1. Where he makes a Contract icithout Authority.

§ 192. Basis of liability. — A person who assumes as

agent for another to make a contract with a third per-

son, impliedly if not expressly represents that he is au-

thorized by his principal to make the contract as he

does; and if it proves to be unauthorized the assumed

agent will be liable to the third person for the loss sus-

tained by the latter from the failure of the contract.

See Kroeger v. Pitcairn, 101 Pa. 311, 47 Am. Rep. 718, Cas. Ag.

501; Farmers' Co-operative Trust Co. v. Floyd, 47 Ohio St. 525, 26

N. E. Rep. 110, 21 Am. St. Rep. 846; Wallace v. Bentley, 77 Cal. 19,

18 Pac. Rep. 788, 11 Am. St Rep. 231; Adams v. Fraser, 82 Fed. Rep.

211, 27 C. C. A. 108.

§ 193. How want of authority may arise. — His

want of authority may result either, first, because he

never possessed it ; second, because once having had it,

it has since expired; or, third, because, while having

some authority, or authority to perform the given act

§§ 193-196.] DUTIES OF AGENT TO THIRD PERSONS. 1 08

in a certain way, he has exceeded his authority, or

failed to observe the manner prescribed.

§ 194. What forms present themselves. — His liabil-

ity for acting without authority may arise in one of

four classes of cases:

1. Where an agent erroneously believing himself

authorized, makes an express representation as to his

authority.

2. Where an agent, knowing that he is not author-

ized, makes an express representation as to his au-

thority.

3. Where an agent, erroneously believing himself

authorized, makes no express representation, but as-

sumes to act as one having authority.

4. Where an agent, knowing that he has no author-

ity, makes no express representation, but assumes to

act as one authorized.

§ 195. Liability of agent. — In all of these cases the

agent will be liable to the third person with whom he

deals for injury which such person naturally and proxi-

mately sustains by reason of the act's being unauthor-

ized.

See Kroeger v. Pitcairn, 101 Pa. 311, 47 Am. Rep. 718, Cas. Ag.

501; Simmons v. More, 100 N. Y. 140, Cas. Ag. 505; Farmers' Co-

operatire Trust Co. v. Floyd, 47 Ohio St. 525, 26 N. E. Rep. 110, 21

Am. St. Rep. 847; Bank of Hamburg v. Wray, 4 Strob. (S. Car.) L.

87. 51 Am. Dec. 659; Patrick v. Bowman, 149 U. S. 411. 37 L. ed. 790.

It is not at all necessary to the liability of the agent

that he should have acted in bad faith, although that

fact may affect the form or the extent of his liability.

Even where in good faith he believes he has authority

to make the contract, but has not, he is nevertheless

liable. WTiere a loss must fall upon one of two inno-

cent persons he must bear it by whose act, however

innocent, it was made possible.

104 DUTIES OF AGENT TO THIRD PERSONS. [§§ 195-198.

See Bank of Hamburg v. Wray, supra; Farmers' Co-operative

Trust Co. v. Floyd, supra; Dale v. Donaldson Lumber Co., 48 Ark.

188, 3 Am. St. Rep. 224.

§ 196. In what form of action liable. — The liabil-

ity of the agent may, according to the facts, be enforced

either in an action of tort or of contract.

Where the agent, knowing that he is unauthorized,

has made express representations as to his authority;

and also where he has assumed to act, knowing that he

is unauthorized, an action on the ease for the deceit

is an appropriate remedy.

Where, however, the agent acted in good faith, an

action based upon the express or implied warranty of

authority would be the appropriate remedy.

And even in the former cases where the action for

deceit might be maintained, the party injured may, at

his option, ignore or waive the element of deceit and

base his action upon the express or implied warranty.

§ 197. When liable on the contract itself. — It has

sometimes been held that an agent who makes a con-

tract without authority is liable upon the contract it-

self, as though originally made by him as principal; but

the better rule is that the agent is liable on the contract