Story Case

Mr. J. H. Bawls was the owner of an automobile. Becoming heavily indebted he went to a friend and asked a loan of $500 and offered to execute a mortgage upon the machine for security. His friend, Mr. S. J. James, agreed to make the loan. Mr. Rawls executed a mortgage upon the machine, and in it he gave Mr. James the power to sell it in case the money was not repaid within sixty days from the date of the execution of the agreement. Ten days later Mr. Rawls died, without having paid the debt. Mr. James retained the machine until the sixty days had expired and sold it to Mr. Young for $1,500. He took from this amount his loan with interest; the balance he tendered to the personal representative of Mr. Rawls. The personal representative refused to accept the amount; he insisted that Mr. James had no right to sell the machine after the death of Mr. Rawls; he thereupon brought suit to recover the machine from Mr. Young. What should be the decision of the Court under the foregoing circumstances?

Ruling Court Case. Hunt Vs. Rousmanier's Administrator, Volume 8 Wheaton United States Reports, Page 174

Lewis Rousmanier, now deceased, applied to Hunt for a loan of $1,450. He offered to give as security, in addition to his note for the amount of the loan, a power of sale over the Brig Nereus, then at sea, of which Rousmanier was part owner. The sum requested was loaned; and thereafter Rousmanier executed two notes for the amount in question. He also executed a power of attorney, authorizing Hunt to make and execute a bill of sale of his interest in the Brig Nereus, in case the loan was not repaid within a certain time agreed upon. This instrument also contained a proviso, that the power was given for collateral security for the repayment of the two notes, and was to be void upon their repayment. If they were not paid, Hunt was authorized to sell the brig, take the amount of the loan therefrom, and turn the surplus back to Rousmanier. A loan was made in the sum of $700 with a similiar agreement in respect to the Brig Industry. Before the return of the two vessels, Rousmanier died in an insolvent condition, having paid only a very small part of the loan. When the two brigs returned, Hunt took charge of them, and offered them for sale. The administrator of Rousmanier objected to the sale. Thereupon Hunt brought this bill to have the administrator join in the sale.

The administrator contended that the death of Rousmanier revoked any authority which Hunt had to sell the vessels in question. Hunt contended that he had an interest in the subject matter of the agency which could not be revoked by any act of the deceased, and was not revoked by his death.

Decision: The general rule is that death revokes the authority of any agent representing the deceased principal. But if the agent has an interest in the subject matter, his authority cannot be revoked by any act of the principal, nor is it revoked by the death of the principal. But the agent must have some interest or estate in the subject matter itself. The fact that he has the power to sell the subject matter and reimburse himself from the proceeds, gives him no interest therein, and such an agency is revoked by the death of the principal. That was the nature of the case. Hunt had authority to sell and reimburse himself from the proceeds, but he had no interest or ownership in the vessels; so his authority to sell was revoked by the death of Rousmanier; and he cannot compell the administrator to join in the sale.

Mr. Chief Justice Marshall, who delivered the opinion of the Court, said in part: "As the power of one man to act for another, depends on the will and license of that other, the power ceases when the will, or this permission is withdrawn. The general rule, therefore, is, that a letter of attorney may, at any time, be revoked by the party who makes it, and is revoked by his death. But this general rule, which results from the nature of the act, has sustained some modifications. Where a letter of attorney forms a part of a contract, and is security for money, or for the performance of any act which is deemed valuable, it is generally made irrevocable in terms, or if not so, is deemed irrevocable in law. Although a letter of attorney depends, from its nature, on the will of the person making it, and may in general be recalled at his will, yet, if he binds himself for a consideration, in terms, or by the nature of his contract, not to change his mind, the law will not permit him to change it. Rousmanier, therefore, could not, during his life, by any act of his own, have revoked the letter of attorney. But does it retain its efficacy after his death? We think it does not. We think it well settled that a power of attorney, though irrevocable during the life of the party, becomes extinct by his death.

"Now as an authority must be pursued, in order to make the act of the substitute the act of the principal, it is necessary that this bill of sale should be in the name of Rousmanier, and is would be a gross absurdity, that a deed should purport to be executed by him, even by attorney, after his death, for the attorney is in the place of the principal capable of doing that alone which the principal might do.

"This general rule, that a power ceases with the life of the person giving it, admits of one exception. If a power be coupled with an 'interest', it survives the person giving it, and may be executed after his death."

Judgment was given for Ronsmanier's administrator.

Ruling Law. Story Case Answer

It has been seen that in the ordinary case the authority of an agent may be revoked by the principal during his life time; also that the death of the principal withdraws the authority of the agent to act. If the principal in granting authority to his agent, at the same time, and as a part of the contract, grants to the agent power of control over the subject matter of the agency, or power to sell for his own benefit, as by way of reimbursement, such a power cannot be revoked by any act of the principal during his life. But the power does not survive the death of the principal. However, if the principal grants to the agent an interest in the subject matter, it cannot be revoked by the principal during his life, nor is it revoked by the death of the principal. In the two former cases, the agent, in order to act, must act in the name of his principal; he has no principal and therefore cannot act. But in the last case, he acts in his own right, and so his right to act is not affected by the death of the person who granted him the right. In the Story Case, the agent had an interest in the subject matter. So his authority to sell the machine was not revoked by the death of Mr. Rawl, and he passed good title to Mr. Young. Therefore the personal representative of Mr. Rawl cannot recover the machine.