Sec. 274. Ground Of Agent's Liability For Unauthorized Acts

In a case already cited,18 it was said:" 'Wherever a party undertakes to do any act as the agent of another, if he does not possess any authority from the principal therefor * * * he will be personally responsible therefor to the person with whom he is dealing for or on account of his principal. There can be no doubt that this is and ought to be the rule of law in the case of a fraudulent representation made by the agent, that he has due authority to act for the principal; for it is an intentional deceit. The same rule may justly apply where the agent has no such authority, and he knows it, and he, nevertheless, undertakes to act for the principal, although he intends no fraud. But another case may be put, which may seem to admit of more doubt; and that is where the party undertakes to act, as an agent, for the principal, bona fide, believing that he has due authority; but, in point of fact, he has no authority, and therefore he acts under an innocent mistake. In this last case, however, the agent is held by law to be equally as responsible as he is in the two former cases, although he is guilty of no intentional fraud or moral turpitude. This whole doctrine proceeds upon a plain principle of justice, for every person so acting for another, by a natural, if not by a necessary, implication, holds himself out as having competent authority to do the act; and he thereby draws the other party into a reciprocal engagement.'19 The reason why the agent is liable in such case to the person with whom he contracts is that the party dealing with him is deprived of any remedy against the principal. The contract, though apparently with the principal, is not his in fact; and it is but just that the loss should be borne by the agent who contracted without authority.20 The liability of the agent rests on the ground that he warrants his authority, not that the contract is to be deemed his own; and on the question of damages the agent's liability is not necessarily measured by the contract, but embraces all injury resulting from his want of power, which was held to include the costs of an unsuccessful action against the alleged principal.21 * * * The ground and form of the agent's liability have been the subject of much discussion, and there are conflicting decisions on the point. In Pennsylvania and certain other jurisdictions it has been held that when the agent makes a false representation of his authority, with intent to deceive, or where, with knowledge of his want of authority but without intending any fraud, he assumes to act as though he were fully authorized, he is personally liable to the other contracting party for the injury sustained, and such liability may be enforced either by action on the case for deceit, or by electing to treat him as a principal.22 The Court of Appeals of this state (New York) has held that 'the later and better considered opinion seems to be that his liability when the contract is made in the name of the principal, rests upon an implied warranty of his authority to make it, and the remedy is by an action for its breach.' 23

16 Clark on Contracts, pp. 738, 739. See also LeRoy v. Jacobosky, 136 N. C. 443; 67 L. R. A. 977 (1904), where many authorities are cited.

17Campbell v. Mnller, 19 Misc. 189; 43 N. Y. Suppl. 233 (1897). See also White v. Madison, 26 N. Y. 117 (1862); Slmmonds v. Moses, 100 N. Y. 140 (1885).

18 Campbell v. Muller, supra.

19 Citing Story on Ag.. Sec. 264; and referring to Ewell. Evan on Ag.. 403; Dnsenbury T. Ellis. 3 Johns. Cas. (N. Y.) 70; White v. Madison. 26 N. Y. 124; Lord v. Van Gelder. 16 Misc. Rep. 22; 37 N. Y. Supp. 668; Farmers Co-op. Trust Co. v. Floyd, 47 Ohio St. 525; 26 N. E. 110; Baltzen v. Nicolay. 53 N. Y. 467; Slmmonds v. Moses, 100 N. Y. 140; 2 N. E. 640; Taylor v. Nostrand. 134 N. Y. 108; 31 N. E. 246.

20 Citing Baltzen v. Nicolay, supra.

21 Citing Taylor v. Nostrand, supra.

"In Noe v. Gregory, 7 Daly (N. Y.) 285, Judge Van Hoesen, delivering the opinion of the court, said: ' I think the law of New York now is that the pretended agent is only liable to an action of deceit, or to an action for breach of warranty as to his authority. Either form of action will apprise him that the question to be litigated is his authority to act for the person whom he represented to be his principal, and he may come prepared to try that issue.' "