Howe v. Buffalo, New York and Erie Rail Road

By the Court, Welles, J. It is stated by Judge Story in his treatise on Agency, (§ 339,) as a general principle of law, £C that an agent who commits a trespass, or other wrong to the property of a third person, by the direction of his principal, if at the time he has no knowledge or suspicion that it is such a trespass or wrong, but acts bona fide, will be entitled to reimbursement and contribution from his principal for all the damages which he sustains thereby;” and that££ the same doctrine applies to all cases of losses or damages sustained by an agent in the course of the business of his agency, if they are incurred without any negligence or default on his own part.” And again, in section 340, the learned author remarks: ££ Here again the common law only [126] follows out the beneficent principles of the civil law; for, as, on the one hand, the agent is not permitted to reap any of the profits of his agency properly belonging to his principal; so, on the other hand, he is held entitled to be indemnified against all losses which have been innocently sustained, by him upon the same account; but not for losses sustained by his own default or negligence.” These are sound propositions, and are well sustained by the authorities referred to in support of them. It seems to me they are applicable to the case under consideration. The plaintiff was prosecuted and a judgment obtained against him for an act done in obedience to instructions from the defendant, his principal, which was done in good faith, and under the belief that the instructions were reasonable and the act lawful. That being so, it is immaterial to the present question whether the act for which the recovery was had against him was, in fact, lawful or unlawful. The instructions were the proximate cause of the act for which he has been adjudged liableand that determines the liability of his principal to indemnify him. The defendant had due notice of the action brought by Hotchkin against the plaintiff, and through its agents employed attorneys and counsel to defend it. Its president and vice president were present at the trial of the action brought by Hotchkin against the plaintiff, and were sworn as witnesses. The' defendant in effect assumed the burthen of the defense in that action, as I think it was in law and in good faith bound to do. It was in reality its own case. Its agent had been prosecuted for obeying its instructions in good faith; and the defendant, and not he, was bound to abide the consequences. Hotchkin recovered in the action, and, as before remarked, it is of no consequence, as between the present parties, whether the recovery was lawful or unlawful. On either hypothesis the instructions given by the present defendant to the present plaintiff were equally the proximate cause of the action and recovery. It is claimed by the counsel for the defendant that there is [127] no implied obligation on the part of a principal to indemnify his agent against the consequences of obedience of a lawful command. I do not, however, so understand the law. If the act done is in the regular course of the business or employment of the agency, it would be most unjust to subject the agent to the consequences of his obedience, when such consequences were the compulsory payment of damages; and quite as much so as in the case of innocent obedience to an unlawful order. In each case the agent acts in good faith, under the belief that the order is lawful. If the judgment in favor of Hotchkin was contrary to law, it was the business of the defendant in this suit, either to pay it up or have it reviewed and set right. The plaintiff owed no duty to this defendant to litigate further, at his own expense and risk. [Monroe General Term, September 1, 1862. I think, also, that the settlement of the judgment by the plaintiff, with Eumsey, who held an assignment of it, after the former had been charged in execution, by giving his negotiable promissory note for the amount, was a good payment of the judgment. Eumsey, on taking the note, gave a receipt in full for the judgment, and agreed to satisfy it of record. I incline also to the opinion that the fact that the plaintiff was charged in execution upon the Hotchkin judgment, was equivalent to an actual payment in money by the plaintiff, of the judgment against him, with a view to charge the defendant with the liability for full reimbursement to the former. It is said in some of the books that if a party against whom a judgment has been recovered, be charged in execution upon the judgment, it is the highest satisfaction known to the law. It seems to me that the judgment rendered by the justice at the circuit is not obnoxious to any 'of the objections urged against it, and that it should be affirmed. Johnson, J. C. Smith and Welles, Justices.]