Agency by Necessity Source: Columbia Law Review, Vol. 25, No. 4 (Apr., 1925), pp.

464-470 Published by: Columbia Law Review Association, Inc. Stable URL: http://www.jstor.org/stable/1114030 . Accessed: 27/01/2014 04:57
Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp

.
JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.

Columbia Law Review Association, Inc. is collaborating with JSTOR to digitize, preserve and extend access to Columbia Law Review.

http://www.jstor.org

This content downloaded from 14.139.214.178 on Mon, 27 Jan 2014 04:57:58 AM All use subject to JSTOR Terms and Conditions

NOTES
AGENCY BY NECESSITY.-The

tendency of the law to group its

phenomena according to similarity of legal analysis, rather than by similarity of policies, is strikingly present in the heterogeneous mass of case material grouped under the heading "agency by necessity." The similarity in legal analysis between agency and agency by necessity lies in the fact that each involves the imposition of a vicarious liability. But the social backgrounds are quite unconnected. Broadly speaking the doctrine of agency by necessity may be stated as follows: When an unforseen situation arises and immediate action becomes imperative in order to avoid an impending disaster to life or property, a stranger, or an agent beyond 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 discussion to investigate the types of situation where the doctrine has been invoked. The theory that vicarious liability may be imposed ex necessitate first appears clearly in the fields of admiralty and negotiable instruments. It has been settled since an early date that the master of a ship in distress can, under proper circumstances, borrow money on the personal credit of his employer2 or on the security of the ship3 or cargo.4 He can also sell the cargo for the benefit of the shipper where it would otherwise perish or deteriorate.5 But beside mere necessity, there must be present the element of inability to communicate with the owner of the ship or goods. If the ship captain is so situated that instructions can be obtained from his principals within a reasonable time, he is not empowered to act.6 This is merely another way of saying that no necessity exists for him to undertake control of the situation in a manner not consistent with his grant of authority. But where the actual necessity does exist, it is at least arguable that the master's conduct is impliedly authorized by virtue of his position. Ship and cargo owners probably contemplate the
See 1 Mechem, Agency (2nd ed. 1914) 718; Tiffany, Agency (Powell's ed. 1924) p. 56 et seq. 2Arthur v. Barton (1840) 6 M. & W. 138; Robinson v. Lyall (1819) 7 Price 592; cf. McCready v. Thorn (1873) 51 N: Y. 454. The Gratitudine (1801) 3 C. Rob. 240 (semble); see Carver, Carriage of Goods by Sea (6th ed. 1918) 310. 4 Cargo 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 sell the cargo if he makes no effort to have it saved. Atlantic Mutual Insurance Co. v. Huth (1880) L. R. 16 Ch. D. 474.

156.

KleinwortCohen& Co.v. CassaMarittima of Genoa(1877) L. R. 2 A. C.

This content downloaded from 14.139.214.178 on Mon, 27 Jan 2014 04:57:58 AM All use subject to JSTOR Terms and Conditions

NOTES

465

perils of navigation, and it seems reasonable to say that their directions to the master include, by implication, an exhortation to use his common sense in the event that something arises which is not provided for by the express terms of his employment. The other classical example of agency by necessity is the right of the acceptor for honor of a bill of exchange to recover against the drawer and indorsers.7 D draws a bill on A, payable to P or order. P indorses to M, who indorses to I. I presents the bill to A, who declines to honor it. X, a stranger to the bill, on hearing of the threatened dishonor of the instrument, accepts it to preserve M's business reputation. X may then proceed for reimbursement up the line of indorsers to the drawer.8 The true analysis of this situation, as pointed out by one of the cases,9 seems to be that the acceptor for honor is in a position similar to that of an indorsee. His acceptance does not increase or affect the liability of the drawer or indorsers, since they are under a duty to meet the instrument after presentment and notice of dishonor. Instead of paying the last holder they pay the acceptor for honor, which is exactly what would have happened if he had acquired the bill by negotiation. The question of extending the application of so-called agency by necessity arose in 1841 in the case of Hazwtaynev. Bourne.l The resident manager of a mine found himself unable to meet his weekly payroll, and the laborers threatened to begin attachment proceedings which would have resulted in shutting down the mine, with attendant financial loss. There was no time for the manager to communicate with the mine owners, so he borrowed money from the plaintiff on his employers' credit, and forestalled the attachment. The plaintiffs sued the mine owners, but they were not permitted to recover, in the absence of proof that the manager had express or implied authority to borrow the money. The court, denying that an imminent catastrophe could ipso facto broaden the manager's power to charge his principals, said that only the master of a ship or the acceptor for honor of a bill of exchange enjoyed any power ex necessitate." The effect of this reasoning is to deny that any power to charge another can spring from necessity, because of the two situations where this court would allow the doctrine to be invoked, 7See 1 Daniel,NegotiableInstruments(6th ed. 1913) 521-531. 8Mertensv. Winnington(1794) 1 Esp. 112; Goodallv. Polhill (1845) 1 C. of the NegotiB. 233 (semble). The commonlaw has beencodified by 161-170 Law. able Instruments 9 See Mertensv. Winnington, supra,footnote8, p. 113. ' 7 M. & W. 595. "Per Parke,B., p. 599. In Gwilliam v. Twist [1895]2 Q. B. 84, the driver omnibusbeing too drunkto continuedriving,a strangerunderof defendant's took to drive the bus. While so doing he negligentlyinjuredthe plaintiff. The court gave judgmentfor the defendanton the groundthat there was no necesto undertake the management of the bus. By way of dictum sity for the stranger

This content downloaded from 14.139.214.178 on Mon, 27 Jan 2014 04:57:58 AM All use subject to JSTOR Terms and Conditions

466

COLUMBIA LAW REVIEW

one may be disposed of as a case of power implied in fact, and the other by the totally ungermane rules of negotiable paper. Hawtayne v. Bourne is generally regarded by the English courts as overruled.12 There are strong indications that the ship captain rule is applicable to carriage by land. In one case13a shipment of butter lay at a way station on the defendant's railroad where a strike of the defendant's employees prevented further transportation. The butter began to melt on account of the hot summer weather, and the station master sold it for what it would bring. The shipper sued the railroad for the non-delivery of the butter. The question of agency by necessity did not require adjudication, but the court indicated that the power of sale and duty to take care should, in the case of land carriers, be coextensive with those of carriers by sea. The growth of a vicarious liability by necessity has by no means been confined to carrier cases in England. The disturbance of foreign trade caused by the war and post-war conditions, created some novel legal problems. In Tetley & Co. v. British Trade Corp.14 the plaintiff consigned goods to the defendant at Batum, in Russian Georgia, for sale and delivery to one of the plaintiff's customers there. An unexpected invasion by Soviet armies prevented the consummation of the sale and imperilled the safety of the goods. The defendant then moved the goods to Constantinople. Plaintiff sued for the conversion of the goods. Not only did the court deny recovery, but it allowed the defendant to counterclaim successfully for the expenses he had undergone in safeguarding the merchandise. In a recent English case which was somewhat similar, an opposite result was reached.15 The goods in question were of a non-perishable nature, and the court found there was no necessity, hence no privilege to sell. Three requisites for agency by necessity were laid down:16 (1) an actual necessity must exist, (2) the person assuming to act must do so in good faith, (3) there must be no possible means of communication between the quasi-agent and his principal. It has been previously indicated in connection with the ship cases, that lack of faciliLord 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 wellknown exceptional cases, such as those of the master of a ship or the acceptor of 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 Springer v. Great Western Railway (1920) 89 L. J. R. 1010, a contrary result was reached because 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 10 List L. R. 678. ' (1922) v. Lloyd's Prager Blatspiel, supra, footnote 12. " Supra, footnote 12, pp. 571-572.

This content downloaded from 14.139.214.178 on Mon, 27 Jan 2014 04:57:58 AM All use subject to JSTOR Terms and Conditions

NOTES

467

ties for communication is really a fact tending to establish necessity. Exactly what is meant by good faith is not perfectly clear. It probably means that the duties and powers of the quasi-agent ex necessitate, once his status is established, are governed by the ordinary rules of fiduciary conduct which determine the legal relations between a true agent and his principal. So it would seem that the creation of power from necessity, as distinguished from its execution, depends only on one factor, necessity. "Necessity" must be taken to be a standard, like probable cause or reasonable care, depending for its definition on the infinite combinations of fact which constantly demand judicial treatment. An interesting extension of agency by necessity has manifested itself in the law of sales. B contracts to buy a shipment of perishable goods from S, who does business in a distant city. S ships goods for the purpose of fulfilling the contract, but when they arrive at B's city, they are found not to comply with warranties. B wires S that the goods were rejected, whereupon S replies that the goods are in conformity with the contract and that B will be held aicordingly. If B declines to touch the goods they will rot at the freight yards, and although he is theoretically not liable for the price, his business experience teaches him that the vicissitudes of litigation may cause him to fail in his defense to the seller's action for the price. On the other hand if he takes and resells the goods he may be held to have accepted them,17thereby losing his right of rejection and being relegated to the less desirable remedies of recoupment or counterclaim18for breach of warranty. To obviate the hardships of this situation Professor Williston19 advocates the rule that, after the seller has refused to receive back goods about which a dispute has arisen, the buyer should be permitted to sell, and hold the proceeds for the seller. This view has been followed where the goods are of a perishable nature.20 The buyer may use reasonable means to take care
17Section48 of the Uniform Sales Act provides: "The buyer is deemedto have acceptedthe goods......when the goods have been deliveredto him, and he does any act in relationto themwhich is inconsistent with the ownershipof the seller ...." and counterclaim 18Recoupment are less desirablefor the buyerbecausethe burdenof proof will be on him to establishthe breachof warranty, whereasif he rejectsthe sellermustprovecompliance with the contract.Furthermore when the marketis dropping, as is frequently the case when these disputesarise, there will be a materialdifference to the buyerbetweenpayingthe contractprice less the amountof his claim for breachof warranty,and not having to receiveor pay for the goods at all.

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 reached even thoughthe goods were not perishable. See Kempv. Pryor (1802) 7 Ves. v. Morton (1843) 11 M. & W. 534,540; Straussv. Furniture 237,246; Chapman Co. (1898) 76 Miss.343,351,24 So. 703; Youghiogheny Iron Co. v. Smith (1870) 66 Pa. 340.

9See 2 Williston, Sales (2nd ed. 1924) 498.

This content downloaded from 14.139.214.178 on Mon, 27 Jan 2014 04:57:58 AM All use subject to JSTOR Terms and Conditions

468

COLUMBIA LAW REVIEW

of the goods and is entitled to compensation.21In order to resell without being deemed to have accepted the goods, the buyer must give the seller a fair opportunity to remove the goods or give instructions.22 It will be seen that the impossibility of communication with the principal, which is a constituent element of necessity in the ship and factor cases, is here displaced by another requisite, viz., a refusal by the seller to deal with the rejected goods. The policy which moves the courts to create a power or privilege based on necessity in the sales cases is the same as in the factor cases, a dislike of wastage. A too strict insistence on the ordinary rules of agency or property would have the effect of diverting economic materials from the consumption for which they were designed. The term "agency by necessity" is sometimes loosely used in the field of domestic relations. Where the husband and wife are not living together, and the husband is at fault or incompetent, a stranger who supplies necessaries to the wife may recover the reasonable value of the goods or services furnished.23 A similar right has been given to persons who undertake the care of minor children, in those jurisdictions where the father is under a common law or statutory duty to support his infant offspring.24 The liability of the husband or father is not grounded on express or implied consent; in fact it exists even though he warns the third person that he will assume no liability.25 Although the wife's power has been described as an agency,26it can be so described only by the wildest sort of fiction. Our social organization is founded to a great extent upon the continued existence of family life, and the economic burden of the unit is borne, in the main, by the husband and father. This social fact has become a rule of law. Recovery in quasi-contract is therefore allowed to anyone who intervenes to prevent the threatened disintegration of family relationships, or the destitution of the wife and children. The wife and children have a power from necessity to charge
21 Barnett & Co. v. Terry & Smith (1871) 42 Ga. 283. In Little Rock Grain Co. v. Brubaker- (1901) 89 Mo. App. 1, the buyer removed the goods to a more favorable market, yet was held not to have lost his right to reject. 2a White v. Schweitzer (1917) 221 N. Y. 461, 117 N. E. 941. 23Read v. Legard (1851) 6 Exch. 636; Cunningham v. Reardon (1867) 98 Mass. 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. 3312. 2 Cromwell v. Benjamin, supra, footnote 24; see Watkins v. De Armond, footnote 24, p. 555. supra, 2 "But the husband may be liable for necessaries furnished to the wife, in certain cases, though the existence of an agency or assent express or implied

well v. Benjamin, supra, footnote 24, p. 560.

in fact, is wholly disprovedby the evidence,and this upon the ground of an in fact." See Cromagencyimpliedin law, thoughthere can be none presumed

This content downloaded from 14.139.214.178 on Mon, 27 Jan 2014 04:57:58 AM All use subject to JSTOR Terms and Conditions

NOTES

469

the husband because the alternative of having them cast upon the bounty of the state is regarded as a less desirable solution. Injuries arising out of dangerous employments, notably railroad operation, have created another type of situation where necessity may create legal power. It often happens that persons injured by railroads require immediate medical attention. The highest ranking railroad official or employee present hires a physician to care for the patient, and then the physician seeks remuneration from the company for his services. The better view seems to be that he may recover where the injured party is an employee of the road, regardless of negligence on the company's part;27 but there is authority to the contrary.28 Two arguments have been advanced to support recovery. One is that since an ordinary employer, out of common humanity, would probably procure imperatively necessary medical attention for an employee who has been wounded by his master's machine, the master's subordinate who is on the scene ought to be permitted to make the contract for him.29 The other is on the basis of implied powers, similar to the reasoning suggested in the ship master cases; viz., that a railroad employee's instructions cannot be so detailed as to exclude all discretion, and in the proper situation he should be permitted to do what seems reasonable.30 Recovery by the physician is apparently not permitted where the injured person is a passenger,31 although there are indications that a liability might be imposed if negligence were shown. The fallacy in this distinction is that it assumes that negligence or its absence is susceptible of easy and definite ascertainment. It is well known that nothing is more vague than proof of negligence, subject as it is to the imperfect memories of witnesses and the varying temperaments of juries. To permit recovery, no matter who the injured party is, seems more sensible. If the physician is relieved from proving the collateral issue of negligence, better medical service at the scene of injury would be obtained, and the slight cost involved would be shifted to the consumer as are the other running expenses of the railroad enterprise.32 27Arkansas SouthernR. R. v. Loughbridge(1898) 65 Ark. 300, 45 S. W. R. R. v. McMurrav(1884) 98 Ind. 358; Mar907; TerreHaute & Indianapolis R. R. v. Taft (1873) 28 Mich.289. quette& Ontonagon v. N. Y. C. & H. R. R. R. (N. Y. 1875) 6 Hun 276. The de28Cooper fendant'sfreedomfrom negligencewas assumedby the court. 29 R. R. v. McMurray, See TerreHaute and Indianapolis supra,footnote 27. p. 361. 80 & Ontonagon R. R. v. Taft, supra,footnote27, p. 298. See Marquette s Cox v. RailwayCo. (1849) 3 Exch. 268; U. P. Ry. v. Beatty (1886) 35Kan. 265 (the court assumingabsenceof negligence). 3 The applicability of the rule allowing recoveryto other industriesis not clear. See Holmes v. McAllister (1900) 123 Mich. 493, 497-8, 82 N. W. 220 (laundry). 33
Supra, footnote 26.

This content downloaded from 14.139.214.178 on Mon, 27 Jan 2014 04:57:58 AM All use subject to JSTOR Terms and Conditions

470

COLUMBIA LAW REVIEW

The use of the phrase, agency by necessity, to cover the various situations in which it has been invoked is somewhat unfortunate. This becomes apparent when a court is found declaring that "the law implies an agency," in other words, confessing that there is no agency at all, if by agency is meant a device whereby natural or juridical persons may extend their activities through the operations of others. This confusion and resort to fiction are the results of the tacit assumption that consent or agreement of some sort is essential to a change of legal relationships. But consent is no longer treated as an indispensable factor of such change. The interdependence of modern life has reduced the freedom of the individual in practically all fields of activity. Waste of life or of goods is an evil to be avoided even at the expense of disregarding the will of the individual whose interests are being disposed of. Agency by necessity is in reality a power vested by society in an individual who is in a position to act, for the purpose of avoiding the destruction of human or economic resources. The confusion of language involved in designating this legal phenomenon "agency" may be of no practical consequence, but a clearer understanding of the motivating policies may enable courts to appreciate the significance of power by necessity, and to develop it in accordance with the requisites of current social conditions.
DEPRIVATION OF "PROPERTY"BY RETROACTIVE LEGISLATION.-

When society gives to an individual rights, powers, privileges, and immunities, it usually creates "property"in a legal sense. And after society has given these rights, powers, privileges, and immunities for a period of time to numerous individuals it becomes quite safe to assert, because of the comparatively invariable quality of society and of the social inheritance of its judicial agents, that an individual has "property." There is a confident prediction that this particular individual will be permitted the same rights, powers, privileges, and immunities as have been granted in the past to others in the same or similar situation. This prediction is so certain that when two individuals perform specified acts, one is said to have transferred to or created "property" in the other. While, of course, it is society by procuration of its governmental agents, and not an individual, that transfers or creates the "property", it is convenient and 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 and state tonstitutions, for it is the only kind of "property" known in this system of government. It is to be noted, however, that "property" is not defined in the constitutions. The definition still remains the prediction. The prediction remains fairly certain because of the social inheritance of the judges. It becomes uncertain only as some additional element, hither-

This content downloaded from 14.139.214.178 on Mon, 27 Jan 2014 04:57:58 AM All use subject to JSTOR Terms and Conditions