Story Case

For several years Roy Harkins had made collections for the Southside Grocery business. On September 28, 1914, because of some misconduct on his part, the company discharged him. However, no notice of his discharge was given to any one. Beginning on the first of January, Harkins made several collections in the name of the company, and absconded with the money. He collected $18 from Mrs. Brown who had paid her bill to him regularly for a year. He collected from Mrs. Jones, who knew he had been in the employ of the company, and believed that he still was, though she had never paid him before. The company now attempts to collect from Mrs. Brown and Mrs. Jones again. They refuse to pay, and the company brings suit.

"What should be the decision of the Court in each case?

Ruling Court Case. Mannia Vs. Meeker, Volume 162 Illinois Reports, Page 203

In this case, it appears that Mrs. Meeker owned a subdivision in a Polish settlement in South Chicago. Most of the inhabitants of the settlement used the Polish language. On October 12, 1889, Mrs. Meeker agreed to convey to Mannia a lot in the subdivision owned by her. By the contract, Mannia agreed to pay Mrs. Meeker $400, in manner as follows: $100 cash in hand, receipt of which was acknowledged by the contract; $100 in one year; $100 in two years; and $100 in three years, with interest, annually, at 6 per cent. By the contract, it was further agreed that if Mannia should fail to make any payment as it came due, the contract should be forfeited, and that Mrs. Meeker would be entitled to the possession of the land.

Frey and Schlund, real estate agents, represented Mrs. Meeker in this transaction, as they had done in others previous thereto. For about a year prior to the transaction in question, one Liebner had acted as agent for Frey and Schlund. Liebner could speak the Polish language and was employed by Frey and Schlund to make collections for them among the Polish people. The fact that he was so employed was well known to most of the people in this settlement.

On or about September 1, 1891, Frey and Schlund discharged him; but no notice, whatsoever, was given of this fact; and it appeared that he was still seen around the office of Frey and Schlund frequently. On the 23 rd of the same month and year, Mannia paid to Liebner $200 on his account for Mrs. Meeker, thinking that Liebner was still the duly authorized agent of Frey and Schlund. Mrs. Meeker now attempts to forfeit the contract because of the non-payment of the purchase price of the land by Mannia. Mannia brought this bill to have Mrs. Meeker compelled to give him a deed for the land in accordance with their contract.

Mrs. Meeker contends that the payment to Liebner was without any effect, because at the time he was without authority to receive payment, and that it made no difference that Mannia was without knowledge that his authority had been terminated.

Decision: Where an agent has had general authority to represent a person, and his authority has been terminated, third persons who dealt with him before, as agent, and third persons who have known of his agency, may still deal with him until they receive notice of the fact that his authority has been withdrawn. So, in this case, since Mannia had no notice to the contrary, he is protected in his dealing with the agent, and his payment was good, and he is entitled to a conveyance by Mrs. Meeker of the land in accordance with the terms of their contract.

Mr. Justice Craig, who delivered the opinion of the Court, said in part: "Mechem on Agency, in speaking on this subject, says: 'Where a general authority is once shown to have existed, it may be presumed to continue until it is shown to have been revoked, and persons, who have dealt with the agent as such, or who have had notice of his authority, may very properly expect that if the authority be withdrawn, they will be given reasonable and timely notice of that fact and that they may, therefore, lawfully presume, in the absence of such notice, that the authority still continues. And it is, therefore, the general rule of the law, that the acts of a former general agent, within scope of his original authority, will, notwithstanding its revocation, continue to bind the former principal to those parties who have been and still are dealing with him in good faith and in reliance upon his former authority, until they have had notice of its revocation. But the rule has no application when the act done is beyond the scope of the agent's former authority, and particularly so where the act is in excess of the power which the agent himself claimed to possess.'"

Judgment was given for Mannia.

Ruling Law. Story Case Answer

When a principal had once clothed an agent with authority, it would be very unjust to permit him to withdraw that authority when he pleased, without giving notice to persons who have dealt with the agent as such, or who have known of his authority. Therefore, the law does not permit the principal to withdraw authority in this way. So, if the principal had given general authority to an agent, third persons, who have dealt with him, as agent, or who know of his authority, may still continue to deal with him and bind the former principal, until they receive notice that his authority has been withdrawn. If the agent has been given only special authority, that is, authority to do a single act, or complete a single transaction, it seems unnecessary to give notice. In the Story Case, Mrs. Brown and Mrs. Jones knew of his agency, and, having received no notice that Harkins' authority had been revoked, they are protected in paying him. This is the penalty which the company must pay for not having taken the trouble and precaution of giving proper, notice to persons who knew of the former relation.