Page:Harvard Law Review Volume 9.djvu/545

THE NATURE OF AGENCY. 51/ agent and the representations to third persons is presented in a series of cases in which the courts of New York have adopted a rule at variance with the rule of other leading jurisdictions of the common law. A typical case presenting this conflict is that of a shipping agent of a railroad who issues a bill of lading for goods that were not in fact received by the railroad, or of a transfer agent who issues a certificate of stock in a corporation upon a transfer of ownership without taking up the prior certificate, or of the cashier of a bank who certifies a check when there are no funds of the drawer in the bank's possession. The third person in each of these cases is assumed to be an innocent purchaser for value. In these cases the appointment of the agent to the position of station-master, or of transfer agent, or of cashier, is in itself a representation to all persons having dealings with the corporation through such agents that they are authorized to do all things necessary to the discharge of their official duties. I cannot do better than quote in support of this statement the unanswerable argument of Mr. Justice Davis in the case of New York, New Haven & Hartford Railroad Company v. Schuyler^: — In truth, the power conferred in these cases is of such a nature that the agent cannot do an act appearing to be within its scope and authority without, as a part of the act itself, representing expressly or by necessary implication that the condition exists upon which he has the right to act. Of necessity the principal knows this fact when he confers the power. He knows that the person he authorizes to act for him, on condition of an extrinsic fact, which in its nature must be peculiarly within the knowl- edge of that person, cannot execute the power without as res gestce mak- ing the representation that the fact exists. With this knowledge he trusts him to do the act, and consequently to make the representation, which, if true, is of course binding on the principal. But the doctrine claimed is that he reserves the right to repudiate the act if the representation be false. So he does as between himself and the agent, but not as to an innocent third party who is deceived by it." The difficulty of these cases arises from the undetermined ele- ments of custom of which I have before spoken. Positions like these are very common. They carry with them certain broad, well recognized duties and powers, and those who deal with agents in such positions assume the existence of those duties and powers 1 34 N. Y. 30, 70 (1865). 68