This section is from the book "The Law Of Contracts", by Theophilus Parsons. Also available from Amazon: The law of contracts.
(t) Dusenberry v. Ellis, 3 Johns. Cas. 70: Byars v. Doores, 20 Mo. 284; Bayley B., Thomas v. Hewes, 2 Cr. & M. 530, n. (a), Collen v. Wright, 7 E. & B. 301, affirmed in 8 E. & B. 647. And a subsequent ratification it seems will not (always at least) excuse him. Rossiter v. Rossiter, 8 Wend. 494; Palmer v. Stephens, 1 Denio, 471. - If A. supposing B to be agent for C in the matter, enter with him into a contract which is illegal if the contract of C, but is not illegal if B's personal contract, and it turn out that B acted without authority, the illegality of the supposed contract is no bar to an action by A against B; for the contract actually made contained no ille-gality. Parke, B., Thomas v. Edwards, 2 M. & W. 217. - It is perhaps doubtful whether or not a party contracting, without authority as agent for another, and giving the name of the principal, can afterwards himself enforce the contract as principal Strictly, it would seem, he cannot. Even admitting that the agent thus acting without authority might be held liable upon the contract as principal, because he acted in his own wrong, yet it does not follow that he himself should be allowed to take advantage of the wrong. And this appears to have been the view of Lord Ellenborough, C J., and Abbott, J., in Bickerton v. nun-ell, 5 M, & Sel. 383; though the decision in that case was put on the narrower, and somewhat unsatisfactory ground, that the plaintiff had not notified the defendant, previous to bringing the action, of his claim to the character of principal. - If the other party, after knowledge of the true state of the matter, elect to act under the contract, it is clear that he has agent is not responsible to third parties for mere neglect or omission in the discharge of his duty, for they must look to the principal. (u)
Whether an agent makes himself liable who transcends his authority, or acts without authority, but believes in good faith that he has such authority, may not be absolutely settled. It must depend upon the question whether he is regarded as always impliedly warranting his possession of authority. Where an agent fraudulently misrepresents his authority, with the purpose of deception, there it is as clear that he is liable legally as it is that he is liable morally.1 But where he verily believes himself to possess the authority under which he acts, but is mistaken on this point, then a deciding test of his liability may perhaps be found in his means of knowledge. If he could have known the truth, and did not through his own fault, then he is ignorant by his own wrong. And if an injury is to result from this ignorance, either to a third party or to him, and the third party is wholly innocent, it ought to fall on him who so represented himself as agent, because he was not therein wholly innocent. He was not guilty of intentional deception, but he was guilty true. But the question still remains, whether the agent is liable where he himself has been deceived wholly without his fault, - as by a forged letter which he could not detect. The case must be very rare in fact, where one acting as an agent is wholly without the means of ascertaining his own agency. But we incline to the opinion, as resting on the better reason, that he would still be held. If he and the third party with whom he deals, are both perfectly innocent, and a loss occurs, and a loss results from his want of authority, this loss must fall somewhere; and it seems just that it should rest on him who has assumed, innocently but yet falsely, that he possessed this authority.1 But a party cannot hold him liable, if the agent acted in good faith, and the contract and all the facts were known to that party. (vv) of deception in fact, and if this was caused * by his want of care or want of diligence, or by his negligence in any way, he must bear the burden of it. And this is what we should infer from some of the cases in which it is said that an agent who states that which he does not know to be true, places himself under the same liability as one who states what he knows to be not true. We think this principle just, only if it be meant that he is thus liable, who states what he does not know to be true, and by proper diligence and care might have known to be not waived his right to object that it was not made originally with the plaintiff as principal. In Rayner v. Grote, 15 M. & W. 359, the plaintiff made a written contract for the sale of goods, in which he described himself as the agent of J. & T.: the buyers accepted part of the goods, and the plaintiff (who in reality was himself principal in the transaction, and not agent for J. & T.) brought an action in his own name against the buyers for refusing to accept the remainder. At nisi prius the jury were instructed that if the defendants received the first portion of goods, with knowledge that the plaintiff was the real seller, and all parties then treated the contract as one made with the plaintiff as principal in the transaction, the plaintiff was entitled to recover, and upon this instruction a verdict having been rendered for the plaintiff, the court held that the case was properly left to the jury, and refused to disturb the verdict.
(u) Colvin v. Holbrook, 2 Comst. 126; Denny v. Manhattan Co. 2 Denio, 118, s. c. 5 Den. 639; Brown v. Dean, 123 Mass. 269; Feltus v. Swan, 62 Miss. 415; Labadie v. Hawley, 61 Tex. 177; Brown v. Lent, 20 Vt. 533.
1 "Persons who induce others to act on the supposition that they have authority to enter into a binding contract on behalf of third persons, on it turning out that they have no such authority may be sued for damages for the breach of an implied war-rantv of authority." Cockburn, C. J., in Richardson v. Williamson, L. R. 6 Q. B. 276, 279. See also Weeks v. Propert, L. R. 8 C. P. 427.
(vv) Aspinwall v. Torrance, 1 Lansing, 381. [Ware v. Morgan, 67 Ala. 461; Michael v. Jones, 84 Mo. 578; Hall v. Lauderdale, 46 N. Y. 70. In Michael v. Jones, the court say: " Where all the facts are known to both parties, and the mistake is one of law as to the liability of the principal, the fact that the principal cannot be held is no ground for charging the agent with liability."]
1 The view taken in the text is that taken by most writers on the subject of agency, and seems logically consistent. It is generally admitted that an agent impliedly warrants that he has authority. If so, he must be liable for breach of the warranty, however innocent of any fraud he may have been and whatever reason he may have had to suppose he had authority. And the rule that an agent warrants his authority is usually stated broadly enough to cover every case. Collen v. Wright, 8 E. & B. 647; Richardson v. Williamson, L. R. 6 Q. B. 276; Weeks v. Propert, L. R. 8 C. P. 427; Firbank's Ex. v. Humphreys, 18 Q. B. D. 54; Meek v. Wendt, 21 Q. B.D. 126; Aff'd W. N. (1889) 14. And see cases cited post p. *68, note. But in Lilly v. Smaler, [1892] 1 Q. B. 456, where agents entered into a contract on behalf of their principals reciting that they did so "by telegraphic authority," it was held that evidence was admissible to show that these words were commonly adopted to negative the implication of any further warranty than that an agent had received a telegram which, if correct, authorized his action.
In Kroeger v. Pitcairn, 101 Pa. 311, it was expressly decided that the agent's innocence and ignorance (however justifiable) of his lack of authority did not excuse him from liability. And so in Bank of Hamburg v. Wray, 4 Strob. L. 87.
On the other hand in Polhill v. Walter, 3 B. & Ad. 114, the right of action is held to be grounded on an affirmation of authority which the one making it knew to be false; and if he acted under an authority which was forged but which he believed genuine he would not be responsible. While this may have been somewhat qualified by Smout v. Ilbery, 10 M. & W. 1, Story seems not to have been justified in saying it was "entirely overthrown" (Agency § 263 n.). Alderson, B. in his opinion does indeed say that one who in good faith represented himself as agent when unauthorized might be" liable, but this on the ground that he might and should have used greater diligence to discover the extent of his authority. The true principle he states to be "there must be some wrong or omission of right on the part of the agent in order to make him personally liable." The facts of the case were that the family of Ilbery was supplied with provisions by Smout. Ilbery was lost on a voyage to India. The action was against his widow, and the chief question was whether she was liable for goods supplied her as her husband's agent, after his death. It was held that she was not, as "there was no mala fides on her part, no omission to state any fact within her knowledge relating to it, and the revocation itself was by the act of God." Smout v. Ilbery is approved in In re Oriental Hank, 28 Ch. D. 634, 641. And in McCurdy v. Rogers, 21 Wis. 197, it is held, largely on the authority of Smout v. Ilbery, that an agent is not liable for his want of authority unless there is some wrong or omission on his part. See also Carriger v. Whittington, 26 Mo. 311.
As to the measure of damages for breach of the implied warranty of authority, see Meek v. Wendt, 21 Q. B. D. 126, Aff'd. W. N. (1889) 14.
The question then occurs, whether in such a case the agent can be held on the contract, and in some cases it has been so decided.1 * But we think it the better opinion that the contract is wholly void. It is not the contract of the principal, because he gave no authority to the supposed agent. It is not the contract of the agent, for he professed to act for the principal. So, if one forges a signature to a note, and obtains money on that note, he cannot be held on it as on his promise to pay. But in all such cases the supposed agent may be reached in assumpsit if money be paid to him or work and labor done for him under such supposed contract, or in trespass for special damages for so undertaking to act for another without authority, or in some other appropriate action; but not on the contract itself. An agent who exceeds his authority renders himself liable to the whole extent of the contract, although a part of it was within his authority. (x) It may, however, be said, that where an agent exceeds his authority, what he does within it is valid, if that part be distinctly severable from the remainder.2
 
Continue to: