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Perhaps the most practically significant area of controversy in agency law was the doctrine of "apparent authority." Under this doctrine, a principal could be liable if his agent held himself out as authorized to enter into a contract even if he had been conferred no actual authority. It was thus possible for a principal to be liable for acts of his agent that were actually contrary to his express will. How could such a doctrine be reconciled with the prevailing will theory of contract?
As we have seen, the doctrine of apparent authority had grown by leaps and bounds during the last two decades of the nineteenth century in response to the growing prominence of the corporate form in business relations. It reflected an increasing unwillingness of courts to allow corporations to disavow the actions of their employees on grounds of absence of actual authority.
The defenders of orthodoxy denied that there was any independent doctrine of apparent authority. Whether an actor has been authorized to do an act, Harvard Professor Joseph Beale wrote, "is purely a question of fact, depending solely upon evidence. The authorizing of an act by an agent is not the creation of a right; it depends solely upon the will of the party, not the law."68 In other words, apparent authority differed from express authority only in terms of the kind of evidence used to prove the principal's state of mind. Both were in fact actual delegations of authority.
Beale's argument was simply a repetition of a debate about implied contracts that had been going on for a half century in America.69 The publication of Keener's Quasi-Contracts (1893) is the ultimate evidence of orthodox acceptance of the view that implied contracts were not necessarily voluntary. Yet Beale sought to ground the parallel doctrine of apparent authority in a will theory that nobody any longer believed could unify the entire body of contract doctrine. It was only a matter of time before the argument was put forth that, just as implied contracts were not necessarily actual contracts, so too apparent authority was not necessarily based on actual authority.
It was one of the founders of Legal Realism, Walter Wheeler Cook, who first saw in 1905 that these judicial developments in the law of agency drew into question the much broader issue of the meaning of the existing contractual paradigm. Like Beale, Cook also argued that the doctrine of apparent authority was based on "a true contractual liability, as well where the authority of the agent is only apparent as where it is real; in other words, that the principal is bound because according to all sound principles he has entered into a contract with the third party.- 70 Thus, Cook did not simply attempt to show that apparent authority was inconsistent with a theory of contract based on a meeting of minds. Rather, he proposed the more audacious view that since even "true contractual liability" was not based on actual assent, there was no reason why a contract-based agency law required such assent. Cook did not challenge Beale's assertion that agency principles were direct derivations from contract principles. Rather, he pushed much further and attacked the orthodox theory of contractual obligation itself.71
Cook thus drew into question once more the paramount issue of the voluntariness of the institution of contract. The dominant orthodox reaction to the criticism that many areas of contract were not based on a meeting of minds was represented by Keener's effort to redefine the contractual relationship simply to exclude all non-voluntary relations from its definition. But Cook returned to the Holmesian effort to objectivize contract law and carried the implications of that move one step further.
Contract law itself, Cook declared, was based on objectivism-"the principle of manifested intention."72 As a result of this, contracts often "arise where there has been no mutual assent, no meeting of the minds of the parties, in fact."73 Thus, in cases of apparent authority, the principal is liable only because he manifested an intention to be bound regardless of his actual intention.
Two years after Cook wrote, George Costigan challenged his conclusions. In the spirit of Keener, Costigan coined the term "constructive" to distinguish those contracts from "consensual" or "actual" contracts in which there was a real meeting of minds. And he declared that Cook was "in error" for confounding the two categories. 74
Did this battle over terminology make any difference? Costigan, like Keener before him, seems, above all, to have wished to prove that there remained an oasis of voluntarism despite mounting instances of the non-voluntaristic interpretation of contract. Cook, by contrast, was inspired by the more revolutionary im plications of objectivism, which, he believed, meant that most agreements bore little necessary relationship to a supposed actual intent of the parties. For Cook, there was no necessary realm of contract law based on a meeting of minds; for Costigan, there was.
For the next thirty years, these two perspectives confused the strategies of those attacking the will theory of contract. For some, the effort was to show that most areas of contract in fact were based on regulatory tort principles. For others, like Cook, the ultimate goal was to show that the institution of contract law itself did not need to be based on any actual will of the parties. Ultimately, these two positions merged when the outer limits of objectivism were seen to leave no basis for any clear distinction between contract and tort.75
The issue ultimately turned on whether tort principles could be said to be distinguishable from contract. In igoq, William Draper Lewis directly challenged Ames's assertion that the liability of the undisclosed principal was an anomaly that "ignores . . . fundamental legal principles."76 The basis of liability in contracts, Lewis argued, following Holmes, was "not the promise of the defendant, but the fact that one man has caused another to do or not to do an act for a stipulated benefit."77 Since the basis of contract was not will but benefit, there was no anomaly in holding an undisclosed principal liable for a beneficial relationship, regardless of whether he promised anything. Socially imposed duties in tort had begun to consume contract.
Agency thus became the first area of the law to feel the full force of the attack on the will theory of contract. And it was not an accident that the attack should have begun here. The corporate form had become dominant precisely at the moment when legal theorists began their efforts to unify and integrate legal theory around the ideas of contract and will. On the one hand, the corporation made agency law more significant than ever, since the corporation necessarily pursued business through agents. On the other hand, the corporation subverted the fundamentally individualistic assumptions behind the law of agency. Who was the principal whose will determined the scope of authority of a corporate agent? How could the will of a corporation be determined? In their efforts to apply the law of agency to corporations, pragmatically inclined judges turned to the doctrine of apparent authority to express a presumption that the agent acted in pursuance of the corporate will.
The corporate form thus forced judges to objectivize legal concepts, to look for the reliance of a "reasonable person" rather than the actual subjective (or particular) command of a principal. Indeed, the influence of the corporate form on the law of agency ran parallel to its tendency in the law of contract to promote an objective standard. Both trends ultimately expressed the same set of perceptions about legal and economic relationships. An increasingly organized, wellstructured, and concentrated economy placed a premium on order, predictability, and standardization of transactions. Objectivism was the legal expression of this quest for uniformity. It shifted legal inquiry away from a focus on actual intent or will toward a concern with reasonable, average, or customary practices. Protecting the eccentric individual will-for, ultimately, that is the principal difference between subjective and objective legal standards-came to be overshadowed by the desire to ensure that the rest of the world could rely upon uniform and predictable legal consequences.
In agency law, as in contract theory generally, the move toward objectivism was first defended on the ground that it was simply the closest practical expression of the subjective will of the parties. But, by degrees, objectivism came to be understood as in fundamental conflict with the premises of individualism. Legal writers began to see
that there was little difference between, on the one hand, an objective theory of contract and, on the other, tort duties imposed by the state. So when Holmes declared in 1897 that courts imply contractual conditions "because of some belief as to the practice of the community or of a class, or because of some opinion as to policy,"78 he was expressing the revolutionary conclusion that the institution of contract itself was subordinate to social and political goals. Duties deriving from contract and tort could not be distinguished in terms of the source of obligation. In both cases, collective social objectives might legitimately overrule the individual will.
In both contract and agency law, the attacks on the will theory crystallized into a new legal theory during the second decade of the twentieth century. The central figure in contract law was Arthur Corbin of Yale Law School, who, like many transplanted Westerners of this period, brought an earthy, pragmatic skepticism to his intellectual work.79 Their experience seemed to confirm their suspicion of large, abstract, and integrated theories that they associated with Eastern elegance and conceptualism. In law, in fact, there was a strong correlation between Eastern anglophilism and the effort to synthesize and formalize legal doctrine in the late nineteenth century. 80
Corbin's writing in contract is perhaps the ultimate legal expression of the pragmatic temperament at work, though if he had even heard of William James or John Dewey, I doubt that Corbin would have cared much for their high-toned philosophizing. Indeed, Corbin never even bothered formally to argue against the will theory. Rather it appears that he simply felt that it no longer made much sense as a way of organizing legal ideas. As John Dewey observed, "[I]ntellectual progress usually occurs through sheer abandonment of questions together with both of the alternatives they assume-an abandonment that results from their decreasing vitality and a change of urgent interest. We do not solve them: [W]e get over them."81
In a series of monumentally influential articles on particular aspects of contract law between 1912 and 1918, which ultimately formed the foundation of his famous treatise, Corbin worked out the implications of Holmes's critiques of orthodox contract theory. He began by asserting that "an obligation to pay damages for breach of contract is created by the law and not by the agreement."" Like Walter Wheeler Cook, his colleague at Yale, Corbin refused to accept Keener's effort to preserve a realm of pure contract. "A quasi-contract cannot be distinguished from a contract or tort on the ground that the obligation is created by the law. All enforcible obligations are created by the law."83 "[T]he law itself, independently of the expressed will of the parties," often imposes conditions on the enforcement of contracts. "In such cases," Corbin wrote, "the legal requirement is based upon principles of justice, policy, and right, and not on the expressed will of the parties."84
An objective theory of contract could not be regarded as simply the best practical approximation of the actual will of the parties, for the law often does not even "create that relation which the parties would have intended had they foreseen. The fact is . . . that the decision will depend upon the notions of the court as to policy, welfare, justice, right and wrong, such notions often being inarticulate and subconscious."85
As "policy, welfare, justice, right and wrong" were substituted as the foundation of contract law, the orthodox effort of the previous generation to distinguish sharply between contract and tort principles began to disintegrate. It was no longer possible to preserve such bright-line categories in order to maintain a pure realm of individual autonomy and unfettered control over one's destiny.
The cutting edge of all efforts to continue to insist upon a sharp distinction between contract and tort was the doctrine of privity of contract. Since judicial decision making had never managed completely to accommodate itself to the will theory, perhaps the most threatening contract law anomaly was the doctrine that a third party could sue on a contract made for his or her benefit even though this person had not participated in the agreement. Since there was no privity and hence no meeting of minds between the promisor and the third party, will theorists reasoned that it violated the underlying rationale of contract.
For Corbin, however, policy, welfare, justice, right and wrong supplied the missing ingredient to justify the suit of the third-party beneficiary. "To many students and practitioners of the common law," he declared, "privity of contract became a fetish. As such, it operated to deprive many a claimant of a remedy in cases where according to the mores of the time the claim was just."86
The result of Corbin's writing was not only to deny that there was any coherent boundary between tort and contract but, ultimately, to bring into question whether there was any meaningful distinction between public and private law. If for orthodox social theorists of the late nineteenth century the institution of contract was the purest legal expression of a regime of private self-determination free from the dangers of collectivism and regulation, Corbin's Progressive legal theory denied that even contract law embodied a pure realm of individual autonomy. In this sense, all law was a reflection of collective determination, and thus inherently regulatory and coercive.
Corbin was not an original thinker. He took the large ideas and insights of others and worked them into concrete legal rules with care and precision. His ability to abide contradiction and his large dose of Western pragmatism and good sense made him the perfect vehicle for shaping the Progressive legal critique into a practical system that was easily accessible to unspeculative judges and praction- ers. Corbin's success lay in his appeal to their undogmatic common sense. Yet, since "common sense" is itself an historically changing category, Corbin's unrivaled influence is perhaps the best measure we have of the extent to which ordinary lawyers could no longer find in their own experiences of the world a clear distinction between public and private realms.
What Corbin did for contract law, Warren Seavey of Harvard Law School did for agency law. In an influential article, "The Rationale of Agency" (i92o), Seavey brought together the twin strands of the Progressive critique of contract and agency law. 87 He explained both the doctrine of apparent authority and the liability of an undisclosed principal as "powers created by law irrespective of the intent of the parties."88 Defending these doctrines against the charge of Ames and Pollock that they were anomalies, he saw the liability of undisclosed principals as resting on "an obligation created by law . . . based upon the justice of the situation.. . ."89 Analogizing it to the third-party beneficiary doctrine that Corbin had defended in contract law, Seavey saw the undisclosed principal rule as expressing a "sort of common law equity."90
For Seavey, the doctrine of apparent authority illustrated the "power of an agent to subject his principal to a contractual duty when acting contrary to his instructions."91 Thus, the law of agency, like the law of contract, was based not on private law but on social conceptions of "justice." "In all the cases where an agent exceeds his authority, one of two persons, both innocent, must suffer. Between these two classes of persons, we must select the class which, in the long run, should suffer."92
The most significant feature of Seavey's mode of justification of the liability of the principal was that it was close to various theories of "enterprise liability" that were simultaneously being put forth in tort.93 Indeed, Seavey brought together categories that had previously occupied entirely different realms. Beginning with Holmes's attack on the liability of the master for the torts of the servant, there had been various attempts to justify the doctrine of respondeat superior on the ground that corporate enterprise could best bear the risk of loss.94 That Seavey should have seen no problem in advancing an argument developed in tort to justify a supposedly contractually based liability is a striking measure of the extent to which Progressive legal thought had brought the distinction between contract and tort to the verge of collapse.
The Doctrine of Objective Causation
At the conceptual center of all late-nineteenth-century efforts to construct a sys- tern of private law free from the dangers of redistribution was the idea of objective
causation. In tort law especially, where the dangers of social engineering had long been feared, the idea of objective causation played a central role in preventing the infusion of politics into law.
If tort law was to be private law, legal thinkers reasoned, its central legitimating function had to be corrective justice, the restoration of the status quo that existed before any infringement of a person's right. The plaintiff in a tort action should recover only because of an unlawful interference with his or her right, not because of any more general public goals of the state.
The idea of vindication of individual rights was intimately connected with the notion of objective causation. Only if it was possible to say objectively that A caused B's injury would courts be able to take money from A and give damages to B without being charged with redistribution. Without objective causation, a court might be free to choose among a variety of possible defendants in order to vindicate the plaintiff's claim. If the question of which of several acts caused the plaintiff's injury was open to judicial discretion, how could private law stay clear of the dangers of the political uses of law for purposes of redistribution?
There were two basic metaphors used by legal thinkers to express the idea of objective causation. The first was the notion of a distinction between "proximate" cause and "remote" cause. This idea had worked its way into the common law from Lord Bacon's Maxims of the Law, the first of which was: In jure non remota causa, sed proxima spectatur ("In law, look to proximate, not remote, causes").95 The second, related notion, taken over from the natural sciences, was that there were objective "chains of causation" from which judges could determine scientifically which acts in a complicated series of events actually caused the plaintiff's injury. A number of related legal doctrines also sought to classify situations in which separate acts constituted "intervening" or "supervening" causes sufficient to break the "chain" and hold another defendant liable. But, above all, it was necessary to find a single scientific cause and thus a single responsible defendant, for any acknowledgement of multiple causation would open the floodgates of judicial discretion.