If the banker fail ; for otherwise he might treat it as his own if

the banker's solvency continued, and as his principal's in case of

failure. (5)* •

V. Kelly, 2 Camp. 123. Wilkinson v. Johnson, 3 B. <& C. 428. Innes v. Stephenson,

1 M. & Rob. 147.

(r) Russell v. Hankey, 6 T. R. 12. Knight v. Lord Plymouth, Atk. 480. ВЈx parte

Parsons, Ambl. 219. "Warwick v. Noakes, Peake, 68.

(В«) See Wren v. Kirton, II Ves. 382; Massey v. Banner, 1 J. & W. 241 ; 4 Madd.

413 ; Fletcher V. Walker, 3 Madd. 73. Darke V. Martyn, 1 Bev. 526.

* The duties of an agent towards his principal may be reduced to these three :

obedience to instructions ; the exercise of competent skill, reasonable care, and entire

good faith in the discliarge of his business ; and the rendition of an account of his

agency upon its termination. The breach of any of these obligations to the preju-

dice of the principal, will confer upon him a right to recover compensation in dam-

ages proportioned to the extent of the injury. An agent will be justified in disobey-

Ing instructions only, when they involve a breach of good morals, or a violation of

the rules of law, or where they are impracticable, or where the agent has acquired

some right in the subject matter of the instructions which he is not bound to sacri-

fice upon the order of the principal. An Illustration of the latter exception occurs

where an agent is directed to sell goods on which he has acquired a lien. As to the

skill and care which an agent is bound to bestow upon the business of his principal,

there is a distinction between agents who act for, and those who act without reward.

The latter are not required to use more diligence than a prudent man would exer-

cise in the management of his own affairs. Pate v. M'Clure, 4 Rand. 1G4. Wilson v.

Brett, 11 Mees and Wels, 113. Doormau v. Jenkins, 2 Ad. & Ell. 256. Dartnall v.

Howard, 4 Bar. & C. 345.

Although a mercantile agent is in general bound to possess such a knowledge of

law as may be essential to the proper discharge of his trust, it by no means follows

that every mistake he may commit can be justly considered as an error of ignorance

and negligence that will render him personally liable for its consequences. 2 Duer on

Insurance, 214. This subject was very fully discussed in the Supreme Court of ilas-

eachusetts in the case of Mechanics' Bank v. Merchants' Bank, 6 Met. 13. The defend-

ants had mistaken the law in not allowing the usual days of grace on yost notes

which they were emplo^'ed to collect. The eft'ect of this mistake was to discharge

the indorsers ; yet it was held by the Court that the defendants were not liable, as

when they committed the error, the practice was various and the law doubtful

Iqq aiErcantile persons.

Eights of Principal against Agent.

It was once hinted, that an action of account was the only

mode of investigating a running account between agent and prin-

cipal in a court of law, {t) which would be equivalent to saying,

(t) Scott V. M'Intosh, 2 Camp. 238.

"The maxims, that every man is bound to know the law, and that ignorance of the

law excuses no man, are undoubtedl}^ salutary," said C. J. Shaw, " but they must be

confined to the case for which they were adopted. They have no application to the

duty of an agent, of whom only ordinary skill is required. Reasonable skill and

knowledge only is demanded in every other branch of science ; why should absolute

knowledge and consummate skill be required in a department where it is often impos-

sible to know the law, in its application to a particular state of facts, until it has

been authoritatively decided?"

To secure entire good faith towards the principal and induce the agent to act

with an eye single to his interest, the law does not allow him to derive any personal

benefit from the exercise of his agency to the prejudice of the principal. He can

acquire no interest adverse to his duty. This rule takes away the sting of tempta.

tion. Thus, if an agent authorized to pay a debt, compounds with the creditor for a

)ess amount, and takes an assignment of the claiij for his own benefit, he will not be

permitted to make himself a creditor of his employer for a larger sum than that ac-

tually advanced. Reid v. Norris, 2 Myl. A Craig, 375. Reed v. Warren, 5 Paige,