Agency by Necessity

8/13/2019 Agency by Necessity

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Agency by Necessity

Source: Columbia Law Review, Vol. 25, No. 4 (Apr., 1925), pp. 464-470Published by: Columbia Law Review Association, Inc.Stable URL: http://www.jstor.org/stable/1114030.

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NOTESAGENCY BY NECESSITY.-The tendency of the law to group itsphenomena according to similarity of legal analysis, rather than by sim-ilarity of policies, is strikingly present in the heterogeneous mass of casematerial grouped under the heading agency by necessity. The similar-ity in legal analysis between agency and agency by necessity lies in thefact that each involves the imposition of a vicarious liability. But the

social backgroundsare quite unconnected. Broadly speaking the doctrineof agency by necessity may be stated as follows: When an unforseensituation arises and immediate action becomes imperative in order toavoid an impending disaster to life or property, a stranger, or an agentbeyond his authority, may act and may impose legal consequences upon.the person for whose interest he acts.1 It will be the purpose of this dis-cussion to investigate the types of situation where the doctrine has beeninvoked.The theory that vicarious liability may be imposed ex necessitatefirst appears clearly in the fields of admiraltyand negotiable instruments.It has been settled since an early date that the master of a ship in dis-tress can, under proper circumstances, borrow money on the personalcredit of his employer2or on the security of the ship3 or cargo.4 He canalso sell the cargo for the benefit of the shipper where it would otherwiseperish or deteriorate.5 But beside mere necessity, there must be presentthe element of inability to communicate with the owner of the ship orgoods. If the ship captain is so situated that instructions can be obtainedfrom his principals within a reasonable time, he is not empowered toact.6 This is merely another way of saying that no necessity exists forhim to undertakecontrol of the situation in a manner not consistent withhis grant of authority. But where the actual necessity does exist, it is atleast arguable that the master's conduct is impliedly authorized by vir-tue of his position. Ship and cargo owners probably contemplate the

See 1 Mechem, Agency (2nd ed. 1914) 718; Tiffany, Agency (Powell'sed. 1924) p. 56 et seq.2Arthur v. Barton (1840) 6 M. & W. 138; Robinson v. Lyall (1819) 7 Price592; cf. McCready v. Thorn (1873) 51 N: Y. 454.The Gratitudine (1801) 3 C. Rob. 240 (semble); see Carver, Carriage ofGoods by Sea (6th ed. 1918) 310.4Cargo ex Sultan (1859) Swabey 504; see Carver, op. cit., 312.5 See Ireland v. Thomson (1847) 4 C. B. 149, 168. The master may not sellthe cargo if he makes no effort to have it saved. Atlantic Mutual Insurance Co.v. Huth (1880) L. R. 16 Ch. D. 474.KleinwortCohen& Co.v. CassaMarittima f Genoa(1877)L. R. 2 A. C.156.

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NOTESperils of navigation, and it seems reasonable to say that their directionsto the master include, by implication, an exhortation to use his commonsense in the event that something arises which is not provided for by theexpress terms of his employment.The other classical example of agency by necessity is the right ofthe acceptor for honor of a bill of exchange to recover against thedrawer and indorsers.7 D draws a bill on A, payable to P or order. Pindorses to M, who indorses to I. I presents the bill to A, who declinesto honor it. X, a stranger to the bill, on hearing of the threatened dis-honor of the instrument, accepts it to preserve M's business reputation.X may then proceed for reimbursement up the line of indorsers to thedrawer.8 The true analysis of this situation, as pointed out by one ofthe cases,9 seems to be that the acceptor for honor is in a position similarto that of an indorsee. His acceptance does not increase or affect the lia-bility of the drawer or indorsers, since they are under a duty to meet theinstrument after presentment and notice of dishonor. Instead of payingthe last holder they pay the acceptor for honor, which is exactly whatwould have happened if he had acquired the bill by negotiation.The question of extending the application of so-called agency bynecessity arose in 1841 in the case of Hazwtaynev. Bourne.l The resi-dent manager of a mine found himself unable to meet his weekly payroll,and the laborers threatened to begin attachment proceedings whichwould have resulted in shutting down the mine, with attendant financialloss. There was no time for the manager to communicate with the mineowners, so he borrowed money from the plaintiff on his employers'credit, and forestalled the attachment. The plaintiffs sued the mineowners, but they were not permitted to recover, in the absence of proofthat the manager had express or implied authority to borrow the money.The court, denying that an imminent catastrophe could ipso factobroaden the manager's power to charge his principals, said that only themaster of a ship or the acceptor for honor of a bill of exchange enjoyedany power ex necessitate. The effect of this reasoning is to deny thatany power to charge another can spring from necessity, because of thetwo situations where this court would allow the doctrine to be invoked,

7See 1 Daniel,Negotiable nstruments 6th ed. 1913) 521-531.8Mertensv. Winnington 1794) 1 Esp. 112; Goodallv. Polhill (1845) 1 C.B. 233(semble). The commonaw hasbeencodifiedby 161-170f the Negoti-able InstrumentsLaw.9See Mertensv. Winnington, upra, ootnote8, p. 113.' 7 M. &W. 595.Per Parke,B., p. 599. In Gwilliam . Twist [1895]2 Q. B. 84, the driverof defendant's mnibusbeingtoo drunkto continuedriving,a strangerunder-tookto drive the bus. Whileso doinghe negligentlynjured he plaintiff. Thecourtgave judgment or the defendanton the groundthat therewas no neces-sity for thestranger o undertakehemanagementf the bus. By wayof dictum

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COLUMBIA LAW REVIEWone may be disposed of as a case of power implied in fact, and the otherby the totally ungermane rules of negotiable paper.Hawtayne v. Bourne is generally regarded by the English courts asoverruled.12There are strong indications that the ship captain rule is ap-plicable to carriage by land. In one case13a shipment of butter lay at away station on the defendant's railroadwhere a strike of the defendant'semployees prevented further transportation. The butter began to melton account of the hot summer weather, and the station master sold it forwhat it would bring. The shipper sued the railroad for the non-deliveryof the butter. The question of agency by necessity did not require adju-dication, but the court indicated that the power of sale and duty to takecare should, in the case of land carriers, be coextensive with those ofcarriers by sea.The growth of a vicarious liability by necessity has by no meansbeen confined to carrier cases in England. The disturbance of foreigntrade caused by the war and post-war conditions, created some novellegal problems. In Tetley & Co. v. British Trade Corp.14 the plaintiffconsigned goods to the defendant at Batum, in Russian Georgia, for saleand delivery to one of the plaintiff's customers there. An unexpectedinvasion by Soviet armies prevented the consummation of the sale andimperilledthe safety of the goods. The defendant then moved the goodsto Constantinople. Plaintiff sued for the conversion of the goods. Notonly did the court deny recovery, but it allowed the defendant to coun-terclaim successfully for the expenses he had undergone in safeguard-ing the merchandise. In a recent English case which was somewhat sim-ilar, an opposite result was reached.15 The goods in question were of anon-perishablenature, and the court found there was no necessity, henceno privilege to sell. Three requisites for agency by necessity were laiddown:16 (1) an actual necessity must exist, (2) the person assuming toact must do so in good faith, (3) there must be no possible means ofcommunication between the quasi-agent and his principal. It has beenpreviously indicated in connection with the ship cases, that lack of facili-Lord Esher said, p. 87, I am very much inclined to agree with the view......that this doctrine of authority by reason of necessity is confined to certain well-known exceptional cases, such as those of the master of a ship or the acceptorof a bill of exchange for the honour of the drawer. ' See also Nicholson v.Chapman (1793) 2 H. B1.254, 258.See Prager v. Blatspiel [1924] 1 K. B. 566, 569.See Sims & Co. v. Midland Railway [1913] 1 K. B. 103, 112. In Springerv. Great Western Railway (1920) 89 L. J. R. 1010,a contrary result was reachedbecause the carrier had ample opportunity to give notice to the shipper. Cf.Great Northern Railway v. Swaffield (1874) L. T. R. (N. s.) 562.14 (1922) 10 Lloyd's List L. R. 678.' Prager v. Blatspiel, supra, footnote 12.Supra, footnote 12, pp. 571-572.

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NOTESties for communication is really a fact tending to establish necessity.Exactly what is meant by good faith is not perfectly clear. It probablymeans that the duties and powers of the quasi-agent ex necessitate, oncehis status is established, are governed by the ordinary rules of fiduciaryconduct which determine the legal relations between a true agent and hisprincipal. So it would seem that the creation of power from necessity,as distinguished from its execution, depends only on one factor, neces-sity. Necessity must be taken to be a standard, like probablecause orreasonable care, depending for its definition on the infinite combinationsof fact which constantly demand judicial treatment.

An interesting extension of agency by necessity has manifested it-self in the law of sales. B contracts to buy a shipment of perishablegoods from S, who does business in a distant city. S ships goods for thepurpose of fulfilling the contract, but when they arrive at B's city, theyare found not to comply with warranties. B wires S that the goods wererejected, whereupon S replies that the goods are in conformity with thecontract and that B will be held aicordingly. If B declines to touch thegoods they will rot at the freight yards, and although he is theoreticallynot liable for the price, his business experience teaches him that thevicissitudes of litigation may cause him to fail in his defense to theseller's action for the price. On the other hand if he takes and resells thegoods he may be held to have accepted them,17 hereby losing his right ofrejection and being relegated to the less desirable remedies of recoup-ment or counterclaim18for breach of warranty. To obviate the hard-ships of this situation Professor Williston19 advocates the rule that,after the seller has refused to receive back goods about which a disputehas arisen, the buyer should be permitted to sell, and hold the proceedsfor the seller. This view has been followed where the goods are of aperishable nature.20 The buyer may use reasonable means to take care17Section48 of the UniformSales Act provides: Thebuyeris deemedtohave accepted he goods.....when the goods have been delivered o him, andhe doesanyact in relation o themwhichis inconsistentwith the ownershipofthe seller ....18Recoupmentndcounterclaimre less desirable or the buyerbecause heburdenof proofwill be on him to establish he breachof warranty,whereas fhe rejectstheseller mustprovecompliancewith the contract.Furthermore henthe markets dropping, s is frequentlyhe case whenthesedisputesarise,therewill be a materialdifferenceo the buyerbetweenpayingthe contractpricelessthe amountof his claim for breachof warranty,and not havingto receiveorpayfor the goodsat all.9See 2 Williston, Sales (2nd ed. 1924) 498.2 DescalziCo.v. Sweet & Son (1910) 30 R. I. 320,75 Atl. 308. In Rubinv.Sturtevant(C. C. A. 2nd Circ.1897)80 Fed. 930,a similarresult was reachedeven thoughthe goodswere not perishable.See Kempv. Pryor (1802) 7 Ves.237,246; Chapman. Morton(1843) 11 M. & W. 534,540;Straussv. FurnitureCo. (1898)76 Miss.343,351,24 So. 703;Youghioghenyron Co.v. Smith(1870)66 Pa. 340.

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COLUMBIA LAW REVIEWof the goods and is entitled to compensation.21In order to resell withoutbeing deemed to have accepted the goods, the buyer must give the sellera fair opportunity to remove the goods or give instructions.22 It will beseen that the impossibility of communication with the principal, whichis a constituent element of necessity in the ship and factor cases, is heredisplaced by another requisite, viz., a refusal by the seller to deal withthe rejected goods. The policy which moves the courts to create a poweror privilege based on necessity in the sales cases is the same as in thefactor cases, a dislike of wastage. A too strict insistence on the ordinaryrules of agency or property would have the effect of diverting economicmaterials from the consumption for which they were designed.The term agency by necessity is sometimes loosely used in thefield of domestic relations. Where the husband and wife are not livingtogether, and the husband is at fault or incompetent, a stranger whosupplies necessaries to the wife may recover the reasonable value of thegoods or services furnished.23 A similar right has been given to personswho undertake the care of minor children, in those jurisdictions wherethe father is under a common law or statutory duty to support his in-fant offspring.24 The liability of the husband or father is not groundedon express or implied consent; in fact it exists even though he warns thethird person that he will assume no liability.25 Although the wife'spower has been described as an agency,26 t can be so described only bythe wildest sort of fiction. Our social organization is founded to a greatextent upon the continued existence of family life, and the economicburden of the unit is borne, in the main, by the husband and father. Thissocial fact has become a rule of law. Recovery in quasi-contract is there-fore allowed to anyone who intervenes to prevent the threatened disin-tegration of family relationships, or the destitution of the wife andchildren. The wife and children have a power from necessity to charge

21Barnett & Co. v. Terry & Smith (1871) 42 Ga. 283. In Little Rock GrainCo. v. Brubaker- (1901) 89 Mo. App. 1, the buyer removed the goods to amore favorable market,yet was held not to have lost his right to reject.2aWhite v. Schweitzer (1917) 221 N. Y. 461, 117 N. E. 941.23Readv. Legard (1851) 6 Exch. 636; Cunninghamv. Reardon (1867) 98Mass. 538; Strawbridge & Clothier v. Sigle (1906) 73 N. J. L. 419, 63 Atl. 865;see Johnston v. Sumner (1858) 3 H. & N. 261, 264; Tiffany, Domestic Relations(3rd ed. 1921) p. 175.24 Stanton v. Willson (Conn. 1808) 3 Day 37; Watkins v. De Armond (1883)89 Ind. 553; Porter v. Powell (1890) 79 Iowa 151, 44 N. W. 295; Cromwell v.Benjamin (N. Y. 1863) 41 Barb. 558; see Tiffany, op. cit., footnote 23, pp. 331-2. 2 Cromwell v. Benjamin, supra, footnote 24; see Watkins v. De Armond,supra, footnote 24, p. 555.2 But the husband may be liable for necessaries furnished to the wife, incertain cases, though the existence of an agency or assent express or impliedin fact, is whollydisprovedby the evidence,and this uponthe groundof anagency mpliedn law,though herecanbe nonepresumedn fact. See Crom-well v. Benjamin, supra, footnote 24, p. 560.

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NOTESthe husband because the alternative of having them cast upon the bountyof the state is regarded as a less desirable solution.Injuries arising out of dangerous employments, notably railroadoperation, have created another type of situation where necessity maycreate legal power. It often happens that persons injured by railroads re-quire immediate medical attention. The highest ranking railroad officialor employee present hires a physician to care for the patient, and thenthe physician seeks remuneration from the company for his services.The better view seems to be that he may recover where the injured partyis an employee of the road, regardless of negligence on the company'spart;27 but there is authority to the contrary.28 Two arguments havebeen advanced to support recovery. One is that since an ordinary em-ployer, out of common humanity, would probably procure imperativelynecessary medical attention for an employee who has been wounded byhis master's machine, the master's subordinatewho is on the scene oughtto be permitted to make the contract for him.29 The other is on the basisof implied powers, similar to the reasoning suggested in the ship mastercases; viz., that a railroad employee's instructions cannot be so detailedas to exclude all discretion, and in the proper situation he should bepermitted to do what seems reasonable.30 Recovery by the physician isapparently not permitted where the injured person is a passenger,31al-though there are indications that a liability might be imposed if negli-gence were shown. The fallacy in this distinction is that it assumes thatnegligence or its absence is susceptible of easy and definite ascertain-ment. It is well known that nothing is more vague than proof of negli-gence, subject as it is to the imperfect memories of witnesses and thevarying temperaments of juries. To permit recovery, no matter whothe injured party is, seems more sensible. If the physician is relievedfrom proving the collateral issue of negligence, better medical serviceat the scene of injury would be obtained, and the slight cost involvedwould be shifted to the consumer as are the other running expenses ofthe railroad enterprise.32

27Arkansas outhernR. R. v. Loughbridge 1898) 65 Ark. 300,45 S. W.907; Terre Haute& IndianapolisR. R. v. McMurrav1884) 98 Ind. 358; Mar-quette& OntonagonR. R. v. Taft (1873)28 Mich.289.28Cooper . N. Y. C. & H. R. R. R. (N. Y. 1875) 6 Hun 276. The de-fendant's reedomfrom negligencewas assumedby the court.29 ee TerreHauteandIndianapolisR. R. v. McMurray,upra, ootnote 27.p. 361.80See Marquette& OntonagonR. R. v. Taft, supra, ootnote27, p. 298.s Coxv. RailwayCo. (1849)3 Exch.268; U.P. Ry.v. Beatty (1886)35Kan.265 (the courtassumingabsenceof negligence).3 The applicabilityf the rule allowingrecovery o other industries s notclear. See Holmesv. McAllister(1900) 123Mich.493,497-8,82 N. W. 220(laundry).33Supra, footnote 26.

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COLUMBIA LAW REVIEWOLUMBIA LAW REVIEWThe use of the phrase, agency by necessity, to cover the various

situations in which it has been invoked is somewhat unfortunate. Thisbecomes apparent when a court is found declaring that the law impliesan agency, in other words, confessing that there is no agency at all, ifby agency is meant a device whereby natural or juridical persons mayextend their activities through the operations of others. This confusionand resort to fiction are the results of the tacit assumption that consentor agreement of some sort is essential to a change of legal relationships.But consent is no longer treated as an indispensable factor of suchchange. The interdependence of modern life has reduced the freedomof the individual in practically all fields of activity. Waste of life or ofgoods is an evil to be avoided even at the expense of disregarding thewill of the individual whose interests are being disposed of. Agency bynecessity is in reality a power vested by society in an individual who isin a position to act, for the purpose of avoiding the destruction of humanor economic resources. The confusion of language involved in designat-ing this legal phenomenon agency may be of no practical consequence,but a clearer understanding of the motivating policies may enable courtsto appreciate the significance of power by necessity, and to develop it inaccordance with the requisites of current social conditions.

DEPRIVATION OF PROPERTY BY RETROACTIVELEGISLATION.-When society gives to an individual rights, powers, privileges, and im-munities, it usually creates property in a legal sense. And after societyhas given these rights, powers, privileges, and immunities for a period oftime to numerous individuals it becomes quite safe to assert, because ofthe comparatively invariable quality of society and of the social inheri-tance of its judicial agents, that an individual has property. There is aconfident prediction that this particular individual will be permitted thesame rights, powers, privileges, and immunities as have been grantedin the past to others in the same or similar situation. This prediction isso certain that when two individuals perform specified acts, one is saidto have transferred to or created property in the other. While, ofcourse, it is society by procuration of its governmental agents, and notan individual, that transfers or creates the property , it is convenientand in no way misleading to use the more familiar figure of speech.It is in this sense that property must be used in the federal andstate tonstitutions, for it is the only kind of property known in thissystem of government. It is to be noted, however, that property is notdefined in the constitutions. The definition still remains the prediction.The prediction remains fairly certain because of the social inheritance ofthe judges. It becomes uncertain only as some additional element, hither-

The use of the phrase, agency by necessity, to cover the varioussituations in which it has been invoked is somewhat unfortunate. Thisbecomes apparent when a court is found declaring that the law impliesan agency, in other words, confessing that there is no agency at all, ifby agency is meant a device whereby natural or juridical persons mayextend their activities through the operations of others. This confusionand resort to fiction are the results of the tacit assumption that consentor agreement of some sort is essential to a change of legal relationships.But consent is no longer treated as an indispensable factor of suchchange. The interdependence of modern life has reduced the freedomof the individual in practically all fields of activity. Waste of life or ofgoods is an evil to be avoided even at the expense of disregarding thewill of the individual whose interests are being disposed of. Agency bynecessity is in reality a power vested by society in an individual who isin a position to act, for the purpose of avoiding the destruction of humanor economic resources. The confusion of language involved in designat-ing this legal phenomenon agency may be of no practical consequence,but a clearer understanding of the motivating policies may enable courtsto appreciate the significance of power by necessity, and to develop it inaccordance with the requisites of current social conditions.

DEPRIVATION OF PROPERTY BY RETROACTIVELEGISLATION.-When society gives to an individual rights, powers, privileges, and im-munities, it usually creates property in a legal sense. And after societyhas given these rights, powers, privileges, and immunities for a period oftime to numerous individuals it becomes quite safe to assert, because ofthe comparatively invariable quality of society and of the social inheri-tance of its judicial agents, that an individual has property. There is aconfident prediction that this particular individual will be permitted thesame rights, powers, privileges, and immunities as have been grantedin the past to others in the same or similar situation. This prediction isso certain that when two individuals perform specified acts, one is saidto have transferred to or created property in the other. While, ofcourse, it is society by procuration of its governmental agents, and notan individual, that transfers or creates the property , it is convenientand in no way misleading to use the more familiar figure of speech.It is in this sense that property must be used in the federal andstate tonstitutions, for it is the only kind of property known in thissystem of government. It is to be noted, however, that property is notdefined in the constitutions. The definition still remains the prediction.The prediction remains fairly certain because of the social inheritance ofthe judges. It becomes uncertain only as some additional element, hither-

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