AGENCY
I. Who is an Agent?
a. RS §1 “Agency” – the fiduciary relation which results from the manifestation of consent by 1 person to another that the other shall act on his behalf and subject to his control, and consent by the other to so act.
1. Principal à the one for whom action is to be taken
2. Agent à the one who is to act
ii. 3 principal forms of Agency:
1. Principal & Agent (deals w/ Ks and communication);
2. Master & Servant (deals w/ torts); and,
3. Employer/Proprietor & Independent Contractor (communication or statement).
Three Elements Required to Show Agency Relationship:
(1) Manifestation by Principal that Agent will act for him
(2) Acceptance by Agent of the undertaking, and
(3) Understanding b/w them that Principal will be in control of the undertaking.
(4) Burden is on person alleging the existence of an Agency relationship
b. Vicarious Liability – wrongful act of Agent is imputed upon Principal to ensure that injured party obtains remedy for wrongful act done by Agent. It’s important to know who Agent is in order to go after the “deep pockets” of Principal.
i. Gorton v. Doty (1937) – Facts: Kid injured in car accident driven by football coach. Π’s argue that coach was acting as Agent of Owner. Owner of car argued that she simply loaned her car and nothing more. App: Owner volunteered use of her car upon express condition that coach drive it, and his consent to do so stemmed from his act of driving the car. Owner manifested her consent that coach could use her car for the narrow purpose under narrow conditions. Held: Owner is a principal. Thus, coach’s negligence is imputed to owner; she has to pay for injuries.
1. For Agency, you need an agreement b/w Principal and Agent, but not necessarily a K, promise, or compensation. It may result although parties do not call it an agency and do not intend the legal consequences of the relation to follow (circumstantial evidence).
2. Ownership alone, regardless of presence/absence of owner in car at time of accident, establishes a prima facie case against the owner b/c presumption arises that driver is the agent of the owner.
3. Injured party gets favored by the law, more than owner who is also innocent b/c she could protect herself through her insurance, which covers any accidents by others driving the car, and she voluntarily made a conscience choice to give the coach her car.
ii. A. Gay Jenson Farms Co. v. Cargill, Inc. (1981) – Facts: Warren had some unsettled accounts w/ farmers, when it entered into agreement w/ Cargill.Cargill financed Warren’s grain elevator operation and purchased the majority of Warren’s grain. Issue: Whether Cargill, by its course of dealing w/ Warren, became liable as Principal on Ks made by Warren w/ Farmers. App: (i) Manifestation – by directing Warren to implement its recommendations, Cargill manifested its consent that Warren would be its agent. (ii) Acceptance – Warren acted on Cargill’s behalf in procuring grain for Cargill as part of its normal operations which were totally financed by Cargill. (iii) Control – Warren couldn’t do much w/o Cargill’s approval b/c they had given Warren an open-line of credit. Warren hid the $4M debt from Cargill, who kept increasing Warren’s loans up to $3.6M. Held: Agency relationship was established by Cargill’s interference w/ internal affairs of Warren, wh
arious Liability:
(1) Who is the Agent?
(2) Who is the Principal?
(3) Who is the 3rd Party?
(4) What did the Agent Say or Do?
(5) Was What the Agent Said or Did Authorized? analyze it and see which kind of authority fits:
Four Kinds of Authorities:
a. Actual Authority (spoken or written – it’s given – i.e. Doty case)
b. Implied Authority (incidental to actual authority – reasonably necessary to accomplish authority – i.e. Mill Street Church case)
c. Apparent Authority (i.e. Lind case)
d. Inherent Authority (gives agents some flexibility in what they can do (i.e. Nogales, Watteau)
a. What is the Scope of the Agent’s Authority?
i. RS §26 Actual Authority – granted by Principal’s written/spoken words other than conduct, which, reasonably interpreted, causes Agent to believe that Principal desires him to act on Principal’s account
ii. RS §35 Implied (Incidental) Authority – Actual authority circumstantially proven which Principal actually intended Agent to possess. Includes such powers as are practically necessary to carry out the duties delegated. Authority to do acts which are:
1. Incidental to it,
2. Usually accompany it, or
3. Are reasonably necessary to accomplish it.
