Is liable for the want of that care and prudence " that men

prompted by self-interest generally exercise in their own

affairs." 2 A third answer is that he is liable for negligence

(without an epithet) and that negligence consists in the want

of care according to the circumstances; that the circum-

stances do not warrant a director in being judged by the stan-

dard of the man who is conducting his own business, but by

the standard of the ordinarily prudent bank director as that

is fixed by experience and usage.^ The last answer seems the

most reasonable, and even in the cases in which "gross"

negligence is made the measure of liability, the reasoning re-

sults in the adoption of this standard.* The question sometimes

1 Swentzel V. Penn Bank, u7 Pa. St. 140; Bank V. Bossieux, 4 Hughes

(U. S. C. C), 387, 398, 3 Fed. R. 817.

2 Ilun V. Gary, 82 n. Y. 65.

3 Briggs )'. Spaulding, 141 U. S. 132 (.•^emhle) ; Delano i". Case, 121

111. 247 ; Williams V. McKay, 40 n. J. Eq. 189.

* See Swentzel v. Penn Bank, supra, where the court says that the

care to be exercised is "ordinary care." "Not, however, the ordinary

care which a man takes of his own business, but the ordinary care of a

bank director in the business of a bank. Negligence is the want of care

according to the circumstances, and the circumstances are everything in

considering this question. The ordinary care of a business man in his

own affairs means one thing ; the ordinary care of a gratuitous man-

datory is quite another matter. The one implies an oversiglit and knowl-

edge of every detail of his business ; the other suggests such care only as

OBLIGATIONS OF AGKNT. 125

turns on wlicther the duty of the directors is to the stock-

holders or to the depositors, it being urged that as to the for-

mer they are agents, while as to the latter they are trustees ; ^

but in eitlicr case the care required is the care customarily

given by such gratuitous agents, that is, the care that an or-

dinarily prudent business man would understand that he had

undei'takcn to exercise under similar circumstances.

a man can give in a short space of time to the business of other persons,

from whom he receives no compensation." Yet after this excellent state-

ment the court holds " the rule to be that directors, /who are gratuitous

mandatories, are only liable for fraud, or for such gross negligence as

amounts to fraud ! "

1 Hun V. Gary, 82 n. Y. 65; Williams V. McKay, 40 n. J. Eq. 189.

PART III.

LEGAL EFFECT OF THE RELATION AS HETWEEN THE

PRINCU^AL AND THIRD PARTIES.

В§ 99. Introduction.

We have now considered, (1) the inauiier in which the

relation of principal and agent may be formed, and (2)

the legal effect of the formation of the relation as between

the principal and agent. We have now to consider, (3) the

legal effect of the execution of the agency as between the

principal and third persons with whom the agent may deal.

The main object of agency is to bring the principal into

contractual relations with third persons. In executing the

agency the agent may disclose his principal or he may not;

he may make admissions or declarations affecting the ])rin-

cipaFs interests; he may receive notice of facts affecting the

principal's interests ; or he may be guilty of fraud or other

torts affecting such interests. Accordingly we have now to

consider each of these possible cases, and to determine the

legal consequences of each. We have, in addition, to con-

sider the liabilities of the third person to the ])rincipal.

CONTRACT FOR DISCLOSED PRINCIPAL. 127

CHAPTER IX.

CONTRACT OF AGENT IN BEHALF OF A DISCLOSED PRINCIPAL.