Story Case

The American Publishing Company published a well bound and beautifully illustrated set of Dickens' Works, which they determined to sell through agents. George Madison applied to them for an agency to sell the edition in South Bend. The company, after looking into his qualifications, decided that Madison should be engaged. A written contract was drawn up between the company and Madison, by which Madison was given the exclusive right to sell the edition in question, in South Bend, Indiana, for a period of one year from the signing of the contract. Madison went to South Bend and began his work. He was doing well, when the company notified him that he was discharged, as they had procured another agent to take his place. In an action brought by Madison against the company for damages, what should the Court decide?

Ruling Court Case. Edmund Burke Vs. Priest And Burke, Volume 50 Missouri Appeals, Page 310

In this case, it appeared that Priest and Burke had lately been co-partners, engaged in the practice of medicine. They dissolved their relation by mutual consent. At this time there were many outstanding claims for services, which they had rendered during the continuance of their partnership relation. They went to Edmund Burke, who was a lawyer, and agreed with him that they would turn over their books of account for collection and adjustment, and further agreed to pay Edmund, as a compensation, ten per cent on all sums collected, and five per cent on all accounts adjusted. Edmund accepted their offer. But, later, Priest and Burke refused to turn over the books to him. Thereupon, he brings this action for damages.

Priest and Burke contended that they had the right to revoke his authority when they saw fit; and having exercised that authority, the agent could not complain.

Decision: The relation of principal and agent is a personal relation. The principal selects an agent for reasons which he alone knows. If, for any reason, the agent ceases to measure up to his personal standard, he has the power to revoke the authority of his agent. This does not, necessarily, mean that he always has the right to revoke the authority. For, in some cases, he may have the power to revoke the authority and yet be compelled to pay damages to the agent for the revocation.

Mr. Justice Smith, who delivered the opinion of the Court, said in part: "The principle is rudimentary, that, as between principal and agent, the authority of the latter is revocable at any time, if not coupled with an interest. The authority of the agent to represent the principal depends upon the will and license of the principal. It is the act of the principal which creates the authority. It is for his benefit, and to subserve his purposes, that it is called into being; and, unless the agent has acquired an interest in the subject matter, it is in the principal alone that the authority is to be exercised. The agent has no right to insist upon a further execution of the authority if the principal desires it to terminate. It is a general rule, that, as between principal and agent, the authority of the latter may be revoked by the former at his will at any time, and without reason therefor, except where the agent's authority is coupled with an interest."

Judgment was given for Priest and Burke.

Ruling Law. Story Case Answer

The relation of principal and agent is a voluntary relation. Furthermore, it is a personal relation. That is to say, the principal chooses an agent to represent and act for him. He, alone, knows just what he desires, in selecting a person to represent and act for him. Accordingly, if the agent fails to discharge his duties in the manner desired by his principal, the latter has the power to terminate his authority, except in cases of agencies coupled with an interest, which will be discussed later. The fact, however, that he has the power to terminate the agency does not necessarily mean that he always has the right to do so. If the relation is founded upon a contract, the principal may revoke the authority, but he must pay the agent whatever damages he may have sustained. In the Story Case, the publishing company has the power to revoke the agency of Madison, for any reason. Whether they had the right, depends upon whether they were justified because of some misconduct or incompetency of the agent. If they did not have the right, he may recover the actual damages for the wrongful dismissal as proven to the jury.