In general, the same rules apply to a breach of the contract

resulting from the agent's negligence, as to a breacii resulting

from the agent's disobedience of instructions. An agent is

presumed by law to warrant that he possesses and will exer-

cise such a degree of skill as is reasonably demanded by the

nature and circumstances of his undertaking ; and for a breach

of this implied warranty he will of course be liable in damages.

But he does not undertake an absolute liability.'^ If the prin-

cipal has knowledge or notice of the agent's deficiency in skill,

the presumption of a warranty is negatived.^

The measure of damages in an action by a principal

against his agent for negligence is such loss sustained

thereby as is the reasonable and probable consequence of

such negligence.^

1 Whitney t'. Martine, 88 N. Y. 535; Bannon v. Warfiekl, 42 Md. 22.

2 Tarpin I). Bilton. 5 Man. & G. 455; Mallough v. Barber, 4 Camp.

150; Strong v. High, 2 Rob. (La.) 103.

8 Allen V. Suydam, 20 Wend. (N.Y.) 321.

4 Allen V. Merchants' Bank, 22 Wend. (N. Y.) 215; First N. B. v.

Fourth N. B., 77 N. Y. 320.

5 Hall V. Storrs, 7 Wis. 253 ; Harlan v. Ely, 68 Cal. 522 ; Ward v.

Smith, 7 Wall. (U. S.) 447.

6 Russell V. Hankey, 6 T. R. 12.

T Page V. Wells, 37 Mich. 415.

8 Felt V. School Dis., 24 Vt. 297.

9 Smith V. Price, 2 F. & F. 748; Whiteman v. Hawkins, 4 C. P. D.

13 ; Neilson v. James, 9 Q. B. D. 546.

110 PRINCIPAL AND AGENT.

В§ 90. (III.) Good faith.

Tlie relation existing between a principal and his agent is

a fiduciary one, and consequently the most absolute good faith

is essential. The principal relies upon the fidelity and integ-

rity of the agent, and it is the duty of the agent, in return, to

be loval to the trust imposed in him, and to execute it with

the single purpose of advancing his i)rincipars interests.^

Upon the general principle just stated the courts will not

permit an agent to take any position, or to acquire any rights

or interests that are antagonistic to those of the principal.

He should not attempt to act for both parties to the same

transaction without their consent,^ or in any way to use his

authority for his own benefit.^ Thus, an agent with instruc-

tions to lease or purchase property for his principal, cannot,

except with his principal's consent, lease or purchase it from

himself.* Nor will one authorized to sell or let property, be

permitted to become the purchaser or lessee.^ In either case

the principal may repudiate the transaction. And this is true,

even though the motive of the agent is perfectly honest, and

his action beneficial to the princii)al. The law sees only the

evil and dangerous tendency of such transactions, and upon

grounds of public policy refuses to enforce them in any case.^

1 Michoud V. Girod, 4 How. (U. S.) 503.

2 Kaisin v. Clark, 41 Md. 158; Walker v. Osgood, 98 Mass. 348;

X. Y., &c. Ins. Co. V. Ins. Co., 20 Barb. (N. Y.) 468; Hinckley r. Arey,

27 Me. 362; Meyer v. Hanchett, 39 Wis. 419. Cf. Rupp v. Sampson, 16

(Jray (Mass.), 398; Orton v. Scofield, 61 Wis. 382; Nolte v. Hulbert,

37 Oh. St. 445; Greenwood, &c. Co. v. Georgia Home Ins. Co., 72

Miss. 46.

8 Bunker v. Miles, 30 Me. 431.

4 Gillett V. Peppercorne, 3 Beav. 78 ; Conkey v. Bond, 36 N. Y. 427 ;

Taussig V. Hart. 58 X. Y. 425 ; Tewksbury r. Spruance, 75 111. 187 ; Bos-

well V. Cunningham, 32 Fla. 277; Davis v. Hamlin, 108 111. 39; Green-

field Sav. Bk. V. Simons, 133 :Mass. 415.

6 Oliver v. Court, 8 Price, 127 ; Thompson v. Havelock, 1 Camp. 527 ;

Kerfoot v. Hyman, 52 111. 512: Eldri.lge v. Walker, 60 111. 230; Martin

V. Moiilton, 8 N. H. 504; People v. Township Bd., 11 Mich. 222; Bain

V. Brown, 56 X. Y. 285.

В« Michoud V. Girod, 4 How. (U. S.) 503; People v. Township Bd., 11

Mich. 222 ; Taussig v. Hart, 58 X. Y. 425.

OBLIGATIONS OF AGENT. Ill

Even a custom which converts an agent into a principal, or

puts him into a position antagonistic to the interests of his

principal, cannot be given effect unless known to the principal

and at least impliedly assented to by him.i

An agent cannot, through a failure to perform his duty,

acquire interests in conflict with those of his principal. For

example, an agent instructed to pay the taxes on his princi-

pal's property, and neglecting so to do, cannot acquire a valid

title to the land by purchase upon tax sale, bat will be re-

garded as a trustee for his principal.^ And an agent whose

duty it is to compromise a claim against his principal, may

not purchase the claim at a discount, and then enforce it in

full against his principal.^^ An attorney engaged to advise on

a title cannot purchase an outstanding adverse title and set it

up against his client ; he will hold the adverse title in trust

for the latter.'* An agent of a corporation commits a breach

of trust if he undertakes to secure voting proxies from share-

holders in order to oust an existing board of directors.^

Upon the same doctrine one who deals with an agent know-

ing that the latter is not in that transaction showing good faith

toward his principal, deals at his peril as a party to the agent's

bad faith or fraud.*^ Good faith requires the agent to give

notice to the principal of all facts coming to his knowledge

which may affect the principal's interests.'

An agent may be prevented by injunction from disclosing

trade secrets of his employer learned while in the employ-

ment.^

1 Robinson v. Mollett, L. R. 7 H. L. 802 ; De Bussche v. Alt, L. R.

8 Ch. Div. 286.

2 Barton v. Moss, 32 111. 50 ; Krutz v. Fisher, 8 Kans. 90 ; Fisher v.

Krutz, 9 Kans. 501 ; Geisinger v. Beyl, 80 Wis. 443.

3 Noyes v. Landon, 59 Vt. 569.

4 Eoff V. Irvine, 108 Mo. 378.

6 Townsley v. Bankers' Life Ins. Co., 56 App. Div. 232.

s Hegenniyer v. Marks, 37 Minn. 6.

' Devall V. Burbridge, 4 W. & S. (Pa.) 305; Storer v. Eaton, 50 Me.

219.

8 Robb t'. Green, 1895,2 Q. B. 315; Louis v. Smellie, 73 L. T. R. 226;

Little V. Gallus, 4 N. Y. App. Div. 569.

112 PRINCIPAL AND AGENT.

Akin to the rule of loyalty and good faith is one to the effect

that an agent may not deny his princii)ars title.^ When, by

virtue of his fiduciary relation to the principal, an agent comes

into the possession of the principal's money or property, and

is subsc(piently called upon by the principal to account for it,

he will not be allowed, as a general rule, to dispute the title of

the principal in such money or property. He may show in

defence, however, that he has been divested of the property by

one holding a paramount title,^ or that the principal's title has

either been terminated or transferred to the person under

whom he claims.^ Likewise, an agent cannot, in defence of

an action by his principal to recover money in his hands, set

up the illegality of the transaction under which he received it

or of the purpose to which it was to be devoted."* In like man-

ner an agent who receives money to the use of his i)rincipal is

bound to pay it over notwithstanding any claims of third

persons.^ But if it is paid to the agent wrongfully, or under

duress, or under a mistake of fact, he may repay it to the

person who so paid it to him.^^

В§ 91. (IV.) Accounting.