Another illustration is that of a shipmaster, who has authority in case of necessity to purchase supplies for the vessel and pledge the credit of the owner.

A libel was filed against a vessel for necessary supplies and labor furnished to the vessel in a foreign port on the authority of the shipmaster. It was held that the vessel and owner were liable, as a master has authority in a foreign port to bond his owners for necessary repairs and supplies. - The H. C. Grady. 87 Federal Reporter 232.

QUESTIONS

1. How is the relation of principal and agent established?
2. Who is a gratuitous agent?

3. Why is it that a gratuitous agent is not an agent by contract?
4. In what three ways may an agent be appointed?

5. What are the exceptions to the rule that an agent may be ap

pointed orally?

6. Is an appointment in writing preferred to an oral appointment? Why?

7. What is meant by an implied appointment?

8. What exceptions are there to the rule that an agent, to make a contract under seal, must receive an appointment under seal?

9. What is a power of attorney?

10. How is an agency created by ratification?

II. Name three ways by which a principal may ratify an agent's acts. 12. What are the special rules governing ratification?

13. How may an agency be created by necessity? Give an example. 14. What are the usual powers of an agent?

15. If Brown should act for Grant without authority, what two courses are open to Grant?

3. OBLIGATION OF PRINCIPAL TO AGENT

Compensation. The principal is under obligation to the agent to compensate him for his services.

When the agreement fixes the compensation the agent is to receive, this, of course, will control.

Wallace agreed to work for a given time at a certain salary. He stayed beyond the time, and nothing was said about the salary for the additional period. It was held that he could recover the salary only at the rate agreed upon. It was said that the best valuation of services was that mutually agreed upon by the parties themselves.

- Wallace v. Floyd, 29 Pa. State 184.

In the absence of an express contract, the law will imply an agreement to pay what the services are reasonably worth, unless it can be fairly inferred that the services were intended to be gratuitous.

Sloan hired out to work for McGuire during harvest; nothing was said about wages. As Sloan is an able-bodied workman and did a good day's work, it is implied that he can collect from McGuire what other workmen are receiving in the same locality and what his services are reasonably worth.

Even if the service was unauthorized but is subsequently ratified, and the benefit is accepted by the principal, the agent, ordinarily, can recover for the service to the same extent as though the service had been originally authorized.

Gelatt was employed to sell real estate on the owner's terms. He sold on other terms, but the principal ratified the sale. Held, that the agent was entitled to his commissions as originally agreed.

Gelatt v. Ridge, 117 Mo. 553.

The principal is also under obligation to reimburse the agent for any sums which he may have paid out, or for which he may have become individually liable in the due course of his agency and for the principal's benefit.

Maitland, a broker, purchased for Martin certain bonds which Martin left in his hands several years, when he directed that they be sold. It was then learned that three of the bonds had been repudiated by the state where issued. Held, that the broker might be reimbursed; that the loss fell on Martin if the broker acted within the lines of his duty and in good faith. - Maitland v. Martin, 86 Pa. State 120.

The agent is further entitled to indemnity from his principal for the consequences of any act performed within his authority and in the execution of his employment. But to be entitled to indemnity the act must be lawful, or the agent must have been ignorant of the fact that the act was illegal.

Moore brought an action to be reimbursed for damages which he had been obliged to pay because of certain acts performed by him as agent for Appleton in dispossessing a third party of lands claimed by Appleton and which Moore had reason to believe belonged to Appleton. Held, that the act was not manifestly illegal, and that the law implies a promise of indemnity by the principal for losses which flow directly and immediately from the execution of the agency. – Moore v. Appleton, 26 Ala. 633.

The Employer's Duty to Employees. The employer's first and most important duty to his employees is to afford them protection by providing a safe, sanitary, and suitable place in which to work, and safe tools with which to work. In addition to this no workman is required to expose himself to dangers of working with reckless or incompetent associates. If the employee himself is in any way careless, the rule of contributory negligence relieves the employer from responsibility.

Laws have been passed in many states which define the duties of employers and the rights of employees. There are two classes of these laws:

1. The employers' liability laws, which aim to define the employer's duties and liabilities and to change or remove the objectionable rules of the common law.

2. The workmen's compensation laws, which aim to regulate and systematize responsibility for injury and to provide insurance for the injured.

Detailed information on these laws and on other important statutes will be found in a chapter on important statutes near the end of the text.

QUESTIONS

1. What are the obligations of the principal to his agent?

2. How is the compensation of the agent fixed?

3. In case nothing is said about compensation, what is implied?

4.

What is the rule if the service rendered was unauthorized?

5. What are the obligations of the principal in the matter of (a) reim

bursing the agent? (b) indemnifying the agent for loss?

6. What are the employer's duties to employees?

7. Under what conditions is the principal liable for injury to the

agent?

8. What is an employers' liability law?

9. What is a workmen's compensation law?

10. What is meant by "contributory negligence "?

4. OBLIGATION OF AGENT TO PRINCIPAL

Agent must Obey Instructions. — The agent is under obligation to his principal to obey the principal's instructions. So long as the agent carries out his instructions he is protected,

but if he goes contrary to them and loss ensues, he is liable for the damage; as, where an agent is instructed by his principal to send a certain claim for collection to A, and instead he sends it to B, and loss ensues, the agent is liable.

The Express Company received for collection a draft with instructions to return at once if not paid. They instead held the draft until the drawee wrote for some explanation. They then failed to present it for two days after the drawee had received a reply from the drawer, and at this time the drawee became insolvent. Held, that the Express Company was liable to the drawer. Whitney v. Merchants Union Express Co., 104 Mass. 152.

Adams hired Robinson as her agent to lease certain premises for $600 per year with good and approved security. Robinson leased the premises without security in violation of his instructions. Held, Robinson was liable for any damages suffered by Adams.- Adams v. Robinson, 65 Ala. 586.

Agent must Use Judgment. The agent owes the duty to his principal to exercise judgment and skill necessary to the prudent and careful discharge of his agency. This prudence and skill can generally be said to be the same as is ordinarily observed by prudent and careful men, under similar circumstances and engaged in similar business.

Thus, an agent to purchase a carload of wheat must exercise and possess only such knowledge and skill as is common to careful dealers in grain; while an agent to purchase an expensive and intricate engine is bound to exercise the caution and skill of an engineer.

Reynolds was general manager of the San Pedro Lumber Co. and it was one of his duties to cause to be kept regular and accurate accounts of the San Pedro Lumber Co.'s business. Such accounts were not kept and the San Pedro Lumber Co. suffered losses because of it. Held, Reynolds was the agent of the San Pedro Lumber Co., and was required to exercise reasonable skill, diligence, and care in the performance of his duties. For his failure to do so he was responsible to his principal.

San Pedro Lumber Co. v. Reynolds, 121 Calif. 74.

Fiduciary Relation. There exists between the principal and his agent what is said to be a fiduciary relation, which means that their relations are such that the utmost good faith is required in their dealings. An agent cannot, therefore, acquire any rights that are contrary to the interests of the principal. He must not act for both the principal and the third party in a transaction without their consent.

Worden was appointed the Company's agent to sell a herd of cattle and horses. The agent produced a purchaser to whom a sale was later made. In an action by the agent to recover for his services it was shown that the agent had acted for both the buyer and the seller, neither of whom knew that the agent was acting also for the other. The court held that neither party was liable to the agent for his services.

Alta Inv. Co. v. Worden, 25 Colo. 215. This rule is based on the principle that no one can serve two

masters.

Neither must the agent use his position or authority for his own benefit.

Miles was employed by Bunker to buy a certain horse for him for $80 or as much less as he could, and was to have $1 for his trouble. Miles bought the horse for $72.50, and returned to Bunker no part of the $80. The court allowed Bunker to recover the balance of $7.50, holding that the agent could not make a profit for himself out of the transaction.

- Bunker v.

Miles, 30 Maine 431.

An agent authorized to sell or rent will not be permitted to buy or lease the property himself without the principal's consent.

Kerfoot owned certain land and employed Hyman to sell it for a certain amount. Hyman bought it himself and took the title in the name of a third party, but for his own benefit without the owner's consent, and at the same time had a part of it sold for as much as he obtained for the whole of it for Kerfoot. Held, that the agent must account to Kerfoot for the excess received, and the remainder not sold will revert to the principal. — Kerfoot v. Hyman, 52 Ill. 512.

Also an agent commissioned to compromise a claim cannot purchase it at a discount and then enforce it in full against the principal.

The agent is under obligation to his principal to render a true account of all of the proceeds and profits of the agency. In the absence of an express agreement to the contrary the agent must render an account to his principal upon demand or within a reasonable time.

Subagents. Another obligation of the agent to his principal is to act in person, except when authorized either by his principal or by established custom to appoint subagents. The reason for this is obvious: the principal employs the agent because of his confidence and trust in his ability and honesty to act in his stead, and the agent appointed cannot delegate to another the duty or trust which has been confided to him.