If one appoints another to do an act for him as the act of the appointing party, such appointing party is known as the principal or master and the other party the agent or servant - agent if the work he is appointed to do is that of contractual negotiation with others; servant, if the work he is appointed to do does not involve contractual negotiation.
When a person procures another to do something for him, we have the following possibilities:
First: The person procured to do the work may undertake results in the accomplishment of which he acts as independently of the one procuring him as such party does of him - they are independent contractors.
Second: The person procuring the work to be done may by his arrangement with the other establish a more or less general control over the work to be done in the nature of a proprietary interest in the services rendered, so that such work, though done by another, is really, as to the responsibility therefor, the work of the appointing party. In such case
(1) The work appointed to be done may be to negotiate contractually with others - and then we call the appointing party the principal and the appointee the agent;
(2) The work appointed to be done may be of a different character, being perhaps (but not necessarily) work done in the performance of the principal's contracts with others, but not creating those contracts. In such case we call the appointing party the master, and the appointee, the servant.
It is seen at once that inasmuch as the work of the agent is to negotiate contractually with others, the rights of the principal against, and his obligations towards, such others arising out of the contracts made by the agent make up a big subject which is necessarily lacking in the relationship of master and servant. In the two relationships we have these principle considerations:
1. The rights and duties between the principal and agent - in contract - in tort.
2. The rights and duties between the principal and third person arising out of contracts made by the agent pursuant to his authority;
3. The obligations of the principal to third persons for the torts of his agent;
4. The rights and obligations between the agent and third persons.
In Master and Servant
1. The rights and obligations in contract and tort
(and also under workmen's compensation acts) between master and servant.
2. The obligations of the principal to third persons for the torts of his servant.
Thus we see that the scope of the work of the servant and the scope of the work of the agent takes us into a field which both traverse, and in a separate field of vast importance traversed only by the agent - the field that involves the authority of the agent to make contracts for his principal. Fundamentally the relationship in either case is that of service. And the reason that we distinguish is that in their incidents and consequences they go far apart.
The fundamental sameness of the relationships is seen in the fact that one may at one moment be agent, and in the next moment while on the same work, be servant. Employed to purchase goods, one becomes a servant to haul them home; employed as a store clerk, his miscellaneous duties are now those of agent, now those of servant.1 The examples below will illustrate this section.
Example 1. A owns a garage and repair shop. He contracts with B, a customer, to overhaul B's car. C works for A and assists in working on B's car. B sends his chauffeur for the car and directs him to buy a new tire from A on B's credit. A has what is called an authorized agency for these tires, but as a matter of fact he buys the tires from the manufacturer under a contract by which for a period the manufacturer agrees to supply what A orders. In this illustration A and B are independent contractors. C is A's servant. The chauffeur is B's agent to get the car from A, and to purchase the tire, and B's servant to drive the car home. A is not an agent of the tire manufacturer, though so called, being merely a purchaser from him for purposes of retail. If A received such tires from the manufacturer to resell upon a commission, A would be the kind of agent known as a. factor (see post herein).
1. Kingan v. Silvers, 13 Ind. Ap. 80; 37 N. E. 413.
Example 2. Echols was charged with having embezzled, as. an agent or servant, money belonging to his employer, Echols was a tailor, and had undertaken to make a suit of clothes for his customer who had paid him money in advance. He did not make the clothes or return the money. The charge must fail. The money when paid to Echols became his. He was liable civilly to the customer for breach of contract, but not criminally liable for embezzlement. If the customer had given Echols $10.00 with which to buy cloth for him, and he had misappropriated it, he would then be taking the customer's money.2
Example 3. A manufactures sewing machines. He sells some machines to B, who resells to customers. He gives C a contract, whereby C sells sewing machines for A from house to house. B is not A's agent. C is, and A is liable for his acts within the scope of the employment.3
The underlying idea in the law of agency is that the principal (or master) is responsible for that which the agent (or servant) does in the line of his employment.
"Qui facit per alium qui facit per se," runs the Latin maxim. "Respondeat superior' is another one. That which the agent or servant does within the scope of his agency renders the principal or master responsible therefor. It is his act, done by him, through another. The principal is therefore liable for the contracts made by the agent which the principal has authorized, and for the torts of the agent or servant, though he has not authorized them, and has in fact forbidden them, when they are a part of the act done.
2. Echols v. State, 158 Ala. 48.
3. Singer Mfg. Co. v. Rahn, 132 U. S. 518.
The principal and agent and master and servant are in law deemed to be one person for the purposes of the agency.
Carrying the idea of the last section a little further, we may think of principal and agent or master and servant as one person in the fiction of the law. "They are famed to be all one person."4 The principal is presumed to be present in the person of his agent doing the act, so that in the phraseology of the law we may say "Now comes John Smith, in his own person, and comes Henry Jones by his attorney or agent." In such a case John Smith and Henry Jones are both legally present. Thus in a stockholders' meeting some are present in person, some by proxy, but all are there who come either way. For this reason that act which the agent does for his principal, the principal is chargeable with as soon as it is done, and before any communication thereof to the principal. The collection made in New York for a Chicago principal is collection by the principal, though the principal never in fact receives it. If the agent has authority to do the act, or the act (being a tort) is done as a part of the act which the agent has authority to do, the act of the agent is the act of the principal because their identities are merged.
4. Dempsey v. Chambers, 154 Mass. 330.
At this point we will merely note the following distinctions, making more particular discussion hereafter.
(a) General and Special Agents.
Courts speak of agents as being either general or special; a general agent being one to whom a line of action is committed, as to manage a store; a special agent, one who has authority to do a certain act as to collect a note. This distinction has been criticized, but practically, it serves a useful purpose. See, later, the authority of the agent.
(b) Agents del credere and not del credere.
A del credere agent undertakes the exceptional responsibility of answering to the principal for the responsibility of all accounts established through his agency. The subject is developed hereafter.
(c) Classification as to skill or profession.