(a) The agent warrants his authority.
If an agent expressly claims to have authority or by his acts indicates that he has authority, he warrants his authority; but if the third person knows the facts as well as the agent, there is no warranty.
An agent may expressly state that he has authority. He may do this because he thinks he has authority or because he intends to deceive. In either case he is liable to the person who thus deals with him, and who on account of lack of authority, apparent or real, could not hold the principal, and therefore suffers damages. Thus suppose that A states to C that he has been sent by P, to purchase C's cattle. C thereupon delivers his cattle to A, to deliver to P. The cattle die on the way through no fault of A. In this case if A had had actual or apparent authority, he could not beheld, as the contract would be between C and P, with A as a mere representative of P. P would be responsible as delivery to his agent would be delivery to him. But if A lacks authority C is not without remedy. He can hold A upon his statement that he has authority, on the strength of which he parted with the cattle.
If, however, in this case, C was in possession of all the facts, and in common with A, misconstrued them, he could not hold A. Thus if A had said: "I have here a letter which P has sent me, in respect to the purchase of cattle, and I think from it that I have authority to buy cattle," and C, upon reading the letter, had assented to that view, yet the legal effect of the letter was not to give A authority to buy cattle, but merely, say, to make inquiries concerning their purchase, here there would be no warranty by A of his authority, for there would be no reliance upon A's assertions that he had authority.
It is not necessary that the agent expressly state that he has authority. An implication to that effect may arise from the facts, and this would, perhaps, be the more usual case. Indeed, the agent by acting as agent and by purporting to bind another person as principal, holds himself out as having the authority to so act and thereby warrants himself to have authority.
Example 23. The P bank by A, as Vice President, guaranteed a commercial account. The bank being sued on the guaranty defended that it had no power as a bank to make such an engagement, not being proper banking business. The court sustained the defense. The plaintiff then sued the Vice President upon the ground that he warranted his authority. But the court held that inasmuch as the third person was chargeable as a matter of law with the power of a bank and therefore must be taken to have known that the Vice President had no powers to bind the bank upon this guaranty, there was no warranty of authority.92
(b) Agent having authority to bind principal may instead bind himself.
One who is an agent and has full power to bind his principal may nevertheless bind himself.
There is nothing to prevent an agent from binding himself upon a contract made by him. He may do this for a variety of reasons. He may be careless in the execution of his authority. He may not disclose the principal, preferring for some reason to let only his own identity appear. Or it may be that his principal has not sufficient credit with the person dealt with and therefore the agent binds himself.
If the principal is undisclosed by the agent the agent is liable.
If the agent does not disclose his principal, the agent is liable. In some such cases the third person upon discovering the principal may elect to hold him, because he is the real party in interest, as we note in another connection; but he may, if he choose, in all cases, hold the agent for it is with the agent that he has dealt as principal.
Example 24. W sold flour to R. R sues for breach of warranty of merchantability of the flour. W defends that he was an agent. On the deal W did not disclose the name of his principal, although he was known to be
92. Thilmany v. Iowa Paper Bag Co. and William Daggett, 108 la. 357.
It is a long established rule that only those who are named or described in and sign a sealed instrument are bound thereon. If the agent signs his own name only, though he describe himself as agent, he will be bound and the principal will not be bound.
By the law of sealed instruments, only those can be sued thereon who are parties thereto. An agent may, by careless execution of a sealed instrument, bind himself when he intended only to bind his principal. We may indicate here the proper form one should use and that will be about the extent to which in this discussion we can go. The books are full of discussions of particular sets of facts and courts are at some variance upon similar cases. But there are well established forms of execution which everyone should have in mind when he executes such paper.
First let us note that it is everywhere agreed that if one merely describe himself as agent, that in itself is not sufficient to bind his principal. Thus if he signs "John Brown, Agent," or "William Smith, President," or "Harry Jones, Trustee," etc., these descriptive words are merely words of description and in no way qualify the liability of the party signing.94 And it is also everywhere agreed that if one go further and say "John Brown, Agent of Thomas Anderson," the deed is the deed of John Brown. So one can go into a multitude of form. The proper and safest mode of description and signature is as follows: to recite in the body of the instrument "Thomas Anderson, by John Brown, his agent," or the "Harris Manufacturing Company, by William Smith, its President," etc.; and to sign as follows: "Thomas Anderson (seal), by John Brown, Agent," or "Harris Manufacturing Company (seal), by William Smith, President."
93. Wheeler v. Reed, 36 111. 81.
94. Casco Nat. Bk. v. Clark, 139 N. Y. 307.
These forms have been held good to bind the principal, but they are not such good usage - "A. B., for C. D.," "for C. D., A. B."
It is not absolutely essential that the agent's name should appear. Yet it is highly desirable, in order that the evidence may be the more surely preserved and other reasons of convenience. It is therefore common and the better usage for the agent to set forth that the execution is by him as agent. Even in those states where statutes have abolished the seal, the above form of signature is the only safe one to use.
Only those described in and who sign negotiable paper are bound thereupon.
What has been said in respect to sealed instruments is also true of negotiable paper. If an agent signs negotiable paper in which only his own name appears, he is personally liable upon it. The forms indicated in the preceding section are subject to the same considerations here, except that a negotiable instrument should not be sealed.
The courts have been very technical in this respect, frequently making an agent liable, where quite apparent from the facts that the agent never intended to bind himself. The uniform negotiable instruments shows a departure from this rigid rule,95 but the only safe rule is to follow the form approved in practice and courts of law.
Example 25. A and B made a note which read "We promise to pay," etc., and signed it, "A, President," "B, Treasurer." The name of the corporation did not appear in the body of the note, but it was upon the corporation's letter head. Held: to be the note of A and B, the words President and Treasurer, being mere words of description.96
An agent is bound if he in terms charges himself on any contract, but if from all the language used, it appears that he did not intend to charge himself, but a principal therein named, he will not be personally liable.
An agent should be careful in the case of any contract, sealed or unsealed, negotiable or not, to make it appear that his principal and not himself is bound. Yet simple contracts are often hastily made and ambiguously worded and it may be hard to state what the intention was. It is clear that if the agent uses only his own name, though he may use the word agent, he only will be bound and he cannot show that he intended to bind some one else in order to free himself (although as we have seen the other party may hold the real principal or the agent at his election where the principal is undisclosed). But if the name of the principal appears in the body of the instrument or in the signature and from the entire contract it may be gathered as a reasonable inference that the agent intended to bind the principal, then the agent can plead that he is not personally bound. No fast rule can be laid down in these cases except that where the agent uses approved forms as heretofore indicated, there can be no question that he is not held, and the further rule that if he does not name the principal at all, though he describes himself as agent, and even though it appear that the principal was known at the time to the other party, the other party may hold him personally.97
95. See Law of Nego. Instru. in this series.
If a person represents a large, unorganized or irresponsible body, it will be presumed, unless the contrary appears, that the representative was given the credit.
If a committee representing a large public gathering as a political party, an unincorporated club, etc., deals with others for supplies, it is reasonable under the circumstances to presume that it is the committee to whom the credit is given, and such committee will usually be personally responsible. Wherever there are situations of that sort in which the credit appears to be given the agent and he must have known it was so given, he will be responsible.98