or where personal trust or confidence is reposed in the agent or special reliance is placed on the agent's skill or knowledge, the undisclosed principal cannot substitute himself for his agent. This, of course, does not apply to ordinary contracts of sale. The fact that an agent for an undisclosed principal has made his contract in writing or has affixed an unnecessary seal will not deprive the principal of any of his rights under the contract. But a principal has no right against a third person on a contract procured by the fraud of an agent acting within the scope of his authority, even though the principal does not authorize the agent to act fraudulently. Money paid to the agent of the undisclosed principal is a good defense in an action by a principal, but one also paying money to an agent after the fact of his agency is disclosed does so at his peril. A principal has a right of action against anybody who interferes with his agent wrongfully causing the principal to lose his agent's services wholly or in part. EXAMPLES 352. X maliciously and without just cause obtains the arrest of an engineer on the P. R. R., thus causing the stoppage of trains and damage to the railroad. X is liable to the railroad for the damages suffered. 353. X and A enter into a written contract for the sale and purchase of ten shares of stock at $50 each and each places his seal on the contract. X refuses to deliver and the market value of the stock goes up to $60. Under the statute no seal was necessary to the contract. P, the undisclosed principal of A, has a right of action for $100 damages against X, for the seal was mere surplusage. 354. X gives his promissory note to A in performance of a contract in which P is the undisclosed principal. Only A may sue on the note; in practice the note may be endorsed to P who may sue as the holder. 360. Agent's obligations to his principal.—An agent ordinarily owes five duties to his principal. He must obey the principal's instruction; he must exercise skill, judgment and care in the prudent performance of his duties; he must act with the highest good faith in the management of his principal's business; he must account duly for the profits and proceeds of the agency; and he must act in person unless by the principal's authority or by custom he is permitted to act through a sub-agent. 361. Agent's duty to obey.-When a principal maps out one course for his agent, the agent will pursue another at his own risk. Reasonable care and diligence in selecting or pursuing another course is no defense. An agent, of course, will incur no liability for failure to do an illegal act and his deviation from a prescribed course may be excused by the principal through ratification expressed or implied. Where an agent has a lien on goods which he is to sell at a minimum price named by the principal he may sell at a fair market price though below that fixed by the principal, if after due notice the principal refuses to pay his indebtedness to the agent. 362. Agent's duty to be prudent.-An agent must use the care, skill and diligence ordinarily observed by prudent men engaged in similar undertakings under similar circumstances. The agent warrants his ability unless the principal has notice or knowledge of his deficiency. EXAMPLE 855. P hires A as a painter. A, while about his work, ruins some valuable marble through ignorance. A will be liable, for in accepting the job he held himself out as a qualified painter. 363. Agent's duty to use good faith.-An agent stands in a position of trust to his principal and must act for the principal alone. He is bound to give his principal due notice of all facts that may affect his interest. For example, an agent cannot buy what he is delegated to sell. A third person who deals with an agent, knowing of the agent's breach of good faith, does so at his peril. It has been held that a principal may enjoin his agent from using trade secrets learned while in the employment of the principal. 364. Agent's duty to account.-An agent is not entitled to secret profits, but must account for all moneys received in the transaction of his principal's business. Even in the case of illegal transactions, he is bound to keep and render accounts. An agent who mixes the property of his principal with his own property will be absolutely liable for any loss that may result. 365. Agent's duty to act in person.-An agent is bound to act in person wherever his business requires the exercise of discretion or judgment, but he may delegate such powers and duties as are merely ministerial or mechanical in their nature. EXAMPLES 356. P empowers A to accept by way of accommodation certain bills of exchange drawn on him. A may not delegate to X the power to select on behalf of P the bills of exchange which are to be accepted, but after having made the selection himself, he may delegate to X the authority to write the acceptance on the selected bills. Where an agent is empowered by his principal to select sub-agents, his duties require that he exercise due care in selecting them. When that duty is fulfilled the sub-agent becomes the agent of the principal. EXAMPLE 357. P deposits a check in the A bank in New York for collection. The A bank sends the check to the X bank in St. Louis with instructions to present it at the Y bank in that city upon which the check is drawn. The X bank does not make a prompt presentation and demand and in the meantime the Y bank fails. In the above example some states hold that the A bank would be liable for any loss arising out of the negligence of the X bank, while other states hold that the depositor gives his bank authority by implication to select its correspondent bank to make the collection, in which case the correspondent bank becomes the direct agent of the depositor. Under the latter rule, the A bank would be liable only in the event of its failure to use due care in the selection of its correspondent. 366. Special forms of agency.-The general principles which have been stated in the preceding sections apply to all agents and their principals, but certain well defined forms of agency need special treatment. The peculiar rules applicable to these special forms of agency are often derived from statute and, therefore, may differ more or less from state to state; but many of the attributes of these forms of agency are the result of custom and find their sanction in the common law. 367. Del credere agents.-A del credere agent is one who guarantees the accounts of the customers who become debtors to his principal through his solicitation. In most of the states of the Union the contract between the principal and his del credere agent need not be in writing. This is contrary to the usual rule governing the contract of guaranty. In fact, the agent is primarily liable. The transactions brought about by a del credere agent amount to a sale to the agent and a resale to the customer. The titles to the goods, however, pass directly from the principal to the third per son. 368. Gratuitous agents.-An executory contract whereby one promises to act as agent without consideration is not enforcible against him. If, however, the agent enters upon the execution of the contract, he is bound to use the same degree of care and prudence that reasonable men exercise under like circumstances. 369. Factors.-Factors or commission merchants are agents to whom goods are sent for the purpose of sale. The factor is a bailee with the right to sell the goods in his own name for cash or on the usual terms of credit and with the power to receive the price and to execute and deliver a binding discharge to the buyer. He has a lien upon the goods for the balance in his favor of the account. A voluntary A voluntary relinquishment of possession destroys the lien. These common law rights and liabilities are generally modified by statutes known as the "factors acts." 370. Auctioneers.—Auctioneers are agents who sell property to the public at the highest price offered. When the goods are knocked down the auctioneer becomes the agent of the seller with power to sign the memorandum of sale in his behalf for the purpose of satisfying the statute of frauds. The auctioneer has possession of the goods and a lien on them for his charges. He must sell them for cash and can accept other goods, negotiable paper or credit only when given special authority. He may sue the purchaser in his own name and may receive payment for the seller. He |