LAW OF AGENCY.

PART I.

NATURE AND FORMATION OF AGENCY.

CHAPTER 1.

DEFINITIONS.

Sec. 1. NATURE OF AGENCY. If one appoints another to do an act for him as the act of the appointing party, such appointing party is known as the principal or master and the other party the agent or servant-agent if the work he is appointed to do is that of contractual negotiation with others; servant, if the work he is appointed to do does not involve contractual negotiation.

When a person procures another to do something for him, we have the following possibilities:

First: The person procured to do the work may undertake results in the accomplishment of which he acts as independently of the one procuring him as such party does of him-they are independent contractors.

Second: The person procuring the work to be done may by his arrangement with the other establish a more or less general control over the work to be done in the

nature of a proprietary interest in the services rendered, so that such work, though done by another, is really, as to the responsibility therefor, the work of the appointing party. In such case

(1) The work appointed to be done may be to negotiate contractually with others and then we call the appointing party the principal and the appointee the agent;

(2) The work appointed to be done may be of a different character, being perhaps (but not necessarily) work done in the performance of the principal's contracts with others, but not creating those contracts. In such case we call the appointing party the master, and the appointee, the servant.

It is seen at once that inasmuch as the work of the agent is to negotiate contractually with others, the rights of the principal against, and his obligations towards, such others arising out of the contracts made by the agent make up a big subject which is necessarily lacking in the relationship of master and servant. In the two relationships we have these principle considerations:

In Agency

1. The rights and duties between the principal and agent

-in contract

-in tort.

2. The rights and duties between the principal and third person arising out of contracts made by the agent pursuant to his authority;

3.

The obligations of the principal to third persons for the torts of his agent;

4. The rights and obligations between the agent and third persons.

In Master and Servant

1.

The rights and obligations in contract and tort (and also under workmen's compensation acts) between master and servant.

2. The obligations of the principal to third persons for the torts of his servant.

Thus we see that the scope of the work of the servant and the scope of the work of the agent takes us into a field which both traverse, and in a separate field of vast importance traversed only by the agent-the field that involves the authority of the agent to make contracts for his principal. Fundamentally the relationship in either case is that of service. And the reason that we distinguish is that in their incidents and consequences they go far apart.

The fundamental sameness of the relationships is seen in the fact that one may at one moment be agent, and in the next moment while on the same work, be servant. Employed to purchase goods, one becomes a servant to haul them home; employed as a store clerk, his miscellaneous duties are now those of agent, now those of servant. The examples below will illustrate this section.

Example 1. A owns a garage and repair shop. He contracts with B, a customer, to overhaul B's car. C works for A and assists in working on B's car. B sends his chauffeur for the car and directs him to buy a new tire from A on B's credit. A has what is called an authorized agency for these tires, but as a matter of fact he buys the tires from the manufacturer under a contract by which for a period the manufacturer agrees to supply what A orders. In this illustration A and B are independent contractors. C is A's servant. The

1. Kingan v. Silvers, 13 Ind. Ap. 80; 37 N. E. 413.