By EDWARD C. REYNOLDS, ESQ.

III.—AGENCY.

Agency is one of the most common relations of individual to individual. It is a delegation of power that few can avoid, in a greater or less degree of importance. The wife who purchases goods for household purposes in her husband’s name, is acting purely as his agent; and the clerk who sells the articles to her acts, in the transaction, as agent for the merchant in whose employment he is.

The legal maxim, Qui facit per alium, facit per se, which we will make read here, “What one does by another he does himself,” is the essential idea of agency; that is, it places on sure foundation the question of responsibility, at least, as to where it belongs. This is the whole doctrine so far as responsibility or liability is concerned.

That it is particularly necessary in business life to have this delegation of power, and this centralization of responsibility, needs no explanation. The publisher of this magazine could be a publisher only in imagination without it, for he would have no influence in his own sanctum, except with himself; and we should feel no security in dealing with a company with no recognized and responsible manager.

We have to deal with a fixed fact. Agency exists. The owners of magnificent stores, the stockholders in the railroad and steamship lines are all indebted to an army of agents whose active brains and eager efforts keep cars and steamers in motion, purchase and sell goods, and keep the accounts of the business world in proper balance.

How is an agency established? Our readers probably could answer this question in part; try it and see if we are not right.

We must answer by remarking that it depends somewhat upon what is wanted of an agent. Thus, if one be possessed of real estate, situated in some distant place, and is desirous of making a sale, and of selecting and commissioning some one to represent him in such a transfer of property, the appointment would be by a power of attorney, executed as described in our later article on real estate, “to which reference is hereby made.”

To represent another in ordinary business transactions one may act by virtue of a written or verbal agreement. Thus, if A places goods in B’s hands for the purpose of selling through B, this will be sufficient to constitute an agency, and for the purposes of this business B is A’s agent, and all would be protected in dealing with him in such capacity. A bookkeeper in the counting room of his employer is fairly presumed to have authority to receipt bills, to pay bills, render accounts, and in some cases to make purchases, particularly if such part by him done has been sanctioned by the merchant in the past. But he has no authority to sign his employer’s name to notes, bills or checks unless specially authorized.

A minor, though not capable of being a party to a contract himself, may do so for an employer, and thus be an agent, and his principal is responsible for his acts in such capacity, unless they be tortious, or wrongs in themselves. There would obviously be no security for innocent parties in fixing upon any other solution of the question of liability, because if A permits B, though a minor, to act for him and thereby takes advantage of his services in that capacity when they are favorable to his interests, it would be inequitable for him to shift the responsibility when it becomes onerous.

While the principal is responsible for the acts of his agent, when not beyond the authority given, it is the duty of the agent to obey the instructions of his principal. This he is always to do unless some unforeseen situation presents itself, which requires the exercise of a discretionary power and immediate action. And then, an agent would be justified in acting contrary to instructions, or without instructions only when reasonable foresight and experience would approve of the course pursued by him. This for legitimate pursuits, our readers always remembering that an agent is not justified in doing an illegal or immoral act, and that, even though specially instructed so to do. The agency must be apparent and known to exist, that third parties may know themselves to be dealing with one in such capacity, and that agents may not be made to assume responsibilities which do not belong to them. This may be accomplished by advertising in and transacting all business in the principal’s name; or where the name of the principal is not necessarily made use of in the course of the business, the fact of the agent’s business employment being known as such would doubtless be sufficient.

A clerk having occasion, in the course of business, to sign his employer’s name to letters, in receipting bills and such routine business, does it in this manner:

E. E. Emmons,
Per S.

Where special authority is given to sign checks, notes and accept bills in his principal’s or employer’s name, the agent will add his own name, with the word “Attorney.”

It must be remembered that an agency, so far as an agency transaction is concerned, must stand by itself, and not be associated with agent’s private business; that principal’s and agent’s property should be kept entirely distinct.

A commission merchant, although an agent so far as his dealings with his principal or consignor, is not such in relation to other parties, since he does business in his own name, and is recognized as a merchant and not an agent, although his business may be largely a commission business. He is bound to obey instructions of his principal or consignor, whom he charges a percentage for the handling of the goods consigned, incidental expenses, and, in cases where he assumes the indebtedness resulting from the sales, an extra commission.

Since mention has been made of commission merchants, we must individualize once more, and mention brokers. A broker simply effects a sale or purchase, as of merchandise or stocks. Unlike commission merchants they neither have, for the purpose of effecting the one, nor acquire by the accomplishment of the other, absolute possession of the chattels bought or sold.

In whatever capacity as special agent for another, one is acting, he is ever bound to keep and render proper account of the business entrusted to his care; to keep his principal properly informed regarding it; to use due diligence in business; to treat the property of his principal with same care and handle with same prudence, as a man of ordinary carefulness and forethought would his own. All this means only, that he should act with ordinary skill, and should render to his principal fair and honest service.

What terminates the agency? Death or insanity of either party; completion of work undertaken; expiration of time agreed upon; by express declaration of either party at pleasure, the other having due notification, and by such action acquiring a valid claim for whatever damages result on account thereof.

Partnership.

It is of constant occurrence that persons deem it advisable to unite themselves together for the prosecution of some general or particular business, paying their respects, by such act, to the old saw, “In union there is strength.” They agree by such an association to undertake the business, which induced them to unite their efforts with the hope of attaining to better results. The partners may or may not equally participate in the activities of the business to be undertaken, and may or may not stand on equal footing so far as relates to the sharing of the gains and losses. All of this is governed by their agreements at the outset, and its subsequent mutually agreed upon changes.

Like other species of contracts, the conditions of partnerships may be agreed upon verbally, may be in writing, and may result by implication. Of the three, which? Regarding this and all other engagements, establish a rule to which adhere rigidly. The rule: Have a thorough understanding with all parties with whom you contract; reduce it to writing, and have all interested parties sign. In this way the difficulties of misunderstandings and convenient forgetfulness will be less troublesome. It is worth all it costs to bear this precaution in mind.

Partners assume different relations and responsibilities as regards the partnership and the business world. There are the ostensible partners who boldly advertise themselves as such, and as such assuming the hazards incident to commercial enterprises; then the nominal partner who seeks to help a partnership by lending it his name, and thereby holding himself out as a member of it and making himself liable to creditors for partnership debts, providing credit was given, because of his supposed connection with the firm, as a regular partner; secret partners, who keep their names from the public, seeking by this means to avoid liability, but at same time sharing with the other partners the profits arising from the business. If such partnership becomes known to creditors, they may enforce collection of claims due from the partnership, as against the property of the secret partner; and the special partner, recognized by the laws of some of the states, which limit his liability to the amount of his investment, on condition that he gives public notice of such partnership agreement in a manner prescribed.

The partnership is organized, the partners assuming such relation to the partnership as they mutually agree upon, bearing in mind the above description of liabilities.

The element agency becomes quite conspicuous here, for each partner is an agent of the partnership and invested with plenary power to bind the other partners by his acts, when within the business sphere of the firm. It will be observed that we say in the line of the copartnership business, because otherwise it would not be sanctioned. As an illustration: A member of a partnership engaged in the flour trade would not have authority to bind his partners, if he attempted to involve them in stock speculations, unless previous similar enterprises by him had been approved by them, in which case there might be a fair presumption that such authority existed. This leads us to the question of liability; and liable they are, each and every partner, unless by virtue of exception previously mentioned, exempted. Their individual property, in the event of there being insufficient partnership assets to liquidate the indebtedness of the firm, must respond to the creditors’ call.

Now, since the acts of a partner may result in a manner disastrous to all associated with him, it is his duty to act with all fidelity and perfect good faith; to give his attention carefully to the business, acting as his best judgment may advise for the benefit of all. While, however, a breach of these obligations creates a liability for such misfeasance or wrong act as a partner may be guilty of, it does in no way affect outside parties, unless cognizant of and participating in same.

Gains and losses how shared? The object of our partnership is the hope of gain; its effect may be the realization of loss.

This question of division ought to be solved by reference to the articles of agreement, which should have expressed the whole partnership contract, and have been signed by all the partners. This not done? Well then, we say, all should share in equal proportions the gains or losses, first making unequal investments equal by an allowance of interest on net investments, and equalizing individual ability and experience by allowing each partner that salary to which, measuring his services by comparison with those rendered by other partners, he seems to be fairly entitled. Where capital and skill are equal, an equal sharing in the gains or losses is equitable.

Dissolution.

The following conditions serve to dissolve a partnership:

The expiration of the time for which the partnership was organized; ordinarily the completion of the business for the purpose of accomplishing which the partnership was formed;

The misfeasance of a partner; whenever a partner fails to act in harmony with his associates, or disposes of his interest in the partnership affairs;

By the death of any one of the partners;

By decree of the court ordering the same;

By the consent of all the partners at any time.

After the dissolution, a partner acts no longer for his former copartners to the extent of entering into or incurring new obligations. Each partner however has full power to collect debts due the firm, signing the firm name to receipts, and also to liquidate outstanding obligations of the firm, unless by special agreement these powers are conferred on one partner alone. This is an arrangement which affects the partners only, third persons being protected in a settlement with any member of a late partnership dissolved.

After the business is wholly settled, all liabilities being paid, and not till then, is a partner entitled to his share of the partnership funds.

Notice of the dissolution of a partnership should be publicly given, it being necessary in the case of one or more retiring from the firm, in order to secure them from future liability. Individually this notice is given by mail to all with whom the firm has been dealing. This, in addition to ordinary publication of notice in newspaper, is sufficient.

SALES—Personal Property.

A sale is the transfer of certain property from one to another for a certain sum paid or to be paid, those being parties to it, to make it valid, who are competent to enter into a contract.

A sale effected entitles the purchaser to possession of the goods on payment of price agreed upon; or, if purchaser be given credit, at once, unless there be some special agreement to the contrary.

In the case of goods shipped to a purchaser who becomes insolvent before they have been delivered, the vendor may order the carrier to hold them subject to his (vendor’s) order, thereby exercising a privilege given him by law, and called the right of stoppage in transitu.

All sales are not made with an actual knowledge on the part of the vendee of the quality of his purchase, some being by sample. Sales in this manner give credence to the inference that the samples constitute a part of the goods sold, and therefore the goods must be of same quality as the samples, else the vendor does not comply with the conditions of the contract to which he is a party, and the purchaser may refuse to complete the sale by acceptance of the goods.

The quality of goods sold must be as represented by the vendor, if he warrants them by such representation, in order to secure a sale. In sales each one is supposed to be on his guard. “Let the purchaser beware,” is the maxim. And if, without actual fraud, concealment or misrepresentation on the part of the vendor, the vendee is deceived in a purchase because of poor judgment, he alone must suffer the consequences and take the loss. A warranty of an article puts the vendor under the necessity of making compensation to vendee, if the article is defective wherein warranted.

A purchase of stolen property gives to the purchaser no title as against the true owner, or the one from whom the property was stolen, even though the purchase be made in good faith, and for a full consideration. “Let the purchaser beware.”

There is but one species of personal property to which this will not apply, and that negotiable commercial paper.

Some contracts regarding sales must be in writing, and signed by the party to be charged, or his agent. What are they? See article on contracts.