There are three persons con- cerned in the law of agency, viz.: person. These each have rights, duties, and liabilities to the other two. Rights will not be discussed, for the duties and liabilities of one party are generally reciprocally the rights of the other. For convenience these duties and liabilities will be discussed in the following order: 320. Duties of Agent to the Principal. The agent must be loyal to his trust. He must not have interests adverse to his principal's. He must account to the principal for the profits resulting from the contract of agency, less his own compensation. He cannot sell his own property to the principal without disclosing the facts, nor can he dispute the title of the principal to the subject matter of the agency. When acting as an agent, he is the impersonation of the principal and if this fact be remembered it will dispose of the problems which arise from the relation of principal and agent. When he acts adversely to his principal he becomes liable for the damage which he causes. EXAMPLES 1. A confidential agent of a theatrical manager who had a lease on a theater, shortly before his principal's lease expired, secretly secured a lease of the theater for a new term of years for himself personally. The theatrical manager could compel the agent to transfer the lease to him. Davis vs. Hamlin, 108 Ill. 39. 2. A principal employed an agent to buy certain mining stock for him at a price of not more than $150 a share, and at the lowest figure possible. The agent notified him that he had secured the stock at $150 a share and sent him stock of his own. On learning these facts the principal could return the stock and demand his money, and would not be compelled to pay the agent his commissions. Curry vs. King, 6 Cal. App. 568. Must obey instructions. The agent is liable for any loss or damage which may be caused to his principal by a failure to follow reasonable and lawful instructions. The relation of agency depends upon a contract and in this contract the principal may make any conditions which he desires. He also has the right to direct the work which the agent is to perform for him. If no express conditions are specified, the agent must act according to established customs and usages. Any breach on his part will render him liable to the principal, who can sue and recover for the resulting damage. EXAMPLE Wilson, a collector, was directed to remit money by mail in denominations of $100, but he remitted a large package of bills of smaller denomination, which were lost. He became responsible for the loss to the principal, having failed to follow instructions. Wilson vs. Wilson, 26 Pa. St. 393. Agent must not be negligent. The care, skill, and diligence required of an agent must be commensurate with the circumstances and nature of his undertaking. He must use the same degree of care as other persons employed in similar undertakings would employ. He is not an insurer against all loss, like a common carrier, but must use ordinary care at all times, and if injury results to his principal from a failure in this respect, he may be sued for the damage thereby occasioned. EXAMPLE Sears, an insurance agent, was ordered by his company to cancel fire insurance on a house which had become a dangerous hazard. Sears neglected to cancel the insurance and the house was destroyed, the company being compelled to pay the owner $1000 under the policy. The company was then entitled to recover this amount from Sears, it having been damaged by his negligence. Franklin Ins. Co. vs. Sears, 21 Fed. 290. To Act in Person. Another duty of the agent to his principal is to act in person, except when authorized either by his principal or by an established custom to appoint sub-agents. When an agent appoints a sub-agent, the liability of the agent extends only to the use of care and prudence in the selection of the subagent, but does not extend to cover injuries or wrongs committed by the sub-agent which were due to no fault of his and which could not have been reasonably expected. In case, for example, negotiable paper is left with an attorney or a bank for collection in another town or state, the attorney or bank, as agent, has the implied authority to forward the instrument to a sub-agent located at the place where collection must be made. The agent and forwarder discharges his duty when he selects a suitable and reputable sub-agent to collect, and will not ordinarily be held responsible* for neglect or misconduct on the part of the sub-agent. EXAMPLES 1. Ames was employed to manage a piece of real estate, keep it in repair, and to sell it for a price which he deemed suitable. He set a price and employed Bates to find a purchaser at that price. This was not a violation of the duty which Ames owed to his principal, as Bates had not been empowered to use any discretion. Penwick vs. Bancroft, 56 Iowa 527. 2. A bank in Burlington, Iowa, received a draft for collection against a New York party. This it forwarded to the Metropolitan Bank of New York for collection, but the latter bank failed to present and protest it in proper time and the indorsers were thereby discharged. For this damage the owner sued the bank in Burlington, Iowa, but was denied recovery, his only remedy being against the New York bank, which alone had been negligent. Guelich vs. National State Bank, 56 Iowa 434. Duty to Account for Money and Property. It is the duty of the agent to keep correct accounts of his transactions, and to account to his principal for all money and property which come into his hands belonging to the principal. He must not mix the principal's funds with his own, and if he does, he will be responsible for any resulting loss. He must, when required, account for the profits of all transactions in which he acted, or should have acted, as the agent of his principal. *In New York, Michigan, Ohio, Indiana, and New Jersey, however, the first agent is held liable for any damages, whether these were caused by his own negligence or not. EXAMPLE An agent collected money for his principal and placed it in a money drawer together with some of his own money, not in separate packages. All the money was stolen without the agent's fault. He was compelled to repay the amount to the principal, because his act of mingling the principal's money with his own made him the debtor, and no longer the agent, of the principal. Naltnor vs. Dolan, 108 Ind. 500. Duty to Give Notice. It is also the duty of the agent to give timely notice to the principal of all facts coming to his knowledge and relating to the subject matter of the agency which it is material for the principal to know for the protection of his interests. EXAMPLE Burbridge was the agent of Devall, operating a steamboat for the latter. While the boat was being thus operated it was seized on a levy under execution by creditors of Devall and sold at public sale for $1000. The boat was reasonably worth $8000, and had Devall known of the seizure and sale he could have bid on it and prevented the sale of his property at a gross sacrifice. Devall was allowed to recover damages for the amount of his loss from Burbridge, whose failure to give notice was responsible for the loss. Devall vs. Burbridge, 4 W. & S. (Pa.) 305. 321. Duties of Agent to Third Persons. The ordinary purpose of the agent is to bring his principal into relations and obligations with third persons, but not to bind or obligate himself personally. He may, however, so conduct himself as to incur a personal liability. The agent is personally liable for injury to third persons when he acts beyond the scope of his authority, or when he makes contracts in his own name and not that of the principal. He is also personally liable for any fraud, assault and battery, or other civil wrong, committed by him, even though he is acting for the principal at the time. EXAMPLES 1. Pitcairn was a fire insurance agent and wrote a policy for Kroeger, the policy providing that the insurance should be void if any gasoline were kept on the premises without written permission. Kroeger called attention to the fact that he always kept a small amount on hand. Pitcairn informed him that no written permission was required where so small an amount was kept and Kroeger accepted the policy on this basis. A fire destroyed Kroeger's building and he could not recover for his loss from the insurance company, on account of the keeping of gasoline without permission. He was, however, allowed to recover his damages against Pitcairn personally for the misrepresentation. Kroeger vs. Pitcairn, 101 Pa. St. 311. 2. While Osborne was at work as a carpenter in a manufacturing plant, Morgan, the superintendent, negligently suspended a tackle block above him in such a way that it fell and injured him. Osborne was allowed to recover from Morgan for his injury, even though the latter was merely the agent of the corporation which employed them both. (130 Mass. 102). In many states where the so-called "Employers' Liability" acts are in force, one workman injured by another can sue the employer, instead of the fellowworkman, for damages. When Agent Exceeds Authority. If an agent exceeds both his real and apparent authority in making contracts for his principal, the principal will not be bound thereby. The agent, however, will be personally liable for any damages which may have been suffered by the party with whom he made the contract by reason of his wrongful act. EXAMPLE Adams was authorized to sign a note for Burnham for $400 payable in six months, payable to Anderson if Anderson would advance this amount. Adams secured the money and signed a note payable in sixty days to Anderson. This act was in excess of authority and Burnham did not thereby become liable on the note, whereas Anderson could recover from Adams any damages which he suffered, in this case $400 with interest. Anderson vs. Adams, 43 Ore. 621. Acting for an Unknown Principal. In order to escape personal liability, the agent must disclose to third persons with whom he deals that he is an agent merely, and not the principal. If he conceals the fact that he is but an agent acting for another, or fails to reveal the identity of his principal, those who deal with him can hold him personally liable on contracts, as any credit which may be given in such events plainly extends to the agent, known to them. EXAMPLE Amans sued Campbell for wages on a contract which he had made with Campbell, as follows: "I hereby agree to work for Campbell & Co. during the logging season of 1896 at $80 a month, etc." Campbell was merely the agent for the McCord Lumber Company, which fact was unknown to Amans at the time of the employment. Amans was allowed to recover against Campbell personally. Amans vs. Campbell, 70 Minn. 493. An agent may also become personally liable by failing to use care to show that he is acting merely as agent for another in the manner in which he signs his name. The proper way for an |