Liability of Third Person To Principal

Notre Dame Law Review
Volume 12 | Issue 3 Article 4
3-1-1937
Liability of Third Person to Principal

State of Indiana Legislators
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State of Indiana Legislators, Liability of Third Person to Principal, 12 Notre Dame L. Rev. 295 (1937).
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THE AMERICAN LAW INSTITUTE'S
RESTATEMENT OF THE LAW OF AGENCY WITH
ANNOTATIONS TO THE INDIANA DECISIONS*
Cbapter 10
LIABILITY OF THIRD PERSON TO PRINCIPAL
Topic 1. Contracts; Disclosed Agency
Section 292. GENERAL RULE.
The other party to a contract made by an agent acting

within his power to bind a disclosed or partially disclosed prin-
cipal is liable to the principal as if he had contracted directly
with the principal, unless the principal is excluded as a party
by the form or terms of the contract.
Annotation:
The rule stated in this Section is in accord with the law of Indiana. Sharpe
v. Jones, 18 Ind. 314, 81 Am. Dec. 259 (1862); Deval v. Halstead, 16 Ind. 287
(1861).
Section 293. PRINCIPAL EXCLUDED FROM TRANSACTION.
The other party to a contract made by an agent on behalf

of a disclosed or partially disclosed principal does not become
liable to such principal upon it in an action at law if the prin-
cipal is excluded as a party by the form or terms of the con-
tract.
Annotation:
No Indiana cases dealing with the subject matter of this Section have been
found.
Section 294. ORDERS OF SEVERAL PRINCIPALS COMBINED.
The other party to a contract made by an agent who has

been authorized by several disclosed or partially disclosed prin-
cipals to act for them separately, but who combines their or-
*The publication of the rules (not the Comments and Examples) of the Re-
statement of the Law of Agency, together with the Indiana Annotations, is con-
tinued in the Notre Dame Lawyer by an arrangement with the American Law
Institute which holds the copyright privileges to that part of the Annotations not
previously published in this Law Review. It is with the consent of the American
Law Institute that the publication is continued in the Notre Dame Lawyer.
NOTRE DAME LAWYER
ders and purports to contract for them jointly, is not liable in

an action at law brought upon the contract by one of them
alone.
Annotation:
found.
Section 295. NEGOTIADLE INSTRUMENTS.
An obligor upon a negotiable instrument given to an agent

on account of the principal is not liable in an action at law to
a principal not named therein and not otherwise a holder.
Annotation:
The following cases illustrate the situation set out in comment (b): Dutch v.
Boyd, Cashier, 81 Ind. 146 (1881); Nave v. Hadley, 74 Ind. 155 (1881).
IND. STAT. ANN. (Baldwin, 1934) § 12859; IND. ANN. STAT. (Burns, 1933)
§ 19-313; IND. ANN. STAT. (Burns, 1926) § 11401.
Section 296. SEALED INSTRUMENTS.
An obligor named in a sealed instrument given to an agent

on behalf of the principal is not liable to the principal upon it
in an action at law unless the principal appears therein as a
covenantee.
Annotation:
The effect of seals in the execution of instruments is governed by statutes.
IND. STAT. AwN. (Baldwin, 1934) § § 243-246; IND. AxN. STAT. (Burns, 19261
§ § 492-495; InD. AN. STAT. (Burns, 1933) § § 2-1601-2-1604.
Section 297. INTERPRETATION OF WRITTEN INSTRUMENTS AS TO

PARTIES.
The rules with respect to the interpretation of written in-

struments as to the parties thereto in actions brought against
the principal by the third person, as stated in §§ 154-158, are
applicable in actions brought by the principal against the third
person.
Annotation:
See the annotations to sections 154-158.
Section 298. DEFENSES OF TrRD PERSON.
The other party to a contract made by an agent on behalf

of a disclosed or partially disclosed principal has all the de-
fenses which he would have had against the principal if the
principal had made the contract under the same conditions.
RESTATEMENT OF THE LAW OF AGENCY
Annotation:
found.
Section 299. RIGHTS BETWEEN THIRD PERSON AND AGENT.
Unless otherwise agreed, the liability of the other party

to a disclosed or partially disclosed principal upon a contract
made by an agent is not affected by any rights or liabilities
then existing between the other party and the agent.
Annotation:
found.
Section 300. AGENT'S CONDUCT SUBSEQUENT TO TRANSACTION.
The liability of a person contracting with a disclosed or

partially disclosed principal is affected by conduct of an agent
in relation to the contract subsequent to its making, if such
conduct:
(a) is authorized; or
(b) comes within the rules stated in §§ 159-178, which
state the conditions under which the principal is sub-
ject to liability for unauthorized conduct.
Annotation:
Section 301. UNAUTHORIZED ASSIGNMENT OF CONTRACT BY AGENT.
If a document evidencing a contract which an agent has

made with another on behalf of the principal is in such form
that the principal has reason to believe that third persons may
reasonably believe the agent to be the owner of the contract
or to have power of disposition of it, and if the agent had pow-
er to bind the principal by a contract in that form the claim
of the principal against the other party is destroyed by the
agent's unauthorized transfer to a bona fide purchaser of the
rights against the other party under the contract.
Annotation:
found.
NOTRE DAME LAWYER
Topic 2. Contracts; Undisclosed Agency

A person who makes a contract with an agent of an undis-

closed principal, intended by the agent to be on account of his
principal and within the power of such agent to bind his prin-
cipal, is liable to the principal as if the principal himself had
made the contract with him, except as stated in §§ 303-310.
Annotation:
An undisclosed principal may sue upon a contract, subject to all equities
growing out of the transaction. Moore v. Butler University, 83 Ind. 376 (1882) ;
Nave v. Hadiley, 74 Ind. 155 (1881)'; Johnson v. Hoover, 72 Ind. 395 (1880);
Brooks v. Doxey, 72 Ind. 327 (1880).
Section 303. PRINCIPAL EXCLUDED FROM TRANSACTION.
A person with whom an agent makes a contract on account

of an undisclosed principal is not liable in an action at law
brought upon the contract by such principal:
(a) if the contract is in the form of a sealed or negotiable
instrument; or
(b) if the terms of the contract exclude liability to any
undisclosed principal or to the particular principal.
Annotation:
found.
Section 304. AGENT MISREPRESENTS EXISTENCE OF PRINCIPAL.
A person with whom an agent contracts on account of an

undisclosed principal may rescind the contract if he was in-
duced to enter into it by a representation that the agent was
not acting for a principal and if, as the agent or principal had
notice, he would not have dealt with the principal.
Annotation:
found.
Section 305. ORDERS OF SEVERAL PRINCIPALS COMBINED.
The other party to a contract made by an agent for several

undisclosed principals who have not jointly authorized him is
not liable in an action at law upon the contract brought by
one of them alone.
Annotation:
found.
Section 306. RIGHTS BETWEEN THIRD PERSON AND AGENT.

(1) If the agent has been authorized to conceal the exist-
ence of the principal, the liability to an undisclosed principal
of a person dealing with the agent within his power to bind
the principal is diminished by any claim which he may have
against the agent at the time of making the contract and
which he could set off against the agent if action were brought
by the agent.
(2) If the agent is authorized only to contract in the prin-
cipal's name, the third person does not have set-off for a claim
due him from the agent unless the agent has been entrusted
with the possession of chattels which he disposes of as directed
or unless the principal has otherwise misled the third person
into extending credit to the agent.
Annotation:
Subsection (1). The rule stated in subsection 1 is in accord with the law of
Indiana. An undisclosed principal of a contract has only such remedies against
the third person as the agent could have had if he had been the principal. Moore
v. Butler University, 83 Ind. 376 (1882); Nave v. Hadley, 74 Ind. 155 (1881);
Johnson v. Hoover, 72 Ind. 395 (1880); Brooks v. Doxey, 72 Ind. 327 (1880).
Subsection (2). No Indiana cases dealing with the subject matter of subsection
2 have been found.
Section 307. AGENT'S CONDUCT SUBSEQUENT TO TRANSACTION.

(1) Until the existence of a principal is disclosed, the lia-
bility of the other party in an action brought upon the con-
tract by the principal is affected by:
(a) a notice to or demand upon the agent provided for in
the contract, or default or repudiation by the agent in
performing the terms of the contract;
(b) the cancellation of the contract made or consented to
by the agent;
(c) payment or other performance rendered to the agent;
(d) a subsequently arising set-off against the agent, under
the principles stated in § 306;
(e) a judgment obtained on the merits in a suit brought
by or against the agent; or
(f) an assignment by the agent to a third, person, under
the principles stated in § 301.
NOTRE DAME LAWYER
(2) After the other party has notice of the existence of

the principal, the other party in his dealings with the agent
can affect his liability to the principal only as if the princpal
were originally a disclosed or partially disclosed principal.
Annotation:
American Window Glass Co. v. Indiana Natural Gas & Oil Co., 37 Ind. App.
439, 76 N. E. 1006 (1906).
Subsection (2). No Indiana cases dealing with the subject matter of this Sub-
section have been found.
Section 308. DEFENSES OF THIn PERSON.

In an action by an undisclosed principal against the other
party to a contract, the other party has all the defenses which
he would have had against the principal had the principal made
the contract under the same conditions.
Annotation:
found.
Section 309. PRINCIPAL CANNOT OR DOES Nor GIVE REQUIRED

PERFORMANCE.
Acts done or offered to be done by an undisclosed principal

which, if performed by a person other than the agent, are not
substantially those which the contract contemplates, are not
effective as a performance or as a tender of performance of
the contract.
Annotation:
found.
Section 310. WHEN PERFORMANCE MUST BE RENDERED TO PRIN-

CIPAL.
An undisclosed principal upon whose account an agent has

acted within his power to bind the principal in making a con-
tract, unless excluded by its terms, may require the other par-
ty to render performance to him instead of to the agent, ex-
cept in the case of personal services or where performance to
the principal would subject the other to a substantially differ-
ent liability from that contemplated.
Annotation:
found.
Topic 3. Non-Contractual Liability

Section 311. MisTAxEN DEALING WITH UNAUTHORIZED AGENT.
A person with whom an agent deals in excess of his power

to subject the principal to liability or to affect the principal's
interests under the rules stated in §§ 140-211 is not relieved
from liability to the principal for interference with the prin-
cipal's interests by such dealing because of a reasonable be.
lief that the agent was authorized or was the owner.
Annotation:
The rule stated in this Section is in accord with the law of Indiana. Coon v.
Gurley, 49 Ind. 199 (1874); Thomas v. Atkinson, 38 Ind. 248 (1871); Reitz v.
Martin, 12 Ind. 306, 74 Am. Dec. 215 (1859); Cathcart v, Dalton, 71 Ind. App.
650, 125 N. E. 519 (1919); Lucas v. Rader, 29 Ind. App. 287; 64 N. E. 488 (1902).
Section 312. INTENTIONALLY CAUSING OR ASSISTING AGENT TO

VIOLATE DUTY.
A person who, without being privileged to do so, intention-
ally causes or assists an agent to violate a duty to his prin-
cipal is subject to liability to the principal.
Annotation:
found.
*
Section 313. ADVERSELY EMPLOYING AGENT Or ANOTHER.
(1) A person who, knowing that the other party to a trans-
action has employed an agent or servant to conduct the trans-
action for him, employs the agent or servant on his own ac-
count in such transaction is subject to liability to the other
party unless the other acquiesces in the double employment.
(2) If, without knowledge of the common agency, two per-
sons employ the same agent to conduct a transaction between
them, the transaction is voidable at the election of either.
Annotation:
Subsection (1). The rule stated in subsection I is in accord with the law of
Indiana. Sterling Fire Ins. Co. v. Comision Reguladora, 195 Ind. 29, 143 N. E. 2
(1924); Alexander v. The Northwestern Christian University, 57 Ind. 466 (1877);
H. H. Woodsmall & Co. v. Steele, 82 Ind. App. 58, 141 N. E. 246, 144 N. E. 620
(1923); Bedford Coal & Coke Co. v. Park County Coal Co, 44 Ind. App. 390,
89 N. E. 412 (1909).
Indiana. Cheney v. Unroe, 166 Ind. 550, 77 N. E. 1041, 114 Am. St. Rep. 391
(1906).
NOTRE DAME LAWYER
Related cases in which agents were not allowed to recover for services because
of adverse employment are: Simonds v. Hoover, 35 Ind. 412 (1871); Hammond
v. Bookwalter, 12 Ind. App. 177, 39 N. E. 872 (1895).
Section 314. QUASI-CONTRACTUAL LIABILITY.
A person who receives from an agent of another the prin-

cipal's things, with notice that the agent is thereby commit-
ting a breach of a fiduciary duty to the principal, holds the
things thus acquired as a constructive trustee or, at the elec-
tion of the principal, is subject to liability to him for their
value; one who receives such things without notice but who
is not a bona fide purchaser is subject to liability as a con-
structive trustee or to the extent to which he has been un-
justly enriched.
Annotation:
The rule stated in this Section is in accord with the law of Indiana. Pearce
v. Dill, 149 Ind. 136, 48 N. E. 788 (1897); Orb v. Coapstick, 136 Ind. 313, 36 N.
E. 278 (1894); Riehl v. Evansville Foundry Ass'n, 104 Ind. 70, 3 N. E. 633
(1885); Pugh v. Pugh, 9 Ind. 132 (1857); McKay v. Corwine, 69 Ind. App. 238,
118 N. E. 978 (1918) ; Robards v. Hamrick, 39 Ind. App. 134, 79 N. E. 386 (1906).
Section 315. THIRD PERSON FRAUDULENT.
A person who fraudulently obtains a contract through, or

enters into a transaction with, an agent acting within the
scope of his power to bind the principal, or who by fraud causes
the agent to do what would be a violation of his duty to the
principal if the agent knew the facts, is subject to liability to
the principal whether the fraud is practiced upon the agent
or upon the principal.
Annotation:
The rule stated in this Section is in accord with the law of Indiana. Pattison
v. Barnes, 26 Ind. 209 (1866) ; Cramer v. Wright, 15 Ind. 278 (1860).
Section 316. INTERFERENCE WITH PRINCIPAL'S BUSINESS.
A person who, not being privileged to do so, intentionally

interferes with the performance of the principal's business
by the agent is subject to liability to the principal under the
conditions stated in the Restatement of Torts.
Annotation:
found.
Section 317. CONTRIBUTORY NEGLIGENCE OF AGENT.
The contributory negligence of an agent acting within the

scope of his power to bind his principal by his conduct bars the
principal from recovery against a third person to the same
extent as if the principal had been negligent.
Annotation:
The rule stated in this Section is in accord with the law of Indiana. Louisville,
New Albany & Chicago R. Co. v. Stommell, 126 Ind. 35, 25 N. E. 863 (1890);
Chicago & Eastern 111. R. Co. v. Van Stone, 68 Ind. App. 47, 119 N. E. 874
(1918); Potter v. Ft. Wayne & Wabash Valley Traction Co., 43 Ind. App. 427,
87 N. E. 694 (1909).
Topic 4. Servants and Subagents

The rules stated in §§ 292-317, relating to the liability of a

third person to a principal, are applicable to his liability:
(a) to a master on whose account a servant has acted or
purported to act; and
(b) to a principal on whose account a subagent has acted
or purported to act.
Annotation:
The annotations to sections 292-317 are applicable to this Section.
Topic 5. Effect of Ratification

Where a purported servant or other agent has entered in-

to a transaction with a third person, its ratification by the
purported master or other principal has the same effect upon
the liabilities of the third person to the principal as an original
authorization, under the conditions stated in §§ 82-102.
Annotation:
Chapter 11
LIABILITY OF AGENT TO THIRD PERSON
Topic 1. Contracts and Conveyances
TITLE A. AGENT A PARTY TO CONTRACT
Section 320. PRINCIPAL DISCLOSED.
Unless otherwise agreed, a person making or purporting

to make a contract with another as agent for a disclosed prin-
cipal does not become a party to the contract.
NOTRE DAME LAWYER
Annotation:
The rule stated in this Section is in accord with the law of Indiana. Hawkins
v. Dorst Co., 186 Ind. 430, 116 N. E. 577 (1917); Hayes v. Shirk, 167 Ind. 569,
78 N. E. 653 (1906); Cochran v. Brooks, 15 Ind. 343 (1860); Robeson v. Chap-
man, 6 Ind. 352 (1855); McHenry v. Duffield, 7 Blackf. 41 (1843); Pitman v.
Kintner, 5 Blackf. 250, 33 Am. Dec. 461 (1839) ; Deming v. Bullitt, 1 Blackf. 241
(1823). Comment (d): Agents acting for merchants resident in a foreign country,
are presumed to intend to become personally liable for contracts made by them
for their employers, notwithstanding, they fully disclose at the time the character
in which they act. However, this presumption can be rebutted by proving that
the credit was given to the principal only. Vawter v. Baker, 23 Ind. 63 (1864).
Comment (e): An agent of a disclosed principal may bind himself personally by
superadding his own credit to that of the principal. Shordan v. Kyler, 87 Ind. 38
(1882).
Section 321. PRINCIPAL PARTIALLY DISCLOSED.
Unless otherwise agreed, a person purporting to make a

contract with another for a partially disclosed principal is a
party to the contract.
Annotation:
No Indiana cases which make a distinction between undisclosed and partially
disclosed prfincipals have been found.
Section 322. PRINCIPAL UNDISCLOSED.

An agent purporting to act upon his own account, but in
fact making a contract on account of an undisclosed principal,
is a party to the contract.
Annotation:
The rule stated in this Section is in accord with the law of Indiana. Merrill
v. Wilson, 6 Ind. 426 (1855); Polk v. Harworth, 48 Ind. App. 32, 95 N. E. 332
(1911).
Section 323. INTEGRATED CONTRACTS.

(1) If it appears unambiguously in an integrated contract
that the agent is a party or is not a party, extrinsic evidence
is not admissible to show a contrary intent, except for the pur-
pose of reforming the contract.
(2) If the fact of agency appears in an integrated contract,
not sealed nor negotiable, and there is no unambiguous expres-
sion of an intention either to make the agent a party thereto
or not to make him a party thereto, extrinsic evidence may
be introduced to show the intention of the parties.
(3) If the fact of agency does not appear in an integrated
contract, an agent who appears to be a party thereto may not
introduce extrinsic evidence to show that he is not a party,
except:
(a) for the purpose of reforming the contract; or

(b) to establish that his name was signed as the business
name of the principal and that it was so agreed by the
parties.
Annotation:
Indiana. This is inferable from the cases cited under subsections 2 and 3.
Indiana. Taylor v. Angel, 162 Ind. 670, 71 N. E. 49 (1904).
Indiana. George v. Smith, 190 Ind. 582, 129 N. E. 231 (1921).
Section 324. NEGOTIABLE INSTRUMENTS.

(1) In the absence of reformation, an agent signing a nego-
tiable instrument in his own name is a party to it although
the fact of agency appears upon it, unless the name of the
principal also appears.
(2) If the name of the principal appears upon a negotiable
instrument, the agent is not liable if the document is inter-
preted as being executed by the agent only on behalf of such
principal provided that the agent has power to bind the prin-
cipal.
(3) If the name of the principal appears upon a negotiable
instrument and the agent does not appear unambiguously as
a party, extrinsic evidence of an understanding that the agent
shal not be a party to it is admissible as against any holder
of the instrument who has notice of the agreement or who
is not a holder in due course.
Annotation:
Subsections (1) and (2). The rules stated in subsections 1 and 2 are in accord
with the law of Indiana. See Negotiable Instruments Law, Baldwin's Indiana
Statutes Annotated (1934) § 12837; IND. ANN-. STAT. (Bums, 1933) § 19-120; IND.
AEN. STAT (Burns, 1926) § 11379. See, also, Flick v. Jordan, 74 Ind. App. 314,
129 N. E. 42 (1920).
Indiana. Extrinsic evidence was held admissable to explain a promissory note
where the name of the corporation was printed at the head of the note, and the
note was signed by an individual with the word "President" following his name;
Second Nat. Bank v. Midland Steel Co., 155 Ind. 581, 58 N. E. 833, 52 L. R. A.
307 (1900); First Nat. Bank of Worcester, Mass. v. Midland Steel Co., 157 Ind,
702, 59 N. E. 1134 (1901); Midland Steel Co. v. Citizens' Nat. Bank, 26 Ind. App.
71, 59 N. E. 211 (1901); See Bay v. Hanna, 69 Ind. App. 348i 122 N. E. 7
(1919), holding that the real intention of the parties may be shown where a note,
joint and several in form, was signed by the company and by the defendant with
the word "President" following his name.
NOTRE DAME LAWYER
Section 325. SEALED INSTRUMENTS.
An agent is not liable as a party to a sealed instrument un-

less he is named in the instrument as the covenantor and it
also purports to be sealed by him. If this appears unambigu-
ously, extrinsic evidence is not admissible to show that it was
agreed that he should not be a party, except for the purpose
of reforming the instrument.
Annotation:
See annotations for Section 296.
Section 326. PRINCIPAL KNOWN TO BE NONEXISTENT OR INCOM-

PETENT.
An agent purporting to make a contract with another for

a principal whom both know to be nonexistent or wholly in-
competent does not necessarily become a party to the pur-
ported contract; unless otherwise agreed, the agent is a party
to such a contract.
Annotation:
found.
Section 327. INTERPRETATION OF WRITTEN INSTRUMENTS AS TO

PARTIES.
The rules with respect to the interpretation of written in-

struments as to the parties thereto in actions brought against
the principal by the third person, as stated in §§ 154-158, are
applicable in actions brought by the third person against the
agent.
Annotation:
See: Hawkins v. Dorst Co., 186 Ind. 430, 116 N. E. 577 (1917); State v. Helms,
136 Ind. 122, 35 N. E. 893 (1893); Tousey v. Taw, 19 Ind. 212 (1862); Bayhs v.
Hanna, 69 Ind. App. 348, 122 N. E. 7 (1919). See, also, the annotations to sec-
tions 154-158.
TITLE B. AGENT NOT PARTY TO TRANSACTION

CONDUCTED BY HIMSELF
Section 328. LIABILITY OF AUTHORIZED AGENT FOR PERFORMANCE
OF CONTRACT.
An agent, by making a contract only on behalf of a com-

petent disclosed or partially disclosed principal whom he has
power so to bind, does not thereby become liable for its non-
performance.
Annotation:
The rule stated in this Section is in accord with the law of Indiana. Hawkins
v. Dorst Co., 186 Ind. 430, 116 N. E. 577 (1917); Hayes v. Shirk, 167 Ind. 569,
78 N. E. 653 (1906); Cochran v. Brooks, 15 Ind. 343 (1860); Robeson v. Chap-
man, 6 Ind. 352 (1855); McHenry v. Duffield, 7 Blackf. 41 (1843); Pitman V.
Kintner, 5 Blackf. 250, 33 Am. Dec. 461 (1839); Deming v. Bullitt, 1 Blackf. 241
(1823). The following cases deal with contracts by public officers: Newman v.
Sylvester, 42 Ind. 106 (1873); Perrin v. Lyman's Administrator,32 Ind. 16 (1869).
Section 329. AGENT WHO WARRANTS AUTHORITY.
Except as stated in § 332, a person who purports to make

a contract, conveyance, or representation on behalf of a prin-
cipal whom he has no power to bind thereby becomes subject
to liability to the other party thereto upon an implied war-
ranty of authority, unless he has manifested that he does not
make such warranty or the other party knows that the agent
is not so authorized.
Annotation:
The rule stated in this Section is in accord with the law of Indiana. Terwilliger
v. Murphy, 104 Ind. 32, 3 N. E. 404 (1885); Newman v. Sylvester, 42 Ind. 106
(1873); Lewis v. Reed, 11 Ind. 239 (1858); Pitman v. Kintner, 5 Blackf 250,
33 Am. Dec. 469 (1839); Deming v. Bullitt, 1 Blackf. 241 (1823); Sourwine v.
McRoy Clay Works, 42 Ind. App. 358, 85 N. E. 782 (1908); Mendenhall v.
Stewart, 18 Ind. App. 262, 47 N. E. 943 (1897); Houston v. Board of Commi.s-
sioners of Clay County, 18 Ind. 396 (1862).
Section 330. LIABILITY FOR MISREPRESENTATION OF AUTHORITY.
A person who tortiously misrepresents to another that he

has authority to make a contract, conveyance, or representa-
tion on behalf of a principal whom he has no power to bind
thereby, becomes subject to liability to the other in an action
of tort for loss caused by reliance upon such misrepresenta-
tion.
Annotation:
See McHenry v. Duffield, 7 Blackf. 41 (1843).
Section 331. AGENT MAKING No WARRANTY OR REPRESENTATION

OF AUTHORITY.'
A person who purports to make a contract, conveyance, or

representation on behalf of a principal whom he has no power
to bind thereby is not subject to liability to the other party
thereto if he sufficiently manifests that he does not warrant
his authority and makes no tortious misrepresentation.
NOTRE DAME LAWYER
Annotation:
The rule stated in this Section is in accord with the law of Indiana. Newman
v. Sylvester, 42 Ind. 106 (1873); Houston v. Board of Commissioners of Clay
County, 18 Ind. 396 (1862).
Section 332. AGENT OF PARTIALLY INCOMPETENT PRINCIPAL.
An agent making a contract for a disclosed principal whose

contracts are voidable because of lack of full capacity to con-
tract, or for a principal who, although having capacity to con-
tract generally, is incompetent to enter into the particular
transaction, is not thereby liable to the other party. He does
not become liable by reason of the failure of the principal to
perform, unless he contracts or represents that the principal
has capacity or unless he has reason to know of the principal's
lack of capacity and of the other party's ignorance thereof.
Annotation:
found.
TITLE C. DEFENSES AND EFFECTS OF SUBSEQUENT EVENTS
Section 333. RIGHTS BETWEEN THIRD PERSON AND PRINCIPAL.
Unless otherwise agreed, the liability of an agent upon a

contract -between a third person and the principal to which the
agent is a party is not affected by any rights or liabilities ex-
isting between the third person and the principal not arising
from the transaction, except that, with the consent of the
principal, the agent may set off a claim which the principal
would have in an action brought against him.
Annotation:
found.
Section 334. DEFENSES OF AGENT.
In an action against an agent upon a contract between a

third person and the principal to which the agent is a party,
the agent has all the defenses which arise out of the transac-
tion itself and those which he personally has against the third
person; defenses which are personal to the principal are not
available to the agent.
Annotation:
found.
Section 335. AGENT SURETY FOR PRINCIPAL.
In an action brought against an agent upon a contract to

which the agent is a party but as to which the primary duty
of performance rests upon the principal, the agent has the de-
fenses available to a surety.
Annotation:
found.
Section 336. ELECTION BY THIRD PERSON TO HOLD PRINCIPAL;

AGENCY DISCLOSED.
Unless otherwise agreed, the agent of a disclosed or par-

tially disclosed principal who is a party to a contract made by
another with such principal is not relieved from liability upon
the contract by the determination of the other party to look
to the principal alone, nor, unless the agent and the principal
are joint contractors, by the fact that the other gets a judg-
ment against the principal. He is relieved from liability to the
extent that he is prejudiced thereby if he changes his position
in justifiable reliance upon a manifestation of the other that
he will look solely to the principal for performance.
Annotation:
found.
Section 337. ELECTION BY THIRD PERSON TO HOLD PRINCIPAL;

AGENCY UNDISCLOSED.
An agent who has made a contract on behalf of an undis-

closed principal is not relieved from liability by the determina-
tion of the other party thereto to look to the principal alone
for the performance of the contract. He is discharged from
liability if the other obtains a judgment against the principal,
or, to the extent that he is prejudiced thereby, if he changes
his position in justifiable reliance upon the other's manifesta-
tion that he will look solely to the principal for payment.
Annotation;
found.
Section 338. EFFECT OF RATrICATION.
Ratification by a principal of a contract which an agent

without authority purported to make for the principal termi-
NOTRE DAME LAWYER
nates the liability of the agent to the other party for the
breach of warranty or misrepresentation of authority, under
the rules stated in §§ 100-101.
Annotation:
See annotations to sections 100-101.
Topic 2. Things Received From or For Principal

TITLE A. THINGS RECEIVED FROM THIRD PERSON
Section 339. THIRD PERSON RESCINDS FOR CAUSE EXISTING AT

TIME OF TRANSACTION; PRINCIPAL DISCLOSED.
An agent who has received things from another for a dis-

closed or partially disclosed principal has a duty to return
them or their proceeds if the other rescinds the transaction
by which they were received for a cause existing at the time
of their receipt, to the extent that the agent has not, before
notice of rescission and in good faith, changed his position.
Annotation:
found.
Section 340. THIRD PERSON RESCINDS FOR CAUSE ARISING AFTER

TRANSACTION; PRINCIPAL DISCLOSED.
Upon rescission by the other party of a transaction by

which an agent has received things on behalf of a disclosed or
partially disclosed principal, the agent is not thereby under a
duty to return the things received to the other if the cause for
rescission arises after their receipt.
Annotation:
found.
Section 341. THIRD PERSON RESCINDS; PRINCIPAL UNDISCLOSED.

An agent who has received things from another on behalf
of an undisclosed principal has a duty to return them or their
proceeds upon rescission of the transaction, under the same
conditions as if the agent had acted-upon his own account, ex-
cept that payment by the agent to the principal does not con-
stitute such a change of position as relieves the agent from
liability to the other.
Annotation:
The rule stated in this Section is in accord with the law of Indiana. Moore
v. Shields, 121 Ind. 267, 23 N. E. 89 (1889).
TITLE B, THINGS RECEIVED FROM PRINCIPAL
An agent who fails to deliver things given him by his

principal for another person is not thereby liable to such per-
son, unless:
(a) the agent, by a contract with the other, or with the
principal for the benefit of the other, has agreed so to
deliver them; or
(b) the other has legal or equitable rights in them, because
of which he is entitled to possession of them or their
proceeds.
Annotation:
found.
Topic 3. Torts
Section 343. GENERAL RuLE.
An agent who does an act otherwise a tort is not relieved

from liability by the fact that he acted at the command of the
principal or on account of the principal, except where he is
exercising a privilege of the principal, or a privilege held by
him for the protection of the principal's interests.
Annotation:
The rule stated in this Section is in accord with the law of Indiana. Berghoff
v. McDonald, 87 Ind. 549 (1882); McNaughton v. City of Elkhart, 85 Ind. 384
(1882); Wright v. Compton, 53 Ind. 337 (1876); Blue v. Briggs, 12 Ind. App.
105, 39 N. E. 885 (1895); Block v. Haseltine, 3 Ind. App. 491, 29 N. E. 937 (1892).
Section 344. LIABILITY FOR DIRECTED CONDUCT OR CONSEQUENCES.
An agent is subject to liability as he would be for his own

personal conduct for the consequences of another's conduct
which results from his directions if, with knowledge of the
conditions, he intends the conduct, or if he intends its con-
sequences, except where the agent or the one acting has a
privilege or immunity not available to the other.
Annotation:
found.
NOTRE DAME LAWYER
Section 345. AGENT EXERCISING PRIVILEGES OF PRINCIPAL.
An agent is privileged to do what otherwise would constitute

a tort if his principal is privileged to have an agent do it and
has authorized the agent to do it.
Annotation:
found. But, see, Runyon v. State, 52 Ind. 320 (1876) ; Pickens v. State, 20 Ind.
116 (1863).
Section 346. PRIVILEGE TO PROTECT PRINCIPAL'S INTERESTS.
An agent is privileged to give such protection to the per-

son or property of his principal as is authorized by the prin-
cipal to the same extent as the principal is privileged to act
in the protection of himself or his property.
Annotation:
found.
Section 347. APPLICABLE IMMUNITIES OF PRINCIPAL.
An agent who is acting in pursuance of his authority has

such immunities of the principal as are not personal to the
principal.
Annotation:
See: Runyon v. State, 52 Ind. 320 (1876); Pickens v. State, 20 Ind. 116
(1863).
Section 348. FRAUD AND DURESS.

An agent who fraudulently makes representations, uses
duress, or knowingly assists in the comnmission of tortious
fraud or duress by others, is subject to liability in tort to the
injured person although the fraud or duress occurs in a trans-
action on behalf of the principal.
Annotation:
See: West v. Wright, 98 Ind. 335 (1884); McHenry v. Duffield, 7 Blackf. 41
(1843).
Section 349. CONVERSION.
An agent who does acts which would otherwise constitute

conversion of a chattel is not relieved from liability by the
fact that he acts on account of his principal and reasonably,
although mistakenly, believes that the principal is entitled to
possession of the chattels.
Annotation:
The rule stated in this Section is in accord with the law of Indiana. Shearer
v. Evans, 89 Ind. 400 (1883); Berghoff v. McDonald, 87 Ind. 549 (1882).
Section 350. NEGLIGENT ACTION.

An agent is subject to liability if, by his acts, he creates an
unreasonable risk of harm to the interests of others protected
against negligent invasion.
Annotation:
The rule stated in this Section is in accord with the law of Indiana. Tippe-
canoe Loan & Trust Co. v. Jester, 180 Ind. 357, 101 N. E. 915, L. R. A. 1915E,
721 (1913) ; Lake Erie & W. R. Co. v. Charman, 161 Ind. 95, 67 N. E. 923 (1903) ;
McNaughton v. City of Elkhart, 85 Ind. 384 (1882); Illinois Central R. Co. v.
Hawkins, 66 Ind. App. 312, 115 N. E. 613 (1917); Lowlsville & N. R. Co. v.
Golliur,40 Ind. App. 480, 82 N. E. 492 (1907); Blue v. Briggs, 12 Ind. App. 105,
39 N. E. 885 (1895); Dean v. Brock, 11 Ind. App. 507, 38 N. E. 829 (1894) ; Block
v. Haseltine, 3 Ind. App. 491, 29 N. E. 937 (1892).
Section 351. DIRECTING OR PERMITTING NEGLIGENT CONDUCT -OF

OTHERS.
An agent who directs or permits conduct of another under

such conditions that he should realize that there is an unrea-
sonable risk of physical harm to others or to their belongings
is subject to liability for harm resulting from a risk which
his direction or permission creates.
Annotation:
See: Lake Erie & W. R. Co. v. Clsarman, 161 Ind. 95, 67 N. E. 923 (1903).
Section 352. FAILURE TO PERFORM DUTIES TO PRINCIPAL; GENER-

AL RULE.
An agent is not liable to another because of his failure to

perform his duties to his principal or because of the improper
performance of such duties, except as stated in §§ 353-357.
Annotation:
The rule stated in this Section is in accord with the law of Indiana. Tippecanoe
Loan & Trust Co. v. Jester, 180 Ind. 357, 101 N. E. 915, L. R. A. 1915E, 721
(1913); Dean v. Brock, 11 Ind. App. 507, 38 N. E. 829 (1894).
Section 353. FAILRE TO ACT INTENDING TO CAUSE HARM.
An agent entrusted by his principal with a duty to act for

the protection of others or their tangible things is subject to
liability to such other for physical harm caused to them or
NOTRE DAME LAWYER
their things by his failure so to act, if he refrains from acting

for the purpose of causing such result.
Annotation:
found.
Section 354. NEGLIGENT FAILURE AFTER UNDERTAKING PROTEC-

TION OF OTHERS.
An agent who undertakes to act for the principal under

such conditions that some action is necessary for the protec-
tion of the person of others or of their tangible things is sub-
ject to liability to such others for physical harm to them or
to their things caused by his undertaking and subsequent
negligent failure to act, if the need for action is so immediate
or emergent that withdrawal from the undertaking is no long-
er possible without unreasonable risk to them, and the agent
should so realize.
Annotation:
The rule stated in this Section is in accord with the law of Indiana. Lake
Erie & W. R. Co. v. Charman, 161 Ind. 95, 67 N. E. 923 (1903); Illinois Central
R. Co. v. Hawkins, 66 Ind. App. 312, 115 N. E. 613 (1917); Louisville & N. R.
Co. v. Gollilur, 40 Ind. App. 480, 82 N. E. 492 (1907).
Section 355. AGENT AS CUSTODIAN.
An agent who has the custody of land or chattels and who

should realize that there is an undue risk that their condition
will cause harm to the person, land, or chattels of others is
subject to liability for such harm caused, during the continu-
ance of his custody, by his failure to use care to take such rea-
sonable precautions as he is authorized to take.
Annotation:
The failure of an agent employed to look after, rent, collect rents, pay taxes,
and make the necessary repairs of certain premises, and keep them in a tenantable
condition, is nonfeasance and not misfeasance, and does not render the agent liable
to a third party. Dean v. Brock, 11 Ind. App. 507, 38 N. E. 829 (1894). But, see,
Tippecanoe Loan & Trust Co. v. Jester, 180 Ind. 357, 101 N. E. 915, L. R. A.
1915E, 721 (1913), where a common carrier's liability was placed upon an agent
in charge of a building for negligently allowing a passenger elevator to go without
repair, to the injury of a third person. See, also, Adams v. Schneider, 71 Ind. App.
249, 124 N. E. 718 (1919).
Section 356. AGENT IN CONTROL OF THIRD PERSONS.
An agent who has taken control over the conduct of an-

other who, as he should realize, is likely to cause physical
harm to the person or tangible belongings of third persons un-

less the conduct of the other is controlled, is under a duty to
use reasonable care to take such measures of control as he is
authorized to take.
Annotation:
found.
Section 357. NEGLIGENT FAILURE TO ACT CAUSING HARM TO PE-

CUNIARY INTERESTS.
An agent who negligently performs or who fails to perform

a duty to his principal is not thereby liable for harm resulting
to the pecuniary interests of a third person, although the
agent realizes that there is an unreasonable risk that such
harm will result.
Annotation:
See: Ohmart v. Citizens' Trust & Savings Co., 82 Ind. App. 219, 145 N. E.
577 (1924); Brown v. Sims, 22 Ind. App. 317, 53 N. E. 779, 72 Am. St. Rep. 308
(1899).
Section 358. LIABILITY FOR CONDUCT OF OTHER AGENTS.
(1) The agent of a disclosed or partially disclosed principal

is not subject to liability for the conduct of other agents un-
less he assists them in the performance of a tortious act or
directs or permits them to commit it.
(2) An agent employing servants or other agents, not re-
vealing to them the existence of the principal, is subject to
liability to third persons for their torts as is any other prin-
cipal; if he reveals the existence of the principal to them, but
not to third persons, he is subject to liability for their torts
only to persons who have dealt with such agents in reliance
upon their apparent employment.
Annotation:
Indiana. Lake Erie & W. R. Co. v. Charman, 161 Ind. 95 67 N. E. 923 (1903).
2 have been found.
Section 359. LABrLITY TO OTHER AGENTS.
An agent is subject to liability to fellow agents of the same

principal as he is to third persons.
NOTRE DAME LAWYER
Annotation:
The rule stated in this Section is in accord with the law of Indiana. Lake Erie
& W. R. Co. v. Charman, 161 Ind, 95, 67 N. E. 923 (1903); Louisville & N. R.
Co. v. Gollihur, 40 Ind. App. 480, 82 N. E. 492 (1907).
Section 360. EFFECT OF RATIFICATION.

Ratification releases a purported agent from liability to a
third person for conduct which was tortious with respect to
him only because the agent had no power to bind the principal
thereby; ratification does not release the agent from liability
for conduct which would have been tortious although author-
ized.
Annotation:
Both the principal and the agent were held liable for the conversion of wheat
where a principal had ratified his agent's act of purchasing wheat from a farm
hand who had taken it wrongfully from his employer. Shearer v. Evans, 89 Ind.
4o (1883).
Topic 4. Servants and Subagents
Section 361. LIABILITY OF SERVANTS AND SUBAGENTS.
The rules stated in §§ 320-360 as to the liability of agents
to third persons are applicable to the liability of servants and
subagents.
Annotation:
See annotations to sections 320-360 in which no discrimination is made be-
tween cases involving principal and agent and master and servant relationships.
Section 362. LIABILITY OF AGENT FOR CONDUCT OF SERVANTS AND

SUBAGENTS.
An agent is liable to third persons for the conduct of sub-
agents and of his servants under the same conditions which
make a principal liable for the conduct of an agent or servant.
Annotation:
The rule stated in this Section is in accord with the law of Indiana. Tippecanoe
Loan & Trust Co. v. Jester, 180 Ind. 357, 101 N. E. 915 (1913); Lake Erie & W.
Ry. Co. v. Charman, 161 Ind. 95, 67 N. E. 923 (1903).
Chapter 12
LIABILITY OF THIRD PERSON TO AGENT
Topic 1. Actions By Agent on Behalf of Principal
TITLE A. WHEN, AGENT CAN SUE IN HIS OWN NAME
Section 363. CONTRACTS; GENERAL RULE.
An agent who makes a contract on behalf of a principal
cannot maintain an action thereon in his own name on be.
half of the principal although authorized by the principal to

bring suit, unless the agent is a promisee or transferee.
Annotation:
The rule stated in this Section is in accord with the law of Indiana. Rawlings
v. Fidler, 31 Ind. 255 (1869); Heavenridge v. Mondy, 34 Ind. 28 (1870); Sharpe
v. Jones, 18 Ind. 314 (1862).
Section 364. CONTRACTS; AGENT A PARTY PROMISEE.

A person with whom an agent makes a contract on behalf
of a principal is subject to liability in an action brought there-
on by the agent in his own name on behalf of the principal if
the agent is a party promisee.
Annotation:
The rule stated in this Section is in accord with the law of Indiana. Rowe v.
Rand, 111 Ind. 206, 12 N. E. 377 (1887); Filler v. Curtis, 100 Ind. 237, 50 Am.
Rep. 786 (1884); Beard v. Sloan, 38 Ind. 128 (1871); Sharp v. Jones, 18 Ind.
314 (1862); Owen v. Harriott, 47 Ind. App. 359, 94 N. E. 591 (1911).
Section 365. AGENT AS TRANSFEREE OF CONTRACT.

Subject to the defenses stated in §§ 368-371, an agent to
whom a negotiable instrument or other contract has been
transferred can maintain an action upon it for the principal's
benefit as any other transferee may do, except so far as this
is prevented by statutes providing that only the real party in
interest can maintain an action.
Annotation:
The rule stated in this Section is in accord with the law of Indiana. Landwerlen
v. Wheeler, 106 Ind. 523, 5 N. E. 888 (1886); Holmes v. Boyd, Cashier, 90 Ind.
332 (1883); Waddle v. Harbeh, 33 Ind. 231 (1870).
Section 366. RESCISSION OR REFORMATION OF CONTRACTS.
The other party to a contract of which the agent is a party

promisee is subject to liability in an action brought by the
agent in his own name on behalf of the principal for its rescis-
sion or reformation, or in other actions based upon its rescis-
sion.
Annotation:
found.
Section 367. POSSESSORY ACTIONS.

A person who tortiously interferes with the possession or
right to possession of chattels held by an agent on behalf of
NOTRE DAME LAWYER
his principal is subject to liability in an action brought by the

agent in his own name.
Annotation:
found.
TITLE B. DEFENSES
In an action brought by an agent in his own name on be-

half of his principal, the other party to the contract has all
the defenses which would be available to him if the action were
brought by the principal, except procedural defenses based
upon the personal want of capacity of the principal to main-
tain the action or, in the case of contracts, defenses based upon
the fact that the principal is excluded as a party thereto by
its form or terms.
Annotation:
See: Rowe v. Rand, ill Ind. 206, 12 N. E. 377 (1887).
Section 369. AGENT WHO HAS ACTED WITHOUT AUTHORITY.
A person who, without power to do so, purports to bind a

disclosed or partially disclosed principal as a party to a con-
tract cannot, although he is a party thereto and offers to per-
form it, maintain an action thereon against the other party to
it, unless the purported principal ratifies it.
Annotation:
found.
Section 370. AGENT WITHOUT AUTHORITY TO MAINTAIN SUIT.
In an action upon a contract brought by an agent for the

benefit of the principal, it is a good defense that the agent
does not have authority from the principal to sue or to con-
tinue the action.
Annotation:
The rule stated in this Section is in accord with the law of Indiana. Rowe v.
Rand, 111 Ind. 206, 12 N. E. 377 (1887) (in which an agency and the consequent
right to sue were terminated by joint principals by a mutual release of claims).
Section 371. SET-OFF AGAINST AGENT.
In an action upon a contract brought by an agent for the

benefit of the principal, the other party to the contract may
set off claims which he could set off against the principal if
the action were brought by him, and only such claims.
Annotation:
found.
Topic 2. Actions By Agent on His Own Behalf

Section 372. AGENT AS OWNER OF CONTRACT RIGHT.
(1) Unless otherwise agreed, an agent who has or who ac-

quires an interest in a contract which he makes on behalf of
his principal can, although not a promisee, maintain such ac-
tion thereon as might a transferee having a similar interest.
(2) An agent does not have such an interest in a contract
as to entitle him to maintain an action at law upon it in his
own name merely because he is entitled to a portion of the
proceeds as compensation for making it or because he is liable
for its breach.
Annotation:
The rule stated in this Section is in accord with the law of Indiana. An agent,
selling property for and by authority of his principal on credit, and having ac-
counted to and satisfied his principal therefor, may sue the purchaser in his own
name. Fuller v. Curtis, 100 Ind. 237, 50 Am. Rep. 786 (1884). See Smock v.
Brush, 62 Ind. 156 (1878).
Section 373. AcTIONs OF QUASI CONTRACT.
A person to whom an agent delivers money or goods be-

longing to his principal, or on account of his principal, is sub-
ject to liability to the agent for their retention if such person
is thereby unjustly enriched at the expense of the agent.
Annotation:
found.
Section 374. ACTIONS OF TORT.
The fact that an act, otherwise a tort upon an agent, is

committed by another while the agent is conducting the affairs
of the principal or because of the agency relationship does
not prevent the agent from bringing an action against the
other on his own account.
Annotation:
found.
NOTRE DAME LAWYER
Section 375. DEFENSES.

An agent who acquires the beneficial interest in a contract
which he has made or purported to make for a principal is
subject to the same defenses by the other party thereto as is
any assignee of such contract.
Annotation:
found.
Chapter 13
DUTIES AND LIABILITIES OF AGENT TO PRINCIPAL
Topic 1. Duties
TITLE A. EFFECT OF MANIFESTATIONS OF CONSENT
BETWEEN PRINCIPAL AND AGENT
The existence and extent of the duties of the agent to the

principal are determined by the terms of the agreement be-
tween the parties, interpreted in light of the circumstances
under which it is made, except to the extent that fraud, duress,
illegality, or the incapacity of one or both of the parties to the
agreement deprives the agreement of legal effect.
Annotation:
found.
TITLE B. DUTIES OF SERVICE AND OBEDIENCE
Section 377. CONTRACTUAL DUTIES.
A person who makes a contract with another to perform

services as an agent for him is subject to a duty to act in ac-
cordance with his promise.
Annotation:
The rule stated in this Section is in accord with the law of Indiana. The
relation between a corporation and its superintendent is that of principal and
agent and therefore is one of confidence and trust. Bedford Coal & Coke Ca. v.
Park County Coal Co., 44 Ind. App. 390, 89 N. E. 412 (1909); Fast v. Judy,
83 Ind. App. 85, 147 N. E. 728 (1925).
Section 378. GRATUITOUS UNDERTAKINGS.
One who, by a gratuitous promise or other conduct which

he should realize will cause another reasonably to rely upon
the performance of definite acts of service by him as the

other's agent, causes the other to refrain from having such
acts done by other available means is subject to a duty to
use care to perform such service or, while other means are
available, to give notice that he will not perform.
Annotation:
The rule stated in this Section is in accord with the law of Indiana. Where one
has undertaken or entered upon a service although it be gratuitous, it is his duty
to conform to the instructions given. The trust and confidence reposed in him
furnish a sufficient consideration for the undertaking to obey instructions, and
a failure to do so will subject him to liability for the loss or damage occasioned
thereby. Criswell v. Riley, 5 Ind. App. 496, 30 N. E. 1101, rehearing denied, 5 Ind.
App. 513, 32 N. E. 814 (1892).
Section 379. DUTY OF CARE AND SKILL.
(1) Unless otherwise agreed, a paid agent is subject to a

duty to the principal to act with standard care and with the
skill which is standard in the locality for the kind of work
which he is employed to perform and, in addition, to exercise
any special skill that he has.
(2) Unless otherwise agreed, a gratuitous agent is under
a duty to the principal to act with the. care and skill which is
required of persons not agents performing similar gratuitous
undertakings for others.
Annotation:
The rule stated in this Section is in accord with the law of Indiana. Subsection
(1). An agent is not responsible for an error in judgment in transacting the busi-
ness of his principal but he would be held responsible for conducting the business
negligently or failing to use proper skill and knowledge. Union Mutual Life Ins.
Co. v. Buchanan, 100 Ind. 63 (1885); Adolay v. Miller, 60 Ind. App. 656, 111
N. E. 313 (1915); Citizens Loan Fund & Say. Ass'n v. Friedley, 123 Ind. 143,
23 N. E. 1075, 7 L. R. A. 699, 18 Am. St. Rep. 320 (1889); Moorman v. Wood,
117 Ind. 144, 19 N. E. 739 (1888); Rochester v. Levering, 104 Ind. 562, 4 N. E.
203 (1886); Hillegass v. Bender, 78 Ind. 225 (1881); Fisher v. Dynes, 62 Ind. 348
(1878); Babcock v. Orbison, 23 Ind. 75 (1865); Criswell v. Riley, 5 Ind. App.
496, 30 N. E. 1101, rehearing denied, 5 Ind. App. 513, 32 N. E. (189,2). Sub.
section (2). See: Criswell v. Riley, supra.
Section 380. DUTY oF GOOD CONDUCT.
Unless otherwise agreed, an agent is subject to a duty not

to conduct himself with such impropriety that he bringsr dis-
repute upon the principal or upon the business in which he is
engaged. If the service involves personal relations, he has a
duty not to act in such a way as to make continued friendly
relations with the principal impossible.
NOTRE DAME LAWYER
Annotation:
found.
Section 381. DUTY To GIVE INFORMATION.
Unless otherwise agreed, an agent is subject to a duty to

use reasonable efforts to give his principal information rele-
vant to affairs entrusted to him which, as the agent has no-
tice, the principal would desire to have and which can be com-
municated without violating a superior duty to a third person.
A nnotation:
found.
Section 382. DUTY To KEEP AND RENDER ACCOUNTS.

keep, and render to his principal, an account of money or other
things which he has received or paid out on behalf of the prin-
cipal.
Annotation:
The rule stated in this Section is in accord with the law of Indiana. An agent
entrusted with his principal's money to be employed for a definite purpose may
be required to account in equity and in making the accounting the burden is
on him to show that his duties have been performed and the manner of performing
them. Holthouse v. Poling, 52 Ind. App. 568, 99 N. E. 810 (1912). It is the duty
of an agent, when called upon, to make accurate report to his principal and pay
over all sums due. Security Mutual Life Ins. Co. v. Frankel,46 Ind. App. 212, 92
N. E. 183 (1910).
Section 383. DUTY TO ACT ONLY AS AUTHORIZED.
Except when he is privileged to protect his own or an-

other's interests, an agent is subject to a duty to the principal
not to act in the principal's affairs except in accordance with
the principal's manifestation of consent.
Annotation:
found.
Section 384. DUTY NOT To ATTEMPT THE IMPOSSIBLE.

the principal not to continue to render service which subjects
the principal to risk of expense if it reasonably appears to him
to be impossible or impracticable for him to accomplish the

objects of the principal and he cannot communicate with the
principal.
Annotation:
found.
Section 385. DuTY TO OBEY.

(1) Unless otherwise agreed, an agent is subject to a duty
to obey all reasonable directions in regard to the manner of
performing a service that he has contracted to perform.
(2) Except where he is privileged to protect his own or an-
other's interests, an agent is subject to a duty not to act in
matters entrusted to him on account of the principal contrary
to the directions of the principal, even though the terms of the
employment prescribe that such directions shall not be given.
Annotation:
Indiana. An agent who violates his instructions is liable to the principal. Hasselman
v. Carroll, 102 Ind. 153, 26 N. E. 202 (1885); Welsh v. Brown, 8 Ind. App. 421,
35 N. E. 921 (1893).
2 have been found.
Section 386. DUTIEs AFTER TERMINATION OF AUTHORITY.

to act after the termination of his authority.
Annotation:
iound.
TITLE C. DUTIES OF LOYALTY
Section 387. GENERAL PRINCIPLE.

Subject to and in accordance with the rules stated in §§
388-398, an agent is subject to a duty to his principal to act
solely for the benefit of the principal in all matters connected
with his agency.
Annotation:
The rule stated in this Section is in accord with the law of Indiana. Cheney
v. Unroe, 166 Ind. 550, 77 N. E. 1041, 117 Am. St. Rep. 391 (1906) ; Bevis v. Hefflin,
NOTRE DAME LAWYER
63 Ind. 129 (1878); Criswell v. Riley, 5 Ind. 496, 30 N. E. 1101, rehearing

denied, 5 Ind. App. 513, 32 N. E. 814 (1892).
Section 388. DUTY TO ACCOUNT FOR PROFITS ARISING OUT OF Em-

PLOYMENT.
Unless otherwise agreed, an agent who makes a profit in

connection with transactions conducted by him on behalf of
the principal is under a duty to give such profit to the prin-
cipal.
Annotation:
The rule stated in this Section is in accord with the law of Indiana. Lafferty
v. Jelley, 22 Ind. 471 (1864); Brannan v. Kelley, 83 Ind. App. 250, 148 N. E. 157
(1925); Blanchard v. Jones, 101 Ind. 542 (1884); Beckett v. Bledsoe, 4 Ind. 256
(1853).
Section 389. ACTING AS ADVERSE PARTY WITHOUT PRINCIPAL'S

CONSENT.

to deal with his principal as an adverse party in a transaction
connected with his agency.
Annotation:
employed to take care and manage his principal's property can not acquire any
title thereto by purchase at a sheriff's sale, as against his principal, while such
relation exists. Fountain Coal Co. v. Phelps, 95 Ind. 271 (1883). Loyalty to his
trust is the agent's first duty and he must not put himself into a position
antagonistic to his principal. Bedford Coal & Coke Co. v. Parke County Coal Ca.,
44 Ind. App. 390, 89 N. E. 412 (1909).
Section 390. ACTING AS ADVERSE PARTY WITH PRINCIPAL'S CON-

SENT.
An agent, in dealing with the principal on his own account

in regard to a subject matter as to which he is employed, is
subject to a duty to deal fairly with the principal and to com-
municate to him all material facts in connection with the trans-
action of which he has notice, unless the principal has mani-
fested that he knows such facts or that he does not care to
know of them.
Annotation:
The rule stated in this Section is in accord with the law of Indiana. The rela-
tion of principal and agent is confidential and fiduciary and binds the agent to
the utmost good faith. Fast v. Judy, 83 Ind. App. 85, 147 N. E. 728 (1925);
Rochester v. Levering, 104 Ind. 562, 4 N. E. 203 (1886).
Section 391. ACTING AS ADVERSE PARTY WITHOUT PRINCIPAL'S

CONSENT.

his principal not to act on behalf of an adverse party in a
transaction connected with his agency.
Annotation:
The rule stated in this Section is in accord with the law of Indiana. See:
Sterling Fire Ins. Co. v. Comision Reguladora Del Mercado De Henequin, 195
Ind. 29, 143 N. E. 2 (1924); Woodsmall & Co. v. Steele, 82 Ind. App. 58, 141
N. E. 246 (1923); Cheney v. Unroe, 166 Ind. 550, 77 N. E. 1041, 117 Am. St.
Rep. 391 (1906).
Section 392. ACTING FOR ADVERSE PARTY WITH PRINCIPAL'S CON-

SENT.
An agent who acts for adverse principals in a transaction

is subject to a duty to act with fairness to each, and to dis-
close to each all facts which he knows or should know would
reasonably affect the judgment of each in permitting such dual
agency, except as to a principal who has manifested that he
knows of such facts or that he does not care to know of them.
Annotation:
may act for both parties where the parties have full knowledge of the facts and
consent thereto. Bedford Coal & Coke Co. v. Parke County Coal Co., 44 Ind.
App. 390, 89 N. E. 412 (1909).
Section 393. COMPETITION AS TO SUBJECT MATTER OF AGENCY.

to compete with the principal concerning the subject matter
of his agency.
Annotation:
found.
Section 394. ACTING AS AGENT FOR COMPETITOR.
Unless otherwise agreed, an agent is subject to a duty

not to act or to agree to act during the period of his agency
for persons whose interests conffict with those of the prin-
cipal in matters in which the agent is employed.
Annotation:
The rule stated in this Section is in accord with the law of Indiana. Sterling
Fire Ins. Co. v. Comision Reguladora Del Mercado De Henequin, 195 Ind. 29,
NOTRE DAME LAWYER
143 N. E. 2 (1924); Cheney v. Unroe, 166 Ind. 550, 77 N. E. 1041, 117 Am. St.
Rep. 391 (1906); Woodsmall & Co. v. Steele, 82 Ind. App. 58, 141 N. E. 246,
144 N. E. 620 (1923); Bedford Coal & Coke Co. v. Parke County Coal Co., 44
Ind. App. 390, 89 N. E. 412 (1909).
Section 395. USING OR DISCLOSING CONFIDENTIAL INFORMATION.
Unless otherwise agreed, an agent is subject to a duty

to the principal not to use or to communicate information con-
fidentially given him by the principal or acquired by him dur-
ing the course of or on account of his agency or in violation
of his duties as agent, in competition with or to the injury of
the principal, on his own account or on behalf of another, al-
though such information does not relate to the transaction
in which he is then employed, unless the information is a mat-
ter of general knowledge.
Annotation:
found.
Section 396. USING CONFIDENTIAL INFORMATION AFTER TERMINA-

TION OF AGENCY.
Unless otherwise agreed, after the termination of the

agency, the agent:
(a) has no duty not to compete with the principal; and
(b) is subject to a duty to the principal not to use or dis-
close to third persons, on his own account or on ac-
count of others, in competition with the principal or to
his injury, trade secrets, written lists of names, or
other similar confidential matters given to him only for
the principal's use or acquired by the agent in violation
of duty. The agent may use general information con-
cerning the method of business of the principal and the
names of the customers retained in his memory, if not
acquired in violation of his duty as agent.
Annotation:
found.
Section 397. WHEN AGENT HAS RIGHT TO PATENTS.
Unless otherwise agreed, a person employed by another to

do non-inventive work is entitled to patents which are the re-
sult of his invention although the invention is due to the work
for which he is employed.
RESTATEMENT OF THE LAW OF AGENCY 327
Annotation:
found.
Section 398. CONFUSING OR APPEARING TO OWN PRINCIPAL'S

THINGS.
Unless otherwise agreed, an agent receiving or holding

things on behalf of the principal is subject to a duty to the
principal not to receive or deal with them so that they will ap-
pear to be his own, and not so to mingle them with his own
things as to destroy their identity.
Annotation:
The rule stated in this Section is in accord with the law of Indiana. Dean v.
State, 147 Ind. 215, 46 N. E. 528 (1897) ; Corya v. Corya, 119 Ind. 593, 22 N. E.3
(1889); Naltner v. Dolan, 108 Ind. 500, 8 N. E. 289, 58 Am. Rep. 61 (1886);
Williams v. Lowe, 62 Ind. App. 357, 113 N. E. 471 (1916); Baughman v. Lowe,
41 Ind. App. 1, 83 N. E. 255 (1908).

Liability of Third Person To Principal

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Notre Dame Law Review

Volume 12 | Issue 3 Article 4

Liability of Third Person to Principal

Follow this and additional works at: http://scholarship.law.nd.edu/ndlr

Topic 1. Contracts; Disclosed Agency

Section 292. GENERAL RULE.

The other party to a contract made by an agent acting

Section 293. PRINCIPAL EXCLUDED FROM TRANSACTION.

The other party to a contract made by an agent on behalf

Section 294. ORDERS OF SEVERAL PRINCIPALS COMBINED.

The other party to a contract made by an agent who has

ders and purports to contract for them jointly, is not liable in

Section 295. NEGOTIADLE INSTRUMENTS.

An obligor upon a negotiable instrument given to an agent

Section 296. SEALED INSTRUMENTS.

An obligor named in a sealed instrument given to an agent

Section 297. INTERPRETATION OF WRITTEN INSTRUMENTS AS TO

The rules with respect to the interpretation of written in-

Section 298. DEFENSES OF TrRD PERSON.

The other party to a contract made by an agent on behalf

Section 299. RIGHTS BETWEEN THIRD PERSON AND AGENT.

Unless otherwise agreed, the liability of the other party

Section 300. AGENT'S CONDUCT SUBSEQUENT TO TRANSACTION.

The liability of a person contracting with a disclosed or

Section 301. UNAUTHORIZED ASSIGNMENT OF CONTRACT BY AGENT.

If a document evidencing a contract which an agent has

Topic 2. Contracts; Undisclosed Agency

A person who makes a contract with an agent of an undis-

Section 303. PRINCIPAL EXCLUDED FROM TRANSACTION.

A person with whom an agent makes a contract on account

Section 304. AGENT MISREPRESENTS EXISTENCE OF PRINCIPAL.

A person with whom an agent contracts on account of an

Section 305. ORDERS OF SEVERAL PRINCIPALS COMBINED.

The other party to a contract made by an agent for several

Section 306. RIGHTS BETWEEN THIRD PERSON AND AGENT.

Section 307. AGENT'S CONDUCT SUBSEQUENT TO TRANSACTION.

(2) After the other party has notice of the existence of

Section 308. DEFENSES OF THIn PERSON.

Section 309. PRINCIPAL CANNOT OR DOES Nor GIVE REQUIRED

Acts done or offered to be done by an undisclosed principal

Section 310. WHEN PERFORMANCE MUST BE RENDERED TO PRIN-

An undisclosed principal upon whose account an agent has

Topic 3. Non-Contractual Liability

A person with whom an agent deals in excess of his power

Section 312. INTENTIONALLY CAUSING OR ASSISTING AGENT TO

Section 314. QUASI-CONTRACTUAL LIABILITY.

A person who receives from an agent of another the prin-

Section 315. THIRD PERSON FRAUDULENT.

A person who fraudulently obtains a contract through, or

Section 316. INTERFERENCE WITH PRINCIPAL'S BUSINESS.

A person who, not being privileged to do so, intentionally

Section 317. CONTRIBUTORY NEGLIGENCE OF AGENT.

The contributory negligence of an agent acting within the

Topic 4. Servants and Subagents

The rules stated in §§ 292-317, relating to the liability of a

Topic 5. Effect of Ratification

Where a purported servant or other agent has entered in-

Unless otherwise agreed, a person making or purporting

Section 321. PRINCIPAL PARTIALLY DISCLOSED.