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Lord Tenterden in Evans v. Trueman (m), are not
sufficiently strong on the subject (n). That is, the
notice and knowledge must be more positive than he
implies. It is also provided, that any bill of lading,
India warrant, dock warrant, warehouse keepers'
certificate, warrant or order for the delivery of goods,
or any document used in business as proof of the
possession or control of goods, or authorizing the

(Z) Navuhhaw v. Brownrigg, uhi supra.

{m) 1 Moo. & Rob. 10. " A person may have knowledge of a
fact, either by direct communication or by being aware of cir-
cumstances which must lead a reasonable man applying his mind
to them, and judging from them, to the conclusion that the fact
is so. Knowledge acquired in either of these ways is, I think,
enough to exclude a party from the benefit of the ))rovisions of
this statute (6 Geo. 4, c. 96): slight suspicion, I tliink, will not."

(n) Navulshaw v. Brownrigg, per Lord St. Leonards.



possessor thereof to transfer or receive the goods
thereby represented, shall be taken to be a document
of title within the meaning of the Act. An agent en-
trusted with documents of title shall be taken to be
entrusted with the goods represented thereby, and
contracts of pledge or lien upon such document
shall be taken to be pledges and liens upon the
goods to which the document relates. An agent
shall be taken to be in possession of goods and
documents, if they are held by some person for
him, and on his behalf. Contracts of loan relating
to goods and documents shall be valid, although
they do not come into the possession of the person
making the advance, until subsequently to the
period of its being actually made. Any contract or
agreement, whether made directly with the agent,
or with any clerk or other person on his behalf,
shall be deemed a contract or agreement with such
agent ; a payment by money or negotiable instru-
ment shall betaken to be an advance, and posses-
sion to be -prima facie evidence of entrusting. The
civil responsibility of the agent for any breach of
his instructions or duty is not diminished (o) ; and
an agent making consignments or transfers con-
trary to the instructions of his principal is guilty
of misdemeanour (7;). Nothing contained in the
Act is to prevent the owner from having the right

(0) Sect. 5. (p) Sect. 6.

GIVEN BY factors' ACTS. 125

to redeem goods or documents which have been
pledged at any time before such goods have been
sold, upon repayment of the amount of the lien
thereon, or restoration of the securities in respect
of which such lien may exist, and upon payment or
satisfaction to such agent, if by him required, of
any money in respect of which he is entitled to re-
tain the goods, by way of lien as against such
owner; or to prevent such owner from recovering
of and from such person with whom any such goods
or documents may have been pledged, or who shall
have any lien thereon as aforesaid, any balance or
sum of money remaining in his hands as the pro-
duce of the sale of such goods, after deducting the
amount of the lien of such person under such con-
tract or agreement as aforesaid. There is a pro-
viso, that in case of the bankruptcy of any such
agent, the owner of the goods which shall have
been so redeemed by such owner as aforesaid shall,
in respect of the sum paid by him on account of
such agent for such redemption, be held to have
paid such sum for the use of such agent before his
bankruptcy, or in case the goods shall not be so
redeemed, the owner shall be deemed a creditor of
such agent for the value of the goods so pledged
at the time of the pledge ; and shall, if he shall
think fit, be entitled in either of such cases to prove
for or set-ofF the sum so paid, or the value of such
goods, as the case may be.


But where there is a mutual understanding be-
tween the agent and the lender, and the deposit of
the principal's goods is only a means of paying the
latter a sum due from the agent, the transaction
will not be upheld. Where a factor was an agent for
two different parties, and was indebted with one to
some other person, and, in order to enable himself
to meet the demand, borrowed of his co-debtor
300/., and deposited the goods of his other prin-
cipal with him as a security for the amount, it was
held that this was no pledge or loan of money, or
deposit of goods, within the Factors' Acts, on the
ground that it was a transaction not exclusively in
his character of factor (rj). Wherever goods have
been consigned to a factor for the purpose of sale,
unless there is some express notice from the prin-
cipal that the factor has no right to pledge them,
he may do so. Thus, where some pearls were
consigned to some factors in England, who, at the
time of the shipment accepted bills for the con-
signors to the amount of 2,4461., and afterwards
on security of the pearls obtained 2,000/". from
their own London agents, who were aware that
they were consigned to the factors for sale, it was
held that there was no evidence of mala fides, and
that the advances were rightfully made (r). " I

(7) Learoyd V. Robinson, 12 M. & W. 7i5.

(r) Naviihliaw v. UrowiiriiSs;, 1 Sim., N. S. 573, and on appeal.
Sec supra, tlic remarks of Lord St. Leonards on tlie Factors' Acts
in tliis case.

GIVEN BY factors' ACTS. 127

believe I should be putting upon the Act of Par-
liament a construction totally different from that
which the legislature intended it to receive, if I were
to say that it meant to deal with two classes of de-
posits by the owners of goods with factors, namely,
one a deposit of goods with authority to sell them ;
and, the other, a deposit of goods, with an autho-
rity to pledge them. I believe that it is a very rare
transaction indeed for a merchant to consign goods
to a factor, merely that he may pledge them"(s).
In this case, therefore, it was decided, that the
principal could not recover the proceeds of the
pearls on the ground of fraud in the transaction ;
and that as the plaintiff might have a remedy at
law, the bill must be dismissed. This decision has
since been confirmed on appeal; and the judgment
of Lord St. Leonards, on the case coming before
him, may be looked upon as a sort of treatise on
the two Acts by which pledges are authorized.

(«) Per Lord Cranworth, Navulshawv. Broiviirigg, 1 Sim., N. S.
573, and judgment of Lord St. Leonards ; 20 Law Times, 25 ;
21 L. J., Ch., 908.

128 payments to agents.

Sect. 7.

OF payments to agents.

A payment to an agent is in law considered as
a payment to the principal (t). But certain cir-
cumstances in connection with the payment must
be attended to. The sura paid must be specifically
declared to be in discharge of a debt due to the
principal ; and this is more especially necessary
where any account is open between the person
making the payment and the agent {u) ; or wliere
the person making the payment holds a cheque or
other security of the agent (x), the agent must, of
course, be authorized to receive payment; and
therefore, unless there be a particular allegation of
authority for that purpose, it must be in the
common course of the agent's employment that
the payment is made. There is generally an im-
plied authority to agents to receive payments,
which are to be made in connection with any busi-
ness they may have in hand. Thus clerks, shop-
men and the like, may receive payment for goods
sold by them in their employers' behalf. But it
seems that the clerk of an agent is not authorized
to receive payment on behalf of his master's pria-

(t) Favrnr v. Jininr/f, 1 1 Kast, .38.

(u) Bartlptt V. I'oitlnml, 10 15. & C. 7(50.

{x) Underwood v. Niclwlls, 25 L. J., C. P., 79.


cipal {y). Payments to masters of ships (2), fac-
tors (a), attornies (b), auctioneers (c), or other
agents, relative to their respective employments,
are valid. But a payment to an agent, in a matter
foreign to his calling, will not discharge the debtor.
Nor will payments made to a person who is
employed to transact a person's general business,
in any particular calling, always discharge the
payer. A person, being a solicitor and general
agent for another, is not, from that fact, authorized
to receive payment for his principal {d). A pay-
ment of a sum of money, agreed to be lent, made
by the lender to an attorney, who is employed to
transact a loan, and acts as agent to both lender
and borrower, will not be considered a payment to
the principal, unless there is something to show
that the attorney was authorized to receive pay-
ment (e). It would appear that expediency, and a
wish to make persons cautious in their dealings,
rather than principle, dictated these two last
decisions, as there can be little doubt that the
attorney, if acting in the usual course of his
employment, would be authorized to receive pay-

{y) Kaye v. Brett, 19 L. J., Exch., 340.
(a) An'dersonv. Hellier, 21 L. J., C. P., 151.
(a) Baring v.Corrie, 2 B. & Aid. 137.
\h) Colman v. Orion, 10 L. J., Cli., 18.

(c) Mynn v. JolUffe, 1 Moo. & Rob. 326, but only of deposit, not
of whole purchase-money.

(rf) Colman v. Orton, 10 L. J., Ch., 18.

(e) Wilkinson v. Candleish, 19 L. J., Exch., 166.



ment. It is incumbent on parties making pay-
ments to one whom they know to be the agents of
another, as well as themselves, to be circumspect.
Thus, where an attorney was employed as agent
for two parties, the grantor and grantee of an
annuity, and was entrusted by the grantor with
money to repurchase the annuity, which money he
appropriated, but nevertheless obtained from the
grantee a release of the annuity, and an acknow-
ledgment that the repurchase money had been
paid ; the person who made the payment was held
not to be discharged thereby ; for that, under the
circumstances of the case, and especially from the
fact of the receiver of payment being agent for
both parties, he ought to have been more circum-
spect as to whom he made payment (/). This
case is one which must be of daily occurrence in
the practice of attornies, and shows the danger of
trusting persons in whom the employer has not
just grounds for placing the most implicit con-

A person employed to sell an estate is not
authorized to receive payment for it, " since it is
to the interest of the vendor that he should receive
payment himself (<7), — a somewhat primitive reason,
as it clearly might bo to the interest of the vendor
that another should receive payment, provided he

(/) Vandakur v. lilaffrave, 17 L..I., Ch., 45.
{g) Mynn v. Jolliffe, 1 Moo. & Hob. 32G.


ultimately gets what is due to him. But where
the circumstances of a sale by an agent are such,
that it is in the alternative for the agent, either to
receive payment from a third person, or to give
him credit on behalf of his principal, he may do
that which is most to his principal's advantage,
and accordingly may receive payment himself.
Thus a master of a ship which had been wrecked,
on disposing of it, for the benefit of the owner, at
a distant port, may receive payment of the pur-
chase-money (h). A payment, to be valid against
the principal, must be made in such a manner as
is usual in the course of trade, unless it may be
inferred that the agent has authority to receive it
in a different manner {i). On this ground it is
probable that the decision, that an agent cannot
receive his own cheque in payment, so as to dis-
charge a party who had cashed it for his accom-
modation, may be sustained (k). A fortiori, the
express direction of the principal, that a payment
may be made in a particular manner, will make any
payment in that manner a valid discharge (/).
Wherever money is due on any security, any person
making a payment thereof should ascertain whether

(h) Ireland v. Thompson, 17 L. J., C. P., 216.
(t) Thorold\. Smith, 11 Mod. 711; Stewart v. Aberdeen, 4: Mee.
& Wels. 211.

(k) Underwood v. Nicholls, 25 L. J., C. P., 79.
(/ ) Barker v. Greenwood, 2 Young & Coll. 419.


the security is in the possession of him to whom
the payment is made ; for otherwise, it is said, he
will not be discharged unless the money reach the
principal, not even though the agent to whom the
payment is made should have been usually em-
ployed to receive money ; for his non-production
of the security rebuts the implication of authority
arising from his employment (m).

Where an agent has received a sum of money
from a third person, which the latter is entitled to
recall, if he has not paid the amount over to his
principal, he is liable to refund upon demand being
made (n). And the mere passing money in account,
making rests without any new credit given, fresh
bills accej)ted, or further sum advanced to the
principal by the agent in consequence, is not equi-
valent to a payment over. Where an insurance
broker, having effected a policy of insurance for his
principal, on a loss taking place received the
amount thereof from the underwriters, passed the
same in account, and gave credit to his principal
for it ; on the underwriter discovering the loss to
be foul, it was held that the broker was bound to
refund the money (o). But if the agent has given
a new credit to his principal since the payment, or

(m) Smith, Merc. Law, p. 127 ; //<■« v. Cacsbt/, 1 Cha. Ca. 93.
In) Cox V. Prenlirc, ;5 M. N: Sil. 3 tt ; Story, § 300,
(o) Bullcr V. Harrison, 2 Cowp. bG5.


has handed the money over without notice not to
do so, he cannot be called upon to refund it, and the
principal must be the party sued, it being a rule of
law that the right of a principal to any money or
property shall not be called in question in an ac-
tion against the agent (p); and that the intermediate
hand shall not be responsible, unless caught with
the money in his possession (q). Thus, when the
plaintiff, an intending purchaser of an estate, paid
the defendant, the agent of the vendor, a sum of
money by way of deposit ; the contract was after-
wards rescinded, but previous thereto the defendant
had paid his principal part of the deposit, and held
the rest by agreement with him ; the plaintiff, on
bringing an action for the deposit against the
agent, was nonsuited on the above ground (r).

Wherever a payment to an agent will be good as
against the principal, a tender to him will be good
also (s).

If an agent illegally gets money into his pos-
session, knowing that neither he nor his principal
have any right to it, his paying it over to his prin-
cipal will not discharge him from liability to refund
it, if required {t).

(p) Sadler v. Evans, 4 Burr. 1985; Hardman v. Willcock, 9
Bing. 382, n. ; Story, § 217.

(q) Addison on Contracts, vol. ii. p. 7-
(r) Hurley v. Baker, 16 L.J. , Exch., 273.
(s) Goodland v. Bleivth, 1 Camp. 477.
(i) Miller v. Arts, Selw. N. P. 93.


If by fraud or misrepresentation an agent has
induced a third person to pay money to him, which
he hands over to his principal, he will still be
answerable for the amount ; and he cannot plead
his agency, and the transfer of the money to his
employer, in bar of the right of the payer to recover
it (u). The same is the case where a payment has
been made to an agent under protest, and in such
a case he cannot discharge himself by paying it
over to his principal (x).

No privity of contract exists between an agent
and the person for whose use money is paid to
him by his principal ; and consequently no action
can be maintained by such third person, unless an
assent has been expressed or implied by the agent
to pay the money according to the directions he
has received (?/).

If a payment has been made to an agent, he
becomes personally liable to his principal for the
amount received, and the principal, to whom the
money is due, will not be permitted to lose by the
conduct of a substitute appointed by the agent, if
from any act of his the money does not come to
the principal's hands (xr).

(u) Smith V. Sleap, 12 M. & W. r,SS.

(.r) Wiihrficld V. Ncwbon, () Q. 15. 280 ; Parker v. Bristol and
Exeter Rriilwai/ Comp'itii/, G I''xcli. 702.
(y) Cobb v.'Beiilc, 6 Q. IJ. D.'H.
(z) Makery v. Itamsage, 9 CI. & Fin. 818.

( 135 )



The employment of agents chiefly takes place in
the negotiations and transactions of commerce;
and questions as to the liability of the principal
or the agent most frequently arise upon the terms
of contracts entered into by agents on behalf of
their principals.

We will now proceed to consider the liabilities
of principals on contracts.

The principal has hitherto been considered as
the only person liable, as indeed he is, if the agent
having authority to contract for him, in so doing
keeps within the scope of his authority. For no
rule of law is better ascertained or stands upon a
stronger foundation than this, that where an agent
names his principal, the principal is responsible
and not the agent (a). An agent may be appointed
either by a formal instrument, by a verbal autho-
rity, by mere transactions passing between himself

(a) Ex parte Hartop, 12 Ves. 352.


and his principal in the way of business, or even by
tacit acquiescence. Having been appointed he
may declare his character, name his principal, and
state all the circumstances relative to his employ-
ment and his instructions, and then enter into all
such contracts as are usually made by those simi-
larly employed in the course of trade ; he may also
do any act, or make any agreement which is called
for by any extraordinary emergency. If these
conditions are complied with, all his contracts and
acts will be binding on his principal, who alone
will be responsible for their fulfilment. The prin-
cipal will be responsible, even if the agent exceed
the limit of his apparent authority, if it can after-
wards be shown that the authority really accorded
to him comprises such excess. The principal will
also be liable, if the agent exceeds the authority
given to him, if he subsequently ratifies the acts of
his agent.

In the above cases the principal alone will be
liable on a contract.

( 137 )


Sect. I.


An agent may, and frequently does, make himself
personally liable on contracts entered into on
behalf of his principal. In the case of an agent
signing a deed in words, which do not clearly show
that he means to bind his principal by the instru-
ment, even though he has the requisite authority
under seal, the principal will not be bound. In
such a case, the agent will be held personally and
exclusively liable, ut res mag'is valeat quampereat,
and, moreover, as the person contracted with, being
liable on such an instrument, must have his remedy
against some person, that person will be the agent.
And if there are any descriptive words declaring
the character of the agent, and the name of the
principal, they will, in contracts of this description,
be treated as mere surplusage. Covenants by
deed must be expressed to be made by the prin-
cipal himself, and if the agent has authority to
execute the instrument, the principal will be bound.
But if they are expressed to be made by the agent>


the disclosure of his principal on the face of the
instrument avails him nothing, and he will be him-
self exclusively responsible. Thus, where a man
covenanted for himself and his heirs for and on
behalf of A, B. to do a certain act; it was held
that he, and not his principal A. B., was answer-
able for its performance (c).

An agent will make himself responsible on agree-
ments or undertakings in writing, not under seal, if
he does not disclose his principal, but enters into
the contract in his own name, even though he is
known to be an agent at the time of entering into
the contract {d). And, if the agent should have
entered into the contract under an authority from
his principal, if he is sought to be charged, he
cannot, if the contract is in writing, introduce oral
evidence to show that his principal, and not him-
self, is the contracting party, and thus discharge
himself from liability {e). But, on the other hand,
although an agent, by writing, contracts as dgent,
and subsequently discloses his principal, if he does
not do so at the time of entering into the contract,
the party with whom the contract is made may
give evidence of the usage of trade, to show
that in the contract the agent is personally
liable (/). In the common form of policies of

(c) /tpp'eton V. Binks, 5 East, 148.

{d) Jones V. JAllhdalc, (i Ail. & E. 186.

(r) Uiagini v. Seiiior, « M. & W. 84-4.

(/) liumfrcy v. Dale, 28 Law Times, Q. B., 285.



insurance, the agent, in his own name, causes
himself to be insured for his principal, or for
whom it may concern. In such a case he is
deemed an immediate, though not the sole con-
tracting party, and the underwriter and himself
become reciprocally parties to and obliged by the
policy ( g). Where an auctioneer after a sale
signed an agreement with the purchaser, " I, A. B.,
do hereby acknowledge to have this day sold, and
I, the undersigned C. C, do acknowledge this day
to have purchased," the auctioneer was held to
have rendered himself personally responsible for the
fulfilment of the contract (/«^. Where an agent
sold some shares for another person in his own
name, and his clerk entered the sale in his sale
book, he was held liable on the contract ii). No
evidence will be admitted for the purpose of dis-
charging an agent in such a case {j). In written
contracts entered into by agents, it is often very
difficult to determine whether the agent is or is not
bound as well as the principal. Justice Story seems
to be of opinion that the fact of the principal being
indirectly liable on the contract does not exonerate
the agent from all personal responsibility. Nothing
is more common than for a contract to be made,
by which the agent is personally bound, and which

(g) Story, § 272.

(/() Gray v. Giitteridge, 1 M. & R. 618.
(i) Magee v. Atkinson, 2 M, & W. 442.
{j) Higgins V. Senior, 8 M. & W. 844.


is ex consequenti binding on the principal also, al-
though the latter is not a direct and immediate
party to the instrument. The correct doctrine
would seem to be that, where the agent is a direct
party to a written instrument and the principal is
not, so that the latter is not ex directo suable
thereon, there the agent, although he describes
himself as agent, is suable upon the covenants
and agreements contained therein, as on his own
personal contract (/i).

Some of the cases appear very irreconcileable.
In one case a man covenanted for himself, his
heirs, &c., for and on behalf of J. S. to do a
certain act, and it was held that he, and not J. S.,
was answerable for its performance (Z). Where,
by a written agreement A., on the part of B.,
agreed to let, and the plaintiff agreed to take a
certain messuage and premises at a yearly rent
payable to the defendant for the use of A., and
licence for certain acts was to be given by the de-
fendant on the part of A., and the plaintiff was to
execute a lease when called upon by the defendant.
The agreement was signed by the defendant in his
own name. An action on the agreement was
brought against the defendant, and he was held to
be personally liable {m), "The contracting parties

(/f) Parke, B.,in lU^gins v. Senior, Story, § 278 ; 8 M, & W. 844'.
(/ ) /tpplrtnn v. lihilcs, f) East, 118.

(jn) Tinnier v. Cliri.sCiau, '![■ I,..!., (i. H., 91 ; Norton v. Ilcrroii,
Ry. & M, 229, is a precisely similar case.


are the defendant of the one part and tlie plaintiff
of the other part. To be sure the words, ' for and
on behalf, &c.,' were added after the defendant's
name ; but still the defendant contracts. In Lewis
V. Nicholson {n), the defendants were not them-
selves to do the act contracted for, and, therefore,
no personal liability was incurred by them." It
was considered a pointof some importance that the
rent was reserved and payable to defendant (o).
By a charter-party between the plaintiff and
defendants, a ship was chartered by the defendants
to the plaintiff for a certain voyage. No mention

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Online LibraryEzekiel Charles PetgraveA manual of the law of principal and agent → online text (page 9 of 21)