Story Case

The Illinois Aluminum Ware Company advertised for agents to sell certain articles manufactured by them. Donald Jones, a student in the University of Chicago, visited the company and desired an agency. The company was willing to engage him. A written contract was drawn up, by which it was provided that, for and in consideration of $5, paid by Jones to the company, Jones was appointed agent to represent and sell the wares of the company. The company gave him the exclusive right to represent them in Peoria, Illinois. During the following three weeks, Jones devoted all his time in preparing for the work. He then went to Peoria, and was about ready to begin, when he received a notice from the company that the agency had been revoked. Jones brought suit for damages. What should be the decision of the Court under the foregoing circumstances?

Ruling Court Case. Clark Vs. Marsiglia, Volume 1 Denio Reports (New York), Page 317

Marsiglia engaged Clark to clean some pictures for him at an agreed price. Clark began on the work, but before he had done a great deal, Marsiglia sent word to him, ordering him to do no more. Clark, however, went on and finished the work and demanded the full price agreed upon. Marsiglia refused to pay him the full price, contending that Clark had no right to continue the work, after he had been notified to cease.

Clark, on the other Hand, contended that Marsiglia had no right to terminate his agency and that he had the right to proceed to do the full work and collect therefor, notwithstanding the notice to stop.

Decision: The principal, except in certain cases, always has the power to terminate the authority of his agency. He must, however, respond in damages when the authority was created by a valid contract, or where the authority has been acted upon to such an extent that revocation by the principal will cause damages to the agent. But, when the agent had been notified that his authority is at an end, he has no right to proceed and complete the work, and then collect the full price agreed upon.

A portion of the opinion of the Court follows: "To hold that one who employs another to do a piece of work, is bound to suffer it to be done at all events, would sometime lead to great injustice. A man may-hire another to labor for a year, and within the year his situation may be such as to render the work entirely useless to him. The party employed cannot persist in working, though he is entitled to damages consequent upon his disappointment. So, if one hires another to build a house, and subsequent events put it out of his power to pay for it, it is commendable in him to stop the work, and pay for what has been done, and the damages sustained by the contractor.

Judgment was given for Marsiglia, in accordance with the principles announced in the decision.

Ruling Law. Story Case Answer

"We have pointed out that the principal may have the power, in most cases, to terminate the authority of his agent, but that this does not necessarily mean that he always has the right to do so. When the authority is conferred by a contract between the parties, the principal may revoke the authority, but must pay such damages as the agent has sustained by breach of the contract. Even when the authority was not conferred by a contract, if the agent has accepted the agency and entered upon the work and damages will be incurred by a termination of his authority, he may here recover such damages. In the Story Case, the company had the power to terminate the agency of Jones; but since the authority was conferred by a good contract, Jones is entitled to recover the amount of actual damages he has suffered as proven to the jury.