Story Case

The Easy-Bunning Sewing Machine Company engaged Howard Dawson to solicit orders for a sewing machine manufactured by them. It was agreed that he should have a ten per cent commission on all sales made and completed by him in the course of his employment. The written contract also contained the following stipulation, to which Dawson agreed: "If, at any time, it shall appear that Howard Dawson is not devoting his exclusive time and attention to the interests of the Easy-Running Sewing Machine Company, his authority to represent and solicit orders for the said company shall terminate and be at an end." After working for some months on this basis, Dawson decided that it would be profitable for him to carry a side line. If, after soliciting an order from a person, he was unable to sell a sewing machine, he would then attempt to sell a Victory Talking Machine. When the company learned this, they notified him that his agency was at an end. Dawson then brings suit for wrongful termination of his employment. What should be the decision of the Court?

Ruling Court Case. Gundlach Vs. Fischer, Volume 59 Illinois Reports, Page 172

George Fischer, on the 3rd day of May, 1867, entered into a written agreement with Gundlach and Esler, by which Fischer was made agent, to act for Gundlach and Esler, in the sale of certain farming implements. Johnson, Pope, and others, all of whom are defendants in this action, were sureties upon the bond of Fischer. This bond was given in the sum of $1,500, to insure the faithful performance of the duties of the agency by Fischer. By the bond, the sureties became liable, in case Fischer did not account for all the moneys collected by him for the sale of the machines which he was to sell. The only provision in the contract in reference to any termination of the agency was: "And the said Gundlach and Esler agree to furnish the said George Fischer such number of machines as the said George Fischer may be able to sell, as their agent, prior to Oct. 1,1867."

In performance of his duties, Fischer failed to account for a large sum of money which had been received by him, in payment of machines which he had sold on account of Gundlach and Esler. Thereupon, an action was brought against Johnson, Pope, and the others, who had signed Fischer's bond.

These bondsmen showed that Gundlach and Esler had furnished machines to Fischer after Oct. 1, 1867, at which time the agency terminated; and that for moneys, which he failed to account for after that date, they were not liable.

Decision: The parties to the relation of principal and agent may expressly agree upon the time when the agency shall terminate. If they do so, the relation automatically terminates at the stipulated time. So, in this case, the contract provided for an agency to last only until the 1st of October, 1867. When that time came, the agency was at an end, so far as the original contract was concerned; and the bondsmen of Fischer were then relieved of any further liability for acts, thereafter, done by Fischer.

Per Curiam: "A fair and reasonable construction of the agreement makes Fischer the agent of Gundlach and Esler, for the sale of machines, until the 1st of October, 1867. And the appellees, i. e., the bondsmen, by their obligation, undertook for the faithful discharge of all Fischer's duties as such agent, and that he should account for all moneys, notes, etc., to Gundlach and Esler, for property and machinery received prior to that date. It appears, from the evidence, that he received machinery prior to the 1st day of October, 1867, amounting to $2,023. For the faithful account of that sum, his sureties are liable, but they are not for machines or property received after that date."

Judgment was given in accordance with the opinion.

Ruling Law. Story Case Answer

We have seen that agency is a voluntary relation. Such being the case, its continuance must depend, largely, upon the will of the parties. It may be terminated either at the will of the parties, or by operation of law. It is terminated by act of the parties, either by mutual agreement, by expiration of the time, by fulfillment of the purpose, by revocation of the principal, or by abandonment by the agent.

When the parties expressly, or by implication, limit the continuance of the agency, the relation ceases when that time limit expires, unless they mutually agree to continue the relation. In the case of Gundlach vs. Fischer, the parties might have mutually agreed that the agency should continue, even after the 1st of October, but that agreement would not bind the bondsmen to continue to stand as sureties for Fischer.

In the Story Case, the company provided that the agency should cease in case the agent failed to perform his duties faithfully. When he began to solicit orders for the talking machines as well as the sewing machines, he had, thereby, done an act which determined the period in which he was to act as agent, and so his agency was terminated.