Jeremiah Travis.

Commentaries on the law of sales and collateral subjects (Volume 1) online

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In an action for non-delivery of the flour, the defendants sought
to give evidence that they had sold the flour as agents, and had
paid over the proceeds thereof to their principals. The presiding
judge of the Circuit Court refused to allow the evidence, and on
error to the Supreme Court,^ the ruling was sustained ; the prin-
ciples applicable to the point being thus correctly stated : " Parol
evidence can never be admitted for the purpose of exonerating an
agent who has entered into a written contract in which he appears as
principal, even though he should propose to show, if allowed, that
he disclosed his agency and mentioned the name of his principal at

1 N. Y. Code of Civil Procedure, § 449. agent for his principal, the contract show-

2 Kennedy v. Gorveia, 3 D. & R. 50.3 ; ing on its face the name of the contract-
Parker V. AVinslow, 7 E. & B. 942 ; Dut- ing parties, the agent may either sign his
ton V. Marsh, L. R. 6 Q. B. 361 ; Buffum own name first, and add to it agent for
V. Chadwick, 8 Mass. 103 ; Packard v. his principal, or he may sign the name
Nye, 2 Met. 47. of his principal first, and add by himself,

3 Albany & Rensselaer Co. v. Lund- as agent. Either form may be followed,
berg, 121 U. S. 451. All that is required in such case is that

* Considerant v. Brisbane, 22 N. Y. the contract shall purport on its face to
389; Sawin v. Kenny, 93 U. S. 289; Weed be the contract of the principal. Smith
Sewing Machine Co.' v. Wicks, 3 Dill. 261; v. Morse, 9 Wall. 76, 82.

United States v. Tracy, 8 Bened. 1. 6 Nash v. Towne, 5 Wall. 689.

* In the case of a contract made by an



[book II.

the time the contract was executed.^ Where a simple contract,
other than a bill or note, is made by an agent, the principal whom
he represents may, in general, maintain an action upon it in his
own name, and parol evidence is admissible, although the contract
is in writing, to show that the person named in the contract was
an agent, and that he was acting for his principal. Such evidence,
says Baron Parke, does not deny that the contract binds those
whom on its face it purports to bind, but shows that it also binds
another, and that principle has been fully adopted by this court.^
Cases may be found, also, where it is held that the plaintiff may
prove by parol that the otlier contracting party named in the con-
tract was but the agent of an undisclosed principal, and in that
state of the case he may have his remedy against either at his
election.3 Evidence to that effect will be admitted to charge the
principal or to enable him to sue in his own name, but the agent
who binds himself is never allowed to contradict the writing
by proving that he has contracted only as agent, and not as
principal." *

1 Higgins V. Senior, 8 M. & W. 844.

^ New Jersey Steam. Nav. Co. v. Mer-
chants' Bank, 6 How. 381 ; Ford v. Wil-
liams, 21 How. 289 ; Oelricks v. Ford,
23 How. 63.

3 Thomson v. Davenport, 9 B. & C. 78.

* Jones V. Littledale, 6 A. & E. 486 ;
Titus V. Kyle, 10 Ohio St. 444.

The question arose in Ford v. Wil-
liams, 21 How. 287, whether the principal
can maintain an action on a written con-
tract, made by an agent in his own name,
without disclosing the name of the princi-
pal, and the Supreme Court of the United
States, in deciding that he could, thus
laid down the principles applicable to the
question: "It is not necessary to the va-
lidity of a contract, under the statute of
frauds, that the writing disclose the prin-
cipal. In the brief memoranda of these
contracts usually made by brokers and fac-
tors, it is seldom done. If a party is in-
formed tliat the person with whom he is
dealing is merely the agent for another,
and prefers to deal with the agent person-
ally on his own credit, he will not be
allowed afterwards to charge the princi-
pal ; but when he deals with the agent,
without any disclosure of the fact of his
agency, he may elect to treat the after-
discoveved principal as the person with
whom he contracted. The contract of the
agent is the contract of the principal, and
he may sue or be sued thereon, thougli not
named therein ; and notwithstanding the
rule of law that an agreement reduced to
writing may not be contradicted or varied
by parol, it is well settled that the prin-

cipal may show, that the agent who made
the contract in his own name was acting
for him. This proof does not contradict
the writing ; it only explains the trans-
action. But the agent who binds himself
will not be allowed to contradict tlie writ-
ing by proving that he was contracting
only as agent, while the same evidence
will be admitted to charge the principal.
'Such evidence,' says Baron Parke, 'does
not deny that the contract binds those
whom on its face it purports to bind, but
shows that it also binds another by reason
that the act of the agent is the act of the
principal.' " See Higgins v. Senior, 8 M.
& W. 843 ; New Jersey Steam Nav. Co.
V. Merchants' Bank 6 How. 381 ; Moore
V. Clementson, 2 Camp. 22; Sims v. Bond,
5 B. & Ad. 393; Beebee v. Robert, 12
Wend. 413 ; Taintor v. Prendergast, 3
Hill, 72 ; Sanderson r. Lambcrton, 6 Rinn.
129 : Fogg V. Virgin, 19 Me. 353; Trask
V. Roberts, 1 B. Mon. 202 ; Biadly v.
Boston Glass Co., 16 Pick. 32 ; Magee v.
Atkinson, 2 M. & W. 440 ; Sowerby
V. [Butcher, 2 C. & M. 371 ; Pentz v.
Stanton, 10 Wend. 277.

L. & Co., cotton brokers at Liverpool,
sold to the appellants cotton for future de-
liveries. L. & Co. made the sales in their
own names, but were really acting as
agents for the respondent's insolvent, their
undisclosed principal. The result of the
transaction was that a sum of £680 was
due by the appellants to L.'& Co. L. &
Co. having failed, the plaintiff brought
an action against the appellants, who
claimed to set off, in defence, money due





The defendants, M. and W., fruit brokers in London, being em-
ployed by the plaintiffs, merchants in London, to sell for them,

from L. & Co. to the defendants in gen-
eral account. The defendants, in answer
to interrogatories as to tlieir belief, stated ;
*' We had no belief on the subject. We
dealt with L. & Co. as principals, not
knowing whether they were acting as
brokers on behalf of principals, or on
their own account as tlie principals." At
the trial, before Baggallay, L. J., it was
proved that L. & Co. bought and sold both
for principals and on their own account,
and that the defendants knew this. Bag-
gallay, L. J., held that the defendants were
entitled to the set-otf, and gave judgment
for them. The Court of Appeal reversed
this decision, and entered judgment for the
plaintiff for the amount claimed, on the
ground that the defendants weie not en-
titled to the set-off unless they had been
induced by the conduct of the principal
to believe, and did in fact believe, that
they were dealing with L. & Co. as the
principals. On appeal to the House of
Lords (Cooke v. Eshelby, 12 App. Cas.
271), the decision of the Court of Appeal
was affirmed. In so deciding. Lord Hals-
bury, L. C, thus laid down the principle
governing the case: "It appears to me
that the principle upon which this case
must be decided has been so long estab-
lished, that, in such a state of facts, the
legal result cannot be doubtful. The
ground upon which all these cases have
been decided, is that the agent has been
permitted by the principal to hold himself
out as the principal, and that the person
dealing with the agent has believed that
the agent was the principal, and has acted
on that belief. With reference to both
these propositions, namely, first, the per-
mission of the real principal to the agent
to assume his character, and with refer-
ence to the fact whether those dealing with
the supposed principal have in fact acted
npon the belief induced by the real prin-
cipal's conduct, various difficult questions
of fact have from time to time arisen ;
but I do not believe that any doubt has
ever been thrown upon the law as decided
by a great majority of judges for some-
thing more than a century. . . . The sell-
ing by a broker in his own name, is only
one fact, and by no means a conclusive
fact, from which, in the absence of other
circumstances, it might be inferred that
he was selling his own goods. Upon the
facts proved or admitted in this case, the
fact of selling in the broker's name was
neither calculated to induce, nor did in
fact induce that belief." Lord Watson
said: "In order to sustain the defence
pleaded by the appellants, it is not enough

to show that the agent sold in his own
name. It must be shown that he sold the
goods as his own, or in other words, that
the circumstances attending the sale were
calculated to induce, and did induce, in
the mind of the purchaser a reasonable
belief that the agent was selling on his
own account, and not for an undisclosed
principal ; and it must also be shown that
the agent was enabled to appear as the
real contracting party by the conduct, or
by the authority, express or implied, of
the principal. The rule thus explained
is intelligible and just ; and I agree with
Bowen, L. J., that it rests upon the doc-
trine of estoppel. It would be incon-
sistent with fair dealirug, that a latent
principal should, by his own act or omis-
sion, _lead a purcha.ser to rely upon a right
of set-off against the agent as the real
seller, and should nevertheless be per-
mitted to intervene and deprive the pur-
chaser of that right at the very time when
it had become necessary for his protec-
tion." Cooke V. Eshelby, 12 App. Cas.
271. In Semenza r. Brinsley, 18 C. B.
N. s. 467, 477, it was held, that one who
buys goods of a person whom he knows to
be selling them as an agent, cai not set
off in an action by the principal for their
price a debt due to him by the agent,
even though he did not know at the time,
of the purchase, and had not the means of
knowing who was the real owner. The
rule in George v. Clagett, 7 T. R. 359, is,
that if a factor, who sells under a del
credere commission, sells goods as his own,
and the buyer knows nothing of any prin-
cipal, the buyer may set off any demand
he may have on the factor against the de-
mand for the goods made by the princi]ial.
But this rule is as above qualified by the
rules laid down in such cases as Cooke v.
Eshelby, 12 App. Cas. 271, and Semenza
r. Brinsley, 18 C. B. N. s. 467, 477.
Thus, in this latter case, Willes, J., refer-
ring to the rule in George v. Clagett, 7
T. K. 359, says : " In order to make a
valid defence within the rule above stated,
it is obvious that the plea should sliow^
that the contract was made by a person
whom the plaintiff had intrusted with the
possession of the goods ; that that person
sold them as his own goods, in his own
name, as principal, with the authority of
the plaintiff ; that the defendant dealt
with him as and believed him to be the
principal in the transaction, and that be-
fore the defendant was undeceived in
that respect, the set-off accrued." See
Fish V. Kempton, 7 C. B. 687 ; Borries v.
Imperial Ottoman Bank, L. R. 9 C. P. 38;



[book II.

gave them the following contract note addressed to the plaint;iffs :
" We have this day sold for your account to our principal," so
many tons of raisins. (Signed.) " M. & W., brokers." The de-
fendants' principal having accepted part of the raisins, and not
having accepted the rest, the plaintiffs brought an action on the
contract against the defendants, and they sought to make the de-
fendants personally liable by giving evidence that, in the London
fruit trade, if the brokers did not give the names of their princi-
pals in the contract, they were held personally liable, although
they contracted as brokers for a principal ; and evidence was also
sriven of a similar custom in the London Colonial Market. The
Court of Queen's Bench held,^ that the evidence of the custom in
the same trade was admissible, as not inconsistent with the writ-
ten contract ; and that the evidence of a similar custom in the
Colonial Market was admissible, being evidence in a similar trade
in the same place, and as tending to corroborate the evidence as
to the existence of such a custom in the fruit trade.^

Norwood V. Dresser, 14 C. B. N. s. 574 ;
17 C. B. N. s. 466 ; Carr v. Hinchcliff, 4 B.

6 C. 551 ; Pinchell v. Salter, 1 Q. B. 197 ;
Sims V. Bond, 5 B. & Ad. 389 ; Baring v.
Corvie, 2 B. & Aid. 137 ; Rabone v. Wil-
liams, 7 T. R. 360 ; Warner v. McKay,
1 M. & W. 591 ; Smart v. Sanders, 3 C.
B. 399.

1 Fleet V. Murton, L. R. 7 Q. B. 126.

2 This case followed Humphrey v. Dale,

7 E. & B. 266 ; s. c. 7iom. Dale v. Hum-
phrey, E. B. & E. 1004, where defendant,
a broker, being employed by S. to pur-
chase oil, signed a note as follows : " Sold
this day for ^Messrs. T.," plaintiff's broker,
"to our principals, ten tons of linseed oil,"
etc., " ([uarter per cent Ijrokerage to " de-
fendant. This note defendant delivered
to Messrs. T. Defendant did not disclose
the name of his principal, S., who became
insolvent, and did not accept the oil.
Plaintiff then sued defendant for not ac-
cepting the oil, laying the sale as by him-
self to defendant. Defendant denied the
contract. On the trial plaintiff proved a
custom in the trade that when a broker
purchased without disclosing the name of
his principal he was liable to be looked to
as purchaser. It was held by the Court
of Queen's Bench that evidence of the
custom was admissible, as not contradict-
ing the written instrument, but explaining
its terms, or adiling a tacitly im))lied inci-
dent ; and that the action lay. The judg-
ment was affirmed on appeal to the Ex-
chequer Chamber, but by a bare majority
of the judges, — four to three. The judg-
ment of the dissenting judges was mainly
based on the ground tliat the memorau-

dura of the contract was insufficient to
satisfy the statute of frauds, the price of
the oil being above £10. This position,
however, is clearly untenable. The cus-
tom or usage is as much imj)lied in the
contract, as is the meaning of technical
language descriptive of the goods sold, or
connected with their quantity, quality, or
price. The law on this point is well and
accurately stated by Cockburn, C. J., thus:
" I am of opinion that where, either by
any rule of law or by the usage of any
trade, the terms of a contract acquire a
particular meaning, the contract must be
taken to express that meaning as much as
though it had been set forth in ertenso ;
and I hold that this obtains as much for
the purpose of satisfying the statute as
for that of establishing the contract inde-
pendently of the statute. That this is so,
when the terms of a contract acquire a
particular effect other than they would
priind facie import, by virtue of some rule
of law, i.s, I think, too clear to admit of
doubt or to require argument ; nor, as it
appears to me, is the difficulty greater
where the particular signification is shown
to attach to the terms of the contract by
the usage of trade. For it must be re-
membered that the principle upon which
evidence of such usage is admitted is that,
as between those who are parties to the
contract, and conversant with the terms
used, those terms as clearly imply the
particular meaning as though it had been
set forth in extenso ; and if this be so for
the purpose of showing tlie effect and ex-
tent of the liabilit}', it must be equally so
for the purpose of satisfying the statute,




Agents selling goods, in which they themselves have an inter-

and to hold otherwise would lead to con-
sequences altogether inconvenient and ab-
surd ; for it would follow that in no case
in which a written contract was required
by the statute of frauds could evidence of
the usage of trade be admitted, — a doc-
trine never dreamed of in the numerous
cases in which such evidence has been ad-
mitted. Now, according to the authori-
ties cited on the argument, the legal effect
of a contract entered into by a person as
agent for an undisclosed principal is to
bind the agent as principal, if the party
with whom the contract is made thinks
proper to sue him ; besides which, in this
case, independently of any rule of law,
the like effect is given to the contract by
the usage* of the particular trade. The
memorandum must therefore be read as
though the defendants, while signing as
agents for an unknown principal, had in
terms declared that in the event of the
vendor not discovering the principals, or
preferring to hold them liable, they would
be liable as principals, for this liability is
tacitly included in the terms used ; and I
think, as I have before explained, that if
this holds (as it undoubtedly does) for the
purpose of ascertaining the liability of the
defendants independently of the statute, it
equally holds for the purpose of satisfying
the statute. It may further be observed,
that unless the foregoing conclusion were
sound, in no case could an unnamed prin-
cipal be sued on such a contract, or a
party purporting to sign as agent, but be-
ing in fact the principal ; nor, on the
other hand, could an unnamed principal
take advantage of such a contract ; yet
the contrary is well established by au-
thority and precedent." Dale v. Hum-
phrey, E. B. & E. at p. 1021. It is note-
worthy that altliough in this case three of
the seven judges held contra, mainly rest-
ing on the statute of fiauds, yet in Fleet
V. Morton, L. R. 7 Q. B. 126, where Dale
i;. Humphrey was followed and approved,
no question was even raised on any ground
as to the correctness of the decision, b}'
either court or counsel. See Higgins v.
Senior, 8 M. & W. 834 ; Jones v. Little-
dale, 6 A. & E. 486 ; Magee v. Atkinson,
2 M. & W. 440; Sowerby w. Butcher, 2 C.
& M. 371; Wilson v. Hart, 7 Taunt. 295;
Spittle V. Lavender, 2 Bro. & B. 452; Gar-
rett V. Handley, 4 B. & C. 664 ; Bateman
V. Phillips, 15 East, 272; Seaberi;. Hawkes,
5 M. & P. 549 ; Paterson v. Gandasequi,
15 East, 62; Le Fevre v. Lloyd, 5 Taunt.
749; Hill v. Perrott, 3 Taunt. 274; Sharp
V. Emmett, 5 Whart. 288 ; Calder i-. Do-
bell, L. R. 6 C. P. 486; Couturier v. Has-
tie, 8 Ex. 40, 56 ; Moore v. Campbell, 10
Ex. 323; Pennell v. Alexander, 3 E. & B.

283 ; Schmaltz v. Avery, 16 Q. B. 655 ;
Hutton V. Warren, 1 M. & W. 466 ; Carr
V. Jackson, 7 Ex. 382; Thompson v. Dav-
en])ort, 9 B. & C. 78 ; Bywater v. Rich-
ardson, 1 A. & E. 508 ; Brown v. Byrne,
3 E. & B. 703; The Reeside, 2 Sumn. 569;
Winthrop v. Union ins. Co., 2 Wash. C. C,
7; Gordon v. Little, 8 S. & R. 533; Snow-
den V. Warden, 3 Rawle, 101; Thompson
V. Hamilton, 12 Pick. 425; Astor f. Union
Ins. Co., 7 Cow. 202 ; Cooper v. Kane, 19
Wend. 386; Shaw v. Mitchell, 2 Mete. 65;
Leach v. Beardslee, 22 Conn. 404; Loring
V. Gurney, 5 Pick. 15. We find the view
we have expressed above as to the compe-
tency of parties to give evidence of a usage
to explain a contract, as they may give
evidence of the meaning of technical lan-
guage used in a written contract, is also
taken by Story, J., in The Reeside, 2
Sumn. 567, 569, where he says: "The
true and appropriate office of a usage or
custom is to interpret the otherwise in-
determinate intentions of parties, and to
ascertain the nature and extent of their
contracts, arising not from express stipu-
lations, but from mere implications and
presumptions, and acts of a doubtful or
equivocal character. It may also be ad-
mitted to ascertain the true meaning of a
particular word or of particular words in a
given instrument, when the word or words
have various senses, some common, some
qualified, and some technical, according
to the subject-matter to which they are
applied. But I apprehend that it can
never be proper to resort to any usage or
custom to control or vary the positive
stipulations in a written contract, and,
a Jorfiori, not in order to contradict
them. An express contract of the par-
ties is always admissible to supersede or
vary or control a usage or custom ; for the
latter may always be waived at the will
of the parties. But a written and express
contract cannot be controlled or varied or
contradicted by a usage or custom ; for
that would not only be to admit parol
evidence to control, vary, or contradict
written contracts, but it would be to al-
low mere presumptions and implications,
properly arising in the absence of any
positive expressions of intention, to con-
trol, vary, or contradict the most formal
and deliberate written declarations of the
parties." It was accordingly held in that
case that the condition in a bill of lading
that goods should be delivered in good
order and condition, the danger of the
seas only excepted, could not be controlled
by a usage exempting the vessel from a lia-
bility for damage to the goods not caused
by the dangers of the seas. The language
uttered by Story, J., as above, over fifty



[book II.

est, and selling in their own names, but for their principals, can
maintain an action in their own names for the price. ^

years ago will cover the various well-de-
cided cases down to the present time, in-
cluding the many nicely decided English
cases on the points involved, to be met
with in the latest reports. See also Hare
V. The Mutual Safety Ins. Co., 1 Sandf. .
137, 150, where Sandford, J., takes, as we
have done, the rule as to the allowance of
evidence to exjjlain technical language in
a written contract as illustrative of the
right to give evidence of usage to explain
the meaning of the contract. At Ibid.
p. 152, he says : " In fine, we believe that
tlie rule of construction applicable to poli-
cies of insurance does not differ from that
applied to other mercantile instruments.
Its sense and meaning are to be ascer-
tained from the terms of the policy, taken
in their plain and ordinary signification,
unless such terms have by the known
usage of trade in respect to the subject-
matter acquired a meaning distinct from
the popular sense of the same terms, or
unless the instrument itself, taken to-
gether, shows that they were understood
in some peculiar manner. And that while
we may not enlarge or restrict the clear
and explicit language of the contract by
proof of a custom or usage, yet in the ap-
plication of the contract to its subject-
matter in bringing it to bear upon any
particular object, tlie customs and usages
of trade are admissible to ascertain what
subjects were within and what were ex-
cluded from its operation. Such evidence
is proper, on the same ])rinciple that proof
of the meaning of technical words and
words of science and the arts is permitted
in arriving at the intention of the parties
in the construction of contracts." Proof
of a general usage, the effect of which is
to control rules of law, is inadmissible.
Edie V. East India Co., 2 Burr. 1216 ;
Frith ('. Birksr, 2 Johns. 327 ; Horner v.
Dow, 10 Mass. 26; Rankin v. The Ameri-
can lus. Co., 1 Hall (N. Y.), 619; Turner
V. Burrows, 5 Wend. 541 ; 8 Wend. 144.
And see Wadsworth v. The Pacific Ins.
Co., 4 Wend. 33; Dow u.Whetten, 8 Wend.
160; Macy v. The Whaliug Ins. Co., 9
Mete. 354 ; Coit v. The Commercial Ins.
Co., 7 Johns. 385; Astor v. The Union Ins.
Co., 6 Cow. 202. That usages of banks
and other public institutions, and some-
times of individuals, may legally be proved
is well settled. Morgan v. Richards, 1
Browne (Pa.), 171. And where such usa-
ges are known to the parties, business is
transacted with reference to them, and
they enter into and form a part of the
contract. All persons accustomed to trans-
act busines.s at banks and other public

offices are presumed to know and assent
to their usages. But the usages of indi-
viduals cannot affect their contracts, un-
less it appear that the usage was known
to the persons with whom they contracted.
The usage is an independent fact, which,
if proved, cannot avail the party relying
on it, unless he brings a knowledge of it
home to the other contracting party.
Loring v. Gurney, 5 Pick. 15.

1 McCuUough V. Pioots, 19 How. 349.
See Bott v. McCoy, 20 Ala. 578 ; Wal-
cott V. Keith, 2 Foster (N. H. ), 196. An
agent who insures for another with his
authority may sue for the sura assured in
his own name. The Provincial Ins. Co.
V. Leduc, L. R. 6 P. C. 224.

L., an agent of B., insured some goods
belonging to B., that were being sent by

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