Voked under other circumstances too various to be referred

to in detail. Thus a bank cashier who employs his powers

to draw checks, for the purpose of converting the funds of

the bank to his own use, is using a trust and confidence

reposed in him by the bank, and the loss must fall on it

ratlier than on innocent parties.^ So an agent of a telegraph

company wlio employs his power to send telegrams as an

operator in the sending of forged telegrams requesting the

transmission of money, is abusing a trust and confidence

placed in him by the company, and the latter, rather than

the innocent receiver of the telegram, should bear the loss.^

U. S. 416 ; National Bank of Commerce v. Chicago, &c. R., 44 Minn. 224,

and cases there cited. The artificial reasoning of this class of cases is

illustrated by a comparison of the case last cited with jNIcCord v. Western

Union Tel. Co, 39 Minn. 181, where the same court ^vent to an even

questionable length in applying the doctrine of estoppel against the

principal.

1 Armour v. Michigan Central R., 65 N. Y. 111.

2 Bank of Batavia r. Xew York, &c. R., 106 N. Y. 195; Brooke v. N.

Y., &c. R., 108 Pa. St. 529; St. Louis, &c. R. v. Larned. 103 111. 293;

Wichita Bank v. Atchison, &c. R., 20 Kans. 519; Sioux City, &c. R. v.

First Nat. Bk., 10 Neb. 556; Fletcher v. G. W. El. Co., 12 So. Dak.

643.

3 National Bank of Commerce v. Chicago, &c. R., 44 Minn. 224, 235.

4 Bank of New York, &c. v. American Dock & Trust Co., 143 N. Y. 559.

5 Phillips V. Mercantile Nat. Bk., 140 N. Y. 556.

В« McCord V. Western Union Tel. Co., 39 ?В»Iinn. 181 ; Bank of Palo Alto

V. Pacific Postal Tel. Cable Co., 103 Fed. Rep. 841.

208 VRIXCirAL AND THIRD I'AKTY.

" Persons receiving despatches in the usual course of busi-

ness, when there is nothing to excite suspicion, are entitled

to rely upon the presumption that the agents entrusted with

the performance of the business of the company have faith-

fully and honestly discharged the duty owed by it to its

patrons, and that they would not knowingly send a false or

forged message ; and it would ordinarily be an unreasonable

and impracticable rule to require the receiver of a despatch

to investigate the question of the integrity and fidelity of the

defendant's agents in the performance of their duties, before

acting." ^

The result of the whole matter is this : one class of cases

insists upon the hard and fast rule that the fraud must be for

the principal's benefit in order to render him liable, while the

other class of cases gives to that fact only an evidential force

in determining the decisive question whether the representa-

tion was so far within the scope of the agent's ostensible

authority as to warrant third persons in relying upon it.

By applying to these cases the doctrines of estoppel already

set forth and clearly applicable to cases of contract, the latter

view appears to be more nearly in accord with the general

principles of agency.^

3. Liahilify for influencing the Conduct of other Persons

toward Plaintiff'.

В§ 158. Representations about plaintiff.

Ill addition to making representations to plaintiff which

induce him to change his legal relations to his damage, an

agent may make representations about plaintiff which influ-

ence the conduct of third persons toward him to his damage.

It may be questioned whether lial)ility for such representa-

tions depends at all upon doctrines applicable to j)rincipal

and agent. These torts may be said to lie on the border

land between the two fields. As they originate in rci)rcscn-

tations they are within the usual class of duties devolved upon

agents as distinguished from servants. But as the injured

1 McCord V. W. U. Tel. Co., supra. В« Ante, В§ 52 a.

TOUTS AND FRAUDS OF AGENT. 209

person is acted upon instead of being induced to act himself,

they are more nearly like the torts of a servant than like

those of an agent.^ Moreover it is doubtful whether any

doctrine of estojjpcl can be applied to them since the plaintiff

in tiiese cases has not been misled to his damage by any

representation of defendant's agent. These cases, therefore,

must be mainly solved by the doctrines applicable to the

torts of servants.^ They may, however, be here briefly

enumerated.

В§ 159. Inducing breach or termination of contract.

It is actionable to induce a breach of contract by any

means, or to induce a termination (without breach), or the

non-formation, of a contract by unlawful means.^ Whether

it is actionable to induce termination or non-formation of a

contract by persuasion alone is in dispute.*

If an agent acting within the scope of his authority induces

X to break a contract with plaintiff, or by use of unlawful

means induces X to terminate, or to refuse to form, a con-

tract with plaintiff, the principal is liable to plaintiff for such

tortious act of his agcnt.^ He is not liable if the agent was

acting outside the scope of his authority or the course of his

employment.^

В§ 160. Defamation.

A principal is liable in an action for defamation where his

agent publishes a libel while acting within the scope of his

authority, or usual course of the employment.^ A corpora-

1 Ante, §§ 148, 149.

2 Ante, В§ 149.

3 Lumley v. Gye, 2 E. & B. 216; Rice r. Manley, 66 N. Y. 82; Angle v.

Chicago, &c. Ry., 1.51 U. S. 1 ; Bigelow on Torts (7th ed.), pp. 127-133.

* Allen V. Flood, 1898, App. Cas. 1; Walker v. Cronin, 107 Mass.

5.5-"); Bigelow on Torts (7th ed.), pp. 115-123; post, В§ 295, ei seq.

5 Rlumenthal v. Shaw, 77 Fed. Rep. 9.54.

В« Gniham v. St. Charles St. Ry., 47 La. An. 1656.

7 Dunn I'. Hall, 1 Carter (Ind.), 344; Fogg v. Boston & Lowell R.,

118 Mass. 513; Peterson v. W. U. Tel. Co., 75 Minn. 368; Long v.

Tribune Printing Co., 107 Mich. 207 ; Allen v. News Pub. Co., 81 Wis<

120 ; post, В§ 252.

14

210 PRINCIPAL AND THIRD PARTY.

tion may be held liable for libel ; ^ Itiit it must be shown tliat

tlie corporate agent had express or imi)lied authority to make

the communieation in behalf of the eorporation.^

An employer is ei'iminally lial>le for a libel published by his

agent or servant witliin tlie general scoi)e of the authority or

the L'm[)i()ymcnt,3 except as otherwise pi'ovided by statute.*

В§ 161. False arrest and malicious prosecution.

Cases of false arrest are more fully treated under the head

of master and servant.^ Briefly it may be said that a princi-

pal or master is liable for a false arrest directed by his agent

or servant when such arrest is made in the course of the

employment and is intended to be in the employer's inter-

ests ; *^ l)ut not when such arrest is outside the course of the

employment'' or primarily in the public interest.^

While there are discordant decisions,^ it may be stated as

a general rule that for malicious prosecution instituted by an

agent or servant the employer is liable provided the institut-

ing of such j)rosecution was within the course of the emj)loy-

ment or the scope of the authority and was intended for the

employer's benefit. ^^

It has been held that corporations could not be made liable

1 Philadelphia, &c. R. v. Quigley, 21 IIow. (U. S.) 202; Iloboken

Printing, ike. Co. v. Kahn, 59 N. J. L. 218.

2 Wa.shington Gas Light Co. r. Lansden, 172 U. S. 5-34.

8 R. V. Gutch, Moo. & Mai. 433; R. v. Walter, 3 Esp. 21; R. v. Cooper,

8 Q. B. 533; People r. Clay, 80 111. 147 ; pnst, В§ 268,

* 6 & 7 Vict. c. 9G; Odgers on Libel & Slander (3d ed.), pp. 432-434;

N. Y. Penal Code, В§ 246.

6 Post, В§ 252.

8 Lynch v. :\Iet. &c. Ry., 90 N. Y. 77; Palineri v. Manhattan Ky,, 133

N. Y. 261; Staples i: Schmid, 18 R. I. 224.

T Bank r. Ow.ston, 4 A])p. Cas. 27<); Poulton v. I^ondon, &c. Rv., L. R.

2 Q. P,. 534.

8 Mulligan r. N. Y. & R. B. Ry., 129 X. Y. 506; Abrahams v. Dea-

kin, 1891, 1 Q. B. 516.

В» Wallace v. Finberg, 46 Tex. 35 ; Carter v. Howe IMachine Co., 51

Md. 200.

" Reed v. Home Savings Bank, 130 Mass. 443; IIu8.sey v. Norfolk, &c.

R., 98 N. C. 34.

TORTS AND FRAUDS OF AGENT. 211

in an action for malicious prosecution ; ^ but most jurisdic-

tions have departed from the artificial reasoning of these

cases and hold a corporation liable for malicious prosecution

to the same extent as any principal ;^ also for malicious

conspiracy.^

1 Abrath v. Northeastern Ry., 11 App. Cas. 217; Owsley y. Montgom-

ery, &c. R., 37 Ala. 5G0.

2 Goodspeed r. East lladdani Bank, 22 Conn. 530; Vance v. Erie R.,

32 N. J. L. 334; Morton v. Met. Ins. Co., 31 Hun, 366; 103 N. Y. 645;

Williams v. Planters' Ins. Co., 57 Miss. 759.

8 Buffalo Lubricating Oil Co. v. Standard Oil Co., 106 N. Y. 669 ; 12

N. E. Rep. 825.

212 PRINCIPAL AND TIIIKD PARTY.

CriAPTER XIV.

LIABILITY OF THIRD PERSON TO PRINCIPAL.

^ 162. Introductory.

"We have thus fur spoken in this part mainly of the liabil-

ities of the principal for the acts of his agent. It now remains

to consider briefly the rights which the principal may acquire

from tlie acts of his agent, as against third j)ersons with whom

the agent deals. The liability of a third person to the princi-

pal may arise : (1) from a contract obligation of which the

principal is entitled to avail himself; (2) from a quasi-con-

tractual obligation of which the })rincipal is entitled to avail

himself ; (3) from a tort obligation of which the principal is

entitled to avail himself ; (4) from a trust obligation of which

the principal is entitled to avail himself in equity. Each of

these classes of liabilities will be briefly discussed.