"It is the general rule that an agent, to avoid personal liability, must contract in such a form as to give a remedy against his principal, and if in making a contract in the name of his principal, he acts without authority, or beyond it, he becomes personally liable." 12 "When an agent assumes to act for an owner, he must see to it that his principal is legally bound by his act, and if he does not give a right of action against his principal, the law holds him personally responsible."13 An agent must so execute his authority as to bring about a contract mutually binding on the principal and the party with whom he contracts.14
Furthermore, the courts have held that where an instrument is executed on behalf of a body which has no existence, the party executing the instrument becomes liable, as where a lease was made on behalf of "the trustees of the German American Institute" as lessees and signed and sealed, " for the Board of Trustees by S. Kauffmann, treasurer," there being no trustees in fact, and only a mere voluntary association.15
It is conceded that the agent is liable in some form for entering into an unauthorized contract. All that it is necessary for the agent to know, therefore, is that he is liable, and it will afford him little consolation to know that he is not liable in a certain form of action, but is under another. The practitioner, however, is interested in the form of the action he is expected to bring under such circumstances. As allowable limits of space will not permit of a prolonged presentation, we quote the concise but comprehensive statement contained in a popular textbook.
12Hall v. Lauderdale, 46 N. Y. 70 (1871).
13 Harrell v. Velth, 13 N. Y. St. Rep. 738. 740 (1888).
14 Sinimonds v. Moses, 100 N. Y. 140 (1885).
15 Bartholomae v. Kauffmann, 15 Jones & Spencer (47 N. Y. Super. Ct.) 552; aff'd. 91 N. Y. 654 (1883), no opinion. Similar Instances of liability are Fredenhall v. Taylor, 23 Wis. 538 (1868), where a "committee" of an incorporated association acted; Blakely v. Bennecke, 59 Mo. 193 (1875), where signature was " Louis Bennecke, Capt. 49th Regt. Mo. Vols., Comdg. Post,"
"An important exception to the rule" that an agent who contracts, as agent, for a named principal, cannot be sued on the contract "is where an agent contracts without authority, or for a non-existent or incapable principal. It is well settled that if a person contracts as agent on behalf of a principal who does not exist, or who cannot contract, or if he enters into a contract in excess of his authority, he is personally liable in some form to the other party. Whether he is liable ex contractu, or whether he is only liable in tort, is an unsettled question, and there is a conflict of opinion. In England and in some of our states, he is liable in contract if he acted in good faith and in tort if he acted in bad faith. If he believed that he had an authority which he did not in fact possess, he may be sued upon an implied warranty of authority. This is an implied or feigned promise to the other party that, in consideration of his making the contract, the professed agent undertakes that he has authority to bind his principal. 'The unreality of this warranty of authority makes it open to criticism, since the promise therein involved was probably never present to the minds of either of the parties affected by it.' Some of our courts have taken this view of the question, and have held that an agent acting without authority cannot be held liable in contract. 'If one falsely represents that he has an authority by which another, relying on the representation, is misled, he is liable; and by acting as agent for another when he is not, though he thinks he is, he tacitly and impliedly represents himself authorized, without knowing the fact to be true, it is in the nature of a false warranty, and he is liable. But in both cases his liability is founded on the ground of deceit and the remedy is by action of tort.' If the professed agent knew that he had not the authority which he assumed to possess, he may certainly be sued by the injured party in an action for deceit. As we have just seen, some courts hold that this is the injured party's only remedy, even where the professed agent acted in good faith."16
In New York it is held that the liability rests on the ground that the agent warrants his authority. The pretended agent may be held liable in an action for deceit or in an action for breach of warranty as to his authority.
A person acting as agent incurs liability as follows: (1) in a case of fraudulent misrepresentation that he has authority; (2) where the agent has no authority, although he intends no fraud; and (3) where a party undertakes to act as an agent bona fide, believing that he has authority, but in point of fact has no authority and therefore acts under an innocent mistake.17