Where the agent regularly pursues his authority and acts as an agent and not as principal, and is guilty of no wrong, he is not liable to the third person with whom he acts for the principal.
We have already considered that an agent is an intermediary, a mere representative, employed to make or in some way affect contractual ties between his principal and third persons. That done, he drops out; no liability attaches to him. This is a matter of common knowledge; the agent who writes insurance does not become liable on the policy; the real estate agent who sells the land of another, assumes no responsibility upon the contract; the agent who procures a loan for his principal is not liable if the principal does not repay. The agent is not surety for the principal.
An agent may bind the principal when the principal holds out, expressly or impliedly, that the agent has authority. This authority the agent may not actually have; it is enough that the principal places the agent in such a position that a third person may assume him to have such authority. There is a holding out by the principal, and it is on that holding out that the third person relies in dealing with the agent. But we may have another set of circumstances. There may be a holding out by the agent, and none by the principal, upon which the third persons relies. The agent may come to me and say, "I am P's agent for this purpose," and I may rely on that alone. In that case I cannot hold P if A was not authorized by P, and furthermore I cannot hold A, the agent, on the contract, because I did not purport to make that contract with him, but with P, through him. Yet A has represented to me that he was P's agent, and acting upon that representation I have done things whereby I am damaged unless I can hold somebody. Therefore the law gives me the right to hold A, upon a warranty by him that he has authority. We will consider this liability and also the other cases of the agent's liability to third persons.