CHAPTER XXIV THE AGENT § 138. Agent's Duty to Principal An agent is, in the line of his duties, subordinate to his principal. Therefore, it is an essential feature of his employment that he should obey orders, act with good faith, and use such prudence, skill, and diligence in his duties as are requisite for their proper discharge. He must, if necessary, keep proper accounts and render statements to his principal. He cannot delegate any duty demanding discretion to others without special authority. If he does not do all this, if he fails in his duty, he may be discharged, his compensation may be denied, and he may be responsible in damages. Any profits made in the course of an agent's employment belong entirely to his principal. An agent may not use his agency for his own advantage. One Cummings, an agent for the sale of stock for the Diamond Match Company, sold stock of the company amounting at par to $170,000 for $200,000, and kept the profit of $30,000 for himself. Later this was discovered by the company, which brought suit and recovered the whole amount.1 In making a contract with an agent or confidential employee, it is safest to contract that he shall not at any time, either while he is employed or thereafter, reveal or use for the benefit of others any special information, secret processes, lists of customers, or other private matters that may be learned in the course of his duty. The courts will protect such an agree ment. 1 Graham v. Cummings, 208 Pa. St. 516. In a Michigan case, a party employed in a manufactory of fly paper, under contract not to use methods elsewhere, after severing his connection with the factory, made plans to give others the benefit of his information. The court granted an injunction to prevent him from revealing the processes.2 Where a salesman or solicitor is employed to work up trade, he necessarily becomes familiar with the list of customers. In such a case, a contract with an agent that he shall not, for a period of years, engage with any other house in the same line doing business in the same territory, will be sustained by the courts. What is here said as to the duty of the agent refers to a general agency, where the agent gives his entire services to one principal. In cases of special agency, what is said of the agent's duty applies only so far as is necessary to effect the object of the agency. A bank may be an agent to collect a draft, but is not called upon to exercise general obedience, loyalty, etc. Notes: I. A general agent must be obedient, loyal, careful, skilful, honest, and of good habits. 2. A special agent is required to exercise only such qualities as are requisite to effect the purpose of his agency. $139. Agent's Obedience Disobedience is good cause for discharge or refusal to compensate an agent, and renders him liable for any resulting damage. It is an agent's duty to obey orders; and by so doing he relieves himself of any responsibility in case of misadven ture. If, however, circumstances should arise which make it 2 Thurm Company v. Tloczynski, 114 Mich. 149. necessary to act contrary to the instructions he has received, it is his duty to do this, provided, of course, that it is impossible to consult his principal before acting. Emergencies may occur where it is the duty of the agent to do the best thing possible, even though it involves his disregarding orders. Where no emergency exists, however, the agent violates his directions at his own risk. It is the principal's right to decide how he wishes his matters attended to; and if the agent obeys and loss ensues, it is the loss of the principal. If a shipping agent or railroad varies directions that goods are to go over some particular line, the agent or the railroad incurs the liability of an insurer. An agent who has been instructed to sell for cash has no authority to allow credit. If he gives credit and loss ensues, he is responsible. If he is authorized to buy or to sell at a certain price, he may not go beyond this. This is not to be understood as prohibiting trifling departures and immaterial variations from exact instructions. The law does not regard negligible things. An agent who is instructed to ship goods or to remit money in a particular way must obey his instructions to the letter. Notes: I. 2. An agent must obey orders if he does not want to make himself liable. When an emergency exists he may act contrary to instructions. 3. A principal should, where possible, give explicit orders to his agent. § 140. Agent's Good Faith Good faith is essential on the part of anyone acting in the capacity of agent. If an agent is found to be working for his own interests as opposed to those of his employer, he may be discharged summarily. If he makes false reports or deceives his employer, or defrauds him in any way, he may be discharged; and he will have forfeited any claim to compensation. If he learns of anything in the line of his business to the principal's advantage, it is his duty to let his principal know and have the benefit of it. A broker, in a Michigan case, sold land to a party whom the owner had previously excepted from those to whom the broker might sell. It was held that the latter was not entitled to commission. 3 In a Massachusetts case, an agent made a sale of some property, and in rendering the account to his employer charged him $50 as paid to an attorney for examining the title, whereas he really paid only $25. The court held that he lost his right to commission.* The Agent Must Not Act for Both Parties. An agent may not represent both parties to a transaction. He may not earn a commission from both buyer and seller. This is a rule that holds good everywhere. But it is said that a double agency may be valid where both parties know of the double agency and agree to it; it is then understood that the agency requires no independent discretion. The Agent Must Not Act for Himself. If the agent is employed by a principal to manage his business, what he does is done for the principal. It is not right for the agent to be interested adversely; and all the profits that are made in connection with the principal's business belong to the principal, unless he has previously agreed to give the agent a share of the profits as part or all of his compensation. If the agent in the course of acting for his principal obtains any particular advantage to himself, and the principal discovers it, the latter can hold the agent accountable for the profits or the property so obtained. Ranney v. Henry, 160 Mich. 597. An Agent Must Not Compete With His Principal. An agent must not be interested adversely to his principal. Neither may he represent and sell goods for a competitor of his principal. An employer has a right to his agent's absolute loyalty. If an agent uses his knowledge of his principal's affairs to secure an advantage for himself, the courts will compel him to make restitution. The law moves on a high plane in matters of this kind. The Agent Must Be of Good Habits. Any habits which interfere with the proper discharge of the agent's duty are sufficient reason for his discharge. Drunkenness in the daytime or while attending to business is undoubtedly sufficient reason for dismissal. As in the case of other employees, the circumstances must be considered. Generally speaking, an agent may be discharged for drunkenness, gambling, or licentiousness. Possibly, the courts would not in all cases justify too close an inquisition into the private habits of employees. A bank, however, employs detectives; and if an employee indulges in loose living he is discharged and has no recourse. Usually an agent who is discharged for any reason of this kind cannot afford to risk the notoriety involved in an attempt to hold his employer for damages. Non-Payment No Excuse for Non-Performance. The fact that the agent is unpaid does not affect his responsibility. The agent's liability does not depend upon how well he is paid for what he does, or whether he is paid at all; for, if he undertakes to do anything for another, he must do it well; and he is responsible in case of bad faith, negligence, or lack of skill. Notes: I. 2. The doctrine of the law on the subject of the agent's |