The distinction has practical importance, as a master is responsible for the acts of a servant, sometimes in cases where the same act or a similar act by an agent will not make his principal liable.

Liability More Important than Definition. In many cases the nature of the act and the circumstances surrounding it will serve to establish the liability, or lack of it, of the principal or master on the one hand, or of the agent or servant on the other, without involving subtle distinctions of definition. At the trial it will be determined, if necessary, whether some act involved liability on the part of the principal or master. The jury will pass on the facts, or where these are undisputed, the judge will determine their legal effect. If the action of the jury seems legally unsound in view of the facts presented and the judge's instructions the judge may set aside the verdict as contrary to the law and facts in the case."

Effect of Statute Law. Recent legislation has provided Statute Law which has done away with some of the earlier fine distinctions, and has made use of the words "employee" or "workman." The greater part of such legislation affects only the relations between employer and employee, and does not touch their relations with third parties. There is some advantage in discussing the law of agency and the law of master and servant separately, in certain respects at least.

AGENCY

Creation of Agency. The functions of an agent are properly contractual. An agency is created ordinarily either by appointment or by ratification. It may be express or implied; if express, it may be either written or oral. If by appointment in the case of personal property, the authority to buy, or sell, or fix prices, may be either written or oral, or perhaps in whole or part by conduct; the request of a principal, written or oral, followed by the entrance upon his duties by the agent, constitutes appointment.

The appointment must be written in certain cases where the principal's act must be in writing, but not in all such cases. In some States it is necessary in case of a lease. In the case of a deed conveying real property, or other instrument which must be executed under seal, the authority of the agent must be under seal also.

Authorization by Contract. The agency is brought about by contract; the authorization, when accepted, is a contract. The agency may be implied as in other cases of contract; if services are rendered, the law implies from their acceptance, not only the assumption of responsibility for the acts, but also a promise to pay for their performance.

Ratification. It often happens that someone performs an act in

behalf of another, for his benefit, substantially as an agent, but without prior authorization, or in excess of authority; if the beneficiary assents to and adopts the action, then by such "ratification," as it is called, a relation of principal and agent is established.

Express or Implied Ratification. This ratification may be express or implied; it may be written, oral, or by conduct; silence is one phase of conduct. The acceptance of benefits from the act constitutes such conduct; acquiescence has sometimes the same effect, this more clearly in a case where the act was one in excess of the authority of an agent.

Principal must be Certain. An act to be subject to ratification must, as a rule, have been openly done by one posing as an agent, in behalf of the person who becomes the principal by ratifying it. While the latter need not be specified, he apparently must be indicated sufficiently to make his identity certain. Assent or adoption by any other person does not create an agency by ratification.

Assent to Legal Acts with Knowledge. To constitute a ratification sufficient to bind the principal, the assent of the principal must be with knowledge of all material facts, or in disregard of them. A principal may ratify any act which he might himself perform, but not illegal acts, nor acts from which he would be estopped. If an act by him must be in writing or other necessary form, his ratification must also be in such form. A ratification once made is irrevocable and binds the principal to responsibility for the acts of his agent, whether in contract or in tort.

Ratification Binds Parties. When ratification has taken place, the third party and principal then become equally bound as the parties to the contract made by the agent. Whether the third party has the right to withdraw pending ratification seems to be not fully settled. The principal can not by ratification give precedence to the acts of his agent over acts of his own in which strangers had acquired rights; for instance, if an agent sells goods and the principal meantime has sold the same goods to a stranger, the principal can not by ratification avoid his own sale to the stranger.

Estoppel. Somewhat along the same line, if a person has encouraged or allowed a third party to believe an agency exists, he is estopped from denying such an agency and is virtually held as principal. The conduct of the principal is measured upon substantially the lines which constitute fraud or deceit as indicated in the chapter on torts.

Agency by Necessity. There is further an agency by "necessity." A wife or minor may thus act for the husband or father in purchasing necessaries; a shipmaster in buying supplies. In the case of delay by act of God, a railroad company may and should sell perishable freight.

Minor as Agent. It is an interesting fact that a minor (under 21 years) may lawfully contract as agent for another although he could not do so

for himself. The law throws its protecting arm around the minor's interests; the principal who employs the minor is competent to take care of himself. The minor is not competent, however, to make the contract of agency between the principal and himself; at least such a contract is voidable by the minor.

Kinds of Agents. In business, there are agents to sell, purchase, collect, execute commercial paper, manage business; to act as bank cashiers, shipmasters, factors, brokers, auctioneers, attorneys at law, and in various other capacities.

Special or General. An agent may be special or general. A special agent is limited in his authority to specific acts. A general agent ordinarily has not unlimited authority or powers, but has full authority or power to do all acts incidental, necessary, or usual to agency in the line of business in which he is engaged. A good example of special agency is that created by a power of attorney authorizing another to do specific acts in the stead of the principal. An example of a general agent is the manager of a commercial or manufacturing establishment. It is evident that a corporation can act only through its officers or agents in general business operations.

Express Authorization. In the case of express authorization of a special agent, the writing should show the extent and character of the agency. In the case of express authorization of a general agent, however, the terms can seldom be complete and explicit. In general, in such cases, any writing will be construed liberally to effect the object, and favorably to an agent as regards any acts done in good faith, and favorably also to a third party. As an aid to determining how far the agency extends, the custom as to agents and general usage in the same or similar lines of business may be invoked, and any ratification by the principal of acts of the agent would have considerable bearing. The principle of ratification is clearly important in connection with agency.

That the line of cleavage as to appointment or ratification will not always be clear, must be evident, and it is the legitimate function of a suit at law to settle any resulting difference of opinion. The burden of proof as to the existence of the agency is on the person dealing with the agent.

Joint Agents. Sometimes two persons are joint agents. The general rule is that in such cases the action of both is essential. Where, however, the intent is apparently otherwise, or where custom serves to determine the status, either one may act. This is also true when partnerships are agents.

Principal Bound by Acts of Agent. Where the relation of agency exists, the principal is bound by the acts of the agent exercised within his authority. He is bound not merely by the agent's contracts, but also by torts com

mitted by him while engaged in acts within the scope of his authority. For example, where a fraud is committed by the agent for the principal's benefit in connection with making a contract, or in case he entices an employee from another employer, acts characteristic of an agent rather than a servant, the principal is responsible; the tort may sometimes be negligence, although more often negligence is an act characteristic of a servant rather than an agent. The principal, however, can seldom be held to criminal responsibility for acts of an agent.

Liability of Agent and Third Party. The agent is also personally liable for torts committed by him, and may be sued if the third party prefers and considers his financial responsibility sufficient. In a similar way the third party is liable to the principal for torts committed in transactions with the agent. On the other hand, the fraud of the third party in connection with a contract acts as a release if the principal so desires.

When Principal is Bound. The principal is bound then: first, when acts of an agent are within the scope of his actual authority; second, when not authorized, but ratified; third, when within the scope of his apparent authority, unless notice is given to the third party. Similarly he may be bound by the acts of his agent even after the termination of the agency in some cases where the third party had no notice of such termination, nor reason to suspect it.

Notice to Agent. The agent represents the principal to such an extent that the latter is bound if the agent acquires knowledge or receives notice in matters within his range of action; and admissions of an agent within the scope of his authority are also competent evidence against the principal.

Delegation of Authority. The general principle prevails that the agent has no power to delegate his authority unless this is expressly or impliedly conferred, because the appointment of agent is with recognition of his fitness. It is held, however, that for ministerial acts performed by clerks and not involving discretion, such authority may be delegated. In modern large business, clerks of varying responsibilities are used, and apparently on the basis of necessity, delegation of authority involving discretion is allowable in extension of subordinate action rather than in the way of substitution, at which the law will surely look askance. The custom of the business is an important matter in justification of such delegation of authority.

Form of Contract by Agent. When an agent, in behalf of his principal, makes a contract, it should be, in its form, in the name of the principal; if it is in the name of the agent, although acting for the principal, the agent will be bound and not the principal, unless from other evidence the fact of agency be apparent. The intent here also is the important element, a question of fact for the jury. A third party may sue or be sued when the

agent has in his own name contracted for an undisclosed principal; in such a suit either the agent, or the principal when he becomes known, may be the party to the suit. If the principal intervenes, the right of the agent ceases. While, in the above cases, the action indicated may be taken with ordinary writings or oral contracts, yet with instruments under seal the principal must be stated as a party, and the same rule holds with negotiable instruments. Sometimes an apparent agent is the real principal, and evidence is admissible on this point.

Acts Without Authority. If a person wrongfully acts for another without authority, and his act be not ratified, the person thus acting as agent is liable to the third party, whether the resulting damages be determined on the basis of breach of contract, or on breach of warranty of authority, or by some other form of action.

Responsibility of Third Party to Principal. A third party, entering into a contract through an agent properly qualified, is responsible directly to the principal. This is true, largely, even when the principal is undisclosed, and the contract was apparently that of the agent. This rule does not hold for instruments under seal or for negotiable instruments. In many business transactions it matters little who the other party is; but every one has a right to choose and if it appears that the third party placed dependence upon the agent personally as the apparent principal, the agent will then be held to be the party to the transaction. Sometimes the third party by mistake or fraud has received money or goods which in good conscience he could not retain; the undisclosed principal will then have his right of action. If the third party has been guilty of fraud to the injury of the undisclosed principal, whether or not by collusion with the agent, the principal again may sue.

Duty of Agent. In the relations of agent and principal with each other it is the duty of the agent to obey instructions unless illegal or impossible, or in emergencies, or where obedience would impair the security for advances made; to exercise proper skill, care, and diligence; to act in good faith, not to his own profit, and not for adverse interests or as agent for both parties to a transaction; to give due information to his principal; to keep accounts, and to account, keep the principal's money separate, and pay it over when due or proper.

Duty of Principal. It is the duty of the principal to pay the remuneration agreed upon, or in the absence of an agreement, the reasonable value of the agent's services; to reimburse for expenses; and to indemnify for acts performed under the agency. To secure these the agent may, if necessary, sue in a court of Law, or in cases of involved accounts, in a court of Equity. In some cases he may have a lien upon goods of the principal in his possession, that is he may have a right to hold the goods