For misfeasance the agent is generally liable to third parties suffering thereby. (Sec. 271.)
If the agent act without authority, or beyond it, he becomes personally liable. (Sec. 272-276.)
Where an agent makes a contract he impliedly agrees that he is authorized to make it. (Sec. 272-275, 277.)
An agent in order to release himself from liability, should disclose his principal. (Sec. 277.)
In regard to the liability of agents to third parties, it may be said that the general subject is of too great magnitude to be more than touched upon here. For a full consideration of the subject, the special works on agency should be consulted.1
"An agent to whom money has been paid with a direction to hand it over to a third person, is accountable only to his principal, and not to such third person, unless he has entered into a binding engagement with such third person which has given the latter a right of action against him." 2 In Fisher v. Meeker, 118 App. Div. 452, 454 (N. Y. 1907), it was held that an agent acting within the scope of his authority cannot be held liable by persons other than his principal for moneys properly received by him in the name and in the business of the principal. Thus, where the plaintiff purchased goods of the defendant as agent to whom he paid the purchase price without any express promise by the agent to pay the sum to the principal and thereafter on demand by the principal again paid a portion of the purchase money, he cannot recover the overpayment from the agent. This, because payment to an agent who has authority to collect, is payment to the principal and an absolute discharge of the debt, and it is of no consequence to the debtor that the agent fails to account to the principal.
1 See Sec. 259 supro.
In the case cited,3 the court said: "The case of Smith v. President, etc., of Essex County Bank, 22 Barb. (N.Y.) 627, is a distinct authority against the right to sustain such an action. It was there held that a payment to an agent who has authority to collect is a payment to the principal and an absolute discharge of the debt, and that it is a matter of no sort of consequence, so far as the debtor is concerned, whether the agent accounts for it or misapplies it. In the case of Hall v. Lauderdale, 46 N. Y. 70, it was held that an action cannot be maintained against an agent, although, having money of his principal in his hands applicable to the payment of the debt of his principal, he refuses to pay it. The court, through Judge Andrews said: 'The defendant was responsible to the principal, and to the principal alone, for any omission or neglect of duty in the matter of his agency.' The case of Colvin v. Holbrook, 2 N. Y. 126,4 recognizes this same principle. The court there said:'The rule, it is believed, is universal, that a known agent is not responsible to third persons for acts done by him in pursuance of an authority rightfully conferred upon him. The very notion of an agency proceeds upon the supposition that what a man may lawfully do by a substitute, when performed, is done by himself, and the individuality of the agent so far is merged in that of the principal. It is also settled, if anything can be established by authority, that an agent is not liable to third persons for an omission or neglect of duty in the matter of his agency, but that the principal is alone responsible.' 5 There is a class of cases * * * in which the responsibility of agents and servants has been upheld. They are cases where the principal had no right to receive the money, and, of course, could confer none upon the agent, or where it was paid by mistake, or where the agent exceeded his authority, or was guilty of misfeasance, not as an agent or servant but as a wrong doer, or where payment was induced by a wrongful act of the agent or there was an explicit agreement to return it."
2 Note in Wells v. Collins, 5 L. R. A. 531 (Wis. 1899). 3 Fisher v. Meeker, 118 App. Div. 452, 454 (N. Y. 1907).