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.