1 Post, в§в§ 1o0-116.

2 Ante, в§в§ 4-5; pout, в§ 243.

В« A nte, В§ 5 ; post, В§ 242 et seq.

* Ewart on Estoppel, pp. 496-501 ; post, В§ 148 f/ seq.

6 Bank of Hatavia V. New York, &c. R., 106 n. Y. 1 в– "': Haskell V.

Starbird, 152 Mass. 117; contra, Britisli IMutual Bankint: Co. r. Charn-

wood Forest Ry., L. R. 18 Q. B. D. 714; Friedlauder v. ily., 130 U. S.

416.

BY ESTOPPEL. 69

and the principal is estopped to deny the agent's anthority

to make such representation where he has clothed his agent

with the apparent authority to make it. If now the represen-

tation is false and known to the agent to be false, and the

third party relies upon it to his damage, the principal should

be liable just as he should be for an excess or abuse of

authority in making a contract under like circumstances.

The application of this doctrine would reconcile the con-

flict in regard to the liability of a principal for fraudulent

representations made by an agent for his own benefit, as in

the case of the issue of fictitious stock by a transfer agent or

of fictitious bills of lading by a shipping agent.^ It is ad-

mitted that a bank cashier has authority to certify checks,

and that therefore his certification binds the bank, although

it falsely states that the drawer has funds when he has not.^

It is admitted that a shipping clerk has authority to certify

to the delivery of goods, but it is denied that his false cer-

tificate that the shipper has delivered goods when he has not

will bind the carrier.^ It is obvious that the distinction can-

not rest on the nature of the instrument, for a principal is

not bound upon an unauthorized negotiable instrument made by

his agent, any more than upon a non-negotiable one. The

primary question in each case is as to the liability of the

principal for his agent's act. In each case the principal has

represented that the agent had authority to do the act, that

Is, certify checks or issue bills of lading ; in each case the

agent has exceeded his actual authority by certifying a check

when the drawer had no deposit, or by issuing a bill of lading

when the shipper had delivered no goods ; in each case the

third party who takes the check or the bill of lading relies

upon the representation of the principal tliat the agent had

authority and upon the representation of the agent that the

funds or the goods Avere in the principal's custody. In one

case the principal is held estopped to deny his representation

1 Post, §§ 154-157; Ewart on Estoppel, pp. 508-511.

2 Merchants' Bank c. State Bank, 10 Wall. (U. S.) 601.

* Friedlauder v. Texas & Pac. Ry., 130 U. S. 416.

70 FORMxVTION OF AGENCY

of authority ; in the other not. The holding that the principal

is estopped in hoth instances seems more consistent and is

justified upon the well recognized grounds of cstopi)el.^

The true ground of distinction in all of these cases is that

the tort is committed by an agent while acting as agent and

not as servant, that is, while engaged in making contracts or

representations for his principal. The confusion has arisen

from an attempt to assimilate these so-called torts to ordin-

ary torts that consist simply in the breach of an antecedent

obligation. Here a voluntary primary obligation is created.

A representation is made with the intent that third persons

shall act upon it, and they do act upon it, thereby creating

the obligation to make good the representation. The sole

question is' had the third persons reasonable grounds to

believe that the agent was authorized to make the representa-

tion ? That question should be answered upon precisely the

same doctrines as if the question were whether the agent had

authority to make a contract. There is as much difference

between a tort by a servant in the course of his employment

and this so-called tort, as between a servant's tort and an

agent's contract. We are dealing with an agent and not

with a servant, and in agency the principal's liability is

determined by the doctrine of estoppel.^

В§ 53. Limits of the doctrine.

The limits of the doctrine are to be sought in the general

law of estoppel by misrepresentation. The rules may be

briefly summarized as follows : ^ —

(1) The misrepresentation must be made by the ])rincipal,

or by some one having apparent authority from him to make

it, or by some one whose representation he has, by some

disregard of duty, made credible.

If made by the principal in person we have the ordinary

case of estoppel. If made by one having authority from him

1 Farmers' & M. Bank v. Butchers' & D. Bank, IG N. Y. 125; Bank

V. R., 100 N. Y. 195.

2 Post, §§ 148-157.

* Bigelow on Estoppel (5th ed.), p. 570; Ewart on Estoppel, p. 10,

BY ESTOPPEL. 71

to make it, we have, first, an estoppel to deny the agent's

authority, and, second, an estoppel to deny the agent's mis-

representation. If made by one (not an agent) whose rep-

resentation he has made credible, we have the case of a

misrepresentation by a third party, aided by some act or

omission by the defendant under circumstances where he

owed a duty to use due care to avoid harm or loss to others.^

(2) The representation must be as to a material fact, or of

such a character as may reasonably influence the conduct of

another person.

(3) The representation must be made with the intent that

the other party shall act upon it, or in a manner calculated

to lead him to act upon it.

(4) The other party must be ignorant of the truth, and his