T UNIVERSITY OF CALIFORNIA LOS ANGELES SCHOOL OF L\W LIBRARY TREATISE ^ftr ilaU30 RELATING TO FACTORS AND BROKEES. BY JOHN A. RUSSELL, B.A., OF gray's inn, barrister-at-law. J QUI EMPTIONIBUS, VENDITIONIBUS, COMMERCIIS, CONTRiCTIBIIS, ILiciTis I'TTLES. Digest- Lib. 50, Tit.li LONDON : S. SWEET, CHANCERY LANE; & R. STEVENS & G. S. NORTON, BELL YARD, LINCOLN'S INN; Hah) iSoo&scIIns anU ^uiliBl&ere. 1844. T h TO Sir WILLIAM WEBB FOLLETT, Knt. HER MAJESTY'S SOLICITOR-GENERAL, C{)t^ l3oo& IS MOST RESPECTFULLY DEDICATED, BY HIS OBLIGED AND FAITHFUL SERVANT, THE AUTHOR. 756671 a3 §i PREFACE. When the last " Factors' Act" was passed, it oc- curred to the Author that an edition of that and the other statutes having reference to the same subject — combining the cases which had been decided thereon — might be useful, and that, therefore, it would not be unacceptable to his professional brethren. Under this impression he was induced to examine, at some length, the various authorities which treat of the laws of agency in general, — chiefly for the purpose of col- lating therefrom the past and present state of the law as to the factor's power to pledge ; and it was whilst thus engaged, that the idea of producing the following pages first suggested itself to him. The simple fact, that the powers and rights of factors had so often en- gaged the attention of the legislature, sufficiently con- vinced the Author of the importance attached to the viii Preface. functions of that class of agents ; and the many pecu- liar principles which, on looking into the Books, he found laid down as being particularly applicable to them, apart from other agents, led him to believe, that the laws by which they were governed in their profes- sional capacity were sufficiently distinctive in character, to admit of then' being properly treated as a separate branch of the commercial-law. Under this belief the present work was commenced ; and it is in the hope that the profession will concur with him in this belief, that the Author now presents to them the result of his labors. The plan of the work is as follows. The jii'st chapter treats of the nature of the employment of factors and brokers, of the persons who are qualified to fill those offices, and of the modes in which they may be appointed. The second chapter treats of their duties and powers ; the thirds of their rights and lia- bilities ; and the fourth, of the means by which the relation subsisting between them and the principal may be dissolved. In pursuing this plan, the Author has endeavoured, to the best of his ability, to trace clearly and succinctly the nature and consequences of this relationship, from its commencement to its close ; Preface. ix and he ventures to express a hope that he has, at least in some measure, succeeded in so doing. At the same time, however, he is conscious that there may be errors, both in the arrangement of the subject and in his mode of treating it, which have escaped him, and for an excuse for which he must wholly rely on the indulgence of those who may honor him by a perusal of his work. In conclusion the Author begs to state, that in citing his authorities he has not confined himself ex- clusively to the decisions and dicta of the lawyers of this country ; but that he has, wherever it appeared to him that he could do so with advantage, availed himself of the opinions of the eminent jurists of other countries, and particularly of those of Mr. Bell, Pothier, and Dr. Story. It is allowed by all, that the opinions of such men on all questions of com- mercial-law cannot be too highly valued; and the Author is confident, that this fact will be admitted fully to justify the frequent reference which he has made to them. 1, Child's Place, Temple. 1st January, 1844. CONTENTS. CHAPTER I, Nature of the employment of Factors and Brokeks ; who MAY BE, AND now APPOINTED .... Page 1 17 CHAPTER II. On the Duties and Powers of Factors and Brokers. Section I. On the duties of factors and brokers . . . 18 — 47 Section II. 1. On their powers, as between themselves and their princi- pals 48—73 2. On their powers as between their principals and third par- ties 74 — 115 3. On the factor's power to pledge .... 116 — 151 xii Contents. CHAPTER III. On hie Rights and Liaiulities of Factors and l^noKERS. Section 1. ). On their rights against liie person of the principal 152 — 190 2. On their rights against the fund . . . 191—239 3. On their rights against third parties . . . 240—257 Section II. 1. On their liabilities to the principal . . . 258—284 2. On their liability to third persons - • . 285—310 CHAPTER IV. On the Detebmination of the AL'TiioniTy of Factors and BnoKEKS 311—321 APPENDIX. No. 1. The Factors' Acts 323—340 2. Stat. 7 &8 Geo. 4, c. 29, ss. 49, 51, 52 . 341—343 3. Regulations for the admission of Brokers in London 344 —348 TABLE OF CASES CITED. Page Page, A. Barton v. Sadock . . v» Williams • .. 56 . 87, 120 .. 175 Adams v. Lindsell, 313 Battersey's Case .. \AI wA]arj . 26, 55 Bauerman v. Radenius 89, 92 V* vv oroicv, . Adamson v. Jarvis 176 Bedford v. Perkins ,. 171 Addison I). Gandesiqui 81, 287 Belli). Anldjo .. . 71 Alexander v. Gibson 91 V. Gilson .. 66 V. Southey 307 V. Humphries . 17 Alley V. Hotson 315 V. Jutting , . .. 194 Alsop V. Silvester .. 277 V. Kymer 292 Alwyn i;. Taylor . 306 Hensley v, Bignold .. 177 Anios V. Temperley 294 Benson v. Hippius 292 Anderson v. Clark 242 Berkley v. Watling .. 95 Andrews v. Robinson 263 Bertram v. Godfrey . 52 Anon. 22, 32,38, 52, 166, 167, Betteley v. Reed .. 280 270 271 282 Betts V. Gibbins 176 Armstrong v. Toler 183 186 Beverley v. Line. Gas Co. 12 Arnold v. Webb 265 Bexwell V. Christie . 21, 281 Atkin V. Barwick . . 230 Bickerton v. Burrell .. 242 Atkyns v. Amber 242 249 Biggs V. Lawrence . 91, 92 Attwood V. Muniiings 49 Bize V. Dickason .. .. 300 Aubert v. Maize 177 Blackburn y. Kymer . Blackbunie v. Scholes 172 68, 104, 105, 311 B. Blandy v. Allan 137, 138, 147, 148, 201 Bacon v. Chesney . 247 Boardnian D. Sill 216 Bailey v. Culverwell 307 Bold V. Rayner . . .. 5 Baker v. Langhorn 300 Boorman v. Brown 68 Barber v. Gingell 80 Booth V. Hodgson .. 278 Barclay v. Cousins 61 Borr V. Vandall 167 Baring v. Corrie. . 1, 4, 56 ,65, Boiilton V. Arlsden .. 74 68,87, 103, 107 108, 250 Buusfield V. Cresswell 35 Barron v. Fitzgerald 50 Bower 11. .Tones .. 155 U L A 269 Boyson D. Coles .. 87, 88, li;0 v, ilusDaiiG Barrow v. Coles . . 237 Brandaoi;. Barnett 150,192, 201 Barry v. Loiigmore . 200 Brind i;. Hampshire.. 171, 269, Bartiett v. Pentland 110, 112 298, 312 XIV Table of Cases cited. Pa?e. Urine f. FiiiltiiTstoiic .- 9S Bristow r. 'I'll v lor •• 313 Hroail V. Thomas 139, KiO, Itij IJroinley f. Coxwell . . '260, y7 1 , 27'J Brown r. Duncan .. IBO t . Ivlinyton . . . . '2.56 V. Hodgson . . '243 I'. Litton . . . . 43 V. Nniriie .. 6, 157, 158 V. Turner . . l78 Browne V. Diivis .. .,188 Bruce i'. Hunter . . 1 7'2 I'. Wait . . '206, '235 Bryans u. Nix..'203, 208, 253, '254 Buclianan i;. Findlay . .268, 277 Bullerr. Harrison '269, 297, 303 Bulmer, etpnrte . . . . 278 Bunne3' v. Poyntz . . 233 Jiurn V. Brown .. 203, 207 Burnett V. Bouch .. 162,163 — I'. Lynch . . . . 270 Burton V. Hughes .. 252 Bush u. Steinnian .. 310 Busk V. Davis . . . . 235 CatTrey t). Darbv 38,187,257 CaHantleri;. Oelr"ichs, 29, 45, 280 Campbell i;. Hassell .. 68, 106 Canij)ion i'. I'himnier . 4 Cannan v. Brvce 177, 185, 199 Capel I). Thornton . . 59 Capp V. Topham . . . . 188 Carr r. Hinchcliir ., 100 Caruthers t'. Giaham .. 160 Cary f. Webster . . 297 Cash »j. Jay l(tr .. .. 81 Catlin V. Bill 19, 21, 259, 281 Chandos II. Brownlow .. 95 Chanter I'. Hopkins .. 256 Chapman v. Darby . . 190, 195 t). Partridge .. 67 V. Walton . . 33, 36, 31, 52, 259, 280, 281 Page. Chase V. Westmore .. 198, 217 Cliedwortii (Lord) v. Edwards 40,43 Child u. Morley .. 52, 70, 169 Chion, exjiarte . . 3l6 Cliurch V. [niperial Gas Co. 12 Citv of London Gas Light Co. i. Nifholls .. 12 Clark V. Powell . . . . 9 Clarke 0. Perry . . 25, 282 Close V. Holmes .. 127,145 Coates t). Bainbridge . . 92 r. Lewis .. 68,104,105 V. Railton . . 229 Cock u. Taylor .. ..292 Cockran v. Iriani 36, 37, 57, 261 Coggs V. I5ernard . . 37, 38, 239 Cohen I'. Paget .. 157 Coles 1'. Robins .. .. 307 Collyer II. Dudley .. 41 Coniber v. Anderson 30, 31, 280 C'lombei;. Woolfe .. 248 Coope V. Eyre . . 15, 16 Cooper V. Hafton . . 266 Cope V. Rowlands 177, 179,181 Copland V. Stein . . 207, 316 Coppin t). Walker .. '245,249 Cork'tt i>. Gordon . . 20 Conifoote V, Fowke . • 94 Cornwall i). Wilson . . 25, 26, 28'2 Cosack V. Wells .. .. 251 Cowell t). Simpson .. 217 Cox V, Prentice . . . . 299 Coxe V. Harden . . 255 Cranth v. White .. 305,306 Cra»furd r. Hunter .. 61,62 Crosskey t). Mills .. 41,279 Cuinming t). Brown .. 237 i;. Forrester .. 301 V. Roebuck . . 4 Curry t). Edensor .. 277 Curtis V. Barclay . . 46, 169 D. Dacosfa v. Scanderet . . 94 Daley. Sollet .. 189,275,276 Table of Cases cited. Page. Dalzell V. Mair . . . . 289 Danitl I). Adams .. 78 D'Aquila v. Lambert . . '.^20 Danbignyv. Uuval 117, 118, 211 Davidson v. Gwjnne . . 2 V.Robertson .. 80 w. Stanley .. 77 Davies ?;. Wilkinson .. 300 Davis V. Garrett . . 275 Dawson V. Atty .. .. 90 De Bouchout v. Goldsinid 87 De Gaillonv. L'Aigle .. 289 De Gaminde v. Pigou .. 108 Delany v.Stoddart .. 282 De Leira 1) Edwards .. 87 Denew v. Daverell 33, 187, 259 De Vignier v. Sw anson . . 66 Dick V. Luiusden . . 58 Dickinson t;. Lilwall. Dickson v. Lodge Dinwiddle v. Bailey Diplock V. Blackburn Dixon V. Baldwen . V. Hammond . V. Hovill V. Yates Dodsley v. Varley Doorman v. Jenkins Dougal V. Kerable . Douglas, in re Driakwater r. Goodwin 59, 96, 99, 100, 197, 211, 245, 246,247,249 Dufresne v. Hutchinson . . 272 Duncan v. Blundell .. 188 Dyer V. Pearson . . . . 77 Dyster, eaparfe .. 180 Eagles t). Vale .. 269 East India Co. v. Hensiey. bt, 74, 83, 84, 291 1). Lake .„ 166 Edgar v. Bumstead . . 190 .53,5^ ,67, 315 51 ..189, 190. 266 n 43 . 228, 229 • -il. 279 173 238 77 33 . 292 293 298, 304 Page. Edgar V. Fowler .. .. 268 Edwards u. Brewer .. 229, 238 V. Footner .. 91 Eicke V, Meyer . . 157 Ekins V. Maclish . . 53, 54 Ellis V. Hunt .. 225,228 Elmore v. Kingscote . . 4 Elsee V. Gatwurd . . 359 Elsworth I'. Cole .. .. 178 Evans V. Nicliol . . 203, 208, 254 V. Trueman . . 139, 140 Faikney t;. Renous .. 177 Fairlie t). Hastings .. 88 Faiebrotlier v. Ansley . . 175 Farmer I'. Robinson .. 312 V. Russell . . 278 Farnsworth y. Garrard . . 187 Fasliion u. Attwood .. 166 Favenc D. Bennett .. 104,107 Feize v. VVray .. 221, 222, 238 Fenn v. Harrison 53, 68, 73, 75, 145 Fielding v. Kyraer . . 121 Fishery. Miller .. 171, 172 Fitzlierbert v. Mather . . 94, 9S Fletcher y. Harcot .. 175 ?;. Heath .. 137,147 Flint «. Le ftlesurier .. 61 Fomin V. Oswell .. 20,273,274 Forster i;. Taylor .. 181 Foster I). Frampton .. 233 V. Pi-arson .. .. 71 II. U. S. Insurance Co. 17 Fowler V. Down . . 252, 253 .. 234 192 17 266 172 271 V. M'Taggart Foxcroft V. Devonshire French i'. Backhouse Friefiis V. Dios Santos Frtihling v. Schroder Fuller V. Smith G. Gale V. Wells 67 Tabic of Cases cited. Page. Garri't t'. Ciilliini . . 316 .. Ilaiiclliy.. .. 2,il Gas Liglil Co. t). Turner .. 177 Gau^sen v. Morton . . 313 Gcor<;<' u. Clai£>;ct. . .. 100 Gibbons ii. Rule .. 9 Gibson t). iMinct .. .. 172 I. Winter .. 113, !?5l Gilman i'. KIton .. 165 1'. Robinson .. 80 Glascr «;. Cowie .. 28 Godfrey v. Saunders 42, 50, 260, 318 r. Furzo .. 316 Godin V. London Assur. Co. 192, 194, V13 Goldsclimidt v. Ljon Gonzales v. Siaden Good, eiparie Goodland i'. Blewith Goodman r. Harvey Goodson V. hrooke Gooni r. Afflalo Goore v. Daubeny Gorgier v. .Alievilie Goswill i;. Dunkley 38, 260, 261, 275 Gould V. Oliver . . ..96 Goupy I). Harden . . 190, 264 Graham v. Dyster 53, 87, 117, 121, 139 V. Fretwell V. Musson Grant v. Atisten V. Fletcher . Green v. Farmer ti. Weaver . . V. White Grounsell v. Lamb Grove v. Dubois Guerreiro v. Feile Gurney v. Sharp olo 248 . 215 113 , 149 71 5, 67 42 150 4 4 298 . 4, 47, 67 192 40, 265, 267 171 .. 299 . . 98, 300 . . 56, 87 . . 170, 204 H. Hagedum v. Oliverson . . 250 Haille v. Smitli..'i;0j, 204, 208 Page. Haines v. Busk . . 182 Hallett V. Bousficid . . 202 Hammond v. Anderson .. 235 V. Holiday . . 1 64, 1 87 Hammonds V. Iiarclav,l89, 196, 197, 210, 317 Hanson v. Meyer . . 235 Harding t). Carier .. 271 Hardman j;. Wilcock .. 279 Harrington D. Hoggart .. 43 Hartop, eiparte .. 81, 285, 287 Hartup D. Wardlove .. 269 Hatfield D.Phillips .,131.141, 144, 145 Hautayne v. Bourne . . 88 Hawes V. Foster . . 5 Hawkes v. Dunn .. . . 223 Hay V, Goldsinid . . . • 49 Haycraft t). Creasy .. 308 Haynes i;. Foster " .. 71,72 Hazard t;. Tread well .. 3l9 Heisc'h y. Carrington .. 98 Helyear v. Hawke . . 90, 91 Henderson D. Barnwell. .68, 69 Hern v. Nichols . . 94 Hevvison v. Guthrie .. 194, 217 Heyman v. Neale .. 67,312 Hey wood v. Waring . . 202 Hibbert D. Shee .. 299 Hicks D.Hankin .. 59,78 Hiern t). Mills . . 95 Higgiiis r. Scott .. .. 210 V. Senior . . 290 D.Stewart .. 172 HilJD. Featherslonhaugh .. 188 Hoare D. Dawes .. 16 Hodgson V. Davies . . 86 V. Loy . . 238 V, Richardson . . 94 Hogg V. Snaith . . 60 Holnianr. Johnson, 21, 177, 178, 179,278, 281 Hoist r. Pownall .. .. 233 Hohscomb V. Rivers .. 42, 260 Hooper t). Lusby .. 13, 17 Hornby, ex/Mi-te .. .. 218 V. Lacy . . 99, 245 Horsfall V. Fauntlerov . . 85, 86 Table of Cases cited. xvu Page. Page. Horsfall v. Handley .. 269 Josephs V. Pebrer 178 Hostler's case . . 210 Judini). Samuel .. .. 270 Houghton V. Matthews ..24,54, 56, 98, 193, 200 K. Houston V. Robertson .. 303 Hovey v. Blakemaa .. 189 Kemble v. Atkins 65, 180 Hovill V. Pack ..115 Kennedy v, Gouveia . . 292 Howard v. Baillie . 49, 53 Kensington, exparte .. 197 V. Braithwaite .. 78, 86 Killock V. Greg 40, 41 V. Chapman .. 59 King (the) v. Lee .. 195 V.Tucker 170 Kinlocli V. Craig .. 202, 203 Hudson V. Granger 47 ,97, 100, Kiiinitz V. Surry . 66, 115 211, 246, 249. 316 Kirton v. Braithwaite .. 113 Hunter v. Parker 13, 24 Knight V. Lord Plymouth . . 44 V. Prinsep 300 Kiiipe V. Jesson 166 V. Welsh . . .. 267 Kostir »;. Eason 300, 301 Hurry v. Mangles 236 Kruger v, Wilcox . . 192, 213 Hurst V. Holding ., .. 187 Kyraer v. Suwercropp .. 81 Hution V. Bragg 202 Hyde v. Johnson . . .. 93 L. J. Lane v. Cotton 305 Jackson v. Clarke 86 Langhorn v. Allnutt .. 88 V. Cumniings .. 191 Lanyon v. Blanchard. .194,200 V. Jacob 68, 114 Leadbitter v. Farrow .. 291 z). Kichol 228, 233, 234, Lee V. Bowler. . 40 338 Leeds v. Merc. Insur. Co... 194 Jacobs V. Latour 215 V. Wright 228 James i;. Griffin.. 228, 2<;9, 231, Le Fevre v. Lloyd .. 263 232, 233 Leuchart?;. Cooper . 149 Jameson v. Swainstone 35, 190 Levi V. Barnes .. 158 Jansen v. Green 9 Levy I'. Barnard . . 194 ,201,216 Jauierry v. Britten .. 126 Lickbarrow i>. Mason 193, 202. Inglis V. Usherwood . 234 '210, 213, 219, 237 Johnson v. Hudson .. 181 Lighlfoot I'. Tenant .. 184 V. Ofiilby .. 286, 294 Lilly V. Hays .. 298 Johnston v. Usborne . . 54, 176 Litt V. Cowley 225, 226 Jones V. Bowden . . .. 308 Lloyd V. Sigourney .. 149 V. Bright 114 Loliuiann n. Rougemont . . 291 V. ciiir .. 270 Lucas V, Groning 51 V. Dvvyer 279 Lucena v. Crawlurd .. 61,62 V. Jones .. 235 Lupton V. White 43 V. Lewis 247 V. Littledale . . 289, 290 V. Pearle . . 210 M. V. Thurloe . . .. 210 Joseph V, Knox 242, 243 Maanss v. Henderson b .. 200 XVIII Table of Cases cited. Page. Mabcr t'. Massias .. 21) 1 M'Corabie v. Davies, 118, SO-l, 'J 14 iMucc 11. Caddell .. 3 16 M'Gillivray v. Sirasoii . . 174 M'Grc'gor r. l,owe .. 278 Macliul, eiparte . . . . 76 iNIackeiiziL' r. Johnson . . il66 .M'KiniicI i. Robinson .. 186 Maclean D. Dunn.. 67, 114,282 Maddox v. Kcmpster . . 206 Masce V. Atkinson . . 290 Mainwairing v. Brandoi. . . 2-^7, 260 Mallougli t'. Barber . . o4 Mann v. SliilFner 118, 195, 214 Mancila V. Barry .. 26 ^lann i'. Forrester 96, 194, 200, 201 Marsliall B. Parsons .. 156 Martin I'. BIytliman .. 175 aiuriini v. Coles. . Il7, 120, 121 Marzetti i'. Williams. .273, 274 Mashiter D. Buller.. .. 300 Mason V. Lickbarrow . . 58 Massey v. Banner . . 44, 266 V. Davies . . 43 Mather, ei/jarte .. 21, 178,281 Matthews D. Haydon .. 260 Mattliiiis r, Mesnard .. 165 Maxwell D. Jameson .. 167 May dew D. Forrester .. 35 Mayor of London I'. Brandon 8 Mayor of Ludlow v. Charlton 11 Medina r. Sloughton .. 308 Mcllisht). Bell .. 66 iSIerrywetlier V. Nixau .. 175 Metcalf t. Clough .. l7l Meyer r. Sliarpe .. .. 316 Miles V. Bernard . . 34 V. Gorton . . 236, 238 Miller t. A ris .. .. 303 V. Race .. ..149 Mills u. Ball .. 226,229,233 Minett V. Forrester .. 302, 315 Mitchell. Kde .. 204 Mitchell t. Lapage .. 5 Moens D. lley^vorth .. 91,94 Page. Moneypenny v. Hartland . . 34 Monk V. Clayton . . . . 97 V. Whitlenbury . . 97 ]Moore v. Clementson . . 103 V. Mourgue . . 30, 35, 51, 259, 280 Morgan v. Corder . . 287 Morison v. Gray . . 255 Morris v. Cleasby . . 2, 98, 170, 263 V. Stacey.. .. 291 Mortimer v. M'Callan. .86, 289 Mountford v. Scott . . 95 Muir V. Fleming . . 205, 206 Murray v. East India Co. , . 60 Mynu V. Jolliffe . . 68 N. Nelson v. Powell . . 81 Newsoinu. Thornton 56,58, 87. 88, 118, 119, 139 Nichols D. Clent .. 209,316 11. Le Feuvre . . 227 Nicholson v. Knowles..44, 279 Nickson v. Brohan . . 75, 76 Nix V. Olive . . . . 58 Northey ?;. Field .. 225,226 0. Oakley v. Rigby . . 178 Olive V. Smith 194 Oom i;. Bruce 245 Oppenheim v. Russell 238 Osgood V. Groning 300 Owen V. Barrow . , 11> V. Gooch . . 286, 287 288 Palethorpe v. Furnish Palmer i;. Jarmain Park V. Hammond Parker v. Beasley 92 272 34 300 Table of Cases cited. Paiker v. Brancher V. Carter V. Godin V. Smith Page. .. 21o 194 .. 303 302, 313 . .. 308 Parrott v. Wilson Pasley v. Freeman Paterson t). Gandesequi 81, 82, 287, 289 V. Tash .. 36, 117,118 Patten v. Thompson 202, 204, 254 Paul w. Birch .. ■ .. 291 Pauli, exparte . . 3l7 Pearse I). Green .. ,. 41 Pearson v. Foster . . 72 • — V. Graham 305, 307,315 Peele V. Nortlicote .. 301 Pellecat v. Angell 178, 179, 186 Perkins v. Smith . . 305, 313 Perrotiin V. Cucullu ,. 60 Peto V. Hague . . .. 91 Petties V. Soanie . . 52, 78 Phillips V. Huth 56, 129, 131. 132, 134, 135, 136, 144, 145 Phi pps, expo j-(e .. 316 Pickering t). Busk.. 48, 52, 56, 58, 75, 76, 82 Pigott y. Thompson .. 241 Polhill V. Waiter . . 294, 296 Pontifex v. Bignold . . 308, 309 Pothonier V. Dawson .. 210 Pott I'. Turner .. .. 316 Poulter V. Cornwall . . 268 Powell V. Divett .. .» 3 Power V. Butcher .. 168,289 Pray d. Ed ie . . . . 63 Prince v. Clarke . . 26, 282 Procter ?;. Brain .. .. 42 Pryce V. Wilkinson .. 154, 155 Pultney t). Kyn.er .. 117,121 Purchell t;. Salter ., 101 Queiroz t). Trueman. .116, 117, 120 R. Page. Rabone v. Williams . . 100, 287 Raleigh i'. Atkinson . . S13, 314 Rackstraw v, Imbcr . . 269 Read v. Rann .. 159, 163 Redhead i'. Cator . . 292 Redshavv v. Jackson . . 304 Reeves t). Capper .. 204,214 Reg. 11. Trueman .. 196 Renteria v. Ruding . . 292 Rex ^. Biggs .. .. 11,12 Rice D.Austin .. .. 202 Richardson v. Anderson, 53, 70 r. Goss .. 228 Rinquist v. Ditchell . . 84, 91 Roberts D.Jackson 156, 158, 159 v. Ogilby .. 279 Robertson D. Kensington . . 136, 138, 140 Robinson, exparte . . 73 D. Gleadow .. 17 Robson V. Kemp . . 208, 315 Rogers v. Boehm . . . . 43 Ruoth V. Wilson .. 252 Ross V. Willis . . .. 134 D.Johnson .. 271 Rosse D. Branstead .. 214 Rothschild D. Brookman . . 61 Rowe D. Pickford . . 228, 229 Rucker v. Camraeyer . . 66 Russell D. Bangley 44, 109, 110, 112 V. Palmer . . 20 Ryall V. RoUe .. .. 273 Sadler v. Evans . . . . 297 V. Leigh . . 242, 245 Sadock D. Burton . . 32 Salte D. Field .. 189,319 Sargent D. Morris .. 242,251 ScarfeD. Morgan 191, 199, 216, 217 Scott D. Irving 110,1 12,1 13,289 XX Tulle of Cases cited. Pupe. Scotl I'. Rl'liitobli . . '.io3 t). Now iiigtoii 211,213, i.'70 t . IVllil . . . . 2-28 t). Portlier .. 171,269 V. Surinuii 21, 34, o9, 268, 273 Scrimsliire v. Alderton . . Seaber i-. Hawkes Si-ainan i'. Foimereau Si-are v. Prt-ntice . . SeliLT V. Work Sever'm v. Keppcll Shaw V. Ardcii Shee V. Clarkson Slieple^' I'. Duvis Sliielli V. Blackburn . Shipley V. Kvnier .. Shipman v. Tliornpsuii Shirley i>. Wilkiiiboii Short V. SpAckiiiaii Siffkiii t. Wray .. Sigouriiey i'. Lloyd Simon V. iMtilivos Simpson v. S«an Sims V. Bond Slater v. Le Feuvre Slubey v. Ileyward Smith V. Cologan . . .. 98 2B7 .. 94. 33, 259 .. 33 271 :87, 188 70, 3.1V 233 33, 239 56, 120 .. 317 . . 93 244 224, 227 .. 149 66 .. 263 101, 246 .. 229 235 15, 26, 28, 262, 280, 282 229, 239 . . 27, i?8 .. ..166 .. ..67 . . 270 271 V. Goss V. Lascelles V. Oxenden V. Sparrow V. While V, Young . Smout V. Ilberry 294, 295, 296, 317,319.320 Snaith V. Burridge . . 205 Snee u. Prescott . . 219, 2 i2 Snooks I'. Davidson .. 194, 200 Snowball y. Goodricke .. 89 Snowden v. Davis . . 303 Soanies I'. Spencer .. 114 Solly V. Hathbone..57, 121, 261 SoloniiMi, ei/jur(e .. 218 Sowerby v. Butcher .. 291 Spears i. Hartley ,. 210 Spencer i'. Si)enccr . . 266 Spittle V. Lavender . . Stacy V. Decy Steers v. Lasliley Stephens, exparte .. V, Badcock 1— V. EKvall . , V. Foster Stevenson v. Blakelock V. Mortimer Stewart v. Aberdein. . V. Fry Stierneld v. Holden Stirling D. Vauglian Stone V. Cartw right Sullivan v. Greaves . Sutton V- Buck V. Tatham . . 35 Swanwick v. Southern Sweet V. Pyin Syeds v. Hay Sykes v. Giles .. Page. 290 .. 100 178 .. 316 .. 261 305 .. 71 198,217 244, 246 110, 111, 112 304 .. 267 62 .. 310 278 .. 252 :, 70, 169 .. 235 213, 224 .. 271 59 Taylor z). Green .. 94 r. Higgins .. 167 V. Kymer .. 127,133, 135, 140, 146 V. Lendie . . 268 jj. Plumnier .. 273 V. Robinson . . 206 V. Tiueman . . 127, 133, 133, 140, 146 Templar I'. M'Lachlan .. 188 Tenant i'. Elliot . . 278 Thomas i'. Edwards .. 286, 287 Thompson t;. Beatsoii .. 193 D.Davenport .. 81, 287, 288 V. Farmer . . 126 V. Havelock. .66, 260 V. Mashiter Thornton v. Charles . V. Kempster V. Meux Thorold V, Smith 165 , 47 67 5 59 Table of Cases cited. XXI Page. Tickle V. Short .. 281 Tobin V. Crawford . . 293 Todd V. Reid .. 70,108,112 V. Robinson . . 80 Tomkins t'. Willshear .. 264 Topliam V. Braddick 40, 41, 265 Toplis D. Grane .. 176 Townsend v. Inglis, 62, 76, 106 Treutell i;. Barandon .. 149 Truenian j;. Loder .. 53,79 Tye V, Fyuinore . . . . 299 U. Usparicha v. Noble . . 222 Vanderveldy 1). Barry .. 166 Varden v. Parker . . 277 Vernon D. Hankey .. 171, 189, 207 Vertue v. Jewell . . 204, 224 W. VVaite v. Jones Wake V. Atty Walker v. Balfour V. Birch W^allace v. Woodgale Walsh V. Whitcomb Wannell v. Reed , . Waring v. Cox 19 178 35, 93 207 206 214 313 179 255 Warner V. M'Kay 102, 211, 246 Warr v. Praed Warwick v. Noakes V. Slade . . Watson V. King 174 44 .. 312 189,317 .. 260 74 Waugh V. Carver Wayland's case Webster v. De Tastet . . 20, 273, 274, 282 Wells u. Porter .. 178,181 V. Ross .. .-. 264 V. Walling . . . . 273 Wentworth i'. Outhwaite. . 228, 235 Westwood V. Bell 194, 200, 201 Westzinthus, in re Wetherell v. Jones Weyuouth v, Boyer Page. .. 238 182 205, 271, 272 273 .. 279 187 .. 216 42 Whitcomb v. Jacob . White V. Bartlett.. V. Chapman V. Gainer V. Lincoln Whitehead v. Anderson . . 226, 227, 233. 234, 236 D.Tuckett 48, 52, 82 V. Yaughan 194, 216 Wliittenbury v, Forrester.. 102 Wilkin u. Wilkin .. 265 Wilkinson v. Clay . . .. 263 V. Coverdale . . S3 V. Martin , . 162, 163 Wilks V. Elliss . . . . 3. 9 Williams v. Barton .. 117, 120 Everett,. 171, 269,298, 312 V. Millington Willis V. Glover . . . 241 .. 94 . 224 . 306 .. 293 175 26,282 .. 159 Wilmliurst v. Bowker Wilson D. Anderton V. Kyraer. . V. Milner V. Poulter . Winter v. IMair ., Wiseman v. Vandeputt 218, 224 Withers y. Lys .. .. 235 Witlieringlon v. Herring .. 49 Wiltshire v, Sims 31, 32, 54, 68 Woltl'i). Horncastle 64, 169, 282 Wookey v. Pole . . 150 Wren v. Kirton . . . . 44 Wright V. Campbell . . 58 V. Lawes . . . . 233 Wynne «. Thomas .. 317 Y. Yates V. Bell . . . . 298 Young V. Cole . . 52, 70, 169 Yowle V. Harbottle ,. 271 ERRATUM. Page 67, 3rd line from thalbottom, /or "assigned" read "con- signed." *U^i^/^ . A TREATISE ON THE LAWS EELATING TO FACTORS AND BROKERS. CHAPTER I. Nature of the Employment of Factors axh Brokers; Who may be, and how appointed. A Factor, or Commission IMevchant, is an agent to whom Definition goods are consigned or delivered for sale by or for a mer- ^^'^.^o^f '^'"' chant or other person residing abroad, or at a distance from the place of sale, and who, in return for his trouble, receives a compensation, commonly called factorage or commission(rt). Factors, however, are sometimes the ostensible vendors of property belonging to merchants resident in the same place; and sometimes the same factor acts both for buyer and seller, the sale being perfected, and the property transferred, by the delivery of bills for the price, and by an entry being made in the foctor's books to the debit of the one party, and the credit of the other (6). (a) Com. Dig. Merchant, B.; Earing v, Corrie, 2 B. & A3. 143. {!>) 1 Bell, Com. on Merc. Jur. 386. B Factors and Brokers. There are two kinds of factors, namely, ho7ne factors, and foreign. Witli us, a man is called a home factor, when both lie and his principal reside in this country ; whilst, on the other hand, a. foreign factor is said to be one who, whether residing in England or abroad, is commissioned by a prin- cipal belonging to a different state or country from that in which the factor himself resides (c). Tiie rate of commission to which a factor is entitled, depends on the terms he makes with his principal; or, in the absence of a.-.y agreement, on the usage of the place where he resides, or the business he transacts (d) ; and such commission may amount either to a mere salary or allow- ance for his care, or it may be what is called a commission del credere; the difference between the two cases being, that in the latter the factor agrees for an additional com- pensation, to guarantee to his principal, in case of sale, the debt due from the buyer, which in the former he does not; and the commission del credere being the premium or price given by the principal to the factor for such guarantee (e). The term Broker has been variously defined. By the 1 Jac. 1, c. 21, brokers ai'e described to be; — persons em- ployed by " merchants English and merchants strangers in contriving, making, and concluding bargains and contracts between them concerning their wares and merchandizes, (c) Ibid. ; 3 Chitly on Com. and Man. 193, 194. The defi- nitions in the text will apply to all classes of factors, without reference to the particular business in which they act, except one, viz. supercargoes. These, however, are only quasi factors (Beawes, Lex JMerc. 47) ; possessing, indeed, the character of factors, inasmuch as they are general agents to purchase goods with the proceeds of cargoes consigned to them ; but differing from it in this, that they usually go out and return home with the ships on board of which such cargoes are embarked. (Ibid, j Davidson v. Gwiinne, 12 East, 381,396.) (d) Beawes, Lex Merc. 41. (e) Morris v. Cleasby, 4 M, & Sel. 574. Nature of Employment. and monies to be taken up by exchange between such mer- chant and merchants, and tradesmen," Chief Baron Comyn again describes them as "persons employed among mer- chants to make contracts between them, and fix the ex- change for payment of wares sold or bought ( /') ; " and lastly, in the case of Wilkes v. ElUss (g), a distinction was taken between a person employed to make public bargains, and one whose business it was to make private bargains only ; and it was stated in the argument for the defendant in that case, on the authority of CoioeVs Interpreter, that the latter was the true definition of a broker (/t). Each of these definitions however must, at the present day, be regarded as somewhat too limited. By the two for- mer, for instance, the employment of brokers is confined entirely to dealings between merchant and merchant ; a description which, it will at once be seen, would exclude stockbrokers, a class most extensively engaged on behalf of persons not merchants ; and by the last, they are described to be persons engaged in making private bargains only ; a limitation which would equally exclude those of them who are in the habit of attending public sales, such as the sales of the East India Company, and who, whilst acting in that capacity, can scarcely be said to enter into none but private contracts. The following definition is perhaps less liable to objec- tion, namely, that a broker is an agent employed among merchants and others to make contracts between them in (/) Com. Dig. Merchant, C. (^) 2 H. Bl. 555. (/i) The distinction was taken in the case cited, for the purpose of showing that a broker was essentially different from an auc- tioneer, whose business it was, among other things, to make . contracts of sale publicly. No opinion, however, was given wi the question ; but the learned reporter states, that " the Court seemed disposed to be of opinion in favour of the defendant ;" and as he makes no mention of any objection having been taken to the distinction, it becomes, on that account, at least worthy of notice, especially as upon it the question of a broker's liability under certain statutes to be hereafter mentioned, might in some measure depend. b2 .\ Factors and Drohcrs. matters of trade, coninicrcc, or navigation, for a commission commonly called brokerage (/) ; and his character differs from that of a factor in the following particulars. A factor, as we shall hereafter sec, may buy and sell either in his own name or in that of his principal. A broker must in general contract in the name of the latter. A factor has the possession, management, and control of all goods which he buys or sells for his principal; a broker, on the contrary, is not intrusted with the possession of what he is employed to sell, nor is he empowered to obtain possession of what he is employed to pu'-chase ; but he acts merely as a middle- man, or uegociator between the parties (j). Indeed, a broker is very properly described by Domut as being a person empowered, not to treat, but to explain the inten- tions of both parties ; and so to negociate as to put those who employ him in a condition to treat together per- sonally (A). In those cases therefore in which a broker is intrusted with policies of insurance, or with negociable secu- rities indorsed in blank and for sale, he becomes rather a factor tlian a broker; and where the two characters are thus combined, a distinction must be made between the acts of the agent in the one and in tlie other, as the same rules would not always apply to each. Mode in Contracts of sale and purchase are usually effected by which bro- brokers bv the delivery to their principals of what arc called Ktm iisii:iMy ' •' ' '^ tUect con- bouglit-aud-sold notes. These notes should contain the Reqiiisiiesof names of botl) the contracting parties (/), the quantit)' of ^Idno^e'sf' *''^ ''^^''^'-■^^' ^o"gl't or sold, and the price {u>). They should also correspond with each other («) ;. and if any material (/■) See Story on Agency, $ 28, and the authorities cited above. (j) Baring v. Cm lie, 2 B. ^ Al. 143 ; 2 Park ou Mar. Insur. 801, 8tli edit. (/c) Domat, B. 1. Tit. 17, s. 1. (/) Chiiinjnnii v. Ptiimmer, 1 bos. & Pul. N. 11. 252; Graham V. Mussou, 7 Scott, 769; Graham v. FrelweU., 4 Scoit, .\. 11.25. (zn) Elmore v. Kingicote, 5 J5. i.*^ C. 583. (7i) Cummiiig V. Roebuvk, IJoIt, N. P. C. 172; Grant v. Fletcher, 5 B. v\ C, 436. Nadtre of Employment. 5 alteration be made therein without the consent of the party sought to be charged, the contract will, as against him, be avoided (o). A mistake however in both notes as to the name of the seller will not vitiate the contract, provided neither party has been prejudiced thereby (;>); and parol evidence is admissible to explain variances which occur in these instruments ; so that if, wlren so explained, both are found to mean substantially the same thing, the contract will not be avoided (9). These notes, moreover, it is said, Effect of, in constitute the original contract, and are the proper evi- *^' *'"^^' dence thereof (r) ; and they are admissible for this purpose, although the entry in the broker's book has never been signed by him (s). It has however been recently questioned whether they are the only evidence of the contract ; and indeed one learned judge has expressed himself to be very strongly of opinion, that if the bought-and-sold notes dis- agree, and there be a memorandum in the broker's book made according to the intention of the parties, that memo- randum, signed by the broker, would be good evidence to satisfy the statute of frauds (.^). The amount of commission to which a broker is entitled Broker's , . . , 111 n T commission, has in some instances been regulated by act ot parliament. Thus by the 10 Anne, c. 19, s. 121, brokers are subjected to a penalty of 20/. for taking more than 2s. 9d. per cent, for buying or selling of anj' tallies, orders, exchequer bills, ex- chequer tickets, bank bills, or any share or interest in any joint stock created by act of parliament, or by letters-patent under the great seal, or bonds of any company thereby erected. So by the 12 Anne, stat. 2, c. 16, the commission (0) Powell V. Divett, 15 East, 29. (p) MitcheU V. Lapage, Molt. N. P. C. 253. (q ) Bold V. Raiiiier, 1 M. & W. .343. ()•) Thornton v. Meux, M. & jM. 43 ; Huwes v. Forster, 1 JM. & Rob. 368. (s) Goom V. Afflalo, 6 B. k C. 1 I 7. (t) Per Parke B., Thortitun v. Charles, 9 M. & W. 802, 808. G Factors and Brokers. of brokers "for procuring the loan or forbearing of anj' sum or sums of money" is limited to "five shillings for the loan or forbearing of 100/. for a year, and so rateably;" and to " twelve pence over and above the stamp duties for making or renewing of the bond or bill for loan, or forbearing thereof;" and in like manner the 53 Geo. 3, r. 141, 5. 9, allows only 10s. per cent, to a broker for procuring a loan upon an aimuity. But these statutes do not restrain brokers from taking larger commission in other cases ; and there- fore where they do not apply, a broker may regulate the amount of his commission by agreement with his principal; or, in the absence of any agreement, it must depend on the custom of trade (m). IJrokers, like factors, may be retained under a commission del credere, and the effect of such commission is the same in both cases (x). Who may be It is a general principle of the common law, that all per- brokcr. °' sons are capable of acting as agents who arc of sound mind. Central rule. jj,j(] ^yjjg have no interest or employment adverse to that of their principals (?/). The reason of this is said to be, that the office of agent is merely ministerial; and that the exe- cution of a naked authority is not necessarily attended witli any advantage to those whom the law regards as not being sui juris, (such as minors, aliens, persons outlawed, &c.) nor to any other person who, by law, might claim an interest imder them (z). This maxim however will not apply, ex- cept in a limited sense, to the case of factors or brokers. Their authority, — although it may be strictly speaking a mere naked authority (a), — is nevertheless one from the execution of which many rights and liabilities arise, which cannot be enforced either by or against any person who (h) liroiuii V. Nairne, 9 C. 6i P. 204. (i) 1 Keif, Com. on Merc. Jur. 289 : 2 l^'ark on Insur. 801. (y) Co. Lilt. 52. A. ; Story, Com. on Agency, § 9. (c) liac. Ab. Authu)ii}^,h. ; 3 Cfiitty on Com. & Man. 194. (a) See Com. Dig. Atiomeii, C. 9, 10. Who way be. 7 labours under a legal incapacity^ The principal, it is true, would be bound by, and could take advantage of the con- tract of such a person, — so far that is, as third parties were concerned. But here the capacity of the agent would cease; and hence, although for the mere purpose of making con- tracts for his employer, a person might be competent to act as a factor or broker notwithstanding he were affected by a legal disability ; — still it follows, that if he were so affected, he could not possess all the incidents belonging to, and there- fore could not properly assume either of those characters (6). Brokers who act as such Avithin tlie city of London or the RuIc in Lon- liberties thereof, require a peculiar qualification, namely, — strtuies 6 that thev should be previously licensed by the Court of ^»«- c 16, •^ . s. 4 ; and 56 Mayor and Aldermen. This regulation is founded on the Geo, 3, c 60. statute 6 Aii7ie, c. 16, s. 4, whereby it is enacted : " That all brokers who shall act as brokers within the city of Lon- don and liberties thereof shall, from time to time be admitted so to do by the Court of Mayor and Aldermen of the said city for the time being, imder such restrictions and limita- tions for their honest and good behaviour as that Court shall think fit and reasonable ;" and the fifth section of the same statute provides, " that if any person shall take upon him to act as a broker, or employ any other under him to act as such within the said city and liberties not being admitted as aforesaid, every such person so offending shall forfeit and pa)' to the use of the said mayor and commonalty and citi- zens of the said city for every such offence the sum of 251., to be recovered by action of debt in the name of the cham- (6) The point mentioned in the text is one not very likely to occur in practice ; but as it appears to be by no means an unim- portant limitation of the general rule of law with reference to the capacity of agents, it is hoped that it will, notwithstanding, be deemed worthy of notice. Since the paragraph in the text was written, the author has discovered that Dr. Story takes the same distinction ; Com. on the Law of Bail. § 162 ; and that it like- wise forms the subject of an article in the civil code of France. Cod. Civil, art. 1990. fon niletl tbcrcon 8 Factors and Brokers. bcrlain of the said city." By the 57 Geo. 3, c. GO, this penalty is increased to 100/. Ill jnir-siiance of tlie former of these statutes, the Court of ReguUiioiis Mayor and .\ldermen of the city of London made, in the year 1708, and afterwards in the year 1818, certain rules and regulations for the admission and government of brokers, which are still in force. According to these regulations, it is requisite for every person before being admitted to act as a broker in London, to enter into a bond to the mayor, com- monaltv and citizens, in a penalty of 1000/., with two sure- ties for 250/. each ; and also to take an oatli, " truly and faithfully to execute and perform the office and employment of a broker," — the form of which oath is prescribed by those regidations. The condition of the above bond provides for the broker's good conduct in the execution of his office, and, to a certain extent, defines his powers and duties in the making of contracts in the way of his calling. It likewise repeats the proviso contained in the fifth section of the stat. 6 Anne, c. 1 6, against a broker employing " any person imder him to act as a broker within the said city and liber- ties thereof not being duly admitted as aforesaid ;" but this proviso, it appears, applies only to cases in which an admit- ted broker can be said strictly, to have employed an unqua- lified person " to act tinde?- him;" and therefore, where two persons had been engaged in making certain contracts for the sale of goods, only one of whom was an admitted broker, but it was shown that in making the contracts in question both had acted with concurrent and equal authority, the court were of opinion that sucli a case as this was not pro- vided ajj'ainst by the bond (r). (c) Mayor of Lnndnn v. Brandon, Holt's N. P. C. 438. The clrcumstnnces of ilie case were as follow. An action was brought against the defendant, a sworn broker of tlie city of London, upon the bond given by him on being admitted to that privilege. Several breaches were assigned, one of which was, that the de- fendant " had allowed his hrother to act under him as a broker, and to make contracts in his own name." .Yt the trial before Lord Klleiihoroiigh three witnesses were called, who produced several contracts for tobacco, made out and signed by the de- Who may be. Various questions have arisen on the construction of the Consiruction of the al statutes. above statutes, both as to the class of persons vvliom they °^ '""^ above were intended to affect, and as to the mode in which such persons are affected b)' them. On the former of these ques- tions it has been hekl, that a stock-broker is a broker within the meaning of the statute of Anne, andhable to tlie penalty iinposed by the 57 Geo. 3, c. 60, for acting as a broker in London without having been duly admitted {d). But it would appear that an auctioneer is not a broker, so as to render him liable to the penalties imposed by the above statutes (e) ; that a ship-broker is not so liable (/*) ; and in the case of Janscn v. Green {g), it was intimated by Lord Mannjletd. that the exemption might also be taken to ex- tend to the case of a merchant who acts by commission from a correspondent abroad. Indeed some of the expres- sions attributed to the judges in the report of that case, are calculated to create a doubt, as to v/hether they thought that the statute oi Anne was intended to apply to any other than brokers who negociate contracts respecting *' public or joint stocks or other public securities ;" but be this as it may, it is clear, that the courts will in no case subject a party to the penalties imposed by the above statutes, unless they are satisfied that he comes within their letter, as well as their spirit (/;). fendant and by his brother, J. B.: but none of the witnesses could swear that they had negociated with J. B. only ; they agreed that the business was transacted by both of them indiif'erently and together. And upon tliis evidence his lordship " thought, that the conduct of the defeadanl and his brother, could not be brought within the precise terms of the bond. It could not be said that .T. B. acted under the defendant, for they seemed to have a concurrent and equal authorily." The plaintiff was accord- ingly nonsuited ; and the court, on motion made to set aside the nonsuit, refused a rule, and unanimously approved of the opinioa expressed by his lordship at the trial. (d) Clarke V. Powell, 4 B. & Ad. 846. (e) Wilkes V. Ellhs, 2 H. Bl. 555. If) Gibbons V. Rule, 4 Bing. 301. (g) 4 Burr. 2103. (k) Per Best, C.J., Gibbons v. Rule, 4 Bing. 305. 10 Factors and Brokers. 'J'hc second class of questions which we mentioned as having arisen under these statutes, will be more properly considered, when we come to treat of the rights of the par- tics to whom they apply. Costom-bouie brokers- A qualification very similar to that prescribed by the statute of Anne, is likewise required of all persons who act as custom-house brokers in the port of London. This is regidatcd by the statute 3 4- 4 W. 4, c. .52, s. 144, whereby it is enacted : " That it shall not be lawful for any person to act as an agent for transacting business at the custom- house in the port of London which shall relate to the entry or clearance of any ship, or of any goods, or of any bag- gage, unless authorized so to do by license of the commis- sioners of his majesty's customs." Such commissioners are likewise empowered, by the same section, to require a bond, with one sufficient surety in the sum of 1000/., to be given by every person to whom such license shall be granted, for the faithful conduct of himself and his clerks whilst acting under the said license ; " provided always, that such bond shall not be required of any person who shall be one of the sworn brokers of the city of London." How a factor or broker may be ap- pointed in ordinary case:. Let us now consider how, and by whom, a factor or broker may be appointed. A factor or broker may be appointed, either, first, by a formal instrument under seal, as by power of attorney ; or, seamd/y, by letter of instructions ; or, tliirdh/, he may be appointed by mere words ; or, lastly, when there has been no actual appointment, third persons may presume its existence, provided the principal has on former occasions employed, or if he has previously adopted the acts and deal- ings of the agent, in matters of a like kind. In general, liowever, factors are authorized to act by letter (i); and although, as is stated by a learned Avriter, a more formal (j) Com. Dig. Merchant, B. How appointed. 11 authority is generally given to authorize an agent to sub- scribe a policy, than for the purpose of authorizing any other act having reference thereto (/c), still it is clear that, except in the case of a policy under seal, such formal authority is not necessary ; and that, whatever the custom may be, an insurance broker, like any other agent of that class, may, in general, be appointed by parol. Such, it is believed, is the general rule of law Avith refe- rence to the appointment of mercantile agents, — a rule aris- ing out of the exigencies of commercial transactions, and adopted by the wisdom of the common law, in order to facilitate the dealings of those engaged in them. Still, how- ever, there is one case in Avhich its applicability appears somewhat doubtful, — that, namely, in which the party ap- pointing the agent, happens to be a corporation ; and it will, therefore, be proper for us to examine how far, according to the present state of the law, the rule above stated is really applicable to this particular case. The old rule of law was, that a corporation aggregate How ap- could do nothing, except by deed under the common seal (Z); corporations and although the strictness of this rule was relaxed in so far as regarded the doing of matters of small importance, such as the retainer of servants and the like, still, in every thing relating to contracts, the law has, until very recent times, remained unchanged. " A corporation aggregate," it was said, " cannot without deed make or enter into any contract; and by like reason they cannot, without deed, empower another to do that act, which they themselves cannot do but under these circumstances (w)-" In modern times, however, this rule has been greatly mo- dified. " Corporations," says Rolfe, B., delivering judg- ment in the case of the Mayor of Ludloiv v. Charlton {ii) * ' have of late been established, sometimes by Royal Charter, (k) 2 Phillips on Insur. 555, 2nd edit. (i) Com. Dig. Franchises, F. 13. (m) Hex V. Biggs, 3 P. Will. 425. (n) 6 M. & W. 814. Factors and Brokers. more freciucntly by act of parliament, for the pm-pose of carrying on trading speculations; and when the nature of their constitution has been such as to render the drawing of bills, or the constant making irf' any particular sort of con- tracts ncccssarii for the purposes of the corporation, there the courts have held, that tliey would imply in those who are, according to the provisions of the charter or act of parlia- ment, carrying on the corporation concerns, an authority to do those acts, without which the corporation could not sub- sist." In pursuance of this principle, it has been held, that a company incorporated for the pui-pose of supplying gas light and coke, might maintain an action for the price of gas supplied, although there had been no contract under seal (o) ; or for breach of a contract by the defendant to ac- cept gas from them at a certain price yearly, although the contract by the company to supply such gas was not under seal {p) ; and in the same case it was held, that, wherever a corporation had power, by law, to enter into a contract without using their common seal, they might sue or be sued thereon, whether such contract were executed or executory, express or implied. It seems then to be, at present, a recognized principle in our law, that a corporation established for the purpose of carrying on any particular trade, is competent to enter into contracts not under seal, with reference to all matters neces- sary for the purposes of the corporation, — such as the sale of commodities, to supply which the corporation was ex- pressly created (y), or the purchase of such articles as are necessary in order to enable the corporation to carry on its trade (r). And, applying this principle to the rule of law as stated in the case of Rex v. Briggs (s), it seems reasonable to infer, at least in the absence of any express decision to the (o) Cilu of London Gas Light and Coke Company v. KichoUs, 2 C. & P". 365. (p) Church v. The Imperial Gas Company, 6 A. & El. 846. (o) 2 C. & P. ^i6rj ; 6 A. & E. 846. (r) Beverlu v. The Lincoln Gas Light and Coke Company, 6 A. & EI. 829. " (s) Supra. How aj)j}ointed. 13 contrarj', that, as a trading corporation may, without deed, enter into contracts both of sale and purchase, when such contracts are in furtherance of the objects for which the cor- poration was created, so they may, without deed, empower another to do those acts, and may therefore, without deed, appoint a factor or broker for that purpose. The modes of appointment mentioned above, apply, of in other course, to such cases only as are within the scope of the '^'*''*** usual employment of a factor or broker, that is, to the mak- ing of contracts for the sale or purchase of goods or mer- chandize, or to the doing of such other acts as naturally arise out of the ordinary transactions of trade, commerce, or navigation. But wherever the authority conferred on the factor or broker extends beyond these limits, the mode of appointment must, as in the case of any other agent, vary accordingly. Thus, if he be authorized to execute a deed in the name of his principal, such authority must be confer- red by deed (<), unless the insti-ument which he is authorized to execute be unnecessarily under seal, (as in the case of the assignment of a ship under the Registry Act, 3 & 4 W. 4, c. 55), in which case a parol authority will besuflicient (a). So, if a factor or broker be authorized to execute a release of a contract originally entered into by deed, his authority so to do must likewise be by deed (.r). Again, if a person usu- ally employed as a factor, were to be retained for any of the purposes described in the Jijst, second, or third sections of the Statute of Frauds, as to make or create leases, estates, or interests of freehold, or terms for years, or any uncertain interest, other than leases under three years, in messuages, manors, lands, tenements, or hereditaments, or for surren- dering the same (except copyhold interests), his authority would require to be in writing {y). And it is said that, in the (() Co. Lilt. 48 b. (u) Hunter \. Parker, 1 M. & W. 322. (i) Bac. Abridg. Release, A. 1. (y) 29 Car. 2, c. 3. ss. 1,2,3. 1 4 Factors and Brokers. management of tlio aftairs of a foreign merchant, — especially when there is occasion to discharge debts and receive money, or to carry on judicial proceedings, — a power of attorney is the proper evidence of authority, as it alone empowers the factor to represent his principal, and to act as the latter miglit have done, if present (z). Lastly : It is enacted by statute 3 & 4 Will. 4. c. 52, s. 130, that whenever any person shall make application to any ollicer of the customs to transact any business on behalf of any other persop, it shall be lawful for such officer to re- quire the person so applying to produce a written authority from the person on whose behalf such application shall be made, and in default of the production of such authority, to refuse to ti-ansact such business; whence it appears, that, for the pui-pose of entering or clearing goods under the above statute, it is necessary that the factor or broker who is charged with this duty should be furnished with a written authority. By whom a With reference to the question, by whom may a factor broker°may ^^ broker be appointed, little difficulty can arise, except in be appointed, cases where more than one person is concerned in such appointment. Where the person appointing acts merely for himself, there the general rule applies, namely ; — that whatever a man has power to do in his own right, he may appoint an agent to do for him (a). But when the person appointing acts for others, as well as for himself, there a question may arise as to the fact of his having had autho- rity to make such appointment ; and if in making the same he have gone beyond his authority, such appointment will, except as to himself, be invalid. (:) 1 Bell, Com. on Merc. Jur. 386. (a) See Smith's Merc. Law, 77. The learned author of that work very properly limits this maxim to acts which a man has power to do in his own right ; for, as we shall see more fully hereafter, where a man is merely an agent, he cannot in general delegate his authonty. By whom apjjointed. 15 The point therefore to be ascertahied in all such cases is this; — had the person appointing the factor or broker, authority so to do ? If he had, then the appointment will bind all those on whose behalf it was raade ; otherwise it inll not. And here it may be as well to observe, that we do not now refer to cases in which an express authority has been given by several persons to one of their immber, to nominate an agent to act on behalf of all ;■ — as in such a case no question could arise with reference to the validity of the appointment : but we speak, at present, of cases in which this authority is merely implied ; and we shall there- fore confine our attention to the inquiry, — under what cir- cumstances does this implied authority exist. It may then be laid down as an undoubted principle in By one parl- our law, that one partner may appoint a factor or broker to others, act for the partnership in any matter connected with the ordinary business of the concern ; and that the contract of the agent so appointed will bind the firm. Tlie reason of this is ; — that the act of one partner binds all his copartners, on account of the communion of profit and loss (b). In conformity with this principle it has been decided, that one partner may appoint a broker, for the purpose of getting an insurance effected on the partnership property (c); and so it is said, that one partner may consign goods to a factor for sale, and that his letter of instructions will bind the firm, even although it may have been written without the knowledge of his copartners (f/). The same rule applies to the case of a secret or dormant Secret or dor- partnership (e). ™-.' P-'" But if the persons concerned in any particular adventure But not where the (6) Per Heath, J. Coope v. Eyre, 1 H. Bl. 37, 45. This maxim however should perhaps be adopted with the following qualification, namely ; that the act done be within the scope of the partnership concern. See CoUyer on Part, 129. (c) Hooper V. Lusby, 4 Camp. 66. (d) Story Com. on Agency, § 39. (e) Coope V. Eyre, 1 H. Bl. 45, 49. 10 Factors and B rulers. parlies, hi- bo iiot strictly partners, tlien no one of them will be taken cern«i h!"ihe '« •'a^'c authority to appoint a factor or broker, so as to Mnii- «dvcii- jjjj^j (],g others. This of course follows from the fact, that liirr, »re iiol pannen. as such a person cannot by his personal contract without express authority, bind any one but himself; so he cannot delegate to an agent a degree of authority which he him- self does not possess. And it seems, that even if a number of persons agree to purchase a certain commodity of which each one is to have a particular share, and, in pursuance of such agreement, th-^y entrust a broker to make the purchase in the name of one of the parties only, which he does; the vendors will not be entitled, in the event of the bankruptcy of that party, to charge the others, unless it be made to appear that they acted in the transaction as partners. This will appear from the following case. The defendants E., H., and P., agreed that they should purchase jointly as much oil as they could procure, in the prospect that the price of that commodity would rise ; that E. should be the ostensible buyer, and that the others should share in his purchase at the same price which he might give ; E. to have one half, and H.and P. one fourth each. Accordingly one G. a broker was ordered to make the purchase, which he did in the name of E. ; E. afterwards failed, and it was held that the others were not liable for the whole ; because, though the parties were jointly concerned in the purchase, they were not to be jointly concerned in the future sale ; — it having been in fact a mere undertaking with the broker by each for a particular quantity, without any agreement to share with one anot]\er in the profit and loss, — in con- sequence of which, the parties were not to be considered as partners {/). Nor where In like manner it has been held, that one part owner of Ihey are i • i merely part a slup has no authority, as such, to insure the interests of the other part owners ; and consequently he cannot give such ( f) Per Lord Loughborough, and Gould, J. Coojpe v. Eyre, 1 H. Dl. 45. 49. See also, Hoarc v. Dawes, \ Doug. 371. By "whom appoint ed. 17 an authority to a broker, so as to bind them (g). But still an authority of this kind may be implied from circum- stances ; and therefore where one of several part owners of a ship, without any express authority from the others, effected a joint insurance on the entire ship, charging the premium and commission in the ship's accounts, which were open to the inspection of, and were actually inspected by the other owners, and not objected to: — it was held, that the jury were warranted in finding, that the managing owner had a joint authority to effect an insurance for the whole ; and that, consequently, all the owners were liable to the broker, notwithstanding the credit was given in the first instance to the managing owner alone {h). It has likewise been held in America, that one part Secus where owner of a cargo has no authority, as sucli, to insure the „ers as^veH ' interests of the other part owners, and that therefore he '"^^ P"''' "^°" •^ ers. liELS no power to appoint a broker for that purpose (i). But if the parties are partners, as well as part owners, — as for example where a ship is owned by a firm as part of the joint stock, — in such a case one of the partners may in- struct a broker to insure the interests of all (A). And it is said by some of the older writers, that if Effect of a several merchants make consignments to the same factor, J"'"' /"'e by ° - I he factor ot and he make a joint sale to one person of their several con- several con- signments, and the vendor fail ; each one of the principals must bear an aliquot share of the loss, although they are mere strangers to one another (/). (g) French v. Backhouse, 5 Burr. 2727 ; Bell v. Humphries, 2 Stark. 345. (h) Rohiuson v. Gleadnw. 2 Scott, 250. (i) See Foster v. United Stutes Insurance Companii, cited 2 Phillips on Insurance, 555. (k) Hooper v. Lnshy, 4 Camp. 66. (/) Beawes, Lex Merc. 41 ; Molloy, 463 ; Vin. Ab. Factor, D.pl. 1. CHAPTER II. On the Duties and Powers of Factors and Brokers. Section I. — Duties. General di- Having thus seen what is the nature of the employment in viiion of the ^yijich factors and brokers are most usually engaged, what »u*'J«e'' . . 111. u persons may act in these capacities, and how they may be appointed, — it follows next in order to inquire, what are the duties incumbent on these functionaries whilst acting in pursuance of such an appointment. This subject will per- haps be best considered with reference to the following cases: first, where the factor or broker has received express in- structions from his principal ; secondly, when merely general instructions have been given; and thirdly, such duties as are generally incidental to these employments, without re- ference to the question whether particular instructions have been given or not. In this enumeration it will not be at- tempted to note particularly the duties which factors and brokers are required to perform in each individual case. This indeed would be an almost impossible task, inasmuch as their duties are, by the usages of trade and other causes, varied more or less in nearly every instance. The following summary, therefore, will be confined to such rules only as are believed to be generally applicable, and particular cases will be introduced merely as illustrations of these general rules. Where the When a factor or broker has received express instructions, g'iten*^are°ex- ^'^ ™"^'' Pursue thosc instructions strictly (a). If he do not (a) Com. Dig. Merchant, B.; Malyne, Lex Merc. 154. Duties of Factors and Brokers. 19 he will render himself responsible to his principal for what- press, (hey ever loss or damage is caused by his deviation from them ; un- sued strictly, less, as we shall hereafter see, the meaning of the instructions be doubtful, and the agent has acted in good faith, although under a mistaken notion of their purport. But if this be not the case, and he deviate from his instructions, hewillbe liable for all loss resulting therefrom, whether such deviation originated in an intention to benefit his principal or to de- fraud him {b). Indeed the only question in such cases seems to be, — has the agent pursued the terms of his com- mission ? and if he have not, he will, except in a few in- stances to be hereafter mentioned, be held liable. Thus, where the plaintiff, a milhner, intrusted the defendant with a quantity of goods, to be sold by him on her account in one of the West India islands, and the latter, not being able to sell the goods in the island to which they were destined, sent them to the Caraccas in search of a market, where they were destroyed by an earthquake ; — it was held, in an ac- tion brought against the defendant for not accounting, that he was liable for the loss ; and the reason given by the court was, " that there being a special confidence reposed in the defendant with respect to the sale of the goods, he had no right to hand them over to another person, and to give them a new destination" (c). From this then it appears, that what- ever may have been the agent's motive in engaging in the unauthorized dealing or speculation, he will be hable to his principal for any loss which may happen to him therefrom ; and it has in like manner been decided that, even should the principal suffer no actual loss by the misconduct of his factor or broker, yet if the latter have, by deviating from his instructions, or by acting in a manner inconsistent with the trust reposed in him, made a profit to himself, he will be obliged to account to his principal for such pi'ofit, and will (ft) Com. Dig. Mercha7it, B.; Catlin v. Bell, 4 Camp. 183. (c) Catlin V. Bell, 4 Camp. 183. 20 Factors and Brokers. not be allowed to retain any advantage arising from it (d); and in both ciises he will forfeit his commission (e). Breaclioi iiii» In order, however, to entitle the principal to a remedy rt"i'i^i.ie,well v. Dtii'iUey, Stra. 680. (6) Paley on Agency, by Lloyd, 17, note 5. (c) Jones on Bail. 102. Their Duties. 39 therefore, the goods are forfeited by reason of his making a false entrj' at the custom house, or by bis neglecting to pay the customs chargeable thereon, the factor will be liable for the consequences {d). Such false entry, however, must be made wilfully, in order to render the factor liable; for if, in making it, he follow the invoice or letter of advice, he shall not be charged, inasmuch as the error did not arise from his default (e). In case of loss arising from the factor's mis- conduct in this respect, he is said to be liable to the extent of the cost price of goods to be exported, or the sale price of goods to be imported, calculated with reference to the country where the seizure is made (/'). (rf) Com. Dig. Merchant, B. (e) Beawes, Lex Merc. 42 ; Molloy, 329. (/) Malyne ; Lex Merc. 83 ; Vin. Ab. Factor, B. 2. pi. 4. The whole subject of the entry of goods and payment of duties, so far as regards the revenue laws of this country, is regulated by statute 3 & 4 W. 4. c. 52. The following is a short abstract of the enactments of that statute, with reference to the duties and powers of agents in this behalf. By sec. 17, Entry inwards of goods imported into the United Kingdom is to be made within fourteen days after the ship's arrival ; and if the duties are not paid within three months after the expiration of the said fourteen days, they may be sold, and the proceeds applied in payment of the freight and duties. Sections 18, 20, and 21, slate the particulars which the bill-of- entry inwards should contain. By sections 19, and 21, Agents making entry of goods, or making a declaration of iheir value without authority from the owner or consignee of such goods, are made liable to a a penalty of £100. By sec. 24, Any importer or agent who cannot for wantof in- formation make a perfect entry of goods, is empowered to make the same by bill-of-sight; but perfect entry must be made within three days. By sec. 34 it is enacted, That, if the person in whose name goods re-imported into this country were entered for exportation, was not the proprietor thereof, but his agent, such agent shall declare on oath, in the bill-of-store, the name of his employer. By sees. 61, and 70, Entry outwards and clearance are made necessary before any goods shall be shipped, or waterborne to be shipped to parts beyond seas. Sections 65, and 66 contain the particulars of the bill-of-entry outwards. count. 10 Factors and Brokers. Duly of ^ ■ and brokers are clothed in order to the due execution of their several functions. These appear to divide themselves most naturally into two classes ;y(Vj>^, the powers which they pos- sess, as between themselves and their principals; andsccondlt/, the powers which they possess, as between their principals and third parties ; under which latter division we shall treat of the factor's power to pledge, and of the " Factor's Acts." How the It may be stated as a general rule on this subject, that in tors and bro- questions arising under the latter of the above classes, the ascerutiierl ^'^ extent of power possessed by factors and brokers must be measured by the usual extent of their employment, and not by the private communications which may have passed be- tween them and their principals, unless, that is, it be sought to affect third parties with a knowledge of those communi- cations (a); whereas, in questions arising under the former, the powers which they possess must, for the most part, de- pend on the terms of the authority by which those powers were conferred. If therefore, the authority given be express and special, the instrument by which it is given must be consulted, as the index to the agent's power (6); but where this is not the case, it is for the law to determine what powers (a) Whitehead v. Tuchet, 15 East, 400; Pickering v. Busk, lb. 38, 43. (6) 1 Bell's Com. on Merc. Jur. 387. Powers of Factors and Brokers. 49 are necessary and proper to be engrafted on the general authority (c). From this, then, it is evident tliat, as be- tween principal and agent, questions depending on the con- struction of the authority given to the latter must frequently arise ; and that, even as between the principal and third par- ties, similar questions must require to be occasionally con- sidered; and such being the case, it may not be improper, before entering on the main subject of this section, to state the principles on which our courts proceed in the construc- tion of these authorities, whether general or special. Where the authority is given by a formal instrument, Antiiority such as a power of attorney, it appears that it will be con- m^i insim- strued strictly. Such instruments, it has been said, do not give "on"',j.,'",|''*^ general powers, except where they are necessary to carry strictly, the purposes of the special powers into effect {d) ; and so it is said, that even where the largest powers are given by them, they must be construed with reference to the subject mat- ter (fi). On the other hand, however, it has been stated, that, although authorities of this kind are to be pursued strictly, they will, notwithstanding, even without the assist- ance of general words, be held to include all medium Mefiinm powers, that is, all the means necessary to be used in order to attain the accomplishment of the object of the principal power. "Our books," says Lord Loughborough, "say that these authorities are to be pursued strictly ; but our books also say that they are to be so construed as to include all the necessary means of executing them with effect" ( f). Where the authoritj' is conferred by informal instruments, Seats where such as letters of advice, instructions, or loosely drawn js conierrert orders, — especially where these are general in their terms — nfarinsmi-" . ment. (c) Bell, supra, and see Hov)ar4^ v. Buillie, post. (d) PerHohoyd. J., Attwoodv. Munuings, 7 B. & C. 278, 284. (e) Hay V. Giildsmidt, ciled I Tauni. 349; per Best, C. J., Wiihinglon v. Herring, 5 Bing. 442, 456. (/) Howard V. Bailtie, 2 H. Bl. 618, 620. D .'JO Factors and Brokers. they will be more liberally construed, according to the ne- cessities of the occasion, and the material, or ordinary, or reasonable course of the transaction (g) ; and it appears that, even where such an authority is given to an agent for his own benefit, it will not be construed strictly, provided its being liberally construed will not alter tlie situation of the principal (//). But if this be the case, it will be otherwise ; and therefore, where the defendant, by letter, authorized his agents B. and S., to whom he was indebted, to eflect a policy of insurance on his life in their own names, and they, having subsequently taken a third party into partnership, caused the policy to be effected in the names of the three ; it was held that this was not a proper execution of the authority, and that the pi-emiums paid on this policy could not be recovered from the principal as money paid to his use (i). Authority ii. Generally indeed, where an authority is given to two or two or nion-, , , . . i • i how con- more agents to do an act, such authonty is construed strictly ; and unless it be executed by all to whom it is given, such execution will be invalid (k). But still it would seem, that in some cases connected with mercantile transactions this rule will be relaxed. For example, where there is a joint consignment of goods to two factors for sale, each of them will, it is said, be considered to possess the whole power over such goods for the pui-poses of the consignment, whether they are partners or not — the mere fact of the joint con- signment being taken to import a consent on the part of the consignor, that the consignees should trust one another in the business (/) ; and, in like manner, it was ruled by Lord Ellenborough, that where directions had been given to G. W. & Co., of London, to effect a policy of insurance, but it (g) 1 Bell, Com. on Merc. Jur. 386. (h) Per Maule, J., Barron v. Fitzgerald, 8 Scott, 460, 468. (i) Barron v. Fitzgerald, supra. (k) Co. Litt. 52 b. See also lb. note 2. (l) Godfrey v. Saunders, 3 VVils. 73. strnetl. Their Powers. 51 appeared that the policy had been effected by G. W. & Co., of Liverpool, a firm consisting, with the exception of one member, of tlie same persons as the London house, the principal was bound by the insurance so effected (??/). The construction of informal instruments, such as letters Construction of advice, is, like that of other mercantile documents, for the instinraentsis most part left to the jury, — it beingconsidered that, on such f"''""'J">'.v- questions they are more likely to arrive at a sound conclu- sion than the court, because their knowledge of them arises from daily experience (n). If the instrument by which the authority is conferred be Rules often not expressed in plain and unequivocal terms, but the Ian- ^iiere the guage in which it is couched is fairly susceptible of different I'^^^^^^l^f]^ interpretations, it appears that the agent will, if he have ambifjuonMy. acted bondjide, and within the supposed limits of his autho- rity, be entitled to the benefit of any doubt which may arise as to its meaning. This rule holds good whether such in- strument be formal or informal, and the reason of it seems to be that, in the first place, the agent is not bound at all events to discover his principal's meaning ; and secondly because, the instructions having been ambiguous, the fault, in the first instance, lay with the latter (o). It has, however, been well observed, that where, upon the whole, the true meaning of the language used is plain, the agent will not be excused merely because another meaning might by possibility be given to it (p). This indeed is . evidently within the principle of the above rule ; because, as we have already seen, the agent is bound to apply to the interpretation of his authority a proper degree of diligence (m) Dickson v. Lodge, 1 Stark. 226. (n) Per Gibbs, C. J., Lucas v. Groning, 7 Taunt. 164, 168; and see Chapman v. Walton, 10 Bing. 57. (o) See Moore V. Muurgue, Cowp. 480; Story on Agency, ^ 7-1. (p) Ibid. d2 ',2 Factors and Brokers. and skill (y); aiul accordingly, if it were made to appear by the testimony of men in the same profession, that to a per- son exercising such diligence and skill the meaning of the authority must on the whole have been free from ambiguity, it is evident that no ground could exist whereon to excuse the agent for his want of correctness in interpreting it. The same rule is followed in equity; and accordingly, where a commission was given to a mercantile house to sell and transfer stock " when the funds should be at 85 per cent, or above that price," such commission was construed to be a particular commission, under which the agent was bound to sell when the funds reached 85 ; and not a general commission, under which he might defer selling until the funds got above that price (r). ;cnerai Another principle invariably adopted in construing the coiiitri'ied's'ir authorities of factors and brokers is ; — that where the autho- ^* ^" j'"^'"''^ rity under which they act is general, it will be held to in- poHers. elude all the powers with which the law has clothed persons filling either of those capacities, whether such powers are incident to them because of their general character as factors or brokers (s), or because of the usage of any particular trade (f), or are to be inferred from the previous mode of dealing between the same parties (u), or from the fact that the common business of the agent is to do a certain act, for instance, to sell, and that the principal has employed him in that business, without in any way limiting his authority (j). And as an authority conferred by a formal instrument will (q) Chapman v. Walton, supra. (r) Bet tram. v. Cotljieii, 1 Knapp. Priv. Coun. Rep. 381. (s) Pettiesv. Sname, 13 ViD.Ab.6; Ambler, 498 ; E.I. Com- pany V. Henley, I Ksp. 111. (0 Child V. Morten, 8 'J'. H. 610 ; Snlion v. Tatham, 10 Ad. 1 & E. -27 ; Yoniig V. Cole, 4 Scoll, 489, Anon. 12 Mod. 614. (It) Whiieheud v. Tucket, 15 East, 400; Townsend v. Ingiis, Holt, N. F. C, 278. (.t) Pickering v. Bitik, 1-5 East, 38. Their Powers. 53 be construed to include all such medium powers as are necessary for carrying its object fully into effect (y), so, a fortiori, will an authority conferred by an informal writing, or by mere general instructions, be construed to include all such powers (s'). If, therefore, it be the intention of the principal to exclude from the authority of his factor or bro- ker any of these powers, it must be done by express direc- tions (a). At the same time, however, it must be borne in mind, that no authority, however general in its terms, will be construed to include any power not usually re- cognized as belonging to the agent to whom the authority is given ; and accordingly, where a factor was instructed to deal with goods consigned to him, " at his discretion ;" it was held that these words must be limited to mean a dis- cretion in his capacity of factor only, and that, therefore, they could not be taken to confer on him a power to pledge the goods in question (b). Lastly : It may be laid down as an established principle, Evidence of that the court will, in construing tliese authorities, whether trade admis- they have been conferred by writing or not, admit evidence ^l'''? '"9^°"" ■^ J a ^ strning these of the custom of trade, either for the purpose of explaining authorities. words used in a sense different from their ordinary meaning, or for the purpose of adding known terms not inconsistent with the authority itself (c J. Such is the rule with reference to the admission of evidence to explain mercantile con- tracts (rf); and it appears to be now decided that, with re- ference tomei-cantile authorities, the same rule is applicable, at least, to an equal extent (e). Thus in the case Ekins v. (y) Howard v. Baillie, 2 H. Bl. 620. (s) Fenn v. Harrison, A T. R. 177; Richardson v. Anderson, 1 Camp. 43, noie. (a') Fenn v. 1 fur riwn, svpra.. (6) Per Abbott, J., Grahum v. Diister, 6 M. & Sel. 1, 6. (c) Bell, Com. on Merc. Jur. 388. (d) Truemnn v. Loder, 11 Ad. & E. 589, 599. (e) See observations of Deniiian, C. J., oa the case of Dickin- son v. Lilwatt, cited 11 Ad. & E. 560. Factors and Brokers. Miiclis/i if), Lord Hardioicke admitted the evidence of mer- chants as to what was, according to tlie usages of trade, the extent of an agent's authority, under the particular words of his commission. So a general authority to a factor to sell is now construed to authorize him to sell on credit, because, as it is said, constant experience proves that factors do sell upon credit, without any special authority (g). On the other hand, it is clear that a general authority to a broker to sell stock will not be construed to authorize him to sell it on credit, because a Iroker is employed to sell only in the usual manner, and he has no power in common cases to give credit for the price of stock which he agrees to sell (//). But, where a general authority was given to a broker employed in the Irish provision trade to sell a quantity of butter, it was held that evidence was admissible to prove that, by the usage of that trade, such an authority expired with the day on which it was given (i). And where a corn merchant in Ire- land sent written instructions to a broker and del credere agent in London to sell oats of a certain quality at a certain price on his (the merchant's) account ; it was held that evidence was admissible to show that by the custom of the London corn trade, a broker was warranted by such instructions in selling in his own name, Denman, C. J., observing, that the court was " not prepared to say that evidence of the custom of London might not have a reasonable influence on the minds of the jury, towards fixing the sense of the broker's authority, if in itself doubtful" (/c). So it is said, that in the case of a foreign factor, his authority will be construed to include full powers to transact the business of his principal in the forms, and by the instruments, and according to the laws of the country in which the factor resides (/). (/) Ambler. 186. (g) Per Chambre, J., Houghton v. Matthews, 3 Bos. & Pul. 489 ; Scott V. Surman, Willes, 407. (h) Wittihire v. 5ms, 1 Camp. 258. (0 Dickinson v. Lilwall, 4 Camp. 279. (k) Johnston v. Upborne, 11 Ad. 6i Kl. 549, 557. (/) Story Com. on Agency, ^ 86. Their Powers. 55 All these decisions are manifestly founded on the principle, Principle of that where an agent is employed to do any act, he shall be supposed to have an authority to do it in the manner in which it is usually done (m), and do not at all infringe upon the rule, that evidence should not be admitted to vary the effect of a written document. To admit such evidence in the latter case, would be to set up something inconsistent with the document itself; whereas, to admit it in the former, is merely to give expression to what may fairly be pi-esumed to have had a place in the mind of the principal at the time he conferred the authority, and to have influenced the judg- ment of the agent in interpreting the degree of jjower con- ferred on him thereby. It is likewise presumed, — ^judging, that is, from analogous Evidence uf ,.„^ ,1 ,.,. .. subsequent cases, — that if a factor or broker were authorized m writing authority a< .•Hiiiioi On the other hand, a factor has no authority under his general commission to dispose of the goods of his principal by way of barter, and should he do so, the principal's pro- perty in them will not be divested, but he may still maintain trover for them against the party with whom they were bar- tered, although the latter did not know that in the transac- tion in question, he was dealing with a factor only (s). Nor, ai com- So by the common law, a factor commissioned to sell )!u"pieTt;t-.'^'"' goods, had no authority to pledge them, either by depositing the goods themselves {I), or by indorsement and delivery of the bill of lading, or any other symbol of property in such goods {u). Nor, if the transaction between the factor and a third party amounted in fact to a pledge, although in some respects it might resemble a sale, was it held to be binding on the principal {x). This, however, was considered a hard doctrine (3/), and it has of late been much modified by statu- tory enactments ; but it is, nevertheless, worthy of notice, as illustrative of the principles upon which such questions have been decided ; for, the reason of the doctrine that a (p) Baring v. Corrie, 2 B. & Al. 137, 143. (q) Com. Dig-. Merchaul, B. ; Houghton v. Mallhews, 3 Bos. & P. 489. (r) Biirion v. Suclock, Bulstr. 103; Beawes, Lex Merc. 41; 2 Kent, Com, on Amer. Law, 622, 623. (s) Gverreiro v. Heile, 3 B. & Al, 616. (t) Palev>,on v. TaJi, 2 Stra. 1178. (u) Newsomv. Thornton, G East, 17; and see Phillips v. Huth, 6 M. & W. 672, 696. (a) Shipley v, lUmer, 1 M. & Sel. 484. (y) Per Lord Eilenborough, Pickering v. Busk, 15 East, 44 Their Powers. 57 factor had no right to pledge, was, " because it was ont of the usual and ordinary course of dealing." Upon this principle it is that, unless where the strictness of }" genet ai, he ' ^ lias no powers the rule has been relaxed by statute, a factor's general com- winch are not . . . ^.,, y 1 i ,. I 1 sanctioned by mission IS still construed to confer sucli powers only as are usaae. sanctioned by usage ; and therefore, where the plaintiffs con- signed goods to their factors, who, not having funds to pay the freight and duties, agreed with the defendants that they should take charge of the consignment, pay the freight and duties, sell the goods, and have one half of the usual com- mission on such sale; and the defendants accordingly paid the freight and duties, and received the goods ; after which the factors became bankrupt, having before informed the de- fendants that the goods were the plaintifl["s; but the de- fendants notwithstanding sold the goods ; — it was held, in trover by the plaintiffs against the defendants, that the latter had no right to retain for the freight and duties so paid, after deducting the balance due from the factors to the plaintiffs at the time of the bankruptcy ; Lord El/enborungh obsei-v- ing, that the consignors of the goods had nothing to do with what passed between the factors and the defendants, in con- travention of the trust reposed in the former (^). And in another case, very similar to the last, the law was thus stated by the same learned judge. " A principal employs a broker, from the opinion he entertains of his personal skill and integrity; and a broker has no right, without notice, to turn his principal over to another of whom he knows nothing. It appears to me, therefore, that there is no privity, either express or implied, between the parties. There certainly was not any express privity; neither can any be implied, unless the case had found that the usage of trade was such as to authorize one broker to put the goods of his employer into the hands of a sub-broker to sell, and to divide the commission with him" (a). . (s) SoUv V. Ralhbone, 2 M. & Sel. 298. (a) Cockraii v. Irlam, 2 M. & Sel. 301. It will be observed d5 liv Factors and Brokers. A laci'T cau- It likewise appears from these cases, that a factor has no hill' !iuii.urir> . power to delegate his authority, unless with the consent of his principal, or in accordance with the usage of trade (6). lie in; : .rs«r A factor's general authority to sell, however, is held to include the power of doing so by indorsing the bill of lading to a bona fide purchaser, even although the goods are at sea at the time the indorsement is made (c) ; but it appears that, in order to entitle the factor to sell in this manner, the bill of lading must be indorsed to him by the consignor, as, in general, the transfer by a factor of an unindorsed bill of lading will not pass the property (d). Still, however, even when the bill of lading has not been actually indorsed to the factor, it may come to his hands accompanied by circum- stances which may amount to an indorsement thereof, and where this is the case, he will have full power to transfer it, and thereby to sell the goods (e). And such indorsement of the bill of lading by the factor to a bom fide purchaser will bind his principal, so as to divest him of the right of stopping the goods in transitu(^f). Hh may war- In like manner, where the factor has a general authority to sell, he is held to have the power of warranting the goods to be sold (g), or of selling them by sample, if such be the custom of the trade. He may re- So he has power to receive payment for goods which that tlie term broker is here used; but on reference to the case it will be found, that the parties acted as factors rather than as brokers in the transaction in question. (6) See also 1 Bell, Com. on Merc. Jur. 388. (c) Wright V. Campbell, 4 Burr. 2046: per Lord Loughborough, Mason V. Lickbarrow, 1 H. BL 367; and see observations of EUenborough, C. J., Newsom v. Thornton, 6 East, 4L (d) Nil V. 0/iye, cited Abbott on .Shipping, 489, sixth edition. (e) Dick V. Lumsden, Peake's iS'. P. C 189. (/) Wright V. Campbell, supra ; Mason v. Lickbarrow, supra ; Abbott on Ship. 474, sixth edition. (g) Per Bailey, J., Pickering v. Busk, 15 East, 38, 45. Their Powers. 50 he sells, and to give receipts for such payments (/«); but «^eive pay- ments. he can receive payment only in the manner which is war- ranted by the usual course of trade («') ; nor has he any power without an express authority to that effect, or unless the usual course of trade wQl justify him in so doing, to receive payment by taking security from the purchaser in his own name, and if he do so, and the purchaser fail, he shall, it is said, be answerable for the loss {k). So if the factor take notes from the vendee, payable to him at a future day, and fail, and his assignees afterwards receive the money due on such notes, the principal may i-ecover it from the assignees in an action for money had and received (/). So a factor has no power under his general commission to commute a payment by receiving something instead of money, for ex- ample, goods, in discharge of the debt(?«); nor can he com- pound the debt, or release it on payment of a composition (n). There are, moreover, cases in which even payment to a factor will not bind the principal ; but these will be more properly considered when we come to treat of the powers which he possesses, as between his principal and third parties. When a factor has a general authority to purchase, he Ru'e \yljere a must be considered as having power to do so according to the amhorized to best of his judgment, and without limitation as to price (o); behi""ii',iiUed and it seems that even when a price is named in his instruc- *' •" P"*^^- tions, he must be so expressly limited to that price as not to be led to consider that he has a discretionaiy power to go beyond it; for if this be not done, the principal will be bound by a purchase, although at a price greater than that mentioned in the instructions (p). (/i) Driiikivater v. Goodwin, Cowp. 256; Capel v. Thornton, 2 C. Sc P. 352 ; and see Sykes v. Giles, 5 M. 6c VV. 645, 651. (i) Tlwrold v. Smith, 11 Mod. 71, 88; and see 6 Geo. 4. c. . 94, s. 4. (/c) Conn. Dig. Merchant, B. (I) Scott V. Surmnn, Willes, 400. (m) Howard v. Chapman, 4 C, (Sc P. 503 ; Doc. & Stu. 286. (n) 3 Chitty on Com. and Manuf. 208. (o) Beawes, Lex Merc. 41. (p) Hicks V. Hunkin, 4 Esp. 114. 00 Factors arid Brokers. Foreign fad or A general authority to a foreign factor to purchase, em- goiKis for ilitir powcrs liim to load the goods purchased generally, so as to •ff's'i'- bind them for the freight (7). The rule is thus laid down by Beawes : " A factor who enters into a charter party with a master for freightment, is obliged by the contract; but if he lade aboard generally, the goods, the principal, and the lading, arc made liable for the freightment, and not the factor (/•). Factor can- A factor, it appeal's, has no power, without a special rai/accept or authority to that effect, to accept or indorse bills so as to bfua"^""* charge his principal (s): but it has been decided in America, that when a factor has a general authority to purchase, he maj-, if no other funds are provided, give notes, or draw and negociate bills oii his principal for the amount {t) . He cannot It is a settled principle in our law, that no man should be sell lo^'hi's ""^ allowed to have an interest against his duty (?<) ; and it has pimcipai. accoi'dingly been held, that an agent employed to purchase, cannot be himself the seller; nor, if he be employed to sell, can he be himself the buyer, unless there be an express un- derstanding to that effect between him and his principal. The reason of this is plain, inasmuch as the duty of the agent to buy or sell in such a manner as would be most beneficial to his employer, is obviously inconsistent with those motives of self interest, in obedience to which his being permitted to assume the character of seller or piu'chaser, would tempt him to act. This rule is well illustrated by the following case. A broker, who was employed by a customer to sell foreign (7) Bell, Coin, on IMerc Jur. 387. (?•) Beawes, Lex Merc. 43. (s) Hogg V. finailh, 1 Taunt. 347; Mtirriiy v. Eaut India Company, 5 B. & A1.204. (t) Ferroiiii v. Cucullu, ciled Story on Agency, § 103. (u) Per Lord Ellenboiough, Thompion v. Haielock, 1 Cemp. 527, 528. Their Powers, 61 stock on a day specified in his letter of instructions, pur- chased the stock in the name of his partners, a firm in Paris, at the market price of the day. Being also employed to purchase foreign stock and honds for his customer ac- cording to his, the broker's, recommendation, he transmitted accounts of the transactions to his employer, with broker's notes, Sec, as if he had purchased the stock of third persons. The fact, however, was, that no stock or bonds were pur- chased, no transfers made, and no broker's notes passed, but that the sales were nominal, — being, in fact, sales of stock and bonds remaining in the hands of the broker and his partners, and not set apart or appropriated to the customer. In order to eflTect these purchases, loans of money were made by the broker to the customer, upon an agreement that the stock and bonds should remain in the hands of the former, to se- cure the repayment of the money advanced. The stock and bonds were afterwards sold at a loss, under the broker's ad- vice. In 1 8 1 9 an account of these transactions was rendered and settled between the customer and the broker, and, great loss having been incun*ed thereupon, a large balance was paid by the former to the latter; but upon a bill filed some years afterwards, all the transactions were set aside, and aa account decreed against the agent. This decree was sub- sequently affirmed on appeal (x). A factor, to whom goods are consigned for sale, has, it He may in- ° ° ^ sure goods would appear, the power of effecting an insurance on such consigned to consignment, not only for himself, to the extent of his com- extent of hi* mission in respect thereof (j/), but also for his principal, on "^^ interest, the full value of the goods (^). The latter part of this pro- (x) Rothschild V. Brockmaii, 5 Bligh, N. S. 165; 2 Dow & Clark, 188. Hyslaluie 31 Geo. 2. c. 4, s. 1 1, salesmen, bickers, or factois employed to buyer sell caltle in London, are expressly prohibiled iVoiii buying or selling on llieir own account, except for the use of iheir families. (v) I'ef Kenyon, C. J., Fiint v. Le Mestnier, ciled2 Park on Mar. Insur. 563 ; see also Barclay v. Cousins, 2 East, 544. (z) Lucena v. Crawfurd, 3 Bos. & Pul. 75, 95, 105 ; Craw- (i2 Factors and Brokers. position cannot indeed be laid down as absolutely settled by our law, there being, it is believed, no express decision to that effect. But in the cases cited, especially in that of Luccna v. Crawfurd, the subject was introduced both during the arguments at the bar, and by the learned judges in de- livering their opinions from the bench ; and, although they were not agreed as to the reasons on which a factor or con- signee for sale should be taken to possess the power in question, yet no doubt seemed to be entertained by them as to the fact. On this point, indeed, the majority of the court expressed themselves very strongly, not even resting the authority of the factor in this particular, on the ground of his possessing any beneficial interest in the property insui-ed, but seeming to consider it as a natural incident to the fact of his being clothed with the character of agent or con- signee (a). The case of Lucena v. Crawfurd was afterwards removed by writ of error into the House of Lords; and the ques- tion of the authority of a consignee for sale, to insure the property consigned to him without orders to that effect, was again brought under review. On that occasion, as on the former, the opinions of the judges were decidedly in favour of such authority (6) ; but, as was the case in the court below, they did not appear to be agreed as to the rea- sons on which it was founded. Perhaps, however, the true reason was that stated by Lawrence, J. " Interest," says he. " does not necessarily imply a right to the whole ; but where a man is so circumstanced with respect to matters exposed to certain risks or dangers, as to have a moral certainty of advantage or benefit but for those risks or dangers, he may be said to be interested in the safety of the thing" (c). This the learned judge considered to be the case of a factor or furdv. Ilu/iter, 8 T. R. 13, 22; and see the dicta of Lord Ellen- borougli aii or sell, jnstnicted to sell goods without any express direction as to the mode, he would be held to have the power of selling them by sample or with warranty. This indeed would seem to follow from the principle — that where a party employs an agent to do a certain act, without restraining his authority as to the mode of doing it, he must be bound by that mode which the agent, in the exercise of his best judgment, adopts (z). Broker can- A broker has, in general, no authority as such, to receive ral.'receive payment for goods sold by him on account of his princi- paymenu. ^^^ ^^^^ . ^^^ jj. ^1^^ custom of trade, or the usual course of dealing between himself and his principal warrant him so to do, he may receive payment for goods so sold {b). Even in these cases, however, he must, like a factor, receive pay- ment in the usual way ; and he has no power to vary the terms of payment after the bargain is completed (r). (it) Boorman v. Biown, 4 Per. & Dav. 401. (i) S. C, in Error, 11 Law .Tour. Excheq. Cham. Rep. 437. (i/) Witishiie V. Sims, 1 Camp. 258 ; Henderson v. Barnewell, 1 Y. & Jer.387. (s) See Feini v. Harrison, 4 T. R. 177. (a) Campbell v. HusseU, 1 Slark, 233 ; and see dictum of Coltman, J., JacHon v. Jacob, 5 Scott, 79, 86, and of Littledale. J., A/i/(i»j V. Joliffe, 1 M. & Rob. 326. (6) Bar\„;i v. Corrie, 2 B. & Al. 137, 147. (c) Ulahlmine v. Scholes, 2 Camp. 343; Campbell v. Hassell, supra ; Coules v. Lewis, 1 Camp. 444. Their Powers. 69 So a broker cannot, without the assent of his principal, Or delegate 1 . - • / i\ his authority, either express or miphed, delegate his authority («). We have ah-eadv seen that it is the duty of a broker in R"le. as to hb , . , , power to tol- all cases, to transact the business of his principal in accord- low the usage ance with the usages of trade ; and tliat his authority will always be construed in such a manner as to give him the power of so doing. But this rule has been carried even further ; and accordingly, it appears that not only has a broker the power of following the usages of trade in con- ducting the immediate business of his employer, but that he likewise possesses this power with reference to matters col- lateral to such business, and arising out of it; and that, whether his employer was acquainted with those usages or not. The following case will illustrate this principle. The plaintiff, a broker, was employed by the defendant to sell certain instruments called Gualamala bojich. He sold them accordingly to one B., who paid him the market price, which he handed over to the defendant. A few days after the sale B. returned the bonds to the plaintiff, he having discovered that, by reason of their not being stamped, they would not be i-ecognized by the government by which they purported to have been issued. The plaintiff thereupon, without any previous communication on the subject with the defendant, refunded to B. the sum he had paid for them ; and his reason for doing so was, that, by the custom of the Stock Exchange, brokers dealing in foreign funds act as principals, and are liable to be expelled if they do not make good their differences. The plaintiff accordingly brought this action to recover the money so paid to B., and the jury gave a verdict in his favour, which the court refused to dis- turb; — on the ground that, when the plaintiff received autho- rity from the defendant to sell the bonds, he must be taken to have received an implied authority to act as all brokers (d) Per Hullock, B., and Vaughan, B., Henderson v. Barnewell, 1 Y. &, Jer. 387, 394, 395. 71) Factors and Brokers. did on similar occasions, — namely, to rescind the contract, if the article delivered turned out not to be the article sold (e). And so in a recent case in which a broker had, in com- pliance with the rules of the Stock Exchange, paid certain differences resulting from a contract into which he had entered for his principal; he was held to be entitled to re- cover from him the money so paid ; because, as was well obser\'ed, a person who employs a broker must be supposed to give him authority to act as other brokers do in like cases (_/"). Insurance- "Wg have already seen that a broker who is instructed to broker has "^ ... power lo effect a policy of msurance, has the power of subscnbmg it adjust losses, . , . t. ii • • /? t j m his own name. It was, moreover, the opmion oi Lord Ellenborough, that where an agent has authority to subscribe a policy, he may likewise adjust it (g) ; and it is believed that the usage accordingly is, for the broker who effects the policy to settle with the underwriters any loss which may happen thereupon. And to re- An insurance broker is also empowered by his general ceive pay- . . r> i i • i ment thereof, authority to receive payment oi any loss which may occur on a policy which he has effected, provided the instrument remain in his hands (h) ; and in this, as in other cases, the possession by the broker of the principal authority will be held to give him all those medium powers which are requisite in order to enable him duly to execute the same. If, there- fore, it appear that the broker has been in the habit of set- tling losses for his principal, which the latter has afterwards (e) Young V. Cole, 4 Scott, 489. (/) SutUm V. Taiham, 10 A. & El. 27, 30. This case may be considered as overruling that of Child v. Morley, 8 T. R. 610, so far as it relates to the question in the text. (g) Richardson v. Anderson, 1 Camp. 43, note a. (/i) Shee V. Clarkson, 12 East, 507, 511 ; Todd v. Reid, 4 15. &: Aid. 310. Their Powers. 71 paid, this will be considered sufficient evidence of an autho- rity in him, to refer a dispute concerning any such loss to arbitration (t). But a broker has no general authority to pay losses for But not to the underwriters by whom he is employed (/c). In what has been already said respecting the powers of Usages of , trade may be factors and brokers, it must have been observed, that many (tisallowed. of these powers exist solely by virtue of, and are regulated entirely by the usages of trade. As was well observed how- ever by the late Lord Tenterden (I), " every mercantile practice of frequent use, and even of general convenience, is not, and ought not to become in all its consequences, a part of the law of the land ;" and on this principle our courts have reserved to themselves the right of judging of the reasonable- ness of those usages, and of allowing or disallowing them accordingly (/n). As an instance of this, in connection with our present Instances oi , . . , ■ 1 • 1 • 1 1 this in the subject, we may mention ttie cases m which it has been case of a bill- questioned whether a^usage which was proved to prevail in po'^^^'^^o London, for a bill-broker to have the power of pledging the pledge, dis- bills of different customers in one mass, on account of an don. antecedent debt due from himself to the pledgee, was a valid usage or not. This point arose in the cases of Haynes v. Foster (n), Foster v. Pearson, and Stephens v. Foster (a); and in the second of these cases, Parke, B., in delivering the judgment of the court, is reported to have said, that (i) Goodson v. Brooke, 4 Camp. 163. Ik) Bell V. Auldjo, 4 Doug 48. (0 Treatise on Shipping, 472, sixth edition. (to) See also 1 Bell Cora, on Merc. Jur. 390, where it is laid down by that learned writer, that three things are necessary to settle a usage, as a rule of the law merchant, 1. Proof of the visage ; 2. The legality of it, or at least, that it is not inconsistent with the common law, but an allowable deviation from it, and 3. The allowance of the custom judicially. (71)2 Crom. & M. 237. (o) 1 C. M. & R. 849. 72 Factors and Brokers. " there was notliiiif? unreasonable in such a practice ;" but us the cjui'slion at issue was seltled on another ground, no express decision was given on the subject. It appears how- ever that the court were clearly of opinion, that aiji^ usage whereby a bill-broker was authorized to pledge the bills of his customers in a mass, for an advance made to him on account of such pledge, was valid ; that the usage having been proved, the principal must be taken, from its general notoriety, to have employed the bill brokers with reference to the usage; and tnat the latter had therefore authority, as between them and their employers, to pledge the bills in the manner they had done. " A bill broker," it was said, " is not a character known to the law with certain prescribed duties; but his employment is one which depends entirely on the course of dealing. It may differ in different parts of the country ; it may have powers more or less extensive in one place than in another; what is the nature of its powers and duties in any instance is a question of fact; and is to be de- termined by the usage and course of dealing in the particu- lar place ;" and on these grounds it was held, that the jury were, on proof of the usage, warranted in inferring that the broker had the authority in question {p). Generally he But unlcss there be a)f usage to the contrary, it is clear does nol pos- , i -n i i i ' • i -n i « i i>e«8 ihis that a bill-broker who receives a bill merely tor the purpose of procuring it to be discounted for his customer, has no right to mix it with bills of his other customers, and to pledge the whole as a security for an advance of money (y) ; and the reason of this is plain, — inasmuch as it is not one of those medium powers, which are necessary to the execu- tion of the chief object of his commission, although it might, in some cases, considerably facilitate such execution. In- deed it appears, that the only powers which the broker pos- sesses for this purpose, under his general commission, are the power. (p) Pearson v. Foster, supra, 858 — 861. {q) Haynes v. Foster, supra, 239. Their Powers. 73 power of indorsing the bill in the name of his principal (;•) ; and, perhaps, that of indorsing it in his own name although it were not indorsed by his principal, provided such in- dorsement were necessary towards his procuring it to be discounted (s). Lastly : it is the opinion of some very eminent writers, A facior or A . -I 1 broker may that a factor or bi"oker will, in all cases, be considered to pursue the have the power of pursuing what may be termed the sub- bis commu"- stance of his authority. Thus it is said, that if a factor were ''°"- commissioned to make a consignment of goods, and were to buy part at one time, and part at another, although from different persons, this would be considered a good execution of his authority ; or that if he were to find that he could not purchase the whole at the price limited by his instructions, he would be held to have authority to purchase such part as he could. In like manner it is said, that if a broker were authorized to buy a certain number of shares of stock, he might treat with one holder for part, and that the contract so made would be good, even although he were unable to purchase the residue. And so, it is said, that if he were in- sti'ucted to procure an insurance for so much, on a particular ship, and after one or more of the underwriters had sub- scribed the policy, the remainder were to refuse the risk, his authority would be held to be well executed as to those who had subscribed, and his principal would be liable for the premiums (/). (r) Fenn v. Harrison, 4 T. R. 177. (s) Exparte Robinson, Buck, Bankruptcy Cases, 113 ; cited Bayley on Bills, 72, 5lh editioD, where the same doctrine is stated. (f; 2 Kent, Com. on Amer. Law, 619 ; Story on Agency, § 170. Questions of this nature, however, do not seem to have arisen very frequently in our courts, with reference to cases of mercantile agency. They form indeed more properly, a part of the law relating to powers ; for which see Sugden on Powers, chapter 5. CHAPTER II.— SECTION II. On the Powers of Factors and Brokers. Divisionvof iIr' subject. PART II. On their Po\ve..s, as between their Principals and Third Parties. Having thus seen what powers are possessed by factors and brokers as between themselves and tlieir principals, we now proceed to the second branch of our inquiry, namely ; — what are the powers which they possess, as between their principals and third parties : and in pursuing this inquiry we propose to show ; first, the powers which they possess to bind their principals by contracts ; secondlt/, by acts done in connection with those contracts; and thirdly, to state what acts of third parties dealing with them in the course of their employment, will bind their principals. Uisiinciion The power of any agent to bind his principal to third general and a parties depends, as we have already said, on the extent of 'peciHi agent. ^^ agent's usual employment. If he be a general agent, the principal will be bound by all acts done by him within the scope of his ordinary employment, w'hether such acts were warranted by his private instructions or not; but if he be a special agent, the principal will be bound only whilst the agent acts according to his particular commission or authority (a). The distinction between these two kinds of agents is thus stated by a learned judge : " If a person be appointed a general agent, the principal is bound by his acts. But an agent constituted for a particular purpose, and under (n) F.usl India Company v. Hensley, 1 Esp. 112 ; WaylaniTs case, 3 Salk. 234 ; BouLton v. Artsden, ib. Powers of Factors and Brokers. 75 a limited and circumscribed power, cannot bind the princi- pal by any act in which he exceeds his authority, for that would be to say, that one man may bind another against his consent (6)." Such then being the difference between the power of a general and that of a special agent to bind his principal, it becomes material to inquire, — what is the meaning of the term general agent, and how may such agency be constituted ? It is believed that none of the cases hi our books, which Howa^e»ie- , » , r 1 • ''"^ agent is have reference to the powers of general agents, contains an constimted. express definition of that term ; but a comparison of the various decisions and dicta which are to be found on the subject would seem to lead to the conclusion, that by the term general agent, in our law, is meant ; either, first, a per- son who is appointed by the principal to transact all his business of a particular kind ; or, secondly, an agent who is himself engaged in a certain trade or business, and who is employed by his principal to do certain acts for him in the course of that trade or business. In both these cases the agent will, — if there be no limitation of his authority known to third parties, — be taken, as to them, to be a general agent, and will, therefore, have the power to bind his principal by all contracts entered into with them, which are within the scope of his ordinary employment (c). The reason of this rule is, that strangers can look only to the acts of the parties, and not to the private communica- tions which pass between a principal and his agent ; and this being the case, it follows, that where the principal has on former occasions authorized or recognized similar acts of his agent, or where the agent himself is employed in a cer- tain business, and is retained by the principal to do certain (/>) Per Buller, J., Feim v. Harrison, 3 T, R. 757, 762. (c) Kickson V. Brohan, 10 Mod. 109, 111 ; Pickering v. Busk, 15 East, 38, 45. e2 7fi Factors and Brokers. acts for him in the usual course of that business, strangers who have no notice to tlie contrary will be at liberty to as- sume that, in the one case, the principal has, in the transac- tion in question, accredited the agent to the full extent of his previous employment (io\ j^j^^ ^j^^^ ^^^ jli^jj. principals (i). Thus, it washeld in the time of Queen Ehzabeth, that if one be factor for a merchant to buy one kind of stuff, as tin, and the said factor hath not used to buy any other kind of wares, but this kind only for his master; now if the said factor buy silks or any other commodities for his master, and assumes to pay money for that, the master shall be charged in assumpsit for the money {k). So it has been decided, that if a factor sell goods for a less price than his commission directs, such sale will nevertheless bind his principal (/). And it appears to have been the opinion of Heath, J., that the same would be the case, if a factor employed to purchase were to exceed the sum at which his principal had instructed him to buy (m). Tliese decisions, moreover, and especially that of Petties v. Sounie, seem to lead to tlie conclusion, that a factor's power to bind his principal in any particular case, is not to be measured merely by the mode in which that principal has previously employed him, but that it depends entirely on the circumstance of his being a factor. In that capacity he is supposed to possess a general power to buy and sell ; and this power carries along with it certain incidents recognized by law, the existence of which all persons who deal with him in his capacity of factor are, unless they have notice to the contrary, at liberty to assume, and by the exercise of which his prmcipal will be bound ; and if this be so, then it (i) Daniel v. Adams, Ambler, 495, 498 ; Petties v. Sname, Goldsborougii's Rep. 138; Bell, Com. on Merc. Jur. 385 ; Hnw urd V. Braithwaile, 1 V^es. & B.202, 209; and they are so regarded by the law of Scotland, Hell, Princip. of the Law of Scot. § 219 ; and of .America, Story on Agency, ^ 131. (fe) Fettiesv. Snume, supra. (/) Daniel V. Adams, supra. (m) Hicks V. Hankin, 4 Esp. 113. Their Powers. 79 follows as a general rule, that a known factor has power to bind his principal by all contracts made by him in the way of his business as a factor, whether he has ever been before employed by the same principal in that capacity or not ; and that such power cannot be limited by any private order or direction with which the party dealing with the factor is not acquainted. Hence the necessity for the caution given in an old case on this subject : — " and for that, let the master take heed what factor he makes." And not only will the principal be bound by contracts Although made by his factor in pursuance of instructions to that effect, stmctions,' but it seems that where the principal has been in the habit ""''^P '''"''• ^ i parlies have of employing a particular factor, he will be bound by con- notice, tracts made by him on his behalf, although without instruc- tions, or even after his agency has been determined; unless, that is, the persons who deal with the factor have notice of those circumstances. Accordingly, the court of the Queen's Bench, in a recent case, refused a rule for a new trial, on the ground that one H. had been trading in his own name as the defendant's agent, with the defendant's full knowledge and authority, and that till the defendant gave notice to the world that he had revoked H.'s power to act for him, all persons had a right to hold him to the contracts made by H. (w). And in like manner, whei-e it appeared that the defendant had in several instances employed one A. B., as his agent, to purchase goods from the plaintiffs on credit, and it was shown that on the occasion in question he had ordered goods in the name of the defendant, and had like- wise ordered them to be sent by the usual conveyance, but which goods, it was proved, had been ordered by A. B. with- out the defendant's authority, and had afterwards been inter- cepted by him and applied to his own use : — it was held, that the defendant was nevertheless liable for the pi-ice of these (n) Truemanv. Loder, 11 A. 6c El. 589, 592. Factors and Brokers. goods, because he had, by the previous course of dealing, authorized the plaintiffs to treat A. B. as his agent (o). In like manner, the principal will be bound by the con- ' tract of his factor even although it be not within the scope of the ordinary business of the latter, provided he have on former occasions recognized and adopted similar contracts entered into by him. This proceeds on the principle, that usual employment is evidence of a general authority (p) ; and falls therefore within the rules already laid down re- specting the power of a general agent to bind his principal. Although, therefore, it is no part of a factor's general authority to draw, indorse, or accept bills by procuration for his principal, yet there can be no doubt, that if on former occasions the factor has done either of these acts, and the principal has approved of them, he will be bound by the like acts of his factor in future, although done without his authority, — unless the party who seeks to charge him had notice of that fact {q). But in these cases the holder of the bill must show, that he actually took it from the factor on the faith of a supposed authority in him, which faith was in- (o) Todd V. Robinson, R. & M. 217; see also Gillman v. Robinson, lb. 226, and 1 C. & P. 642. The law on this subject is thus stated by Domat : " The powers of factors and agents are determined by their revocation. Jiut if after they aie recalled they treat with persons who knew nothing of their being recalled, what they shall have transacted will oblige the principal, unless the revocation has been published, if it was the custom so to do, or unless by other circumstances, the person who treated with the factor might have known that he ought not to have treated with him." 1 Domat, B. l.Tit. 16, § 3. In order to obviate the difficulties arising from the law on tiiis subject, Mr. Chitty, in his Treatise on llills of Kxchange, suggests, that for the purpose of apprising all parlies of the determination of the factor's autho- rity, notice of that fact should be given by the principal in the Gazette, as well as to his correspondents individually — notice in the Gazette not being in general sufficient to affect a former cus- tomer, unless he has had express notice thereof. Chitty on Bills, 32. (p) Per Lord Eldon ; Davison v. Robertson, 3 Dow. 229. (q) Beawes, Lex Merc. 86 ; Barber v. Gingell, 3 Esp. 60. Their Powers. 81 duced by the fact of his having known him to have previously engaged in similar transactions on behalf of his principal {r). But still it must be remembered, that the right of third Cases in parties to hold the principal bound by contracts into which credit to ihe^ they have entered with his factor, is liable to be very Ji^j^'^^ai-^Tg [ije much hmited by the conduct of such third parties them- principal, selves. Thus, if the seller of goods, knowing at the time of the sale that the buyer, although dealing with him in his own name, is in truth acting as factor for another, never- theless elect to give credit to such factor, he cannot after- wards charge the principal for the price of the goods (s). But if the principal be not known at the time of the sale, but be afterwai-ds discovered, then the mere fact of the ven- dor having given the factor credit in the first instance, will not deprive him of his right to charge the principal when so discovered {t) ; even although the principal should in the meantime have remitted money to the agent for the purpose of discharging the debt (m). Nor will the vendor be de- prived of this right, although he knew at the time of the sale that the vendee was acting as a factor, provided he did not know who his principal was (x). But if, after the prin- cipal is discovered, the vendor allow the day of payment to go by, without calling on the principal, and in the mean time the latter has paid his factor the price of the goods, the vendor will be deprived of his right to charge the principal; because, by the conduct of the vendor the principal may have been led to suppose that he relied solely on the factor for payment (;y). (r) See Cash v. Taylor, 8 Law Jour. 262. First series. (s) Patersnn v. Gandesiqui, 15 East, 62 ; Addison v. Gat>desiqui, 4 Taunt. 573 ; see also Exp. Hartop, 12 Ves. 352. (t) Paterson v. Gandesiqui, supra ; Thompson v. Davenport, 9 B. & C. 78. (w) Nelson v. Powell, 3 Doug. 410. (x) Thompson v. Davenport, supra. (y) Kymer v. Suwercropp, 1 Camp. 109. .S2 Factors and Brokers. In tlie case of a foreign factor, it appears that, by the usage of trade, the credit is in all cases understood to be confined to him ; but still this is a question for the jury (z). As to the How far the rules above laid down, with reference to the llUeSlioll, ^ n I'll- • • 1 !• U1 i whether a powcr of 0. factor to bnid his pruicipal, are appucable to ^^(^raUgent. the case of a broker is, from the want of express decisions on the subject, somewhat difficult to determine. An opinion seems at one time to have been entertained, that the character of a broker was that of a special, rather than that of a general agent; and that therefore his power to bind his employer must depend on his actual authority. With reference to this however, Lord EUenborough is reported ta liave said : " I cannot subscribe to the doctrine that a bro- ker's engagements are necessarily, and in all cases limited to his actual authority" («) ; and perhaps the more coiTect rule is ; — that a common broker employed in the ordinary course of his trade, is so far a general agent, as to have power to bind his principal to third parties by contracts within the scope of that employment, whether the terms of such contracts be in accordance with his private instructions or not. Such certainly appears to be the doctrine laid down in the cases of Fickering v. Busk, and Whitehead v. Tuc- kett (b) ; or at least, such doctrine would seem to be fairly deducible from them ; for although in both those cases there was perhaps sufficient evidence to show^, that in the particu- lar transactions out of which they arose the agents had, (without reference to their character as brokers), been clothed by their principals with a general authority in respect of the subject matter ; still it seemed to be the opinion of all the judges, and especially of Lord Ellenboruugh and Mr. Jus- tice Buyleij{c\ that the mere fact of the principal's having employed the brokers to dispose of property in the ordinary course of their business, was tantamount to giving them a (s) Per Bayley, J., Paterson v. Gandesiqui, supra, (o) I'ickeriug v. Busk, 15 East, 38, 43. (b) 15 East, 38, 400. (0 15 East, 43, 45,411. Their Powers. 83 general antTiority, as to third parties, with reference to such property. The only case which, it is helieved, mihtates against this East India •' • 1 1 Company «. view of the subject, is the following. An action was brought Hensley. to recover damages for the loss arising from the re-sale of a certain quantity of raw silk sold by the plaintiffs at one of their sales, to the defendant. The silk had been bought for the defendant by one B., a broker, and the defence set up by the defendant was ; — that his orders to B. were to buy the best Bengal raw-silk ; whereas this was not raw-silk, nor of the best quality ; and Lord Kenvon, before whom the cause was tried, after distinguishing between the power of a general and that of a special agent to bind his principal, is reported to have said : — that if in the present case the de- fendant could prove, that he had so specially authorized B. to bid for him for best Bengal silk, and this turned out to be not of that description, he should not be bound by a contract so made without his authority; but that B. should be liable to an action at the suit of the plaintiffs for the abuse of it {d). Now, it will be observed, that in the above report of this Remarks on case it is not stated whether there was evidence of the fol- * '^*'^' lowing facts ; first, whether B. was a known broker; or secondly, whether he had been in the habit of buying for the defendant at the company's sales on former occasions. The decision proceeds on the general ground, — that the broker having been authorized to purchase a commodity of one particular kind only, his principal was not bound by the purchase of any other. It is submitted however, that as a general proposition, this cannot be maintained. If it was part of the broker's ordinary business to make contracts of purchase, and if for this purpose he was in the habit of attending at places where goods were exposed for sale, surely the parties to whom such goods belonged would, from (d) East India Company v. Hensley, 1 Esp. 111. S4 Factors and Brokers. this very circumstance, have a right to assume that he had come to the place of sale clothed with full power to bind his principal by contracting for the purchase of any goods which might be there exposed for sale ; or if this be not admitted, is it then to be contended that the vendoi-s would be obliged in every case to consult the broker's mandate, in order to ascertain whether the authority thus apparently conferred on him was his real authority or not ? Such appears to be the only conclusion to wliich the decision now under review would lead ; but it is submitted that this conclusion is ex- pressly negatived by the whole tenor of the cases cited above; and that it is likewise at variance with those general princi- ples of policy, by which our courts are more or less influenced in the decision of all questions relating to mercantile trans- actions. Rinqnist v. Indeed in a case which was afterwai'ds decided by the Diicbvll. _ _ •' _ same leai-ned judge, he seems to have acted on the principle now contended for. The case was this. A broker in London had been employed by the master to advertize a ship as a general ship bound to Hamburgh; and in the printed papers the broker had inserted a clause, purporting that the ship was to sail with convoy from the place of rendezvous. There was no evidence given either of the assent or dissent of the defendants (the owners) to this warranty, or of their know- ledge of it. But there was contradictory evidence upon a question made at the trial, as to whether the master had for- bidden the broker to insert this clause. Lord Kent/on however told the jury, that he thought that point quite immaterial ; for, as the broker was authorized to advertize the ship, the owners were answerable to strangers for his acts, although he had exceeded his authority, and must seek their remedy against him. And accordingly the plaintiff" had a verdict (e). Conclojioa. This case appears to contain the only true principle hy (e) Rinquist V. Ditchell, cited Abbott on Ship. 113, 6th edition. This case was decided in Michas. 40 Geo. 3 ; that of the East India Company v. llensley, in Hit. 34 Geo. 3. Their Powers. 85 which to test the powers of a broker to bind his employer to third parties ; and if this be so, then it is submitted that the proposition stated above is fully borne out. A glance at the case itself will show this. The broker was authorized to ad\-ertize a ship — he had no instructions to insert in the advertisement any warranty as to sailing with convoy, but nevertheless he did so ; and his employer was held bound. Why 1 Because the broker, by inserting this clause, was not going beyond the scope of his usual employment. It was perfectly consistent with his business as a broker to insert the warranty in question; and therefore, although by so doing he went beyond his instructions, still, third parties who had no notice of these instructions were considered to be entitled to hold the principal to the warranty so made. But if the vendors of goods, prior to a sale taking place, Circum- issue and circulate catalogues of the goods to be sold, in „iii limjt the which catalogues are likewise contained the conditions of po^g^'* sale; it may be doubted whether a principal, to whom one of these catalogues is sent by his broker, and who authorizes his broker to purchase on the terms therein specified, would be bound by a contract entered into by his broker at such sale on any other than those terms, even although the ven- dors did not know that the party buying was merely a bro- ker. This point arose in the case of Horsfall v. Fuunt- leroy (/), but was not expressly decided. Mr. Justice Parke however, in delivering judgment in that case, expressed him self to be very strongly of opinion that, under the circum- stances mentioned, the principal could not be presumed to have authorized his broker to enter into a contract, on any other terms than those contained in the conditions of sale communicated to him. At all events it appears, that if the conditions of sale were such as to lead the principal to con- clude, that he would be safe in paying his broker the price of the goods purchased, the vendor would not be at liberty, in (/)]0B. &C.755. 86 Factors and Brokers. the event of the broker becoming bankrupt without having paid liini, to turn round and charge the principal (g). Caies in In the cases which wc have considered hitherto, the con- broker'* *coii. tracts of the broker, if they bind the principal at all, will ^rprTncipl'i'' ^'"'^ ^""^ absolutely ; but there are some cases in which the roniliiionaliy. principal IS only conditionally bound by such contracts. Tlius by the custom of London, where goods are sold by a broker to be paid for by bill, the principal has a right to annul the contract A-itliin a reasonable time, provided he is dissatisfied with the sufficiency of the purchaser. But the intimation of his dissent must be made so soon as he has had an opportunity of making inquiry ; and five days have been considered too long a time for that purpose {h). And in like manner, it lias been recently decided by the Court of Exchequer, that even in cases in which it is usual for third parties to credit the broker in the first instance whether the principal be named or not, (as is the custom on the Stock- Exchange), it is still open for the jury to say whether cre- dit was actually given to the broker or to his principal, and that if they find the latter, the principal will, notwithstanding the usage, be bound (t). Rule, where As has been already hinted however, these rules will not have iiotice of ^PP^y *^° ^"J ^^^^ '" which the person who deals with a fac- the facior's or tm- gr broker has notice of the extent of his actual authority, — broker s ac- , "^ tualaiiihoriiy. because in these cases the authority itself becomes, as be- tween the principal and the person with whom the agent deals, as much the measure of the agent's power as if the question was between him and his principal only ; and accordingly, if, in such a case, the agent go beyond his authority, the principal will not be bound (j). (g) Per Tenterden, C. J., Horsfall v. Fauntltroy, supra. (h) Hod<^soH V. Diivies, 2 Camp. 533. (0 M.ininier v. M'Caltan, 6 M. & W. 58. (j) Howard v. BruUhwaile, I Ves.&c B.202 ; Jacksoii v. Clarke, 1 Y. 6c Jer. 216. Their Powers. 87 So it appears, that even where the person with whom a Rule, where known factor or broker deals has no notice of the extent of broker goes his actual authority, the principal will, notwithstanding, be ^^^^^\ ^^^ at liberty to repudiate any contract entered into by him, authority of which is beyond the scope of the general authority of that agents, class of agents, unless, that is, he has enabled the factor or broker to deceive third parties, by furnishing him with the means of concealing his representative capacity {k). The reason of tliis appears to be, that persons engaged in mer- cantile transactions must be presumed to know what con- tracts are within the limits of the general authority of a factor or bi'oker ; and that therefore, before entering into a con- tract which is not of this character, they are bound to in- quire into the real authority of the person with whom they are about to contract. Tims, whilst on the one hand the law protects persons dealing with this class of agents, by binding their principals by all contracts entered into with them in the ordinary course of their business, so on the other, the principal is protected wherever the contract is not of this character. The agent in this latter case has not been clothed with an apparent authority — for that, as we have seen, can be presumed to extend only to acts within the scope of his usual employment ; and accordingly, when he goes beyond this, it becomes the duty of third persons to in- quire ii.to his real authority, nor can they neglect to do so except at their own peril. *' It would be well," says Lord Ellenborovgh, " if traders, when they deal with brokers as if they were merchants, would make themselves secure by first inquiring whether they will be borne out in dealing with them in that character; it would save a vast deal of risk and litigation" (/). At the same time, if the principal (k) Kewsom v. Thnrnton, 6 East, 17; De Leira v. Edwards, cited 1 M. & Sel. 147 ; Bnyson v. Coles, 6 M. lS: Sel. 14, 25 ; Bariu!^ v. Cortie, 2 B. & Al. 137, 144; Guerreiro\. Peile, 3 B. & Al.' 616; Barton v. Williams, 5 B. & Al. 395, 403; Ve Bouchout V. Goldsmid, 5 Ves. Jr. 211, 213. (i) Graliam v. Dysier, 6 M. & Sel. 1,4; see also the observa- 88 Factors and Brokers. enables liis factor or broker so to deal with property as to conceal iiis representative capacity, and thereby to mislead third parties, there can be no doubt that he will be bound by such dealings, even although the agent may, by engaging in them, have exceeded his general authority (m). What arts oi Having thus treated of the powers of factors and brokers brokers will ^0 bind their principals by contracts, let us now consider the bind their powers which they possess to bind their principals by acts done in connection with those contracts. General rule. The rule on this Subject has been thus stated. " An agent may undoubtedly, within the scope of his authority, bind his principal by his agreement, and in many cases by his acts. What the agent has said, may be what consti- tutes the agreement of the principal, or the representations or statements made may be the foundation of, or the in- ducement to the agreement. Therefore if writing is not necessary by law, evidence must be admitted to prove the agent did make that statement or representation" (n). In like manner it was said by another learned judge : — " When it is proved that A. is the agent of B., whatever A. does, or says, or writes, in the making of a contract as the agent of B., is admissible in evidence, because it is part of the con- tract which he makes for B., and therefore binds B"(o); and it has been well observed, that it is quite consistent with the rules of evidence that proof of the representation or statement of the agent in such cases should be admitted, because such representation or statement is in the nature of original evidence, and not of hearsay, — it being indeed the lions of Lawrence, J., in Netesom v. Thornton, supra ; and the recent case of Hawtayne v. Bourne, 7 M. & \V. 597, where the same principle is illustrated. (m) BovsMi V. Coles, 6 M. & Sel. 14. (h) Sir W. Grant, M. R., Fairlie v. Hastins:s, 10 Ves. Jr. 123, 126. {a) Per Gibbs, J., Langhorn v. Allmilt, 4 Taunt. 511, 519. Their Powers. 89 ultimate fact to be proved, and not a mere admission of some other fact(/j). " The reason of this rule," said the late Mr. Justice Park, " is nothing more than that which the law of England has for general convenience adopted, in treating of the relation between master and servant; declaring that the master must alwa3's be responsible for the act of his servant, if done by his express or implied command. It would indeed be of very mischievous consequence, if a man might shelter him- self from i-esponsibility of any kind, by throwing the blame upon his agent: — it would be to allow him to contradict a maxim of law which says, that no man shall be suffered to make any advantage of his own wrong; and would over- turn that wise principle of equity, — that when one of two innocent persons (for the master may, without danger to the argument, be supposed innocent), must suffer for the fraud or negligence of a third, he who gave credit to that third person shall bear the consequences arising from the confi- dence so reposed" {q). In order however to bind the principal, the act of the Qualifications , , , 1 . • T 1 J of ihis rule, agent must be done by his express or implied command; and the above rule must therefore be taken subject to the following qualifications. First ; it is clear that the act of an agent will not bind his principal, unless such act be within the scope of his general authority (r) ; — in the case of a factor or broker therefore it follows, that if the contract in con- nexion with which the act in question is done, be beyond the scope of his general authority, and therefore not bind- ing on his principal, the latter will not be bound by the act itself; — and secondly, it is necessary that the act in respect (p) 1 Phil, on Ev. 402 ; Greenleaf on Ev. 128. (9) 1 Park on Mar. Insur. 446, 8th edit. (r) Per Ashurst, J., Bauerman v. Radeniits, 7 T. R. 663, and see Drake v. Marryat, 1 B. & C. 473 ; iiiwwbull v. Goodricke, 4 B. & Ad. 541 ; Garth v. Howard, 8 Bing. 451. 90 Factors and Brokers. of which tlie principal is sought to be charged, should have been done at the time of making the contract (s), or, in the words of Sir W. Grant, it must appear that it was the foun- dation of, or inducement to the contract. Unless this be the case, the act in question cannot be considered to form part of the res gestd, and therefore, will not bind the prin- cipal. These qualifications will in all cases be insisted on ; and it appears to be necessary for the protection of the principal that they should, because, — although, for some purposes, a person who deals with an agent is considered to be dealing with his principal, and. has therefore a right to hold the lat- ter bound by the representations and statements of the for- mer, — still, the representation of the agent cannot be re- garded as that of the principal, if it be made with reference to a contract into which the former has entered without any authority either real or apparent from the latter, inasmuch as, beyond these limits the agent does not represent his princi- pal at all ; and for a like reason, the representation of the agent cannot be regarded as that of the principal, where it is not made until after the contract with reference to which it is made has been completed, — because, with the comple- tion of the contract, the agent's authority, quoad that con- tract, is determined. It is evident then, that in such cases the principal gives no warrant to third parties to regard representations made by his agent, as having been made by himself; and justice therefore does not require that he should be bound by them. Subject to the above observations, the following may be regarded as the result of the cases on this subject. Principal First, the principal will be bound by the representation of (s) Dawson v, Alty, 7 East, 367 ; Helyear v. Hawke, 5 Esp. 72. ^ Their Powers. 91 his factor or broker, made with i-eference to any contract bound by the entered into by tlie latter on his behalf(<), unless there be tionof his evidence of such representation having been altered or with- ^^^"^ ^^ '^**' drawn, previous to the completion of the contract (?<). So the declaration or admission of the factor or broker. By his decla- made imder like circumstances, will bind his principal (x) ; mission, but whether evidence of a mere acknowledgment by a fac- tor employed to buy goods, that he had received such goods, ■would be evidence of their having been delivered to his principal, so as to bind him, is very doubtful. It is true that in the marginal note to the case of Biggs v. Lawrence {y), the law is so stated. But on reference to the text of that decision it will be found, that the agent, the effect of whose acknowledgment was then in dispute, was an agent em- ployed not to buy, but only to receive goods which were to be procured by another ; and the report states that Mr. Jus- tice Buller, — who tried the cause — held at Nisi Prius, that an acknowledgment under the hand of such an agent would be evidence against his principal, as much as if it had been in the hand-writing of the principal himself. If this be law, then it would seem to follow, — not that, where a factor is employed to purchase goods, his acknowledgment of having received them will be evidence of a delivery to the principal, — but, that if goods were sent to a factor by a third person, for sale on his principal's account, his acknow- ledgment of having received them would be attended with this effect. But whether this be law or no admits of much question. The point involved in the above dictum of Mr. Justice Buller was not, let it be observed, the principal point in the case ; nor does it appear to have entered into (0 Moens v. Hexiworth, 10 M. & W. 147 ; Helyear v. Hawke, 5 Esp. 71 ; Alexander v. Gibson, 2 Camp. 555; Rinquist v. Ditchell, cited Abbott on Ship. 113, sixth edition. (w) Edwardu v. Fnotner, 1 Camp. 530. (x) Petn V. Husue, 5 Esp. 133. (y) 3 T. R. 454. Factors and Brokers. the consideration of the court, in coming to their ultimate decision with reference thereto. Moreover a doubt was expressed as to the correctness of that dictum in the subse- quent case of Bauerman v. Rudenius {z) ; and it was even stated by counsel in the course of the argument in that case, tliat Lord Kerii/on had frequently ruled the contrary at sittings since the time of Biggs v. Lawrence, without the correctness of such ruling ever having been questioned; but, as neither that learned judge (who was present during the argument in the case of Bauerman v. Rudenius,) nor his learned brethren on the bench, expressed any opinion as to the correctness or incorrectness of the disputed dictum, and as it is believed that there is no case since that time in which the precise point has arisen, it must still be regarded as a vexutu qutestio. It has indeed been decided that a letter from an agent abroad stating the receipt of money, coupled with the answer of the principal directing the disposition of the money, is evidence of the receipt of such money by the latter (a). But this case, it will at once be seen, does not depend upon the bai-e admission of the agent, and therefore does not strengthen the position said to have been laid down in Biggs v. Lawrence. Sach adtnis- Again, previous to the passing of the statute 9 Geo. 4, «ion will not . . . take a debt c. 14, it was held, that the admission of any servant or agent statute of intrusted by the principal to transact his business for him, limitation,. ^q^,ij ^^^^.^ j^^^^j ^j^^ ^g.^^^ ^^ ^,^-^^^^ ^ ^^^^ ^^^ ^^ ^^^^ statute of limitations (t). But this is no longer the case, it being now decided, that the written acknowledgment required for that purpose by the said statute of the 9 Geo. 4, c. 14, must bear the actual signature of the party to be charged thereby ; and that the signature of an agent will not suf- (t) 7 T. R. 663. (fl) Coatesv. Buinbridge, 5 Bing. 58. (6) Fatethorpe v. Furnish, 2 Esp. 511. Their Powers. OS fice ((•). Such an admission therefore by a factor or broker will not bind his principal. And, as the declaration or admission of the factor or bro- Principal ' _ bound by Ihc ker will bind his principal, so the latter will be bound by the misrepresent - misrepresentation or concealment by the former of any ma- factor or bro- terial fact connected with the subject of his agency, whether ^*'^' such misrepresentation or concealment happen through the fraud of the agent, or merely through his negligence. Thus in the case of Shirley v. Wilkinwn (d), it was held by Lord Munsjidd and the rest of the court, that if a broker at the time when he effects a policy does not, in representing to the underwriter the state of the ship and the last intelli- gence concerning her, disclose the whole, and what he con- ceals shall appear to the jury to be inaterial, they ought to find for the underwriter ; because in such a case the contract is void, although the concealment may have been innocent, the facts not communicated having appeared immaterial to the broker, and having been concealed merely on that ac- count. But where a broker, in pursuance of instructions previously received, effected a policy at Lloyd's, and at that time there was a letter lying unopened on his table at the coal-exchange, which letter announced the ship's loss; it was held that the jury were warranted in finding, that this was not such negligence on his part as to avoid the policy (e). And it has likewise been held ; that if an insurance-broker, at the time he eflTects a policy, state merely by way of in- ference and computation, that the ship on which the policy is eflTected is at a certain place, and it turn out that he was wholly mistaken, this will not avoid the policy ; — the under- writer not having taken the pains to inquire what were the facts on which the broker formed his conclusion {/). But where a factor — employed by an agent of the plaintiff to pur- (f) Hyde v. Jchnson, 3 Scott, 289. (d) IDoug. 306, note 81. (e) Wukev. Ally, 4 Taunt. 493. (/) Brine v. Featherstone, 4 Taunt. 869. 9 1 Factors and Brokers. chase a cargo of oats, which were to be consigned to one F., on the plaintiff's account — purchased and shipped the oats accordingly, and advised the plaintiff that he had so done ; whereupon the plaintiff caused an insurance to be effected on the said cargo ; but it appeared that before the factor's letter was despatched, he knew that the ship had been lost; it was held that the plaintiff could not recover, " because it must be taken for granted that the principal knows whatever the agent knows ; and if he build his information on that of his agent, and his agent be guilty of misrepresentation, the principal must suffer (g)." In like manner, if a cargo of goods be consigned to a fac- tor, with instructions to effect insurance thereon, and he conceal anj' material fact, the underwriters will be dis- charged (//) ; or if a factor sell goods of one kind or quality, and represent them to be of another, the merchant will be liable for the consequences of this fraudulent sale, although there has been no fraud on his part (j). In all these cases the principal is held liable on the ground already mentioned, namely, that where one of two innocent persons must suffer by the fraud or negligence of a third, the loss should fall on him by whom the latter was accredited, rather than on a stranger (k). (g) Fitzherbert v. Mather, 1 T. R. 12, 16. (/i) Willes V. Glover, 1 Bos. & Pul. N. R. 14 ; and see Da Costa V. Scanderet, 2 P. VVras. 170; Seaman v, Fonnereau, 2 Sir. 1183 ; Hodgson v. Richardson, 1 BI. 463. (i) Hern v. Nichols, 1 Salk. 289 ; Com. Dig. Action on the Case for Deceit, B. (k) Per Buller, J., Fitzherbert v. Mather, supra ; and see per Iloh, C. J., Hern v. Nichols, supra ; 1 Park on Mar. Insur. 446, 8th edition ; and per Denman, C. J ., in the recent case of Taylor V. Green, 8 C. & P. 316. As to what will be sufficient evidence of fraud, so as to avoid a contract as against the pnncipal, on ac- count of a representation made by the agent, see Comfoote v, Voirke, 6 iM. & \V. 358, and Moens v. Heyworth, 10 M. &c W. 147, in which latter case it was held by the Court of Exchequer, Abinger, C. B., disseutienle, tliat a collateral statement, made at the lime of entering into a contract, but noterabodied in it, must, Their Powers. 95 Under this branch of our subject, it now remains for us Acts of third . ■ , r paitifs which only to State, what acts of third parties deahng vvitli factors will bind the or brokers will bhid their principals. pnacipa . First then ; it is clear that notice to a factor or broker, of J^"""Pi"' ' _ bounn by iio- any fact or circumstance connected with a transaction in lice to his •which he is engaged for his employer, will bind the latter ; ijer. and it appears that the principal will be equally bound by notice given to his agent, whether such notice be actual or merely constructive (/). These rules follow naturally from the maxim, — that it must be presumed the principal knows whatever the agent knows (»?) ; and they are consistent with the soundest principles of policy ; for, as has been well observed, were it otherwise, the neglect of the agent, whether intentional or not, might operate very prejudicially on the rights of third parties. In order however to the principal's being affected by notice to his agent, it must appear that the latter had such notice while he was in fact concerned for the principal, — and in- deed in the course of the very transaction respecting which the notice was given (?«) ; and in like manner, as the know- ledge of the agent is the knowledge of the principal only so far as the agency extends, it follows, that the principal will not be affected by notice to his agent in any matter which is not within the authority of the latter. Where therefore, to an action brought for improperly loading a cargo of timber, whereby it was lost, the answer was, that it had been so in order to invalidate the contract on the ground of its being a fraudulent statement, be shown not only to have been false, but to have been known to be so by the party making it, and that the other party was thereby induced to enter into the contract. (l) Hiern v. Mill, 13 Ves. 120; Chandos v. Brownhw, 2 Ridgw. P. C. 394. (m) Per Ashurst, J., Fitzherbert v. Mather, supra; and per Littledale, J., Berkley v. Watling, 7 A. & El. 29, 38. (n) Hiern v. Mill, supra; Muuntford v. Scott, 3 JVIadd. 34; 1 M. & R. 66. 9Ct Factors and Brokers, loaded with tlie assent of the plaintifT; but the only evidence in support of this was, that the plaintiff's agent knew of the manner in which it had been loaded without having made any objection thereto ; it was held, that the knowledge and assent of the plaintiff could not be inferred from that fact, as it was not shown that the agent had any authority to inter- fere with the loading of the timber in question (o). By payment It has likewise been long recognized as a rule in our law, to bii factor. -i p • i ,^ i • that a payment li'ade to a factor in the course of his em- ployment will bind his principal, unless the latter have given the debtor express notice not to pay the factor. " The pur- chaser of goods from a factor," says Lord Manajield, "has a right to ])ay him the money and be discharged ; yet when the principal and factor have a dispute, the buyer, with notice of such dispute, has no right to prejudice the title of the principal" (p). In like manner it was said by Mr. Jus- tice Buller, — " a factor's sale does by the general rule of law create a contract between the owner and buyer; and therefore, if a factor sell for payment at a future day, and the owner give notice to the buyer to pay him and not the factor, the buyer would not be justified in afterwards paying the factor" (9) ; and this rule has now been made the sub- ject of legislative provision ; for, by the statute 6 Geo. 4, c. 94, s. 4, it is enacted : — that it shall be lawful for any per- son to contract with any agent intrusted with goods, or to whom the same may be consigned, for the purchase of any such goods, and to pay for the same to such agent; and that such payment shall be binding upon the owner of such goods, notwithstanding such person shall have notice that the per- son entering into such contract is an agent : provided such payment be made in the usual and ordinary course of busi- ness, and that such person shall not, when such contract is (0) Gould V. Oliver, 2 Scott, N. R. 241, 263. (p) Drinkivater v. Gooduvi, Cowper, 251 , 255. (V) Buller's N. P. 130, and see Maun v. Forester, 4 Camp. 60. Their Powers. 97 entered into or payment made, have notice that such agent is not authorized to sell the said goods, or receive the said purchase money. It should however be borne in mind, that the mere ab- sence of notice that the agent intrusted with the goods is not authorized to sell, will not protect a purchaser under this statute, unless it appear that the agent's ordinary business was that of a factor. And therefore, where a wharfinger, who was also in the habit of doing business as a flour factor, received flour merely in his capacity of wharfinger, and without any authority to sell the same ; and the defendant, having no notice of the wharfinger's want of authority, pur- chased the flour in question from him, and paid him the price, with which he afterwards absconded : — it was held, that the owner of the flour might maintain trover against the purchaser, notwithstanding the statute (r). Again, it is presumed that payment to a factor would bind Even after the principal, even after the revocation of the factor's autho- authority, if ritj-, provided the party paying had no notice of such revo- "'^''^ wuhoiu notice. cation (s). But it appears that in the event of the factor becoming bankrupt, it would be otherwise ; for that event, of itself, operates as a revocation of his authority to receive any money on account of his principal (<). Nor will payment to a factor, before the time of credit But not, ir has expired, bind his principal, unless there be a custom to ,|;g ,;,„£ „, that effect in the particular trade, from the prevalence of '^'!*^'''' '•'** ^''' M'hich both parties must be supposed to have known that they were dealing on the terms of such custom ; or unless (r) Mfltik V. Whittenburn, 2 B. & Ad. 484. (s) See Monk v. Claytoii, JMolloy, 270. The law of Scotland is expressly to this eflect. Eiskine's words are : — " payment to one who had formerly been factor to the creditor, before the re- vocation of the factory was intimated to the debtor, exlinguishes the obligation effectually." Inst. B. 3, Tit. 4, j 3. (0 Per Holroyd, J., Hudson v. Granger, 5 B. & Al. 27, 33. F 118 Factors and Brokers. the principal has allowed the factor to deal with the goods as his own ((/). Payment to a An opinion was at one time entertained, that where a biud"hr pilu- factor acted under a del credere commission, the buyer would cipai, alter be Safe in paving; him the price of o^oods sold by him on notice, even i ^ o ^ r o ^ j although the account of liis principal, even afier notice by the latter not del credere. " to V^y <'^*3 factor (.-'). But tliis doctrine was founded on an erroneous opinion of the nature of tlie commission del cre- dere, and it is now quite exploded. The mistake arose thus. It was considered that the commission del credere was an ab- solute engagement from the factor to tlie principal, to pay for the goods sold, and that it made him liable to his principal in the first instance (?/) ; and hence it was argued, that if the fac- tor were not warranted, under such circumstances, to receive the price from the vendee, it would be a great hardship on him ; because he would still be liable to his principal under his del credere commission, and yet not have the means of getting the money into his own hands by calling on the vendee (z). This point however was aftei-wards more fully looked into, and the court uliimately expressed their opinion to be, that the commission del credere was nothing more than the premium or price given by the principal to the factor for his guuruiilee ; that it presupposed a guarantee ; and that therefore, the effect of it was merely to render the factor answerable for the solvency of the vendee, so that on the failure of the latter the factor should stand in his place, and make his default good («). From this view of the case it became evident, that the object of the principal in giving a del credere commission was to obtain an additional secu- (jO Heischv. Can-ington, 5 C. & P. 471 ; 11 Ad.& El. 555. (x) Scrimshire v. Alderioii, Stra. 1182; per Chambre, J., Hoiighlon V. Matthews, 3 Bos. & Pul. 489. (v) Per Lord ftlansfield, C. J., Grove v. Dubois, 1 T. R. 112, 115. (s) Per Bayley, J.. Morris v. Cleaihy, 1 M. & Sel. 576, 582 (a) Morris v. Cleasby, 4 W. & Sel. 666, 574. Theh Powers. 99 rity, — that namely of the factor ; and it was said, that it would be extremely hard, if, instead of having an additional security, he shoidd find that he had only substituted one for another, that, in fact, he had merely shifted the responsi- bility from the buyer to the factor. But such, it was con- sidered, was not the effect of the commission del credere. A sale effected by a factor, it was said, must always be taken to create a contract between the owner and the buyer, whether the factor acted under a del credere commission or not; the owner therefore had, in this, as in other cases, a right to look for payment to the buyer, and might at any time before the factor was paid, step in and require pay- ment to himself; and hence it was concluded, that although, before the principal interfered, the vendee would, by paying the factor in due course and according to the contract, be protected, — still, if he paid him after the principal had in- terfered, he paid entirely on the credit of the factor, and that therefore, if the latter made default, the purchaser would still be liable to the principal (6). It is however, well settled, that when the principal is in- Unless the !•/■ iiir balance of debted to his factor on the general balance of accounts, accounts be in a payment to the latter will bind the principal, even after fact°o/. ° notice. " There is no case in law or in equity," says Lord Mansfield, " where a factor, having money due to him to the amount of the debt in dispute, was ever prevented from taking money for goods in his hands (c) ;" and this doctrine is founded on the principle, that a factor has a lien on the price of goods in the hands of the buyer ; and that for this reason, although he have not the possession of the goods, still, as he has the power of giving a discharge or bringing an action for the price, he has a right to retain the money in consequence of his lien, just as the mortgagee (6) Hornby v. LaC}), 6 M. & Sel. 166, 172. (c) Drinkwaterv. Goodwin, Cowp. 251, 255. f2 1 00 Factors and Brokers. of an estate has, when the title deeds remain in liis hands, althouj;h lie is not in actual possession (d). I'.iyiiitiit lo In conformity with this principle it has hecn held, that, a4»ii;iice« will cven after the bankruptcy of the factor, a payment to his bind iiie prill- asgijrnees wiU bind the principal, if the balance of account cip^il, II IJie o II' balance be in jj^ against the latter. This pohit was decided in the foUow- favoiir uf the ° /. i , ■ • i . i factor. ing case. 1 he owner of goods benig indebted to a factor, in an amount exceedhig their value, consigned them to him for sale; and the factor, being similarly indebted to J. S., sold the goods to him. The factor afterwards became bank- rupt; and on a settlement of accounts between J. S. and the assignees, J. S. allowed credit to them for the price of the goods, and proved for the residue of his claim against the estate ; and it was held, that as the factor had a lien on the whole price of the goods, such settlement of accounts be- tween the vendee and the assignees, afTorded a good answer to an action by the original owner against the vendee for the price of the goods. " The factor," said Mr. Justice Best, " having a lien on the goods, and on the proceeds when received, had a right to require that the money should be paid to him, and not to his principal ; and he had also a right even to retain the money against his principal. The payment to the factor, or to his assignees, who stand in his place, was therefore a valid payment as against the principal, and this is a good answer to the present action (e)." Where a far- j\nd not onlv Will the princiijal be bound by actual pay- tor sells gootis , . ~ , ./. , 1 ,1 1 , . for an iindis- mcnt to his factor ; but, if the latter sell goods as his own, pr('uhe''fai'i'i;'r ^^^ ^^^ buyer knows nothing of any principal, the buyer 18 bound by a ^^^y set off any demand he may have on the factor, afi:ainst set.otf against ' •' •' . the former, the demand for such goods, made by the principal (J'). The (d) See per Lord iMansfieltl, Drinkwater v. Coodv:iit, supra. (e) /i«W.M)H V. Granger, 5 15. & Al. 27, 34 ; see also, Scott v. Siiiviait, \\ illes, 400; and Garrutt v. CvlUim, ib. 405. (/) George \. Cluogett, 7 'J'. R. 359; liabiwe v. Wiltuims, Strucy V. Vecy, Ibid, notes a, and r. ; Carr v. Hinchcliff,A B.fic i Their Powers. 1 01 reason of this is, that when a contract, not under seal, is made with an agent in his own name for an undisclosed principal, either the agent or the principal may sue upon it; and it is therefore just that the defendant should, in the event of the principal suing on such contract, be placed in the same situation as if the agent had actually been tlie contracting party, and had brought the action in his own name (g). It does not even appear to be necessary, in order to en- title the buyer to this right, that the debt sought to be set off should have been contracted by the factor, before the principal was disclosed. This point was decided in the fol- lowing case. A factor was employed to sell a cargo of goods consigned to him, and on the 6th of February sold to A. one parcel of the goods, and delivered to him an invoice in his own name. On the 13th of the same month A. applied to pur- chase another parcel ; but some difference occurring as to the price, the factor said he must write to his principals. He did so, and afterwards informed A. of their answer. A. bought the goods at the price named by the principals; and on the 20th the factor delivered to him an invoice and bought-note in the names of the principals. On the same day the factor apphed to A. to accept a bill, (not expressly on account of these goods). He did so, and also made other advances to the factor, which covered the price of the first pai'cel sold on the 6th of Februari/, except a sum which was paid into court. It was proved that the factor sometimes sold goods on his own account to pay himself advances; and that some- times he sold as a factor ; that in the former case it was his practice to deliver invoices in his own name ; and in the lat- ter to deliver also bought-notes. The question between the parties was ; whether A. was entitled, as against the princi- C. 547 ; PurcheU v. Salter, 1 A. & El. N. S. 197 ; and see 6 Geo. 4, c. 94, s. 6. (f) See Sims v. Bond, 5 B. & Ad. 389, 393. 1 02 Factors and Brokers. pals, to deduct the sum paid by him to the factor on the bill of exchange, as well as the other monies advanced to him ; and the learned judge told the jury, that the bill could not be considered as payment for the goods; but that if they were of opinion that the factor sold the goods on his own account, and that A. bandjide believed he had avillicrity to do so, then the principals were bound by all the equities which existed against the factor, and consequently must allow A. to set off the amount of his advances to them, against the price of the goods. The jury thereupon found, that they beheved the factor had communicated to A. that he sold the goods for other persons as principals, but that A., on the 6th of Febriiarii , and until the 2()lh, honufwe believed that he was purchasing from the factor, and that he sold to pay him- self advances ; and that using the ordinary precaution of merchants, he was not bound to make any further inquiry on the 20th, when he accepted the bill. The verdict was thereupon entered for the defendant (x\.), and the court, on motion made to enter it for the plaintiffs (the principals), after taking time to consider, refused a rule(/i). So he is bound It was likewise held by Chief Justice Gibba (t), that if a sob-^agent factor be instnicted to sell goods, and, having authority so to hclot^ ^^^ ^^' ^^ employ a third party to eflect such sale, in whose hands he places the goods for this purpose, without disclos- ing his principal, — such ihird party, if previously under ad- vances to the factor, would be entitled to set off" the amount of those advances, against the claim of the principal for the proceeds of the goods; and that, — such advances being a just debt between the factor and the person employed by him, — the circumstance of the latter giving the factor credit in account for the monies received on tlie sale of the goods, would, as between them, be a good pa3'ment; so that the (ft; Warner v. WKay, 1 M. & W. 591. (i) Whitlenbury v. Forrester, cited, 6 M. & Sel. 7, note. Their Powers. 103 principal, not having been known at the time the transac- tion took place, would be bound thereby. And now by the statute 6 Geo. 4, c. 94, s. 1, the principle Principle or of these cases is extended so far, as to give the consignee confirmed by of goods, where the real owner is undisclosed, a lien on ^'^^;j^ ^*j'' *' those goods, for the amount of the factor's debt to him. For by that section it is enacted ; — that any person intrust- ed for the purpose of consignment or sale with any goods, and who shall have shipped such goods in his own name, or in whose name any goods shall have been shipped by any other person, shall be taken to be the true owner thereof, so far as to entitle the consignee thei-eof to a lien thereon in respect of any money or negociable security advanced by such consignee for the use of the person in whose name the goods shall be shipped, or received by such person to the use of such consignee, in like manner as if such person was the true owner of the goods, provided the consignee had not notice by the bill of lading or otherwise, that such person was not the actual and bond fide owner thereof. And by the same section it is enacted, that such person shall be taken, for the purposes of the act, to have been intrusted with the goods for the purpose of consign- ment or sale, unless the contrary be made to appear (k). But if, before the goods are all delivered, and before any when the part of them is paid for, the purchaser is informed that they JJot"bonnVby belonged to a third person, he will not be allowed, in an set-off against ,,,.., , • \. 1 the factor, action brought by the prmcipal to recover the price of such goods, to set off a debt due to him from the factor (/). We have already seen that a broker has, in general, no Payinent to a (/c) For the above siature, ree Appendix. (i) Moore V. ClemeiUsou, 2 Camp. 22. Tlie same rules as to the right of a purchaser lo set ofi', against ihe principal, a debt due from Ills faoior, are adopied by the law of Scoiland. — Eisk. Inst. B. 3, Tit. 4, § 13, note 1, :\]jcallan's edition, 1838, the Litter is ondicclixed. 1 oi Factors and Brokers. broker will authority to sell in his own name, and therefore no authority cipal, where to receive payment for goods sold by him. If, however, the broker sells goods for an undisclosed principal, a pay- ment made to him in the usual course of trade, on account of such goods, will bind his principal (;«). Indeed it has been said that a broker, acting for an undisclosed principal, may even vary the terms of payment after the sale is com- pleted, and that although the principal may interfere at any time before payment, yet he cannot rescind what has before been done by his broker, —because, where the person em- ployed to sell, himself acts as principal, the real principal, knowing this, must be taken to have authorized his mode of dealing and all its consequences (ra). If therefore it appear, that the owner of goods has allowed the broker through whom he sold them, to sell them as a principal, the purchaser of goods so sold will be discharged, by payment to the broker in any way which would have been sufficient had he been the real owner (o). What will be There can however be no question, that the rule laid down sufficient no- . , . . .,11 i 1 • 1 • 1 tice of the in the above decisions will apply to those cases only in wnicn whiciMhe' the broker actually appears as principal; and that if the broker acts? party vvith whom the broker deals, knows that in the par- ticular transaction he acts as broker merely, a payment to him, otherwise than on the terms of the contract, will not bind his employer. What then will be considered sufficient notice of the character in which the broker acts ? On this point there seems to be some doubt. Thus in the case of Coates v. Lewis (p) it was suggested, that the defendants must have known that the broker was not acting on his own account, because they knew him to (m) Favenc v. Bennett, 11 East, 36. (n) Per Lord Ellenborough, Coates v. Lewis, 1 Camp. 444; Blackburn v.Scholes,2 Camp. 341, 343. (0) Coaies V. Lewis, supra, (p) Supra. Their Powers. 105 be a sworn broker of tlie city of London. But Lord Ellen- borough said, that a breach of the broker's duties in that respect could not affect the rights of third parties ; and con- sequently he overruled the objection. So, in the case of Blackburn v. Scholes(!!), it was objected on the part of the plaintiff, — that the defendant must have known that the person from whom he bought was acting only in the capa- city of broker, because he was described in the catalogues of sale as a sworn broker. But it is stated, — in the marginal note to that case, — to have been held, that the circumstance of a person selling goods being so described in the cata- logue of sale, was not sufficient notice to a purchaser that he was onlv an agent, so as to prevent such purchaser from dealing with him as principal. It is submitted however, that the authority of both these cases, with reference to this point, is much shaken by that of Baring v. Corrie {t), and that, in all probability, it would now be held, that such notice of the character of the seller would be sufficient to render it incumbent on the buyer, at least, to inquire into the authority of the former to receive payment on behalf of his principal ; so that if payment were made without such inquiry, it would not bind him. Indeed it would seem, that subsequently to the decision of the above cases of Coates v. Lewis and Blackburn v. Sc/ioles, Lord Ellenborough himself entertained this opinion. This may be inferred from the following case. An action was brought by the assignees of a bankrupt to recover the price of a quantity of skins which had been sold by the bankmpt to the defendant. It appeared that the contract was con- cluded thi-ough the intervention of T. & Co., who had acted as brokers for both parties, and that the terms fixed for pay- ment were, — bill at four months, two-and-a-half discount for ready money, prompt 14 days. It further appeared that the (s) Supra. (t)2 13. & Al. 137. 1 OU Factors and Brokers. defendants knew tliat T, ^ Co. were l)rokers, but that they did not know for whom they were concerned in the sale in question ; and it was proved, that after the bargain was completed tliey ])aid T. & Co. for the skins, not according to the terms originally agreed npon, but by ])ill at two months, deducting one-and-a-half discount. There was, however, no evidence that T. & Co. had been authorized by their employer to accept paymcjit in this way, and accord- ingly Lord .FJtenl)ori)ii<'li decided ; — that, as the payment made to the brok'>rs was not a payment under the terms of the contract, it was not available as a defence to the claim of the principal (h). When pay- But eveii where the principal is known, a payment to his brokerViii broker, although out of the usual course, will bind him, pro- bind the prin- vided the broker have on former occasions received payments cipal, al- _ , , ...,,. though iheiat- in a similar way with the sanction of his principal. This doctrine is established by the following decision. A., as the broker of U. S: Co., sold goods to C, and drew a bill-of- exchange in his own name for the amount, which C. ac- cepted and paid, A. subsequently became bankrupt, where- upon 13. & Co. disavowed the transaction, and called upon C. for payment. This C. refused, — alleging that he had already paid the liroker, — and, as B. & Co, refused to de- liver the goods, lie brouglit trover against them in order to obtain possession of tlie same. It was contended on behalf of B. & Co. tliat, as C. liad paid the broker and not them, they were entitled to the goods; but Gibbs, C. J., held, that inasmucli as B. S: Co. had sutfered their broker upon some occasions to draw bills in his own name, without mention of them as his principals, they wore bound by the payment which had been niade to him by C. in the present instance, and that in consequence C. was entitled to the goods (j-). (m) Campbell v. Hussel, 1 Staikie, 233. (i) Townsend v. Inglh, Molt, N. P. C. 278. TMr Powers. 107 ' Such are the circumstances under whicli, and the modes Payment .„ . 1 1 • 1 '""*' ^^ made ' m which, payments made to a broker will m general bmd expressly on ] his principal. There is however a further requisite in order p^r^'tuiaf '''^ to give this effect to such payments, and that is, — that they ''«'"• must be made expressly on account of the particular debt from which the buyer seeks to be discharged ; and there- : fore, where the defendants were indebted for two parcels of ) goods which they had purchased from different parties by \ the intervention of the same brokei", and for which they had j accepted a bill drawn on them by the broker, the amount of J which bill was greater than the price of either parcel, but I less than that of the two together, and no specific appropria- tion of which to either parcel had been made at the time; — it was held, that the payment so made should be apportioned between the respective owners of the goods, and that the '[ principal might recover for the difference (i/). i We have seen that the purchaser of goods from a factor, Set-off against ; who acts for an undisclosed principal, may set off a debt due will not bind from the factor to himself, against a claim made by the '"^ pimcipai. principal for the price of such goods. But where goods are I sold through the intervention of a broker, it is otherwise. ' This is owing to the difference which exists between the i character of a broker, and that of a factor. The latter, it will I be remembered, has the power of selling in his own name ; j and when he does so. the law places the vendee in the same I situation, after the discovery of the principal, as he was before, ] and allows him therefore to assert against the principal any \ claim of set-olF which he might have asserted against the fac- tor. But when a broker sells goods without disclosing the j name of his principal, he acts beyond the scope of his autho- j rity; his principal, therefore, is not bound by the consequences of such sale, and hence he cannot be affected by any claim of j set-off which may exist between the broker and the vendee (z). ! (v) Favenc v. Bennett, 11 East, 36. I'z) Baring v. Carrie, 2 B. & Al. 137. 108 Factors and Brokers. It appears moreover, that it will be sufficient to deprive the purchaser of this right, if he knew that the seller was a bro- ker, even without knowing that he acted as a broker in the particular instance ; and that where it is doubtful whether a party sells as a broker or not, it is the duty of the buyer to make inquiry in order to satisfy himself of the fact(«). If, however, the principal enables the broker to mislead the purchaser, — as by delivering to hlni either the possession of, or the indicia of property in the goods to be sold, — it will be otherwise (6). '^leMion, as It has been made on various occasions a matter of ques- an und'e'r." ° tion, — whether a broker who adjusts a loss on a policy of in- writer to set surance has any authority to bind his principal, except by principal, receiving payment of such loss in money ; or whether, on from iiie bro- the contrary, the underwriter has the riglit or settmg on the amount of any premiums which may be due from the bro- ker to him, against the claim of the assured for such loss. I>e Gammde The first case in which this point appears to have arisen, was that of De Guwinde v. Figou (c), and it was there held, —that, in an action against an underwriter for a loss, he can- not set off premiums due to him from the broker, unless he can make it appear that the state of the relative accounts between the assured, the broker, and himself, is such as to take the case out of the ordinary rule, namely, — that the re- ceipt of the underwriter for the premium is conclusive evi- dence for the assured, that the premium has been actually paid to him. Todd V. Reid. The same question afterwards arose in the case of Todd V. Reid (d). That was an action by the assured against an (o) Baring v. Carrie, supra. (6) lb. and see Bell's Princip Law of Scotland, § 573. (c) 4 Taunt. 246. Id) 4 13. & AI.210. Their Powers. 109 i underwriter, and tlie question was, — whether the loss had beenjDaid. Thepolicy had been adjusted between the broker and the defendant, and part of the sum for which the latter had subscribed the policy had been paid over to the plaintiff. At the time of settling the loss the broker was indebted to the underwriter for premiums on other policies of insurance, — \ to which policies, however, the plaintiff was not a party, — in I a sum equal to the residue of the money due on the policy in i question. This sum was allowed in account between the bro- i kerand the underwriter : and it was contended that this was to be considered as a payment to the assured to that amount. i It was proved at the trial, that it had been the practice at Lloyd's, for many years, thus to settle losses between the Usage at broker and the underwriter ; but the learned judge who * ; tried the cause was of opinion that the broker, as agent of \ the assured, was only entitled to receive payment in money, ' and that no usage could sanction such a practice as that I which was stated to have prevailed in this particular business. This decision was afterwards confirmed by the whole court. In the next case in which the question occurred, the facts Russell r. I 1 • Bangley. were the same as those in the case just quoted, except that the amount of the loss had not only been allowed in 1 account between the broker and the underwriter, but had ' also been passed to the credit of the assured in the account ! between him and the broker, and a bill drawn by the assured and accepted by the broker for the balance. This, it was contended, amounted to an agreement by the assured, to \ accept the broker as his debtor instead of the underwriter, and must, as between the underwriter and the assured, ! operate as a payment of the loss in question ; but the court : decided to the contrary ; resting their opinion, however, i chiefly on the ground, that, at the time of the settlement, 'i the name of the underwriter had not been struck off the policy (e). ' (e) Russell v. Bangley, 4 B. & Al. 395. 1 1 Factors and Brokers. Bartlett e. The same point was again discussed in the case of Bart- I'eniland. ' , , . , ,. . i i • letl V. PentlumL{f) ; and there, in addition to there being evidence of the allowance of the loss in account between the parties, according to the usage at Lloi/d'a, and of the giving of a bill by the broker to the assured for the balance, as in the case of Riisaell V. Baiiglei/; there was also evidence, that at the time of the settlement the undei writer's name had been struck off the policy. There was however no proof that the name of the underwriter had been struck out with the consent of the assured ; nor was iL shown that the brokers had any express authority to settle the loss in question according to the usage at Lload's, or that the assured knew of such usage, or that the course of dealing between the broker and himself was such as to raise an im])hed authority in the former to comply therewith: and for these reasons, the court held the under wriier liable. Scott V. In the subsequent case of Scoit v. Irving (g), this right of set-off in the underwriter by virtue of the above usage, was again asserted, and it was again disallowed by the court, on the broad ground, that the assured was not shown to be cognizant of it. The authority of the broker, it was said, was priiiiu Jiiiie lo receive payment in money. A special authority might be given to receive payment in some other mode ; and such authority might be infen-ed from facts, or from some usage to which (he assured had assented ; but such usage could be binding only on those who were ac- quainted with it, and had consented to be bound by it. Stewart c. The effect of these decisions was recently very fully con- Aberdein. . , , i ,-, /. t- i • i . n • sidered by the (. ourt ot hxchequer m the lollowing case. An action was brought by the assured on a policy of in- surance, to recover from one of (he underwriters the amount of his subscription. The defendant pleaded, amongst other (/) 10 B. Sc C. 760. (g) 1 B. & Ad. 605. Their Powers. things, that at the time the loss was adjusted, D. & Co., the brokers of the plaintiti', were indebted to him, the defendant, in a larger sum of money than the amount at which the loss had been settled, and that, by the authority and with the sanction of the plaintiff, the brokers accepted a credit on ac- count with the defendant as a payment of the said sum, and made themselves hable to the plaintifls for the same, and that he, the plaintiff, discharged the defendant therefrom. In a second plea the defendant set forth the custom between the brokers and underwriters in London, to make these set- tlements in account by way of payment ; and alleged that the plaintiff had knowledge of that custom, and had assented to it, and that the settlement was made accordingly. It appeared in evidence that the plain tiff resided in Liverpool, and that he had for several years employed D. & Co. as his brokers for effecting insurances in London. At the trial several brokers were called, who stated the usage at Lloyds to be as pleaded, and it was also stated by some of them that the said usage was well known in Liverpool, as well as in London. The jury found a verdict for the defendant; and the court, after a very full ai-gument, and time taken to con- sider, refused a nde for a new trial ; — they being of opinion, that there was at least sufficient evidence to prove the de- fendant's first plea, and that it was an answer to the action ; because, "where an insurance broker or other mercantile agent has been employed to do work for anothei", in the general course of business ; and where the known general course of business is, for the agent to keep a running account with his principal, and to credit him with sums which he may have received by credits in accoimt with the debtors, — with whom he also keeps running accounts, — and not merely with monies actually received ; it must be understood, that where an account is bona Jide settled according to that known usage, the original debtor is discharged, and the agent becomes the debtor, according to the meaning and intention, and with the authority of the principal" (/;). (/i) Suwartv. Aberdeln, 4 M.&c. W. 211, 228. I 1 2 Factors and Brokers. llejuii of The result of the above cases may be stated to be as fol- tbest c;ue«. lows. First ; Prima facie, the broker cannot bind his principal by receiving payment of a loss on a policy of insurance, unless such payment be made in money (i). Secondli/ ; If the broker receive a credit in account with the underwriter for the amount of a loss, and, after giving credit to the assured for tlie same in his account with him, permit the assured to draw on him for the balance, the underwriter will be discharged ; — provided, at the time of the settlement, the name of the underwriter be struck off the policy with the privity and consent of the assured (/c). T/iirdh/; If the ordinary course of dealing between the principal, his broker, and the underwriter, has been for the broker to set off sums due from the underwriter to his prin- cipal for losses, against sums due from himself to the under- writer for premiums, &c., and to give credit to his principal in his account with him, as well for sums which he may have received by such credits in account with the under- writer, as for monies actually received (/) ; or if it be proved that the general course of business is such, and that the principal was cognizant of it, such settlement in account will discharge the underwriter (m). Fourtfili/ ; It will not be necessary to pi-ove that the prin- cipal had precise knowledge that such was the general course of business. Proof that it was known amongst mercantile men in the place where he carried on his trade will be suf- ficient («). And Laslli/ ; If the principal, after being informed of the state of accounts between the broker and the underwriter, delay enforcing his claim, and in that interval the relative situation of the broker and underwriter be changed, — as by (j) Todd V. Eeid, supra. (/c) Russell V. Baiigley, supra. (I) Per Liltledale, J., Barilett v. Pentland, supra. (m) Barilett v. I'enlland, Scott v. Irving, Stewartv, Aberdein, (n) Stewart v. Aberdein, supra. Their Powers. 113 liis giving the former fresh credit for preniiiuns in account, — the assent of the principal to the usage will perhaps be pre- sumed, so as to operate as a discharge to the underwriter (o). These observations, however, apply only to cases in which Rule where the principal is the 2)laintiff in the cause; for, where the sngjon the broker sues on the policy, any defence which is good against P**'''=y' him, will be good against the principal ; on the ground, — that a trustee suing in a court of law must be treated in all respects as if he were the real plaintiff in the cause. And therefore, where a broker in whose name a policy of in- surance under seal was effected, brought an action of cove- nant thereon, and the defendant pleaded payment to the plaintiff according to the tenor and effect of tlie policy ; and the proof was, — that after the loss happened, the assurere paid the amount to the broker by allowing him credit in account for premiums due from him to them ; — it was held, that, although that was no payment as between the assured and assurers, it was a good payment as between the plain- tiff on the record and the defendants, and that, therefore, it was an answer to the action (/>). There can be no doubt that payment to a factor or broker Rule as to of the amount due on a bill of exchange or other negotiable negoctable" instrument will bind the principal, provided the factor or instruments, broker have possession of such instrument at the time the,,v,rv; .;'■'" payment is made (^). «><^.tf''^t ' ' It is equally clear, that in all cases in which p^iient to Rule as to a factor or broker will bind the principal, he wSf also be bound by a tender made to the factor or broker (ry,; and it appears that, even where the agent has no authority to re- (o) Per Lord Tenterden, and Taunton, J ., Scott v. Irving, supra. {p) Gibson V. Winter, 5 B. & Ad. 96. (9) Owen V. Barrow, 1 Bos. & Ful. N, R. 101, 103. (r) Goodland v. Blewith, I Canjp. 447 ; per Parke, B., Kirton v. Braithwaite, 1 M. & W. 310, 313. 1 1 A Factors and Brokers. ceive pnynient, so tliat a tender to him would not bind his principal, still, if the latter, after being informed tiiat a ten- der has been made to his agent, do not disclaim it on account of the agent's want of authority, he will be bound thereby {s). Krttfct oi re- In the instances already given with reference to the priiKi|>u '^"^"'i'|Ki'i,''Jr power of a factor or broker to bind his principal, we have ihe acts of hU assumed that, at the time of entering into the contract, the factor or bro ' " _ kcr. agent was possessed of at least some authority, express or implied, to enter mto such contract, and (hereby to bind his employer. We have already seen however, that if the prin- cipal, with full knowledge of the facts, ratify the act or omission of his factor or broker, this will exonerate the lat- ter from the consequences of any breach of duly of which he may have been guilty ; and in like manner it is well set- tled, that wherever a spcciiic appointment of an agent is necessary in order to enable him to bind his principal to third parties, a subsequent recognition of acts done by him in that capacity, will have this eHcct, as much as if they had been done by virtue of a previous authority (t). Thus, where a broker, wilhout authority, made a contract in writing for the purchase of goods by B., and B. subsequently ratified the contract; it was held, that such ratification rendered the broker an agent suHiciently authorized to make the contract, under the statute of frauds (w). So, where A. entered into a contract for the sale of a quantity of oil without the autho- rity or knowledge of B., and B., on receiving information of the circumstance, refused to be bound, but afterwards as- sented by parol, and samples of the oil were accordingly delivered to the vendees ; it was held, that B.'s ratification of the contract rendered it binding upon him (.i). What cTi- It appears, moreover, that slight evidence of such ratifi- (s) Jackson v. Jacob, 5 Scott, 79. (C) Jones V. Bright, 5 Hing. 533. (It) I\lactenit v. Dunn, 4 Bing. 722. (j) Hoames v. Spencer, 1 Dow. & By. 32. The'ir Powers. 115 cation will be sufficient to bind the principal. Where there- dence of re- fore, the broker who signed the broker's note upon a sale of sufficient, com was the seller's agent, but the buyer acted upon the note, by sending a servant to examine the bulk of the corn on the authority of such note. Lord EUenboroiigh held, that that was such an adoption of the broker's agency as to make his note sufficient within the statute of frauds (y). We have likewise seen, that where the question is be- Agency adopt- tween the factor or broker and his principal, the latter can- adopted ' not adopt the acts of the former in part, and reject them in part. And in like manner, where the question is between the principal and third parties, if the agency be adopted at all, it must be adopted throughout ; or, in the words of a learned judge, it must be taken cum onere {z). (y) Kinnitz v. Surrey, cited Paley on Agency, 171. (s) Per EUenborough, C. J., Hov'il v. Pack, 7 East, 164, 166. toto. CHAPTER II.— SECTION II. Ox THE Powers of Factors and Brokers. PART III On the Factor's Power to Pledge. We have treated hitherto of those powers only, which are possessed by factors and brokers by the common-law. , We come now to treat of the factor's power to pledge, — a power which, in its present state, is regulated almost entirely by statute. Few subjects have given rise to more discussion in our courts, than that which we are now about to consider ; and there are few on which the opinions of our most eminent judges have been more divided — not so much as to the ex- tent to which, prior to the passing of the " factors' acts," the power in question did exist according to our law ; but chiefly as to the expediency of allowing it to exist at all. The I'ule — that a factor had no power to pledge the pro- perty of his principal — was, on the one hand, upheld " as one of the greatest safeguards which the foreign merchant had in making consignments of goods to be sold in this country" («), and because of its having thereby " operated much to increase the foreign commerce of the kingdom" (6) ; whilst on the other, its policy was questioned, on the ground " that when the owner of property concealed himself," it was nothing but justice that " whoever could prove a good (a) Per Abbott, C. J., Queiroz v. Trueman, 3B.k C.342, 350. "•^ '^'jrBayley, J., ib.351. ^ (6JPerBayley, J., ib.351. 2// ^,<^/dP~ Factor^ s Power to Pledge. 117 ; title under the person whom the owner permitted to hold it, i should retain that property against the owner" (c). ' Which of these opinions was the better founded, it is not Division of j „ 1 . , , , . , ihe subject. i lor us now to say ; and indeed any speculation on such a i question would be out of place in a practical treatise like the present. Laying aside therefore all discussion as to the ; policy either of the former or present state of the law on i this point, we shall confine ourselves in this section to the j consideration of the following subjects : — Jirst ; the state of i the law with reference to the factor's power to pledge, prior j to the passing of the statutes, 4 Geo. 4, c. 83, and 6 Geo. 4, ' c. 94, : secondh/ ; the decisions which have taken place on those statutes : and tliirdlii, we shall endeavour to deduce from those decisions, taken in connexion with the provisions ' of the " factors' act" recently passed (d), the present state of j the law on this subject (e). j ■| First then, let us see what was the state of the law as re- ' garded the factor's power to pledge, prior to the interference | of the legislature with reference thereto. The eai-liest reported case on the subject of a factor's State of ihe \ power to pledge is that of Paterson v. Tash{f). That passing of the jj case was tried before Lee, C. J., at Guildhall, at the sittings '^cu''*^" i in Hilaiy Term, 16 Geo, 2; and the report states, that it „ was held by that learned judge ; — that although a factor Tash. j had power to sell, and thereby to bind his principal, yet he (c) Per Best, C. J., Williams v. Barton, 3 Bing. 139, 145. Id) 5&i6 Vic. c. 39. (e) For the opinions of the different judges on the expediency of the rule mentioned in the text, the reader is requested to con- sult the following authorities. Dauliigny v. Duval, 5T. R.604 ; Pultny V. Kymer, 3 Esp. 182 ; Muriin'i v. Coles, 1 M. & Sel. 140; Graham v. Dyster, 6 M. & Sel. 1 ; Queiroz v. Trueman, 3 B. & C. 342; Williams v. Barton, supra; 1 Bell, Com. on JVlerc. Jur, 483 ; Story on Bail. 215, 217. (/) 2 Strange, 1178. 1 1 8 Factors and Brokers. could not bind or afTect the property of the goods by pledg- ing them as a security for his own debt. Daubigny t>. The next case in whidi the question arose was that of Daubigni/ v. Duvol(g); and there the point raised was, — not whether a factor had power to pledge the goods of his principal for an advance made to himself simplUiler, — but, whether the circumstance of the factor being in advance to his principal, and thereby having a lien on the goods, conferred on him the power of pledging them to the extent of his lien. The court however held ; that a lien, being a personal right, could not be transferred to a pawnee; and that therefore, in the case then under consideration, the principal, by having tendered to the factor the sum due to him, had entitled himself to maintain trover against the pawnee for the goods. It was however afterwards decided, — that although no lien was transferred by the pledge of the factor under such circumstances as the above, still that this doctrine must be taken to apply, only to the case of a tor- tious transfer of the goods of the principal effected by the factor undertaking to pledge them as his own ; and not to the case of one who, intending to give a security to another to the extent of his lien, delivers over the actual possession of goods on which he has the lien to that other, with notice of his lien, and appoints that other as his servant to keep pos- session of the goods for him, — in which latter case, the court were of opinion that the lien might be preserved (A). Newsoni v. After the decision of the above cases of Palernon v. Task, "'" ""■ and Daubigni/ v. Duvol, it does not appear to have been disputed, that a factor had no power to pledge the goods of his principal for his own debt. Cut in the subsequent case of Newsom v. Thornlun (i), it was asserted, — that although (^)5T. R.604. (/i) Man v. Shiffner, 2 East, 523; M'Combie v. Davies, 7 East, 5. (!) 6 East, 17. Factor^ s Power to Pledge. a factor could not pledge tlie goods of his principal by ac- tually depositing them in the hands of a third person, still he might do so by making a deposit of the bill of lading as the symbol of the goods ; and that such deposit of the bill would confer a good title on the pledgee to the property therein contained. The ground on which this power was claimed for the factor appears to have been this ; — that the owner of goods who placed them in the hands of a factor for sale, had no means of marking the goods themselves in such a manner as to show in what capacity the factor held them, and that the law therefore must protect him, in case the factor should exceed his authority by pledging such goods. But with respect to a bill-of-lading the case, it was argued, was dif- ferent; — inasmuch as the owner had the means, by an in- dorsement on the instrument itself, of informing every per- son into whose hands that instrument might come, that the person who had possession thereof held the same as factor only; and it was accordingly contended, that the possession of the bill-of-lading by the factor without any indorsement to that effect, must be taken as evidence that he had the absolute controul over the property, so as to be able to pass it to a third person, who had no notice to the contrary, by indorsement and delivery of such bill-of-lading to him for a valuable consideration (/c). The court however were of opinion, that these circumstances did not confer on the factor any additional power ; that the symbol could not have a greater operation to enable him to defraud his principal, than the actual possession of that which it represented ; that a factor, therefore, could have no power to pledge the goods of his principal by depositing the bill-of-lading in the hands of a third person, any more than he had the power to do so by so depositing the goods themselves ; and that the pledgee, in such a case, would have no ground to complain of his (fc) Per Erskine and Garrow, urgwendo ; Newsom v. Thornton, supra. 1 Of) Factors and Brokers. having been misled by the bill-of-ladiiig, as it would be easy for liini to inciuire for the letter of advice vvhicli brought such bill,— which letter, it was said, would show whether the pawnor held the goods as factor or vendee (/). Uculiof It thus became an admitted principle in our law, that a thoe ca.c^ ^^^j^j. i^.^^i „^j py^^^g,. to p|gj^,e the property of his employer for his own debt, either by an actual deposit of such pro- perty witli the pawnee, or by placing in his hands the bill- of-lading, as the symbol of such property; and the same rule was afterwards extended to those cases in which the factor, — being possessed of a warrant or order for the de- livery of goods from the warehouse in which they were de- posited, — pledged such warrant or order as a security for advances to himself : — it being held, that the possession of such an instrument by the factor was not sufficient evidence of his ownership in the goods to be delivered thereunder, to entitle the pledgee to hold the principal bound by such pledge, and that, before the principal could be so bound, it must be shown, that he had armed the factor with such other indicia of property in the goods, as to enable him to deal with them entirely as his own (w). And not only did the courts deny to a factor the power of pledging the property of his principal for advances made to himself, but they enforced this rule with equal stringency even in cases where the advances, on account of which the goods were pledged, had been made, either to pay the duties chargeable on such goods, or for some other purpose con- nected with the sale thereof; or where they had been made in order to meet bills drawn by the principal on the factor, for the whole or part of the price of the goods so pledged. On this subject indeed Lord Ellenborough and Mr, Jus- (/) See also Martini v. Coles, 1 M. & Sel. 140; Shipley v. Kumer, ib. 484 ; Qneinn v. Tnieman. 3 B. & C. 342, (in) JitniSKii V, Cotes, 6 M. & Stl. 14 ; Barton v. Williams, 5 B. 6: Al. 395 ; Williams v. Barton, 3 Bing, 139. 1 Factor s Power to Pledge. 121 tice Le Bhmc seem to have entertained a contrary opinion. In the case of JMartini v. Coles, the former is reported to have expressed himself thus. " If the defendants (the pawnees) had advanced money for any purposes connected with the sale, and for which brokers in the ordinary course of disposing of goods are accustomed to advance it, they would have had a lien in respect of such advance ;" and in the same case Mr. Justice Le Blanc is reported to have said, — "consignments are frequently accompanied with a bill drawn on a factor for part of the price of such con- signments;" and from this fact the learned judge came to the conclusion, that " if advances were made, merely to take up the bill of the consignor, and were appropriated to that purpose, there would be no mischief, — as that might be con- sidered to be in furtherance of the authority given by the principal" (?i). The former of these dicta however was never confirmed by any express decision, — the only case in which the question seems to have arisen (o) having been decided on another ground (p) ; whilst with reference to the latter it was afterwards expressly held ; — that even where the prin- cipal did draw on the factor in anticipation of the proceeds of a consignment of goods made to him, this circumstance gave the latter no power to pledge these goods, — at least, not if the pawnee knew, or had the means of knowing, that he was dealing with a factor and not with a principal (9) ; and thus the rule, — that a factor could not pledge the goods (n) Martini v. Coles, 1 M. & Sel. 147, 149. (o) Solly V. Rathbune, 2 M. & Sel. 298. (p) It may be mentioned here that Lord Eldon seems to have entertained an opinion on this point, similar to that mentioned in the text. See Pultney v. Kymer, 3 Esp. 282. (q) Graham v. Dyster, 6 1\I. & Sel. 1 ; Fielding v. Kymer, 2 Brod. & Bing. 639. Although the absence of the qualifying circumstance stated in the text, might perliaps have made no dif- ference in the opinion of tlie couit upon the cases cited, still it has been thought proper to introduce it, because in both those cases it was mentioned by the judges as one of the grounds of their decision. G 1 22 Factors and Brokers. of bis employer, was firmly established, against all the attempts which had been made to engraft exceptions on it. The " Fac- Such, it is believed, is a correct summary of the law on lors cts. jj^^ subject now under review, as it stood prior to the passing of the " Factors' Acts;" — let us now, in the second place, consider the provisions of these acts, and the various cases which have been decided thereon. As has been already observed, the restrictions thus im- posed upon the power of a factor to pledge were far from receiving the unanimous approval of the Bench ; whilst, among mercantile men an almost universal opinion was en- tertained to the effect, — that a factor or commercial agent, intrusted by his principal with the possession of or the in- dicia of property in goods, should be deemed to be the true owner thereof, in respect of third persons dealing with him fairly in the course of business, whether they dealt with him as purchasers or pawnees, provided they were in ignorance of 4Geo. 4,c,83. his real character (?•). The result of this opinion was, that the matter was brought under the notice of the legislature ; and accordingly, in the year 1823, a statute was passed (s), by the provisions whereof the law was very considerably modified. This statute however was not considered sufficient to answer the end proposed ; and the consequence was, that about two years afteiwards another statute was passed (i), the object of which, as set forth in the preamble, was, to alter and amend the former statute, and to make further pro- visions in relation to the contracts and agreements therein mentioned. 6Geo.4,c.94. By this last mentioned statute, it was enacted as follows. (r) Abbott on Ship. 481. 6th edit, (s) 4 Geo. 4, c. 83 ; see Appendix, (t) 6 Geo. 4, c. 94; see Appendix. Factor^ s Power to Pledge. 123 That a person intrusted with and in possession of a bill- of-lading, India-warrant, dock- warrant, warehouse-keeper's or wharfinger's certificate, or any warrant or oi-der for the dehvery of goods, should be deemed the true owner of the goods described therein, so far as to give validity to any contract or agreement made by him for the sale or disposi- tion of the goods, or the deposit or pledge thereof, if the buyer, disposer, or pawner, had not notice by the document or otherwise, that such person was not the actual and bona fide owner of the goods (m). But if such deposit or pledge were made as a security for a pre-existing debt or demand, the person taking the same without notice, should acquire such right, title, or interest in the thing pledged, as was possessed by the person making the deposit or pledge, but no other (.r). That any person might accept any goods, or any such document as aforesaid, on deposit or pledge from any factor or agent, notwithstanding he had notice that the party was a factor or agent ; but that in such case, he should acquire such right, title or interest only, as was possessed \>y the factor or agent at the time of the deposit or pledge (j/). And by the sixth section it was enacted : — that the act should not prevent the true owner of goods from recovering them from his factor or agent before a sale, deposit, or pledge, or from the assignees of such factor or agent in the event of his bankruptcy : nor from recovering from the buyer the price of the goods, subject to any right of set-off on the part of the buyer against the factor or agent : nor from recovering the goods deposited or pledged, upon repayment of the money, or restoration of the negociable instrument advanced on the security thereof to the factor or agent ; or upon payment of such further money, or restoration of such other negociable (m) Sec. 2. (i) Sec. 3. (y) Sec. 5. g2 124 Factors and Brokers. instrument (if any) as might have been advanced by the factor or agent to the owner, or on payment of money equal to the amount of such instrument : nor from recovering from any person any balance remaining in his hands as the pro- duce of a sale of the goods, after deducting the money or negociable instrument advanced on the security thereof. And that in case of the bankruptcy of the factor or agent, the owner of the goods so pledged and redeemed should be held to have discharged pro tanto his debt to the estate of the bankrupt (2). Summary of By the above statute then it appears, that the legislature [{lf,''"(","'J" intended to confer on a factor the power of pledging the property of his principal, by depositing in the hands of the pledgee the documents therein enumerated in the following cases. First; Where the pledgee made advances to the factor on the faith of such deposit, without notice of his being a factor(a). Secondly ; Where he made such advances, but with notice that the person with whom he was dealing held the docu- ments pledged, as a factor only; — in which case the pledgee was to have no greater lien on the goods pledged, than the factor himself could have enforced against his principal at the time of such pledge (6). Thirdly ; Where the deposit or pledge was made by the factor, as a security for a pre-existing debt; — in which case, as in the last, the lien of the pledgee was likewise to be measured by that which the factor himself could have en- forced against his principal, at the time of the pledge (c). And, — as by the common law, the owner of goods which (2) The statute likewise contains certain provisions respecting fraudulent pledges by factors. These however will be more pro- perly noticed hereafter. The above abstract is taken almost verbatim from that by the late Lord Tenierden ; see Abbott on Ship. 481, 482. 6th edit. (a) Sec. 2. (6; Sec. 5, (c) Sec. 3. Factor's Fower to Pledge. 1 25 had been pledged by a factor in contravention of his autho- rity, had the power of recovering such goods or the proceeds thereof from the pledgee {d), — so by the sixth section of the act, power was reserved to such owner to follow his goods whilst in the hands of his factor, or, — in case of the bank- ruptcj' of the lattei', — whilst they were in the hands of his assignee ; or to recover them from any third person with whom they might have been pledged, on paying his advances secured upon them. The cases which have been decided on the above statute, Review of may be considered under the following heads : — iLereon. li^ As to the character in which it has been decided, that the pawnor must appear to have held the property pledged. 2nd. As to the nature of the transfer which has been held to constitute a " pledge," or a " sale or disposition" within the meaning of the act. 3rd. As to the documents which it has been held might be pledged under the act. 4th, As to the advances by the pawnee, which have been considered to be within the meaning of the act. 5th. As to what has been held to constitute such a lien on the part of the factor, as would entitle him to pledge under the 3rd and 5th sections of the act ; — and Lastly ; As to what has been considered sufficient notice of the true character of the pawnor. 1. On the first of these points it has been decided ; — that Who might a pledge by a party holding goods who does not appear to "* have held them as a factor or agent for the owner, does not bring the case within the above statute. This was decided in the following case. An action of trover was brought against a warehouseman for goods, and the defendant pleaded, in substance, as follows : — that one R. was possessed of the goods in question, and being so pos- (d) See the cases cited ante pp. 117 — 121. 1 26 Factors and Brokers. sessed, applied to one F., to discount a bill-of-exchange for him; that F. agreed to do so, on having the said goods de- posited as a collateral security ; that R. agreed so to deposit them, and that by the direction of F. they were deposited accordingly with the defendant. That the bill was dis- honoured ; and that in consequence thereof, the defendant, as the ser%'ant of F., detained the goods, as he lawfully might for the cause aforesaid. But the court, on special demurrer, held that the plea was bad, inasmuch as there was nothing in it to bring the case within the statute, — it not being averred, that R. was intrusted with the goods in question as a factor or agent for the purpose of sale (e). Meaning of 2. With reference to the nature of the transfer which .'f'pi'/Jg'^?. 3u^ constitutes a "pledge," or "a sale or disposition," within " sa'e or dis- the meaning of the act, it has been held : — that if A., holding position. ' ° . , . /. 1 goods of B. with a lien on them agamst him, transfer them to C, the latter cannot, under the Jifth section of the act, retain them as against B. to the extent of A.'s lien, unless it appear that the transfer was made expressly as a pledge : and therefore, where a factor, who had purchased goods for his principal, was allowed to retain the warrants for the delivery of such goods, as a security for advances which he had made to his principal, — but without power to sell, — and on the failure of the factor it was discovered that the war- rants were in the hands of the defendants, and that they had become possessed of them by way of sale, and not by way of pledge ; it was held, that the defendants were not intitled to the protection of the fi/'th section of the statute ; because the provisions of that section could refer only to a pledge made distinctly as such (J"). So, on the other hand, it has been decided, with reference to the meaning of the words " sale or disposition" in the second section of the act, — that the legislature did not in- (e) Jaulerry v. Britten, 5 Scott, 655. (/) Thompson v. Farmer, 1 JMood. & M. 48. Factor's Power to Pledge. 127 tend, by the introduction of the term " disposition," to give effect to any transfer which was in its nature distinct from either a sale or a pledge; but that to constitute a " disposi- tion" of property within the meaning of the act, there must have been some dealing with reference to it which was in the nature of a sale. And therefore, where it appeared that a transfer of goods had taken place which was not in the nature of a sale, and which, moreover, was not considered to be such a pledge as was contemplated by the statute, such transfer was held not to come within the protection of the statute at all (g). 3. The next topic we proposed to consider was, as to the What might documents which a factor has been held to have the power ^ P ^ S* • of pledging, under the statute 6 Geo. 4, c. 94. By the second section of that statute it is enacted; — " that any person intrusted with, and in possession of any bill-of-lading, India-warrant, dock-warrant, warehouse- keeper's certificate, wharfinger's certificate, warrant or order for the delivery of goods, shall be deemed and taken to be the true owner thereof," so as, inter alia, to give him the power of pledging the same. It appears then to have been Factor could the intention of the legislature, that mere possession should Sj,c'imeu°3*^ not be taken to give the factor the power to pledge ; but °"'y', "'•"'' that to intitle him so to do, he must be shown to have been been in- " intrusted" with, as well as in possession of, the property pledged; and it therefore became a matter of very great importance to ascertain what was such an intrusting, as to bring parties within the provisions of the act. The first reported case on this subject is that of Close v. Holmes (A) ; the facts of which were as follow. The plain- (g) Taylor v Tmeman, 1 Mood. & M. 453 ; Taylor v. Kymer, 3 B. & Ad. 320, 337. (fe) 2 Mood. 6c Rob. 22. Factors and Brokers. tiffs were merchants at Manchester, — having also estabh'sh- ments abroad, and they had been in the habit of employing one H., who resided at Hull, as their commission agent, and of making consignments of goods to him as such agent, for sail'. The defendant was the registered officer of the Hull Bunking Company. In the months of January and February 1835, two ships — the Francis and the Dean, — arrived at Hull with cargoes consigned by the plaintiffs to H. for sale on their account; the bills of lading being trans- mitted to him, inaorsed by the shippers in blank. H. had the goods landed ; and he afterwards warehoused both car- goes in his own name ; — the former in a bonded warehouse belonging to one Hopivood; the latter in the warehouse of the Hull Duck Compani/. In June 1835, H. applied to the Banking Company for an advance of money. They acceeded to his application; and on the 17th of June he obtained from the Hull Dock Compajit/, and lodged with the banking company, an acknowledgment in writing that they held the cargo e.r the Deari to the order of the banking company ; and thereupon the banking company paid H.'s acceptance for £500. The banking company afterwards made an advance on the cargo of the Francis; — the delivery order for that cargo being likewise pledged with them as a security; but on neither occasion did H. pledge or produce the bills of lading. The plaintiffs brought trover for both cargoes; the defendants claimed by their plea to hold the goods under the 6 Geo. 4, c. 94, s. 2; and on the trial of the cause, the following objection was taken on the part of the plaintiffs. The act, it was argued, gave validity to pledges by a factor, only of bills of lading and other docu- ments of that nature, evidencing title, and with which the factor might have been intrusted by his principal. But here the banking company had made advances on the faith of a mere delivery order in the one case, and of the warehouse- man's acknowledgment in the other, — both of which were instruments created by the factor himself, for the very pur- pose of raising money ; and the learned judge who tried the Factor's Power to Pledge, cause, {Alderson B.) allowed the objection to prevail, being clearly of opinion, that the defendant, in order to be intitled to the protection of the statute, must show that H. had been actually intrusted by the plaintiff with the property pledged, — of which however there was no evidence in the case then under consideration («). The same point was afterwards raised, and solemnly de- cided in the case oi^ Phillips v. Hutli (/c). That was an action for money had and received, and it was brought under the following circumstances. The plaintiffs had placed the bills of lading of two cargoes of tobacco in the hands of W. and C. as their factors, for sale. The cargoes were entered by the factors at the custom-house in their own names ; this enabled them to obtain dock-warrants also in their own names ; and they obtained such warrants for both cargoes accordingly ; there was however no evidence, that by the usage of trade, the possession of such warrants by the factors, was neces- sary, in order to enable them to effect a sale of the tobacco in question. W. and C. afterwards pledged the tobacco to the defendants, by depositing these warrants with them ; and they subsequently became bankrupts. The defendants sold both cargoes ; and wljen this action was brought to recover the proceeds, they paid the same into court, less the amount of their advances. The question was, whether, under the 6 Geo. 4, c. 94, s. 2, they were entitled to make such de- duction ; and in order to decide whether thej' were or not, the learned judge who tried the cause, {Gurney, B.),' left it to the jury to say : — whether the plaintiffs had intrusted W. and C. with these warrants or either of them ? This question the jury found in the affirmative. A rule nisi for a new trial was afterwards obtained on the ground that the verdict was against evidence, and also that the direction of the judge had not been sufficient in point of law ; and the court, (0 See also per Alderson, B., Phillipi v. Huth, 6 M. 6c W. 572, 5B0. (A:) Supra. 1 30 Factors and Brokers. on cause shown, and after taking time to consider, made such rule absohite,— thereby deciding, that the factors, in this case, had not been intrusted with the dock-warrants, within the meaning of the statute, although by the delivery of the bills of lading to them, their principals had enabled them to procure such wan-ants in their own names. " It is necessary," says Parke, B., delivering the judgment of the court, " in order to give effect to this clause, that the owner should have intrusted the factor with the document; not that it is necessary that the owner should have had per- sonal possession of the document, so as to be able to mark it with his name, and himself deliver it to the factor, for if his own agent, general or special, puts it into the hands of the factor with the factor's name on it, or if the factor be insti-ucted by the owner to obtain the document in that state, and does so, no doubt he is intrusted by the owner Meaning of with it, within the meaning of the act. But in order to ■' fntrus^etT Constitute an intrusling of such document, it is necessary that w'lh" the owner should have intended the factor to possess it in that form, at the time when he had the possession. In- trusting with the document, is essentially different from enabling a person to become possessed of it — from giving him the means of obtaining it. It is_ not enough therefore to show, that the plaintiffs empowered W. and C. to possess themselves of the warrants whenever they chose ; it must be shown that the plaintiffs really intended that the factors should be possessed of them at the time they pledged them ; or it must be shown that the plaintiffs meant them not merely to have the power which the bill-of-lading would give, — of getting the warrants when they (the plaintiffs) liked, but to exercise that power by obtaining them, whenever they (the factors), in their discretion might think fit. If cither of these intentions were proved, it would be sufficient ; but if the factors were proved to be in possession of the warrants, under such circumstances as that the plaintiffs, if they had been informed of that fact, might justly have said — " we never meant this," it is impossible to say that they Factor's Power to Pledge. 131 intrusted the factors with these warrants. If it had been the established usage of trade to sell by dock-warrants only, and to obtain them at the time these were obtained, doubtless there would be a strong case for the jury ; for the plaintiffs might fairly be considered, in the absence of express in- structions to the contrary, as having intended that the fac- tors should pursue the ordinary and usual course. There was no such proof of its being the usual course, but the con- trary ; and we think that no inference of intention can be drawn from the mere fact of the delivery of the bills of lading, as to obtaining the warrants, except that the factors shoidd obtain them, if those documents should be reasonably required for the purposes of sale, and at the time when they should be so required" (/). The principles laid down in the above case, with reference to the meaning of the words " intrusted with" in the second section of the statute now under consideration, were after- wards fully recognized and confirmed in the case of Hatfield V. Phillips {m). The pleadings and facts of this last men- tioned case were in substance the same as those in Phillips V. Huth ; and in this instance likewise, the learned judge who tried the cause (Lord Abinger) left it to the jury to say, — whether the factor had been intrusted with the property pledged, within the meaning of the act. To this direction a bill of exceptions was tendered, — on the ground that the question was one of law, and not of fact; that the factor, being intrusted with the bill of lading, was necessarily and impliedly intrusted with the dock-warrants ; or at all events, that the judge should have told the jury what was an in- trusting in point of law. The case was afterwards argued in the Exchequer Chamber ; and the direction of the learned judge held to have been right. " The bill of lading," says Lord Denman, delivering the judgment of the court, " is functus officio, as soon as the goods are landed and ware- (0 6 M. & W. 598, 599. (m) 9 M. & W. 647. 1 32 Factors and Brokers. housed in the name of the holder; that holder then hecomea possessed of the goods themselves in the eye of the law, and any power he may have over them arises, not from the bill of lading, but from such possession. If they are received into Ills own warehouse, it is clear that neither by the com- mon law, nor by the statute in question, can he pledge the goods ; nor will there be any document indicative of title which can bring him within the second section of the sta- tute. If they remain in the dock warehouse, and are only in his constructive possession, he will be authorized to do such acts, and to procure such documents, as are necessary and proper to enable him to sell the goods. To this extent, and no further, is he intrusted, in the absence of any specific instructions and authority" (n). Factor bad no It will likewise be seen on referring to the judgment in piedge,"wheii the abovc case, and to that in Phillips v. Huth, that the I'e* «ion oMh'e J"*^?^^ ^''^^^ °^ opinion ; — that a factor Avas not authorized goods only, by the Statute G Geo. 4, c. 94, to pledge the goods of his principal, when he had possession only of the goods them- selves, but that to enable him to exercise this power under the statute, it was requisite that he should have in his hands some document showing the title to the goods, which docu- ment might be so marked as to show whose goods they were (o). What ad- 4. With reference to the advances by the pawnee which proiecied by ^''^^^ Considered to be within the protection of the act, the the act. decisions are as follow. Merc deposits It was held, that in order to entitle the pawnee to the not pioiected. benefit of the seco«{/ section, he must have actually advanced money or negociable instruments, upon the faith of the documents deposited with him in that particular transac- (n)9 M. & W. 649. (o) 6 M. & W. 597; 9 M. & W. 650. Factor's Power lo Pledge. tion ; and that a mere deposit of documents, in exchange for other documents already in the hands of the pawnee as a security for advances previously made on them, would not be protected. This point was decided in the following case. N. & Co., who were factors, were instructed to purchase and did purchase for the plaintiffs certain chests of indigo then lying in the warehouses of the East India Company, for which they afterwards got the warrants. Before this time N. & Co- had borrowed a large sum of money from the defendants, and had deposited with them as a security, a number of East India warrants for other indigo. N. & Co. being in want of some of this indigo, applied to the defend- ants to deliver to them the warrants for eleven chests ; and they obtained these warrants from the defendants on a pro- mise to pay them the value of the said eleven chests in the course of the day. N. & Co. failed to do this ; and instead thereof they deposited with the defendants, ten of the war- rants belonging to the plaintiffs. The plaintiffs brought trover for these ten warrants ; and Lord Tenterden, before whom the cause was tried, held that they were intitled to recover. " Holding the warrants originally deposited with them as securities," said his Lordship, " the defendants give them up, and receive the warrants in question in exchange. This does not appear to me a transaction within the second section of the statute. It is no pledge or deposit of them as a security for money advanced on the faith of them ; for the money for which they are a security was previously due, namely on the former transactions, when the warrants for which they were exchanged, came into the hands of the defendants" (jd). The same question afterwards arose in the case of Taylor V. Kymer((j), in which the facts, so far as they relate to our present subject, were substantially the same as those in Taylor V. Irueman ; and on that occasion likewise, it was (p) Taiihr v. Trueman, 1 Mood. & M. 453. (q) 3 13. & Ad. 320. 1 34 Factors and Brokers. decided by the whole court, that a deposit or pledge, to come within the second section of the act, must have been made for money or a negociable instrument, advanced or given by the pledgee, upon the faith of the documents pledged (r). EscepiioDs to But where these advances had been made to a factor on Ibis rule. ^ deposit of American State Bonds ; and an agreement was subsequently entered into between him and the pawnee for a further advance to a larger amount, on a deposit by way of security of certain dock- warrants ; which second advance was accordingly made, the bonds given up, and credit in account given by the pawnee to the factor for the amount of the second advance, less the discount on the former one, the balance being paid over to the factor : — the court were of opinion that these circumstances were not sufficient of them- selves, to deprive the pawnee of the benefit of the statute, as to this second advance ; but that the true question was, whether, according to the intention of both parties, the money advanced on the security of the dock-warrants was meant to be placed entirely at the disposal of the factoi', so that he might, without any breach of the understanding be- tween himself and the pawnee, have used the amount for any purpose of his own, notwithstanding which he had directed it to be applied to satisfy the old debt : or whether the money had been received merely for the purpose of its being handed back in order to pay such debt ; in which latter case they thought that there would have been no advance within the meaning of the statute, whilst in the former there would (i). And in the same case the court expressed an opinion to the effect; — that if documents were deposited by a factor (r) See also Boss v. Willis, Dans. & Lloyd, Merc. Cases, 19. ^^s) Phillips V. Huth, 6 M. & W. 600. Factor s Power to Pledge. 135 as a security for the balance of a sum of money, — the whole of which sum the pawnee had previously agreed to advance on the faith of other documents which had been pledged with him, but had afterwards refused to do so, — such second deposit would be protected by the act. The pawnee, it was said, might be bound by bis contract to advance the residue of the sum agreed to be advanced on the security of the first deposit ; but still, if he refused to do so, and the factor, in- stead of suing him on his contract, chose to pledge such property for an immediate advance, such pledge would be good (0. And not only were those pledges protected by the statute, Advances of which were made as a security for advances of money, but instiumenis" the same protection was extended to cases in which the ad- P''"'^'^"^ • vance consisted, not of money, but simply of negociable in- struments (?<). By " negociable instruments" however, it has Meaning of 1 1 ■ T 1 1 • 1 , -11 1 I'''" term, been deciaed, are meant, such instruments only as bills and notes, which pass by indorsement; and not such instruments as East India warrants, which pass by delivery merely. Where therefore a factor deposited with a third person the warrants for certain goods, and on the faith of such deposit, the pawnee gave up to the factor certain East India war- rants for other goods, which the latter had pledged with him for a previous advance, — it was held, that the first men- tioned warrants had not been deposited as a security for negociable instruments obtained on the faith of them, within the meaning of the act {v). 5. We next proposed to consider the question ; what will Nature of lien constitute such a lien on the part of the factor, as willintitle or?i'eMo'in- him to pledge, under the third and fifth sections of the "He a factor I- ^ ' J J to pledge for above statute ? an antecedent debt, or with a person who bad notice of (0 P/!t//ips V. Uuih, supra. (m) See section 2. nJctor'onP (y) Taylor v. Trueman, 1 Mood. &M. 453 ; Taylor v. Kymer, 3 B. & Ad. 320. It may not be out of place to mention here, Factors and Brokers. On referring to these sections it will be observed, that where a factor pledges goods for an antecedent debt(.r), or where the pledgee takes such a pledge with notice that the pawnor is a factor {y), the party taking such pledge is to acquire " such right, title, or interest only, as was possessed and might have been enforced" by the factor, at the time of the deposit or pledge. The following cases will show what is such a " right, title, or interest" as was contemplated by the act. The plaintiff sent to one B., as his factor for sale, a num- ber of East India warrants for silk, and drew bills of ex- change on B., to stand against the proceeds of the silk when sold. These bills B. accepted. B. however could not sell any of the silk before the bills became due ; and the plain- tiff, in consequence thereof, promised to provide funds to take them up ; but this course becoming inconvenient, he proposed that B. should draw bills on him to a certain amount, which bills he would accept, and that B. should discount those bills, and with the proceeds take up his own acceptances. The bills were drawn and accepted accordingly. At the time that B.'s acceptances became due he had dis- counted only one of the last set of bills, but on that day he pledged the warrants with the defendants, his bankers, for a sum of money, — giving them notice that he held them as factor only ; and with this money he paid his acceptances. All the other bills accepted by the plaintiff were afterwards discounted by B., and the proceeds applied to his own use, — the amount however being carried to the plaintiff's credit, that Lord Teuterden on one occasion expressed himself to be of opinion, that a pledgee would not derive any right to retain goods pledged by a factor, against the true owner, further than that given by the statute, from the mere fact of the owner having de- layed to give the pledgee notice, that the goods were his ; at least, not unless it appeared that by reason of such delay, the pledgee's situation had been altered for the worse, or that of the owner for the better. Robertson v. Kensingto7i, Llovd & Wels. 187; 5M. &Ry. 381. (x) Sec. 3. (y) Sec. 5. Factor's Power to Pledge. 137 in their account current. The plaintiff paid all his accept- ances as they became due. B. afterwards became bankrupt, and the plaintiff then discovered that the warrants had been pledged with the defendants, who claimed to retain them on account of their advances to B. The plaintiff accordingly brought trover; and it was held that he was intitled to recover. "The defendants," said Lord ren^errfen delivering the judgment of the court, " could acquire no further or other right, title, or interest than was possessed and could have been enforced by B. at the time of the deposit. The right of B, was to an indemnity against bills of exchange. If in the result of the transaction, B. discharged the bills out of his own funds, his right would be converted into a lien for money actually advanced, and the plaintiff must repay the money to have the wan-ants. If in the result of the transaction the bills were all discharged by the plaintiff's money, or by the sale of his goods, the right of B. would cease and become void, and the plaintiff would become in- titled to the possession of the warrants. And from the failure of B. this event happened. The plaintiff had the same right to receive the warrants from the defendants as he would have had to receive them from B, We therefore think the defendants had no lien on the warrants" (z). The same rule was acted upon in the subsequent case of Blandy v. Allan (a) ; in delivering judgment in which case, Best, C. J., — before whom the cause was tried, — observed ; " It appears to me that the principle of the decision in Fletcher v. Heath, is, that liability under acceptances is not sufficient to intitle a man to pledge. In such a case he has only a i-ight to hold, nomine pana, till the liabiHties are discharged. From these cases then it appears, that the lien contem- plated by the statute, is not such a lien merely as would (s) Fletcher v. Heath, 7 B. & C. 517. 524. (a) 3 C. & P. 447 ; Dan. & Lloyd, 29, S. C. (he factor. 13S Factors and Brokers. have intitlcd the factor to retain in his own hands the goods pledged, until such lien were satisfied; but that, to come within the meaning of the act, the lien must be such as the factor could have actually enforced at the time of the pledge ; or, in other words, that it must be a lien arising out of a money demand. "By right to enforce," says Best, C. J., " I mean, right to call for the payment of money" (6). Nor a money It has also been decided, that in order to give a factor the general" such a licu as waj contemplated by the fifth section of the balance of ^^f jj must appear that upon the face of the whole account accoanis wa« ' ... in favour of between them, the principal is indebted to the factor. This rule is well illustrated by the following case. A factor, by desire of his principal, — who carried on busi- ness on his own account, and also in partnership with M., — kept separate accounts of transactions, in some of which the principal was solely interested, and in others of which he was interested as partner with M. The factor regularly posted all the items of both these accounts in one general account, distinguishing however the separate account of his principal by the mark " H. K." and the joint account of his principal and M. by the mark " H. R.". Goods were con- signed to the factor on the joint or " H. R." account, and a draft drawn on him by his principal against that account," for the purpose of meeting which he pledged these goods with the defendant. At the time of the pledge, the factor was indebted to his principal upon the general account, in a sum larger than the amount of the draft ; but upon the " H. R." account, — against which the draft was drawn, — and to which the goods pledged belonged, — a small balance was due from the prhicipal to the factor: — and it was held that, under these circumstances, the factor had no right to pledge the goods, and that the pledgee could not retain them against the principal (c). (6) Blandy v. Allan, supra, 451. (c) Robertson v. Kensington, 5 M. & Ry. 381. Factor's Power to Pledge, 130 Lastly. It is enacted by the second section of the statute, What was that the person with whom the documents of title to goods sufficient no- are pledged, shall be intitled to retain them against the true J'" °[ ""^ owner, only in case such person " shall not have notice by racter. such documents or either of them, or otherwise," that the person pledging the same is not the actual and bo7id fide owner thereof. This clause of the statute has been construed very strictly, — the rule as to what shall be considered to amount to no- tice under it, having been confined within almost the same limits, as those by which it was bounded at common law. We have already seen that, before the passing of the act, parties deahng with a factor were not protected in cases where he exceeded his authority, merely by the fact of their having had no direct notice of the existence of the agency ; but that it was held to be the duty of third parties in such cases, to ascertain the true character of the person with whom they dealt, — especially if any circumstances existed which might tend to create a doubt, as to whether he was, in the particular transaction, concerned as principal, or merely as agent (d). The same rule has been followed in construing the clause in question ; and it has accordingly been de- cided, that the " notice" intended by that clause is not a notice acquired by direct communication ; but that, if the circumstances of the transaction were such as that a reason- able man, and a man of business applying his understand- ing to them, would come to the conclusion that the goods pledged were not the property of the person pledging them, this, in the absence of any other notice, would be sufficient to deprive him of the protection of the statute (e). (d) See Newsom v. Thornton, 6 East, 17, 43; Graham v. Dyster, 6M. &S. 1,4. (e) Evans v. Trueman, 1 Mood. & Rob. 10. In addition to the points mentioned in the text, it has been decided on the 6 G. 4, c. 94, that a defendant seeking to avail himself of the statute, 1 10 Factors and Brokers. Remarks on From tliis Summary of tlie cases which have been decided 'theUwVndcfOn the G Geo. 4, c. 94, it will at once be seen, that our the above courts liavc cviuced no disposition to relax the rules of the common law with reference to pledges by factors, any fur- ther than they were warranted in doing, by a very literal construction of the statute in question. Indeed the reader cannot have failed to observe, that the result of all the de- cisions to which we have adverted in the course of the above summary, was unfavourable to the rights of pawnees ; and perhaps it has occurred to him, that owing to the interpre- tation which our courts appear to have felt themselves bound to give the statute in question, innocent third parties were, notwithstanding its provisions, as much exposed to risk in making advances to factors as they had been before that statute came into existence. A glance at the cases will serve to illustrate this. The second section of the act, it may be i-emembered, contains a proviso to the effect, — that a pawnee shall be in- titled to the benefit of that section, only in the event of his having no notice, that the party pledging was not in fact the owner of the goods pledged. In this proviso, there was perhaps nothing unreasonable ; but when we find that the term " notice" was held to mean, not merely notice of the agency by direct communication, but any notice arising must prove his contract with the factor ; and consequently if there was a written agreement, the defendant must produce it. Evuus V. Trueman, 2 13. & Ad. 886. It has likewise been held, that when the pawnee, without authority, sells the goods pledged, the owner of the goods may bring trover, without tendering to the pawnee the sum due from iiimself to the factor, but that in estimating the damages, the pawnee will be intitled to credit for such sum. Taylor v. Trueman, 1 Mood. & M. 453 ; Taylor v. Kymer, 3 B. & Ad. 320. And it appears further, that where goods have been improperly pledged, the owner will be intitled to have the damages increased, by adding to the value of the goods the amount of rent and other expenses paid or to be paid to the persons in whose warehouse they have been deposited. Robertson v. Kensington, Lloyd & Wels. 187, note. Factor s Power to Pledge. 141 from such circumstances as would lead a reasonable man to infer that such agency existed, and when we reflect, more- over, that according to the mode in which mercantile agen- cies are generally conducted, circumstances of this kind must be found in almost every case, — it becomes evident that instances could very rarely occur, in which the full benefit of that section could be claimed. Again ; the statute enacts that a factor shall not be in- titled to pledge the goods of his principal, unless he shall have been " intrusted" with the documents of title to those goods. But then, the meaning given to the term "intrusted" was such, as to place it almost beyond the reach of any third party to know when he was dealing with a person " in- trusted" within the meaning of the act. In this case indeed, the difficulty seems to be greater even than it was at the common law. We have seen that, at common law, the only duty of the pawnee was, to ascei'tain whether the pawnor was a principal or a factor. If he made due inquiry on this subject he was safe ; and as the factor could seldom fail to have such documents in his possession, as would at once afford the information I'equired, the inquiry was com- paratively easy. But with reference to the qnestion ; whether the factor was " intrusted" within the meaning of the statute, the case was very different. As was observed in the case of Hatfeld v. Phillips (J'), it was impossible to say what was an intrusting in point of law. There might be an express intrusting, by the delivery of a document by the owner to the factor, or by desiring him expressly to procure such document ; or there might be an implied intrusting, from the usual course of dealing or other circumstances. Here then there was first, the difficulty of knowing what constituted an intrusting within the meaning of the act ; then the difficulty of ascertaining such circumstances as would enable the pawnee to judge, whether the factor had been intrusted or not ; and lastly, the risk of his not coming (/) 9 M. & W. 647, 649. 1 42 Factors and Brokers. to a correct conclusion from these circumstances. With such obstacles in their way, it will at once appear, to what hazard mercantile men must have been exposed, in all deal- ings under the act in question. The same remark applies to the advances which were held to be protected by the statute. Men not accustomed to con- strue acts of parliament, would not very rfeadily detect the dif- ference between advances made on the faith of documents, and a deposit of documents made in exchange for ofhers on which advances had been already made; nor would they at first sight discover, that by the term " negociable instru- , ments" was meant, such instruments only as passed by in- dorsement and delivery, and not such as passed by delivery merely. And thus, although the intention of the statute was to relax the rules of the common law, yet so great was the difficulty of bringing parties within the benefit intended to be conferred by it, that its effect as a measure of protection to mercantile men, was rendered almost nugatory. Statute, 5 & c The law continued in this state until nearly the close of the session of parliament 1841 — 42; but it having been found productive of much inconvenience, — owing to the extent to which mercantile agents were intrusted with the property of others, and the frequency with which advances were made on the security of such property, — the legislature thought it expedient again to interfere, for the purpose of extending the provisions of the statute 6 Geo. 4, c. 94, and establishing the law with reference thereto, on a clear and certain basis (g). Accordingly the statute 54-6 Vic. c. 39, was passed ; the provisions of which, in so far as they relate to our present subject, are shortly as follow (A). By section \U it is enacted : That any agent intrusted with the possession of goods, or of the documents of title to goods, may make a valid pledge of the same, as well for any ig) See the preamble to statute 5 & 6 Vic. c. 39. {h) For the statute see Appendix. Factor's Power to Pledge. original advance bona fide made on the security thereof, as for any continuing advance in respect thereof, notwithstand- ing the pledgee shall have notice that the person pledging is only an agent. Section 2nd enacts : That contracts for pledge made in consideration of the transfer to such agent of any other goods, documents of title, or • negociable security, on which the pledgee had at the time a valid and available lien in respect of previous advances, if bona Jide on the part of the person with whom the contract is made, shall be considered as valid and effectual as if the consideration of the contract had been a bond fide present advance of money. But the pledgee, in such case, is to acquire no lien on the goods &c. deposited in ex- change, beyond the real value of the goods &c. exchanged. Section 3rd enacts : That the act shall not be construed so as to protect any contract not made bond fide, and without notice that the agent has no authority to make the same, or that he is acting mala fide in so doing ; nor so as to protect any lien or pledge for any antecedent debt. Section 4th explains the meaning of the term " docu- ment of title :" it then goes on to enact ; — that " any agent intrusted as aforesaid and possessed of such document of title, whether derived immediately from the owner of such goods, or obtained by reason of such agent's having been intrusted with the possession of the goods, or any other document of title thereto" shall be taken to have been " in- trusted" witliin the meaning of the act ; — that such agent shall be taken to be " possessed" of goods &c. within the meaning of the act, whether the goods &c. be in his actual custody, or be held by some other person for him ; — that advances made bond fide to such agent, on the faith of any agreement in writing to deposit goods &c. shall be taken to be within the meaning of the act, provided such goods &c. shall be actually received by the person making the advance, 1 J. J. Factors and Brokers. without notice of such agent's want of authority, although they should not be so received until a period subsequent to the making of the advance ; — that any agreement, whether made with such agent or with a clerk or other person on his behalf, shall be taken to be an agreement with such agent ; — that the term " advance" shall extend to any payment, whether made in money, bills of exchange, or other nego- ciable securities; — and that the mere possession of goods &c. by such agent shall be evidence of his having been " intrusted" therewith; unless the contrary be made to ap- pear (i). I'resenl stale (■f (lie law. It would appear, therefore, that the present state of the law with reference to pledges by factors, is as follows. A factor who is intrusted with the possession either of Factor may pledge either goods or goods or of the documents of title to goods, may now deposit documents of title. the same by way of pledge, lien, or security for advances made to himself (A:); whereas under the 6 Geo. 4, c. 94, the mere possession of the goods themselves, was not sufficient to intitle a factor to pledge, — that statute having been held, as we have seen, to give him such power, only when he was possessed of some document of title, which could be so marked by the owner as to show to whom the goods be- longed (/). Pledge not I^ like manner, a factor had no power under the 6 Geo. by'mere"^no. "*' '^^ ^^' ^° Pledge the property of his principal to a greater tice that the extent than the amount of his own lien upon it, where the pawnor is a '■ factor. pawnee knew that he was dealing with a factor only. But (0 The statute likewise contains provisions respecting fraudu- lent pledges by agents (sec. 6) ; and also respecting the right of the owner of goods to redeem the goods pledged, or to recover the balance of the proceeds thereof (sec. 7), similar to those con- tained in the 6 Geo. 4, c. 94. (k) 5& 6 Vic. c. 39, s. 1. (/; See Phillips v. Uuth; Hatfield v. Phillips, ante p. 132. Factor's Power to Pledge. 145 it appears that now, the pawnee will be protected to the full extent of his advances, even altliough at the time of making them he had such notice (?/?) : and that the only circumstances which will deprive him of this protection are either, — that the deposit was made on account of an ante- cedent debt ; — or that the advance was not made bondjide on the part of the pawnee ; — or that he had notice that the There must r 11 !• 11 1 • T • 1 ^^ notice of lactor had no authority to pledge, or that, m so domg, he his want of was acting mala fide against the owner of the property fhat'teW °'^ pledged (72). And where the advance is bond fide made, ^^f'°^ '""'" not on account of an immediate deposit, but in considera- tion of a written contract to deposit goods or documents of title, notice to the pawnee of the factor's want of authority to make such deposit will not invalidate the conti-act, unless it be received by him before the goods or documents of title have been actually deposited with him (0). We have likewise seen that, under the former statute, a Factor may factor had no power to pledge any document of title which any document was not derived immediately from the owner of the goods ; '^^l^^'^^ ha, and that, even although the principal had so far intrusted 'l^e posses- sion. the factor as to enable him to procure such document in his own name, this was not considered to be sufficient evi- dence of his having intrusted him, so as to intitle him to pledge (p). But it seems that now, mere possession by the factor is to be considered prima facie evidence of his having authority to pledge : and that where he is possessed of any document of title to goods, he will be taken to have been intrusted therewith, so as to be intitled to pledge the same, whether such document was in fact derived immediately from the owner, or has been obtained by the factor by reason of his having been intrusted with the possession of the goods, or of some other document of title thereto (9), (m) 5& 6 Vic. c. 39, s. 1. (n) lb. sec. 3. (0) lb. sec. 4. (p) Close v. Holmes ; Phillips v. Huth ; Hatfield v. Phillips, ante pp. 127—132. (q) lb. sec. 4. H 1 4() Factors and Brokers. So he rii.iy So under the G Geo. 4, c. 94, no pledge by a factor was comfnu^ng" valid, unless for advances made expressly on the faith of the «dvancc, or documents pledged (r). But now, a valid pledge may be on a mere i o v ' _ . . ^ deposit in made, either for an original, or a continuing advance (s) ; exc wDge. ^^^^ where an advance has been already made to a factor, on the security of goods, documents of title, or negociable securities, and these are given up in consideration of the deposit by the factor of other goods, documents of title, or negociable secu'-ities, the pledgee will have a lien on this second deposit to the extent of the value of the goods, docu- ments of title, or negociable securities given up in consider- ation thereof (^). Or tor an an- The law with reference to pledges made on account of irfhe exleni' antecedent debts will, it is presumed, be still regulated by of bis lien, if tbe G Geo. 4, c. 94, s. 3 : for, although the third section of Ihe pawnee ' o had no notice the 5 4' G Vic. c. 39, cxpressly declares, — that nothing in only a factor, the last mentioned statute shall be construed to protect any lien or pledge for any antecedent debt, — yet it is submitted, that this does not operate as a repeal of the 6 Geo. 4, c. 94, s. 3, inasmuch as the two enactments are perfectly recon- cilable (m). On referring to the second and third sections of the last mentioned statute it will be found, that they pro- tect pledges by factors, whether on account of present ad- vances, or on account of antecedent debts, only in case the pawnee accepts the pledge without notice that the pawnor is a factor. By the first section of the 5 4' 6 Vic. c. 39, how- ever, this proviso as to notice is repealed, so far as regards pledges within the second section of the 6 Geo. 4, c. 94 ; and as the only proviso contained in the third section of that act in common with the second, is that as to notice, it would seem to follow, that the clause in the 5 4- 6 Vic. c. 39, s, 1, which repeals this proviso as to the latter of these (?•) Taylor v. Trueman ; Taylor v. Kymer, ante pp. 132 — 134. (s) .5 & 6 Vict. c. 39, sec. 1. (() lb. sec. 2. (ii) 1 1 Co. R. 63, 64. Com. Dig. Parliament, R. 9. Factor's Power to Pledge. 147 sections, is the only one which could be construed to extend to cases within the former, — that is, to cases of pledge for antecedent debts. Construing therefore the declaration contained in the third section of the 5 4" 6 Vic. c. 39, accord- ing to this view of the subject matter, the intention of that declaration ^yould seem to be, rather to prevent the repeal of the proviso as to notice from being extended to cases of pledge for antecedent debts, than to invalidate such pledges altogether : and, if this be so, then we may conclude, that now, as heretofore, a factor may pledge the property of his principal for an antecedent debt, to the extent of his own lien thereon at the time of the pledge, provided the pawnee has not, at that time, notice that the pawnor is a factor. There is however, one very important particular with And perhaps reference to pledges of this nature, in which, perhaps, our nty under ac- courts may now be induced in some measure to relax the "ni'n"o'w*i>e law as settled by fonner decisions, — that namely with re- held lo con- , , „ , . T T . , ,. stitnte a suffi- spect to what shall be considered to constitute such a hen on cient lien. the part of the factor, as will intitle him to pledge for an antecedent debt. There is, it is believed, no report of any decision on this point under the third section of the 6 Geo. 4, c. 94 ; but as it has arisen under \he fifth section of that act, the wording of which in this respect is the same as that of the third, the cases under that section may be used to illustrate the present question. The reader then will remember that it was de- cided, that a mere liability under acceptances did not con- stitute such a lien as would intitle a factor to pledge under the fifth section of the 6 Geo. 4, c. 94(3'), and that to give him this power it was held to be necessary, that his lien should be founded on a money demand. In the case of Fletcher v. Heath, the reasons on which the court grounded their decision do not appear to have been very fully stated ; (i) Fletcher v. Heath, 7 B & C. 517 ; Blandy v. Allan, 3 C. & P. 447, ante pp. 136, 137. h2 1 is Factors and Brokers. but in that of Blundi/ v. AlUm it is otherwise ; and, in this latter case, tlic question seems to liave been decided chiefly by comparing the Ji/th and eighth sections of the act, and interpreting the former by the latter. In delivering judg- ment in that case, Best, C. J., says: " I think that the eighth section renders it perfectly clear, for it says that the factor shall not be liable to prosecution for having deposited goods, provided they are not made a security for the payment of any greater sui.i of money, than was justly due from the princij)al at the time of the deposit. This plainly shows, that the liability intended is a pecuniary liability ;" and then he goes on to say ; " the section further provides that the acceptance of bills of exchange by the factor or agent, on account of his principal, shall not be considered as consti- tuting any part of his debt." By the sixth section of the 5 S)- 6 Vic. c. 39 however, it is enacted ; — that no agent shall be liable to prosecution for pledging any goods or documents of title, in case the same shall not be made a security for any greater sum of money than the amount which, at the time of the deposit, was justly due to such agent from his principal, " together with the amount of any bills of exchange drawn by or on account of such principal, and accepted by such agent." By this enactment then the eighth section of the 6 Geo. 4, c. 94, is evidently repealed ; and therefore, — presuming that in any case in which the question may here- after arise, the o be reimbursed all payments, advances, and expenses, in- curred by them in the regular course of their employment. This right, — unlike that which we have just been discussing — they possess in common with simple mandataries ; and, notwithstanding the difference between these two kinds of agencies in respect of the former particular, their similarity in this would seem to be perfectly well founded. The sim- ple mandatar}', it is said, should be reimbursed his expenses, because it can never be presumed that a gratuitous trust is designed to be a burden on the person who undertakes it (6). He neither bargains for nor receives any reward for the trouble to which he may be put in the execution of his office; and it is therefore just that he should, at least, be saved from incurring any positive loss thereby. Now the same reason- ing will apply to the case of factors and brokers. They are, as we have seen, agents for hire ; but still the hire they re- ceive is intended as a compensation, not merely for their (o) Per Best, C. J.. Hamond v. Holiday, 1 C. & P. 384, 386. (6) Slory on Bail. 197. Their Rights. 1G5 ; trouble, but likewise for the exercise of their skill. In the i contract which they make with their principals the posses- sion of this skill is implied, — a point in which their agency differs essentially from that of gratuitous mandataries ; — they are moreover liable to their principals for the consequences '' of their want of such skill ; and this being the case, it fol- ;; lows, that they are intitled to be rewai'ded for it, without i their being exposed to the chance of having this reward i diminished, by the deduction of any expenses which they i may necessarily incur in the course of their employment ; be- , cause, if this wei"e not so, the burden in the one case would, j in the event of such deduction being made, be as great as in the other ; for, as the gratuitous mandatary would suffer by a ; positive outlay, so the paid agent would suffer by the diminu- ' tion of his stipulated reward. Some such reasoning as this, in all probability led to the rule, which has been thus stated; — that wherever it is necessary for an agent in the regular . course of his employment to make advances, the principal ! who deputed him in the business where they are necessary, < must be taken to have requested him to make them, and is ' therefore bound to reimburse them (c). ) I I The most ordinary charges of this kind which a factor or What ciiar^ea i broker is intitled to make, are those for premiums, ware- are generally j house-room {d), duties, freight, general average, salvage, '*"""'*''• j porterage, and journeys (e). He will also be intitled to ^ charge for all payments made for the necessary preservation j of the property committed to his care {J), and in short, for j _^ < (c) See Smith's Merc. Law, 91. > ((/) The goods of a principal however, which are in the hands \ of his factor, are not liable to be distrained for warehouse rent due : from the latter; Gilman v. Ellon, 6 Moore, 243 ; nor where a i factor t<) whom goods are consigned, having no warehouse of his j owD, deposits them 'n that of another, are they liable to be dis- i trained for rent due from the warehouse-keeper, Thompson v. I Mashiler, 1 Hing. 283; Matlhias v. Mesnurd, 2 C. & P. 353. , (e) Story Com. on Agency, 335 ; 3 Chittv on Com, and Man. I 222. " ' I (/) 1 Roll. Ab. 124, pl.7. I IGG Factors and Brokers. whatever expenses he incurs in order to enable him to ac- complish the objects of his commission (g). A factor how- ever will not be allowed to place anything to account under the head of general expenses (h) ; and it is said that, if by making any improper charge he wrong his employer, he will have to answer for the same, not only for the amount of the principal money, but also for the interest thereof for the time (j). So, on the other hand, it appears that if the fac- tor, in his own vrong, has forgot to charge the merchant's account with payments made by him, the merchant will have, in like manner, to answer for it to the factor with interest for the time (A"). And it is said, that as between merchant and factor, if the factor has paid more than the merchant could have demanded of him, the latter will not be intitled to an account from the factor " till he has made even"(/). Query, if a factor will be allowed to charge for foreign cus- tom.-, which he has not paid. Opinion of Holt, C. J. We have mentioned the duties payable on goods, as one of those disbursements which a factor is impliedly authorized to make, and with which he has therefore a light to charge his principal. It has however been held, that the factor shall have the benefit of customs saved, and not the mer- chant who employed him, provided only they be due to a foreign power ; and consequently, that although the factor evade the payment of such customs, he will nevertheless be intitled to charge his principal with them {m). But it is submitted, that this doctrine is not tenable. The reasons on which it was founded were stated in the following case. A factor of the East India Company had carried over a large sum in gold to India, where a custom was due for it, (g') Stoiy on Agency, supra. (h) E. 1. Company v. La/ce, Fincli. 117,Vin. Ab. Factor, B.2. (i) Mai. LexiAlerc. 83. (/v) AJal. Lex Merc. 83 ; Vin. Ab. Factor, B. 3. (/) Failiinn v. Attuood, 2 Ch. Ca. 38, in notis, (m) Smith v. Oieiiden, Cha. Ca. 25 ; Knipe v. Jesson, ib. 76 ; Vanderveldy v. Barry, Vin. Ab. Factor, B. 6, ^non. 3Salk. 235. Their Rights. 167 which he never paid ; and it was held by HoU, C. J., that the factor should have the benefit, and not the company, because it was due from them, and ought to have been paid ; they therefore could not make title to it against one who had the possession, — for that was sufficient in all cases but against him who had the very right ; and moreover the non- payment was at the peril of the factor («). Now, however technically correct the former part of this Remarks argument may be, it is still diincult to see how the lactor could support a claim for money paid for the use of his prin- cipal, unless he were in a situation to prove that he had in fact paid such money, or done something equivalent to it(o) ; and, with reference to the non-payment having been at the peril of the factor, it would seem to be sufficient to answer, in the words of Lord Keeper North, that the factor had, in evading the payment, ventured his master's goods, as well as his own hfe (p) ; and that therefore, to give him the benefit of such venture, would be to allow him to profit by a breach of duty. But this doctrine is objectionable even on broader grounds than these. A distinction, we have seen, is made between the evasion of home and foreign customs, the factor being allowed the benefit of his evasion in the latter case, but not in the former ; and the reason of this distinction appears to have been, that the non-payment of home cus- toms was a fraud on the King (q). In another report of the same case however, it is stated to have been decreed against the factor on the general ground of fraud (?•) ; and this seems to be the only ground on which such a question could be fairly decided. Such then being the case, it may well be asked, in the words of an old writer, why should it not be (n) Anon. 3 Salk. 235. (o) Maiwell V. Jameson, 2 B. & Al. 51 ; Taylor v. Higgins, 3 East, 169. (p) Anon. Skin. 149. Iq) Borr v. Vandall, Cha. Ca. 30. (r) N. Ch. R. 87 ; Vin. Ab. Factor, B. 6. 1G8 Factors and Brokers. deemed a fraud to cheat a foreign state of its customs? '' fraud," says he, "is always the same, though an allow- ance ill one case may be more prejudicial than another, and surely a court of justice should not connive at any thing so detrimental to good faith, commerce, and reciprocal assur- ance" (.v). For these reasons it is conceived that, at the pre- sent day, the above doctrine would not be maintained. Insurance- It has howevor been decided, that an insurance broker charge "iVir* ™^y charge his principal with premiums, vehether he have preniinmf, ju fj^jt pajd them or not. The reason of this is, that by the u-heilier he '^ _ . ... Ims paid ihem usage of trade the broker gives the underwriter credit in account for the premium when the policy is effected, and the underwriter by the terms of the policy acknowledges the receipt of the premium from the assured; — which cir- cumstances are, as between the broker and his principal, considered to be equivalent to actual payment (<)• The same rule holds when the policy is under seal, and the broker merely covenants with the underwriter to pay him the pre- mium. But it appears that, under such circumstances, the broker could not recover on the common count, as for money paid to the use of his principal (w) Cases in It will be remembered that the right of a factor or broker char^ee will be ^° ^'^ repaid his advances was stated with this qualification, allowed for uamelv, — that such advances were made in the regular advances "^ , ° made out of course of his employment. There are however some excep- course of "^ tions to this rule, of which the following are examples. If, for business. instance, circumstances of emergency occur, in which, to use the language of Dr. Paley, " he has reason to believe that his employer, if he were present, would alter his inten- tion" (r), and authorize a departure from the usual course, (s) See tbe leraarks on the above tnaxira, I Eq. Ab. 369, in nolis. (t) Per Parke, J., Hnuer v. Butcher, 10 B. & C. 329, 347, ((') Pouer V. liiitclier, supra. (j; Mor. & Pol. Phil. B.3, c. 12. I Their R'l gilts. 169 the factor or broker will, it seems, be intitletl to charge his principal with the ovitlay thereby occasioned. 'I'hus it has been said, that if, on account of the lateness of the season, or for any other sufficient cause, a factor were, although without instructions, to effect an insurance on the goods of his employer, the latter would be liable to pay the pre- miums (_»/); and in like manner, where it appeared that a factor had a general authority to receive and sell goods, and out of the proceeds to repay himself his advances, charges, and commission, it was held ; — that the costs of an action against a wrong-doer who withheld the possession of the goods, and also the costs of a reference bona fide incurred for the recovery of the goods, were legal charges thereon, and might be set off by the factor in an action brought against him by his principal to recover the proceeds of the sale(z). Incases like these, the agent's right to recover his disbursements depends on the rule, — that where from the occurrence of exigencies not provided for by the regular rules of business he is obliged, although acting for the best, to incur increased expenditure in the execution of his agency, it may reasonably be inferred that such expenditure was in- curred by the authority of his 2)rincipal(a). So if by the custom of trade, — as for example by the usage of the Stock Exchange, — a broker be obliged, without any default on his own part, to pay monies on account of a contract into which he has entered for his principal, the latter nmst repay the same, and that whether he was ac- quainted with the usage by which the broker was governed or not (6). Cases like these, indeed, seem hardly to come within the exceptions of which we are now treating ; be- cause, whatever be the circumstances under which such (i/) Per Buller, J., Wolf\. Honicastle, 1 Bos. & Pul, 321. (s) Curtis V. Barclay, 5 B. & C. 141. (a) 1 Bro. 323; 3 Chitty on Com. and Man. 222. (6) Young V. Cole, 4 Scott, 489 ; Snttnn v. Tatham, 10 A. & El. 27, overruling Child v. Morley, 8 T. R. 610. I I 70 Factors and Brokers. payments are made, still, from the fact of their being made in compliance with the usage of trade, they may very pro- perly be considered as payments made in the regular course of business. No charpc But a factor or broker is not intitled to charge his princi- wiii be allow- ^^ ^^.jjjj ^j^y payment, or advance, which he makes volun- voluniai) tarily, and in his own wrong. Thus if a factor, without commission, pay money lor a merchant to another man, it is said to be at his peril to answer for it(c). So, where the defendant as broker for B. purchased the goods of A., — for whom he also acted as broker under a commission del cre- dere, — and afterwards resold the goods for B. and paid A. the price ; it was held, in an action brought to recover the balance due on such resale ; — that the defendant was not intitled to set off the payment made to A., and that the fact of his having had a commission del credere from A. made no difference (d). And in like manner, where a broker, who was employed to sell goods, found, on applying for the de- livery of them, that they were stopped for freight, which freight he paid in order to obtain possession of the goods, although his principal had formerly directed him not to do so, alleging that the freight had been paid already, it was held ; — that this advance was made by the broker in his own wrong, — though the freight had not been paid as the prin- cipal supposed, — and that therefore, the latter was not liable for it (e). jjpj. f^j. It is likewise an incontestible principle in our law, that monies paid where a party orders his agent to pay money to a third per- after revoca- 1 J o r j j c lion of order son, but afterwards, before the money is paid or passed in same. "^ account, countermands such order, the agent, paying after (c) Mai. Lex Merc. 83. (d) Morris v. Cleaiby, 4 M. & Sel. 566; and see Gurney v. Shiirpe, 4 Taunt. 242. (e) Howard v. Tucker, 1 B. & Ad. 712. Their Rights. 171 such countermand, must be deemed to have made the pay- ment wrongfully and without authority {f). If therefore a factor or broker make a payment under such circumstances, he will not be intitled to charge the same in account against his principal : and, in like manner, if he make such a pay- ment after notice of an act of bankruptcy committed by his principal, he will be held to have done so in his own wrong {g). It should however be borne in mind, that orders for the Unless the payment of money by an agent are not always revocable, be irrevoca- Thus, if the order have been executed either by the actual '' delivery of the money by the agent to the person for whom it was intended, or by some binding engagement having been entered into between the agent and such person, which would give the latter a I'ight of action against the former, such order is no longer revocable, and the agent may there- fore pay the money, even after notice not to do so (A). And where a trader, before any act of bankruptcy, directed his broker, who had authority to receive certain monies due to him, to pay a sum to B. in satisfaction of a debt, and the broker bona fide agreed with B. to pay him so soon as he received the money, after which the trader became bank- rupt : it was held that his assignees could not recover this sum from the broker, although he had not in fact paid it to B. imtil after the commission issued {i). Nor is an order to an agent to pay over money revocable, if it be given in the first instance on a sufficient consideration (/c) ; and if the circumstances of the case amount, as between the principal (/) Per Pell, Sergt., arguendo ; Fisher v. Miller, 1 Bing. 153. (g) Vtrnon v. Haiikey,2 T. R. 113 ; Green v. White, 3 Scott, 387. (/i) Per Park, B., Brind v. Hawpshire,\ M. & \V. 365, 372; and see Williams v. Everett, 14 East, 596; Scott v. Porcher, 3 Meriv. 652. (i) Bedford v. Perkins, cited in Green v. White, 3 Scott, 390. (k) Per Tenterden, C. J,, Metcalfe v. Clough, 2 M. & Ry. 178, 179. i2 1 72 Factors and Brokers. and the person to wliom the money is ordered to be paid, to an actuiil appropriation tliereof by the former to the latter, the agent will be justified in making the payment even after liaving had orders to the contrary (/). In cases like these therefore, the factor or broker will be intitled to be reim- bursed by his i)rincipal, under the ordinary rule. Whon a There are perhaps few questions which have been more /erM^wul 'be frequently disputed, than the right of parties to recover in- aiiu«i(i. terest on monies claimed by them from a debtor ; but the general rule seems now to be, that interest is payable only where it is given by the express terms of a contract; or by an engagement implied from the nature of the security, — as in the case of bills of exchange ; or by the usage of trade to which the contract has relation (w). If therefore a factor or broker can support his claim on any of these grounds, he will be intitled not only to be repaid his advances, but like- wise to receive interest thereon (n) ; and in one case, in which it appeared that the plaintiff, a broker, had delivered an account to the defendant annuallj', charging interest at the end of each year, and at each rest adding the interest of the former year to the principal, and that this mode of ren- dering the accounts had continued for some years without any objection on the part of the defendant : — Lord Ellen- borough held, that it was fair and reasonable that the de- fendant should pay interest in the manner charged (o). Effeci ..i .«!:t- ^^ here however the claim is submitted to a jury, the fac- 4"'c.4-* s'. 2S. ^^•" "*' hroker may intille himself to interest on his advances, even in the absence of any express or implied contract to (/) Fisher v. Miller, 1 Bing. 150; and see Gibson v. Minet, 2 liiijg. 7. (m) Per Tindal, C. J., Fruhliiig v. Schroder, 2 Scott, 135, 144 ; per Abbott, C. J., Higgins v. Stewart,2 B. & C. 348, 349. (h) Blacklmrn v. Kymer, 5 Taunt. 584 ; Bruce v. Hunter, 3 Camp. 467. (o) Bruce V. Hunter, supra. Their Rights. 173 that effect. This riglit he possesses under the statute 3 S,- 4 W. 4, c. 42, s. 28, whereb)' it is enacted : — that upon all debts or sums certain, the jury, on the trial of any issue or inquisition of damages, may, if they think fit, allow in- terest for the creditor, at a rate not exceeding the current rate of interest, from the time when such debts or sums cer- tain were payable, provided the same were payable by virtue of some written instrument at a certain time ; or if payable otherwise, then from tlie time when a demand of payment shall have been made in writing, so as such demand shall give notice to the debtor that interest will be claimed from the date of such demand until the time of payment. What has been said with reference to the right of a factor Rules, where or broker to be reimbursed his advances applies, of course, a,ivaiu;eg i° to those cases only in which that right is not regulated bv ""^g^'^ttd by •^ _ '^ ° •' agreement, special agreement with the principal ; and it seems hardly necessar}' to add, that where such an agreement has been entered into between the parties touching this right, the law will hold it to be limited or enlarged entirely according to the terms on which they have so agreed. It need therefore be only remarked further, with reference to this subject, that it seems that such agreements will be construed by the courts with considerable liberality towards the agent; and accordingly, where it appeared that the plaintiff had engaged to effect for the defendant an insurance on certain goods, with such names as should be to the defendant's satisfaction ; — it was held, in an action brought by the agent to recover the premium, that, — the voyage having been performed, and the defendant never having required to see the names on the policy, — he could not resist the agent's claim by objecting that they had never been exhibited to him for his approval (p). And in like manner, where it appeared that J. and Co. had been indebted to the defendant, who was their broker ; that, whilst they were so indebted, it had been (p) Diion V. Hovill, 4 Bing. 665. 1 74 Factors and Brokers. agreed between them, — " that, in consideration that J. and Co. would employ the defendant as broker to sell certain timber on commission, and would indorse and deliver the bills of lading of such timber to him, he, the defendant, undertook to account for and pay over the proceeds of the sale without deducting therefrom the sums of money so due to him as aforesaid," — and it further appeared that J. and Co. afterwards became bankrupt ; it was held, in an action brought by the assignees of J. and Co. to recover the pro- ceeds of the timber, that the above agreement was not bind- ing on the broker, so as to deprive him of the right to set off the amount of the debt due to him from J. and Co., against the claim of the assignees for such proceeds [q). Factor or bro- Lastly ; a factor or broker is intitled to charge his princi- to be reim- P^l with all damages sustained by him in the execution of his damaees'in- inundate, unless they have been incurred by his own default. curred in ibe This is according to the rule of the civil law, — oflicium ne- coarse of his . " i , • employment. 7ni?u debet esse damnosum (?•). Where, therefore, the pnn- cipal sent his factor abroad, and commissioned him to draw on a foreign merchant, which he did, and so stated in the account which he furnished to his principal ; and the princi- pal gave credit for the bills drawn, as for cash, but, by his contrivance, they were never accepted ; — it was held, that the factor should not be concluded by his account, but be paid (s). It will be observed, however, that in the case just cited, the factor himself was the only party who sustained any in- jury from the conduct of his employer; and hence it follows that, but for the question arising on the account furnished by the factor, no doubt could have been entertained as to his right to be indemnified for the fraud whicli had been practised upon him. But this rule, with reference to the (q) M'GilUvrav v. Simsm, 9 D. & Ry. 35. (r) Inst. /.;/). 56, § 4. (s) Warr v. Praed, Colies, P. C. 57. Their Rights. 1 75 right of a factor or broker to be saved harmless against all damages sustained by him in the execution of his office, has been carried still further, and is now held to apply to many cases in whicli the agent, by obeying the orders of his principal, injures the rights of thu-d parties, as well as to those in which he himself is the only sufferer. Let us briefly trace the steps by wliich our courts have come to entertain this doctrine. It is a well known maxim in our law, — that there is no Even when contribution amongst wrong-doers ; and it was long since ^^1;^,, ^"^^^^ .^^^ decided, that where, from the nature of his office, an agent '"•ni'ssement ' ' _ , ^y hiin of ihe must be taken to have been conscious that he was acting rights of third .,,.„,. parlies. agamst law, even an express promise to mdemniiy him was void {t). But at a very early period a distinction was made between the case of an agent who was commanded to do what was manifestly illegal, and that of one who was commanded to do an act legal in itself, although his principal might have, unknown to him, no authority to commission him to do it ; and, in accordance with this distinction it was held, that where a person had been induced, ignorantly, to commit an illegal act, an express promise to indemnify him from the consequences thereof was valid {u). Still however it re- mained to be decided, whether, in such a case as the above, the law would, in the absence of an express promise to that effect, imply an undertaking on the part of the principal to indemnify his agent ; and although Lord Kenyan on one occasion seemed to favour the opinion that the law would imply such an undertaking (jc), still the only judge before whom, for a long period, the question appears to have arisen directly, held quite the contrary {y). (f) Martin v. Bltithmati, Yelv. 197. (m) Fletcher \, Harcot, Hutton, 55; reported as Battersey's case. Winch. 48. (i) See Merryweatber v. Nixan, 8 T. R. 186. (y) Per Ellenljorouwh, C. J,, Farebrother v. Andey, 1 Camp. 343, 345 ; Wihon v. Milner, 2 Camp. 452. 17(5 Factors and Brokers. At length tlie point was raised before the Court of Com- mon-Picas ; and that court, after taking time to consider, solemnly decided in favour of the right of the agent in such cases to an indemnity. " By the principles which regulate all laws of principal and agent," it was said, " every man who employs another to do an act which the employer ap- pears to have a right to authorize him to do, undertakes to indemnify him for all such acts as would be lawful if the employer had the authorit}^ he pretends to have .... Bro- kers, factors, and agents, do not take regular indemnities;" and " these would be indeed surprised if, having sold goods for a man and paid him the proceeds, and having afterwards suffered in an action at the suit of the true owners, they were to find themselves wrong-doers, and could not re- cover compensation from him who induced them to do the wrong" (r). The same doctrine has since been laid down by the Court of Queen's-Bench (a), and again by the Court of Common- Pleas in a recent case : and accordingly it may now be stated as clear law, — that where an act has been done by a factor or broker under the express directions of his principal, which act has occasioned an injury to the rights of third persons, the principal shall be bound to in- demnify the factor or broker against the consequences thereof, provided the act done was not manifestly illegal in itself, but was done honestly and bona fide, in compliance with the directions of the principal (6). Having thus treated of the right of factors and brokers to their commission and advances, and having likewise seen under what circumstances they may be deprived of this right by the usages of trade, or by their own agreement, let us now consider those cases in which they are debarred the exercise thereof by operation of law. (2) Adamson v. Jarvis, 4 Bing. 66, 72. (a) Belts V. Gihbins, 2 Ad. & E. 57. (h) See per Tindal. C. J., Tnplis v. Grane, 7 Scott, 620, 643 ; and see Johnston v. Uiborne, 11 Ad. & E. 549. Their Rights. 177 It has been said to be perfectly settled, that where the Factor or bro- , r, , . kei" is not in- contract which a party seeks to enforce, be it express or mied to com- implied, is expressly or by implication forbidden by the com- "(jvances, in mon or statute law, no court will lend its assistance to give respect of il- ' _ ° legal trans- it effect (f); and it has accordingly been held, that if a fac- actions. tor or broker engages, in that capacity, in an illegal trans- action, he will not be allowed to recover from his employer, either his commission or the advances or payments which he may have made in order to carry his instructions into effect. Thus, where in assumpsit by a broker for work and labour, and for money expended in the purchase of shares in a concern called the " Equitable Loan Bank Company" it appeared, that that company was illegal within the opera- tion of the 6 Geo. 1, c. 18, as having transferable shares, and affecting to act as a body corporate without authority by charter or act of parliament ; — it was held, that the plaintiff could not recover, inasmuch as his claim arose out of an (c) Per Parke, B., Cope v. Rowlands, 2 M. & W. 149. 157 ; and see liictum of Tindal, C. J., Gas Light Company v. Turner, 7 Scott, 793. It will at once be seen that the principle laid down in the text includes every act which the law says a man ought not to do, — whether it be prohibited as being against good morals, or as militating against the interests of the state; and that it therel'oie applies to acts which are mula pruhibita, as well as to those which are mala in se. Indeed it is somewhat surprising that our courts should have ever entertained such a distinction as that which was introduced by the use of the above terms, inas- much as it appears to confound the nature of the acts forbidden, with the act of the law in forbidding them, — all illegal acts being, in the latter view of the case, mala pmhibita, whether in the former they are mala in se or not. The distinction however is now quite repudiated. See per Heath, J., and Rooke, J., Auhert .V. Maize, 2 l5os. & Pul. 374, 375 ; per Abbott, C. J., Cannan V. Brjfce, 3 B. & Al. 183 ; and per liest, J ., Bensley v. Bignold, 5 B. & Al. 341. Lord Mansfield seems to have been the first to introduce it in connection with our present subject ; see Faikney V. Reynous, 4 Burr. 2072; but from the subsequent case of Hnl- man v. Johnson, Cowp. 341, it would appear that latterly it was not recognized by that learned judge. His words in that case are, " no court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act." I 5 ] 7 8 Factors and Brokers. illegal transaction {d). So where a bill had been indorsed to a broker in consideration of money paid by him in effect- ing certain insurances, one of which was illegal, and the acceptor afterwards became bankrupt ; —the petition of the indorsee, to prove, was dismissed as to what arose upon the illegal insurance (e) ; and in a court of law, a bill given under such circumstances would be held to be altogether void : for, although it is a maxim in equity, that when the consideration con^'ists of two parts, one bad, and the other good, the bill shall stand as to what is good ( /), — the rule of law is, that if either part of the consideration is shown to be illegal, the whole will be vitiated {g). In like manner it is held, that where money has been paid by a broker in order to settle illegal stock-jobbing transactions, such money can- not be recovered back {h). So it was said by Lord Lough- borough, that if a man be employed to buy smuggled goods, and he pays for the goods, and they come to the hands of the person who employed him, that person shall not paj^for them {i). How f;ir a But it appears that if a factor residing abroad should, in 1 actor resid- „ • • p .i • , i i ing abroad, is pursuance 01 a commission irom this country, purchase and MHT^aws of ^^'P goods which at the time of the delivery he knew were tiiis coiinio. intended to be smuggled into England, he would neverthe- less be intitled to recover his commission and advances in respect thereof (/c). The reason of this seems to be, that the (d) Jo&efh& V. Tehrer, 3 B. & C. 639. (e) Expane Mather, 3 Ves. Jr. 373. (/) Ibid. 374. (g) Per Tindal, C. J., Waite v. Jones, 1 Scott, 730, 735. (/i) Steers V. Lashley, 6 'J'. II. 61 ; Brown v. Turner, 7 T. R. 631. Time bargains in foreign funds liowever are not within the prohibition of the stock jobbing act, 7 Geo. 2, c. 28, nor are they illegal at comnion law, and therefore the above decisions do not apply to them ; Wells v. Porter, 3 Scott, 141; Oakley v. Righu, ibid. 194; Elsworlh v. Cole, 2 M. & \V. 31. (i) Kiparte Mother, supra. (k) See per Lord Manslield, Holman v. Johnson, Cowp. 344 ; PeUecatv. Aiigell, 2 C. iM. & R. 311. Their Rights. 1''9 subject of a foreign country is not bound to pay allegiance or respect to the revenue laws of this ; and that although when he comes within the act of breaking them himself, he cannot recover liere the fruits of that illegal act, still the mere fact of his knowing that the goods he sells are to be disposed of in contravention of the fiscal laws of this country^ is not to be considered as a breach of those laws (l). If however the contract, so far as the factor is concerned, be not completed abroad ; as if he agree to deliver the goods in England, or if he take an actual part in the illegal adven- ture, — as by packing the goods in prohibited parcels, or otherwise, — he will not be intitled to recover (?n); because, by undertaking to deliver the goods in that manner, know- ing the use to be made of them, he offends against the laws of this country in the very contract itself (w). It has also been recently decided that a broker, acting as Rules as to such within the city of London, cannot maintain an action tisi*ng'i^, /^o^I for his commission on the purchase or sale of stock, unless '^'"*- he have been duly licensed by the mayor and aldermen of that city, pursuant to the statute 6 Anne, c. 16 (o). But a distinction is to be observed between cases which involve a breach of the above statute, and those in which the broker is merely guilty of a contravention of the regulations under (/) See per Abinger, C. B., Pellecat v. Angell, supra. (m) See Holman v. Johnson, supra; Pellecat \. Angell, supra ; Waymell v. Reerl, 5 T. R. 599. (n) Per Duller, J., Waymell v. Reed, supra, 600. The rule is thus stated by the Scottish lawyers. " When a merchant, settled abroad, whether a foreigner or a native of this country, simply sells goods to a smuggler tanquam quitihet, and makes delivery on the spot, he can maintain an action for them in our courts, though he should have suspected or even known they were to be smuggled into Britain; but if he is accessory to the smug- gling, and thereby to an infringement of the laws of this land, which he is bound to know as far as concerns his trade, he can- not demand the aid of the British courts for the recovery of his debt." Morrison's Diet, of Decisions in the Court of Session, 9554. (o) Cope V. Rowlands, 2 M. & W. 149. 1 80 Factors and Brokers. whicli lie was admitted by the court of mayor and aldermen to act as a broker within the city of London, — inasmuch as the prohibition to act without admission is statutory, whereas, the regulations adopted in the case of admitted brokers are purely municipal, and have not the force of general law, — the only consequences of their violation being those which the regulations themselves prescribe. Where therefore it appeared that a broker had entered into a contract in viola- tion of these regulations, and of the bond given by him to the mayor, aldermen, and commonalty on his admission, he was held not to be disqualified from suing on such con- tract (p) ; and so it has been decided that a broker may prove for a debt arising out of transactions as a merchant, although such transactions are in contravention of the said regulations, and in direct violation of his bond (9). The contract in such a case is not ipso facto void ; and conse- quently the only remedy against the broker is an action for the penalty of the bond, in breach of which such contract was made (r), TiaiisKciioiis An opinion seems at one time to have been entertained, the^r mi • • . • 1 • 1 • where the tnereor. Inis question arose m a case in which it was trall^actionis argued, that time bargains in the foreign funds were pro- "'«^«'2''"" • hibited by the stock-jobbing act, and were therefore illegal ; or that, at least, they were mere gambling speculations, and were therefore void at common-law ; and for these reasons it was contended, that the broker who had negociated these bargains was not intitled to recover his commission in respect thereof. But the court were clearly in favour of the plain- tiff on the former point ; and with reference to the latter they were of opinion, that it would be too much to say, that an action for work and labour could not be maintained in respect of work done by a broker or agent, in the making of a contract which was not illegal, but at the most void (y). {t) Johnson v. Hudson, 11 East, 180. (h) See observatioas of Littledale, J., Forster v. Taylor, 5 B. & Ad. 898, 900, (,r) See judgment of the court in Cope v. liowlands, 2 M. & W. 157. (II) Per Tmdal, C. J., Wells v. Porter, 3 Scott, 141, 151. 182 Factors and Brokers. Or where ii is At all cveiits it is clcar, that where the claim of a factor ri/yineg"" °^ broker for his commission and advances is sought to be defeated on the ground of the illegality of the contract in i-espect of wliich he makes such claim, it must be shown that the contract itself was of such a nature as that it could not have been legally performed ; for if it appear that the con- tract, although it did contemplate the doing of an illegal act, could nevertheless have been legally performed by the adop- tion by the parties of certain subsequent proceedings, the agent will in that case be intitled to recover a compensation for his trouble in making such contract. Where therefore the defence was, that the charter-party procured by the bro- ker was such, that if the charterer failed to obtain certain licenses the voyage would be illegal, it was held, that this was no answer to an action by the broker for his commis- sion (r). And so it would appear, that if the consideration and the matter to be performed are both legal, the factor or broker will not be precluded from recovering his commission merely because, in the performance of something to be done on his part, he has been guilty of an infringement of the law, which was not contemplated by the contract (a). Query, \w\\ In cases such as those stated above, the application of the lily of the o?i- ^ule which we have been endeavouring to illustrate is com- gioal transac- parativelv easv. In them all, the factor or broker was shewn collateral to have been actually engaged in furthering an illegal trans- transactions. . . , i-ii- 11 11. action, or m other words, m breakmg the law ; and, this point having been made out, it followed as a natural con- sequence, that the law would not assist him in asserting any claim which arose out of a transaction of that nature. But circumstances may occur which would render it very diffi- cult thus to apply tlie rule. Suppose, for instance, that the (a) Haines v. Busk, 5 Taunt. 521. (a) See the dictum of Teriterden. C. J., Wetlierell v. Jones, 3 B. & Ad. 221,226. Their Rights. 183 agent liad no concern in the original scheme by which his principal proposed to break the law ; but that at a subse- quent period he engaged to do some act collateral to and remotely connected with it, and that from the doing of that act a claim arose which he sought to enforce against his princi])al, — in such a case as this, how and to what extent, according to the above rule, would the i-ight of the factor or broker, on this new contract, be affected by the illegality of the original scheme? It does not appear that the above question has ever be- Uiw of Atne- come the subject of an express dec'sion by our courts. Dr. quesi"un. Story however lays it down, on the authority of a case de- cided in the Supreme Court of the United States (b), that the law in that country is to the following effect, namely ; — " that an agent who has made advances to pay the duties due to the government upon goods which have been pre- viously, by a collusive capture, fraudulently introduced into the country by the principal, but in which transaction the agent had no part or co-operation, may recover such ad- vances" (Oi ^'^^ ^^ i' ^^ ^^^ improbable that a case involv- ing similar principles may at some future time be brought before the courts of this country, it may perhaps be interest- ing to inquire, how far the grounds of the above decision are consistent with the present state of the law amongst us. The reason of the above doctrine is thus stated by Dr. Remarks « ™, 1. 1 ,, • 1 thereon. Story. " The new contract, says he, " is one degree re- moved from the original illegal transaction; and as it is perfectly legal in its consideration and formation as an in- dependent contract, it ought not to be tainted by the ille- gality of the original transaction, although, at the time, the agent had knowledge of it" (J). Now it may be at once (ft) Armstrong v. Toler, 11 Wheat, 258. I (c) Law of Agency, § 347. < (d) Ibid. I 181 Factors and Brokers. admitted, that if, in the case sui)posed, the factor or broker could show that the engagement into which he had entered was " in itself perfectly legal in its consideration and form- ation, as an independent contract," there would be no objection to his enforcing any claim arising therefrom. But supposing that goods were fraudulently introduced into this country by the principal, and that the agent, although he had had no part or co-operation in that transaction, yet knew that they h;'d been so fraudulently introduced, but nevertheless engaged to pay, and did pay the duties due to government thereon, it seems very doubtful whether our courts would consider that this was a contract " perfectly legal in its consideration and formation." Indeed the au- thorities would seem to lead to the contrary opinion. There can be no question that a participation in carrying an illegal purpose into effect vitiates every contract, whether primary or secondary, of which it constitutes the object (c) ; and it has been said, that knowledge affords a strong ground to infer participation in the whole transaction {d). If then this dictum be law, the presumption would seem to be, that the doctrine laid down in America on the point now under discussion, would not be coincided in by the courts in this country ; and that that dictum is law, will, it is submitted, appear from the following case. One A. engaged in an illegal stock-jobbing transaction, by which he sustained a heavy loss; but it was expressly found, that the defendant was not a partner in such trans- action. A. was unable to pay the loss, and, for the express purpose of enabling him so to do, the defendant lent him a sum of money, which sum of money was applied for that purpose. To secure the money so lent, A. assigned several cargoes to the defendant, — after which he became bankrupt. Subsequently to this, the defendant received certain sums (r) 2 Pothier on Obligations, by Evans, 8, in iiolis. (d) Per Eyre, C. J., LightJ\>ot v, Teitaut, I Bos. & Pul.551, 557. Their Rights. 1 85 of money on account of tlie proceeds of these cargoes, and this action having been brought by the assignees of A. to recover the same, as money had and received to their use, the plaintiffs had a verdict, which was afterwards con- firmed by the court, — on the ground, that the loan was illegal, and the securities void. The statute, it was said, ab- solutely prohibited the payment of money for compounding differences ; and if it were unlawful in one man to pay, how could it be lawful for another to furnish him with the means of payment, — especially in a case wherein the means wei"e furnished with a full knowledge of the object to which they were to be applied, and for the express purpose of accomplishing that object (e). Here then, the party who lent the money had had no connection whatever with the illegal stock-jobbing transac- tions ; and had he not known that they had taken place, the mere fact of the money he lent having been applied to purposes connected with them, would not have tainted him with their illegality. But because he was aware of the pur- pose to which the money was to be put, he was held to have done an illegal act, inasmuch as he had knowingly furnished another with the means of breaking the law. Now in the case of the factor paying the duties on goods illegally im- ported, the same reasoning would seem to apply. True it is, he may have had no share in importing the goods into this country, and had he not known that they were being imported contrary to law, he would have been justified in paying the duties. But if he knew that fact, the case would be different ; because the probability is that, but for his having paid the duties, the goods would not have been ad- mitted into this country at all, — so that the breach of law contemplated by his principal would never, but for his aid, have been carried fully into effect; and thus, by his having made such payment, he has knowingly assisted in accom- plishing the illegal scheme. It seems to be a fallacy to say, (e) Cannau v. Bryce, 3 B. & Al. 179, 185. 1 86 Factors and Brokers. as was said in the case of Armstrong v. Toler, that " if the amount of duties be paid by A, for B., it is the payment of a debt due in good faith from B. to the government" {/)• The duties payable on goods, are not, it is submitted, a debt due in good faith to the government, except the goods are legally imported. If they are known to be illegally im- ported, the duties are not received, but the goods themselves are seized by the Crown ; and consequently no duties would be received on such goods, unless they were represented to be, what in fact they were not, namely, goods imported according to law. Such being the case then, it is difficult to see how the agent, besides contributing to the fraud of another, could avoid practising, on his own part, an actual fraud on the government, — which circumstance would, of course, alter his position very much for the worse ; and for these reasons it is submitted, that if a factor or broker residing in this country, were to make advances under circumstances such as those mentioned above, he would not be held entitled to recover them from his principal {g). With regard to a factor residing abroad, the case would perhaps be different ; for there, as we have already seen, mere knowledge is not considered to be evidence of par- ticipation (Ji). Factor or bro. Ill the next place it may be stated, as an estabHshed rule ker IS not ^f jj^^^ jj^^j. jf ^ factor or broker have been guilty of such intitled to ' t> J (/) Cited Story on Agency, 310. (g-) See the late case of M'Kinvell v. Robinson, 3 M. & VV. 434. (h) Pellecatt v. Angell. 2 C. M. & R. 311. Dr. Story men- tions anoiher case in which the agent has been held intitled to recover, namely ; — where he has advanced money to assist his principal in defending a prosecution for smuggling; Law of Agency, § 347 ; and, — supposing that the agent were not con- cerned in the scheme as consignee, and liad no interest in the goods by way of commission, there does not appear to be any objection to that opinion. Their Rights. 187 gross negligence and unskilfiilness in conducting his bnsi- commission ness, as to render what he has done altogether useless to the where h'tThas principal, or to subject him to an actual loss, he will not be ^^^'' '^"'"'y °* . , , , . gross negli- intitled to claim his commission or advances in respect gence or un- thereof (i) . And it appears that this will be the case, even although the negligence of the agent was not the proximate cause of the principal's loss; because, whatever may have been the immediate occasion of that loss, the property would not have been in a situation to sustain it, but for the agent's previous neglect (A). So, if the principal, on account of the misconduct of his factor or broker, refuse to complete a contract into which the latter has entered on his behalf, the agent will not be intitled to recover either his commission or advances in respect of that transaction. And accordingly, where a broker, who was instructed to purchase certain goods at a month's credit, did so, and paid the price and duties ; but, after the goods were dispatched, the seller, — who had heard rumours which were detrimental to the principal's credit, — procured the broker to delay their arrival till the month's credit had expired, and then to tender them to the principal on payment of the price, whereupon he refused to accept them; — it was held, that the broker was not intitled to recover either the price, the duties, or his commission (/). At the same time, however, it should be observed, that gut he may if it be shown that the principal has received any advantage ^''raeiimes II JO recover pro from the acts of his factor or broker, the latter will be in- rata. titled to a proportionate compensation (?»). (i) White V, Chapman, 1 Stark. 113; Hamond v. Holiday, 1 C. & P. 384. And see per Tindal, C. J., Shaw v. Arden, 9 Bing. 287, 290. (k) See Caffrey v. Darhy, 6 Ves. 496. (/) Hurst V. Holding, 3"Taunt. 32. (m) Per Best, C. J., Hanumd v, Holidaii, supra. See also, Farnswovth v. Garrard, 1 Camp. 38 ; and Denexo v. Daverell, 3 ] 88 Factors and Brokers. Nor is he in 111 like manncv it would seem, that if a factor m* broker pensli^iiinir- tl'ro"g'> inadvertence or inexperience,— although without red iliri.iiuii g^y improper motive, incur trouble or expense in the course inexpeiitiu-e. j i i: i of his employment, from which his principal derives no benefit, he cannot make it the subject of remuneration ; because, as has been well said, he ought not to undertake the work if it cannot succeed, and he ought to know whether it will succeed or not («). But still it should be borne in mind that, in cnses like this, the result alone will not be conclusive proof that the work was improperly undertaken, Secus, where — inasmuch as the error might have arisen from a bona Jide ■A bontl.fid<: mistake of judgment, without implying the want of proper i'm'l 'mJnt" ^'^'^^ *^" ^^^^ P^^^ ^^ ^"'^^ agent ; and it will tlierefore be for the jury to say on the whole of the evidence, whether in the matter in question, the factor or broker has acted with the discretion which was due to the interests of his prin- cipal, or whether the work was altogether useless (o). Nor to dama- And the same rules are applicable to cases in which the his own neg- factor or broker has sustained damages from the execution *^'' of his mandate ; for although, as we have seen, he is, under ordinary circumstances, intitled to claim such damages from his principal, yet, if it be made to appear that they were incurred by his own mistake or neglect, he alone will be liable for them (p). Camp. 451. It was held at one lime, that in such cases the only remedy of the principal was by cross action for the negli- gence of his agent ; and that unUss he had derived no benefit at all from the acts of the latter, evidence of negligence could not be admitted ; Browne v. Davis, cited 7 East, 479 : Templar V. M'Luclilan, 2 B. & Pul. N. R. 136 ; but it is believed that the rule to the contrary, as stated in the text, is now quite esta- blished. See the cases cited above; and also a very learned note by Air. Smith, 2 Lead. Ca. 14. (n) Duncan v. Blundell, 3 Stark. 6 ; Hill v. Feather stonhaugh, 7 Bing. 569. (o) See per Tindal, C. J., Shaw v. Arden, supra. (p) Capp v. Topham, 6 East, 392. Their Rights. 189 | A factor or broker will likewise cease to be intitled to his Nor if he be- i commission, in the event of his becoming the executor or (,',r ,o h\i administrator of his principal (y). pnncipal. j And lastl}', if his authority be revoked, he will not be N,,riftbe allowed, eitlier at law or in equity, to charge for commission Jj",^' " af^p^*"^^ or advances in respect of business done after notice of "*"''eo'''''t' . 1 1 1 p levocaiion of such revocation (r). But it appears that even the death of his amhoriiy. the principal will not have this effect, until the agent has had notice of that event. And therefore, where a ship and cargo were consigned to a factor with instructions to effect an insui'ance on freight, — which he did, and also to sell the ship ; and the principal drew on the factor against the pro- ceeds; but it appeared that the premiums had not been advanced nor tlie acceptances given, until after the prin- cipal's death, although before the factor had received any intimation thereof: — the court expressed a strong opinion, that the death of the principal did not operate as a revoca- tion, so as to prevent the factor from having the fruits of that which was the consideration on which he disbursed his money (i). At all events, if the executors of the prin- cipal confirm his instructions, the factor will be intitled to claim his disbursements {t). Such then are the rights which a factor or broker pos- Rempdies by sesses against the person of his principal ; and these may Jj'l?r aLiinsihis be enforced either by action at law, or by set-ofi'(«), and principal, sometimes by suit in equity. This latter remedy however does not appear to have been frequently adopted (v) ; and (q) Hnvey v. Blakeman, 4 Ves. 596. (?■) Sake V. Field, 5 T. R. 211, 215 ; Hammonds v. Barclay, 2 East, 227 ; Vernon v. Hankey, 2 T. R. 113 ; S. C. 3 Br. C. C. an ; 3 Chitty on Com. & Man. 223 ; Story on Agency, § 349. (s) Hammonds v. Bnrclai), supra, 229, 230. See however the dictum of Lord EUenborough, Watson v. King, 4 Camp. 273. (t) Hammonds v. Bardaii, supra. (it) Dale V. SoUett, 4 Burr. 2133. (u) In the case of Dinwiddiev. Bailey, cited infra, it is stated, I 1 90 Factors and Brokers. it seems theit if the subject of a broker's claim be matter of set-off, and capable of proof at law, a bill by him against his principal for a discovery and account will not be sus- tained (j). Semble, that It IS Said moreover, that where a factor receives a del Msei'i^'haT'iio credere commission on the sale of goods on which he has personal re- jjiade advances, he must be deemed, by reason of his having course Id Ills _ ' ' •' ° principal. given such guarantee, to have waived any personal recourse to the principal for the recovery of his advances, and to rely for this purpose on the fund alone ; and it appears further, that in such cases the factor's advances will, to avoid circuity of action, be treated as a payment pro tantu to his principal. So it is said, that a waiver of personal recourse to the principal may be presumed from the sub- sequent conduct of the factor ; as if he sells the goods on credit, and, before the credit has expired, settles the account with his principal, deducting his commissions, and then pays over the balance to him ; for, in such a case, the payment of the balance may be fairly treated as an assumption by the factor of the outstanding debt {y). And lastly ; even where a factor or broker has no del credere commission, j'et he can- not recover money from his principal which he has paid to or passed in account with him, — although from the insolvency of the debtor he himself has never received it, — provided it appear from the circumstances of the case, that in the first in- stance he took the responsibility of the debtor on himself (z). that the cause having stood over for the purpose of searching for precedents, it was reported, that there were numerous cases of accounts sought by a principal against a factor, and one upon the bill of the factor against the principal, — which was disposed of on another point ; Chapman v. Derby, 2 Vern. 117 ; but that no case had been found of a bill by an insurance broker. (i) Dimviddie v. Bailey, 6 V'es. jun. 136. (y) Story's Com. on Ag. § 342. (z) Goupy v. Harden, 7 Taunt. 160 ; Edgar v. Bumstead, 1 Camp. 41 1 ; Jameson v. Swainstone, 2 Camp. 546 ; note. CHAPTER III.— SECTION I. On the Rights of Factors and Brokers. PART II. On their Rights against the Fund. We come now, in the second place, to treat of the rights Division of possessed by factors and brokers as against the goods or ""* '" J^*^'' funds of their principals which may happen to be in their hands, or under their control. These rights are two in number; namely, ^?'sf, — the right of lien ; and seconclh/, — in the case of a factor — , that of stoppage in transitu. Let us consider these in their order. I. A lien is said to be, — the right in one man to retain Definiiion of that which is in his possession belonging to another, till ngn, certain demands of him, the person in possession, are satis- fied («) ; and it is in its nature, either particular or general. A particular lien is the right which by common law, — in the absence of any special agreement, — is possessed by a bailee who has expended his labour and skill in the improve- ment of a chattel delivered to him, to retain such chattel for his charge in that respect (b) ; whilst, on the other hand, a general lien confers on the bailee a right to hold, not only for demands specifically arising out of the thing retained, but for the general balance of accounts between the parties, (a") Per Grose, J., Hammonds v. Barclay, 2 East, 227,235. (6) See per Parke, B., Jackson v. Cummins, 5 M. &c VV. 349 ; and Scarje v. Morgan, 4 M. cV W. 283; and per Best, C. J., Bevan v. Waters, I M. & Malk. 236. 192 Factors and Brokers. in respect of dealings of the like nature (r) ; and it arises, not by common law, bnt either out of an express contract, or out of a contract which is evidenced by the usage of trade, and to which, in the absence of any proof to the con- trary, both the principal and the agent must be considered as having intended to conform {d). The lien of factors, and that of the onl}' class of brokers who are held to pos- sess this right, are both of the latter description. Factor has (he Up to the middle of the last century it certainly was m/'i'ie'i'/"'* doubtful whether a factor had a lien, and could retain for the balance of his general account (e). About that time however {f) a case occurred before Lord Hurdioicke in which the question arose (g) ; and after argument thereon at the bar, his Lordship adjourned the cause, and desired several merchants, who had been examined in the course of the proceedings, to attend in court, in order to be con- sulted by him with reference thereto. They attended ac- cordingly; and after having asked them several questions upon the custom and usage of merchants relating to the matter in doubt, his Lordship gave his opinion to the effect ; — that if there be a course of dealings, and a general ac- count between the merchant and factor, and a balance be due to the factor, he may retain the ship and goods or pro- duce, for such balance of the general account, as well as for the charges, customs &c. paid on account of the par- ticular cargo (//). The same opinion was afterwards con- firmed by Lord Alansfield (i), and several other eminent (c) Paley on Prin. & Ag. by Lloyd, 127 ; 2 Selwyn's N. P. 1404, 9th edit. (d) See per J'indal, C. J., Biandao v. Baniett, 2 Scott, N. R. 112. (e) See observations of Lord Mansfield, in Green v. Farmer, 4 Burr. 2218. (/) Hil.Term, 1755. (g) Kruaer v. Wilcoi, 1 Ambler, 252. (ft) Kriiger v. Wilcox, supra, 254. (i) See Godin v. London Assurance Company, 1 Burr. 489 ; FoicroJ't v. Devonshire, 2 Burr. 936 ; and Green v. Farmer, supra. Thch- Rights. 193 judges (A'); and at lengtli tlie proposition, — that a factor has a lien for his general balance, — came to be considered as too well established to admit of dispute (/). Brokers, on the contrary, do not usually possess the right Brokers have of general lien. They may indeed, like other agents, be occasionally in a situation to exercise the right of particular lien {in) ; but Avith one exception, that namely of insur- ance-brokers, the right of general lien does not pertain to tliem. The reason of this does not appear to be explained by any of our books ; but it is probably the following. The right of lien is, as we have seen, — a right in one man to retain that which is in his possession belonging to another, initil certain demands of him, the party in possession, are satisfied (7;) ; and it thus presupposes, that the person making the claim has possession of property belonging to the person against whom the claim is made. But it will be remembered, that one distinguishing feature in the cha- racter of a broker is, that in general he is not intrusted ■with the possession of the property respecting which he is employed to act in that capacity, but that his business is merely that of a negociator between the contracting parties (0) ; and this circumstance explains why it is that he does not possess the right of general lien as against his principal ; — because it is evident that, from the nature of liis occupation, he has not, under ordinary circumstances, any property of the latter in his hands, on which that right can attach. {k) Particularly by Lord Kenyon and Mr. Justice Ashurst, in Walker v. Birch, 6 T. R. 262; and by Buller, J„ delivering: judgment in the House of Lords in Lickbarrow v. Mason, 6 East, 21,28. (/) Per Lord Kenyon, Walker v. Birch, 6 T. R. 262; and per Chambre, J., Houghton v. Matthews, 3 Bos. &: Pul. 489. (m) See Thompson v. Beutson, 1 Bing. 145. («) Ante, p. 191. ((») Ante, p. 4. K 194 Factors and Brokers. Except insu- With respect to insurance-brokers, however, the case is ranee brokers, (jiffgreut. It jg, as we have seen, customary to intrust them with the possession of policies of insurance which they have effected, in order to enable them to adjust losses which may have happened thereon ; and it has accordingly become a well recognized principle in our law, that they, like factors, have a lien on such policies and the proceeds thereof, for their general balance {p). So, where a factor makes insurance on account of his principal, he is intitled to retain the policy, if the latter be indebted to him on the balance of accounts between them {q). And where a man acts for his principal both as insurance- broker and factor, and in the former capacity effects policies and pays the premiums thereon, whilst in the latter he has goods placed in his hands for sale, on which he makes advances, — it seems that he is intitled to retain the sum received for a loss on any of such policies, as well in liqui- dation of his advances on the goods, as for the balance due to him on account of premiums (r). Right of lien Nor is the lien of a factor or bi'oker available merely is available . i • • i i i • • against third agamst the prmcipal, but he may, m some cases, assert it persons. even against third parties : and accordingly it has been de- cided, that the assignee of a policy of insurance on goods, — who became such by the indorsement to him of the bill of lading by the consignor, after the latter had directed his (p) Per Bulier, J,, Whitehead v. Vaughan, Cooke's Bank. Law, 547, 7lh edit. ; Parker v. Carter, ib. ; Montague on Lien, App. 20 ; Levy v. Barnard, 8 Taunt. 149 ; Snook v. Davidion, 2 Camp. 218 ; Lanyon v. Blanchard, ib. 597 ; Manit v. For- rester, 4 Camp. 60 ; Westwood v. Bell, ib. 349 ; Bell v. Jutting, 1 Moore, 155 ; Leeds v. Merc. Ins. Coy. cited 2 Phillips on Ins. 575. It would appear that, so far as regards insurance-brokers practising in the city of London, they are intitled to a lien for their general balance on all policies in their possession, by the usage and custom of merchants in the said city. See the case of Heivison v. Guthrie, 3 Scott, 298, in which the custom was pleaded. (q) Per Lord Mansfield, Godin v. London Assur. Company, 1 Burr. 494. (r) Olive v. Smith, 5 Taunt. 56. Their Rights. 195 ■factor to effect an insurance on such goods, — takes it sub- ject to the lien of the factor for his general balance, and can only claim the money received thereon by the broker — into whose hands the factor has placed it for the purpose of settling the loss, — subject to that lien (s). So, although it was formerly held, that if^after a factor Against the had advanced money to his principal on the security of deceased goods in his possession, — the principal died, and the admi- P""<^'P* • nistrator sued the factor for the goods, the factor could not avail himself of his lien as a defence to that action, be- cause, if there were debts of a higher nature than the factor's, it would be a devastavit in the administrator to pay his debt {t), yet there can be no doubt that this decision is no longer law, and that the factor would now be intitled to claim his lien, even against the specialty creditors of a de- ceased principal (u). In hke manner it has been held, that a factor to whom And generally ,,■1,0 against the goods have been sent for sale, and who has accepted bills oi Crown. exchange drawn on him by his principal to the amount of their value, has a lien on such goods and the price thereof, available even against the Crown (.r). But with reference to exciseable commodities it would appear that, at the pre- sent day, the law is different ; for by statute 4 ^- 5 Vict, c. 20, s. 24, it is enacted : — that all goods in respect of which any duty of excise is by law imposed, and all ma- terials from which any such goods are made, and all imple- ments for making the same, which are in the possession of the person who caiTies on the trade in respect of which the duty is or shall be imposed, or which are in the possession of any factoi\ agent or other person in trust for or for the (s) Man V. Shiffner, 2 East, 523. (f) Chapman v. Derby, 2 Vern. 117. (u) See Montague on Lien, 62 ; Paley on Agency, by LloyJ^ 129, note (m) ; Story Com. on Agency, § 378. (x) The King v. Lee, 6 Price, 369. k2 106 Factors and Brokers. use of the person carrying on such trade, sliall be liable to all the duties of excise which, during the time of such pos- session, shall be charged on or be owing from the person carrying on such trade ; and shall also be liable to all pe- nalties which, during any such possession, shall be or shall have been incun-ed by the person carrying on such trade, for any offence by him conmiitted against any act relating to the revenue of excise. The same section of tlie above statute likewise contains a proviso for the protection of bond Sents as to Jicle purchasers from liability in the aforesaid cases ; and a'ble'goods/ " Jt seems to be the settled opinion, — although the precise point lias not been decided, — that, on the whole reading of that section, a factor who has in his possession exciseable goods on which he has made advances, cannot be held jntitled to avail himself of his lien in respect thereof, against the claim of the Crown for the duties chargeable on such goods, or for penalties which the owner may have incurred with reference thereto (?/). Having thus stated, in general terms, the rules as to the right of lien possessed by factors and insurance-brokers, let us now inquire somewhat more particularly; Jlr^st, how may this right be acquired; secondly, how may it be enforced; and, tliivdly, how may it be lost. How the right !• I'^ order that a factor or insurance-broker may acquire «). The reason of this rule was well explained by Lord Chief Justice Tindal in a recent case, — where the question was as to the right of a banker to retain the property of a third person deposited with him by the agent of that person, for a debt due from the agent himself. The contract of lien " being made between the banker and the customer only, cannot," said his Lordship, " bind the rights of other parties. It is competent to the banker and his customer to agree that the banker shall have a lien on all property on which the cus- tomer can lawfully give it, which may come to the hands of the banker ; and this agreement may be expressed in words, or may be inferred from the course of trade : but it is not competent for them to agree expressly, or in any other manner, that the banker shall have a lien on the property of other persons on which the customer had no authority to (i) Per Chambre, J., Houghton v. Matthews, 3 Bos. & Pul. 485, 488. (k) See observations of Ellenborougli, C. J., Mann v. Forrester^ 4 Camp. 61. (/) See Barry v. I.nngmore, 12 Ad. Si El. 639, and cases cited infra. (m) Maanssv. Henderson, 1 East, 335; Snook v. Davidson, 2 Camp. 218 ; Lanyon v lilanchard, ib. 597 ; and see the judg- ment of Gibbs, C. J., in Westwood v Bell, 4 Camp. 349, 352. Their Rights. 201 give one" (?«). And so it is manifest, that a factor or broker and his principal are not competent to enter into any such agreement. If however a policy of insurance be effected by a broker, Secus, where in ignorance that it does not belong to the person by whom s„res'for au" he is employed, he is held to have a lien upon it for the =*§«"' Y'"*. ^ "^ _ ' . conceals his amount of the balance which that person owes him (o) ; and principal. the reason of this is, that the broker must be supposed to have made advances on the credit of the policy which was thus allowed to remain in his hands (p). Nor, as it seems, will the broker's right of lien be defeated, merely by his having notice of the third person's interest before he receives the money under the policy ; the only effect of such notice being, that from the time he receives it, the excess beyond the satisfaction of the broker's general balance, becomes money had and received by him to such third person's use {q). The only other requisite towards the acquisition by a There must factor or broker of the right of lien, is, that he have posses- ^ po^sessi sion of the thing which, by virtue of that right, he claims to retain. The right to retain springs, as we have said, from the fact of there being a debt due from the principal to the agent. But in order to render this right effectual, there must exist the power to retain ; and this power, it is mani- fest, can spring only from the possession of the thing which (jj) Braiidao v. Bartiett, 2 Scott, N. R. 113. (o) IVestwood V. Bell, supra. (p) Per Ellenborough, C. J., Mann v Forrester, supra., (q) Ibid. But from the case of Levy v. Barnard, 8 Taunt. 149, it would appear to have beea the opinion of the Court of Common Pleas, tiiat notice to the broker, prior to the receipt of the money payable ou the policy, that tiie person by whom he had been employed was not acting on liis own account, would deprive him of any lien thereon, except for the specific premiums paid in respect thereof. If this be so, the doctrine stated in the text must be received with some qualification. It is how- ever difficult to say, what is the precise point decided in the case referred to. k5 202 Factors and Brokers. is sought to be retained. " A man cannot have a lien on goods," says Chief Justice Gibbs, "unless behave in some sort the possession of the goods" (r). What posses- I-ict us now inquire, what will amount in law to such a sion suflBcient. possession by the factor or broker as to invest him with this power In general As between principal and factor the ordinary rule seems acnial "posses-^ to be, that the latter has no lien on the goods for his general sion of the balance, unless they come into his actual possession (s). It •which ihe has however been made a question, whether, in the event of ed. a bill of lading, duly indorsed, being transmitted to a factor Avho had at the time a balance of account in his favour, the possession of this document would not give to him the right of taking and keeping possession of the goods represented thereby, as a satisfaction for his debt ; and although there is no express decision to the effect that such possession would be sufficient, yet the opinion, that under such circumstances the factor would have a lien on the goods, appears to have been favoured by, at least, one very eminent judge (t). But, as already stated, there is no decision which goes this length (u). Formerly indeed the law was quite the reverse ; — for it was held, that though the factor might have given acceptances on the faith that consignments would be made (r) Hutton V. Bragg, 7 Taunt. 15, 26; see also per Buller, J., Lickbiirrow v. Mason, 6 East, 27 ; Heywood v. Waring, 4 Camp. 291 ; and per Lord Eldon, Hallettv. Bousfield, 18 Ves. 188. (s) Kinloch V. Craig, 3 T. R. 119. (0 Mr. Justice Abbott, in Patten v. Thompson, 5 M. & Sel. 350,367. "Taking this case," said the learned Justice, " as one between principal and factor who were engaged in a general course of dealing, the principal consigning to bis factor from time to time cargoes to be sold for his account, and remitting bills and drawmg upon him in such a manner as to form a general account between Ihem, I should have required further time to consider whether, if the factor might have retained this cargo had it come to his possession, he would not also have a right to insist upon taking possession, in order that he might retain." (m) it seems however to have been so held in America ; Rice V. Austin, 17 Mass. Rep. 197. Their Rights. 203 to him, still this was a mere executory agreement, for the non-performance of which only a right of action accrued, and that no property in the goods was thereby vested in him (t) ; — and this conclusion seems to have been come to ■without at all considering the question, whether, had the factor under such circumstances come into possession of the bill of lading, his rights would have been in anywise en- larged. On referring however to more recent cases on this subject But in some it will be found, that our courts have now changed their views sion of the ■with reference thereto; and it appears that at the present day, wiii°Jive a ^ a factor's right of lien on goods, the insignia of which only ''e'> OQ 'lie have come to his hands, will depend on the question ; — was it the intention of the consignor to vest the property in the consignee, from the moment of delivery to the carrier ? — and it is said, that if the intention of the parties to pass the pro- perty, whether absolute or special, in certain ascertained chattels, be established, and they are placed in the hands of a depositary, — no matter whether such depositary be a com- mon carrier, or ship-master, employed by the consignor or a third person, — and the chattels are so placed on account of the person who is to have that property, and the deposi- tary assents, it is enough : and that it matters not by Avhat documents this is effected ; nor is it material whether the per- son who is to have the property be a factor or not, for such agreement may be made with a factor, as well as with any other individual (3/). Wherever therefore the bill of lading or other document operates as evidence of a change of pro- perty, the factor will be intitled, immediately on receipt thereof, to claim his lien ; and on the arrival of the goods, he will have a right to insist on their being delivered to him, in order that he may retain them by virtue thereof (2:). (a) Kinloch v. Craig, in Bom, Proe. 3 T. R. 786. (y) See Bryans v. Nix, infra. (2) Huille V.Smith, 1 Bos. & Pul, 563 ; Bryans v. Mi, 4 M. & W. 775, 791 ; Evans v. Nichol, 4 Scott, N. R. 43, 53. 204 Factors and Brokers. Accordingly where it appeared that S. and Co. had made advances to 13., and that B., as a security, had consigned goods to tlicm for sale on his .account, and had also remitted to them the invoice and bill of lading indorsed in blank; — it was held, that S. and Co. might maintain trover for the said goods against the assignees of B., he having become bankrupt after the receipt of the bill of lading by S. and Co., but before tlie goods were delivered to him (a). But where the biil of lading has not been delivered to the consignee, and there is no other evidence of an intention in the consignor to consign the specific property to him, no lien will attach ; — because, in the absence of evidence of such intention, the consignor will be held intitled to change the destination of the goods, at any time before they come into the actual possession of the consignee (/>). Or possession So it appears that possession of the goods by a servant or ^ "* ^ ' agent appointed by the factor or broker for that purpose, will be sufficient to intitle him to enforce his i-ight of lien (c) ; and that the possession even of the principal himself will confer this right on the agent, provided there be an agree- ment between the parties, with the terms and provisions of which the existence of such right is consistent ((/). But possess- On the contrary however, where a factor is employed to c'ircumstances pwchase goods, and they are delivered to him as the agent which are in- jm^j fg^ the use of his principal, such delivery will be con- inconsistent . . with the right sidered as a delivery mto the possession of the latter ; and suflicie'ii.* ^"1" this reason the factor's lien will not attach (e). (a) Ilaille v. Smith, supra. See also per Lord Elienborough, in Vertue v. Jewell, 4 Camp. 31 ; and in Fatten v. Tliompion, 5 M. ix Sel. 356, 357. {h) Mitchelv. Ede, U Ad. & El. 888. (f) I'er Lord Kllenborough, M'Combie v. Davies,! East, 5,8. id) Reeies v. Capper, 6 Scott, 877. ^e) Gurney v. Sharp, 4 Taunt. 242. This case is generally Their Rights. So where it appeai-ed that a consignment of goods had been made, for the express purpose of their being dehvered by the consignee into the government stores, it was held, that the possession of the goods gave the consignee no right of lien, because, having accepted the consignment for a par- ticular purpose, he could not legally divert it to any other( /"). In like manner, where goods had been deposited with a fac- tor for sale, for the net proceeds of which he promised to be accountable, and to pay the same to his principal, it was held that, — the goods not having been sold, — his possession thereof gave him no lien thereon for his general balance, although had they been sold, he might have claimed a lien on the proceeds, for his commission in respect of that par- ticular sale (g). And so where A. had agreed to sell goods to B., M'hich were to be accounted for in part of a debt due from A. to B., and C, with notice of this agreement, was appointed by consent of both parties to sell the goods as factor for A. ; — he was held to have no right of lien on the proceeds of such goods for a debt due to him from A., — be- cause, from the moment he had notice of the agreement be- tween A. and B., he was bound not to controvert it (/t). Cases like these, indeed, are governed by the maxim, coii- ventio vincit legem ; or to use the words of Lord Kenyan, applying this maxim to the subject now before us, — " the lien which the factor has on the goods of his principal, arises from an agreement which the law implies : but where there is an express stipulation to the contrary, it puts an end to the general rule of law"(i). cited as having been decided on the grouncl, that the advances, on account of which the lien was claimed, had been incurred by the factor without the authority of his principal, and the marginal note certainly leads to this impression. On examining the judgment of the court however, it will, it is believed, be found, that the true ground of their decision was that stated in the text. (/_) Snaith v Biirridge, 4 Taunt. 684. {g) Walker V. Birch, 6 T. R. 258, 2b3. (h) Per Buller, J., Weymouth v. Boyer, 1 Ves. Jr. 416, 425. (t) Walker V. Birch, supra ; and see Burn v. Broun, 2 Stark. 272 ; Muir v, Fleming, I D.icR. 29. 206 * Nor posses- aion obtained as ibe agent of a third party. Factors and Brokers. It is further requisite, in order to constitute such a pos- session as will give a factor or broker the right of lien, that the property whicli he claims to retain should not only belong to the person from whom the debt to him is due, but that it should come to his hands as the agent of that person. Where therefore C, a corn merchant, advised B., his factor, of an intended consignment of oats, and drew on him in anticipa- tion thereof; but instead of sending the bill of lading to B., he indorsed and remitted it to one H., desiring him to sell the oats for his account, whereupon H. sent the bill of lading to B. requesting him to act for him in the matter, and B., on the arrival of the vessel, took possession of the cargo and paid the freight ; — it was held, that B. had no lien thereon, because the goods were in his hands as the agent of H. only, and not as the agent of C. (/c). It was said in that case however, that if C. had authorized II. to employ a broker to sell the goods, and B. had been employed in consequence, he might perhaps have had a lien thereon (/). Or by mis- representa- tioo. Again it must appear, in order to intitle a factor or bro- •ker to his lien, that his possession of the property which he claims to retain was not tortious ; and accordingly this right will be defeated, wherever it is shown that such possession was acquired by means of misrepresentation, or in any other manner unauthorized by the principal (?«). Or merely for a parti- cular pur- pose. So if the factor or broker have been intrusted with pro- perty merely for a particular purpose, he will not be intitled to retain it under a claim of general lien. Thus, where a policy of insurance was deposited with a broker for safe cus- tody only, he was held to have acquired no general lien thereon by means of such possession {n). And in like man- (k) Bruce V. Wait, 3 M. & W. 15. (0 Per Parke, B., ibid. 20. (m) Madden v. Kempster, 1 Catnp. 12 ; Taylor v. Robinson, 8 Taunt. 648. (n) Muir V. Fleming, 1 D. & R. 29. Their Rights. " 207 ner, where it appeared that the factor of a ship-owner had requested the master to deliver to him the ship's certificate of registry, in order to enable him to pay certain duties at the custom-house, and it was delivered to him accordingly ; it was ruled, that his having been so intrusted with the pos- session of that document did not intitle the factor to claim a lien thereon, for the general balance due to him from the ship-owner (o) So if the factor or broker have notice of the bankruptcy of Or after no- bis principal, prior to the time at which he gets possession of principal's the property on which he claims his right of lien, this will in ''ankruptcj. some cases divest him of that right. Formerly indeed it was held, that a trader could under no circumstances confer a right of lien on his factor, after having committed even a secret act of bankruptcy {p) ; and the reason assigned for this rule was, that after the bankruptcy the goods became the property of the assignees, so that, to have allowed the bankrupt to give his factor a lien thereon, would have been to permit the latter to claim that right on goods sent to him by a person to whom they did not belong (9). But the law on this subject has been recently very much altered by statute (r); and it is presumed that a factor or broker would now be held intitled to his lien, if the goods or policy on which he claimed it were shown to have come to his posses- sion before the date and issuing of the fiat against his prin- cipal — provided that is, he had, at the time they so came to his possession, no notice of any prior act of bankruptcy having been committed by him ; — and further that, in the case of a factor, even if he were to have notice of the bank- ruptcy of his principal whilst he was in the course of selling the goods, he would still have a right to proceed with the (0) Burn V. Brown, 2 Stark. 272. (p) Copland V. Stein, Q T. R. 199 ; see also Vernon v. Hankey, ■2 T. R. ] 13 ; Walker v. Balfour, 2 Camp. 579. (9) Per Grose, J., Copland v. Stein, sup. 206. (r) 2 & 3 Vic. cap. 29. ^08 Factors and Brokers. sale, to receive the money, and to hold it in payment of his own balance (s). Semhle that ^^or, as it seems, would it be in all cases necessary in in some cases, order to intitle a factor to this right, to show that the goods the mere ... . . ,1 r. ■, receipt of tlie did actually come mto his possession prior to the date 01 the by the t>icio? fiat in bankruptcy against his principal. We have already before the ^^^^ where there is evidence to show that it was the dale of the ' fiat, or notice intention of the consignor to vest the property in the goods of an act of ^ , p \ ^■ ^ bankrupi.y in the Consignee, from the moment of dehvery to the carrier, pal, wo'iiki"^' the mere possession by the consignee of the insignia of such ijtiiiile him to property will be sufficient, under ordinary circumstances, to goods. intitle him to claim his lien on the goods themselves (^) ; and so it is submitted that, according to the construction of the statute already referred to, if a contract to the above effect were bona fide entered into between the factor and his principal, prior to the date of the fiat against the latter, — the factor having no notice of any previous act of bankruptcy having been committed by him, — and in pursuance of such contract the bill of lading or other insignia of property in the goods were transmitted to the factor, the fact of the latter having notice of the bankruptcy of his principal after the receipt of the bill of lading, but before the arrival of the goods themselves, would not divest him of his right of lien. But if the acts on which the factor relies, as evincing an intention on the part of the consignor to vest the property in him from the time of its being delivered to the carrier, were proved not to have been done until after the date of the fiat, or notice by the factor of the consignor's bank- ruptcy, then the case would be different. Thus it was held under the old law, that even an actual possession given to a (s) See per Lord Ellenborough, Robson v. Kemp, 4 Esp. 232, 236. (t) See ante, p. 203 ; and the cases of Haillev, Smith, 1 Bos. & Pul. 563 ; Bnia'is v. Nix, 4 M. & AV. 775, 791 ; and Evans V. Nichol, 4 Scott, N. R. 43, 53. Their Rights. 209 factor by a carrier by order of the shipper, — but which order •was not given until after the shipper's bankruptcy, — was not such a possession as would give him a lien against the assignees, although the goods were shipped on account of the factor, and bills had been accepted by him on the faith of such shipment {u) ; and, reasoning on the same prin- ciple, it is clear that, according to the present state of the law, if the order for delivery to the factor were not given by the shipper until after the former had notice of his bankruptcy, or until after the date and issuing of the fiat against him, possession of the goods acquired bj'^ the factor under such order, would not intitle him to a lien against the assignees of the shipper, even although, as in the case cited, the factor had accepted bills on the faith of the consign- ment. It appears, moreover, that possession acquired by a factor So possession even after the death of his principal, will in some cases ,[,£ factor or intitle him to a lien on the property which has thus come j^^g'dMrh'of to his hands ; and accordinsjlv, where a principal had given I'ls principal, , . ' „ . , , . r ^ ■ ''^ '" some- notice to his factor of an intended consignment ol a ship times intitle to him for the purpose of sale, and had in consequence [j'JJJ/° '* drawn bills on him which the factor accepted, but before the arrival of the ship the principal died ; whereupon it was contended, that the factor had no lien on the proceeds of the sale of the ship for his advances and acceptances, because whatever authority the principal had given was countermanded by his death ; — the court, although they de- cided the case on another ground, still expressed themselves to be of opinion, that it was not very consistent with jus- tice to say, that after the factor had advanced premiums and paid bills on the credit of the consignment, the death of the consignor should operate as a revocation, so as to prevent the factor from having the fruits of that which was (ii) Xichols v. Clent, 3 Price, 547. 210 Factors and Brokers. the foundation and consideration upon which he disbursed his money (.i). Or possession And lastly : it is now well settled, that though the sta- afte?'tbe eta- tute of limitations has run against a demand, yet, if the t°'n°[i''s"r'nn" creditor obtain possession of goods on which he has a lien against the for a general balance, he may hold them for that demand by virtue of his lien (?/). The reason of this is, — that the debt is not discharged by the statute, but the remedy only ; the creditor therefore has an actual subsisting demand at the time the goods come into his possession, and hence it follows, that he may enforce that demand by the lien which the law has given him for his general balance {z). How the right 2. We proposed to show secondly, how the right of lien be enforced °^ ^ factor or broker may be enforced. Generally, A lien, we have seen, is said to be the right in one man t*a^n^ing^pos- to retain that which is in his possession belonging to an- session of the other, until certain demands of him, the person in posses- which it is sion, are satisfied (ci) ; and in accordance with this definition it is held, that he who has a lien can in general enforce it, only by retaining possession of the property on which be claims his right {b). Property detained as a lien cannot, it is said, be sold, used or disposed of by the party detaining, unless with the consent of the owner (c) ; but he may plead his lien as a defence to any action which may be brought against him for the recovery of the property, or he may use it as matter of title whereon to ground an action for the (i) Hammnrids v. Barclay, 2 East, 227, 235. (y) Per Lord EldoD, Spears v. Hartley. 3 Esp. 81, 82. (:) Spears v. Hurtleii, supra ; and see per curiam, in the case of Higgiiis V. Scott, 2 B. &i Ad. 414. (n) Ante, p. 191. (b) Per Buller, J., Lickharrow v. Muson, 6 East, 27. (c) Hostler s case, Yelv. 66 ; Jones v. Pearle, 1 Stra. 556 j Jones V. Thurloe, 8 Mod. 171 ; per Gibbs, C. J., Pothonier v. Dawsoji, Holt, N. P. C. 383, 385. Their Rights. 211 purpose of reclaiming such property, if he have been un- lawfully dispossessed of it {d). The rights of a broker in enforcing his lien, are, it is But a factor believed, measured strictly by the above rule ; those of a sell the goods factor however, are somewhat more extensive. Thus it is ^°^ '^'"'l? *"' ' _ _ hen on the clear, that where a factor has a lien on goods which have price. been intrusted to him for the purpose of sale, he may claim this right, not only on the goods whilst they are in his possession, but likewise on the price of the goods when sold ; and hence it follows, that, having the lien, he may sell the goods and enforce payment to himself in opposition to his principal (e). So it is said, that where the principal consigns a cargo of goods to his factor for sale with a limit as to price, the latter may bring the goods into the market against the will of the principal, in order to satisfy his own advances, provided the principal does not, on receiving notice of the factor's intention so to do, repay him the amount {/). And a sale by a factor under such circum- stances would, even without notice, bind the principal to third parties (g). In like manner, although at common law a lien is a mere And perhaps personal right which cannot be transferred to a pawnee, — pledge them so that if a person, having a lien, abuses it by pledging the |^° '^^j^ ^^^^^ goods, the owner's right to the possession revives (Ji), — still it is submitted, that a factor may now, by virtue of the various " Factors' Acts" (particularly the 5 4' 6 Vict. c. 39), take advantage of his lien by pledging the goods on which (d) Story, Com. on Ag. § 371. (e) Per Bayley, J., Hudson v. Granger, 5 B. & Al 27, 31. See also, per Mansfield, C. J., Drhikwater v. Goodwin, Cowp. 256. (/) 3 Kent. Com. on Amer. Law, 642, 3d edit. (g) Per Lord Abinger, War,ier v. M'Kay, 1 M. & W. 591, 598. (h) Bauhigny v. Duval, 5 T. R. 604 ; perTindal, C. J., Scott V. Newington, 1 M. & Rob. 252. 2\2 Factors and Brokers. it is claimed, for an advance to himself not exceeding in amount the sum which, at the time of such pledge, was due to him from his principal ; and that the principal could not retake the goods, without discharging the claim of the pawnee for the advances made by him on the security thereof, unless it were shown that such pawnee had notice, at the time of making the advance, either that the factor had no authority to pledge the goods, or that he was acting viala fide in respect thereof against the owner of such goods (/). Semble, that But the above rule, — that a factor employed to sell goods ploTeTto'"" retains his lien on the price of the goods when sold, does purchase can- not appear to apply to the case of a factor employed to not sell the ,'' ,„, , , . . i. , , goods, in purchase. The latter has, it is true, a hen on the goods tisfy his" lien, purchased, for his advances made in respect thereof, and is not bound to deliver or ship them subject to the absolute control of the principal, until he is reimbursed or secured for such advances, — unless, that is, there be a^ usage of trade or a course of dealing to the contrary (A") ; but it does not appear to have been decided that he has any right to enforce his lien by selling such goods, although he might Bat perhaps perhaps be held to have the right of pledging them for an I'lfenrfo'^ihe^^ advance to himself, provided it were not greater in amount extent of his than the sum due to him from his principal on the general balance of accounts at the time the pledge was made. This rule is evidently consistent with the maxim above laid down, namely, — that property detained as a lien cannot be sold, used, or disposed of by the party detaining, unless with the consent of the owner ; for, as in the case of a factor for sale, the consent of the principal to his parting with the property by way of sale is implied in the very natui'e of his commission, so it is plain that in the case of a factor for purchase no such consent is implied ; and hence it follows. (0 See Stat. 5 & 6 Vict. c. 39, ss. 3, 6. (k) 2 Bell. Com. on Merc. Jur. § 755. Their Rights. 213 that unless there be evidence of the principal's expre ss con sent to that effect, the factor's right of lien cannot, in this instance, be taken to confer on him the additional right of selling the goods in order to repay himself his advances {^l). 3. Let us now inquire, in the third place, how the right How the right of lien of a factor or broker may be lost. J^^^f " '"''>"'''^ First ; it is clear that, in general, the lien of a factor or By partini; broker will continue, only so long as the property on which session to the the lien is claimed remains in his possession, and that if he prfnjipai*"* once part with the possession after the lien attaches, the lien is gone (v«). If therefore he deliver up the property to his principal (7j) ; or if, having a lien on goods, he deliver them to a ship-carrier, to be conveyed on the account and at the risk of his principal (o), or if he sell them when he has no gy selling or authority so to do («), or if he pledge them in a manner not p'edgingwith- ^ ^^'' i ° out authority, warranted by law (q) ; in all these cases the factor or broker, by parting with the possession, parts with his lien. But if the factor or broker gives up the property to his Secus, if the principal by virtue of a special agreement, under the terms parted^wUh ^ of which the latter acquires no interest therein, but only a ""f^^ra" ^ ' •' agreenieut license or permission to hold it for a limited time, — it would which re- serves the right of lien. (I) The contrary doctrine appears to have been held in America. See Parker V. Brancher, 2 Law Reporter, 46 ; cited, Story on Agency, 331 ; Dr. Story however merely refers to that case ; and the author regrets that, — having been able to meet with the first volume only of the Law Reporter, — it is consequently out of his power to furnish the reader with any statement of the grounds on which the doctrine laid down therein was founded. (to) Per Buller, J., Lickbarrow v Miisun, 6 East, 21, 27 ; and per Lord Mansfield, Godin v, London Assurance Company, 1 Burr. 494. (n) Krtiger v. Wilcox, Ambler, 254. {o) Sweet V. Pym, 1 East, 4. (/)) Ante, p. 212. (q) Scott V. Newington, 1 M. & Rob. 252. -214- Factors and Brokers. seem that in such a case the possession of the principal would be regarded as the possession of the agent, and that, there- fore, the latter would not lose his lien (?•). Or to a ser- And SO it has been said, that if one who intended to give noiicronhe a security to another to the extent of his lien, were to de- iien. jjygj. ^o |.|j.jt other the actual possession of the property on which he had the lien, and were, after giving him due notice of his lien, to appoint him as his servant to keep possession of the goods for him, in this case likewise the lien would be preserved (s). Or through fraud. Again : if the principal, by means of fraud and misre- presentation, induce the factor or broker to give the property up to him, and he take it away in order tliereby to destroy the lien, the factor or broker will have a right to repossess himself of such property by virtue of his lien (t). Or compul- eioD. In like manner it is held, that the agent will in no case lose his lien, where he does not part with the pi'operty voluntarily. Thus, where it appeared that the principal had consigned a cargo of goods to his factor in Denmark, which were seized by the Danish government (upon the breaking out of hostilities between that country and Great Britain) after the factor had been obliged to pay the freight and other charges thereon ; and, on the restoration of peace, the British government ordered compensation for the losses sustained by their subjects from the seizures made in Denmark, — whereupon the value of the said goods was awarded to the principal's assignees by the compensation-commissioners; —it was held, that the factor was intitled to a portion of (r) See the case of Reeves v. Capper, 6 Scott, 877, 884. (s) Per Lord Ellenborough, M'Combie v. Duties, 7 East, 5, 7 ; seealso Man v. Shiffner, 2 East, 523, 530. (0 Wallace v. Woudgate, 1 C. & P. 675 ; Rosse v. Branstead, 2 Roll. 438. Their Rights. 215 the fund received by the assignees, equal to the amount of his disbursements in respect of freight and other charges (m). And so it appears, that if the property be taken from the factor or broker, under an execution against his principal at the suit of a third party, he will still be intitled to insist on his lien (x). But if it be taken under an execution at But the factor the suit of the factor or broker himself, and such execution I'Jsg'^^l'/i'ieT," prove invalid, he will not be allowed to retain the property 'f ^^ ^^^^^. ">e ^ ' ... L L ^ properly la by falling back upon his right of lien, even although such execution at property has been sold to him under the execution, and has never been removed off the premises, — because the sheriff, in order to sell, must have had possession, and after he had had possession from the agent, the subsequent possession of the latter must have been acquired under the sale, and was not therefore such a possession as would confer the right of lien (3/). The reason of this is plain ; because, as we have already seen, the right of lien will attach only where pos- session is acquired from a person who has authority to con- fer this right ; but the authority of the sheriff is an authority to sell merely, and therefore, if the person who acquires possession from the sheriff cannot make out a valid title under the sale, it is not competent for him to retain such possession, by claiming to hold from the sheriff under an- other title which the latter had no power to confer. But there is a difference between the last mentioned case Lien in gene- and those cases in which the factor or broker, after having ([,£ ^^i^^ or parted with the property to the principal himself, receives it ^p°5^^'"„'j.g' again from him, — inasmuch as it is always in the power of possessed of , . . , „ , .,/.,. , • ■ • the property. the prmcipal to confer the right 01 lien, by giving possession of the property to the person by whom that right is claimed : and accordingly it has been held, that where a broker gives up a policy of insurance on which he has a lien, to the party (u) Exparte Good, 2 Deac. Bank. Rep. 389. (i) Per Best, C. J., delivering the judgment of the court, Jacobs V. Latour, 5 Bing. 130, 132. (y) See Jacobs v. Latour, supra. 216 Factors and Brokers. by wliose order it was effected, the lien will revive on his beconiino; repossessed of the policy {z) ; and so, where it appeared that a broker, who was in advance to his principal for premiums, had given up the policy of insurance to him, and had afterwards, upon hearing reports not favourable to the credit of his principal, obtained the policy from him under pretence of receiving payment for a loss which had happened thereon, but in reality with a view to holding it as a security for his own demand : — it w'as held, that such possession was sufficient to intitle him to claim his lien («). Factor or broker will A factor Or broker will likewise lose his lien if, when the lose his lien . , i ,> i • i i • • • if he claims lo property is demanded oi lum, he claniis to retani it on a pertyon any different ground, making no mention of his lien (6). other ground. But not by -^ut '^G will not lose his lien by the mere fact of his omit- inerely omit- jj^™ ^q say — when the demand is made, — that he claims to ting to men- o j^ ^ ^ ... tion his right, hold the property in that right (c), or by his claiming to hold or by claiming . , n i • i- to hold for too 't lor a sum, greater than the actual amount oi his hen on large a snm. ^.j^^ property in question {d). In the former of these cases, therefore, the principal must tender to the agent the amount of his lien, before he can have a complete right to the pro- perty (e) ; and in the lattei-, likewise, a tender is equally ne- cessary, — because, as has been well said, the natural con- clusion from the fact of a person claiming to retain certain property in respect of two sums is, — not that he meant to waive his right as to one — but that he meant to act upon both ; and hence it becomes the duty of the owner to ten- der at least one of these sums, in order that the party who (:) Levu v. Barnard, 8 Taunt. 149. (a) Whitehead v. ]'arighan, Cooke's Bankrupt Law, 547, 7th edition, decided before Huller, J., and Lord Mansfield. (b) Boardman v. Sill, decided before Lord Ellenborough, sit- tings after ~SV\c. Term, 49 Geo. 3, cited 1 Camp. 410, in notis, (c) White V. Gainer, 1 C. Sc P. 324. S. C.2 Bing. 23. (d) Scarf e V. Morgaa, 4 M. &: W. 270. (e^ Per Best, C. J., White v. Gaiiier.l C. ic P. 326. Their Rights. 217 claims the lien may have an opportunity of I'eflecting, whether he really has a right to detain the property as to the other (/). Again '. a factor or broker will lose his Hen, if he take a But he win security for the debt in respect of which he claims such lien : I"**; 'l'^ '"^" '^ ^ * lie lake secu- — "It is well established," says Lord Chief Justice Tindal, ""''>' '"•■ •''« 1-11 flebt, or enler " that if a security is taken for the debt for which the party imo any spe- has a lien upon property of the debtor, such security being ^^^ ih'e'pay^ payable at a distant day, the hen is gone" (g) : and indeed "•^'" thereof it would seem that, in general, if the possession commences under an implied contract, and a special contract is after- wards made as to the time or mode of payment, the one contract will destroy the other, and the lien which existed under the implied contract will be lost, — provided, that is, such special contract be apparently inconsistent with the right to retain possession of the property (/(). But still it ap- Semhle that pears, that although by taking a security, — such as a bill of revive if ihe exchange, — for his debt, the factor or broker will lose his lien, p^j^ accord- this right will revive if the bill be not paid at maturity (t) ; '"? '" *°'*' and the same rule would seem equally applicable to any other case in which, after the lien existing under an implied contract has attached, a special time or mode of payment is agreed upon between the parties, and the principal makes default ill paying his factor or broker at the time or in the mode specified, — because, by the breach of the special con- tract, the implied contract revives, and consequently the right of lien which arises out of it revives likewise (/c). Lastly : where a factor or broker claims a lien on pro- So ihe factor (/) Per AldersoD, B., Scarfe v. Morgan, 4 M.& W. 281,282. (g) Hewison v. Guthrie, 3 Scott, 298, 311. (/i) See per Lord Eldon, Coweil v. Simpson, 16 Ves. Jr, 275 ; and Chase V. Westmore, 5 M. & Sel. 180; particularly the very able judgment of Lord EUenborough in the latter case (0 See per Loid EUenborough, Stevenson v. Blakelock, 1 M, &c Sel. 535, 544. {k) Ibid. L 2 1 8 Factors and Brokers. or broker will perty in his liands belonging to his principal, and, on the by ^proving ' bankruptcy of his principal, he comes in under the commis- for his debt gj^^ ^^^ proves for the amount of such claim, his lien is under a com- ' inissioi) gone ; — because such proof is equivalent to payment, and agHJnst liis , /. . • .1 • ,1 ■!.,,, principal. therefore vests ni the assignees the same right to the pos- session of the property, as the principal himself would have had if, prior to his bankruptcy, he had paid the debt for which such property was detained (/). As to the fac- II. Intimately connected with the factor's right of lien is stop yn trans- *^^ right which he possesses, in certain cases, to stop goods ''"• which he has consigned to his principal in transitu, — or in other words, to prevent the latter, in the event of his be- coming bankrupt or insolvent before the goods come to his actual or constructive possession, from taking possession of such goods, and to detain them until the price thereof be paid or tendered. Indeed the factor's right in this respect may very properly be considered simply as a means of en- forcing his right of lien, although, — for the sake of securing a more lucid arrangement of our subject, — we have treated of it in this place as a substantive independent right. Let us now endeavour to ascertain : Jirst, under what circum- stances a factor has the power of exercising the right in question ; secondly, how it may be exercised ; and thirdly, how it may be defeated. When this First, then, as to the circumstances under which a factor right may be i i /. • ■ exercised. may exercise the right of stoppage m transitu. As between The first case in which the question, — as to the right of consignor and . ^ ^ ii i • j • ^ •» consignee, ^ consignor to stop the goods consigned, m transitu, — ap- generally. pears to have arisen, is that of Wiseman v. Vandeputt (m). There, A., being beyond sea, consigned goods to B., then (/) Exparte Hornby, Buck. Bankruptcy Cases, 351, 354; see also Exparte Sotoinoit, 1 Glyn. &: Jam. 25. (jtt) Decided in the Court of Chancery in the year 1690 ; re- ported 2 Vern. 203. Their Rights. 219 in good circumstances in London ; but before the ship sailed news came that B. had failed, and thereupon A, altered the destination of the goods, and consigned them to the de- fendant. On the first hearing of the case, the Lord Chan- cellor ordered an action of trover to be brought, to try whether the consignment vested the property in the con- signees; and it was then determined, in a court of law, that it did: but the court of equity thought it right to interpose and give relief, — holding, that if A. could, by any means, prevent the goods from coming into the hands of B. or his assignees, it was allowable in equity; and since that time it has likewise been uniformly held in our courts of law, that the consignor may seize the goods before they are actually or constructively delivered to the consignee, in case of the insolvency of the latter before payment of the price (n). It will be obsei-ved however, that in the above case the As between parties stood to each other merely in the relation of vendor consignee,'"' and vendee, and not in that of principal and factor ; and "''"^'' ''l^ '^ ^ _ former is a this leads to the remark that, — although, as between parties factor, holding the former relation, the doctrine of stoppage in transitu has been so long and so clearly settled, yet the application of that doctrine to cases in which the parties hold the latter relation, is of much more recent date. The earliest case in which this question appears to have Early cases, arisen as between principal and factor, is that of Snee v. Prescot (o) ; and there it was held, that where agents abroad are in disburse for their principal, and upon being doubtful of his circumstances they make bills-of-lading to their own order, indorsed in blank, and afterwards the agent's partner, who resides at the place to which the goods are consigned, writes them word that the principal has become bankrupt, (n) Per Grose, J., Lickharmw v. Mason, 2 T. R. 63, 76. (o) 1 Alk. 245; decided before Lord Ilardwicke, in the year 1743. 220 Factors and Brokers. and desires them to send him the bills-of-lading, and an order to the captain to deliver the goods, which they send to him accordingly, — such partner may retain the goods on behalf of himself and company, against the assignees un- der the commission, until he is reimbursed so much as the partnership is in advance, notwithstanding the first bills-of-lading may have come to the hands of the principal. And the like conclusion was afterwards come to in the fol- lowing case. The plaintiff, who was a merchant at Leghorn, bought a large quantity of goods by the direction of the de- fendant, who resided in EngUmd, which he consigned to him and drew bills of exchange for the money. The bills were accepted by the defendant, but were protested for non- payment, on his becoming insolvent and assigning his effects in trust for the benefit of his creditors. The goods arrived at the port of London, whereupon the agent for the con- signor and the agent for the creditors severally applied to the captain for them, but he refused to deliver them until the right was settled. The plaintiff thereupon brought his bill to have the goods delivered, and the Lord Chancellor decreed them to be delivered accordingly (p). Remarks But although in both the above cases the parties actually hereon. stood to each other in the relation of principal and factor, no point founded on this relationship appears to have been raised in either; and indeed, — if we except one sentence in the judgment of Lord Henley in the latter case, namely, that " the plaintiff was to be considered as substantially a, merchant selling goods to the defendant," ((j) — nothing is stated in the reports of the arguments or judgments in the cases referred to, which would lead to the conclusion that they were decided on any other grounds, than those which subsequent decisions have shown to be exclusively appli- (/)) D'Aqnila v. Lambert, 1 Ambler, 399, cor. Lord Henley, 9th June, 1761. ('/) Ibid. 400. Their Rights. cable to the ordinary cases as between consignor and con- signee. At length however, in the case of Feize v. Wray (?•), the Feize v. J'Vtclv question as to a factor's right to stop goods consigned by him to his principal, in transitu, came directly before the Court of Kings Bench ; and by their judgment on that occasion the extent of this right was, for the first time, accurately defined. The case was as follows. In the month of June 1801 an order was given by B. to F., his corre- spondent abroad, to purchase certain goods for him. F. bought them accordingly of another merchant, who was a complete stranger to B., and had no account or correspon- dence with him. On the 2d of August the goods were shipped ; on the 4th F. drew bills of exchange on B. for the price; and on the 10th the latter received the bill-of- iading and invoice. On the 2d of September, B. became a bankrupt, and on the next day the defendant, on behalf of F., obtained from B.'s brother the bill-of-lading and in- voice. B.'s acceptances were never paid. The goods were afterwards sold on account of F. by his agent in this country ; and the assignees of B. having brought trover in order to recover possession thereof, a verdict was found in their favour, subject to the opinion of the court on a spe- cial case. The cause accordingly came on for argument, and it was then objected on behalf of the assignees, that F. had no right to detain the goods, because no relation existed between B. and F. on which the right to stop in transitu could attach, — inasmuch as F. was a mere factor purchasing on behalf of B., and, as such, had no right to stop in transitu, like the vendor or owner of the goods, but had only a lien on them for his balance so long as they re- mained in his possession. The court however overruled the objection, and decided in favour of the right of F. to retain possession of the goods in question. " It has been (r) 3 East, 93; decided in Michaelmas Term, 1802. 222 Factors and Brokers. contended," said Mr. Justice Lmarence, delivering judg- ment in the above case, " that the right of stopping in transitu does not attach between these parties; that B. must be considered as the principal for whom the goods were originally purchased ; that F. was no more than his factor or agent, purchasing them on his account ; and that the right of stopping in transitu does, in point of law, apply solely to the case of vendor and vendee. If that were so, it would nearly put an end to the application of that law in this country ; for I believe it happens, for the most part, that orders come to the merchants here from their corre- spondents abroad to purchase and ship certain merchandize to them; the merchants here, upon the authority of those orders, obtain the goods from those whom they deal with, and they charge a commission to their correspondents abroad upon the price of the commodity thus obtained. It never was doubted but that the merchant here, if he heard of the failure of his correspondent abroad, might stop the goods in transitu. But, at any rate, this is a case be- tween vendor and vendee, for there was no privity between the original owner of the goods and B. ; but they may be considered as having been first purchased by F., and again sold to B. at the first price, with the addition of his commis- sion upon them. He then became the vendor as to B., and consequently had a right to stop the goods in transitu'^ (s). A factor is ^^ addition to the above authorities, there is likewise a now held to dictum of Lord Ellenborough to the effect, — that where a stop goods person purchases goods for another in his own name, or on consigned to,. -. ii. i»i-ii^i i his principal, nis own credit, SO as to make himself liable for them to the wherever he '^'cndor, he may retain them while in transitu (t). In like has become manner it has been more recently decided by the Court of responsible to _ j j the vendor for Exchequer, — with reference to the case of a home-factor, — iht-reoL^ that where such an agent has made himself responsible for (s) Feize v. Wray, 3 East, 93, 101, 102. (0 See Usparicha v. Noble, 13 East, 338. Their Rights. 223 the price of goods which he has consigned to his principal, he may stop them in transitu (u) ; and accordingly it may now he laid down as a settled rule in our law, — that wherever either a home or a foreign factor consigns goods to his prin- cipal by his order, which goods the factor has procured in his own name and on his own credit, he becomes, quoad his principal, the vendor of such goods, and has therefore the right, in the event of the principal becoming insolvent before his advances in respect of the goods are repaid, to stop them in transitu. It seems moreover, that the right of the consignor to This riglit is . ° , not restricted stop in transitu will not be restricted to those cases only m to cases in which the consignee has become bankrupt or insolvent be- prin^cipal has fore the goods are paid for: but that this right will like- ''^<^o'"<'.''3"^- "' '^ ' ° rupt or nisol- wise be held to exist wherever, under the terms of the par- vent, ticular contract, the consignor appears to have reserved to himself the power of withholding the actual delivery of the goods until the consignee should comply with a certain sti- pulated mode of payment, but with which mode of payment the consignee has not complied. And accordingly, where a parcel of wheat had been sold on the following terms, — " payment by banker's draft on London at two months' date, to be remitted on receipt of invoice and bill-of-lading ;" — but it appeared that on receipt of the invoice and bill-of- lading, the consignee, instead of a banker's di'aft on London, transmitted to the consignor his own acceptance for the invoice price, whereupon the consignor returned the accept- ance and stopped the wheat; — the court were of opinion, that the intention of the parties under the contract was, that the consignor should retain the power of withholding the actual delivery of the wheat, in case the consignee failed in remitting the banker's draft, not upon delivery of the wheat, but on receipt of the bill-of-lading ; and that, the condition not having been performed by the consignee, (?i) Hawhes v. Dunn, 1 Crom. & Jer. 519. 324 Factors and Brokers. the consignor was justified in preventing the wheat from being delivered (a). But (he far.ior But if, at the time tlie consignment is made, the factor to'stop't'he ^^ indebted to his principal on the general balance of ac- goods m "»y be by the consignor hmiself or by his agent ; and accovchngly, stopped by it is said, that an agent expressly authorised for the purpose, age'u"i*of Vhe or a general agent without particular authority, — provided factor. his act be afterwards confirmed by the consignor, — may effectually stop goods in transitu, in any manner in which the consignor himself might have done so (/c). But the person who stops the goods must, it is said, be in some degree the agent of the consignor at the time of his so stopping them ; and it appears to be doubted whether a stoppage by a mere stranger will be legal, even although the consignor subsequently give his assent thereto (/). Judging however from a recent case on this subject, it And the court , , , , ... . •Ill will construe would appear that the court will exercise a considerable amhoriiies of degree of hberality in construing authorities of this nature ; {IgraUy"' '' and accordingly, where it was proved that the agent, who had stopped a cargo of goods in transitu, had been ap- pointed by the consignor to act for him, should any difficulty arise with reference to certain bills of exchange which were mentioned in his letter of instructions, amongst which bills was one drawn on account of the cargo in question, — this was held to amount, at least, to some evidence of a general authority in the agent to take such steps as he should think fit for the purpose of securing those bills ; and, by impli- cation, to an authority to stop the cargo for the price of which one of the bills was drawn (m). Lastly ; as to the means by which the factor's i-ight to How this stop in transitu may be defeated. de^ieated.^ The consignor's right to stop in transitu exists, as the By the goods term itself imports, only so long as the goods are in their actual or con- stnictive pos- session of the (k) 3 Chitty on Com. and Man. 344. consignee. (/) Nichoils V. Le Fenvre, 7 Scolt, 577 ; Siffken v. Wray, 6 East, 371, 381 ; and Chitty on Com. and Man. supra. (m) Whitehead v. Anderson, 9 M. & W. 518, 533. 228 Factors and Brokers. passage to the consignee ; and hence it follows, that this right will in all cases he defeated by the fact of the goods arriving at the actual or constructive possession of the latter {n), because, by this means, the transitus, or state of passage, is determined. If therefore the goods be delivered at the consignee's own warehouse (o), or be taken posses- sion of by his assignees (p) ; or if the consignee, having no warehouse of his own, is in the habit of using that of some other person, for instance that of his packer or wharfinger, for the purpose of receiving goods consigned to him, and the goods be delivered there (9) ; or if they be delivered at a place where the consignee means them to remain, until a fresh destination is communicated to them by orders from himself (r), — in all these cases the transitus will be considered to be at an end, and the right of the con- signor to stop the goods will be defeated. Possession of In cases such as these, however, one question must fre- aira^(;'e''t'<"^ quently arise, namely, — whether the person, to whose pos- the consignee, session the goods are shown to have come, was an agent so for the mere ° ' ^ purpose of far representing his principal as to make a delivery to him them to him, a full, effectual, and final delivery to the principal ; or ^at t"h'is right, whether, on the contrary, such person was virtually acting as a carrier or mean of conveyance to or on account of his principal, in a mere course of transit towards him. If the former have been the case, then the principles stated in the decisions above referred to will apply ; but if the latter, then (n) Per Tindal, C. J., Jackson v. Nichol, 7 Scott, 577, 590. (0) Per Parke, B., James v. Griffin, 2 INI. & W. 623. 633. (p) Eilis V. Hunt, 3 T. R. 464 ; Scott v. Fettit, 3 Bos. & Pul. 469. (q) Rowev. Pickford, 8 Taunt. 83 ; perChambre, J., Richard- son V. Goss, 3 Bos. & Pul. 119, 127 j Leeds v. Wright, ibid. 320 : Scott V. Pellit, ibid. 469. (r) Wentuorth v. Oiithwaite, 10 M. & W. 436; Di}nn v. Baldueii, 5 East, 175 ; and see per Parke, B., James v.GriJ)in, supra. Theh R'lgJits. 229 the possession of the agent will be considered to have been merely that of a middle-man between the consignor and con- signee, so as not to determine the transUus, and conse- quently, such possession will not be sufficient to defeat the right of the latter to stop the goods (s). And even in cases in which the consignee himself has, Nor will pos.- .., . II- .^ i 1 • c session by the either ni person or by his agent, taken possession or, or consignee assumed a control over the goods, a question will some- himseK o ' I always have times arise as to the intention with which he has done these this effect, acts ; and on this question of intention will depend the further question, — whether by his having taken such pos- session or assumed such control, the transitus of the goods was determined. Thus, if the consignee gives orders for instances of the goods to be landed at a particular wharf, and it appears ""s- that his intention was merely to make the wharfinger an instrument of further conveyance to his own warehouse, then the transitus will still be considered as continuing ; and in like manner, if it appear that the sole intention of the consignee in landing the goods, was to prevent the captain of the vessel from which they were landed from becoming liable to demurrage, such landing will not deter- mine the transitus {t). So if the consignee take possession of, or assume a con- If the con- trol over the goods, with the intention of allowing them still pos°essfon"f to remain for the benefit of the consignor, this will not ">\g''0''s '« ° ' a ihird party, determine the transit. This last doctrine is well illustrated for the benefit by the following decision. signor, the Goods were consigned by A. to B. ; but before they gj^p'^gg wH arrived at the warehouse of the latter he found himself to "»' ^^ ^e- ,.„.,.. feated. be m failing circumstances, and, being an honest person, (s) Edwards v. Brewer, 2 M. & W. 375 ; Slater v. Le Feuvre, 2 Scott, 146; Smith v. Goss, 1 Camp. 282 ; Coates v. Railton, 6 B. & C. 422 ; and see Dixon v. Baldwen, supra ; Rowe v. Pichfnrd, supra ; and Mills v. Ball, 2 Bos. & Pul. 457. i^i) Per Parke, B., James v. Griffin, 2 M. & W. 623, 634. 230 Factors and Brokers. he declined, on this account, to receive them when they did aiTive. He sent the goods accordingly to the warehouse of another man, accompanied by a letter stating that he did not choose to receive them, and desiring him to hold them for the benefit of the consignor. This was before his bankruptcy. The day after the act of bankruptcy he ad- dressed a letter to the consignor himself, telling him what he had done ; and upon this a question arose between him and the assignees cf B., as to which party was intitled to the possession of the goods. For the assignees it was ar- gued ; — that the goods were the property of B. by the act of sale ; that they had been sent to him ; that the contract which vested the property in him could not be rescinded except by the consent of both parties ; and that, as he had become bankrupt before he gave notice to A., and before the latter consented to receive the goods back, it became impossible for him then to rescind the contract himself, or to give A. a right to receive the goods, without the assent of the assignees. On the other side it was argued, that a man must be presumed to do every thing which it was his interest to do, until the contrary be made to appear ; and that, therefore, as the person to whom the goods were sent had received them as the assets and for the benefit of the consignor, the consent of the latter to that act must be pre- sumed. With this argument the court agreed, and accord- ingly they held that the consignor had still the right to take possession of the goods (ii). And it makes It appears moreover that the rule stated above will apply, thai the con- "ot only to those case« in which, as in that of Atkin v. not'commuiii- -Son^icA;, the person in whose custody the goods were placed cate his in- by the consignee is shown to have been privv to the inten- snch third tion of tlie latter, but even to cases in which such intention ^^''^y- has not been communicated to him. Tills point was de- cided in the following case. (it) Atkin V. Barwick, 1 Stra. 165 ; S. C. 10 Mod. 432. Their Rights. An action of trover was brought by the assignees of a bankrupt for some lead which had been shipped by one S., and consigned to E., the bankrupt. The defendants were wharfingers ; and the question was, whether S. had a right to stop the lead in transitu. The facts in evidence were these. The lead in question was shipped on board two vessels, which arrived in the Thames in the month of De- cember, 1834. After the arrival of the vessels, the captains called at the warehouse of the bankrupt for orders. They could however get no directions from him, and they, in con- sequence, threatened to land the lead unless he gave them some instructions about it. The bankrupt, — who was then in insolvent circumstances and indebted to S., — accordingly told his son to request the captains to land the lead at the defendant's wharf; but at the same time he told him that, under the circumstances in which he was then placed, he did not intend to take the lead, and that S. ought to have it. In compliance with these instructions the lead was after- wards landed at the wharf of the defendants ; but no com- munication was ever made to them as to what had passed between the bankrupt and his son, as to the intention of the fomier not to take the lead. Under these circumstances Lord Abinger, — who tried the cause — reserved the question, whether the transitus was at an end ; and gave the defen- dants leave to move to enter a nonsuit, provided the coui"t should be of opinion that this was not the case. The case was afterwards very fully argued, and the court, after taking time to consider, decided (Lord Abinger disscntiente) that the facts proved at the trial did not amount to a determination of the transit, and accordingly nonsuited the plaintiffs (a'). " I am of opinion," said Mr. Baron Alderson, delivering judgment in the above case, " that the true question is, — whether the acts done amounted to a taking possession of the lead by the bankrupt as owner, and if this be so, then the intention of the bankrupt is, as it seems to me, most (.r) James v. Griffin, 2 INI. & \V. 623. 2fi2 Factors and Brokers. material, and it is not material whether it was or was not communicated to the defendants, except as a test for the jury to judge whether such intention was real or not. Here the intention is to be taken as real ; and indeed the facts are abundantly clear on that point. Now the taking possession here, is by the bankrupt's agent; and the declared inten- tion of the bankrupt to him, when he directs him to do the act, appears to me to be precisely the same as if the bank- rupt had himself done the act, making the same declaration of his intention at the time. The agent has only a qualified authority, and I cannot see how, under such circumstances, his ordering the goods to be landed can be held to be a taking possession of them by the bankrupt as owner, when the bankrupt, at the time, declares that his agent is not to do so, — that he does not mean thereby to take the goods, but to relieve the captains from the inconvenience of delay, leaving, however, the goods for S., who afterwards stopped them in tr-tinsitii" (i/). And in like manner, it was observed by Mr. Baron Furke in the same case : — " The intention not to take the goods as owner was clearly proved by the bank- rupt's son ; and the only effect, as I think, of the want of the disclosure of that intention to the wharfingers, was to give them rights as between themselves and the vendee, — for whom they may have supposed that they were acting as warehouse-keepers, — which, but for the want of that dis- closure, they might not have possessed. It does not vary the rights of the unpaid vendor, which continue or not, ac- cording to the real character which the person bears who has the custody of the goods" (z). Semble, that It is Said, however, that the question of intention can arise, oMntem'i'on ^"b' where it is attempted to be shown that the transitus cannot arise ^y^g p^jt an end to by something which took place before the wliere the '■ j o i (1/) James v. Griffin, 2 M. 6c VV. 630. (s) Ibid. 635. For the arguments against the doctrine stated in the text, see the very able judgment of the Lord Chief Baron, ibid. 636—642. Theh- Rights. 233 goods came to the natuml end of their journey ; and not to goods have , . , , , . reached the any case in which it appears that they came to the possession end of their of the consignee by reaching their ultimate destination («). J""'^"'^>'- Again : it would appear that if the consignee, before the The consignee , ,,.,..,.. , , n ^ maydeter- goods reach their ultimate destination, takes them out or the mine the possession of the carrier into his own, either with or without tici"n*aiin^the" the consent of the carrier (b) ■. or if he does any other act "''"'y' of the . . goods, which is equivalent to taking actual possession thereof on his own account, the transitus will be considered to be at an end, and the consignor will be held to have no longer any right to stop them (c) ; and therefore, where it appeared that the consignee of a quantity of sugars, upon receiving notice from the carrier that they had arrived, took samples there- from, and, for his own convenience, desired the carrier to allow them to remain in his warehouse until he should re- ceive further directions, but before they were removed the consignee became bankrupt ; — it was held, that these acts of the consignee had determined the transit, and that the con- signor's right of stoppage was gone (d). In like manner it would appear, that if the consignee, And this may , „ , -1^1 T , . *= ' be done even before the arrival of the goods, takes constructive possession bytakingcon- of them, the transitus will be at an end ; and therefore if, session^ '"^^ (a) Per Alderson. B., James v. Griffin, 1 M, & W, 20, 30. (6) See Whitehead v. Anderson, 9 M. & W. 518, 534. (c) Per Lord Kenyon, Wright v. Lawes, 4 Esp. 82 ; per Lord Alvanley, Mills v. Ball, 2 Bos. & Pul. 457, 461 : Foster v. Frampton, 6 B. & C. 107 ; and see per Parke, B., James v. Griffin, 2 M. & W. 633 ; and per Tindal, C. J., Jackson v. Nichol, 7 Scoit, 577, 592. (d) Foster v. Frampton, supra. In the case of Hoist v. Puwnall, 1 Esp. 240, it was held by Lord Kenyon, that if a consignee of goods took possession of them, whilst the ship on board which they were was performing quarantine, this was not such a pos- session as to defeat the consignor's right to stop them, because the voyage was not completed until the ship had pei formed her quarantine. But the authority of this case is very questionable ; and indeed it would appear, from the decisions quoted above, to be now overruled. 234 Factors and Brokers. Avhilst the goods are on tlieir passage, the carrier enters expressly or by inipHcation into a new agreement, — distinct from the original contract for carriage, — to hold the goods for the consignee as his agent, not for the purpose of expe- diting them to the place of original destination pursuant to that contract, but in a new character, for the purpose of custody on account of the consignee, and subject to some new or further order to be given by him, the consignor's right to stop the goods w'll be defeated (e). But not by Kut although if the consignee take either actual or inTa^Ifemami.^^"^*^'"'^*^^^ possessiou of the goods before the voyage has completely terminated, the consignor's right of stoppage is gone, yet there is no authority for the position, (and prin- ciple, it is said, seems to be the other way), that a mere demand by the consignee, — without any delivery, — before the voyage has completely terminated, will deprive the con- signor of this right {f). Delivery of Again : a delivery of goods by the consignor on board a board"a''shii? ^^"'P chartered by the consignee, will operate as a dehvery chartered by to the latter SO as to defeat the right of the consignor to stop the consignee, . . , . or giving de- them in transitu (g) ; and, in like manner, if the vendor to a wharfin- Send EH Order to a wharfinger to deliver the goods to the the H'i;h*t''io^*' ^'^""^^^J ^"^ *^^ wharfinger make an entry in his books, Slop in tran- transferring the goods into the name of the vendee, this will be suificient to pass the property, provided nothing remains to be done by the seller, in order to the completion of the contract, but mei-ely to make deliveiy of the goods. But if it be necessary, either by the terms of the contract or by the order to the wharfinger, that any thing should be done to the goods previous to the delivery, the transfer will not be (e) Whiteheads. Anderson, 9 M. & W. 518, 535. (/) Per Tindal, C. J., Jackson v. Nichnl, 7 Scott, 577, 592. (g) Fowler v. M'Taggart, 7 T. R. 442 ; Ingtis v. Usherwood, 1 East, 515. Their Rights. 235 complete until that thing be done, and the right of the ven- dor to stop the goods will not be defeated. If therefore part Provided the of a bulk be sold, so that weighing is necessary in order fnproprrated. to determine the identity or individuality of the article ; or if the whole of a commodity be sold, but weighing is neces- sary for the purpose of ascertaining the price, because the quantity is unknown, the weighing or measuring must pre- cede the delivery, and the symbolical delivery by transfer in the wharfinger's books, without such weighing or measuring, will not be sufficient to defeat the vendor's right of stoppage in transitu (h). So, if the consignee take possession, under the bill-of- Or if the con- lading, of part of the goods consigned, with the intention of pogg^j'^n of takinof the possession and dominion of the whole, this will P""^' '" *''f " _ uaiiie of the be sufficient to defeat the consignor's right to stop the whole, goods (i) ; and in like manner, if the goods be in the pos- session of a wharfinger, and the vendee, having a general order for the delivery of the whole, take away part under that order, this, it appears, will put an end to the vendor's right to stop the residue {k). But where several packages of goods had been sold under an entire contract, some part of which were forwarded to the consignee by land and some by water-carriage, and it appeared that after the arrival of the former at their destination, the consignor stopped the latter in transitu ; it was held, that he was intitled to retain the part actually stopped, until he was paid the price of the whole, but that he had no right to retake that which had arrived at the journey's end (/). (/i) Per Lord Denman, Swa7iwick v. Sotbern, 9 Ad. & EI. 895, 900. See also, Hansoji v. Meyer, 6 East, 614; Shepleyv- Davis, 2 M. & Sel. 397 ; Busk v. Davis, 5 Taunt. 617 ; Withers v. Lys, Holt, N. P. C. 18. (i) Jones v. Jo7ies, 8 M. & \V. 431 ; Slubey v. Heyward, 2 H. Bl. 504. {k) Hammond v. Atiderson, 1 Bos. & Pul. N. R. 69 ; and see Biinney v. Poyntz, 4 B. & Ad. 568. (/) Weiitworth v. Uuthwaite, 10 M. & W. 436. .^236 Factors and Brokers. Query, whe- But it is very doubtful whether, whilst the goods are in ther marking ^^^^ hands of a carrier, the mere act of markinsf, taking sam- or taking ' °' " samples is «uf- plgg, or the like, without any removal from the possession of ficientlodi- ' . .... . ,. i . vest this right, the earner, — although done with the mtention oi takmg pos- session, — would amount to such a constructive possession as to defeat the right of stoppage in transitu, unless it were accompanied with such circumstances, as to denote that the carrier was intended to keep and assented to keep the goods, in the nature of an agent for custody (??j). If the vendor receives warehouse rent tor the goods, tliis will divest his right to stop. Unless by agreement they are to remain " at rent.' It has been decided further ; — that if, after the goods are sold, they remain in the warehouse of the vendor, and he receives warehouse-rent for them, this will put an end to his right to stop thein in transitu, — because, as has been said, if a man pay for part of a warehouse, so much of it becomes his own, and thus an executed delivery is made by the seller to the buyer, of the goods of the latter which are allowed to remain therein (?i). But if the vendor send an invoice to the vendee, which states that the goods are to re- main on the premises of the former " at rent," the effect of this will be, not to make the warehouse of the vendor the warehouse of the vendee, but to make it part of the con- tract between the parties, that the goods are not to be de- livered until, not the price only, but the rent also is paid ; and thus the vendor will have a right to hold the goods both for the price and the rent (o). So if the con- signee assign the bill-of- lading. The right of the consignor of goods to stop them in transitu will likewise be defeated, by the assignment of the bill-of- lading by the consignee to a third person for a valuable con- sideration ; and there is no distinction for this piU"pose, be- tween a bill-of-lading indorsed in blank, and one indorsed to (m) Whitehead v. Anderson, 9 M. & W. 518, 635. (n) Per Lord Ellenborough, Hurry v. Mangles, 1 Camp, 452, 453. (o) Per Bayley, B., Miles v. Gorton, 2 Com. & M. 504, 513. Their RigJits. 237 a pal'ticular person (p). If however the bill-of-lading con- tain a condition, for example, if there be an indorsement on it to the effect, that the goods are to be delivered provided the consignee pays a certain draft, then every indorsee takes it subject to that condition, and will have no title to the goods unless it be performed (q). So if the assignee of the bilUof-lading act mala fide, for Unless the instance, if he knew that the consignee was insolvent, and ma^&^e^ took the assignment of the bill-of-lading for the purpose of defeating the right to stop in transitu, and so of defrauding the consignor out of the price, — he will be held to stand in the same situation as the consignee, and the consignor will still be intitled to his right of stoppage (r). But the mere fact of the assignee having known, that, at the time the bill- of-lading was assigned to him, the consignor had received no money payment for the goods, but merely an acceptance not then due, will not, without evidence of collusion, intitle the consignor to stop them in transitu (s). A mere pledge of the bill-of-lading by the consignee, A pledge of however, will not defeat the right of the consignor to stop lading will'not the goods in transitu ; for, although by the pledge the legal ".'^^^^ '*"' right to the possession of the goods passes to the pawnee, still the consignor may, on the insolvency of the consignee, resume his interest in them, subject to the rights of the pawnee, and will be intitled, at least in equity, to the pos- session of whatever may remain after satisfying his claim. And further, if the goods comprised in the bill-of-lading be pledged along with other goods belonging to the consignee, the consignor will have a right to have all the goods of the (p) Lickbarrow v. Mason, 2 T. R. 63; see also, 6 East, 21. (q) Barrow v. Coles, 3 Camp. 92. (r) Per Lord Ellenborough, Cumming v. Brown, 9 East, 506, 514. (s) Ibid. 238 Factors and Brokers. former appropriated to the discharge of the pawnee's claim, before any of the goods comprized in the bill-of-lading arc so appropriated (/). Nor a sale ot goods. mere the Nor will a mere sale of the goods by the consignee to a third party defeat the right of the consignor to stop them m trcmailu ; the general rule being, that the second vendee of a chattel cannot stand in a better situation than his ven- dor (u) ; and in like manner, a delivery of part of the goods by the first vendor to the subvendee, will not prevent the former, on the insolvency of the original vendee, from re- taining such part of the goods as may still remain in his pos- session and under his control, until the price of the whole be paid(x). Nor part pay- mem, or giving bills tor the price. It has likewise been well settled, that the consignor's right to stop in transitu will not be taken away by the fact of the consignee having partly paid for the goods (y), nor by his having given bills of exchange for the price {z) ; and it ap- pears that, where the consignee has given his acceptance for the price of the goods, the consignor may, on the insol- vency of the former, stop them in transitu without tender- ing back the bill (a). Nor the car. Lastly : the right of the consignor of goods to stop them rier's cIhIiii . ^. .„ i ■. /- if , • o , • of lien, nor a m transitu Will not be defeated by any claim of the earner foreign at- tachment. against the consignee, for his lien for a general balance (6); (t) In re Westzinthus, 5 B. & Ad. 817 ; see also, 1 Smith, L. C. 435. (u) Miles V. Gorton, 2 Corn, fie M. 504; Dixon v. Yates, 5 B. & Ad. 339. (x) Miles V. Gorton, supra. (y) Hodgson v. Loy, 7 T. R. 440. (s) Feize v. Wray, 3 East, 93 ; Miles v. Gorton, supra. (a) Edwards v. Brewer, 2 M. & VV. 375. (b) Opfenheim v. Rus'iel, 1 Bos. £< Pul. N. R. 42 ; Jackson v. Nichol, 7 Scott, 577, 591. TJicir Rights. 239 nor will tliis right be defeated by reason of the goods, whilst in their transit, being attached by process out of the court of the mayor of London, at the suit of a creditor of the con- signee (c). (e) Smith v. Goss, 1 Camp. 282. I CHAPTER IlI.-SECTION I, Ox THE Rights of Factors and Brokers. PART III. On their Rights as against Third Parties. the subjeci. Having tlius treated of the rights of factors and brokers as against their principals, we now proceed, in pursuance of the arrangement proposed at the commencement of the present chapter, to treat of their rights as against third parties. These are the two following. Fiist ; the right of factors and brokers to sue third parties on contracts into which the latter may have entered with them in that capacity ; and secondly, their right to sue third parties for wrongs of which the latter may have been guilty towards them in the course of their agency. The former of these rights, again, may be very properly treated with reference to the following cases ; Jirst, with reference to those cases in which the factor or broker has only a qualified right to exercise it ; and secondly, with reference to those in which his right to exercise it is absolute. Let us consider these in their order. Cases ill 1 . And first, of the cases in which the factor or broker has which ihe fac , i-/' i • i i • i • torhasaqiiaii- Only a quautied right to sue third parties, on contracts into fled right to ^j^jch the latter may have entered with him in the course of his employment. General rule It is a general rule in our law, that where a contract of of- an ageiu to Sale or Other agreement is entered into with a mere servant iraci'8''made °^' ^o^^^ °" behalf of another person, such servant or age 't Rights of Factors and Brokers. 241 ' cannot maintain an action thereon. Thus, in the ordinary by him in that , case of a sale of goods by a shopman, the right to sue for the '^"P^'^' J • price of the goods sold is always considered to belong ex- clusively to the master. So, in the case of a purchase of i goods by a servant the natural conclusion is, that the ven- I dor gives credit to the principal, and that the servant is a ' mere agent for him in making the bargain, — unless, that is, i such inference be rebutted by proof, that on former occasions ^ the servant has been authorized to deal for ready money I only, from which circumstance it would follow, that he had no power to pledge the credit of his principal at all (a). ' And in like manner, where it appeared that A. had agreed, , in writing, to pay the rent of certain tolls which he had hired, " to the treasurer of the commissioners," — it was held, : that no action for such rent could be maintained in the name of the treasurer, because the meaning of the contract was, that the defendant should pay the commissioners through 1 the medium of their officer, and such being the case, they j were the only persons who could sustain the action (b). ' But where the agent has any beneficial interest in the Rule where performance of the contract, as for commission or the like; a beifeTciaT' or where, instead of having a bare custody of goods which '"'*''"'• he is employed to sell or purchase, — as is the case with a servant or shopman, — he has a special property therein, or a lien thereon in respect of his commission and advances, — in such a case he may support an action in his own name, for the price or non-delivery of the go'>ds, or for the non- fulfilment of the contract (c). Accordingly it is now well settled, that wheie a factor, Afacior, although known to be such, sells goods in his own name on knmvu'lu be (a) Per Holt, C. J., Show. 95. (6) Pigott V. Thompson, 3 Bos. & Pul. 147, 150. (c) See, per Lord Loughborough, Williatns v. Millington, 1 H. Bl. 81, 84; see also, 3 ChiUy on Com. & Man. 210; and 1 ChittyonPl. 7. M 242 Factors and Brokers. soch, imy sue behalf of his principal, he may bring an action for the value on coniiiicis thereof (J); and it has been held, further, that even where owii^n'anie' V *-^^ ^^^^ ^°^^ *^*^ Contract appears to have been made by the factor for his principal, yet if the factor declare thereon as on a contract made with himself, this will be no variance(e). But still it would appear, that if the contract, on the face of it, purported to be made by the factor as the agent of a third person, he could not sue thereon as principal, without giving notice to the othi^r contracting party that he was the person really interested {f). Again ; it is clear that where a fac- tor sells goods in his own name, he is a good petitioning creditor against the purchaser, — because, being in a situa- tion to sue the purchaser for the price in an action for goods sold and delivered, and having therefore a legal debt due to him, it follows, that he may sue out a commission of bank- rupt against the debtor {g). In like manner, where goods are consigned to a factor for sale, and there is evidence of an intention on the part of the consignor, to vest the property thereui in the factor from the time of their being delivered to the carrier, the possession by the factor of the bill-of-lad- ing, whereby the goods are made deliverable to him, will give him such a special property therein, as to intitle him to sue the carrier in assumpsit for their non-delivery (A). And so, on the other hand, where a factor ships goods as agent for his principal, and pays the freight for them at the port of shipment, he may maintain an action, in his own name, against the owner of the ship, for not delivering the goods according to the bill-of-lading (t). But if the freight be not (d) Per Lord Hardwicke, Saee v. Prescot, 1 Atk. 245, 248 ; per Lord Alvanley, Houghton v. Matthews, 3 Bos. & Pul. 485, 495 ; per Eyre, C. J., Atktjns v. Amber, 2 Esp. 493 ; and per Bayley, J., Sargent v. Morris, 3 B. & Al. 277, 28L (e) Atkijni v. Amber, supra. (/) Bickerton v. Burrtll, 5 M. & Sel. 383. ig) Per Lord Elleiiborough, Sadler \, Leigh, 4 Camp. 195. (h) Anderson v. Clark, 2 Bing. 20. (i) Joseph V. Knox, 3 Camp. 320. Their Rights. 243 paid by the factor, and tlie goods are stated in the bill-of- ladiiig to be shipped by order and on account of the con- signee, then the latter only can maintain an action for their non-delivery, — because the bill-of-lading in this latter case does not, as in the former, establish any privity of contract between the owner and the factor {k). And it is said that, in cases like the above, it makes no Whether be difference whether the factor acts under a commission del mbsion*^dw' credere, or not (/)• credere or nol. Again ; as in the cases which have just been considered A fortiori, it we have seen that the factor, although known to be acting known prin- as such, has still the right to sue third parties on contracts '^'P* " made with them in that capacity ; so it follows, a fortiori, that he possesses this right, wherever he is the onlj' known and ostensible principal, and consequently, in contemplation of law, the real contracting party (?;;). Nor, as it appears. And in this will even the renunciation of the contract by the actual prin- nunciation of cipal affect the factor's rights in this respect; but he will still jj^'^ihe'reaf be intitled to sue the party with whom he has contracted, for principal will 1 • 1 1 1 • 1 1 « ""t atTect the any damages which he may liave sustained by reason of a factor's right. breach of contract by the latter. This proposition is proved by the following case. The plaintiffs, being factors, and authorized by one H. to buy for him a quantity of oil, em- ployed B., an oil broker, to make such purchase for them. The defendant afterwards agreed with B. to sell the oil to the plaintiffs; and hought-and-sold notes, signed by B., were thereupon sent by him to the plaintiffs and defendant respectively, in which notes the goods were stated to have been "'Bought for Messrs Short, Brown, and Bowyer, (the plaintiffs), of Mr. W. F. Spackman," (the defendant), on certain terms therein specified. The plaintiffs sent a cor- (/c) Brown V. Hodgson, 2 Camp. 36; Joseph v. Knoi, supra. (I) Per Lord Alvanley, Houghton v. Matthews, supra, (m) See Story, Com. on Agency, §§ 393, 396. ».\i Factors and Brokers. responding bought-note to II., their principal ; and tliey afterwards, under a general authority from him, sold the goods for his account, through another broker, to B. 8c Co. Tlie bought-and-sold notes, in this latter transaction, men- tioned the plaintiffs and B. & Co. as the buying and selling parties. On this sale being communicated to H., he re- turned the sold-note Avhich had been sent to him, declaring that he would have nothing to do with the oil either as pur- chaser or seller; and to this the plaintiffs assented. The defendant afterwards refused to deliver the oil in pursuance of his agreement ; and the plaintiffs, being unable to fulfil their engagement with B. & Co., were obliged to pay them a sum of money in satisfaction, the market having risen since the time of making the last mentioned contract. The plaintiffs thereupon brought their action against the defen- dant for not delivering the goods, and the court held that they were intitled to recover, — notwithstanding the renun- ciation of the contract by H., and the acquiescence of the plaintiffs therein, — because on the face of the contract it appeared that the plaintiffs had purchased as principals («). Tac or may It has likewise been said, that where a factor, in entering sne in liisowii . , i i i • i • ■ r name, where into a Contract, has exceeded his authoritj', so as, in tact, to e*i hisTmho-' ''^^'^ thei'eby made himself a principal, he may sue on such ••ity- contract (o). Or t.i recover Further; it was held by Lord Mansfield, and, as it seems, on a cnnsider- is admitted at the present day, that where a man pays ^'.'""a^led'^'' iwoney by his agent which ought not to have been paid, tlie agent may bring an action to recover it back(/>). And accordingly, where it appeared that a factor residing in this country liad, as the agent of a merchant resident abroad. (»^) Short v.Spachman, 2 B. & Ad. 962. (o) 3 Chilly on Com. tx. Man. 210. (p) Stevenson v. Mortimer, Cowp. 805, 806; see also Paley on Prin. and Agent, by Lloyd, 437 ; Smith's Merc. Law, 117 ; and 3 Chitty ou Com. & Man. 210. Their Rights. 245 effected an insurance on goods at and from a port in Russia to London, — which insurance was in fact made after the commencement of hostilities by Russia against this country, but before intelligence of that fact had arrived in London, — and the ship was afterwards seized and confiscated; it was held, that the factor was intitled to sue in his own name for a return of premium, inasmuch as the policy had never at- tached (^). If, however, nothing more appears than the mere fact, But in these . . • 1 /> 1 cases tlie prin- that m makmg the contract m question the factor acted as cipal may the ostensible principal, this will give him only a qualified ^("cior'l rightl right to sue on such contract, and the principal will still have the power of superseding the factor's right, by suing in his own name, or by taking any other proceedings whereby it becomes manifest that he intends to consider the other contracting party as his debtor. Thus, if a factor sells goods in his own name, without disclosing his principal, and be- fore he has sued the vendee for the price, the latter takes steps for recovering the debt directly from the vendee, such debt will then be considered to be due to the principal, in the same manner as if the sale had been made personally by him in the first instance, and after the intervention of the prin- cipal the factor will cease to have any right to sue (r). So, if before payment to the factor, the principal give the vendee notice to pay the debt to him and not to the factor, the factor's right to sue for such debt will be extinguished (s) ; and, a for- tiori, will this right be extinguished if, before the factor makes his claim, the principal has already been paid the price of the goods (^), or if the debt has in any other manner been dis- charged. (q) Oom v. Bruce, 12 East, 225. ()•) Sadler V. Leigh, 4 Camp. 195. (s) Drinkwater v. Goodwin, Cowper, 251, 255 ; Buller, N. P. 130. (t~) Coppbi V. Walker, 7 Taunt. 237; Hornby v. Lacy, 6 iM. & Sal. 172. 246 Factors and Brokers. And the same rule applies with equal force to all the other cases in which, as we have seen, the factor has a right to sue. Thus it is well established, that where a contract, not under seal, is made with an agent in his own name for an undisclosed principal, the latter as well as the former may sue upon it {u) ; so it is clear, that if money have been paid by a factor on a consideration which has failed, his principal may bring an action for the recovery thereof (.r) ; and hence it follows, that in these cases also the factor's right to sue is a qualified right merely, being subject to be defeated by the intervention of the principal at any time prior to its having been actually enforced. Indeed, although the factor, under such circumstances as the above, has a legal right to sue as well as his principal, still, as has been well observed, he sues merely as a trustee for his principal (t/) ; and such being the case, it is evident that his right to sue can exist, only so long as his cestui-que trust refrains from exercising that right in his own person. But the rights But still it must be borne in mind, that the rights both of pal as well as the principal and of third parties with reference to the ques- ties'are sub"^ ^^°^ °^ which we are now treating, are subject to the follow- ject to ihe jng limitations in favour of the factor, namely, — that where factor's lien. ° , . . the factor has a lien on goods intrusted to him for sale, and which he has sold pursuant to that trust, such lien, as we have seen, attaches on the price of the goods when sold, so as to intitle him to insist on payment to himself to the extent of his lien, even in opposition to his principal (z) ; and it ap- pears further, that if, before the intervention of the princi- pal, the other contracting party have notice of the factor's claim, he will thenceforth hold the price of the goods subject (w) Per Lord Denman, Sims v. Bond, 5 B. & Ad. 389, 393. (i) Per Lord Mansfield, Stevenson v. Mortimer, Cowp. 806. (y) Smith's Merc. Law, 117. (s) Drinkwater v. Goodwin, Cowp. 251, 255; Hudson v. Granger, 5 B. & Al. 27 j Warner v. M'Kay, 1 M. & W. 591. Their Rights. 2i7 to that claim, and be compelled to discharge it before paying the principal (a). It appears however to be taken for granted, that, in such cases, third parties are intitled to an oiFer of indemnity from the factor (b) ; and it is believed that, in practice, such indemnity is usually offered ; although, whe- ther this be absolutely essential in order to the security of the factor's rights, may admit of question (c). At all events if, after such notice and offer of indemnity the purchaser pay the principal, the payment so made will not be available as a defence to an action by the factor (d). Lastly : we have seen that where a factor acts under a And where commission del credere, he is regarded as a surety to his , com'iiission employer for the solvency of those with whom he contracts ''f' credere, ' •' _ "' ihe principal on his behalf (e) ; and it follows therefore, from the nature cannot imer- of the relation between principal and surety, that in such rights without cases the factor's employer cannot interfere with the rights roa'^anfee of the former against the person for whom he is surety, — except by suing him, — without at the same time waiving the factor's guarantee. If therefore he accept payment from the principal debtor, or discharge the debt by taking something as a compensation therefor, or by giving a release, or accepting a fresh security, in all these cases the factor will likewise be discharged from his liability as surety (J). And so, it appears, that any alteration in the terms of cre- dit, without the consent of the factor (g); or the fact of the principal having entered into any binding agreement with (a) 3 Chitty oa Com. & Man. 211 ; Drinkwater v. Goodwin, supra. (6) Per Lord Mansfield, Drinkivater v. Goodwin, supra. (c) See tbe remarks of Dr. Story, Com. on Agency, p. 365, note 1. (d) Dririkwater v. Goodwin, supra. (e) Ante, pp.98. 99. (/) Jones V. Lewis, 4 B. & C. 506 ; 1 Pothier on Obligations, part 2, c. 6, s. 1, by Evans. (g) Biicon V. Chesiiey, 1 Stark. 192. MS Factors aiid Brokers. the debtor, to refrain from taking proceedings against hinj, will have the like effect (A). Cases in Secondly ; as to the cases in which a factor is considered t^cior's' rfght ^° '^^^*^ '^" absolute right to sue third parties, on contracts to tiie 19 ab- made with them in that capacity. solute. -^ •' Foreign These cases appear to be two in number. First, it is '"^'°'^" said ; — that where a factor to a person beyond sea buys or sells goods for the principal in his own name, an action will lie against him or for him in his own name ; for the credit will be presumed to be given to him in the first case, and, in the last, the promise will be presumed to be made to him, — and the rather so, as it is much for the benefit of trade {i) : and in like manner it has been said ; — that where the principal resides abroad, he is presumed to be ignorant of the circumstances of the party with whom his factor deals, and that therefore the whole credit is considered as subsisting between the contracting parties (/c). It thus ap- pears that, in the case of foreign factors, exclusive credit is considered to be given both by and to them in all their dealings in that capacity ; and it has accordingly become the received opinion, that they alone are intitled to main- tain actions on contracts which have arisen out of such dealings (JL). " This doctrine," says an eminent authority, " is in conformity to the general usage of trade ; and it was, in all probability, originally derived from it, as afford- ing a just exposition of the intentions of all parties, and as being founded in public policy and expedience, and in the safety, if not the necessities of commerce" (m). (h) Cflombe v. Woolfe, 8 Bing, 156. (0 Gonzalez v. Sladen, Bull. N. P. 130. {k) Per Cliarabre, J., Houghton v. Matthews, 3 Bos. & Pul. 485. 490. (0 3 ChittyoD Com. & Man. 203; 1 Bell's Com. on Mer. Jiir. § 209 ; Story's Com. on Agency, § 400. (m) Story, ut supra. Their Rights. 249 The other case in which a factor is held to possess an Where ihe ' absolute right to sue third parties, on contracts into which n^n „„ ,h,. the latter have entered with him in that capacity, is where ^'^^"^ ^JooL he has a lien on the price of the goods sold, — either in , respect of those goods in particular, or for his general ba- \ lance, — to an amount equal to, or greater than the value of ' such goods. This rule indeed follows as a corollary to that which has been already stated, with reference to the factor's 1 rights in those cases where he has a lien on the price of the \ goods to an amount equal to part of their value only ; for, ] as in the latter case we have seen that he is intitled to { insist on payment to himself to the extent of his lien, even i in opposition to his principal, so it is evident that, the extent ^ of his lien in the former being equal to the whole value of the goods, he must in that case be intitled to insist on pay- 1 ment to himself of the entire price (?z). If therefore the i debtor have notice of the factor's lien, a payment made by ! him to the pi'incipal, after such notice, will be no defence ; to an action by the factor for the price of the goods (o). i And it appears that, in such a case, the debtor will not In such cases ; be allowed to avail himself, as against the factor, of any from prin- I claim of set-ofF which he may have against the principal, ^'i* s'et^ort""' i " The factor," says Lord Mansfield, " has a right to bring against factor , an action against the buyer to compel the payment ; and it i would be no defence to that action to say, that, as between him and the principal, he (the buyer) ought to have that | money because the principal is indebted to him in more i than that sum ; for the principal himself can never say j that, but where the factor has nothing due to him" (p) I (?i) Drinkwater v. Goodwin, Cowp. 251, 256; Hudson v. Granoer, 5 B. & Al. 27. (o) Coppin V. Walker, 7 Taunt. 236. (/)) Drinkwater v. Goodwin, supra; and see Atkyns v. Amber ■2 Esp. 493. M 5 ^50 Factors and Brokers. Ill Kfixrai a In determining how far the rules stated above, with re- I'lie'^iihil" ""' fe'ence to the right of a factor to sue in his own name on own naiiip contracts made by him for his principal, are applicable to the case of a broker, properly so called, we must again have recourse to the distinction which has been already so fre- quently mentioned as existing between the characters of these two classes of agents. It will be remembered then, that the rule as to the factor's right in this behalf was thus stated; — that where a factor, although known to be such, sells goods in his own name on behalf of his principal, he may bring an action for the value thereof (g) ; and in like manner it will be found, on referring to all the cases which we have adduced in illustration of this rule, that, whatever might be the nature of the contract itself, and whether the principal were disclosed or not, it was still necessary in order to the possession by the factor of the right of suing thereon in his own name, that the contract on which he sued should have been made by him in his own name. Applying this principle then to the case of a broker, we shall find that, in general, he cannot possess the right in question. He is not, as we have seen, at liberty, under ordinary circumstances, to contract in his own name (r) ; and hence it follows that, under ordinaiy circumstances, he possesses no right of suing in his own name on any contract made by him in his representative capacity. insurance brokers. Secus, as lo With reference to insurance-brokers however, the case is otherwise. In the ordinary form, a policy of insurance on ship and goods runs thus : — " A. B. (the broker) as well in his own name, as for and in the name and names of all and every other person and persons to whom the same doth, may, or shall appertain, in part or in all, doth make assurance and cause himself and them and every of them to be insured" (s) ; and, in accordance with this form of (q) Ante, p- 241. (r) Baring v. Corrie, 2 B. & Al. 137, 143. (s) 2 Park on Mar. Insur. Appendix, No. 1, p 988, 8th ed. Their Rights. 251 policy, the practice has now become usual, to allow the in- surance-broker to sue thereon in his own name (t), whether, in the particular case, he has acted under a commission del credere or not («) ; nor, as it seems, will he be debai-red from maintaining this action, even although it be averred in the declaration that he was interested in the policy jointly with another person (j) ; nor although it be made to ap- pear, that at the time the policy was effected he had no authority from his principal to effect the same, provided the latter have ratified his act before action bx-ought (3/). But still the broker does not possess an absolute right to But they , s i i sion. the actual possession thereoi (e), yet the law seems now to be otherwise, — it being well settled by a number of recent decisions, that where goods have been consigned to a factor, under circumstances which show that it was the intention of the consignor to vest the property therein in the factor from the time of shipment, the latter may maintain trover against any one who wrongfully withholds the possession of such goods from him, even although he has never actually (c) See per Eyre, C. J ., Fowler v. Down, 1 Bos. & Pul. 47 ; 1 Chitty on PI. 61 ; 3 Chitty on Com. & Man. 210 ; Story on Bail. § 150. (d) See per Chambre, J., Sutton v. Buck, 2 Taunt. 302; Ruoth V. Wilson, 1 B. & Al. 59 ; and see per Best, C. J., Burton v. Hughes, 2 BiDg. 173, 175. (e) Per Eyre, C. J., Fowler v. Down, supra. Their Rights. received them (f). This rule is illustrated by the following cases. T., a corn merchant at Longford, — who had been in the habit of consigning cargoes of corn to the plaintiffs, as his factors for sale, and obtaining acceptances from them on the faith of such consignments, — obtained from the master of a canal-boat a receipt signed by him for a full cai'go of oats, therein stated to be shipped on board such boat de- liverable to the agent of T. in Dublin, in care for and to be shipped to the plaintiffs at Liverpool. At the time the above receipt was obtained, the boat was actually loaded. T. thereupon inclosed the receipt to the plaintiffs, and drew a bill on them against the value of the cargo, w^hich bill the plaintiffs afterwards accepted and paid. Prior to the accept- ance of the bill by the plaintiffs, W., an .agent of the de- fendant who was T.'s factor for sale in London, arrived at Longford and pressed T. for security for previous advances. T. accordingly gave W. an order on his agent in Dublin, to deliver to W. the aforesaid cargo of oats so soon as it arrived there ; and under this order W. afterwards took possession of the said cargo for the defendant. The plain- tiffs thereupon brought trover for the oats, and the court held that, — inasmuch as from the whole of the evidence it was clear that the intention of the consignor was to vest the property in the consignees from the moment of its being delivered to the carrier, — they were intitled to recover {g). And in like manner, where one C, a manufacturer at Neiv- castle, consigned goods to E. & Co. his factors in London, specifically to meet a bill drawn upon them, and at the same time transmitted to them a receipt, signed by the mate of the vessel, acknowledging the goods to have been received on board to be delivered to E. & Co. ; — it was held, that E. & Co. had a sufficient property in and right to the pos- (/) Per Eyre, C. J., Fowler v. Down, supra; and see the cases cited infra. {g) Bryans v. Nix, 4 M. & \V. 775. 254 Factors and Brokers. session of the goods, to intitle them to maintain trover against a wrong-doer, who sought to withhold such posses- sion from them (/i). And it appears, that if it be manifest that the intention of the consignor was to vest the property in the goods in tlie consignee from the time of the shipment, it will be wholly immaterial whether the instrument by which this intention is proved be a bill of lading or not, — as it may equally be proved by means of a carrier's or wharfinger's receipt, or by correspondence alone (i). In wh;ii cases g^jj; jf there be no evidence of such an intention on the tie caniiut. part of the consignor, then the factor will not be intitled to maintain trover in order to obtain possession of the goods. Thus, if the principal when he consigns goods to his factor for sale be merely in a course of drawing on the factor, without there having been any acceptance of bills by the latter on account of the particular cargo, this circumstance, although it might give the factor a right to detain the goods when they came to his hands, will not intitle him to antici- pate the possession, by bringing trover for them against the agent of the unpaid vendor, to whom they have meanwhile been delivered (/c). So, although the factor may have ac- cepted bills expressly on account of a particular consignment of goods, yet, if at the time the carrier signs the receipt for such goods, there have been in fact no goods of the kind mentioned, delivered to him or otherwise specifically ap- propriated to the factor, and the consignor afterwards alters the destination of the goods, the factor will not be intitled to maintain trover for them (/). And in like manner, if the j)rincipal draw bills on his factor in anticipation of a par- ticular cargo, and, before the cargo is loaded, the latter {h) Evans v. Nichol, 4 Scott, N. R. 43. (i) Bri^aiis V. A'ii, supra. (k) Fatten v. Thompson, 5 M. & Sel. 350. (/) Bryans v. Nix; Evans v. Nichol, supra. Their Rights. il55 accept such bills, but the principal, instead of sending the bill of lading to him, sends it to a third party with instruc- tions to sell the cargo for his (the principal's) account, pos- session of the bill of lading afterwards acquired by the factor as the agent of such third party, will not intitle him to sue the latter in trover, in order to obtain possession of the cargo (m). So it appears, that the indorsement of a bill of lading of goods by the principal to his factor without consideration, and merely for the purpose of enabling the factor to take possession of the goods, in order to secure to the principal the amount of a bill drawn by him on a third party to whom the goods have been consigned, will not give the factor a right to bring an action of trover for them in his own name (n) ; nor will such an indorsement of the bill of lading to a factor, in order to authorise him to stop the goods in transitu on account of his principal, intitle him to maintain trover for them in his own name, unless it appear that he actually demanded the goods before the right of stoppage in transitu was at an end (o) ; but it has been held, that if the factor make such demand before the right of stoppage in transitu is determined, he will be intitled to bring trover in his own name for the goods, although the bill of lading was indorsed to him without consideration and for the mere purpose of enabling him to exercise that right (;j). Asrain : a factor may sue in his own name to recover for So lie may , • 1 • 1 nS"e lliird per- any damages which he may have sustamed m the course of sons for da- his employment, by reason of the fraud or misrepresenta- ["fif^rt by'him in conse- qiience of their mis- Cm) Bruce v. Wait, 3 M. & W. 15. representa- (n) Per Lord EUenborough, Coxe v. Harden, 4 East, 211, "**"-• 217. (o> Warhig V. Cox, 1 Camp. 369 ; and see the remarks of the Court of Common Pleas on this case ia Morisoit v. Gray, intra. (p) Morison v. Gray, 2 Bing. 260. 2.5 C Factors and Brokers. tions of third persons. Accordingl)' it is said, that if a factor were authorised to buy goods for his principal of one particular quality only, and the seller of such goods were fraudulently to represent them to be of that quality, — whereas they were not, — and the principal were to refuse to receive them, or the factor were to be otherwise injured by means of such misrepresentation, he would be intitled to a full recompense from the seller for the tort(^). And in like manner it is presumed, that if a factor were to purchase a commodity by order of his principal, under circumstances from which the law would imply a warranty on the part of the vendor, that the thing bought was reasonably fit and proper for a certain purpose (r), and the factor were to sus- tain any loss by reason of the breach of such implied war- ranty, he would be intitled to recover damages from the vendor for the loss so sustained. Anil he may And lastly : if a factor employ a sub-agent for the pur- agent for any pose of carrying into effect the orders of his principal, and '"*■ oc<:asion- gyj.]^ sub-agent, by neglecting the instructions of the factor, the negli- commits a breach of duty for which the factor is compelled "dice of th6 i")rMier. to answer his principal in damages, the factor will be in- titled to recover from the sub-agent the damages which he has so sustained. Thus, where a factor, having a commis- sion from A. to ship for him a cargo of tobacco, employed B. as his broker to effect the purchase for him, and directed him to buy " Porto-Rico tobacco of the best quality;" whereupon B. purchased and shipped the tobacco, and de- livered a bought-note to the factor, — in which however the tobacco was described as " Porto-Rico tobacco," only — but A., finding the tobacco to be very bad, refused to accept it and brought an action against the factor, in which he had (q) Story's Com. on Agencj', § 415. (r) As to the cases in which the law will imply such a war- ranty, see Bruwn v. Edgin^tou, 2 Scott, N. R. 496, 504, 505 ; Chanter v. Hopkins, 4 M. & \V. 399 ; 3 Bla. Com. 166. Their Rights. 257 a verdict ; — it was held, that the factor might sue B. for the damages recovered against him in the action by A., and that his acceptance of the bought-note from B. was no waiver of the directions he had given him as to the quahty of the goods to be purchased (s). And the measure of damages to which the factor is in- Measure of titled in such a case is held to be, the damages and costs sac'ii^aMse. recovered in the action against him, — he, at the same time, undertaking to assign the goods to the defendant, or to sell them and account to him for the produce (t). (s) Mainwaring V. Brandon, 8 Taunt. 202. {t) Ibid. 208. CHAPTER III.— SECT. II. On the Liabilities of Factors and Brokers. PART I. On their Liabilities to the Principal. Division of The next subject which presents itself to our notice, ac- the eiibjfct. coiding to the arrangement proposed at the commencement of this chapter, is the consideration of those liabilities which factors and brokers may incur in the course of their employment ; and in treating of these we shall' pursue a course similar to that which we have adopted in treating of their rights, — directing our attention, in the first place, to the liabilities which they may incur to their principals ; and, secondly, to those which they may incur to third persons. Liabilities to In the first place then, let us see what liabilities a factor or broker may incur to his principal ; and then let us in- quire into the remedies which the principal may adopt in order to avail himself of such liabilities. Under orrii- We have already discussed, at considerable length, the stances. various duties which the law holds to be incumbent on factors and brokers in the exercise of their agency, and the several powers with which it has clothed them, or which it considers them, under special circumstances, to possess, in order to their being enabled duly to perform their office ; and in treating of these subjects, we have had frequent occasion to mention the liabilities which they would incur to their principals, by reason of the non-performance of such Liabilities of Factors and Brokers. 259 duties, or from being guilty of any unauthorised excess in the exercise of such powers. Such being the case then, it would appear to be unnecessary to enter into any further enumeration, in this place, of the particular instances in which the factor or broker may expose himself to liabilities of the kind referred to; and accordingly, we shall content ourselves by merely stating in general, — that wherever the factor or broker has committed, in the course of his employ- ment, any breach of duty, or has overstepped his powers, or has been guilty of negligence or fraud, and the principal has suffered a loss in consequence of his factor's misconduct, the latter will be liable to the former to the full extent of such loss, and will likewise forfeit his commission (a). And it may be stated, further, that mere honesty of intention on the part of the factor or broker in doing the act complained of will not be admitted, under ordinary circumstances, as an excuse for his breach of duty (b) ; nor will it make any difference in his liability, that the loss in question was occasioned simply by his inadvertence, because, in the very essence of the relation between him and his principal is involved a contract on his part, to the effect, that he pos- sesses reasonable skill for the exercise of his employment (c); and in like manner, he will be equally liable whether the negligence complained of consisted of a positive act, or of a mere omission ; because, being an agent for hire, he is answerable as well for nonfeasance as for misfeasance (d). And not only is a factor or broker liable to his principal In wiiat ca^es. ... 1 n 1 1 1 • 1 • liable lor ihe for his own act or default, but he is also, m some cases, acts ot third parlies. (o) Malyne, Lex Merc. 154; Beawes, Lex Merc. 41, 43; Com. Dig. Merchant, B. ; Moore v. Mourgue, Cowp. 479; 3 Chilly on Com. and Man. 215. (6) Com. Dig. Merchant, B. ; Catliii v. Bell, 4 Camp. 183. (c) Chapman v, Walton, 10 Biiig. 57 ; Seare v. Prentice, 8 East, 348 ; Denew v. DavereU, 3 Camp. 451 ; Shiells v. Black- burn, 1 H. Bla. 159, 162. 163. (d) Cnggs V. Bernard, 2 Ld. Raym. 919; Elsee v. Gatward, 5 T. R. 143. 2G0 Factors and Brokers. liable for the acts and defaults of third persons. Thus, if a consignment of goods be made to two factors jointly, and one of them die, the other will be liable for the pro- ceeds of the whole ; and it will make no difference that the business in question was, in fact, transacted solely by the deceased (c). So if two ship-brokers, residing at different ports, enter into an agreement to share the profits of their respective commissions, they will both be liable under this agreement, to all persons for whom either may have acted in that capacity, even although it were provided by such agreement that each of them should be liable for his own F:icti)r or ^cts and losses only (J"). In like manner, if a factor or ""^n' ral"' '" ^'^o'^^'" employ a sub-agent to assist him in transacting the liable for the affairs of his nrincipal, he will be liable for the acts and acts of sub- . . /> * 1 1 rrii -r- /• agents. emissions of such sub-agent. Thus, if a factor employed to purchase goods instruct a ,sub-agent to effect such pur- chase, and he purchase goods of an inferior quality, the factor will be liable to his principal in damages (g) ; or if he be employed to sell goods, and he appoint a sub-agent to effect the sale and receive the price, payment of the money to the sub-agent will be sufficient to charge him with the receipt thereof (h). And in like manner, if he deposit goods which have been intrusted to him, in the warehouse of a third person, and the goods whilst there are lost, he will have to answer for them to his principal, unless he is in a situation to show that he exercised reasonable and proper care in the choice of such place of deposit (/). Dr. Story indeed is of opinion, that where it becomes necessary or is usual for the agent to employ a sub-agent, the former will, in no case, be responsible for the negligence or mis- (e) HoUscomb v. Rivers, 1 Ch. Ca. 127 ; Godfrey v. Saunders, 3 Wils. 73. (/) See Waugh V. Carver, 2 H. Bla. 235. {g) See Maiuwaring v. Brandon, 8 Taunt. 202. (/i) See per Lord Kenyon, Matthews v. Haydon, 2 Esp. 509, 510. (j) Goswill v. Dunkley, Stra. 680. llieir Liabilities. 261 conduct of the latter, unless it appear that he has not used reasonable diligence in his choice as to the skill and ability of the sub-agent ; but that the sub-agent himself will, in such cases, be alone responsible to the principal lor his own neg- ligence or misconduct (A:) ; and in support of this opinion he cites the cases referred to below (/). But, with all defer- ence to so high an authority, it is submitted, that the effect of those cases is merely to show, that although, under ordinary circumstances, the appointment by an agent of a sub-agent will create no privity between the latter and the principal, j'et that cases may occur in which the existence of such privity will be presumed ; and that as, in the former case, the principal could not sue the sub-agent because no privity existed between them («), so, in the latter, he might sue him by reason of the presumed existence of such privity. This however would seem to prove, not that where neces- sity or custom invests an agent with authority to appoint a sub-agent, the principal will be taken to have waived his right to sue the former, but that under such circumstances he will acquire the additional right of suing the latter, if he elect so to do ; and this without reference to the question, whether the agent, in choosing the sub-agent, has exercised proper care or not. But still it appears, that if the principal, with full know- But not if the 11 f t f 1 1 (• 1 1 1 1 1 ii sub agent lias ledge 01 the tacts, adopt the acts or the sub-agent, the latter been adopttd will then become the immediate representative of the prin- ^fp^}'* *"'"" cipal, and the agent by whom he was appointed will cease to be responsible. Where therefore a broker, who had been instructed to effect an insurance, being unable to effect it himself, einployed another broker for that purpose ; and the latter effected the insurance, kept possession of the (fc) Cora, on Agency, 201. (/) Bromley v. Coxwell, 2 Bos.& P. 438 ; Goswill v. Vuiihleij, supra ; So//y v. Ualhboiie, 2 M. & Sel. 298 ; and Cockrun v. Irlam, ibid". 301. (to) Stephens v. Badcock, 3 B. & Ad. 354. 2G2 Factors and Brokers. policy, and afterwards received from the underwriters the amount of a loss which had happened thereon; whereupon the principal, with full knowledge of these facts, applied to the sub-broker for payment of the money so received by him, but afterwards, on his becoming bankrupt, brought an action against his own broker for the recovery thereof; it was held, that he could not maintain such action, because if he had intended to insist on his right to have the money from his own broker, he should never have looked to the other broker at all (ra). LNbiiiiies It will at once be seen, that the liabilities which we have ci'r'ouim-''^*^'" mentioned above are such as may exist in every case in suiicKs. which a factor or broker is employed, and moreover, that they are such as necessarily arise out of the very relation in which those agents stand to their principals. The liabilities of a factor or broker to his principal, however, are not limited to those of the above description only ; nor can they be in all cases measured, simply by a reference to the duties which he ought to perform, or the powers which he pos- sesses in that capacity ; but they may be enlarged or varied almost to any extent, either by the agreement of the parties or by the act of the agent himself. Where, therefore, such an agreement exists, it must be taken as the index of the agent's liability ; and so, where he has done any act to en- large his liability, he will be held to be answerable to his principal to the full extent of such enlarged liability, whether, had he merely done his duty or exercised his powers in the usual way, he would have been liable to that extent or not. Thus, although, under ordinary circumstances, a factor who sells goods in pursuance of his instructions is not liable to the principal for the price thereof, until he has actually re- ceived it from the buyer, yet it is clear, that if he have agreed with his principal to sell on a commission del credere, he will be liable to him for the price of goods sold under that («) See Smith v. Colugan, 2 T. R. 188, 189, in notis. Their LiahUilies. commission wbetlier he himself have received it or not (o). So, if a factor who is employed to sell goods, sells them on the terms of payment by bill at a certain date, and then draws a bill on the buyer for the amount, which bill he re- mits to his principal, — he will be answerable to the latter thereon, even although he may not have a commission del credere (p). In like manner, if a factor, upon selling goods, takes a security from the purchaser, payable to himself, and, without disclosing to his principal the name of the pur- chaser, remits to him his own promissory note for the pro- ceeds, and the purchaser becomes insolvent before pa3'ing the factor for the goods, — the factor in such a case will be considered to have taken upon himself the responsibility of the purchaser, and will be liable on the note given by him to his principal (9). So, if an insurance-broker debit the underwriter with a loss, and then take his acceptance for the balance of the general account between them, — which acceptance is made payable at a date later than that at which the loss would have been payable in cash, — the assured may sue the broker as for money had and received, although he has not in fact received the money from the underwriter, — inasmuch as, by his having taken the bill, from the under- writer he has deprived the assured of his immediate remedy against him (r) ; and for a like reason it is held, that if the insurance-broker receives credit in account with the under- writer for a loss, and then erases the name of the under- writer from the policy, his principal may maintain an action against him for money had and received, to recover the amount of such loss, although it has never been actually paid to him (sj. Again; if a factor or broker purchase foreign bills for his principal and indorse them to him with- (0) Morris V. Cleasby, 4 M. & Sel. 574 ; ante 2. (p) Le Fevre v. Lloyd, 5 Taunt. 749. (q) Simpson v. Swan, 3 Camp. 291. (»•) Wilkinson v. Clay, 6 Taunt. 110. (s) Andrew v. Robinstiu, 3 Camp. 199. 234 Factors and Brohers. out qualification, he will be liable to the principal on such indorsement, however small be the commission which he gets on tlie purchase (J) ; and in like manner, if goods are con- signed to joint factors for sale, but, before the goods are sold, tliey dissolve partnership, and the commission to sell is thereupon assumed by one, that one will be liable to the principal in an action for money had and received to recover the proceeds of the sale («). Remedies by Having thus taken a general view of the liabilities of factors principal. i i i i • • • i i ji and brokers to then- pnncipals, we now proceed, secondly, to state by means of what remedies these liabilities may be enforced ; and, — in order that we may judge with some degree of accuracy of the extent to which the principal may avail himself of such remedies, — we shall then state, briefly, the nature of the damage which it will be necessary for him to prove in order to fix the liabihty of the factor or broker, as well as the several defences of which the latter may avail himself, in answer to any action which his principal may bring against him for that purpose. Where the 1 , Where the breach of duty of which the factor or bro- breacli ot dury , , , /. v, relates to ker has been guilty, relates to some matter of account be- ot'^ccomli" tween him and his principal, the latter may adopt, according to circumstances, some one of the following remedies. Action of First, where the principal wants an account and cannot give evidence of his right without it, there, it is said, the action of account is the proper remedy (.r). But the mere circumstance of there being long complicated accounts be- tween him and his factor or broker will not, of itself, com- pel him to have recourse to this action ; for, however nu- merous the transactions between the parties may have been, still there can be no doubt, — notwithstanding some dicta to (t) Goupy V. Harden, 7 Taunt. 160. (m) IVetls V. Ross, 7 Taunt. 403. (i) Per CJibbs, C, J., Tumkinsv. WilUhear, 5 Taunt. 431. account. Their Liabilities. 265 the contrary (j/), — that if, upon dissecting the account, there appears to be money due upon certain items, an action for money had and received will lie (2). Again ; it is said that wherever one acts as bailiff he Assumpsit for not — ing. promises to render an account (a) ; and accordingly it has been held, that where goods are consigned to a factor for sale, the law will imply a promise on his part to account for such as are sold, to pay over the proceeds, and to deliver the residue unsold on demand (6): or that, if a man be employed as a broker, a like promise will be implied from him, to be at all times ready to render a full and clear ac- count of his transactions (c). If therefore the factor or broker should neglect or refuse to furnish his principal with such an account, the latter may bring a special action of assumpsit against him for the breach of this implied pi'omise ; and it is said, that the remedy by such action will be found very convenient, particularly where the principal is unable to fur- nish the evidence necessary to support an action of indebita- tus assumpsit or trover, — as, for instance, where he is unable to prove how the goods or money intrusted to the agent have been disposed of, or that, if disposed of, he has re- ceived the proceeds (rf) . In such cases as the above, however, a preference has of By bill in late years been given to the mode of proceeding by bill in ^l""^- equity in order to compel an account ; and this mode of proceeding is attended with very considerable advantages, particularly by this, — that it gives the principal an oppor- tunity of obtaining a discovery, on the oath of the agent, of (y) See Scott \. M'Intosh, 2 Camp. 238, 240, (2) Ibid. ; and see per Dampier, J., Arnold v. Webb, reported 5 Tauut. 432, note (a). (a) Per Holt, C. J.. Wilkin v. WilJdn, Salk. 9. (6) Topham V. Braddick, 1 Taunt. 572. (c) Green v. Weaver, 1 Sim. 404, 425. (d) See Chitty on Contracts, 486; 2nd edition. N 266 Factors and Brokers. the mode in which he has acted in the execution of his agency (e) ; at the same time that it affords an opportunity, by having the account taken before a master-in-chancery, of investigating long and intricate transactions, witli a de- gree of minuteness which the hurry of Nisi Prius would altogether preclude. It is said, moreover, that wherever tlie relation of principal and agent exists, the former may file a bill against the latter for an account {f) ; and hence it would appear, that the principal may avail himself of this remedy without reference to the question, whether the par- ticular case was a proper one for investigation in a court of law or not(g). This remedy Indeed the remedy by bill for a discovery and account (e) Per Sir John Leach, V. C, Mackenzie v. Johnston, 4 Madd. 373, 375. (/) Ibid.; and see per Sir John Leach, V. C, Massey v. Banner, A Madd. 413, 417 ; and Dinwiddle v. Bailey, 6 Ves. jun. 141 , note 94. ig) The learned editor of Mr. Paley's " Treatise on the Law of Principal and Agent," appears to have fallen into an error on this subject. He states, that " the bare relation of principal and agent is not sufficient to intitle the former to relief in equity, if the matter can be fairly tried at law" (Paley on Agency, by Lloyd, 59, note m.) ; and in support of this opinion he quotes the cases of Spencer v. Spencer, 2 Y. & Jer. 249 ; Frietas v. Dins Santos, 1 Y. & Jer, 575 ; and Cooper v. Hatton, 12 Price, 502. The first of these cases, however, was that of a bill by one part- ner against Ins co partners, and not that of a bill by a principal against his agent ; and in the other two the question was, not whether a bill for an account might be brought by a principal against his agent, but whether, after an action at law had been so brought, the agent was intitled to bring a bill for a general account of his dealings with the principal, and for an injunction to restrain the latter from proceeding with h's action; and in both cases it was held, that the agent had no such right, because there was nothing alleged in his bill which could not have been given in evidence as a defence to the action at law. These cases therefore, do not appear to support Mr. Lloyd's opinion ; and as the author has not been able to discover any others which do, he is inclined to regard the dicta of Sir John Leach stated in the text, as containing the true doctrine on the subject in question. Their Liabilities. 267 may be adopted by the principal, in aid of a proceeding may be adopt- against his factor or broker by action at law. Thus, if the „„ acjo,, ai factor or broker have been guilty of misconduct in the course ''■*^- of his agency, and the principal brings an action at law in order to recover compensation for the damage he has sus- tained by reason of such misconduct, he will likewise be intitled in equity to a full discovery of all the transactions in the course of which the agent has misconducted himself, as well as of all books containing entries relative to those trans- actions, on a bill filed for that purpose which alleges, that he requires such discovery for the pui'pose of enabling him- self to give evidence in the action at law. And in one case a London broker was compelled to answer such a bill, even although it appeared that the discovei-y prayed would subject him to the penalty of the bond given by him to the corporation of that city on his admission (A). But if the principal can so fashion his claim as to reduce Action for 1 1 .1 i- p money had it to a mei-e money demand, then an action oi assumpsit or and received. debt, as for money had and received to his use, is the pro- per remedy. Thus, if the factor have sold the goods in- trusted to him, and received the proceeds, money had and received will lie ; and so, it appears, that this action will lie even although there be no evidence that the factor has re- ceived such proceeds, provided he has refused to account for the same within a reasonable time, — because, under such circumstances the presumption is, that he has actually sold the goods and received the proceeds in money («') So, if goods are placed in the hands of a factor for sale, and he indorse the bill-of-lading to a sub-agent, with instructions to him to sell such goods, which he does and receives the proceeds, — it appears that the principal may sue the sub- agent as for money had and received to his use (/c). In like (h) Green v. Weaver, 1 Sim. 404. {i) Hunter v, Welsh, 1 Stark. 224. (k) Stierneld v. Holden, 4 B. & C. N 2 ■ 6S Factors and Brokers. manner, if a factor sell goods for his principal, and become bankrupt before payment, and his assignees afterwards re- ceive the money for them, the principal may recover it from them in an action for money had and received (/) ; and so, if the factor on such a sale take payment from the vendee in notes which are made payable to himself at a future day, and his assignees afterwards receive the money due on the notes, the principal will be intitled to recover it from them in an action for money had and received (m). But if the factor had received the money before his bankruptcy, and it had not been laid out by him in the purchase of any specific thing so as to distinguish it from the rest of his estate, the action for monej' had and received could not have been main- tained, and the principal must have come in with the other creditors under the commission (n). Again ; if a factor or broker receive a sum of money from his principal with in- structions to apply it to a particular purpose, and he refuses to apply it to that purpose, or to account for the same, an ac- tion for money had and received will lie against him (o). So, he w'ill be liable to this action if he applies the money to the particular purpose, after his authority so to apply it is coun- termanded (p) ; and it would appear, that even if money were placed in the hands of a broker to enable him to pay the premiums on illegal insurances, his principal could still maintain this action in order to recover such money from him, provided it were brought at any time before he had actually paid it to the underwriters (q). In like manner, if the factor or broker applies the money to a different purpose from that to which he was instructed to apply it, an action for money had and received will lie against him(r); but if (/) Scott V. Surtnan, Willes, 400. {m) Ibid. (h) Ibid. (o) B«cAa?ia« v.f i/i or lost, or stolen (?z) ; . nor is he liable to this action where the only breach of duty i ( f) See dictum of Berkley, J., Com. Dig. Action upon the case upon trover, E. (g) Harding v. Carter ; coram Lord Mansfield, Easter Vaca- tion, 1781. Cited 1 Paik on Alar. Insur, 5. (7i) Anon. 2 Salk. 655 ; Syeds v. Hay, 4 T. R. 264; Yowle V. Harbnttle, Peake, N. P. C. 49. (i) Fuller \. Smith, 3 Salk. 366; per Buller, J., Weymouth v. Boyer, 1 Ves. jun., 416, 424, and per Heath, J., Bromley v. Cotwell, 2 Bos. & Pul. 438, 439. (fe) Buller, N. P. 44 ; Smith v. Young, 1 Camp. 439. (/) See per Heath, J., Bromley v. Coiu-ell, supra; and per Lord EUenborough, Severin v. Keppell, 4 Esp. 156, 157. (m) Cro. El. 219 ; Owen, 141 ; Com. Dig. Action upon the case upon trover, E. (n) Salk. 655, note (a) ; Ross \. Johnson, 6 Burr. 2825. 272 Factors and Brokers. complained of is, that he has sold goods at a price less than that at which he was authorized to sell thein(o); or that, having been intrusted with goods under an agreement to sell them himself, he has delivered them to a sub-agent for that purpose (p). In like manner, if a factor sell goods in pursuance of his authority, but afterwards refuse to deliver over the proceeds to his principal, this will not render him liable to an action of trover for such goods (9) ; and so, if a bill broker be authorized by the holder of a bill of exchange to get such bill discounted, and to apply the proceeds in a particular way, and the broker does get the bill discounted but misapplies the proceeds or part thereof, an action of trover will not lie against him to i-ecover possession of the bill (/•). In these and like cases the courts appear to pro- ceed on the principle, that the factor or broker, having parted with the property in pursuance of his authority, has been guilty of no conversion of the property itself; and that therefore, — whatever remedy the principal may have, to recover from him the proceeds of such property, — he cannot proceed by an action of trover m rem, because the gist of that action is the conversion. The principal ^ut although where a factor or broker disposes of property M*^ r'o"erT according to his authority, the fact of his misapplying or BO ir.ng as it refusing to account for the proceeds thereof will not intitle can be ajcei- .... ... tainert. the pruicipal to sue him m trover for the purpose of recover- ing that property, still there can be no doubt, that if he in- vests the proceeds of the property sold in some other de- scription of property, such as goods, or securities, or stock, the principal will be intitled to sue either the factor or bro- ker himself, or, in the event of his bankruptcy, his assignees, in trover for such property, provided it can be traced to be (0) Dufresne v. Hutchinson, 3 Taunt. 117. (p) Bromley v. Cniuell, 2 Bos. & Pul. 438. (9) Per BuUer, J., H'ei/wouf/i v. Buyer, 1 Ves. jun. 416, 424. (r) Palmer v. Jarmain, 2 M. & \V. 282. Their Liabilities. 27 S actually the product of the money which the factoi" or bro- ker has so misapplied ; and the reason of this is, that the property of a principal intrusted by him to his factor or bro- ker for any special purpose is still taken to belong to the principal, — notwithstanding any change which it may have undergone in point of form, — so long as such property is capable of being identified and distinguished from all other property. " The product or substitute of the original thing," says Lord EUenborong/i, " still follows the nature of the thing itself, so long as it can be ascertained to be such ; and the right only ceases where the means of ascertainment fail, which is the case when the subject is turned into money, and mixed and confounded in a general mass of the same description" («). 3. Next, as to the nature of the damage which the prin- Nature of tbe cipal must have sustained, in order to his being able to fix th™nriDdpa\ the liability of the factor or broker. ■""^t prove. Where the principal sues his factor or broker in trover, he He must show will be intitled to recover damages against him, provided he been deprived prove that the latter actually converted the property, because "/ j*" ^'='""' the conversion is, as we have seen, the gist of that action (i) ; and so, where he sues him in case or assumpsit for negli- gence or breach of duty, he will be intitled to recover pro- vided he show, that by reason of the agent's misconduct he has forfeited some right which, but for such misconduct, the law would have enabled him to enforce (m). But it is not necessary that the principal, in order to maintain these actions, should prove that he has sustained any actual (s) Tatilor\.PIi(mer,3 M. & Sel. 562, 574, 575; Scntt v Surman, VVilles, 400; Whitecomb v. Jacob, Salk. 160; and per' Burnet, J., Evall v. Rolle, 1 Atk. 165, 172. (0 1 Chitty on PI. 161. (u) Marzeitiv. Williams, 1 B. & Ad. 415; Webster v. De Tastet, 7 T. R. 157 ; Fomin v. Oswell, 3 Camp. 357 ; and see per De Grey, C. J., Weils v. Walling, 2 W. Bl. 1233. N 5 274 Factors and Brokers. damage by the deprivation of his right; for the mere injury to the right itself constitutes a good cause of action, and the party whose right has been injured is always intitled, at least, to nominal damages (x) ; nor does it make any difference in such cases, whether the form of action adopted by the principal be founded in contract or in tort, or whether the duty, the breach of wliich is complained of, has resulted from an express contract, or from one which is merely im- plied (_(/). Still, however, the principal must be prepared to prove that he has been actually deprived of a right by reason of the agent's breach of duty ; and therefore, if it appear that the alleged right was such that no cause of action could ever have been founded thereon (z), or tliat, although it would have formed a good cause of action, it must still have been defeated on some other ground independent of the misconduct of the agent («), — in neither case will the prin- cipal be intitled to recover. Uui iiieloss Qjj ^i^g other hand, although the principal must thus be need not have ... ' & i r been cause'i in a situation to show that he has been deprived of some right by the con by the misconduct of his factor or broker, in order to his 'aeeni"' ''"^ being intitled to sue him for such misconduct, still it should be observed, that it is not necessary that the misconduct complained of should have been the immediate cause of the principal's loss, but that, if it was the proximate cause of that loss, this will be sufficient to intitle him to maintain his action. Thus, although under ordinary circumstances, a factor to whom goods had been intrusted would not be liable for a loss which had happened to them by fire or robberj' (i), still, if it were shown that before the happening of the loss he had negligently deposited the goods in an unsafe and improper place, and that whilst there they had been lost by (i) Marzetti v. Williams, supra. (y) Ibid. (2) Webster \. De 7'(is 90. (/) Per Lord Tenterden, C. J., ibid. 86. Their Liabilities. 28-9 of all persons in trade, the credit is considered to be given to the British buyer, and not to the foi-eignev (?«) ; so it Stock-broker, appears that, according to the course and practice of the Stock Exchange, the general usage is to give credit to the broker, even although the name of the principal be dis- closed (w) ; and in like manner, according to the ordinary Insurance- course of trade in insurance cases, the insurance broker is held to be exclusively liable to the underwriter for all pre- miums payable on policies which he effects for him (o). In these instances therefore tlie usage of trade will always fix the liability of the factor or broker, unless there be evidence to rebut the presumption arising from such usage, namely, that it was to him that the credit was exclusively given ; and accordingly, in the absence of such evidence, he will be regarded as tlie only person who is liable on the contract. Again ; it is clear that if a factor or broker enters into a Factor or contract in writing in such a form as to make himself per- |?[,^s'jvely lla- sonally responsible, he cannot afterwards relieve himself '''*'• "''^■'f.''^ ' . enters in his from that responsibility by showing that he contracted own name merely as an agent; and it will make no difference whether contract ..f his principal were or were not known at the time of the '^j'* "'' P'"^' ^ >■ chase. contract (/>). Thus if a factor or broker sells goods, and gives an invoice to the purchaser describing them as being bought of himself, he will be liable to the purchaser in an action brought against him for the non-delivery thereof; and it will be no defence on the part of the factor or broker to that action, to show that at the time the goods were (wi) Ibid, and see per Bayley, J., Paterson v. Gandesiqni, 15 East, 62, 69 ; and per Eyre, C. J., De Gaillon v. L'Aigle, 1 Bos. & Pul. 368. (n) See Mortimer v. M'Callan. 6 M. & W. 58, 61. (o) Per Bayley, J., Power v. Butcher, 10 B. & C. 329, 340; per Lord Tenterden, Scolt v. Irving, 1 B. & Ad. 605, 612 ; and see the learned reporter's note to the case of DalzelL v. Mair 1 Camp, 534. (p) Per Denman, C. J., Jones v. Littledale, 6 Ad. & E. 486 490. O 290 Factors and Brohers. sold he intimated to tlie purchaser that he sold as an agent only, and further, that the invoice was made out in his name merely in conformity with the custom of trade at the par- ticular place, — the object of such custom being, to insure the passing of the purchase-money through the hands of the factor or broker {q). In like manner, if a broker enters into a contract for the sale of stock or shares, and delivers a con- tract note which mentions his own name as that of the seller, he will be liable to an action at the suit of the purchaser for not completing the sale ; and he will not be permitted to give in evidence as a defence to that action, that, according to the custom of the particular place where the contract was made, it was usual to deliver broker's notes without disclos- ing the name of the principal (r). And so, if a factor or broker enters into a written agreement for the sale of goods, it is not competent for him, in an action brought against him for the non-delivery thereof, to show that such agree- ment was really made by him by the authority of and as agent for a third person, and that the plaintiff was aware of those facts at the time the agreement was made and signed (s). In cases such as these the courts proceed upon the principle, that parol evidence is not admissible for the purpose of con- tradicting a written agreement ; and accordingly the agent will always be bound, wherever the form of the instrument is such, that from a reasonable exposition of the whole he appears to be personally liable thereon {t), and that without reference to the question, whether, at the time of his enter- ing into the contract, the other contracting party was aware that he contracted as principal, or merely as an agent. Or riraws Foi" ^ 'i^c rcason, a factor or broker who draws, accepts, acceprs, or imlorscs bills or IlOtt;?. ((y) Jones V. Liltledale, 6 Ad. & E. 486. (r) Miigee v. Atkinson, 2'M. & W. 440. (s) Higgins V. Senior, 8 M.&i W. 834. (^t) See Spittle v. Lavender, 2 Bred. & Bing. 452. Their Liabilities. 291 qualification, will always be held liable to third parties thereon (^u) ; and even where a bill drawn by the principal on his factor is expressed to be payable out of certain monies of the former which the latter has in his hands, the factor, if he accept such bill generally, will be liable to third parties thereon, although as between him and his principal the balance of accounts may actually be in his favour (r). In like manner, if a factor purchase, goods and remit bills-of- exchange for the price, to which he does not attach his name, but which he promises to see paid by the parties thereto, this will render him liable for the price of the goods (j/) ; but if he draws a bill on a third party, and remits it to him for acceptance on account of his principal and subject to the ratification of the latter, the acceptance of such third party becomes, so soon as the ratification is given, an absolute acceptance on account of the principal, and the acceptor, if he afterwards pay the bill, cannot re- cover from the factor the money so paid, as money paid to his use (2). In like manner, if a factor enters into a charter-party in Or enter" into his own name with the master of a ship, for the hire of the nar'jy"o/other ship at a certain rate per month, the factor himself, and not agreement to the goods of his principal which are loaded on board such demurrage, ship, will be liable for the freight (a) . So, it appears that if, after a charter-party has been entered into by the prin • cipal himself for a particular voyage, and after the voyage has been partly performed, the factor enters into an agree- ment in his own name with the master, under which the ship is sent on a diflTerent voyage from that which Avas ori- ginally agreed upon, the factor will thus render himself (m) See Leadbitter v. Farrow, 5 M. & Sel. 345 ; Sowerby v. Butcher, 2 C. & M. 371. (i) Maber v. Massius, 2 W. Bl. 1072. (1/) Morris v. Slacey, Holt, N. P. C. 153. (s) Lohmann v. Rnugemont, 8 Scott, 520. (a) Paul V. Birch, 2 Atkins, 621, 622 ; MoUoy, 496, § 9. o2 ;^92 Factors and Brokers, personall}' liable for the freight due upon the whole voy- age (b). So, if the consignee of a cargo of goods instructs his factor to sell them, but the owner of the ship refuses to deliver the goods to the factor without an undertaking on his part to pay the freight and demurrage, and he gives such undertaking accordingly, the delivery of the goods by the owner will, under such circumstances, be held to be a good consideration for the factor's promise, and he will therefore be personally liable thereon (c). And in like manner, if the factor of a foreign merchant agrees with a person in this country, to whom his principal has made a consignment by way of sale, that the shipment shall be in confonnity with the revenue laws of Great Britain, so that no impediment shall arise upon the importation of the goods, or that, in default thereof, the consequence shall rest with the seller, he himself will be personally responsible on such agreement (d). Or lakes pos- Again ; if a bill-of-lading direct the delivery of goods goods "under " to A. or liis assigns," or simply " to A., he or they a bill-ot- pavina; freight for the same," and such bill-of-lading be lading in- t J i^ b ' o dorsed lo ran- indorsed by the consignor to his factor, and the latter siynp.e or his . • n ^ t i i i -ii i ansiyns, he or iake possession 01 the goods thereunder, he will be per- fr%hi^'"'" sonally liable to the owner of the ship for the freight ; be- cause, although there was no original privity of contract between the owner and the factor for payment of such freight, still the taking of the goods from the ship by the latter under the bill-of-lading, is considered to be evidence of a new agreement by him, — as the ultimate appointee of the shipper for the purpose of delivery, — to pay the freight due for the carriage of such goods (e); and so strictly is this rule adhered to, that if a factor be allowed to take pos- {h) Kennedy v. Gouveia, 3 D. & R. 503. (r) Benson v. Hippius, 4 Biug. 455. {(l) Redhead v. Cittor, 1 Stark. 14. (e) Per Lord Ellenborough, Cock v. Taylor, 13 East, 399, 402 ; and see Bell v. Kymer, 5 Taunt. 477 ; and Doiigal v, hemble, 3 liing. 383 ; Renteria v. Ruding, Lloyd & VVels. 274. Their Liabilities. 293 session of goods under sucli a bill-of-lading, without paying the freight, the owner will not be intitled, on the bank- ruptcy of the factor, to charge the principal therefor, un- less he can prove that the latter authorised his factor to enter into a contract for the payment of the freight in futuro {f). Nor, as it is said, can this rule operate as a hardship on factors, because they know the terms of the bill under which they claim, and the amount of freight which is due, and therefore, they need not make advances on the goods to an amount beyond their real value after deducting the sum payable on account of such freight (g). Still however, although the factor be the indorsee of the bill-of-lading, yet if he do not get possession of the goods as such indorsee, but in some other way, he will not be liable for the freight ; and accordingly, where a bill-of-lading was indorsed to a factor, but the goods were delivered to him, not by virtue of such indorsement, but under an order for their deliveiy from the consignee, he was held not to be responsible for the freight, because the giving of such order by the consignee imported that he continued to be the pro- prietor of the goods, and consequently, the name of the factor was never pledged, as that of the person to whom the owner was to look for the payment of the freight due in respect thereof (/t). Nor will the factor be liable for the freight of goods which But not he receives under a bill-of-lading, on the face of which it ap- pears on the pears that he acts as a mere agent for the consignor. Thus, If.^,^ ?V!j^ where a cargo of goods was consigned from B. to L., and '» be merely 1 • c 1 1 1 • 1 1 1 • 1 *" agent for the captam oi the vessel on board which they were shipped the consignee, signed a bill-of-lading, whereby the goods were made de- liverable " unto N. T. for the London Gas Company, or to (/) Tobin V. Crawford, 9 M. & W. 716; S. C. 5 M, & VV. 235 ; and see per Parke, B., ibid. 241. (g) Per Best, C. J., Dougal v. Kemble, 3 Bing. 389. Ih) Wilson v. Kymer, 1 M. & Sel, 157, 164, 166. 29i Factors and Brokers. his assigns, he or they paying freight;" and on the arrival of the vessel N. T. produced the bill-of-lading and received the goods under it ; it was held, that he was not personally hable for the freight thereof; because, being on the face of the bill-of-lading a mere agent to receive the goods, it fol- lowed, that the promise to be inferred from the receipt of tlie goods by him thereunder, was prima facie a promise on his part, as agent for the consignees, to pay the freight on their account, and not a promise to be personally respon- sible therefor (i). A factor or A factor or broker is likewise personally liable to third iiabie'to*third parties whenever in his dealings with them, — although he parties, contracts in the name of his principal, — he nevertheless where he ex- ' ' ' ceeds his au- knowinglv exceeds his authority (k), or fraudulently mis- represents the extent ot that authority so as to induce them to deal with him (/), or does an act which, although he be- lieves it to be within the scope of his authority, yet in fact is not so (m). These maxims, with the reasons on which they are founded, are stated and illustrated in the judgment of the Court of Exchequer in a recent case as follows. " The point, how far an agent is personally responsible who, having in fact no authority, professes to bind his principal, has on various occasions been discussed. There is no doubt that in the case of a fraudulent misrepresentation of his authority with an intention to deceive, the agent would be personally responsible. But independently of this, which is perfectly free from doubt, there seem to be still two other classes of cases in which an agent who, without actual au- thority, makes a contract in the name of his principal, is (i) Amos V. Temperley, 8 M. & W, 798, 805. (fc) East India Company v. Hensley, 1 Esp. Ill ; 3 Chitty on Com. & Man. 212. (0 See Smnut v. Ilherri/, 10 M, & W. 1, 9; and Johnson v. Ogilbv, 3 P. Wms. 277, 279. (w) Polhill V. Walter, 3 B. & Ad. 114 ; Farrot v. Wells, 2 Vern. 127. Their Liabilities. 295 personfilly liable, even Avliere no proof of such fraudulent intention can be given. First, where he has no authority and knows it, but nevertheless makes the contract as having such authority. In that case, on the plainest principles of justice, he is liable. For he induces the other party to enter into a contract on what amounts to a misrepresentation of a fact peculiarly within his own knowledge; and it is but just, that he who does so should be considered as holding himself out as one having competent authority to contract, and as guaranteeing the consequences arising from any want of such authority. But there is a third class in which the courts have held, tliat where the party making the con- tract as agent bond fide believes that such authority is vested in him, but has in fact no such authority, he is still person- ally liable. In these cases, it is true, the agent is not actu- ated by any fraudulent motives; nor has he made any statement which he knows to be untrue. But still his liability depends on the same principles as before. It is a wrong, differing only in degree but not in its essence from the former case, to state as true what the individual making such statement does not know to be true, even though he does not know it to be false, but believes, without sufficient grounds, that the statement will ultimately turn out to be correct ; and if that wrong produces injury to a third person who is wholly ignorant of the grounds on which such belief of the supposed agent is founded, and who has relied on the correctness of his assertion, it is equally just that he who makes such assertion should be personally liable for its consequences" (ra). From this then it would seem, that a factor or broker But not will not be liable to third parties on contracts in making merely stales which he has exceeded his authority, unless he has either f^'the'e^stent been guilty of some fraud, or has made some statement «'' his amho- • 1 o r. 1 ,. 1-11 '■''y' although With reference to the extent of his authority which he the principal may refuse ■ — — to ratify his (n) Smout V. Ilberry, 10 M. & W. 1, 9, 10. """■ 200 Factors and Brokers. knew to be false, oi- has stated as the truth, with reference thereto, something which he did not know to be true, — omitting at the same time to give sucli information to the other contracting party as would have enabled him, equally with himself, to judge as to the authority under which lie proposed to act. If therefore it be shown that, at the time of entering into the contract, he did no more than make a statement, according to the strict truth, of his belief that he had the requisite authority and that the principal would ratify his act, at the same time giving the other party to understand that he would not hold himself personally re- sponsible in the event of such ratification being refused, there would not, as has been well observed, appear to be any legal ground upon which, in case of a non-ratification by the principal, the agent, thus acting bona fide, could be Nor where held personally liable (o). And in like manner, if the factor iias1j'een"e- or broker were to enter into a contract within the scope of voked.^bMt^^^ ^jjg authority, but it were to appear that such contract had notice of the been entered into after his authority had in fact been re- revocation. 1111/.111 • ^1 • 1 yoked, but beiore he had notice oi such revocation, he would not be held personally liable thereon; because in this case he had full authority, originally, to contract, and there is no ground for saying, that in representing his au- thority as continuing he did any wrong whatever. There was no mala fides on his part, no want of diligence in acquiring knowledge of the revocation, no omission to state any fact within his knowledge relating to it; and accord- ingly, — the true principle derivable from the cases being, that there must be some wrong or omission of right on the part of the agent, in order to make him personally liable on contracts made in the name of his principal, on the ground that he has exceeded his authority — it follows, that in such a case as the above the factor or broker would not be re- sponsible (p). (o) Smout v. Ilherry, supra; and see per Lord Tenterden, PoUiiU V. Walter, 3 B". & Ad. 114, 124; and Story's Com. on Agency, § 265. {p) See Smout v. llberry, supra. Their Liabilities. ~97 Another liability which a factor or broker may incur to In what cases , . •■ . . ', , . , . 1 11 lie is liable to third parties, is that which arises where money has been ,hir(i parties paid to him for the use of his principal, to which the latter p°,'"id"'to"hfm is afterwards discovered not to be intitled ; and it is clear ''or ihe "?« ol his prin- that, in cases of this description, the factor or broker will clpal. be liable to an action at the suit of the person from whom he received such money, as for money had and received to his use, unless he has, before action brought, actually paid the money over to his principal, or done something which is equivalent thereto (9). " In general," says Lord Mans- jield, " the principle of law is clear, that if money be mispaid to an agent expressly for the use of his principal, and the agent has paid it over, he is not liable in an action by the person who has mispaid it :" but " if, after the payment so made to him and before he has paid the money over to his principal, the person corrects the mistake, the agent cannot afterwards pay it over to his principal, without making him- self liable to the real owner for the amount" (r). But the mere circumstance of the principal remitting la what cases bills-of-exchange or money to his factor or broker, with ^^-^^^ parties" instructions to apply the same or their proceeds to the use for money ^ ^ •' ^ paid to him of a third party, will not intitle such third party to sue the by his prin- factor or broker as for money had and received to his use, use. because, as has been well observed, it is entire to the re- mitter to give and countermand his directions respecting the bills or money as often as he pleases, and the person to whom the same are remitted holds them for the use of the remitter himself, until by some engagement entered into by him with the person who is the object of the re- mittance, he has precluded himself from so doing, and has (9) Buller v. Harrison, Cowp. 565 ; and per Lord Ellen- borough, Cox V. Prentice, 3 M. & Sel. 344, 348. (r) Buller v. Harrison, supra. And see Cary v. Webster, I Stra. 480 ; Sadler v. Evans, 4 Burr. 1984. o5 cipal for their J98 Factors and Brokers. appropriated the remittance to the use of such person (.s). If however the factor or broker once enter into a binding engagement with the remittee, to hold the bills or money for his use, the latter may maintain an action against him {t) ; and there are even cases in which the law will presume the existence of a sufficient privity of contract between the factor or broker and the I'emittee, to intitle the latter to maintain this action against the former, notwith- standing there may be no evidence of his having made any actual engagement to hold the property to his use. Thus, if the factor or broker be not only the agent of the person remitting the money or bills, but be likewise the general agent of the person for whose use they are remitted, this circumstance will of itself be sufficient to render him ac- countable to the latter for them (u) ; and in like manner, if the factor or broker have acted as the agent of both parties in the particular transaction, and the one party remit money or bills to the factor or broker in the course of that trans- action, for the use of the other, at the same time informing ihat other that he has done so, this will be sufficient of itself to intitle him to sue the factor or broker for the money or bills or their proceeds. Where therefore it ap- peared, that M. & Co. had, through the agency of A. & Co., procured B. to consign goods to them, and that M. & Co. had afterwards remitted bills to A. & Co. specifically appropriating them to pay B. for such goods, and had also written to B. advising him thereof; — it was held, that, as the original transaction had taken place through the agency of A & Co., they must be regarded as the agents of both parties throughout the transaction, and that, accordingly, there was a sufficient privity between A. & Co. and B., to intitle him to recover the bills from them (x). (s) Per Lord Ellenboiough, Williams v. Everett, 14 East, 582, 597 ; Blind v. Hamjnhire, 1 M. 6c W. 365; Yates v. Bell, 3 B. & Al. 643 ; Grunt v. Austen, 3 Price, 58. (0 Ibid. (ft) See per Patteson, J., Lilly v. Hays, 5 Ad. & El. 548, 550. {x) In re Douglas, 1 iMont. & Chit. 1. Their Liabdilies. 299 Having thus considered the habiHties which factors and Defences by brokers may incur to third parties on contracts made with broker, them in the course of their employment, let us now sec by means of what defences they may limit their liability in the above mentioned cases. From what has been already stated it appears, that where in general he a factor or broker who conceals his principal, enters into hj^fsgif of the any contract with a third party, such third party is at '^""^ '^^- ., _ _ 1 ./ ' I . fences as if liberty to treat him as the actual principal, and to proceed he were ihe against him accordingly ; and this being the case, it would cipal. seem to follow, that wherever the factor or broker is sued upon such a contract, he may avail himself of any defence of which he could have availed himself, had he been in fact the principal in the transaction. Thus it is pre- sumed, that if a factor or broker were sued for the price of goods sold, he might plead any right of set-off which he had against the vendor (j/); or that if he were sued for not accepting goods, he might avail himself of such de- fences as the following, for instance, that the bulk of the goods sold did not agree with the sample (z), or that they did not correspond with the kind of goods mentioned in the contract, or satisfy a particular condition contained therein («). So it would appear, that if he were sued for not delivering goods, he might defend himself by showing that the vendee had been guilty of the breach of some condition precedent, whereby he was discharged from the performance of his conti-act (6); or that, if he were sued as the acceptor or drawer or indorser of a bill-of-exchange, he might show that as between himself and the drawer in the one case, or as between himself and his immediate in- dorsee in the other, there had been no consideration for his (y) Story's Com. on Agency, § 411. (z) Hibbert v. Shee, 1 Camp. 113. (o) Tye w. Fynmore, 3 Camp. 113; Grounsell v. Lamb, I M. & W. 352. (6) Chitty on Contracts, 570—575. 300 Factors and Brokers. promise (c), or that the consideration was illegal {d), or that for any other reason, such as the want of notice of dishonor, or the release of prior parties to the bill, or the giving time to such j)arties, he was discharged from his liability thereon. And in like manner it would seem, that if he were sued for freight he might take advantage of any of the usual defences, such as that the carriage of the goods had not been completely performed (e), or that the master of the ship had refused to forward the goods to their desti- nation (J), or that the owner was only intitled to recover freight /)7-o i-uta on the voyage in question {g). In an aciiuii Again ; it appears to be now well settled, that where an iiiiums' an insurance-broker who has a right to sue on a policy and insurance- ^-jjo jj^g likewise a lien on such nolicv, is sued by the broker whose _ i j > j name is on underwriter or his assignees for premiums, he may set off the policy, ., . i-i, 111 ■, r ma> set off 1" that action any sum which he could have recovered from osses. ^Ijg underwriter or proved against his estate on the policy in question, on account of a loss which has happened thereon ; and this, whether such policy was effected by him on his own account or not, or whether he has, in the par- ticular transaction, acted under the ordinary commission, or under a commission del credere (h). But if the policy (c) Chitty on Hills, 91, 5lh edit. (d) Bailey on Bills, 410, 4th edit. (e) Maihiterv. Bailer, 1 Camp. 84. (/) Hunter V, Prinsep, 10 East, 378; Osgood v. Groning, 2 Camp. 4tJ6. (g) P'ora summary of Hie cases in which freight pro rata only is earned, see 3 Chitty on Com. & Man. 413—416. (h) Per liest, C. J., Davies v. Wilkinson, 4 Bing. 573, 575 : Parker v. Beasley, 2 M. &c Sel. 423 ; Koster v. Eusoa, ibid. 112; Grove v. Dubois, 1 T. R. 112; Bize v. Dickason, ibid. 285. If the marginal note to the case of Baker v. Langhont, 6" I aunt. 519, were to be followed, that case would seera to militate against the doctrine staled in the text. The marginal note is as follows ; " Senihle, that an insurance broker cannot set oft' against premiums due to the assignees of a bankrupt oq policies undeiwrilten by the bankrupt, losses which occurred before the bankruptcy, thougli the policy was effected in thg Their Liabilities. 301 under which the loss sought to be set off is claimed, was effected in the name of the principal and not in that of the broker, the latter will not be intitled to set off the amount of such loss in an action brought against him by the under- writer or his assignees for premiums, even although he may have guaranteed the payment of the loss to his prin- cipal imder a commission del credere (i) ; nor will the fact of the broker having a lien on the policy, or having actually paid the amount of the loss to his principal, intitle him to a set-ofF in such a case ; because the policy being effected in the name of his principal, the broker could not sue thereon except in his name, nor, consequently, could he, on a plea of set-off, prove a debt due to himself there- under ; and thus, there being a want of mutuality of debts or credit between him and the underwriters, the set-ofF could not be supported (/c). It appears further, that where the underwriter sues the Or returns of broker for premiums, the latter will be permitted to set off P''^™'""'- in that action any sums which may be due from the former to his principal for returns of premium, provided the events which intitled his principal to such returns actually took place before action brought. Nor does the broker's right in this respect appear to depend on his being personally interested in the policy in respect of which the returns are broker's name as agent." But this doctrine does not seem to be warranted by the judgment of the court in that case. On the contrary they appear to have admitted, although reluctantly, that the established doctrine was that stated in the text; at the same time that they decided against its being applied to the case in question, because before the action was brought, an account of the premiums claimed had been exhibited to the defendant, which he had over an i over again piomised to pay, and because there had been no attempt to claim a set-oflP until a very late period in the transaction. {i) Cumming V. Furie'iter, 1 M. & Sel. 494; and per Lord Ellenborough, Koater v. Eason, 2 lU. & Sel. 112, 119, (/c) See per Lord Ellenborough, KoUer v. Easoii, supra ; and Peele v. Northcote, 7 Taunt. 478. 302 Factors and BroTters. claimed, — it being sufficient for this purpose, that the policy has been allowed to remain in his hands in order to enable him to adjust and receive such returns (/). The reason of tliis rule seems to be ; — that the broker not only receives the premiums from the assured as the agent of the under- writer, but that, until the latter calls upon him to pay over those premiums to him, he is likewise his agent to pay to the assured any sums to which he (the assured) may mean- while become in titled for returns out of those premiums ; and hence it follows, that if the underwriter brings an ac- tion against the broker for premiums, and before action brought the latter have notice that events have happened which intjtle the assured to returns of premium, he has a right, as such agent, to deduct those returns in that action, from the gross amount of premiums due from him to the Except wiieu underwriter (??<). But this rule does not apply to any case b^oudii'bv^ in which the broker is called upon to pay the premiums, (he assignees not by the Underwriter himself, but by his assignees after (.f Ihe under- ,.,•', , , . , ^ ^ wriier. his bankruptcy, — unless, that is, the amount due for re- turns of premium has been actually adjusted between the broker and the underwriter before the bankruptcy of the latter {n) ; because, by the banki-uptcy of the imderwriter, the broker's authority to deduct returns of premium as his agent is revoked, and the assignees have therefore a right to call upon him to pay over the full amount of the pre- miums for the benefit of the bankrupt's estate (o). Nor does it appear to make any difference in such a case, whether the returns of premium became due before the Or by ilis Underwriter's bankruptcy or after it {p). The same rule executor. holds where the broker is called upon to pay the premiums (0 Shee v. Clarkson, 12 East, 507. (m) Ibid.; and see per Lord EUenborough, Parker v. Smith, 16 East, 382, 386 ; and per Mansfield, C. J., Minett v. For- rester, 4 Taunt. 541, 544. (k) See per Lord EUenborough, Parker v. Smith, supra. (o) Parker v. Smith and Minett v. Forrester, supra. (p) Minett v. Forrester, supra. Their Liabilities. 303 by the executor of the underwriter ; because, by the death of the latter, the broker's authority to make returns of pre- mium to the assured is revoked ; and, consequently, he can- not set off those returns in an action brought against him for premiums, after that event has taken place (9). Where an action is brought by a third party against a Ueiences, in factor or broker to recover money vvhicli has been paid to ^^i','^"' ''^^^i him by mistake for the use of his principal, it will be a '" ''""> ''> . third persons good defence in him to show, that before he had notice of tor the nse ot that fact he had paid the money over to his principal ; but cipaK it will be no defence on the part of the agent to such an action, that he has merely passed the money in account with his principal, or made a rest in such account, unless he is likewise prepared to show, that he has given his prin- cipal fresh credit, or accepted new bills, or has bought goods from, or advanced money to him in consequence thereof (r). Nor will even the actual payment of the money by the factor or broker to his principal be a good defence to such an action, imless he can prove that he received the same expi-essly for the use of his principal (s) ; nor, if the factor or broker have received money from a third person under circumstances which, as between themselves, would give the former no title to retain it, will it be any defence to an action brought against him to recover back that money, that he has paid it over to his principal (f). And lastly; it appears that if a factor or broker be sued Defences in by a third party to recover money which has been paid to j^^ °g°y 1"^^! him by his principal for such third party's use, he may, at t° ^im by his , . s. J ' J ' ^ principal for least in some cases, set up the same defence to that action ihe use of as his principal could have done, had the action been brought {q) Houston V. Roheruon, 6 Taunt. 448. (r) Per Lord Mansfield, Buller v. Harrison, Cowp. 565, 568. (s) See Snnicdoii v. Davis, 1 Taunt. 359. (f) See per Lord Kenyon, Miller v. Aris, Sel. N. P. 89, 9th edit. 304 Factors and Brokers. against him. Where therefore an action for money had and received was brought by the holder of a bill-of-ex- change against an agent who had received a sum of money from the acceptor to satisfy it, it was held, that any defence might be set up in that action, which would have been available had the action been brought against the acceptor himself. The plaintiff, it was said, made out his right to the money in the defendant's hands, through the medium of the bill-of-excbange, and the latter, by impeaching the plaintiff's title to the bill, showed that he had no cause of action against him, and that though he had the money in his hands, it was not for his use, but for the use of whoever might be legally intitled to the bill(M). In like manner, it will be a good defence on the part of the factor or broker in such an action to show, that his principal countermanded his instructions before the money was paid over, or before he had entered into any engagement with the holder of the bill to hold the remittance for his use (,r). But it will be no defence to an action brought against a factor or broker by a third person, to recover money remitted to him by the principal for his use, to show that at the time of the re- mittance the latter was indebted to the factor or broker in a sum equal to the amount of such remittance ; because, where a principal remits money to his agent for the pur- pose of its being paid over to a third party, the agent is bound, either to fulfil his instructions by paying the money over, or else to return it to the remitter, and therefore, he cannot keep it for the purpose of discharging any debt due from the remitter to himself (y). Liability to 2. Let US now see, in what cases a factor or broker will third persons , ,. , , i • i r • i i i • • for torts. be liable to tnird persons tor wrongs committed by him in the course of his agency. («) Per Lord Ellenborough, Redshaw v. Jackson, 1 Camp. 372, 373. (x) Stewart v. Fry, 7 Taunt. 339. ly) In re Douglas, 1 Mont, fie Chit. 1, 15. Their Liobilitics. 305 The general rule on this subject is stated by Lord Chief Factor or Justice Hult to be as follows : — " A servant or deputy, „er«ny "abU quutenuH such, cannot be charjTed for neglect, but the prin- '" ^^"^ P^J" ■' ' » o ' r sons for mis- cipal only shall be charged for it ; but for a misfeazance an feazances. action will lie against a servant or deputy, but not quatenus a deputy or servant, but as a wrong-doer" {z) ; and from this it would seem to follow ; that if a factor or broker, whilst acting in that capacity, be guilty of any misfeazance with reference to the property of third persons ; or if he dispose of property which may happen to be in his hands, but to which his principal has no title ; or if, in the course of his employment, he be guilty of any fraud or misrepre- sentation, he will be liable to third persons for all damages which they may sustain by reason of such his tortious act, whether such act have been done bona fide by command of his principal and for his benefit, or at the mere will and for the benefit of the factor or broker himself («). Thus, if a factor or broker, after the bankruptcy of his principal, sell goods or other property of his principal which may happen to be in his possession, and on which he has no lien for advances or otherwise, he will be liable to an action of trover at the suit of the assignees for the recovery of the same, whether at the time of the sale he was aware of the principal's bankruptcy or not (Jb). So, if the principal pur- chase goods, after notice that an act of bankruptcy has been committed by the vendor, or after the date of a fiat in bank- ruptcy against him, and then consign those goods to his factor for sale, the latter, if he sell the goods, will be liable to an action of trover at the suit of the vendor's assignees, (s) Lane v. Cotton, 12 Mod. 473, 488. (n) See per Lee, C. J., Perkins v. Smith, 1 Wils. 328 ; S. C. Sayer, 40 ; per Lord Ellenboiough, Stephens v. ElwaU, 4 M. & Sel. 259. 261 ; and per Tiodal, C. J., Cranch v. White, 1 Scott, 314, 318; see also Far/cer v.Godin, 2 Stra. 813, 814; Bui. N. P. 47 ; 1 Chitty on PI. 84; and 3 Chitty on Com. & Man. 214. (6) See Pearson v. Graham, 6 Ad. & El. 899 ; Stephens v. ElwaU, supra. 306 Factors and Brokers. although, at the time of the sale, he was wholly ignorant of his principal's want of title {b). So, if the factor or broker receive a bill-of-exchange from his principal, with notice that it was intrusted to the latter by a third person for the pur- pose of its being discounted, and he gets the bill discounted accordingly, but applies the proceeds thereof in paj-ment of a debt due from the principal to himself, he will be liable to an action of trover at the suit of such third person, in order to recover possession of the bill(c). And in like manner, if by command of his principal he detain property in his hands which is claimed by a third person, and it turn out that his principal has, in fact, no title to such property, he will be personally liable to the owner for all damages sus- tained by him by reason of his detention thereof (c?). But it is said that the mere fact of a sale of goods being made by a broker after a sale of the same goods by his principal, but without notice of such prior sale, will not render the broker liable to an action of trover at the suit of the person who purchased the goods from his principal (e) ; nor will a reasonable and qualified refusal on the part of the factor or broker to deliver up property which is claimed by a third person, until he has had an opportunity of consulting his principal, subject him to an action of trover at the suit of that person, for the recovery thereof, — provided, at the time the claim was made, he had no notice that the principal (6) Story's Com. on Agency, $ 312 ; and see stat. 2 & 3 Vict. c. 29, s. 1. (c) Cranch v. White, supra. (d) See Wilson v. Anderton, 1 B. & Ad. 450. " The situ- ation of the bailee," in such a case, it is said, " is not one with- out remedy. He is not bound to ascertain who has the right ; he may file a bill of interpleader in a court of equity. But a bailee who forbears to adopt that mode of proceeding, and makes himself a party by retaining the goods for the bailor, must stand or fall by his title." Per Lord Tenterden, ibid. 456. (e) Per Roll, J., /J /u'l/n V. Tflv/oj-, Aleyn's Select Ca. 93,94, Mich. Term, 24 Car. 1, " The broker ought in such a case to make his sale conditionally — if the master hath not sold before." Ibid. Their Liabilities. had already been applied to, and had refused to give an order for the delivery of the property ( /'). So, a distinction might perhaps be made between cases in which the factor or broker sells goods for his principal after a secret act of bankruptcy by the latter, by virtue of his general authority merely ; and cases in which he sells them by virtue of an express command from his principal with reference to those specific goods, — it being held to be very doubtful, whether, in the latter case, the agent could be said to have converted the goods as against the assignees of his principal (g) ; and it is held, further, that if the assignees of a bankrupt claim goods which have been sold to the bankrupt by a factor or broker, but which have been allowed to remain in the hands of the latter, they can only take them subject to all the equitable rights attaching on the bankrupt with reference thereto. Where therefore it appeared that A., as factor for B., had sold goods then in his possession, to C, which were paid for by a bill drawn by C. and accepted by D. ; that C. afterwards ordered A. to keep the goods in his hands and to sell them if he could make a certain profit ; that before the bill became due D. failed; that in consequence thereof A. applied to C. for a further security, whereupon C. gave him an order to sell the goods and apply the proceeds in payment of the bill, and that B. subsequently ratified A.'s act ; that C. afterwards, and before the goods were sold, be- came bankrupt ; that the bill drawn on D. was dishonoured at maturity ; and that the assignees of C, having made a demand of the goods from A., brought trover for the same ; — it was held, that they could not maintain that action, for that, after the order given by C. to A. to sell the goods and apply the proceeds in payment of the bill, they must be taken to have remained in his hands subject to that charge (h). (/) See Alexander v. Southey, 5 B. & Al. 247, 248. ig) See per Lord Deninan, Pearson v. Graham, supra; and Cotes V. Robins, 3 Camp. 183. (7() Bailey v. CuUerwell, 8 B. & C. 448. 308 Factors and Brokers. Or for fraud Again ; it is clear that if a factor or broker, who conceals senution^"^^ his principal, be guilty of any fraud in the course of his em- ployment, or of any breach of an express or implied war- ranty, or if he make any false representation whereby third persons are induced to deal with him, he will be liable as principal for all damages resulting therefrom, whether in committing such fraud, or making such representation or warranty, he acted by the command of the real principal or not ( j) ; and so, if the factor or broker be engaged in a trade in which there is a custom, to the effect that when a certain kind of goods sold therein have received a particular injury, that circumstance should be stated by the factor or broker at the time of the sale, the latter, if he omit to make such statement, will be taken to have warranted that the goods have not received the injury in question, and will be liable to the purchaser accordingly. Where therefore a broker had sold by auction a quantity of pimento which had been sea-damaged and repacked, — without, however, making any express warranty of soundness, — but it was proved that, when pimento which had been sea-damaged or repacked was offered for sale by auction, it was usual in the trade to state those facts at the time of the sale ; and it was further proved, that no statement to that effect had been made at the sale in question, the broker was held to be liable as for a breach of warranty (k). In like manner it would appear, — notwithstanding some cases to the con- trary, — that if a factor or broker, as the mere agent of his principal, make any false affirmation to a third party with an intent to defraud him, and such third party suffer da- mages thereby, the factor or broker will be liable to him for the deceit (/) ; and, a fortiori, will he be so liable if, in (i) See Cora. Dig. Aclion upon the Cane for a Deceit, A. 11 ; Fitzh. N. B. 98, K. ; 1 Roi. 96, 1. 15 ; ib. 90, P. 1. 3 ; ib. 97, 1. 5 ; Meuina v. Stoughton, 1 Salk. 210. (fc) Jones V. Bowden, 4 Tauat. 847. (/) See per Tindal, C. J., Pontifex v. Bignold, 3 Scott, N. R, 390, 408 ; and see Pasley v. Freeman, 3 T. R. 51 ; Haycrajt v. Creasy, 2 East, 92. Their Liabilities. 309 making such false affirmation, he have acted without the privity of his princijial, or contrary to liis express com- mands {m). With reference to a mere servant, indeed, an opinion seems at one time to have been entertained, that it was only in this latter case that he was liable for a deceit of which he had been guilty in transacting the business of his master ; for it was said, that where a servant in any case sells for his master, and by the command and covin of his master is even knowingly guilty of a deceit in con- ducting such sale, the master shall be liable and not the servant, because tlie sale is the sale of the master («). But the correctness of this doctrine appears to be doubted, even in regard to the case of a mere servant (o) ; and, judging as well from recent decisions (/j), as on principle, it would seem to be wholly inapplicable to the case of a factor or broker; because, even where in effecting a sale he acts as a known agent, he has in general a beneficial interest in the subject-matter of the sale; and therefore, although such sale be in fact the sale of the principal, so as to render him liable for the deceit of the factor or broker, still, to allow the latter, on this account, to derive his full share of benefit from such sale, notwithstanding its having been ac- tually effected by means of his deceit, would manifestly be to controvert the well known maxim, — that no man shall be permitted to take advantage of his own wrong. But it would appear that a factor or broker who, by the Not liable, iu authority of his principal, appoints a sub-agent to assist in fi^g'toris of^ transacting the business of his principal, will not be liable sn^-agents. to third persons for any tort which such sub-agent may commit in the course of his employment, unless it be shown (m) Com. Dig. Actimi upon the Case for a Deceit, B. ; 1 Rol. 95, 1. 5. (n) Com. Dig. supra; 1 Rol. 95, 1. 10. (o) Story's Com. oq Agency, § 310 ; Smith's Merc. Law, 125, note (o). (p) See Ponlifei v. Bigiwld, supra. .■? 1 Factors and Brokers. that he actually ordered the latter to do those acts from which the damage has ensued (7) ; and the reason of this would seem to be, that the principal having empowered the factor or broker to ap])oint the sub-agent, such sub-agent is, in contemplation of law, the agent of the principal and not of the factor or broker, — whence it follows, that the former and not the latter must answer to third persons for his acts (r). (g) See Stone v. Cartwright, 6 T. R. 411, 413. (r) See per Eyre, C. J., Bush v. Steinman, 1 Bos. & Pul. 404, 407. 3I\ CHAPTER IV. On the Determination of the Authority of Factors AND Brokers. Having thus traced the relationship which exists between a factor or broker and his principal, through all its several stages, and having likewise taken a review of the various rights and liabilities which, in the course of that relationship, these agents may acquire against or incur to third parties, it now remains for us, in the last place, to ascertain how this relationship may be determined, and the consequences with which its determination will be attended. First then, as to the modes in which the authority of a How ihe factor or broker may be determined. bedeier^'"^"^ ininefl. 1. The first and most obvious mode by which this maj' By counter- be done, is manifestly by a countermand of the authority on '"''°''- the part of the principal; for such authority having been given in the first instance at the will of the latter, and for his benefit, it follows that it can be exercised only so long as the person from whom it emanated, and for whose bene- fit it was confeiTed sees fit that it should be so exercised ; and accordingly it has been laid down as an undoubted rule, — that the agent's power may be countermanded at the mere will of the principal, and that this countermand may, in general, be effected at any time before the contract is completed (a). Thus, the authority of an insurance broker (a) 3 Chitty on Com. k Man. 223. 3 1 2 Factors and Brokers. may be revoked by his principal at any time before tlie underwriters have actually subscribed the policy, even al- tliough they may have previously signed the slip (6) ; and in like manner, the principal may countermand the autho- rity of his factor to sell goods, at any time before a memo- randum of the contract of sale has been written and signed by the latter, pursuant to the statute of frauds (f); but it appears, that in the case of a broker, neither party can re- cede from the contract after he has made an entry thereof in his book, even although the bought-and-sold-notes have not been delivered ; because the entry made and signed by the broker is the only binding contract, and the bought-and- sold-notes are merely copies thereof (d). Cases iu The above rule however is liable to some exceptions. which the an- ,ni • i i i i • • i • i ihority cannot Ihus, it would seem tliat the prmcipai cannot, m general, manded''^'' revoke the authority of his factor or broker, after that authority has been in part executed (e). -Accordingly we have seen, that if a factor or broker were instructed by his principal to pay money to a third party, and were, in pur- suance of those instructions, to enter into a binding engage- ment with such third party to pay the money to him, his authority would cease to be revocable (^/ ) ; and so, if a fac- tor, in consequence of having received instructions to pur- chase goods, were to enter into a contract with a third party for such purchase, the principal could not afterwards, of his own mere will, recal the authority by virtue of which the factor had so bound himself (^g). Indeed it may be stated (6; Warwick v. Slude,'3 Camp. 127. (c) Farmer v. llobimott, 2 Camp. 339, note. (d) Per Lord EUenborough, Heyman v. Neale, 3 Camp. 337, 338. (0 3 Chitty on Com. & Man. 224 ; 1 Bell. Com. on Merc. Jur. § 413. (/■) Brind v. Hampshire, 1 M. & W. 365; Williams v. Everett, 14 East, 582. (g) 2 VVils. and Shaw, House of Lords Rep. 599, 7wte (1); and see Ersk. Inst. B. 3, Tit. 3, § 40. Determination of their Authority, 313 as a general rule, that unless the authority given to the fac- tor or broker be severable, so as to admit of the revocation of the unexecuted part without exposing him to damages by reason of his having executed it pro tanto, the principal will not be allowed to revoke that authority after such part execution, at least, not without fully indemnifying the fac- tor or broker against the consequences thereof (A); audit would appear, that in the case of a factor or broker living at a distance from his principal, his authority will cease to be revocable, provided he have done some act in pursuance thereof before i-eceiving the letter containing such revoca- tion, even although that letter was actually written before he had done the act in question (i). Again ; the authority of the factor or broker will be irrevocable, if it be coupled with an interest (/c). For instance, if a factor have the pos- session of goods on which he has a lien for previous ad- vances, and the principal, in consideration that the former will forbear to sue him for such advances, authorizes him to sell the goods for loss than the invoice prices, in order to re- pay himself, such authority will be irrevocable (/), So, if the principal consign goods to his factor for sale, in con- sideration of advances made by the latter on the security of those very goods, the authority in such a case will, it is pre- sumed, be irrevocable (in) ; and indeed, the same rule is said to be applicable to every case in which the power given to the factor or broker is necessai-y to effectuate any se- curity («). If however a factor have a mere lien for previous advances, on goods which have been consigned to him for sale at a certain price, and the principal afterwards autho- rizes him to sell the goods at a less price, in order to repay (/i) Story Com. on Agency, § 466; and see Ersk. Inst, supra. (0 See Adams, v. Lindselt, 1 B. & Al, 681, 683. {k) Per Lord Ellenborough, Bristoiu v. Tai^hr, 2 Stark, 50, 51. (/) Per Parke, B,, Ualeigh v. Atkinson, 6M. & W. 670, 676. (m) Ibid., and see Gaussen \. Morton, 10 B. & C. 731. (»^ Sec per Lord Kenyoti, Walsh v. Whitcomb, 2 Esp. 565, 566." P $u Factors and Brokers. himself, this authority, unless conferred for a valuable con- sideration, such as forbearance or the like, will still be re- vocable, and the principal will be intitled, within a reason- able time after notice to that effect, to redeem the goods on payment of the factor's claim (o). By renuncia- tion. 2. An equally obvious means whereby the authority of a factor or broker may be determined, is by the renunciation of the agency on the part of the latter himself; and this, it is said, may be done by him even after he has accepted, and in part executed his commission {p). But wherever the agent renounces his agency, he would seem to be bound to give notice of that fact to his principal, and if he delay or neglect so to do, he will be liable for all damages which the latter may sustain by reason thereof (j). By comple- 2. Again ; the authority of the factor or broker is ipso ■DorDose for fo^^^ determined by the completion of the purpose for which ■which the that authority was given (r) . Thus it is said, that if a man antbority was „ , , , i ^ , • , , , . given. sell goods as a broker, the moment the sale is completed he is functus officio (s) ; so, although the authority of a factor who acts for an undisclosed principal does not, as between his principal and third parties, cease with the completion of the contract, still there can be no doubt that, as between the principal and the factor himself, so soon as the contract is completed, his authority quoad that contract is at an end (J.) ; and in like manner we have seen, that even as between the principal and third parties, the authority of the factor to bind him by any matter collateral to the contract, for in- (o) Raleigh v. Atkinson, supra. , (p) Ersk. Inst. B. 3, Tit. 3, $40 J S'oiy Com. on Agency, § 478. (?) Ibid. (r) 3 Chitty on Com. & Man. 223. (s) Per Lord Ellenborough, Blackburn v. Scholes, 2 Camp. 341, 343. (0 Ibid. Determination of their Authority. 315 stance by a representation, exists only so long as the con- tract itself is in the course of formation, and no longer (u). Further : the authority of the factor or broker may be de- ^x «'""'' of •' time, termined by the efflux of time. Thus, if by the express terms of his commission it be limited to a certain period, it will manifestly cease so soon as that period has expired (x) ; and so, if there be a usage in the particular trade in which he is engaged, to the effect that an authority to buy or sell shall continue for a limited time only, the mere lapse of that time will operate as a revocation of the authority (j/). 4. The authority of a factor or broker will likewise be de- By the bank- iiiii m • 1 r 1 ■ ruptcy of the termmed by the bankruptcy of his employer, so tar, that is, principal. as regards the doing by him of any act merely as the agent of the latter ; and this rule depends upon a very obvious principle, namely, — that inasmuch as the principal himself is not competent, after his bankruptcy, to exercise any power over the subject-matter of the agency, he cannot authorize another so to do, since this would be to allow the derivative authority to be stronger and more extensive than the origi- nal and principal authority, which, it is said, cannot be (z). Accordingly a factor or broker will not be allowed to pay money as the agent of his principal after the bankruptcy of the latter (a) ; nor to sell goods as such agent (b) ; but if the factor have a lien on goods in his possession for ad- vances, and have likewise authority to sell the same, he may exercise such authority by selhng the goods and receiving the price, even after the bankruptcy of his principal (c) ; be- (w) Ante, 89—91. (at) Story Com. on Agency, § 480. (i/) Dickinson v. Lilwall, 4 Camp. 279. (s) Per Lord Ellenborough, Parker v. Smith, 16 East, 382, 386. (a) Ibid., and see Goldscmidt v. Lyon, 4 Taunt. 534 j and Minett v. Forrester, ibid. 541. (b) See Pearson v. Graham, 6 Ad. & El. 899. (c) Per Lord Ellenborough, Alley v. Hotson, 4 Camp, 325, 326; Rubson V. Kemp, 4 Esp. 233. p2 51C Factors and Brokers. cause in this case he has an authority coupled with an inte- rest, and consequently, so far as that interest extends, he acts, not as the agent of his principal, but for the purpose of as- serting a right which accrued to himself before the bank- ruptcy, and which, as we have seen, that event docs not de- Or of the fac- stroy {(l). In like manner, the bankruptcy of the factor or tor or broker. 1)j.q],(,,. hiniself will operate as a revocation of his authority to do any act in his representative character, unless it be a merely formal act whereby no interest is passed (e). Thus, if a factor sells goods and becomes bankrupt before he re- ceives the price, his bankruptcy will operate as a counter- mand of his authority to receive such price on account of his principal (_/'). But in this case also, as in that of the prin- cipal's bankruptcy, the factor, if he had a lien on the goods at the time of the sale, would be intilled, even after his bank- ruptcy, to receive the price thereof; because here he does not receive such price as the agent of his principal, but on his own account in respect of his lien (g). (d) Ante, 207 ; and see Copland v. Stein, 8 T. R. 199 ; Meyer v. Sharpe, 5 Taunt. 74 ; Nichols v. Clent, 3 Price, 547. (e) 3 Cbitty on Com. & Man. 223; Polliier, Trait, du Cont. de Mandat, § 120, Oeuv. torn. 4, p. 269; par Di;pin. (_/'} Per Baylcy and Ilolroyd, Js., Hudson v. Granger, 5 B. & Al. 27, 31, 33. (g) Ibid. By statute 6 Geo. 4, c. 16, s. 2, factors and bro- kers are made liable to the bankruptcy laws, and the term " bro- kers" used in that section has been lield to include, not only such biokers as are concerned in the purchase and sale of merchandize, but also stock-brokers, Culleii, 48 ; ship-brokers, Pott v. Turner, 6 Bing. 702 ; insurance-brokers, Exparte Stevens, 4 Madd. 256; and bill-brokers, Exparte Phipps, 2 Deac. 487; so that it would seem, that the effects of bankruptcy on factors and brokers con- sidered merely as traders, will, in general, be the same as its ef- fects on any other traders to whom the " bankrupt acts'' apply. There is however one circumstance with reference to the effect produced by the bankruptcy of the factor, which deserves specific notice, namely, — that the propeity of his principal wiiich is in his possession at the timp of his bankruptcy, does not pass to his as- signees ; Garret v. Cullum, Bui. N. P. 42 : Exparte Chion, 3 P. Wms. 187, 11. ; Godfrey v. Furzo, ibid. 186; Mace v. Caddell, Cowp. 233 ; and in like manner, that where the principal trans- mits bills-of-exchange to his factor for sale, which the latter ia- J Determination of their Authority. 317 5. Again ; the death of the principal will operate as a By n,e ,ieaih revocation of the authority of the factor or broker to do any °' I''^ P"'":'- act merely as the agent of the former, because, as has been well said, a valid act cannot be done in the name of a dead man (A). But where the factor or broker has authority to do an act in his own name, there it would seem that the death of the principal will not ipso facto determine such authority (i) ; and a J'ortinvi will this be the case, if the authority conferred by the principal be coupled with an in- terest ; because in this latter instance, the factor or broker would seem to act on his own behalf, so far that is as his interest extends, and not merelj' as the agent of his princi- pal {k). In like manner, the authority of a factor or broker Or of the fac- will be determined by his death, and his personal represen- '°'' °'^ 'roker. tatives will not be intitled to take any steps therein (/) ; be- cause this event not only puts it out of his power to execute the authority either in his own name or in that of his prin- cipal ; but likewise, because the commission is supposed to have been given in the first instance on the ground of the principal's special confidence in the factor or broker, and this confidence cannot be presumed to extend to his repre- sentatives as well as to himself (?n). So, it is said, that the dorses and sells in his own name, the principal, and not the as- signees, is intitled to the proceeds, in the event of the factor's bankruptcy. Eipavte Pauli, 3 Deac. 169. (/i) Per Lord Ellenborough, Watson v. King, 4 Camp. 272, 274 ; and see per Fortescue, B., Shipman v. lliompsoii, Willes, 105 ; and per VVilles, C. J., Wijnne v. Thomas, ibid. 563, 565. (i) SeeSmout v. Ilberry, 10 M. & VV. 1, 11, (k) See iShipman V. Thompson, suftd.; Harnmo/idsv. Barclay, 2 East, 227, 235 ; Story, Com. on Agency, § 489. (0 3 Chitty on Com. iSt Man. 223 ; Pothier, Trait, d'.i Cnnt. de Mandat, § 101, Oeuv. torn. 4, pp. 260, 261. (to) Story Com. on Agency, § 490 ; Ersk. Inst. B. 3, Tit. 3, § 40. Another mode whereby the authority of a factor or broker may sometimes be determined, is by the marriage of a woman who, whilst sole, has conferred on him the authority in question ; for, as by marriage the property of the woman vests in her hus- band, it follows that she herself ceases to be able to dispose of it, and consequently any authority which she may have given to another to effect such disposition ceases likewise. Story Cum, 318 Factors and Brokers. death of one of two oi* more joint agents will determine the agency as to the rest (ra) ; but perhaps this rule would be relaxed for the convenience of commerce, so as, in the case of the death of one of two or more joint factors or bro- kers, to admit of a valid execution of the authority by the survivor or survivors (o). Time at which the revocation of authority will take effect. Such then are the circumstances imder which the autho- rity of a factor or broker may be determined, and such the events whereby that determination may be effected. With regard however to the events above enumerated, it is neces- sary to remark further, that the mere happening of those events will not in each case operate per se as a complete revocation of the factor's or broker's authority ; but that, on the conti'ary, there are some of them which will not have this effect, until notice of the same has been commu- nicated both to the factor himself, and to those with whom he deals. Thus, if the principal by his own act counter- on Agency, § 481. This however is a case which does not fre- quently occur in connexion with those agents of whom we are now treating. As to the effect of the insanity of the principal on the authority of the factor or broker, the opinions of the most eminent jurists seem to be divided. Mr. Bell inclines to think, that unless that fact were established under a commission of lunacy, it would not have the effect of revoking the agent's au- thority, 1 Com. on Merc. Jur. 395, 396 ; and Mr. Chancellor Kent seems to be of the same opinion, 2 Com. on Amer. Law, 645; whilst, on the other hand. Dr. Story considers that " if a principal should become insane, that would operate as a suspen- sion or revocation of the authority of his agent, during the con- tinuance of the insanity ; for the party Iiimself during his insanity could not do a valid act, and his agent cannot, in virtue of a derivative authority, do any act for and in the name of his prin- cipal, which he could not lawfully do by himself," Com. on Agency, § 481. This reasoning seems quite conclusive, and, judging from the other cases which we have considered in the text, the passage just cited would appear to contain the true doctrine with reference to the disputed question. (7i) Polhier, Trait, du Co7it. de Mandat, § 102, Oeuv. torn. 4, p. 262 ; Co. Litt. 52, b ; Bac. Ab. Authority, C. (o) See Godfrey v. Saunders, 3 Wils. 73j ante, 50. Determination of their Authority. 319 mand the authority of his factor or broker, such counter- mand will not take effect as to the agent himself until it is made known to him, nor will it take effect as to third persons, until it is made known to them (n). And it is pre- sumed that, in like manner, if the factor or broker renounce his agency, such renunciation on his part will not free him from liability either to his principal or to third parties, until notice thei-eof has been given to them. Again ; it would appear that even the death of the principal will not, of itself, operate as a revocation of the authority of a factor to purchase goods in his own name on behalf of his prin- cipal, — at least, not so as to make the factor himself liable on the contract ; but that in order to its having this effect, the factor must have had notice of his principal's death at the time he effected the purchase (o) ; and indeed it is said, that a sale or purchase by the factor, without notice of the death of his principal, will not only not render him liable, but will in fact bind the representatives of the latter (p ). In like manner it is said, that if an insurance broker were authorized to procure a policy of insurance, and should ex- ecute his orders, but before the execution thereof the prin- cipal should, unknown to him, die, it would certainly deserve consideration, whether, in such a case, the policy would be void by the supposed revocation of the order by operation of law (q) ; and so it is said, that the right of an insurance broker to receive losses which may happen on policies effected in his own name, is admitted, even although at the time such losses are paid, it may be known that the prin- (n) See per Buller, J., Sake v. Field, 5 T. R. 211, 215; V. Harrison, 12 Mod.346; Hazard v.Treadwell, 1 Stra.506; 3 Chit, on Com. & Man. 197. See also 1 Pothier on Obligations, by Evans, 335, § 474 ; and 1 Domat, b. 1, tit. 16, § 3, art. 9. (o) See SmoiU v. Ilberry, 10 M. & W. 1, 9—11 ; 3 Cliitly on Com. & Man. 223. (p) Story's Com. on Agency, § 496. ((/) Ibid. $ 497. 320 Factors and Brokers. cipal is clcad(r). In all these cases the governing maxima would seem to be, that the principal shall be bound to third parties by the act of his agent, because it is done under color of an authority into the validity of which strangers cannot examine (s) ; and that the agent himself shall not incur any liability by reason of his authority having, without his knowledge, been revoked ; because, under such circum- stances, he has been guilty of no such wrong or omission of right, as is held necessary in order to render any agent personally answerable on a contract, on the ground that, in in making sucli contract, he has exceeded his authority {t). Consequences Lastly, as to the consequences of the determination of the factor's or broker's authority. catiun. To these we have already had occasion, more than once, to advert, and we shall therefore content ourselves in this place, with a brief recapitulation. Thus we have seen, that the principal will not be liable on any contract made by his factor or broker, after the authorit}' of the latter has been completely revoked {u) ; we have likewise seen, that the factor or broker himself will be liable on such contracts (.r), and further, that in some cases, — such as when his autho- rity is revoked by the bankruptcy of his principal, — he may even become liable to an action founded in tort, if he dis- pose of the property of the latter after such revocation(3/). Again ; we have seen that if the factor or broker renounce his commission, he becomes bound to restore to his prin- (»•) Ibid. ; and see 1 Pothier on Obligations, by Evans, 337, $ 475, where it is stated, that if the death or change of situ- ation were unknown to the debtor at the time of pa^iment, his making such payment bona fide would be valid. See also Pothier, Trait, da Cont. de Mandat, § 121, Oeuv. torn. 4, p. 269. (s) 3 Chitty on Com. & Man. 223. (t) Smout v. llberry, 10 M. & W. 1, 11. (u) Ante, 79. (.r) Ante, 294. (y) Ante, 365. Determination of their Authority. 321 cipal all property which has been intrusted to him by the latter thereunder {z) ; and lastly we may observe, that where the authority of the factor or broker himself is de- termined, that of any sub-agent appointed by him is like- wise determined ; because, as the former cannot, after that event, do any act personally so as to bind his principal, so neither can the latter acting in his stead, inasmuch as the soxu'ce of his authority has ceased to exist (a). If however the sub-agent were appointed, in the first instance, with the express consent of the piincipal, it would perhaps be other- wise ; for, in such a case, his authority might be very pro- perly regarded as emanating from the principal himself, and therefore, it would not necessarily be extinguished by the revocation or determation of that of the intermediate agent (6). (s) Ante, 276. (a) Pothier, Trait, da Cont. de Mandat, Oeuv. torn. 4, p. 260, § 112. (b) Pothier, Trait, dti Cont. de Mandat, Oeuv. torn. 4, p. 263, j 105. p5 I APPENDIX. No. I. THE FACTORS' ACTS. 4 Geo. 4, c. S3. An Act for the better Protection of the Property of Merchants and others, who may hereafter enter into Contracts or Agreements in relation to Goods, Wares, or Merchandizes intrusted to Factors or Agents. [18th July, 1823.] * Whereas it has been found that the law, as it now ' stands, relating to goods shipped in the names of * persons who are not the actual proprietors thereof, * and to the deposit or pledge of goods, affords great * facility to fraud, produces frequent litigation, and ' proves, in its effects, highly injurious to the inte- * rests of commerce in general ;' be it therefore enacted by the king's most excellent majesty, by and with the advice and consent of the lords spiri- tual and temporal, and commons in this present par- liament assembled, and by the authority of the same. That from and after the passing of this act, any per- Persous in son or persons intrusted, for the purpose of sale, roodTshaU be ■with any goods, wares, or merchandize, and by whom shipped, shall such goods, wares, or merchandize shall be shipped, owner"soj?s* in his, her, or their own name or names, or in whose '? intitie con- name or names any goods, wares, or merchandize I'fn^trereon, shall be shipped by any other person or persons, ^' iieiein shall be deemed and taken to be the true owner or owners thereof, so far as to intitie the consignee or SS* Appendix, No. 1. consignees of such goods, wares, and merchandize to a lien tliereon, in respect of" any money or negotiable security or securities advanced or given by such con- signee or consignees to or for the use of the person or persons in whose name or names such goods, wares or merchandize shall be shipped, or in respect of any money or negotiable security or securities received by him, her, or them to the use of such consignee or consignees, in the like manner to all intents and purposes as if such person or persons was or were the true owner or owners of such goods, W'ares, and merchandize ; provided such consignee or consignees shall not have notice, by the bill-of- lading for the delivery of such goods, wares, or merchandize cr otherwise, at or before the time of any advance of such money or negotiable security, or of such receipt of money or negotiable security, in respect of which such lien is claimed, that such person or persons so shipping in his, her, or their own name or names, or in whose name or names any goods, wares, or merchandize shall be shipped by any person or persons, is or are not the actual and hand fide owner or owners, proprietor or proprietors of such goods, wares, and merchandize so shipped as aforesaid, any law, usage, or custoin to the contrary thereof in any wise notwithstanding : provided also, that the person or persons in whose name or names any such goods, wares, or merchandize are so ship- ped as aforesaid, shall be taken for the purposes of this act to have been intrusted therewith, unless the contrary thereof shall appear or be shown in evi- dence by any person disputing such fact. Any person H. And be it further enacted, That it shall be goods oH)iii- lawful to and for any person or persons, body or ofiadingin bodics politic or Corporate, to accept and take any u6D0sit from ■*. . , *^ consignee; goods, wares, or merchandize, or the bill or bills-of- biit shall not JaJiptr for the delivery thereof, in deposit or pledge, acquire any ^ . ^ . iz-ii further rigiit ft-om any Consignee or consignees thereoi ; but then «i'ffnpp°n,«.p« an(l i" that case such person or persons, body or '"K"<->- 1JUB3CS- ... ^ 111- n ^ sed. bodies pohtic or corporate, shall acquire no lurther or other right, title, or interest, in or upon or to the Stat. 4 Geo. 4, c. 83. 325 said goods, wares, or merchandize, or any bill-of- lading for the deUvery thereof, than was possessed, or could or might have been enforced by the said consignee or consignees at the time of such deposit or pledge as a security as aforesaid ; but such per- son or persons, body or bodies politic or corporate, shall and may acquire, possess and enforce such right, title, or interest as was possessed, and might have been enforced, by such consignee or consignees, at the time of such deposit or pledge as aforesaid ; any rule of law, usage or custom to the contrary not- withstanding. III. Provided always, That nothing herein con- Right of tained shall be deemed, construed, or taken to de- low^Ms^^oocis prive or prevent the true owner or owners, proprie- ^^hiie in the ■"■ ^ . f 1 1 1 hands of his tor or proprietors oi such goods, wares, or mercnan- agent, or of dize, from demandino; and recovering the same from !''' assignees o o ijj Cfis^ ^)f his, her, or their factor or factors, agent or agents, bankruptcy, before the same shall have been so deposited or "^^^ fron^' pledged, or from the assignee or assignees of such assignees, factor or factors, agent or agents, in the event of his, ^,^' i";'^,""/''*" her, or their bankruptcy ; nor to prevent any such vances secnr- owner or owners, proprietor or proprietors rrom de- ^^,,. manding or recovering of and from any person or persons, or of or from the assignees of any person or persons in case of his or her bankruptcy, or of or from any body or bodies politic or corporate, such goods, wares, or merchandize, so consigned, depo- sited or pledged, upon repayment of the money, or on restoration of the negotiable security or securi- ties, or on payment of a sum of money equal to the amount of such security or securities, for which money or negotiable security or securities such per- son or persons, his, her, or their assignee or as- signees, or such body or bodies politic or corporate, may be entitled to any lien upon such goods, wares, or merchandize ; nor to prevent the said owner or owners, proprietor or proprietors, from recovering of and from such person or persons, body or bodies politic or corporate, any balance or sum of money remaining in his, her, or their hands, as the produce 326 Appendix, No. 1. of the sale of such goods, wares, or merchandize, after deducting thereout the amount of the money or negociable security or securities so advanced or given Proviso as to upon the Security thereof as aforesaid: provided J,'|,'J^"P"=^°'^ always, that in case of the bankruptcy of such factor or agent, the owner of the goods so pledged and re- deemed as aforesaid shall be held to have discharged pro tanto the debt due by him to the bankrupt's estate. 6 Geo. 4, c. 94.. An Act to alter and amend an Act for the better Pro- tection of the Property of Merchants and others who may hereafter enter into Contracts or Agreements in relation to Goods, Wares, or Merchandize in- trusted to Factors or Agents. [5th July, 1825.] 4Geo.4,c.83. ' Whereas an Act passed in the fourth year of the ' reign of his present majesty, intituled An Act for ' the better Protection of the Properly of Merchants * and others who may hereafter enter into Contracts or ' Agreements in relation to Goods, Wares, or Mer- ' chandize intrusted to Factors or Agents : and whereas ' it is expedient to alter and amend the said Act, and ' to make further provisions in relation to such con- ' tracts or agreements as hereinafter provided :' be it therefore enacted by the king's most excellent majesty, by and vvith the advice and consent of the lords spiritual and temporal, and commons, in this present parliament assembled, and by the authority Factors or of the same, That from and after the passing of this goods' &cyTif '**^^» ^"y person or persons intrusted, for the purpose possession of Consignment or of sale, with any goods, wares, or enf.'^o as'to"" merchandize, and who shall have shipped such goods, give validity wares, or merchandize in his, her, or their own name to contracts i • i with persons Or namcs, and any person or persons m whose name deaiins; bonA qj- names auv goods, wares, or merchandize shall be jUic upou the •' c? ' ' faiiii of such shipped by any other person or persons, shall be property. deemed and taken to be the true owner or owners Stai. 6 Geo. 4, c. 94. 327 ' thereof, so far as to intitle the consignee or con- signees of such goods, wares, and merchandize to a lien thereon, in respect of any money or negotiable security or securities advanced or given by such con- signee or consignees to or for the use of the person ^ or persons in whose name or names such goods, wares, or merchandize shall be shipped, or in respect of any money or negociable security or securities received by him, her, or them, to the use of such ^ consignee or consignees, in the like manner to all j intents and purposes as if such person or persons | was or were the true owner or owners of such goods, I wares, and merchandize : provided such consignee or Proviso as to ] consignees shall not have notice by the bill-of-lading "o'l", j for the delivery of such goods, wares, or merchan- dize or otherwise, at or before the time of any ad- vance of such money or negotiable security, or of ^ such receipt of money or negotiable security in re- ] spect of which such lien is claimed, that such person ! or persons so shipping in his, her, or their own name j or names, or in whose name or names any goods, \ wares, or merchandize shall be shipped by any per- son or persons, is or are not the actual and bond fide ■ owner or owners, proprietor or proprietors of such j goods, wares, and merchandize so shipped as afore- ' said, any law, usage, or custom to the contrary ' thereof in any wise notwithstanding : provided also. And as to bill i that the person or persons in whose name or names ^'^^"•=*'v«''y' j any such goods, wares, or merchandize are so ship- \ ped as aforesaid, shall be taken, for the purposes of \ this act, to have been intrusted therewith for the j purpose of consignment or of sale, unless the con- j trary thereof shall be made to appear by bill of dis- j covery or otherwise, or be made to appear, or be ] shown in evidence by any person disputing such fact. \ II. And be it further enacted, That from and after Persons in | the first day of October one thousand eight hundred biiis-^of lading, i and twenty six, any person or persons intrusted with &c. deemed | and in possession of any bill-of-lading, India warrant, art"o^niakr , dock warrant, warehouse-keeper's certificate, whar- valid con ■ finger's certificate, warrant, or order for delivery of iJ28 Appendix, No. 1. goods, shall be deemed and taken to be the true owner or owners of the goods, wares, and merchan- dize described and mentioned in the said several documents hereinbefore stated respectively, or either of them, so far as to give validity to any contract or agreement thereafter to be made or entered into by such person or persons so intrusted and in possession as aforesaid, with any person or persons, body or bodies politic or corporate, for the sale or disposition of the said goods, wares, and merchandize, or any part thereof, or for the deposit or pledge thereof or any part thereof, as a security for anj"^ money or ne- gotiable instrument or instruments advanced or given by such person or persons, body or bodies politic or corporate, upon the faith of such several documents Proviso as to Or either of them : provided such person or persons, notice. body or bodies politic or corporate, shall not have notice by such documents or either of them or other- wise, that such person or persons so intrusted as aforesaid is or are not the actual and bond fide owner or owners, proprietor or proprietors of such goods, wares, or merchandize so sold or deposited or pledged as aforesaid ; any law, usage, or custom to the con- trary thereof in any wise notwithstanding. No person to Ijl. Provided always, and be it further enacted, cnn'iy'iipor That in case any person or persons, body or bodies jjoorts in the politic Or Corporate, shall, after the passing of this agent for an act, accept and take any such goods, wares, or mer- de'bi ''b'^^o (i c^i^"dize in deposit or pledge from any such person amoiint of or pcrsous SO in possession and intrusted as afore- ?est"in t'he^ Said, without uotice as aforesaid, as a security for goods. any debt or demand due and owing from such per- son or persons so intrusted and in possession as aforesaid, to such person or persons, body or bodies politic or corporate, before the time of such deposit or pledge, then and in that case such person or per- sons, body or bodies politic or corporate, so accept- ing or taking such goods, wares, or merchandize in deposit or pledge, shall acquire no further or other right, title, or interest in or upon, or to the said goods, wares, or merchandize, or any such document Slat. 6 Geo. 4, c. 94. 329 as aforesaid, than was possessed or could or miglit have been enforced by the said person or persons so possessed and intrusted as aforesaid at the time of such deposit or pledge as a security as last afore- said ; but such person or persons, body or bodies politic or corporate, so accepting or taking such goods, wares, or merchandize in deposit or pledge, shall and may acquire, possess and enforce such right, title or interest as was possessed and might have been enforced by such person or persons so possessed and intrusted as aforesaid ; any rule of law, usage or custom to the contrary notwithstanding. IV. And be it further enacted, That from and Per-ons may after the first day of October one thousand eight hun- know'n L^nts dred and twentv six, it shall be lawful to and for any •" 'he or for owner and merchandize so pledged and redeemed as afore- piedged\°nd said, shall be held to have discharged pro tanto the redeemed. debt due by him, her, or them to the estate of such bankrupt. VII. ' And whereas it is expedient to prevent the Agents frau- . . 1 . ^ 1 c 1 dulently ' miproper deposit or pledge oi goods, wares, or pledging * merchandize, or the documents relating to such ^?°'^^ °^ P"°" , T , ,. . ^, cipals, mis- * goods, wares, or merchandize, intrusted or con- demeanor; * signed as aforesaid to factors or agents ;' be it therefore enacted, That if any such factor or agent, at any time from and after the said first day of Octo- ber one thousand eight hundred and twenty-six, shall deposit or pledge any goods, wares, or merchandize, intrusted or consigned as aforesaid to his or her care or management, or any of the said several documents 332 Appendix, No. 1. so possessed or intrusted as aforesaid, with any per- son or persons, body or bodies politic or corporate, as a security for any money or negotiable instrument or instruments borrowed or received by such factor or agent, and shall apply or dispose thereof to his or her own use, in violation of good faith, and with intent to defraud the owner or owners of any such goods, wares, or merchandize, every person so of- fending, in any part of the United Kingdom, shall be deemed and taken to be guilty of a misdemeanor, Punishment, and being convicted thereof according to law, shall be sentenced to transportation for any term not ex- ceeding fourteen years, or to receive such other pu- nishment as may by law be inflicted on persons guilty of a misdemeanor, and as the court before whom such offender may be tried and convicted shall adjudge. Proviso for VIII. Provided always, and be it further enacted, <-a!.es in which Xhat nothinci; herein contained shall extend or be agent has not o made good a construed to extend to subject any person or persons wnd'extent ^o prosccution, for having deposited or pledged any of his own goods, wares, or merchandize so intrusted or con- '^"' signed to him, her, or them, provided the same shall not be made a security for or subject to the payment of any greater sum or sums of money than at the time of such deposit or pledge was justly due and owing to such person or persons from his, her, or How far ac- their principal or principals : provided nevertheless, ceptances of {\^q^i j^e acceptance of bills-of-exchange by such per- create a lien. SOU or persons drawn by or on account of such prin- cipal or principals, shall not be considered as con- stituting any part of such debt so due and owing from such principal or principals within the true in- tent and meaning of this act, so as to excuse the con- sequence of such a deposit or pledge, unless such bills shall be paid when the same shall respectively become due. Proviso foi I^' Provided also, and be it further enacted, That partner! not the penalty by this act annexed to the commission of offence? a^iy oflTence intended to be guarded against by this act, shall not extend or be construed to extend to Stat. 5 4' G \ict. c. 29. 333 any partner or partners, or other person or persons of or belonging to any partnership, society, or firm, except only such partner or partners, person or per- sons, as shall be accessary or privy to the commis- sion of such offence ; any thing herein contained to the contrary in any wise notwithstanding. X. Provided also, and be it further enacted. That Andforrcme- nothing in this act contained, nor any proceeding, eq*,^i,v^, "^^""^ conviction, or judgment to be had or taken thereupon, shall hinder, prevent, lessen or impeach any remedy at law or in equity, which any party or parties ag- grieved by any offence against this act might or would have had or have been intitled to against any such offender if this act had not been made, nor any proceeding, conviction or judgment had been had or taken thereupon ; but nevertheless, the conviction of any offender against this act shall not be received in evidence in any action at law or suit in equity against such offender : and further, that no person shall be liable to be convicted by any evidence whatever as an offender against this act, in respect of any act, matter, or thing clone by him, if he shall at any time previously to his being indicted for such offence have disclosed any such matter or thing on oath under or in consequence of any compulsory process of any court of law or equity, in any action, suit, or pro- ceeding, in or to which he shall have been a party, and which shall have been bond jide instituted by the party aggrieved by the act, matter, or thing which shall have been committed by such offender afore- said. 5 &Q Vict. c. 39. i I An Act to amend the Law relating to Advances bona ; fide made to Agents intrusted with Goods. ■ [30th June, 1842.] ] ' Whereas by an act passed in the sixth year of the 6Geo.4,c.94. i ' reign of his late majesty King George the Fourth, Appendix, No. 1. intituled //n Act to alter and amend an Act for the better Protection of the Property of Merchants and others who may hereafter enter into Contracts or Agreements in relation to Goods, Wares, and Mer- chandize intrusted to Factors or Agents, validity is given, under certain circumstances, to contracts or agreements made with persons intrusted with and in possession of the documents of title to goods and merchandize, and consignees making advances to persons abroad who are intrusted with any goods and merchandize are intitled, under certain cir- cumstances, to a lien thereon, but under the said act and the present state of the law advances can- not safely be made upon goods or documents to persons known to have possession thereof as agents only: And whereas by the said act it is amongst other things further enacted, " that it shall be law- ful to and for any person to contract with any agent intrusted with any goods, or to whom the same may be consigned, for the purchase of any such goods, and to receive the same of and to pay for the same to such agent, and such contract and pay- ment shall be binding upon and good against the owner of such goods, notwithstanding such person shall have notice that the person making such con- tract, or on whose behalf such contract is made, is an agent ; provided such contract or payment be made in the usual and ordinary course of business, and that such person shall not, when such contract is entered into or payment made, have notice that such agent is not authorized to sell the same, or to receive the said purchase-money :" And whereas advances on the security of goods and merchandize have become an usual and ordinary course of busi- ness, and it is expedient and necessary that reason- able and safe facilities should be afforded thereto, and that the same protection and validity should be extended to bond Jide advances upon goods and merchandize as by the said recited act is given to sales, and that owners intrustmg agents with the possession of goods and merchandize, or of docu- Stat. 5 S^ Q, Vict. c. 39. 335 * ments of title thereto, should in all cases where * such owners by the said recited act or otherwise ' would be bound by a contract or agreement of sale * be in like manner bound by any contract or agree- * ment of pledge or lien for any advances bond fide * made on the security thereof: And whereas much * litigation has arisen on the construction of the said * recited act, and the same does not extend to pro- * tect exchanges of securities hond fide made, and so * much uncertainty exists in respect thereof that it * is expedient to alter and amend the same, and to * extend the provisions thereof, and to put the law ' on a clear and certain basis :' be it therefore en- acted by the queen's most excellent majesty, by and with the advice and consent of the lords spi- ritual and temporalj and commons, in this present parliament assembled, and by the authority of the same, That from and after the passing of this act Bon^ fide any agent who shall thereafter be intrusted with the advances to possession'of goods, or of the documents of title to trusted with goods, shall be deemed and taken to be owner of "l^ P°^'^'^i°° D ' . of goods or such goods and documents, so far as to give va- documents of lidity to any contract or agreement by way of pledge, tnown ^olae lien, or security hond fide made by any person with agents, pro- such agent so intrusted as aforesaid, as well for any original loan, advance, or payment made upon the security of such goods or documents, as also for any further or continuing advance in respect thereof, and such contract or agreement shall be binding upon and good against the owner of such goods, and all other persons interested therein, notwithstanding the person claiming such pledge or lien may have had notice that the person with whom such contract or agreement is made is only an agent. II, And be it enacted. That where any such con- Bona fide tract or agreement for pledge, lien, or security shall exchange" be made in consideration of the delivery or transfer protected; to such agent of any other goods or merchandize, or document of title, or negotiable security, upon which the person so delivering up the same had at the time a valid and available lien and security for 136 but no lien beyond the value of the goods given up. But the sta- tute to be construed to protect only transactions bond fide, without no- tice that the agent pledg- ing is acting ■without au- thority, or malil fide against the owner. Appendix, No. 1. or in respect of a previous advance by virtue of some contract or agreement made with such agent, such contract and agreement, if bond Jide on the part of the person with whom tlie same may be made, sliall be deemed to be a contract made in consideration of an advance within the true intent and meaning of this act, and shall be as valid and effectual, to all intents and purposes, and to the same extent, as if the consideration for the same had been a bond fide present advance of money : Provided always, that the lien acquired under such last-mentioned contract or agreement upon the goods or documents deposited in exchange shall not ex- ceed the value at the time of the goods and mer- chandize which, or documents of title to which, or the negotiable security which shall be delivered up and exchanged. III. Provided always, and be it enacted. That this act, and every matter and thing herein con- tained, shall be deemed and construed to give va- lidity to such contracts and agreements only, and to protect only such loans, advances, and exchanges, as shall be made bond fide, and without notice that the agent making such contracts or agreements as aforesaid has not authority to make the same, or is acting maid fide in respect thereof against the owner of such goods and merchandize; and nothing herein contained shall be construed to extend to or protect any lien or pledge for or in respect of any ante- cedent debt, owing from any agent to any person with or to whom such lien or pledge shall be given, nor to authorize any agent intrusted as aforesaid in deviating from any express orders or authority re- ceived from the owner ; but that, for the purpose and to the intent of protecting all such bond fide loans, advances, and exchanges as aforesaid (though . made with notice of such agent not being the owner, but without any notice of tlie agent's acting without authority), and to no further or other intent or pur- pose, such contract or agreement as aforesaid shall: Stat. 5^-6 J'ict. c. 39. 337 be binding on the owner and all other persons in- terested in such goods. IV. And be it enacted, That any bill of lading, Meaning of •r 1. 11 i_ 1 > the term " do- India warrant, dock warrant, warehouse keeper s cument of certificate, warrant, or order for the delivery of'^'^i" goods, or any other document used in the ordinary course of business as proof of the possession or control of goods, or authorizing or purporting to authorize, either by indorsement or by delivery, the possessor of such document to transfer or receive goods thereby represented, shall be deemed and taken to be a document of title within the meaning of this act ; and any agent intrusted as aforesaid, and when and possessed of any such document of title, whether Jr^ajled"" derived immediately from the owner of such goods, or obtained by reason of such agent's having been intrusted with the possession of the goods, or of any other document of title thereto, shall be deemed and taken to have been intrusted with the posses- sion of the goods represented by such document of title as aforesaid, and all contracts pledging or giving a lien upon such document of title as aforesaid shall be deemed and taken to be respectively pledges of and liens upon the goods to which the same relates ; and such agent shall be deemed to be possessed of and when in such goods or documents, whether the same shall possession. be in his actual custody, or shall be held by any other person subject to his control or lor him or on his behalf; and where any loan or advance shall be bond fide made to any agent intrusted with and in possession of any such goods or documents of title as aforesaid, on the faith of any contract or agree- ment in writing to consign, deposit, transfer, or de- liver such goods or documents of title as aforesaid, and such goods or documents of title shall actually be received by the person making such loan or ad- vance, without notice that such agent was not autho- rized to make such pledge or security, every such loan or advance shall be deemed and taken to be a loan or advance on the security of such goods or documents of title within the meaning of this act, Q 338 Appendix, No. 1, though such goods or documents of title shall not actually be received by the person making such loaa „ ^jgm^jj j,^ or advance till the period subsequent thereto; and agreement," any contract or agreement, whether made direct with vance." " such agent as aforesaid, or with any clerk or other person on his behalf, shall be deemed a contract or agreement with such agent ; and any payment made, whether by money or bills of exchange, or other negotiable security, shall be deemed and taken to Possession be an advance within the meaning of this act ; and evidence of an agent in possession as aforesaid of such goods or documents shall be taken, for the purposes of this act, to have been intrusted therewith by the owner thereof, unless the contrary can be shown in evi- dence. Agent's civil V. Provided always, and be it enacted. That no- responsibiiiiy things herein contained shall lessen, vary, alter, or not to be di- rr 1 • -i -i-i-. c r minished. atiect the civil responsibiuty oi an agent tor any breach of duty or contract, or non-fulfilment of his orders or authority in respect of any such contract, agreement, lien, or pledge as aforesaid. Agentmaking ^I- Provided always, and be it enacted. That if consignments any agent intrusted as aforesaid shall, contrary to or inslrac't^on of without the authority of his principal in that behalf, P^!"'='P^'' . for his own benefit and in violation of good faith, demeanor. make any consignment, deposit, transfer, or delivery of any goods or documents of title so intrusted to him as aforesaid, as and by way of a pledge, lien, or security ; or shall, contrary to or without such authority, for his own benefit and in violation of good faith, accept any advance on the faith of any contract or agreement to consign, deposit, transfer, or deliver such goods or documents of title as afore- said ; every such agent shall be deemed guilty of a misdemeanor, and being convicted thereof, shall be sentenced to transportation for any term not exceed- 1 ing fourteen years nor less than seven years, or to j suffer such other punishment by fine or imprison ment, or by both, as the court shall award ; and every clerk or other person who shall knowingly and wilfully act and assist in making any such con Stat. 5^-6 Vict. c. 39. 339 signment, deposit, transfer, or delivery, or in accept- ing or procuring such advance as aforesaid, shall be deemed guilty of a misdemeanor, and, being con- victed thereof, shall be liable, at the discretion of the court, to any of the punishments which the court shall award, as hereinbefore last mentioned : Pro- vided neverthelesss, that no such agent shall be liable to any prosecution for consigning, depositing, tranferring, or delivering any such goods or docu- ments of title, in case the same shall not be made a security for or subject to the payment of any greater sum of money than the amount which at the time of such consignment, deposit, transfer, or delivery was justly due and owing to such agent from his prin- cipal, together with the amount of any bills of ex- change drawn by or on account of such principal and accepted by such agent : Provided also, that the conviction of any such agent so convicted as afore- said shall not be received in evidence in any action at law or suit in equity against him, and no agent intrusted as aforesaid shall be liable to be convicted by any evidence whatsoever in respect of any act done l3y him, if he shall at any time previously to his being indicted for such offence, have disclosed such act, on oath, in consequence of any compulsory process of any court of law or equity, in any action, suit, or proceeding which shall have been bona fide instituted by any party aggrieved, or if he shall have disclosed the same in any examination or de- position before any commission of bankrupt. VII. Provided also, and be it enacted, That no- Right of thing herein contained shall prevent such owner as 0^^"^""/° '■^" aforesaid from having the right to redeem such goods ' -or documents of title pledged as aforesaid, at any time before such goods shall 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 sum of money for or in respect of which such agent would by law be entitled to retain the same goods or documents, Q 2 or to recover balauce of proceeds. redeemed. 540 Apj)end'ix, No. 1. or any of tlicm, by way of lien as against such owner, or to ])revent the said owner from recovering of and from such joerson with whom any such goods or documents may have been pledged, or who shall have any such 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- , f tract or agreement as aforesaid : Provided always. In case oi , ~ ^ j ^ bankruptcy, that in case of the bankruptcy of any such agent the prove'^for Owner of the goods which shall have been so re- anionnt paid deemed by such owners as aforesaid shall, in respect for'^va?ue"of "^ of the sum paid by him on account of such agent goods, if uii- foi- 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 sliall 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. VIII. And be it enacted, That in construing this act the w ord " person" shall be taken to designate a body corporate or company as well as an indi- vidual ; and that the words in the singular number shall, when necessary to give effect to the intention of the said act, import also the plural, and vice versa ; and words used in the masculine gender shall, when required, be taken to apply to a female as well as a male. IX. Provided also, and be it enacted, That nothing herein contained shall be construed to give validity to or in anywise to affect any contract, agreement, lien, pledge, or other act, matter, or thing made or done before the passing of this act. Interpreta- tion of act. Not to affect any contract before passing of tliis act. APPENDIX, No. II. 7 &S Geo. 4, c. 29, ss. 49, .51, 52. An Act for consoUdaUng and amending the Lams Ui England relative to Larceny and other Offences con- nected the reivith. [21st June, 1827.] XLIX. And, for the piniisliment of embezzlements Agents em- committed by agents intrusted with property, be it moneyin- enacted, That if any money, or security for the pay- trusted to ment of money, shall be intrusted to any banker, mer- appTie'dtoany chant, broker, attorney, or other a ' .' pose ; direction in writing to apply such money, or any part thereof, or the proceeds or any part of the proceeds of such security, for any purpose specified in such direction, and he shall, in violation of good faith, and contrary to the purpose so specified, in anywise con- vert to his own use or benefit such money, security, or proceeds, or any part thereof respectively, every such offender shall be guilty of a misdemeanor, and being convicted thereof, shall be liable, at the dis- cretion of the court, to be transported beyond the seas for any term not exceeding fourteen years nor less than seven years, or to suffer such other punish- ment by fine or imprisonment, or by both, as the court shall award ; and if any chattel or valuable or embez- security, or any power of attorney for the sale or ^'">|any „ •' ' p -' S . . -^ , ,. , goods or valu- transter or any snare or interest in any pubhc stock able security or fund, whether of this kingdom, or of Great Bri- JherforVafe tain or of Ireland, or of any foreign state, or in any custody, or fund of any body corporate, company, or society, cui^purpose, shall be intrusted to any banker, merchant, broker, g«'ityofa ^1 ^' c r ^1 r ' misdemeanor. attorney, or other agent tor sate custody, or tor any special purpose, without any authority to sell, nego- tiate, transfer, or pledge, and he shall, in violation of 342 /Appendix, No. 2. good faith, and contrary to the object or purpose for which sucl) chattel, security, or power of attorney sliall have been intrusted to him, sell, negotiate, transfer, pledge, or in any manner convert to his own use or benefit such chattel or security, or the proceeds of the same, or any part thereof, or the share or in- terest in the stock or fund to which such power of attorney shall relate, or any part thereof, every such offender shall be guilty of a misdemeanor, and, being convicted thereof, shall be liable, at the dis- cretion of the court, to any of the punishments which the court may award, as hereinbefore last men- tioned. Factorspiedg- LI. And be it enacted, That if any factor or agent ing for their intrusted, for the purpose of sale, with any goods or goods'tTrdo^ merchandize, or intrusted with any bill-of-lading, cuments re- warehouse-keeper's or wharfinger's certificate, or goods intrust- Warrant or order for delivery of goods or merchan- f^ 'the''^^- <^'2e, shall, for his own benefit, and in violation of pose of sale, good faith, deposit or pledge any such goods or mer- misdemea^nor. chandize, or any of the said documents, as a security Not to ex- for any money or negotiable instrument borrowed or ^here°the'^' received by such factor or agent, at or before the pledge does time of making such deposit or pledge, or intended X amount of to be thereafter borrowed or received, every such their lien. offender shall be guilty of a misdemeanor, and, being convicted thereof, shall be liable, at the dis- cretion of the court, to be transported beyond the seas for any term not exceeding fourteen years nor less than seven years, or to suffer such other punish- ment by fine or imprisonment, or by both, as the court sliall award ; but no such factor or agent shall be liable to any prosecution for depositing or pledg- ing any such goods or merchandize, or any of the said documents, in case the same shall not be made a se- curity for or subject to the payment of any greater sum of money than the amount which, at the time of such deposit or pledge, was justly due and owing to such factor or agent from his principal, together with the amount of any bill or bills of exchange, drawn 7^-8 Geo. 4, c. 29, ss. 49, 51, 52. 343 by or on account of such principal, and accepted by such factor or agent. LII. Provided ahvays, and be it enacted, That These provi- nothing in this act contained, nor any proceeding, agTnts^shaii conviction, or judgment to be had or taken there- notiessenany upon against any banker, merchant, broker, factor, thrparty ag- attorney, or other agent as aforesaid, shall prevent, g'ieved now lessen, or impeach any remedy at law or in equity which any party aggrieved by any such offence might or would have had if this act had not been passed ; but nevertheless the conviction of any such oflender shall not be received in evidence in any action at law or suit in equity against him ; and no banker, merchant, broker, factor, attorney, or other agent as aforesaid, shall be liable to be convicted by any evi- dence whatever as an offender against this act, in respect of any act done by him, if he shall at any time previously to his being indicted for such offence have disclosed such act, on oath, in consequence of any compulsory process of any court of law or equity in any action, suit, or proceeding which shall have been hondjide instituted by any party aggrieved, or if he shall have disclosed the same in any ex- amination or deposition before any commissioners of bankrupt. APPENDIX, No. III. RULES, ORDERS, AND REGULATIONS, Made, ordained, and established by the court of Lord Mayor and Aldermen of the city of London, on Tuesday, the 15th day of September, 1818, for the admission of Brokers within the city of London and liberties thereof, with restrictions and limitations for the honest and good behaviour of all persons admitted, or who shall hereafter be admitted, by the said court, into the office and employment of a bro- ker within the said city and liberties thereof. 1. That every person applying to be admitted into the office and employment of a broker shall produce and show, to the satisfaction of this court, a certifi- cate of his having competent skill and knowledge in the particular trade or business wherein he seeks to be admitted and act as a broker, which certificate shall also recite the nature of his former servitude, or otherwise the line of business he has been brought up in, and has lately used ; such certificate to be signed by respectable merchants and others, not fewer than six in number at the least, using and carrying on trade or merchandize. 2. That every person so applying to be admitted into the office and employment of a bi'oker, shall, in his petition to this court for such admission, set forth the line of business which he intends as such broker to pursue, and shall establish to the satisfac- tion of this court that he is conversant with such line of business, and in the articles he intends to inter- meddle with as such broker. 3. That no certificate or recommendation of any Rules, 8)C. as to London-Brokers. 345 person to be admitted a broker be signed by an alderman of this city. 4. That this court will from time to time limit the admission of brokers to such competent and suffi- cient number, as this court in their discretion shall deem meet and necessary. 5. That the order of this court, of the 23rd day of June, 170S, viz. " That no person shall thereafter be " licensed to exercise the employment of a broker *' who shall drive any other trade, and that all per- " sons who have been already admitted brokers, and " do use or exercise any trade or calling, shall forth- " with leave off' and relinquish such trade or calling, " or otherwise the court will discharge him or them " from the said office and employment of a broker," be for the future strictly enforced. 6. That no broker shall make out or take any bill of parcels in his own name, or receive or take any bill of parcels or invoice on account of his principal, made out in his the broker's name, nor shall demand, receive, or take, any larger sum of money than the amount of the usual brokage or commission. 7. That in the event of any broker becoming bankrupt, making composition with his creditors, or taking the benefit of any insolvent act, his license to act as a broker shall forthwith cease and determine, and he shall not afterwards be permitted to exercise the office and employment of a broker, unless he shall be readmitted upon application to this court. 8. That every broker shall and do enter every bar- gain or contract he shall make in a book to be kept in his office or counting-house, and to be intituled, *' The Broker's Book," on the day of making every such bargain or contract, with the christian and sur- name at full length of both the buyer and the seller, the quantity and quality of the articles sold or bought, and the price of the same, and the terms of credit agreed upon, and deliver a contract note to both buyer and seller, or either of them, upon being re- quested so to do, within twenty-four hours after such Q 5 346 Ap'pendix, No. 3. request respectively, containing therein a true copy of such entry. 9. That no broker shall take or receive double brokage, that is to say, from both buyer and seller of the same article, but from the buyer or seller only, whichever it may happen to be that shall employ him, and that no broker be employed for both buyer and seller in the same transaction, except only in regard to purchases made by brokers at public sales, and then always in such cases that the said purchases be made hondjide, and that the name or names of the principal or principals be entered in the Broker's Book immediately after the conclusion of the day's sale, or the space of twenty-four hours next after every such transaction. 10. That every broker shall keep by him an authentic copy of his admission, under the hand of the town clerk, and shall produce and show the same, and also the silver medal delivered to him at the time of his admission, for his authority and the satisfac- tion of all persons concerned to know the same, upon being required so to do by any such person or persons. 11. That the penalty of the bond given by the brokers be increased, and that each broker shall enter into such bond in the penalty of One Thou- sand Pounds, and find two sureties to be approved of by this court who shall also enter into bond in the penalty of Two Hundred and Fifty Pounds each, for the due and just execution by the broker of his said office and employment. 12. That a copy of the bond entered into by bro- kers, and the oath taken by them on their admission, be advertised, and otherwise made public. 13. That the names of all brokers admitted and discharged shall, as soon after the order for their admission or discharge as the same can be conve- niently done, be fixed up in a conspicuous manner at the Royal Exchange, and otherwise made public, as this court shall from time to time deem necessary and order. Rules, ^ c. as to London Brokers. Sill The Bond above referred to. Whereas tlie above bounden [mentioning the brolker^s name and description^ is by the court of lord mayor and aldermen of the city of London allowed to be admitted and sworn a broker within the same city and liberties, to have, use, and exercise the said office and employment during the pleasure of the said court, and no longer : Now the condition of this obligation is such that if the said [broker's name'\ for and during such time as he shall and doth con- tinue in the said office and employment, shall and do well and faithfully execute and perform the same %vithout fraud, covin, or deceit, and shall, upon every contract, bargain, or agreement by him made, de- clare and make known to such person or persons with whom such agreement is made, the name or names of his principal or principals, either buyer or seller, and shall keep a book or register intituled, The Broker's Book, and therein truly and fairly enter all such contracts, bargains, and agreements and the day of the making thereof, together with the christian and surname at full length of both buyer and seller, and the quantity and quality of the articles sold or bought, and the price of the same, and the terms of credit agreed upon, and deliver a contract note to both buyer and seller, or either of them, upon being requested so to do, within twenty-four hours after such request respectively, containing therein a true copy of such entry, and shall, upon demand made by any or either of them to manifest and prove the truth and certainty of such contract and agreement, and for the satisfaction of all such as shall doubt whether he is a lawful and sworn broker or not, shall, upon request, produce a medal of silver with her majesty's arms engraven or stamped on one side, and the arms of the city with his name on the other, and shall not directly or indirectly, by himself or any other, deal for himself or any other broker in the exchange or remittance of money, or in buying any tally or tallies, 348 /Appendix, No. 3. order or orders, bill or bills, share or shares, or in- terest in any joint stock to be transferred or assigned to himself or any other broker, or to any other in trust for him or them, or in buying any goods, wares, or merchandizes to barter or sell again upon his own account, or for his own or any other broker's benefit or advantage, or make any gain or profit in buying or selling any goods over or above the usual bro- kage ; and shall and do discover and make known to the said court of lord mayor and aldermen in writing the names and places of abode of all and every per- son and persons that he shall know to use and exer- cise the said office or employment, not being there- unto duly authorized and empowered as aforesaid, within thirty days after his knowledge thereof, and shall not employ, or cause, or permit, or suffer any person or persons to be employed with, under, or for him, to act as a broker within the said city and liber- ties thereof, not being duly admitted as aforesaid ; then this obligation to be void and of none effect, or else to be and remain in full force and virtue. INDEX. A. ACCOUNT, factors and brokers bound to account to their principals, 40 — 42 what this account should contain, payments and receipts, 42 profits made on money received ad merchandizandum, id. interest made on money remaining in his hands, 43 or by the course of exchange, id. or by selling to his principal on his own account, id. action of account, when it will lie against factor or broker, 264 ACCOUNTING, assumpsit for not, 265 bill in equity to compel, id. in what cases the proper remedy, 266, 267 ACTION, actions by principal against his factor or broker, where the breach of duty relates to matter of account, action of account, 264 assuvipsit for not accounting, 265 action for money had and received, 267 — 269 special assumpsit on commission del credere, 269 actions, when factor or broker has been guilty of negligence, assumpsit, 270 case, id. trover, when it will lie, id. when not, 271 when principal may bring trover against third persons, 272, 273 nature of damage which the principal must prove, 273 — 275 j and see title Damages. defences by factor or broker, 275 — 282 ; and see title Defences, ADMISSION, by factor or broker, will bind principal, 91 will not take a debt out of the statute of limitations, 92 350 Index. ADVANCES, factor or broker intitled to be reimbursed for, 164 what advances generally allowed, 165, 166 query, if factor allowed to charge for foreign customs not paid, 166—168 insurance-broker may charge for premiums not paid, 168 advances sometimes allowed, although made out of the usual course of busmess, 168 — 170 no charge allowed for voluntary payments, 170 nor for monies paid after revocation of order, id. unless order irrevocable, 171, 172 interest, when allowed, 172, 173 agreement as to advances, effect of, 173, 174 AGENT, general, what, 74 special, what, id. general agent, how constituted, 75 — 77 factors and brokers are general agents, 77, 82 — 85 AMBIGUITY, rules of construction where authority of factor or broker is ambiguous, 51, 52 APPOINTMENT, how factor or broker may be appointed, 10 — 14 who may appoint, 14 — 17 ARBITRATION, insurance -broker may submit to, 71 AUTHORITY OF FACTORS AND BROKERS, how conferred ; in ordinary cases, 10 by corporations, 11, 13 other special cases, 13, 14 by whom ; partners, 15 part-owners, 15 — 17 how construed ; when conferred by formal instrument, 49 when by informal, 49, 50, 5i authority to two or more, 50 general authorities are construed so as to include all usual powers, 52, 53 custom of trade admissible in construing, 53, 55 or subsequent authority, 55 powers conferred by ; as between factor or broker, and his principal, 55 — 73 as between principal and third parties, 77 — 1 15 Index, 351 AUTHORITY OF FACTORS AND BROKERS— continued, how determined ; by countermand, 311 — 313 by renunciation, 314 by completion of purpose for which it was conferred, id. by efflux of time, 315 by bankruptcy of principal, id. or of factor or broker, 316 by death of principal, 317 or of factor or broker, id. by marriage or insanity of principal, id. note(»?i) time from which countermand of authority will take effect, 318—320 consequences thereof, 320, 321 B. BANKRUPTCY, of principal ; revokes the authority of factor or broker to act as his agent, 315 payment to factor after, not good, 97 unless he have a lien on the price, 315 possession of property acquired after notice of, does not intille to lien, 207 unless bill-of-lading previously received, 208 of factor or broker ; determines his authority, 316 factor's assignees may receive the price of goods sold by him, where he has a lien, id. secus, where the factor has no lien, 268 goods in the hands of a factor at the time of his bank- ruptcy, do not pass to his assignees, 316, note (g-) BARTER, factor has no authority to, 56 BILL-BROKER, by custom of London, may pledge bills for advances to himself, 71, 72 in general he does not possess this power, 72 is liable on his unqualified indorsement of bills purchased by him, 263 is subject to the bankrupt-laws, 316, note {g) BILL-OF-EXCHANGE, factor cannot, in general, accept or negotiate, 60 payment of, to factor or broker will bind principal, 113 giving bills for the price of goods, does not devest factor's right to stop in transitu, 238 when factor is personally liable to his principal thereon, 263, 264 when liable to third parties, 290 352 Index. BILL-OF-LADING, factor may sell, by indorsing, 58 may pledge, 144 possession of, when it intitles factor to lien on goods, 203, 208 assignment of, by consignee, defeats factor's right to stop in transitu, 236, 237 possession of, when it intitles factor to maintain trover for goods, 252—255 acceptance of goods under, when it renders factor liable for freight, 292—294 BILL-IN-EQUITY, principal may file, to compel factor or broker to account, 265 may be filed in aid of an action at law, 266, 267 BOUGHT-AND-SOLD NOTES, what they are, 4 what they should contain, 4, 5 effect of, in evidence, id. BROKER, what he is, and nature of his employment, 1 — 5 distinction between broker and factor, 4 how the rate of his commission is legulated, 5, 6, 153 — 164 who may be, 6 who are at liberty to act as such in London, 7 regulations for their admission so to act, 8 to what classes of brokers these regulations apply, 9 regulations as to custom-house brokers, 10 how a broker may be appointed in ordinary cases, id. how by corporations, 11 — 13 other special modes of appointment, 13, 14 by whom appointed, 14 rules as to appointment by partners, 15, 16 in what cases part owners may appoint, 16, 17 duties of; see tit. Duties, powers of ; see tit. Powers. rights of ; see lit. Rights. liabilities of; see tit. Liabilities. determination of authority, see title Authority. subject to bankrupt-laws, 316, note (g) C. CARRIER, lien of, on goods, will not defeat factor's right to stop in tran- situ, 238 CASE, action on the, when it will lie by principal against factor or broker, 270 Index. 353 CHARTER-PARTY, when factor personally liable thereon, 291 COLLATERAL TRANSACTION, when affected by illegality of original transaction, so as to de- prive factor or broker of his commission, 182 — 186 COMMISSION, rate of, how regulated, 1, 5, 153, 154 agreement as to, excludes custom of trade, 155 or charges for extra attendances, id. when regulated by usage of trade, 156 usage must be uniform, 157 rule where there is no usage of trade or special contract, 158 where payment of, depends on a contingency, id. as to ship-brokers in London, 159. where there is a commission del credere, 160 where bargain opened bv one broker is completed by another, 160 when factor intitled to, 163, 164 CONSTRUCTION, of authority of factor or broker, 49—55 CONTRACT, signed by broker, binds both parties under the statute of frauds, 66,67 factor may sue on, when made in his own name, 241, 242 factor or broker exclusively liable on written contract made in his own name, 289 CORPORATION, appointment of factor or broker by, 11 COUNTERMAND, by principal revokes factor's or broker's authority, 311, 312 from what time it takes effect, 318, 319 CUSTOM-HOUSE BROKERS, regulations as to, 10 CUSTOMS, factor bound to pay, 38 foreign, not allowed unless paid, 166 — 168 CUSTOMS- ACT. provisions of, 39, note (b) D. DAMAGE AND DAMAGES, for what damage to principal's goods factor is liable, 38 factor or broker intitled to be reimbursed all damages incurred in the course of his employment, 174 although caused by the infringement of the rights of third parties, 175, 176 measure of damages in action by factor against sub-agent, 257 354 Index. DAMAGE AND DAMAGES— mituineJ. nature of damage whicli principal must prove, in action against factor or broker for negligence ; must have been deprived of an actual right, 20, 273 but loss need not have been caused immediately by the act of the agent, 274, 275 DEATH, of principal, factor may acquire a lien on goods received after, 209 revokes factor's or broker's authority to act as his agent, 317 unless It be coupled with an interest, id. of factor or broker, determines his authority, id. query, whether death of one joint-factor determines the authority of the others, 317, 318 DEFENCES OF FACTOR OR BROKER, to action by principal, where he is sued for a money demand, 275, 276 where he is sued in trover, 276 where he is sued for not accounting, 277 where he has a commission del credere, id. illegality no defence to action for money had and received to principal's use, 278 nor JUS tertii, 279 defences where he is sued for negligence, 280 illegality of commission, 281 where he is sued for neglecting to insure, 281, 282 ratification by principal, 282 defences to criminal proceedings, 284 to action by third parties, in general may avail himself of the same defences as if he were the principal, 299, 300 in action for premiums, insurance-broker may set off losses, 300, 301 or returns of premium, 301, 302 defences in actions for money paid by mistake, for the use of his principal, 303 in actions for money paid to him by his principal for the use of third persons, 303, 304 DEL CREDERE, what, 2 del credere factor, payment to, will not bind principal, after no- tice, 93 factoi or broker intitled to receive payment of, at once, 160 where factor has, principal cannot interfere with his rights thereunder without waiver of guarantee, 247 Index. 355 DEL CREDERE— contimied. liability of factor or broker under, 262 action against him thereon, 269 DETERMINATION, authority how determined, 311 — 320 stoppage in transitu, right of, how determined, 227 — 239 DILIGENCE, factor or broker bound to exercise, 33 — 35 what constitutes proper diligence, 35, 36 DISTRESS, goods of principal in factor's hands not liable to, 165, note (