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Agency

( Originally Published 1918 )



An Agent, in law, is a person authorized to act for another, called the principal, the relation between them being known as agency.

Agency is one of the most common and necessary relations of life. Nearly everyone acts every day as the agent of someone else. Thus every clerk in a store is the agent of the proprietor.

Almost all the business of brokers, commission merchants, lawyers, auctioneers, etc., is some sort of an agency. Corporations act wholly by means of agents, viz.: their officers, clerks, etc.

Who May Act as Principal or Agent.—Anyone who is competent to do business for himself may act as principal, and appoint an agent to transact it for him.

A. General Agent is one authorized to represent his principal in all his business of one particular branch.

A Special Agent is one appointed to a particular thing only, or a few particular things.

How Appointed.—An agent's authority may be given orally or by writing; no particular form of words is necessary. In important matters, the agent is often appointed by a written instrument which is called a power of attorney. When thus authorized under seal and said instrument duly acknowledged and recorded, an agent can sign deeds, or other conveyances of real estate or sealed instruments.

Extent of Authority.—The employing of an agent is the act which gives him his authority. An agent has authority to do whatever is necessary or generally done in connection with the purposes for which he is employed. Some employments give very wide latitude of power, and leave very much to the discretion of the agent; others give a very limited authority.

Liability of Principal.—The principal is responsible for the acts of his agent committed in the execution of the agency and which are within the scope of the agent's authority. A distinction is here made between a special and a general agent. If a special agent exceeds or disobeys his instructions the principal is not liable; but if a general agent exceeds his authority the principal will be bound, if the act is within the apparent scope of an agent's authority, when it is such an act as is natural and usual in transacting business of that kind. By appointing him to that business, the principal is considered as saying to the world that his agent has all the authority necessary to transact it in the usual way. For any criminal act, however, of the agent, the principal is not responsible unless he authorized him to cormmit it.

Wrongful Acts of Agents: As to wrongs and injuries, or torts, as they are called in law, the general rule is that the principal is liable to third persons for the wrongful acts of the agent when acting within the scope of his agency. But this does not relieve the agent of personal liability himself.

The Agent's Liability.—1. To his Principal. An agent is bound in transacting the affairs of his principal to exercise all the care which a reasonable man would exercise in his own, and to the utmost good faith. For any loss to the principal through neglect or unfaithfulness, the agent is liable to him. 2. To the Third Party. If an agent conceals his character as an agent, or transcends his authority, or if he expressly binds him-self in any way, he is himself liable to the third party.

Accounting.—The principal may call his agent to an account at any time, and may recover full indemnity for all injuries sustained by reason of the positive misconduct or negligence of the agent, or by his transcending his authority. An agent is not liable to his principal for not accounting until demand, which demand should be made, and sufficient opportunity given him for payment.

Compensation Fees Against the Principal.—An agent is entitled to compensation for his services, and reimbursement for the expenses of his agency, and for personal loss or damage in properly transacting the business thereof.

Sub-Agents.—An agent may in many cases himself appoint another agent and act through him. Such a person is called a sub-agent, and is responsible to him who has appointed him, as his principal. In most commercial transactions sub-agents may be employed.

In Whose Name the Business Is Done.—All business should be transacted and money deposited in the name of the principal.

Mixing Property.—If an agent mixes his own property with that of his principal, so that it cannot be identified, it will all belong to the principal.

Responsibility to Third Party.—Ordinarily a person can only be responsible for his own acts, but an agent's act is really considered as that of his principal. Therefore the rule is that the principal is responsible for the acts of his agent. The principal is bound even though he was unknown at the time the act was done, because he is supposed to derive the benefit of the same.

Ratification.—If a principal ratifies an act done, he is bound by it, whether he had given the agent authority or not. Subsequent ratification is equivalent to prior authority. But if such ratification is made under a mistake of circumstances it is not binding.

Responsibility of Third Party.—A person doing business with an agent is just as responsible to the agent's principal as though he had trans-acted the business with the latter in person.

Revocation.---It is usually in the power of the principal to revoke an agency; but if the power conferred is coupled with an interest, as where an agent has power to sell goods and apply the proceeds to his own use; or if it is given for valuable consideration, and a continuance of the agency is necessary to meet the responsibilities he has assumed in advance, to carry it on, then such agency cannot be revoked at the pleasure of the principal.

How to Revoke an Agency.—It must be done by an express act of the principal or by the act of law. The first implies a written form revoking the power of attorney that has been conferred, or any express declaration to revoke. The second occasion may be the death of the principal or agent.

Notice to Be Given.—Due notice should be given by the principal of such revocation to those who knew of the authority given to such agent, because a general authority may continue to bind the principal after it has been actually recalled, if the agency were well known and the recalling of it wholly unknown to the party dealing with the agent, without that party's fault.

Power of Attorney.—The power of attorney is usually in writing and under seal, though for many purposes it may be created by parol. Strict rules of construction are applicable to these instruments, and courts incline to construe even general powers narrowly rather than broadly. If the power of attorney is to be recorded it should be properly acknowledged before an officer the same as a deed.

General Form of Power of Attorney

Know All Men by These Presents, That I, William Brown, of Chicago, County of Cook, and State of Illinois, have made, constituted, and appointed and by these presents do make, constitute, and appoint, George B. Stadden my true and lawful attorney for me and in my name, place and stead, [here state the purpose for which the power is given], giving and granting unto my said attorney full power and authority to do and perform all and every act and thing whatsoever, requisite and necessary to be done in and about the premises, as fully, to all intents and purposes, as I might or could do if personally present, with all power of substitution and revocation, hereby ratifying and confirming all that my said attorney or his substitute shall lawfully do or cause to be done by virtue hereof.

In witness whereof, I have hereunto set my hand and seal the — day of —, one thousand nine hundred and —.

WILLIAM BROWN. [SEAL]

Signed, Sealed and Delivered in Presence of

...........................

Power to Take Charge of and Carry on Business

Know All Men by These Presents, That I, Henry Saylor, of Aurora, Illinois, do by these presents appoint, constitute, and make R. I. Winters my true and lawful attorney, for me and in my place and stead to take charge of my business of general merchandising at Aurora, Illinois; to purchase and sell for cash or on credit all such articles, goods, merchandise, and wares, as he shall deem proper, necessary, and useful in said business; to sign, accept, and indorse all notes, drafts, and bills; to state accounts; to sue and prosecute, compromise, collect, and settle all claims or demands due or to become due, now existing or here-after to exist in my favor ; to adjust and pay all claims or demands which now exist or may hereafter arise against me, either connected with said business or otherwise.

In witness whereof, I have hereunto set my hand and seal, this — day of —, 19--.

HENRY SAYLOR [SEAL]

NOTES ON AGENCY

A general agent must be of known good character and probity.

A special agent must have the qualities necessary to the purpose of his agency.

An agent who disregards or acts contrary to the instruction of his principal is liable at law to the principal, unless in an emergency where such disregard becomes necessary in the interest of the principal.

An agent may not act for both parties in a transaction. He may not receive a commission from both buyer and seller, unless both are aware of and agree to the double agency.

An agent may not compete with his principal. nor act for himself in the principal's business.

An Indiana court in a well known case decided: "In case it becomes the duty of an agent or a trustee to deposit money belonging to his principal, he can escape risk by making the deposit in his principal's name; or by so distinguishing it in the books of the bank as to indicate in some way that it is the principal's money. If he deposits it in his own name, he will not in case of loss be permitted to throw the loss on his principal."

Where an agent is employed for a definite time, express or implied, and the agent is discharged without cause before the expiration of the time, the principal is liable to the agent the same as in any other breach of contract. In such cases the agent may elect to treat the contract as rescinded, and bring an action to recover the value of his services and money expended.



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