"An agent must also obey instructions and observe the terms of the agency; otherwise he does not perform, in the eye of the law, his full duty towards his principal and is not entitled to receive the compensation for his services promised to him in the contract of agency."5
"A departure by an agent from his instructions does not ipso facto constitute fraud. It is competent evidence on the issue of fraud in an action by the principal against him, and, with other circumstances, may satisfactorily establish it. Agents frequently overstep the limits of their authority, and it is quite conceivable that it is often done in the supposed interest of their principal. In such cases they take the risk. If the principal ratifies the act, they stand justified. If he disaffirms it and suffers loss from it, the agent is responsible. But proof that an agent has transcended the limits of his authority, would not alone support an action by the principal for a fraudulent misuse of his power."6
4 Price v. Keyes, 62 N. Y. 382, 383, 384 (1875).
5Raleigh R. E. & Trust Co. v. Adams, 145 N. C. 165 (1907).
"An agent owes a duty to his principal to disclose to him any information which he may have which may be relevant to that agency.7 The law conclusively presumes that the agent makes such disclosure, unless the agent has some private purpose to accomplish, the accomplishment of which would be imperiled thereby,"8 as where the broker is secretly interested in the deal or is engaged in furthering a scheme to defraud his principal.9
"The concealment by an agent of facts which are material to his principal's interests, especially after inquiry made, amounts in law to fraud."10 And so, where in an exchange, one of the parties requests the broker to ascertain the actual rental of the property he is to take, and the broker procures an erroneous statement thereof, which the principal relies upon and contracts to exchange, but rescinds after learning the facts, the broker is not entitled to commissions.11
"It is not always necessary that explicit authority must be given an agent to justify his indorsement of a check or bill drawn to his principal's order. An agent who is employed to procure a note to be discounted may indorse it in the name of his employer, or he may, unless expressly restricted, indorse it in his own name and claim indemnity of his principal.12 And the power to make and indorse negotiable instruments may be implied as a necessary incident of powers expressly conferred, as where an entire business or an entire transaction is intrusted to the agent and it becomes necessary to make or indorse negotiable paper in order to effectually carry out the agency."13
6Price v. Keyes, 62 N. T. 382, 383, 384 (1875).
7 See Raleigh R. E. & T. Co. v. Adams, 145 N. C. 165 (1907) ; Rodman v. Manning, 99 Pac. 657 (Ore. 1909).
8 Crooks v. People's Nat. Bank, 72 App. Div. 335 (N. Y. 1902) ; Clark & Skyles on Agency. Sec. 416. See also Sec. 264-266 infra.
9See Henry v. Allen, 151 N. Y. 1 (1896); Benedict v. Arnoux, 154 N. Y. 728 (1898); Constant v. Un. of Rochester, 111 N. Y. 611 (1888). 10 Low v. Woodbury, 107 App. Div. 298 (N. Y. 1905). 11Marcus v. Bloomingdale, 63 App. Div. 227 (N. Y. 1901).
The claim is often made, and in some jurisdictions sustained, that conversion will only lie for the conversion of certain specific personal property, to which category money does not belong, and that, therefore, an action for its conversion will not lie; and that the only remedy is an action on contract.
In New York it is settled that an action in tort will lie to recover money received by an agent, broker or other person in a fiduciary capacity, which he refuses to deliver to his principal.14
12 Citing Nelson v. Hudson River R. R. Co., 48 N. T. 498.
13 Porges v. U. S. Mortgage & Trust Co., 135 App. Div. 487, 488 (N. Y. 1909), (citing Whitten v. Bank of Fincastle, 100 Va. 546; Gould v. Bowen, 26 Iowa 77; Gate City Building & Loan Assn. v. Nat. Bank of Commerce, 126 Mo. 82).
14Jones v. Smith, 65 Misc. 528 (N. Y. 1910), (citing Britton v, Ferrin, 171 N. Y. 235; Jackson v. Moore, 94 App. Div. (N. Y.) 504, 508).