2. Where the Agent alone is bound.

В§ 183. (I) Unauthorized contract.

Where the agent knowingly, negligently, or mistakenly

holds himself out, either expressly or impliedly, as having

authority to act for a principal in a particular transaction,

when in fact he has no such authority, he is liable to the

third party who deals with him on the strength of such

representation for any damage the latter may suffer in con-

sequence of any change of his legal relations induced by

the representation.^ The question remains, in what kind of

an action may the third party pursue his remedy ?

(1) Agent not liable upon the contract. It is now gen-

erally agreed that the agent does not bind liimsclf upon

the contract. He does not bind his principal because he

lias no authority to do so ; he does not bind himself because

he is not a party to the contract, and the courts will not

create a new contract either against or in favor of the

1 Owen V. Gooch, 2 Esp. 567; Ex parte Ilartop, 12 Ves. 3-19; Robins

V. Bridge, 3 M. & W. 114; Whitney i'. Wyman, 101 U. S. 392; Bonynge

r. Field, 81 N. Y. 159; Covell t'. Hart, 14 Ilun (N. Y.), 2.V2.

2 Spittle V. Lavender, 2 Brod. & Biiig. 452; Grant v. Beard, 50 X. H.

129; Brown v. Bradlee, 1.50 Mass. 28; ante, §§ 46-49, 101.

8 Downnian v. Williams, 7 Q. B. 103; Southwell v. Bowditch, 1 C. P,

I). 374; Gadd v. Houghton, 1 Ex. Div. 357; post, §§ 186, 188, 189-195.

197.

* Jones V. Littledale, 6 A. & E. 486; Holding v. Elliott, 5 H. & N.

117 ; Williamson v. Barton, 7 H. & N. 899 ; Long v. Millar, 4 C. P. Div.

450.

6 CoUen V. Wright, 7 El. & Bl. 301 ; Kroeger r. Pitcairn, 101 Pa. St.

311.

LIABILITY IN CONTRACT. 231

agent.^ Some early New York cases ^ which held that an

action would lie upon the contract, must be regarded as

overruled,'' and other cases holding a similar doctrine^ as

opposed to the weight of authority.

(2) A(j' nt liable as for breach of warranty of authority.

Where the agent innocently exceeds his authority under cir-

cumstances not amounting to deceit, no action in tort can

be maintained.^ Yet clearly the third party has suffered as

great an injury as if the representation had been made

fraudulently. In order to provide a remedy in such an emer-

gency, the courts have invented the fiction that the agent

"warrants" his authority wiienever he makes a contract

for his principal, and allow an action for damages for the

breach of this warranty of authority.^ The fiction is well

enough, but it should not be allowed to disguise the fact

that this is a plain exception to the rule that no action lies

for an innocent misrepresentation.'' It serves the additional

purpose of giving an action against the estate of the agent

after his death, whereas a tort action would not survive.^

This rule is subject to the qualification that if the agent acts

in good faith, and the third party has full knowledge of all

the facts upon which the agent's belief is founded, there is

1 Ballon V. Talbot, 16 Mass. 461 ; J^IcCurdy v. Rogers, 21 Wis. 199 ;

Duncan v. Niles, ;}2 111. 532; Hall v. Craudall, 29 Cal. 568; Cole v.

O'Brien, 34 Xeb. 68; Noyes v. Loving, 55 Me. 408; Jenkins r. Hutchin-

son, 13 Q. B. 744 ; Lewis v. Nicholson, 18 Q. B. 503 ; Pollock on Cont.

(6th ed.) 101-103.

2 Dusenbury v. Ellis, 3 Johns. Cas. 70 ; White v. Skinner, 13 Johns.

307.

3 White V. Madison, 26 N. Y. 117 ; Dung r. Parker. 52 X. Y. 494 ;

Baltzen v. Nicolay, 53 N. Y. 467 ; Simmonds v. Moses, 100 N. Y. 140.

4 Dale c. Donaldson, 48 Ark. 188; Weare v. Gove, 44 N. H. 196.

5 Ante, В§ 152.

6 Collen V. Wright, 8 El. & Bl. 647; Suart v. Haigh, 9 T. L. Pv. 488;

Baltzen v. Nicolay, 53 N. Y. 467; Kroeger v. Pitcairn, 101 Pa. St. 311;

Weare v. Gove, 44 N. H. 196 ; Trust Co. v. Floyd, 47 Oh. St. 525; See-

berger v. McCormick, 178 111. 404, 415-419.

в– ? Firbank's Ex'rs v. Humphreys, 18 Q B. D. 54.

8 Pollock on Torts (5th ed.), pp. 60, note k, 508.

H.ili ACENT AND THIRD PAIiTY.

no implied warranty,^ and to the further qualification that

if the a<rcnt expressly or impliedly states he docs not war-

rant iiis authority, the implication of a warranty is rebutted.'^

It is neecssai-y, further, in order that tlie action may be

maintained, that tlie contract made by the agent should be

one which would be valid and enforceable against the j)rin-

cij)al if the agent had been duly authorized.^

(3) Aijent liable in tort for wilful deceit. If the agent

wilfidly misrepresents his authority, by express declaration

or by contract, he is liable to the injured party in an action

of deceit.'* The action ex delicto rests upon the wilful or

reckless conduct of the agent. If, as suggested above, the

fiction of implied w'arranty were rejected, and the action

based upon the representation, whether innocent or guilty,

an innocent misrepresentation by an agent would escape the

general rule that deceit requires wilfid or reckless repre-

sentations. It is necessary that the other elements of deceit

be present. The third party must actually be deceived. If

he knows all the facts, the agent is not liable.^

(4) Pleasure of damage for breach of ivarranty of authority.

The measnre of damages for breach of a warranty of author-

ity by an agent is all the loss resulting from such breach

as a natural and probable consequence thereof.*' Usually

this damage is the same that might have been recovered

against the principal in case the contract had been author-

ized and he had refused to perform it." If the third person

has brought an action against the ])rincipal and been de-

1 Siiiout V. Ilbery, 10 IM. & W. 1.

2 Lilly V. Sniales, 1892, 1 Q. B. 456 ; post, В§ 201.

8 Baltzen v. Nicolay, 53 N. Y. 467; Warr v. Joues, 21 W. R. 695;

Pow V. Davis, 1 B. & S. 220.

* Polhill V. Walter, .3 B. & Ad. 114 ; Rand.-U v. Triiueii, IS C. B. 786;

Noyes r. Loring, 55 Me. 408.

^ Michael v. Joiie.s, 81 Mo. 578; Hall r. Lauderdale, 46 X. Y. 70.

В« Firbank's Ex'r.s r. Ihiinplirey.s, 18 Q. B. 1). 54; Meek v. Weiidt, 21

Q. B. I). 126; Re National Coffee Palace Co., 24 ( li. Div. 3!i7; Bush r.

Cole, 28 N. Y. 261; Sininionds v. Moses, 100 N. Y. 140; Taylor v. Nos-

traud, 134 N. Y. 108.

' Ibid., Trust Co. v. Floyd, 47 Oh. St. .525; Seeberger c. McCormick,

178 111. 404, 419.

LIABILITY IN COXTRACT. 233

featcd because of the want of autliority of the agent, he

may, in a subsequent action against the agent for breach

of the warranty of authority, recover in addition to the

usual damages the costs of the action against the principal.^