This section is from the book "Business Law - Case Method", by William Kixmiller, William H. Spencer. See also: Business Law: Text and Cases.
(a) An Agent Works Under the Control of the Principal.
(b) An Independent Contractor Agrees to Produce.
Results and Is Free to Use His Own Means.
Fred Moore made a contract with John Samson, whereby the latter agreed to sell merchandise for the former. Samson agreed to pay a stipulated price to Moore for all goods which were ordered, to maintain his own office and not charge any expense to Moore. Samson had the right to sell the goods at any price he could get, and to devote as much time to the work as he chose. During the course of his business Samson accepted certain commercial paper which he knew was defective and which he could not collect. He passed the paper on to Moore, who had no knowledge of the defect of the paper. When Moore brought suit on the notes, the defendant set up the defense that Moore could not collect since his agent, Samson, knew of the defect, and knowledge of the agent is knowledge of the principal. The case turns on the question whether or not Samson is an agent or independent contractor.
The Virginia Construction Company was under a contract to build the Midland Railroad from Memphis to Jackson. It sublet to Meredith and Horton the laying of track from a point near Memphis toward Jackson as far as the chief engineer might determine and order, at the price of $475 per mile.
Meredith and Horton agreed to unload the rails, ties and fastenings on their arrival, to reload and unload them in making their distribution, and to lay and surface the tracks. The construction company agreed to furnish push cars, locomotives, flats and engineer, firemen and one brakeman, to be used and controlled by Meredith and Horton in doing this work. The whole work was to be done in a thorough and workmanlike manner, to the satisfaction of the chief engineer of the construction company.
The facts showed that the servants furnished by the construction company were competent, but that Meredith and Horton selected an engineer by whose negligence the plaintiff, Powell, was injured. The liability of the company depended upon whether Meredith and Horton were agents who had employed a sub-agent, the engineer, or whether they were independent contractors.
Justice Hughes submitted the opinion.
The Court held that Meredith and Horton were independent contractors, since they were to produce results; that the crew furnished with the construction train were servants of Meredith and Horton, since they were under the control of the latter, and that the Virginia Construction Company was not liable to the plaintiff for the injury he sustained. The finding of the Court was for the defendant, because the injury was not caused by an act of the company's servant.
Here we must distinguish between agent and servant on the one hand, and independent contractor on the other. This is a very important distinction upon which turn many questions concerning the rights, duties and liabilities of principal and master.
Anticipating matters which will be considered hereafter, it may be said to be the general rule that the principal is liable for all acts of his agent while acting within the scope of his authority. But, generally speaking, a master is not liable for any of the acts of an independent contractor.
This difference in liability turns upon the difference in the two relations. As between principal and agent, the principal has the right to direct, control and supervise all acts and movements of his agent. Whether he exercises his right or not is not material in fixing his liability for the acts of his agent. On the other hand the master or employer reserves no such control and power over an independent contractor. The employer contracts that certain results shall be attained, leaving to the contractor the selection of the means and supervision of the operations by which those results are to be attained.
In the Story Case, Samson was an independent contractor since he was not working under the control or supervision of Moore. Samson agreed to sell goods and retained the right to determine the means and manner of selling.
 
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