CHAPTER XXII.

SERVANT'S AUTHORITY AS TO CONTRACTS.

A SERVANT may bind his master by contracts (1) when he is specially authorised to do so; (2) when he is entrusted with duties for the due discharge of which authority to make such contracts is necessary or usual; or (3) when third persons have reason to believe from his master's conduct that he has authority to bind his

master.

When a master entrusts to a servant the performance of certain duties, there is an implied authority or mandate to enter into contracts which are necessary or usual for the performance of such duties, and persons dealing with servants will not be affected by restrictions which are placed upon the servants' authority unless such restrictions are known to them (a).

The relation of master and servant invests the latter with no authority to bind the former (b), but the servant may have from the particular duties assigned to him the right to bind his master in regard to contracts. When, for instance, a foreman employed by the owner of a sawmill agreed to supply a quantity of firstaves, the latter, it was held, was bound by the contract though he had given his foreman no special authority to enter into it (c). It is often left to a jury to say whether a servant had authority to enter into a particular contract, or whether his employer held him out as having such authority (d). Thus, in Langan v. The

Great Western Rail. Co. (e), passengers injured in a collision on defendants' line were carried into plaintiff's inn. The sub-inspector of railway police for the district, who was for the time being the superior of all the station-masters and servants of the company, was on the spot, and he ordered brandy to be given to one of the injured persons. In reply to a question put by the plaintiff as to who would pay for the maintenance of the injured persons, he said, "Don't trouble yourself about that; we'll see that is all right." The plaintiff brought an action against the defendants for board, lodging, and necessaries supplied to the injured passengers. It was held, affirming the view of the Queen's Bench, that there was evidence to go to the jury in favour of the plaintiff.

The sub-inspector was the chief person there. It was the interest of the company that the mischief resulting from the accident should be the smallest possible, if the company were liable, and the company might be. Then is there a necessity, under circumstances such as these, for what may be called instantaneous action? Surely it is reasonable to say that the person who is chief in office where the accident takes place should have authority to do those things which must be done at once, and which are presumably for the benefit of the company (ee).

It is not clear that a servant is, except in certain special cases, "an agent of necessity." At all events, he has no authority to employ anyone if he can communicate with his employer (ƒ).

On the same principle of what is sometimes called "necessary authority," the servant of a horse-dealer or livery stable keeper was entitled to bind his master by giving a warranty, although he had express orders not to give it (g). On the other hand, if the servant of a person who does not carry on the business of horse dealing is entrusted to sell a horse on one occasion, and gives a warranty without authority from his master, it will not be binding ().

There is no implied authority to do what is unusual; and hence when an agent, appointed by a mining company to manage a mine, borrowed money of the plaintiffs, who were bankers, it was held he

(e) (1874), 30 L. T. (N. S.) 173. (ee) Per Bramwell, B., l. c. p. 176. (f) Gwilliam v. Twist, [1895] 2 Q. B. 84. See p. 24, supra.

(g) Howard v. Sheward (1866), L. R. 2 C. P. 148. In this case evidence of a general practice among horse dealers not to warrant was held to be not

admissible. See Baldry v. Bates (1885), 52 L. T. (N. S.) 621.

(h) Brady v. Todd (1861), 9 C. B. N. S. 592; Helyear v. Hawke (1803), 5 Esp. 71; Miller v. Lawton (1864), 15 C. B. N. S. 834; Brooks v. Hassall (1883), 49 L. T. (N. S.) 569. See Payne v. Leconfield (1882), 51 L. J. Q. B. 642.

had no authority to bind the company (i). So owners of a ship are bound by contracts of a master with respect to the usual employment of the ship (k). But he cannot bind the owners to a contract at variance with the usual employment of the ship, e.g., to carry goods for freight payable to other than the owner (1). The relation of master and coachman does not clothe the latter with ostensible authority to pledge his master's credit for forage supplied for his horses (m). The distinction is often expressed by saying that when a man appoints a general agent, he is bound by all his acts; but that, when he appoints a special agent, he is bound only to the extent of the authority which he has in fact given (n). But this distinction does not bring out the fact that, when a person appears to be a general agent, the master is bound by his acts and is estopped from denying his authority; that the important point is not what the agent's powers are, but what they seem to be; and that, notwithstanding an arrangement to the contrary, it will be assumed that he has usual authority (o). If, however, a person dealing with a servant knows that he has a special or limited authority, he is bound to see that the authority is observed.

A master, whose servant has committed frauds, may, by his conduct, be estopped from denying the servant's authority to do the acts out of which the frauds arise, and have to bear the loss under the rule of law that where one of two innocent persons must suffer loss through the acts of a third person, he who has enabled the third person to occasion the loss, must sustain it (p).

A servant may have authority from the course of previous dealings to bind his master; if they would naturally lead tradesmen and other persons to believe that a servant is authorised to pledge his master's credit, the latter will be liable. A private arrangement between them forbidding buying on credit, or attaching conditions to doing so, will be no defence. In the case of a groom, who took his master's horses to a smith and farrier to be shod and to be doctored, Lord Kenyon ruled that it was no defence to an action against the master that he had made a special arrangement with his groom by which for a year the groom was to keep

(i) Hawtayne v. Bourne (1841), 7 M. & W. 595.

(k) Myers v. Willis (1855), 17 C. B. 77; 18 C. B. 886; Sandemann v. Scurr (1866), L. R. 2 Q. B. 86.

(Reynolds v. Gex (1865), 34 L. J. Q. B. 251.

(m) Wright v. Glyn, [1902] 1 K. B.

745.

(n) Per Kenyon, C. J., in East India Co. v. Hensley (1794), 1 Esp. 112; Ashurst, J., in Fenn v. Harrison (1790), 3 T. R. 760; Story on Agency, s. 126.

(0) Summers v. Solomon (1857), 7 E. & B. 879; Watteau v. Fenwick & Co. (1892), 67 L. T. (N. S.) 831.

(p) Farquharson Bros. & Co. v. King & Co., [1901] 2 K. B. 697.

his master's horses properly shod and to furnish them with medicine (q); a decision which, if there were no special facts, is to be regarded as overruled by Wright v. Glyn (r). On the other hand, if a servant chooses to go to a tradesman with whom there have been no previous dealings-if, for example, as was the case in Hiscox v. Greenwood (s), a coachman sends, without his master's knowledge, a chaise to a coachmaker who had never been before employed-the master incurs no liability. A common example of this principle occurs when a servant is allowed to make repeatedly purchases on credit on behalf of his master. Tradesmen dealing with him are entitled to assume that he has in these circumstances authority to do that which he usually does with the knowledge or permission of his master, in the absence of notice that his authority is limited, or has been withdrawn. Accordingly, if a servant who usually buys for his master on credit, appropriates to his own use things which have been so bought, the master is liable. On the other hand, if the servant is always in cash beforehand to pay for goods, the master is not liable if the servant misappropriates the money or the goods (t). "Nothing," said Lord Kenyon, in Stubbing v. Heintz (u), " could be clearer than that where a man gives his servant money to pay for commodities as he buys them, if the servant pockets the money, the master will not be liable to pay it over again."

To rebut the presumption of authority raised by a previous course of dealings, it must be shown that notice was given of the intention to make a change. The cases seem to show that notice to a servant of a tradesman will not suffice. In Gratland v. Freeman (v) it appeared that the defendant was in the habit of dealing with the plaintiff, a publican, on credit. He paid his bill and then gave notice to the plaintiff's servant that he would run up no more bills, but only pay for beer as it came. Lord Eldon ruled that the defendant must show that the plaintiff had notice of this change in the manner of dealing, and that notice to the servant alone would not be sufficient.

Even if there have been no previous dealings, the master's conduct may amount to a representation that the servant has authority to contract in his name. Thus, when a coachman with whom his master had a private arrangement that he was to provide

(9) Precious v. Abel (1795), 1 Esp. 350. (r) [1902] 1 K. B. 745.

(s) (1802), 4 Esp. 174.

(t) Rusby v. Scarlett (1803), 5 Esp. 76. (u) (1791), 1 Peake, N. P. 66.

(v) (1799), 3 Esp. 85.

horses, went to a stable keeper in his master's livery and ordered horses, the master was liable. Littledale, J., in directing the jury, said::

If he (the servant) made the contract in his own name, and represented to the plaintiff the agreement between himself and the master, of course under such circumstances the plaintiff cannot recover. But if he made no such representation of any agreement between himself and his master, I think that, by the master's sending him forth into the world wearing his livery, to hire horses which he (the master) afterwards uses, knowing of whom they were hired, and yet not sending to ascertain if his credit had been pledged for them, an implied authority is given, and the master is bound to pay the hire (x).

A master will render himself liable if he ratifies the acts of his servant. Ratification may take place in many ways. If the servant orders goods in his master's name, and the latter uses them, knowing or having grounds for believing that they have been so ordered, he will be held to have ratified his servant's act. If he ratify a contract concluded by his servant, he will be taken to ratify it altogether. Thus if he receive the price of a horse sold by his servant, he will be bound by a warranty which the servant may have given in selling it (y).

It is often a difficult question, especially when contracts are made orally, to determine whether a master or a servant has been, in fact, trusted. If the servant did not act as his master's agentif he either expressly or by implication contracted on his own behalf-the master is not liable (z).

Has a servant power to pledge his master's credit after he quits his employment? This is a mixed question of law and fact, and depends upon whether his master, after the expiration of the employment, in any way holds the servant out to the world as his agent. With reference to a servant, who had been in the habit of drawing bills of exchange in his master's name, and who was discharged, Holt, C. J., said, "If he draw a bill in so little time after that the world cannot take notice of his being out of service, the bill, in these cases, shall bind the master" (a). In a Nisi Prius

(x) Rimell v. Sampayo (1824), 1 C. & P. 254. See Wright v. Glyn, note (m).

(y) Bristowe v. Whitmore (1861), 4 L. T. (N. S.) 622.

(2) Williamson v. Barton (1862), 7 H. & N. 899.

(a) Anon. v. Harrison (1699), 12 Mod. 346. In Stavely v. Uzielli (1860), 2 F. & F. 30, Erle, C. J., ruled thus:

"Although the law is clear that the master who has once held out a servant as having authority to contract on credit must withdraw that authority by notice, not to the servant, but to the tradesman, and that it is not enough to do so merely by notice to the servant; yet there is much more than that in this case, and there may be notice by other means than