64. Revocation of Agency by Operation of Law. When one of the parties to an agency contract dies, becomes insane or bankrupt, the agency is said to terminate by operation of law. When the principal dies, the agency terminates. Death of itself, constitutes notice to third persons of the termination of the agency. This is true of all agencies except those coupled with an interest, discussed in another section. If any agent and a third person innocently make a contract in the name of the principal after the death of the principal, and without notice of the principal's death, the contract is not enforceable against the principal's estate. Death of the principal revokes the agency. Death of the agent also revokes the agency.
Insanity of the agent, or of the principal terminates an agency not coupled with an interest. It is regarded the same as death of one of the parties.
An agency is terminated by the bankruptcy of either principal or agent. Mere insolvency on the part of the principal or agent does not, of itself, terminate the agency, but bankruptcy, voluntary or involuntary, terminates it, and is of itself, notice to third persons. An innocent third person who has parted with his money on a contract made with the agent after the agency has been terminated by reason of insanity, or bankruptcy of the principal, may not enforce his contract, but may recover his money. Injury or disability of an agent, rendering it impossible for him to carry out the terms of the agency, terminates the agency.
65. Agency Coupled with an Interest. An agency coupled with an interest cannot be terminated by attempted revocation of the principal, nor is it terminated by death, insanity or bankruptcy of the principal or agent.
If the agent has an interest in the subject of the agency outside his interest in his compensation, he is said to have an agency coupled with an interest. Such an agency is irrevocable. A pays B one thousand dollars ($1,000.00) for one eighth interest in a patent, and in consideration of this purchase is given the agency to sell the patented article for a fixed commission. This constitutes an agency coupled with an interest, and is not revoked by an attempted revocation of the principal or by the principal's death. A is indebted to B, his attorney, for one hundred dollars ($100.00). A gives B a note for one hundred and fifty dollars ($150.00) to collect, agreeing to pay him 10% of the amount collected, and to permit him to deduct the one hundred dollars ($100.00) indebtedness. This constitutes an agency coupled with an interest, and cannot be revoked by A.
To constitute an agency coupled with an interest, the interest must be coupled with the subject matter of the agency, and not merely with the compensation the agent is to receive. For example, if A sends his attorney, B, a note to collect, agreeing to give B 25% of the amount collected, this does not constitute an agency coupled with an interest, and may be revoked at any time by A.
QUIZ QUESTIONS
LAW IN GENERAL
1. How many classes of rights are there?