Story Case

Steven Miner was the road superintendent of John Meyer, a contractor. Miner had authority to employ and remunerate the employees under him. Burnham was an assistant foreman to whom there was owing $200. This amount Miner collected, of which fact Burn-ham had knowledge. Miner, however, stated to Burn-ham, that it would be a personal favor if the latter would permit him to keep the money ten days, accepting, in the meantime, Miner's personal note for the amount. This was done, but neither the note nor any amount was ever paid to Bnrnham. He brought suit for the sum against Meyer, the principal, who put in the defense of payment to Miner, and the acceptance of the note by Burnham. Is this a good defense?

Ruling Court Case. Lincoln Vs. Battelle Volume 6 Wendell's Reports 475

The defendant owned large estates in the Island of St. Croix. She engaged Thomas Battelle to employ overseers for the proper management of these estates. He employed Lincoln among others, who performed his work in a satisfactory manner. The defendant, Sidney Battelle, had given her agent sufficient funds to pay for the services of these overseers. Lincoln knew this and received from the agent a part thereof. But he was not paid the balance. He brings this action against the defendant for the balance due. It was contended by the defendant that the plaintiff's knowledge of the facts above recited and his acceptance of a part payment from the agent was equivalent to the credit of the agent.

Justice Savage delivered the opinion.

Where a person is employed by an agent, he may call upon the principal for payment for the services rendered. He may do this although he knows that the agent has charged the demand to the principal and received the funds, unless he has agreed to discharge the principal and rely upon the responsibility of the agent. No facts appeared in this case which showed that the plaintiff relinquished his right against the principal, and so he was permitted to recover.

Ruling Law. Story Case Answer

It is a well established principle that a principal is bound by all the acts and contracts made for him by his agent so long as the agent acts within the course of his employment, and does not exceed his real or ostensible authority. This is a necessary conclusion from the theory of the relationship, that he who does a thing through another does it himself. Further, the agent is not liable upon such a contract unless he expressly assumes personal liability. Also the third person can continue to hold the principal although he also has the credit of the agent, unless by word or conduct he releases the principal. In the Story Case, by accepting the note of Miner, the agent, and permitting him to keep the money given by the principal, Burnham has in fact by conduct released Meyer and created a new relation of debtor and creditor between himself and Miner.