CHAPTER 3-01 Creation and Termination of Agency

3-01-01. Definition.

Agency is the relationship which results when one person, called the principal, authorizes another, called the agent, to act for the principal in dealing with third persons.

Source:

Civ. C. 1877, § 1337; R.C. 1895, § 4303; R.C. 1899, § 4303; R.C. 1905, § 5751; C.L. 1913, § 6319; R.C. 1943, § 3-0101.

Derivation:

Cal. Civ. C., 2295.

Notes to Decisions

Agency Is Not Presumed.

A presumption exists that a person acts for himself and not as the agent of another. Lander v. Hartson, 77 N.D. 923, 47 N.W.2d 211, 1951 N.D. LEXIS 121 (N.D. 1951).

Attorney As Agent.

Employment of attorney to prevent sale of land in father’s estate and subsequent employment of same attorney in behalf of administrator of estate of one of father’s sons did not make attorney agent of another son for sale of his interest in property of father’s estate. Tostenson v. Ihland, 147 N.W.2d 104, 1966 N.D. LEXIS 152 (N.D. 1966).

Failure to Instruct on Agency.

It was not error for a trial court to grant a new trial on the basis of the court’s determination that a failure to instruct properly as to agency resulted in a miscarriage of justice and had a tendency to confuse the jury. Meyer v. National Fire Ins. Co., 67 N.D. 77, 269 N.W. 845, 1936 N.D. LEXIS 154 (N.D. 1936).

Fiduciary Duty.

District court's finding that a limited liability company (LLC) did not breach a fiduciary duty in acquiring oil and gas leases for an oil and gas company was not clearly erroneous because no fiduciary duty precluded the LLC from acquiring the leases after its authority to acquire leases had been terminated; the parties' written contract was silent on the question of a fiduciary duty. Border Res., LLC v. Ir. Oil & Gas, Inc., 2015 ND 238, 869 N.W.2d 758, 2015 N.D. LEXIS 253 (N.D. 2015).

Formation of Agency Relationship.

In the formation of the agency relationship it is necessary that the principal shall, either expressly or by implication from conduct for which he is responsible, appoint the agent, and it is equally essential that the agent accept the appointment. Lander v. Hartson, 77 N.D. 923, 47 N.W.2d 211, 1951 N.D. LEXIS 121 (N.D. 1951).

Credit company was permitted to file an agricultural supplier’s lien for supplies, even though it was not the seller of such, because it was an agent for the seller, pursuant to an agency agreement. The credit company was the actual agent of the seller for the purpose of collecting account receivables, which gave it the authority to file such a lien. Stockman Bank v. AGSCO, Inc., 2007 ND 26, 728 N.W.2d 142, 2007 N.D. LEXIS 31 (N.D. 2007).

N.D.C.C. § 38-18.1-04 allows an owner’s representative to record a statement of claim and does not require the owner of the mineral interest to record the claim. Therefore, a mineral interest did not lapse in quiet title action; the statute of frauds did not apply since there was not a transfer of real property, and an agreement by several heirs to have two people act as their representatives was not required to be in writing. Larson v. Norheim, 2013 ND 60, 830 N.W.2d 85, 2013 N.D. LEXIS 60 (N.D. 2013).

3-01-02. General and special agent defined.

An agent for a particular act or transaction is called a special agent. All others are general agents.

Source:

Civ. C. 1877, § 1339; R.C. 1895, § 4305; R.C. 1899, § 4305; R.C. 1905, § 5753; C.L. 1913, § 6321; R.C. 1943, § 3-0102.

Derivation:

Cal. Civ. C., 2297.

Notes to Decisions

Collecting Bank Is Agent of Holder of Note.

Where the transferee of a note, payable at a defunct bank, sent it, at the obligor’s request, to another bank, such bank was the special agent of the transferee, and the maker was not liable, in the absence of fraud or bad faith, on the insolvency of the local bank and its failure to transmit the money. Burch v. Odell, 54 N.D. 363, 209 N.W. 792, 1926 N.D. LEXIS 155 (N.D. 1926).

Power of General Agent.

A general agent authorized to sell twine binder machines for a company had the power to warrant that a machine would do good work and to represent and bind the company on the warranty. Canham v. Plano Mfg. Co., 3 N.D. 229, 55 N.W. 583, 1893 N.D. LEXIS 17 (N.D. 1893).

3-01-03. Actual and ostensible agency defined.

An agency is either actual or ostensible. It is actual when the agent really is employed by the principal. It is ostensible when the principal intentionally or by want of ordinary care causes a third person to believe another to be the principal’s agent, who really is not employed by the principal.

Source:

Civ. C. 1877, §§ 1340 to 1342; R.C. 1895, §§ 4306 to 4308; R.C. 1899, §§ 4306 to 4308; R.C. 1905, §§ 5754 to 5756; C.L. 1913, §§ 6322 to 6324; R.C. 1943, § 3-0103.

Derivation:

Cal. Civ. C., 2298 to 2300.

Cross-References.

Actual or ostensible authority, see § 3-02-02.

Notes to Decisions

In General.

Agency is a question of fact to be decided by the trial court. Supreme court will not disturb a trial court’s finding of agency unless it is clearly erroneous. Red River Commodities v. Eidsness, 459 N.W.2d 805, 1990 N.D. LEXIS 159 (N.D. 1990).

How a principal and agent describe their relationship between themselves does not regulate their relationship to others. If an act done by one person on behalf of another is in its essential nature one of agency, then he is an agent regardless of the title bestowed upon him. Red River Commodities v. Eidsness, 459 N.W.2d 805, 1990 N.D. LEXIS 159 (N.D. 1990).

Actual agency existed between a scrap metal purchaser and buyer where the purchaser advanced $ 30,000 to the buyer and the buyer was authorized to purchase the seller’s scrap metal with the funds, with the expectation that it be delivered to the purchaser after the purchase. Lagerquist v. Stergo, 2008 ND 138, 752 N.W.2d 168, 2008 N.D. LEXIS 139 (N.D. 2008).

Creating Ostensible Agency.

If a principal allows the purchaser of realty to believe that an agent has authority to receive payment of the purchase price, the agent has ostensible authority to receive such payment. First Nat'l Bank v. Henry, 30 N.D. 324, 152 N.W. 668, 1915 N.D. LEXIS 128 (N.D. 1915).

It is not fair to assume that any person is chargeable with notice of all the little confidential talks between a husband and wife, and where a wife gave a deed into her husband’s hands for delivery to a bank to secure some notes, the circumstances indicated that the husband had ostensible authority to deliver the deed as security for his debts. Farmers' Sec. Bank v. Verry, 42 N.D. 264, 172 N.W. 867, 1919 N.D. LEXIS 153 (N.D. 1919).

Where the principal holds the agent out as having power to endorse negotiable instruments or permits him to act as if he possessed such power under circumstances inducing those dealing with him reasonably to rely on its existence, an apparent authority arises under which persons accepting commercial paper from the agent will be protected. Fidelity & Casualty Co. v. First Nat'l Bank & Trust Co., 71 N.D. 415, 1 N.W.2d 401, 1941 N.D. LEXIS 182 (N.D. 1941).

Warranty service representative of a manufacturer of air conditioners who, despite the fact he was not an electrician, modified electrical wiring in order to install an air conditioning unit, was acting as an agent for the manufacturer. Foremost Ins. Co. v. Rollohome Corp., 221 N.W.2d 722, 1974 N.D. LEXIS 177 (N.D. 1974).

Evidence clearly supported the trial court’s finding that farmer was an agent of seed company in dealing with plaintiff, where plaintiff had bought seed corn from seed company for several years before purchasing through farmer, who told him in 1984 that he was a “salesman” for seed company, where seed company provided the order forms and delivery receipts, preprinted with its emblem, for use by farmer, where after plaintiff discovered that the wrong seed had been delivered, he contacted an area supervisor for seed company, who in turn contacted seed company’s district manager, where the district sales manager contacted plaintiff and negotiated for a possible adjustment with him, and where seed company handled orders from farmer by credit with complete allowance for all returns. Fleck v. Jacques Seed Co., 445 N.W.2d 649, 1989 N.D. LEXIS 174 (N.D. 1989).

Essential Features of Ostensible Agency.

The essential features of an ostensible agency are that the third party must have believed in the existence of the authority in the supposed agent, and such belief must rest upon some act or statement of the principal sought to be bound by the alleged authority. Bernard v. Madsen, 52 N.D. 822, 204 N.W. 196, 1925 N.D. LEXIS 128 (N.D. 1925); Scherbenske v. Maier, 71 N.W.2d 770, 1955 N.D. LEXIS 133 (N.D. 1955).

An ostensible agency exists where the conduct of the supposed agent is consistent with an agency, and where, in a particular transaction, someone is justified in dealing with the supposed agent. Krank v. A.O. Smith Harvestore Prods., 456 N.W.2d 125, 1990 N.D. LEXIS 115 (N.D. 1990); Red River Commodities v. Eidsness, 459 N.W.2d 805, 1990 N.D. LEXIS 159 (N.D. 1990).

Limitations on Authority of Agent.

Even though an actual agency relationship is found, it does not follow that the agent had implied authority to invite a guest to ride in a motor vehicle in his charge. Bentley v. Oldetyme Distillers, 69 N.D. 587, 289 N.W. 92, 1939 N.D. LEXIS 189, 1939 N.D. LEXIS 190 (N.D. 1939).

No Ostensible Agency Found.

Appellant’s claim that dismissal of various parties pursuant to NDRCivP 50 was error because they were allegedly affiliated with a social worker whom the patient filed suit against under a claim of professional malpractice lacked merit; there was no clear and convincing evidence to show that the social worker and the dismissed parties were in an ostensible agency or ostensible partnership for purposes of the dismissed parties’ liability, as there was no showing that they knowingly held themselves out as partners of the social worker or that they acted in such a way to cause the patient to believe there was an agency or partnership relationship. Carpenter v. Rohrer, 2006 ND 111, 714 N.W.2d 804, 2006 N.D. LEXIS 113 (N.D. 2006).

Pretended Agent.

An agency is not established by the statement or act of a pretended agent. Gordon v. Vermont Loan & Trust Co., 6 N.D. 454, 71 N.W. 556, 1897 N.D. LEXIS 21 (N.D. 1897).

Where a party dealing with an alleged agent knew nothing of his authority except as he represented it, the question of ostensible agency did not arise. O'Brien v. J. C. Penny Co., 55 N.D. 817, 215 N.W. 268, 1927 N.D. LEXIS 156 (N.D. 1927).

3-01-04. Who may appoint an agent — Who may be agent.

Any person having capacity to contract may appoint an agent and any person may be an agent.

Source:

Civ. C. 1877, § 1338; R.C. 1895, § 4304; R.C. 1899, § 4304; R.C. 1905, § 5752; C.L. 1913, § 6320; R.C. 1943, § 3-0104.

Derivation:

Cal. Civ. C., 2296.

3-01-05. Authorization to agent.

An agent may be authorized to do any acts which the agent’s principal might do, except those to which the principal is bound to give personal attention.

Source:

Civ. C. 1877, § 1343; R.C. 1895, § 4309; R.C. 1899, § 4309; R.C. 1905, § 5757; C.L. 1913, § 6325; R.C. 1943, § 3-0105.

Derivation:

Cal. Civ. C., 2304.

Cross-References.

Damages for breach of warranty of agent’s authority, see § 32-03-18.

Notes to Decisions

Disaffirmance of Agent’s Authority.

A principal could not disaffirm the authority of his agent to make a contract, and at the same time retain the benefit of his unauthorized act. Brotherhood of Am. Yeomen v. Farmers' Equity State Bank, 45 N.D. 532, 178 N.W. 285, 1920 N.D. LEXIS 147 (N.D. 1920).

3-01-06. How agency created.

An agency may be created and an authority may be conferred by a prior authorization or a subsequent ratification.

Source:

Civ. C. 1877, § 1346; R.C. 1895, § 4312; R.C. 1899, § 4312; R.C. 1905, § 5760; C.L. 1913, § 6328; R.C. 1943, § 3-0106.

Derivation:

Cal. Civ. C., 2307.

Notes to Decisions

Executory Agreement to Act As Agent.

Ordinarily an executory contract to act as agent is not binding on either party unless based on sufficient consideration, but if the agent enters upon the execution of the business and loss results from his neglect or failure, he may be held responsible. Odegard v. Haugland, 40 N.D. 547, 169 N.W. 170, 1918 N.D. LEXIS 107 (N.D. 1918).

Oral Agreement.

N.D.C.C. § 38-18.1-04 allows an owner’s representative to record a statement of claim and does not require the owner of the mineral interest to record the claim. Therefore, a mineral interest did not lapse in quiet title action; the statute of frauds did not apply since there was not a transfer of real property, and an agreement by several heirs to have two people act as their representatives was not required to be in writing. Larson v. Norheim, 2013 ND 60, 830 N.W.2d 85, 2013 N.D. LEXIS 60 (N.D. 2013).

Proof of Agency.

Whether a prima facie case of agency has been established by evidence independent of the agent’s declaration is for the court to determine before receiving the agent’s declarations. Lake Grocery Co. v. Chiostri, 34 N.D. 386, 158 N.W. 998, 1916 N.D. LEXIS 40 (N.D. 1916); Bratton v. Hoerr, 49 N.D. 719, 193 N.W. 308, 1923 N.D. LEXIS 17 (N.D. 1923).

An agency cannot be established by the declarations of the claimed agent. Bratton v. Hoerr, 49 N.D. 719, 193 N.W. 308, 1923 N.D. LEXIS 17 (N.D. 1923).

Where an agency can be established by parol, the agency is a competent witness to prove the agency. Motley v. Standard Oil Co., 61 N.D. 660, 240 N.W. 206, 1931 N.D. LEXIS 324 (N.D. 1931).

3-01-07. No consideration necessary.

The relationship of principal and agent can be created although neither party receives consideration.

Source:

Civ. C. 1877, § 1347; R.C. 1895, § 4313; R.C. 1899, § 4313; R.C. 1905, § 5761; C.L. 1913, § 6329; R.C. 1943, § 3-0107.

Derivation:

Cal. Civ. C., 2308.

Notes to Decisions

Oral Agreement.

N.D.C.C. § 38-18.1-04 allows an owner’s representative to record a statement of claim and does not require the owner of the mineral interest to record the claim. Therefore, a mineral interest did not lapse in quiet title action; the statute of frauds did not apply since there was not a transfer of real property, and an agreement by several heirs to have two people act as their representatives was not required to be in writing. Larson v. Norheim, 2013 ND 60, 830 N.W.2d 85, 2013 N.D. LEXIS 60 (N.D. 2013).

3-01-08. Ratification of agency — How made — Extent.

A ratification can be made only in the manner that would have been necessary to confer an original authority for the act ratified or, when an oral authorization would suffice, by accepting or retaining the benefit of the act with notice thereof. A ratification is not valid unless at the time of ratifying the act done the principal has power to confer authority for such an act and ratification of part of an indivisible transaction is a ratification of the whole.

Source:

Civ. C. 1877, §§ 1349 to 1351; R.C. 1895, §§ 4315 to 4317; R.C. 1899, §§ 4315 to 4317; R.C. 1905, §§ 5763 to 5765; C.L. 1913, §§ 6331 to 6333; R.C. 1943, § 3-0108.

Derivation:

Cal. Civ. C., 2310 to 2312.

Notes to Decisions

In General.

An unauthorized agent does not bind the principal unless his acts are ratified. Clendening v. Hawk, 8 N.D. 419, 79 N.W. 878, 1899 N.D. LEXIS 31 (N.D. 1899).

Contract for Sale of Land.

A written contract for the sale of land, which is entered into by an agent who has only parol authority to sell, is void. Halland v. Johnson, 42 N.D. 360, 174 N.W. 874, 1919 N.D. LEXIS 188 (N.D. 1919).

Fraudulent Misrepresentations by Agent.

Where it appears that a special agent made fraudulent misrepresentations in making an unauthorized purchase, the principal, not knowing of such misrepresentations, will not be liable for them even though he accepts the benefits of the purchase. Nichols v. Bruns, 37 N.W. 752, 5 Dakota 28, 1888 Dakota LEXIS 13 (Dakota 1888).

Knowledge of Facts Necessary for Ratification.

To be binding, a ratification must be shown to have been made with full knowledge of all the material facts. Martinson v. Kershner, 32 N.D. 46, 155 N.W. 37 (N.D. 1915).

Ratification by County Board of Commissioners.

Since the voters had not assented to a certain expenditure, the board of county commissioners was without lawful authority to make the same, and therefore the board’s acceptance of the benefits would not operate to bind the county. State ex rel. Diebold Safe & Lock Co. v. Getchell, 3 N.D. 243, 55 N.W. 585, 1893 N.D. LEXIS 18 (N.D. 1893).

School District Not Liable for Unauthorized Acts of Officer.

A school district is not liable for the act of its officer, done without its authority, and ratified only so far as to receive and adopt the results of his acts, but without knowledge that in doing the act ratified he had exceeded his authority, or agreed to do what was forbidden by law. School Dist. v. Collins, 41 N.W. 466, 6 Dakota 145, 1889 Dakota LEXIS 11 (Dakota 1889).

Validating Mortgage.

To validate an unauthorized mortgage, it must be ratified in writing. Morris v. Ewing, 8 N.D. 99, 76 N.W. 1047, 1898 N.D. LEXIS 18 (N.D. 1898).

Collateral References.

Ratification by principal of payment of purchase money to agent authorized to sell real property, 30 A.L.R.2d 805.

Evidence of ratification as admissible under allegation of agency, 45 A.L.R.2d 583, 610.

3-01-09. Retroactive ratification limited.

No unauthorized act can be made valid retroactively to the prejudice of third persons without their consent.

Source:

Civ. C. 1877, § 1352; R.C. 1895, § 4318; R.C. 1899, § 4318; R.C. 1905, § 5766; C.L. 1913, § 6334; R.C. 1943, § 3-0109.

Derivation:

Cal. Civ. C., 2313.

Notes to Decisions

In General.

The rule that a principal may validate the unauthorized acts of his agent by ratification is modified by the proviso that the ratification cannot affect the rights of third persons which have intervened prior thereto. Clendenning v. Hawk, 10 N.D. 90, 86 N.W. 114, 1901 N.D. LEXIS 7 (N.D. 1901).

3-01-10. Rescission of ratification.

A ratification may be rescinded when made without such consent as is required in a contract or with an imperfect knowledge of the material facts of the transaction ratified, but not otherwise.

Source:

Civ. C. 1877, § 1353; R.C. 1895, § 4319; R.C. 1899, § 4319; R.C. 1905, § 5767; C.L. 1913, § 6335; R.C. 1943, § 3-0110.

Derivation:

Cal. Civ. C., 2314.

Notes to Decisions

In General.

To be binding, a ratification must be shown to have been made with full knowledge of all the material facts. Martinson v. Kershner, 32 N.D. 46, 155 N.W. 37 (N.D. 1915).

3-01-11. Termination of agency.

  1. An agency is terminated as to every person having notice thereof by:
    1. Expiration of its term;
    2. Extinction of its subject;
    3. Death of the agent;
    4. Renunciation by the agent; or
    5. Incapacity of the agent to act as such.
  2. Unless the power of an agent is coupled with an interest in the subject of the agency, it is terminated as to every person having notice thereof by:
    1. Its revocation by the principal;
    2. Death of the principal; or
    3. Incapacity of the principal to contract.

Source:

Civ. C. 1877, §§ 1383, 1384; R.C. 1895, §§ 4349, 4350; R.C. 1899, §§ 4349, 4350; R.C. 1905, §§ 5797, 5798; C.L. 1913, §§ 6365, 6366; R.C. 1943, § 3-0111.

Derivation:

Cal. Civ. C., 2355, 2356.

Notes to Decisions

Incapacity of the Principal.

The subsequent marriage of a single woman, who had executed a power of attorney not coupled with an interest, amounted to a revocation of the power as to all persons having notice of the marriage. Wambole v. Foot, 2 N.W. 239, 2 Dakota 1, 1878 Dakota LEXIS 1 (Dakota 1878).

Power Coupled with Interest.

The power of sale in a real estate mortgage is a power coupled with an interest, and is not terminated by the mortgagor’s death. Grandin v. Emmons, 10 N.D. 223, 86 N.W. 723, 1901 N.D. LEXIS 28 (N.D. 1901).

In determining whether or not there is a “power coupled with an interest”, the universally accepted test is the existence or nonexistence of and interest in the thing itself on which the power is to operate. Brown v. Skotland, 12 N.D. 445, 97 N.W. 543, 1903 N.D. LEXIS 51 (N.D. 1903).

Power to Sell Real Estate Exhausted by Sale.

The written authority to sell land is exhausted by a sale thereof, and the agent cannot cancel the first sale made and make a second which is binding upon the principal. LUKE v. GRIGGS, 30 N.W. 170, 4 Dakota 287, 1886 Dakota LEXIS 22 (Dakota 1886).

Collateral References.

Right to terminate agency contract because of agent’s illness or physical incapacity, 21 A.L.R.2d 1247.

What constitutes power coupled with interest within rule as to termination of agency, 28 A.L.R.2d 1243.

Oral agreement respecting duration of employment or agency as admissible where written contract is silent, 85 A.L.R.2d 1331.

Notice: effect of attempt to terminate agency contract upon shorter notice than that stipulated in contract, 96 A.L.R.2d 272, 277.

Lease: liability of lessee’s guarantor or surety beyond the original period fixed by lease, 10 A.L.R.3d 582.

Distributorship: termination by principal of distributorship contract containing no express provision for termination, 19 A.L.R.3d 196.

CHAPTER 3-02 Principal and Agent Relation

3-02-01. Acts done by or to agent.

Every act which legally may be done by or to any person may be done by or to the agent of such person for that purpose, unless a contrary intention clearly appears.

Source:

Civ. C. 1877, § 1344; R.C. 1895, § 4310; R.C. 1899, § 4310; R.C. 1905, § 5758; C.L. 1913, § 6326; R.C. 1943, § 3-0201.

Derivation:

Cal. Civ. C., 2305.

Cross-References.

Indemnity against acts of certain person includes his agents, see § 22-02-04.

Notes to Decisions

Declaration of Agent.

The declarations of an agent, not made while acting within the scope of his agency, are not binding on the principal. Rounseville v. Paulson, 19 N.D. 466, 126 N.W. 221, 1910 N.D. LEXIS 51 (N.D. 1910).

3-02-02. Actual or ostensible authority.

An agent has such authority as the principal actually or ostensibly confers upon the agent. Actual authority is such as a principal intentionally confers upon the agent or intentionally or by want of ordinary care allows the agent to believe the agent possesses. Ostensible authority is such as the principal intentionally or by want of ordinary care causes or allows a third person to believe the agent possesses.

Source:

Civ. C. 1877, §§ 1354 to 1356; R.C. 1895, §§ 4320 to 4322; R.C. 1899, §§ 4320 to 4322; R.C. 1905, §§ 5768 to 5770; C.L. 1913, §§ 6336 to 6338; R.C. 1943, § 3-0202.

Derivation:

Cal. Civ. C., 2315 to 2317.

Cross-References.

Actual and ostensible agency defined, see § 3-01-03.

Liens by apparent owner, effect, see § 35-06-05.

Notes to Decisions

In General.

The extent of the authority of an agent depends on the will of the principal, and the latter will be bound by the acts of the agent only to the extent of authority, actual or apparent, which he has conferred on the agent. Corey v. Hunter, 10 N.D. 5, 84 N.W. 570 (1900), explained, Grant County State Bank v. Northwestern Land Co., 28 N.D. 479, 150 N.W. 736 (1914), distinguished, Bernard v. Madsen, 52 N.D. 822, 204 N.W. 196 (1925) and Robinson v. Swenson, 54 N.D. 573, 209 N.W. 982, 1926 N.D. LEXIS 49 (N.D. 1926).

“Ostensible authority” of an agent is based upon the principle of estoppel and rests upon the conduct and communications of the principal which, reasonably interpreted, cause a third person to believe that the agent has authority to act for and on behalf of the principal. Stoffels v. Brown, 37 N.D. 272, 163 N.W. 834, 1917 N.D. LEXIS 96 (N.D. 1917); McLane v. F. H. Peavey & Co., 72 N.D. 468, 8 N.W.2d 308, 1943 N.D. LEXIS 82 (N.D. 1943).

There must have been some conduct on the part of the principal reasonably resulting in the belief in the mind of the third party, that an agency existed together with a reliance thereon. Bernard v. Madsen, 52 N.D. 822, 204 N.W. 196, 1925 N.D. LEXIS 128 (N.D. 1925); Scherbenske v. Maier, 71 N.W.2d 770, 1955 N.D. LEXIS 133 (N.D. 1955).

An agent has no authority other than that conferred upon him by this statute. Fargo Nat'l Bank v. Agricultural Ins. Co., 184 F.2d 676 (8th Cir. 1950).

How a principal and agent describe their relationship between themselves does not regulate their relationship to others. If an act done by one person on behalf of another is in its essential nature one of agency, then he is an agent regardless of the title bestowed upon him. Red River Commodities v. Eidsness, 459 N.W.2d 805, 1990 N.D. LEXIS 159 (N.D. 1990).

Authority of Agent to Receive Payment.

The authority of an agent to collect money or receive payment, like his authority generally, is to be determined in the light of all circumstances surrounding the parties, and the business transactions. First Nat'l Bank v. Henry, 30 N.D. 324, 152 N.W. 668, 1915 N.D. LEXIS 128 (N.D. 1915).

The person paying notes to the owner’s agent is entitled to a discharge of the mortgage securing them, regardless of lack of knowledge of the agency. Swarthout v. Meyers, 56 N.D. 301, 217 N.W. 160, 1927 N.D. LEXIS 101 (N.D. 1927).

Authority of General Agent.

Instructions to or limitations on the powers of the general agent which are not disclosed do not affect apparent powers, and though the agent exceeds his authority, he will bind the principal if the acts are within the scope of his apparent authority. Michigan Idaho Lumber Co. v. Northern Fire & Marine Ins. Co., 35 N.D. 244, 160 N.W. 130, 1916 N.D. LEXIS 159 (N.D. 1916).

Authority of Special Agent.

When a special agent acts under a special and limited authority he cannot bind his principal by any act in excess thereof. Winkel v. Atlas Lumber Co., 36 N.D. 542, 162 N.W. 364, 1917 N.D. LEXIS 184 (N.D. 1917).

An agent authorized merely to collect a debt cannot bind the principal by any arrangement short of an actual collection and receipt of money. Meyer v. National Fire Ins. Co., 67 N.D. 77, 269 N.W. 845, 1936 N.D. LEXIS 154 (N.D. 1936).

Authority to Fill in Blanks in a Writing.

Blanks of any description left in a writing not under seal, except as prohibited by the statute of frauds, may be filled in pursuance of mere parol authority. Merchants' Nat'l Bank v. Brastrup, 39 N.D. 619, 168 N.W. 42, 1918 N.D. LEXIS 51 (N.D. 1918).

Burden of Proof.

Where an agency is denied, the burden of proof is upon the one who asserts that an agency exists. Martinson v. Kershner, 32 N.D. 46, 155 N.W. 37 (N.D. 1915); Stoffels v. Brown, 37 N.D. 272, 163 N.W. 834, 1917 N.D. LEXIS 96 (N.D. 1917).

Where the existence of an agency relationship is denied, the burden of proof is upon the party who affirms its existence to establish such existence by clear and convincing evidence. Farmers Union Oil Co. v. Wood, 301 N.W.2d 129, 1980 N.D. LEXIS 322 (N.D. 1980).

Check Cashing.

Even if payee corporation was negligent or conduct warranted finding of ostensible authority conferred upon district manager who cashed corporation checks and diverted funds into personal bank account, such facts would not bar recovery by corporation from bank where manager’s conduct did not in any way induce bank to rely blindly on genuineness of his endorsement. Fargo Nat'l Bank v. Massey-Ferguson, Inc., 400 F.2d 223, 1968 U.S. App. LEXIS 5676 (8th Cir. N.D. 1968).

Corporate Agents.

The authority of the agent of a corporate principal may be established as in other cases of agency; for example, by proof of the ostensible authority of the agent. Grant County State Bank v. Northwestern Land Co., 28 N.D. 479, 150 N.W. 736, 1914 N.D. LEXIS 146 (N.D. 1914); Merritt v. Adams County Land & Inv. Co., 29 N.D. 496, 151 N.W. 11, 1915 N.D. LEXIS 25 (N.D. 1915).

Actual authority to act for and bind a corporation may be presumed from acts of recognition in other instances when such power was in fact exercised. McIntosh v. Dakota Trust Co., 52 N.D. 752, 204 N.W. 818, 1925 N.D. LEXIS 146 (N.D. 1925).

The actions of the agent which indicate authority beyond carrying on the mere general affairs must be open and notorious so that it is presumed the corporation knew what he was doing, and coincided with it. Union Cent. Life Ins. Co. v. First Nat'l Bank, 56 N.D. 103, 216 N.W. 201, 1927 N.D. LEXIS 77 (N.D. 1927).

Determination of Trial Court.

Agency is a question of fact to be decided by the trial court. Supreme court will not disturb a trial court’s finding of agency unless it is clearly erroneous. Red River Commodities v. Eidsness, 459 N.W.2d 805, 1990 N.D. LEXIS 159 (N.D. 1990).

Endorsement of Check by Agent.

Where the principal holds the agent out as having power to endorse negotiable instruments or permits him to act as if he possessed such power under circumstances inducing those dealing with him reasonably to rely on its existence, an apparent authority arises under which persons accepting commercial paper from the agent will be protected. Fidelity & Casualty Co. v. First Nat'l Bank & Trust Co., 71 N.D. 415, 1 N.W.2d 401, 1941 N.D. LEXIS 182 (N.D. 1941).

Husband and Wife.

Where a man and wife live together, and he does business in her name under a general power of attorney, she must take the risk of his business ventures. Buchanan Elevator Co. v. Lees, 37 N.D. 27, 163 N.W. 264, 1917 N.D. LEXIS 67 (N.D. 1917).

Ostensible Authority.

The relationship of landlord and tenant is insufficient to establish the ostensible authority of a tenant to waive an implied warranty of fitness of grain for use as seed. McLane v. F. H. Peavey & Co., 72 N.D. 468, 8 N.W.2d 308, 1943 N.D. LEXIS 82 (N.D. 1943).

Ostensible authority is also called apparent authority and it is such as the principal intentionally or by want of ordinary care causes or allows a third person to believe the agent to possess; principal is bound by agent’s acts under ostensible authority only to third persons who have incurred a liability in good faith and without ordinary negligence. Transamerica Ins. Co. v. Standard Oil Co., 325 N.W.2d 210, 1982 N.D. LEXIS 346 (N.D. 1982).

An ostensible agency exists where the conduct of the supposed agent is consistent with an agency, and where, in a particular transaction, someone is justified in dealing with the supposed agent. Red River Commodities v. Eidsness, 459 N.W.2d 805, 1990 N.D. LEXIS 159 (N.D. 1990).

Ostensible agency relationship did not exist between a scrap metal buyer and purchaser as there was no evidence of the purchaser’s actions or communications prior to the formation of the contract that would induce the seller to believe the buyer had the authority to act for the purchaser. Lagerquist v. Stergo, 2008 ND 138, 752 N.W.2d 168, 2008 N.D. LEXIS 139 (N.D. 2008).

Proof of Agency.

The acts of an alleged agent cannot establish an agency without evidence showing the principal’s knowledge or assent thereto. Rigler v. North Dakota Constr. Co., 57 N.D. 37, 220 N.W. 441, 1928 N.D. LEXIS 93 (N.D. 1928).

Railroad Station Agent.

A local station agent’s authority extends only to the control of the carrier’s business at his own station. Knapp v. Minneapolis S. P. & S. S. M. Ry., 34 N.D. 466, 159 N.W. 81, 1916 N.D. LEXIS 64 (N.D. 1916).

Collateral References.

Doctrine of apparent authority as applicable where relationship is that of master and servant, 2 A.L.R.2d 406.

Power of corporate officer or agent to hire employees for life, 28 A.L.R.2d 929, 940.

Implied or apparent authority of agent selling personal property to make warranties, 40 A.L.R.2d 285.

Implied or apparent authority of agent to purchase or order goods or merchandise, 55 A.L.R.2d 6.

Authority of corporate officers to mortgage or pledge corporate personal property, 62 A.L.R.2d 712.

3-02-03. Agent authority.

Every agent has actually such authority as is defined by this title unless specially deprived thereof by the agent’s principal, and has even then such authority ostensibly, except as to persons who have actual or constructive notice of the restriction upon the agent’s authority.

Source:

Civ. C. 1877, § 1357; R.C. 1895, § 4323; R.C. 1899, § 4323; R.C. 1905, § 5771; C.L. 1913, § 6339; R.C. 1943, § 3-0203.

Derivation:

Cal. Civ. C., 2318.

Notes to Decisions

Authority to Create Warranty.

An agent authorized to sell binders for another had the power to create a warranty as to the work of the machine, and his general authority to so warrant could not be restricted as to third persons who had no knowledge of such restriction. Canham v. Plano Mfg. Co., 3 N.D. 229, 55 N.W. 583, 1893 N.D. LEXIS 17 (N.D. 1893).

3-02-04. Authority limited to specific terms.

When an authority is given partly in general and partly in specific terms, the general authority gives no higher powers than those specifically mentioned.

Source:

Civ. C. 1877, § 1360; R.C. 1895, § 4326; R.C. 1899, § 4326; R.C. 1905, § 5774; C.L. 1913, § 6342; R.C. 1943, § 3-0204.

Derivation:

Cal. Civ. C., 2321.

Notes to Decisions

Authority to Endorse Negotiable Instrument.

The authority of an agent to endorse negotiable instruments will not be implied from the fact of agency unless it be necessary in order to carry out the express authority conferred on the agent by his principal. Embden State Bank v. Schulze, 49 N.D. 777, 193 N.W. 481, 1923 N.D. LEXIS 24 (N.D. 1923).

Fiduciary Duty.

Fiduciary Duty. District court's finding that a limited liability company (LLC) did not breach a fiduciary duty in acquiring oil and gas leases for an oil and gas company was not clearly erroneous because no fiduciary duty precluded the LLC from acquiring the leases after its authority to acquire leases had been terminated; the parties' written contract was silent on the question of a fiduciary duty. Border Res., LLC v. Ir. Oil & Gas, Inc., 2015 ND 238, 869 N.W.2d 758, 2015 N.D. LEXIS 253 (N.D. 2015).

3-02-05. General authority limited.

An authority expressed in general terms, however broad, does not authorize an agent to act in the agent’s own name unless doing so is the usual course of business, to define the scope of the agent’s agency, or to do any act that a trustee is forbidden to do under chapters 59-09, 59-10, 59-11, 59-12, 59-13, 59-14, 59-15, 59-16, 59-17, 59-18, and 59-19.

Source:

Civ. C. 1877, § 1361; R.C. 1895, § 4327; R.C. 1899, § 4327; R.C. 1905, § 5775; C.L. 1913, § 6343; R.C. 1943, § 3-0205; 2007, ch. 549, § 1.

Derivation:

Cal. Civ. C., 2322.

Notes to Decisions

Authority of Agent to Compromise.

A general agent having charge of a bank’s collections has no authority to compromise or settle claims for a less sum than is due, by virtue of such general agency to collect alone. First Nat'l Bank v. Prior, 10 N.D. 146, 86 N.W. 362, 1901 N.D. LEXIS 17 (N.D. 1901).

Acting in Own Name.

If an agent contracts in his own name, he alone is liable. National German-American Bank v. Lang, 2 N.D. 66, 49 N.W. 414, 1891 N.D. LEXIS 27 (N.D. 1891).

Ambiguous Instructions.

If a principal gives his agent ambiguous instructions, which the agent executes in good faith according to a reasonable interpretation, the principal is estopped to say that he intended them to be construed otherwise. Anderson v. First Nat'l Bank, 4 N.D. 182, 59 N.W. 1029, 1894 N.D. LEXIS 26 (N.D. 1894).

DECISIONS UNDER PRIOR LAW

Acts Forbidden Under Former Chapter 59-01.

An agent authorized to sell property of his principal cannot sell the same to himself. Anderson v. First Nat'l Bank, 5 N.D. 80, 64 N.W. 114, 1895 N.D. LEXIS 19 (N.D. 1895).

A national bank which purchased notes which it had been authorized by the owner to sell to a third party, and which thus became liable for conversion, was not protected from such liability by the National Bank Act, though it was not in its power to act as agent for the sale of the notes. Anderson v. First Nat'l Bank, 6 N.D. 497, 72 N.W. 916, 1897 N.D. LEXIS 28 (N.D. 1897), aff'd, 172 U.S. 573, 19 S. Ct. 284, 43 L. Ed. 558, 1899 U.S. LEXIS 1397 (U.S. 1899).

An insurance policy written by an agent on his own property is invalid, unless the company is fully informed regarding it and approves its issuance. Clifford v. Firemen's Ins. Co., 58 N.D. 13, 224 N.W. 891, 1929 N.D. LEXIS 175 (N.D. 1929).

Railroad’s authorization for agent to deal “for its own account” with railroad’s oil and gas rights was an “authority expressed in general terms” and thus the obligations of a trustee imposed by former N.D.C.C. §§ 59-01-09 to 59-01-19 applied to the agency relationship. Burlington Northern & Sante Fe Ry. v. Burlington Resources Oil & Gas Co., 1999 ND 39, 590 N.W.2d 433, 1999 N.D. LEXIS 41 (N.D. 1999).

Agent did not breach his fiduciary duty to cattle owner by negotiating the sale of cattle to a cattle operation in which the agent had a minority ownership interest where the cattle owner had previously dealt with that cattle operation, was aware of the agent’s ownership interest in it, and had time and opportunity to reject the sale. Auction Effertz, Ltd. v. Schecher, 2000 ND 109, 611 N.W.2d 173, 2000 N.D. LEXIS 120 (N.D. 2000).

Presumption of Undue Influence.

The presumption in former § 59-01-16, of undue influence for transactions between trustee and his beneficiary applied to the purchase of a savings certificate by an attorney-in-fact with his principal’s funds where the attorney-in-fact and his principal held the certificate as joint tenants with right of survivorship. In re Estate of Mehus, 278 N.W.2d 625, 1979 N.D. LEXIS 182 (N.D. 1979).

The presumption of undue influence imposed by former § 59-01-16 on transactions between trustees and beneficiaries applied to a contract authorizing railroad’s agent to lease railroad’s oil and gas rights to itself. Burlington Northern & Sante Fe Ry. v. Burlington Resources Oil & Gas Co., 1999 ND 39, 590 N.W.2d 433, 1999 N.D. LEXIS 41 (N.D. 1999).

Collateral References.

Commodities broker’s state-law duties to customers, 55 A.L.R.4th 394.

3-02-06. Form of authorization.

An oral authorization is sufficient for any purpose, except that an authority to enter into a contract required by law to be in writing, other than an instrument covered by chapter 41-03 can be given only by an instrument in writing.

Source:

Civ. C. 1877, § 1348; R.C. 1895, § 4314; R.C. 1899, § 4314; R.C. 1905, § 5762; C.L. 1913, § 6330; R.C. 1943, § 3-0206; S.L. 1965, ch. 296, § 2.

Derivation:

Cal. Civ. C., 2309.

Notes to Decisions

Attorney’s Verbal Authority.

Rule that land sale contract entered into with purchaser by agent who had only verbal authority from owner is void was applicable even though agent was attorney; mere payment of money consideration by buyer is not sufficient justification for enforcing oral contract to convey land; acts relied upon as partial performance, to take an oral agreement out of statute of frauds, must be such as to be incomprehensible unless related to contract; payment of taxes, partial payment of $3,000 mortgage and possession of premises by purchaser were consistent with operation of land under his seven-eighths ownership of property and were insufficient to take alleged oral contract for sale of remaining one-eighth interest out of statute of frauds. Tostenson v. Ihland, 147 N.W.2d 104, 1966 N.D. LEXIS 152 (N.D. 1966).

Contract to Purchase School Land.

An oral contract which authorizes one to purchase school land, and to hold the same in trust for others, is within the statute of frauds and is void. Weber v. Bader, 42 N.D. 142, 172 N.W. 72, 1919 N.D. LEXIS 127 (N.D. 1919).

Endorsement of Negotiable Instrument by Agent.

This section is held not to require that there be written authority to an agent to endorse a negotiable instrument belonging to a corporation. McLeod State Bank v. Vandemark, 51 N.D. 573, 200 N.W. 42, 1924 N.D. LEXIS 52 (N.D. 1924).

Promissory Estoppel.

Principal was estopped from asserting the statute of frauds as a bar to enforcement of an agency contract where the principal represented to the agent that he would sell grain at a stated price and the agent, in good faith, relied upon this representation and immediately found a buyer to whom he was later required to pay damages due to the principal’s failure to perform. Minnesota Farm Bureau Marketing Corp. v. North Dakota Agricultural Marketing Asso., 563 F.2d 906, 1977 U.S. App. LEXIS 11162 (8th Cir. N.D. 1977).

3-02-07. Fraud limits authority.

An agent never can have authority, either actual or ostensible, to do an act which is, and is known or suspected by the person with whom the agent deals to be, a fraud upon the principal.

Source:

Civ. C. 1877, § 1345; R.C. 1895, § 4311; R.C. 1899, § 4311; R.C. 1905, § 5759; C.L. 1913, § 6327; R.C. 1943, § 3-0207.

Derivation:

Cal. Civ. C., 2305.

Notes to Decisions

Liability for Agent’s Fraud.

Where a reasonable investigation would have led to the conclusion that partner as agent for partnership had authority to obligate partnership funds because he had a management role and took responsibility for partnership’s financial affairs, this section did not strip the partner of his authority to enter sham transactions. Woods Farmers Coop. Elevator Co. v. Z-Mega Farms Ltd. Pshp. I, 95 F.3d 693, 1996 U.S. App. LEXIS 23880 (8th Cir. N.D. 1996).

3-02-08. Authority to do necessary acts and make representations.

An agent has authority:

  1. To do everything necessary or proper and usual in the ordinary course of business to effect the purpose of the agent’s agency.
  2. To make a representation respecting any matter of fact, not including the terms of the agent’s authority, but upon which the agent’s right to use the agent’s authority depends and the truth of which cannot be determined by the use of reasonable diligence on the part of the person to whom the representation is made.

Source:

Civ. C. 1877, § 1358; R.C. 1895, § 4324; R.C. 1899, § 4324; R.C. 1905, § 5772; C.L. 1913, § 6340; R.C. 1943, § 3-0208.

Derivation:

Cal. Civ. C., 2319.

Notes to Decisions

In General.

The general authority of an agent is confined strictly to the particular kind of business placed in his hands. Jasper v. Hazen, 2 N.D. 401, 51 N.W. 583, 1892 N.D. LEXIS 19 (N.D. 1892).

Admissions of Agent.

Where the act of the agent will bind the principal, his representations, declarations, and admissions respecting the subject matter also will bind the principal if made at the same time and if they constitute a part of the res gestae. Short v. Northern Pac. Elevator Co., 1 N.D. 159, 45 N.W. 706, 1890 N.D. LEXIS 20 (N.D. 1890).

Authority of General Agent.

A general agent of territory comprising several states, who has authority to contract with local agents for the sale of machinery subject to approval of the principal and power to sell machinery from the head office, also has authority to do everything necessary to effect the purpose of his agency, including authority to employ assistance in making sale of machine. Kopan v. Minneapolis Threshing Mach. Co., 39 N.D. 27, 166 N.W. 826, 1918 N.D. LEXIS 15 (N.D. 1918).

A general agent has authority to do everything necessary or proper and useful in the ordinary course of business for effecting the purpose of his agency. Bentley v. Oldetyme Distillers, 71 N.D. 52, 298 N.W. 417, 1941 N.D. LEXIS 136 (N.D. 1941).

District court properly found that the seller's CEO had authority to execute a stock purchase agreement on behalf of his wife and the other selling shareholders because the statute at issue authorized the action, the shareholders and board of directors authorized the CEO, individually and as their agent, to execute the stock purchase agreement, and the stock purchase agreement included two paragraphs relating to the judgment creditor's litigation and indemnification, and nothing statutorily relating to indemnity required a contract for indemnity to be in writing. SNAPS Holding Co. v. Leach, 2017 ND 140, 895 N.W.2d 763, 2017 N.D. LEXIS 136 (N.D. 2017).

Authorized Representations As Evidence.

If there is independent evidence tending to prove an agency, it is competent to prove acts of the alleged agent as well as his declarations that he was acting as agent in the particular transaction. Grant County State Bank v. Northwestern Land Co., 28 N.D. 479, 150 N.W. 736, 1914 N.D. LEXIS 146 (N.D. 1914); Lake Grocery Co. v. Chiostri, 34 N.D. 386, 158 N.W. 998, 1916 N.D. LEXIS 40 (N.D. 1916).

Oral Agreement Changing Written Contract.

An agent cannot make an oral agreement changing the terms of a prior written contract of sale. Reeves & Co. v. Corrigan, 3 N.D. 415, 57 N.W. 80, 1893 N.D. LEXIS 36 (N.D. 1893).

Collateral References.

Commodities broker’s state-law duties to customers, 55 A.L.R.4th 394.

3-02-09. When agent may disobey instructions.

An agent has power to disobey instructions in dealing with the subject of the agency in cases when it is clearly for the interest of the agent’s principal that the agent should do so and there is not time to communicate with the principal.

Source:

Civ. C. 1877, § 1359; R.C. 1895, § 4325; R.C. 1899, § 4325; R.C. 1905, § 5773; C.L. 1913, § 6341; R.C. 1943, § 3-0209.

Derivation:

Cal. Civ. C., 2320.

Notes to Decisions

Failure to Comply with Instructions.

An agent must carry out promptly and in good faith his principal’s instructions relating to the subject of the agency. Queen City Fire Ins. Co. v. First Nat'l Bank, 18 N.D. 603, 120 N.W. 545, 1909 N.D. LEXIS 13 (N.D. 1909).

3-02-10. Authority to warrant property sold.

Authority to sell and convey real property includes authority to give the usual covenants of warranty. Authority to sell personal property includes authority to warrant the title of the principal and the quality and quantity of the property.

Source:

Civ. C. 1877, §§ 1362, 1363; R.C. 1895, §§ 4328, 4329; R.C. 1899, §§ 4328, 4329; R.C. 1905, §§ 5776, 5777; C.L. 1913, §§ 6344, 6345; R.C. 1943, § 3-0210.

Derivation:

Cal. Civ. C., 2323, 2324.

Notes to Decisions

Notice of Restrictions on Authority to Warrant.

An agent has the power to warrant that machinery he is selling for another will do as good work as any other machine in the market and his authority to so warrant cannot be restricted as to third persons who have no knowledge of such restriction. Canham v. Plano Mfg. Co., 3 N.D. 229, 55 N.W. 583, 1893 N.D. LEXIS 17 (N.D. 1893).

A principal who empowers an auctioneer to sell goods without actual or constructive notice of restrictions on his power to warrant is bound by the warranty of quality made by the auctioneer. Cysewski v. Fried, 24 N.D. 152, 139 N.W. 104, 1912 N.D. LEXIS 18 (N.D. 1912).

“Quality” Defined.

The word “quality” imports “adaptiveness, suitableness, and fitness for the purpose specified” and, in case of a horse, adaptiveness and suitableness for purposes for which the horse is purchased. Holbert v. Weber, 36 N.D. 106, 161 N.W. 560, 1917 N.D. LEXIS 161 (N.D. 1917).

Collateral References.

Implied or apparent authority of agent selling personal property to make warranties, 40 A.L.R.2d 285.

3-02-11. Authority of general and special agent to receive price.

A general agent to sell, who is entrusted by the principal with the possession of the thing sold, has authority to receive the price. A special agent to sell has authority to receive the price on delivery of the thing sold, but not afterwards.

Source:

Civ. C. 1877, §§ 1364, 1365; R.C. 1895, §§ 4330, 4331; R.C. 1899, §§ 4330, 4331; R.C. 1905, §§ 5778, 5779; C.L. 1913, §§ 6346, 6347; R.C. 1943, § 3-0211.

Derivation:

Cal. Civ. C., 2325, 2326.

Collateral References.

Ratification by principal of payment of purchase money to agent authorized to sell real property, 30 A.L.R.2d 805.

Purchase or order of goods or merchandise, authority of agent as to, 55 A.L.R.2d 6.

3-02-12. Agent must inform principal — Not exceed authority.

An agent must use ordinary diligence to keep the agent’s principal informed of the agent’s acts in the course of the agency. An agent must not exceed the limits of the agent’s actual authority as defined by this title.

Source:

Civ. C. 1877, §§ 1164, 1165; R.C. 1895, §§ 4130, 4131; R.C. 1899, §§ 4130, 4131; R.C. 1905, §§ 5578, 5579; C.L. 1913, §§ 6141, 6142; R.C. 1943, § 3-0212.

Derivation:

Cal. Civ. C., 2019, 2020.

Notes to Decisions

Agent with Interests Adverse to Principal.

One who assumes to act as agent for the collection of any claim is bound to give such collection preference over any similar claim which the agent may have on his own account against the same debtor. Commercial Bank v. Red River Valley Nat'l Bank, 8 N.D. 382, 79 N.W. 859, 1899 N.D. LEXIS 23 (N.D. 1899).

An agent having interests adverse to the principal as to matters within the scope of the agency has the duty of revealing such interests to the principal. First Nat'l Bank v. Larsson, 67 N.D. 243, 271 N.W. 289, 1937 N.D. LEXIS 77 (N.D. 1937).

3-02-13. When agent can delegate powers.

An agent, unless specially forbidden by the agent’s principal to do so, can delegate the agent’s powers to another person in any of the following cases, and in no others:

  1. When the act to be done is purely mechanical.
  2. When it is such as the agent personally cannot, and the subagent lawfully can, perform.
  3. When it is the usage of the place to delegate such power.
  4. When such delegation is specially authorized by the principal.

Source:

Civ. C. 1877, § 1380; R.C. 1895, § 4346; R.C. 1899, § 4346; R.C. 1905, § 5794; C.L. 1913, § 6362; R.C. 1943, § 3-0213.

Derivation:

Cal. Civ. C., 2349.

Notes to Decisions

Usage or Circumstances.

The power to delegate authority may be inferred from usage or circumstances. Robinson v. Swenson, 54 N.D. 573, 209 N.W. 982, 1926 N.D. LEXIS 49 (N.D. 1926).

3-02-14. Lawful subagent principal’s agent.

A subagent lawfully appointed represents the principal in like manner with the original agent, and the original agent is not responsible to third persons for the acts of the subagent.

Source:

Civ. C. 1877, § 1382; R.C. 1895, § 4348; R.C. 1899, § 4348; R.C. 1905, § 5796; C.L. 1913, § 6364; R.C. 1943, § 3-0214.

Derivation:

Cal. Civ. C., 2351.

Notes to Decisions

Default of Subagent.

An agent is not responsible for the negligence or want of skill of a subagent if the latter’s employment was necessary and the agent used reasonable diligence in his choice of the subagent. Kuhnert v. Angell, 10 N.D. 59, 84 N.W. 579, 1900 N.D. LEXIS 9 (N.D. 1900).

Terms of Agency Agreement.

Regardless of the effect of defendant’s employee’s alleged dual agency status, as agent of defendant and plaintiff, and the effect of general principles of agency law under this section, the clear and unambiguous terms of agency agreement imposed liability upon defendant for breach of contract, where the agency agreement was neither unlawful under section 9-08-01, or void as against public policy. Ohio Farmers Ins. Co. v. Dakota Agency, 551 N.W.2d 564, 1996 N.D. LEXIS 196 (N.D. 1996).

3-02-15. Responsibility of mere agent or unauthorized subagent.

A mere agent of an agent is not responsible as such to the principal of the latter. If an agent employs a subagent without authority, the former is a principal and the latter is the former’s agent and the principal of the former has no connection with the latter.

Source:

Civ. C. 1877, §§ 1167, 1381; R.C. 1895, §§ 4133, 4347; R.C. 1899, §§ 4133, 4347; R.C. 1905, §§ 5581, 5795; C.L. 1913, §§ 6144, 6363; R.C. 1943, § 3-0215.

Derivation:

Cal. Civ. C., 2022, 2350.

Notes to Decisions

Subagent Responsible to Agent.

An agent who must respond in damages to his principal for the consequences of a subagent’s derelictions of duty can have redress over and against the subagent. Commercial Bank v. Red River Valley Nat'l Bank, 8 N.D. 382, 79 N.W. 859, 1899 N.D. LEXIS 23 (N.D. 1899).

3-02-16. Duty of agent as collector of negotiable instrument.

An agent employed to collect a negotiable instrument must collect it promptly and take all measures necessary to charge the parties thereto in case of its dishonor, and, if it is a bill of exchange, must present it for acceptance with reasonable diligence.

Source:

Civ. C. 1877, § 1166; R.C. 1895, § 4132; R.C. 1899, § 4132; R.C. 1905, § 5580; C.L. 1913, § 6143; R.C. 1943, § 3-0216.

Derivation:

Cal. Civ. C., 2021.

3-02-17. Limitation of duties of licensed real estate agents.

The duties of real estate brokers and real estate salespersons, who are licensed under chapter 43-23, and the civil liabilities arising from the duties, are limited to those duties set forth in chapter 43-23 or under rules adopted under that chapter.

Source:

S.L. 1995, ch. 411, § 1.

CHAPTER 3-03 Principal and Third Person Relation

3-03-01. Rights and liabilities accruing to principal.

An agent represents the agent’s principal for all purposes within the scope of the agent’s actual or ostensible authority, and all the rights and liabilities which would accrue to the agent from the transactions within such limit, if they had been entered into on the agent’s own account, accrue to the principal.

Source:

Civ. C. 1877, § 1366; R.C. 1895, § 4332; R.C. 1899, § 4332; R.C. 1905, § 5780; C.L. 1913, § 6348; R.C. 1943, § 3-0301.

Derivation:

Cal. Civ. C., 2330.

Cross-References.

Actual or ostensible authority, see § 3-02-02.

Notes to Decisions

Imputed Knowledge.

When the vice president of the bank fraudulently induced a debtor to enter into a $250,000 loan by making false statements, the district court correctly imputed his fraud to the bank in accordance with agency law as set forth in N.D.C.C. § 3-03-01. The bank was not permitted to collect on the loan. Am. Bank Ctr. v. Wiest, 2010 ND 251, 793 N.W.2d 172, 2010 N.D. LEXIS 255 (N.D. 2010).

Partnership Liability.

Partnership was liable for actions of a single partner as its agent, where partner engaged in sham transactions to protect partnership’s access to ready credit. Woods Farmers Coop. Elevator Co. v. Z-Mega Farms Ltd. Pshp. I, 95 F.3d 693, 1996 U.S. App. LEXIS 23880 (8th Cir. N.D. 1996).

Collateral References.

Malicious prosecution, acts of agent in procuring warrant or aiding prosecution as within scope of agency so as to render principal liable for, 18 A.L.R.2d 402.

Selling agent’s power to exchange to barter principal’s personal property, 44 A.L.R.2d 1058.

Salesman’s power to pledge principal’s personal property, 49 A.L.R.2d 1271.

Duty to ascertain agent’s authority, where seller turns over goods at buyer’s premises, as affecting responsibility for loss from theft or the like, 50 A.L.R.2d 330.

Authority of agent to borrow money for principal, 55 A.L.R.2d 1215.

Undisclosed principal’s payment to or settlement with agent as affecting former’s liability to third person with respect to contract negotiated by agent, 71 A.L.R.2d 911.

Principal’s liability for false arrest or imprisonment caused by agent or servant, 92 A.L.R.2d 15.

Insurance agent’s statement or conduct indicating that insurer’s cancellation of policy shall not take effect as binding on insurer, 3 A.L.R.3d 1135.

Liability of holder of credit card or plate for purchases made thereon by another person, including an agent, 15 A.L.R.3d 1086.

Liability of executor or administrator, or his bond, for loss caused to estate by act or default of his agent or attorney, 28 A.L.R.3d 1191.

Subsidiary corporations: liability of corporation for contracts of subsidiary, 38 A.L.R.3d 1102.

Liability of public accountant to third parties, 46 A.L.R.3d 979.

Employer’s knowledge of employee’s past criminal record as affecting liability for employee’s tortious conduct, 48 A.L.R.3d 359.

Accountant’s malpractice liability to client, 92 A.L.R.3d 396.

Liability of independent accountant to investors or shareholders, 48 A.L.R.5th 389.

3-03-02. Principal bound when agent exceeds authority.

When an agent exceeds the agent’s authority, the agent’s principal is bound by the agent’s authorized acts so far only as they can be plainly separated from those which are unauthorized.

Source:

Civ. C. 1877, § 1369; R.C. 1895, § 4335; R.C. 1899, § 4335; R.C. 1905, § 5783; C.L. 1913, § 6351; R.C. 1943, § 3-0302.

Derivation:

Cal. Civ. C., 2333.

3-03-03. When ostensible authority binding.

A principal is bound by acts of the principal’s agent under a merely ostensible authority to those persons only who in good faith and without ordinary negligence have incurred a liability or parted with value upon the faith thereof.

Source:

Civ. C. 1877, § 1370; R.C. 1895, § 4336; R.C. 1899, § 4336; R.C. 1905, § 5784; C.L. 1913, § 6352; R.C. 1943, § 3-0303.

Derivation:

Cal. Civ. C., 2334.

Notes to Decisions

Authority of Agent to Receive Payment.

Where a principal intentionally or by want of ordinary care permits the agent to believe that he has authority to receive the purchase price, the agent has such authority. First Nat'l Bank v. Henry, 30 N.D. 324, 152 N.W. 668, 1915 N.D. LEXIS 128 (N.D. 1915).

The presumption is that the agent who has possession of the security has authority to make collection thereof; but the agent who does not have such possession has no authority to collect. Martinson v. Kershner, 32 N.D. 46, 155 N.W. 37 (1915), distinguished, Fitch v. Engelhardt, 34 N.D. 187, 157 N.W. 1038 (1916); Bernard v. Madsen, 52 N.D. 822, 204 N.W. 196, 1925 N.D. LEXIS 128 (N.D. 1925), and Robinson v. Swenson, 54 N.D. 573, 209 N.W. 982, 1926 N.D. LEXIS 49 (N.D. 1926).

Check Cashing.

Even if payee corporation was negligent or conduct warranted finding of ostensible authority conferred upon district manager who cashed corporation checks and diverted funds into personal bank account, such facts would not bar recovery by corporation from bank where manager’s conduct did not in any way induce bank to rely blindly on genuineness of his endorsement. Fargo Nat'l Bank v. Massey-Ferguson, Inc., 400 F.2d 223, 1968 U.S. App. LEXIS 5676 (8th Cir. N.D. 1968).

Jury Question.

Where an agent has, in certain instances, been authorized to run the business of another and to sign checks as well as other negotiable instruments in the course of conducting the principal’s business in the past, it cannot be said as a matter of law that the agent had no ostensible authority to approve an agreement settling tort liability, and the question of whether such ostensible authority existed was a jury question. State Auto. & Casualty Underwriters v. Skjonsby, 142 N.W.2d 98, 1966 N.D. LEXIS 175 (N.D. 1966).

Proof of Agency.

On the issue of agency affecting a particular transaction, the range of proof may be extended to cover similar and related transactions between the same parties. Mischel v. Harnden, 63 N.D. 107, 246 N.W. 644, 1933 N.D. LEXIS 161 (N.D. 1933).

Reliance on Authority.

The benefit of this statute could be had under the ostensible authority of an agent only by those who without ordinary negligence had parted with value upon the faith of ostensible authority of the agent. Fargo Nat'l Bank v. Agricultural Ins. Co., 184 F.2d 676 (8th Cir. 1950).

There was evidence that a corporation intentionally or by want of ordinary care caused a lessor to believe the purported president of the corporation was authorized to enter into a sale-and-leaseback arrangement where the other members of the corporation permitted the purported president to initially acquire the airplane and, as part of this acquisition, the purported president executed a purchase agreement as the president of the corporation, the other members of the corporation seemingly never inspected this document nor objected to the purported president’s representation, two title searches, one of which relied on Federal Aviation Administration registration records, revealed the president to be the president of the corporation, and the purported president had control of the corporate checkbook and was the person responsible for drafting and filing the company’s corporate documents. Weinreis v. Hill, 2005 ND 127, 700 N.W.2d 692, 2005 N.D. LEXIS 163 (N.D. 2005).

Airplane lessee, a partnership, was not bound by its partner’s actions in holding himself out as its president and entering a sale-lease back transaction because the leasing company had acted negligently; there were problems with the documentation it had received and it deposited the proceeds of the transaction in the partner’s bank account rather than the lessee’s account. Weinreis v. Hill, 2006 ND 170, 719 N.W.2d 354, 2006 N.D. LEXIS 173 (N.D. 2006).

Collateral References.

Master and servant: doctrine of apparent authority as applicable where relationship is that of master and servant, 2 A.L.R.2d 406.

Apparent or ostensible authority of corporate agent to hire employees for life, 28 A.L.R.2d 929, 940.

Apparent authority as affecting responsibility for loss from theft or the like, where seller turns over goods at buyer’s premises, 50 A.L.R.2d 330.

Implied or apparent authority of agent to purchase or order goods or merchandise, 55 A.L.R.2d 6.

Implied or apparent authority of agent to borrow money upon purchasing or ordering goods or merchandise, 55 A.L.R.2d 6.

Apparent authority of corporate officer to mortgage or pledge personal property, 62 A.L.R.2d 712.

3-03-04. Instrument within scope of authority binding.

Any instrument within the scope of the agent’s authority by which an agent intends to bind the agent’s principal does bind the principal if such intent is plainly inferable from the instrument itself.

Source:

Civ. C. 1877, § 1373; R.C. 1895, § 4339; R.C. 1899, § 4339; R.C. 1905, § 5787; C.L. 1913, § 6355; R.C. 1943, § 3-0304.

Derivation:

Cal. Civ. C., 2337.

Notes to Decisions

Deed Signed by Attorney in Fact.

A deed which is signed and sealed “Patrick M., attorney in fact for Amelia B.” is the deed of Amelia because such words indicate that the attorney was acting in a representative and not in a personal capacity. Donovan v. Welch, 11 N.D. 113, 90 N.W. 262, 1902 N.D. LEXIS 191 (N.D. 1902).

Each Member Agent of Partnership.

A partner who signs a written contract binds his partners within the scope of his authority. Benson v. Post, 9 N.W. 684, 2 Dakota 220, 1880 Dakota LEXIS 7 (Dakota 1880), aff'd, 108 U.S. 418, 2 S. Ct. 799, 27 L. Ed. 774, 1883 U.S. LEXIS 1052 (U.S. 1883).

Sale of Real Estate by Agent.

Where contract entered into by the purchaser and the real estate broker specifically provides that it is understood and agreed that the sale is made subject to approval in writing by the owner, it is immaterial whether the broker had the actual authority to make such contract in behalf of the owner, as approval of owner is necessary before a valid contract is made. Queen City Lumber Co. v. Fisher, 111 N.W.2d 714, 1961 N.D. LEXIS 105 (N.D. 1961).

3-03-05. Notice to principal or agent.

As against a principal, both principal and agent are deemed to have notice of whatever either has notice and ought, in good faith and the exercise of ordinary care and diligence, to communicate to the other.

Source:

Civ. C. 1877, § 1368; R.C. 1895, § 4334; R.C. 1899, § 4334; R.C. 1905, § 5782; C.L. 1913, § 6350; R.C. 1943, § 3-0305.

Derivation:

Cal. Civ. C., 2332.

Notes to Decisions

Knowledge of Agent Prior to Employment As Agent.

To charge a principal with knowledge on the part of his agent which came to the agent prior to his employment as agent, it must appear that such knowledge was present in the mind of the agent when he acted for the principal in the transaction involved. Gregg v. Baldwin, 9 N.D. 515, 84 N.W. 373, 1900 N.D. LEXIS 267 (N.D. 1900).

Liability of Bank for Acts of Cashier.

Where a cashier of a bank receives funds illegally by giving a check upon a corporation of which he is the treasurer, the bank is liable for his acts. Emerado Farmers' Elevator Co. v. Farmers' Bank, 20 N.D. 270, 127 N.W. 522, 1910 N.D. LEXIS 99 (N.D. 1910).

Notice to Insurance Agent.

The act of an insurance agent in taking an application for insurance being within his authority, the principal is deemed to have knowledge and notice of information received by the agent at the time the application is taken. Schwindermann v. Great E. Casualty Co., 38 N.D. 584, 165 N.W. 982, 1917 N.D. LEXIS 60 (N.D. 1917); Horswill v. North Dakota Mut. Fire Ins. Co., 45 N.D. 600, 178 N.W. 798, 1920 N.D. LEXIS 162 (N.D. 1920).

Where insured told solicitor-agents of insurer that he had “had some trouble with high blood pressure” four years earlier but concealed from insurer’s examining physician the fact that he had suffered from precordial pain radiating to the left arm which worsened on exertion, had shown a blood pressure of 210/140, and had been taking medication for hypertension for the last three years, the comment to insurer’s solicitor-agents was not sufficient notice of his condition and the policy was voidable for misrepresentation. Lindlauf v. Northern Founders Ins. Co., 130 N.W.2d 86, 1964 N.D. LEXIS 124 (N.D. 1964).

Termination of lease

Court did not err in holding that the leases terminated on December 31, 2011 and in dismissing the lessee's counterclaims because there was no automatic renewal, the lessors' letter sent to the lessee was effective to exercise the lessors' right to terminate the leases for any cause at the end of the one-year term, the lessee failed to raise a genuine issue of material fact about corporate ratification, and the lessee's counterclaim was time-barred as a matter of law. Funke v. Aggregate Constr., Inc., 2015 ND 123, 863 N.W.2d 855, 2015 N.D. LEXIS 121 (N.D. 2015).

Law Reviews.

Summary of significant decisions rendered by the North Dakota Supreme Court in 1990 relating to municipal law, 66 N.D. L. Rev. 840 (1990).

3-03-06. Incomplete execution of authority.

A principal is bound by an incomplete execution of an authority when it is consistent with the whole purpose and scope thereof, but not otherwise.

Source:

Civ. C. 1877, § 1367; R.C. 1895, § 4333; R.C. 1899, § 4333; R.C. 1905, § 5781; C.L. 1913, § 6349; R.C. 1943, § 3-0306.

Derivation:

Cal. Civ. C., 2331.

3-03-07. Credit to agent — Principal exonerated.

If exclusive credit is given to an agent by the person dealing with the agent, the agent’s principal is exonerated by payment or other satisfaction made by the principal to the agent in good faith before receiving notice of the creditor’s election to hold the principal responsible.

Source:

Civ. C. 1877, § 1371; R.C. 1895, § 4337; R.C. 1899, § 4337; R.C. 1905, § 5785; C.L. 1913, § 6353; R.C. 1943, § 3-0307.

Derivation:

Cal. Civ. C., 2335.

Notes to Decisions

Liability for Agent’s Fraud.

When the vice president of the bank fraudulently induced a debtor to enter into a $250,000 loan by making false statements, the district court acted properly by imputing his fraud to the bank in accordance with agency law as set forth in N.D.C.C. § 3-03-07. The bank was not permitted to collect on the loan. Am. Bank Ctr. v. Wiest, 2010 ND 251, 793 N.W.2d 172, 2010 N.D. LEXIS 255 (N.D. 2010).

3-03-08. Setoff against agent.

One who deals with an agent without knowing or having reason to believe that the agent acts as such in the transaction may set off against any claim of the principal arising out of the same all claims which the person dealing with the agent might have set off against the agent before notice of the agency.

Source:

Civ. C. 1877, § 1372; R.C. 1895, § 4338; R.C. 1899, § 4338; R.C. 1905, § 5786; C.L. 1913, § 6354; R.C. 1943, § 3-0308.

Derivation:

Cal. Civ. C., 2336.

3-03-09. Negligence of agent.

Unless required by or under the authority of law to employ that particular agent, a principal is responsible to third persons for the negligence of the principal’s agent in the transaction of the business of the agency, including wrongful acts committed by the agent in and as a part of the transaction of the business, and for the agent’s willful omission to fulfill the obligations of the principal. The principal is not responsible for:

  1. Other wrongs committed by the principal’s agent unless the principal has authorized or ratified them, even though they are committed while the agent is engaged in the principal’s service.
  2. Injuries or death to passengers and other persons or damage to properties resulting from:
    1. Operation or use of a motor vehicle, not owned, leased, or contracted for by the principal in a ridesharing arrangement, as defined in section 8-02-07.
    2. Information, incentives, or other encouragement to agents to participate in a ridesharing arrangement, as defined in section 8-02-07.

Source:

Civ. C. 1877, §§ 1374, 1375; R.C. 1895, §§ 4340, 4341; R.C. 1899, §§ 4340, 4341; R.C. 1905, §§ 5788, 5789; C.L. 1913, §§ 6356, 6357; R.C. 1943, § 3-0309; S.L. 1981, ch. 131, § 2.

Derivation:

Cal. Civ. C., 2338, 2339.

Notes to Decisions

Corporations.

A corporation is liable for the misrepresentations of an agent which were made by the agent in and as a part of the transaction of authorized business. Grant County State Bank v. Northwestern Land Co., 28 N.D. 479, 150 N.W. 736, 1914 N.D. LEXIS 146 (N.D. 1914).

Manufacturer of air conditioner was liable for the acts of its warranty service representative who caused a trailer fire by his installation of larger fuses to assure the operation of the air conditioner. Foremost Ins. Co. v. Rollohome Corp., 221 N.W.2d 722, 1974 N.D. LEXIS 177 (N.D. 1974).

Knowledge Requisite.

The acceptance of benefits by the principal without knowledge on his part will not create liability for fraudulent representations of an unauthorized agent. Nichols v. Bruns, 37 N.W. 752, 5 Dakota 28, 1888 Dakota LEXIS 13 (Dakota 1888).

Liability for Servant’s Tort.

A wife who keeps a hotel is not responsible for an assault committed by her husband upon a guest, even if he was acting as her servant, where the act was committed without her advice or ratification. Curtis v. Dinneen, 30 N.W. 148, 4 Dakota 245, 1886 Dakota LEXIS 17 (Dakota 1886).

Liability of Partners.

A partner is liable for the fraudulent representations of every other partner made in selling partnership property as a means of effecting such sale. BRUNDAGE v. MELLON, 5 N.D. 72, 63 N.W. 209, 1895 N.D. LEXIS 6 (N.D. 1895).

Partners were not liable for a copartner’s negligence while using a partnership truck on personal business without the partners’ permission. Bagan v. Bitterman, 65 N.D. 429, 259 N.W. 268, 1935 N.D. LEXIS 125 (N.D. 1935).

The general rule is that the liability of general partners for each other’s acts is the same as that of principal and agent. Truscott v. Peterson, 78 N.D. 498, 50 N.W.2d 245, 1951 N.D. LEXIS 127 (N.D. 1951).

Ownership of Motor Vehicle.

Ownership alone is not sufficient to impose liability upon the owner of an automobile because of the negligence of another who has been permitted to use it. Vaux v. Hamilton, 103 N.W.2d 291, 1960 N.D. LEXIS 73 (N.D. 1960).

Vicarious Liability of Employer.

In light of clear and unambiguous contractual provisions, and evidence before the trial court on the motion for summary judgment, reasonable minds could only reach the conclusion that employee was not acting within the scope of his employment at the time of his alleged negligent conduct; accordingly, summary judgment on this issue was appropriate. Zimprich v. Broekel, 519 N.W.2d 588, 1994 N.D. LEXIS 157 (N.D. 1994).

An employer’s vicarious liability extends only to those acts done on the employer’s behalf and within the scope of the employee’s duties. Zimprich v. Broekel, 519 N.W.2d 588, 1994 N.D. LEXIS 157 (N.D. 1994).

Under the doctrine of respondeat superior, if an individual is not an independent contractor, agency principles provide that the employer is vicariously liable to third persons for the negligence of the employer’s agent in the transaction of the business of the agency. Doan v. City of Bismarck, 2001 ND 152, 632 N.W.2d 815, 2001 N.D. LEXIS 165 (N.D. 2001).

Collateral References.

Acts of agent, in procuring warrant or aiding prosecution, as within scope of agency so as to render principal liable for malicious prosecution, 18 A.L.R.2d 402.

Liability of insurance company for libel or slander by its agent, 55 A.L.R.2d 828.

False arrest or imprisonment caused by agent or servant, principal’s liability for, 92 A.L.R.2d 15, 93 A.L.R.3d 826.

Labor union: liability of labor union or its membership for torts committed by officers, members, pickets, or others, in connection with lawful primary labor activities, 36 A.L.R.3d 405.

Liability of public accountant to third parties, 46 A.L.R.3d 979.

Employer’s knowledge of employee’s past criminal record as affecting liability for employee’s tortious conduct, 48 A.L.R.3d 359.

Imputation of servant’s or agent’s contributory negligence to master or principal, 53 A.L.R.3d 664.

Imputation of contributory negligence of servant or agent to master or principal in action by master or principal against another servant or agent for negligence in connection with duties, 57 A.L.R.3d 1226.

Accountant’s malpractice liability to client, 92 A.L.R.3d 396.

Liability of hospital or sanitarium for negligence of physician or surgeon, 51 A.L.R.4th 235.

Liability, under statute, of labor union or its membership for torts committed in connection with primary labor activities—state cases, 85 A.L.R.4th 979.

Employer’s liability for assault, theft, or similar intentional wrong committed by employee at home or business of customer, 13 A.L.R.5th 217.

Liability of independent accountant to investors or shareholders, 48 A.L.R.5th 389.

CHAPTER 3-04 Agent and Third Person Relation

3-04-01. Agent warrants authority.

One who assumes to act as an agent thereby warrants to all who deal with that person in that capacity that the person has the authority which the person assumes.

Source:

Civ. C. 1877, § 1376; R.C. 1895, § 4342; R.C. 1899, § 4342; R.C. 1905, § 5790; C.L. 1913, § 6358; R.C. 1943, § 3-0401.

Derivation:

Cal. Civ. C., 2342.

Cross-References.

Damages for breach of warranty of agent’s authority, see § 32-03-18.

Notes to Decisions

Liability As Principal.

One who, without authority, executes a written contract in the name of his principal, without believing in good faith that he has authority to do so, is responsible as principal to third persons for his acts done in the course of his assumed agency. Kennedy v. Stonehouse, 13 N.D. 232, 100 N.W. 258, 1904 N.D. LEXIS 35 (N.D. 1904).

3-04-02. When agent liable as principal.

One who assumes to act as an agent is responsible to third persons as a principal for that person’s acts in the course of that person’s agency in any of the following cases, and in no others:

  1. When, with that person’s consent, credit is given to that person personally in a transaction.
  2. When that person enters into a written contract in the name of that person’s principal without a good-faith belief in having the authority to do so.
  3. When that person’s acts are wrongful in their nature.

Source:

Civ. C., 1877, § 1377; R.C. 1895, § 4343; R.C. 1899, § 4343; R.C. 1905, § 5791; C.L. 1913, § 6359; R.C. 1943, § 3-0402.

Derivation:

Cal. Civ. C., 2343.

Notes to Decisions

Personal Liability of Agent.

The liability of an agent for misfeasance does not rest on his agency, but on the ground that he is a wrongdoer. Schlosser v. Great N. Ry., 20 N.D. 406, 127 N.W. 502, 1910 N.D. LEXIS 92 (N.D. 1910).

Unauthorized Sale of Property.

Where an agent, without authority, executed a contract to sell property upon a crop payment plan, he was liable as principal upon the contract and the plaintiff’s cause of action arose when he was ejected by the owner. Kennedy v. Stonehouse, 13 N.D. 232, 100 N.W. 258, 1904 N.D. LEXIS 35 (N.D. 1904).

Collateral References.

Release of (or covenant not to sue) master or principal as affecting liability of servant or agent for tort, or vice versa, 92 A.L.R.2d 533.

Personal liability of agent for injury to third person by fraud committed on behalf of employer, 96 A.L.R.2d 208.

Personal liability of servant or agent for advances or withdrawals in excess of commissions earned, bonus, or share of profits, 32 A.L.R.3d 802.

Attorney’s personal liability for expenses incurred in relation to services for client, 66 A.L.R.4th 256.

3-04-03. Surrender of property adversely claimed.

If an agent receives anything for the benefit of the agent’s principal, to the possession of which another person is entitled, the agent on demand must surrender it, or so much of it as the agent has under the agent’s control at the time of the demand, to such other person, on being indemnified for any advance which the agent has made to the agent’s principal in good faith on account of the same. The agent is responsible therefor, if the agent delivers it to the agent’s principal after notice from the owner.

Source:

Civ. C. 1877, § 1378; R.C. 1895, § 4344; R.C. 1899, § 4344; R.C. 1905, § 5792; C.L. 1913, § 6360; R.C. 1943, § 3-0403.

Derivation:

Cal. Civ. C., 2344.

CHAPTER 3-05 Auctioneers

3-05-01. Authority from seller.

An auctioneer, in the absence of special authorization or usage to the contrary, has authority from the seller only as follows:

  1. To sell by public auction to the highest bidder.
  2. To sell for cash only, except such articles as usually are sold on credit at auction.
  3. To warrant the title, quality, and quantity of personal property sold by the auctioneer.
  4. To prescribe reasonable rules and terms of sale.
  5. To deliver the thing sold upon payment of the price to the clerk of the auction.
  6. To do whatever else is necessary or proper and usual in the ordinary course of business for effecting these purposes.

Source:

Civ. C. 1877, § 1385; R.C. 1895, § 4351; R.C. 1899, § 4351; R.C. 1905, § 5799; C.L. 1913, § 6367; R.C. 1943, § 3-0501; S.L. 1985, ch. 86, § 1.

Derivation:

Cal. Civ. C., 2362.

Notes to Decisions

Authority to Warrant Quality.

A principal is bound by a warranty of the quality of goods made by the auctioneer. Cysewski v. Fried, 24 N.D. 152, 139 N.W. 104, 1912 N.D. LEXIS 18 (N.D. 1912).

Statute of Frauds.

Sales by auction, unless specifically exempted, are within the provisions of the statute of frauds. Brey v. Tvedt, 74 N.D. 192, 21 N.W.2d 49, 1945 N.D. LEXIS 67 (N.D. 1945).

Collateral References.

Implied or apparent authority of auctioneer selling personal property to make warranties, 40 A.L.R.2d 285.

3-05-02. Authority to bind both parties.

An auctioneer has authority from a bidder at the auction as well as from the seller to bind both by a memorandum of the contract whenever a written memorandum is required by any statute or by usage to make a valid contract of sale, and such memorandum must be in the form and content prescribed.

Source:

Civ. C. 1877, § 1386; R.C. 1895, § 4352; R.C. 1899, § 4352; R.C. 1905, § 5800; C.L. 1913, § 6368; R.C. 1943, § 3-0502.

Derivation:

Cal. Civ. C., 2363.

Cross-References.

Auctioneer memorandum sufficient, see § 9-06-06.

Notes to Decisions

Memorandum.

This section does not require that for a memorandum to be sufficient it must become a binding agreement or be prepared by the auctioneer. Gerhardt v. Fleck, 256 N.W.2d 547, 1977 N.D. LEXIS 156 (N.D. 1977).

Statute of Frauds.

Statutes of fraud apply to sales of privately owned real estate at public auction with the express modification contained in this section. Brey v. Tvedt, 74 N.D. 192, 21 N.W.2d 49, 1945 N.D. LEXIS 67 (N.D. 1945).

CHAPTER 3-06 Factors

3-06-01. Definition.

A factor is an agent who, in the pursuit of an independent calling, is employed by another to buy or sell property in the factor’s own name and is entrusted by the principal with the possession or control of the property or authorized to receive payment therefor from the purchaser.

Source:

Civ. C. 1877, §§ 1168, 1387; R.C. 1895, §§ 4134, 4353; R.C. 1899, §§ 4134, 4353; R.C. 1905, §§ 5582, 5801; C.L. 1913, §§ 6145, 6369; R.C. 1943, § 3-0601.

Derivation:

Cal. Civ. C., 2026, 2367.

Cross-References.

Factor’s lien, see § 35-20-06.

Notes to Decisions

Factor’s Right to Buy in Own Name.

Factors had the right to purchase grain in their own names and ship the grain to the principal, retaining title in themselves as security for their advances to the principal. Turner v. Crumpton & Crumpton, 21 N.D. 294, 130 N.W. 937, 1911 N.D. LEXIS 94 (N.D. 1911).

3-06-02. Authority of factors.

In addition to the authority of agents in general, a factor has actual authority from the factor’s principal unless specially restricted:

  1. To insure property consigned to the factor uninsured.
  2. To sell property consigned to the factor on such credit as is usual, except such things as it is contrary to usage to sell on credit, but having once agreed with the purchaser upon the terms of credit, a factor may not extend it, nor may the factor pledge, mortgage, or barter the property so consigned.
  3. To delegate the factor’s authority to the factor’s partner or servant, but not to any person in an independent employment.

Source:

Civ. C. 1877, §§ 1170, 1388; R.C. 1895, §§ 4136. 4354; R.C. 1899, §§ 4136, 4354; R.C. 1905, §§ 5584, 5802; C.L. 1913, §§ 6147, 6370; R.C. 1943, § 3-0602.

Derivation:

Cal. Civ. C., 2028, 2368.

Collateral References.

Warranties: implied or apparent authority of commission merchant or dealer selling personal property to make warranties, 40 A.L.R.2d 285.

3-06-03. Ostensible authority of factor.

A factor has ostensible authority to deal with the property of the factor’s principal as the factor’s own in transactions with persons not having notice of the actual ownership.

Source:

Civ. C. 1877, § 1389; R.C. 1895, § 4355; R.C. 1899, § 4355; R.C. 1905, § 5803; C.L. 1913, § 6371; R.C. 1943, § 3-0603.

Derivation:

Cal. Civ. C., 2369.

Collateral References.

Implied or apparent authority of commission merchant or dealer selling personal property to make warranties, 40 A.L.R.2d 285.

Commodities broker’s state-law duties to customers, 55 A.L.R.4th 394.

3-06-04. Must obey instructions — Exception.

A factor must obey instructions of the factor’s principal to the same extent as any other employee, notwithstanding any advances the factor may have made to the principal upon the property consigned to the factor, except that if the principal forbids the factor to sell at the market price, the factor nevertheless may sell for the factor’s reimbursement after giving to the factor’s principal reasonable notice of the factor’s intention to do so and of the time and place of sale, and proceeding in all respects as a pledgee.

Source:

Civ. C. 1877, § 1169; R.C. 1895, § 4135; R.C. 1899, § 4135; R.C. 1905, § 5583; C.L. 1913, § 6146; R.C. 1943, § 3-0604.

Derivation:

Cal. Civ. C., 2027.

3-06-05. Liability under guaranty commission.

A factor who charges the factor’s principal with a guaranty commission upon a sale thereby assumes absolutely to pay the price when it falls due as if it were a debt of the factor’s own and not as a mere guarantor for the purchaser, but the factor does not thereby assume any additional responsibility for the safety of the factor’s remittance of the proceeds.

Source:

Civ. C. 1877, § 1171; R.C. 1895, § 4137; R.C. 1899, § 4137; R.C. 1905, § 5585; C.L. 1913, § 6148; R.C. 1943, § 3-0605.

Derivation:

Cal. Civ. C., 2029.

3-06-06. Relieved of liability by consent only.

A factor who receives property for sale under a general agreement or usage to guarantee the sale or the remittance of the proceeds cannot obtain relief from responsibility therefor without the consent of the factor’s principal.

Source:

Civ. C. 1877, § 1172; R.C. 1895, § 4138; R.C. 1899, § 4138; R.C. 1905, § 5586; C.L. 1913, § 6149; R.C. 1943, § 3-0606.

Derivation:

Cal. Civ. C., 2030.