my notions of natural justice that the overseer should not recover a compensation for the services, so far as they were directed and which have been beneficial to the employer, and I am unable to discover any evil which is likely to result from submit- ting such a matter to the sound dis- cretion of a jury of the country, and as a matter of expediency I should be disposed to establish it as a rule." § 276 PRINCIPAL AND AGENT. 484 servant is employed for a term and wrongfully discharged before the end of it, the presumption is, that he is entitled to recover for the whole term, and the burden is on the defendant to show a legal excuse for not paying him the full amount for the whole term.^ The defendant must prove "either that the plaintiff was actually engaged in other profitable service during the term, or that employ- ment was offered him and he rejected it."^ If the servant finds employment at the same or higher wages, he is en- titled to recover for the time actually lost; and if he finds employment at lower wages, he is entitled to recover the difference between the amount earned and what his mas- ter had agreed to pay liim.^ The servant may recover wages during the time he is idle, even though in his sec- ond employment he gets higher wages than under his first contract, and therefore in all he is better off than though he had not been discharged.'' If the servant sue for the breach before the term expires, he can only re- cover damages up to the time when he sues; but if he waits until the end of the term, he can recover full dam- ages for the whole time.^ If the servant institutes suit 1 King V. Steiren, 44 Pa. St. 99; 84 Willoughby v. Thomas, 24 Gratt. E22; Am. Dec. 419; Gillis v. Space, 63 Barb. Gillis v. Space, 63 Barb. 177; Sugg v. 177; Polk V. Daly, 14 Abb. Pr., N. S., Blow, 17 Mo. 359; Huntington «. K. E. 156; Costigau v. Mohawk R. R. Co., Co., 33 How. Pr. 416; Sutherland v. 2 Denio, 609; 43 Am. Dec. 758; Horn Wycr, 67 Me. 64. V. Land Asa'n, 2J M'nn. 233; De Leon * Sherman v. Trans. Co., 31 Vt. 162; V. Echeverria, 45 N. Y. Sup. Ct. 610: Willoughby v. Thomas, 24 Gratt. 552; Pond V. Wymaa, 15 Mo. 175; Nearns Gillia v. Space, 63 Barb. 177. V. Harbert, 25 Mo. 352; Howard v. * Kicbardsou v. Eagle Mac. Works, Daly, 61 N. Y. 362; 19 Am. Rop. 285; 78 Ind. 422; 41 Am. Rep. 585. A Hearne v. Garrett, 49 Tex. 619; Byrd servant wrongfully discharged before V. Boyd, 4 McCord, 246; 17 Am. Dec. the expiration of the term for which 740; Saxonia Mining Co. v. Cook, 7 he was hired cannot recover on the Col. 569. In an action for damages theory of constructive service, but for a wrongful discharge, the burden must claim damages for his wrongful is on the master to show that the dis- discharge: Bennett v. St. Louis Car charge was for good cause: Koenig- Rooting Co., 23 Mo. App. 587; James kraemer v. Missouri Glass Co., 24 Mo. v. Allen County, 44 Ohio St. 226; 58 App. 124. Am. Rep. 821. One hiring another to ^ 2 Greenl. Ev., sec. 261 a, and cases work one month for a stipulated suin, cited; King v. Steiren, supra. See and discharging him before the end of Hunt V. Crane, 33 Miss. 669; 69 Am. the month without sufficient cause, is Deo. 381. liable to pay him for the fuU month; 3 Heim v. Wolf, 1 E. D. Smith, 70; Dunn v. Hereford, 1 Wy. Ter. 206. 485 CONTRACTS BETWEEN MASTER AND SERVANT. § 276 and recovers judgment before the expiration of the term for which he was hired, this will operate as a bar to any subsequent action.' Thus if a person hired for three years is discharged during the second quarter, sues to recover for arrears of wages and damages for breach, and recovers a judgment for one quarter's wages, this will be a bar to a second suit upon the same contract, for wages of the subsequent quarter of the first year, and damages.^ Where a servant is wrongfully discharged, but his wages are paid up to that time, he cannot recover for future installments, but only for breach of contract, and one recovery is a bar.' Where the employer agrees with the appellant to fulfill his contract ? Still another difficulty presents itself. Sup- pose the respondent should die within the four years, or become incapacitated to perform service of any kind, would he be entitled to recover the damages he has recovered? In ascertaining the amount of damages on his con- tract running four years, we do not think the court and jury were au- thorized in assuming that the same state of things existing at the time of trial would continue until the expira- tion of the contract. Had the re- spondent seen fit to wait before bring- ing his action until the period had elapsed for the complete performance of the agreement, the measure of com- pensation could then have been easily arrived at But as the case now stands, we think he was only entitled to recover his salary on the contract down to the day of trial, deducting therefrom any wages which he might have received or might have reason- ably earned in the mean time. This rule appears to us to be the most equitable and sate of any that occurs to our minds, and the one most likely to effect substantial justice between the parties. " '■ Booge V. Pacific R. K Co., 33 Mo. 212; 82 Am. Dec. 160; Soursin v. Sa- lorgne, 14 Mo. App. 486. '' Colburn v. Woodworth, 31 Barb. 381; Booge v. Pacific R. R. Co., 33 Mo. 213; 82 Am. Dec. 160; contra, Isaacs V. Davies, 68 Ga. 169. * James v. Allen County, 44 Ohio St. 226; 58 Am. Rep. 821. A servant dismissed from bis master's employment before the expiration of the term contracted for cannot main- tain an action to recover wages subse- quently accruing; his remedy is an action for damages for breach of the contract: Weed v. Burt, 78 N. Y. 191. In Gordon v. Brewster, 7 Wis. 355, the plaintiff was employed as superin- tendent of a lumbering establishment for five years at a salary of two thou- sand a year. At the end of the first year he was discharged. He immedi- ately instituted suit to recover dam- ages for the balance of the term. He afterwards obtained employment at a yearly salary of one thousand dollars. The trial took place while he was thus employed. A verdict of four thousand dollars was rendered in favor of plain- tiflf, on the theory that the state of facts existing at the time of trial would continue until the end of the term of his first engagement. In re- versing the judgment, the supreme court said: "Inany business the price of labor fluctuates greatly within four years; particularly is this true of the lumbering business in this country. Now suppose the respondent could only obtain for his services next year five hundred dollars, and so on, would it not be unjust to say he should only recover according to the rule adopted by the jury in this case ? Or suppose the value of labor should rise so that he could obtain for his services two thousand dollars or two thousand five hundred dollars a year, what then would be his loss by the failure of the § 277 PRINCIPAL AND AGENT. 486 servant that if after trying him three months the master is satisfied, a year's salary will be paid him "just as if he had worked for a full year," and then without cause dis- charges the servant, the servant is entitled to the whole yearly salary.' A master cannot set up the unskillfulness or dishonesty of the servant in an action for his wages. His remedy was to have discharged the servant.'^ Illustrations. — A wrote to B, who was in the Sandwich Is- lands, offering him fifteen hundred a year to serve him in Chi- copee, Massachusetts. B accepted and removed to Chicopee, but A refused to receive him. Held, that B could not recover for the time consumed in or the expenses of the journey. He could only claim to be placed in as good a condition as he would have been if the contract had been performed: Noble v. Ames Mfg. Co., 112 Mass. 497. A plaintiff had been employed by the defendant for one year at a specified salary, payable in monthly installments, and before the year expired he was dis- charged, and afterwards, before the end of his term, he brought suit, claiming that the contract was still in force, and that he was and had been ready and willing to perform. Held, that he could only recover for the installments that had matured at the time the suit was brought, notwithstanding the term had expired before the cause was tried. If, when he was discharged, he had terminated the agreement, and sued on the breach of the contract, and the cause was not tried until the term had expired, and it had then appeared that he had been unable to procure employment during the time, it may be that he could have recovered for all the damage he had sustained during the term by the breach of the contract: Hamlin v. Eace, 78 111. 422; In an action for discharge from employment, plaintiff proved a contract for one year, and that he did his work properly, and was paid up to the time of his discharge before the expiration of the year. Held, that it was error to award a nonsuit: Alex- ander V. Americus, 61 Ga. 36. § 277. Servant Bound to Seek Other Employment.— The discharged servant is bound to make reasonable efforts to obtain employment elsewhere.* But the servant ' Wachs V. Friedmann, 11 Mo. App. ' Sherman v. Trans. (Jo., 31 Vt. 162; 602. Howard v. Daly, 61 N. Y. 362; 19 Am. - Clark V. Fensky, 3 Kan. 389; Rep. 285; Polk v. Daly, 14 Abb. Pr., Turner v. Kouwenboven, 29 Hun, N. S., 156; Fowler n. Armour, 24 Ala. 232. 194; Steinberg v. Gebhardt, 41 Mo. 487 CONTRACTS BETWEEN MASTER AND SERVANT. § 277 is only bound to seek emploj'^ment of the same general nature as that in which he is employed, and in the same place.^ A general laborer would be required to seek 520; Benziger v. Miller, 50 Ala. 206; Booge V. Kailroad Co., 33 Mo. 212; 82 Am. Dec. 160; Gillis v. Space, 63 Barb. 177; Gazette Printing Co. v. Moras, 60 Ind. 153; Williams v. Chicago Coal Co., 60 111. 149; Armiield v. Nash, 31 Miss. 361; Chamberlin v. Morgan, 68 Pa. St. 168. In Shannon v. Com- stock, 21 Wend. 457, 34 Am. Dec. 262, Cowen, J., said: "Here we hare a contract to sell labor and services. On the vendee declining them, the vendor sells them to another, or converts them to his own use; in other words, he goes about his business in another direction, which fetches him the same, or nearly the same, or more perhaps, than the agreed price, which has failed. This is necessarily so, unless the ven- dor of the labor choose to lie idle for the supposed length of time which performance would have demanded. Bat that he has no right to do. The rule of this subject is well laid down by Mellen, C. J. , in Miller v. Mariners' Church, 7 Me. 51, 20 Am. Dec. 341. 'In general, the delinq^ueut party is bolden to make good the loss occa- sioned by the delinquency. But his liability is limited to direct damages, which, according to the nature of the subject, may be contemplated or pre- sumed to result from his failure. The purchaser of perishable goods at auc- tion fails to complete his contract. What shall be done? Shall the auc- tioneer leave the goods to perish and throw the entire loss upon the pur- chaser? That would be to aggravate it unreasonably and unnecessarily. It is his duty to sell them a second time, and if they bring less, he may recover the difference, with commissions and other expenses of resale from the pur- chaser. If the party entitled to the benefit of a contract can protect him- self from the loss arising from a breach at a reasonable expense, or with rea- sonable exertions, he fails in his social duty if he omits to do so, regardless of the increased amount of damages, for which he may intend to hold the other contract party liable. ' The rea- son and justice of these remarks are open to continued illustration in the affairs of men. A mason is engaged to work for a month, and tenders him- self and offers to perform, but his hirer declines his service. The next day the mason is employed at equal wages elsewhere for a month. Clearly his loss is but one day, and it is his duty to seek other employment. Idleness is in itself a breach of moral obligation. But if he continue idle for the purpose of charging another, he superadds a fraud which the law had rather punish than countenance." 1 Howard v. Daly, 61 N. Y. 362; 19 Am. Rep. 285; Strauss v. Meertief, 64 Ala. 299; 38 Am. Rep. 8; Walworth v. Pool, 9 Ark. 394; Beckmant;. Drake, 2 H. L. Cas. 606; Fuohs v. Koerner, 107 N. Y. 529. In Costigan v. Mohawk R. R. Co., 2 Denio, 609, 43 Am. Dec. 758, the court said: "The defendants had agreed to employ the plaintiff in super- intending a railroad and they cannot insist that he should, in order to relieve their pockets, take up the busi- ness of a farmer or a merchant. Nor could they require him to leave his home and place of residence to engage in business of the same character with that in which he had been employed by the defendants." So in Strauss «. Meertief, 64 Ala. 299, 38 Am. Rep. 8, the court say: "We must not be un- derstood as intimating that he is under the duty of engaging in or accepting any other employment than such as may be of the same nature and descrip- tion of that in which he was employed by the defendant; or employment of that kind at a place different ifrom that in which the employment of the de- fendant contemplated his remaining during the term. The father hiring his minor son as a clerk to a merchant may juftly be presumed to have in view the acquirement by the son of knowledge and skill in that particular business. This will often be a more material consideration than the wages the son can earn during minority. Tliat for the son there was offered, or could with reasonable exertions have been obtained, employment as a la- § 277 PRINCIPAL AND AGENT. 488 general work. But a carpenter would not be compelled to do the work of a farm laborer, or an actor the work of a clerk,' or a physician the work of a dentist, or a super- intendent of a railroad the work of a conductor,^ or an overseer the work of a day-laborer,' or a foreman in a type foundry the work of a common hand,^ or a head gamekeeper the work of assistant gamekeeper.* It is no defense to a claim for damages for being discharged from employment in manufacturing at a fixed salary, that after his discharge plaintiff refused an offer of em- ployment to' sell goods of a different kind on commission.^ He need not go beyond the neighborhood where he was employed. His duty is to seek and accept work only in the same vicinity. Thus a teacher is not bound to leave her home to find employment,^ or a railroad superintend- ent the community where employed,* or an actor a city where he was to perform,' or an overseer the vicinity in which he was to do service.*" But while the master may reduce the damages by showing that the servant obtained or could have obtained other employment, this cannot defeat his right of recovery." If he fails to get it and does work for himself, its value cannot be deducted from borer on a farm, or as the employee of or morals, which could be made to the a'railroad company, or a workman in person from whom employment could a machine-shop, or as an operative in a be obtained, would afford ajustifioation factory, or in any service not of the to the plaintiff for rejeciang it when same kind, and not affording to the offered, or excuse him from not making son like advantages for the aoqnire- exertion to secure it. " ment of knowledge and skill as a ' Polku. Daly, 14Abb. Pr.,N.S.,156. merchant, cannot and ought not to ^ Costigan v. Railroad Co., 2 Denio, furnish aground for the diminution of 609; 43 Am. Dec. 758. the plaintiff 's recovery. There is much " Walworth i;. Pool, 9 Ark. 394. of personal trust and confidence re- * Gillis v. Space, 63 Barb. 177; Beck- posed by a father in engaging his son ham v. Drake, 2 H. L. Cas. 607. in the service of another. It must be, * Ross v. Pender, 1 Ses. Cas. S., 4th if sheer indifference to the welfare of series, 352. the son is not imputed, a material in- * Fuchs v. Koemer, 52 N. Y. Sup, gredient of all such contracts. Because Ct. 77. of the personal trust which enters ' Gillis v. Space, 63 Barb. 177. into a contract of apprenticeship, the * Costigan v. Railroad Co., 2 Denio, law holds it is not assignable by the 609; 43 Am. Dec. 758. master: Tucker v. Magee, 18 Ala. 99. ' Howard v. Daly, 61 N. Y. 362; 19 Any reasonable objection because of Am. Rep. 285. capacity, reputation, mode of dealing, '' Walworth v. Pool, 9 Ark. 394. and transacting business, or of habits ^' Wilkinson v. Black, 80 Ala. 329. 489 CONTRACTS BETWEEN MASTER AND SERVANT. § 278 the amount of his claim.^ A master having discharged a servant has no right to recall him on pain of forfeiting all claim for compensation; but if the servant is not other- wise employed, he may recall him to do a part of the stipu- lated work without restoring him to his former position.^ Illustrations. — A hired B for a year, and discharged him before the end of the year. B sued for breach of contract. Held, that A was entitled to prove that afterwards, within the year, he again offered B employment, which B refused, as this would diminish damages: Bigelow v. American Forcite Powder Mfg. Co., 39 Hun, 599. § 278. Waiver by Servant of Wrongful Discharge. — A servant may by acquiescing in a wrongful discharge waive his right to sue for damages,' but an involuntary acquiescence will not bar him, as where a servant was ordered by the master to send in his resignation, as he was to be dismissed any way, and he did so.* Illustrations. — A made a contract with B for a year's ser- vice. Before the expiration of the year, A by letter discharged B, and inclosed in the letter a check in settlement for a cer- tain amount, requesting B to return the check if the amount was not satisfactory. B kept the check and used it, and after the expiration of the year sued A for a year's salary, crediting him with the amount of the check. Held, that the action could not be maintained: Hutton v. Stoddart, 83 Ind. 539. Plaintiff, being employed by defendant as its state agent for Wisconsin for a term of one year from April 1, 1877, was notified by de- fendant's vice-president, under date of December 14, 1877, that, for reasons stated (not implying any dissatisfaction with plain- tiff), the directors had concluded that at least for the next calendar year the agency for Wisconsin must be added to the duties of the person who was then defendant's state agent in an adjoining state; and added that defendant's general agent was then in the West, and would probably visit plaintiff in a few days, when "all matters relating to the future" could "be ar- ranged between" him and plaintiff. Plaintiff immediately answered at length, expressing acquiescence in the necessity for the change, and giving no intimation that he should claim ' Harrington v. Gies, 45 Mich. 374. ^ Hutton v. Stoddart, 83 Ind. 539. 2 Mitchell V. Toale, 25 S. C. 238; 60 * Cumberland etc. R. K. Co. v. Am. Eep. 502. Slack. 45 Md. 161. § 279 PRINCIPAL AND AGENT. 490 his salary after January 1, 1878. On December 19, 1877, he sent out circulars to defendant's subordinate agents in Wiscon- sin, stating that on January 1st next the relations existing between him and them would be dissolved " by expiration of engagement"; and commending to them the state agent who was to succeed him. Held, that these papers showed a termina- tion of plaintiff's employment with his consent; and he could not recover salary for the remainder of the year covered by his contract: Southmayd v. Watertown Fire Ins. Co., 47 Wis. 517. § 279. Waiver by Master of Breach or Forfeiture.— A master may waive a breach of contract by the servant, or condone a ground of discharge.^ Keeping the servant in his service after knowledge of such breach raises an in- ference of waiver on his part.^ Where an employee was to receive payment at a specified rate if he continued tem- perate and faithful in the employer's service, it was held that the fact that he was occasionally intemperate and discontinued the service for short periods would not pre- vent his recovering the stipulated rate for the time ac- tually spent in such service, if he was received back into it, and continued therein, without any new arrangement being made, or any intimation given that the old one was terminated.' So a master may waive a forfeiture of wages for leaving his service before the end of the term, by a tender of payment or by making part, payment, or by any acts on his part showing that he recognizes a liabil- ity.'' But the waiver of one breach does not estop the master as to a subsequent breach;' and the retention of a servant whose torts have injured the master does not waive his right of action against the servant for dam- ages.* ' Brown V. Kimball, 12 Vt. 617. 170; Dover v. Plemmons, 10 Ired. 23; 2 Harrington u. Bank, 1 Thomp. & Seaver v. Morse, 20 Vt. 620; Cahill v. C. 363; Ridgwayu. Market Co., 3 Ad. Patterson, 30 Vt. 592; Boyle?>. Parker, & E. 171; Jonea v. Trinity Parish, 19 46 Vt. 343; Hogau v. Titlow, 14 Cal. Fed. Rep. 59. 255; Kice v. Dwight Mfg. Co., 2 Gush. 3 Prentiss a. Ledyard, 28 Wis. 131. 80. * Patnote v. Sanders, 41 Vt. 66; * Hunter v. Gibson, 3 Rich. 161. Pelouze V. Stewart, 1 N. Y. Leg. Obs. « Stoddard v. Treadwell, 26 Cal. 294. 491 CONTRACTS BETWEEN MASTER AND SERVANT. § 280 Illustrations. — A agreed with B to serve him as overseer for a certain term, and to abstain during the term from all in- toxication, under a penalty of forfeiture of his wages ''if he got drunk and was dismissed." A did repeatedly get drunk, and was finally dismissed. Held, that a failure of B to take advan- tage of the first act of drunkenness was not a waiver of the pro- vision of forfeiture, and that A could not recover on a quantum meruit for his services: Hunter v. Gibson, 3 Rich. 161. A laborer did work under a contract to work for a specified period, but left before the time expired, and the parties after- wards met and attempted to settle, and the employer offered to pay the laborer for the time he had worked if he would make a certain deduction for damages, which he refused to make, and the parties separated. Held, that this was not a waiver of the special contract on the part of the employer: Monell v. Burns, 4 Denio, 121. § 280. Causes Which will Justify Servant in Abandon- ing Service. — The servant is justified in leaving the ser- vice before the end of his term, upon the breach by the master of any of the express provisions of the contract. The same is true as to those provisions which the law incorporates into every contract of service. These are, among others: Assaulting him even without a battery, where the servant fears injury if he continues;' char- ging the servant wrongfully with committing a crime; ^ employing him in unlaw^fuP or unreasonably danger- ous services;* or in work not contemplated in the hir- ing; ° the existence of an epidemic in the neighborhood;" ' Bishop V. Ranney, 59 Vt. 316. A excused from the pertormance of his master has no right to use " moderate contract, and justified in quitting when force " to compel liis servant, a girl of he did by reason of the alarm and dan- eighteen, to obey his reasonable com- ger occasioned by the prevalence of mands: Tinkles. Dunivant, 16 Lea, the cholera in the vicinity ot the mills, 503. and that he is entitled to a reasonable '' Longmuir v. Thompson, 11 Shaw, compensation for the labor performed. 571. If the fulfillment of the plaintiff's con- 'Wamer«. Smith, 8Conn. 14; Com- tract became impossible by the act of monwealth v. St. German, 1 Browne, God, the obligation to perform it was 24; Berry v. Wallace, Wright, 657. discharged. If he was prevented by ' Wood on Master and Servant, sec. sickness or similar inability, he may 83; Eagle etc. Co, v. Welch, 61 Ga. 444. recover for what he did on a quantum * Baron v. Placide, 7 La. Ann. 229. meruit: 1 Parsons on Contracts, 524. ' Lakeman v. Pollard, 43 Me. 463, The plaintiff was under no obligation 69 Am. Dec. 77, Hathaway, J., saying: to imperil his life by remaining at "The plaintiff contends that he was work in the vicinity of a prevailing § 281 PRINCIPAL AND AGENT. 492 exposing the servant to dangers, physical and moral, even without the master's fault; ^ failing to provide him with proper food and lodging;^ fault-finding by the master, if severe and unjustifiable, and the servant does not waive it by remaining in the service;' treating, him improperly and inhumanely;* refusing to pay him his wages.' Illustrations. — A female servant left her employment be- cause of the continued annoyance and rudeness towards her of a relative of the employer. This relative lived in the same house, but the employer had no control over him. Held, justifi- able: Patterson v. Gage, 23 Vt. 558; 56 Am. Dec. 96. §281. Dissolution of Contract — By Expiration of Time or Consent of Parties. — The contract of service is ended by the expiration of the time limited. The servant has then the right to leave.® But the fact that he honestly thinks that the time has expired will not excuse him if the fact was otherwise.' So the contract, before its ex- piration, may be ended by the consent of the parties, express or implied,* and if the master consents, he can- epidemio so dangerous in its character ' Patterson v. Gage, 23 Vt. 558; 56 that a man of ordinary care and pru- Am. Dec. 96. dence, in the exercise of those qualities, ^ Gillis v. Space, 63 Barb. 177. If wouhl have been justified in leaving by the employer furnish a suitable room, reason of it; nor does it make any dif- it is enough even though it does not ference that the men who remained suit the taste of the servant: Illinois there at work after the plaintiff left College v. Perry, 8 111. App. 188. were healthy and continued to be so. " Brown v. Kimball, 12 Vt. 617. But He could not then have had any cer- harsh language by an employer is no tain knowledge of the extent of his sufficient excuse for breaking a contract danger. He might have been in im- to labor a specific time at a fixed price: minent peril, or he might have been Forsyth v. Hastings, 27 Vt. 646. influenced by unreasonable apprehen- * McGrath v. Herndon, 4 T. B. Mon. sions. He must necessarily have acted 480; Newman v. Bennett, 2 Chit, at his peril, under the guidance of his 195; Matthews v. Terry, 10 Conn, judgment. The propriety of his con- 455. duct in leaving his work at that time * Dobbins v. Higgins, 78 111. 440; must be determined by examining the R. R. Co. v. Spurck, 24 111. 588; Canal state of facts as then existing. When Co. v. Gordon, 6 Wall. 561; Lefrancois the laborer has adequate cause to jus- v. Charbonnet, 5 Rob. (La.) 185; 39 tify an omission to fulfill his contract. Am. Dec. 533. such omission cannot be regarded as " Wood on Master and Servant, sec. his fault. Whether or not the plain- 159. ti£F had such cause was a question of ' Winn v. Southgate, 17 Vt. 355. fact, to be determined by the jury ^ Wood on Master and Servant, sec. upon the evidence." 164; Boyle v. Parker, 46 Vt. 343. 493 CONTRACTS BETWEEN MASTER AND SERVANT. § 282 not set up that the servant left before the end of his term, in answer to his claim for wages for the time served.' The master's consent may be implied from hi3 acts.^ Illxtsteations. — A lady engaged a servant upon condition that she obtained a certificate of good character from her last master. He.ld, that no recovery could be had if the certificate was not obtained, for refusing to receive her: Forbes v. Milne, 6 Shaw, 75. The defendant agreed to serve the plaintiff as a traveler and agent ''for twelve months certain," after which time either party should be at liberty to terminate the agree- ment by giving the other a three months' notice. Held, that at the close of the twelve months the agreement could be de- termined by either party without any notice, and that the stip- ulation as to a three months' notice only applied in case the engagement was prolonged beyond the twelve months: Langton V. Carleton, L. R. 9 Ex. 57. Before the end of his term the ser- vant told his master that he was going to quit. The master did not object, but said there were as good men to be had as he was. Held, that the servant could recover for the time served: Boyle V. Parker, 46 Vt. 343. The servant, before the end of his term, asked his employer if he wanted him to work any longer. The master said he might do as he pleased. Held, not a consent to his leaving: Winn v. SniUhgate, 17 Vt. 355. Before the end of his term the servant quit. Afterwards the master said that he was glad he had gone, as he was worth nothing to him. But though he had previously manifested a wish to get rid of him, he had never told him to go. Field, that the servant had no right to leave: Decamp v. Stevens, 4 Blackf 24. The agent of a railroad company employed A to guard certain convicts. Then the company leased the convicts to B, who agreed to assume the responsibility of guarding them. Of this A had no notice. Held, that the company was bound to pay A for his services, and that the fact that the agent who hired A became B's agent was immaterial: Marietta and North Georgia R. R. Co. v. Hil- burn, 75 Ga. 379. § 282. When Service may be Dissolved by Either Party. — The service may be determined by either party at any time in these cases: 1. Where the continuance of ' Patnote v. Sanders, 41 Vt. 66; 98 Thomas v. Williams, 1 Ad. & E. Am. Dec. 564; Rogers v. Steele, 24 685. Vt. 513; Green v. Hulett, 22 Vt. 188; 2 Boyle v. Parker, 46 Vt. 343. §§ 283, 284 PRINCIPAL AND AGENT. 494 the term is discretionary;^ 2. Where the term is indefi- nite;^ 3. Where the contract is not mutual.* § 283. Dissolution of Partnership. — The dissolution of a partnership releases a servant of the partnership.^ If, however, the dissolution is by the act of the parties, they are liable to the servant;^ but if the dissolution is by the death of one of the partners, they are not liable.* And if the firm is not dissolved, — though one partner goes out voluntarily or by death, — the contract is not ended.' A master by taking a partner in his business does not dis- solve his contract with a servant.* If a contract for per- sonal service for a certain sum per month, and a further sum at the end of the year, and a proportionate part of the latter sum if the contract become void by death or mutual consent, be broken by the voluntary dissolution of the partnership, the firm is liable for a proportional part of the sum that was to be paid at the end of the year.^ Where, pending the term of a clerk's service, his employer enters into partnership with another, and the clerk enters into the service of the firm, his contract with his original employer is at an end; and if, afterwards, he is discharged, he cannot recover of his original employer.'" § 284. Bankruptcy of Master. — The bankruptcy of the master dissolves the contract." Where a written con- tract between a salesman and his employers provided that the salesman, in consideration of a stipulated salary for two successive years, should devote his whole time and * Provost V. Harwood, 29 Vt. 219; * Wood on Master and Servant, seo Patrick v. Putnam, 27 Vt. 759; Dur- 165. fin V. Baker, 32 Me. 273; Daveny v. ^ Id. hattuck, 9 Daly, 66. " Id. ; contra, Fereira v. Sayres, 5 2 De Briar v. Mintum, 1 Cal. 450; Watts & S. 210; 40 Am. Dec. 496. Coffin V. Landis, 46 Pa. St. 430; Pea- ' Id. cock V. Cummings, 46 Pa. St. 434; « Harkins v. Smith, 13 Jur. 381. Harper v. Hassard, 113 Mass. 187; ' RedheflFerv.Leathe, 15Mo.App. 12. Blaisdell v. Lewis, 32 Me. 515; Thayer " Anderson v. Freeman, 75 Ga. 93. V. Wadsworth, 19 Pick. 349. " Wood on Master and Servant, sec, 3 Dunn V. Sayles, 5 Q. B. 685. 163. 495 CONTRACTS BETWEEN MASTER AND SERVANT. § 286 attention to the employers' business, it was held that this did not raise an implied obligation upon the employers to continue the engagement for two years; and that, on their going into bankruptcy during the first year, the salesman could not recover his contract compensation beyond that time.^ § 285. Abandonment by Servant. — Also the abandon- ment of the service by the servant ends the contract.^ § 286. Dismissal by Master. — So does the dismissal of the servant for cause;' and where the servant is wrong- fully discharged, the contract is so far ended that the master could not compel him to resume his service.'' A master cannot, while repudiating his contract with the servant to serve for a definite period of time, reduce the servant's right of recovery to merely nominal damages, by showing that he offered the servant the same work at the same price for a less period than that for which he was hired. Thus where one is hired for a year and dis- charged, but the master offers the servant the same work at the same price, but by the week, the servant is not bound to accept it.^ An employer may countermand the doing of work which he has engaged another to do, and if he does so, and the servant nevertheless goes on and completes it, he cannot recover for his labor after the countermand, but only damages which he has suffered by the breach of his contract.* Where a contract of hiring provides that if the servant remains after a year in the master's employ his wages shall be higher, and that the master may discharge him at any time, the reasons of the master for discharging him are immaterial, at least » Orr V. Ward, 73 III. 318. * Wachs v. Friedmann, 11 Mo. App. ^ Wood on Master and Servant, sec. 602. 162. « Clark v. Marsiglia, 1 Denio, 317; » Green v. Hulett, 22 Vt. 188. 43 Am. Dec. 670; Lord v. Thomas, 64 * Wood on Master and Servant, eec. N. Y. 110; Owen v. Frink, 24 Cal. 161. 178. 287, 288 PRINCIPAL AJSTD AGENT. 496 where there is no pretense of fraud/ The words, "I am very sorry to have to ask you to resign your position," in a letter from an employer to an employee, are properly construed as a peremptory discharge.^ § 287. By Death or Disability.— The death of either party or the permanent sickness of the servant ends the contract.^ § 288. Rights of Master — Injuries to Servant by Third Person. — At common law in England, the master had an action against a third person who unlawfully injured or interfered with his servants. This right, however, was restricted to menial servants — those to whom the master stood in somewhat the relation of a parent — in loco paren- tis.* At the present time a master has a right of action against any person who injures his servant whereby he suffers an actual loss.* Thus the master may sue a car- * Smith V. Buffalo Street R. R. Co., 35 Hun, 204. '•* Jones V. raliam and Morton Transp. Co., 51 Mich. 539. s Clark V. Gilbert, 26 N. Y. 279; 84 Am. Deo. 189; Hubbard v. Belden, 27 Vt. 645; Yerrington v. Greene, 7 E.. I. 589; 84 Am. Dec. 578. A clerk is hired for a term of three years at a stipulated salary, to carry on a branch store for his employer. Before the end of the term the employer dies. The contract is terminated, and no re- covery against the estate of the em- ployer can bo had: Yerrington v. Greene, supi-a. * See remarks of Wright, J., in Burgess v. Carpenter, 2 S. C. 7; 16 Am. Rep. 643. * Wood on Master and Servant, sees. 221, 223; Dennis v. Clark, 2 Gush. 347; 48 Am. Dec. 671; Drew «. R. R. Co., 26 N. Y. 49; Fordw. Mun- roe, 20 Wend. 210. In Woodward v. Washburn, 3 Denio, 369, the court say: "It is enough that the relation of master and servant exists between the plaintiff and the person who is dis- abled or prevented from performing the service he has contracted to per- form by the tortious act of the de- fendant. It is not necessary to sustain such action to show that the person whose service had been lost by the plaintiff was either his apprentice or child. The reason and foundation upon which this doctrine is built seem to be the property that every man has in the services of those whom he has employed, acquired by the con- tract of hiring, and purchased by giv- ing them wages. The point of the argument of the counsel for the de- fendant on this part of the case is, that the relation of master and servant cannot exist quoad this action, except between apprentice and master, parent and child, or unless the plaintiff stands in the place of a parent to the one from whom service is due. It seems to be conceded when that relation ex- ists, and the master has sustained loss of service by his servant being dis- abled by the tortious acts of the defendant, that the action lies. Chan- cellor Kent, in considering the relation of master and servant, subdivides the several kinds of persons who come within the description of servants into first, slaves; second, hired servants; 497 CONTRACTS BETWEEN MASTER AND SERVANT. § 289 rier for injuries to a servant while being carried by it,' or a person whose vicious dog or other animal bites or in- jures his servant.^ A railroad company may sue a person who maliciously arrests one of its engineers while run- ning the train for the purpose of delaying it.' One en- gaging the servant of another in an obviously dangerous task is responsible to the master for any injury received by him while so engaged, even though the servant was negligent.^ No actual contract to serve need be proved, — it is enough for the master to show that at the time of the injury he was having the benefit of the servant's labor.' Where the injury results in the immediate death of the servant, the master has no right of action at common law.* This is but one phase of the common-law rule as to a,ctions for the death of another, — a rule which now both in America and England has been altered by statute. Illustrations. — A clerk went to a bank on business shortly before the closing hour, and while he was there the doors were closed and he was refused exit for some time. Held, that an action against the bank for loss of services by the employer of the clerk would lie: Woodward v. Washburn, 3 Denio, 369. § 289. Enticing Servant from Employment. — And it is now held, both in this country and in England, that an action will lie by the master against another who know- ingly entices away his servant, or induces him to break his contract of service.' An action will lie for enticing and third, apprentices. In regard to * McCarthy v. Guild, 2 Met. 291; the second description, the learned Dennis v. Clark, 2 Cush. 347; 48 Am. commentator says; 'The relation of Deo. 671. master and servant rests altogether ^ Railroad Co. v. Hunt, 55 Vt. 570; upon contract. The one is bound to 45 Am. Rep. 639. render the service, and the other to * Louisville etc. R. R. Co. v. Willis, pay the stipulated consideration.' And 83 Ky. 57; 4 Am. St. Rep. 124. again: 'In England, there seems to be ^ Evans v. Walton, 36 L. .J. Com. P. a distinction between menial and some 307; Martinez v. Gerber, 3 Man. & G. other servants, but I know of no legal 88. distinction between menial or domes- ° Wood on Master and Servant, sec. tic and other hired servants ' ": 2 223; see Personal Rights and Reme- Keut's Com., 4th ed.. pp. 258 et seq. dies, poiit, Division II. 'Ames 0. Union R. R. Co., 117 ' Haskins v. Royster, 70 N. C. 601; Mass. 541; 19 Am. Rep. 426. 16 Am. Rep. 780; Walker v. Cronin, Vol. I. -32 § 289 PRINCIPAL AND AGENT. 498 away a servant at will, when a subsisting service is in- terrupted by the act of the defendant/ But a person has a right to employ another's servant after he has actually left his employer, or after his term has expired, even though but for the new offer he would have remained in the same service another term.^ After an infant has disaffirmed his voidable contract for personal services, a person who employs him is not chargeable with the offense.' An action on the case brought by a father for the enticing away of his son from his service is not sup- ported by proof that the defendant, knowing that the son had left his father's service without his father's consent, induced him to enter into the service of the defendant, and detained him when he wished to return.* The meas- ure of damages for enticing away the servant of another, who is hired by the year, where that other fails to supply the servant's place, is the direct loss suffered, and the average net profits that were made by men of fair busi- ness capacity, out of the labor of such a servant during the year for which the enticed servant was hired.' A master may recover damages of any one who, after de- mand made, detains a servant.* Under a count for har- boring or entertaining a servant, evidence of enticement is not necessary.^ Illustrations. — Defendant, for the purpose of injuring plaintiff and of inducing him to abandon a lease of a planta- 107 Mass. 555; Jones v. Blocker, 43 Ga. Hart v. Aldridge, Cowp. 54; Nichols 331; Sabter v. Howard, 43 Ga. 601; v. Martyn, 2 Esp. 732; Boston Glass Luraley v. Gye, 2 El. & B. 216; Bixby Co. v. Biuney, 4 Pick. 425. The Ten- V. Dnnlap, 56 N. H. 456; 22 Am. Rep. iiessee statute covers the case of one 475; Daniel v. Swearengen, 6 S. C. who hires without knowledge of a 297; 24 Am. Kep. 471; Huflf v. Wat- previous contract of hire, if he fails to kins, 15 S. C. 82; 40 Am. Rep. 680; discharge the laborer on being notified Butterfield v. Ashley, 2 Gray, 254; that the latter is under a contract or Carew v. Rutherford, 106 Mass. 1; 8 has violated it: Morris v. Neville, 11 Am. Rep. 287; Melbume v. Byrne, 1 Lea, 271. Cranch C. C. 239; Haight v. Badgely, ^ Laugham v. State, 55 Ala. 114. 15 Barb. 499; contra. Burgess v. Car- * Butterfield v. Ashley, 2 Gray, 254. peuter, 2 Rich. 7; 16 Am. Rep. 643. * Lee v. Vilest, 47 Ga. 311. 1 Noice V. Brown, 39 N. J. L. 569. « Ferrell v. Boykin, Phill. (N. C.) 9. " Sykes v. Dixon, 9 Ad. & E. 693; ' Dubois v. Allen, Anth. 128. 499 CONTRACTS BETWEEN MASTEE AND SERVANT. § 290 tion, persuaded and threatened plaintifiTs laborers, so that they left him. Held, that defendant was liable for the damage thus sustained: Dickson v. Dickson, 33 La. Ann. 1261. On the trial of an action for enticing away plaintiff's servants, it appeared that defendant's conduct was of an aggravated character. Held, that a verdict for the net profits which plaintiff would have realized but for defendant's conduct, and for plaintiff's loss by reason of his inability to improve his property, was properly rendered, and not excessive: Smith v. Goodman, 75 Ga. 198. § 290. Combinations among Workmen. — Every man has a right to work for whom he pleases, and on what terms he pleases. He may refuse to deal with a particu- lar man or class of men. It is perfectly legal for any number of persons, without an unlawful object in view, to agree that they will not work for or deal with certain persons, or under a fixed price, or without certain condi- tions.^ The test is the legality of the intent. Thus it ' Carew v. Rutherford, 106 Masa. 1 ; 8 Am. Rep. 287; Walker v. Cronin, 107 Mass. 555; Boston Glass Co. v. Bin- ney, 4 Pick. 425; Bowen v. Mathe- Bon, 14 Allen, 499. This subject lies more properly in the criminal law, — the law of conspiracy. For a learned discussion of the law as to conspira- cies to control wages of workmen, see People V. Fisher, 14 Wend. 9, and note in 28 Am. Dec. at page 507. Commonwealth v. Hunt, 4 Met. Ill, 38 Am. Deo. 346, is a leading case. Here Shaw, C. J., says: "The de- fendants and others formed them- selves into a society, and agreed not to work for any person who should employ any journeyman or other per- son not a member of such society after notice given him to discharge such workman. The manifest intent of the association is to induce all those engaged in the same occupation to be- come members of it. Such a purpose is not unlawful. It would give them a power which might be exerted for useful and honorable purposes, or for dangerous and pernicious ones. If the latter were the real and actual object, and susceptible of proof, it should have been specially charged. Such an association might be used to afipord each other assistance in times of poverty, sickness, and distress; or to raise their intellectual, moral, and social condition; or to make improve- ment in their art, or for other proper purposes; or the association might be designed for the purposes of oppres- sion and injustice. But in order to charge all those who become members of an association with the guilt of a criminal conspiracy, it must be averred and proved that the actual if not the avowed object of the association was criminal. An association may be formed, the declared objects of which are innocent and laudable, and yet they may have secret articles, or an agreement, communicated only to the members, by which they are banded together for purposes injurious to the peace of society or the rights of its members. Such would undoubtedly be a criminal conspiracy, on proof of the fact, however meritorious and praiseworthy the declared ob- jects might be. The law is not to be hoodwinked by colorable pretenses. It looks at truth and reality, through whatever disguise it may assume. But to make such an association, § 290 PEINCIPAL AND AGENT. 500 has been held that an agreement between members of a society not to ship sailors below a specified rate of wages is not criminal/ nor an agreement not to teach a new hand the trade of the members without the consent of the society.^ But, on the other hand, a conspiracy to ob- tain a sum of money from an employer by inducing his workmen to leave him, and deterring others from en- gaging with him, is illegal.^ Any association, in short, designed to coerce workmen to become members, or to dictate terms to employers on which their business shall be conducted, by means of threats of loss, interference with their property, traffic, or lawful employment of other persons, is pro tanto an illegal combination, and any do- ings in furtherance of such design accompanied by dam- age are actionable.^ ostensibly innocent, the subject of it will be criminal in those who thus prosecution as a criminal conspiracy, misuse it, or give consent thereto, but the secret agreement which makes it not in the other members of the asso- BO is to be averred and proved as the ciation." gist of the offense. But when an ' Brown v. Matheson, 14 Allen, 503. association is formed for purposes ^ Snow v. Wheeler, 113 Mass. 185. actually innocent, and afterward its ' Carew v. Rutherford, 106 Mass. 1; powers are abused by those who have 8 Am. Rep. 287. the control and management of it to * Old Dominion S. S. Co. v. Mc- purposes of oppression and injustice, Kenna, 30 Fed. Rep. 48. 601 LIABILITIES OF MASTER AND SEKVANT. § 291 CHAPTER XXIII. LIABILITIES OF MASTER AND SERVANT. § 29L Master is liable for torts of servant. § 292. Willful and malicious acts of servant. § 293. Trespasses of servant. § 294. Who are " servants " within previous sections. § 295. Master not liable for acts of independent contractor. § 296. Exceptions — Where work is a nuisance or dangerous per se. % 297. Exceptions — Where duty is imposed by contract. § 298. Exceptions — Where duty is imposed by law. § 299. Exceptions — Where employer interferes with or directs work. § 300. Exceptions — Other cases where employer is liable. § 30L Master not liable for injury to servant. § 302. Exceptions — Defective machinery, buildings, or appliainces. § 303. Exceptions — Latent defects and dangers. § 304. Duty of railroad companies to servants employed. § .305. Knowledge by master of defect necessary. § 306. Direct negligence of master. § 307. Concurrent negligence of master and fellow-servant. § 308. Unsuitable or incompetent fellow-servants. § 309. Rule where servant is an infant or minor. § 310. Statutory provisions as to liability of master to servant. § 311. Servant waives danger by entering or remaining in service knowing of it, § 312. Aliter where he complains and master promises to remedy. § 313. Contributory negligence of servant — Failing to notify master of defect. § 314. Contributory negligence of servant — Going into dangerous situation by command of master. § 315. Contributory negligence of servant — Other cases of contributory neg- ligence. § 316. Contributory negligence of servant — Wbat not contributory negligence in servant. § 317. Doctrine of "comparative negligence." § 318. Contracts between master and servant as to injuries. § 319. Who are "fellow-servants " — Common employment the test, §320. Who are not "fellow-servants." § 321. Superior servant having control of inferiors a vice-principal. § 322. Servant having charge of construction or repair of machinery used by other servants. § 323. Servants of different masters. § 324. When relation of master and servant does not subsist — Time. § 325. Volunteer assisting servant. § 326. Evidence of incompetence of fellow-servant. §291 PEINCIPAL AND AGENT. 602 § 327. Evidence of negligence in selecting and maintaining machines and ap- pliances — Cases where it was held sufficiently shown. § 328. Same — Cases where it was held not sufficiently shown, § 329. Liability of servant to third person. § 330. Liability of servant to master. § 331. Liability of servant to fellow-servant. § 291. Master is Liable for Torts of Servant. — A master is liable civilly for wrongs committed by his servant while acting about his business.* A master is civilly liable to a statutory penalty for an illegal sale of intoxicating liquor, made by his servant without his knowledge or consent, and against his instruction.^ A railroad company is liable for its servant's negligence in leaving down the bars in a fence, where the plaintiff's horses escaped and were killed by a passing train, though the servant was employed as a day-laborer, and his act was done in the night-time, and 1 Yates V. Squires, 19 Iowa, 26; 87 Am. Dec. 418; Zulkee v. Wing, 20 Wis. 408; 91 Am. Deo. 425; Hart v. Railroad Co., 1 Rob. (La.) 178; 36 Am. Dec. 689; Johnson v. Barber, 5 Gilm. 425; 50 Am. Dec. 416; Powell v. De- veney, 3 Cush. 300; 50 Am. Dec. 738; Pickens v. Drecker, 21 Ohio St. 212; 8 Am. Rep. 55; Cosgrove v. Ogden, 49 N. y. 255; 10 Am. Rep. 361; Black v. Railroad Co., 10 La. Ann. 33; 63 Am. Dee. 586; Moore w.KtchburgR. R. Co., 4 Gray, 465; 64 Am. Dec. 83; Corrigan V. Union Sugar Refinery, 98 Mass. 577; 96 Am. Dec. 685; Donaldson a. Rail- road Co., 18 Iowa, 280; 87 Am, Dec. 391; Satterfield v. Western Union Tel. Co., 23 111. App. 446; Turberville v. Stampe, 1 Ld. Raym. 26; Hilsdorf v. St. Louis, 45 Mo. 94; 100 Am. Dec. 352; Minteri;. Pacific R. R. Co., 41 Mo. 503; 97 Am. Dec. 288; Limpua v. Lou- don etc. Omnibus Co., 1 Hurl. & C. 526; Pennsylvania etc. Steam Nav. Co. V. Hungerford, 6 Gill & J. 291; Illinois etc. R. R. Co. v. Reedy, 17 111. 582; Noble v. Cunningham, 74 111. 51; Cook V. Parham, 24 Ala. 21; Don- aldson V. Mississippi etc. R. R. Co., 18 Iowa, 280; 87 Am. Dec. 391; Arm- strong V. Cooley, 10 111. 509; Snyder V. Hannibal etc. R. R. Co., 60 Mo. 413; Simons v. Mouier, 29 Barb. 420; Gil- martin V. New York, 55 Barb. 239; Lannen v. Albany Gas Light Co., 46 Barb. 264; 44 N. Y. 459; Chapman u. New York etc. R. R. Co., 31 Bai-U 399; 33 N. Y. 369; 88 Am. Dec. 392; Courtney v. Baker, 60 N. Y. 1; Day V. Brooklyn etc. R. R. Co., 12 Hun, 435; Leviness v. Post, 6 Daly, 321; Tuel V. Weston, 47 Vt. 634; Enoa v. Hamilton, 24 Wis. 628; McCahill v. Kipp, 2 E. D. Smith, 413; Thomas V. Winchester, 6 N. Y. 397; 57 Am. Dec. 455; Ryall v. Kennedy, 8 Jones & S. 347; Harriss v. Mabry, 1 Ired. 240; Burns u. Poulsom, L. R. 8 Com. P. 563; Venables v. Smith, L, R. 2 Q. B. Div. 279; Whiteley v. Pepper, L. R. 2 Q. B. Div. 276; Pickard v. Smith, 10 Com. B., N. S., 470; Booth V. Mister, 7 Car. & P. 66; Sadler v. Henlock, 4 El. & B. 570; 1 Jur., N. S., 677; 24 L. J. Q. B. 138; Foreman V. Canterbury, L. R. 6 Q. B. 214; Whatman v. Pearson, L. R. 3 Com. P. 422; Mitchell v. Crassweller, 13 Com. B. 235; Wilson v. Rockland Mfg. Co., 2 Harr. (Del.) 67; Tebbutt v. Bristol etc. R. R. Co., L. R. 6 Q. B. 73; 19 Week. Rep. 383; 40 L. J. Q. B, 78; Holmea v. Wakefield, 12 Allen, 580; 90 Am. Dec. 171. 2 George v. Gobey, 128 Mass. 289; 35 Am. Rep. 376. 503 LIABILITIES OF MASTER AND SERVANT. § 291 not ill the business of the company.^ But the servant's act must be within the scope of his employment.^ Tlie master is not liable while the servant is acting outside of his business.^ A railroad company is not liable for dam- age to property adjoining its road, by a fire kindled by its sectiou-meu for the purpose of cooking their meals while engaged in repairing the track.* One employed to sell goods in his employer's absence, or to superintend his employer's business at a particular store, has no implied authority to arrest and search a person suspected of having stolen goods and secreted them about his person so as to render the employer liable in damages for such an arrest and search.* The owner of a bridge is not liable for in- jury caused by the bite of a dog belonging to his toll- keeper, if it appears that he did not authorize or require the dog to be kept, and that it was not needed for the conduct or protection of the business in which the owner of the dog was employed.* A master who permits his ser- vant to go to a fair with a horse and cart is not liable for damage arising from the servant's negligent management of the horse.^ A father is not liable for injuries caused 1 Chapman v. Railroad Co., 33 N. Y. 26 Pa. St. 482; Campbell «. Providence, 369; 88 Am. Deo. 392. 9 R. I. 262; Storey v. Ashton, L. R. 4 ■■'Reilly v. Railroad Co., 94 Mo. Q. B. 476; Rayneru. Mitchell, 2 Com. P. 600. 357; Sleath t-. Wilson, 9 Car. & P. 607; 'Mitchell V. Crassweller, 13 Com. Heath v. Wilson, 2 Moody & R. 181; B. 236; McManus «. Crickett, 1 East, Joel v. Morrison, 6 Car. & P. 501; 106; Wright «. Wilcox, 19 Wend. 343; Goodmans Kennell, 1 Car. & P. 167; 32 Am. Dec. 507; Douglassi;. Stephens, Patten v. Rea, 2 Cora. B., N. S., 606; 18 Mo. 362; McClenagan v. Brook, 5 Lyons v. Martin, 8 Ad. & E. 512; Rich. 17; Mali v. Lord, 39 N. Y. 381; Yates v. Squires, 19 Iowa, 26; 87 Am. 100 Am. Deo. 448; McKenzie v. Me- Deo. 418; Porter v. Chicago etc. R. R. Leod, 10 Bing. 385; Snyder «. Hanni- Co., 41 Iowa, 358; Higgins v. Chesa- baletc. R. R. Co., 60 Mo. 413; Hudson peake etc. Canal Co., 3 Harr. (Del.) V. Missouri etc. R. R. Co., 16 Kan. 411. See the sections on Liability of 470; Lamb v. Lady Palk, 9 Car. & P. Principal for Acts of Agent, for a fuller 629; Haack v. Fearing, 5 Robt. 528; exposition of this principle; also Bail- 35 How. Pr. 459; Wilson v. Peverly, ments, subtitle Carriers. 2 N. H. 548; McCoy w. McKowen, 26 * Morier v. Railroad Co., 31 Minn. Miss. 487; 59 Am. Deo. 264; Cavanagh 351; 47 Am. Rep. 793. V. Dinsmore, 12 Hun, 465; Cousins v. ^ Mali v. Lord, 39 N. Y. 381; 100 Hannibal etc. R. R. Co., 66 Mo. 572; Am. Dec. 448. 6 Cent. L. J. 294; Mitchell v. Crass- ^ Baker v. Kinsey, 38 Cal. 631; 99 weller, 13 Com. B. 236; Cantrell v. Am. Dec. 438. Colwell, 3 Head, 471j Bard v. Yohn, ' Bard v. Yohn,26 Pa. St. 482. § 291 PRINCIPAL AND AGENT. 504 by the negligence of his sou, who was also his hired man, in insecurely fastening a horse, the property of his father, the son taking the horse without the knowledge of his father, and not being engaged in his business.^ If a car porter throws a bundle of his own effects out of the car window, the railroad company is not liable to one struck by it.^ Illustrations. — Master Held Liable. — A warebouseman employed a master porter to remove a barrel from his ware- house. The master porter employed his own men and tackle. Through the negligence of one of his men, the tackle failed, and the barrel fell on the plaintiff. Held, that the warehouse- man was liable: Randleson v. Murray, 8 Ad. & E. 109. The defendant, owner of an express wagon, employed a driver, with authority to secure and transact such business as he could. The driver, having delivered a trunk, on his return got a load of poles for himself, and while carrying them home on the wagon negligently ran over and injured the plaintiff's child. Held, that the defendant was liable: Mulvehill v. Bates, 31 Minn. 364; 47 Am. Rep. 796. Defendant was the keeper of a gun store. His servant, a clerk in the store, while engaged, during defendant's absence, in exhibiting a gun to a customer, loaded it, contrary to defendant's orders. In so doing it was accidentally discharged, and shot the plaintiff, who was on the opposite side of the street. Held, that the defendant was liable for the injuries: Garretzen v. Duenckel, 50 ISlo. lOA; 11 Am. Rep. 405. A toll-gate keeper, having charge of the gate at all times, but not required to collect toll at night after nine o'clock, let the beam of the gate down upon the plaintiff, who was endeav- oring to pass the gate after that hour, and injured him. Held, that the company was liable: Noblesville etc. Road Co. v. Gause, 76 Ind. 142; 40 Am. Rep. 224. A druggist's clerk gives a customer, by mistake, a poisonous drug instead of the prescrip- tion called for, whereby the latter is injured. The master is hable: Fleet v. Hollenkemp, 13 B. Mon. 219; 56 Am. Dec. 568. In the absence of his master, a general farm servant, working in his master's cornfield with other servants, undertook to drive out a cow of the plaintiff which had broken into the field, and in so doing negligently struck her with a stone, and killed her while she was in the field. Held, that the master was liable: Evans v. Davidson, 53 Md. 245; 36 Am. Rep. 400. The plaintiff's horse was killed without negligence of the plain- ' Way V. Powers, 57 Vt. 135. Sleeping Car Company, 139 Maaa. ' Walton V. Kew York Central 556. 505 LIABILITIES OP MASTER AND SERVANT. § 291 tiff's servant, who Lad charge of him, by reason of a span of horses belonging to the defendant, which had run away with his coachman, running against a feed wagon in the public street. Held, that although the horses might have run away without any fault or negligence of the defendant's servant, yet the defendant was liable if the servant caused the injury by running against the feed wagon, although he ran against it solely with a view to his own personal safety, provided the act was a prudent one, by which to stop the defendant's horses: Wolfe v. Mersereau, 4 Duer, 473. The owner of a lot of land occupied by his servant directed him to summer-fallow a part of it, and in order to prepare the land for the plow, the ser- vant cut down and placed in piles on one side the brush grow- ing upon the premises, and then at a time of unprecedented drought, when the act was negligent in itself, directed his son, a lad, to set fire to the brush heaps, which he did, and thereby fire was communicated to the plaintiff's woods. Held, that the removal of the brush was within the scope of the servant's employment; that the act of firing was the act of the servant, and that the master was liable: Simons v. Monier, 29 Barb. 419. Defendant, a boiler-maker, had just completed a boiler for a customer. The boiler stood in the street in front of de- fendant's manufactory, and defendant told his superintendent to test it. The customer asked for a test under 180 pounds pressure; defendant said that 150 pounds was enough. The superintendent said that he would test it "200 anyhow." When the pressure was applied, defendant and the customer had walked away. After a pressure of 198 pounds, the super- intendent took hold of and held down the lever, when the boiler exploded, and plaintiff, who was standing in the street, was injured. Held, that the act of the superintendent, though reckless and fool-hardy, was within defendant's business: Ochsenbein v. Shapley, 85 N. Y. 214. The servants of the pro- prietor of a blacksmith-shop were guilty of negligence and unskillfulness. He left them in charge of his shop, and they were intrusted by him, in the proprietor's absence, with the task of shoeing his horse, although they were not employed for the purpose of shoeing horses. Held, that the proprietor was liable. Finding them in charge and at work, the plaintiff had a right to assume that they had authority and sufiBcient skill: Leviness v. Post, 6 Daly, 321. The owner of a stearnboat, the custom on which was to notify passengers when their landings were reached, held, to be liable for the negligence of two par- ties, one representing the officers of the boat, and the other representing the clerk, in directing a lady to disembark at a wrong landing in the night: Carson v. Leathers, 57 Miss. 650. § 291 PEINCIPAL AND AGENT. 506 A servant employed by a flour merchant to deliver goods, hav- ing started out with a wagon load for different customers, left by the roadside several bags of bran while he went upon a side road to deliver a quantity of flour, intending to take the bran on his return; his object being to save an unnecessary transportation of the bran, and thus finish the delivery sooner, and thus get time to attend to some private business of his own. Held, that in leaving the bags by the roadside he was to be regarded as acting in the master's employment, and that the latter was liable for an injury caused by the fright of a hcrse driven by: Phelon v. Stiles, 43 Conn. 426. The occupant of an upper tenement held to be liable for damages done to the lower one, by an overflow of water, caused by the negligence of his servant in leaving a faucet open: Simontori v. Loring, 68 Me. 164; 28 Am. Rep. 29. Plaintiff's husband, while drunk, lay down on a street-car track, and the driver of the car, though seeing an object which he thought to be a bundle of grain, made no effort to stop his car, in which he could easily have succeeded, but drove directly over the person, and so killed him. Held, that the company was liable: Werner v. Citizens' R'y Co., 81 Mo. 368. A master instructed his servant to go to a certain place and kill a beef, and the servant went, and finding no animal there but plaintiff's bull, killed and dressed that. Held, that the master was liable: Maier v. Ran- dolph, 33 Kan. 340. Illustrations Continued. — Master Held not Liable. — A coachman after having gone on an errand for his master, in- stead of going back to the stable, used the carriage in going on some business of his own without his master's knowledge, and while so driving injured a person. Held, that the master v/as not liable: Sheridan v. Charlick, 4 Daly, 338. A minor son, who had been permitted to use his father's horse and wagon without restriction, took them in the absence and without the knowledge of his father on business of his own, left the horse unfastened in the street, and the horse ran away and injured the plaintiff's carriage. Held, that the father was not liable: Maddox v. Brown, 71 Me. 432; 36 Am. Rep. 336. The defend- ants ordered their teamster to deliver a wagon-load of paper to Taylor in Glastonbury, four miles distant, and to return by way of Nipsic with a load of wood. On reaching Taylor's the latter requested the teamster to carry the paper to Hartford, four and a half miles farther, and at the railway station there to get some freight of Taylor's and bring to him. The teamster consented, and while he was paying the freight-bill at the sta- tion, the team, being left unfastened, ran away and injured 507 LIABILITIES OP MASTER AND SERVANT. § 292 plaintiff's property. Held, that defendants were not liable there- for: Stone V. Hills, 45 Conn. 44; 29 Am. Rep. 635. The plain- tiff put his mare in the defendant's livery-stable for keeping, instructing a servant of the latter to exercise her, but this was not part of the contract of keeping. The mare died in conse- quence of immoderate riding by the servant. Held, that the defendant was not responsible: Adams v. Cost, 62 Md. 264; 50 Am. Rep. 211. A truck-driver in defendant's employment ran over a person while away from his proper course, having gone at the request of a third person, a friend of his own, to deliver a trunk unconnected with defendant's business. Held, that defendant was not liable: Cavanagh v. Dinsmore, 12 Hun, 465. A master of a ferry-boat left the wharf of the owners without the direction of their agent, who alone possessed au- thority to start the boat upon each trip, and took a burning barge in tow. After towing the barge some distance, he was obliged to cut it loose, and it drifted against a yacht and dam- aged it. Htld, that the master of the ferry-boat was acting without the scope of his employment, and the owners of his boat were not liable for the injury to the yacht: Aycrigg v. Railroad Co., 30 N. J. L. 460. Defendant's armed watchman, employed to guard his brewery, fatally shot C. as he was retreating from the brewery. Held, that he was not liable in damages for the servant's act, it not being in the line of his dutj': Golden v. Newbrand, 62 Iowa, 59; 35 Am. Rep. 257. A servant is di- rected to drive cattle out of a certain field, and ho drives them elsewhere than out of the field, and one of them dies. The master is not liable: Oxford v. Peter, 28 111. 434. § 292. Willful and Malicious Acts.^ — It is held in a number of decided cases that where the servant acts will- fully and maliciously in doing a wrong to another the master is not liable, even though he does the act in the pursuit of his master's business,^ unless the master au- thorized the particular act or ratified it after it was com- 1 Vanderbilfc v. Turnpike Co., 2 N. 425; Oxford «. Peter, 28 111. 434; Mc- Y. 479; 51 Am. Deo. 315; Vfright v. Coy v. McKowen, 26 Mias. 487; 59 Wilcox, 19 Wcad. 343; 32 Am. Dec. Am. Dec. 264; Bichmoud Turnpike 507; Fraserv. Freeman, 43 N. Y. 566; Co. v. Vanderbilt, 1 Hill, 481; Cava- 3 Am. Rep. 740; Garvey v. Denig, 30 nagh v. Dinsmore, 12 Hun, 468; Ware How. Pr. 315; Steele v. Smith, 2 E. D. v. Canal Co., 15 La. 169; 35 Am. Dec. Smith, 321; Puryear v. Thompson, 5 189; Cox v. Keahey, 36 Ala. 340: 76 Humph. 397; Haltz v. Markel, 44 111. Am. Dec. 325; Hagerstown Bink v. 225; 92 Am. Dec. 182; Pritchard v. Adams Express Co., 45 Pa. St. 419; 84 Keefer, 53 111. 117; luller v. Voght, Am. Dec. 499. 13 111. 277; Johnson v. Barber, 10 111. § 292 PRINCIPAL AND AGENT. 508 mitled.' This doctrine has been often criticised and condemned, both by text-writers and by courts;^ and the later and better rule is, that a servant authorized to do an act is liable if he uses excessive force, though he does so willfully, and with malice towards the person injured;' and the master is liable, although the servant had no orders as to the particular act, or proceeded in the matter contrary to orders.* The principal must be held respon- sible where his employment afforded the agent the means or opportunity which he used while so employed in com- mitting an injury on a third person ; and the willful tres- pass or injury of the agent derived from the authority confided to him by the principal as a source of power in the exercise of his master's employment makes the prin- cipal responsible.^ Illustrations. — A trespasser on a locomotive was thrown off by the company's servants, while the train was running at a high rate of speed, and injured. Held, that the company was liable: Carter v. R. R. Co., 98 Ind. 552; 49 Am. Eep. 780. A was the owner of certain premises which he leased to B. Sub- sequently A and his servant, C, attempted to enter upon the premises by force, and in the conflict which ensued, C shot B, who spon afterwards died of the wound. In a civil action by the representatives of B to recover, under the statute, damages for the wrongful killing of their intestate, the judge refused to 1 MoManus v. Crickett, 1 East, 106; 8 Am. Rep. 451; Hawkins v. Riley, 17 Lindsay v. Griffin, 22 Ala. 629; Brown B. Mon. 101; Duggins v. Watson, 15 V. Purviance, 2 Har. & G. 316; Moore Ark. 118; 11 Am. Dec. 560; Buckley V. Sanborne, 2 Mich. 519; 59 Am. Dec. v. Kuapp, 48 Mo. 152; Metcalf v. 209. In a Missouri case a master was Baker, 2 Jones & S. 10; Bryant v. held liable to his landlord for the wan- Rich, 106 Mass. 180; 8 Am. Rep. 311; ton and reckless act of his clerk, which Redding v. R. R. Co., 3 S. C. 1; 16 blewup and destroyed the store: Mason Am. Rep. 681; Nashville etc. R. R. V. Stiles, 21 Mo. 371; 64 Am. Dec. 242. Co. v. Starnes, 9 Heisk. 52; 24 Am. ^ See Reeve on Domestic Relations, Rep. 297; Korah v. Ottawa, 32 111. 640; Cooley on Torts, 535; 2 Thomp- 121; 83 Am. Deo. 255. son on Negligence, sec. 4, p. 886. * Page v. Defries, 7 Best & S. 137; '' Hewett V. Swift, 3 Allen, 420; Leviness w. Post, 6 Daly, 321 ; Limpua Moorew. FitchburgR. R. Co.,4Gray, v. Omnibus Co., 1 Hurl. & C. 526; 465; 64 Am. Dec. 83; Seymour v. Southwick v. Estes, 7 Cush. 385; Gar- Greenwood, 6 Hurl. & N. 359; Croft retzen v. Duenckel, 50 Mo. 104; 11 V. Alison, 4 Barn. & Aid. 590; Howe v. Am. Rep. 405; Powell v. Deveney, 3 Newmarch, 12 Allen, 49; Wolfe v. Cush. 300; 50 Am. Dec. 738; Duggins ». Mersereau, 4 Duer, 473; Hawes v. Watson, 15 Ark. 118; 60 Am. Dec. 560. Knowles, 114 Mass. 518; 19 Am. Rep. * New Orleans etc. R. R. Co. v. All- 383; Sherley v. BUlings, 8 Bush, 147; britton, 38 Miss. 242; 75 Am. Dec. 98. 509 LIABILITIES OF MASTER AND SERVANT. § 293 charge that, "if the jury believe that C fired the shot which caused B's death, with the premeditated design to effect his death, A is not liable for his act." Held, error: Fraser v. Freeman, 43 N. Y. 566; 3 Am. Rep. 740. Defendant's engine- man wantonly and maliciously sounded the locomotive whistle, so as to frighten the horses of plaintiff, whereby he was injured. Held, that defendant was liable: Chicago etc. R. R. Co. v. Dickson, 63111.151; 14 Am. Rep. 114. A servant of a railway company, employed to clean and secure the cars and keep persons out of them, kicked the hand of a boy eleven years old from a railing while the car was in motion, causing him to fall and be run over and killed. Held, that although the act itself was in nobody's line of duty, yet if done while the servant was in the discharge of his duty, the company was liable: Northwestern R. R. Co. V. Hack, 66 111. 238. A horse is intentionally fouled in a race, or purposely run against or interfered with by the rider of another horse. Held, that the employer of such rider is lia- ble for the damages resulting: McKay v. Irvine, 11 Biss. 168. Defendant put a bag containing barley into his wagon under his shed. In two or three days thereafter his hired servant took the bag from the wagon, supposing it to contain oats, and carried it to a place where he was drawing logs for his master, to feed his horses with its contents. Finding his mistake, the servant fed some of the barley, and then put an iron bolt that he had been using as a clevice-pin into the bag, and carried the bag home and put it into the wagon where he found it with the barley and bolt in it, without informing his master of what he had done. Soon after the defendant, not knowing what his servant had done, nor that the bolt was in the bag, filled the bag with ears of corn, and carried the corn to plaintiff's mill to be ground, and in grinding, the bolt got into the corn-cracker and injured it. Held, that defendant was liable for the care- lessness of his servant: Tuel v. Weston, 47 Vt. 634. A brake- man willfully dashed a jet of water upon a passenger, who had refused to pay the brakeman for watering the passenger's hogs. Held, that the company was liable: Terre Haute and Indian- apolis R. R. Co. V. Jackson, 81 Ind. 19. A's servant, in charge of his horses and moving-machine, abandoned them to engage in a personal encounter with B. The noise of the fight fright- ened the horses, and they ran away, injuring the machine. Held, that the negligence of A's servant was the negligence of A, and he could not recover against B: Page v. Hodge, 63 N. H. 610. § 293. Trespasses of Servant. — So the master is liable for the trespasses of the servant,' but not if the trespass ^Luttrell V. Hazen, 3 Sneed, 20; v. Piper, 9 Barn. & C. 591; 4 Man. & Bath V. Caton, 37 Mich. 199; Gregory R. 500; Maokay v. Commercial Bank. § 293 PRINCIPAL AND AGENT. 510 be criminal and felonious.^ Thus the master has been held liable where he sends his servant to cut timber in his wood, without taking care to advise him as to its bounda- ries, and he thereby accidentally fells a tree on the land of another;'' or where he directs his servant to pile rub- bish in a certain place, and it accidentally slides down against his neighbor's wall;' or where a servant, in order to move his master's barge to a dock, removes the plain- tiff's therefrom, and so injures it.^ If a servant, in the ordinary course of his business, obstruct a highway, from which a traveler receives injury, the master is liable.' Where a railroad company employs a detective to arrest and prosecute persons obstructing its track, and he arrests an innocent person, the company is responsible.* The master is liable if the servant, while engaged in his mas- ter's service of pursuing a criminal, arrest illegally an- other man, supposing him to be the fugitive, though acting in disobedience of orders in further pursuit.'' Illustrations. — Laborers in the employ of a telephone com- pany, in erecting the line, cut trees not on the right of way, in disobedience of the company's orders. Held, that the company was not liable: Fairchild v. E. R. Co., 60 Miss. 931; 45 Am. Rep. 427. The plaintiff went to the defendant's store in New York City to purchase an ulster for herself. After she had examined one and put it on preparatory to its purchase, a floor- walker in the employ of the defendant approached and told her that she did not wish to purchase the ulster, but was a spy from a rival establishment, and told the saleswoman to take the cloak from the plaintiff, which was done. Held, that this con- stituted an actual assault, and that the defendants were liable for it: Geraty v. Stern, 30 Hun, 426. The defendant, owner of land adjoining the plaintiff's land, employed workmen to cut of Brunswick, L. R. 5 P. 0. 394; ♦Page v. Defries, 7 Best & S. Smith V. Webster, 23 Mich. 298; Po- 137. tulnir. Saunders, 37 Mian. 517; conJra, ^Harlow v. Humiston, 6 Cow. Bolingbroke v. Swindon Local Board, 189. L. E. 9 Com. P. 575. ^ EvansviUe etc. R. R. Co. v. Mo- ' Golden v. Newbrand, 52 Iowa, 59; Kee, 99 Ind. 519; 50 Am. Ecp. 35 Am. Rep. 257. 102. 2 Bath V. Caton, 37 Mich. 199. ' Harris v. Louisville etc. R. R. Co., ' Gregory v- Piper, 9 Barn. & C. 591. 35 Fed. Rep. 116. 511 LIABILITIES OF MASTER AND SERVANT. § 294 trees on his own land, but omitted to employ competent per- sons to superintend the work, or properly to instruct them, so that they might distinguish his boundaries. Held, that de- fendant was liable for trees of the plaintiff which the workmen ignorantly cut down and removed: Carmen v. Mayor etc. of New York, 14 Abb. Pr. 301. § 294. Who are Servants within Previous Sections. — The word "servant" in this connection is not restricted to domestic servants; it includes any person subject to the control of the party sought to be charged; the test briefly given being, Had he the right to control the per- son's conduct, and to discharge him from his employment for disobedience to his orders?' Another test is said to ' Michael v. Stanton, 3 Hun, 462; Blackwell v. Wiswall, 24 Barb. 355; Pawlet V. R. R., 28 Vt. 297; McGuire V. Grant, 25 N. J. L. 357; 67 Am. Dec. 49; Blake v. Ferris, 5 N. Y. 48; 55 Am. Dec. 304; Qaarman v. Burnett, 6 Mees. & W. 509; Wood v. Cobb, 13 Allen, 58; Kimball n. Cushman, 103 Mass. 194; 4 Am. Rep. 528; Corbin v. Am. Mills, 27 Conn. 274; 71 Am. Dec. 63. In Brackett v. Lubke, 4 Allen, 138, 81 Am. Dec. 694, in holding the tenants of a house liable to damages for an injury to a pedestrian, caused by the negligence of a carpenter em- ployed by him on the building, the court say: "The defendants are lia- ble because it appears that the negli- gent act which caused the injury was done by a person who sustained towards them the relation of servant. There was no contract to do a certain specified job or piece of work in a par- ticular way for a stipulated sum. It is the ordinary case where a person was employed to perform a service for a reasonable compensation. The defendants retained the power of con- trolling the work. They might have directed both the time and manner of doing it. If it was unsafe to make the repairs or alterations at an hour when the street was frequented by passers, it was competent for the defendants to require the person em- , ployed to desist from work until this danger ceased or was diminished. If the means adopted to gain access to the awning were unsuitable, the de- fendants might have directed that an- other mode should be used. In short, if the work was in any respect con- ducted in a careless or negligent man- ner, the defendants had full power to change the manner of doing it, or to stop it, and to discharge the person employed from their service. The mere fact that the work was done by one who carried on a separate and in- dependent employment does not ab- solve the defendants from liability. If such were the rule, a party would be exempt from responsibility even for the negligent acts of his domestic servants, such as his cook, coachman, or gardener. This point was distinctly adjudicated in Sadler v. Henlock, 4 El. & B. 570. The distinction on which all the cases turn is this: If the person employed to do the work carries on an independent employment, and acts in pursuance of a contract with his employer by which he has agreed to do the work on certain speciiied terms, in a particular man- ner, and for a stipulated sum, then the employer is not liable. The relation of master and servant does not subsist between the parties, but only that of contractor and contractee. The power of directing and controlling the work is parted with by the employer and given to the contractor. But, on the other hand, if work is done under a general employment, and is to be per- formed for a reasonable compensation § 294 PRINCIPAL AND AGENT. 512 be, "Was the employee working by the job, or at wages by the day, week, or month? If the latter, he is a "servaut," and the master is responsible for his acts.' Where the hirer of a team with a driver agrees with the owner that he will temporarily furnish his own driver, the hirer is bound to ordinary care toward the owner, and the driver is his servant.^ A lessor is not liable to a servant of the lessee for an injury resulting from the negligence of the latter, unless it arose from some unperformed duty remaining upon the lessor, even though the servant was originally the servant of the lessor, was ignorant of the lease, and supposed himself still in the lessor's employ.' Whether a teamster through whose negligence in deliver- ing coal one falls into a coal-hole and is injured is, in an action therefor, to be considered as the servant of the / occupant of the building, depends on whether such occu- pant had the right to control the manner of delivery.* One engaged in selling and delivering wood to the pro- prietor of a mill at so much per cord is not an employee of the proprietor so as to put him in the situation of one ■who takes the risk upon himself of negligence in those running the mill.° A contractor for a job, by accepting and paying for work done thereon by a mechanic without bis prior order or authority, does not render liimself liable for injuries caused to a third person by a negligent act committed by the mechanic while doing the work, not or for a stipulated price, the employer Brackett v. Lubke, 4 Allen, 138; 81 remains liable, because he retains the Am. Dec. 694. See Moore v. Sanborne, right and power of directing and con- 2 Mich. 519; 59 Am. Dec. 209; City trolling the time and manner of exe- of Tiffin v. McCormack, 34 Ohio St. cuting the work, or of refraining from 638; 32 Am. Rep. 408. But it has doing it if he deems it necessary or been held in Conecticut that this test expedient. This distinction is recog- is not always decisive : Corbin v. Amer- nized in the cases adjudged by this ican Mills, 27 Conn. 274; 71 Am. Dec. court: Sproul v. Hemmingway, 14 63. Pick. 1; 25 Am. Dec. 350; Stone v. ^ Hofer v. Hodge, 52 Mich. 372; 50 Codman, 15 Pick. 299; Milliard v. Am. Rep. 256. Richardson, 3 Gray, 349; 63 Am. Dec. ' Crusselle v. Pugh, 67 Ga. 430; 44 743; Linton v. Smith, 8 Gray, 147." Am. Rep. 724. 1 2 Thompson on Negligence, 912; * Clappti. Kemp, 122 Mass. 481. Schular v. R. R. Co., 38 Barb. 653; * Wadsworth v. Duke, 50 Ga. 91. 513 LIABILITIES OF MASTER AND SERVANT. § 294 a part or result of the work itself, e. g., carelessly letting fall a brick.' The relation of master and servant does not exist between a contractor in a penitentiary and a con- vict; and the contractor is not liable to a third person for injuries resulting from the negligence of the convict in the course of his employment.^ A fireman in the city in which he lives has no such relation to it as a servant as to prevent his maintaining an action to recover special dam- ages occasioned by defects in a highway in such city/ nor has a police officer.* The inmates of a county hospital are not servants of the superintendent, and he is not respon- sible for their acts.^ A gas company is not responsible for injuries sustained in consequence of the carelessness, in letting on gas, of a person who, though formerly an agent of the company, is no longer such, but is permitted by the company to let on gas when a consumer requests- it.* A party who avails himself of the use, temporarily,, of the services of a servant regularly employed by another person may be liable, as master, for the acts of such ser- vant during the temporary service.' Whether the relation of master and servant or principal and agent exists be- tween defendants jointly prosecuted for a tort, is a question of fact for the jury.' Illustbations. — G. and S. occasionally exchanged labor with their teams. On one occasion G. sent a driver with a team to draw some material for S. Held, that while so employed the driver was the servant of G., and S. was not liable for the negligence of such driver: Michael v. Stanton, 5 Thomp. & C. 634; 3 Hun, 462. A storekeeper, having sold merchandise, permitted or directed the purchaser's servant to remove it by throwing it from an upper window into the street. The ser-_ vant did this carelessly, and injured the plaintiff. Held, that ' Coomes u. Houghton, 102 Mass. ♦ Kimball v. Boston, 1 Allen, 417. 211. sggjjrubbe v. Connell, 69 Wis. ^ Cunningham v. Bay State Shoe and 476. Leather Co., 25 Hun, 210; Hartwig v. " Flint v. Gloucester Gaslight Co., 9 ' Bay State Shoe and Leather Co., 43 Allen, 552. Hun, 425. ' Wood v. Cobb, 13 Allen, 58. 3 Palmer v. Portsmouth, 43 N. H. » Banfleld v. Whipple, 10 Allen, 27;. 265. 87 Am. Dec. 618. Vol. I.— 33 § 294 PRINCIPAL AND AGENT. 514 the storekeeper was not liable: McCullough v. Skoneman, 105 Pa. St. 169; 51 Am. Rep. 194. The owners of a foundry for years had given the ashes to their engineer in consideration of his removing tliein after working hours. The engineer de- posited them, to the knowledge of his employers, on an unin- closed lot opposite the foundry, owned by third persons, whose permission he had obtained, and sold the ashes to third per- sons, and to the defendants. A young child, running across that 1ft, fell into a quantity of the hot ashes, and was burned. Held, that the owners of the foundry ^ere not liable therefor: Burlce v. Shaw, 59 Miss. 443; 42 Am. Rep. 370. A and B were partners. A owned individually a horse and carriage, which he sent with his own servant to the station to meet B and bring him to the store. While going to the store with B, the servant recklessly ran against C and injured him. Held, that the ser- vant was not the servant of B, and that B was not liable: Muse v. Stern, 82 Va. 33; 3 Am. St. Rep. 77. In an action against A for the negligence of B, it having been shown that A was working under a contract to haul sand at so much a load from B's lot, held, that to determine whether the relation of master and servant existed between A and B, a witness might be asked by whose orders A quit drawing sand from another lot of B, and whether B could have directed A to stop hauling from the lot in question: Fink v. Missouri Furnace Co., 10 Mo. App. 61. Defendant was the owner of a certain building, and after it was burned he allowed certain persons to enter on the premises for the purpose of removing the debris, which they did so unskill- fully that they knocked down the walls of the house onto plaintiff's premises. Held, to show the relation of master and servant, making defendant liable: Dillon v. Hunt, 82 Mo. 150. V. was a passenger on a street-car, drawn by horse-power, and on its arrival at a point of intersection with a steam railroad, the crossing was occupied by a train of cars belonging to the latter company, and the horse-car stopped to wait the passage of the train. After the train had crossed the street, the flag- man of the steam railroad company signaled the driver of the car to go forward, and he did so, and at the same time the train backed and struck the car before it had quite crossed the track, injuring V. Held, in an action against the horse-rail- road company, that the fact that the driver of the horse-car had been directed by his superior to obey the signals of the flagman, and did so obey them, did not convert the flagman into an agent of the horse-railroad company: Chicago etc. M. R. Co. v. Voile, 45 111. 175. A bought a heavy article of B, at his store, and sent a porter to get it, and the porter, by permission of B, using his tackle and fall, through negligence suffered the article 615 LIABILITIES OF MASTEK AND SERVANT. § 295 to fall, by which C was injured. Held, that the porter acted as the servant of A, and that B was not answerable: Stevens v. Armstrong, 6 N. Y. 435. A contractor, engaged in repairing a bridge upon a railroad for the company, employs men to work thereon by the day. Held, that the latter are the servants of the contractor, and not of the company; and between them and the company there is no privity whatever: Yov/ng v. Railroad Go., 30 Barb. 229. A public licensed drayman was employed to haul a quantity of salt from a warehouse, and deliver at the store of the employer at so much per barrel, and while in the act of delivering the salt, one of the barrels, through the care- lessness of the drayman, rolled against and injured a person passing on the sidewalk. Held, that the employer was not lia- ble for the injury: De Forrest v. Wright, 2 Mich. 368. A railroad company undertook to remove a cargo of coal from a vessel to its freight-cars, and having had some diflBculty with the gang of shovelers, who were on a strike, made an arrangement with its weigh-master to allow him a certain sum per ton for shovel- ing and dumping the coal, and that he should employ the shovelers, and if he could employ them for less than the sum allowed him, the difference should be his perquisite, indepen- dent of his regular wages as weigh-master. The weigh-master then hired a gang of shovelers, made his returns weekly to the company of the number of tons shoveled, received the amount allowed him, and paid the shovelers. The regular pay- rolls of the employees of the company, including the weigh- master, did not embrace the shovelers. Held, that the shovelers were not the servants of the company: Burke v. Railroad Co., 34 Conn. 474. § 295. Master not Liable for Acts of Independent Con- tractor. — Where a person contracts with another exercis- ing an independent employment to do a work for him, ac- cording to the contractor's own methods, and not subject to his control or orders except as to the results to be ob- tained, the former is not liable for the wrongful acts of such contractor or his servants.' So a contractor is not ' Hilliard v. Richardson, 3 Gray, Barry v. St. Louis, 17 Mo. 121; Bos- 349; 63 Am. Dee. 743; Harkins v. well v. Laird, 8 Cal. 469; 68 Am. Dec. Standard Sugar Co, 122 Mass. 400; 345; Fanjoy v. Scales, 29 Cal. 243; Forsyth v. Hooper, 11 Allen, 419; Du Pratt b. Lick, 38 Cal. 631 ; Schuler Lurton». Smith, 8 Gray, 147; Coomes v. Hudson R. R. Co., 38 Barb. 653; V. Houghton, 102 Mass. 211; Mor- Blake v. Ferris, 5 N. Y. 48; 55 Am. gan V. Bowman, 22 Mo. 538; Clark Dec. 304; Detroit v. Corey, 9 Mich. 11. Hannibal E. E. Co., 36 Mo. 202; 165; 80 Am. Dec. 78; Darmstaetter v. § 295 PRINCIPAL AND AGENT. 516 liable for the wrongs of an independent subcontractor;* nor the subcontractor for the acts of his subcontractor, and so on.^ If a person hires a wagon or carriage, horses and driver, to another, the former is alone liable for the negligence of the driver which injures a third person,' or wliich damages the vehicle.* One who contracts with a furnace company to dig sand on its land and draw it to its furnace at a fixed price per load, there being no pro- visions as to the manner of the performance of the work, is not a servant for whose negligence the company is liable.* The lessee of land is not the servant of his les- Moynahan, 27 Mich. 188; Allen v. Willard, 57 Pa. St. 374; Erie v. Oaul- kins, 85 Pa. St. 247; Paulet v. Rut- land R. R. Co., 28 Vt. 297; Robinson r. Webb, 11 Bush, 464; Kellogg <,. Payne, 21 Iowa, 575; Callahan v. Burlington etc. R. R. Co., 23 Iowa, 562; Wood v. School District, 44 Iowa, 27; Kansas etc. R. R. Co. v. Fitzsim- mons, 18 Kan. 34; Schewickhardt v. St. Louis, 2 Mo. App. 571; Harrison V. Collins, 86 Pa. St. 153; 27 Am. Rep. 699; Cincinnati v. Stone. 5 Ohio St. 38; Clark v. Fry, 8 Ohio St. 358; 72 Am. Deo. 590; Kepperly o. Ramsden, 83 111. 3.54; Scammon v. Chicago, 25 111. 424; 79 Am. Dec. 334; West v. St. Louis etc. R. R. Co., 63 111. 545; Prairie State Co. v. Dorg, 70 111. 52; Hale V. Johnson, 80 111. 185; Connors V. Hennessey, 112 Mass. 96; Wright V. Holbrook, 52 N. H. 120; 13 Am. Rep. 12; Pack v. New York, 8 K. Y. 222; Painter v. Pittsburgh, 46 Pa. St. 213; Hunt v. Pennsylvania R. R. Co., 51 Pa. St. 475; Reedz;. Allegheny City, 79 Pa. St. 300; Wray v. Evans, 80 Pa. St. 102; Ryder v. Thomas, 13 Hun, 296; Clark v. Vermont etc. R. R. Co., 28 Vt. 103; Van Wert v. Brooklyn, 28 How. Pr. 451; Benedict v. Martin, 36 Barb. 288; Barrett v. Singer Mfg. Co., I Sweeny, 545; McCafferty v. Spuyten Duyvil etc. R. R. Co., 61 N. Y. 178; 19 Am. Rep. 267; O'Rourke v. Hart, 7 Bosw. 511; 9 Bosw. 301; Potterw. Sey- mour, 4Bosw. 140; Kelly ii. New York, II N. Y. 432; 4 E. D. Smith, 291; Gent V. New York, Seld. Notes, 240, Gardner v. Bennett, 6 Jones. & S. 197; King V. New York etc. R. R. Co., 66 N. Y. 182; 23 Am. Rep. 37; Pierpont V. Loveless, 72 N. Y. 211; Linton v. Smith, 8 Gray, 147; Eaton v. Railroad Co., 59 Me. 520; 8 Am. Rep. 430; Cuff V. Railroad Co., 35 N. J. L. 17; 10 Am. Rep. 205; MoGuire v. Grant, 25 N. J. L. 350; 67 Am. Dec. 50; Mulcahy v. Dock Co., 8 Daly. 03; Lancaster etc. Improvement Co. v. Rhoads, 116 Pa. St. 377; 2 Am. St. Rep. 608; Mayor v. McCarry, 84 Ala. 469; Brown v. MoLeash, 71 Iowa, 381. "If the person employed to do the work carries on an independent em- ployment, and acts in pursuance of a contract with his employer, by which he has agreed to do the work on cer- tain specified terms, in a particular manner, and for a stipulated price, then the employer is not liable. The relation of master and servant does not subsist between the parties, but only that of contractor and con- tractee ": Bigelow, C. J., in Brackett V. Lubke, 4 Allen, 138; 81 Am. Dec. 694. But see Stone v. Cheshire R. Pv. Co., 19 N. H. 427; 51 Am. Deo. 192 1 Cuff V. Newark Co., 35 N. J. L. 17; 10 Am. Rep. 205; Slater v. Mesereau, 64 N. Y. 138; 5 Daly, 445; Holt V. WTiatley, 51 Ala. 569. 2 Knight V. Fox, 5 Ex. 721. 2 Quarman v. Burnett, 6 Mees. & W. 499; Crockett v. Calvert, 8 Ind. 127. * Ames V. Jordan, 71 Me. 540; 36 Am. Rep. 352. ^ Fink V. Furnace Co., 82 Mo. 276; 52 Am. Rep. 376. 517 LIABILITIES OF MASTER AND SERVANT. § 295 sor;* nor the vendee in possession the servant of the ven- dor;^ so, also, the receiver of a corporation is not its servant within this rule.' So as between the owner and charterer of a vessel, the owner is liable for the acts of the crew if he provides them and controls them;^ the charterer is liable if the whole matter is given into his control for a certain term.* A ship-owner is not liable for an injury to his employee by the negligence of a stevedore in loading the vessel.* A licensed pilot voluntarily employed by the owner of a vessel is his servant, for whose acts he is re- sponsible.' And where it is compulsory by law for the master to take a particular pilot, his acts are not the acts of the owner or of the master.® Illustrations. — Master Held not Liable. — The plaintiff was injured by the negligent driving of the defendant's team by the defendant's driver, both team and driver being hired by a third person, who had requested the services of that particu- lar driver. Held, that the defendant was not liable: Joslin v. Grand Rapids Ice Co., 60 Mich. 516; 45 Am. Rep. 54. The de- fendant contracted to have T. cut timber from defendant's land at a specified price per foot, and deliver it at the mouth of a certain river, using the defendant's dams in the driving of the logs, if he chose. T. used the defendant's dam in the business in an unreasonable manner, to the plaintiff's injury, but the defendant had nothing to do with the cutting, hauling, or driv- ing of the logs. Held, that the defendant was not liable: Carter V. Berlin Mills, 58 N. H. 52; 42 Am. Rep. 572. The defendant, owning a saw-mill, employed master machinists to repair the water-wheel, and the machinists sent the plaintiff with others to do the work. It was understood between the workmen and 1 Fiske V. Manufacturing Co., 14 « Rankin v. Trans. Co., 73 Ga. 229; Pick. 491; Blackwell v. Wiswall, 24 54 Am. Bep. 874. Barb. 355; 14 How. Pr. 257; Norton ' Yates v. Brown, 8 Pick. 23; Shaw e. WiswaU, 26 Barb. 618; 14 How. v. Reed, 9 Watts & S. 72; Bussy v. Pr. 42. Donaldson, 4 Dall. 206; The Killar- 2 Earle v. Hall, 2 Met. 353. ney, 1 Lush. 427; Neptune the Sec- ' Ohio etc. R. R. Co. v. Davis, 23 ond, 1 Dod. 4671 Ind. 553; 85 Am. Dec. 477. « Snella. Rich, 1 Johns. 305; Bennet * Annett v. Foster, 1 Daly, 502; v. Moita, 7 Taunt. 258; The Annapo- Fenton v. Dublin Steam Packet Co., 1 lis, 1 Lush. 295; The Maria, 1 Wm. Perry & D. 103; 8 Ad. & E. 835; Dal- Rob. 106; General Steam Navigation yell ». Tyrer, El. B. & E. 906. Co. v. British Navigation Co., L. R. 3 ' Abbott on Shipping, sec. 55; Korah Ex. 330. B. Ottowa, 32 111. 121; 83 Am. Dec. 255. § 295 PRINCIPAL AND AGENT. 518 the defendant that the mill should be run when they were not working on the wheel. While they were so. at work, the de- fendant's engineer negligently started the wheel, injuring the plaintiff. Held, that defendant was not liable: Ewan v. Lip- pincott, 47 N. J. L. 192; 54 Am. Rep. 148. When the plaintifiF was driving on a highway, his horse became frightened at a eteam-shovel in use on the defendant's lands near the road, and ran away, and the plaintiff was hurt. The shovel was operated and controlled by an independent contractor, although the defendant contemplated its use when the contract was made. Held, that the defendant was not liable: Bailey v. Railroad Co., 57 Vt. 252; 52 Am. Rep. 129. An owner of land contracts with a person to clear it. In doing so the contractor starts a fire, which communicates to adjoining land. Held, that the em- ployer is not responsible: Ferguson v. Hubbell, 97 N. Y. 507; 49 Am. Rep. 544. A ship was chartered to the commissioners of the royal navy as an armed vessel, and navigated by a master and sailors provided by the owner. Held, that he was liable for damage done to another vessel by the misconduct of such crew, although a commander of the royal navy and a king's pilot were on board: Fletcher v. Braddick, 2 Bos. & P. N. R. 182. The plaintiff was injured by the carelessness of men occupied in repairing the roof of defendant's building. The men were employees, and under the orders of one who carried on the busi- ness of slating roofs, and who was engaged by the defendant to do the job in question. Held, that the slater carried on an in- dependent employment, and the defendant was not liable: Mc- Carthy V. Second Parish of Portland, 71 Me. 318; 36 Am. Rep. 320. One of the defendants, a painter, contracted to paint the interior of a dome, and having no knowledge of building scaf- folds, contracted with the other defendant, an experienced scaffold-builder, to erect a first-rate scaffold therefor. The builder defectively constructed the scaffold, and it gave way and caused the death of the plaintiff's intestate, who was at work upon it in the master painter's employ. It did not appear that the master knew or had reason to know of the defect. Held, that the master was not liable, but that the builder was: Devlin v. Smith, 89 N. Y. 470; 42 Am. Rep. 311. A being noti- fied by the authorities of the citj' to take down his house, or to make it safe, thereupon entered into a verbal contract with B, whereby B agreed " to take the building down." In doing so, B negligently weakened a party-wall, and caused the house of C to fall. Held, that A was not liable to C: Earl v. Beadleston, 10 Jones & S. 294. A town contracted with a person to clear off a strip of land surrounding a pond, which it had purchased for the purpose of supplying its inhabitants with water. In so 619 LIABILITIES OF MASTER AND SERVANT. § 295 doing he negligently set fire to the timber and fences of an ad- jacent owner. Held, that the town was not liable: Wright v. Holbrook, 52 N. H. 120; 13 Am. Kep. 12. A well-borer con- tracted with a school district to bore a well in the school-house yard. He left his machine unguarded, whereby one of the school children was injured. Held, that the school district was not liable: Wood v. Independent School District, 44 Iowa, 27. A enters into a contract to protect B's farm from fire, and, in carry- ing itcut, sets fire to the field of C. Held, that A, and not B, must pay damages to C: Kellogg v. Payne, 21 Iowa, 675. A, the pro- prietor of a pinery, contracted with B that B should cut all the logs A had on certain land, and deliver them to A at a place named, A to have no part in the running of the logs until they reached the place named, and not to render B any assistance in the prosecution of the work, pecuniary or otherwise. Held, that B was not the servant of A, and A was not liable for B's negligence in obstructing the navigation: Moore v. Sanborne, 2 Mich. 519; 59 Am. Dec. 209. A employed B to construct a drain in a public highway; B employed C to fill in the earth over the brick-work, and to carry away the surplus. C, in performing his work, left the earth raised so much above the level of the road that D, driving in the dark, was thereby upset and injured. A was held not responsible for the neg- ligence of C: Peachey v. Rowland, 13 Com. B. 182. D. and M. had an absolute contract with a railroad company to draw their cars, furnishing the horses and drivers, and assuming the entire control. Held, that the company was not liable for injury arising from the negligence of D. and M.'s employees in this work: Schular v. Railroad Co., 38 Barb. 653. The defendant, who was an undertaker, was employed by a third person to superintend a funeral, it being arranged that he should furnish carriages for various persons, among whom was the plaintifiT, who were to attend the funeral. While returning from the funeral, the driver of the plaintiff's carriage stopped at and entered a hotel, leaving his horses, which ran away and injured the plaintiff. There was evidence that the driver had entered the hotel at the invitation of defendant. The carriage and horses were owned by the driver. Held, that the defend- ant was not liable for the injury: Boniface v. Relyea, 6 Kobt. 397; 5 Abb. Pr., N. S., 259. ,The owner of a building employed a plumber to repair the water-pipes in his own way. Held, not liable for an injury produced to a third person by his negligence in that work: Bennett v. Truebody, 66 Cal. 509; 56 Am. Rep. 117. A was employed to paint a church, and he gave to B a contract for frescoing. A lent B two competent men, who were sent up to place the planks, etc. A painter employed by B sustained § 295 PRINCIPAL AND AGENT. 520 injury from the breaking of one of these planks. The planks were furnished by the church. The painter who was injured sued A on the ground that the men sent to do B's work should have detected the imperfection in the plank. Held, that the action could not be maintained: Ditberner v. Rogers, 66 How. Pr. 35; 13 Abb. N. C. 436. Plaintifif was injured by a falling fence built by a contractor whom defendant had employed to construct a vault for a new building to be erected. Held, that defendant was not liable: Martin v. Tribune Ass'n, 30 Hun, 391. B agreed, for a specified sum, to dig a ditch and lay a pipe for A, A to furnish pipe and boxing, but to have no further connec- tion with the work. Held, that B was an independent con- tractor, for whose negligence in leaving the ditch unprotected, whereby C sustained injury, A was not responsible: Smith v. Simmons, 103 Pa. St. 32; 49 Am. Rep. 113. A was employed to paint a building, and not being able himself to build a scaffold, employed a skillful and competent person to build it. It broke, and one of A's workmen was injured. Held, that A was not liable: Devlin v. Smith, 25 Hun, 206. A canal-boat came to the dock of A, who was bound to unload her. He employed shovelers, who, at the request of the captain of the boat, and for the convenience of all, moved a scow, to her injury. Held, that A was not liable: Morrell v. Rheinfranh, 24 Fed. Eep. 94. A railway company contracted with certain parties to construct its road and its appurtenances. The contractors hired the plaintiff to work upon a freight-house they were building for the company. A poisonous mixture, in which corrosive subli- mate was an ingredient, was applied to the timber to prevent decay. The plaintiff was injured by breathing the exhalations of this substance, and by handling the timber to which it had been applied. Held, that the railway company was not liable to the plaintiff for the injury he received, but that the contrac- tors were solely responsible, and were not in this respect the servants of the company: West v. St. Louis etc. R. R. Co., 63 111. 545. A railway company employs a contractor to build its road, and agrees to furnish the motive power and operate the construction trains, the contractor to handle all material, and build a certain number of miles per month. Held, that the company's engineer on a construction train is not under the control of the company, but under that of the contractor, and the company is not liable for injuries caused by negligence of the engineer in too rapidly operating the train: Miller v. Min- nesota etc. R'y Co., Iowa, 1888. Illdstkations Continued. — Master Held Liable. — The defendant's horse kicked a loose shoe through the plaintiff's 521 LIABILITIES OF MASTER AND SERVANT. § 296 window-glass. The horse was being driven by a person paid by the defendant, and by the latter let with a wagon by the day to a city in the work of paving streets. It was under the sole management of that person, whose duty it was to keep it properly shod. Held, that the driver was at the time the ser- vant of the defendant, and the defendant was liable for the in- jury: Huffy. Ford, 126 Mass. 24; 30 Am. Rep. 645. A railroad company let certain work to a contractor, furnishing him a con- struction train, with an engineer to run it. Except in respect to speed and side-tracking for other trains, the train was under the control of the contractor. The company was bound to dis- charge the engineer on the contractor's complaint; otherwise, the company controlled him; and it paid his wages, but de- ducted them from the amount due the contractor. Held, that the engineer was the servant of the company: New Orleans etc. R. R. Co. V. Norwood, 62 Miss. 565; 52 Am. Rep. 191. The owner of cars used by the railroad company agreed to clean them. His employee, while crossing the track in the discharge of his duty, was injured by a car negligently and suddenly set in motion by employees of the railroad company. Held, that the employee had a right of action against the railroad com- pany: Harold v. New York Central etc. R. R. Co., 13 Daly, 89; Young v. New York Central etc. R. R. Co., 13 Daly, 294. A rail- road furnished platform cars to shippers of lumber, allowing shippers to furnish stakes or standards to set in the iron sockets and support the lumber. A stake so furnished broke, precipi- tating a brakeman, on the lumber, to the ground. Held, that the brakeman had an action against the railroad: Bushbyy.New York, Lake Erie etc. R. R. Co., 107 N. Y. 374. An employee of a railroad permitted an incompetent engineer to take charge of a train, and an accident ensued. Held, that the company was liable to a passenger injured: Lakin v. R. R. Co., 15 Or. 220. §296. Exceptions — Where Work is a Nuisance or Dangerous per Se. — An exception to this rule exists where the work is wrongful per se, and must result in a nuisance. Here the original employer will be liable for any injury done to third persons, although the work is employed by an independent contractor, employing his own servants.' If. o}xe employs a contractor to enter upon ' Ellis V. Sheffeld Gaa Co., 2 El. & Robbins, 2 Black, 418; Cuff v. New- B. 766; Keegan u. Weatern R. R. Co., ark R. R. Co., 35 N. J. L. 17; 10 8 N. Y. 175; 59 Am. Deo. 476; Look- Am. Rep. 205; Kellogg v. Payne, 21 ■wood V. New York, 2 Hilt. 66; Water Iowa, 578; Hundhausen v. Bond, 36 Co. V. Ware, 16 WaU. 566; Chicago v. Wia. 29; Clark v. Fry, 8 Ohio St. 358; § 296 PRINCIPAL AND AGENT. 522 land and do certain work, and it turns out that the entry is a trespass, the employer is liable for a trespass thus committed by a subcontractor.* One who employs an- other to fill his ice-house by the cord, and obtains license from the municipal authorities to encumber the street for that purpose, cannot shield himself from liability for injuries caused by unlawfully obstructing the street with blocks and fragments of the ice, under an objection that his employee was a contractor and alone liable.'' So, too, where the work is per se dangerous to others, the pro- prietor is required to foresee such dangers and provide against them.* So, where the injury is caused by defective construction which was inherent in the original plan of the employer.* He cannot relieve himself from liability to third persons by any contract he may make with the contractor.^ Illusteatioks. — A, a proprietor, employed B, a contractor, to tear down and rebuild his house, committing the entire work to B, who assumed the risk of supporting the adjacent house of C, which was entitled to support from the house of A. The house of C was injured, through the negligence of B in failing properly to support it. A was held answerable in dam- ages to C : Bower v. Peate, L. R. 1 Q. B. Div. 321 ; Brown v. Werner, 40 Md. 15. Defendant employed B, who was engaged in ''the roofing and cornice business," to repair the cornice of his hotel, in the city of New York. No price or plan was specified; and the mode of repair and the means to be employed were left en- tirely to the judgment of B. The employees of B suspended a ladder from the roof, upon which planks were placed to serve as a scafibld. A heavy wind caused one of the planks to fallj 72 Am. Dec. 590; Carman v. Steuben- ' Leber v. Minneapolis and North- ville, 4 Ohio St. 399; Treadwell u. western R'y Co. , 29 Minn. 256. New York, 1 Daly, 128; Creed v. ^ Damistaetter v. Moynahan, 27 Hartmann, 29 N. Y. 591; 86 Am. Dec. Mich. 188. 341; Lowell v. Boston etc. E. R. Co., ^ Robbins v. Chicago, 4 Wall. 657; 23 Pick. 24; 34 Am. Dec. 33; Deford Chicago v. Robbina, 2 Black, 418. V. State, 30 Md. 179; City of Tiffin v. * BosweU v. Laird, 8 Cal. 469; 68 McCormack, 34 Ohio St. 638; 32 Am. Am. Dec. 345; Lancaster v. Conn. Rep. 408. One who employs a con- Mat. Ins. Co., 92 Mo. 460; 1 Am. St. tractor to do an unlawful act is re- Rep. 739. sponsible for any damage arising from ^ Ellis v. Gas Co. , 2 El. & B. 770j the negligent manner in which the Carman v. Steubeuville, 4 Ohio St. work is performed: Congreve v. Mor- 399. gan, 5 Duer, 495. S23 LIABILITIES OF MASTER AND SERVANT. § 297 and it struck and injured the plaintiff, who was passing. De- fendant was not in the city during the repairs, and had no knowledge of the manner in which they were being done. The building was separated from the sidewalk by an area fifteen feet wide. Held, that the scaffold was not a nuisance, and the defendant was not liable: Hexamer v. Webb, 101 N. Y. 377; 54 Am. Rep. 703. § 297. Where Duty is Imposed by Contract. — So, also, where a person contracts to do a certain thing, he cannot evade liability by giving over to another the work he has agreed to perform.^ Thus where a mining company con- tracts for the removal of ore, but assumes the duty of making arrangements to protect the workmen, it is liable to the contractor's employees for injury in conseauence of neglect of that duty." Illustrations. — A company undertook to lay water-works in a city, agreeing with the municipality that it would "protect all persons against damages by reason of excavations made by them in laying pipes, and to be responsible for all damages which might occur by reason of the neglect of their employees in the premises." The company let out the work to a contractor, who used a steam-drill in such a manner as to frighten a trav- eler's horse and injure the traveler. Held, that the company was liable to the traveler: Water Co. v. Ware, 16 Wall. 566. O. contracted to put a cornice on defendant's mill, defendant agree- ing to erect the scaffolding necessary for the purpose, free of cost to 0. Defendant erected the scaffolding so negligently that it fell, killing plaintiff's intestate, a servant of 0., who was at work upon it. Held, that defendant was liable: Coughtry v. Globe Woolen Co., 56 N. Y. 124; 15 Am. Rep. 887. A contracted with the owners of a mine to excavate the ore, they agreeing to erect such supports and props as would render the miners safe whenever notified by the contractor that the same were neces- sary. Held, that even in the absence of such notice the owners were liable to a miner for injury caused by the lack of proper supports, if, having actual knowledge of the necessity, they failed to erect them : Kelly v. Howell, 41 Ohio St. 438. ' Langridge v. Levy, 2 Mees. & W. odist Soc, 6 Rep. 751; Campbell v. 519; 4 Id. 337; Sulzbaeher v. Dickie, Somerville, 114 Mass. 334. 6 Daly, 469; Francis v. Cockrell, L. ' Lake Superior Iron Co. v. Erick- B. 5 Q. B. 184, 501; Mulchey v. Meth- son, 39 Mich. 192; 33 Am. Bep. 423. § 298 PRINCIPAL AND AGKNT. 524 § 298. Where Duty is Imposed by Law. — And where a duty is imposed upon a person by a statute, he is liable for any injury in performing it, whether by himself or by a contractor employed by him.* Where a municipal ordinance requires the owner of materials forming an obstruction in a street to prepare and place lights thereon, with such care and diligence as reasonably to secure their burning till daylight, such owner is liable to third per- ' Gray v. PuUen, 5 Best & S. 970. But see Eaton v. Railroad (Jo., 59 Me. 520; 8 Am. Rep. 430. Lowell v. Bos- ton etc. R. R. Co., 23 Pick. 24, 34 Am. Deo. 33, 13 an instructive case in this connection. See statement by Thomas, J. , in Hilliard v. Richardson, 3 Gray, 349; "In a previous suit the town of Lowell (Currier t>. Lowell, 16 Pick. 170) had been co]np''"<>d to pay damages sustained by Currier by reason of a defect in one of the highways of the town. The defect was caused in the construction of the railroad of the Boston and Lowell company. It con- sisted in a deep cut through the high- way made in the construction of the railroad. Barriers had been placed across the highway to prevent travel- ers from falling into the chasm. It became, in the construction of the railroad, necessary to remove the bar- riers, for the purpose of carrying out stone and rubbish from the deep cut. They were removed by persons in the employ of the corporation, who ne- glected to replace them. Currier and another person, driving along the high- way in the night-time, were precipi- tated into the deep cut and seriously injiired. Currier brought his action against the town of Lowell, and re- covered damages. This action was to recover of the railroad corporation the amount the town had been so com- pelled to pay. The railroad corpora- tion denied their responsibility for the negligence of the persons employed in the construction of that part of the railroad where the accident took place, because that section of the road had been let out to one Noonan, who had contracted to make the same for a stipulated sum, and had employed the workmen. Thia defense was not sus- tained, nor should it have been. The defendants had been authorized by their charter to construct a. railroad from Boston to Lowell, four rods wide through the whole length. They were authorized to cross turnpikes or other highways, with power to raise or lower such turnpikes or highways so that the railroad, if necessary, might pass conveniently over or under the same. Now, it is plain that it is the corporation that are intrusted by the legislature with the execution of these public works, and that they are bound, in the construction of them, to protect the public against danger. It is equally plain that they cannot escape this responsibility by a delega- tion of this power to others. The work was done on land appropriated to the purpose of the railroad, and under authority of the corporation vested in them by law for the pur- pose. The barriers, the omission to replace which was the occasion of the accident, were put up and maintained by a servant of the corporation, and by their express orders; and that ser- vant had the care and supervision of them. The accident occurred from the negligence of a servant of the rail- road corporation, acting under their express orders. The case, then, of Lowell V. Boston and Lowell R. R. stands perfectly well upon its own principles, and is clearly distinguish- able from the case at bar. The court might well say that the fact of Noonan being a contractor for this section did not relieve the corporation from the duties or responsibility imposed on them by their charter and the law, especially as the failure to replace the barriers was the act of their immedi- ate servant, acting under their orders." 525 LIABILITIES OP MASTER AND SERVANT. § 299 sons for injuries incurred through negligence in the performance of this duty, either by himself or by a con- tractor in his employ, and even if the lights were extin- guished by an unknown cause.^ Illustrations. — A railroad company was empowered by act of Parliament to construct a bridge across a navigable river. The act provided that it should not be lawful to detain any vessel navigating the river, for a longer time than suffi- cient to enable any carriages, animals, or passengers ready to traverse, to cross the bridge, and to open it to admit such vessel. The company employed a contractor to construct the bridge, in conformity with the act; but before the works were completed, the bridge, from some defect in its construction, could not be opened, and the vessel of A was prevented from navigating the river. Held, that the company was liable to A: Hole v. Sitting- bourne E. R. Co., 6 Hurl. & N. 488. A, by statute, was em- powered to make a drain from his premises to a sewer, by cutting a trench across the highway. The statute provided, in careful terms, that where the surface of a highway should be thus broken, the person so breaking it should restore it to its former condition, or be subject to a penalty for failing so to do. A employed to do this work a contractor, by whose negligence the drain was filled improperly, in consequence of which dam- ages ensued to B. Held, that A was liable to B: Grey v. Pul- len, 5 Best & S. 970; City of Detroit v. Corey, 9 Mich. 165; 80 Am. Dec. 78. § 299. Where Employer Interferes with or Directs Work. — The proprietor may make himself liable by retaining the right to direct and control the time and manner of executing the work or by interfering with the contractor and assuming control of the work, or of some part of it, so that the relation of master and servant arises, or so that an injury ensues which is traceable to his in- terference.^ But merely taking steps to see that the > WUaon V. White, 71 Ga. 506; 51 Lubke, 4 Allen, 138; 81 Am. Deo. 694; Am. Rep. 269. Faren v. Sellers, 39 La. Ann. 1011; 4 : ^ 2 Thompson on Negligence, p. 913, Am. St. Rep. 256. If an owner modi- sec. 40; Gilbert v. Beach, 4 Dner, 423; fies in any respect his contract with 5 Bosw. 445; 16 N. Y. 608; Jones v. those contracting to erect a building, Chantry, 4 Thomp. & C. 63; Griffiths so that in doing any particular act «. Wolfram, 22 Minn. 185; Burton v. they are obeying the directions of the Railroad Co., 61 Tex. 526; Brackett v. owner, if that act is negligent, and § 299 PKINCIPAL AND AGENT. 526 contractor carries out his agreement, as, having the work supervised by an architect or superintendent, does not make the employer liable;"^ nor does reserving the right to dismiss incompetent workmen.* Illustrations. ^ A contractor agreed with trustees ef an estate to take down a building for them carefully, and under their direction, and subject to their approval. Held, that the trustees were liable for injury to a. third person by the con- tractor's negligence in the work: Linnehan v. Rollins, 137 Mass. 123; 50 Am. Rep. 287. A contract stipulated: "The work to be done under the direction of the city civil engineer, or agent appointed by the city council for the same, who shall have entire control over the manner of doing and shaping all or any part of the same, and whose directions must be strictly obeyed." Held, that the city was liable for the negligence of the contractor in depositing a pile of stones so as to obstruct the flow of sur- face water and flood the premises of an adjacent owner: Cincvftr nati V. Stone, 5 Ohio St. 38. The charter of a city gave the street commissioners authority to " direct and control the per* sons employed " on the streets, and it was stipulated in the contract that the work was to be done " under the direction of the street commissioners." Held, that the city was responsible for an injury to a traveler by the negligence of the contractor: St. Paul V. Seitz, 3 Minn. 297. Defendant, a railroad corpora- tion, made a contract with A, whereby he was to have entire charge, in defendant's freight-car yard, of the work of making up freight trains, etc., and to be paid a certain sum per ton of freight and for each car hauled from the yard. Defendant's superintendent was authorized to see that the work was don^ satisfactorily, and if it were not, defendant could terminate the contract at twenty-four hours' notice. The men employed in the yard were paid by A. B sued defendant for injuries re- ceived through the negligence of train-men in the employ of A. damage ensues, the owner is liable. Iowa, 562; City of Erie v. Caulkins, In such a case, it is his duty to see 85 Pa. St. 247i Nevins v. Peoria, 41 that what is done under his E^ecial HI. 502; 89 Am. Dee. 392; EobinsoB orders is not negligently done: Heffer- v. Webb, 11 Bush, 464s Paqk v. New naa v. Benkard, 1 Robt. 436. The York, 8 N. Y. 222; Hunt v. Railroad owner of a mine who furnishes the Co., 61 Pa. St. 475; Samuelson v. operating machinery and engages an- Cleveland Mining Co., 49 Mich. 164; other person to open the mine sustains 43 Am. Rep. 456; contra, Schwartz % the relation of master to an employee Gilmore, 45 111. 455; 92 Am. Dee. 227; of the person so engaged: Fell v. Rich Camp v. Churchwardens, 7 La. Aim. HUl Coal Mining Co., 23 Mo. App. 321; Harper . Railroad Co., 4 Ex. 244; Mo. 202; Callahan v. Railroad Co., 23 Schular v. BailroadCo., 38 Barb. 653. 527 LIABILITIES OF MASTER AND SERVANT. § 300 Held, that A was the servant of defendant, and not an indepen- dent contractor: Speed v. Railroad Co., 71 Mo. 303. The contract between a railroad company and a contractor for building its road stipulated that if at any time the contractor failed to em- ploy men, tools, implements, and machinery in kind and quality to the satisfaction of the chief engineer of the company, the company, after written notice to the contractor, should have the right to annul the contract. Held, that this did not show such a right of selection of the contractor's servants as to make the company responsible for an injury sustained from the fall of a chain used by a servant of the contractor: Burvieister v. New York Elevated R. R. Co., 47 N. Y. Sup. Ct. 264. § 300. Other Oases where Employer is Liable.' — Other circumstances may render the proprietor liable, as, for instance, knowingly selecting an incompetent contractor.-' Judge Thompson says:^ "Notwithstanding the injury may have happened while the work was being prosecuted by an independent contractor, yet the proprietor will be liable if it is traceable to his previous negligence, — as, if a building falls down in process of erection, in conse- quence of the plans furnished to the contractors requiring the use of materials which are unsafe.' Again, a contrac- tor may be employed to do a particular job, under cir- cumstances which leave the proprietor charged with the duty which regularly attaches to him to see that the work does not endanger the safety of others. A builder may make lawful and necessary excavations in the street;^ a blacksmith may remove a grating in the sidewalk to repair it;' a coal merchant may make an opening in the sidewalk to deliver coal to his customer.* In all these cases, the liability to guard the excavation may remain upon the proprietor, and he may be chargeable for any damages resulting from his failure so to do. It has been well laid down, that if the building of a house is split up ' 2 Thompson on Negligence, p. 908. 4^ Wall. 657; Homan v. Stanley, 66 » 2 Thompson on Negligence, sec 29, Pa. St. 464; 5 Am. Rep. 389. p. 907. ' McCleary v. Kent, .3 Duer, 27. ' Homer v. Nicholson, 56 Mo. 220. * Fickard v. Smith, 10 Com. R, * Rohbins v. Chicago, 2 BUck. 418; N. S., 470. § 301 PRINCIPAL AND AGENT. 528 into several different contracts, and the owner undertakes to supply the materials, and no provision is made for the supervision of the work, or for maintaining guards, the duty of protecting the public remains on the owner.' If the proprietor interferes with the work of the contractor, and directs a particular thing to be done, from which injury results, obviously he will be liable, for it is his own personal act."^ Illustrations. — 0. and M. contracted with defendant to put a cornice on its mill, any scaffolding required for that pur- pose to be erected free of cost to them. Plaintiff's intestate, a workman in the employ of 0. and M., while engaged in the work, was killed by the fall of a scaffold erected by defendant for that purpose. In an action to recover damages, plaintiff was nonsuited, upon the ground that defendant owed no duty to deceased in respect to the construction of the scaffold. Held, error; that the scaffold being erected by defendant upon its own premises for the express purpose of accommodating the workmen, a duty was imposed upon it toward them to use proper diligence in constructing and maintaining the structure; and that this duty existed independently of the contract: Coughtry v. Globe Woolen Co., 56 N. Y. 124; 15 Am. Rep. 387. § 301. Master not Liable for Injury to Servant. — As a general rule, subject to certain exceptions to be after- wards noticed, a master is not liable for an injury to a servant while in his service, caused by the negligence of a fellow-servant. This important exception to the maxim respondeat superior is generally said to be founded upon an implied contract on the part of the servant in entering the employment that he will assume the ordinary risks thereof, one of which is the risk of being injured by the negligence of a fellow-servant.' The rule that a servant ' Homan v. Stanley, 66 Pa. St. 464; Priestley v. Fowler, Lord Abinger, C. 5 Am. Rep. 389. B., said: "If the master be liable to the * Jones V. Chantry, 4 Thomp. & C. servant in this action, the principle of 63. that liability will be found to carry us ^ Priestley v. Fowler, 3 Mees. & W. 1, to an alarming extent. He who is re- is regarded as the leading English case sponsible by its duty or by the terms on this topic, and Farwell v. Boston K. of his contract for all the consequences R. Co., 4 Met. 49, 38 Am. Dec. 339, the of negligence in a matter in which he leading American adjudication. In is a principal ia responsible for the 529 LIABILITIES OP MASTER AND SERVANT. § 301 cannot recover of his master for damage sustained from the negligence of his fellow-servant does not prevent his negligence of all his inferior agents. If the owner of the carriage is there- fore responsible for the sufficiency of his carriage to his servant, he is re- sponsible for the negligence of his coach-maker, or his harness-maker, or his coachman. The footman, there- fore, who rides behind the carriage may have an action against his master for a defect in the carriage, owing to the negligence of the coach-maker, or for a delect in the harness, arising from the negligence of the harness- maker, or for drunkenness, neglect, or want of skill in the coachman; nor is there any reason why the principle should not, if applicable in this class of cases, extend to many others. The master, for example, would be liable to the servant for the negligence of the chambermaid, for putting him into a damp bed; for that of the uphol- sterer for sending in a crazy bedstead, whereby he was made to fall down while asleep and injure himself; for the negligence of the cook in not prop- erly cleaning the copper vessels used in the kitchen; of the butcher in sup- plying the family with meat of a qual- ity injurious to the health; of the builder for a defect in the foundation of the house whereby it fell, and in- jured both the master and the servant by the ruins. The inconvenience, not to say the absurdity, of these conse- quences affords a sufficient argument against the application of this principle to the present case. But in truth the mere relation of the master and the servant never can imply an obligation on the part of the master to take more care of the servant than he may rea- sonably be expected to do of himself. He is, no doubt, bound to provide for the safety of his servant in the course of his employment to the best of his judgment, information, and belief. The servant is not bound to risk his safety in the service of his master, and may, if he thinks fit, decline any ser- vice in which he reasonably apprehends injury to himself; and in most of the cases in which danger may be incurred, if not in all, he is just as likely to be acquainted with the probability and extent of it as the master. In that Vol. I.— 31 sort of employment, especially, which is described in the declaration in this case, the plaintiff must have known as well as his master, and probably bet- ter, whether the van was sufficient, whether it was overloaded, and whether it was likely to carry him safely. In fact, to allow this sort of action to pre- vail would be an encouragement to the servant to omit that diligence and cau- tion which he is in duty bound to exer- cise on the behalf of his master, to protect him against the misconduct or negligence of others who serve him; and which diligence and caution, while they protect the master, are a much better security against any injury the servant may sustain by the uegligence of others engaged under the same mas- ter, than any recourse against his mas- ter for damages could possibly afford." In Farwell v. Boston R. R. Co., Chief Justice Shaw urges similar reasons against such a liability. He says: "The general rule resulting from con- siderations as well of justice as of pol- icy is, that he who engages in the employment of another for the per- formance of specified duties and ser- vices, for compensation, takes upon himself the natural and ordinary risks and jierils incident to the performance of such services; and, in legal pre- sumption, the compensation is adjusted accordingly. And we are not aware of any principle which should except the perils arising from the carelessness and negligence of those who are in the same employment. Ihese are perils which the servant is as likely to know, and against which he can as effectually guard, as the master. They are perils in- cident to the service, and which can be as distinctly foreseen and provided for in the rate of compensation as any oth- ers. To say that the master shall be re- sponsible because the damage is caused by his agents, is assuming the very point which remains to be proved Where several persons are employed in the conduct of one common enter- prise or undertaking, and the safety of each depends much on the care and skill with which each other shall perform his appropriate duty, each is an observer of the conduct of the oth- - § 301 PRINCIPAL AND AGKNT. 530 maintaining an action against his master for consequen- tial damages by liim sustained through an injury to his wife from such negligence.^ The rule is also in no way affected by the fact that both servants, at the time of the accident, were illegally employed, the day being Sunday.^ Illustrations. — Plaintiff was employed by defendant to re- move the sand or " form " from a large oven recently built by defendant's lessor. The oven fell in, injuring plaintiff. There was no evidence of knowledge on defendant's part of the danger- ous condition of the oven, and there was nothing charging de- fendant with negligence in not possessing knowledge. Held, that a verdict for plaintiff must be set aside: Naaon v. West, 78 Me. 253. An elevator boy, engineer, and plaintiff were in de- fendant's employ. The engineer's duty was to furnish the mo- tive power for an elevator, which the boy ran, and which carried plaintiff to his work. The engineer always took the elevator on a trial trip every morning with nobody on board. On one occa- sion plaintiff entered the elevator in the morning, shortly before the hour when he was required to go to work, just as the en- gineer was making the trial trip. The elevator boy was not there, and plaintiff was injured. Held, that if the injury was ers, can give notice of any misoouduct, Ohio etc. R. R. Co. v. Tindal, 13 incapacity, or neglect of duty, and Ind. 366; 74 Am. Dec. 259; McCos- leave the service if the common em- ker v. R. R. Co., 84 N. Y. 77; ployer will not take such precautions Sykes v. Packer, 99 Pa. St. 465; Pin- and employ such agents as the safety greeti. Leyland, 135 Mass. 398; Yeaton of the whole party may require. By v. R. R. Co., l35 Mass. 418; Frazier these means the safety of each will be v. R. R. Co., 38 Pa. St. 104; 80 Am. much more effectually secured than Deo. 461; Louisville etc. R. R. Co. v. could be done by a resort to the com- Collins, 2 Duvall, 114; 87 Am. Dec. mon employer for indemnity in case 486; Oilman v. R. R. Co., 10 Allen, of loss by the negligence of each other. " 233; 87 Am. Dec. 635; Fisk v. Cent. These positions are supported and fol- Pac. R. R. Co., 72 Cal. 38; 1 Am. St. lowed by a host of authorities, both Rep. 22; Casey v. R. R. Co., 84 Ky. in this country and in England. The 79; Fort Hill Stone Co. v. Orm, 84 rule in the text, in its broadest state- Ky. 183; Hoar v. Merritt, 62 Mich, ment, is so well settled that it will 386; Collyer v. R. R. Co., 49 N". J. L. serve no purpose to set out the mass 59; Alleghany Heating Co. v. Rohan, of authorities in this note. They may 118 Pa. St. 223; Moran v. Brown, 27 be found collected and arranged ac- Mo. App. 457. A female servant can- cording to states up to the year 1880 not bring an action against her master in 2 Thompson on Negligence, p. 969, for persuading her to have sexual iu- sec. 1 ; and see Murray v. South Caro- tercourse with an infant fellow-ser- lina R. R. Co., 1 McMuU. Eq. 385; 36 vant: Jordan v. Hovey, 72 Mo. 574; Am. Dec. 269; Shields v. Yonge, 15 37 Am. Rep. 447. Ga. 349; 60 Am. Deo. 698; Slater v. ' Gannon v. R. R. Co., 112 Mass. Jewett, 85 N. Y. 61; 2 Am. Rep. 627; 234; 17 Am. Rep. 82. Fox V. Sandford, 4 Sneed, 36; 67 Am. ^ Houston etc. R. R. Co. v. Rider, Dec. 587; Illinois etc. R. R. Co. v. 62 Tex. 267. Cox, 21 111. 20; 71 Am. Dec. 298; 531 LIABILITIES OP MASTER AND SERVANT. § 302 caused by negligence other than that of plaintifif, it was the negligence of the elevator boy or the engineer, who were plain- tiff's fellow-servants, for which defendant was not liable: Wol- cott V. Studehaker, 34 Fed. Rep. 8. A fireman was killed while cleaning the ash-pan of his locomotive, by the running of a work-train, contrary to the rules of the road, into the fireman's train. Held, that this was one of the ordinary hazards of his employment, for which his administrator could not recover: Wabash, St. Louis etc. R. R. Go. v. Conkling, 15 111. App. 157. A transportation company paid a stevedore to load a ship. Through the stevedore's negligence one of his men received an injury. Held, that he could not recover against the company: Rankin Y. Merchants' and Miners' Trans. Co., 73 Ga. 229; 64 Am. Rep. 874. Two distinct corporations operated two separate por- tions of a through-line of travel connecting at a common ter- minus. Each sold tickets over the entire route, but divided the receipts between them proportionately. Held, that there was no such legal identity between them as would render their respect- ive employees servants of a common master so as to prevent the maintenance of an action by the employee of one of them against the other for personal injuries occasioned through the negligence of its servants: Carroll v. Railroad Co., 13 Minn. 30; 97 Am. Dec. 221. §302. Exceptions — Defective Machinery, Buildings, or Appliances. — But the rule in the last section is sub- ject, as before said, to mauy qualifications. The first of these is, that the master being by law bound to take reasonable care not to subject the servant to extraordi- nary danger, he will be liable for an injury to the servant, caused by defective or unsafe buildings, machinery, or appliances.^ The master is not a warrantor of the safety • See cases cited in 2 Thompson on N. Y. 410; 82 Am. Dee. 315; Thayer Negligence, 973; Connolly v. Poillon, v. Railroad Co., 22 Ind. 26; 85 Am. 41 Barb. 366; Keegan v. Railroad Deo. 409; Snow v. Railroad Co., 8 Co., 8 N. Y. 175; 59 Am. Dec. 476; Allen, 441; 85 Am. Dec. 720; Rogers Chicago etc. R. R. Co. v. Jackson, 55 v. Ludlow Mfg. Co., 144 Mags. 198; 111. 492; 8 Am. Rep. 661; Noyea v. 59 Am. Rep. 68; Rice v. King Phillip Smith, 28 Vt. 59; 65 Am. Dec. 222; Mills, 144 Mass. 229; 59 Am. Rep. 80.; McMillan i;. Union Press Brick Works, Boardman v. Brown, 44 Hun, 336; 6 Mo. App. 434; Buzzell v. Laconia Pennsylvania etc. R. R. Co. v. Mason, Mfg. Co., 48 Me. 113; 77 Am. Dec. 109 Pa. St. 296; 58 Am. Rep. 722; 212; and see note to this case in 77 Brossinan v. Railroad Co., 113 Pa. St. Am. Dec. 218-225; Nashville etc. 490; 57 Am. Rep. 479; Goodman v. B. R. Co. V. Elliott, 1 Cold. 611; 78 Richmond R. R. Co., 81 Va. 576; Am. Dec. 506; Ryan v. Fowler, 24 Wormell v. 'Maine Cent. R. R. Co., § 302 PRINCIPAL AND AGENT. 532 and sufficiency of his machinery and appliances. He is required but to use reasonable and ordinary care in selecting and maintaining them.' It is not a univer- sal rule of law that it is always an employer's duty to furnish suitable appliances; and an instruction assuming this affords ground for reversal.^ To render the master liable for an injury to his employee, caused by defective 79 Me. 397; 1 Am. St. Rep. 321; Robertson v. Coruclson, 3 1 Fed. Rep. 716; Little Rock etc. R. R. Co. v. Levorett, 48 Ark. 333; Krueger v. R. R. Co., Ill Ind. 51; Pennsylvania Co. V. Whitoomb, 111 Ind. 212; Covey <. R. R. Co., 27 Mo. App. 170. 1 Daubertti. Pickel, 4 Mo. App. 590: Vi/^haloii V. Centenary Church, (52 Mo. S27; Cayzer v. Taylor, 10 Gray, 274; 69 Am. Dec. 317; Fort Wayne etc. R. R. Co. c. Gildersleeve, 33 Mich. 133; Jones jj. Yeager, 2 Dill. 64; Seaver V. Boston etc. R. R. Co., 14 Gray, 467; Locke V. Sioux City et«. R. R. Co., 46 Iowa, 109; Cooper v. lovra Central R. R. Co., 44 Iowa, 134; St. Louis etc. R. R. Co. V. Valirius, 58 Ind. 511; Camp Point Mfg. Co. v. Ballou, 71 111. 417; Nashville etc. R. R. Co. v. Jones, 9 Heisk. 27; Connolly v. Poillon, 41 Barb. 36G; llouaton etc. R. R. Co. v. Oram, 49 Tex. 341; International etc. R. R. Co. V. Doyle, 49 Tex. 190; King V. R. R. Co., 9 Cush. 112; Mad River R. R. Co. V. Barber, 5 Ohio St. 541; 67 Am. Dec. 312; Leonard v. Collins, 70 N. Y. 90; Indianapolis etc. R. R. Co. V. Love, 10 Ind. 554; Shanny v. Androscoggin Mills, OG Me. 420; Gib- son «. Pacifio E. R. Co., 46 Mo. 163; 2 Am. Rep. 497; Lawler v. Railroad Co., 62 Me. 463; 16 Am. Rep. 492; Hough V. Railroad Co., 100 U. S. 213; De Graff V. Railroad Co., 76 N. Y. 125; Chicago R. R. Co. v. Mahoney, 4 111. App. 262; Painton v. Railroad Co., 83 N. Y. 7; Jones v. Railroad Co., 22 Hun, 284; Little Rock R. R. Co. v. Duffey, 35 Ark. 602; Kranz v. White, 8 111. App. 583; Mansfield Coal Co. v. McEnery, 91 Pa. St. 185; King v. R. R. Co., 14 Fed. Rep. 277; Buckley V. Mining Co., 14 Fed. Rep. 833; Payne v. Reese, 100 Pa. St. 301; JMis- souri R. R. Co. v. Lyde, 57 Tex. 5&5; Wabash etc. R. R. Co. v. Fenton, 12 111. App. 417; Chicago etc. E. R. Co. ■a. Bragonier, 11 111. App. 516; Armour V. Hahn, 111 U. S. 313; Bajus v. Rail- road Co., 103 N. Y. 312; 57 Am. Rep. 723; Allison Mfg. Co. «. McOormiok, 118 Pa. St. 519; 4 Am. St. Rep. 613; Moynihaa v. Hills Co., 146 Mass. 586; 4 Am. St. Rep. 348; Webber v. Piper, 109 N. Y. 496. In Baker v. Railroad Co., 95 Pa. St. 211, 40 Am. Rep. 034, the rule of law is con- cisely stated by Sharswood, C. J. : "A servant assumes all the ordinary risks of his employment. He cannot hold the master responsible for an injury which cannot be traced directly to his negligence. If it ha? resulted from the negligence of a fellow-servant in the same employment, he must look to him, and not to the' master, for re- dress. The master does not warrant him against such negligence. The duty which the master owes to his servants 1.3 to provide them with safe tools and machinery where that is necessary. When he does this, he does not, however, engage that they will always continue in the same con- dition. Any defect which may be- come apparent in their use, it is the duty of tho servant to observe and re- port to his employer. The servant has the means of discovering any such defect which the master does not pos- sess. It is not negligence in the master if the tool or machine breaks, whether from an internal original fault, not apparent when the tool or machine was at first provided, or from an ex- ternal apparent one produced by time and use, not brought to the master's knowledge. These are the ordinary risks of the employment which the servant takes upon himself. " ^ Robinson v. George F. Blake Mfg. Co., 143 Mass. 528. 533 LIABILITIES OF MASTER AND SERVANT. § 302 machinery, it must appear that the master knew, or by the exercise of proper diligence ought to have known, of its unfitness, and that the servant did not know, or could not reasonably be held to have known, of the defect.^ The danger must be shown to be such as to suggest itself to a man of ordinary prudence.'' As between master and servant, the fact that the appliance is defective, and the servant is injured, does not raise a presumption of negligence in the master.* The master is not compelled to provide the safest and newest machinery, or the newest inventions.* The owner of a mine is not bound to employ the most expensive precautions against fire- damp, but only to use reasonable efforts for ventilation.' A master, in the absence of a statute, is not bound to provide means of escape from a factory where the fire is not caused by his neglect.* A railroad is not bound to discard cars of an old pattern because the coupling of them with cars of a new pattern is attended with more danger than the coupling of new cars with each other.^ Nor to adopt what is known as the "target switch," simply because this kind of switch guards more effectu- ally against the negligence of switchmen than the com- mon switch, it appearing that the latter is safe when properly operated.* Nor is it bound to pursue a system of inspection of its cars and locomotives which would embarrass the operation of the road, but simply to exercise 1 Hullu. Hall, 78 Me. 114, Railroad Co., 69 Iowa, 450; 68 Am. 2 Nelson V. Allen Paper Car-wheel Rep. 227. Co., 29 Fed. Rep. 840. ^ Berns v. Gaston Gas Coal Co., 27 » Bowen v. Railroad Co., 95 Mo. W. Va. 285; 65 Am. Rep. 304. But 268; Cahill v. Hilton, 106 N. Y. 513; see St. Louis etc. R. R.Co. v. Valirius, Philadelphia etc. R. R. Co. v. Hughes, 66 Ind. 611; Nashville etc. R. R. Co. 119 Pa. St. 301. V. Elliott, 1 Cold. 611; 78 Am. Deo. * Fort Wayne R. R. Co. o. Gilder- 506. sleeve, 33 Mich. 133; Botsford v. Rail- " Jones v. Granite Mills, 126 Mass. road Co., 33 Mich. 256; Jones v. 84; 30 Am. Rep. 661; Keiths. Gran- Granite Mills, 126 Mass. 84; 30 Am. ite MUls, 126 Mass. 90; 30 Am. Rep. Rep. 661; Toledo etc. R. R. Co. v. 666. Asbury, 84 111. 429; Wonder v. Rail- ' Fort Wayne etc. R. R. Co. v. road Co., 32 Md. 411; 3 Am. Rep. Gildersleeve, 33 Mich. 133. 143; Philadelphia etc. R. R. Co. v. ^ Salters v. Canal Co., 3 Hun, Keenan, 103 Pa. St. 124; Burns v. 338. § 302 PRINCIPAL AND AGENT. 534 ordinary care.' The master must establish proper rules for the guidance of his employees and their safety.^ Illustrations. — A railroad engineer was killed by the ex- plosion of a locomotive boiler. The boiler was made of the best material, and by first-class manufacturers; it had not been used long enough to create a reasonable suspicion of its unsafe condi- tion, the defect could not have been discovered by any of the usual tests, and its appearance did not indicate its unsafe coudition. Held, that the company was not answerable, being bound only to provide machinery of good material, constructed in a workmanlike manner: Indianapolis etc. R. R. Co. v. Toy, 91 111. 474; 33 Am. Rep. 57. The proprietor of an establish- ment, in one room of which about twenty girls were employed, removed an engine from one room of the factory to another. Being pressed with business, they made the change in the night- time; and in the morning the machine was left in such a posi- tion that the main shaft projected through the wall into this room from four to six feet. In this state, the machinery was put in motion. One of the girls, in passing near the revolving shaft about her work, was caught by it and fatally injured. Held, that the proprietors were liable for damages: Fairbank v. Haentzsche, 73 111. 237. A hook in an iron foundry, which a careful inspection would have shown to be weak, broke, and a heavy weight hung on it fell and injured a workman. Held, that he could maintain an action against his employer, whose duty required an inspection of the hook: Spicer v. South Boston Iron Co., 138 Mass. 426. A corporation believed, and was justified in believing, that a certain quantity of grain could be safely stored on a floor of their building. Held, that the fact that the floor gave way, without warning, was not sufficient to render the corporation liable in damages to one of its employees who was injured by the fall: Dillon v. Sixth Av. R. R. Co., 48 N. Y. Sup. Ct. 283. A factory girl was injured by the fall of a privy attached to the factory and rendered insecure by certain circumstances, which,, with this natural consequence thereof, were proved to have been known to and unremedied by the owner. Held, that the girl might recover from the owner, her employer, damages for her injuries: Ryan v. Fowler, 24 N. Y. 410; 82 Am. Dec. 315. A hoisting apparatus consisting of sev- eral pieces, and set up on the ground, fell because of careless- ness in setting an anchor-post. Held, that the apparatus was not to be deemed a single machine, for a defect in which the master was liable to the servant injured by the fall, but that ' Smoot V. Railroad Co., 67 Ala. 13. Pennsylvania Co. v. WMtcomb, 111 2 Schmidt v. Block, 76 Ga. 823j Ipd. 212. 535 LIABILITIES OP MASTER AND SERVANT. § 303 the case was that of the negligence of a fellow-servant: Peschel V. Railroad Co., 62 Wis. 338. The engineer and fireman were killed by the explosion of a locomotive boiler, which had been recently and insufficiently repaired in the shops of the railroad company. Hdd, that the company is not relieved from liabil- ity by the fact that the repairers and the deceased were fellow- servants, although under the same superintendent: Penn. etc. E. E. Co. V. Mason, 109 Pa. St. 296; 58 Am. Rep. 723. Plain- tiff, conductor on a freight train, was injured by the giving way of a defective ladder on one of the cars. The negligence of the defendant railroad company was clearly shown, and the plaintiff testified that he had no suspicion of the unsafe condition of the ladder. Held, that a verdict for plaintiff should not be set aside: Goodman v. Eichmond and Danville E. E. Co., 81 Va. 576. A laborer was killed by something, supposed to be a brick, falling on his head from above. There was evidence tending to show a want of protection against such an accident. Held, that a verdict against the owner of the building should not be disturbed: Ford v. Lyons, 41 Hun, 512. § 303. Latent Defects and Dangers. — The servant takes the risk of "seen dangers," but the master is under a duty to exercise reasonable care in protecting him from latent defects in the machinery or appliances which he uses,^ or dangerous services unknown to him.^ It is the duty of a proprietor of a lime-kiln to warn an inexperienced laborer on the kiln of the danger of falling into the fire by the removal of the stone at the base, and the conse- quent subsidence of the mass above, upon which he is employed to work.^ The tendency of a board, when warped, to spring back during the operation of being 1 Paulinier w. ErieR. R. Co., 34 N. Am. Sb. Rep. 675; Little Rock etc. J. L. 151; Shanny v. Androscogj^in R. R. Co. v. Leverett, 48 Ark. 333; 3 Mills, 06 Me. 427; Georgia R. R. Co. Am. St. Rep. 230; Faren v. Sellers, 39 V. Keiiney, 58 Ga. 485; International La. Ann. 1011; 4 Am. St. Rep. 256; R. R. Co. V. Doyle, 49 Tex. 190; Clapp v. Minnesota etc. R. Co.. 36 Cowling V. Allen, 6 Mo. App. 195; Minn. 6; Steen v. SL Paul etc. R. R. Houston etc. R. R. Co. v. McNamara, Co., 37 Minn. 310; Wuotillaji. Railroad 59 Tex. 255; Texas etc. R. R. Co. v. Co., 37 Minn. 153. MoAteo, 61 Tex. 695; Bean v. Steam- ^ Baxter v. Roberts, 44 Cal. 187; 13 ship Nav. Co., 24 Fed. Rep. 124; Am. Rep. 160; Jones v. Mi ling Co., Atkins «. Thread Co., 142 Mass. 431; 66 Wis. £68; 57 Am. Rep. 269; Olsen Smith V. Peninsular Car Works, 60 v. McMuUen, 34 Minn. 94. Mich. 501; 1 Am. St. Rep. 542; Cra- ' Parkhurst». Johnson, 50 Mich. 70; ver V. Christian, 36 Minn. 413; 1 45 Am. Eep. 28. § 303 PRINCIPAL AND AGENT. 536 sawed by a circular saw is not so obvious that an inex- perienced workman must be held necessarily to take cognizance of it without being warned.^ Illustrations. — The plaintiff engaged in the service of a corporation as a miner. At that time ordinary blasting-powder was used. Subsequently giant-powder, a iDore dangerous ex- plosive, was substituted by order of the president. The plaintiff was not informed of the proper mode of using it, although the corporation had printed directions. The plaintiff was injured by an explosion. Held, that the corporation was liable: Smith v. Oxford Iron Co., 42 N. J. L. 467; 36 Am. Rep. 635. Defendant claimed title to land occupied by other persons, who threat- ened to resist by force any interference with their possession. Defendant, knowing this, but, without communicating it to plaintiff, employed plaintiff to go with him to the land to do some work, in doing which plaintiff was shot by the persons in possession. Held, that he might recover against defendant for the damage so suffered by him: Baxter v. Roberts, 44 Cal. 187; 13 Am. Rep. 160. An employee, who was not a ship-carpenter or a joiner, or a mechanic of any kind, and who knew nothing about the construction of scaffolding, or the forces which it would be required to resist, was put into the hold of a gunboat by his employer, to remove the chips and rubbish from beneath a scaffold. Held, that he had a right to rely upon the superior knowledge of his employer, who was a ship-builder, and his care and prudence that the scaffolding was of suflacient and adequate strength to insure him against all harm: Connolly v. Poillon, 41 Barb. 366. A's business of hauling for B required him to drive under a revolving shaft, which, without his knowledge, was re- paired between two of his trips in such a manner that there was not room to drive under it without injury. The change was not apparent, and A was not warned thereof Held, that B was liable for injuries sustained: HawJcins v. Johnson, 105 Ind. 39; 55 Am. Rep. 169. Plaintiff was employed as "inside helper" at defendant's furnace for smelting ores. One of plain- tiff's duties was to take the hot slag from the furnace. In front of the furnace was a slight depression in the floor, in which, usually, water lay. Plaintiff was not warned of the certainty of a powerful explosion in case of the hot slag coming in contact with water. On the third day of plaintiff's employment, as he was removing a pot of slag from the furnace^ the pot tipped over, the slag came in contact with the water, a powerful ex- plosion followed, and plaintiff sustained the injury to recover damages for which he sued his employer. Held, that defendant ■ Wheeler v. Wason Mfg. Co., 135 Mass. 294. 537 LIABILITIES OF MASTER AND SERVANT. § 303 / was at fault for not warning plaintiff, and that a recovery might be had: McGowan v. La Plata Mining and Smelting Co., 3 McCrary, 893. A "helper" of considerable experience in coupling cars was injured in attempting to couple a car con- structed in a peculiar and dangerous manner, which he had never seen. He was not warned concerning it. Held, that he coald recover for the inj ury : Missouri Pacific R'y Co. v. Callbreath, 66 Tex. 526. Plaintiff, a laborer, was called in to assist defend- ant in moving a heavy safe, and was told the appliances were safe. Defendant supervised their arrangement, and plaintiff did as he was told. The framework gave way and plaintiff was injured. Held, that his action was maintainable: Bradbury v. Goodwin, 108 Ind. 286. Plaintiff, a carpenter in defendant's employ, was sent by it to remove one of its electric lamps, and connect the wires with the circuit. The evidence showed that the usual time for turning on the electric current was 4:30, p. m., on cloudy days, and 4:45, p. m., on clear days. Plaintiff testified that when he reached the lamp, and began work, it was barely 4:15, p. M., and that the day was clear; that he knew noth- ing about electric wires, the work assigned him being outside the scope of his employment; that wl:ile handling the wires the current was turned on, and he received a shock, producing the injuries sued for. Held, that a nonsuit was properly refused; the questions of negligence and contributory negligence being for the jury: Colorado Electric Co. v. Luthers, Col., ISSS. A rail- road company used an engine, which, from being out of repair, was accustomed to move automatically and without warning. Plaintiff, an engine-cleaner in the employ of the company, was ordered to go into the pit under the engine to clean it. He did not know of the defect in the engine, nor was he informed of it. While he was cleaning it, it suddenly moved back three feet automatically, cutting off his fingers. Held, that the company was liable:' itic/iison, TopeJca etc. R. R. Co. v. Holt, 29 Kan. 149. Plaintiff, a detective in the employ of defendant railroad com- pany, was directed to go from one station to another on a hand- car belonging to the company, and was ordered by the man in charge of the hand-car to sit with his feet hanging over the rear end. He was injured by reason of planks being between the rails. No harm would have happened had his feet been inside the car. Held, that a verdict for the plaintiff would not be disturbed: Pool v. Railroad Co., 56 Wis. 227. An employee, a green hand, was put in charge of machinery, which outwardly indicated no danger, as attendant upon the wiping of a certain plate attached to it, and was directed by the superintendent to wipe such plate, without any caution, whereby he was injured. Held, that he was not negligent in failing to so examine the § 304 PRINCIPAL AND AGENT. 538 machinery as to have perceived the danger: Howard Oil Co. v. Farmer, 56 Tex. 301. A railroad company furnished its em- ployee a hand-car with a handle of brash, brittle wood, which from its being painted, and because of his near-sightedness, plaintiff could not see to be defective. Held, that the company was liable for an injury caused by the handle's breaking while being properly used: Siela v. Railroad Co., 82 Mo. 430. § 304. 'Dutj of Railroad Companies to Servants Em- ployed. — Railroad companies must keep their macliin- ery, roadway, and bridges — their appliances for the carrying on of their business— in such a safe and good condition as care and foresight are able to accomplish.^ But a railroad is not bound to furnish absolutely safe appliances.^ A railroad company is under no obligation to build its bridges so high that a man standing on a box-car or on the top of a car may pass under safely.' Nor is it liable for the death of a brakeman, caused by his falling through a bridge in process of repair, upon which the train had stopped at night.^ A railroad com- pany receiving a loaded car from another company, to be run over its road, is not bound to test the safety of the car for its servants, but may assume its safety unless 1 Toledo etc, R. R. Co. v. Conroy, 61 Co., 36 Minn. 6; 1 Am. St. Rep. 629; 111. 162;- 68 111. 567; Chicago etc. R. Little Rock etc. R. R. Co. v. Lever- R. Co. V. Rwett, 45 111. 201; 92 Am. ett, 48 Ark. 333; 3 Am. St. Rep. 2.31; Dec. 206; Illinois etc. R. R. Co. v. Little Rock etc. R. R. Co. v. Eubauks, Welch, 52 111. 183; Illinois etc. R. R. 48 Ark. 460; 3 Am. St. Rep. 245; Co. )'. PhiUips, 49 111. 234; Pittsburg Franklin v. Railroad Co., 37 Minn, etc. R. R. Co. V. Thompson, 56 111. 409; Hiihn v. Railroad Co., 92 Mo. 138; Houston etc. R. R. Co. v. 440; Parsons v. Railroad Co., 94 Mo. Oram, 40 Tex. 341; Flike v. Railroad 286; CoUyeri;. Railroad Co., 40 N. J. Co., 53 N. Y. 549; 13 Am. Rep. 545; L. 59; Bushby v. Railroad Co., 107 Chicago etc. R. R. Co. v. Tavlor, 69 N. Y. 374. 111. 4131; 18 Am. Rep. 626; Branu v. ^TMerv. Railroad Co., 93 Mo. 79; Railroad Co., 53 Iowa, 595; 36 Am. Gutridge v. Railroad Co., 94 Mo. 468; Eep. 243; Fuller v. Jewett, 80 N. Y. 4 Am. St. Rep. 392; Bowen v. Rail- 46; 36 Am. Rep. 575; Holden v. Fitch- road Co., 95 Mo. 208. burgR. R. Co., 129 Mass. 268; 37 Am. » gj^yior ^. Railroad Co., 40 N. J. Eep. 343; Baker v. Railroad Co., 95 L. 23; 29 Am. Rep. 209; Rains u Rail- Pa. St. 211; 40 Am. Rep. 634; Trask road Co., 71 Mo. 16i; 30 Am. Rep. V. California R. R. Co., 63 Cal. 96; 459; Dovitt v. Railroad Co., 50 Mo. Thayer?). St. Louis etc. R. R. Co., 22 302; Baltimore etc. R. R. Co. v. Ind. 26; 85 Am. Dec. 409; St. Louis ' Strieker, 51 Md. 47; 34 Am. Rep. 291. etc. R. R. Co. V. Irwin, 37 Kan. 701; ' Kooutz d. Railroad Co., 65 Iowa, 1 Am. St. Rep. 266; Clapp v. Railroad 224; 54 Am. Eep. 3. 539 LIABILITIES OF MASTER AND SERVANT. § 304 the contrary appears.' Where a railroad company buys the line of another company, embracing a bridge obvi- ously unsafe in plan and construction, and fails to correct the defects, and one of its employees is injured by the fall of the bridge, the company is liable, although the bridge had been in use for several years before the purchase without accident." A railroad company is liable for an injury to a brakeman in carefully coupling cars, occa- sioned by its negligently leaving sticks of firewood scat- tered along beside the- track at the station.' But that a brakeman is required to couple cars having dissimilar draw-heads does not necessarily make the company lia- ble for any injury sustained by liim while coupling such cars.* Railroad companies must use ordinary prudence in making and publishing to their employees sufficient and necessary rules and regulations for the safe running of their trains, and for the government of their employees. For an injury to one of their employees, arising from the want of such regulations, they are liable.^ Illustrations. — A brakeman in coupling freight-cars for the defendant was injured by a loose dead-wood on a car which had come from another road. The defendant had competent inspectors, whose business it was to reject such cars. Heldj that the brakeman could not recover of the defendant: Smith V. Railroad Co., 46 Mich. 258; 41 Am. Rep. 161. A railroad brakeman, sudddenly called to supper by the conductor, slipped on snow and ice accumulated near the station platform, and was injured. Held, that the company was not liable: Piquegno v. Railroad Co., 52 Mich. 40; 50 Am. Rep. 243. A brakeman in defendant's employ, descending the ladder of a moving freight-car to throw a switch, was struck by a telegraph pole standing only eighteen inches from the car, and killed. 1 Ballou V. Chicago, Minneapolis, & * Woodworth v. Railway Co., 18 St. P. K B. Co., 54 Wis. 259; 41 Am. Fed. Rep. 282. Rep. 31. But see Gutridge v. Mis- * Cooper v. Railroad Co., 44 Iowa, souri Pacific R. R. Co., 94 Mo. 468; 134; Chicago etc. R. R. Co. v. Tavlor, 4 Am. St. Rep. 392. 69 111. 461; Bushby v. Railroad "Co., 2 Vosburgh V. Railroad Co., 94 K 107 N. Y. 374; 1 Am. St. Rep. 844; Y. 374; 46 Am. Rep. 148. Lewis v. Seifert, 116 Pa. St 628; 2 ^ Hulehau v. Railway Co., 58 Wis. Am. St. Rep. 631; Reagan v. Railroad 319. ' Co., 93 Mo. 348; 3 Am. St. Rep. 542. § 305 PRINCIPAL AND AGENT. 540 The pole had been suffered to remain in that position three years, but there was no evidence that defendant put it there or knew of its existence. There was no evidence that the brake- man knew of it. Held, that an action for damages for the kill- ing was maintainable: Chicago etc. R. R. Co. v. Russell, 91 111. 298; 33 Am. Rep. 54. A brakeman caught his foot in a frog and was injured. Held, that the company incurred no special liability for not having blocked its frogs, it not being shown that greater risks might not thereby be incurred than those averted: McGinnis v. Canada Southern Bridge Co., 49 Mich. 466. One of three railroad companies employed a switchman to work in their union yard. Held, that all were jointly and sever- ally liable to him for the negligence of one of the companies, and that the company which employed him could not deny the re- lation of master and servant: Gulf, Colorado, etc. R'y Co. v. Dorsey, 66 Tex. 148. A railroad company used on its cars the same kind of oil that was generally used upon cars, and had no knowledge, and by the exercise of ordinary care would not have obtained any knowledge, of anything poisonous connected there- with. Held, that plaintiff employee could not recover for being poisoned thereby: Kitteringham v. Railway Co., 62 Iowa, 285. A track-repairer was run over after nightfall by a locomotive furnished with a proper head-light, which, however, was not lighted. Held, that while failure to provide a head-light would have made the company liable, it was not liable to the person injured for the failure to light the one provided, the neglect being that of his fellow-servant: Collins v. Railroads Co., 30 Minn. 31. A brakeman was injured because of defective buffers. Held, that he might maintain an action against the railroad companj': Ellis v. Railway Co., 95 N. Y. 546. A section-hand in the employ of defendant company, while in performance of his duties, took a hand-car off the track to allow a train to pass, and while standing near it was struck in the eye by steam and water thrown from the passing engine. Held, that he had a cause of action: Atchison etc. R. R. Co. v. Thul, 32 Kan. 255; 49 Am. Rep. 484. Defendant company put a freight-car into the train at night, the handle to the ladder of which had been broken for some time, and plaintiff's intestate, in attempting to descend, grasped at the handle, missed it, fell, and was killed. Held, that the company was liable: Richmond etc. R. R. Co. v. Moore, 78 Va. 93. I 305. Knowledge by Master of Defect Necessary. — Knowledge on the part of the master of the defect is necessary to fix his liability. Unless the master knew of ■541 LIABILITIES OF MASTER AND SERVANT. 305 the defect which produced the injury or ought to have known it, he cannot be held liable.' Negligent ignorance is equivalent to knowledge.^ " Notice of a given defect to that servant or agent of the common master whose duty it is to keep the particular machinery in repair, or guard against the injurious consequences of any defects therein, if given while such servant or agent is acting about such business of the master, will be notice to the master;^ and it has been so held in cases of corporations.* Under this rule, notice of a defect in a railway track to the superin- tendent and foreman,* to the assistant superintendent," to the foreman of a gang of men employed by the com- pany to repair its track,^ to an engineer in charge of an engine engaged in pushing freight-cars up an incline,* has been held notice to the company. So, notice of the condition of a defective railway locomotive is notice to • Elliott V. Railroad Co., 67 Mo. 272; Toledo etc. R. R. Co. v. Conroy, 61 111. 162; Columbua etc. R. R. Co. v. Troesch, C8 111. 545; 18 Am. Rep. 579; Hayden v. Smithville Mfg. Co., 29 Conn. 548; Faulkner v. Railroad Co., 49 Barb. 324; Chicago etc. R. R. Co. V. Shannon, 43 111. 338; Chicago etc. R. R. Co. V. Piatt, 89 111. 141; Huff- man V. Railroad Co. , 78 Mo. 50. 2 Noyes i'. Smith, 28 Vt. 59; 64 Am. Deo. 222; Toledo etc. R. R. Co. v. Con- roy, 61 111. 164: 68111. 5C0, 569; Walsh V. Feet Valve Mfg. Co., 110 Mass. 23; Mobile etc. R. R. Co. v. Thomas, 42 Ala. 672; Wright v. New York etc. R. R. Co., 25 N. Y. 562; Sullivan v. Louisville Bridge Co., 9 Bush, 81, 90; Ryan v. Fowler, 24 N. Y. 410, 414; 82 Am. Dec. 315; Chicago etc. R. R. Co. V. Swett, 45 111. 197; 92 Am. Dec. 206; Chicago etc. R. R. Co. v. Shannon, 43 111. 338; Columbus etc. R. R. Co. v. Troesch, 68 111. 545; 18 Am. Rep. 579; Greenleaf v. Illinois etc. R. R. Co., 29 Iowa, 14; 4 Am. Rep. 181; Schooner Norway v. Jensen, 52 111. 373; Colo- rado etc. R. R. Co. V. Ogden, 3 Col. 497; Faulkner v. Erie R. R. Co., 49 Barb. 324; Lewis v. St. Louis etc. R. K. Co., 59 Mo. 495; 21 Am. Rep. 385; Gibson v. Pacific R. R. Co., 46 Mo. 163; 2 Am. Rep. 497. " It is the mas- ter's duty to be careful that his servant is not induced to work under a notion that tackle or machinery is stanch and secure, when in fact the master knows, or ought to know, that it is not so"; Lord Cranworth, in Paterson v. M''al- lace, 1 Macq. 748; contra, and holding actual notice to be necessary, see An- derson V. Steamboat Co., 7 Robt. 611; King V. Stewart, 1 Daly, 431; McMil- lan V. Railroad Co. , 20 Barb. 450. ^ Wade on Notice, sec. 672; Story on Agency, sees. 140, 451; Wharton on Agency, sec. 178. * Patterson v. Pittsburgh etc. R. R. Co., 76 Pa. St. 389; 18 Am. Rep. 412; Colorado etc. R. R. Co. v. Ogden, 3 Col. 499; Brabbitts v. Chicago etc. R. R. Co., 38 Wis. 289; Nashville etc. R. R. Co. V. Elliott, 1 Coldw. 611, 618; 78 Am. Dec. 506; Frazier v. Pennsyl- vania R. R. Co., 38 Pa. St. 104; 80 Am. Dec. 467. ° Patterson v. Pittsburgh etc. R. R. Co., 76 Pa. St. 389; 18 Am. Rep. 412. ''' Colorado etc. R. R. Co. v. Ogden, 3 Col. 499. ' Gage V. Delaware etc. R. R. Co., 14 Hun, 446. « Nashville etc. R. R. Co. v. Elliott, 1 Cold. 611; 78 Am. Dec. 506. § 306 PEINCIPAL AND AGENT. 542 the company, if given to the foreman of the road-house and superintendent of machinery/ or to the foreman^ of the company's repair shops.'" Illustrations. — A switchman was coupling cars, the engine attached suddenly started, and the switchman was injured. It appeared that the sudden starting of the engine was caused by a defect which the engineer had before reported to the company as making the engine dangerous. Held, that these facts justi- fied a verdict against the company, in an action brought by the switchman: Chicago and Eastern R. R. Co. v. Rung, 104 111. 641. A was employed by B to run his elevator, which was new and made by a first-class machinist. The chain broke, and A was injured. B's engineer had previously told B's manager that the chain was not strong enough. Held, that A could maintain an action against B: Delaney v. Hilton, 50 N. Y. Sup. Ct. 341. Plaintiff, a workman in a coal mine, was injured by the fall of a rock. There had been a crack for some time where the rock broke off, and the superintendent of the mine knew that it was widening and was dangerous. Held, that the mine- owner was liable for the injury: Pantzar v. Tilly Foster Mining Co., 99 N. Y. 368. The plaintiff, being employed as a common laborer by defendant, who was a brewer, was engaged in clean- ing hogsheads by means of a steam apparatus, the use of which was explained to him. After he had been so employed for a number of days, he was injured by the explosion of a hogshead, caused by the pressure of steam. There was evidence that the apparatus was unsafe, owing to the omission of a certain gauge or valve, but it did not appear that the defendant knew or had reason to believe that it was dangerous in its actual condition. Held, that the defendant was not liable: Loonam v. BrocJcway, 3 Robt. 74; 28 How. Pr. 472. A owned a building on which B agreed, for a lump sum, to trim certain stone-work; B should have furnished his own scaffold, but as he did not, A allowed him to use one which had been hung by painters over a rotten cornice, which gave way and injured B. Held, that A was not liable: Matthes v. Kerrigan, 63 N. Y. Sup. Ct. 431. § 306. Direct Negligence of Master. — If an injury to the servant is owing to the direct negligence of the mas- ter, as where he is personally present, superintending the work and giving orders, the master is answerable for the 1 Chicago ebc. R. B. Co. v. Shannon, 43 111. 338. » Brabbitta v. Chicago etc. R. R. Co., 38 Wis. 289. * 2 Thompson on Negligence, 994. 543 LIABILITIES OF MASTER AND SERVANT. 307 damages to the same extent as though the relation of master and servant did not exist. The master, although engaged at a common labor with the servant, does not be- come a fellow-servant.' Where a servant is assured by his employer that the spot where he is ordered to work is safe from the fall of bricks, and he relies upon the assur- ance and is injured by falling bricks, through no negli- gence of his own, he may maintain an action against his master.^ § 307. Concurrent Negligence cf Master and Fellow- servant. — If the negligence of the master, as by provid- ing defective apparatus, etc., combines with the negligence of a servant, and the two together contribute to the injury of a fellow-servant, the master is responsible.^ That the > Ashworth v. Stanwix, 3 El. & E. 701; Roberts v. Smith, 2 Hurl. & N. 213; Ryan v. Fowler, 24 N. Y. 410; 82 Am. Dec. 315; McMahon v. Walsh, 11 Jones & S. 36; Berea Stone Co. v. Kraft, 31 Ohio St. 287; 27 Am. Rep. 510; Keegan v. Kavanaugh, 62 Mo. 230; Johnson v. Bruner, 61 Pa. St. 58; 103 Am. Dee. 613; Lorentz v. Robin- son, 61 Md. 64. "The doctrine that a servant, on entering the service of an employer, takes on himself, as a risk incidental to the service, the chance of injury arising from the negligence of fellow-servants engaged in the common employment, has no application in the cace of the negli- gence of an employer. Though the change of injury from the negligence of fellow-servants may be supposed to enter into the calculation of a servant in undertaking the service, it would be too much to say that the risk of dan- ger from the negligence of a master, when engaged with him in their com- mon work, enters in like manner into his speculation. From a master he is entitled to expect the care and atten- tion which the superior position and presumable sense of duty of the latter ought to command. The relation of master and servant does not the less subsist because by some arrangement between the joint masters one of them takes on nimselt the functions of a workman. It is a fallacy to suppose that on that account the character of master is converted into that of a fel- low-laborer": Ashworth w. Stanwix, 3 El. & E. 701. 2 Daley v. Sohaaf, 28 Hun, 314. •'' Cayzer v. Taylor, ^0 Gray, 274; 69 Am. Dec. 317; Crutchfield v. Railroad Co., 76 N. C. 320; Booth v. Railroad Co., 73 N. Y. 38; 29 Am. Rep. 97; Cone V. Railroad Co., 81 N. Y. 206; 37 Am. Rep. 491; McMahon v. Hen- ning, 1 McCrary 0. C. 516; Boyce v. Fitzpatrick, 80Ind. 526; Grand Trunk R. R. Co. V. Cummings, 106 XJ. S. 700; Daley v. Schaaf, 28 Hun, 314; Frank- lin V. Railroad Co., 37 Minn. 409. In Paulmier v. Railroad Co., 34 N. J. L. 151, the track over a trestle-work was unsafe, and the engineer in charge had orders not to put the engine thereon, but disobeyed orders, and a fireman who was on the engine, and who was unaware of the orders or of the dan- ger, was killed in consequence of the trestle-work giving way. It was held that the master was responsible, the court saying: "The servant does not agree to take the chances of any negli- gence on the part of his employer; and no case has gone so far as to hold that where such negligence contributes to the injury, the servant may not re- § 308 PRINCIPAL AND AGENT. 544 servant disobeys the order of the master does not excuse the liability of the latter for his negligence/ A railroad company neglecting to see that there are a sufficient num- ber of brakemen on a train when it starts on its trip is liable to a servant consequently injured without contribu- tory negligence on his part, although the immediate neg- ligence in so starting was that of a co-servant.^ Illustrations. — The fireman of an engine of a "wildcat" train was injured by a collision caused by the neglect of an agent and telegraph-operator, in the employ of the company, to strictly observe the rules laid down by the company for govern- ing the movements of trains. Held, that the company was lia- ble, every reasonable precaution to avoid the collision not having been taken: Sheehan v. Railroad Co., 91 N. Y. 332. § 308. Unsuitable or Incompetent Fellow-servants. — Again, if the master has failed to exercise ordinary or reasonable care in the selection of his servants, in conse- quence of which he has in his employ a servant who, by reason of habitual drunkenness, negligence, or other vicious habits, or by reason of want of the requisite skill to discharge the duties which he is employed to perform, or for any other cause is unfit for the service in which he is engaged, and if in consequence of such unfitness an injury happens to another servant, the master must an- swer for the damages suffered by such servant.^ As to the cover. It would be both unjust and Ala. 294; Taylor v. Western Pacific impolitic to suffer the master to evade R. R. Co., 45 Cal. 323; Illinois etc. the penalty of his misconduct in ne- R. R. Co. v. Jewell, 46 111. 99; 92 Am. glecting to provide properly for the Dec. 240; Chicago etc. R. R. Co. v. security of his servant. Contributory Sullivan, 63 111. 293; Thayer v. St. negligence, to defeat a right of action, Louis etc. R. R. Co., 22 Ind. 26; 85 must be negligence of the party in- Am. Dec. 409; Chicago etc. R. R. Co. jured." V. Harney, 28 Ind. 28; 92 Am. Deo. 1 Mound City Paint Co. v. Conlon, 282; Couch v. Watson Coal Co., 46 92 Mo. 221. Iowa, 17; Kansas etc. R. R. Co. v. 2 Booth V. Railroad Co., 73 N. Y. Salmon, 14 Kan. 512; 11 Kan. 83; Chi- 38; 29 Am. Rep. 97. cago etc. R. R. Co. v. Doyle, 18 Kan. ^ 2 Thompson on Negligence, p. 974, 58; Union Pacific R R. Co. v. Young, and cases cited; Senior v. Ward, 1 El. 19 Kan. 488; Cayzer v. Taylor, 10 & E. 385; 5 Jur., N. S., 172; 28 L. J. Gray, 274; 69 Am. Dec. 317; Oilman Q. B. 139; 7 Week. Rep. 261; Tarrant v. Eastern R. R. Co., 10 Allen, 233; t). Webb, 18 Com. B. 796; 25 L. J. 87 Am. Dee. 635; 13 Allen, 433; 90 Com. P. 261; Walker v. Boiling, 22 Am. Dec. 210; Cumberland etc. R. R. 545 LIABILITIES OF MASTER AND SERVANT. § 308 selection and retention of servants, the master does not warrant anything. His duty is to use reasonable care in selecting them, and not to retain them after he has dis- covered their incompetency.' " The same care requisite in hiring a servant in the first instance must still be exercised in continuing him in the service; otherwise the employer will become responsible for his want of care or skill. The employer will be equally liable for the acts of an incompetent or careless servant whom he continues in his employment after a knowledge of such incom- petency or carelessness, or when, in the exercise of due care, he should have known it, as if he had been wanting in the same care in hiring."^ When the unfitness is Co. v. State, 44 Md. 283; Harper v. Indianapolis etc. R. R. Co., 47 Mo. 567; 4 Am. Rep. 353; Moss v. Pacific R. R., 49 Mo. 1G7; 8 Am. Rep. 126; Conuor v. Chicago etc. R. R. Co., 59 Mo. 285; Laniug v. New York etc. R. R. Co., 49 N. Y. 521; 10 Am. Rep. 417; Sizer w. Syracuse etc. R. R. Co., 7 Lans. 67; Chapman v. Erie R. R. Co., 1 Thomp. & C. 526; Hardy v. Carolina etc. R. R. Co., 76 N. C. 5; Frazier v. Pennsylvania R. R. Co. , 38 Pa. St. 104; Ardesco Oil Co. «. Gilson, 63 Pa. St. 146. And see BmIoc v. Railroad Co., 59 N. Y. 356; 17 Am. Rep. 325; Nordyke Co. v. Van Sant, 99 Ind. 188. ' Columb\is etc. R. R. Co. v. Troesch, 68 111. 545, 550; 18 Am. Rep. 578; Tar- rant V. Webb, 18 Com. B. 797; Miohi- g.an Central R. R. Co. v. Dolan, 32 Mich. 510; Union Pacific R. R. Co. v. Mdliken, 8 Kan. 647; Lawler «. Rail- road Co., 62 Me. 463; 16 Am. Rep. 492; Jordan v. Welb, 3 Woods, 527; Blake v. Railroad Co., 70 Me. 60; 35 Am. Rep. 297; Buckley v. Railroad Co., 14 Fed. Rep. 833; O'Conuell v. Raih-oadCo., 20 Md. 212; 83 Am. Dec. 549. I-.i Michigan etc. R. R. Co. v. Dolan, 32 Mich. 510, the court said: "A corporation stands on the same footing with an individual in this re- spect, and both are bound to use such care as the nature and dangers of their business require, and no more. In such a business as that of conducting VOL. I.— 35 a railroad, personal presence of direc- tors and officers all along the line would be impossible. The charge of looking after various divisions of busi- ness and local management must of necessity be given to many subordi- nates, of greater or less authority, and each of these must be intrusted with considerable discretion, not only in managing business, but also in choos- ing their inferiors in position. It is incambent on the principal, whether individual or company, to have safe rules of business, and to use care in selecting such agents as are imme- diately appointed. It is also a duty to remove such persons or to change such regulations as they have reason to believe unfit. But, until informed to the contrary, they have a right to trust that an agent or officer carefully chosen will use good judgment in mak- ing his own appointments and doing his own duties; and they have a righ; to rest upon that belief until, in the exercise of that general vigilance which devolves upon themselves, they find they have been mistaken. And as all men are liable to errors, no one can be bound to treat an agent as incoriipe- teat, unless for some €rror or miscon- duct going to his general unfitness for his place. " '^ Shanny v. Androscoggin Mills, 66 Me. 420. But it has been ruled in New York that the same care is not required in the keeping of servants as § 308 PRINCIPAL AND AGENT. 546 shown to have existed at the time of employment, a prima facie case of negligence is made out against the master, and the burden is upon him to disprove negli- gence.' The mere fact that a railroad engineer is near- sighted does not prove him to be an improper person for the duty,^ or that a brakeman was slow and lazy.' The fact that a servant was intoxicated at the time of the hap- pening of an accident, whereby a fellow-servant was in- jured, is a circumstance to be considered on the question of whether the master was in fault for employing an in- competent servant.^ A master is liable for injury to a servant by the negligence of a fellow-servant hired by him in entire ignorance of his qualifications, and without inquiry in reference thereto.^ A corporation is liable to a servant for personal injuries resulting from the negli- gence of an employee in selecting fellow-servants, however competent such employee may be in the business of select- ing them.* Failure to employ a suflBcient number of men to properly perform a work in a safe manner is negli- gence.^ Illusteations. — The fireman of a locomotive on defendant's railroad was killed through the alleged negligence of a switch- man of the road. A prior act of neglect had been charged upon the switchman, but upon investigation, by the defendant's gen- eral agent, he was retained in his position. He had at all times appeared competent and faithful. Held, that no negligence could be imputed to defendants in retaining the switchman in their employ, and that, therefore, they were not liable for the death of the fireman: Baulec v. Railroad Co., 59 N. Y. 356; 17 Am. Rep. 325. An employee of a railroad company was in- jured by one of its locomotive engines, owing to the negligence in their selection, because it is said ' Corson v. Eailroad Co., 76 Me. their fitness is presumed to continue: 244. Chapman?;. Erie E. R. Co., 53 N. Y. * Probst v. Delamater, 100 N. Y. 579. And see Davis v. Railroad Co., 266. 20 Mich. 105; 4 Am. Rep. 364; Blake ^ Indiana Mfg. Co. v. Millican, 87 V. Railroad Co., 70 Me. 60; 35 Am. Ind. 87. Rep. 297. " Tyson u. Railroad Co., 61 Ala. 1 Crandall v. McRrath, 24 Minn. 127. 554. ' Texas etc. R. R. Co. v. Barring- ' Johnson v. Ashland Water Co., 71 ton, 62 Tex. 597. Wis. 553. 547 LIABILITIES OF MASTER AND SERVANT. § 309 or incompetence of the fireman, who, against the rules of the company, had been temporarily left in charge of the engine by the engineer. The master mechanic of the company, whose duty it was to employ and discharge the engineers and firemen, knew that the engineers generally were in the habit of so leav- ing their engines. Held, that the company was liable for the injury: Ohio etc. R. R. Co. v. Collarn, 73 Ind. 261; 38 Am. Rep. 134. A foreman of work of a railroad company was, when hired, a fit person to discharge the duties for which he was em- ployed, but afterwards became addicted to habits of intemper- ance, and while intoxicated caused a defective scaffolding to be erected, which fell, injuring the plaintiff, a workman under him. Held, that the master was liable: Laning v. Railroad Co., 49 N. Y. 521; 10 Am. Rep. 417. A, who had never learned the carpenter's trade, and had only worked as a carpenter for twelve weeks, was employed as foreman of a gang of carpenters engaged in erecting a building. Plaintiff, one of the gang, was injured by a staging on which he was working giving way. Held, evidence to sustain an action against the employer: Bun- nell v. Railroad Co., 29 Minn. 305. A railroad engineer is wild, reckless, and careless, and is going down grade at such an im- proper and excessive rate of speed as to necessitate the setting of the brakes, and the setting of the b'-akes caused the train to oscillate, violently throwing the brakeman from the train and killing him. Held, that the railroad company is liable for damage for such killing if the incompetence of the engineer was so generally known that they would be held to a knowledge of it: Illinois Cent. R. R. Co. v. Jewell, 46 111. 99; 92 Am. Dec. 240. § 309. Where Servant is an Infant or Minor. — A minor under twenty-one, even a child of tender years, in entering a service, assumes, like the adult servant, the risks of that service.* But it seems essential that the con- tract with the infant should be a valid one.^ The mere > Brown v. Maxwell, 6 HUl, 592; 41 ^ j^ Eailroad Co. v. Miller, 49 Tex. Am. Dec. 771; Hayden v. Manufao- 322, a, father recovered two thousand turing Co., 29 Conn. 548; Nashville dollars damages for an injury which etc. R. R. Co. V. Elliott, 1 Cold. 611; happened to his minor son while em- 78 Am. Dec. 506; Gartland v. Railroad ployed, without his permission, on the Co., 67 111. 498; King v. Boston E. R. defendant's railroad as a brakeman. Co., 9 Cuah. 112; Chicago etc. R. R. The following instruction to the jury Co. V. Harney, 28 Ind. 28; 92 Am. was held correct; " When a person or Dec. 282; Ohio etc. R. R. Co. v. Ham- corporation employs a minor, it de- mersley, 28 Ind. 371; Curran v. Mer- volves on such employer to obtain chants' Mfg. Co., 130 Mass. 374; 39 the consent of the father, when such Am. Rep. 457; Fisk v. Cent. Pac. R. minor is under the control of the R. Co., 72 Cal. 38; 1 Am. St. Rep. 22. father, and whilst said minor forms a § 309 PRINCIPAL AND AGKNT. 548 employment, or the employment about dangerous work, of a minor by a railroad company, without the consent of his father, is not in itself negligence.' But it has been held an act of negligence on the part of a railroad company to take into its employment as a brakeman a minor of such tender years as not to know the risks of the service.'' The law makes it the duty of the master to explain the hazards of the service to the minor, and to make him fully alive to the dangers of the situation.' But he is not bound to point out patent dangers;^ for example, as to the use, by a servant fourteen years old, of a freight ele- vator into the well of which opened a series of doors, one on each story.' And if the master, or his foreman or vice-principal, sends a minor to perform a dangerous ser- vice outside his regular duties, the master will be liable if he is injured in performing it." In the absence of clear part of the father's family. Whilst a minor, the father is liable for the sup- port of his child, and i3 entitled to the earnings of his son; and whore the son, through the negligence of the em- ployer or its servants, receives an injury incapacitating him for a while from labor, and rendering him less serviceable up to his arriving at the age of twenty-one years, the employer thus engaging a minor, without the knowledge or consent of the father, is liable to tlie father in damages. " And see Hamilton v. Kailroad Co. , 54 Tex. 556. But a contract with an infant, for his benefit, is valid until avoided by the parent or guardian, and con- tracts of service are frequently so made: Nashville etc. R. E. Co. v. El- liott, 1 Cold. Gil; 78 Am. Dec. 506; Gartland v. R. R. Co., 67 111. 498. ' Texas and Pacific R. R. Co. v. Carlton. 60 Tex. 397; Pennsylvania R. R. Co. V. Long, 94 lud. 250. 2 Goff D. Railroad Co., 36 Fed. Rep. 299. ^ Coombs V. New Bedford Cordage Co., 102 Mass. 572; 3 Am. Rep. 507; Sullivan v. India Mfg. Co., 113 Mass. 398; Grizzle v. Frost, 3 Fost. & F. 62'J; Hill V. Gust, 55 Ind. 45; St. Louis etc. R. R. Co. V. Valirius, 56 Ind. 511; Bowling V. Allen, 74 Mo. 13; 41 Am. Rep. 298; Fisk v. Cent. Pac. R. R. Co., 72C'.il. 38; 1 Am. St. Rep. 22. A boy of nineteen, employed in the upper story of a factory, from which the means of escape are insufficient in case of fire, is not presumed, as matter of law, to have assumed the risk. Wliether he has done so is a question of fact: Schwandner v. Birge, 33 Hun, 186. The master is bound to use more care in the case of an infant servant: Robertson v. Cornelson, 34 Fed. Rep. 710. * Fones v. Phillips, 39 Ark. 17; 43 Am. Rep. 265; Rock v. Indian Or- chard Mills, 142 Mass. 522; Gilbert V. Guild, 14-t Mass. 601; Ciriack v. Merchants' Woolen Co., 146 Mass. 182; 4 Am. St. Rep. 307. ^ Costello V. Judson, 21 Hun, 398. « Railroad Co. v. Fort, 17 Wall. 553; Siegel V. Schantz, 2 Thomp. & C. 353; Grizzle v. Frost, 3 Fost. & F. 622; Jones V. Old Dominion Cotton Mills, 82 Va. 140; 3 Am. St. Rep. 92; contra, Ander.3on v. Morrison, 22 Minn. 274. In an Indiana case, the court went fur- ther, and held that where an infant servant is ordered by a fellow-servant to perform a work outside of his du- ties, and is injured, the master is liable: Chicago etc. R. R. Co. v. Har- ney, 28 Ind. 28; 92 Am. Dec. 282. 549 LIABILITIES OF MASTER AND SERVANT. § 310 proof to the contrary, an infant of the age of fourteen years will be presumed to have sufficient capacity to recognize and avoid danger/ Illustrations. — A boy of fifteen, employed to feed a defect- ive press, was injured by placing his fingers under the punch, as was habitually done, notwithstanding a rule forbidding it, nor could the work well be done without disregarding the rule. Held, that the employer was liable: Hayes v. Bush and Denslow Mfg. Co., 41 Hun, 407. A boy of thirteen, employed by a cot- ton manufacturing company, caught his hand in a winder. Held, that a mere neglect to fence the winder was not negli- gence, a winder not being a peculiarly dangerous machine; that if the boy had been sufSciently instructed concerning the danger, the company's duty towards him had been performed: Each V. Indian Orchard Mills, 142 Mass. 522. The plaintiff, a girl fifteen years old, was employed in the defendant's factory, and was kept at work until three o'clock Sunday mornings, and was then, by order of the superintendent, allowed to re- main in the factory till daylight, but only in a basement room. On the occasion in question the night-overseer of the factory, finding the basement room damp, put the plaintiff, with other children operatives, in a second-story lighted room, which had an unguarded elevator bole in an adjoining unlighted passage- way. The children played at hide-and-seek, and the plaintiff, running into the passage-way, fell through the hole and was injured. Held, that the defendant was liable: Atlanta Cotton Factory Co. v. Speer, 69 Ga. 137; 47 Am. Rep. 750. A girl of eleven, under an agreement between her father and A, worked for A at his house. He permitted her to go across a prairie so insuSiciently clad that she froze. Held, that she could main- tain an action against A: Nelson v. Johansen, 18 Neb. 180; 53 Am. Rep. 806. A girl of fourteen, employed to feed collars in an ironing machine, was not instructed as to the obvious dan- ger. After six weeks, she caught her finger in a button-hole, and her hand was drawn between the rollers. Held, that her employer was not liable: Hickey v. Taaffe, 105 N. Y. 26. § 310. Statutory Provisions as to Liability of Master to Servant. — By statute in some of the states as well as in England, the liability at common law of a master for in- juries to his servants has been somewhat altered. By the California Code,^ "an employer is not bound to indemnify ' Nagle V. Railroad Co., 88 Pa. St. 2 Civ. Code, sec. 1970. 35; 32 Am. Rep. 413. § 310 PRINCIPAL AND AGENT. 550 his employee for losses suffered by the latter in conse- quence of the ordinary risks of the business in which he is employed, nor in consequence of the negligence of another person employed by the same employer, in the same general business, unless he has neglected to use or- dinary care in the selection of the culpable employee." This statute has been construed so as to make no differ- ence whether the culpable emploj'ee was in a superior grade of service to the injured employee, or not/ By the Georgia code it is provided: "Railroad companies are common carriers, and liable as such. As such companies necessaril}'- have many emploj'ees who cannot possibly control those who should exercise care and diligence in the running of trains, such companies shall be liable to such employees, as to passengers, for injuries arising from the want of such care and diligence."^ "The principal is not liable to one agent for injuries arising from the neg- ligence or misconduct of other agents about the same business. The exception in the case of railroads has been previously stated."* "A railroad company shall be liable for any damages done to persons, stock, or other property, by the running of the locomotives or cars, or other machin- ery of svich company, or for damage done by any person in the employment and service of such company, unless the company shall make it appear that their agents have exercised all ordinary and reasonable care and diligence, the presumption m all cases being against the company."'' " If the person injured is himself an employee of the com- pany, and the damage was caused by another employee, and without fault or negligence on the part of the person injured, his employment by the company shall be no bar to the recovery." ^ These provisions change the common- law rule, and permit any employee who is free from fault 1 Collier v. Steinhart, 51 Cal. 116; ' Ga. Code 1873, sec. 2202. McLean v. Blue Point Gravel Co., 51 * Id., sec. 3033. Cal. 255. ^Id., sec. 3036. 2 Ga. Code 1873, sec. 2083. 551 LIABILITIES OF MASTER AND SERVANT. § 310 to recover for the negligence, of any other employeej without respect to whether the two were engaged about the same business, or not.' By statute in Illinois, the owners of coal mines are required to take certain pre- cautions for the safety of their workmen, and their neglect to do so renders them liable to a servant in- jured.^ By the code of Iowa it is provided: " Every corporation operating a railway shall be liable for all damages sustained by any person, including employees of such corporation, in consequence of the neglect of agents, or by any mismanagement of the engineers or other employees of the corporation, and in consequence of the willful wrongs, whether of commission or omis- sion of such agents, engineers, or other employees, when such wrongs are in any manner connected with the use and operation of any railway on or about which they shall be employed; and no contract which restricts such liability shall be legal or binding.'" To make the master liable under this statute, the culpable servant must have failed to use ordinary, not extraordinary, care.'' Under this statute, an employee riding on a hand-car, but Injured by another hand-car running into his, has been held entitled to recover,^ and so has a servant who stepped on the track to avoid a runaway team, and was injured by a hand-car negligently run by fellow-servants of his." Where, in an action for negligence, it appeared that plain- tiff was a section-hand, and at the time of the injury was loading a car, it was held that liis service did not pertain to the operation of the road under section 1307 of that code, permitting recovery for negligence of a co-employee only in such a case.' An employee of a railway company, '■ Georgia R. R. Co. v. Goodwire, * Hunt v. Chicago etc. R. R. Co., 26 56 Ga. 196; Marsh v. South Carolina Iowa, 363. R. R. Co., 56 Ga. 274; Georgia R. R. * Lombard v. Railroad Co., 47 Iowa, Co. V. Rhodes, 56 Ga. 645. 494; Hoben v. Railroad Co., 20 Iowa, 2 Underwood's 111. Stats. 1878, pp. 562. 867, 871, sees. 8, 14; Sard's 111. Stats. « Moore v. Railroad Co., 47 Iowa, 1877, pp. 669, 671, sees. 8, 14. C88. " Iowa Code 1873, sec. 1307. ' Smith v. RaUroadCo., 59 Iowa, 73. § 310 PRINCIPAL AND AGENT. 552 engaged in the work of repairing the track, is within the statute as thus limited, and entitled to recover damages of the company for the negligence of a co^employee.' A running of special trains over a railway hy a construction company, while engaged in building it, is "operating a railway," within the statute; and a person engaged in shoveling gravel from the cars of such a train is within the constitutional scope of the statute.^ A person em- ployed by a railway company at the work of taking down and removing a bridge, who was compelled by orders of his superior to go upon one of the company's trains, and while so riding was injured, was engaged in operating the road, within the statute, and was entitled to damages/* But a person engaged at work in the repair-shop of a railway company is not within the statute, and if he can maintain an action at all for an injury received while thus engaged, it must be under the principles of the common law.^ Whether the nature of the service in which the injured servant was engaged brought him within the statute has been held a question of fact for the jury, and not of law for the court.^ Contributory negligence of the injured employee is a bar to his ac- tion, as at common law.° In Kentucky, by statute, "if the life of anj' person is lost or destroyed by the willful neglect of another person or persons, company or com- panies, corporation or corporations, their agents or ser- vants, then the personal representative of the deceased shall have the right to sue such person or persons, com- pany or companies, corporation or corporations, and re- ^ Frandsen v. Railroad Co., 36 Iowa, * McAiinich v. Mississippi etc. R. R. 372. Co. , 20 Iowa, 338; Hoben v. Burling- - McKnight V. Construction Co., 43 ton etc. R. R. Co., 20 Iowa, 562; Iowa, 406. Hamilton v. Des Moines etc. R. R. Co., ^ Schrceder v. Chicago etc. R. R. 36 Iowa, 31; Carlin w. Chicago etc. R. Co., 47 Iowa, 375, 3S3; 41 Iowa, 344. R. Co., 37 Iowa, 316; Lang v. Holi- * Potter V. Chicago etc. R. R. Co., day Creek R. R. Co., 42 Iowa, 677; 46 Iowa, 399. Steele v. Iowa Central R. R. Co., 43 '■' Schroeder ;•. Chicago etc. R. R. Iowa, 109; Lombard v. Chicago etc. Co., 41 Iowa, 344. R. R. Co., 47 Iowa. 494. 553 LIABILITIES OF MASTER AND SERVANT. § 310 cover punitive damages for the loss or destruction of the life aforesaid." ^ Under this statute, it is held that if the person killed was an employee of a railroad company, and not a stranger to it, in order to a recovery the miscon- duct of the company or its agents or servants must have been so gross as to imply actual malice, or recklessness.^ But if the person killed was a stranger to the railroad company, then, under another section of the same stat- ute,^ whilst punitive damages cannot he recovered unless the jury should find that the company, its agents or ser- vants, had been guilty of willful neglect, yet there can be a recovery of compensatory damages if the killing was the result of want of ordinary care on the part of the defend- ant.* When the grade of negligence denominated "willful neglect" is established, the master must pay damages, no matter how negligently the person killed may have acted.' A Maine statute enacting that every railroad corporation shall be liable for injuries sustained by "any person" under certain circumstances has been construed to mean persons not servants of the corporation, and hence not to change the common-law rule as to injuries by a fellow- servant.* And a similar statute in Missouri ' has received a similar construction.* The New York Laws, 1876, chapter 122, make it a misdemeanor to use a child in a dangerous employment. An action against the employer may be maintained by a child thus injured, and ordi- narily it is for the jury to say whether the employment •Stanton'sRev. StatKy. 510, sec. 3. Co. , 10 Bush, 263. But see Sullivan ''■ Claxton V. Kailroad Co., 13 Bush, v. Raiboatl Co., 9 Bush, 81. 636; Jacobs v. Railroad Co., 10 Bush, "Rev. Stats. Me. 1S40, c. 81, sec. 263. 21; Carle v. Bangor etc. R. R. Co., 43 » Stanton's Rev. Stat. Ky. 510, sec. 1. Me. 269. * Jacobs V. Louisville etc. R. R. Co., ' Rev. Stats. 1855, p. 647; Gen. 10 Bush, £63; Claxton v. Lexington Stats. 1865, p. 601; Wagner's Stats. etc. R. R. Co., 13 Bush, 636. 519; Rev. Stats. 1879, sees. 2121, * Claxton V. Lexington etc. R. R. 2122. Co., 13 Bush, 636; Louisville etc. R. ^Proctor v. Hannibal etc. R. R. R. Co. V. Mahony, 7 Bush, 235, 239; Co., 64 Mo. 112; overruling Schultz «. Di^by V. Kenton Iron Co., 8 Bush, Railroad Co., 36 Mo. 13, and Counor 167; Jacobs v. Louisville etc. R. R. v. Railroad Co., 59 Mo. 285. § 311 PRINCIPAL AND AGENT. 554 was dangerous.* In Wisconsin, a statute making a rail- road company failing to fence liable to "persons" injured may be availed of by an employee of the company.^ A hammer used for driving spikes into cross-ties on a railroad is not machinery within the Alabama code pro- viding that an employer is liable for injuries to an em- ployee as if he were a stranger, when the injury is caused by any defect in the machinery used in the business of the master or employer.^ § 311. Servant Waives Defect by Entering or Remain- ing in Service Knov/ing of It. — If the servant before he enters the service knows, or if he afterwards disco\'ers, or if by the exercise of ordinary observation or reasonable skill and diligence in his department of service he may discover, that the building, premises, machine, appliance, or fellow-servant in connection with which or with whom he is to labor is unsafe or unfit in any particular, or that the occupation he is entering is a dangerous one, and if, notwithstanding such knowledge, or means of knowledge, he voluntarily enters into or continues in the employ- ment without objection or complaint, he is deemed to as- sume the risk of the danger thus known or discoverable, and to waive any claim for damages against the master in case it shall result in injury to him.^ Where an em- 1 Eickey ?■. Taafifo, .'52 Hun, 7. v. Holmes, 7 Hurl. & N. 937. United ^ Quackenbush v. KailroaJ Co., 62 St.ate3: Kielley ti. Belcher etc. Mining Wis. 411. Co. , 3 Saw. 500 ; Dillon v. Union Paciiio = Georgia Pac. R'y Co. v. Brooks, 84 R. R. Co., ?, Dill. 310; Jones v. Yeager, Ala. 138. 2 Dill. C4. Connecticut: Hayden v. *2ThompsononNegligenee, p. 1008, Smithville Mfg. Co., 29 Conn. 548. citing and grouping the following Georgia: Western etc. R. R. Co. v. decisions: British; Assop v. Yates, 2 Bishop, 50 Ga. 465; Johnson w. West- Hurl. & N. 707; Griffiths o. Gidlow, em etc. R. R. Co., 55 Ga. 133; Georgia 3 Hurl. & N. G4S; Skipp v. Eastern R. R. Co. w. Konney, 58 Ga. 485. Com- Counties R. R. Co., 9 E.x. 223; 3 L. pare Central R, R. Co. y. Kelley, 58 Ga. J. Ex. 23; Wco.;iey c. Metropolitan 107. Iowa: LumleyM. Caswell, 47 Iowa, R. R. Co., 2 Ex. Div. 384; Ogden v. 159; 7 Rep. 5.59. Illinois: Chicago Rummens, 3 Fost. & F. 751. Com- etc. R. R. Co. v. Jackson, 55 111. 492; pare Seymour v. Maddox, 16 Q. B. Camp Point Mfg. Co. v. Ballou, 71 326; Dynen v. Leach, 26 L. J. Ex. 111. 417; St. Louis etc. R. R. Co. v. 221; contra, Britton v. Great West- Britz, 72 111. 256; Chicago etc. R. R. ernCottonCo.,L. R. 7Ex. 130; Clarke Co. v. Munroe, 85 111. 25; Morris «;. 555 LIABILITIES OF MASTER AND SERVANT. §311 ployee, after having the opportunity of becoming ac- quainted with the risks of his situation, accepts tliem, he cannot complain if he is subsequently injured by such exposure.^ One whoso employment in a railroad yard requires him to move damaged cars takes the risks inci- dent to mistaking a damaged car for a sound one,^ like- wise the risk arising from the use of worn rails for side-tracks in a railroad yard.^ A brakeman cannot re- cover for being struck by a snow-bank left along the sides of the track by the snow-plow, as he assumes such risks.'* One who works on a raised platform without a railing Glaason, 1 Bradw. 510; Toledo etc. K. R. Co. V. Asbury, 84 III. 429; Chi- cago etc. R. R. Co. V. Ward, 61 111. 13J; Indianapolis etc. R. R. Co. v. Flanigan, 77 111. 3G5; Moss v. John- son, 22111. 6.3.3. Kentucky: Sullivan w. Louisville B. Co., 9 Bush, 81. Mas- sachusetts: Ladd V. New J3edford R. R. Co., 119 Mass. 412. Maine: Buz- 2ell V. Laconia Mfg. Co., 48 Me. 113; 77 Am. Dec. 212. Maryland: Balti- more etc. R. R. Co. V. Woodruff, 4 Md. 242; 39 Am. Dec. 72; Hanrathy V. Northern etc. R. R. Co., 46 Md. 280. Minnesota: Le Claire v. First Division etc. R. R. Co., 20 Minn. 9. Michigan: Davis v. Detroit etc. R. R. Co., 20 Mich. 105; 4 Am. Dec. 364; Fort Wayne etc. R. R. Co. v. Gilder- sleeve, 33 Mich. 133. Missouri: Dale V. St. Louis etc. R. R. Co., 63 Mo. 465; Devitt v. Pacitic R. R., 50 Mo. 302. North Carolina: CrutchfieUl v. Richmond etc. R. R. Co., 78 N. C. 300; 76 N. C. 320. Nov\r York: Do Graff V. New York etc. R. R. Co., 3 Thomp. & C. 256; reversed, 19 Alb. L. J. 134; Laning v. New York etc. R. R. Co. , 49 N. Y. 521; 10 Am. Rep. 417: Gibson w. Erie R. R. Co., C3 N. Y. 449; 20 Am. Rep. 552; reversing 5 Hun, 39; Haskin V. New York etc. R. R. Co., 65 Barb. 129; affirmed 56 N. Y. 608; Wright v. New York etc. R. R. Co., 25 N. Y. 56?; Jones v. Roach, 9 Jones & S. 248. Pennsylvania: Frazier v. Pennsylva- nia R. R. Co., 38 Pa. St. 104; 80 Am. Dec. 467; and see O'Donnell v. Rail- road Co., 59 Pa. St. 239; 98 Am. Dec. 336. Rhode Island: Kelley v. Silver Springs etc. Co., 12 R. I. 112; 34 Am. Rep. 615. Texas: Robinsons. Hous- ton etc. R. R. Co., 46 Tex. 540; In- ternational R. R. Co. V. Doyle, 49 Tex. 190. Wisconsin: Dorsey f. Phil- lips etc. Co., 42 Wis. 583; OakBridge Coal Co. V. Reed, 6 Cent. L. J. 275; Wormell v. Maine Cent. R. R. Co., 79 Me. 397; 1 Am. St. Rop. 321; Smith V. Car Works, 60 Mich. 501; 1 Am. St. Rep. 542; and see Grcenleaf v. R. R. Co., 29 Iowa, 14; 4 Am. Rep. 181; Money v. Coal Co., 55 Iowa, 671; Nay lor v. Chicago etc. R. R. Co., 53 Wis. 661; Clark v. Railroad Co., 28 Minn. 128; Chicago etc. R. R. Co. v. Clark, 11 111. Aijp. 104; Chicago etc. R. R. Co. V. Simmons, 11 111. App. 147; Louisville etc. R. R. Co. v. Gower, 85 Tenn. 465; Spiva v. Osage Coal Co., 88 Mo. 68 ; Brown v. Railroad Co. , CO Iowa, 161;Herrimaui'. R.R.Co., i;7Mo.App. 435; Kuoxville Iron Co. v. Smith, 86 Tenn. 45; Norfolk etc. R. E. Co. o. Emmert, 83 Va. 640; Bolicr v. Eavey- meyer, 46 Hun, 557; Norfolk etc. R. R. Co. V. Cottrell, 83 Va. 512; Woodward v. Shrumpt, 120 Pa. St. 458; Wilson v. R. R. Co., 37 Iilinn. 326; Anderson u. Sowle Elevator Co., 37 Minn. 539; Hudson v. Ocean S. S. Co., 110 N. Y. 625; New York etc. R. R. Co. V. Lyons, 119 Pa. St. 324. 1 Umback v. R. R. Co., 83 Ind. 191. 2 Fraker v. R. R. Co., 32 Minn. 54. 3 Michigan Central R. R. Co. v. Austin, 40 Mich. 247. * Dowell V. Railway Co., 62 Iowa, 629. § 311 PRINCIPAL AND AGENT. 566 takes the risk of falling off.' A servant does not necessa- rily assume the risks incident to the use of unsafe ma- chinery furnished by his master, because he knows its character and condition; it is also necessary that he should know, or by the exercise of common observation might have known, the risks attending its use.^ A work- man in a mine does not assume risks incident to defects in the hoisting apparatus used for lowering him to the place where he works. This is not machinery about which he is employed.' Illosteations. — The plaintiff was employed to work on a machine of an old pattern, which had not all the safeguards of newer machines. He worked on it for several years, and then told the owner's superintendent that it ought to have an ad- ditional safeguard. The superintendent promised to attend to it, but it was not furnished, and the plaintiff was required to continue to work with it, under threat of being discharged if he refused. He complied, and was injured. Held, that the mas- ter was not liable: Sweeney v. Berlin and Jones Envelope Co., 101 N. Y. 520; 54 Am. Rep. 722. A railroad switchman had been sent by the defendants to switch a car owned by another rail- road company, to be loaded with nitro-glycerine by the con- signor of that company. Owing to the negligence of the servants of that consignor there was an explosion, by which the switchman was killed. The switchman knew the danger- ous character of the work. Held, that defendant was not lia- ble: Foley V. Railroad Co., 48 Mich. 622; 42 Am. Rep. 481. A brakeman in the service of a railroad company was injured by catching his foot in the guard of a switch. The guard was made of T rail, the kind in general use, and it appeared that U rail would have been safer, although not in general use. The brakeman knew the character of the rail, and continued in the service without objection. Held, that the railroad company was not responsible in damages: Smith v. Railroad Co., 69 Mo. 32; 33 Am. Rep. 484. A conductor on defendant's railroad was knocked from a freight train and killed by a projecting roof of defendant's depot. He was familar with the road, had passed over it daily for a long time, and the roof had not been altered after he entered the defendant's employ. Held, that the company was not liable: Gibson v. Railroad Co., 63 N. Y. 449; •Moulton V. Gage, 138 Mass. ••' Russell i>. R. R. Co., 32 Minn. 230. 393. ' Moran v. Harris, 63 Iowa, 390. 657 LIABILITIES OF MASTER AND SERVANT. § 311 20 Am. Rep. 552. A locomotive engineer, in the employ of a railroad company, while leaning outside an engine in motion, and looking back for a signal from the conductor, was injured by his head coming in contact with a signal post three feet eight inches distant from the track, and visible half a mile away. There were many other signal posts and other erections along the track at the same distance from it. He knew of those facts, but had not noticed this particular post. Held, that he was not entitled to recover against the railroad company for the injury, as he knev/ the danger and assumed the risk: Love- joy V. Railroad Co., 125 Mass. 79; 28 Am. Rep. 206. A car- coupler or switchman was constantly employed in running damaged cars to the shop for repairs. While attempting to couple two of these cars he was killed. Held, that he had ac- cepted the service and its risks, and could not recover: Chicago etc. R. R. Co. v. Ward, 61 111. 130. A fireman was killed by the overturning of an engine engaged in "bucking" snow. Held, in the suit of his representatives against the company, that a verdict for defendant was properly directed: Bryant v. Railroad Co., 65 Iowa, 305; 55 Am. Rep. 275. A workman in a railroad yard caught his foot between the main rail and the guard rail at a crossing. He knew that there were no blocks. Field, that the risk was one which he assumed, and that for his injury the comjjany was not liable: Hass v. Railroad Co., 40 Hun, 145. An employee of a railroad, while on top of a freight- train, was caught by a telegraph wire about four feet above the top of the train, and was killed. The wire had been there for five weeks. The employee was well aware of its position, had frequently passed under it, and was an experienced hand. Held, that there was no evidence of negligence on the part of the management of the railroad which should be submitted to a jury: Dalton v. Atlantic, Mississippi, etc. R. R. Co., 4 Hughes, 180. A railroad corporation was in the habit of running special trains without notice. An employee knowing this, while on a hand-car, was run into and injured by a special train going at a high rate of speed without notice. Held, that he had no right of action against the corporation: Pennsylvania R. R. Co. V. Wachter, 60 Md. 395. A workman was employed by a rail- road company to stand in a dangerous place to signal trains. Held, that he assumed the obvious risks of the position: Ken- nedy V. Railroad Co., 33 Hun, 457. A railroad track in a j'ard curved so sharply as to be dangerous to one attempting to make a coupling from the inner side. Held, that the risk was incident to the employment, and that a brakeman killed there must be deemed to have assumed the risk: Tuttle v. Detroit, Grand Haven, etc. R'y Co., 122 U. S. 189. A workman engaged § 312 PRINCIPAL AND AGENT. 558 in excavating a tnnnel was injured by a land slide, the danger from which was apparent to him. Held, that he could not re- cover of his employer, although he was ordered to work there by a foreman, who also knew of the danger: Anderson v. Win- ston, 31 Fed. Rep. 528. A fireman knowing the danger lets on steam when there is water in the pipes, and is injured by the bursting of a valve in which there is no defect. Held, an injury arising from the risks of his employment: Linch v. Sagamore Mfg. Co, 143 Mass. 206. The engineer of a train was killed in an accident caused by a misplaced switch. It appeared that the switch-target was painted green, and the plaintiff contended that if it had been red it could have been more readily seen at a distance, and enabled intestate to stop his train in time. Held, that as all the switch-targets on the road were green, and had been for two years, during which time intestate had been in the employ of the company, he was presumed to have accepted it as one of the risks of the employment: Naylor v. N. Y. Cent. R. E. Co., 33 Fed. Rep. 801. One employed as switchman in a freight-yard, while coupling cars, stepped into one of several drainage sluices which were in existence when he entered the employment, and which he knew remained without alteration, and was killed. Held, that the company's receiver was not liable: De Forest v. Jewett, 88 N. Y. 264. § 312. Aliter where He Complains and Master Prom- ises to Remedy Defect. — As stated in the last section, the servant, by continuing in the service after knowledge of defects, is deemed to assume the risk himself.^ But if the servant complain of the defect to the master, and the lat- ter promises to remedy or repair it, the servant, by remain- ing on this assurance for a reasonable time in the service, will not be considered to have waived it, and the question of a reasonable time will be for the jury.^ But if the defect ^ Kroy«. Chicago etc. R. R. Co., 32 N. C. 300; Shanny v. Androscoggin Iowa, 357; Greenleaf v. Dubuque etc. Mills, 66 Me. 420; Lauingu. New York R. R. Co., 33 Iowa, 52; Muldowney v. etc. R. R. Co., 49 N. Y. 521; 10 Am. Illinois etc. R. R. Co., 39 Iowa, C15; Rep. 417; Holmes v. Worthington, 2 Way V. Illinois etc. R. R. Co., 40 Fost. & F. 533; Holmes v. Clarke, 6 Iowa, 341; Lnmley v. Caswell, 47 Hurl. & N. 349; 30 L. J. Ex. 135; Iowa, 159; 7 Rep. 559; Crutchfield affirmed in Exchequer Chamber, sub V. Richmond etc. R. R. Co., 78 N. C. nom. Clarke v. Holmes, 7 Huil. & N. 300; Jones v. Roach, 9 Jones & S. 937; Conroy v. Vulcan Iron Works, 248; Morris v. Gleason, 4 111. App. 62 Mo. 35, 39; Paterson v. Wallace, 395. 1 Macq. 748; 1 Pat. App. 389; 26 ^ Belair v. Railroad Co. , 43 Iowa, Scot. Jur. 550; Kelley v. Silver Spring 662; Crutchfield v. Railroad Co., 78 etc. Co., 12 R. I. 112; 34 Am. Rep. 559 LIABILITIES OF MASTER AND SERVANT. § 312 is not remedied withiu the promised time, his remaining in the service is at his own risk.' And when a master has furnished implements perfect of their Ifind, but not designed for or adapted to the performance of his work, and a servant objects to using them on this account, but continues to use them, he will be hold to have assumed the risk.^ And the mere complaint of the servant will not be sufficient, unless the master expressly or impliedly promises to repair the defect.' In some jurisdictions it is even held that although the servant may have been aware of the defect, yet if it was of such a nature that a man of ordinary prudence would not on account of it have abandoned the service, and the servant continued therein, and was in consequence of the defect injured, he may recover damages.* Illustrations. — A railroad employee in passing over the track had observed that it was rough and uneven. Held, not an assumption of the risk: Dale v. St. Louis etc. R. E. Co., 63 Mo. 455; Dorsey v. Railroad Co., 42 Wis. 583. The deceased, a miner, complained to the manager of a mine of a dangerous 615; Patterson «. Railroad Co. , 76 Pa. ment at a gunpowder factory St. 389; 18 Am. Rep. 412; Missouri If the defendants knew of the defect, Furnace Co. v. Abend, 107 111. 44; 47 and undertook to repair it, and the Am. Rep. 425; Greene i). Railroad Co. , plaintiff went on working, relying on 31 Minn. 248; 47 Am. Rep. 785; Manu- their repairing it, then thay may be facturiug Co. v. Morrissey, 40 Ohio St. liable. It the plaintiff complained of 148; 48 Am. Rep. 6G9; Conroy v. Vul- the defect, and the defendants prom- can. Iron Works, 6 Mo. App. 102/ ised that it should be remedied, he is Parody v. Railroad Co., 15 Fed. not to be deprived of his remedy Rep. 205; Counsell v. Hall, 145 Mass. merely because, relying on their 468. In Holmes v. Worthington, 2 promise, he remained in their em- Fost. & F. 533, Mr. Justice Willes ploy meat." said: "There is no case deciding that 'Eureka Co. v. Bass, 81 Ala. 200; where the employer and the servant 60 Am. Rep. 152. are both aware that the machinery is '' Texas etc. R. R. Co. v. Bradford, in an unsafe state, and the servant 66 Tex. 732; 59 Am. Rep. 639. foes on using it under a reasonable '^ Railroad v. Drew, 59 Tex. 10; 46 elief that it will be set right by the Am. Rep. 261. employer, and it is not set right, and * Snow v. Railroad Co., 8 Allen, 441 ; he suffers an injury, he cannot sustain 85 Am. Dec. 720; Patterson?'. Railroad an action. The master may choose to Co., 76 Pa. St. 389; 18 Am. Rep. 413; be too chary of repairs for the sake Colorado R. R. Co. v. Ogden, 3 Col. of economy. No doubt if, knowing 499; Buzzell o. Mfg. Co., 48 Me. 113; this, the servant chooses to use the ma- 77 Am. Deo. 212; Britton w. Cotton chine, he may lose hia remedy, just as Co., L. R. 7 Ex. 130; Clarke i;. Holmes, in the case of the man taking employ- 7 Hurl. & N. 937, § 313 PRINCIPAL AND AGENT. 560 stone in the roof of the mine, and he promised to remove it. ■* The foreman sent men to remove it, and the deceased went to work below, instead of waiting till it was removed. The work- men accidentally detached the stone, and it fell on the deceased, killing him. Held, that the deceased had not waived the de- fect: Patterson v. Wallace, 1 Macq. 648. An employee of a railroad company complained to the yard-master that the work on which he was engaged was unsafe, because enough hands were not furnished to perform it. No promise to furnish more was given. The employee continued in the service and was injured. Held, that he was not negligent as matter of law: Thorpe v. Railroad Co., 89 Mo. 650; 58 Am. Rep. 120. § 313. Coiitributory Negligence of Servant — ^Failing to Notify Master of Defect. • — If the servant continues in the use of the particular machine, tool, or appliance, or to work in the particular building, on the particular premises, or in connection with the particular fellow- servant, after he has discovered that it is dangerous for him to do so, without informing his master of the danger, he is guilty of contributory negligence, such as will pre- clude him from recovering damages of the master in case he is afterwards injured thereby.^ He mast either make ' 2 Thompson on Negligence, sec. - that they had become insufficient and 19, p. 1014; Greenleaf v. Dubuque etc. unsafe, or when they had been in use R. R. Co., 33 Iowa, 52, 57; Crutch- as long as they could with safety be field 0. Kichmond etc. R. R. Co., 78 used, to take them off the road until N. C. 300; 76 N. C. 320; Timmons v. repaired and made sufficient and safe. Central Ohio R. R. Co., 6 Ohio St. 105; And for any injury sustained by an Buzzell 0. Laconia Mfg. Co., 48 Me. agent or employee of the company 113; 77 Am. Dec. 212; Catawissa R. fromanyneglect of this duty, the com- R. Co. V. Armstrong, 49 Pa. St. ISO; pany would be liable. But the rela- Mansfield Coal Co. v. McEuery , 91 Pa. tion occupied by the agent or employee St. 185; 36 Am. Rep. 662; Pennsyl- imposes a reciprocal duty upon him. vania Co. v. Lynch, 90 111. 333. in It was the duty of Barber, as the con- Mad River R. R. Co. «. Barber, 5 duotor of this train, to use ordinary Ohio St. 541, 67 Am. Dec. 312, the and reasonable skill and diligence on court say: "The duty imposed on the his part, not simply in the manage- company by the relation occupied by ment of the train, but also in super- the conductor was to use reasonable vising the due inspection of the cars, and ordinary care and diligence in machinery, and apparatus, as to their furnishing him with sufficient sound sufficiency and safety while under his and safe cars and machinery for the charge; and on the discovery of any train. This duty required not only defect or insufficiency, to notify the that the company should use proper company, and to take the proper pre- skill and diligence in procuring and cautions to guard against danger there- furnishing sufficient and safe cars and from. And if he was injured by the machinery, but also, when notified negligence of the company in furnish- 561 LIABILITIES OF MASTER AND SERVANT. §314 the necessary repairs himself, or report the fact to the employer or person having charge of the repairs, and if he omits to do so, and is injured in consequence, he can- not recover from the employer.^ It is contributory neg- ligence in the servant, if after discovering defects in the machinery, or incompetence in his fellow-servants, not to notify the master of the fact;^ unless, it seems, where the master has equal knowledge of the defect with the servant.^ But the servant is not negligent per se for us- ing defective machinery, even with knowledge of defecls, if the danger is not immediate.* § 314. Going into Dangerous Situation by Command of Master. — Where the master orders the servant into a ing or ccnrtinning to use defective cars and machinery, yet if his own neglect of duty in the management of the train, or due inspection of the cars and machinery in his charge, con- tributed as a proximate cause of the injury, he could have no right of ac- tion against the company for damages; or if he knew of the defects and in- suflEiciency of the cars or machinery, and without taking the necessary and proper precaution to guard against danger, continued to use them, he took upon himself the risk, and waived his right as against the company. If there was no neglect of due and or- dinary care and diligence on the part of the company furnishing or continu- ing the use of the cars and machinery, and the. injury was caused by latent defects, unknown alike to the com- pany and to the conductor, and not discoverable by due and ordinary skill and diligence in the inspection of the cars and machinery, it would be a mis- adventure, falling among the casualties incident to the business, and for which no one could be blamed. But if the defects which caused the injury were actually unknown, either to the com- pany or the conductor, and not dis- coverable by due and ordinary in- spection, and yet were such as resulted from a neglect of reasonable and or- dinary care and diligence on the part of the company, either in procuring Vol. L— 36 the cars or machinery to be made, or in continuing their use on the road beyond the time when they could be safely used, the company would be liable in damages for the injury. And whether such was the case or not was a matter of fact for submission, under proper instructions, to the jury in the court below." - Stroble V. Railroad Co., 70 Iowa, 555; 59 Am. Rep. 456. ' Illinois etc. R. R. Co. v. Jewell, 46 111. 99; 92 Am. Deo. 240; Toledo etc. R. R. Co. V. Eddy, 72 111. 138; Crutchfield v. Richmond etc. R. R. Co., 76 N. C. 320; 78 N. C, 300; Pat- terson V. Railroad Co., 76 Pa. St. 389; 18 Am. Rep. 412; McMillan v. Rail- road Co., 20 Barb. 449; Davis v. Rail- road Co., 20 Mich. 105; 4 Am. Rep. 364; AUerton Packing Co. v. Egan, 86 111. 253; Porter v. Railroad Co., 97 N. C. 66; 2 Am. St. Rep. 272. If a servant linows that the tools given him by his master to work with are defective, he cannot recover for an in- jury caused by the defect: Texas and Paci6c R'y Co. v. Bradford, 66 Tex. 732; 59 Am. Rep. 639; as where a section-master used a defective dump- car after he had been ordered to get another: Pleasants v. Raleigh and Au- gusta Air-line R. R. Co., 95 N. C. 195. * Fairbank v. Haentzsche, 73 111. . 236; Perry v. Ricketts, 55 111. 234. * Huhn V. Railroad Co., 92 Mo. 440. . § 314 PRINCIPAL AND AGENT. 562 situation of danger, and he obeys, and is thereby injured, the law will not deny him a remedy against the master on the ground of contributory negligence, unless the dan- ger was so glaring that no prudent man would have en- tered into it, even where, like the servant, he was not entirely free to choose.' Although a master may have directed a servant, through his superintendent, to wipe off a machine while in motion, without caution as to the danger of so doing, yet if the danger is apparent, and the servant in doing so allows the waste which he is using to hang down and be caught in the cog-wheels below, this is contributory negligence.^ The fact that an employee has performed work, knowing it to be dangerous, does not of itself make him guilty of contributory negligence, but it must appear that he performed that which was danger- ous in a negligent manner." So where the person injured was ordered into a service of peculiar danger, such as he did not undertake to perform, by another servant, stand- ing toward him in the relation of superior or vice-principal, if he obeys such an order, and is injured, he may recover damages. The law will not declare his act of obedience negligence per se, but will leave it to the jury to say whether he ought to have obeyed or not.^ Illustrations. — The plaintiff was a laborer in the employ of a railroad company, under the control of a section foreman, engaged in spiking down rails. He was furnished with a ham- mer obviously and dangerously defective. He protested to the foreman against working with it, but was ordered to use it on pain of losing his place. The work in hand required speedy performance. He used the hammer, and was injured by reason 1 Keegan v. Kavanaugh, 62 Mo. 230; Co. «. Kraft, 31 Ohio St. 287; 27 Am. Leary v. Railroad Co., 1.S9 Mass. 580; Rep. 510; Bradley v. New York etc. 52 Am. Rep. 733; Jones v. Railroad R. R. Co., 62 N. Y. 99; Mann v. Co., 49 Mich. 573; Cole v. Railroad Oriental Print Works, 11 R. I. 153; Co., 71 Wis. 114. Chicago etc. R. R. Co. v. Bayfield, 37 ^ Atlas Engine Works v. Randall, Mich. 205; Patterson v. Pittsburg R. 100 Ind. 293; 50 Am. Rep. 798. R. Co., 76 Pa. St. 389, 394; 18 Am. 'Mobile etc. R'y Co. v. Holbom, Rep. 412; Fort v. Whipple, 11 Hun, 84 Ala. 133. 586; Chicago etc. R. R. Co. v. Harney, * Lalor V. Chicago etc. R. R. Co., 52 28 Ind. 28; 92 Am. Dec. 282. m. 401; 4 Am. Rep. 616; Berea Stone 563 LIABILITIES OF MASTER AND SERVANT. § 314 of its defective condition. Held, that the railroad company was liable: East Tennessee etc. R. R. Co. v. Duffield, 12 Lea, 63; 47 Am. Eep. 319. The defendant, owner and master of a steam-tug, ordered the cook to go forward and handle the bow-line, and he got entangled in it and was hurt. He was usually employed at the stern, and the employment in question was more dangerous, and the defendant did not warn him, but urged him to the duty with an oath. But the plaintiff was nineteen years old, had lived at the seashore all his life, and had been to sea three sum- mers, and on the tug four months. Held, that a verdict for the defendant must stand: Williams v. Churchill, 137 Mass. 243; 50 Am. Rep. 304. The plaintiff, in the employ of a railroad com- pany, went under a car standing alone on a repair track, by order of his foreman, to repair it, and was there injured by the starting of the car by an advancing train. The track was usu- ally protected. There was no proof of any precautions to pro- tect it on this occasion. Held, that a nonsuit was improper: iMehle V. Railroad Co., 59 Wis. 127; 48 Am. Repf 483. A ser- vant is directed by his master to drive a van under a gateway, over which there is a sign, the master having better means of observation, and in following directions is injured by coming in contact with the sign. Held, that he may maintain an action against the master for such injury: Haley v. Case, 142 Mass. 316. A hod-carrier, engaged at work about an excavation, per- , ceiving that it was dangerous, manifested some reluctance to descend into it, but was ordered by his employer to do so, and obeyed, and the earth caved in upon him and killed him. Held, that his widow might recover damages of his employer: Keegan v. Kavanaugh, 62 Mo. 230. Plaintiff's intestate was employed by defendant, a railroad company, as a common laborer, for the purpose of loading and unloading freight-cars. While thus engaged he was ordered by the depot superintendent to couple a freight car with other cars attached to a locomotive; and having to go between the cars for this purpose, the engine was so carelessly managed that he was crushed to death. The duty of coupling the cars was entirely different from that for which deceased was hired. Held, that plaintiff could recover: Lalor v. Railroad Co., 52 111. 401; 4 Am. Rep. 616. A took service with a railroad company as a brakeman on a passenger train. After a while he was ordered to do yard-work. He objected and protested, but, rather than lose his place, complied with the order. While in the performance of the yard-work, which was of a dangerous character, he received injuries. Held, that the company's liability to him was greater than it would have been had he been an ordinary yard-hand, and that it was competent for him to show that he protested § 315 PRINCIPAL AND AGENT. 564 against doing the work when ordered to: Jones y. Railroad Co., 49 Mich. 573. A railroad engineer was ordered to use two engines coupled together for bucking snow off the track. The practice is general and well known, but dangerous. The en- gineer, while thus engaged, was killed. Held, the occupation was included in the ordinary risks of his employment: Morse V. Railroad Co., 30 Minn. 465. A master ordered his servant to go on a platform, which was dangerous because sloping outwards, slippery, and unprotected, to do a piece of work. The servant knew the danger as well as the master, and might have taken some precautions against it. He took none, how- ever, fell, and was injured. Held, that the master incurred no liability: English v. Railroad Co., 24 Fed. Kep. 906. § 315. Other Cases of Contributory Negligence. — It is negligence in the servant to disobey the regulations of the mastei*wbereby he is injured,' provided the violation is the proximate cause of the injury;^ as where a brake- man was injured by coupling cars by hand, when the rules of the company declared that "a short stick must alw.ays be used to guide the link." ' If a servant is di- rected to do a certain thing, and he voluntarily and negligently chooses a dangerous method of doing it, there being a safer method, his master is not liable for injuries resulting from such negligence.^ An engineer cannot recover against the company for injuries received in a collision with another train, where his own train, as well as the other, was out of time.^ Illustrations. — An engine was old and rickety, and liable, when fired up, to start off of its own accord; but by the observ- ance of certain simple rules this could be prevented. A fireman, well knowing these rules, neglected them when he fired up the engine for the day's work, and while he was standing on the track, adjusting the key to the cellar-box, the engine started, > Lyon V. Railroad Co., 31 Mich. = Wolsey v. Railroad Co., 33 Ohio 429; Shanny v. Androscoggin Mills, St. 227. 66 Me. 420; Memphis R. K. Co. v. * St.LouisBoltandlronCo.w. Burke, Thomas, 51 Miss. 637. 12 111. App. 369. 2 Ford V. Railroad Co., 110 Mass. ^ Georgia R. R. etc. Co. j). McDade, 240; 14 Am. Rep. 598; Locke v. Sioux 59 Ga. 73. City R. R. Co., 46 Iowa, 109. S65 LIABILITIES OF MASTER AND SERVANT. § 315 injuring him. Held, that he was guilty of contributory negli- gence: Vicksburg R. R. Co. v. WUhins, 47 Miss. 404. The boiler of a locomotive contained defects which were plainly visible on the outside. Notwithstanding this, the engineer continued to run the engine, keeping the steam much higher than he was instructed to do, and higher than would have been safe with a sound boiler. It exploded, and he was killed. Held, contributory negligence: Hubgh v. Railroad Co., 6 La. Ann. 495; 54 Am. Dec. 565. A servant gropes along a dark passage-way on his master's premises where he has no busi- ness, and opens a door and falls down an elevator, which has a bar in front of it. Held, that he has no cause of action against his master: Ffeiffer v. Ringler, 12 Daly, 437. A brake- man, endeavoring to couple cars under circumstances of pecu- liar danger, disregarded the warning of by-standers, and was injured. Held, contributory negligence, preventing him from recovering damages: Muldonney v. Railroad Co., 39 Iowa, 615. An experienced brakeman undertook to couple cars which he knew to be of unequal height, without using *he ordinary crooked link which is used for the purpose of preventing acci- dents in such case. Held, contributory negligence, barring a recovery: Hulctt v. Railroad Co., 67 Mo. 239. On the defend- ant's railroad was a bridge with sides five feet high, coming up one foot above the floor of the engine-cab, and thirteen and a half inches from the sides of passing engines. The plaintiff's intestate, a fireman, well knowing the character and situation of the bridge, without orders and in violation of the rules, opened the ash-pan, whereby fire was communicated to woolen waste in a journal box. Then without orders or necessity he stood outside of the engine on the steps of the engine and tender and endeavored to extinguish the fire with a hose, and while so employed he was struck by the side of the bridge and killed. Held, that the company was not Jiable: Sheeler v. Railroad Co., 81 Va. 188; 59 Am. Rep. 654. An engineer carried more steam than the rules of the company allowed, and suffered the water to get too low in the boiler. An explosion took place and he was killed: Held, contributory negligence: Illinois etc. R. R. Co. V. Houch, 72 111. 285. ■ An engineer was running his train at a high, reckless rate of speed, in order to make up for lost time. The engine ran off the track while passing a battered rail on a curve, and he was injured. Held, contributory negli- gence: Illinois etc. R. R. Co. v. Paterson, 69 111. 650. A railroad company used on some of its cars an apparatus for coupling known as the " Miller " draw-bar, and on others an ordinary draw-bar. When it is attempted to couple a car provided with the "Miller" draw-bar with one provided with the ordinary § 315 PRINCIPAL AND AGENT. 566 ' draw-bar, the ends are liable to slip past each other, thus bringing the platforms of the two cars near together. This, on one occasion, happened with two of the company's cars, in the presence of an experienced brakeman. Soon after, the same cars got detached from each other, and this brakeman went between them to couple them, and was crushed and killed by reason of the ends slipping past each other and the platforms coming together. JJeJd, that there could be no recovery : Toledo etc. R. R. Co. V. Ashbury, 84 111. 429. A brakeman failed in his first attempt to make the coupling, and instead of stepping out from between the cars, as he might have done, continued the attempt as the cars were moving on, and while so doing, got his foot in the frog of the rails, whereby he was injured. Held, that although the company had failed to furnish cars which coupled readily, yet the negligence of the brakeman was the proximate cause of theinjury: Williavis v. Railroad Co., 43 Iowa, 396. A brakeman whose duty it was to uncouple cars saw that the train did not stop to enable him to perform this duty. He nevertheless ran in between the cars while they were moving, endeavoring to uncouple them, and was killed. Held, con- tributory negligence: Marsh v. Railroad Co., 56 Ga. 274. The proprietors of a factory failed to fence a shaft, which they were required to do by statute. One of their servants, contrary to their express commands, and knowing that it was dangerous to meddle with the shaft, took hold of it and set it in motion, whereby he was injured. J/eW, contributory negligence: Caswell V. Worth, 5 El. & B. 849. A servant of a ship-builder, knowing a bridge to be weak and defective, and that blocks had previ- ously been placed under it to strengthen it, and that when so strengthened it had borne the weight of eighteen hundred pounds, attempted to use it without the aid of such strength- ening-blocks. It broke down and he was drowned. Held, contributory negligence: Jones v. Roach, 9 Jones & S. 248. A brakeman of a gravel train, having lost his coat from the train ■while in motion, got off to pick it up, and attempted to board it while in motion, and in doing so caught hold of the rim of a box-car, which broke, and he fell. Held, contributory negli- gence: Timmons v. Railroad Co., 6 Ohio St. 105. A railroad flagman stood on the track in front of an approaching train, and was run over. Held, contributory negligence: Mills v. Railroad Co., 2 McAr. 314. An experienced seaman was placed to await orders in the wheel-house of a steam-barge which was being towed. He unlashed the wheel without orders, and as the rudder came into contact with an obstruc- tion on the bottom, the wheel revolved and injured him while trying to hold it. Held, that he was guilty of contributory 567 LIABILITIES OF MASTER AND SERVANT. § 315 negligence: The John B. Lyon, 33 Fed. Eep. 184. A brakeman, while descending the ladder on the side of the caboose, not in the discharge of his duty, but for some purpose of his own, was struck and injured by the supply-pipe of a water-tank. He had been on the road for three months, knew of the proximity of the tank, and that there was not sufficient space for a person to pass between the pipe and the train. Held, that be was guilty of contributory negligence: Wilson v. Louisville & N. R. Co., Ala., 1888. A brakeman, having been warned of the danger, attempted to couple cars with double dead-woods, and was injured. Held, that he was guilty of contributory negligence. Hathaway v. Michigan Cent. E. R. Co., 51 Mich. 253; 47 Am. Eep. 569; and see Kelly v. Abbott, 63 Wis. 307; 53 Am. Rep. 292. A brakeman attempted to change an engine-link without having the engine stop before going on an unballasted side- track, and was iijjured. Held, contributory negligence: Penn- sylvania Co. V. Hankey, 93 111. 580. A foreman of a gang of stone-cutters directed a particular stone to be taken from a large pile. This was done in such a manner as to cause the fall of another stone, by which the plaintiff, one of the gang, a person under age, had his leg broken. There was evidence tending to show negligence both on the part of the foreman and of the workmen. Held, contributory negligence: Brown v. Maxwell, 6 Hill, 592; 41 Am. Dec. 771. A laborer attempted to raise a weight by fastening an engine to it by means of a clip. The clip slipped off, the weight fell, and he was killed. Held, contributory negligence: Dynen v. Leach, 26 L. J. Ex. 221. An employee rode on the top of a car and was struck by a bridge, whose situation he well knew. Held, contributory negligence: Pittsburg etc. R. R. Co. v. Sentmeyer, 92 Pa. St. 276; 37 Am. Rep. 684; Clark v. Railroad Co., 78 Va. 709; 49 Am. Rep. 394; Hooper Y. Railroad Co., 21 S. C. 541; 53 Am. Rep. 691; Owen V. Railroad Co., 1 Lans. 108. A brakeman was thrown from a railroad car and killed, by reason of the brake-head coming off the upright shaft, through the nut at the top being loose and coming off. Held, that the company was not liable, as it was the brakeman's duty to see that the brake was in good repair and in fit condition for use, and to report its defects to the com- pany: Illinois Cent. R. R. Co. v. Jewell, 46 111. 99; 92 Am. Dec. 240. An engineer, while leaning out of the locomotive, and looking back to get a signal from the conductor, was injured by Ms head coming against a signal-post, three feet and eight inches distant from the track. Before looking back he had looked ahead and seen no obstruction. He knew of the signal- posts, but had never noticed this one. There were other struc- tures on the line of the road at the same distance from the §§ 316, 317 PRINCIPAL AND AGENT. 568 track. Hdd, that he could not recover of the company for the injury: Lovejoy v. Boston etc. R. R. Co., 125 Mass. 79; 28 Am. Rep. 206. A workman in a mining tunnel, fully aware of the danger of an unsupported ceiling which he was fixing in his own way (confessedly a dangerous way), sat down while rest- ing directly under the dangerous spot. The ceiling fell, and he was injured. Held, in an action against the employer, that the jury should be directed to find for defendant: Bunt v. Sierra Buttes Gold Mining Co., 24 Fed. Kep. 847. An employee in a stove factory, in the absence and in violation of the directions of his employers, exchanged his usual and proper place of work, for which he was employed as a catcher, — a place of little or no danger, — for that of sawyer, a much more dangerous position; and while he was so acting as sawyer, a band-wheel broke, and one of the pieces struck and injured the employee. Held, that the employee, by going from his proper place into one of greater danger, contributed to his injury: Brown v. By- roads, 47 Ind. 435. An engineer in the employ of a railroad company was injured by the falling of an embankment. Held, that the fact that he had with him in the locomotive, at the time of the accident, another engineer, contrary to a rule of the company, would not prevent his recovering damages against the company, provided that the presence of the other engineer did not contribute to the disaster: Central R. R. Co. v. Mitchell, 68 Ga. 173. § 316. What not Contributory Negligence in Servant. — It has been held not contributory negligence for a brakeman to attempt to pick up a coupling-piu from the track in front of a slowly moving train;^ for section-bands to run a hand-car over a track ahead of a train past due;* for a baggage-master to jump from a moving train which is in danger of collision;' for a locomotive engineer to stick to his post in the face of danger;^ far a locomotive engineer to run the engine, knowing the air-brake to be out of order.' § 317. Doctrine of "Comparative Negligence." — The doctrine of "comparative negligence" exists in a few 'Steele v. Railroad Co., 43 Iowa, • Cottrell v. Railroad Co., 47 Wis. 109. 634; 32 Am. Rep. 796; Pennsylvania 2 Campbells. Railroad Co., 45 Iowa, Co. v. Roney, 89 Ind. 453; 46 Am. 78. Rep. 173. ^ Georgia R. R. Co. v. Rhodes, 56 " Flynn v. Railroad Co., 78 Mo. 195; Ga. 645. 47 Am. Rep. 99. 569 LIABILITIES OF MASTER AND SERVANT. § 318 states. The rule of "comparative negligence" is, that a comparison may be made by the jury between the negli- gence of the plaintiff, or the deceased, and that of the defendant; and if, in comparison with each other, the negligence of the former is slight, while that of the latter is gross, the plaintiflp will be entitled to recover.' Under this rule, recoveries have been sustained in the following instances: Where a fireman on a railroad locomotive in motion, leaning out from the gangway or side window, on the look-out for signals, was killed by a " mail-catcher";^ where a railroad company retained in its employ, as con- ductor of a gravel train, a person notoriously given to habits of intemperance, and by his negligence, when partly intoxicated, another employee was killed, himself negligent in sitting on the end of a flat-car with his legs hanging down;' where the proprietors of a factory, in moving an engine, left a revolving shaft extending several feet into a room where twenty girls were at work, and one of them, while going about her work, was caught by it and killed;' where several railroad section-hands, returning from their work on a hand-car, were ran upon by an engine which came suddenly round a curve at an unlawful rate of speed, although the deceased might have saved himself by jump- ing off the hand-car as the rest did.^ § 318. Contracts between Master and Servant as to In- juries. — It has been held in Georgia that contracts be- tween railroad companies and their employees, by which the latter assume all risks incident to the employment, are valid if they do not include criminal acts.^ But in ^ Chicago etc. R. R. Co. v. Sullivan, ^ Chicago etc. R. R. Co. v. Gregory, 63 111. 293; St. Lonis etc. R. R. Co. v. 58 111. 272. Britz, 72 111. 256; Fairbank v. Haen- ^ Chicago etc. R. R. Co. v. Sullivan, tzsche, 73 111. 236; Chicago etc. R. R. 63 111. 293. Co. V. Gregory, 58 111. 272; Toledo etc. * Fairbank v. Haentzsche, 73 111. 236. R. R. Co. V. O'Connor, 77 111. 391; ■* Toledo etc. R. R. Co. «. O'Connor, Foster v. Chicago etc. R. R. Co., 84 77 111. 391. 111. 165; Harms i;. Sullivan, 1 Bradw. ^Galloway v. Railroad Co., 57 Ga. 251. 512; Western etc. R. R. Co. v. Bishop, § 319 PRINCIPAL AND AGENT. 570 other states it is held that such a contract, made to in- clude negligence, is void as against public policy/ Con- tracts between the master and servant, entered into after the servant received the injury, by which a servant re- leases the master from the damages, are upheld as valid if founded upon a valuable consideration, and not ob- tained from the servant by means of misrepresentations or fraud.^ The fact that an employee has been disabled while in the employ of a railroad company, and in the discharge of his hazardous duties, is a sufficient consider- ation to support a promise to pay for the nursing and medical attendance necessary to his cure.* § 319. Who are Fellow-servants — Common Employment the Test. — "The decided weight of authority is to the ef- fect that all who serve the same master, work under the same control, derive authority and compensation from the same common source, and are engaged in the same gen- eral business, though it may be in different grades or de- partments of it, are fellow-servants who take the risk of each other's negligence."^ Though servants work under diff'erent overseers, if engaged in the same line of employ- ment, such as necessarily brings them into frequent con- tact with each other in the prosecution of their work, they are co-servants.^ The fact that the negligent servant, in his grade of employment, is superior to the servant in- jured does not, in the opinion of most of the courts, take 50 Ga. 465; Western etc. E. R. Co. v. 52 111. 183; 4 Am. Rep.. 593; Schultz Strong, 52 Ga. 461; Hendricks v. sj. Railroad Co., 44 Wis. 638; Chicago Western R. R. Co., 52 Ga. 467; and etc. R. R. Co. u. Doyle, 18 Kan. see Mitchell v. Railroad, 1 Am. Law 58. Reg. 717. ^ Toledo etc. R. R. Co. v. Rodriguea, 1 Roesner v. Hermann, 10 Biss. 486; 47 111. 183; 95 Am. Dec. 484. Railroad Co. v. Spangle, 44 Ohio St. * 2 Thompson on Negligence, sec. 471; 58 Am. Rep. 833; Kansas Pac. R. .31, p. 1026; Wonder v. Railroad Co., R. Co. V. Peavey, 29 Kan. 169; 44 Am. 32 Md. 411; 3 Am. Rep. 143; Foster Rep. 630; Little Rock etc. R. R. Co. v. Railroad Co., 14 Minn. 360; Chicago V. Eubanks, 48 Ark. 460; 3 Am. St. etc. R. R. Co. v. Murphy, 53 HI. 336; Rep. 245; Memphis etc. R. R. Co. v. 5 Am. Rep. 48. Jones, 2 Head, 517. * Chicago and Alton R. R. Co. v. ' lUinois etc. E. R. Co. v. Welch, O'Bryan, 15 111. App. 134. 571 LIABILITIES OF MASTER AND SERVANT. §319 the case out of the rule; they are equally fellow-servants, aud the master is not liable.^ Where two servants are at work in the same employment, neither having authority over the other, the mere fact that one of them has au- thority to employ and discharge other servants does not change his character of fellow-servant to that of a rep- resentative of their employer.^ The following have in different cases been held to be in the same common em- ployment, and therefore "fellow-servants" with each other, viz.: A locomotive engineer and a switch-tender;^ a fire- man on one engine and a substitute for a switch-tender;^ a brakeman and the men engaged in making up a train;" a mill superintendent and a common spinner;^ a track- repairer and those in charge of a train upon which he rode;'' a brakeman of one train and the engineer of ' O'Connell v. Baltimore R. R. Co., 20 Md. 212; 83 Am. Dec. 549; Mc- Gowaa v. St. Louis etc. R. R. Co., 61 Mo 528; Columbus etc. R. R. Co. v. Arnold, 31 Ind. 174; 99 Am. Dec. 015; Thayer v. St. Louis etc. R. R. Co., 22 Ind. 26; 85 Am. Dec. 409; Daubert v. Piokel, 4 Mo. App. 590; Cumberland Coal and Iron Co. o. Scally, 27 Md. 589; Shauck v. Northern etc. R. R. Co., 25 Md. 462; O'Connors. Roberts, 120 Mass. 227; Albro v. Agawam Canal Co., 6 Cush. 75; McLean v. Blue Point M. Co., 51 Cal. 255; Faulkner v. Erie R. R. Co., 49 Barb. 324; Conway v. Belfast etc. R. R. Co., I. R. 9 C. L. 498; Murphy v. Smith, 19Com. B.,N. S.,361; 12L.T.,N. S., 605; Allen v. New Gas Co., 1 Ex. Div. 25; Howells v. Landore Siemens Steel Co., 10 Q. B. 62; Gallagher v. Piper, 16 Com. B., N. S., 6C9; Lehigh Valley Coal Co. V. Jones, 86 Pa. St. 432; Lawler v. Androscoggin R. R. Co., 62 Me. 463; 16 Am. Rep. 492; Feltham V. England, L. R. 2 Q. B. 33; revers- ing 4 Post. & F. 460; Wilson w. Merry, L. R. 1 H. L. S. 326; Brown v. Max- well, 6 Hill, 592; 41 Am. Dec. 771; Peterson v. Coal Co., 50 Iowa, 673; 32 Am. Rep. 143; Blake v. Railroad Co., 70 Me. 60; 35 Am. Rep. 297; Brown V. Railroad Co., 27 Minn. 162; 38 Am. Rep. 285; Eagan v. Tucker, 18 Hun, 347; Delaware etc. R. R. Co. v. Car- roll, 89 Pa. St. 374; Petersons. White- breast Coal Co., 50 Iowa, 673; 32 Am. Rep. 143; Quincy Mining Co. v. Kitts, 42 Mich. 34; McDermott v. Boston, 133 Mass. 349; Flynn v. Salem, 134 Mass. 351; Hart v. Dry Dock Co., 48 N. Y. Sup. Ct. 460; Hoth v. Peters, 55 Wis. 405; Dwyer v. Am. Ex. Co., 55 Wis. 453; Willis v. Railroad Co., 11 Or. 257. "Lincoln Coal Mining Co. v. Mc- Nally, 15 111. App. 181. ^ Farwell v. Railroad Co., 4 Met. 49; 38 Am. Dec. 339. * Tinney v. Boston etc. R. R. Co., 52 N. Y. 632. ' Hodgkius V. Railroad Co., 119 Mass. 419. ^ Albro V. Agawam Canal Co., 6 Cush. 75. ' Gillshaunon v. Stony Brook R. R. Co., 10 Cush. 228; Seaver v. Boston etc. R. R. Co., 14 Gray, 466; Gilman V. Eastern R. R. Co., 10 Allen, 233; 87 Am. Dec. 635; 13 Allen, 433; 90 Am. Dec. 210; Russell v. Hudson River R. R. Co., 17 N. Y. 134; Ohio etc. R. R. Co. V. Tindall, 13 Ind. 366; 74 Am. Dec. 259. § 319 PRINCIPAL AND AGENT. 572 another colliding with the first;' a locomotive engineer and a master mechanic of the railroad;^ several persons engaged in a mine, some breaking down the ore with picks and by blasting, others loading and wheeling it out;' the persons in charge of a railroad locomotive and a section-man engaged in repairing defendant's track ;^ a laborer engaged in hoisting coal by machinery and the engineer in charge of the engine;' an underground work- man in a coal-pit and the engineer at the top of the pit;* a licensed water-man employed by a warehouseman by the week, but whose duties only required him to attend three hours at every high tide, and the other servants of the warehouseman engaged in hoisting goods;' the fore- man of a shop, having charge of the machinery therein and a workman in the shop injured by a defect in the machinery;* the heads of different departments in the same coal-mine working together under a common su- perintendent;' a master of a vessel and the mate;'" an "under-looker " in a coal mine, whose duty it is to exam- ine the roof and prop it up if dangerous, and a common laborer in a mine;" servants engaged in operating differ- ent trains on the same line or road;'^ a conductor of a "dump," or gravel train, and a common laborer thereon;" a brakeman on a train and the mechanics in the repair- ■ Wright V. New York etc. R. K. * Hanrathy v. Northern etc. R. R. Co., 25 N. Y. 562; Randall v. Rail- Co., 40 Md. 280; 5 Rep. 698. road Co., 1G9 U. S. 478. ' Lehigh Valley Coal Co. v. Jones, 2 Hard v. Vermont etc. R. R. Co., 86 Pa. St. 432; 6 Rep. 125; 17 Alb. 32Vt. 473. L. J. 513. ' Kielley v. Belcher Silver Mining '" Halverson v. Nisen, 3 Saw. 562. Co., 3 Saw. 500. " Hall v. Johnson, 3 Hurl. & C. 589; * Foster v. Minnesota etc. R. R. 11 Jur., N. S., 180; 34 L. J. Ex. 222; Co., 14 Minn. 360; Coon v. Syracuse 13 Week. Rep. 411; 11 L. T., N. S., etc. R. R. Co., 5 N. Y. 492; Whaalan 779. V. Mad River etc. R. R. Co., 8 Ohio '^ Hutchinson v. York etc. R. R. St. 249. Co., 5 Ex. 343; 6 Eng. R. R. Cas. " Wood V. New Bedford Coal Co., 680; LouisviUe etc. R. R. Co. v. Rob- 121 Mass. 252. iuson, 4 Bush, 507; Pittsburgh etc. * Bartonshill Coal Co. v. Reid and R. R. Co. v. Devinney, 17 Ohio St. McGuire, 3 Macq. 266, 300; 4 Jur., 197. N. S.. 767; 1 Pat. App. 785. ." O'Connell v. Baltimore etc. R. 'LoveU«. Howell, L. R. 1. Com. P. R. Co., 20 Md. 212; 83 Am. Dec. Div. 161; 45 L. J. 387. 549. 573 LIABILITIES OF MASTER AND SERVANT. § 319 shops; a brakeman, and the inspector of machinery and rolling stock;' a conductor of a construction train and one of the laborers employed on it, in the absence of proof that the conductor was in fact a vice-principal;^ a carpen- ter or other employee of a railroad company and the men in charge of the train by which he is carried to or from his work, in pursuance of his contract of service;' an em- ployee on a train going to his work and a signal-man of the company;^ a conductor traveling on another train to his place of service;' a fireman and a master machinist of the company;^ an engineer, brakeman, and shoveler;' a coal-miner employed by a mining company, who has been detailed, with many other miners, to work repairing a break in a railroad belonging to the company, and the conductor of a construction train on such railroad, on which train the person injured was working;' a switch- tender and a locomotive engineer;* a brakeman and another brakeman, together with a conductor of a freight train;^" the general traffic manager and a "milesman" employed under the orders of the "ganger";" a carpenter at work for the railroad company and the servants of the company in charge of a turn-table;'^ a conductor and a brakeman employed on the same train;*' a brakeman on a freight train and an engineer on a passenger train of 1 Wonder v. Baltimore etc. R. R. 31 Ind. 174; 99 Am. Dec. 615; over- Co., 32 Md. 411; 3 Am. Rep. 143. ruling Fitzpatrick v. New Albany etc. 2 MoGowan v. St Louis etc. R. R. E. R. Co., 7 Ind. 436. Co., 61 Mo. 528. ' St Louis etc. R. R. Co. v. Britz, 'Seaver v. Boston etc. R. R. Co., 72111. 256. 14 Gray, 466; Gillshannon v. Stony * Cumberland Coal and Iron Co. u. Brook R. R. Co., 10 Cush. 228; Mor- Scally, 27 Md. 589. gan V. Vale of Neath R. R. Co., 5 ' Farwell v. Boston etc. R. R. Co., Best & S. 7.36; 5 Best & S. 570; Tun- 4 Met. 49; 38 Am. Dec. 339. neyu. Midland R. R. Co.. L. R. 1 Com. '" Hayes v. Western R. R. Corp., 3 P. 291; contra, O'Donnell v. Allegheny Cush. 270. Valley R. R. Co., 59 Pa. St. 239; 98 " Conway v. Belfast etc. R. R. Co., Am. Dec. 336. I. R. 9 C. L. 498. * Moran v. New York etc. R. R. " Morgan v. Vale of Neath R. R. Co., 3 Thomp. & C. 770; 67 Barb. 96. Co., L. R. 1 Q. B. 149; 5 Best & S. 736; ' Manville v. Cleveland etc. R. R. 5 Best & S. 570. Co., 11 Ohio St. 417. " Dow v. Kansas Pacific R. R. Co., * Columbus etc. R. R. Co. v. Arnold, 8 Kan. 642. § 319 PRINCIPAL AND AGENT. 574 the same company;' a repairer of cars at a particular station, and an engineer in charge of a switch-engine at the same station, although each received his or.ders from a different foreman;^Hhe servants of a person who had contracted to deliver wood to a railroad company, and the engineer, fireman, and conductor furnished by the rail- road company, in pursuance of the terms of the contract, who were associated together on the same train;' the engineer and shovelers on a gravel train ;^ a servant em- ployed at a particular station, whose duties consisted in coupling and uncoupling trains, and the engineer and conductor of any train that might come along and need his services in switching cars;' a brakeman and a section- boss whose duty it was to tend the switch at a particular station;* a brakeman and the engineer on the same train; ' a guard on a train on an English railway and the " ganger," whose duty it is to inspect the track and see that such tree-nails are renewed as are decayed;* a station- master having charge of the freight trains of a certain division of the road and the engineer of such a train; ° a car repairer and the head brakeman and yard-master at a particular yard;" the general superintendant of a rail- road, the supervisor of the road and engineer, a section- master, and a common laborer; " the laborers on a gravel or construction train and the conductor or engineer of the same;'^ a railroad conductor and engineer on the same 1 Louisville etc. R. R. Co. ■„. Robin- R. Co. v. Britz, 72 111. 256; Nash- 80n, 4 Bush, 507. ville etc. R. R. Co. v. Wheless, lO'Lea, 2 Chicago etc. R. R. Co. v. Murphy, 741; 43 Am. Rep. 317; Pittsburg etc. 53 111. 336; 5 Am. Rep. 48; Valtez v. R. R. Co. v. Raimey, 37 Ohio St. 665. Ohio etc. R. R. Co., 85 III. 500. « Waller c South Eastern R. R. ' lUinoia etc. R. R. Co. v. Cox, 21 Co., 2 Hurl. & C. 102. HI. 20; 71 Am. Dec. 298. » Evans v. Atlantic etc. R. R. Co., * Ohio etc. R. R. Co. v. Tindall, 13 62 Mo. 49. Ind. 366; 74 Am. Deo. 259. " Besel v. Railroad Co., 70 N. Y. * Wilson V. Madison etc. R. R. Co., 171. 18 Ind. 226. " Mobile etc. R. R. Co. v. Smith, 6 « Slatfcery t). Toledo etc. R. R. Co., Rep. 264. 23 Ind. 81. '^ Ryan v. Cumberland Valley etc. ' Summerhays v. Kansas Pacific R. R. R,. Co., 23 Pa. St. 384; Chicago etc. R. Co., 2 Col. 484; St. Louis etc. R. R. R. Co. v. Keefe, 47 111. 108. 575 LIABILITIES OF MASTER AND SERVANT. § 319 train;* one of a gang of track repairers and the foreman of the gang;^ a brakeman on one train and the conductor or engineer on another train belonging to the same com- pany;' a track repairer and the fireman or engineer of a passing train;* an inspector of the track and the servants of the company in charge of passing trains;' a laborer employed in getting out ballast and a track-layer who had laid a temporary track on which such laborer was at work; * a brakeman and the conductor and engineer of the same train;^ a train dispatcher and a brakeman;* an em- ployee in a railroad repair-shop and another employee in a different department of the shop;' a "gang-boss" and a workman on a railroad;'" the master of a vessel and the mate;" the road-master of a railroad and an engineer or fireman;'^ a telegraph operator at a railroad station and a locomotive engineer;" a switchman and a car in- spector;" a track repairer and an employee on a train;'' an engineer running a switch-engine and a switch-tender;'" one running a steam-engine for hoisting in a mine and workmen in the mine;" an engineer of one train and an engineer of another train on the same road;'^ an engineer in charge of a steam-shovel and a workman engaged with the machine;" a road-man in a mine and a miner;^" the ' Ragsdale v. Memphis etc. K. R. '° Keystone Bridge Co. v. Newberry, Co., 59 Tenu. 426. 96 Pa. St. 246; 42 Am. Rep. 543; ' Weger v. Pennsylvania R . R. Co., Chicago etc. R. R. Co. v. Simmons, 11 55 Pa. St. 460. 111. App. 147; Doughty v. Log Driving = Pittsburgh etc. R. R. Co. v. Co., 76 Me. 143. Devinney, 17 Ohio St. 197. " Mathews v. Case, 61 Wis. 491; 50 * Whaalan v. Mad River etc. R. R. Am. Rep. 151. Co., -8 Ohio St. 249; Boldt v. New i^ Walker v. Boston etc. R. E. Co., York etc. R. R. Co., 18 N. Y. 432; 128 Mass. 8. Ohio etc. R. R. Co. v. Collarn, 8 Cent. " Dana v. Railroad Co. , 23 Hun, 473. L. J. 12; 7 Rep. 143. " Gibson t'.RailroadCo.,22Hun,2S9. * Coon V. Syracuse etc. R. R. Co., '^Gormley«. Railroad Co., 72 InJ.31. 5 N. Y. 492. ii! Chicago etc. R. R. v. Henry, 7 111. ° Lovegrove v, London etc. R. R. App. 322. Co., 16 Com. B., N. S., 669. " Buckley v. Mining Co., 14 Fed. ' Sherman v. Rochester etc. R. R. Rep. 833. Co., 17 N. Y. 153; Johnston v. Pitts- '» Chicago etc. R. R. Co. v. Doyle, burg R. R. Co., 114 Pa. St. 443. 60 Miss. 977. * Robertson v. Raiboad Co., 78 Ind. " Thompson v. Railroad Co., 18 Fed. 77; 41 Am. Rep. 552. Rep. 239. » Murphy v. Railroad Co., 88 N. Y. ^o Troughear v. Coal Co., 62 Iowa, 146; 42 Am. Rep. 240. 576. § 319 PKINCIPAL AND AGENT. 576 conductor of a gravel or construction train and a laborer thereon;^ a station agent and an engineer of a locomotive running on the tracks about the station;^ a foreman in charge of a derrick and a workman moving stone on a truck;^ an engineer on a train and a workman in the engine-yard;'' a fireman and brakeman on a train;^ car inspectors and brakemen on the same road;" a foreman of a night-crew and a night-watcher;' a foreman of a car- yard and a car-mover;' a master machinist of a railroad and a fireman;" coal-heavers and firemen of a railroad and track-walkers;^" a stevedore and a boatswain engaged to perform a single operation;" a brakeman and the en- gineer;^^ a laborer employed in constructing a sewer and one having the oversight and direction of the work;^' an employee of the state, injured while digging clay, and the captain of a boat belonging to the state, under whose di- rection he was acting;" a servant employed to operate a machine and other operatives who repair it;'^ a laborer who shoveled grain for an elevator company and the captain of a tug owned by the company engaged in bring- ing a vessel to the elevator;'" a track repairer and a train- man;'' the engineer of a coal-mine, whose duty it is to lower and raise the cages, and a common laborer, prepar- ing the bottom of the shaft to receive them;'* the conduc- » Heine v. Railroad Co., 58 M^is. -525; >» Schultz v. Railroad Co., 67 Wia. Cassidy v. Railroad Co., 76 Me. 488; 616; 58 Am. Rep. 881. St. Louis etc. R. R. Co. v. Shackel- '■'■ Smith v. The Furnessia, 30 Fed. ford, 42 Ark. 417. Rep. 878. ^ Brown v. Railroad Co., 31 Minn. ^'' Missouri Pac. R. R. Co. v. Texas 553. and Pacific R. R. Co., 31 Fed.. Rep. 2 Scott V. Sweeney, 34 Hun, 292. 527. * Texas etc R. R. Co. v. Harring- '' Conley v. Portland, 78 Me. 217. ton, 62 'i'ex. 597. " Loughlin v. State, 105 N. Y. 139. * Galveston etc. R. R. Co. v. Faber, '^ Reading Iron Works v. Devine, 63 Tex. 344. 109 Pa. St. 246. ^ Little Miami R. R. Co. v. Fitz- '^ Baltimore Elevator Co. v. Neal, Patrick, 42 Ohio St. 318. 65 Md. 438. ' Chicago etc. R. R. Co. v. Geary, " Corbett v. St. Louis and Iron 110 111. 383. Mountain etc. R. R. Co., 26 Mo. ^ Fraker v. Railroad Co. , 32 Minn. 54. App. 621. * Columbus etc. R. R. Co. v. Ar- ^^ Starne v. Schlothane, 21 111. App. nold, 31 Ind. 174; 99 Am. Dec. 615. 97. 577 LIABILITIES OP MASTER AND SERVANT. § 320 tor and engineer of a construction train and a shoveler thereon, having the same master;* a track-walker and a locomotive fireman;^ a mining boss and a miner;* a brakeman and a car-inspector;^ an engineer and a coupler of a train ;^ a track repairer and an engineer of an ele- vated railroad;" a section-hand and an engineer of a train;' a foreman of a mine and a miner employed to work under him;' the brakeman and the conductor on a train;' locomotive engineers;'" an engineer of a train and a switchman;*' the foreman at the round-house and an employee working under him;" the station agent and a brakeman on a train;" a second mate and a seaman;'^ a "wiper" of engines and the employees in charge of a train.'* §320. Who are not Fellow servants. — And these have been held not fellow-servants within the rule as to common employment, viz.: A carpenter employed by the railroad company and train-men in charge of a train on which he is riding to his work;'* a draughtsman in a locomotive-works and a carpenter and workmen excavat- ing a cellar under the, building;" a pilot and one of th& crew of the vessel;'^ a train dispatcher and an ordinary employee;" a locomotive engineer and a laborer on a * Chicago and Alton R. R. Co. v. " Van Avery v. Union Pac. R. R.. McDonald, 21 111. App. 409. Co., 35 Fed. Rep. 40. " Schultz V. Chicago and Northwest- " Naylor v. N. Y. Cent. R. R. Co.,. era R. R. Co., 67 Wis. 616; 58 Am. 33 Fed. Rep. 801. Rep. 881. " Gonsior v. Railroad Co., 36 Minn. 'Redstone Coke Co. v. Koby, 115 385. Pa. St. 364. " Toner v. Railroad Co., 69 Wis. 188. * Philadelphia etc. R. R. Co. v. '* Roberts v. Egyptian Monarch, 36. Hughes, 119 Pa. St. 301. Fed. Rep. 773. 'Boatwright I!. Railroad Co., 25 S.O. " Bwald v. Railroad Co., 70 Wis. 128. 420. « Van Wickle v. Railroad Co., 32 "O'Donnells. Railroad Co., 59 Pa. Fed. Rep. 278. St. 239; 98 Am. Deo. 336. ' Eastou V. Railroad Co., 32 Fed. " Baird v. Pettit, 70 Pa. St. 477. Rep. 893. " Smith v. Steele, L. R. 10 Q. B. 1 Stephens D. Doe, 73 Cal. 26. 125. * Brown v. Cent. Pac. R. E, Co., 72 "Booth v. Railroad Co., 67 N. Y. Cal. 523. 593; 73 N. Y. 38; 29 Am. Rep. 97. Vol. I.— 37 § 320 PEINCIPAL AND AGENT. 578 railroad;^ a section foreman of a railroad and a brake- man;* the fireman on a locomotive and a track repairer;' the conductor of a railroad material train and a train-man or laborer;* a section-hand and a train-man;^ the con- ductor of a construction train and a gang of day -laborers;' a train dispatcher and a locomotive engineer;^ a car- inspector and a car-coupler;* railroad employees on differ- ent trains;* section-hands of a railroad and a brakeman;" the master of a steam-tug and the foreman; " a switchman and a section foreman;*^ the carpenters who erect a scaf- fold and a laborer who carries bricks thereon;" the con- ductor of a train and the engineer;" a deck-hand on a boat and the pilot;'^ a contractor to break rock at a certain price per foot and the superintendent of the mine;*' a brakeman and the conductor of another road;" a brake- man on a freight train and a master mechanic of the road;" a master mechanic and the foreman of the railroad shops;" a car-inspector in the railroad yards and brakemen on the road;'^° the employee of the E. company engaged in shoveling ashes from a pit and the engineer of a locomo- tive belonging to the T. company, though the E. company had exclusive control over the servants of the T. company employed on its locomotives while in the yard;*' a servant • Ryan v. Eailroad Co., 60 HI. 171; " The Clataop Chief, 7 Saw. 274. 14 Am. Rep. 32. " Hall v. Misaouri R. R. Co., 74 Mo. ' Lewis V. Railroad Co., 59 Mo. 495; 298. 21 Am. Rep. 385. " Green v. Banta, 16 Jonea & S. ' Chicago etc. R. R. Co. v. Moranda, 156. 93 m. 302; 34 Am. Rep. 168. " Chicago etc. R. R. Co. v. Rosa, 112 « Moon V. Railroad Co., 78 Va. 745; U. S. 377. 49 Am. Rep. 401; Coleman v. Railroad '* The Titan, 23 Fed. Rep. 413. Co., 25 S. C. 446; 60 Am. Rep. 516. " Mayhew v. Mining Co., 76 Me. * Moon V. Railroad Co., supra. 100. ' Chicago etc. R. R. Co. v. Swanaon, " Zeigler v. Danbury R. R. Co., 82 16 Neb. 254; 49 Am. Rep. 718. Conn. 643. ' Darrigan v. Railroad Co., 52 Conn. ^* Cooper v. Railroad Co., 24 W. Va. 285; 52 Am. Rep. 590. 37. » Tiemey v. Railroad Co., 33 Minn. " St. Louis etc. R. R. Co. v. Harper, 311; 53 Am. Rep. 35. 44 Ark. 624. » Cooper V. Mullina, 30 Ga. 146; 76 » Little Miami R. R. Co. v. Fits- Am. Dec. 638. patrick, 42 Ohio St. 318. » Vautrain r. Eailroad Co., 8 Mo. " SulUvan v. Tioga R. & Co., 44 App. 538. Hun, 304. 579 LIABILITIES OP MASTER AND SERVANT. § 320 ignorant of the use of a macliine and an instructor fur- nished him, from whose incompetency or negligence the servant is injured;* a section-hand and a section-boss;* a laborer employed by a contractor engaged in grading a railroad and the engineer of a train furnished by the company to move the dirt;* an engineer in charge of a train and a brakeman acting under his orders;* an assist- ant foreman having charge of the department and a workman engaged therein under his orders;* one em- ployed to superintend the construction of a cistern and one of the workmen whom he employs;* a servant to whom a master intrusts the duty of furnishing machin- ery for other servants and such other servants;'' a brake- man and a car-inspector;* a car-inspector and a yard- master;' a subcontractor for building bridges for a rail- road and those employed by it in managing its trains;"* a switchman and a yard-master engaged at the time as engineer; " a master mechanic and wreck-master and a bridge carpenter;** an employee on a freight train and an employee on a passenger train;" a conductor of train and an employee on the train;" a telegraph operator and the conductor of a train ;*^ a foreman of gang and a laborer;" an engineer and a brakeman." ' Brennan v. Gordon, 13 Daly, 208. " Donaldson v. Railroad Co., 18 > Fatton V. Western North Carolina Iowa, 280; 87 Am. Dec. 391. R. R. Co., 96 N. C. 455. " Harvey v. Railroad Co., 36 Fed. ' Louisville, New Orleans, etc. R. R. Rep. 657. Co. V. Conroy, 63 Miss. 562. " Tabler v. Railroad Co., 93 Mo. * East Tennessee and Western North 79. Caroliaa R. R. Co. v. Collins, 85 Tenn. " Central Trust Co. v. Wabash etc. 227; Louisville etc. R. R. Co. v. R. R. Co., 34 Fed. Rep. 616. Brooks, 83 Ky. 129; 4 Am. St. Rep. " Boatwright v. Raflroad Co., 25 135. S. C. 128; Coleman v. Railroad Co., 25 ' Dutri V. Geisel, 23 Mo. App. 676. S. C. 446; 60 Am. Rep. 516. « Malcaima v. Janesville, 67 Wis. " East Tenn. R. R. Co. v. De Ax- 24. mond, 86 Tenn. 73. ' Kelly V. Erie Telegraph and Tele- " Wabash etc. R. R. v. Hawk, 121 phone Co., 34 Minn. 321. 111. 259; 2 Am. St. Rep. 83. ' Missouri Pacific R'y Co. v. Dwyer, " Louisville etc. R. R. Co. v. Brooks, 36 Kan. 58. 83 Ky. 129; 4 Am. St. Rep. 135; Louis- ' Macyv. St. Paul and Dulnth B. B. ville etc. B. B, Co. v. Moore, 83 Ky. Co., 35 Minn. 200. 675. §321 PRINCIPAL AND AGBNT. 580 § 321. Superior Servant having Control of Inferiors, a "Vice-principal." — Where the master delegates to a servant, such as a foreman or superintendent, the man- agement of his business or a department of it, the servant becomes a vice-principal, and inferior servants, subject to his orders and control, and injured by his negligence, can recover of the master. The vice-principal is not a " fellow-servant " as to them.^ The selection of an em- ployee by a superintendent who has entire charge of the work, with power to hire and discharge servants, is the act of the master; not that of a fellow- servant.* Under this rule, it has been held that the following are vice-prin- cipal and servant, and not "fellow-servants," viz.: The general manager of a railroad and an engineer on one of the trains of the company;' a superintendent of a machine- ' Washburn v. Railroad Co., 3 Head, 638; 75 Am. Dec. 784; Little Miami R. R. Co. V. Stevens, 20 Ohio, 415; Cleveland etc. R. R. Co. v. Keary, 3 Ohio St. 201; Berea Stone Co. v. Kraft, 31 Ohio St. 287, 292; 27 Am. Rep. 510; Railroad Co. o. Collins, 2 Duvall, 114; Whaalau v. Mad River R. R. Co., 8 Ohio St. 249; Gormly V. Vulcan Iron Works, 61 Mo. 492; Brothers v. Cartter, 52 Mo. 373; 14 Am. Rep. 424; Corcoran v. Hol- brook, 59 N. Y. 517; 17 Am. Rep. 369; Mullan v. Railroad Co., 78 Pa. St. 25; 21 Am. Rep. 2; Dobbin v. Rail- road Co., 81 N. C. 446; 31 Am. Rep. 512; Tyson v. RaUroad Co., 61 Ala. 554; 32 Am. Rep. 8; Cowles v. Rail- road Co., 84 N. C. 309; 37 Am. Rep. 621; Mitchell v. Robinson, 80 Ind. 281; 41 Am. Rep. 812; Wilson v. Willimau- tic Linen Co., 50 Conn. 433; 47 Am. Rep. 653; Miller v. Railroad Co., 17 Fed. Rep. 67; Greville v. Railroad Co., 3 McCrary, 352; Gilmore v. Railroad Co., 18 Fed. Rep. 866; Quinn v. New Jersey Lighterage Co., 23 Fed. Rep. 363; Louisville etc. R. R. Co. v. Fil- bern, 6 Bush, 574; 99 Am. Dec. 690; Jones 0. Old Dominion Cotton Mills, 82 Va. 140; 3 Am. St. Rep. 92; Farren V. Sellers, 39 La. Ann. 1011; 4 Am. St. Rep. 256. See Crispin v. Babbitt, 81 N. Y. 516; 37 Am. Rep. 521; L. & N. R. R. Co. V. Lahr, 86 Tenn. 335. In Malone v. Hathaway, 64 N. Y. 5, 21 Am. Rep. 573, the court say: "When the servant by whose acts of negligence or want of skill other servants of the common employer have received injury is the aliter ego of the master, to whom the employer has left everything, then the middle-man's negligence is the neg- ligence of the employer, for which the latter is liable. The servant in such case represents the master and is charged with the master's duty: Cor- coran V. Holbrook, 59 N. Y. 517; 17 Am. Rep. 369; Murphy v. Smith, 19 Com. B., N. S., 361. When the mid- dle-man or superior servant employs and discharges the subalterns, and the principal withdraws from the manage- ment of the business, or the business is of such a nature that it is necessarily committed to agents, as in the case of corporations, the principal is liable for the neglects and omissions of duty of the one charged with the selection of other servants in employing and se- lecting such servants, and in the gen- eral conduct of the business committed to hia care." » Henry v. Brady, 9 Daly, 142. ' Erogg V. Atlanta etc. R. R. Co., 77 Ga. 202; 4 Am. St. Rep. 79. 581 LIABILITIES OF MASTER AND SKEVANT. § 321 shop and an errand-boy employed therein;' a girl em- ployed in a hemp factory and the foreman;^ the engineer of a manufactory and the fireman;* the superintendent of work of a railroad and a teamster;* the foreman of a wrecking gang and the members of the crew;^ the archi- tect and superintendent of a building and the workmen;' the section-boss of a railroad and workmen working under him;' the conductor of a construction train and a laborer employed thereon;* the superintendent of a railroad com- pany and its ordinary employees;' the captain of a ship and one of the crew;'" a captain of a mine and a laborer employed therein ;'^ the mate of a vessel and a sailor or deck-hand;"^ the conductor of a train and the engineer and brakemen;" a stevedore's foreman, intrusted with the supervision of unloading a vessel, and the laborers em- ployed by him;'* a train dispatcher and those engaged in the operating of the trains;" the mate of a ship and the seamen;'* the foreman of a gang of laborers with power to discharge them and a laborer;" the engineer of a locomo- tive and the general manager of a railroad;" a train dis- patcher and the conductor or engineer;'* a section-boss and the brakeman on a train.'*" Says a writer of authority:" 1 Railroad Co. v. Fort, 17 Wall. 553; " Olson v. Clyde, 32 Hun, 425; Daub 2 Dill. 259. V. Railroad Co., 18 Fed. Rep. 625. » Grizzle v. Frost, 3 Fost. & F. 622; " Chicago etc. R. R. Co. v. Ross, 112 and see Nashville etc. R. R. Co. v. V. S. 377. Jones, 9 Heisk. 27. " Brown v. Seunett, 68 Cal. 225; 58 ° Mann v. Oriental Print Works, Am. Rep. 8. 11 R. I. 152; and see Cooper v. Rail- '^ Smith v. Railroad Co., 92 Mo. road Co., 44 Iowa, 134. 359; 1 Am. St. Rep. 729; Lewis.?;. Sei- * Cook V. Railroad Co., 63 Mo. 397. fert, 116 Pa. St. 628; 2 Am. St. Rep. ' Wabash etc. R. R. Co. v. Hawk, 631. 121 III. 259; 2 Am. St. Rep. 83. i« ScharfE v. Metcalf, 107 N. Y. ° Whalen v. Centenary Church, 62 211. Mo. 326. " Criswell v. Railroad Co., 30 W. ' Louisville etc. R. R. Co. v. Bowler, Va. 799. 9 Heisk. 866. " Krogg v. Railroad Co., 77 Ga. 202; 8 Chicago etc. R. R. Co. v. Bayfield, 4 Am. St. Rep. 79. 37 Mich. 205. " Smith v. Railroad Co. , 92 Mo. 359; ' Washburn ». Railroad Co., 3 Head, 1 Am. St. Rep. 729; Lewis v. Seifert, 638; 75 Am. Dec. 784. 116 Mass. 628; 2 Am. St. Rep. 631. " Ramsey v. Quinn, 4 Cent. L. J. " Hulehan v. Railroad Co., 68 Wia. 478. 520. " Ryan v. Bagaley, SO Mich. 179; 45 " 2 Thompson on Negligence, p. Am. Bep. Z5. 1030. § 321 PEINCIPAL AND AGENT. 582 " It is held that if a master delegates to a superintendent the power to employ and discharge servants, which be- longs to him as master, he thereby makes himself liable for injuries sustained by a servant, caused by the negli- gence of such superintendent * in selecting an insufficient number of servants for the duty required of them,* or in selecting a servant unfit for the duties required of him,' or for an injury through the negligence of the servants employed by such superintendent while acting under his orders." * Illustrations. — Plaintiff, under the direction of defend- ant's foreman, put up a staging about twenty-eight feet high, firmly nailing the two planks which constituted the floor. During his absence, another workman, under direction of the foreman, removed one of the planks, placing another in its place, without fastening it. Plaintiff, not knowing that any change had been made, returned to his work on the staging, which let him fall to the ground. Held, that not the failure of plaintiff's fellow-workman to nail the plank which replaced the nailed one, but the act of the foreman in misleading plaintiff into danger, was the cause of the injury, for which defendant was liable: Heckman v. Mackey, 35 Fed. Rep. 353. The fore- man and general superintendent of a machine-shop hired a boy, and told him to do whatever K., another employee, directed him. K., being in charge of dangerous machinery, told the boy to do a certain act in regard to it, whereby he was injured. Held, that K. and the boy were not fellow-servants as to that act, and the boy could recover against the principal: Dowling v. Allen, 74 Mo. 13; 41 Am. Eep. 298. The foreman of a gang of men employed by a railroad corporation negligently gave, and insisted on, an order in reference to moving a car and some ' Brothers v. Cartter, 52 Mo. 373; for the neglects and omiasiona of duty 14 Am. Rep. 424; Stoddard v. St. of the one charged with the selection Louis etc. R. R. Co., 65 Mo. 514; of other servants, in employing and Kansas Pacific R. R. Co. v. Little, 19 selecting such servants, and in the Kan. 267; Walker v. BoIIiag, 22 Ala. general conduct of the business com- 294; Chapman v. Erie R. R. Co., 55 mitted to his care ": Malone n. Hatha- N. Y. 579, 583. "When the middle- way, 64 N. Y. 5; 21 Am. Rep. 573, man or superior servant employs and per Allen, J. discharges the subalterns, and the ' Stoddard v. St. Louis etc. R. R. principal withdraws from the manage- Co., 65 Mo. 514. ment of the business, or the business ' Walker v. Boiling, 22 Ala. 294. is of such a nature that it is necessa- * Lydon v, Manion, 3 Mo. App. 601, rily committed to agents, as in the case 602. of corporations, the principal is liable 583 LIABILITIES OP MASTER AND SERVANT. § 322 lumber, obedience to which, on the part of one of the men, caused the lumber to fall, injuring him. Held, that the fore- man was the representative of the corporation, and that the rule which exempts a master from liability for the negligence of a servant towards a fellow-servant was inapplicable: Chicago etc. R. R. Co. V. May, 108 111. 288. A workman was injured by a defective rigging of a derrick, the ropes having become stretched by the rain of the night before the morning of the ac- cident. The foreman who had charge of the derrick superin- tended its starting. Held, that the owner was liable for the injury: Courtney v. Cornell, 49 N. Y. Sup. Ct. 286. An em- ployee, in assisting to get a car on the track, is injured by the breaking of an old worn rope, used by direction of the road-mas- ter superintending the job. Held, that he may recover damages: Galveston etc. R. R. Co. v. Delahunty, 53 Tex. 206. The rules of a railroad company required that "conductors must in all cases, while running by telegraph or special orders, show the same to the engineer of their train before leaving stations where orders are received," and that "the engineer must read and understand the order before leaving the station." Held, that the engineer was subordinate to the conductor, and they were not fellow-servants: Ross v. Railroad Co., 2 McCrary, 235. A conductor orders a brakeman to get off a train moving at the rate of four miles an hour in the night-time, and the brakeman obeys, using such care as he may, and is injured by alighting on a skid left by train-hands between the tracks. Held, that he may maintain an action against the company; and it is no defense that the conductor, under the company's rules, had no jight to order a man off a moving train: Central R. R. Co. v. De Bray, 71 Ga. 406. A plumber employed in a railroad com- pany's repair-shops was directed by the master mechanic, to whose orders he was subject, to hold a piece of timber between a tender and an approaching locomotive- to prevent a direct collision, and so holding he asked the mechanic if that was right, to which the latter replied : " Yes, that will do." The engine striking higher up than the buffer of the tender brought the timber violently against the plumber, and severely injured him. Held, that the company was liable therefor: Douglas v. Railroad Co., 63 Tex. 564. § 322. Servant having Charge of Construction or Re- pair of Machinery Used by Other Servants. — On this ground, it is held in the best considered of the cases on, the subject that a servant who has charge of the construc- tion and repairs of the machinery, or the buildings or § 323 PRINCIPAL AND AGENT. 584 works used, is not, in the master's absence, to be deemed a fellow-servant with a servant who is employed in con- nection with its running operations. The former is a vice-principal.' Other courts, however, hold that the master is not liable where the injury happens in con- sequence of the negligence of his master mechanic, in- spector of machinery, or other servant or servants whose duty it is to see that his machinery is kept in safe condi- tion for use, if such servant was a competent and fit person to be so employed, and if the master has been guilty of no personal negligence in employing him or in retaining him in his service.^ § 323. Servants of Different Masters. — It is generally requisite that the servants, to be " fellow-servants," should be servants of the same master.' Therefore the servants of an independent contractor are not "fellow-servants" of the servants of the employer for whom the contractor is working.* The rule as to fellow-servants is not applica- 1 Shanny v. Androsooggin Mills, 66 Graniteville Mfg. Co., 18 S. C. 262; 44 Me. 420; charge of the court below in Am. Rep. 573; Davia v. Railroad Co., Soaver v. Boston etc. R. R. Co., 14 55 Vt. 84; 45 Am. Rep. 590; Kain v. Gray, 466; Ford v. Fitehburg R,. R. Smith, 25 Hun, 146; Houston etc. R. Co., 110 Mass. 240; 14 Am. Rep. 598; R. Co. v. Marcelles, 59 Tex. 334; Atchi- Chicago etc. R. R. Co. v. Gregory, 58 son etc. R. R. Co. v. Moore, 31 Kan. 111. 272; Houston etc. R. R. Co. v. 197; Mulvey u. Locomotive Works, 14 Dunham, 49 Tex. 181; Cumberland R. I. 204. etc. R. R. Co. V. State to Use of ^ See 2 Thompson on Negligence, pp. Moran, 44 Md. 284; Cumberland etc. 1040etseq. ; McGee «. Boston Cordage R. R. Co. V. State to Use of Hogan, Co., 139 Mass. 445. 45 Md. 229; Chicago etc. R. R. Co. v. ^ McAndrews v. Burns, 39 N. J. L. Jackson, 55 111. 492; 8 Am. Rep. 661; 119; Smith v. Railroad Co., 19 jST. Y. Flike V. Boston etc. R. R. Co., 53 127; 75 Am. Dec. 305; Shearman and N. Y. 549; 13 Am. Rep. 545; Brab- Redfield on Negligence, sec. 116; bitts V. Chicago etc. R. R. Co., 38 Swainson v. Railroad Co., L. R. 3 Ex. Wis. 289; Mullan v. Philadelphia etc. Div. 341; Sawyer v. Railroad Co., 27 R. R. Co., 78 Pa. St. 25; 21 Am. Rep. Vt. 370; Carroll v. Railroad Co., 13 21; Lewis v. St. Louis etc. R. R. Co., Minn. 30; 97 Am. Deo. 221; Cooper v. 59 Mo. 495; 21 Am. Rep. 381; Kansas MuUins, SO Ga. 146; 76 Am. Dec. Pao. R. R. Co. V. Little, 19 Kan. 267; 638. Illinois etc. R. R. Co. v. Welch, 52 * Svensou v. Pacific Mail Co., 57 Mo. 183; 4 Am. Rep. 593; Colorado N. Y. 108; Young v. Railroad Co., 30 etc. R. R. Co. 0. Ogden, 3 Col. 499; Barb. 299; Abraham v. Reynolds, 5 Railroad Co. v. Stent, 17 Wall. 553; Hurl. & N. 142; Burke v. Railroad Spelman«. Railroad Co., 56 Barb. 151; Co., 34 Conn. 474; contra, Johnson v. Chicago etc. R. R. Co. v. Swett, 45 Boston, 118 Mass. 114; Illinois Cent. 111. 197; 92 Am. Dec. 206; Gunter v. R. R. Co. v. Cox, 21 HI. 20; 71 Am, 585 LIABILITIES OP MASTER AND SERVANT. 323 ble to a case where a servant of tenants lias been injured by the negligence of a servant of the owner employed in the same room to manage an engine working an elevator, upon which the injury occurred.' An agreement between connecting roads, in order to secure speed and comfort for through-passenger travel between certain points, does not make an employee of one of the roads the fellow-servant of an employee of another one.^ Illustrations. — A railroad company, A, permitted another company, B, to use its station, subject to its rules and to the con- trol of its station-master, and one of its servants was injured by the negligence of an engine-driver of B company, who shunted a train upon the siding without giving or receiving the signal re- Dec. 298; Wiggett v. Fox, 11 Ex. 832. In Harkins v. Standard Sugar Refin- ery, 122 Mass. 400, the court said: "The alleged injury was caused by the breaking of the rope furnished by the master rigger. The rope broke while hoisiting a beam, either by rea- son of its own imperfection or the un- skillfulness with which it was used by the rigger. The rigger was either the servant of the defendant, or a con- tractor having exclusive control of the work he had contracted to do. If he was a contractor, the defendant would not be liable for any injury caused by his negligence, whether arising from the selection of his tackle or the man- ner of using it: Connors v. Hennessy, 112 Mass. 96, and oases cited. If not a contractor, but a servant, then he and those employed under him to do the hoisting were fellow-servants with the master mason and the men em- ployed as masons under him, of whom the plaiatiflf 's intestate was one. They, together with the carpenters, were en- gaged in the common employment of erecting and completing the structure, under the general direction of tlie de- fendant's agent: Johnson v. Boston, 118 Mass. 114. All the master me- chanics thus employed were to furnish the men, tools, and tackle necessary to do the work in their respective de- partments. A master thus employing servants to do a certain work, and to furnish the tools and other appliances necessary for the prosecution of the work, is responsible to a fellow-ser- vant only for care in the selection of the men thus employed. He is not responsible for a defective ax, rope, or trowel so furnished, which, in the hands and under the control of one of his servants, injures a fellow-servant, any more than he is responsible to his servant for the careless and negligent manner in which such tool or appli- ance is used by a fellow-servant. Sup- pose a carpenter and jjlumber are en- gaged in the common employment of making repairs, each bringing, as is usual in such cases, his own tools: the master would not be liable for an injury to the carpenter caused by a defect in the furnace of the plumber. Two woodmen are employed to cut down trees, and they both bring their own axes: it could not be contended, if one is injured by a defect in the ax of the other, that the master would be responsible. The workman takes the risks of the employment he engages in, which include the results of negli- gence on the part of others engaged in the same service; and where all fur- nish their own tools, and are engaged in a common employment, the work- man takes the risk of the negligence of his fellow-workman in selecting and caring for his tools, as well as in the use of them." ^ Stewart v. Harvard College, 12 Allen, 58. ^ Philadelphia, Wilmington, etc. R. R. Co. V. State, 58 Md. 372. § 324 PRINCIPAL AND AGENT. 586 quired by the rules of A company. Held, that Buch servant of A company was not a fellow-servant with the engine-driver of B company, and that B company must pay damages to him: Warburton v. Railroad Co., L. R. 2 Ex. 30. A road of A com- pany formed a junction with that of B company, and the cars of B company, under an arrangement between the two com- panies, ran for four miles over the road of A company. B company intrusted a servant of A company with the duty of switching its trains, bo as to avoid collisions with the trains of A company, and gave him a joint time-table of the two roads to enable him to do so. Owing to the negligence of this servant, a train of B company collided with a train of A company while on the track of A company, kilhng a servant of A company. Held, that B company was liable for the damages: Taylor v. Railroad Co., 45 Cal. 323. The plaintiff, a deck-hand on the steamboat A., was injured by the explosion of the boiler of the steamboat R., while the boats were near each other. The de- fendant was owner of the steamboat A., but had an agreement with the owner of the steamboat R. that each should employ the men and manage his own boat, and at the end of the season the profits of the boats should be divided between them. Held, that the defendant and the owners of the R. were partners, and each responsible for the negligence of the ofBcers and crew of each boat; that the plaintiff and the crew of the R. were not fellow-servants: Connolly v. Davidson, 15 Minn. 519; 2 Am. Rep. 154. The plaintiff, while engaged in the employ of a tel- egraph company in distributing poles along the line of a rail- road, and while upon a train on such railroad, was injured by the negligence of the railroad company's engineer upon the train. The train, in pursuance of a contract between the com- panies, was transporting men and materials of the telegraph company. The train was manned by employees of the railroad company, but was temporarily under the direction of the fore- man of the telegraph company. Held, that the plaintiff could recover of the railroad company: Coggin v. Railroad Co., 62 Ga. 685; 35 Am. Rep. 132. § 324. When Relation of Master and Servant does not Subsist — Time. — If a servant has quit his work for the day and started for his home, he is not to be deemed a fellow-servant with other servants of his master who are still engaged in the master's employment; but he stands as a stranger towards the master, and if he is injured by the negligence of such servants, the master is liable to 587 LIABILITIES OF MASTER AND SERVANT. § 324 him on the principle respondeat superior.' So where the servant is at the time on a private errand of his own, and not engaged in his master's work.^ So where he is absent from his place, even without leave.^ A railroad company is not liable for an injury to an employee occur- ring while performing an individual service for his su- perior under the latter's direction.* Illusteations. — B, the harbor-master of the city of Balti- more, in obedience to the requirements of the board of health, ordered a vessel to be removed from the wharf and to be moored in the stream. He employed C to do such duty, who, having finished it with his assistants, returned from the vessel to the shore in a boat belonging to the vessel, which they afterward abandoned and lost. Held, that from the time the vessel was moored in the stream C ceased to be B's agent, and that he was not responsible for any acts of his, or their consequences, after such time: Brown v. Purviance,2 Hai. &G.S16. A soap manu- facturer employed women to work at one end of a room seventy- two feet in length, to wrap the soap in papers which were brought to them, and one of the women, returning out of work- ing hours, went to the back part of the room to get some paper, and there fell into a reservoir of lye. Held, that the employer was not liable: Neff v. Broom, 70 Ga. 256. A laborer, after loading ice from a wharf upon a vessel, went on board for the gratification of his curiosity, and there fell down an open hatch- way and broke his leg. Held, that he was a mere intruder, and that the owners of the vessel were not liable for the injury: Sev- ery v. Nickerson, 120 Mass. 306; 21 Am. Rep. 514. Plaintiff's intestate was hired from day to day as brakeman, running between X and Y every day except Sunday, for which day he was not paid unless employed. He was, however, expected to remain at X from Saturday night till Monday morning; but his family residing in Y, he received permission one Sunday to visit them, and while traveling thither under a conductor's pass, he was killed by the negligence of the company's em- ployees. Held, that he was not a co-employee: State v. Rail- road Co., 63 Md. 433. The plaintiff was in the employ of a railroad company, his business being, with other laborers, to ballast part of their road, excavating gravel from certain banks, • 2 Thompson on Negligence, sec. ^ Washburn d. Railroad Co., 3 Head, 43, p. 1046; Baltimore etc. E. B. Co. 638j 75 Am. Dec. 784. V, Trainor, 33 Md. 542; Bairdi). Pettit, ^ Washburn v. Railroad Co., supra. 70 Pa. St. 477; Brydoa v. Stewart, 2 * Hurst v. Railroad Co., 49 Iowa, Macc[. 30, 76. § 325 PRINCIPAL AjND agent. 588 loading it in gravel-cars, and then distributing it along the track. Some of the workmen, among them the plaintiff, lodged in C, a village two miles from the gravel banks, and by agree- ment with the company were to be conveyed to the village for meals and lodging, and then back to the banks. Wliile so employed, the plaintiff, during his conveyance on a gravel-car to the banks to work, by the gross negligence of the engineer of the train he was riding on, was injured and his leg broken. Held, that the company was liable for the injury: Fitzpatrick V. Railroad Co., 7 Ind. 436. A servant of a railroad company took down the bars in a fence on the side of the track, and left them down, whereby horses escaped at night from an adjoining field upon such track and were killed by the engine of the com- pany; at the time of taking down the bars the servant was en- gaged in a business which concerned himself, and in which the company had no interest, but it was understood that by virtue of the employment of the servant by the company, that if the former at any time after his day's labor was over saw anything amiss, he was required to give the necessary attention to it without being specially directed to do so. Held, that the ser- vant was negligent in leaving the bars down, and that the com- pany was liable in damages therefor: Chapman v. Railroad Co., 33 N. Y. 369; 88 Am. Dec. 392. § 325. Volunteer Assisting Servant. — A volunteer who assists a servant in an emergency cannot recover from the master for an injury caused by the negligence of the servant.^ But it is otherwise if the person is not a mere volunteer, but interferes in order to expedite his own or his master's business.^ Where an employee of a railroad ' Degg V. Railroad Co., 1 Hurl. & tained gas, asked information of the N. 773; Osborne v. Eailroad Co., 68 plaintiff, who happened to be passing; Me. 49; 28 Am. Rep. 16; Flower v. the plaintiflF thereupon going to the Railroad Co., 69 Pa. St. 210; 8 Am. trench and pointed out the gas-main, Rep. 251; Mayton v. Railroad Co., into which the defendant's workmen 63 Tex. 77; 51 Am. Rep. 637. One proceeded to make a hole for the in- wuo at the request of a person in sertion of a service-pipe. This was charge assists in a, work without ex- done in a manner unnecessarily haz- pectiug pay is for the time being a ardous, in consequence of which a servant: Johnson ■«. Ashland Water chip of the metal entered the plain- Co., 71 Wis. 553; Central Trust Co. tiff's eye, while he stood by looking V. Railroad Co., 32 Fed. Rep. 448. on, and seriously injured him, for In an English case, however (Cleve- which the plaintiff was held entitled land I'. Spier, 16 Com. B., N. S., 398), to recover. workmenof the defendant, a gas-fitter, ^ Holmes i;. Railroad Co., L. R. 4 having coms upon two pipes in the Ex. 254; L. R. 6 Ex. 123; Wright v. cour.ie of their digging in the road, Railroad Co., L. R. 1 Q. B. Div. and being doubtful aa to which con- 252. 589 LIABILITIES OP MASTER AND SERVANT. § 326 company, engaged in its service, summons his son, eleven years old, to his temporary assistance, and the son, while so assisting, is injured by the negligence of another rail- road company, the latter is liable to the son therefor.* And where a servant engages in a temporary work for another, on the false representation that the master had directed it, he does not become the servant of that other so as to be remediless for an injury by the negligence of the latter's servant.^ Illustrations. — A railroad yard-man, whose business is not to couple cars, attempts to do so to accommodate an engineer, and is injured by the negligence of the engineer. Held, that the company is not liable: Bradley v. Railroad Co., 14 Lea, 374. The conductor of a train ordered a boy standing by, and who was not in the employ of the railroad company, to un- couple the cars. The boy refused, but on being threatened by the conductor uncoupled the cars, and in doing so was injured. Held, that the railroad company was not liable: New Orleans etc. E. R. Co. V. Harrison, 48 Miss. 112; 12 Am. Rep. 356. The plaintiff was a passenger on a car of a street-railroad having but one track with occasional turn-outs. In turning out to avoid a car coming in the other direction, the car ran beyond the turn-out, and the driver requested the plaintiff to assist him in backing it upon the turn-out. While so engaged he was in- injured by the negligence of the driver of the other car. Held, that the railroad company was liable: Street R. E. Co. v. Bolton, 43 Ohio St. 224; 54 Am. Eep. 803. The owner gave general directions to his servant to throw the snow and ice from his roof; a friend of the servant voluntarily assisted him in the work. Held, that the owner was liable for an injury caused by snow and ice thrown down by either of the two: Althorp v. Wolfe, 22 N. Y. 355. A Pennsylvania statute gives one injured while lawfully engaged about the premises of a railroad company only an em- ployer's right of action. Held, to apply to one who was injured while unloading his own goods from the cars of the company, permission to do which had been granted by the agent of the company: Ricard v. Railroad Co., 89 Pa. St. 193. § 326. Evidence of Incompetence of Fellow-servant. — The incompetence of the servant may be shown by evi- ' Pennsylvania R. R. Co. v. Galla- = Kelly v. Johnson, 128 Mass, 530; gher, 40 Ohio St. 637; 48 Am. Rep. 689. 35 Am. Rep. 398. § 327 PRINCIPAL AND AGENT. 590 dence of general reputation.* Specific acts of carelessness may also be proved to show that the master had retained the servant in his service after he knew or ought to have known him to be incompetent.^ Evidence that the ser- vant was notoriously a drunkard is admissible in aggra- vation of damages.' § 327. Evidence of Negligence in Selecting and Main- taining Machinery and Appliances — Cases in Which It was Held SufBciently Shown. — The following instances are given by a recent writer/ where it was held that there was evidence of negligence to go to the jury: Where an employee was killed by the fall of an elevator, by reason of the chain being worn;° where it appeared that the ser- vant knew that the floor over which he was required to pass was decayed, and that there were holes in it, but it did not appear that he could have ascertained that the place where he broke through was dangerous, without examining part of the floor not open to his inspection;* where a railway brakeman, in attempting to couple cars at a way-station in the night-time, stepped into an uncov- ered ditch which ran across the track and was killed;" where a servant went upon a staging by his master's directions, and was injured by the fall of it, which staging was insecure in consequence of having been constructed of unsuitable materials, or in consequence of their having been fastened together insecurely, and which was built before the plaintiff began work, by persons who were afterwards his fellow-workmen, and he had directed what lumber should be used in it, though it was not built under his personal supervision.* ' Frazier v. Railroad Co., 38 Pa. St. * 2 Thompson on Negligence, p. 104; 80 Am. Dec. 467. 1054. 2 Pittsburg etc. R. R. Co. v. Ruby, * Hackett v. Middlesex Mfg. Co., 38 Ind. 294; 10 Am. Rep. Ill; Baulec 101 Mass. 101. V. Railroad Co., 59 N. Y. 356; 17 Am. * Huddleston v. Lowell Machine Rep. 325; contra, Frazier v. Railroad Shop, 106 Mass. 282. Co., 38 Pa. St. 104; 80 Am. Deo. 467. ' Plank v. New York etc. R. R. Co., a Cleghorn v. Railroad Co., 56 N. Y. 1 Thomp. & C. 319. 44; 15 Am. Bep. 375. ' Arkersouti.DezmisoD,117Mass.407. 591 LIABILITIES OF MASTER AND SERVANT. § 328 § 328. Cases in Which It was Held not Sufficiently Shown. — The following instances are given by the same author where it was held that there was no evidence of negligence to go to the jury: Where a railway switch- conductorj standing on a flat-car, signaled to the engineer to slack up, and the jerk produced by this movement threw him upon the track, where he was injured by two cars passing over him;' where a jury found specially that the defendant, a railroad company, was negligent in not having applied a sufiBcient test to a brake-shaft or rod, the supreme court, on an examination of the evidence, reversing the judgment below; ^ where a charwoman, directed by her employer's wife to wash clothes in the house, was cut by a fragment of glass which was found in the tub;' where a manufacturer of locomotive engines had a crane worked on the tramway, supported on piers of brick-work, which piers were of insufiQcient strength, so that they gave way, causing an accident to one of the men employed in working the crane;* where a person at work on a bridge fell and was killed, in consequence of the breaking of a plank which he and his fellow-workman had placed in position as part of a scaffold; ° where the gravamen of the action was, that the defendant, a railroad company, had failed to exercise due care in selecting and retaining in its service an employee through whose negli- gence the injury was done, and the court ruled that there was a failure of proof to support the allegation;* where a proprietor, proposing to erect a building, employed one man to do the mason's work and another to do the car- penter's work, and a servant of the mason was injured by the fall of a ladder erected by the carpenter, it was held that this, without more, disclosed no cause of action ' Columbus etc. R. R. Co. v. Troesch, • Feltham v. England, L. R. 2 Q. B. 57 lU. 155; 68 111. 545; 18 Am. Rep. 33, reversing 4 Fost. & F. 460. 578. * Kelly u. Bridge Works, 17 Kan. 558. 2 Smith V. Chicago etc. R. R. Co., « Union Pacific R. R. Co. v. Milli- 42 Wis. 520, ken, 8 Kan. 647; Union Pacific R. R. » Flynn v. Beebe, 98 Mass. 675. Co. v. Young, 8 Kan. 658. § 329 PRINCIPAL AND AGENT. 592 against the owner of the building, since, for aught that appeared, the carpenter erected tlie ladder for his own use merely, and not for the use of the mason and his servants;^ where the owner of a factory had supplied his building with proper appliances for extinguishing fire, the care and use of which were necessarily intrusted to his servants, the fact that the water failed to run on the occasion of the burning of his factory, in consequence of which an employee was injured, was held not evidence of negligence, — it was rather to be attributed to the negli- gence of fellow-servants;^ where an employee sustains an injury by falling on a slippery floor against an uncovered cog of a printing-press;^ where a girl sixteen years old in the habit of using a card-cutting machine, the knife of which descended, when she placed her foot on the treadle, was injured by the descent of the knife, nothing more appearing to show neglect on the part of her employer.^ § 329. Liability of Servant to Third Person. — A servant is not liable to a third person for an act of omission, as for failing to execute his master's orders, even though the third person is injured by such failure.^ But if, in ex- ecuting his master's orders, he commits an act of mis- ^ Mercer v. Jackson, 54 HI. 397. his agent, leaving him to his remedy ^ Jones V. Granite Mills, 126 Mass. over against the agent in all cases 84; 30 Am. Rep. 661. where the tort is of such a nature that ° Clark V. Barnes, 37 Hun, 389. he is entitled to compensation. The * Reardon v. New York Cousoli- agent is personally liable to third per- dated Card Co., 19 Jones & S. 134. sous for his own misfeasances and ^ Hill V. Caverly, 7 N. H. 215; 26 positive wrongs; but he is not, in gen- Am. Dec. 735; Harriman v. Stowe, 57 eral, liable to third persons for his own Mo. 93; Bissell v. Roden, 34 Mo. 63; non-feasances, or omissions of duty, 84 Am. Dec. 71. "The law on this in the course of his employment. Hia subject, as to principals and agents, is liability in these latter cases ia solely founded upon the same analogies as to his principal, there being no privity exist in the case of masters and ser- between him and such third persons, vants. The master is always liable to and the privity exists only between third persons for the misfeasances, him and his principal. Therefore, the negligences, and omissions of duty of general maxim as to all such negli- his servant, in all the cases within the gences and omissions of duty is, in scope of his employment. So the cases of private agency, respondeat principal, in like manner, is liable to superior, and such is the general doc- third persons for the like misfeasances, trme" : Harriman v. Stowe, 57 Mo. negligences, and omissiona of duty of 93. 593 LIABILITIES OF MASTER AND SERVANT. § 330 feasance or trespass, he will be personally liable to the person injured.* So a vice-principal is liable to an in- ferior servant injured by his negligence.^ A servant is not liable for his master's wrongful conversion of a chattel that had been lawfully taken by the servant with the owner's consent.* § 330. Liability of Servant to Master. — The maxim respondeat superior does not apply against the master in a suit against a negligent servant; and hence a servant is personally liable to the master for any damage occasioned by his misconduct to the master directly, or to a third person whom the master has been obliged to compen- sate.^ And this is so even where the negligence of an- other servant concurred in producing the injury.' An engineer of a tug-boat was held to be liable to his em- ployer for any damage thereto, by fire or otherwise, which could be fairly attributable to any act done or omitted by him as a natural result or just consequence, even though not directly so attributable.* Employers cannot claim damages from a laborer for faulty construction of the thing they have employed him to make, if the defects in the plan they have prescribed and the tools they have furnished for the work have contributed, with unskillful- ness of the employee, to render the result faulty.' In the case of an injury to a third person that the employer has paid for, it is not necessary that the employer should resist the demand to action and judgment. He may recover what he voluntarily and actually paid, but not exceeding the sum for which he was made legally liable.* A servant ' Harriman v. Stowe, 57 Mo. 9.^; An express messenger is not an insurer Wright V. Compton, 53 Ind. 337; to the company of the safety of goods Suydam v. Moore, 8 Barb. 358; Waul intrusted to him: De Reamer v. Pa- li. Hardie, 17 Tex. 553. cific Express Co., 84 Mo. 529. 2 Fort V. Whipple, 11 Hun, 586. * Id.; Zulkee v. Wing, 20 Wis. 403; =1 Silver V. Martin, 59 N. H. 580. 91 Am. Dec. 425. * 2 Thompson on Negligence, p. 1061 ; « Gilson v. Collins, 66 III. 1 36. Smith V. Foran, 43 Conn. 244; 21 Am. ' Wilder v. Stanley, 49 Vt. 105. Rep. 647: Mobile etc. R. R. Co. v. « Smith v. Foran, 43 Conn. 244; 21 Clanton, 59 Ala. 392; 31 Am. Rep. 15. Am. Rep. 647. Vol. L — 38 § 331 PRINCIPAL AND AGENT. 594 requesting his master to defend a suit for injuries occa- sioned by the servant's misconduct is liable for tlie costs and counsel fees therein.^ § 331. Liability of Servant to Fellow-servant. — A ser- vant is liable to another servant engaged in the same general business for a common employer for injuries re- sulting to the latter from the negligence of the former in the discharge of his duties.^ Thus where a road-master who had charge of all second hands directed one to bend a bar without heating it, as was usual, and as he had been told to do by his section-boss, and he was injured by so doing, it was held that the road-master was liable to the servant.''' 1 Grand Trmik R. R. Co. ■«. Latham, Walfram, 22 Minn. 185; Rogers v. 63 Me. 177. Overton, 87 Ind. 410; contra, Albro v. - Hinda v. Harbou, 58 Ind. 121; Jaquitli, 4 Gray, 99; 64 Am. Deo. 56; Hinds V. Overacker, C6 Ind. 547; 32 overruled in Osborne v. Morgan, 130 Am. Rep. 114; Swainsou v. Railroad Mass. 102; 39 Am. Rep. 437. Co., L. R. 3 Ex. Div. 341; Griffiths v. ^ Rogers v. Overton, 87 Ind. 410. TITLE II. CORPORATIONS. Paet I.— corporations IN GENERAL, §§ 332-508 Part II. — BANKS, §§ 509-537. Part III.— RAILROAD COMPANIES, §§ 538-569. Part IV. — GAS COMPANIES, §§ 570-579. Part V.— BUILDING AND LOAN ASSOCIATIONS, §§ 580-593. Part VI.— VOLUNTARY ASSOCIATIONS, §§ 594-607. Part VIL— RELIGIOUS SOCIETIES AND CORPORA- TIONS, §§ 608-621. Part VIII.— CHARITABLE ASSOCIATIONS AND CHAR- ITIES, §§ 622-634. TITLE 11. CORPORATIONS. Part I.— CORPORATIONS IN GENERAL. CHAPTER XXIV. THE FORMATION OF CORPORATIONS. § 332. Definition of corporation- — The different classes of corporations. § 333. Corporation is created by state. § 334. Power of Congress to charter corporations. § 335. Delegation of power to create corporations. § 336. Form of grant of corporate franchises. § 337. Ratification by state of unauthorized corporation. § 338. Franchise must be accepted. § 339. Form of acceptance of grant. § 340. Incorporation under general laws — Procedure — Condil.ions precedent. § 341. Conditions precedent to grant — Performance when necessary. § 342. Corporations by prescription, § 343. Who may be corporators. § 344. Proof of incorporation, how made. § 345. Proof of performance of conditions precedent, how made. § 346. Foreign corporations — Grant of franchise cannot extend beyond limits of state. § 347. But foreign corporations are permitted by comity to do business. § 348. Subject to local laws. § 349. Citizenship of corporations within federal laws. § 350. Foreign corporations may be sued. § 351. Service of process on foreign corporations. § 332. Definition of Corporation — The Different Classes of Corporations. — A corporation is "an artificial being, invisible, intangible, and existing only in contemplation § 332 COEPOKATIONS. 598 of law."^ It is "a natural person or body of persons upon whom has been conferred a distinct legal existence continued by succession and certain characteristic pow- ers possessed and exercised independent of any changes of members. These characteristics are generally power to admit and remove members, to act by a common seal, to purchase, hold, and dispose of property, real and personal, to sue and be sued, and to make by-laws."^ Corporations are either aggregate or sole. The former is a collection of individuals united into one body under a collective name. It is an artificial being created by law, and composed of individuals who subsist as a body politic under a special denomination, with the capacity of perpetual succession, and of acting within the scope of its charter as a natural person.^ A corporation sole consists of a single person who is made a body cor- porate and politic. In the American law the latter is not in use, and all corporations are corporations aggre- ate.* Corporations are also public or private. Public corporations are such as are created for the discharge of public duties in the administration of civil government.^ Private corporations are such as are created for the ad- vantage, benefit, or emolument of individuals." Quasi public corporations, those corporations are sometimes termed which have in view to promote some public work in which the public is interested, but for the private profit of the members, as railroad, turnpike, or canal 1 Dartmouth College v. Woodward, 616; Regentg v. Williams, 9 Gill & J. 4 Wheat. 518. 365; 31 Am. Deo. 72; Weston t;. Hunt, 2 1 Abbott Law Dictionary, 1, p. 2 Mass. 501. 290. A statute restraining any per- * Regents v. Williams, 9 Gill & J. sons from doing certain acts restrains 365; 31 Am. Deo. 72; Tinsman v. corporations: Peoples. Utioa Ins. Co., R. R. Co., 26 N. J. L. 148; Ten Eyck 15 Johns. 358; 8 Am. Dej. 243. v. Canal Co., 18 N. J. L. 200; 37 Am. sFietsam v. Hay, 122 HI. 293; 3 Dec. 233; School Commissioner v. Am. St. Rep. 492. Putnam, 44 Ala. 566. * Brunswick V. Dunning, 7 Mass. 447; °Id.; Rundle u. Delaware Canal, 1 Bank of Havana v. Wickham, 7 Abb. Wall. Jr. 275; Logwood v. Bank, Pr. 134; Dartmouth College v. Wood- Minor, 30; Cleaveland v. Stewart, 3 ward, 4 Wheat. 518; Thomas v. Dakin, Ga. 283. 22 Wend. 9; People v. Assessors, 1 Hill, 599 FORMATION. § 333 companies/ Reclamation districts are public corpora- tions;- so are levee districts;' so is the establishment and maintenance of a wharf-boat and steam-elevator, for a general storage and forwarding business.^ An English joint-stock company, having the powers incident to a corporation, will be treated as a corporation in this country, although acts of Parliament declare that such companies are not corporations.'' School districts are quasi corporations." The term "franchise," in its legal sense, is confined to such rights and privileges as are conferred upon corporate bodies by legislative grant. It is the right or privilege of being a corporation, and of doing such things, and such things only, as are author- ized by the corporation's charter.' § 333. Corporation is Created by State. — A corporation is the progeny of government, — it cannot form itself. In England the crown or Parliament may charter a corpora- tion. In the different states of the United States the right to create corporations is usually given by the constitu- tions to the legislature,* but this power is inherent there unless expressly withheld by the constitution." A eorpo- ' Miners' Ditch Co. v. Zellerbaoh, Am. St. Kep. 492. A corporation or- 37 Cal. 54,3; 99 Am. Dec. 300; Andrews ganized for the purpose of building a V. Estes, 11 Me. 207; 26 Am. Deo. union depot for railroads, and of own- 521; Riddle v. Proprietors, 7 Mass. ing, maintaining, etc., different lines 169; 5 Am. Dec. 35; Adams v. Bank, therefrom within the city limits, is 1 Me. 363; School District v. Wood, not an ordinary railroad company: 13 Mass. 198; Mower v. Leicester, 9 People v. Clieeseman, 7 Col. 376. Mass. 247; 6 Am. Dec. 63; Bennett's Where the object of a corporation is Appeal, 65 Pa. St. 212; Louisville eljC. to advance the private interests of R. R. Co. V. County Court, 1 Sneed, land-owners in the incorporated dis- 637; 62 Am. Dec. 424; Pierce v. Com- trict, although it may incidentally monwealth, 104 Pa. St. 150. , enhance the general prosperity of the " People V. Williams, 56 Cal. 647. whole community, it is ne^'ertheless a ' Dean v. Davis, 51 Cal. 406. private corporation: Directors etc. v. * Glen V. Beard, 35 La. Ann. Houston, 71 111. 318. 875. 8 stowe v. Flagg, 72 111. 401 ; McKim ^Liverpool Ins. Co. v. Maasachu- v. Odin, 3 Bland, 417; Aurora w. Wesi, setts, 10 Wall. 566. 9 Ind. 74. " Gaskill V. Dudley, 6 Met. 546; 39 ' Bank of Chenango v. Brown, 26 Am. Dec. 750. See'post, Division iv., N. Y. 467; Briscoe v. Bank, 11 Pet. Municipal Corporations. 257; Bell v. Bank, Peck, 269; Frank- ' Fietsam v. Hay, 122 111. 293; 3 lin Bridge Co. v. Wood, 14 Ga. 80, § 334 CORPOEATIONS. 600 radon cannot be constituted by the mere agreement of parties.' It cannot be created by mere acquiescence, but only by an act of the legislature, or by some power thereto authorized by a legislative act.^ In some of the states the constitution limits the power of the legislature to grant charters;^ as, for example, by prohibiting spe- cial charters.'* Such limitations are binding on the legis- lature, and restrict its inherent powers.^ And the legisla- ture has no power to confer upon a corporation privileges or exemptions which it cannot constitutionally confer upon a private person. Therefore a provision in a char- ter, granting to a corporation the privilege of charging a greater rate of interest than the general laws allow, is unconstitutional and void.' But although an act creating a corporation may be void as being within a constitu- tional prohibition of special acts for that purpose, yet it may operate as a legislative license or authority to the parties named to do what its language and intent author- ize them to do.® The legislature cannot charter a cor- poration whose object is to violate the laws of the United States; as, for example, an association formed to assist a rebellion against the national government.^ Where a corporation seeks to escape from the burdens imposed upon it by the legislature, clear evidence of the legislative assent to such esoueEation is oeceasary.* § 334. Power of Congress to Charter Corporations. — The power to charter corporations is not given to Con- gress by the United States constitution, but it neverthe- 1 Stowe V. Flagg, 72 111. 397; State ^ Brent v. State, 43 Ala. 297. V. Curtis, 35 Conn. 374; 95 Am. Deo. ' Trustees v. Satohwell, 71 N. C. 263. Ill; Chioora Co. v. Crews, 6 Rich. 2 Washington etc. R. R. Co. ■». 243. A charter for a mutual marriage R. R. Co., 19 Gratt. 592; 100 Am. benefit association has been refused, Dec. 711. its object being against public policy: ^ Green v. Graves, 1 Doug. 351. In re Mutual Aid Ass n, 15 Phila. * San Francisco v. Spring Valley 625; In re Helping Hand Marriage Water Works, 48 Cal. 493. Ass'n, 15 Phila. 644. " Gordon «. Winchester Building etc. ^ Brasliu v. R. R. Co., 145 Mass. Ass'd, 12 Bttsh, 110; 23 Am. R«p. 713. 64, 601 FORMATION. §§ 335, 336 less exists in that body as an incident to the powers expressly given; and as a means for carrying out a federal purpose Congress may charter a corporation.^ § 335. Delegation of Power to Create Corporations. — A-S a rule, a power to grant a charter cannot be dele- gated.^ But, as in all cases of agency, mere ministerial duties may be delegated; as the issuing of the certificate;^ or ascertaining whether the objects of the association fall within the provisions of the law.^ It has been held that Congress may delegate to a territorial government the power to create corporations." § 336. Form of Grant of Corporate Franchise. — Un - less so required by the constitution, no formal terras are necessary in the grant of a corporate franchise. The use of the words " incorporate" or " corporation " is not even necessary.* Any expression showing the intention of the ■ McCuUooh V. Maryland, 4 Wheat. 316; Thomson v. R. R. Co., 9 Wall. 585; Osborn v. Bank, 9 WTieat. 738; Farmers' Nat. Bank v. Dearing, 91 U. S. 29. ^ Morawetz on Corporations, sec. 8. See Bank of Chenango v. Brown, 26 N. Y. 467. * Franklin Bridge Co. v. Wood, 14 Ga. 80; In re Deveaux, 54 Ga. 673. * In re Medical College, 3 Whart. 456. ° Williams v. Bank, 7 Wend. 539; Vincennes University v. Indiana, 14 How. 270. ^ Liverpool Ins. Co. v. Massachu- setts, 10 Wall. 566; Warner v. Beers, 23 Wend. 103; People v. Assessors, 1 Hill, 620; Bow V. Allenstown, 34 N. H. 351; 69 Am. Deo. 489. In Thomas v. Dakin, 22 Wend. 103, Coweu, J., says: " It has been impossi- ble for me to see the force of the argu- ment that, because the legislature have constantly avoided to call these asso- ciations, or any of their machinery, a corporation, therefore we cannot ad- judge them to be so. If they have the attributes of corporations, if they so are in the nature of things, we can no more refuse to regard them as such than we could refuse to acknowledge John or George to be natural persona, because the legislature may, in mak- ing provisions for their benefit, have been pleased to designate them as belonging to some other species. Should the legislature expressly de- clare each of them to be corporations, without giving them corporate succes- sion, or other artificial attributes, the declaration would not make them so. On the other hand, even an express legislative declaration that certain associations are not included in the definition of corporations would not change their character, provided they should in fact be clothed with all the essential powers of corporations. Sup- pose the legislature should attempt to create an ordinary safety-fund bank, with its usual machinery, by a major- ity vote: could the bank thus created maintain its ground merely because the statute might, in conclusion, de- clare that such bank should not be called or known as a corporation? The restrictive provision in the constitu-- § 337 coEPOUATioNS. 602 legislature to be to grant a franchise is sufficient.' A grant of the power to perform corporate acts implies a grant of corporate powers.^ An act of incorporation is not void .because it omits to designate and limit the amount of capital stock, or prescribe the value and num- ber of shares, or provide for the election of directori or administration of the affairs of the corporation in any mode other than may be found in the grant of " the usual rights and privileges of such corporations."^ Charters of private companies are to be construed strictly in favor of the state, but at the same time reasonably.* Where such intent is not clear, no presumption of a corporate grant will arise.^ Where an act of incorporation expresses the conditions on which the grant of a franchise is to de- pend, other conditions cannot be inferred from the nature and objects of the grant.** Where a statute recited that A had purchased property for educational purposes, and declared " that said institution is hereby incorporated under the name of Ward's Seminary for Young Ladies," it was held insufficient as an act of incorporation.^ § 337. Ratification by State of Unauthorized Corpora- tion. — A corporation formed without lawful authority may be legalized by the legislature. It may do this by simply recognizing it as a valid corporation.* But a sim- ple recital of its name in an act, with no intention of rati- fying its existence, will not legalize it.° By a subsequent tion was leveled at the thing, not the ^ Cheraw etc. R. R. Co. v. White, 10 name; at that species of legal being S. C. 155. already known to tlie law as a corpo- ' Nashville v. Ward, 16 Lea, 27. ration, not what the legislature might * Kanawha Coal Co. v. Kanawha oto. call so." Co., 7 Blatchf. 391; McDougald v. Bel- ' Mahoney v. Bank, 4 Ark. 620. lamy, 18 Ga. 412; Society v. Pawlet, 4 2 Commonwealth v. E. R. Co., 3 Pet. 480; People v. Farnham, 35 111. Grant Cas. 200. 562; McAulay v. R. R. Co., 83 111. 348; ' Kirksey v. Plank Road Co. , 7 Fla. Williams v. Union Bank, 2 Humph. 23; 68 Am. Dec. 427. 339; Bow v. AUenstown, 34 N. H. 351; * Monongahela Bridge Co. v. iCirk, 69 Am. Dec. 489. 46 Pa. St. 112; 84 Am. Dec. 527. ' Thornton v. R. R. Co., 123 Mass. ^Gregory v. Shelby, 2 Met. (Ky.) 32; Green v. Seymour, 3 Sand. Ch. 589; Myers v. Irwin, 2 Serg. & R. 368. 285, 603 FORMATION. § 338 legislative ratification, the acts done before by the corpora- tion become as valid and binding as if previous authority- had been given.* The requirement that an application be filed with the secretary of state, and acknowledged before a proper officer, may be waived by the state by a subsequent statute recognizing the existence of a corpo- ration organized without compliance with said require- ment.^ § 338. Franchise must be Accepted. — A person cannot be made a corporator without his consent.' In like luan- ner a grant of a corporate franchise does not become effec- tive until it is accepted by the grantees,* and no right can be claimed under it until it is accepted.^ A grant is an ofier which may be withdrawn by the legislature at any time before it is accepted by the grantees,* and if not ac- cepted within a reasonable time it will expire.' A statute granting new franchises to an existing corporation upon specified conditions is inoperative until it is accepted.' Where an act of incorporation is accepted, and the com- pany organized provisionally thereunder, no subsequent withdrawal of any of the corporators will affect its valid- ity .' It must be accepted as offered; the grantees cannot add new terms to it."* It can only be accepted by the grantees." But a majority »f an association may a«cept a franchise on beha,lf of all.'^ 1 lUinois etc. R. R. Co. v. Cook, 29 ' Green v. Seymour, 3 Sand. Ch. 111. 2.37; Goodrich v. Reynolds, 31 111. 285. 490; 83 Am. Deo. 240; Baashor v. Dres- ^ State v. Dawson, 16 Ind. 40; Chesa- sel, 34 Md. 503; St. Louis etc. R. R. peake Canal Co. v. R. R. Co., 4 Gill Co. V. R. R. Co., 2 Mo. App. 69. & J. 1. ^ Central Agricultural Mechanical ' State v. Bull, 16 Conn. 179. Aas'n V. Alabama Gold Life Ins. Co., » Lyons v. R. R. Co., 32 Md. 18. 70 Ala. 120. » Busey v. Hooper, 35 Md. 15; 6 2 Lauman v. R. R. Co., 30 Pa. St. Am. Rep. 350. 46; 72 Am. Dec. 685; EUis v. Mar- i» King v. Westwood, 2 Dow & C. shall, 2 Mass. 269; 3 Am. Dec. 94; 21; R. v. Amery, 1 Term Rep. 589. Lexington etc. R. R. Co. v. Chandler, Lyons v. R. R. Co., 32 Md. 18. 13 Met. 315. " R. v. Amery, 1 Term Rep. 589. * Lincoln etc. Bank v. Richardson, '' St. Paul Sons of T. v. Brown, 1 1 1 Greenl. 79; 10 Am. Deo. 34. Minn. 356, 339 CORPORATIONS. 604 Illustrations. — Corporators met and by resolution accepted the charter, elected oflBcers, authorized contracts, and the stock was all subscribed for. Held, that "the charter was in opera- tion," within the meaning of the Illinois constitution: McCartney V. R. R. Co., 112 111. 611; and see Ohio etc. R. R. Co. v. Mc- Pherson, 35 Mo. 13; 86 Am. Dec. 128. A voluntary association became incorporated by an act of the legislature, and a major- ity of the members accepted the charter. Held, that a mem- ber who had united in the application for a charter, and had expressed no dissent thereto, could not repudiate it, though he was not present at the organization under the charter: Ferris V. Strong, 3 Edw. Ch. 127. A charter was granted by the legis- lature of North Carolina. The corporation held their first meeting in Maryland, and accepted the charter: Held, an in- valid acceptance: Smith v. Silver Valley Mining Co., 64 Md. 85; 54 Am. Rep. 760. § 339. Form of Acceptance of Grant. — No particular form of acceptance is essential. An intention on the part of the grantees to accept is enough.^ Where persons apply for a charter and it is granted, acceptance of it by them is presumed;^ so, too, parties are presumed to have ' Bank v. Dandridge, 12 Wheat. 71; American Bridge Co. v. Bragg, 11 N. H. 102; Smead v. Railroad Co., 11 Ind. 104; Covington v. Covington Bridge, 10 Bush, 70; Penobscot Co. v. Lamson, 16 Me. 224; .S3 Am. Dec. 656; Blanford v. Gibbs, 2 Cush. 39. In Middlesex v. Davis, 3 Met. 137, the court say: "It is true that it does not appear by the records of the soci- ety that the act of incorporation has been accepted by an express vote to that efifect; nor does it appear in what manner the first meeting of the corpo- ration was called. But the presump- tive proof, both of the acceptance of the act of incorporation and of the legal organization of the society, is exceedingly strong, and quite as satis- factory as direct evidence. That such presumptive evidence is admissible and proper, is fully maintained by tlie decisions in Dedham Bank v. Chick- ering, 3 Pick. 335; and in Bank of United States v. Dandridge, 12 Wheat. 71; and by the numerous authorities cited in the latter case. By these au- thorities it isnow well settled, whatever may have been the ancient d!ootrine as to corporations, that as the acts of private persons, even of the most sol- emn nature, may be presumed or proved by presumptive evidence, so as to the acts of a corporation, if they cannot be reasonably accounted for but on the supposition of other acts done to make them legally operative and binding, they are presumptive proofs of such other acts. Thus, as deeds and grants to private persons, which are beneficial to them, are pre- sumed to have been accepted, so also may the acceptance of an act or char- ter of incorporation, beneficial to the corporation, be presumed tor the like reason. And a long lapse of time, and the continued exercise of the corporate powers granted to a corporation, suffi- ciently justify the presumption of the acceptance of the charter. So if a particular charter is applied for, and it is granted, the acceptance may be presumed from such previous appliea- tion. " 2 Middlesex v. Davis, 3 Met. 137; Atlanta v. Gas Light Co., 71 Ga. 106; Astor V. B. R. Co., 48 Hun, 562. 605 FOEMATION. § 339 accepted a grant beneficial to them.^ The question of the acceptance of an act of incorporation is for the jury.^ A charter granted to certain persons therein named is pre- sumed to have been granted at their instance, and to have been accepted by them; but such presumption is rebutted by evidence that no proceedings were ever had under the charter, although seven years had elapsed since its date.s Though it is optional with members of a private corpora- tion whether they will take the benefit of their charter, yet after they have made their election by executing the power* granted, the duties and liabilities attach which the charter imposes.^ Acceptance of a charter may be shown by the expenditures and other transactions in furtherance of the purpose thereof, without proof of any formal organization by meeting, election, etc.° It is not essential that the records of the corporation should show a formal acceptance of the act by the persons incorpo- rated.® A company, by accepting a charter, becomes bound by all its provisions, and cannot insist that the enactment of any provision therein was fraudulently ob- tained/ Exercise by a corporation of a power granted by an amendment to its charter raises a presumption of an acceptance of the amendment.* Where a corporation, which is already in existence, and acting under a former charter or prescription or usage, accepts a new charter before the expiration of the old, the corporatLon may still act under the former, or partly under both/ ' Bank v. Dandridge, 12 Wheat. 71, * McKay v. Beard, 20 S. C. 156. and cases supra; Regents v. Williams, ° Russell v. MoLellan, 14 Pick. 9 Gill & J. 365; 31 Am. Dec. 72; Tal- 63. ladega Ins. Co. v. Landers, 43 Ala. 115. ' Bushwick and Newton Bridge Co. = Hammond v. Straus, 53 Md. 1. v. Ebbets, 3 Edw. Ch. 353. ' Newton v. Carberry, 5 Crauch 0. ^ Wetumpka etc. R. R. v. Bingham, C. 632. 5 Ala. 658; PaUrey v. Paulding, 7 La. * Riddle v. Proprietors of Locks etc. Ann 363; Bangor etc. R. R. Co. v. on Merrimack Ri\rer, 7 Mass. 184; 5 Smith, 47 Me. 34; Smead v. R. R. Co., Am. Dec. 35; Goshen Turnpike v. 11 Ind. 104. Sears, 7 Conn. 86; Commonwealth v. ' Woodfork v. Union Bank, 3 Cold. Worcester Turnp. Corp., 3 Pick. 327. 488. § 340 CORPORATIONS. 606 Illustrations. — A statute, in addition to a former act creating a corporation for the management of a trust fund, was passed without the knowledge or request of the corporation, and was never adopted by any direct vote, but the corporation elected certain officers, provided for by the act in addition, who exercised the powers conferred on them for ten years. Held, sufficient evidence of a formal assent and adoption by the cor- poration: Third School District in Blandford v. Gibbs, 2 Cush. 39. A statute was drawn up by the attorney of an insurance company, and passed upon the application of a portion of the directors, and afterwards recognized by the board of directors in various ways. Held, that it would be presumed to have been accepted by the corporation: Sumrall v. Sun Mut. Ins. Co., 40 Mo. 27. The same persons composed two corporations, and passed a vote, as members of one of them, proposing to enter into a contract with the other, and the conditions of such pro- posal were partially executed by both corporations, without any corporate vote on the subject. Held, to constitute an ac- ceptance of the proposal: Proprietors of Canal Bridge v. Gordon, 1 Pick. 2&7. § 340. Incorporation under General Laws — Procedure — Conditions Precedent. — By the constitutions of most of the states, the legislature is forbidden to create corpora- tions by special charter. Under such general corporation laws, the right to form a corporation is extended to all persons who comply with certain prescribed conditions.^ A substantial compliance with these conditions precedent is generally deemed sufficient.^ Such an irKegularity as the failure of the notary to certify that those signing the articles of incorporation were personally known to him, is not fatal.^ In Iowa the filing of the articles of incor- poration in the office of the secretary of state is not es- sential.* In Nebraska and Arkansas the filing of articles of incorporation with the county clerk is a condition precedent to the existence of any corporate franchise. ' The charter of a private corpora- Mokelumne Co. v. Woodbury, 14 Cal. tion organized under a general law ia 424; 73 Am. Deo. 658. as inviolable as that of one organized ^ People v. Cheeseman, 7 Col. .S76. under a special act: People v. Keese, * First Nat. Bank of Davenport v. 27 Hun, 483. Davies, 43 Iowa, 424; and see Cross v. " Morawetzoo-Corporations, sec. 17; PinckaeyviUe Mill Co., 17 111. 54. 607 FORMATION. § 340 The law and the articles so filed, taken together, are considered in the nature of a grant from the state, and constitute the charter of the company/ In Kansas a corporation is created when the certificate of incorpora- tion is filed with the secretary of state.^ The Nebraska act does not authorize corporations formed under it to commence business before the whole capital stock has been subscribed.' In Kentucky the statutory re- quirements of published notice of names of corporators, amount of stock, etc., must be complied with.* In Indi- ana the articles must specify the objects of such associa- tion in strict accordance with the statute.^ In California articles of incorporation must state that a majority of the members of the association were present and voted at the election of directors.^ A defect in the certificate of in- corporation of a company incorporated under a general statute is cured by a legislative recognition of such cor- poration.' If a corporation is illegally formed, the stock- holders are not relieved from individual liability by the good faith of the corporators, or the actual transaction of business by the corporation.' The neglect of the trustees of a religious society to make the record of its certificate of incorporation that the statute requires, does not pre- clude the society from proving its corporate existence by evidence of acts of user.' A requirement that one half the capital stock of a corporation should be actually paid in money is substantially complied with if the corpora- tion has received property whose market value is greater ' Abbott V. Omaha Smelting Co., 4 ^ West v. Bullskin Prairie Ditching Neb. 416; Garnett v. Richardson, 35 Co., 32 Ind. 13S; O'Reiley v. Kanka- Ark. 144; and see Bigelow ». Gregory, kee Valley Draining Co., 32 Ind. 73 111. 197. 1G9. 2 Hunt V. Kansas Missouri Bridge ^ People v. Selfridge, 52 C'al. 331. Co., 11 Kan. 412; St. Louis etc. R. R. ' Basshor v. Dressel, 34 MJ. 503. Co. v. Tiernan, 37 Kan. 607. ^ Kaiser ?•. Lawrence Savings Bank, ' Livesey u. Omaha Hotel Co., 5 5G Iowa, 104; 41 Am. Rep. 85. Neb. 50. ' Washington Baptist Church v. • Heinig v. Adams and Westlake R. R. Co., 5 Mackey, 269. Mfg. Co., 81 Ky. 300. § 340 CORPORATIONS. 608 than the par value of the stock.' Under such a statute, the subscriptions must have been made in good faith by persons having a reasonable expectation of being able to pay." Articles of association are properly signed although only the initial letter of christian names is used." Under a constitution which provides that corporations may be formed under general laws only, the legislature is restricted not only from creating, in the strict sense of the term, a business corporation by a special act, but also from conferring by a special act any powers or fran- chises upon a corporation.* So the mere recognition of a corporate body as an existing corporation in acts of the legislature cannot operate to give the organization validity.^ The failure of the corporation to file its arti- cles of incorporation in the county in which it owns property, as required by statute, does not prevent it from defending an action for M"ork and labor done on said property." The certificate of incorporation is made for the benefit of the public, and not for the corporation or its stockholders; and those who participated in the incor- poration, and by a certificate made in pursuance of the statute announced the amount of the capital stock of the corporation, cannot, as against its creditors, contradict the certificate.' Illdsteations.^ — The language of the charter of a railroad corporation imported an immediate grant. A proviso required the commencement of operations within a specified time. Held, that no condition precedent was created by the proviso: Cheraw etc. R. R. Co. V. White, 14 S. C. 51. A railroad company was created "a body politic and corporate." A subsequent section of the charter enacted "that when one hundred thousand dollars shall have been subscribed, and one dollar on each share shall have been paid in, the said company may organize and proceed 1 State V. Wood, 84 Mo. 378; 13 " Oroville etc. R. K Co. v. Plumaa Mo. App. 139. County, 37 Cal. 354. 2 Holman v. State, 105 Ind. 569. " Weeks v. Garibaldi etc. Co., 73 Cal. s State V. Beck, 81 Ind. 500. 599. * City of San Francisco v. Spring ' Thompson v. Bank, 19 Nev. 103; Valley Water Works, 48 Cal. 493. 3 Am. St. Rep. 797. 609 FOEMATION. § 341 to work." Held,, thsft this requirement was sirfficiently complied ■with when one hundred thousand dollars was subscribed, and a Bum in gross paid in equal to one dollar upon every share sub- scribed: Spartanburg etc. R. R. Co. v. Ezell, 14 S. C. 281. A rifle club was organized under the law providing for the crea- tion of corporations for "literary, scientific, and charitable pur- poses." Held, that the object of the association was not within the purview of the law, and that rifle-shooting was not a sci- ence, though it might be an art: Vredenburg v. Behan, 33 La. Ann. 627. § 341. Conditions Precedent to Grant — Perfonrance when Necessary. — Where the grant is subject to the per- formance of certain conditions before the grantees can form the corporation, those conditions precedent must be complied with or the corporation is not legal.^ But where the performance of certain conditions is only a prerequisite to the right of the corporation to carry on business after it is formed, a failure to perform those con- ditions does not afifect the existence of the corporation.^ If all the requirements of the charter are observed, al- though not in the order prescribed, the organization is sufficient.' When a charter is granted, and the corpora- tion is to be brought into existence by some future acts of the corporators, the franchises or property which the charter grants to the body remain in abeyance until such acts are done.* Illustrations. — A provision in a conveyance of real estate, that part of the purchase price should be paid when a certain contemplated corporation should be organized, held, not to re- quire an organization of the corporation strictly in accordance with the statutory requirements, before the amount should be- come due, but to be satisfied by signing the certificate of incor- poration, adopting by-laws, electing officers, and other acts effecting a de facto organization: Ghilds v. Smith, 46 N. Y. 34. The legislative charter of a religious corporation being about to 'People V. Chambers, 42 Cal. 201; 142; Charles River Bridge v. Warrea Childs V. Smith, 55 Barb. 45. Bridge, 7 Pick. 344. 2 Harrod v. Hamer, 32 Wis. 162; ^ Bakright v. R. K. Co., 13 Ind. 404. City Hotel v. Dickinson, 6 Gray, 593; * Dartmouth College v. Woodward,. Central Tp. Co. a. Valentine, 10 Pick. 4 Wheai. 518, 691. VOL. L— 39 §§ 342-344 CORPORATIONS. 610 expire, due application for a renewal was mai^e to the clerk. Without the fault of the corporation there was delay in granting tihe renewal. Held, that when granted it related back so as to prevent a reverter of property: St. Phillips Church v. Zion Pres. Church, 23 S. C. 297. § 342. Corporations by Prescription. — Public corpora- tions may exist by prescription; that is to say, after a certain length of time a grant to them will be presumed, although it cannot be found.' But there is no such rule in favor of a private corporation.^ If the acts and pro- ceedings of a company or association, of however long standing, consist only of such as it is coitipetent for in- dividuals to perform without an incorporating act, a grant of such an act cannot be inferred.* § 343. Who may be Corporators. — Any person capable of contracting may be a corporator. So may infants, married women, and persons non compos mentis become stockholders by transfer or by inheritance. A corporation may be a stockholder in another corporation., and so may a state or a municipality.^ § 344. Proof of Incorporation, how Made.— That a body is a corporation is proved by showing the grant of the charter and its acceptance. Of public laws only will the courts take judicial notice.* The legality of the ex- istence of a corporation is presumed.* A private domestic corporation must, like a foreign corporation, aver and prove the fact of its incorporation.'^ The rule that the » Jameson v. People, 16 111. 257; 63 v. Tipton, 5 Ala. 787; 39 Am. Dec. 344. Am. Dec. 304; Bow v. AUenstown, 34 ' Greene v. Dennis, 6 Conn. 302; 16 N. n. 351; 69 Am. Dec. 489; Kobie v. Am. Dec. 58. Sedgwick, 35 Barb. 326; Dillingham * Mora wetz on Corporations, sec. 21. V. Snow, 5 Mass. 547; Sherwin v. ^ Morawetz on Corporations, sec. 23; Bugbee, 16 Vt. 439; Londonderry v. Merobants' Bank v. Harrison, 39 Mo. Andover, 28 Vt. 416; New Boston v. 433; 93 Am. Dec. 285. Dunbarton, 15 N. H. 201; All Saints * Hagerstown Co. v. Creeger, 5 Har. Church V. Lovett, 1 Hall, 191. & J. 122; 9 Am. Dec. 495; Busey v. ' Morawetz on Corporations, see. 22. Hooper, 35 Md. 15; 6 Am. Rep. 350. But see Greene v. Dennis, 6 Conn. 293; ' Holloway v. R. R. Co., 23 Tex. 465; 16 Am. Dec. 58; Selma etc. R. R. Co. 76 Am. Deo. 68. 611 FOEMATION. § 344 existence of a corporation may be pToved by producing its charter and showing acts of user under it has no ap- plication to a corporation formed under the provisions of a general statute, requiring certain acts to be performed before the corporation can be considered in esse, or its transactions possess any validity.* Proof of user or cor- porate acts makes a prima facie case of the entity or iden- tity of a corporation." Where a body professing to be a corporation has been dealt with expressly as such, those who have so dealt with it cannot question its corporate existence for the purpose of charging its members in- dividually as if they were partners.* A body sued as a corporation is not estopped from denying its corporate existence by reason of having done acts which might have been done equally well by an unincorporated body.* A copy of the articles of association of a corporation, filed in the county recorder's office, when officially certified to as a full, true, and complete copy from the record, is admissible as evidence of the original articles which have been lost.° A charter granted by a sister state or a foreign country is proved like other foreign laws.* A copy of an act to in- corporate a foreign corporation, to which is appended the certificate of the secretary of the state of such corporation with the seal of the state affixed, is admissible to show the business of the corporation.' Where a corporation sues in a federal court, it need not prove its corporate existence, where defendant has pleaded the general issue only.* The corporate existence is not admitted from the mere fact that one dealing with it has, in a contract with the com- pany, designated it by a name appropriate to a corporate • Mokelumne Hill Min. Co. v. Wood- ' Walker t>. Shelbyville and Ruah- bury, 14 Cal. 424; 73 Am. Dec. 658. ville Turnpike Co., 80 Ind. 452. 2 Derrenbaeher u. R. R. Co., 21 Hun, ' United States Bank v. Stearns, 15 612; 59 How. Pr. 283; St. Paul Ins. Wend. 314; Society v. Young, 2 N. H. .Co. V. Allis, 24 Minn. 75. 310; State v. Carr, 5 N. H. 367. ' Merchants' Bank «. Stone, 38 Mich. 'Pacific G-uano Co. v. Mullen, 66 779. Ala. 582. • Kirkpatrick v. Keota United Pres- ' Union Cement Co. v. Noble, 15 byterian Church, 63 Iowa, 372. Fed. Rep. 502. §§ 345, 346 COEPOEATXONS. 612 body, unless it is distinctly stated in the contract that it is an incorporated company. Such designation admits only the existence of an association acting under that name.' Illustrations.^ In a suit on a contract, the question of the corporate existence of a company came up collaterally. Held, that as it was only necessary to prove that the company as- sumed to act as a corporation, the duly identified book of rec- ords, showing organization and acts thereunder, was competent evidence on that point: Reynolds v. Myers, 51 Vt. 444. On a trial a deed of trust, issued under its corporate seal to secure the plaintiff's debt, and reciting that the corporation had been or- ganized in pursuance of law, was introduced. Held, admissible to prove the defendant's legal existence as a corporation: Ander- son V. Kanawha Coal Co., 12 W. Va. 526. § 345. Proof of Performance of Conditions Precedent — How Made. — That conditions precedent have been duly performed may be proved by the books and records of the company." § 346. Grant of Corporate Franchise cannot Extend beyond Limits of State.— A state cannot grant a fran- chise outside of its territorial limits, and therefore the grant of a privilege of acting in a corporate capacity cannot extend into a foreign state or country.* The ' HoUo'wuy V. R. R. Co., 23 Tex. pliance with the requirements of the 465; 70 Am. Dec. 68. statute. But there is a broad and ob- ^ Grant v. Coal Co., 80 Pa. St. 208; vious distinction between such acts as Wood V. Jefferson Bank, 9 Cow. 194; are declared to be necessary steps to Penobscot R. R. Co. v. t)unn, 39 Me. the process of incorporation, and such 588; Ryder v. Alton, 13 111. 523; Hill as are required of the individual seek- V. Carey, 5 Ga. 239; Duke ti. Naviga- ing to become incorporated, but which tion Co., 10 Ala. 82; Mokelumne Min- are not made prerequisites to the as- ing Co. V. Woodbury, 14 Cal. 424; 73 sumption of corporate powers. In re- Am. Dec. 658, the court saying: "The spect to the former, any material general rule is, that the existence of omission will be fatal to the existence a corporation may be proved by pro- of a corporation, and may be taken ducing its charter, and showing acts of advantage of, collaterally, in any form user under it, but this rule has no ap- which the fact of incorporation can plication to a corporation formed under properly be called in question. In the provisions of a general statute, re- respect to the latter, the corporation quiring certain acts to be performed is responsible only to the government, before the corporation can be consid- and in a direct proceeding to forfeit ered in ase, or its transactions possess its charter." any validity. The existence of a cor- ' Bank of Augusta v. Earle, 13 Pet. poration thus formed must be proved 588; Paul v. Virginia, 8 Wall. 181; by showing at least a substantial com- Claike v. Bank, 10 Ark. 516; 52 Am. 613 POEMATION. §346 residence of a corporation is in the state which created it, and in the place where its principal office is.* The members of a foreign corporation, where it sues or is sued in a United States court, are conclusively presumed to be citizens of the state or country which created it.^ A national bank located in New York is a domestic, not a foreign, corporation, and may sue as such.^ A corpora- tion does not, by purchasing and operating property in another state, under enabling acts of that state, become a corporation of that state.* In New York a corporation created by the laws of that state is deemed a resident thereof, although the bulk of its property and business lies in a foreign state.' When the charter of a corpora- tion in one state is duplicated in another state, and the Dec. 248; Allegheny v. K R. Co., 51 Pa. St. 228; 88 Am. Deo. 579; Bal- timore etc. R. K. Co. V. Glenn, 28 Md. 287; 92 Am. Dec. 688; Phoenix Ins. Co. V. Com., 5 Bush, 68; 96 Am. Dec. 331. A court may enjoin it with- out intrusting property in litigation to the custody of a non-resident, under circumstances indicating an intention to remoTe it for keeping or manage- ment outside of the state: Matthews V. Theological Seminary, 2 Brewst. 541. In Miller v. Ewer, 27 Me. 509, 43 Am. Deo. 619, the court say: "There are a variety of corporations. It will only be necessary on this ccca- sioa to speak of one class of them, corporations aggregate, composed of natural persons. It is often stated in the books that such a corporation is created by its charter. This is not precisely correct. The charter only confers the power of life, or the right to come into existence, and provides the instruments by which it may be- come a:i artificial being, or acting en- tity. Such a corporation has oeen well defined to be an artificial being, invisible, intangible, and existing only in contemplation of law. The instru- ments provided to bring the artificial being into life and active operation are the persons named in the charter, and those who, by virtue of its pro- visions, may become associated with them. Those persons or corporation^^ as natural persons, have no such power. The charter confers upon them a new faculty for this purpose; a faculty which they can have only by virtue of the law which confers it. That law is inoperative beyond the bounds of the legislative power, by which it is enacted. As the corporative faculty cannot accompany the natural persona beyond the bounds of the sovereignty which confers it, and they cannot . possess or exercise it there, — can have no more power there to make the arti- ficial being act than other persons not ' named or associated as corporators, — any attempt to exercise such a faculty there is merely a usurpation of author- ity by persons destitute of it, and act- . ing without any legal capacity to act in that manner. It follows that all votes and proceedings of persons pro- fessing to act in the capacity of cor- porators, when assembled without the bounds of the sovereignty granting the charter, are wholly void." * Sangamon R. R. Co. v. Morgan Co., 14 111. 163; 56 Am. Dec. 497. 2 National S. S. Co. v. Sugman, 106 U. S. 118. ^ Market Bank v. Pacific Bank, 64 How. Pr. 1. * Wilkinson v. R. R. Co., 22 Fed. Rep. 353. 'Crowley v. R. R. Co., 30 Barb. 99; Inter. Life As. Co. v. Sweetland, 14 Abb. Pr. 240. § 347 COEPORATIONS. 614 legislature assumes to create a home corporation, the effect is to consolidate the two; but for purposes of juris- diction it is a separate corporation within the state of its adoption.* A railroad corporation chartered in Indiana, with authority to own and manage property in Ohio, is not thereby empowered to change its domicile to that state.^ A corporation chartered by two states by the same name and style, clothed with the same powers, and in-, tended to accomplish the same objects, fulfilling the same duties in both states, is a distinct and separate body in , each state.* The new corporation resulting from the con- solidation of a domestic and a foreign corporation is a domestic corporation.* Illustrations. — A New York corporation was authorized by its charter to hold real estate and to act as trustee, and was ap- pointed by a New York court trustee under the will of a citizen of that state. Held, that it had no power to hold real estate of the testator in Illinois: United States Trust Co. v. Lee, 73 III. 142; 24 Am. Rep. 236. A foreign corporation took a mortgage on lands in New Jersey, to secure a loan already made to the mortgagor on stock collateral, which became depreciated. Held, that although its charter may not have authorized the taking of a mortgage in another state as an original investment, yet the corporation might take such mortgage by way of additional security: National Trust Co. v. Murphy, 30 N. J. Eq. 408. § 347. But by Comity Foreign Corporations are Per- mitted to do Business. — But by the comity of states, cor- porations chartered by foreign states are permitted to carry on their business and operations within the powers granted by their charters in states outside the state which chartered them.® Acts done by a corporation out of the state which created it, unless forbidden by its charter or the laws of the state in which it may attempt to act, are ^ Blackburn v. R. R. Co., 12 Flip. * In re St. Paul etc. R. E. Co., 36 525. Minn. 85. 2 Aspiuwall V. R. R. Co., 20 Ind. ° Bank of Augusta v. Earle, 13 Pet. 492; 83 Am. Dec. 329. 519; Christian Union v. Yount, 101 ' Coixnty of Allegheny v. R. R. U. S. 356; Commonwealth v. Milton, Co., 51 Pa. St. 228; 88 Am. Dec. 12B. Mon. 212; 54Am.Dec. 522; Cow- 579, ell w, Colorado Springs Co. , 1,00 U.S. 55. 615 FORMATIOK. § 347 valid."^ But the state in giving this permission may annex such conditions thereto as it wishes.^ A Texas law, recognizing the existence of a corporation organized under Kansas law, and conferring on it within Texas the same rights and powers as are granted it by Kansas, within its territory, but not purporting to create a new corporate body, does not make it a corporation or citizen of Texas.' A railroad corporation organized by the legis- lature of one state, but having portions of its line in a second state, will be considered a corporation of the sec- ond state so far as to be amenable to its laws.* So one incorporated in Maryland, but leasing and operating a railroad in Virginia, is subject to suit in Virginia, and is not entitled to a removal of the cause to the federal court. '' A federal court cannot interfere to prevent the orgaaiza- tion of a corporation bearing the same name as that of a foreign corporation doing business in the state.* The effect of an omission to comply with the requirements of a statute, prescribing terms on which foreign corporations may do business within the state, is not to avoid the con- tracts which agents of the corporation may make, but to preclude enforcing such contracts until the statute has been complied with.' Soliciting and receiving subscrip- tions for a newspaper published by a corporation in an- other state is not "doing business" in the state.* The right of a foreign corporation to do business in a state can only be questioned by the state itself." A corpora- tion, though doing, no business in the state where it is ^ New York Floating Derrick Co. v. * Baltimore etc. R. R. Co. v. Wight- New Jersey 0;i Co., 3 Duer, 648; man, 29 Gratt. 431; 26 Am. Rep. Mumforti v. American Life Ins. etc. 384. Co., 4 N. Y. 463; Bajd v. Poole, 12 « Lehigh Valley Coal Co. v. Ham- N. Y. 495. blen, 23 Fed. Rc>p. 225. 2 State V. Lathrop, 10 La. Ann. 398; ' Wood Mowing etc. Co. v. Cald- Erie R. R. Co. v. State, 31 N. J. L. well, 54 Ind. 270; 23 Am. Rep. 641. 531; 86 Am. Dec. 226. But see In re Comstock, 3 Saw. 218. ' Missouri etc. R. R. Co. v. R. R. ^ Beard v. Union and American Co., 4 Woods, 360. Publishing Co., 71 Ala. 60. ' McGregor v.R. R. Co., 35 N. 0. L. ' Deringer v. Deringer, 5 Houst. 115. 416; 1 Am. St. Rep. 150. § 348 COEPOKATIONS. 616 organized, may hold and deal in land in another state.* A foreign corporation may buy at execution sales on judgments in its favor/ or may acquire land in satisfac- tion of a debt due to it.^ So foreign corporations may sue one another if both are doing business within the state, and the cause of action accrued there.^ A foreign corporation cannot purchase and hold real estate in Illi- nois beyond what is necessary for the transaction of its business, or the collection of its debts, either for its own benefit or in trust for others.^ Illustrations. — A company was incorporated under the laws of Pennsylvania, and its charter provided that it might do business anywhere, "except in the state of Pennsylvania." Held, that it could not do business in Kansas; Land Grant etc. Co. V. Coffey County, 6 Kan. 245. A railroad corporation char- tered in Connecticut bought the franchises and property of a railroad corporation created under the laws of Connecticut and Rhode Island. The Rhode Island legislature ratified the sale, and authorized the former company to exercise the rights thus acquired. Held, that the company thus became the successor of the former company, and a Rhode Island corporation: Clarh v. Barnard, 108 U. S. 436. § 348. Subject, however, to Local Laws. — But its charter can give the foreign corporation no power to do acts forbidden by the laws of the country which it has entered.^ So a corporation which cannot take real estate by devise in its own state cannot take by devise in another state.'' A corporation created in Connecticut for the sole purpose of buying and selling lands cannot buy and sell or hold in perpetuity lands in Illinois.* A foreign insur- 1 New Hampshire Land Co. ■;;. Til- « Milnor v. Railroad Co., 53 N. Y. ton, 19 Fed. Rep. 73. 363; Bard v. Poole, 12 N. Y. 505; 2 Elston V. Piggott, 94 Ind. 14. Stetson w. Bank, 2 Ohio St. 174; Lewis ' Columbus Buggy Co. v. Graves, v. Bank, 12 Ohio, 132; 40 Am. Dec. 108 ni. 459; see Thompson v. Waters, 469; Bank v. Earle, 13 Pet. 539; Blair 25 Mich. 214; 12 Am. Rep. 243. v. Lis. Co., 10 Mo. 559; 47 Am. Dec. * Emerson u. McCormick Harvesting 129; People v. R. R. Co., 48 Barb. Machine Co., 51 Mich. 5; Thompson 478. r. Waters, 25 Mich. 211; 12 Am. Rep. ' Starkweathers. Am. Bible Soc, 72 243. HI. 50; 22 Am. Rep. 133. '•' United States Trust Co. v. Lee, 73 ^ Carroll v. East St. Louis, 67 111. HI. 142; 24 Am. Rep. 236. 568; 16 Am. Eep. 632. 617 FORMATION. § 848 ance company cannot, without first complying with the state laws enacted for its regulation, make contracts which it may enforce; and where the company fails to file the statement of its condition and the consent of the auditor to transact business within the state, as required by law, the company cannot recover on a note given in such state for stock and premiums, notwithstanding the law imposes a penalty for doing business in such state in violation of its provisions.^ A prohibition against foreign corporations doing business in the state, without having a known place of business therein, and an agent on whom process may be served, does not prohibit a single contract of sale by a foreign corporation to a citizen of the state, and the maintenance of an action in the state by the cor- poration for a breach of the contract.^ Comity cannot extend to the point of granting to a foreign corporation privileges which its charter does not permit it to exercise; and in applying for privileges, it must show that it has power to exercise them.^ In a suit by a foreign corpora- tion, it must show not only the papers and proceedings of incorporation, but the statute of the state where it was incorporated, authorizing such incorporation.* Illustrations. — A Maryland corporation is authorized by its charter to take and receive devises. A devise is made to it in New York, but by the laws of New York devises to corpora- tions are not legal. Held, that the corporation cannot take: White V. Howard, 46 N. Y. 144. A corporation is authorized by its charter to charge on its loans a rate of interest which by the laws of the state of B is usurious. Held, that it cannot charge that rate in the state of B: Hitchcock v. Banh, 7 Ala. 435. A corporation by its charter was prohibited from lending money at a rate of interest exceeding the legal rate. It lent money in another state at a rate of interest which, although legal there, was higher than the legal rate in the state of its incorporation. Held, within its powers: United States Mortgage Co. v. Sperry, 24 Fed. Rep. 838. A statute required agents of foreign corpo- ■ Ciuciunati etc. Assur. Co. u. U. S. 727; Sherwood v. Alvis, 83 Ala. Rosenthal, 55 III. 85; 8 Am. Rep. 115; 3 Am. St. Rep. 695. 626. 3 Match Co. v. Powers, 51 Mich. 145. ' Cooper Mfg. Co. v. Ferguson, 113 ' Savage v. Russell, 84 Ala. 103. § 349 CORPORATIONS. 618 rations to file in certain offices evidence of their appointment, and of their authority to accept service of process for the cor- poration, and imposed a penalty on them for failing so to do; and provided that no such corporation should enforce a contract made with its agents before compliance with the act. Held, — 1. That the act did not apply to the agent of a foreign corpora- tion engaged in manufacturing a patented article; and 2. That the act did not avoid contracts so made, but only suspended the remedy on them until the act was complied with: Walter A. Wood Mowing Machine Co. v. Caldwell, 64 Ind. 270; 23 Am. Rep. 641. A statute required foreign insurance companies, as a condition precedent to receiving a license to do business in the state, to agree not to remove into the United States courts any actions brought against them in the state courts; and en- acted that on violation of such agreement by an insurance com- pany it should "be the imperative duty of the secretary of state to revoke its license." Held, — 1. That the statute was consti- tutional; and 2. That the secretary might be compelled to revoke the license by mandamus at the relation of any person interested: State v. Doyle, 40 Wis. 175; 22 Am. Rep. 692. § 349. Cithsenship of Corporations within Federal Laws. — The coiistitution of the United States provides that the judicial power of the United States shall extend to "controversies between citizens of the different states," and that the laws made in pursuance of the constitution shall be the supreme law of the land. The judiciary acts provide that in any suit of a civil nature at law or in equity, where the matter in dispute exceeds, exclusive of costs, the sum or value of five hundred dollars, in which there is a controversy between the citizens of different states, the United States courts shall have jurisdiction.* It was at first held in the federal courts that a corporation was not a "citizen" within these, provisions.^ But this decision has been overruled, and it is now settled that a corporation is a citizen of the state which created it.' A corporation chartered and created by two or more 1 Act 1789, 1 Stats. 79, c. 20, sec. = u. S. v. Devaux, 5 Cranch, 61. 12; Act 1866, 14 Stats. 306, c. 288; ^r r q^. v. Whitton, 13 Wall. Act 1867, 14 Stats. 588, i;. 196; Act 270; Marshall v. R. B. Co., 16 How. 1875, 18 Stats. 270, c. 137. 329. 019 .FORMATION. 350 states is a citizen of each state.^ Where existing corpora- tions of different states are authorized by their respective states to consolidate and form one and the same company, such corporation is a citizen of each state.^ § 350. Foreign Corporations may be Sued. — A foreign corporation may be sued, provided it is brought into court in a proper way.' For a tort committed by a foreign corporation within a state, such corporation is liable to be sued therein if found in the state in the person of an officer or agent upon whom process may be served.* The members of a corporation are legally presumed to be citi- zens of the state by the laws of which it was created, and in which alone the corporate body has a legal existence. And a suit by or against such corporation in its corporate name must be presumed to be a suit by or against citizens • Ohio etc. B. B. Co. v. Wheeler, 1 Black, 286; Insurance Co. a. Francis, 11 Wall. 210; B. B. Co. v. Whitton, 13 Wall. 270. In Baltimore etc. R. B. Co. V. Harris, 12 Wall. 82, the court held that a legislative enactment of one state, "confirming" an act of incorporation of another state, and granting the same rights and privi- leges, and subjecting it to the same pains and penalties and obligations as imposed by the original act, and re- serving the same rights, privileges, and immunities as is reserved in the original act, did not create a new cor- poration, but granted a license, and nothing more; its unity and ownership were unchanged, and therefore such corporation was amenable in the Dis- trict of Columbia for an injury com- mitted in Virginia. * Insurance Co. v. French, 18 How. 404; Sprague v. R. B. Co., 5 E. I. 233; Maryland v. B. B. Co., 18 Md. 193. ^ Bushel V. Com. Ins. Co., 15 Serg. &R. 176; Lafayette Ins. Co. v. French, 18 How. 407; City Fire Ins. Co. v. Carrugi, 41 Ga. 670; North Mo. B. R. Co. V. Akers, 4 Kan. 453; 96 Am. Dec. 183; Folger v Ins. Co., 99 Mass. 267; 96 Am. Dec. 747. In Libby i;. Hodgson, 9N. H. 394, Wilcox, J., said: "If, upon principles of law or comity, corpora- tions created in one jurisdiction are al- lowed to hold property and maintain suits in another, it would be strange in- deed if they should not also be liable to be sued in the same jurisdiction. If we recognize their existence for one pur- pose, we must also for the other. If we admit and vindicate their rights, even-handed justice requires that we also enforce their liabilities, and not send our citizens to a foreign jurisdic- tion in quest of redress for injuries committed here. There may be diffi- culties in procuring legal service of a writ upon a foreign corporation; and so, in case of an individual residing in a foreign jurisdiction, it may be diffi- cult or impossible to procure such ser- vice of process upon him as to subject him to the jurisdiction of our courts. But in either case, when the service can be made, or when the person of the corporation appears and submits to our jurisdiction, we see no objection to the authority of the court to pro- ceed." * Gray v. Taper-Sleeve Pulley Works, 15 Fed.- Kep. 436. § 351 CORPORATIONS. 620' of the state creating the corporation.^ An action against a foreign corporation having an agency in the state where the action is commenced is not prevented from proceed- ing to judgment by a subsequent decree dissolving the corporation and appointing receivers to wind up its af- fairs made in the state of its creation, unless it is shown that the corporation is utterly extinct.^ A foreign cor- poration can only be sued in Massachusetts by means of attachment of its property, unless by virtue of an express statutory provision.' Illustbations. — The provisions of a statute of Pennsylvania limited the amount of the debts and liabilities (not including capital stock) of certain companies to the amount of their capi- tal actually paid in, and further provided that "if any debts or liabilities shall be contracted exceeding the said amount, the directors and officers contracting the same, or assenting thereto, shall be jointly and severally liable, in their individual capaci- ties, for the whole amount of such excess, and the same may be recovered by action of debt as in other cases." In an action to recover for a violation of this statute, held, that the liability so created was in the nature of a penalty, and was not enforceable by action outside of the state which enacted the law: First Na- tional Bank of Plymcyuth v. Price, 33 Md. 487; 3 Am. Rep. 204. § 351. Service of Process on Foreign Corporations. — At common law, service of process on the managing agent of the corporation in the state is the usual mode of obtain- ing jurisdiction.* But it is generally provided by statute that service on certain agents of a foreign corporation shall be good,' or that the corporation shall designate an attorney on whom service of process may be made." Ser- vice of process upon an officer of a foreign corporation, who is temporarily in another state, and who does not voluntarily appear to the action, does not give the courts ' Hobbs V. Insurance Co., 56 Me. * Newby v. Manufactunng Oo., L. 417; 96 Am. Deo. 472. R. 7 Q. B. 293; Libby v. Hodgson, 9 2 Hunt V. Insurance Co., 55 Mo. 290; N. H. 394. 92 Am. Dec. 592. ^ Morawetz on Corporations, sec. 524. 2 Andrews v. Eailroad Co., 99 Mass. * Gibbs v. Queen Ins. Co., C3 N. Y. 534; 97 Am. Deo. 51. 114; 20 Am. Rep. 513. 621 FORMATION. § 351 of that state jurisdiction over the corporation.' But it is not necessary under the Michigan statute that the officer or agent of a corporation upon whom servioe is made while in the state should be in the state upon official business for his corporation, or be specially authorized by it to receive service of process.^ A voluntary appear- ance of a foreign corporation will confer upon a court having, jurisdiction of the subject-matter full power to decide the matter in controversy, and the defendant cor- poration cannot afterwards set up as a defense want of jurisdiction of the person.' 1 Latimer v. R. R. Co., 43 Mo. 105; Co., 61 Mioh. 226; 1 Am. St. Rep. ■vray, 43 Mo. 105; 97 Am. Dec. 571. 378. * North Missouri R. R. Co. v. Akers, 2 Shickle Iron Co. «. Construction 4 Kan. 388; 96 Am. Dec. 183. CORPORATIONS. 622 CHAPTER XXV. THE POWERS OP CORPORATIONS AND THE VALmiTY OF COR- PORATE ACTS. § 352. Powers of corporation are only those conferred by charter. § 353. Acts or contracts of corporations in violation of rules of law. § 354. Acts or contracts of corporations in violation of statutes. § 355. Acts or contracts of corporations in violation of charter. § 356. Statutory prohibition against exercising powers not granted by charter. § 357. Prohibitions in charter — If legislative inteilt be that prohibited act shall be void, courts will so hold. § 358. Prohibitions in charter — Aliter where prohibition is merely for benefit of share-holders. § 359. Prohibitions in charter — Formalities prescribed by charter. S 360. Acts of majority of corporators bind corporation. § 361. But only where act is authorized by charter. § 362. Contracts ultra vires — May be avoided if unexecuted. § 363. Defense of ultra vires — Not good against person without notice. § 364. Transfers of property — Valid though ultra vires. § 365. Executed contracts — Valid though ultra vires. § 366. Contracts unenforceable because ultra vires — Benefits received must be repaid. § 367. Corporations liable for torts. § 368. Corporation liable for torts committed in ultra vires transaction. S 369. De facto corporation — Validity of acta of. § 370. Fraud in obtaining charter — Misuser or non-user no defense in collat- eral proceeding. § 371. Corporation must be in existence dejure or de facto. § 372. Proof of existence of corporation. § 373. Powers of corporation are only those given by charter. § 374. Or those implied from nature of business. § 375. Grants of special privileges to corporations strictly construed. § 376. What are franchises. § 377. Franchises cannot be transferred nor mortgaged. § 378. Consolidation of corporations. § 379. Implied powers of corporations — To purchase and hold property. § 3S0. Implied powers of corporations — To transfer and sell property. § 381. Implied powers of corporations — To hold property in trust. § 382. Implied powers of corporations — To take by devise. § 383. Implied powers of corporations — To borrow money and malse debts. § 384. Implied powers of corporations — To mortgage property. § .385. Implied powers of corporations — To issue negotiable paper. § 386. ImpUed powers of corporations — To sue and be sued. 623 POWERS. § 352 § 387. Implied powers of corporations -^ Other acts. § 388. Implied powers of corporations ■ — Power of expulsion of members. § 389. Implied powers of corporations — Remedies for wrongful expulsion — Restoration. § 390. Corporation may do business in foreign state. § 391. May employ its surplus or property to best advantage. § 392. May alter its business to suit changes of time and circumstances. § 393. Power to issue preferred stock. § 394. Power to issue preferred stock — Bights of preferred stookholdSrs. § 395. Power to alter charter. § 396. Power to alter charter — Whatnot "alterations"— 'Grant of additional franchises — Discharge of obligations to state. § 397. Effect of alteration on stockholder's liability. § 398. Cannot engage in different business from that which it was chartered to engage in — Illustrations. § 399. Authority to wind up business. § 400. No implied power to enter into partnership. § 401. No implied power to deal in shares of other coiporations. § 402. No implied power to alter amount of capital stock, or purchase its own shares. § 403. No implied power to giv* away property gratuitously. § 404. The corporation name. § 405. The corporation seal. § 352. Powers of Corporation are only Those Conferred by Charter. —A corporation has only such rights and powers as are expressly conferred by its charter, or as are necessary to carry its rights and powers into effect.^ The term ultra vires, when used in reference to corporations, is employed in different senses. An act is said to be ultra vires when it is not in the power of the corporation to perform it under any circumstances; and an act is also said to be ultra vires with, reference to the rights of certain parties, when the corporation cannot perform it without their consent; and it may also be ultra vires Vfith reference 'Head v. Providence Ins. Co., 2 27 Pa. St. 339; 67 Am. Dec. 471; Dart- Cranoh, 127; New York Kreman's Ins. mouth College ti. Woodward, 4 Wheat. Co. V. Ely, 5 Conn. 560; 13 Am. Dec. 636; Beatty v. Marine Ins. Co., 2 100; Leggett u. New Jersey Mfg. Co., Johns. 109; 3 Am. Deo. 401; People 1 N. J. Eq. 541; 23 Am. Dec. 728; v. Utica Ins. Co., 15 Johns. 358; 8 Franklin Co. v. Lewiston Inst, for Sav- Am. Deo. 243; State v. Mayor of Mo- ings, 68 Me. 43; 28 Am. Rep. 9; bile, 5 Port. 279; 30 Am. Dec. 564; Matthews v. Skiuker, 62 Mo. 329; 21 Chicago G. L. Co. v. People's G. L. Am. Rep. 425; Weckler v. Bank, 42 Co., 121 111. 530: 2 Am. St. Rep. Md. 581; Commonwealth v. R. R. Co., 124 §§ 353, 354 CORPORATIONS. 624 to some specific purpose, when the corporation cannot perform it for that purpose.' When the act of the cor- poration is ultra vires in the first sense, it is void in toto, and the corporation may avail itself of the plea; but when it is ultra vires in the second or third sense, the right of the corporation to avail itself of the plea will depend upon the circumstances of the case.^ Corporations are pre- sumed to contract within their powers; and general words used in a corporate contract, which admit a double con- struction, will be construed consistently with the charter.' A corporation which sets up a lack of power to do a par- ticular act within the scope of its general powers assumes the burden of proving such defense.* The burden of showing that any contract of a corporation exceeds its corporate powers rests on the party objecting.® A cor- poration acting within the scope of its authority has all the powers of ordinary persons.* § 353. Acts, or Contracts of Corporations in Violation of Rules of Law. — Any contract made or act done by a corporation, contrary to a rule of law, is as invalid as such a contract or act would be in the case of an indi- vidual.' § 354. Acts or Contracts of Corporations in Violation of Statutes. — The same principle applies to contracts or acts prohibited by statute.* Thus it has been held that a statute providing that in addition to the powers enu- merated in the first section of the act (which are the or- dinary powers of all corporations), "and to those expressly ' Miner's Ditch Co. v. Zellerbach, " Deringer's Adm'r o. Deringer's 37 Cal. 543; 99 Am. Dee. 300. Adm'r, 5 Houat. 416; 1 Am. St. Rep. ^ Miner's Ditch Co. v. Zellerbach, 150. 37 Cal. 543; 99 Am. Dec. 300. ' Thomas v. R. R. Co., 101 U. S. 71; » Morris etc. R. R. Co. v. R. R. Hartford H. R. Co. v. R. R. Co., Co., 20 N.J. Eq. 542. 3 Robt. 416; Messenger v. R. R. •Kappelw. Chaari Zedek Cougrega- Co., 36 N. J. L. 413; 13 Am. Rep. tion, 19 Hun, 364. 457. * Downing v. Mount Washington ^ Pangbom v. Westlake, 36 Iowa, etc. Co., 40 N. H. 230. 546; Harris v. Runnels, 12 How. 79. 625 powEES. §§ 355, 356 given in its charter, or in the act under which it is or shall be incorporated, no corporation shall possess or exer- cise any corporate powers except such as shall be necessary to the exercise of the powers so enumerated and given," — is a prohibition of any acts not within the scope of the powers permitted.* § 355. Acts or Contracts of Corporations in Violation of Charter. — The same principle also applies where the act or contract is in violation of any provision in the charter or act of incorporation.^ Where a bank charter provides that no director shall be indebted to it beyond a certain amount, a note given to it by a director beyond that amount is void.' Parties dealing with corporations are chargeable with notice of the limitations imposed by the charter upon their powers,* § 356 . Statutory Prohibition against Exercising Powers ' not Granted by Charter. — Where a statute prohibits a corporation from exercising any powers or doing any act except those granted to it by its charter, it is held in some states that contracts made or acts done in violation of such statute are void.® In other states, such a provision is not considered as rendering such unauthorized con- tracts or acts wholly void.® 1 Morris etc. R. R. Co. v. R. R. Ins. Co., 15 Johns.:383;8 Am.Dec. 243; Co., 20 N. J. Eq. 542. Bank v. Swayne, 8 Ohio, 257; 32 Am. 2 Taylor v. R. R. Co., L. R. 2 E.^. Deo. 707; Sherwood v. Alvis, 83 Ala. 379; In re Cork R. R. Co., L. R. 4Ch. 115; 3 Am. St. Rep. 695. App. 748; In re Hitchcock, 7 Ala., ■'' Workingmen's Banking Co. v. N. S., 386; Philadelphia Loan Co. v. Rautenberg, 103 111. 460; 42 Am. Rep. Towner, 13 Conn. 249; Whitney v. 26. Peay, 24 Ark. 22; Rutland R. R. Co. * Franklin Co. v. Lewiston Insti- V. Proctor, 29 Vt. 93; Ohio Life Ins. Co. tution for Savings, 68 Me. 43; 28 Am. V. Merchants' Ins. Co. , 11 Humph. 24; Rep. 9. 53 Am. Dec. 742; State Board v. R. R. " Ashbury R. R. Co. v. Riche, L. R. Co., 47 Ind. 411; Wood Mac. Co. u. 7 H. L. 653; Morris etc. R. R. Co. v. Caldwell, 54 Ind. 271; Bankw. Owens, R. R. Co., 20 N. J. Eq. 542. 2 Pet. 527; Martin v. Zellerbach, 38 "Whitney Arms Co. v. Barlow, 63- Cal. 300; 99 Am. Dec. 365; Crocker w. N. Y. 62; 20 Am. Rep. 504; Moss v.. Whitney, 71 N. Y. 161; People v. Utica Averell, 10 N. Y. 460, Vol. I. -40 §§ 357, 358 CORPORATIONS. 626 § 357. Prohibitions in Charter— If Intent of Legisla- ture was that Prohibited Act should be Void, Courts will so Hold. — Where it appears clear from the words of the charter that the legislature intended that a forbidden act or contract should be absolutely void, it will be so held by the courts.' Illustrations. — The charter of a bank prohibits it from charging interest in excess of a certain rate. A contract violat- ing this provision is void: Bank v. Owens, 2 Pet. 527; Bank v. Swayne, 8 Ohio, 257. A statute prohibits any banking corpora- tion from issuing or circulating any bill or note not payable on demand and without interest. A bill or note issued contrary to this enactment is void: Tracy v. Tallmage, 14 N. Y. 162; 67 Am. Dec. 132. A statute makes it unlawful for the agents of foreign insurance companies to transact business before procur- ing a certificate of authority from the state. A promissory note given to an insurance company which had not obtained the certificate is void : Cincinnati etc. Ass'n Co. v. Rosenthal, 55 111. 85; 8 Am. Rep. 626. § 358. Alitor where Prohibition is Merely for Benefit of Share-holders. — On the other hand, where the prohibi- tion in a charter appears to have been inserted for the benefit of the share-holders only, a contract or act in viola- tion of the prohibition, though uUravires, is not absolutely void, but may be executed and ratified by the corpora- tion." A statute prohibiting savings banks from loaning money on the security of names alone is directory to the trustees, and designed for the protection of the deposi- tors, and will not prevent a bank from enforcing payment of a promissory note, whether the purchase was or was not in conformity with its provisions.* Where property which a corporation, under certain circumstances, is au- thorized by its charter to acquire is purchased in a mode or for a purpose not authorized, the title of the corpora- 1 In re Comstock, 3 Saw. 218; Bank 98 U. S. 621; Thornton v. Bank, 71 V. Page, 6 Or. 431. Mo. 221; Mott v. V. S. Trust Co., 19 °- Hazlehurst v. R. R. Co., 43 Ga. Barb. 568. 13; Ayres v. Banking Co., L. R. 3 ' Farmington Savings Bank v. Fall, P. C. 548; National Bank v. Matthews, 71 Me. 49. 627 POWERS. §§ 35&-361 tion to the property cannot be defeated by a party who is a stranger to the agreement by which .the property was acquired, and who is not injured by the transfer.' A corporation which has been duly organized in pursuance of the laws of a state has the power to transact such business as its charter contemplates, although the entire amount of the capital stock as fixed by the charter has not yet been subscribed for or taken.'' § 359. Same — Formalities Prescribed by Charter. — Of provisions of the kind referred to in the last section are those in corporation charters or acts of incorporation prescribing certain formalities to be observed in corpo- rate acts. Acts done not in conformance with these pro- visions are not absolutely void.^ Illustrations. — The charter requires the contracts of the corporation to be executed in a certain form. Held, that it is liable upon its contracts made in a different form : Bvlkley v. Fishing Co., 2 Conn. 252; 7 Am. Dec. 271; Kilgore v. Bullcley, 14 Conn. 362. A by-law provided that contracts signed by the president and secretary should be binding. Held, that this did not exclude other modes of contracting: De Graff r. Ameri- can etc. Linen Co., 21 N. Y. 124. § 360. Acts of Majority of Corporators Bind Corpora- tion. — A majority of the members of a corporation may bind it, and the will of the majority is presumed to be the act of the whole, and binds the dissenting minority.'* § 361. But only where Act is Authorized by Charter. — But the majority can only bind the entire body within the limits of its powers, and therefore a corporation is not bound by a majority of its members, unless the act was authorized by the charter.^ The principle of this ' Ehnnan v. Union Central Life Ina. 383. But see Kinzie v. Trustees, 3 Co., 35 Ohio St. 324. HI. 187; 33 Am. Deo. 443. ^ Massey v. Citizens' Building etc. * -New Orleans etc. R. R. Co. v. Har- Ass'n, 22 Kan. 624. ris, 27 Miss. 537. ^Zabriskieii.R. R. Co.,23How. 381; * Burgess's Case, 31 L. J. Ch. 749; Bank o. Dandridge, 12 Wheat. 64; Nalush v. Irving, Gow on Partner- Steam Nav. Co. V. Weed, 17 Barb, ship; Ormsby v. Vermont etc. Co, §361 CORPORATIONS. 628 rule is, that when several persons enter into a contract, the terms of the contract cannot be altered, except with the consent of all. On this ground it has been held that a majority of the stockholders cannot accept an altera- tion of their charter, — even from the legislature, — but that the consent of every member is essential.^ Nor can the majority effect a consolidation with another corpora- tion.^ 56 N. Y. 623; Kean v. Johnson, 9 N. J. Eq. 407, where it is said: " As stockholders, they own the road in common, to be employed in speci6ed uses. Each owns a share in the whole, and is to have a proportionate share in itj profits. Tliey have invested a por- tion of their capital in it, and in it alone. They have a right ia the road and in every dollar it earns. The directors are their trustees to employ the joint capital in the management of the road, and the road only, to the end that from the investment the stockholders have chosen they may reap the con- templated profits. And this is the agreement of tho stockholders among themselves. They each contract with the other that their money shall be so employed. What the majority deter- mine within the scope of this mutual contract, they each agree to abide by; but thero their mutual contract ends, and no majority, however large, has a right to divert one cent of the joint capital to any purpose not consistent with, and growing out of, this original fundamental joint intention. To sell tho road, to abandon the contemplated investment and embark in another scheme, whether entirely different, or only more extensive than the original contemplation as apparent on the face of the charter, is, it seems to me, clearly contrary to the rights of the individual stockholders. If they had any right as partners or beneficiaries, it would seem to be this, that their money should be devoted to that use, and never employed in auy other, nor returned to them before they desire it. " • New Orleans etc. E.. 11. Co. v. Har- ris, 27 Miss. 517. ^ Mowery v. R. R. Co., 4 Biss. 78; Clearwater v. Meredith, 1 Wall. 25; Pearce v. R. R. Co., 21 How. 441j Stevens v. R. R. Co., 29 Vt. 565; New Orleans etc. R. R. Co. v. Har- ris, 27 Miss. 540; Tuttle v. R. R. Co., 35 Mich. 247. In Lauman v. R. R. Co., 30 Pa. St. 46, 72 Am. Dec. 685, the court said: "He [the dissenting stockholder] may object that it is a ■\-iolation of the contract of association by which he and his asso- ciates agree to become one corporate company for a given jjurpose; that he united in the association for one pur- pose, then agreed on, and now the majority are diverting their capital to a different purpose. This is a viola- tion of chartered contract, — not the supposed one between the government and the corporators, but the one be- tween the corporators themselves. He may object that his co-corporators have no power to make a new contract for him, and thereby constitute him a member of a new aud different corpo- ration; for it i3 of the very nature of a contract relation that it can be insti- tuted only by the real parties to it, unless it bo a mere constructive con- tract, which is only a convenient form or fiction of law, invented to enforce a corresponding legal duty. He may object that even the legislature can- not authorize this, for by doing so, they would authorize the destructiott of one private contract, and the com- pulsory creation of another in its stead, and would take away the remedy by due course of law, which the dissent- ing stockholder is entitled to, because of the departure or diversion of tho association from its agreed purposes; and would, besides this, change the essential nature of contracts, which even legislative power cannot do, and much less legislative authority. He may object that, though in corporate action, after the corporation is consti- 629 powEES. §§ 362, 363 § 362. Contract Ultra Vires may be Avoided if Unexe- cuted. — A contract ultra vires — that is to say, outside of and not authorized by its charter — may be avoided by either party so long as it remains unexecuted.^ Courts will not compel a corporation to perform a contract ultra vires? Nor will they enforce specific performance of a contract ultra vires at the suit of the corporation.' § 363. Defense of Ultra Vires— Not Good against Per- son without Notice. — That the corporation had no au- thority to make a contract cannot be set up by the corpo- ration as a defense against a person who had no notice of such want of authority.'* Illusteations. — A company, supposing itself to be incorpo- rated, issued paper in its corporate name, but afterwards find- ing that it was not properly organized, it dissolved, and was legally incorporated under a difierent name. Held, that it could not repudiate its paper: Empire Mfg. Co. v. Stuart, 46 Mich. 482. A corporation was authorized to issue bonds secured by mortgage to the amount of two thirds of its capital paid in, and it issued bonds to an amount less than two thirds tuted, and its province defined, the de- only so, but on the application of a tails of its business and the making of stockholder, or of any other person its contracts must necessarily be un- authorized to make the application, a der the control of a majority; yet it is court of chancery would interfere and of the nature of things that, in the act forbid the execution of a contract of constituting the corporation, and of ultra vires. So, too, if a contract ultra taking stock, each man must act for vires is made between a corporation himself, and therefore that he cannot, and another person, and while it is by a vote of a corporate majority of yet wholly unexecuted the corpora- the Lebanon Company, and against tion recedes, the other contracting his consent, be constituted a member party would probably have no claim of the Reading Company." for damages." • Bradley v. Ballard, 55 111. 413, ^ Hitchcock v. Galveston, 96 U. S. 8 Am. Rep. 656, the court saying: 341; Bank v. Niles, Walk. Ch. 99; "This doctrine [of estoppel] is applied New York etc. R. R. Co. v. Schuyler, only for the purpose of compelling 34 N. Y. 30. corporations to be honest, in the sim- ' Bank v. Niles, 1 Doug. (Mich.) plest and commonest sense of honesty, 401; 41 Am. Dee. 575; Nassau Bank and after whatever mischief may be- v. Jones, 95 N. Y. 115. long to the performance of an act ultra * Safford v. Wyckoff, 4 Hill, 442; ■vires has been accomplished. But Stoney v. Am. Life Ins. Co. , 1 1 Paige, while a contract remains executory, it 635; Bradley v. Ballard, 55 111. 413; 8 is perfectly true that the powers of Am. Rep. 656; Manufacturing Co. v. corporations cannot be extended be- Canney, 54 N. H. 296; Page v. R. R. yond their proper limits, for the pur- Co., 31 Fed. Rep. 257. pose of enforcing a contract. Not §§ 364, 365 CORPORATIONS. 630 of its authorized capital, but much more than the amourrt paid in. Held, that the bonds were enforceable in the hands of bona fide holders: Hackensack Water Co. v. De Kay, 36 N. J. Eq. 648. § 364. Transfers of Property Valid though Ultra Vires. — Transfers of property — real or personal — by or to a corporation will be recognized as valid, even though the transfer may have been beyond the power or ultra vires the corporation.' § 365. Executed Contracts Valid though Ultra Vires. — And where the contract has been performed or par- tially performed by either of the parties, the other cannot set up as a defense to an action that the corporation had no authority to eater into it.^ A corporation which has ' Shewalter v. Pirner, 55 Mo. 218; Runyan v. Coster, 14 Pet. 122; Cow- ell V. Springs Co., 100 U. S. 55; Na- tional Bankw. Matthews, 98 U. S. 621; Barrow v. Nashville etc. Co., 9 Humph. 304; Chicago etc. B. E. Co. v. Lewis, 53 Iowa, 101; Leazu^e^J. Hillegas, 7 Serg. & R. 313; Groundie v. Northampton Water Co., 7 Pa. St. 233; Grant v. Henry Clay Co., 80 Pa. St. 218; Kelly V. Transportation Co., 3 Or. 189; R. R. Co. V. Howard, 7 Wall. 393; Natoma Water Co. v. Clarkin, 14 Cal. 552; Miner's Ditch Co. v. Zellerbach, 37 Cal. 544; 99 Am. Dec. 300; Edwards u. Fairbanks, 27 La. Ann. 449; Parish V. Wheeler, 22 N. Y. 494; National Banki). Porter, 125 Mass. 333; 28 Am. Rep. 235; Hough «. Cook Co. Land Co., 73 111. 23; 24 Am. Rep. 230. 2 Morawetz on Corporations, sec. 100; Hitchcock v. Galveston, 96 U. S. 3il; Steam Nav. Co. v. Weed, 17 Barb. 378; Arnot v. R. R. Co., 67 N. Y. 319; State Board v. R. R. Co., 47 Ind. 407; 17 Am. Rep. 702; Newburg Petroleum Co. v. Weare, 27 Ohio St. 343; Merchants' Bank v. Cen- tral Bank, 1 Ga. 418; 44 Am. Dec. 665; Gerraantown Mutual Ins. Co. v. Dhein, 43 Wis. 420; 28 Am. Rep. 549; Wright v. Pipe Line Co., 101 Pa. St, 204; 47 Am. Rep. 701; San Fran- cisco Gas Co. V. San Francisco, 9 Cal. 453; American Union Tel. Co. v. R. R. Co., 1 MoCrary, 188. In Whitney Arms Co. v. Barlow, 63 N. Y. 62, 20 Am. Rep. 504, a com- pany chartered to manufacture fire- arms entered into a contract to make railroad locks. Having made and de- livered a large number of them, it was held that it could recover the contract price. Said the court: "It must be conceded that the manufacturing and vending of 'railroad locks' is not within the purposes for which the plaintiff was incorporated, or within the powers conferred by its charter. Neither is such business incidental to the purposes of the incorporation, or in any way necessary to, or, as far as appears, even an aid in, the exercise of the powers conferred upon the plain- tiff by its constitution, so that it could be regarded as among the im- plied powers granted by the legisla- ture, and assumed by the corporators. Did the question now made arise upon an application by the stockholders and corporators, to restrain the corporate agents from applying the corporate funds to purposes foreign to the cor- poration, or engaging in business out- side of that for which the company was formed, or on proceedings by the sovereign power to annul the charter for an abuse of the powers granted, or in a proceeding to enforce and for the performance of an executory con- 631 POWERS. §365 had the benefit of another's bona fide performance of a contract cannot avail itself of the defense of ultra vires tract, where, upoa a rescission or an- nulling the agreement, both parties ■would have the same position as if no contract had been made, the rules of decision would be diflferent from those which must prevail in the present ac- tion. In either of the cases suggested, it is very likely the courts would be compelled to give full effect to the ob- jection, and hold the business unau- thorized, and a violation of the char- ter, and a forfeiture of the chartered rights, and the contract null, and re- fuse to perform it or give effect to it. The manufacture of the locks, or con- tract to sell them to the Seal Lock Company, were not acts immoral in themselves, or forbidden by any stat- ute, neither mala in, sese or mala pro- hibita, so as to make the contract il- legal and incapable of being the foundation of an action, — such a con- tract as the law will not recognize or enforce; but applying the maxim, Ex facto illicito non oritur actio, leave the parties as it finds them. When acts of corporations are spoken of as ultra vires, it is not intended that they are unlawful, or even such as the corpo- ration cannot perform, but merely those which are not within the powers conferred upon the corporation by the act of its creation, and are in violation of the trust reposed in the managing board by the share-holders, that the affairs shall be managed, and the funds applied solely, for carrying out the ob- jects for which the corporation was created: Earl of Shrewsbury v. North Staffordshire R. Co., L. R. 1 Eq. 593; Taylor v. Chichester and Mid- hurst 11. Co., L. R. 2 Ex. 356; Bissell V. Michigan C. R. Co., 22 N. Y. 258. Whether the contract as originally made was ultra vires is not a very im- portant inquiry at this time. If it was, the state under whose sovereign- ty it dwells, and by whose act and favor it exists, has no interest in ar- resting its action for the recovery of moneys equitably due upon a contract fully exeou ted, and a work fully accom- plished, whatever may be its right to annul its charter. The share-holders whose confidence has been abused, and whose funds have been diverted from their proper use, have a direct inter- est in reclaiming and restoring to proper custody, and applying to legiti- mate uses, the funds which have been diverted and improperly used for pur- poses dehors the legitimate business of the corporation. The plea of ultra vires should not, as a general rule, pre- vail, whether interposed for or against a corporation, when it would not ad- vance justice, but on the contrary would accomplish a legal wrong. Here, as between two corporations, the debtor and creditor corporation, the contract has been fully performed by the creditor, the plaintiff in this ac- tion, and the Seal Lock Company has received the full consideration of its promise to pay. The plaintiff has parted with its property to the latter corporation, and unless a legal liabil- ity exists on the part of the latter to pay, the plaintiff can neither reclaim the property or recover compensation, and under this technical plea a great wrong will be perpetrated. A pur- chaser who acquired by contract, and under an agreement to pay for it, the property of a corporation, cannot de- feat the claim for the purchase price by impeaching the right of the corpo- ration to become the owner of the property. One who has received from a corporation the full consideration of his engagement to pay money, either in services or property, cannot avail himself of the objection that the con- tract thus fully performed by the cor- poration was ultra vires, or not within its chartered privileges and powers. It would be contrary to the first prin- ciples <'f equity to allow such a defense to prevail in an action by the corpora- tion. It is now very well settled that a corporation cannot avail itself of the defense of ultra vires when the con- tract has been in good faith fully per- formed by the other party, and the corporation has had the full benefit of the performance and of the contract. If an action cannot be brought directly upon the agreement, either equity will grant relief or an action in some other form will prevail. The same rule holds e converso. If the other party has had the benefit of a. contract fully p3r- § 3G5 coRPcmATiONS. 632 against a decree for specific performance.^ A railroad corporation which, ultra vires, has taken a lease, and oc- cupied under it, cannot, when sued for the rent, set up its want of power to take the lease." A fire insurance com- pany having insured against hail, which it was not au- thorized to do, the insured having performed his part of the contract, and the company, having accepted the bene- fit, is estopped to set up its want of power to issue such a policy.^ One who has given a mortgage to a corporation from which he has received a loan is estopped to deny, in a suit to foreclose, that it had authority to make the loan.^ Where the payment of bonds issued by one company is guaranteed by another company, and the guaranty is partly performed, the former company cannot avoid a mortgage executed to indemnify the latter on the ground that the guaranty was ultra vires, at least so far as the actual payments were concerned.^ A corporation which without legal authority has discounted commercial paper may recover the money loaned, although the securities are void.* A recovery may be had for work and labor in engraving bills for a corporation, although the corpo- ration is prohibited by law from engaging in the business of banking.'' It cannot resist an action to recover money loaned to it, upon the ground that the money was bor- rowed and expended in a business beyond the corporate powers.^ It is bound by its note in the hands of an inno- cent holder for value, although in executing it the corpo- formed by the corporation, he will not ^ Denver Ins. Co. v. McClellan, 9 be heard to object that the contract Col. 11; 59 Am. Rep. 135. and ]joriormanoe were not within the * Pancoast v. Travelers' Ins. Co., 79 legitimate powers of the corporation. Ind. 172. Ex parte Chippendale, 4 De Gex, M. ^ Macon etc. R. R. Co. v. R. R. Co., & G. 19; lu re National P. B. Build. 63 Ga. 103. Soc, L. R. 5 Ch. App. 309; In re Cork " Pratt v. Short, 79 N. Y. 437; 35 etc. R. C, L. R. 4 Ch. App. 748; Am. Rep. 531. Fishmongers' Co. v. Robertson, 5 ' Underwood v. Newport Lyceum, JIcCt. 131." 5 B. Mon. 129; 41 Am. Deo. 260. 1 People's Gas Light and Coke Co. v. » Bradley v. Ballard, 55 111. 413; 8 Gas Light etc. Co., 20 lU. App. 473. Am. Rep. 656; Conn. River Savings ■^ Camden etc. R. R. Co. v. R. R. Bank v. Fiske, 60 N. H. 363. Co., 48 N. J. L. 530. 633 POWERS. §§ 366, 367 ration exceeded the amount of uadeTstedness which it was authorized to incur.' § 366. Contracts not Enforceable because Ultra Vires — Benefits Received Recoverable. — Where the contract can- not be enforced because it is ultra vires, the benefits which either party has received under the contract the courts will require to be repaid to the other.^ A corporation cannot retain property acquired under a transaction ultra vires, and at the same time repudiate its obligations under the same transaction.' It cannot retain money borrowed, and plead ultra vires to a suit for its recovery.'' An officer of a corporation, sued by the corporation for unlawfully converting stock purchased by him for the corporation, cannot plead ultra vires in defense.' Illustrations. — A company incorporated to do business as a common carrier made a contract with defendant to buy a quantity of grain. Held, that the contract was ultra tires, and that therefore plaintiff could maintain no action for non-delivery of the grain, but that it could recover back the part of the purchase-money already paid: Northwestern Union Packet Co. V. Shaw, 37 Wis. 655; 19 Am. Rep. 781. § 367. Corporations Liable for Torts. — Though at one time the courts held that a corporation could not commit a tort,® this doctrine is obsolete, and it is now the settled law that a corporation is liable for the torts of its agents to the same extent as an individual,' and the doctrine of ' Auerbaoh v. he Sueur Mill Co., 28 * St. Louis Stoneware Co. v. Par- Minn. 291; 41 Am. Rep. 285. tridge, S Mo. App. 217. ^ Brioe's Ultra Vires, 2d ed., 769; « See Orr v. Bank, 1 Ohio, 36; 13 Hardy v. Land Co., L. R. 7 Ch. 427; Am. Deo. 588. Li re Phoenix Life Ass. Co., 2 Johns. ' Main v. R. R. Co., 12 Rich. 82; 75 & H. 441; Humphrey v. Patrons' Am. Dec. 725; Whitemanr. R. R. Co.. Ass'n, 50 Iowa, 607; In re German 2 Harr. (Del.) 514; 33 Am. Dec. 411; Mining Co., 4 De G-ex, M. & G. 19; Underwood v. Newport Lyceum, 5 In re Electric Tel. Co., 29 Beav. 353; B. Mou. 129; 41 Am. Dec. 260; Meares In re Cork etc. R. R. Co., L. R. 4 Ch. v. Commissioners of Wilmington, 9 760; New Castle R. R. Co. w. Simpson, Ired. 73; 49 Am. Dec. 412; Walling 23 Fed. Rep. 214. v. Mayor, 5 La. Ann. 660; 52 Am. '^ -Memphis etc. R. R. Co. v. Dow, Dec. 608; Raymond v. City of Lowell, 19 Fed. Rep. 388. 6 Cush. 524; 53 Am. Deo. 57; Atlantic * Millard v. St. Francis Xavier Fe- etc. R. R. Co. v. Dunn, 1 j Ohio St. 162; male Academy, 8 lU. App. 341. 2 Am. Kep. 382; Alexander v. Relfe, 367 CORPORATIONS. 634 ultra vires has no application in favor of corporations for wrongs committed by them/ Therefore a corporation is liable for the deceit or false representations of its agents;^ for assault and battery;' for the damages caused by the wrongful canceling of a certificate of its stock by its president and secretary;^ for libel or slander;^ for the tort of its agent in refusing to deliver chattels to their owner;" 74 Mo. 495 ; Moore v. R. R. Co. , 4 Gray, 465; 64 Am. Dec. 83; Jones v. R. R. Co., 27 Vt. 399; 65 Am. Dec. 207; First Nat. Bank v. Graham, 100 U. S. 699, Mr. Justice Swayne saying: "Corpora- tions are liable for every wrong they commit, and in such cases the doctrine of vltra vires has no application. They are also liable for the acts of their servants while such servants are en- gaged in the business of their princi- pal, in the same manner and to the same extent that individuals are liable under like circumstances: Merchants' Bank v. State Bank, 10 Wall. 604. An action may be maintained against a corporation for its malicious or neg- ligent torts, however foreign they may bo to the object of its creation or be- yond its granted powers. It may be sued for assault and battery, for fraud and deceit, for false imprisonment, for malicious prosecution, for nuisance, and for libel. In certain cases it may be indicted for misfeasance or non- feasance, touching duties imposed upon it in which the public are inter- ested. Its offenses may be such as will forfeit its existence: R. R. Co. v. Quigley, 21 How. 209; 2 Wait on Ac- tions and Defenses, pp. 337-339; An- gell and Ames on Corporations, sees. 186, 385; Cooley on Torts, pp. 119, 120." ' National Bank v. Graham, 100 U. S. 699. 2 Peebles v. Patapsco Co., 77 N. C. 233; 24 Am. Rep. 447; New York etc. R. K. Co. V. Schuyler, 34N.Y. 30; Fogg V. Griffin, 2 Allen, 1; Butler v. Wat- kins, 13 Wall. 456. But not unless it has authorized them, or there is proof of bad faith, or absence of reasonable grounds of belief: Houston etc. R. R. Co. V. McKmney, 55 Tex. 176; Erie City Iron Works v. Barber, 106 Pa. St. 125; 51 Am. Rep. 508. 'Philadelphia etc. R. R. Co. v. Derby, 14 How. 468; Hewitt v. Swift, 3 Allen, 420; Ramsden v. R. R. Co., 104 Mass. 117; 6 Am. Rep. 200; Chi- cago etc. R. R. Co. V. Williams, 55 111. 185; 8 Am. Rep. 641; St. Louis etc. R. R. Co. V. Dalby, 19 111. 353; Pennsylvania R. R. Co. v. Vandiver, 42 Pa. St. 365; 82 Am. Dec. 520. * Factors' etc. Ins. Co. v. Marine Dry Dock etc. Co., 31 La. Ann. 149. " Howe Co. v. Souder, 58 Ga. 64; Aldrich v. Press Co., 9 Minn. 133; 86 Am. Deo. 84; Hewitt v. Pioneer Press Co., 23 Minn. 178; 23 Am. Rep. 680; Vinas v. Merchants' Ins. Co., 27 La. Ann. 367; Johnson w. St. Louis etc. Co., 2 Mo. App. 565; 65 Mo. 539; 27 Am. Rep. 293; Daily Post Co. v. McArthur, 16 Mich. 447; Philadelphia etc. R. R. Co. V. Quigley, 21 How. 202; Tench v. R. R. Co., 33 CJ. C. Q. B. 8; Maynardv. Fireman's Ins. Co., 34 Cal. 48; 91 Am. Dec. 672; McDermotty. Evening Jour- nal, 43 N. J. L. 488. Aitler where it is not in the course of the duty of the agent who published it, and is not authorized or ratified by the corpora- tion: Southern Express Co. v. Fitzner, 59 Miss. 581; 42 Am. Rep. 379. One corporation may maintain an action against another which slanders its business and represents its product to be of inferior quality: Buffalo Lubri- cating Oil Co. V. Standard Oil Co., 42 Hun, 153. An allegation that the presi- dent of a corporation interfered with plaintiff 's trade and calling as a mer- chant, by telling others that he had no right to sell his goods, etc. , does not state a cause of action against the cor- poration: Perkins v. Maysville Dis- trict Camp-Meeting Association, Ky., 1888. * Sherman v. Commercial Printing Co., 29 Mo. App. 31. 635 POVTEES. §§ 368, 369 for malicious prosecution and false imprisonment;^ or for a trespass.^ § 368. Corporation Liable for Torts Committed in Ultra Vires Transaction. — A corporation is liable for a tort com- mitted by it while acting in or carrying on an under- taking or business or doing any act beyond its chartered powers.' § 369. De Facto Corporation —Validity of Acts of. — The validity of corporate acts performed by an associa- tion which is not legally incorporated is governed by the same rules as the validity of corporate acts, performed by a lawfully incorporated company beyond its charter powers.* A de facto corporation is estopped to deny its existence as to those who deal with it, but this does not preclude proof of the subsequent cessation of its corporate functions.* As in the case of an incorporated company, contracts en- tered into by a corporation de facto are binding if exe- ' Goodspeed v. East Haddam Bank, 22 Conn. 530; 58 Am. Dec. 439; Cofly v. Grover, 2 Woods, 494; Carter v. Howe, 51 Md. 290; 34 Am. Rep. 311; Iron Mountain Bank v. Mercantile Bank, 4 Mo. App. 605; Williams v. Planters' Ins. Co , 57 Miss. 759; 34 Am. Rep. 494; Wheless v. Nat. Bank, 57 Tenn. 469; 25 Am. Rep. 783; Vance v. R. R. Co., 32 N. J. L. 334; 90 Am. Dec. 665; Fenton?). Wilson Sewing Machine Co., 9 Phila. 189; Reed v. Home Savings Bank, 130 Mass. 443; 39 Am. Rep. 469; Jordan v. R. R. Co., 74 Ala. 85; 49 Am. Rep. 800; Ricord v. R. R. Co., 15 Nev. 167; American Ex. Co. V. Patterson, 73 Ind. 430; Wheeler and Wilson Mfg. Co. v. Boyce, 36 Kan. 350; 59 Am. Rep. 571; Hussey v. R. R. Co., 98 N. C. 34; 2 Am. St. Rep. 312. See Gillett v. R. R. Co., 55 Mo. 315; 17 Am. Rep. 653, overruled in Boogher v. Life Ass'n, 75 Mo. 319; 42 Am. Rep. 413. A corporation which ratifies or accepts the unauthorized malicious acts of its agents is lia- ble ia exemplary damages: Galves- ton etc. R. R. Co. V. Donahoe, 56 Tex. 162. In Maryland, where a criminal prosecution for embezzlement was set in motion by an employee or the corporation, it was held that, to render the corporation liable, express authority or ratification and adoption by the corporation must be shown: Carter v. Howe Machine Co., 51 Md. 290; 34 Am. Rep. 311. 2 Riddle v. Proprietors, 7 Mass. 169; 5 Am. Dec. 35; Chestnut Hill Co. v. Rutter, 4 Serg. & R. 6; 8 Am. Dec. 675; Main v. R, K Co., 12 Rich. 82; 75 Am. Dec. 725; Brokaw v. R. R. Co., 32 N. J. L. 328; 90 Am. Deo. 659. * New York etc. R. R. Co. v. Haring, 47 N. J. L. 137; 54 Am. Rep. 123; Buf- iettv. R. R. Co., 40 N. Y. 168; Hutch- inson «. R. R. Co., 53 Tenn. 634; Bird- sell V. R. R. Co., 22 N. Y. 2.^8; Central R. R. Co. V. Smith, 76 Ala. 572; 25 Am. Rep. 353; Tinsman v. R. R. Co., 26 N. J. L. 148; 69 Am. Dec. 565. ' Morawetz on Corporations, sec. 136. ^ Dobson V. Simouton, 86 N. C. 492. § 370 CORPORATIONS. 636 cuted.' And the same rule applies to transfers of property made by or to a corporation de facto? Illustrations. — Certain persons drew up and signed articles of incorporation of a cattle company, and before they were filed for record, and before the time fixed for the commencement of the business of the corporation, they selected a president, who, in their presence and with their approval, executed and deliv- ered to M. a note, in consideration of certain property for the corporation, which after the organization was perfected, and after the time fixed for the commencement of its business came into its possession and ownership, and was used and enjoyed by it. Held, that M.'s indorsee could recover on the note against the corporation: Paxton Cattle Co. v. Bank, 21 Neb. 621; 59 Am. Rep. 852. § 370. Charter Obtained by Fraud — Misuser or Non- user — No Defense in Collateral Proceeding. — "It cannot be shown in defense to a suit by a corporation that the charter was obtained by fraud. Neither can it be shown that the charter has been forfeited for misuser or non- user. Advantage can only be taken of such forfeiture by process on behalf of the state, instituted directly against the corporation for the purpose of avoiding its charter, and individuals cannot avail themselves of it in collateral suits until it be judicially declared." ' Nor can the validity 1 Palmer v. Lawrence, 3 Sand. 161; v. Hills, 6 Cow. 23; 16 Am. Dec. 429; Platte Valley Bank w. Hafding, 1 Penobscot Boom Co. v. Lainson, 16 Neb. 461; Douglas Co. v. Bolles, 94 Me. 224; 33 Am. Dec. 656; Mickles w. U. S. 104; Aller v. Cameron, 3 Dill. Rochester Bank, 11 Paige, 118; 42 198; Dooley v. Chester Glass Co., 15 Am. Dec. 103; Cahill v. Ins. Co., 2 Gray, 494; Ohio etc. R. R. Co. v. Mc- Doug. (Mich.) 124; 43 Am. Dec. 457; Pherson, 35 Mo. 13; 86 Am. Deo. 128. Jones v. Bank, 8 B. Mon. 122; 46 Am. 2 Smith V. Sheeley, 12 Wall. 385; Dec. 540; Connecticut etc. R. R. Co. «. Snyder v. Studebaker, 19 Ind. 462; 81 Bailey, 24 Vt. 465; 58 Am. Deo. 181 j Am. Deo. 415; Case v. Benedict, 9 Southern Ins. Co. i). Lanier, 5 Fla. 110; Cush. 540; West Winsted Bank v. 58 Am. Deo. 448; Butchers' etc. Bank Ford, 27 Cona. 282; 71 Am. Dec. 66; v. McDonald, 130 Mass. 264; Hacken- Palmer v. Lawrence, 3 Sand. 161; sack Water Co. v. De Kay, 36 N. J. Thompson v. Candor, 60 111. 244; Eq. 548; Turnpike Co. v. McCarty, 8 Dooley v. Wolcott, 4 Allen, 406. Ind. 392; 65 Am. Dec. 768; TaggarttJ. 2 Kayser v. Bremen, 16 Mo. 90; R. R. Co., 24 Md. 563; 89 Am. Deo. County of Macon v. Shores, 97 U. S. 760. The state may complain if a cor- 277; Pattison v. Building Aas'n, 63 poration violates its charter, but a Ga. 373; Minor v. Mechaidcs' Bank, 1 third party cannot, unless he is spe- Pet. 66; Chester Glass Co. v. Dewey, cially damaged: Belcher Sugar Refin- 16 Mass. 94; 8 Am. Deo. 129; Trustees ing Co. v. St. Louis Grain Elevator 637 POWERS. § 371 of the incorporation be impeached by proving, aliunde the certificate of incorporation, that certain prerequisites of the law have not been complied with;^ nor by irregular- ities in adopting its by-laws or electing its officers.^ The validity of the articles of incorporation of an association cannot be inquired into collaterally;^ and thus the own- nership of a wagon-road claimed by a corporation can- not be inquired into in a proceeding by a third party to compel the county authorities to fix rates of toll.* No party except the state can object that a corporation is holding real estate in excess of its rights.^ Until the statutory requirements to organize a corporation have been complied with, a subscriber to the articles of asso- ciation is not estopped to deny the existence of the corpo- ration.* Illustrations. — A corporation, authorized to receive grants of land for its purposes, brings suit against a trespasser to re- cover possession of lands granted to it. Held, that the tres- passer will not be heard to question its title on the ground that it had no authority to take them: Southern Pacific R. R. Co. v. Orton, 6 Saw. 157. Th^re was a law authorizing the formation of railroad companies, under which articles of association were prepared and filed with the secretary of state, who issued the certificate provided for. There was a user of the franchise purporting to be invested with the association, and the road was built and used under this authority. Held, that the association became a de facto corporation, and neither the eligibility of the directors, nor the rightfulness of the existence of the corpora- tion, could be questioned collaterally in a suit by the company: Cincinnati etc. R. R. Co. v. R. R. Co., 75 111. 113. § 371. Corporation must be in Existence, either de Jure or de Facto. — But a corporation must be in existence Co., 10 Mo. App. 401. Judgment ^ Keene v. Van Reuth, 48 Md. 184; obtained against corporation as such Swartwout v. R. R. Co., 24 Mich, estops party from afterwards denying 389. its corporate existence: Pochelu v. * Weaverville etc. Wagon Road Co. Kemper, 14 La. Ann. 308; 74 Am. v. Trinity County Supervisors, 64 Cal. Dec. 433. 69. ' Laflin and Rand Powder Co. ■«. Sins- ^Alexander?;. Tollestou Club, 110 heimer, 46 Md. 315; 24 Am. Rep. 522. 111. 65. " Ginrich v. Patrons' Mill Co., 2] * Indianapolis etc. Mining Co. v. Kan. 61. Herkimer, 46 Ind. 142. §§ 372, 373 CORPORATIONS. 638 either de jure or de facto. In an action upon a contract brought by a corporation, the defendant may always deny the existence of the corporation.^ A contract with a cor- poration does not estop the party making it to dispute its existence, if there be no law which authorized the sup- posed corporation, or if the statute authorizing it be un- constitutional and void.^ § 372. Proof of Existence of Corporation. — In order to establish the existence of a corporation, it is, as a rule, necessary to show the adoption of a charter or articles of association, and that the corporation has held itself out to the world as such.' The mere acting as a corporation for any length of time is not sufficient. If the law provides that a corporation may be formed upon a subsequent compliance with prescribed regulations and forms, some of those regulations and forms must have been observed, although others have been omitted.* The fact that a per- son has entered into a contract with a corporation, as such, is prima facie evidence that it is a corporation de facto at least.^ A corporation in suing need not aver how it was incorporated.* That the corporation is mis-named in a contract is not material, if its identity can be estab- lished.^ § 373. Powers of Corporation are only Those Given by Charter. — The powers of a corporation are those and those only which expressly or impliedly are given to it by its charter or act of incorporation. Whatever acts are not so authorized are prohibited. "The charter of a corpora- ' Morawetz on Corporations, sec. Jones v. Type Foundry, 14 Ind. 90; 138. Dutchess Mfg. Co. ■». Davis, 14 Johns. 2 Snyder v. Studebaker, 19 Ind. 462; 238; 7 Am. Deo. 459; Cahill v. Kala- 81 Am. Dec. 415. mazoo Ins. Co., 2 Doug. (Mich.) 124; ^MorawetzonCorporations, sec. 139. 43 Am. Dec. 457. * De Witt V. Hastings, 40 N. Y. « Bank v. Smalley, 2 Cow. 770; 14 Super. Ct. 463; Abbott v. Omaha Am. Deo. 526. Smelting Co., 4 Neb. 416. ' Berks etc. Road Co. v. Myers, 6 s WiUiama v. Cheney, 3 Gray, 215; Serg. & E. 12; 9 Am. Dec. 402. 639 POWERS. § 374 tion is the measure of its powers, and tbe enumeration of these powers implies the-exclusion of all others,"^ § 374. Or Implied from Nature of Business, — In addi- tion to the powers given in the charter, all powers neces- sary for the carrying out of those express powers are impliedly given, and the courts are liberal in construing charters so as to include them.^ The right to construct and to own boats includes the right to employ or navigate them;* to manufacture and sell musical instruments gives authority to purchase of an agent a note which he had acquired by the sale of an article manufactured by the corporation;^ to make all contracts necessary for the erec- tion of a specified building gives power to accept an order in favor of a material-man, drawn by the contractor, and payable from the money due the latter by the corpora- tion.^ A turnpike company has a right to take and hold under lease premises necessary for storing implements used in road repairs and for sheltering its servants.® A power to carry on an iron furnace confers the power to keep a "supply store" connected therewith.'' An associa- tion formed to promote municipal reform may expend its money in any way calculated to promote its object.^ Au- thority to construct and maintain a railroad, to make » Thomas v. R. R. Co., 101 U. S. Colony R.R. Co. «. Evana, 6 Gray, 38; 82; Dartmouth College v. Woodward, 66 Am. Deo. 394; Union Bank v. Ja- 4 Wheat. 6.S6; Perrine t'. Canal Co., 9 cobs, 6 Humph. 525; Ohio Life Ins. How. 184; Bellmeyer J). School District, Co. v. Merchants' Ins. Co., 11 Humph. 44 Iowa, 564; Metropolitan Bank v. 22; 53 Am. Deo. 742; Clark ti. Farring- Godfrey, 23 III. 579; Weckler v. First ton, 11 Wis. 333; Willmarth v. Craw- Nat. Bank, 42 Md. 581; 20 Am. Rep. ford, 10 Wend. 342; Dana v. Bank, 4 95; Matthews v. Skinker, 62 Mo. 329; Minn. 385; St. Louis i;. Weber, 44 Mo. 21 Am. Rep. 425; Overmyer v. Wil- 547; State v. Noyes, 47 Me. 189. liams, 15 Ohio, 31; Com. v. R. R. Co., ^ Bridgef ord «. Hall, 18La. Ann. 211. 27 Pa. St. 339; Brooklyn Gravel Co. v. * Western Cottage Organ Co. v. Slaughter, 33 Ind. 185; City Council Reddish, 51 Iowa, 55. V. Plank Road Co., 31 Ala. 76; Van- ^ Prairie Lodge Trustees v. Smith, dall V. South San Francisco Dock Co., 58 Miss. 301. 40 Cal. 83; Beach v. Fulton Bank, 3 « Crawford u. Longstreet, 43 N. J. L. Wend. 583. 325. '' AAHiitewater Valley Canal Co. v. ' Searight v. Payne, 6 Lea, 283. Vallette, 21 How. 424; Barry v. Mer- « Ingham v. Reform Club, 12 Phila. chaata' Ex. Co., 1 Sand. Ch, 289; Old 264. § 374 CORPORATIONS. 640 contracts, and "to do all acts needful to carry into effect the objects for which it was created," gives power to make contracts for transportation for a fixed future period.^ A corporation organized to manufacture a certain article may assume the filling of a contract made with another for the same article.'' Although the charter of a corporation may not, in terms, authorize the company to incur ex- pense, on account of injury received by their employees, yet they may, in exercising such franchises, incur such liability.^ The fact that the articles of incorporation of an institution did not authorize it to raise an endowment fund, was not a prohibition against raising such fund.* A corporation having the right to mine, in organizing another corporation for mining purposes, or in dealing in the stock of such corporation, acts without the scope of its powers. ° Illustrations. — A rai'-oad, which extended from Lake Michigan to the Mississippi Eiver, was authorized to make "such contracts as the management of its railroad and the convenience and interests of the corporation might require," and "to build and run as a part of its corporate property such number of steamboats as they may deem necessary," and "to accept from any other state and use any powers or privileges .... applicable to the carrying of persons and property by railway or steamboat." Held, to have the power to employ steamboats belonging to others to carry passengers and freight in connection with its own road: Green Bay etc. R. R. Co. v. Union Steamboat Co., 107 U. S. 98. The charter of a corpora- tion authorized it to purchase and hold, "in fee-simple or other- wise," real and personal estate to the amount of fifty thousand dollars, which was increased by subsequent statutes to six hun- dred thousand dollars; and provided that it might appropriate its funds to charitable purposes, and that its annual income should be employed, among other purposes, "to promote inven- tions and improvements in the mechanic arts, by granting - Cleveland etc. R. R. Co. v. Himrod rigues, 47 111. 188; 95 Am. Dec. Furnace Co., 37 Ohio St. 321; 41 Am. 484. Rep. 509. ' Simpson Centenary College v. '' Louis Cook Mfg. Co. u. Randall, 62 Bryan, 50 Iowa, 293. Iowa, 244. * McMillan v. Carson Hill Union Toledo etc. R. R. Co. v. Rod- Mining Co , 12 Phila. 404. 641 POWERS. §§ 375, 376 premiums for said inventions and improvements." Neither the charter nor the subsequent statutes directed the manner in which the provisions for granting these premiums should be car- ried out. Held, that it might purchase land and erect a per- manent building thereon, in which to hold exhibitions and its meetings: Richardson v. Massachusetts Charitable etc. Ass'n, 131 Mass. 174. § 375. Grants of Special Privileges to Corporations Strictly Construed. — On the other hand, grants of special privileges are strictly construed by the courts. Where the corporation claims by virtue of its charter the right to do things which the citizen cannot do, or an exemption from duties to which the citizen is subject, nothing will be presumed in its favor. The proof is on the corpora- tion, and every doubt is construed against the corporation.^ One clause of a charter is not to be construed in as large a sense as to silence other clauses, where, without violence to the language, a construction can be given which will make all harmonize.^ Ambiguous words are to be con- strued most strongly against the corporation.' Mere general words in a charter do not authorize the corpora- tion to do acts which are prohibited by the general public law of the state.^ Doubtful expressions in a statute con- ferring franchises are construed to the benefit of the pub- lic rather than to that of the corporation.^ A legislative intent, upon change or reorganization of a corporation, to absolve it from existing liabilities cannot be inferred.*' § 376. What are Franchises. — A franchise is a right or privilege granted by law. The ordinary franchise granted to a corporation is the right or privilege of acting ' Fertilizing Co. v. Hyde Park, 97 ' Mcintosh v. Merchants' Co., 9 La. U. S. 666; State v. Commissioners, 23 Ann. 403. N. J. L. 510; 57 Am. Deo. 409; Cheaa- ^ Perrine v. Canal Co., 9 How. peake Canal Co. v. Key, 3 Crauch 182. 0. C. 599; Mohawk Bridge Co. v. * State v. Krebs, 64 N. C. 604. R. R. Co., 6 Paige, 554; Cayuga * Spring Valley Water Works v. Bridge Co. v. Magee, 2 Paige, 116; San Francisco, 52 Cal. 111. Auburn Plank Road Co. v. Donglaas, * University Trustees v. Moody, 62 9 N. Y. 444. Ala. 389. Vol. L-41 §§ 377, 378 coEPOEATioNS. 642 in a corporate capacity within the limits of the charter. Extraordinary franchises are such as are not essential to the corporate existence, but give additional privileges, — - as the right to take property to build a railroad, or to use the public highway, or to take tolls, or the like. The term "franchise" has several significations, and there is some confusion in its use. The better opinion, deduced from the authorities, seems to be that it consists of the entire privileges embraced in the grant. It does not, then, embrace the property acquired by the exercise of the franchise.' The franchise of a corporation cannot be levied on for a debt, in the absence of power given either by the charter of the corporation or by the general law.^ § 377. Franchises cannot be Transferred. — The fran- chises granted by the state to a corporation cannot be transferred without the state's consent.' Without legis- lative authority, a corporation cannot alien its franchises, either absolutely or temporarily, by way of lease." Neither can franchises be mortgaged without the state's consent.' An act which empowers the leasing of completed rail- roads only will not authorize the transfer of a franchise for building a railroad.' §378. Consolidation of Oorporations. — Corporations cannot consolidate without authority from the state, and such authority must be clearly shown.' But where the law ' Bridgeport v. R. R. Co., 36 Conn. Am. Deo. 518; State v. Morgan, 28 255, 266; 4 Am. Rep. 63. La. Ann. 482; State v. Sherman, 22 2 New Orleana etc. U. R. Co. v. Ohio St. 428; Bardstown etc. R. R. Co. Delamore, 34 La. Ann. 1225. v. Metcalfe, 4 Met. (Ky.) 199; 81 Am. ' Morawetz on Corporations, sec. Dee. 541. 537; Coez). R. R. Co., lOOhioSt. 372; « Wood v. R. R. Co., 8 PhUa. 75 Am. Dee. 518. 94. * Philadelphia v. Western Union ' Pearce v. R. R. Co., 21 How. Tel. Co., 11 Phila. 327. 442; Clearwater v. Meredith, 1 Wall. " Richardson v. Sibley, 11 Allen, 67; 25; State v. Bailey, 16 bid. 51; 79 87 Am. Dec. 700; Com. v. Smith, 10 Am. Deo. 405; Aspinwall v. R. R. Co., Allen, 448; 87 Am. Dec. 672; Car- 20 Ind. 492; 83 Am. Deo. 329; Lauman penter v. Mining Co., 65 N. Y. 43; v. R. R. Co., 30 Pa. St. 42; 72 Am. Atkinson ■«. R. R. Co., 15 Ohio St. 21; Dec. 685; MoMahan v. Morrison, 16 Coe V. R. R. Co., 10 Ohio St. 372; 75 Ind. 172; 79 Am. Deo. 418. 643 POWERS. § 378 permits the consolidation of corporations, it is not against public policy for a corporation to be organized with the ulterior purpose of consolidation with another/ To merge or consolidate one company with another is generally a measure beyond the authority of an executive committee and directors. It requires the consent of stockholders, and is inoperative as against those who do not agree,^ and releases non-consenting stockholders from subscriptions.' The dissenting stockholders are entitled to withdraw their shares of the capital stock, and may enjoin the consolida- tion till they are secured.* While a corporation cannot relieve itself from responsibility to those to whom it may be indebted, by becoming merged into a new organiza- tion, it may, by the act of merger, become so situated as to be estopped from claiming that it remains undissolved.' Where a new corporation is established in the place of an old one, whose property it purchases, neither this prop- erty, excepting so far as it is subject to a prior lien, nor the future earnings of the new company, can be taken to pay the debts of the old one.* A consolidated corporation has no power to declare a dividend, as such, of the earnings made prior to the consolidation by one of the companies which was merged in the consolidation, or dividends on the stock of that company out of the earnings of the consolidated one.^ Where a new corporation is formed by amalgamation, under the authority of the state, of two or more distinct corporations into one, it succeeds to all the rights and faculties of the several components, and is subject to all the conditions and duties imposed by the law of their creation, except so far as it may be other- wise provided by the act under which such consolidation is effected.* Where several corporations are united in one, ' Hill V. Kisbet, 100 Ind. 341. » Carey v. R. R.0o., 5 Iowa, 357. 2 Blatohford v. Rosa, 54 Barb. 42; « Bruflfett v. R. R. Co., 25 111. 353. Tuttle V. R. R. Co., 35 Mich. 247. ' Chase v. Vanderbilt, 37 N. Y. 3 Booe V. R. R. Co., 10 Ind. 93. Sup. Ct. 344. • State V. Bailey, 16 Ind. 46; 79 Am. « Chicago etc. R. R. Co. v. Moffitt, 75 Dec. 406. m. 524; State v. R. R. Co., 66 Me. 48. § 378 COEPORATIONS. , 644 and the property of the old companies Tested in the new, the latter is liable in equity for the debts of the former, at least to the extent of the property received from them; and if it is also liable at law, the latter remedy is not ex- clusive.* Equity cannot dissolve a corporation consoli- dated from several other corporations on the ground alleged by a stockholder in one of the original corpora- tions, that the consolidation was for a fraudulent purpose, and not legally effected.* An action by a railroad com- pany to enforce payment of a subscription to its stock is not defeated by the fact that pending it the plaintiff has consolidated with another company, and thereby ceased to exist.* If corporations of different states, by permis- sion of the legislatures, consolidate into one corporation, and as such mortgage the property belonging to one of the consolidated companies, such mortgage is the sole mortgage of said company, and not of all the consoli- dated companies, and is legal and valid.* The consolidation of corporations chartered by the same state creates a new and distinct corporation.' A corporation created by the laws of Iowa, although consol- idated with another of the same name in Missouri, under the authority of a statute of each state, is, nevertheless, in Iowa, a corporation existing there under the laws of that state alone.' Illustrations. — Two boom companies having booms on the same river were consolidated. Both were required by their separate charters to maintain booms sufficiently strong to retain all the lumber contained in them, and by the act of consolida- tion the company was entitled to all the rights and privileges, ' Harrison v. R. K Co., 4 MoCrary, 25; Shields v. Ohio, 95 U. S. 319; At- 264. lanta etc. R. R. Co. v. State, 63 Ga. 2 Terhune v. R. R. Co., 38 N. J. Eq. 483; State v. Bailey, 16 Ind. 46; 79 423. Am. Dec. 405; McMahan v. Morrison, = Swartwoot v. R. R. Co., 24 Mich. 16 Ind. 172; 79 Am. Dec. 418; Ind. 389. etc. R. R. Co. v. Jones, 29 Ind. 465; * Racine etc. R. R. Co. v. Loan and 95 Am. Dec. 654; Miller v. Lancaster, Trust Co., 49 lU. 331; 95 Am. Dec. 595. 5 Cold. 514. ^ ClearwatOT. v. Meredith, 1 Wall. ' MuUer v. Daws, 94 U. S. 444. 645 POWEES. § 379 and subject to all the restrictions, of the former charters. Held, that the company was liable for loss by insufficiency of the boom: Brown v. Boom Co., 109 Pa. St. 57; 58 Am. Rep. 708. A corporation acting under a contract of consolidation made mort- tages and sold bonds to bona fide purchasers for several years. Held, that both it and its stockholders were estopped to assert that the contract was ultra vires: Dimpfel v. B. R. Co., 9 Biss. 127. A railroad company was consolidated with another, under an act of the legislature, which vested in the new corporation all the powers, rights, franchises, etc., of the old corporations. Held, that the new corporation might lawfully use a patented axle-box which both the old corporations had been licensed to use: Lightner v. Boston etc. R. R. Co., 1 Low. 338. Two corpo- rations were empowered by their charters respectively to do all that was necessary to construct and put in operation a railroad between certain places named in the acts of incorporation. Held, that the two corporations had no right to unite and place both under the same management, nor to establish a steamboat line to run in connection with the railroads: Pearce v. R. R. Co., 21 How. 441. Two corporations created by the acts of two states for the purpose of constructing a canal were united by new acts, and the stockholders of each were made stockholders of the other. Held, that they did not cease to exist as distinct corporations: Farnum v. Canal Corp., 1 Sum. 46. A corpora- tion was chartered to make and sell gas until a certain date. Some time before the charter expired, another corporation was chartered with similar privileges after the said date. It was contemplated that the latter corporation should make prepara- tions before that date. Held, that a consolidation of the two corporations on the day preceding that date could be had: New Orleans Gas Co. v. Louisiana Light Co., 115 U. S. 650. While negotiations were pending between two gas companies for their consolidation, upon a certain basis of indebtedness, one of the companies passed a resolution, without the knowledge of the other, declaring a scrip dividend of ten per cent on the amount of their capital stock, with interest, payable at the option of the company, thus increasing their indebtedness to that amount. Certificates of indebtedness were issued in accordance with the resolution. Consolidation was efifected between the companies without any knowledge of the other company as to such resolu- tion and such increased indebtedness. Held, that the scrip was void: Bailey v. Citizens' Gas Light Co., 27 N. J. Eq. 196. § 379. Implied Powers of Corporations — To Purchase and Hold Property. — A corporation has an implied right to acquire and hold property necessary to the carrying § 379 CORPORATIONS. 646 on of its business.* A corporation may hold land by ten- ancy in common, as may a natural person ;'* or take a mortgage, although unable to take the oath required by statute;' or purchase and hold any patent the ownership of which is appropriate to enable it to execute the corpo- rate purpose;^ or become the assignee of a bond;° or hav- ing power to hire buildings, may enter into the usual covenants, as to repair, etc.;^ or acquire by transfer title to a note taken in the course of its business, and sue upon the note.' Power to purchase "property deemed desir- able in the transaction of its business" gives the cor- poration power to purchase its own stock.* Land which a corporation cannot hold in its own name it cannot hold in the name of another; and when a corporation cannot hold the legal title to land, it cannot take a beneficial interest in it.^ Illdsteations. — An agricultural society was authorized "to do all acts necessary for the prosperity of the society in the in- tervals of the meetings of the board." Held, not to give power to purchase real estate: Tracy v. Outhrie Co. Agric. Soc, 47 Iowa, 27. The charter of a railroad gave it power to acquire a strip of land not exceeding one hundred feet wide for a right of way, and to hold sufiBcient ground for the erection and main- tenance of depots, landing-places, etc. Held, that the corpora- tion had no power to acquire land for purposes of speculation: Pacific E. R. C». v. Seely, 45 Mo. 212; 100 Am. Dec. 369. A charter gave a csrporation power to "acquire and hold estate, ' Thompson v. Waters, 25 Mich. " Estell v. rTniversity of the South, 222; 12 Am. Rep. 243; Blanchard's 12 Lea, 476. etc. Co. V. Warner, 1 Blatchf. 258; ' Lincoln Savings Bank v. Ewing, Page !). Heineberg, 40 Vt. 81 ; 94 Am. 12 Lea, 598. Dec. 378; Moss v. Averill, 10 N. Y. * Dorsey Harvester Hake Co. v. 449; Spear v. Crawford, 14 Wend. 23; Marsh, 6 Fish. Pat. Cas. 387. 23 Am. Dec. 513; The Banks v. Poi- ^ Bennington Iron Co. v. Ruther- tiaux, 3 Rand. 136; 15 Am. Dec. 706; ford, 18 N. J. L. 467. McOartee v. Orphan Asylum, 9 Cow. " Abby v. Billups, 35 Miss. 618; 72 437; 18 Am. Dec. 517; Lathrop v. Am. Deo. 143. Bank, 8 Dana, 114; 33 Am. Deo. 481; ' Wayland University v. Boorman, Rivanna Nav. Co. v. Dawsons, 3 Gratt. 56 Wis. 657. 19; 46 Am. Dec. 183; Callaway Co. v. ^ Iowa Lumber Co. v. Foster, 49 Clark, 32 Mo. 305. A corporation in Iowa, 25; 31 Am. Rep. 140. taking a mortgage to secure a debt is ' Coleman v. S. K. T. R. Co., 49 Cal. not dealing in lands: Blunt t;. Walker, 517. 11 Wis. 334; 78 Am. Dec. 709. 647 POWERS. § 380 real, personal, or mixed, and the same to buy, exchange, se3, and mortgage, transfer, pledge, or otherwise encumber or alien, ate, as the board of directors of said association may deem expedient." Held, to give it power to loan its surplus funds: Western Boatmen's Benevolent Ass'n v. Kribben, 48 Mo. 37. A corporation was authorized by its articles to "purchase and hold, sell or exchange, any real estate or other property deemed desirable in the transaction of its business." Held, to have power to buy shares of its own stock: Iowa Lumber Co. v. Fos- ter, 49 Iowa, 25; 31 Am. Rep. 140. A statute gave a corporation power to discount non-negotiable notes, and to take, hold, and convey any property, real, personal, or mixed. Held, that it might take and hold city warrants: Aull Savings Bank v. Lex- ington, 74 Mo. 104. § 380. Implied Powers of Corporations — To Transfer or Dispose of Property. — A corporation has implied au- thority to transfer or dispose of its property whenever necessary for the purposes of its business.^ The right of corporations to sell their property is absolute at common law, where they act by a majority of their stockholders; and this right is not limited as to objects, circumstances, or quantity." A corporation may sell its property to an- other corporation.' It may sell its assets to a new corpo- ration, and take the stock of the latter in payment, with the assent of the majority of the stockholders of the old corporation.* A corporation organized for the purpose of owning ditches for the conveyance and sale of water has power to sell and convey all its corporate property, pro- vided the sale is made for corporate or lawful purposes.' 1 White Water Canal Co. «.Vallette, 423; Pierce v. Emery, 32 N. H. 486; 21 How. 424; Barry v. Merohanta' Story v. Plank Road Co., 16 N. J. Eq. Ex. Co., 1 Sand. Ch. 280; Reynolds 13; 84 Am. Deo. 134. A power to V. Commissioners, 5 Ohio, 204; Town "sell" does not authorize a barter or Council ti. Elliott, 5 Ohio St. 113; BueU exchange: City of Cleveland v. State V. Buckingham, 16 Iowa, 284; 85 Am. Bank, 16 Ohio St. 236; 88 Am. Dec. Dec. 516; Aurora Agric. Soo. v. Pad- 445. dock, 80 111. 263; Miners' Ditch Co. v. ^ Treadwell v. Manufacturing Co., 7 Zellerbaoh, 37 Cal. 543; 99 Am. Dec. Gray, 393; 66 Am. Dec. 490. 300; Burton's Appeal, 57 Pa. St. 213; » Wartieldi). Canning Co., 72 Iowa, Dupee V. Boston Water Power Co., 666; 2 Am. St. Rep. 263. 114 Mass. 37; Partridge v. Badger, 25 * Treadwell v. Manufacturing Co., 7 Barb. 146; Beers v. Phoenix Glass Co., Gray, 393; 66 Am. Dec. 492. 14 Barb. 358; Dana v. Bank, 5 Watts & * Miners' Ditch Co. v. Zellerbaoh, 37 S. 223; n. S. Baak v. Huth, 4 B. Mon. Cal. 543; 99 Am. Dec. 300. § 381 COEPOEATIONS. 648 A railroad company, in carrying out an enterprise author- ized by its charter, has power to assign its stock subscrip- tions.^ Where an insolvent corporation has no means to contest attachment suits, it is not a breach of trust for the directors, on advice of counsel and in good faith, to make an advantageous sale of the corporate assets to an attaching creditor, on condition that he cancel his own debt and discharge the debts of the other attaching cred- itors? Where the charter of a corporation only empowers it to sell the real estate necessary for the transaction of its business, when not required for the uses of the corpora- tion, it cannot lease such real estate, nor maintain an ac- tion for rent under its lease.' The stockholders are not in their individual capacities owners of the property as ten- ants in common, joint tenants, copartners, or otherwise, and a joint deed executed by all the stockholders would convey no title.'' A corporation has no right to transfer its franchise, or any property essential to its exercise which it has acquired by right of eminent domain.® § 381. Implied Powers of Corjiorations — To Hold Property in Trust. — Formerly, it was held that a cor- poration could not hold property in trust.^ But the rule is now different,'' and authority in a corporation to hold in trust will be implied whenever the trust is in further- ance of the general objects of the corporation.* But a ' Downieu. Hoover, 12 Wis. 174; 78 create a good trustee, viz., the want Am. Deo. 730. of confidence in the person, yet that ^ White, Potter, etc., Mfg. Co. v. doctrine has long since been exploded Importing Co., 30 Fed. Rep. 864. as unsound and too artificial; and it is * Metropolitan Concert Co. v. Ab- now held that where a corporation has bey, 52 N. Y. Sup. Ct. 97. a legal capacity to take real and per- '' Gashwiler v. Willis, 33 Cal. 11; 91 sonal estate, there it may take and Am. Dec. 608. hold it upon trust in the same manner " Fietsam v. Hay, 122 HI. 293; 3 Am. and to the same exeent aa a private iu- St. Rep. 492. dividual may do ": Story, J., in Vidal « Greene v. Dennis, 6 Conn. 293; 16 v. Girard, 2 How. 187. Am. Dec. 58. * In re Howe, 1 Paige, 214; Chapin ' "Although it was in early times v. School District, 35 N. H. 445; Rob- held that a corporation could not take ertson v. Bullions, 11 N. Y. 243; Bell and hold real and personal estate in Co. v. Alexander, 22 Tex. 350; 73 trust, upon the ground that there was Am. Deo 268; Deringer v. Deringer, 5 a defect of one of the requisites to Honst. 416; 1 Am. St. Rep. 160. 649 POWERS. §§ 382, 383 corporation cannot be a trustee for purposes foreign to its institution.^ A corporation authorized by its charter "to receive deposits on trust" may receive money on deposit, and give certificates therefor, and this power is not affected by a proviso prohibiting the corporation from issuing bills, bonds, notes, or other securities, to circulate in the com- munity as money .^ Power vested in a corporation "to acquire property by gift, purchase, or otherwise," as fully authorizes it to acquire a leasehold interest in lands and houses for a term or for life as to become the owner thereof in fee.' § 382. Implied Powers of Corporations — To Take by Devise. — At common law, a devise of realty to a corpora- tion was not legal. The power of corporations to take property by devise is now generally regulated by statute in the different states.* § 383. Implied Powers of Corporations — To Borrow Money and Make Debts. — A corporation has an implied power to borrow money and make debts for the purposes of its business.® The power to create debts is treated as an incident to the express powers, and not as in itself one 'Trustees u. Peaslee, 15 N. H. shaU, 23 N. Y. 366; 80 Am. Dec. 317. 290. 2 Talladega Ins. Co. v. Landers, 43 ^ Rock-well v. Elkhom Bank, 13 Ala. 115. Wis. 653; Tucker v. City of Raleigh, » Abby V. Billups, 35 Miss. 618; 72 75 N. C. 267; Commissioners v. R. R. Am. Deo. 143. Co., 77 N. C. 289; Barry v. Mer- * Morawetz on Corporations, sees, chants' Ex. Co., 1 Sand. Oh. 280; 161, 162; McCartee v. Orphan Soc, 9 Partridge v. Badger, 25 Barb. 146; Cow. 437; 18 Am. Dec. 516; Page v. Clark v. Titcomb, 42 Barb. 122; Cur- Heineberg, 40 Vt. 81; 94 Am. Dec. tis v. Leavitt, 15 N. Y. 9; Barnes v. 378. A private corporation may take Ontario Bank, 19 N. Y. 152; Smith v. a bequest in trust for religious uses: Law, 21 N. Y. 296; Nelson v. Eaton, Protestant Episcopal Education So- 26 N. Y. 416; Magee v. Canal Co., 5 ciety V. Churchman, 80 Va. 718. A Cal. 258; Hamilton v. R. R. Co., charter of a"corporation empowering it 9 Ind. 359; Fay v. Noble, 12 Cush. " to hold, ^purchase, and convey " real 1; Oxford Iron Co. v. Spradley, 46 estate, authorizes it to receive a de- Ala. 98; Alabama etc. Ins. Co. v. vise: American Bible Society v. Mar- Central Ass. Co., 54 Ala. 73; Moss v. shall, 15 Ohio St. 537. So authority Hespetuh Academy, 7 Heisk. 285; to take " by direct purchase or other- Union Mining Co. v. Bank, 2 Col. wise" is an "express authority to 248; Mahoney Mining Co, v. Bank, take by devise": Downing v. Mar- 104 U. S. 192. § 384 C0BP0RATI0N3. 650 of the express powers.* Authority to borrow includes authority to give evidences of indebtedness.'^ § 384. Implied Powers of Corporations — To Mortgage Property. — The right to mortgage its property is always implied where the right to borrow or to incur a debt is given to the corporation.^ The power to mortgage is in- cluded in a power to "sell and dispose of" property;^ the right to " use, rent, or sell " hydraulic powers and privi- leges gives power to mortgage them.* Any corporation, public or private, has capacity, if not prohibited, to make a mortgage as security for a debt contracted in further- ance of the objects of its creation.* Authority to a plank road company to "mortgage the road or other property" permits a mortgage of the franchise of receiving tolls; but not the mortgage of any franchise essentially corpo- rate in its nature, and not enjoyable by a natural person.' A corporation authorized to raise money by mortgage may mortgage to a trustee for creditors.* Goods bought by a corporation ultra vires become their property, and they can sell or mortgage them.® The pledging by a turn- pike company of their income and tolls is not a mort- gage of the road.'" A corporation, having authority to mortgage its property for the purpose of carrying on its business, is not prohibited by the laws of the state from executing such a mortgage, to secure the payment of 1 Smith «. Eureka Flour Mills, 6 Cal. •Gordons. Preston, 1 Watts, 385; 1; Burr v. McDonald, 3 Gratt. 215. 26 Am. Deo. 75. The power to "dis- 2 Id. ; Booth v. Robinson, 55 Md. pose " of a seat in a stock exchange 419. includes the power to mortgage it: * Morawetz on Corporations, sec. Clute v. Loveland, 68 Cal. 254. 175; Aurora Agricultural Society v. * Willamette Mfg. Co. v. British Paddock, 80 III. 263; Thompson v. Columbia Bank, 119 U. S. 191. Lambert, 44 Iowa, 239; Watt's Ap- " State v. Rice, 65 Ala. 83; Taylor peal, 78 Pa. St. 370; Richards v. R. R. v. Agricultural and Mechanical Assoc, Co., 44 N. H. 135; Bardstown R. R. 68 Ala. 229. Co. V. Metcalfe, 4 Met. (Ky.) 199; 81 ' Joy v. Jackson etc. Co.f 11 Mich. Am. Dec. 541; Burt v. Rattle, 31 155. Ohio St. 116; Barry v. Merchants' Ex- » Wright v. Bundy, 11 Ind. 398. change, 1 Sand. Ch. 280; Johnston v. » Parish v. Wheeler, 22 N. Y. 494. Crawley, 25 Ga. 316; 71 Am. Dec. '» Farmers' Turnpike Co. v. Coven- 173. try, 10 Johns. 389, 651 POWERS. § 385 money to be thereafter advanced.' Authority to mortgage its "road, income, and other property" does not author- ize a mortgage of its franchises, though such authority includes the power to make a deed of trust in the nature of a mortgage.'' The power of a corporation to pledge securities owned by it for the payment of its debts is included in the power to sell such securities for that purpose.^ Power to pledge franchises and rights of a corporation implies, as incident thereto, the power to pledge everything that may be necessary to the enjoy- ment of the franchise, and upon which its real value depends.* One who becomes the sole owner of all the corporate stock of a private business corporation may individually make a valid mortgage of its property.^ The bonds of a railroad company are not made void by being secured by a mortgage which the company had no power to execute. Nor is the holder's right to recover on such bonds at all affected by a memorandum thereon that they were issued by the company in accordance with its charter, and that the mortgage therein recited had been duly executed.* A mortgage by a corporation to secure a debt in excess of the limit allowed by its articles of incorporation is not for that reason invalid, although given to the directors and share-kolders as preferred cred- itors.^ § 385. Implied Powers of Corporations — To Issue Negotiable Paper. — A corporation has an implied power to issue negotiable paper for the purposes of its busi- ness, or to take and negotiate the notes of others.' It • Jones V. New York Guaxanty etc. ' Warfield v. Canning Co., 72 Iowa, Co., 101 U. S. 622. 666; 2 Am. St. Rep. 263. ' Pullau V. E. Co., 4 Bisa. 35. * Morawetz on Corporations, sec. ' Leo V. R. R. Co., 17 Fed. Rep. 273. 177; Munn v. Commission Co., 15 ♦ Phillips V. Winslow, 18 B. Men. Johns. 44; 8 Am. Dec. 219; Moss v. 431; 68 Am. Deo. 729. Oakley, 2 Hill, 267; Safford v. Wyck- * Swift V. Smith, 65 Md. 428; 57 off, 4 Hill, 446; Curtis v. Leavitt, 15 Am. R«p. 336. N. Y. 173; Mclntire v. Preston, 5 ' Philadelphia etc. R. R. Co. v. Gilm. 48; 48 Am. Deo. 321; Kelley v. Lewi?, 33 Pa, St. 33; 75 Am. Deo. 574. Mayor, 4 Hill, 263; Clark v. School § 385 CORPORATIONS. 652 may guarantee the bonds of another corporation.* A cor- poration authorized to employ its stock solely in advancing money upon goods and selling them upon commission may lawfully accept bills drawn on account of future con- signments or deposits of goods, and is bound by its agent's acceptance of such bills.^ Authority to "borrow money and issue its bonds therefor" imports power to make negotiable or non-negotiable notes, and give such secu- rities as may be deemed most advantageous.' A provision prohibiting the corporation from dealing in commercial paper will not extend to the receiving and selling of notes given for the sale of its lands.* Authority "in the prosecution of its business to accept and indorse bills and notes" does not empower it to accept accommodation paper.^ The oflBcers of a corporation have no power to authorize the execution of a note for a debt of a third party to the payee, having no relation to the corporate business, and in which the corporation has no interest.* A corporation has power to transfer notes of third parties held by it to secure the payment of its debts/ A corpo- Distriot, 3 R. I. 199; Smith v. Eureka demand, when such note is given for Mills, 6 Cal. ,1; Rockwell v. Bank, any of the legitimate purposes for 13 VPis. 653; Goodrich v. Reynolds, which the company was incorporated: 31 111. 490; 83 Am. Dec. 240; Lucas Attorney-General v. Life and Fire In- V. Pitney, 27 N. J. L. 221; aliter in surance Co., 9 Paige, 470; Mott v. England: Morawetz on Corporations, Hicks, 1 Cow. 513; 13 Am. Deo. 550; sec. 178; Moss u, Averill, 10 N. Y. Barbers;. Mechanics' Insurance Co., 3 457, the court saying: " If the corpo- Wend. 94; Moss v. Oakley, 2 Hill, 265; ration could make the purchase, as it Safford v. Wyokoff, 4 Hill, 442; Kel- has been shown they could, they might ley v. Mayor of Brooklyn, 4 Hill, lawfully make promissory notes on 263; Moss v. Rossie Lead Mining Co., time for the price; an ability to make 5 Hill, 137; Conro v. Port Henry a contract implies an ability to make Iron Co., 12 Barb. 27." a promissory note. Indeed, the stat- ' Low v. R. Co., 52 Cal. 53; 28 Am. ute 'of promissory notes and bills Rep. 629. of exchange' expressly includes cor- * Munnw. Commission Co., 15 Johns. poratious having a capacity to make 44; 8 Am. Dec. 219. contracts among the persons who may ' Talladega Ins. Co. v. Peacock, 67 make notes in writing: 1 R. S., 768, Ala. 253. sees. 1-3. No question is better set- * Buckley v. Briggs, 30 Mo. 452. tied upon authority than that a corpo- * Farmers' etc. Bank v. Empire etc. ration, not prohibited by law from do- Co., 5 Bosw. 275. ing so, and without any express power * Hall v. Auburn Turnpike Co., 27 in its charter for that purpose, may Cal. 255; 87 Am. Dec. 75. make a negotiable promissory note, ' Clark v. Titoomb, 42 Barb. 122, payable either at a future date or upoa 653 POWERS. § 386 ration which has indorsed negotiable paper for the ac- commodation of the maker is liable to a bona fide holder who has discounted it before maturity in good faith and in the usual course of business.^ A draft by the secre- tary on the treasurer of the corporation is but an order of the corporation upon itself, and need not be presented for acceptance, nor. need any notice of non-payment be given.'' A corporation note given for an individual obli- gation is presumptively ultra vires? § 386. Implied Powers of Corporations — To Sue and be Sued. — A corporation may sue in its corporate capa- city. " It may avail itself of any legal or equitable remedy which would be available to an individual under similar circumstances."* It may maintain an action for libel upon averment and proof of special damages.^ The words "to sue and be sued" in a charter or act give the corpo- ration no greater powers and subject it to no greater lia- bility than if it was a natural person.* Two corporations may unite in an action to recover money deposited in a bank in their joint names.^ The managing agents of a corporation have a right to employ counsel to give legal advice, or to institute legal proceedings." It may defend legal proceedings taken against its agents in acting for it.' A corporation is such a legal entity that a stockholder may maintain an action against it, either at law or in chancery.*" The trustees of a stock corporation have not ' Mechanics' etc. Aas'n v. New York ' Bjiiokerbocker etc. lua. Co. v. etc. Co., 35 N. Y. 505. Ecclesine, 11 Abb. Pr., N. S.j 385; 42 2 Dennis v. Table etc. Co., 10 Cal. How. Pr. 201. 369. « Freeholders v. Strader, 18 N. J. L. ' Merchants' Nat. Bank v. Detroit 108; 35 Am. Deo. 530. Knitting and Corset Works, Mich., '' Sharon Canal Co. v. Fulton Bank, 1888. 7 Wend. 412; Gathwright v. Callaway * Morawetz on Corporations, sec. County, 10 Mo. 663. 184. A raiboad company may sue in ° Western Bank v. Gilstrap, 45 Mo. its own name on a written order to 419; Pixley v. E. B. Co., 33 Cal. 183; deliver stock to "D. A. N., president 91 Am. Dec. 623. of the Eastern EaUroad Company ": ° Morawetz on Corporations, sec. 235. Eastern R. E. Co. ■». Benedict, 5 Gray, "> Wilson v. Cheyenne Bank, 1 Wy. 561; 66 Am. Dec. 384. Ter. 108. § 387 CORPORATIONS. 654 power to direct the filing of a petition to have the cor- poration adjudged a bankrupt.' A person about to be damaged by the act of a company assuming to act as a corporation, but not legally organized, may bring his action against such company in the corporate name.'^ In a suit to enjoin the use of a corporate name, the corpora- tion whose name is alleged to be wrongfully used must be a party plaintiff or defendant. If the corporation refuses to bring such suit upon request, its bond-holder or credi- tor may do so, and make such corporation a party defend- ant.^ A railroad corporation having no residence in a certain county cannot there maintain guits against resi- dents of other counties.* § 387. Other Acts. — A corporation, unless restricted by its charter, or prevented by the operation of some bankrupt or insolvent law, may make an assignment of its effects, entire or partial, if made bona fide for the pay- ment of its debts, the same as any natural person may do.^ ' It may become a joint owner of a ferry .° It has, as incidental to its common-law power to make contracts, a right to make an agreement with an agent to compen- sate him for obtaining subscriptions to the stock.^ A company incorporated to make spermaceti candles may purchase state bonds, and engage to pay for them at a future day.' A statute authorizing a city to subscribe its bonds for certain railroad stock authorizes that railroad to receive the subscription.* A railroad corporation, au- thorized to buy land for the purpose of procuring stone and other material necessary for the construction of the 1 Matter of Lady Bryan Mining Co., 401; 20 Am. Deo. 49; Hopkins v. 2 Alib. 527. Gallatin Turnpike Co., 4 Humph. 403. ^ Newton County Draining Co. v. " Hackett v. R. R. Co., 12 Or. 124; Hofsinger, 43 lud. 566. 53 Am. Rep. 327. ' Newby v. R. R. Co., Deady, 609. ' Cincinnati etc. R. R. Co. v. Clark- • Connecticut etc. R. R. Co. v. son, 7 Ind. 595. Cooper, 30 Vt. 476; 73 Am. Dec. 319. » Indiana v. Woram, 6 Hill, 33. Ringo V. Real Estate Bank, 13 * Clark v. Janesville, 10 Wis. 136; Ark. 663; Fope n. Brandon, 2 Stew. Bushnell v. Beloit, 10 Wis. 195. 655 POWERS. §388 road, has power to buy land for the purpose of getting cross-ties and fire-wood.^ A corporation may make a valid bond in a judicial proceeding as an appeal bond, reciting that S., "as superintendent of" a certain "rail- road company," and the other persons whose names were signed thereto, " are held and firmly bound," etc.'' A corporation has not the legal capacity to take an oath.' It has no authority to change its domicile to another state because of authority granted to it to own and manage property in that state.^ It has power to waive its legal rights, and is bound by estoppels in pais like natural persons.^ , Corporate acts performed by the body of the corporation sitting out of the state creating it are void.* A corporation may prefer one creditor to another, even though he is a stockholder.' A railroad has no power to guarantee payment of dividends to the sub- scribers of stock in an elevator company.' A corpora- tion cannot take out letters of administration.' § 388. Power of Expulsion of Members. — The power of expulsion of members is an incident of every corpora- tion, being considered in proper cases a power necessary to their proper government.'" But under a power to admit members, the directors of a corporation cannot disfran- » Mallett V. Simpson, 94 N. C. 37; 55 Am. Hop. 595. 2 Collins V. Hammock, 59 Ala. 448. ' Alabama etc. E. R. Co. v. Oaks, 37 Ala. 694. * Aspinwall v. E. E. Co., 20 Ind. 492; 83 Am. Dec. 329. " Hale V. Ins. Co., 32 N. H. 295; Si Am. Deo. 370. . « Aspinwall u. E. E. Co., 20 Ind. 492; 83 Am. Deo. 329. ' Warfield v. Canning Co., 72 Iowa, 663; 2 Am. St. Eep. 263; Poster v. Mullanphy Co., 92 Mo. 79. 8 Elevator Co. v. K. E. Co., 85 Tenn. 703; 4 Am. St. Eep. 798. ' But it may act as administrator where administrator is not required to take oath or do any act wMch a corporation cannot do: Deringer v. Deringer, 5 Houst. 416; 1 Am. St. Eep. 150. " Pilchem. Board of Trade, 121 HI. 412; Smith v. Smith, 3 Desau. 557; King V. Eichardson, 1 Burr. 517; 2 Kent's Com. 297; Gregg v. Massachu- setts Soc, HI Mass. 185; 15 Am. Eep. 24; Society v. Com., 52 Pa. St. 125; 91 Am. Dee. 139. An injunction indefinitely suspending an officer of a corporation is an indirect mode of effecting his removal, and a court of equity has no power to grant it. The power of a motion belongs to the corpo- ration: Griffin v. St. Louis Vine etc. Assoc, 4 Mo. App. 596. The right to remove a member for improper con- duct is incident to every corporation. § 388 CORPORATIONS. 656 chise members.* The power of expulsion belongs only to the society at large, unless the charter or some by-law- founded on it transfers this power to a select few.* But this power cannot be exercised in the case of companies organized for profit, — the member cannot be deprived of his pecuniary interest without his consent.^ But if the charter provides that shares may be forfeited for non- payment, this may be done.^ Where the charter does not specify any distinct grounds for removal, the corporation has an implied power to expel, where the member has been guilty of a crime indictable by the laws of the land,' and infamous, and where he has been guilty of an offense against the corporation itself.* A member of a corpora- tion, a by-law of which provides for the expulsion of a member "who feigns himself sick without being so, or who continues to draw relief after his recovery," may be expelled for those causes.' Regulations of an asylum for aged seamen, which forbid inmates to leave the premises without permission from the governor or an assistant, and enjoin quiet demeanor at the table, on pain of expul- Bion, are reasonable regulations, and an expulsion for a breach of them is lawful.* " Vilifying " a fellow-member • Case of IPhila. Savings Inst., 1 Lnsitanian Soc, 15 La. Ann. 73; An- Wliart. 461; 30 Am. Dec. 226. gell and Ames on Corporations, 238; ' Hasaler v. Philadelphia Musical Hope v. International Financial Soc., Assoc, 14 Phila. 233. W. N. C. (1876) 257. 3 People V. Board of Trade, 80 111. * Cum. •;;. St. Patrick's Soc, 2 Binn. 134; Leech v. Harris, 2 Brewst. 571; 448; 4 Am. Dec. 453; People v. Med. Evans «). Philadelphia Club, 50 Pa. St. Soc, 24 Barb. 570; 32 N. Y. 187; 107. Fawcet v. Charles, 13 Wend. 476; * Evans v. Philadelphia Club, 50 Pa. People v. Fire Underwriters, 7 Hun, St. 107; Society v. Commonwealth, 52 248; Society v. Com., 52 Pa. St. 125; Pa. St. 125; 91 Am. Dec 139; Leech 91 Am. Deo, 139. V. Harris, 2 Brewst. 571; Hopkinson ^ Com. v. St. Patrick's Soc, 2 Binn. V. Exeter, L. R. 5 Eq. 63; Rochler v. 448; 4 Am. Dec. 453; People v. Fire Mechanics' Aid Soc, 22 Mich. 86; Underwriters, 7 Hun, 248; Page o. Davis V. Bank of England, 2 Bing. Board of Trade, 45 111. 112; People «. 393; State v. Tudor, 5 Day, 329; 5 N. Y. Com. Ass'n, 18 Abb. Pr. 271. Am. Dec. 162; Delacy v. Neuse River ' Soc for Visitation of the Sick v. Nav. Co., 1 Hawks, 274; 9 Am. Dec. Commonwealth, 52 Pa. St. 125; 91 636; Ebaugh v. Hendel, 5 Watts, 43; Am. Dec. 139. 30Am. Dee. 291; Waterburyv. Express ^People v. Sailor's Snug Harbor, 5 Co., 3 Abb. Pr., N. S., 163; State v. Abb. Pr., N. S., 119. 657 POWERS. § 388 is not a good ground of expulsion.^ Charges that the member of " a society for mutual support and assistance" " assisted, as president of the society, in defrauding the society out of the sum of fifty cents," and " of defaming and injuring the same in public taverns," are not suffi- cient cause of disfranchisement.^ But a member can in no case be expelled without no- tice of the intention and the reason for sucli act, and an opportunity to be heard in his defense.' A reasonable time must be given in which to answer the charges and produce the testimony; and he is also entitled to be repre- sented by counsel, to cross-examine the witnesses, and to except to the proofs against liim.^ But when a member has been convicted by a jury of an infamous crime, a vote of expulsion would be legal without any notice or preferment of charges, however necessary those cere- monies might be when the oflFense concerned the corpo- rate interests.* Illustrations.- — A private corporation or club owning prop- erty, and at liberty to accumulate more, expelled one of its members for quarreling with and striliing another member within the walls of the club-house. Held, that the club had no authority for such expulsion, in the absence of any provision therefor in the charter: Evans v. Philadelphia Club, 50 Pa. St. 107. The articles of a corporation authorized the expulsion oi a member for scandalous or improper proceedings, which might ' Com. V. St. Patrick's Soc, 2 Binn. Delacy v. Neuse Riv. Co., 1 Hawks, 448; 4 Am. Deo. 453. 274; 9 Am. Dec. 636; South Plaak ^ Commonwealth v. German Soc, 15 Road Co. v. Hixon, 5 Ind. 165; Leech Pa St. 251. V. Harris, 2 Brewst. 571; White v. 2 Black and Wlyte Smiths' Soc. v. Brownell, 2 Daly, 329; Sibley v. Car- Vandyke, 2 Wharf; 309; 30 Am. Deo. teret Club, 40 N". J. L. 295; State r. 263; G-reen v. Afr. Meth. Epis. Soc, Chamber of Commerce, 47 Wis. 6j'J;. 1 Serg. & R. 254; Com. v. Penn. Ban. contra: Manning v. San Antonio Cliib, last., 2 Ssrg. & B. 141; Com. v. Guar- 63 Tex. 166; 51 Am. Rep. Odi). diaas, 6 Serg. & R. 469; Com. v. Pike ' State v. Bryoe, 7 Ohio, 414; Rex. Ben. Soc, 8 Watts & S. 247; Wash- v. Richardson, 1 Burr. 540; Bex v. ington Soc v. Bacher, 20 Pa. St. 425; Liverpool, 2 Burr. 734; Murdoch v. Fuller f. Plaintield Acad., 6 Conn. 52.3; Academy, 12 Pick. 244; Rex v. Barrows v. Med. Soc, 12 Cush. 402; Chalke, 1 Ld. Raym. 226; Rex v. Peoples. St. Franciscus Ben. Soc, 24 Derby, Cas. temp. Hardw. 154. How. Pr. 216; People i>. N. Y. Com. ^ Angell and Ames on Corporations,. Ass'n, 18 Abb. Pr. 271; People v. 246. Sailor's Snug Harbor, 54 Barb. 532; VOL. L— 12 § 389 CORPORATIONS. 658 injure the reputation of the society. Held, to be a good cause of expulsion, that a member claiming relief from the society had altered the amount of a physician's bill from four dollars to forty dollars, and had presented the bill to the president as the basis of his claim: Commonvjealth v. Philanthropic Soc, 5 Binn. 486. The charter of an incorporated company stated that the company was formed, among other things, "to inculcate just and equitable principles in trade." Held, that they might expel a member for obtaining goods under false pretenses, though the offense was not committed within the local juris- diction of the corporation, nor against a member thereof: People V. N. Y. Commercial Ass'n, 18 /Vbb. Pr. 271. A corporation was empowered by its charter to expel members in the manner to be prescribed by its rules and by-laws. A by-law provided for the expulsion of a member for non-fulfillment of any contract, whether written or verbal. Held, that the by-law was reason- able, and authorized the expulsion of a member refusing to per- form a contract void by the statute of frauds: Dickenson v. Chamber of Commerce of Milwaukee, 29 Wis. 45; 9 Am. Rep. 544. A medical society under power to make by-laws con- tained in its charter adopted a law providing for the expulsion of a member who shall be guilty of ungentlemanly conduct during a session of the society, or shall conduct himself out of the society in such a manner as would render him ineligible to njembership. Held, valid; but the society has not an uncon- trollable discretion in its construction and enforcement: State V. Georgia Med. Soc, 38 Ga. 608; 95 Am. Dec. 408. § 389. Remedies for Wrongful Expulsion — Restora- tion. — WheQ a member of a corporation is illegally re- moved, he may be restored by application to the court. The remedy is by mandamus.'- Equity will not enjoin a private corporation from expelling a member for violating the by-iaws; his remedy, if any, is at law.^ A person ' Burrows v. Mass. Med. Soc, 12 Mich. 86; State v. Chamber of Com., ■Cusli. 402; Crocker v. Old South Soc, 20 Wis. 68; Society v. Com., 52 Pa. St. JOG Mass. 489: Sleeper v. Franklin 125; 91 Am. Dee. 139; Com. v. Soc, 2 Xyceum, 7 Pt. I. 523; People v. St. Binn. 441; Franklin Ben. Soc v. Com., Franciscus Soc, 24 How. Pr. 216; 10 Pa. St. 357; Com. v. German Soc, People V. Med. Soc, 24 Barb. 570; 15 Pa. St. 251; Evans v. Phila. Club, People W.St Stephen's Church, 6 Laaa. 50 Pa. St. 107; Cook v. College of 172;" People v. Ben. Soc, 3 Hun, 301; Physicians, 9 Bush, 541; Black and Delacy v. Neuse Riv. Co., 1 Hawks, White Smiths' Soc. r. Vandyke, 2 ■274; 9 Am. Dec. 636; State v. Georgia Whart. 309; 30 Am. Dec. 263; Sibley Med. Soc, 38 Ga. 608; 95 Am. Dec. „. Carteret Club, 40 N. J. L. 295. 408; State v. Lusitanian Soc, 15 La. ■' Sturges i). Chicago Board of Trade, Ann. 73; People v. Mich. Aid Soc, 22 86 lU. 441. 659 POWERS. §§ 390, 391 having been suspended as a member of the stock exchange, on his confession of insolvency, cannot be reinstated, or maintain any claim against the association, except in accordance with its rules; and where they provide an ample remedy, equity will not relieve.' One who for nine- teen years has acquiesced in his expulsion from the mem- bership of a corporation for non-payment of corporate dues will not be reinstated by the court.^ I 390. May do Business in Foreign State. — In the absence of any limitation in its charter, a corporation may do business outside the state which chartered it;* provided, of course, that it has the consent of the foreign • state. But it should have its central office, or place of management, within the state which gave it its charter.* A corporation, cannot enact or pass a by-law, or any rule or resolution for its government, except within the state under whose laws it is organized, and where it has a cor- porate existence.® § 391. May Employ Surplus of Money or Property to Best Advantage. — A corporation which has a surplus of money or property is not obliged to let it remain idle because it is unable to use it for the purposes for which the company was formed. It may employ such surplus in the most profitable manner it can.* ' Moxey v. Philadelphia Stock Ex- by which an act creating a corporation change, 14 Phila. 185. for certain specific objects, or to carry '' Bostwick V. Detroit Fire Depart- on a particular trade or business, is to ment, 49 Mich. 513. be strictly construed as prohibitory of ' Bank of Augusta v. Earle, 13 Pet. all other dealings or transactions not 558. coming within the exact scope of those ' State V. R. R. Co., 45 Wis. 579. designated. Undoubtedly, the main * Mitchell V. Vermont Copper Min. business of a corporation is to be con- Co., 40 N. y. Sup. Ct. 406. fined to that class of operations which " Simpson v. Hotel Co., 8 H. L. Cas. properly appertain to the general pur- 712; Forrest v. R. R. Co., 30 Beav. poses for which its charter was granted. 40. In Browni;. Winnisimmet Co., 11 But it may also enter into contracts Allen, 326, a ferry company was held and engage in transactions which are to have power to lease its surplus incidental or auxiliary to its main boats to other parties. "We know of bu.siness, or which may become neces- no rule," said the court, " or principle, sary, expedient, or profitable in the § 392 CORPORATIONS. 660 § 392. May Alter its Business to Suit Changes of Time or Circumstances. — "It is implied in the formation of every corporation that it shall adapt itself to changes of time and circumstances, and that it may avail itself of any new appliances or inventions which are deemed necessary vv convenient to a successful prosecution of its business. .... This is no departure from the original agreement (if the corporators, although the latter could not possibly have contemplated the alterations wliich time and events have brought about."* Thus it has been held that a cor- poration, chartered to purchase lands and create water power by the erection of dams, might, after changes in the country had made water privileges of little account, raise the grade of its lands, and then sell them;^ that a care and management of the property ■which it is aiitiiorized to hold under the act by which it was created. For example, it might perhaps be held that a corporation established for the purpose of manufacturing cotton and •woolen cloth could not properly invest all its capital in mill powers and priv- ileges, and engage exclusively in the business of leasing them to others to be used for manufacturing purposes, or that it could n.ot lawfully confine its operations to the makin;^ of steam- engines and machines for sale. But no one could doulit that it would be within the scope of its powers to allow another parson or corporation, for a reasonable compensation, to draw sur- plus water from its mill-pond, or to employ that portion of its steam power wliich was not recjuired for its ow n use. So a stage-coach company or a street- railway corporation would exceed its corporate powers if it engaged exten- sively in the transportation of passen- gers and merchandise on land or sea by steam; but it would be acting strictly within the limits of its capa- city if it should occasionally let a horse, or a coach, or a car, not required for its own immediate purposes, to another person or corporation, or should enter into a contract for the employment of its horses in another occupation during a portion of the year, when the business of the corporation did not require their use. We can see no substantial differ- ence between transactions of this char- acter and that which the defendants entered into when they made the con- tracts with the plaintiffs." ' Morawetz on Corporations, sec. 192. ^ Dupee V. Boston Water Power Co., 114 Mass. 37, the court saying: "It is contended that a sale of the lauds of the corporation in the mode proposed would be a breach of trust. This de- pends upon the question whether a sale on such terms is by reasonable implication within the chartered pow- ers of such a corporation. It is not enough that the proposed action may be shown to be prejudicial to the gen- eral corporate interests, if it is not illegal, and if it equally affects all the corporators. Regard must be had to the peculiar situation of the property. Tho increase of population since the original act of incorporation has given greatly increased valne to the lands acquired by the company. The busi- ness of the company can no longer be profitablj' confined to the develop- ment and use of its water privileges. It has, by contract with the common- wealth, the city, and other owners of land, extinguished its water power, and now owns instead thereof exten- sive and valuable tracts of land, over which it had originally only the right to flow. This change in its business 661 POWERS. § 393 canal company may widen and deepen its canal to meet the requirements of greater traffic;* that a manufacturing company may buy new machinery and patents;^ that a land improvement company may build a saw-mill and a hotel;' that a manufacturing company may open a shop to supply its employees with necessaries;* that a railroad company may agree to carry beyond its line.* A com- pany incorporated " for the purpose of manufacturing and selling glass" may purchase glassware to supply their customers, while repairing their works.* §393. Power to Issue Preferred Stock. — Preferred shares are those the owners of which are entitled to profits to a certain extent in preference to other share- holders. The holders of such shares are not creditors of, but stockholders in, the company. They differ from other share-holders only in being entitled, as against them, to payment of dividends in priority to them. Preferred, preference, preferential, or guaranteed shares, as they are indifferently called,^ are usually issued by companies who have expended their original capital for the purpose of obtaining further capital, and therefore where the author- ity to issue preference stock is given, it is necessary that it shall be employed for that purpose alone, and the com- haa made it necessary to fill in and receive it in pledge or in payment in improve the land, that it might be the lawful exercise of its corporate made available as assets of the com- powers: Leland v. Hayden, 102 Mass. pany, and this necessity has been rec- 542; American Railway-Frog Co. v. ognized by a resolve of the legislature Haven, 101 Mass. 398; 3 Am. Rep. authorizing an increase of capital for 377; Nesmith v. Washington Bank, 6 that purpose: Ees. 1856, c. 76. There is Pick. 324, 329; Coleman v. Columbia nothing in the general laws of the com- Oil Co., 51 Pa. St. 74; City Bank of mouwealth, or in the company's char- Columbus v. Bruce, 17 N. Y. 507; Ex ter, which forbids the sale proposed, parte Holmes, 5 Cow. 426." The power to purchase and hold implies ' Selden v. Delaware Canal Co., 29 the power to sell, and to sell upon such N. Y. 634. terms as to secure the highest price. ^ In re British etc. Cork Co., L. R. The whole capital is now represented 1 Bq. 231. by these lands from the sale, and not ^ Watt's Appeal, 78 Pa. St. 370. from the income or use, of which the * Dauchy v. Brown, 24 Vt. 197. share-holders must derive their return. ''See post, title Bailments; Carriers. In the absence of legislative provision * Lyndeborough Glass Co. v. Mass. to the contrary, a corporation may Glass Co., Ill Mass. 315. hold and sell its own stock, and may ' Henry v. R. R. Co., 4 Kay & J. 1. § 393 COEPOEATIONS. 662 pany cannot, for example, pay dividends with such stock.* The issue of preferred stock cannot be justified except for the purpose of strengthening the company's standing or enlarging its business. The corporation has reached a crisis in its affaii's; the stockholders are unable or un- willing to sink more money in the enterprise, but yet are ready to give to those who will do so a preference in any profits which the increased means may enable the concern to make. These considerations render the transaction fair and equitable.^ A distinction is made by the courts between dividends or interest upon preferred stock, and upon common stock, and it is this: that as to the latter, their declaration is discretionary with the directors; while as to the former, the question of ability to pay will be de- cided by the court, and the decision of the directors is not conclusive.' Equity will compel directors of a corporation to declare dividends in favor of holders of preferred stock who are shown to be entitled thereto.^ Preferred stock cannot be issued without express or implied authority in tlie charter, unless with the assent of all the stockholders. The effect of it would of course be to impair the contract of the original stockholders, which could not be done against their wishes.^ A power to borrow money does not give 1 Hoole V. R. R. Co., L. R. 3 Ch. thousand pounds, to be divided into App. 262. twelve thousand shares, of ten pounds ^ Lockhardt v. Van Alstyne, 31 each. In the articles of association, Mich. 76; 18 Am. Rep. 156. there are provisions in regard to the ' Barnard v. R. R. Co., 7 Allen, 512; payment of the dividends, that they Bryant v. Ohio College, 1 Cin. 67; shall not be paid out of capital, and Dickinson v. R. R. Co., 7 W. Va. 390; that when dividends are paid to the King V. R. R. Co. , 9 Rep. 4.31 ; Fur- share-holders they are to be in propor- ness V. R. R. Co., 25 Beav. 614; Chase tion to the shares which they hold. V. Vanderbilt, 37 N. Y. 334. So that when any person takes a num- * Hazelfcine v. R. R. Co., 79 Me. 411; ber of shares in this company a con- 1 Am. St. Rep. 331. tract is entered into between him and * Kent V. Quicksilver Mining Co., the general body of share-holders, to 78 N. Y. 159. In Hutton v. Scarbor- the effect that all those who have ough Clifif Hotel Co., 2 Drew. & S. taken or shall take any of the twelve 514, 4 De Gex, J. & S. 672, the court thousand shares shall have a ratable said: "I think it is clear that this is dividend, whenever there is a divi- a case for an injunction. There is dend, in proportion to their respective a memorandum of association which shares. Tliia is the contract between prescribes that the capital of the com- the parties. The question then really pany shall be one hundred and twenty comes to this: Can the majority of the 663 POWERS. § 393 authority to issue preferred stock.' But wliere such stock was secured by bond and mortgage, the holders being expressly prohibited by statute from being members of the corporation,^ where the preferred stock was surren- dered, and a bond and mortgage taken in its stead, the preferential share-holders thereafter not being entered as members of the corporation,' where there was a provision for the redemption of the stock,'' and where there was a con- dition for payment of interest until the company should go into operation,' — in all these cases the proceedings were adjudged not ultra vires, being looked upon as in the nature of loans. But where the charter authorizes the issue of preferred stock, no question as to the power to issue it can be raised by a dissenting stockholder.* And where its is- sue is agreed to by all the stockholders, it is, of course, legal.'' The legislative authority may be given subse- quent to the organization of the corporation.* The issue of preferred stock may be acquiesced in, so as to bar the other stockholders from objecting, from their recognizing share-holdera, in order to induce per- that the directors have no right to sons to take some of these twelve commit." thousand shares, which are not yet ' Kent v. Quicksilver Mining Co., issued, authorize the directors to make 78 N. Y. 159. an arrangement for giving to them, ^ Burt r. Rattle, 31 Ohio St. 116. not that which all the existing share- ^ Tntten v. Tison, 54 Ga. 139. holders contracted should he given, * ^yestchester etc. R.. R. Co. v. Jack- Viz., a dividend in proportion to their son, 77 Pa. Sb. 321. shares, but a preferential dividend, so ^ Richardson v. R. R. Co., 44 Vt. that every one who has contracted 613. that he shall have a proportionate " Matthews v. R. B. Co., 48 L. J. dividend with all those who take any J. Ch. 375; Henry o. R. R. Co., 1 De of the twelve thousand shares will no Gex & J. 606; Taft i\ R. R. Co., 8 R. longer have a proportionate dividend, I. 310; 5 Am. Rep. 575; St. John v. R. but his dividend will not be paid at R. Co., 10 Blatchf. 271; 22 Wall. 13G; all or at least suspended, until other Davis v. Proprietors, 8 Met, 321; In persoas who shall have been induced re Anglo-Danubian Steam Nav. Co., to take some of these twelve thousand L. R. 20 Eq. 339. shares shall have been paid their divi- ' Prouty v. R. R. Co., 1 Hun, dend in full ? That is a clear breach 655. and violation of the contract which ^ Rutland etc. R. R. Co. v. Tlirall, the parties entered into. It is not 35 Vt. 53v5; City of Covington v. Cov- necessary that there should be a case ington etc. Bridge Co., 10 Bush, 69; of fraud in the moral sense of the Midland R. R. Co. w. Gordon, 16 Mees. term. It is a breach of contract, and & W. 804. § 394 COEPORATIONS. 664 it at corporate meetings;' and especially where it has passed into the hands of innocent holders.^ §394. Rights of Preferred Stockholders. — Interest or dividends to preferred stockholders can be paid only out of the profits actually earned.^ Therefore, an express guaranty to pay a certain dividend on preferred stock en- titles the holders only to such dividends when there are profits out of which they can be paid." But arrears in one year may be made up, it seems, from profits earned in subsequent years.^ In declaring dividends on preferred stock, the arrearages of one year cannot be paid out of the earnings of a subsequent year, when the by-law of the corporation upon the subject implies that the entire net earnings of each year shall be paid out in dividends." But preferred stockholders are entitled to dividends from earnings on hand without first making provision for the payment of the principal of the bonded debt, where the corporation is in good circumstances and credit, and could doubtless provide for an extension of the time for paying such debt, or make payment by the issue of other bonds.' Preferred stockholders have no control over the corporation which is not enjoyed by common stockholders; the difference between them is simply this: that the one class is to be first paid out of a certain fund, to the exclu- sion of the other, if that fund be inadequate to pay both. ' Lookhart i\ Van Alstyne, 31 Mich, erence to its ability to pay them from 7G; IS Am. Rep. 156. earnings, was void. - Kent V. Quicksilver Min. Co., 12 * Lockhart v. Van Alstyne, 31 Mich. Hun, .53; 78N. Y. 159; Hoytu Quick- 76; 18 Am. Rep. 156; Taft v. R. R. silver Min. Co., 17 Hun, 169. Co., 8 R. I. 310; 5 Am. Rep. 575. ■'MoDougallw. Jersey Imperial Hotel '■' Henry v. R. R. Co., 1 De Grex & J. Co., 2 Hem. & M. 528; Pitts, etc. 606; Matthews v. R. R. Co., 28 L. J. R. Co. V. Allegheny Co., 63 Pa. St. Ch. 375; Lockhart v. Van Alstyne, 123; Curran ;'. Arkansas, 15 How. 31 Mich. 76; IS Am. Rap. 156; Taft 304; Bates v. R. R. Co., 49 Me. 491; v. R. R. Co., 8 R. I. 310; 5 Am. Rep. Taft o.R. R. Co., 8 R. I. 310; 5 Am. 575; Prouty v. R. R. Co., 1 Hun, Rep. 5/5. In Lockhart v. Van Al- 655. styne, 31 Mich. 76, 18 Am. Rep. 156, « Hazeltine v. R. R. Co., 79 Me. 411; it was held tliat an agreement by a 1 Am. St. Rep. 330. corporation to pay annual dividends ' Hazeltinew. R. R. Co., 79 Me. 411; to preferred stockholders, without ref- 1 .Am. St. Rep. 331. 665 POWERS. § 394 The corporation is no more a trustee for the holders of preferred stock than for the holders of common stock, and consequently the former have no right to complain of acts of the directors, which simply make it less likely that the particular fund from which they expect to be paid will prove sufficient to satisf}'' their claims. Therefore, the exe- cution of a mortgage upon the whole line of a railroad, for the purpose of raising funds for the company, and subse- quent to the issuance by the corporation of preferred stock, is not in derogation of the rights of the preference share-holders, and an injunction will not issue to restrain the execution of such mortgage;^ and so preferred stock- holders who are entitled to receive interest in preference to the payment of dividends on the common stock, and after payment of the mortgage interest, are not to be con- sidered prejudiced by the corporation issuing mortgage bonds consolidating prior and subsequent indebtedness.^ Owners of preferred railroad stock entitled to an annual non-accumulating dividend, dependent on a declaration of profits by a board of directors, which has reported more than sufficient net profits for the payment of the dividend, but which has determined to use it all for the improvement of the road, can compel payment to them- selves.^ Where an option was given to common stock- holders to become preferred ones by surrendering their stock before a given day, a stockholder who receives no notice in time to make the exchange, on account of his living abroad, is not entitled to relief.^ i^o where an op- tion was given to convert loan notes into shares within a given time,* and where by the terms of a railroad bond a time was fixed within which it might be converted into stock if the holder so desired, an extension of the time of payment of the bond was held not to extend the time of 1 Garrett v. May, 19 Md. 177. * Nickals v. R. B. Co., 15 Fed. Rep. ^ Thompson v. R. R. Co., 42 How. 575. Pr. 68; 11 Abb. Pr. 188; 45 N. Y. ' Pearsou «. R. R. Co., 14 Sim. 541. 468. ^ Campbell v. R. R. Co., 5 Hare, 519. § 394 CORPORATIONS. 666 the right of conversion.* Preferred stock was entitled to preferred dividends "out of the net earnings of the road, .... after payment of mortgage interest and delayed coupons in full." Subsequent to the issue of this stock, the company leased new roads, and borrowed monej'^ for the repair and equipment of the road, as it had power to do. The rent of the new road and the interest on this borrowed money, it was held in the supreme court of the United States, had priority over the preferred stock.^ Where the certificate of preferred stock provides that after the payment of the guaranteed per cent the pre- ferred stockholders shall share in any surplus beyond a certain per cent which may be divided upon the common stock, such preference share-holders are, after receiving their guaranteed per cent, to be deferred until the com- mon share-holders have received their specified per cent, and then all stockholders are to be on the same footing as to any remaining surplus.^ The rigiit of the holders of preferred stock extends only to a priority as to dividends; as to assets or capital, they stand in the same position as ordinary share-holders.^ ' Muhlenberg r. R. R. Co., 47 Pa. profits than is the proportion borne by St. 16. his share o£ the capital to the capital - St. John V. R.. R. Co., 10 Blatchf. of the others, wliether on account of 271 ; 22 Wall. 137. his services (which is the more fre- ^ Bailey v. R. R. Co., 1 Dill. 174; 17 quent ground in cases of partnership Wall. 93. for giving the larger share), or on ac- •' In re London Rubber Co., L. R. 5 count of tho services of others formerly Eq. 519, Where the power was express, given to the partnership, which is preference capital was issued by an sometimes done, especially in the case English corjjoration, and its validity of a seooud or third generation, that sustained: In re Bangor etc. "^Uab Co., privilege ceases when the partnership L. R. 20Eq. .59. So in an American case, is dissolved. If you give an annuity where it was allowed by statute: Me- out of profits to a widow during the Gregory. Uome Ins. Co., 33 N. J. Eq. continuance of the partnership, she ]S1. The rule was clearly laid down having no share of the capital, of in an English case, Grifiith v. Paget, course that ex vi termini will come to L. R. 6 Ch. Div. 511, in these words: an end at the dissolution of the part- " These companies are commercial nership. If you give a managing part- partnerships, and are, in the absence ner a salary, or a larger share of profits of express provisions, statutory or than his proportion of the capital, of otherwise, subject to the same consid- course, at the dissolution, the manage- erations. If in an ordinary commer- ment comes to an end and his larger cial partnership one or more of the share of profits. But in the ordinary partners has a larger share of the case, when the profits are unequally 667 POWERS. § 395 Illustrations. — A corporation authorized to issue preferred stock after it had received a certain sum for each share, which should be payable on dissolution in full next after the pay- ment of debts, guaranteed that it ''shall receive semi-annual dividends of four dollars on each share." Held, that the guar- anty was absolute, and independent of the profits earned: Williams v. Parker, 136 Mass. 204. A supplement to the char- ter of a corporation authorized issuance of preferred stock, and provided "that when so issued, the holders thereof, respect- ively, shall be entitled to receive dividends on the same, not to exceed seven per centum per annum, before any dividend shall be set apart or paid on the other and ordinary stock of said company." Held, that holders of preferred stock were entitled to such dividends, up to seven per cent, as the profits of a par- ticular year would yield, before any dividends were paid to the common stockholders, although the deficiency of profits in one year was not to be made up in another year; and when a holder of preferred stock failed to claim his rights in certain years, a subsequent owner thereof could claim reimbursement: Elkins V. R. R. Co., 36 N. J. Eq. 233. §395. No Implied Power to Alter Charter. — The charter of the corporation cannot be altered without the consent of the legislature," and the consent of every mem- ber of the corporation.^ A legislature, under an express divided, that is, unequally as regards continuance of the partnership would the share of the capital, the same rule have no direct bearing on the division prevails, and that is quite indepen- of the capital, as distinguished fro:n dent of the circumstance whether the profits earned up to the time of the excess of profits is given tor services, dissolution, after the dissolution of or given to a sleeping partner for the the company. " use of his name or otherwise. When ' Morawetz on Corporations, tec. the partnership comes to an end, the 196. right to the share of the profits comes '^ Morawetz on Corporations, sec. to an end also; and you distribute the 196; Union Locks Co. v. Towne, 1 assets, after providing for the profits N. H. 44; 8 Am. Dec. 33; Com. v. earned up to the time of the dissolu- Cullen, 13 Pa. St. 133; 53 Am. Dec. tion in proportion to the partners' 450; Brown w. Fairmount Mining Co., shares of the partnership capital. 10 Phila. 32; contra in New Yorii and That is the general rule of law in a Massachusetts: See Morawetz on Cor- commercial partnership. Therefore, porations, sec. 202. In Zabriskie v. you would distribute the assets simply R. R. Co., 18 N. J. Eq. 191, 90 Am. in proportion to the capital. This is Dec. 627, the court say; "The de- ft commercial partnership subject to cisions in the cases of Banet v. R. certain statutory provisions. There- R. Co., 13 111. 504, Pacific R. R. fore, if there were no provision to be v. Reushaw, 18 Mo. 210, and Pacific found anywhere, you would distribute R. R. v. Hughes, 22 Mo. 291, 64 Am. the assets in proportion to the capital, Dec. 265, hold that the majority of and the mere arrangement for the the stockholders, by authority of the division of profits inter se during the legislature, may make a change, pro- § 396 CORPORATIONS. 668 reservation of power to "repeal, alter, or modify" the charter of a private corporation, cannot modify it without the consent of the corporation. But if the corporation refuses to accept a statutory modification, it must cease to transact business in a corporate capacity.' Whenever a corporation accepts a material alteration of its charter from the legislature, by regular action of the stockholders in general meeting duly organized, the act is binding upon each individual member, unless he shall expressly dissent therefrom before any debts are contracted or rights inure to third parties in carrying out the new designs or enter- prise.^ If a statute, in force at the time a subscription to the capital stock of a railroad company is made, author- izes an extension of the line of the road, the subsequent exercise of such power by the company will not affect the subscription.' § 396. What not " Alterations " — Grant of Additional Franchises — Discharge of Obligations to State. — But the vided it is not great or a radical one. enter upon such enterprises as are They, in express terms, say that a allowed by the legislature. Again, chaiigo like this would not be war- the power of the legislature has its ranted, and so far as of authority are limits. It ean repeal or suspend the on the side of the complainant. But charter; it can alter or modify it; it the principle on which they are de- can take away the charter; but it ean- cided is wrong; and it it is once not impose a new one, and oblige the conceded that a majority of the cor- stockholders to accept it. It can alter porators maj?', by authority from the or modify the old one; but power to legislature, change the object of the alter or modify anything ean never be enterprise in small things, there is no held to imply a power to substitute a principle of law by which they can be thing entirely different. It is not the restramed in any a little larger or in meaning of the words in their usually the character of the whole work. The received sense. Power to alter a same principle will lead the courts of mansion-house would never be con- Illinois and Missouri, as it did those strued to mean a power to tear down in New York, to allow radical changes, all but the back kitchen and front and must, if consistently applied, allow piazza, and build one three times as a charter for a railroad to be used for large in its place. In anything altered, banking or insurance business, or for something must be preserved to keep a canal, theater, brewery, or beer up its identity; and a matter of the saloon. There is no other alternative same kind, wholly or chiefly new, to the proposition that while the power substituted for another, is not anal- reserved authorizes the legislature, teration; it is a change. " within certain limits, to make sueh ' Yeaton v. Bank of the Old Domin- alterations as they choose to impose, ioa, 21 Gratt. 593. it gives no authority, when the legis- " Martin v. R. R. Co. , 8 Fla. 370; 73 lature does not impose them, for the Am. Dec. 713. majority to adopt such alterations or * Jewettv. R. R. Co., 34 Ohio St. 001. 669 powEKs. § 397 grant of additional franchises by the legislature to the corporation is not an alteration, and may be accepted by a majority of the corporators.^ So, also, the discharge of obligations due the state by the corporation is not an alteration of the charter within the last section.^ An act extending the charter is valid as to creditors without acceptance.^ An alteration in the charter increasing the number of directors may be accepted by a majority of the stockholders.* Amendments which are necessary to carry into effect its main design may be made without the con- sent of a share-holder; but not an amendment which fundamentally changes the object and purposes of the act of incorporation." A subscriber to the capital stock of a company, who agrees to be subject to the rules and regula- tions which may from time to time be adopted by the directors, cannot avoid payment because the charter has been amended, reducing the number of days of notice to be given, if the amendment of the charter has been ac- cepted." Illustrations. — An agricultural society's object was "to improve the condition of agriculture, horticulture, and the me- chanic and household arts." It was reorganized into a joint- stock company, " to improve the condition of agriculture, horti- culture, floriculture, mechanic and household arts," the name being changed only by substituting the word "l^ard" for "society." The old society provided for holding annual fairs, and the new for annual fairs and exhibitions. Held, that there was no substantial change in the objects of the society: Living- ston County Agricultural Society v. Hunter, 110 111. 155. § 397. Effect of Alteration on Stockholder's Liability. — A subscriber to the capital stock of a corporation is iPryji. R. R. Co., 2 Met. (Ky.)322; 470; Milford v. Brush, 10 Ohio, 111; Irwine v. Turnpike Co., 2 Penr. & W. 33 Am. Dec. 78. 466; 23 Am. Deo. 53; Gray v. Monon- ' Voae v. Handy, 2 Me. 322; 11 Am. gahela Nav. Co., 2 Watts & S. 156; 37 Deo. 101. Am. Dec. 500; Pacific R. R. Co. •;;. * Mower v. Staples, 32 Minn. 284. Hughes, 22 Mo. 291; 64 Am. Dec. 265; ^ Fry v. R. R. Co., 2 Met. (Ky.) Cross t). R. R. Co., 90 Pa. St. 392. 314. " Joyw. Jackson Plank Road Co., 11 ' Hlinois River R. R. Co. v. Beers, Mich. 155; Wilson v. R. R. Co., 33 Ga. 27 111. 185. § 398 CORPORATIONS. 670 discharged from his liability on his subscription by the alteration of the charter by the legislature, even though the alteration is adopted by a majority of the stockhold- ers/ But the rule is different where the legislature has reserved the right at the beginning to amend or alter the charter.^ Illustrations. — The defendant subscribed for stock in the B. & C. Railroad Company; the legislature changed the terminus from B. to M., and authorized the company to run a line of steamers beyond their terminus. Held, that the defendant was released from his subscription: Marietta etc. R. R. Co. v. Elliott, 10 Ohio St. 57; Thompson v. Guion, 5 Jones Eq. 113. A had contracted to take a share in a corporation created for the purpose of making a river navigable, and empowered to hold real estate not exceed- ing six acres, and to collect a toll for forty years, not exceeding twelve per cent per annum on the amount of money expended; and afterwards the legislature, on the petition of the corporation, but without the consent of A, authorized them to hold real es- tate to the amount of one hundred acres, and to collect a toll unlimited as to its amount and duration. Held, that A was dis- charged from his contract, and not liable for any subsequen- assessment on the share: Union Locks and Canals v. Towne, 1 N. H. 44; 8 Am. Dec. 32. § 398. No Implied Power to Engage in Business out- side of That Which It was Chartered to Carry on. — There is no implied authority in a corporation to engage in a business outside of the particular business it was chartered to carry on.^ Thus it has been held that a railroad com- pany has no implied power to purchase and hold land for speculation and sale,^ nor a coal-mining companj"^ to buy coals in the market as a speculation,^ nor a toll-bridge company to build a wharf and rent it,* nor a railroad to trade in coals,' or become a steamboat company, or carry ' Hartford etc. R. R. Co. «. Croswell, * Rensselaer R. R. Co. v. Davis, 43 .5 Hill, 38.3; 40 Am. Dec. 354; Troy N. Y. 137; Pacific R. R. Co v. Seeley, etc. R. R. Co. V. Kerr, 17 Barb. 606; 45 Mo. 212; 100 Am. Dec. 369. MoCuUough V. Moss, 5 Deuio, 580; * Alexander v. Cauldwell, 83 N. Y. Bank v. Charlotte, 85 N. C. 433. 480. 2 Northern R. R. Co. v. Miller, 10 « Toll-bridge Co. v. Osbom, 35 Barb. 260. Conn. 7. ' Clark V. Farrington, 11 Wis. 306; ' Attorney-General v. R. R. Co., 1 Waldo V. E. R. Co., 14 Wis. 575. Drew. & S. 154. 671 POWERS. § 398 on a brewery,^ nor a fire or life insurance company to do a marine business,^ nor a toll-road to establish a stage line and carry the mails,^ nor a company for manufacturing and selling railroad carriages to obtain a charter and build a railroad in a foreign country/ nor a railroad to do a banking business.' A corporation chartered to dock and repair vessels cannot engage in the owning and navi- gating of ships." A corporation chartered to do an insur- ance business cannot engage in banking.' A contract by a railroad company to guarantee the expenses of a musi- cal festival is ultra vires. So is the same contract by a corporation chartered to manufacture and sell musical instruments.* A corporation organized for the purpose of engaging in the "general freight and transfer busi- ness" is not bound by its contract of suretyship in a matter outside of its regular business.' A corporation chartered for the purpose of manufacturing machinery cannot act as selling agent of another manufacturer's machinery.^" Illustrations. — A corporation was chartered to construct and operate a railroad between Savannah and Macon, and to organize and carry on a banking business. Held, to have no authority to enter into a partnership with a private individual to purchase and run a steamboat on the Chattahoochie River, forming no part of its route: Central R. E. & BanJcing Co. v. Smith, 76 Ala. 572; 52 Am. Rep. 353. A company was incor- porated " for the purpose of establishing and conducting a line or lines of steamboats, vessels, and stages, or other carriages between P. and B., for the conveyance of passengers and trans- portation of merchandise and other articles." Held, that a con- tract of such company for the breaking of ice and towing ' Lyde v. R. R. Co., 36 Beav. 14. ' Blair v. Perpetua,! Ins. Co., 10 Mo. sin re PhiEiiix Life Ins. Co., 2 559; 47 Am. Dec. 129; Ohio etc. Ins. Johns. & H. 441. Co. v. Merchants' Ins. Co., 11 Humph. 3 Downing?). R. R. Co., 40 N. H. 230. 1; 53 Am. Dec. 742. * Riche V. R. R. Co., L. R. 9 Ex. 224. » Davis v. R. R. Co., 131 Mass. 221; * People V. R. R. Co., 12 Mich. 389; 41 Am. Rep. 236. 86 Am. Dec. 64. ° Lucas v. White Line Transfer Co., 'New Orleans Steam Co. v. Ocean 70 Iowa, 541; 59 Am. Rep. 449. Dry Dock Co., 28 La. Ann. 173; 26 " Westinghouse Machine Co. ■w.Wil- Am. Rep. 90. kiason, 79 Ala. 312. § 399 COEPORATIONS. 672 vessels through the track thus broken, such vessels being bound for v., is invalid: Steam Nav. Co. v. Dandridge, 8 Gill & J. 248. A private corporation was chartered by the name of the "State Grange of the Patrons of Husbandry of Alabama." Held, that it had no power to lend money; such power is excluded by the declaration that the corporation is not created for pecuniary profit: Chambers v. Falkner, 65 Ala. 448. § 399. Authority to Wind up Business. — A corporation cannot, except with the consent of the legislature, alienate its property, and relinquish the control and management of its affairs, so as to divest itself of all further responsibil- ity.' Trading or manufacturing corporations have an implied authority, with the consent of a majority of the stockholders, to wind up the business, distribute the assets, and surrender the charter.^ ' York etc. R. R. Co. v. Winans, 17 How. 30; see post, Dissolution of Cor- porations. ^ Wilson V. Central Bridge Co., 9 K. I. 590; Wood v. R. R. Co., 8 Phila. 94; Black v. R. R. Co., 22 N. J. Eq. 404; Lanman v. R. R. Co., 30 Pa. St. 42; 72 Am. ]>ec. 085. In Trcadwell V. Salisbury Mfg. Co., 7 Gray, 393, 06 Am. Dec. 400, it is said: "We enter- tain no doubt of the right of a corpora- tion established solely for trading and manufacturing purposes, by a vote of the majority of their stockholders, to ■wind up their afTairs and close their business, if in the exercise of a sound discretion they deem it expedient so to do. At common law, the right of cor- porations acting by a majority of their stockhiildci 5 to sell their property is absolute, and is not limited as to objects, circumstances, or quantity: Angell and Ames on Corporations, sees. 127 et seq.; 2 Kent's Com., 6th ed., 2S0; Mayor etc. of Colchester v. Low- ton, 1 Ves. & B. 226, 240, 244; Binnev's Case, 2 Bland, 142. To this general rule there are many exceptions arising from the nature of particular corpora- tions, the purposes for which they were created, and the duties and liabilities imposed on them by their charters. Corporations established for objects quasi public, such as railway, canal, and turnpike corporations, to which the right of eminent domain, and other large privileges are granted in order to enable them to accommodate the pub- lic, may fall within the exception; aa also charitable and religious bodies, in the administration of whose affairs the community, or some portion of it, has an interest to see that their corporate duties are properly discharged. Such corporations may perhaps bo restrained from alienating their property, and compelled to appropriate it to specific uses by mandamus or other proper process. But it is not so with corpora- tions of a private character, established solely for trading and maimfacturing purposes. Neither the public nor the legislature have any direct interest in their business or its management. These are committed solely to the stockholders, who have a pecuniary stake in the proper conduct of their affairs. By accepting a charter they do not undertake to carry on the busi- ness for which they are incorporated, indefinitely, and without any regard to the condition of their corporate property. Public policy does not re- quire them to go on at a loss. On the contrary, it would seem very clearly for the public welfare, as well as for the interest of the stockholders, that they should cease to transact business as soon as, in the exercise of a sound judgment, it is found that it cannot be 6?3 POWEES. §§ 400, 401 § 400. No Implied Power to Entar into Partnership. — Nor has a corporation any implied authority to enter into a partnership.^ But it may make joint contracts by which both parties may become liable.^ A corporation may be a joint owner of a ferry, and be entitled to an accounting.' A corporation established to manufacture iron may be a partner with an individual in carrying on that business.^ § 401. Nor to Deal in Shares of Other Corporations. — Nor has a corporation any implied authority to deal in shares in another com.pany.^ Though a railroad corpo- ration may take the stock of another railroad corporation by way of security for a debt, it has no right to invest its capital stock of another corporation, unless authority to become such is clearly conferred by statute: Mutual Savings Bank etc. v. Meriden Agency, 24 Conn. 159; Franklin Co. v. Lewis- ton Inst., G8 Me. 43; 28 Am. Rep. 9; Central R. R. Co. v. Collins, 40 Ga. 532; Su'nner v. Marcy, 3 Wood. & M. 105. Were this not so, one corpora- tion, by buying up the majority of the shares of the stock of another, could take the entire management of its business, however foreign such business might be to that which the corporation so purchasing said shares was created to carry on. A banking corporation could become the opera,- tor of a railroad, or carry on the busi- ness of manufacturing, and any other corporation could engage in banking by obtaining the control of the bank's stock. Nor would this result follow any the less certainly if the shares of stock wore received in pledge only to secure the payment of a debt, provided the shares were transferred on the books of the company to the name of the pledgee. A person in whose name the stock of the corporation stands on the books of the corporation is as to the corporation a stockholder, and has the right to vote upon the stock: State ex rol. White v. Ferris, 42 Conn. 503; Ex parte AVillcocks, 7 Cow. 402; 17 Am. Dec. 525; In re Barker, G Wend. 509; Hoppin v. Buffum, 9 R. I. 513; II Am. Rep. 291; Field on Corpora- tions, sec. 69." prudently continued. If this be not so, we do not see that any limit could be put to the business of a trading cor- poration short of the entire loss or de- struction of the corporate property. The stockholders could be compelled to carry it on until it came to actual insolvency. Such a doctrine is with- out any support in reason or author- ity." ' Marine Bank v. Ogden, 29 111. 248; New York etc. Canal Co. v. Fulton Bank, 7 Wend. 412; Whittenton Mills V. Upton, 10 Gray, 582; 71 Aji. Dec. 681; Morris etc. Coal Co. v. Barclay, 68 Pa. St. 173. 2 Marine Bank v. Ogden, 29 HI. 248. » Haokett v. R. R. Co., 12 Or. 124; 53 Am. Rep. 327. ' Catakill Bank v. Gray, 14 Barb. 471. * Sumner v. Marcy, 3 Wood. & M. 105; Mechanics' Bank v. Meriden Agency, 24 Conn. 159; Central R. R. Co. V. Collins, 40 Ga. 582; Hazlehurst V. R. R. Co., 43 Ga. 13; Berry v. Yates, 24 Barb. 199; Franklin Co. v. Lewiston Inst., 68 Me. 43; 28 Am. Rep. 9; Coppiu v. Greenless Co., 38 Ohio St. 275; 43 Am. Rep. 425. In Franklin Bank v. Commercial Bank, 36 Ohio St. 350, 38 Am. Rep. 594, the court say: "There would seem to be little doubt, either upon principle or authority, and independently of ex- Jjress statutory prohibition of the same, that one corporation cannot be- come the owner of any portion of the Vol. I.— 43 § 402 CORPORATIONS. 674 corporate funds in the purchase of such stock. Such au investment is ultra vires} § 402. Nor to Alter Amount of Capital Stock or Pur- chase its Own Shares. — A corporation has no implied authority to increase or diminish the number or value of its shares.^ The power to increase its capital stock cannot be exercised by the directors, unless they are specially authorized so to do, either by the charter or by the stock- holders.^ Where a corporation has power to increase its stock, those holding stock in the first instance are entitled to subscribe for the new stock according to their respective shares, and may sue the corporation for refusing them this right.* A majority of the stockholders of a corpora- tion cannot, without the coubent of the minority, dispose of new stock without regard to its actual value.' A cor- poration cannot, by by-laws or otherwise, deprive an unconsenting stockholder of a right secured to him by the corporate articles. Thus a building association cannot retire and cancel shares of stock against the will of the holder thereof.^ Therefore it cannot, without express authority, buy shares of its own stock, as this would in- crease the value of each remaining share;' but it may acquire its own shares by bequest,* or in satisfaction of debts due it.^ A corporation may purchase its own stock, there being no element of fraud in the transaction, and the corporation neither being insolvent nor contemplat- ing dissolution.'" ' Milbank v. R. R. Co., 64 How. Pr. ' German Savings Bank v. Wulfe- 20. kuhler, 19 Kan. 60; Currier v. Leb- 2R. R. Co. V. Allerton, 18 Wall, anou Slate Co., 56 N. H. 262; 235; Knowltou v. Congress etc. Co., 14 contra, Iowa Lumber Co. v. Foster, 49 Blatchf. 364; Yew York etc. R. R. Co. Iowa, 25; 31 Am. Rep. 140. V. Schuyler, 34 N. Y. 30; Sutherland * Rivanna Nav. Co. v. Dawsons, 3 V. Olcott, 95 N. Y. 93. Gratt. 19. 3 Eidman v. Bowman, 58 111. 444; 11 » Taylor v. Ex. Co., 6 Ohio, 177; Am. Rep. 90. State Bank v. Fox, 3 Blatchf. 431; * Gray v. Portland Bank, 3 Mass. Barton v. Plank Road Co., 17 Barb. 364; 3 Am. Dec. 156. 397; Cooper v. Frederick, 9 Ala. '^ Jones V. Morrison, 31 Minn. 140. 738. * Bergman v. St. Paul Mutual Build- '» Fraser v. Ritchie, 8 111. App. ing Ass'n, 29 Minn. 275. 554. 675 POWERS. § 403 Illusteations. — The constitution and laws of Louisiana pro- vide for the increase of corporate stock, but not for its decrease. Held, that a corporation is without power to make a decrease: Seignouret v. Home Ins. Co., 24 Fed. Rep. 332. Unissued stock of a corporation was, by agreement of all the stockholders (there being no creditors), paid for with corporate funds, and issued to one stockholder to be held in trust for all. Held, that the issue was valid, and that the directors had no authority afterwards to direct the stock to be sold: Jones v. Morrison, 31 Minn. 140. The charter of a corporation provided for sixty days' notice of authorization of any increase of the capital stock, within which time any stockholder might have the privilege of taking addi- tional shares. Held, that any stockholder not applying and tendering payment withia such time would forfeit the privilege: Hart V. St. Charles Street R. R. Co., 30 La. Ann., pt. 1, 768. In- creasing the capital stock of a corporation, and issuing new shares to be sold at less than par to supply a fund actually needed by the corporation, held, not a "fictitious increase of the stock," within the California constitution avoiding such increases: Stein v. Howard, 65 Cal. 616. By the charter of an insurance company, its capital stock was fixed at a certain sum, with au- thority to increase it at the discretion of the stockholders. Held, that no formal vote of the stockholders was necessary to make the increase. The requisite assent of the stockholders could be shown by their conduct and acquiescence: Payson v. Stcever, 2 Dill. 428. The A. Life Association bought the greater part of the capital stock in the L. Life Ins. Co., paying with drafts. The directors of the A. were then elected directors of the L., and the larger part of the shares purchased were presented for re- demption and redeemed, the consideration being the return of the largest draft, and by other transactions all the other drafts given by the A. for the stock were returned to it. Held, that these acts which resulted in the cancellation and retirement of the capital stock of the L. were constructively fraudulent: Alex- ander V. Relpe, 74 Mo. 495. § 403. Nor to Give Away Property. — There is no implied authority in a corporation or any of its agents to transfer or give away any of its funds or property gratuitously.' Thus it has no authority to sign accom- modation paper for others, or to lend its credit, or give a guaranty without consideration.^ A corporation may ' Morawetz on Corporations, sec. * Lafayette Bank v. St. Louis Stone- 232. ware Co., 2 Mo. App. 299; Morford v. § 404 CORPOEATIONS. 676 dispose of its stock for less than its face value, and the transaction, as between the corporation and the pur- chaser, will be valid unless prohibited by statute.' § 404. The Corporation Name. — A corporation should use the name which its charter gives it," though it seems it may acquire a different name by usage.^ A change in the name of a corporation can only be affected by chan- ging the articles of incorporation, and the best evidence of this change is the articles themselves.^ A court of equity may, upon objection made to the organization of a cor- poration by a specific name, on the ground that another corporation has already adopted the proposed name, or one so near like it as to lead to confusion, require a suffi- cient modification of the name to obviate objection.^ An injunction may be granted by analogy to the law of trade- marks to a corporation, to restrain persons from adopting and using the same corporate name with that previously adopted regularly, and in good faith by complainant.* A contract is not avoided by the misnaming therein of the corporation with which it is made.'' A misnomer in a grant by statute, or by devise to a corporation, does not avoid the grant, though the right name of the cor23oratioil be not used, provided the corporation really intended be made apparent.' " The Enterprise Manufacturing Co.," when the charter name was " Enterprise Manufacturing Farmera' Bank, 26 Barb. 568; Savage bins, 16 Gray, 77: 77 Am. Dec. 396; Mfg. Co. V. Worthington, 1 Gill, 284; Fuller v. Hooper, .S Gray, 341. Monument Nat. Bank u. Globe Works, ''Chicago etc. K. R. Co. v. Keisel, 101 Mass. 57; 3 Am. Eep. 322. But 43 Iowa, 39. see Taunton v. Royal Ins. Co., 2 Hem. * Ex parte Walker, 1 Tenn. Oh. 97. & M. 135. « Newly v. R. R. Co., Deady, 609; ' Harrison t;. R. R. Co., 4 McCrary, Holmes v. Holmes etc. Mfg. Co., 37 264. Conn. 278; 9 Am. Rep. 324. So by ^ Glass V. Turnpike Co., 32 Ala. statute in some states a certificate of 376. incorporation will not be granted for a ^ Minot V. Curtis, 7 Mass. 441 ; Mel- name the same as, or an imitation of, ledge V. Boston Iron Co., 5 Cusli. 158; a prior one: State v. McGrath, 92 Mo. 51 Am. Dec. 59; Smith v. Plank Road 355. Co., 30 Ala. 650; South District v. ' Hobokeu etc. Ass. v. Martin, 13 Blakeslee, 13 Conn. 227; Brown v. N. J. Eq. 427. Parker, 7 Allen, 338; WiUiams v. Rob- ^ Vansaut v. Roberts, 3 Md. 119. 677 POWERS. § 405 Co.," is not a material variance.' Where a corporation has been sued by a wrong name, the mistake may be cor- rected by an amendment of the writ.^ Mere change of a corporation's name by the legislature does not affect third persons, as long as its identity appears.^ A subscription to the capital stock of a corporation is not invalidated by a legislative change in the name, and may be recovered in a suit under the new name.* Although the name of a cor- poration has been changed by an act of the legislature, if the corporation continues to conduct its business in its original name, and otherwise exclusively uses that name after the passage of the act, it may by usage regain such original name, and can be lawfully sued and proceeded against in bankruptcy by that name.* Illustrations. — A statute forbade a corporation to take the name of a person or firm without adding the word " com- pany " or " corporation," together with some word designating the business. Held, that "Mallinckrodt Chemical Works" was not objectionable, although "Mallinckrodt" is a family name: State v. McGrath, 75 Mo. 424. Pending a suit by a cor- poration, an act of the legislature was passed changing the name of the corporation, if the corporators should consent, and the suit proceeded to judgment in the original name. Held, that it was too late after judgment for the defendant to set up that there was no such corporation, especially if he fails to make it appear that the corporators accepted the new name: Water Lot Oompany v. Bank of Brunswick, 53 Ga. 30. § 405. Corporation Seal — Not now Always Essential. — A corporation contracts by the hands of its agents. Formerly the assent of the corporation could only be shown by the use of its corporate seal, but it is now * Jackson v. State, 76 Ga. 552. law, and will be strictly construed. A ' Barnhain w. Savings Bank, 5 N. H. misnomer is fatal: King v. Randlett, 573; Sherman v. Connecticut River 33 Cal. 318. Bridge Co., 11 Mass. 338; BuUard v. * Rosenthal v. Madison P. R. Co., 10 Nantucket Bank, 5 Mass. 99; George- Ind. 359. town V. Beatty, 1 Cranoh C. C. 234; * Bucksport ete. R. R. Co. v. Buck, Lane v. R. R. Co., 5 Jones, 25. 68 Me. 81. The statute authorizing suit to be ^ Alexander v. Berney, 28 N. J. Eq. brought against a company by its 90. name is in derogation of the common § 405 CORPORATIONS. 678 well settled, in this country at least, that this is not essential, and that a corporation may make a valid con- tract without the use of a seal.* A certificate of stock is valid without a seal.^ The corporate seal is not essen- tial to the validity of a mortgage purporting to have been executed by a private business corporation through its proper officers.^ A corporation may use any seal it pleases, but the seal used must be shown to have been adopted by the corporation, and to have been afi&xed by the proper ofScers.* It seems that a corporation may adopt and make effectual as its seal the individual seals of its ofiBcers affixed to its deed, when it has no seal of its own.^ The seal of a corporation must be proved." Proof of the corporation seal is not necessary^ where it is affixed by the proper officer of the company.' The use of a cor- porate seal will be presumed to be a lawful use.' The corporate seal attached to a contract is prima facie evi- dence that it was duly entered into by the corporation.' The secretary of a corporation is the proper custodian of the corporate seal; and when the secretary affixes it to a mortgage or other instrument, the presumption is, he did it by the direction of the corporation, and it devolves upon those who dispute the validity of the deed to prove that he acted without authority.'" The usual practice is ' Morawetz on Corporations, sees. Danforth v. Schoharie Turnpike Co., 167-170; Mofct V. Hicks, 1 Cow. 513; 12 Johns. 227. 13 Am. Dec. 551; Angell and Ames on '' VitzhxLgli v. Bank, 3 T. B. Mon. Corporations, sec. 257; The Banks v. 126; 16 Am. Dec. 90. Poitiaux, 3 Rand. 136; 15 Am. Dec. ^ Leinkauf i;. Caiman, N. Y., 1888. 706; Barker v. Ins. Co., 3 W^end. 94; * Perry v. Price, 1 Mo. 664; 14 Am. 20 Am. Dec. 664; Garrison v. Combs, Dec. 316. 7 J. J. Marsh. 84; 22 Am. Dec. 121; * Taylor v. Heggie, 83 N. C. 244. Am. Ins. Co. o. Oakley, 9 Paige, 496; « Den v. Vreelandt, 7 N. J. L. 352; 38 Am. Dec. 561; Ross v. City, 1 Ind. 11 Am. Dec. 551. 281; 48 Am. Dec. 361; Chestnut Hill ' Susquehanna Bridge Co. v. Gen- Turnpike V. Rutter, 4 Serg. & R. 6; eral Ins. Co., 3 Md. 305; 56 Am. Doc. 8 Am. Dec. 675; School District in 740. Rumford v. Wood, 13 Mass. 199; Bank ^ Indianapolis etc. R. R. Co. v. of United States v. Dandridge, 12 Morganstern, 103 111. 149. Wheat. 64; Bank of Columbia v. Pat- ^ Berks Road Co. v. Myers, 6 Serg. tersou, 7 Cranch, 299; Union Bank v. & R. 12; 9 Am. Dec. 403; Musser v. Ridgely, 1 Har. & G. .324; Fleckner v. Johnson, 42 Mo. 74; 97 Am. Dec. 316. BanJi of United States, 8 Wheat. 338; i» Evans v. Lee, 11 Nev. 194. 679 POWERS. § 405 to prove the identity of a corporate seal by a witness acquainted with its impression.^ The use of the seal gives no validity to a contract ultra vires? A court of equity will not declare a contract between two corpora- tions void merely because the seals of the corporation are not affixed to it; but if necessary, will rather compel the parties to affix their seals.' A corporate seal otherwise sufficient, which is affixed to bonds by the printer, under direction of the corporate officers, who afterwards sign and issue the bonds, renders them valid as obligations under seal.* The name of a corporation need not be signed to its sealed instruments, as a corporation executes its convey- ances under its corporate seal, and the corporate name being subscribed would not give the instrument greater validity.^ ' City Council v. Moorhead, 2 Kich. * Royal Bank of Liverpool v. R. R. 430. Co., 100 Mass. 444; 97 Am. Dec. ■^ Gibson v. Goldthwaite, 7 Ala. 281; 115. 42 Am. Dec. 592. * Johnston v. Crawley, 25 Ga. 613; ^ Missouri River etc. R. R. ■». Com- 71 Am. Deo. 174. missioners, 12 Kan, 482. 406 COEPOKATIONS. 680 CHAPTER XXVI. THE POWERS AND LIABILITIES OP OFFICERS AND AGENTS OF CORPORATIONS. § 406. Powers of agenta of corporations generally. § 407. Liability of corporations for acts of promoters. § 408. The board of directors have all powers of the corpoTation. § 409. The board of directors cannot make radical changes. § 410. The board of directors cannot wind up corporation. § 411. Directors are trustees for corporation. § 412. The board of directors must not have conflicting interests. § 413. Liability of directors for fraud. § 414. Liability of directors for neglect. § 415. Liability of directors for mistakes made in good faith. § 416. Directors must act as board — Majority govern. § 417. Directors' meetings. § 418. Implied authority to appoint inferior agents and delegate authority. § 419. Powers of secretary and treasurer. § 420. President of corporation — Powers of. § 421. Removal of ofSoers. § 422. Corporation bound by acts of agenta within their authority. § 423. A liter when outside authority. § 424. Acts of agent not in form required by statute not binding. § 425. Agent with general powers — Third person without notice of limita- tions of his power not bound — Presumption. § 426. Third persons presumed to know limitations in charter. § 427. But third persons not presumed to know limitations not in by-laws or regulations of company. § 428. Liability of corporations for fraudulent representations of agent. § 429. Unauthorized act of agent may be ratified by corporation. § 430. Unauthorized act of agent may be ratified by superior agent. § 431. Ratification inferred from conduct. § 432. Act beyond authority of agent cannot be ratified by majority of stock- holders. § 433. Implied ratification by stookholdors from conduct. § 434. What acts cannot be ratified, § 406 . Powers of Agents of Corporations Generally. — So far as the powers and liabilities of agents of corporations are governed by the general principles of the law of agency, see the title "Principal and Agent," where the subject is discussed at length. In this and the succeeding sections 681 LIABILITIES. § 407 will be considered only the powers of the various agents of a corporation, as given or as limited by the charter or by general statutes relating to corporations. A corporation, unless expressly restrained by its charter, may contract through the agency of a select committee of its members.' When the common seal of a corporation is afiSxed to an instrument, and the signature of the proper ofl&cers are proved, courts presume that the officers did not exceed their authority.^ § 407. Liability of Corporation for Acts of Promoters. — A corporation is not responsible for the engagements of its promoters,' but it may become liable by adopting and taking the benefit of their acts, and this adoption may be either express or implied.* To make a corpora- tion liable for services performed under a contract with the promoter of the corporation before its organization, the services must inure to its benefit, and have been ren- dered on its credit, not on that of individuals.^ Where, after the charter and before the organization of a cor- poration, services are rendered which are necessary to complete that organization, and after it has been per- fected the corporation elects to take the benefit of such services, knowing that they were rendered with the un- derstanding that compensation was to be made, it will be held liable to pay for them, upon the ground that it must take the burden with the benefit.* Illustrations. — An action was brought against a railroad company to recover the value of services performed before the ' Berks and Dauphin Co. v. Myers, v. Loan etc. Co., 26 La. Ann. 389; 6 Serg. & R. 16; 9 Am. Dec. 402. Frost v. Belmont, 6 Allen, 152; Vl'hite '' St. Louis Public Schools w. Risley, v. Mfg. Co., 1 Pick. 215; 11 Am. Dec. 28 Mo. 415; 75 Am. Dec. 131. 168; Munson v. R. R. Co., 103 N. Y. » Rockford etc. R. R. Co. v. Sage, 68. 65111. 328; 16 Am. Rep. 587; Safety * Bells Gap R. R. Co. v. Christy, 79 Deposit Life Co. v. Smith, 65 111. 309; Pa. St. 54; 21 Am. Rep. 39; Frankfort Western Screw Co. v. Cousley, 72 111. Co. v. Churchill, 6 T. B. Mon. 427; 17 531; Franklin Fire Ins. Co. v. Hart, Am. Dec. 159. 31 Mel. 59; New York etc. R. R. Co. » Perry v. R. R. Co., 44 Ark. 383. V. Ketchum, 27 Conn. 170; Marchaud «Low v. R. R. Co., 45 N. H. 370. § 408 COEPOEATIONS. 682 incorporation, in procuring the charter, making surveys, etc. Held, that plaintiff could not recover, in the absence of proof that a majority of the corporators or promoters of the corpora- tion authorized the service: Bells Gap R. R. Co. v. Christy, 79 Pa. St. 54; 21 Am. Rep. 39. An agreement among parties owning a mine, and who expected to incorporate themselves, but did not then do so, that a person was entitled to two thousand five hundred shares of the stock of the company, held, not to be the agreement of the corporation: Morrison v. Gold Mountain Co., 52 Cal. 307. Certain persons about to organize a corporation agreed to pay B. a royalty on articles to be manufactured un- der a patent he had applied for, and after the organization he obtained the patent. Held, that the corporation's payment of the royalty for a while was a ratification of the contract, and rendered it liable to account to B. : Bommer v. American Spiral etc. Hinge Mfg. Co., 81 N. Y. 480. By an agreement among the promoters, before organization, of a hotel corpora- tion, its principal subscriber turned over to it, at its organiza- tion, furniture equal in value to the amount of his subscription, and to release it from prior encumbrances took its notes there- for, secured by chattel mortgage thereof. Held, that these were valid obligations: Reichwald v. Commercial Hotel Co., 106 111. 489. § 408. The Board of Directors — Have All Powers of Corporation. — The board of directors of a corporation have implied authority to do every thing in the manage- ment of the business of the company that the corporation can itself do. They have, in short, all the powers of the corporation delegated to them. This arises from the fact that it cannot be expected that the whole body of the corporators, or even a majority of them, will or can take an active part at all times in the management of the busi- ness of the corporation, and therefore the corporation must act by some authorized hand, and this authorized hand is usually denominated the board of directors.^ The power to have a board of directors is inherent in all pri- vate corporations. No special power need be conferred by statute.^ ^ Burrill v. Nahant Bank, 2 Met. 159; Salem Bank v. Gloucester Bank, 163; 35 Am. Dec. 396; Hoyle v. R. R. 17 Mass. 29; 9 Am. Dec. 111. Co., 54 N. Y. 314; 13 Am. Rep. 595; 2 Hurlbut v. Marshall, 62 Wis. 590. Bank V. Rutland etc. R. R. Co., 30 Vt. 683 LIABILITIES. § 408 Unless required by charter or statute, a director need not be a stockholder.' Where the cliarter provided that stockholders only should be elected directors, persons having no interest in the stock, but fraudulently and coUusively receiving the transfer of a share to qualify them, are not eligible; and such fraud on the charter will prevent those participating in it from receiving any pro- tection under its provisions to escape private responsi- bility.^ The directors have power to authorize the president and cashier to borrow money.' The action of a board of directors de facto, which has been ratified by the subse- quent action of the corporation, is valid, although after their election, but before the action was taken, another board of directors had been chosen, no evidence being offered that the second board ever accepted their trust.'' Directors of a corporation formed under a general law are chargeable with knowledge of the provisions of the law regulating their duties, or imposing liabilities upon them.* But the corporation is not bound unless the directors act in the manner required by the charter." The pro- ceedings of a board of de facto directors of a private corpo- ration are presumed regular until irregularity is shown; therefore, when acting under a by-law, they remove an ofi&cer, it will be presumed that they acted on sufficient grounds, until their action is impeached by proof.^ Au- thority given to a board of directors to alter or amend the by-laws does not authorize them to alter or annul a by-law imposing a limitation on their powers.' And 1 Wight u. R. R. Co., 117 Mass. 226; '^ Van Etten v. Eaton, 19 Mich. 19 Am. Rep. 412. 187. ^Bartholomew v. Bentley, 1 Ohio 'Beatty u. Ins. Co., 2 Johns. 109; 3 St. 37. Am. Dec. 401. ^ Ridgway v. Bank, 12 Serg. & R. ' State v. Kupferle, 44 Mo. 154; 256; 14 Am. Dee. 681. 100 Am. Dec. 265. ' Penobscot etc. R. R. Co. v. Dunn, * Stevens v. Davison, 18 Gratt. 819; 39 Me. 587. 98 Am. Deo. 692. § 408 CORPORATIONS. 684 when the directors have been selected by the stock- holders, the powers given to them cannot be interfered with by a majority of the stockholders/ The by-laws of a corporation giving to the directors "a general superin- tendence and control over the affairs of the corporation," with power to sell lands and tenements on such terms as they may deem advantageous, gives the directors no au- thority to delegate to an attorney power to lease lands.* The power to fill vacancies in a corporation and elect offir cers is a corporate incident, but this power does not attach to the board of officers to fill vacancies in their own board.' ILLUSTRATION'S. — A Btockholder's resolution that "it is not deemed necessary to adopt by-laws, for the reason that the articles of incorporation provide that the control and manage- ment of the corporation shall be in the hands of the board of directors." Held, to leave the entire control of the corporate business with the directory: Reichwald v. Covimercial Hotel Co., 106 111. 439. A statute authorized a railroad company to take for a passenger station land occupied by another railroad. The by-laws of the company provided that the directors might pur- chase all real estate they deemed needful for the railroad, and exercise all powers granted to the company by their charter for the purpose of locating, constructing, and completing the rail- road, and all other powers necessary and proper to carry out the objects of the company and the purposes of their charter. Held, that an acceptance of the statute by the stockholders was not necessary, to authorize the directors to take the land: East- ern E. R. Co. V. R. R. Co., Ill Mass. 125; 15 Am. Rep. 13. The by-laws of a corporation provided that the directors should have, in the management of the aflairs of the corporation, all the powers which the corporation itself possessed, not incompati- ble with the provisions of the by-laws and the laws of the com- monwealth. Held, that the directors might mortgage the lands of the corporation in security for its bonds, where the by-laws permitted: Hendee v. Pinkerton, 14 Allen, 381. A provision in a bank charter required a certain portion of the directors to be practical mechanics. Held, not to require that they should be in actual practice at the time of election: Gray v. Mechanics' Bank of Alexandria, 2 Cranch C. C. 51. » Conro <;. Port Henry Iron Co., 12 ^ GilUs v. Bailey, 21 N. H. 149. Barb. 27. » Kearney t;. Andrews, 10 N. J. Eq. 70. 685 LIABILITIES. § 409 § 409. Exceptions — Cannot Make Radical Changes. — But the authority of directors "extends merely to the supervision and management of the company's ordinary or regular business. A board of directors have no im- plied authority to make a material and permanent altera- tion of the business or constitution of a corporation, even though the alteration be within the company's chartered powers."^ No fundamental change in the charter of a corporation, which vitally and radically affects fixed and established rights, can be forced by the acts of the major- ity upon an unwilling stockholder." The directors of an incorporated company, to whom the management of the concern is given generally, have no authority to apply to the legislature to increase their powers; and an act of the legislature, passed on such application without author- ity from the company, giving power to the company to raise an additional assessment on the stockholders, is void.^ Directors of a corporation, unless specially em- powered, have no authority to make sale of any portion of its estate essentially necessary for the transaction of its customary business.'' A majority of the board of directors of a passenger railway company, though con- trolling a majority of the stock, have no power, without special authority in their charter, to execute a lease of the road and property without first submitting the question to the stockholders at a meeting called in accordance with their charter.^ Where the charter of a corporation says that the capital stock of the corporation shall be a sum named, "and may be increased from time to time at the pleasure of the said corporation," the directors alone, and without the matter being submitted to and approved by the stockholders, have no power to increase it, unless ^ Morawetz on Corporations, sec. ' Marlborough Mfg. Co. v. Smith, 2 239; Railway Co. v. Allertoa, 18 VPall. Conn. 579. 233; New York etc. R. R. Co. v. * Rolling «. Clay, 33 Me, 132. Schuyler, 3S Barb. 534. * Martin v. R. R. Co., 14 Phila.. 2 Hoey V. Henderson, 32 La. Ann, 10. 1069. § 410 COKPORATIONS. 686 expressly authorized thereto. The fact that the charter declares that "all the corporate powers of the said cor- poration shall be vested in and exercised by a board of directors, and such officers and agents as said board shall appoint," does not alter the case. The powers thus granted to the directors refer to the ordinary business transac- tions of the corporation.' Illustbations.- — The charter of a coi'poration provided that its capital stock should be one hundred thousand dollars, with the power to increase it to five hundred thousand dollars, but did not provide by whom this power should be exercised. Held, that the board of directors could not increase the capital stock without the assent of the stockholders: Eidman v. Bowman, 58 111. 444; 11 Am. Rep. 90. A board of directors of a mining corporation makes a nominal lease of the mine owned by the corporation, to a party really acting in the interests of a mi- nority of the stockholders, not in the ordinary course of the busi- ness of the corporation, but for tlie purpose of withdrawing the mine from the control of a board of directors about to be elected at an approaching meeting of the stockholders, and thereby perpetuating the control of the minority. Held, that a court of equity will cancel the lease on a bill filed by the corporation for that purpose: Mahoney Mining Co. v. Bennett, 5 Saw. 141. The powers and privileges of the Norfolk Manufacturing Com- pany were, by its charter, made subject to the provisions of an act vesting the levj'ing of assessments exclusively in the corpo- ration. A by-law was passed, authorizing the directors "to take care of the interests and manage the concerns of the corpora- tion." Held, that the corporation had no power to delegate an authority to the directors to lay assessments, and that the by- law did not, in fact, import an intention to delegate it: Ex parte Henry Winsor, 3 Story, 411. § 410. Cannot Wind up Corporation. — Nor have the directors implied authority to wind up the company, or to sell property necessary to carry on its business,'' or to give away its funds, or deprive it of any of the means to ac- complish the purpose for which it was chartered.* A » KaQway Co. v. AUerton, 18 Wall. Rubber Co., 33 Barb. 578; RoUina v. 233. Clay, 33 Me. 132. 2 Bank Commissioners v. Brest, 1 * Bedford R. R. Co. v. Bowser, 48 Harr. Ch. 106; Abbot v. American Pa. St. 29. 687 LIABILITIES. § 411 corporation's assignment for benefit of creditors, made by the board of directors, without consent of the stockhold- ers, is void as against the stockholders, but not as against a mere creditor.-' § 411. Directors Trustees for Corporation. — The di- rectors of a corporation stand in a fiduciary relation to the stockholders, and are generally recognized as trustees. Hence, they are held to the utmost good faith in their dealings for and with the corporation.^ A director of a corporation occupies a trust relation towards the stock- holders, which disables him from taking any personal benefit under a contract entered into by the board, on behalf of the corporation. Thus a railroad director can- not be individually interested in a contract for the con- struction of the road.* So where a director, by means of his power as such, secures to himself any advantage over other stockholders or creditors, equity will treat the trans- action as void, or charge him, as trustee, for the benefit of the injured parties; nor can such director, as to such ' Eppright V. Nickerson, 78 Mo. the corporation. From this position 482. arose the dnty of managing and con- * Keohler v. Black River Iron Co., dncting its affairs to the best advan- 2 Black, 715; European etc. R. R. Co. tage, and the obligation not to let the ». Poor, 59 Me. 277; Butts v. Wood, private interests of any individual di- 38 Barb. 188; Cumberland Coal Co. v. rector compete with his duty toward Sherman, 30 Barb. 553; Port v. Rus- the corporation. Whether a director sel, 36 Ind. 60; 10 Am. Rep. 6; Kim- of a corporation is to be called a mell V. Geeting, 2 Grant Cas. 125; trustee or not, in a strict sense, there Redmnnd v. Dickerson, 9 N. J. Eq. can be no doubt that his character is 607; 59 Am. Dec. 418; Blair Town fiduciary, being intrusted by others Lot Co. V. Walker, 60 Iowa, 376; Lit- with powers which are to be exercised tie Rock R. R. Co. v. Page, 35 Ark. for the common and general interests 304; Chouteau v. Allen, 70 M o. 290; of the corporation, and not for his own Hoffman etc. Coal Co. v. Cumberland private interests. He falls, therefore. Coal Co., 16 Md. 456; 77 Am. Dec. within the great rule by which equity 311; Simons «. Vulcan Oil Co. , 61 Pa. requires that confidence shall not be St. 202; 100 Am. Dec. 628; Hoyle v. abused by the party in whom it is re- R. R. Co., 64 N. Y. 314, 13 Am. Rep. posed, and which it enforces by im- 595, the court saying: "Vilas was a posing a disability, either partial or director of the railroad company dur- complete, upon the party intrusted to ing the whole period of the transac- deal, on his own behalf, in respect to tions in question. He and his co- any matter involved in such confi- direotors were together clothed with dence." the power of managing the corporate ^ European etc. R. R. Co. v. Poor, property and coaducting the affaira of 59 Me. 277. § 411 CORP0KATIONS. 688 parties, claim to have acted in ignoraoce of what it was his duty to know concerning the conduct and condition of the affairs of the corporation.^ Equity will not permit a director in the exercise of his official duties to make a profit for himself, to the exclusion of the other stockhold- ers.^ A resolution of the board of trustees, carried by the casting vote of the president, ratifying an unauthorized act of the president, in a matter in which he was per- sonally interested, is void.* When a director assents to a contract from which he is to derive a secret profit, equity will compel him to surrender it to the company.* A director cannot enforce a contract made with his co- directors, under which he is to have one third of a profit of one hundred thousand dollars for selling a railroad property, his services being trifling. Such a contract is beyond the power of the directors to make.® A director cannot use the funds of the corporation in payment of a note made by them to the president of the corporation as payee, and for its benefit.* So directors who sell to them- selves stock at one third of its par value are liable to the company and its creditors for the full value of the stock J A director cannot speculate with the funds of the corpo- ration, and appropriate the profit. Nor can he in making sales and purchases take advantage of his position for his own profit.* A sale by directors of its assets to another corporation in which the same persons are interested as stockholders, for an inadequate price, should be set aside as against any stockholders in the former company who have not consented to it. Such a sale is in efiect a sale by a trustee to himself. The vendor and purchaser are in the same interest. It is the duty of the managing ' Corbett v. Woodward, 5 Saw. ^ Habbard v. New York oto. Invest- 403. ment Co., 14 Fed. Rep. 675. '■' Farmers' etc. Bank v. Downey, 53 '' Gallery v. Albion Exchange Bank, Cal. 466; 31 Am. Rep. 62. 41 Mich. 169. ^ Chamberlains. Pacific Wool-grow- ' Freeman v. Stine, 15 Phila. 37. ing Co., 54 Cal. 103. » Redmond v. Diokerson, 9 N. J. * Bent V. Priest, 10 Mo. App. 543. Eq. 507} 59 Am. Dec. 41& 689 LIABILITIES. § 411 directors of the vendor company, as snch, to obtain the highest price for the property; while, as stockholders in the purchasing company, it is their interest to buy it as low as possible.* A director who, by agreement with his co-directors, sells the bonds of the corporation on his private account, must account for the profit realized to creditors or stockholders.'' The stockholders and credi- tors of a canal company may compel a railroad to account for the additional value of property of the canal company appropriated by the railroad company for railroad pur- poses, with the assent of the board of directors of the canal company elected in the interest of the railroad com- pany, the compensation therefor being agreed upon by the directors of the two companies, and being far below the value of the property, although they cannot, after the railroad has been completed, reclaim the property or en- join its use.^ The executive committee of a company have no right to vote money to themselves in addition to their regular compensation, for their services as promoters and originators of the company, or in consideration of the members retiring from the executive committee. And if large sums are granted for those purposes, this affords a good reason for the appointment of a receiver.* A creditor of a corporation may pursue its property into the hands of a director, a share-holder, to whose use were appropriated bonds, assets of the corporation, under a resolution in the passage cf which he aided, he being liable to the creditors as trustee for the value of such bonds.^ A creditor holding property of a corporation, in order to apply the profits thereof to reimburse himself and pay its other debts, is analogous to a trustee, and must return to the stockholders the remnant of the prop- 'Goodiii V. Canal Co., 18 Ohio St. * Blatchford v. Boss, 54 Barb. 42;. 169; 98 Am. Dec. 95. 5 Abb. Pr., N. S., 434; 37 How. Pr. = Widrig i>. R. E. Co., 82 Ky. 511. 110. ' Goodin v. Canal Co., 18 Ohio St. * Union Bank v. Douglass, 1 Mc- 169; 98 Am. Dec. 96. Crary, 86. Vol. L— 44 § 411 CORPORATIONS. erty in his hands after the purposes of the quasi trust have been subserved.* Directors are quasi trustees, and without special power under the charter cannot bind the corporation or its assets by a contract to pay usury.^ A promissory note made by a corporation to its trustees is void as against public policy.* The officers and direc- tors of a railroad corporation are not technical trustees, and have a perfect right to buy up the shares of stock- holders at less than the par value, and sell them at a profit to another corporation, which thereby acquires a majority of the stock, and so the control of the railroad.* A direc- tor may become its creditor, and foreclose a mortgage and purchase at the execution sale, but he is bound to act in the utmost good faith, and the sale will be set aside on slighter grounds than in ordinary cases.* The doctrine that the directors are trustees for the stockholders has relation only to the acts of the directors in connection with the property held bj-^ the corporation itself, and to their management of its business. And a director in purchasing his stock is not bound to communicate to the stockholder his knowledge of its worth, although the same was obtained by reason of his official relation to the company; nor is he bound, in order to make a valid pur- chase, to pay a fair and adequate price therefor.® A di- rector of a railroad company stands in a fiduciary relation to a stockholder, and in acting for him in his absence can- not be regarded as a stranger/ Illustrations. — A majority of stockholders, authorized by law to dissolve the corporation and distribute its property^ themselves having become the purchasers at an unfair ap- praisal, held, accountable to the other stockholders for its - Pioneer Gold Mining Co. v. Baker, ' Hallamir. Indianola Hotel Co., 56 20 Fed. Rep. 4. Iowa, 178, 2 Planters' Warehouse Co. v, John- ' Comm'rs of Tippecanoe County v. son, 62 Ga. 308. Reynolds, 44 Ind. 509; 15 Am. Rep. 3 Wilbur V. Lynde, 49 Cal. 290; 19 245. ■ A.m. Rep. 645. ' Philadelphia etc. R. R. Co. v. Cow- « Deaderiok v. Wilson, 8 Baxt, 108. ell, 28 Pa. St. 329; 70 Am. Dec. 128. 691 LIABILITIES. § 411 value: Ervin v. Oregon E'y & Nav. Co., 20 Fed. Rep. 577. A director of a bank loaned the moneys of a bank on a note run- ning to the bank at a stipulated rate of interest, but on a secret agreement with the borrowers that he should participate in the profits of lands to be purchased with the moneys. Held, that he was bound to surrender those acquired profits to the bank. Farmers' etc. Bank v. Downey, 53 Cal. 466; 31 Am. Rep. 62. The president of a company who was also director, having knowledge through his official position that the company's Btock was worth more than its nominal market value, pur- chased stock of a stockholder for the market price, and without disclosing to him the facts within his knowledge, as to the real value. Held, that there was no relation of trust between the parties, and that in the absence of actual fraud the purchase was valid: Commissioners v. Reynolds, 44 Ind. 509; 15 Am. Rep. 245. One, in order to secure his pay as president and attorney of a private corporation, caused its secretary to assign to him certain certificates of purchase of land held by the corpo- ration, and in their possession as oflBcers thereof. Held, that a court of equity might compel an unconditional return of the cer- tificates ; the officers had no lien thereon : Emporium etc. v. Emrie, 54 111. 345. A bill was brought by the assignees of a foreign cor- poration against several citizens of Massachusetts, who had been directors of said corporation, alleging that they had not used the property and moneys of the corporation for lawful purposes, but had illegally misused and expended it, and divided some of the money among themselves for their own benefit. Held, that it was not demurrable: Gindrat v. Dane, 4 Cliff. 260. The trustees of a corporation resolved by vote to borrow money upon mortgage of the corporate property to pay corporation debts, and authorized A, the president, to execute a mortgage. A purchased the debts, and had them assigned to a firm of which he was a member, to which firm the mortgage was made. In an action to foreclose, held, that this transaction was not authorized by the resolution of the trustees, nor would the law permit the president thus to deal with himself: Davis v. Rock Creek etc. Mining Co., 55 Cal. 359; 36 Am. Rep. 40. The trus- tee of a corporation contracted to purchase land for the corpo- ration, to take the title in his own name, and to then convey to the corporation, the land having been paid for. Held, that he could be compelled to accept a deed and to convey: Eins- phar V. Wagner, 12 Neb. 458. A sale to a stockholder of the corporate property ordered sold at a general meeting of the stockholders, not all the stockholders being present, there being no board of directors, held, voidable, though the purchaser paid a fair price: Reilly v. Oglebay, 25 W. Va. 36. B and C, as promoters of a projected corporation, negotiated an agreement § 412 CORPORATIONS. 692 between it and A, a patent owner, by which B and C were to receive certain shares of the stock. B and C then offered the public an option to take stock, disclosing that a portion was to be issued to A in part payment, but not that B and C were to have stock on any different terms. B was elected president and C treasurer, and they placed a large amount at seven dol- lars a share, getting their own stock for nothing. Held, that their fiduciary relation was such that any secret profits must be refunded to the company; and that they were jointly liable therein as partners: Chandler v. Bacon, 30 Fed. Rep. 538. A lease was made by the board of directors on the day their terms of office expired, two of the board having been concerned in a fraudulent issue of spurious stock to two lessees in the employ of the corporation, one of whom had been an agent in the issue of such stock, and securing such lessees a clear profit equal to one half of the gross earnings of the road. Held, a fraud on the rights of the stockholders: Stevens v. Davison, 18 Graft. 819; 98 Am. Dec. 692. A debt of a corporation beyond the limit pre- scribed by its charter was held by its directors, and they in good faith took a mortgage on the property of the corporation for security. Held, that they may enforce such security, even though they participated in the management of the corporate business in such a way as to permit the accumulation of the debt beyond the allowed limit, and though the corporation was insolvent when the mortgage was taken, and the mortgage gave them a preference over other creditors: Garrett v. Plow Co., 70 Iowa, 697; 59 Am. Rep. 461. § 412. Must not have Contrary Interests. — Therefore a director cannot represent the company when he has adverse interests of his own in any transaction.' Acts of officers of a corporation, in any transaction in which both the corporation and they themselves individually are inter- ested, do not bind the corporation.^ A contract between a railroad and a construction company is void, when any 1 Hoyle V. R. R. Co., 54 N. Y. 314; Vt. 144; Wardell v. R. R. Co., 4 Dili 13 Am. Rep. 595; CnmberUnd Bank 330; 103 U. S. 751; European etc. R. V. Sherman, 30 Barb. 553; Gilman etc R. Co. v. Poor, 59 Me. 277; First Nat. R. R. Co. V. KeUey, 77 111. 426; Bank v. Gifford, 47 Iowa, 575; Stew- Goodinw. Canal Co., 18 Ohio St. 109; art v. R. R. Co., 38 N. J. L. 505; 98 Am. Dec. 95; Simons v. Vulcan Oil San Diego v. R. R. Co., 44 Cal. 106; Co., 61 Pn. St. 204; 100 Am. Dec. 628; Gallery v. Bank, 41 Mich. 169; 32 Am. Covington R R. Co. v. Bowler, 9 Bush, Rep. 149. 468; Paine v. R. R. Co., 31 Ind. 283; ^ Davenport Bank v. Gifford, 17 Cook V. Berlin Wool Co., 43 Wis. 443; Iowa, 575. Stark Bwk », V, &, Pottery Co., 34 693 LIABILITIES. §412 of the directors of the railroad are members of the con- struction company, and the fact of long acquiescence on the part of the stockholders of the railroad makes no dif- ference/ Directors of one telegraph company, who are also directors of another company, which owns two fifths of the stock of the former company, cannot vote to lease the former company to the latter.'' A contract between a corporation and a director thereof, embodied in a reso- lution for the passage of which the director's vote was necessary and was given, is invalid.' A contract between two corporations is not void because all the directors of one corporation are members of the board of directors of the other corporation.* A purchase by a corporation will not be set aside because of the interest of one of the directors, where the complaining stockholder has suffered no damage.' A party who constructs ditches under a written contract with the directors of a draining com- pany may recover on the contract, although he was one of the directors at the time of its execution.* In order to enable a manufacturing corporation to pay its debts, and thus continue its business, its directors may guarantee payment of its note made to its own order, and take as security for their liability its mortgage on all its prop- erty.'' While an arrangement by which a managing director of a railroad corporation puts forward a third person as a contractor to do work for the corporation, the director designing to secure a special benefit to himself may be constructively fraudulent, yet where the relation of the director to the contract is not that of an undis- closed principal, and the stockholders have knowledge of the facts and power to prevent the consummation of the ' Thomas v. E. R. Co., I McCrary, * Alexander w. Willains, 14 Mo. App. 392. la 2 Bill V. Western Uniou Tel. Co., 16 » Hill v. Nisbet, 100 Ind. 341. Fed. Rep. 14. « Ward v. Polk, 70 Ind. 309. ' Bennett v. St. Louis Car Roofing ' Hopson v. ^tna Axle and Sjiring Co., 19 Mo. App. 349. Co., 50 Conn. 597. § 413 CORPORATIONS. 694 contract, if they choose, actual fraud not existing, con- structive fraud will not be presumed.' Illustrations. — The president of a railroad company, who ■was not a stockholder, loaned it $81,000, to secure which its board of directors directed its treasurer to deliver to him, for it, 810 of its bonds, each for $1000. In an action to foreclose a mortgage given to secure its bondfe, held, that in absence of any showing of fraud or of insolvency of the company when he was entitled to take the bonds, he might prove them for their full amount, and share in the distribution up to the amount of his claim; and this though two other members of the board were guarantors: Duncomby. R. R. Co., 88 N. Y. 1. § 413. Liability of Directors for Fraud. — The direc- tors are liable to the company for losses resulting from their frauds or willful acts.^ For the damage sustained by a stockholder from illegal and fraudulent acts of di- rectors and officers of a company, an action may be sus- tained by the stockholder against the officers and directors.* So a court of equity, at the instance of the stockholders, may call the directors of a corporation to account for abuse of trust, waste, or misapplication of funds.^ Direc- tors of a corporation placing bonds in the hands of an agent for sale, and falsely and knowingly causing them, to be indorsed "first-mortgage bonds," are liable in dam- ages to purchasers in good faith relying on such indorse- ment and injured by the misrepresentation.* So if direc- tors of a corporation knowingly issue spurious stock and obtain a loan on it, they are personally liable." A director of a corporation who sees a card issued by the officers of the company in the ordinary course of their business, (• ^ Union Pacific R. R. Co. v. Credit Oao who has acted as trustee may be Mobilier, 135 Mass. 367. liable, altliough he was not legally '^ Percy v. Millaudon, 3' La. 568; elected, and was not a stockholder: United Society?). Underwood, 9 Bush, Halstead v. Dodge, 51 N. Y. Sup. Ct. 017; 15 Am. Rep. 731; Verplauch v. 109. Ins. Co., 1 Edw. Ch. 87; Robinson v. * Crook v. Jowett, 12 How. Pr. 19. Smith, 3 Paige, 222; 24 Am. Deo. * Bayless v. Orue, 1 Freem. Ch. 101. 212; Smith v. Rathbun, 66 Barb. 405; ^ Clark v. Edgar, 12 Mo. App. 345; Hodges V. New England Screw Co., 1 84 Mo. 106; 54 Am. Rep. 84. R. I. 312; 53 Am. Dec. 624; Smith v. « Exchange Bank v. Bibley, 71 Ga. Poor, 40 Me. 415; C3 Am. Dec. 672. 726. 695 LIABILITIES. § 413 with the names of the directors attached, cauacrt be held liable for false representations contained in the card, ■where it appears that he did not circulate the cards, and had no knowledge as to the truth or untruth of the repre- sentations thereon, but allowed his name to be used without reflection as to the consequences.' A director of a manufacturing company, who has assented to a dividend amounting to more than the profits, may be sued for such violation of duty without joining with him the company as defendant.^ False representations, made by the officers of a corporation which has become a stockholder in an- other corporation, as to the financial condition of the latter, do not subject the former to liability as a member of the latter for debts, etc.^ The directors of an insurance company are liable personally to the assured, who, by reason of the insolvency of the company, has been unable to recover upon his policy, where they have fraudulently made and published false representations as to the finan- cial condition of the company whereby the plaintiff was induced to insure therein; and it is no defense that they were acting oflficially, or that there was no privist'^y of con- tract between them and the plaintiff." Illustrations. — An insolvent corporation being indebted to its officers and directors, they executed the notes of the corpo- ration in their own favor, and having obtained judgment by default, issued execution thereon. In the distribution of the proceeds of the sheriff's sale of the personal property of the cor- poration, held, that this conduct of the officers was a fraud in law, which gave them no preference over general creditors in the distribution: Hopkins's Appeal, 90 Pa. St. 69. The defend- ant, a director in a life insurance company, in consideration of certain railroad bonds delivered to his business partner, agreed to and did advocate and vote for the assignment of the com- pany's policies to, another company, and for the reinsurance of the same in the latter company. Held, that so many of the bonds as defendant received belonged to the corporation of ' Wakeman v. Dalley. 44 Barb. ^ Langau v. Iowa and Mionesota 498. Coustr. Co., 49 Iowa, 317. ^Hill V. Frazier, 22 Pa. St. * Salmon ti. Richardson, 30 Conn. 320. 360; 79 Am. Dec. 255. § 414 COEPORATIONS. 696 which he was a director, and on his failure to produce the same, a judgment for their estimated value was rightly entered: Bent V. Priest, 86 Mo. 475. A treasurer of a corporation presented his claim for pay for services to the board of directors, and it was allowed; all the proceedings were strictly regular, but it was shown that the quorum of directors present at the meeting consisted of the treasurer himself, his father, and another rela- tive. The payment of such compensation to the treasurer was contrary to the distinct understanding of the parties. Held, that a suit against these three directors by one stockholder, in behalf also of the rest, would lie, and that a judgment setting aside the transaction as an abuse of trust, and for the repayment of the money, was correct: Butts v. Wood, 38 Barb. 181. A statute, pro- viding for the making of a return by the officers of certain corpo- rations, enacted that if the certificate of the state of the company were false in any material representation, the officers signing it should be personally liable, etc. A certificate set forth that the capital stock had been paid in in cash, whereas in fact it had been paid in in property of an uncertain value. Held, that this was a material misrepresentation, and the officers were liable: Waters v. Quimby, 27 N. J. L. 198. Certain partners, as direc- tors in a corporation, voted to award a construction contract, which they knew was then going to be transferred, to their co- partners, who were also directors. Held, that they could not enforce an agreement giving them a share in the transaction, as they were participants in the fraud: Weed v. R. R. Co., 31 Minn. 154. A. bought property for eighty thousand dollars, and eight months afterwards conveyed it to a corporation for the nominal sum of seven hundred thousand dollars, taking all the capital stock of the corporation in payment. The direc- tors swore to a certificate stating that the amount of capital stock paid in full was seven hundred thousand dollars. Held, that the directors were properly found to have sworn to a false certificate, and therefore to be personally liable to a credi- tor of the corporation: Huntington v. Attrill, 42 Hun, 459. § 414. Liability of Directors for Neglect. — They are likewise liable for losses caused by their carelessness or neglect in attending to the duties of their oflSce.* It is no defense that they acted gratuitously and without com- pensation. The law requires that he who undertakes the responsibilities of the position of a director shall bring to the exercise of his trust a skill and knowledge com- 1 Sperings's Appeal, 71 Pa. St. 11; 10 Am. Rep. 684. 697 LIABILITIES. § 414 mensurate with the duties of that important position. A director is liable for ordinary neglect, and is bound to exercise reasonable diligence proportionate in every case to the undertaking.' When directors of a corporation have the means of knowledge, ignorance will not excuse them for allowing the funds thereof to be diverted from the purposes of the trust; and they are individually re- sponsible therefor.^ To charge a trustee of a manufactur- ing corporation within the statute for signing a false report, knowing it to be false, some fact or circumstance must be shown indicating that it was made in bad faith, or for some fraudulent purpose, and not ignorantly nor inadvertently; and this is a question of fact that must be passed upon before the liability can be adjudged. If the report filed be untrue, and constitutes a false representa- tion, it renders liable only the trustee who signed it, and who signed knowing it to be false.' A creditor of a cor- poration cannot maintain an action against the directors for damages, on the ground that their misconduct has caused the insolvency of the corporation.* Directors are not necessarily bound to keep corporate property insured.* Under a statute making the directors of a corporation liable to its creditors for losses occurring from their of- ficial mismanagement, they are personally responsible only for the official mismanagement which occurred dur- ing the year for which they were chosen, and during which they acted. One board of directors cannot be an- swerable for renewals of worthless paper, discounted by a previous board.* Under a statute making the trustees of a manufacturing corporation liable for debts existing at the time of the neglect of the trustees to file the annual report required, a judgment existing at the time of such ' Bank v. HUl, 56 Me. 385; 96 Am. * Winter v. Baker, 34 How. Pr. 183. Dec. 471. ' Charlestown Boot and Shoe Co. v. 2 Shea V. Mabry, 1 Lea, 319. Dunsmore, 60 N. H. 85. ' Pier V. Hanmore, 86 N. Y. 95; ^ Bank of Mutual Redemption u. Pier V. George, 86 N. Y. 613. Hill, 56 Me. 385; 96 Am. Dec. 470. §415 COEPORATIONS. 698 neglect is a "debt" within the meaning of the statute.' Under a statute making directors of a corporation liable for debts beyond the amount, of its capital, debts to them are not to be counted.^ § 415. Liability for Mistakes Made in Good Faith. — Directors, like mandataries and other agents, are not re- sponsible for an error in judgment when duty compels them to choose between difficulties, and the case is one in which doubt may reasonably be said to exist and it is hard to say which is the safe course. But when the error is gross, the necessity for the act not apparent, and the consequences fatal, they must be held responsible, or the principal be left without protection.' Where certain per- responsible for mistakes of judgment, or want of skill and knowledge? They have been requested by their co-stock- holders to take their positions, and they have given their services without compensation. We are dealing now with their responsibility to stock- holders, not to outside parties, — creditors and despositors. It 13 un- necessary to consider what the rule may be as to them. Upon a close examination of all the reported cases, although there are many dicta not easily reconcilable, yet I have found no judgment or decree which has held directors to account, except when they have themselves been personally guilty of some fraud on the corporation, or have known and connived at some fraud in others, or where such fraud might have been prevented had they given ordinary attention to their duties. I do not mean to say by any n^eans that their responsibility is limited to these cases, and that there might not exist such a case of negli- gence, or of acts clearly iiltra virca, as would make perfectly honest directors personally liable. But it is evident that gentleman elected by the stock- holders from their own body ought not to be judged by the same strict stan- dard as the agent or trustee of a private estate. Were such a rule applied, no gentlemen of character and responsi- bility would be found willing to accept ' Lewis V. Armstrong, 8 Abb. N. C. 385. ^McClave v. Thompson, 36 Hun, 365. ^ Hodges V. New England Screw Co., R. I. 312; 53 Am. Dec. 624; Scott v. Depeyster, 1 Edw. Ch. 513. In Sper- ing's Appeal, 71 Pa. St. 11, 10 Am. Rep. 684, the law is well stated by Sharswood, J., as follows: "It is by no means a well-settled point what is the precise relation which directors sustain to stockholders. They are, undoubtedly, said in many authoritie.'i to be trustees, but that, as I apprehend, is only in a, general sense as we term an agent or any bailee intrusted with the care and management of the prop- erty of another. It is certain that they are not technical trustees. They can only be regarded as madataries, — persons who have gratuitously under- taken to perform certain duties, and who are therefore bound to apply or- dinary skill and diligence, but no more. Indeed, as the directors are themselves stockholders, interested as well as all others that the affairs and business of the corporation should be successful, when we ascertain and de- termine that they have not sought to make any profit not common to all the stockholders, we raise a strong pre- sumption that they have brought to the administration their best judgment and skill. Ought they to be held 699 LIABILITIES. § 416 sons enter into a contract claiming to be directors of a corporation, if no such corporation really exists, such persons are individually liable on the contract.^ The publication by savings bank directors, that directors and stockholders are personally responsible for its debts, does not constitute a contract with depositors, but if intention- ally false, affords the basis of an action for deceit.^ Illustrations. — The officers of a public corporation in their official capacity made a contract under a mistake of law. The other party to the contract was equally mistaken as to the law. Each had the same opportunities of knowing the law. Held, that the officers were not personally liable, and that a like rule would apply to public bodies not incorporated: Humphrey v. Junes, 71 Mo. 62. The directors of an insurance company re- elected their secretary, but took no new bond, supposing that the bond first given was a continuing security. They took no legal advice, but were good business men, stockholders in the company, and acted in good faith. Held, that they could not be made personally liable fOr the secretary's defalcation: Vance V. Phceniz Ins. Co., 4 Lea, 3S5. The president of an omnibus company directed its drivers to exclude all colored persons. Held', that he was individually liable for the ejection and per- sonal injury of such persons, although an action might have been maintained against the company: Peck v. Cooper, 112 111. 192; 54 Am. Rep. 231. § 416. Directors must Act as Board — Majority Gov- ern. — The directors must act as a board, and not singly. All must either be present or have been notified, and the vote of u majority binds all.^ A majority of the directors must be present to constitute a board competent to trans- such places These citations, so gross as to appear to us absurd and which might be multiplied, establish, ridiculous, provided they are honest, as it seems to me, that while directors and provided they are fairly within arc personally responsible to the stock- the scope of the powers and discretion holders for any losses resulting from confided to the managing body. " fraud, embezzlement, or willful mis- ' Herod v. Kodman, lli Ind. 241. conduct, or breach of trust for their '' Westervelt v. Demarest, 46 N. J. own benefit, and not for the benefit of L. 37; 50 Am. Rep. 400. the stockholders, for gross inattention ' Morawetz on Corporations, sec. and negligence by which such fraud or 247; Despatch Line v. Bellamy Mfg. misconduct has been perpetrated by Co., 12 N. H. 205; 37 Am. Deo. 20;5; agents, officers, or co-directors, yet Elliot v. Abbot, 12 N. 11. 549; 37 tSey are not liable for mistakes of Am. Deo. 227; liuell v. Buckingham, judgment, even though they may be 16 lywa, 284; 85 Am. Dec. 510. § 416 CORPORATIONS. 700 act business.* A contract by a board of directors cannot be changed by less than a quorum.^ Where a quorum votes to make a contract with one of their number, the contract is not necessarily void because such member voted, no fraud or bad faith being charged.' Where a quorum attend a meeting, it will be presumed that all were notified.^ If a quorum meet and unite in any action, the corporation is bound, although the other directors were not notified.® An assessment on stock, authorized to be made by a board of managers, may, in the absence of a regulation as to the number necessary to constitute a quorum, be made by a majority of the board.* An assignment for the benefit of creditors, made by a majority of the directors constituting a legal quorum, is not invalid because two of the directors, being out of the state at the time, failed to receive actual notice of the meeting.' Illustrations. — The charter of a corporation empowered the president and directors to make by-laws. Held, that the power might be exercised by the president and a majority only of the directors: Cahill v. Kalamazoo Mutual Ins. Co., 2 Doug. (Mich.) 124; 43 Am. Dec. 457. An original charter granted by the state of Connecticut required four directors to constitute a quorum. The company was afterwards merged with a corporation char- tered by Rhode Island, whose charter was silent as to the num- ber required. By the contract of merger, which was affirmed by the Rhode Island legislature, the latter company surren- dered its franchises, powers, and privileges to the Connecticut company; and the Connecticut legislature, by an act confirm- ing the merger, declared that all the rights of the old company in this state should be preserved to the new one. Held, that after the merger, four only, and not a majority, were necessary for a quorum : Lane v. Brainerd, 30 Conn. 565. The charter of a railroad company provided that for non-payment of assess- ments, "the directors may order the treasurer to sell such > Ex parte Willcocks, 7 Cow. 402; * Edgerly v. Emerson, 23 N. H. 555; 17 Am. Dec. 525. 55 Am. Dec. 207. ^ Tennessee etc. E. R. Co. v, R. R. ^ St. Louis Colonization Ass'n v. Co., 73 Ala. 426. Hennessy, 11 Mo. App. 555. 3 Leavitti;. Mining Co., 3 Utah, 265. ' Chase v. Tuttle, 55 Conn. 455; 3 * Chouteau Ins. Co. v. Holmes, 68 Am. St. Rep. 64. Mo. 601; 30 Am. Rep. 807. 701 LIABILITIES. § 417 shares at auction, etc., and the delinquent subscriber shall be held accountable for the balance, if the shares sell for less than the assessments." The directors voted that the president and treasurer be a committee to collect arrearages, and enforce such collection by sales or otherwise. Held, that a sale under this vote was void; that the directors could not delegate the power of ordering sales to a committee, and that an order to the treas- urer must be absolute, and not in the alternative: York etc. R. R. Co. V. Ritchie, 40 Me. 425. § 417. Directors' Meetings. — It is inamaterial in what manner the stated meetings of directors have been fixed. It is enough if they are in fact regularly held on stated days.^ Where the charter of such corporation does not restrict the directors as to the place of their meeting, they may meet in another state, and there appoint a secretary.* A trustee elected to fill a vacancy holds over until his suc- cessor is elected and qualified, if that is the rule as to or- dinary trustees.' Where the action of the directors at a special meeting is ratified at a subsequent special meet- ing, of which all the directors had legal notice, and at the next regular meeting "the minutes of the last two meetings were read and approved," it is immaterial whether all the directors were legally notified of such first special meeting, in the absence of fraud or conspiracy.'' Illustrations. — A mortgage was executed under a resolution passed at a special meeting of the directors. The resolution recited that written notices of the meeting had been served on each director. The purpose of the meeting was not specified in the notices. Held, that the meeting was regularly called, and the mortgage valid : Granger v. Original Empire Mill etc. Co., 59 Cal. 678. The by-laws of a corporation fixed stated days for directors' meetings, and provided that when less than a quorum, but more than three, should be present, they might adjourn to any day prior to the next regular meeting. Held, that at a meeting so adjourned the acts of a majority of a quorum present were binding, though the absentees had no special no- ' Atlantic Fire Ins. Co. v. Sanders, * Huguenot Nat. Bank v. Studwell, 36N. H. 252. 6 Daly, 13. "MoCaUv. Bryam Mfg. Co., 6 Conn. * County Court s). R. R. Co., 35 Fed. 428. Rep. 161. § 418 CORPORATIONS. 702 tice of the adjourned meeting: Smith v. Law, 21 N. Y. 296. A meeting of the directors of a bank in New Haven, called by the cashier, by direction of the president, who was then in New York, by personal notice to the directors in New Haven, with- out specifying in such notice the object of the meeting, held, to be a legal meeting for the transaction of ordinary business: Savings Bank v. Davis, 8 Conn. 191. § 418. Implied Authority to Appoint Inferior Agents, and Delegate Authority. — The directors have implied au- thority to employ inferior agents to attend to the affairs of the corporation.' But the general power of manage- ment cannot be delegated by the directors. "Hence," says Mr. Morawetz," "it has been held that the board of di- rectors of a colliery company cannot delegate the power of allotting shares to two members of the board and the manager;^ nor can the directors of a corporation delegate the power of making calls,* or of declaring dividends,' or of ordering a sale of shares for non-payment of assess- ments."" The board of directors may appoint agents to receive subscriptions to its capital stock, and the sub- scriptions so received are binding.' If a corporation fur- nishes its secretary with money to pay its employees, and an employee monthly delivers to the secretary receipts for the month's salary, and leaves the money with the secretary, the corporation is not liable for the default of the secretary in failing afterwards to pay over the amounts.' In order to render a corporation liable for services of an attorney employed by a subordinate agent, a delegation of authority to employ must be shown.' Illustrations. — The articles of association provided that the directors should have power to appoint and remove agents ' Western Bank v. Gilstrap, 45 Mo. R. I. 164; Farmers' Mutual Ins. Co. v. 419; Kitchen v. R. R. Co., 59 Mo. Chase, 56 N. H. 341. 514; Hoyt v. Thompson, 19 N. Y. 207; * Gratz v. Redd, 4 B. Men. 186. Barrill v. Nahant Bank, 2 Met. 163. « York etc. R. R. Co. v. Ritchie, 40 ■' Morawetz on Corporations, sec. Me. 425. 249. ' Lohman v. R. R. Co., 2 Sand. 39. ' Howard's Case, L. R. 1 Ch. App. » Gardner v. R. R. Co., 63 Cal. .326. 561. ' Maupin v. Virginia Lead Mining * Silver Hook Road v. Greene, 12 Co., 78 Mo. 24. t03 LIABILITIES. § 419 of the corporation. Held, that a contract with A, agreeing to appoint B the agent and manager of all the mining property of the corporation, and that B should be retained in that position until B should pay A out of the profits a certain sum which A claimed was due him, and that B should be removable at A's pleasure, was one which the directors had no power to make, and was not binding upon the corporation: Flagstaff Silver Mining Co. v. Patrick, 2 Utah, 304. § 419. Powers of Secretary and Treasurer. — The clerk of a corporation, unless the laws of the state or by- laws of the corporation provide otherwise, remains in office until another is chosen.' A signature by a corpora- tion by their secretary is prima facie their act, and must be denied under oath.^ The secretary is the proper per- son to prove the corporate books.' He cannot, in the ab- sence of special authority, bind the corporation by a "due bill" given a stockholder in consideration of his surrender of his stock.^ The secretary of a mining com- pany has no implied authority to make an assignment of promissory notes belonging to the company .* It is the duty of a treasurer to keep the moneys of his principal distinct from his own (unless a special agree- ment be made to the contrary), and to be able and ready at all times to pay over what balance he owes to his prin- cipal, and to pay it upon demand.* The treasurer, who holds money to pay a dividend which has been declared, and who refuses to pay the dividend upon certain shares, upon the ground that he is himself the owner of the shares, is liable personally to an action of assumpsit for money had and received, brought in the name of the real owner of the shares, to recover the amount of such divi- dend.'' The treasurer, who is held out to the world as the 1 South Bay Meadow Dam Co. v. * Blood v. Marcuse, 38 Cal. 590; 99 Gray, 30 Me. 547. Am. Dec. 435. 2 Frye v. Tucker, 24 111. 180. » Second Avenue R. B. Co. v. Cole- ' Smith V. Natchez Steamboat Co., man, 24 Barb. 300. 2 Miss. 479. ' Williams v. FuUerton, 20 Vt. * Gregory v. Lamb, 16 Neb. 205. 34G. § 419 CORPORATIONS. 704 proper agent to whom a payment to the corporation is to be made, is an agent to whom notice may be given as to the purpose for which the payment is made/ The treas- urer has the right to negotiate notes or bills taken in the name of his office.* If the directors authorize their treas- urer to indorse notes of the corporation to a third person, or if such treasurer is suffered to draw and accept drafts, to indorse notes paj^able to the corporation, and to do other similar acts whereby he is held out to the public as having the general authority implied from his official name and character, an indorsement made in pursuance of such express or implied authority passes a valid title to the indorsee.' A treasurer has no authority to pay himself a claim he holds against it, unless the claim has been approved and its payment authorized by the cor- poration.* If the power of the treasurer of an association, incorporated for the purpose of erecting and obtaining a monument, is expressly limited in the by-laws to the payment of such bills as have been approved by the direc- tors in a particular form, he cannot bind the corporation by a negotiable promissory note on demand, given in part payment for the monument, although the directors have authorized a committee to contract for the same, and draw on the treasurer for the price, and the com- mittee have accordingly contracted for the same, and the monument has been erected and approved by the corpora- tion, and the committee have verbally authorized the treasurer to pay the price, and he thereupon, not having on hand sufficient monej' for the purpose, has executed the note.' The treasurer of a corporation has not any authority to pay the debts of the corporation, nor set off the debts due from, by those due to, the company;" nor to 'New Eaelaml Car Sprint; Co. v. * Peterborough R. R. Co. «. Wood, 61 Union India Rubber Co., 4 ^Blatclif. N. H. 418. 1. ° Torrey v. Dustin etc. Ass'n, 5 ■' Perkins v. Bradley, 24 Vt. 03. Allen, 327. » Lester v. Webb, 1 Allen, 34. " Brown v. Weymouth, 36 Me. 414. 705 LIABILITIES. § 420 confess judgment for it;' nor to assume a debt against a third person.^ Illtisteations. — On a bill by a savings bank to foreclose a mortgage, where the defense of usurj'^ was set up, there was proof that a premium had been paid to its treasurer, for the loan, in pursuance of a contract made by him with the borrower in the name of the corporation. Held, that the premium must be presumed to have been paid to the corporation : Dime Sav- ings Inst. V. Mulford, 31 N. J. Eq. 99. The treasurer of an incorporated joint-stock company, who was charged with the custody of the corporate seal, and of all the books relating to the issue and transfer of stock certificates, borrowed through a broker large sums of money on certificates fraudulently issued by himself. These certificates bore the signature of the presi- dent of the company, were countersigned by the treasurer, sealed with the corporate seal, and purported to be genuine in every respect. Thp lender of the money acted in good faith, not knowing for whom the money was wanted, and supposing the certificate to be genuine. Held, that the company was bound by the act of its agent, and was liable in damages to the lender of the money: Tome v. R. R. Co., 39 Md. 36. An employee of a corporation was accnstomed to leave part of his wages on deposit with the treasurer, the amount being indorsed on the pay-roll, supposing it was deposited with the corporation. This practice was not known to the other officers, and the treasurer appropriated the funds. Held, that the company was liable to^ the employee: Carroll v. People's E'y Co., 14 Mo. App. 490. §420. President of Corporation — Powers of. — It has been laid down in some cases that the president of a cor- poration has, as sucb, no greater power — except that of presiding officer — than any other member of the board of directors.^ The express powers of a president are usually, however, larger than this, and are given either by the charter or the by-laws of the corporation. He may, without express authority, perform all acts which are incident to the execution of the trust reposed in him, and which cus- tom or necessity imposes upon the office.* His powers, ' Stevens v. Carp River Iron Co., 57 98; Walworth Co. Bank v. Loan Co., Mich. 427. 14 Wis. 325; but see Smith v. Smith, 2 Stark Bank v. United States Pot- 62 111. 493. tery Co., 34 Vt. 144. * Mitchell v. Deeds, 49 HI. 416; 95 "Titus V. R. R. Co., 37 N. J L. Am. Dec. 621; Chicago etc; R,. K. Co. VouL-lS § 420 COBPORATIONS. 706 however, to bind by contracts, extend only to matters arising in the ordinary course of its business.^ If he was in the habit of acting as a business agent for the company with its knowledge and without objection, ac- tual authority will be inferred from such acts, and the company will be bound by them.^ His power to bind the company as its agent may be implied from acts and circumstances.^ When . a corporate body intrusts its president, or other principal officer, with the conduct of its proper business, it thus clothes him with the power of a general agent, and the restrictions imposed privately on him will be immaterial to third parties.^ A vote of the directors that the president have full power and control of its business authorizes him to purchase the materials to be used in its operations, and to borrow money for the corporation, and give its note for the money borrowed.'' Where a corporation is embarrassed, and without funds to purchase its past-due outstanding bond, its president may purchase the same and hold it as against the com- pany, but not if he purchase with the funds or credit of the company." The president has implied power to in- stitute suit to enjoin a party from illegally using water belonging to the corporation;' to take a lease of an office on behalf of a foreign corporation;* to appear and confess a judgment against it;' to indorse securities for transfer.*" With power to contract on its behalf, he has power to release a contract." Where the president of V. Coleman, 18 111. 297; 68 Am. Dec. • Grafiua v. Land Co., 3 Phil. 447. 544. A corporation cannot be bound ^ Castle v. Belfast Foundry Co., 72 by a contract made by its president, Me. 167. unless power to bind it is given to him ^ Bradly v. Williams, 3 Hughes, by the act of incorporation, or he is 26. authorised by the corporation to make ' Reno Water Co. v. Leete, 17 Nev. the contract: Mount Sterling etc. 203. Turnpike Road ?j. Looney, IMet. (Ky.) ^ Steamboat Co. v. McCutcheon, 13 550; 71 Am. Deo. 491. Pa. St. 13. 1 Blen V. Bear River etc. Co., 20 Cal. ' Chamberlin v. Mammoth Mining 602; 81 Am. Dec. 132. Co., 20 Mo. 96. 2 Doughertys. Hunter, 54 Pa. St. 380. '» Caryl v. McElrath, 3 Sand. 176. ' Northern etc. R. R. Co. v. Bastian, '' Indianapolis Rolling Mill Co. v. 15 Md. 494. R. R. Co.» 120 U. S. 256. 707 LIABILITIES. § 420 a private business corporation has previously been its attorney, and has general charge of its business, au- thority on his part to employ attorneys is implied.^ He has the right to indorse and assign notes and mort- gages given to it to aid in its construction, and the in- dorsee, before maturity, takes the notes free from any equities between the maker and the company.^ Where notice is required to be given by the president of a bank, a notice by the president and directors, under the seal of the corporotion, is sufficient.* Presidents and cashiers of incorporated companies, acting as their executive offi- cers, can make indorsements in their behalf by simply indorsing their own names, with their titles of office.'' That the president of a railroad usually gave notes of the company on printed forms, and signed them as pres- ident, will not prevent a recovery against the company upon a due bill not upon a printed form, and not signed as president, but is a mere circumstance to be weighed by the jury in determining whether or not the considera- tion passed to the company so as to make them liable.* A president of a corporation has no authority ex officio to buy or sell land for the corporation.^ He cannot borrow money in its name and pledge its responsibility, unless authorized by its charter or by a by-law or resolution of the directors.'' He has no authority ex officio to execute a bond and warrant of attorney for an entry of judgment against the corporation.' A corporation which, by its charter, can only act through its board of directors cannot contract, through its president, without the au- thority of the board, except as to matters of simple administration, which of necessity should be managed ' Wetherbee v. Fitch, 117 HI. 67. * Bliss v. Kaweah Canal and Irriga- 2 Irwin V. Bailey, 8 Biss. 523. tion Co., 65 Cal. 502; Blen v. Water 5 Crawford v. State Bank, 5 Ala. Co., 20 Cal. 602; 81 Am. Deo. 132. 679. ' Life and Fire Ins. Co. v. Meohan- * State Bank v. Fox, 3 BlatcM. 431. ies' Fire Ins. Co., 7 Wend. 31. * Kichmond etc. R. R. Co. v. Suead, ^ gtokes v. New Jersey Pottery Co., 19 Gratt. 354; 100 Am. Deo. 670. 46 N. J. L. 237. § 420 CORPORATIONS. 708 by the president without such authority.* A deed de- scribing the grantors as a corporation, executed by the president thereof in his own name, and under his own seal, does not pass the title from the corporation.^ Although a president of a corporation should have con- sulted the board of directors before authorizing certain expenditures, yet if he acted in good faith, and did only what they would probably have authorized, he is not lia- ble to the corporation for damages; nor can it set up his conduct, by set-off or otherwise, in bar of his action for his salary.' Where the constitution and by-laws of a large corporation likely to be engaged in litigation are silent as to the duties of its president, he has authority to de- fend suits brought against it, and may apply for a writ of error, and employ and dismiss counsel, unless restrained by some act of the directors.* A by-law of a railroad cor- poration authorizing its president to act as its "business and financial agent" does not authorize him to mortgage a locomotive owned and in use by it.* A by-law giving the president of a corporation "the general charge and direction of the business of the company, as well as all matters connected with the interests and objects of the corporation," does not authorize him to do an act which, by another by-law, is expressly given to a committee.' Where a board of directors refers a matter to a com- mittee of three, one of whom is the president of the corporation, the president cannot act alone so as to bind the corporation.' The president is liable for ne- glect in not taking a bond from the secretary, where the by-laws make it his duty to take bonds from the offi- cers.' The president of a corporation is not made liable ' Bright V. Metairie Cemetery Aas'n, * Luse v. R. R. Co., 6 Or. 125; 25 33 La. Ann. 58. Am. Rep. 506. 2 Hatch V. Ba-rr, 1 Ohio, 390. « Twelfth Street Market Co. v. Jack- " Davia v. R. R. Co., 22 Fed. Rep. son, 102 Pa. St. 269. 883. ^ Railroad Co. v. Ebling, 12 Daly, 99. * Colmaa v. West Virginia Oil etc. ° Pontchartrain R. R. Co. v. Pauld- Co., 25 W. Va. 148. ing, 11 La. 41; 30 Am, Dec. 709. 709 LIABILITIES. § 420 to an action for a personal injury merely by transmitting an order of the corporation to a servant, who in executing it uses illegal force; but if the order is issued by him on his own responsibility, he is liable.* On the death of the president, the vice-president may act in his stead, though that ofBoe was not provided for by name in the by-laws, the directors simply being authorized to create other offices, and they having created that of vice-president.^ The president of a corporation properly elected holds over until another president is elected, although there is no special provision in the charter to that effect.^ The death of a bank president in whose name a judgment was obtained does not abate a suit brought in behalf of the bank.* A contract entered into by the president of a corporation is binding upon the corporation, and not ultra vires and void, though the power to make contracts is vested in the board of directors, if the evidence suffi- ciently establishes a ratification by the directors in pais of the president's act.^ When the charter of a corpora- toin provides that certain officers may be elected, and their salary fixed by a board of directors, and a president is thus elected, but without a salary being named, the law raises an assumpsit on the part of the corporation to pay a reasonable compensation for his services rendered after such election.* Illustrations. — A note was made by the directors of one corporation, as individuals, and transferred to another corpora- tion, one of the makers being payee and indorser, and president of both corporations. Held, that he could not consent for the creditor to any arrangement releasing or impairing the indi- vidual liability of himself or his co-directors: Gallery v. Na- tional Exchange Bank of Albion, 41 Mich. 169; 32 Am. Rep. 149. The president and superintendent of a corporation had author- ity to buy and sell material, and to make contracts for it. Held, ' Hewett V. Swift, 3 Allen, 420. ♦ Wright v. Rogers, 26 Ind. 218. '' Colman v. West Virginia Oil etc. * Pixley v. R. R. Co., 33 Cal. 183; Co., 25 W. Va. 148. 91 Am. Dec. 623. » Olcott V. R. R. Co., 27 N. Y. 546; " Gruny v. Pine Hill Coal Co., Ky. 84 Am. Dec. 298. ' 1888. § 421 COEPORATIONS. 710 that their authority extended to releasing the purchaser (who had become unable to meet his payments), and to substituting a third person in his stead: Indianapolis Rolling Mill Co. v. R. R. Co., 26 Fed. Rep. 140. The president of a corporation sub- scribed for stock in the name of the defendant, promising "to take care of it for him." There was also evidence tending to show that he transferred a portion of the defendant's stock. Held, that in all that the president did for the defendant, he must be regarded simply as the defendant's private agent, and that the character of his acts as such could not be affected by the fact of his presidency: St. Nicholas Ins. Co. v. Howe, 7 Bosw. 450. A steamship company had virtually ceased to exist for all purposes of business, and for promoting the object of the charter as originally granted, all its powers had been taken away, its property was expended, and it was hopelessly insol- vent. Held, that the president might contract on liis individual behalf to run steamers, and do the business which the company had ceased to do, provided he put no duty, obligation, or re- straint upon the company: Murray v. Vanderbilt, 39 Barb. 140. The president of a corporation had general discretionary powers as to all matters in the prosecution of the company projects; he bought a house, to be used as an ofHce, and the trustees held their meetings in it during six weeks. Held, that even if he had no authority, the trustees had ratified his acts, and there- fore that a subsequent rejection of the contract was of no avail, and could not excuse the company from payment: Shaver v. Bear River etc. Co., 10 Cal. 396. An article in the by-laws of a religious corporation provided that the president should convene the board of trustees at least once in every month, and might call extra meetings, whenever in his opinion, or in the opinion of three members of that body, it should be deemed necessary for the interest or welfare of the congregation. Another article provided that a majority of the board might admit new mem- bers. The president, on application by four members of the board, refused to call a meeting thereof, after which a majority of the board convened without such call, after giving the presi- dent notice of the time and place of their intended meeting. Held, that the board thus convened had no power to elect new members of the corporation, and that all their acts were illegal and void: State v. Ancker, 2 Rich. 245. § 421. Removal of Officers. — The power of amotion, i. e., of removal of its officers for cause, is inherent in a corporation.* But a corporation cannot exercise the power ' Angell and Ames on Corpora- pal Corporations, 270; 2 Kent's Com. tions, 408, 409j Wilcock on Munici- 277. 711 LIABILITIES. § 421 of amotion except for reasonable cause, — -as to those offi- cers who are of the essence of the corporation, that is, who have such voice or office in the management and direction of the corporation that without them its busi- ness could not be carried on, as directors of private cor- porations, or aldermen in municipal corporations.' As to mere ministerial officers, such as clerks, agents, or subor- dinates, they may be discharged as any other master may discharge a servant.^ The causes for which an officer may be removed were stated by Lord Mansfield in an English case,^ and his classification has been adopted in our courts.* They are: 1. The commission of an infamous offense; or 2. A vio- tion of official duty so gross as to amount to a breach of the tacit condition annexed to the office; or 3. An offense constituting not oiily a breach of official duty, but also matter indictable at common law. The power to remove directors is conferred in some cases by express statute, or the charter of the corporation, or the by-laws provide for such contingencies.^ Where by such statutory power the stockholders may remove for "reasonable cause," their discretion in deciding what is or is not such cause will not be inquired into (except in cases of fraud) by the courts.* When they prescribe tlie terms and conditions under which the power can be exercised, their provisions must be pursued.^ Where, however, the charter enu- merates certain causes for which removal will lie, whether this excludes the power to remove for causes not enumer- ated would depend on the legislative intent as gathered from the whole charter. Thus where power was given to ' Fuller i>. Plainfield School, 6 Conn. VP'is. 63; Potter on Corporations, 725; 532. Dillon on Municipal Corporations, ^ Angell and Amea on Corporations, 189. sec. 426, 429. ^ Hunter «. Ins. Co., 26 La. Ann. 13. ^ R. V. Richardson, 1 Burr. 517. ^ Inderwick v. Snell, 2 McN. & S. * Evans v. Philadelphia Club, 50 Pa. 216. St. 107, 114; Com. V. St. Patrick's ' State v. Vincennes University, 5 Society, 2 Binn. 441; 4 Am. Dec. 453; Ind. 77, 89; State v. Bryce, 7 Ohio, State V. Chamber of Commerce, 20 pt. 2, pp. 82, 83. § 421 CORPORATIONS. 712 appoint, "subject to removal only for," etc. this was held to limit the power of removal to the specified causes.^ In the absence of statutory or charter power, a suit will lie at the instance of either the corporation or a stockholder to remove a director who is incapable or unwilling to per- form his trusts.^ But except in a gross case of miscon- duct, a director elected for the ordinary term of a year cannot be removed before that time.' Charges must be made setting forth with substantial accuracy the grounds of complaint, and a reasonable no- tice of these charges, and of the time and place of hearing them, should be given to the party accused. A hearing of the evidence in support of the charges must be had, and an opportunity given to the party of making his defense, either in person or by counsel, and a sentence of the loss of the right to the office must be pronounced.* In Cali- fornia it is held that the removal of mere private or min- isterial officers of a corporation is a right which belongs to the corporation alone, and the courts have no jurisdic- tion to order such removal, or, it seems, to enjoin such officer from acting.^ The individual bankruptcy of a per- son who is a stockholder in and a director and officer of a corporation which is not in bankruptcy does not in- capacitate him from exercising his functions as such offi- cer, nor render inoperative and void, as to third parties, the acts and conveyances done and executed through him ' State V. Higgins, 15 111. 110. this. A vote passing a resolution re- ^ Morawetz on Corporations, sec. citing the offense and conviction, and 543. declaring the right to the oflBoe for- " Taylor on Corporations, sec. 650. feited, is all that is required: Angell * State V. Vincennes University, 5 and Ames on Corporations, 422. The Ind. 89, 90; State v. Bryce, 7 Ohio, stockholders of a corporation in which pt. 2, p. 82; State v. Adams, 44 Mo. the general public has no interest may 586, 587; Dillon on Municipal Corpo- depose its officers, for causes stated in rations, sec. 188. But where an offi- the charter or by-laws, without notice cer is removed because convicted of an and trial; Adamantine Brick Co. v. infamous oflfenae, it is not necessary to Woodruff, 4 McAr. 218. prefer charges and have a hearing be- ^ Neall v. Hill, 16 Cal. 145; 76 Am. fore the corporation; the conviction Dec. 508; and see Griffin v. St. Louis in a court of law takes the place of Wine Co., 4 Mo. App. 595. 713 LIABILITIES. § 421 as its representative.* Where, after a decision removing certain directors from office, they, on the same day, met and executed a note for the company, and on the next day the judgment was filed and recorded, it was lield that they being de facto directors, the note was binding on the company.^ The title of directors of a corporation, who are in under color of an election, cannot be inquired into in a suit in equity, instituted to restrain them from exer- cising the functions of directors, upon the ground of an irregularity in their election.' The direptors of a corpo- ration against which judgment of ouster has been pro- nounced ape individually answerable for the costs of the proceeding, though they had no direct agency in defend- ing the suit.* The effect o,f an amotion is to vacate the office, and the subsequent acts of the officer are not bind- ing unless permitted by the corporation.® But his rights as a member of the corporation are not affected. Where the removal is unauthorized, because of insuffi- cient cause, or because the proceedings were irregular and illegal, the officer may be restored by mandamus,^ except that the court will only in extreme cases, when the cause is sufficient and the proceedings simply irregular, compel the restoration, for the reason that the officer being still subject to removal in a new proceeding, the order will have little effect.' A director improperly excluded from meetings by his co-directors has an individual right of action against them for the injury caused to him by such exclusion.* ^ Atlas Bank v. F. B. Gardner Co., 20 Wig. 63; Sibley v. Carteret Club, 8 Bias. 537. 40 N. J. L. 295. And by the restora- ' Mahoney Mining Co. v. Anglo- tion the acts of the ofBcer while so re- Californian Bank, 104 U. S. 192; San moved are made valid: Angell and Jose Sav. Bank v. Lumber Co., 63 Cal. Ames on Corporations, 431. li'9. ' Dillon on Municipal Corporations, '' Hughes V. Parker, 20 N. H. 58. sec. 192; R. o. Griffiths, 5 Barn. & ♦ People V. Ballon, 12 Wend. 277. Aid. 7 35. ' Dillon on Municipal Corporations, ' Pulbrook v. Eichmond Mining Co., 194. 27 Week. Rep. 377, the court saying: * Puller V. Plainfield School, 6 Conn. " This motion raises a question of im- 532; State v. Chamber of Commerce, portance, viz., whether a director who § 422 CORPORATIONS. 714 § 422. Corporation Bound by Acts of Agents within their Authority. — Corporations, like natural persons, are bound, and bound only, by the acts and contracts of their agents, done and made within the scope of their author- ity.' But to establish agency on behalf of a corporation, it is not indispensable to show a written authority, or vote or resolution of the corporation.'^ Drafts accepted by the treasurer of a corporation are presumed to be properly ac- cepted by the corporation, there being no circumstances to indicate fraud or illegality; and in an action by the holder against the corporation as acceptor, the burden of proof is upon the defendant corporation to show that the plaintiff had knowledge that the acceptances were for accommodation, and that he was not a bona fide holder for value.' Illustrations. — A trustee under a marriage settlement was also president and acting manager of a mining corporation, and in violation of his duty as trustee sold all the trust property at public auction, part of which he purchased at the sale, as man- ager of the company. Held, that the corporation was liable as a participator in the breach of trust: Barksdale v. Finney, 14 Gratt. 338. is improperly excluded by his brother is done to the company by excluding directors from the board is entitled to a director from board meetings, the an order restraining his brother direo- company must sue, that is, for a wrong tors from so excluding him. As a done to the company, and not for one director he is entitled to certain fees, done to the individual. It may hap- and it is doubtful whether he could pen that the wrong is done to both; claim such fees if he did not attend but in the case of an individual wrong, meetings. Therefore, it seems to me, a share-holder cannot, on behalf of his exclusion is an individual wrong, himself and others, not sufferers by and an invasion of his legal rights, for the wrong, maintain an action for that which the directors are personally wrong. Therefore the plaintiff here liable. He has a right to take a part has a right of action. " in the management of the company, ' Chicago etc. R. R. Co. v. James, 22 and to vote at the meetings, and a Wis. 199; Hayden v. Middlesex Tp. right to know what takes place at the Co., 10 Mass. 397; 6 Am. Dec. 143; meetings, because it has sometimes Mott v. Hicks, 1 Cow. 513; 13 Am. been held that a director not attending Dec. 550; Eabassa v. Orleans Nav. Co. , is liable for what is done. Besides, he 5 La. 461; 25 Am. Deo. 200; Lamm v. is in the position of a managing part- Port Deposit etc. Ass., 49 Md. 233; 33 ner, and has a right to remain so, and Am. Rep. 246; Peterborough R. R. to receive remuneration for his ser- Co. v. R. R. Co., 59 N. H. 385. vices. Therefore, for the injury done ^Williams ii. Christian Female Col- him by excluding him from the meet- lege, 29 Mo. 250; 77 Am. Dec. 569. ings, he has a right to sue; and when ^ Credit Co. v. Howe Machine Co., the decisions say that when a wrong 54 Conn. 357j 1 Am. St. Rep. 123. 715 LIABILITIES. § 423 § 423. Acts of Agents beyond Powers of Corporation not Binding. — Acts of an agent in excess of the chartered powers of the corporation are of course not binding on the corporation.' Where a director assumes a power never delegated, such, for instance, as to tell a merchant that the corporation will be responsible for goods furnished to an employee of the corporation, the merchant cannot charge the corporation for goods furnished in the belief that the corporation would pay for them.^ Where an agent of a railroad company is empowered " to procure a right of way," this does not give him power to promise an owner of land that the company will locate a depot in a certain place.' The president of a corporation, who, in behalf of the corporation, attempts to bind it by a contract ultra vires the corporation, does not bind himself, the other party knowing that his action was not so intended.* The officers of a corporation have no power to make or ratify a note given by one of their number to secure his individual indebtedness;^ nor to authorize the execution of a note as surety for another in respect to a matter having no relation to the corporate business; and a party receiv- ing such note with notice cannot recover it.* A person dealing with a corporation is bound to know whether or not the officer or agent who represents it and acts in its name is authorized so to do. If he is, and the act is within the apparent scope of his authority, the dealer is not bound to have knowledge of intrinsic facts making it improper for him to act in that case.' Though by the by-laws of a corporation an officer has power to make con- ' Morawetz on Corporations, see. 60; * Holt v. Winfield Bank, 25 Fed. Rollins V. Clay, 33 Me. 133; The Floyd Rep. 812. Acceptances, 7 Wall. 666; New Haven ° Hall v. Turnpike Co., 27 Cal. 255; etc. R. R. Co. V. Hayden, 107 Mass. 87 Am. Dec. 75. 525; Boynton v. Lynn Gaslight Co., ^ Hall w. Turnpike Co., 27 Cal. 255; 124 Mass. 197. 87 Am. Dec. 75. ^ Rice V. Peninsular Club, 52 Mich. ' Credit Co. v. Howe Machine 87. Co., 54 Conn. 357; 1 Am. St. Rep. * Houston etc. R. R. Co. v. MoKin- 123. ney, 55 Tex. 176. §§ 424, 425 CORPORATIONS. 716 tracts and execute conveyances, yet where a contract is made directly with the corporation and registered on its books, any papers executed by the ofl&cer to carry the contract into effect are prima facie unwarranted, in so far as they depart from the terms agreed upon and so registered.^ § 424. Acts of Agents not in Form Required by Char- ter not Binding. — In like manner, the acts of an agent not in the form required by the charter are not binding on the principal.^ § 425. Agent with General Powers-— Third Parties not Presumed to Know Limitations of his Power. — But where an agent has general power to do similar acts, his power in the particular case depending on the existence of facts peculiarly within the knowledge of the principal, a party dealing with him has a right to presume his authority, and the corporation will be bound by his acts or con- tracts.^ Officers of a corporation are special and not general agents, consequently they have no power to bind the corporation except within the limits prescribed by the charter and by-laws. Persons dealing with such offi- cers are charged with notice of the authority conferred upon them, and of the limitations and restrictions upon it contained in the charter and by-laws. Nor is there any grant of power in the name by which such officer is • East Rome Town Co. v. Brewer, People Ins. Co. v. Westoott, 14 Gray, Ga. 18S8. 440; St. Andrews Bay Land Co. v. 2 McCuUough V. Moss, 5 Denio, 567; Mitchell, 4 Fla. 192; 54 Am. Deo. 340. Beatty v. Marine Ins. Co., 2 Johns. ' New York etc. R. R. Co. v. Schuy- 109; 3 Am. Dec. 401; Dawes «. North ler, 34 N. Y. 30; West St. Louis River Co., 7 Cow. 462; Hemming v. Bank v. Shawnee Bank, 95 U. S. 557; U. S. lus. Co., 47 Mo. 425; Murphy East River Nat. Bank v. Gove, 57 N. V. Louisville, 9 Bush, 189; Salem Y. 597; Ossipee Manufacturing Co. v. Bank v. Gloucester Bank, 17 Mass. 1; Canney, 54 N. H. 295; Bank of Geu- 9 Am. Dec. Ill; Badger v. Am. Ins, essee v. Patchin Bank, 13 N. Y. 309; Co., 103 Mass. 244; Saftordw. Wyckoff, 19 N. Y. 312; Moss v. Mining Co., 5 4 Hill, 446; Gordon v. Preston, 1 Hill, 137; Royal British Bank v. Tur- Watts, 385; 26 Am. Dec. 75; Head v. quand, 6 El. & B, 327; Ryan v. Dun- Providence Ins. Co., 2 Cranoh, 127; lap, 17 111. 40; 63 Am. Dec. 334, 717 LIABILITIES. § 426 designated.' Directions and assurances made by the managing agent and superintendent of a company, if made within the general scope of his powers and duties, are binding upon the company, although not authorized by them, unless the party who claims to have acted in reliance upon them is chargeable with notice of the want of authority.^ Illustbations. — The president of a railroad company fraudu- lently issued certificates of stock, properly signed and sealed, in excess of the amount authorized by law. Held, that the stock should be treated as genuine in the hands of bona fide holders: Willis V. Fry, 13 Phila. 33. The president and treasurer of a railroad corporation confided to a clerk the duty of filling up and supplying certificates to the holders of coupons. The cer- tificates were delivered, signed, to the clerk, who fraudulently filed them up, and put them on the market, whence they came into the hands of innocent purchasers for value, without knowl- edge of the fraud. Held, that the railroad corporation was responsible for the fraud of its clerk, and must bear the loss: Wedern Maryland R. R. Co. v. Franklin Bank, 60 Md. 36. § 426. Third Person Fresnmed to Enow Limitations in Charter. — A person dealing with the agent of a corpora- tion is bound to know the limits of his authority as con- tained in the charter or articles of association.' Under a statute providing that officers of a corporation shall have no powers except such as are conferred by resolution or by-laws of the stockholders, which by-laws must be filed with the county recorder, after which all contracts made by such officers in violation of the by-laws, or in excess of their powers under them, shall be void as against the cor- poration, but binding upon all officers making them or dissenting therefrom, such officers, by virtue of their office, acquke no power whatever. Their office is dor- 'Adriance v. Roome, 52 Barb. 399. v. R. R. Go., 21 How. 443; Hoyt v. ' Spelmau v. Fisher Iron Co., 56 Thompson, 19 N. Y. 207; Alexander Barb. 189. v. Cauldwell, 83 N. Y. 480; Bocook v. »Merritt«). Lambert, 1 Hoff. Ch. 168; Alleghany Coal etc. Co., 82 Va. 913; Saiiman v. R. R. Co., 27 Gratt. 119; 3 Am. St. Rep. 128. Boot V. Wallace, 4 McLean, 8; Fearce §§ 427, 428 CORPORATIONS. 718 mant until they have been vested with power by by-laws adopted and filed by the corporation. Until then their personal liability does not begin; they have no power ex officio, and can do no act and make no contract which will be binding upon the corporation.' § 427. But not By-laws or Regulations of Company. — But this rule does not extend to the rules or by-laws of the corporation.'' A by-law which is a mere rule for the government of the officers of the corporation in conducting their own business can have no effect upon the contracts of the corporation with other parties.' But it was held in a New York case that the president of a manufacturing company, organized under the general act of 1848, cannot lawfully bind it in the purchase of goods required in its business, where there is a resolution to the contrary on its books, even if the other party has no notice thereof, unless there has been a well-recognized general course of dealing creating an implied authority.* § 428. Liability of Corporation for Fraudulent Repre- sentations of Agents. — The liability of a corporation for the fraudulent representations of its agents depends on the same principles as its liability for their contracts, as shown in the previous sections.^ Illustrations. — The treasurer of a private corporation, whose duty it was to issue certificates of the stock of the corporation, fraudulently issued certificates, regular in form, but not repre- senting any real stock, and pledged them to secure money bor- rowed by himself. Held, that the corporation was liable to the pledgee, who had no notice of the fraud, for the amount lent by > Hall V. Crandall, 29 Cal. 567; 89 ' Samuels v. Central etc. Ex. Co., Am. Dec. 64. McCahon, 214. A stockholder is 2 Smitli V. Smith, 62 111. 493; Wild not chargeable with notice of rules ». Bank, 3 Mason, 506; Samuels v. adopted by the directors: Pearsall v. HoUiday, 1 Woolw. 400; Jackson Ins. Tel. Co., 44 Hun, 532. Co. V. Cross, 9 Heisk. 283; Kingsley « Westerfield v. Radde, 7 Daly, V. Ins. Co., 8 Cush. 393; Fayw. Noble, 326. 12 Cush. 1; Mechanics' etc. Bank v. ^ New York etc. R. R. Co. ti. Schuy- Smith, 19 Johns. 115. ler, 34 N. Y. 30. 719 LIABILITIES. §§ 429-431 him, with interest: Tome v. R. R. Co., 39 Md. 36; 17 Am. Rep. 540. The general manager of a corporation, who was authorized to collect its checks, etc., presented a check belonging to it to a bank for payment. By mistake, the bank overpaid him. Held, that the corporation was liable for the amount of the over- payment, without regard to whether the manager accounted to the corporation for the amount: Kansas Lumber Co. v. Central Bank, 34 Kan. 635. § 429. Unauthorized Act of Agent may be Ratified by Corporation. — An unauthorized act of an agent or agents may be ratified by the corporation, and will then bind it.' The corporation cannot afterwards dispute his authority on the ground that be was not regularly appointed by the directors.'' § 430. Or by Superior Agent. — An act performed by an inferior agent without authority may be ratified by a superior agent in some cases. The directors of a corporation, for instance, have, in very many cases, power to ratify the unauthorized acts of inferior agents of the corporation.' §431. Batification maybe Inferred from Conduct. — A ratification need not be in words, but may be implied from conduct or acquiescence.* A binding contract may be implied from the acts of a corporation, without proof of an express vote.° It is immaterial as against strangers whether the person acting as managing director of a cor- ' Morawetz on Corporations, see. St. 426; Payson w. Stoever, 2Dill. 427; 74; Kent v. Quicksilver Mining Co., Walworth Bank u. Farmers' Trust Co., 78 N. Y. 159; Watt's Appeal, 78 Pa. 16 Wis. 629; Chicago etc. R. R. v. St. 370; Ohio etc. R. R. Co. v. Mc- James, 24 Wis. 388; Daist v. Gale, 83 Pherson, 35 Mo. 13; 86 Am. Dec. 128; 111. 136; Perry v. Simpson, 27 Conn. Bleu ». Water and Mining Co., 20Cal. 520; Pacific R. R. Co. v. Thomas, 19 602; 81 Am. Deo. 132. See title Kas. 256; Union Gold Mining Co. v. Agency, snjn-a. National Bank, 96 U. S. 640; Blen v. '' Flynn v. R. R. Co., 63 Iowa, 490. Bear River W. & M. Co., 20 Cal. 602; ^ Fleckner v. Bank, 8 Wheat. 338; 81 Am. Dec. 132; Bank of United Kelsey v. Bank, 69 Pa. St. 426; Sher- States v. Dandridge, 12 Wheat. 64; man v. Fitch, 98 Mass. 59; Lynde- Bank v. Comegys, 12 Ala. 772; 46 borough Glass Co. v. Mass. Glass Co., Am. Deo. 278. Ill Mass. 315. * Canal Bridge v. Gordon, 1 Pick. * Kelsey <;. National Bank, 69 Pa. 296; 11 Am. Dec. 171. §§ 432, 433 CORPORATIONS. 720 poration received a specific appointment to that position from the board of directors, if he has long acted in that capacity without objection, and if his services as such have been invariably accepted.* Illustrations. — The cashier of a bank, havijjg agreed to dis- charge his duties without compensation, appropriated funds of the bank for compensation. Knowing that the rules of the bank forbade interest on demand certificates, he issued demand certificates on interest to himself, and took funds of the bank to pay such interest. He also sold bonds belonging to the bank to himself for less than their value. These transactions were entered on the bank books, but the directors had no actual knowledge thereof. Held, that a ratification by the bank could not be implied: First National Bank of Fort Scott v. Drake, 29 Kan. 311; 44 Am. Rep. 646. § 432. Act beyond Authority of Agent cannot be Rat- ified by Majority of Share-holders. — Acts in excess of the authority of the charter can only be ratified by all the stockholders. A majority cannot ratify such an act.^ § 433. Implied Ratification by Stockholders from Con- duct. — The question whether there has been a ratification by the share-holders of a corporation is generally a ques- tion of fact. Proof that every individual share-holder concurred is not essential. It is sufficient if it appear that the act in question was generally known among the share-holders, and that none of them objected.' These circumstances have been held evidence of ratification on the part of the share-holders; viz., that the share-holders, knowing of the unauthorized act having been performed by their agents, took no steps to set it aside or to disaffirm it;^ that the share-holders have abstained from inquiring » Walker v. R. R. Co., 47 Mieh. .3.38. Quicksilver Mining Co., 78 N. Y. 187, » Marsh v. Fulton Co., 10 Wall. 676; f olger, J., says: " Where third parties Hazard v. Durant, 11 R. I. 196; Phos- have dealt with the company, relying phate of Lime Co. v. Green, L. R. 7 in good faith upon the existence of cor- Com. P. 43. porate authority to do an act, where it 2 Morawetz on Corporation, sec. 79. is not needed that there be an express * Phosphate of Lime Co. v. Green assent thereto on the part of stock- L. R. 7 Com. P. 43. In Kent «i. holders to work an equitable estoppel 721 LIABILITIES. § 433 into the affairs of the company and attending its meetings;^ that the corporation has accepted the benefits of the act;' that a share-holder or share-holders have not protested against avoteof the majority, though they did not join in it.^ Stockholders of a corporation who do not vote against the re-election of directors may be deemed to acquiesce, by such omission, in acts of such directors done prior to the re-election, and of which such stockholders had in- formation sufficient to put them on inquiry, and are not entitled afterward to have those directors suspended on the ground of misconduct previous to the re-election.'' Where, at the meeting of a board of directors of a cor- poration formed for purposes of pecuniary profit, an act is ordered to be done without objection either then or subsequently made to the regularity of the meeting by any director or stockholder, and the act thus author- ized is afterwards performed, its legality cannot afterwards be questioned in a suit in equity on the ground of irreg- ularity.' If stockholders would impeach transactions en- tered iAto on behalf of the corporation by the fraud of its directors, they must act promptly; they cannot, however,, be charged with acquiescence by remaining still while some of their number are seeking to impeach the trans- actions.* Where the directors have transferred its original charter without authority of stockholders, and such stock- holders have subsequently participated in the company's upon them. Their conduct may have without loss. It is the doctrine of. been such, though negative in char- equitable estoppel, which applies to . acter, as to be taken for an acquiescence members of corporate or associated in the act; and when harm would bodies, as well as to persons acting in come to such third parties if the act a natural capacity." were held invalid, the stockholders are ' Morawetz on Corporations, sec. 79. estopped from questioning it. We * Burrill v. Nahant Bank, 2 Met. suppose acquiescence or tacit assent 163; 35 Am. Dec. 395. to mean the neglect to promptly and ' Biche v. Ashbury Carriage Co., L. actively condemn the unauthorized R. 9 Ex. 224. act, and to seek judicial redress, after * Ramsey v. R. R. Co., 7 Abb. Pr., knowledge of the committal of it, N. S., 156; 38 How. Pr. 193. whereby innocent third parties have ^ Samuel v. HoUaday, 1 Woolw. 400. been led to put themselves in a position ^ Metropolitan etc. R. R. Co. v. R. from which they cannot be taken R. Co., 14 Abb. N. C. 103, Voi*"L-46 § 433 CORPORATIONS. 722 business under a new management, or permitted the scheme to be carried out without objection, they are estopped from denying the validity of the transfer.' Where the bank account of a mining company is over- drawn by its president and secretary, without special authority of its directors, thecompany will, notwithstand- ing, be held liable for the overdraft, if their acts in this respect be subsequently ratified by the directors. Such ratification may be made by their ordering the issue of a note of the company for the amount overdrawn.^ When the directors have allowed the president to purchase loco- motives, and have afterwards taken possession of them and acquiesced in their use on the company's road for several years, they cannot repudiate the president's au- thority to draw bills in payment for them.' Where stock- holders sanctioned a contract under which moneys were loaned to a corporation by its directors, and its bonds therefor secured by a mortgage given, and the moneys have been properly applied, the corporation is estopped from setting up that the bonds and mortgage are void by reason of the trust relations which the directors sustained to it.* A bill to restrain a corporation from employing its assets in excess of its corporate powers must show due diligence to prevent the same. The right to restrain ceases when the members have consented to the rule of the majority within such powers.* Illusteations. — The constitution and by-laws of an associa- tion provided that its business should be conducted upon the cash principle, and that no credit should in any case be given. Held, that the holder of a note against the association might prove that the cash system was abandoned, that goods were sold on credit, and the money was hired with the knowledge and consent of the association: Doio v. Moore, 47 N. H. 419. By the by-laws of the defendent corporation, the executive com- mittee, which was empowered to hire rooms, required for a 1 Upton V. Jackson, 1 Flip. 413. * Hotel Company v. Wade. 97 U. S. ' Auglo-Californian Bank v. Ma- 13. honey Mining Co., 5 Saw. 255. * Leo v. R. R. Co., 19 Fed. Rep, 5 dloott V. K. R. Co., 27 N. Y. 646. 283. 723 LIABl'LITIES. § 434 quorum to transact business two directors and the president, and if the latter were absent a president pro tern, must be chosen. Two of this committee met informally in the absence of the president, and without electing any pro tern, notified the agent of the plaintiff corporation, who was a third member of such committee, that they would hire the rooms to be let by the plaintiff corporation. The defendants never occupied the rooms. Held, on suit brought for rent, that there was no con- tract made which was binding on the defendants, and no ratifi- cation of the informal action by the subsequent acts of the corporation: Corn Exchange Bank v. Cumberland Coal Co., 1 Bosw. 436. The U., a rolling-stock companj', and the A., a railroad company, by their respective boards of directors, en- tered into a contract whereby the U. agreed to supply the A. with all the rolling stock required in the operation of the A.'s railroad for seven years, at an agreed monthly rental. The five persons composing the A.'s board were members of the U.'s board, which consisted of thirteen persons. At the meet- ing of the U.'s board, at which the contract was confirmed, there were present only eight directors, two of whom were di- rectors of the A. The U. supplied the rolling stock as agreed, and the A. received and used the same for nearly two years and a half, when the contract was terminated. Held, that even if the contract was voidable in equity at the election of the U. within a reasonable time, for want of a quorum of directors at the meeting who were not directors of the A., the delay in exercising the election to avoid it operated as a waiver of the right so to do: United States Rolling Steele Co. v. R. R. Co., 34 Ohio St. 450; 82 Am. Rep. 380. A corporation paid a bill for furniture con- tracted by A, and subsequently used other furniture also bought by him. Held, that they were liable therefor, as having made A their agent, though be had never been appointed by any act under the corporate seal: Bancroft v. Wilrrvington Conference Academy, 5 Del. 577. § 434. What Acts cannot be Ratified. — Acts in viola- tion of the charter of the corporation or contrary to law or statute are void, and cannot be ratified.^ A corpora- tion cannot ratify a contract made by their agent which they could not lawfully authorize.^ A proposition from the officers of a corporation to settle a suit brought against the corporation for malicious i)rosecution does not import a ratification of the act or charge complained of therein.^ ^ In re Comstock, 3 Saw. 218; Tip- ' Downing v. Mount Washington pecanoe Co. v. R. K. Co., 50 Ind, etc. Co., 40 N. H! 230. 86, ,' Green r. South. Ex. Co., 41 Ga. 515, CORPORATIONS. 724 CHAPTER XXVII. EIGHTS AND LIABILITIES OP STOCB^IOLDERS AND OF CRED- ITORS OF THE CORPORATION. § 435. The contract of membership — How created. § 436. Statutory method o£ becoming a stockholder must be followed. § 437. De facto corporation — Subscriber for shares not liable until corpora- tion legally organized. § 438. Corporator cannot avoid his contract because corporation not duly or- ganized. § 439. Subscribers not stockholders until all shares have been taken. § 440. Agreements to form corporation — Inchoate corporation. § 441. Mutual assent necessary to contract of membership. § 442. Preliminary deposit with subscription — When a condition precedent. § 443. Proof of contract of membership. § 444. Liability of stockholder to contribute his share of capital stock. § 445. Liability of subscriber — Capital agreed must be subscribed. § 446. Other conditions precedent. § 447. Assessments and caUa — Who may make. § 448. Notice of time and place of payment, when requisite, and how given. § 449. Liability of subscriber after abandonment of enterprise. § 450. Subscriptions upon conditions. §451. Subscriptions upon conditions — When sebscriber held uncondition- ally. § 452. Subscriptions obtained by fraud, when voidable. § 453. When not voidable. § 454. Laches of subscriber. § 455. Stockholder cannot rescind contract. § 456. Violation of charter no ground for rescission. § 457. Forfeiture of shares for non-payment of assessments. § 458. Right to transfer shares. § 459. When stockholder Uable notwithstanding transfer. § 460. Effect of transfer of shares. § 461. Formalities in transfer required by charter must be obserTed. § 462. Equitable assignments. § 463. Assignment by indorsement of certificate. § 464. Effect of assignment of certificate by indorsement — Rights of pur- chaser. § 465. Lien of corporation on shares. § 466. Remedies against corporation for refusing to allow transfer. § 467. Liability of corporation for making or permitting unauthorized transfers. § 468. Status of shares as property, § 469. What are "profits." 725 STOCKHOLDERS. § 435 § 470. Dividends and interest can only be paid out of profits. § 471. Distribution of profits — Discretion of directors. § 472. Stock dividends. § 473. Issuing new stock — Increasing the capital stock. § 474. Payment of dividends. § 475. Eight to examine books — Other rights of stockholders. § 476. Stockholders' meeeings — Notice of time and place essential. § 477. Who may call meetings. § 478. General and special meetings- — Distinction. § 479. Adjourned meetings. § 480. Who has right to" vote. § 481. Election of oflScers. § 482. Power of majority to make by-laws. § 483. By-laws held valid. § 484. By-laws held invalid. § 485. Individual stockholders cannot sue for injury to corporation. § 486. When stockholders entitled to relief. § 487. Discretionary powers of officers will not be interfered with at suit of stockholders. § 488. Stockholders' bill — Who may or must be complainants. § 489. Who may or must be defendants. § 490. Stockholders not personally liable on corporate contracts. § 491. Nor for debts of corporation. § 492. Capital stock a trust fund for creditors. § 493. Shares must bo paid for in money or property. § 494. When property cannot be taken in payment of shares. § 495. Rights of a creditor to unpaid assessments. § 490. Personal liability of stockholders by statute. § 497. Construction of such statutes. § 49S. Nature of personal liability. § 499. Personal liability for wages of employees and laborers. § 500. Rights of a bona fide holder of shares apparently paid up. § 501. Rights of creditors — To interfere in management of corporation. § 502. To prevent dissolution or alteration in charter. § 435. The Contract of Membership — How Created. — Persons become stockholders either by original contract with the other members at the formation, or by substitu- tion for some original share-holder.^ Thus if the statute requires the subscriptions to be in writing, an oral sub- ' Morawetz on Corporations, sec. either as between themselves and the 255. A broker, purchasing stock for corporation or creditors. They are a customer, and treating it as his own, still entitled to show that they held may be charged with the liability of a such stock as collateral security, and stockholder: MoKim v. Glenn, 66 Md. not otherwise: Union Sav. Co. v. Se- 479. But the act of voting stock does ligman, 92 Mo. 635; 1 Am. St. Rep. not make voters absolute stockholdei?s, 776, § 435 coRPOEATioirs, 726 scription is not valid.* It is competent evidence, to show a person to be a stockholder in a corporation, that he had subscribed for some shares therein; that his name was entered upon the records of the corporation; that he had stated that he had taken such shares; and that the corporation treasurer had offered him his certificate there- for.^ A receipt for a certificate of stock, written on the margin of the subscription-book, is a sufficient subscrip- tion for stock,* Subscriptions for shares in the stock oi an incorporated company constitutes the subscriber a stockholder in such company, even though he fail to meet the subsequent calls on his subscription.* A subscription to stock is not only an undertaking with the company, but with all other subscribers, and a sub- scriber cannot be permitted to set up a secret parol arrangement with the agents of the company, by which he may be released from his subscription, while his fellow-subscribers continue to be bound.^ A certificate issued in the ordinary form of certificates of stock, but containing a promise on the part of the corporation to pay interest thereon until the hapjjening of a specified event, constitutes the person to whom it is issued a stock- holder.* A signature to articles of association, setting forth the name of the proposed company, the amount oJ the capital stock, and the number of shares, imports that the subscriber will take and pay for the number oi shares set opposite his name.'' A writing reciting ac association for the purpose of organizing a bank, anc stating, among other things, "the names and residences of the share-holders, with the number of shares held bj * Vreeland v. Stone Co., 29 N. J. Phoenix Warehousing Co. v. Badger Eq. 188; Pittsburgh etc. R. E. Co. ■;;. 67 N. Y. 294. Gazzam, 32 Pa. St. 340. * Miller v. B. R. Co., 87 Pa. St. 95 2 New Hampshire Cent. R. R. Co. 30 Am. Rep. 349. V. Johnson, 30 N. H. 390; 64 Am. Dec. « McLaughlin v. R. R. Co., 8 Mich 300, 100. * Lohman v. R. R. Co., 2 Sand. 39. ' Rensselaer etc. Plank Road Co. v * SohaefFer v. Ins. Co., 46 Mo. 248; Barton, 16 N. Y. 457, note. 727 STOCKHOLDERS. § 43^5 each," and subscribed by the incorporators, constitutes a subscription to the capital stock on the part of the sign- ers, and binds them to pay for the number of shares set opposite their respective names/ A widow who assents to an order of distribution of her husband's estate, by which certain shares of stock are allotted to her, becomes a stockholder, and liable to creditors of the corporation, though she has not received the certificates of stock, and though they have not been transferred on the company's books.^ If persons sign the subscription-book of a cor- poration, leaving the amount blank, intending that they shall be represented as subscribers for the purpose of in- fluencing others, as to creditors seeking to recover unpaid subscriptions, such persons impliedly authorize the fill- ing up of the blanks by those taking the subscriptions.^ An agreement to subscribe for stock in a corporation is not a subscription.'' One who signs a mere subscription paper, agreeing to take a number of shares in a corpora- tion to be formed, is not liable thereon after the forma- tion of the company.^ An action will not lie on a stock subscription, unless its terms express a promise to pay.® An oral promise, pending the organization of a corpora- tion, to take shares of the stock, does not constitute the promisor a stockholder or member, and will not support a note given by him to pay for such shares.' The mere fact of subscribing to the stock of an incorporated com- pany does not constitute the subscriber a stockholder; but it seems that such a subscription puts it in his power to* become a stockholder, by compelling the corporation to give him the legal evidence of his being a stockholder, ' Nulton V. Clayton, 54 Iowa, 425j naoht, 21 Pa. St. 220; 60 Am. Deo. 49 37 Am. Rep. 213. Hedge's Appeal, 63 Pa. St. 279 2 Coquard v. Marshall, 14 Mo. App. MoClure v. R. R. Co., 90 Pa. St. 271 80. Peninsular R. R. Co. v. Duncan, 28 ^ Jewell V. Rock River Paper Co., Mich. 152. 101 m. 57. ^ Odd Fellows' Hall Co. v. Glazier, 5 ♦ Mt. Sterling Coalroad Co. v. Little, Harr. 172. 14 Bush, 429. ' Fanning v. Ins. Co., 37 Ohio St. » Strashurg R. R. Co. v. Echter- 339; 41 Am. Rep. 517. § 435 COEPOBATIONS. 728 upon Lis complying with the terms of the subscription.' One who signed, with others, a subscription paper, prom- ising to take and pay for shares in a joint-stock associa- tion to build a hotel, most of which subscribers were afterwards incorporated, but the defendant was not one of them, is not bound by his subscription to pay for his shares to the corporation, there being no privity of con- tract.^ The issue of a certificate of stock is not essential to make a subscriber a stockholder.' Making a certificate and mailing it to a stockholder is regarded as the issuing of it.^ No certificate of stock need be tendered before bringing a suit for the subscription.^ The loss of plain- tiff's certificates and the advertisement thereof being sufficiently established, the defendants cannot refuse to issue new certificates on the ground that a bond of in- demnity is not furnished. The stock cannot be trans- ferred by relator except upon the books of the respondent, and on the production of the certificates. This is suffi- cient protection to the company.* The authority of an agent appointed to receive subscriptions to the stock of a company is exhausted by the act of receiving the sub- scriptions. The subscription instantly inures to the bene- fit of the company, creating a contract between it and the subscriber, which the agent cannot rescind.' Where a corporation has no secretary or clerk, and the president has charge of the stock-books, a demand on the latter to make the necessary transfer of stock to a purchaser of outstanding shares is sufficient.* Illustrations. — A stock subscription simply agreed "to take the amount of shares set against our respective names." Held, to impose no personal obligation to pay for the shares: Belfast ' Busey v. Hooper, 35 M Bank v. Lanier, 11 Wall. 369. 779 STOCKHOLDERS, § 468 genuine, but at the time of the transfer were thirteen years old. Held, that the corporation was put on inquiry, and was bound first to ascertain if the powers had been revoked: Pennsylvania R. R. Co.'s Appeal, 86 Pa. St. 80. Certain stock stood on the books of a corporation in the names of two persons, " executors of A." It was then transferred on the books to " B, guardian," and a certificate issued in B's name. B was the guardian of the minor children of A. B indorsed the certificate and intrusted it to C, his attorney. C, by a petition in B's name, procured an order from a circuit judge for the sale of the stock and reinvest- ment of the money. C then hypothecated the stock to a bank for money for his own use. C failed to redeem, and the stock was sold, the bank purchasing, and afterwards transferring it to its president, E, also president of the corporation, and to F. In an action by the wards, held, that the books of the corporation, the certificate of stock, and order of the judge were sufficient to put E on inquiry, and charge him with a knowledge of the trust and conversion; that his knowledge in the matter was the knowl- edge of the corporation of which he was president, and that the corporation, as well as B, the guardian, was liable: Webb v. Graniteville Mfg. Co., 11 S. C. 396. § 468. Status of Shares as Property. — Shares in a corporation are not real property even where the corpo- ration owns real estate.' They are not an "interest in land" within the statute of frauds,^ but stock in an in- corporated company is "property" within the meaning of the Kentucky code.* They are not subject to dower.* On the death of the owner, they pass to the executor, and not to the heir.^ They are generally by statute declared to be personal property." They are "goods, wares, and merchandise," within the statute of frauds.'' A share of the capital stock gives the right to partake, according to the amount put into the fund, of the surplus profits of the corporation, and ultimately, on the dissolution of it, - Edwards v. Hall, 6 De Gex, M. & " Mohawk etc. R. B. Co. v. Clute, 4 G. 74. Paige, 384; Kuhn v. McAllister, 1 2 Bradley v. Holdsworth, 3 Meea. & Utah, 273; Griffith v. Watson, 19 W. 422. Kan. 23; Union Bank v. State, 9 » Field a. MontmolHn, 5 Bush, 455. Yerg. 490; Bank v. Waltham, 10 Met. • Johns V. Johns, 1 Ohio St. 350. 334. ' Hutching v. Bank, 12 Met. 426. ' Fine v. Homsby, 2 Mo. App. 61. Contra, Welles v. Cowles, 2 Conn. 567. §§ 469-471 Corporations. 780 of so much of the fund thus created as remains unim- paired, and is not liable for debts of the corporation.' § 469. What are Profits. — By "profits" is meant the excess of receipts over expenditures, or the net earnings.* Profits for the year mean the surplus receipts, after pay- ing expenses and restoring the capital to the position it was in on the first day of the year.' § 470. Dividends and Interest can only be Paid out of Profits. — Dividends can only be paid out of profits, and cannot be taken out of the capital,* and interest on shares must be paid from the same source.® A corporation has no power to contract for the payment of interest or divi- dends on its capital stock, in excess of the earnings of the company .' The action of directors in declaring a divi- dend with a knowledge that there are no profits is ille- gal.' § 471. Distribution of Profits — Discretion of Directors. — It is generally in the discretion of the directors whether profits shall be distributed in dividends, or shall be al- ' Burrall ■«. R. R. Co., 75 N. Y. less the expenses of operating the road 211. to earn such receipts. Interest on '' In Barry v. Merchants' Exchange debts is paid out of what thus remainsj Co., 1 Sand. Ch. 307, the court say: that is, out of the net earnings. Many " The capital stock of a corporation is other liabilities are paid out of the net like that of a copartnership or joint- earnings. When all liabilities are stock company, the amount which the paid, either out of the gross receipts partners or associates put in as their or out of the net earnings, the re- stake in the concern. To this they mainder is the profits of the share- add upon the credit of the company holders to go towards dividends, which from the means and resources of in that way are paid out of the net others, to such extent as their pru- earnings": Connolly v. Davidson, 15 dence or the confidence of such other Minn. 519; Eysterc. Centennial Board, persons will permit. Such additions 94 U. S. 500. create a debt; they do not form capital. ' Hazeltine v. R. R. Co., 79 Me. And if successful in their career, the 411; 1 Am. St. Rep. 330. surplus over and above their capital * Morawetz on Corporations, sec. and debts becomes profits, and is 344. either divided among the partners and * Rutland R. R. Co. v. Thrall, 35 Vt. associates, or used still further to ex- 543. tend their operations." In St. John * Pittsburg etc. R. R. Co. v. AUe- V. R. R. Co., 10 Blatchf. 271, 22 Wall, gheny County, 63 Pa. St. 126. lS6, Blatchford, J., said: "Net earn- ' Slaj'den v. Coal Co., 25 Mo. App. lags are properly the gross receipts, 439. 781 STOCKHOLDERS. § 472 lowed to accumulate for future use.' But the directors must not abuse this discretion. They cannot willfully withhold profits, or apply them to purposes not authorized by the charter.^ Dividends declared by the directors and received by the stockholders may be reclaimed by the directors, if illegally declared under a misapprehension of the right to declare them; and if there be an assignment by the corporation to a trustee, such right to reclaim dividends improperly declared and paid passes to the assignee, if the terms of the assignment are sufiiciently comprehensive to embrace them.' A corporation owning property may increase either income or capital out of money in its hands, according to the discretion of its directors; and courts will not go behind their action, and attempt to ascertain how they came by the funds out of which they declare either cash or stock dividends.'' § 472. Stock Dividends. — The corporation may, in- stead of distributing the profits in the form of dividends, issue new stock and distribute it among the stockholders.^ There is nothing in the law, nor public policy, prohibit- ing the issue of scrip dividends to represent the surplus earnings of a corporation.' A stock dividend belongs to the holders of the stock at the time of the declaration of the dividend, without regard to the source from which, or the time during which, the funds divided were acquired * Morawetz on Corporations, sec. plua profits, and against a division of 348; King v. R. R. Co., 29 N. J. L. 82. capital stock, without consent from ' Beers v. Bridgeport Co., 42 Conn, the legislature, make the action of the 17; Pratt v. Pratt, 33 Conn. 446; Scott W^estern Union Telegraph Company, V. Eagle Fire Ins. Co., 7 Paige, 203. of January, 1881, in declaring and dis- ' Lexington etc. Ins. Co. v. Page, trihuting a stock dividend, vltra vires 17 B. Mon. 412. and void; and the court will so ad- * Minot V. Paine, 99 Mass. 101; 96 judge at the instance of a stockholder. Am. Dec. 705. who, but for the fact that the public ' Morawetz on Corporations, sec. have an interest, would be held to 349. have precluded himself of the right to ° Williams v. Western Union Tel. complain by acquiescence in the action Co., 61 How. Pr. 216. Its charter, of the company : Williams v. Western and the statute prohibition against Union Tel. Co., 48 N. Y. Sup. Ct. declaring dividends except from aur- 349. §§473,474 CORPORATIONS. 782 by the corporatiou/ Whether the distribution by a cor- poration of its earnings among its stockholders is an apportionment of stock or a division of profits depends upon the substance and intent of the action of the corpo- ration, as shown by its votes.'' Cash dividends, however large, are to be regarded as income, and stock dividends, however made, as capital. A cash dividend is an income from capital, and a stock dividend is an accretion to cap- ital.^ § 473. Issuing New Stock — Increasing the Capital Stock. — Where the corporation increases its capital by issuing and selling new shares, every old stockholder has a first right to them in proportion to the number of shares held by him.* § 474. Payment of Dividends. — The share-holder has no rights to profits until a dividend has been declared or is wrongfully withheld.^ But when a dividend has been declared, each stockholder has a right to be paid his share, which he may recover by assumpsit against the corporation,* or equity will compel payment.' Mandamus is not a proper remedy. Directors who have failed to declare dividends at the charter time cannot declare one extending over the period of their failure." Unpaid divi- dends of a joint-stock company are assets, and liable for the debts of the company.* Dividends are to be consid- ered as divided and paid over to the stockholders of an insurance company when the stockholders have received ^ Jermain v. R. R. Co., 91 N. Y. 'Morawetz on Corporations, sec. 351. 483. ^ King v. R. R. Co., 29 N. J. L. 83. 2 Rand v. Hubbell, 115 Mass. 461; 504; Kane v. Bloodgood, 7 Johns. Ch. 15 Am. Rep. 121. 90; Jackson v. Plankroad Co., 31 N. 'Minot V. Paine, 99 Mass. 101; 96 J. L. 277; Westchester R. R. Co. v. Am. Dec. 705. Jackson, 77 Pa. St. 321. * Eidman v. Brown, 58 111. 444, ' Beers v. Bridgeport Spring Co., 42 Contra as to old stock which has come Conn. 17; Le Roy v. Globe Ins. Co., 2 back into the hands of the corporation. Edw. Ch. 657. This may be sold on the market: Page ' Gordon v. R. R. Co., 78 Vt. 501. X). Smith, 48 Vt. 290. » Curry v. Woodward, 44 Ala. 305. 783 STOCKHOLDERS. § 474 the same in money, or in credits on stock-notes in posses- sion of the company.' A stockholder who alleges that his right to participate in a dividend declared by the corpo- ration has been wrongfully denied by it cannot maintain an action in the first instance for money had and received against another stockholder who has participated in such dividend.^ The acceptance by a stockholder of a dividend upon his stock can be no ratification of the illegal conduct of the directors.^ The sale of shares gives the purchaser the right to dividends already declared, hut not payable until after the transfer of the stock.^ Where a contract is made for the sale of stock, on which a dividend has been declared, payable upon a day subsequent to the agreed time for delivery of the stock, such dividend does not pass to the buyer." Unless the resolution declaring the dividend otherwise directs the officers, they must pay the dividend to the persona holding stock on the books of the com- pany at the date when the dividend is declared." Funds of a corporation are to be distributed among those who are its stockholders at the time when the dividend is de- clared, no matter when such funds accrued.'' Dividends are personalty, and do not go to the heir.* Extraordi- nary dividends belong to the person holding a life inter- est in the stock, upon which such dividends are earned.^ Increase of capital of corporation should be kept for re- mainderman, and an increase of income should be paid to the tenant for life." Where the property of a corpora- tion consists wholly of real estate, and a part of it is taken by right of eminent domain, the compensation therefor, if distributed as a dividend to the share-holders, belongs ' Citizens' etc. Ins. Co. v. Lott, 45 ^ Jones v. Railroad Co., 17 How. Ala. 185. Pr. 529; 27 Barb. 353. 2 Peokham v. Van Wagenen, 83 N. • Goodwin v. Hardy, 57 Me. 143; 99 Y. 40; 38 Am. Rep. 392. Am. Dec. 758. ' miles V. Parrish, 14 N. J. Eq. ^ belles v. Cowles, 4 Conn. 182; 10 380. Am. Deo. 115. ' Burroughs v. R. R. Co., 67 N. » Woodruff's Estate, 1 Tuck. 58. C. 376; 12 Am. Rep. 611. "> Minot v. Paine, 99 Mass. 101; 96 ' Spear v. Hart, 3 Robt. 420. Am. Dec. 705. § 474 CORPORATIONS. 784 to the capital, and not to the income of a trust fund in- vested in the shares.' Where a corporation makes a dividend of the proceeds of a sale of part of its original franchise and property, it will be regarded, as between a life tenant and a remainderman of part of the stock, as capital, and not as income.^ When a corporation de- clares a dividend on its stock payable in money, the stockholder at the time, whether a life tenant or remain- derman, is entitled to it, irrespective of its source, amount, or the length of time in which it was earned." If a fund held in trust to pay the income to one until his death, and then convey the capital to another, includes shares in the stock of a corporation, shares of additional stock dis- tributed to the trustee as a lawful dividend thereon accrues as capital, although they represent net earnings of the corporation.'* A stockholder in a corporation has an in- terest, in proportion to the amount of his stock, in all the corporate property, and has a right to share in any sur- plus of profits arising from its use and employment in the business of the company; and this right does not depend upon the time when he becomes a stockholder, but attaches whenever he acquires the stock, and entitles hira to all sub- sequent dividends.^ When an administrator illegally dis- poses of stocks at private sale, and the same are, by direction of the administrator, transferred on the books of the com- pany, and it is not known to the heir who is the holder thereof, the company is a proper party defendant to .a bill filed to discover the owner of the stock, and praying, a retransfer of the same and an account of the dividends.* Dividends on stock correspond to the hire of property. The purchaser of railroad stock from an administrator at an unauthorized private sale is liable in equity to the dis- = Heard v. Eldredge, 109 Mass. 258; * Minot v. Paine, 99 Maas. 101; 96 12 Am. Rep. 687. Am. Deo. 705. = Vinton's Appeal, 99 Pa. St. 434; « Jones v. B. R. Co., 57 N. Y. 4A Am. Rep. 116. 196. * Richardson v. Richardson, 75 Me. ' Southwestern etc. R. R. Co. ,v. 570; 46 Am. Rep. 428. Thonjason, 40 Ga. 408. 785 STOCKHOLDEKS. § 474 tribtitees of the estate to which the stock belonged for all damages resulting directly from the conversion, including, besides the value of the shares, the consequent loss of dividends, with interest thereon. The dividends to be treated as lost are all those innocently paid by the corpo- ration after the illegal purchase and up to the time of the decree, whether paid to the purchaser himself or to those holding under him, immediately or remotely, by regular transfer.^ Dividends already paid to the stockholders can- not be reached by creditors of the corporation.^ A corpo- ration which has issued negotiable certificates for an extra dividend, making them payable at a time fixed therein, or sooner at its option, and elects to redeem them sooner, cannot refuse to pay a stockholder the amount of a lost certificate. It may protect itself by exacting iudemuity, as in case of lost commercial paper.' As a rule, dividends cannot be apportioned, but must he paid to the owner of the share at the time the dividend is declared.* But in an early case in South Carolina, where a person entitled for life to dividends on bank stock, payable half-yearly, died just before a semi-annual dividend was declared, it was held that the dividend should be apportioned, and a part paid to his executor.^ Illustrations. — L. contracted, previous to July 3d, to sell shares of stock in a corporation to B. at B.'s option, to be ac- cepted by July 16th. On the last-named day the shares were transferred to B. On July 3d a dividend on the stock was de- clared, payable August 1st. Held, that the dividend belonged to L.: Bright v. Lord, 51 Ind. 272; 19 Am. Rep. 732. The di- rectors of a joint-stock corporation voted "to declare a dividend of seventy per cent upon the capital stock, the amount to be placed pro rata to the credit of each stockholder, and made pay- able without interest at such time as may be directed by the board." The dividend was based upon profits actually received. ' Nutting w. Thomasson, 57 Ga. 418. March v. R. R. Co., 43 K H. 520; 2 Reid V. Eatonton Mfg. Co., 40 Ga. Brundage v. Brundage. 60 N. Y. 551;, 98; 2 Am. Rep. 562. Hyatt v. Allen, 56 N. Y. 553; 15 Am. ' Butler V. Glen Cove Starch Co., 18 Rep. 449. Hun, 47. * Ek parte Rutledge, 1 Harp. Eij.. , * Goodwin v. Hardy, 57 Me. 145; 65; 14 Am. Deo. 696. Vol. L— 60 § 474 CORPORATIONS. 786 Held, that the corporation thereby became indebted to each stockholder for the amount of his share of the dividend, pay- able within a reasonable time, and that on the refusal of the corporation, the stockholder could enforce payment by the aid of a court of equity: Beers v. Bridgeport Spring Co., 42 Conn. 17. A testator bequeathed the "income, profit, and products" of certain stock in a corporation to a person for life, remainder over. Afterward the corporation increased its capital stock, al- lowing each stockholder the option to take at par as many new shares as he held of the old. The trustees under the will sold part of their "options" to take the new shares, and with the proceeds bought new shares. Held, that the new shares were capital, and went to the remainderman: Moss's Appeal, 83 Pa. St. 264; 24 Am. Rep. 164. On the sixth of March A made a written proposal to B to convey to him all his right and title in certain shares in a turnpike, at five dollars per share, provided B gave security for the price by the 24th of March. After this A received a dividend on the shares, and B, not knowing that the dividend had been received, on the eigh- teenth of March gave security for the price, and took a convey- ance of all the interest A then had in the shares. Held, that the dividend received by A belonged to B, and that B could recover it in an action for money had and received: Harris V. Stevens, 7 N. H. 454. The directors of a corporation de- clared two dividends, the one payable on the day the same was declared and the other at the option of their agent. Held, that although no day was definitely named for the payment of the second dividend, and no time fixed for closing or opening book*, to determine who otherwise would be entitled, stock- holders who were such on the day the dividend was declared are the persons who should receive it: Hill v. Newichawanich, Co., 48 How. Pr. 427. A assigned to B a stock certificate con- taining a statement that stock was transferable only upon the books of the corporation. B failed to obtain such transfer. A ■died. Held, that the corporation, having paid dividends to A's administrator, could not be held liable to B for their amount, no presentation of a certificate being necessary upon a demand for dividends by the owner of record of the stock or his personal representative: Brisbane v. R. R. Co., 25 Hun, 438. A railroad company, having declared a dividend upon its stock, deposited A sufficient sum with bankers expressly to pay such dividend, but before the whole amount so deposited was paid out, with- drew the remainder and subsequently became insolvent, and a Tsceiver was appointed. Held, that the fund so deposited should be regar4ed as specially appropriated for the payment of the dividend, and that the stockholders acquired in equity a lien Wppn swb fund, to the extent of the amount to which they were 787 STOCKHOLDEES. § 475 respectively entitled, and that the lien followed the fund in the hands of the receiver: Matter of Le Blanc, 4 Abb. N. C. 221. §475. Right to Examine Books — Other Rights. — A stockholder has a right to examine the books of the cor- poration/ and the court will compel by mandamus the officers of the corporation to accord this right to the stock- holder,^ or to those entitled to see or use them. And this will include the agent, solicitor, counsel, or expert of the party asking therefor,* or a share-holder who is also the solicitor of opposing litigants.^ It has been held that the fact that a stockholder has been refused permission to examine the books of the corporation with the assist- ance of an expert, his bill charging no fraud or miscon- duct on the part of the directors, but merely alleging that the reason for his examination is to discover whether he has been defrauded by the directors in the distribution of the assets, presents no ground of equitable jurisdic- tion; his remedy is at law by mandamus.^ • Field on Corporations, sec. 168; ' Stettaner v. New York etc. Oon- Augel and Ames on Corporations, sec. struction Co., 42 N. J. £q. 46. In a 681, 682; Field v. R. R. Co., 18 Fed. note to this case Mr. Stewart says: Rep. 471; People v. Throop, 12 Wend. " Au inspection will not be allowed to 183; Sinclair w. Gray, 9 Fla. 71. gratify mere idle curiosity: People v. 2 People ». Throop, 12 Wend. 183; Walker, 9 Mich. 328; nor because People V. Mott, 1 How. Pr. 247; Peo- some of the books are necessarily kept pie V. Pacific Mail Steam. Co., 50 Barb, in another state, where the main ofiSce 280; Sage v. R. R. Co. , 70 N. Y. 220; is, in violation of a statute of Connec- State V. GoU, 32 N. J. L. 285; St. ticut: Pratt v. Meridan Co., 35 Conn. Luke's Church v. Slack, 7 Cush. 226; 36. See Sykes's Case, 10 Beav. 162; Com. V. Phoenix Iron Co., 105 Pa. St. Ervin v. R. R. Co., 22 Hun, 566; 111; 51 Am. Rep. 184; Cockburn v. Cain v. Pullen, 34 La. Ann. 511; nor Union Bank, 13 La. Ann. 289. to fish out a defense: Birmingham ' Hide V. Holmes, 2 MoUoy, 372; Co. v. White, 1 Q. B. 282; Imperial Blair v. Massey, L. R. 5 I. R. Eq. Gas Co. v. Clarke, 7 Bing. 95. See 623; Joint-Stock Discount Co. 's Case, Hoyt v. Am. Ex. Bank, 1 Duer, 652; 36 L. J. Eq. 150; Bonnardet v. Taylor, Shoe and Leather Ass'n v. Bailey, 17 1 Johns. & H. 383; Attorney-General Jones & S. 385; nor upon an alJega- V. Whitwood, 40 L. J. Ch. Div. 592; tion of belief that the company's affairs Lindsay v. Gladstone, L. R. 9 Eq. are being conducted improperly, and 132; Williams v. Prince of Wales Ins. the officers unduly chosen, and alleg- Co., 23 Beav. 358; State v. Bienville ing mismanagement in some particu- Co., 28 La. Ann. 204; Ballin v. Ferst, lars not affecting petitioners, nor then 65 Ga. 546. in disx'ute: Rex v. Merchant Tailors* ' Reg. V. Wilts Co., 29 L. T., N. S., Co., 2 Barn. & Adol. 115; nor to fur- 922; Kingsford v. R. R. Co., 16 Com. nish materials to the other side for a B., N. S., 761. new trial: Pratt v. Goswell, 9 Com. §475 CORPORATIONS. 788 Where the property of a corporation is sold on execu- tion against it, a stockholder may buy it for his individ- ual benefit, and he will not be bound to account for it to the other stockholders, although it was bid in by him at a price much below its value, if there was no fraud in the sale.' Where one of the owners of a ferry, in his lifetime, refused to take the value of his interest in the ferry in the stock of a bridge company to erect a bridge in the same ■place, as authorized by the act of incorporation of the bridge company, such refusal being after the requisite amount of stock had been subscribed, and the bridge erected, his heirs could not, after his death, come in as stockholders, but were concluded by the refusal of their ancestor.^ One claiming to be a share-holder of a cor- poration, but not recognized as such in the payment of a dividend, cannot maintain an action against a recog- B., N. S., 706; nor to ascertain whether petitioner would better accept, with the other share-holders, what was of- fered her for her holding in an old company, which was being wound up, rather than proceed with an arbitra- tion; Glamorganshire Banking Co., L. R. 28 Ch. Div. 620; nor to estab- lish a justification in an action against the petitioner for libel, imputing in- solvency to the company: Metropoli- tan Co. V. Hawkins, 4 Hurl. & N. 146. See Finlay v. Lindsay, 7 I. R. C. L. 1 ; Collins V. Yates, 27 L. J. Ex. 150; Opdyke v. Marble, 44 Barb. 64; nor to examine all the books of the com- pany for the preceding fifty years, because petitioner alleges that he is dissatisfied with the management of the company and with the accounts, and on other grounds: Reg. v. Grand Canal, 1 Irish Law Rep. 327; nor where the petition does not specify the particular books asked for, and the object of the petitioner in making the application to the officers, and also to the court: Reg. v. London and St. Catherine's Docks Co., 44 L. J. Q. B. 4. See Hunt v. Hewitt, 7 Ex. 236; Pepper v. Chambers, 7 Ex. 226; New England Iron Co. v. N. Y. Loan Co., 55 How. Pr. 351; Central E. R. ». R. R. Co., 53 How. Pr. 45; Com- missionerD v. Lemly, 8.5 N. C. 341; Walker v. Granite Bank, 44 Barb. 39; nor whether certain allegations in the applicant's affidavit are true; nor whether he has documents in his pos- session relating to the matters in issue: Raynerr. Alnusen, 15 Jur. lOGO". The court may control the manner of the examination: Williams v. Prince of Wales Ins. Co., 23 Beav. 338. An appeal was held to lie from an order granting a party leave to inspect and examine the books of a corporation, the appellant: Thompson v. R. R. Co., 9 Abb. Pr., N. S., 212; Lanca- shire Co. u. Greatorex, 14 L. T., N. S., 290; Cummer v. Kent, 38 Mich. 351 > Commissioners v. Lemly, 85 N. C. 341. See Saxby v. Easterbrook, L. R. 7 Ex. 207; Bustros v. White, L. R. 1 Q. B. D. 423; Clyde o. Rogers, 24 Hun, 145; McCargo v. Crutcher, 27 Ala. 171; Sage's Case, 70 K Y. 221. As to the costs of an inspection, see Hill' V. Philp, 7 Ex. 232; Davey v. Pem- berton, 11 Com. B., N. S., 629; Gard- ner V. Dangerfield, 5 Beav. 389. " ' Mickles v. Rochester City Bank, 11 Paige, 118. '' White V. Florence Bridge Co., 4 Ala. 464. 789 STOCKHOLDERS. § 475 nized share-holder for a part of the dividend; he can only enforce recognition by an action against the corporation itself/ Illustrations. — A petition alleged that the petitioner held a large amount of the stock of a corporation, that notwithstanding its prosperous business, no dividend had been declared for nine years, and charged malfeasance of the president and two of the directors, by which the principal part of the company's business had been diverted for their personal benefit, and its funds mis- appropriated. It further alleged that he had, at a stockholders' meeting, and at other times, asked for information touching the corporation's transactions, which request had invariably been, refused, and that he proposed to file a bill in equity against the corporation and its officers, for which purpose it was necessary that he should see the books and papers in order to state the facts correctly. Held, that a mandamus would issue for the pro- duction of such books and papers as contained information upon the subjects specified in the petition: Commonwealth v. Phoenix Ins. Co., 105 Pa. St. Ill; 51 Am. Rep. 184. The petition averred that a public notice had been issued to attend a stockholders' meeting, "to vote upon the reduction of the capital stock, and upon other matters," and that the directors had concealed from him the true condition of the company's affairs, without a knowledge of which he could not vote understandingly. Held, that he was entitled to the inspection: State v. Bienville Co., 28 La. Ann. 204. A corporation was required by charter (in ad- dition to general provisions of the statute upon the subject) to cause a book to be kept containing the names and residences of all stockholders, the number of shares held by each respect- ively, etc., such book to be at all reasonable times open for inspection of creditors and stockholders. The corporation kept no book precisely answering to the requirement of the charter; it kept, however, a transfer-book, a register of certificates of stock, and a stock ledger. On application by a stockholder for an opportunity to inspect the book prescribed to be kept by the charter, the oiBcers of the corporation offered an inspection of the transfer-book and register, but refused to permit the stock ledger to be examined. Held, that the stockholder was entitled to an inspection of the stock ledger, that being, of all the books kept by the company, the one which most nearly fulfilled the requisites of the charter provision. The circumstance that it contained more fasts than the charter required to be stated formed no excuse for refusing to furnish it, so long as the coni- 1 Peckham v. Van Wagenen, 45 N. Y. Sup. Ot. 328. § 476 coRPORATiONa. 790 pany neglected to keep such a book as was required: People v. Pacific Mail Steamship Co., 3 Abb. Pr., N. S., 364; 84 How. Pr. 193. A statute requires corporations, under a penalty, to keep the stock-book and ledger open every day except Sunday and the Fourth of July, for the inspection of stockholders and credi- tors. A stockholder applied to examine the books, and was told that they were locked up in the safe, and that the clerk in charge, who alone knew the combination, was not in town, but would return in a day or two, when the examination could be had. Held, no refusal to exhibit the books had been proved: Kelsey v. Pfaudler Process Fermentation Co., 41 Hun, 20. § 476. Stockholders' Meetings — Notice of Time and Place Essential. — Every stockholder is entitled to reason- able notice of the time and place of holding a corpoation meeting.^ But if the charter or by-laws fix the time and place, no additional notice is necessary.^ If no method of giving notice is provided by the charter or by-laws, persona] notice must be given.^ If the charter or by- laws prescribe the manner of giving notice, that mode must be followed.^ Where the charter of a corporation declares that two weeks' published notice shall be given of the annual meetings for the election of man- agers, managers elected after a notice of two days only given are not elected according to law, and no by-law can render nugatory the mandatory provision of the charter.* An authority given in a charter of incorporation, in gen- eral terms, to certain persons, to call the first meeting of the corporators, does not authorize them to call such meeting at a place without the state whose legislature granted the charter.* The statute relative to the observ- ■' People V. Batohelor, 22 N. Y. 134; ' Stow u. Wyse, 9 Conn. 214; 18 In re Long Island B. R. Co., 19 Wend. Am. Deo. 99; Harding v. Vande- 37; 32 Am. Dec. 429; Stow v. Wyse, water, 40 Cal. 77; People v. Batehe- 7 Conn. 214; 18 Am. Dec. 99; Shelby lor, 22 N. Y. 128; State v. Ferguson, R. R. Co. V. R. R. Co., 12 Bush, 31 N. J. L. 107; People Ins. Co. v. 62. Westoott, 14 Gray, 440; Wiggin r. 2 People V. Batchelor, 22 N. Y. 128; Baptist Church, 8 Met. 301. San Buenaventura Mfg. Co. v. Vaa- * Shelby etc. R. R. Co. v. R. R. Co., sault, 50 Cal. 534; Warner v. Mower, 12 Bush, 62. 11 Vt. 385; Sampson »a Corporation, * United States v. McKelden, Mb- 36 Me. 78; Atlantic Ins. Co. v. San- Ar. & Mackey, 162. ders, 36 N. H. 252. » j^miej. „ jjwer, 27 Me. 509. 791 STOCKHOLDERS. § 477 ance of Sunday does not apply to the proceedings of busi- ness meetings of societies held on that day. The holding of business meetings of a benevolent society, or transact- ing its business on Sunday, is not forbidden as illegal.' Illusteations. — The charter of a Texas corporation pur- ported to authorize it to transact business at Paris, France. Held, that the corporation could not hold stockholders' meetings outside of Texas, and that directors elected at a meeting held at Paris were not directors even de facto, and that their acts were a nullity: Franco-Texan Land Co. v. Laigle, 59 Tex. 339. The notice of the time of holding an election of directors was for twelve o'clock, m. Held, that a meeting called to order, under such notice, and organized about fifteen minutes before twelve o'clock was a surprise and fraud upon many of the stockhold- ers, and as against such of them as did not participate in the meeting, was irregular and void. Such irregularity could not be cured by a reorganization of the meeting at twelve o'clock, where such meeting was, in fact and in legal effect, but a con- tinuation of the first meeting: People v. R. R. Co., 55 Barb. 344; 7 Abb. Pr., N. S., 265; 38 How. Pr. 228. Notice was sent by mail to a director of a corporation, from the town of A, on the twentieth of the month, of a meeting of the directors to be held there on the twenty-third. Held, sufficient, as it appeared that a person leaving A on the morning of one day could go to B, where said notice was sent, and get back by the evening of the next: Covert V. Rogers, 38 Mich. 363. The stockholders of a corporation were notified that the annual meeting for the election of directors would be held at a certain hour of the day fixed by the charter, and the corporation was restrained from holding an election on that day, in consequence of which no meeting was held until several hours after the time fixed in the notice, when a small number of stockholders, without the knowledge of the others, met, organized, and adjourned until the next day, at which time an election was held by a minority of the stockholders, without notice to others who were in the vicinity for the pur- poses of the meeting, and might have been readily notified. Held, that such election was invalid, whether the restraining order did or did not bind the stockholders: State v. Bonnell, 35 Ohio St. 10. § 477. Who may Call Meetings. — A meeting of stockholders can be called only by some person having • People V. Young Men's etc. See, 65 Barb. 357. § 478 CORPORATIONS. 792 authority to do so.^ But the want of authority of the person calling it is waived by the stockholders attend- ing it.'' The call for the original meeting of corporators to elect directors need not be by a formal order of those authorized to make the call; it is sufficient that it is made by their direction.' Where the charter of a corpo- ration requires annual meetings for the election of direc- tors, the directors cannot, by a by-law, so change the time of the annual election as to continue themselves in office more than a year, against the wishes of the holders of a majority of the stock.^ It is not necessary that a demand for an annual election of trustees of a corporation should be made upon the board of trustees when in ses- sion; a demand upon each individual triistee of the cor- poration is sufficient." Where the by-laws of a corporation provide that meetings of the stockholders shall be called by the trustees, the action of the board of trustees is ne- cessary to convene a legal meeting; the president of the corporation has no atithority to call such a meeting.* Illustrations. — Under a statute providing "that a general meeting of the stoukholdera may be called at any time by the board of directors, or by any number of stockholders, holding together at least one tenth of the capital," held, that a call by the secretary, simply on authority of stockholders holding one tenth of the capital, was invalid, and all proceedings thereunder iUegal: Reilly v. Oglebay, 25 W. Va. 36. § 478. General and Special Meetings — Distinction. — ^ It is not necessary to notify the stockholders of the nature of the business to be brought before a general meeting.^ But as to a special meeting it is, and no business can be transacted at such a meeting except as to the matters ' Bethany v. Sperry, 10 Conn. 200; ' Hardenburg v. Farmers' and Me- State V. Pettinelli, 10 Nev. 141; Johns- chanics' Bank, 3 N. J. Eq. 68. ton V. Jones, 23 N. J. Eq. 216; Evans * Elkinsa.R. R. Co.,36N. J. Eq.467. V. OsgooJ, 18 Me. 213; Stevens v. * State «. Wright, 10 Nev. 167. Eden Meeting House, 12 Vt. 688. " State v. Pettineli, 10 N'ev. 141. 2Juda1i -■. I'ls. 4 Cow, 382, note. » State v. Chute, 34 Minn. 135. § 480 CORPORATIONS. 798 Voting must be personal, and not by proxy, unless per- mitted by the charter or statute.^ At common law each share-holder has only one vote, no matter how many shares he holds ;^ but this is generally fixed by charter or statute.^ It has been held that where the charter gives no such authority, a by-law giving members a right to vote by proxy is invalid.^ But in other jurisdictions such a by-law has been considered valid.* A proxy given by a member of a corporation for voting in the ordinary con- cerns of the corporation is no authority to vote for a fundamental change in or surrender of the charter of the corporation.® Where by statute a stockholder, " being a citizen," is authorized to vote by proxy, such privilege cannot be claimed by an alien stockholder.'' Inspectors of a corporate election have no right to reject a vote offered by proxy, upon the ground that the written proxy is not acknowledged or proved by a subscribing witness. If the proxy is regular in its form, and apparently the act of the stockholder, the inspectors should receive it.* Illusteations. — Some oftheBtockholders of a manufacturing company transferred four hundred shares to C, to be held by him " for the benefit of the corporation " ; and at an election of officers C. voted on these four hundred shares, whereupon the election was claimed by the persons having the highest number of votes. Held, that a mandamus would issue to compel the surrender of the ofiices to the persons having the highest number of votes, after excluding the four hundred: American R. R. Frog Co. v. Haven, 101 Mass. 398; 3 Am. Rep. 377. In an election of ofii- cers one stockholder claimed to represent another as proxy, and ' Philips V. Wickham, 1 Paige, 590; tion that the statutes thereof do not People V. Twaddell, 18 Hun, 427; Tay- provide for voting by proxy: Wood- lor V. Griswold, 14 N. J. L. 222; 27 ruff«. R. R. Co., 30 Fed. Rep. 91. Am. Dec. 33; Craig v. First Presby- '' Taylor v. Griswold, 14 TS. 3. L. terian Church. 88 Pa. St. 42; 32 Am. 222, 237; 27 Am. Dec. 33. Rep. 417; State v. Tudor, 5 Day, 329; ° See the statutes allowing voting by 5 Am. Deo. 162; Brown v. Com., 3 proxy cited in 27 Am. Deo. G2. Grant Cas. 209; Com. v. Bringhurst, * Taylor v. Griswold, 14 N. J. L. 103 Pa. St. 134; 49 Am. Rep. 119. An 222; 27 Am. Dec. 33. injunction will not be granted in one * People v. Crossley, 69 111. 195. state to restrain officers of a corpora- * Smith v. Smith, 3 Desaus. Enwealth, 93 Pa. St. 264. § 485. Corporation must Sue for Injuries to Itself — In- dividual Stockholders cannot Sue for It. — For wrongs or injuries to a corporation the agents of the corporation must sue, acting for it. A stockholder or stockholders cannot bring any suit or proceeding on behalf of the cor- poration, unless the corporation refuses to proceed itself, on account of the misconduct or failure of its agents." A ' St. Luke's Church v. Mathews, 4 * Cartau v. Father Matthew etc. Desaus. £([. 578; 6 Am. Dec. 619. Soc, 3 Daly, 20. » Sargent v. Franklin Ins. Co., 8 * In re Klaus, 67 Wis. 401. Pick. 90; 19 Am. Dec. 306. « Russell v. Wakefield Co., L. R. 20 » In re Rev. David MulhoUaud Ben. Eq. 479; Hersey v. Veazie, 24 Me. 9; Soc. of Manayunk, 10 Phila. 19. 41 Am. Deo. 365; Robinson v. Smith, § 485 CORPORATIONS. 808 stockliolder in a corporation, the directors of which have been guilty of mismanagement and neglect of duty, by which the value of the stock has become depreciated, can- not bring suit in his own behalf to recover damages for himself personally.* The general rule is, that a suit brought for the purpose of compelling the ministerial officers or agents of a private corporation to account, or for misconduct, must be in the name of the corporation itself, and cannot be maintained in the name of an in- dividual stockholder.^ A stockholder cannot enjoin a levy and sale upon the foreclosure of a mortgage, executed by the officers of his corporation, without showing some sufficient reason why the corporation is not the com- plainant.^ Where a corporation by a valid contract ac- quires a majority of the stock of another corporation, share-holders in the latter corporation have no standing in court to restrain the acts of the directors of the former corporation, it not appearing that they have unsuccess- fully tried within the corporation to get what they want, or that their interests are betrayed or jeopardized. It is not enough that the former corporation is violating its contract.* A bill cannot be maintained by the stock- holders of a corporation against its officers for conduct prejudicial to the corporation, to which the corporation is not made a party, and in which no reason was given why the relief sought might not be had through the 3 Paige, 233; Allen v. R. R. Co., 49 185; Campbell v. Brunk, 25 111. 225; How. Pr. 14; Memphis City v. Dean, Hay v. McCoy, 6 Blackf. 69; Trustees 8 Wall. 73; Kennebec E. B. Co. v. R. of Lexington v. McOonnell, 3 A. K. R. Co., 54 Me. 181; Smith v. Hurd, Marsh. 224; Mauney w. Motz, 4 Ired. 12 Met. 372; 46 Am. Dec. 690; Brown Eq. 195; Porter v. NeckerTis, 4 Rand. V. Van Dyke, 8 N. J. Eq. 795; 55 Am. 359. Corporation is trustee for its Dec. 250; Arkeuberg v. Wood, 23 stockholders: Supply Ditch Co. v. Barb. 360; Baltimore etc. R. R. Co. v. Elliott, 10 Col. 327; 3 Am. St. Rep. Wheeling, 13 Gratt. 40; Allen v. 586; Caulkinw.GasJjightCo., 85Tenn. Curtis, 26 Conn. 456; Silk Co. v. 683: 4 Am. St. Rep. 786. Campbell, 27 N. J. L. 539; Dimpfell ' Evans v. Brandon, 53 Ter. 56. V. R. R. Co., 110 U. S. 209; Smith v. * Browns. Van Dyke, 8N. J. Eq. 795. Poor, 40 Me. 415; 63 Am. Dec. 672; » Henry v. Elder, 63 Ga. 347. Bradley v. Richardson, 2 Blatchf . 343; * Conrerse ti. Dimock, 22 Fed. Rep. Insane Hospital v. Higgins, 15 111. 573. 809 STOCKHOLDERS. § 485 machinery of the corporation, or in its name.* If an individual stockholder has suffered damage on a contract with the corporation, through the fraudulent and illegal acts of the directors, done by color of their office, his only remedy is against the corporation. He can maintain no action against the directors, who are themselves liable to the corporation.^ A refusal by the directors of a bank to commence a suit to test the question of the legality of a tax upon the property of the bank is not a breach of their duty for which a bill will lie against them at the suit of a stockholder.* Stockholders of a corporation cannot maintain an action accruing to the corporation for breach of contract, and which its officers and directors refuse to bring.* The commission of a fraud upon a cor- poration by its officers does not give to a creditor an action at law for fraud and deceit against them.^ The request made by corporators to the directors to bring an action must have been made in good faith, and not have been simulated to serve as the foundation of a suit by the corporators.® A bill in equity to enforce performance of public duty by a corporation cannot be maintained by a private person in the absence of a special right or au- thority; nor in such a case has the complainant a right to a decree compensating him for any damage suffered.^ That a stockholder has been refused permission to ex- amine the books of the corporation with the assistance of an expert, his bill charging no fraud or misconduct, but alleging his desire to discover whether he has been de- frauded by the directors of the assets, presents no ground of equitable jurisdiction; his remedy is at law by manda- mus.^ ' Blacks. Huggins, 2 Tenn. Ch. 780. = Priest v. White, 89 Mo. 609. » Smith V. Poor, 40 Me. 415; 7 Am. « Bacon v. Irvine, 70 Cal. 221. Dec. 672. ' Buck Mountain Co. v. Lehigh Coal 'Dodge V. Woolsey, 18 How. 331; etc. Co., 50 Pa. St. 91; 88 Am. Deo. Moch. etc. Bank v. Debolt, 18 How. 534. 380; Same v. Thomas, 18 How. 384. » Stettauer v. New York etc. Con- ' Slattery v. Transportation Co., 91 struotion Co., 42 N. J. Eq. 46. Mo. 217; 60 Am. Rep. 245. .§ 486 OORPOBATIONS, 810 Illustrations. — In an action on a note, defendant pleaded that certain shares of stock in a corporation of which plaintiff was an oflScer were delivered as security for the note; that by plaintiff's negligence and misconduct as such officer the stock subsequently greatly depreciated in value, to defendant's dam- age. Held, that this defense was not available, as it would in effect be an action against a corporate officer by a stockholder, to hold him responsible for his ofiBcial misconduct, without request and refusal of the corporation to bring the action : Palmer v. Hawes, 73 Wis. 46. § 486. When Stockholders Entitled to Relief.— But where the managing agents of the corporation are doing wrong, and wrongfully refuse to bring suit, in the name of the corporation, then at the suit of a stockholder the courts will give relief. "A stockholder is entitled to re- lief in a court of equity on account of an injury to his equitable rights as member and beneficiary of a corpora- tion, provided, firstly, that the corporation be unable, by reason of the default of its agents, to obtain an adequate remedy within a reasonable time; and secondly, that the right to obtain redress for the injury be not impliedly relinquished by the stockholders to the discretion of the regular agents of the corporation as a mutual concession for the sake of peace and good government."* A corpora- ' Morawetz on Corporations, sec. ferred on them by their charter or 400; Taylor v. Miami Exporting Co., other source of organization; or such 5 Ohio, 162; 22 Am. Deo. 785; Dodge a fraudulent transaction, completed or V. Woolsey, 18 How. 331; Hodges v. contemplated by the acting managers, New England Screw Co., 1 E,. I. 312; in connection with some other party, 53 Am. Dee. 624; Mussina v. Gold- or among themselves, or with other thwaite, 34 Tex. 125; 7 Am. Rep. 281; share-holders, as will result in serious March V. R. R. Co., 40 N. H. 548; 77 injury to the corporation, or to the Am. Deo. 733; Hawes v. Oakland, 104 interests of the other share-holders; U. S. 450, the court saying: "We or where the board of directors, or a understand the doctrine to be, that majority of them, are acting for their to enable a stockholder in a corpora- own interest, in a manner destructive tion to snstain in a court of equity, in of the corporation itself, or of the rights his own name, a suit founded on a of the other share-holders; or where right of action existing in the corpora- the majority of share-holders them- tion itself, and in which the corpora- selves are oppressively and illegally tion itself is the appropriate plaintiff, pursuing a course, in the name of the there must exist, as the foundation of corporation, which is in violation of the suit, some action, or threatened the rights of the other share-holders, action, of the managing board of direc- and which can only be restrained by tors or trustees of the corporation, the aid of a court of equity. Possibly which is beyond the authority con- other cases may arise in which, to pre- Oil STOCKHOLDERS. § 486 tor whose membership has been denied by the corporation may sue the corporation to establish his right thereto.* Where the majority of the stockholders are illegally pur- suing a course, in the name of the corporation, which is in violation of the rights of the other stockholders, and which can only be restrained by a court of equity, an action to obtain equitable relief may be maintained by an aggrieved stockholder, or those whose rights are thus affected may join as plaintiffs in the action.^ A stock- holder may file a bill in chancery to restrain the ofi&cers of the company from the commission of an unauthorized act.' A minority of the stockholders have a remedy in chancery against the directors and against the corporation, and against all others, whether individuals or corpora- tions, assisting or confederating with them, to prevent such corporation, and the directors thereof, from making any misapplication of their capital or profits which might result in lessening the dividends of stockholders, or the value of their shares, if the acts intended to be done create what in law is denominated a breach of trust or duty.^ A stockholc'er may bring suit in his own name, for himself, vent irremediable injury or u total an honest effort to obtain action by the failure of justice, the court would be stockholders as a body, in the matter justified in exercising its powers, but of which he complains. And he must the foregoing may be regarded as an show a cause, if this is not done, where outline of the principles which govei'n it could not be done, or it was not this class of cases. But, ia addition reasonable to require it. The efforts to the existence of grievances which to induce such action as complainant call for this kind of relief, it is equally desires on the part of the directors and important that before the share-holder of the share-holders, when that is is permitted, in his own name, to in- necessary, and the cause of failure in stitucu and conduct a litigation which these efforts, should be stated with par- usually belongs to the corporation, he ticularity, and an allegation that com- should show to the satisfaction of the plainant was a share-holder at the time court that he has exhausted all the of the transactions of which he com- means within his reach to obtain, plains, or that his shares have devolved within the corporation itself, the re- on him since, by operation of law. " dress of his grievances, or action in ' Tipton Fire Co. c/. Barnheisel, 92 conformity to his wishes. He must Ind. 88. make an earnest, not a simulated, ef- ' Barr v. R. B. Co., 96 N. Y. 444. fort, with the managing body of the ' Bliss v. Anderson, 31 Ala. 612; corporation, to induce remedial action Keall v. Hill, 16 Cal. 145. on their part. If time permits, or has * March v. R. R. Co., 40 N. H. 548; permitted, he must show, if he fails 77 Am. Deo. 733. with the directors, that he has made § 486 COBPORATIONS. 812 and others similarly situated, to recover the property of the corporation which one of its trustees has converted to his own use, where the corporation has declined to bring the action; and in such a case the corporation is properly made a party defendant.^ A stockholder has a remedy in chancery against the directors to prevent them from doing acts which would amount to a violation of the charter, or to prevent any misapplication of their capital or profits which might lessen the value of the shares, if the acts intended to be done amount to what is called in law a breach of trust or duty. So, also, a stockholder has a remedy against individuals, in whatever character they profess to act, if the subject of complaint is an imputed violation of a corporate franchise, or the denial of a right growing out of it, for which there is not an adequate remedy at law? A stockholder of an insolvent corpora- tion may bring suit for a rescission of an unlawful con- tract, without first demanding that the corporation shall sue, if it is apparent that the corporation could not act because its directors are under the control of the persons with whom the contract was made.^ Where the officers and directors have improperly exercised their powers in making contracts, and in using the company's money, and have the control of the company, the stockholders may sue in equity for redress, making said officers and directors defendants, together with the corporation.^ To constitute an illegal application of the funds or money of a corporation, it is not necessary that there should be any intentional wrong or actual fraud; and to give the court jurisdiction in equity in such a case, the plaintiff need not allege or prove any such actual and willful fraud or collusion on the part of the company or companies, or the directors thereof.® • Carpenter v. Roberts, 56 How. Pr. • Currier v. R. R. Co., 35 Hun, 355. 216. * Deaderick v. Wilson, 8 Baxt. 108. ■' WUcox V. Bickel, II Neb. 15*. " March v. R. R. Co., 43 N. H. 515. 813 STOCKHOLDERS. § 486 A stockholder may maintain a bill against the corpora- tion to restrain them from paying a tax illegally levied upon the property of the company, the state treasurer be- ing made a party defendant to the bill, and enjoined from collecting the tax.' Stockholders may bring suit to can- cel a deed purporting to have been made by the corpora- tion, as a cloud on the title of the corporation.'' Where the officers have wasted its funds, a share-holder desiring redress need not, before resorting to the courts, make a demand, which necessarily would be unavailing, on the officers to bring suit.' Where a stockholder brings suit to obtain redress for grievances common to others, and to vindicate the rights of the corporation, he must show that he has made an earnest, not a simulated, effort to obtain redress within the corporation, and where time has permitted, that he has endeavored to induce the stockholders, as a body, to take action. He must also show that he was a share-holder at the time of the trans- actions complained of, or that his shares have since de- volved on him, not by purchase, but by operation of law; and his bill must disclose his efforts to obtain redress in the ordinary mode.* Where a stockholder brings a suit in equity, which should have been brought by the corpo- ration, his bi)l must set forth in detail the efforts made by him to secure, on the part of the corporation, the desired action, or it will be dismissed.' A stockholder may main- tain an action to set aside an election of directors, although at the time of the election uo stock had stood in his name on the books of the corporation sufficiently long to entitle him to vote." A court of equity will enforce assessments on unpaid subscriptions necessary to pay ci-editors, if the ■Dodge V. Woolsey, 18 How. 331; * Dannmeyer v. Coleman, 8 Saw. Mechanics' and Traders' Bank v. De- 51. bolt, 18 How. 380j Mechanics' and * Foote v. Cunard Mining Co., 17 Traders' Bank ». Thomas, 18 How. 384. Fed. Rep. 46. = Baldwin v. Canfield, 26 Minn. 43. " Wright v. Central California Col- ' Kelsey v. Sargent, 40 Hun, 150. ony Water Co., 67 Cal. 532. § 486 CORPORATIONS. 814 directors refuse to act.' Where a corporation has ceased to appoint officers, and has abandoned its bixsiness, a stockholder may bring suit for himself and the others for the protection of their rights, without a showing of a re- fusal of corporate officers to act.^ Stockholders may main- tain a bill, to which the corporation is party defendant, against the remaining stockholders who have a majority of the stock, and constitute a majority of the directors, where the bill charges such directors with fraudulently combin- ing to appropriate the funds of the corporation for their individual benefit, destroying the business, and depre- ciating the stock, improperly withdrawing the funds of the corporation, concealing their amount, and refusing to permit it to be charged on the books, or to permit suits to be brought for its recovery, and threatening to sell the corporation property for less than its value, and to waste and destroy it for their individual benefit, and praying for a disclosure and an account, the payment of whatever may be due to the corporation, and an injunction against selling or wasting its property.' Illustbations. — A number of shares of the stock of a turn- pike company being about to be sold, the officers of the com- pany appointed an agent to buy them, for the "use of the company"; but when purchased, they took a part of them to themselves. A stockholder instituted a suit against them to recover the damages he sustained by the course taken. Held, that he could recover: Kimmel v. Stoner, 18 Pa. St. 155. By state statute, a street-railroad company's charter was repealed, and its franchises and track transferred to another, and the company refused to seek a remedy. Held, that a stockholder asking for an injunction, on the ground that the statute im- paired the obligation of a contract, had a standing in equity: Greenwood v. Freight Co., 105 U. S. 13. Plaintiff and others, hav- ing owned and worked for some years a mining claim, incorpo- rated themselves, and turned their interests into shares of cor- porate stock, plaintiff failed to pay a stock assessment, and the corporation sold his share at public auction; he then sued > Glenn v. Semple, 80 Ala. 159. * Sears v. Hotcbkiss, 25 Conn. 171; » Crumlish ^. E. E. Co., 28 W. Va. 65 Am. Dec. 657. 623. 815 STOCKHOLDEES. § 487 for his undivided proportion of the claim. Held, that he coold maintain suit to recover his stock if the sale had been improper, but could not sue the corporation for a specific interest in the corporate property: Smith v. Maine Boys etc. Co., 18 Cal. 611. In a suit by a stockholder against a corporation of which he was a member, the declaration alleged a conversion and mis- application of money by the corporation and its president, and that the latter kept false books of account, and refused to pay over money rightly due plaintiff. Held, that a sufficient cause of action had been stated, without alleging that the corporation had refused to bring suit: Brown v. jR. R. Co., 27 Hun, 342. In a suit by a stockholder of a corporation to restrain it from ille- gally furnishing water to a city, plaintiff alleged simply that he requested the directors to desist, and that they refused. Five days after the refusal he brought suit. Held, that there was no such action or fraud on the part of the corporation, or the majority of its directors, or injury to plaintiff's interest, apparent on the face of his allegations, as to entitle him to equitable re- lief: Hawes v. Oakland, 104 U. S. 450; Huntingdon v. Palmer, 104 U. S. 482. A corporation having forfeited its property, two of the three directors voted against bringing any suit enjoining defendant from taking possession, alleging, as ground for their action, that they feared they could not obtain justice in the state courts. The third director, a non-resident, was willing to trust the local courts. Upon suit brought in the United States court by him the next day after the vote, held, that the refusal was not so clearly real and persistent as to give him authority to sue on behalf of the corporation: Detroit v. Dean, 106 U. S. 537. § 487. Discretionary Powers of OflBcers will not be Interfered with at Suit of Stockholders. — The court will not, as a rule, interfere with the discretion of the officers in acting within the powers given them, so long as they act honestly.' The action of the officers of an incorporated company, without any violation of the charter or consti- tution of the company, cannot be disregarded or controlled by any court at the instance of a stockholder, unless it is shown to have been a willful abuse of their discretion, or the result of bad faith, or of a willful neglect or breach of a known duty.^ Only in cases of aggravated miscon- 'Morawetz on Corporations, sees. 1 Woolw. 400; Chetlain v. Republic 387, 388; Dudley v. Kentucky High etc. Ina. Co., 86 111. 220. School, 9 Bush, 578; Hedges v. Pa- ' Smith v. Prattville Mfg. Co., 29 quett, 3 Or. 77; Sampel v. Holladay, Ala. 503. § 488 COKPORATIONS. 816 duct will ecjuity interfere with the acts of corporate of- ficers.^ Equity will not, by injunction at the suit of a stockholder in a business corporation, interefere with the general management of the corporation property, — such as the mode of investing its surplus moneys, — unless there be a clear violation of express law, or a wide depart- ure from charter powers.^ The directors of a railroad will not be enjoined from doing acts within their powers, such as making contracts with connecting roads, and selling stock of another road owned by the company, at the suit of one holding a majority of the stock, because they are hostile to him, unless some dishonest purpose is shown.' But any one dissenting stockholder may restrain the com- pany from executing a contract which exceeds its powers.* Illustrations. — In an action for fraud against a corporation, wherein the declaration alleged that, in order to carry out the fraud an unnecessary assessment was levied, but did not allege that the assessment was in excess of the powers of the directors, held, that as to the wisdom or necessity of an assessment, or the motives which prompted it, the court would not inquire: Oglesby v. Attrell, 105 U. S. 605. A corporation voted to in- crease its capital stock two thousand shares out of its sur- plus earnings. The increase was for a special object, though not so stated in the vote, and the object immediately there- after failed, whereupon the vote was rescinded before action taken under the former vote. A stockholder, with knowledge of the foregoing facts, a year later brought a suit in equity to compel an issue to him of stock, upon the basis of the vote before mentioned. Important transactions had intervened, and stock changed hands on the basis of the unincreased capital. Held, that the mere vote to increase gave the petitioner no vested interest, and that the company had power to rescind its vote, and that the petitioner, by his laches and acquiescence for so long a time, had lost whatever equity he might have had: Terry V. Ea^e Lock Co., 47 Conn. 141. § 488. Stockholders' Bill — Who may or must be Com- plainants. — The holder of a single share may bring ' Cieotte v. Anoiaux, 53 Mich. " Elkina v. R. R. Co., 36 N. J. Bq. 227. 241. ' Bach V. Pacific Mail Steamship Co., ' Zabriakie v. R. R. Co., 23 How, 12Abb. Pr., N. S., 373. 381. 817 STOCKHOLDEES. §§ 489, 490 suit/ or all the share-holders may join as complainants.'' It has been held that a person who has purchased shares for the simple purpose of bringing suit cannot bring the action.^ The liability of stockholders for the debts of a corporation, contracted before the whole capital stock has been paid in, cannot be enforced by a single creditor suing on his own behalf. The bill must be brought in behalf of all creditors, and the assets of the corporation must first have been exhausted.^ Where any fraud has been perpetrated by the director of a company, by which the property or interest of the stockholders is affected, they have a right to come in as parties to a suit against the company, and ask that their property shall be relieved -from the effect of such fraud.^ §489. Who may or must be Defendants. — The de- fendants in a bill by a stockholder to protect his interests in a corporation should be, first, the corporation itself;" and secondly, all other persons against whom relief is sought.'' A stockholder, not being personally liable, is not a proper party in an action against the corporation.' § 490. Corporators or Share-holders not Liable Person- ally on Corporate Contracts. — If the corporation was not in legal existence at the time, or if the contract made with a corporation legally in existence is not enforceable against it, either because it was ultra vires the corporation ' Seaton v. Grant, L. R. 2 Ch. 462; * Baylias v. R. R. Co., 8 Bias. Armstrong v. Church Soc, 13 Grant 193. Ch. 556; Zabriskie v. R. R. Co., 23 "Davenports;. Dows, 18 Wall. 626; How. 395; Dodge v. Woolsey, 18 How. Greaveati. Gouge, 69 N. Y.154; Charles- 331; Giflford v. R. R. Co., 10 N. J. Eq. ton Ina. Co. v. Sebring, 5 Rich. Eq. 17 J. 342; Deaderiok v. Wilson, 8 Baxc. 2 Robinson v. Smith, 3 Paige, 232; 108. Peabody v. Flint, 6 Allen, 57; Rogers ' Morawetz on Corporations, sec. V. Lafayette Agr. Works, 52 Ind. 297; 411; Hare v. R. R. Co., 1 Johns. & H. Whitney r. Mayo, 15 III. 251. 252; Taylor w. Maimi Co., 5 Ohio, 162;. s Sparhawk v. R. R. Co., 54 Pa. St. 22 Am. Deo. 785. 401. ' Adams ». Bank, 1 Me. 361; 10 Am.. ' Harper v. Union Mfg. Co., 100 Deo. 88. 111. 225. Vol. I. -^2 § 491 COEPORATIONS. 818 or beyond the authority of the agent, the members of the corporation cannot be charged personally, either jointly or severally.^ The stockholders in a corporation are not liable as such, either on account of any misrepresenta- tions made by the company before incorporation, or for the non-disclosure of the company's indebtedness, on its application for a charter.^ But incorporators are individ- ually liable for money illegally received by the corpora- tion, where the corporation is but a cloak for the purpose of covering up the gaming transactions contemplated in its organization and done as a business.' Illustrations. — The directors of a bank agreed to buy the stock of A, a stockholder for the bank. The bank had no power to purchase the stock. Held, that the directors were not per- sonally liable to A: Abeles v. Cochran, 22 Kan. 405; 31 Am. Kep. 194. A colored man was ejected from an omnibus by the driver, receiving injuries. The omnibus was owned and run by a corporation, and suit was brought against certain of the stock- holders for the tort of the omnibus driver. No evidence was introduced to show any participation in the act on the part of the defendants. Held, that there could be no recovery: Pech v. Cooper, 8 111. App. 403. § 491. Stockholders not Personally Liable for Debts, etc., of Corporation. — The stockholders of a corporation are not personally liable for its debts, unless made so by statute.^ A by-law of a corporation will not sufiBce to create liability for corporation debts upon a member or of- ficer, unless the member signs it and money is lent upon the credit thereof.' When neither the charter of a corpo- ration nor any general statute imposes on the individual ' Fay V. Noble, 7 Cuah. 188; Trow- holders, sec. 4; Morawetz on Cor- bridge v. Scudder, 11 Cush. 83; First porations, sec. 559; Freeland v. Nat. Bank v. Almy, 117 Mass. 476; McCuUough, 1 Denio, 414; 43 Am. Blanohard v. Kaull, 44 Cal. 440; contra, Dec. 685; Salt Lake City Bank v. Hill V. Beach, 12 N. J. Eq. 31; Hess Hendrickson, 40 N. J. L. 52; Norton V. Werts, 4Serg. & R. 356. v. Hodges, 100 Mass. 241; Lowry o. 2 Matthewes v. Stanford, 17 Ga. Inman, 46 N. Y. 119; Pollard v. 543. Bailey, 20 Wall. 527; Shaw v. Boylan, ' McGrew v. Produce Exchange, 85 16 Ind. 384. Tenn. 572; 4 Am. St. Rep. 771. * Flint v. Pierce, 99 Mass. 68; 96 ' Thompson on Stock and Stock- Am. Dec. 691. 819 STOCKHOLDERS. § 492 members a liability to pay its debts, such liability cannot be imposed by a by-law of the corporation.* But stock- holders in a corporation which has failed to comply with the requirements of the law necessary to render their prop- erty exempt from corporate debts are primarily liable for such debts, and may be sued without the property of the corporation being first exhausted.^ To render the indi- viduals of a corporation personally liable for its debts on account of fraud, creditors must show that they were in- duced to become creditors by something said or done by its members, amounting to the perpetration of deceit upon them.* § 492. Capital Stock a Trust Fund for Payment of Creditors. — But the capital stock of a corporation is a trust fund for the payment of creditors.* The unpaid subscriptions are a trust fund for all the creditors, and cannot be attached by a judgment creditor.* Illusthations. — A railroad company, being indebted to a construction company in the sum of seventy thousand dollars, which it could not pay, issued to the members of the construc- tion company, in satisfaction, certificates of its stock of the face value of three hundred and fifty thousand dollars. Held, that ' Trustees of Free Schools in An- N. Y. 422; Hurdu. Tallman, 60 Barb, dover v. Flint, 13 Met. 539; Eeid v. 272; Bank of St. Marys v. Powers, 25 Eatonton Mfg. Co., 40 Ga. 98. Ala. 612; Carrey v. Woodward, 53 Ala. ' Marshall v. Harris, 55 Iowa, 182, 375; Smith v. Huckabee, 53 Ala. 195; » Sisson V. Matthews, 20 Ga. 848. Paschall v. Whitsett, 11 Ala. 472; ♦Story's Eq. Jur., sec. 1252; Wood Allen o. K. R. Co., 11 Ala. 437; Bas- B. Dammer, 3 Mason, 308; Vose v. sett v. St. Albans Hotel Co., 47 Vt. Grant, 15 Mass. 505; Spear v. Grant, 313; Adler v. Milwaukee Patent Brick 16 Mass. 9; Baker v. Atlas Bank, Co., 13 Wis. 57; Miers v. Zanesville, 9 Met. 192; Mumma v. Potomac Co., Co., 11 Ohio, 274; 130hio, 197; Henry 8 Pet. 286; Curran v. Arkansas, 15 v. B.. R. Co., 17 Ohio, 187; Moss How. 304; Tarbell v. Page, 24 111. 46; v. Burroughs, 1 Wood, 467; Payne v. Ogilvie V. Knox Ina. Co., 22 How. 387; BuUard, 23 Miss. 90; 55 Am. Dec. 74; Payson v. Stoever, 2 Dill. 431; Sawyer Tinkham v. Borst, 3l Barb. 407; Has- V. Hoag, 17 Wall. 610; Burke ». Smith, tings v. Drew, 76 N. Y. 9; Wetherbee 16 Wall. 390; New Albany v. Burke, v. Baker, 35 N. J. Eq. 501; Rider ». 11 Wall. 96; Hightower v. Thornton, Morrison, 54 Me. 429; Shickle v. 8 Ga. 486; 52 Am. Dec. 412; Robinson Watts, 94 Mo. 410; Thompson, v. V. Carey, 8 Ga. 530; Reid v. Eatonton Reno Savings Bank, 19 Nev. 103; 3 Co., 4 Ga. 102; Schley v. Dixon, 24 Am. St. Rep. 797; and see note to this Ga. 273; 71 Am. Dec. 121; Slee v. case in 3 Am. St. Rep. 806-873. Bloom, 19 Johns. 456; Briggs v. Penni- * Lane's Appeal, 105 Pa. St. 49; 51 man, S Cow. 395; Maun «. Peutz, 3 Am. Bep. 168. § 493 CORPORATIONS. 820 the receivers were liable as stockholders to creditors of the rail- road company, for the remaining eighty per cent of the par value: Jackson v. Traer, 64 Iowa, 469; 52 Am. Rep. 449. A corporation whose capital was impaired bought in its own stock through an agent. The seller did not know who the purchaser T,as. Held, that the seller was liable to a creditor of the corpo- ration: Crandall v. Lincoln, 52 Conn. 73; 52 Am. Rep. 560. A private corporation, the stockholders of which were not individu- iilly responsible for its debts, increased its stock under authority of its charter, and subscriptions to such new stock were made upon the agreement, set forth in the subscription paper, that no assessment should be made, and that each subscriber was to pay only ten dollars per share for such new stock, the par value of which was one hundred dollars per share. Held, that this provision was void as against creditors of the corporation with- out notice of it, and that such creditors could enforce payment for such stock to the extent of their demands: Union Mutual Life Ins. Co. v. Frear Stone Mfg. Co., 97 111. 537; 37 Am. Rep. 129. A, by his bond, acknowledged the receipt from an insur- ance company of ten shares of its capital stock, and agreed to pay two hundred dollars therefor in installments, — one fourth on receipt of the stock certificate, and the remainder in three equal amounts, at three, six, and nine months from January 7, 1871, the date of the bond. He paid, on executing it, twenty- five dollars, and his name was entered as a stockholder on the books of the company. The certificate was not delivered or demanded. In 1872 the company became bankrupt. Held, that the assignee was entitled to recover of A the unpaid install- ments: Haivley v. Upton, 102 U. S. 314. An insurance com- pany had been officially reported as unsound, and proceedings to wind up its affairs were to be instituted. The directors, being aware of these facts, passed a resolve that all stockholders who would pay five per cent on their stock (on which ninety per cent was unpaid), and surrender their certificates to the com- pany, should have the privilege of retiring and withdrawing the notes which they had given for their stock. Had all the stock- holders done this, the company would have had funds enough to pay about one half of its ascertained liabilities, without making any provision for its outstanding policies. Held, that this re- solve was a fraud upon the company's creditors, in law if not in fact, and as against them it afforded no protection to the stockholders who had availed themselves of it: Gill v. Balis, 72 Mo. 424. § 493. Shares must be Paid for in Money or Money's Worth. — Shares of stock must be paid for in money or 821 STOCKHOLDERS. § 493 money's wortli. Paid-up stock may be la,wfully issued in payment of indebtedness due and payable/ or in payment for property purchased by the corporation." Subscriptions of stock to a corporation, organized to carry on an iron furnace, may be paid in coal lands, iron lands, and other property necessary for the business, if such property is taken at its real value, and the transactions are in good faith.' In the absence of any showing of fraudulent rep- resentation or concealment, the fact that securities given by a party to a corporation in payment of a subscription to stock prove to be of no value, does not invalidate the certificates issued and delivered.* Stock issued by a cor- poration to a creditor, in satisfaction of a debt due, is paid- up stock, and such stockholder is not liable to a creditor of the corporation as unpaid stock. Where stock is issued for a sum less than the par value thereof, a creditor of the corporation may recover the difference from the stock- holder.* While unpaid installments on stock ordinarily ' Vau Cott V. Van Brunt, 82 N. Y. be paid otherwise than in money, we 535. Power conferred by charter upon regard as asserting a more reasonable directors to decide time, manner, and doctrine, — a doctrine better adapted proportions in which the stockholders to the practical affairs of business life, shall pay for their respective shares. Regarding the matter, then, in this authorizes them to give a subscriber light, we shall rule that payment of credit; Blunt ■». Walker, II Wis. 3.34; stock subscriptions need not be in cash, 78 Am. Dec. 710. but may be in whatever, considering ^ Brant v. Ehlen, 59 Md. 1 ; East N. the situation of the corporation, repre- Y. R. R. Co. V. Lighthall, 6 Rob. (N. sents to that corporation a fair, just, Y.) 407; Phelan v. Hazard, 5 Dill. 45; lawful, and needed equivalent for the Coit «. N. 0. Gold Amalgamating Co., money subscribed. Any other doc- 14 Fed. Reij. 12; Peck». Coalfleld Coal trine than this would, as it seems to Co , 11 Brad. (111.) 88; Schenok v. An- us, place a corporation at a disadvan- drews, 57 N. Y. 133; Carr «. Le Fevre, tage, under a disability not contem- 27 Pa. St. 413. In Liebke v. Knapp, plated by the law, and under which a 79 Mo. 22, 49 Am. Rep. 213, shares of natural person does not labor. Besides, stock in a bridge company were given a corporation, unless prohibited by to a newspaper in consideration of statutory provisions, has a general articles to be published in the paper capacity of contracting, which the advocating the enterprise. This was common law concedes to every one held to be " paid-up " stock. Said the ordinarily competent to enter into court: "The authorities are not in binding engagements." entire accord as to whether the pay- ' Searight v. Payne, 6 Lea, 283. ment of a stock subscription can be * Protection Life Ins. Co. v. Osgood, made in anything else than money, 93 111. 69. some holding one way and some the ^ Kehlor v. Lademann, 11 Mo. App. other. But the class of authorities 550, which declare that a subscription may § 493 CORPORATIONS. 822 constitute a trust fund for the payment of the corporate debts, j'et where stock has been issued to a stockholder and settled for by him, under an arrangement made in good faith with the company, it is not in the power of a creditor, in all cases, and as a matter of right, to disturb the arrangement so made, on the ground that, in the light of subsequent events, it was a disadvantageous one, and especially where such creditor knew of the transaction at the time, and acquiesced in it.* Where a stockholder exe- cuted to the company his note and mortgage in payment of his stock subscription, the stock must be regarded as paid in, and the note and mortgage as given for money loaned or invested by the company. The liability of the stockholder on the note and mortgage is no less than that of any other borrower; nor do his rights as a stockholder stand on any better footing than those who paid for their stock, but borrowed nothing from the company.* Illustrations.^ — ■Stockholders were allowed to pay their subscriptions by conveying, or causing to be conveyed, to the corporation coal-lands, the business of the corporation being to mine coal and to buy and sell coal-lands, and the value thereof was bona fide fixed at five hundred thousand dollars-, the whole amount of the capital stock, although the land cost only fifty- seven thousand dollars when bought from the farmers. Held, that tbey were not liable as upon unpaid stock for the debts of the corporation: PecJc v. Coalfield Coal Co., 11 111. App. 88. Certain stock in a company was sold at par. A note was given for the price payable out of the net receipts or earnings of the stock, to be paid quarterly by the company. The note contained a condition that the principal should become due upon failure to pay the installments regularly. Held, that, under the cir- cumstances, the transaction amounted to a valid sale: Dean v. Nelson, 10 Wall. 158. After the owners of mining property had organized themselves into a corporation, they contracted with the directors, they being the directors, whereby they conveyed the property to the corporation, and received as payment full- paid stock. This contract was never impeached. Held, that a creditor of the corporation, which had become insolvent, could not show that the said stock had never been paid for, in whole ' Coit V. North Carolina Gold Amal- ' Union Central Life Ina. Co. v. gamating Co., 14 Fed. Rep. 12. Curtis, 35 Ohio St. 343. 823 STOCKHOLDERS. § 494 or in part, so as to hold the stockholders liable for his debt: Phelan v. Hazard, 5 Dill. 46. In an action to recover from de- fendant a debt of a manufacturing corporation, on the ground that the capital stock had not been fully paid in, it appeared that defendant had signed the articles of incorporation, had subscribed for stock, was a trustee and secretary of the corpo- ration, and actively engaged in its management, and that his name was recorded in the corporation books as a stockholder. Held, that he was a stockholder, although he had neither paid for his stock nor received a certificate for it: Wheeler v. Millar, 90 N. Y. 353. § 494. When Property, etc., cannot be Taken in Pay- ment of Shares. — Where property has no actual, posi- tive, and ascertainable value, it seems that it cannot law- fully be accepted in payment of stock.^ Where paid-up stock is issued for services to be performed,^ or in pay- ment of indebtedness not yet due,' the person receiving it becomes liable for its par value. Where nominally paid- up stock is issued without consideration, either as a bribe or a present, the person who receives it becomes liable to creditors for its par value.'* A secret agreement with a com- pany, that a stock subscription of defendant was merely to be colorable, is a fraud upon other subscribers for stock, and is not a defense.^ One who takes capital stock from the corporation, paying no consideration therefor, cannot avoid his responsibility to creditors of the corporation, on the ground that he is the holder of full-paid stock.^ Pay- ment by a stockholder to a firm of which he was a mem- ber, of a sum equal to the amount of his stock, to satisfy a debt due from the corporation to the firm, will not ex- tinguish his liability as stockholder to other creditors of the corporation.' Transfer of patent rights of unascer- tained value cannot be deemed payment of a subscription » Tasker v. Wallace, 6 Daly, 364. & J. 372; Crawford v. Kohrer, 59 Md. "Barnes v- Brown, 11 Hun, 315; 599. Andress'a Case, L. B. 8 Ch. Div. 126. ^ Downie v. White, 12 Wis. 176; 78 ' Appleyard's Case, 49 L. J. Ch. Am. Dec. 731. 290. "A. Wight Co. v. Steinkemeyer, 6 'Everman v. Krieokhaus, 7 Mo. Mo. App. 574. App. 455; Ex parte Daniell, 1 DeGex ' Buchanan v. Meisser, 105 111. bdS. § 495 CORPORATIONS. 824 to the stock of a railroad companj' such as -wiTl satisfy the statute.' Notwithstanding stock in a corporation has been issued as full-paid stock, but in payment for property taken by agreement instead of money for the use of the company, yet, upon proof that the property was not of value commensurate with the stock, and that the arrange- ment was collusively made, a receiver can maintain a suit to compel the stockholder to contribute the amount unpaid towards the demands of creditors.* Where the charter of a corporation authorizes capital stock to be paid for in property instead of in cash, creditors cannot complain because this is done, if it is done in good faith and without fraud.' § 495. Eights of Creditors to Unpaid Assessments by Share-holders. — Therefore when any share-holder has not paid up his share in full, he holds the balance as a trustee for the creditors of the corporation,^ and if the corpora- tion becomes insolvent, and its assets exhausted before a member has paid for his shares, a court of equity will interpose and compel him to make such payment for the benefit of creditors. Unless he has paid, he must pay; and the court will entertain a bill for discovery to compel the corporation or its members to disclose whether they have paid or not,^ and will put aside and discharge all sham devices and secret agreements not to pay, or not to pay in full, or to pay in something other than money or money's worth.* The obligation to make good unpaid 'Taskert'. Wallace, 6 Daly, 364. 'Miers v. Zaneaville Co., 11 Ohio, » Van Cott V. Vau Brunt, 2 Abb. N. 273; Middletown Bank v. Ruaa, 3 Conn- C. 283. 135; Bogardus v. Rosendale Man. Co.. » Coit V. Gold Amalgamating Co., 7 N. Y. 147. 119 U. S. 343. «Mann v. Cooke, 20 Conn. 179, 187; ' Adler ». Patent Brick Co., 13 Wis. Robinson r. R. R. Co., 32 Pa. St. 334; 60. But stockholders are liable to Graffs. R. R. Co., 31 Pa. St. 489; New creditors only to the extent of their Albany etc. R. R. Co. v. Fields, 10 Ind. unpaid subscriptions: Warfield«. Can- 187; New Albany etc. R. R. Co. t>. ning Co., 72 Iowa, 666; 2 Am. St. Rep. Slaughter, 10 Ind. 218; Downie v. 263; Bell's Appeal, 115 Pa. St. 88; 2 White, 12 Wis. 176; 78 Am. Dec. 731; Am. St. Rep. 532. Blodgett v. Morrill, 20 Vt. 509; Na> 825 STOCKHOLDERa § 495 portions of capital stock when necessities of creditors require it is a charge upon the stock, which passes with it to the transferees thereof, subject to exceptional in- stances, where the original subscribers are not with- standing liable by charters or general statutory provis- ions.' A bill in equity by a creditor will lie to compel a stockholder to pay arrears on stock, though by the statutes of the state an ample remedy is provided.'' Be- fore the dissolution of a corporation, a court of equity, not a court of law, is the proper forum for a suit by a judgment creditor of the corporation to enforce the liability of a share-holder on his unpaid subscriptions.^ Creditors of an incorporated company, who have ex- hausted their remedy at law, can, in. order to obtain sat- isfaction of their judgment, proceed in equity against a stockholder to enforce his liability to the company for the amount remaining due upon his subscription, al- though no account is taken of the other indebtedness of the company, and the other stockholders are not madfe parties, and although, by the terms of their subscriptions, the stockholders were to pay for their shares "as called for" by the company, and the latter had not called for more than thirty per cent of the subscriptions.* A stock- holder cannot decrease his number of shares after debts have accrued.' A resolution permitting stockholders on payment of thirty per cent on their shares to forfeit them is void as against creditors.* The word "non-assessable" npon the certificate of stock does not cancel or impair the obligation to pay the amount due upon the shares created than V. Whitlock, 9 Paige, 152; Noble ' Bell's Appeal^^JS Pa. St. 88; 2 Am. V. C;illencler, 20 Ohio St. 199; Henry ». St. Rep. 532. i^; , ,. R. R. Co., 17 Ohio 187; Haviland v. ^ Payne v. Ballard, 23 Miaa. 88; 55 Chaoe, 39 Barb. 283. The presump- Am. Deo. 74. tioii is, that a certificate of stock in ' Brown v. Fisk, 23 Fed. Rep. the usual form is full paid, and a pUr- 228. chaiier who takes it without notice is * Hatch v. Dana, 101 XJ. S. 205. not liable to creditors if the company's ' Payne v. Ballard, 23 Miss. 88; 55 ropreseutations that the stock is fuU Am. Deo. 74. paid were false: Johnson v. LuUman, " Slee v. Bloom, 19 Johns. 456j 10 88 Mo. 567. Am. Dec. 273. § 495 CORPORATIONS. 826 by the acceptance and holding of such certificate. At most, its legal effect is a stipulation against liability from further assessment or taxation after the entire subscrip- tion of one hundred per cent shall have been paid.* Illustrations. — The general law under which a corporation was organized declared: "No stockholder shall ever be held liable for the contracts or faults of such corporation in any further sum than the unpaid balance due to the company on the shares owned by him." The charter prescribed in what installments forty per cent of the stock should be paid, and then declared: "The balance on each share, or any portion of such balance, shall not be called for unless with the assent of three fourths of the stockholders, and then only to increase the business of the corporation." Held, that after the payment of forty per cent of his stock, no stockholder was liable for the balance, unless it had been called for by a vote of three fourths of the stockholders: Louisiana Paper Co. v. Waples, 3 Woods, 34. One subscribed for the capital stock of a corporation, under a parol promise by the agent who procured the subscrip- tion that the subscriber should not be called upon to pay for the stock or respond to any assessments. Held, that he was never- theless bound: Ohouteau Ins. Co. V. Floyd, 74 M.0.2SQ. Certain stockholders of a corporation took some of its first-mortgage bonds, and in return received stock issued by the corporation, of which forty per cent was credited as paid. Held, that said stockholders were liable to the extent of this forty per cent to the creditors of the corporation: Skramka V. Allen, 7 Mo. App. 434; 76 Mo. 384. Subscribers to the stock of a corporation paid twenty per cent of the shares, and received full-paid cer- tificates, with an agreement by the company that no further assessments should be made thereon. Held, that this agree- ment was void as to creditors, who are entitled to consider the stock subscribed as a trust fund for their payment: Scovill v. Thayer, 105 U. S. 143. A corporation in 1871 reduced its cap- ital stock, of which twenty-four per cent only had been paid in, and issued paid-up certificates based upon the new valuation. Afterwards the corporation became bankrupt, and the assignee paid a forty-per-cent dividend to creditors generally from assets realized upon, without calling on the stockholders. Held, that as to debts contracted before the reduction of the capital stock in 1871, the stockholders of that date were liable beyond the amount of their twenty-four-per-cent payment; but that as to debts afterwards contracted, those stockholders were to be coa- 1 Uptou V. Tribilcock, 91 U. S. 45. «27 STOCKHOLDERS. § 496 sidered as having paid up their subscriptions, but that they should take no benefit from the forty-per-cent payment by the assignee, as this should have been made primarily to creditors who could not resort to the liabilities of the stockholders: In re State Ins. Co., 14 Fed. Rep. 28. The charter of a railroad com- pany provided that five per cent on each share should be paid when subscribed, and subsequent payments be made upon calls. The stockholders voted that no further calls be made; that cer- tificates issue for stock to the extent to which payment had been made, and that the balance of the subscription be can- celed. This vote was carried out while the company was sol- vent. Seven years after, when the company was bankrupt and practically dissolved, certain of its creditors sought to make the parties released liable as stockholders for unpaid subscrip- tions. Held, that said parties had been released from all such liabihty: Steacy v. R. R. Co., 5 Dill. 348. A railroad corpora- tion was insolvent, and its stock was worthless. The corpora- tion owed G., and in good faith transferred to him, in payment of the debt, the unissued stock at twenty cents on the dollar. Held, that notwithstanding the Iowa statute, G. was not liable to creditors of the corporation for the remaining eighty cents: Clark V. Bever, 31 Fed. Rep. 670. A corporation transferred shares of its stock and its bonds to the defendant gratuitously. The defendant sold the bonds. None of the property of the corporation had been applied in the payment of the bonds. Held, that a creditor of the corporation could not compel the defendant to pay for the stock, or account for the bonds: Chris- tenson v. Eno, 106 N. Y. 97; 60 Am. Rep. 429. § 496. Personal Liability of Stockholders by Statute. — But in some states, by statute stockholders have beeu made personally liable for the debts of the corporation.^ Un- der the New York statutes, the receiver of a corporation may bring separate actions against each stockholder to collect unpaid subscriptions.^ Fraud must be established to authorize the recovery of damages against members of a corporation under the Iowa code. The statute does not give a right of action for negligence or mismanagement.* 1 Mokelumne etc. Co. ». Woodbury, peraonalliability upon its stockholders: 14 Cal. 265; G»ay v. Coffin, 9 Gush. Reid v. Eatonton Mfg. Co., 40 Ga. 98; 192; Coffin v. Rich, 4.5 Me. 507; 71 2 Am. Rep. 562. Am. Dec. 559; Com. Bank v. Steam ' Van Wageneu v. Clark, 22 Hun, Factory, 6 R. I. 154; 75 Am. Dec. 688. 497. A corporation cannot, unless author- ' Hoffman v. Dickey, 54 Iowa, 135. iaed by charter or statute, impose a § 496 CORPORATIONS. 828 Under a statute providing that all stockholders of corpo- rations shall be individually liable to the creditors of the company to the amount of unpaid stock held by them, that the creditor who sues is also a stockholder does not, under the statute, make any difference, provided he has paid in full for the stock held by him, and consequently is not individually liable for the debts of the company.' A receiver of a corporation organized under the New York general manufacturing act is not vested with the right of action given by that act to creditors of the corporation to enforce their liabilities against the stockholders. This right is conferred only upon such creditors as are within the prescribed conditions, and for their personal benefit.* Where a statute makes each stockholder liable for the debts of a company, each stockholder at the time the debt was contracted is meant.' The liability of a stock- holder for the debt of a corporation may be enforced by action against his executors, although the debt accrues after the stockholder's death.* If one subscribes for stock in the name of minors, for the purpose of avoiding per- sonal responsibility if the corporation should become in- solvent, and receives the benefit of the stock, he will be liable for the corporate debts.® The liability of a stock- holder, under a charter making each liable to the corpo- ration creditors "to the amount of his stock, and no more," is not affected by the fact of his having paid to the corporation the full amount of his stock subscrip- tion.* A clause of the constitution providing for the personal liability of stockholders of corporations may be waived hj the insertion of a stipulation to that eff'ect in all the contracts of the corporations.' In Iowa, before any stockholder can be charged with the payment of a 1 Smith V. Londoner, 5 Col. 365. ' Castlemani;. Holmes, 4 J. J. Marsh. 2 Farnsworth w. Wood, 91 N. Y. 1; Roman v. Fry, 5 J. J. Marsh. 634. 308. 'Lewis v. St. Charles County, 5 ' Moss V. Oakley, 2 Hill, 265. Mo. App. 225. * Manville v. Edgar, 8 Mo. App. ' French v. Teschemaker, 24 Cal., 324. 518. 829 STOCKHOLDERS. § 496 judgment rendered against a corporation of which he is a stockholder, a proceeding by ordinary action must be instituted against him, and his liability determined therein.^ Stockholders in a banking corporation are only personally liable, or their individual property chargeable, for the debts of the corporation to the extent and as prescribed by the charter. By becoming stock- holders, they assent ito the terms and assume the liabilities imposed by the act creating the corporation. The obli- gations thus assumed are created by the charter, and cannot be extended by implication beyond the terms of that instrument reasonably interpreted. If a general personal liability is created, it may be enforced by a per- sonal action, as other personal obligations are enforced. If the charter merely permits the individual property of stockholders to be levied upon and taken in execution on a judgment against the corporation in a given con- tingency, and provides that the same process may be used and enforced by the stockholders whose property is first taken, against the property of the other stockholders, so as to compel a ratable contribution by all, no general individual liability is created for which a personal action can be brought. In such case the creditor of the corpora- tion is confined to the remedy against the stockholders, and their individual property given by the act.^ Where a stockholder was induced to take the stock by the false representations of the president of the corporation, that it was full-paid capital stock, on which was no liability of stockholders, it was held to be no defense in an action by Judgment creditors of the corporation on his statutory liability.' Where by the charter of a bank stockholders are "bound respectively for all the debts of the bank in proportion to their stock holden therein," one creditor cannot sue a stockholder at law (there being numerous I Bayliaa v. Swift, 40 Iowa, 648. » Briggs u. Comwell, 9 Daly, 436. * Lowry v. luman, 46 N. Y. 119. § 496 COEPOKATIONS. 830 other creditors) to recover the full amount of his debt, without regard to those other creditors, or to the ability of the other stockholders to respond to their obligations under the charter, and so appropriate to himself the en- tire benefit of that stockholder's security, and exclude all other creditors from it. He should proceed in equity, where the proportion can be ascertained upon an ac- count taken of debts and stock, and a pro rata distribu- tion of the debts among the several stockholders.* Where by statute a stockholder is liable to creditors to double the amount of his stock, each stockholder is severally liable to any creditor.^ A receiver of "all the estate, property, and equitable interest" of an insolvent banking corporation created by the state of Illinois cannot enforce against a stockholder in the corporation the liability im- posed by the statute of Illinois on each stockholder for double the amount of his stock, such liability being one in favor of creditors of the bank, and not in favor of the corporation.' A creditor of a corporation, who can also resort to stockholders, has not two funds in such a sense as to be compelled to resort first to the stockholders at the suit of a corporation creditor who has no recourse against the stockholders, because the stockholders are not com- mon debtors.'' Illustrations. — A bank charter provided that stockholders "shall be individually liable to the amount of their stock for all the debts of the corporation." Held, 1. That the lia- bility reaches to the nominal value of the stock, and not merely to the unpaid balance on stock subscriptions; 2. That the stockholder is liable, although he was not a stockholder when the creditor's cause of action accrued: Root v. Sinnoch, 120 111. 350; 60 Am. Rep. 558. The charter of a corporation provides that "each stockholder shall be jointly and severally liable to the creditors thereof in an amount, besides the value of his share or shares therein, not exceeding ten per cent of the par value of the share or shares held by him." He.ld, that a 1 Pollard V. Bailey, 20 Wall. 520. ' Jacdbson v. Allen, 20 Blatohf . 525. 2 McCarthy v. Lavasche, 89 111, 270; * Carter v. Neal, 24 Ga. 346; 71 Am. 31 Am. Rep. 83. Dec. 136. 831 STOCKHOLDERS. § 497 creditor may bring his individual action at law against one of the stockholders to recover his debt to the extent of ten per cent of the par value of the defendant's shares: Hall v. Klinck, 25 S. C. 348; 60 Am. Rep. 505. § 497. Construction of Such Statutes. — Statutes ren- dering a stockholder pei'sonally liable, it is held in some courts, should be liberally construed;^ in other courts it is held that such statutes should be strictly construed;^ and again in other courts it is said that they should be rea- sonably construed.' A statute which provides that the di- rectors of any corporation (except banking companies) shall be liable for its debts in excess of its capital stock, applies only to debts voluntarily created by the directors, and does not include a judgment against the corporation for damages for loss of a steamboat through the negli- gence of its agents.'' Where a statute makes stockholders personally liable to the holder of bills drawn on the cor- poration and refused payment by the corporation, only such stockholders and their successors as were members when the payment was refused are liable.' A subscriber for stock in a corporation who has paid part of his sub- scription, but whose stock is afterwards forfeited by the company for non-payment of calls, is not a stockholder within the meaning of the New York statute, making each stockholder in any company formed under the act liable to its creditors "to an amount equal to the amount of unpaid stock held by him," until the stock so held by him shall have been paid up. The forfeiture relieves the subscriber from all liability to the company for the un- paid subscription, and he ceases to be a stockholder ' Carver v. Braintree Mfg. Co., 2 Hendriokson, 40 N. J. L. 52; Irvine Story, 432; Freelaad v. MoCoUough, v. MoKeon, 23 Cal. 472. 1 Denio, 414; 43 Am. Dec. 685. ' Mokelunme Hill Co. •;;. Woodbury, 2 Lowry v. Inman, 46 N. Y. 119; 14 Cal. 265; Davidson u. Rankin, 34 Chase V. Lord, 77 N. Y. 1; Moyer v. Cal. 505. Slate Co., 71 Pa. St. 293; Meaus'a * Cable v. Gaty, 34 Mo. 573. Appeal, 85 Pa. St. 75; Gray v. Coffin, ^ Bond v. Appleton, 8 Mass. 472; 5 9 Cuah. 192; Salt Lake Nat. Bank v. Am. Dec. 111. § 497 CORPORATIOKS. 832 within the meaning of the statute.* The summary rem- edy provided by the Missouri Revised Statutes, against stockliolders of a corporation against which an execu- tion has been obtained, cannot be maintained against the administrator of a deceased stockholder.^ A judg- ment against the corporation for waste is an "indebted- ness" for which a stockholder is liable.' The liability of a corporation for the infringement of letters patent is not, before judgment, a "debt" for which under a statute the officers are personally liable.^ A street railway is a railroad corporation, under a statute imposing only single liability on the stockholders of "all existing railroad corporations."* The individual liability of a stockholder for a debt of the corporation may be released by a cancellation of the stock by the corporation before the creation of the debt, the issue having been on the pretense that a stock dividend had been earned when such was not the fact.* A judgment credi- tor of a corporation, after execution returned unsatisfied, may sue in equity for himself, and for such other credi- tors as may join him making the corporation, and such of its delinquent stockholders as are within the jurisdiction, defendants, and may have an account taken, and an order compelling payment by such stockholders; and this not- withstanding that a state statute provides a remedy at law against an individual stockholder to enforce contribution. If such stockholders are liable to the full amount of their unpaid subscriptions, an assessment before suit is un- necessary.' A demand against a corporation for damages for loss of a steamboat through the negligence of its agents is not a "debt" of the corporation for which the stock- holders are jointly and severally liable, under a statute providing that the stockholders are jointly and severally ' Mills V. Stewart, 41 N. Y. 384. ^ Jerman v. Benton, 79 Mo. 148. ^ Cumminga v. Wright, 11 Mo. App. * Hollingshead v. Woodward, 35 348. Hun, 410. » Powell K. R. B., 36 Fed. Rep. 726. ' Holmes v. Sherwood, 3 McCrary, * Child V. Boston Iron Works, 137 405; 16 Fed. Eep. 725 Mass. 516; 50 Am. Rep. 328. 833 STOCKHOLDEKS. § 497 liable if the corporation fails to give notice annually of all the "existing debts" of the corporation.' A creditor of a corporation which was established in New York, un- der the statute of that state which provides that stock- holders and officers shall be personally liable as a penally iu certain contingencies, cannot maintain his action in Massachusetts to enforce his claim personally against a stockholder or officer of the corporation.^ A statute pro- viding that if the indebtedness of a mining company shall at any time exceed the capital stock paid in, the directors assenting thereto shall be individually liable to the creditors for such excess, applies only to the un- paid creditors, to the making of whose debts the directors assented, and directors are not liable to creditors to whose debts they did not assent, although such debts were in- curred to pay off former illegal indebtedness to which they had assented.' A notice of an application for an execution against a stockholder on a judgment against a corporation confers no jurisdiction of the person if served personally without the state.^ Illustrations. — A Missouri statute exempted from liabil^ ity for corporate debts all persons holding stock in a corpo- ration as collateral security, but treated the persons pledging such stock as holding the same, making them liable therefor. Held, that persons to whom a corporation pledged its stock as collateral security were exempt: Burgess v. Seligman, 107 U. S. 20. A corporation became insolvent pending the settlement of the estate of a stockholder whose stock was only half paid up at the time of his death. No call was made on him or on his executor. Held, that after settlement and distribution, a credi- tor of the corporation could riot maintain an action against the executor, who was legatee and devisee as well: Larhin v. Willi, 12 Mo. App. 135. A corporation gave a trust deed to S. to- secure the payment of first-mortgage bonds, and also issued paid-up stock to be held by S. for one year, that he might con' trol the corporation, and secure the payment of interest on 1 Cable V. McCune, 26 Mo. 371; 72 = Allison v. E. K. Co., Tenn., 1888. Am. Deo. 214. * Wilson v. Seligman, 36 Fed. Rep ' 2 Halsey v. McLean, 12 Allen, 439; 154. 90 Am. Dec. 157. Vol. I.— B3 § 497 CORPORATIONS. 834 the bonds; the stock-book showed that S. was a stockholder, and the transfer-book that he held the stock in escrow. Held, that S. was not liable to one who became a creditor of the corporation before S. assumed the rights of a stockholder by voting: Fisher v. Seligman, 7 Mo. App. 383. The charter of a* corporation contained this clause: "Each stockholder shall be liable to double the amount of stock held or owned by him, and for three months after giving notice of transfer," etc. The corporation having become insolvent, A, a creditor, brought an action against B, one of the stockholders, in which he sought to hold him responsible for the debt to the amount of the stock held by him. Held, that B could not set up the unconstitution- ality of the charter in defense, and that under the above clause, the stockholders were severally and individually liable: Mc- Carthy V. Lavasche, 89 111. 270. A statute provides that where execution against a corporation cannot be satisfied on the cor- porate property, it may be levied on the property of the stock- holders to the extent of their shares, but only upon an order from the court in which the action has been brought, and upon motion after notice to the stockholders. Held, that the stock- holder's liability depended upon the amount of shares held at the return of the execution, and not at the time of making the motion: Skrainka v. Allen, 76 Mo. 384. A statute pro- vides that every stockholder of any company shall be indi- vidually liable to the creditors of such company to an amount equal to the amount unpaid of the stock held by him, for all debts and liabilities of such company, until the whole amount of the capital stock so held by him shall have been paid to the company. Held, that a stockholder could offset any demand he had against the company: Jerman v. Benton, 79 Mo. 148. The statutory requirement to make stock- holders liable personally, that a demand shall be made on the corporation, that it may pay the debt or expose property to attachment, held, met by a demand by letter on the treas- urer, who told the creditor he could not pay the debt, and did not expose any property: Connecticut River Savings Bank v. Fiske, 60 N. H. 363. Iowa Code, section 1072, makes stock- holders liable when corporate funds have been diverted to pay- ments of dividends, leaving insufficient funds to meet the lia- bilities. Held, that the word "funds" means resources, and not merely cash on hand, and that the word "liabilities" does not include the capital stock of the corporation : Miller v. Bra- dish, 69 Iowa, 278. A bank charter made the stockholders in- dividually liable "to make good losses to depositors or others." Held, that the stockholders were liable to all creditors suffering from the failure of the bank to pay its debts: Queenan V. Palmer, 117 111. 619. 835 STOCKHOLDERS. § 498 § 498. Nature of Personal Liability.— The liability of stockholders under such statutes is not that of guarantors, but is an original liability like that of partners or mem- bers of an unincorporated association.' The stockholders are liable for the corporate debts as if there had been no incorporation, except that the liability is suspended until the assets of the corporation have been exhausted.'' But a few cases deny this doctrine, and hold that the liability of the stockholder is secondary and collateral, and like that of a guarantor.' Creditors of a corporation seeking to recover from a stockholder on his individual liability must first show that they have exhausted their remedy against the corporation.'' A stockholder is not liable to an execution creditor unless such stockholder- be in default to the corporation.^ A creditor of a corporation organ- ized under the general manufacturing act cannot proceed against a stockholder for the debt until he has obtained judgment against the corporation, and an execution has been returned unsatisfied.® A stockholder who is also a creditor of the corporation cannot enforce the personal liability of the stockholders for his debt, and one to whom he has assigned his claim for the sole purpose of enforcing such liability stands in no better position.' A stockholder who under the charter of a corporation is personally lia- ble for its debts cannot, by buying up at a discount debts ' Green v. Beekman, 59 Cal. 547; ' Conklin v. Furman, 8 Abb. Pr., N. Coming v. McCullough, 1 N. Y. 47; S., 164; Hawthorne v. Calef, 2 Wall. 49 Ajn. Dec. 287; Conklin v. Ftlrman, 22. 8 Abb. Pr.,K S., 164; Clark ». Myers, 'Wright v. McCormaok, 17 Ohio 11 Hun, 609; Mos3 v. Averill, ION. Y. St. 86; Patterson v. Wyomiasing Co., 459; Jones v. Barlow, 62 K Y. 210; 40 Pa. St. 117; Hoard v. Wilcox, 47 WUes V. Suydam, 64 N. Y. 176; Chase Pa. St. 51; Perry v. Turner, 55 Mo. V. Lord, 77 N. Y. 33; Southmayd v. 418; Hanson v. Donkersley, 37 Mich. Euss, 3 Conn. 52; Planters' Bank v. 184; Malloy v. Mallett, 6 Jones Eq. Billingsville, 10 Rich. 95. Th? liabil- 345; Andrew v. Vauderbilt, 37 Hun, ity of members for the corporate debts 468. is by the statutes several, and not joint, ♦ Bush v, Cartwright, 7 Or. 327. and in the nature of a guaranty, and. * Simpson v. Reynolds, 71 Mo. 594. differs from the common-law obliga- * Handy v. Draper, 89 N. Y. 334. tion of a contract deemed to have been ' Potter *. Stevens Machine Co., 127 Inade by them: Pratt v. Bacon, 10 Mass. 592; 34 Am. Rep. 428. Pick. 127. § 498 COEFOEATIONft. 836 of the corporation, thus discharge his liability for more than the amount actually paid by him.' A judgment against a corporation is binding upon the stockholders till reversed, and is conclusive upon them in a subse- .quent suit against them by the same plaintiff.* It is competent evidence of the plaintiff's status as a creditor of the company and of the amount due him.' A release by a creditor of a stockholder's liability for debt, by an instrument under seal, discharges the corporation and the other stockholders to the same extent as the one to whom the release is executed is discharged. Thus if the release be of the releasee's proportion of the indebtedness of the corporation, the corporation and other stockholders are only released pro tanto.* Illustrations. — The assignees of an insolvent corporation which had surrendered its charter obtained a decree directing the payment of the assets in their hands, and tbey acted ao- cordingly. One of the creditors, who had been paid the share awarded him by the decree, filed a bill against certain stock- holders of the corporation for unpaid subscription of stock, claiming that the assignees had not collected said debts. Held, that he had no cause of action: Branch v. Knapp, 61 Ga. 614. Under a charter providing that "until thirty thousand dollars of the capital stock have been paid in, every stockholder shall be held individually liable for the debts of the company," held, that the stockholders were liable to be sued as partners, and not as guarantors. But the remedy of a creditor who was also a stockholder was in equity, and not at law: Perkins v. Sanders, 56 Miss. 733. Under a provision in an act of incorpo- ration, "that the private property of the individual stockholders shall be liable for the debts, contracts, and liabilities of the cor- poration," held, that the responsibility on the individual stock- holders is a secondary one, and that when the debts against the corporation became extinct by the expiration of its charter, the liabilitity of the individual stockholders became extinct also: Malloy v. Mallett, 6 Jones Eq. 345. A promissory note signed with the name of a corporation by- its treasurer, and in- dorsed with its name by its directors, was delivered to a person, under an agreement between him and the corporation, "that > Thompson v. Meisaer, 108 111. 359. ' Stephens v. Fox, 83 N. Y. 313. 2 Milliken v. Whitehouse, 49 Me. * Prince v. Lynch, 38 Cal. S28j 99 527. Am. Dec. 427. 837 STOCKHOLDERS. § 499 there should be no personal liability on the note." He after- wards recovered judgment against the corporation in an action at law upon the note. Held, on a bill in equity against the stockholders of the corporation, to enforce payment of the judg- ment, that it was meant that there should be no statutory lia- bility on the part of the stockholders; and that this agreement was admissible in defense, and was not merged in the judgment: Brown v. Eastern Slate Co., 134 Mass. 590. § 499. Personal Liability for Wages of Employees, "Laborers, etc. — By statute iu some states, stockholders are •personally liable for wages due certain persons who have been employed by the defunct corporation, as, for example, -laborers, servants, etc. In an action on a stockholders' liability, under the New York laws, for debts due labor- ■ ers, the complaint must show that the debt was to have been paid within one year from the time it was con- tracted.' A provision that "all members," etc., "shall be personally liable for all debts contracted by the company for manual labor performed for the company," does not render a stockholder liable for debts of the company contracted before he became a member.^ It is no ground of defense to one of the defendants that he, the stock- holder, has paid some of the operatives other sums due them, and has a claim for contribution upon the other defendants.' A traveling salesman is not a "laborer,"^ nor a secretary and book-keeper,* nor an assistant chief engineer of a railroad," nor a contractor to prepare the road-bed of a railroad.' A stockholder is not liable as for a labor debt for money due under a contract with the corporation, whereby the contractor is to carry on certain . quarrying operations at his own expense and for a period of years, in a quarry owned by the corporation, and de- liver rock to the corporation at certain rates.* Under the 1 Dean v. Mace, 19 Hun, 391. * Viele v. Wells, 9 Abb. N. C. 277. 2 Reeder v. Maranda, 66 Ind. 485. « Brockway v. Innes, .39 Mich. 47. ' Bumap 0. Haskina Steam Engine ' Peck v. Miller, 39 Mich. 594. Co., 127 Mass. 586. * Taylor v. Man waring, 48 Mich. *,Jone3 V. Avery, 50 Mich. 326. 171. § i99 -CORPOKATIONS. 838 phrase "laborer, servant, operative, or apprentice," the following have been held not to fall, viz.: a book-keeper and general manager;^ one employed to fill the place of a raining superintendent during his absence.^ Under a statute which gives servants and employees of certain corporations a claim for wages against individual stock- holders, in addition to the liability of the corporation, an employee does not, by taking a note of the corporation for such wages, and attempting to collect from the corpo- rate assets, waive his rights against the individual stock- holders. Nor can the stockholder, after the liability to the employee is incurred, avoid it, as a personal claim, by a transfer of his stock. ^ Illl'steations. — A mercantile firm delivered goods to the laborers of a mining corporation upon orders drawn in this form: "Due A for labor from the M. & P. Rolling Mill Co., $ , in goods, at the store of C. E., treasurer, by G."; and on delivery of goods to the amount so called for, the firm stamped each order " Paid." It was apparently understood that the firm should receive and honor the orders of the corpo- ration, and that the latter should settle with it every month, and pay the amount of the orders taken by it. The firm be- came insolvent, and had among its assets a large number of these orders, on which suits were brought as for labor debts, and for the use of the persons to whom the orders were drawn, against one of the stockholders of the corporation. Held, that the actions would not lie; and that the use of the words " for labor," in the orders, was simply to indicate the nature of the service for which they were given, and not to keep them alive as against stockholders: Beecher v. Dacey, 45 Mich. 92. A was given a situation at a monthly salary of one thousand dollars a year, by a manufacturing corporation, on condition of his ob- taining for the corporation a loan of three thousand dollars. A acted as foreman, helped to manufacture stone, kept time of the hands, solicited orders, and did whatever told to do by the superintendent. Held, that he was a laborer or servant within a statute making members of manufacturing corporations per- sonally liable for the wages of laborers or servants: Short v. Med- herry, 29 Hun, 39. A statute provided that the "stockholders of ^ Wakefield v. Fargo, 90 N. Y. and see Krauser v. Uuekel, 17 Hun, 213 463. ' 2 Dean v. De Wolf, 16 Hun, 186; » Jackson ti. Meek, Tenn., 1888. 839 STOCKHOLDERS. § 50O certain corporations shall only be liable for the amount of the stock subscribed by them respectively, provided, that such stock- holders shall be individually liable for all debts due laborers, servants, apprentices, and employees for services rendered such corporation." Held, that a corporation aggregate could not be the "employee" of another corporation: Dukes v. Love, 97 Ind. 341. § 500. Rights of Bona Fide Holder of Shares Apparently Paid up. — In England, and in several of the courts of this country, it is held that a bona fide holder for value of shares which purport to be fully paid up is protected.^ On the other hand, it is held iu New York that the holder of stock which is not in fact paid up is liable to creditors of the corporation for the unpaid balance, whether a purchaser for value and without notice, or not.^ Where he has been made the victim of fraud, he has his recourse against his vendor.^ Where it is claimed that the holder of nomi- nally paid-up stock, purchased in the course of business, took it with notice that it was not paid up, the burden of proving notice is apon the plaintiff.'' A secret agreement entered into between the directors of a railroad corpora- tion and a subscriber for shares in its capital stock, that he may, within a specified time, reduce the number of shares thus subscribed for, the subscription being held out as bona fide for the full amount, in order to induce others to subscribe, is void as a fraud on the other sub- ' Steacy v. R. R. Co., 5 Dill. 348; go and satisfy himself that the asser- Sanger v. Upton, 91 U. S. 60; Brant tion was true, and that the money had V. Ehlen, 59 Md. 1; Keystone Bridge been actually paid; . . . even if such Co. V. MeCluney, 8 Mo. App. 49G. In a person were minded to make the in- Burkinshaw v. NiooUa, L. R. 3 App. vestigation, he would be absolutely Cas. 1017, the chancellor said: "It without the means of making it, — it would paralyze the whole of the deal- would be impossible for him to obtain ings with shares in public companies, accurate information as to whether this if a share being dealt with in the or- state of things was true or not." dinary course of business, dealt with ^ Boynton v. Andrews, 63 N. Y. 93; in the market with the representation but see Holbrook v. New Jersey Zinu upon it by the company that the whole Co., 57 N. Y. 616. amount of the share was paid, the per- ' Tasker v. Wallace, 6 Daly, 364. son who took it was to be obliged to * Burkinshaw v. NicoUs, L. R. 3 disregard the assertion of the company, App. Cas. 1017. and before he could obtain a title must §§ 501, 502 CORPORATIONS. 840 scribers; and the original subscription may be enforced, for its full amount, between the corporation and the sub- scriber.^ Where a stockholder of a manufacturing cor- poration, whose stock has not been fully paid in, in good faith makes an absolute and valid transfer of his stock to another, he is not liable for calls made after the transfer.* Illustrations. — A transferred to B, for an old debt, shares of bank stock on which no payment had been made, although B supposed the shares to have been paid up. Afterwards A paid forty per cent upon the shares as calls were made, and B received dividends. The bank became insolvent, and a receiver was appointed, who sued B to recover the balance of A's sub- scription. Held, that the action could not be maintained : Wint- ringham v. Rosenthal, 25 Hun, 580. § 501. Rights of Creditors — To Interfere in Manage- ment of Corporation. — Creditors have no right to inter- fere in the management of a corporation, or the transfer of its assets, unless it be actually insolvent or in danger of insolvency.^ § 502. To Prevent Dissolution or Alteration in Charter. — Creditors have no power to prevent a dissolution of a corporation,* or an alteration in its charter.® 1 White Mountaina R. R. Co. v. * Mummai). Potomac Co., 8 Pet. 286; Eastman, 34 N. H. 124; Downie v. Smith 1). Canal Co., 14 Pet. 45; Ourran White, 12 Wis. 176. v. State, 15 How. 310; Mobile etc. 2 Billings V. Robinson, 94 N. Y. R. R. Co. v. State, 29 Ala. 573. 415. ^ Pennsylvania College Cases, 13 3 Mills V. R. R. Co., L. R. 5 Ch. 621. Wall. 218. 841 "dissolution. § 503 CHAPTER XXVIII. DISSOLUTION OF CORPORATIONS. §503. Dissolution of corporation — By expiration of time or happening of contingency. § 504. By surrender of charter. § 505. Other cases. § 506. By forfeiture at suit of state for non-user or misuser of franchise. § 507. EflFect of dissolution. § 508. Revivor of corporation. § 503. Dissolution of Coii)oration — By Expiration of Time or Happening of Contingency. — A corporation chartered to exist until a certain date ceases upon the expiration of that time.' So a corporation which is to exist until a certain contingency happens will expire upon the happening of that event. But there must first be a judicial determination of the fact.^ If a franchise is granted by the legislature to construct a street railroad within a certain time, with a condition that if the pro- visions of the act are not complied with the franchise shall be forfeited, a failure to lay the track within the time limited works a forfeiture of the right to lay the same without a judgment at the suit of the state declaring a forfeiture, and the legislature may confer the franchise upon any other company or person.^ Where, for every practical purpose, a manufacturing corporation may be deemed to have been dissolved and its purpose abandoned before a given year, it need not file any report for that year.^ » People V. Walker, 17 N. Y. 502; hull, 25 Mich. 99; 12 Am. Rep. 233; La Grange etc. R. R. Co. v. Rainey, Ormsby v. Vermont Mining Co., 65 7 Coldw. 432; Bank v. Wrenn, 3 Smedes Barb. 360; Moseby v. Burrow, 52 Tex. & M. 791; Bank v. Trimble, 6 B. Mon. 396. 601. ^OaklandR. R. Co. w. R. R. Co., 45 ^ Brooklyn Steam Transit Co. v. Cal. 365; 13 Am. Ren. 181. But see Brooklyn, 78 N. Y. 524; La Grange contra, Day v. R. R." Co., 107 N. Y. ■etc. R. R. Co. V. Rainey, 7 Coldw. 129. 432; ElJnt etc. R. R. Co. ». Wood- * Bruce v. Piatt, 80 N. Y. 379. § 504 CORPORATIONS. .842 Illustrations. — The charter of a private corporation in- vested it with " perpetual succession." Held, to mean that it was invested with the right to exist forever: Fairchild v. Masonic Hall Assoc, 71 Mo. 526; contra, Scanlan v. Cranshaw, 5 Mo. App. 337. A corporation is chartered to construct a canal, to be completed within a given time. The failure to finish the work within that time does not dissolve it: Mclntire v. Zanes- ville Co., 9 Ohio, 203; 34 Am. Dec. 435. In an action to recover tolls by a corporation chartered to erect a bridge, and to take tolls thereon for twenty years, held, that although the forfeiture of a corporate franchise could only be taken advantage of by the state, the defendant might show that the twenty years had expired, and thereby defeat the action: Grand Rapids Bridge Co. V. Prange, 35 Mich. 400; 24 Am. Rep. 585. The corporation act of Oregon declares that if any corporation shall neglect and cease to carry on its business for any period of six months, its corporate powers shall cease. Held, that such neglect did not terminate the existence of the corporation as by lapse of time, but that it was a cause of forfeiture of the corporate privileges, of which no one but the state could complain or take advantage: Wallamet Falls etc. v. Kittridge, 5 Saw. 44. § 504. By Surrender of Charter. — A corporation be- comes dissolved by surreadering its charter to the state,^ provided the state accepts the surrender;" for in order to make a surrender of a corporate charter effectual, it is necessary that it be accepted by the government, and that a record thereof be made.^ It does not require a unani- mous vote to surrender the franchises of a corporation; it may be done by a majority.* A great distinction exists between public and private corporations. Railroad, canal, turnpike, charitable, religious, and other corpo- rations established for objects quasi public cannot sur- ' Morawetz on Corporations, sec. v. Sea. Ins. Co., 7 Paige, 294; Boston 637; Slee v. Bloom, 19 Johns. 456; 10 Glass Co. v. Langdon, 24 Pick. 49; Am. Dec. 273; MoMahan v. Morrison, Norris v. Mayor etc. of Smithville, 1 16 Ind. 172; 79 Am. Deo. 418. Swan, 164; Curien v. Santini, 16 La. 2 Enfield Toll Bridge Co. v. K. K. Co. , Ann. 27. 7 Conn. 45; Revere v. Boston Copper ^ Norris v. Mayor etc. of Smithville, Co., 15 Pick. 351; Town v. Bank of 1 Swan, 164. Eiver Raisin, 2 Doug. (Mich.) 530, * Wilson v. Proprietors of Central 538; La Grange etc. R. R. Co. v. Bridge, 9 R. I. 590; Treadwell v. Salis- Rainey, 7 Cold. 420; Wilson v. Prop, bury Mfg. Co., 7 Gray, 393; 66 Am. etc., 9 R. L 590; Harris v. Mus- Dec. 490; Zabriskie v. R. R. Co., 18 kiugumMfg. Co., 4 Blackf. 268; Ward N. J. Bq. 193. 843 DISSOLUTION. § 504 render or dispose of their franchises without the consent of the state. ^ On the other hand, mere private corpora- tion, or a trading corporation which is formed solely for the pecuniary benefit of its share-holders, may wind up its business by the sale of its assets, whenever the major- ity, in the exercise of sound discretion, deem this course to be expedient.* And this may be done by a majority of the stockholders, even against the wishes of a minority.^ But the sale must be made with the bona fide object of winding up the corporation.* The minority are entitled to an immediate distribution of the proceeds of the sale,^ and thej' may elect in what form they will receive their proportion of assets, — whether they will take the specific property into which the corporate assets have been trans- ferred, or insist upon cash in lieu of the same.^ The ' Tread well v. Manufacturing Co., 7 Grav, 393; 66 Am. Dec. 490; Johnson V. R. R. Co., 3 De Gex, M. & G. 914; Shrewsbury etc. K. R. Co. v. R. R. Co., 6 H. L. Gas. 113; Macgregor v. R. R. Co., 18 Q. B. 618; Thomas v. R. R. Co., 101 U. S. 71, 83; York & Md. R. R. Co. V. Winans, 17 How. 30, 39; Black v. Delaware etc. Canal Co., 22 N. J. Eq. 130, 399; Commonwealth «. Smith, 10 Allen, 448, 455; Lauman V. R. R. Co., 30 Pa. St. 42; 72 Am. Dec. 685; Troy etc. R. R. Co. •». Kerr, 17 Barb. 581, 601; American Union Tel. Co. V. R. R. Co., 1 McCrary, 188; Richardson v. Sibley, 11 Allen, 66; Lyon V. Jerome, 26 Wend. 485. ' Merchants' etc. Line v. Waganer, 71 Ala. 581; Tread well v. Salisbury Mfg. Co., 7 Gray, 393; 66 Am. Dec. 490; Wilson o. Prop'rs of Central Bridge, 9 R. I. 590; McCurdy v. Myers, 44 Pa. St. 535; Curran v. State of Arkansas, 15 How. 304, 310; Ward v. Soc. of Attys, 1 Coll. 370; Bank of Switzerland v. Bank of Turkey, 5 L. T., N. S., 649; Rid- dle V. Prop, of Locks etc., 7 Mass. 185; Hampshire v. Franklin, 16 Mass. 86; Savage v. Walshe, 26 Ala. 619; Mumma v. Potomac Co., 8 Pet. 681; Penobscot Boom Co. o. Larason, 16 Me. 224; Enfield Toll Bridge Co. v. Conn, etc. Riv. Co., 7 Conn. 29; Com- monwealth V. Slifer, 53 Pa. St. 71; Reveres v. Copper Co., 15 Pick. 351; Lauman v. R. R. Co., 30 Pa. St. 42; 72 Am. Dec. 685; Hancock v. Hol- brook, 4 Woods, 52; Black v. Dela- ware etc. Canal Co., 22 N. J. Eq. 414, 415. ^ Black V. Del. etc. Canal Co., 22 N. J. Eq. 130, the court saying: "Becom- ing incorporated for a specific object, without any specified time for the con- tinuance of the business, is no contract to continue it forever any more than articles of partnership wiHiout stipu- lations as to time. There is no reason why it should be construed into such a contract; such is not implied in the charter, and a doctrine that all the share-holders but one may be com- pelled to continue a business which they find undesirable, and wish to abandon, is so unreasonable and un- just that it will not be held to arise by implication, unless that implication is a necessary one. " * Morawetz on Corporations, sec, 212. '^ McVicker v. Ross, 55 Barb. 247; Frothingham v. Barney, 6 Hun, 366; Taylor v. Earle, 8 Hun, 1. « Lauman v. R. R. Co., 30 Pa. St. 42; 72 Am. Dec. 685; N. 0. etc. R. R. Co. V. Harris, 27 Miss. 517; Black v. Del. & Rar. Canal Co,, 22 N. J. Eq. § 505 CORPORATIONS. 844 minority cannot be compelled to take an annuity instead of their proportion of assets, or the proceeds from the sale of the same.' Nor are they obliged to take stock in an- other company, unless that stock has a fixed money value, and is easily convertible into cash; but the dissentients cannot prevent the exchange of assets for stock, provided those who favor this transaction make provision for pay- ment of cash to those who prefer it.^ And it is the duty of the majority to wind up the corporation, by the sale of its assets, upon such terms as shall be most advantageous.' A surrender of a charter by a corporation may be pre- samed from a neglect for a long time to choose corpora- tors, and to exercise the corporate franchises.^ § 505. Other Oases. — A corporation does not become dissolved merely by neglecting to appoint agents, or to carry on its business.^ Neither does insolvency work a dissolution.* Neglect by a corporation to hold meetings for ten years is not, in itself, ground for a dissolution;' nor omitting to elect ofBcers;^ nor does a sale of its prop- erty and cessation of active business.' A corporation created by the legislature for the purposes of local munici- 130; McCiirdy «. Myers, 44 Pa, St. 'State v. Vineennes University, 5 535; Frothingtiam v. Barney, 6 Hun, Ind. 77; State v. Bull, 16 Conn. 179. 3(56; Middlesex R. R. Co. v. R. R. * Morawetz on Corporations, sec. Co., 115 Mass. 351. 635; Lehigh Bridge Co. v. Lehigh Coa! ' Morawetz on Corporations, sec. Co., 4 Rawle, 9; 26 Am. Deo. Ill; 213. St. Louis etc. Ass. v. Augustin, 2 Mo. 2 Clearwater v. Meredith, 1 Wall. App. 123. The old officers hold over: 25; Ex parte Bagshaw, L. R. 4 Eq. St. Louis etc. Ass. v. Augustin, 2 Mo. 341 ; McCurdy v. Myers, 44 Pa. St. App. 123. 535; State v. Bailey, 16 Ind. 51; " Cobum ». Papier Mache Co., 10 Hodgea v. New England Screw Co., 1 Gray, 245; Dewey v. St. Albans Trust R. L347; Treadwell i;. Salisbury Mfg. Co., 56 Vt. 476; 48 Am. Rep. 803; Co., 7 Gray, 393; 66 Am. Deo. 490. Niramons v. Tappan, 2 Sweeny, 652; '^ Cramer v. Bird, L. R. 6 Eq. 143; Morau ». Lydecker, 27 Hun, 582. In re Saburban Hotel Co., L. R. 2 Ch. ' State v. Barron, 58 N. H. 370. 737, 750; Pratt v. Jewett, 9 Gray, 34; ^ Boston Glass Co. v. Langdon, 24 Salem Mill Corp. v. Ropes, 6 Pick. Pick. 49; 35 Am. Dec. 294; Cahill v. 23: Lafond v. Deems, 81 N. Y. 507; Kalamazoo Ins. Co., 2 Doug. (Mich.) Denike v. N. Y. etc. Lime Co., 80 N. 124; 43 Am. Dec. 456. Y. 599; Bliven v. Peru Steel Co., 60 « Kansas City Hotel Co. v. Sauer, How. Pr. 280; De Witt v. Hastings, 69 65 Mo. 279; Reichwald v. Com. Hotel N. Y. 518. Co., 106 111. 439. 845 DISSOLUTION. ^ 505 pal government cannot, without a provision to that effect, be dissolved by the mere failure to elect oflScers. The inhabitants of the designated locality are the corporators, and the officers are their mere servants or agents.^ In a Pennsylvania case it is said that a corporation is not neces- sarily dissolved by insolvency, assignment for the benefit of creditors, or writ of sequestration. If it keeps up its organization, it still exists, and its franchises and powers not capable of assignment must be exercised by it in sub- serviency to its legal and equitable obligations.^ The fact that a manufacturing corporation has temporarily leased its property to some person to continue and carry on its business does not give a portion of its stockholders a standing in a court of equity to ask for a dissolution of the corporation.' A private corporation does not become dormant, or forfeit its franchises, because a single indi- vidual becomes, by purchase of the stock, sole owner of the corporate property and franchises. And if such sole owner continues the business under the corporate name, without notice to the public, he may be sued as such cor- poration.^ The use of an abbreviation of its corporate name by a corporation is not a usurpation, and will not support a proceeding by quo warranto to oust it from the enjoyment of its franchise.' A court of equity has no jurisdiction to restrain a navigation company from collect- ing tolls on the streams to which its charter refers, on the ground that it had failed to improve the streams as its charter prescribed, or to keep them in order.* But it has been held that where a manufacturing company ceases to do business, having expended all its resources and become bankrupt, this works a dissolution.' So it may be dis- ^ Welch V. Steamer Genevieve, 1 * Newton etc. Co. v. White, 42 Ga. Dill. 136. 148. ^ Germantown R. R. Co. v. Fitler, ^ People v. Bogart, 45 Cal. 73. 60 Pa. St. 124; 100 Am. Deo. 546. = Pixley v. Roanoke Nav. Co., 75 ^ Denike v. New York and Rosen- Va. 320. • dale Lime and Cement Co., 80 N. Y. ' Briggs v. Penniman, 8 Cow. 387; 599, 18 Am. Dec. 455. § 506 CORPORATIONS. 846 solved by the death of all its members/ The sale by a railroad corporation of its road, although the corporation still retains important franchises pertaining to its land grants, is ground for the forfeiture of its charter.^ Illustrations. — The trustees of a mutual benefit association illegally voted themselves back pay, and issued unauthorized certificates of membership. Held, not sufficient ground for ousting the association of its franchise: State v. People's Mut. . Benefit Assoc, 42 Ohio St. 579. A corporation, formed under the act relative to corporations for manufacturing purposes, had become utterly insolvent, and had ceased to manufacture, or to act as a corporation in any respect. Held, that the corporation was dissolved so far as to give to the creditors of the corporation a remedy against the stockholders, under the statute: Penniman V. Briggs, Hopk. 300. But see Penniman v. Briggs, 8 Cow. 387; 18 Am. Dec. 455. A stockholder in a corporation brought suit to obtain a judgment dissolving it, on the statutory ground that it had suspended its business for a year. After it had begun business its patents were attacked by a rival company, and pending the litigation, an agreement was made for a division of ■profits when the litigation should be terminated, and the two companies were consolidated by agreement. The organization was kept up, royalties were received, licenses issued, and suits prosecuted and defended. Held, that grounds for a dissolution were not shown, and that if the arrangement for consolidation, etc., was unauthorized, the action should be brought by the attorney-general, and not by the stockholder: Kelseyv. Pfaudler Process Fermentation Co., 45 Hun, 10; 19 Abb. N. C. 427. § 506. Dissolution by Forfeiture for Misuser or Non- user of Franchises. — Misuser or non-user of its franchises may dissolve the corporation by a judgment of forfeiture at the suit of the state.' For non-user or misuser, courts ' Mclntire v. Zanesville Co., 9 Ohio, Dec. 119; Boston Glass Co. v. Lang- 203: 34 Am. Deo. 436. don, 24 Pick. 49; 35 Am. Dec. 292; ^ State V. R. K Co., 36 Minn. 246. State v. Real Estate Bank, 5 Ark. 595; ^Terrett v. Taylor, 9 Crauch, 51; 41 Am. Dec. 109; Arthur v. Commer- People V. Turnpike Co., 23 Wend, cial etc. Bank, 9 Smedea & M. 394; 48 193; 35 Am. Deo. 551; Atty.-Gen. Am. Dec. 719; State v. Commercial V. R. R. Co., 6 Ired. 456; People Bank, 13 Smedes & M. 569; 53 Am. V. Utioa Ins. Co., 15 Johns. 358; Slee Dec. 106; Paschallw. Whitsett, 11 Ala. V. Bloom, 19 Johns. 456; 10 Am. Deo. 472; Mumma v. Potomac Co., 8 Pet. 273; State Bank v. State, 1 Blackf. 281; Com. «. Blue Hill Tp. Co., 5 Mass. 267; 12 Am. Deo. 234; John v. Farm- 423;Com. v.Unionetc. Ins. Co.,5Mass. ers' etc Bank, 2 Blaokf. 367; 20 Am. 230; Folger v. Columbian Ins. Cb., 99 847 DISSOLUTION. § 506 cannot judicially declare forfeited the charters of public corporations.^ A corporation's franchises continue in full force until a forfeiture is claimed by the state grant- ing them.^ The mere judgment of forfeiture does not, of itself, work a dissolution of the corporation. There must first be an execution for the seizure of the franchises, be- fore the penalties of forfeiture take place.' The attorney- general may not be compelled by mandamus to institute a suit for the forfeiture of the charter of a corporation.* A claim of the forfeiture of the franchise cannot be raised collaterally, but only in a direct proceeding instituted for the purpose.^ An information in equity, by the attorney- general, cannot be maintained against a private trading corporation, where the acts complained of are not shown to have injured or endangered any rights of the public, or of any individual or other corporation, and where the Only objection to them is, that they are not authorized by its act of incorporation, and are, therefore, against public policy." The "reasonable cause to decree a dissolu- tion," within the Massachusetts statutes, imports more than a mere vague apprehension of some future mischief. So where one telegraph company had made a fraudulent lease of its line to another, but after the filing of the peti- tion for dissolution the lease was canceled by vote of the directors of both companies, it was held that no ground Mass. 267; 96 Am. Dec. 747; Board of ' Nevitt v. Bank of Port Gibson, 14 Edacation r. Bakewell, 122 111. 339. Mias. 513. The fact that a corpora- Repeated and willful aots- of misuser tion has, by non-performance of a Con- or non-user by a corporation, which dition of its charter, forfeited its cor- are of the essence of the contract be- porate rights and powers, may be tweeu it and the state, constitute a asserted by any one whose land or ]ast ground of forfeiture of the fran- property is sought to be appropriated, chise: State v. Council Bluflfa and Ne- in answer to the application therefor: braska Ferry Co., 11 Neb. 354. Equity In re Brooklyn etc. K. R. Co., 72 N. has not jurisdiction to declare corpo- Y. 245. jate franchises forfeited: Society v. * State v. Attorney-General, 30 La. Morris Canal Co., 1 N. J. Eq. 157; 21 Ann, pt. 2, 954. Am. Dec. 41; Atty.-Gen. v. Stevens, '^ Toledo etc. R. R. Co. v. Johnson, 1 N. J. Eq. 369; 22 Am. Dec. 526. 49 Mich. 148. 'Welch V. Str. Genevieve, 1 Dill. ^ Attorney-General w. Tudor Ice Co., 130. 104 Mass. 239; 6 Am. Rep. 227. 2 Moore v. Schoppert, 22W.Va. 282. § 506 CORPORATIONS. 848 for a decree of dissolution remained.* It is not every excess of power, nor every omission of duty, that pro- duces the effect of forfeiting a charter. The public must have an interest in the act done, or omitted to be done. If it is confined to the corporation, and in no wise affects the community, it should not be considered as of those conditions upon which the grant is made. In order to a forfeiture, there must be something wrong done, arising from willful abuse or improper neglect; there must be a plain abuse of power, by which the corporation fails to fulfill the design and purpose of its organization. The acts of misuser or non-user must be touching matters which are of the essence of the contract between the sovereign and the corporation.^ Not every failure of a corporation to perform a duty imposed by its charter will work a forfeiture thereof. It must be something more than accidental negligence, or excess of power, or mere mistake in the mode of exercising an acknowledged power; and though a single act of willful non-feasance may be a ground of forfeiture, a specific act of non-feasance, not committed willfully, and not producing or intending to produce mischievous consequences to any one, and not being contrary to particular requisitions of the charter, will not be.' Where a charter provides that " if the cor- poration shall at any time misuse or abuse" its fran- chises, the legislature may revoke the grant, the power of revocation is thereby made conditional upon the fact of some misuse or abuse, and this fact must be proved upon some inquiry, giving the corporation an oppor- tunity to be heard in defense, before the charter can be revoked.* Where a corporation has abused its corporate powers, but not in any particular as to which it is de- clared by statute, the act shall operate as a forfeiture of - In re FrankliB Tel. Co., 119 Mass. ' State v. Pawtuxet Turnp. Co., 8 447. R. I. 182. 2 Harris v. B. R. Co., 51 Miss. * Baltimore v. R. R. Co., 1 Abb. 602. G. C. 9. 849 DISSOLUTION. § 506 its cliarter; the court is vested with a discretion to deter- mine whether the corporation shall be ousted of its fran- chise to be a corporation, or of the exercise of the powers illegally assumed.^ Failure of the corporators to organize under the charter is not such a non-user as will warrant an action of quo warranto to vacate the charter.^ A sale and conveyance by an incorporated turnpike company of a portion of its road to a municipal corporation, and neglect thereafter to repair that portion, is a willful, de- liberate act, violative of its plain duty, which warrants a judicial decree of forfeiture of its charter.' Proceedings may be had for the dissolution of a corporation neglect- ing for a year to pay its debts, and may be initiated by a stockholder, where the corporation is organized under the general manufacturing laws.* The question whether a franchise has been abandoned is one of intention; and auch intention, to constitute an abandonment, must be dearly indicated by facts or circumstances. Non-user, even for twenty years, although a fact which may be used in determining the question, is not per se conclusive evi- dence of abandonment.' The legislature may waive a forfeiture.* A waiver will take place where the legislature declares that the corporation shall continue, or where it authorizes the defunct corporation to perform corporate acts.^ The forfeiture is not waived by the appointment by the governor of the state of a state director on the board.* Illustrations. — A corporation organized for the promotion of education, after carrying out the purposes of its charter for a time, transferred its property and remained inactive for nine- ^ State V. Oberiin Building ancLLoan * Milford v. Bru3h, 10 Ohio, 111; 36 Assoc, 35 Ohio St. 258. Am. Dee. 78. 2 State V. Simonton, 78 N. C. 57. ' State v. Bank of Charleston, 2 = State V. Pawtuxet Tump. Co., 8 McMuU. 439; 39 Am. Dec. 135; State E. I. 182; 8 R. I. 521. v. Turnpike, 15 N. H. 162; 41 Am. Deo. * Kittredge v. Kellogg Bridge Co., 690; State v. R. R., 20 Ark. 495; Peo- 8 Abb. N. C. 168. pie v. Manhattan Co., 9 Wend. 351. * Raritau Water Power Co. v. ' People v. Phcenix Bank, 24 Wend. Veghte, 21 N. J. Eq. 463. 431; 35 Am. Dec. 634. VOL, L- 64 § 507 CORPORATIONS. 850 teen years. Held, that quo loarranto for a dissolution would lie, and this, notwithstanding the pendency of a suit to recover some of the land formerly owned by it, but sold nineteen years before: State v. Pipher, 23 Kan. 127. An incorporated turnpike company in good faith attempted to consolidate with another one. Twelve years afterwards the consolidation was declared void. The company then resumed possession of its property, and for a year continued to exercise its franchises. Held, that it should not be deemed to have forfeited them: State v. Craw- fordsville and Shannondale Turnpike Co., 102 Ind. 283. The charter of a turnpike corporation provided that at the end of every six years after the setting up of any toll-gata, an account of the expenditures and profits of the road should be laid before the legislature, "under forfeiture of the privileges of the act in future." Toll-gates were erected in the year 1806. No account was laid before the legislature until the year 1830, but in that year, and in the years 1836 and 1842, accounts were submitted, which were received by the legislature as " sufiicient and satis- factory," and in the year 1833 an act was passed authorizing the corporation to change the route of the road in certain places. Held, that such acts amounted to a waiver of the forfeiture: State V. Fourth N. H. Turnpike, 15 N. H. 162. §507. Effect of Dissolution. — At common law, the effect of a dissolution of a corporation was, that the real estate reverted to the grantor and his heirs, its goods and chattels went to the crown, and the debts due to and from it became extinguished.' But this harsh rule is now ob- solete, and the courts of equity, on the dissolution of a corporation, will take charge of its assets, and apply them first to the payment of creditors, and then to distribution among the share-holders.^ The forfeiture of a charter ' state Bank v. State, 1 Blackf. 267; v. Funk, 18 Iowa, 469; Tinkham v. 12 Am. Deo. 234; Fox v. Horah, 1 Borst, 31 Barb. 407; Hastings v. Drew, Ired. Eq. 358; 36 Am. Dec. 48; Coul- 50 How. Pr. 254; Crease v. Babcock, ter V. Robertson, 24 Miss. 278; 67 23 Pick. 334; 34 Am. Dec. 61; Folger A.m. Dec. 168. In Maine, upon the v. Ins. Co., 99 Mass. 267; 96 Am. Dec. dissolution of a mutual insurance com- 747. The rule of the common law, pany, its personal property, after pay- that real estate held by a corporation ment of legal liabilities, vests in the at the time of its dissolution reverts state: Titcomb v. Kennebunk Mut. F. to the grantor, does not prevail in this Ins. Co., 79 Me. 315. state in respect to stock corporations. 2 Bacon v. Robertson, 18 How. 480; Where lands are conveyed absolutely Curran v. State, 15 How. 312; Lum v. to a corporation having stockholders, Robertson, 6 Wall. 277 ; City Ins. Co. , no reversion or possibility of a reverter V. Com. Bank, 68 HI. 348; Muscatine remains in the grantor: Heath v. Bar- 851 DISSOLUTION, §507 dates from the commission of the act which causes the forfeiture, but the corporation continues in existence de facto until judgment of forfeiture is pronounced.^ The dissolution of a corporation changes the character of the property of its stockholders; it destroys their stock, and substitutes the thing which their stock represented; that is, a legal interest in the corporate property.^ In a very more, 50 K. Y. 302. In Bacon v. Bobertsou, supra, the court said: "The effects ot a dissolution of a corporation are visuall y described to be th e reversion of the lands to those who had granted them; the extinguishment ot the debts, either to or from the corporated body, so that they are not a charge nor a benefit to the members. The in- stances which support the dictum in reference to the lands consist of the •statutes and judgments which followed the suppression of the military and religious orders of knights, and whose lands returned to those who had granted them, and did not fall to the king as an escheat; or of cases of dis- solution of monasteries and other ec- clesiastical foundations, upon the death of all their members; or of donations to public Ijodies, such as a mayor and commonalty. But such cases afford no analogy to that before us. The acquisitions of real property by a trad- ing corporation are commonly made upon a bargain and sale for a full con- sideration, and without conditions in the deed; and no conditions are im- plied in law in reference to such con- veyances. The vendor has no interest in the appropriation of the property to any specific object; nor any rever- sion, where the succession fails. If the statement of the consequences of a dissolution upon the debts and cred- its of the corporation is literally taken, there can be no objection to it. The members cannot recover, nor be charged with them, in their natural capacities, in a court of law. But this does not solve the difficulty. The question is. Has the bona fide and just creditor of a corporation dissolved un- der a judicial sentence, for a breach in its charter, any claim upon the corporate property for the satisfaction of his debt, apart from the reservation in the act of the legislature which di- rected the prosecution? Can the lands be resumed in disregard of their rights by vendors, who have received a full payment of their price, and executed an absolute conveyance? Can the careless, improvident, or faithless debtor plead the extinction of his debt, or of the creditor's claim, and thus receive protection in his delin- quency? The creditor is blameless, — he has not participated in the corpo- rate mismanagement, nor procured the judicial sentence; he has trusted upon visible property acquired by the cor- poration, in virtue of its legislative sanction. How can the vendors of the land or the delinquent debtors resist the might of his equity? But if the claims of the creditor are irresistible, those of the stockholder are not in- ferior, at least against the parties who claim to hold the corporate property. The money, evidences of debt, lands, and personalty acquired by the cor- poration were purchased with the capital they lawfully contributed to a legitimate enterprise, conducted un- der the legislative authority. The enterprise has failed, under circum- stances, it may well be, which entitle the state to withdraw its special sup- port and encouragement; but the state does not affirm that any cause for the confiscation of the property, or for the infliction of a heavier penalty, has arisen. It is a case, therefore, in which courts of chancery, upon their well-settled principles, would aid the parties to realize the property belong- ing to the corporation, and compel its application to the satisfaction of the demands which legitimately rest upon it." ^ State V. Bank of Charleston, 2 Mc- Mull. 439; 39 Am. Dec. 135. 2 Lauman v. R. R. Co., 30 Pa. St, 42; 72 Am. Dec. 685. § 507 CORPORATIONS. 852 recent case in New York, it is held that the dissolution of a corporation neither destroys its property nor annuls its contracts; they stand in the same position as those of a natural person on his death. The reservation in a char- ter of a right to repeal it, allows the state to destroy its corporate life, and prevent it f'om continuing its corpo- rate business; but personal and real property acquired by it during its lawful existence, rights of contract, or choses in action so acquired, and which do not in their general nature depend upon the powers conferred by the charter, are not destroyed by such repeal. A franchise to construct and maintain a street-railway survives the dis^ solution of the corporation grantee, resulting from the repeal of its charter enacted pursuant to a right of repeal reserved by the legislature. Upon the repeal of an act of incorporation, all the property and rights of the corpora- tion become vested in the directors then in office, or in such persons as by law have the management of the busi- ness of the corporation, in trust for the stockholders and creditors, unless the repealing law provides for the ap- pointment of other persons than the officers of the corpo- ration as trustees.* After dissolution the corporation cannot sue.^ It can- not be made a party to a suit by the receiver,' and no legal judgment can be rendered against it.* If the corporation ^People V. O'Brien, 111 K. Y. 1; 7 corporation, the legislature may pro- Am. St. Rep. 684. vide that, after it has expired, actions 2 Bank v. Wilson, 19 La. Ann. 1; may, within a limited time, be oom- Miami Ex. Co. v. Gano, 13 Ohio, 269. menoed in its name for the benefit of ' Carey v. Giles, 10 Ga. 9. After the stockholders; and the power to the charter of a corporation is declared commence actions within that time forfeited, it can do no act by which gives the power to prosecute them to rights can be acquired, nor can it final judgment: Franklin Bank v. maintain a suit to enforce those ac- Cooper, 36 Me. 179. quired during the continuance of the ' Merrill v. Suffolk Bank, 31 Me, charter, unless its power and capacity 57; 50 Am. Dec. 649; Folger v. Ins, for that purpose is continued by stat- Co., 99 Mass. 276; Bonaffe v. Fowler, ute after its existence as a corporation 7 Paige, 576; Farmers' Bank v. Little, is ended: Saltmarsh v. Planters' and 8 Watts & S. 207; Dobson v. Simon Merchants' Bank, 17 Ala. 761; S. P., ton, 86 N. C. 492. The proper rem- Greeley v. Smith, 3 Story, 057. Be- edy against an insolvent corporation, fore the expiration of the charter of a ^hen its assets are of such a nature 853 DISSOLUTION. § 507 expires before judgment, no execution can be issued in its name;' nor will a writ of error lie.^ "Where the char- ter expires by lapse of time during the pendency of an appeal in a suit against the corporation, the appeal abates.' A corporation cannot dissolve itself by mere corporate act or vote of a majority of its members, so as to escape its responsibilities or liabilities.'' No repeal of the charter of a corporation can take away or impair the remedy of a creditor against it for previously incurred liability.^ A lease to a corporation is not terminated by the dissolution of the corporation, and a receiver will be required to pay rent l^ue under the lease.* A stockholder of a defunct corpora- tion has such an interest as entitles him to defend a suit brought to foreclose a mortgage alleged to have been exe- cuted by the corporation when alive.' On the dissolution of a corporation, its stockholders may authorize the sale of its property, and prescribe the manner in which such sale shall be made.* Illustrations. — A volunteer fire company was chartered by the legislature, and its officers were commissioned by the gov- ernor. It had no stock or subscription, and could acquire no property except by donation. The only compensation of its members was relief from militia and jury duty. Held, that the heirs of a deceased member had no interest in its property on its dissolution: Mason v. Atlanta Fire Co., 70 Ga. 604; 48 Am. Rep. 585. In an act of incorporation it was provided that the same should be void unless a certain sum of money was paid in as part of the capital stock of the corporation within two years from its passage. Held, that after five years had elapsed from the expiration of that period, it was too late to institute that they cannot be levied upon and Portland, 12 B. Mon. 77; Polar Star sold under execution, is a bill in equity Lodge v. Polar Star Lodge, 16 La. Ann. to marshal and distribute its assets: 53; Curien v. Santini, 16 La. Ann. 27; Irons V. Manufacturers' Kat. Bank, 6 Revere v. Boston Copper Co., 15 Pick. Biss. 301. 351; Town v. Bank of River Raisin, 2 ' May V. State Bank, 2 Bob. (Va.) Doug. 530. 56; 40 Am. Deo. 726. * Blake v. R. R. Co., 39 N. H. 435. '' Renick v. Bank, 13 Ohio, 298; 42 « People v. National Trust Co., 82 Am. Deo. 203. N. Y. 283. ' Rider v. Nelson Factory, 7 Leigh, ' Chouteau v. Allen, 70 Mo. 290. 154; 30 Am. Dec. 495. ^ Moore v. Willamette Transp. etc. * Portland Dry Dock etc. Co. v. Co., 7 Or. 359. §. 508 CORPORATIONS. 854 proceedings to obtain a forfeiture on account of omission to comply with such provision. The court will lay down no uni- versal rule in such cases, but will decide whether the delay has been unreasonable or not from the circumstances of each case: People V. Oakland County Bank, 1 Doug. 282. A Missouri corpo- ration having real estate in Illinois was sued in the latter state, and the real estate attached. Afterwards the corporation was dissolved, and its affairs put into the hands of a receiver in Missouri. Held, that the suit would not thereby be defeated, especially as the decree dissolving the corporation provided that suits might be brought and defended in the name of the corporation: Life Ass'n of America v. Fassett, 102 111. 315. A corporation went into liquidation, and transferred all its prop- erty to another corporation. A was injured afterwards by a vessel thus transferred, and his administrator sued the old cci« poration and recovered judgment. Held, that the judgment could not be enforced in equity against the property of the new corporation: Gray v. National S. S. Co., 115 U. S. 116. An insurance company is dissolved by decree of court. Held, that all contracts of insurance are thereby terminated: Carr v. Union Mut. Ins. Co., 28 Mo. App. 215. A ferry is maintained as an incident to a chartered turnpike to facilitate travel over it. Held, that the forfeiture of the turnpike franchise forfeits the privilege of maintaining the ferry: Darnell v. State, 48 Ark. 321. § 508. Revivor of Corporation. — A corporation whose charter has expired may be revived by the legislature.' Lincoln etc. Bank v. Richardson, 1 Greenl. 79; 10 Am. Dec. 34. IISTDEX IKDEX. [This brief index ttUI, it is hoped, he found snfflcient for immediate use. A com- prehensive index to the entire work will he made on its completion.] Agency. See also Attobnets at Law; Auctioneers; Brokers; Corpo- rations; Delegation of AtfTHOBiiY; Dissolution op Axsency; Joint Agents; Joint Principals; Ratification. agency defined p. 1, § 1 different classes of agents p. 2, § 2 Who may he principals. all persona sui juris p. 4, § 3 married woman may p. 4, § 4 idiots and lunatics may not p. 4, § 4 nor alien enemies p. 5, § 5 nor convicts .....„,.„ p. 5, § 5 Who may he agents. all persons p. 5, § 6 infants p. 5, § 6 married women p. 5, § 6 husband for wife p. 5, § 6 father for son p. 6, § 6 son for father ,p. 6, § 6 corporation for individual p. 6, § 6 alien enemy p. 6, § 6 persons having adverse interests cannot p. 6, § 7 double agencies p. 7, § 7 nor to do unlawful acts p. 8, § 8 or personal acts , p. 8, § 8 Appointment of agents. authority essential to agency p. 9, § 9 interpreter not an agent p. 9, § 9 may be conferred by parol p. 11, § 10 or implied from acts p. 11, § 11 authority not provable by agent's declarations p. 15, § 12 agent to execute deed must be appointed by deed p. 15, § 13 aliter where principal is present. p. 17, § 14 authority to execute writing need not be in writing p. 18, § 15 nor to make contract for sale of land p. 19, § 16 IV INDEX, Agency (Continued). Ajufhority of agent. general and special agency defined and illustrated pp. 73-82, § 56 who are general agents pp. 73-82, ? 56 who are special agents pp. 73-82, § 56 as to persons without notice of limitation of authority, .pp. 75-82, § 56 authority of agent may bp implied pp. 82-84, § 57 but is restricted to character in which it is given p. 84, § 58 general agent has no authority to do acts not for principal's benefit p. 84, § 59 construction of agent's authority when in writing p. 85, § 60 general words restricted by context p. 85, § 60 language of instrument will be construed strictly p. 85, § 60 and in favor of innocent parties p. 85, § 60 usages of trade will be regarded p. 86, § 60 what acts are or are not within particular phrases p. 87, § 61 "accountable " p. 88, § 61 "all matters" p. 88, § 61 "attend to business " p. 88, § 61 "borrow" p. 88, § 61 "business and financial agent " p. 88, § 61 "buy and sell" p. 88, § 61 "canvass" p. 88, § 61 " cash " p. 89, § 61 " cost " p. 89, § 61 "cite and appear " p. 89, § 61 " claims and effects " p. 89, § 61 "collect " pp. 89, 90, § 62 "deliver " p. 91, § 62 " deposit " p. 91, § 62 " draw, indorse, and accept bills " • p. 91, § 62 "execute" pp. 91, 92, §62 "give dischai^ges" p. 92, § 62 " hire " p. 92, § 62 " indorse " p. 92, § 62 "invest" p. 92, §63 "lands " p. 93, § 63 " lay out " p. 93, § 63 "loan " p. 93, § 63 " make deeds and sales " p. 93, § 63 " manage " p. 94, § 63 " mortgage" p. 94, § 63 "obtain securities'' p. 94, § 63 " place " p. 94, § 63 "procure a purchaser" p. 94, §63 " purchase " p. 94, § 64 " rent and care for " p. 95, § 64 INDEX. Agency (Continued). ' receive checks " p. 96, 'release" p. 96 ' sell " pp. 96-99: ' sell and convey " p. " sell at retail " p, " settle " p. "ship" ^ p. " sign name" p. " solicit " p. " subscribe " p. " sue " p. " take careof " p. " transact " p. Implied power of agent p. advertising p. admissions p. arbitrate p. assign p. auction p. board at hotel p. borrow p. cancel p. compromise p. collect p. confess judgment p. employing agents , .p. employing counsel p- exchange or barter p. deliver P- foreclose mortgages P- give credit p. gua;ranty , , P- hiring horses P- indorsing P- lease P- legacy P- license P- loan P- making accommodation notes p- making deeds pp. 106, negotiable paper PP- 107, mortgage P- pledge P- purchase • P- receive payment PP- HO- renting store P 99, . 99, 100, 100, 101 101 100, 100, 100, 101 102, 102, 102, 103, 103, 103, 103, 103, 103, 103, 104, 104, 104, 104, 105, 105, 105, 105; 105, 105, 106, 106, 106, 106, 106, 106, 107, 108, 108, 109. 109, 113, 113, VI INDEX. Agency (Continued). rescind contract.^ p. 113, §72 sell pp. 113, 114, § 73 settle p. 114, §73 suretyship p. 114, § 73 tender p. 114, § 73 transfer p. 114, § 73 voluntary conveyance p. 114, § 73 ■waiver pp. 114, 115, § 74 ■warranty pp. 115, 116, § 74 powers of agents of carriers p. 116, § 75 agents of railroads pp. 117, 118, § 76 agent must execute contract in principal's name p. 157, § 99 rule as to instruments under seal pp. 157-160, § 100 rule as to instruments not under seal pp. 161-165, §§ 101, 102 the rule of desoriptio personse pp. 165-168, § 193 Duties of agent to principal. to act as agent "-PP- 120, 121, § 78 where service is gratutious pp. 120, 121, § 78 to perform duties in person p. 121, § 79 to give notice to principal pp. 121, 122, § 80 to obey orders and instructions of principal pp. 122-126, § 81 to act in good faith and in principal's interest pp. 126, 127, § 82 to act with skill and diligence pp. 127, 128, § S3 liability of agent for faults of deputies p. 129, § 84 profits made by agent belonging to principal ...,^....^»„„.. »..,.». .p. 129, 130 Ziabilities of agent to principal. agent not liable for losses in business ,^ ....-.«.,... .p. 130, § 86 liability of agent for loss of money deposited by him p. 131, § 87 liability of agent for remittances made him p. 131, § 88 agent must keep accounts and account for money pp. 132, 133, § 89 agent cannot dispute principal's title pp. 133, 134, § 90 agent must not mix his property with principal's p. 134, § 91 agent must not make profits pp. 135-137, § 92 agent cannot purchase principal's property pp. 137-141, § 93 or sell his own property to principal pp. 137-141, § 93 agent cannot be agent for two opposite parties pp. 141-143, § 94 JJiahiUties of principal to agent. agent entitled to compensation for services pp. 144^150, § 95 when agent not entitled to compensation pp. 151, 152, § 96 agent entitled to reimbursement from principal pp. 152-156, § 97 when agent not entitled to reimbursement p, 153, § 98 Liability of agent and principal to third persons. when principal bound by instrument executed by agent pp. 157-168, §§ 99-103 when agent not bound ..pp. 161-168, §§101-103 when agent personally bound, descriptio personse p. 165, § 103 INDEX. vii Agency (Continued). agent acting within authority binda principal and not him- self pp. 168-170, § 104; p. 190, § 113 rule where principal is in a foreign country p. 170, § 105 rule where principal is irresponsible p. -17], § 106 rule where principal is not disclosed pp. 172-176, § 107 agent may bind himself personally pp. 176-179, § 108 as by paying over money after notice p. 179, § 109 liability of agent acting without or beyond authority, .pp. 180-183, § 110 agents not personally liable for torts p. 184, § 111 exceptions, when agent liable p. 185, § 112 liability of principal for torts of agent pp. 191-193, § 114 Liability of third persons to principals and agents. principal may enforce contract made by agent with third person pp. 194^197, §§ 115, 110 third parties may plead fraud or misrepresentation p. 197, § 117 or equities p. 198, § 118 rule as to contracts under seal p. 199, § 119 rule where exclusive credit has been given to agent p. 199, § 120 principalmayrecovermoney wrongfully paid by agent, .pp. 199, 200, § 121 principal may sue for torts to property in agent's hands p. 200, § 122 agent cannot sue on contract made by him as agent p. 200, § 123 exceptions, when agent may sue pp. 201-204, § 124 agent's right to sue controllahle by priacipaL p. 204, § 125 Alien Enemies. as principals p. 5, § 5 as agents p. 6. § 6 Arrest. exemption of attorney from pp. 227, 228, § 138 Assessments. See Cobpqbauons. Apprenticps. who are apprentices p. 434, § 232 who may bind p. 434, § 232 who may take p. 434, § 232 contract of apprenticeship pp. 434, 435, §§ 232, 233 assignment of contract p. 435, § 232 duties of master to apprentice pp. 435, 436, § 234 right of master to discharge apprentice p. 436, § 235 right of master to earnings of apprentice p. 436, § 236 right of parents and guardians p. 437, § 237 liabilities of parent and guardian p. 437, § 238 what is faithful service pp. 437, 438, § 239 what will excuse faithful service.^ •»*„-.^.^ „.--.._. .p. 437, 438, § 239 Attorneys at Law. attorney defined p. 205, § 126 admission or license to practice essential pp. 206-208, § 127 nature of the office of attca:ney t pp. 208, § 128 Vlll INDEX. Attorneys at Law (Oontmuecl). power of court to disbar attorneys pp. 209-211, § 129 what are good grounds for disbarment pp. 212-215, § 130 what are not good grounds for disbarment pp. 215-219, § 131 suspension from practice pp. 219-221, § 132 previous conviction not necessary p. 221, § 133 practice in disbarment proceedings pp. 222-225, § 134 evidence pp. 222-225, § 134 appeal p. 225, § 134 mandamus lies to restore disbarred attorney p. 225, § 136 attorney may be readmitted — PP. 225, 226, § 137 Privileges and eicemptions of attorneys. attorney exempt from arrest in civil suits, when pp. 227, 228, § 138 privilege of suing p. 228, § 139 exemption from civil duties, juror, etc p. 229, § 140 liability of attorney for words spoken in judicial pro- ceedings pp. 228-231, § 141 attorney must defend destitute person without fee p. 231, § 142 attorney cannot act in diverse capacities pp. 231-233, § 143 or on both sides of case pp. 233-235, § 143 attorney prohibited from purchasing demand in suit p, 235, § 145 privileged communications between attorney and client, pp. 236, 237, § 146 extent of privilege p. 240, § 146 attorney cannot be compelled to testify in court as to conversations with client pp. 240-243, § 146 exceptions, when privilege does not attach pp. 243-250, § 147 attorney cannot become surety for client p. 250, § 148 right of attorney to be witness in cause p. 251, § 149 Liability of attorney to third persons pp. 252, 253, § 150 for acting in name of party without authority p. 253, § 151 liability to third persons on implied contracts p. 253, § 152 liability of attorney for costs and fees pp. 254^256, § 153 liability of attorney for trespass pp. 256-258, § 154 liability of attorney for malicious prosecution^ pp. 258, 259, § 155 Authority and powers of attorney. attorney's authority is evidenced by his retainer pp. 269-263, § 156 attorney's authority to appear is presumed p. 263, § 157 but court may order authority to be produced pp. 264-266, § 158 appearance for several, effect of p. 266, § 159 appearance by attorney binds party, though unauthor- ized pp. 267, 268, § 160 attorney cannot delegate his authority pp. 268-270, § 161 law partnerships pp. 270-272, § 161 law clerks p. 272, § 162 authority of attorney, how terminated p. 272, § 163 by dissolution of partnership . . . .' pp. 272, 273, § 164 by act of parties i pp. 273-276, § 165 INDKX. ix Attorneys at La-*? (Continued). by termination of suit ,,_.„,.pp. 276, 277, § 166 by death p. 277, § 167 by oth?r causes p. 277, § 168 implied power of attorneys pp. 278, 279, § 169 admissions p. 280, § 170 aflSidavits p. 280, § 170 altering securities p. 280, § 170 appeal pp.280, 281, § 170 arbitration , p. 281, § 170 arrest p. 282, § 180 assignment p. 282, § 170 attachment p. 282, § 170 compromise pp. 282-285, § 171 continuance p. 285, § 171 contract p. 285, § 171 discharge , p. 285, § 171 discontinuance p. 285, § 171 employing counsel p. 286, § 171 error p. 286, § 171 executing bonds p. 286, § 171 execution p. 286, § 171 guaranty p. 286, § 171 judgment pp. 286, 287, § 172 payment pp. 287-289, § 172 process p. 290, § 173 purchase p. 290, § 173 release p. 290, § 173 sell p. 290, § 173 set-off p. 291, § 173 sue p. 291, §173 supplementary proceedings p. 291, § 173 waiver and release pp. 291, 292, § 113 extent of authority of attorney as to time pp. 293, 294, § 174 ratification of unauthorized acts of attorney...... '-PP- 29^> ^^> § ^75 LiaUlity ofaMmney to client. dealings between attorney and client p. 296, § 176 attorney must render accounts; mixing money pp. 297, 298, § 177 attorney must notify client of collection of money p. 298, § 178 attorney must pay over money collected , pp. 298-300, § 179 liability of attorney for negligence; degree of skill re- quired of him pp. 301-303, § 180 negligence a question of fact p. 303, § 181 liabiUty for mistakes of law pp. 303, 304, § 182 liability for mistakes in drawing papers; pleadings p. 305, § 183 liability for mistakes in prosecution of suit pp. 306-308, § 184 liability for mistakes in giving advice......^ . „ pp. 308, §09, § 185 X TNDEX. Attorneys at Law (Continued). attorney must follow instruction of- client pp. 309, 310, § 187 liability of attom^ for mistakes or frauds of agents or associates pp. 310, 311, § 188 liability of attorney for acting without authority p. 311, § 189 liability of attorney for acting in excess of authority. . pp. 311, 312, § 190 attorney not liable as to matters outside his profession p. 312, § 191 remedy as against attorney; proceedings are not affected p. 312, § 192 summary jurisdiction of court over attorneys p. 313, § 193 when it will and will not be exercised. . .■ p. 314, § 194 for what acts it will and will not be exercised.. pp. 315-318, § 195 lAahility of client to attorney. attorney or counsel may sue for services. pp. 319-322, § 196 contract to pay for services implied pp. 322-324, § 197 how amount of compensation is determined. pp. 324-328, § 198 value of services may be shown by experts p. 327, § 198 what compensation allowed where no express contract. pp. 329-331, § 199 attorney may deduct fees from funds in his hands p. 331, § 200 compensation out of fund in court p. 332, § 201 retainer must be proved pp. 333-338, § 202 and that services were rendered pp. 338, 339, § 203 services in appellate courts ; pp. 339, 340, § 204 when attorney cannot recover compensation pp. 340-343, § 20S attorney may make special contract for compensa- tion pp. 343-349, §§ 206, 207 •jvhen such contracts not sustainable p. 349, § 208 vSect of interruption of service on contract pp. 350, 351, § 209 by withdrawal from case p. 351, § 210 by dismissal from case. . , pp. 351-355, § 211 Auctioneers. sales at auction, nEiture and effect of. pp. 356-359, §212 tvho are auctioneers; license , pp. 359, 360, § 213 duties of auctioneers pp. 360, 361, § 214 powers of auctioneers. pp. 361, 362, § 215 auctioneer as agent to sign contract of sale under stat- ute of frauds pp. 363-368, § 216 powers not possessed by auctioneer pp. 368, 369, § 217 liabilities of auctioneers pp. 369-373, § 218 rights and liabilities of bidders pu. 3"3-378, § 219 fictitious bids, agreement not to compete pp. 378-386) § 220 compensation of auctioneer; right to fets and commis- sions pp. 386-388, § 221 Authority of Agent. See Agenct. Bankruptcy. of principal, effect of on agent's authority p. 66, § 48 of agent, effect of on authority p. 66, § 49 effect of on contract of hiring. p. 494, § 284 INDEX. xV BroKers. defined; different classes of pp. 389-393 § 222 bill brokers ^ pp. 390-393, § 222 insurance brokers pp. 390-393, § 222 merchandise brokers pp. 390-393, § 222 pawnbrokers pp. 390-393, § 222 real-estate brokers pp. 390-393, § 222 ship-brokers pp. 390-393, § 222 stock-brokers pp. 390-393, § 222 authority of brokers in general pp. 393, 394, § 223 what authority not implied to brokers pp. 394-396, § 225 duties and liabilities of brokers pp. 396, 397, § 226 broker's compensation; right to fees and commissions, .pp. 397-4a4:, § 227 Citizensh.ip. of corporations pp. 619, 620, § 350 Combinations. among workmen, legality of. ., p. 499, § 290 Construction of Instrument. See Agenct. Convicts. as principals p. 5, § 5 Corporations. See also Foreign Corporations. corporations defined p. 397, § 332 corporations, sole and aggregate p. 598, § 332 corporations, public and private pp. 598, 599, § 332 quasi public corporations p. 598, § 332 what are franchises p. 641, § 642 Formation of corporation. corporation is created by state p. 599, § 333 power to create corporation is inherent in state p. 599, § 333 limitation in constitution on legislative power to create p. 600, § 333 power of Congress to charter corporations pp. 600, 601, § 334 power to charter a corporation cannot be delegated p. 601, § 335 exceptions, mere ministerial duties p. 601, § 335 form of grant of corporate franchise pp. 601, 602, § 336 state may ratify unauthorized corporation pp. 602, 603, § 337 franchise must be accepted by corporators pp. 603, 604, § 338 acceptance may be express or implied pp. 604, 605, § 339 incorporation under general laws pp. 606-609, § 340 procedure pp. 606-609, § 340 conditions precedent to grant — performance, when necessary . p. 609, § 341 corporations by prescription p. 610, § 342 who may be corporators p. 610, § 343 proof of incorporation, how made pp. 610-612, § 344 performance of conditions precedent, howmade p. 612, § 34 proof of existence of corporation p. 638, § 372 grants of special privileges of corporation strictly construed.. p. 641, § 375 the corporation name pp. 676, 677, § 404 the corporation seal......... pp. 677-679, § 405 Xil INDEX. Corporations (Continued). Powers of corporoctions. are those conferred by ctiarter-or necessary to carry out its objects pp. 623, 624, 63S-641, §§ 352, 373, 374 acts or contracts of corporations in violation of rules of law invalid p. 624, § 353 statutes p. 624, § 354 provisions of charter p. 625, § 355 probihitiona in statute — when are prohibition acts void p. 625, § 356 charter — when are prohibition acts void p. 626, § 357 not void pp. 664-667, §§ 357, 358 acts of majority of corporators bind corporation p. 627, § 360 but not where act is unauthorized by charter pp. 627, 628, § 361 ultra vires contract may be avoided if unexecuted p. 629, § 362 but not as to persons without notice p. 629, § 362 transfer of property valid though ultra vires p. 630, § 363 and so as to executed contracts pp. 630-633, § 363 where contract is not enforceable because ultra vires bene- fits received recoverable p. 632, § 364 corporation is liable for torts pp. 633-635, § 367 even where committed in ultra vires transaction p. 635, § 368 validity of acts of do facto corporation pp. 635, 636, § 369 fraud in obtaining charter no defense in collateral proceeding . p. 636, § 370 misuser or non-user of charter no defense in collateral proceed- ing p. 636, § 370 but corporation must be in existence either de jure or de facto pp. 637, 738, § 371 Implied powers of corporation. to act as agent .^_-_ p. 6, § 6 to transfer franchises p. 642, § 377 to consolidate t)p. 642-645, § 378 to purchase and hold property pp. 645-647, § 379 to transfer and dispose of property pp. 647, 648, § 38 to hold property in trust pp. 648, 649, §381 to take by devise; p. 649, § 382 to borrow money and make debts p. 649, § 383 to mortgage property pp. 650, 651, § 384 to issue negotiable paper pp. 651-653, § 385 to sue and be sued p. 653, § 386 other acts pp. 654, 655, § 387 to expel members pp. 655-658, § 388 remedies for wrongful expulsion — mandamus p. 658, § 389 to do business in foreign state p. 659, §390 to employ surplus money in property p. 659, § 391 to alter its business p. 660, § 392 to issue preferred stock pp. 661-666, § 393 rights of preferred stockholders pp. 664-666, § 391 INDE2'. xiii Corporations (Costiaoed). to alter charter _ „ p. 667, § 395 ■what are not alterations in charter pp. 668, 669, § 396 grant of additional franchise , .p. 669, § 396 discharge of obligations to state ■•■•.?• 669, § 396 effect of alteration on liability of stockholders^ pp. 669, 670, § 397 to engage in different kinds of fcusinfiss pp. 670-672, § 398 to wind up business p. 672, § 399 to enter into partnership j. 673, § 400 to deal in shares of other corporations. , . p. 673, § 401 to alter amount of capital stock pp. 674, 675, § 402 to purchase its own shares .pp. 674, 675, § 402 to give away its property p. 675, § 403 Officers and agents, powers and liabUities of. p. 680, § 406 promoters, powers of, liability of corporation for acts of p. 681, § 407 board of directors, powers of pp. 682-684, § 408 but directors cannot make radical changes pp. 685, 6S6, § 409 or wind up corporation p. 686, § 410 directors are trustees for corporation pp. 687-692, § 411 must not have conflicting interests , p. 692, § 412 liabilities of director for fraud pp. 694^696, § 413 for neglect pp. 696-698, § 414 for mistEukea in good faith." pp. 698, 699, § 415 directors must act as a board pp. 699, 700, § 416 majority of directors govern p. 700, § 416 directors' meetings.. p. 701, § 417 power of directors to delegate authority to employ agents, .p. 702, § 418 president, powers and liabilities of pp. 705-710, § 420 secretary and treasurer, powers and liabilities of pp. 703-705, § 419 removal of ofScers of corporations pp. 710-713, § 421 acts of agents within their authority bind corporation. p. 714, § 422 otherwise when beyond the corporate powers p. 715, § 423 or are not in form required by charter /p. 716, § 424 kiiowledge by third person of limitation in power of general agent not presumed p. 716, § 425 knowledge by third persons of provisions of charter pre- sumed. '. p. 717, § 426 but not of by-laws or regulations p. 718, § 427 liability of corporation for fraudulent representation of agent., p. 718, § 428 ratification by corporation of act of agent pp. 719, §§ 429, 430 ratification implied from conduct p. 719, § 431 what acts cannot be ratified by stockholders. . .pp. 720, 723, §§ 432, 434 implied ratification by stockholders pp. 720-722, § 433 Siochkolders, rights and UdMUties of. conicact of membership in corporation, how created. . .pp^ 725-729, § 735 elatutory method of becoming stockholder must be fol- lowed pp.729, 730, §436 XIV INDEX Corporations (Coatimied). stockholder not bound on subscriptiotj until corporatioA is legally authorized pp. 730-732, § 437 exceptions, when contract cannot be avoided p. 732, § 438 subscriber not bound until all shares are taken pp. 732-734, § 439 liability in promise to form corporation and take shares, pp. 734, 735, § 440 mutual assent necessary to contract of subscription pp. 735-737, § 441 when preliminary deposit a condition precedent pp. 737, 738, § 442 contract of subscription, how proved p. 738, § 443 liability of subscriber to pay for his shares ..pp. 738-740, § 444 but capital agreed must have been Subscribed p. 740, § 445 other conditions precedent p. 741, § 446 assessment and calls, who may make p. 741, § 447 notice of time and place of pajrment pp. 742, 743, § 448 liability of subscriber after abandonment of enterprise. p. 744, § 449 subscriptions on conditions precedent pp. 744-748, § 450 when subscriber is bound unconditionally pp. 748-751, § 451 subscriptions obtained by fraud, when voidable pp. 751-753, § 452 when not v»idable pp. 753-755, § 453 effect of laches of subscriber p. 756, § 454 subscriber cannot rescind contract of subscription pp. 756-758, § 455 as for violation of charter p. 758, § 456 forfeiture of shares for non-payment of assessments pp. 759-762, § 457 transfer and assignment of shares, right to stockholder to p. 762, § 458 Then stockholder liable notwithstanding transfer p. 763, § 459 effect of transfer of shares p. 764, § 460 ' transfer must be made according to forms prescribed by charter pp. 765-767, § 461 equitable assignments of shares, effect of pp. 767-769, § 462 assignment by indorsement of certificate pp. 769, 770, § 463 rights of purchaser pp. 770, 771, § 464 lien of corporation on shares pp. 771-774, § 465 refusal of corporation to allow transfer-of shares, reme- dies pp. 774^766, § 467 liability of corporation for permitting unauthorized, transfers pp. 776-779, § 468 status of shares as property pp. 779, 780, § 468 profits, what are p. 780, § 469 dividends and interest payable only out of p. 780, § 470 discretion of directors in distributing profits pp. 780, 781, § 471 stock dividends p. 781, § 472 new stock, right of old stockholder ta p. 782, § 473 payment of dividends pp. 782-786, § 474 right of stockholder to examine books of corporation. . .pp. 787-789, § 475 other rights of stockholders ^.-p. 788, § 475 stockholders' meetings, notice of time-ood place~essen- tial „ pp^790, 791, § 476 INDEX. XV Corporations (Continued). who may call pp. 791, 792, § 477 general and special meetinga,. pp. 792, 793, § 478 adjourned meetings .^ p. 793, § 479 who have right to vota. pp. 793-799, § 480 election of officers .pp. 799-803, § 481 power of majority to make by-laws pp. 803, 804, § 482 what by-laws are valid pp. 805, 806, § 483 what by-laws are not valid pp. 806, 807, § 484 stockholders cannot sue for injuries to corporation pp. 807-809, § 485 exception, when stockholders may sue pp. 810-815, § 486 court will not interfere with discretion of directors at suit of stockholders pp. 815, 816, §487 stockholders' bill, who must be complainants pp. 816, 817, § 488 who must be defendants p. 817, § 489 stockholders not personally liable on corporate con- tracts pp. 817, 818, § 490 for debts of corporation pp. 818, 819, § 491 capital stock a trust fund for cieditors— pp. 819, 820, § 492 shares must be paid up in money pp. 820-823, § 493 property cannot be taken in lien of money, when pp. 823, 824, § 494 right of creditors of corporations to unpaid assessments, pp. 824-827, § 495 liability of stockholders to creditors by statute pp. 827-830, § 496 construction of statutes as to personal liability pp. 831-834, § 497 nature of the statutory liability pp. 835-837, § 498 personalliabiUtyforwagesof employees, laborerSj'etc. pp. 837-839, § 499 rightsofbonafideholderof shares apparentlypaid up. pp. 839, 840, § 500 right of creditors to interfere in management of corporation- p. 840, § 501 to prevent dissolution or alteration in charter p. 840, § 502 dissolution of corporation, by expiration of time. pp. 841, 842, § 503 by happening of contingency — pp. 841, 842, § 503 by surrender of charter pp. 842-844, § 504 in other cases - -pp- 844^846, § 505 by forfeiture for misuser or non-user pp. 846-850, § 506 effect of dissolution of corporation pp. 850-854, § 507 revivor of corporation...... ».- « P- 854, § 508 Ck>sts. Uabilityof attorneyfor f p. 254-256, § 153 Death.. effect of on contract of hiring p. 496, §287 of principal, effect of on agent's authority pp. 63-65, § 46 of agent, effect of on agent's authority » pp. 65, 66, § 47 effect of on authority of attorney 4"- 267, § 167 Delegation of Authority. See also Attoknbt ai Law. an origiual authority may be delegated. p. 25, § 25 exception, illegal acts - p. 25, § 25 exception, personal acts P- 25, § 25 XVl INDEX. delegation of Authority (Continned). a delegated authority cannot be delegated pp. 26-28, §§ 26, 27 exceptiona „ „ pp. 28-30. § 28 Directors. See Cobpqbaxion9. Dissolution. of corporation pp. 841-S54, §§ 50S-S07 Dissolution of Agency. modes of disaolviog relation of principal and agent p. 55, § 42 by performance of object pp. 56, 57, § 43 by iapae of time pp. 56, 57, § 43 by act of principal pp. 57-62, § 44 principal may revoke agent's authority at any time. . .pp. 57, 58, § 44 except when power is coupled with interest pp. 59, 60, § 44 or is founded on a consideration pp. 69, 60, § 44 by act of agent p. 62, § 45 by death of principal pp. 63-65, § 46 by death of agent pp. 65, 66, § 47 by bankruptcy of principal p. 66, § 48 by bankruptcy of agent p. 66, § 49 by marriage of principal pp. 66, 67, § 50 by marriage of agent p. 66, § 50 by insanity of principal p. 67, § 51 by insanity of agent p. 67, § 52 by destruction of the subject-matter of the agency p. 67, § 53 by war , p. 68, § 54 from what time revocation of agenfs authority takes effect. pp. 68-71, § 55 Dividends. See Corporations. Factors. factors defined p. 414, § 227 del credere agents defined p. 416, § 227 implied authority of factors. p. 420, § 228 what authority not implied to factor pp. 421, 422, § 229 duties and liabilities of factors pp. 422-432, § 230 Fellow-servants. See Master and Servant. Foreigr<^ Corporations. grant of franqhise cannot exteQd. beyond liouts of state granting it pp. 612-614, § 346 corporation is by .co;nity pernjitted to do businessin for- reign state pp. 614-616, § 347 but subject to local laws pp. 616, 617, § 348 citizenship of corporations within federal laws p. 618, § 349 foreign corporations may be sued pp. 619, 620, § 350 service of process on foreign corporations • > i > . . , p. 620, § 351 Oeneral Agent. See Aoenoy. Guardian. See Apprentices. Infants. as principals , , , 1 1 . . i • • • > < f • . . . . . .p. 4, § 3 as agents p. 5, § 6 INDEX. xvii Insanity. of principal, effect of p 57 § 5^ of agent, effect of p. 67, § 52 Joint Principals. are not agents for each other p. 20, § 18 except when they are partners ; p. 20, § 19 or part owners p, 21 § 19 rights of joint principals p. 21, § 20 liabilities of joint principals p. 21, § 20 Joint Agents. authority given to two agents must be exercised by both. .pp. 21, 22, § 21 one cannot delegate his power to the other p. 22, § 21 where partnership is an agent, one partner cannot act after death of the other p. 22, § 21 by usage two joint agents may act p. 22, § 21 and where power is coupled with interest p. 22, § 21 or when joint power is given by separate instruments p. 23, § 21 or where agency is for public purpose p. 24, § 22 liability of joint agents. p. 24, § 23 Juror. attorney exempt from duties of , p. 229, § 140 Iiegacy. services rendered in expectation of p. 444, § 247 Lien. of corporation on shares of stock pp. 771-774, § 465 Iiunatics. as principals p. 4, § 4 Uaster and Servant. See also Affbentices. who are servants p. 433, § 231 contract of service need not be in writing p. 440, § 240 implied promise to pay for services pp. 440, 441, § 241 right of intruder to recover for services pp. 441, 442, § 242 right to recover for services rendered through fraud or duress . p. 442, § 243 right to recover for iUegal or immoral services p. 443, § 244 promise to pay implied from request p. 444, § 245 exception, request without benefit p. 444, § 246 services rendered in expectation of legacy p. 444, § 217 presumption that services are rendered for hire p. 445, § 248 exception, near relatives pp. 445-447, § 249 entire contract for services, compensation not recover- able until work completed pp. 447, 448, § 250 contract abandoned, no recovery for part pp. 448, 449, § 251 exception, where quantum meruit recoverable pp. 450-454, § 252 hours of labor p. 452, § 253 extra hours, when compensation recoverable for p. 453, § 234 work on Sunday, compensation p. 454, § 255 right to order servant to different en^ployment pp. 454, 455, § 256 xvm index:. Slaster and Servant (Conticmed). increased duties, extra compensation pp. 455-458, § 257 servant cannot be compelled to make up lost time, p. 468, § 259 personal contract cannot be assigned p. 458, § 253 general hiring is prima iacie for what term pp. 459-462, § 260 continuance in service after expiration of term p. 462, § 261 regnlations of master binding on servant pp. 462, 463, § 262 duty of servant to keep master's secrets p. 463, § 263 duty of master to provide work p. 464, § 264 board of servant p. 464, § 265 measure of compensation of servant, right of servant to wages pp. 465-470, § 266 master may recoup damages pp. 470, 471, § 267 right of master to earnings of servants p. 471, § 268 right to discharge servant by contract pp. 472, 473, § 269 by law p. 474, § 270 what are good grounds for dismissal pp. 475^78, § 271 involuntary breaches by servant p. 479, § 272 discharged servant must leave peaceably p. 480, § 273 servant may recover wages to time of dismissal p. 480, § 274 servant occupying master's house not a tenant p. 481, § 275 remedies of servant for wrongful discharge pp. 482-486, § 276 servant bound to seek other employment pp. 486-489, § 277 waiver by servant of wrongful discharge p. 489, § 278 waiver by master of breach or forfeiture p. 490, § 279 what will justify servant in abandoning service p. 491, § 280 dissolution of contract of service by expiration of term or consent p. 492, § 281 when contract may be dissolved by either party p. 493, § 282 by dissolution of partnership p. 494, § 283 by bankruptcy of master p. 494, § 284 by abandonment by servant p. 495, § 285 by dismissal by master p. 479, § 286 by death or disability p. 496, § 287 right of master to sue for injury to servant pp. 496, 497, § 288 for enticing servant from service pp. 497, 499, § 289 combinations among workmen ^^ p. 499, § 290 Liabilities of master and servant to third persona. master liable for torts of servant „ . „ ,, .pp. 503-507, § 291 willful and malicious acts of servant pp. 607-509, § 292 trespasses of servant pp. 509-511, § 293 who are " servants," for whose acts master is liable. . . .pp. 511-515, § 294 master not liable for acts of independent contractor pp. 515-521, § 295 exceptions, where work is a nuisance or dangerous per se pp. 521-523, § 296 where duty is imposed by contract p. 523, § 297 where duty is imposed by law pp. 524, 525, § 298 INDEX. XIX f Master and Servant (Continued). where employer directs work pp. 525-527, § 299 other cases where master is liable p. 527, § 300 liability of servant to third person pp. 592, 593, § 329 Liability of master to servant. master not generally liable for injury to servant pp. 528-531, § 301 exceptions, defective machinery, buildings, or appli- ances pp. 531-535, § 303 latent defects or dangers pp. 535-538, § 303 duty of railroads to servants employed pp. 538-540, § 304 knowledge by master of defect necessary pp. 540-542, § 305 direct negligence of master p. 542, § 306 concurrent negligence of master and fellow-servant p. 543, § 307 unsuitable or incompetent fellow-servants pp. 544-547, § 308 where servant an infant , pp. 547-549, § 309 liability of master to servant by statute pp. 549-554, § 310 servant waives danger by remaining in service after notice pp. 554-558, § 311 except where master has promised to remedy defect, .pp. 558-560, § 312 contributory negligence of servant, failing to notify master of defect p. 560, § 313 going into dangerous situation by command of master pp. 561-564, § 314 other cases of contributory negligence pp. 564-568, § 315 what not contributory negbgenoe in servant p. 568, § 316 the doctrine of " comparative negligence " pp. 568, 569, § 317 contracts between master and servant as to injuries . . .pp. 569, 570, § 318 who are "fellow-servants," common employment the test pp. 570-577, § 319 who are not " fellow-servants " pp. 577-579, § 320 superior servant a vice-principal, not a fellow-servant, pp. 580-585, § 321 servant having charge of construction or repair of machinery used by other servants p. 583, § 322 servants of different masters pp. 584-586, § 323 when relation of master and servant does not subsist p. 586, § 324 where servant is on his own business pp. 586^ 587, § 324 volunteer assisting servant becomes a " fellow-aer- vant " pp. 588, 589, § 325 evidence of incompetence of fellow-servant pp. 589, 590, § 326 evidence of negligence in machinery and ap- pliances pp. 590-592, §§ 327, 328 liability of servant for damages to master through his neglect. p. 593, § 330 liability of servant to fellow-servant p. 594, § 331 Mistake. liability of attorney for pp. 303-309, §§ 182-185 Malicious Prosecution. liability of attorney for pp. 258, 259, § 155 XX INDEX. Mandamus. lies to restore disbarred attorney .p. 25S, § 136 Uarriage. of principal, effect of pp. 66, 67, § 50 of agent, effect of p. 66^ § 50 Married Women. may be principals , , p. 4, § 4 may be agents p. 5, § 6 ITegligeiLce. See Agency; Attorneys at Law; Masteb^and Servant. Notice. of limitation in powers of agent pp. 75-82, § 66 Officers. See Corfobations. Parent and Child. See Appkentices. Partnership. partners are agents for each other p. 20, § 19 effect of death of one partner on agency %f partnership p. 22, § 21 dissolution of, effect of on authority of attorney pp.-272, 273, § 164 effect of dissolution of, on contract of hiring p. 494, § 283 Pauper. attorney obliged to defend gratuitously p. 231, § 142 Preferred Stock. See CoBPOBAxioNa. Prescription. corporations by p. 610, § 343 Privileged Communications. See Attobnxy and Client. Property. status of shares as .pp. 779, 780, § 468 Bailroads. See Master and Servant. Batiflcation. of unauthorized acts of agent by principal pp. 31-35, § 29 must not divest vested rights pp. 35, 36, § 30 act ratified must not be illegal or void pp. 36, 37, § 31 act must have been done on behalf of principal p. 37, § 32 principal must be in existence p. 38, § 33 ratification must be made knowing all the facts pp. 38-40, § 34 ratification once made is irrevocable p. 40, § 35 ratification absolves agent and estops principal pp. 40, 41, § 36 effect of ratification upon subagent p. 41, § 37 ratification must be entire pp. 41, 42, § 38 what acts of agent cannot be ratified p. 43, § 39 form of ratification pp. 43, 44, § 40 implied ratification by acts and conduct pp. 44-54, § 41 of unauthorized acts of attorney at law pp. 294, 295, § 175 Kevivor. of corporation p>854, § 508 Revocation of Authority. See Dissokttion of Agency. Slander and Iiibel. liability of attorney tor words spoken in judicial proceed- ings pp. 228-231, § 141 TNDEX. XXI Special Agent. See Aoenct. Stockholders. See CoBPORAinnts. Surety. attorney as, for client. .... „ -.— « p. 250, § 148 Torts. liability of corporation for. — . ..,......» .,. ...v... .. ..-—pp. 633-635, § 367 liability of agent for p. 184, § 111 liability of principal for. .- — pp. 191-193, §114 Trespass. UabUity of attorney for ^.^ ^ pp. 256-258, § 154 War. effect of on agent's aathority „., .-.,-. , p. 68, § 54 Witness. attorney as , p. 251, § 149