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COMPENDIUM

ERCANTILE LAW.

BY THE LATE

JOHN WILLIAM SMITH.

(ri)irb edition.

GREATLY ENLARGED AND REVISED Tfl ROUGH OUT FROM TH:
LAST ENGLISH EDITION.

JAMES P. HOLCOMBE

AND

WILLIAM Y. GH OLSON.

D. APPLETON AND COMPANY,

Nos. 443 & 445 BROADWAY
1867.

TJi-'i 3 i/^t

Kntered, according to Act of Congress, In the year ISOO,

By D. Appleton & Company,

Ir the Clerk's Office of the District Court of the United Stales for llie Southern District ot

New York.

PREFACE

TO THE THIRD EDITION,

Tins edition of Mr. Smitli's excellent treatise on Mer
cantile Law will be found to differ materially, and it k
hoped for the better, from the last. The present Editor
has carefully revised all the notes originally prepared by
him, constituting much the larger portion of the American
additions to the work. He has not taken as large a liberty
with the contributions of Judge Gholson, but has appended
to them a statement of the most important points which
have been since adjudicated on their subjects, by the En-
glish and American courts. He has endeavored so to
select, arrange and condense from the mass of learning
before him, as to compress within the limits of this volume
the most important expositions of commercial law by the
American courts. With what success the task has been
accomplished, he submits to the judgment of the profession.

James P. Holcombe

January Isf, 1855.

PREFACE

TO THE SECOND EDITION,

The reader will find tlie contents of this edition mucli en*
larged. A great portion of the new matter was compiled
by the late Mr. Smith, who had most carefully inserted,
both in the text and notes, the cases published previously
to his death at the close of the year 1845, including the
four volumes of Queen's Bench, the earlier portion of the
sixth volume of Manning and Granger's, and the whole of
the twelfth volume of Meeson and Welsby's Reports. A
few cases may be found in the recent earlier Reports,
bearing on the different topics discussed, which are not
cited ; but from the copious references to the same volumes
in which they are contained, the Editor is satisfied that
the omission of them was intentional, and he has not pre-
sumed to add them. So far as he could do so, consistently
with the due correction of the text, he has confined his
additions or alterations to the notes, and he has refrained
from inserting any mark to distinguish the parts inserted
by him, as he believes the facts stated above will enable
the I'eader to do this without the inconvenience of
brackets.

PREFACE

TO THE FIRST ENGLISH EDITION

The idea of tliis work was suggested by Mr. Burton'a
Compendmm of tlie Law of Real Property. Tlie acknow-
ledged utility of that book induced tlie author to believe,
that an attempt to compress the chief doctrines of an
equally important branch of the law into a treatise of
similar dimensions, might not prove altogether useless.
The Mercantile Law is, in one respect, better adapted to
such compression than the Law of Real Property, inas-
much as the reasons upon which the former is based can
be explamed more shortly than those which support the
latter. The reasons upon which our Law of Real Pro-
perty is founded, are, generally speaking, historical ; and
part of history must, therefore, be recounted, in order to
explain them clearly and philosophically ; while the Mer-
cantile Law is deduced from considerations of utility, the
force of which the mind perceives as soon as they are
pointed out to it. For instance, if a writer were desirous
of explaining why a rent-service cannot be reserved, in a
conveyance by a subject of lands in fee-simple, he would
be obliged to show the feudal relations that existed be-
tween lord and tenant, the nature of subinfeudations, and

PREFACE.

how the lord was injured by tliem in sucli liis relation to
his tenant ; how the statute quia emijtores was enacted to
prevent this injury, in consequence of which statute a
tenure, without which no rent-service exists, cannot be
raised by a conveyance from one subject to another in fee-
simple. In like manner, the explanation of a recovery, of
a fine, of a copyhold, of an estate in ancient demesne, of a
use, of a trust, would require a process of historical deduc-
tion. But when the reader is told, that the drawer of a
bill of exchange is diseharged if timely notice be not given
him of its dishonor, because, without such notice, he might
lose the assets he has placed to meet it in the drawee's
hands ; or, that if A hold himself out as B's partner, he
will be liable as such, because he might else enable B to
defraud persons who had trusted him upon the faith of the
aj^parent 2:>artnership and joint responsibility — when these
reasons, and such ■ as these, are given, every man at once
perceives their cogency, and needs not to be told lioio^ that
he may know wliij^ the law was settled on its present foot-
ing. The fitness of this subject 'for compression is, there-
fore, hardly questionable. The difficulty of compressing
it is, however, extreme ; the author who attemj)ts to do so,
must continually keep in view a triple object — must aspire
at once to clearness, brevity and accuracy ; a combination
so difficult, that its difficulty may, it is hoped, be fairly
pleaded in excuse for some of the deficiencies and imper-
fections which the reader may discover in the following
pages, and which would have l)een still more numerous,
but for the kind assistance of friends, to whom the Author
takes this opportunity of returning his sincere acknow
ledgments.

July 30. 1834.

ADYEKTISEMENT

TO THE A3IERICAN EDITION

TnK tieatise of Mr. Smitli oa Mercantile Law wants no
introduction to tlie profession. It lias been received, both
in England and in this country, with signal and growing
favor. There is no work in the lawyer's library, of which
it can be said with more truth, '•'■ multiim in ixirvoy-
There is scarcely an important principle of commercial
law, which has been decided by the English courts, that
it does not state with fullness, perspicuity, and accuracy, and
sustain by reference to the adjudicated cases.

But great as is, beyond question, the value of that
work, it is not sufficiently adapted to the wants of the pro-
fession in the United States. It devotes more space to
analosries and illustrations, drawn from the civil law, than
to the labors of Kent, Story, and other eminent American
jurists. The Editors believe, that in the department of
mecrantile law, we are in advance of our transatlantic
brethren. Under these circumstances, they have supposed
that a running commentary, as it were, upon the most
important American decisions, pointing out the cases in
which there exists any conflict of authority, and directing
attention to the new questions which have arisen for adja-

10 ADVERTISEMENT.

dication in our own courts, must greatly increase the use-
fulness of the original work. The present edition lias been
prepared for the purpose of accomplishing that object.
How far they have succeeded it is not for the Editors to
say ; but they believe that they have brought under
review as many of the decisions of the Supreme Court of
the United States, and of the principal commercial courts
of the several States, as the limits of a single volume
would permit.

The original work has been reprinted from the last
and most complete English edition, greatly improved by
the author before his death. The American Editors have
added references to the most important cases which have
been since decided.

The volume, in its present form, is presented to the
profession, in the hope that it will supply a desideratum
which has been long felt and acknowledged by all.

Ja:mes p. Holcombe.
WiLLiAii Y. Gholson.

CONTEXTS.

FASa

Introduction 17

BOOK I.

OF MERCANTILE PERSONS.

Chap. 1—0/ Sole Traders 37

Chap. II. — Of Partners —

Sect. 1. Partnership, what 43

Sect. 2. How formed 52

Sect. 3. How dissolved 53

Sect. 4. Rights and liabilities of partners among themselves 56

Sect. 5. Rights of third persons against partners 73

Sect. 6. Rights of partners against third persons 97

Chap. III. — Joint Stock Companies —

Sect. 1. What 101

Sect. 2. How formed — and dissolved 103

Sect. 3. Rights and liabilities of members inter se 130

Sect. 4. Rights against, and liabilities to, third parties .... 134

Chap. IV. — Corporations 140

Chap. V. — Principal and Agent —

Sect. 1. Definition and character of agent 147

Sect. 2. Rights of principal against agent 153

Sect. 3. Rights of agent against principal . . . , , IfJG

12 co]^rrENTS.

Sect. 4i. Rights of third persons against principal 169

Sect. 5. Rights of principal against third parties 203

Sect. 6. Rights of agent against third parties 208

Sect. 7. Rights of third parties against agent 209

BOOK II.

OF MERCANTILE PROPERTY.

Chap. I. — Incidents peculiar to Mercantile Property 221

Chap. II. — Shipping —

Sect. 1. The privileges of a British ship 228

Sect. 2. Wliat ships are, properly speaking, British, 230

Sect. 3. How title to British ships may be acquired and

transmitted 238

Sect. 4. Rights of part owners 248

Chap. \\l.— Goodwill 252

Chap. IV. — Properdj in Negotiable Instruments 255

BOOK III.

OF MERCANTILE CONTRACTS..

Chap. I. — Bills of Exchange and Promissory Notes —

Sect. 1. Their definition, requisites, and form 2G2

Sect. 2. Parties to a bill or note 280

Sect. 3. Transfer of bills and notes 287

Sect. 4. Acceptance 297

Sect. 5. Presentment 303

Sect. 6. Notice 331

Sect. 7. Payment 334

Sect. 8. Resistance against payment 337

Sect. 9. Remedy on lost bills and notes 355

Chap II. — Contracts ivith Carriers 359

Chap. III. — Contracts of Affreightment —

Sect. 1 . AfTreightment by charter-party 369

Sect. 2. Contract for conveyance in a general ship 370

CONTEXTS. 13

PAGE

Sect. 3. Duties of master and owners 380

Sect. 4. Duties of the merchant 389

Sect. 5. General average 401

Sect. 6. Salvage 404

Sect. 7. Dissolution of contracts of affreightment 408

Chap. IV. — Maritime Insurance,

Sect. 1. Definition and nature of contract 410

Sect. 2. The parties to a contract of insurance 412

Sect. 3. The subject matter, or what may be insured 414

Sect. 4. The policy — its form and construction 419

Sect. 5. Results of contract 472

Sect. G. Proceedings after a loss 483

Chap. V. — Insurance vpon Lives 495

Chap. VI. — Lisurance arjainst Fire 503

Chap. VII. — Bottomry and Respondentia 527

Chap. VIII. — Contracts of Hiring and Service 532

CuAP. IX. — Contracts with Seamen —

Sect. 1. Nature and form of contract 538

Sect. 2. Duties and rights of seamen under the contract .. . 542

Sect. 3. Wages, how lost or forfeited 548

Sect. 4. Remedies of seaman for his w^ages 553

Chap. X. — Ajyprenticeship 557

Chap. XI. — Guaranties —

Sect. 1, Nature and form of contract 5G2

Sect. 2. Surety, how far liable 581

Sect. 3. Surety, how discharged 5S2

Sect. 4. Surety, how indemnified 585

Sect. 5. Representations in the nature of guaranties 587

Chap. XII. — Contracts of S'lle —

Sect. 1. Ability of vendor to sell 593

Sect. 2. Form and requisites of a contract of sale 590

Sect. 3. Duties of vendor (522

Sect. 4. Duties of vendee (540

Sect. 5. Effect of illegality q4q

]4 COXTEXTS.

Chap. XIU.— Contract of Debt-
Sect. 1. Definition of contract 053

Sect. 2. Duty of debtor G54

Sect. 3. Duty of creditor G72

BOOK IV.

OF MERCANTILE REMEDIES.

Chap. I. — Stoppage in Transitu —

Sect. 1, Right to stop in transitu, what G77

Sect. 2. Who possesses it CS2

Sect. 3. IIow long it continues GS2

Sect. 4, IIow defeated G85

Sect. 5. IIow it may be exercised CS7

Chap II. — Lien —

Sect. 1. Lien, what GS8

Sect. 2. How acquired G89

Sect. 3. IIow lost G97

A COMPENDIUM

MERCANTILE LAW

COMPENDIUM

MERCANTILE LAW.

INTRODUCTIOK

This Treatise will be divided into Four Books. The First, concern«
ing Mercantile Persons ; the Second, Mercantile Property ; the Third,
Mercantile Contracts; the Fourth and last, Mercantile Eemedies : A
method which appears the simplest and most comprehensive ; since
it includes, under a few heads, the description of those by whose
intervention trade is carried on ; of that which they seek to acquire
by so employing themselves ; of the arrangements which they are in
the habit of adopting, in order to do so effectually ; and of the mode
in which the proper execution of those arrangements are en-
forced, (a)

As it is anxiously desired that the book should be of practical
utility, it has been thought prudent to refrain, while stating and

(a) Tlie division of the Code de Commerce is into four Books: — 1. Du Commerce en
general, under which head is placed the law relating to sole traders, partnerships,
principal and agent, sales, bills of exchange, and promissory notes. 2. Du Commerce
maritime. 3. Des faillites et des Banqueroutes. 4. De la Jurisdiction Commerciale.
This last head can of course find no place in an English treatise, the jurisdiction ia
commercial cases being, in this country, vested in the same tribunals which take
cognizance of other civil causes.

18 INTRODUCTION.

Origin, History, and Importance of Commercial Law.

explaining the various rules of law comprised under tlie foregoing
heads, from entering into much historical inquiry regarding their
origin. Such inquiry might, it was apprehended, have diverted
the mind of the reader from the practical part of the work : besides
which, any attempt to blend an account of the ancient with an ex-
planation of the modern state of the law would have introduced
confusion into the latter, and prevented the attainment of that de-
gree of clearness and brevity which is so desirable, indeed essential,
in a work of this sori. Add to this, that a knowledge of the his-
tory of our commercial law is not so conducive to the right under-
standing of its present rules as is that of the feudal history to a
clear comprehension of our present law of real property. Great
part of the latter system stands solely upon feudal reasons, and
must appear to the man ignorant of those a mere collection of arbi-
trary regulations. Our mercantile law, on the contrary, is wholly
founded on considerations of utility ; and though many of its rules
are derived from the institutions of ancient times and distant coun-
tries, still is their introduction into our system owing not to a blind
respect for their origin, but to an enlightened sense of their pro-
priety. No one, unless acquainted with their feudal source, could
assign any reason for the rules which respect fines, escheats, or re-
coveries ; but it is not necessary, for the purpose of enabling the
reader to see the justice and good sense of the law of general aver-
age, to show him that it formed part of the maritime code of the
ancient Rhodians.

At the same time, it cannot be denied that the history of our
commercial law is a subject of great interest and rational curiosity,
and it may not be amiss to say a few words of the sources whence
its various regulations are derived, here, at the commencement of
the volume, where they cannot possibly embarrass the practical
consideration of the topics to which the remainder is devoted.

As the mercantile law of England concerns a great variety of
interests and possessions, so it is derived from a variety of sources and
authorities. In ascertaining the legal rights arising out of commer-
cial transactions, it frequently becomes necessary to have recourse
to the volumes of international law,(i) frequently to the contempo-

(b) See De la Yega v. Vianna, 1 B. & Ad. 284. Medeiro3 v. Hill, 8 Bing. 234.

IXTEODUCTIOX. 19

Origin, History, and Importance of Commercial Law.

raneous laws of nations.(c) So far as it affects title to lands, it de-
pends upon those feudal institutions from whicli tlie rules that, in
our country, govern such property, originate. It is deducible in
great part from the imperial code of Eome, in great part from the
different maritime codes of ancient Europe ; and all these, its com-
ponents, while they are interspersed and qualified by a multiplicity
of statutory enactments, are explained, blended, and applied, and
the cases for which they have omitted to provide are solved, by the
decisions of our English Courts of law and equity.

Numerous, however, as are its subsidiaries^ it is to the maritime
and the imperial laws that it is most largely indebted. Personal
property is the chief object of commerce : with that kind of property,
therefore, is the mercantile law chiefly conversant. Now the Eng-
lish law, so far as it concerns that branch of property, is deducible
in great part from the laws of Rome. Our ancient jurists, devoted
almost altogether to the explanation of the feudal system and its
consequences to the tenure of real property, seldom discuss the
nature of what they considered a far inferior species of possession :
and, whenever they do touch upon personal property, adopt, almost
verbatim, the doctrines and language of the civilians. The fact is,
that when commerce and commercial property began, during the
reigns of John and his son Henry the Third, to attract some little
attention, (as we may gather from the famous stipulation in Magna

Kaylor v. Taylor, 9 B. & C. 718. The Admiralty Reports passim, Haveloek v. Rock-
wood, 8 T. R. 2G8.

(c) See Trimbey v. Yignier, 1 Bing. K C. 151. Rothschild v. Currie, 1 Q. B. 43_
Alivon V. Furnival, 4 Tyrwh. 751, 1 C. M. & R. 211. la determining how far the
ordinances of a foreign code are to influence the decisions of an English court of
justice, the following is a leading principle on which the case is often found to turn ;
viz., foreign contracts must be construed according to the law of the place where
they were made. But the remedy on them must be pursued as it exists where the
parties happen to be. De la Vega v. Viauna, iiU supra. Huber v. Steiner, 2 Bino-.
N. C. 202.*

* The general principle tlius briefly but clearly laid down, has been recognized
in man}- leading cases in the American Reports. There is one important limitation
to it, however, which is thus expressed by Chief Justice Taney, in the case of The
Bank of Augusta v. Earle, 13 Peters, 519, 589. "Courts of justice have always ex-
pounded and executed contracts made in a foreign country, according to the 'iiws of
the place in which they were made: provided that law teas not rcpugjia^it to the law*
or policy of their own country."

20 IXTRODUCTIOX.

Origin, History, and Importance of Commercial Law.

Charta, in favor of foreign merchants, and the enactment of the
Statute de Mercatorihus{d) a few years afterwards for the security of
trading debts,) questions respecting trade and personal property
began more frequently to intrude themselves upon the notice of the
judges, who, finding that those principles of feudal law which had
been the main object of their previous study were often wholly
insufficient to meet the exigencies of these new cases, were glad to
have recourse to the already mature system exhibited in the com-
pilations of Justinian, which had been discovered about a century
before, (e) a system which must have appeared the more applicable
to personal property, as it had been adopted by the ecclesiastical
authorities to whom the administration of such property, after its
owner's death, was already intrusted. Thus it came to pass, that
the imperial law, which, at this very time, was so indignantly re-
pelled from any interference with the landed interest of the king-
dom, (/) was adopted as tile governing principle of a description
of property destined ultimately to compete in importance with the
landed interest itself.

The maritime law, to which our courts arc so considerably
indebted, is a system or rather a collection of systems, which grew
up in Europe upon the revival of commerce after the dark ages.
Some parts of it are indeed of far greater antiquity, being confess-
edly derived from a Greek origin, particularly from the celebrated
law of Ehodes,(^) the masterpiece of ancient jurisprudence. As

((/) 13 Edw. I. This act created a species of security entitled a statute merchant^
the holder of ■which had a right to seize all his debtor's lands and hold them till his
claim was satisfied out of the profits. " It is remarkable," saj's an eminent writer,
speaking of this statute, " that the feudal restraints of alienating lands, and charging
them with the debt of the owner, were softened much earlier for the benefit of trade
than for any other consideration."

(e) Viz., in 1130, at Amalfi; but Mr. Hallam thinks that the Pandects were either
wholly or in part known in Europe before the discovery of the Amalfitan copy.

(/) See the famous passage in the Statute of Merton, 20 Hen. 3, cap. 9. Koga-
verunt omnes episcopi magnates ut consentirent quod nati ante matrimonium essent
legitimi sicut illi qui nati sunt post matrimonium. Et omnes comites etBaronesund
voce responderunt quod nolunt leges Anglia; mutare quaj bucusque usitataj sunt et
adprobatse. See also Selden, Jan. Angl. 1, 2, s. 43, in Fortesc. c. 33, where we find
the nobility declaring "that the realm never had, nor never shall be governed by
the civil law."

((/) Our law of general average is a copy of that of Rhodes. "Lege Rhodia

INTRODUCTION. 21

Origin, History, and Importance of Commercial Law.

to tlie Eomans, though, they had numerous and well-framed regu-
"■ itions for the government of personal, in common with other pro-
perty, for commerce, considered as commerce, they appear to have
entertained scarce more respect than did the feudal lords. That
portion of Justinian which contains the maritime code of ancient
Italy (A) seems to have been no improvement on the pre-existing
laws of Ehodes and Athens. (z) Far more important are the rules
established by those commercial republics of Southern Europe,
which first emerged from the barbarism of the dark ages. Dante
and Petrarch are not better witnesses of their early progress in
civilization, than is the Consolato del Mare the first modern code of
marine jurisprudence, (/) The influence of the Italians over the
commerce and commercial regulations of our own ancestors is well

cavetur ut si, levandae navis gratia, jactus mercium factus sit , omnium contributione
sarciatur quod pro omnibus datum est." Dig. 14, 2, 1.

(/t) See the Pandects from 14 to 20, and Eoceus Notabilia de Navihus et Naulo,
passim. Tlie work of Roccus contains an abstract of tlie points to be collected from
Justinian and various other sources, and is an extremely useful compendium.

(i) We have tlie authority of an Emperor for this proposition : — 'kvruvlvog elnev
'Evdaifiovr " 'Eyu ^iv tov kocj/xou Kvgiog, 6 6^ vouog ri/g daTiuaarjg. Tcj vofiij tuv
'Podluv KqiviaOu -cj vavTiKu) iv olg firj Tig tuv ijjieTtguv avTui vu/uog ipavTiovTac." Dig
14, Tit 2.

{j) This is a collection of the maritime laws of Barcelona. Tliere is an excellent
translation by M. le Professeur Boucher, published in 1808. In calling it the earliest
modern code, I have followed Lord Tenterden. Mr. J. Park, however, describes it as
a compilation from the laws of Venice, Pisa, Genoa, Barcelona, Marseilles, and Amalfi,
which last he ctatea to have been published in the eleventh centurj-, and to be the
earlist modern sj'stem of marine law. See the Consolato del Mare, cited and relied
on by Tindal, L. C. J., in Gould v. Oliver, 4 Bing. N. C. 134. There is an edition of
the Conxolato in the Inner Temple Library, which is the earliest I have seen, and
which belonged to the celebrated Daines Barrington. It is a translation from Cata-
lonian into Castilian, for the use of the people of Valencia, printed in 1539, and con-
taining bj' way of supplement a charter granted to the merchants of Valencia by
Ferdinand of Arragon. This charter regulates the election of consuls, and contaits
provisions regarding the paj-ment of losses upon policies, which prore the system
of marine insurance to have been then well understood at Valencia. The book con-
cludes — " £Jn honor y gloria de Dios todo poderoso, y de la sacratissima Virgen Maria
niadre suya abogadora de los pccadores, y de los ben aventurados Santos Sant^ Elmo, San
Olemente, San Nicolas, San Antonio, y de las ben aventuradas Santas Santa Tecla, Santa
Ursola, Santa Barbara, Santa Clara, patronos y abogados de todos los navegantes, haze
fin el presente libro llamado Consolado del Mare, imevamente traduzido de la lengua
Catalana en nostro rmlgar Castellano impresso en la metropolifana Cuidad de Valencia,
por Fraiicisco Diaz Roma7io a un dias de mes de Enero anno, 1539."

22 INTRODUCTION.

Origin, History, and Importance of Commercial Law.

known, and is attested,- even at this day, hj the reference in sea-
policies to the street which was distinguished by the name and resi-
dence of their countrymen. The towns situated upon the northern
coast of Europe soon emulated the activity of the Italians. The
Ordinance of Wisbuy and the Hanseatic Ordinances remain as proofs
of their advancement, while that of Oleron, promulgated by our
own Richard the First, (/c) bears testimony that the advantages of a
well regulated marine were not, even at that early period, alto-
gether unknown to English statesmen, notwithstanding our con-
fessed inferiority to the republics of the Baltic and Mediterranean.
It would be wrong to quit this part of the subject without men-
tioning the most perfect of all foreign ordinances, that of Louis the
Fourteenth, " composed," to use the words of the ablest English
writer on commercial law, "in the reign of a politic prince, under
the auspices of a wise and enlightened minister, by laborious and
learned persons, who selected the most valuable principles of all
the maritime laws then existing ; and which, in its matter, method,
and style, is one of the most finished acts of legislation that ever
was promulgated."

These various systems of commercial law have been discussed,
improved, and illustrated by several extremely able writers. The
names of Vcdin, Pothier, [l) and Emerigon are familiar to every Eng-
lish as well as every foreign lawyer. It was not till lately that our
own country could boast of any names fit to compete with those of
the continental jurists; that of Molloy could scarce be cited in
answer to this reproach, which is now, however, completely effaced
by the industry and ability of many valuable writers, at the head
of whom may be placed Lord Tenterden, Mr. Justice Park, and Sir
John Bayley. America, too, whose authors, resembling us as she
does in laws and language, may be fairly reckoned with our own,
has, of late, contributed much to the elucidation and improvement
of commercial law. And it would be unpardonable in me while

{k) It seems to admit of doubt whether the laws of Oleron are not attributable
to another source. See Hallam, Middle Ages, vol. ii. p. 482, 1st ed. Pardessus Col-
lections des Lois Maritimes, chap. 8.

{I) See the encomium passed on Potlder in Cox v. Troy, 5 B. & A. 481. A con-
siderable part of this writer's works has been adopted verbatim into the French
code.

INTRODUCTION-. 23

Origin, History, and Importance of Commercial Law.

touching, however cursorily, upon this topic, to omit the mention
of Chancellor Kent and Judge Story. ^

Here it should be observed, that the foreign laws and foreign
lawyers who have been just mentioned as having mfluenced the
formation of the mercantile law of this country, were never, at any
period, recognized by the judges of our courts as bemg, per seof
any authority whatever. Respected the rules which they_ lay
down may be for the learning and sagacity which they evince
but, when they are obeyed, it is as part of the law and custom of
England, declared to be such, either by long usage and tradition,
or by the decisions of our own courts of justice containing an
enlightened adaptation of ancient principle to modern convenience,
and promulgating that as law which the judges of remoter times
would have pronounced to be such, could similar questions have
come before them under similar circumstances and in a similar state
of society : not, indeed, that there is any foundation for the charge
which some persons are in the habit of repeating against the Eng-
lish iudo-es, whom they accuse of inventing rules of law to answer
the exigencies of the case before them, and then pronouncing those
rules to\ave been the common law of the realm from time imme-
morial. True it indeed is, that the judges are occasionally forced
to lay down a new rule, in order to meet some new class of circum-
stances ; but, in doing so, they are obliged to take the greatest care
that this addition to our law shall not conflict with any pre-esistmg
portion of it. However politic, however useful, the adoption of a
particular doctrine may appear, still, if demonstrated to be mcon
sistent with any principle or rule already known and acted upon,
the judges, obliged thereto by oath, refuse to sanction it. Thus is
the course of their decisions hemmed in, as it were with walls, by
ancient principles and analogies, and, if there be but one way of
determinincr a case without offending those, in that one way aro
they compelled to determine it. Nothing therefore can be moro
unfair than to upbraid judges thus restricted as being arbitrary
devisors, rather than faithful expounders of the law.

Fortunately for the prosperity of this country, our tribunals,
when they first began to direct their serious attention towards com-
mercial subjects, found that the customs which had, by long accep-
tation ripened into law, whether originally taken from the sources

24 INTRODUCTIOX.

Origin, History, and Importance of Commercial Law.

abcye pointed out, or devised, as many of them doubtless were, by
tlie good sense of the people themselves, were all extremely reason-
able ; and they were consequently enabled, without deviating from
that analogy to old rules which they were bound to preserve while
promulgating new ones, to build up, on the foundation which had
thus been laid, a system under which England has arrived at her
present unexampled height of commercial prosperity. We will
conclude this introduction by tracing as briefly as jDOSsible the
gradual advancement of our law towards this its present state of
excellence.

The history of our commercial law is of course closely inter-
woven with that of our commerce.* When trade was unimportant

* " It is under the action of assumpsit that the modern Law Merchant has been
incorporated into the Common la\r. In the time of Edward III. we discover, that
in the ordinary transactions amongst merchants, that is, members of the trading com-
munity, a distinct law prevailed, of a more liberal nature than the general law, and
that it was more summarily and expeditiously exercised. This was called the lex
mercatoria : it had, in all probabilit}-, silently prevailed in London, and other com-
mercial towns, in some shape, throughout the whole of the Anglo-Saxon times.

" By the statute 27, Edward III. (stat. 2) in each town where the staple was or-
dained, a mayor was to be chosen, skilled in the law merchant, to do right to every
man according to that law. The lex mercatoria is expressly mentioned by Fortescue.
In common societies of merchants, and in mutual contracts, saj's Selden, equity and
good conscience, rather than strict law, is required; and he mentions a case in the
time of Edward II. where, following up this principle, the defendant in an action of
debt brought secundum legem mercatoriam, for some corn sold, was not permitted to
wage his law, though he might have done so in an ordinary action of debt. It
would seem, too, that merchants had always been specially favored, by having a
more summary process in the King's Court

"As regards the modern law merchant. In the reign of James I. it was held,
that if a merchant direct a bill of exchange to another merchant, payable to A, or
to order, and the other accept it ; by the law merchant a promise was to be implied
in the acceptor to pay it ; afterwards an action of assumpsit was given to every in-
dorsee to whom the bill was assigned.

"So every indorser who assigned such bill, was held liable to an assumpsit by
every subsequent indorsee ; and if the merchant to whom it was directed refused it,
the director (drawer) was liable to every indorsee ; — and so the law continues.

" A comprehensive and rational system of law, on the subject of Bills of Exchange
and Promissory ISTotes, has, with some help from the legislature, been established by
the judicial decisions of Lord Mansfield and his colleagues, and their distinguished
successors.

"Through the medium of the action of assimipsit, also under the auspices of Lord

IXTRODUCTION. 25

Origin, History, and Importance of Commercial Law.

and despised, there could be little need of regulations for its govern-
ment ; the increase of the one occasioned the multiplication of the
other. During the early feudal times, when no profession was
deemed honorable except that of arms, when a separate jurisdiction
and a petty tyrant were to be found in each manor, and the court
at which the injured trader must have sought redress from the
oppression of a powerful baron was presided over by that very
baron or his deputy, it is obvious that there could be little safety,
little room for commerce, and accordingly we find that it was
greatly neglected. Most of that which existed was in the hands
of Jews and foreigners, the former of whom were the inventors, or,
at least, the first to make use, in this country, of bills of exchange,
(m) as the latter were, though at a somewhat later period, of policies
of insurance. The native traders were to be found nowhere but in
the cities and free towns, whose municipal privileges enabled them
to afford security to the persons and j^roperties of their inmates
against the grasp of feudal oppression, and which, although in
later ages their exclusive rights may have operated disadvanta-
geously on commerce, were, in those early and distracted times, its
nurseries and safeguards. In these places, under a self-elected
government, supplied with adequate means of defence, and strong

(m) Little is kno'W'n for certain as to the origin of bills. Letters of credit were
known to the ancients (see an example, Cic. Epist. ad Alt. xii. 24, xv. 25) ; but they
Beem never to have become negotiable. This subject is learnedly discussed hy-Pothier
Traite du Contrat de Change, part. 1, cap. 1, s. 1. His conclusion is " 11 n'y a rien sur
cela de certain si ce n'est que les lettres de change etoicnt en usage dhs le quatorzihme
siecle." The first case in our law books concerning them is Martin i-. Boure, Cro. Jac,
6. Sir "W. Blackstone, on the authority of the Universal History, attributes their in-
vention to the Moguls, 2 Comm. 466.

Mansfield, the law of Insurance was formed into a system, which has been found to
be adapted to all the exigencies of society; indeed, the whole of the modern system
of commercial law may be said to have almost originated with tlie same eminent
Judge.

"This system, which is admitted to exhibit a comprehensive and enlightened
spirit of jurisprudence, is based upon very different reasons and principles from those
which govern real property law, and is derived from a variety of sources and au-
thorities — from international law — the different maritime codes of ancient Europe,—
Dut, far above and be3-ond all from the Imperial Code of Rome."

Spence's History of Equity Jurisdictio7i,Yo\. I, p. 247.

26 IXTRODUCTIO:S'.

Origin, History, and Importance of Commercial Law.

enough to bid defiance to the most powerful of the neighboring
barons, the traders of the realm exercised their avocations peacefully,
defended by the arms and charters of these half mercantile, half
military communities.

The promulgation of the laws of Oleron by Eichard the First,
and the protection assured to foreign traders and to the corporate
towns of the realm by the Great Charter, are the only legislative
incidents memorable with regard to commerce with which we meet
I prior to the reign of Edward the First, when a signal benefit was
1 conferred on the trader by allowing his debtor to charge his lands
in a statute-merchant, and permitting execution to be levied against
them by digit. During the period which intervened between his
reign and the accession of the House of Tudor, commerce pro
gressed but by slow steps. About that period a concurrence of
fortunate events gave it a sudden impulse. The discovery of
America and of a passage by sea to the East Indies, the total ces-
sation of civil hostilities, and the augmented might of the crown,
were all circumstances in the highest degree favorable to it. The
power of the barons was now rapidly on the decline, and, under
the safeguard of the throne, the realm at large became a free field
for the industry of the trader. The increase of commerce is now
distinctly marked by an increased attention to the laws which regu-
f lated it. In the reign of Ilenry the Eighth, bankruptcy laws were
' , for the first time introduced. During the long reign of Elizabeth,
I trade rose to an extraordinary pitch of prosperity. Policies of in-
' surance became so frequent, that a peculiar court was instituted to
adjudicate upon them, which was, however, soon abandoned for
the ordinary tribunals. And, even while we may lament the
shackles placed on enterprise by the creation at this period of a
number of unjustifiable monopolies, still, even here, we have occa-
sion to remark the increased spirit of the mercantile community,
since their remonstrances compelled that arbitrary princess to re-
voke the most obnoxious of them. In the reign of her less for-
midable successor, James, monopolies were publicly declared ille-
gal, and the law of patents placed almost upon its present footing.
The nation was now in a rapid course of advancement, which was
not checked even by the civil war. To the reign of Charles the
Second, a period fertile in legislative improvement, we are indebted

INTRODUCTION. 27

Origin, History, aud Importance of Commercial Law.

for tliose excellent navigati(jn(w) laws, to which England has to
attribute so much of her subsequent maritime greatness. In those
of William and Anne, promissory notes were placed upon their
present footing, and the banking system, a history of which will be
found in the great case of the Bank of England v. Anderson^ 3
Bing. N. C. 589, dates from that period. Much was now done for
commerce, not merely by the legislature, but by the courts, which
were now filled with learned and liberal-minded men, anxious to
apply the law so as to meet the exigencies of the subject. Among
these stands pre-eminent the Lord Chief Justice Holt, whose name
no English lawyer ought ever to pronounce without great venera-
tion. He was a man of profound learning and unflinching integ-
rity, and he possessed a fund of strong natural good sense which
rendered him peculiarly ca]3able of dealing with commercial ques-
tions, many valuable decisions on which are referable to his time.
Indeed, I have no hesitation in saying that Lord Holt alone accom-
plished more for English mercantile law than the whole body of
the English judges prior to his elevation.(o) Those who desire
to estimate his powers of mind and mode of dealing with im-
portant legal questions, will do well to peruse his celebrated judg-
ment in Coggs v. Barnard, Lord Raymond, 909, in which, availing
himself of his acquaintance with the civil law, he settled the law
relative to bailments on its present footing.

At last — a great epoch in our commercial history — the Court of
King's Bench was presided over by Lord Mansfield. (p)

The character and qualities of this great man were singularly
well adapted to the work he felt himself called on to achieve, that
of communicating form and symmetry to the then rude and shape-
less mass of our commercial law. Sprung from a noble family, he

(n) Smith, in his Wealth of Nations, speaks highly of them. " When the Act of
Navigation was made," says he, " though England and Holland were not actually at
■war, the most violent animosity subsisted between the two nations. It is not impos-
sible, therefore, that some of the regulations of this famous act may have proceeded
from national animosity. They are as wise, however, as if they had been all dictated
by the most deliberate wisdom."

(o) The present law with regard to Bills of Lading seems to have originated with
Lord Holt; see Evans v. Martlett, 1 Ld. Raym. 271.

{p) His lordship was sworn in on the 8th of May, lYoG, vice Sir Dudley Ryder.

28 INTRODUCTION.

Origin, History, and Importance of Commercial Law.

had enjoyed an education suited to his birth. He was versed not
only in the liiws and history of his own country, but in those cele-
brated writin2;s which constitute the noblest monuments of ancient
greatness. To these he could recur as guides in doubt and models
of arrangement ; from these he learned to regard law as a science,
to be expanded by the development of principles, not merely am-
plified by the accumulation of precedents. He was imbued too
with a taste for polite literature, and this he turned to its true use,
not to efface or supersede his graver studies, but to embellish their
results with the graces of clear, appropriate, and energetic language.

Great as the improvement he effected was, it cannot be a matter
of surprise that such a judge, occupying the chief seat of judica-
ture for upwards of thirty years, was able to accomplish it. The
change which his accession to the bench produced is thus described
by the ablest of his judicial contemporaries.

"Before that period," says Mr. J. Buller(2') "we find that, in
courts of law, all the evidence in mercantile cases was thrown to-
gether; they were left generally to a jury, and they produced no
^stablished principle. From that time, we all know the great study
has been to find out some certain general principles, which shall be
known to all mankind, not only to rule the particular case then
under consideration, but to serve as a guide for the future. Most
of us have heard those principles stated, reasoned upon, enlarged,
and explained, till we have been lost in admiration at the strength
and stretch of the human understanding. And I should be very
sorry to find mj^self under the necessity of differing from any case
which has been decided by Lord Mansfield, who may be truly said
to be the founder of the commercial law of this country."

It is needless to recount here what has taken place since the de-
cease of this great judge. It will be found in the ensuing pages,
and is in the recollection of many of our own contemporaries. Suf-
fice it to say, that the course on which he entered has been pursued
with no less zeal than wisdom by his successors. One great man,
LordStowell, has done much to raise the reputation of his country:
his judgments — models of judicial argument and eloquence — are
cited and admired not merely in our courts, but in those cf every

(q) Lickbarrow v. Mason, 2 T. R. 63.

IXTRODUCTIOK 29

Origin, History, and Importance of Commercial La'W.

commercial nation in the world. The legislature has, in the mean
while, clone its part, and, while it has not been slow to supply de-
ficiencies and correct mistakes, it has, hitherto, fortunately abstained
from any vexatious interference with arrangements dictated by that
best of legislators — Experience.

The mercantile law of England is, in point of fact, an edifice
erected by the merchant, with comparatively little assistance either
from the courts or the legislature. The former have, in very many
instances, only impressed with a judicial sanction, or deduced proper
and reasonable consequences from, those regulations which the ex-
perience of the trader, whether borrowing from foreigners or in-
venting himself, had already adopted as the most convenient, (r)

(r) Thus the earliest English dissertations on commercial law are collections of
usages written by merchants, who, from their practical knowledge of the regulations
in use among their own class, had become better commercial lawyers than those of
Westminster Hall. The author of Marius was a public notary, who lived in the
middle of the seventeenth century. It is scarcely to be looked on as a legal treatise
on bills of exchange ; it is, as the name imports, a work giving good practical advice
from a practical man, to persons receiving and negotiating bills of exchange. Per
Parke B. in Whitehead v. Walker, 9 M. & W. 514. So too, it was, at one time, the
practice, when a disputed point of commercial law arose, to receive evidence of the
custom of merchants with regard to it, and then leave it to the decision of the jury
in the way mentioned by Mr. J. Buller.*

* Mr. Justice Story, in the case of Rogers?;, the Mechanics' Ins. Co., 1 Story's Rep.
608, observes, "I own myself to be no friend to the indiscriminate admission of evi-
dence of supposed usages and customs in a peculiar trade and business, and of the un-
derstanding of the witnesses relative thereto, which has been in former times so freely
resorted to, but which is now subjected by our courts to more exact and well-defined
restrictions. Such evidence is often — verj- often — of a loose and indiscriminate nature,
founded upon very vague and imperfect notions of the subject ; and therefore, it should,
as I think, be admitted with a cautious reluctance and scrupulous jealousy, as it may
shift the whole ground of the ordinary interpretation of policies of insurance and
other contracts." Mr. Btll, in his Commentaries on Mercantile Jurisprudence, page
390, says, that " three things are necessary to settle a usage as a rule of the law mer-
chant: 1, proof of the usage; 2, the legality of it, or at least, that it is not incon-
sistent with the common law, but an allowable deviation from it; and 3, tlie allow-
ance of the custom judicially." " Of these two alternatives," says Mr. Dunlap, in his
edition of Paley on Agency, " it is assured]}' better that the merchants receive their
law from the courts, than the courts their law from the merchants." The same sen-
timents are expressed by Lord Eldon, C. J., in Anderson v. Picher, 2 B. <fe P. 168.

The usage, however, being established, the law is well stated in the following re
marks, whicli we quote from the note of the reporter to Yeats et al. :: Pirn et al. 1

so INTRODUCTION'.

Origin, History, and Importance of Commercial Law.

The latter, wisely reflecting that commercial men are notoriously
the best judges of their own interests, have interfered as little as
possible with their avocations, have shackled trade with few of those
formalities and restrictions, which are mischievous, if only on
account of the waste of the time occupied in complying with them.
The mercantile law of England is perhaps of all laws in the world
the most completely the offspring of usage and convenience, the
least fettered by legislative regulations. Thus, the performance of
one of the most obvious parts of the duty of a merchant, and one
which the laws of most other countries enforce by many and anx-
ious provisions, viz.^ the keeping a correct account of his transactions,
(5) is left by us to be enforced solely by public opinion, and by the

(s) See the French Code de Commerce, \\\. 1, tit. 2, which, after describing several
books which every tradesman is to keep, besides an inventory of his whole property,
proceeds in art. 11. "Les livres dont la tenue est ordonnee par les art. cidessus
eerout cotes parapbes et vises soit par un des jnges des tribunaux de commerce, soit
par le maire ou un adjoint dans la forme ordinaire et sans frais." This kind of in-
quisition must be a great check on commercial enterprise. Again, in France many
branches of agency, which, among us, are open to the competition of every indivi-
dual, are monopolized by persons nominated by the government, entitled agens de
change and courtiers. Code de Commerce, liv. 1, tit. 5.

Holt, 92. "All contracts made in the ordinary' course of trade, without stipulation,
warrantv, or express provision, are presumed to incorporate the usage and custom of
the trade to which they relate. The mode is tlie ground of the contract, and the
custom and usage, as members or parts of that trade, compose a whole thing. The
contracting parties being conusant of such customs, are presumed, and the presump-
tion is generally consistent with the truth, to have it in their intention that their con-
tract shall not exclude such usages. But as it would be absurd to say that any one
should be bound to a condition, under whatever name, against his will and contrary
lo his interest, so in all cases where there is a warranty, or any special provision in
the contract, contrary to the custom of the trade, such custom is excluded ; the parties
having varied the ordinary mode of dealing: and the custom, as a mere usage of
trade, having no separate legal obligation, the expressed will contradicts the con-
struction of law, and the limitation or enlargement is, of course, exempt. No usage
of trade, therefore, can be set up in conti'avention of an express contract.

"The daj'S of grace on a bill of exchange, are no exemption to the rule. Bills of
exchange are purelj' mercantile contracts ; days of grace are a part of the nature of
the thing; thej' are as much a part of the contract in a bill of exchange, as the act
of payment itself. They are not incidental, but of essence: they are not adseititious,
but the thing itself With respect to the sale of goods, if the contract be, tliat they
shall be paid for on a particular daj-, no contract can dispense with such a term.
Nevertheless, in ordinary cases, where no day of payment is expressed, the usage of

INTRODUCTIOK 3^

Origin, History, and Importance of Commercial Law.

dread of that reproach and loss of credit which would follow the
detection of any gross irregularity. It is, perhaps, in consequence
of this, that we find such high and peculiar sentiments of com-
mercial honor prevalent among English merchants. When trade
began to flourish in this country, those occupied about it soon dis-
covered that the law had jDrovided but few rules for the guidance
of their transactions, and that it was, therefore, necessary that they
should themselves adopt some regulations for their own government.
Thus, they, in early times, erected a sort of mercantile republic, the
observance of whose code was insured, less by the law of the land,
than by the force of opinion aixd the dread of censure. The
law is now indeed more copious, but the spirit which has been thus

the ti-ade may introduce into the contract a particular credit, though the bargain, in
form of law, raises a debitum inpresenti. But the usage operates in that case because,
not being accepted by express words, the parties are presumed to contract with re-
ference to the general course of the trade."

Tliose usages which, from their general prevalence and long continued recog-
nition among merchants, have been received and incorporated into the law, as the
custom of merchants, must not be confounded with the particular usages of trade.
The custom of merchants is applied to that collection of rules and principles of law
which the courts received originally from the merchants, but of which they now
take notice, judicially, and which are binding throughout the realm. These customs
having been judicially established, are no longer in the power of the merchants, and
can no more be altered or superseded by the acts or agreements of parties, than the
other rules of law. But wherever in any course of business, a particular usage ob-
tains, whicli is general, uniform, notorious, reasonable, and consistent with the rules
of law, such usage will be presimied to have entered into the contemplation of all
parties contracting in reference to the subject matter as to which it prevails, unless
the contrary is shown. This principle, although most frequently applied in mercan-
tile transactions, is not restricted to them, but extends to contracts in all depart-
ments of business, mechanical, agricultural, and professional, upon the principle that
wlierever the knowledge of any usage or custom is necessary to the right under-
standing of an agreement, it would be unreasonable to deny to the reader the light
enjoyed by the writer.

The existence of a particular usage is always a question of fact, to be determined
^y '1 J"'T- Where, indeed, it has been frequently proved, it may become so far incor-
porated with the general law, that the courts will judicially take notice of it; but
its nature and effect will remain unaltered. Wliether it is proved in the particular
case, or imported into it by a judicial recollection of similar evidence given before
in similar cases, it will be for the jury to draw the inference, that the particular
contract before them was entered into with reference to that usage. See note
A. to Vol. 65 E. C. L. R. 967. But although a particular usage has been so fre-
quently recognized b}' judicial decision, a? to render proof of it unnecessary, evidence

32 IXTRODUCTIOX.

Origin, History, and Importance of Commercial Law.

called forth has ever since continued to pervade our mercantile
community, and has conduced to a more scrupulous observance of
good faith and punctuality than could have ever been enforced even
by the most anxious efforts of the legislature.

These and such as these are the reflections which have rendered
the author of this work exceedingly averse from any idea of redu-
cing our commercial system into a code, by which the energies of
the mercantile community would, he apprehends, be shackled, and
prevented from operating, as they now most usefully do, upon the
law, and working out its improvement, without assistance from the
legislature. A criminal code would be of great utility, for the
rules of criminal law ought to be not only definite, but inflexible,

is admissible to show that it has been subsequently altered. Cookendorfer v. Pres-
ton, 4 How S. C. R. 317 ; Renncr v. Bank of Columbia, 9 "Wheat. 582.

The opinion has been expressed b}' tlie highest authority, that the proposition
frequently laid down in dicta of the courts, that no usage can be established which
is inconsistent with the rules of law, must be received with an important qualifica-
tion. The right of the parties to a contract, to waive by their positive stipulations
the application of any of the rules of law by which their riglits and liabilities may
be defined, is undoubted. As a usage when established affords the same evidence of
intention as the most direct language, it must have the same efi"ect. Any and every
rule of law, tlierefore, wliich it is competent to the parties to vary or restrain by an
exprers stipulation, is liable to be affected to the same extent by an existing and
valid usage.

Althougli an existing usage, in reference to the subject matter of a contract, may
be regarded as its key, without which the intention of the parties cannot be ascer-
tained, yet it cannot be admitted to enlarge or restrict the clear and explicit lan-
guage of a contract The true ofEc« of a usage or custom is to interpret the other-
wise indeterminate intention of the parties, and to ascertain the nature and extent
of their contracts, arising not from express stipulations, but from mere implications
and presumptions, and acts of a doubtful or equivocal chai'acter ; or to ascertain the
true meaning of particular words in an instrument where those words have different
senses. The peculiar sense or meaning which it is proposed by the evidence to
attach to the words of the contract, must not vary or contradict, either expressly or
by implication, the terras of the written instrument. In the language of Lord L3-nd-
hurst in Blaokett v. R. E. Insurance Co., 2 Tyrrw. 266, usage may be admissible to
explain what is doubtful, but is never admissible to contradict what is plain. Spar-
tali V. Benecke, 10 C. B. R. (70 E. C. L.) 213. The Reeside, 2 Sumn. 569. Renner
V. Bank of Columbia, 9 "Wheat. 581. Van Ness v. Pacard, 2 Pet. 137. Clark v.
Baker, 11 Mete. 186.' Slacomber v. Parker, 13 Pick. 176. Mutual Safety Ins. Co
•.■. Hone, 2 Comst. 235. Gross, jNh-ers & Moore v. Criss, 3 Gratt. 262, and an elaborate
examination of the American authorities in the note to 1 Smith's L. Cases, 588.

lA'TRODUCTION. 33

Origin, History, and Importance of Commercial Law.

incapable of extension, save bj the supreme power of tlie state.
Ttie whole of our remedial system, including the formalities of ac-
tions at law, and suits in equity and in the ecclesiastical and admi-
ralty courts, would be a very proper subject for codification, for it
is a collection of arbitrary rules, which are then best when most
accessible. The codification of the law of real property is not
worth seeking for. Its j)rinciples and practice are so abstruse, that
no code would render them intelligible to the public, while, by the
profession, they are already understood sufficiently. But the codi-
fication of our mercantile law would be a national evil." It would
destroy the singular and fortunate plasticity of a system whose
rules hitherto have been, and always ought to be, made by the
merchant, and dictated by his exigiencies."

* In the notes to this work great prominence has been given to the decisions of
the Supreme Court of the United States. We have taken this course, not only be-
cause of the intrinsic value of those decisions and the eminent reputation of that
Court, but in the hope of their eventual reception by our State judiciaries as autho-
ritative expositions of commercial law. This disposition has been manifested in
many of our younger States, and it is the only mode by which our people can obtain
the advantages of a uniform and homogeneous system of mercantile law. As the law
now stands, the interpretation and effect of a mercantile contract between citizens
of different States, will, in many cases, vary with the tribunal (State or Federal) in
which suit is brought to enforce it. It was determined by the Supreme Court of the
United States in Swift v. T3-son, 16 Peters, 1, that the decisions of the local courts
upon the interpretation and effect of commercial contracts furnished no positive rule
to govern their judgment, and would be followed only so far as they conformed to
the general principles and doctrines of commercial jurisprudence; and the principle
established in that very case imposed a responsibility which would have been repu
diated by the State court if the case had been brought before it. A similar inconve-
nience is to some extent felt in Great Britain, in consequence of the different systema
of law prevailing in England and Scotland.

BOOK THE FIRST.

OF MEECANTILE PERSONS,

OF MERCANTILE PERSONS.

Trade may be carried on by Individuals, Partnerships, or Com*
panies, Corporations, and their respective Agents. As it will, tbere-
fore, be necessary to devote some space to each, of the above classes
of the mercantile community, this book will be divided into five
chapters, the first, treating of Sole Traders ; the second, of Partner-
ships ordinarily so called ; the third, of those peculiar and extensive
partnerships denominated Companies; the fourth, of Corporations
formed for trading purposes; the fifth, of persons occupying the
relation of Principal and Agent.

CHAPTER I.

OF SOLE TRADERS.

The word Trader is used in the bankrupt laws in a definite and
peculiar sense. For the general purposes of law it seems to have
a wider signification than is either there, or in the common par-
lance of mankind, attributed to it ; and, perhaps, it is not going too
far to say, that every man who does an act upon which any of the
rules of mercantile law operate becomes, quoad that act, a trader,
though his ordinary pursuits may not be of a mercantile charac-
ter. Thus it is laid down by books of authority, that if a man
draw a bill of exchange, he is, for the purposes of that bill, a mer-
chant, (a)

(a) Com, Dig. Merchant, A. 1. The French law defines the word trader as fol-

38 MERCANTILE PERSONS.

Sole Traders.

The law of England, following in this respect the maxims ot
sound and liberal policy, licenses every individual, who is desirous
of so doing, to assume the character and functions of a trader, un-
less he fall within the letter of some special prohibition, which
takes his case out of the ordinary rule, and subjects him to a pecu-
liar disqualification ; nay, such is the anxiety with which the law
watches over the interests of trade and commerce, that it will not
allow a man to deprive himself of his right of embarking in com-
mercial enterprise. A bond or other contract, by which a person
binds himself generally not to exercise his trade or business, in this
country is merely void. (/;) For " the law," to use the expressions
of Best, 0. J., " will not permit any one to restrain a person from
doing what his own interests and the public welfare require that he
should do."(c) A partial restraint of this kind will, indeed, be up-
held, provided it be reasonable in its nature and extent, and founded
on a legal consideration, {d) But if it want these qualities it will
be void, (e) And all contracts in restraint of trade are, if no special
circumstances appear to show them to be reasonable, invalid in the
eye of the law. (/)* Particular personal disqualifications, how-
lows : — " Sont commerjans ceux qui exercent les actes de commerce et en font leur
profession habituelle." Co. 8, 85, 631, s. 638.

{b) Mitchell V. Reynolds, 1 P. Wms. 181, 1 Smith's Leading Cases, 171.

{d^ Mitchell V. Rej'nolds, uhi supra; Chesman v. Xainby, 2 Str. 739 ; Hitchcock v,
Coker, 6 Ad. & E. 439 ; Archer v. Marsh, Ibid. 966 ; Leighton v. Wales, 3 M. & W.
545 ; see per Parke, B., Green v. Price, 13 M. & W. 698.

(e) See Horner v. Graves, 7 Bing. 743 ; Young v. Timmins, 1 Tyrwh. 226, 1 C. &
J. 331 ; Mallan v. May, ubi supra.

(/) Horner v. Graves, ubi supra; Ward v. Bj-rne, 5 M. A W. 548.

* An exception to the common law rule, that an instrument under seal imports a
consideration, exists where the condition is in restraint of trade. The considera-
tion in such case must appearon the face of the instrument. Parke, B., Mallan v.
.May, 11 Mees & W. 665.; Hiitton v- Harker, 7 Dowl. 739.

The opinion at one time entertained, that the court could look into the adequacy
of the consideration, has been overruled by the recent English authorities, which
have held that the parties must judge of that matter for themselves, and that the
court has no judicial perception of the ratio of the consideration to the restriction.
Archer v. Marsh, 6 Ad. & Ell. 966 ; Hitchcock v. Coker, 6 Ad. & Ell. 439 ; Atkyns v.
Kinnier, 4Excheq. R. 776; Tallis z;. Tallis, 18 E. L. &. E. R. 151. What constitutoa

SOLE TRADERS. 39

Sole Traders.

ever, as has been said, exist, which incapacitate the individuals
J".boring under them from engaging in commercial pursuits. It
may be proper to adduce one or two examples of this sort of dis-
ability : the instances of most usual occurrence are to be found in I
the law relating to the capacity of aliens^ infants^ married tvomen, '<
and clergymen.

An alien ranks either under the head of alien friend or that of
alien enemy^ i. e. the nation to which he belongs is either at ^^mce '
or war with this kingdom. In the former case he may trade in
this country as freely as any British subject, indeed his safety while
doing so is the subject of a special clause in Magna Charta. In
order to enable him to trade with more ease and advantage he was
permitted to hold a lease for years of a house, for " without habita-

a reasonable restraint is a question of law, and one upon ■which the courts seem in-
clined to relax the strictness of the ancient rule. There are many partial restraints
on trade which it is for the benefit of the public at large to enforce : as where a shop
in a particular place is sold, with a stipulation on the part of the vendor not to
trade in the same place. This is in effect the sale of the good-will, and offers an en-
couragement to trade, by allowing a party to dispose of all the fruits of his industry.
Parke, B., Mallan v. May, 11 Mees & Wels, 6G3. The rule which the courts seem dis-
posed to lay down, as a test, to determine the reasonableness of any particular re-
straint, is to consider whether the restraint is larger and wider than the protection
of the party with whom the contract is made, can possibly require. If it goes be-
yond this, it is unnecessary, oppressive, unreasonable in the eye of the law, and
therefore void. Mitchell v. Reynolds, 1 P. Wms. 181 ; Hitchcock v. Coker, 6 Ad. &
Ell. 438 ; Ward v. Byrne, 5 Mees & W. 548 ; Proctor v. Sargent. 2 Man. & Gr. 31.

It has been finally determined in England, that a restraint reasonably limited as
to space, but enduring for the life of the party restrained, may be valid as the only
effectual mode of securing to the covenantee the benefit of the good-will of his trade.
Hitchcock V. Coker, 6 Ad. <t Ell. 438, 1 N tfc P '796, in the Exchequer Chamber, re-
versing the judgment of the Queen's Bench ; Pemberton v. Vaughan, 10 Q. B. R. 81
(59 E. C. L. R.); Mallan v. May, 11 Mees & "W. 653. The doctrine was still farther
extended in the recent case of Elves v. Crofts, 10 C. B. R. (70 K C. L.) 241. A
butcher, on assigning, for the residue of a term, certain premises upon which he had
carried on his business, together with the fixtures and the good-toill of the trade,
covenanted with the purchaser that he would not at any time thereafter, either by
himself, or as agent, or journeyman for another, set up, exercise, or be employed
in, the trade of a butcher, within five miles from the premises thereby assigned. It
was held that this covenant did not cease to operate on the expiration of the term,
or on the covenantee's ceasing by himself or his assigns to carry on the business as-
signed. " If the covenant," says Wilde, C. J., " is binding to its full extent when made,
its signification cannot be varied by any subsequent occurrence: and to hold other

40 MERCANTILE PERSONS.

Sole Traders.

tion he cannot merchandise or trade."(5f) And though there was
an ancient statute, 32 Hen. 8, c. 16, which avoided leases of houses
and shops granted to alien artificers and handicraftsmen^ yet it was
very strictly construed, (A) and now by 7 & 8 Vict. c. Q(^^ s. 5, any
alien friend may hold lands and houses for the purposes of residence
or occupation, or any business, trade, or manufacture, for a term
not exceeding 21 years.

But an alien enemy is incapable of trading here, except by the
King's license, {%) which must, if granted, be very strictly pur-
sued. (;)

Infants and married loomen are incapable of binding themselves

) by any description of mercantile contract : an infant cannot even

state an account or give a cognovit. {Ic) But there is this difference

between the cases of an infant and a married woman, that the for-

{g) Co. Litt. 2, ct nolas.

(h) See Jevens v. Han-idge, 1 Wins. Saund. 7, ct notas. Pilkington v. Peach, 2
Shovrer, 135. Wotton v. StefFenoni, 12 M. & "W. 129. Vide tamcn Lapierre v. Mcln
tosh, 8 Ad. & Ell. 875.

(i) See Kensington v. Inglis, 8 East, 2'!' 3.

(j) See Vandyke v. Witmore, 1 East, 475.

(k) Oliver v. Woodroffe, 4 M. & W. 650.

wise, would be to render its im])ort uncertain, and to impair its efficiency for that
protection which the law contemplates as just Cases might be conceived, in which,
notwithstanding the facts found by the jury (in this case), the good-will assigned
might not be at once extinguished ; and if considerations of time or degree be per-
mitted to affect the right to enforce such a covenant, its value would be diminished,
and the saleable quality of good-will would be affected."

Whether a total restj?iction on trade, limited only as to time, can in any case be
supported, does not seemto be definitively settled. Such a restraint was declared
unreasonable in Ward v. Byrne, 5 Mees & W. 548, on the ground, that where a limit
as to space is imposed, the public do not lose altogether the services of the party in
the particular trade, nor within the limited space will they be deprived of the bene-
fit of the trade being carried on ; but in the case of a general restriction, limited onlj-
as to time, the public are altogether losers for that time of the services of the indi-
vidual, and derive no benefit in return. This view does not seem, however, alto-
gether consistent with the decision of Lord Langdale in Whittaker v. Howe, 3 Beav.
383.

The student will find a discussion of the general doctrine in the following Ameri-
can cases: Pierce v Fuller, 8 Mass. 22o ; Pierce v: Woodward, 6 Pick. 296 ; Nobles v.
Bates, 7 Cow. 307; Chappel v. Brockway, 21 Wend. 158; Pike v. Thomas, 4 Bibb.
486 ; Bowser v. Bliss, 7 Black, 344.

SOLE TRADERS. 41

Sole Traders.

mer may at full age ratify the contract, (Z) which the latter cannot
do : of course, therefore, neither of them can support the character
of a sole trader. By the custom of the City of London, however, a
married woman may be there a sole trader ^{m) and when a woman'?
husband is civilly (n), although not physically defunct, she may
carry on trade, as if she were iifeme sole^ for her own support, and
in either of these cases may become a bankrupt, (o)

Clergymen occupying any spiritual employment were by stat. 57
Geo. 3, c. 99, prohibited from carrying on any trade or buying and
selling for lucre, upon pain of forfeiting the value of the goods so
bought or sold, and the contracts entered into by them in any such
trade or dealing rendered utterly void. This act became the sub-
ject of much discussion on the occasion of the celebrated case of
Hall V. FranHin,(j)) in which the Court of Exchequer expressed
their opinion that a joint-stock banking company, having beneficed
clergymen among its members, could not maint-ain an action
against the drawer of a bill indorsed to the company. This occa-
sioned the immediate enactment of stat. 1 Yict. c. 10, which ren-
dered valid partnerships of more than six persons formed or to be
formed before the end of the then next session, although consisting
partly of spiritual persons.

The act of 57 Geo. 3, c. 99, is now itself repealed by 1 & 2 Yict.
c. 106, by sections 29, 30, and 31 of which the subject is now regu-
lated, {q)

There were formerly nume];ous disabilities imposed by statutes
which forbade the exercise of certain trades to all persons who had
not previously served an apprenticeship thereto :(?•) and there
were other disabilities imposed by the customs and laws of corjoo-
rate towns, which prohibited the exercise of particular trades by

(!) Williams v. Moore, 11 M. & "W". 256. See note to Harrison v. Fane, 1 M. &

551.

(m) See a full account of this custom in Beard v. Webb, 2 B. & P. 93.

(»i) See per Parke, B., in Barden v. De Keverberg, 2 M. & W. 64.

(o) See post, Book 4, cap. 3, see, 1.

{p) 3 Mee. & W. 259.

(q) See them in App.

(r) See R. v. Kilderb}', 1 Wms. Saund. 300, et notas.

42 MERCANTILE PERSONS.

Sole Traders.

Strangers witliin the territories of tlie respective corporations. (s)
The former class is, however, repealed by stat. 64 Geo. 3, c. 96, and
the latter is in great part destroyed by sec. 14 of stat. 5 &; 6 "Wm.
4, c. 76, entitled, " An Act to provide for the regulation of Munici-
pal Corporations in England and Wales."

(s) See Shaw v. Pope, 2 B. & Ad. 465. Shaw v. Poynter, 2 Ad. & Ell. 312.
Clarke v. Denton, 1 B. <fe Ad. 92. Simson v. Moss, 2 B. & Ad. 6-4.^ Mayor of Lei-
cester V. Burgess, 5 B. <fc Ad. 246.

CHAPTER II.

OE PARTNERS.

Sect. 1. Partnership — what.
2. How formed.
8. How dissolved.
4. Bights of partners, inter se.
6. JRiglits of third persons against partners.
6. Rights of partners against third pjersons.

SECTIOIsr 1 . — Partnersh ip — ivhat.^

Partnership is the result of a contract, whereby two or more
persons agree to combine property or labor for the purpose of a
common undertaking and the acquisition of a common profit.f

* " The Law of Partnership is a subject of general interest. With the duties, obli-
gations, and responsibilities of this peculiar connection, every mercantile man should
be acquainted. It is a species of connection which pervades the mercantile world
— which has existed and will exist in all ages and nations. It is a word of most ex-
tensive usage ; it comprehends equally the union of a day, and those venerable
guilds, and ancient associations, which, in the country whence our laws have been
derived, have existed for centuries ; it applies at once to the ephemeral operations
of adventurers, whose projects commence and terminate in the compass of a few
hours, and to the mighty transactions of that company of merchants, which, com-
mencing with a factory on the shores of India, has overthrown kingdoms, and from
their ruins cemented a splendid empire. The inducement to its formation results
from the combination of qualities and the concurrence of circumstances necessary to
successful commercial adventure. It is a connection than which none more close can
exist among men. It places in the power of him with whom you form it, your
property and your reputation. His virtues and his skill, in unison with your own,
may raise you to the pinnacle of prosperity. His folly, or his crimes, may strip
you of every flourishing branch and leaf, and leave you a naked, withered, and dis-
honored trunk. It should be formed, tiierefore, with little less care than the mar-
riage tie, to which it has been, by a late Chancellor, not inaptly compared." — Laio
Journal, Vol. I.

f Professor Parsons, in his recent work on Contracts, Vol. I. p. 149, makes the fol-

44 MERCANTILE PERSONS.

Partnership — what.

There may be a ^partnership in one transaction as "well as in a
continuing business, and between persons out of trade as well as
in trade, since, in either case, there may be a combination of prop-
erty or labor, in order to a common undertaking and a common
profit, (a)

This community of profit is the criterion whereby to ascertain
whether a contract be really one of partnership, for one partner
may stipulate to be free from loss, and the stipulation will hold
good as between himself and his companions, {h) though it will not
diminish his liability to strangers, (c) So one partner may con-
tribute all the money, all the stock, c^ all the labor necessary for
the purposes of the firm. But if there be not a community of
profit, there is no real partnership ; {cl) while, on the other hand,

(a) Ux parte GeHar, 1 Rose, 297. Salomons v. Nissen, 2 T. R. 6Y4. Societatem
coire solemus aut totorum, quam Gr£cci specialiter Koivuviav appellant, aut uniua
aliciijus negotiationis. Inst. 3, 26.

(i) Fere'lay v- Plornderne, Jae. 144. Gilpin v. Enderb}-, 5 B. <fe A. 954. Bond v.
Pittard, 3 M. & W. 35*7 ; see 18 Ves. 300, unless, indeed, such stipulation be inserted
as a mask to disguise usury. Jestons v. Brooke, Cowp. '793. Morse v. "Wilson, 4 T.
R. 353.

(J) Hoare v. Dawes, Douglas, 371. Coope v. E3're, 1 II. BL 37. Finckle v. Sta-
cey, Sel. Ca. eh. 9. Many societies, such for instance as clubs, so far resemble part-
nerships, that each member is bound by certain acts of the rest, done in furtherance
of the common object. See Delauney v. Strickland, 2 Stark. 41G. But these are
not pai'tnerships, though possessing some of the attribiites thereof; the}' are, in
reality, mere cases of principal and agent. Flemyng v. Ilector, 2 M. & W. 172.
Todd V. Emly, 7 M. & W. 427, 8 M. & "W. 505. And the same remark seems to be
applicable to persons "who become members of a provisional committee for the
purpose of promoting a railway or other work, though the end they propose to
themselves may be individual profit. By simply consenting to become members of
such a committee, and allowing their names to be published as such, they do not
authorize the rest of the committee, or the ofRcers, to bind them by contracts oven
for necessaries to prosecute the project. Reynell v. Lewis, 15 M. & "W. 517. Cooke
V. Tonkin, 16 L. J., Q. B., 153. See contra, Barnett v. Lambert, 15 M. & "W. 489.

lowing valuable suggestions : — " The power of each partner to represent and bind the
rest, and to dispose of the partnership property, is sometimes regarded as arising from
the agency which all confer upon each ; and sometimes from the community of in-
terest, whereby no partner owns any part of the partnership property exclusively of
the rest, but each partner owns the whole in common with all the others. We think
it rests upon both of these foundations together. It is true there may be a co-

PARTNERS. 45

Partnership — what.

where sucli community of profit exists, each, of the sharers in it is,
and may be treated by the creditors of the whole body as a partner,
although he may have stipulated with his companies not to be re-
sponsible for the engagements entered into by them with strangers,
to whom he, notwithstanding, will be liable ; and very justly so ;
for by taking a j)art of the profits he takes from the creditors a
part of that fund which is the proper security to them for the pay-
ment of their debts ;(e) and on this ground it is that a dormant
partner^ that is to say, one who is a sharer in the concern, but does
not appear to the world as such, is held responsible for its engage-
ments.(/)*

{e) Per Eyre, C. J., Waugh v. Carver, 2 H. Bl. 235. Barry v. Nesham, 16 L. J.
K. P. 21. See ex parte Rowlandson, 1 Rose, 89, and 17 Ves. 412.

(/) Robinson v. AVilkinson, 3 Price, 538. Wintle v. Crowther, 1 Cr. & Jer. 816,
1 Tyrw. 210. But though a stranger may sue such a partner along with, the rest,
yet he is not obliged to do so, on account of the difficulty of discovering him. Mul-
lett V. Hook, M. & M. 88. De Mautort v. Saunders, 1 B. & Ad. 398, overruling Du-
bois V. Ludert, 1 Marsli. 2-18. But see Bonfield v. Smith, 12 M. & W. 405. See also
ex parte Hamper, 17 Ves. 412. JEx parte Hodgkinson, 19 Ves. 294.

partnership where one or more of the partners has no interest in the capital stock,
by agreement among themselves. But even then all own together the profits, and
po much of the funds or capital of the firm as consists of profits. Partners are,
undoubtedl}-, some way agents of each other. But the principle of agency alone
will not explain the whole law of their mutual responsibility. Out of the combination
of this principle, with those which grow out of the community of property and of
interest, the law of partnership is founded. And this law may often be illustrated
by a reference to the principles of agency ; but must still be regarded as consisting
of a distinct system of rules and principles peculiar to itself."

* In many of the states there are laws authorizing the formation of limited part-
nerships, and protecting the special partner from responsibility in solido, upon cer-
tain conditions. A substantial compliance with the statutory requisitions is deemed
essential to the validity of such partnerships. Besides New York, where a great
many decisions have been made upon this contract, limited partnerships exist in
Massachusetts, Pennsylvania, Maryland, Virginia, South Carolina, Georgia, Alabama,
Ohio, Tennessee, Mississippi, Indiana, and Louisiana; and probably in the other
states, except New Hampshire and North Carolina. The law in reference to limited
partnerships, so far as it has been expounded by the American courts, is very fully
discussed in the recent work of Mr. Troubat.

In No. 2 of the very able series of articles, published in the American Jurist, upon
the Codification and Reform of the Law, there are some suggestions upon this sub-
ject which we have deemed of such interest and importance to the mercantile com-
munity as to extract at length : —

^^ LIERCAiniLE TERSONS.

Partnership — what.

If A. and B. agree together to contribute eacli a sum of money
for tlie purchase of a lot of goods, wliich they intend afterwards to
divide, in this case, after the purchase of the goods and before the
division, they are joint-owners, not partners. But if, instead of
dividing, they sell them again, and divide the gain accruing upon
the re-sale, now there is a community of profit, and they become,
in the legal sense of that word, iXLriners.{fj) However, though the

(g) The working of a mine, colliery, or other real property of that description,
is looked on to some extent as a trade, and where several, having a common interest
in such propertj', work it in common, and sell the produce for their common benefit,
they become partners. Crawshay v. Maule, 1 Swanst. 495. Jeffreys v. Smith, 1 Jac-
& Walk. 298. Hawken v. Bourne, 8 Mee. & Welsh. 703. Tred^st.u v. Bourne, 6 M.
& W. 461. Ralph v. Harvey, 1 Q. B. 845. See 2 Atk. 630. But mining concerns
though partnerships to most purposes, are not so to all. See Vice v. Lady Anson, 7
B. <fe C. 409. For they are not subject to dissolution on the death or bankruptcy of
any of the partners, and the shares are transferable without the consent of the other
partners. Fereday v. Wightwick, 1 Russ. & Mylne, 45. "We shall see presently that
partners in a mine have not in general the power of binding one another by bills of
exchange.

"It is provided in substance by these statutes, '.hat there shall be (on thft com-
pliance with certain rules of registry and notice} partnerships, the members of
which shall be liable, in different degrees, to those who contract with them — a
general partner wlio shall be subject to a full and general accountability to creditors
and others, and a special partner, who shall be only liable to that extent that he
shall have contributed to the partnership stock, which is to be ascertained by refer-
ence to the registry. Hence results the injustice of the law. A small establishment
commences with the capital of which it has notified the public. In the progress of
time, its prosperity increases, and its capital is augmented. The stock of the pro-
tected partner increases perhaps tenfold, but tlie day of adversit}- comes, and then
he withdraws behind his registered accountabilit}-. He gives up his interest in the
property, but as he has during the season of prosperous trade been receiving profits
on a stock vastly extended beyond its original amount, why should his losses be
limited to the small sum originally furnished? It would s>>em reasonable that the
chance of loss should correspond with the chance of profit Such will be the
exemption, and the result on the supposition of perfect good faith ; but the temp-
tations to fraud, and the difficulty of detecting it^ are greatly increased by this law.
He may withdraw his accumulated capital, and the extent of his liability is only
the sum which lie originally furnished. We think no action at law could reach liim.
The statute protects liim, and if it is said, that a court of equity will follow the fund
which he has withdrawn, still it may be replied, tliat the necessitj- of resorting to
the extraordinary jurisdiction of that tribunal, demonstrates the inexpediency, as
also the inadequacy of the law. But there is no justice in making the amount of
capital furnished decide the extent of liabilitj-. The capital is the basis of the part

PARTNERS. 47

Partnership — what.

profit of partners must be joint, they may, if they think fit, arrange
that it shall be unequally divided. (A)

Further, it is to be observed, that, to constitute such a corrvniu--
nitij of jirojit as is here intended, a partner must not only share in |
the profits of his companions, but must share in them as a iprinci-
;£alj i. e, he must not be a mere agent, factor, or servant, receiving,
in lieu of wages, a sum proportioned to the profit gained by his
employers, (^) or a certain portion of a fund which includes the

(//) Per Ld. Loughborough, Coope v. Eyre, 1 BL Bl. 48. Fremont v. Coupland, 2
Bing. 171. Ex oarte Langdale, 18 Ves. 300. Si nihil de partibus lucri et damni
nominatim conveuirit sequales scilicet partes et in lucro et in danino spectantur :
ouodsi expresste fuerint partes, h"ae servari debent. Inst. 3, tit. 26, § 1. It is not
necessary that a partner's share should be ascertained, but its not being so is a cir-
cumstance tending to show the non-existence of the partnership; j^er Bosanquet, J.,
in Howell v. Brodie, 6 Bing. K C. 50.

(i) Dixon v. Cooper, 3 Wils, 40. Wilkinson v. Frazier, 4 Esp. 182. Mair v. Glen-
nie, 4 M. <fe S. 240. Dry v. Boswell, 1 Camp. 330. R. v. Hartley', Russ. & Ry. 139.
Benjamin v. Porteus, 2 II. Bl. 590. Perrott v. Bryant, 1 Y. & Coll. 68. Wish v.
Small, ib. 331. Ilesketh v. Blanchard, 4 East, 144. Rawlinson v. Clark, 15 II. &
W. 292, and see Withington v. Herring, 3 M. & P. 30. Geddes v. Wallace, 2 Bligh,
270. Sed vide ex parte Rowlandson, 1 Rose, 91. £x parte Langdale, 18 Ves. 300.
Ex parte Watson, 19 Ves. 459. Smith v. Watson, 2 B. «fe C. 401. Green v. Beeslej-,
2 Bing. N. C. 110. So a person receiving a per centage on sales effected through
his influence is not liable as a partner. Pott v. E^-ton, 15 L. J. C. P. 257.

nership transactions, but the trade is bj'^ no means necessarily limited to the amount
of capital. Purchases are often made extensively on credit, and, in a prosperous
course of trade, such transactions may be sustained, and the profits may be large.
The limited partner shaves the benefit, and runs no risk of loss from reverses. Ha
derives profit from the credit of the partnership, but is protected against loss from
reverses. He derives profit from the credit of the partnership, but is protected
against loss beyond a limited sum. The actual capital of the partnership often con-
sists of the sum which he furnishes, and the remainder of the stock in trade is the
result of the credit of the partnership. In this he shares in proportion to his inter-
est in the actual capital. In the enjoyment of this advantage lie incurs no risk, for
he is liable, when a bankruptcj' happens, only to the extent of his recorded advance-
ment, which, in comparison with his actual interest, may be small. When a mer-
cantile house thus limited becomes bankrupt, it seldonr. happens that the natiire of
the partnership is known, especially after it has been long in existence, and creditors
are astonished to find that there are responsible partners wlio are protected from
their debts. If it is thought desirable to sustain or introduce this law, the statutes
should be guarded by provisions, rendering the partners, whose liability is limited,
responsible (when on a bill of discovery, or otherwise, it shall appear that they have
received pii)fits) to the amount which they shall have received."

48 MERCANTILE PERSONS.

Partnership — what.

profits, but is not dependent on them for existence. Still, if a ser-
'vant or agent stipulate for a share in the i^rofits^ and so entitle him-
self to an" account of them, he becomes, as to third jiersons^ a part-
ner, (j) though, in questions between himself and his employer, he
would not be so considered. (/c) This distinction between the lia-
bility of an agent remunerated out of the profits, and that of one
remunerated by a sum proportioned to the profits, is certainly ex-
tremely fine. It is, however, established upon high authority.
"It is clearly settled," said Lord Eldon in ex parte IIamper,{l)
"though I regret it, that if a man stipulates that he shall have as
the reward of His labor, not a specific interest in the business but a
given sum of money, even in proportion to a given quantum of the
profits, that will not make him a partner ; but if he agrees for a

» part of the profits assucJi^ giyii^S ^^i^i a right to an^^account, he is^

I as to Jhird persons, a ,p_artner."(m)'^

(j) Smith V. Watson, 2 B. & C. 407. JS:c j.arte Rowlandson, 1 Rose, 91. Ex
parte Langdale, 18 Ves. 809. Green v. Boesley, 2 Bing. X. C. 108.

(it) See Geddes v. Wallace, 2 Bligh, 270. Rex v. Hartlej', Russ. &, Ry. 139.

{I) 17 Ves. 112.

(m) See the expression of his Lordsliip in the same case, 17 Ves. 494, and see ex
parte Rowlandson, 19 Ves. 461.

* It is impossible so to reconcile the various English and American cases -which
have turned on the question of what interest in the results of an adventure will
create a partnership therein, so as to deduce from them any uniform rule of con-
struction. The courts seena to have been embarrassed by a struggle between the
general principles which regulate the law of contracts, and tlie autliority of certain
technical distinctions established in the early cases. The intention of the parties is
considered, inter se, to be the key of this as of all other contracts ; but there are
cases in which the responsibility of a partner has been imposed, at the instance of
creditors, on a party who was employed as an agent, and who was clothed, not with
the equal authority of a principal, but only the subordinate discretion of a deputy,
and this, upon the ground of his participation m tlie profits of tlie business. Indeed,
it seems to be settled by the great weight of authority, that wherever a party has
stipulated for a share in the profits, (whether gross or net,) so as to entitle him to an
account and specific lien, or a preference in paj-ment over other creditors, (thus giv-
ing him the full benefit of the profits of the business, without a corresponding risk,
in case of loss,) he will be held liable to th'.rd persons as a partner. Wilde, J., in
Denny v. Cabot, 6 Met. 92. Evei'ett v. Chapman, 6 Conn. 347. Champion v. Bost-
wick, 18 Wend. 175. Everett v. Coe, 5 Denio 180. Taylor v. Terene, 5 Harr. & J.
505. Smith v. Watson, 2 B. & C. 407. Ex parte Rowlandson, 1 Rose, 91. Green v.
Beesley, 2 Bingh. K C. 110. Ex parte Langdale, 18 Ves. 300. Smith's Leading
Cases, Vol. I. p. 506, and notes of American editor, 836, 837.

PARTNERS. 49

Partnei'ship — what.

It is almost needless to observe, that, in every question respect-
ing the contract of ]3artnersLip, if the legislature have dictated no
particular course, and the law adopted no peculiar regulation
founded on the nature of the subject, we must be guided by those
principles which govern contracts in general. Thus, each of the
parties to it must be competent, and therefore, the cohtract of part-
nership, if attempted to be concluded by an infant, will be void-
able at his full age, {n) and void if by a feme covert, (o) or alien

(n) Holmes v. Blogg, 1 Moore, 466, 8 Taunt. 35 & 508. "Warwick v. Bruce, 2 M.
& S. 205. Corpe v. Overton, 10 Bingh. 252. He mvist elect to avoid within a rea-
sonable time after his full age, and give notice thereof to the world, otherwise he
will be liable on partnership contracts made after his attaining twentj-one. Goode
V, Harrison, 2 B. & A. 150. But not on those made during his non-age, unless he
confirm them after his full age in writing. Stat. 9 G. 4, c. 14, s. 5.

(o) But semble that a feme covert, trading as she may do by the custom of the Ci(y
of London, may be a partner. See Beard v. Webb, 2 B. & P. 93.

The case supposed is that of a mere salary, but so charged on profits as to create
not merely a riglit of action dej^ending on the personal responsibility of the debtor,
but an interest in the resulting property or its proceeds, amounting to a jus ad rem,
or in re, in which case a partnership will arise by legal inference, and without regard
to intention. But, if the stipulation is for a remuneration in proportion to profits,
or out of profits, whether gross or net, without conferring any proprietary interest
in the capital stock or accruing credit, the contract does not create a partnership,
contrary to the intention of the parties. Loomis v. Marshall, 12 Conn. 69. Burckle
V. Eckhart, 3 Comst. 132. Bradley v. White, 10 Met. 303. Vanderburgh v. Hull, 20
Wend. 70. Denny i;. Cabot, 6 Met. 82. Wilkinson v. Jett, V Leigh. 115. Bartlett
V. Jones, 2 Strobh. 471. Dunham v. Rogers, 1 Barr, 255. See, also, cases collected
and the distinction clearly pointed out in note of American editor of Smith's Leadino-
Cases, Vol. L p. 837, and the recent English case of Stocker v. Brockelbank,' 5 E. L.
& E. R. 67. Judge Story, in his Commentaries on Partnership, p. 38, comments very
forcibly on the assumption that there exists any absolute rule of law requiring the
court to pronounce an agency to be a partnership, contrary to the truth of the facts
and the intention of the parties. His opinion seems to be, that a participation in
the profits should merely raise a presurajjtion of law that the contract is one of
partnership, which will prevail in the absence of controlling circumstances, but may
be controlled by them.

This doctrine seems to be much more consistent with the general principles and
analogies of the Law Merchant than the artificial notion that a proprietarj^ interest
in the profits, although conferred as a compensation for services as an agent, shall
fix upon the recipient, in favor of creditors, the responsibilities of a principal.
The basis of the whole doctrine, and, as it seems to the editor, the point of departure
from true principle, is the proposition of Chief Justice De Grey, in the leading case
of Grace v. Smith, 2 Henr. Blacks, 998: "That every man who has a share of the
4

50 SIERCANTILE PERSONS.

Partnei'ship — what.

enemy. So, if the undertaking be illegal, the contract, upon_ ordi
nary principles of law, is void, and that whether it be to do a thing,
improper in itself, or rendered so by the positive prohibition of the
legislature, {p)

Though partnership is, as between the partners themselves, the
result of a contract, yet a man may, without entering into any con-

{p) Aubert v. Maze, 2 B. A P. 371. Mitchell v. Cockburn, 2 H. Bl. 379. Booth
V. Ilodson, 6 T. R. 405. De Begnis v. Armistead, 10 Bing. 107. Duvergier v. Fellows,
10 B. C. 826. Armstrong v. Lewis, 2 Cr. <fe Mee. 274. Gordon v. Howden, 12 CI. <fe
Fin. 237.

profits of a trade, ought also to bear his share of the loss, and that whoever takes
part of the profits, takes part of the fund on which the creditors of the trader rely
for payment." No authority was claimed for tliis doctrine under anj- peculiar cus-
tom of merchants ; it is, therefore, to be tried by the general rules and analogies of
the law. It assumes the existence of an interest in the assets of a partnership,
belonging to its creditors, and amounting to a quasi lien. But not only was the
partnership propertj' free from any lien in behalf of social creditors, at law, but not
even in courts of chancery has it been treated as a trust fund for their benefit. The
preference of the social creditor is worked out solely through the medium of the
equities subsisting between the parties themselves. In the eye of the law, tlie social
creditor of a partner stood upon the same footing with his private creditor. Both
were supposed to have trusted the debtor, simply upon the credit of his personal
responsibility. The law, therefoi-e, which did not confer upon the social creditor
any legal interest in the social assets, could not consistentlj- make the supposition of
such an interest the foundation of a right to charge third persona.

The rule in question may be supposed to rest for its support upon the old maxim
that he who receives the benefit should bear the burthen. But the facts do not
justify an application of the maxim. An agent compensated by profits does not
derive any immediate advantage from the purchase for which it is sought to make
him responsible. His benefit results from a distinct and independent consideration
which he subsequently advances; to wit, his own time, skill, and labor.

The rule is inconsistent with the doctrine of the common law, which allows a
debtor to discriminate between his creditors, preferring one to another. An agent
to be compensated out of profits, only occupies the position of a preferred creditor.
If a factor may hwy or sell goods for his principal, and hold a lien upon the proceeds
ror his indemnitj', without thereby rer.dering himself liable to an}' third party, why
should any other agent incur a larger responsibility, because he lias sought to pro-
tect himself from loss bj' a stipulation which secures to him a similar lien.

The true criterion of liability is furnished by the general law of contracts. No
man can be bound by a contract, unless he has entered into it personall}', or through
the intervention of an an authorized agent. Partnership is a mutual agency. Par-
ticipation in the profits can do no more than raise a presumption that the party
enjoj'ing it is a principal: is is not in itself conclusive evidence of that relation.

PARTISTIRS. 51

Partn ershi p — what.

tract, impose upon himself the liabilities of a partner with regard
to third persons ; for the law of England is, that he who lends his
name and credit to a firm, and, as the phrase is, hold himself out
to the world as a partner therein, is liable for its engagements;
and that whether he have any real interest in the firm or not, for
it would be highly prejudicial to commerce to allow a wealthy
man, by the loan of his name, to give other persons a factitious
credit in the world, and then refuse to satisfy creditors who had
made their advances upon the faith of his apparent responsibility.(2')
Such a man is usually called a nominal partner. And it has been
said to make no difference in his liability, that the creditor of
the firm who seeks to charge him was not aware of such holding
out at the time that he made his advance. (r) In order to fix a
person with responsibility of this description, no particular mode
of holding himself out to the world as a partner is required. If he
do acts, no matter of what kind, sufficient to induce others to be-
lieve that he is a partner, he will be chargeable as such ; ex. gr.^ if
he accept bills drawn on the firm,(s) or describe himself as having
a joint interest in its property.(^) But a man who describes him-
self, as partner with another in a j^firticular kind of transaction,
ex.. gr.^ in discounting bills, does not thereby hold himself out as
his general partner in any other business Avhich he may happen to
profess ;(u) and if the acts relied on as constituting a holding out
were done without the knowledge or default of the person thereby

{q) Guidon v. Robson, 2 Camp. 302. Waiigh v. Carver, 2 H. Bl. 235.

(r) Young v. Axtel, cited 2 H. Bl. 242. The justice of this rule is questionable,
and the expression of Mr. Parke, in Dickinson v. Valpy, 10 B. & C. 140, are op-
posed to it. Ilis Lordship says, " If it could have been proved that the defendant had
held himself out to be a partner, not to the workl, for that is a loose expression, but to
tlie plaintiff himself, or under such circumstances of publicity as to satisfy ajui-y that
the plaintiff knew of it and believed 1dm to be a partner^ he would be liable," <tc. See
also Shott V. Stealfield, 1 M. & Rob. 8, which militates against :t, and Ford v. "Whit-
marsh, 1 Ilurlst. & Walms. 3. Ex. Mich. 1840. See the direction in Wood v. The
Duke of Argyll, 6 M. & G. 028, and per Cresswell, J., p. 932, and Lake v. The Duke
of Argyll, 6 Q. B. 447.

(i) Spencer v. Billing, 3 Camp. 310. See 10 B. & C. 140.

(t) Parker v. Barker, 1 B. & B. 9, 3 Moore, 226. See also Good v. Harrison, 5 B.
& A. 147. Swan v. Steele, 7 East, 210.

{u) De Berkom v. Smith, 1 Esp. 29. Ridgway v. Philip and Broadhurst, 5 Tyrwh
121. IC. M. ifeR. 415.

52 MERCANTILE PERSONS.

Partnership — how formed.

represented as a partner, or if it can be proved that the party seek
ing to charge him had notice of the real circumstances of the case,
he will not be auswerable.(t')

But a person holding himself out to the world in the manner
above described, though he may, for the benefit of others, be treated
as a partner, is not, properly speaking, such ; for partnership is, as
we have seen, the result of a particular species of contract, into
which he has never entered.

We will now, therefore, proceed to inquire, first, how this
contract of partnership may be formed ; secondly, how it may be
dissolved. "We will afterwards consider what are the rights and
liabilities of partners, as between themselves, and what, as between
them and third persons.

Section II. — How formed.

It must be formed by the intervention of all the persons to be
bound by it : one partner may, as we shall see, bind another for
many purposes without his knowledge, but there must be consent
of every individual member of the firm to authorize the introduc-
tion of a new one ]{id) so necessary is this consent, that the exec-
utors of a deceased partner are not allowed to occupy his place,(a:)
unless there be a stipulation in the contract of partnership, that
they shall do so, in which case modus et conventio vincunt legem.
But, if there be any thing, in the very nature and constitution of
the partnership, which renders it impossible that the members
could have expected, or intended, the consent of the whole body
to be applied for upon the occasion of each change ; as where a
company was to be formed with a capital, divided into 12,000
shares ; and script receipts were given to the intended shareholders,
which receipts were publicly sold to strangers ; and any persons

(«) Fox V. Clifton, 6 Bingh. VT6, 9 Bingh. 118. Alderson v. Pope, 1 Camp. 404.
n. Minnet v. Whitnej', 5 Bro. P. C. 489.

(w) Ex parte Barrow, 2 Rose, 225, and see M'Neil v. Reid, 9 Bingh. 68. But a
partner may assign his share. Bray v. Fromont, 6 Madd. 5. Jeffrey v. Smith, 3 Rusa.
151. And an action at law may be maintained in an agreement for the sale of it
Tempest v. Kilncr, 2 C. B. 300.

(x) Pearce v. Chamberlain, 2 Yes. 33.

PARTiS'EES. 53

Partnership — how dissolved.

producing them and paying a second instalment on tlieir shares
were allowed to execute the deed of partnership, so that the power
of transferring script to any one could not but have formed part of
the original design ; such a case would not, it seems, be governed
by the rule which, in ordinary cases, restrains partners from |)art-
ing with their shares without each other's consent. (?/) Eespecting
the formation of the contract, it need only further be observed,
that it is not one of those which the law requires to be in writing,
and may therefore either be concluded by mere words, or inferred
from the acts of the parties, (z)

Section III. — How dissolved.

Let us next see how the contract of partnership may be dis-
solved. It often happens, that at the time of its formation, the
parties expressly agree that it shall endure but for a stated period ;
there may also happen cases, in which, though there be no express
provision, an implied contract as to its duration may arise : for in-
stance, partners may purchase leasehold interests of such a descrip-
tion as to raise a fair presumption that they intended to continue
the partnership as long as those leases should endure, (a) K a limit
to the term of partnership be thus prefixed, the contract will, of
course, dissolve on its arrival. It may likewise be dissolved at any
time by mutual consent, and courts of equity have power to put
an end to it by their decree, a power which they will exercise in
case the partnership undertaking turn out impracticable, (6) or
liopelessly embarrassed^ (c) or one of the partners become an incu-
rable lunatic, {d) or be guilty of gross misconduct, such as refusing

(y) Fox V. Clifton, 9 Bingh. 119.

{z) Peacock v. Peacock, 16 Ves. 49. Aldersou v. Cla_y, 1 Stark. 405.

(a) See Crawsliay v. Maule, 1 Swanst 521.

\b) Baring v. Dix, 2 Cox, 212. See Waters v. Taylor, 2 V. tfe B. 299.

[d) Baring v. Dix, 1 Cox, 212. See Waters v. Taylor, 2 V. & B. 299. Sayer v.
Bennet, Mont. Part. Vol. i. Append. 18. Sadler v. Lee, 6 Be v. 324. Lunacy of a
partner is not ipso facto a dissolution, but only ground upon which equity will de-
cree one. Jones v. Noy, 2 Mj'. & K. 125. Kirby v. Carr, 3 Y. & Coll. 184. Besch v.
Frolich, 1 Pli. 172. Sander v. Sander, 2 Coll. 276; and if the articles provide that
the partnership may be dissolved upon notice, such notice, if given to the lunatic^
will be effectual. Robertson v. Lockie, 15 L. J. C. C. 379.

54 MERCANTILE PERSONS.

Partnership — how dissolved.

to account for his receipts, or to submit bis deabngs to the exami-
nation of bis companions, (e) But to induce tbe court to interfere
in tbis manner tbere must be some serious reason given ; tbe ex-
istence of comparatively unimportant disputes and squabbles will
not be sufficient (/) If no limit was originally fixed, it is called
&, partnership at will, and may be dissolved at tbe individual plea-
sure of eitber party, at even a moment's notice, {g) In all cases,
it is dissolved by tbe bankruptcy of any one of tbe partners, fol-
lowed by adjudication, (A) by bis outlawry, or attainder of treason
or felony, for tbe first of tbese disqualifies bim for tbe duties of a
partner, and tbe otber strips bim of all civil capacity, (i) It baa
been tbougbt that a sale of tbe common stock under a separate
execution against one of tbe partners, would amount to a dissolu-
tion of tbe partnersbip.(y)* Tbe deatb of one of tbe partners

(e) See Goodman v. Whitcombe, 1 Jac. &, "Walk. 592. Chapman v. Beach, ibid.
594. Marshal v. Bolman, 2 Jac. &, "Walk. 200.

(/) "VVray v. Hutchinson, 2 My. &. K. 235.

(t/) Nerot V. Burnard, 4 Russ. 260. Peacock v. Peacock, 16 Ves. 50. Feather-
Btonhaugh v. Fenwick, 17 Ves. 298, and per Parke, J., Heath v. Evans, 4 B. & Ad.
175.

(/() Fox V. Hanbury, Cowp. 445. Ex parte Smith, 5 Yes. 295. But Bankruptcy
does not necessarily vacate the office of director of a joint-stock company, Plielpe v.
Lyle, 11 Ad. & E. 113, unless it be subject to the provisions of the statue 6 <fe 7 Vict,
c. 110, s. 29.

(i) Publicatione quoquc distrahi soeietatem, manifestum est, scilicet si universa
bona socii publiceutur ; nam, cum in ejus locum alius succedat, pro mortuo habetur.
Irst 3. 26. 7.

(j) "Waters v. Taylor, 2 V. & B. 299.

* "If all the interest of a partner," says Chancellor Kent, "be seized and sold
on execution, that fact -will likewise terminate the partnership, because all his share
of the joint estate is transferred by act of law to the vendee of the sheriff, who be-
comes a tenant in common with the solvent partners. I have not met with any
adjudication of the point in the English law, though it is frequently assumed ; but it
follows from the sale of his interest as a necessary consequence, and is equivalent in
that respect to a voluntary assignment." Such also was the rule of tbe civil law.
Mr. Justice Story seems to think that the partnership is dissolved to tbe extent of
the right, title, and interest levied upon and sold under the execution. " If the levy
is a part of the partnership property, there is a severance, pro tanto, of the partner-
ship interest therein : if of the whole, then there is a severance of the entirety."
Story on Partn. 443.

PARTNERS. 55

Partnership — ^liow dissolved.

operates of course as a dissolution,* since we have seen that his
executors cannot represent him ; (/c) and so will the marriage of a
female partner, since her husband would otherwise be introduced
into the firm without the consent of her co-partners. {!)

Whenever any of the above circumstances happen, the entire
firm, though it consist of never so many, is dissolved, unless the
contrary has been in express terms provided for, {m) though the re-
maining partners may of course come to a new agreement, to carry
on the business upon the old terms. And herein our law adopts the
maxim of the civilians, cum aliquis renuncizverit societatl solvitur soci-
ctas , the reason of which is thus expressed by M. Pothier, " Traite
du contrat de societe/' cap. 8: "Za raison est que les qualites person-
elks de chacun des associes entrent en consideration dans le contrat de
societeP A reason upon which the laAV of England sometimes acts
in pronouncing other contracts dissolved on the secession of a party
whose personal qualification may have been the chief inducement
to enter into them, (n)

(Ar) Si consensu plurium soeietas contracta sit, morte unius socii solvitur, est/
plures supersint. Inst. 3. 26. 5.

(i) See Nerot v. Burnand, 4 Russ. 260. "Wrexham v. Huddlestone, 1 Swanst,
517. n.

(-/Ai) Crawshay v. Collins, 15 Ves. 228. Kinder v. Taj-lor, (Jow. Part. 240. Craw-
shay V. Maule, 1 Swanst. 509, in notis. Si quis ex sociis mole debiti prregravatus
bonis suis cesserit, et ideo propter publica et privata debita substantia ejus V£eneat,
solvitur soeietas. Inst 3. 26. 8.

(rt) Robinson v. Sharp and another, 2 B. <fe Ad. 303. Griffiths v. Griffiths, 2 Hare,
587, where "Wigrara, V. C, held that the retirement of one member of a firm of at-
torneys discharged their retainer bj' a client

* A partnership may continue by express agreement after the death of one of the
partners. Gratz v. Bayard, 11 Ser. <fe Raw. 41. But unless a positive stipulation to
that effect is inserted in the articles of agreement, a partnership, although formed for
a certain number of years, is dissolved by the death of one member before the expi-
ration of the term. Scholefield v. Eichelberger, 1 Peters' Rep. 586.

The member of a partnership may authorize his executor by his last will and
testament to carry on the business of the firm after his death. But the executor can
not do so without incurring a personal responsibility to future creditors, which will
be the more onerous, as the general assets of the testator will not be bound for such
debts, without the clearest evidence upon the face of the will, of an intention to fix
upon them such a liability. Bur well v. Mandeville's executor, 2 How, 560. Ex parte
Garland, 10 Ves. 110.

5G MERCANTILE PERSONS.

Rio-lits and Liabilities of Partners among themselves.

The above are the modes in which a partnership may be deter-
mined, as hetween the partners themselves ; for those who desire to
end it as toSrangers, should give notice to the world of its dissolu-
tion, otherwise they hold themselves out as beiug still in conjunc-
tion with their late partners, and will continue to be bound by their
CDgagements. (o) The mode of giving this notice will be hereafter
described, when we come to speak of the time at which the liability
of partners to third persons determines.

Section IY. — Rights and LiaJnlities of Partners l mong themselves.

It was proposed to consider, in the third place, the rights of
partners against, and theu' liabilities to, one another.

They are jointly, (2?) and, in the absence of evidence to the con-
trary, are taken to be equally, {q}* interested in the partnership
stock and effects, subject to the application of a maxim, which will
hereafter be discussed, viz., "t/us accrescendi inter mercatores locum
non hahety (?') But equit}^, which exercises a peculiar jurisdiction
over the accounts of partners, looks on the right of each in the joint
stock as subject to the state of those accounts; so that, as between
himself and his companions, his valuable interest may amount to
little or nothing, nay, he may be indebted to the concern of which
he is a member ; for it is to be observed, that a partnership is held
in equity so far distinct from the individuals composing it, that
each of them may buy or borrow from the firm, and the firm from

(0) Parkin v. Carutliers, 3 Esp. 248. Graham v. Hope, Peake, 15-4.

(p) In the absence of agreement, a partner's right seems like that of other joint-
owners- if there be two, an midlvided moiety; if three, a third, and so on. A con-
trary doctrine was once acted upon at N. P., Peacock v. Peacock, 2 Camp. 45, and
see S. C. 16 Ves. 49, but has since been disapproved of by high authority. See 16
Ves. 56 where it is laid down that the presumption is that the}' share equally. But
see Howell v. Brodie, 6 Bing. N. C. 50. Sharpe v. Cummings, 2 Dowl. & L. 504, and
the observations of Lords Wynford and Brougham in Thompson v. Williamson, 7
Bligh, N. S. 432.

(q) Farrar v. Beswick, 1 M. & Rob. 527 See the rule of the civil law, ante, p.
i1, note (/().

(r) Vide Book 2.

S. P. Conwell v. Sandidge, 5 Dana, 21 L

PARTNERS. 51

Rights and Liabilities of Partners among themselves.

him, vice versa, (s) and although each partner, acting as such, can,
as we shall hereafter see, bind the joint stock, by dealing with
strangers in the name of the firm, yet he cannot do so by an act of
his own individual account to a larger extent than his own interest.
Thus, though the goods may be taken, and Jiis share therein sold
for his own private debt ; yet the purchaser from the sheriff buys
only that to which the defendant is (as between himself and his
companions) justly entitled, (^) and the rule is the same if he be-
come individually a bankrupt, (w)"

(s) "But though these terms creditor and debtor are so used, nothing can be more
inconsistent with the law of partnership than to consider the situation of either party
as in any degree resembling the situation of those from whom the appellation has
been so borrowed. The supposed creditor has no means of compelling payment of
his debt, and the supposed debtor is liable to no proceedings either at law or in
equity, assuming always that no separate security has been given." Per Ld. Cotten-
ham, C. Richardson v. Bank of England, 4 M. i; C. 112.

{t) Haydon v. Ilaj'don, 3 Salk. 392. Chapman v. Koops, 3 B. & P. 289. John-
eon V. Evans, 7 M. <fe G. 240.

(m) West V. Skip, 1 "Ves. 242. Holderness v. Shackles, 8 B. & C. 612. There are
several peculiar rules adapted to the use of a bankrupt partner ; these will be treat-
ed of in the Fourth Book, under the head of Bankruptcy.

* The law is laid down in the late case of Johnson v. Evans, 7 Mann & Grang.
(49 E. C. L.) 240. " It is an admitted general rule of law, that the judgment cred-
itor of any partner may take in execution against that partner, as well his separate
propertj-, as his share or interest in all the personal property of the partnership,
that is tangible and capable of being seized ; and it is undoubtedly true that in order
to make, and for the purpose of making, the execution effectual against the share of
the debtor partner, in the joint property, the sheriff must seize the whole, the share
of the two partners being undivided. Such seizure of the whole, it is obvious, arises
fi'om the necessity of the case; just as if a man purchases an undivided moiety of a
chattel that is indivisible, he cannot in any way take possession of that moiety with-
out taking possession of the whole. But neither in the one case nor the other does
such taking possession of the whole convey any interest or property whatever in
the other part-owner's share. The seizure of the whole, which is made of necessity,
leaves the property of the solvent partner, and the possession also, which follows
the property in chattels, just where it was before, in the solvent partner."

There is great conflict among the authorities as to the mode in which a separate
creditor of one partner may make his execution available against the interest of the
debtor partner in the partnership assets. It seems to have been held in Alabama
that the sheriff might take exclusive possession of the partnership property, for the
purpose of making sale of the debtor partner's interest. Moore v. Sample, 3 Alab.
N. S. 317. The same rule was recognized by J. Dewey, in Reid v. Howard, 2 Mete.
39. In Phillips v. Cook, 24 "Wend. 389, it was decided, after an elaborate examina-

58 MERCANTILE PERSONS.

Rights and Liabilities of Paftners among themselves.

To ascertain each partner's share in the joint stock, it is prima-
rily important to know what property is comprehended within that
denomination. Now it by no means follovvs, that because property
has been used or risked for the service of the firm, it is, therefore,
partnership property ; it may be the sole property of any one of
the partners ; thus if A., being the owner of a parcel of goods, pro-
pose to B. that they should exert themselves jointly in selling
them, and divide the profit ; B., although a partner in the profits,
is not so in the goods, nor are they any part of the joint stock, but
the sole property of A., risked by him for the service of the part-

tion of the authorities, that upon an execution against one of two partners, the
sheriff may seize the entire partnership effects, or so much thereof as may be neces-
sary to satisfy the execution, and sell the interest of the partner against -whom the
execution has issued, and against the -will of the other partner deliver the property
sold to the purchaser ; and that the other partner or his assigns cannot bring an
action of trespass against him for thus delivering the property sold to the purchaser.
The same rule prevails in Indiana. Burgess v. Atkins, 5 Black, 337.

On the other hand, in New Hampshire, it has been held, that the sheriff, on a
demand against one partner for his private debt, cannot seize the goods of the part-
nership, and exclude the other partners from the possession. The specific property
of a partnership, it was said, could not lawfully be taken and sold to satisfy the pri-
vate debt of one partner. The creditor can have no greater right than the debtor
himself has individually: which is a right to a share of the surplus. Gibson v.
Stevens, 7 N. Ilamp. 352 ; Morrison v. Blodgett, 8 N. H. 238.

The editors of the American Leading Cases, Vol. I. p. 487, after a very instruct-
ive examination of the decided cases, submit the following remarks : — " The whole
discussion resolves itself into the question, whether a partner's interest in partner-
ship effects can be seized upon at all, under a common law execution. That it may,
principle, policy, and authority agree : the first, because the partner has a legal in-
terest in possession, which is a leviable estate • the second, because otherwise a debtor
by merely entering into a partnership might screen all his property from his cred-
itors; and the third, by a series of cases, and a continued practice from the earliest
times. If an execution can be sustained at all, there is no mode in which it can be
done but by a seizure of the goods and a levy and sale of the partnership interest"

Whether a court of equity will interpose to prevent a sale by the sheriff of the
vmascertained interest of one partner, and upon whose application, is a point upon
which the highest judicial authority is in conflict. "\Ve quote the following obser-
vations from the work of Mr. Justice Story on Partnership : —

" In case of the seizure of the joint property for the separate debt of one of the
partners, a question has arisen, whether a court of equity ought to interfere, upon a
bill for an account of the partnership, to restrain the sheriff from a sale, or the
vendee of the sheriff from an alienation of the property seized, until an account is
taken, and the share of the partner is ascertained. Mr. Chancellor Kent has decided
in Moody v. Payne, 2 J. C. R. 548, that an injunction for such a purpose ought not to

PAKTNERS. 59

Rights and Liabilities of Partners among themselves.

nersliip. (i-)* But still partnerships may and do exist, in which all
the capital is contributed by one, and nothing but his labor by the
other ; who, nevertheless, is entitled to consider the capital as joint

(i/) Smith V. 'Watson, 2 B. & C. 401. Meyer v. Sharpe, 5 Taunt. 4*7. See ex parU
Hamper, lY Ves. 404. "Wedderburn v. "Wedderburn, 4 M. & Cr. 41, 1st point.

issue to restrain a sale by the sheriff, upon the ground that no harm is thereby done
to the other partners; and the sacrifice, if any, is the loss of the judgment debtor
only. But that does not seem to be a sufficient ground upon which such an injunc-
tion should be denied. If the debtor partner has, or will have, upon a final adjust-
ment of the accounts, no interest in the partnership funds ; and if the other partners
have a lien upon the funds, not only for the debts of the partnership, but for the
balance ultimately due to them ; it may most materially affect their rights, whether
a sale take place or not. For, it may be extremely difficult to follow the property
into the hands of the various vendees: and the lien of the other partners may, per
haps, be displaced, or other equities arise by intermediate bona fide sales of the
property in favor of the vendees, or other purchasers without notice ; and the part-
ners may have to sustain all the chances of anj' supervening insolvencies of the im-
mediate vendees. To prevent multiplicity of suits and irreparable mischiefs, and to
insure an unquestionable lien to the partners, it would seem perfectly proper, in
cases of this sort, to restrain any sale by the sheriff. And besides, it is also doing
some injustice to tlie judgment debtor, by compelling a sale of his interest under cir-
cumstances, in which there must generally, from its uncertainty and litigious char-
acter, be a very great sacrifice, to his injury. If he has no right, in such a case, to
maintain a bill to save his own interest, it furnishes no ground why the Court should
not interfere in his favor, through the equities of the other partners. This seems
(notwithstanding the doubts suggested by Mr. Chancellor Kent) to be the true result
of the English decisions, on this subject; which do not distinguish between the case
of an assignee of a partner and that of an executor or administrator of a partner, or
of the sheriff, or of an assignee in bankruptcj'."

The student will find the authorities on the question reviewed in an interesting
essay in the American Law Magazine.

* The investment of partnership funds in real estate for partnership purposes,
impresses upon it, in the eye of the Court of Equity, the character of personality, as
between the partners themselves and their creditors. "Whether it is to be treated as
real or personal estate, where the controversy arises between the heirs and personal
representatives of a deceased partner, is a question of more difficult}', and upon which
there is great diversity of judici il opinion. In England, the doctrine can hardly be
considered as settled the high names of Thurlow and Grant and Shadwell being
arrayed against those of Eldon and Leech and Alderson. Story on Partn. 129, and
cases there cited. The weight of American authority leans towards considering real
estate under such circumstances as personal, even between the heirs and distributees
of the deceased partner. Pierce's Adams v. Trigg's Heirs, 10 Leigh, 406. Sigourney
V. Munn, 7 Conn. 11. Kent's Comm. 3 vol. 39, and cases there cited ; and American
Leading Cases, vol. 1, p. 327. But see contra Buchan v. Sumner, 2 Barb. Ch. E. 165
Yeatman v. Woods, 6 Yerg. 20 ; Goodburn v. Stevens, 5 Gill. 1.

60 .MERCANTILE PERSONS.

Rights and Liabilities of Partners among themselves.

stock, and claim an equal share of it or its produce, (iv) The law
in all these cases moulds itself to the intention of the parties when
that can be ascertained, and is conformable in this respect to the
doctrine laid down bj continental jurists, (a;)*

In the conduct of partners towards each other, the most scru-
pulous fidelity must be observed, and its observance is enforced by
courts of equity. Thus, one is not allowed to stipulate for any
private advantage at the expense of the rest ; if he do, he will be
prevented from enjoying it, or compelled to hold it as a trustee for

(w) Reid V. Hollingshead 4 B. & C SG?

(x) See Potliier, Contrat. de Societe, cap. 2, sec. I.

Mr. Bisset, in his Treatise on the Law of Partnership, deduces from an elaborate
examination of the English cases, the following general conclusions : —

1. That in the absence of any specific agreement to the contrary', real estate, pur-
chased with partnership funds, for parinershij) purposes, is converted out and out into
personal estate, and therefore goes to tlie personal representative, and not to the heir
of a deceased partner. (Townsend v. Devagnes, 1 Mont. Part, notes, 97. Phillips v
Phillips, 1 Myln & Keen, 649 ; Broom v. Broom, 3 Mj-l. & Keen, 443. Morris v.
Kearsley, 2 You. & Coll. 139.)

2. That real estate p-.irchased with partnership property, but not for partnership
purposes, is not converted into personalty. (Randall v. Randall, 8 Sim. 529.)

3. That real estate, brought into partnership by a partner, under an agreement
that during the partnership, and if necessary for 2">artnership purposes, after the ex-
piration thereof, it should be considered as personal estate, but not purchased v,'ith
partnership funds, and not required to be sold for payment of debts, or for any of
the other purposes of the partnership, is not converted into personal estate as be-
tween heirs and personal representatives. (Cookson v. Cookson, 8 Sim. 529.)

4. The real estate devised to partners is not partnership property, though used
for pai'tnership purposes. (Phillips v. Phillips. M. S.)

5. That though partners purchase with partnership funds, the equity of redemp-
tion of mortgages devised to them, the equity of redemption follows the mortgage,
and does not become partnership property. (S. C.)

At law, however, real estate owned by a partnership, is held by them subject tc
the ordinary incidents of land held in common. (Coles v. Coles, 15 Johns. 159 ;
Hoxie V. Carr et als, 1 Sumn. 174. Burnside v. Merrick, 4 Mete. 537. Dyer v. Clart,
5 Met. 662 ; Feck et als, I'.Fislier, 7 Cush. 386 ; Goodburn v. Stevens, 5 Gill. 1 ; Pugh
V. Currie, 5 Alab. N. S. 446 ; Lawrence v. Taj-lor, 5 Hill, 111.)

* What is the rule of he civil law where partners have contributed unequjil
portions to the capital s>.ock, and the contract of partnership is silent as to the ap-
portionment of profits, is discussed in Towner v. Lane's Administr., 9 Leigh, 262i
Judge Brolcenhoroucrh inclines to the opinion that the English writors have miscon
fitrued the a»vil law rule.

part]si:rs. (31

Eights and Liabilities of Partners among themselves.

their benefit. (3/)* "It is clear," said Sir William Grant, M. E.,
" that one partner cannot treat privately, and behind the backs of
his co-partners, for a lease of the premises where the joint trade is
carried on ; if he do so, and obtains a lease in his own name, it is
a trust for the partnership." (2) Nay, a partner must not place
himself in a situation likely to give him an interest, or even a bias
against the discharge of his duty ; (a) all which results from that
broad principle of equity, that from every person standing in a sit-
uation of trust and confidence with respect to another, a conduct
marked with the most scrupulous good faith shall be required ; and
it is almost superfluous to observe, that, in the case of partnership,
good faith dictates not merely abstinence from all deceit and injury,
but zealous co-operation in the objects of the concern, honorable
exactness in keeping accounts, and readiness to- submit them to in-
spection ; and surely, considering that each partner is the accredited
agent of the rest, and has power to bind them to all contracts within
the scope of the joint trade, no one can blame the strictness with
which this good faith is required by courts of equity, which will
even declare the partnership dissolved, in case of any very flagrant
breach thereof. This is, however, done with great reluctance, {b)
and the contract of partnership has been, not unaptly, compared
by an eminent judge to that of marriage ; since the parties to each
take one another for better and for worse, and must not call at

(f/) Russell V. AustA^ick, 1 Sim. 52. Maddeford v. Aiistwiek, ibid. S9, and see
Somerville v. Macka}', 16 Ves. 382. Fawcett v. "Whitehouse, 1 Rnss & Mylne, 132.

(z) Featherstonhaugh v. Fenwick, 17 Ves. 298, 2 How. Suppl. 4*78. The civil law
went even further. Plane, si quis callide in hoc renuntiaverit societati, ut obveniens
aliquod lucrum solus habeat . . . cogitur hoc lucrum communicare. Inst. 3. 26. 4.

(a) Glassington v. Thwaites, 1 Sim. & Stu. 133 Burton v Wookey, 6 Madd. 36t.

(6) See Wray v. Hutchinson, 2 Myl. <fe K. 235.

* Partners are not entitled to charge each other, or the firm of which they are
members, for their service in the co-partnership business, unless there is a special
agreement to that effect ; or where such an agreement can be implied from the course
of business between the co-partners, as by making such allowances in the adjustment
of the accounts from time to timfe during the continuance of the partnership, or from
the nature of the service performed being such as it is not usual for one co-partner
to perform without receiving a separate compensation therefor. Each pai'tner, ia
the management of the common business, is attending to his own interest therein, ai
well as to the interest of his co-partner. (Caldwell v. Lieber, T Paige Rep. 604,
See also Patton's Ex'ors v. Calhoun's Ex'ors, 4 Grat. 138.)

62 MERCANTILE PERSONS.

Rights and Liabilities of Partners among themselves.

every turn upon the law, to rectify the consequence of their own
want of foresight.

It has been already observed, that a partnership is oflen con-
tracted in writing ; such an agreement usually goes by the name of
Articles of Partnership ;* where these exist, they must of course,

* The following form, which mdj be adapted to suit the circumstances of any
ease, is taken from the appendix to the excellent work of Bisset on Partnership.

DEED OF PARTNERSHIP BETWEEN TWO PERSONS.
(general form.)

Tliis indenture, made the day of between A. B. of of the one part,

and C. D. of of the other part, witnesseth that in consideration of the mutual

trust and confidence which the said A. B. and C D. have in each other, each of them,
the said A. B. and C. D., doth for himself, his heirs, his executors, and administra-
tors, covenant with the other of them, his executors and administrators, b}' these
presents in manner following, that is to say :

I. That they, the said A. B. and C. D., will be partners in the business of

Nature of business and com- fj-om the day of , for the term of fourteen

mencement and duration of

partnersbip. years thence next ensuing.

II. Tiiat if, nevertheless, either of the said partners shall be desirous to determine

Proviso for dissolution upon and dissolve the said partnership at the end of seven years
notice at the end of tlie first . ■, n i^ -i

seven years. from the said day of , and of such his desire

shall give not less than six calendar months previous notice in writing to the other

of them ; or shall leave such notice at the place where the said business shall for the

time being be carried on ; then, and in such case, the said partnership shall cease

and determine upon the expiration of the said seven years.

III. Tliat if either of the said partners shall be guilty of any breach or non-ob-
Power of eitlier partner to servance of any of the stipulations contained in the twelfth,
on'br«JhTce"tail''cov^^^ thirteenth, fourteenth, and fifteenth articles hereinafter
nants by the otlier. mentioned, the other of the said partners shall be at liberty,
if he shall think fit, within three calendar months after the same shall have become
known to him, to dissolve the said j>artnership, by giving to the partner who shall
so offend, or leaving in the counting-house, or other place where he shall usually carry
on business, notice in writing, declaring the said partnership to be dissolved and de-
termined ; and the said partnership shall, from the time of giving or leaving such
notice, or from any other time to be therein appointed for the purpose, absolutely
cease and determine accordingly ; without prejudice, nevertheless, to the remedies
of the respective partners, for the breach or non-observance of all or any of the
covenants or agreements contained in these presents, at any time or times before the
determination of the said partnersl ip. And the partner to whom the said notice
shall be given, shall be considered as quitting the business, for the benefit of the
partner who shall give the said notice.

Style of film. IV. That the form and style of said partnership shall be

Place of business. V. That the business of the said partnership shall be carried

on at , or at such other place or places as the partners shall here after determine^

PARTNERS. OS

Rights and Liabilities of Partners among themselves.

as far as they will go, be acted on, for modus et conventio vincunt
legem: their terms, however, are explained, and their deficiencies
sup23lied by reference to the above principles, which they them-

VI. That the capital of said partnership shall consist of the sum of $ , to

be brought into the said business by the said A. B. and C. Proportions in which part-

° . •■Ill "S''* '■'* ^^ interested in cap-

D., in equal proportions ; and the said capital, and the ital and profit.

profits arising therefrom, shall (subject as hereinafter mentioned) be employed in the

6aid business : and the said A. B. and C. D. shall be entitled to and interested in the

said capital, and so much of the gains, profits, and produce thereof, as shall remain

after all payments hereinafter directed, to be made thereout, shall have been made,

in equal proportions.

VII. That the said A. B. and C. D., respectively, shall be at liberty from time to

time to draw out of the moneys of the said partnership, any Partners may draw out cer-

j. f j.\ r ix. i.1 tain money for their own

sum or sums, not exceedmg the sum of $ per month, use, subject to a proviso for

for their own separate use ; but in case at the end of any refunding in case of excess.

year, it shall appear upon taking the general annual account, that the net profits of

Buch year shall not have amounted to the sum of $ , (the total amount drawn

out by both parties during the year,) then, and in such case, immediately after such

general account shall have been taken, each of them, the said A. B. and C. D., shall

repay to the said partnership the excess (if any) of the amount of the sums which

he shall have actually received, over the sum which he shall have been entitled to

receive as his share of the net profits of said business during such year.

VIII. That each of them, the said A. B. and C. D., will diligently employ himself

in the business of the said partnership, and be faithful to Parties to attend to tlie
. . . - . business, and be laithful to

the other m all transactions relating to the same, and give a each other.

true account of the same, and all letters and things which may come to his hands or

knowledge concerning the said partnership to the other, as the same shall be required.

IX. That neither of them, the said A. B. and C. D., will either by himself, or

with any other person or persons whomsoever, either di- Not to engage in any other

,1 • ]• ii • ii, u • e /t.1 business.or employ tlio part-

rectly or indirectly, engage m the business of , (the „„ship moneys except on

business of this partnership,) or in any business except the account of the partnership.

business of the said partnership, and upon account thereof; and that neither of them

will, without the consent in writing of the other, employ any of the monej's or effects

of the said partnership, or engage the credit thereof, except upon the account and

for the benefit of the said partnership.

X. Tliat neither of them, the said A. B. and C. D., will take any apprentice, or
hire or dismiss any clerk or servant in the business of the or hire or dismiss any ser-
partnership, without the consent of the other of them. "^'1°'' *<=., without consent.

XI. That in all cases where there shall be occasion to give any bond, note, bill, or
other security, for the payment of any sum or sums of money, Both partners shall sign sc-
on account of the said partnership, (except where the con- curiiies for money,
trary shall in the common course of business be unavoidable,) the same shall be re-

spoctivelv signed and executed by both of them, the said A. And any partner signing

Bj n" r\ J i.1 i. -i- -ii i- ii 1 11 • I alone, shall be sepafatoly

. and O. D. ; and that it either oi them shall give any such liable.

security, (except in the cases before mentioned,) which shall not be signed and

(54 MERCANTILE PERSONS.

Rights and Liabilities of Partners among themselves.

selves indeed, in many parts, do little other than express, (c) They
generally point out the objects of the partnership ; the time at
which it is to commence, which if no other be specified, is from

executed by the other of them, the same shall be deemed to be given on the separate

account of the partner so giving it, and he shall satisfy the same out of his own se

parate estate, and shall indemnify the other of them from all expenses on account

thereof.

XIL That if either of them, the said A. B. and C. D., shall at any time during

Any partner lending or giv- the continuance of the said partnership, lend any of the mo-

ing credit to any person jjgyg qj, deliver upon credit any of the goods belonging to
wliom the other shall have -' ' ' -' ° o o

forbidde]! him to trust, or the said partnership, to any person or persons, whom the

MunTo "the'^Ct.Lrsh'ip,^or other of them shall have, previously by notice in writing, for-

coinpouiiding debts due to jjj^jjen him to trust ; or shall borrow or take up any money
the partnership, to make _ r j j

good the deficiency. whatsoever on account of said partnership, or compound any

debt or debts which shall be due to said partnership, without the consent in writing
of the other, then, and in such case, tlie partner so lending or delivering upon credit
such money or goods, shall pay to the said partnership so much ready money as the
full value or amount of the money or goods which he shall so lend or deliver upon
credit as aforesaid ; and the partner so borrowing money on account of the said part-
nership shall make good unto the said partnership the whole of the money so bor-
rowed ; and the partner so compounding debts shall make good unto the said partner-
ship the whole of such moneys and debts as he, or any other person by his order or
authority, shall give any receipt for

XIIL That if either of them, the said A. B. and C. D., shall at any time buy,
Neither partner without the order, or contract for any goods or articles e.\-ceeding the

consent of tlie other, to en- ^ f ^ without the previous consent in writing of

terinto any contract above ■» i &

a certain amount. the other, in such case the other shall have the option either

to take such goods or articles on account of the said ^partnership, or to let the same

remain the separate property of the partner who shall have so bought, ordered, or

contracted for the same.

XIV. That each of them, the said A. B. and C. D., will punctually pay and dis-

Each to pay his separate charge his separate debts, and indemnify the other of them,
debts and indemnify part- . . . .

nership against them. and the capital and property of the said partnership, agamst

the same, and all expenses or injury of any kind on account thereof.

XV. That books of account shall be kept by the said partners, and proper entries

Books of account to be made therein of all the moneys, goods, effects, debts, sales,
kept, and each party to have . ^ » o > , , ,

access thereto. purchases, receipts, payments, and all other transactions of

the said partnership ; and that the said books of account, together with all bonds,

notes, bills, assurances, letters and other writings belonging to the said partnex'ship,

shall be kept at the counting-house in aforesaid, or in such other place where

the business of the partnership shall be carried on, and each of the said partuei-a

shall have free access at all times to examine, and copy out the same.

PARTNERS. (55

Rights and Liabilities of Partners among themselves.

the date of the articles ; {d) that at which it is to end ; the amount
of capital and the proportions in which it is to be advanced by, and
in which the profits of the trade are to be distributed amono- the

(d) Williams v. Jones, 5 B. & C. 108.

XVI. That on the day of in the year — ■ — , and on the day of

in every succeeding year during the existence of the part- -Annual accounts to bo
, . /• 11 1 .-1 . T . • •,• taken, and a valuation

nership, a lull and particular account and rest in writing taken.

shall be made and taken by the said partners of all the stock in trade, moneys, credits,
and things belonging, due, or owing to the said partnership, and of all debts due or
owing from the same, and of all such other matters or things, as are usually compre-
hended in annual accounts of the like nature, taken by persons engaged in the busi-
ness of ; and that a just valuation or appraisement shall be made of all the

particulars included in such account which require and are capable of valuation or
appraisement : and that this said annual account, or a sufficient abstract thereof, re-
ferring to the particulars in the ordinaiy books of the partnership, shall be entered
in two books, and signed in each of such books, by each of them, the said A. B. and
C. D., within tliree calendar months after the time appointed for taking thereof re-
spectively, and that after such signature, each of the said partners shall take one of
the said books into his custody, and shall be bound and concluded by every such
account respectively, unless some manifest error shall be discovered therein within
twelve calendar months next ensuing, and be signified by either of the partners to
the other of them, and then and in such case, such error shall be rectified.

XVII. That within'six calendar months after the expiration of the said partner-
ship, a full, true, and particular account in writing shall be Mode In whicli final account
made and taken by the said A. B. and C. D. of all the stock and affairs wound up. '
in trade, moneys, credits, effects, and things then belonging to said partnership, and
of all moneys and debts due or owing by the said partnership, and of all liabilities
of the said partnership; and a just valuation or appraisement shall be made of all
the particulars included in such account which are capable of valuation or appraise-
ment ; and immediately after such last mentioned account shall have been so taken
and settled, the said partners shall pay, or make due provision for the payment of the
debts owing by the said partnership, and for meeting all the liabilities thereof; and
the balance of the said stock in trade, moneys, credits, effects, <fec., then belonging to
the said partnership, shall be divided between the said A. B. and C. D. in equal
shares ; and such instruments in writing shall be executed by the said A. B. and C. D.
respectively, for getting in the outstanding effects and credits of the said partnership,
and for indemnifying each other concerning the premises, and for vesting the sole
property in the said respective shares of and in the said stock in trade and effects in
each of the said partners, to whom respectively the same shal'l upo.n such division
belong, and for releasing to each other all claims on account of the said partnership
as are usual in cases of the like nature, such instruments respectively to be at the
expense of the person requiring the same ; and if any question shall arise as to the
propriety of any instrument required by either party, such question shall be referred
to arbitration

66 ]\IERCANTILE PERSONS.

Rights and Liabilities of Partners among themselves.

partners, who stipulate therein for the due performance of their
respective duties. It is sometimes also provided, that differences
among them shall be ended bj the vote of the majority, and,
almost always, that an account shall be taken annually of the debts
and effects of the partnership, and a particular mode of winding up
affairs pursued upon its dissolution, in general, either by turning
all the effects into money, and dividing them, which is the course
pursued by courts of equity if there be no stipulation on the sub-
ject, or by the transfer of one partner's share to the other at a
valuation.* Sometimes also it is agreed, that the executor, or

XVIII. That in case either of said partners shall die during the terra of said

T r J M „r „!n,„, partnership, his executors or administrators shall, if such

In case of death or either r i> >

partner during term.provis- death shall happen before the day hereinbefore appointed
ion for ascertaining the sum , ,, o . i - i ,-,i i . ., ■■ ,

to be paid to Lis representa- for the nrst general account, be entitled to the capital

*''''^** brought in by such deceased partner, or if the same shall

happen after the day hereinbefare appointed for the first annual account, shall be
entitled to such sum of money as the share of the deceased partner of and in the
Btock in trade, moneys, credits, and effects of the partnership shall ujjon the then last
general annual account amount to, or as such share -would have amounted to, in case
8uch account had been taken at the proper time. And in either case, the executors
or administrators of the deceased partner shall also be entitled to an allowance after
the rate of — per cent, per annum, upon the capital, or share of stock in trade, of
the deceased partner, in lieu of profits, from the commencement of the said partner-
ship, or from the then last general annual account, as the case maj^ be, to the time of
such death, and the surviving partner, his executors or administrators, shall pay such

allowance in lieu of profits on demand: and shall within next after the death

of the deceased partner execute and deliver to his executors or administrators, a
bond in a penalty double the principal, conditioned for the payment of the said prin-
cipal sum to which they shall become entitled as aforesaid, with interest as before
fixed thereon, from such death, within months.

XIX. That the surviving partner, his executors or administrators, shall also cxe-
Proviso for execution of pro- <^ute and deliver a bond on a sufficient penalty-, to the exe-
perindemnities,and releases, tutors or administrators of the deceased partner, for indem-
nifying them, and the estate of the deceased partner, from the debts, engagements and
liabilities of the said partnership at or after such decease, and from all expenses on
account of the same ; and the executors or administrators of the deceased partner
shall release and assign unto the surviving partner, his executors or administrators,
all their share, right, title, and interest of, in and to the stock in trade, moneys, credits,
and effects of the said partnership, and empower and enable him and them, as much
as in them lies, to recover and receive the same.

In witness, Ac.

* The propriety of inserting such a stipulation in the articles of agreement is very
manifest. A compulsory sale is often a harsh mode of settlement, but it is now tha

PARTNERS. 67

Rights and Liabilities of Partners among themselves.

other person appointed in the will of a partner, shall succeed him.
Where there is such a clause, its general effect appears to be to
give the executor, or appointee, his option whether he will remain
a member of the firm, or have its affairs wound up, and his share
ascertained and paid to him. (e) And he will be entitled to a
reasonable time, and an inspection of the partnership accounts to
assist him in his election. (/) Yet upon principle it seems, and
probably would be decided, that where it is clear that the testator
intended him to have no option, he must either conform and carry
on the trade, or relinquish his claim to any benefit under the will
appointing him ; {g) and it behooves him to consider very warily,
for if he once become a member of the firm, though but in trust
for others, he will be liable, like any other partner, for its engage-
ments, both in person and property, and may even become bank-
rupt, (/i) It has been usual to stipulate, that disputes between part-
ners shall be referred to arbitration, but whether this can be enforced
has been much questioned ; for it is said that courts of equity will
not allow their jurisdiction to be ousted by any such private
arrangement ; {i) and equity will not decree a specific performance
of it. {j) Lord Eldon has suggested, that where such a covenant is

(/) Pigott V. Bayley, MeClell. & Younge, 569.

{g) See Lord Eldon's observations in Crawshay v. Maule, 1 Swanst. 512.

{h) Wightman v. Townroe, 1 M. & S. 412. Ex parte Richardson, Buck. 202.

(i) Kill V. Hollister, 1 Wi.s. 129. See Tattersall v. Groote, 2 B. <fe P. 131.

(j) Price V. Williams, 6 Ves. 818. Agar v. Macklew, 2 Sim. & Stu. 418.

established doctrine that either party has a right to insist upon it, whether the disso-
lution be caused by death or otherwise. " One partner has no claim upon the indi-
vidual proportion of any specific article, nor can he insist upon an exclusive right in
it; but he is entitled only to a general arrangement of the partnership concern, and
for that purpose to an account of the produce of the aggregate joint effects. He
cannot separate his share from the bulk of the joint property, nor compel his co-
partner to accept what, according to a valuation, his interest may be worth. That
is not a mode in which a Court of Equity winds up the affairs of a partnership. But
in every case in which it interferes in closing the transactions of a firm, it directs the
value of the whole of the joint property, whether real or personal, to be ascertained
in the way in which it can be best ascertained, viz., by a sale, and its conversion into
money." Gow. on Part 234. Featherstonhaugh v. Fenwick, 19 Ves. 298. Crawshay
V Collins. 15 Ves 218

(38 MERCANTILE PERSONS.

Rights and Liabilities of Partners among themselves.

inserted, liquidated damages for its breach should also be agreed
on ; since otherwise, a court of law, even if it would entertain the
action, might find dif&cultj in awarding more than a nominal sum
to the plaintiff; for perhaps he would have failed before the arbi-
trators, had thej been appointed, {k)

It only remains to observe, that equity, in construing these
instruments, looks mainly to the intention of the parties as evi-
denced by their conduct, and if it find that some of the provisions
have been purposely and uniformly disregarded, will even consider
them totally dispensed with. " There would," said Lord Eldon, in
the case of Jachson v. jSedgivicJc, (T) " be no dif&culty in applying
the articles to the particular business with reference to which they
were framed. But if the parties engaged in business in which
their application would work injustice, then I say, that these arti-
cles, though they contain a general reference to other business, are
not such as would have been prepared with relation to that specific
business, and that engaging in that business affords a reason for not
performing the stipulations."

Our last inquiry under this head, is as to the mode in which
the mutual rights of co-partners may be enforced and vindicated,
an object which must of course be effected, in general, by appli-
cation to some court of law or equity.

As to the remedy at laiv.* If there be a covenant by deed, or
a special undertaking not by deed, {rii) for the performance of the
duty neglected, an action may be brought upon such covenant or
undertaking, (72) Assumpsit too may be maintained by a partner

{fc) See Street v. Rigby, 6 Ves. 815.

(l) 1 Swanst. 460. See also England v. Curling, 8 Beav. 129.
(m) BroTVTi v. Tapscott, 6 M. & W. 119.

(«) Want V. Reece, 1 Bingh. 18. In Bedford v. Brutton, 1 Bingh. K C. 399, the
plaintiff and defendants were members of a joint-stock compan}-, plaintiff agreed to

* The doctrines of the text in reference to remedies at law between partners
have been frequently considered and approved in the American courts. Lawrence
V. Clark, 9 Dana's R. 257. Killam v. Preston, 4 Watts & Serj. 14. Lamalere v. Case,
1 Wash. C. C. R. 435. Clark v. Dibble, 16 Wend. 601 ; 6 Gratt. 354. Glover v. Tuck,
24 Wend. 153. Haskell v. Adams, 1 Pick. 59. Van Ness v. Forest, 8 Cranch 30
Pope V. Randolph, 13 Alab. 214. Bonaffe et als. v. Fenner et al, 6 Sme. & Mars. 212i
See also Cross v. Cheshire, 6 L. & E. R. 517.

PARTNERS. GQ

Rights and Liabilities of Partners among themselves.

for cash which, he advanced to his co-partner before the partner-
ship, and in order to its formation ; (o) or which he has paid, since
its dissolution, to a stranger who had not due notice of that event,
and to whom therefore his late partner was able to render him
liable, though he had no interest in the dealing by which such lia-
bility accrued to him. {p) So also he may recover for work done
for the firm before he became a member of it. (q) Where an ac-
count has been taken and a balance struck, a partner may sue at
law for what appears to be due to him 'on such balance from his
companion ; and that whether the account was taken by the parties
themselves, or through the medium of a court, or of an arbitrator : (r)
and, though it was once laid down that an express promise to
pay such balance must be proved, in order to sustain the action, (s)
yet Gibbs, C. J., and subsequently the full Court of Exchequer, has
decided for the sufficiency of an implied one. (t) There may also
be special bargains, by which particular transactions are insulated
and separated from the joint account, so as to entitle one partner
to sue at law on them against another ; (u) and these decisions are
analogous to the rule of law respecting other accounts lying peculi-
arly within the jurisdiction of equity, which cannot indeed, while
open, bft made the subject of a suit at law, (v) yet if a specific sum be
admitted by the trustee to be due, that is recoverable by action, (tv)

deniise Vnd to defendants as trustees for the company, and defendants covenanted
to pay ))im rent, and by a separate deed, jilaintiff and the other members of the com-
pany covenanted to indemnify defendants for acts done by them as trustees. Held,
that pla-intifi^ though a member of the company, might sue defendants on their
covenant.

(o) Venning v. Leckie, 13 East, 7. Elgie v. "Webster, 5 M. & W. 518.

(p) Osborn v. Harper, 5 East, 225. Hutton v. Eyre, 1 Marsh. 603.

(y) Lucas v. Beach, 1 M. <fe G. 417.

(r) Moravia v. Levy, 2 T. R. 483, n. Foster v. Allanson, ibid. 479. Winter v.
Whi*«, 1 B. & B. 350. See Henley v. Soper, 8 B. & C. 16. Brown v. Tapscott, 6 M.
& W. 119. Carr v. Smith, 5 Q. B. 128.

(s) Fremeut v. Coupland, 2 Bingh. 170 ; 9 B. M. 318.

(i!) Rackstraw v. Iniber, Holt, K P. C. 368. Wray v. Milestone, 5 M. & W. 21.

(m) Jackson v. Stopherd, 4 Tyrwh. 335 ; 2 C. <fe M. 361. Coffey v. Brian, 10 B. M.
M5 ; 3 Bingh. 54. Wray v. Milestone, 5 M. & "W. 21. Elgie v. Webster, 5 M. & W.
518. Vide tamen Robson v. Curtis, 10 B. M. 341.

(y) Case v. Roberts, Holt, 500.

(w) Roper v. Holland, 3 Ad. & E. 99. Remon v. Hayward, 2 Ad. & E. 666.

70 MERCANTILE PERSONS.

Rights and Liabilities of Partners among themselves.

A partner may maintain an action on the note or acceptance of
his companion, (x) though for value received on the partnership
account : and it was once thought, that one partner who had been
sued, and obUged to pay damages incurred by the wiiole firm,
might maintain an action against the rest for contribution. (?/) But
this is now settled otherwise, excepting where the partnership is
only in an isolated transaction. (2)

For the general rule of law is, that oetween partners, whether
they are so in general, or for a particular transaction only, no ac-
count can be taken at law, («) nor action maintained for work and
labor, or money expended on account of the partnership ; the rea-
son for which seems to be, that a court of law could not in such
cases do complete justice, since the forms of an action would not
permit it to enter on such an investigation of the entire state of the
partnership accounts as would be necessary, in order to ascertain
the fair and real claims of the contending parties.

When, however, it is said that no account can at law be taken
between partners, this must be understood to mean that it cannot
be taken in any of the forms of action ordinarily adopted; for in
the action of account such an investigation may be obtained even
at law, and this course, after having become entirely obsolete, has
begun, within the last year or two, to be occasionally resorted to,
probably in consequence of the delays of courts of equity.* And,
indeed, by the substitution of an arbitrator for the auditors who
regularly would be assigned by the Court, the action of ac-
count seems capable of being rendered a very efficient mode of
remedy, (h)

(x) Preston v. Striitton, 1 Anst. 50 ; see 4 Bingh. 15L Fox v. Frith, 10 M. & "W.
131.

(.y) See Abbott v. Smith, 2 Bl. 9-47. "Woolley v. Batte, 2 Carr. <t P. 417.

{z) Sadler v. Nixon, 5 B. & Ad. 936. See Wilson v. Cutting, 10 Bingh. 436. Pear-
son V. Skelton, 1 M. & "W. 504. Brown v. Tapscott, 6 M. & W. 119.

(a) See Bovill v. Hammond, 6 B. <fe C. 149. Accord. Uolmes v. Higgins, 1 B. <fe C>
V4. Brown v. Tapscott, 6 M. & W. 119. Wilson v. Curzon, 15 M <fe W. 532.

(6) See a recent example, Baxter v. Hozier, 5 Bingh. N. C. 288 ; and Sturton v.
Richardson, 13 M. & W. 17.

* But this action does not lie except in the case of a mei'cantile partnership
McMurray v. Rawson, 3 Hill, 59.

PARTNERS. 71

Riglits and Liabilities of Partners among themselves.

In the case of a joint-stock banking company, and also of a
joint-stock company established since the first day of November^ 1844,
the rule that a partner cannot sue the firm, or the firm a partner,
is, as will be seen in the next chapter, to some extent abrogated.

As to the remedy in Courts of Equity.^ — If there be so flagrant
a violation of any covenant contained in Articles of Partnership,
as to call for a dissolution of the entire contract, equity will, as we
have seen, enforce that dissolution by its decree ; but where there
is a covenant, and therefore a remedy at law, it has a strong dis-
inclination to interfere in any case of less importance : (c) unless,
perhaps, under circumstances of peculiar aggravation and hard-
ship ; {d) especially if the remedy at law were inadequate to com-
pensate the party injured, for then one of the ordinary grounds of
equitable jurisdiction would exist.

As courts of law cannot, at least in the ordinary forms of action,
examine the accounts of partners among themselves, it follows that
courts of equity will do so, for otherwise there would be a defect
of justice. But whether one partner can file a bill against another,
praying for an account without a dissolution of the partnership,
has been questioned. Lord Eldon seems to have thought, and. Sir
L. Shadwell decided, that he could not ; (e) but Sir John Leach
sustained the contrary opinion, (/) which, from Lord Cottenham's
judgment in Wallworth v. Holt^ 4 M. & C. 619, seems to be the

(J) Ibid.

(e) Forman v. Ilomfray, 2 Ves. &, Bea. 329. Loscombe v. Russell, 4 Simon, 10.
See also Knebell v. White, 2 Y. <fe C. 16, and Richardson v. Bank of England, 4 M.
& C. 170.

(/) Harrison v. Armitage, 4 Madd. 14.3. Richards v. Davis, 2 R. & Myl. 347,
and see Lord Cottenham's judgment in Wallworth v. Holt, 4 M. & C. 619. Richard-
son V. Hastings, 1 Beav. 323. Deeks v. Stanhojie, 14 Sim. 57. Harvey v. Bignold, 8
Beav. 343.

* Courts of equity will not ordinarily decree the specific execution of a contract
to form a partnership, as tlie utility of such an association depends in a great mea-
sure upon unanimity of views and feelings. And this indisposition is peculiarly
great where no period has been prescribed for its duration. But there are many
cases where the jurisdiction will be exercised, as when it is necessary to prevent
gross injustice. — Crawshay v. Maule, 1 Swanst. Rep. 513. Birchett et al. v. Boiling, 5
Monf 442. Story on Partn. 286.

72 MERCANTILE PERSOXS.

Eiglits and Liabilities of Partners among themselves.

better one, at all events where the account is not sought with the
mere object of a division of profits. Therefore, when one partner
is violating the partnership contract for the fraudulent purpose of
compelling a dissolution, and has excluded his co-partner from the
books and refused to give any account, the Court will entertain a
bill, which has for its object the enabling of the latter to have the
benefit of the articles without a dissolution, and will grant him
relief, and some account as incidental to it. {g) And if in a con-
tinuing partnership, a few have an interest in a particular subject-
matter, adverse to the rest, and claim the benefit of that interest
for themselves, a bill in equity may be filed against those few by
one or more of the other parties on behalf of himself and all the
rest, praying an account respecting it, without praying even a ge-
neral account. (A)

On decreeing a dissolution and taking the account, the Court
has power to order a sale of the partnership effects and a division
of the produce, (z) in the proportion to which it considers each
partner entitled ; in fixing which, it takes into consideration, not
merely the balance upon all transactions completed at the period
of the dissolution, but also such as were at that time pending, and
from which profit or loss has since resulted. (J) Nay, if one part-
ner die, or become bankrupt, which, we have seen, causes the im-
mediate dissolution of the concern, and the remaining partners
continue to trade with the joint stock, the representatives of their
late partner will be entitled to a portion of the profits, since his
property was made use of in order to acquire them, and thus ex-
posed to the risks of bankruptcy and insolvenc}^ (/c)

We have seen that, in cases of misconduct, equity will some-
times interfere, by decreeing a dissolution of the partnership and
restraining the offender from a repetition of his ill-behavior by
injunction. In some cases too, where one partner seeks to exclude

(^f) Fairthorne v. "Weston, 3 Hare, 38Y.

(Ji) Richardson v. Hastings, uh. sup., per Lord Langdale, M. R. Harvey v. Bignold,
8 Beav. 343.

{i) Crawshay v. Collms, 15 Ves. 218. Wilson v. Greenwood, 1 Swanst. 471. Fea«
therstonhaugh v. Fenwick, 17 Ves. 298.

(_;') Jackson v. Sedgwick, 1 Swanst. 468.

{k) Crawshay v. Collins, 15 Ves. 218, 2 Russ. 325. See Brown v. De Tastet^ Jbc
292. "VVedderburn v. Wedderburn, 4 M. & C. 47.

PARTNERS. 73

Rights of third Persons against Partners.

another from that share of the concern to which he is entitled, the
Court will appoint a receiver of the partnership stock, {I) but with
reluctance, since such a step can scarcely be taken without injury
to the trade, (m)

SECTI02T Y. — Bights of third Persons against Partners.

Next, as to the rights of third persons against the partnership.
It is a general rule, that each partner is the accredited agent of the
rest, whether they he active, nominal, or dormant, and has authority as
such to hind them, either hy simple contracts respecting the goods or
business of the firm, or hy negotiable instruments circulated in its hehalf
to any person dealing bond fide, (n)*

{I) ■Wilson V. Greenwood, 1 S-wanst. 471. Peacock v. Peacock, 16 Ves. 49.

(?») Goodman v. Whitcombe, 1 Jac. & "Walk. 589. Oliver v. Hamilton, 2 Anst.
453. Richards v. Davies, 2 Russ. & M. 347. Madgwick v. Wimble, 6 Beav. 495.

(w) Yere v. Ashby, 10 B. & C. 288. Bond v. Gibson, 1 Camp. 185. Wiutle v.
Crowther, 1 0. <fe J. 316. Thicknesse v. Bromilow, 2 C. & J. 425.

* "The distinction between general and special partnerships," says Mr. Justice
Van Ness in Livingston v. Roosevelt, 4 Johns. Rep. 251, " is probably coeval with
their existence. A general rule applicable to both is, that in transactions relating to
the joint concern, one of several partners may bind the rest. Thus, he may sign
notes, endorse or accept the bills for the common benefit, and without consulting the
rest in every particular case. But in the case of a special partnership this power
can only be legally exercised within the compass of that particular business to
which the partnership relates. It is circumscribed as the partnership itself. It is
therefore analogous to that which is conferred on an agent, appointed for a special
purpose, who if he exceeds his authority cannot bind his principal. This analogy is
complete in all cases wnere third persons have dealings with a special partner with
notice that he is such. And accordingly, it has been repeatedly ruled, that when-
ever such a partner pledges the partnership funds or credit, in a transaction which
is known to be unconnected with, and not fairly or reasonably within the compass
of the partnership, it is fraudulent and void. They, however, to entitle themselves
to the protection of this rule of law, must not do or consent to, or suffer any thing
to be done, which may hold them out to the world as general partners; and it
would always be prudent and proper to give public notice to tlie community that
the jjartnership is special, and of the particular species of traffic or business to which
it is confined." Tlie powers of a general partner may be restrained by stipulations,
inserted in the articles of partnership, to that effect. But these stipulations will
not be permitted to affect the rights of third persons who deal with the partnership

74 MERCANTILE PERSONS.

Rights of third Persons against Partners.

Although it may have been agreed amoug themselves, that he
shall have no such authorit}-, (o) yet will they be bound, unless the
party dealing with him have notice of the arrangement ; Qj) and, in
order to engage the firm, it is not necessary that all its members
should be specified ; for a partnership comprising several, as A.,
and B., and C, may carry on trade in the name of one, as A., or
in the name of "A. and C." or evenin a fictitious name, or that of
a mere stranger, and when any of these methods is adopted, the

(o) South Carolina Bank v. Case, 8 B. <& C. 427.

(p) Minnet v. AVliinery, 5 Bro. P. C. 489. Willis v. Dyson, 1 Stark. 164 Hawken
w. Bourne, 8 M. & W. 703.

in ignorance of these limitations. Sandilands v. Marsh, 2 Barn. & Aid. 673. Wind-
ship u Bank of the United States, 5 Peters' Rep. 561. United States Bank ii. Bin-
ney, 5 Mason, 176. In the case of Livingston v. Roosevelt, from which the preced-
ing language is quoted, it was held by the Court, that a note executed by one part-
ner in a sugar refinery, on the purchase of a lot of brandy, in the name of the firm,
was not obligatory upon them, being out of the course of their usual business.

Upon these principles have proceeded the cases which deny to the individual mem-
bers of a professional partnership, as in the practice of law or physic, the authority
to execute negotiable instruments in tlie name of the firm, for the purpose of raising
money. Crosthwait v. Ross, 1 Hump. 23. Breckenridge v. Shrive, 4 Dana, 375.

The authority of each partner to bind the firm by anj'^ engagement or contract,
within the scope of the partnership business, exists as Avell in the case of dormant as
of open and avowed partnerships. And if the active partner has used the name of
the dormant partner to raise money ostensibly for the business, it is not necessary
for the creditor to show that it went to the use of the firm, in order to chai-ge the
dormant partner. If this were otherwise, there would be a difference between the
responsibility of a dormant partner, and one whose name was to the articles. This
doctrine was declared in the cases of the United States Bank v. Binnej-, 5 Mason's C.
C. R. 176, Etheridge v. Binney, 9 Pick. Rep. 272, and Winship v. Tlie Bank of the
United States, 5 Peters' Rep. 529. In the last case Mr. Justice Baldwin dissented
from the opinion of the Court. " The plaintiff," saj's he, " who seeks to make those
persons parties to a note, whose names do not give it currency or credit, can only do
so by affirmative proof of interest in profits, previous authority, or subsequent recog
nition. It is true that when a dormant partner is discovered he is liable ; but then
he must be shown to be one by an interest in the subject matter of the note. Till
this is brought home, he is no party to it. I know of no authority for saying that
the mere existence of a partnership, composed of names not avowed or pledged to
the public, makes them liable when discovered, for any other contracts than those
in which they have an interest ; one who suffers his name to be used on paper, ia
liable as a partner, though there is in fact no existing partnership; but the man
who does not suffer his name to be pledged, is bound only by virtue of his interest"

PARTNERS. 75

Rights of third Persons against Partners.

pledge of the partnership's name binds the whole firm ; {q) nay, to
such an extent is this'rule carried, that where two firms have a
common partner and a common name, each one can bind the other
to the payment of negotiable securities, drawn, indorsed, or accept-
ed in that common name, (r)

Let us examine the rule above laid down a little more minutely.
I have said that each partner may bind the rest hj simple contracts,
for he cannot by deeds, unless he have express authority bij deed for
that purpose, (5)* not even though the contract of partnership were

(^) "Wintle V. Crowther, 1 C. <& J. 316, 1 Tyrwh. 21a.

(r) Swan v. Steele, 7 East, 210. Baker v. Charlton, 1 Peake, 80. See Lloyd i
Ashb}-, 2 B. (& Ad. 23.

(/) Harrison v. Jackson, 7 T. R. 207. Hall v. Bainbvidge, 1 M. & G. 42 ; but se«
Ball V. Dunsterville, 4 T. R. 313, where it was held that if both are present and one
seal, it is sufficient.

* There has been a disposition among the modern authorities to relax the strict-
ness of the ancient rule upon this subject. After an elaborate examination of all the
cases, the principle has been affirmed in the Supreme Courts of Massachusetts and
Pennsylvania, and by the Superior Court of the City of New York — Gram v. Seton,
1 Hall, 262. Cady v. Shepperd, 11 Pick. 400. Bond v. Aitkin, 6 Watts & Serg. 168
— that one partner may bind his co-partner by a contract under seal, in the name,
and for the use of the firm, in the course of the partnership business, provided the
co-partner assents to the contract previously to its execution, or afterwards ratifies
and adopts it; and this assent or adoption may be by parol. This conclusion was
declared to be founded on principles of justice and policy, and supported by the
general tenor of the adjudged cases in this country and in England. The opinion of
C. J. Jones, in the case of Gram v. Seton, is referred to with great respect, if not ap-
probation, by Judge Story, in his work on Partnership. It is also sustained by the
decisions in Maine, Kentucky, Alabama, and South Carolina. Pike v. Bacon, 21,
Maine, 280; Lucas v. Saunders, 1 McMul. 311 ; McCart v. Lewis, 2 B. Monr. 267;
Hatch V. Crawford, 2 Porter, 54. But in Tennessee, in the late case of Turbevil &
Darden v. Rj'an, 1 Hump. 113, the court adhered to the ancient rule, and considered
the cases to which we have referred as repudiating the doctrine laid down by Lord
Kenyon in Harrison v. Jackson, 7 Term Rep. 207. The rule, however, that one part-
ner cannot bind his co-partner by deed, does not apply to a conveyance of property
by deed, where such instrument was wholly unnecessary to transfer the title, as, for
example, a mortgage of the goods of the firm. Tapley v. Butterfield, 1 Mete. 515.
Anderson v. Tompkins, 1 Brok. Cir. R. 456. Sale v. Dishman's Ex., 3 Leigh, 548.
Lawrence v. Taylor, 5 Hill, 107. Forkner v. Stuart, 6 Gratt. 197. The student will
find the American cases on this subject fully collated, and the leading distinctions
traced out, in the 1st vol. of the American Leading Cases, page 286. In Mississippi,
Jt has been held that a bond signed by one r'artner, in the partnership name, with-

76 MERCANTILE PERSOXS.

Rights of third Persons against Partners.

under seal, if it do not contain a specific power to that eflfect ; {t)
nor though the others afterwards acknowledge his authority ; (w)
and if he execute such instruments, he will himself be bound,
though they will not. (v) These observations, however, apply to
cases where the deed is in the nature of a grant ; for, it would
seem, that one partner can execute a valid release by deed in the
name of the firm, and this distinction appears conformable to gen-
eral principles of law, (lu) since it is clearly settled, that "if a party
by his own act be barred from recovery in an action, he cannot, by
joining other persons as plaintiffs, undo his own act and acquire a
right to recover." (x) It must be observed, also, that though one
partner cannot, unless authorized by deed, bind the remaining
members of the firm by deed, so as to render them liable in cove-
nant or as obligors, yet there may be cases in which the deed may
bind their interest as a writing, in the same manner as the deed of
an agent not himself authorized by deed has been held to bind his
principal as an instrument in writing, (y)

Moreover, the contract must be respecting the partnership busi-
ness. " In partnerships, both partners are authorized to treat for
each other in every thing which concerns, or properly belongs to,
the joint trade, and will bind each other in transactions with every
one who is not distinctly informed of any particular circumstances

(0 Ibid.

(m) Steiglitz V. Eggington, Holt, N. P. C. 141.

(v) Elliott V. Davies, 2 B. <k P. 338.

(w) See 1 Ilolle, Abr. 410. Bayley v. Llo^-d, 7 Mod. 250. Ruddock's case, 6 Co
252. Perry v. Jackson, 4 T. R. 516. Hawkshaw v. Parkins, 2 Swanst. 544; and see
Arton V. Booth, 4 Moore, 192. Furnival v. "Weston, 1 Moore, 856.

(x) "Wallace v. Kelsall, 8 Dowl. 847. 7 M. & W. 264. But a covenant by one
partner not to sue could not be pleaded as a release in an action b}' both. "Walms*
ley V. Cooper, 11 A. & E. 216.

(y) Hunter v. Parker, 7 M. & W. 322.

out authorit}', is absolutreiy void, and not merely voidable ; and though such bond
may become obligatory, by the subsequent acquiescence of the party not signing it,
that acquiescence is only evidence that the other partner was empowered to sign the
joint name. Doe ex dem of Smith v. Tupper, 4Sm. & M. 261.

By an act of Congress, 1823, a bond given and sealed by one partner in the name
of the firm, for the payment of duties on goods imported for and belonging to the
partnership, is made binding upon all the members of the partnership.

PARTNERS. 77

Rights of third Persons against Partners.

that may vary the case. On the other hand, when the transaction
has no apparent relation to the partnership, then the presumption is
the other way, and the partnership will not be bound by the act of
one of the partners without special circumstances." (2) Such is the
general rule, but it is not easy to draw the line, and say what mat-
ters are and what are not sufficiently akin to the partnership busi-
ness. "It has," said Abbot, L. C. J., " undoubtedly been held,
that, in a matter wholly unconnected with the partnership, one
partner cannot bind the other ; but the true construction of the rule
is this, that the act and assurance of one partner made ivith reference
to business transacted hy the firm^ will bind all the partners ;" (a)
and in that case a navy agent, whose business is not to deal in an-
nuities, was held to bind his firm, by guaranteeing the payment of
an annuity which he had j^urchased for a customer. On the other
hand, one partner cannot bind another by a submission to arbitra-
tion, without some authority beyond that which flows from the
general relation of partnership, (6)* nor, it was thought, to the pay-
ment of a sum by way of liquidated damages, (c) This last propo-
sition has, however, been denied by the Court of Exchequer, in
Beckham v. Brake, 9 M. & W. 79, and in cam. Scacc, 11 M. & W. 315.
Whatever may be the full extent of the protection afforded to
co-partners by this part of the rule, it follows from it, at least, as
an undoubted consequence, that they cannot be bound by any con-
tract made with their partner as an individual, and on his own ac-
count, though he may afterwards impart to them the benefit derived
from it.{d) Thus, a several note or acceptance by, or a several

(is) Per Eyre, C. J., m ex parte Agace, 2 Cox, 312. Armitage v. "Winterbottom, 1
M. & G. 180, 1 Scott, ]Sr. R. 23.

(a) Sandilands v. Marsh, 2 B. <fe A. 673, and see Hooper v. Lusby, 4 Camp. 66.
Marsh v. Keating, 1 Bingh. N. C. 198. Hasleham v. Young, 5 Q. B. 833.

(6) Stead v. Salt, 10 Moore 395. Adams v. Bankhart, 1 C. M. & R. 681, 5 Tyrwh.
425. See Armitage v. Winterbottom, 1 M. & G. 130; 1 Scott, K R. 23. See also
Hambridge v. De la Crouee, 16 L. J., C. P. 85.

(c) Beckham v. Knight, 4 Bingh. N, C. 243. Sed vide Beckham v. Drake, 9 M. &
W. 79, which disagrees with it in this respect, and S. C. in error, 11 M. & W. 315.

(d) Beckham v. Knight, 4 Bingh. N. C. 243 ; and in error, 1 M. & G. 738. Vidi
tamen Beckham v. Drake, 9 M. & W. 79, 11 M. & "W. 315, which does not shake the

* S. P. Karthaus v. Ferrer, 1 Peters' Rep. 228.

78 MERCANTILE PERSONS.

Rights of third Persons against Partners.

loan to, one of a partnership, will never charge the rest, though
their companion maj'' have applied to the use of the firm the money
which he obtained by the discount or advance, (e) A good exam-
ple of this is to be found in the contract under which books are
frequently published, known to the trade by the name of the half-
profits' contract, by which the author agrees to furnish the manu-
script, and the publisher to print and publish it at his own risk and
expense, and to account to the author for one-half of the net profits.
In such a case, the author would not, unless he had held himself
out as being so, be liable in respect of -the printing and materials
furnished to the bookseller. (/) But it would be different, if the
contracting partner were really empowered to treat, and did treat
on account of the firm, while he described himself as treating in
his individual capacity ; in such a case, although the partnership
could not be sued on any security of a several nature given by
him, still if the transaction had been such as a loan of money or a
purchase of goods, the creditor would have a right to charge it, on
subsequently discovering the transaction to have been on its ac
count, [g] And further, it is apprehended, that the very nature and
consideration of the debt may be such as to raise a presumption, in
the absence of direct evidence, that it was incun^ed under the au-
thority of the firm. Thus, if a member purchase goods, such as
the firm deals in, and apply them when so purchased to its use, a
strong presumption seems to arise, that he was dealing in its behalf;
though had he borrowed money and contributed that to the firm,
such a presumption might not have arisen. For when the firm

proposition in the text, though it does the authority in the decision of Beckham v.
Knight. In Latch v. Wedlake, 11 Ad. & E. 959, A. B. and C. being in partnership,

A. and B. signed a contract purporting to be made between the firm and D., the Q.

B. held, that even assuming them to have authority to bind the firm, it was a ques.
tion of fact for the jury whether they intended to exercise it till the signature of D.
had been added. This point seems susceptible of much controversy.

(e) SifFkin v. Walker, 2 Camp. 308. Emly v. Lye, 15 East, 7. Lloyd v. Freshfield»
2 C. & P. 325. Smith v. Craven, 1 C. & J. 500, 1 Tyrwh. 389. Bevan v. Lewis, 1
Sim. 376. And so is the general rule between principal and agent. See Thacker v
Moates, 1 M. & Rob. 79.

(/) Wilson V. Wliitehead, 10 M. & W, 503.

{g) Robinson v. Gleadow, 2 Bingh. N. C. 156. See Brown v. Gibbons, 5 Bro. P.

C. 491. Lloyd V. Freshfield, 2 C. & P. 325. Denton v. Rodie, 3 Camp. 493. Beck-
nam v. Drake, 9 M. & W. 97.

PARTNERS. 79

Rights of third Persons against Partners.

desires a partner to procure goods, whicli they cannot but know lie
must obtain bj purchase, the inference is, that they authorize him
to purchase, and so contract through him with the vendor, (h) But
when they call on him for a contribution of money, the inference
is, that they intend to receive it from himself, not to empower him
to borrow for them from a third person, and therefore in such a
case where A. had lent money to B., who had advanced it to the
firm of which he was a member. Lord Hardwicke said, "Here are
plainly two contracts, one between A. and B., the other between B.
and his partner." (i)

There is of course no doubt, that a third party may contract
with the whole firm, and take the several bill, note, bond, or other
obligation of a co-partner as his collateral security, (j)

Provided the contract have a sufiicient relation to the business
of the firm, and the contractor have in other res^DCcts acted bond
Jide, it matters not much what may be its description, or how griev-
ous the contracting partner's fraud and misconduct : (k) thus, the
firm are liable, whether it be a loan for his expenses while engaged
in the partnership business, {I) or a purchase of goods such as might
be used therein, but which he instantly converts to his own bene
fit ; {m) so they are bound by his sale (n) or pledge (o) of the joint
property.* So, though a partner has no right to guarantee a sepa

(/i) See Gouthwaite v. Duckworth, 12 East, 421.

(i) Ex parte Hunter, 1 Atk. 223. See ex parte Emlj, 1 Rose, 61. See CoUey w
Smith, 2 M. <fe Rob. 96.

{j) JEx parte Brown, cited 1 Atk. 225. Denton v. Rodie, 3 Camp. 493.

{k) See Willett v. Chambers, Cowp. 814. Rapp v. Latham, 2 B. & A. 195. "Wil-
son V. Bailey, 9 Dowl. 13, where the advance was partly before and partly after
notice.

(1) Rothwell V. Ilumj^hreys, 1 Esp. 406.

(m) Bond v. Gibson, 1 Camp. 185.

(n) Lambert's Case, Godbolt, 244.

(o) Raba v Ryland, Gow, N. P. C. 132. Tupper v. Haythorn, ibid. 135. Reid
V. Hollinshead, 4 B. ife C. 86Y. In these cases the defendants were ignorant that they
were dealing with a partner, but the decisions in all proceeded on the ground, that
the pledgor's right as partner was sufficient to sustain the pledge.

* Tliere is great diversity of judicial opinion and decision as to the power of one
partner to make a valid assignment of the partnership effects to the benerit of the
social creditors without the assent of the other partners. The right of the acting;

80 MERCANTILE PERSONS.

Rights of third Persons against Partners.

rate transaction in the name of the rest, yet he may give a guaranty
for his partnership in a matter relating to the partnership ; {p) and,
if they afterwards adopt and recognize his act, they will be bound,
whether the guaranty related to the business of the firm or not, (q)
Again, one partner can bind the firm hi/ circulating negotiable

(p) Fx parte Nolte, 2 Glyn. & Jam. 306 ; but see Hasleham v. Young, 5 Q. B.
833.

(q) Ibid. Crawford v. Stirling, 4 Esp. 207. Payne v. Ives, 3 Dowl. & R. 664.

partner, in the absence of his co-partner from the country, to make a general assign
ment of the personal assets of the firm, for the benefit of creditors, is sustained by
numerous American adjudications of the highest authority, and especially by tha
cases of Harrison v. Sterry, 5 Cranch's Reports, 300. Anderson v. Tompkins, 1 Brock.
C. C. Reports, 456. Robinson v. Crowder, 4 McChord's S. C. Rep. 419. McCulloiigh
V. Somerville, 8 Leigh, 496. Ilennessy v. The Western Bank, 6 "Watts & S. 301.
Whitton et ah. v. Smith et ah., Freem. Chr. Rep. 231. Egbert v. Wood, 3 Paige, 517.
The doctrine of these cases seems to rest mainly on two considerations; the implied
authority given by the absent partner to his co-partner to exercise his discretion
generally in all matters of the firm, for the common benefit, and the difficulty of
discriminating between the admitted power of a single partner to pay any number
of the social creditors out of the assets, and the power to make a general assignment
for the same purpose. The weight of reason as well as authority is in favor of the
proposition, that where such an assignment is made without the concurrence of the
other partners, and imder circumstances in which they could have been consulted,
or still more, if made contrary to their expressed wishes, it amounts to a fraud upon
their rights, and will not be suppoi'ted. A transfer of all the effects of a firm for
the payment of its debts is a virtual dissolution of the partnership, and cannot, like
the payment of a single creditor, be supposed to fall within the scope of the part-
nership business. The transaction is still more objectionable, if the assignment is
made to a trustee in whose judgment, integrity, and solvency the remaining partners
have a deep interest, and in whose selection they should therefore have a voice.
So, if the assignment gives a preference to particular creditors, and thus deprives
the remaining partners of all participation in the distribution of their common
assets. The force of these considerations have been recognized in the following
cases : — ^Pierpont v. Graham, 4 Wash. C. C. Rep. 232. Havens v. Hussey, 5 Paige, 30.
.Hitchcock V. St. John, 1 Hoff. Rep. 511. Deming v. Colt, 3 Sand. S. C. Rep. 284.
Dana's Adm'ors v. Lull, 2 Washburn's (Verm.) Rep. 390. Kirby v. IngersoU, 1
Douglas (Michigan) Rep. 477. Hughes v. Ellison, 5 Missouri, 463. Drake v. Rogers
«fc Shrewsbury, 6 Miss. 317.

This discussion can, of course, have no bearing upon the power of one partner
over th^ real estate of the firm. It belongs to the partners as tenants in common,
and neither of the partners can convey more than his individual interest. Story OQ
Partn., s. 101. Lawrence v. Taylor, 5 Hill, 107.

PARTNERS. 81

Eights of third Persons against Partners.

instruments on its hehalf. This is quite clear, (r) and may be done,
as we have above seen, by negotiating them in the name, whatever
that may be, in which the partnership trade is usually carried on.
We may further remark, that if a bill be drawn upon the partner-
ship in their usual style and firm, and accepted by one of the part-
ners in his own name, it will bind them all; for he must be under-
stood to accept the bill according to the terms in which it is
drawn, (s) It has however been decided that a partner cannot bind
the rest by drawing a bill in any name except that of the firm, {t)
It seems, that a firm may use one distinct name for all other pur-
poses, and another, that for instance of the managing partner, for
the purpose of indorsing negotiable instruments, (w) When the
trade is carried on in the name of one partner, a question will
arise, whether in negotiating a bill or note, he meant to pledge the

(r) Pinkney v. Hall, 1 Salk. 126. Harrison v. Jackson, 7 T. R. 20Y. Kenyon, C.
J. dix. Sutton v. Gregorj', 2 Peake, 150. Wintle v. Crowther, 1 C. & J. 316. Tliiek-
nesse v. Bromilow, 2 C. & J. 425.

(s) Wells V. Masterman, 2 Esp. TSl. Mason v. Ruinsey, 1 Camp. 384. Dolman v.
Orchard, 2 Carr. &, V&j. 104.

{t) Kirk V. Blurton, 9 M. & W. 284; the marginal note of which is wrong, and
in which none of the cases mentioned in the last note were cited. There is obviously
a great difference between holding that the acceptance of a bill drawn on a firm by
its right name, and accepted by a partner, does not bind the firm, because that part-
ner signs his name to the acceptance which requires no signature at all (Dufaur v.
Oxenden, 1 M. & R. 90), and holding that a bill in which the firm is not mentioned,
shall bind its members. In Faith v. Richmond, 11 Ad. & E. 339, where a partner in
the Newcastle and Sunderland Walls End Coal Company had made a note in the
name of the Newcastle Coal Company, the Lord Chief Justice directed the jury that
it would be binding on the companj', if the plaintiff had been used to deal with
them as the Newcastle Coal Company, and the Court of Queen's Bench approved of
the direction. There is a mistake in the marginal note of this case also. It states
the question left to the jury to have been, "whether the name used, though inaccu-
rate, substantially describes the firm, or so varies it that the indorser must be taken
to have issued the note on his own account." It might be argued that to leave such
a question to the jury would be to leave to them the construction of a writing. The
question really left to them by the Lord Chief Justice was obviously a fit one for
their consideration, since, if the firm had dealt by the name of the Newcastle Coal
Company with the plaintiff, he would have a right to treat that as the real name.
It would also appear that the rule laid down in Kirk v. Blurton only applies to the
case of a deviation from the fictitious name of the firm, and that if the true namea
of the partners were used, they would be bound. Norton v. Seymour, 16 L. J, 0. P*
100; see also ex parte Buckley, 15 M. & "W. 469.

(w) Williamson v. Johnson, 1 B. <fe C. 146.

g2 MERCANTILE PERSONS.

Rights of third Persons against Partners.

firm or himself only ; this must be solved by extrinsic evidence,
tor prima facie lie alone is liable, (v)

Further, these negotiable instruments must have been circulated
on helialf of the firm. Now, it is clear that when the purposes of
the firm do not require that its members should pass negotiable in-
struments, it is not very likely that such should be circulated in its
hehaf: in such cases, therefore, the implied authority of a partner
fails, and the firm will not be bound by his negotiation. Hence
an attorney cannot bind his partner by a note, though given for
the debt of the firm ; {w) and it has been decided, that partners in a
farming or mining concern have no such authority, (x) From the
observations of the judges in the case last cited, I think it may be
collected : First^ that partners in a trade, strictly mercantile, have
^ an authority implied by law to bind each other by bills or notes.
Secondly^ that partners in some particular businesses, such as farm-
ino" and mining, h^vQ prima facie no such authority. Thirdly^ that
this presumption against their authority may be rebutted, by show
ing, 1st, that the constitution and particular purposes of the firm
are such as to render it in their individual cases necessary ; or
2dly, that though not necessary, it is in other similar cases usual,
"for if it be necessary or usual, the law will imply it." (?/)

Lastly. It is an essential portion of the rule that the person to
whom the firm is to be bound should have dealt bond fide. If he
who seeks to charge the firm was himself privy to a fraud, if he
knew, or even if there were circumstances sufficient to induce a
man of moderate discernment to believe, that the partner with
whom he contracted had no authority to bind the rest, innocent
members will not be allowed to suffer by his wickedness or stu-
pidity. " There is no doubt," said Lord Mansfield, " but that the
act of every single partner in a transaction relating to the partner-

{v) Ex parte Bolitho, Buck. 100. South Carolina Bank v. Case, 8 B. & C. 427 ;
Bee, however. Furze v. Sharwood, 2 Q. B. 388, where, under the circumstances, the
onus was held to be shifted to the firm. In that case the bills were discounted with
customers of the firm, and not till the separate business had been discontinued.

(?c) Ileadley v. Bainbridge, 3 Q. B. 316.

(x) Gr°.enslade v. Dower, T B. & C. 635. Brown v. Byers, 16 L. J., Ex. Hi
Dickenson v. Valpy, 10 B. & C. 139.

(y) Per Littledale, J., ibid.

PARTNERS. 83

Rights of third Persons against Partners.

ship binds all the others. But there is no general rule which may
not be infected by covin, or such gross negligence as may amount
or be equivalent to covin ; for covin is defined to be a contrivance
between two lo defraud or cheat a third." (2) With respect to ne-
gotiable instruments given in the name of the firm, the rule is, that
they cannot be enforced by any party who was guilty of fraud in
receiving them, (a) or who took them from him, knowing that they
had been so fraudulently received, or even without knowing it, un-
less he gave a valuable consideration for them, (h) But that they
may be enforced by any one who obtained them for value, and
without fraud, (c) or gave a valuable consideration for them with-
out knowing that they had been fraudulently obtained, (d)^ How-
ever, though the fraud of one partner may be a good defence to an

(z) Hope V. Oust, 1 East, 53, ex relatione Lawrence, J. Lloyd, v. Freshfield, 2 C. &
P. 325. Snaith w.Burridge, 4 Taunt. 684. Lord Galway v. Matthews, 1 Campb. 403.
Willis V. Dyson, 1 Stark, 164. In Lord Galway v. Matthews, a circular, in Willis v.
Dyson, an advertisement had given notice of the want of authority. See Minnet v.
Whinery, 5 Bro. P. G. 489. Vice v. Fleming, 1 Y. <& J. 227,

(a) Arden v. Sharpe, 2 Esp. 624.

(6) See Heath v. Sansom, 2 B. & Ad. 291.

{d) Swan v. Steele, 1 East, 210. Lacy v. Woolcot, 2 Dow. & Ry. 458.

* It is not within the purpose and business of a mercantile firm to indorse ne-
gotiable paper for the accommodation of its neighbors, and therefore no authority
to make such indorsements is implied or attached to any one of its members. Such
indorsements are in fraud of the firm, and void, unless in the hands of a bond fide
holder. Wherever therefore the holder is apprised of the nature of the indorsement,
he is chargeable with notice of want of authority, and guilty of concurring in an at-
tempted fraud upon the other partners, unless he can prove their assent, express or im-
plied, either before or after the signature. But in England, the assent of all the part-
tiers is presumed, and the burthen of avoiding the security is thrown upon the firm,

Lavertyv. Burr, 1 Wend. 529, Gansevoort t». Williams, 14 Wend. 133. Wilson
V. Williams, 14 Wend. 146. Austin v. Vandermark, 4 Hill's K Y, R, 259. Stall y
Catskill Bank, 18 Wend. 466. Bank of Tennessee v. Saffarans, 3 Hump. Rep. 597
New York Fire Insurance Corap. v. Bennett, 5 Conn. 574. Eastman v. Gooper, 15
Pick. 267. Beach v. The State Bank, 2 Ind. Rep. 488.

Tlie same general rule applies to a guaranty, or letter of credit, given by one
partner in the name of the firm. Sutton v. Irwine, 12 Serj. <fe Rawle, 13. Kent's
Comm., vol. iii. page 46. Con. Coursey v. Baker, 7 Harr. & I, 18, Sweetser v. French
2 Gush. 309. Hamill v. Purvis, 2 Pein. 177.

g4 MERCANTILE PERSONS.

Riglits of third Persons against Partners.

action against all, yet they cannot, it seems, institute an action m
order to avoid it. Thus, where a partner has fraudulently given
the bills and money of the firm for his own debt, they cannot bring
trover for the one and assumpsit for the other, for, in doing so, they
would be obliged to join the fraudulent partner as co-plaintiff.
Their remedy, therefore, in such case, lies in equity, (e)

It would seem, that the unexplained fact, that a partnership
security has been received from one of the partners in discharge of a
separate claim against himself, is a badge of fraud, or of such pal-
pable negligence as amounts to fraud, (/) which it is incumbent on
the party \Vho so took the security to remove, by showing either
that the partner from whom he received it acted under the authority
of the rest, or at least that he himself had reason to believe so. (g)
Yet Lord Ellenborough appears to have thought that, even in such
a case, thg onus of showing want of authority in the single partner
would lie upon the firm, if it were, from the nature of the transaction,
possible for them to procure direct testimony to that effect, [h) And
unless the security was transferred for a sejmrate demand, no such
presumption will arise ; for, if it be in the ordinary course of com-
mercial transactions, as upon discount, without any knowledge on
the part of the transferee that it was a separate transaction, the
firm will be bound, though the transferring partner may have con
verted the whole produce of the security to his own use : (i) to hold
the contrary would tend to shake all paper credit.

The transfer of a partnership security may be fraudulent in
part, yet good for the residue ; thus, where the defendant's partner
was separately indebted to the plaintiff in the sum of 80Z., and gave
him the acceptance of the firm for 130?. 10s, Qd., the Court of Ex-
chequer held, that though the plaintiff had no right to retain
thereout his debt of 80Z., yet he might keep a verdict which he had

(e) Jones v. Yates, 9 B. & C. 532. And see Wallace v. Kelsall, 1 M. & W. 264,
and Gordon v. Ellis, 1 M. & G. 607.

(/) See Hope v. Cust, 1 East, 53, cited by Mr. J. Lawrence from a note of Buller
J. Sheriff v. Wilks, 1 East, 48. Green v. Deakin, 2 Stark. 347.

(g) See Sir J. Leach's observations in Frankland v. M'Gusty, Knapp, Priv. C. C
274, and Lord Eldon's in ex parte Bonbonus, 8 Ves. 540.

(h) Ridley v. Taylor, 13 East, 175. See ex parte Kirby, Buck. SIL Winae h
Growther, 1 C. <fe J. 316, 1 Tyrwh. 210.

U) Ex varte Bonbonus, 8 Ves. 540.

PARTNERS. 85

Rights of third Persons against Partners.

recovered from the residue, and for the amount of another
partnership acceptance, with respect to which no fraud was
proved, (j)

It remains to observe that though a transaction may be primd
facie fraudulent against the firm, yet it will bind them if they
subsequently approve of it, for subsequent approbation raises an
inference of previous positive authority. (Jc)

Besides the cases mentioned in the rule above laid down, the
firm may, in various other ways, be bound by the conduct of a
partner. Thus, his admission, acknowledgment, or representation,
is evidence against them ; (Z) and part payment of principal or in-
terest by one of several partners is, even since stat. 9 Geo. 4, c. 14,
an answer to the statute of limitations as to all ; {in) but since that
act no other species of acknowledgment by a co-partner is so.
Notice by (n) or to (o) one partner is equivalent to notice by or to
all. Moreover, as he is the accredited agent of the rest, it follows
upon grounds which we will examine more deliberately in Chapter
v., that they are liable for breaches of contract (p) and negligent
wrongs (q) committed in such his capacity ; nay, they have been
held responsible for frauds (r) and breaches of the revenue laws
riommitted by him in his management of the partnership busi

(j) Wintle V. Crowther, 1 C. <k J. 316. Wilson v. Bailey, 9 Dowl. 18.

(^•) ^x/)ar<eBonbonus, 8 Ves. 540. See fXjodrteNolte, 2 Glj'n. tfe Jam. 306. Cra'W-
ford ti. Sterling, 4 Esp. 207. Payne v. Ives, 3 D. & R. 664.

(l) Rapp V. Latham, 2 B. <fe A, 795: Wood v. Braddick, 1 Taunt. 104. Pritchard
V. Draper, 1 Russ. 4 Myl. 199. Cheap v. Cramond, 4 B. <fe A. 663. Lacy v. M'Xeill, 4
D. & R. 7.

(»i) W^-att V. Hodson, 8 Bingh. 309. But the payment of a surviving jsartner
will not keep alive a debt against the estate of a deceased partner in equity. Way
V. Bassett, 5 Hare, 55.

(n) Mayhew v. Eames, 1 C. & Q. 550. Hunt v. R. E. A. Co. 5 M. & 6. 47.

(o) Alderson v. Pope, 1 Camp. 404. Poithouse v. Parker, 1 Camp. 82. Perry v.
Jackson, 4 T. R. 516. Heath v. Sansom, 2 B. & Ad. 291. This observation would
appear not to be applicable to Joint Stock Companies, as to which, see Thomson v
Speirs, 13 Sim. 469. Powles v. Page, 15 L. J., C. P. 217.

(p) Stone V. Marsh, 6 B. <fe C. 551, Ry. & Moo. 364. Marsh v. Keating, 1 Bingh.
K C. 199. Sadler v. Lee, 6 Beav. 324.

(q) Moreton v. Harderne, 4 B. & C. 223.

(r) Marsh «. Keating, 1 Bingh. N C. 199. Wollettf. Chambers, Cowp. 814. Rapp
V. Latham, 2 B. <fe A. 795. Sadler v. Leigh, 6 Beav. 324. Blair v. Bromley, 16 L. J,
C. C. 105.

e(5 MERCANTILE PERSONS.

Rights of third Persons against Partners.

ness ; (s) and may even, in certain cases, be made criminally answer
able for liim. (t)

The liability of each partner to third persons, in respect of the
engagements of the others, commences with the commencement of
liis partnership, and is not postponed by postponing the execution
of the deed, provided that the partnership have, in fact, com-
menced, {u) He is not liable for contracts previously made, {v) If,
indeed, after his accession to the partnership he receive benefit
from them and recognize their existence, he may become respon-
sible by virtue of a new contract to the same effect as the old one,
which his conduct will be evidence of his having entered into along
with his partners, {iv)

His liability ceases upon his dissolving the partnership, remov-
ing his name from the firm, and giving proper notice of the disso-
lution ; {x) for, until the world is duly advertised thereof, he con-

• (s) Att. Gen. v. Stanniforth, Bunb. 97. Att. Gen. v. Weeks, ibid. 223. Att. Gen.
V. Burges, ibid. See King v. Manning, Comyn, 616. Att. Gen. v. Siddon, 1 C. <fe J*
220 ; 1 Tyrwh, 41. Att. Gen. v. Riddell, 2 C. & J. 493 ; Tyrwh. 523.

{£) R. V. Almon, 5 Burr. 2686. R. v. Pearce, Peake, 75. R. v. Topham, 4T. R. 126.
R. V. Gutch, 1 M. <fe M. 437. See further on this subject, post, cap. 5, sect. 4.

(m) Battley v. Lewis, 1 M. & G. 155. 1 Scott, N. R. 143.

(v) Catt V. Howard, 3 Stark. 5. Vere v. Ashby, 10 B. & C. 288. (A strong case,
since tliere the partnersliip was by agreement to have a retrospective operation.)
See the judgment in Battley v. Lewis, 1 M. & G. 155. Young v. Hunter, 4 Taunt.
582. Fox V. Frith, 10 M. & W. 135. Saville v. Robertson, 4 T. R. 720, and Fox v.
Clifton, 6 Bingh. 776, and Dickenson v. Valpy, 10 B. & C. 142, ubi per Parke, J. " If
a person agree to become a partner at a future time with others, provided other per-
sons agree to do the same, and advance stipulated portions of capital, or provided
any other previous conditions are performed, he gives no authority at all to any
other individual until all those conditions are performed. If any of the intended'
partners in the mean time enter into contracts, he is not bound by them, on the sim-
ple ground that he never authorized them, always supposing that he has not held
himself out directly or indirectlj' as having given such authoritj'." See also Howell
V. Brodie, 6 Bingh. N. C. 44. Barnett v. Lambert, 15 M. & W. 482. Gabriell v.
Erill, 9 M. & W. 297. Hawken v. Bourne, 8 M. & W. 703. He is not liable by re-
lation; Battley v. Lewis, 1 M. <fe G. 155. Vere v. Ashby, 10 B. <fe C. 288 ; nor for
goods furnished while he is a member under a contract made before he became one.
Whitehead v. Barron, 2 M. & Rob. 243.

(w) Ex parte Jackson, 1 Ves. 131. Ex parte Peele, 6 Ves. 602. Helsby v. Meara,
5 B. & C. 504. Barker v. Birt, 10 M. & W. 61.

(x) On the question what amounts to dissolution, see a7ite sect. 3, and Heath u
Samson, 4 B. <fe Ad. 177.

PARTNERS. 87

Rights of third Persons against Partners.

tinues, as we have before remarked, to hold himself out as still in
business with his late companions, and will be still responsible for
their engagement; {y) and, if he do not remove his name from the
firm, he gives strangers cause to disbelieve his notice, though he
may have promulgated one, and will, therefore, notwithstanding
it, continue liable. (2) But then this non-removal must, to produce
this effect, be the result of his own negligence ; for if his late part-
ners wrongfully persevere in using his name, that will not bind
him. (a)

As to the mode of giving notice of the dissolution.* To per-
sons who have not dealt with the firm, notice in the Gazette will be
sufficient, ih) To persons who have so dealt express notice ought
to be given ; (c) this is usually done by circular letters, {d) But if
a fair presumption can be raised from other circumstances, that the
party had actual notice, that will be enough, (e) Thus, a change in
the wording of checks has been held notice to a creditor who uses
them. (/)

As to a dormant partner, as his name never appeared in the
firm, of course it cannot be removed ; and as the correspondents of

{y) Parkin v. Carruthers, 3 Esp. 248. Graham v. Hope, 1 Peake, 154. In Jones
*>. Shears, 4 Ad. & E. 832, held that a retired partner, though he had not notified his
retirement, was not bound by the admission of a subsequently appointed agent of
the firm.

{z) Williams v. Keats, 2 Stark. 290. Dolman v. Oi-chard, 2 Car. & P. 106.

(a) Newsome v. Coles, 2 Camp, 616.

(6) Godfrey v. TurnbuU, 1 Esp. 371. Wrightson v. Pullan, 1 Stark. 3*75.

(d) Newsome v. Coles, 2 Camp. 61Y. Jenkins v. Blizzard, 1 Stark. 418.

(e) M'lver v. Humble, 16 East, 169.

(/) Barfoot v. Goodall, 3 Camp. 147. See Hart v. Alexander, 2 M. & W. 484.

* There are no American cases of any authority questioning the accuracy of the
law, as it is stated in the text. The same principles are settled inKetchum^;. Clarke,
6 J. R. 144. Mowatt v. Howland, 8 Day's Rep. 353. Nott. v. Downing, 6 Louis. Rep.
680. Shurlds v. Tilson & Pitkin, 2 McClean's C. C. R. 458. Mitchum v. The Bank
of Kentucky, 9 Dana, 166. Kelly v. Hurlburt, 5 Cow. Rep. 534. Martin v. Walton,
1 McChord's Rep. 16. Irby v. Vining, 2 McChord's R. 379. Coddington v. Hunt, 6
Hill's N. Y. R. 595. Davis v. Allen, 3 Comst. 168. Magill v. Mesrie, 5 B. Monr. 168.
White V. Murphy, 3 Rich. 369.

88 MERCANTILE PERSONS.

Rights of third Persons against Partners.

the house never knew him to be a partner, they need not be in-
formed of his ceasing to be such ; {g) nay, though many may have
been aware that he was a partner, yet will he not be chargeable,
except by individuals who knew it at the time of entering into
their engagements with the firm ; (A) to such persons he will be
liable, if he have not given a proper notice of retirement, {i)

On his dissolving the partnership, removing his name from the
firm, and duly promulgating notice of his withdrawal, all danger
of his liability for the future acts of his companions is at an end ; {j)
unless created by his own authority, as if he allow them to go on
using his name, notwithstanding the dissolution ; (/c) and Lord
Kenyon has even doubted whether a bill, indorsed by one partner
in the name of the firm before dissolation, could be negotiated after-
wards. (?)* The Court of Queen's Bench, however, has since held

(g) Evans v. Drummond, 4 Esp. 89. Brooke v. Enderby, 2 B. & B. 11. See
Heath v. Sansom, 4 B. & Ad. 177.

(A) Carter v. Whalley, 1 B. & Ad. 11.

(i) Evans v. Drummond, 4 Esp. 89. Farrer v. Defiinne, 1 Car. & K. 580.

Ij) Pinder v. Wilks, 5 Taunt. 612. Abel v. Sutton, 3 Esp. 108. "Wrightson v Pul-
lan, 1 Stark. 375. Heath v. Sansom, 4 B. <fc Ad. 177.

(Jt) Smith V. Winter, 4 M. & "W. 454. It seems that the authority maj' be express
or implied from the terms of the separation. But authority to wind up the partner-
ship would not warrant the indorsement of a bill lb.

(l) Abel V. Sutton, 3 Esp. 108.

* The effect of a dissolution is to put an end to the mutual agency, which exists
during the continuance of the partnership, except for the purpose of winding up its
affairs. Each partner may, after the dissolution, perform any act relating to debts
and conti-acts previously existing, which would have been valid if performed by him
before the dissolution, such as releasing or giving a receipt for a partnership debt;
but he has no authority to impose any new obligation upon his co-partner. Whether
his acknowledgment of debt will be sufficient to take it out of the operation of the
statute of limitations, has been a much controverted question. In the case of Bisp-
ham V. Patterson & Walter, 2 McLean's Rep. 87, Judge McLean declared that no rule
of evidence seemed to be better settled in the English courts, than that the admissions
of a partner, though not a party to the suit, are evidence against another partner,
■who is sued as to a joint contract, made during the existence of the partnership,
■whether the admission be made before or after the dissolution thereof, and, as the
learned judge conceives, on sound principles. Mr. Justice Story, in his work on Part-
nership, ex']:>resses a different opinion.

The acknowledgment of a debt by one partner after the dissolution of the firm,
and after it has been barred by the lapse of time, is insufficient to take it out of the

PARTNERS. 89

Rights of third Persons against Partners.

that a bill drawn by a partnership before the dissolution, might be
indorsed after the dissolution, to a person having notice of it. (pi)
Abel V. Sutton and Smith v. Winter were not cited upon the argu-
ment of this case, which possibly may be heareafter thought open
to review, since it may be argued that all express authority to in-
dorse was put an end to by the dissolution, and all implied authority
by the notice.

He, however, of course, remains liable for contracts made by
the firm while he continued to belong to it ; yet if the partnership
be dissolved in consequence of his death, his personal representa-
tive stands in a very different situation, for he is completely exon-
erated from responsibility at laiu ; the rule there being, that per-^
sonal claims and liabilities survive. Equity, however, unwilling
that this maxim should work injustice, considers the estate of the
deceased partner as liable to the demands of the partnership cred-
itors, until the debts which affected him at the time of his decease
have been fully discharged, {n) Whether, indeed, the claim of the

{m) Lewis v. Reillj^ 1 Q. B. 349.

{n) VuUiamy v. Noble, 3 Meriv. 593. See the judgment in Winter v. Innes, 4 M.

operation of the statute of limitations. Clementson v. Williams, 8 Cranch, 72.
Bell V. Morrison, 1 Peters' S. C. R. 373. Bispham v. Patterson & Walter, 2 McLean's
C. C. R. 87. Beutley v. White, 4 B. Mon. 263. Yandes v. Lefavour, 2 Black, 37 L
Mure V. Donelson, 2 Hump. 166. Seariglit v. Craighead, 1 Pen. & Walls. 135. This
is law in Virginia by force of statutory provision. According to the reasoning of the
Supreme Court, in the leading case of Bell v. Morrison, the new. promise is not to be
regarded as a mere continuation of the original promise, but as a new contract
springing out of, and supported by, the original consideration. If an acknowledg-
ment of a cause of action barred by statute of limitations, is operative at all, it creates
a right, because it revives a debt extinct in the eye of the law. Inasmuch as the
dissolution of a partnership is a revocation of the implied authority of each partner
to act as the authorized agent of the firm within the scope of the partnership busi-
ness, except so far as its continued existence is indispensable to the winding i:p of its
affairs, a new authority must be communicated to a partner, to enable him to revive
against the firm an extinct cause of action. After the dissolution the relation of the
partners is that of joint debtors. The same principles affirmed in New York, in
National Bank v. Norton, 1 Hill's N. Y. R. 572. Van Iveusen v. Parmelee, 2 Comst. 525.
But in some of the courts, the declarations of one partner after the dissolution
concerning facts which transpired before that e\ ent, have been received as evidence
for the plaintiff, in an action commenced against all the partners previous to the dis-
Bolution, Parker v. Merrill et al., 6 Green, 41. Mann v. Locke, 11 N. H. 246. Cady v
Shepherd, 11 Pick. 400. Mclntire v. Oliver, 2 Hawks, 209. Ivisk v. Hiatt, 2 Ind.Rep. 322

90 MERCANTILE PERSONS.

Rights of third Persons against Partners.

partnership creditors on the separate estate of the deceased shall be
postponed to that of his own separate creditors, or whether they shall
come in with iheva pari passu^ or whether, lastly, they have any claim
against it at all, until the insolvency of the partnership estate has
been ascertained, are questions which were long unsettled, (o) The
last of them, however, is resolved by the case of Wilkinson v. Hen-
derson^ (p) which decides that the joint creditor is not compelled to
pursue the surviving partner in the first instance, but may resort at
once to the assets of the deceased, without showing that full satis-
faction cannot be obtained from the survivor, and may leave the
representatives of the deceased to recover what, if any thing, shall
appear upon the partnership account to be due from the survivor
to the estate of the deceased partner. It was not, however, decided
in that case, that the creditors of the firm could come in pari p)assu
with the separate creditors, and the better opinion seems to be that
they cannot, (j)* But of this general rule there is no doubt, viz.^

& Cr. Ill, and qucere, as to the effect of the Statute of Limitations on the creditor'^
equity against the estate of the deceased partner. If the firm be indebted to his
estate beyond the proportion it ouglit to bear of the claim, it seems the statute
"would bar the equity, and it is clear that a payment of part, or of interest, by the
surviving members will not deprive the executors of the deceased partner of this de-
fence. Way V. Bassett, 5 Hare, 55, 68.

(o) See Gray v. Chiswell, 9 Ves. 118. Ex parte Kendall, 17 Yes. 519. Campbell
V. Mallet, 2 Swanst. 576. Devaynes v. Noble, 1 Meriv. 529. Cowell v. Sykes, 2 Russ.
191. The better opinion seems to be that the joint creditors must be postponed to
the separate.

(p) 1 Mylne & K. 589.

{q) This seems to have been admitted by Mr. Pemberton, in Wilkinson v. Hender-
Bon ; see also Fisher v. Farrington, Seton on Decrees, 239, cited 1 Mylne & K. 583.

* This question arose in Allen v. Wells, 22 Pick. 450, and the whole doctrine as to
the respective rights of joint and several creditors is discussed in the following learned
and interesting opinion of Judge Dewey: —

"The question arises whether by the law of this Commonwealth an attachment of
the private estate of one of several co-partners for a debt due from the co-partnership
is valid as against an after attachment of the same estate by a separate creditor of tha
same co-partner.

" This point was supposed to have been settled by the decision of this Court in the
case of Newman v. Bayley & Tr., 16 Pick. 570; but the counsel for the defendants
being desirous of a re-examination of this question, we have been disposed, consider-
'ng the practical importance of the question under consideration, to revise that

PARTNERS. 9]

Rights of third Persona against Partners.

that the separate estate of the deceased can never be discharged while
any partnership debt remains outstanding. Nay, courts of equity will
even reform joint securities, when executed by partners for a part-
opinion, -with the aid of the very full and elaboi-ate arguments of the counsel in the
present case,

"The conflicting claims of co-partnership and separate creditors have been a fruitful
source of litigation in England. The questions more usually have arisen under the
bankrupt law, and the decisions are mostly to be found in the Chancery Reports, but
not exclusively so. The great number of cases in which this question has arisen,
shows very clearly that there could have been at the time no very well defined gene-
ral principles, known and acknowledged as such, applicable to the adjustment of
these conflicting rights. Even as regards the joint property of partners, the rule was
varied. By the rules of law as formerly held in England, the sherifl^, under an exe-
cution against one of two co-partners, took the partnership eflPects and sold the moiety
of the debtor, treating the property as if owned by tenants in common. Heydon v.
He3'don, 1 Salk. 392. Jacky v. Butler, 2 Ld. Raj^m. 871. But the principle is now
well settled in England, both at law and in equity, that a separate creditor can only
take and sell the interest of the debtor in the partnership property, being his share
upon a division of the surplus, after discharging all demands upon the co-partner-
ship. Fox. V. Hanbury, Cowp. 445. Taylor v. Fields, 4 Ves. 396. The same fluc-
tuation in the rule as to partnership property has existed in the United States. The
rule of selling the moiety of the separate debtor in the partnership property, on an
execution, for his private debts, formerly prevailed in several of the States of the
Union, but the later decisions have changed the rule, and that now more generally
adopted is in accordance with the one prevailing in England, and which has already
been mentioned. The State of Vermont still adheres to the doctrine, that partner-
ship creditors have no priority over the creditor of one of the partners, as to the
partnership effects. Reed v. Shephardson, 2 Vermont R. 120. The rule in Massa-
chusetts, giving a priority to the partnership creditor in sucli.cases, was settled in
the case of Pierce v. Jackson, 6 Mass. R. 242, and has been uniformly followed since.
The efi^ect of the rule, that the only attachable interest of one of the co-partners, by
a separate creditor, was the surplus of the joint estate which miglit remain after dis-
charging all joint demands upon it, necessarily was to create a preference in favor of
the partnership creditors in the application of the partnership property, and this
efi'ect would be produced, although the original purpose of the rule might have been
the securing the rights of the several co-partners, as well as those of their joint cred-
itors. Whatever may have been the objects of the rule, the rule itself is now to be
considered as well settled as to the appropriation of partnership eff"ects.

" Tlie defendants allege, that by law a similar priority exists in favor of a creditor
of one memVjer of a co-partnership, as to the separate property of his debtor. Upon
this point there has been not only a direct contrariety in the decisions as to the prin-
ciple itself, but even where ■'.he principle has been admitted, various exceptions have
been ingrafted upon this rule.

"The more ancient doctrine,as established by Lord Hardwick, was, that separat«
sreditors had a prior claim upon the separate estate. This princi^^le was contro-

92 MERCANTILE PERSONS.

Rights of third Persons against Partners.

nership debt, by construing them joint and several, so as to bind
the executor of a deceased co-partner. (?•) But such an instrument
must have arisen out of some antecedent partnership liability, for

(r) Burn v. Burn, 3 Ves. 573. Orr v. Chase, 1 Meriv. 729.

Terted by Lord Thurlow, who allo-wed joint creditors to take their dividends upon
the separate estate of the partners. In the time of Lord Loughborough, the doctrine
"was again asserted, that the separate estate was first tc v,e applied to the separate
debts. Such has been the state of this question in the English courts, as declared by-
Lord Eldon in ex parte Clay, 6 Ves. 813. The want of uniformity in the application
of the rule, as well as serious doubts in his own mind as to its atility, are plainly
suggested by Lord Eldon in Button v. Morrison, 17 Ves. 205. In the case ex
parte Elton, 3 Ves. 238, which is usually relied upon as having re-established
the rule in England, making the separate property first applicable to the pay-
ment of the separate debts, it seems to be admitted that a joint creditor who sues
out the commission of bankruptcy against a separate debtor, is entitled to share
rateably with the separate creditors in the distribution of the separate property.
Subsequent English cases more explicitly state the rule of distribution to be, that of
priority in favor of the separate creditors in the application of the separate estates.
Such was the doctrine there, as was declared by Chancellor Kent, in the opinion pro-
nounced by him in Murray v. Murray, 5 Johns. Ch. R. 60, where the leading English
cases up to that period (1821) were fullj- considered by him.

"But it will be found somewhat difficult to reconcile all the English cases, and to
maintain that since the time of Lord Loughborough to the present day, there has
been no departure in principle from tlie rule adopted by him. The learned American
commentator on equity jurisprudence, in noticing some of the later decisions, re-
marks, 'that if the true doctrine be that avowed by Sir William Grant, in the case
of Deraynes v. Noble, 1 Meriv. 529, and afterwards affirmed by Lord Brougham, 2 Rus-
sell and Mylne, 494, that a partnership contract is several as well as joints then there
seems no ground to make any difference whatsoever in any case between joint and
several creditors, as to payment out of joint or separate assests.' 1 Story on Equity,
626 in notis. I am not to be understood as suggesting that Mr. Justice Storj^ doubts
the existence of the rule in equitj', that separate creditors are entitled to be first paid
out of the separate estate. On the contrary, he distinctly affirms it. This principle
has been directly recognized also in the cases of Wilder v. Keeler, 3 Paige, 267.
Egberts v. Wood, 3 Paige, 518. Hall v. Hall, 2 M'Cord's Ch. R. 302. Woddrop v.
Ward, 3 Desaus. 203. Tunno v. Trezevant, 2 Desaus. 270.

"As authorities prescribing a rule to govern a court of equity in the distribution
of the assets of an insolvent estate, these decisions would be entitled to much con
eideration. But it is to be remarked, that no cases from any of the States cf the
Union have been cited, when the question has arisen in a court of law, between dif-
ferent attaching creditors, and when an attachment or lien of a joint creditor upon
the separate property of one of the partners has been postponed or superseded by
one subsequently made by a separate creditor of the same partner. ' The better
opinion would seem to be, that it is in a court of equity only, that the joint creditor

PARTNERS. 93

Rights of third Persons against Partners.

a presumption then arises that, as the demands for which the secu
ritj was given might have been enforced against the estate of a de-
ceased partner, the parties must have intended that the security

can be restrained from proceeding against the separate estate. Such was the opin-
on of the late Chief Justice Marshall, as stated in the case of Tucker v. Oxley, 5
Cranch, 35. So also in M'Culloch v. Dashiel, 1 Har. & Gill, 96, it was said, that a*
law the joint creditors may pursue both the joint and separate estates, unless re
strained by a CQurt of equity. The same doctrine seems to be asserted by Mr. Jus-
tice Story, in his Commentaries on Equity, Vol. I. p. 625, where he says, ' The sep-
arate creditors of each partner are entitled to be first paid out of the separate effects
«f their debtor, before the partnership creditors can claim any thing ; which can
only be accomplished by the aid of a court of equity; for at law, a joint creditor
may proceed directly against the separate estate.'

" It is urged, however, on the part of the defendants, that as this court, as a court
of law, have long since recognized the principle, that an attachment of the goods of
a partnership by a creditor of one of the partners is not valid as against an after
attachment by a partnership creditor, it should also adopt the converse of the pro-
position, giving a like preference to separate creditors in respect to the separate pro-
perty. But we think that there is a manifest distinction in the two cases. The
restriction upon separate creditors as to the partnership property, arises not merely
from the nature of the debt attempted to be secured, but also from the situation of
the property proposed to be attached. In such a case, a distinct moiety or other
proportion, in certain specific articles of the partnership property, cannot be taken
and sold, as one partner has no distinct separate property in the partnership effects.
His interest embraces only what remains upon the final adjustment of the partner-
ship concerns. But on the other hand, a debt due from the co-partnership is the
debt of each member of the firm, and every individual member is liable to pay the
whole amount of the same to the creditor of the firm. In the case of the co-partner-
ship, the intei'est of the debtor is not the right to any specific property, but to a re-
siduum which is uncertain and contingent, while the interest of one partner in his
individual propei'ty is that of a present absolute interest in the specific property.
Each separate member of the co-partnership being thus liable for all debts due from
the co-partnership, and no objection arising from any interference with the rights of
others as joint owners, it seems necessarily to follow, that his separate property may
be well adjudged to be liable to be attached and held to secure a debt due from the
co-partnership."

There is no difficulty in ascertaining the respective rights of the joint and
several creditors, as recognized by courts of law, in the separate and social estate ;
but the question has arisen in equity under such a variety of circumstances, that
it is impossible to deduce from the authorities any general and uniform rule.
As the only interest which the separate creditor can sell at law, is the right of the
debtor partner in the pai'tnership effects upon a settlement of the partnership ac-
counts, the priority of the joint creditor in the distribution of the social assets is of
necessity secured. In a struggle, however, between the joint and several creditors
of a partner for his separate estate, there is no rule of law by which the several cre-
ditor can appropriate such assets in the first instance, to the exclusion of the joint

y4 MERCANTILE PERSONS.

Rights of third Persons against Partners.

should be similarly available. But where the instrument is pure
matter of arbitrary convention growing oat of no such antecedent
liability, that presumption does not arise, and then even a court oi
equity will not, if it be jointly worded, construe it joint and sev-
eral, but will, like a court of law, measure its extent by the terms
in which it is conceived, (s)

However, the liability of a retired partner and that of a de-
ceased partner's estate, will be reduced by the amount of all pay-
ments {t) made by his late companions since the dissolution of the
partnership, and appropriated, either specifically or impliedly, to
the reduction of the demands upon the firm. Thus, Devaynes and
others were in partnership as bankers, Clayton had a running ac-
count with the firm, and was in the habit of paying in and drawing
out money. At the time of Devaynes's death, there was a balance
in favor of Clayton and against the firm of £1713. After the
death of Devaynes, his late partners became bankrupt : but, before
their bankruptcy, Clayton had drawn out sums to more than the
amount of £1713, and had paid in other sums yet more consider-

(«) Summer v. Powell, 2 Meriv. 30.

(t) Brooke v. Enderby, 2 B. <fe B. 70. Newmarch v. Clay, 14 East, 2^0. Clayton's
case, 1 Meriv. 572.

creditor. So long as any portion of the joint estate remains, a court of equity, in a
proper case, upon the principle of marshalling securities, may stop the hands of the
social creditor, until the fund thus available for the satisfaction of his debt has been
exhausted.

"Where the controversy arises in equity, the considerations which secure to the
joint creditor a priority at law in the application of the joint estate, produce a cor-
responding result. But in reference to the separate estate, a great diversity of judi-
cial opinion has been expressed, as to the proper mode of its administration in equity
in a contest between the social and several creditors of a partnership. In Murrel v
Neil, 8 How S. C. R. 414, the rule which prevails in England, in cases of bankruptcy,
of appropriating the separate estate in the first instance to the several creditors, was
received as a general doctrine of equity. In Virginia, in Morris's Administr. v. Mor-
ris's Administr. et ah., 4 Gratt. 294, the subject was elaborately discussed, and the
Coiirt were equally divided in opinion as to the true rule. In the note to Silk v.
Prime, 2 "White and Tudor's Leading Cases in Equity, p. 259, and 1 American Lead-
ing Cases, 488, the American cases are collected, and the distinctions which they es-
tablish very clearly elucidated. The subject is considered and the rule laid down
by the Supreme Court of the United States, denied in the recent case of Cleg-
Lorn V. The Insurance Bank of Columbus, 9 Georg. Rep. 319.

PARTNERS 95

Rights of third Persons against Pai'tners.

able. Upon the bankruptcy of the surviving partners, Clayton
was desirous of having recourse to the estate of Devaynes ; but it
was held that the sums drawn out by Clayton since the death must
be appropriated to the payment of the balance of £1713 then due,
and that, as the total amount of those sums was greater than the
balance, the debt due from the firm at the death of Devaynes had
been discharged and his estate exonerated ; the sums paid in by
Clayton since the death, constituting a new debt, for which the
survivors only could be held liable, (w)*

Although among themselves, partners may, and often do, agree,
that after the dissolution, the credits of the firm shall be received,
and its debts paid, by one of the late partners only, yet this ar-
rangement does not afifect their joint responsibility to third per-
sons, unless such persons agree to exchange the liability of the firm
for that of the single 'partner, {v) And though it has been held,
that neither acceptance of the single partner's note, as a collateral
security, {iv) nor receipt of interest from him on the joint debt, {x)
nor changing the heading of the account from the name of the
firm to that of the single partner and drawing on him for part
of the balance, amounted to conclusive evidence of such an agree-
ment ; iy) yet it seems clear on principle, that if the creditor be

(w) Clayton's case, 1 Meriv. 572. See also Toulmin v. Copeland, 3 Y. <fe Coll. 625
(AfF. in D. P. 1 "West App. C. 164) Jones v. Maund, ibid. 347. Pemberton v. Oakea,
4 Rus3. 154:; in -which latter cases Lord Lyndhurst and Lord Abinger seem to disa
gree as to the effect of such pa3'ments, where a new partner has been taken into the
old firm to which the retired partner belonged. See the subject of Appropriation of
Payments discussed, post, B. IIL in the Chapter on Contracts of Debt.

iy) Kirwia v. Kirwin, 2 C. <fe M. 617, 4 Tyrwh. 491.

(w) Bedford v. Deakin, 2 B. <fe A. 210.

(a:) Gough v. Davies, 4 Price, 200.

(y) David v. EUice, 5 B. <k C. 196. See Lodge v. Dicas, 3 B. & A. 611. Qiicert
tamen, for these cases have been much reflected on, particularly in Hart v. Alexan-

* The courts of New York and Virginia have not followed the recent English
decisions, but have adhered to the old rule, requiring the creditor to pursue his rem-
edy at law against the surviving partner, unless he can claim the interposition of
equity upon some ground of necessity. See Slatter v. Carrol, 2 Sandf C. R. 573,
where the authorities are cited and reviewed ; also Sale v. Dishman's Ex'rs, 3 Leigh.
548. In Virginia, the rule is now altered by statute. The modern Englisli doctrine
is recognized by the Supreme Court of the United States, in Nelson et alt. v. Hill, 5
How, 127.

96 MERCANTILE PERSONS.

Rights of third Persons against Partners.

actually a party to the arrangement of tlie late partners among
themselves, their acquiescence in that arrangement would be a
consideration for his promise to accept the single, instead cf the
double liability which contributed to induce them so to acquiesce.(2)
Besides which, the liability of a single partner may possibly be
more beneficial to the creditor than the joint liability of two,
either in respect to the solvency of the parties, or the convenience
of the remedy ; and therefore, in a recent case in the King's Bench,
it was decided, that if the creditors of a firm consisting of two
persons, expressly agreed with them to take, and did take, the se-
parate bill of one partner in satisfaction of the joint debt, their so
doing amounted to a discharge of th? other partner by way of ac-
cord and satisfaction, (a) Whether such an agreement have been
made is, in each case, a question proper to be submitted to a jury.(i)
This sort of arrangement was usual under the civil law, and went
by the name of Novatio. {cy'^

der 2 M. & "W. 484, ubi per Parke, B., " I apprehend the law now to be settled, that
if one partner goes out of the firm and another comes in, the debts of the old firm
may, by the consent of all the three parties, the creditors, the old firm, and the new
firm, be transferred to the new firm. In David v. Ellice, the retired partner was
held liable, but the court was substituted for a jury in that case ; and I much doubt
whether twelve merchants would have determined it as the court did. [The autho-
rity, however, of that case, as well as of Lodge v. Dicas, has been much shaken by
Thompson v. Pereival, and, it may be added, by the Chancellor's judgment in "Win-
ter V. Innes, 4 Myl. <& Cr. 108-9. Lodge v. Dicas is virtually overruled in Lj-th v.
Ault, 11 Eng. L. & E. R. 580, The true principle is, that the law does not measure
the value of a consideration. If thei'e is a difference between the separate liability
of one debtor, and the joint liability of two or more, a bargain to take one for the
other will be good. SeealsotheAmericancaseofWildesi'.Fessenden,4Met.l2. — A.E.]
(?) Ibid., and see Goode v. Cheesman, 2 B. & Ad. 328. Cartwright v. Cook, 3
B. & Ad. 703. Per Shadwell, V. C. Benson v. Hadfield, 4 Hare, 37.

(a) Thompson v. Pereival, 3 Nev. <fe Man. 167, 5 B. <k Add. 925. See in equity,
Winter v. Innes, 4 M. & Cr. 109, and Reed v. "White, 5 Esp. 122. Evans v. Drum
mond, 4 Esp. 89. Kirwan v. Ivirwan, 2 C. <fe M. 617, 4 Tyrwh. 491.

(b) Thompson v. Pereival. Kirwan v. Kirwan, and see Hart v. Alexander, 2 M.
& W. 485, which is a very strong case.

(c) "Novatione toUitur obligatio, veluti si id, quod tibi Sextus debebat, a Titio
dari stipulatus sis." Inst. lib. 8, tit. 30.

* The student will find a learned discussion of this doctrine in Vol. I. p. 110
Am. Law Mag., and Hossack's Ex. v. Rogers, 25 "Wend. R. 313.

PARTNERS. 97

Riglits of Partners against third Persons.

As an entire firm may be bound, so it may also be discharged \j
by transactions with a single partner ; thus payment or satisfaction
of a debt by one partner is payment or satisfaction by them all, ((?)
so a release or discharge even without deed to one or several part-
ners or joint debtors, though the debt be joint and several, is a
discharge to them all. {e) But though a covenant not to sue an
individual may, to avoid circuity of action, be pleaded by him as a
release, yet a covenant not to sue one partner, does not release the
rest ; for it is as easy to give a release as such a covenant, and
therefore the only reason for preferring the latter course must be
to prevent the benefit from extending to a co-partner. (/)

Section VI. — Riglds of Partners against third Persons.^

As to the rights of partners against third persons, they involve
very few peculiar considerations ; those few relate either to the

(J) Innes v. Stephenson, 1 M. & Rob. 1-45. Cheap v. Cramond, 4 B. & A, 663.
Ballam v. Price, 2 Moore, 235. Clark v. Clement, 6 T. R. 525. Newton v. Blunt, 16
L. J., C. P. 121.

{e) Co. Litt. 232, a. See Collins v. Prosser, 1 B. A C. 682. Nicholson v. Revill,
4 A. & E. 675. Cheetham v. Ward, 1 B. & P. 630. By special words, this opera
tion may, however, be prevented. Solly v. Forbes, 2 B. <fe B. 38, 4 Moore, 448.
Thompson v. Lack, 16 L. J., C. P. 75.

(/) Hutton V. Eyi-e, 1 Marsh, 608, 6 Taunt. 289. Thomas v. Courtnay, 1 B. <fe A. 8
Lacy V. Kj-naston, 12 Mod. 551. Dean v. Newhall, 8 T. R. 168. ■ Comjiounding an
action against one of two joint contractors was held no discharge of the others. Field
V. Robins, 2 K & P. 226, 6 A. & E. 90

* The case of Rogers v. Batchelor, 12 Peters' Rep. 221, raised the question,
whether the application of partnership j^roperty to the payment of his separate
creditor b}' one partner, without the assent, express or implied, of his co-partners,
would be valid against them, provided the creditor was wholly ignorant of the fact.
And after a review of the English and American authorities, which were all sup
posed to lead to the same conclusion, the court held, that the rights of the remain-
ing co-fiartners could not be affected by the innocence and ignorance of the separate
creditor. One man cannot be permitted to dispose of the property of another, un-
less the latter has authorized the act. The question of knowledge does not arise
in such a case. The true question is, Has the title to the property passed from the
partnership to the separate creditor? If it has not, and it is difficult to see how it
could by an illegal conversion, then the partnership may re-assert their claim tft
it in the hands of such creditor. S. P. Kelley v. Greenleaf, 3 Story's C. C. Rep. 98.
7

98 MERCANTILE PERSONS.

Rights of Partners against third Persons.

mode in whicli tliey may be acquired, or that in which they may
be determined.

As to the mode in ivhich they may he acquired. It has been held,
that where one party applies to another for a loan, without in-
quiring whether the money is to be advanced by the lender as an
individual, or as the member of a firm, he is liable either to the in-
dividual, or to the firm, as the advance may chance to be made, {g)
It has also been held, that when one partner sells the goods of the
firm in his own name, the whole partnership is, nevertheless, en-
titled to sue the buyer for the price. (A) But this right of theirs
does not preclude the buyer from setting off any debt due to him
from the single partner, for the existence of that debt may have
been his inducement to deal with him. {i) The above are cases of
direct liability, and in which the defendant received a valuable con-
sideration, viz., the goods or money of the firm. But even in cases
y of collateral liability, where a written agreement is required by the
Statute of Frauds, it has been held that the firm may sue upon a
guaranty given to a single partner, if there be evidence that it was
given for the benefit of all. [j) And in a case at N. P., Mr. J,
Gazelee held, that a guaranty addressed to one partner would
enure to the benefit of all, the guaranty having been given to secure
payment for goods such as the firm were in the habit of dealing in,
and the j^artuer to whom it was given carrying on no separate
trade ; and further, that a guaranty, without an address, would
enure to the benefit of those to whom, or for whose use, it was de-
livered, {k) All this results from a universal rule of law, viz., that
where 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, the defendant in the latter case being entitled to
be placed in the same situation at the time of the disclosure of

{g) Alexander v. Barker, 2 C. & J. 13."., 2 Tyrwh. 149. See Boswell v. Smith, 6
C. & P. 62. Sims v. Bond, 5 B. & Ad. 393. Sims v. Britain, 4 B. <k Ad. 375.

(A) Cothay v. Fennell, 10 B. & C. 671. Skinner v. Stocks, 4 B. «fe A. 437. See
Rodwcll V. Redge, 1 C. & P. 220.

(i) Stacy v. Decy, 2 Esp. 469, 7 T. R. 361. George v. CLaggett, 7 T. R. 359. As
to the requisites of such a plea of set-off, see Gordon v. Ellis, 2 C. B. 821.

(j) Garrett v. Handley, 4 B. <fe C. 664.

ijc) Walton V. Dodson, 3 C. & P. 162, and see MoUer v. Lambert, 2 Camp. 548.

PARTNERS. 99

Rights of Partners against third Persons.

the real principal, as if tlie agent had been the contracting
party. (Z)

Where a security is given to the firm, which is intended to con-
tinue in force, notwithstanding any change that may take place in :■'
its constitution, such intent must appear, either expressly or by
implication, upon the security : (m) since otherwise it will, if by deed,
become inoperative as to future events on the incoming or outgoing
of a partner ; (n) and the same rule is applied to simple contracts, (o)
However, a promissory note, given to secure advances made by the
firm, will be available for the benefit of future as well as present
members, if such clearly appear to have been the intention of the
makers, (p)

As to the mode in which the rights of the firm against third persons ^
may he determined^ the better opinion, as has been already stated,
appears to be, that they may be released by any one of the part-
ners : {q) accord and satisfaction, without fraud, to one partner pre-
vents the rest from suing ; (?•) and there is no doubt that payment
of a partnership debt to one member is payment to all : and that .
even after the firm has been dissolved, (s) and notwithstanding a
clause in the deed of dissolution, that another partner shall receive

{I) Sims V. Bond, 5 B. <fe Ad. 393, post.

{m) See Barclay v. Lucas, 1 T. R. 291, which is, however, doubted in Strange v.
Lee ; and see Leadley v. Evans, 2 Bing. 32. Saunders v. Taj-lor, 9 B. & C. 35. Sim-
8on V. Ingham, 2 B. & C. 65. Simson v. Cooke, 1 Bingh. 452 ; a guaranty will be
binding, though it be given for goods, and contain no binding contract on the part
of the future firm to supply them. Chapman v. Sutton, 2 C. B. 634. See also Met-
calfe V. Bruin, 12 East, 4aO, 2 Camp. 422, where it was held that the trustees of a joint
stock company might sue on a bond made to them, as such, notwithstanding a change
in the company ; for the obligor, knowing the fluctuating nature of the company,
must have so intended. But the Court will be slow in extending, by implication, the
meaning of words beyond what they ordinarily bear, in legal construction, in order
to extend the liability of a security. Chapman v. Beckinton, 3 Q. B. 703.

(n) See Lord Arlington v. Merrick, 2 Wms. Saund. 412, et notas. Strange v. Lee,
3 East, 484. Pemberton v. Oakes, 4 Russ. 154. Dance v. Girdler, 1 K R. 34. Wes-
ton V. Barton, 4 Taunt, 673. Wright v. Russell, 2 Bl. 934.

(o) Myers v. Edge, 7 T. R. 254. Ex parte Kensington, 2 V. <fe Bea. 79. Dry v,
Davy, 10 A. & E. 30.

{p) Pease v. Hirst, 10 B. & C. 122.

Iq) Philips V. Clagett, 11 M. & W. 84. Rawstone v. Gandell, 15 M. & W. S04.

(r) Wallace v. Kelsall, 8 Dowl. 845, 7 M. & W. 264.

(s) Porter v. Taylor, 6 M. & S. 156.

100 MERCANTILE PERSOXS. :

Rights of Partners against third Persons.

all the joint debts, {t) So one partner may give time to the debtor
of the firm, as by taking his acceptance, (w) or may preclude the
partnership from suing, by some act which would render it uncon-
scientious in himself to do so. {v) Thus, where Jacaud and Blair
indorsed a bill to Jacaud and Gordon, and afterwards received
effects from the drawer to discharge it, which they converted to
their own purposes, it was held, that Jacaud and Gordon could not
sue the acceptor on this bill. " Jacaud," said Lord Ellenborough,
" being a partner with Blair, must be considered as having, together
with Blair, received money to take up this very bill. How then
can he, because he is also a partner with Gordon, be permitted to
contravene his own act, and sue upon this bill, which has been al-
ready satisfied as to him ?"

'(t) King V. Smith, 4 C. & P. 108.

(m) Tomlins v. Lawrence, 8 M. & P. 655, 6 Bing. 316.

(v) Richmond v. Heapy, 1 Star. 202. Sparrow v. Chisman, 9 B. »fe C. 241. Jaeaua
V. French, 12 East, 317. AVallace v. Kelsall, 7 M. & "W. 264. Jones v. Young, 9 B. &
C, 532. Gordon v. Ellis, 2 C. B. 821

CHAPTER III.

JOIKT STOCK COMPANIES.

Sect. 1. What

2. Sow formed — and dissolved.

3. Bights and Liabilities of Members^ inter se.

4. Rights against^ and Liabilities to, third Parties.

Section I. — What.

A JOINT STOCK company is a partnership, consisting of a very
large number of members, wliose riglits and liabilities would be
precisely the same as those of any other sort of partners, did not
their multitude oblige them to adopt certain peculiar regulations
for the government of the concern, which are ordinarily contained
in an instrument, called a Deed of Settlement, to which is fre-
quently added an act of parliament passed ex|)ressly for that pur-
pose, (a)*

(a) See on the construction of such Acts, Blakemore v. Glamorganshire Canal Co.,
1 Mylne & K. 154. Where such Acts of Parliament in any way affect the piiblic, as
in the case of Canal Acts, ■wherein tolls are imposed, the statute is considered as ex-
pressing the terms of a bargain between the public and the company ; any ambiguity
therein must operate most strongly against the adventurers, and in favor of the pub-
lic, and the adventurers can take nothing under it that is not clearly given them.
Stourbridge Canal Company v. Wheeley, 2 B. & Ad. '792. Hull Dock Co. v. La Marcho,
8 B. <fe C. 52. Priestley v. Foulds, 2 M. & G. 196. Leeds and Liverpool Canal Co. v.
Hustler, 1 B. & C. 424. R. v. Hungerford Market Co., 4 B. & Ad. 602. Parker v. The
Great Western Railway Company, 7 M. & G. 253. Where no time for carrying the
object of such an act into effect is expressly limited, the Court will not imply one.
Thicknesse v. Lancaster Canal Co., 4. M. <fe W. 472.

* Previous to the enactment of the statutes cited in the text, the English law

102 IMERCANTILE PERSONS.

Joint Stock Companies — what.

With respect to companies established bj act of parliament
after the 8th of May, 1845, for the execution of undertakings of a
public nature, in order to produce uniformity, a general act, termed
"The Companies Clauses Consolidation Act" (8 & 9 Vict. c. 16),
embodying all the clauses usually contained in acts of parliament
establishing such companies for the regulation of their proceedings,
and the transfer of shares, and their general government ; and an-
other act, termed " The Lands Clauses Consolidation Act, 1815"
(8 9 Vic. cap. 18), containing provisions as to their taking lands
for such purposes, were passed. These acts constitute a code
by which companies of this description are governed, and among
them are included railway companies. On account, however, of
the peculiar nature and importance of the latter undertakings, a
third statute, termed " The Eailway Clauses Consolidation Act,
1845" (8 & 9 Vict. c. 20), has enacted regulations as to the mode
of constructing their works, the amount and mode of enforcing tolls
and fares, the making of by-laws for the conduct of their business,
the recoveries of penalties and damages, and other objects of a like
nature. This enactment extends to railway companies subsequently
created ; but several general acts, affecting likewise railway com-
panies previously existing, have been passed, which control the
amount of their fares, and impose various regulations upon their
proceedings, as well as the conduct of their business, and empower
the government, through the medium of a Board of Trade, to a cer-
tain extent, to interfere in their management, {h) By a later act
(9 & 10 Vict. c. 105), her Majesty was enabled to appoint commis-
missioners of railways, to whom the powers vested in the Board of
Trade were to be transferred, and commissioners, pursuant to this
statute, have since been appointed.

(6) 3 & 4 Vict. c. 9T ; 5 <fe 6 Viet. c. 55 ; 1 & 8 Vict. e. 85.

recognized no distinction in unincorporated partnerships, growing out of the num-
ber of partners and extent of objects undertaken. Owing, probably, to the greater
liberality of our law in reference to corporations, and the greater facility with which
charters are obtained by associations for public or private purposes, those considera-
tions of public convenience which induced legislation in England, have obtained but
to a small extent in the United States, and similar provisions are to be found in few
if any, of our states.

JOINT STOCK COMPANIES. iQg

Joint Stock Companies — how formed and dissolved.

For the regulation of sucli public companies in their preliminary
stages, but more especially for the general regulation of joint stock
companies, the object of which can be attained without special
powers derived from the legislature, the statute 7 & 8 Vict. c. 110,
was passed, which will for the future, it is presumed, cause acts of
parliament for such undertakings to be less often sought or granted.
Inasmuch as this act only applies to companies the formation of
which may be commenced after the 1st of ISTovember, 1844, it will
be necessary, in the first place, to advert to the state of the law and
the course usually adopted in the formation of companies pre-
viously to that period. "Wherever a company exists under that or
any other act of parliament or letters patent, it certainly differs
very materially from an ordinary firm, but still, so far as the act or
patent has not provided, it is governed by the ordinary law of part-
nership.

Section II. — How formed — and dissolved.

A joint stock company is usually formed by Deed of Settlement^
as it is called^sometimes accompanied by a private act of parliament
or a royal ixitent.

The Deed of /Settlement constitutes trustees of the partnership
property, directors of the partnership affairs, auditors of its accounts,
and such othe. • officers as the objects of the society require, and con-
tains covenants for the performance of their respective duties, which
are specifically set out, as are those of the other partners or share-
holders; it also defines the number of shares, the power and
method of transferring them, and of calling for the instalments re-
quired to be made thereon ; the mode of convening general meet-
ings of proprietors, their rights when convened ; and a variety of
other rules, suited to the exigencies of that particular undertaking.
As far as the provisions of this instrument extend, it is the law by
which the partnership affairs are to be governed ; when it is silent,
the general law respecting partnership is to be followed, (c)

(c) The powers conferred by such an instrument on the directors must be strictly
pursued. See Moore v. Hammond, 6 B. & C. 456. Daviea v. i^wkins, 3 M. & S. 488

104 MERCAJvTILE PERSON'S.

Joint Stock Companies — how formed and dissolved.

It seems proper to make a few remarks on the clause almost al-
ways inserted in an instrument of this description, and by which
the shares of each partner are rendered transferable without the
consent of all the other shareholders, but subject, in general, to the
approbation of the directors. By stat. 6 Geo. 1, c. 18, usually
called the Bubble Act, companies of a certain tendency very loosely
described therein were declared illegal, as was " the acting or pre-
suming to act as a corporate body, the raising or pretending to raise
transferable stock, transferring or pretending to transfer any share
in such stock without legal authority." That act, which passed
during the excitement occasioned by the speculations of the famous
South Sea Company, has since been repealed, (c/) But there is no
doubt, that " acting or presuming to act as a corporate body" is an
offence at common law, viz., the usurpation of a royal franchise,
and punishable as such by information ; and it has been supposed
that a company which attempts to make its shares transferable
without any restriction, at the mere will of the holders, is guilty of
usurping the privileges of a corporation, and consequently illegal.
" There can," said Best, C. J., " be no transferable share of any stock,
except the stock of corporations, or of joint stock companies, created
hy acts of parliament — the pretending to be possessed of transferable
stock, is pretending to act as a corporation, and pretending to pos-
sess a privilege which does not belong to many corporations." (e)

It is, however, difficult to say what end of public policy would
be answered, by prohibiting partners from dispensing with the
necessity of obtaining their own consent to the introduction of a
new member into the firm, which is all that need be done, in order

Bucarry v. Gill, 4 C. <fe P. 121. A company of a public nature may in this respect
differ in some degree from one of a more private description, as a power of a pilblic
nature given to several may be executed by the majority. See Grindley v- Barber, 1
B. & P 229. Cortis v. Kent W. W. Co., 7 B. & C. 332. Wilkinson v. Malin, 2 Tyrwh.
544, 2 C. & J. 636.

{<!) By stat. 6 Geo. 4, c. 91.

((?) In Duvergier v. Fellowes, 5 Bing. 267, and see Josephs v. Pebrer, 3 B. «fe C. 639,
The Vice C. has in a late case approved of the above doctrine. Blundell v. "Winsor,
8 Sim. 601. But see London Grand Junction Railway Co. v. Freeman, 2 M. & G.
606, Garrard v. Hardey, 5 M. & G. 471, in which it was much qualified after time
•taicen to consider by the Court of Common Pleas ; also Harrison v. Heathorn, 6 M. <fe
G. 81.

JOINT STOCK COMPANIES. 105

Joint Stock Companies — how formed and dissolved.

to make shares in the concern transferable without restriction at the
will of the holder; and in a late case, (/) Tindal, C. J., speaks of
such a proceeding without any marks of disapprobation. " The
present case,". says his lordship, "appears not to be governed by
reference to the rules which restrain partners from parting with
their shares in ordinary cases without each other's consent ; for in
this case, the power of transferring the scrip to any one, cannot but
have formed a part of the known original design." Even before
the repeal of stat. 6 Greo. 1, c. 18, Lord Ellenborough intimated,
that " it may admit of doubt, whether the raising of transferable v-
stock is in any case^er se an offence against the act, unless it has
relation to some undertaking or project which has a tendency to
the common grievance, prejudice, or inconvenience of his Majesty's
subjects, or of great numbers of them." (g) And it is quite clear,
that a very slight restriction on the transferability of the shares,
such, for instance, as the common one, by which the approbation of
the directors is required, was, even before the repeal of the act, suf-
ficient to render the company legal ; (A) and would a fortiori be so
now, if indeed the necessity of any restriction at all continued to
exist. At all events it is now settled, that on a plea, framed on the
words of 6 Geo. 1, c. 18, sect. 19, and stating that a company raised
transferable stock without any authority from the crown or from
parliament, does not describe any thing amounting to a nuisance
indictable at common law. (^)

As to companies created by ro3'al charter, they must, by the
express enactment of 1 Vict. c. 73, be divided into shares, and there
is no doubt that those shares may, by the deed of association, be
legally rendered transferable ad libitum. And in companies com-
pletely registered under the Joint Stock Companies Act, it is de-
clared, (y) that every shareholder shall be entitled to sell and trans-
fer his shares.

It has been decided^ that when the shares are, by the provisions '/

(/) Fox V. Clifton, 9 Bingh. 120, and see London Grand Junction R. Co. v. Free-
aian, 2 M. & G. 606.

(g) R. V. Webb, 14 East, 406. See Josephs v. Pebrer, 3 B. <fe C. 639.

(/() R. V. Webb, supra. Pratt V.Hutchinson, 15 East, 511.

(i) Garrard v. Hardey, 5 M. & G, 471. Harrison v. Heathorn, 6 M. & G. 81.

(j) 1 &8 Vict. c. 110, s. 54.

106 MERCANTILE PERSONS.

Joint Stock Companies — how formed and dissolved.

of an act of parliament, transferable bj deed only, tlie purcliasei
must tender a conveyance to tlie seller for execution, before lie can
sue for not transferring tbem, even though tiie act makes the shares
personal property, (h) and a sealed instrument of transfer having
the name of the vendee in blank at the time when it is sealed and
delivered is invalid. "It is an attempt," said Parke, B., "to make
a deed negotiable and transferable like a bill of exchange or ex-
chequer bill, which the law will not permit." (A The transferee
may, however, under certain circumstances, estop himself from
taking advantage of a defect in the transfer, even as against the
company, (m) Generally speaking, shares in a joint stock com-
pany, not falling within the Statute of Frauds, are transferable by
parol, (n) and an action for not accepting them may be maintained
by the vendor upon an agreement to purchase them, (o) If the ap-
probation of the directors be required as a preliminary to the trans
fer, the vendor of the shares must procure it; and if they refuse it,
although improperly, the purchaser may rescind the contract, (p) ■

The Act of Parliament (q) usually euable^the company to
sue and be sued in the name of its secretary, or some one member
to be appointed for that purpose, thereby obviating the technical
objections that might arise in consequence of the non-joinder of
some among a great number of partners, providing at the same
time that the suit shall not be abated by the death of such nominal
plaintiff or defendant, that he shall be indemnified against the con-
sequences of the action, (?-) and not disqualified for a witness by

{k) Stephens v. Medina, 4 Q. B. 422. Bowlby v. Bell, 16 L J., C. P. 18.

{1) Hibblewhite v. M'Morine, 6 M. &. W. 200 ; see Humble v. Langton, 7 M. & W.
517. And Baron Parke's judgment in Daly v. Thompson, 10 M. & W. 319 ; aad sea
London and Brighton Railway Co. v. Fairclough, 2 M. & G. 674.

(m) Sheffield and Manchester Railway Co. v. "Woodcock, 7 M. & W. 574.

{n) See judgment of Parke, B., ibid., and Humble v. Mitchell, 11 A. «feE. 205: see
also Knight v. Barber, 16 M. & "W. 66.
'(o) Tempest v. Kilner, 2 C. B. 300.

(p) Wilkinson v. Lloyd, 7 Q. B. 27.

(q) Upon, the question what provisions in such an act are directory, and what
imperative, see Thames Haven Dock Co. v. Rose, 4 M. <fe Gr. 552.

(rVjDifficulties sometimes arise in obtaining execution against a company sued in
this manner, the act often providing, either expressly or impliedly, that the nominal
defendant shall not be liable to execution, or to attachment in case of a reference to
arbitration. See Harrison v. Timmins, 4 M. & W. 510. "Wormwell v. Hailstone,

JOINT STOCK COMPANIES. lOT

Joiut Stock Companies — how formed and dissolved.

his appearance as a party on the record. It sometimes prohibits
the company from increasing their capital beyond a certain sum,
and always conclades with a cautionary proviso, that nothing
therein shall extend to incorporate the partnership, and a direction
that the act shall be deemed public. Acts of this sort sometimes
contain a clause, directing that the books and minutes of the com-
pany shall be evidence for certain purposes, especially in actions
for calls. (5)

In Eailway, Canal, and Market Companies' acts, there is usu-
ally a proviso that the shares shall be personal property ; where
this is the case, they may be sold by parol. And it has been hinted
that they might be so leven without such a proviso, {i)

6 Bingh. 668. Corpe v. Glynn, 3 B. <& Ad. 801. In such cases, the act sometimes
goes on to provide, that execution may be issued against the members of the com-
pany, and then a suggestion of the facts must be previously entered on the record,
since otherwise the execution would appear not to be warranted by the judgment,
and the court would set it aside on motion. Bartlett v. Pentland, 1 B. & Ad. 704.
If the act contam no 'such provision, the plaintiff's remedy is by »iaw(^a!??iMS. R. v.
St. Katharine's Dock Co. 4 B. <fe Ad. 360. Corpe v. Glynn, 3 B. <fe Ad. 801. How-
ever, when the judgment is entered against the company, it is by execution.
Whether in case of_tlieir having no assets, the court would issue a mandamus to
make calls is uncertain. R. v. Victoria Park Co., 1. Q. B. 288. In the case of joint
stock banks and companies incorporated under the statute 1 Vic. c. 73, it is by scire
facias. Cross v. Law, 8 Dowl. 791:. "VVhittenbury v. Law, 6. Bingh. N. C. 345.
Bosanquet v: Ransford, and Paulett v. Nuttall, 11 A. ifeE. 520. Eardley v. Law, 12
A. & E. 802. Ransford v. Bosanquet in error, 12 A. & E. 813. Phillipson v. the
Earl of Egremont, *6 Q. B. 587. To this writ the defendant may set up as an answer,
that the original judgment was obtained by fraud and collusion, but he cannot rely on
any defence which would have been a good answer to the original action. Phillip-
son V. the Earl of Egr^ont. Bradley v. Eyre, 11 M. & W. 432. Same v. Urquhart,
ibid. 456. In a late case it was held, that a private act, which directed that the
chairman might sue in behalf of the company, " for recovering any debts or enforcing
any claims or demands," entitled him to sue for a libel on the company. "Williams v.
Beaumont, 10 Bingh. 260. See on the other hand Guthrie v. Fiske, 3 B. <fe C. 178.

(s) See Southampton Dock Company v. Richard, 1 M. & G. 448. Miles v. Bough,
3 Q. B. 845, and West London Railway Co. v. Bernard, ibid. 873, as to the construe,
tion of such a clause ; and see London Grand Junction Railway Co. v. Preeman, 2 M.
& G. G06. Birmingham, Bristol, and Thames Railway Co. v. Locke, 1 Q. B. 256.
Sanie v. Graham, ibid. 271. Sheffield and Manchester Railway Co. v. Woodcock,
7M. «k W. 574. Also London and Brighton Railway Co. v. Fairclough, 3 Scott'a
N. R. 68 ; 2 M. & G. 674.

{t) Bradley v. Holdsworth, 3 M. &W. 422. Judgment of Parke, B., in Hibble-

108 MERCANTILE PERSONS.

Joint Stock Companies — how formed and dissolved.

Sometimes the act requires that the proprietors should be
registered ; such a clause does not, however, prevent a valid trans-
fer of shares from being made, prior to the formation of the regis-
ter, {u) And where the act directed that the subscribers should
constitute the company, and it appeared that the subscription was
by signing the parliamentary contract, on which a scrip receipt was
handed to the person signing, the transferee of such a person having
been registered, was held to have become a proprietor, the enact-
ment being, that the proprietors of shares might sell them, {v)

With regard to the pjatent — it has been long since found by
experience that the number of members of a joint stock company,
and the extent of the transactions in which it engages, render it
difficult to carry it on under the general rules provided by law for
the government of partnership. Hence, as above stated, it became
usual to call the legislature in to assist in supplying the powers,
without which it was impossible to conduct the enterprise advan-
tageously ; and a private act of parliament was commonly obtained
for that purpose, the ordinary provisions of which have been just
enumerated. However, when joint stock companies began to mul-
tij)ly, their conductors sometimes endeavored to dispense with the
private act, on account of the large sums of money it cost, and the
trouble it occasioned to obtain it; and the ingenuity of convey-
ancers was taxed to supply, as far as, by ingrafting special terms
upon the deed of settlement, they could suppl}^, the want of legis-
lative assistance. It was, however, impossible for them, though
they certainly exerted great skill, to accomplish this completely.
With respect to joint stock banks of issue at a distance of more
than sixty-five miles from London, they were, indeed, in a different
situation from other large partnerships, being governed by a law
of their own (stat. 7 Geo. 4, c. 46), which not only aUoived, but
compelled them to appoint public officers, in whose names they were
to sue and be sued. With respect to other companies, however,
the state of the law was extremely inconvenient. The attention

white V. ]M'Morine, 6 M. &W. 200. Humble v. Mitchell, 11 A. & E. 205. Duncroft
V. Albrecht, 12 Sim. 189 ; see also Thompson v. Thompson, 1 Coll. 386

(u) Sheffield and Manchester Railway Co. v. AVoodcock, 1 M. &. W 674.

(?') Biniiinghara, Bristol, and Thames Railway Co. ■«. Locke, 1 Q. B. 256. Same
«. Graham, ih. 271. As to the stamp on transfers, see "Wolsey v. Cox, 2 Q. B. 32l.

JOINT STOCK COMPANIES. 109

Joint Stock Companies — how formed and dissolved.

of parliament was at last directed towards the subject, and it was
thought expedient to empower the crown to grant to joint stock
companies such powers as were likely to be most useful to them,
without either putting them to the expense of obtaining a private
act of parliament or conferring upon them all the incidents of cor-
porate existence.

The first attempt made by the legislature to effect this object
was by 6 Geo. 4, c. 91, which enacted, " that in any charter of in-
corporation thereafter to be granted, it should be lawful for his Ma-
jesty to declare and provide that the members of such corporation
should be individually liable in their persons and property for the
debts, contracts, and engagements of the corporation, to such ex-
tent and subject to such regulations and restrictions as his IMajesty,
his heirs and successors, might deem fit and proper." This act,
however, proved insufi&cient to meet the exigency of the case, on
account of the difiiculty and expense of obtaining charters of in-
corporation for every new joint stock company. The next legis-
lative experiment is contained in stat. 4 & 5 Wm. 4, c. 94 ; an act
by which a mode of remedying the difiiculty was adopted precisely
the converse of that tried in stat. 6 Geo. 4, c. 91 ; for by 6 Geo.
4, c. 91, the crown, as we have seen, was empowered to cut down
the immunities of corporations by rendering their members, to
some extent, individually liable, so as to reduce them nearer to the
level of ordinary companies ; but by stat. 4 & 5 Wm. 4, c. 94, the
crown was empowered to increase the privileges of companies so
as to lift them up nearer to the level of corporations. And for this
purpose, the crown was enabled to grant to joint stock 'companies,
by letters patent, the privilege of bringing or defending actions in
the name of any of their ofl&cers, upon certain conditions. The
provisions of this statute, however, not being found sufficiently ex-
tensive, and the subject having been much investigated and dis
cussed, in consequence of the prodigious growth of railroad, bank-
ing, gas, steam, mining, and other joint stock companies, an at-
tempt was made by stat. 1 Vic. c. 73, entitled, " An act to en-
able her Majesty to confer certain powers and immunities on
trading and 'other companies," by which the powers of the crown
to confer peculiar privileges upon joint stock companies were re-
gulated.

110 MERCANTILE PERSON'S.

Joint Stock Companies — how formed and dissolved.

This statute, after reciting (z^;) "that divers associations may
be formed for trading and other purposes, some of which it would
be inexpedient to incorporate, though it would be expedient to con-
fer upon them some of the privileges of corporations, and also to
confer upon them other powers and privileges," and referring to the
above enactments, 6 Geo. 4, c. 9, and 4 & 5 Wm. 4, c. 94, empow-
ered {x) her Majesty to grant, by letters patent, to any company any
privilege which she could grant by charter of incorporation. It
also enacted (y) that in such patent it may be provided that all
suits and proceedings ly or on helicdf of the company shall be car-
ried on in the name of one or two of&cers appointed to sue and
be sued in the name of the company, and that all suits and pro-
ceedings against the company shall be carried on against such
officer, or if there be none such, against any member of the com-
pany, provided that any member may be joined with such officer
for the purpose of discovery, or in case of fraud. That (z) in such
patents the liability of members for debts and engagements may
be limited to such extent per share as shall be therein declared.
That (a) the company shall be formed by a deed or agreement, {h)
and the undertaking divided into shares, each of which is to have
a distinguishing number. This deed or agreement must set forth
the name or style of the companj^, and the names or styles of its
members, the date of its commencement, the business or purpose
for which it is formed, the principal or only place for carrying it
on, and must appoint two or more officers to sue and be sued in
its behalf. The company is also (c) to make a return to one of
the officers for enrolment mentioned in the act, of the date of the
grant, the name or style of the company, its business or purpose,
its principal or only p*ace of business, the total number of shares,
the amount to which each share is to render its holder liable, the
names, and (except as to bodies politic) the places of abode of its
members, and the distinctive numbers of their respective shares,
and also of the names and descriptions of the officers appointed to
sue and be sued. Any change in the style of the company is for-

(m) Sect. 1. {x) Sect. 2. {y) Sect 3.

\z) Sect. 4. (a) Sect. 5.

\b) See as to this, Phillipson v. Earl of Egremont, 6 Q. B. 587.

JOINT STOCK COMPANIES. Ill

Joint Stock Companies — how formed and dissolved.

bidden, and returns are to be made of any change in its place of
business, (c/) of persons ceasing to be or becoming members, ex-
cept by transfer, or of any change in the names of members, within
three months, (e) In the case of any transfer, (/) the transfer, or
a memorandum stating its date and the name and abode of the
transferee, and the numbers of the shares to which it relates,
signed by the parties, is to be left at the company's principal or
only ofiice, and {g) the company are, within three calendar months,
or sooner on the request of either of the parties, to make a return
of it, containing the last-mentioned particulars, together with the
name and place of abode of the transferor. Where {h) the extent
of the liability of the members is limited, any member who has
been compelled by execution to pay money for the company, is to
make a return, accompanied by a voucher, in a given form, and (^')
if any such sum be repaid, a return of that must also be made.
Upon(y) the death, the resignation, or removal of one of the oflGi-
cers appointed to sue and be sued, the company are, within three
calendar months, to appoint another, and return the names and
descriptions of both. These various ijc) returns are to be signed
by one of such officers, or if there be none such, by a member, and
verified by a declaration, but no return (J) of the name and abode
of a member or transferee shall be invalid by reason of any error
or omission, provided it is rectified within one calendar month after
discovery, and it was not fraudulent. Where (m) the principal or
only place of business is in England, the returns are to be made to
the Enrolment Office of the Court of Chancery ; where in Scotland,
to the General Kegistry Office ; where in Ireland, to the Enrolment
Office of the Court of Chancery ; and they may be inspected by any
person on payment of one shilling, and certified copies (which are
made evidence) procured (?2) on payment of one shilling and six-
pence per folio. Until registered, (o) no new member can sue for
his share of profits, and the(^) liability of old members continues
until their ceasing to be such is registered. Proceedings {q) by or

{d) Sect. T. (c) Sect 8. (/) Sect. 9.

{g) Sect. 10. [h) Sect. 11. {i) Sect. 12.

(j) Sect. 13. {k) Sect. 14. (Z) Sect. 15.

(rn) Sect. 16. (m) Sects. 1*7 and 18. (o) Sect. 20.

(p) Sect. 21, \q) Sect. 22.

112 MERCANTILE PERSONS.

Joint Stock Companies — how formed and dissolved.

against the company are not to be abated by the death, resigna-
tion, or removal of the officer, or any change in the members, and
both (r) officers and members are rendered competent witnesses in all
cases. Judgments, (-s) decrees, interlocutors, and orders against the
officer, are to have the same effi^ct as if obtained against all persons
liable, and execution may issue accordingly to the amount to
which each appears by the register to be still liable. The (w) bank-
ruptcy, insolvency, or stoppage, also, of individual members, is not
to be construed that of the c'ompany. Service {v) of legal proceed-
ings on the company may be on its clerk, or at its head office, or,
if the clerk cannot be found, on any officer or agent at his place
of abode, and(zy) summonses, demands, and notices by the com-
pany may be by its clerk, attorney, or solicitor. In case (a;) of the
determination of the company, it shall be considered to continue
to subsist till its affairs are wound up, in order to such winding
up, and it may sue and be sued till such winding up is completely
effected.

Thus, it will be seen, a comjoletely new system was created, to
which bodies receiving charters (y) under this act were subjected,
such companies partaking in some degree of the nature of a cor-
poration, though in other respects being governed by the general
law of partnership. Under this statute, however, very few appli-
cations for charters were made, and the rapid increase in the num-
ber of these associations rendered some general enactment, the
operation of which should not be dependent upon their option,
necessary. The statute 7 & 8 Vict., c. 110, was therefore passed,

(r) Sect. 23. (s) Sect. 34.

{t) Tliis is to obviate the difficulty which occurred in "Wormwell v. Ilailstone, 6
Bingh. 668. Corpe v. Glynn, 3 B. & Ad. 801, and Bartlett v. Pentland, 1 B. & Ad. 704.
The proper course of proceeding against a member is by scire facias, to which he may
plead that the judgment was obtained by fraud or collusion between the plaintiff
and the public officer, but he cannot plead any matter which would have been an
answer to original action. As to this and the requisites of a declaration in sci.fa.,
see Phillipson v. The Earl of Egremont, 6 Q. B. 587.

{u) Sect. 25. (v) Sect. 26.

(to) Sect. 27. (.r) Sect. 28.

(y) Before any charter could be granted, notice of the application for it must
have been inserted three times in the Gazette, and in one newspaper at least in the
county where the principal place of business was intended to be, at intervals of not
less than one week. Sect. 32.

JOI]S'T STOCK COMPANIES. 113

Joint Stock Companies — how formed and dissolved.

which created a uniform system with reference to companies es-
tablished after the first day of ISTovembei', 18-i-i. The provisions
of this act are so minute and numerous, that it is impossible to
furnish an abridgment which can convey accurate information as
to its provisions, and the following epitome can, therefore, only be
considered as affording a general view of them, and of the sj^stem
they create. AYhere j)recise acquaintance with the details is re-
quired, recourse must be had to the statute itself. This statute,
after reciting that it is expedient to make provision for the due
registration of joint stock companies during the formation and sub-
sistence thereof, and, after such complete registration as therein
is mentioned, to invest such companies with the qualities and inci-
dents of corporations with some modifications, and subject to cer-
tain conditions and regulations ; and also to prevent the establish-
ment of any companies which shall not be duly authorized and
regulated according to the provisions of that act, declares (2) that
its provisions shall apply to every joint stock company, the -^Drma-
tion of which shall be commenced after the first of November,
1844, for any commercial purpose, or purpose of profit, or insur-
ance (except banking companies, schools, and scientific and literary
institutions, friendly, loan, and benefit building societies duly cer-
tified and enrolled, other than friendly societies granting assurances
on lives as afterwards mentioned, companies incorporated by sta-
tute or charter, or authorized by statute or letters to sue or be
sued in the name of some ofl&cer or person, partnerships (a) for
making mines and quarries on the cost book principle, as (6) well
as Irish anonymous partnerships) ; and that the term, joint stock
company, shall comprehend every partnership whereof the capital
is divided into shares, so as to be transferrable without the express
consent of allthe co-partners ; every life, fire, storm, other casualty,
or marine insurance and annuity company, and every friendly so-
ciety, insuring upon one life, or for any one person more than
£200, as well as every partnership which, at its formation, or by
subsequent admission, (except any admission subsequent on devo-
lution or other act of law,) shall consist of more than 25 members.
But that, except where specially provided, it shall not extend to

(r) Sect. 2. (a) Sect. 73. X^) Sect. 74.

114 MERCANTILE PERSONS.

Joint Stock Companies — how formed and dissolved.

companies for executing any bridge, road, cut, canal, reservoir,
aqueduct, waterwork, navigation, tunnel, archway, raihvay, j^ier,
port, harbor, ferr}^, or dock, which cannot be carried into execu-
tion without obtaining the authority of parliament. Before {c) pro-
ceeding to make public any proposal to form a company, either for
executing any such last-mentioned work or for any other purpose,
the promoters or their solicitor must make a return to the registrar
of joint stock companies, whom the Board of Trade are authorized
to appoint, {d) of the proposed name, business, or purpose of the
company, and the names, occupations, places of business and re-
sidence of its promoters, whereupon they are entitled to a certifi-
cate of provisional registration. But they are also bound, from
time to time, to make returns of the name of the street and of the
number or other designation of the provisional place of business,
of the names, occupations, places of business, and residence of the
committee, or body acting in its formation, together with a written
consent of every such member or promoter to become such, and
an agreement, signed by him, to take one or more shares, and of
the names, occupations, places of business and residence of the of-
ficers, and of the subscribers to the company. Likewise a return
must be made, before it is circulated, of a copy of every prospec-
tus, circular, handbill, advertisement, or other such document ad-
dressed to the public, or the subscribers, or others, and afterwards,
until complete registration, of ever}'- addition to, or change in, any
of those particulars. A failure (e) for the period of a calendar
month after these particulars have been ascertained or determined
on, to register them, subjects the promoters to a penalty, or (/) if
they have appointed an attorney or solicitor to make the returns,
then he is liable to a penalty ; and if the omission were fraudulent,
he may be suspended from practice, or struck off the rolls. No (g)
company, whether for executing any such work under the au-
thority of parliament, or any other purpose can act otherwise than
provisionally until it has obtained a certificate of complete regis-
tration, and it cannot obtain this, unless it be formed by a deed of
settlement appointing not less than three directors, and one or mora

(/) Sect. 6. (.9) Sect. 7.

JOINT STOCK COMPANIES. 115

Joint Stock Companies — how formed and dissolved.

auditors, and setting forth in a schedule the name and business or
purpose of the company ; the principal or only place for carrying it
, and every branch office ; the amount of the proposed capital
and additional capital, the means by which it is to be raised, and if
it be not money, or entirely money, its nature and value ; the
amount of money to be raised by loan ; and the total amount of
capital subscribed, or proposed to be subscribed, at the date of the
deed. Also the division of the capital into equal shares, and the
number of them each being distinguished by a separate number in
regular series ; the names, occupations, and places of residence of
the subscribers ; the number of shares each subscriber holds, and
their respective numbers, distinguishing the number of the shares
on which the deposit has been paid from those on which it has not
been paid ; the names, occupations, places of business, and residence
of the then directors, trustees and auditors; and the duration of the
company, and the mode or condition of its dissolution. The deed
must also contain a covenant, by every shareholder with a trustee,
to pay the instalments on his shares, and to perform the several en-
gagements contained in it on the part of the shareholders. Pro-
visions must likewise be inserted for such of the purposes sc^ forth
in the schedule A to the act, as the nature and business of the com-
pany may require, regulating the holding of meetings, and the pro-
ceedings thereat ; the execution of the affairs of the company and
the registration of its proceedings ; the distribution of its capital
into shares or the apportionment of the interest in its property ; and
the borrowing of money where that is contemplated. The deed,
before it can be registered, must be signed by one-fourth in number
of the persons who at its date have become subscribers, and who
shall hold one-fourth of the maximum number of shares, and be
certified by two directors. Upon the production of such deed, and
a complete abstract of it, and not till then, the registrar may grant
a certificate of complete registration, which is made evidence of the
proper provisions being contained in the deed, and of the perform-
ance of the conditions required. Any defect or omission may be
supplied by a supplementary deed, which, in order to be operative,
must be registered. If any original or supplementary deed (A) at

(A) Sect 8.

116 MERCANTILE PERSOXS.

Joint Stock Companies — how formed and dissolved.

any time appear to the registrar to be defective or inconsistent with
the act, he is to notify the particulars to the persons or the company
by whom it shall have been presented. This deed of settlement, (i)
however, may be dispensed with, and a certificate of complete regis-
tration shall be granted in the case of any of the companies above
mentioned for works which cannot be carried into execution with-
out the authority of parlianient, if they deposit in the ofiices of the
two Houses, in compliance with the standing orders, such deeds of
partnership or^ subscription contracts as shall be required to be de-
posited by the standing orders, and also return to the Kegistry of-
fice a copy of them, together with a certificate of the receipt of such
plans, sections, and books of reference as the Board of Trade ap-
points. - Throughout the continuance of the company a copy of
every new or supplementary deed of settlement, (j') with an abstract
of it, must be transmitted within one month from its date to the
registrar ; and within six months after any change shall have taken
place in any of the particulars required to be set forth in the
schedule to the deed of settlement, except so far as respects the
shareholders and their shares, returns of the particulars so changed
must be made, under a penalty upon each director not exceeding
£20.' In the months of January and July, annually, the directors
of every completely registered company (/c) must make returns to
the registrar, in a given form, of every transfer of any share made
since the last return ; of the names and abodes of all persons who
have ceased to be, or have become shareholders, otherwise than by
transfer ; and of all changes in the names of the shareholders, b;^
marriage or otherwise, in that interval, under a similar penalty. If
any {I) party, however, to a transfer of a share shall at any tijae in
writing request the directors to . make a return thereof, they forth-
with shall make the same ; and on proof of such transfer and re-
quest to the satisfaction of the registrar, the party may make a re-
. turn of the transfer. Until (m) the return of the transfer, or other
fact or event, whereby a person becomes the holder of any share,
is made, it shall not be lawful to pay such person, nor for him to
sue for or recover any profits, or to act as a shareholder ; and the

(i) Sect. 9. (J) Sect. 10. ' {k) Sect. 11.

{I) Sect. 12. (m) Sect. 13.

JOINT STOCK COMPANIES. 117

Joint Stock Companies — how formed and dissolved.

person whose share has been transferred, so far as respects his lia-
bility to the debts and engagements, and the reimbursement of any
loss, damages, costs and charges he may incur thereby, is deemed
to continue a member. In January, {-n) or at such other period as
the Board of Trade, on the application of any company, shall ap-
point, every completely registered company shall annually return
to the registry the name and business "of the, company, on the re-
ceipt of which the registrar shall give a certificate thereof ; and if
this return be not made within one month, the company becomes
liable to a penalty. Upon (o) the return of the. required, documents .
and particulars, it is declared to be the duty of the registrar to cause
to be written on every of them the day of the receipt thereof, and
a number denoting the order in which they were received, and to
give an acknowledgment of the , receipt ; and if such returns • or
documents be conformable to the act, to register the same, and to
grant to the company a certificate of provisional or complete regis-
tration, as the case may require, signed by him, and sealed with the
seal of his office ; and in the absence of evidence to the contrary,
any such certificate shall be received in evidence without proof of
the signature or seal. Until (p) complete registration, the pro-
moters or their solicitor must make the required returns, signed by
one of them at least, or their solicitor, and after complete registra.
tion the directors must make these returns, signed by one director
at least, and sealed with the seal of the company. The form of, (q)
and manner and time of making these returns may be varied, or
any of them may be dispensed with by the Board of Trade ac-
cording to regulations published in the Gazette, and {r) every per-
son shall be at liberty to inspect the returns, deeds, registers, and
indexes kept by the registrar, upon payment of one shilling, and
may require a copy or extract, certified by the registrar, upon pay-
ment of such fee, not exceeding 6d. per folio, as the Board of Trade
may appoint; which copy or extract so certified shall be evidence
without proof of the signature or seal. The certificate of (s) pro-
visional registration continues in force for twelve months, and no
longer, unless it be renewed, but no renewed certificate shall be

(n) Sect. 14. (o) Sect. 15. (p) Sect. 16.

(q) Sect. 11. (r) Sect. 18. (s) Sect. 23.

118 MERCANTILE PERSONS.

Joint Stock Companies — how formed and dissolved-

in force for a longer period than twelve months. " During such
period the promoters may assume the name of the intended com-
pany ; but, coupled with the word "registered provisionally," open
subscription lists, allot shares, and receive deposits at a rate not
exceeding IO5. for every £100 on the amount of every share in the
capital, and in the case of the companies for the works above men
tioned which cannot be carried into execution without the author-
ity of parliament, such further sum on each share as may be re-
quired by the standing orders to be deposited ; and also perform
such other acts as are necessary for constituting the company, or
for obtaining letters patent, or a charter, or :m. act of parliament.
But they may not make calls, nor purchase, contract for, nor hold
lands, nor enter into contracts for any services or the execution of
any works, or the supply of any stores, except such services, stores,
or other things as are necessarily required for establishing the com-
pany, and any purchase or other contract to be made conditional on
the completion of the company, and to take eflect after the certifi-
cate of complete registration, or act of parliament, or charter, or
letters patent shall have been obtained ; and exce]3t, in the case of
companies for executing such works as aforesaid, contracts for ser-
vices in making surveys and performing all other acts necessary for
obtaining an act of incorporation, or other act for enabling the com-
pany to execute such works. If, {t) before obtaining a certificate
of provisional registration, any of the promoters or any person em-
ployed by or under them, take any moneys in consideration of the
allotment, either of shares, or of any interest in the concern, or by
way of deposit for shares to be granted or allotted ; or issue in the
name or on behalf of the company, any note, or scrip, or letter of
allotment, or other instrument, or writing to denote a right, or
claim, or preference, or promise absolute or conditional to any
shares ; or advertise the existence or jDroposed formation of the
company ; or make any contract whatsoever for, or in the name, or
on behalf of the intended company, such person (11) is liable to for-
feit a sum not exceeding £20.

The act then proceeds to make provisions respecting companies
after they have obtained a certificate of complete registration. Ini'

(t) Sect. 24. («) Sect. 25.

JOINT STOCK COMPANIES. 119

Joint Stock Companies — how formed and dissolved.

mediately upon the company obtaining this certificate, the then
shareholders and all succeeding shareholders, whilst shareholders,
are incorporated as from the date of the certificate, hj its name,
and for the purpose of carrying on the business for which it was
formed, but only according to the provisions of the act and the
deed of settlement, and for the purpose of suing and being sued,
and of taking and enjoying the property and effects of the com-
pany ; and any covenants or engagements entered into with any
trustee on behalf of the company before complete registration,^ may
then be proceeded on and enforced by the company, as if made or
entered into with the company after incorporation. The company
is to continue so incorporated, until it shall be dissolved and all its
affairs wound up, yet so as not in any wise to restrict the liability
of any of the shareholders under any judgment, decree, or order
for the payment of money, which shall be obtained against the
compan}^ or any of its members in au}^ action or suit prosecuted
by or against the company, but every shareholder shall in respect
of such moneys, subject as afterwards provided, (v) be, and con-
tinue liable, as he would have been if the company had not been
incorporated. The company is then empowered to use the regis-
tered name, adding thereto "registered;" to have a common seal,
with power to change it, but on which must be inscribed the name
of the company ; to sue and be sued by their registered name in
respect of any claim by or upon the company upon or by any per-
son, whether a member of th'e company or not ; to enter into con-
tracts for the execution of the works and for the supply of the
stores, or for any other necessary purpose of the company ; to pur-
chase as places of business, and also (but with tlie license first ob-
tained of the Board of Trade) such other real property as the nature
of the business of the comjoany may require ; to issue certificates
of shares and receive instalments from subscribers; to borrow
money within the limits prescribed by the deed; to declare divi-
dends out of the profits ; to hold general meetings ; to make, at
general meetings specially summoned for the purpose, by-laws not
inconsistent with the act or deed of settlement, for the regulation
of the shareholders, members, directors, and of&cers; and to per-

(«) Sect. 56.

I«i0 MERCANTILE PERSONS.

Joint Stock Companies — how formed and dissolved.

form all other acts for carryiog into effect the purposes of the com-
pany, in all respects as other partnerships are entitled to do. The
company is also required from time to time to appoint for a period
not longer than five years, not less than three directors, who may
be re-eligible, as provided by any deed of settlement or by-law ;
and to appoint and remove one or more auditors, and such other
officers as the deed of settlement may authorize. There is, how-
ever, a provision, with regard to any company for carrying on the
works above-mentioned which cannot be cariied into execution
without obtaining the authority of parliament, that before the
granting of the act it shall not be lawful for its officers to exercise
this power to enter into contracts, otherwise than conditionally
upon obtaining the act; or to receive instalments beyond the de-
posits required by the standing orders, or such other sum as may
be requisite for obtaining the act ; or to exercise the power to bor-
row money, or to declare dividends. Subject, however, to these
last-mentioned exceptions, all the powers given to any company
completely registered, except the general power to perform all acts
necessary for carrying on the business 'of the company, may be
exercised as fully by any such company so completely registered,
as by any other company completely registered, but it may perform
all acts necessary for obtaining an act, and when that comes into
operation the powers conferred by this, act and its regulations cease.
No {iv) shareholder is entitled to receive any, dividends or profits, or
to the remedies or powers given to shareholders, until he has exe-
cuted the deed of settlement or some deed referring to it, and paid
up all instalments due from him, and been registered in the Regis-
try Office ; but after these preliminaries he is entitled to be present
at all general meetings, to take part in discussions, to vote in de-
termination of any question thereat, and that either in person or
by proxy, unless the deed of settlement preclude voting by prox}^,
and to vote in the choice of directors and auditors; subject never-
theless to the provisions of that act and of the deed of settlement,
or other special authority, so far as they shall either regulate or
restrict the exercise of such powers, but not so as to deprive such
shareholders thereof Also with regard to subscribers and every

(m) Sect. 26.

JOINT STOCK COMPANIES. 121

Joint Stock Companies — how formed and dissolved.

person entitled, or claiming to be entitled to any share in any com-
pany {x) until it " shall have obtained a certificate of complete regis-
tration, and until- any such subscriber or person shall have been
duly registered as a shareholder in the Eegistry Office, it shall not
be lawful for such person to dispose by sale or mortgage of such
share or of any interest therein, and every contract for, or sale, or
disposal of such share or interest shall be void, and every person
entering into such contract shall forfeit a sum not exceeding £10."
For the protection of purchasers it is declared to be the duty of the
directors to state on every certificate of shares the date of the first
complete registration, and a false statement subjects the director or
officer to the penalty of a misdemeanor. The powers and duties (y)
of the directors are declared to be to conduct and manage the affairs
of the company according to the act and the deed of settlement, or
any by-law, and for that purpose to .enter into all such contracts,
and to 'execute all such acts and deeds as the circumstances may
require ; to appoint the secretary, if any, and the clerks, and ser-
vants, and to remove them and appoint others; to appoint other
persons for special services as the concerns of the company may
require ; to hold meetings periodically, and from time to time, as
requisite ; and to appoint a chairman of such meetings, and in his
absence a chairman at each such meeting, but subject to the act and
the deed of settlement or other special authority ; but not so as to
enable' the shareholders to act on their own behalf in the ordinary
management of the concerns, otherwise than by means of the direc-
tors. It is, however, provided that the directors may not purchase
or sell any shares, except shares forfeited for non-payment of instal-
ments,' or lend any, one of their number, or any officer of the com-
pany, any money belonging to the company without the sanction of
a general meeting. The {z) appointment of any person to be or act

(x) As this portion of the clause only mentions the word companies, it has been
held, pursuant to the restrictions of that word imposed by sect. 2, that the sale of
scrip in companies provisionally registered, projected for the execution of the pub-
lic works alluded to in that clause which cannot be carried into execution without
the authority of parliament, is legal. Young ij. Smith, 15 M. <fe W. 131. And this
decision has been confirmed by the Court of Queen's Bench in Lawton v. Hickman.
16 L. J. Q. B, 20.

(j/) Sect. 27. (2) Sect. 28.

122 MERCANTILE PEESONS.

Joint Stock Companies— how formed and dissolved.

as a director, whether honorary or otherwise, or to hold the office
of patron or president, or any other office of the like description, is
forbidden, and he is prohibited from acting in any such capacity,
unless at the time of his appointment, or his acting, he hold in his
own right at least one share. The person thus filling, or acting in,
any of these capacities forfeits a sum not exceeding £20 for every
offence ; and if any person be announced or held out by or on be-
half of the company in any of them without having consented in
writing, or acted, each director knowingly concurring in the repre-
sentation shall forfeit a like sum. If (a) any director be directly or
indirectly concerned or interested in any contract proposed to be
made by or on behalf of the company, he shall, on the subject of
such contract, be precluded from voting or acting as a director, and
if any contract or dealing (except a policy of assurance, grant of
annuity, or contract for the purchase of an article, or of service,
which is the subject of the proper business of the company, such
contract being made upon the same or the like terms as any like
contract with other customers or purchasers) be entered into, in
which any director shall be interested, the terms of such contract
or dealing shall be submitted to the next general or special meeting
of the shareholders, and shall have no force until approved and
confirmed by them. If, too, a director cease to be a holder of the
prescribed number of shares, or become a bankrupt or insolvent,
or shall have suspended payment, or compromised with his credit-
ors, or be declared a lunatic, it shall be unlawful for him to con-
tinue as a director or act as such, and his office is declared by the
act to be vacant. Notwithstanding (b) any defect or error in the
appointment of a director, or his disqualification, all acts done by
him, before its discovery, shall be as binding on him and the com-
pany and its directors and officers, and, if done bond fide, shall be
as binding on all persons whomsoever, as if he were duly appointed
or qualified. Acts(c) of fraudulent commission ar omission, or
falsification, mutilation, or erasing of books or documents by any
director or officer, are declared to be a misdemeanor. If the entry {d)
of the proceedings of any meeting of the shareholders or directora
purport to be signed by the chairman duly presiding at such men-

(a) Sect. 29. (6) Sect 30. (c) Sect. 31. (c?) Sect. 32.

JOINT STOCK COMPANIES. 123

Joint Stock Companies — how formed and dissolved.

ing, and sealed with the company's seal, all courts, justices and
others shall receive the book in which such entry shall be made
2iS prima facie evidence, not only of the proceedings of the meeting,.
but of its having been duly convened, and of the persons making
or entering such orders or proceedings, being shareholders, or di-
rectors, and of the signature of the chairman. The books (e) re-
cording the proceedings are to be kept at the principal place of
business, and to be open to the inspection of any shareholder ; sub-
ject to the provisions of the deed of settlement or any by-law.
The accounts (/) are to be kept in books by the directors, who, {g)
at least fourteen days before the period at which the accounts are
afterwards required to be delivered to the auditors, shall cause them
to be balanced, and a balance-sheet to be made out, examined by
three of them, signed by the chairman, recorded in the books, and
produced {h) to the shareholders at each ordinary meeting. During
fourteen days(i) before each ordinary miveting, and one month
afterwards, each shareholder may inspect these books and the bal-
ance-sheet, and take copies and extracts, and three directors may
authorize such an insjDection at any other time. Every company {j)
must annually appoint at a general meeting one or more auditors
(one of whom shall be appointed by the shareholders), and return
their names to the registrar; and if an auditor be not appointed on
behalf of the shareholders, or if he die, or become incapable, or de-
cline to act, or if such return be not made, the Board of Trade, on
the application of a shareholder, may appoint such an auditor and
direct his salary to be paid by the company. Twenty-eiglit days (IS)
before the ordinary meetings the directors are to deliver the ac-
counts and balance-sheet to the auditors, who shall examine them ;
but throughout the year (J) the auditors may inspect the books of
account and registry, and documents relating to the accounts.
Within {m) fourteen days after their receipt, the auditors shall con-
firm the accounts and report generally, or, if they do not confirm
them, report specially, and deliver the accounts and balance-sheet
to the directors, who {ii) ten days before the ordinary meeting, sub-

(A) Sect 36. (t) Sect. 37. U) Sect. 38.

(yfc) Sect. 39. {I) Sect. 40. vi) Sect. 41.
(n) Sect. 42.

124 MERCANTILE PERSONS.

Joint Stock Companies — how formed and dissolved.

ject to the deed or any by-law, are to send a printed copy of the
balance-sheet and auditors' report to every shareholder, and to
cause such report and the directors' report to be read at each meet-
ing. Within fourteen days (o) after the meeting, the directors must
return to the Registry Office a copy of the balance-sheet and the
auditors' report.

For the purpose of regulating (^j) contracts entered into on be-
half of the company, " except contracts for the purchase of any
article the payment or consideration for which doth not exceed
the sum of £50, or for any service the period of which doth not
exceed six months, and the consideration for which doth not exceed
£50, and except bills of exchange or promissory notes," it is enacted
'* that every such contract shall be in writing, and signed by two
at least of the directors of the company on whose behalf the same
shall be entered into, and shall be sealed with the common seal
thereof, or signed by some officer of the company on its behalf,
to be thereunto expressly authorized by some minute or resolution
of the board of directors applying to the particular case ; and
that in the absence of such requisites, or any of them, any such
contract shall be void and ineffectual (except as against the com-
pany on whose behalf the same shall have been made)." '."That
everv such contract for the purchase of any article the considera-
tion for which doth not exceed the sum of £50, or for any ser-
vice the period of which doth not exceed six months, and the
consideration for which doth not exceed £50, may be entered into
by any officer authorized by a general by-law in that behalf," and
that every such contract, whether under seal or not, shall be im-
mediately reported to the secretary or other appointed officer, who
shall enter the same in the books ; and if it be not so reported and
entered, the officer omitting to enter or report it shall be liable to
repay the amount of the consideration agreed to be paid by the
company. AVith regard ('/) to bills and notes " made, accepted, or
indorsed on the behalf or account of the company, so far as relates
to the mode of making, accepting, or endorsing the same, and to the
liability of the company'- thereon," if the directors " be authorized by
deed of settlement or by-law to issue or accept bills of exchange or

(o) Sect. 43. (p) Sect. 4-i. {q) Sect. -Ic

JOINT STOCK COMPANIES. I05

Joint Stock Companies- — how formed and dissolved.

promissory notes, then every sucli bill of exchange or promissory
note shall be made or accepted (as the case may be) by and in the
names of two of the directors of the company on whose behalf 01
account the same may be so made or accepted, and shall be by
such directors expressed to be made or accepted by them on behalf
of such company ; and that every such bill of exchange and pro-
missory note so made or accepted as aforesaid, shall ,be counter-
signed by the secretary or other appointed officer of the company
in whose behalf the same is expressed to be made or accepted, and
that every bill of exchange so made as aforesaid, or received b^
or on behalf of the company, may be indorsed in the name of the
company by any officer authorized by deed of settlement or by-iaw
in that behalf." Every such bill or note is then to be reported to
the proper officer, who shall enter it in the pro2:)er books ; and if it
be not so reported and entered, the officer omitting to report or
enter it, shall be liable to repay the amount the company may pay
or be liable to pay on it. Neither the secretary nor the officer thus
becomes liable oh the bill, nor do the directors, except as share-
holders ; and the company shall and may sue and be sued on any
such bill or note " as fully and effectually, and in the same manner,
as in the case of any contract made and entered into under their
common seal." All (r) deeds and instruments bearing the seal of
the company shall be signed by two at least of the directors. All
(5) by-laws must be in writing and -under the common seal ; and
until registered in the registry, are of no force. They must be
printed, and a copy given to every officer or shareholder requirino-
it ; and {t) in all legal proceedings for the enforcement of such by-
laws, or penalties for the breach thereof, a written or printed copy,
with the seal of the registrar affixed thereto, shall be sufficient
evidence. The directors (m) . must also keep a book called the
"Eegister of Shareholders," in which they must enter from time
to time the names and addresses of all persons or corporations be-
ing shareholders ; the number of shares to which such shareholders
shall respectively be entitled, distinguishing each share by ita
number ; and the amount of the instalments paid on such shares ;

(r) Sect. 48. (s) Sect. 47.

CO Sect. 48. (m) Sect. 49.

126 MERCANTILE PERSOXS.

Joint Stock Companies — how formed and dissolved.

which register {v) is to be open to the insiDection of every share
holder gratis, and of which he may require a co^jy, on payment of
6(1. for every 100 words required to be copied. On the demand
of the {lu) holder of any share, the company shall cause a certificate
of the proprietorship, specifying the share and the amount paid up
in respect of it, in a prescribed form, under the common seal, to be
delivered to him, for which the company may demand a sum not
exceeding Is. This certificate (.x) is made primd facie evidence of
the title of the shareholder to the share specified in it: but the
want of such certificate will not prevent the holder of any share
from disposing of it, and a fresh certificate, (?/) in case of injury or
loss, may upon certain conditions be procured. Subject (2) to the
regulations contained in the act, and any deed of settlement, every
shareholder is entitled " to sell and transfer his shares therein by
deed duly stamped, in which the full amount of the pecuniary con-
sideration for such sale shall be truly expressed, and which instru-
ment shall be according to the form in the schedule to the act
annexed, or to the like effect." Upon its production the directors
must cause a memorial of it to be entered in the registry of trans-
fers, and the entry to be indorsed on the transfer, upon payment
of Is. Until the production of it for such registration the pur-
chaser is not entitled to receive any profits, or to vote ; and unless
there is a provision to the contrary in the deed of settlement, if
the shareholder shall not have paid the full amount due on every
share held by him, he shall not be entitled to transfer any share.
The company (a) may sue a shareholder failing to pay any instal-
ments, in an action of debt, and declare therein in a compendious
form, and upon proof that the defendant was the holder of any share
when the instalments for which the action is brought became due,
the company may recover them and five per cent, interest. In the (h)
case of shares held jointly, notice to the person whose name stands
first on the register of shareholders suffices, and he is entitled to
vote and have all the privileges conferred on shareholders. At
•;very(c) principal place of business, copies of an abstract of the
deed of settlement, approved by the registrar ; a list of the share-

{v) Sect. 50. (?o) Sect. 51. {x) Sect. 52

(,V) Sect. 53. {z) Sect. 54. (a) Sect 55.

(6) Sect. 56. (c) Sect. 57.

JOINT STOCK COMPANIES. 127

Joint Stock Companies — how formed and dissolved.

holders and of the shares held by them ; a list of the directors and
officers ; and a copy of the by-laws, sealed with the company's seal,
must be kept, which any shareholder or person authorized in writ-
ing by him has a right to inspect, under a penalty on the directors
or officers refusing it. Companies existing (cZ) on the 1st Nov. 1844
were required to make a return to the registrar ; but their condition is
not affected by the act. It is, (e) however, provided that any such
company may obtain a certificate of complete registration, and be en-
titled to the benefit of the act, if its deed of settlement accord with
the deeds prescribed for future companies, or is made to accord with
them, but its incorporation shall not affect previous obligations, (/)
The Board of Trade, (^7) upon a memorial presented within five
years by any company, except assurance companies, may, after
giving certain notices, dispense with or modify the provisions of the
act. And (h) " forasmuch as great injury has been inflicted on the
public by companies falsely pretending to be patronized, or directed,
or managed by eminent or opulent persons; for the purpose of pre-
venting such false pretences, be it enacted, with regard to every
company or pretended company whatsoever, whether registered or
not, and whether then existing or not, that if any person shall
make any such false pretences, knowing the same to be false, in any
advertisement or other paper, whether printed or written, and
whether published in any newspaper, or hand-bill, or placard, or
circular, then every such person shall forfeit for every such offence
a sum not exceeding £10." Judgments, (i) decrees, or orders ob-
tained against any company completely registered, in any legal
proceeding by or against it, may be enforced, and execution issued
thereon, not only against the property and effects of the company,
but also, if due diligence shall have been used to obtain satisfaction
of it by execution against the property and effects of such company,
"then against the person, property and effects of any shareholder
for the time being, or any former shareholder in his natural or in-
dividual capacity; provided, in the case of execution against an}'-
former shareholder, that he was a shareholder at the time when the
contract or agreement, for which such judgment, decree, or order

(d) Sect. 58. («) Sect. 59. (/) Sect. 61.

{</) Sect, 62. {h) Sect. 65. (i) Sect. 66.

J 28 MERCA^'TILE FERSOXS.

Joint Stock Companies— how formed and dissolved.

may have been obtained, was entered into, or became a shareholder
■during the time it was unexecuted or unsatisfied, or was a share-
holder at the time of the judgment, decree, or order, being ob-
tained ;" provided that in no case shall such execution be issued
against a former shareholder after three years from his ceasing to
be a shareholder. Every (j) person, against whom such execution
has issued, may recover, against the company all loss, costs, dama-
ges, and charges he may have incurred by reason of such execution,
and after due diligence used to obtain satisfaction thereof against
the property and effects of the company, he may recover contri-
bution from the several other persons "against whom execution
upon such judgment, decree, or order might have been issued under
the act, and he shall recover it in like manner as contribution in
ordinary cases of co-partnership. In the (k) case of execution to be
issued under the act " against the person, or against the property
and effects of any shareholder or former shareholder, or against the
property or effects of the compan}'-, at the suit of any shareholder
or former shareholder, in satisfaction of any moneys, damages,
costs, and expenses paid or incurred by him as aforesaid in any
action or suit against the company, such execution may be issued
by leave of the court, or of a judge of the court, in which such
judgment, decree, or order, shall have been obtained, upon motion
or summons for a rule to show cause, or other motion or summons
consistent with the practice of the court, without any suggestion or
scire facias in that behalf," The court or judge may grant or dis-
miss the application, and give directions as to the costs, or make
any other order therein ; and the form of writs of execution shall
be such as the judges shall -.think fit to direct. In the case of an
order of a judge an appeal is granted to the court, and no motion
shall be made, or summons granted to charge a shareholder, until
ten days notice thereof shall have been given to the person sought
to be charged. Provisions {!) are also contained for the recovery
of the penalties, which in some cases are enforced before two jus-
tices ; in other cases by action ; but (m) the consent of the attorney-
general is in all cases necessary.

(;•) Sect. 67. (jfc) Sect. 68.

{I) Sects. 69, TO, Tl, 72, 73, 74, 15, 76. (wi) Sect. 77.

JOINT STOCK COMPANIES. 129

Joint Stock Companies — how formed and dissolved.

As to joint stock banking companies, they were, since May 6,
1844, governed by a law of their own, stat. 7 & 8 Vict. c. 113.

By sect. 1 of that act, all banks of more than six j^artners,
formed since May 6, 1844, are to obtain letters patent, the mode of
procuring which is pointed out by sects. 2 and 3. The patent is to
contain, among other things, the provisions of their deed of part-
nership, which is to be in a form provided by sect. 4.

By sect. 5 no company is to commence business till the deed
has been executed, all the shares subscribed for, and half the
amount paid up. The charter may, by sect. 6, incorporate the
company ; but by sect. 7 is not to take away the liability of share-
holders. By sect. 9 shareholders may sue and be sued by the com-
pany. In case of a judgment against the company, judgment is to
go first against it, and then, m default of satisfaction, against the
individual members who were such when the cause of action arose,
provided they would have been liable thereto as partners, and pro-
vided judgment has been obtained within three years after their
ceasing to be members. The act contains provisions for the reim-
bursement of individual shareholders; as to the mode in which
execution is to be obtained ; for the registration of a memorial con-
taining the title of the company, the names of its members and of-
ficers and its place of business; for the signature of bills and
notes ; the transfer of shares ; the mode of making and enforcino-
calls, and service of notice upon the company. A mode is also
pointed out of bringing existing companies within the act.

As to the dissolution of a joint stock company, (n) that can be
hardly said, as in the case of an ordinary firm, to take place upon
the change of each individual member, though certainlv, as far as
the individual is personally concerned, his retirement, by selling out
his share, has the same effect upon his rights and liabilities as the
retirement of the member of a firm has upon his, and the company
must therefore, perhaps, strictly speaking, be considered a new one
upon each change of shareholders. Where there is a private act,
indeed, the legislature either impliedly or expressly recognizes the
continuance of its identity under such circumstances. The same

(n) See the mode adopted for winding up the affairs of the Imperial Distillery
Company, on its dissolution. Wilson v. Butler, 4 Bingh. N. C. 156.
9

130 MERCANTILE PERSONS.

Jo?nt Stock Companies'— rights and liabilities of members inter se.

observation applies to every company formed by charter under stat.
1 Vict. cap. 73, (o) and is involved in the very definition of the
word Oompany^ in cases within the statute 7 & 8 Vict. 110.

In order to effect the dissolution of a joint stock company, the
provisions for that purpose contained in the deed of settlement
must be pursued, {jj) Resolutions, even of general meetings, to re-
duce the capital, or ihe number of shares prescribed by the deed,
will not bind persons who are absent, and such acts do not dissolve
the company, but are wholly inoperative and void, {q)

In consequence of statute 7 & 8 Vict. c. Ill, a joint stock com-
pany, whether existing under 1 Vict, c, 73, or 7 &; 8 Vict. c. 110,
may now be dissolved by its becoming bankrupt, and the company
thereupon being determined by order of the crown under sect. 26
of the same act. That act which provides a new system of bank-
ruptcy, applicable to such companies, is set out at the end of the
chapter on bankruptcy, to which, in order to avoid the necessity
of repetition, the reader is referred for its provisions.

Section III. — Rights and Liabilities of Members inter se.

"With regard to the rights of members of a joint stock company
among themselves ; these are provided for and regulated by their
deed of settlement, and if infringed, must be vindicated in the same
manner as the rights of ordinary partners inter se, except always
so far as the private act of parliament may have provided the con-
trary. And whenever there is no act or charter, and the deed of
settlement is silent, the 'general law of partnership prevails, and
supplies its omissions. Thus, in the absence of some stipulation
to the contrary, each member has a right to inspect the books of

(o) See Wilson v. Craven, 8 M. & "W. 584.

(p) See Lyon v. Haynes, 5 M. & G. 504, as to the effect of dissolution, and the
mode of winding up the affairs. The only other modes of dissolving a company, seem
to be by obtaining the consent of each member, or by a bill in equity, to which all
the members must be parties. See the recent authorities collected upon the laet
point note (a;), p. 132.

((?) Smith V. Goldsworthy,;4 Q. B. 430.

JOINT STOCK COMPANIES. 131

Joint Stock Companies — rights and liabilities of members inter ae

the company. (?') So, one member cannot maintain an action
Rgainst the rest, or the rest against him, on a contract made with
the company, (s) It has been usual to endeavor to obviate the ef-
fect of this rule, by inserting a clause in the deed of settlement, in
which the members bind themselves to take no advantage of it in
legal proceedings by and against the company, and expressly agree
and declare themselves to be estopped from so doing. But the va-
lidity of such a clause has never been established, and is perhaps
more than questionable.

Companies regulated by the statute 7 & 8 Vict. c. 110, and
completely registered, may sue and be sued by their registered
name, in respect to any claim by or upon a member. As to joint
stock banking company, that is, by 1 & 2 Vict. c. 96, (i!) as well
as by 7 & 8 Vict. c. 113, empowered to sue, and to be sued by its
members, whose shares in the concern cannot be made matter of
set-off in an action. And, as in the case of partnership, a member
may recover from the company for work done previously to his
having become interested in it. {iC)

As the management of the company is confided by the deed of
settlement to the directors and their agents, and the bulk of the
shareholders must necessarily continue passive, the courts of equi-
ty are very strict in enforcing the due execution of the trust re-
posed in those functionaries, (y) In ^Vallworth v. Holt, 4 M. &

(r) Baldwin v. Lawrence, 2 Sim. & Stu. 18.

(s) Holmes v. Higgins, 1 B. &,. C. 74. Wilson v. Curzon, 15 M. &. W. 532. Chad-
Trick V. Clark, 1 C. B. 700. Neal v. Turton, 4 Bingh. 149 ; 12 B. M. 365. Teague v.
Hubbard, 1 M. &, R. 869; 8 B. & C. 345; Dans. & L. 118. Moneypenny «j. Hart-
land, 1 C. & P. 352 ; 2 C. & P. 378. Parkin v. Fry, 2 C. & P. 311. Melburn v. Codd^
1 M. & R. 238 ; 7 B. & C. 419. Goddard v. Hodges, 3 Tyrwh. 209; 1 C. <fe M. 33.
Perring v. Hone, 4 Bingh. 28. Vide Davies v. Hawkins, 3 M. & S. 488, where an at-
tempt was made to evade this rule.

{t) Bosanquet v. "Woodford, 5 Q. B. 310.

(m) Lucas V. Beach, 1 M. & Gr. 417.

(y) Difficulty sometimes arises as to the parties to the bill. Tlie inclination of the
Coiirt, however, is, as far as possible, to obviate the technical difficulty that would
arise if all were to be made parties. Cockburn v. Thompson, 16 Ves. 321. Long v.
Young, 2 Sim. 369. Vide Hitchens v. Congreve, 4 Russ. 562. Vansandau v. Moore,
1 Russ. 441, and Lord Cottenham's judgment in Wallworth v. Holt, 4 M. & Cr. 619,
and the cases quoted in the two next notes. See the rule that where the parties in
tcrested are numerous and the suit for an object common to all, one may sue foi

132 MERCANTILE PERSONS.

Joint Stock Companies — rights and liabilities of members inter se.

Cr. 619, the affairs of a joint stock bank having fallen into a very
disastrous condition, the Lord Chancellor entertained a bill against
the public officer, directors and trustees, filed by some of the share-
holders in behalf of the rest, praying for an account of the assets,
and a due application of them to the liabilities. The authority of
this case has been recognized, and the rule laid down by it acted
upon in several recent instances, {iv) in some of which an attempt
has also been made to extend the relief to a decree for the disso-
lution of the company, but the courts have refused to entertain a
bill for such a purpose, without making the whole of the members
parties to the suit, (x) Where a projected company has never been
brought into actual operation, the persons who have advanced
money on the fliith of the completion of the undertaking, may
maintain an action to recover it. (y) And equity will give effec-
tual relief where the scheme turns out a mere bubble, concocted in
fraud. (2)

The chief, or one of the chief questions which commonly oc-
curs between the company and its individual members, relates to
the payment of money due from them in respect to their shares.
The power of the directors to make calk for these must be
strictly followed, (a) To use the expression of Lord Denman in
Meighy. Clinton, {b) "it is a specific power, and must be strictly
pursued." The liability of the shareholders or subscribers, (c)

himself and the rest, applied to the case of a company in Taylor v. Salmon, 4 M. <&
Cr. 134. Fenn. v. Craig, 3 Y. & Coll, 216.

{w) Richardson v. Hastings, 7 Bear. 323. Decks v. Stanhope, 14 Sim. 57. Har
vey V. Bignold, 8 Beav. 343.

(x) Richardson v. Hastings, 7 Beav. 323, per Lord Langdale. Decks v. Stanhope;
14 Sim. 57. Harvey v. Bignold, 8 Beav. 343; and see Abraham v. Hannay, 13 Sim,
681. But see Richardson v. Larpent, 2 Y. & Coll. C. C. 507, and Apperley v. Page,
16 L. J. C. C. 100.

(y) Nockles v. Crosby, 3 B. & C. 814 ; 5 D. & R. 751. Kempson v. Saunders, 4
Bingh. 5; 12 B. M. 44. Watkins v. Huntley, 2 C. <fe P. 410. Walstau v. Spottia-
woode, 15 M. & W. 501.

{z) Colt V. Woollastan, 2 P. "Wms. 154. Green v. Barrett, 1 Sim. 45. Blain v.
Agar, 2 Sim. 289. As to the form of proceeding, Harvey v. CoUett, 15 L. J. C. C. 376*.

(a) Moore v. Hammond, 6 B. & C. 456.

(6) 11 Ad. &E. 428.

(c) As to the meaning of which word, see Great North of England 262. Londom
Grand Junction Railway Co. v. Freeman, 2 M. & Gr. 606. Railway Co. v. Biddulph,

JOINT STOCK COMPANIES. 133

Joint Stock Companies — I'ights and liabilities of members inter se.

depends, of course, mainly on the deed or act of parlia-
ment, (d)

"Where there were no express words in the act prohibiting it, it
has been held, that the calls might be made to take effect infuturo,
and the time and mode of payment fixed by an act subsequent to
the resolution making the call. There had, it may be observed,
been no intermediate change in the direction, (e)

It has also been decided that the member of a joint stock com-
pany who has been forced to pay calls made after he had parted
with his shares, on account of his not having formally perfected the
transfer, has no right to maintain an action to recover the amount
on an implied assumpsit by the transferee. (/)

There is generally a power vested in the directors to declare the

7 M. & "W. Meigh v. Clinton, 11 Add. &, E. 428. See as to the construction of a
power to make calls on shareholders for the tvne being, Ayelsbury Railway Co. v.
Mount, 4 M. & Gr. 651 ; 7 M. & Gr. 898, and Thames Tunnel Company v. Sheldon,
6 B. & C. 341. See also The Midland Great Western Railway Co. v. Gordon, 16 L.
J. Ex. 166.

{d) See Huddersfield Canal Co. v. Buckley, 7 T. R. 36. Norwich and Lowestoff
Navigation v. Theobald, M. & M. 151. Stratford and Morton Railway Co. v. Strat-
ton, 2 B. <fe Ad. 519. Cromford and Highpeake Railway Co. v. Lacy, 3 Y. <fe J. 80:
as to the pleadings in actions for calls see Edinburgh and Leith Railway Co. v. Ileb-
blewhite, 6 M. & W. 711 ; and see London and Brighton Railway Co. v. Fairclough,
3 Scott^ N. R. 68, 2 M. & Gr. 674, in which a variety of points were decided on the
construction of the act and the evidence in the action. For instance, the act direct*
ing that the books should be evidence, one book alone was not allowed to be so ; but
though the act directed a memoi'ial of each transfer to be made, the deed of transfer
was allowed to be evidence, without proof of the memorial. And though the trans-
fer was, by the act, to be executed by the purchaser, j'et the deed of transfer was
held to require a fresh stamp on the alteration of the name of the purchaser from A.
to B., as before A.'s execvition of it.

There is usually a provision in the act that the register shall be evidence in these
actions, and in such case it will be prima facie evidence, although irregularly kept.
Birmingham, Bristol, and Thames Railway Co. v. Locke, 1 Q. B. 256. In Chelten-
ham and Great Western Railway Co. v. Daniel, 2 Q. B. 292, Lord Denman said that
he considered it settled by Sheffield and Manchester Railway Co. v. Woodcock, 7 M.
& W. 580, that all difficulties which arise from not adopting the machinery of the
act, are got over by the conduct of parties who claim to be placed in the situation
of proprietors, and are so placed accordingly.

(e) Sheffield and Manchester Railway Co. v. Woodcock, 7 M. & W. 574 : see Great
North of England Railway Co. v. Biddulph, 7 M. & W. 24.3.

(/) Humble v. Livingston, 7 M. & W. 517. In the case of a mortgage, as to the
liability of the mortgagor to indemnify the mortgagee, see Phene v. Gillam, 5 Hare 1.

134 MERCANTILE PERSOIS'S.

Joint Stock Companies — rights against, and liabilities to third parties.

shares of defaulters forfeited ; and, under ordinary circumstances,
equity it seems will not relieve against the exercise of this power, {g)
The power generally is to be exercised by giving a certain number
of days' notice to pay, otherwise, that the shares will be forfeited ;
but the mere circumstance of such a notice having been given is
not a defence in an action for the calls, {h)

Section IV. — Bights against, arul Liabilities to third Parties.

It sometimes happens, that a joint stock company created by
act of parliament has, under the provisions of its act, peculiar rights
against, and is subject to, peculiar liabilities to third persons ; foi
instance, a canal company is sometimes empowered to levy tolls b_y
way of distress ; {%) and in some cases, as in the case of railway or
market companies, the act gives a right of taking other persons'
land, and points out a mode of compensating the owners, {j) The
powers and mode of taking land for undertakings of a public
nature, imder acts passed since May 8th, 1845, are regulated by
statute 8 & 9 Vict. c. 18, usually called the Land Clauses Consoli-
dation Act. The mode in w^hich such acts are to be construed has

{g) Trendergast v. Turton, 1 Y. & Coll. Ch. 98.

[h) Birmingham B. & T. Railway Co. v. Locke, 1 Q. B. 256. Edinburgh and Leith
Co. V. Ilebblewhite, 6 M. & W. 707.

(i) A canal company empowered to levy tolls b}^ way of distress is bound to keep
the navigation secure, and is liable in tori in case of mischief occasioned \>y its failure
in so doing. Parnaby v. Lancaster Canal Co. Lancaster Canal Co. v. Parnaby, 11
Ad. & E. 223. See Parrett Navigation Co. v. Robins, 10 M. & W. 693.

{j) See as to construction, Doe v. Bristol and Exeter Railway Co., 6 M. AW
820. Grand Junction Railway Co. v. White, 8 M. &, W. 222. Fenton v. Trent and
Mersey Nav. Co., 9 M. & "W. 203. Barret v. .Stockton and Darlington Railway Co.,
2 M. & Gr. 134, 3 M. &. Gr. 956, 1 M. &, Gr. 8*70. R. v. London and Greenwich Rail-
way Co., 3 Q. B. VtQ. As to landowners' right of passage across the railway, Man-
ning V. Eastern Counties Railway Co., 12 M. »& W. 237. In R. v. Scott, 3 Q. B. 543,
■where a company had power to obstruct a highway, making one equally convenient,
their default in so doing was held to render them indictable for a nuisance to the
road obstructed. In railway acts there usually are clauses requiring the company
to carry for reasonable and equal rates, and then they are liable to actions for
exceeding. See Pickford v. Grand Junction Railway Co., 10 M. & "W. 399, and Parket
V. Great Western Railway, 7 M. & G. 253.

JOINT STOCK COMPANIES. 135

Joint Stock Companies — rights against, and liabilities to third parties.

been already pointed out. Tliey are looked upon as bargains made
between the public and the company, and to be construed liberally
in favor of the former, who had no hand in concocting them, and
whose rights are nevertheless affected by them. "Where land is
taken it is usually provided that if the owner do not agree with the
company upon a compensation it shall be assessed by a jury. Qc)
As to the mode in which such inquisitions are construed, see Doe
d. Payn v. Bristol and Exeter Railway Company. {[) It is laid down
by Baron Parke in that case, that, as an extraordinary jurisdiction
is to be exercised, every thing requisite ought to appear on the in-
quisition. At the same time the decision shows that there are
matters which come by way of defeasance to the powers given by
the act, and need not be stated. Questions sometimes arise as to
the nature of the property in respect cf which the owner is entitled
to compensation. In such cases, the act is to be construed liberally,
so as to include every interest atl'ected. {in)

In ordinary cases, however, a member of a joint stock company
is, like members of an ordinary firm, entitled to the benefit of all
its contracts, and responsible for engagements made by the agents
of the concern, and for its purposes, {n) His liability commences
with the commencement of the company, and he is not responsible
for contracts made before that period by its intended members or
directors, while preliminaries, on the accomplishment of which he
had agreed to join the company, are unaccomplished, (o) Thus,

{k) The effect of such an assessment is not at once to vest the land in the com-
pany. Upon their paying tlie amount into the Bank of England, they should first
call on the owner to produce his title, and to convey, though before the assessment
he had refused to do so. Doe de Hutchinson v. Manchester, Bmy, Rossendale Eail-
way Co., 14 M. & TV. 687.

(Z) 6 M. <fe W. 320.

(?») Ex parte Farlow, 2 B. tfe Ad. 341. R. v. Eastern Counties Railway Co., 2 Q.
B. 347.

(n) Carlen v. Drury, 1 V. & B. 157. Keasley v. Codd, 2 C. & P. 408. Harvey v.
Kay, 9 B. & C. 356. Maudesley v. Le Blanc, 2 C. <fe P. 409, n. So if he holds him-
self out. Braithwaite v. Scholfield, 9 B. & C. 401.

(o) Fox V. Clifton, 6 Bingh. 776. Dickenson v. Valpy, 10 B. & C. 142. Bourne
V. Freeth, 9 B. & C. 632. Pitchford v. Davis, 5 M. & W. 2. Barnett v. Lambert, 15
M. & W. 489. Reynell v. Lewis, ibid. 517. See also Walstab v. Spottiswoode, ibid.
501. For cases where the partnership liability was held to have attached, see Har-
vey V. Ka}', ^lhi supra. Ellis v. Schmoeck, 5 Bingh. 521. Lawler v. Kershaw, M. A

136 MERCANTILE PERSONS.

Joint Stock Companies — rights against, and liabilities to third parties.

" where a prospectus is issued and shares collected for a speculation
to be carried on by means of a certain capital, to be raised in a
certain number of shares, a subscriber is not liable in the first in-
stance, unless the terms of the prospectus in that respect are ful-
filled ; but if it be shown that he knows the directors are carrying
on the undertaking with a less capital, and has acquiesced in their
so doing, he may become answerable for their future contracts." {p)
And, in a late case, his writing letters to the directors, who were
carrying on the undertaking with the smaller capital, requiring
them to call a meeting, has been held evidence of acquiescence, (g)*
And though in the absence of acquiescence, no partnership takes
place till the preliminaries are completed, yet when the partnership
has once begun, every member is liable in respect of a contract
made by the directors or agents in the iisual course of business,
though contrary to the original stipulations, {r) Persons, also, who
consent to become members of the provisional committee of a pro-
jected company, do not thereby authorize the other members of the
committee to engage their credit, even for things necessary to estab-

M. 93. Doubleday v. Muskett, 4 M. & P. 150; T Bingh. 110; and Hutt v. Giles, 12
M. & W. 492, where in an action for calls, the subscription of the whole capital was,
under the terms of the deed then in question, held not to be a condition precedent.

(p) Per Lord Abinger, in Pitchford v. Davis, 5 M. & W. 2. Steigenberger v. Carr.
3 M. & Gr. 191.

(q) Tredwen v. Bourne, G M. & W. 461.

(r) Hawken v. Bourne, 8 M. & W. 703.

* "The question," saj's Mr. Bisset, in his treatise on Joint Stock Companiesi
Wliat constitutes partnersJiip ? can onlj' arise in the case of joint stock companies,
when they are in the preliminary stages, which precede complete registration or
incorporation. For the deed of settlement, or act of pai'liament, or charter, will
place the question of partnership, as regards any individual who has been registered
xmder it, beyond a doubt. The result of the cases is, that in a scheme for a com-
pany which has not advanced to completion, that is, which has not arrived at a
point held out by the promoters or provisional directors to the subscribers as the
starting point — wiiich point may be stated to be complete registration and incorpo-
ration respectiveh' — there is no partnership existing quoad strangers; and therefore
that the subscribers or allottees are not liable for debts incurred to strangers in the
name of the company merely, qua subscribers or allottees, where they have not
expressly authorized the directors to jii'oeeed with the smaller or incomplete sub
scription or capital, and where they have not in any way held themselves out aa
personally res2)ousible.''

JOINT STOCK COMPANIES. 137

Joint Stock Companies — I'ights against, and liabilities to third parties.

lish tlie compan3\ The bare fact of allowing their names to be
published to the world, as members of such a committee, (s) will
not render them liable. If, however, they have done any acts, in
relation to the proposed company, those acts raise a question for the
jury, as to whether they authorized the pledging of their credit for
matters necessary to the formation of the company. So their per-
mitting their names to be inserted in a prospectus, which represents
certain persons as the agents of the committee, e. g. solicitors and
secretaries, should be submitted to the jury, and it is for them to
judge whether by so doing, they did not intend to authorize those
agents to do all such things on their behalf, as are usually done by
them in similar cases. If the prospectus also states the names of
an acting committee, it is for the jury to say, whether the meaning
of that is, that the acting committee is to take the whole manage-
ment, to the exclusion of the provisional committee, their pro-
visional character having ceased, in which case they would not be
liable ; or that the provisional committee have appointed the acting
committee, or the majority of it, on their behalf, and as their agents,
in which event they would be liable upon contracts made by them
as such agents. It is, however, quite clear that they cannot be
charged for goods supplied or debts incurred previously to their
consenting to act. {t)

It has been decided that, in the absence of proof to the con-
trary, one member of a joint stock company cannot bind the re-
mainder by negotiable instruments. In Bramah v. Roberts, {u) a bill
was drawn by one of the directors of a joint stock gas light and
coke company on himself and the other directors, and accepted by
the chairman for himself and the other directors, the acceptance was
held not to bind them. " The address of a bill," said Tindal, C.
J., delivering the judgment of the Court, " to the directors of a
metropolitan compan}^, and the frame of acceptance by the chair-
man of such directors for himself and the other directors, can only
be referable, unless some explanation is given, to a company of the

(«) Rej-nell v. Lewis, Wyld v. Hopkins, 15 M. & "W. 51Y. Cooke v. Tonkin, 16 L.
J. Q. B. 153. Barker v. Stead, ibid. C. P. 160. See also Lake v. The Duke of Argyle^
6 Q. B. 2. Woods V. Tlie Duke of Argyle, 6 M. & G. 928.

(0 Barnett v. Lambert, 15 M. & W. 489.

(ti.) 3 Bingh. N. C. 963. See also Steele v. Harraer, 14 M. &. W. 831.

138 MERCANTILE PERSONS.

Joint Stock Companies — rights against, and liabilities to third parties.

description well known in all the courts of law and equity in "West-
minster Hall as joint stock companies^ and not to ordinary partner-
ships in trade. It was proved upon the trial of the cause, that
Clare, the drawer of the bill, from whom the plaintiffs derived title,
and upon whose indorsement they rely, was the same William Clare
who is one of the acceptors and one of the defendants in his capa-
city of acceptor. So that the bill is drawn by one of the directors
upon himself and the other directors, paying to his own order, and
accepted by another director for himself and the rest. But the
right of one director to draw a bill upon the rest, and still further,
the power of one director to accept a bill for himself and the others,
so as to make those others liable, according to the case of Dicken-
son V. Valpy^ (v) in the authority of which case we entirely concur,
is not a right or power implied by law, like that which belongs to
one member of an ordinary partnership in trade, with respect to
bills drawn and accepted for the purposes of the trade ; it must de-
pend upon the powers given by the charter, or deed, or agreement,
under which the company is established or constituted, or some
other agreement between the parties, whether a bill so drawn and
accepted shall or shall not have that legal effect. But upon the
trial of this cause, no evidence whatever was given by the plain-
tiffs of the constitution of this company, nor of any authority given
by deed or otherwise to any one of the directors to bind the other
directors, or to bind the company at large, by his acceptance of bills
of exchange ; and in the absence of such evidence, we are of opinion
that no such authority is to be implied by law, or can be held to
exist."

In Tredwen v. Bourne^ [w) Lord Abinger expressed an opinion
that the question whether the directors of a mining company have,
in the absence of express provision, power to bind the company by
dealing on credit, must depend on the general nature of the con-
cern, and is a matter for the jury to decide on ; "and, I think,"
added his lordship, " they would not have had much difficulty in
saying that it is the general nature of mining concerns to deal on
credit for the purpose of carrying on their business." In the sub-

(v) 10 B. & C. 142. (w) 6 M. & ^Y. 465.

JOIXT STOCK COJIPAXrES. I39

Joiut Stock Companies — rights against, and liabilities to third parties.

sequent case of Hawlcen v. Bourne^ {x) proof to that effect was given
in a Cornish case.

It is apprehended, that as the general nature of a joint stock com-
pany is to contract, through the medium of its directors or their
agents only, the contract of a private member would in no case
bind the others, unless recognized. This observation appears to be
in some degree sanctioned by the judgment in Bain v. Cooper, {y)
It has been expressly held, that an agent appointed by the directors
has no implied power to borrow money for the use of a mining
company, however urgent may be the necessity, (z)

The liability of the member of a joint stock company will, in
the absence of any special arrangement, be determined in the sama
manner as that of an ordinary partner, (a)

(a;) 8 M. <fe TV. '703.

{y) 9 M. &, W. 701 : see particularly the judgment of the L. C. Baron at p. 708.
(2) Hawtayne v. Bourne, 7 M. &, W. 595.

(a) Weald of Kent Canal Co. v, Kobinson, 5 Taunt. 801. Kidwelly Canal C<w «•
Raby, 2 Price, 93.

CHAPTER rV

COEPOEATIONS.

A CORPORATION aggregate (a) consists of several individuals united
in such a manner, that they and their successors constitute
but one person in law, a person distinct from that of any of the
members, though made up of them all, and whose privileges and
possessions, when once vested in it, will be forever vested, withoifl
any new conveyance to new successors ; for all the individual mem
bers that have existed from the foundation to the present time, or
that shall ever hereafter exist, are but one person in law ; as the
river Thames is still the same river, though the parts which com-
pose it are changing every instant. (5)

From this distinction between the aggregate existence of the
corporation and the individual existence of each of its members, it
follows that they may sue and may be sued by one another in a
court of law. (c)*

(a) The consideration of corporation sole is foreign to the subject of this treatise.

(6) 1 Black. Coram. 468.

* A question of the highest importance and interest was decided in the case of
tlie Bank of Augusta v. Earle, 13 Peters, 519, after an eloquent and elaborate discus-
sion by the most eminent counsel in the country. The plaintiffs, a corporation crea-
ted by the laws of another state, had discounted a bill of exchange, through their
agent, in Alabama : and it was contended that the corporation could have no legal
existence, for any purpose, out of the boundaries of the sovereignty by which it was
established, and consequent!}-, no capacity to contract. The court, Mr. Justice
McKinley dissenting, overruled the objection, and held that there was no greater ob-
jection to the capacity of an artificial, than a natural person, by its agents, to make
a contract within the scope of its limited powers, without the sovereignty in which
it resides : provided the contract is valid according to the laws of the place where
made ; that the right of foreign corporations to make contracts without the jurisdic-
tion creating them, had been long acknowledged by the comity of nations ; and that

CORPORATIONS. 141

Corporations.

A corporation may exist by force of the common law, prescrip-
tion, the king's charter, {d) or an act of parliament, (e) When
erected, a name must be given to it, and by that name alone it
must sue and be sued, and perform all legal acts : the courts are,
however, more strict in compelling the exact insertion of the name
in actions brought by corporations than in deeds executed by them,
for in the former case a mistake may be remedied, not so in the
latter. (/) With respect to their deeds, therefore, the rule is, that
in grants or conveyances the name of a corporation must be the
same in substance with the true name, but need not be the same
in words or syllables, {g) Such name is the very ceing of its con-
stitution, the knot of its combination, without which it could not
perform its corporate functions. When it has been so formed and
named, it requires the right to have perpetual succession, to sue or
be sued, implead or be impleaded, grant or receive by its corporate

[d) "When a charter for a trading company is applied for, and the application re-
ferred to the Privy Council, the applicants must insert the same advertisements as
are required by stat. 1 Vict., c. 73, s. 32, to be inserted by a company making a simi-
lar application, in the Gazette and a county newspaper.

(e) When a corporation is created by a public act of parliament, the courts take
judicial notice of it. Church v. Impl. Gas Light Comp., 3 K tfe P. 37 ; 6 Ad. &, E.
846. But not where it exists merely by charter, see Cooch v. Goodman, 2 Q. B. 580.
In such an act it was provided that no action should be brought against any person
for any thing done under it without twenty days' notice. The word person was
held to include the corporation. Boyd v. Croydon Railway Company, 4 Bing. N. C.
669.

(/) 10 Rep. 120, a.

{g) Per Parke, J., in Rex v. Haughley, 4 B. & Ad. 655. See on this subject, Mellor
V, Spateman, 1 Wms. Saund. 340, in notis.

the rules and principles of comity were alike applicable between the different states
of the Union. This case in some of its aspects is inconsistent with the decision of
the Court of Appeals of Virginia, in the earlier, but well-considered case of the
Bank of Marietta v. Posidall, 2 Rand. Rep. 466.

It has been held in Virginia — Bank of IT. States v. Merchants' Bank of Balti-
more, 1 Robin. Rep. 573, that under an act authorizing proceedings in courts of
equity against absent debtors, a creditor of a corporation, created by another state,
may maintain a suit in equity against such corporation, as a defendant out of the
commonwealth, where there are persons within the same who have in their hands
effects of, or are indebted to, such absent defendant ; or may maintain a suit in equity
against such corporation as an absent defendant, where it has lands or tenements
■within the commonwealth.

142 MERCANTILE PERSONS.

Corporations.

name, and do all other acts as natural persons may. Being, how-
ever, an invisible body, it cannot manifest its will by oral commu-
nication : a peculiar mode has, therefore, been devised for the au-
thentic expression of its intention, namely, the affixing of its com-
mon seal ; and it is held, that though the particular members may
express their private consents by words, or signing their names,
3^et this does not bind the corporation ; it is the fixing of the seal,
and that only, which unites the several assents of the individuals
composing it, and makes one joint assent of the A^hole. (A) How-
ever, it has been considered that a trading corporation may differ
from others, as to its powers of contracting, and its remedies on
contracts relating to the purposes for which it was formed, {i) Thus,
such a corporation may in some cases bind itself by promissory
notes, {j) and bills of exchange ; {k) and it was even held that the
Bank of England might, without deed, appoint an agent for such
purposes, (l) But a corporation will not have these extraordinary
powers, unless the nature of the business in which it is engaged
raises a necessary implication of their existence. (?n)* It certainly

(7<) Arnold v. Maj-or of Poole, 4 M. &, Gr. 860. Mayor of Ludlow v. Charlton, 6
M. &"W. 815. The corporation of London indeed appoints an attorney without seal,
but that is of record in the Court See Arnold v. Mayor of Poole, judgment Fish-
mongers' Co. V. Robertson, 5 M. & Gr. 200. East London Water Works Company v.
Bailey, 4 Bingli. 283. Gibson v. East India Company, 5 Bingh. K C. 263. Vide
tamen Church v. Imp. Gas Companj-, 3 K & P. 37. 6 Ad. & E. 846.

[i) 3 B. <L' Ad. 131. Church v. Imp. Gas Light Company, 3 N. &, P. 37. 6 Ad.
& E. 846.

( j) Stat 9 Anne, c. 1, and Bayley on Bills, 5th edit p. 67.

(k) R. V. Bigg, 3 P. Wms. 419. Edie v. E. L Company, 2 Burr. 1216, admitted
arguendo in Broughton v. Manchester and Salford Water Works Company, 3 B. <fe
A. 3.

{I) R. V. Bigg, supra, N. B. There was a difference of opinion. See 1 Str. 18.

()>i) Broughton v. Manchester and Salford Water Works Company, 3 B. <fe A. 1.
Murray v. E. I. Compy., 5 B. <fe A. 204. Dunstan v. Imp. Gas Light Company, 3 B
& Ad. 125. Slark v. Highgate Archway Compy., 5 Taunt. 792. Steele v. Ilarmer, 14
M. & W. 831. The principle on which the exception depends seems to be "conveni-
ence almost amounting to neccssiti/." Per curiam in Church v. Imp. Gas Light Compy.,
3 K A P. 37, 6 Ad. &. E. 846.

* More just and rational principles prevail in our own country, in reference to
the capacity of corporations ; and such as have been referred to witli respect by tho
most distinguished English judges, who, while adhering to the strictness of the old

CORPORATIONS. 143

Corporations.

appears, that there are other acts, mostly of a trifling nature, which
every corporation may do without seal, or even writing. Such, it
has frequently been said, is the hiring a common servant, or the
appointment of a bailiff to distrain ; {n) yet, it is so doubtful what
acts are included within this exception, and the authorities are so
conflicting, (o) that it is impossible to speak on the subject with

(n) Plowd. 91; Vin. Abr. Corp. K.; Bro. Corp. 47; 3 Lev. 127; 1 Salk. 191;
Com. Dig. Franchises F. 13. R. v. Bigg, supra. Yarborough v. B. of England, 16
East, 6. 4 H. 7, 6. 13 H. 7, 17. 13 H. 8, 12. 1 Sauiid. 305, b. Smith v. Birming-
ham Gas Light Co., 1 Ad. & E. 526, ubi per Taunton, J. "The distinction is between
matters that do, and matters that do not, affect any interest of the corporation-
Thus they must appoint a bailiff by deed for entering lands for condition broken in
order to revisit their estate. But they need not do so when the bailiff is only to dis-
train for rent."

(o) 1 Mod. 18; Bro. Corp. 24, 34. Dunstan v. Imp. Gas Light Compy., 3 B. it Ad.
125. Home v. Ivy, 1 Vent. 47. See an enumeration of them in the judgment of
Best, C. J., in East London Water Works v. Bailey, 4 Bingh. 283.

doctrine, have adverted to the obvious circumstances which justify our advancing
with somewhat freer step to the discussion of the ancient rules of the common law
The reasoning upon which the American courts have proceeded is unfolded with
great learning and ability by Judge Story, in the case of the Bank of Columbia v.
Patterson's Adra'rs, 7 Cranch, 299, and Fleckner v. Bank of the U. States, 8 Wheat.
338. "Whatever," saj's he, "may be the original correctness of this doctrine, as
applied to corporations existing by the common law, in respect even to which it has
certainly been broken in upon in modern times, it has no application to corporations
created by statute, whose charters contemplate the business of the corporation to be
transacted exclusively by a special body, or a board of directors. And the acts of
such body, or board, evidenced by a written vote, are as completely binding upon
the corporation, and as complete authority to their agents, as the most solemn acts
done under the corporate seal. In respect to banks, from the very nature of their
operations in discounting notes, in receiving deposits, in paying cliecks, and other
ordinary and daily contracts, it would be impracticable to affix the corporate seal,
as a confirmation of each individual act. And if a general authority for such pur-
poses, under the corporate seal, would be binding upon the corporation because it is
the mode prescribed by the common law, must not the like authority, exercised by
agents, in the mode prescribed by the charter, and to whom it is exclusively given
oy the charter, be of as high and solemn a nature to bind the corporation ? To
suppose otherwise, is to suppose that the common law is superior to the legislative
authority, and that the legislature cannot dispense with forms, or confer authorities
whicli the common' law attaches to general corporations." "The existing law on
this subject is," says Ch. Walworth, "that a corporation may be bound by the acta
of its agents, although not under its corporate seal, and even where they are not re-
duced to writing; except in those cases where, by the provisions of the Statute of

144 MERCANTILE PERSONS.

Corporations.

confidence. Every exception of this kind stands on the ground of
necessity, {p) Assumpsit lies against a trading corporation on an
executed contract for goods sold, {g) and hy it upon an executory
contract to accept and pay for them, (r) And a corporation may
maintain assumpsit upon a parol contract performed on their parts,
notwithstanding they could not have been sued upon it for want of
the affixing of the common seal, (5) and may be sued in this form
of action for money which it has wrongfully received, (f) Where
a corporation can become a party to a bill, it may be sued upon it
in assumpsit ; {u) and in actions upon policies of insurance, made by
the two incorporated insurance companies, and which are, there-
fore, always by deed, a general form of plea is given to the defend-
ants by stat. 11 Geo. 1, c. 30, s. 43. In some cases a trading cor-
poration is exempted by the act incorporating it from liability to
actions, in order to equalize the rights of its creditors, whose debts

{p) See judgment in Beverly v. Lincoln Gas Light Compy., 6 Ad. & E. 844-5.

Iq) Beverley v. Lincoln Gas Light Comp}-., 1 N. & Perr. 283; 6 Ad. &. E. 829

(r) Church v. Imp. Gas Light Compj^, 3 K Perr. 37 ; 6 Ad. A E. 846

(s) Fishmongers' Company v. Robertson, 5 M. & Gr. 131.

{t) Hall V. the Mayor of Swansea, 5 Q. B. 526

(?<) Edie V. E. I. Compy., 2 Burr. 1216. Murray v. E. I. Compy., 5 B. <fe A. 204
Slark V. Highgate Archway Compy., 5 Taunt. TS)2. Broughton v. Manchester and
Salford Water Works, 3 B. & A. 1.

Frauds, or otherwise, a contract must be in writing to render it valid, if m.ide by a
private person. And the acts and assent of corporations, like those of individuals,
when not reduced to "writing, may be inferred from other facts and circumstances,
without a violation of any known rule of evidence." The American Insurance Co.
V. Oakley, 9 Paige, 496. See Dunlap's Paley on Agency, 155, where there is a full
and learned examination of the subject.

In the recent case of Melledge v. Boston Iron Company, 5 Cnsh. R. 175, C. J.
Shaw, delivering the opinion of the Court, uses this language : "It seems to be now
well settled in this commonwealth, since the great multiplication of corporations,
extending to almost all the concerns of business, that trading corporations, whose
dealings embrace all transactions from the largest to the minutest, and affect almost
every individual in the community, are affected like private persons with obligations
arising from implications of law, and from equitable duties Avhich imply obligations,
with constructive notice, implied assent, tacit acquiescence, ratifications from acts
and from silence, and from their acting upon contracts made by those professing to
be their agents, and generally by those legal and equitable considerations which af-
fect the rights of natural persons."

CORPORATIONS. 145

Corporations.

are all directed to be secured by mortgages upon its property. The
instances of this are generally canal companies, (v)

It has been held in equity, that an incorporated joint stock
company is bound to make good expense necessarily incurred in
order to its own formation, (tv)

A corporation has a right to make by-laws for its own govern-
ment, which are binding upon the members, unless contrary to the
law of the land or the directions of their charter ; (cc) and this
power of making by-laws may be delegated by the whole body to
a select part, which thus becomes the representative of the whole
community, (i/)*

The above were the principal incidents to a corporation at
common law ; but by stat. 1 Vict. c. 73, sect. 29, the crown, when
it creates a corporation, may confer upon it any of the incidents to
the species of joint stock company created by that act.

A corporation may be dissolved, first, by act of parliament;
secondly, by the natural death of all its members ; thirdly, by sur-
render of its franchise to the crown ; fourthly, by forfeiture of its
charter through negligence or abuse of its franchise. These are
the only modes in which it could have been dissolved at common

{v) See Pontet v. Basingstoke Canal Comp., 3 Bingh. K C, 433 ; also Pardoe v.
Price, 11 M. & W. 427. 13 M. & W. 267.

(w) Edwards v. Grand Junction Railway, 1 M. & Cr. 650.

{x) R. V. Cutbush, 4 Burr. 2204. Kirk v. No well, 1 T. R. 118. See 4 Burr. 2260;
3 Burr. 1827, 47 ; 2 Bro. P. C. 394, 329 ; 2 M. <fe S. 58 ; 7 T. R. 643 ; 1 Burr. 12 ; 6 T.
R. 732 ; 11 Rep. 54. Graves v. Colby, 1 P. <fe D. 235. 9 Ad. & E. 356.

(y) Per Ld. Mansfield, 3 Burr. 1837. Rex v. Westwood, 7 Bingh. 1.

* A novel and interesting point, involving the relations of the directors of a cor-
poration to the individual stockholders, was decided by the Supreme Court of Mas-
sachusetts, in the case of Smith v. Hurd et ah., 12 Mete. 371. A stockholder of an
incorporated bank brought an action on the case against its directors for so negli-
gently conducting its business through a series of years, as to waste the entire capi-
tal, and thus render the shares of the plaintiff worthless. The court held that the
action could not be maintained. The directors were not the agents of the individual
stockholders, but of the corporation. To this body politic, having a separate exist-
ence as a distinct person in law, all its officers and servants were responsible for neg-
ligence or other delinquency in the discharge of their duties. The stockholders, as
individual members of the corporation, could not severally or jointly exercise any
control over the directors. If an action could be brought by any one stockholder
the directors might be subject for the same default to a great number of actions.
10

146 MERCANTILE PERSONS.

Corporations.

law : there is now, however, a fifth, namely, by the expiration of
i its charter, since charters of incorporation may, by stats. 1 Yict. c.
73, sect. 29, and 7 & 8 Vict. c. 113, be granted for limited periods.
A trading corporation also may, in consequence of the provisions
of 7 & 8 Vict. c. Ill, be now dissolved by bankruptcy : the pro-
visions of that act are fully stated at the end of the chapter on
bankruptcy ; and under the Joint Stock Companies Eegistration Act
(?/) such societies may be dissolved in the mode prescribed by their
deeds of settlement.

Here it is to be observed, that debts to or from a corporation
/ are, generally speaking, wholly extinguished by its dissolution, so
that the members cannot recover or be charged with them in their
natural capacity; however, by stat 6 Geo. 4, c. 91, it was enacted,
that in any charter thereafter to be granted by his Majesty, his
heirs or successors, for incorporation of any body or company of
persons, it should be lawful to provide, that the members should be
individually liable in their persons and property for the debts, con-
tracts, and engagements of such corporation, to such extent, and
subject to such regulations and restrictions as his Majesty might
deem fit, and the members should be liable accordingly. In conse-
quence of this act, when trading companies were incorporated, it
was usual to provide in the charter, that the private property of in-
dividual partners should be liable to the debts of the company, in
case of an execution on a judgment obtained against it, in propor-
tion to their individual shares. That statute is indeed repealed by
1 Vict. c. 73, which, however, effects the same object by enabling
her Majesty, in any charter of incorporation thereafter to be grant-
ed, to make the corporation and its officers or members subject to
all the provisions, directions, and liabilities, applicable, under that
statute, to joint stock companies, and which are above enumerated
in chap. 3. In the recent statutes 7 & 8 Vict. cc. 110, 111, 113,
provisions are contained, which effectually guard against the extin-
guishmefit of the debts of the companies to which they relate by
their dissolution.

{z) See ante, pp. 115 and 118.

CHAFI'EIl V.

PEINCIPAL AND AGENT.

Sect. 1. Definition and character of agent.

2. Rights of principal against agent.

3. Rights of agent against principal.

4. Rights of third parties against principal,

5. Rights of principal against third parties.

6. Rights of agent against third parties.

7. Rights of third parties against agent.

Section I, — Definition and character of Agent.

As a comparatively small part of an extensive business can be car-
ried on by the unassisted exertions of the trader, whether sole or
the member of a partnership or corporation, the agents by whom
he is obliged to transact the remainder constitute an important,
though subordinate, class of mercantile persons; this book will
therefore conclude with a sketch of the law relating to them.

An agent is a person authorized to do some act or acts, in the
name of another, who is called his principal. Whatever a man
has power to do in his own right, he may (except in one or two
very peculiar cases) (a) appoint an agent to do for him, I say in
his own right, for one agent cannot nominate another to perform the

(a) An agent cannot sign an acknowledgment for the purpose of taking a case
out of the Statute of Limitations ; Hyde v. Johnson, 2 Bingh. N, C. 777 ; nor could
a devise be executed by an agent, because the Statute of Frauds expressly required
the signature of the testator ; but now see 7 W. 4, & 1 Vict. 4, c. 26, s. 9.

148 MERCANTILE PERSONS.

Definition and character of Agent.

subject of his agency, vicarius non hahet vicarium. (b)^ It is true,
that when, from the nature of his trust, it cannot be expected that
he should accomplish it all by his own personal exertions, he will
be allowed to employ others to assist him ; and therefore, where a
factor lodged goods in the warehouse of the South Sea Company,
the Court held that he had a right to do so, for that a bailiff aa
merchandkandum is not obliged to keep the goods always about
him. (c) So where the guardians of the poor of Witney Union
employed Kempthorne to draw a specification for a workhouse, and
Kempthorne employed Moon to make calculations, the Court of
Common Pleas decided that Moon, though he had no communi-
cation with the guardians, might sue them for a compensation,
having first proved that Kempthorne, in employing him, had acted
in accordance with the custom of his trade of architecture ; " for,"
said the L. C. J., " in contractis tacite insunt quce sunt moris et con-
suetudinisr {d) In these cases, however, he does not so much dele-
gate his agency, as exercise a power impliedly contained in his
appointment ; in doing which, he must act with precaution, and not
exceed what is proper under the circumstances of the case, and
■warranted by the usage of trade.

(6) Roll. Abr. 330; 9 Co. 11, b. Coles v. Trecothick, 9 Ves. 236, 251, 252. Solly
V. Rathbone, 2 M. & S. 289. Cockran v. Irlam, 2 M. <fe S. 301. Schraaling v. Tom-
linson, 6 Taunt. 147. Catlin v. Bell, 4 Camp. 184. Doe d. Rhodes v. Robinson, 3
Bingh. K C. 678. Clark v. Dignam, 3 M. <fe "W. 318. Ess v. Truscott, 2 M. & W.
385. Maryatt v. Broderick, 2 M. & "W. 369. Miles v. Bough, 3 Q. B. 845.

((f) Moon V. Guardians of "Witney Union, 3 Bingh. K C. 817.

* This maxim is sometimes thus expressed : — delegata potestas non potest delegan
Agency is a personal trust and confidence, which cannot be delegated unless thb
principal has conferred such a power of substitution in express terms, or by impli
cation fairly to be deduced from the nature of the employment. Thus, a factor can-
not transfer a consignment made to him, for sale, to another factor, without the
authority of his principal. So, it has been held that where powers requiring the
exercise of discretion have been confided to a corporation, they cannot be delegated
to the directors, but must be exercised solely by the corporation, at a legal meeting
held for that purpose. Ex parte Henry "Winsor, 3 Story C. C. R. 411. These general
principles are recognized and enforced in the later case of Warner v. Martin, 11 How
e. C. R. 224.

rPJXCIPAL AXD age:s't. 149

Definition and character of Agent.

Some persons may be agents for others who could not act in
their own capacity. An infant, or feme covert^ may become an
agent, the latter even for her own husband, (e) But it has been
decided that one of two contracting parties cannot be agent for the
other, even with that other's consent, so as to bind him by a writ-
ing within the Statute of Frauds. (/)

An agent may in general be appointed by bare words, or such
appointment may be inferred from the conduct of his supposed
principal respecting him ; {g) there are, however, cases in which the
nomination must be in writing, or even by deed. (A) The appoint-
ment of an agent for the purposes specified by the 1st, 2d, and 3d
sections of the Statute of Frauds (^) must be by writing ;* and it is
a general rule that an agent who is to execute a deed, {j) or to take
or give livery of seisin, {k) must be appointed by deed for that pur-
pose. Moreover, as a corporation aggregate can in general act only

(e) Co. Litt. 62, a. Emerson v. Blonden, 1 Esp. 142. Palethorpe v. Furnish, 2
Esp. 511. Prestwick v. Marshall, 7 Bingh. 565. Prince v. Brunatte, 1 Bingh. N. C.
438.

(/) Wright V. Dannah, 2 Camp. 203. Farebrother v. Simmons, 5 B. & A. 333.
Raynor v. Linthorn, R. & M. 325. Cooper v. Smith, 15 East, 103. See, however
Bii'd V. Boulter, 4 B. <fe Ad. 448, and dicta of the Judges there.

(g) See post, sec. 4.

(Ji) Bac. Abr. Authority, A-

{i) 29 Car. 2 cap. 3.

(j) Harrison v. Jackson, "7 T. R. 209. Elliott v. Davis, 2 B. <fe P. 338. Horsley v.
Rush, cited 7 T. R. 209. Berkeley v. Hardy, 5 B. <fe C. 355. Williams v. Walsby, 4
Esp. 220. Stfciglitz v. Egginton, 1 Holt, 141. See Hunter v. Parker, 7 M. &. W. 322,
from which it appears that though an agent cannot bind his principal by deed, unless
himself appointed by deed, yet the deed executed by the agent may sometimes bind
the principal as a writing.

(k) 2 Roll. Abr. R. pi. 3, 4.

* The 4th and I7th sections of the statute contains no such provision, and it has
been held in England and in many of the United States, that an agent may be ap-
pointed to enter into a contract respecting real estate by parol, although an instru-
ment of writing will be necessary to bind the principal. Clinan v. Cooke, 1 Sch. &
Lefr. 31. Coles v. Trecothick, 9 Ves. 234. Shaw v. Nudd, 8 Pick. 9. Yerby v.
Grigsby, 9 Leigh, 387. Talbot v. Bowen, 1 Marsh K. R. 436. Mortimer v. Crom-
well, 1 HofF. R. 351 ; but the opposite doctrine has been ruled in Pennsylvania, &
Berg. & Raw. 90.

150 MERCANTILE PERSONS.

Definition and character of Agent.

by deed, its agent must be so appointed, (Z)* though it would seem
that some trifling agencies, even for corporations, may be created
without one ; (m) and there is one case in which it was considered
that a corporation might, without deed, empower an agent to do
acts in the common course of its corporate business, as to make
notes for a banking corporation.

There are two extensive classes of mercantile agents, viz., factors,
who are intrusted with the possession as well as the disposal of
property, and hrolcers^ who are employed to contract about it, with-
out being put in possession. But though brokers are usually em-
ployed in the manner just stated, yet every person so employed is
not a hroher ; thus it would seem, that neither auctioneers (n) nor
merchants acting by commission from correspondents abroad, (o)
can properly be called brokers. It is perhaps strange that the
meaning of the word should not be better ascertained, for by stat.
6 Anne, c. 16, and 57 Geo. 8, c. 60, brokers in London must be
admitted by the mayor and aldermen, paying £5 on admission, and
a like sum annually, under a penalty of £100 ; in pursuance of
■ which act, regulations were afterwards made by the court of mayor
and aldermen concerning the admission of brokers, whereby they
are required to take an oath, and enter into a bond for the observ-
ance of certain regulations, respecting which, and the mode in
which the bond itself is construed, the authorities cited in margine
may be consulted. (p)f

(Z) 9 Edw. 4. pi. 59 ; Bro. Corp. 2-t, 34; 1 Roll. Abr. 514; 1 Mod. 18. Arnold v.
Maj^or of Poole, 4 M. <fe Gr. 860.

{m) Plowd. 91; Vin. Abr. Corp. K. R. v. Bigg, 3 P. Wms. 419. See stat. 3 <fe 4
Anne, c. 9 ; Bro. Corp. 47, per Townsend, J. Ibid. 48, per Littleton, J., 3 Lev. 127 ; 3
Salk. 191-2. See stat. 6 Geo. 4, c. 16, s. 46. See also Dunstan v. Imperial Gas Light
Compy., 3 B. & Ad. 125, and Dean and Chapter of "Windsor v. Gover, 2 Wms. Saund,
305, b.

{n) Wilks V. Elliss, 2 H. Bl. 555.

(o) Janson v. Green, 4 Burr. 2, 104. See also as to who are brokers, Milford v,
Hughes, 16 Mees & "Wels, 174.

{p) 1 Meriv. 156, 157; 1 Holt, N. P. C. 431-433; 7 Taunt. 260; 1 Moore 6; 2
Stark, 14 ; 1 Nev. &, Mann. 492.

* The more liberal rule of the American courts is stated in the note to ehaptei
•jn corporations, page 142.

■j- There is a vast variety of forms of mercantile agency. With some modifi

PRINCIPAL AXD AGEXT. 151

Definition and character of Agent.

It is decided that a person who does work iu London as a
broker, without being duly qualified under the above acts, cannot
recover any compensation, (q)

(q) Cope V. Rowlands, 2 M. & "W. loY.

cations, growing out of the business in which they may be employed, the same gene^
ral principles regulate the rights, duties, and responsibilities of all agents, for what-
ever purpose constituted.

Judge Story, iu his work on Agency, considers particularly six classes of com-
mercial agents: auctioneers, brokers, factors, ship husbands, masters of ships, and
partners. The peculiar principles applicable to each of these relations, except that
of brokers and factors, are discussed in different parts of this treatise. And in refer-
ence to these, the present seems a proper place to enlarge upon the brief statements
m the text. Tlie distinction between them cannot be stated with more accuracy,
perspicuit3r, or comprehensiveness, than in the language of Mr. Justice Holroyd, in
the leading case of Baring et al. v. Come, and 2 Barn. & Aid. 137. "A factor who
lias the possession of goods, differs materially from a broker. The former is a person
to whom goods are sent or consigned, and he has not only tiie possession, but in con-
sequence of its being usual to advance money upon them, has also a special property
in them, and a general lien upon them. "When, therefore, he sells in his own right,
it is within the scope of his authority ; and it may be right, therefore, that the prin-
cipal should be bound by the consequences of such a sale ; amongst which the right
of setting off a debt due from the factor is one. But the case of a broker is differ-
ent; he lias not the possession of the goods, and so the vendee cannot be deceived
by that circumstance ; and besides, the employing of a person to sell goods as a
broker, does not authorize him to sell in his own name. I^ therefore, he sell in hia
own name, he acts beyond the scope of his authorit}', and his principal is not bound.
But it is said that by these means the broker would be enabled, by his principal, to
deceive innocent persons. The answer, however, is obvious, that this cannot be so,
unless the principal delivers over to him the possession and indicia of property. Tht
rule stated in the case in Salkeld (Hern v. Nicholas), must be taken with some quali-
fications ; as, for instance, if a factor, even with goods in his possession, act beyond
the scope of his authority-, and pledge them, the principal is not bound ; or if a
broker, having goods delivered him, be desired not to sell them, and he does sell
them, but not in market overt, the principal may recover them back. The truth is,
that in all cases, except where goods are sold in market overt, the rule of caveat
emptor applies." A broker is a person employed in the negotiation of mercantile
contracts, and according to the branch of business to which he devotes himself, he
is called an exchange broker, a stock broker, a merchandise broker, a ship broker, or
an insurance broker. The character of factor and broker, however capable of being
distinguished, are frequently combined; the broker having possession of what he is
employed to sell, or being empowered to obtain possession of what he is employed
to purchase; thus a broker is commonly intrusted with negotiable instruments, in-
dorsed in blank, for sale. In these cases he is, properly speaking, a factor, clothed

152 MERCAXTILE PERSONS.

Definition and character of Agent.

There are some peculiar enactments relating to stock brokers.
Stat. 10 Anne, c. 19, s. 12, limits their commission on government
stock to 25. 9d. per cent., and 7 Geo. 2, c. 8, commonly called Sir
John Barnard's Act, requires each of them to keep a book, called
the 'broker's hook, in which he is to enter all contracts for stock made
by him on the same day, with the names of the parties and the day
which book he is to produce when lawfully required, (r)

(r) See Dunbar v. Wilson, 6 Bro. P. C. 6.

with the rights, and suhject to the responsibilities of that relation. See Story on
Agenc}-, from 28 to 35, and the following cases on the authority, duties, and respon.
sibilities of factors: Evans v. Potter, 2 Galli. Rep. 13. Van Amringe v. Peabody, 1
Mass. C. C. R. 440. Thompson v. Perkins, b ibid. 232. Loraine v. Cartwright, 3
Wash. C. C. R. 151. Brown v. McGran, 14 Peters, 479. Leverick v. Meigs, 1 Cow-
645. Williams v. Littlefield, 12 Wend. 362. Jackson v. O'Hara, 5 Leigh, 456. Beck-
with V. Sibley, 11 Pick. 482. Clark v. Moody, 17 Mass. 145-148.

The cashier of a bank is a commercial agent so common in our own country, that
it is important to ascertain the extent of his authority. " The cashier of a bank, '
says J. Story, is, in virtute officii, generally intrusted with the notes, securities, and
other funds of the bank, and is held out by the bank as its general agent in the nego-
tiation, management, and disposal of them. Prima facie, therefore, he must be deemed
to have authority to transfer and indorse negotiable securities, held by the bank for
its use and in its behalf No special authority for this purpose is necessary to be
proved. If any bank chooses to depart from this general course of business, it is cer-
tainly at liberty so to do ; but it is incumbent upon the bank, in such case, to show
that it has interposed a restriction, and that such restriction is known to those with
whom it is in the habit of doing business. Wild v. Bank of Passamaquoddy, 3
Mass. 505.

The cashier has no authority to bind the bank by any agreement with the makers
or indorsers of a note which is offered at bank for discount, by which the legal effect
of the written instrument is varied or controlled. It is not his duty to make such
contracts, and he has no authoritj' to bind the bank, except in the discharge of his
ordinai-y duties. Bank of the United States v. Dunn, 6 Peters, 51. Nor has he any
power to accept bills of exchange on behalf of the bank, for the accommodatiou
merely of the drawers. Farmers' and Mechanics' Bank v. Troy City Bauk, 1
Dougl. 457

A cashier cannot be protected in any known departure from his official duties,
either by the connivance or direct sanction of the board of directors ; as for exam-
ple, in the case of a usage, to allow certain customers to overdraw, and to have their
checks and notes charged up without present funds in the bank ; a usage, in other
words, to misapply the funds of the bank. No court of justice could countenance
such a practice. Minor et al. v. Mechanics' Bank of Alexandria, ] Peters, 46. The
student will find the American cases collected in a note to Mr. Dunlap's edition of
Paley on Agency, 156, Note 2.

PRINCIPAL AND AGENT. 153

Rights of Principal against Agent.

Having stated what is and who may be an agent, how and by
whom he may be nominated, let us proceed to consider the results
of such nomination as they affect,

1. The mutual rights of the agent and his principal.

2. Those of the principal and third parties.

3. Those of the agent and third parties.

Section II. — Rights of Principal against Agent.

The duties of the agent to his principal must of course depend
on the instructions contained, either expressly or impliedly, in his
appointment ; for, be those what they may, his duty is to carry
them into effect, if possible, to the letter ; (s) unless, indeed, his
obedience would involve a fraud on third persons, for no contract
can oblige a man to make himself the instrument of fraud, {t) The
appointment is his only authority ; it may be general^ to act in all
his principal's affairs, or special^ concerning some particular object;
it may be limited^ by certain instructions as to the conduct he is to
pursue, or unlimited, i. e., leaving his conduct to his own discretion ;
but this discretion should not be exercised at random, for in the
absence of specific instructions, it is his duty to pursue the accus-
tomed course of that business in which he is employed, {u) or, if
prevented by some unforeseen obstruction, at all events to give due

(s) Guerreiro v. Peile, 3 B. & A. 616.

{t) Bex-well v. Christie, Cowp. 395.

(m) Russell V. Palmer, 2 Wilson, 325. See Moore v. Mourge, Cowp. 480 ; 2 T. R.
188, hi notis. Pitt v. Yalden, 4 Burr. 2061. Russell v. Hankey, 6 T. R. 12. War-
wick V. Nokes, Peake, 68. Bee Forster v. Pearson, 5 Tyrwh. 267 ; 1 C. M. & R. 849.
Heiteh v. Carrington, 5 C. tk P. 471. Thus a banker is bound to honor his customer's
drafts, if he have assets lodged with him within a reasonable time for tliat purpose,
and the drafts be duly presented to him. Marzetti v. Williams, 1 B. »fc Ad. 415.
Whitaker v. Bank of England, 1 C. M. & R. 744 ; 5 Tyrwh. 268. But he is not bound
to do so, if they be not presented during banking hours, ibid. ; though possibly there
would be a neglect imputable to him, if it were shown that he had a person stationed
at the bank after banking hours to give answers, and that person had omitted to in-
form the holder of the draft that there were assets to meet it, ibid. So it had been
held that a known stockbroker employed to sell may bind his principal to the ordi-
nary rules of the exchange, Sutton v. Tatham, 10 A. & E. 27, and in certain trades
a factor may by custom sell in his own name. Johnston v. Usborne, 11 Ad. <fe K 549.

154 MERCANTILE PERSONS.

Rights of Principal against Agent.

notice to his principal. (?;)* And lie must possess a competent de-
gree of skill, in order to enable liim to do so ; if lie engage with-
out such skill he is a deceiver, and will be justly liable for the con-
sequences of his incapacity ; he is, moreover, responsible not only
for himself, but for those whom he may employ under him. {w)f

(v) Callander v. Olerich, 5 Bing. K C. 58.

(mi) Lord North's case, Dy. 171. Mackersy v. Ramsays, 9 CI. & Fin. 818. Tlie
principal in most instances has no remedy directly against the sub-agent^ there being
no privity between them. See Cobb. v. Becke, 6 Q. B. 930. See also, Wilson & Co.
t;. Smith, 3 How. S. C. R. 363.

* The distintion betwen a general and an unlimited authority is pointed out in
the following cases. Whitehead v. Tuckett, 15 East, 408. Anderson v. Cronley, 21
Wend. 299. Odiorne v. Maxcy, 13 Mass. Rep. 181. Hewes v. Doddridge, 1 Rob. v.
R. 143. St. John v. Redmond, 9 Porter R. 428. Russell on Factors and Brokers, 15.

■j- The responsibility of an agent to whom commercial paper has been intrusted
for collection, is considered very much at large by Chief Justice Marshall, in the case
of Hamilton, Donaldson & Co. v. Cunningham, 2 Brok. 350. The rule deduced from
the authorities is, that the agent does not bear the same relation to his principal as
the holder of a bill of exchange does to the drawer or indorser; but his responsibil-
ity is to be determined b}' the law regulating the relation of principal and agent
generallj'. The actual loss sustained by the principal, in consequence of the miscon-
dncs of the agent, is the amount of damage for which the latter is responsible. In
accordance with the same principles, it was held by Judge Stor}^ in the case of
the United States Bank v. Goddard, 5 Mason, 366, that an agent is only bound to
give notice of the dishonor of a note which has been committed to him for collec-
tion to his principal, the holder, and not to the indorsers, although the latter might
receive information much sooner from him than the principal. "The agency," says
J. Story, "does not include any such duty. If the agent contracts with his principal
to give such notice, it is a mere private contract between the parties, with which an
indorser has nothing to do. It neither enlarges nor limits his rights. It may be in-
convenient for him to receive a circuitous notice, but that is not sufficient to change
the law. I think it would be far more inconvenient to establish the doctrine now
contended for in the defence. All that is required by law is, that the holder should
give notice to the indorser, in a reasonable time after he has notice of the dishonor,
and that there should be no laches in getting that knowledge, if an agent has been
employed." S. P. Bank of the United States v. Davies, 2 Hill's Rep. 451. But the
failure of an agent to give reasonable notice to his principal, of the dishonor of a
bill of exchange, which he has taken on the sale of his property, will render him an
insurer of the solvency of the purchaser. Harve}' v. Turner, 4 Rawle, 223. For-
resteir v. Bordman, 1 Story's C. C. Rep. 44. See also Allen v. Suydam, 17 Wend. 868,
20 Wend. 321.

The deposit of a bill in one bank to be transmitted for collection to another, is a
common usage of great public convenience. The benefit which the collecting bank

PPJXCIPAL AXD AGEXT. 155

Eights of Principal against Agent.

The most satisfactory mode of determining whether he have exer-
cised such skill is, to show by evidence whether a majority, or even
moiety, out of a given number of skilful and experienced persons,
would have acted as he has done, {x) Of whatever description his
authority may be, if he exceed it and any loss ensue, that loss will
fall on him ; (y) though if a benefit result, he will not be allowed
to share it, but must account for it to his employer, (z) However,

(x) Chapman v. Walton, 10 Bingh. 63.

(y) Catliu v. Bell, 4 Camp. 184. Barrow v. Fitzgerald, 5 Bing. K C. 201.

[z) Russell V. Palmer, 2 Wils. 325, and post.

derives from the use of the funds whilst in its custody, and the profits on exchange,
are a valuable compensation for the labor and expense to which the business subjects
it, and constitute such bank, in acting for others, an agent for reward; and of course
clothe it with the responsibilities belonging to that character. If the principal sus-
tains any damage from the failure of the bank to use due and legal diligence in the
performance of its duty, the bank will be responsible to him in an action on the case.
Bank of Washington v. Trij^lett, 1 Peters, 25. Fabens v. Mercantile Bank, 23 Pick.
330. Bank of Utica v. Smeade, 3 Cow. 662. Mechanics' Bank at Baltimore v. Mer-
chants' Bank at Boston, 6 Mete. Rep. 13. Van Wart v. Wooley, 3 Barn. & Cress. 419.
To fix the responsibility of the bank, two facts must be established; first, that the
drawer or indorser has been discharged ; and second, that this result has been owing
to the neglect or want of due skill on the part of the bank. It is a very interesting
and important question, whether a bank receiving a note for collection, and placing
it in the hands of a notary in time for demand and payment, is liable for the neglect
of the notary to give notice, if it is the cause of actual damage. In some of the
cases, it has been held that the bank is not responsible for the negligence or miscon-
duct of the notary, if it used reasonable care and diligence in making the selection.
Such is said to be the general rule, wherever it is necessary for one agent to employ
a sub-agent to transact the business. Bellemire v. Bank of United States, 1 Miles,
1T3. Hyde & Goodrich v. Planters' Bank of Mississippi, 17 Louisiana Rep. 560.
Tiernan et al. v. Commercial Bank of Natchez, 7 How. Miss. 648. East Haddam Bank
V. Scovill, 12 Conn. Rep. 303. Dorchester <fe Milton Bank v. New England Bank, 1
Cush. 177. The same doctrine was held by the Chancellor and Supreme Court of
New York, in the case of Allen v. The Merchants' Bank, 22 Wend. 215. But the
Court for the Correction of Errors reversed the judgment below in the last case, and
declai'ed the law to be, that in the absence of any express contract, a bank in New
York receiving for collection a bill -of exchange drawn there upon a person in another
state, was liable for any neglect of duty occurring in its collection, whether arising
from the default of its oflicers at home, or its correspondents, and that the neglect
of a notar}', who was a commissioned public officer, did not vary the rule. He acted
pro hac vice, merely as the agent of his employers, and not in his official capacity.
In South Carolina the rule has been settled as in New York. Thompson v. The Banij
of the State of South Carolina, 3 Hill S. C. R 77

156 MERCANTILE PERSONS.

Rights of Principal against Agent

if his principal subsequently recognize his departure from the letter
of his instructions, he is exonerated ; for omnis ratihibitio retroira-
hitur et mandato cequiparatur. And such a recognition may be in-
ferred from the employer's conduct ; thus, the receipt of interest on
a sum lent by the agent recognizes the loan, (a)^

It has been already said, in the chapter on Partnership, that
from a person standing in a situation of confidence with regard to
another, the strictest good faith is required. This maxim applies
in full force to agents, (b) of whose morals the law is so careful
that it will not suffer them even to incur temptation ; thus an agent
employed to sell is not allowed to be the purchaser, at least not
unless he make known that he intends to become such, and furnish
his employer with all the knowleclge he himself possesses, (c) or
unless the court, perceiving that the principal would lose by a

(a) Clarke v. Perry, 2 Freem. 48. Prince v. Clarke, 1 B. & C. 186.

(6) Huguenin v. Basely, 14 Vcs. 273.

(c) Lowther v. Lowther, 13 Ves. 103. Wren v. Kirton, 8 Ves. 502. Coles v. Tre*
cothick, 9 Ves. 234. Morse v. Royal, 12 Ves. 355. Crow v. Ballard, 3 Bro. C. C. 119
Charter v. Trevelyan, 11 CI. <fc Fin. 714.

* The ratification of the acts of an unauthorized agent will not bind the principal,
unless he was fully informed at the time of all the circumstances of the transaction.
Owings V. Hull, 9 Peters, 60*7. Copeland v. Merchants' Insurance Co., 6 Pick. 202.
Fletcher v. Dysart, 9 B. Monr. 413, Mount v. Derick, 5 Hill, K Y. R. 455. The
general principle is affirmed in Bell v. Cunningham, 3 Peters, 81. Richmond Manu-
facturing Co. V. Stark, 4 Mason's Rep. 296. Delafield v. State of Illinois, 26 Wend.
226. Weed v. Carpenter, 4 Wend. 219. Cairnes v. Bleeker, 12 Johns. R. 300. Hooe
& Harrison v. Oxley & Hancock, 1 Wash. V. 23. Horton & Hutton v. Townes, 6
Leigh. 47. Culver v. Ashley, 19 Pick. 300. Burn v. Denman, 2 Exch. Rep. 167,
Wilson V. Tamman, 6 Man. & Gran. 236. If the act of the agent was in itself un-
lawful, and directly injurious to another, no subsequent ratification will operate to
make the principal a trespasser, unless the trespass was committed for his use and
benefit ; an authority to commit a trespass does not result by mere implication of
law. 2 Green on Evid. 62. This proposition, however, seems inconsistent with the
later authorities. See Bird v. Brown, 14 Jurist 132. Wilson v. Tamman, 6 Man. & 9,
242. Burn v. Denman, 2 Exch. 167. A principal will not, however, be liable for a
wilful trespass committed by his servant, because approved by his genei-al agent.
Vanderbilt v. Richmond T. Co., 2 Comst. 479. A corporation as well as an indivi-
dual maj' render itself liable by affirming the unauthorized act of its agent. New Eng-
land Insurance Co. v. De Wolfe, 8 Pick. 55. Mass. v. The Rossic Lead Mining Co., 5
Hill's Rep. 137 : or the act of an unauthorized agent, Merchants Bank of Macon v.
Central Bank of Georgia, 1 Kelly Rep. 418.

PRINCIPAL AND AGENT. 157

Rights of Principal against Agent.

re-sale, think fit on that account to upliold the transaction ; {d) so
neither can an agent employed to purchase be himself the seller,
unless there was a plain understanding between him and his prin-
cipal to that effect, (e) And if an agent who is employed to pur-
chase, purchase for himself, he will be considered a trustee for his
principal. (/) This is in accordance with the rule of the Civilians.
Tutor rem impilli emere non potest: Idem que porrigendum est ad
similia, id est ad curatores^ procuratores et qui negoti aaliena gerunt.
Dig. 1. 18, tit. 1. The Legislature has, in one instance, enforced
these doctrines, by prohibiting agents, employed to buy or sell cat-
tle in London, from buying or selling on their own account ; (g)
and it has, as we have seen, been held that one contracting party
cannot act as the agent of the other, even with that other's consent,
so as to bind him by a writing within the Statute of Frauds. An
agent will not be allowed to dispute the title of his principal to
the subject matter of the agency, (h) Thus, a wharfinger who has
acknowledged that he holds goods for a particular transferee, can-
not afterwards refuse to deliver them to him, and if he do refuse,
is liable to trover.

It is a very essential part of the good faith required from him,
that he should keep a clear account and communicate the result
from time to time to his employer ; (^) though an inferior agent is

[d] Lowther v. Lowther, Lord Hardwick v. Vernon, 4 Ves. 41 L Whitcombe v.
Minchin, 5 Madd. 91. Oliver v. Court, Dan. 391 ; 8 Price, 127 ; and if he hav3 sold
again for a profit, the Court ■will consider him a trustee to that extent for his em-
ployer. Baker v. Harrison, 2 Coll. C. C. 546.

(e) Massay v. Davies, 3 Ves. jun. 227. See E. I. Company v. Henchman, I Ves.
jun. 289.

(/) Lees V. Nuttall, 2 M. <fe K 819. Taylor v. Salmon, 2 M. & Cr. 139.

(g) Stat. 31 Geo. 2, c. 40, s. 11.

(h) Holl. V. Griffin, 10 Bingh. 246, where the acknowledgment was prospective.
Dixon V. Hammond, 2 B. <fe A. 310. Roberts v. Ogilby, 9 Price, 269. Gosling v.
Birnie, 1 Bingh. 339. White v. Bartlett, 9 Bingh. 378. Gillett v. Hill, 4 Tyrwh.
290. 2 C. & M. 530. Kieran v. Saunders, 6 Ad. & E. 516. Betteley v. Reid, 4 Q. B.
511. Vide Sims v. Brittain, 4 B. <fe Ad. 376. However if the property in the agent's
hands have heen fraudulently obtained by the principal from third persons, this rule
does not apply ; Hardman v. "VVilcox, 9 Bingh. 382 ; for no man is bound to make
himself the instrument of a fraud, ante, page 88. See Grawshay v. Thornton, 2 M.
AC. 1.

(») Lord Chedworth v. Edwards, 8 Ves. jun. 49. Lord Hardwicke v. Vernon, 14

J 58 MERCANTILE PERSONS.

Rights of Principal against Agent.

accountable only to his own immediate master ; (j ) unless indeed
he have been a party to a breach of trust, for then the rule of equity
applies, viz., that all parties to a breach of trust are equally liable,
'and there is between them no primary liability, {k) In stating this
account, the principal will, in the absence of his own express or
implied agreement to the contrary, (0 be entitled to every m-
crease made from his own property, (m) Thus an agent who has
made interest upon his principal's money will, in general, be obliged
to account for it; (n) however, a mere stakeholder, such as an auc-
tioneer receiving a deposit, will be excused; (o) and no interest is
due for money which has lain dead in the agent's hands, unless his
employment was of such a nature as to render it his duty to invest
it. (p) He will also be charged with all payments actually made
to him, and with all losses incurred by his own negligence, or even
through the imposition of a forger ; for when an agent is called on
to transicr his employer's property by virtue of an authority given
to a stranger, he must examine into its validity at his peril, (q)

Ves. 510. Topham v. Braddick, 1 Taunt. 572. Lady Ormond v. Hutchinson, 13 Ves.
47. Lupton V. White, Panton v. Panto n, 15 Ves. 436.

(;•) Cartwright v. Hateley, 1 Ves. jun. 292. Pinto v. Santos, 5 Taunt. 447. Ste-
phens V. Badcock, 8 B. & Ad. 357. Howell v Batt, 5 B. & Ad. 504. Cobb v. Becke,
6 Q. B. 930. See Baron v. Husband, 4 B. & Ad. 611.
(it) Wilson V. Moore, 1 Myl. & K. 146.

(/) Lord Chedworth v. Edwards, 8 Ves. 48. Beaumont v. Boultbee, 11 Ves. 360.
Bee Shepherd v Maidstone, 10 Mod. 144.

(»«) Brown v. Litton, 1 P. Wms. 141. Massey v. Davies, 2 Ves. jun. 317. v.

JoUand, 8 Ves. 72. Docker v. Simes, 2 Myl. & K. 655. Diplock v. Blackburne, 3
Camp. 43. See Taylor v. Plumer, 3 M. & S. 562. It is on this principle, viz., that
the employer has a right to every increase made from his own propertj', that if he
engage a servant or agent, stipulating for his whole time and labor, ex. g. the mas-
ter of a ship, and that servant undertake another agency, the first employer will be
entitled to retain against the servant any remuneration earned by him in his second
occupation. For the servant's whole time and labor is the master's property, and
consequently the remuneration earned therewith is an increase made from his pro-
perty. Tliomson v. Havelock, 1 Camp. 529 Lidgate v. Williams, 4 Hare, 465. Dip
lock V. Blackburne, 3 Camp. 43 ; Abb. on Shipp. part 2, cap. 4. See Patmore «. Col-
burn, 4 Tyrwh. 847. 1 C. N. & R. 65.
(w) See Rogers v. Boehm, 2 Esp. 704.
(o) Harrington ii. Hoggart, 1 B. & Add. 577.

(p) 1). JoUand, 8 Ves. 72.

(y) Foster v. Clements, 2 Camp. 17. See Smith v. Mercer, 6 Taunt. 76. Kcgom

PRINCIPAL AXD AGENT. 159

Eights of Principal against Agent.

But he will not be chargeable with any loss incurred by him, with-
out default or negligence, while he is engaged in the prudent exer-
cise of his discretion, and in pursuance of the regular and accus-
tomed course of trade, (r) It seems, however, that if he place his
principal's money to his own account at his banker's without any
mark distinguishing it from his own, he will be answerable for it
if the banker fail ; for otherwise he might treat it as his own if
the banker's solvency continued, and as his principal's in case of
failure. (5)* •

V. Kelly, 2 Camp. 123. Wilkinson v. Johnson, 3 B. <& C. 428. Innes v. Stephenson,
1 M. & Rob. 147.

(r) Russell v. Hankey, 6 T. R. 12. Knight v. Lord Plymouth, Atk. 480. £x parte
Parsons, Ambl. 219. "Warwick v. Noakes, Peake, 68.

(«) See Wren v. Kirton, II Ves. 382; Massey v. Banner, 1 J. & W. 241 ; 4 Madd.
413 ; Fletcher v. Walker, 3 Madd. 73. Darke v. Martyn, 1 Bev. 526.

* The duties of an agent towards his principal may be reduced to these three :
obedience to instructions ; the exercise of competent skill, reasonable care, and entire
good faith in the discliarge of his business ; and the rendition of an account of his
agency upon its termination. The breach of any of these obligations to the preju-
dice of the principal, will confer upon him a right to recover compensation in dam-
ages proportioned to the extent of the injury. An agent will be justified in disobey-
ing instructions only, when they involve a breach of good morals, or a violation of
the rules of law, or where they are impracticable, or where the agent has acquired
some right in the subject matter of the instructions which he is not bound to sacri-
fice upon the order of the principal. An Illustration of the latter exception occurs
where an agent is directed to sell goods on which he has acquired a lien. As to the
skill and care which an agent is bound to bestow upon the business of his principal,
there is a distinction between agents who act for, and those who act without reward.
The latter are not required to use more diligence than a prudent man would exer-
cise in the management of his own affairs. Pate v. M'Clure, 4 Rand. 1G4. Wilson v.
Brett, 11 Mees and Wels, 113. Doormau v. Jenkins, 2 Ad. & Ell. 256. Dartnall v.
Howard, 4 Bar. & C. 345.

Although a mercantile agent is in general bound to possess such a knowledge of
law as may be essential to the proper discharge of his trust, it by no means follows
that every mistake he may commit can be justly considered as an error of ignorance
and negligence that will render him personally liable for its consequences. 2 Duer on
Insurance, 214. This subject was very fully discussed in the Supreme Court of ilas-
eachusetts in the case of Mechanics' Bank v. Merchants' Bank, 6 Met. 13. The defend-
ants had mistaken the law in not allowing the usual days of grace on yost notes
which they were emplo^'ed to collect. The eft'ect of this mistake was to discharge
the indorsers ; yet it was held by the Court that the defendants were not liable, as
when they committed the error, the practice was various and the law doubtful

IQQ aiERCANTILE PERSONS.

Eights of Principal against Agent.

It was once hinted, that an action of account was the only
mode of investigating a running account between agent and prin-
cipal in a court of law, {t) which would be equivalent to saying,

(t) Scott V. M'Intosh, 2 Camp. 238.

"The maxims, that every man is bound to know the law, and that ignorance of the
law excuses no man, are undoubtedl}^ salutary," said C. J. Shaw, " but they must be
confined to the case for which they were adopted. They have no application to the
duty of an agent, of whom only ordinary skill is required. Reasonable skill and
knowledge only is demanded in every other branch of science ; why should absolute
knowledge and consummate skill be required in a department where it is often impos-
sible to know the law, in its application to a particular state of facts, until it has
been authoritatively decided?"

To secure entire good faith towards the principal and induce the agent to act
with an eye single to his interest, the law does not allow him to derive any personal
benefit from the exercise of his agency to the prejudice of the principal. He can
acquire no interest adverse to his duty. This rule takes away the sting of tempta.
tion. Thus, if an agent authorized to pay a debt, compounds with the creditor for a
)ess amount, and takes an assignment of the claiij for his own benefit, he will not be
permitted to make himself a creditor of his employer for a larger sum than that ac-
tually advanced. Reid v. Norris, 2 Myl. A Craig, 375. Reed v. Warren, 5 Paige,
650. So, although the usage of trade may warrant a factor in selling on credit, and
taking a note from the purchaser pavable to himself, yet he must not deal with such
note as his own property and for his own benefit. Where, for example, the factor
in such case discounted the note for his own use, and the maker became insolvent
before its maturity, the factor was held absolutely responsible to the principal. The
factor had made the note his own, for it is evident that had the maker continued
solvent, and the factor become insolvent, the note on its maturity would have been
the property of the indorsee, and the factor a debtor to the principal for the amount.
Johnson &, Duggens v. O'Hara, 5 Leigh. 456. S. P. Myers v. Entriken, 6 "Watts &
Serg. 44. Jackson v. Baker, 1 Wash. C. C. R. 394. "A usage," said Lord Ellenbo-
rough, "authorizing an agent to make a profit by a bill on his principal, would be
a usage of fraud and plunder." Diplock v. Blackburen, 3 Camp. 43.

The agent, when the agency has closed, is bound to render an account thereof to
his principal. Viner's Abridg. Acco. c. 7, d. 16. Mathews v. Walwyn, 4 Ves. 25.
White V. Lady Lincoln, 8 Ves. 369. Bacon's Abridg. Merchant. B. Agents Account-
ing. Wilkin V. Wilkin, 1 Salk. 9. Clark v. Moody, 17 Mass. 145. Cooley v. Belts,
24 Wend. 203. American Leading Cases, Vol. L p. 697, second edition. The rule
as to the liability of agents to be called to account, must be taken with this qualifi-
cation, that where, as in the case of clerks, shopmen, and apprentices, the agency is
but an execution from time to time of the immediate orders of the principal, the ex-
ecution of such orders, and the communication of the result to his principal, or the
entry of the same by the agent in his principal's books in pursuance of his prescribed
duty, will discharge the agent from the necessity of sending in formal accounts, or

PRINCIPAL AND AGENT. 161

Rights of Principal against Agent.

that the parties must have recourse to equity. However, it is now
clear, that if the items can be proved, indebitatus assumpsit will lie
for the balance ; {u) and according to Gibbs, C. J., the foundation
of an action of account is, that the party wants an account and is
not able to prove his items without it, in which case he may either
maintain a special action against his agent, for his breach of duty
in refusing to account, {v) or seek relief in equity, {iv) where he
may have a discovery of books and papers, and the benefit of the
defendant's oath.

As mercantile agents are generally employed in sales or pur-
chases, let us examine somewhat more particularly their duties
with reference to those contracts.

A factor is bo and to keep the goods in;rusted to him for sale
with the same care that a prudent man would keep his own ; (x) he
is not liable in case of robbery, fire, or other accidental damage,
happening without his default, (y) unless previous to such damage

(m) Tompkins v. Wiltshire, 1 Marsh. 115 ; 5 Taunt. 431. Arnold v. Webb, 5 Taunt
432, in notis.

(v) Wilkins v. Wilkins, Carth. 89 ; Salk. 9.

(mi) Mackenzie v. Johnson, 4 Madd. 373. See Scott v. Surman, Willes, 404.

(x) Coggs V. Barnard, 2 Ld. Raym. 917 ; Vere v. Smith, 1 Vent. 121.

(y) Co. Litt. 89, a; Anon. 2 Mod. 100. Vere v. Smith, 1 Vent. 121. The liability
of carriers and innkeepers is more extensive. As to the former, see Book 3, ch. Con-
tracts with Carriers. As to innkeepers, they are bound to keep their guests' property-
safe from thieves, Calye's case, 8 Rep. 33, a. Richmond v. Smith, 8 B. & C. 9. Kent
V. Shuckland, 2 B. & Ad. 803. Jones v. Tyler, 1 Ad. & E. 622. Farnworth v. Pack-

from having his past transactions inquired into, unless some prima facie ease of
fraud is made out against him. Pulling on Mercantile Accounts, p. 36. Co. Litt.
172. a. Evans v. Birch, 3 Camp. 10. Anon. 1 Vern. 136, 208.

By neglecting to keep proper accounts, an agent may not only forfeit his whole
title to compensation, but become liable for any loss to which this default may sub-
ject his principal. Lord Chedworth v. Edwards, 8 Ves. 48. Lupton v. White, 15
Ves. 439. Hart v. Ten Eyck, 2 Johns. C. R. 108.

In compensation for the burthen thus imposed on the agent of keeping and ren-
dering an account, the law attributes to it a, prima facie credit. It is for the benefit
of the principal that this duty should be performed, and when performed, it would
be unreasonable that he should have the power of rendering it wholly nugatory, and
throwing upon the agent the task of furnishing evidence in relation to the transac-
tion, which may involve minute details, difiicult of proof. Mertens v. Nottebohms,
4 Gratt. Va. Rep. 163.
11

1(52 MERCANTILE PERSONS.

Rights of Principal against Agent.

he had committed some improper act, had it not been fbr which the
property might have escaped ; for then he will be answerable, (2)
and will not be allowed to say, that perhaps it might not have es-
caped, even had he acted rightly, for it is a rule of law that 7io man
shall qualify his own zvrong. (a) Where goods are consigned to a fac-
tor, it is his duty to insure them, or at least make every usual exer-
tion to insure them, at the request of his principal, if in the course
of their previous dealings he have been used to do so, or, even
thouo-h he may not have been used, if he have effects in hand
enough to cover the expenses of insurance, or if the bill of lading
contain a requisition to insure, for by accepting the goods under it
he ao-rees to such requisition. In any of these cases, if he neglects
to make the fit insurance, he will be responsible for damage which
would have been covered thereby, {b) And where it is the duty of
an agent to insure, it is his duty also to give notice to his principal
in case of his being unable to effect an insurance, (c)

If any price be limited by his instructions, he must sell for
that, and he will not be justified in deviating from them by the
circumstance, that he has, subsequently to receiving them, made
advances to his principal, and given him reasonable notice requir-
ing payment, and informing him of his intention to sell ; for al-
though advances made by a factor create a lien on the goods in his
favor, and may perhaps render the authority to sell, -which he had
at the time of making them, irrevocable, yet they do not create a
pledge; neither by the failure of repayment of them within a rea-
sonable time after demand is the authority of the factor enlarged,
so that he has an absolute right to sell at any time for the best

wood, 1 Stark. K P. C. 251, et notas: unless indeed the guests were guilty of gross
negligence. Burgess v. Clements, 4 M. <t S. 306, or the thieves were his own compa-
nions or servants, Calye's case, 8 Co. 2. The innkeeper is liable for any loss or injury
arising "pro defectu hospitatoris, vel servientum suorum," and the loss or injury will be
presumptive evidence of negligence. Dawson v. Chamney, 5 Q. B. 164. But this pe-
culiar liability of the carrier and innkeeper is on account of the peculiar nature of
their respective employments. 2 Ld. Raym. 916, 917.

(2) Caffrey v. Darby, 6 Ves. 496.

(a) Davis v. Garrett, 6 Bingh. 723.

(6) Smith V. Lascelles, 2 T. R. 189. Smith v. Cadogan, 2 T. R. 188, in notis. Wal
lace V. Telfair, ibid. Delany v. Stoddart, 2 Ves. 239.

PRINCIPAL AXD AGENT. 163

Rights of Principal against Agent.

price that can be obtained, -vvitliout regard to ttie interests of the
principal, (c/) If no price be limited, then he must sell for what
the goods are fairly worth ; and, if the property be of a description
commonly sold for ready money only, he must not sell upon credit;
for an agent employed generally to do any act, is authorized to do
it only in the usual way of business, (e) But if he be a factor in
a sort of dealing or trade where the usage is to sell upon credit,
then if he sell to a person of good credit at the time, he is dis-
charged, and will be entitled to his commission, though such ven-
dee may afterwards become insolvent, (/) provided that the credit
which he gave was reasonable and usual, and that his principal
was made acquainted with the transaction within a reasonable and
usual space of time. However, as some merchants do not choose
to run this risk, and to trust so implicitly to the discretion of their
factors, an agreement called del credere has been invemed, the name
of which is taken from an Italian mercantile phrase, signifying
guarantee ; and by which the factor, for additional premium beyond
the usual commission, when he sells goods on credit becomes bound
to warrant the solvency of the purchaser, {g) It was at one time
thought, that an agent acting under a del credere commission was
not merely a surety, responsible only in case of the default of the
purchaser, but that he was liable to his principal in the first in-
stance ; (A) but that doctrine has been questioned, and at last over-
turned by subsequent authorities, {i) which have settled, that he is
but a surety.* If indeed the factor, after the sale, remit his own

{d) Smart v. Saunders, 5 Man. Grang. &, S. 895.

(e) Wiltshire v. Sims, 1 Camp. 258. Earl of Ferrers v. Robins, 5 Tj-rwh. ^05. 2
C. M. <fe R. 152. Sykes v. Giles, 5 M. & W. 645.

(/) Anon. 12 Mod. 514. Scott v Surnam, Willes, 406. See Russell v. Hankey, 6
T. R. 12. Knight v. Plymouth, 3 Atk. 480.

{g) See Mackenzie v. Scott, 6 Bro. P. C. 280, Tomlin's ed.

(/t) Grove v. Dubois, 1 T. R. 112. Bize v. Dickason, 1 T. R. 285. Weinolt v.
Roberts, 2 Camp. 586.

ij) Morris v. Cleasby, 4 M. & S. 566. Hornby v. Lacy, 6 M. & S. 166. Ciimraing
». Forrester, 1 M tii: S. 494. Baker v. Langhorn, 6 Taunt. 519.

* This is tlie conclusion of Judge Stor^*, Chancellor Kent, and Mr. Duer, who have
soch examined the questions elaborately'. Thompson v. Perkins, 3 Mason C. C. R.
232. 2 Kent's Comm. 624, 625, and notes. Story on Agency, s. 215. Leveriek v.

164 MERCANTILE PERSONS.

Rights of Principal against Agent.

note or acceptance to his principal for the amount of the proceeds,
he will be liable on that, whether employed under a del creden-t
commission or not, and whether the vendee be or be not solvent.
For, by giving such an instrument, he lulls all the suspicions of
his employer, and causes him to dismiss all care about the solvency
of the purchaser, (j)

With respect to imrchases. As no agent can lawfully exceed his
orders, it follows, that if he do so, his principal, though he may
perhaps insist upon keeping them, if he think it for his advantage,
{k) has a right to refuse the goods improperly purchased ; and it
has been said, that, in such case, if he have advanced money on
them, he may, instead of returning, take upon himself to dispose of
them, as factor for the agent who transgressed his orders. (Z) But
then he must repudiate the transaction, and give notice of his dis-
agreement to the agent within a reasonable time, else he will be
taken to have adopted it, and the loss, if any, will fall upon him-
self; (m) and it has been intimated, (n) that though an agent exceed
the price named in his instructions, yet if, by means of doing so, he
effect a saving on the same goods equal in amount to the excess of
price, equity at least would consider him as justified.

An agent employed to purchase goods which are to be shipped
abroad, ought to transmit the bill of lading to his employer as soon
as possible, (o)

(y) Lefevre v. Lloyd, 5 Taunt. "749. Simpson v. Swan, 3 Camp. 29L Goupy v.
Harden, 7 Taunt. 159.

{k) Taylor v. Plummer, 3 M. & S. 562.

{I) Paley on P. & A. cap. 1, sect. 1. Cornwall v. Wilson, 1 Ves. sen. 509. See
Kemp V. Prior, Y Yes. jun. 240.

{m) Cornwall v. Wilson, 1 Ves. sen. 509. Prince v. Clarke, 1 B. <fe C. 186.

in) In Cornwall v. Wilson.

(o) Barber v. Taylor, 5 M. &, W. 5 27.

Meigs, 1 Cow. R. 645. Duer on Insurance, vol. ii. p. 331, 371. In the later case of
Wolff V. Koppel, 2 Denio R. 368, there was a conflict of judicial opinion on this
point. See also Swan v. Nesmith, 7 Pick. 220, and Couturier v. Hastie, recently de-
cided in the Court of Exchequer, 16 E. L. & E. R 562, where an agreement by a fac-
tor to sell upon a del credere commission was declared not to be a promise to answer
for the debt, default, or miscarriage of another person, within the 4th section of
the Statute of Frauds, and therefore valid, although not in writing.

PRINCIPAL AND AGENT. 16c

Rights of Principal against Agent.

In conclusion of this head we must observe, that there is a dif- j
ference between the principal's rights against a remunerated and
against an unremunerated agent. The former having once en-
gaged, may be compelled to proceed to the task which he has un-
dertaken; the latter cannot, for his promise to do so, being induced /
bj no consideration, the rule ex nudo pacto non oritur actio applies.
{l)) But if he do commence his task, and afterwards be guilty of
misconduct in performing it, he will, though unremunerated, be
liable for the damage so occasioned ; since, by entering upon the
business, he has prevented the employment of sctne better qualified
jjerson, and the detriment thus occasioned to his principal is a suf-
ficient consideration to uphold an undertaking on his part to act
with care and fidelity, {q) Less skill, however, is required fronr
him than from a paid agent ; he is bound to use such skill as he
jjossesses (r) but is bound to that only, and it is for gross negligence
alone that he can be held answerable ; (s) unless he act in a public
or professional character, in which case he holds himself out as pos-
sessing, and will be assumed to possess, skill, his omission to use
which constitutes gross negligence, {t)

Embezzlements and fraudulent conversions of their employers'
property committed by agents in breach of the confidence reposed
in them, are punished criminally by stats. 7 & 8 Geo. 4, cap. 29,
sects. 49, 50, 51, 52, and 5 & 6 Vic. c. 39, s. 6.*

{p) Elsee V. Gateward, 5 T. R. 143; 1 Esp. '74. Coggs v. Bernard, 2 Ld. Raym.
909.

(?) ^''SSS '»• Bernard, 2 Ld, Raym. 909. Wilkinson v. Coverdale, 1 Esp. '74. Door*
man v. Jenkins, 4 Fev. & Mann. 170, 2 Ad. &, K 256. Beaucliamp v. Powley, 1 M. &
Rob. 40. Whitehead v. Greetham, 2 Bing. 464. Shillibeer v. Glynn, 2 M. &, W. 143.

(r) Wilson v. Brett, 11 M. & W. 113.

(«) 2 Ld. Raym. 909 ; 2 Atk. 406. Doorman v. Jenkins, 4 Nev. & Mann. 170 ; 2
Ad. & E. 256. Dartnell v. Howard, 4 B. & C. 345. In Wilson v. Brett, 11 M. & W,
113, Baron Rolfe observed that he could see no difference between negligence and
gross negligence, that gross negligence was only negligence with a vituperative
epithet.

{t) Shiells V. Blackburne, 1 H. Bl. 161. See Bourne v. Diggles, 2 Chitt. 311.
Dartnall v. Howard, 4 B. <fe G. 345. Lamphier v. Phipos, 8 C. <fe P. 475.

* It is well settled, that wherever the principal can trace his own propertj', or its
proceeds, and distinguish it from the mass of the property of his factor, he may re-

16G MERCANTILE PERSOXS.

Eights of Agent against Principal.

Section III. — Rights of Agent against Principal.

The chief right of the agent is to receive his remuneration, or
as it is often called, commission ; the amount of which is fixed
either by contract between him and his employer, or by the usage
of trade in like cases, (w) or, in some few instances, as in those of
navy agents and brokers, or solicitors negotiating annuities and
loans, by act of parliament, {v) or, if there be no usage, contract, or
enactment applicable to the case, the value of his services must be
determined by the verdict of a jury. He may, however, be de-
prived of it in several ways ; if the object of his employment be
illegal, he can of course claim none ; {iv) he may also forfeit it by
misconduct, as by neglect to keep an account, that being an essen-
tial part of his employment, (x) or if gross negligence or want of
skill on his part prevent his employer from deriving any benefit
from his services, [y] a fortiori^ if he betray his trust and act ad-
versely to his j)i'incipal. (2) As the usage of trade may regulate

(m) See Eicke v Meyer, 3 Camp. 412. Cohen v. Paget, 4 Camp. 96. Roberts v.
Jackson, 2 Stark. 225. Levi v. Barnes, 1 Holt, 412. Chapman v. De Tastet, 2 Stark.
294. Stewart v. Kahle, 3 Stark, 161. See also Bower v. Jones, 8 Bingh. 65.

{v) 31 Geo. 2, c. 10, s. 30; 17 Geo. 3, c. 26; 12 Anne, stat. 2, c. 16, s. 2. See
Pryce v. Wilkinson, 2 Bingh. 470.

(w) Stackpole v. Earle, 2 Wils. 133. Josephs v. Pebrer, 3 B. & C. 639. Cope v.
Rowlands, 2 M. & W. 157. See tlie Bicffst, lib. 3, tit. 27. " liei turpis nullum man-
datum est ; illud quoque mandatum non est obligatorium quod contra bonos mores est,
veluti si Titius defurto aut de damno faciendo, aut de injuria faciendd mandet tibi, licet
enim pcenam istius facti nomine prcestiteris non tamen ullam habes adeersus Titium ac-
tionem."

(x) "White V. Lady Lincoln, 8 Ves. 371. See 11 Yes. 355.

(y) Denew v. Daverell, 3 Camp. 451. White v. Chapman, 1 Stark. 113. Ham-
mond V. Holida}", 1 C. <fe P. 384. Hill v. Featherstonhaugh, 7 Bingh. 596. Turner v^
Robinson, 6 C. & P. 16. Shaw v. Arden, 9 Bingh. 287. Gill v. Laugher, 1 Tyrwh. 124.
1 C. & J. 170.

{z) Hurst V. Holding, 3 Taunt. 32. Brown v. Croft, 6 C. <fe P. 16, n. g.

claim it ; and it is immaterial whether the factor had or had not a del credere com-
mission. If, however, the factor so blends the money thus received with his own
funds, that it cannot be distinguished, in the event of his death or insolvency, the
principal must come in as a common creditor. Thompson v. Perkins, 3 Mason C. C.
E. 232. See also Overseers of Poor v. Bank of Virg. 2 Gratt. 544.

PRINCII'AL AND AGENT. 161

Eights of Agent against Principal.

the amount of bis commission, so it may, under certain circum-
stances, deprive him entirely thereof: thus it would seem, that a
shipbroker can charge a shipowner nothing for his labor in procur-
ing a charterer for the ship, unless the owner think proper to con-
clude a charter-party Avith him : (a) in these cases the usage is
looked on as incorporated into the contract of agency. But we
have seen, that in ordinary cases the agent, if he act with compe-
tent discretion and fidelity, and without deviating from the regular
course of business, will not be answerable for any loss that may
occur to his employer's property, and will, notwithstanding such
loss, be entitled to his commission.

Besides commission, he has a right to charge his principal with
all advances made by him in the regular ccxrse of his employment
I say in the rerjular course^ for such advances the principal who
deputed him in a business where they are necessary has impliedly
requested him to make, (h) Such are the charges for duties, ware-
housing, and porterage ; concerning the first of which it has been
said, that if an agent at his own risk evade the payment of the
foreign customs, he may charge them to his principal as paid;(c)
but not so of home customs, for that would be a fraud upon the
king, {d) However, the former part of this proposition has been
questioned, (e) and appears very questionable. But though the
principal's request may be inferred, where the advances are made
in the regular course of trade, or even on the spur of some pressing
exigency, not provided for by any ordinary rule, since the employer
may fairly be taken to have authorized the employed to do, under
any circumstances, that which a prudent man would conceive ne-
cessary for the safeguard of his interests, ex. gr. to insure a cargo,
which is in extraordinary danger on account of the lateness of the

(a) Broad v. Thomas, 1 Bingh. 99. Read v. Rann, 10 B. & C. 440. Lloyd and
"Welsh}', 121. Dal ton v. Irvin, 4 C. <fe P. 289 ; and see 8 C. & P. 1. In some cases a
doubt has arisen, whether on the special framing of the contract the agent or servant
•was not left to his emploj'er's mercy in respect of his remuneration. See Bryant v
Flight, 5 M. & "W. 114. Taylor v. Brewer, 1 M. & S. 290.

(b) See Sutton v. Tatham, 10 A. & E. 27.

((/) Borr V. Vandall, 1 Ch. Ca. 30 ; Eq. Ca. Ab. 370
{r) 13 Viner's Abr. 3, by Lord North.

IQQ MERCANTILE PERSOIS^S.

Rights of Agent agciinst Principal.

season ; (/) yet, if an agent think fit to make a payment out of the
regular course of business, lie will not, unless he can show circum-
stances from which his principal's authority may be inferred, be
entitled to repayment, (g) Moreover, though he is entitled to be
repaid his regular expenses, yet, if he conduct himself so negligently
in his employment as to incur expenses which would not have
been necessary had he acted rightly, he will be allowed nothing on
account of them. (A)

An agent is entitled to indemnity when acting in obedience to
the lawful orders of his principal,* or when, in conformity to that

(/) Wolff V. Horncastle, 1 B. & P. 323.

(g) French v. Backhouse, 5 Burr. 2*727. Edaiiston v. "Wright, 1 Camp. 88. How-
ard V. Tucter, 1 B. & Ad. 112. Child v. Moiiej, 8 T. R. 610. "Wilson v. Creighton,
1 T. R. 113. Stokes v. Lewis, 1 T. R. 20.

{h) Capp V. Topham, 6 East, 392.

* The law relative to the rights of a factor, who has made advances to his prin-
cipal upon the goods consigned to him for sale, was discussed in the case of Brown
& Co. V. McGrann, 14 Peters, 479. Judge Storj-, in delivering the opinion of the
Court, says, ""We understand the true doctrine on this subject to be this: —

"Whenever a consignment is made to a factor for sale, the consignor has a right,
generally, to control the^ sale thereof, according to his own pleasure, from time to
time, if no advances have been made, or liabilities incurred on account thereof; and
the factor is bound to obey his orders. This arises from the ordinary relation of
principal and agent. If, however, the factor makes advances, or incurs liabilities on
account of the consignment, by which he acquires a special property- therein, then
the -factor has a right to sell so much of the consignment as may be necessary to re-
imburse such advances or meet such liabilities, unless there is some existing agree-
ment between himself and the consignor which controls or varies this right. Thus,
for example, if contemporaneous with the consignments and advances or liabilities,
there are orders given by the copsignor, which are assented to by the factor, that
the goods shall not be sold until a fixed time, in such a case, the consignment is pre-
sumed to be received by the factor subject to such orders; and he is not at liberty to
sell the goods to reimburse his advances or liabilities until after that time has elapsed.
The same rule will apply to orders not to sell below a fixed price ; unless, indeed, the
consignor shall, after due notice and request, refuse to provide anj^ other means to
reimburse the factor. And in no case will the factor be at liberty to sell the con-
signment contrary to the orders of the consignor, although he has made advances or
incurred liabilities thereon, if the consignor stands ready and offers to reimburse and
discharge such advances and liabilities.

"On the other hand, where the consignment is made generally, without any spe-
cific orders as to the time or mode of sale, and the factor makes advances or incurs

PRmCIPAL AND AGENT. 16G

Rights of third Persons against Principal.

principal's instructions, he does an act which, may be either right or
wrong, but which he is induced to believe right by the conduct of
his employer, for, though there can be no indemnity between wrong-
doers, yet that rule applies only where the party who seeks for the
indemnity must have been conscious that in committing the act,
against the consequences of which he asks to be indemnified, he
was a wrong-doer. (^)

Section' IV. — Rights of third Persons against Principal.

Next in order are the considerations respecting the mutual
rights of the Principal and third Person.

{i) Betts V. Gibbins, 2 Ad. & Ell. 57. Humphreys v. Pratt, 5 Bligh, N. S. 154
Collins V. Evans, Per Tindal, C. J., 5 Q. B. 830. See as to form of proceedings, Rawl-
ings V. Bell, 1 C. B. 951.

liabilities on the footing of such consignment, there the legal presumption is, that
the factor is intended to be clothed with the ordinary rights of factors to sell, in the
exercise of a sound discretion, at such time and in such mode as the usage of trade
and his general duty require, and to reimburse himself for his advances and liabili-
ties out of the pi'oceeds of the sale; and the consignor has no right, by any subse-
quent orders, given after advances have been made or liabilities incurred by the fac-
tor, to suspend or control this right of sale, except so far as respects the surplus of
the consignment not necessary for the reimbursement of such advances or liabilities.
Of course, this right of the factor to sell, to reimburse himself for his advances and
liabilities, applies with stronger force to cases where the consignor is insolvent, and
where, therefore, the consignment constitutes the only fund for indemnity."

The Court of Common Bench in England, examined this subject in the late case
of Smart v. Sanders, 6 Man. & Grang. & S. 896 ; and whilst manifesting a strong iu-
clinatiou to recognize the existence of a general custom among factors to sell on de-
fault of the principal, yet decided that the factor's authority to sell was revocable at
the will of the consignor, although the latter on request had refused to refund ad-
vances previously made, to the full value of the property. Some of the American
courts have pushed the doctrine of Brown v. McGran yet farther, and hold that
where a factor has made advances upon goods in good faith, he may sell upon de-
fault of the pi'incipal, on reasonable demand, to reimburse him, although such sale
may be inconsistent with the instructions given at the time of the consignment.
Blot V. Borieau, 1 Sand. Sup. Ct. Rep. Ill, S. C. ; 3 Comst. 78. Parker v. Branker,
22 Pick. 40. Marfield v. Goodhue, 3 Comst. 62. Frothingham v. Everton, 12 N. H,
239. See also Williams & Morley v. Littlefield, 12 Wend. 362. Jordan et ah. v.
James, 5 Hamm. 88.

170 MERCANTILE PERSONS.

Rights of third Persons against Principal.

As far as the agent's authority extends, lie has a right to bind
his principal to third persons. Now his authority may, as we have
seen, be either expressly given, or inferred from the acts of his sup-
posed principal. When it is expressly given, there can be no doubt
as to its extent, except from the uncertainty of words employed in
delegating it. (j) When, however, it is to be inferred from the con-
duct of the principal, that conduct furnishes the only evidence of
its extent as well as of its existence ; and, in solving all questions
on this subject, the general rule is, that the extent of the agent^s au-
thority is {as between his principal and third parties) to be measured by
the extent of his usual em2:>loyment ; for he who accredits another by
employing him, must abide by the effects of that credit, and will
be bound by contracts made with innocent third persons, in the
seeming course of that employment, and on the faith of that credit,
whether the employer intended to authorize them or not; {k) since,
where one of two innocent persons must suffer by the fraud of a
third, he who enabled that third person to commit the fraud should
be the sufferer. {I) On this principle it is, as we have seen in the
first chapter, that one partner can bind another to contracts within
the scope of the partnership business ; the same principle is well
illustrated by Lord C. J, Holt, (m) who says, " If a man send
his servant with ready money to buy goods, and the servant buy
upon credit, the master is not chargeable. But if the servant usu-
ally buy for the master upon tick, and the servant buy some things
without the master's order, yet, if the master were trusted by the
trader, he is liable." The same principle is applied to cases re-
specting notes or bills, which, if drawn, indorsed or accepted by a
clerk who has been previously allowed to do so. bind the master,

(_;■) See Esdaile v. La Nause, 1 Y. & Coll. 394 ; whence it appears, that it requires
Tcry clear words to give the agent a power to make, accept, or indorse negotiable in-
struments. See also Attwood v. Munnings, 1 B. & C. 278.

{k) See Pickering v. Busk, 15 East, 38. Townsend v. Inglis, Holt, 2'78. "Wliite-
head v. Tuckett, 15 East, 400. Barker v. Gingell, 3 Esp. 60. Haughton v. Ewbank, 4
Camp. 88. Watkins v. Vince, 2 Stark. 368. See 10 Mod. Ill ; Moll. 282.

(l) ^quum prcetori visum est sicut commoda sentimus ex contractu institorum, ita
etiam oUigari nos ex contractibus eorum. Dig. lib. 14, tit. 3. Qui non prohibti pro se
intervenire mandare creditur. Dig. lib. 50, tit. 17.

(m) Shower, 95 ; Weyland's case, 3 Salk. 234. Rusby v. Scarlett, 5 Esp. 7b.

PRINCIPAL AND AGENT. 171

Rights of third Persons against Principal.

though the money never come to his use ; (n) it is applied to sales
(o) and guarantees, (jp) in a word, to every species of mercantile
transaction, and whether the agent have or have not been dismissed
from his employer's service, provided that the third party had no
reason to be aware of the determination of his employment, (q)
which has occasioned a learned writer to suggest the propriety of
giving notice in the Gazette, and by circulars, whenever a mercan-
tile agent's employment is determined, as is the practice on the dis-
solution of a partnership. Nor can the principal relieve himself
by agreeing with his agent that the latter shall take the liability on
his own shoulders, for strangers not cognizant of such agreement
are not bound by it. (r)

The nature of the authority to be inferred, and the sufficiency
of the principal's acts to raise the inference, must of course depend
on the special circumstances of each case, and involve questions fit
for the consideration of a jury, (s) There is one instance in which
the recognition of a single purchase made by his servant upon
credit, was held to bind the principal to a succeeding one. (t) How-
ever, as the employment is the measure of the authority to be in-
ferred, if there were no previous employment, there can of course

\n) Frescott v. Flinn, 9 Bingh. 21. Boulton v. Arlesden, Sal. 234. Barber v. Gin-
gell, 3 Esp. 60. Houghton v. Ewbank, 4 Camp. 88. See 12 Mod. 346. Molloy, 107.
An authority to draw does not import authority to indorse ; but evidence of such
authority to draw is not to be withheld from the jury, who are to determine whether
such authoi'ity to indorse exists or not, and who may be justly satisfied with less
evidence thereof, where it is proved that the clerk is a confidential clerk, and
has undisputed authority to draw in the name of his principal. Prescott v. Flinn, 9
Bingh. 23. Vide Smith v. Topping, 5 B <fe Ad. 6Y4.

(o) Pickering v. Busk, 15 East, 38. Trueman v. Loder, 11 A. <fe E. 591.

(p) Watkins v. Vince, 2 Stark. 368.

(q) Trueman v. Loder, 11 A. & E. 591. 10 Mod. Ill ; 12 Mod. 346 ; Molloy, lOY,
282.

(r) Precious v. Abel, 1 Esp. 350. Rich v. Coe, Cowp. 636. Waring v. Favenck,
1 Camp. 85.

(s) See Dyer v. Pearson, 3 B. <fe C. 38. Hazard v. Treadwell, 1 Str. 506. Todd v.
Robinson, 1 R. <fe M. 217. Oilman v. Robinson, ibid 226. Boulton v. Arlesden, Sal.
234. Anderson v. Sanderson, 2 Stark. 204. Stubbing v. Heintz, Peake, 47. Wey-
land's case, 3 Sal. 234. Rusby v. Scarlett, 5 Esp. 76. See Smith v. Topping, 5 B. «4
M. 674. Davidson v. Stanley, 2 M. & Gv. 721.
(t) Hazard v. Treadwell, 1 Str. 506.

172 JIERCANTILE PERSONS.

Rights of third Persons against Principal.

bd no inference of authority : in such a case, the party who trusts
a servant, does it at his peril, since the master will only be liable
for what comes to his use ; and not even for that, if he gave his
servant money to pay for it;(M) and, as the employment is the
measure of the authority, an employment in one line of business
affords no inference of authority to act in another, (v) and the au-
thority must be inferred by fects which have occurred during the
course of such employment, not from mere argument as to the
utility or propriety of the agent's possessing it. (iv)

Thus, though a clerk or apprentice may have an implied -au-
thority to receive money for his master in the course of business,
yet that will give him no authority to receive it in collateral trans-
actions out of the ordinary course of business, (x) And thus also,
though a master when abroad, or even at home, in case of neces-
sity, (y) has an implied authority to borrow money for the purposes
of the ship, and may therefore bind his owner by contracting a
loan for those purposes, yet, if he borrow money on his own ac-
count, and afterwards apply it to the purposes of the ship, that is
no exercise of his authority, and his master is not bound to repay
that money. (2)

It follows from the above observations, that an agent may be
tied down by very strict directions, as between himself and princi-
pal, wbom he may, notwithstanding, have power to bind by con-
tracts, unauthorized by, and even in defiance of them. Cases of
this sort occur, when a general agent^ as he is called, exceeds his in-
structions. A general agent is a person whom a man puts in his
place to transact all his business of a particular kind : thus a man
usually retains a factor to buy and sell all goods, and a broker to
negotiate all contracts of a certain description, an attorney to trans-
act all his legal business, a master (a) to perform all things relating

(m) See Pale}-, P. & A. lG-4. 1 Ld. Raym. 225. Kilgour v. Finljson, 1 H. Bl. 155.
{v) See Boucher v. Lawson, Rep. temp. Hardwicke, 85.
{w) Hawtaj-ne v. Bourne, 7 M. & W. 598.
{x) Sanderson v. Bell, 2 Cr. & Mee. SO-i.

(7/) Arthur v. Barton, 6 M. & W. 138. "Weston v. Wright, 7 M. & W. 396.
{z) Thacker v. Moates, 1 M. & Rob. 79.

{a) The authority of a master is very extensive. See Rinquist v. Ditchell, Abb.
p 2, c. 2. Ellis V. Turner, 8 T. R. 531 ; Abb. p. 2, c. 3. And see particularly Arthur

PEINCIPAL AND AGEXT. 173

Rights of third Persons against Principal.

to the usual employment of his ship, and so in other instances.
The authority of such an agent to perform all things usual in the
line of business in which he is employed, cannot be limited by any
private order or direction, not known to the party dealing with
him. {b) But the rule is directly the reverse concerning £(. particular
agent, i. e. an agent employed specially in one single transaction,
for it is the duty of the party dealing with such an one, to ascertain
the extent of his authority ; and if he do not, he must abide the
consequences, (c)

V. Barton, 6 Mee. & Welsh. (12,) where it was held, that even in an English port the
master may, if it be a ease of necessity, borrow money for the use of the ship.
Accord. Weston v. Wright, 7 M. & W. 396. But this is on the supposition not
merely that the supply of money is necessary, but that the owner cannot be com-
municated with, and the rule is the same as to goods. Johns v. Simons, 2 Q. B. 425.
Stonehouse v. Gent, ibid. 431. He may in foreign ■ parts hypothecate the ship or
freight, if that be necessary, in order to raise money for her use ; he may for tho
same purpose hypothecate the cargo. The Gratitudine, 3 Rob. A. R. 240. Nay, if
money cannot otherwise be obtained for repairs, he may sell part of it, Abbott, p. 2,
c. 3, and may, in some cases of extremity, dispose even of the cargo or ship itself, for
the benefit of all concerned. Hunter v. Parker, 7 M. & W. 322. Vlierboom v. Chap-
man, 13 M. & W. 230. He has, moreover, authority over all persons in the ship, in
matters relating to her navigation and the preservation of good order on board, and
may, in case of disobedience or disorder, administer reasonable correction ; his au-
thority in this respect resembling that of a parent over his child, or a master over
his apprentice or scholar. But he must take care that there is a sufficient cause for
chastisement, and that the chastisement be reasonable, otherwise he will be punish-
able. Abbott, p. 2, c. 4.

[The authority of a master was very much discussed in the recent case of Grant
et als. V. Norway et als., 10 C. B. 665. (70 E. C. L. R.) It was there held that the
master of a ship, signing a bill of lading for goods which have never been shipped,
is not to be considered as the agent of the owner in that behalf, so as to make the
latter responsible to one who has made advances on the faith of the bill of lading so
signed. The very nature of a bill of lading shows that it ought not to be signed until
goods are on board ; for it begins by describing them as shipped. It being generally
known from the usage of trade and the general practice of shipmasters, that the
master derives no authority from his position to give a bill of lading under such
circumstances, the case is the same as if the party taking the bill of lading had
notice of an express limitation on the master's authority. — A. E.]

{b) Whitehead v. Tuckett, 15 East, 400. Nicksonw. Brohan, 10 Mod. 109. Thorold
V. Smith, 11 Mod. 87. See Daniells v. Adams, AmbL 498. Petties v. Soame, 13 Vin.
Abr. 6. E. I. Compy. v. Hensle}', 1 Esp 11..

(c) Fenn v. Harrison, 4 T. R. 177. Waters v. Brogden, 1 T. <k J. 457. Daniells
V. Adams, Ambl. 498. Clinan v. Cooke, 1 Sch. & Lef. 22. Seton v. S'.ade, 7 Ves. 276.
E. I. Compy. v. Hensley, 1 Esp. 111. Woodiu v. Burford, 2 C. & M, 391. Jordan v

174 MERCANTILE PERSONS.

Rights of third Persons against Principal.

We have seen that a subsequent assent by tlie principal to his
agent's conduct exonerates the latter from the consequences of a
departure from his orders. In like manner it will render the prin-
cipal liable for contracts made in violation of such orders, or even
without any previous retainer or employment, for omnis ratihiUtio
retrotmhitur et mandato cequiparatur. (d) Such an assent may be in-
ferred from the conduct of the principal, (e) who cannot confirm a
transaction in part, and repudiate it as to the rest, but must either
adopt all or none. (/)

The general rule, however, is that the authoiity, of whatever
description, must he strictly imrsued ; otherwise the principal, if his
agent be a particular one, will not be bound ; and if he be a gen-
eral agent, will not be bound, save under the circumstances above
described, and not under any circumstances whatever, if the third
party, at the time of his contracting, was, or ought to have been,
aware of the limited extent of the agent's authority, which is con-
strued by the courts with a great deal of strictness : {g) thus, if given
to two, it cannot be executed -by one, though the other should die
or refuse ; and if given to three jointly and severally, it cannot be
executed by two, though it may either by all three, or by one
only. (/<) However, the courts are now disposed to relax from the

Norton, 4 M. & W. 155. Sykes v. Giles, 5 M. & W. 645. Rotton v. Inglis, 2 Q. B.
667, -where a bill drawn on Bruce, Shand & Co., having been transmitted to Alexan-
der & Co. by the holders, with instructions to do the needful, and having been dis-
honored by non-acceptance, it was held that A. & Co. had no authority to receive
payment of it after protest, and that the money so paid did not become the holder's.
{d) Ward V. Evans, Sal. 442. Comb. 450 ; Ld. Raym. 980. Maclean v. Dunn, 4
Bingh. 122. Henderson v. Barnwall, 1 Y. & J. SS*?. Fenn v. Harrison, 3 T. R. 757 ;
4 T. R. 177. Coles v. Trecothick, 9 Ves. 236, 251, 252 ; but the assent must be given
to the act really done by the agent, and not to one which he is falsely represented
to have done. Horsefall v. Fauntleroy, 10 B. & C. 755.

(e) Thorold v. Smith, 11 Mod. 88. Howard v. Baillie, 2 H. Bl. 618. Wilson v,
Poulter, 2 Str. 859. Smith v. Hodscn, 4 T. R. 211 ; B. N. P. 131.

(/) Wilson V. Poulter, 2 Str. 159. Billon v. Hyde, 1 Atk. 128. Smith v. Hodson,
4 T. R. 211. Hovil V. Pack, 7 East, 146,

(^f) Gardiner v. Baillie, 6 T. R. 591. Tobin v. Crawford, 5 M. & W. 235. Aeey u.
Fernie, 7 M. &, W. 151. Co. Litt. 258, b. It is said, that if an agent do more than
he is authorized, the act is bad for the excess only, provided that can be distinguished ;
if he do no less, bad altogether, except in cases where his authority is co apled with
an interest. See Co. Litt. 258, b. Alexander v. Alexander, 2 Ves. 644.
Ih) Co. Litt. 112, b; 181, b; 1 Roll. Abr. 329; 1 And. 145.

PRINCIPAL AND AGENT. 175

PJglits of third Persons against Principal.

technical precision of ancient times in construing tliese and tlie like
words, and will search the whole instrument for the maker's inten-
tion ; {i) but, where that is once ascertained, they will confine the
agent to it with the utmost strictness. (/)*

At the same time, the courts are so far liberal in construing
authorities given to agents, that they will hold them to include per-
mission to use all necessary, or even usual means, of carrying the
main intention of the principal into effect in the best manner : {Ic)
thus, an agent employed to get a bill discounted may, perhaps,
unless expressly restricted, indorse it in the name of his employ-
er : (f) a broker employed to effect a policy of insurance may adjust

(i) Guthrie v. Armstrong, 5 B. <fe A. 628.

(j) Barron v. Fitzgerald, 6 Bingh. N. C. 201, -where an authority to Barron and
Stewart, to effect an insurance in their own two names, was lield not to warrant the
effecting one in the names of Barron, Stewai't, and Smith, whom they had taken into
partnership. Attwood v Munnings, 7 B. <fe C. 278, an important case, but which can-
not be satisfactorily abridged. Hogg v. Snaith, 1 Taunt. 3-47. Murray v. E. I. Compy,,
5 B. cfe A. 204. Esdaile v. La Nauze, 1 Y. & Coll. Fearn v. Filica, 7 M, & Gr.
513. Agent to pay and receive cannot indorse bills. Davidson v. Stanley, 2 M. &
Gr. 721.

{k) Richardson v. Anderson, 1 Camp. 43, n. Goodson v. Brooke, 4 Camp. 163.
Withington v. Herring, 5 Bingh. 442. Ducarry v. Gill, 1 M. & M. 450. Alexander v.
Gibson, 2 Camp. 555, et notan. Helyar v. Hawke, 6 Esp. 72. Runquist v. Ditchell, 3
Esp. 65. See Hicks v. Ilankin, 4 Esp. 114. Whitehead v. Tuckett, 15 East, 400.
Ellis «. Turner, 8 T. R. 531.

(0 Fenn v. Harrison, 4 T. R. 177 ; 3 T. R. 757.

* Agents are either joint or several. It is a general rule of the common law, that
when an authority is given to two or more to do an act, all the agents must concur
in its execution, unless words are used which manifestly show an intention to create
a several authority. This rule is, however,' only applicable to agencies of a private
nature ; for in the case of public agencies, the execution of an authority by a major-
ity of the agents, has been always held to be sufficient. A departure from the rule
is also admitted in commercial transactions, in favor of trade : and in the case of
several agents, each is supposed to possess the whole power. Thus, on a consign-
ment of goods for sale to two factors (whether they are partners or not), either of
them may dispose of the goods, for the purposes of the consignment, without the
concurrence of the other. See Story on Agency, 56, 47, 48. Green v. Miller, 6
Johns. R. 39. Peter v. Beverly, 10 Peters, 532. Downing v. Rugar, 21 Wend. 278.
Where there are several joint agents, notice to any one is notice to the principal.
Bank of the United States v. Davis, 2 Hill, 463. So notice to one partner is notice
ii> the firm. The Fulton Bank v. New York and Sharon Canal Co., 4 Paige, 137.

17G MERCANTILE PERSOXS.

Rights of third Persons against Principal.

tlie loss, and do all that is requisite towards sucli adjustment: (w)
an agent to receive rents and let has power to determine the ten-
ancy : (n) an agent employed to issue process may receive the debt
and costs, (o) and a warranty given by an agent intrusted to sell _prrma
facie binds the principal, (p)* A master who sends his servant to
buy goods, and gives him no money to pay, doubtless authorizes
him to pledge his credit, {(pj But though the agent has an implied
authority to use those means, of which the principal could not but
have foreseen the necessity, and therefore could not but have in-
tended to authorize ; yet, if an unusual contingency arise, it does
not follow that the agent will have power, however useful it might
be, to do that which would enable him to meet the contingency in
the best manner : thus, it was decided in Hawtayne v. Bourne^ 7 M.
& W. 597, that there is no implied authority in an agent conduct

(m) Richardson v. Anderson, 1 Camp. 43, n.

(n) Doe d Manvers v. Mizen, 2 M. & Rob. 5Y.

(o) Weary v. Alderson, 2 M. & Rob. 127.

(p) See the cases cited supra, note/. And see Woodin v. Burford, 2 C. <fe Mee.
391 ; 4 Tyrwh. 164.

{q) Per Tindal, L. C. J., delivering judgment of Ex. Ch. in Tobin v. Crawford, 9
M. & W. 718.

* An agent to sell, whether general or special, may be presumed, in the absence
of all proof to the contrary, to be clothed with authority to warrant the quality or
condition of the thing sold ; inasmuch as a warranty or representation is one of the
usual modes of eSFecting a sale. Fenn v. Harrison, 4 T. R. 177. Sandford v. Handy,
23 Wend. 260. Nelson v. Cowing, 6 Hill, 336. Skinner v. Gun, 9 Porter, 305.
Bradford v. Bush, 10 Alab. 386. Hunter v. Iremeson, Iredell's N. C. Rep. for June,
1846. An authority to sell does not, however, authorize a sale on credit, unless it is
a known usage of trade that the articles which form the subject of the authority
should be sold in that manner. Thus, the owner of stock is not ordinarily bound by
the contract of his agent employed to sell, if he has sold on credit. See Delafield v.
The State of Illinois, 26 "Wend. 223. When the business which makes the object of
the agency may, with equal advantage to the principal, be performed in two or more
different ways, the agent may, in general, do it in either, provided a particular mode
has not been prescribed to him. But when his authority prescribes the mode of
doing the business, he will not be at liberty to pursue another. Tlius, an authority
to sell by auction will not support a sale by private contract. 1 Liv. on Prin. &
Agent, 103. Daniel v. Adams, Amb. 495.

An authority given by statute to public agents, vests them by implication with all
the ordinary means for carrying into effect the objects contemplated by the legisla-
ture. The United States v. Wyngall, 5 Hill, 16.

PRINCIPAL AND AGENT. 177

Rights of third Persons against Principal.

ing the general business of a mine to borrow money in case of ne-
cessity. — " No such power," said Parke, B., " exists, except in the
cases of the master of a ship, and of the acceptor of a bill for the
honor of the drawer. The latter derives its existence from the law
of merchants, and, in the former case, the la-w, which generally pro-
vides for ordinary events, and not for cases which are of rare occur-
rence, considers how likely and frequent are accidents at sea, when
it may be necessary, in order to have the vessel repaired or to raise
the means of continuing the voyage, to pledge the credit of her
owners ; and therefore it is that the law invests the master with
power to raise money, and by an instrument of hypothecation to
pledge the ship itself if necessary. If that case be analogous to
this, it follows, that the agent had power, not only to borrow money,
but, in the event of security being required, to mortgage the mine
itself. The authority of the master of a ship rests on the peculiar
character of his of&ce, and affords no analogy to the case of an
agent. I am therefore of opinion, that thg agent of this mine had
not the authority contended for."

Such being the general rules concerning an agent's power, let us
now consider a little more particularly, what course he must pursue,
in order to bind his principal by two or three of the most usual
species of engagements.

In executing a deed, he may either sign the name of his princi-
pal, (r) or state it to be done by himself as agent for his principal, (s)
or by his principal, through him, the agent, {t) But if he sign
his own name without mentioning his principal, the latter will not
be bound, (w)*

In like manner, an agent employed to draw, indorse, or accept

(r) 9 Co. 76, 77 ; Moor, pi. 1106 ; 1 Str. 705. Wilks v. Back, 2 East, 142.
(s) 9 Co. 77. Parker v. Kett, Sal. 95.
(<) Wilks V. Back, 2 East, 142, per Grose, J.

(m) 9 Co. 76, 77. D'Abridgeeourt v. Ashley, Moor, 818; see 1 Str. 705. Wilks v.
Back, 2 East, 142. Bacon v. Dubarry, 1 Ld. Raym. 246; Sal. 70; 12 Mod. 129.

* S. P. Lessee of Clark v. Courtney, 5 Peters, 318. Martin v. Flowers, 8 Leigh.
158. Townsend v. Corning, 23 Wend. 435. Townshend v. Hubbard, 4 Hill N. Y.
851.

i78 MERCANTILE PERSONS.

Rights of third Persons against Principal.

negotiable instruments, must take care not to do so in his own name,
for, if he do, he will himself be liable to the holder, (v)

As to his power to bind the principal by a disposition of his
goods, the common law rule was, as may be collected from the fore-
going observations, that to acquire a good title to the employer's
property by purchasing it from his agent, such purchase must have
been, either in market overt and without knowledge of the seller's
representative capacity, or from an agent acting according to his in-
structions, or from one acting in the usual course of his employment,
and whom the buyer did not know to be transgressing his instruc-
tions, {w) The reason of this is clear ; for unless the transaction
took place ho7ia fide in a market overt (in which case, a peculiar
rule of law steps in for its protection), {x) an agent selling without
exjjress authority must, that his act might be supported, have sold
under an imjjlied one. But we have seen that an implied authority
always empowers the person authorized to act in the usual course of
his employment; consequentl}', if he sold in an unusual mode, he
could have no implied authority to support his act ; and as he had
no express one, his sale of course fell to the ground. For instance,
the usual employment of a factor being to sell^ it was repeatedly
decided that he could not pledge the goods intrusted to him. {y)

Such was the rule of the common law ; but, being considered
prejudicial to credit by the greater number of mercantile men, it
was altered by statute 4 Geo, 4, c. 83, and afterwards by the amend-
ed act of 6 Geo. 4, c. 94, usually called "The Factor's Act," and
from which, taken in conjunction with the statute 5 & 6 Vict. c. 39,
the law on this subject must new be collected.

iy) Leadbitter v. Farrow, 5 M, &, b. 845. Le Fever v. Llo3'd, 5 Taunt 749.
Sowerby v. Butdier, 2 Cr. & Mee. 371; 4 Tyrwh. 325. Rew v. Pettet, 1 Ad. <fe E.
196.

(io) Vide 12 Mod. 514. Wiltshire v. Sims, 1 Camp. 258. Newson v. Tliornton,
6 East, 17. M'Combie v. Davies, 6 East, 538. De Bouchot v. Goldsmid, 5 Ves jun.
211.

{x) See Book 3, cap. "CoD'tracts of Sale."

(y) Patterson v. Tash, 2 Str. 1182. Daubigny v. Duval, 5 T. R. 604. De Bouchot
V. Goldsmid, 5 Ves. jun. 211. See Pickering v. Busk, 15 East, 44. Martini v. Coles,
1 M. <fe S. 140. Shipley v. Keymer, 1 M. &, S. 484. Solly v. Rathbone, 2 M. & S. 298.
Cockran v. Irlam, ibid. 301. Williams v. Barton, 3 Bingh. 139. Duclose v. Ryland,
5 Moore, 418, n.

PRINCIPAL AND AGENT. I79

Rights of third Persons against Principal.

By tliis statute, the person (z) in whose name goods are shipped
is to be deemed the true owner thereof, so far as to entitle the con-
signee to a lien thereon, in respect of any money or negotiable se-
curity advanced by him to such person, or received by such person
to his use, if he has not notice by the bill of lading or otherioise^ at
or before the time of the advance or receipt, that such person is not
the actual and bona fide owner of the goods, and such person shall
be taken, for the purposes of this act, to have been intrusted with
the goods for the purpose of consignment or of sale, unless the con-
trary be made to appear.

A person (a) intrusted tvith^ (h) and in possession of, any bill of
lading, India warrant, dock warrant, warehouse-keeper's certificate,
wharfinger's certificate, warrant, or order for delivery of goods,

{z) Sect 1.

(a) Sect. 2.

(6) In Close v. Holmes, 2 M. &, Rob. 23, these -words are said to have been ruled
by Alderson, B., to give validity to pledges of documents intrusted to the factor by
his principal, not to pledges of documents created by the factor himself. It seems,
however, from Baron Alderson's observations at page 580 of Phillips v. Huth, 6 Me«.
<fe Wels. 5*72, that there was some misconception about the point really decided in
Close V. Holmes. In Phillips v. Huth, 6 Mee. & "Wels. 572, the Coui't of Exchequer
held that it did not follow that documents were intrusted to a factor by his principal,
because the principal had put into his hands the means of obtaining possession of
them. In that case factors were intrusted with the bills of lading of two cargoes of
tobacco, by means of which bills they were enabled to obtain the dock warrants. It
■was proved that tobacco was sold sometimes by delivery order, sometimes by war-
ranty which latter is, however, not convenient unless an entire cargo be sold. The
factors having, before any necessity for a sale arose, obtained the warrants and
pledged them for debts of their own, it was held, that the pledges were not protect-
ed by this section. "It is not enough (said the Court) to show that the plaintiffs em-
powered the factors to possess themselves of the warrants whenever they chose; it
must be shown that they really intended the factors should be possessed of them at
the time they pledged them, or it must be shown, that they meant them not only to
have the power the possession of the bill of lading would give — of getting the war-
rant when they liked — but to exercise it by obtaining it whenever they in their dis-
cretion might think fit." In Hatii.-ld v. Phillips, 9 M. & "W. 647, & 14 M. & W. 665,
the E.\-chequer Chamber and House of Lords were of the same opinion on a bill of
exceptions, and the former court tiiouglit that the question whether the factor was
intrusted with the particular document or not, was one of fact for the jury; and in
Bonzi V. Stewart, 4 M. & Gr, 295, the C. P. acted on the rule laid down in those cases.
See, however, the statute of 5 & 6 Vict. c. 39, presently cited, and which appears to
have been passed partly with a view to the above decisions.

IgO MERCANTILE PERSONS.

Rights of third Persons against Principal.

shall be deemed to be the true owner of the goods described in the
said several documents, so far as to give validity to any contract or
agreement made by him for the sale or disposition (c) of the goods,
or any part thereof, or the deposit or pledge thereof, or any part
thereof, as a security for any money or negotiable instrument ad-
vanced or given upon the faith of such document, {d) if the buyer,
disponee, or pawnee, has not notice by the document, or otherwise,
(e) that such person is not the actual and bona fide owner of the
goods.

{c) A disposition must be something in the nature of a sale. Taylor v. Kymer, S
B. & Ad. 337. Taylor v. Trueman, 1 M. & M. 457.

(c^ India warrants are not negotiable instruments within this section, ibid. See,
however, 5 <fe 6 Vict. c. 39. A party seeking to avail himself of the 2d section, must
produce the contract or agreement to which he wishes to give validity, if it be in
writing. Evans v. Trueman, 2 B. & Ad. 886; 1 M. & Rob. 10. As to the meaning of
advanced, &c., see Phillips v. Iluth, 6 M. & "W. 605. And Bonzi v. Stewart, 4 M. & Gr.
295 where it was decided, that when the advance was made on documents, for wliich
others were afterwards substituted, the latter transaction was not protected.

(e) This word is said to have been introduced by Lord Eldon in committee. On
the question. What is such notice? vide Evans v. Trueman, 1 M. & Rob. 10, ubi per
Lord Tenterden, " A person may have knowledge of a fact either by direct commu-
nication, or by being aware of circumstances which must lead a reasonable man, ap-
plying his mind to them and judging from them, to the conclusion that the fact is so.
Knowledge acquired in either of these ways is, I think, enough to exclude a party
from the benefit of the provisions of this statute ; slight suspicion, I think, will
not."*

* The construction of 5 & 6 Vict. c. 39, came before the Court of Chancery, in
Navulshaw v. Brownrigg, 13 E. L. <fe E. R. 261. The plaintiff had consigned pearls
to a Liverpool merchant for sale, and drew bills upon him to an amount greater than
the value of the pearls, which he accepted. The Liverpool merchant then handed
the pearls to his London agent to be sold, and drew bills upon him as an advance
upon account of the pearls. The London agent accepted the bills, having notice
that the pearls had been consigned by the plaintiff for sale. The Liverpool merchant
became insolvent, and the bills drawn upon him by the plaintiff were not paid. The
London agent sold the goods to recoup himself the bills drawn upon him by the
Liverpool merchant. Upon a bill filed by the consignor alleging fraud and collusion,
and praying that the London agent might be decreed to pay him the amount pro-
duced by the sale of the pearls, the Lord Chancellor, affirming the decree of the
Vice Chancellor, held that the pledge was a valid one within the act of Victoria;
that notice to the pledgee of the fact that the goods were transmitted to the con-
signee with directionB to sell simply, would not vitiate the pledge, although it would

PRIXCIPAL AXD AGENT. 181

Rights of third Persons against Principal.

But if sucli person (/) deposit or pledge the goods as a security
for a pre-existing debt or demand., lie who so takes the deposit or
pledge, without notice, shall acquire such right, title, or interest, and
no further or other than was possessed by the person making the
deposit or pledge.

Any {g) person {li) may contract for the purchase of goods with
any agent intrusted loith the goods., or to whom they may be con-
signed, and receive and pay for the same to the agent, notwithstand-
ing he shall have notice that the party with whom he contracts is a
factor or agent; if such contract and payment be made in the ordi-
nary and usual course of business, and he has not, at the time of
the contract or payment, notice that the agent is not authorized tc
sell or to receive the price.

(/) Sect 3.

(^r) Sect. 4. *

(A) In Monk v. Whitteubury, 2 B. & Ad. 484, the Cor:t said, "It is difficult to say
what is meant in this section by 'an agent intrusted with goods;' but we are clearly
of opinion that a wharfinger is not such a person." See as to the meaning of intrust-
ed, in the former section, page ante, 179 note (6).

have been otherwise if the pledgee had notice that the consignee was prohibited
from pledging. The Lord Chancellor supposed that the language of Lord Tenterden,
in Evans v. Trueman, 1 Moo. & Rob. 10, on the question of what notice would bind
the person aecepting the pledge, was too general. "If you are dealing with an agent
you must take it for granted that he has a power to sell in every case. The act says
it has become a usual course of business to pledge : not that it was legal ; on the con-
trary, it says that it was not legal, but had become the usual course of business, and
that it meant to give legal effect to that course of business. "When, therefore, you
are dealing for a pledge with an agent who has a consignment, the knowledge that
he has the power to sell, appears to me to amount to nothing; for every agent must
be supposed to have a power to sell who has the disposition of goods. Assuming,
then, that (the London agents') knew expressly, before they accepted the bills and
took the pledge, that (the Liverpool agent) had a power o-f sale only, even that
would not alter the right because if they had not been infoi--med of it, they would
have been considered to have known it, inasmuch as they were dealing witli an
agent in the possession of goods. But it wants something more than merely the
right positively to sell ; it wants a prohibition from the owner not to pledge." S. C.
"7 E. L. & E. R. 106. See the following autliorities on Factor's Act, in United States.
Covin V. Hill &, Sandford, 4 Denio, 323. Jennings v. Merrill, 20 Wend. 1. Stevens v.
Wilson, 6 Hill, 512. S. C. 3d Denio, 472. Zachristie v. Ashman, 2 Sand. Sup. Ct
R. 68.

182 MERCANTILE PERSONS.

Riglits of third Persons against Principal.

Anj{i) person may accept any goods or any such document
as aforesaid, on deposit or pledge (/) from any factor or agent, otot-
withstanding he shall have notice that the party is a factor or agent;
but, in such case, he shall acquire such right, title, or interest, and
no further or other than was possessed by the factor or agent at
the time of the deposit of pledge, {k)

It is further provided {T) that this act shall not prevent the true
owner of the goods from recovering them from his factor or agent,
before a sale, deposit, or pledge, or from the assignees of such fac-
tor or agent in the event of his bankruptcy, nor 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 payment of the money, or restoration
of the negotiable instrument, advanced on the sojurity thereof to
the factor or agent ; and upon payment of such further money, or
restoration of such other negotiable instrument (if iiny) as may
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 produce of a sale of the goods, after deducting the money or
negotiable instrument advanced on the security thereof; and, in
case of the bankruptcy of the factor or agent, the owner of the
goods so pledged and redeemed shall be held to have discharged
pro tanto his debt to the estate of the bankrupt.

This act having proved in some respects unsatisfactory, and
having been much canvassed in' the case of Phillips v. Huth^ and
Hatfield V. Phillips, 9 M. & W. 648, {m) by the 5 & 6 Vict. c. 89, re-
citing the 6 Geo. 4, c. 94, and reciting that under it advances could
not safely be made on goods or documents to persons known to
have possession as agents only, and reciting that it is necessary that

(i) Sect. 5.

(j) The words " as a security for any money or negotiable instrument," used in
sect. 2, are not found here. A fraudulent sale cannot be upheld as a pledge within
the meaning of this section. Thomas v. Farmer, 1 M. & M. 48.

(A-) And therefore, if the agent's interest in the thing pledged be liable to be de
feated by the performance of a condition, so will the pledgee's. Blandy v. Allen
Dans. & Lloyd, 22. Fletcher v. Heath, 7 B. & C. 517.

(Z) Sect. 6. (w) Ante, note (6).

PRINCIPAL AND AGENT. 183

Rights of third Persons against Principal.

the same protection should be given to advances on goods as to
sales, and that owners who would be bound by a contract of sale,
should be bound by a contract of lien ; and reciting that the act
did not protect exchanges of securities, and had given rise to much
litigation, it was enacted, " that from and after the passing of that
act any agent who shall thereafter be intrusted with the possession
of goods, or of the documents of title to goods, shall be deemed
and taken to be owner of such goods and documents, so far as to
give validity to any contract or agreement by way of pledge, (n)
lien, or security bona fide made by any person with 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. " That where any such contract or agreement for pledge,
lien, or security shall be made in consideration of the delivery or
transfer to such agent of any other goods or merchandise, or docu-
ment of title, or negotiable security, upon which the person so de-
livering up the same had at the time a valid and available lien and
security for or in respect of a previous advance by virtue of some
contract or agreement made with such agent, such contract and
agreement, if bona fide on the part of the person with whom the
same may be made, shall be deemed to be a contract made in con-
sideration 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 bona 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 exceed the
value at the time of the goods and merchandise which, or the docu-
ments of title to which, or the negotiable security which shall be
delivered up and exchanged.

(n) See as to this Learoyd v. Robinson, 12 M. cfe "W. '745.

J 84 MERCANTILE PERSONS,

Rights of third Persons against Principal.

III. " That that Act, and every matter and thing therein con-
tained, shall be deemed and construed to give validity to such con-
tracts and agreements only, and to protect only such loans, advances,
and exchanges, as shall be made honajide, and without notice that
the agent making such contracts or agreements as aforesaid has not
authority to make the same, or is acting mala fide in respect thereof
against the owner of such goods and merchandise ; and nothing
therein contained shall be construed to extend to or protect any
lien or pledge for or in respect of any antecedent 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 devi-
atino- from any express orders or authority received from the
owner ; but that for the purpose and to the intent of protecting all
such bona fide loans, advances, and exchanges as aforesaid, (though
made with notice of such agent not being the owner, but without
any notice of the agent's acting without authority,) and to no further
or other intent or purpose, such contract or agreement as aforesaid
shall be binding on the owner and all other persons interested in
such goods.

IV. " That any bill of lading, India w\arrant, dock warrant,
warehouse-keeper's certificate, warrant, or order for the delivery of
goods, or any other document used in the ordinary course of busi-
ness, 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 bs deemed and taken to be a document of title
within the meaning of that Act ; and any agent intrusted as afore-
said, and possessed of any 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 of any other document of title thereto, shall be deemed
and taken to have been intrusted Avith the possession 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 such goods or documents, whether the
same shall be in his actual custody, or shall be held by any other

PRIiS^CIPAL AND AGENT. 185

Rights of third Persons against Principal.

person subject to his control, or for him on his behalf; and where
any loan or advance shall be bona 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 agreement in writing to
consign, deposit, transfer, or deliver such documents of title as afore-
said, and such goods or documents of title shall actually be received
oy the person making such loan or advance, without notice that
such agent was not authorized 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 that Act, though such goods or documents
of title shall not actually be received by the person making such
loan or advance till the period subsequent thereto ; and any con-
tract or agreement, whether made direct with such agent as afore-
said, or with any clerk or other person on his behalf, shall be
deemed a contract or agreement with such agent ; and any pay-
ment made, whether by money, or bills of exchange, or negotiable
security, shall be deemed and taken to be an advance within the
meaning of that Act ; and an agent in possession as aforesaid of
such goods or documents shall be taken, for the purposes of that
Act, to have been intrusted therewith by the owner thereof, unless
the contrary can be shown in evidence.

V. " That nothing therein contained shall lessen, vary, alter, or
affect the civil responsibility of an agent for any breach of duty or
contract, or non-fulfilment of his orders or authority, in respect of
any such contract, agreement, or pledge as aforesaid.

VI. " That if any agent intrusted as aforesaid shall, contrary to
or without the authority of his principal in that behalf for his own
benefit and in violation of good faith, make any consignment, de-
posit, transfer, or delivery of any goods or documents of title so in-
trusted to him as aforesaid, as and by way of a pledge, lien, or se-
curity ; 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 aforesaid ; every such
agent shall be deemed guilty of a misdemeanor, and being con-
victed thereof, shall be sentenced to transportation for any term not
exceeding fourteen years, nor less than seven years, or to suffer such

186 MERCANTILE PERSONS.

Rights of third Persons against Principal.

other punishment by fine or imprisonment, 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 consignment, de-
posit, transfer, or deliver}^, or in accepting or procuring such ad-
vance as aforesaid, shall be deemed guilty of a misdemeanor, and
being convicted thereof, shall be liable, at the discretion of the
Court, to any of the punishments which the Court shall award, as
herein before last mentioned : Provided, nevertheless, that no such
agent shall be liable to any prosecution for consigning, depositing,
transferring, or delivering any such goods or documents of title, in
case the same shall not be made a security for or subject to the pay-
ment 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 principal, together with the
amount of any bills of exchange drawn by or on account of such
principal and accepted by such agent : Provided also, that the con-
viction of any such agent so convicted as aforesaid shall not be re-
ceived in evidence in any action at law or suit in equity against
him, and no agent intrusted as aforesaid shall be liable to be con-
victed by any evidence whatsoever 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 ac-
tion, suit, or proceeding which shall have been honafide instituted
by any party aggrieved, or if he shall have disclosed the same in
any examination or deposition before any commissioner of bank-
rupts.

VII. " That nothing therein contained shall prevent such owner
as aforesaid from having the right to redeem such goods or docu-
ments 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, or any of them, by way of lien as against such owner,
or to prevent the said owner from recovering of and from such
person with whom any such goods or documents may have been

PRINCIPAL AND AGENT. 187

Rights of third Persons against Principal.

pledged, or who shall have any such lien thereon as aforesaid, any
balance or sum of money remaining in his hands as the produce of
the sale of such goods, after deducting the amount of the lien of
such person under such contract or agreement as aforesaid : Pro-
vided always, that in case of the bankruptcy of any such agent the
owner of the goods which shall have been so redeemed by such
owner as aforesaid shall, in respect of the sum paid by him on ac-
count of such agent for such redemption, be held to have paid such
sum for the use of such agent before his bankruptcy, or in case the
goods shall not be so redeemed, the owner shall be deemed a credi-
tor of such agent for the value of the goods so pledged at the time
of the pledge, and shall, if he shall think fit, be entitled in either of
such cases to prove for or set off the sum so paid, or the value of
such goods, as the case may be."*

When an agent having a proper authority purchases in the
name of his principal, it is clear from what has been said, that the
principal is bound to the vendor : if, however, the vendor, prefer-
ring the credit of the agent to that of the principal, agree with the
former to accept him as his debtor instead of the latter, he cannot
afterwards alter his election, turn round and charge the principal. (o)f
But it often happens, that a broker purchases in his own name
without disclosing that he has any j^rincipal : v/here this takes
place, the broker is of course the person to whom the vendor o-iyes
credit; yet, if he afterAvards discover the j^rincipal, he may elect
to abandon the responsibility of his broker, and charge him : {p)

(o) Paterson v. Gandasequi, 15 East, 62. Addison v. Gandasequi, 4 Taunt. 5*74
2 Smith's L. C. 205.

{p) Railton v. Hodgson, 4 Taunt. 5Y6, n. "Wilson v. Hart, 7 Taunt. 295. The law
of evidence opposes no obstacle to the exercise of this election even where the con-

* The English statute has been retained in the text, because it is the basis of
Bimilar provisions in most of the States of the Union ; as for example, in New York
Pennsylvania, Rhode Island, Ohio, Ac.

f In the case of Raymond v. Crown & Eagle Mills, 3 Met. 219, it was held that
this rule was confined to the case of a vendor, who at the time of sale to the agent,
had actual knowledge of his principal, and did not preclude a vendor who was
eimply possessed of the means of informing himself, and who originally credited the
ftgent, from subsequently resorting to the principal. The English authorities are
•oUectcd and reviewed by Mr. Smith, in vol. 2, page 222, of his Leading Cases.

188 MERCANTILE PERSONS.

Rights of third Persons against Principal.

and so he may, if the broker, on making the purchase, stated him-
self to be an agent, but omitted to state the name of his principal,
which is afterwards discovered : {q) unless, in either of these cases,
the seller have suffered the time for payment to elapse, and the
principal to alter the state of his account with the broker in such
a manner that he would be a loser if called on to pay to the seller, (r)
for then, indeed, sooner than that the principal should be injured,
the seller will be taken to have selected the agent for his debtor, (s)
But if the time for payment have not elapsed, the principal cannot,
by prematurely settling with his agent, deprive the seller of hia
election, {i) It seems also to be a rule that whenever the agent
is an English, and the jprincipal a foreign merchant, ihe seller will
be considered as having given credit to the Englishman, and that
he, and not the foreigner, is liable, {u)

Though the foregoing observations chiefly refer to contracts,
the principal will be equally bound by any act done by the agent
m the course of his employment and with reference to the object
of it; for a man cannot depute another to transact his business and
refuse to be responsible for his conduct in transacting it. There-
fore, the representation of the agent about the subject matter of a
contract, which he is negotiating for his principal, will, if made du-
ring the course of that negotiation^ bind the latter ; (y) but it must be
made during^ and in the course of the negotiation, while the agent is
actually representing his principal therein, for if made at any other
time it has no more effect than that of a mere stranger, {lo) So a>so
the suppression or misrepresentation by an agent of a material fact

tract is in writing, for if the principal allow the agent to contract for him in his (the
agent's name), that name becomes, for the pm-poses of the contract, his own. True-
man V. Loder, 11 A. & E. 594.

{q) Tliompson v. Davenport, 9 B. & C. 78. 2 Smith's L. C. 212.

(r) For instances in which such alterations in the accounts have been treated aa
material, see Robinson v. Read, 9 B. <fc C. 449. "Wyatt v. Marquis of Hertford, 3
East, 147.

(s) See Th-ompson v. Davenport, Kymer v. Suwercropp, 1 Camp. 109.

{t) Kj'mcr V. Suwercropp, 1 Camp. 109.

(m) Paterson v. Gandasequi. Thompson v. Davenport

\v) Peto V. Hague, 5 Esp. 134. Phill. on Ev. 7th edit. Vol. I. p. 99.

(w) Phill. on Ev. ubi supra. Dawson v. Aiiy, 7 East, 367. Snowball v. Good-
ricke, 4 B. & Ad. 541.

PEINCIPAL AND AGENT. 189

Rights of third Persons against Principal.

vitiates an insurance, although that fact may have been known
only to him, not to his principal ; (x) for notice to the agent is con-
sidered in law notice to the principal^ who is taken to know every
thing about a transaction that his agent in it knows, (y) and via
versa, notice to the principal is, where that becomes material, gener-
ally speaking (2) at least, notice to the agent, (a) And as the agentV
representation binds the principal, so is the former's admission ol
a fact evidence against the latter of its truth. (Z>) But the admis
sion must, like the representation, concern a matter in which the
agent is employed to act for his principal, and must be made du-
ring, and in the course of such employment ; (c) to use the words of
Gibbs, J., in Langhorne v. Allnut, " where it is proved that A. is agent
for B., whatever A. does, or says, or writes in the making of a con-
tract as agent for B., is admissible in evidence, because it is part
of the contract which he makes for B., and therefore binds B. ; but
it is not admissible as his account of what passes." In consequence
of the wording of the 9 Geo. 4, c. 14, it has been decided that an
acknowledgment written and signed by an agent will not take a
debt out of the Statute of Limitations, as against the principal. (cZ)

{x) Fitzherbert v. Mather, 1 T. R. 12. See Soaman v. Fonnereau, Str. 1183.
Roberts v. Fonnereau, Beawes, 266. Edwards v. Footner, 1 Camp. 530. Fillis v. Bar-
ton, Park. 182.

(y) Willis V. Bank of England, 4 A. <fe E. 21. Cowen v. Simpson, 1 Esp. 290
Brotherton v. Hall, Vernon, 5*74. Jennings v. Moore, 2 Ves. G09. See also Ambl. 438.
Sheldon v. Cox, 2 Eden, 224. Doe v. Martin, 4 T. R. 66. Toulmin v. Steer, 3 Meriv. 210

{z) These words have been added on account of the qualificaftion which this doc-
trine seems to have undergone from Cornfoot v. Fowke, 6 M. <fe Wels. 358 ; a case,
the authority of which seems however to be doubtful, and has now been denied in
Fuller V. AVilson, 3 Q. B. 58. This ease was reversed on error, but upon a different
ground ; 3 Q. B. 79 ; see Evans v. Collins, 5 Q. B. 804. Collins v. Evans, ibid. 820.

(a) Willis V. Bank of England, 4 A. & E. 21.

(6) Harding z). Carrer, Park. 4. Palethorp v. Furnish, 2 Esp. 511. Anderson v.
Sanderson, 2 Stark. 204. Gregory v. Parker, 1 Camp. 894. Clifford v. Burton, 1
Bingh. 199. Jacobs v. Humphrey, 4 Tyrwh. 2*72. 2 C. <fe M. 413.

(c) Fairlie v. Hastings, 10 Ves. jun. 123. Langhorn v. Allnut, 4 Taunt. 511.
Kalh V. Johnson, ibid. 565. See Garth v. Howard, 8 Bingh. 451. Snowball v. Good-
rieke, 4 B. & Ad. 541. It has been held, that if one man refer to the evidence or
opinion of another, that evidence or opinion is given by the other as his agent, and
is receivable against him by way of admission. Daniel v. Pitt, Peake, 238. William
V. Innes, 1 Camp. 364. Sybray v. White, 1 Mee. & Wels. 435.

((f) Hyde v. Johnson, 2 Bingh. K C. 7*76.

190 MERCANTILE PERSONS.

Rights of third Persons against Principal.

Payment or tender of payment to an agent in the course of his em-
phijment is 2)a2jment or tender of j^aijment to the principal, (e) but the
payment must be in the course of his employment, (/) for otherwise he
will liave no express authority, and tbere will be nothing whence
to deduce the existence of an implied one; therefore, if a man
comes to pay a mortgage debt to a merchant at his counting-liouse,
and Days it to a clerk, or if an executor pays a legacy left to a
tradesman to a shopman serving in his shop, who has been in the
habit of receiving liis weekly bills, in neither of these cases would
there be a good payment to the master, {g) It is not in the course
of a hroher's business to receive payment for goods, the sale of
which he has negotiated ; (A) unless he be acting for an undisclosed
principal, {i) An insurance broker has a right to receive payment
of a loss ; but he must not, in the absence of any evidence of con-
sent to such a course on the part of the assured, set it off against
his own debt to the underwriter ; (j) for "it is a general rule of
law, that if a creditor employ an agent to receive money of a debtor,
and the agent receives it, the debtor is discharged as against the princi-
pal; but if the agent, instead of receiving money, write off money due
from him to the debtor, then the latter is not discharged^ {IS)" Where,

(e) Favenc v. Bennett, 11 East, 38. See 6 G. 4, c. 94, s. 4, a7ite, p. 181 ; and where
an ao-ent has a right to receive payment, a tender thereof to him is a tender to his
principal. Goodland v. Blewith, 1 Camp. 477. Moffat v. Parsons, 1 Marsh. 55 ; 6
Taunt. 307. Kirton v. Braithwaite, 1 M. & Wels. 310.

(/) Sykes v. Giles, 5 M. & W. C45.

Iff) Sanderson v. Bell, 2 Cr. & Mee. 304 ; 4 Tyrwh. 244.

(/i) Baring v. Corrie, 2 B. & A. 137. Blackburne v. Scholes, 2 Camp. 343. See
Mynne v. Joliffe, 1 M. & Rob. 327.

(«■) Blackburne v. Scholes, ubi sup.

(j) Todd V. Reid, 4 B. & A. 210, (which is, however, incorrectly reported, ^er
Parke, B., in Stewart v. Aberdein, 4 M. & TV. 224.) Russell v. Bangley, ibid. 395.
Bartlett v. Pentland, 10 B. & C. 760. Scott v. Irving, 1 B. & Ad. 605. The principal
may of course render such a transaction good by adopting it. Gibson v. "Winter, 5
B. & Ad. 99.

(A-) Per Abbott, L. C. J., in Russell v. Bangley, 4 B. <fe A. 395. Young v. White,
7 Beav. 506.

* For a discussion and application of this rule to the case of an attorney, see
Wilkinson v. HoUoway, 7 Leigh. 277.

PRINCIPAL AND AGENT. 191

Rights of thii'd Persons against Principal.

however, tlie usual course of trade warrants the receipt of a check,
note, or bill, payment in that way to an agent will discharge the
debior, unless indeed the agent be a particular one, and such a
course be inconsistent with his instructions. (Z) And though the
general rule is, as has just been stated, in the words of the late
learned Lord Chief Justice of the Queen's Bench, yet it is held,
that " where an insurance broker or other mercantile agent has
been employed to receive money for another, in the general course
of his business, and where the known general course of business is
for the agent to keep a running account with the principal, and to
credit him with the sums which he may have received, by credits
in account with the debtors, with whom he also keeps running ac-
counts, and not merely with moneys actually received, the above
rule cannot properly be applied, but it must be understood that,
where an account is bond fide settled, according to that known usage,
the original debtor is discharged, and the agent becomes the debt-
or, according to the meaning and intention, and with the authority
of the principal." {m) Payment to an agent, moreover, in order to
be good, must be specifically appropriated to the debt due to his
principal, not made upon a general account, {n) A factor is, by the
nature of his employment, authorized to receive payment for the
goods of which he disposes, yet a payment even to him will not
exonerate a debtor who has received express notice from the creditor
not to pay his factor, (o) However, if the creditor be indebted on
the balance of account to the factor, the debtor will be exonerated
by a payment to the latter: for a factor has, as we shall see in the
Fourth Book, a lien for the general balance of his account upon
the price of goods which he has sold, {p)

When money is due upon a Avrittcn security, such as a bill or
bond, it is the duty of the debtor, if he pay to an agent, to see that
such agent is in possession of the security, for otherwise it is said

(/) Thorold v. Smith, 11 Mod. Tl, 88. Ward v. Evans, 2 Ld. Raym. 930; 2 Sal.
442. See Partridge v. Bank of England. 15 L J. Q. B. 395.

(m) Per cur. Stewart v. Aberdein, 4 M. & W. 211, 228,

(«) See Bartlett v. Pentland, ubi sup.

(o) Mann v. Forrester, 4 Camp. 60. B. N. P. 130.

{p) Drinkwater v. Goodwin, Cowp. 251. Hudson v. Granger, 5 B. & A. 27. Se«
Wainer v. M'Kay, 1 M. & W. 595.

192 MERCANTILE PERSONS.

Rights of third Persons against Principal.

that he will not be discharged unless the money reach the princi-
pal, or unless he can prove that the agent really was deputed to
receive that money ; not even though the agent to whom he pays
may have been usually employed to receive money, (q) for his non-
production of the security rebuts the implication of authority aris-
ing from such his employment.

As payment to an authorized agent is payment to his principal,
so a delivery to the former is a delivery to the latter : thus, a de-
livery of goods to a carrier's servant is a delivery of them to the
carrier ; all these instances, and many others, only exemplify that
general maxim upon which the whole law of principal and agent
hinges, Quifacitj^er alium facit i^er se.

Hitherto we have only considered the responsibility of the prin-
cipal to third parties, in consequence of contracts, and acts connected
with such contracts ; but he is also liable, and that to a considerable
extent, for lorongs committed by his agent while engaged in his
service. He will, of course, be so in every instance in which he
has expressly commanded the wrong to be done, or given orders
which could be executed only by its commission ; (r) and there are
many instances in which it requires no express command to make
.him answerable.

Thus he is responsible for the negligence of his agent, acting m
the prosecution of his business, though not under his immediate
direction ; as if one of his servants lame a customer's horse in shoe-
ing him, or drive his master's carriage so unskilfully that it injures
the person or property of a stranger;* innumerable other cases

(j) Hen V. Caisby, 1 Cha. Ca. 93, n. Gerard v. Baker, 1 Cha. Ca. 94. D. of Clevo
land V. Dashwood, 2 Eq. Ca. Ab. 709. Wosteuholme v. Davies, 2 Freem. 289.

(r) Gregory v. Piper, 9 B. & C. 591.

* The liability of a master for the negligence of his servants, is confined to stran-
gers, and does not extend so far as to render him responsible to one servant for an
injury arising from the carelessness of another who is engaged in the same general
business. This principle was discussed and affirmed in the recent case of Farwell v.
The Boston and Worcester Railroad Corporation, 4 Met. 49, and subsequently recog-
nized and approved in Brown v. Maxwell, 6 Hill, 592. Albro v. Agawam Canal Co.,
6 Curt. Y5. Hutchinson v. York, Newcastle and Berwick Railway, 5 W. H. & G. 343,
ib. 354. The doctrine, after elaborate discussion, has been denied in Ohio, Stevens

PRINCIPAL AND AGENX I93

Rights of third Persons against Principal.

might be put illustrating the general principle, (s) which seems to
extend so far as to make the employer responsible, at least in some
cases, not only for the act of his immediate agent, but for that of a
sub-agent employed by him. Thus, where A. employed B. to re-
pair his house, B. contracted with C. to do the work, and C. with
J), to furnish the materials, which D.'s servant carelessly left on the
road, and thereby caused an injury to the plaintiff, it was held that
A. was answerable for the mischief, (t)

(«) Brucker v. Fromont, 6 T. R. 659. See 1 Raym. 739. Hurry v. Rickman, 2
M. & R. 126. Leslie v. Pounds, 4 Taunt. 649. "Weyland v. Elkins, Holt, 227 ; 1 Stark.
272. See Lyons v. Martin, 8 A. & E. 512.

(t) Bush V. Steinman, 1 B. <fe P. 404. Matthews v. "West Midd. W. W. Company,
3 Camp. 403. Harris v. Baker, 4 M. & S. 27. "Weyland v. Elkins, supra. See the
great case of Laugher v. Pointer, 5 B. & C. 647, in which thfe Court of K B. was
equally divided, and all the authorities and arguments pro and con fully discussed ;
it was a case in which the defendant hired job-horses and a coachman from a livery
stable keeper to draw his own carriage, and the coachman, who was selected and
paid by the livery stable keeper, drove the carriage against the plaintiff's horse.
Abbott, C. J., and Littledale, J., who held the defendant not to be liable, distin-
guished Bush V. Steinman, on the ground that the tort there happened in the course
of an operation on the defendant's real property, and was therefore in the nature of
a nuisance ; and asked whether the employer of a hackney coachman, or a water
man, or the hirer of post-horses would be liable for injuries done thereby. Bayley
J., and Holroj'd, J., contra, conceded that the employer would in those cases be irre-
sponsible, but distinguished them by founding such irresponsibility on usage and the
public nature of those employments. See Smith v. Lawrence, 2 M. <fe R. 1. Fenton
V. C. of Dublin Steam Packet Co., 8 A. <fe E. 835. Goodman v. Rennel, 1 M. & P. 241.
Brady v. Giles, 1 M. & Rob. 494, where Lord Abinger left the question, " as whose

V. Miami Railroad Co., 20 Ohio. Priestly v. Fowler, 3 Mees. & Welb. 1, and Murray
V. The Souih Carolina Railroad Co., 1 McMullan, 385, were referred to in argument
of the case in Massachusetts, as sanctioning the rule, which was there adopted. The
case being one of recent impression, and some difficulty, the court threw out a
caution against any hasty conclusion as to the application of the rule to cases not
falling directly within the principle. The general doctrine was recognized and ap-
proved by the Supreme Court of Georgia, in Scudder v. "Woodbridge, 1 Kelly's Rep.
195, but it was held not applicable where one servant was a slave,

* In various American cases, the doctrine of Bush v. Steinman, and Randleson v.
Murray, which seem to have been overruled by the later English decisions, has
been followed. Lowell v. Boston and Lowell Railroad Co., 23 Picker. 24. Mayor of
New York v. Baily, 2 Denio, 433. See also Peachy v. Rowland, 16 E. L. & E. Rep.
442.

194 MERCANTILE PERSONS

Riglits of third Persons against Principal.

But though the employer is answerable for the negligence of his
agent while engaged in his service, yet he is not so for his wilful
and malicious trespass: thus, "if a servant driving a carriage, in
order to effect some purpose of his own, wantonly strike the horses
of another person and produce the accident, the master is not liable,
though if, intending to effect his master's orders, he strike, but in-
judiciously, and to extricate himself from a difficulty, that will be
nefflio'ent and careless conduct for which the master will be liable,
being an act done in pursuance of the servant's employment." {uf

servant was the driver acting," to the jury. In Randleson v. Murray, 8 Ad. & Ell.
113, a warehouseman employed a master-porter to remove a barrel from his ware-
house, the master-porter employed his own ratn and tackle, and through the neglect
of the men the tackle broke and the plaintiff was injured. Held, that he might
recover from the warehouseman. In Quarman v. Burnett, 6 M. & Wels. 499, the
same point which had been argued in Laugher v. Pointer arose in the Court of
Exchequer, who decided in favor of the view taken by Lord Tenterden and Mr.
Justice Littledale. However, assuming that the view taken by the Court of Ex-
chequer in that case be ultimately allowed to be correct, as in all probability it will
be, care must be taken to distinguish between the case in which a man is sued for
the act of the servant of another with wliom he has contracted, and the case in
which he is sued for the act of one whom he has authorized another to retain as his
agent. " Upon the principle that qxd facit per aliumfacit per se, the master is respon-
eible for the acts of his servant, and that person is undoubtedly liable who stood in
the relation of master to the wrong-doer — he who had selected hira as his servant
fi'om a knowledge of or belief in his skill and care, and who could remove him for
misconduct, and whose orders he was bound to receive and obey. And whether
that servant l\<i? been appointed b}' the master directly or intermediately through the
intervention of an agent authorized by him to appoint servants for him, can make no
difference." Per Parke, B., in Quarman v. Burnett, uhi supra. Quarman v. Burnett
lias since been acted on in Rajison v. Cubitt^ 9 M. <fe W. 710; and see Milligan v.
Wedge, 12 Ad. & Ell. 737. The case too of persons, who in the prosecution of a
lawful work enter into a contract with a third person for its performance, seems to
be wholly distinguishable from that of the employment of a mere servant. There
eeems to be no reason for holding them responsible for acts which they never autlio
rized or even contemplated, and for acts done by an independent person against
whom they could only have redress for deviations from his engagement injurious to
themselves. See Allen v. Hayward, 15 L. J. Q. B. 99. Burgess v. Gra}-, 1 C. B. 578.
(?i) Per curiam Croft v. Alison, 4 B. <fe A. 590. McManus v. Crickett, 1 East, 106.
Lyou3 V. Martin, 8 A. & E. 512. See Hurry v. Rickman, 1 M. & Rob. 126 ; sed qucere

* The extent of the master's liability for the acts of hij ser^apt jvas considered by
the Supreme Court of the United States, in the case of the Philadelphia and Reading

PRINCIPAL AND AGENT. 195

Rights of third Persons against Principal.

The principal has been thought to be responsible, not merely
for the neo^lio-ence but for the deliberate fraud of his agent com-
mitted in the execution of his employment, though without the

whether the principal's responsibility be not too largely described in that case.
Huzzey v. Field, 2 C. M. & R. 432. It may be remarked, that there is an exception
in the case of some public officers, such as the postmaster-general, coiTimissioners of
customs and excise, auditors of the exchequer, Ac, who are not liable for the acta
of their inferior officers, nor is the captain of a man-of-war responsible for the mis-
conduct of the lieutenant, if there is none on his own side. Nicholson v. Mounscy,
15 East, 884. Lane v. Cotton, 1 Ld. Raym. 646; Com. 100. "Whitfield v. Lord Le
Despencer, Cowp. 754. See St. de Scaceario, 51 H. 3, stat. 5, ss. 7 & 8, and stat. 21
E. 3, c. 21, de proditionibus ; but this exemption does not extend to the privaie agents
of such public officers. Dj'. 161 ; 3 Mod. 323, nor to sheriffs, 2 Esp. 507; Roll. Ab.
92, pi. 2 ik S; see Morris v. Parkinson, 4 Tyr. 700, 1 C. M. & R. 163, except when
actmg in their judicial capacity'. Turner v. Morris, 4 Dowl. 225. For it is a general
rule that the law looks to the sheriff, and to him alone ; he is responsible even for
tlie bailiff's wilful misconduct or deliberate fraud ; "lie is identified with his officers in
every case, except where, as in Crowder v. Long, 8 B. <fe C. 598, the party opposed
to the sheriff is colluding with the officer." Raphael v. Goodman, 8 A. & E. 565.
Smart v. Hutton, ibid. 568. Owners and masters of ships obliged by statute to em-
ploj' licensed pilots, are exonerated from responsibilit}' for their conduct. 6 Geo. 4,
c. 125.

Railroad Company v. Derby, 14 How. S. C. R. 468. A suit had been brought against
the conijiany by a person injured by a collision. It appeaa-ed that the plaintiff was
riding in a special car, upon the invitation of the president of the company, paying
no fare, and that the engineer having the control of the colliding locomotive was
forbidden to run upon the track at the time, and had acted in disobedience to his
orders. The Court sustained the action. J. Grier delivering the opinion of the Court,
saj's : "We find no case which asserts the docti'ine that a master is not liable for the
acts of a servant in his employment, when tlie particular act causing the injury was
done in disregard of the general orders or special command of the master. Such a
qualification of the maxim respondeat superior would in a measure nullify it. A large
proportion of the accidents on railroads are caused by the negligence of the agents
of the company. Nothing but the most stringent enforcement of discipline, and the
roost exact and perfect obedience to every rule and order emanating from a superior,
can insure safety to life and propert}'. The Intrusting such a dangerous and power-
ful engine as a locomotive to one who will not submit to control, and render implicit
obedience to orders, is itself an act of negligence, the '^ causa caicsans" of the raia-
chicf, wh'.le the proximate cause, or the ipsa neyligentia which produces it, may
trulj' be said, in most cases, to be the disobedience of orders by the servant bo in-
trusted. If such disobedience could be set up by a railroad company as a defence,
when charged with negligence, the remed}' of the injured party would in most cases
be illusive, discipline would be relaxed, and the danger to the life and limb of the

196 MERCANTILE PERSONS.

Rights of third Persons against Principal.

principal's authority; as, for instance, by selling false jewels foi
true ones : the reason given for this by Lord C. J. Holt appears a
sensible one. "Seeing," says he, "that some one must be a losei
by the deceit, it is more reasonable that he who employs and con-
fides in the deceiver, should be the loser, tban a stranger." (v) Such
certainly was the opinion of the Roman lawyers, '^ Procuratoris
scientiam et dolum nocere debere domino^ neque Fom/ponius duhitat
neque nos duhitamusy Dig. 14, tit. 4, Ulpian.

In general, the principal is not criminalhj responsible for the
act of his agent, unless he expressly commanded it. {w) However,
in a case of indictment for libel, it was held, that the person who
derived profit from, and furnished the means of carrying on, a
newspaper, intrusting the publication to one whom he selected, and
in whom he confided, would be criminally answerable for what
appeared therein, though it could not be shown that he was con-
cerned in the individual publication ; (x) so in informations for
breaches of the revenue laws, the employment of an agent in the
defendant's usual course of business has been held sufficient evidence.

iy) See the observations of Bayley, B., in Att. Gen. v. Siddon, 1 Tjrw. 46, 47. 1
C. & J. 220. Taylor v. Green, 8 C. & P. 316. Willett v. Chambers, Cowp. 814. Rapp
t'. Latham, 2 B. & A. 195. Marsh v. Keating, 1 Bing. K C. 198. Hern v. Nicholls, 1
Sal. 289, cited by Baron Parke, in Cornfoot v. Fowke, 6 M. <fe W. 358. "It must be
conceded," says his Lordship, " that if one employ an agent to make a contract, and
that agent in making it, knowingly commit a fraud, though the principal be perfectly
guiltless, not only is the contract void, but the principal is liable to an action." VitU
etiain Grammar v. Nixon, 1 Str. 653. Crockford v. Winter, 1 Camp. 124, per Lord
Ellenborough. Southern v. How, Bridgman, 126-Y ; 2 Moll. 330; Cro. Jac. 468. R,
V. Bower, Cowp. 323. See, however, 9 H. 6, 53 b, cited in Bro. Abr., " Action sur le
Case," where per curiam, " If ni}'^ servant sell false stuff, an action on the case does
not lie against me, unless he sold it through my covin, or by my command."

(w) 2 Str. 885 ; R. v. Huggins, per Raym. C. J., Lamb's Ca., 9 Co. 59.

{x) R. V. Gutch, 1 M. cfe M. 437. See R. o. Almon, 2 Burr. 2686. R. v. Dixon, 2
M. & S. 11. See Colburn v. Patmore, 1 C. M. & R. 73 ; 4 Tyrw. 677.

traveller greatly enhanced." S. P. Southwick v. Ertes, 7 Gushing Rep. 385. For the
general doctrine, see Shaw v. Reed, 9 Watts & Serg. 72. Wilson v. Peverly, 2 N. H.
548. Foster v. Essex Bank, 17 Mass. 479. Vanderbilt v. Richmond Turnpike Co., 1
Hill, 480; 2 Comst. 479. Harris v. Nicholas, 5 Munf. 483. Church v. Mansfield, 20
Conn. 284. Armstrong v. Cooley, 6 Gilm. 512. Mitchell v. Crass weller, 16 E. L. A
E. R. 448, and cases cited by annotator.

PRINCIPAL AND AGENT. 197

Riglits of third Persons against Principal.

to be left to a jury, who may, if they think fit, thence presume, that
such an agent was authorized to do the prohibited act, with which
it is sought to charge his principal (i/)

Our last inquiry under this head is, how the agent's power to
commit his principal to third parties may be determined. It will
be so of course by the revocation of his authority, which is, in
general, determinable at will, (2) unless coupled with an interest,
or given for valuable consideration, as in the case of a power of
attorney given by way of security to a creditor, (a) So likewise,
by his own renunciation of it, at all events if accepted by his prin-
cipal, {b) So by the marriage of the principal, if a feme sole, (c)
It will be revoked also by the death of the principal, (d) and that
even though coupled with an interest ; " for how," says Lord Ellen
borough, " can a valid act be done in the name of a dead man ?" (e)*

(y) Att. Gen. v. Siddon, 1 Tjrw. R. 41. 1 C. & J. 220. Att. G€.i. v. Riddell, 2
Tyrw. 523. 2 C. & J. 498. See also Att. Gen. v. Burges, Bunb. 223.

(2) Farmer v. Robinson, 2 Camp. 339, n. Warwick v. Slade, 3 Camp. 12Y. Bris-
tow V. Taylor, 2 Stark. 50.

(a) Walsh v. Whitcombe, 2 Esp. 563. Bromley v. Holland, 7 Ves. 28. Gaussen v.
Morton, 10 B. & C. 731. Walker v. Rostron, 9 M. & W. 411. Whether the authority
of a stakeholder be or be not countermandable, is not quite settled. The better
opinion, however, is, that it is not so. Marryat v. Broderick, 2 Mees. & W. 371. See
Eltham v. Kingsman, 1 B. <fe A. 682.

(6) Generally speaking, a power cannot be released unless coupled with an inter-
est in the party possessing it. Trippets v. Eyre, 2 Vent. 110. Digge's Case, 15 H.
VII. fol. 11, b. But this case does not seem applicable to the case of a mercantile
agent, for he may be said to have an interest in the remuneration he is entitled to,
and, besides, his power being in its nature revocable by the principal, whom it would
be unfair in many cases to treat as free, while the agent was bound, probably it may
be considered that the creation of a mercantile agency contains an implied term,
that it shall be revocable at the will of either, if the contrary do not appear.

(J) Bac. Abr. "Authority," E. Co. Litt. 52, b. See Whitehead v. Taylor, 10 A.
& E. 211. Shonian v. Allen, 1 M. & Gr. 96, n. Palmer v. Reiffenstein, ib. 94. Smout
V. Ilberry, 10 M. & W. 1.

(e) Watson v. King, 4 Camp. 272. See Lepard v. Vernon, 2 V. & B. 51. Har-
den V. Forsyth, 1 Q. B. 177.

* It may be doubted whether the text states the general rule with accuracy, even
as it prevails in England. See general discussion of the doctrine in the late case of
Smart v. Sandars, 5 C. B. 895, 917. Certain it is, that in the United States the autho

198 ^lERCANTILE PERSONS.

Rights of third Persons against Principal.

or bj his bankruptcy, (/) except in certain cases in wbicli the in-
terest of the creditors cannot be affected and the power is one
which in conscience ought to be exercised, as where the vendor of

(/) Parker v. Smith, 16 East, 382. Minett v. Forester, 4 Taunt. 541. Pearson v.
Graham, and Kynaston v. Crouch, post.

rity of an agent will survive the death of the principal, where it is coupled with an
interest in the thing which is the subject of agency. The doctrine was laid down with
great fullness and precision by Chief Justice Marshall, in the case of Hunt v. Rous-
maniere's Admrs., 8 Wheat. R. 291, by Mr. Justice Story, in the same case, on Cir-
cuit, 2 Mason's Rep. 244, and by Chan. Kent, in Bergen v. Bennett, 1 Caines' Cas. in
Error, 1. S. P. Knapp v. Alvord, 10 Paige's Rep. 205. Cassiday v, McKenzie, 4 Watta
& Serg. 282. Smyth v. Craig, 3 Watts & Serg. 14.

It is declared by statute in Maryland and Georgia, that a power of attorney shall
continue in force, tuitil the agent has notice of the death of his principal. The same
equitable rule prevails in all those countries whose jurisprudence is founded upon
the civil law, and there has been manifested a disposition in some modern cases to
ingraft the same just and rational doctrine upoD the common law. Cassiday v. McKen-
zie, 4 Watts & Serg. 282 ; Beard v. Kirk, UN. Hamp. 397. The strictness of the
ancient rule was maintained in Tennessee, in the recent case of Rigs et al. v. Cage, 2
Hump. 350. A duly authorized agent had purchased goods in New York, after the
death of his principal, but in entire ignoranoe of the fact. The Court held, that the
death of the principal constituted an instantaneous and entire revocation of the
autliority of the agent, «\nd that his subsequent acts, with whatever good faith pei'-
formed, were wholly void. In Cassiday v. McKenzie, 4 Watts & Serg., payment to an
ageijt after the death of the principal, both parties being ignorant of the fact, was
held to be good, and binding upon the estate of the principal. Mr. Justice Rogei-s,
in delivering the opinion of the Court, said: "But, finally, it is contended, that a
payment after the death of the principal is not good. It is conceded, that the death
of the principal is, ipso facto, a revocation of a letter of attorney. But does it avoid
all acts of the attorney intermediate between the death of the principal and notice
of it? In Salte v. Field, (5 Term Rep. 214,) Mr Justice Buller observes, ' It has "been
questioned, with respect to an agent acting under a power of attorney, whether acts
done by him before he knows of the revocation of his warrant, are good against the
principal ; and it seems that the principal, in such a case, could not avoid the acts
of his agent done bond fide, if they were to his advantage, though he might consent
to avoid suoh as were for his benefit. And in Hazard v. Treadwell, (Str. 506 ; 12
Mod. 346,) it is ruled that the credit, arising from an ostensible employment con-
tinues, at least with regard to those who have been accustomed to deal on the faith
of that employment, until they have notice of its being at an end, or till its termina
tion is notorious. And these are principles founded on the most obvious justice
Thus, if a man is the notorious agent for another, to collect debts, it is but reasona-
Dle that debtors should be protected in payments to the agent until they are informed
that the agency has terminated. But this, it is said, is only true of an agency

PRINCIPAL AND AGENT. 199

Rights of third Persons against Princioal.

a ship at sea executed a power to indorse the transfer on her certi-
ficate, and then became bankrupt, the power was held not revoked
by the bankruptcy. ( </) The effect of insanity upon the relation

(g) Dixon v. Ewart, 3 Meriv. 322. Buck. 94.

terminated by express revocation, and does not hold of an implied revocation by the
death of the principal. It would puzzle the most acute min to give any reason wh>
it should be a mispayment, when revoked by death, and a good payment when ex-
pressly revoked by the party in his lifetime.' — In Watson v. King, 4 Campb. 272,
however, it is ruled, 'that a power of attorney, though coupled with an interest, ii
instantly revoked by the death of the grantor; and an act afterwards bona fide done
under it by the grantee, before notice of the death of the grantor, is a nullity.' Lord
EUenborougli says : ' A power coupled with an interest cannot be revoked by the
person granting it ; but it is necessarily revoked by his death. How can a valid act
be done in the name of a dead man V It will be observed that the reason is purely
technical. How can a valid act be done in the name of a dead man ? And it might
with as much propriety be asked, How can a valid act be done by an agent whose
authority is revoked by his principal? But, notwithstanding the opinion thus con-
fidently expressed, it is now an admitted exception, that, where the power or autho-
rity is coupled with an interest in the thing actually vested in the agent, then an
act done by him after the death of his principal is good. And the reason given by
Chief Justice Marshall, in Hunt v. Rousmaniere's Admrs., (8 Wheat. 174,) is, that the
agent having the legal title in the property, is capable of transferring it in his own
name, notwithstanding the death of the principal ; and the death of the principal has
no operation upon his act. The power given by the principal is, under sucli cir-
cumstances, rather an assent or agreement that the agent may transfer the property
vested in him, free from all equities of the principal, than strictly a power to trans-
fer. The whole reasoning of the Court, in Hunt v. Rousmaniere's Admrs., shows
their anxiety to rid themselves of the absurdity into which a strict adherence to the
pi'inciple that death is a revocation of a power would lead them. Why not place
it on the rational ground, that, although the conveyance would be bad at law, yet
it would be good in equity, when made bona fide without any notice whatever of the
death of the principal? — But, be this as it may, the principle does not apply here.
There is no act to be done. This money has been paid by the debtor, and received
by the agent, in good faith ; and why should it not be good when the authority is
revoked by death, as it confessedly is, when expressly revoked by the principal in
his lifetime ? Here the precise point is whether a payment to an agent, when the
parties are ignorant of the death, is a good paj'ment. In addition to the case in
Campbell, before cited, the same Judge, Lord EUenborough, has decided in 5 Esp.
in, the general question, that a payment after the death of the principal is not
good. Thus, a payment of sailors' wages to a person having a power of attorney to
receive them, has been held void, when the principal was dead at the time of the
payment. If by this case, it is meant merely to decide the general proposition, tliat,
by operation of law, the death of the principal is a revocation of the powers of the

200 MERCANTILE PERSONS.

Rights of third Persons against Principal.

of principal and agent seems not yet well settled, {h) As to the
implied authority arising from previous employment, that can, as
we have seen, be determined only by rendering it notorious to the
world in general, or to the particular person who relies on it, that

{h) See this question learnedly discussed in Story on Principal and Agent, 1st ed.
435 ; and see Ex parte Bradberry, 4 Deacon, 202.

attorney, no objection can be taken to it. But if it is intended to say, that this prin-
ciple applies where there was no notice of death, or opportunity of notice, I must be
permitted to dissent from it.— In addition, it is contrary to the opinion of Lord Lough-
borough in Tate i». Hilberts, (2 Ves. jun.,) where on a question, whether a check
given by a dying person to a relation, but not presented in his lifetime, could be en-
forced, as a donatio causa mortis, against the executor, he said, if the donee had re-
ceived the money upon the check immediately after the death of the testator, and
before the cashier was apprised of it, he was inclined to think no court would have
taken it from him. And what would he have said if the attempt had been made to
subject the banker when he was ignorant of the death ? But, if tliis doctrine applies,
why does it not apply to the case of factors, foreign or domestic, to commission
merchants, to supercargoes and masters of ships, and to various other agencies which
the necessities of commerce may require ? In the case of a foreign factor, for exam-
ple, has it been supposed that his acts, after this implied revocation of authority,
are void? Cases of this kind must often have occurred; and it would astonish the
mercantile world to be informed, that the factor was liable on a contract, made in
the name of his principal, because he was dead, a fact of which he was ignorant,
and of which he could not by any possibility be informed ; or that the merchant,
who was trusting his goods on the credit of the principal, was to be cast on him who
may have been of doubtful solvency for payment. Can it be, that a payment made
to an agent from a foreign country, and from one of our cities to the Western States,
employed for the special purpose of collecting debts, is void, because his principal
may have died the day before the actual receipt of the money?— that a payment
may be good to-day, or bad to-morrow, from the accidental circumstance of the
death of the principal, which he did not know, and which by no possibility could he
know ? It would be unjust to the agent, and unjust to the debtor. In the civil law,
the acts of the agent, done bona fide in ignorance of the death of his principal, are
held valid and binding upon the heirs of the latter. The same rule holds in the
Scottish law ; and I cannot believe the common law is so unreasonable, notwith-
standing the doubts expressed by Chancellor Kent in 2d Vol. of his Commentaries,

p. 466."

However the interesting point which is here raised may be finally adjudicated,
the law seems now to be settled in England, that an agent contracting on behalf of
his principal, after the death of the latter, in ignorance of the fact, and without
making any representations as to it to the other party, will not incur any personal
responsibility. Smout v. Ilberry, 10 Mees. & Welb. 1.

PRIN'CIPAL AND AGENT. 201

Rights of third Persons against Principal.

such employment has been put an end to. {i) /SV Tilium omnibus
nogoiiis meis prcejjosuero, deinde vetuero eum, ignorantibus debitor ibiis,
administrare negotia mea^ debitores ei solvendo liberabuntur. And, if
a particular agent were to contract after the revocation of his au-
thority, but before the revocation had been made known to him,
there seems little doubt that jDcrsons who had dealt upon the faith
of it, would not be permitted to suffer, {j) except indeed in the case
of a revocation by death, in which it seems from Blades v. Free^ 9
B. and C. 167, that the representatives of the deceased principal
would not be liable, and from Smout v. Ilberry^ 10 M. and W. 1,
that the agent would not be so. It would seem also just, on prin-
ciple, that an agent should not be prejudiced by the revocation of
his power, without his own knowledge ; yet, though it would ap-
pear that an agent acting under a particular authority, after his
master's bankruptcy, which was not known to him, will not be lia-
ble to the assignees, it has been held otherwise where his authority
was a general one. {k)

The rule of the civil law guarded against detriment either to
the agent or to those contracting with him, by the sudden revoca-
tion of his authority. Nemo potest mutare consilium, suum in alterius
injuriain.il) Si tibi mandassem ut fandum eryieres, p>ostea scripsissem
ne emeres, tu antequam scias me vetuisse emisses, mandato tibi obligatus
era, ne damno ajfficiatur is qui suscipit rnandatum. (rn) Pothier goes
further, and lays it down that an agent has, in such cases, a right
faire ce qui est une suite necessaire de ce quil avait commence, (n)
"When an agent has completed his task, his authority of course de-
termines: thus, an auctioneer, when he has sold, is functus officio,
and has no right to treat about the mode of making out a title, (o)

(J) Hazard v. Tread well, Str. 506. v. Harrison, 12 Mod. 346.

(j) See the remarks of Buller, J., in Salte v. Field, 6 T. R. 215, and see Hodgson
V. Anderson, 3 B- & C. 842.

(k) Pearson v. Graham, 6 Ad. & Ell. 900. Kynaston v. Crouch, 14 M. & W. 266.

(0 Dig. 50, tit. IT.

(m) Dig. 17, tit. 1.

(n) Pythier de Mandat. N. 121. See the subject discussed and all the authorities
eoUected. Story, p. 424, et seq.

(o) Seton V. Slade, 7 Ves. 276. See Dickenson v. Lilwall, 4 Camp. 279. Mynne
r. Joliffe. 1 M. & Rob. 827. Sykes v. Giles, 5 M. & W. 645.

202 MERCANTILE PERSONS.

Rights of the Principal against third Parties.

So where the prefixed time during whicli tlie agency was to con-
tinue, expires, {p)

Section Y. — Rights of the Princijxd against third Parties.^

As tlie principal is bound by the acts and contracts of his au-
thorized agent, so he may take advantage of them ; {q) and if one
person contract, even without authority, in tlie name of another,
that other, though he may repudiate the contract, may, if he think
fit, adopt and enforce it. (r) But then he must adopt it altogether :
he cannot ratify what is beneficial to himself, and reject the re-
mainder, (s) And there is a difference between his right to adopt
a contract, and a bare act, the effect of which would be to raise a
duty towards him from a third party, and subject that third party
to damage for its non-performance. Such an act can never, if un-
authorized at first, be confirmed by any recognition ex post facto.
thus, a demand of payment, in order to oust the debtor's plea of
tender, or a demand of property, in order to found an action of

(p) Dickenson v. Lilwall, iibi sup.

Iq) Seignior v. Walmer, Godb. 3G0.

(r) Routh V. Thompson, 13 East, 274. Ilagedorn v. Oliverson, 2 M. &. S. 485.
Marsh v. Keating, 1 Bingh. N. C. 108. In Whitehead v. Taylor, 10 A. & E. 210, held
that an executor might adopt a distress made imder the testator's direction, but after
his death.

(s) Wilson V. Poulter, 2 Str. 859. Billon v. Il3-de, 1 Atk. 128. Smith v. Hodson,
4T. R. 211. B. N. P. 131. Brewer v. Sparrow, 7 B. <fe C. 310. Thorpe y. Thorpe,
3 B. & Adol. 580. See Burn v. Morris, 4 Tyrwh. 486, 2 C. <fe M. 579, where A. having
found a bank note of the plaintiff's gave it to the defendant, who got it changed,
and handed A. the proceeds ; A. was taken up, and 11., part of the proceeds, found
on her, and restored to the plaintiff, wlio afterwards sued the defendant in trover for
the note. Lord Lyndhurst, C. B., said tliat "in Brewer v. Sparrow the whole pro-
ceeds of the sale were taken, that is an adoption of the act ; here the receipt of the
7Z. does not ratify the act, it only goes in diminution of damages."

* It is now well settled by the authorities, that where the property of one is sold
by another, as agent, if the principal gives notice to the purchaser before payment
to pay to himself, and not to the agent, the purchaser is bound to pay the principal,
subject to any equities of the former against the agent. Huntington v. Knox, 7 Gush.
Rep. 373

PRINCIPAL AND AGENT. oqs

Rights of the Principal against third Parties.

trover, must be made bj an agent ]ireviously authorized ; {() and the
same doctrine applies to a notice to quit, (zi) notwithstanding the
cases of Roe v. Pearce, {v) and Goodiitle v. Woodward, {id) (which lat-
ter may be supported on another ground.) (cc) Where a previous
authority is requisite, it seems that the person whom it is to affect
may require to be properly satisfied of its existence, and is not
bound to take the agent's bare assertion, {y) In other instances,
where no duty is to be raised on the part of a third person, an
adoption ex post facto is generally sufficient ; ex. gr. of an entry to
avoid a fine. (2)

If an agent acting for an undisclosed principal have made a
contract in his own name, the principal may sue upon it, and it fol-
lows, as a branch of this rule, that if a person lend money nomi-
nally on his own account, but really on account and as the loan of
another, the real lender may sue for the money ; but in such a case,
the plaintiff who alleges that he was in reality the lender, must
prove that fact clearly and distinctly, (a)

The principal's right to enforce contracts made by his agent is
subject to this rule, viz., that if the agent have been allowed to deal
in his own name, the party dealing with him will enjoy the same
rights against the employer as he might have exercised against his
agent had that agent really been a principal, ih) Thus, when a

{t) Coore V. Callawaj", 1 Esp. 115. Coles v. Boll, 1 Camp. 478. Solomons v.
Dawes, 1 Esp. 83. See Bartram v. Farebrother, 4 Bingh. 579. See this distinction
much discussed in "Whitehead v. Anderson, 9 M. <fe W. 518.

{n) Doe de Lyster v. Goldwin, 2 Q. B. 143. Doe v. Walters, 10 B. <fe C. 626.

(t>) 2 Camp. 96. (jc) 3 B. cfc A. 689.

(a*) Vide Doe v. Summersett, 1 B. <k Ad. 135.

{y) Solomons v. Dawes, 1 Esp. 83. See Roe v. Davies, 7 East, 363. Charrinton v,
Johnson, 13 M. & W. 856.

(z) Co. Litt. 258, a. So the recognition of an act professedly done by A. as the
agent, and for the benefit of B., may be ratified by the latter, and will protect A.
Walker v. Hunter, 2 C. B. 324; but if it were done professedly as the agent, and for
the benefit of some other person, B.'s ratification would be wholly unavailing. Wil-
eon V. Tumman, 6 M. & G. 236.

(a) See Sims v. Bond, 5 B. <fe Ad. 393. Alexander v. Barker, 2 Tyrwh. 146. 2 C
& J. 133. Sims V. Brittain, 4 B. & Ad. 375. See Bastable v. Poole, 5 Tyrwh. Ill, J
C. M. & R. 410. Humphj jy v. Lucas, 2 Car. &, K. 152.

{b) Coates v. Lewis, 1 Camp. 444. See this doctrine clearly stated in Sims v
Bond, 5 B. & Adol. 393, and see Bastable v. Poole, 5 Tyrwh. 111. 1 C. M. & R. 410-

204 MERCAXTILE PERSONS. "j^ ^

Eights of the Principal against third Parties. * ^Jl f*'''^'

factor dealing for a principal, but concealing that principal, delivers
• goods in his own name, the person contracting with him has a right
to consider him to all intents and purposes the principal, and,
though the real principal may appear and bring an action on that
contract against the purchaser of the goods, yet that purchaser may
set off any claim he may have against the factor, in answer to the
demand of the principal, (c) This rule is to prevent the hardship
under which a purchaser would labor, if, after having been induced
by peculiar considerations, such for instance, as the consciousness of
possessing a set-off, to deal with one man, he could be turned over
and made liable to another, to whom those considerations would
not apply, and with whom he would not willingly have contracted.
But if, at any time in the course of the transaction, he have means
of knowing that the person with whom he deals is not a principal,
the above reason does not apply, and then cessante ratione cessat
ipsa lex. {d) Thus, though, if o, factor sell goods in his own name,
the buyer may avail himself of a right of set-off against the factor ;
yet if a hroker do so, the rule will, except under extraordinary cir-
cumstances, be different ; for " o, factor who has the possession of
goods, differs materially from a hroker : the factor is a person to
whom goods are consigned, and, when he sells in his own name, it
is within the scope of his authority, and it is right, therefore, that
his principal should be bound by the consequences of such sale,
one of which is the right of setting off a debt due from the /actor,
but the case of a hroker is different, he has not the possession of the
goods, and so the vendee cannot be deceived by that circumstance,
and besides, the employing a person to sell goods as a hroker does
not auth';rize him to sell in his own name : if, therefore, he sell in
his own name, he acts beyond the scope of his authorit}^, and his
principal will not be bound : if it be said, that by these means the
hroker would be enabled by his principal to deceive innocent per-

(f) Straey v. Decy, T T. R. 361. George v. Claggett, 7 T. R. 359, et ULtns. Black-
burne v. Scholes, 2 Camp. 343. Carr v. Hinchcliff, 4 B. <fe C. 551. Taylor v. Kymer,
3 B. tfe Ad. 334. See Warner v. M'Kay, 1 M. & Wels. 595, which goes further per
haps than any previous case.

(d) Maans v. Henderson, 1 East, 335. Moore v. Clementson, 2 Camp. 24. Escott
». Milward, 7 T. R. 361.

PRINCIPAL AND AGENT. OQS

Rights of the Principal against third Parties.

sons, the answer is obvious : that cannot be so, unless the principaJ
deliver to him the possession and indicia of jDroperty." (e)

We have seen that payment or delivery to an agent, is payment
or delivery to his principal : this holds good vice versa^ (/) and there-
fore where the agent has paid away or delivered over his master's
property on a consideration which fails, or otherwise under circum-
stances which would entitle him to recover it, the master may, if he
please, maintain an action in his own name to be reimbursed, {g)
which it will often be advisable to do, in order not to lose the agent's
evidence ; and in some cases the master may sue for this purpose
where the agent could not ; for instance, if the agent and a third
person have joined in applying his property to an illegal purpose,
as to the insurance of lottery tickets ; for though the agent, being
pariiceps crirrmiis, (Ji) might not be able to recover, on account of the
rule pari delicto potior est conditio defendentis ; yet that rule does not
affect the master who is guilty of no criminality. (^) And where
the agent disposes of the master's property, without either an ex-
press or an implied authority, as if he sell his master's goods on
credit in a trade the usual course of which is to sell for cash only,
the master, though he may affirm the transaction, may, if he please,
rejDudiate it, and recover the property thus tortiously disposed of
from the disponee. (y)

There is another case in which it has been lately thought that
a principal may be in a better situation in consequence of his hav-
ing contracted through an agent, than he would have been if he

((?) Baring v Osriie, 2 B. <fc A. 137, judgment of Holroyd, J.

(/) Coare v. Giblett, 4 East, 85.

{g) Duke of Norfolk v. "Worsley, 1 Camp. 337. Ancher v. Bank of England,
Dougl. 63Y. Stevenson v. Mortimer, Cowp. 805.

(K) There is no doubt of this position, if the agent can be looked upon as a 'parti-
ceps criminis, and he was considered such in Clarke v. Shee; but see Jaques v,
Golightly, 2 Bl. 10*73. It is, generally speaking, safer to sue in the name of the
principal than in that of the agent, for if the agent be made plaintiff, any thing
■which would be a good defence against him will be an answer to the action. Gibson
V. Winter, 5 B. & Ad. 101, where all the authorities are collected. "Wilkinson v.
Lindo, 7 M. & "W. 83.

{i) Clark v. Shee, Cowp. 19Y.

{j) 12 Mod. 514. Wiltshire v Sims, 1 Camp. 258. Guerriero v. Peile, 3 B. & A
616.

200 MERCAISTILE PERSONS.

Rights of the Principal against third Parties.

had contracted personally. It arose in Cornfoot v. Foivhe, 6 M. &
W. 358, in which an agent who had been employed to let a house,
being asked whether there was any thing objectionable about it,
answered in the negative. It turned out that there was an objec-
tion, of which the principal was aware, though the agent was not.
It was contended, that the contract was invalid, on the ground of
fraud, for that the knowledge of the pri'ncipal was that of the agent,
whose statement, therefore, would amount to such a misrepresen-
tation as would entitle the contractee to repudiate the agreement ;
or that, at least, the agent's assertion, being made about a matter
of which he knew nothing, and turning out afterwards to be false,
amounted to a fraud in law, and might be taken adviintage of
against the principal. On the other hand, it was said, that there
was no fraud in the principal, for he did not make the represen-
tation, nor any fraud in the agent, for he did not know that the
representation was false. Lord Abinger, C. B., was of the former
opinion, but Parke, Alderson, and Rolfe, B., being of the latter, the
contract was held valid. The authority of this decision has, how-
ever, been questioned, and the Court of Queen's Bench repudiated
it in a recent case, (^) in which, however, the judgment was re-
versed on another point in Cam. Scacc. (?) The same principle was
discussed in a later case (m) in the Court of Exchequer, in which
Lord Abinger adhered to his former opinion and differed from the
other judges. The true expression of the question seems to be : Is
legal fraud actionable, and does it invalidate a contract, though not
coupled with moral fraud ? This question underwent discussion in
the more recent case of Evans v. Collins, (?z) in which the Court of •
Queen's Bench adhered to the opinion they had expressed in Fuller
V. Wilson. Lord Denman, C. J., observed there, "One of two per-
sons has suffered by the conduct of the other. The sufferer is
wholly free from blame ; but the party who caused his loss, though
charged neither with fraud nor with negligence, must have been
guilty of some fault when he made a false representation. He was

(it) Fuller V. Wilson, 3 Q, B. 58.

{I) Wilson V. Fuller, 3 Q. B. 68. See also Stone v. Compton, 5 Bingh. N. C. I.ifi

(?») Moens v. Hey worth, 10 M. & W. 147.

(w) 5 Q. B. 804. See also Ormrod v. Huth, 14 M. & W. 651.

PEINCIPAL AND AGENT. 207

Rights of the Principal against third Parties.

not bound to make any statement, nor justified in making any
which he did not know to be true; and it is just that he, not the
party whom he has misled, should abide the consequences of his
misconduct. The allegation that the defendant knew his represen-
tation to be false is therefore immaterial." This judgment was
overruled by the Court of Error, (o) which held that a plea, alleging
that the defendant had reason to believe, and with good faith be-
lieved, his representation to be true, was a good answer to an action
on the case for a misrepresentation ; that falsehood in a statement
without fraud would not sustain it ; and that " a representation
which is false in fact, but not known to be so by the party making
it, but, on the contrary, made honestly and in the full belief that it
is true, affords no ground of action." This, it is to be observed,
was an instance of an action founded upon the misrepresentation,
and it was clear that no party was cognizant of the mistake ; it may,
however, be a different question whether the circumstance of the
principal being cognizant of the real state of facts might not afford
a good defence to an action founded on a contract, which a party
has been induced to enter into through the erroneous representation
of an agent, though innocently made by him. It is an important
question whether, at all events in equity, a principal can enforce a
contract so obtained, or whether the employment of an agent igno-
rant of the facts, and an intentional omission to mention them to
him, may not be fraudulent, and constitute a ground either of action
or of defence, {pf ^<^-A^jh^^^s>^-S^^^^ ^ '"r ^ ''^.

The establishment of the principal's rights against third parties ''
is facilitated by that rule of evidence which renders the agent a
competent witness in his favor : {q) this was long since established,

(o) Collins V. Evans, Cam. Scacc, 5 Q. B. 820.

(p) See Rawlings v. Bell, 1 C. B. 951.

{q) Mason v. Hogsden, 11 Mod. 226, 262. Dixon v. Cooper, Wils. 40. Benjamin
i;. Porteus, 2 II. Bi. 591. Buckmaster v. Ilarrop, 4 Ves. 474. Martin v. Horrell Str.
64Y. Barker v. McCrea, Camp. 144. B. N. P. 289^ See, however, respecting the

* The opinion of Lord Abinger in Cornfoot v. Fowke, is sustained by the case of
Fitzsimmons v. Joslin, 21 Verm. Rep. 129, and the opinion of Chancellor Kent, 2
Kent's Coram. 621, note a. See on the general doctrine, Lord et als. v. Goddard, 13
How. S. C. R. 198, and Crmnp v. U. S. Mining Co., 7 Gratt. 352.

208 MERCANTILE PERSONS.

Rights of Agents against third Parties.

as an exception, ex necessitate^ to the general canon, that a witness
having any interest in the event of the cause was incompetent,
qualified now in other cases, by stat. 3 & 4 W. 4, c. 42, s. 26, and
removed by stat. 6 & 7 Vict. c. 85.

Section YI. — Rights of Agents against third Parties.

A factor or other agent, who has made a contract, in the subject
matter of ivhich he has a sipecial 'property^ may maintain an action
thereon in his own name, and that lohether he 'professed to contract for
himself or not:{r) thus, an auctioneer may sue in his own name for
the price of goods sold by him on the owner's premises, and known
to be his property, (s) So, if an agent have transferred his master's
property, under circumstances which give a right to recover it back,
he may do so in his own name ; though we have seen that it may
also be recovered in that of his principal, {t) So he may maintain
actions of tort for injuries done to it while in his possession, {u) In
the above instances, he sues as a trustee for his principal ; but there
are others in which he may proceed for his own benefit ; thus a
factor who has a lien for his balance on the price of goods sold by
him, may maintain an action for that price against the buyer ; and,
if he have previously given him notice not to pay to his principal,
it has been thought that payment to the principal would not be a
defence to such an action, {v) though without notice it would be
so ; {w) and in such a case Eyre, L. C. J., refused to allow the defend-
ant to set off money due to him from the principal, {x) There are,

limits of this rule, which does not include agents acting out of their usual employ-
ment, or agents for one particular transaction, McBrain v. Fortune, 3 Camp. 317.
Green v. New River Company, 4 T. R. 589. Edmonds v. Lowe, 8 B. <fe C. 408.

(r) 1 Atk. 248, 2 Esp. 493, B. N. P. 130. Williams v. Millington, 1 H. Bl, 81.
Sadler v. Leigh, 4 Camp. 195.

(s) Williams v. Millington ; see Sykes v. Giles, 5 M. & "W. 645.

{t) Per Lord Mansfield, Stevenson v. Mortimer, Cowp. 805.

(w) 1 H. Bl. 81. Joseph v. Knox, 3 Camp. 320.

{v) Drinkwater v. Goodwin, Cowp. 255.

(tfi) Coppin V. Walker, 7 Taunt. 237.

{x) Atkyns v. Amber, 2 Esp. 493. See Lord Mansfield's judgment in Drinkwater
«. Goodwin, Cowp. 256.

PRINCIPAL AND AGENT. 209

Rights of third Parties against the Agent.

however, cases in whicli great hardships might result, if such a set-
off were not allowed ; (?/) and, generally speaking, where an agent
sues in right of his principal, whatever would be a defence against
the principal, will be so against him. And the declarations and
admissions of the principal will be evidence against him. (2)

An agent may also sue upon any contract made with him, in
his own name^ for an undisclosed principal, (a) And, if such a con-
tract be made by deed, he is the only person who can sue on it, for
it is an invariable rule of law, that no person can sue upon a deed,
who is neither party to nor mentioned in it.

Another state of facts also may occur, viz., ivhere a person has
entered into a contract as agent^ ivhen in fact he ivas the principal. It
would appear that in such a case the party making the contract
could not sue upon it, if it were a contract involving the consider-
ation of personal skill or knowledge, or if it were wholly executory,
or had been partially executed, the other contracting party remain-
ing in ignorance of the real principal. But if it were of a descrip
tion not involving such a consideration, but being of such a nature
that partial execution would render the contract obligatory, as if,
for instance, it were for the sale of goods, and part of them had
been accepted with a knowledge that the person delivering was the
real principal, and not a mere agent as he professed to be, then he
could maintain an action for its non-fulfilment. (6)

Section VII. — Rights of third Parties against the Agent,

An agent contracting as such for a known and responsible em-
ployer, incurs no personal liability to third parties, (c) If the iii-

{y) See the observations of Eyre, C. J., in Atkyns v. Amber, and see Coppin v.
Craig, n Taunt. 243.

(3) Welstead v. Levy, 1 M. <fe Rob. 138. Megginson v. Harper, 4 Tyrwh. 94. 2
C. <fe M. 322. R. V. Hardwick, 11 East, 578. Harrison v. Vallance, 1 Bingh. 45.
Smith V. Lyon, 3 Camp. 465.

(a) Per Denman, C. J., delivering the judgment of the court in Sims v. Bond, 5 B.
& Ad. 393.

(6) Raynor v. Grote, 15 M. & W. 359. See also Bickerton v. Burrell, 5 M. & S.
383.

210 MERCANTILE PERSONS.

Rights of third Parties against the Agent.

dividual with whom he contracted knew him to be an agent, knew
his principal, and knew that he intended to bind that principal, he
will be taken to have trusted to the credit of the principal, and the
agent will not be bound. There is one exception to this rule, viz.,

/ the case of masters of ships, who are responsible as well as their
owners, on contracts for repairs, or stores, or loans of money for
those purposes ; {d) yet, even in that case, if there be circumstances
which show that the owners alone Avere trusted, they alone will be
responsible, (e) An agent may, however, bind himself by an ex-
press undertaking. (/) If he contract without naming any princi-

1/ pal he is himself the person j^nma facie responsible ; and though
the other party may, in most cases, elect to charge the employer
on discovering him, yet he need not do so, but may, if he please,
continue to look to the agent ; {g) and the rule is the same, at least
as far as the agent's liability is concerned, where, at the time of
contracting, he states himself to be an agent, but does not disclose
his principal, {h) As this subject has been discussed in a previous
section, it is better to refer to it for further detail, than to fatigue
the reader with a repetition of the authorities there cited, (i) It
has also been mentioned, {j) that where a British agent contracts
for a foreign principal, the British agent is responsible : (/c) this is
said to be for the benefit of trade, or is perhaps a branch of the
following general rule, viz., that where there is no responsible em-
ployer, the agent shall be held personally liable ; thus where A.

{d) Rich V. Coe, Cowp. 636. See Morse v. Sluice, 1 Vent. 190, 238, 1 Mod. 85, 2
Lev. 69.

(e) Hoslcins v. Slayton, Ca. temp. Hardw. 876.

(/) See Appleton v. Binks, 5 East, 148. Cass v. Rudell, 2 Vern. 280. Benson v.
Hippins, 4 Bingh. 455. Readhead v. Cator, 1 Stark. 14. Morris v. Stacey, Holt, 153.
Talbot V. Godbolt, Yelv. 137. Haines v. French, Aleyn, 6. Kennedy v. Gouveia, 3
D. & R. 503. Scrace v. Whittington, 2 B. & C. 11. Kendray v. Hodson, 5 Esp. 228.
Higgins V. Senior, 8 M. & ^Y. 834.

{g) See Morgan v. Corder, Paley, 372. Higgins v. Senior, 8 M. & "W. 834.

(h) Hanson v. Roberdeau, Peake, 120. Thomson v. Davenport, 9 B. & C. 78.

(i) Ante, sect. 4. Paterson v. Gandasequi, 15 East, 62. Thomson v. Davenport^
P B. «fe C. 78, and Lord Kenyon's judgment in Owen v. Gooch, 2 Esp. 567.

U) Ibid.

{k) De Gaillon v. L'Aigle, 1 B. <fe P. 368. Paterson v. Gandasequi, 15 East, 62.
Thompson v. Davenport, 9 B. & C. 78. Houghton v. Matthews, 3 B. & P. 490. B. N.

r 130.

PRINCIPAL AND AGENT. 211

Rights of third Parties against the Agent.

agreed with B. and C. to pave the streets of Putney, and thej on
behalf of the parish agreed to pa_y him, they were held personally
responsible. (?)* There is an exception to this rule in favor of
government officers acting for the public; (m) and possibly this ex*

(l) Myriel v. Hymensold, Hard. 205. See Horsley v. Bell, Ambl. 7Y0, 1 Bro. Cha.
Ca. 101. Eaton v. Bell, 5 B. & A. 34. Anon. 12 Mod. 559. Burls v. Smith, 7 BingK
705. See the judgment in Rew v. Pettet, 1 Ad. & E. 196,

(m) M'Beath v. Haldimand, 1 T. R. 172. Unwin v. Wolseley, ibid. 764. Myrtle
V. Beaver, 1 East, 134.

* This rule received a learned examination in the case of Ivirkpatriek v. Stainer,
22 Wend. 244, Chancellor Walworth and Senator Verplanck delivering elaborate but
conflicting opinions. It was admitted on all sides to be inapplicable to the ease of a
principal and agent domiciled in different States of the Union. "The presumption
tliat credit was given exclusively to the agent, is not one," says Mr. Verplanck, " raised
by legal reason to be taken notice oi^ as of course, and applied to such contracts wher-
ever made, but one of special usage, or of local understanding. If the course of trade
and of credit is now so fixed and so imiversally recognized in England, as to have
become a rule of presumptive evidence — a legal inference from known public usage
to be applied without special proof of its existence — still I cannot regard it as being
necessarily a part of our own commercial law. It forms no part of the old common
law of England, nor is deduced from any settled doctrine or principle of that law,
otherwise than as a rule of presimiptive evidence of intention, growing out of posi-
tive and unvarying local commercial usage. If this presumption be now the law of
the English courts, without requiring evidence of usage in every case, it is founded
upon admitted general usage and understanding; but it is not law deduced from the
doctrines of the old common law, or resting upon reasons of natural equity, or uni
versal public policy extrinsic to the local usage of trade, and applicable alike at
London or in New York. No usage or course of business analogous to that preva-
lent in England, being notorious or well established by former evidence as existing
here, and no proof having been offered of anj? special or local usage, or common un-
derstanding, charging the agent alone, and not his foreign principal, for purchases oi
contracts made avowedly for such known principal, the case must be governed by
the general law, as to the contracts of a private agent clothed with full authority,
and acting openly on behalf of his principal." Judge Story, in the last edition of
his Commentaries on Agency, noticing this case, still adheres to his original state-
ment, the accuracy of which had been questioned by I\Ir. Verplanck, in the course
of his opinion, that where the principal lives abroad, the law raises the presumption
of an exclusive credit having been given to the agent, liable, indeed, to be rebutted,
but which must prevail in the absence of any usage or contiact to the contrary; and
the rule, as it is stated by this eminent jurist, has been followed by the Supreme
Court of Louisiana. The Newcastle Manufacturing Co. v. Red River Railroad Co., 1
Robin. Louis. Rep. 145.

212 MERCANTILE PERSONS.

Rights of third Parties against the Agent.

ception may extend to all 2^uUiG officers acting as such, (?i)* The
rule itself seems to be one of evidence, and all cases falling under
it to be reducible to the question, To ivhom was credit given ? For
it seems, on the one hand, that, if a party choose to give credit to
irresponsible persons of any description acting by their agent, and
it be manifestly intended that the agent's credit shall not be
pledged, in such a case the agent will not be responsible ; (o) while,
on the other hand, it is clear, that if the agent contract for an irre-
sponsible employer, a strong presumption will arise that he meant
to pledge his own credit, and that the party dealing with him meant
to accept it, unless indeed he be a government or public officer
acting in his public capacity. There is another possible case, viz.,
that of a man contracting as agent for a person from whom he has
in reality no authority. In such a case the person so contracting
as agent would be liable to an action on the case for his misrepre-
sentation, or he might, at least in many cases, be charged himself
as principal ; {p) unless, indeed, as in the case of SmoutY. llherry^ 10

(w) See 1 T. R. 182, per Buller, J. Bowen v. Morris, 2 Taunt. 374.

(o) See Hoskins v. Slayton, Ca. tempt. Hardwieke. 376. This view is supported
by Parrott v. Eyre, 10 Bing. 283, where Tindal, C. J., left it to the jury to say whether
trustees of a road, who had contracted in a mode different from that in which the
funds of the road were by statute capable of being bound, had contracted on the
credit of the road, or on their own credit ; and the same question was left to the
jury in Eaton v. Bell.

(p) Thomas v. Edwards, 2 M. <fe W. 215. Jones v. Dowman, 4 Q. B. 235, n. Down-
man V. Williams, 7 Q. B. 103. See Story on Agency, 118, c. 7, s. 147, also 230, c. 10,
• 269.

* The liabilities of public and private agents are not co-extensive. If the former
makes a contract on behalf of the government, and describes himself as a public
agent, he will not be rendered responsible by the use of language which would in-
volve a private agent in a personal liability. The reason of the distinction is, that
no private person can be presumed to have assumed any responsibility for the con-
tracts of the government, because it must be supposed to be unnecessary. Every
man dealing with a public agent in that capacity, has a right to place implicit con-
fidence in the good faith and ability of the government. The rule which we have
stated applies not only to simple contracts, but to specialties executed by public
agents in their own naflaes. As, however, a public agent may assume a personal re-
sponsibility, the inquiry in every case is a question of evidence as to the intention
of the parties. Hodgson v. Dexter, 1 Cranch's Rep. 345. Walker v. Swartwout, 12
J. R. 444. Tutt V. Lewis, 3 Call. Rep. 233. Perry v. Hide, 10 Conn. Rep. 329.

PRINCIPAL AND AGENT. 213

Rights of third Parties against the Agent.

M. & W. 1, lie had once had an authority, the determination of
which could not be known to him.

We have seen that the agent will be personally liable, where he
has expressly undertaken to be so. It is sometimes difficult to de-
termine whether, upon the true construction of an agreement, the
agent making it intended to bind himself or his principal.* The
nature of these difficulties will be best illustrated by two examples.
In Appleton v. Binks, (q) a man covenanted for himself, his heirs,
&c., for and on the part and behalf of J. S. to do a certain act ; and
it was held that he, and not J. S., was answerable for its non-per-
formance. On the other hand, in Spittle v. Lavender^ (r) Laven-
der entered into an agreement, as agent for, and on the part and
behalf of S. R., and signed it, at the foot of which agreement were
these words : " I hereby sanction this agreement, and approve of
Charles Lavender having entered into it on my behalf," and it was
held that Lavender was not responsible.

If the agent exceed his authority, so that his principal is not
bound, he will himself be liable for the damage thus occasioned to
the other contracting party, althoug-h he may have been innocent
of any intention to defraud. (s)f

{q) 5 East, 148. See Cass v. Rudell, 2 Yern. 280. Kennedy v. Gouveia, 3 D. <fe
R. 503. Talbot v. Godbolt, Yelv. 137. Haines v. French, Alejm, 6. Clajliill v.
Fitzgerald, 1 Wils. 28, 68. Bacon v. Dubarrj^ 1 Ld. Raym. 246, 1 Sal. 70. Norton
V. Herron, Ry. & M. 229. Burrell v. Jones, 3 B. <fe A. 4Y. Iveson v. Conington, 1 B.
& C. IGO. Hall V. Ashhurst, 1 Cr. &, Mee. 714. Magee v. Atkinson, 2 Mee. & Welsh.
440, whore it was held that a person who signed the contract in his own name is li-
able, though known to be a broker. Ace. Higgins v. Senior, 8 M. & W. 834.

(r) 2 B. <fe B. 452. Jones v. Downman, 4 Q. B. 235, n. Downman v. Williams, 7
Q.B. 103. See Hartop v. Juckes, 2 M. & S. 438. Hart v. White, Holt, 76. See
Evans v. Evans, 3 Ad. & El. 132.

(s) Polhill V. Walter, 3 B. <fe Ad. 114. See 1 Esp. Ill, per Ld. Kenyon. 3 T. R.
661, 3 P. Wms. 279, 1 Eq. Ab. 308, 2 Vern. 127.

* The student will find an elaborate review of the various classes of cases in which
an agent incurs a personal responsibilit}', while contracting for his principal, in
Roberts v. Button et al., 14 Verm. 195.

f The exemption of the principal from all responsibility, either in law or equity,
does not extend to the agent. Thus, although a state cannot be sued, it is different
with its officers or agents. Bank of the United States v. Osborn, 9 Wheat. 743 1
Bald. 217. Elliott v. Swartwout, 10 Peters, 137.

214 MERCANTILE PERS02TS. '

Rights of third Parties against the Agent.

The question, -whether an agent is personally liable for money
paid to him for the use of his principal, under circumstances which
would entitle some person to recover it from. that principal, involves
much difiiculty. In the first place, it is clear that if the agent have,
without notice to act otherwise, paid over the money to his princi-
pal, he never can be called on to refund it. (t) But in Cox v,
.Prentice, {u) it was laid down by the Court, on the authority of
BuUer V. Harrison, that an agent who receives money for his
principal, is liable as a principal, so long as he stands in his original
situation, and until there has been a change in circumstances by
his having paid over the money to his principal, or done what is
equivalent to it. (y) In that case the defendant received a bar of
silver from his principal, and sold it to the plaintiff, at a price cal-
culated with reference to the number of ounces which, on assay,
it was thouoht to contain ; it turned out afterwards, that it con-
tained fewer ounces than had been supposed, and the plaintiff was
held entitled to recover the money overpaid from the defendant,
who had not yet handed it to his principal, although he had for-
warded an account to him, in which he was credited with the full
sum, but which was still unsettled. In Buller v. Harrison, the de
fendant was an insurance broker, and the money sought to be recov-
ered, was paid by the plaintiff, an underwriter, in discharge of a loss
which turned out to be foul. It will be observed, that in neither
of these cases could the principal himself, ever by possibility, hav6
claimed to retain the money for a single instant had it reached his
hands, the payment having been made by the plaintiff under pure
mistake of facts, and being void, ah initio, as soon as that mistake
was discovered, so that the agent would not have been estopped
from denying his principal's title to the money, any more than the
factor of J. S. of Jamaica, who has received money paid to him
under the supposition of his employer being J, S. of Trinidad,
would be estopped from retaining that money against his employer,
in order to return it to the person who paid it to him. Besides
which, in Buller v. Harrison, had the agent paid the money he

{t) Buller V. Harrison, Cowp. 565. Horsefall v. Handley, 8 Taunt. 136. Green-
Vvay V. Hurd, 4 T. R. 553, Vernon, 136, 208.

(m) 3 M. & S. 344. See Calland v. Lloyd, 5 Mee. & Welsh. 27.

(w) See Gary v. Webster, 1 gtr. 480. M'Carthy v. Galvin, 9 A. «fe E. 612.

PRINCIPAL AND AGENT. 015

Rights of third Parties against the Agent.

received from the underwriter, in discharge of the foul loss, over
to his principal, he would have rendered himself an instrument of
fraud, which, as we have already seen, no agent can be obliged to
do. Except in such cases as these, the maxim respondeat superior
has been applied, and the agent held responsible to no one but his
principal, (iv) Thus, in Stephens v. BadcocJc, (x) the defendant, an
attornej^'s clerk, having received, by his master's orders, rents for
the plaintiff, a client; it was held, that he was not responsible to
the plaintiff, though his employer, the attorney, had since become
a bankrupt : so it was held, that an attorney who had received
cash for his principal upon a sale which went off, could not be sued
by the intended vendee for it. (?/) Nor can an action for money
had and received be brought against the agent who has received
it on behalf of his principal for the purpose of trying the existence
of a right in that principal ; thus, the right of a lord of the manor
cannot be tried in an action against his steward for quit-rent
voluntarily paid : (2) and these decisions are but just, since, as the
agent is estopped from questioning the title of his principal, he
would, but for this rule of respondeat superior, be frequently ex-
posed, without any defence, to two different suits, in respect of the
same subject matter, (a)'-^

(w) Cobb V. Becke, 6 Q. B. 930.

(x) 3 B. & Ad. 354. And see Baird v. Robertson, 1 M. & Gr. 981.
(y) Bamford v. Shuttleworth, 11 A. <fc E. 926.

(z) Saddler v. Evans, 4 Burr. 1984. Staplefield v. Yewd, cited ibid. B. N. P. 138.
See Alexander v. Southey, 5 B. & A. 24Y. Wilson v. Anderton, 1 B. & Ad. 450.

(«") See White v. Bartlett^ 9 Bingh. 378: sed vide Hardacre v. Stewart, 5 Esp. 103.

* The general doctrine stated in the text was discussed and approved in Elliot v.
Swartwout, 10 Peters, 137. It was held in that case, that a collector of the revenue
was personally responsible in an action to recover back an excess of duties paid to
him as collector, and by hina paid over to the Treasury of the United States, in good
faith, and under instructions from the department, if at the time of payment, notice
was given to him that the duties were charged too high, and that the party paid for
the purpose of getting possession of his goods, and intended to sue to recover back
the amount, and that he should not pay over the excess into the Treasury, but that
the collector would incur no personal responsibility, unless protest was made at the
time of payment, and such notice given. "No instructions," the Court says, "from
the Treasury Department, could impair the rights of the plaintiff, or qualify the re-
eponsibility of the defendant." S. P. Bend v. Hoyt, 13 Peters, 263. But in Gary a'

216 MERCANTILE PERSOXS.

Rights of third Parties against the Agent.

But an agent cannot defend himself, even on the ground of pay-
ment over to his principal, if he receive money illegally from a
party who is not prevented from suing him by the rule pari delicto
potior est conditio defendentis. {b) This was decided in Miller v.
Aris, (c) where the money was received by a jailer from a prisoner
for rent of a room illegally let to him, and paid over by the jailer
to his employers, (d) Neither do the foregoing remarks extend to
cases in which the money gets into the agent's hands in conse-
quence of a tort committed by him under the directions of or
jointly with his principal ; for in .thai case the party aggrieved
might have sued Him in tort, and may npon the ordinary principle
waive his right to proceed in that form and adopt assumpsit, (e)
Of course, if an agent pay money to his principal, which was not
intrusted to him for that purpose, he will not be discharged, (/)
ex. gr., if a stakeholder pay over the deposit before the condition on
which it was to become due is performed.

Although there must be special circumstances to render an
agent liable on contracts made for his employer, yet it is otherwise
if he commit torts while acting in his master's service. In such
a case, the principal will, it is true, often be liable, but then the
agent will invariably be so. {g) However, an agent is not answer-

ed) See Smith v. Bromley, Dougl. 696. Sharland v. Mildon, 15 L. J. C. C. 434-

(J) Accord. Townson v. "Wilson, 1 Camp. 396. Wakefield v. Newbon, 6 Q. B
276.

(e) Tugman v. Hopkins, 4 M. «fe Gr. 389.

(/) Saddler v. Evans, ante. Snowden v. Davis, 1 Taunt. 359. Edwards v. Hod-
ding, 5 Taunt. 815.

{g) 12 Mod. 488, 1 Leon. 146, Roll. Ab. 94, pi. 5. Craneh. v. White, 1 Bingh. N
C. 414. Davies v. Vernon, 6 Q. B. 443. Perkins v. Smith, Sayer, 41, 1 Wils. 328.
Barker v. Braham, 2 Bl. 867. Goodwin v. Gibbins, 4 Burr. 2108. Bates v. Pilling, 6
B. & C. 38. Stephens v. Elwall, 4 M. & S. 259. Michael v. Alestree, 2 Lev. 172. Wil-
son V. Anderton, 1 B. & Ad. 450. Sharland v. Mildon, 15 L. J. C. C. 434. But see

Curtis, 3 How. 236, it was held by a majority of the Court, that this doctrine, as ap-
plicable to collectors of the revenue, had been abrogated by the Act of Congress of
Marc-h 3d, 1839, chap. 82, sect. 2; and that whether any means or not were left to
the claimant, of bringing his case before a court of justice, the collector was not per-
sonally responsible. See also Hurley v. Baker, 16 Mees. & Wels. 26. Wharton v
Hudson, 3d Rawle, 390. Colvin v. Holbrook, 2 Comst. 126.

PRINCIPAL AND AGENT. 217

Plights of third Parties against the Agent.

able to third parties for mere nonfeasance, that is, for neglectin.<'-
to do, as his master's agent, that which his master is bound, and
has deputed him, to do. Thus, if the servant of a common carrier
were to refuse to receive A.'s goods to be carried, on tender of the
proper hire, he would not be liable to an action at the suit of A.,
although the carrier, his master, would, and although the servant
would himself be liable to his master for a breach of duty as his
agent, (h)*

We have thus gone through the chief rules which affect the
relation of Principal and Agent. The subject of this chaper will
be, however, further illustrated by some of those contained in Booh
the Third, in which it is proposed to treat Mercantile Contracts.
For instance, it is obvious, that in the description of contracts of
affreightment, of insurance, or of sale, light must be cast upon the
duties of the agents, who are employed in the negotiation or exe-
cution of those contracts, and who are, of course, bound to know
and act upon the rules which govern them. The duty of the ao-ent
thus depends, in great measure, upon that of his principal, and, con-
sequently, upon the nature of those compacts from which the latter
takes its ori";in.

Alexander v. Southey, 5 B. (fe A. 247. Miles v. Solesby, 2 Mod. 242. In Roll. Abr. 95,
it is laid down, that if the servant of a taverner sell wine that is corrupted, know-
ing it to be so, no action of deceit lies against the servant, for he did it but as a ser-
vant ; whence it has been inferred, that a servant is not liable for fraud committed
in his master's business ; but surely this is difficult to be supported.

(/i) As to the liability of public officers for acts of omission, see Barry v. Ai'naud
10 Ad. & E. 646.

* The well-settled doctrine, that an agent is not liable to third persons for an
omission or neglect of duty in the matter of his agency, but that the principal alone
is responsible, was recognized in New York, in the recent cases of Drury v. Manhat.-
tan Co., 2 Denio, 118. Colvin v Holbrook, 2 Comst. 126.

BOOK THE SECOND.

OF MERCANTILE PROPERTY

OF MERCANTILE PROPERTY.

"We now come to our second grand head, that videlicet^ of Mercan-
tile Property. And here it must be premised, that it is not intend-
ed to consider the nature of the various possessions of which a
merchant's property, as well as that of any other individual, may
be composed : for that would be to write a treatise upon property
in general. The objects of this Book will be, 1st, to point out those
peculiar incidents which property acquires, by passing into the
custody of a merchant, and becoming part of his stock ; and, 2dly,
to give some brief account of that description of property which,
being seldom or never found in the hands of any one except a mer-
chant, has more than ordinary claims to be included in a treatise
devoted to Mercantile Law. There is, however, one circumstance
connected with the general law of property which it is fit here to
remark, viz., that the law will not permit it to be rendered inalien-
able by any device whatever, (a) for to permit this would, to use
the words of Lord Coke, militate '■^against trade and traffic, and
against baraaining and contracting between man and man."

CHAPTER I.

INCrDENTS PECULLIK TO 3IEKCAXTILE PROPERTY.

First^ then, with regard to the incidents which property acquires
in the hands of a merchant, it is to be observed, that all such pro-
perty becomes transferable by, and subject to the operation of, the

(<i) Litt S60, and the Commentary. An exception to this rule is aUowed in the
case of property given or settled to the \ise of a married woman. TuUett v. Arm
<itr»ng, 4: M. it Cr. 877. Baggett r. Meux, 1 Phill. 627.

222 MERCANTILE PROPERTY,

Incidents peculiat to Mercantile Property.

ba,nkrupt laws : as we have appropriated a chapter in the last part
of this treatise to the consideration of Bankruptcy, we will make
no further observation upon it at present.

Secondly. It is known to be the ordinary rule of law, that where
two or more persons are jointly possessed of property, the entire
right to it, on the decease of any of them, remains to his survivors,
and, at length, to the last survivor, who thus becomes entitled to
the whole, which incident to joint tenancy is called by our ancient
writers the jus accrescendi. {h) To this rule there is an exception in
the case of partners in trade, of whom Lord Coke says, that " the
rv^ares, merchandises, debts, or duties, which they have as joint
merchants or partners shall not survive, but shall go to the execu-
tors of him that deceaseth, and this is per" legem mercatoriam, which
is part of the laws of this realm, for the advancement and continu-
ance of commerce and trade." (c) Of the existence of this excep-
tion there is no doubt ; but it has been questioned whether it can
be enforced in courts of common law. It seems to be admitted
upon all hands, that if real property be held in joint tenancy for the
purposes of trade, its exemption from the common rule relating to
survivorship can be enforced only through the medium of equity ;
the question above stated must therefore be confined to cases of
joint-tenancy of chattels. In Lord Tenterden's admirable treatise
on the Law of Merchant Ships and Seamen, 8th edit. p. 97, his
lordship, after remarking that ships are usually purchased by several
persons in distinct shares, so as to create a tenancy in common
amono- them, goes on to observe, that " if the interests are not sev-
ered and distinguished in this way, but the entire ship is granted to
a number of persons generally, it is apprehended that they become
joint tenants at law, and that the rule jus accrescendi inter mercatores
locum non habet, which is applicable to a ship, is to be enforced only
in equity." No authority is cited for this position, which, however,
besides the weight which it derives from the high character of its
distinguished author, seems to be countenanced by the expressions
of the Master of the Kolis, in LuJce v. Gibson, (d) where it is laid

(6) Litt. 280, 281, 2 Black. Com. 184

(d) Co. Litt. 182, a. Comyn's Dig. Merchant D.

(d) 1 Abr. Eq. 290.

ITS PECULIAR INCIDENTS. 223

Incidents peculiar to Mercantile Property.

down, that "in all cases of a joint undertaking or partnership,
either in trade or any other dealing, they are to be considered as
tenants in common, or the survivors as trustees for those who are dead."
Jeffreys v. Small, (e) which is usually cited as proving the exception
turns out, upon examination, to refer solely to the rule in equity.
On the other hand, in the passage above cited from the first Insti-
tute, the proposition is laid down generally by Lord Coke, who in
all probability did not mean to refer to any rule in courts of
equit}^, (/) and his opinion is supported by the authorities and prece
dents collected in the margin, (gr)*

This maxim, " Jus accrescendi inter mercatores locum non hahei,^
applies, as we have seen, to real property held in partnership foi
the purposes of trade. Its application can, however, only be en-
forced by courts of equity, and incident to its enforcement is the
question which sometimes arises, whether the separate share of each
partner is to be considered as real, or as chattel property ; such share

(e) 1 Vern. 217, 3 P. Wms. 158.

(/) It is observable, that the doctrine of Lord Coke, in the above passage, ex
tends to "Debts and Duties," the remedy for which survives, as it is apprehended,
notwithstanding some contrary dicta in 2 Lev. 188, 228, Lutw. 1493, Noy. 55, Sal.
444, Com. Dig. Merch. D.

(ff) K"oy. 55, Brownl. & Gold. 99. Kempe v. Andrews, Holt, 145. S. C. 3 Lev.
290. S. C. Sal. 1 Smythe ct al. v. Milward, Lutw. 1493. Hall v. HufFam, 2 Lev. 88,
228. Martin v. Crompe, 1 Ld. Raym. 340. R. v. Collector of Customs, 2 M. &, S. 223 ;
this case is omitted in Abbot on Shipping.

* This question was discussed in the recent case of Buckley v. Barber, before the
Court of Exchequer, reported in 1 Eng. L. &, E. R. 506. It appears from the autho-
rities cited in that case, that no trace of doctrine of survivorship in chattels, inter
mercatores, is to be found in the earlier books, but very respectable authorities (and
amongst them Lord Coke) opposed to the now conceded doctrine of survivorship as
to remedies or choses in action. The coirt determined that there was no satisfactory
evidence that the former branch of the ancient rule had ever been altered, and that
the notion advanced by Lord Tenterden that the title to partnership chattels sur-
vived at law, and that the rights of the deceased partner could only be protected in
equitj', was inaccurate. This exception from the general law of joint-tenancy extend-
ed not only to the goods of merchants but to those of manufacturers and to trade
fixtures. The Court also expressed a doubt whether any such Jms disponendi belonged
to the surviviilg partner, by virtue of his implied authority to wind up the partnership
affairs, as would enable him to transfer to third persons a good legal title to the share
Belonging to the executors of the deceased, even in payment of partnership debts.

224 MERCANTILE PROPERTY.

Incidents peculiar to Mercantile Property.

having been always personal in its enjoyment, tliougli freehold in
its nature, and having usually been acquired, not as a matter of
choice but of necessity, by the sacrifice of part of the chattel pro-
perty of the firm, which its owners would, had it been possible,
have desired to continue in its original state of personalty.

In the earlier cases on this subject, it appears to have been
thought, that freehold lands bought with the money, and used for
the purposes of the firm, ought not to be considered in equity as
converted into personal property ; and therefore, that, at the death
of one of the partners, as equity allows no jus accrescendi among
merchants, even in lands, the share of the deceased would descend
to his heir, whose right thereto might be enforced in equity, (h)
This doctrine, however, is overturned, {i) and the rule now is that
all property of what nature soever, bought with the cash and for
the purposes of a trading partnership concern, must in equity be
looked upon as personal, and that, as there can be no survivorship
4 in it, a partner's share will on his death pass to his personal repre-
sentative, {j) for whose benefit the surviving partners, or their trus-
tees, will hold it ; since, in this case, the jits accrescendi takes place
at law. If, indeed, the i3artners have stipulated that freehold lands
purchased by them shall not be subject to the application of this
equitable doctrine, but shall follow the ordinary rules respecting
property of that description, or if they act so that such a stipulation
may be reasonably inferred from their conduct, in such a case the
rule of equity yields to the ordinary course of law coupled with the
intention of the parties, for quilihet potest renunciare juri pro se intro-
ducto. ik)

This seems the proper place in which to notice a peculiar rule
of law, established in order to favor trade, and concerning certain
property in which traders are temporarily interested, viz., that goods

(/() Tliornton v. Dixon, 3 Bro. 199. Bell v. Pliyn, 7 Ves. 435, 2 Hov. Suppl. 61.

(«) Phillips V. Phillips, 1 Mylne & K. 663. Broom v. Broom, 3 M. & K. 444.
Morris v. Barrett, 3 Y. & J. 384. Houghton v. Houghton, 11 Sim. 491.

{j) See Lord Eldon's observations in Solkrig v. Davies, 2 Dow. 242. Ripley v.
"Waterworth, 7 Ves. 425. Townshend v. Devaynes, Mont, on Part. Appendix, 96.

{k) Balmain v. Sliore, 9 Ves. 500, 2 Hov. Supp. 187. Rowley v. Adams, 7 Beav.
548. See Smith v. Smith, 5 Ves. 189, 1 Hov. Supp. 502. Thornton v. Dixon, above
cited, seems to fall within this class of cases.

ITS PECULIAR INCIDENTS. 225

Incidents peculiar to Mercantile Property.

delivered to a person exercising a trade, to be carried, wrought, or \/
managed in the way of his trade or employ, are for that time privi-
leged from a distress for rent, (l) Thus, goods in the hands of an
agent, wharfinger, auctioneer, or commission agent, (in) or the car-
cass of a beast left at a butcher's to be slaughtered, {n) are exempted
from the liability to distress. It has, however, been decided, that
machinery bailed to the trader to work the material with is not so
privileged, (o) The exemption just described is absolute. The
necessary implements of a man's trade are also privileged against
distress for rent, but only when there is sufficient of other distrain-
able goods to meet the landlord's claim, (p) They are not exempt
if there be no other sufficient distress except of growing crops, for
to seize those might delay the landlord and put him to inconveni-
ence, {q) and they are liable equally with other goods to a distress
for poor rates, that being in the nature of an execution, (r)

There is another privilege which will be most appropriately '■-^
noticed along with that against distress afforded to the chattels
above mentioned. It is conferred on certain fixtures which, if set
up for ordinary purposes, would not be severable from the freehold
by the owner of a particular estate or by his representative, but
which, in order to encourage commerce, are removable when set up
for commercial purposes. Such is the greater part of the machinery
set up by manufacturers, and which is now of a description so ex-
pensive, that to prohibit its removal from their landlord's premises
would be a serious discouragement to persons exercising the trade
in which it is used. Upon the nature and extent of this privilege
the reader may consult the valuable work of Mr. Amos, and the

{I) 1 Inst. 4Y, a. Gisbourn v. Hurst, 1 Sal. 249.

{m) Gillman v. Elton, 3 B. & B. 75. Tliompson v. Mashiter, 1 Bingli. 283. Adams
V. Grane, 1 Cr. & Mee. 380, 4 Tyrwh. 328. Gibson v. Ireson, 3 Q. B. 39. Findon v-
McLaren, 6 Q. B. 891.

(w) Brown v. Shevill, 2 Ad. &, E. 140. See Musprat v. Gregory, 1 M. & "W.
633.

(o) Wood V. Clark, 1 C. & J. 497, 1 Tyrwh. 327 ; and see Muspratt v. Gregory, 1
M. & W. 633. Joule v. Jackson, 7 M. <fe "W. 450.

(p) See Simpson v. Hartopp, Willes, 512, 1 Inst. 47, a. b. Fenton v. Logan, 9
Bingh. 675.

(?) Piggot V. Birtles, 1 M. & W. 441,

(r) Hutchins v. Chaabers, 1 Burr. 579.
15

22Q MERCANTILE PROPERTY.

Incidents peculiar to Mercantile Property.

authorities below cited, particularly the great case of Elwes v.
Mawe. (s)*

(s) 3 East, 38. 2 Smith's Leading Cases, 99, 2d ed. Poole's case, 1 Salk. 368.
Lawton v. Lawton, 3 Atk. 13. Lawton v. Salmon, 1 H. Bl. 259, a. Penton v. Robart^
2 East, 90. Dean v. Allaly, 3 Esp. IL Trappes v. Harter, 4 Tyrwh. 624, 2 C. & M.
153. As to the construction of covenants in leases respecting such fixtures, see Foley
V. Addenbrooke, 13 M. & W. 174.

* This doctrine was considered at some length, in the case of Van Ness v. Pacard, 2
Peters, 137. "This exception," says Judge Story, delivering the opinion of the Court,
" of buildings and other fixtures, for the purpose of carrying on a trade or manu-
facture, is of very ancient date, and was recognized almost as early as the rule itself
The very point was decided in 20th Henry 7th, 13, a and b, where it was laid down,
that if a lessee for years made a furnace for his advantage, or a dyer made his vats
or vessels to occupy his occupation during the term, he may remove them afterwards.
That doctrine was recognized by Lord Holt, in Poole's case, Salk. 368, in favor of a
soap-boiler who was a tenant for years. He held that the party might well remove
the vats he set up in relation to trade ; and that he might do it by the common law,
(and not by virtue of any custom,) in favor of trade, and to encourage industry. In
Lawton v. Lawton, 3 Atk. Rep. 13, the same doctrine was held in the case of a fire
engine, set up to work a colliery by a tenant for life. Lord Harwicke there said,
that since the time of Henry the 7th, the general ground the courts have gone upon
of relaxing the strict construction of law is, that it is for the benefit of the public to
encourage tenants for life, to do what is advantageous to the estate during the term
He added, ' One reason whicii weighs with me is, its being a mixed case, between
enjoying the profits of the land, and carrying on a species of trade ; and in consider-
ing it in this light, it comes very near the instances in brew-houses and of furnaces
and coppers.' The case too, of a cider-mill between the executor and heir, is ex-
tremely strong, for though cider is a part of the profits of the real estate, yet it was
held by Lord Chief Baron Comyns, a very able common lawyer, that the cider-mill
was personal estate, notwithstanding, and that it should go to the executor. 'It
does not differ, in my opinion, whether the shed be made of brick or wood, for it is
only intended to cover it from the weather and other inconveniences.' In Penton v.
Robart, 2 East, 88, it was further decided that a tenant might remove his fixtures for
trade, even after the expiration of his term, if he yet remained in possession ; and
Lord Kenyon recognized the doctrine in its most liberal extent.

" It has been suggested that this exception in favor of trade, has never been ap-
plied to a case, like that before the Court, where a large house has been built and
used in part as a family residence. But the question whether removable or not,
does not depend upon the form or size of the building, whether it has a brick foun-
dation or not, or is one or two stories high, or has a brick or other chimney. 77ie
sole question is, whether it is desiffned for purposes of trade or not. A tenant may erect
a large as well as a small messuage, or a soap-boilery of one or two stories high, and
on whatever foun lation he may choose. The only point, according to all the cases,

ITS PECULIAR INCIDENTS. 227

Incidents peculiar to Mercantile Property.

is, ■whether it is accessory to carrj-ing on the trade or not. If bond fide intended for
this purpose, it falls within the exception in favor of trade.

"Then as to the residence of the family within the house, this resolves itself into
the same consideration. If the house was built principally for the purpose of a
dwelling house for the family, independently of carrying on the trade, then it would
doubtless be deemed a fixture, falling under the general rule, and immovable. But
if the residence of the family were merely an accessory for the more beneficial carry-
ing on of the trade, and with a view to superior accommodation in this particular,
then it is within the exception. There are many trades which cannot be carried on
well, without the presence of many persons, by night as well as by da}''. It is so in
some valuable manufactories." The same general principles ai'e recognized and dis-
cussed in the following American cases. Holmes v. Tremper, 20 Johns. 29. Cresson,
V. Stout, 17 Johns. 116. Swift v. Thompson, 9 Conn. 63. Lemar v. Miles, 4 Watts.
330. Gale v. Ward, 14 Mass. 352.

CHAPTER II.

HIPPING."

Sect. 1. Privileges of a British sMp.

2. Wltat ships are British.

3. Title to thenij how acquired and transmitted.

4. Rights of part owners.

There is one species of property, I mean that in shipping, (a) to
which (because it is almost exclusively mercantile, and subject to
very peculiar regulations) it will be right to devote some attention :
with this view we will consider —

1. What are the privileges of a British ship.

2. What ships are, properly speaking, British.

8. How title to them may be acquired and transmitted.
4. The rights of part owners.

Section I. — The privileges of a British Ship.

These are now comprised in stat. 8 & 9 Vict. c. 88, {b) which,
prohibits the importation into the United Kingdom for use, of a

(a) This subject is mainly regulated by two excellent statutes, the Ship Registry
and Navigation Acts.

(6) Superseding 3 & 4 Wm. 4, c. 54.

* The Acts of Congress of the 31st of December, 1792, and the 18th of Feb. 1T92,
and the Ist of March, 181Y, constitute the bases of our regulations upon the subject
of shipping. They confer peculiar privileges upon American ships, and follow very
closely the provisions of the British statutes upon the same subject. The student may
find them in Gordon's Digest of tlie Laws of the United States, the United States Sta-
tutes at large, or in the appendix to the last Boston edition of Abbott on Shipping.

SHIPPING. 229

Privileges of a British Ship.

number of European goods therein enumerated (c) except in British
ships, ships of the country of which they are the produce, or from
which they are imported, (c?) and, with some few exceptions, of all
goods the produce of Asia, Africa, or America, in foreign ships,
unless they be ships of the country in Asia, Africa, or America, of
which the goods are the produce, and from which they are import-
ed, (e)

All trade between the United Kingdom and Guernsey, Jersey,
Alderney, Sark, or Man, (/) all trade between those islands, or be-
tween different parts of any one of them {g) or of the United King-
dom, (/i) all exportation from the United Kingdom to any British
possession in Asia, Africa, or America, {i) all commerce between
such possessions, or between different parts of the same posses-
sion, (y) except in British vessels, is prohibited ; nor can any goods
be imported into any such possession in foreign ships, unless they
be ships of the country of which the goods are the produce, and
from which they are imported, (JS) The Queen, however, may, by
an order in Council, permit the importation of foreign goods into
Hong Kong in foreign vessels. (Z)

All manufactured goods are deemed the produce of the country
of which they are the manufacture, {rnf

((i) Sect 2. (e) Sects. 3 and 4. (/) Sects. 6, 1 and 8.

\g) Sect. 9. {h) Sect. 8. {i) Sect. 7. ( j) Sect. 10.

(^•) Sect. 11. — N. B. No ship is admitted to be of a particular country, unless
wholly owned by subjects of that country usually residing therein, or by a corpo-
ration established in it, sect. 15; though a foreign-built ship may be legally owned
by a British subject, Long v. Duff, 2 B. & P. 209, yet she will not fall within this or
the preceding exception.

(/) Sect. 12. , (»«) Sect. 5.

* By an act passed June 26th, 184:9, the British Navigation laws, so long a favor-
ite policy of her statesmen, were substantially repealed. "Tlie onl}' remains of the
system are the following, viz., 1st. The coasting trade between the United Kingdom
and the adjacent British islands continues restricted to British ships. 2d. No goods
or passengers can be carried from one port of any British possession in Asia, Africa,
or America, to another port of the same possession, except in British ships. The
Queen in council is authorized, on the address of the legislature of any British pos-
session, to admit other than British sliips to cojivey goods or passengers from one
part of such possession to another part. In consequence of this alteration of tlie

230 MERCANTILE PROPERTY.

What Ships are, properly speaking, British.

Section II.— What Ships are, properly speaking, British.

In order that a ship may be entitled to the name and privileges
of a British vessel, she must be, 1st, navigated, and 2d, registered, as
one. (n)

A ship is navigated as a British vessel when the master and
three-fourths of the crew are British, and if employed in coasting
between different parts of the United Kingdom, or in a voyage be-
tween the United Kingdom and Jersey, Guernsey, Alderney, Sark,
or Man, or between any of them, or in coasting between different
parts of those islands, or in fishing od the coast of the United King-
dom, or of any of those islands, the entire crew must be British, (o)
In all cases, however, except those in which the whole crew is to
be British, the ship is daly navigated if she have one British sea-
man for every twentv tons, though the other seamen may exceed
in number one-fourih of the crew, (p)

The master or seamen are considered British, if natural-born
subjects of her Majesty, or subjects by naturalization or denization,
or having iecome so by conquest or cession, and having taken the
oath of allegiance or fidelity, or persons who have served on board
a Qncen's ship of war, in war time, for three years ; but natives
of places within the East India Company's charter, though under
British dominion, are not therefore British, {q) The Queen may,
by proclamation, in war time, declare two years' service on board
a ship of war sufficient for this purpose, (r) and may at any time
lessen the requisite proportion of British men. (5) Ships trading
between places in America may be navigated by British negroes,
and ships trading eastward of the Cape of Good Hope, and within

{n) Sect. 13, stat. 8 & 9 Vict. c. 88. See as to Indian shipping, 3 & 4 Yict. c. 66
(o) 8 & 9 Vict. c. 88, sect. 13. (p) Ibid. sect. 17. {q) Ibid,

(r) Ibid. sect. 18. (s) Ibid. sect. 21.

British laws, British vessels, after the 1st of January, 1849, -were admitted into porta
of the United States, -with cargoes of the growth or production of any part of the
world, on the same terms as to duties, imposts and charges, as vessels ot United
States and their cargoes." 3 Kent's Comm. note p. 186.

SHIPPIXG. 231

What Ships are, pi-operly speaking, British.

the East India Company's charter, by Lascars and other natives
of the countries within those limits, (t)

If the due proportion of British seamen cannot be procured at
any foreign port, or any place within the limits of the Company's
charter, or have been unavoidably destroyed, the master will be
excused, on producing a certificate thereof from the British consul,
or two known British merchants, if there be no consul, or the
British governor of any place within the limits of the Company's
charter, or on making proof thereof to the satisfaction of the collec-
tor and comptroller of customs of any British port, or of some other
person authorized to make inquiry, (w)

For every excess of foreign seamen, the master or owners for-
feit £10 per man ; {v) for goods illegally imported, exported, or
carried coastwise, the goods themselves, and the master forfeits
£100 ; {lo) nor is any registered ship to be allowed to depart from
any port in the British dominions unless duly navigated, (x)

In order to entitle a vessel to the privileges of a British ship,
it is (save in a few cases mentioned at the end of this section) fur-
ther necessary that she should be registered as one, and a certifi-
cate of registry obtained ; {y) for otherwise she will, by exercising
any of those privileges, become forfeited, with her tackle, &c., and
may be seized by any ofi&cer of customs, (z) On this subject it may
be proper to consider, first, what vessels are entitled to be regis-
tered ; secondly, where, how, and by whom they must be registered ;
thirdly, when registry de novo is required ; and, lastly, when registry
is dispensed with.

First, then, no ship is entitled to be registered, which is not, (a)
1st, wholly of the build of the United Kingdom, or of the Isle of
Man, or Guernsey, or Jersey, or some of the colonies, plantations,
islands, or territories in Asia, Africa, or America, or of Malta,
Gibraltar, or Heligoland, which belong to Her Majesty at the time
of building ; or, 2dly, condemned by a Court of Admiralty ; or,

{€) Ibid. sect. 19, sect. 13.

(w) Ibid. sect. 20. See on the construction of the corresponding enactment, Suart
p. Powell, 1 B. <k Ad. 266.

(^) 8 <fe 9 Vict. c. 88, sect. 20. (w) Ibid. sect. 2-i. {x) Ibid. sect. 19.

iy) Ibid. sect. 13 ; 8 <fe 9 Vict. c. 89, sect. 2.

(2) 8 & 9 Vict. c. 82, sect. 4. {a) Ibid. sect. 5

232 MERCANTILE PROPERTY.

"What Ships are, properly speaking, British.

8dly, condemned by some competent court for a breach of the re-
gulations relating to the slave trade.

Nor can any ship be registered, unless all the owners are British
subjects : (b) and even a British subject cannot be such owner if he
usually (c) reside in any foreign country, unless he be a partner in^
or agent for, some British factory, or house carrying on trade in
Great Britain or Ireland : neither can any person who has sworn
allegiance to a foreign state, except under the terms of some capitu-
lation, unless he afterwards become naturalized, or a denizen, (d)

Such ship as the above, nevertheless, loses her privileges, and
ceases to be considered British, or entitled to registry —

1st. If repaired in a foreign country, to the value of twenty
shillings per ton, unless by some extraordinary damage sustained
abroad, such repairs are rendered necessary to enable her to per-
form her voyage, and return to some port in the king's dominions,
and those circumstances be proved before the persons and in the
manner specified by stat. 8 & 9 Vict. c. 89, s. 7, and a note thereof
made on the ship's certificate of registry, (e)

2dly, If declared stranded or unseaworthy, and therefore or-
dered by the decree of a competent court to be sold for the benefit
of the owpers. (/)

3dlj. If captured by and become prize to an enemy, (g)

4thly. Or sold to foreigners. (Ii)

Secondly y with respect to the mode of registry. In general every
ship must be registered at the port to which she belongs, {i) A
ship is said to belong to some port, at or near which some or one
of the owners, who shall make and subscribe the declaration re-
quired previous to registry, the nature of which will presently be
specified, resides, {j) But no ship can be registered at Heligoland,
unless wholly built there ; nor can any ship registered at Malta,

(h) Sect. 5. This does not apply to a corporation : it is sufficient if that be a body
established by the law of this country, though some of the members composing it
may be foreigners. See Regina v. Arnaud, 16 L. J. Q. B. 50.

(o) For the construction put upon this word, see case of the Eleanor, 1 Edwards,
148.

(d) 8 & 9 Vict. c. 89, sect. 12.

(e) 8 <fc 9 Vict. c. 89, sect. 7. (/) Sect 8. {g) Sect. 9. (A) Ibid,
(t) Sect. 10. U) Sect. 11.

SHIPPING. 233

What Sliips are, properly speaking, British.

Gibralta, or Heligoland, be afterwards registered elsewhere, or be
entitled to the privileges of British vessels in trading between the
United Kingdom and our American colonies, {k) Ships taken
and condemned as prize, are to be registered at Southampton,
"Weymouth, Exeter, Plymouth, Falmouth, Liverpool, or White-
haven. (Z)

The persons by whom registry is to be made are, at ports in
Great Britain, Ireland, or Isle of Man, the collectors and comptrol-
lers of custorhs ; in any port of the British possessions in Asia, Af-
rica, or America, the collector and comptroller, or collector if there
be no comptroller ; in Guernsey or Jersey, the principal officers of
customs, together with the governor, lieutenant-governor, or com-
mander-in-chief; in ports within the limits of the East India Com-
pany's charter, and under its government, the collector of duties,
or any other person of the rank of senior merchant, or of six years'
standing in the Company's service, appointed to act by any of its
governments in India ; in any British possession within the same
limits and not under the Company's government, the collector of
duties, together with the governor, lieutenant-governor, or com-
mander-in-chief of such possessions ; at Malta, Gibraltar, and Heli-
goland, the governor, lieutenant-governor, or commander-in-chief:
the powers and duties of these persons in the execution of the Ee-
gistry Act are identical, {m)

The functions which (as will be seen) are vested in the com-
missioners of customs, may be performed by the governor, lieuten-
ant-governor, or commander-in-chief of any place where sliips are
registered, (n)

In order to obtain registry, a declaration must be made, and
subscribed by tne owner, if only one ; if two, both resident within
twenty miles of the place of registry, by both of them ; if either at
a greater distance, by one only ; if more than two, by the greater
part (not exceeding three), if resident within twenty miles, unless
a larger number wish to join ; if all, or all but one, reside at a
greater distance, then by one only. If the required numbers do
not attend, declaration must be made by such as do that the absent

(k) Sect. 3. (1) Sect. 33.

(wi) 8 <fe 9 Vict. c. 89, sect. 8. (n) Sect. 3.

234 MERCANTILE PROPERTY.

What Ships are, properly speaking, British.

do not reside within twenty miles, and have not wilfully absented
themselves, or are prevented by illness from attending, (o)

The declaration contains the ship's name (which must not after-
wards be changed), and must be painted on her stern, together with
the port to which she belongs, in white or yellow letters four inches
long, on a black ground, and not afterwards obliterated or con-
cealed, unless in square-rigged vessels during war ; nor must she be
described by any other name in print or writing, or even verbally,
to a revenue officer on duty, (disobedience to these regulations sub-
jecting to a penalty of 100/.) ; (|:>) her port, master, and description ;
the names, description, and residences of the owners, with other
circumstances tending to prove them subjects of her Majesty, and
denies that any foreigner is interested in the ship, {q)

If the ship belong to a corporation, the declaration is made by
the secretary or other proper of&cer, and the corporate name sub-
stituted for the names of the owners, (r)

The attending owner and the master must also jointly, or in
case of the master's absence with the ship, severally (by which,
however, they are jointly and separately bound), execute a bond
as a security, that the certificate shall be used for the ship's service
only, and for its return, in case the ship be lost, captured, destroyed,
prevented from returning to her port, forfeit her privileges, be con-
demned for illicit trading, sold in execution, sold to the crown, or
to a foreigner either in part or whole, or registered de novo, (s)

The applicant for registry must also produce an account under
the builder's hand, and which the builder is required to give, of the
ship's time and place of building, denomination, and tonnage, to-
gether with the name of the first pTirchaser ; he must also make
declaration of her identity ; but where by reason of the death of
the builder or other unavoidable cause, the builder's certificate can-
not be produced, it may be dispensed with, (i)

The mode in which the tonnage of British merchant {u) shipping

(o) Sects. 13, 14. (p) Sect 27.

{q) Sect. 13, ubi vide form of declaration.

(r) Sect. 13. See Regina v. Arnaud, 16 L. J. Q. B. 50, in which it was held that
a corporate company established in England, was entitled to register, though some
of the members were aliens and resided abroad.

(s) Sect. 23. (t) Sect. 28. (m) Sects. 16 to 20.

SHIPPING. 235

What Ships are, properly speaking, British.

is to be ascertained, is regulated by the same statute, wbicli requires
tbat the amount of tonnage shall be carved on the main beam be-
fore the vessel is registered, (y)

In the case of a prize or condemned ship, the owner must pro*
duce a certificate of her condemnation under the judge's hand and
seal, and an account of the particulars to be set forth in a certificate
of registry subscribed by one or more skilful persons appointed by
the court to survey her, and must make declaration of her iden-
tity, (iv)

The above requisites being complied with, the ship is registered,
and a certificate of registry deliyered to the applicant: this certificate
contains (x) the name, occupation, and residence of every owner;
the name of the ship ; the place to which she belongs ; her tonnage ;
the name of the master ; the time and place of the build or of con
demnation ; the name of the surveying ofi&cer ; the number of decks
and masts ; the height, breadth, and depth between decks, if more
than one, or depth of the hold if only one deck ; whether rigged
with a standing or running bowsprit ; the description of her stern ;
her build, whether carvel or clinker built ; and gallery, and kind
of head, if any ; and on the back are indorsed the names of the
owners, who cannot be more than thirty-two, with the number of
sixty -four shares held by each ; the property of everj vessel being,
as we shall hereafter see, divided into sixty -four equal shares, (y)

All the above particulars are entered in a book, which the
registering of&cers are required to keep ; every registry is num-
bered in progression, beginning from the commencement of each
year, and an exact copy thereof tr3,nsmitted, within a month, to the
commissioners of customs. (2)

If at any period the master be changed, the certificate must be
delivered to the person authorized to register at the port where the
change takes place, who are to indorse the change on the certificate,
and transmit notice of it to the proper officer at the ship's port, who
transmits it to the commissioners of customs : the new master is to
give a bond, such as was given by the old one at the time of the
registry, (a)

(v) Sect. 20. (w) Sect. 32. (x) Sect. 2.

(2/) 8 & 9 Yict. c. 89, sect 36. {z) Sect. 10. (a) Sect. 2L

236 MERCANTILE PROPERTY.

What Ships are, properly speaking, British.

Thirdhj, with regard to registry de novo ; that ceremony must
be gone through in five cases. 1st. Whenever the owner or owners
who subscribed the declaration shall have transferred all his or
their shares in the ship, she must be registered de novo, before de-
parture from the port to which she belongs, or from any port in the
same part of the United Kingdom, or the same colony, plantation,
island or territory. But the collector and comptroller may certify
on the back of the certificate that it is to remain in force during
another voyage, if there be not time for registry de novo, before her
departure thereon, (5)

2dly. If the certificate be lost or mislaid, the commissioners of
customs are to permit a registry and certificate de novo, the master
and owners giving a bond, conditioned that the old certificate, if
found, shall be delivered up, and has not been, nor shall be ille-
gally used with their knowledge. Or the commissioners may grant
a license, which will, pro tempore, serve as a certificate ; the master
in such case declaring that the ship was registered, naming the port,
time, and particulars of the certificate, to the best of his belief, and
giving a bond such as is last mentioned ; the ship too must be sur-
veyed, as if for registry de novo, and the certificate of survey pre-
served by the collector and comptroller at the ship's port, in virtue
whereof the commissioners will permit the ship to be registered
after her departure, whenever the owners attend to make the de-
claration and comply with the other requisites of the act, except so
far as relates to the bond to be given by the master, and will trans-
mit the new certificate to the collector and comptroller of any port,
to be handed to the master on his executing the bond, and giving
up the license, (c)

3dly. If any person be convicted of illegally detaining the cer-
tificate, (which is punishable summarily by sect. 30,) {d) the persons
who made the first registry will, on certificate of the conviction, be
entitled to make registry de novo ; and if the detaining party have
absconded, the commissioners will, on proof thereof, permit registry
ie novo, as in case of a certificate lost or mislaid, (e)

(6) Sect. 11. (c) 8 <fe 9 Vict. c. 89, sect 29.

(d) As to the form of conviction under the corrfsponding section of the former
act, see Rex v. Walsh, 1 Ad. & Ell. 481. [e) Sect. 30.

!5HIPPING. 237

What Ships are, properly speaking, British.

4tblj. If the ship have been altered, so as not to correspond
with the particulars in her certificate, she must be registered de novo
on her return to her port, or to any other port in the same part of
the United Kingdom, or the same colony, plantation, island, or
territory, (/)

5thly. On any change of property in a ship, the owners may^ if
they thiok fit, have her registered de novo, {g)

Lastly. It remains to enumerate the cases in ivhich registry is dis-
pensed with, viz. :

1st. That of British built boats and vessels, not exceeding fif-
teen tons burthen, wholly owned and navigated by British subjects,
and employed in the rivers and on the coasts of the United King-
dom, or of the British possessions abroad, and not proceeding over
sea, except within the limits of the respective colonial governments,
wdthin which their managing owners reside. (A)

2dly. British built boats or vessels, wholly owned and navigated
Dy British subjects, not exceeding thirty tons, and not having a
whole or fixed deck, employed solely in fishing on the banks and
shores of Newfoundland, and the parts adjacent, Canada, Nova
Scotia, New Brunswick, adjacent to the Gulf of St. Lawrence, or
the North of Cape Canso, or of the islands within the same, or in
trading coastwise within the same limits, (i)

8dly. Ships built in the British settlements at Honduras, and
owned and navigated as British ships, which are entitled to the
privileges of British ships, in all direct trade between the United
Kingdom or the British possessions in America, and the said settle-
ments, on production of a certificate from the superintendent of the
settlement, that the ship is so built and owned, and with the time
of her clearance for the voyage indorsed by him upon it. (j)

4thly. There is one case in which the registry of a ship is tem-
porarily dispensed with, viz., if a ship be built in any of the colo-
nies, plantations, islands, or territories, in Asia, Africa, or America,
for owners in the United Kingdom, and the master or agent for the
owner produce to the collector and comptroller of the port at or
near which she was built, the builder's certificate required by the

(/) Sect. 31. {</) Sect. 42. (A) 8 & 9 Vict. c. 88, sect. 14.

(i) 8 A 9 Vict. c. 88, sect. 14. (j) Sect. 15.

238 MERCANTILE PROPERTY.

How title to British Ships may be acquired and transmitted.

Eegistry Act, and make declaration of lier identity, the principal
owners' names and descriptions, and that no foreigner, to his belief,
is interested therein ; the collector and comptroller shall cause her
to be surveyed and measured, and give the master a certificate,
which has for two years, if the ship arrive not sooner in the United
Kingdom, the force of a certificate of registry, {k)

Lastly. It is to be observed, that no ship is absolutely required
to be registered, registry being only necessary to confer the privi-
leges of a British ship.*

Section III. — Sow title to British /Ships may he acquired and
transmitted.

We have now shown what are the privileges of a British ship,
and what ships have a right to be called British. We proceed to
consider how title to such ships may be acquired, and how trans-
mitted.

A ship is a personal chattel, and therefore, generally speaking,
subject to the rules which govern that description of property. It
may be originally acquired —

1. By building it.

2. By capture from an enemy in time of war, sanctioned by
condemnation by a competent court of the capturing power, con-
stituted according to the law of nations.

Although such capture and condemnation suppose a pre-exist-
ing right in some one to the vessel captured, yet this is enumerated
as a mode whereby property in it may be originally acquired, be-
cause we are, as must be recollected, treating only of British ships,
and its right to be registered, and consequently to be called British,
does not accrue till sentence of condemnation, (l) Respecting the

{Jc) 8 & 9 Vict. c. 89, se^t. 11. (/) 8 & 9 Vict. c. 89, sect. 5.

* It is not essential to the validity of a bill of sale, that it should be enrolled in
the custom house. The enrollment is only necessary to secure the character and
privileges of an American vessel. Wendover 'i. Hogeboom, 7 Johns. 308. Hozey v
Buchanan, 16 Peters, 215.

SHIPPING. 239

How title to British Ships may be acquired and transmitted.

court ia which this sentence is passed, there is the following rule,
viz., That a legal sentence of condemnation cannot, according to
the law of nations, (which regulates all cases of prize,) be passed by
the consul or minister of the belligerent power in the country of a
neutral power to which the prize has been taken, (m) But states
in alliance with the captors, and at war with the country to which
the prize belongs, are considered as forming one community with
the captors, and a prize carried into such a state may be condemned,
either there by a consul belonging to the nation of the captors, (?z)
or in the country of the captors, (o)

2dly. Title to a ship may be transmitted by the operation of
the bankrupt or insolvent law, or it may be taken and sold in execu-
tion, being, as we have seen, a chattel personal, in which case it
must be registered de novo.

But the ordinary mode of acquiring property in shipping is by
conveyance from a person authorized to dispose of it. Such a per-
son may be —

1st. The Master.

It is said, that in case of extreme necessity, the master may sell
the ship for the benefit of the owners, though nothing but extreme
necessity will justify such a step. (^)* " Suppose, for instance,"

(m) Tlie Flad Oyen, 1 Rob. Ad. Rep. 135. The Kierlighett, 3 Rob. Ad. Rep. 96.
Havelock v. Rockwood, 8 T. R. 268.

(n) The Betsey, 2 Rob. Ad. Rep. 210, n. Oddy v. Bovil, 2 East, 4*73.

(o) The Christopher, 2 Rob. Ad. Rep. 209.

(p) See on this subject Abbott on Shipping, pt. 1, c. 1.

* The authority of the master to sell the ship or cargo, in case of necessity, seems
to be well settled ; and the same principles apply to the sale of both. Abbott, pt. 1,
eh. 1, p. 11. But as to the degree of necessity which will authorize a sale, there ap-
pears to be a conflict in the authorities. Some require a very high degree of neces-
sity, and use the strongest language to express it, such as "imperious uncontrollable
necessity," Pierce v. Ocean Ins. Co., 18 Pick. 88 ; " an overwhelming or extreme ne-
cessity," Robinson v. Commonweal ;h Ins. Co., 3 Sumn. 249 ; "a necessity which leaves
no alternative — which prescribes the law for itself, and puts the party in a positive
state of compulsion to act," Hall v. Franklin Ins. Co., 9 Pick. 477 ; Bryant v. Com-
monwealth Ins. Co., 13 Pick. 543. Other and later authorities take a more moderate

240 MERCANTILE PROPERTY.

How title to British Ships may be acquired and transmitted.

said the learned judge, in the case of the Fannij and Mmira, {q) "a
ship in, a foreign country, where there is no correspondent of the
owners, and no money to be had on hypothecation to put her into
repair ; under these circumstances, what is to be done ? The ship
may rot before the master can hear from his owners ; and, there-
fore, if the necessity were clearly shown, with full proof that every

{g) Edw. Ad. Rep. 111.

ground. From them it may be gathered, that the master is required to act, as under
like circumstances, a considerate owner, who was uninsured, would act for his own
true interest, and that of all concerned in the voyage. It is not sufficient, however,
to show that the master has acted fairly in the exercise of his discretion, but it must
appear that he acted with competent skill and judgment, with due care, diligence
and attention, and with strict fidelity. New England Ins. Co. v. Brig Sarah Ann, 13
Pet. 38*7 ; S. C. 2 Sumn. 215. Patapsco Ins. Co. v. Southgate, 5 Pet. 604. Robinson
V. Commonwealth Ins. Co., 3 Sumn. 220. Jordan v. "Warren Ins. Co., 1 Story R. 342.
Lawrence i'. New Bedford Com. Ins. Co., 2 Story R. 411. In this last ease. Judge
Story uses the expression that "the sale must be justified by necessity or by a high
degree of expediency." See also on this subject Fontaine v. Phoenix Ins. Co., 11 John.
293. American Ins. Co. v. Center, 1 Cowen, 564; S. C. 4 Wend. 45. American Ins.
Co. V. Ogden, 15 Wend. 532. Fontaine v. Columbian Ins. Co., 9 John. 20. Salters v.
Ocean Ins. Co., 12 John. 107. Gordon v. Mass. F. & M. Ins. Co., 2 Pick. 249. Winn
V. Columbian Ins. Co., 12 Pick. 279. Smith v. Martin, 6 Binney, 262. Arthur v.
Schooner Cassius, 2 Story R. 81.

It cannot be laid down as a universal rule, that the master's authority to sell is
limited to cases of necessity in a foreign port, or in a port of another state. The
true criterion is, whether the owners or insurers, when they are not distant from the
place where the necessity occurs, can, by the earliest use of the ordinary means to
convey intelligence, be informed of the situation of the vessel or cargo, in time to
direct the master before a loss will probably occur. If there be a probability of
loss and it is made more hazardous by every day's delay, the master may then act
promptly, to save something for the benefit of all concerned. New England Ins.
Co. V. Brig Sarah Ann, 13 Pet. 387 ; S. C. 2 Sumn. 215, qualifying Scull v. Briddle, 2
Wash. C. C. R. 150.

The fact that the vessel is got off, delivered of her peril, and repaired by the pur-
chasers, after the sale, does not disprove the necessity of the sale : for cases of this
sort are not to be judged of by the event. 13 Pet. 387. Fontaine v. Phoenix Ins. Co.,
11 John. 293.

A purchaser from the master, or a party affirming such a sale, is required to show
the necessity for the same, by proving the facts and circumstances attending it.
Some weirfit may be given to the presumption that the master did his duty in mak-
ing the sale, but that presumption ought not to prevail in the absence of all other
proofs of the necessity of the course. Robinson v. Commonwealth Ins. Co., 3 Sumn.
220, 227.

SHIPPING. 241

How title to British Ships may be acquired and transmitted.

thing was done optima fide, for the real benefit of tlie owners, the
Court might be disposed to sustain a purchase so made. But there
must be the clearest proof of necessity ; it must be shown not only
that the vessel was in want of repair, but lil^ewise that it was im-
possible to procure the money for that purpose."

"The Court," said Baron Parke, in Parker v. Hunter, (r) "do
not mean to intimate that the master has not such a power, in case
of actual necessity, notwithstanding the case of Reid v. Darby, (s) in
which the point was judicially decided, for it appears from subse-
quent authorities, that the master has not merely those powers that
are necessary for the navigation of the ship, and the conduct of the
adventure to a safe termination, but also a power, when such ter-
mination becomes hopeless, and no prospect remains of bringing
the vessel home, to do the best for all concerned, and, therefore, to
dispose of her for their benefit." In that case it became unnecessary
to decide the point, for it turned out that the owner had done acts
which amounted to a ratification of the sale by the master.

2dly. The Owner.

The conveyance of property in British ships is almost entirely
regulated by the provisions of the Eegistry Act, stat. 8 & 9 Vict,
c. 89. We have already seen how a ship is registered in the first
instance ; the nature of the hook of registry, which the public offi-
cers are required to keep, and of the certificate of registry, which
they deliver to the owners. It is further necessary to observe, and
has indeed been incidentally stated, that the property of every Bri-
tish vessel is considered by law as divided into sixty-four equal
parts, and that no person can be registered as owner, in respect of
any proportion not being a sixty-fourth part, {t)

It is, however, provided, that if the property of an owner or
owners cannot be divided into sixty -four parts, the owner or own-
ers of such fractional parts as are above the number into which it

(r) 7 M. & TV. 342. See Vlierboom v. Chapman, 13 M. & "W. 230, and the obser-
vations of Tindal, C. J., in Benson v. Chapman, 6 M. & Gr. 810, and see also Ireland
V. Thompson, C. P. H. T. 1847.

(s) 10 East, 143. {t) Sect. 85.

242 MERCANTILE PROPERTY.

How title to British Ships may be acquired and transmitted.

can be divided, may transfer the same to one another, or to a new
owner, without payment of stamp duty, and their rights shall not
be affected by the non registry of their shares. And that partners
may hold ships or shares in the name of their house, without distin-
guishing the interest of each owner, which ship or shares are to be
subject to the rules that govern other partnership property. If they
specify the names of the partners, they must specify them all, or
an interest will vest in those only who are specified, {u)

It is further to be observed, that not more than thirty-two per-
sons can be legal owners of a ship at the same time, or registered
as such ; a provision which does not, however, affect the equitable
title {v) of minors, heirs, legatees, creditors, and others, duly repre-
sented by, and holding from any registered owners within that
number ; and the commissioners of customs have the power of al-
lowing joint stock companies of any number, to hold ships through
the intervention of not less than three trustees, (iv)

Keeping these rules in mind, we will proceed to consider the
mode which the Legislature has pointed out for the transfer of a
ship from one person to another.

This is effected by a bill of sale, or other instrument in -UTiting,
which must recite the certificate or principal contents thereof,
otherwise the transfer is invalid.* No bill, however, is to be void

(u) Slater v. Willis, 1 Beav. 361. (i) See 6 Ves. 739, 15 Ves. 68. (w) Sect. 36.

* The doctrine of the text, that a bill of sale, or other instrument in writing, ia
essential to the transfer of a ship, is well settled in England, both in the courts of
admiralty and the courts of common law. " I have not been able," says Judge Story,
in Ohl V. Eagle Insurance Company, 4 Mason, 390, " to find a single case in English
jurisprudence, in which it has been held that a ship might pass by mere delivery,
without any document in writing of actual ownership." See The Sisters, 5 Rob. ] 55,
ex parte Hackett, 19 Ves. 475. The question has more than once arisen in this coun-
try, in the courts of common law, and they have manifested a disposition to depart
from the rule of admiralt}', and apply to a controversy respecting the ownership of
a vessel the rules which ascertain the title of ordinary chatties. See Bixby v. Whit,
ney, 8 Pick. 86. Badger v. Bank of Cumberland, 26 Maine Rep. 428. Wendover v.
Hodgeboom, 7 John. Rep. 308.

Under the Registry Act of 1792, a bill of sale on the transfer of a registered ves-
eel, is essential to enable the purchaser to obtain a new registry, and give an Ameri-
can character to the vessel. And by an act of 1850, no bill of sale is valid against

SHIPPIXG. 243

How title to British Ships may be acquired and transmitted.

on account of any error in the recital, or the recital of a former
instead of the existing certificate, provided the identity of the ship
be sufficiently proved thereby, (x) But no bill of sale is valid or
eflPectual, for any purpose, (y) until produced to the collector and
comptroller of the port where the ship is registered, or about to be
registered de novo, who are to enter in her last book of registrj^, in
the one case, or in the book of registry de novo, after all requisites
for such registry de novo have been complied with, in the other
case, the name, residence, and description of the vendor and ven-
dee, mortgagor and mortgagee, or each, if more than one, the num-
ber of shares transferred, and the date of the instrument, and of the
production of it ; and are (except in cases of registry de 7iovo, when
a new certificate is granted,) to indorse on the slu2:)^s certificate of
registry when produced to them, the aforesaid particulars in a pre-
scribed form, and give notice thereof to the commissioners of cus.
toms, and if required, to certify by indorsement on the bill of sale,
or other instrument, that such entry on the book and indorsement
on the certificate of registry, have taken place. (2)

When the entry in the hook of registry has been made, the bill
of sale or other instrument becomes effectual to pass the property
intended to be transferred, as against all persons whatever, except
against such subsequent purchasers and mortgagees who shall first
procure the indorsement to be made on the certificate of registry, in
manner hereinafter mentioned, (a) For where the same property
has been transferred more than once, the several vendees and mort-
gagees take priority, not according to the time of entering their respec-
tive instruments in the hook of registry, hut according to the time ivhen
the indorsement is made on the certificate, {b)

(x) Sect. 34.

(y) See Boyson v. Gibson, 16 L. J. C. P. 147.

(2) Sect. 37. See on this section R. v. Philip, 1 Moody C. C. 274.

(«) Sect. 38.

(6) Sect. 39.

any other than the grantor, mortgagor, or persons having actual notice tliereof, un-
less it is recorded in the office of the collector of customs wliere such vessel is regis-
tered or enrolled. See Gordon's Digest, sects. 2508, 2509. Phillips v. Ledlc}', 1 Wash
C. C. R. 226. United States v. Willing et als., 4 Cranch, 48.

244 MERCANTILE PROPERTY.

How title to British Ships may be acquired and transmitted.

Thus, if the owner of a share fraudulently execute two differ-
ent bills of sale thereof, to two different persons, and both cause
their conveyances to be entered in the book of registry, but the
second get into possession of the certificate, and procure the in-
dorsement to be made on it, he, and not the first vendee, will have
the legal title to the share.

But it is further provided, that when any instrument of trans-
fer has been entered in the book of registry, there must be a lapse
of thirty days, or (if the ship were absent from her port at the time
of such entry) thirty days from her arrival thereat, before any in-
strument purporting to be a transfer of the same ship or share from
the same vendor or mortgagor to any other person, can be entered :
so, if a second instrument have been entered, a like period must
elapse between its entry, and that of a third; and wherever more
than one have been entered, the of&cer is to indorse on the certifi-
cate the particulars of that one under which the person claims, who
shall produce the certificate for that purpose within thirty days
after the entry of his instrument in the book, or of the ship's re-
turn to port, if she were absent at the time of such entry : and if
no person produce the certificate within such time, then the officer
is to indorse the particulars of that person's instrument who shall
first produce the certificate for that purpose. It is, however, pro-
vided, that if the certificate be lost, mislaid, or detained, on proof
of this by a vendee or mortgagee, time may be granted either for
its recovery or for registry de novo, during which additional time no
other transfer can be entered in the book of registry, (c)

Thus, it appears, that in case of successive sales of the same
property by the same person, each of the rival vendees has thirty
days from the entry of his instrument, or next subsequent return
of the ship to port, during which no one but himself can obtain a
perfect title. But if he let that space of time go by, he will be in
danger of having his claim defeated by an indorsement of the pai"-
ticulars of some other vendee's instrument on the certificate, un-
less, indeed, further time have been granted to him, in the manner
above pointed out.

(c) Sect. 39. See as to the operation of this clause, and the expediency of pro-
turing immediately this indorsement, Chapman v. Thompson, 2 Hare, 142.

SHIPPING. 245

How title to British Shij^s may be acquired and transmitted.

To put an example. Suppose the owner of a share in a ship at
sea fraadulently executes one bill of sale to A., and another to B. ;

A. causes his bill of sale to be entered in the book of registry at
the ship's port: his title is now perfect against the vendor, and
against every one else, except B. ; and B. himself cannot procure
his bill of sale to be even entered in the book of registry, the time
not having elapsed, which is given, as we have shown, to A. exclu-
sively. The ship returns to port, say on the first of October, A.
allows that month to elapse without taking any step ; on the 81st
of October, A.'s thirty days expire ; and on the 1st of November

B. procures his instrument to be entered in the book of registry,
but neglects to adopt any further measure to secure his purchase
A. now obtains the certificate of registry from the master of the
ship, but cannot perfect his title, by having the particulars of his
bill of sale indorsed on it, until the 2d of December shall have ar-
rived, the law appropriating the intermediate days to the exclusive
use of B. On the 2d of December, however, A. produces the cer-
tificate to the collector and comptroller at the ship's jDort, has the
indorsement made, and his title then becomes perfect against all the
world.

It is further provided by the Eegistry Act, that if, after any bill
of sale has been recorded at the port to which the ship belongs, it
be produced with a notification upon it of such record and along
with the certificate of registry, to the officers of any other port ;
those officers, if required, are to indorse on the certificate the trans-
fer mentioned in the bill of sale, and give notice of their having
done so to the officers of the port to which the ship belongs, who
will record it there, as if they had made the indorsement them-
selves, but mentioning the facts. However, before the officers of
the other port can make such indorsement, they are to give notice
of the requisition made to them, to the officers of the port to which
the ship belongs, and ascertain from them whether any and what
bills of sale have been entered in the book of registry, after which
they are to proceed to indorse the certificate, as if their port ivere thai
to tohich the ship helongs. {d)

Thus, the person who would be entitled to have the indorse-

(a) Sect. 40.

246 MERCAI^TILE PROPERTY.

How title to British Ships may be acquired and transmitted.

ment made ou the certificate, immediately on the return of an ab-
sent vessel to her port, may have it made by anticipation during
her absence.

If a ship or share be sold in the owner's absence, by his known
agent and correspondent acting for him, and who has executed a
bill of sale to the purchaser, without any legal power to do so, the
commissioners of customs may, on proof of the fair dealing of the
parties, permit the transfer to be registered, recorded, or indorsed,
as the case may be, as if a legal power had been produced. So, if
a bill of sale cannot be produced, or by reason of distance of time,
or absence, or death of parties, cannot be proved to have been exe-
cuted, the commissioners may, on proof of the fair dealing of the
parties, permit the ship to be registered de novo, as if a bill of sale
had been produced. But in any of these cases good security must
be given to produce a legal power or bill of sale in reasonable time,
or abide the future claims of the absent owner or his representa-
tives, which security will be available for the protection and indem-
nity of the party whose property has thus been transferred, in ad-
dition to his other rights, whether in law or equity, (e)

In case of mortgage.

The above considerations are applicable to every instance in
which property in shipping is transferred, but there are one or two
regulations peculiar to ^ases of mortgage.

When a transfer is made by way of mortgage, or to a trustee,
for the purpose of sale for the payment of debts, the nature of the
transfer is to be expressed in the entry in the book, and indorse-
ment on the certificate of registry, and the transferee is not deemed
to have become, or the transferror to have ceased to be, the owner
of the property transferred, except so far as may be necessary to
make it available by sale or otherwise, for the payment of the debt
it was transferred to secure. (/)* It has been doubted since this

{e) Sect. 44. (/") Sect. 45

* The law as to liability of mortgagees, whether in or out of possession, for re-
pairs and supplies to tlie vessel, has been the subject of many fluctuating decisions.

surppixG. 247

IIow title to British Ships may be acquired and transmitted.

enactment, whether a mortgagee can insure the entire value of the
ship, (g) However, if he take possession of it, as he may, during
a voj^age, he is entitled to receive the freight earned in that voy-
age, [h) As the entire property does not pass to the mortgagee,
there of course remains a portion in the mortgagor, which he can
transfer to a second purchaser or mortgagee, in the manner pre-
scribed by the Eegistry Act ; and it seems from the remarks of the
Bench in a recent case, {i) that an instrument purporting to transfer

(^) Irving V. Richardson, 2 B, & Ad. 196.

(h) Kerswell v. Bishop, 2 Tyrwh. 602, 2 C. & J. 529.

(^) Ex parte Jones hi re Richardson, 2 Tyrwh. 686, 2 C. & J. 525.

According to Chancellor Kent, the weight of American authority is in favor of the
position that a mortgagee of a ship out of possession, is not liable for repairs or ne-
cessaries procured on the order of the master, and not upon the particular credit of
the mortgagee, the latter not being in the receipt of the freight; though the rule is
otherwise when the mortgagee is in possession, and the vessel is employed in his ser-
vice. 3 Kent's Com. 13-i. Hesketh v. Stevens, 7 Barb. S. C. R. 488. Ring v. Frank-
lin, 2 Hall K Y. R. 1. Miln v. Spinola, 4 Hill's Rep. 177. Tucker v. Buffington, 15
Mass. R. 477. Duff v. Bayard, 4 Walls. & Ser. 2 40. Henderson v. Mayhew, 2 Gills.
R. 393. Jones v. Blum, 2 Rich. S. C. R. 475. Judge Sergeant, in Duff v. Bayard, thus
expounds the principles of the doctrine. " That the owners of a vessel are liable for
supplies or necessaries furnished for her use by the orders of the master, where no
other percon has been expressly credited, is a principle long established. But who
is such owner in any given ease, is a question upon which there are to be found con
tradictory cases and fluctuating opinions in the reports. The latter decisions, how-
ever, seem to agree, that one having the legal title onl3-, without any interference in
the management of the ship, or any right to receive her freight or earnings, is not
responsible, whether the title is by bill of sale or other sufficient conveyance, or
whether it is by mortgage or other document in the nature of a pledge or security.
Such persons are, it is true, in one sense owners ; that is to sa^', they have a valid
claim or title to the property of the vessel, in law or in equity. But that is not suf-
ficient. The owner who is responsible in such cases, is the person, who, having some
kind of claim or title, has the control or management of the vessel, and has the right
to receive the freight and earnings. And the ground of this liability seems to be the
common maxim, qui sentit commodum sentire debet et onus." It is for the former of
these {i. e., who employ the vessel), and not for the latter, that the master is consid-
ered as agent, and competent to bind them by his orders for supplies furnished to
the vessel. " It is obviously right and just that he who enjoys the benefits of the
vessel, and controls her operations, who receives her gains, or has the chance of so
doing, ought to pay the debts incurred for the fitting out, supply, and navigation of
the vessel, which is to produce for him those earnings, and not a person who merelj
holds a right in her without the profit or asufruct."

248 MERCANTILE PROPERTY.

Rights of Part Owners.

such residue of interest, and taking notice of the right of a prior
mortgagee, will not entitle the party claiming under it to a priority
to such mortgagee, although his transfer may never have been in-
dorsed on the certificate, and all proper formalities may have been
complied with in the case of the second instrument.

The mortgagee is preferred to the assignees of the mortgagor
in case of bankruptcy, and protected from having the mortgaged
proj)erty considered as in the bankrupt's ordering and disposi-
tion. {J)

Section IV. — Bights of Part Owners.

It remains to consider the rights of part owners of a ship
amongst themselves.

It is possible that joint tenancy may be created in a ship, as
well as in any other chattel, by grant to several persons jointly,
and if it be, the rule jus accrescendi inter mercatores locum non habet,
will apply to it. (k) But the operation of the Eegistry Act occasions
this sort of property to be usually conveyed in distinct shares of
one or more sixty-fourth parts, the owners of which are tenants in
common of the vessel, and would hold it subject to the general
rule of the common law, which permits any one tenant in common
to seize upon the chattel, and regulate the mode of its enjoyment
to the exclusion of the rest, (l) were it not that public policy steps
in, and exempts this sort of property from a rule, which, if applied
to it, might prove injurious to commerce. Accordingly, if the
owners themselves have not precluded all dispute by agreeing in
the choice of a sAjp's husband, or managing owner, and delegating
the care of their interests to him, the Court of Admiralty interferes
by arresting the ship, and preventing the majority of owners from
sending her abroad against the will of the minority, without first
entering into a stipulation, in a sum equal in value to the shares of

(j) Sect. 46; but see Boyson v. Gibson, 16 L. J. C. P. 147, and Campbell v.
Thompson, 2 Hare, 140.

{k) See R. v. Philip, 1 Moo. C. 0. 2Y4.

(I) Graves v. Sawcer, L. Rajm. 15, 1 Lev, 29. Strelley v. Winson, 1 Vern. 297.
SJdnner, 230.

SHIPPING. 249

Riglits of Part Owners.

the dissentients, either to bring back the ship or pay the value of
their shares. On giving this security they are permitted to send
the ship to sea , (m) and if the minority are in possession of it, may
take it out of their hands for that purpose by a warrant of the court.
But the dissentient owners bear no part of the expense, and are en-
titled to no part of the profit of the voyage to which they have dis-
agreed, (n) In case the owners be equally divided in opinion, either
half may apply to the court to interfere, in the manner above
stated, (o)*

As the Court of Admiralty may arrest the ship, for the protec-
tion of one part of the owners against another, so it may for the
protection of the owner or owners against a wrong-doer, {j))

The ordinary mode for part owners to obtain an adjustment of
the ship's accounts is by suit in a court of equity ; they may, how-
ever, by naming a ship's husband, and inserting special provisions
in his appointment, entitle themselves to an action against him, in
case he fail in making up his account, and dividing the profits; (q)
while, on the other hand, the ship's husband, if he have advanced
money for outfits, may sue each of the owners for his j)roportion.
Part owners resemble partners, with respect to the concerns of the
ship, and are, therefore, generally speaking, all liable to the full
extent, of debts contracted for its repair and other necessary ex-

(m) See Abbott on Ship., part 1, c. 3.

(«) Davis V. Johnson, 4 Simon, 539. Tlie Apollo, 1 Hagg. Ad. Rep. 306. Abbott
•D Shipping, part 1, c. 3.

(o) Ibid.

(p) Per curiam, in re Blanchard and others, 2 B. & C. 244.

{q) Owston v. Ogle, 13 East, 538. Servante v. James, 10 B. & C. 413. See Raden-
hurst V. Bates, 3 Bingh. 463. Davies v. Hawkins, 3 M. & S. 488. As to the rights of
the ship's husband against the ship owners, see Helme v Smith, "7 Bingh. 709.

* "Mr. Justice Story strenuously contends for the lawful exercise, by the courts
of admiralty, of the power to decree a sale of the vessel, on the disagreement of the
part owner.s of a ship upon a particular voyage, whether the ship be owned in equal
or unequal shares. This is the rule of the maritime law abroad, and is sustained by
the decision of Judge "Washington, in the case of Davis &, Brooks v. Brig Seneca, re-
ported in 18th vol. of American Jurist, 486, and by general convenience and policy."
Kent's Comm., vol. 3, 152. See the case of The Seneca, reported in 1 Gilp. R. 10, and
The sloop Hope, Bee's Adm. Rep. 2, and "Willings v. Blight, 2 Peter's Adm. R. 288.

250 JIERCANTILE PROPERTY.

Rights of Part Owners.

penses, wliicli can be shown or presumed to have been incurred
with their assent. But this liability arises in every case out of con-
tract, and is not an incident inseparable from the registered owner
ship of the vessel ; and therefore, if the registered owners can show
that the expense was not incurred on their credit, they will not be
liable for it. And, in like manner, any one of them will be ex-
empted who can show that he has not pledged his responsibility ;
for the mere legal ownership, ^er se, is in no case sufficient to render
an owner liable, (r)*

Where the ship is under the management of the master, and
the owners divide the profits, the master is, with resj)ect to her con-
cerns, prima facie (s) agent for them all. But although their con-
nection in this respect resemble that of partners, yet it is clearly
not a partnership. (;!) The admission of one is not binding upon

(r) Teed v. Baring, Abbott on Shipping, p. 84. See Briggs v. Wilkinson, 7 B. <fe
C. 30. £x parte Bland, 2 Rose, 91. Thompson v. Finden, 4 C. & P. 158. Cox v.
Reid, R. & M. 199. Curling v. Robertson, 1 M. & G. 336.

(s) Briggs V. Wilkinson, 7 B. & C. 34. Jennings v. Griffiths, R. & M. 43. Young
V. Brander, 8 East, 10. Frazer v. Marsh, 13 East, 238. Reeves v. Davis, 1 Ad. & Ell.
312.

(i!) See Wilson v. Dickson, 2 B. <fe A. 2. Ilelme v. Smith, 7 Bingh. 715. Briggs v.
Wilkinson, 7 B. <fe C. 34. Williams v. Thomas, 6 Esp. 18. See Robinson v. Gleado-w,
2 Bingh. K C. 163. Wedderburn v. Wedderburn, 4 M. & Cr. 41.

* The principle established by the modern cases seems to be, that in all that con-
cerns the repairs and necessaries of the ship, one part owner is agent for the other
part owners, and where the ship is under the management of the master, and the
owners divide the profits, the master is agent for them alb To withdraw a case
from the operations of this general principle, it must be shown that the creditor has
entered into a contract with one of tliese parties, relying upon the credit exclusively,
and without any intention of resorting to the other parties. It is said tliat he cannot
afterwards, when he finds that the security which he deliberately chose is worthless,
resort to the original security which he deliberately abandoned. Flanders on Ship-
ping, 379. CoUyer on Partnership, 1225. Sx parte Bland, 2 Rose, 91. James v.
Bixby, 11 Mass. 37. Hursey v. Allen, 6 Mass. R. 163.

As to responsibility for torts, the doctrine is thus summed up by Mr. Justice Story*
"Part owners of ships are, without question, all responsible at the common law,
severally as well as jointl}', m soliJo,ior all torts personally committed or authorized
by them, or occasioned to third persons by the negligence of one or more, or all of
them, or by that of the master of the ship, or ship's husband, or other agent thereof
but not for the wilful or malicious acts of tlie latter." Story on Partn., s. 458.

SHIPPIXG. 251

Rights of Part Owners.

the Other ; (u) each may transfer his share without the consent of
the others, nor is it liable to confiscation for acts done by the others
without his privity : thus, if one part owner be the proprietor of
the cargo, condemnation thereof involves the condemnation of hia
share of the ship, but not that of the shares of other part owners,
who knew nothing of the contraband commodities, (v)*

(m) Jaggers v. Binnings, 1 Stark. 64-
(v) The Jonge Tobias, 1 Rob. 329.

* The most important distinction bet-ween the two relations is, that one partner
may dispose of the entire subject, which constitutes partnership property, but a part
owner can only sell his own interest But, although part ownership is the relation
■which the law presumes to subsist between ship owners, a partnership may exist by
stipulation, as in the case of any other chattel. Abbott on Shipping, American
edition, 125. Harding v. Foxcroft, 6 Greenl. IQ. Hewitt v. Sturdevant, 4 B. Monr.
Rep. 459. NicoU v. Mumford, 20 Johns. 622. Seabrook v. Rose, 2 Hill, Ch. S. C. R.
555. French v. Price, 24 Pick. 19. Wherever a partnership exists, to which a ship
belongs, each partner is competent to sell it, as he may other partnership property.
Lamb v. Durant, 12 Mass. 54. Se Macey v. De Wolf, 3 Wood & Mi. 193.

It results also from this distinction, that a creditor of both part owners is not en-
titled to any priority in payment out of the vessel, or subject of the tenancy in com-
mon, against the separate creditors of either, Harding v. Foxcroft, 6 Greenl. 76.

CHAPTER HI.

GOODWILL.

There is another sort of property, if property it can be called, of
a nature so exclusively mercantile, as to deserve a separate men-
tion. I mean tlie goodwill of a business, which though arising from
various, and other accidental circumstances, such as the situation
of a house, the changes in a neighborhood, and even the prejudices
of customers, has been often recognized in courts of equity as an
existing and valuable interest : (a) and, therefore, when property to
which it attaches, is sold under their decrees, they will direct that
steps be taken to impress the purchaser with a just notion of its
value, {h) It has also been taken notice of by a court of law. (c)
But where the profits of the business result, almost entirely, from
confidence placed in the personal skill of the party employed, as in
the case of surgeons, or attorneys, {d) the goodwill is too insignifi-
cant to be taken notice of The sale of a goodwill, in the absence
of any express stipulation, (e) does not preclude the seller from set-
ting up the same kind of basiness again in the same neighborhood,
if he do not describe himself as setting up the identical business
that has been purchased. (/) By the conveyance of a shop, the
goodwill passes, although not specifically mentioned, (g) A sale of

(a) Kennedy v. Lee, 3 Mei'. 441.

(6) Cooke V. CoUingridge, Jac. 607, and' note to Collyer on Part. p. 1*72.

(c) i:x parte Farlow, 2 B. <fe Ad. 341. R. v. Hungerford, M. Co. JEx parte Still,
4 B. & Ad. 592. Ibid. Ex parte Gosling, ibid. 596.

(J) Farr v. Pearce, 3 Madd. 78. Spicer v. James, Rolls, M. T. 1830, reported
Collj-er on Part. 82. Bozon v. Farlow, 1 Mer. 459. See per Lord Langdale, "Whitaker
V. Home, 3 Beav. 390.

(e) Rannie v. Irving, 7 M. &. G. 969.

(/) Farr v. Pearce, 3 Madd. 74. Crutwell v. Lye, 1 Rose, 123.

{g) Cliissuni v. Dewes, 5 Russ. 29.

GOODWILL. 253

Goodwill.

stock and goodwill for £60 requires a stamp, not being a mere sale
of goods, (/i)*

(h) South V. Finch, 3 Bingh. N. C. 506.

* This interest is so entirely the growth of modern civilization, that the courts
have scarcely settled the landmarks by which it is to be defined and protected. A
court of equity will interpose by injunction to prevent any injury to it, from the un-
lawful acts of third persons, though at an early period it refused to decree the
specific performance of a contract for its conveyance.

It is an interesting question, and one upon which the highest authority has been
at issue, whether, on the dissolution of a partnership by the death of one of its mem-
bers, the goodwill would survive, or be considered as assets of the partnership. It
was first determined in the ease of professional partnership, that the goodwill would
survive. Indeed it is difficult to perceive how any such interest can exist, when a
professional connection is dissolved by the death of one of its members. The busi-
ness of such a firm must depend almost entirely upon public confidence in the per-
sonal qualifications of those who compose it, and it is entirely beyond the capacity
of a court of equity to prolong or transfer a patronage flowing from such sources.
It would seem to be the modern English doctrine, that the same rule is applicable
to every species of mercantile business. Lewis v. Langdon, 7 Sim. 421. Before the
decision of this case, it had been held by Vice Chancellor Hoffman in New York,
that the goodwill was partnership assets. Dougherty v. Van Nostrand, 1 Iloflf. C.
R. 68. Besides the authorities cited by the author in the note, the subject is con-
eidered in the following cases. Whittaker v. Howe, 3 Beav. 390. Horner v. Graves,
7 Bingh. 145. Eannie v. Irvine, Y Mann. & Grang. 9*78. Bell v. Locke, 8 Paige, 15.
Case V. Abeel, 1 Paige 401. Marten v. Van Schaik, 4 Paige, 479.

The nature of the goodwill, and the protection which will be extended to it, have
recently undergone a critical examination in Pennsylvania, Holden's Administr. v.
McMakin, 1 Pars. S. Eq. Cases, 270. The controversy related to the subscription list
of the Saturday Courier, which was claimed by the surviving partner, on the ground
of the alleged survivorship of the goodwill. President King, delivering the opinion
of the court, expressed great doubt whether the subscription list of a newspaper
could be considered as a part of the goodwill. The judicial idea of the goodwill
was supposed to agree with its popular signification, viz., the right and privilege of
continuing an old and established business in an old and established place. The
vague and undefinable character of such an interest might have led the courts to
doubt as to the propriety of bringing it into account, as an item of partnership
property, in winding up the business. The cases in which these decisions were ren-
dered, furnished no analogy for determining the character of a subscription list.
The great value of the particular list as property, and the ease and certainty with
which that value could be ascertained, were established by evidence. It had been
decided in a court of law, that the subscription list of a public journal would pass
to a purchaser of the printing materials at a sheriff's sale, as incident and accessary
to the purchase of the establishment. McFarland v. Stewart, 2 Watt's R. 111. There
was supposed to be no princii)le of equity upon which they could be separated after

254 MERCANTILE PROPERTY.

Goodwill.

the death of one i^artner, to the injury of his representatives, and for the exclusive
benefit of the survivor. The court, moreover, held, that if the subscription list con-
stituted a part of the goodwill, it nevertheless, according to the weight of authority,
remained part of the joint estate, and did not survive.

An interest somewhat analogous in its nature to the goodwill of a business, is tha
right to the exclusive use of a particular name or mark upon goods and merchandise.
Although no man possesses any abstract right to the exclusive use of a particular
mark, such right may be acquired by appropriation and undisturbed enjoyment ; and
will be recognized and protected both at law and in equity. Tliis recognition of
property in trade, marks, or symbols, is essential both to protect the public from
fraudulent imposition, and to secure to the manufacturer and merchant the full bene-
fit of his ingenuity, industry, and integrity. A merchant or manufacturer will not be
permitted to use a trade mark or name which has been properly appropriated by an-
other, although he may be ignorant of that fact, and honestly believe that the name
in question is only a techijical term to designate the particular material or species of
thing on which it is placed. No action for damages will lie against a manufacturer
who uses the trade marks of another in the ordinary course of business, and in igno-
rance of their previous appropriation: but a court of equity will interpose by in-
junction, and this protection will be extended as fully to a foreign as to a domestic
merchant. It is not necessary that there should be an exact similarity between the
two marks : it is sufficient that one is so closely imitated from the other as to deceive
the public and draw away customers. The cases upon this subject are collected and
arranged in an article in the 14th vol. of Hunt's Merchants' Magazine, p. 830, from
the pen of Mr. Charles Edwards of New York, and in a note by the Reporter to the
case of Coats v. Holbrook, Nelson & Co., 2 Sand. N. Y. C. R. 586. See also the re-
cent cases of Taylor v. Carpenter, 3 Story Rep. 458. Marsh et al. v. Billings et als. 1
Cush. Rep. 322. Knott v. Morgan, 2 Keen, 213. Croft v. Day, 7 Beav. 84, Rogers
V. Nowill, 5 Man. G. & S. 109,

CHAPTER IV.

PEOPERTY LN" NEGOTIABLE n^^STRUJMENTS.

Under the head of Mercantile Property, it seems right to advert
to a peculiarity in the mode in which title may be acquired to a de-
scription of chattels most usually found in the hands of mercantile
men, viz., negotiable instruments. The common and well-known
rule of law, is, that property in a chattel personal cannot, except
by sale in market overt, be transferred to a vendee, however inno-
cent, by a party who does not himself possess it. (a) The contrary,
however, is the case with respect to negotiable instruments, a trans-
fer of which, when in that state in which by law and the usage of
trade, they accustomably pass from one man to another by delivery,
causes the property in them, like that in coin, to pass along with
the possession, (/>) provided that the transferee has been guilty of no
fraud (c) in taking them, in which case he would be forced to bear
the loss, {d)

(a) See Peer v. Humplirey, 2 Ad. & R 495.

(6) See Grant v. Vaughan, 3 Burr. 1516. Lang D.Smyth, 7 Bingh. 284. Gorgier
V. Mieville, 3 B. <fe C. 45.

(c) Groas negligence was ruled to be the correct expression in Crook v. Jadis, 6 C.
& P. 194, 5 B. & Ad. 909. The negligence must, however, be so gross as to render it
impossible that the instrument should have been taken bona fide, and the case of Gill
V. Cubitt seems not to be supportable. Backhouse v. Harrison, 5 B. tfe Ad. 1105. See
the observations of Parke, B., in Foster v. Pearson, 1 C. M. <fe R. 849, 5 Tyrwh. 255.
CunlifFe v. Booth, 3 Bingh. N. C. 821. In the case, however, of Goodman v. Harvey
4 Ad. <fe E. 870, the Q. B. ruled that gross negligence would not be a sufficient answer
where a party has given consideration for the bill, and that gross negligence could
only be important so far as it supplied evidence of mala fides. Accord. Uther v. Rich,
10 Ad. & E. 784.

{d) Solomons v. Bank of England, 13 East, 135, n. Gill v. Cubitt, 3 B. <fe C. 466.
Snow V. Peacock, 3 Bingh. 408. Down v. Hailing, 4 B. & C. 330. Slater v. "West,
Dans. & Lloyd. 15. Beckwith v. Corral, 3 Bingh. 444. Strange v. Wigney, 6 Bingh.
677. Easley v. Crockford, 10 Bingh. 243. Crook v. Jadis, 6 C. <fe P. 194. Burn v.

256 MERCANTILE PROPERTY.

Property in Negotiable Instruments.

An instrument is, properly speaking, negotiable, when the legal
right to the property secured by it is transferable from one man to
another by its delivery : of this description are bills and notes pay-
able to bearer or indorsed in blank, (e) and exchequer bills ; (/) and
such was held a bond, whereby the king of Prussia bound himself
and his successors " to every person who should for the time being
be the holder of the bond," and which was proved to be usually
negotiable in the English market by delivery, {g) The forms of
several foreign securities of this description will be found in The
Attorney- General v. Bouwens, (A) which decided, that Danish, Dutch,
and Russian bonds, transferahle in the marhet hy delivery^ are, on
their owner's death, assets in this country, and liable to probate
duty, in which respect they differ from French rentes^ and American
stock, which are considered to be locally situated abroad, being
transferable there only, and are, on that account, exempt
from probate duty in this country, as also are debts of an or-
dinary description, due from persons resident in a foreign coun-
try, (i)

I call those instruments negotiable, by delivery of which the
legal right to the property which they secure may be conveyed.
For there are other instruments (/ ) v/hich, though saleable in the
market by the usage of merchants, can yet only be put in suit, in
the name of the original contractee, and are not, properly speaking,
negotiable. Moreover, instruments which in one state would be

Morris, 2 C. <fe M. 579, 4 Tyrwh. 485. Haynes v. Foster, 2 C. & M. 237, 4 Tyrwh. 66.
Fancourt v. Bull, 1 Bingh. N. C. 681.

(e) Miller v. Race, 1 Burr. 452 ; and see the notes to that case, 1 Smith's Leading
Cases, 258. Clarke v. Shee, Cowp. 200. Solomons v. B. of England, 13 East, 135.
Grant v. Vaughan, 3 Burr. 1516. Collins v. Martin, 3 B. & P. 649. Peacock v. Rhodes,
Dougl. 636. "Wookey v. Pole, 4 B. & A. 1.

(/) Brandao v. Barnett, 6 M. & Gr. 630.

(^) Gorgier v. Mieville, 3 B. & C. 45.

(A) 4M. <fe W. 171.

(i) Att. Gen. v. Hope, 1 C. M. & R. 530. See 8 Bligh. 44, 1 C. & J. 356.

(j) See Glynne v. Baker, 13 East, 509. Taylor i;.Kymer, 3 B. & Ad. 338. Taylor
V. Trueman, 1 M. k M. 453, 1 Lloyd & Welsh. 184. Thompson v. Dominy, 14 M. &
W. 403. Partridge v. The Bank of England, 15 L. J. Q. B. 395. See Ford v. Hop
kins, 1 Sal. 284 ; and see 1 Burr. 452. Ambl. 187, and Turner v. Cruikshank, thera
cited.

KEGOTIABLE INSTRUMENTS. 257

Property in Negotiable Instruments.

negotiable^ Yany^ by being put into another, cease to be so. Tlius,
though a bill or note will be negotiable if indorsed in blank, yet
the holder may, by a special indorsement, determine its nego-
tiability, {k)

{k) Sigourney v. Lloyd, 8 B. & C. 622, 5 Bingli. 525. Anclier v. Bank of England,
Douglas, 639. Snee v. Prescott, 1 Atk. 249, per Lord Hardwicke. Treuttel v. Baran-
don, 8 Taunt. 100. Cunliffe v. Whitehead, 3 Bingh. N. C. 828.
17

BOOK THE THIRD.

OF MERCANTILE CONTRACTS.

OF MERCANTILE CONTEACTS.

We now proceed to the -examination of those contracts which are
most commonly in use among mercantile men. In these, though
for the sake of clearness they are here treated of under a distinct
head, a very large portion of the Mercantile Property of the king
dom consists. Thus, a considerable part of a man's wealth is often
made up of bills of exchange, bank notes, and credits with his
banker or correspondent, all which species of property lie in con
tract, or as the courts term it, in action ; their owner being possessed,
not of the sums of money specified in the bill or note, or deposited
in the hands of the banker, but of a right to receive those sums
from the person holding, or supposed to hold them ; and to enforce
their payment, if denied, through the medium of some competent
tribunal.

It would be improper, in a work of this description, to entei
upon any disquisitions as to the nature of contracts in general^ or to
attempt to point out the distinctions which exist between the differ-
ent classes of contracts recognized by the law of England. With
these topics the reader is supposed to be already in some degree
acquainted, and there is not much hazard in the supposition, since
they are discussed in every elementary treatise upon English law,
and particularly in the invaluable Commentaries of Mr. Justice
Blackstone.

CHAPTER I.

BILLS OF EXCHANGE AI^D PEOillSSORT NOTES.

Sect. 1. Their Definition^ Requisites, and Form.

2. Parties to,

3. Transfer of.
4.. Acceptance.

5. Presentment.

6. Notice.

7. Payment.

8. Resistance against payment.

9. Remedy on lost hills and notes.

Section I. — Their Definition, Requisites^ and Form.

A Bill of Exchange is a written order for the payment of a certain
sum of money unconditionally.* He "wlio makes this order is called

* The contracts arising on a bill of exchange or promissory note are simple con-
tracts, although they differ from the ordinary simple contracts of the common law
in some important particulars. Under the law of continental Europe, the addition
of a seal might not deprive an instrument of its mercantile qualities, but in English
and American jurisprudence, it would subject it to the technical rules applicable to
common law securities. The old form of definition, "an open letter," etc., would
seem to possess greater precision. See cases of Mann v. Sutton, 4 Rand. 253. Clark
V. Farmers' Man. Comp. 15 Wend. 256. Foster v. Floj'd, 4 McChord R. 159, and
Hibblewhite v. McMorine, 6 Mees. & Wels. 200. In many of the States, sealed instru-
ments, V ith negotiable words, are placed upon the same footing as bills of exchange
and promissory notes, as in Ohio, and North Carolina, and Georgia. In some of the
States promissory notes have never been put on the footing of bills of exchange, but
remain as at common law before the statute of Anne, the rights and liabilities of an
indorser being similar to those of the assignor of a bond. Such is the law in refer-
ence to all promissory notes, except such as are ex-pressed on their face to be negoti-
able and payable at some chartered bank, which prevails in Virginia, Indiana, and
Illinois.

BILLS OF EXCHANGE AND PROMISSORY NOTES. 2G3

Their Definition, Requisites, and Form.

the drawer : lie to whom it is addressed the draivee ; and if he accept
it, the acceptor: he in whose favor it is made, ihQ payee.

A Promissory Note is a written promise to pay a certain sum of
money unconditionally. He who promises is called the maker ; he
to whom the promise is made, the payee, (a)

{a) A check is a bill of exchange, addressed to a banker, and payable to a certain
person or bearer.* A bank note is a promissory note made by a banker.

* A bank check is a written order, addressed to a bank or person carrying on the
banking business, directing them to pay on presentment, to a person therein named,
or to bearer, a certain sum of money. It is described by Chitty, in his Treatise on
Bills, (52, 322,) as uniformly' payable to bearei-. In the case of Woodruff v. the Mer-
chants' Bank of the City of New-York, 25 Wend. 673, this was held to be essenti.-il
to their character. But in the matter of Brown, 2 Story's C. C. R. 512, Judge Story
expresses the opinion that it is not requisite to a check tliat it should be payable to
bearer, or on demand.

As a general rule, a check should be presented for payment some time during
banking hours of the day after it was issued, as against the drawer, or as against the
party delivering it, on the day after it was received from him ; and where it is
received at a place different from that of payment, it should be forwarded on the
following day. Chitty on Bills, 512, a. The subject of diligence, as to the present-
ment of checks, is considered in 10 AVend. 304, Mohawk Bank v. Broderick, and 13
Wend. 5'19, Gough v. Staats, and the Merchants' Bank v. Spicer, 6 "Wend. 443. Alex-
ander V. Burchfieldt, 39 E. C. L. R. 1061.

Bank checks so nearly resemble bills of exchange and promissory notes, that they
are frequently spoken of without any discrimination. In Harker v. Anderson, 21
Wendell's Rep. 373, Justice Cowen has placed them in all respects upon the same
footing, and fortified his opinion by an elaborate citation of authorities. Other cases
are to be found in the American Reports which sustain the same doctrine, and
amo>g them may be mentioned the case of Brown v. Lusk, 4 Yerg. Rep. 210. In the
matter of Brown in Bankruptcy, 2 Story's C. C. R. 502, Mr. Justice Story reviewed
the law upon this subject. He distinguishes checks from bills of exchange m several
important particulars: first, that they are always drawn upon a bank or banker-
second, that they are paj-able immediately on presentment, and without daj-s of
grace ; and third, that they are not presentable for acceptance, but only for payment.
Judge Story farther held, in accordance with the opinion expressed by Chancellor
Kent, in his Commentaries, and bj' Justice Sutherland, in Murray v. Judah, 6 Cowen's
Rep. 490, and in opposition to the authority of Harker v. Anderson, that the want of
due presentment of a check, and notice of non-payment thereof, only exonerated the
drawer so far as it was the occasion of any actual damage to him. But a different
rule applies to indorsers, who are discharged by want of diligence in making pre-
sentment, whether it result in prejudice or not. The distinction was followed in
New-York, in the subsequent case of Little v. the Phoenix Bank, 2 Hill's N. Y. R
425. The same principle is acknowledged in Daniels v. Kyle, 1 Kelly, 304.

2(34 3.IERCANTILE CONTRACTS.

Their Definition, Requisites, and Form.

Bills of excliange derive their i^eculiar properties from the cus-
tom of merchants ; promissory notes, from stat. 3 & 4 Ann, cap. 9,
which places them on the same footing with bills of exchange.
That act was passed in consequence of the refusal of Lord Holt to
concede to the custom which had sprung up among merchants of
treating promissory notes as negotiable, the effect which would, at
a somewhat later period, probably have been attributed to it. His
Lordship, departing perhaps somewhat from that excellent good
sense which usually characterized him, treated the endeavor to up-
hold the negotiability jof notes with some indignation, saying that
" it proceeded from the 'obstinacy and opinionativeness of the mer-
chants, who were endeavoring to set the law of Lombard street*
above the law of Westminster Hall." {b)

Although a promissory note, while in its original shape, bears
no resemblance to a bill ; yet when indorsed, it is exactly similar to
one ; for then it is an order by the indorser of the note upon the
maker, to pay to the indorsee. The indorser is, as it were, the
drawer ; the maker, the acceptor ; and the indorsee the payee, (c)
The reader, bearing this similitude in his mind, will easily be able
to apply to notes the decisions hereinafter cited concerning bills,
and vice versa.

A bill of exchange operates as an undertaking from the drawer
to the payee and every subsequent holder, that the drawee is a per-
son competent to accept, that is, engage to pay it ; and that he will,
when requested, accept, and when it becomes due, pay it. {d) If ho
refuse to accept, the contract is broken, and the statute of limitation

(6) Clerk v. Martin, 2 Ld. Raym. 757.

(c) See Heylin v. Adamson, Burr. 669. Brown v. Harraden, 4 T. R. 148. Carlos
V. Fancourti 5 T. R. 482. Edie v. E I. Company, Burr. 1224.

id) This is the effect of a bill as ordinarily -worded, but pay without acceptance, is
a good bill. R. v. Kinnear, 2 M. & Rob. 117.

* The student -will find a learned and interesting history of promissory notes and
inland bills in the appendix to vol. 1 of Cranch's Reports. It is stated by Mr. Web-
eter, in his argument in the case of The Bank of Augusta v. Earle, 13 Peters, 564-
that neither inland bills nor promissory notes were negotiable or transferable, so as
to enable the holder to bring suit thereon in his own name, imtil several years after
the notes of the Bank of England went into circulation

BILLS OF EXCHANGE AND PROMISSORY NOTES. 205

Their Definition, Requisites, and Form.

begins to run from that period, (e) for the engagement is not a
double one ; first^ that the drawee shall accept upon presentment
for acceptance, and secondly, pay upon presentment for payment,
but single, namely, in the case of a bill payable after sight, that
the drawee shall, upon the bill being presented to him in a reason-
able time after date, accept the same, and having accepted shall
pay it when duly presented for payment ; and in the case of a bill
payable after date, that the drawee shall accept it, if it is presented
to him before the time for payment, or if it is not presented for
acceptance at all, then that he shall pay it when duly presented for
payment. (/)

A note operates as an undertaking by the maker to the payee
and every subsequent holder, that he will pay the money therein
named, in the mode therein specified.

ISTo particular form of words is requisite to constitute a note or
bill ; {g) and if it appear doubtful for which of the two a particular
instrument was intended, it may be treated as either. (A)* But it

(e) "Whitehead v. "Walker, 9 M. & "W. 507.

(/) Whitehead v. Walker, 9 M. & W. 507.

{g) Chadwiek v. Allen, Str. 706. Morris v. Lea, Ld. Raym. 1396, Str. 629. Shut-
tleworth v. Stephens, 1 Camp. 407. Greig v. Milner, 8 Taunt. 739. Stark v. Chees-
man, Carth. 509. Dehers v. Harriott, Show. 163. Robinson v. Bland, 2 Burr. 1077.
Ridout V. Bristow, 1 C. <fe J. 231. 1 Tyrwh. 84 Green v. Davies, 4 B. & C. 235.
Block. V. Bell, 1 M. &. Rob. 149.

{h) Edis V. Bury, 6 B. & C. 433. See Dickenson v. Teague, 1 C. M. & R. 231, 4
Tyrwb. 450. Block v. Bell, 1 M. & Rob. 149.

* There are a class of cases in which it is difficult to determine whether a party,
whose name is upon a promissory note, is to be regarded as a maker or gaurantor. A
Llank indorsement, if made contemporaneously with the inception of the note,
whether the latter be negotiable or not, is treated, in Massachusetts and some of the
ether States, as an original promise. Baker v. Briggs, 8 Pick. 122. Flint v. Day, 9
Verm. R. 345. Martin v. Boyd, 11 N. H. R. 385.

In New York a distinction has been taken in the case of notes which are negotia-
ble ; and it has been held that an indorsement of such a note, made at the time of
its execution, does not convert the party into a maker or a guarantor, but his chai-acter
is simply that of an indorser upon the note. Seabury v. Hungerford, 2 Hill's N. Y. R.
80. Hall V. Newcomb, 3 Hill's N. Y. R. 233. Dean v. Hall, 17 Wend. 214.

A blank indorsement, made after the execution of the note, can operate, at best^
but as a guaranty, and then only upon proof of a distinct and valid consideration
Ulen V. Kittredge, 7 Mass. R. 233. Dean v. Hall, 17 Wend. Rep. 214.

266 MERCANTILE CONTRACTS.

Their Definition, Requisites, and Form.

must fall strictly within one of the above definitions. Thus, there
must be an order or promise to pay ; the mere achnowledgment of
a debt, such as an I. 0. U., is not a promissory note, {i) nor does a

{%) Fisher v. Leslie, 1 Esp. 426. Childres v. Boulnois, 1 Dowl. N. P. C. 8. Ellis
V. Ellis, Gow. 216. Israel v. Israel, 1 Camp. 499, but see Gny v. Harris, Cliitty on
Bills, oth ed. 428, contra. In Casliborne v. Dutton, P. S. N., 8tli ed. S"?!, the follow-
ing instrument was, after solemn argument, held to be a good note.

"I do acknowledge myself to be indebted to A. in £ to be paid on demand for
value received."

The words to he paid being held to amount to a promise to pay.

In Brooks v. Elkins, 2 M. & "W. 74, the following instrument was held to requiie

a stamp.

"11th October, 1831.

" 1. 0. U. 20Z. to be paid on the 22d instant.

" W. Brooks."

"I have received the imperfect books which, together with the cash overpaid oa
the settlement of your account amounts to 80Z., which sum I will pay in two years."
Held a note. "Wheatley v. Williams, 1 M. «& W. 533.

"I have received* the sum of 20/. which I borrowed from you, and I have to be
accountable for the said sum with interest." Held an agreement, not a note. Homo
V. Redfearne, 4 Bing. N. C. 433.

"11th November, 1839.

"I. 0. U. 45/. 13*. which I borrowed of Mrs. Melanotte, and to pay her five per
cent, till paid. " Robert Teasdale."

Held not a note, and not to require a stamp as an agreement. Melanotte v. Teasdale,
13 M. & W. 216.

" Memorandum. Mr. Sibree has this day deposited with me 500Z. on the sale of
10,300/. 3 per cent. Spanish, to be returned on demand. James T. Tripp." Held not
a note. Sibree v. Tripp, 15 M. & W. 23.

"Where the indorsement is special, it must receive such a construction as will best
carry out the intention of the parties, and which is to be gathered from its terms.
The courts of New York have construed such words as these, "I guaranty the pay-
ment of the within note," whether indorsed at the time, or subsequent to the execu-
tion of the note, to import an absolute promise, and not simply a guaranty. But thig
construction has been repudiated in Massachusetts. Manrow v. Durham, 3 Hill's N.
Y. R. 584. Oxford Bank v. Haynes, 8 Pick. 423. The doctrine in Massachusetts ia
evidently approved by Judge Story, in his work on Promissory Notes, 581.

In New York the courts have drawn a distinction between a guaranty of the
" payment,' and a guaranty " of the collection" of a note ; holding the latter to be
a mere guaranty, and void within the Statute of Frauds, unless a consideration ap-
pear on the face of the indorsement. Hunt v. Brown, 5 Hill's N. Y. R. 145.

The student will find the American authorities, on the whole subject, collected
and reviewed in the treatise referred to, of Jud(je Story on Promissory Notes.

BILLS OF EXCHANGE AND PROMISSORY NOTES. 267

Tlieir Definition, Requisites, and Form.

supplication to the drawee that he will pay, amount to a bill of ex-
change ; for that purpose there must be an order. (J) Again, it
must be for the payment of money alone ; Qc) an order or promise
to pay " in cash or Bank of England notes," is insufficient ; (Z) and
that money must be a certain sum, for a promise to pay J. E " 65Z.,
with all other sums that may be due to him," or to pay 13/., and all
fines according to rule, (m) is not a promissory note, (n) Moreover,
the money must be payable unconditionally.^ If it contain any

"John Mason, ISth Feb., 183G, borrowed of his sister M. A. M., the sum of 14/.
in cash, as per loan, in promise of payment of which I am truly thankful for and
shall never be forgotten by me, John Mason, your affectionate brother, 14/." Held to
be a note. Ellis v. Mason, Y Dowl. 593.

"11th September, 1839.

" I undertake to pay to Mr. Robert Jarvis the sum of 6/. 4s. for a suit of clothes
ordered hj Daniel Page. "S. "W". Wilkins."

Held a guarantee, 7iot a note. Jarvis v. Wilkins, 7 M. & W. 410. Baron Parke said,
that had "supplied" been inserted instead of "ordered," it would have been a note.

*' At twelve months after date I promise to pay R. & Co. -500/. to be held by them
as a collateral security for moneys now owing them by J. M., which they may be un-
able to receive on realizing the securities they now hold, and others which may be
placed in their hands by him."

Held not a note. Robins v. May, 11 Ad. & E. 213.

(_;■) Little v. Slaekford, 1 M. & M. 171. A mere authority to pay is not a bill.
Norris v. Solomon, 2 M. & Rob. 266. Russell v. Powell, 14 M. & W. 418.

{k) Martin v. Chauntrj-, Str. 1271. Anon, B. N. P. 272. Fx parte Imeson, 2
Rose, 225. £Jx parte Davison, Buck. 31. R. v. Wilcox, Bayley, oth ed. p. 11. Bol-
ton V. King, 4 B. & Ad. 619.

{I) Sed quaere, since 3 <t 4 Wm. 4, c. 98, sect. 6. Continued 7 & 8 Vict. c. 32,
Beet. 27.

(w) Ayrey v. Fearnsides, 4 M. & W. 168,

{ii) Smith V. Nightingale, 2 Star. 375.

* In the case of Patterson v. Poindexter, 6 Watts h Serg. 227, it was held that an
instrument in writing issued by a bank, signed by the assistant cashier, in these words,
*I hereby certify that C. T. has deposited in this bank, payable twelve months from
1st May, 1839, with five per cent, interest till due, per ann., $3691 63, for the use
of R P. tfe Co., and payable only to their order upon the return of this certificate,"
was not a promissory note within the statute of Ann, but a certificate of deposit on
special terms. Such an instrument was deemed negotiable for the purpose of trans-
fer only, but not to make R. P. tfe Co. liable on their indorsement to the liolJer. It
was regarded as a special agreement, to pay the dej^osit to any one who should pre-
Bent the certificate, and the depositor's order.

The decision in Patterson v. Poindexter, is inconsistent with the weight of Aine-

268 MERCANTILE CONTRACTS.

Their Definition, Requisites, and Form.

condition precedent, or defeasance, or be payable at an uncertain
time, or out of an uncertain fund, it is no bill or note, (o)* In one

(o) Colehan v. Cooke, "Willes, 393. Appleby v. Biddulph, 8 Mod. 363, 4 Vin. 240,
pi. 16. Roberts v. Peake, Burr. 323. Beardsley «;. Baldwin, Str. 1151. Joselin v. La-
Berre, 10 Mod. 294, 316. Haydock v. Lineh, Ld. Ray. 1563. Dawkes v. Deloraine,
Bl. 782. Jenny v. Herle, Ld. Ray. 1361, Str. 591. Hill v. Halford, 2 B. & P. 413.
Leeds v. Lancashire, 2 Camp. 205. Hartley v. Wilkinson, 4 Camp. 12Y, 4 K <fe S. 25.
Williamson v. Bennet, 2 Camp. 417. Crowfoot v. Gurney, 9 Bingh. 574. Clai-ke v.
Perceval, 2 B. & Ad. 660. Worley v. Harrison, 3 A. & E. 669. Wiieatley v. Wil-
liams, 1 M. & W. 532. Drury v. Macaulay, 16 M. & W. 147. Moffat v. Edwards, Car.
& M. 16.

rican authority. An instrument almost identical in terms, was held to be a promis-
sory note in Connecticut, in Kilgore v. Bulkley, 14 Conn. 363. The same doctrine
■was established in New York in Bank of Orleans v. Merril, 2 Hill's N. Y. R. 295, and
by the Supreme Court of the United States in Miller v. Austin, 13 Howard, S. C.
R. 218.

* A note or bill made payable out of a particular fund, is not payable at all
events and imconditionally, inasmuch as the fund may prove deficient. Atkinson
V. Marks, 1 Cow. 691. Cowperthwaite v. Sheffield, 1 Sand. Sup. Ct. Rep. 416. Warden
V. Dodge, 4 Denio, 159. Upon the same principle have proceeded a class of cases in
which orders upon public functionaries liave been held not negotiable. Tlius, in
Reeside v. Knox, 2 Whart. 233, an order drawn by a mail contractor on the Post-
master General, in these words: "On 1st of January, 1836, pay to my order, five
thousand dollars, value received, and charge the same to my account for transport-
ing the United States mail," was held not to entitle an indorsee to sue in his own
name. In this case the Court lay down the general proposition, that every bill on
government is, in contemplation of law, drawn on a fund, and that its acceptance is
merely a recognition of the instrument as a transfer of credit, and that such a bill
is not negotiable. S. P. Strader v. Batch eler, 8 B. Monr. 168. So in the case of the
United States v. Bank of United States, 5 How. 382, an order in the form of a bill
of exchange had been drawn by the Secretary of the Treasury of the United States
upon the same officer of the French government, in favor of the Bank of the United
States, for a sum of money due by a treaty stipulation between the two govern-
ments: the order showing on its face the nature of the debt. It was held by a majo-
rity of the Court that this was not a bill of exchange, subject to commercial law
and usages, on which the drawer was responsible for re-exchange. " A bill of ex-
change," saj-s J. Catron, delivering the opinion of the majority of the Court, " must
carry on its face its authority to demand the money drawn for; so that the holder
or the notary acting as his agent, may receive the money and give a discharge on
presenting tlie bill and receiving payment: or if payment is refused, enter a protest,
from which follows the incident of damages ; but if no demand can be made upon
the bill standing alone, or it depends upon other papers and documents to give it
effect, and these must necessai'ily accompany the bill and be presented with it, it

BILLS OF EXCHANGE AND PROMISSORY NOTES. 269

Their Definition, Requisites, and Form.

of the latest cases on this subject, the instrument was in the follow-
ing form : —

1200?. Warrington, Ath March, 1824.

On demand, we promise to pay Mr. George Clarke, or
order, twelve hundred pounds, for value received, in stock, ale,
brewing-vessels, &c., this being intended to stand against the un-
dersigned Mary Perceval as a set-off for the sum left me in my
father's will above my sister Ann's share.

Thomas Perceval.
(Witness,) William Hall. Mary Perceval.

The Court of King's Bench held that the 1200?. was not paya-
ble at all events, and the instrument therefore not a promissory
note, {p)

{p) Clarke v. Perceval, 2 B. & Ad. 660. See also Robins v. May, 11 Ad. & R
213.

cannot be a simple bill of exchange that circulates from hand to hand as a represen-
tative of current cash. In this case, the mere signature of the Secretary of the Trea-
sury could not be recognized by the French government, as conferring authority
upon the holder to demand payment. The transaction being one of nation with na-
tion, he, who demanded payment must have had not only the autliority of his nation
before he could have approached the French government, but that authority must
have been communicated by the head of this government, through the proper de-
partment carrying on our national intercourse, which was the State dapartment :
until the French government was thus officially advised, tlie bill was valueless in
the hands of the holder against France." From this opinion Justices McLean and
Wayne dissented.

There are other circumstances besides the character of the drawer or drawee,
and the nature of the fund or transaction, which will take an instrument in the form
of a bill or note, out of the pale of the commercial law. It must not only be an
absolute and unconditional engagement to pay money, but it must be a simple pro-
mise, unclogged with incidents which would destroy its character or value as a com-
mercial security. Overton v. Tyler, 3 Barr. 346. A. L. C. vol. 1, p. 309. " A nego-
tiable bill or note," says C. J. Gibson, delivering the opinion of the Court, " is a cou-
rier without luggage. It is requisite that it should be framed in the fewest words,
and those importing the most certain and precise contract; and though tl?is i"equi-
site is a minor one, it is entitled to weight in determining a question of intention.
To be within tlie statute, it must be free from conditions, or contingencies which
would embarrass it in its course."

270 MERCANTILE CONTRACTS.

Their Definition, Requisites, and Form.

But an order hy the freigliler of a ship to pay money on account
of freight^ {q) or an order to pay so much as the drawer's quarter'' s
half pay hy advance, (r) or for value deposited and registered, {s) or I
promise to pay M. A., on demand, £ hy giving up clothes and
papers, {t) or when J. S. comes of age, to wit, June 12, 1750, (a) or
six weeks after the death of A. B., {v) have been held payable at all
events, and therefore good ; for, to use the words of Willes, C. J.,
" If a bill or note be made payable at ever so distant a day, yet if
it be a day that must come, it is no objection to the bill or note ;"
and therefore a note payable within two months after his Ilaj'esty's
ship A. B. shall he paid off, is good, for the paymaster being Gov-
ernment, it is morally certain that payment will be made, {w)

An instrument is not the less a note, because it contains a
memorandum that the maker has deposited title deeds with the
payee as a collateral security, (x) So an instrument, the effect of
which was — I promise to pay 600Z. by instalments, and I agree to
set off 95Z., was held not to be a note ; for besides its complexity,
the 95Z. could not be payable to an indorsee, {y)

If at the time of making a hill or note an indorsement be written
on it, rendering it payable only on certain conditions ; that will de-
prive it of the character of negotiability, and turn it into an agree-
ment as between the parties privy to it. (2) But the indorsement
on a note of a mere reference to an agreement for the purpose of
ear-marking it as the note named in that agreement, has not such

(q) Pierson v. Dunlop, Cowp. 571, for it admits so much freight to be due. But
an order from the owner to the freighter to pay so much on account of freight is no
bill. Bunbury v. Lisset, Str. 1211.

(r) M'Cleod v. Smee, Ld. Raym. 1481.

(.s) Haussolier v. Hartsinb, 7 T. R. 733.

{t) Dixon V. Nutall, 6 C. & P. 320. See also Slienton v. James, 5 Q. B. 199. Fox
V. Frith, Car. & Marsh, 502.

(?<) Goss V. Nelson, Burr. 226.

(v) Colehan v. Cooke, Str. 1217, Willes, 3yS. Roffey v. Greenwell, 10 Ad. & E
222.

(w) Andrews v. Franklin, Str. 24. " I promise to pay, or cause to be paid," is a
good note. Lovell v. Hill, 6 C. & P. 238.

(x) Wise V. Charlton, 4 Ad. & E. 786. Fancourt v. Thorne, 16 L. J., Q. B. 344.

(jr) Davies v. Wilkinson, 10 Ad. &, E. 98.

(2) Leeds v. Lancashire, 2 Camp. 205 Hartly v. Wilkinson, 4 M. & S. 25. Stone
V. Metcalf, 1 Stark. 23.

BILLS OF EXCHANGE AND PROMISSORY NOTES. 271

Their Definition, Requisites, and Form.

an effect, (a) Nor can sucli an instrument ever be rendered con-
ditional bj a contemporaneous parol agreement, for it is one of the
first principles of the law of evidence, that oral testimony shall
never be permitted to vary or contradict the terms of any written
contract, (i)

Although conformity with one of the above definitions is in
general strictly required ; yet, if a word be fraudulently inserted
by the maker or drawer, in order to prevent the instrument from
acquiring the legal properties of a bill or note, as where the maker
of a note worded it thus — " I promise not to pay," the court will
reject the word so fraudulently introduced, and read the instrument
without it, (c)

A bill or note is called inland when made and payable in Eng-
land ; {d) foreign^-^ when made payable abroad. "We will first con-
sider the form and requisites of inland bills and notes, and after-
wards remark upon the incidents peculiar to those which are foreign:
premising that a bill, drawn in England and payable abroad, is
governed by the law of the country where it is made payable, ac-
cording to the maxim of the Civilians, " Contraxisse unusqmsque in
eo loco intelligitui\ 171 quo ut solveret se ohligaverit,^^ (e) and that in
pleading, such an instrument is always presumed to be inland, un-
less the contrary be shown. (/)

(a) Brill V. Crick, 1 M. & W. 232. See Cholmley v. Dsxvley, 14 M. & ^Y.
344.

(6) Foster v. Jolly, 1 C. M. & R. 105.

(d) A bill drawn in England on a person residing abroad, but payable in Eng-
land, is an inland bill. Araner v. Clarke, 2 C. M. & R. 468.

(e) Rothschild v. Carrie, 1 Q. B. 43.

(/) Armani v. Castrique, 13 M. & W. 443.

* It is a point now well settled by authority, that a bill of exchange drawn in
one of the United States, and payable in another, is a foreign, and not an inland bilk
Buckner v. Finley, 2 Peters' Rep. 586. Bank of the United States v. Daniel 12 Pe-
ters, 32. Phoenix Bank v. Hussey, 12 Pick. 483. Wells v. Whitehead, 26 Wend. 527
Halliday v. McDougall, 20 Wend. 80. Brown v. Ferguson, 4 Leigh. 37. Rice v. Ho»
gan, 8 Dana, 134. In some of the States, however, there are express statutory pro-
visions, making such bills inland.

272 MERCANTILE CONTRACTS.

Their Defiaition, Requisites, and Form.

FORM OF AN INLAND BILL OF EXCHANGE.

£100 „ ,, London^ January 1, 1823.

At sight, (or on demand, or at days

[Stamp.] after sight, or at days after date), pay

to Mr. , or order, (or hearer,) one hun-
dred pounds, for value received.

John Wood.
To Mr. Thomas Jones, merchant,
at Liverpool.

FORM OF A PROMISSORY NOTE.

£100 ,, „ London, January 1, 1833.

Two months after date, I promise to pay to

[Stamp.] Mr. ■ , or order, one hundred pounds,

for value received.^

John Wood.

The principal parts of these instruments are the amount, stamp,
date, time for payment, place of payment, designation of 2^^y^^i name
of drawer, and name of drawee. We will consider these in order,
observing first, however, that all negotiable bills or notes made in
England, if for less than twenty shillings, are void by stat. 48 Geo.
S, c. 88, s. 2 ; and if for more than twenty shillings and less than
five pounds, are (with the exception of drafts by a man on his
banker) also void, unless they specify the name and abode of the
payee, are attested by one subscribing witness, bear date at or be-
fore the time of issue, and are made payable within twenty-one
days after date, but not to bearer on demand ; nor will such instru-

* It waa at one time supposed that the words "for value," were essential parts of
a bill or note ; but it is now settled that they are not material. — Byles on Bills, (A.
edition), p. 63. The character of the instrument raises a presumption of considera-
tion under the Mercantile Law. Hatch v. Frayes, 11 Ad. & Ell. 702. Watson v.
Kightley, 15 Ad. & Ell. 702. Benjamin v. Tillman, 2 M'Lean, 213. Bristol v. "War-
ner, 19 Conn. 7. Townshend v. Derby, 3 Met. 363. Hubble v. Fogartie, 3 Rich. 413.
Kendall v. Gal'rin, 15 Main. 131.

BILLS OF EXCHANGE AND PROMISSORY NOTES. 073

Their Definition, Requisites, and Form.

ments be negotiable after the time therein limited for payment. 7
Geo. 4, c. 6, and 17 Geo. 3, c. 30.

Amount. — AVith regard to the amount. It is usual to specify
this in figures on the lower left-hand corner of the instrument as
well as in writing in the body. Where a difference appears be-
tween the words and figures, evidence cannot be received for the
purpose of explaining it, and the Court of Common Pleas has de-
cided that it is proper to adopt the rule of commercial writers, viz.,
that where a difference appears between the figures and words of
the bill it is safer to attend to the words, (g)^

/Stamjj. — The stamp is an essential part of every inland bill and
note, and though it purport to have been drawn abroad, and be in
the hands of an innocent holder, yet any party may show that it
was actually made in this country, and insist upon the want of a
stamp. (A) If unstamped, it is a nullity, and cannot be given in
evidence even as an admission of a debt from one of the parties
therein mentioned to the other, (i) The paper on which a bill or
note is written must have the stamp previously impressed upon it,
for if that be neglected, it cannot afterwards be stamped, (j) except
in the single case of its having been impressed with a stamp of
equal or higher value, but of a wrong denomination, (k) However,
it will be sufficient if it be impressed wnth a stamp of adequate or
greater amount, though of an improper denomination, unless such
Btamp be specifically appropriated to some other instrument, by hav-

{g) Saunderson v. Piper, Bing. N. C. 425.

{h) Jordaine v. Lashbrook, V T. R. 601. Steadman v. Duhamel, 1 C. B. 888.

(i) Wilson V. Vysar, 4 Taunt. 228. Jardine v. Payne, 1 B. & Ad. 6Y0. Cundy v.
Harriot, 1 B. & Ad. 696.

(j) See Wright v. Riley, Peake, 1Y3. Roderick v. Hovil, 3 Camp. 103. Rapp. v.
Alnutt, ibid. 106. Green v. Davies, 4 B. & C. 235. Abrahams v. Skinner, 12 Ad. &
E. 763.

(k) 1 Ann. stat. 2, c. 23, s. 2 <k 3. Stat. 23, Geo. 3, c. 25, s. 19. Stat. 37, Geo. 3,
c. 136, s. 5. See Bradley v. Bardsley, 14 M. & W. 873. Chamberlain v. Porter, 1 N.
E. 30.

* There is an important provision of the law of Louisiana, rendering invalid any
bill or note, the amount of which shall be expressed in figures only.

274 MERCANTILE CONTRACTS.

Their Definition, Requisites, and Form.

ing its name on the face of it. {I) The amount of duty upon bills
or notes is fixed by stat. 55 Geo. 3, c. 184.

Where the stamp duty is payable, its amount will not be in-
creased by the circumstance of interest being reserved from the
date of the bill or note, (m) or even from a day prior to the
date, (n)

There is a proviso in stat, 9 Geo. 4, c. 14, usually called Lord
Tenterden's Act, sect. 8, which enacts that "no memorandum or
other writing made necessary by this Act shall be deemed to be an
agreement within the meaning of any statute relating to ihe duties
of stamps." Under this proviso, however, an unstamped note can-
not be given in evidence for the purpose of avoiding the statute, (o)
though an unstamped agreement may. {p)

There are some instruments which, though not, properly speak-
ing, bills or notes, because payable at an uncertain time or out of
an uncertain fund, yet require stamps by the words of the schedule
of 55 Geo. 3, c. 184. {q)

Date. — The date, though a usual and convenient part of every
bill and note, is not in general an essential one ; for if it be omit-
ted, the instrument dates from the day on which it was made, (r)
Post-dating of a bill or note in order to evade the stamp laws, is
rendered a very serious offence by stat. 55 Geo. 3, c. 184, and ren-
ders the instrument incapable of being used in evidence, {s)

As an undated bill or note dates from the time when it was
made, so, vice versd, if a question arise as to the time of making, it
is prima facie taken to have been made on the day of which it is

{I) 65 Geo. 3, c. 184, s. 10.

(m) Pruessing v. Ing, 4 B. & Aid. 204.

(w) Wills V. Noot, 4 Tyrwh. '726.

(o) Jones V. Ryder, 4 M. <fe W. 32.

(jo) Morris v. Dixon, 4 Ad. & E. 845.

{q) See Hutchinson v. Heyworth, 9 Ad. & R 375. Jones v. Simpson, 2 B. <fe C.
818. Emly v. Collins, 6 M. & S. 144. Lord Braybrooke v. Meredith, 13 Sim. 2*71.
Firbank v. Bell, 1 B. <fe A. 30. Butts v. Swan, 2 B. <fe B. 78.

(r) De la Courtier v. Bellamy, 2 Show. 422. Hague v. French, 3 B. & P. 173.
Giles V. Bourne, 6 M. & S. 73.

(s) Field V. Wood, 6 Dowl. 24. 7 Ad. & E 114. Serle v. Norton, 9 M. & "W
S09.

BILLS OF EXCHANGE AND PROMISSORY NOTES. 275

Their Definition, Requisites, and Form.

dated, (t) If it bear no date the time of making may be inferred
from tlie circumstances, (u)

Time for Payment — When the word month is used in specifying
the time of payment, it is, as in other mercantile contracts, to be
understood of a calendar month. The time for payment is gener-
ally expressed to be on demand, or at sight, or a certain time after
sight, or a certain time after date; the effect of these and other words
in regulating the time at which the instrument should be presented
for payment, will be discussed hereafter, when we come to treat, in
the fifth section, on presentments. If no time of payment be spe-
cified, the instrument is payable upon demand, (v)

Place of Payment — Although, in the forms above given, no par-
ticular place of payment is specified, the drawer may, if he think
proper, fix one ; and if he do, a presentm.ent must be made at the
place mentioned, (iv) in order to charge him with the acceptor's de-
fault ; but it is otherwise if it be only named in a memorandum at
the foot of a promissory note, {x) though a distinction has been
taken in this respect between a memorandum printed and one writ-
ten, (y)

Designation of Payee. — The bill or note may be payable to a
particular individual, or to a particular individual or his order, or
generally to the hearer.* "When an individual is mentioned, a mis-

{t) Sinclair v. Baggaley, 4 M. & "W. 312. Anderson v. Weston, 6 Bingh. N. C.
296.

(m) Ihid.

{v) Bayley, 6th ed. 109. See Whitloek v. Underwood, 2 B. ife C. 157.

(mi) Roche V. Campbell, 3 Camp. 247. Gibb v. Mather, 8 Bingh. 214.

{x) Exon V. Russell, 4 M. & S. 505. Williams v. Waring, 10 B. & C. 1. Vide
Hardy t). Woodroofe, 2 Stark. 319. Saunderson v. Judge, 2 H. Bl. 509. Wild v. Ren-
nard, 1 Camp. 425, n. Callaghau v. Aylett, 2 Camp. 549, and the remarks on those
cases in Bayley, 5th edit. 222.

(y) Trecothick v. Edwin, 1 Stark. 468.

* It was formerly a matter of doubt whether it was not essential to the character
of a bill of exchange, that i*; should be negotiable, that is to say, that it should be
payable either to A. or his order, or to the bearer. But this doubt has been lonq

276 MERCANTILE CONTRACTS.

Their ■Definition, Requisites, and Form.

take in his name is of no importance, if it be sufficiently clear who
was intended, (z) If the instrument be made payable to an indi-
vidual without further words, it will not be negotiable. If it be
payable to an individual or his order, he may transfer his right to a
third party, by indorsing his name upon it ; (a) if to hearer gener-
ally, or to a specified individual or hearer, it may be transferred by
mere delivery ; and in the last case it matters not, though the indi-
vidual named never existed, and could not possibly exist : thus a
draft payable to the ship Fortune or bearer, is negotiable by deliv-
ery. {J}) If payable to a fictitious person or his order, although no

(z) Rex V. Box, 6 Taunt. 325.

(a) A question has lately been raised, whether a note payable to the maker's
order, be assignable under the Statute 3 <& 4 Anne, c. 9. A declaration so describing
a note, and stating that the maker indorsed it to the plaintiff has been held bad on
demurrer, by the Court of Exchequer, Flight v. Maclean, 16 M. & W. 57, but it may
be questioned whether the effect of the indorsement in blank of such an instrument
would not at all events be to make it payable to bearer, and whether it might not in
pleading be thus properly described. In the more recent case, however, of Wood v.
Mytton, T. T. 1847, the Court of Queen's Bench held such a note to be a good note
within the statute.*

(6) Grant v. Vaughan, Burr. 1516.

since removed, and it is now settled in Great Britain and the United States (although
it is otherwise in France), that it is not necessary to constitute a bill of exchange or
promissory note, that it should be negotiable. Thus, it has been held that an instru-
ment without these words will be entitled to days of grace. Smith v. Kendall, 6
Term.R. 123. Duncan v. Maryland Sav. Inst. 10 Gill. & J. 300. But the transfer of
a bill or note without negotiable words, will not authorize the indoi'see to bring an
action against the maker or acceptor, in his own name. Gerard v. La CosH, 1 Dall.
194, 1 A. L. C. 316, 329.

* The question does not j'et seem to be fully settled in England, whether a note
payable to the maker's own order is a promissory note within the statute of Anne.
See Flight v. Maclean, 16 Mees. & W. 51. Hooper v. Williams, 2 Exch. 13. Wood v.
Mytton, 10 Adol. & Ell. N. S. 806. Gay v. Lander, 6 C. B. 336. It is supposed by the
American editor's of Meeson & Welsby, that this question would occasion no embar-
rassment in our courts, and that a construction proceeding upon a minute verbal
consideration of an ancient remedial statute like this of 3 & 4 Anne, would be
deemed inadmissible. It is suggested as the true ground of- decision, that according
to long-ascertained judicial interpretation and practice, the intention of that statute
was to place promissory notes upon the same footing as bills of exchange; and there
is no doubt that bills of ea iliange payable to the drawer's order are negotiable by
the Law Merchant.

BILLS OF EXCHANGE AND PROMISSORY NOTES. 271

Their Definition, Reqixisites, and Form.

order can be made bj the payee, wlio is not in existence, yet if the
instrument be issued into the world with an indorsement in blank
(the nature of which will presently be explained), purporting to be
made by such fictitious person, it will, as against the drawer or
maker, be considered payable to bearer ; and so will a bill drawn in
a fictitious name, as against an acceptor, who knew that it was
such, (c) But though a bill or note with a fictitious payee may be
negotiable, yet it is not so if he be uncertain, ex. gr.^ if the instru-
ment be payable to A. or B. (cZ) But a note may be made payable
to the trustees acting under AJs loill^ and parol evidence will be ad-
missible to show who they are and what the trusts are, (e) and the
same law applies to the case of a bill or note payable to the manager
of a bank. (/) If a blank be left for the payee's name, any hona
fide holder may insert his own, by which he will acquire all the
rights of payee, and convert the instrument from a mere writing
into a bill of exchange, [g)

Name of Maker or Drawer. — The name of the maker or drawer
must be inserted or subscribed {h) by himself or his agent ; but as
there must be no uncertainty about the payee, so neither must there
be about the maker or drawer ; thus a note must not be signed A.
B., or else C. D. ; {i) the name of the drawer, however, may be in-
scribed before it is certain what will be the exact form of the in-
strument, for it has been decided that he who signs his name upon
a sheet of stamped paper, which he delivers to another, is liable on
any bill which that person may think fit to draw on it, and which

(c) Tatlock V. Harris, 3 T. R. 174. Vere v. Lewis, ibid. 182. Minet v. Gibson,
ibid. 481, 1 H. Bl. 569. Collins v. Emmett, 1 H. BL 313.

{d) Blanckenhagen v. Blundell, 2 B. <fe. A. 417.

{e) Megginson v. Harper, 4 Tyrwh. 96, 2 C. <fe M. 322.

(/) Robertson v. Sheward, 1 M. & Gr. 511, and see R. v. Box, 6 Taunt. 325. Cart-
ridge V. Griffiths, 1 B. & A. 5Y. Metcalf v. Bruin, 12 East, 400, 2 Camp. 422. Scares
V. Glyn, 14 L. J. Q. B. 313.

{g) Crutchley v. Clarence, 2 M. & S. 90. Crutchley v. Mann, 5 Taimt. 529. At-
wood V. Griffin, 1 R. & M. 425. R. v. Randall, Bayley on Bills, 5th ed. p. 37.

(A) Taylor v. Dobbins, Str. 399. Elliott v. Cowper, Str. 609. Lord Raym. 137&
Smith V. Jarvis, Lord Raym. 1484. Ereskin v. Murray, ibid. 1542.

(i) Ferris v. Bond, Ba^'ley, 5th edit. 17.

278 MERCANTILE CONTRACTS.

Their Definition, Requisites, and Form.

the Stamp is sufficient to cover. (7) If a man draw a bill or make
a note in the name of another without authority, he may be per-
sonally liable on it. {Jc) But no one can be liable as acceptor, unless
for honor, but the real drawee. {I)

By Stat. 7 & 8 Vict. c. 110, s. 45, bills drawn or accepted, ana
notes made by the directors of a joint stock company, under that
act, are to be made or accepted by, and in the name of two direct
ors, and by them expressed to be in behalf of the company, and
countersigned by the secretary or other appointed officer.

And by 7 & 8 Yict. c. 113, s. 22, bills and notes of a banking
company regulated by it, may be made, accepted or indorsed in any
manner provided by the deed of settlement, so that they be signed
by a manager or director on behalf of the company, and it be so
expressed.

Name of Drawee. — A bill may be addressed to the drawer him-
self, though in legal operation such an instrument is rather a note
than a bill, (m) And an instrument will not be less a bill, because,
instead of being addressed to a particular person it is addressed to a
particular house, at least as far as the person who accepts it is con-
cerned, (72) nor because the word at is prefixed to the drawee's name. (0)

The following is the form of a foreign bill of exchange : —

London^ January 1, 1806.
[Stamp.] Exchange for 10,000 livres.

At two usances (or " at sight,'''' or " after date'^)

pay this, my first hill of exchange, {second and third of the same tenor

(j) Collins V. Emmett, 1 H. Bl. 313. Leslie v. Hastings, 1 M. & Rob. 119. Mol-
loy V. Delves, 7 Bingh. 428. See Abrahams v. Skinner, 12 Ad. & E. 763.

{k) See Wilson v. Barthrop, 2 M. & W. 863. Polhill v. Walters, 3 B. <fe Ad. 114.

(l) Ibid. Davies v. Clark, 6 Q. B. 10.

(9?i) Block V. Bell, 1 M. & Rob. 149. Starke v. Cheesman, Carth. 509. Dehers v.
Harriot, Show. 163. Robinson v. Bland, Burr. 1077. Jocel}-!! v. Lacerre, Fort. 282.
As to a note payable to the maker's order, see ante, p. 274, note. Miller v. Thomp-
son, 3 M. <fe Gr. 676, where a bill drawn by a bank on its own branch was treated
as a note.

(w) Gray v. Milner, 8 Taunt. 739.

(o) Shuttleworth v. Stephens, 1 Camp. 407. Allen v. Maw son, 4 Camp. 115. Se«
R. I'. Hunter, Bayley on Bills, 5th ed. 7.

BILLS OF EXCHANGE AND PROMISSORY NOTES. 079

Their Definition, Requisites, and Form.

and date not paid) to Messrs. or order ^ (or "Z^earer,") ten ihou'

sand Uvres, value received of them, and place the same to account^ as pet
advice from

James Hood.
To Mr. , at Paris.

payable at

Foreign bills are usually drawn in sets ; that is, copies of tli6
bills are made on separate jjieces of paper, each part containing a
condition that it shall continue payable only so long as the others
remain unpaid — a method, the adoption of which considerably di-
minishes the chances of losing the bill.* Bills drawn in Eng-land
on a foreign country must be stamped as directed by stat. 55 Geo.
8, cap. 184, sch. I. ; and by the same act, sec. 29, promissory notes
payable to bearer on demand, made, or purporting to be made by
or on behalf of any person resident out of Great Britain, except
when made and payable in Ireland only, cannot be negotiated here,
unless they be stamped in like manner as notes of the same tenor
and value made in Great Britain, under penalty of 201.

But bills draivn in a foreign country, or at sea, require no stamp
under any English act of parliament ; {pi) and where a person re-
sident at Antwerp desired his correspondent in England to fill up
a bill of exchange, and to return it to him, which was done, and he
then signed it as drawer at Antwerp, this bill was held to have

{p) Boehm v. Campbell, Gow. K P. C. 56. Snaith v. Mingay, 1 M. <fe S. 87.
Cruteliley v. Mann, 5 Taunt. 529. See Ximenes v. Jacques, 1 Esp. 21 L Hamelin v.
Bruck, 15 L. J. Q. B. 343.

* In the case of Downes & Co. v. Edward B. Church, 13 Peters' S. C. R. 205, it
was held that iu an action upon the second set of foreign bills of exchange, which was
protested for non-acceptance, with the protest thereto attached, the plaintiff can re-
covei", without producing the first of the same set, or accounting for its non-produc-
tion. But in Wells v. Whitehead, 15 Wend. 527, where the second of a set of three
bills of exchange had been protested for non-acceptance, the plaintiff, in a suit
brouglit against an indorser upon the first set, was not allowed to recover, because
he failed to produce the second of the set which had been protested, or to account
for its non-production. No other rule would protect the defendant from a subsequent
claim by an acceptor supra protest.

280 SIERCANTILE COKTRACTS.

Parties to a Bill or Note.

been virtually drawn abroad, and to require no stamp, (g) And
tbougli the foreign country in which the bill was drawn may have
a law requiring it to bear a particular stamp, it will nevertheless
be valid in this country without such stamp, for our courts take no
notice of the revenue laws of another state, (r) But if the bill be
drawn or note be made in a British possession abroad, the local
law of which requires it to be stamped, it will not be available here
unless so stamped. (5) Such local law must, however, be proved by
the party who relies on it. (;!)

Section II. — Parties to a Bill or Note.

The parties to a bill or note must of course be such as would
be capable of entering into any other contract.* Thus, an infant
ought not to be one: {u) even though the instrument be given for
necessaries, {v) Neither ought a feme covert^ {w) unless she act as
agent for her husband, {x) or he be under a civil incapacity of re-

(g) Boelim V. Campbell. See Abrahams v. Skinner, 12 Ad. & E. '763 Snaith v.
Mingay, and Hamelin v. Bruck, uh. sup.

(r) James v. Catherwood, 3 D. & R. 190.

(s) Alves V. Hodgson, 1 T. R. 241.

{t) Buchanan v. Rucker, 1 Camp. 63. Le Cheminant v. Pearson, 4 Taunt. SGY.
Millar V. Heiurick, 4 Camp. 155.

(w) Williams v. Harrison, Carth. 160; 3 Salk. 197. Gibbs v. Merrell, 3 Taunt,
307.

{v) ■Williamson v. Watts, 1 Camp. 552. Trueman v. Hurst, 1 T. R. 40.

(m.) Marshall v. Rutten, 8 T. R. 545. Caudell v. Shaw, 4 T. R. 361.

{x) Cotes V. Davis, 1 Camp. 485. Prestwick v. Marshall, 7 Bingh. 565. Prince
V. Brunatte, 1 Bingh. N. C. 435. Yet if she do draw a bill, and the drawee accept it,
he thereby admits her ability.

* A person may become a party to a bill of exchange, not only by his own imme-
diate act, but by that of his agent or partner. Where his liability arises through
the intervention of an agent, he is said to draw, accept, or indorse by procuration.
As this agency is a mere ministerial act, it may be exercised by infants, feme coverts,
and others incapable of contracting on their own account. This authority may be
created by instrument of writing, or by verbal directions, or be implied from the
relations existing between the actual maker of the note and the persons whom he
assumes to represent. Long v. Colburn, 11 Mass. Rep. 97. Chitty on Bills, 28.

BILLS OF EXCHANGE AND PROMISSORY NOTES. 281

Parties to a Bill or Note.

siding here, (y) But where a married woman, being administratrix,
lent her husband a sum of money which she had received in that
character, and took for it the joint and several promissory note of
her husband and two other persons, payable to her with interest,
the Court of King's Bench held, though she could not have sued
on it in her husband's lifetime, yet, that any time within six years
after his death she might, (z) for the note being a chose in action^ had
become hers by survivoisJup, according to the ordinary rule that
choses in action given to the wife during the coverture survive to
her after her husband'^ death, unless he have reduced them into
possession. However, if a bill or note be made payable to the
order of a feme covert^ or be so indorsed, her husband may either
negotiate or sue upon it, and that either in his own name, or jointly
with his wife, (a) But if it be made or indorsed payable to her
alone, he cannot sue upon it in his own name nor can he transfer
it. He may reduce it into possession by receipt of the amount, or
by suing upon it jointly with his wife ; but if she die before he has
thus reduced it into possession, it will belong to her executor or
administrator ; if she survive him, she may sue upon it. (h) The
effect of bills and notes, to which agents, mercantile corporations,
or firms, are parties, has already been discussed in the first book,
under those respective heads. It will, however, be proper in this
place to mention some peculiar rules respecting hanking corpora-
tions and p)arinerskips^ who, together with bankers carrying on busi-
ness individually, have been the objects of certain special legisla-
tive enactments.

There are three classes of banks existing in England —

1. The Bank of England.

2. Banks of six or fewer than six persons.

8. Banking corporations, and companies of more than six per-
sons.

(y) Derry v. Duchess of Mazarine, Ld. Raym. 147.

(2) Richards v. Richards, 2 B. <fe Ad. 447. Accord. Gaters i;. Madeley, 6 M. & "W
423. Nash v. Nash, 2 Madd. 135.

(a) Arnold v. Revoult, 1 B. <fe B. 443. Philliskirk v. Pluckwell, 2 M. & S.
893.

(6) Sherrington v. Yates, 12 M. & W. 855. Hart v. Stevens 6 Q. B
937.

282 MERCANTILE CONTRACTS.

Parties to a Bill or Note.

1. The Bank of England^ (c) which is a corporation, (cZ) enjoying
privileges now regulated by 3 & 4 W.^ c. 98, and 7 & 8 Vict. c. 32,
can issue bills or notes unstamped. It hjiS the exclusive privilege
of doing so within three miles of London, (e) and may reissue its
notes after payment thereof, ad libitum. (/) Its notes payable to
bearer on demand, are, like cash, a legal tender, except by the Bank
itself, or its branches, (g) Such notes, if issued out of London,
must be made payable where issued. (/<)

2. Banks of six or fewer than six peisons, who, on the 6th of May,
1844, were carrying on the business of a banker in England or
Wales, having first obtained a license and given security by bond,
may, subject to the restrictions hereafter specified, and except within
the city of London, or within three miles thereof, issue on unstamped
paper promissory notes for five pounds or upwards, payable to
hearer on demand, or to order, at any period not exceeding seven days
after sight, and also to draw and issue on unstamped paper bills of
exchange, payable to order on demand, or any period not exceeding
seven days after sight, or twenty-one days after date ; provided such
bills of exchange be drawn on a bank in London, Westminster, or
Southwark, or be drawn by a banker or bankers at a town or
place where he or they shall be duly licensed to issue unstamped
notes and bills upon himself, or themselves, or his or their copartner
or copartners, payable at any other town or place where such banker
or bankers shall also be duly licensed to issue such notes and bills
as aforesaid. ({)

3. Banking {j) corporations and companies of more than sixpersons,

(c) The history of the Bank of England, and of its exclusive privileges, is given,
and the statutes creating them set out at large, in Bank of England v. Anderson, 3
Bingh. N. C. 589.

{d) 39 & 40 Geo. 3, c. 28, s. 15 ; 3 tfe 4 Wm. 4, c. 98, s. 1.

(e) 9 Geo. 4, c. 23, s. 1.

(/) 55 Geo. 3, c. 184, s. 20.

(^) 3 & 4 Wm. 4, c. 98, s. 6.

(/t) Ibid., s. 4.

(i) 9 Geo. 4, c. 23, s. 1. See also 7 & 8 Vict. c. 32, sect. 26, as to other bills.

Ij) Stat. 3 & 4 Wm. 4, c. 98, s. 2; 39 <fe 40 Geo. 3, c. 28 ; 7 Geo. 4. c. 46. See
Chitty, 8 ed. p. 16. Bank of England v. Anderson, 3 Bingh. N. C. 589. Booth v.
Bank of England, 6 Bingh. N. C. 415. As to banking companies established since
May 6th, 1844 see 7 & 8 Vict. c. 113.

BILLS OF EXCHANGE AND PROMISSORY KOTES. 283

Parties to a Bill or Note.

are forbidden to issue in London, or within sixty-five miles thereof,
any bill or note, for the payment of money on demand, or upon
which any person holding the same may obtain payment on de-
mand ; or to borrow, owe, or take up any sum of money, on their
notes payable on demand, or at any less time than six months from
ths borrowing thereof, during the continuance of the exclusive
privileges of the Bank of England ; Qc) but if they carry on business
in London, or within sixty-five miles thereof, they may draw, ac-
cept, or indorse hills of exchange^ provided they be not payable to
the bearer on demand. (/) Such a corporation or company, how
ever, having an establishment more than sixty-five miles from Lon-
don, provided it carried on the business of banking and issued notes
on the 6th of May, 18-i4, may, subject to the restrictions hereafter
specified, issue bills or notes, payable on demand or otherwise at
the place luhere they are issued and also at London^ {in) and have an
agent in London, or any other place where the same shall be made
payable, for the purpose of such payment only. But no such bill
or note shall be for less than five pounds, or be reissued in Lon-
ccon, or within sixty-five miles thereof.

Even beyond the distance of sixty-five miles from London, such
a corporation or company can only issue such bills or notes, subject
to the regulations prescribed by stat, 7 Geo. 4, c. 46, which directs
that their bills and notes shall be made payable at some place or
places specified thereon, exceeding the limited distance, (subject
however to the license given by 3 & 4 TVm. 4, c. 98, s. 2 ; 3 & 4
Wm. 4, c. 88, s. 2; and 7 & 8 Vict. c. 82, s. 11 & 22;) that the
corporation or copartnership shall have no establishment as bankers
in London, or within sixty-five miles thereof; that every member
of such corporation or partnership shall be responsible for the pay-
ment of bills and notes issued by the corporation or partnership,
such person being a member at the date of the bills or notes, or
becoming so before they are payable, or while any sum on any of

{h) This restriction was formerly larger, 3 <& 4 Wm. 4, c. 98, sect. 3, and 39 & 40
Geo. 3, c, 28, sect. 15. See Bank ol England v. Anderson, 3 Bingh. N. C. 689. Booth
V. Bank of England, 6 Bingh. K C. 415.

(^) 7 & 8 Vict. c. 32, s. 26.

(m) 3 A 4 Wm. 4, c. 98, s. 2, and 3 & 4 Wm. 4, c. 83, s. 2. The license given bj
the latter section seems more extensive than that of the former.

284 ilERCAIsTILE CONTRACTS.

Pai-ties to a Bill or Note.

tliem is unpaid ; and that tliey shall deliver into the stamp-ofB.ce,
before they issue any bills or notes, and every year afterwards, be-
tween February 28th and March 25th, an account in form specified
in a schedule to the act, which account sets forth the true name of
the corporation or partnership, and of every bank established by
them, and the names and abode of two members resident in Eng-
land, who have been appointed public oflS.cers of the corporation or
Tjartnership. A further account is also to be delivered within the
year, if there be any change in the officers or members.

The copartnership is to sue and be sued {n) in the name of any one
of the above mentioned officers, (o) of whose appointment, though
it may be otherwise proved, (p) a copy of the account certified
under the hand of one of the commissioners of stamps is evidence ;
this copy also proves that all persons named therein were members
at the period of its date. (2') A decree or judgment against such
public officer binds the copartnership, and execution may be taken
out against any member for the time being, and if that prove in-
effectual, against any person who was a member at the time of the
contract, or became a member before it was executed, or was a mem-
ber at the time of judgment obtained ; but no such execution as
last mentioned can be issued, without leave first granted on motion
in open court, which motion cannot be made without notice to the
party sought to be charged, nor more than three years after he has
ceased to be a member, (r)

(n) This is compulsory, Steward v. Gi-eaves, 10 M. AW. Ill, and in such suits
the officer is not allowed to plead his individual bankruptcy, at all events when the
plaintiff will undertake not to sue out execution against his person, lands, or goods.
Steward v. Dunn, 11 M. <fe W. 63.

(o) See, in case of change of partners, "Wilson v. Craven, 8 M. &. "W. 584.

(p) Edwards v. Buchanan, 3 B. & Ad. 788.

(q) A cop3' of the return so certified is evidence, by itself, of the facts stated in it>
and it is not necessary to prove aliunde that the person who made the affidavit an-
nexed, was the public officer, and his continuance in office, till tlie contrary is shown,
•will be presumed. Steward v. ]')uni , 12 M. & W. 655. It will likewise be evidence
that the persons named were members at the time of swearing the affidavit, if no
other date be assigned, and notwithstanding it may appear not to have been made
between Feb. 28th and March 25th, the period described for making the return.
Bosanquet v. Woodford, 5 Q. B. 310. As to the degree of certainty required in the
return, see Armitage v. Hamer, 3 B. <& Ad. 793.

(r) See Barker v. Buttress, 1 Beav. 134 It would from that case appear that ia

BILLS OF EXCHANGE AND PROMISSORY NOTES. 285

Parties to a Bill or Note.

The practical mode of charging members after a judgment
against the public officer is by scire facias^ which in the case of an
actual member issues as of course, in the case of a late member by
leave on motion made in open court ; (s) against the officer himself
no scire facias is necessary, he being a party on the record, {t)

The right of suing and being sued by their own members,
through the medium of their public officer, is extended to them by
1 & 2 Vict. c. 96, and they are prohibited from setting off their
shares in any such suit.

The issue of bank-notes or bills, whether by banks of many or
few partners, is now subject to the following restrictions imposed
by the statute 7 & 8 Vict. c. 32, the present Bank Charter Act,
which provides (w) that no person other than a banker, who on
May 6th, 1844, was lawfully issuing his own bank-notes, shall
make or issue them in the United Kingdom. "That(v) it shall
not be lawful for any banker to draw, accept, make, or issue in
England or TVales any bill of exchange, or promissory note or
engagement for the payment of money payable to bearer on de-
mand, or to borrow, owe, or take u-^ in England or Wales any
sum or sums of money on the bills or notes of such banker payable
to bearer on demand :" save and except that any banker who was
on May 6th, 1844, lawfully issuing his own bank-notes under the
authority of a license, may continue to issue such notes, but only
to the extent and under the conditions afterwards mentioned. But
it declares that the right of any company or partnership to con

the event of the death of a shareholder, against whom execution had not been ob
tained, a scire facias ■would not be maintainable against his representatives.

(s) Cross V. Law, 6 M. & W. 217 ; 8 Dowl. "794. Whittenbury v. Law, 6 Bingh.
N. C. 345. Ransford v. Bosanquet, 12 Ad. & E. 813, as to proceedings in sci. fa
against members. See Fowler v. Rickerby, 3 Scott N. C. 138, 153; 2 M. & Gr. 760.
Clowes V. Brettell, 10 M. & W. 507, 11 M. & W. 461, which decide that there can be
no plea of non-joindec As to the consequence of issuing a scire facias without leave,
eee Bradley v. "Warburg, 11 M. &, W. 452. Bradley v. Urquhart, ib. 583, see 7 <fe 8 Vict.
c. 113, and chapter on Joint Stock Companies and as to the circumstances under
•whicl: the Court grants leave, see Eardley v. Law, 12 Ad. &, E. 802.

(t) 8 Dowl. 899. Harwood v. Law, Parke, B., dubitante, 7 M. & W. 203.

(m) Sect. 10. The term banker applies to all corporations, societies, partnerships,
and persons, and every individual person carrying on the business of banking, excepi
the Bank of England. Sect. 28.

{v) Sect. 11,

286 MERCANTILE CONTRACTS.

Parties to a Bill or Note.

tinue the issue shall not be jDrejudiced by any change which may
take place in the personal composition of it, either by transfer of
shares or the admission of any new partner, or the retirement of
any present member ; provided, that it shall not be lawful for any
company or partnership then consisting of only six or less than six
persons, to issue such notes, after the number of partners shall ex-
ceed six in the whole. If a {w) banker becomes bankrupt, or ceases
to carry on the business of a banker, or discontinues tne issue of
bank-notes, he may not afterwards issue them. Every banker {x)
who claimed the right of issuing such notes was directed, within
one month after the passing of the act, to give notice to the com-
missioners of stamps and taxes of such claim, who were thereupon
to ascertain whether he was, on the 8th of May, 1844, a banker,
lawfully issuing his own notes, and if he were, to ascertain the
average amount of the bank-notes of such banker, or of united
banks, {y) which were in circulation during the period of twelve
weeks preceding April 12th, 1844, and to certify such amount,
when so ascertained, to the banker, and to publish it(2) in the
Gazette. The statute then declares that such banker shall not
at any time after October 10th, 1844, have in circulation upon the
average of four weeks, (for the ascertainment of which there are
special provisions,) (a) a greater amount of notes than the amount
so certified. A bank exceeding the limit forfeits the sum equal to
the excess ; (5) but in the event of two banks, each of which con-
sists of more than six members, uniting, the commissioners may
make a fresh certificate of the aggregate of the amounts they were
entitled to issue, and thereupon the united body may issue notes to
the extent so certified.

When several persons who are not in partnership accept a bill,
or make a promissory note, the question whether they are bound
jointly, or jointly and severally, depends upon the wording of the
instrument. A note beginning with " / promise,^^ and signed by
several persons, has been held joint and several ; (c) but a note so
beginning, and signed by one partner for himself and his copart-

(w) Sect. 12. {x) Sect 13. {y) Sect. 14.

(z) Sect. 1.5. (a) Sects. 18, 19, 20. (6) Sect. 16.

(c) Clark v. Blackstock, Holt, 474. March v. Ward, Peake, 130. Lord Gal way
». Matthew, 1 Camp. 403 ; 10 East^ 264. Hall v. Smith, 1 B. & C. 407, 1 D. «fe R. 584,

BILLS OF EXCHANGE AND PROMISSORY NOTES. 287

Transfer of Bills and Notes.

ners, is a joint note, and the partner signing is not severally liable
upon it. (d) In no case will the signature of one of such makers
or drawees bind any person except himself; (e) nor if such persons
be payees, can any one of them transfer the bill or note by his in
dividual indorsement, (/) An executor or administrator becoming
party to the bill or note, given for the debt of the deceased, binda
himself personally, (g)

Section" III. — Transfer of Bills and Notes*
Although, by the ordinary rule of law, the benefit of contracts

{d) Ex parte Buckley in re Clarke, 14 M. & W. 469, overruling; Hall v. Smith, 1
B. & C. 407.

(e) B. N. R 279. Marius, 2d ed. 16 ; Beawes, 1st ed. 444. See Innes v. Stephen-
son, 1 M. & Rob. 146.

(/) Carvick v. Viekery, Dougl. 653, n. 134.

(g) Ridout V. Bristow, 1 Tyrwh. 90, 1 C. & J. 231. Childs v. Monins, 2 B. <k B.
460. Serle v. Waterworth, 4 M. & W. 9. Nelson v. Serle, 4 M. & W. 795.

* The indorsement of a bill is not merely a transfer of the paper, but a fresh and
iubstantive contract. It is equivalent to a new bill drawn by the indorser upon the
acceptor ia favor of the indorsee. As it falls under the general rule that the obliga-
tions of a personal contract are to be determined by the law of the place of its ex-
ecution, an indorser may become responsible for a much higher rate of damages and
of interest, upon the dishonor of a note, then he can recover from the drawer. Slo-
cum V. Pomeroy, 6 Cranch, 221. Van Taphorst v. Pearce, 4 Mass. 253. Powers v.
Lynch, 3 Mass. R. 77. Story on Conflict of Laws, 262. So, although no suit can be
brought in the Federal courts against the maker of a promissory note by an assignee,
unless the action could have been maintained if there had been no assignment, yet
as between immediate indorsee and indorser, being citizens and inhabitants of dif-
ferent states, the jurisdiction of the Federal courts attaches as upon a distinct con-
tract between these parties, independently of the residence of the original and remote
parties to the instrument. Coffee v. Planters' Bank of Tennessee, 13 How. S. C. R.
183. "The contract of indorsement," sajs C. J. Gibson, in Patterson v. Poindcxter, 6
Watts & Serg. 234, "is not an independent one, but a parasite, which like the cha-
meleon takes the hue of the thing with which it is connected. Attached to com-
mercial paper it becomes a commercial contract, operating as a contingent guaranty
of payment, and a transfer of the title, where the paper is negotiable ; attached to
any other chose in action, it becomes an equitable assignment of the bene-ficial inter-
est, without recourse to the assignor." For illustrations of the same principle, sea
Aymar v. Sheldon, 12 Wend. 439. Allen v. Merchants' Bank, 22 Wend. 215. Hatcher
I'. McMorine, 4 Dea. N. C. 122; but see Rothschild v. Currie, 1 Q. B. 43.

288 MERCANTILE CONTRACTS.

Transfer of Bills and Notes.

cannot he transferred, so as to give the transferee a right to sue at
law upon them in his own name ; yet those arising out of bills and
notes, generally speaking, may be so, in the manner hereinafter
specified; and, though it once was doubted whether an English
note were transferable abroad, it has been since decided that it is
so ; {h) and a foreign note is in like manner transferable so as to
entitle the transferee to sue here, (^) but it must be transferred ac-
cording to the law of the foreign country, (j) at least if the in-
dorsement be made there ; if elsewhere, Mr. Chitty thinks that the
mode of indorsement follows the law of the place of indorsement.
(Chitty on Bills, 253.)

A bill or note payable to bearer, or indorsed in blank, may be
transferred by mere delivery. Other bills and notes, by the in-
dorsement of the transferor's name on the instrument. (Z;)* Indeed,
if the bill or note be for less than five pounds, the indorsement
must mention the name and place of abode of the indorsee, bear
date at or before the time of making it, and be attested by a sub-
scribing witness. {I)

(h) De la Cbaumette v. Bank of England, 2 B. & Ad. 358.
(i) Milne v. Graham, 1 B. <fe C. 192. Bently v. Northouse, M. & M. 66.
(;■) Trimbey v. Vignier, 6 C. & P. 25; 1 Bingh. N. C. 151.

(A.) Which indorsement maybe written iu pencil, as well as ink. Geary v. Physic,
5 B. <fe C. 234.

(Z) 17 Geo. 3, c. 30, s. 1. By the French law an indorsement must specify the

* The following extraordinary decision was made in the case of Brown v. The
Butchers &, Drovers' Bank, 6 Hill's N. Y. R. 443. The next step in breaking down
the settled principles of commercial law, would be to declare that a parol contract
of indorsement evidenced by no writing, would be obligatory as such. Brown, the
defendant, was held to be the indorser of a note, on which the figures 1, 2, 8 were
written with a lead pencil, his name not appearing at all upon the paper, there being
parol evidence to show that the figures were made by him, and that he intended,
by placing them on the back of the paper, to bind himself as indorser. It also ap-
peared that he was able to write. The Court, in defence of this doctrine, refers to
cases, where a mark made by a party after his name, has been held to be a sufiicient
signing, within the Statute of Frauds. A mark is the adoption of a name, and un-
less it was admissible, there are many contracts of which an unlettered man could
not derive the benefit. But should this exception be extended any farther than the
necessities of society absolutely require, and to cases in which the name of the party
sought to be charged does not appear at all upon the instrument?

BILLS OF EXCHANGE AND PROMISSORY NOTES. 289

Transfer of Bills and Notes.

Indorsements are either full or in blank ; a full indorsement is
one which mentions the name of the party in whose favor it was
made. An indorsement in blank, one which does not mention
such name.

A bill or note indorsed in blank is, as has been said, transfera-
ble by merely delivering it to the intended transferee, (m) but one
indorsed in full must be indorsed again by the person to whom it
was so indorsed in full, in order to render it transferable to every
intent, for he who indorses to a particular person, declares his
intention not to be made liable, except by that person's indorse-
ment over. Indeed, where a bill was indorsed in blank by the
payee, and after other indorsements specially indorsed to Jackson,
who delivered it without indorsement to Muir and Atkinson, who
discounted it with the plaintiff. Lord Kenyon allowed the plaintiff
to strike out all the indorsements except that of the payee, and re-
cover in an action on it against the acceptor. (?i)* And where a
bill was specially indorsed to the plaintiff, who, without indorsing,
handed it to B., who indorsed it, and gave it to the plaintiff, it was
held that B. was liable as the drawer of a fresh bill, and that no
new stamp was requisite, (o) The authority of this decision has
been a little questioned, and, at all events, does not govern the case

value given and the indorsee's name, and must be dated. Trimbey v. Vignier, 6 C.
«fe P. 25 ; 1 Bingh. N. C. 151.

{m) Delivery, as will be again mentioned, is implied in the very term indorsement.
Marston v. Allen^ 8 M. & W. 494. Adams v. Jones, 12 Ad. <fe E. 455.

(n) Smith v. Clark, Peake, 225.

(o) Penny v. Innes, 5 Tyrwh. lOY ; 1 C. M. & R. 439. But see Plimley v. West-
ley, 2 Bingh. N. C. 2t9. Gwinnell v. Herbert, 5 Ad. & E. 436, and Burmester v. Ho-
garth, 11 M. & W, 97, in which case a remark was made which appears not to have
occurred in any former discussion, namely, that if the indorsement of a bill, specially
indorsed, be the drawing of a new bill, it is the drawing of one of a different class,
viz., of a bill payable to bearer.

* It has long been the settled doctrine of the English and American courts, that
the bonajide holder of a bill of exchange, may at any time before or after the insti-
tution of a suit against an indorser, by writing over a blank indorsement, direct that
the money should be paid to a particular person ; and that the holder does not
thereby become an indorser. Evans v. Gee, 11 Peters S. C. Rep. 80.
19

290 MERCANTILE CONTRACTS.

Transfer of Bills and Notes.

of a promissory note, tlie indorsee of wliicli cannot be declared
against as maker in such, a case as the above, {jp)

A mistake in spelling the name of a person to whom a bill is
specially indorsed, will not prevent that person from transferring it
by the indorsement of his name properly spelt upon it. {q)

An indorsement may be so worded as to restrain the negotia-
bility of the instrument, and is then called a restrictive indorsement;
thus, "pay the contents to J. S. only," or " to J. S. for my use," are
restrictive indorsements, and put an end to the instrument's trans-
ferability. (?•) But in such case there must appear an unequivocal
intention to restrain, (s) therefore an indorsement in full to A. with-
out the words " or order," will not deprive A. of the power of
transferring by his indorsement, {t) An indorsement cannot be for
part of the sum secured by the bill or note, if the residue continue
unpaid, (for that would subject the previous parties to a variety of
suits,) though it seems that, if the residue be paid, it may. (w)
Where the drawer or maker has, in the original wording of a bill
or note, rendered it payable to an individual, without adding words
of transfer, such as " or order^'' it is, as Ave have seen, not transfer-
able. However, if the holder of such a bill think proper to in-
dorse it, lie will be chargeable on his indorsement, (y) (though ante-
cedent jDarties to the instrument will not,) unless indeed the stamp
laws interfere so as to prevent it ; and from the case gf Penny v.
Lines, above stated, it might have been supposed that the stamp
laws would, in such a case, have interposed an obstacle, the iden-

(p) Gwinnell v. Herbert, 5 Ad, ik E. 436.

{q) Leonard v. Wilson, 4 Tyrwh. 415, 2 C. <fe M. 589.

(r) Per Wilmot, J., Burr. 1227 ; Bl. 229. See Robertson v. Kensington, 4 Taunt.
30. Sigourney v. Lloyd, 8 B. <fe C. 622. Aneher v. Bank of England, Dougl. 615,
eST. Similar to a restrictive indorsement is the common practice, which will be
hereafter noticed, of writing the name of the payee's banker across a check.

(s) Treuttel v. Barandon, 8 Taunt. 100. Potts v. Reed, 6 Esp. 57.

{t) Moore v. Manning, Cora. 311. Acheson v. Fountain, Str. 557; B. N. P. 275.
Edie V. E. L Company, Bl. 295 ; Burr. 1216.

(m) Hawkins v. Cardy, Ld. Raym. 360; Carth. 466; 12 Mod. 213; Salk. 6.5.
Johnson v. Kennion, 2 Wils. 262, per Gould, J. Reid v. Furnival, 1 C. & M.
538.

(i.) Hill V. Lewis, Salk. 132. See Penny v. Innes, 5 Tyi-wh. 107, 1 C. M. & R. 439.
Bayley, 5th ed. 120. Sed vide Plimley v. Westley, 2 Bingh. N. C. 249.

BILLS OF EXCHANGE AND PROMISSORY NOTES. 291

Transfer of Bills and Notes.

tity of the instrument continuing. But in PlimJey v. Westleij {w)
the Court of Common Pleas seem to have been of a different opin-
ion. In that case the defendant being indebted to the phaintiif for
goods, indorsed to him a note made by H. payable to E. and W.,
■\vithout the words " or order^'' indorsed by E. and W. and by J.
K., from whom defendant received it. The Court seems to have
been of the opinion that the defendant was not liable on this note
for want of a fresh stamp. But, as that point was not essential to
the decision of the case, which was th?„t the defendant was liable
for the price of the goods, the note not having been paid when due,
its authority on the question respecting the stamp does not appear
conclusive, {x)

Such is the mode of transferring a bill or note, which transfer
may in general be made by any holder, or his legal representative ;
as, if the holder die, by his executors or administrators ; (?/) if he
become bankrupt, by his assignees, unless under particular circum-
stances, as where the bankrupt held the bill in the character of
trustee or agent for another person ; {i) and if a bill or note be
given to a married woman, (a) or if the holder of a bill or note
marry, the right to transfer it devolves during their joint lives
upon her husband, (5) and, it has been said, in his assignees if he
become a bankrupt, (c) But persons holding bills in aider droit
should exercise this power of transfer with much caution, for un-

(w) 2 Bingh. N. C. 249.

(x) Burniester v. Hogarth, 1 1 JI. <fc W. 9Y.

{y) Rawlinson v. Stone, 3 Wils. 1.

(2) Ramsbottom v. Cator, 1 Stark. 228. Ex parte M'Gae, 2 Rose, 3T6 ; 19 Ves.
60Y. Arden v. Watkins, 3 East, 317. Willis v. Freeman, 12 East, 656. Gladstone
V. Hadwen, 1 M. <fe S. 517. Bruce v. Hurley, 1 Stark. 23. Ex parte Smith, 1 Buck.
355. Zinck v. Walker, Bl. 1154. Giles v. Perkins, 9 East, 12. Ex parte Rowton, 1
Rose, 15. Ex parte Seargeant, 1 Rose, 153. Ex parte Hull m re Boldero, 19 Ves.
25; 1 Rose, 232. Ex parte Towgood, 19 Yes. 229. Ex jyarte Buchanan, 1 Rose, 280.
Ex parte Harford, 2 Rose, 1G2. Ex parte Armestead, 2 Gh'un &, Ja. 371. Thompsoa
V. Giles, 2 B. & C. 422, and post, Bk. 4, Chapter Bankruptcy.

(a) Mason v. Morgan, 4 Nev. & Mann. 46 ; 2 Ad. & E. 31.

(6) Mdson V. Morgan, 2 Ad. & E. 31. M'Neilage v. Holloway, 1 B. & A. 218.
Connor v. Martin, Str. 516. Sherrington v. Yates, 11 M. <fe W. 42, overruled, S. G
12 M. & W. 855. Hart 1-. Stevens, 6 Q. B. 937.

(c) Yates v. Sherrington, 11 M. <fc W. 42, overruled on another point, 12 M. & W
655. See also Hart v. Stevens, 6 Q. B. 937.

292 MERCANTILE CONTRACTS.

Transfer of Bills and Notes.

less tliey by some special form of words prevent such, liability,
they will be personally bound by their indorsement. (cZ) When a
bill or note is lost or stolen, a thief or finder can of course convey
no title in it to any other person, if at the time of the loss it be
transferable only by indorsement ; and if it be transferable by mere
delivery, although the thief or finder may convey a title in it to
any person acquiring it from him, honafide^ and for a valuable con-
sideration, (e) yet, if such person take it without sufficient caution,
under circumstances which should have led him to suspect the true
state of the case, and subject him to the imputation of such gross
negligence as evidences fraud, he will not be allowed to retain it,
even though he have given its full volue. (/)

As to the time at which a bill or note may be transferred, it
may be so at any time before it has become due, (nay, in one case
it was held no objection that the indorsement had been made be-
fore the bill itself was drawn,) {g) or after {Ji) it had become due. (^)
But then a person who takes a bill after it is due, or with notice of
its having been dishonored by non-acceptance, takes it subject to
all the equities with which it was incumbered while in the hands
of the person from whom he received it, for it comes, to use Lord
Ellenborough's words, disgraced to him ; thus, if he took it from a
thief or finder, he could not recover on it, inasmuch as the thief or

{d) Childs V. Monis, 2 B. <fe B. 460. King v. Thorn, 1 T. R, 487. Goupy v. Harden,
Holt, 342; 2 Marsh. 404; T Taunt. 159. Eaton v. Bell, 5 B. & A. 34. Thomas v
Bishop, Str. 955.

(e) Anon. Ld. Rayra. 738; Salk. 126; 3 Salk. 71. Miller v. Race, Burr. 452.
Lavrson v. "Weston, 4 Esp. 56. Grant v. Vaughan, Burr. 1516. Peacock v. Rhodes,
Dougl. 611, 633. Snow v. Saddler, 3 Bingli. 610.

(/) Strange v. Wigney, 6 Bingh. 683. Solomons v. Bank of England, 13 East,
135. Gill V. Cubitt, 3 B. & C. 406. Down v. Hailing, 4 B. <fe C. 330. Snow v. Pea-
cock, 3 Bingh. 406. Beckwith v. Corrall, 3 Bingh. 444. Easley v. Crockford, 10
Bingh, 243. Egan v. Threllfall, 5 D. «fe R. 326, n. See Crook v. Jadis, 5 B. <fe Ad-
909. Cunllffe v. Booth, 3 Bingh. N. C. 821. Goodman v. Harvey, 4 Ad. & E. 780.
Uther V. Rich, 10 Ad. & E. 784. The two last cases decide that gross negligence does
not per oe invalidate the holder's title, and is only important as evidence of fraud

{rj) Sehultz V. Astley, 2 Bingh. N. C. 544.

(/,) Unless it be for less than bl. 17 Geo. 3, c. 30, s. 1.

(j) Dehers v. Harriott, 1 Shower, 163. Mutford v. Walcott, Ld. Raym 575.
Charles v. Marsden, 1 Taunt. 224. Graves v. Key, 3 B. & Ad. 313. Stein v. Yglesiaa,
1 C. M. & R. 565.

BILLS OF EXCHANGE AXD PROMISSORY NOTES. 293

Transfer of Bills and Notes.

finder could not : (j) and it was long thought, on the same princi-
ple, if A. accepted a bill for B.'s accommodation, and B. indorsed it
overdue, the indorsee could not sue on it, inasmuch as the drawee ;
could not do so. Bat this was first qualified by excluding the
case of a bill accepted when overdue, which it must, therefore, clearly
have been the intention of the parties to allow to be negotiated
when overdue, {h) And, subsequently, the Court of Common Pleas
decided that to the action against an acceptor, "it was no plea to
say that tlie bill was accepted without value before due, and in-
dorsed after it became due." But these equities, as they are called,
must be such as naturally arise out of the bill or note transaction,
not out of some collateral matter, as for instance, alright of set-off,
which, the maker or acceptor would have had against the party
who transferred it to the holder. (Z)-

{j) Taylor v. Mather, 3 T. R. 83, n. Brown v. Davies, 3 T. R. 80. Boehm i;. Stir-
ling, 7 T. R. 431. Tinson v. Francis, Selw. N. P. Sth ed. 321. Crossley v. Ham, 13
East, 498. Lee v. Zagury, 8 Taunt. 114. Beauchamp v. Parry, 1 B. & Ad. 89, per
Lord Tenterden. But a bill or note payable on demand, especially if with interest, is
not considered overdue, at least not without some evidence of payment having been
demanded and refused. Brooks v. Mitchell, 9 M. & "W. 15. Barrough v. "White, 4 B. &
C. 325 ; 2 C. <fe P. 8. See Ileywood v. Watson, 4 Bingh. 496. Gascoyne v. Smith,
M'Clel. & Y. 338. Sed vide Banks v. Colwell, 3 T. R. 81.

(k) Stein v. Yglesias, 3 Dowl. 252. Sturtevant v. Ford, 4 M. &, Gr. 103. See
Charles v. Marsden, 1 Taunt. 224. Atwood v. Crowder, 1 Stark. 483. Lazarus v.
Cowie, 3 Q. B. 450.

(/) Burrough v. Moss, 10 B. & C. 558. Whitehead v. Walker, 10 M. & W. 696.
"I do not think that the holder is precluded from suing in all cases of accommoda-
tion bills indorsed after the time at which they purport to be payable. Nothing
dehors the bill, as payment, «fec., ought, I think, to affect an indorsee for value."
Tindal, C. J., in Sturtevant v. Ford, 4 M. & Gr. 101. Stain v. Yglesias, 1 C. M. & R.
565. But see Goodall v. Ra}', 4 Dowl. 82, hereafter commented upon. As to th«
limit of the abo\ e rule in other respects, see Chalmers v. Lanion, 1 Camp. 383. Bo-
6anquet v. Dudman, 1 Stark. 1. Atwood v. Crowdie, 1 Stark. 483 Buzzard v. Fleck-
noe, 1 Stark. 333. Collinridge v. Farquharson, 1 Stark. 259. Dunn v. O'Keefe, 6
Taunt. 305, affirmed 5 M. & S. 282, in error.

* The modern English doctrine is, that the indorsee of an overdue note takes it
subject to equities between the maker and indorser, arising out of the transaction
itself, but not a set-ofF, arising out of collateral matters. Burrough v. Moss, 10 Barn.
& Cres. 558. Whitehead v. Walker, 10 Mees. & Welb. 696. The doctrine was re-
cognized in Pennsylvania, in Ilughe? v. Large, 2 Barr's Rejx 103, and C. J. Gibson,

294 MERCANTILE CONTRACTS.

Transfer of Bills and Notes.

But though a bill or note is, generally speaking, negotiable af-
ter it has become due, yet it is not so after it has once been^aiof
at maturity, if such negotiation would have the effect of charging
persons who otherwise would be discharged, (m) Indeed, in most
cases it is expressly forbidden to be reissued by the stamp laws, {n)
However, an indorser, who pays a bill as such, may afterwards ne-
gotiate it, for his indorsement can give no right save against him-
self, and those whom he himself might sue. (o) And, although, if
a bill be j)a/(Z at maturity, that payment will discharge the parties
to it even though their names should be left on the bill by acci-
dent and it should subsequently be negotiated, yet, if it be paid
before it arrives^ at maturity, the person so paying or receiving pay-
ment must run the risk, if he allow his name to remain on it,' of
being subsequently called on by a bona fide holder, if it should get
into the hands of such a person. — "Nothing," to use the words of
Parke, B., " will discharge the acceptor or the drawer except pay-
ment according to the laio merchant, that is, payment of the bill at
maturity. If a party pays it before, he purchases it, and is in the
same situation as if he had discharged it. {p)

Lastly. It is to be observed on the subject of transfer, that the
party who indorses, undertakes thereby to the indorsee and every

{m) Beck v. Robley, cited 1 H. Bl. 89, n. And see Bartrum v. Caddy, 9 Ad. &
E. 275 ; see, however, the judgment in Lazarus v. Cowie, 3 Q. B. 464.

{n) See 55 G. 3, c. 184, and Bartrum v. Caddy, 9 Ad. & E. 275; also Lazarus v.
Cowie, 3 Q. B. 459.

(o) Callow V. Lawrence, 3 M. (feS. 95. Hubbard w. Jackson, 4 Bingh. 390. Graves
V. Key, 3 B. & Ad. 313.

(jd) Morley v. Culverwell, 1 M. &. W. 174; and see Deacon v. Stodhart, 2 M. &
Gr. 317, post sect. 8.

in delivering the opinion of the Court, observes, that " it is somewhat remarkable
that this distinction between equities and cross demands did not occur in England
before 1830, though it had been taken three years before in Massachusetts and New
York." The rule was also followed in Connecticut, in Robinson v. Lyman, 10 Conn,
80 ; in New Hampshire, in Chandler v. Drew, 6 N. Hamp. 469. But in New York,
by a provision of the Revised Statutes, and in Massachusetts by subsequent adjudi-
cation, the right of set-off has been greatly er,'>.<irged. See Peabody v. Peters, 5 Pick.
1 ; Sargent v. Sargent, 5 Pick. 311. For applications of the principle in later Ameri-
can cases, see Miner v. Hoyt, 4 Hill, 193. Baxter v. Little, 6 Met. 7. Tuscumbia
Railroad Co. v. Rhodes, 8 Alab. 206. Tinsley v. Beall, 2 Georg. 134.

BILLS OF EXCHANGE xVND PROMISSORY NOTES. 295

Transfer of Bills and Notes.

subsequent liolder, that the bill or note shall be discharged by the
drawee or maker when it becomes due. (5')* The transfer of a bill
or note by mere delivery raises no such undertaking on the part
of the transferor : (r) however, if such transfer was by way of pay-

{g) In fact, the contract of an indorser is in so many respects similar to that of a
drawer, that it is often said that every indorser is the drawer of a new bill, and so
far is this idea carried, that where in an action against an indorse: he pleaded that
he did not draw the bill, and the plaintiff signed judgment, it was set aside, the Court
saying that the plea, though demurrable in form was good in substance, for that the
indorser waa a new drawer in contemplation of law. Allen v. Walker, 2 M. & W.
317.

(r) Such transfer by delivery, if for valuable consideration, teems to imply a
warranty that the bill or note is genuine. Jones v. Hyde, 5 Taunt. 488. Bruce v.
Bruce, 1 Marsh 165.* It has been questioned whether the transfer of a note payable

* The indorsers of an accommodation bill are not joint sureties, but are liable to
each other in tlie order of their becoming parties. Tlie indorsev of a promissory
note, who receives no value for his indorsement from a subsequent indorser, or from
the drawer, cannot set up the want of consideration received by himself; he is not
permitted to say that the promise is made without consideration ; because money
paid by the promisee to another, is as valid a consideration as if paid to the pro
missor himself. McDonald v. Magruder, 3 Peters S. C. R. 470. Williams v. Bosson
& Brothers, 11 Ohio Rep. 62. Bank of United States v. Bierne, 1 Grattan, 236.
"The rights and duties of the several parties to an accommodation note, or bill of
exchange, are the same as upon those which are denominated business notes."
Church V. Barlow, 9 Pick. 547.

* The American authorities recognize the doctrine that the transfer of a bank-
note by delivery is a warranty of its genuineness. A great difference of opinion,
however, prevails upon the question whether there is an implied warranty of value.
Mr. Parsons, in his work on Contracts, Vol. I. p. 220, suggests that the effect of a
payment in the bills of an insolvent bank, both parties being equally ignorant of the
fact, must depend upon the question (to be determined by the peculiar circumstances
of each case) whether the payee takes the bills as absolute payment at his own risk^
or takes them only as conditional payment, he to be bound only to use due diligence
in collecting the bills, and if he fails the paj-ment to be null. Perhaps, he adds, the
weight of authority, as well as of reason, is in favour of this last view predominating,
where there is no sufficient evidence of a contrary intention. In the late case of
Timmis v. Gibbons, 14 E. L. & E. R. 64, a question was presented very similar in its
nature. The plaintiff had deposited with a banking company in London certain
countrj' bank-notes, for which he received a memorandum acknowledging the receipt
" of £80, for which we are accountable." It turned out that the bank which had
issued the bills had stopped payment upon the day of deposit, but neither of the
parties was aware of the fact. The Court of Queen's Bench Iield that the plaintiff

296 MERCANTILE CONTRACTS.

Transfer of Bills and Notes.

ment of a former debt, tliat debt will not be looked upon as satis-
fied, unless the bill or note be discliarged when it comes to ma-
turity. An indorsement admits the ability and signature of every
antecedent party, [s)

With regard to the meaning of the term indorsement, it should
be remarked that it includes delivery to the indorsee, and therefore
a denial of the indorsement includes a denial of such delivery, {t)

to bearer by delivery, does not imply a ■warrant}^ that the maker of the note is
solvent at the time of such delivery. But the general opinion seems against such
implication: see the subject discussed in Rogers v. Langford, 1 C. & il. 637.

(s) Lambert v. Pack, Sal. 127; Ld. Raym. 443; 12 Mod. 244; Holt, 117. Wil-
liams V. Seagrove, 2 Barnard, 82. Crichlow v. T.^rrj, 2 Camp. 1S2. See Armani v.
Castrique, 13 M. & W. 443. But an indorsement seems to be no warranty that prior
indorsements are genuine. E. L Compy. v. Tritton, 3 B. & C. 280. It has been said
that an indorsement in blank is an equivocal act: and if a man indorse a bill in
blank, and give it to his agent to obtain payment, that agent may either use his
principal's signature to discharge the party paying, by writing a receipt over it, or
may consider it a transter of the right of action on the bill to himself. Clark v.
Pigot, Sal. 126, 12 Mod. 192. Adams y. Oakes, 6 C. <fe P. 71.

{t) Marston v. Allen, 8 M. <fe W. 494. Adams v. Jones, 12 Ad. & E. 455. See
Hayes v. Caulfield, 5 Q. B. 81.

could not maintain an action either for money lent, or money had and received,
against the banking company. The Court treated it as a case of complete failure of
the consideration upon which defendants' promise had been founded, the promise
having in fact been made under a material mistake of fact. The deposit of notes
under such circumstances was distinguished from their pay^nent in satisfaction of an
antecedent debt, or on a present sale. In reference to a suggestion of counsel, that the
maxim of caveat emptor was applicable to a payment of notes over the counter upon
a present sale, but not to their transfer in consideration of a precedent debt, the
Court declined considering it, inasmuch as no sale or debt was supposed to exist
between the parties to the controversy before them. Lord Campbell, C. J., however,
intimated an opinion that thei'e was no solid distinction between the two cases. The
courts of New York, New Hampshire, Vermont, and Maine, have decided that a
payment in insolvent notes, the fact being unknown to both parties, does not dis-
charge a debt. Lightbody v. Ontario Bank, 13 Wend. 107. Fogg v. Sawyer, 9 N. H.
365. Wainwright v. Webster, 11 Verm. 576. Frontier Bank v. Morse, 22 Maine, 88.
This doctrine seems to be sanctioned by the approbation of Judge Story. Story on
P. Notes, 125. A different view of the law has been taken in Massachusetts, Penn-
gylTania, Virginia, Tennessee, and Alabama. Young v. Adams, 6 Mass. 182. Bayard
V. Shunk, 1 Walls &. Y. 92. Edmunds v. Digges, 1 Gratt. 359. Loury v. Murrel, 2
Porter, 282. Scruggs v. Gass, 8 Yerg. 175.

BILLS OF EXCHANGE AND PROMISSORY NOTES, 297

Acceptance.

Section IV. — Acceptances^

It has been already stated, that he who draws a bill undertakes
thereby that the drawee shall, when requested, accept, that is, en-
gage to pay it ; the request made for this purpose by the holder to
the drawee, is called a presentment for acceptance. As there is no
drawee in a note, there can of course be no such presentment,
though when a note is payable within a certain time after sight, it
must be 2'>i'€sented to the maker, in order that such time may begin
to run. (w)

This acceptance, which may, at least in most cases, be made
before the bill is actually drawn, (y) and which will bind the
acceptor, though not made till after the time appointed for pay-
ment, (id) may, in case of a foreign bill, be either verbal or in
writing ; (x) and Ireland is for this purpose to be considered a
country foreign to England, even since the Union, {y) But by
Stat. 1 & 2 Geo. 4, c. 78, s. 2, the acceptance of an inland bill must
be in writing on the bill ; and though a bill drawn in Ireland on a
person in England, or vice versa, is, as we have just seen, not an
inland bill within this act, yet a bill drawn in Ireland on another
person also in Ireland is, and the same rules prevail respecting
Scotland. {£) No particular form is necessary to make an acceptance
by the drawee, it need not even be signed by him : (a) any expres-

{u) Sturdy v. Henderson, 4 B. & A. 592. See Dixon v. Nuttall, 6 C. A P. 320.

{v) Molloy v. Delves, 7 Bingh. 428. Leslie v. Hastings, 1 M. & Rob. 119. Simon
V. Lloyd, 3 Dowl. 816. Schultz v. Astlej-, 2 Bingh. N. C. 544. Pillans v. Van
Mierop, Burr. 1663. Mason v. Hunt, Dougl. 284, 297. Sed vide Johnson v. Collings,
1 East, 98.

(m) Jackson v. Piggott, Ld. Raym. 364. Mutford v. Walcot, Ld. Raym. 574; Sal.
129. Stein v. Yglesias, 5 Tyrwh. 172 ; 1 C. M. & R. 565.

{x) Lumley v. Palmer, Str. 1000. Julian v. Shobrook, 2 "Wils. 9. Powell v. Mon-
nier, 1 Atk. 612. Pillans v. Van Mierop, Burr. 1662. Sproat v. Matthews, 1 T. R. 182.

{y) Mahoney v. Aslin, 2 B, & Ad. 478.

(z) Mahoney v. Aslin, uhi supra.

(a) Dufaur v. Oxenden, 1 M. & Rob. 90.

* The making of a promissorj^ note is equivalent to the acceptance of a bill of
exchange, for it is an engagement to pay the money for which the note is given ; and
therefore nothing under this head is applicable to promissory notes.

298 MERCANTILE CO^'TRACTS.

Acceptance.

sions indicative of liis inteution to pay the bill when due, will
be sufficient, (i) Indeed, so liberal are the courts in construing
acceptances, that the words "presented," "seen," or "the day
of the month," if written upon the bill, prima facie amount to
acceptances, (c) Similar liberality is used in construing verbal
acceptances, {d) A promise to accept a bill already draivn upon an
executed consideration, (e) or that the bill "shall meet with due
honor," (/) or that the drawee will accept, or certainly pay the
bill, {g) have been held to amount to acceptances. (A) But a promise
to accept a non-existing bill will not amount to an acceptance ; (^■)*

(6) Billing v. Devaux, 3 M. & Gr. 565.

(c) Anon. Comb. 401, per Holt. Vide PoiPell v. Monnier, 1 Atk. 611. Moor v.
Whitby, B. N. P. 270. Dufaur v. Oxenden, 1 M. & Rob. 90.

{d) See Mendizabal v. Machado, 6 C. <k P. 218, an extremely strong case.

(e) Pillans v. Van Mierop, Burr. 1662. See Mason v. Hunt, Dougl. 284, 297.
Pierson v. Dunlop, Cowp. 571. Billing v. Devaux, 3 M. & Gr. 565.

(/) Clark V. Cock, 4 East, 57. See Pierson v. Dunlop.

{g) Wynne v. Raikes, 3 East, 514. See on this subject Fairley v. Herring, 3 Bingh.
625. Powell V. Monnier, 1 Atk. 611. Miln v. Prest, 4 Camp. 393; Holt, 181. Wil-
kinson v. Lutwidge, Str. 648. Grant v. Hunt, 1 C. B. 44.

(A) Pierson v. Dunlop. Mason v. Hunt, supra.

(^) Johnson v. Collings, 1 East, 98. Bank of Ireland v. Archer, 11 M. & W. 383.

* It seems now to be settled \>y the law of England, that a promise to accept a
non-existing bill of exchange does not amount to an acceptance thereof, when drawn
in favor of the holder, even though he has taken the bill upon the faith of such
promise. See opinions of Sir Wm. FoUet et al. in Russel et al. v. Wiggins et al., 2
Story's C. C. R. 213. Wildes et al. v. Savage, 1 Story, 22. Bank of Ireland v. Archer,
11 Mees & Welsh. 383. But see Am. L. Magazine, vol. 6, 342. A different doctrine,
however, generally prevails in the United States. A letter written within a reason-
able time, either before or after the date of a bill of exchange, describing itintermi
not to he mistaken, and promising to accept it, is regarded, if shown to the person
who afterwards receives the bill upon the credit of the letter, as a virtual acceptance
thereof, and binding upon the party making the promise. Coolidge v. Payson, 2
Wheat. Rep. 66. Schimmelpennick v. Bayard, 1 Peters' Rep. 284. Townley v. Sumrall,
2 Peters' Rep. 170. Boyce v. Edwards, 4 Peters, 110. Wildes et al. v. Savage, 1
Story's C. C. R. 22. Russell et al. v. 'Wiggins et al., 2 Story's C. C. C. 213. Bayard
V. Lathy, 2 McLean's C. C. R. 462. Parker v. Greele, 2 Wend. 545. Von Phul v.
Sloan, 2 Robins. Louis. Rep. 158. Wilson v. Clements, 3 Mass. Rep. 1. Vance &
Dicks V. Ward, 2 Dana, 95. Kendriek v. Campbell, 1 Bailey, 522. The doctrine,
however, is confined to those bills which are payable on demand, or at a fixed pe«
riod after date.

BILLS OF EXCHANGE AKD PROMISSORY NOTES. 099

Acceptance.

and a promise by tlie drawee to the drawer, who was not the payee,
that the bill " should have attention," is no acceptance, unless in
the course of dealings it had usually been considered such: {j) and
theie are other cases, each depending on its own peculiar circum-
stances, in which equivocal words have been held not to amount to
acceptance. {IS)

There are some cases in which mere acts of the drawee, such as
keeping or destroying the bill, may amount to acceptance; (Z)
though such their tendency may be explained away by other cir-
cumstances, {m)

An acceptance may be either absolute or conditional.

A conditional acceptance becomes available when the condition is
performed, (n) and not before ; (0) for, though the bill must, as we
have seen, be drawn for the payment of the sum mentioned in it
unconditionally, and the payee may therefore, if he think proper,
refuse to take an acceptance upon condition ; yet if he do take such
acceptance, he must abide by it. {j))

(j) Rees V. Warwick, 2 B. A A. 113 ; 2 Stark. 411.

{k) See Powell v. Jones, 1 Esp. 17. Anderson v. Hick, 3 Camp. 1*79. Anderson m,
Heath, 4 M. &, S. 403.

{I) Bayley on Bills, 5th ed. 191-193.

{m) Ibid.

(n) Pierson v. Dunlop, Cowp. 511. Mlln v. Pest, Holt, 181 ; 4 Camp. 393.

(0) Banbury v. Lisset, Str. 1211. Sproat v. Matthews, 1 T. R. 182.

{p) Smith V. Abbott, Str. 1152. Julian v. Shobrook, 2 Wils. 9. See Mitchell v.
Baling, 10 B. & C. 4.

Judge Story, in the case cited above, of Wildes et al. v. Savage, remarks, that
" the Supreme Court have shown a strong disinclination to enlarge, in &ny respect,
the doctrine of a virtual acceptance of a non-existing bill. It is, perhaps, to be
lamented that it ever was established ; and if the question had been entirely new, I
am satisfied that it would not have been recognized as fit to be promulgated by that
court, it being at once unsound in policy and full of inconvenience." And it is to be
observed, that all the subsequent cases have confined the rule strictly within the
limits laid down in Coolidge v. Payson. But such a promise is not assignable.
McEvers v. Mason, 10 Johns. Rep. 207. Scott v. McLellan. It was held in Kennedy
V. Geddes &, Co., 8 Porter, 263, that a verbal promise to accept a non-existing bill,
made even to the person in whose favor the bill is to be drawn, does not amount to
an acceptance. The same rule now prevails in New York, by virtue of a provision
of the Revised Statutes.

500 MERCANTILE CONTRACTS.

Acceptance.

It has been laid down that an acceptance may be rendered con-
ditional by another contemporaneous writing, ((7) though not as
against a bona fide holder ignorant of the existence of such writing.
Its terms cannot be varied by any contemporaneous parol agree-
ment, since that would be against the first principles of the law of
evidence, (r)*

As an acceptance may vary from the tenor of the order, by in-
troducing a condition, so it may vary from it as to the sum, time,
place, or mode of payment ; (-s) and if the holder think proper to
take any such acceptance, he will be bound by it, though he has a
right to require one in writing conformable to the tenor of the
order, specifying, if none be mentioned, a place for its payment,
and mentioning the time of presentment, if it be payable after
eight, it)

An acceptance once complete and issued, cannot be revoked;
but before issue it may. {u) It admits the drawer's ability to make
the bill, (f ) and, if made after sight of the bill, his signature, {iv) but
not the ability or signature of an indorser, though his name were
on the bill at the time of acceptance ; {x) and even though the
drawer and indorser were the same person and the bill was payable to
his order, it does not admit his handwriting on the indorsement, (3/)

(5) Bowerbank v. Monteiro, 4 Taunt. 844. But see stat. 1 & 2 Geo. 4, c. TS, s. 2.
See Spiller v. Westlake, 2 B. & Ad. 155. Gibbon v. Scott, 2 Stark. 286.

(r) Adams v. Wordley, 1 M. & W. 34Y. See Lohman v. Rougemont, 6 Bingli. N. C.
253, et qucere.

(s) See Baylej' on Bills, 5tli ed. 199. Weggersloffe v. Keen, 1 Str. 214. Hamelia
V. Bruck, 15 L. J. Q. B. 343.

(t) Bayley on Bills, 5th ed. 202, 203.

(m) Marius, 20. Cox v. Troy, 5 B. & A. 474. Grant v. Hunt, 1 C. B. 44. See Ben
tinck V. Darrien, 6 East, 199.

(ii.) Porthouse v. Parker, 1 Camp. 82. Prince v. Brunatte, 1 Bingh. N. C. 435
Pitt V. Cliappelow, 8 M. k "VV. 616. Braithwaite v. Gardiner, 15 L. J. Q. B. 187.

(w) Wilkinson v. Lutwidge, Str. 648. Jenny v. Fowler, ibid. 946. Saunderson v.
Collman, 4 M. k Gr. 209.

{x) Smith V. Chester, 1 T. R. 654. Carviek v. Vickery, Dougl. 630.

(y) Robinson v. Yarro-w, 7 Taunt. 455 ; but where the drawer is a fictitious person,
the acceptor's undertaking is, that he will pay to the signature of the same person

S. P. The United Statp? «. The Bank of the Metropolis, 15 Peters' Rep. 877.

BILLS OF EXCHANGE AND PROMISSORY NOTES. SOI

Acceptance.

thougli it does his ability to indorse, (z) and if such a bill purport
to be drawn and indorsed by procuration, it admits only the for-
mer procuration, not the latter, (a)

There is a peculiar species of acceptance called Acceptance for
Honor. This happens when, in order to promote the negotiation
of the bill, or save the credit of the drawer or some other party
thereto, in a case where the drawee is not to be found, or cannot or
will not accept, or after he has accepted, absconds, or becomes
bankrupt, a stranger thinks fit to accept the bill for the honor of
some one of the parties thereto, which acceptance will inure to the
benefit of all the parties subsequent to him for whose honor it was
made (6) and whose name it generally specifies ; if it do not, it is
considered to be for the honor of the drawer, (c) A bill accepted
for the honor of some one of the parties to it, may be again accepted
for the honor of another, {d) In saying that this kind of acceptance
is by a stranger^ I mean by a person not acting in the character of
drawee, or in compliance with the drawer's order, for the drawee
himself may accept for the honor of an indorser. (e) But in no case
is the holder obliged to take an acceptance for honor. (/)*

•who signed for the drawer. Cooper v. Meyer, 10 B. k C. 468. Quaere as to the case
where the drawer is not a fictitious person, but his name is forged, and the indorse-
ment in the same handwriting. Beeman v. Duck, 11 M. <fe "W. 251.

(z) Taylor v. Croker, 4 Esp. 18*7. Bass v. Clive, 4 M. <fe S. 13.

(a) Robinson v. Yarrow, 7 Taunt. 455.

(6) Bayle}', 5th ed. 176; Beawes, 83; Marius, 21. Ex ■parte "Wackerbarth, 5
Ves. 574.

\d) Beawes, 42 ; 2 Camp. 448, n.

\c) Bayley, 5th ed. 177.

(/) Mitford z>. Walcot, 12 Mod. 410; Ld. Raym. 575; Beawes, 37. Gregorys
Walcup, Com. 76. Pillans v. Van Mierop, Burr. 1663.

* The right of a stranger to constitute himself the creditor of another, by paying
his debt without his concurrence, is unknown to the common law. It is allowed by
the law merchant for the benefit of trade, and cannot be recognized unless the form
of proceeding sanctioned by mercantile usage is subsequently pursued. The bill
Bhould be paid, not before, but after protest ; and the payment should be evidenced
by a notarial acfe, showing why and for whom the payment was made ; and of all
this the parties intended to be charged should have notice. Wood v. Pugh, 7 Ohio
Rep. 488. As an accommodation acceptor, without effects, would not be liable to

302 MERCANTILE CONTRACTS.

Acceptance.

Such an acceptance is a conditional undertaking to pay, if tlie
drawee do not : it is equivalent to saying to the holder, " Keep the
bill ; do not return it ; and when the time arrives at which it ought
to be paid, if it be not paid by the party on whom it is drawn,
come to me and you shall have the money." In order, therefore,
to complete the liabihty of the acceptor for honor, the bill must be
presented, for payment when it falls due, notwithstanding the former
refusal of the drawee, who may possibly at the same time have re-
ceived assets, (g) This presentment must, according to Mr. Chitty, (h)
be made in cases of bills payable after date, on the day on which
thev would fall due according to their date ; but in that of a bill
payable after sight, upon the day on which it would fall due,
reckoning from the acceptance for honor, and adding the three
days of grace, (i) Notice of the non-payment must also be given
within due time to the acceptor for honor, otherwise he will be dis-
charged, {j) Statute 6 & 7 Wm. 4, cap. 58, reciting that bills are
occasionally accepted supra protest for honor, or have a reference
thereon in case of need, and that doubts have arisen when bills have
been protested for want of payment, as to the day on which they
should be presented for payment to the acceptor or acceptors for
honor, or referee or referees in case of need ; enacts, that it shall
not be necessary to present them to such acceptor, &c., until the day
following that on which they became due, and that if the place of
address on such bill of such acceptor, &c., be in any city, town, or
place other than that wherein such bill shall be therein made
payable, then it shall not be necessary to forward it for present-

(c/) "Williams v. Germaine, 7 B. <fe C. 468. Hoare v. Cazenove, 16 East, S91. Mitchell
V. Baring, 10 B. & G. 4; 1 M. & M. 3S1. See Brunetti v. Lewin, Lutw. 896.
(/t) Chitty on Bills, 8th ed. 380.
(i) Williams v. Germaine, supra,
(j) Williams v. Germaine, Mitchell v. Baring, tibi supra.

the drawer, he -would not be liable to one who paid for honor of the drawer.
Gassara v. Armstrong, 3 Dana's Rep. 554. So where a bill is paid sicpra protest, at
the request of the drawee, for the honor of the indorser, the same defence may be
made by tlie party who is sued for tlie amount so paid, which could be made if the
bill had been paid and the suit brought by the drawee himself. Konig v. Bayard,
I Peters, 250.

BILLS OF EXCHANGE AND PROMISSORY NOTES. 303

Presentment.

ment for payment to such acceptor, &c., till the day following that
of its becoming due ; and if the day follovring that on which it
shall become due happen on Sunday, Good Friday, Christmas-day,
or any day of solemn fast, or thanksgiving, then it need not be pre-
sented or forwarded till the day following such Sunday, &c. An
acceptance for honor made after the bill has been protested, is
called an acceptance supra protest, and care must be taken, at least
in the case of a foreign bill, that such protest be made jDrevious to
either acceptance or payment for honor. (Z;) The nature of a j3?*ote5f
will be hereafter explained.

The acceptor for honor has his remedy against the party for
whose honor he accepts, and all whom that party might have
sued, (Z) and therefore against the drawee, if he had accepted.

Unless for honor, there can be no acceptance by a stranger, (m)
nor can there be a second acceptance : if such a one be written on
the bill, it is a guaranty, {n) Indeed, if the drawee of a foreign
bill accept two sets, he may perhaps be sued by the holder of each
of them, (o)

Section V. — Presentment*

Every holder of a bill or note ought to present it in due time,
for acceptance^ if necessary ; in all cases, for payment ; and to give

(/t) Vandewall and another v. Tyrrell, 1 M. <& M. 87 ; Bayley, 5th ed. 180. In
the preamble of stat. 6 <fe 7 "Wm. 4, c. 58, it seems to be taken for granted that all
bills having an acceptance for honor or reference in case of need are, when not paid,
protested.

(l) Beawes, 47. Smith v. Nissen, 1 T. R. 269. See Fx parte Lambert, 13 Yes. 179.
£!x parte Wackerbarth, 5 Ves. 574.

(m) Davis v. Clarke, 6 Q. B. 16.

(n) Jackson v. Hudson, 2 Camp. 447.

(o) See Holdsworth v. Hunter, 10 B. & C. 449. Perreira v. Jopp, there cited.

* The Editors have sought to bring together, in the order of the text, the most
'.mportant American decisions on the points which are considered in this section.

1. When presentment for acceptance tmnecessary. — The holder of a bill may charge
the drawer, without presenting it for acceptance, wherever the relations of the
drawer and drawee were such as to render the drawing of the bill a fraud upon

304 MERCANTILE CONTRACTS.

Presentment.

notice, if it be dishonored, to every party wlio would be entitled to
bring an action on it after paying it. If lie fail in any of these
particulars, such parties will be discharged. (^) The maker or

(p) If it have been presented for acceptance and dishonored, notice of dishonor
must at once be given to the parties whom it is intended to charge, and the Statute
of Limitations runs from that period. Whitehead v. Walker, M. & W. 506.

the holder. What circumstances will be sufficient to impress such a character upon
the transaction, will be considered when we come to treat of the cases in which a
notice of dishonor is unnecessary. A bill payable at a fixed time after date, need
not be presented for acceptance at all. Bank of Washington v. Ti'iplett, 1 Peters'
S. C. R. 25.

Where a hill has been lost or destroyed. — Tender of indemnity should be made to
both maker and indorser at the time of demand and notice ; because, as the former
is not bound to make payment without the production of the note or indemnity, in
case of loss, for that very reason payment ought not to be required of the latter, till
the proper steps have been taken to secure his immediate recourse against his prin-
cipal. Besides, the indorser is entitled to indemnity for his personal liability upon
the i^aper, which should be given without delay, that he may be in a situation to
liquidate the demand and look to the maker. Smith v. Rockwell, 2 Hill's Rep. 482.

To whom bill must be presented. — In Harris v. Clark and another, 10 Ohio Rep. 5,
a demand upon one of three joint and several makers of a note, was held to be
sufficient to charge an indorser. The decision was placed mainly upon the great
inconvenience which would result from requiring a demand to be made on each
maker, when residing in places distant from each other. Chancellor Kent has inad-
vertently fallen into an error in the statement of this case, in his Commentaries, vol.
3. p. 105, n. b., where it is cited as sustaining the doctrine, that a notice of the dis-
honor of a note to one of several joint indorsers, not partners, was sufficient to bind
all. The point which was ruled in the case from Ohio, arose recently in the
Supreme Court of Massachusetts, and was decided differently. Union Bank of
WejTnouth v. Braintree, 8 Mete. 504.

By whom presentment is to be made. — The question has arisen in several recent
cases, whether a notary may appoint his clerk, or other third person, as agent to
discharge his official function of making presentment of foreign bills for acceptance
or payment. Mr. Chitty in one of the earlier editions of his work on Bills, intimated
an opinion that presentment of foreign bills should be made by a notary himself,
because he was a public officer, to whom credit as such was given, and that the
authority could not be delegated to his clerk. This suggestion led to a corres-
pondence between Mr. Chitty and an association of notaries in Liverpool, from which
it appeared that the presentment of foreign bills both for acceptance and paj-ment,
and their subsequent protest, by notarial clei'ks, was a practice fully sanctioned by
commercial usage in England. Indeed, it was urged that the commercial business
of the kingdom would come to a stand, if a different rule prevailed; because it
would be just as impossible for all bills to be presented by notai'ies in person, as bj

BILLS OF EXCHANGE AND PROMISSORY NOTES. 305

Presentment.

acceptor, indeed, is not entitled to a presentment, unless the instru-
ment be either payable at or after sight, or be made payable at some
particular place. Even a note payable on demand need not be pre-

bankers. Mr. Chitty, in bis answer to the letter of the Liverpool notaries, maintained
his former opinion, both upon principle, English precedent, and continental practice.
In the ninth edition, however, of the same work, although he still commends the
prudence of a presentment by the notary in person, he evidently recedes from
his original position as to its necessity. In New York, it has been held upon the
authority .of Chitty, and the broad language of their Revised Statutes, that this duty
must be performed by the notary himself, and cannot be delegated to his clerk. The
Onondaga County Bank v. Bates, 3 Hill's N. Y. R. 53. In Virginia the question was
discussed in the case of Nelson v. Fotterall, 7 Leigh. 179, but the Court were divided
in ojjinion upon it. Judge Brokenborough, who concurred with the president,
(Tucker,) remarks: "It is proved that there is a custom at Liverpool that bills may
be demanded by a notary's clerk. I do not see why this may not be, at le.xst with
this obvious qualification, that though the authorized clerk of the notary ma}- present
the bill for acceptance, and though a refusal to pay him upon demand may justify a
protest by the notary, yet the notary's certificate is in such case no evidence whatever
of the facts of presentment and refusal, but they must be proved by the oaths of wit-
nesses, as any other facts are." In Kentucky, in the case of Chenowith &, Co. v. Cham-
berlin, 6 B. Monr. 61, the general rule, as first stated by Mr. Chitty, and laid down
in 3 Hill, was followed. S. P. Carmichael v. Bank of Pennsjdvania, 4 How. Miss. 567.
Sacrider v. Brown, 3 McLean, 48L Carter v. Union Bank, 7 Hump. 548. But in
the Bank of Kentucky v. Garey, 6 B. Mon. 626, a distinction was taken between pre-
sentation by the clerk, and by the deputy of the notar}'. " Official authority may be
implied in a deputy, when no such authority would be implied in a mere clerk."
And in consequence of the practical difficulty which in a great commercial city
woxild attend the presentation of all drafts and notes by notaiues in person, the
Court presumed that in the case before it, (which occurred in New Orleans,) the pre-
sentment by deputy was justified either by law or custom. The distinction which is
drawn by the Court seems too nice and shadowy, and strongly illustrates the necessity
of adopting the rule as declared by the society of notaries, and which seems to pre-
vail at this time in England.

Places where presentment is to be made. — The English doctrine was settled by the
House of Lords, in 1820, in the great case of Row v. Young, 2 Broderip & Bingham,
164. "The principles upon which this decision was based," says Mr. Justice Storj-, in
Picquet v. Curtis, 1 Sumn. Rep. 481, "strike my mind as irresistible." The American
authorities, however, with great unanimity establish the opposite doctrine. In the
case of The Bank of the United States v. Smith, 11 Wheat. Rep. 171, the Supreme
Coui't intimated the opinion that as against the maker or acceptor of a note or bill,
no averment or proof of demand of payment at the place designated, was necessary;
and in Wallace v. McConnell, 13 Peters' Rep. 136, the law is so declared, after a
very elaborate examination of the cases. To the same effect are the decisions in
Massachusetts, New Hamj^shire, Connecticut, New York, New Jersey, Maryland,
Virginia, Ohio, Tennessee, Alabama.
20

oQQ MERCANTILE CONTRACTS.

Presentment.

sented in order to charge the maker, the commencement of an action
against him being considered a sufficient demand for that purpose, {q)
Presentment also is not necessary in order to charge a person col-

(q) Norton v. Ellam, 2 M. (feW. 461. Consequentlj- on such a note the Statute of
Limitations runs from the date, ibid.

Payson v. Whitcomb, 15 Pick. 212; Eastman v. Fifield, 3 N. H. 333; Eldred v.
Haines, 4 Conn. 465. Caldwell v. Cassidy, 8 Cow. 271. Haxtun v. Bishop, 3 "Wend
13 ; Green v. Goings, 7 Barb. Sup. C. Rep. 652. Irvine v. Withers, 1 Stew. 234.
Weed V. Houton, 4 Halst. N. J. R. 189. Dowie v. Duvall, 1 Gill. & John. 175. Wat-
kins V. Crouch & Co., 5 Leigh. 522 to 540. Armistead v. Armistead, 10 Leigh. 512.
Conn. V. Gano, 1 Ohio R. 483. McNairy v. Bell, 1 Yerg. R. 502. Mulhoven v. Hannum,
2 Yerg. 81. Contra, Palmer v. Hughes, 1 Black. 329.

The rule, however, is different as to the indorser, and even if the maker was ready
to pay at the time and place, it is a matter of defence which will protect him against
interest and costs, on his bringing the money into court.

The general rule of law is, that when a negotiable instrument is not made paj-a-
ble at any particular place, in order to charge the indorser, payment must be de-
manded of the maker personally, or at his dwelling-house, or other place of abode,
or at his counting-house or place of payment. There are exceptions, however, to
this general rule, by which any demand may be dispensed with. They are enume-
rated by Judge Beardsley in Taylor v. Snyder, 3 Denio Rep. 151, and received the
sanction of the Court of Appeals of New York, in Spies v. Gilmore, 1 Comst, R. 321.
Time when presentment must be made. — The general principles stated in the text,
as to the time within which the presentment of a bill for acceptance must be made,
have been considered and approved in many American cases, among which it is suf-
ficent to cite Robinson v. Ames, 20 Johns. 146; Austin v. Rodman, 1 Hawks, 195;
Aymer v. Beers, 7 Cow. 705; Wallace v. Agrj', 4 Mass. 336; Bachelor v. Priest, 12
Pick. 399.

The allowance of days of grace, in the absence of any special law or usage to the
contrary, is now universally understood to enter into every bill or note of a mercan-
tile character, and so forms a part of the original contract. The same rules as to their
number and mode of computation generally prevail in America as in England. The
4th of July is treated as a holiday. Renner v. Bank of Columbia, 9 Wheat. 581. Og-
den V. Saunders, 12 Wheat. 213. Bank of Washington v. Triplett &■ Neal, 1 Peters'
Rep. 30. Cuyler v. Stevens, 4 Wend. Rep. 560. Ransom v. Mack, 2 Hill's N. Y. R.
587. Lewis v. Burr, 2 Caine's Cases in Error, 195. Wood v. Corl, 4 Met. 203. This
statement is confined to bills or notes on time, and not to such as are paj-able on
demand. In re Brown, 2 Story, 503. Whether days of grace are allowed on bills
payable at sight, seems yet unsettled. Mr. Byles expresses the opinion that in Eng-
land, the weight of authority inclines to their allowance. On Bills, 162.

When protest is necessary. — In the case of the dishonor of a foreign bill of ex-
change, a protest is said to be a part of its constitution, so indispensable has it been
rendered by the custom of merchants. Of course, it is necessar}-, in the absence of

BILLS OF EXCHANGE AND PROMISSORY NOTES. S07

Presentment.

laterally liable, e. g., on a guaranty for the payment of a bill or note
payable on a clay certain, at least in the absence of proof that he
has sustained damage by the omission to make it. (r) But in all

(r) Hitchcock v. Humfrey, 5 M. & Gr. 559. Watson v. Mascall, 13 M. & W. 452.

any legislation, in the case of a bill drawn in oi e state of the Union, upon persons
living in another, such a bill being treated as foreign. la Ohio, the holder of a bill
drawn in one state upon a person resident in another, is not required to protest it,
except for the purpose of obtaining statutory damages. 10 Ohio R. 180, Case v.
Heffner. The same rule has prevailed in Missouri. Robinson v. Johnson, 1 Miss
Rep. 434.

Although, however, a written protest is necessary on the dishonor of a foreign
bill, a notice unaccompanied by a copy of the protest will be sufficient to charge the
indorser. Wallace v. Agry et al., 4 Mass. C. C. R. 344. Opinion of Judge Woodbury,
in Mussen et al. v. Lake, 4 How. S. C. R. 282.

The protest of an inland bill, unless required by statute, is neither necessary, nor
evidence of the facts stated in it. Union Bank v. Hyde, 6 Wheat. 572 ; Burke v.
McKay, 2 How. Sup. C. R. 66. But it is a practice, which, on account of its general
convenience, and the evidence which it furnishes in the event of the death of the
notary, is veiy common in our commercial cities.

Form of protest. — Brooke, in his treatise on the office of a notary, (73,) expresses
the opinion that the protest of a notary for non-acceptance or non-payment, should
be authenticated by a seal. This opinion seems to have been derived from his ob-
servation of notarial usage, rather than from any examination of authorities. Under
the civil law, and according to continental practice, his signature alone would be
sufficient. There is some doubt as to whether the seal was necessary or not, at com-
mon law. The protest, however, must in this particular conform to the law of the
place where the protest is made ; the protest being considered as a part of the con-
stitution of a foreign bill of exchange. The subject is discussed in the case of the
Bank of Rochester v. Gray, 2 Hill's Rep. 227 ; but there was no adjudication on the
point. See also Carter v. Beverly, 9 N. Hamp. 558 ; Duraont v. McCracken, 6 Black.
355 ; Bank v. Pursley, 3 Mon. 238 ; Nelson v. Fotteral, 7 Leigh. 180. In the recent
case of Musson et al. v. Lake, 4 How. S. C. R. 262, it was decided that the notarial
certificate of the dishonor of a foreign bill of exchange, must set forth the fact speci-
fically, that the bill was presented to the drawee, at the time when demand of pay-
ment was made, or it cannot be offered in evidence. Justices AVoodbury and McLean
dissented from a majority of the Court, and their opinions are sustained by the prior
case of Nott's Executors v. Beard, 16 Louis. Rep. 308.

Effect of protest of a foreign bill. — Protest of a foreign bill is evidence of dishonor,
but tlie facts which it states in relation to the dishonor may nevertheless be contro-
verted by other evidence. The protest is prima facie not conclusive evidence of such
facts. Nelson v. Fotterall, 7 Leigh. 180. The general rule is recognized in Nieholls
V. Webb, 7 Wheat. 333. Townsley v. Sumrall, 2 Peters, 179. Chanoine v. FoAvler, 3
Wend. 173.

308 MERCANTILE CONTRACTS.

Presentment.

cases in whicli it is souglit to charge the indorser or any party wlio
would have a right to bring an action on it after paying it, tlie in-
strument must be duly presented to the maker or drawee ; and tliis

Who must give notice.— A notice will be sufficient, if given by any person duly
authorized by the holder. The object of the rule requiring notice from the holder, is
simply to prevent any officious stranger from fixing a responsibility upon the indorser,
•which the holder may be willing to waive, and not to preclude him from giving no-
tice by an agent. Harris v. Robinson, 4 How. S. C. R. 336. He who accepts or pays
supra protest must give the same notice, in order to charge a party, which is required
of other holders. Konig v. Bayard, 1 Peters, 250. Martin v. IngersoU, 8 Pick. 1,

To whom notice must be given. — In Sayre v. Frick, 8 "Watts & Serg. 383, it was held
that joint owners of a bill, who jointly indorse it, do not thereby constitute them-
selves partners, qicoad hoc, so that notice of the dishonor of a bill to one will charge
both : it is but a joint contract, and each must have notice in order to charge him.
S. P. Willis V. Green, 5 Hill's Rep. 232. Shepherd v. Hawley, 1 Conn. Rep. 368.

Hoiv the notice must he given. — When the party entitled to notice has in the same
city or town, a dwelling-house or place of business within the compact part of such
city or town, it may be served at either place. But where the parties reside in the
same town, notice cannot in general be given through the post-office. Bowling v.
Harrison, 6 How. S. C. R. 248. Kramer v. McDowell, 8 Watts & S. 138. Pierce v
Pendar, 5 Met. 352. Pansom v. Mack, 2 Hill, 587. K, however, a party actually
receives notice in due time, and this can be established, he will not be permitted to
object to the manner in which it has been conveyed to him. So, where the indorser
resides in a different town from the holder, it is sufficient to send the notice through
the mail. If the town is not a post-town, the letter should ordinarily be directed to
the post-office nearest to his residence. Where the party is in the habit of receiving
his letters at variovis post-offices, to suit his own convenience or business, it may be
sufficient to send it to either. Bank of Columbia v. Lawi'ence, 1 Peters, 578. Bank of
United States v. Carneal, 2 Peters, 543. Bank of Geneva v. Hewlett, 4 Wend. 328.
Chouteau v. Webster, 6 Met. 1.

Where the notary, on the non-jjaj'ment of a bill, left a notice for the indorser at
his boarding-house with a fellow-boarder, requesting him to deliver it to the indorser,
who was not within at the time, the notice was held sufficient. Bank of United
States V. Hatch, 6 Peters, 250. "This," says Judge Story, in delivering the opinion
of the Court, " is not like the case of a public inn, and a delivery to a mere stranger,
who happens to be there in transitu, and cannot be presumed to have any knowledge
or intercourse with the party. Boarders at the same house may be presumed to
meet daily, and to feel some interest in the concerns of each other, and to perform
punctually such common duties of civility as this. In our large cities many per-
sons engaged in business live in this manner ; and it is not always easy to obtain
access to the master of the house, or to servants who may be safely intrusted with
the delivery of notices of this character. A person who resides in the house upon a
footing of equality with the guests, may well be supposed to feel a greater intei'est
in such matters than a mere servant, whose occupations are pressing and various, and
whose pursuits do not lead him to place so high a value upon a scrupulous discharge

BILLS OF EXCHAISTGE AKD PROMISSORY NOTES. 30V)

Presentment.

presentment must, whether it have been previously accepted or
have not been presented for acceptance at all, be made at a season-
able hour of the day on which it becomes payable. Indeed, if the

of duty. We think that a stricter rule would be found inconvenient, and tend to
subvert rather than subserve the purposes of justice." But see Bank of United States
V. Corcoran, 2 Peters, 121. Granite Bank v. Aj-res, 16 Pick. 32.

An exception to the general rule, that where the holder and indorser reside in
the same town, tlie notice must be personal or at the place of business, was intro-
duced in the recent case of The Eagle Bank v. Hathaway, 5 Met. 212, and the Court
intimate an indisposition to extend the rule bej^ond the cases to which a long line
of judicial decisions and the established course of mercantile usage have applied it,
A bill of exchange was made payable at Philadelphia to the defendant or his order,
who resided in Providence ; and he, for a valuable consideration, after its accept-
ance, indorsed it to the plaintiff, a bank in Providence. This bank indorsed and
transmitted the bill to a bank in New York for collection ; which bank also in-
dorsed and transmitted it for collection to a bank in Philadelphia ; the latter bank
caused the bill to be presented for paj^ment to the acceptor at maturity ; and pay-
ment being refused, caused written notices to be made out for all parties to the bill,
and seasonably sent those notices to the bank in New York, which bank seasonably
sent notice to the bank in Providence, and also inclosed to that bank the notice to
the defendant, the first indorser: the bank in Providence immediately placed this
notice to the defendant in the post-office in that city. The Court held, that as the
transaction to be notified to the defendant took place in Philadelphia ; as notice to
him by mail, either from there or from New York, when the draft got back to the
indorser there, would have been good ; as the plaintiff was the conduit of convey-
ance, and not the party from whom the notice emanated; as tlie defendant, if he
were looking for notice of dishonor of this bill of exchange paj'able in Pliiladelphia,
would naturally look to the post-office for that notice ; the notice through the post-
office, under the circumstfinces, was good.

Where the giving of notice at either the domicile or place of business of the party
entitled to receive it, is prevented by his own act, as by his absence from town, and
the shutting up of his establishment, the holder will be excused. Williams v. The
Bank of the United States, 2 Peters, 97.

The form of the notice. — The law has not prescribed any fixed form of notice,
which should be given to the indorser of a promissory note, of its dishonor. The ob-
ject of the notice is simply to inform the indorser that the maker or acceptor has
failed or refused to pay ; that he is considered liable, and that he will be looked to
by the holder, for payment. It must contain enough to identify the note, to show-
that it has been dishonored, and that the holder looks to the person receiving the
notice for reimbursement and indemnity. But no precise or formal allegation of
these matters is necessary: it is sufficient if the party receiving the notice, can spell
them out, as it were. Mills v. Bank of the United States, 11 Wheat. 431. Bank of
Alexandria v. Swann, 9 Peters, 33. Bank of the United States v. Carneal, 2 Peters,
552. Opinion of Judge Woodbur}-, in Musson v. Lake, 4 How. S. C. R. 2S2. Gilbert

310 MERCANTILE COIsTRACl'S.

Presentment.

maker or drawee abscond, or the house at which the bill or note
was drawn payable be found shut up, it may be treated as dis-
honored ; {s) but care must be taken that he have absconded, not

(s) Anon. Ld. Raym. 743. Hardy v. "Woodroffe, 2 Stark. 319. Hine v. Allely, 4
B. & Ad. 624.

V. Dennis, 3 Met. 495. Cowles v. Harts, Johnson & Co., 3 Conn. 516. Ranson v.
Mack, 2 Hill's K Y. R. 587. Miers v. Brown, 11 Exch. 372. Cayuga County Bank
V. Warden, 1 Comst. 413. Housatonic Bank v. Laflin, 5 Cush. 546. Tobey v. Len-
nig, 14 Penn. St. Rep. 483.

In the recent case of Piatt v. Drake, 1 Douglas' Michigan Rep. 296, it was held
that inasmuch as the protest of a promissory note "was unnecessary, a notice to the
indorser that the note had been " protested for non-payment, and that the holders
looked to him for payment of the same," was not sufficient evidence of dishonor.
"Such notice must contain words showing directly, or by necessary construction,
that the note has been presented for payment, and payment refused. A protest is a
formal instrument, made by a notary public, alleging the due presentment and dis-
honor of the bill, and declaring that the notary protests the same for non-acceptance,
or non-payment, as the case may be ; and the statement that a bill or note has been
protested, refers rather to the making by the notar}' of the instrument denominated
a protest, than to the acts which might authorize such protest to be made." A dif-
ferent rule was declared in the case of the Housatonic Bank v. Laflin, 5 Cush. 546,
•where notice merely informed the indorser that the note had been protested for non-
payment, and that the holders looked to him for payment. The Court held that
this language implied, that payment had been demanded and refused, and thus that
the note had been dishonored by default of the maker. S. P. Smith v. Little, 10 N.
Hamp. 526.

What is due diligence in giving notice. — This has repeatedly been held to be a
question of law, where the facts are ascertained. Rhett v. Poe, 2 Howard S. C. R.
457. The Bank of Columbia v. Lawrence, 1 Peters' S. C. R. 578. Bank of Utica v.
Bender, 21 "Wend. 643. Brown & Sons v. Ferguson, 4 Leigh. 50. Brenser v. Wight-
man, 7 Watts & Serg. 264. Davis v. Herrick, 6 Ohio Rep. 55. This subject was
considered in the Supreme Court of the United States, in the case of the Bank of
Alexandria v. Swann, 9 Peters, 33, and the general rule stated by Mr. Justice Thomp
son, in delivering the opinion of the Court. "Tlie law does not," says he, "require
the utmost possible diligence in the holder in giving notice of the dishonor of the
note : all that is required is ordinary reasonable diligence ; and what shall consti-
tute reasonable diligence ought to be regulated with a view to practical convenience,
and the usual course of business." In that case, a notice was esteemed sufficient,
given under the following circumstances. Payment of the note on which suit was
brought, had been demanded at the Bank of Alexandria, where it was payable, be-
fore three o'clock, on the last day of grace. Notice of the dishonor was put into the
post-office on the following day, directed to the indorser, who resided in Washington.
According to the course of the mail from Alexandria to the city of Washington, all

BILLS OF EXCHANGE AND PROMISSORY NOTES. 311

Presentment.

merely removed, (t) Nor is his bankruptcy, insolvency, or stopping
payment, any excuse for the want of presentment and notice, {u)
It has indeed been held that if the drawer have no assets in the

(t) Collins V. Butler, Str. 1087.

(m) Russell V. LangstafFe, Doug. 497, 515, per Lee, J. Esdail« v. Sowerby, 11
East, 114. Lafitte ?;. Slatter, 6 Bingh. 623; Bayley, 5th ed. 252. Bowes v. Horn,
5 Taunt. 80. See Rogers v. Langford, 1 C. & M. 637, and Camidge v. Allenby, 6 B.
ife C. 373. See Henderson v. Appleton, 3 Tyrwli. 660.

letters put into the mail before half-past eight o'clock, p. m., at Alexandria, would
leave there some time during that night, and would be delivered in "Washington the
next day, at any time after eight o'clock, a. m. It was urged that notice should have
been sent upon the evening of the day when the note was dishonored ; but the Court
say in reply, that ■" the law, generally speaking, does not regard the fractions of a
day. If the time of sending notice is limited to a fractional part of the day, it will
alwa^'s come to a question how swiftly the notice can be conve3'ed. We therefore
think, that the notice sent by the mail the next day after the dishonor of the note,
was in due time."

The holder of a note may prove the exercise of due diligence in two ways. 1.
Bj' showing a sufficient protest (whenever it was necessary) for non-acceptance or
non-payment, and timely notice of the dishonor given or forwarded to the parties
on the bills. In this case there arises a legal presumption of its receipt in time. 2.
By proof that the notice actually came to hand in time, though the letter was not
properly directed, nor sent by the most direct or expeditious route. Dickens v.
Beal, 10 Peters, 572.

What will excuse failure to give notice. — In England, when a bill of exchange
comes into possession of the crown, the neglect of its officers to give notice of the
dishonor will not discharge the drawer or indorsers. But in the case of The United
States V. Barker, 12 "Wheat. 559, it was Iield that where the government of the
United States, through its lawfully authorized agents, becomes the holder of a bill
of exchange, it is bound to use the same diligence to charge the indorsers, as would
be necessary in the case of a transaction between private individuals.

2. An indorser who unites with drawer in deceiving holder, by representing that
a bill will probably be accepted, when he knows that it will not, is guilty of a
fraud, which deprives him of the right to require notice either of non-acceptance or
non-payment. The Farmers' Bank v. Vanmeter, 4 Rand. 553. But mere knowledge
by the drawer or indorser that a bill will not be paid at its maturity, will not
dispense witli the necessity of notice of dishonor. Brown & Sens v. Ferguson, 4
Leigh. 37. Upon the same principle, an indorser who has transferred a note upon
which nothing is due, cannot require notice. The law will not permit him to derive
any advantage from the fraud which he has practised upon the holder. Bissell v.
Bosman, 2 Dev. Eq. Rep. 162. So, a payee who indorses and delivers a promissory
note which he knows to be void by reason of usury, is liable without notice. Copp
V. McDugall, 9 Mass. 1.

J12 :mercaxtile contracts.

Presentment.

«••-

drawee's hand, nor any reason to expect that the bill will be paid,

a presentment is, for the purpose of charging hirn, unnecessary, {v)

\ But nothing short of this will do ; even a declaration by the drawee

(v) Terry v. Parker, 6 Ad. & E. 502.

3. Another established exception to the general rule that notice must be gi^en lo
the drawer of the dishonor of a bill, is where he has no funds in the hands of the
drawee. The rule does not extend to an indorser who has no concern in the
accounts between the drawer and the drawee, and is in all cases entitled to notice.
Indeed, it has been suggested by the highest aiithority, that it would have been
more conducive' to the interests of commerce, to have precluded the holder in any
case from giving evidence of circumstances to excuse the want of notice. The
general rule with its exceptions and modifications is discussed in French v. The
Bank of Columbia, 4 Cranch, 153; Dickins t, Beal, 10 Peters' S. C. E. 5'71;
Farmers' Bank v. Vanmeter, 4 Rand. 553 ; Hansborough v. Gray, 3 Gratt. 356 ;
Lewis V. Hanchman, 2 Barr's Rep. 416; Sherrod v. Rhodes, 5 Alab. 683; Hopkirk
V. Page, 2 Brock. C. C. Rep. 20. Unless the circumstances of the transaction are
such as to place it beyond the pale of commercial usage, and to lead to the pre-
sumption of fraud, notice will be required. Thus, notice is necessary where the
drawer has made or is making a consignment to the drawee, and draws before the
goods have been received ; or where he draws where the goods are in transitu, but
the bill of lading has not been sent to the ccyisignee, or tbe goods are lost ; or where
the drawer has any funds or property in the hands of the drawee ; or where there
is a fluctuating balance between them, or a running account; or where the course
of dealing between the parties has been such as to raise a reasonable expectation
that the bill would be paid.

4. The holder of the note is not relieved from the necessity of giving notice of
non-paj'ment to the indorser by the simple fact of the death of the maker, and the
grant of letters of administration on his estate to the indorser before the maturity
of the note. The undertaking of the indorser is conditional. The use of due dili-
gence in seeking paj-ment from the maker, and timely notice of his failure to
discharge the debt, are ctnditions precedent, upon the performance of which the
liability of the indorser depends. There is nothing in the fact that the indorser has
become the personal representative of the maker, to warrant a departure fi'om
established commercial principles and usage, or to show that demand and notice of
non-payment would be wholly useless. It is, indeed, possible that the note may
have been paid by the maker before it fell due, or that assets which would have
been applied in satisfaction of the debt, had payment been demanded, may have
received a different direction. Magruder v. Tiie Union Bank of Georgetown, 3
Peters, 87.

5. Kor is the holder excused from giving notice to the indorser because, from
Bome reason, he is unable to make demand of the maker or drawee. Price v. Young,
1 McCord's Rep. 339.

6. Kor is the absence of an indorser from home, any excuse for failing to trans-
m't notice to him of the dishonor of a bill. Lawrence v. Ralston, 3 Bibb, 102,

BILLS OF EXCHANGE AND PROMISSORY NOTES. 313

Presentment.

that he will not pay it: {w) though if a party, having full knowl-
edge that he is discharged by non-presentment, promise to liqui-
date or do partly liquidate it, as against him it will be treated as

(w) Fx parte Bignold, 1 Deac. 728.

Y. Where the indorser of a note takes from the maker an assignment of all hia
propertjr, or a sufficient portion thereof to protect himself from liability, it has
been regarded as a waiver of his legal right to notice of dishonor. Bend v. Farn-
ham, 5 Mass. 1*70. Prentiss v. Damelson, 5 Conn. 175. Durham v. Rice, 5 Yerg.
SOO. Duvall vir.*^arHfers' -Bank, -.g Gill & J. 31. Stephenson v. Primrose, 8 Porter,
155. Coddington v. Davis, 3 Deuio 16, ib. 610. But a partial indemnity does not
operate to dispense with notice. Bronson v. Napier, 1 Yerg. 199. Burrows, Hall &
Co. V. Hannegan, 1 McLean, 309. Spencer v. Harvey, 17 Wend. 489. Kyle v. Green,
14 Ohio, 495. Denny v. Palmer, 5 Ired. 610.

The general rule was qualified in the case of Kramer v. Sandford, 4 Watts and
Serg. 328. The opinion of Chief Justice Gibson contains so clear and forcible an
exposition of the law, that we liave transferred a portion of it to our pages. " An
indorser is entitled to notice whenever it is necessary for his protection: for he is
not presumed to have waived it to his detriment. It is useless to him where he has
taken a general assignment of tlie maker's effects, and thus obtained beforehand all
the advantages that his own or the indorsee's vigilance could give him ; and it has
accordingly been held that he assumes the maker's debt when he receives his means
to pay it. The chance of the maker's acquiring other property, to which he might
resort, if the fund in his hands should fall short, is so inconsiderable as to fall within
the maxim de mhwnis. But the supposed waiver of notice in consideration of a
chose in action given as a collateral security, contingent and inadequate to produce
perfect safety, as every chose in action must be, stands on a less firm foundation.
The acceptance of such a security is never thought to be a waiver by the parties
themselves, though it is frequently a motive for the act of indorsement. Collateral
security is cumulative in its very essence; and it is never suffered to impair tlie
obligation of the contract immediately between the parties. It may be accepted
though known to be inadequate at the time, the indorser relying for tlie rest on the
maker's other means, and his own energy of pursuit, when warned of the necessity
of exerting it; and it would be contrary to the understanding of the parties, to
make the acceptance of such a security a substitute for notice. There can be no
presumptive waiver of notice where there has been no waiver of recourse to the
maker; and the acceptance of a security is not such, unless it has been taken in
satisfaction. Notice may be necessary to make the very security available on which
the indorser is supposed to have relied, but which he may have reserved for the
critical moment." The learned judge concludes, from an examination of the
adjudged cases, that "the doctrine of waiver iu consideration of a security has no
footing in Westminster Hall," and that the principle, that an indorser is not entitled
to notice, who has protected himself by an assignment, or collateral security, is toe
Droadly laid down by Chancellor Kent. "The true criterion seems to be the obliga-

314 MERCANTILE CONTRACTS.

Presentment.

duly presented, {x) and a promise to pay subsequently to the bill
. or note becoming due is, as against the party making such promise,
prima facie evidence that it has been duly presented, [y)

The principal circumstances concerning presentment, are the
person to ivhom, the place tvhere, and the time when it is to be made.

Generally speaking, the presentment should be to the 'maker or
\ drawee ; but if a bill or note be payable at a particular banker's, a
presentment at that banker's is sufficient ; (2;) if at a particular
place, a presentment at all the banking-houses in that place, (a)
If the maker or drawee be dead, the presentment must be to his
personal representative ; (h) if he be absent, and the bill or note be
made or accepted by agent, to that agent, (c) Where a particular
house is pointed out by the bill as the acceptor's residence, he is
bound, if he remove from that house, to leave sufficient funds to
meet the bill, and a presentment to any inmate, {d) or, if the house
be shut up, at the door, (e) Avill be sufficient. By the usage of
bankers in London, a bill or check held by a banker and payable
by another may be presented at the Clearing-house. As to the

a-) Iloply V. Dufresne, 15 East, 275. Hodge v. Fillis, 3 Camp. 463. See Goodall
V. DoUey, 1 T. R. 712.

(y) Croxon v. Worthen, 5 M. & W. 5. See on the principle Miles v. Bough, 3 Q.
B. 871.

{£) Saunderson v. Judge, 2 H. BL 509. Harris v. Parker, 3 Tywrh. 370. See
Bailey v. Porter, 14 M. & W. 44, in •which the fact of the bankers at whose bank the
bill was made payable, being themselves the holders, was considered equivalent to
presentment.

(a) Hardy v. Woodroflfe, 2 Stark. 319.

(6) Molloy, b. 2, c. 10, s. 34.

{(1) Buxton V. Jones, 1 M. & Gr. 87.

(e) nine v. Allely, 4 B. & Ad. 624.

tion to take up the note. "When that remains with the maker, it continues to be
the duty of the holder to apprise the indorser of his default ; where it has devolved
on the indorser himself, he needs no notice." The conclusions of C. J. Gibson are
fully sustained by the Court of Appeals of Virginia, in the case of Watkins v.
Crouch & Co., 5 Leigh. 522, where the judges in their opinions enter upon an elabo-
rate examination of the question. See also 8 Leigh. 164. The student will find
most of the American authorities on this subject reviewed and collated in the notes
of the American Editors of Smith's Leading Cases to the case of Biekerdike «
Bollman, vol. 2, p. 36.

BILLS OF EXCHANGE AND PROMISSORY NOTES. 315

Presentment.

mode of sucli presentment and the degree of responsibility which
attaches to the banker on whom the bill is drawn while it remains
in his possession, see Wcanuick v. liogers, 5 M. & G. R. 340.

With respect to the j^^'^f'C^ of presentment, we have already seen
that if the bill or note sjDccify a particular place for payment, it
must be presented there ; (/) and, before stat. 1 & 2 Geo. 4, c. 78,
s. 1, if such place had been pointed out by the acceptance, a pre-
sentment there would have been necessary to charge either the
drawer or acceptor. (^) By stat. 1 & 2 Geo. 4, c. 78, s. 1, "if any
person shall accept a bill payable at the house of a banker, or other
place, without further expression in his accej^tance, such acccDtance
shall be deemed to all intents and purposes a general acceptance of
such bill ; but if the acceptor shall in his acceptance express that
he accepts the bill payable at a banker's house, or other place only,
and not otherwise or elsewhere, such acceptance shall be deemed to be
to all intents and purposes a qualified acceptance, and the acceptor
shall not be liable to pay the said bill, except in default of payment,
when such payment shall have been duly demanded at such banker's
house or other place."

Since this statute, it has been decided that in an action against
the acceptor on a \)\\\. payable hy the language of the hill at a particular
place, a presentment at that place need not be averred or proved,
the statute applying equally whether the bill be made paya"ble at a
particular place by the drawer or by the acceptor. (A)

But that where the drawer directs hy the hody of the hill that
the money shall be payable at a particular place, a presentment at
that place must be proved in an action against him;(i) for the

(/) If it be payable at two places, the holder has liis option at which to present
it. Beeching v. Gower, Holt, 313.

(g) Rowe v. Young, 2 B. & B. 165.

(/() Selby V. Eden, 3 Bingh. 611. Fayle v. Bird, 6 B. & C. 531. But it is no vari-
ance to describe the bill as payable there. Blake v. Beaumont, 4 M. & Gr. 1. And
if it be described in pleading as payable there, it will not be necessary to aver pre-
lentment at that place unless it be stated to have been payable there and not else-
where, as it is in fact payable there. Halstead v. Stevens, 6 Q. B. 86. But this
statute does not extend to notes, and in an action against the maker on a note made
payable at a particular place in the body of it, a presentment there must be averred
and proved. Emblin v. Dartnell, 12 M. & W. 830.

(*) Gibb V. Mather, in Cam. Scacc, 8 Bingh. 214.

310 MERCANTILE CONTRACTS.

Presentment.

statute, to use the words of Tindal, 0. J., "neither intended to
alter, nor has in any manner altered the liability of drawers of
bills of exchange, but is confined in its operation to the case of
acceptors alone."

It has been doubted whether, if a bill be accepted payable at a
particular place, the indorsee must prove a presentment at that
23lace 171 order to charge the drawer or indorser. Some of the words
of the Chief Justice in Gihh v. Mather appear to warrant that conclu-
sion. See, on the other hand, the expression of" Lord Lyndhurst
and Bayley, B., in Walter v, CuUey^ {j) where an alteration had
been made with the acceptor's consent after the bill was issued, by
changing ^payable at Mr. CiMey's, King's Road^ Chelsea,^ into ^pay-
able at Mr. Bland^s, Surrey Street, Blackfriars.'' — Per Lord Lyndhurst,
" I do not think it at all alters the contract ;" and per Bayley, B.,
"The alteration did not qualify the acceptance." These expres-
sions, however, were probably meant to apply only to the case
before the Court in which the party sued was the acceptor. In
Park V. Edge {Jc) the point was raised, but not settled ; that case
deciding only that the indorsee need not aver such a presentment
in his declaration against the drawer or indorser ; but may prove
it, if necessary, under the allegation of a general presentment. (Z)
It seems to have been taken for granted in that case, and has been
expressly held at N. P. (m) that a presentment at the place named
in such acceptance is, since the statute, as before, sufficient to
charge the drawer or indorser: supposing it to be so, the accept-
ance must still be prpved, in order to warrant a presentment at the
place therein named, instead of to the acceptor personally, or at his
residence, {a)

The time for presentment must be considered with reference, 1st,
to a presentment for acceptance ; 2dly, to one for payment.

We have already seen the nature of a presentment for accej^t-
ance : it is necessary in all cases of bills or notes (o) payable at or

{j) 4 Tyrwh. 87 ; 2 C. & M. 151. {k) 1 C. & M. 434.

{I) This seems to have been forgotten in Lj-on v. Holt, 5 M. & W. 250, -where the
C<'urt granted a rule nisi in arrest of judgment for omitting such averment,
(m) Harris v. Parker, 3 Tyrwh. 370.
(w) See Smith v. Bellamy, 2 Stark. 223.
(o) Dixon V. Nuttall, 4 Tyrwh. 1013 ; 1 C. M. & R. 307. Holmes v. Kerrison, 2

BILLS OF EXCHANGE AND PROMISSORY NOTES. 817

Presentment.

after sight ; and in cases of other bills, although not necessary, is
usual and prudent, since the holder, if he succeed in obtaining it,
gains the additional security of the drawee, while if he fail, his
remedy against the drawer is accelerated.

Where presentment for acceptance is necessary, it must be made
within a reasonable time ; what is such reasonable time, depends
upon the circumstances of each case. ( j:)) No delay warranted by
the ordinary course of business is unreasonable ; and therefore bills
drawn by a country banker upon London, may by the course of
dealing be retainable, as part of the circulating medium of the
country, for a longer period than they would if drawn under other
circumstances, (q) So with respect to bills payable abroad after
sight, in the absence of any positive regulation, general usage, or
particular course of trade, the rule is, that they must be forwarded
to their destination for acceptance within a reasonable time : what
is that reasonable time, is a mixed question of law and fact, to be
decided by a jury acting under tlie direction of a judge on the par-
ticular circumstances of each case, and who, in order to arrive at
its determination, should not take into their consideration the situ-
ation and interests of the drawer only, or of the holder only, but of
both; and where they have been directed to act thus, and have
held a delay of four months and twenty-one days not unreasonable,
their decision has been approved of, {r) though the bill was not
cu'culated during that time. If the bill is circulated during the
interval, greater indulgence is allowed, and in one case, Buller, J.,
said that if a bill at three days' sight were kept out in that way for
a year, he could not say there would be laches, {s) But if there be
a wanton or careless detainer by the holder even of such a bill, the
other parties are discharged. (;!) On a presentment for acceptance,

Taunt. 323. A presentment of notes, payable after sight with interest, for payment
of interest on them, is a sight, and the Statute of Limitations •will run from such pre-
eentment. Way v. Bassett, 5 Hare, 55.

(p) Fry V. Hill, 1 Taunt. 39Y.

(q) Shute v. Robins, 1 M. & M. 133.

(j-) Mellish V. Rawdon, 9 Bingh. 416. Muilman v. D'Eguino, 2 H. Bl. 564. Stra^
ker V. Graham, 4 M. <k W. 721.

(«) Muilman v. D'Eguino, 2 H. Bl. 265, and Goupy v. Harden, 1 Taunt. ] 59.

(<) Muilman v. D'Eguino, Mellish v. Rawdon. Straker v. Graham, 4 M. & "VV. 721,

518 MERCANTILE CONTRACTS.

Presentment.

the bill must, it seems, be left with the drawee twenty-four hours,
unless he in the interim accept or refuse to do so. (u)

Though & presentme7it for payment be not made on the very day
when the bill or note becomes due, the maker or acceptor will not
be discharged ; {v) though, if it were payable at a particular place
where money had been lodged to meet the expected demand and
lost in consequence of the holder's delay, the rule might possibly
be different ; (iv) nor if it be presented at a particular banker's, and
dishonored, need notice of dishonor be given to the maker or
acceptor, for the bankers are his agents, and dishonor by them is
dishonor by him, {x) But the drawer and all the indorsers will be
discharged if a presentment be not made upon the very day, or if
proper notice of dishonor be not given. A bill or note payable on
demand becomes due at the moment of presentment ; but this pre-
sentment must be made within a reasonable time after receiving
it. {p) What is a reasonable time, is, in the absence of any settled
rule, a mixed question of law and fact, to be decided in the same
\vay as the like question concerning the presentment for accept-
ance (2) of bills payable at or after sight ; and a longer time for
presentment will be allowed where the instrument has been circu-
lated, and was apparently meant for circulation ; (a) but any delay

(n) Bayley, 5th ed. p. 231. But not on a presentment for payment; if it be, the
presentment is not complete till the money is called for. Haywood v. Bank of Eng-
land, Str. 550. If, •while the bill remains with the drawee for acceptance, it be lost
through his carelessness, he will be responsible : but it will be otherwise if the
holder or his agent have carelessly allowed a third person to learn the private
marks on the bill, and obtain it from the drawee hj describing them. Morrison v.
Buchanan, ? C. & P. 22. See "Warwick v. Rogers, 5 M. & Gr. 340.

(v) Rhodes v. Gent, 5 B. & A. 244.

(w) Rhodes v. Gent, ante.

(x) Smith V. Thatcher, 4 B. <fe A. 200. Treacher v. Hinton, 4 B. & A. 413
Pearce v. Pemberthy, 3 Camp. 261.

(_?/) Ward II. Evans, Ld. Raym. 928. Moor v. Warren, Str. 415. Fletcher v.
Sandys, Str. 1248. Turner v. Mead, ibid. 416. As to checks, Moule v. Brown, 4
Bingh. N. C. 266. Alexander v. Burchfield, 7 M. & Gr. 1061.

(«) See ante, Shute v. Robins, Muilman v. D'Eguino, Mellish v. Rawdon, Straker v
Graham.

(a) See Barough v. White, 4 B. & C. 325 ; 2 C. & P. S Heywood v. Watson, 4
Bingh. 496. Gascoyne v. Smith, M'Clell. & Y. 338. Banks v. Colwell, 3 T. R. 8L
Camidgu v. Allenby, 6 B. <fe C. 873. Rogers v. Langford, 1 C. & M. 637.

BILLS OF EXCHANGE AND PROMISSORY NOTES. 319

Presentment.

beyond what the common course of business warrants is, in ordi-
nary cases, unreasonable. The course of business formerly was
understood to be, to allow the party to keep it, if payable in the
place where it was given, till the morning of the next business day
after its receipt ; if payable elsewhere, till the next post, {h) Various-j
contradictory decisions afterwards took place upon the subject, and ■
the established rule now is, that if the instrument be payable at a
banker's and in the place where a party receives it, it suffices to
present it for payment at any time during banking hours on the day
after it is received, (c) If it be payable elsewhere, it suffices to
forward it by the regular post on the day after it is received ; {d)
and the party receiving it by post, has till the next day to present
it. (e) These limits, however, must not be transgressed, (/) save
under very particular circumstances, as where a servant received
the notes on Friday for his master, who was then absent, and did
not return till after banking hours on Saturday, and consequently
could not present the notes till Monday, (g) In the case of a check,
any delay to present it for payment does not exonerate the drawer,
unless the banker or person on whom it was drawn has failed in
the interim, and the maker would thus sustain a loss. (A)

A bill or note, (i) importing in its terms to be payable within a
limited time after a certain event, ex. gr. after sight, or on a par-
ticular day, or at sight, is not really payable till three days after-

(6) "Ward v. Evans, Ld. Raym. 928. Moor v. "Warren, Str. 415. Fletcher v.
Sand^-s, Str. 1248. Turner v. Mead, Str. 416. Hoar v. Da Costa, Str. 910. Man-
waring V. Harrison, Str. 608. E. I. Company v. Chitty, Str. 1175.

(c) Robson V. Bennett, 2 Taimt. 388. Pocklington v. Silvester, Chitty on Bills, 8th
ed. 419. See Gillard v. "Wise, 6 B. «fc C. 134. Camidge v. Allenby, 6 B. & C. 373.
Boddington v. Schlenker, 1 Nev. <fe Mann. 640. See as to checks, Moule v. Brown, 4
Bing. N. C. 266. Alexanders. Birchfield, 7 M. & Gr. 1061.

{d) Rickford v. Ridge, 2 Camp. 537. Darbyshire v. Parker, 6 East, 3.

(e) "Williams v. Smith, 2 B. & A. 496.

(/) Beeching v. Gower, Holt, N. P. C. 135. Camidge v. Allenby, 6 B. C. 37S.
Moule V. Brown, 4 Bingh. N. C. 266, case of a check : so likewise Alexander v. Burch-
field, 7 M. <fe Gr. 1061.

ig) James v. Holditch, 8 D. & Ry. 40. See "Williams v. Smith, 2 B. «fe A. 496.

{h) Robinson v. Hawskford, 15 L. J. Q. B. 377. Serle v. Norton, 2 M. & Rob.
401.

(i) A note paj-able by instalments is entitled to the days of grace. Oridge v.
Slierborne, 11 M. & "W. 374.

320 MERCANTILE CONTRACTS.

Pi'esentment.

wards, (/) unless tlie third be a day of public rest, such as Sunday,
Good Friday, Christmas-day, or some day appointed by proclama-
tion for a solemn fast or day of thanksgiving, in which case it is
payable upon the second day. (A;) The surplus days are called
days of grace, and their number differs in different countries. (Z)
In France, Genoa, Leghorn, Palermo, Amsterdam, Antwerp, and
Rotterdam, there are none. In England, as has been said, they
are three ; and as, in computing the time a bill has to run, the day
of its date must always be excluded, so must the day on which it
purports to fall due, in computing the commencement of the days
of grace, (in) upon the last of which it must be presented. Thus
if a bill be dated 2d November, 1832, and payable at two months
after date, January 3, 1833, will be the first day of grace, and on
January 5, 1853, the bill must be presented.

"When a bill is drawn at a place using one style, and payable at
a place using another, the rule, as stated in Bayley on Bills, is that,
" if the time be to be reckoned from the date, it shall be computed
according to the style of the place at which it was drawn, other-
wise according to the style of the place where it is payable ; and
in the former case, the date must be reduced or carried forward to
the style of the place where the bill is payable, and the time reck-
oned from thence."

When a bill is to be paid so many days after the happening of
a particular event, as after sight, the day on which that event hap ■
pens is excluded, (n) Thus a bill payable six days after sight, if
seen upon the 1st of January, would import to be payable upon the
7th, and would be payable in reality upon the 10th, allowing for
the days of grace.

(j) Coleman v. Sayer, 1 Barnard, 303. Bro-wni). Harradan, 4 T. R. 148 ; B. N. P.
2*74. J. Anson v. Thomas, Bailey, 5th ed. 98. Dehers v. Harriott, 1 ShoAV. 168 ;
Kyd. p. 10. As to the effect of a note payable on demand at sight, see Dixon v. Kutt-
all, 6 C. & P. 320 ; 4 Tyrwh. 1013 ; 1 C. M. &, R. 30Y.

{k) Tassell v. Lewis, Lord RajTn. Y43 ; 39 & 40 Geo. 3, c. 42 ; 7 & 8 Geo. 4, c. 15,
ss. 1 & 2.

(?) Beawes, 200, 1st ed. p. 449. Goldsmith v. Shee, and Idem v. Bland, Bayley,
5th ed. 246. See Chitty on Bills, 8th ed. 407.

(m) Except at Hamburgh, wliere it is the first of the days of grace.

(?i) Bayley on Bills, 5th ed. 250. Coleman v. Sayer, 1 Barnard, 303.

BILLS OF EXCHAJS^GE AND PROMISSORY NOTES. 321

Notice.

A foreign bill is frequently drawn jDayable at so many usances^
as in the form above given. An usance signifies the time in which,
during the infancy of bills, all bills between this country and the
place on or at which the instrument is drawn, were payable : (o)
these usances are calculated exclusively of the day of the date and
of the days of grace. Thus an usance between this country and
Venice being three calendar months, a bill drawn on Venice at
two usances, and dated on the 1st of January, purports to fall due
upon the 1st of July following. But at Venice six days of grace
are allowed, excluding Sundays, holidays, and days on which the
bank is shut ; the bill therefore must not be presented till the 7th,
and if such a day intervene, not till the 8th.

In computing the time which such bills have run, it sometimes
becomes necessary to divide a month ; thus a bill drawn on Venice
at half usance, is payable at one month and a half from date : in
such cases the half month vnQimQ fifteen days, {p)

We have now seen on what day a bill or note should be pre-
sented, and must further observe, that such presenment must take
place at a seasonable time on that day. Where, by the known
custom of a particular place or business, the presentment ought to
be made within certain hours, a presentment out of those hours,
ex. gr. to a banker after banking hours, is unseasonable, (q) But in
other cases, eight in the evening is not an unseasonable hour, (r)

The rules which regulate the presentment of a bill to an ac-
ceptor for honor or referee in case of need, will be found a^iie, in
Section IV., on Acceptance.

Section- VI. — Notice.

When a bill or note is refused acceptance or payment, notice
of such refusal must immediately be given to any party to it, to

(o) See a table of Usances, Chitty on Bills, 8tli ed. 405.

{p) Marius, 23.

{q) Parker v. Gordon, 7 East, 385. Elford v. Teed, 1 M. & S. 28. "Whittaker v.
Bank of England, 1 C. M. & R. 744.

(r) Barclay v. Bailey, 2 Camp. 527. "Wilkins v. Jadis, 2 B. ife Ad. 188. Morgan
i> Davidson, 1 Stark. 114. And see Startup v. Macdonald, 6 M. &, Gr. 593.
21

322 SIERCANTILE CONTRACTS.

Notice.

whom the holder wishes to have recourse, (s) Notice to a person
not a party to the bill, but only collaterally liable as upon a guaran-
ty for its payment, is unnecessary : (t) if he have died, to his rep-
resentatives ; if he have become a bankrupt, and assignees are
chosen, to those assignees, (w) Although a bill may not require
acceptance, yet if it be presented for acceptance and refused, and
notice be not given, it becomes unavailable, (v) save in the hands
of a subsequent indorsee for value, who was not aware of the dis-
honor, {iv)

Notice of dishonor does not mean mere knowledge, and a party
may be entitled to a formal communication of the dishonor of a
bill, though it may be clearly shown that he knew it would be dis-
honored, {x) The notice may however be by parol, {y) or even
proved by circumstantial evidence ; as where the day after the dis-
honor a letter had been sent by the holder to the defendant, which
was not produced, though notice to produce it had been given, and
the defendant (an attorney) afterwards objected that the bill had
not been presented, but said nothing about the want of notice of
dishonor, the jury were held justified in drawing the inference that
the letter contained a sufl&cient notice. (2) So it may be inferred
from a promise by the defendant, after its dishonor, to pay the bill,
or a part payment, or an admission by him that he continues liable
upon it. (a)

(s) Lafitte V. Slatter, 6 Bingh. 623.

(<) Walton V. Mascall, 13 M. & W. T2. Hitchcock v. Humfrey, 6 M. & Gr
559.

(w) Rhode v. Proctor, 4 B. & C. 5lY. See Ux parte Moline, 19 Ves. 216.

{v) Blesard v. Hurst, Burr. 2670. Goodall v. Dolley, 1 T. R. 112. Bartlett v.
Benson, 14 M. A W. 733.

(w) O'Keefe v. Dunn, 6 Taunt. 305. Dunn v. O'Keefe, 5 M. & S. 282. Unless under
peculiar circumstances, as in Goodman v. Harvey, 4 Ad. <fe E. 870.

{x) Burgh V. Legge, 5 M. & W. 418.

{y) Houlditch v. Cauty, 4 Bingh. N. C. 411.

(z) Curlewis v. Corfield, 1 Q. B. 814.

(a) Lundie W.Robertson, 7 East, 231. Gibbon v. Coggon, 2 Camp. 188. Paterson
V. Becher, 6 Moore, 319. Horford v. "Wilson, 1 Taunt. 12. Wilkins v. Jadis, 1 M. 4
Rob. 41. Brownell v. Bonney, 1 Q. B. 39. Croxon v. Worthen, 5 M. & W. 5.
Campbell v. Webster, 2 C. B. 258. In the last case even a conditional promise was
held evidence, not only of due notice of protest, but also of the fact of the bill haT-
ing been duly protested.

BILLS OF EXCHANGE AND PROMISSORY NOTES. 323

Notice.

The notice must come from the holder, or some person entitled,
or who, as party to the bill, j^robably will be entitled, to call for
payment or reimbursement, {b) Notice from the acceptor has been
held sufficient ; (c) however, as a learned author remarks, he proba-
bly acted in that case as agent for the holder. (cZ) But a notice _
given by the holder, or any other party, inures to the benefit of all
who stand between that party and the person receiving it ; (e) and a
notice given by one party to another, and communicated without
laches, by that other to prior parties, renders them liable to him
who gave the first notice. (/) It has also been decided that a party
to the bill may, immediately on its dishonor, give notice to those
prior to him, though he is not, at the time, the holder, and he will,
on afterwards becoming holder, be permitted to avail himself of that
notice, (g) The notice need not, however, state on whose behalf it
is given ; (A) but if it purports to do so, and by mistake the name
of another party to the bill be mentioned, the notice will not be
void. The only effect, it seems, will be to entitle the person to
whom it is addressed to avail himself as against the party on whose
behalf it is actually given, of any defence he would have against
the party whose name is used, (i)

Though there is no particular form of notice, yet it must import
in express terms or by necessary implication, that the bill or note
has been dishonored; and it was long thought, on the authority of
the judgments in Tindal v. Broion, and Solarte v. Palmer, that it
must likewise import that the party receiving the notice is con-
sidered liable and expected to discharge it. {j)

(6) Chapman v. Keane, 3 Ad. &, E. 193. Ex parte Barclay, 7 Ves. 597. Jameson
V. Swintou, 2 Taunt. 224. Wilson v. Swabey, post. See Stewart v. Kennet, 2 Camp.

{d) Bayley on Bills, 5th ed. 254.

(e) Wilson v. Swabey, 1 Stark, 34. Chapman v. Keane, 3 Ad. &, E. 193, overruling
as to this pointy Tindal v. Brown, 1 T. R. 167 ; 2 T. R. 186. And Ex parte Barclay, 7
Ves. 597. Harrison v. Ruse, 15 M. & W. 231.

(/) V7ilson V. Swabey, 1 Stark, 34. Jameson v. Swinton, 2 Camp. 373.

(</) Chapman v. Keane, 3 Ad. <fe E. 193.

(Ji) "Woodthorpe v. Lawes, 2 M. <fc W. 109.

(i) Harrison v. Ruscoe, 15 M. & W. 231.

(;■) Tindal v. Brown, 1 T. R. 167, 186. Hartley v. Case, 4 B. <k C. 339. Solarte o

324 MERCANTILE CONTRACTS.

Notice.

In Solarte v. Palmer, a notice conceived in the following terms
was held insufficient.

17 DecW, 1825

Gentlemen,

A bill for 683Z. drawn bj Mr. Joseph Keats upon Messrs.
Daniel, Jones & Co., and bearing your indorsement, has been put

Palmer, 7 Bingh. 530. S. C. in Dom. Proct., 1 Bingh N. C. 194. See "Woodtliorpe v.
Lawes, 2 M. & "W". 109. In Boulton v. Welsli, 3 Bingh. N. C. 688, the G. P. held the
following notice insufficient :

"33 Northampton Square, 22rf October, 1836.
"Sir, the promissory note for 200/. drawn by H. H., dated 18th July last, payable
three mouths after date, and indorsed by you, became due yesterday, and is returned
to me unpaid. I therefore give you notice thereof, and request you will let me have

the amount forthwith.

"W. L Boulton."

In Houlditch v. Cauty, 4 Bingh. N. C. 412, where the notice was eked out by parol
evidence, the L. C. J. said "he saw no reason for saying the decision in Boulton v.
Welsh was not law; nevertheless, if it were necessary, he should be ready to recon-
sider it, provided he was not called on to alter the principle laid down."
"Dear Sir,

" To ray surprise I have received an intimation from the Birmingham and
Midland Comities Bank that your draft on A. B. is dishonored, and I have requested
them to proceed on the same." Held sufficient Shelton v. Braithwaite, 7 M. and
W. 436.

In Housego v. Cowne, 2 M. & W. 348, the plaintiff sent a person to the drawee's
house, who saw his wife, and said "he had brought back the bill which had been
dishonored." The Court of Exchequer held this sufficient. In the King's Bench, in
Grugeon v. Smith, cited 2 M. & W. 802, and now reported 6 Ad. & E. 499. "Your
bill due this day has been returned with charges, to which we request 3"our immediate
attention." Held sufficient.

In Hedger v. Stevenson, 2 M. & "W. 799, " Sir, I am desired by Mr. H. to give you
notice that your note for 98?. 18s. payable 'o your order two months after date, be-
came due yesterday, and has been returnc i unpaid, and I have to request you will
please remit the amount thereof, with Is. &d. noting, free of postage, per return of
post. I am, &e., Jones Spyer." Held sufficient.

In Strange v. Price, 10 Ad. & E. 125, 2 Per. &D. 278 ; notice was—

"Swindon, Dec. 29, 1836.
" Messrs. Strange, Strange & Co. inform James Price that Mr. John Ballerton'a
acceptance of 875/. is not paid. As indorser, Mr. Price is called upon to pay the
money, which will be expected immediately." Held insufficient.
In Messenger v. Southey, 1 M. <fe Gr. 7 6.

"1839. Stokenchurch, 6 August.
"Sir, — ^This is to inform you that the bill I took of you, 15/. 12s. 6J. is not took

BILLS OF EXCHANGE AND PROMISSORY NOTES. 305

Notice.

into our hands by the assignees of Mr. J. E. Alzedo, with direc
tions to take legal measures for the recovery thereof, unless imme
diately paid to, Gentlemen,

Yours, &c.,

J. & S. Pearce.

np, and 4s. 6d expense, and the money I must pay immediately. My son will be it
London on Friday morning. Wm. Messenger." Held sufficient.

In Lewis v. Gompertz, 6 M. & W. 399.

" Mr. G. — The bill of exchange for 250^. drawn by S. R. on and accepted by C. S
and bearing j-our indorsement, has been presented for payment to the acceptor
thereof, and returned dishonored, and now lies overdue and unpaid with me as above,
of which I hereby give you notice." Held sufficient.

In Cooke v. French, 10 Ad. & E. 131. "D.'s acceptance for 200^. drawn and in-
dorsed by you, due 31st of July, has been presented for payment and returned, and
now remains unpaid." Held sufficient.

In Furze v. Sharwood, 2 Q. B., 388, six notices of dishonor were held insufficient:
each of them stated, with the addition of immaterial circumstances, that the bill
was unpaid.

The first — " Sir, — A bill for 29^. iTs. 3cZ, drawn by Ward on Hunt, due yesterday,
Ls unpaid; and I am sorry to say, the person at whose house it is payable, don't
6peak very favorably of the accej^tor's punctuality. I should like to see you upon it
to-day. Yours, J. F."

The second was —

"This is to give you notice that a bill drawn by you and accepted by Josias
Bateman for 47/. 6s. 9c?., due July 9th, 1835, is unpaid, and lies due at Mr. J. F.'s, 65
Fleet Street."

Th ; third was —

" W. II. 's acceptance for 21/. 4s. Ad., due on Saturday, is unpaid. He has
promised to pay it in a week or ten days. I shall be glad to see you on it as early
as possible."

The fourth, fifth, and sixth, with difference of amount only —

"Sir, — This is to give you notice that a bill for 1*76/. 5s. 6J., drawn by S. Maine,
and accepted by George Clisby, dated May 7th, 1835, at 4 months, lies due and
unpaid at my house. I am, sir, your most obedient servant, J. F."

They were all held bad, because, " Consistently with all that is set forth, the
plaintiff, either from ignorance or inadvertence, or because he may have really
looked to another, may have abstained altogether from presenting one of these
bills."

In King v. Bickley, 2 Q. B. 419.

"I hereby give notice, that a bill for 60/., at three months after date, drawn by
A. upon and accepted by B., and indorsed by you, lies at (fee. dishonored^ Held
sufficient.

In Robinson v. Curlewis, 2 Q. B. 421.

"Your draft upon C. for t^l. due 3d March, is returned to us unpaid, and if not

326 MERCANTILE CONTRACTS.

Notice.

This case having been decided first by Lord Tenterden at N. P.,
then on a bill of exceptions by the Exchequer Chamber, and at
last by the House of Lords, was of course an authority not to be
directly struggled with, and accordingly in the subsequent cases,
the chief of which will be found in the subjoined note, the endeavor,
it will be perceived, has been to distinguish the terms of the notice
from those of Solarte v. Palmer, in applying which case, it will be
found that the Common Pleas has used the greatest, the Exchequer
the least, strictness.

The most important case, however, since Solarte v. Palmer, ap-
pears to have been that of Furze v. Sharwood, 2 Q. B. 888, on account
of the endeavor which the Court of Queen's Bench there made, to
lay down some principle of construction applicable to this class of
cases ; and the endeavor was so far successful that the Court suc-
cessfully demonstrated, by a comparison of the notice of dishonor
with the protest in place of which it comes, that there could be, on
principle, no necessity for its showing that the holder looked to the
person to whom the notice is addressed for payment, further than
that is to be implied from the fact that a notice of dishonor, which
can be for no other purpose useful to the party sending it, is given
to him. (A;) And it was also shown that such necessity, asserted in
terms in the judgments in some of the cases, and particularly in
Solarte v. Palmer, was not invoked in those decisions ; and the
opinion, thus expressed by the Court, was in King v. BicUey, 2 Q. B.
421, confirmed by the other judges, after a conference with whom,
Lord Denman stated the rule to be " that it is not necessary in express
terms to inform the party ivhom it is intended to charge that he will he
looked to for payment, and that the sending notice of dishonor is, in
itself, sufficient for that purposed The notice required, therefore, is
of dishonor, and this involves two facts ; 1st, that the bill has been

taken up this day, proceedings will be taken against you, for the recovery thereof."
Held sufficient.

lu Bailey v. Porter, 14 M. & W. 44, -where the bankers at -whose house the bill
•was made payable -were the holders of it, notice that "James Court's acceptance,
due this day, is unpaid, and I request your immediate attention to it," -was held
sufficient.

(A:) But it has been suggested that there is a distinction bet-ween notice from the
holder and the party not being the holder. East v. Smith, 16 L. J. Q. B. 202.

BILLS OF EXCHANGE AND PROMISSORY NOTES. yo^

Notice.

duly presented ; 2d, tliat it has not been paid ; and on referring to
the late decisions, the true rule of construction will, I think, be
found to be that the mere statement that the bill is unpaid will not
suf&ce, because that fact in no manner involves 'presentment; but
if, in addition to the fact of non-payment, something be stated
which could only result from presentment, for instance, as in Hedger
V. Stevenson, a charge for noting, that will convert the notice of
non-payment into one of dishonor. That the word dishonored is
sufficient to support the notice, seems, after the decision in King v.
Bickley, to be indisputable. {I)

The notice should ascertain the instrument ; but an inaccuracy
in the description of it, by which the party cannot be misled as to
the bill intended, is immaterial ; {m) and so is an error as to the
place where the bill is lying, (n)

A foreign bill dishonored, should be protested, and information
of the ^jro/es^ sent with the notice, (o) It was once thought that a
CO}')!] of the protest must have been sent, unless indeed in the case
of a person, who having drawn or indorsed a bill abroad, came to
this country and received the notice here, {p) It is now, however,
settled that it is suflicient to send information that the bill has been
protested, without any copy of the protest, {q) With respect to in
land bills, they require no protest, but are usually noted for non-
payment, a ceremony which is, however, qaite unnecessary, (r)

A protest is a minute of the non-acceptance, accompanied by a
solemn declaration on the part of the holder against any loss to be
sustained thereby: {s) it is made out by a notary public, who, at a
seasonable hour in the course of the ?ame day in which the bill has

{I) Sea Miers v. Brown, 11 M. & W. 372. Rowlands v. Springett, U M. &
W. 7.

(?«) Stockman v. Parr, 11 M. & "W". 809. Bromage v. Vaughan, 16 L. J
Ex. 10.

(n) Rowlands v. Springett, 14 M. & W. Y.

(o) Rogers v. Stephen, 2 T. R. 713. Gale v. Walsh, 5 T. R. 239. Brough v. Par-
kins, Ld. Raym. 993.

{p) Cromwell v. Hynson, 2 Esp. 511. Robins v. Gibson, 3 Camp. 334 ; 1 M. & &
288; B. N. P. 271.

{q) Goodman v. Harvey, 4 Ad. & E. 870.

(r-) See the subject discussed, Chitty on Bills, 8th ed. pp. 500, 501

(s) See the form, Chitty on Bills, 8th ed. p. 497.

328 ilERCANTILE CONTRACTS.

Notice.

been dishonored, again presents or causes it {t) to be presented, and,
if payment be again refused, makes a minute, consisting of his ini-
tials, the day, month, and year, and reason, if assigned, of non-pay-
ment : this minute, the making of which is termed noii7ig the bill,
is a mere memorandum, from which the notary may afterwards
draw up a protest at his leisure, {a) but per se, it is of no legal
effect. {vY The process must, in this country, be stamped, accord-
ing to Stat. 55 Geo. 3, c. 184.

In ordinary cases the bill is protested for non-acceptance or non-
payment, in the place where acceptance or payment was refused, {w)
By Stat. 2 & 3 Wm. 4, cap. 98, it is enacted, that a bill made pay
able by the drawer at any other place than the place therein men-
tioned by hini to be the residence of the drawee, and which shall
not be accepted on presentment, shall or may be, without farther
presentment, protested for non-payment in the place where it has
been made payable, unless the amount shall have been paid to the
holder on the day when it would have become payable if duly
accepted.

As to the time at which the notice must be given, notice upon
the very day on which a bill was presented for payment and dis-
honored, has been held not too soon ; {x) but it will be too late if

{t) The question whether the notary must not present in person seems as yet un-
decided. See Leftly v. Mills, 4 T. R. 170, and Chitty on Bills, 8th ed. 493.

(w) See Ctaters v. Bell, 4 Esp. 48.

{v) Leftly V. Mills, 4 T. R. ITO. Rogers v. Stephens, 2 T. R. 713. Gale v. Walsh,
5 T. R. 239 ; B. N. P. 271. Orr v. Maginnis, 7 East, 359.

{w) See Mitchell v. Baring, 10 B <fe C. 4.

{x) Burbridge v. Manners, 3 Camp. 193. Ex parte Moline, 19 Yes. 21G. lime v.
Allely, 4 B. <fe Ad. 624.

* When the fact recorded on a protest has taken place, and been duly entered by
a notary in his book at the time of the transaction, it is sufficient if the formal pro-
test be drawn up afterwards, though even after action brought. Bailey v. Dozier, 6
How. S. C. R. 23. An exception was supposed at one time to be established to this
general rule in the case of a paj-ment supra protest for the honor of a party to the bill,
where it was thought not to be sufficient that the facts recorded in the protest should
have taken place, but that a formal instrument of protest must also be drawn up or ex-
tended before the payment for honor. The case of Vandewall v. Tyrrell, M. <fe M. 87, was
su^^posed to sustain this positi )n. The question was recently raised in Geralopulo v. Wie-
lei, 10 C. B. R. 690, and the go leral rule declared to be uniform and without exception

BILLS OF EXCHANGE AND PROMISSORY XOTES. 329

Notice.

not given by the holder to parties who reside in the place where
the presentment was made, by the expiration of the day following
the refusal ; to other parties, by the post of that, or, if there be no
post on that, of the next post day ; {y) each party, however, has a
day for giving notice. Thus, if A. draw a bill in favor of B., whc
indorses it to C, and the bill is refused payment on Monday, C
has all Tuesday to give notice either to A. or B,, and if he give
notice to B. on that day, B. has all Wednesday to give notice to A.
And Sundays, days of public rest, and days to which a man's pe-
culiar creed gives the same sanctity as that of Sunday, are excluded
from the computation altogether, [z) A banker presenting a bill or
note for his customer, has the same time to give notice to his cus*
tomer as if he, the banker, were the holder for his own benefit ; and
the customer has the same time as if such had been the case to
transmit the notice to former parties, (a) And a person who pays a
bill for the honor of an indorser, holds as upon a transfer from him,
and has a right to take advantage of any notice, of which the per-
son for whom he made the payment could have availed himself, (h)
It sometimes happens that the person holding the bill or note at the
time of dishonor is ignorant of the residence of previous parties
thereto ; in such a case it has been decided that if he received it
from his traveller, he may give notice to that traveller, notice from

(y) Bayley, 8tli ed. 268. Bray v. Hadwen, 5 M. &. S. 68. "Wriglit v. Shawcross,
2 B. & A. 501. Jameson v. Swinton, 2 Taunt. 224. Geill v. Jeremy, 1 M. & M. 61.
Where the notice is to be sent by j)Ost he is entitled to the whole of the day, after
he receives the notice, though a post go out during that day. Hawkes v. Salter, 4
Bingh. 'TIS. Where the parties both live -within the limits of the twopenny post, the
notice, if sent by post, must be shown to have been put in time enough to be delivei'ed
before the expiration of the day following the dishonor. Fowler v. Hendon, 4 Tyrwh.
1002.

(2) Hawkes v. Salter, 4 Bingh. VI 6. Smith v. Mullet, 2 Camp. 208. Haynes v.
Birks, 3 B. <fe P. 599. Scott v. Lifford, 9 East, 347. Lindo v. Unsworth, 2 Camp.
602. Tassell v. Lewis, Lord Raym. 743 ; 39 <fe 40 Geo, 3, c. 42, and V & 8 Geo. 4,
c. 15.

(a) Haynes v. Birks, 3 B & P. 599. Scott v. Lifford, 9 East, 347. Langdalo v.
Trimmer, 15 East, 291. Poole v. Dicas, 1 Bingh. K C. 640. See Boyd v. Emmer-
son, 2 Ad. & E. 184. In case of a bill liaving passed through several branch banks,
each branch is to be considered as an independent holder, and entitled to notice and
the time to transmit it. Clode v. Bajdey, 12 M. <fe W. 51.

(6) Goodall V. Polhill, 1 C. B. 233.

j;]() ilERCANTILE COKTRACTS.

Notice.

whom to those parties will be sufficient, (c) If he is forced to
employ an attorney to find out their i^sidences, the attorney has a
day after he has obtained the necessary information to apprise his
client thereof, and receive his directions; (c?) and in general, when
it is not known where a party resides, due diligence to find him out
will be sufficient, (e) If the party to whom notice is to be given
have himself, by his mode of drawing or indorsing, thrown diffi-
culty in the way of the holder, the time allowed the latter will be
extended, as, for instance, where the drawer wrote his name so
badly that the holder mistook the spelling of it, (/) and the letter
containing the notice consequently miscarried. A party's time for
giving notice will not be enlarged by the circumstance of his hav-
ing received his own sooner than he had a right to it, or of his
having given it within the time in which it might have been trans-
mitted from himself to the defendant, through all the intervening
parties, [g]

The notice need not be in writing ; Qi) it may be sent to the
party's counting-house, (i) if he be a merchant ; if a private person,
to his dwelling-house, where he is bound to have some one to re-
ceive it. (j) If dispatched by the post, that is sufficient, though it
be not received : Qc) nay, where the drawer dated a bill generally,
"Manchester," a letter addressed "Manchester" was held suffi-
cient, (Z) the jury thinking that it reached the drawer; and so too,
where the bill was dated " London." (wi) But jprima facie^ such a
direction is too general, (n) If there be no post, it is enough to

{d) Firth V. Thrush, 8 B. & C. 387.

(e) Bateman v. Joseph, 12 East, 433. Beveridge v. Burgis, 3 Camp. 262. Brown-
ing V. Kinnier, Gow. 81. Frith, v. Thrush, ante.

(/) Hewitt V. Thompson, 1 M. & Rob. 543. See Siggers v. Browne, ibid. 520.

{g) Turner v. Leech, 4 B & A. 451.

(A) Goldsmith v. Bland, Bayley, 5th ed. 2*76. Housego v. Cowne, 2 M. & W. 343.

(i) Cross V. Smith, 1 M. & S. 545. Bancroft v. Hall, Holt, 4'76. See Shelton v.
Braithwaite, M. & "W. 252, where it was sent to a place where one of the firm had
gone on business.

(_;■) Housego v. Cowne, 2 M. & W. 348.

{k) Sanderson v. Judge, 2 H. Bl. 509. Woodcock v. Houldsworth, 16 L. J Ex. 49

{I) Mann v. Moss, 1 R. & M. 249.

(m) Clarke v. Sharpe, 3 M. & W. 166.

\n) Walter v. Haynes, 1 R. & M. 149.

BILLS OF EXCHANGE AND PROMISSORY NOTES. 33]

Notice.

use the ordinary method of conveyance ; for instance, in the case
of a foreign bill, the first regular ship, (o) But though it is in all
cases sufficient to send notice by the ordinary conveyance, it is not
absolutely necessary to do so ; the employment of a private agent
will suffice, provided that he actually give the notice, or take due
steps for that purpose, (^j) In some cases, under very peculiar
circumstances, notice is excused; ((7) thus, though the drawer O' \^
indorser, if he partly liquidate, or promise to liquidate, a bill, in
ignorance that he has been discharged by want of proper notice, is
not precluded from insisting upon such discharge when he dis-
covers it ; if) yet if he had full knowledge of the circumstanee, he
will be precluded. (5)* It has also been held that if a bill has
been accepted for the accommodation of the drawer, who had not

(0) Muilman v. D'Eguino, 2 H. Bl. 563.

(p) Bancroft v. Hall, Holt, 476.

{q) Whether facts that excuse notice can be proved under a declaration averring
notice, was a mooted point. See Corey v. Scott, 3 B. tt A. 619, cited as to this question
in Bayley on Bills, 5th ed. 406. Firth v. Thrush, 8 B. «i; C. Z%1. The practice is to
plead the facts excusing notice especially. (See for the mode of pleading them, Fitz-
gerald V. Williams, 6 Bingh. N. C. 68. Kemble v. Mills, 9 Dowl. 451 ; 1 M. tk Gr.
'75'?. Legge v. Thorpe, 12 East, 171. Carter v. Flower, 16 L. J. Ex. 199.) And it
has been held that an express dispensation of notice micst be pleaded. Burgh v,
Legge, 5 M. &, W. 418, where Baron Parke said that his ojjinion always was that
want of effects must be pleaded specially as an excuse for notice. Limdie v. Robert-
son, 1 East, 231. See Watson v. Minchin, 1 Jones Jr. Rep. 583, and Carter v. Flower.

(r) Blesard v. Hirst, Burr. 2670. Goodall v. DoUey, 1 T. R. 712. Pickin v. Gra-
ham, 1 C. & M. 725. See particularly Hicks v. The D. of Beauford, 4 Bingh. N. C.
229. Houlditch v. Cauty, ibid. 411, where the Court of Common Pleas seem to have
been of opinion that the subsequent promise to pay was only available as presump-
tive evidence that the person receiving it had had a previous regular notice. See
Brownell v. Bonney, 1 Q. B. 43. Croxen v. AVorthen, 5 M. & W. 5.

(s) Vaughan v. Fuller, Str. 1246. Gunson v. Metz, 1 B. <fe C. 193. Horford v.
Wilson, 1 Taunt. 12. Lundie v. Robertson, 7 East, 231. Gibbon v. Coggon, 2 Camp.
188. Greenway v. Hindley, 4 Camp. 52. Hodge v. Fillis, 3 Camp. 463. Wood v.
Brown, 1 Stark. 217. Potter v. Ray worth, 13 East, 417. Rogers v. Stephens, 2 T.
R. 713. Wilkes v. Jacks, Peake, 202, B. N. P. 276 : see the case ante, note.

* A promise to pay by an indorser who has been discharged by the laches of
the holder, will only be binding upon him if made with full knowledge of the facts.
Jones V. Savage, 6 Wend. 608. Warder v. Tucker, 7 Mass. 449. Gai land v. Salem
Bank, 9 ib. 408. Kennon v. McRea, 7 Porter, 175.

332 MERCANTILE CONTRACTS.

Notice.

the least reason to expect that it would be paid, he will not
be entitled to notice of its dishonor, {t) since the reason for
notice is, that the drawer may, without delay, withdraw his effects
from the drawee's hands, which reason, of course, cannot apply
when he has none there * But it is dangerous to rely on this
excuse, for the drawer is entitled to notice, if, on taking up the
bill, he could sue the acceptor, or any other party, (u) or if he
had effects on their way to the drawee, (y) or had effects in the
drawee's hands at the time when the bill was drawn, (w) or when
it was presented for acceptance, (x) or afterwards, but before it be-
came due, (y) though the effects were less than the amount of the
bill, and the drawer was indebted to the acceptor in a larger
amount than their value: (a) in a woid, if he have any reasonable
, ground to expect that the bill will be paid, he is entitled to no-
tice, (a) Neither will the destruction of the bill, coupled with the
drawer's refusal to give a new one, according to stat. 9 & 10 Wm.
8, c. 7, {h) the insolvency of the acceptor, (c) or the fact of his

(t) Sharp V. Bailey, 9 B. & C. 44. Rogers v. Stephens, 2 T. R. 713. Biekerdike
V. BoUman, 1 T. R. 405. Goodall v. Dolley, 1 T. R. 712, per BuUer, J. Legge v-
Thorpe, 12 East, 171. Claridge v. Dalton, 4 M. & S. 226. Kemble v. Mills, 9 Dowl.
P. C. 446 ; 1 M. & Gr. 757. FitzgeraM v. Williams, 6 Bingh. N. C. 68.

(m) Ex parte Heath, 2 Ves. & B. 240; 2 Rose, 141. Corey v. Scott, 3 B. <fe A. 619.
Nortoa v. Pickering, 8 B. <fc C. 610. So in the case of an indorser Carter v. Flower,
16 L. J. Ex. 199.

{v) Rucker v. Hiller, 3 Camp. 217 ; 16 East, 43.

(w) Orr V. Maginnis, 7 East, 359.

{x) Blackhan v. Doren, 2 Camp. 503.

(y) Hammond v. Dufresne, 3 Camp. 145. Thackray v. Blackett, 3 Camp. 164.

(z) Thackray v. Blackett, ubi sup. Blackhan v. Doren, 2 Camp. 503.

(a) Lafitte v. Shatter, 6 Bingh. 623.

(6) Thackray v. Blackett, ubi sup.

* The general doctrine that an accommodation drawer or indorser is entitled to
notice, inasmuch as they have a right to presume that the instrument will be
honored by the party primarily liable on its face, and should therefore have an
opportunity of providing for their own safety if it be not, has been established by
numerous decisions in this country. Frencli's Execution v. Bank of Columbia, 4
Cranch, 141. Smith v. McClean, 2 Taylor's N. C. R. 73. Shirley v. Fellowes, 9
Porter, 300. Holland v. Turver, 10 Conn. 308. Reed v. Morrison, 2 Watts & S. 401

BILLS OF EXCHANGE AND PROMISSORY NOTES. 333

Notice.

having told the drawer that he would not pay the bill, and having
given him part of the amount to assist him in doing so, {d) or
indeed any circumstances other than those hereinbefore stated, be
sufficient to excuse the want of notice, (e) It was once held that
where A., knowing the maker's insolvency, became payee of a
note for his accommodation, he could not complain of the want of
due presentment and notice. (/) But inasmuch as A. in such case,
could, upon payment of the note, have sued the maker, he was,
according to the rule above laid down, clearly entitled to notice.
That case, therefore, seems not to be law, and has, in fact, been ,/
virtually overruled by subsequent decisions ; (g) if indeed A. had
taken effects from the maker to answer the note, the case would
be different, for then he could not expect the maker to take it
up, and would have no action against any one on payment of it. (A)

It has been held that where two indorsers were discharged by
the holder's neglecting to give them notice of a refusal to accept,
and one of them, in ignorance of his discharge, paid the bill when
it became due, he could not recover its amount against the other
whose liability could not be revived by the plaintiff's ignorance of
his own discharge. (^)

Immediately upon receiving {j) the notice, the party to whom
it is given becomes liable to an action at the suit of the holder,
unless the money due upon the bill or note be then paid. If, in-
deed, after the notice, and before a writ actually issue against him,
he promptly and directly makes a tender, that perhaps would con-
stitute a defence. But the tender, to be thus available, must, at all
events, be made within a reasonable time (generally twenty-foui-
hours) after the receipt of the notice, {k)

{d) Baker v. Birch, 3 Camp. lOY. See Pickin v. Graham, 1 C. M. '725.

(e) See Clegg v. Cotton, 3 B. & P. 239. Staples v. Okines, 1 Esp. 332. Prideaux
V. Collier, 2 Stark. 57. Leach v. Hewit, 4 Taunt. YSL Free v. Hawkins, 8 Taunt.
92. Pickin v. Graham, 1 G. & M. 125.

(/) De Berdt v. Atkinson, 2 H. Bl. 336.

(cr) Nicholson v. Gouthit, 2 H. Bl. 609. Smith v. Becket, 13 East, 187. Brown v.
Maffrey, 15 East, 216.

{h) Corney v. Da Costa, 1 Esp. 302.

(i) Roscow V. Hardy, 12 East, 434. (j) Castrique v. Bernabo-, 6 Q. B 490.

(^•) Walker v. Barnes, 5 Taunt. 240 ; 1 Marsh, 36. Siggera v. Lewis, 4 Tyrwh,
847 ; 2 Dowl. 681 ; 1 C. M. & R. 370.

334 MERCANTILE CONTRACTS.

Payment.

Section VII. — Payment

The payment must of course be to the holder or his represent-
ative. (?) Where money is paid into a bank on the joint account
of persons not partners in trade, the bankers are not discharged by
payment of the check of one of those persons drawn without the
authority of the others, (m) There are some rules of which it is
proper to take notice, respecting payment of a forged note or bill.
Though the drawer's signature be forged, the drawee, if he accepts
the biU, is bound to pay it, provided it be in the hands of a holder
bona fide and for value, in) for the drawee's acceptance admits the
drawer's handwriting to be genuine. If he have not accepted, yet
if he pay it, he cannot recover his money back from such a holder ;
at all events, not unless he discover the forgery, and give notice
of it that very day. (o) And the same diligence is incumbent on
one who pays for the honor of a person whose signature has been
forged. (^) Nor will he who pays a forgery have any remedy
against the person whose signature has been forged, {g) unless that
person have, by his gross negligence, facilitated the commission of
the forgery ; in which case he will have to bear the loss thereby
occasioned. Thus where Hall drew upon his banker for three
pounds, and the bearer of the check altered the 3 into 200, the
banker having paid it in that state, was forced to bear the loss, (r)
But where a check for £50 25. 3cZ. was drawn so carelessly that the
agent who presented it, and who had previously filled it up, was

(I) It seems that if the drawer of a check write across it the name of the banker
of the party to whom he pays it, it will be at the drawee's peril, if he pay an}'- one
except that banker. Stewart y Lee, 1 M. & iL 158. Boddington v. Schlenker, 1
Nev. & Mann. 540 ; 4 B. & Ad. Yo'i.

(ill) Innes v. Stephenson, 1 M. & Rob. 145.

(«) Smith V. Chester, 1 T. R. 654, per Buller, J. Sanderson v. CoUman, 4 M. h
Gr. 209.

(o) Price v. Neale, Burr. 1354, Bl. 390. Smith v. Mercer, 6 Taunt. 76. Cocks •,
Masterman, 9 B. & C. 902. See Wilkinson v. Johnson, 3 B. & C. 428.

(p) Wilkinson v. Johnson, vhi supra.

(q) Johnson v. Windle, 3 Bingh. N. C. 225.

(r) Hall V. Fuller, 5 B. <fe C. 750.

BILLS OF EXCHANGE AND PROMISSORY NOTES 335

Payment.

enabled to introduce a figure of 3 before the figures 50, and the
words '■'■Three hundred and'^ before the word ^'' Fifty ^''' it was held
that the drawer, not the banker, who paid it in its altered state,
should be the sufferer. (5) Where any of the signatures through
which the holder claims are by procuration, the party paying must
ascertain the sufiiciency of the f rocuration at his peril, {t) He
must also take care that there be no restrictive indorsement, (w)
and it is dangerous to pay before the instrument is due. {v)

Payment supra protest. — After a foreign bill has been protested,
any person may pay it for the honor of the drawer or indorser,
and will have his remedy against the party for whose honor he
paid, and all others who are liable to ' him. {w) But before he so
pays, he must take care that the bill is protested, (x) Such a pay-
ment is usually made immediately upon dishonor, and at any rate,
if it be proposed to be made afterwards, it is quite optional with,
the holder to take it or not. {y)

How enforced. — Payment of a bill or note may be enforced by
action (2) against the drawee, if he have accepted ; against the

(s) Young V. Grote, 4 Bingh. 253. See Momson v. Buchanan, 6 C. & P. 18.

{t) E. L Compy. v. Tritton, 3 B. & C. 280.

(',.) Sigourney v. Lloyd, 8 B. (fe C. 622; 5 Bingh. 525. Ancher v. Bank of England,
Dougl. 615, 63Y. See Stewart v. Lee, 1 M. & M. 150.

((') DaSilvai;. Fuller, Chitty, 148; Bayley, 5th ed. 326; Marius, 31.

(w) Beawes, pi. 50; Baylej', 5th ed. 325. See Mertens v. Winnington, 1 Esp. 112.
Ex parte Lambert, 13 Ves. 179. As to the character in which he holds and his
rights, see Goodall v. Polhill, 1 C. B. 233.

(.t) Vandewall v. Tyrrel, 1 M. & M. 87. If an inland bill, it must be due. Deacon
V Stodhart, 2 M. & Gr. 317.

(y) Per Cur. in Rotton v. Inglis, 2 Q. B. 685.

{z) The remedy is facilitated by stat. 3 <fe 4 "Wra. 4, c. 42, s. 12, which allows the
plaiKtifF in his affidavit to hold to bail, process and declaration, to describe parties
by the initial letter, or a contraction of their Christian names, if they are so desig-
nated in the bill or note. But this only applies to parties to the suit. Applemans v.
Blanche, 14 M. & W. 154. If other parties to the bill use initials, that fact should be
stated as an excuse for inserting them in the declaration. Esdaile v. Maclean, 15 M.
& W. 277. As to the form of action, debt lies wherever there is a privity of contract.
Cloves V. "Williams, 3 Bingh. N. C. 808. Compton v. Taylor, 4 M. & W. 138, and
whether the words value received (which were once thought essential to support
that form of action) be used or not. Hatch v. Trayes, 11 Ad. & E. 702. It is, there-

336 MERCANTILE CONTRACTS.

Payment.

drawer and indorsers, if the bill have been dishonored either by
Qon-acceptance or non-payment: all these parties may be sued
either at the same time or successively ; but if they be sued at the
same time, the Court will stay proceedings on payment of the bill
and costs, (a) In general, the drawer or indorser of a bill to whom
it has been re-indorsed has no remedy upon it against any interme-
diate parties, because he would be liable over to them, {h) Yet if
it were indorsed by them under circumstances excluding their
rio-ht to have recourse to him, for example, as sureties to him for
the acceptor, he may sue them upon it. (c) A drawer, indorser,
acceptor for honor, or the bail of such a party, or any one who has
discharged the bill on his account, becomes on payment a holder.
He does not, however, hold as on a transfer from the person to
whom he has made the payment ; but, if a party to the bill, as in
his original capacity, {d) if not, as on a transfer from the person in
whose behalf he made the payment, (e) in whose precise situation
he stands ; so that when that party could not sue on the instru-
ment, he cannot. (/)

What recoverable. — The holder is generally entitled to recover
the money expressed to be payable in the instrument, with interest,
(which, however, unless it be reserved, the jury are not absolutely
bound to give,) {g) and all incidental expenses occasioned by non-
acceptance or non-payment. If interest be expressly reserved, it is

fore, maintainable between an indorsee and his immediate indorser. Watkins v.
Wake, T M. & W. 490, but not against an indorser in blank, by a person to whom it
has been handed by an intermediate holder. Lewin v. Edwards, 9 M. & W. 720.
Assumpsit may be maintained in all cases.

(a) Smith v. "Woodcock, 4 T. R. 691, which decision must now be read along with
the general rule of Trinity Term, 1838.

(6) Bishop V. Hayward, 5 T. R. 208.

{d) Louviere v. Laubrey, 10 Mod. 36. Simonds v. Parmenter, 1 "Wills. 185 ; 4 Bro.
P. C. 604.

(e) Mertens v. "Winnington, 1 Esp. 112. Hall t). Pitfield, Bayley, 5th ed. 329.
Goodall V. Polhill, 1 C. B. 233.

(/) Bishop V. Hayward, 4 T. R. 470. JEx parte Lambert, 13 Ves. 179.

{(j) Du Belloix v. Lord Waterpark, 1 D. & R. 16. See Brooke v. Coleman, 1 C. &
M. 621. Latraille v. Hoepfner, 10 Bingh. 334. If it be reserved, it forms part of tha
debt, and is recoverable as such. Hudson v. Faucett, 7 M. & Gr. 348.

BILLS OF EXCHANGE AND PROMISSORY NOTES. 337

Resistance against Payment.

computed from the date, (/i) if not, from tlie time at which, the bill
or note is payable, (^) provided it was then duly presented, as, if it
be payable on demand, from the time of demand. It is generally
computed up to the time when final judgment may be signed ; (j)
but if there have been a tender, to the time of tender only, (k) It
is clear that, notwithstanding stat. 3 & 4 Anne, c. 9, s. 5, interest
may be recovered against drawers and indorsers of inland bills,
though not protested ; (Z) the object of that act being to give new
rights, not destroy old ones. But the expenses of noting and
postage incurred on the return of an inland bill, are not recover-
able unless specially laid as damage in the declaration, and proved
accordingly, (m) On a foreign bill re-exchange is also recoverable ;
and, though the bill be returned through ever so many hands, the
drawer will be liable for the re-exchange on each return, (n) It
has been said that the acceptor is not liable for re-exchange ; (0)
but this is doubtful.

SECTioisr YIII. — Resistance against Payment.

If the person sued upon a bill or note think proper to defend
himself, he either denies that he was ever liable, or, admitting his
liability to have existed, contends that it has been determined.

First. — If he deny that he was ever liable, he may rely upon
the absence of any of those circumstances which are above shown

(A) Kennerly v. Nash, 1 Stark. 452. Hopper v. Richmond, 1 Stark. 507. Denman
V. Dibdin, 1 R. & M. 380. Roffey v. Greenwell, 10 Ad. & E. 222.

{i) Blaney v. Bradley, Black. 761. Bayley,. 5th ed. 348. Phillips v. Franklin,
Gow, 196. Pierce v. Fothergill, 2 Bingh. N, G. 167.

{j) Robinson v. Bland, Burr. 1077.

{k) Dent v. Dunn, 3 Camp. 296.

(I) Windle v. Ajidrews, 2 B. «& A. 696.

(hi) Kendrick v. Lomax, 2 Tyrwh. 447 ; 2 C. <fe J. 405. Indeed, in Dickenson v.
Hatfield, 1 M. & Rob. 141, the postage -was recovered under the count for money
paid, but there the defendant had expressly directed the plaintiff to charge him
with it.

(«) Mellish V. Simeon, 2 H. Bl. 378. De Tastet v. Baring, 11 East, 265.

(0) Napier v. Schneider, 12 East, 420. But see Bayley, 5th ed. 353. Francis v
Rucker, Ambl. 672.
22

338 MERCANTILE CONTRACTS.

Resistance against Payment.

to be essential to the holder's right to recover, the presence of
which he has not by his own act admitted ; {p) or on the insuffi-
ciency or illegality of the consideration for his liability.

Insufficiency of Consideration.^ — Contrary to the general rule
which prevails respecting other simple contracts, a bill or note is
always 7;?-f?na facie presumed to have been given for a sufficient
consideration. This presumption is, however, open to rebuttal,
and the defendant may show that he has received no consideration,
or no sufficient consideration, for his liability : (q) the former of

(p) Vide ante.

(q) Bell V. Gardiner, 4 M. & Gr. 11, where a note had been given m renewal of a
bill satisfied by alteration. Abbott v. Hendricks, 1 M. & Gr. 794. Spincer v. Spincer,
2 M. & Gr. 295. Jeffries v. Austen, Str. 647. Jackson v. "Warwick, V T. R. 121.

* A bill of exchange or promissory note always imports prima facie a considera-
tion. "Where it has gone into the hands of a bona fide holder for value, without
notice of any defect, and in the due course of trade, before its maturity, this presump-
tion cannot be rebutted. This rule is founded upon the policy of encouraging the
free circulation of commercial paper, and thereby facilitating the great business of
exchange. The holder is supposed to take the instrument in these cases, on an inde-
pendent title by the indorsement, and will not be affected by any payment, set-off,
fraudulent consideration, or other matters of defence, which the acceptor or promi-
sor might have had against any previous holder or prior pai'ty. He is not in privity
with such prior partj'', does not claim under him, and is not bound by his acts,
frauds, or admissions. Opinion of Shaw, C. J., Fisher v. Leiand, 4 Cush. Rep. 456.
"Where, however, a negotiable note is found in circulation after it is due, it carries
suspicion on its face, and although it does not give an indorsee notice of any specific
matter of defence, it puts him upon inquiry, and he takes only such title as the
indorser himself has. The note does not cease to be negotiable ; the indorsee takes
a title, and may sue, but he is so far in privity with his indorser that he takes only
his title. Ibid. Eyre, C. J., in Collins v. Martin, 1 Bost. Poll. 651. Howard v. Ames,
8 Met. 308. The entire absence of consideration between the original parties, will
not impose upon the holder the burden of showing that he is a bona fide pur-
chaser ; but it is otherwise, where the defendant can show that the note was
obtained through fraud, or is affected with illegality. Tliese facts raise a presump-
tion that the guilty party will dispose of the instrument, and place it in the hands
of some other person to bring suit : and this presumption, it has been held, ought to
impose upon the holder the obligation of proving that he is a bona fide purchaser.
Bailey v. Bid well, 13 Mees. & W. 75. Munroe v. Cooper, 5 Pick. 412. Rogers v.
Morton, 12 'Wend. 412. Holme v. Karsper, 5 Binney, 469. Knight v. Pugh, 4 "Watta
& S. 445. Vathir v. Zane, 6 Gratt. 246. Thompson v. Armstrong, 1 Alabara. 256.
McClintick v. Cummins, 2 McLean, 98. Thomas v. Newton, 2 Carr &, P. 606.

BILLS OF EXCHANGE AND PROMISSORY NOTES. 339

Resistance against Payment.

whicli circumstances may be a defence in Mo ; {7-) the latter ^jro
tanto, provided the deficiency of consideration can be estimated, for
otherwise the remedy is by cross action, (s) He may also protect
himself on the ground that his signature was obtained by duress, {t)
or fraud, {u) or that the bill or note has been lost, improperly con-
verted, or stolen, (v)

These defences may be rebutted by the fact that the holder
himself, or some intermediate party, took the bill or note bona fide,
and paid a valuable consideration for it ; {iv) and where that is the

Barber v. Backhouse, Peake, 61. Darnell v. Williams, 2 Stark. 166. HoUiday v. At-
kinson, 5 B. & C. 501. Jones v. Hibbert, 2 Stark. 304. Thompson v. Clubley, 1 M.
& W. 212. Sparrow v. Chisman, 9 B. & C. 241. Thomas v. Newton, 2 C. <fe P. 606.
Solly V. Hinde, 4 Tyrwh. 306 ; 2 C. & M. 516. A gift of a bill would not be such a
consideration as would sustain an action on it against the giver. Easton v. Pratchett,
4 Tyrwh. 4Y2 ; 1 C. M. & R. V98. See Burkett v. Ransom, 2 Coll. 395. But the debt
of a deceased person is a sufficient consideration for a note from the executor or
administrator, or even from a person entitled to administration, unless there be no
assets. Ridout v. Bristow, 1 Tyrwh. 84; C. <fe J. 231. Serle v. Waterworth, 4 M. & W.
9; reversed in error, 4 M. & W. 796, but the above rule is not shaken. A judgment
debt is a good consideration for a note payable at a future day, as it is evidence of
an agreement to suspend the remedy. Bailey v. Walker, 14 M. & W. 455.

(r) Wells V. Hopkins, 5 M. & W. 1. Spincer i\ Spincer, 2 M, & Gr, 295.
Wells V. Hopkins, the bill was given for hops to be supplied according to sample. In-
ferior hops having been supplied, the bill falls to the ground. In Jones v. Jones, 6 M.
& W. 84, a plea, that the bill was the price of an estate bought without writing, was
held bad, unless it also state a refusal to convey.

(s) Morgan v. Richardson, 1 Camp. 40, in notis. Flemming v. Simpson, ibid. Solo-
mon V. Turner, 1 Stark. 51. Tye v. Gwj-nne, 2 Camp. 346. Moggeridge v. Jones, 14
East, 486. Spiller v. Westlake, 2 B. & Ad. 155. Richards v. Thomas, 1 0. M. & R. .
'772. Day v. Nix, 9 B. Moore, 159. See Tricky v. Larne, 6 M. & W. 278, where the
difficulty in estimating the deficiency was occasioned by the form of pleading.

(t) Duncan v. Scott, 1 Camp. 100.

(m) Heath v. Samson, 2 B. & Ad. 291. Rees v. Marq, of Ileadford, 2 Camp. 574.
Ledger v. Ewer, Peake, 216.

{v) Grant v. Vaugham, Burr. 1516. Peacock v. Rhodes, Dougl. Gil, 633. Gill v.
Cubitt, 3 B. <fe C. 466. See cases collected, ante, sect. 3.

(w) Robinson v. Reynolds, in error, 2 Q. B. 196. In tliat case, to an action by the
indorsee the acceptors pleaded that they had accepted in consideration of a bill of
lading, which the drawer knew to be forged, and handed to the indorsee with tlie
acceptance, in order that he miglit deposit it with the defendants, which he did, and
obtained their acceptance on the faith of such deposit. The plea was held bad, non
obstante veredicto, on the ground that it admitted the indorsee to have become so foi
value, and showed no knowledge on his part of the forgery. Rothschild v. Corney.

340 MERCANTILE CONTRACTS.

Resistance against Payment.

case, it will be no defence that the bill was originally accommoda*
tion-paper, and known by the holder so to be. {x) And as every
indorsement prima facie im^Dorts consideration, the holder will be

9 B. <fe C. 388. Down v. Hailing, 4 B. & C. 330. Morris v. Lee, Bayley, 500 ; B. K P.
274. De Bras v. Forbes, 1 Esp. 117. Bosauquet v. Dudman, 1 Stark. 1. See Ex parte
Bloxam, 8 Ves. 63. Heywood v. "VVatson, 4 Bingli. 496. If, on recovering the amount,
he would hold part only of the money beneficially, and the rest as a trustee, he never-
theless may recover all. Reid v. Furnival, 1 C. & M. 538. Cole v. Creswell, 11 Ad. &
E. 661. Brown v. Rivers, Dougl. 455, S. P. It has been doubted by some persons of
eminence whether the extinguishment of a pre-existent debt, due from the indorser
to the indorsee, would be a valuable consideration within the meaning of this rule.
I think it would be so held ; the exj^ressions of Parke, B., in Percival v. Prampton, 2
C. M. & R. 180, 3 Dowl. 750, are strongly to that effect. See also the judgment in
Foster v. Pearson, 5 Tyrwh. 264, 1 C. M. & R. 849. The case principally relied on in
support of the contrary opinion is De la Chaumette v. Bank of England, 9 B. & C
208.*

{x) Pearce v. Champneys, 3 Dowl. 277. Smith v. Knox, 3 Esp. 46. Charles v
Marsden, 1 Taunt. 224. But quaere if the latter case be well decided.

* "Whether the payment of an antecedent debt by the transfer of a bill of ex
change before its maturity, is to be deemed a valuable consideration in the sense of
the law merchant, so as to protect the holder from any equities existing between thf
previous parties, does not seem to have been positively adjudicated in England, al
though the weight of judicial opinion probably inclines to the affirmative of the
proposition. It has been suggested that a distinction may exist between the cases,
where an instrranent is taken payable on demand, and where it is payable at a fu
ture day. In the latter case, the remedy on the previous debt being suspended till
the maturity of the bill, the holder is to be regarded in the same light as if he had
made fresh advances upon the bill. Byles on Bills, 28, 96. In the decisions of the
American courts, a great diversity of judicial opinion has prevailed. It may pro-
bably be laid down both upon principle and the great weight of authority, that where
the consideration for the transfer of a negotiable instrument not due, is \h.Q 'payment
of an antecedent debt, or the suspension of a previous right of action, or the relin-
quishment of any security, the holder will be regarded as a purchaser for value.
Baker v. Walker, 14 Mees. <& Wels. 465. Swift v. Tyson, 16 Peters, 1. Williams v.
Little, 11 K H. 66. Blanchard v. Stevens, 3 Cush. 162. Bank of St. Albans v. Gil-
liland, 23 Wend. 31. Brush v. Williams, 11 Conn. 388. Appleton v. Donaldson, 3
Barr, 381. Carlisle v. Wishart, 11 Ohio, 172. Bostwick v. Dodge, 1 Doug. 414.
Reddick v. Jones, 6 Ired. 107. Bank of Mobile et als. v. Hall, 6 Alab. 639. Bond v. Cen-
tral Bank of Georgia, 2 Kelly, 93. Woomley v. Lowry, 1 Hump. 470. Bramhall v.
Becket, 21 Maine, S05. In Swift v. Tyson, Judge Story held, delivering the opinion
of the majority of the Court, that this rule equally obtained, where the negotiable
instrument was given merely as a collateral security for a precedent debt. Mr. Justice
Catron dissented from this portion of the opinion, on the groimd that the point was

BILLS OF EXCHANGE AND PROMISSORY NOTES. 34 1

Resistance against Payment.

presumed to have acquired his interest bona fide and for value,
until some suspicion has been cast upon his title, which it becomes
incumbent on him to clear up ; {y) therefore, where to a declaration
bj the indorsee against the acceptor, the defendant pleaded that he
had no consideration for his acceptance from the drawer, the plea
was held bad, for it was to be presumed, in the absence of any aver-
ment to the contrary, that the plaintiff was an indorsee for value,
and the plea contained no mention of him, and consequently threw

(y) Mills V. Barber, 1 M. & "W. 425. Jacob v Lungate, 1 M. & Rob. 445. Ed-
munds V. Groves, 2 M. & W. 642.

not essential to the decision of the case, (as it clearly was not,) that it had not been
argued, and that he was not prepared to adjudicate it. Chancellor Kent, in his Com-
mentaries, has sanctioned the doctrine of Judge Story. 3 Kent's Comm. 80 6th ed.
The same views were taken by Judge McLean in Riley v. Van Amringe, 2 McLean,
589, and by the courts of Ohio, Massachusetts, Connecticut, Maine, and Georgia,
in the cases cited. The courts of New York, New Hampshire, Pennsylvania, Ten-
nessee, and Kentucky have adhered to the old doctrine as laid down in Coddington
V. Bay, 20 Johns. Rep. 637, viz. : that a person receiving a negotiable instrument before
its maturity, as security merely for an antecedent debt, and who relinquishes no pre-
vious security, nor parts with any new value upon its credit, is not to be regarded
as a bona fide holder for a valuable consideration. In Stalker v. McDonald, 6 Hill's
Rep. 93, Chancellor Walworth elaborately examines the question, and reviews the
English authorities, for the purpose of showing that they do not sustain the conclu-
sions of the Supreme Court in Swift v. Tyson. See Kirkpatrickw. Muirhead, 16 Pa. St.
Rep. 123. Petrie y. Clark, 11 Serj. <fe Rawl. 37*7. Mickles v. Colvin, 4 Barb. Sup. C.
R. 304, and also 1 Hump. 468. Where a note is transferred as collateral security by
a holder, who is a bona fide purchaser, the last holder will not be affected by any
equities which could not have been established against the previous holder. Pren-
tice & Weisiger v. Zane, 2 Gratt. 262.

The general question is very fully and ably discussed in the American Leading
Cases, vol. 1, p. 844, vol. 2, p. 120. It seems to the annotator, that the principle ia
clearly established, that an existing indebtedness will not^er se support a new pro-
mise to the creditor or any third person, Hopkins v. Logan, 5 Mees. & W. 242 • and
that therefore the mere transfer by a debtor to his creditor, of a negotiable security
will not, by reason of the antecedent liabibty, communicate to the transfer any effect
which it would not otherwise have possessed. It would follow, that the holder of
a negotiable instrument which has been received simply as a collateral securit-^- and
who is under no legal obligation to forego the pursuit of any existing remedy, and
who in no other form has parted with any value, acquires no greater rights than if
the instrument had been the subject of gift, and is therefore exposed to the equitiee
of prior parties attaching on it.

342 MERCANTILE CONTRACTS.

Resistance against Payment.

no suspicion upon his title. (2) So also where the defendants
pleaded that the acceptance on which they were sued was fraudu-
lently made by their partner, the plea was bad, for the Court said
they must presume that the plaintiff, an indorsee, was a holder
bona fide and for value, (a) And it is not sufficient, for the purpose
of casting such a suspicion on the holder's title as would call on
him to prove that he had given value, to show that the bill was an
accommodation bill, or even that it was accepted to raise money
for the acceptor, which money was appropriated by the payee to
his own use : for that purpose, it should be shown that the bill was
obtained from the acceptor, or some person between him and the
holder, fraudulently, (i) and that by evidence, not by a mere admis
sion on the record by not traversing, (c)

It will be recollected, that when a bill or note is taken by the
holder overdue, he takes it subject to whatever equities it may have
been incumbered with while in the hands of the person from whom
he received it, provided that those equities are such as naturally
arise out of the bill transaction, and are not merely collateral, {d)

Illegality. — Another ground of defence is the illegality of the con-
sideration : (e) as that the bill or note was given for signing a bank-
rupt's certificate ; (/) for joining in the acceptance of a composition ; (g)

(2) French v. Archer, 3 Dowl. 130. Lowe v. Chiffney, 1 Bingh. K C. 267. See
Heath v. Sansom, 2 B. A Ad. 29L Patersou )■. Ilardacre, 4 Taunt. 114. Wyatt v.
Campbell, 1 M. & M. 80. Mann v. Lent, 10 B. & C. 87Y. Whitaker v. Edmunds, 1
Ad. & E. 638. Percival v. Frampton, 2 C. M. & R. 180 ; 3 Dowl. 749.

(a) Bramah v. P.oberts, 1 Bingh. K C. 469.

{b) Jacob V. Hun^'ate, 1 M. & Rob. 445, et notas.

{d) Brown v. Davis, 3 T. R. 80. Barrough v. "White, 6 D. <t R. 379 ; 4 B. <fe C,
325. Vide tamen Goodall v. Ray, 4 Dowl. 76.

(e) Knight v. Hunt, 5 Bingh. 432. Britten v. Hughes, 5 Bingh. 460. Blogg v.
Pinker, 1 R. & M. 125. Haywood v. Chambers, 5 B. & A. 753. Bryant v Christie,
1 Stark. 329. Leicester v. Rose, 4 East, 372. See Young v. Timmins, 1 Tyrwh
237.

(/) Stat. 6 Geo. 4, c. 16, s. 125 ; 5 & 6 Vict. cap. 122.

{g) Vide cases as above, note (e), and Hawley v. Beverly, 6 M. & G. 221. Bel-
cher V. Samboiirne, 6 Q. B. 414. But a security for the early paj-ment of his compo-
sition to a creditor who has accepted one is not illegal. Feise v. Randal, 6 T. R. 146
And see on the subject of further securities given by a debtor to one of his creditors in
respect of a debt, for which a composition Aas been accepted jointly with other credi

BILLS OF EXCHANGE AND PROMISSORY NOTES. 343

Resistance against Payment.

for prostitution ; {h) to secure the present payment of a sum
certain for the future expenses of a bastard child ; {i) for stock-
jobbing differences ; (j) for dropping a criminal prosecution ; (Z,-)
for ransom or money lent to enable the proprietor to obtain
the ransom of a British vessel, or goods, except in certain cases ; {I)
for recommendation to an oflEice in the King's household ; {m)
in pursuance of a smuggling, usurious, or stock-jobbing con-
tract ; (n) for money lost by gaming (except in a royal palace, in
which the king is actually residing, the freeiiold and inheritance
of which is in the Crown, and which is not in lease) ; or betting on
the sides of persons so gaming ; money knowingly lent for sucb
gaming or betting, or lent at the time and place of such play, to
any person then gaming or betting, or who shall, during the play,

tors, Tuck V. Tooke, 9 B. & C. 437. In Brix v. Braliam, 1 Bingh. 281, an indorse-
ment bona fide given in pajment of a debt antecedent to the bankruptcy, by a bank-
rupt to his creditor, between bankruptcy and certificate, was held good. Hut contra
of an acceptance where the creditor was petitioning creditor and assignee. Rose v.
Main, 1 Bingh. N. C. So? ; and see 6 Geo. 4, c. 16, s. 8. Davis v. Holding, 1 M. & W.
159. Davis v. Holding, 11 Ad. & E. 710. A curtailment of the usual term of im-
prisonment by the Court in favor of a defendant, who has agreed to pay a sum of
money to the prosecutor, is not an illegal consideration. Beeley v. "Wingfield, 11 East,
46. Kirk V. Strickwood, 4 B. & Ad. 421. Nor, where there have been both civil and
criminal proceedings, a compromise of the latter. Harding v. Cooper, 1 Stark, 467.
Nor the liquidation of excise penalties with the consent of tlie commissions. Pilk-
ington V. Green, 2 B. <fe P. 51. Sugars v. Brinkwerth, 4 Camp. 46.

(fi) Walker v. Parkins, Burr. 1568. Past seduction is not an illegal consideration.
Annandale v. Harris, 2 P. "Wms. 232. Cray v. Rooke, Forrest, 153. But for past co-
habitation has been said to be a good consideration. Turners. Vaughan, 2 Wils. 339,
per Bathurst, J. But it certainly is not a sufficient consideration to support an agree-
ment. Beaumont v. Reeves, 15 L. J. Q. B. 141, and quare -whether it would support
a bill or note. .

(i) Cole V. Gower, 6 East, 110.

{j) Armory v. Merry weather, 2 B <fe C. 578. See Day v. Stuart, 6 Bingh.
109.

(Ar) Collins v. Blantern, 2 Wils. 347. Keir v. Leeman, 6 Q. B. 308 ; and see Fivaz
V. Nicholls, 2 C. B. 501.

(Z) 45 Geo. 3, c. 72. See Webb v. Brooke, 3 Taiint. 6.

(m) Harrington v. Duchatel, Bro. Cha. C. 114.

(n) See Day v. Stuart, 6 Bingh. 109. Guichard v. Roberts, Bl. 445. Banks v. Col-
well, cited 3 T. R. 81 ; 12 Anne, stat. 2, c. 16 ; stat. 7 Geo, 2, c. 8. Faikney v. Rey-
nous. Burr. 2069. Petrie v. Hannay, 3 T. R. 418. Steers v. Lashley, 6 T. R. 6L
Brown v. Turner, 7 T. R. 630. See Turner v. Vaughan, 2 Wills. 339.

344 MERCANTILE CONTRACTS.

Resistance against Payment.

play or bet ; (o) for the amount of a wager, upon any branch ol
the public revenue; Q^) or for spirituous liquors sold in small quan-
tities contrary to stat. 24 Geo. 2, c. 40, s. 12. {q)

Where the consideration of a bill or note is partly illegal, the
security, being entire, becomes void in toto;{r) though the plaintiff
may still, without using the bill or note, recover that part of the
consideration which is good, (s) If a bill or note given for an
> illegal consideration be renewed, the new instrument is also void, {t)
though not if it be so reformed as to exclude that part of the con-
sideration which was objectionable, (w)

Formerly, in some cases of illegality, the bill was void even in
the hands of a holder lona fide and for value : these were, where
the consideration was, either wholly or in part, for signing a bank-
rupt's certificate ; {v) for money lost or applied in any of the modes
of gaming above enumerated ; {w) for ransom, or money lent in
order to ransom, {x) Money lent on a usurious contract was at
first within this class ; {y) but by stat. 58 Geo. 3, c. 93, no bill or
note given on a usurious condition is to be void in the hands

(o) Anne, c. 14. See Lloyd v. Gurdon, 2 Swants. 180. Jeffreys v. Walter, 1
Wils. 220. Lynall v. Longbotliam, 2 Wils. 36. Shillito v. Theed, V Bingh. 405. A
bill in equity lies to discover the consideration of a gaming security. Andrews v.
Berry, 3 Anst. 634. This was the state of the law up to August 8th, 1845, when the
statute 8 & 9 Viet. c. 109, was passed, which repealed the statutes o 16 Chas. 2, c. 7,
9 Anne, c. 14, and declared that all contracts or agreements, whether hy parol or in
Rrriting, shall be null and void, and that no suit shall be brought in any court of law
cr equity for recovering any sum of money or valuable thing alleged to be won upon
any wager, or which shall have been deposited in the hands of any person to abide
the event on which any wager shall have been made; with the exception of contri-
butions or subscriptions to any plate, prize, or sum of money, to be awarded to the
winner of any lawful game, sport, pastime, or exercise.

{p) Shirley v. Sankey, 2 B. <fe P. 130. Atherfoldi'. Beard, 2 T. R. 610.

{q) Scott V. Gillmore, 3 Taunt. 226.

(r) Scott V. Gillmore, 3 Taunt. 226. See Cruikshank v. Rose, 1 M. & Rob. 100.

(s) Robinson v. Bland, Burr. 1077. Wood t;. Benson, 2 Tyrwh. 93 ; 2 C. <fe J. 94

{t) Chapman v. Black, 2 B. & A. 588. Wynne v. Cullandar, 1 Russ. 2C3. Preston
V. Jackson, 2 Star. 237.

(m) See Preston v. Jackson, ubi sup. Hubner v. Richardson, Bayley, 5th ed. 516i

(y) Stat. 6 Geo. 4, c. 16, s. 125.

{w) Bowyer v. Bampton, Str. 1155.

(a;) 45 Geo. 3, c. 72, ss. 16, 17. See AYebb v. Brooke, 3 Taunt. 6.

(y) 12 Anne, stat. 2, c. 16. Lowe v. Walter, Dougl. 708, 736.

BILLS OF EXCHANGE AND PROMISSORY NOTES. 345

Resistance against Payment.

of an indorsee for valuable consideration, if lie were ignorant of
the usury at the time he took the bill or gave the consideration.
And Stat. 5 & 6 Wm, 4, c. 41, has enacted that no bill or note
shall be absolutely void on any of the above grounds, but that any
bill or note that would have been void on any of the above grounds
shall be deemed to have been drawn, accepted, made, or taken for
an illegal consideration ; (z) and that if any person shall make,
draw, give, or execute any such note or bill, and shall j)ay to any
indorsee or holder thereof the money thereby secured, or any part
thereof, such money shall be deemed to have been paid for and on
account of the person to whom such bill or note was originally
given upon such illegal consideration as aforesaid, and shall be a
debt due from such last-mentioned person to the person who shall
so have paid the money. By stat. 3 & 4 Wm, 4, c. 98, s. 7, bills
or notes payable within three months after date, or not having
more than three months to run, were exempted from the usury
laws altogether, (a) Stat. 1 Vict. c. 80, has extended this exemp-
tion to twelve months ; the latter act was limited to expire in 1840.
As few bills have a longer period than twelve months to run, the
effect of this enactment was practically almost to abolish the laws
of usury as far as negotiable instruments are concerned. And it
has since been continued, and its operation considerably extended,
by 2 & 3 Yict. c, 37, and 8 & 9 Vict. c. 102, the former of which
statutes will be found in the Chapter on " Contracts of Debt."

(z) See Hitchcock v. "Way, 6 Ad. k E. 943.

(a) See King v. Bradden, 10 Ad. & E. 675. It has been held that where a bill \z
exempted from the operation of the usury laws by this act, a warrant of attorney
given to secure the payment thereof is so also. Connop v. Meaks, 2 Ad. & E. 326.
But, where money was advanced on deposit of a lease and a warrant of attorney, and-
a promissory note was given as a collateral security, it was held, that the case was
not within the statute. Berrington v. Collis, 5 Bingh. N. C. 332. A note payable
within the limited time, but, by agreement, to be renewed, was held good by the
Exchequer in opposition lo a decision of the Court of Bankruptcy. Holt v. Miers, 5
M. &, "W. 168. The deposit of a lease or other real security given for the amount of
bills then due and interest, on the original discounting of which more than 5 per
cent, interest had been agreed for, is not invalid, if nothing is said at the time as to
its being a security for further interest at the same rate, and it will not be invali
dated by the subsequent receipt of bills for the debt at a greater rate of interest.
Bell V. Coleman, 2 C. B. 268.

346 MERCANTILE CONTRACTS.

Resistance against Payment.

When the illegality Avas such as to make the instrument void
in the hands even of a hona fide indorsee, yet if it were not origi-
nally made on that consideration, such illegality in the consideration
' on which it was afterwards transferred, was no defence against such
indorsee, if he was not, in making out his title, bound to state or
prove the signature of the person who made the illegal transfer ; {b)
the authorities were contradictory upon the question whether such
illegality was a defence, when he was bound to state the signature
and prove it. (c)

As to gaming securities, it was never any objection to an action
against the indorser that the bill or note was made on a gaming
consideration ; for though the statute directed that they should be
void to all intents and purposes, that meant only so far as was
necessary to further the purposes of the act ; and, to exempt an in-
dorser from suit might have assisted a winner, whom the statute
meant to punish, not to protect, (c?)

Again, the defendant may admit his former liability, but con-
tend that it has been determined by the suspension^ extinguishment^
I satisfaction, or discharge, of the holder's right of action. We will
say a few words concerning each of these grounds of defence.

1st. Of Suspension. — If the holder renew the bill or note, that is,
if he take another bill or note from the defendant in continuation
of it, his right of action on the first bill or note is susj^ended (e) till
he has satisfied the defendant that he has no claim against him on
the second, ex. gr. by delivering it up. There may, after a hill o^t
note has been made, be a binding verbal promise for valuable consid-

(6) Daniel v. Cartony, 1 Esp. 2H.

{d) Edwards v. Dick, 4 B. <fe A. 212.

(e) Kendrick v. Lomax, 2 Tyrwli. 445 ; 2 C. & J. 405. See Ex parte Barclay, T
Ves. 597. Bishop v. Rowe, 3 M. & S. 362. Dillon v. Rimmer, 1 Bingh. 100. See
Lumley v. Musgrave, and Luraley v. Hudson, 4 Bing. N. C. 9. Maillard v. Duke of
Argyll, 6 M. & Gr. 40. But the receipt of bills accepted by a third person, which
are not negotiable by the party giving them, will not suspend the remedy. Jamea
V. Williams, 13 M. & W. 828. As to the requisites of a plea setting up this defence,
see Price v. Price, 16 L. J. Ex. 98.

BILLS OF EXCHANGE AND PROMISSORY NOTES. 347

Resistance against Payment.

eration to renew it when due ; (/) but the defendant who relies on
such a promise must show that he took proper steps to obtain the
renewal ; [g) and such a promise must not be contemporaneous with
the drawing of the bill or note, or, if it be made to an indorser,
with his indorsement ; if it be, the law will not enforce it ; for, to
do so, would be to incorporate with a written contract an incongru-
ous parol condition, which is contrary to first principles, {h)

2dlj. Extinguishment. — The defendant's liability on the bill or
note will be extinguished, if the plaintiff obtain from him a security
of a higher description, ex. gr. a judgment upon it against him. {%)
But such a judgment is not per se a satisfaction of the debt, nor will
it, until satisfaction, prevent the holder from proceeding on the bill
or note against any other distinct party to it. (y)*

(/) Hoare v. Graham, 3 Camp. 58, per Lord Ellenborougli. See Gibbon v. Scott,
2 Stark. 286.

{g) Gibbon v. Scott, uhi S2ipra.

(h) Hoare v. Graham, 3 Camp. 57. Free v. Hawkins, 8 Taimt. 92. Woodbridge
V. Spooner, 3 B. & A. 233. Ridout v. Bristow, 1 Tyrwh. 84; 1 C. & J. 231. Rawson
V. Walker, 1 Stark. 361. Moseley v. Hanford, 10 B. & C. 729. Campbell v. Hodson,
Gow, 74. On the same principle, proof cannot be received of a consideration dif-
ferent from that named in the instrument, Ridout v. Bristow ; or of a parol agree-
ment contemporaneous with the making of the note, to the effect that it shall not be
paid if a certain event happen. Foster v. Jolly, 1 C. M. tfe R. 703, See Richards v.
Thomas, ibid. 774. Adams v. Wordley, 1 M. & W. 374.

(^■) Siddall v. RawclifFe, 1 C. & M. 487 ; 3 Tyrwh. 441.

{j) Bac. Abr. Extinguishment ; D. Claxton v. Swift, 2 Shower, 441. 494 ; Lutw. 882.
Hayling v. Mulhall, Bl. 1235. See Letchmere v. Fletcher, 1 C. & M. 623; 3 Tyrwh.
450, iibi, per Bayley, B., " Suppose that on a joint and sei)eral note, you sue. one and
get judgment, you may sue the other." S. C. p. 634. " It may be, where you sue
and recover judgment against one debtor only, upon a contract which is joint and
not several, that your right to sue on the joint contract is destroyed ; that, if so,
would be so merely on the ground of the difficulty to which the form of action would
give rise, because the defendant would have a I'ightto plead, that he made no con-
tract, except with the other defendant, against whom the judgment was entered, and
he could not be joined." And, in conformity with these observations, it has recently
Deen held that a judgment against one contractor on a simply joint contract, not
withstanding stat. 3 & 4 "Wm. 4, c. 42, s. 10, affords a good answer to an action against
any other of the joint contractors. King v. Hoare, 13 M. <k W. 494.

* Whether the taking of a higher security for the same debt extinguishes the lower
security, is treated in many of the cases as a question of intention. Gardiner v.

348 ]Aercantile contracts.

Resistance against Payment.

3dly. Satisfaction. — Satisfaction is by actual payment of the bill
or note, or what is equivalent to payment, and this releases all the
13arties ; for though the holder's claim may be extinguished as to

Hurt, 2 Richard, 601. Tlie Betsy and Rlioda, Da vies Rep. 112. Steamboat Char-
lotte V. Hammond, 9 Miss. 59. Butler v. Miller, 5 Deni. 159. It is impossible to re-
concile the different eases, but the distinction taken by C. J. Gibson, in Jones v.
Johnson, 3 "Wall. <feSerg. 276, appears to be just. "There is a substantial distinction
which I have not seen particularly noticed, between cases of extinguishment by
merger of the security, and eases of extinguishment by satisfaction of the debt. These
classes, althoii-gh depending upon different principles, have usually been confounded ;
and hence a perceptible want of pi'ccision in the language of those who have written
or spoken of them. In the first of them the original security is extinguished, but the
debt remains ; in the second, the debt as well as the security is extinguislied by the
acceptance of another debt in payment of it. Extinguishment by merger takes place
between debts of different degrees, the lower being lost in the higher; and being by
act of law, it is dependent on no particular intention : extinguishment by satisfaction
takes place indifferently between securities of tlie same degree or of different degrees;
and being by act of the parties, it is the creature of their will. No expression of in-
tention would control the law, which prohibits distinct securities of different degrees
for the same debt ; for no agreement would prevent an obligation from merging in
a judgment on it, or passing in rem judicatmn. Neither would an agreement, how-
ever explicit, prevent a promissory note from merging in a bond, given for the same
debt by the same debtor ; for to allow a debt to be at the same time of different de-
grees, and recoverable by a multiplicity of inconsistent remedies, would increase liti-
gation, unsettle distinctions, and lead to embarrassment in the limitation of actions
and the distribution of assets. But as the existence of a promissory note as a con-
current security for a book debt produces no such consequences, it operates no extin-
guishment by act of law ; and it depends on the consent of parties, tacit or explicit,
whether the new evidence of the debt is accepted in discharge of the old one. The
diflference on the whole consists in this, that in a case of merger there is a change
only of the security ; but in a case of satisfaction by substitution, there is a change
of the debt." The views of Judge Gibson are sustained by the late case of Price et als.
V. Moulton, 10 C. B. 561, where it was decided, that a bond or covenant given to
secure an existing debt, would operate in law, irrespectively of the intention of the
parties, as a merger of the remedy on the simple contract.

It is held in Massachusetts, that when the party bound to the payment of a
simple contract debt, gives his own negotiable note for it, the law presumes such
note to have been accepted in satisfaction and discharge of the pre-existing debt, be-
cause the party receiving it relinquishes no security, but has the same responsibility
for payment that he had before, with more unequivocal evidence of the debt, and a
more simple remedy for recovering it, and with power also by indorsement to trans-
fer the whole interest in it to another. But this is a presumption of fact only, and
may be rebutted by evidence that such was not the intention of the parties. Mel-
ledge V. Boston Iron Company, 5 Cushing, 158, reviewing the cases where a specialty

BILLS OF EXCHANGE AND PROMISSOR'i NOTES. 34*^

Resistance against Payment.

some and not as to others, yet if satisfied as to any, it is satisfied as
to all. (Z:)* But payment of the bill, even at maturity, by a stranger,
who had improperly discounted the bill, and pays in order to obtain
it from the holder, will not discharge the acceptor. (?) The taking
of a man in execution, and discharging him on a letter of license,
is no satisfaction as to antecedent parties ; (m) nor if he be so taken,
and afterwards discharged as an insolvent, will that protect Mm
against any party except that one at whose suit he was taken, {n)
There may be a satisfaction j^iro tanto^ as by part payment, or
the receipt of dividends under a commission of bankruptcy. (0)

Any material alteration {jo) of a bill or note, after it has been. ^

(it) Ex parte ^il^mau, 2 Ves. 115. Windham v. Withers, Str. 515. Gillard v.
Wise, 5 B. & C. 134. As to "wliat may operate as a satisfaction, see Sard v. Rhodes,
1 M. <fe W. 153. Sibree v. Tripp, 15 M. & W. 23.

{I) Deacon v. Stodhart, 2 M. & Gr. 317.

(»i) Hayling v. Mulhall, BI. 1235. M'Donald v. Bovington, 4 T. R. 825. See this
subject discussed, Michael v. Mj'ers, 6 M. & Gr. 702. These two cases seem referable
to the next head, viz., Discharge.

{n) M'Donald v. Bovington, 4 T. R. 825. This case was decided on the peculiar
wording of 32 Geo. 2, c. 28, now repealed by 1 & 2 Vict. c. 110, which would appear
to have a more extensive operation.

(0) Bacon v. Searles, 1 H. BI. 88. Pierson v. Dunlop, Cowp. 571. See Johnson v.
Reunion, 2 Wils. 262.

(p) Sometimes an alteration, which would otherwise be material, is prevented
from being so by the form of pleading, ex. gr., in Sibley v. Fisher, 7 Ad. & E. 444, an
^Iteration in the date was not allowed to be insisted on, issue having been taken on
iie indorsement only. So in Parry v. Nicholson, 13 M. & W. 778, under an issue on
the acceptance, and in Mason v. Bradley, 11 M. & W. 500, the removal of the name
of a joint maker from a note, was held not to be available as an objection under a
traverse of the making. See Heming v. Trenery, 9 Ad. & E. 926.

security is given in place of a simple contract security, the latter will be extinguished
if the remedy given by the former will be co-extensive with that which the creditor
held upon the latter. This is not the case according to the English authorities,
where only one of two makers of a joint and several promissory note has executed
the specialty, inasmuch as the new remedy is confined to one of the original debtors.
Ansell V. Baker, 15 Adol. & Ell. N. S. 20.

* A payment under circumstances which show a want of good faith on the part
of the acceptor will be wholly nugatory. Nor would payment before maturity pro-
tect an acceptor against a holder, who subsequently, and prior to its maturity', ao-
quired the bill bona fide and for a valuable consideration.

350 MERCANTILE CONTRACTS.

Resistance against Payment.

issued, unless satisfactorily accounted for, operates as a satisfaction
thereof; (q) and even though the parties consent to such an altera-
tion, the instrument, though unimpeachable by them, is a new con-
tract, and the old stamp will not suffice, (r) unless such alteration
were made to correct a mistake, and render the bill what it was
originally meant to have been, (s) Alteration in the date, sum, or
time for payment, or the insertion of words authorizing transfer,
expressing the value received to be on a particular account, or an
unwarranted place for payment, {t) or adding a new maker or
drawer, {u) are material. But the insertion of a mere memoran-

(q) Alderson v. Langdale, 3 B. <fe Ad. 660. Master v. Miller, 4 T. R. 320. The
latter of these cases decides, that no action can, after such alteration, be maintained
on the bill; the former, that such an alteration made by the plaintiff operates as a
satisfaction, not only of the bill but of the debt for which it was given. In Alderson
V. Langdale, the debtor was the drawer of the bill ; but in Atkinson v. HaAvden, 2
Ad. & E. 628, where he was the acceptor, and so would have no remedy over on the
bill, the alteration was held to be no satisfaction of the original debt. So where an
agent of both parties altered it before it had been delivered to the plaintiff. Sloman
V. Cox, 5 Tyrwh. 175 ; 1 C. M. & R. 471. An alteration, even by a stranger in a
material point, will vitiate the instilment, as it was the laches of the holder in not
keeping it safely. See the principle laid down and explained, Cam. Scacc. Davidson
V. Cooper, 13 M. & W. 343.

(r) Bowman v. Kichol, 5 T. R. 537.

(s) Byrom v. Thompson, 11 A. <fe E. 31. Kershaw v. Cox, 3 Esp. 246. Jacob v.
Hart, 6 M. & S. 142. Clark v. Blackstock, Holt, 474.

{t) Walton V. Hastings, 4 Camp. 223 ; 1 Stark. 215. Outhwaite v. Luntley, 4 Camp.
179. Bowman v. Nichol, 5 T. R. 537. Cardwell v. Martin, 9 East, 190. Kershaw
V. Cox, 3 Esp. 246. Knill v. Williams, 10 East, 431. Clark v. Blackstock, Holt, 474.
Alderson v. Langdale, 3 B. & Ad. 660. Tidraarsh v. Grover, 1 M. & S. 735. Cowie
V. Halsall, 4 B. <& A. 197. R. v. Treble, 2 Taunt. 328. Mackintosh v. Haydon, 1 R.
& M. 362. See Taylor v. Moselj-, 6 C. <fe P. 278. In these two cases, and also in Cal-
vert V. Baker, 4 M. & W. 416, the alteration consisted in the insertion of a place of
payment in the acceptance, without adding tlie words prescribed by stat. 1 <fe 2 Geo.
4, c. 78, after which statute both cases occurred : both actions were against acceptors.
See Heming v. Trenery, 9 Ad. & E. 926, and Crotty v. Hodges, 4 M. & Gr. 561. In
neither case, however, was the addition made with the acceptor's consent. In Wal-
ter V. Cubley, 4 Tyrwh. 87, 2 C. <fe M. 151, a similar alteration was made with the ac-
ceptor's concurrence, and in an action against him was held to be immaterial. Both
these points are recognized in Desbrowe v. Wetherby, 1 M. & Rob. 438.

{u) Sed vide Cattlin v. Simpson, 3 Nev. & Per. 348. See tliis question discussed,
Gould V. Coombs, 1 C. B. 543. And it would seem the removal of the name of a
joint maker from a note to which it was originally stipulated he should be a party,
would be a material alteration. Parry v. Nicholson, 13 M. & W. 778.

BILLS OF EXCHANGE AND PROMISSORY NOTES. 351

Resistance against Payment.

dum, giving tlie right place for payment, or the correction of the
drawee's name to make it correspond with his acceptance, are not
so. (v) An alteration perfectly immaterial to the rights of the
parties will have no effect, as, for instance, the addition of a new
name after the note had already become due, and was dishon-
ored, {w) Nor will the alteration affect its validity, if made with
the consent of parties before it has issued, (x) A bill or note is
issued when it is in the hands of some person entitled to
make a claim upon it, not before ; (?/) and this is, prima facie,
so soon as it is passed a',vay by the drawer or maker, or (when
the alteration is in the acceptance) accepted by the drawee, (z)
If a bill or note exhibit the appearance of alteration, it is for
the holder to account for it. (a) But the mere cancellation, bi/
mistahe, of an acceptance or indorsement, is no satisfaction of
the bill, or discharge to the parties whose signatures are so can-
celled, (h)

4thly. Discharge. — ^Discharge is when the right of action is not
merely suspended, but destroyed, without any satisfaction, as by a

(w) Trap V. Spearman, 3 Esp. 57. Marsen v. Petit, 1 Camp. 82, n. Farquhar v.
Southey, 1 M. & M. U.

(m) Catton V. Simpson, 8 Ad. & E. 136.

(x) Downes v. Richardson, Bayley, 5th ed. 166. Johnson v. D. of Marlborough, 2
Stark. 313.

(y) Downes v. Richardson. Cardwell v. Martin, 9 East, 190. Kennerley v. Nash,
1 Stark. 452.

(z) Walton V. Hastings, 4 Camp. 223. Outhwaite v. Limtley, 4 Camp. 1*79. Knill
V. Williams, 10 East, 431. Tidmarsh v. Grover, 1 M. & S. 735. Co-n-ie v. Halsall, 4
B. & A. 197. Johnson v. D. of Marlborough, 2 Stai-k. 313. Langton v. Lazarus, 5 M.
& W. 629.

(a) Knight v. Clements, 8 Ad. & E. 215. The jury, if there be no other evidence,
cannot be permitted to look at the bill and conjecture from its appearance how the
alteration came about. Ibid. Clifford v. Lady H^-de Parker, 2 M. & Gr. 909. But
circumstantial evidence of consent is sufficient, as when interest has been paid on it
as altered, and the person who prepared the note states that he meant to have drawn
it in that form. Cariss v. Tattersall, 2 M. & Gr. 890. See Henman v. Dickenson, 5
Bingh. 183. Bishop v. Chambre, 1 M. & M. 16. Johnson v. D. of Marlborough, and
Downes v. Richardson, ante.

(b) Roper v. Birkbeck, 15 East, 17. Wilkinson v. Johnson, 3 B. <fe 0.428. NoveDi
«•• Rossi. 2 B. & Ad. 757. Warwick v. Rogers, 5 M. & Gr. 340

352 IVIERCANTILE CONTRACTS.

Resistance against Payment.

release, or the provision of a Bankrupt or Insolvent Act.* Thus
an acceptance may be ivaived, either expressly or impliedly^ so as
to discharge the acceptor ; — expressly, by an agreement to that ef-
fect, (c) or by a message to the acceptor of an accommodation bill,
that the business was settled with the drawer ; {d) impliedly, by the
holder's taking to himself the known consideration of the accept-
ance, as when the holder agreed with the acceptor, that he, the
holder, would receive, instead of him, that benefit which had in-
duced him to accept, (e) But neither length of time, silence, nor a

(c) "Walter v. Pulteney, Dougl. 236, 237, 248, 249. See Farquhar v. Southey, 1 M.
<fe M. 14. See Ellis v. Galindo, cited Dougl. 250, n. Stevens v. Thacker, Peake, 187
Bayley, 5tli ed. 208. Steele v. Harmer, 15 M. o. W. 831.

{d) Black V. Peele, Dougl. 236, 237, 248, 249 ; Bayley, uU supra.

(e) Mason v. Hunt, Dougl. 284, 297 ; Bayley, uU supra.

* "Where a promissory note has been barred by a discharge in bankruptcy, the
authorities are divided as to the effect of a new promise in reviving its negotiability.
It has been held in Maine, Vermont, and New York, that the new promise does not
renovate the old contract, but that the defendant's liability rests entirely upon the
new contract, and the suit, therefore, miist be in his name with whom such con-
tract is made. Depuy v. Swart, 3 Wend. 135. Moore v. Viele, 4 "Wend. 420. "Wal-
bridge v. Harroon, 18 "Verm. 448. White v. Gushing, 17 Shep. 267. On the othei
hand, it has been decided in Massachusetts, that the new promise does not create a
new and substantive cause of action which may be the basis of a judgment, but that
it merely operates as a waiver, by the promisor, of a defence which the statute has
furnished him against an action on the old promise ; and therefore that a new pro-
mise made to the payee of a negotiable note, is a promise to pay him or his order,
or bearer, according to its tenor. "Way v. Sperry, 6 Cush. Rep. 238.

It is the settled doctrine of the Supreme Court of the United States, that no
state can enact a bankrupt or insolvent law, which would discharge the obligation
of any contracts made previous to its passage, or indeed after its passage, between any
other persons than its own citizens. Ogden v. Saimders, 12 "Wheat. Rep. 213. Boyle
V. Zacharie, 6 Peters' Rep. 348. Springer v. Fostei-, 2 Story's C. C. R. 383. The gen-
eral principles upon which effect is given to a discharge under a foreign bankrupt
law, are very fully and ably discussed by the Supreme Court of Massachusetts, in
May et als. v. Breed et ah., 7 Cush. Rep. 15. It was held in that case, in strict accord-
ance (as it seems to the editor) with principle and the weight of authority, that a
discharge under the English bankrupt law, of a merchant residing in England, from
a debt to a citizen of Massachusetts, contracted and payable in England, was a bar
to a subsequent action upon the debt in Massachusetts, whether the creditor proved
his debt under the English commission of bankruptcy or not.

BILLS OF EXCHANGE AND PROMISSORY NOTES. 353

Resistance against Payment.

declaration by the holder, that he should look to the drawer foi
payment, are sufficient to discharge the acceptor. (/)

It is a maxim of law that if one principal in a contract, by any
act of his 0W71, discharge, or even give time, though but for a mo
ment, to the other princijDal, he discharges all his sureties. In the
contract by bill or note, the maker or acceptor is considered the
principal, and the indorsers as his sureties ; and consequently if the
holder either discharge or suspend his remedy against the former,
the latter, unless they have previously consented to it, {g) or after-
wards promised to pay with knowledge of it, are all immediately
discharged ; (A) but a mere forbearance to sue the acceptor, without
any valid agreement not to do so, will not discharge them ; (i) nor
will the taking a collateral security from the acceptor, (j) as a new
bill not in renewal of the old one.^ It seems that a subsequent in-
dorser stands in the light of a surety for the prior ones, (Ic) and :
therefore, that if the holder discharge or give time to a irrior in-

(/) Parker v. Leigh, 2 Stark. 228. Farquhar v. Southey, 1 M. & M. U. Ding
wall V. Dunster, Dougl. 235, 247. Adams v. Gregg, 2 Stark. 531. Anderson v. Cleave-
land, 13 East, 430 ; Bayley, ubi supra.

(g) Clark v. Devlin, 3 B. & P. 3G3. See Withall v. Masterman, 2 Camp. 179.
Stevens v. Lynch, 12 East, 38. Isaac v. Daniel, 15 L. J. Q. B. 148. Consenting to a
judge's order for a stay of proceedings against the acceptor, or prior party, on pay
ment of debt and costs, is not giving him time so as to discharge the drawer, or sub
sequent party. Kennard v. Knott, 4 M. & Gr. 474. Michael v. Myers, 6 M. & Gr.
702.

(h) Ex parte Smith, Co. B. L. 5th ed. 168, 169. English v. Darley, 2 B. & P. 61.
Gould V. Robson, 8 East, 676. "VVithall v. Masterman, 2 Camp. 179. De la Torre v.
Barclay, 1 Stark. 7. Rees v. Berrington, 2 Ves. jun. 540.

(i) Walwyn v. St. Quentin, 1 B. & P. 652. Philpott v. Briant, 4 Bingh. 717.
Orme v. Young, Holt, N. P. C. 84. Combe v. "Wolfe, 8 Bingh. 156. Clarke v. Wilson,
8 M. & W. 208.

{j) Bring v. Clarkson, 1 B. & C. 14. See Price v. Edmunds, 10 B. & C. 578. Bed-
ford V. Deakin, 2 Stark. 178.

(Jc) Bed vide the observations of Tindal, C. J., in Basset v. Dodgin, 9 Bingh. G53.

* The agreement must be clear, that farther time is to be given for payment to
the acceptor or other party ; it must be without the concurrence of the other par-
ties; and it must also be founded upon a valid and valuable consideration. If either
lact fail to be made out in proof, there is an end of the defence. The law is laid
down in the following cases : McLemore v. Powell, 12 Wheat. 554. The Bank of
the United States v. Hatch, 6 Peters, 250.
23

354 MERCANTILE CONTRACTS.

Resistance against Payment.

dorser, he will discharge those subsequent to him, {I) But the dis-
charge of a subsequent indorser does not discharge o. prior one. (w)
In Hall V. Cole^ {n) the drawer of a bill payable to his own order,
indorsed to A., who indorsed it back to the drawer, and the drawer
then indorsed it to B ; in an action by B, against A., it was held,
that the acceptance by B. of a cognovit from the drawer discharged
A., though it did not appear whether the cognovit was given in the
character of drawer or in that of indorser.

It was once thought that the acceptor of an accommodation bill,
or maker of an accommodation note, stood in the light of a surety,
and that the holder would discharge him by discharging or giving
time to the person for whose accommodation he accepted, (o) But
this has often been questioned ; and would perhaps not now be so
decided, (p) especially where the holder, when he took the bill or
note, did not know of the accommodation. However, in such a
case it has been held that giving time to an accommodation ac-
ceptor will not discharge the drawer for whose accommodation he
accepted. (5') Where a promissory note is deposited by one party
by way of security for the debt of another, the liability of the maker
stands on the same footing precisely as that of an ordinary guar-
antor, (r)

One of two joint makers of a promissory note, though he may
have signed for the other's accommodation, cannot, it seems, con-
sistently with the principles above laid down, be so looked upon

{I) Hall V. Cole, 4 Ad. &, E. 577 ; 6 Nev. & Mann. 124. Ellison v. Dezell, Selw.
J^. P. 8th ed. 364, per Lord Eldon, in English v. Darley, 2 B. <k P. 62. See Bank of
Ireland v. Beresford, 6 Dow. 234. Smith v. Knox, 3 Esp. 46, per Lord Eldon.

(m) Hayling v. Mulhall, 2 BI. 1235. Claridge v. Dal ton, 4 M. & S. 226. See
Haight V. Jackson, 3 M. & W. 598.

(n) 4 Ad. & E. 577.

(o) Laxton V. Peat, 2 Camp. 185. See Bank of Ireland v. Beresford, 6 Dow. 233.
Ex parte Glendinning, 1 Buck. 517.

{'p) Raggett V. Axmore, 4 Taunt.' 730. Fentum v. Pocock, 5 Taunt. 192. Kerri-
80n V. Cooke, 3 Camp. 362. Mallet v. Thomson, 5 Esp. 178. Yallop v. Ebers, 1 B.
& Ad. 698. Carstairs v. RoUeston, 5 Taunt. 551. Farquhar v. Southey, 1 M. <fe M.
14. Nichols V. Norris, 3 B. tfe Ad. 41. Harrison v. Courtland, 3 B. «& Ad. 36.

{q) Collett V. Haigh, 3 Camp. 281.

(r) Stone v. Compton, 5 Bingh. N. C. 142. See also Brown v. Wilkinson, 13 Mi
& W. 14.

BILLS OF EXCHANGE AND PROMISSORY NOTES. 8o5

Remedy upon Lost Bills and Notes.

as his surety, tliat giving time to the other may discharge him. (s)
Supposing even that he could, he would not be discharged by tlie
holder's taking from the other maker a cognovit, defeasible upon the
payment of instalments, the first of which would fall due before the
maker giving it could have been sued to execution, {t) But one
joint maker of a note is discharged by the holder's discharging the
other, and that without any reference to the law of principal and
surety, but on the ground that the creditor's discharge of one joint
debtor is a discharge of all. (w)

Section IX. — Remedy upon Lost Bills and Notes.

We have now seen how payment of a bill or note is, generally
speaking, to be enforced or resisted. There are, however, some
peculiar considerations respecting the mode of proceeding, when
the instrument has been lost or destroyed. The person who pays a
bill or note has, generally speaking, a right to the instrument itself
as his voucher; and there is a case in which the acceptor, having
paid the money to the holder, was held entitled to recover it back
on the refusal of the latter to give up the bill, (v)

If a bill or note has been lost before it is due, and was, when lost,
in such a state that a transferee of the finder bona fide and for a
valuable consideration might recover on it, the loser cannot succeed
in an action upon it at law ; {id) nor can any action be maintained
for the consideration on which it was given, {x) since the bill
operated as payment. So if a bill or note transferable by delivery
be cut in halves, and half be lost, it has been held that the holder

(s) Price v. Edmunds, 10 B. & C. 578. See Garrett v. Jull, Selw. K P. 386, Stli ed.
Hall V. "Wilcox, 1 M. & Rcb. 58. Perfect v. Musgrave, G Price, 111.

{t) Price V. Edmunds, 10 B. & C. 578.

(m) Nicholson v. Revell, 4 Ad. & E. 675, and so will the obtaining judgment against
one joint maker discharge the other. King v. Iloare, 13 M. <fe W. 494.

{v) Alexander v. Strong, 9 M. & "W. 733.

(w) Pierson v. Hutchinson, 2 Camp. '211, et notas. Davis v. Dodd, 4 Tannt. 602.
Poole V. Smith, Holt, 145. Pooley v. Millard, 1 Tyrwh. 331 ; 1 C. & J. 414. Hansard
V. Robinson, 7 B. <fe C. 90.

(x) Champion v. Terry, 3 B. & B. 295. Anderson v. Langdale, 3 B. cfe Ad. 660.

356 MERCANTILE CONTRACTS

Remedy upon Lost Bills and Notes.

cannot sue at law npon the other half, (y)* In Bayley on Bills of
Exchange, 5th edition, p. 274, it is remarked that Lord Ellen-
borough assigned as a reason for the decision in this case, that
" the other half might have immediately got into the hands of a
bona fide holder for value, and he would have as good a right of
suit on that as the plaintiffs on the other half, which afterwards
reached them ; but the maker of a promissory note cannot be liable
in respect of it to two parties at the same time ;" and the learned

(y) Mayor v. Johnson, 3 Camp. 324.

* According to Baron Parke, in tlie recent case of Clay v. Crowe, 18 E. L. & E. R.
514, the cases of Hansard v. Robinson, and Ramur v. Crowe, 1 Exch. 167, as modifi-ed
by Wain v. Bailey, have settled the English law, on the subject of lost bills, to be
this: If a negotiable bill or note, that is, a bill payable in its original state to bearer
or order, be lost at the time a party to it is called on to pay, the loss constitutes a
good defence; otherwise, if it be not m its original state a negotiable bill or note, as
where it is payable to the payee only. In the last case, the loss of the bill or note
is no answer to an action by the payee. The American decisions on the respective
limits of the common law and the equitable jurisdictions in the case of lost instru-
ments, were mostly rendered before the case of Hansard v. Robinson. They generally
establish the doctrine that where an instrument is lost upon which, either from its
original character, or want of negotiability at the time of the loss, the debtor could
set up any equitable defence against a subsequent bo7ia fide holder, claiming title
throuo-h the finder, the jurisdiction maj^ be properly exercised at law ; but in all
other cases the only remedy is in Chancery. See Opinion of Gaston, J., in Allen &
Wycofif V. State Bank, 1 Dev. & Batt, 1. McNair v. Gilbert, 3 Wend. 344. Kirby v.
Sisson, 2 Wend. 345. Chewning v. Singleton, 2 Hillch. 371. Thayer v. King, 15
Ohio, 242. Smith et al. v. Walker, 1 Sm. & M. C. R. 432. Aborn v. Bozworth, 1 Rh.
Isl. R. 401. It may admit of much doubt whether the broad principle stated by Lord
Tenterden, that in every case governed by the law merchant the instrument must be
produced before a party to it can be called upon to pay, would not more certainly
secure the ends of justice by throwing the great mass of cases into the Court of
Chancer}", where only a complete indemnity against any hazard of future loss can
be furnished. Where a bank-note is divided for transmission by mail, and one half
is lost, any subsequent taker receives it under such siispicious circumstances as to be
bound by the equities of the original parties. In the language of one of the Judges,
the half bank-note would no more be negotiable than the vignette, if torn off. But
according to the weight of American authority, the remedy of the rightful holder
of the remaining half, the original owner of the note, is in the Court of Chancery.
See Bank of Ya. v. Ward, 6 Munf. 166. Farmers' Bank v. Reynolds, 4 Rand. 186.
Ballet V. Bank of Pennsylvania, 2 Wash. C. C. R. 1*72. Patton v. State Bank, 2 Nott
& McChord, 464. Hinsdale v. Bank of Orange, 6 Wend. Sl8. Bank of U. S. v. Sill,
5 Conn. 106.

BILLS OF EXCHANGE AKD PROMISSORY NOTES. 357

Remedy upon Lost Bills and Notes.

author adds, " But qucere whether a man who takes half a note does
not take it at his periL" There seems good reason for the doubt
in this qucere ; and the case oi Mayor v. Johnson may be considered
open to review. However that may be, if the loser can show that
the bill was accidentally destroyed, or had no indorsements, except
special ones, or was unindorsed and not transferable save by in-
dorsement, he may (unless the previous authorities be considered as
overruled by Hansard v. Robinson., 7 B, & C. 90, which is, however,
prior to Wain v. Bailey., 10 Ad. & E. 616) maintain an action either
on it or for the original consideration, if an}'-, since no one else can in
such case acquire a title to it (2) (unless, indeed, the defendant would
have had a remedy over on the bill or note upon paying it) ; (a) and
in such a case, if judgment go by default, the Court will grant a rule
to compute principal and interest, (i) Sir John Campbell, in his
note to Pierson v. Hutchinson, suggests that "another distinction
may perhaps be taken with respect to a bill indorsed in blank, and
lost after it has become due : as the finder could not in that case
give an effectual right of action even to an indorsee for value and
without notice, it may be thought that the acceptor cannot insist
on an indemnity." 'However, he afterwards observes, that, " as a
plaintiff would make out a prima facie case by proving the accept-
ance and indorsement, it might be hard to expose the acceptors,
without any indemnity, to the hazard of showing by legal evidence
that the bill had been lost after it became due." And accordingly
the distinction in question has been virtually denied to exist, (c)
In Bayley on Bills, 5th edition, pp. 372, 373, a distinction is drawn
between this case and that in which judgment is allowed to go by
default. The words are, '' If a bill be lost after action brouoht
thereon, and defendant suffer judgment by default, the Court will,
on a copy verified by affidavit, refer it to the Master, to see what is

{z) Vide "VVain v. Bailey, 10 Ad. & E. 616. Rolt v. Watson, 4 Bingli. 273. Mayor
V. Johnson, Pierson v. Hutchinson, et notcwi. Long v. Bailv, ibid. Vide Hansard v,
Robinson, 7 B. & C. 90.

(a) Chapman v. Terry, 3 B. & B. 285.

(6) Fliglit V. Brown, 2 Tyrwh. 312. Brown v. Messiter, 3 M. <fe S. 281. Allen v.
Miller, 1 Dowl. 320.

358 MERCANTILE CONTRACTS.

Remedy upon Lost Bills and Notes.

due thereon, {d) especially where the bill has been shown to de-
fendant, and he has admitted his signature, and jDromised payment.
But if the bill be lost after action brought, and defendant resist the
action, and put the plaintiff to prove the bill, the loss will be no
excuse for the non-production of the bill, and plaintiff will not be
entitled to recover." However, neither in Brown v. Ilessiter, nor in
Allen V. Miller, does it appear on what terms the rule to refer was
granted, or in what character the j^laintifi" sued ; possibly he was
either payee or special indorsee ; for in a subsequent case, (e) the Court
granted the rule, subject to the terms of producing to the Master a
copy of the bill verified by afiidavit, and it being also sworn that
there was no indorsement on the bill itself.

In cases when the loser of a bill is precluded by the above rules
from obtaining relief in a court of law, he may enforce payment in
equity on giving a proper indemnity. (/) And stat. 9 & 10 Wm.
3, c. 17, s. 3, enacts, "that if any inland bill be lost or miscarry,
icithin the time limited for its payment, the drawer shall, on security
given upon request to indemnify him if such bill be found again,
give another bill of the same tenor with the first." It has been
remarked that the equity of this statute seems to comprehend in-
dorsements also, and that stat. 3 & 4 Anne, c. 9, which gives the
same remedies on notes as were then in use on inland bills, would
seem to extend it to notes, {g)

{d) Brovra v. Messiter, 3 M. S. 281. Accord. Allen v. Miller, 1 DowL 420. See
Clarke v. Quince, 3 Dowl. 26.

(e) Flight V. Browne, 2 Tyrwh. 312. But now the plaintiff would not be bound
to produce the bill before the Master, as the defendant could not avail himself of any
part payment upon a judgment by default. He is not bound to produce it without
notice upon the trial, unless there be a plea which renders it incumbent on him to
prove it : see Lawrence v. Clai-ke, 14 M. & "W. 250. Godered v. Armour, 3 Q. B. 292.
Read v. Gamble, 10 Ad. & E. 597, note ; and it may be questioned whether the defence
of the bill being lost, or the plaintiff not being the holder of it, must not be specially
pleaded ; otherwise, the plaintiff might prove it in the same manner as any other
instrument which he cannot produce.

(/) 1 Ves. 341 ; 5 Ves. 338 ; 6 Ves. 812 ; and see the judgment of C, B. Richards
ji Davies v. Dodd, "Wils. Exch. Rep. 111.

ig) Bayley, 5th ed. 131.

CHAPTER II.

COIfTEACTS WITH CAEEIEES.

A COMMON carrier is one wlio undertakes for hire to transport the
goods of such as choose to employ him from place to ]3lace. (a) Of
this description are the proprietors of stage-wagons, and coaches
which carry goods for hire; lightermen, hoymen, barge-owners,
ferrymen, (b) canal-boatmen, owners and masters of ships, engaged
generally in the transportation of goods for hire ; and other per-
sons, owning similar instruments of public conveyance, (c)* A

(a) 1 Sal. 249.

(6) A ferrjTnan, however, seem not to be in the situation of a common carrier, at
all events, where he takes the passenger along with the goods. Payne v. Parti'idge,
1 Show. 257 ; 1 Salk. 12. Walker v. Jackson, 10 M. & W. 161.

(c) Ld. Kaym. 909, 918; 5 T. R. 389. Forward v. Pittard, 1 T. R. 27. Bac. Ab.
Carriers, A. Morse v. Slue, 2 Lev. 69. Rich v. Kneeland, Cro. Jac. 330. Maving v.
Todd, 1 Stark. 72. Brook v. Pickwick, 4 Bingh. 218. Lovett v. Hobbs, 2 Show. 128.
Upshare v. Aidee, Com. 25. As to the declaration against a common carrier, see
Butterton v. Wood, 3 B. <fe B. 54. Pozzi v. Shipton, 8 Ad. & E. 963.

* S. P. Camden and Amboy Co. v. Burke, 13 Wend. 611. Boyce v. Anderson, 2
Peters' S. C. P.. 150. Stokes v. Saltonstall, 13 Peters, 181. In the case of Boyce v.
Anderson, it was held by the Supreme Court, that a common carrier was only liable
for ordinary neglect in ti-ansporting slaves. S. P. Clark v. McDonald, 4 McChord's
Rep. 223. Williams v. Taylor, 4 Porter, 238.

Other cases may be mentioned to illustrate the proposition, that a modification
of the liability attached to common carriers occurs, as the nature of the thing to be
carried, and the extent of the custody and control over it of the carrier, varies.
Thus, as the proprietor of a stage-coach cannot place a passenger under the same
custody and control as a bale of goods, such proprietor will not be responsible for
any injury to the traveller, which has been occasioned by the want of ordinary care
on the part of the latter. So, if the owner of goods accompanies them in their tran-
sit, to take care of them, and is himself guilty of negligence, he is not entitled to re-
cover. Brind v. Dale, 8 Carr. & P. 207. The same principles apply to all cases,
where the entire custody and control over the propei'ty does not belong to the car-
rier. White V. Winnissimet Company, 7 Cush. 155. Willoughby v. Horridg^ 16 E.
L. & E. R. 437.

300 MERCANTILE CONTRACTS.

Contracts with Carriers.

stage-coacli owner, who carries passengers only^ is not, properly
speaking, a common carrier ; he does not warrant the safety of the
passengers, at all events ; but only that, so far as human care and
foresight will go, he will provide for their safe conveyance, (c?)
Nor is a town carman not plying between certain termini, but un-
dertaking casual jobs, (e) A railway company are common car-
riers with regard to the goods which they convey, unless the act
constituting them limit their liability. (/)*

The duty of a common carrier is to .:arry the goods of all per-
sons offering (for there need not be an actual tender)^ {g) to pay his

{d) Aston V. Heaven, 2 Esp. 533. Christie v. Griggs, 2 Camp. 79. Dudley v.
Smith, 1 Camp. 167. White v. Boulton, Peake, 81. Robinson v. Dunmore, 2 B. & P.
416. See Sharp v. Gray, 9 Bingh. 457. The conveyance of passengers by stage-
coaches is regulated by 2 «fe 3 Wm. 4, c. 120, and 5 & 6 Vict. c. 79.

(e) Brind v. Dale, 2 M. & Rob. 80.

(/) Palmer v. Grand Junction Railway Co., 4 M. & W. 749.

(g) Pickford v. G. J. Railway Co., 8 M. & W. 372.

* The owners of steamboats engaged in carrying trade on the navigable rivers,
are considered as common carriers. Allen v. Sewall, 2 Wend. 327. Gilmore et al. v.
Carman, 1 Sm. & M. 279. So a railroad company, whose business it is to transport
for compensation the baggage as well as persons of travellers. Camdon &, Amboy
Co. V. Burke, 13 AVend. 611, Nor in the case of a common carrier of passengers and
their baggage, is the i-ule affected by the circumstance that no distinct price is paid
for the transportation of tlie baggage. Orange Co. Bank v. Brown, 9 Wend. 85.
HoUister v. Nowlen, 19 Wend. 234. Cole v. Goodwin, ib. 251. Jones v. Voorhees,
10 Ohio, 145. But the owners of a steamboat, who undertake to tow a freight-boat
for hire, are not quoad hoc common carriers, and bound to more than ordinary dili-
gence and care in the management of their boat. Caton v. Rumney, 13 Wend. 887.

But although the fact that a steamboat is employed in the business of transporting
passengers or merchandise, renders the owners responsible, pro Itac vice, as common
carriers, it does not follow that they are common carriers of specie or bank bills.
This depends upon the nature and extent of the business in which they hold them-
selves out to the public as being engaged. Citizens' Bank v. Nantucket Steamboat
Co., 2 Story C. C. R. 16. Allen v. Sewall, 6 Wend. 335. S. P. Orange County Bank
V. Brown, 9 Wend. 85. Hawkins, 6 Hill, 586. It has, however, been held by the
more recent authorities, that money taken bona fide for personal use and travelling
exjienses, may properly be regarded as forming part of a traveller's baggage. The
rule is otherwise as to money intended for trade, or business, or transported for any
3ther purpose than that stated, Jordan v. Fall River R. Company, 5 Cush. Rep. 69.
Weed V. Saratoga & Schenectady Railroad Co., 19 Wend. 534.

CONTRACTS WITH CARRIERS. 361

Contracts "with Carriers.

hire, {h) (unless, indeed, his carriage be full, or the goods are of
such a kind as to be liable to extraordinary danger, or such as he
is unaccustomed, or unable, to convey,) {i) to take proper care of
them in their passage, and to make a safe and right delivery of
them* at the time agreed upon, or in the absence of any stipula-
tion in that respect, within a reasonable time. (/) At common law
he stands in the situation of an insurer of the property intrusted to
him, and is answerable for every loss or damage happening to it
while in his custody, no matter by what cause occasioned, unless it
were by the act of God, such as a tempest, or that of the king's
enemies.f In other cases, even his entire faultlessness does not ex-
cuse him : thus, he is liable for damage done by accidental fire, or
by a robbery, {k) His liability continues up to the time of the
goods being delivered ; Q) unless, as sometimes happens, they con-
tinue in his possession after the determination of their journey, un-

(/*) Jackson v. Rogers, 2 Sliower, 329 ; Bac. Abr. Carriers, B. Riley v. Horne, 5
Bingli. 217. Parker v. Great Western Railway Company, 7 M. & Gr. 253.

(i) Jackson v. Rogers, 2 Show. 32Y ; 1 Saund. 312, n. Lane v. Cotton, 1 Ld. Raym.
646. Edwards v. Sherratt, 1 East, 604. Lovett v. Hobbs, 2 Show. 128. Batson v.
Dunovan, 4 B. & A. 21.

(j) Streeter v. Horlock, 1 Bingh. 34. Ilyde v. Trent & Mersey Nav. Co., 5 T. R.
389. Ellis V. Turner, 8 T. R. 631. Davis v. Garrett, 6 Bingh. 716. Raphael v. Pick-
ford, 5 M. & Gr. 551.

{k) Dale v. Hall, 1 Wils. 281 ; 1 Inst. 89. Covinton v. Willan, Gow. 115.

(l) Gatliffe v. Boui-ne, 4 Bingh. K C. 314. Bourne v. GatliflFe, 4 Scott E". C. 1 ; 3
M. & Gr. 643 ; 7 M. & Gr. 850 ; 11 CI. & Fin. 45.

* The obligation of common carriers, engaged in transporting passengers for
hire, to give them a passage under all circumstances, was discussed in the case of
Jencks v. Coleman, 2 Sumn. Rep. 221, and the Court determined that it was not un-
limited, but subject to reasonable restrictions. They may rightfully exclude all per-
sons of bad character or habits — all whose objects may in any way interfere with
their interest, or disturb the patronage of their line, and all who refuse to obey the
reasonable regulations which have been made for the government of the boat; and
they may inquire into the habits or motives of passengers who offer theraselv«s for
transportation.

■j- What constitutes an act of God, so as to' excuse the carrier, has been exten-
sively considered in the following American cases. McArthur v. Sears, 21 Wend.
190. Friend v. Woods, 6 Gratt. 1 89. The Reeside, 2 Sumn. 571. Gilmore v. Carman,
I Sm. & M. R. 279. Ewart v. Street, 2 Bailey S. C. R. 157. Fish v. Cluapman, 9
Georg. 349.

362 MERCANTILE CONTRACTS.

Contracts with Carriers.

der a contract, express or implied, by which the nature of his employ-
ment, and, of course, of his liabilities with regard to them, may be
altered ; for instance, if, on their arrival, he agree to hold them as
a warehouseman or wharfinger, (m)

This being the rule of the common law, and regulating all cases
in which there was no special contract between carriers and their
employers, the former soon found it their interest to make agree-
ments requiring a premium in proportion to the risk incurred,
where the goods intrusted to them were beyond a certain value.
This was generally done by inserting in the newspapers, distribu-
ting in handbills, and sticking up in their offices, a notice, that they
would not be accountable for any property beyond a certain value,
unless insured and paid for at the time of delivery. If this notice
were brought home to the knowledge of the employer, (for that
was indispensably necessary in order to render it available,) (w) his
consent to its terms was implied, (o) and the carrier became entitled
to the protection for which he stipulated ; (7:*) but these notices, as
generally worded and interpreted by courts of law, only exoner-
ated the carrier from liability for loss or damage occurring to unin-
sured goods, loithout fault on his part ; for if he were guilty of wilful
misconduct, or gross negligence, he was chargeable with the damage
occasioned thereby, and his notice was not permitted to limit his
responsibility, (g') unless the employer had been guilty of a wilful
concealment of the nature and value of the property, (?•) for that

(m) Cairns v. Robins, 8 M. & W. 258.

(71) Kerr v. "Willan, 6 M. & S. 150. Palmer v. Grand Junction Railway Co., 4 M.
& W. '739. "Walker v. Jackson, 10 M. & W. 161.

(o) Mayhew v. Eames, 3 B. <& C. 601. Rowley v. Home, 3 Bingh. 2.

(p) Nicliolson V. Willan, 5 East, 507.

{q) Smith v. Home, 2 B. Moore, 18. DufF v. Budd, 3 B. & B. 17*7 ; 8 Taunt. 144.
Holt, K P. C. 643. Birkett v. Willan, 2 B. & A. &56 Garnett v. Willan, 5 B. & A,
53. Sleat i;. Flagg, 5 ib. 341. Wright «. Snell, 5 ib. 350. See the judgment of Bay-
ley, B., in Owen v. Burnett, 4 Tyrwh. 143 ; 2 C. & M. 353 ; and see Bodenham v. Ben-
nett, 4 Price, 31.

(r) Batson v. Donovan, 4 B. & A. 21. Miles v. Cattle, 6 Bingh. 743. See tho
comments of Lord Mansfield, C. J., on Kenrig v. Eggleston, Aleyn, 93, and the case
cited by Hale, 1 Vent. 238, contained in Gibbons v. Paynton, 4 Burr. 2301, B. N.
P. 71.

CONTRACTS WITH CARRIERS. 8G3

Contracts -with Carriers.

would have discharged the carrier, even though he had given no
notice.*

The construction of these notices, and the necessity of proving

* The doctrine that a common carrier may abridge his common law liability by
a special agreement, is daily acted upon in the English courts. In the United States,
such contracts have elicited a great variety of judicial opinion. The most eminent
commentators have expressed opposite views as to the present state and tendency of
the decisions of this country. Parsons on Contracts, vol. 1, p. 703, n. d. Wallace's
note to Smith's Leading Cases, vol. 1, p. 274. It has been argued on the one hand,
that no stronger reasons exist for forbidding such resti'ictions in the case of the car-
rier than in the case of any other insurer of goods ; that the owner, by entering into
the contract, virtually agrees, that in respect to the particular transaction, the car-
rier is not to be regai'ded as in the exercise of his public employment, but as a pri-
vate person, who incurs no responsibility beyond that of an ordinary bailee for hire,
and is answerable only for misconduct or negligence; and that the right thus to re-
strict the obligation is admitted in a large class of cases founded upon bills of lading
and charter-parties. Opinion of Nelson, J., in The New Jersey Steam Navigation Com-
pany V, Merchants' Bank, 6 How. 344. It has been urged on the other side, that the
law imposes upon the common carrier definite and absolute duties, which thereby
disable him from entering into any contract in derogation of those duties; that he
should no more be permitted to vary his obligations as a public servant by contract,
than a sheriff or other officer appointed hj law; that the legal grounds and nature
of his responsibility do not, like that of an insurer, depend upon contract, and that
any agreement to remit a part of his liability-, for the single purpose of inducing a
carrier to exercise his business of transporting goods, is without consideration, un-
der unlawful compulsion, and opposed to general convenience and public policy.
Wallace's note, cited above. Co wen's opinion, Cole v. Goodwin, 19 Wend. 281. Nis-
bet's opinion. Fish v. Chapman, 2 Geor. 349.

The question has not been authoritatively determined in the Supreme Court of
the United States. The views expressed by Nelson, J., in 6 How. 344, were not neces-
sary to sustain the actual points decided by the Court. The suit in that case was
brought upon a special agreement, and under which the carrier assumed a more
onerous responsibility than the law imposed. The question, therefore, of the general
rights to limit his common law liability, was not necessarily involved. In New
York, the recent cases overruling Gould v. Hill, 2 Hill's R. 623, have affirmed the
right of the carrier to make such a special contract. Parsons v. Monteath, 13 Barb.
353. Dorr v. N. J. Steam Navigation Company, 4 Sand. 136. Stoddard v. Long
Island Railroad Co., 6 Sand. ISO. The courts of Maine, Pennsylvania, South Caro-
lina, and Missouri, have recognized the same docti'ine. Parker v. Flagg, 26 Maine,
181. Bingham v. Rogers, 6 Watts & S. 495. Admstr. of Patton v. M'Grath, 1 Dud-
ley Rep. 159. Swindler v. Hilliard, 2 Rich. 286. Laing v. Colder, 8 Barr, 479, and
16 Pa. St. R. 67. The doctrine of Gould v. Hill has received judicial approbation
In Jones v. Voorhees, 10 Ohio, 145. Fish v. Chapman, 2 Geor. 349.

The American courts, which have recognized the validity of these special con

364 MERCANTILE CONTRACTS.

Contracts with Oarriers.

that they had arrived at the employer's knowledge, giving rise to
much litigation, the Legislature has enacted positive regulations on
the subject. Those which concern carriers by water we will enu-
merate under the head Contracts of A ffreiglitment ; that concerning
Carriers hy Land, is stat. 11 Geo. 4. and 1 Wm. 4, cap. 68, which
enacts, that no common carrier hj land, for hire, shall be liable for
the loss or injury to any gold or silver coin, gold or silver in a
manufactured or unmanufactured state, precious stones, jewelry,
watches, clocks, timepieces, trinkets, {s) bills, bank-notes, orders,
notes, or securities for payment of money, stamps, maps, writings,
title-deeds, paintings, engravings, pictures, gold or silver plate, or
plated articles, glass, (i) china, silks manufactured or unmanufac-
tured, wrought up or not wrought up with other materials, (w)

(s) A gold chain used for an eye-glass held not a trinket. Davey v. Mason, Car.
& M. 45.

{t) See Owen v. Burnett, 4 Tyrwh. 133 ; 2 C. & M. 853.

(m) Silk dresses made up for wear do not come withirr these words. Davey v
Mason, Car. &, M. 45.

tracts, have not so interpreted them as to protect the carrier from the consequences
of his own negligence. See cases before cited in 6 How. 344; 2 Rich. 286; 4 Sand,
136; Reno v. Hogan, 12 B. Mon. 63. The cases are collated in the Editor's notes to
Austin V. Manchester & Railway Co., 11 E. L. & E. R. 514, and Carr v. Lancashire &, Z.
R. Co., 14 E. L. & E. R. 344, in which case the English courts extended the exemption
of the carrier beyond any American precedent.

The student will find in the annotation to the last case a collection of the Ame-
rican authorities upon the question, whether a general notice by a carrier, of an
intention to assume a limited responsibility, brought to the knowledge of the bailor,
without proof of his assent, will have the same effect as a special contract. The
great weight of judicial opinion seems to be in favor of a distinction between the
cases, and against holding such notices to be equivalent to special contracts. In the
recent case of Camden & Amboy R. R. Co. v. Baldauf, 16 Pa. St. Rep. 67, it was held
that although a general notice, clear and explicit in its terms, and brought home to
the knowledge of the person with whom the cari'ier deals, might operate as a special
contract, this effect would not be attributed x^o a general notice, as a passenger-ticket
in the English language, so as to raise a presumption of such contract against a Ger-
man passenger ignorant of the English language.

The rigorous rule of the common law did not extend to the time of delivering
goods. The carrier might excuse delay in delivery by showing the exercise of rea-
sonable diligence. Parsons v. Hard}', 14 Wend. 215. Bo^de v. McLaughlin, 4 Harr.
& G. 291.

CONTRACTS WITH CARRIERS. 3G5

Contracts with Carriers.

fars, (v) or lace, contained in any parcel, when the value exceeds
the sum of lOZ. ; unless at the time of delivery at the office, ware
house, or receiving house, (w) the value and nature of the article
shall have been declared, and the increased charges, or an engage-
ment to pay the same, accepted by the person receiving the parcel.
By sect. 2, common carriers, on the delivery of such parcels ex-
ceeding the value of lOZ., and so declared as aforesaid, may demand
an increased rate of charges, which is to be notified by a notice in
legible characters affixed in the office ; (a:) and persons sending
parcels are to be bound by such notice, without further proof of
the same having come to their knowledge. By sect. 3, carriers
shall, if required, give a receipt for the parcel, acknowledging the
same to have been insured, which receipt shall not be liable to any
stamj) duty ; and carriers who do not give such receipt when re-
quired, or affix the proper notice, are not entitled to the benefit of
this act. Carriers cannot, by a notice, limit their liability at com-
mon law to answer for the loss of any articles in respect whereof
they are not entitled to the benefit of this act. (?/) Every office of
such common carrier shall be deemed a receiving house ; any one
proprietor shall be liable to be sued, and no action shall abate for
the want of joining any co-proprietor. (2) Special contracts are not
to be affected by this act. (a) Parties entitled to damages for parcels
lost or damaged, may recover the extra charges for insurance. (5)
This act does not protect any such common carrier from liability
to answer for losses or injury arising from the felonious acts of
any servant in his employ ; nor does it protect any such servant
from liability to answer for the consequences of his own neglect or
misconduct, (c) Common carriers are not concluded as to the value
of any parcel by the value declared, (d) Money may be paid into
court by common carriers in the same mode, ana with the same
effect, as money paid into court in any other action, (e) Notwith-

(v) On the question what falls within this denomination, see Mayhew v. Xelson,
6 C. & P. 58.

{w) See Syms v. Chaplin, 5 Ad. & E. Goi.

(a:) The form of notice almost universally adopted by land carriers since this act
is given in the notes to Owen v. Burnett, 4 Tyrwli. 134, n. a.

(y) Sect. 4. (z) Sect. 5. (a) Sect. 6.

(6) Sect. 1. (c) Sect. 8. {d} Sect. 9. (e) Sect. 10.

366 MERCANTILE CONTRACTS.

Contracts with Carriers.

standing this act, it was considered that the carrier was still liable
for gross negligence^ although he might have affixed in his office
such a notice as the act requires, and although the articles lost by
his misconduct might be of such a description as to require a dec-
laration of value and payment of increased charges, which their
owner had however neglected to make in respect of them. (/) In
determining what should be considered such negligence, the cases
previous to the act were supposed to be still authorities ; {g) for the
protection given to the carrier by the act in respect of the articles
there named was thought to be substituted for the protection
which he formerly derived from his own notice. The Queen's
Bench has, however, lately decided that the carrier is not, under
such circumstances, liable for a loss of the articles named in the
statute occasioned by the gross negligence of his servants not
amounting to a 'inisfeasance. (h)

Generally speaking, when goods are forwarded in pursuance of
an order which binds the person giving it to receive the goods, as
the property in them passes to that person by the delivery to the
carrier, he is the proper plaintiff if they should be lost ; {i) for the
vendor was his agent to employ the carrier. But it is otherwise
when the property in the goods has not yet passed to the vendee,
as where there is no writing sufficient to satisfy the Statute of
Frauds, and the carrier was not of his selection ; (j) or where the
goods are sent merely for approval, (/c) or the consignee is the
agent of the consignor, {I) or the carrier has contracted to be liable
to the consignor in consideration of the latter's becoming responsi-
ble for the price of the carriage. (?n) It frequently happens that
goods are sent to a booking-office keeper for the j)urpose of being

(/) See the judgment of the Court in Owen v. Burnett, 4 Tyrwh. 142; 2 C. tfe M.
353. And see Wyld v. Pickford, 8 M. & W 443, which decides that negligence must
De replied to a plea of the notice.

(g) See also Owen v. Burnett, ubi supra.

(h) Hinton v. Dibbin, 2 Q. B, 646.

{i) Dawes v. Peck, 8 T. R. 330. Dutton v. Solomonson, 3 B. <fe P. 582.

(j) Coats V. Chaplin, 2 Q. B. 483. See also Norman v. Phillips, 14 M. & W. 277

(k) Swain v. Shepherd, 1 M. <fe Rob. 224.

(Z) Sargent v. Morris, 3 B. & A. 211.

{m) Moore v. "Wilson, 1 T. R. 659. Davis v. James, 5 Burr. 2680.

CONTRACTS WITH CARRIERS. 3G7

Contracts -with Carriers.

delivered by him to a carrier. In such case, the booking-office
keeper being the agent of the owner for the purpose only of de-
livering to the carrier, it must, in order to fix him with negligence,
be shown that he omitted so to deliver. It will not be even prima
facie evidence against him, as it would against the carrier, that the
goods never reached their destination, {n)

A question frequently arises in practice, whether carriers who
have received a parcel to be taken to a point beyond that to which
their own means of conveyance extend, are liable as carriers for
loss beyond that point, or are to be considered as agents for the
purpose of carrying to the end of their tract, and employing fresh
agents at its termination to complete the journey. The question
seems to be for the jury, but the inclination of the courts is to look
on them as the carriers throughout, (o)*

With regard to the remuneration to which a carrier is entitled,
it is clear he must carry for a reasonable amount ; and if he insist
on receiving more before conveying the goods, or before parting
with them, an action for money had and received will lie against
him for the excess, {p) What is such reasonable amount appears
to be a question for the jury, {q) But where the goods are of

(n) Gilbert v. Dale, 5 Ad. & E. 543.

(o) Muschamp v. Lancaster & Preston R. R. Co., 8 M. & "W. 421.
{p) Parker v. Great "Western Railway Co., 7 M. &, Gr. 253. See Pickford v. G. J.
R., 8 M. & W. 872; S. C. 10 M. & W. 399. Ashmole v. Wainwright, 2 Q. B. 837.
{q) Ashmole v. Wainwright, 2 Q. B. 837.

* It has been held by the Supreme Court of Pennsylvania, of Ohio, and of
Illinois, tliat the privilege of transhipment, reserved in a bill of lading, is intended
for the benefit and convenience of the carrier, but is not designed to limit his
responsibility, or in &ny manner vary his obligation to deliver the goods safely to
the consignee. Whiteside v. Russell, 8 Watts & Serj. 44. McGregor & Co. v. Kil
gore, 6 Ohio, 358. Dunseth v. Wade et al., 2 Scamm. 288.

The doctrine of Muschamp v. Lancaster & Preston R. R. Co. has been sanctioned
oy the Court of Queen's Bench, in the late case of Watson v. Railway Co. 3 E. L. &
E. R. 497. Scotthorn v. South Staffordshire R. R. Co., 18 E. L. & E. R. 553. It has
been disapproved in Vermont in Farmers & Mechanic's Bank v. Champlain Trans-
portation Co., 23 Verm. 186; and in New York in Van Santford v. St. John, 6 Hill,
158, reversing decision of Supreme Court in 25 Wend. 660.

3G8 MERCANTILE CONTRACre.

Contracts with Carriers.

extraordinary clanger, or carried under peculiar circumstances,
it may possibly be in his option to insist upon a special con-
tract, (r)

(r) See "Wyld v. Piekford, 8 M. & W. 443. If such goods are tendered to a car-
rier, and he give notice to the owner that he will not be responsible for loss, unless
a more than ordinary rate of insurance be paid, which the owner declines to pay,
but leaves the goods to be carried ; it appears that the carrier receives them on the
footing of such notice, his liability becomes limited, and he is only bound to use the
ordinary care of a bailee for reward.

CHAPTER III.

CONTEACTS OF AFFREIGHTMENT.

Sect. 1. Contracts of affreightment hy charter-party.

2. Contract for conveyance in a general ship.

3. Duties of master and owners.

4. Duties of merchant.

5. General average.

6. Salvage.

7. Dissolution of contracts of affreightment.

Contracts of affreiglitment fall under the general clenominaWn
of contracts with carriers, being contracts for the carriage of goods
in vessels, (a) On account, however, of the important place they
occupy in the mercantile law, it has been thought proper to devote
a separate chapter to their consideration. Contracts of this de-
scription are either —

1. Contracts of affreightment by charter-party ; or,

2. Contracts for the conveyance of goods in a general ship.
We will speak separately of the form and peculiar incidents of

each of these two contracts, and then jointly of the obligations
which are equally imposed by both.

Section I. — Affreightment hy Charter-party.

The contract by charter-party is defined to be that "by which
an entire ship, or some principal part thereof, is let to a merchant ^
for the conveyance of goods, on a determined voyage to one or

(a) The carriage of passengers in mercliant vessels is regulated by stats. 6 4 6
Viot. c. lOY, and 10 <& 11 Vict. c. 103.
24

370 MERCANTILE CONTRACTS.

AfFreiglitment by Charter-party.

more places ;" (i)* the instrument by which it is recorded, and
which, though often a deed, is not necessarily so, is generally exe-
cuted by the owner of the ship, when made at the place of his
residence, and sometimes by the master also, (c) If made abroad,
it can of course only be executed by the master, unless there be an
agent of the owners, and, in that case, if a deed, no action of cove-
nant can be maintained on it against the owner, unless the party
executing it had an authority by deed to do so ; (ri) though an
action on the case may, for the breach of such of the general duties
of a ship owner, as are not inconsistent with its terms ; (e) and a
voyage may be made up to a certain period under a charter-party
by deed, and afterwards under a parol agreement, or vice versa. (/)f
The terms of a charter-party cannot of course be varied by parol, {g)
though it may, like other mercantile instruments, be explained by
the usage of trade. {li)X The instrument expresses the freight to

(&) Abbott, part 3, c. 1.

(c) But the chartering of a vessel need not be in -writing, though it usually is so
effected, a verbal agreement acted upon may have the same operation as a charter-
part}'. Lidgett V. Williams, 4 Hare, 456.

{d) Harrison v. Jackson, 7 T. R. 207, and Horsley v. Rush, there cited.

(e) Leslie v. "Wilson, 3 B. & B. 171. And see per Tindal, C. J., in Bushel! v.
Beavan, 1 Bingh. N. C. 121.

(/) White V. Parkin, 12 East, 578.

((/) Gibbon v. Young, 2 B. Moore, 224. Thompson v. Brown, 7 Taunt. 656.

(//) Donaldson v. Forster, Abb. p. 3, c. 1, s. 17. Robertson v. Jackson, 2 C. B. 412.
Thus in Cockburn v. Wright, 6 Bingh. N. C. 228, where the Court held that a voj-age
to London and back, with privilege of sending the ship to Calcutta, did not entitle
the merchant to a voj-age from Bombay to Calcutta, Maule, J, said, "If we could
import into this case knowledge that Calcutta is in the East Indies, and that it is
usual on the outward voj-age to take in a cargo at Bombay to be discharged at Cal-
cutta before the commencement of the voyage homewards, there might be some
ground for the construction of the charter-party for which the plaintiff contends."

* A ship may be let by the owner to the government, or to a person other than
a merchant, and for other purposes than the conveyance of goods, as to be emploj-ed
in warfare, the can-ying of troops or passengers, and such contract would be properly
called a charter-party. Abbott on Shipp. 241.

•{• A charter-party has been more briefly defined to be "a contract by which the
owner lets his vessel to another for freight." Marshall, C. J., Spring v. Gva.y, 6
Pet. 164.

t A ship may be hired by a parol contract, so as to be binding on both parties:

CONTRACTS OF AFFREIGHTMEXT. 371

AfFreightment by Charter-party.

be paid, and generally tlie burthen of the ship, by which latter
specification the parties are not, however, concluded ; for a mer-
chant has been held liable on his covenant to furnish a full cargo,
though he had furnished 260 tons, the specified burthen of the ship,
which, in reality, contained 400. (^) It also comprises covenants
from the owners that the ship shall be tight, stanch, furnished
with all necessaries, that she shall be ready by a certain day to re-
ceive, and shall wait a certain time to ship her cargo, shall sail at
a particular time for her destined port, (j) deliver the goods safely
there, and be properly found in men and stores during the voyage,
to the best of the owner's endeavors. It may of course comprise
any other engagements which the mei\:;hant thinks proper to exact
and the owner to concede.

A clause is usually to be found, exempting the owner from lia-
bility in case of his being prevented from performing his contract
by restraint of princes. These words apply to an actual, not an
expected restraint, {IS) and enure to the benefit of the owner, not of
the merchant, on account of which I have sometimes seen the
clause worded, restraints, d'c, mutually excepted.

The merchant usually covenants to load and unload within a
specified time, or, if he detain the ship for a longer time, which he
sometimes receives liberty to do, to pay a daily sum, which, as well
as the delay itself, is called demurrage.'^ It sometimes ends with

(i) Hunter v. Fry, 2 B. <fe A. 421.

(_/) If no particular time be mentioned, the law implies that she shall sail within
a reasonable time. M'Andrew v. Adams, 1 Bingh. N. C. 29. See also Clipsham v.
Yertue, 5 Q. B. 265.

{k) Atkinson v. Ritchie, 10 East, 530. And if this clause be limited " during the
voyage," a delay arising from such causes at the port of loading is not comprised
within it. Crow v. Falk, 15 L. J. Q. B. 183.

there is no statute of the United States which makes a charter-party, by deed or
writing, essential evidence of the contract. Taggard v. Loring, 16 Mass. 336. Ohe v.
Eagle Ins. Co., 4 Mason, 390.

* Demurrage is an allowance or compensation for the delay or detention of a
vessel. It is often a matter of contract, but not necessarily so. Story, J., in the
Appollon, 9 Wheat. 362. (5 C. R. 621.) See Robertson v. Bethune, 3 John. R. 342.

In the case of an unjustifiable seizure and detention of a vessel and cargo, where
the property has been restored, and the circumstances do not call for aggiavatcd or

372 MERCAIS'TILE CONTRACTS.

Affreightment by Charter-party.

a clause purporting to bind the ship's freight and cargo in a pecu-
niary penal t}^ to the performance of the contract ; but this seems
to be inoperative. {T)

The stipulations must of course be strictly performed on both
sides. With respect to the time allowed for loading and unloading,
it is held, that the merchant must pay demurrage for any delay
beyond the arranged period, even though not attributable to his
fault, but to some unforeseen impediment to her loading or unload-
ing, (m) such as the crowded state of the docks ; for he has ex-
pressly engaged and is bound by the terms of his own j^ositive
contract : {n) so, though he may not have been apprised of the
ship's arrival, (o) or the bill of lading have not come to his hands ;
without which, or an indemnity, the master, as he has a right, re-
fuses to deliver the goods, {p) But where the detention was occa-
sioned, not by any impediment to the ship's loading, but by ice,
which prevented her from sailing after she was loaded, it was held
that demurrage was not payable, since, to render the freighter liable
to it, the delay should have been for the purpose of loading, (q)
And when the owners interrupted the unloading by their wrongful
interference, they were not allow^ed to receive demurrage, though
the unloading, in fact, occupied a greater number of days than
would imder the charter-party have been allowed had the owners

(0 Abbott, pt. 3, c. 1.

(»?i) See Barker v. Hodgson, 3 M. & S. 267. Barret v. Dutton, 4 Camp. 333.
Thompson v. "Wagner, ibid. n. 335.

(w) Abbott, pt. 3, c. 1. See Gibbens v. Buisson, 1 Bingh. N". C. 283. See Pringle
V. MoUett, 6 M. & W. 80. Leer v. Yates, 3 Taunt. SST, explained on this ground by
Baron Parke in Kell v. Anderson, 10 M. & "W. 502. And see also Hills v. Sughrue,
15 M. & W. 253, where the undertaking to load was on the part of the owner.

(o) Harman v. Clarke, 4 Camp. 159.

{p) Jesson V. Solly, 4 Taunt. 52.

Iq) Pringle v. MoUett, 6 M. & W. 80.

vindictive damages, reasonable demurrage for the vessel, and interest on the value
of the cargo, have been, generally allowed in courts of admiralty, as the true measure
of damages. 9 Wheat. 362.

A covenant to pay for demurrage, applies to a detention voluntary on the part
of the hirer of the vessel, and not to a detention by capture. Douglass v. Moody, 9
Mass. 548.

CONTRACTS OF AFFREIGIITilEXT. 373

Affreightment by Charter-party.

abstained from such interference. (?') If a certain demurrage be
agreed on for the time during which the ship may be obliged to
wait for convo}^, or to receive a cargo, it ceases, in the former case,
as soon as the convoy is ready ; (s) and, in the latter, as soon as the
cargo is laden and the clearances obtained, {t) though the ship be
longer detained by tempestuous weather, or set out and be driven
into port again. The days mentioned in the clause of demurrage
are, by the custom of merchants in London, understood to be work-
ing days ; (u) in the absence of custom, running days are taken to be
meant : (v) it is proper to state whether working or running days be
intended.* Where a certain number of lay days are allowed for
unloading, they are to be reckoned from the vessel's arrival, not at
the entrance of the port, but at the usual place of discharge ; to
hold otherwise would be extremely inconvenient in many ports,
ex. gr., that of London, which extends to Yantlet Creek, (tc)

The substitution, by mutual consent, of a new port for that
named in the charter-party, without mention of lay days, will not
have the effect of depriving the merchant of the lay days stipulated
for in the original contract, (x)

(r) Benson v. Blunt, 1 Q. B. 870. And see Taylor v. Clay, 16 L. J. Q..B. 42.

(s) Lannoy v. Werry, 2 Bro. P. C. 60.

(<) Jamieson v. Laurie, 6 Bro. P. C. 4T4. But see Barret v. Dutton, 4 Camp. 333.
Thompson v. Wagner, note ibid. 335. Harman v. Gandolphi, Holt, 35.

(w) Cochrane v. Retburgh, 3 Esp. 121.

(v) Brown v. Johnson, 10 M. & W. 331.

(w) Brereton v. Chapman, T Bingh. 557. Accord. Brown v. Johnson, 10 M. & W.
331, where the words were " for discharging at her destined port," and were held to
mean from her arrival in dock ; not from her arrival at the entrance of tJie port, or at
the place in the dock where she was to unload. And see, to the same effect, Kell v.
Anderson, 10 M. A W. 49S.

(x) Jackson i\ Galloway, 5 Bingh. N. C. 71, which was reversed; but not on this
point. Galloway v. Jackson, 3 M. & Gr. 960.

* And if there be no usage to the contrary, and no express exclusion of them,
Sundaj-s will be computed in the calculation. Abbot, 304. Brown v. Johnson, 10
M. & W. 331.

When the charter-party allows a certain number of lay days for unloading the
cargo, the consignee has the whole period, and is not bound to receive them as soon
as the master of the ship offers to deliver them; and if a loss occurs in the interme-
diate period, after his refusal to receive the goods, the freight is not earned. Lee
Comb. V. Wain. 4 Binn. 299. Robertson v. Bethune, 3 John. R. 342. •

374 MERCANTILE CONTRACTS.

Affreightment by Charter-party.

Where the merchant fails to load within the stipulated time,
the master may, of course, sail home again, and in that case any
cargo which may have been loaded, although not the stipulated one,
will go in reduction of the freight for the benefit of the merchant, (3/)
unless, indeed, a particular sum have been agreed on as the for-
feiture, in case of the merchant's default ; in which case, the owner
would be entitled to receive that sum, and also any thing more the
ship might earn, even though he might thereby get a larger sum
than the freight stipulated for. {z)

On the other hand, where a charter-party provided that a vessel
should proceed to Trieste, and there load a full cargo, the vessel to
sail from England on or hefore the 4:th of February next, it was held,
that the breach of the owner's contract to sail by that day,
discharged the merchant from his obligation to produce a car-
go, (a)

" The very words, to sail on or before a given day, import," said
the Lord Chief Justice, " the same as the words, conditioned tc

sail And, looking at the subject matter of the contract,

without regarding the precise words, we think that construing the
words as a condition precedent will carry into effect the intention
of the parties with more certainty, than holding them to be matter
of contract only, and merely the ground of an action for damages.
Both parties were aware that the whole success of a mercantile ad-
venture does, in ordinary cases, de|)end on the commencement of
the voyage by a given time. The nature of the commodity to be
imported, the state of the foreign and home market at the time
when the contract of charter-party is made, and the various other
calculations which enter into commercial speculations, all combine
to show that dispatch and certainty are of the very first importance
to their success, and certainly nothing will as effectually insure both
dispatch and certainty, as the knowledge that the obligation of the
contract itself shall be made to depend on the actual performance
of the stipulation which relates to them."

(y) Pullers. Staniforth, 11 East, 232; Abbott, Sth ed. 265. Lidgett i;. 'Winiams,
4 Hare, 456. As to his duty in procuring such a cargo, see Hai'ries v. Edmonds, 1
Car. & K 686.

(,:) Boll V. Puller, 2 Taunt. 285 ; Abbott, Sth ed. 265, 266.

(a) GlahoLm v. Hays, 2 M. & Gr. 257.

COXTRACTS OF AFFREIGHTMENT.

Affreightment by Charter-party.

It often becomes important to determine whether, according to
the true construction of a charter-party, the possession of the
ship passes to the merchant, so as to constitute him an owner j-^j-o
hac vice, and cause the general owner to stand to him in tlie re-
lation of a lessor, rather than a carrier.* On this question may
depend the owner's right of liew for the freight, of which descrip-
tion of remedy we shall speak more fully hereafter, (b) or his own
liability to the suit of third parties: (c) it is impossible, however, to
lay down general rules for its solution, which must in each case
be gathered from the terms of the instrument, or its purpose and
object ; as where, in case of a ship let to the commissioners of the
Transport Board, the possession was held to pass to ihe King,
on account of the nature of the service on which she was to be
engaged, (d)

(b) See Abbott, part 3, cap. 1. Campion v. Colvin, 3 Bingh. N". C. lY, and Small
V. Moats, 9 Bingh. 574. Belcher v. Capper, 4 M. & Gv. 502. See also Thompson v.
Small, 1 C. B. 328.

(c) Newberry v. Colvin, 1 Tyrwh. 67 ; 1 C. & J. 192. Dean v. Hogg, 10 Bingh. 345.
/Reeye v. Davis, 1 Ad. & E. 312. Fenton v. City of Dublin Steam Packet Company,
S A.d. & E. 835.

(d) Trinity H. v. Clarkee, 4 M. & S. 288. See Dean v. Hogg, 6 Carr. & P. 54; 10
Bingh. 345. Yates v. Railstone, 3 Taunt. 293. In Fenton v. City of Dublin Steam
Packet Co. the owners were to keep the vessel in order and the charterers to pay all
wages and disbursements, it was held that the owners continued in possession ' the
ship, and liable for mischief done by the negligence of the crew.

* A person may be owner for the voyage, who, by a contract with the general
owner, hires the ship for the voyage, and has the exclusive possession, command,
and navigation of the ship. Vallejo v. Wheeler, Cowp. 143. But where the general
owner retains the possession, command, or navigation of the ship, and contracts to
carry a cargo or freight for the voyage, the charter-party is considered as a mere
affreightment sounding in covenant, and the freighter is not clothed with the
chai-aeter or legal responsibility of ownership. Hooe v. Grovermah, 1 Craneh,
214.

la the first case, the general freighter is responsible for the conduct of the master
and mariners during the voyage. In the latter case, the responsibility rests on the
general owner. Marcardier v. Chesapeake Ins. Co., 8 Craneh, 39. (3 C. R. 20.) Clarkson
V. Edes, 4 Co wen, 470. Palmer v. Gracie, 4 Wash. C. C. R. 110. Certain Logs of
Mahogany, 2 Sumii. 589.

376 MERCANTILE CONTRACTC.

Contract for Conveyance in a General Ship.

Section II. — Contract for Conveyance in a General Ship.

When the master and owners of a ship engage with separate
merciiants to convey their goods to the place of her destination, the
contract is said to be for conveyance in a general shq^. It is usual
to advertise such ships in the newspapers, or in cards and handbills ;
and care should be taken to insert nothing in these advertisements
which it is not the ship-owner's intentipn to make strictly good ;
since it is not clear that some of ' *ic Terms of such advertisement
may not be looked upon as incorporated into the contract, (e) But
the instrument to which reference is generally had for the terms of
such a contract is the Bill of Lading : this the master must sign and
deliver to the holder of the receipt given by him for the goods when
shipped, on having that receipt returned to him. Several parts
({. e. copies) of the bill of lading are commonly made out, of which
the merchant sends one or two to the person for whom the goods
are destined, and retains one for himself. The master must also
take care to have a part made out for his own use.

There is some doubt whether a Bill of Lading, properly so called,
be not confined to marine adventures, and whether an instrument
so worded given by a boat-master in a canal navigation, would
operate in any way except as a receipt or memorandum. (/)

The following is the form of a Bill of Lading : —

J. W. \ " Shipped in good order by A. B., merchant, in and

.No. 1. [upon the good ship called the ■ , whereof C. D. is master,

0. 20. y now riding at anchor in the river Thames, and bound for
Barcelona, in Spain, 20 bales, containing 100 pieces of
broadcloth, marked and numbered as per margin, and are
to be delivered in the like good order and condition, at
Barcelona aforesaid ; (the act of God, the King's enemies,
fire, and all and every other dangers and accidents of the
seas, rivers, and navigation, of whatever nature and kind

CONTRACTS OF AITREIGHTSIENT, 377

Contract for Conveyance in a General Ship.

soever excepted,) unto E. F., mercliant there, or bis assigns,

he or they paying freight for the said goods ■ ■ per piece

freight, Avith primage and average accustomed. In Witneso
whereof, the master or j)urscr of the said ship hath af-
firmed to three bills of lading of this tenor and date ; one
of which bills being accomplished, the other two to stand
void.
Dated at London the dav of ."

In the above form, a consignee of the goods, viz. E. F., is men-
tioned, to whom, or to his assigns, they are to be delivered. But
the bill is sometimes made out for delivery to the consignor, or his
assigns, and sometimes "to order or assigns," which

import an engagement to deliver to the person whom the consignor
shall nominate, and his assigns. Other clauses may be, and some
times are, introduced into the bill of lading, according to the nature
of the contract between the parties to it ; to provide, for instance,
for the payment of demurrage by the consignee, the effect of which
will be to raise an implied undertaking on his part to pay it, if he
receive the goods under such bill of lading, and that, though he
have no valuable interest in them, for (r/) "the acceptance of goods
in pursuance of a bill of lading, whereby the shipper has made the
payment of freight or demurrage a condition precedent to delivery,
is evidence of a contract by the consignee to pay such demand."
We shall have occasion to advert again to this subject.

It has been seen that the bill of lading is usually made out for
the delivery of the goods to some person, ex. gr., E. F., or Ms assigns.
E. F. can, therefore, by naming an assign, transfer his right to them
to some other person. {Ji) The mode of appointing an assign is by
indorsing and handing over to him the bill of lading, which is thus
a negotiable instrument; accordingly, it is the common practice of
merchants to negotiate it, and, by such assignment, the property

(//) Scaife v. Tobin, S B. & Ad. 523, per Parke, J.

(/() Even though the word assir/yis be omitted, it will, it has been thought., be
transferable by indorsement, if such be the custom of merchants. Renteria v. Ruding,
1 M. & M. 511 ; sed qncere. At all events, a party taking the goods comprehended in
it will be liable to freight.

378 MERCANTILE CONTRACTS.

Contract for Conveyance in a General Ship.

in tlie goods is held to pass to tlio indorsee of the bill of lading, (i)^
Nay, though the consignee named in the bill of lading should be-
come insolvent, without having paid for the goods, yet his assign-

(i) Wright V. Campbell, 4 Burr. 2046 ; 1 Bla. 628. Caldwell v. Ball, 1 T. R. 205.
Hibbert v. Carter, 1 T. R. Ho.

* By the well settled principles of commercial law, the consignee is thus consti-
tuted the authorized agent of the owner, whoever he may be, to receive the goods;
and by this indorsement of the bill of lading to a bona fide purchaser for a valuable
consideration, without notice of any adverse interests, the latter becomes, as against
all the world, the owner of the goods. This is the result of the principle, that bills
of lading are transferable by indorsement, and thus may pass the property. It mat-
ters not whether the consignee in such case be the buyer of the goods, or the factor,
or agent of the owner. His transfer in such a case is equally capable of divesting the
property of the owner and vesting it in the indorsee of the bill of lading. And
strictly speaking, no person but such consignee can, by an indorsement of the bill
of lading, pass the legal title to the goods. But if the shipper be the owner, and the
shipment be on his own account and risk, although he may not pass the title by
virtue of a mere indorsement of the bill of lading, unless he be the consignee, or
what is the same thing, it be deliverable to his order, yet by any assignment, either on
the bill of lading or by a separate instrument, he can pass the legal title to the same;
and it will be good against all persons, except a purchaser for a valuable con"
sideration, without notice, by an indorsement of the bill of lading itself. Such an
assignment not only passes the legal title, as against his agent and factors, but also
against his creditors, in favor of the assignee. Conard v. Atlantic Ins. Co., 1 Pet. 445.
Rowley v. Bigelow, 12 Pick. 307. Dawes v. Cope, 4 Binn. 258. Nathan v. Giles, 5
Taunt. 558. Chandler v. Sprague, 5 Met. 306. Chandler v. Belden, 18 John. 157.
Wilmshurst v. Bowker, V Man. & Grang. 882.

A bill of lading to bearer, or even in blank, delivered by the shipper, for value,
would be sufficient to enable the holder to receive and hold the property against any
person, except a prior indorsee, withoiit notice. Allen v. Williams, 12 Pick. 29Y.
Low V. De Wolf, 8 Pick. 101.

If a bill of lading is signed before the goods are on board, or even pui'chased, and
afterwards, at any time before the ship proceeds on the voyage described, goods are
placed on board, as and for the goods embraced in the bill of lading, as against the
shipper and master, the bill of lading will operate on such goods by way of relation
and estoppel. Rowley v. Bigelow, 12 Pick. 307.

The insertion of the name of a person as consignee in a bill of lading, gives such
person no property in the goods, nor right to take possession of them, until effect be
given to the bill of lading, by a delivery to such person, hy the shipper himself, or
some person by him duly authorized. Nor will the mere indorsement of a bill of
lading, by the consignee, without a delivery of it, transfer the property in the goods.
A.llen V. Williams, 12 Pick. 297. Buffington v. Curtis, 15 Mass. 528.

A delivery of the bill of lading to a third person, for the benefit of the indorsee.

CONTRACTS OF AFFREIGHTMENT. 379

Contract for Conveyance in a General Ship.

ment made for a valuable consideration, and without notice to the
assignee that the goods were not paid for, or that they were paid
for by bills sure to be dishonored, has been held to pass them
absolutely to his assignee, and deprive the consignor of his right to
stop in transitu., which, as against the original consignee, he might
have exercised, {j) But if the assignee of the bill of lading have
not acted hona fide, for instance, if he knew that the consignee was
insolvent, and assisted to defraud the consignor of the price of his
goods, (^•) he stands in the same situation as the consignee, and the
consignor retains his right to stop in transitu ; and, if there be any
condition either in the bill of lading, or in the indorsement thereof,
ex. gr., if the goods are to be delivered, provided E. F. pay a certaii
draft, all subsequent indorsees take subject to that condition, and
have no title until it is complied with, il) But although the bill

(_;■) Lickbarro-w v. Mason, 2 T. R. 63, which was reversed in ei-ror, 1 H. Bl. 357,
and error brought on the reversal in Dom. Proc, and the cause directed to be tried
anew, which it was, and adjudged as at first, 5 T. R. 683, which judgment was
acquiesced in. See Newsom v. Thornton, 6 East, 17. Salomons v. Nissen, 2 T. R.
674. Dick V. Lurasden, Peake, N. P. C. 190. Haille v. Smith, 1 B. «fe P. 563. And
Bee stat. 6 Geo. 4, c. 94, below cited. But a delivery order or shipping note is not
like a bill of lading, and will not pass the property in the goods, Jenkyns v. Us-
borne, 7 M. & Gr. 678.

(k) Cumming v. Brown, 9 East, 506.

{I) Barrow v. Coles, 3 Camp. 92.

or inclosing it in a letter directed to him, and putting the letter in the post-office,
would, it seems, amount to a constructive delivery, and from that time pass the
property. Buffington v. Curtis, 15 Mass. 528.

[Since the above note was written, the subject has imdergone a critical examination,
leading to a modified enunciation of the law. The indorsement and transfer of a
bill of lading amounts to no more than a symbolical delivery of the goods. In the
language of Lord Ellenborough, in Newsom v. Thornton, 6 East, 41, "it can operate
no farther than a direct delivery of the goods would iiave done." It is demonsti-ated
by the American Editors of Smith's Leading Cases, vol. 1, p. 751, note to Lickbarrow
V. Mason, in an able and elaborate analysis of the adjudicated cases, that the posses-
sion of the bill of lading can clcthj the holder with no greater powers than would
result from the actual possession of the goods. It does not constitute title in itself,
and, as in some cases of transfer of negotiable instruments, dispense with the rule,
nemo plus juris ad alienum transferre potest quam ipse habet. If therefore the con-
eignee of the goods could not transfer a good title, although in possession, to a bona
fide purchaser, his indorsement and delivery of a bill of lading will not be allowed a
greater effect even in favor of an innocent party who has paid value for it.]

380 MERCANTILE CONTRACTS.

Duties of Master and Owners.

of lading is thus negotiable, its indorsement transfers no more than
the property in the goods, it does not transfer the contract between
the original parties to it, and therefore the assignee of such an in-
strument cannot maintain an action founded upon that contract, {m)

This power of transferring the property in the goods by an
assignment of the bill of lading remains to the shipper as long as
the goods are in the hands of any agent of his, and he may alter
their destination while they are on board : thus, if the captain sign
a bill of lading for the delivery of the goods to A. or his assigns,
and the shipper afterwards transmit a bill of lading to B., making
them deliverable to him, B. will be entitled to them if nothing
further had been done to vest the property in A. (n)

The above observations regarding the negotiation of the bill of
lading by a consignee, apply to the case of consignment of goods
'to a 2^urchaser ; for, where they were consigned to a factor^ his
power of altering the property in them, by indorsement of the bill
of lading, was less extensive, since it was thought that though he
might bind his principal by a sale of the bill of lading, because a
factor's usual employment is to sell, yet he could not by a pledge
thereof, for that is not within the scope of his authority : (o) and
though stats. 6 Geo. 4, c. 94, and 5 & 6 Yict. c. 39, have now
given effect to his ^jZec7^e also, yet they have not 'given it, in all
cases, the same effect as if the goods were his own property. By
those statutes the subject is at present regulated. The provisions
are set out and commented upon, ante^ Book I., ch. 5. (2>)

Skotion III. — Duties of Master and Owners.

"We now come to consider the obligations which the two sorts
of contracts of affreightment equally impose. These are divided
by a celebrated author {q) into duties to be performed —

(m) Sanders v. Vanzeller, 4 Q. B. 297. Thompson v. Doming'-, 14 M. & W. 403.

\n) Mitchell v. Ede, 11 Ad. & E. 888.

(o) Newsora v. Thornton, 6 East, 17. Martini v. Coles, 1 M. & S. 140. Shipley v.
Kymer, ibid. 484. Solly v. Rathbone, 2 M. & S. 298. Cockran v. Irlam, ibid. 301.
See ante. Book I. cap. 5.

(/)) See also, post, Book iv. cap. 1, and in re "Westzinthus, 5 B. <fe Ad. 817.

iq) Abbott, p. 3, c. 3.

CONTRACTS OF AFFREIGHTMENT. 381

Duties of Master and Owners.

1. By the master and owners.

2. By the merchant.

The former class are again divided into those which respect,
1st, the preparation for ; 2d, the commencement ; 8d, the course ;
and, 4th, the completion of the voyage.

1. With respect to the 'preparation, (r) the vessel must be tight,
stanch, and strong, and furnished with proper necessaries; this a
charter-party usually requires ; but it is equally required by law,
though there be no charter-party, (s)* The same observation ap
plies to her crew, who must be sufficient in number and ability ; {()
so, if usage or the law of the country require that she should have
a pilot, there must be one on board, as there must also when the
ship comes in the course of her voyage to any place where there is
an establishment of pilots, and it is possible to procure one before
she enters on the difficult part of the navigation, {u) The goods
are to be taken by the master or owner, whose responsibility com-
mences with their receipt, from the shipper, and stored carefidly
on board ; and all things necessary for that purpose, such, for
instance, as ropes, must be provided by the master, since, if the
goods be injured by or in consequence of improper stowage, he
and his owners are responsible. {v)\ The master must also have

(r) See generally, Abb. p. 3, c. 3.

(s) Coggs V. Bernard, 2 Ld. Raym. 909. Lyon v. Mells, 5 East, 428.

{t) Shore v. Bentall, 7 B. <fe C. 798, n.

(m) Law V. HoUingsworth, 7 T. R. 160. Phillips v. Headlam, 2 B. «& Ad. 380.

(y) Go£f V. Clinkard, cited 1 Wils. 282.

* There is in every contract of affreightment an implied warranty of the sea-
worthiness of the vessel. It is the duty of the owner of the vessel when he charters
her, to put and keep her in a suitable condition to transport her cargo. The owner
is also bound to furnish suflScient men and stores, unless the contrary be in terms
provided for, or results from the nature of the express contract. Putnam v. Wood,
8 Mass. 481 ; Goodrich v. Lord, 10 Mass. 483 ; Ripley v. Scaife, 5 B. tfe C. 167, (11 K
C. L. R. 188.)

I When goods are shipped under the common bill of lading, it is presumed that
they are shipped to be put under deck, as the ordinary mode of stowing cargo.
Vernard v. Hudson, 3 Sumn. 405. Creery v. Holly, 14 Wend. 26. In the case of
Vei-nard "j. Hudson, Judge Story held, that this presumption might be rebutted, by
showing a positive agreement between the parties that the goods were to be carried
on deck, or circumstances from which such an agreement might be inferred. "Th«

382 MERCANTILE CONTRACTS.

Duties of Master and Owners,

on board the i^roper manifest and other documents necessary for
the protection of the vessel, and must carry no false papers or con-
traband goods, whereby she may be forfeited.

He must, as we have seen, give a receipt for the cargo to the
shipper, and sign bills of lading as he may direct, on having that
receipt returned to him. (w) If, by agreement, the master is to
proceed to a particular place for the cargo, he must use due dili-
gence, or the freighter may be discharged ; {x) and if the vessel
takes out a cargo, in which, the freighter has no interest, the cap-
tain shall give notice when the vessel is ready to receive the cargo,
or the freighter will not be liable for omitting to provide it. (^)

2dly and 3dly. With respect to the commencement and con-
tinuance of the voyage — the proper clearances being obtained, the
ship must set sail at the stipulated time, or if no time for sailing
have been expressly agreed upon, must sail within a reasonable
time ; for, upon general principles, in all contracts by charter-
party, where there is no express agreement as to time, it is an
implied stipulation that there shall be no unreasonable or unusual
delay in commencing the voyage ; (2)* and, if there be a stipula-

(«') As to the right of the shipper who has taken such a receipt, to demand the
immediate re-delivery of his goods, see Thompson v. Small, 1 C. B. 328.

(x) Freeman v. Taylor, 8 Bingh. 124. A slight dela}" will not have this effect.
It must be such a delay as frustrates the object of the voj-age, Clipsham v. Vertue, 6
Q. B. 265, unless it be made a condition. See Glaholm v. Hays, 2 M. & Gr. 251

{y) Fairbridge v. Pace, 1 Car. & K. 317.

{z) M'Andrew v. Adams, 1 Bingh. N. C. 38. Freeman v. Taylor, 8 Bingh. 124.

admission of proof to this effect^" he says, " is perfectly consistent with the rules of
law ; for it simply rebuts a presumption arising from the ordinary course of busi
ness." But in the case of Creery v. Holly, the Court held that parol evidence was
inadmissible, to show an agreement by the shipper that the goods might be stowed
on deck, when a clean bill of lading had been given. See x\bbott, 489, note 1.

* And the same stipulation, it seems, would be applied as to the prosecution and
completion of the voj-age. But the principle upon which the extraordinary respon-
sibility of common carriers is founded, does not require that that responsibility
should be extended to the ime occupied in the transportation. A common carrier,
in respect to the time of delivery of goods, is responsible only for the exertion of due
diligence ; and may excuse delay in the delivery by accident or misfortune, although
not inevitable. It is enough if he exerts due care and diligence to guard against
delay. Parsons v. Hard}-, 14 Wend. 215. As to the damages which may be re-

CONTRACTS OF AFFREIGHTMENT. 383

Duties of Master and Owners.

tion to that effect, must do so under the safeguard of a convoy ;
concerning the nature of which escort, and the rules respecting it,
we treat under another head, viz., that of Insurance. She mast
then proceed to her destined port without deviation ; for if she
deviate unnecessarily, and be lost, the master and owners are re-
sponsible, although the loss be by the act of God or the King's
enemies ; (a) in fine, the master is to use every effort to convey the
cargo safely to its destination ;* and if, by reason of a storm, or
some other unexpected cause, it becomes impossible to do so in his
own vessel, he is to do what a prudent man would think most for
the benefit of all concerned ;f what that may be it is impossible to
anticipate : we have, however, high authority for saying, that
" transhipment for the place of destination, if it be practicable, is
the first object, because that is in furtherance of the original pur-
pose ; ih) if that be impracticable, return or a safe deposit (c) may
be expedient ; the merchant should be consulted if possible ; {d)
a sale is the last thing the master should think of, because it can

(a) Parker v. James, 4 Camp. 112. Davis v. Garrett, 6 Bingh. 716.

(6) See Shipton v. Thornton, 9 Ad. & E. 314, and post, sect. 4, ad Jinem, p. 285.
Some doubt is entertained in that case whether it be the master's right to tranship,
or his duty.

(c) See an instance of deposit, which seems not to have been questioned, in Lid-
dard v. Lopes and another, 10 East, 426.

id) Wilson V. Miller, 2 Stark. 1.

covered for a failure to deliver goods in a reasonable time, the goods themselves not
being injured, see Bracket v. McNair, 14 John. ITO. Bell v. Cunningham, 3 Pet. 69.
Colvin V. Jones, 3 Dana, 576.

* Moreover, the master must, during the voj-nge, take all possible care of the
cargo. If it require to be aired or ventilated, as fruit and some other things do, he
must take the usual and proper methods for this purpose. Abbott, pt. 4, ch. 5,
p. 371.

+ In cases of necessity or calamity during the voyage, the master is by law
created an agent from necessity, for the benefit of all concerned; and what lie fairl3''
and reasonably does, under such circumstances, in the exercise of a sound discretion,
binds all the parties in interest in the voyage, whether owners, or shippers, or
underwriters. Jordan v. Warren Ins. Co , 1 Story R. 353. What may be done
ought to be done, when the rights of third persons are essentially con:erned in the
act. The master is bound to act for the best interest of all concerned. Kent, C. J.,
Scheiffelin v. New York Ins. Co., 9 John. 27. Douglass v. Moody, 9 Mass. 561
Searle v. Scovil, 4 John. Ch. R. 224.

384 MERCANTILE CONTRACTS.

Duties of Master and Owners.

be only justified by that necessity which supersedes all human
laws : if he sell without necessity, his owners, as well as himself,
will be answerable to the merchant ; (e) and they will be equally
answerable if he place the goods at the disposal of a Vice- Admi-
ralty Court in a British colony, and they are sold under an order
of the court, such court having no authority to order a sale;(/)
and the persons who buy under such circumstances will not acquire
a title as against the merchant, {g) but must answer to him for the
value of the goods." (A) However, the master's authority extends
to hypothecate the cargo, or even sell a part of it where it is neces-
sary to do so for repairs, in order to the preservation of the entire
venture ; (^)* and if he do the latter, the merchant on the ship's
safe arrival at the place of destination will have a right to receive
what the goods would have fetched if brought thither, {j) or may
elect to take the sum they actually sold for, and may in that case,
if he please, deduct it from the freight. {Ic)\

(e) Freeman v. E. I. Compy., 5 B. & A. 61*7. 'Wilson v. Dickson, 2 B. <fe A. 2.

(/) Cannan v. Meaburn, 1 Bingh. 243 ; 8 B. Moore, 127.

{g) Morris v. Robinson, 3 B. <fe C. 196.

(A) Abbott, p. 3, c. 3, s. 8.

{i) The Gratitiidine, 3 Rob. A. R. 240.

Ij) Alers V. Tobin, Abb. p. 3, c. 3, s. 10.

(k) Campbell v. Thompson, 1 Stark. 490.

* United Ins. Co, v. Scott, 1 John. R. 106. Fontain v. Columbian Ins. Co., 9
John. 29. Searle v. Scovil, 4 John. Ch. R. 222. American Ins. Co. v. Coster, 3
Paige, 323. This right of the master being only allowed when there will be a
benefit, or prospect of benefit to the cargo, of course ceases on the arrival of the
ship at her port of destination. The cargo then becomes subject to the control of
the consignees, and the master must, if deficient in funds, resort to other sources,
1 John. R. 111. And the master cannot hypothecate or mortgage the ship for the
benefit of the cargo. 9 John. 31. As to his authority to sell the ship, see ante,
section "Shipping."

•j- In addition to the personal responsibility of the master and owners of the
ship, he has also a lien on the ship for the value of the goods sold, and a right of
contribution over against the other owners of the cargo. American Ins. Co. v.
Coster, 3 Paige, 323. The Packet, 3 Mason, 255. And it seems that even if the
vessel be subsequently lost, the claim against the owners of the ship would not be
discharged. Pope v. Nickerson, 3 Story's R. 499, 500, But see Abbott, pt. 4, ch. 5^
p. 3Y2.

CO^^TRACTS OF AFFREIGHTMENT. 385

Duties of Master and Owners.

4thly. On the completion of the voyage^ the master must have
the vessel properly moored, report his ship and crew, exhibit his
manifest and other papers to the proper officers, and deliver up the
cargo to the consignee named in the bill of lading, on payment of
the freight and other charges in respect thereof: these other
charges are generally primage and averaye^ the nature whereof
will j)resently be stated ; and the master need not, in general, part
with the goods till they are liquidated; if, indeed, it appear from
the bill of lading that the freight or other charges have been paid,
he is estopped from claiming them as against the assignee of such
bill of lading ; il) nor can he detain the goods of one person for
charges upon those of another, though he may any part of what is
consigned to one and the same person for the charges upon it
all. {m) The manner of delivering up the goods, and consequently
the period at which the master ceases to be responsible for them,
depends, in the absence of agreement, on the custom of the
place. (??)^ In the absence of any custom upon the subject, the

{I) Howard v. Tucker, 1 B. & Ad. '712. But as between tlie shipper of goods and
the owner of the ship, a bill of lading does not operate as an estoppel. Bates v.
Todd, 1 M. & Rob. 106, and see Beckley v. Watling, 7 Ad. & E. 29, where some
doubt seems to be cast on the conclusiveness of bills of lading.

{in) Soldergreen v. Flight, Abbott, p. 3, c. 3, s. 11, cited 6 East, 622.

(n) Warden v. Mourilljan, 2 Esp. 693.

* In the absence of any custom at the place of delivery, or any express agree-
ment, the master is not bound to deliver goods to the consignee personally. It is
sufficient if he lands them at some usual place of delivery, and gives notice thereof
to the consignee, which, in the case of carriers by ships or boats, comes in lieu of the
personal delivery usually required of other common carriers. Chickering v. Fowler,
4 Pick. 371. Ostrander v. Brown, 15 John. 39. Gibson v. Culver, 17 Wend. 305.
Fisk V. KewtoD, 1 Denio, 47. Cope v. Cordova, 1 Rawle, 203. 2 Kent's Com. 605.
And when goods are safely conveyed to the place of destination, and tlie consignet
is dead, absent, or refuses to receive, or is not known, and cannot, after due effort*
are made, be found, the carrier may discharge himself from further responsibility,
by placing the goods in store with some responsible third person in that business, at
the place of delivery, for and on account of the owner. Fisk v. Newton, 1 Denio, 47.
Ashur V. Schooner Cassius, 2 Story's R. 81. Hemphill v. Chenie, 6 Watts & Serj. 62.
And in this last case, the Supreme Court of Pennsylvania held, that the same duty
would devolve on carriers engaged in inland navigation, as on the Ohio river, in case
the consignee to whom notice had been given should neglect to receive and take
charge of the goods. That as to such carriers, the rule laid down above, and by that
25

58G MERCANTILE CONTRACTS.

Duties of Master and Owners.

consignee's right has been decided to be to have reasonable time
and opportunity for coming and receiving them from the ship's
side, (o) If the consignee send a lighter for the goods, the master
must, by the custom of the river Thames, watch them in the
lighter till it is fully laden, (p) but not afterwards, (q)

All these duties, which the law imposes upon the ship-owner
and his agents, are, after all, no more than consequences of the
general rule before stated, respecting carriers, viz., that they are
responsible at common law for every thing, except the act of God
and the King's enemies. However, this, their common law liabil-
ity, is usually narrowed by their own express stipulations in the
charter-party or bill of lading, and has also been qualified by the
intervention of the legislature.*

(o) Gatliffe v. Bourne, 4 Bingh. N. C. 314. Bourne v. Gatliffe 4 Scott, 1 ; 3 Mann.
& Gr. 643. Confirmed on writ of error in Don. Froc, 1 M. & Gr. 850, 11 CI. &
Finn. 45.

(p) Catley v. Wintringham, Peake, N. P. C. 150.

(q) Robinson v. Turpi n, Abbott, j). 3, c. 3, s. 12.

court, in Cope v. Cordova, did not apply; and that it is tlieir duty to altend to the
actual delivery. See .also as to the manner of delivery, Gracie v. Marine Ins. Co. of
Baltimore, 8 Cranch, 75, (3 C. R. 39.) Brown v. Ralston, 9 Leigh. 532, 542. Powell
V. Myers, 26 Wend. 591. Bourne v. Gatliffe, 7 Man. <fe Grang. 850.

* Masters and owners of vessels employed in the transportation of property, are
liable as common carriers, in respect to foreign as well as internal voyages. Elliott
V. Russell, 10 John. 1. Kemp v. Coughtry, 11 John. 107. McGregor v. Kilgore, 6
Ohio, 358. Dunrish v. Wade, 2 Scam. 289. Gordon v. Buchanan, 5 Yerg. 71 ; id. 427.
King V. Shepherd, 3 Story Rep. 349. Hart v. Allen, 2 Watts Rep. 114. Nor is there
any distinction, whether the navigation be upon the ordinary rivers, or the great
rivers and lakes of this country. McArthur v. Sears, 21 Wend. 190. Gilraore v,
Carinan, 1 Sm. & M. 279. But see Hart v. Allen, 2 Watts 114, and The Nantucket
Steamboat Co., 2 Story's C. C. R. 16, 33. In the case of common carriers by water,
there has been a more general recognition of the right to restrict the general
liability by special contract, than in the case of carriers by land. Thus the validity
of the ordinary exceptions in the bill of lading has never been questioned.

In 1851 Congress passed an Act, embodying substantially the provisions of the
text, in reference to the liability of ship owners in cases of fire, the loss of money or
any precious stone or metal, or an}' loss or injury to property on board from embez-
zlement, collision, or any other cause. Vessels of all descriptions, engaged in river
and inland navigation, are expressly excepted from the operation of the Act. In
Maine, Massachusetts, and probably some other states, the responsibility of ship

C0XTRACT3 OF AFFREIGHTilENT. 087

Duties of Master and Owners.

The bill of lading contains, as we have seen, these words : " the
act of God, the King's enemies, fire, and all and every other
dangers and accidents of the seas, rivers, and navigation, of what-
ever nature and kind soever, excepted." The first two of these
were, as we have seen, exceptions, even at common law ; and the
third was made so by stat. 26 Geo. 8, c. 86, s. 2, which enacts,
"that no owner or OAvners of any ship or vessel shall be subject or
liable to answer for or make good to any one or more person or
persons any loss or damage which may happen to any goods or
merchandise whatsoever, which shall be shipped, taken in, or put
on board, any such ship or vessel, by reason or by means of any
fire happening to or on board the said ship or vessel."

On this section, Lord Tenterden remarks, (r) that the master
is not mentioned therein, and that it may therefore be doubtful
whether his responsibility is, in this case, removed by the statute,
but that the insertion of the word " fire" in the bill of lading cer-
tainly removes it.

The same statute enacts, (s) that no master^ OAvner, or owners of
any ship or vessel, shall be liable to answer for or make good any
loss or damage which may happen to any gold, silver, diamonds,
"watches, jewels, or precious stones, which shall be shipped, taken
in, or put on board, any such ship or vessel, hy reason or means of
any robbery^ embezzlement^ making awag vjith^ or secreting thereof^
unless the owner or shipper thereof shall, at the time of shipping
the same, insert in his bill of lading, or otherwise declare in writing,
to the master, owner, or owners of such ship or vessel, the nature,
quality, and value of such gold, silver, diamonds, watches, jewels,
or precious stones. {() It is doubtful whether this statute extends
to shipments made in foreign parts, (a)

(r) Abbott, p. 3, c. 4.
(s) Sect. 3.

{() It is sufficient to describe it by the ordinary name, and the Vf.lue by the coin
of the place of shipment. Gibbs v. Potter, 10 M. <fe "W. 70.
(m) Gibbs V. Potter, ibid.

owners is limited by statute to the amount of the owner's interest in tlie sliip and
freight. As to limitation on the common law liability, see note to previous chapter
on Common Carriers.

388 MERCANTILE CONTRACTS.

Duties of Master and Owners.

By Stat. 6 Geo. 4, c. 125, s. 53, (v) owners and masters of ships
are exempted from liability for any damage arising from the want
of a licensed or duly qualified pilot, unless it be proved that such
want arose from any refusal to take one on board, or from wilful
neo-lect, in not heaving to, or using all practicable means consistent
with the ship's safety, for the purpose of taking on board any pilot
who may offer; and section 55 exempts them from liability for
damage arising from the neglect, default, incompetency, or in-
capacity of any licensed pilot in charge of the vessel, so long as
such pilot shall be duly qualified to have charge of the vessel, or
no duly qualified pilot shall have offered to take charge thereof {w)

It will be seen that the common law liability of ship-owners is
discharged to a considerable extent by these enactments : where it
remains, it is restricted to a certain ascertainable amount by

Stat. 7 Geo. 2, c. 15, which exempts the owners from responsi-
bilitv for loss, by reason of any embezzlement, secreting, or making
away with, by the master or mariners ; or for any act, matter or
thing, damage or forfeiture, done, occasioned, and incurred by the
same persons, without the privity of the owners, further than the
value of the shij), luith her aiiinirtenances, and the freight due, or to
grow due, for the voyage ivherein such loss happened, {x)

Stat. 26 Geo. 3, c. 86, s. 1, extends the provisions of this act to
all cases of robbery, though the master or mariners be not con-
cerned therein.

By stat. 58 Geo. 3, c. 159, owners are not liabl'e to answer for
or make good any los.s or damage arising by reason of any act,
neglect, matter or thing, done, committed, and occasioned without

(v) The Pilotage Act.

(m)) The Protector, 1 "W. Rob. 45. Tlie Agricola, 2 "W. Rob. 10. See Neptune the
Second, 1 Dodson, 467. The Transit, before Sir J. Nicholl, Feb. 1 and March 11, 1838,
reported K L. M. 582. The exemption conferred by this section extends to all cases
in -which the pilot was bound to take charge of the ship, though the master may not
have been bound to employ him, as where she was only moving to another part of
the harbor into dock. Lucey v. Ingram, 6 M. & W. 802. The Fame, 2 W. Rob. 184.
But if the mischief arose partly from the misconduct of the crew, the owner is not
excused. The Diana, 1 "W. Rob. 131. Stuart v. Isemonger, 4 Moore, P. C. 11. As to
the ships to which this provision extends, see the Girolamo, 3 Hagg. 169. The Vor-
non, 1 "W. Rob. 316. The Maria, 1 W. Rob. 95.

{x) Sect. 1. See Sulton v. Mitchell, 1 T. R. 18.

COXTRACTS OF .VFFREIGHTMENT. ;j8S

Duties of the Merchant.

the fault and privity of such owner or owners, whicli may happen
to any goods, wares, merchandises, or other things laden or put on
board the ship, further than the value of the ship (?/) and freight
due, or to grow due, during the voyage which may be in prosecu-
tion, or contracted for at the time of the happening of the loss.
In construing this section, the costs of obtaining the compensation
are allowed beyond the value of the ship's freight. (2)

This statute further defines what shall be considered Freight^
within its meaning, (a) and that of the two prior acts ; and orders,
that distinct losses happening during the same voyage, or same in-
terval between two voyages, shall be compensated in the same
way and to the same extent as if no other loss had happened
during the same voyage or interval ; and, as well as the two former
ones, provides a proportionate compensation in cases where the
value of the ship and freight is less than the total amount of losses,
and a mode of distribution, and relief in equity. But this act does
not extend to vessels used solely in rivers and inland navigations,
nor to any ship not duly registered according to law ; nor do any
of the acts extend to lighters and gabbets. (/>)

The benefit of the three last-mentioned acts does not extend to
masters; and the last contains a provision against relieving the
master who happens to be a part owner from responsibility ; yet
if he be sued along with the part owners, he will be protected as
well as they ; for it is a rule, that the damages given against co-
defendants must be one and the same sum. (c)

Section IY. — Duties of the Merchant.

The merchant who has taken a ship to freight must lade her
within the stipulated time, and even if no time be expressly stipu-
lated, must do so in a reasonable time, {d) lie must lade her with

(«/) See Dobree v. Schroder, 6 Sim. 291. Brown v. Wilkinson, 15 M. & "W. 391
and the Richmond, 3 Hagg. 431.

(z) The Dundee, 1 Hagg. 109. Ex parte Rayne, 1 Q. B. 982.

(a) Sect. 2.

(6) Hunter v. M'Gowan, 1 Bligh. 573. (c) Wilson v. Dickson, 2 B. <fe A. 2.

{(1) WoUey V. Reddelien, 5 il. & Gr. 316, where by the charter-party the ship

390 MERCAXTILE CONTRACTS.

Duties of the Merchant.

the stipulated cargo, (e) and must put on board no contraband
goods, whereby she may be subjected to forfeiture. For a default
in any of these particulars, he will be liable to make good the in-
jury sustained in consequence.* He must also pay the chargea
due on his commodities; these are usually primage, average, de-
murrage, and freight.

Primage is a small customary payment to the master for his
care and trouble.

Average denotes several petty charges, such as towage, beacon-
age, &c., which it would be dif&cult and useless to enumerate;
there is a more important charge called General Average^ of which
we shall treat in the next section.

after deliverinir her oiat-n-ard cargo at Malta, \^&s to sail with all convenient speed to
such port, to Marseilles. Genoa, or another safe port on the 'west coast of Italy, not
higher than Manfredonia, as should be ordered at Malta. It -was held, the merchant
impliedly undertook that she should receive orders within a reasonable time from
her arrival at Malta.

(e) When the merchant undertook " to furnish and provide for loading on board
the said ship a full and complete cargo of copper, tallow, and hides, or other goods,"
it was held by Lord EUenborough, at K P., that the stipulation was pei-formed by
furnishing as large a quantity of tallow and hides as she could take on board, though
in consequence of the absence of copper she was obliged to keep in her ballast.
Moorsom v. Page, 4 Camp. 103. And when the stipulation in the charter-party was
" to furnish a full and complete cargo, and that 100 tons of rice or sugar should be ship-
ped previous to any other part of the loading to ballast the vessel," the Court held
that the owner was bound to supply any ballast that was necessary beyond the 100
tons, and that the merchant was not bound to pay freight for the additional tonnage
of such ballast Irving v. Clegg, 1 Bingh. N. C. 53. For as the owner is bound to
have his vessel in a fit state for the voyage, (see a7itc,) it is his duty in the first instance
to provide ballast, and the merchant's liability to do so can in no case reach beyond
his express undertaking. See further in Capper v. Foster, 3 Bingh. N. C. 938, the
vessel was to sail to Rio Nimez, discharge there, and reload " a full and complete cargo
of lawful merchandise," freight to be paid at certain rates on certain specified arti
cles, viz., gum, beeswax, rice, bullion, ttc. ; should rice exceed SO tons, 1/. per ton ex-
tra on surplus. Hides not to exceed 50 tons. Should she not be full at Rio Nunez,
the merchant to have the liberty of filling her up at St. Mary's. Held, that a fidl and
complete cargo of lawful merchandise meant a cargo of goods ejusdem geyieris with
those specified, and that the merchant was not justified in shipping a great quantity
of lumber at St. Mary's, though that was the staple commodity there, but must pay
freight as if he had shipped the proper cargo.

* Smith V. Elder, 3 John. Rep. 105.

C0XTRACT3 OF AFFREIGHTMENT. 391

Duties of the Merchant.

Demurrage lias been already spoken of. (/)

Freight is the payment made for tlie conveyance of the mer-
chandise {g) to its destination ; it denotes the price of carriage^ not
of receiving goods to he carried ; and, therefore, though a merchant
may, of course, contract to pay a sum of money to a ship-owner for
taking goods on board, yet such payment is not, strictly speaking,
freight, (h) Hence it follows, that no freight becomes due, unles?
the carriage of the goods be completely performed, (t)* In conse
quence of this rule, when a ship has been engaged to sail from one
port to another, as from A. to B. and back again, it often becomes
important to know whether this employment is to be looked upon
as consisting of one or two distinct voyages ; since if the ship be
lost after her transit from A. to B., but before that from B. back to
A. has been completed, freight will, by adopting the latter con-
struction, be due for the carriage from A. to B., but not by adopt-
ing the former. In solving this question, the Court must be guided
by the intention of the parties, as collected from the words and
subject matter of the agreement. (y)f

(/) See ante, p. 3*71, and see Evans v. Foster, 1 B. & Ad. 118. Brouncker v.
Scott, 4 Taunt. 1, and 5 Bingh. 188. With regard to the question what time should
be allowed where goods stowed at the top imjiede the delivery of those at the bot-
tom, see Lee v. Yates, 3 Taunt. 387. Rogers v. Hunter, M. & M. 63. Dobson v.
Droop, ibid. 441.

(g) Lewis v. Marshall, 1 M. & Gr. 729.

{h) Blakey v. Dickson, 2 B. & P. 321. Andrew v. Moorhouse, 5 Taunt 435. Ab-
bott, p. 3, c. 7.

[i) Mashiter v. Bullar, 1 Camp. 84. Crozier v. Smith, 1 M. & Gr. 407.

(_;■) Mackrell v. Simond. B^'rne v. Pattison, Abbott, p. 3, c. 7, s. 17. Crozier v.

* Caze V. Baltimore Ins. Co., 7 Cranch, 358 ; (2 C. R. 528.) The ship Nathaniel
Hoopei, 3 Sumn. 554. Brown v. Ralston, 4 Rand, 504. Palmer v. Lorillard, 16 John.
356. Griggs v. Austin, 3 Pick. 20. Although the vessel may have been hired by the
month or week. Abbott, 406. Locke v. Swan, 13 Mass. 79. Passage money and
freight, it seems, are governed by the same rules. Abbott, 405, note 1. "Watson v.
Duykinck, 3 John. 335; 3 Pick. 20. "Freight is the compensation for the carriage
of goods, and if it be paid in advance, and the goods be not carried by reason of any
event not imputable to the shipper, it is to be repaid, unless there be a special agree-
ment to the contrary." Griggs v. Austin, 3 Pick. 23. Watson v. Duykinck, 3 John.
335. Pitman v. Hooper, 3 Sumn. 50.

f Brown V. Hunt, 11 Mass. 45, 47. Locke v. Swan, 13 Mass. 76. Coffin v. Storer,

392 MERCANTILE CONTRACTS.

Duties of the Merchant.

The owner will not, however, lose his freight in consequence
of an interruption, without his fault, of the voyage, which is after-
ward completed, such as a capture and recapture ; (Jc)* and, if the
goods have been thrown overboard for the ship's preservation, the
merchant must pay freight, and be repaid by a general average. So,
if part be sold for necessary victuals or repairs, the owners pay the
merchant the value, and receive the freight from him : and if the
ship and cargo be taken, retaken, and carried by the recaptors into
a port short of its destination, and there, in consequence of some
legal doubt or of the -merchant's delay, th^vsliip be -restored before
the cargo,' the'*bwners need not wait to convey the latter to its des-
tination, but are entitled to the freight, subject to salvage.(Z)f There

Smith, 1 M. & Gr. 407, where the ship was to sail to Jamaica, and having discharged
her outward cargo there, " receive a cargo from thence, or from a port in the Spanish
main, if required," if she should be required, 41. per diem was to be paid till she
should be dispatched from her loading port. Held, that tlie voyage from Jamaica to
the Spanish main was not a distinct voyage, but part of the homeward.

(k) The Race Horse, 3 Rob. A. R. 101. Beale v. Thompson, 3 B. & P. 405.

(Z) Abbott on Shipping, p. 3, c. 7, ss. 5, 6.

5 Mass. 252. Banker v. Cheriot, 2 John. 352. Penoyer v. Hallett, 15 John. 332
Blanchard v. Buckman, 3 Greenleaf, 1.

* But the voyage must be completed, after the interruption is at an end, to en-
title the owner of the ship to freight, unless the original interruption, or the subse-
quent failure to complete the voyage, be caused by some wrongful act or default of
the owner of the cargo. The owner of the ship has the right, in case of an interrup-
tion, as by an embargo or blockade, to retain the goods a reasonable time, for the
purpose of completing the voyage and earning his freight. Palmer v. Lorillard, 16
John. 348. Burrill v. Cluman, 17 John. 72. The ship Nathaniel Hooper, 3 Sumn.
542. Brown v. Ralston, 4 Rand. 504. Spofford v. Dodge, 13 Mass. G6.

When a ship and cargo are injured by a peril of the seas, and the ship is repaired
in a reasonable time, so as to be able to carry on the cargo, the owner of the ship
has the right to carry it on, if it specifically remains, and is capable of being car-
ried, although it be so damaged that it would be utterly worthless on its arrival.
The shipper, in such case, has no right to demand it, at any intermediate port, short
of the port of destination, without paj^ment of full freight for the voyage. And on
its arrival at tlie port of destination, though utterly ruined and woi-thless, by reason
of the sea damage, the shipper cannot abandon the goods for the freight, but is per-
sonally bound to pajr full freight to the master or owner of the ship. Griswold v.
New York Ins. Co., 3 John. 321. Jordan v. Warren Ins. Co., 1 Story's R. 342. Bock
V. Norton, 2 McLean, 422.

+ Tliis point was decided in the case of the Race Horse, 3 Rob A. R. 101 ; and

COXTRACTS OF AFFREIGHTMENT. 393

Duties of the Merchant.

are also some cases in which a part payment of freight may be
claimed : these shall be presently considered.

Where goods are sent in a general ship, the amount of freight
depends on the agreement of the parties, or the value of the service
performed, estimated according to the usage of trade in like cases.
If there be a charter-party, and a gross sum is to be paid for the
whole or part of a ship, it becomes due, although the merchant do
not provide a complete lading. If the payment be so much per ton,
it must be calculated on the number of tons the ship or part thereof
contains ; not on the number mentioned in the description in the
charter-party, {m) or the quantity of goods laden on board. On the
other hand, if the master improperly refuse to take the entire quan-
tity of goods agreed on, he will, nevertheless, if the payment was
to be per cask, or bale, have a right to a compensation for what he
has carried ; (?i) as he will in case of his deviating, (0) or sailing
with his ship out of repair, (^j) or not sailing according to stipula-
tion with the first wind or convoy ; (q) the rule being, as stated by
Lord Ellenborough, (?•) that " unless the non-performance alleged

(m) Hunter v. Fry, 2 B. & A. 421.

(n) Ritchie v. Atkinson, 10 East, 295.

(o) Bonrman v. Tooke, 1 Camp. 37Y.

(p) Havelock v. Geddes, 10 East, 555.

(q) Constable v. Cloberie, Pahner, 397. Hall v. Cazenore, 4 East, 477.

(r) Davidson v. Gwynne, 12 East, 381. And see Clii^sham v. Vertue, 5 Q. B. 265.

the cases of The Martha, 3 Rob. A. R. 136, and The Hoffman, 6 Rob. A. R. 231, are to
the same effect. la the ca?e of The Nathaniel Hooper, 3 Sumn. 556, Judge Story
comments on these cases and disapproves of the decisions in them on this point. Un-
less the capture or detention of the cargo was owing to some wrongful act or default
of the shipper, it seems difficult to sustain the decisions on principle. And even if
correct, it is said by Judge Story, that "it is not safe or correct in many cases to
reason from the peculiar doctrines arising out of the administration of international
law and policy in the courts of prize, to the ordinary exigencies of commerce, or the
ordinary interpretation of common civil contracts." 3 Sumn. 555.

"The whole of the cases, in which the full freight is, upon the ordinary princi-
ples of commercial law, due, notwithstanding the non-arrival of the goods at the
port of destination, may be reduced to the single statement, that the non-arrival has
been occasioned by no default or inability of the carrier ship, but has been occa-
sioned by the default or inability of tlie merclianl shipper." The Xatliaiiiol Hoop-
er, 3 Sumn. 55r>

394 MERCANTILE CONTRACTS.

Duties of the Merchant.

in breach of the contract goes to the whole root and consideration
of it, the covenant broken is not to be considered a condition pre-
cedent, but a distinct covenant, for the breach of which the party
injured may be compensated in damages."

If the agreement be to pay so much per month, week, or other
aliquot part of the voyage, the merchant takes the risk of its dura-
tion, and the freight will begin to run against him from the clay the
ship breaks ground, and continue to do so, not only while she is at
sea, but during any unavoidable delay which does not suspend the
contract, ex. gr.^ for repairs, (s) But if the agreement be in any
other form, the owner takes the risk of the duration of the voyage,
and is only entitled to the same amount, however long it may con-
tinue.

The owner has a lien on the goods until the freight is paid, if
he do not agree to waive it, and have not framed his charter-party
in such a manner as to part with the possession of the vessel to the
charterer, and it has been held, even in case of a charter-party by
which part of the freight was payable during the voyage and the
rest by bills at two and fovir months' date from the day of the
arrival of the ship in the Thames on her homeward voyage, that,
the charterer having failed before the ship's return, the owner
might insist on retaining -a lien on the goods for his freight, it)
Whether he exercise that right or no, he may sue the charterer
upon his contract to pay freight. (?/) When there is no charter-

(r) Haveloek v. Geddes, 10 East, 555. Ripley v. Scaife, 5 B. <feC. 167. See Beale
V. Thompson, 3 B. & P. 405.

{t) Campion v. Colvin, 3 Bingh. N. C. lY. See Saville v. Campion, 2 B. & A. 503.
Christie v. Lewis, 2 B. & B. 410. In Campion v. Colvin, the Court appears to rest its
decision on the ground of special agreement, rather than on the general right of lien.
"Looking," saj's his Lordship, "to the intent of the parties, it is clear the ship-owner
meant to insist on the delivery of the bills before the delivery of the cargo, so that
■with respect to the time at which the freight was payable, there is no difference be-
tween this and the preceding cases." And see Alsager ii. St. Katharine's Dock Comp.,
14 M. (few. 194, where it was held there was no lien for freight, it having been made
payable " in cash two months after the vessel's inward report," though another clause
provided that the ship should deliver her cargo "on being paid freight" at 4/. per
ton, and the charterer had become bankrupt.

(m) Tapley v. Martens, 8 T. R. 451. Christy v. Row, 1 Taunt. 300. Shephard v.
De Bernales, 13 East, 565. Abbott on Shipping, 8th ed. 416.

CONTRACTS OF AFFREIGIITirENT. 395

Duties of the Merchant.

party, and the consignee is, by tlie terms of the bill of lading, tc
pay freight. Lord Tenterden expressed an opinion at N. P. that
the shipper was not liable, (v) But it has since been decided m
banco (w) that, where a bill of lading expressed goods to be con-
signed on account and risJc of William Beckford. to Messrs. P. and
W. or their assigns, iJieij ^:)a?/i»^ freigJit, the owner had a right to
sue the consignor, Beckford, for freight, in the absence of any evi-
dence of a custom among merchants to the contrary. It might,
however, be otherwise, if the consignment were from vendor to
vendee, (x) In such a case, it might be urged that the consignor,
in employing the ship-owner, acted as agent for the consignee ; (?/)
and perhaps Dommet v. Bechford^ and the opinion of Lord Tenter-
den in Drew v. Bird, might, if this distinction were adopted, prove
not completely irreconcilable.* "Where the goods are deliverable
to assigns on 2^aying freight, and the consignees indorsed to C. k Co.,
their agents who obtained the goods, it was held that the consignees
were not liable for freight. (2)

The consignee or indorsee of the bill of lading may be sued, if
he have received the goods in 2^ursuance of a hill of lading, im-
posing the payment of freight upon him ; (a) at all events, in cases
where there is no charter-party. But if the consignee apjoears upon

{v) Drew v. Bird, M. & M. loG. See Tobin v. Crawford, 5 M. & W. 235. Cole-
man V. Lambert, 5 M. <fe \V. 503.

(w) Dommet I). Beckford, 2 Nev. & Mann. 370; 5 B. <fe Ad. 521. See Tobin?;.
Crawford, 5 M. & W. 239. Coleman v. Lambert, 5 M. & W. 502.

{x) See Barker v. Havens, 17 Johns. Rep. 234, cited M. &, M. 157, in notis.

(3/) See 1 Nev. & Mann. 420.

(2) Tobin V. Crawford, 9 M. & W. 716.

(a) Ace. Renteria v. Ruding, M. & M. 511. Roberts v. Holt, 2 Shower, 443. Cock
V. Taylor, 13 East, 399. Bell v. Kymer, 5 Taunt. 477. See Mitchenson v. Begbie, 6
Bingh. 190. He cannot discharge himself by seizing them under a sham execution
against the consignor, instead of accepting them under the bill of lading. Lucas v.
Nockells, 10 Biagli. 157.

* It is said by Spencer, C. J., in Banker v. Havens, 17 John. 237, that he "should
clearly be of opinion, that if it appeared that the goods were not owned by the con-
signor, and were not shipped on his account, and for his benefit, that the carrier
would not be entitled to call on the consignor for freight;" and that in all cases, the
master ought to endeavor to get the freight from the consignee. See also 3 Keut'i
Com. 222.

396 MERCANTILE CONTRACTS.

Duties of the Merchant.

the face of the bill of lading to be a mere agent, no contract to be-
come personally liable for freight can be implied from his receipt
of the goods under it. (b) Nor is the acceptance of the goods of
ifee?/" sufficient to impose charges in respect of them, although other
circumstances concurring with acceptance may;(c) such, for in-
stance, as the previous dealings of the parties ; {d) and if there be
only a bill of lading, the law will not, from his mere receipt of good-
under the bill of lading, raise an implied promise from an indorsee
to do so, (e) though it is evidence of such a promise which may be
submitted to the jury, and on which they may find it. (/) But if
there be a charter-party containing an express contract by the char-
terer to pay freight, referred to in the bill of lading, it is question-
able whether a jury would be warranted in finding an agreement
on the part of the consignee or indorsee to pay freight, as the re-
ference to the bill of lading may have been introduced simply for
the purpose of keeping the charter-party unvaried, and preserving
the lien for freight under it. {g)

There are some cases in which an utter stranger to the contract
may become chargeable with freight. Thus, if a neutral vessel
laden with the goods of one of two belligerents, be captured by the
other, the ship is to be restored, and the goods confiscated, the cap-
tor paying the full freight ; for he has by his own act put himself
in the place of the merchant, with respect to the goods, and waived
the completion of the voyage ; {h) but this is only where the goods

{b) Amos V. Temperley, 8 M. & W. 198.

((f) Coleman v. Lambert, 5 M. & W. 502, vbi, by Parke, B., "Tlie consignee is,
prima facie, the owner of the goods, but if he be not, he is not liable, dmplicitcr as
consignee, except on a new contract, to pay the freight. That is evidenced in or-
dinary cases by the bill of lading. I accede also to the decision in Wilson v.
Kymer, that the same evidence may be deduced from tlie previous dealings between
the parties."

(e) Moorsom v. Kymer, 2 M. & S. 303. See Finder v. Wilks, 5 Taunt. 612; Ab-
bott on Shipping, 423, 8th ed.

(/) Sanders v. Vanzeller, 4 Q. B. 260, and see that case as to the mode of pleal-
!ng such a contract.

{g) Ibid.

(/t) The Copenhagen, 1 Rob. A. R. 289.

CONTRACTS OF AFFREIGHTMENT. 397

Duties of the Merchant.

are such as a neutral ship may, by tlie law of nations, carry. (/)
On the other hand, if the ship be hostile, and the goods those of a
neutral, the captor is entitled to the freight, if he convey them to
their destination, but not otherwise, {j)

It has been mentioned that fx part payment of freight may some
times be claimed : this happens in some cases in which only part of
the cargo is delivered, or part only of the voyage is performed. In
the former case, if the ship were a general one, or if she were char-
tered for freight to be paid according to the quantity of the goods,
freight is due for as much as is delivered, ijc) But if a ship char-
tered at a specific sum for the voyage, without reference to the
quantity of goods, were to lose part of her cargo, it has been
doubted whether freight would be payable for the remainder, (J)
Yet certainly the hardship of the case would induce the Court to
construe such a charter-party as favorably as the strictness of law
would permit: and, if there were any circumstances whence it
could be inferred, such, for instance, as an acceptance by the
freighter of the remaining portion of the cargo, a new contract to
pay freight ^^ro rata might be held to arise by implication, (m) such
OS we are now going to advert to.

(i) Abbott, p. 3, c. 7, s. 6. {j) Fortuna, 4 Rob. A. R. 278.

{k) Christy v. Row, 1 Taunt. 300.

{I) Malyne, Lex. Mercat. p. 100. Bright v. Cowper, 1 Brownlow, 21, and the ob
servations iu Abbott, p. 1, c, 7, s. 9. See also Robei'ts v. Haveloek, 3 B. & Ad. 404.
Sinclair v. Bowles, 9 B. <k C. 92, in which tlie judges seem to have pointed at a simi-
lar distinction as existing in the general law of contracts. See also Read v. Rann, 10
B. & C, 438.

(»i) Mitchell V. Darthez, 2 Bingh. N". C. 555; in that ease a ship was chartered
from London to Buenos Ayres and back to Gibraltar, freight 1300^., viz., 200^. pay-
able before sailing, the rest on the final delivery of the homeward cargo. She ar
rived at Buenos Ayres, took in her homeward cargo, and was wrecked on her return
homeward at Fayal, and afterwards sold as unseaworthy. Part of the cargo was
there sold, and the proceeds, except 224Z. 3s. 9(/., applied to defray charges. The
captain sailed for England with the 224Z. 3s. 9c/., and was again shipwrecked, and the
money lost. The greater part of the residue of the cargo was sent to Gibraltar, by
the British Viee-Consul, at the request of the captain, and the freiglit from Faj-al to
Gibraltar there paid upon it by the merchant's agent. Under these circumstances
the Court held that the ship-owner was entitled to no more on the outward voyage
than the 200/., but that he might recover a reasonable compensation for the carriage
from Buenos Ayres to Fayal, if the goods ultimately reached Gibraltar.

398 MERCANTILE CONTRACTS.

Duties of the Merchant.

For, 2clly, If the ship having performed part of her voyage, be
disabled from completing the remainder, the master may, as we
have seen, tranship the goods, in order to convey them to their
destination. In that case it was long a question whether the re-
mainder of the voyage after the transhipment was to be considered
as performed under the old contract or under a new one, and
whether the remuneration was to be at the rate of freight origi-
nally contracted for, or on a quantum meruit. It is, however, now
settled, that if the goods be conveyed safely to their destination, the
freight paid shall be that originally contracted for. That was de-
cided in Shipton v. Tliornton^ {n) where goods shipped on board
the James Scott at Singapore for London, under bills of lading to
Merchant, were, under circumstances of necessity, transhipped at
Batavia into the Mountaineer and Sesostris under bills of lading to
one Ellward or assigns. The goods arrived safe. Ellward in-
dorsed the bills to Merchant, and he received the goods. And it
was held that he was liable to the original freight as per James
Scott, not to the freight as per James Scott to Batavia only, and
then to the rates (which were smaller) as per Mountaineer and
Sesostris. "It maybe taken," said the Court, "to be either the
duty or the right of the owner to tranship. If it be the former, it
must be so in virtue of his original contract ; and it should seem
to result from a performance by him of that contract, that he will
be entitled to the fall consideration for which it was entered into,
without respect to the particular circumstances attending the fulfil-
ment. If it be the latter, a right to the full freight seems to be
implied. The master is at liberty to tranship ; but for what pur-
pose, except for that of earning his full freight at the rate agreed
on?"

There was a question incidentally mooted in this case, on which
the language of the judgment is important, viz., "i/" ihe tranship-
ment can only be effected at a higher than the origiyial rate of freight,
which party is to stand to the loss .^"* The opinion of the Court ap-

{n) 9 Ad. & E. 314.

* It is the duty of the master, when his vessel is disabled in the course of the
▼oyage, to procure another, if he can, and take on the cargo ; and in his character

'-•VjaAV 4^ '^'

CONTRACTS OF AFFREIGHTMENT. 399

Duties of the Merchant.

peared to be that in such case the master's right to tranship would
be at an end, but that he would become the freighter's agent to do
what was most for his benefit under the circumstances, and that,
consequentl J, if it were for the freighter's advantage that the goods
should be forwarded and an increased rate of freight incurred, the
freighter would be bound by his agreement to pay such increased
rate. If the merchant prefer receiving the goods where they are,
he must pay freight 2"/»*o rata itineris peracti. (o) And this, not in
the original contract of affreightment, upon which the owner, if
obliged to sue, must not proceed, but under a new one, which the
law implies from the merchant's behavior, {p) If the master, being
at too great a distance from the mercliant to consult him, and, act-
ing for the best, direct a sale, having good grounds to believe it
necessary, it was thought by some that there was no reason why an
implied contract to pay freight pro rata should not arise on the
merchant's receiving the proceeds, as it certainly will, where the
goods are seized, and sold by a competent prize court, under a
sentence which is afterwards reversed, and the proceeds restored. (5')*

(o) Malyne, 98. Lutwidge v. Grey, Abbott, p. 3, c. 7, s. 13. The Copenhagen, 1
Rob. A. R. 289.

(p) Luke V. Lyde, 3 Burr. 882; 1 Black. 190. Cook v. Jennings, 7 T. R. 381
MuUoy V. Backer, 5 East, 316. Mitchell v. Darthez, 2 Bingh. N. C. 555.

{q) Baillie v. Moudigliani, Parke, c. 2, p. 70.

as agent for the owner, cast on him by the necessity of the case, he may charge the
cargo with the increased freight arising from the hire of the new vessel. Mumford
V. Commercial Ins. Co., 5 John. 262. Searle v. Scovil, 4 John. Ch. R. 218. SeheifFelin
V. N. Y. Ins. Co., 9 John. 21.

But this rule is only imperatiTe when another vessel can be had in the same or a
contiguous port, and would not extend to cases where resort must be had to distant
places ; and, independent of procuring a vessel, there are further serious impediments
in the way of putting the cargo on board. Treadwell v. Union Ins. Co., 6 Cowen,
270. Saltus V. Ocean Ins. Co., 12 John. 107.

A stipulation in the bill of lading that the master, in case of low water, may re-
ship into another craft, does not vary his obligation to carry safely; and the floods
being injured in attempting to remove them from one place to another on shore,
where they Lad been lauded for the purpose of reshipping, it was held that the
owners of the vessel were responsible under the bill of lading. McGregor v. Kil-
gore, 6 Ohio R. 358. And see Whitesides v. Russell, 8 Serg. & Watts, 4-1. Dunseth
V. Wade, 2 Scam. 289.

* In the case of Caze v. Baltimore Ins. Co., 7 Cranch. 358, 2 C. R. 528, it is said

400 MERCANTILE CONTRACTS.

Duties of the Merchant.

The Court of Exchequer has, however, decided that no such con-
tract arises ; (r) and if the master sell without necessity, or refuse
to forward the goods to their destination, no freight is due. (s) And
as, in the absence of express stipulation, the voyage does not com-
mence till the ship has broken ground, her owners, if she be pre-

(r) Vlierboom v. Chapman, 13 M. & W. 230.

(s) Hunter v. Prinsep, 10 East, 378. Liddard v. Lopes, 10 East, 526. Osgood v.
Groning, 2 Camp. 466.

by the Court, " Fi'eight in general is not due imless the voyage be performed. Here
the ship and cargo never arrived at their port of destination, and of course the wliole
freight could not be due. "Was a pro rata freight due ? "We think not. The whole
class of cases resting on the authority of Luke v. Lyde, 3 Burr. 882, proceed on the
ground that there is a voluntary acceptance of the goods themselves at the interme-
diate port ; and not, as in the present case, a compulsive receipt from the hands of
the admiralty, after capture and condemnation, and ultimate restoration upon the
appeal. There is, in our judgment, no equity to support such a claim; and, although
it receives countenance from some remarks incidentally thrown out in Baillie v.
Moudigliani, the current of more recent authorit}-, as well as of principle, clearly
points the other way." See also Columbian Ins. Co. v. Catlett, 12 "Wheat, 383; 6 C.
R. 541. In the ease of The Nathaniel Hooper, 3 Sumn. 542, 550, Judge Story says,
there is no principle which would justify a pro rata freight, where there has been
no voluntary acceptance of damaged goods at an intermediate port, dispensing with
the further carriage of them, but an involuntary sale, from necessity, to prevent
them from there perishing by a total loss. He cites numerous authorities in support
of this position. See also Abbott on Shipp., 5th Am. edit. 443, 455, notes, in which
the American cases on the subject of freight pro rata itineris are collected.

In the case of "Welch v. Hicks, 6 Cowen, 510, it is said, "that freight pro rata
itineris is due where a ship, in consequence of the perils of the sea, without any
fault of the master, goes into a port short of her destination, and is unable to prose-
cute the voyage, and the goods are received by the owner at such intermediate port."
"On the other hand, it is conceded that where the master refuses to repair his ship
and send on the goods, or to procure other vessels for the purpose, and the owner of
the goods then receives them, that this is not such an acceptance of the goods as will
entitle the ship owner to a pro rata freight. It is not a voluntary acceptance. He
does not elect to receive his goods at the intermediate port, and sell them there, or
become his own carrier to the port of destination. He does not assent to the
termination of the voyage at the intermediate port ; but it having been terminated
there, against his will, by the refusal of the master to send on his goods to the port
of destination, he does not, by receiving them under such circumstances, in judgment
of law, promise to pay the freight to the intei-mediate port."

As to the mode of adjusting a demand for a p>ro rata freight, see Coffin v. Storer,
5 Mass. 252. Robinson v. Marine Ins. Co., 2 John. 323.

CONTRACTS OF AFFREIGHTMENT. 401

General Average.

vented from sailing, are entitled to no compensation for work
already done, such as loading the goods on board, {t)

Section Y. — General Average.

There are two charges which frequently accrue during the pro-
secution of the adventure, and fall sometimes on the merchant,
sometimes on the owner, and sometimes on both : these are general
average and salvage.

Whatever damage or loss is incurred by any particular part of
the ship or cargo, for the 'preservation of the rest^ is called General
Average : that is, the several persons interested in the ship, freight,
and cargo, shall contribute their respective proportions to indemnify
the owner of the particular part against the damage which has
been incurred, for the good of all ; {u) but the damage must be for
the general good ; and consequent!}^, in order that there must be a
general average, the whole adventure must have been in jeopardy, {v)
It need not, however, consist in the actual loss or injury of the
subject matter, in respect of which average is claimed, but may be
any expense incurred with relation to it for the common good, ex.
gr., that of unloading the cargo, that the ship may be repaired ; {w)
but the loss must have been voluntarily incurred; for masts and
sails destroyed, in consequence of the necessity of carrying an
unusual press of canvass, are not subjects of general average, (x)
though they are so if cut away and abandoned for the preservation
of the ship= {y) If a ship be obliged to go into port for necessary
repairs, the wages of the seamen during the delay are not, in general,
a subject of average ; {z) though it seems doubtful whether they
would not, if the damage to be repaired itself were so ; {a) nor is

{t) Curling v. Long, 1 B. & P. 634.

(m) Da Costa v. Newnliam, 2 T. R. 407. "Williams v. London Assurance Co., 1
M. & S. 318. Price v. Noble, 4 Taunt. 123.
{v) Nesblt V. Lusliingtou, 4 T. R. 783.
{w) Plummer v. AVildman, 3 M. & S. 482.

{x) Covington v. Roberts, 2 N. R. 378. Power v. Whitmore, 4 M. &, S. 141.
{y) Birkley v. Presgrave, 1 East, 220.
(z) Power V. Witmore, 4 M. & S. 141. (a) Abbott, 493, Stli ed.

403 MERCANTILE CONTRACTS.

General Average.

the injury done to the ship, the ammunition lost, or the expense of
heahng sailors wounded in an action with the enemy, reimbursed,
according to our law, by a general average, {b)

With respect to the articles which contribute, it is held that all
objects of value are not liable, but only those which fall under the
denomination "merces,^^ hence provisions are exempt, (c) as is the
wearing apparel of passengers. The owners contribute according
to the clear value of ship and freight at the end of the voyage, after
deducting the expense thereof. But mariners do not contribute for
their wages, save in the instance of the ransom of the ship, which
is, however, prohibited by law in this country, {d)

As to the mode of contribution, goods to be replaced are valued
when the average is calculated at the ship's place of destination, at
the price they would have fetched there ; but when at the port of
lading, at the invoice price, (e) The practice is to make an account
of the articles that are to contribute, in which the property sacrificed
is included, otherwise its owners would receive its value without
paying towards the loss. Another account is made of the losses to
be replaced : the average is then commonly adjusted by the brokers
and paid by the insurers of the different parties chargeable; and if
there be any dispute, may be recovered either by action at law (/)
or suit in equity. ((/) There is also a lien for general average when
due by the cargo. (A)

This law of general average is of extreme antiquity, being con-
fessedly derived from that passage in the Ehodian Code preserved
by Justinian, — " Lege Rhodia cavetur, ut si levandce navis gratia jadus
mercium /actus sit omnium contrihutione sarciatur quod pro omnibus
datum estJ'' It is scarce necessary to point out tlie reasonableness
of this regulation. " When the ship," writes Lord Tenterden, "is in

(6) Taj-lor v. Curtis, 2 Marsh. 309 ; 6 Taunt. 608. As to the right of goods laden
on deck to contribution, see Gould v. Oliver, 4 Bingh. N. C. 134, and Milward. v.
Ilibbet, 3 Q. B. 120.

(d) 22 Geo. 3, c. 25. 43 Geo. 5, c. 160. 45 Geo. 3, c. 12.

(e) Abbott, p. 3, c. 1.

(/) Birkley v. Presgrave, 1 East, 220. Dobson v. Wilson, S Camp. 480.

{g) Shepherd v. Wright, Shower, P. C. 18.

{h) See Lord Teiterden's judgment, Scaife v. Tobin, 3 B. «fe Ad. 528.

COXTRACTS OF AFFREIGHTMENT. 403

General Average.

danger of perishing from the violent agitation of the wind, or from
the quantity of water that may have forced a way into it, or is
laboring on a rock or a shallow upon which it may have been
driven, or when a pirate or any enemy pursues, gains ground, and
is ready to overtake, no measure that may facilitate the motion and
passage of the ship can be really injurious to any one who is in-
terested in the welfore of any part of the adventure, and every such
measure may be beneficial to almost all. In such emergencies,
therefore, when the mind of the brave is appalled, it is lawful to
have recourse to every mode of preservation, and to cast out the
goods in order to lighten the ship, for the sake of all. Bat if the
ship and the residue of the cargo be saved from the peril by the
voluntary destruction or abandonment of part of the goods, equity
requires that the safety of some should not be purchased at the
expense of others, and therefore all must contribute to the loss."

The jurists of the middle ages sought to fritter away this useful
law, by prescribing various, and sometimes intricate, forms to be
observed on the occasion of the jettison. But, as Lord Tenterden
has remarked, " the regulations prescribed by persons at ease in the
closet or senate- house, will seldom be followed at the moment when
life or liberty is in jeopardy, — at such a moment every one present
will exclaim, with the friend of Juvenal,

' Fundite quce meet sunt — etiam puUherrima — '
and, provided that the jettison have been the effect of danger and
the cause of safety, all writers agree that contribution ought to be
made, though the forms have not been complied with." Indeed,
Emerigon, to whom his lordship refers, cites a remark of Parga, who
says, that during sixty years' experience as a Genoese magistrate,
he had met with but five instances of regular jettison, all of which
were suspected of fraud, because the forms had been too accurately
observed.*

* This subject was examined ■with much learning in tlie case of the Columbian
Ins. Co. V. Ashby, 13 Pet. 331. It is admitted on all sides, that the rule as to general
average ii derived to us from the Rhodian law, as promulgated and adopted in the
Roman jurisprudence. The Roman law fully recognized and enforced the leading
limitations and conditions to justify a general contribution, which have been ever
since steadil}- adhered to by all maritime nations. First, tliat the ship and cargo
ehould be placed in a common imminent peril • secondly, that tliere should be a

40-4 MERCANTILE CONTRACTS.

Salvage.

Section YI. — Salvage.

Salvage is defined to be a compensation to be made by the ship-
owner or mercliant, to otlier persons, by whose assistance the ship

voluntary sacrifice of property to avert that peril ; and, thirdly, that by that sacri-
fice the safety of the other property should be presently and successfully attained-
Hence, if there was no imminent danger or necessity for the sacrifice, as if the
jettison was merely to lighten a ship too heavily laden by the fault of the master in
a tranquil sea, no contribution was due. So, if the ship was injured or disabled in a
storm, without any voluntary sacrifice; or if she foundered or was shipwrecked
without design, the goods saved were not bound to contribution. On the other
hand, if the object of the sacrifice was not attained ; as if there was a jettison to
prevent shipwreck, or to get the ship off the strand, and in either case it was not
attained, as there was no deliverance from the common peril, no contribution was
due. 13 Pet. 338.

In the case of Bradhurst v. Columbian Ins. Co., 9 John. 9, it was held that where
a ship is volimtarily run ashore for the common good, and she is afterwards re-
covered and performs the voyage, the damages resulting from this sacrifice are to be
borne as a general average. But that where the ship is totally lost, it is not a
general average. The same question, however, came up for decision, in Caze v.
Keilly, 3 Wash. C. C. 298 ; Simms v. Gurney, 4 Binn. 513 ; and Gray v. Wain, 2 Serg.
& Eawle, 229 ; and it was held, that there was no difference between the case of a
partial and that of a total loss of tlie ship, by a voluntary stranding, and that both
constituted equally a case of general average. And the Supreme Court of the United
States in the case just cited, 13 Pet. 343, says, " We have examined tlie reasoning in
these opinions, (referring to tlie authorities we have quoted,) and are bound to say
that it has our unqualified assent: and we follow without hesitation the doctrine, as
well founded in authority and supported by principle, that a voluntary stranding of
the ship, followed by a total loss of the ship, but with a saving of the cargo, con-
stitute, when designed for the common safety, a clear case of general average."

In the case of Padeford v. Boardman, 4 Mass. 549, it is said, " General average
expresses that contribution to a loss or expense voluntarily incurred for the preserva-
tion of the whole, in which all who are concerned in a ship, freight, and cargo, are
to bear an equal part, proportionable to their respective interests. And for the loss
incurred by this contribution, however small in amount, the respective owners are
to be indemnified by their insurers."

In the same case it was held, that when in the course of a voyage, a ship insured,
being damaged by winds and storms, voluntarily seeks a port to refit, the expenses
consequent thereon, including the wages and provisions of the crew during the de-
tention, are a subject of general average; but the repairs are a distinct cliarge upon
the vesseh See also Saltus v. Comra. Ins. Co., 10 John. 48Y. Potter v. Ocean Ins.
Co., 3 Sumn. 27. But it has been said that " General average can only arise, where
the sacrifice has been made for the common benefit, and has accomplished the object.

C0XTRACT3 OF AFFEEIGIITMEXT. 405

Salvage.

or its lading may be saved from impending peril, or recovered after
actual loss, (i) The policy, as well as justice, of awarding such a
compensation, is so obvious, that it has been in all ages allowed by
the codes of all civilized nations, {j) Salvage may become due,
either upon rescue from the perils of the sea, or from the hands of
enemies.

(i) Abbott, p. 3, c. 10. As to salvage in a i-iver, see Nicholson v. Chapman, 2 IL
BL 245.

(j) In England it has alwaj's existed bj' force of the law merchant ; and it is now
recognized and secured in cases of rescue from perils of the sea, by stat. 9 «fc 10
Vict. c. 99, s. 19.

The expenses and charges of going to a port of necessity to refit, can properly be a
general average only when the voyage has been or might be resumed. If it has
been abandoned from necessity, then it is not a case for the application of the doc-
trine." Williams v. Suffolk Ins. Co., 3 Sumn. 513.

The necessary costs and charges incurred in case of capture in prociu'ing the
restoration of the ship and cargo are to be allowed as a general average ; but in this
case, it is held in Massachusetts, the wages and provisions of the crew during the
detention are not to be included. The reason given is that the delay is not
voluntarily incurred. Spafford v. Dodge, 14 Mass. 65, 74. In New York they are
included. Leavenworth v. Delafield, 1 Caines, 573. Penny v. New York Ins. Co., 3
Caines, 155.

In case of jettison of a deck load, to avoid dangers of the seas, the owner is not
entitled to the banefit of general average. Doane et al. v. Keating, 12 Leigh. 391.
This rule has bsan recognized in New York, New Hampshire, Connecticut, and
Louisiana.

In case of jettison of goods, their value is generally to be estimated at their
prime cost, or original value; or, if the vessel have arrived at her port of des-
tination, at their value at such port. "Nothing could be more conjectural and
uncertain, in the ascertainment of the value of goods, thrown overboard in cases
of jettison, than to leave that value to be fixed by the probable or possible chances
of escape from the impending danger." Rogers v. Mechanics' Ins. Co., 2 Story,
173, 174.

In cases of general average, the master and owners may retain all goods of the
shippers, until their share of the contribution towards the average is either paid
or secured. And it seems there is no exception to this rule in favor of the
government.

AVhere certain slop clothing, belonging to the United States, was shipped on board
a vessel, which went ashore, and much expense was incurred in saving the goods on
board, it was held that the officei's of the United States had no right to take tlia
goods shipped by them, without paying or securing their contribution to tlie gfuerivJ
average. United States v. Wilder, 3 Sum. 308.

406 MERCANTILE CONTRACTS.

Salvacje.

When tlie rescue is from dangers of the sea, the salvor or
rescuer has a lien on the goods preserved, and formerly might have
kept them till a recompense had been made to him ; {k) but by a
recent statute, {I) he is required to report, and place them at the
disposal of the receiver appointed under that act, or the officer of
customs at the nearest port, who may detain (m) the same until
satisfaction is made of the salvage, or security or bail has been
given by the owner for its payment. The amount of this recom-
pense might, too, if the parties Avould not agree, have been ascer-
tained by a jury in an action brought by the salvor against the
owner of the goods, or by the owner of the goods (having first
tendered what he thought sufficient) against the salvor, {n) In most
cases, the Court of Admiralty had, and in many cases retains juris-
diction, and will, on suit brought, fix the amount of salvage to be
paid, and take care of the property, pendente lite, (o)

Besides the common law and admiralty jurisdictions, a tribunal
for the summary adjustment of salvage in certain cases was pro-
vided by several statutes ; (p) but these are now repealed by the
recent statute above referred to, by which every receiver {q) ap-
pointed under it, and all (r) justices of the peace, mayors, bailiffs,
and other officers of corporations and port towns, constables, head-
boroughs, tithing-men, and officers of customs and excise, are
armed with powers to gather men and horses and carts, and de-
mand assistance from vessels lying in the neighborhood, in order
to the preservation of any ship in distress. A mode is also chalked
out for adjusting summarily their remuneration, and that of the
rescuers in other cases of salvage, by the intervention of two jus-
tices (s) residing near the place, or, if they cannot agree, a third
person conversant with maritime affairs, nominated by them, who

(k) Hartford v. Jones, 1 Lord Raym. 393. Baring v. Day, 8 East, 57.
(0 9 <fc 10 Vict. c. 99, s. 5.
(r,i) Sects. 19, 23.

(n) Abbott, p. 3, c. 10, s. 2 ; but now see 9 & 10 Vict. c. 99, s. 21.
(o) Sect. 19.

Ip) 12 Ann, st. 2, c. 18. 26 Geo. 2, c 19. 49 Geo. 3, c. 122. 63 Geo. 3, c. 87
1 «fe 2 Geo. 4, cc. 75, 76.

{q) 9 & 10 Vict. c. 99, sect. 2.

(r) Sect. 14. (») Sect. 21.

CONTRACTS OF AFFREIGHTMENT. 407

Salvage.

may decide on the amount of salvage, and enforce its payment in
oases where the sum claimed shall not exceed 200?. A like(^)
power is in similar cases given to three or more commissioners of
salvage, whom the commissioners of admiralty are authorized to
appomt for different ports and districts. The decision (i() of both
these tribunals is subject, however, to appeal to the High Court of
Admiralty, and, in the event of such appeal, the property must be
delivered up to the owner upon his giving bail in double the
amount awarded for salvage. In the event of the salvage claim
exceeding 200Z., and the same not being settled by agreement or
arbitration, it must be determined exclusively (t;) by the High
Court of Admiralty, which is expressly declared to have jurisdic-
tion to decide all claims and demands in the nature of salvage,
except in certain cases of droits of admiralty, and where the jus-
tices or commissioners have given a decision, which has not been
duly appealed against, {lu) These regulations do not apply to the
Cinque Ports, {x) where a summary jurisdiction is, however, pro
vided by stat. 1 & 2 Geo. 4, c. 76. (See with regard to appeals in
such cases, 3 & 4 Vict. c. 65, s. 5.)

With respect to salvage from enemies, the law formerly was,
that where a ship was taken and retaken before the captor had
conducted her infra pi'cesidia^ or, at all events, before he had ob-
tained a sentence of condemnation against her, the original owner
had a right to her again on paying salvage to the recaptors. But,
if not retaken till a late: period, she was deemed to have become
the absolute property of the captors, and consequently the lawful
prize of the recaptors ; the original owner's possibility of reinstate-
ment being considered extinguished by the carriage infra lyraisidia^
or sentence of condemnation, {y)

This rule was, however, altered by the legislature in favor of
the original owner of the captured property, (z) who is now entitled
to have it again on payment of salvage, no matter at what period
the recapture may have taken place, and the benefit of thisr

{t) Sect. 22. (m) Sect. 23. {v) Sect. 21.

{w) Sect. 40. {x) Sect, 43.

{y) See case of L'Actif, 1 Edw. 185.

{z) 13 Geo. 2, c. 4, s. 18. 17 Geo. 2, c. 34, s. 20. 29 Geo. 2, e. 34, s. 24.

408 MERCANTILE COFTRACTS

Dissolution of Contracts of Affreightment.

alteration is extended to the allies of Great Britain, whose vessels
have been captured by the enemy and recaptured by British ships,
unless, indeed, it appear that those allies themselves act towards
British property on a less liberal principle, for, in that case, our
courts adopt their rule, and mete to them according to their own
measure of justice, (a) ; '■'--(^- 'v» - ^a-'-'^''- {\.- ■ ^

The amount of salvage on recapture has at various times been
variously regulated by statute. In 1793, it was fixed at one-eighth
for the Eoyal Navy, and one-sixth for private ships, {b) Similar
provisions were made during the last war, and the same rate of
salvage is fixed for His Majesty's hired armed ships as for the
Eoyal Navy, (c)

Section VII. — Dissolution of Contracts of Affreightment.

It remains only to add a few words upon the mode in which
contracts of affreightment may be dissolved. Like all others, they
may, of course, be rescinded by the consent of parties, and are so,
if rendered unlawful by a declaration of the government made
before their performance : thus, the breaking out of hostilities be-
tween the country to which the ship belongs and that to which she
is bound, rescinds the contract of affreightment. It is not, how-
ever, dissolved by an embargo, which is but a temporary suspen-
sion, not a total interdiction of Commerce ; {d) unless, indeed, the
embargo was intended as a hostile measure against the country to
which the ship belongs, and the object of the voyage has been
thereby lost, (e)

On the same principle, if the exportation of the articles of
which the cargo is to consist be prohibited, the contract of affreight-
ment is dissolved, (/) But such a prohibition by a foreign govern-

(a) The Santa Cruz, 1 Rob. A. R. 63.
(6) 33 Geo. 3, c. 60.

{(I) Iladley v. Clarke, 8 T. R. 259.

(«) Touteng v. Hubbard, 3 B. & P. 291.

(/) See Lord EUenborough's remarks, in Barker v. Hodgson, 3 M. & S. 267.

C0XTRACT3 OF AFFREIGHTMENT. 499

Dissolution of Contracts of Affreightment.

ment is no excuse for the non-performance of an engagement to
lade a vessel with a cargo of the goods the exportation of which
is prohibited ; for one nation will not enforce the merely positive
regulations of another, if inconsistent with its own. {g)

It is illegal, as contrary to the law of nations, to attempt to
enter a blockaded port in violation of the blockade ; and, after a
notification of such blockade, the act of sailing loith the intention of
violating the blockade, is illegal. Qi) But the mere act of sailiu"-
to a port which is blockaded at the time the voyage is commenced
without any premeditated intention of breaking the blockade, if it
shall' be found to continue in force when the ship arrives off the
port, is not illegal ; {i) for it may be of the first importance to
neutral merchants to possess the opportunity of introducing their
goods at the earliest moment after the blockade has been relaxed.*

{g) Bright v. Page, Abb. p. 2, c. 11 ; 3 B. & P. 295, n. a. Et vide Sjoerds v. Lus-
eombe, 16 East, 201.

(A) The Neptunus, 2 Rob. 110. Medeiros v. Hill, 8 Bingh. 231.

{i) Medeiros v. Hill, 8 Bingh. 231. The Shepherdess, 5 Rob. 2G-4. See ISTaylor v.
Taylor, 9 B. & C. 718.

* The measure of damages in action against carriers, according to Mr. Sedge-
wick, is the value of the goods at the place of destination. Tliis rule is sustained in
a note to Flanders Maritime La-w, p. 159, by reference to a number of American
eases, among others to Gillingham v. Demprey, 12 Serg. & Rawl. ISS. The Cassius,
2 Story, 81. Watkinson v. Laughton, 8 Johns. 213. Brackett v. McNair, 14 Johns,
ITO. Contra, Bridge v. Austin, 4 Mass. 115. Edmondson v. Baxter, 4 Hayw, 112.

CHAPTEE, IV.

MARITIME I 2s" S U E A N C E .

Sect. 1. Definition and nature of the contract.

2. The parties^ or who may he insurers and insured,

3. Subject matter^ or ivhat may he insured.

4. The policy.

5. Residts of contract.

6. Proceedings on the contract.

Section I. — Definition and Nature of Contract.

Insukakce is a contract by wliicli one partj^, in consideration
of a premium, undertakes to indemnify another party against a
particular event, (a) A policy of insurance is the instrument in
which this contract is set forth.* The party who undertakes to

(a) 2 Bl. Comm. 458.

* In England, it would seem to be a necessary result from the requisitions of certain
statutes, 28 Geo. 3, c. 56, and 35 Geo. 3, c. 63, that a contract of insurance, to be
valid, must be in writing. And the learned authors who have treated on thesubiecl
of insurance in this country, express a doiibt whether an action on a contract of in-
surance merely oral, would now be sustained, as the usage of a written contract has
long and universally prevailed. 1 J. Duer on Ins. 60; 1 Phil, on Ins. 8. It is ad-
mitted, however, that upon principles of common law, an unwritten or parol contract
of insurance would undoubtedly be sufficient. It may be observed, that the usage
which has prevailed to express the contract of insurance in writing, by no means
conflicts with the right to make it by words. And although there are certain con-
tracts which at common law might be made by parol, that are now required to be in
writing, thus forming a class of written contracts not under seal, wholly unknown
to the common law, yet it is submitted that nothing short of legislative enactment
can increase that class of contracts, or add, as it were, another clause to the Statute
of Frauds.

MARITIME INSURANCE. 411

Definition and Nature of Contract.

indemnify is called the Insurer^ and, having subscribed the policy,
the Underwriter. The party indemnified is termed the insured or
assured. The subject matter of insurance is very extensive, since
any description of interest may be insured against any species of
danger ; save only where the contract would be opposed to the
common law, or to some statute, ex. gr.^ 9 Anne, c. 6, s. 57, which
forbids insurances on marriages, births, christenings, and service.
The three principal species of insurance, which will alone be taken
notice of in this treatise, are: 1. Maritime Insurance. 2. Insurance
on Lives. 3. Insurance against loss by Fire.

Maritime Insurance takes place when a merchant gives a pre-
mium to others to assure his ship or goods, from one port or place,
to some other port or place, on such terms as they agree to. And
if the ship, or goods, &c., perish, or are lost in whole, or in part,
every subscriber is to make a recompense either to the extent of
his subscription, or 2^'''o rata, in proportion thereto, "whereby,"
says the statute 43 Eliz. c. 12, " on the loss or perishing of any
ship, there followeth not the undoing of any man, but the loss
lighteth rather easily on many than heavily upon a few." This
contract, which was introduced into England by the Italians, ap-
peared of so much importance to the legislature in the reign of
Elizabeth, that by the statute 43 of tliat Queen, cap. 12, the chan-
cellor was empowered to issue a commission, appointing the Ee-
corder of London, the Judge of the Admiralty, two doctors of the
civil law, two common lawyers, and three merchants, to form a
court, of whom three were to be a quorum, who were to adjudi-
cate on all controversies arising out of policies. But this juris-
diction, proving defective in many respects, soon fell into disuse,
especially after it had been decided by the Court of Upper Bench,

Pai'ties may make a valid agreement for an insurance, to be afterwards carried
out by the execution of a policy in due form. Perkins v. "Washington Ins. Co., 4 Cow.
646. On a refusal to execute the policy, a Court of Equity will decree a specific
performance. 1 J. Duer, 66, 110. Flint v. Ohio Ins. Co., 8 Ohio, 504. Tayloe v. Mer-
chants' Fire Ins. Co., 9 How. S. C. R. 390. Or it seems an action at law might be
sustained on tlie agreement, and if a loss lias occurred, a recovery had for it as part
of the damages. 1 J. Duer, 66. Lightbody v. North American Ins. Co., 23 Wend.
18. McCullock V. Eagle Ins. Co., 1 Pick. 278.

412 MERCANTILE CONTRACTS.

The Parties to a Contract of Insurance.

in Cane v. Moy, 2 Sid. 121, that a judgment in the Court of Po-
licies in the defendant's favor was no bar to a subsequent action
against him for the same cause. It is always considered a con
tract uherrimce. Jidei^ and receives a liberal construction, (5) for
the benefit of trade, and of the assured. In considering it, we
will treat, 1. Of the parties to the contract, or who may be in
surers and insured. 2. Of the subject matter of the contract, or
what may be insured. 3. Of the policy or instrument in which
the contract is set forth, its form and construction. 4. Of the
results of the contract ; and, 5. Of the proceedings consequent
on those results.

Section II. — The Parties to a Contract of Insurance.

At common law, any individual, partnership, or corporation,
might have become insurers. By stat. 6 Geo. 1, c. 18, the King
was empowered to erect two chartered companies, viz., the Eoyal
Exchange Assurance, and London Assurance Companies, for
insuring ships, and lending money on bottomry; and by the 12th
section of that act, a monopoly was conferred upon them, as
against all, excepting individual underwriters ; of which, however,
they have since been deprived, and the common law on this sub-
ject is restored, by stat. 4 Geo. 4, c. 114.

Any person, whether British or alien, may, generally speaking,
be insured. No policy, however, can be effected, nor action
maintained by or on behalf of an alien enemy during war : (c)
vmless, indeed, his ship be protected by the royal license, in which
case any person who effected the insurance as his trustee may
sue. {d) A neutral part-owner of goods, the residue of which be-
longs to one who, before the action, though subsequently to the
loss, became an enemy, may sue on an insurance of his own share, (e)

(6) 2 Wms. Saund. 200, in notis.

{d) Kensington v. Inglis, 8 East, 2'73, recognized in Flindt v. Waters, 15 East, 260.

{i) Rotch V. Edie, 6 T. II. 413. See Mr. Campbell's remarks on that ease, Brom-
ley V. Hesseitine, 1 Camp. 76, in notis.

MARITIME INSURANCE. 413

The Parties to a Contract of Insurance.

An English subject living and trading under the p-otection^ and
for the henejit^ of a foreign state, is looked on, if that state be hos-
tile, as an enemy ; if it be neutral, as a neutral. {/) But it does
not appear to follow that, because a British or neutral merchant
happens to be resident in an enemy's country, goods to be de-
livered for him at a neutral or friendly port are, on that account,
uninsurable ; (5') nor does the military occupation of a country by
our enemies, 12:180 facto constitute the natives of that country also
enemies. (A)

Under the head of Parties, it seems proper to remark, that
subscriptions to a policy are almo&t always procured by a Broker, {{)
concerning whom the practice is that the underwriters, to whom,
in most instances, the insured are unknown, look to the broker
for the payment of the premium, and he to the insured. The
latter pay the premiums to the broker only, and he is a middle-
man between the insured and underwriter ; but he is not solely
an agent ; he is a principal to receive the money from the insured,
and pay it to the underwriter, (y)* The mode in which this pay-

(/) M'Connel v. Hector, 3 B. <fe P. 113. WilHson v. Patteson, 7 Taunt. 439.

(cf) Bromley v. Hesseltine, 1 Camp. '75.

(k) Hagedorn v. Bell, 1 M. & S. 450.

(i) In the absence of any precise instructions, it is the duty of the broker to pro-
cure the policy to be made and to obtain it from the insurers within a reasonable
time, and he will be liable in an action on the case for an omission to do this, in
■which it is sufficient to allege that, although a reasonable time had elapsed, lie wrong-
fully, and in breach of his duty, neglected to procure the policy to be effected ; and
if he seeks to excuse himself on the ground of the impossibility of finding persona
willing to undertake tlie risk, or any other justifiable ground, he must set that up.
See Turpin v. Bilton, 5 M. & Gr. 455.

(j) Power V. Butcher, 10 B. & C. 329. See a very clear explanation of this doc-
ti'ine by Lord Ellenborough, in his judgment in Jenkins v. Power, 6 M. & S. 282.

* An agent who insures for his principal has authority to abandon the cargo.
Chesapeake Ins. Co. v. Stark, 6 Cranch, 288. And to settle the loss, if he has posses-
sion of the policy. Errick v. Johnson, 6 Mass. 192. As to effect of revocation of
authority on the right of agent to sue on poliej' in his name, see Reed v. Pacific In
Burance Co., 1 Mete. 166.

One part-owner of a vessel, as such, has no authority to insure for the rest of tha
owners, although he bo also the ship's husband. Finney v. Fairhaven Ins. Co., 5
Mete. 192, Pinney v. "Warren Ins. Co., 1 Mete. 16. Turner v. Burrows, 8 "Wend. 144.

414 IfEr.CAyTUJE CONTRACTS.

The Subject Matter, or What may be Insured.

ment, and the payment made to the insured in ca.se of loss, is
usually effected, will be seen in Stewart v. Aherdein. {k)

Section III. — The Salject Matter^ or What may le Insured.

At common law, an interest on the part of tlie insured in the
subject matter of insurance was not absolutely requisite, and might
have been dispen.sed with by a policy containing the words interest
err no interest; though, in the absence of such words, it was under-
stood to exist, and must have been proved. (Z) However, by stat.
19 Geo, 2, c. 37, s. 1, it is enacted, "that no in.surances shall be
made by any person, bodies corporate or politic, on any ship lehng-
vny to Bis Majesty or any of his subjects, or any goods, merchandises,
or effects laden, or to be laden on board such ships, interest or no
interest, or without further proof of interest than the policy, or by
way of gaming or wagering, or without benefit of salvage to the
assurer, and that every such insurance shall be void," A policy
offending against the provisions of this section is called a Wager
Policy!^ By sect. 2, however, " insurances on private ships of war,
fitted out by any of Ilis Majesty's subjects, solely to cruise against

(A;) 4 M. & W, 211 ; arde, b. i. c. 5.

{I) See Lucena v. Crawford, 3 B. <fe P. 101, per Chambre, J. In Saddlers' Co. v. Bad--
cock, 2 Atk. 5.56, per Ld. Ilardwicke, such an instrument was rather a viager than a
j>r>lijC]i, wliich is a contract to indernnifif, and accordingly some wagers have been held
proliibited by stat. 14 Geo. 3, c. 48, which aimed at similar policies on lives. Patter-
son V. Powell, Bingh. 320.

Nor a master of a vessel, as such. Foster v. United Ins. Co., 11 Pick. 8.5. But where
a partrowner of a vessel eflfects insurance for himself and the other owners without
their previous authority, they may ratify his act even after they obtain knowledge
of the loss of the vessel ; and tlie bringing of an action on the policy in their names
is a sufficient ratification of his act. Finney v. Fairhaven Ins. Co., .5 Mete. 192.

* In most, if not all of the United States, it is believed wager policies are now
rirohibited, either expresslj', or as coming within the purview of statutes against
gaming and wagers. Independent of any statute, it is doubtful whether such policies
would now be sustained, though in some of the earlier cases of New York their
validity at common law seems to have been recognized. In Massachusetts, they were
considered illegal on general j)rinciples. Ruchanan v. Ocean Ins. Co., 6 Cow. 318
Amory v. Oilman, 2 Mass. 1. 1 J. Duer on Ins. if4.

MARITIME IXSURANCR 415

The Subject Matter, or What may be Insured.

his euemies, may be made by or for the owners thereof, interest or
no interest, free of average and without benefit of salvage to the
insurer." By sect. 3, an}'' eflects from any port or places in Europe
or America, in possession of the crowns of Spain or Portugal, may
be insured in the same manner as if this act had not been made.

It will be observed, that, in consequence of the words printed
in italics, foreign ships are not within the statute, {m) In ordinary
cases, it is now requisite that the subject matter of insurance should
be one in which the insured is interested^ and of course, it must be
such as it is possible to have an interest in ; and it has been decided
that if the insured has before the loss assigned away his interest,
ex. gr., by selling the vessel insured, he cannot sue upon the policy
for his own benefit, nor as trustee for the assignee, unless the policy
was expressly or impliedly assigned, {n) Ships, (o) goods, a special
property therein, ex. gr., that of a carrier, (p) or money expended
by a captain for the ship's use, his commission and privileges, {q)
expected profits, (;•) bottomry or respondentia interest, (s) freight, {t)
have all been held fit subjects of Marine Insurance. Under the
term freight, may be insured the benefit an owner would derive
from carrying his own goods in his own vessel ; {>() but in order to
recover under a policy upon freight, the assured must prove that,
but for the intervention of a peril insured against, some freight
would have been earned, by showing, either that some goods were
put on board, or that there was some contract for doing so. (r)

(w) Thelussou v. Fletcher, Doug. 315. Craiiford v. Hunter, ST. R. 11. Nantes v.
Thompson, 2 East, 3S5.

(h) Fowles V. Innes, 11 M. it W 10.

(o) It seems doubtful whether a mortgagee of a ship can now insure the whole
ralue. Irving v. Richardson, 2 B. «fe Ad. 193.

(p) Tark, U. Crowley v. Cohen, 3 B & Ad. 47

{q) Gregory v. Christie, Park, 14. King v. Glover, 2 X. R. 20G.

(r) Grant v. Parkinson, Park, 402. Eyre v. Glover, 16 East, 218; 3 Camp. 2T6.
Barclay v. Cousins, 2 East, 544. Stockdale v. Dunlop, 6 M. <fe "W. 224.

(s) Simonds t'. Hodgson, 3 B. & Ad. 50.

(<) Montgomery v. Eggington, 3 T. R. 3G2. Taylor v. Wilson, 15 East, 324. See
Barclay v. Stirling, 5 M. & S. C.

(«) Flint v. Flemyng, 1 B. «t Ad. 40. Devaux v. J'Anson, 5 Bingh. X. C. 510.

((') Fliat V. Flemyng, nbi supra, Ilorncastle i<. Stuart, 7 East, 400. See Forbes r.
Aspinall, 13 East, 331. Lord Ellenborough's expressions in tliat case, "that, hi order
to recover 07i a policy on fnUjht, a full cargo must be ready to be s\ipped, attd the ship

416 MERCANTILE CONTRACTS.

The Subject Matter, or What may be Insured.

There are many other legal subjects of insurance; a defeasible or
inchoate interest may be insured, as well as one absolute and per-
fect, (ty)* In a word, any person who has an interest in the subject
matter of insurance may be insured to the extent of that interest:
and any person may be said to have an interest, who may b'
injured by the risks to which that subject matter is exposed, (x)f
or would only but for them have a moral certainty of advantage.

must be ready to receive her cargo,'' are explained by Tindal, C. J., in Devaiix v. J'An-
son 5 Binfh. N. C. 538. His Lordship remarks, that in that case the inability of the
ship to receive the cargo was not occasioned by any peril insured against, but by her
being already partly loaded. In Devaux v. J'Anson, the ship was lost while in a dock,
where she could not have received the cargo, in consequence of an accident, which
happened on endeavoring to get her out of the dock, in which she had been placed
for repairs. The insured were held entitled to recover on the policy on freight.

{w) In Sutherland v. Pratt, 11 M. <fe W. 297, it was decided that a merchant's in-
terest in the safety of goods which he had purchased as sound, but which had been
damaged at a time prior to the purchase, was insurable by a policy containing the
words lost or not lost. See post, Stirling v. Vaughan, 11 East, 619; 2 Camp. 225. Le
Cras V. Hughes, Park, Insur. 406. But it is doubtful whether Le Cras v. Hughes can
be supported. In Devaux v. Steele, 6 Bingh. N. C. 358, strong reflections were cast
on it.

{x) Lucena v. Crawford, 2 N. R. 800. See Stirling v. Vaughan, ubi supra. Hobba
V. Hannam, 3 Camp. 93. Page v. Fry, 2 B. <& P. 240. See the notes to Coram v.
Sweeting, 2 Wms. Saund. 202, e.

* The decisions in the United States, as to the interest in the subject matter of
insurance, are fully as liberal in relation to the right to insure, as those referred to in
the text. The term interest, as used in application to the right to insure, does not
necessarily \m^\j property in the subject of insurance. One holding goods as agent,
or trustee of another, has an insuiiable interest. Buck v. -Chesapeake Ins. Co., 1 Pet.
151. See, as to an equitable interest, Locke v. North American Ins. Co., 13 Mass. 61 ;
as to profits, Patapsco Ins. Co. v. Coulter, 3 Pet. 239 ; as to expected commissions cf
merchants to whom goods have been consigned, Putnam v. Mercantile Marine Ins.
Co., 6 Mete. 886 ; as to interest of mortgagor, which it seems may be insured,
although the property be mortgaged to its full value, Iligginson v. Dall, 13 Mass. 94;
and as to a bottomry interest, which it seems must be insured eo nomine, Kenny v
Clarkson, 1 John. 885; and s6e also, Hancox v. Fishing Ins. Co., 3 Sumn. 132, 140, in
which case the doctrine on this subject is generally stated. "The truth is," &&ya Mr.
Justice Story, " that an insurable interest is sui generis, and peculiar in its texture and
operation. It sometimes exists where there is not any present property, or jus in re, oi
jus ad rem. Inchoate rights, founded on subsisting titles, unless prohibite'd by the
policy of the law, are insurable ; as, for example, freight, resi^ondentia, and bottomry."

f See note to 10 Ves. 158 ; 15 Ves. 67 ; 5 Term, 709 ; 2 Peters, 25.

MARITIME INSURANCE. 417

The Subject Matter, or What may be Insured.

Still, tliongh the definition of an interest is thus wide, there must be
some interest such as the law can take notice of; thus, though the
profits likely to be made on an expected cargo may be insured, yet
no insurance can be effected on the expected profits of a cargo, to
which the claim of the party insuring is founded on a contract void
by the Statute of Frauds, {y) And, upon the whole, the leaning
seems to be at present' towards a more confined signification of the
word interest than has been attributed to it by some of the older
authorities, (s)

The insurance of seamen's wages, or any thing to be received in
lieu thereof, is illegal ; for the maxim, that freight is the mother of
wages, a maxim which tends to the public good, by stimulating
mariners to exertion, would be evaded if the mariner could insure
the receipt of his wages at all events, (a) Lord Ellenborough held
at ]Sr. P. that an insurance on 300/. lent to the captain^ payable out of
the freight, teas illegal, {h)

The interest which an underwriter acquires in the safety of that
which he has insured, is not, in this countr}^, a legal subject matter
of insurance, except in three cases, viz.: 1, the insolvency ; 2, the
hanhruptcy ; 3, the death of the insurer, in which a reassurance, as it
is termed, is allowed, but must be stated in the policy to be such,
and must not exceed in amount the sum before insured, (c)* This
section of the act extends to foreign ships, {d)

{y) Stockdale v. Dunlop, 6 M. & W. 224.

(z) See Devaux v. Steele, 6 Bing. N. C. 358. Lucena v. Crawford, 2 N. R. 321.

(a) See Webster v. De Taster, 7 T. R. 157.

(6) Wilson V. Roj-al Exchange Assurance Co., 2 Camp. 625.

{d) Andree v. Fletcher, 2 T. R. 161.

* A contract of reassurance is not prohibited by the principles of the common
law ; and it is not believed that any of the states have adopted the statute cited by
the author. Merry v. Prince, 2 Mass. 278. 3 Kent. Com. 278. The reinsured may
recover costs and expenses incurred in good faith, in defending a suit on the first in-
surance. New York Marine Ins. Co. v. Protection Ins. Co., 1 Story R. 459.

A double insurance is when one insures the same thing twice over, against the

same perils; Perkins v. New Eng. Marine Ins. Co., 12 Mass. 217 ; and in such case the

assured has an obligation from two or more parties to perform the same thing at the

same time. He cannot obtain satisfaction from both. But he may consider each as

418 MERCANTILE CONTRACT.

The Subject Matter, or What may be Insured.

It is scarcely needful to observe, that the subject matter of the
insurance will be improper, and the policy unavailable, where a
voyage insured is one prohibited by law ; or goods insured are in-
tended for carrying on an illegal commerce, (e) Trading with an
enemy without the King's license is illegal. (/) But such trade
will be legalized by a royal license, (g) the conditions of which
must be strictly observed. Thus, if it require a bond as a prelim-
inary to exportation, that bond must be given, or the exportation
will be illegal, (h) So, if the license be for a limited time ; though,
if the adventure were bona fide prosecuted within the time, it will
not become illegal so as to avoid a policy, because accidentally
protracted beyond it. {i) A subject of Great Britain domiciled in
a country in amity with ours, may exercise the privilege of a sub-
ject of that country, by trading with one in hostility to ours, {j)

An infirmity in any part of an integral voyage or policy ren-
ders the whole illegal ; {k) as, for instance, if a merchant insure
le"-al and illegal goods together in the same policy : but if a ship

(e) Camden v. Anderson, 723; 1 B. & P. 2'72. Johnson v. Sutton, Dougl. 254.
D^.mada v. Motteux, Park, 234.

(/) Potts V. Bell, 8 T. R. 548.

{g) Vandyck v. Whitmore, 1 East, 4Y5. Usparicha v. Noble, 13 East, 332. See
Robinson v. Touray, 1 M. <fe S. 217. Robinson v. Cheeswright, ibid. 220. Hagedorn
V. Reid, 1 M. & S. 5GV. Rucker v. Ansley,' 5 M. &, S. 25.

(/«) Vandyck v. Whitmore, ubi supra.

{i) Schroeder v. Vaux, 15 East, 52.

(j) Bell V. Reid, 1 M. <fe S. 726.

(k) Parkin v. Dick, 2 Camp. 221, 11 East, 502, in "Vtilson v. Marryat, 8 T. R. 31.

liable to paj- a proportionate part, and recover accordingly, or he may require either
to pay the whole ; and tlie party who pays the whole, or a disproportionate partj
will be entitled to a contribution against the other, so that the burden maybe borne
according to their respective liabilities. Wiggin v. Suffolk Ins. Co., 18 Pick. 145.
And without regard to the order of time in which the policies were made. 2 Kent.
Com. 280.

It is usual among the insurance offices in this country to insert clauses in their
policies, in relation both to prior and subsequent insurances against the same risks.
As to the effect and construction of these clauses, which differ in several offices, see
Kent V. Manufacturers' Ins. Co., 18 Pick. 19. Jackson v. Mass. Mutual Fire Ins. Co.,
23 Pick. 418. American Ins. Co. v. Griswold, 14 Wend. 399. Carpenter v. Provi-
dence Washington Ins. Co., 16 Pet. 495. An^post, note mider the head of Fire In-
iurance.

MARITIME INSURANCE. 419

The Policy — its Form and Construction.

bring hither from a hostile country some goods licensed and others
not licensed, an insurance on the licensed goods will not be there-
by vitiated. (0*

Sectiox IV. — The Policy — its Form and Construction.

The policy, which is usually printed, with a few terms super-
added in writing, as the intention of the parties happens to require,
is an instrument of an extremely ancient form, and very inaccu-
rate and ungrammatical in its language, which, however, having
acquired a fixed meaning from judicial decisions, and the usage of
trade, it is now safest to. adhere to. (?n) The words in writing, if
there be a doubt upon the meaning of the whole, tave greater ef-
fect attributed to them than those in print ; because they are the
immediate terms selected by the parties, whereas the others are a
general formula, (n) Parol evidence is not admissible to control

{I) Pieschall v. Allnutt, 4 Taunt. 792. See 1 M. & S. 450.
{m) Brough v. Whitmore, 4 T. R. 206.

(w) 4 East, 136. See per Pollock, C. B. Alsager v. St. Katherine's Dock Com-
pany, 14 M. & W. 798.

* The effect on the contract of insurance of the illegality of the voyage, which
may arise either from the character of the goods or the nature of the trade, has been
examined wi+h much learning, and forms a prominent head in some of the works on
Insurance, and particularly the treatise of Mr. Duer, recently published.

It is contended by that Jearned author, that a subsequent illegality, although not
contemplated or intended by the insured, when the policy was effected, avoids the
policy from the time it occurs, and discharges the insurers from all subsequent risks.
1 J. Duer, 344. But in the case of Clark v. Protection Ins. Co., 1 Story R. 109, Judge
Story expresses the opinion that the only effect of such subsequent illegality, is to
exempt the insurers from any liability for a loss, of which the illegality is the imme-
diate and proximate cause, whilst their liability for all losses proceeding from other
risks remains unimpaired ; and it is said by Chancellor Kent that if the voyage, as
originally insured, be lawful, a subsequent illegality does not affect it, if the loss be
not tainted with such illegality. 3 Kent Com. 262. And it is conceded, that al-
though an infirmity in any part of an integral voj'age renders the whole illegal,
yet an illegality arising from subsequent causes, and not intended at the inct^ption
of the voj'age, does not render the contract void in its origin, and the insured cau
recover for losses occurring before the illegality attached.

420 MERCANTILE CONTRACTS.

llie Policy — its Form and Construction.

the meaning of a policy, or indeed of any other written instru
ment ; (o) tliougli it is admissible, as in cases of other mercantile
instruments, to ex]}lai7i the language of the policy with reference
to the usual practice of trade, ex. gr., to show that the Gulf of
Finland is considered by mercantile men part of the Baltic, (j))^

(o) Aguilar v. Rogers, 7 T. R. 421. Yeats v. Pym, 6 Taunt. 446. Haines v.
Knightley, Skinn. 54. Weston v. Ernes, 1 Taunt. 115. Blackett v R. E. A. C, 2
Tyrwh. 266 ; 2 C. & J. 244. Reading v. Menbam, 1 M. & Rob.

{p) Ubde V. AValters, 3 Camp. 16, accord. Robertson v. Clark, 1 Bingb. 445.
Moxon V. Atkins, 3 Camp. 200. Vallance v. Dewar, 1 Camp. 503. Letbulier's case,
2 Sal. 443. Noble v. Kennoway, Doug. 510. Chauraud v. Angerstein, Peake, 43.
Powell V. Horten, 2 Bingb. N. C. 668. Bold v. Rayner, 1 M. & W. 343. See also
Lewis V. Marsball, 7 M. & Gr. 729.

* In some cases parol evidence is necessary to enable tbe Court to give any con-
struction to the written contract. General and indeterminate words sometimes occur
in a policy, which may properly be explained and limited by parol evidence, so as to
designate with certainty the subject to which the parties intended to refer. Words
which may be consistently applied to different subjects, are of this character, as, for
instance, the -wovd freiffht, which may mean goods on board of a vessel, or the price
to be paid for the carriage of the goods. 1 J. Duer, 167, 170.

Foreign words, when such happen to be used, or words purely technical, of which
the legal import has not been fixed, must, of necessity, be translated, or explained by
evidence, to enable the Court to give them any effect. 1 J. Duer, 175. Sleight i'.
Hartshorne, 2 Johns. 531.

Parol evidence may, of course, be received to remove a latent ambiguity in a con-
tract of insurance, as in other written insti-uments. As where a vessel is insured to
a foreign port, and it appears that there are two ports of the same name to which
the description in the policy will equally apply, in such case evidence will be re-
ceived to show which of them was intended by the parties. 1 J. Duer, 174. Carru
thers V. Sheddon, 6 Taunt. 14.

When particular words have acquired, by the known usage of trade, a peculiar
meaning, wholly distinct from their ordinary and popular sense; or when by a gen-
eral practice the voyage or trade to which the insurance relates, has been pursued in
a certain course or manner, that the terms of the policy in their ordinary interpreta-
tion would not embrace; it may be shown by parol evidence, and the Court will in
the one case adopt the commercial meaning of the words in the construction of the
contract, and in the other give the same effect to the usage as if it were adopted in
the contract by express words. 1 J. Duer, 179, 195.

And when the interpretation of words, or the construction of a clause in the
policy that may be understood in a sense more or less extensive, has not been fixed
by judicial decisions, parol evidence may be admitted to show, whether they have
obtained by use and practice between the assurers and the assured, any, and what

MARITIME INSURANCE. 421

Tlie Policy — its Form and Construction.

But the usage of Lloyd's, being prima facie only tlie usage of a
single house, will not be binding upon one who cannot be shown
to be acquainted with it. (5-) And it has been thought that the
practice of admitting usage to explain mercantile contracts, ought
not to be extended, (r)

A policy is either open or valued. An open policy is where the
value of the thing insured is not inserted in the policy ; and, there-
fore, must be proved at the trial, if a loss happen. A valued policy
is where the value of the thing insured is settled by agreement
between the parties, and inserted in the policy, usually in this form :
— " Tlie said ship, c&c, goods^ and merchandise^ c&c, for so much
as concerns the assureds hj agreement between the assureds and assurers
in this policy, are and shall he valued at £, ." And sometimes

{q) Gabay v. Lloyd, 3 B. & C. 793. But qucere whether it be not admissible in
certain cases even between such persons, on the same principle as the rules of the
Liverpool Stock Exchange were admitted between parties not members, in Stewart v.
Cauty, 8 M. &. W. 160.

(r) Anderson v. Pitcher, 2 B. <fe P. 168, per Lord Eldon.

known and definite import. The usage, if proved, will govern the construction. 1
J. Duer, 185. Parr v. Anderson, 6 East, 20Y.

In relation to the constituent qualities and essential requisites of a valid usage,
our limits will not allow more than the insertion of the general rule laid down by
Mr. Duer in his valuable treatise on Insurance, from which we have extracted the
matter of this note, and to which we refer the reader for a full, interesting, and able
exposition of the rule, and of the subject of usage generally. "It is to be collected
from the decisions, that in these cases, a usage, that can alone be allowed to control
the intei'pretation of the policy, or vary the legal rights of the parties, must be gen-
eral, uniform, notorious, reasonable, and consistent with the terms of the policy, and
to a certain extent with the rules of law. I do not mean to affirm that, in any sin-
gle case, all these are stated as the necessary properties of a valid usage, or that in
any, the terms used to describe them have been defined with the precision they will
be found to require. It is only from an attentive consideration and comparison of
all the cases, that these essential requisites of a usage can be deduced, and it is by
the same process, that we must ascertain the sense in which the terms used to describe
them are properly to be understood." 1 J. Duer, 258. And see al^o Yeaton v. Fry.
5 Cranch, 335; 2 C. R. 273. Columbian Ins. Co. v. Catlett, 12 Wheat. 383; 6 C. R.
541. Gracie v. Marine Ins. Co. of Baltimore, 8 Cranch, 75; 3 C. R. 39. Seaman v.
Loring, 1 Mason, 127. Donnell v. Col. Ins. Co., 2 Sumn. 381. Palmer v. Warren
Ins. Co., 1 Story, 360. Rogers v. Mechanics' Ins. Co., 1 Story, 607. Citizens' Bank
V. Nantucket Steamboat Co., 2 Stor}', 16.

422 MERCANTILE CONTRACTS.

The Policy — its Form and Construction.

the words, '"'' the policy to he deemed sufficient proof of interest in cast
of loss,^^ are added. Valued policies derive their origin from the
difficulty the assured sometimes had in proving the value of his in-
terest, which induced him to give the insurer a greater premium to
agree to estimate it at a certain sum, from which he derives this ad-
vantage, viz., that in case of a total loss, he is only bound to show
some interest in order to satisfy the stat. 19 Geo. 2, c. 87, but not
the value, because that is admitted by the insurer, (s) However,
valued policies must not be used as a cover for wagering ; and, there-
fore, the interest of the assured must be a real hona fide interest, not
a mere colorable one, otherwise the policy wixl be void ; nay, if he
fraudulently overvalue his interest, in order to cheat the insurers,
he will not be permitted to recover even for what he actually had
on board, (/)

The following is the ordinary form of a j)olicy of insurance on
ship and goods :

"/n the name of God. Amen.

"A. B., as well in his own name, as for and in the name and
names of all and every other person or persons to whom the same
doth, may, or shall appertain, in part or in all, doth make assur-
ance, and cause himself, and them, and every of them, to be in-
sured, lost or not lost, at and from Upon any kind of
goods and merchandises, and also upon the body, tackle, apparel,
ordnance, munition, artillery, boat, aud other furniture, of and in
the good ship or vessel, called the whereof is
master, under God, for this present voyage, E. T., or whoever else
shall go for master in the same ship, or by wdiatsoever other name
or names the same ship, or the master thereof, is or shall be named
or called ; beginning the adventure upon the said goods and mer-
chandises from the loading thereof aboard the said ship,

"upon the said ship, &c. and so shall continuo

and endure during her abode there, upon the said ship, &c. And
further, until the said ship, with all her ordnance, tackle, apparei,

(.s) Lewis V. Ptucker, 2 Burr. lltL Tlielusson v. Fletcher, Doug. 315.

(t) Ilaigh V. De la Cour, 3 Camp. 319. See Shawe v. Felton, 2 East, 116.

MARITIME INSURANCE. 423

The Policy — its Form and Construction.

&c., and goods and merchandises whatsoever, shall be arrived at

upon the said ship,
&c., until she hath moored at anchor twenty-four hours in good
safety ; and upon the goods and merchandises, until the same b?
there discharged and safely landed. And it shall be lawful for the
said shij), &c., in this voyage, to proceed and sail to, and touch
and stay at any ports or places whatsoever,

without prejudice to this insurance. The said ship, and goods
and merchandises, &c., for so mucii as concerns the assureds, by
agreement between the assureds and assurers in this policy, are
and shall be valued at Touchimy the adven-

tures and perils which we the assurers are contented to bear, and
to take upon us in this voyage ; they are of the seas, men-of-war,
fire, enemies, pirates, rovers, thieves, jettisons, letters of mart and
countermart, surprisals, takings at sea, arrests, restraints, and de-
tainments of all kings, princes, and people, of what nation, condi-
tion, or quality soever, barratry of the master and mariners, and
of all other perils, losses, and misfortunes that have, or shall come
to the hurt, detriment or damage, of the said goods and merchan-
dises, and ship, &c., or any part thereof. And in case of any loss
or misfortune, it shall be lawful to the assureds, their factors, ser-
vants, and assigns, to sue, labor, and travel for, in and about the
defence, safeguard, and recovery of the said goods, and merchan-
dises, and ship, &c., or any part thereof, without prejudice to this
insurance ; to the charges whereof, we the assurers will contribute
each one according to the rate and quantity of his sum herein as-
sured. And it is agreed by us the insurers, that this writing or
policy of assurance, shall be of as much force and effect as the
surest writing or policy of assurance heretofore made in Lomhard
street^ or in the Royal Exchange^ or elsewhere in London. And so
we the assurers are contented, and do hereby promise and bind
ourselves, each one for his own part, our heirs, executors, and
goods, to the assureds, their executors, administrators and assigns,
for the true performance of the premises, confessing ourselves paid
the consideration due unto us for this assurance by the assured
at and after the rate of
" In witness whereof, we the assurers have subscribed our namea
and sums assured in London^

424 MERCANTILE CONTRACTS.

The Policy — its Form and Construction.

" N. B. Corn, fish, salt, fruit, flour, and seed, are warranted free
from average, unless general, or the ship be stranded. Sugar^
tobacco, hemp, flax, hides, and skins, are warranted free from ave-
rage, under 5^. per cent— Audi, all other goods, also the ship and
freight, are warranted free from average, under 2>l. per cent.^ unless
general, or the ship be stranded."

The principal parts of the policy are : — 1. The name of the in-
sured or his agent. 2. That of the ship. 3. The subject matter
of insurance. 4. The voyage insured. 5. The perils insured
against. -6. The date and subscription. 7. The memorandum.
8. Stamp. 9. Warranties. Let us consider these in order.

1. N'ame of Insured. {u)—Bj stat. 28 Geo. 3, cap. 56, it is enact-
ed, that it shall not be lawful for any person to make or effect any
policy of insurance, on any ship, goods, or other property, without
first inserting the name or names, or usual style and firm, of 07ie or
more of the i^ersons interested in such insurance, or of the consignor or
consignors^ consignee or consignees of the property so insured, or of the
person or persons residing in Great Britain who shall receive the order
for and effect such policy, or of the person or persons who shall give
the order to the agent immediately employed to effect such policy.
Policies are declared void if contrary to this statute, which must, it
has been held, receive a liberal construction, (v)*

(?() Usually inserted thus : — " A. B. (the insured), as -well in bis own name, as for
and in the name and names of every other person or persons to whom the same
doth, may, or shall appertain, doth make assurance, and cause himself and them and
every of them, to be insured, lost or not lost."

(v) See WoolfF v. Ilorncastle, 1 B. & P. 316. Bell v. Gilson, ibid. 445, and De
Vignier i;. Swanson, there cited. Mellish v. Bell, 15 East, 4. Ilibbert v. Martin, 1
Camp. 588. Dickson v. Lodge, 1 Stark. 22G. See Bell v. Janson, 1 M. & S. 201.

* There is no similar statute in the United States, and no reason is perceived why
a policy delivered, in blank as to the name of the assured, might not be filled up with
the name of the party intended. Burrows v. Turner, 24 Wend. 276. In practice it
is understood to be the usual mode, to insert the name of the party effecting the
insurance, whether principal or agent, and adding, "for himself and whom it may
concern."

The phrase ickom it may concern is a technical one, and is understood to mean, nol

MARITIME INSURANCK 405

The Policy — its Form and Construction.

2, The Name of the Ship, {w) — The ship ought to be truly de-
scribed, for a variance from its right name might discharge the un-
derwriter: it is, however, usual to insert in the policy, "or by
whatever other name or names the ship shall be called ;" the effect
of which is, to render a mistake in the name immaterial, if the iden-
tity of the ship can be proved, and the underwriter be not preju-
diced by it. (x) A policy may also be effected upon ship or shijjs
expected from any particular place. (?/) The same observations
apply to the name of the master, which is generally inserted along
with that of the ship, with the addition of, " or whosoever else shall
go for master in the said ship."

3. The Subject Mattel' of Insurance. {£) — The subject matter should
be described with accuracy, (a) and evidence of usage is not admis-

{w) Generally described as "the good &\\\]} or vessel called the , whereof is

master, under God, for this present voj^age, E. F., or whosoever else shall go for
master iu the said ship, or by whatsoever name or names the same ship or master
thereof is or shall be named or called."

{x) Le Mesurier v. Vaughan, 6 East, 382.

ly) Kewley v. Ryan, 2 H. Bl. 343.

{z) When the policy is on ship, described as — "the body, tactle, apparel, ord-
nance, munition, artillerj', boat, and other furniture of and in the good ship or vessel
called," tfec, (fee.

(a) Glover v. Black, 3 Burr. 1394. Simonds v. Hodgson, 6 Bingh. 114, reversed
upon another point in 3 B. <fe Ad. 57.

any body who may have an interest in the thing insured, but only such as are in the
contemplation of the contract ; and he for whose benefit the insurance is procured,
is the person, in the contemplation of the contract, whom it alone concerns. Under
this term the policy will cover the interest intended by the person ordering the
policj^, altliough the existence of such interest was unknown, not only to the in-
surers, but to the broker or agent effecting the policy; and these words may inure
for the benefit of any person intended to be insured, though he gave no authority
for the purpose, if he afterwards adopt it, which he may do not only before, but
after a loss takes place. 1 Phil, on Ins. 152, 153, 157. 3 Kent's Cora. 258. Buck v.
Chesapeake Ins. Co., 1 Pet. 151.

But where a policy is made in the name of a particular person, who is the owner
of a proportion only in interest of the property insured, without any such words in-
dicating an intention to insure beyond his own interest, it seems that it cannot be
made effectual to cover the interests of others, upon parol proof that such was the
intention and understanding of all the parties. Finney v, Bedford Commercial Ins.
Co., 8 Mete. 834.

426 MERCANTILE CONTRACTS.

The Policy — its Form and Construction.

sible to contradict the plain meaning of sucli description, {b) A
ship-owner may insure, under the name of freight, the benefit ho
expects to derive from carrying his own goods in his own vessel ; (c)
so, provisions are comprehended imder the word furniture, {d) It is
a sufficient description to say that a policy is upon goods generally ;
but that word will be intended to mean goods of ordinary, not ex-
traordinary, danger; not such, for instance, as goods intended to be
lashed on deck, (e) unless, indeed, they be goods which it is usual
and j)roper to stow there : (/) for what is usually done by such a
ship with such a cargo on such a voyage, is understood to be re-
ferred to by every policy, and to make a part of it, as much as if it
were expressed therein, (g) An assurance may be effected upon
prof is generally. (A) But freight must be insured eo nomine, and is
not covered by a policy on goods, (i) Although the suhject matter
of insurance must be properly described, tlie nature of the interest
may be, generally speaking, left at large ; in other words, though, a
policy must state correctly what is insured, it is not necessary that
the reason loliy the party insures should also be expressed, {j)

It sometimes happens that the insurance is upon goods, " to be
thereafter declared and valued, by ship or ships;" or in some form
which leaves it to the insured to make a subsequent declaration of
the goods intended. This declaration of interest, as it is called, is the
mere exercise of a power conferred on the assured : it requires no
assent on the part of the underwriters, though they generally sign
their initials to it, not, however, for the purpose of expressing their

(6) Blackett v. Royal Kxchange Assurance Co., 2 Tyrwh. 26G ; 1 C. & J. 244. Seo
Lewis V. Marshall, 7 M. & Gr. T29.

{d) Brougli V. AVhitmore, 4 T. R. 206. As to the extent of this -word, see Blactett
u. Royal Exchange Assurance Co., 2 Tyrwh. 266 ; 2 C. & J. 244.

(e) Judgment of Lord Lyndhurst in Blackett v. Royal Exchange Assurance Co.,
Ross V. Thwaites, Park, 26. Backhouse v. Ripley, ibid.

(/) Da Costa v. Edmunds, 4 Camp. 142. See Gould v. Oliver, 4 Bingh. K C. l34.
See Milward v. Hibbert, 3 Q. B. 120.

{g) Pelly v. Royal Exchange Assurance Co., 1 Burr. 350. See Noble v. Kenno
way, Doug. 510, and 2 Wms. Saund, 200, in notis.

(h) Eyre v. Glover, 16 East, 218; 3 Camp. 3*76.

(i) Baillie v. Moudigliani, Park, 90.

(;■) Crowley v. Cohen, 3 B. & Ad. 478.

MARITIME INSURANCE. 427

The Policy — its Form and Construction.

assent, but for that of autlientication. It is generally put upon tlie
policy for convenience ; but this is not necessary; neither is there
any necessity for its being in writing. An error in it, made with
out fraud, may be corrected without the assent of the underwriter,
and without a new stamp, {k) But though it does not require the
underwriter's assent, it ought to be communicated to him, {l) else
it would be in the power of the insured to destroy it, and substi-
tute another in its place. If the words of the policy be large enough
to cover an illegal adventure, and an illegal adventure was in fact
intended by the insured, the policy is void, and the underwriter
cannot sue for the premium, (w)

4. The Voyage. (?2)* — The voyage also must be accurately de-

(^•) Robinson v. Touray, 3 Camp. 160.

{I) Harman v. Kingston, 3 Camp. 150.

(»i) Jenkins v. Power, 6 M. & S. 282.

(?t) Usually described as follows : — A. B., <te., do make assurance, &c., lost or not

lost, at and from , upon the body, Ac. Beginning the adventure upon the said

ship, (fee, from and immediately following , and so shall continue and endure

until the said ship, <fec., shall be arrived at , and there hath moored at anchor

twenty-four hours in good safety ; and it shall be lawful for the said ship in this
vo3'age to proceed, and sail to, and touch and stay at any ports or places whatso-
ever, for any purposes whatsoever, particularly at C. and D., and forwards and back-
wards, and backwards and forwards, in any direction for the purposes of," (fee.

* An insurance on a ship in reference to the voyage, under the usual terms of the
policy', is an insurance on the ship for the voyage, and not on the ship and voyage.
It is an undertaking for the ability of the ship to perform the voyage, and to bear
any damage which she may sustain during the voyage; not an undertaking that she
shall in any event perform the voyage. Alexander v. Baltimore Ins. Co., 4 Craneh,
370; 2 C. R. 143.

In the case of Cleaveland v. Union Ins. Co., 8 Mass. 316, the insurance was at a
certain premium per month, on the brig Liberty, her cargo and outfits, "at and from
Salem to any port or ports, place or places, backwards and forwards, round the
globe, one or more times, during her stay and trade at all such places, until her re-
turn to her port of discharge in the United States;" and it was held that the com-
mencement and end of the voyage were sufSciently expressed. See as to the mean-
ing and construction of the term, at a?i(7/ro?«. Merchants' Ins. Co. v. Clapp, 11 Pick.
56. Taylor v. Lowell, 3 Mass. 341. Hendricks v. Commercial Ins. Co., 8 Jolin. 1.
At and from Island, Dickey v. Baltimore Ins. Co., 7 Craneh, 327 ; 2 C. R. 514. As to
goods being landed in "good safety," Bridge v. Niagara Co., 1 Hall, 423.

428 MERCANTILE CONTRACTS.

Tae Policy — its Foi-ra and Construction.

scribed ; (o) the description comprehending the times and places at
which the risk is to begin and end. It is said that an omission of
the X'T''^^^ where the risk is to begin, would render the policy void
for uncertainty ; {p) but that an omission of the time would cause
the risk to begin from the making of the policy. (2)* The insertion
of the words at and from the ship's loading port has the effect of
making the insurer answerable for any misfortune which may
happen while the ship remains there, as if she be burnt or lost
there, or detained by an embargo, (r) The insertion of these
words, moreover, implies that the ship is either there at the time,
or shortly will be there ; (5) in default of which, the underwriter is
discharged ; and, if she be not there when the policy is made, she
must, in order that the risk may attach, arrive there in good
physical safety. If she arrive at the outward port so shattered as
to be a mere wreck, a policy on the homeward voyage never
attaches, {t) I use the words good physical safety, because it is
suf&cient if she arrive safe in that sense, though from political

(o) Robertson v. French, 4 East, 130. Langhorne v. Hardy, 4 Taunt. 628. Spitta
V. "Woodman, 2 Taunt. 416.

(p) Molloy, 62, c. Y ; Park, 28. Sed qucere.

\q) Ball V. Knight, Fitz. 274. Barnard, 454.

(r) Rotch V. Edie, 6 T. R. 413. Palmer v. Marshall, 8 Bingh. 79. Williamson v.
Innes, there cited. See 2 Atk. 359. Warre v. Miller, 4 B. & C. 538.

(s) Per Lord EUenborough, Hull v. Cooper, 14 East, 479. Mount v. Larkins, 8
Bingh. 108, and see Freeman v. Taylor, 8 Bingh. 124.

(t) Parmeter v. Cousins, 2 Camp. 235.

* "When the insurance is for a term of time, the termini of the risk are the day
and hour specified when the insurance commences and terminates, and the statement
of the place of either is not common. Groupet v. Sea Ins. Co., 24 "Wend. 209. Manly
V. United M. & F. Ins. Co., 9 Mass. 82. Coggleshall v. American Ins. Co. of K Y., 8
"Wend. 283. And a deviation, in the ordinary sense of the word, is not predicable
of a marine policy on time merely Union Ins. Co. v. Tysen, 3 Hill, 118. A policy
of insurance on goods, ta be shipped oetween two certain daj"s, does not cover goods
shipped on either of those days. Atkins v. Boylon F. & M. Ins. Co., 5 Mete. 439.
In marine policies on time a clause is frequently inserted, providing that if the ves-
eel be at sea at the expiration of the time, the risk shall continue until she arrives at
her port of destination. As to being at sea, within the meaning of such a clause, sea
Union Ins. Co. v. Tysen, 3 Hill, 118. American Ins. Co. v. Hutton, 24 "Wend. 330.
Bowen v. Hope Ins. Co., 20 Pick. 275.

MARITIME INSURANCE. 409

The Policy — its Form and Construction.

causes she may be in great danger of condemnation, (u) It is also
implied that she shall sail thence as soon as she reasonably can,
and, therefore, if the insured mean to protect his vessel during a
stay in port, he should use those words in the policy, {v) A policy
at and from on freight, the ship being in a foreign port, means on
the homeward freight, and will not cover a subsequent loss of the
outward ; {iv) neither does such a policy at all attach until the
vessel is in a condition to begin to take in her homeward cargo, {x)
When the policy is at and from any island or district, the words in
general protect the ship in sailing from one port to another in that
island or district for the purpose of loading, at least, if the whole
island or district be usually considered as one place ; (?/) but it
would be otherwise if the i3olicy were "at and from her port of
lading in such an island or district:" the commencement of the
voyage would then be restricted to one particular place, and, gen-
erally speaking, the words port of lading comprehend one place
only, and it is a deviation if a ship insured at and from her port of
lading, begin to load at one place and finish at another out of the
line of her intended voyage, even though within the jurisdiction
of the same Qustom-house. (2) A policy on goods at and from Gr.,
beginning the adventure from the loading on board the ship, does
not protect goods laden before the ship's arrival at G., (a) unless
there be something to indicate that a prior loading was contem-
plated ; (&) as when the words used were " from the loading on
board the ship wheresoever." (c) A voyage to A. B. and C. means

(m) Bell V. Bell, 2 Camp. 475.

(d) Palmer v. Penning, 9 Bingh. 460. Palmer v. Marshall, 8 Dingh. 319. See
Smith V. Surridge, 4 Esp. 25. Grant v. King, 4 Esp. 175, where the delay was held
reasonable.

(w) Admitted Mackenzie v. Shelden, 2 Camp. 431, Bell v. Bell, ibid. 475.

{x) Williamson v. Innes, 1 M. & Rob. 88.

(?/) Camden v. Cowley, 1 Bla. 417. Bond v. Nutt, Cowp. 601. Porshaw v. Cha-
bert, 3 B. <fe B, 158. Warre v. Miller, 4 B. <fe C. 538. Cruiekshank v. Janson, 2
Taunt. 301.

(2) Brown v. Tayleur, 4 Ad. & E. 241.

(a) Langhorn v. Hardy, 4 Taunt. 628. Horneyer v. Lushington, 15 East, 46.
Spitta V. Woodman, 2 Taunt. 416; 6 East, 188. Mellish v. Allnutt, 2 M. & S. lOd.
liickman v. Carstairs, 2 Nev. & Mann. 571 ; 5 B. <fe Ad. 663.

(b) Bell V. Hobson, 16 East, 240. Gladstone v. Clay, 1 M. &. S. 418.

430 MERCANTILE CONTRACTS.

The Policy — its Form and Construction.

a voyage to all or any of tliem, with this reserve, that if the ship
go to more places than one, she must visit them in the order
in which they are mentioned in the policy, {d)* and must not split
the voyage into two; ex. gr., by loading goods at A., and unload-
ing them and loading others at B. (e) If a voyage be from or
to a district containing several ports, they must, in the absence
of provisions to the contrary, be visited in their geographical
order. (/) But words are generally inserted to auihorize devia-
tions from the direct track, in order to the better accomplishment
of the purposes of the voyage, {g) However, if the vessel sail
upon a voyage different from that described in the j)olicy, or, hav-
ing sailed on that described, afterwards deviate, the underwriters
are released, (/.' their risk, in the former case, never attaching, and
in the latter bbing discharged upon a principle which we will ex-
plain when we come to speak of Warranties. But a mere intention
to deviate never carried into effect will not discharge them, (i) and,
if the ship be hindered from completing her voyage by a mere

(d) Marsden v. Reid, 3 East, 512.

(e) Sellar v. M' Vicar, 1 N. R. 23. Vide 5 B. & C. 201, 5 B. & A. 45.

(/) Cl.ason V. Simraonds, G T. R. 633. See Andrews v. Mellish, 5 Taunt, 496.
It will be stated presently, on the authority of Gardner v. Senhouse, 3 Taunt. 16,
and Marsden v. Reid, 3 East, 57, that in case of a voyage to, or liberty to touch at,
several places, they must be taken in the order mentioned h\ the policy ; but as this
results from an implication from the order in which they are named, it probably
might be controlled by a custom to visit them in a different order.

((/) See Leathly v. Hunter, 1 Bingh. 517. Bottomley v. Bovil, 5 B. <fe C. 210.
Bragg V. Anderson, 4 Taunt. 229. Wright v. Sliiffuer, 11 East, 515. Lambert v. Lid-
dard, 5 Taunt. 480.

(/t) Woolridge v. Boydell, Dough 16. "Way v. Moudigliani, 2 T. R. 30. Bottom-
ley V. Bovil, 5 B. & C. 210. Hogg v. Horner, Park, 445. Middlewood v. Blakes, 1
T. R. 162. Parkin v. Tunno, 11 East, 22.

(i) Kewley v. Ryan, 2 H. Bl. 343, cited Hare v. Travis, 7 B. <fe C. 14. Heselton
«. Allnutt, 1 M. &S. 46.

* Kane v. Col. Ins. Co., 2 Johns. 264. But an insurance on a voyage at and from
C. to N. with liberty to touch at M. for trade, and to take in part of cargo, would
not justify a voyage directly to M. and from thence to N. Where the policy ex-
pressly stipulates tliat the voj-age shall commence at a particular place, no other
can be substituted, though it be one in the usual course of the voyage. Murray v.
Cob Ins. Co.. 4 Johns. 443.

MARITIME INSURANCE. 431

Tlie Policy — its Form and Construction.

temporary impediment, slie may, it would seem, lawfully wait at a
neighboring place of safety till it is removed, and afterwards pur-
sue her voyage at the risk of the underwriter, (j) We have seen
that the words at and from an island or district will generally pro-
tect the ship in sailing from one port of that island or district to
another. Bat where she is insured to such an island or district, the
risk as to the ship determines at the first port there at which she
stops to unload ; (IS) the owner who wishes to avoid the effect of
this rule should insure the vessel to her port or ports of discharge.
These words, if used, protect the vessel till her cargo is substan-
tially discharged ; I say substantially, for if the principal part of the
cargo be unladen, the risk will thereupon determine, daough part
be left on board to effect some object unconnected wifAi that of the
voyage insured, ex. gr.^ to serve as ballast while she proceeds in
search of a new cargo, il) As to the goods, they will, in general,
continue to be protected till their arrival at their port of de-
livery, (m)

The voyage, as far as the underwriter's risk is concerned, is
generally limited to determine when the ship has been moored
" twenty -four hours in good safety.'''' The words " good safetif are
material ; for instance, though she arrive in port, and remain there
more than four-and-twenty hours, yet, if she arrive a mere wreck,
and afterwards founder, she cannot be said to have moored
an instant in good safety^ and the underwriter will not be dis-
charged, {n) But it is otherwise, if having continued in safety
twenty-four hours, she be afterwards lost, although in consequence
of an act performed during the voyage, for instance, smuggling ; (0)
and if the words good safety be not used, the risk determines at the
expiration of the limited time, whatever be the condition of the

{j) See Schroeder v Tliompson, 7 Taunt. 462. Blackenhagen v. L. A. Co., 1
Camp. 454. Hadley v. Clarke, 8 T. R. 259. But see Brown v. Vigne, 12 East, 383.
Doyle V. Powell, 4 B. A Ad. 207.

{k) Camden v. Anderson, 1 Bl. 417. Leigh v. Mather, 1 Esp. 412.

{l) Moore v. Taylor, ] Ad. <fe E. 25.

(?n) Leigh v. Mather, 1 Esp. 412.

(«) Shawe v. Felton, 2 East, 109 See Horneyer v. Lushington, 16 East, 46.
Maples V. Eames, 2 Str. 1243.

(0) Lockyer v. OfEey, 1 T. E. 252. Angersteia v. Bell, Park, 55.

432 MERCANTILE CONTRACTS.

The Policy — its Form and Construction.

vessel. (;j>)* But if the risk be " until the ship be discharged from
her voyage," she is not considered discharged until the goods are
unladen, {q)

The risk on goods is generally limited to continue until they
shall be " discharged and safely landedP This landing must, how-
ever, be accomplished with reasonable expedition ; delay would be
in the nature of a deviation, and would discharge the under-
writer. (?') But as the policy protects the goods till landed, the
underwriter is liable, though the loss happen after a transhipment
into shallops, lighters, droghers, or launches, such transhipment
being in the usual course of the voyage, (s) which course the un-
derwriter is, as we have repeatedly observed, presumed to know.
But it is otherwise if the assured tranship them on board another
vessel, it) or send his own lighter, and take the goods into his
own custody, or discharge the public lighterman who was em-
ployed, (w)

(;)) Meretony v. Dunlop, cited in Lockyer v. Offley, 1 T. R. 252. See Pole «
Fitzgerald, Willes, 641.

{q) Skinn. 243, Com. Dig. Merchant, E. 9.

(r) Park, 470. See Leigh v. Mather, 1 Esp. 412. Noble v. Kennoway, Dougl. 492.

(s) Stewart v. Bell, 5 B. & A. 238. Matthie v. Potts, 3 B. & P. 23. Rucker v. L.
A. Co., B. & P. 432. Tierney v. Ethrington, Burr. 348.

(t) Bold V. Rotheram, 15 L. J. Q. B. 2Y4.

(w) Sparrow v. Carruthers, 2 Str. 1236. Strong v. Natally, 1 K R. 19.

* The case of Meretony v. Dunlop has been supposed to lay down the rule
that where there is a time policy on a ship, if the ship within the time receives
damage, however severe, by the perils of the sea, but the amount of it is not ascer-
tained until after the time has expired, and till then she is kept afloat as a ship,
although from this damage she afterwards sinks, or is found to be in a state not fit
for navigation, and is incapable of being repaired, the insurers can neither be made
liable for a total nor partial loss. This doctrine was overruled by the Court of
Queen's Bench in Knight v. Faith, 15 Ad. <fe Ell. K S. 649, Lord Campbell express-
ing great doubt as to whether it had ever in fact been laid down by Lord Mansfield.
It has been disapproved by Continental and American jurists. See Peters v. Phcenis
Insurance Company, 3 Serg. &l Rawl. Rep. 25. "The doctrine," says Lord Campbell,
"seems contrary to the principle of insurance law, that the insurer is liable for a
loss actually sustained from a peril insured against during the continuance of the risk."

Tlie general question of what will constitute an arrival in good safety, is dis-
cussed in Meigs v. Mutual Marine Insurance Company, 2 Cush. R. 439. King v.
Middletown Insurance Company, 1 Conn. 184. Dickey v. United Insurance Com-
pany, 11 Johns. R. 358. Samuel v. Royal Exchange Assurance Company, 8 B. & C. H9.

MARITIME INSURANCE. 433

The Policj' — its Form and Construction.

5. Perils* — The perils against Avhich the insurer guarantees,
are described to be " Of the seas, men-of-war, fire, enemies, pirates,
rovers, thieves, jettisons, letters of mart and countermart, surpri-
sals, takings at sea, arrests, restraints, and detainments of all kings,
princes, and people, of what nation, condition, or quality soever ;
barratry of the master and mariners, and all other perils, losses,
and misfortunes, that have or sliall come to the hurt, or detriment,

or damage of the said , or any part thereof." When the words

lost or not lost, Gallic^, " sur honnes et mauvaises nouvelles,^^ are in-
serted, they render the underwriter liable in respect of loss by any
of the above perils, though the ship be lost at the time of insurance;
a circumstance which, but for those words, would avoid the po-
licy, {v) Nay, it will even include cases in which the subject mat-
ter of insurance had not vested in the assured at the time of the
occurrence of the loss ; for instance, if a merchant having bought
goods at sea were to insure them, lost or not lost, the policy would
cover a loss sustained by them during the voyage, but before the
purchase, {ic) It is sometimes the practice to restrain these words,
by warranting the ship to be well on a particular day ; yet, even
then, if she were well on any part of that day, though she be lost
before the policy is effected, the underwriter will be liable, (x) In-
deed, if the insured knew at the time of making the insurance that
the ship was lost, that fraud avoids the policy, {y) But where the
member of a mutual insurance company proposed a vessel for in-
surance which was accepted and the premium paid, but afterwards
and before the policy was actually executed, she was lost, Avhich

(v) Jeffreys v. Legendra, 1 Sho-w. 324. E. of March v. Pigot, 5 Burr. 2803.

{w) Sutherland v. Pratt, 11 M. & W. 296.

(a;) Blackhurst v. Cockell, 3 T. R. 360.

(y) Jeffrej-s v. Legendra. E. of March v. Pigot, nbi supra.

* The insurers do not undertake that the voyage shall be performed without de-
lay, or that the perils insured against shall not occur. They undertake only for
losses sustained by those perils. The peril must act directly, and not circuitously,
upon the subject of insurance. It must be an immediate peril, and the loss the proper
consequence of it; and it is not sufficient tliat the voj-age be abandoned, for fear of
the operation of the peril. Smith v. Universal Ins. Co., 6 Wheat. 176 ; 5 C. R. 54
Parties raaj' contract so as to incur risks antecedent to the date of the contract.
Coggleshall v. American Ins. Co., 3 Wend. 283.
28

434 MERCANTILE CONTRACTS.

The Polic}- — its Form and Construction.

was known to all parties at the time of executing the policy, the
words lost or not lost were held to entitle the assured to recover.
The Court said that there was considerable analogy between this
case and Paine v. Meller, (2) decided by Lord Eldon, who held the
purchaser bound to perform his contract, although the house was
burnt before the time appointed for conveying it. So in the pre-
sent case the insured had bought and paid for the underwriter's
promise to indemnify ; equity would have compelled the latter to
execute a formal policy whenever tendered to him : in voluntarily
executing it, he had only performed a manifest duty, and could not
now retract the obligation, (a)

Let us now examine the extent of the above words, and see
what losses will be embraced by them.

Perils of the Sea.^ — These words mean, losses occasioned strictly

(z) 6 Ves. jun. 3-19.

(a) Mead v. Davison, 3 Ad. &. E. 303.

* The meaning of the terms "perils of the seas," and "dangers of the river,"
have frequently come under consideration in actions against common carriers ; it
being usual to insert in bills of lading an exception of such perils and dangers. A
question has arisen whether those terms are more comprehensive than the exception
implied at common law, " an act of God, or of the public enemies."

An act of God means something in opposition to the act of man ; such an act as
could not happen by the intervention of man — as storms, lightning, and tempests.
Even the words "inevitable accident," sometimes used, are hardly adequate to ex-
press the ground of a common carrier's excuse at common law, for accidents arising
from human force and fraud are sometimes inevitable. The term "act of God," can
only mean natural accidents, as those above mentioned ; and not accidents arising
from the fault or negligence of man. But the terms " perils or dangers of the seas,"
and "perils or dangers of the river," in addition to losses arising from natural
causes, will sometimes embrace those arising from the act of tliird persons; and will
be found to allow, in several cases, human agency and other causes to excuse a loss
bv a common carrier. McArthur v. Sears, 21 Wend. 190. Keal v. Saunderson, 3
Smedes &, Marsh. 5*72. Many disasters which would not come within' the definition
of "act of God," come within the term "dangers of the river," which term narrows
down the liability of the common carrier. Such, for instance, as losses occasioned
by hidden obstructions in the river, newly placed there, and of a character that hu-
man skill and foresight could not have discovered and avoided. Gordon v. Buchanan,
6 Yerg. 71 ; Turney v. Wilson, 7 Yerg. 340. See Howell v. Cincinnati Ins. Co. 7 Ohio,
276, in which case a contrary opinion appears to have been expressed.

MARITIME INSURANCE. ^^ty

The Policy — its Form and CoQstruction.

by sea damage, (b) ex. gr., by stress of Avcather, winds and waves,
lightning and tempest, rocks, sands, &c. A loss occasioned by the
ship insured being run down, is one by perils of the sea ; (c) so is a
loss, by her taking the ground on the uneven bed of a dry harbor, {d)
or a loss of animals, killed by the agitation of the ship in a

(b) Ex marinse tempestatis discrinaine. Emerigon, vol. i. c. 12, in initio. See 5
M. & S. 464; Com. Dig. Merchant, E. 9. Shawe v. Felton, 2 East, 109, and Parfit v.
Thompson, 13 M. & W. 392.

(c) Smith V. Scott, 4 Taunt. 126. Buller v. Fisher, 3 Esp. 6Y ; for winds and
waves which drive the ships together are causa causans.

{d) Fletcher v. Inglis, 2 B. & A. 315. See Ilahn v. Corbett, 2 Bingh. 205.

"The phrase 'danger of the seas,'" says Judge Story, "whether understood in
its most limited sense, as importing only a loss by the natural accidents peculiar to
that element ; or whether understood in its more extended sense, as including inevi-
table accidents upon that element, must still, in either case, be clearly understood to
include only such losses as are of an extraordinary nature, or arise from some irre-
sistible force, or some overwhelming power, which cannot be guarded against by the
ordinary exertions of human skill and prudence." The Scliooner Reeside, 2 Sumn.
571.

It should, however, be observed that a common carrier may be liable on account
of a loss occurring bj' a danger of the sea or river, unless care and diligence to
avoid it be shown. Whitesides v. Russell, 8 Serg. & Watts, 44. And yet for the
Bame loss the insurer may also be liable ; for it is no defence to the latter, as will be
more fully shown hereafter, that the carrier did not use the requisite skill and care
to avoid the danger which actually caused the loss. Waters v. Louisville Merchants'
Ins. Co., 11 Pet. 213. King v. Shepperd, 3 Story R. 360; and ^os;!, 347, note. See
Natchez Ins. Co. v. Stanton, 2 Sm. <fe Marsh, 340.

In the case of Perrin v. The Protection Insurance Co., 11 Ohio, 147, where the in-
surance was on a steamboat, and the risks described were according to the usual
form, it was held that a loss arising from an explosion of the boiler, was covered by
the policj^ This, say the Court, "seems plain to us when we consider the subject
insured, and the nature of the risks to which it is of necessity exposed. The insu-
rance was on a steamboat. The policy is in the form which has long been in use for
marine risks ; and the words which describe the perils are large enough to embrace
all such as arise in the ordinary use of the thing insured. A policy on ships covers
losses arising from accidents to the power which moves them ; and it must be pre-
sumed that the parties contemplated the same protection to a steamboat when the
loss occui's (b}- accident) to her motive agencies." This decision has been followed
in Missouri. Citizens' Ins. Co. of Missouri v. Glasgow, 9 Misso. Rep. 411. See Hale
V. New Jersey Steam Navigation Co., 15 Conn. 539, in which case it was held that
the circumstance that the carriage of the goods was by a steamboat made no dili'er
once as to the liability of a common carrier for a loss by fire.

436 MERCANTILE CONTRACTS.

The Policy — its Form and Construction.

storm, (e) If a vessel be not heard of within a reasonable time
after her sailing it is presumed that she foundered, (/) and the as-
sured may recover for a loss bj 'perils of the sea.. But if the ship be
worm-eaten, {g) or rat-eaten, (A) or hove down on the beach within
the tideway to repair, and thereby bilged, {i) these are not losses by
perils of the sea.

Fire. — How the fire was occasioned is immaterial, whether by
a common accident, or lightning, or an act done in duty to the
State, {j) But, if goods be put on board in a damaged condition,
and are, in consequence, liable to effervesce, and generate the fire
by which they are consumed, the underwriters are not liable, {h)

Enemies. — This word is used in contradistinction to '''■pirates^
rovers, thieves,^'' afterwards mentioned, a capture by whom is an
act of depredation, whereas one by enemies is an act done jure
heUi. Q)^ We have already had occasion to touch upon the change
of property by capture, and to state that the mere fact of capture
does not of itself divest an owner's property in the thing captured.
Insurance, however, being a contract of indemnity, the insured must
be reimbursed, if he have in point of fact suffered a loss, and the
underwriter cannot protect himself by any technical rules about the

(/) Park, 105, 106. Green j;. Brown, Str. 1199. Cohen t). Hinckley, 2 Camp. 51.
Koster v. Innes, R. & M. 333. See Koster v. Reed, 6 B. <fe C. 19. In such a case, if
the ship reappear, the underwriters maj^, it seems, take possession of her. Houst-
man v. Thornton, 1 Holt, 242.

(g) Park, 105. Rohl v. Par, 1 Esp. 444.

(A) Hunter v. Potts, 4 Camp. 203.

(i) Thompson v. Whitmore, 3 Taunt. 227. See Rowcroft v. Dunsmore, ibid. 228
Philips V. Barber, 5 B <fe A. 161.

{j ) Gordon v. Rimington, 1 Camp. 1 23. Austin v. Drew, 6 Taunt. 436. Busk v.
R. E. A. Co., 2 B. & A. 13. Shaw v. Robberds, 6 Ad. <fe E. 75. Hollingworth v
Brodrick, 7 Ad. & E. 40.

(jfc) Boyd V. Dubois, 3 Camp. 133. '

[1) See Matthie v. Potts, 3 Bos. & P. 23.

* If, after the commencement of the voyage insured, a war breaks out between
the country to which the property belongs and a foreign country, the policy is not
vacated, and the insurers are liable for a loss arising out of a state of war. Saltus v.
United Ins. Co., 15 John. 523.

MARITIME INSURANCE. 437

The Policy — its Form and Construction.

change of property, (m) If indeed the vessel be recaptured, and
the owners become entitled to restitution on payment of salvage,
that may, under some circumstances, change into a partial loss one
which was, 'prima facie^ total, {n) But, even when the vessel is pre-
served, the insured have a right to be indemnified against charges
bona fide incurred in accomplishing that object ; as where a neutral
ship was improperly captured, an interlocutory decree pronounced
against her, and the owners, dreading the expense and delay of
appeal, compromised the suit, and purchased the captor's consent
to a reversal. (0) An insurance against British capture is illegal, as
being against public policy, {p)

Pirates^ Rovers, and Thieves.^ — The meaning of the word pirate

(m) Goss V. Withers, 2 Burr. 694. Hamilton v. Mendes, ibid. 1209. See Milles v.
Fletcher, Dougl. 219. Roteh v. Edie, 6 T. R. 413. MTver v. Henderson, 4 M. & S.
576. Cologan v. L. A. Compy., 5 M. &, S. 447.

(»i) Hamilton v. Mendes, 2 Burr. 1189. Bainbridge v. Nelson, 10 East, 329.
M'Masters v. Shoolbred, 1 Esp. 237. Patterson v. Ritchie, 4 M. & S. 393. Vide post.

(0) Berens v. Rucker, 1 Bla. 313. See Wilson v. Foster, 6 Taunt. 25 ; 1 Marsh, 425.

(p) Furtado v. Rodgers, 3 B. & P. 191. Ivellner v. Le Mesurier, 4 East, 397.
Gamba v. Le Mesurier, 4 East, 407.

* In 3 Kent Com. 303, it is laid down, that the theft insured against by name,
means that which is accompanied by violence, and not simple theft ; and in support
of this rule he cites various treatises, both of English and Continental writers, on the
subject of Insurance. But in the case of the Atlantic Ins. Co. v. Storrow, 5 Paige,
292, Chancellor Walworth expressed a contrary opinion, and came to the conclusion
that the language of the Continental writers on this subject had been followed,
without adverting to the difference of the language of their policies from that which
was contained in those of England and America. In the case of Marshall v. F. & M.
Ins. Co., 1 Hump. Ten. R. 99, in which this point was directly involved, the Court
decided, in accordance with the rule laid down by Cliancellor Kent, and other
learned writers on the subject of Insurance, and upon their authority, which the
opinion of Chancellor Walworth referred to as a dictum, was not considered sufficient
to overthrow. This decision, however, was made confessedly without an examina
tion into the subject, upon the ground that the rule was so settled by the elementary
writers. In the case of the American Ins. Co. v. Bryan, 1 Hill, 25, 26 Wend. 563, this
question was examined with great learning and ability, and the Supreme Court and
Court of Errors of New York both decided, that the word thieves in a policy, covers
a loss occasioned by a simple larceny, unaccompanied by open force or violence, by
persons other than the master or crew of the ship or steamboat in which the goods
were transported.

438 MERCANTILE CONTRACTS.

The Policj' — its Form and Construction.

is explained in 4 Bl. Comm. 72. {q) Generally speaking, be is one
•who commits on the liigli seas those acts of robbery and depredation
which, if committed on land, would have been felonies.

Jettison. — Jettison is a throwing of goods overboard, ex justa
causa, ex. gr.^ to prevent their capture by an enemy. (?-)

Arrests, Restraints, and Detainments of Kings, Princes, and
Peojple.* — By kings and princes are here meant all potentates
whether at peace or war with us. (s) The term people signifies the
ruling power of a country whatever it may be, and v» Jl not include
a crowd of riotous individuals, {t) One of the most usual species of
detainments is an embargo, which is an arrest laid on ships or mer*
chandise by public authority, or a prohibition of State, commonly
issued to prevent foreign ships from putting to sea in time of war,
and sometimes to exclude them from entering our ports.

[q) See also Com. Dig. Admiralty, E. 8 ; Hawk. b. 2, c. 38, s. 11. Kesbit v. Lush-
ington, 4 T. R. 783. Regina v. Serva, 2 Car. & K. 53.

(r) Butler v. Wildman, 3 B. <& A. 398.

(s) Per Lord Mansfield in Goss v. Withers, 2 Burr. 696. Mellish v. Andrews, 15
East, 13. Sewell v. R. E. A. Compy., 4 Taunt. 856.

(t) Nesbit V. Lushington, 4 T. R. 183.

* This claiise refers to the operations of the sovereign power by an exercise of
the vis major, in its sovereign capacity, controlling or divesting for the time the
dominion and authority of the owner over the ship; and of course does not extend
to proceedings of a mere civil nature to enforce private rights, though had under the
authority of the sovereign power, as in the case of an arrest or detainment of a ship
imder admiralty process, to recover a supposed claim for salvage. Bradlie v. Mary-
land Ins. Co., 12 Pet. 402. It is not necessary to constitute a loss by this peril, that
actual physical force should be applied to the subject insured. An embargo is ad-
mitted to be a peril within the policy. And it seems to be the better opinion, that
a blockade, although not an arrest or detainment, is a restraint, and embraced by that
word in the policy. Olivera v. Union Ins. Co., 3 Wheat. 183; 4 C. R. 227. 1 Phil.
an Ins. 673. And so a vessel detained in a neutral port, from which she could not
depart without imminent danger of being captured by cruisers of the enemy of the
country to which she belonged, was held to be lost Avithin the risk of restraint of
princes or of men of war. Saltns v. United Ins. Co., 15 John. 523. But see Brewer
V. Union Ins. Co., 12 Mass. 170 ; and as to the question whether a blockade of the
port of destination is a loss within the policy, see Richardson v. Maine Ins. Co., ft
Mass. 102 ; 1 Phil, on Ins. 657 660 ; Schmidt v. Unit. Ins. Co., 1 John. 249.

MARITIME INSURANCE. 430

The Policy — its Form and Construction.

As we have seen that the insured is not protected against British
capture, so neither is a foreigner allowed to insure against British
detention, (u) except so far as it may be accidental and erroneous, {v)
Nor can a foreigner insure against the act of his own government, {lu)
unless the underwriter agree to make such insurance with full
knowledge of the country of the insured ; (x) for a, foreigner, insured
against a loss of that description, might give such information to
his own government as would produce a seizure, the blow of which
would fall upon the British underwriter. It seems, however, that a
British subject might insure against British embargo, (y) If the de-
tention be occasioned by the gross negligence (z) or improper conduct
of the assured himself, ex. gr., in carrying simulated papers without
the underwriter's permission, he will not be permitted to recover ;
for his supineness or misconduct is a breach of his implied warranty
to guard the assured against all risks covered by the policy. («)
But a contravention of the mere revenue laws of a foreign country,
consented to by the underwriter, will not vitiate ; for our courts do
not take notice of them, {h) If the vessel be deterred from pro-
ceeding in her voyage through fear of an embargo ; (c)* or find the
port of her destination shut against her ; (d) or be permitted to land
her goods (which are afterwards seized) in the usual manner ; (e)
these losses are not within the policy ; for, in the former cases,

(m) See Touteng v. Hubbard, 3 B. & P. 291.

(v) Mullett V. Shedden, 13 East, 304.

(«') Campbell v. Innis, 4 B. & A. 423. See Conway v. Gray, 10 East, 536.

(a;) Simeon v. Bazett, 2 M. & S. 94. S. C. 5 Taunt. 824 ; 4 M. <fe S. 147.

(j/) See Lord Alvanley's Opinion, in Touteng v. Hubbard, 3 B. <fe P. 291. Green v.
Young, 1 Ld. Raym. 840.

(2) Pipon V. Cope, 1 Camp. 434. See 2 Vern. 176. Horneyer v. Lusliington, 3
Camp. 85. Bell v. Carstairs, 14 East, 374.

(a) 1 Camp. 436, note.

(6) Planche v. Fletcher, Dougl. 238. Holman v. Johnson, Cowp. 343. See Simeon
V. Bazett, 2 M. & S. 94 : 5 Taunt. 824.

(J) Hadkinson v. Robinson, 3 B. <fe P. 388.

(e) Brown v. Carstairs, Camp. 161. See Carruthers v. Gray, 15 East, 25; 3
Camp, 142.

* King V. Delaware Ins. Co., 6 Cranch, 71 ; 2 C. R. 303. Smith v. Universal Ins,
Co., 6 Wheat. 176; 5 C. R. 54. Williams v. Suffolk Ins. Co., 13 Pet. 415.

440 JMERCANTILE CONTRACTS.

The Policy — its Form and Construction.

there was no seizure ; in tlie last, none until the voyage had deter-
mined. But the underwriter cannot protect himself by saying that
the seizure was unjustifiable, or that the insured had a remedy ovei
against the aggressors. (/)

Barratry by the Master and Mariners. — Barratry is derived from
an Italian word, which signifies to cheat. In policies it includes
every species of fraud or knavery in the master or mariners of the
ship, by which the owners are injured. {gY Thus barratry may
be committed by a wilful deviation in fraud of the owner, (A) by
smuggling, {i) by running away' with the ship, {j) by sinking or
deserting her, or by defeating or delaying the voyage, with a

(/) Rotch V. Edie, 6 T. R. 413. MuUett v. Shedden, 13 East, 304. Wilson v.
Forster, 6 Taunt. 25.

{g) Lockj-er v. Offley, 1 T. R. 252. Knight v. Cambridge, Str. 581, the first case on
the subject. Heyman v. Parish, 2 Camp. 149.

(A) Vallejo v. Wheeler, Cowp. 143.

(i) See Loekj-er v. Offley, ubi supra.

(j) Hibbet v. Martin, 1 Camp. 539. Hucks v. Tliornton, 1 Holt, 30. Toulrain v.
Inglis, 1 Camp. 421. Toulmin v. Anderson, 1 Taunt, 227.

* In Marcardier v. Chesapeake Ins. Co., 8 Cranch, 39, 3 C. R. 20, the Court give
substantially the same definition as that in text; but in the Patapsco Ins. Co. v.
Coulter, 3 Pet. 222, Mr. Justice Johnson, in delivering the opinion of the Court,
doubts the con-ectness of the general definitions -which have been given of the term
barratry/. "They all," he says, "agree that fraud must be a constituent of tlie act of
barratry, and it is from this point in the definitions that practically all the difficulties
arise. The question seems to be between 'dolus' and 'culpa,' which of those two
words best conveys the sense of the law." And after a very learned examination
into the derivation of the word, and the authorities in relation to its meaning, he
arrives at the conclusion that barratry is not confined to moral fraud, and that prac-
tically in its application to this subject, 'culpa' would better express the idea than
' dolus.' " Negligence," he says, " when gross, is itself evidence of barratry. A
master of a vessel who sees another engaged in the act of scuttling or firing hia
vessel, and will not rise from his berth to pi-event it, is prima facie chargeable with
barratry. Although a mere misfeasance, it is a breach of trust, a fault, an act of
infidelity to his owners. See also American Ins. Co. v. Bryan, 26 Wend. 563. Amer-
ican Ins. Co. V. Dunham, 15 Wend. 11. Stewart v. Tennessee F. <fe M. Ins. Co., 1
Humph. 242. The nature of barratry, and the circumstances which will excuse bar-
ratrous acts, were very much discussed by the Supreme Court of Massachusetts in
Lawton v. Sun Mutual Ins. Co., 2 Cush. 500.

MARITIJIE INSURANCE. 441

The Policy — its Form and Construction.

criminal intent. (/:) Even dropping an anchor, with a fraudulent
intent, is barratry. Q) If, by reason of these, or other similar acts,
the subject matter of insurance is detained, lost, or forfeited, the
insured will be entitled to recover for a loss by barratry. However,
to constitute an act of barratry there must be fraud; it must arise
ex maleficio ; a simple deviation through ignorance, unaccompanied
with fraud or crime, will not be barratry, {m) From the definition
of barratry above given, it follows, that it can be committed by no
one but the master and mariners, and against no one but the owner
of the ship, {ii) a term which, however, comprehends owners pro hac
vice, ex. gr., general freighters, (o) Of course, when the owner of the
ship is also master, he cannot commit barratry against himself, (p)
nor can an act performed with his consent be barratrous against
him. {q) But barratry may be committed against the freighter,
though with the consent of the general owner ; (?•) and it seems
doubtful whether it may not against the owners, though with the
consent of the freighter, (s) And though an act cannot be bar-
ratrous against the owner, if it be done with his consent, yet an act
done for his benefit, if without his consent, may. Thus where the
master, having general instructions to make the best purchases with
dispatch, went to an enemy's port and traded there, for which his
ship was seized; this was held barratry, although his only object
was to do the best for his employer, (t) For it is not for him to judge
in cases not intrusted to his discretion, or to suppose that he is not
breaking the trust reposed in him, but acting meritoriously when
he endeavors to advance the interest of his owners by means which

(k) Roscow V. Carson, 8 Taunt. 684. Vide Dixon v. Reid, 5 B. tfe A. 597.

(l) Per Buller, J., in Ross v. Hunter, 4T. R. 38.

(?rt) Per Lee, C. J, Stamma v. Brown, cited 7 T. R. 508, per Lord EUenborough.
Earle v. Rowcroft, 8 East, 126. Phyn v. R. E. A. Co., 1 T. R. 505. Bottomley v.
Bovill, 5 B. <fe C. 212.

(n) Nutt V. Bordieu, 1 T. R. 323.

(o) Vallejo V. Wheeler, Cowp. 143. Soares v. Thornton, 1 Taunt. 627.

Ip) Ross V. Hunter, 4 T. R. 33.

Iq) Stamma v. Brown, Str. 1173. Nutt v. Bordieu, 1 T. R. 323.

(r) Yallejo v. Wheeler, Cowp. 143. Soares v. Thornton, 7 Taunt. 627.

(«) In Hobbs V. Hannam, 3 Camp. 93, Lord EUenborough held that it could not;
but see Boutflower v. Wilmer, S. N. P. 963.

(0 Earle v. Rowcroft, 8 East, 126. See Moss v. Byrom, 6 T. R. 379.

442 MERCANTILE CONTRACTS.

The Policy — its Form and Construction.

the law forbids, and wliich his owners must be taken also to have
forbidden, both from their sense of public duty and their dread of
risk. It is not necessary that the loss should be contemporaneou?
with the barratry ; but it must happen during the voyage insured.
Thus where the master, during the voyage, committed barratry by
smuggling, for which the ship was seized, but not till after she had
been moored twenty-four hours in safety at her destined port, the
underwriter was discharged, {a)

Other Perils. — These general words are inserted, as Molloy re-
marks, to preclude all those nice questions formerly agitated by
civilians and common lawyers, and may be useful where the loss,
though one against which the assured ought to be indemnified,
does not fall within any of the other classes specified in the policy.
An instance of this may be found in Cullen v. Butler^ {v) the first
case in which the effect of these words came directly into question,
where the crew of a British ship, believing the ship insured to be
an enemy, fired upon and sunk her ; this loss was held a loss by
other perils ; so where a ship, placed in a graving dock to be re-
paired, was, by the violence of the wind, thrown over on her side
and bilged, {w)

The perils and losses mentioned in the policy having been thus
separately considered, there remain a few general observations on
this part of the contract. First, the underwriters are not liable for
a loss which is necessarily incidental to the property, rather than
occasioned by an adventitious cause, such as loss by worms, (x)* or

(m) Lockyer v. Offley, 1 T. R. 251. (y) 5 M. & S. 461.

(w) Phillips V. Barber, 5 B. <& A. 161. Accord. Devaiix *. J' Anson, 5 Bingh. N. C.
619. See Butler v. Wildman, 3 B. & A. 398.
{x) Rohl V. Parr, 1 Esp. 444.

* In the case of Hazard v. New England Ins. Co., 8 Pet. 557, the Circuit Court,
Story, Judge, had instructed the jury that, if "in the Pacific Ocean worms ordinarily
assail and enter the bottoms of vessels, then the loss of a vessel destroyed by worms,
would not be a loss within the policj^ ;" and it was said by the Supreme Court of the
United States, that " in the form in which the instruction under consideration was
given, this Court think there is no error. If it be desirable to be insured against thia
active agent which infests southern seas, it may be specially named in the jjolicy." 8
Pet. 585. See also Martin v. Salem Marine Ins. Co., 2 Mass. 420.

MARITIME INSURANCE. 443

The Policy — its Form and Construction.

rats, {y) or the self-ignition of damaged hemp. (2) Secondly, there
is a class of losses which seems not to fall within the contemplation
of the policy, but only to entitle the loser to be reimbursed by the
owner of the ship ; (a) as, for instance, where the captain is obliged
to sell part of the goods for the repair of the ship, ij)) Thirdly, in
policies on freight, if the goods laden still exist, and the ship con-
tinue capable of carrying them, the underwriter is not liable,
although the master sell or leave them behind on account of the
great expense which would attend carrying them forward; for
though he may in doing so have exercised a prudent discretion,
yet it would be dangerous to allow him, by any exercise of his dis-
cretion, to cast the loss of freight from the shoulders of his owner
on those of the underwriter, (c)* Fourthly, a loss is properly as-
cribed to a particular peril, if that peril be the immediate cause of
the loss, though another cause may have contributed ; as where a
merchant vessel was taken in tow by a ship of war, and thus
exposed to a tempestuous sea, {d) this loss was properly ascribed to
the perils of the sea ; so, where an enemy chases the ship and takes
her, the loss is one by capture, though that enemy would not have
overtaken her had not her rate of sailing been checked by sea-
damage, (e) In these and many other instances, (/) the maxim

(y) Hunter v. Potts, 4 Camp. 203.
(,z) Boyd V. Dubois, 3 Camp. 133.

(a) See judgment of Baylej', J., and Abbott, J., in Powell v. Gudgeon, 6 M. &
S. 43Y.

(b) Powell v. Gudgeon, ttbi supra. Sarguy v. Hobson, 2 B. & C. Y.

(d) Hagedorn v. Whitmore, 1 Stark. 157.

(e) Livie v. Janson, 1 2 East, 648, per Lord Ellenborough, Green v. Emslie, Peake,
212.

(/) Vide Hann v. Corbett, 2 Bingh. 205. Bondrett v. Hentigg, Holt, 149. Hay-
man V. ParisV, 2 Camp. 150. Walker v. Maitland, 5 B. & A. ITI. Hodgson v. Mal-
colm, 2 N. R. 336. Gordon v. Rimington, 1 Camp. 123. Redman v. Wilson, 14 K
& W 4'76.

* Jordan v. Warren Ins. Co., 1 Story 321 ; McGaw v. Ocean Ins. Co., 23 Pick. 405;
Griswold v. New York Ins. Co., 3 John. 321 ; Center v. American Ins. Co., 7 Cow. 564{
S. C. 4 Weud. 45.

444 MERCANTILE CONTRACTS.

The Policy — its Form and Construction.

equally applies, In jure causa proxima non remota spectator, {g)"
Fifthly, when two causes contribute equally to the loss, it may be
ascribed to either. Thus, if a ship be barratrously delivered to the
enemy, the loss may be ascribed either to barratry or capture ; (A)
as, in the case of Hagedorn v. Whiimore, above cited, it probably
might have been to seizure and detention as well as to the perils of
the sea. Where two causes, however, both contribute to the loss,
but unequally, the maxim injure causa proxima non remota spectatur
applies. And, if the proximate cause of the loss be not reducible
to some one of the perils mentioned in the policy, the underwriters
will not be chargeable with it : for instance, if the vessel insured be
driven against another ship by stress of weather, this is an injury
by perils of the sea, and the insurer must make it good ; but if, in
the collision, she do some damage to the other ship, a positive rule

ig) Vide Be Vaux v. Salvador, 4 Ad. & E. 420.

(/<) Arcangelo v. Thompson, 2 Camp. 620. Toulmin v. Anderson, 1 Taunt. 22Y ; 1
Holt, 30. And see Butler v. Wildman, 3 B. & A. 398.

* This principle has been fully recognized in the United States, in the case of the
Patapsco Ins. Co. v. Coulter, 3 Pet. 222, where the loss was by fire, and barratry was
also insured against, the Court held that the negligence of the master and crew was
no defence, though the remote cause of the loss. In the case of the Columbian Ins.
Co. of Alexandria v. Lawrence, 10 Pet. 507, the Court, after deciding that in cases of
insurances against fire on land, they cover losses occasioned by the mere faults and
negligence of the assured and liis servants, unaffected by any fraud or design, inti-
mate an opinion that in marine policies, "a loss whose proximate cause is one of the
enumerated risks in the polic}-, is chargeable to the underwriters ; although the
remote cause may be traced to the negligence of the master and mariners." And in
the case of Waters v. Louisville Merchants' Ins. Co., 11 Pet. 213, this opinion was
acted on and fully confirmed, the Court holding, that in a marine policy, when the
risk of fire is taken, and the risk of barratry is not, a loss by fire remotely caused by
negligence, is a loss within the policj'. This decision is in accordance with the
English cases. Bush v. Royal Exc. Ass. Co., 2 Barn. & Aid. 79 ; Walker v. Maitland,
5 Barn. & Aid. 174. Some of the previous decisions in the State courts were to the
contrary. Grim v. Phoenix Ins. Co., 13 John. 451. Cleveland v. Union Ins. Co., 8
Mass. 308. Lodwick v. Ohio Ins. Co., 5 Ohio R. 436. Fulton v. Lancashire 0. Ins. Co.,
7 Ohio R. pt. 2, 5. But since the decision of the Supreme Court of the United States,
the two last cited eases have been overruled, Perrin v. Protection Ins. Co., 11 Ohio
R. 147, and the doctrine in that decision will probably bo generally adopted. See
Williams v. Suffolk Ins. Co., 3 Sumn. 276. Copeland v. New England Marine Ins.
Co., 2 Mete. 432.

MARITIME INSURANCE. 445

The Policy — its Form and Construction.

of the Court of Admiralty prescribes that the loss sustained by
both shall be added together, and the aggregate equally divided.
Now, in this case, if the ship insured have done more damage than
she has received, and her owners are therefore obliged to pay the
balance, this is neither a necessary nor proximate effect of the perils
of the sea : it grows out of a provision of the law of nations, and
cannot be charged upon the underwriters, (t)*

(i) De Vaux v. Salvador, 4 Ad. & E. 420.

* The point mentioned here, and the case cited, came under the consideration of
the Supreme Court of the United States, in the case of Peters v. The Warren Ins. Co.,
14 Pet. 99, and that court arrived at a conclusion directly opposite to that of the
King's Bench, in the case of De Vaux v. Salvador.

The ship Paragon, which "svas insured against the usual risks, and among others,
that of the perils of tlie seas, proceeding from Hamburgh down the Elbe, with a pilot
on board, came in contact with a galliot and sunk her. The Paragon was herself
injured by the collision, and put into a port within the jurisdiction of Hamburgh for
repairs. Whilst Ij'ing there she was proceeded against in the Marine Court of Ham-
burgh for the injury to the galliot, which court decided that the collision was not the
result of fault or carelessness on either side, and that therefore, according to the
marine law of Hamburgh, the loss was a general average loss, and to be borne equally
by each party. Under this decision, as the galliot had been the most injured by the
collision, the Paragon was compelled to pay to the owners of the galliot twenty-six
hundred dollars. In an action against the insurer, the Supreme Court of the United
States held, that under these circumstances, the contributory amount paid by the
Paragon, on accoimt of the collision, was a direct, positive, and proximate effect from
the accident, in such sense as to render the defendants liable therefor. And Mr.
Justice Story, in delivering the opinion of the Court, said: "In a just view of the
matter, the collision was the sole proximate cause of the loss; and the decree of the
court did but ascertain and fix the amount chargeable upon the Paragon, and attached
thereto, at the very moment of the collision. The contribution was a consequence of
the collision, and not a cause. It was an incident inseparably connected, in contem-
plation of law, with the sinking of the galliot, and a damage immediate, direct, and
positive from the collision." 14 Pet. 109.

In the case of Hall v. The Washington Ins. Co., 2 Story Rep. 176, the same learned
judge extended the same principle to a case where the injury caused by the collision
was the result of negligence, and the damages were voluntarily paid on a compromise.
In this case, the ship Columbia, through the negligence or fault of her mate and crew,
came into collision with the bark Ritchie, by which both vessels sustained damage,
and the master of the Columbia, in behalf of the owners, paid to the owners of the
Ritchie a certain sum by way of compromise for the damage sustained by tlie latter
vessel ; and it was held, that the underwriters on the Columbia were liable for the
sum so paid, as well as the damages for the repairs and looses by the collision to the

446 MERCANTILE CONTRACTS.

The Policy — its Form and Construction.

Date and Subscription. — The date and subscription, including
a receipt for the premium, are inserted as follows : " And so we,
the assurers, are contented, and do hereby promise and bind our-

Columbia. " The insurance," says Judge Story, " does not attach merely to the extent
of the direct injury sustained by the very thing insured." "Any and every expense
borne by and chargeable ujjon the owner of the thing insured, as a direct and imme-
diate consequence of a peril insured against, is covered by the policy." " It makes no
-difference whether the ship was liable at all for the loss, if the loss was a peril in-
sured against, and the owner was compellable to pay the loss, as happening by and
in consequence of the peril. There are many expenses incurred by the owner, in
consequence of a peril insured against, which constitute no charge in rem, and yet
the underwriters are bound to pay the same, as the fees of proctors and counsel in
cases of capture, of notaries in making protest, the costs of a survey, duties, ex-
penses and charges paid in a port of necessity, or the expenses and charges of a sale
of damaged goods. These are all incidents to the original peril or loss, and they
must be borne by the underwriters, although they constitute, strictly speaking, no
lien in rem.'" 2 Story R. 189. This case, on a first view, may appear to carry the
liability of the insurers very far, but it will, we think, on consideration, be found, as
stated by the learned judge, to be a legitimate result of the cases of Waters v. Louis
ville Merchants' Ins. Co., 11 Pet. 213, and Peters v. Warren Ins. Co., 14 Pet. 99.

The views taken by Judge Stoi-y in Hall v. Washington Insurance Company,
were in effect overruled by the Supreme Court of the United States in the recent
ca-se of the General Mutual Insurance Company v. Sherwood, 14 How. 351. That
case directly presented the question, whether under a policy insuring against the
usual perils, including barratry, the underwriters are liable to repay to the insured,
damages paid by him to the owners of another vessel and cargo, suffered in a col-
lision, occasioned by the negligence of the master or mariners of the vessel insured.
The Court regarded it as an important fact, tending to show the practical construc-
tion which the contract had received from merchants and underwriters, that until
the ease of De Vaux v. Salvador, no such claim seemed ever to have been made.
Where the loss is inflicted by a collision, or is by law a necessary consequence of it,
the underwriter, it was admitted, could not set up the negligence of the servants of
the assured as a defence. But in the case before the court, it was not the underwriter
who was seeking to go behind the cause of loss, and to defend himself by showing
that this cause was produced by negligence. "The insured himself goes behind the
collision, and shows as the sole reason why he has paid the money, that the negli-
gence of his servants compelled him to pay it. It is true that an expense, attached
by the law maritime to the subject insured, solely as a consequence of a peril, may
be considered as proximately caused by that peril. But where the expense is
attached to the vessel insured, not solely in consequence of a peril, but in con-
sequence of the misconduct of the servants of the assured, the peril per se is not the
efficient cause of the loss, and cannot, in any just sense, be considered its proximate
cause. In such a case, the real cause is the negligence, and unless the policy can be
»o interpreted as to insure against all losses directl}' referable to the negligence of

MARITIME IXSURANCE. 447

The Policy — its Form and Construction.

selves, each for his own part, our heirs, executors, and goods, to
the insured, for the true performance of the premises, confessing
ourselves paid the consideration due unto us for this assurance, by

the assured, at and after the rate of . In witness whereof, we,

the assurers, have subscribed our names and sums assured in
London."

The insertion of the amount of premium is required by stat.
35 Geo. 3, c. 63 ; and the acknowledgment of receipt herein con-
tained has been held conclusive between the assured and insurer
in the absence of fraud, (j) The insertion of the amount insured
is not required otherwise than by the stamp laws, (^') but is never
omitted in practice ; in conformity to which the underwriter also
annexes the date to his subscription.*

{j) Dalzell V. Mair, 1 Camp. 532. See Foy v. Bell, 3 Taunt. 493. De Gaminde v.
Pigou, 4 Taunt. 246. Mavor v. Simeon, 3 Taunt. 49*7.

(k) 35 Geo. 3, c. 63 ; and see now 1 & 8 Vict. c. 21. Dowell v. Moon, 4 Camp. 166.

the master and mariners, such a loss is not covered by the policy. We are of opinion
the policy cannot be so construed. When a peril of the sea is the proximate cause
of the loss, the negligence which caused that peril is not inquired into ; not because
the underwriter has taken upon himself all risks arising from negligence, but because
he has assumed to indemnify tlie insured against losses from particular perils, and the
assured has not warranted that his servants will use due care to avoid them." The
views thus announced were not considered inconsistent with the case of The Paragon.
14 Petei's, 99.

* Tlie date of a policy of insurance, like that of other written instriiments, is not
conclusive evidence of the time of the transaction ; and this, when material, may be
proved notwithstanding the existence of a written date. And a policy executed
without any written date would, nevertheless, be valid. Lee v. Massachusetts F. &
M. Ins. Co., 6 Mass. 208.

A policy bearing date on the day the premium was paid and the contract con-
cluded, takes effect fi'om that day, although not delivered until several daj's after-
wards. Liglitbody v. North American Ins. Co., 23 Wend. 18.

" Where a policy has, in fact, been executed, and notice of its execution has been
given to the insured, its actual deliveiy is not essential to the completion of the con-
tract. The insurer, whether an individual or an incorporated company, would not
be allowed to retract a consent thus confessed to have been given, but would be con-
sidered as holding the policy for the benefit of the insured, and bound to deliver it
at his request. Should a loss occur, and the policy then be withheld from the in-
sured, it would not be necessary for him to seek the aid of a court of equity. He
would have a complete remedy in an action at law." 1 J. Duer, 66. An action of

448 MERCANTILE CONTRACTS.

Tlie Policy — its Form and Construction.

Memorandum. — The memorandum was first introduced into po-
licies about the year 1749. {I) It is inserted to protect the under-
writer from liability to small averages, i. e., partial losses which
might be claimed in respect of certain perishable commodities. It
is as follows : — " N". B. Corn, (m) fish, salt, (n) fruit, flower, and seed,
, are warranted free from average, unless general (o) or the ship be
stranded. Sugar, tobacco, hemp, flax, hides, and skins, are war-
ranted free from average under five pounds per cent. ; and all other
goods, also the ship and freight, are warranted free from average
under three pounds per cent,, unless general, or the ship be strand-
ed." This memorandum protects the underwriter from making
good any partial loss whatever upon the class of articles first spe-
cified, and any loss under five per cent, on the class secondly speci-
fied ; unless^ in either case, the loss were incurred in consequence
of a general average, or the ship be stranded. "

(l) So stated by Mr. Dunning, arguendo in Wilson v. Smith, 3 Burr. 1551, and by
Mr. R. V. Richards, 5 M. & W. 573.

(»i) This word comprehends peas, Mason v. Skurry, Park, 179, and malt. Moody
V. Surridge, 2 Esp. 633, but not rice, Scott v. Bourdillon, 2 K R. 213.

(n) This does not comprehend saltpetre. Journu v. Bourdieu, Park, 179, per "Wil
son, J.

(o) For an account of general average, see chap, on Contracts of AiFreightment,
sect. 5.

trover would be the proper remedy in such a case. 1 J. Duer, 109, note 6. See
Kohn V. Ins. Co. of North America, 1 Wash. C. C. 93. Ocean Ins. Co. v. Carrington,
3 Conn. R. 357.

* The legal effect of the memorandum is to protect the underwi'iter from all par-
tial losses. Nothing short of a total extinction, either physical or in value, of memo-
randum articles at an intermediate port, would entitle the insured to turn the case
into a total loss, when the voyage is capable of being performed. And when the
commodity specifically remains, though of no value, it is not quite settled whether
under the like circumstances an abandonment for a total loss can be made. Marcar-
dier v. Cliesapeake Ins. Co., 8 Cranch, 39 ; 3 C. R. 20. Moreau v. U. S. Ins. Co., 1
Wheat. 219 ; 3 C. R. 550.

When a part of memorandimi articles of only one species is lost, it is a partial
loss, and excluded by the memorandum. Biaj's v. Chesapeake Ins. Co., 7 Cranch, 415 ;
2 C. R. 552. In this case the insurance was on a cargo of hides, " warranted free
from average, unless general." A part were sunk and totally lostj another part
greatly injured and sold, the residue were carried to the poi-t of destination. The
insurers were held to be protected by the memorandum clause from any liability for

MARITIME INSURANCE. 449

The Policy — its Form and Construction.

The reason of the exception where the ship has been stranded,
is, that, in such a case, the underwriters agree to ascribe the loss
to the stranding, as being the most probable occasion of the dam-
age, though the fact cannot be ascertained ; and, accordingly, it is
now clearly settled, that every average or partial loss becomes a
charge upon the underwriters, where a stranding has taken place,
whether the loss has been in reality occasioned by the stranding,
or no. (p) In consequence of this, the true sense of the word
"stranding" has become a matter of importance. The rule laid
down by Lord Tenterden in Wells v. Hopivood, and considered
by him deducible from all the cases on the subject, is, " That where

(p) Per Lord Tenterden, in Wells v. Hopwood, 3 B. & Ad. 34.

the loss. And so in a case where there was an insurance on a cargo consisting of
lemons and oranges, and the whole of the oranges were lost by a peril insured
against, the insurers were held not to be responsible, under the usual memorandum,
warranting the imderwriters free from particular average on "fruit," under which
the lemons and oranges were considered to be embraced. Humphreys v. Union Ins.
Co., 8 Mason, 429. These decisions were recognized and followed in the case of
Wadsworth v. Pacific Ins. Co., 4 "Wend. 33 ; and the Chancellor, in his opinion on that
case, says, " It must now be considered a settled rule of American Insurance law,
that the underwriter is not answerable for any partial loss on memorandum articles,
except for general average, unless there is a total loss of the whole of the particular
species, whether the particular article is shipped in bulk, or in separate boxes or
packages." See also Guerlain v. Columbian Ins. Co., 7 John. 527.

A policy of insurance contains a clause, by which it is agreed, in effect, that sucli
and such articles are warranted free of average unless general, and such and such
other articles free of average under certain rates — as 15, 10, ^i 2)er cent. — unless gen-
eral : held, that where payment is claimed upon this policy, for an injury from one of
the perils insured against to goods within one of the warranties, in order to ascer-
tain whether the loss is so great as to make the underwriters liable, notwithstand-
ing the warranty, the amount of damage is to be compared, not with the total value
of all the goods insured, nor with the value of the varioiis articles to which the
same warranty or rate of average applies, taken together, but witli the value of
that one of the several articles specified in the warranty to which the damage has
occurred. Louisville F. & M. Ins. Co. v. Bland, 9 Dana, 143, 148.

Under the exceptions of losses under a certain rate, as five per cent., if the ag-
gregate losses " during the voyage," though happening at different successive periods,
amount to five per cent., the imderwriters are liable. Donnell v. Col. Ins. Co., 2
Sumn. 366. 2 Phil, on Ins. 500.

As to the stranding of a ship, see Potter v. Suffolk Ins. Co., 2 Sumn. 197. Lake «.
Columbus Ins. Co., 13 Ohio, 48.
29

450 MERCANTILE CONTRACTS.

The Policy — its Form and Construction.

a vessel take the ground in the ordinary and usual course of navi-
gation and management, in a tide-river, or harbor, upon the ebbing
of the tide, or from natural deficiency of water, so that she may
float again upon the flow of the tide, or increase of water, such an
event is not to be considered a stranding within the sense of memo-
randum. But where the ground is taken under any extraordinary
circumstances of time or place, by reason of some unusual or acci-
dental occurrence, such an event shall be considered a stranding
within the meaning of the memorandum." And his Lordship was
further of opinion that the fact of the vessel's not receiving injury
from such a grounding was of no consequence.

In the case just cited, the ship was moored in a tide-harbor
against the quay, with her head fastened to the opposite side of the
harbor by a rope ; at the first ebb she took the mud, but at the
second, the stretching of the rope and a strong wind caused her to
ground upon a bank, where she was strained, and her seams opened,
and received some water, whereby the cargo was damaged, but at
high tide they closed again, and the vessel was ultimately unin-
jured. These circumstances were held by three Judges, Parke, J.,
disseniiente, to constitute a stranding within the meaning of the po-
licy. In Kingsford v. Marshall^ {q) another recent case upon this
subject, the vessel on the ebbing of the tide took the ground cohere
it was intended that she shoidd, but, in so doing, struck against some
hard substance, which made two holes in her bottom, and damaged
ner cargo ; this was held not to constitute such a stranding as would
subject the underwriters to average ; and the Lord Chief Justice,
in delivering judgment, mentioned the case of Wells v. Hopwood^
and said it was decided on the principle that the taking the ground
was occasioned by an extraneous and accidental cause; but that in
the case before him, the grounding was such as the master and creiu
intended, that is, merely by the ebbing of the tide in the ordinary
course of navigation. These two instances will serve to show the
reader how nice the distinction between what is, and what is not a
stranding, has become, (r) To constitute a stranding, the ship must

{q) 8 Bingh. 458.

(r) See further, Bishop v. Pentland, "7 B. & C. 214. Hearne v. Edmunds, 1 B. &
B. 888. Carruthers v. Sydebotham, 4 M. & S. 11. Rayner v. Godmond, 5 B. & A.
225.

MARITIME INSURANCE. 45I

The Policy — its Foi'm and Construction.

be stationary: the striking on a rock, wiiere the vessel remained a
minute and a half only, was thought not to be a stranding, though
she thereby received an injury, which eventually proved fatal, (s)
And though it is not necessary that the injury to the property in-
sured, for which a compensation is claimed, should have been occa-
sioned by the stranding, still that event must have happened before
the risk upon the property insured had altogether determined ; thus,
where the subject matter of insurance consisted of hides, which
were damaged by a peril of the sea so much that they were neces-
sarily sold during the voyage, and the ship was afterwards strand-
ed, it was held that the insured could not recover for a total loss,
as he had not abandoned, and could not recover for an average
loss, as the hides were warranted " free of particular average, unless
the ship be stranded," and that the stranding had not taken place
until the risk upon the hides had been determined, [t] The strand-
ing of a lighter, into which the goods had been transhipped for
the purpose of landing them, is not such a stranding as will justify
this condition, even although risk of craft be expressly guarded
against by the policy, {u) It has been decided in a late case, that
the underwriter is liable, if the aggregate of averages, however mi-
nute each average may be ^^er se, come up to three per cent, upon
the whole on property warranted free from average under three per
cent. The Court, however, said that, perhaps, usage would be ad-
missible to show that the contrary was intended ; but there was no
evidence of usage in the case before them, {v)

As to the distinction between a total loss of an integral part of
the cargo and a particular average guarded against by the memo-
randum, see Hills v. London Assurance Corporation, {iv)

Stamp. — A policy of insurance may be duly stamped at the

(s) MacDougle v. R. E. A. Co., 1 Stark. 130.

(t) Roux V. Salvador, 1 Hodg. 49 ; 1 Bingh. N. C. 526. This case -n-as reversed in
Camm. Scacc. upon the ground that abandonment was unnecessary, hut the decision
of the C. P. on the second point seems to have been approved of. Ro..x v. Salvador
8 Bingh. N. C. 266.

(u) Hoffman v. Marshal, 2 Bingh. N. C. 383.

(t>) Blackett v. R. E. A. Compy., 2 Tyrwh. 266 ; 2 C. & J. 244.

(to) Hills V. London Assurance Corporation, 5 M. & W. 569.

452 MERCAXTILE COXTRACTS.

The Policy — its Form and Construction.

time when it is effected : it cannot be legally stamped afterwards, (x)
But policies of mutual insurance, i. e., policies by wliich. divers per-
sons agree to insure one another, may be stamped with additional
stamps, if not underwritten to an amount exceeding the sum war
ranted by the former stamps, (y)

By 35 Geo. 3, c. 63, s. 13, it is provided, " That the act shall
not extend to prohibit the making of any alteration which may
lawfully be made, in the terms and conditions of any policy of in-
sm^ance duly stamped, after the same shall have been underwritten,
or to require any additional stamp duty by reason of such altera-
tion, so that such alteration be made before notice of the determina-
tion of the risk originally insured, and so that the thing insured
shall remain the property of the same persons, and so that such
alteration shall not prolong the term insured beyond the period
allowed by this act, and so that no additional or further sum shall
be insured by means of such alteration." This clause receives a
liberal interpretation, {z) A mere extension of the time of sailing
is within it. (o) So is a memorandum waiving the warranty of sea-
worthiness, (b) "Where a policy " on ship and outfit" was altered
by inserting "ship and goods," it was held, that the insured could
not recover on the policy as altered, for want of a new stamp, (c)
since the words " tJmig insured^'' required one identical and con-
tinued subject matter of insurance ; nor on the policy as it before
stood, by reason of the alteration ; but when the alteration in the
subject matter of insurance is to rectify a mere mistake, as where a
broker intrusted to effect a policy on goods, effected it on ship, no
new stamp is necessary. (cZ) A memorandum to a policy on " hemjD,
marked E., and valued, with warranty to sail before August 20,"
withdrawing the mark of the hemp and warranty of saiHng, in

(x) 35 Geo. 3, c. 63. Roderick i'. Hovil, 3 Camp. 103.

{y) 9 Geo. 4, c. 49.

(2) Per Lord Tenter den, in Brocklebank v. Sugrue, post.

{a) Kensington v. Inglis, 8 East, 273. Hubbard i^. Jackson, post.

(b) Weir V. Aberdeen, 2 B. & A. 320.

(c) Hill V. Patten, 8 East, 373, cited Bathe v. Taylor, 15 East, 415. French v. Pat-
ten, 9 East, 351, on the same policy, cited Reed v. Deere, 7 B. <fe C. 261.

{d) Sawtell v. Loudon, 5 Taunt, 359. See Robinson v. Touray, 1 M. & S. 217.
Kershaw v. Cox, 3 Esp. 246. Byrom v. Thompson, 11 Ad. (fe E. 31. Cariss v. Tatter-
sall, 2 M. &. Gr. 890.

MARITBIE IIS'SURAXCE. 453

The Policy — its Form and Construction.

consideration of four guineas, does not render an additional stamp
necessary ; (e) nor does the alteration of a voyage from "Stock-
holm to Swinemunde," to one " from Stockholm to Swinemunde,
Konigsberge, or Memel;"(/) nor of a risk "at and from Liver-
pool to Quebec," to one "from Liverpool to St. John's, ISTew
Brunswick." {g) But the terms of the original policy cannot be
so altered by any memorandum as to bring it into a class re-
quiring a higher duty, without affixing the stamp thereby re-
quired. (A)

The rate of stamp duty payable on policies of marine insu-
rance is regulated by stat. 7 & 8 Vict. c. 21.

Warranties. — TVe now pass to the consideration of warranties.
" A warranty in a policy of insurance is a condition or contingency,
and unless that be performed there is not any contract : it is per-
fectly immaterial for what purpose it was introduced ; but, being
inserted, the contract does not exist unless it be literally complied
with, {i) and, in this necessity for a literal compliance, it differs from
a representation^ which it is sufficient to perform suhstantially. War-
ranties are either express — i. e., appearing in the body or margin, {j)
or at the bottom [k) of the policy, or in some writing, which is by
reference incorporated with it ; il) — or implied^ i. e., understood to
exist in every policy unless expressly negatived. Any thing may,
of course, be expressly warranted ; but those things which are most
usually so, are,

1. The time of sailing.

2. The safety of the ship at a particular time.

(/) Ramstrom v. Bell, 5 M. & S. 267.

(g) Brocklebank v. Sugrue, 1 B. <fc Ad. 81.

{h) Per Lord Tenterden, in Brocklebank v. Sugrue.

(i) Per Lord Mansfield, C. J., 1 T. R. 345. And therefore it has been thougnt the
underwriter, in an action on a policy, cannot, after paying money into Court, rely
upon a breach of warranty, for the paj'ment admits that the insured has a right t»
recover something, -which he could not if there had been a breach of warranty
Harrison v. Douglas, 3 Ad. & E. 396, tamen qucere.

(j) Bean v. Stupart, Dougl. 11. De Hahn v. Hartlej', 1 T. R. 343.

ik) Blackhurst v. Cockell, 3 T. R. 360.

(l) Worsley v. Wood, 6 T. R. 710. Routleige v. Burrell, 1 H. Bl. 254.

454 MERCANl'ILE CONTRACTS.

The Policy — its Form and Construction.

8. That she shall depart with convoy.
4. That the property is neutral.
6. Freedom from seizure in port.
Let us consider these in order.

1. Time of Sailing. — When a ship is warranted to sail on a par-
ticular day, that means that she shall be upon her voyage on that
day, for which purpose she must be completely unmoored ; it will
not be sufficient that she had her cargo on board, and was only pre-
vented from sailing by stress of weather, (m) But if she hona fide
set sail for the purpose of completing her voyage, that will be
enough, {n)^ although she be detained beyond that day at another
part of the same river or territory, ex. gr., by an embargo (o) or by
stress of weather. It must, however, be observed, that a warranty
to sail is not complied with, by a vessel's raising her anchor, getting
under sail and moving onwards, unless, at the time of performing
these acts, she has every thing read}'' for the performance of the
voyage, and these acts are done as the commencement of it, nothing
remaining to be done afterwards ; {p) for instance, if she have not
her clearances, or have not taken in her entire cargo, she cannot be
said to have sailed, within the meaning of the warranty. Noi
must her sailing be a merely colorable one, for the purpose of com-
plying with the letter of the warranty, and not in real furtherance
of the intended voyage, {q)

If the warranty be to depart^ or to "sail from a place," which
seems to bear the same sense as depart^ i^r) it is necessary not only

(?m) Nelson v. Salvador, 1 M. & M. 309.

(«) Wright V. Shiffner, 11 East, 515; 2 Camp. 247. Lang v. Anderdon, 3 B. <fe O.
495.

(o) Bond V. Nutt, Cowp. 601. Tlielusson v. Fergiisson, Dougl. 361. Cochrane v.
Fisher, 2 C. & M. 581; 4 Tyrwh. 424. S. C. in Cam. Scacc, 1 C. M. <fe R. 809; ft
Tyrwh. 499.

{p) Lang V. Anderdon, 3 B. & C. 495. Pittegrew v. Pringle, 3 B. tfe Ad. 514
Graham v. Barras, 5 B. & Ad. 1011.

{q) Cochrane v. Fisher, 2 C. <fe M. 581 ; 4 Tyrwh. 424.

(r) See Lang v. Anderdon, ubi sup.

* S. P. 20 Pick. 2*75, Bowen v. Hope Ins. Co.

MARITIME mSURANCE. 455

The Policy — its Form and Construction.

that tlie ship should set sail on the voyage^ but also that she should
be out of port on or before the day. (s)* To sail is to set sail on the
voyage ; to depart is to depart /rom some particular place.

2. Safety of a Ship on a Particular Day. — AVe have already ob-
served that a warranty of the safety of the ship on a particular day
is often inserted, in order to restrain the force of the expression,
" lost or not lost,^^ that if the ship be safe at any tir'>e in that day the
warranty is complied with, (/)

3. To depart with Convoy. — This is a warranty usual in time of
war, when a departure with convoy is, from motives of public
policy, in general, also enforced by statute, {u) A convoy is a naval
force under the command of a person appointed by the government
of the country to which the vessel insured belongs. The appoint-
ment by government is essential ; for a ship of war accidentally
bound on the same voyage with the vessel insured, is not a sufficient
convoy, {v) But a convoy appointed by the admiral command-
ing in chief on a foreign station is one appointed by government, {w)
The terms of the warranty are, sometimes to depart with convoy^ at
other times with convoy for the voyage. These two forms of expres-
sion mean precisely the same, and render a departure with convoy
for the voyage necessary, (x) But, as it sometimes happens that gov-
ernment appoints a convoy to accompany the ships for part only
of their voyage, and then to be succeeded by another, or to detach
a portion of itself from the main body, to bring them up to a par-
ticular point; the warranty will be complied with if the vessel sail
with the first convoy, and proceed with the force so appointed or

(s) Moir V. R. E. A. Co., 3 M. & S. 461 ; 6 Taunt. 245, And see the remarks o:
Abbott, C. J., in Lang v. Anderdon, and of Ld. Denman, C. J., in Fisher v. Cochrane,
5 Tyrwh. 501.

\t) Blackhurst v. Cockell, 3 T. R. 360.

{u) See Stat. 43 Geo. 3, c. 57, 38 Geo. 3, c. 1Q.

(v) Hibbert v. Pigou, Park, 498.

(w) Ibid. Vide Audley v. DufF, 2 B. & P. Ill,

(x) Jeffrey v. Legendra, 3 Lev, 321. Lilly v. Ewer, Dougl. 72.

* S. P. 3 Hill, 118, Union Ins. Co. v. Tysen.

456 MERCANTILE COISTTRACTS.

The Policy — its Form and Construction.

detaclied. (?/) Indeed, as government alone can appoint convoys,
the question whether a convoy be or be not sufficient, must to a
great extent depend upon its orders. (2) It may be impossible to
procure a convoy either precisely from the port of departure, or
precisely to that of destination ; (a) for instance, no convoy ever
sails from the port of London, (b) In such cases, the rule is, that
if the vessel sail with convoy from the place of rendezvous ap-
pointed for vessels bound from her lading port, and to the nearest
point to which she can be conducted by the convoy appointed for
vessels going to her place of destination, that is sufficient. A war
rawty to depart- with- convoy is not<;omplied with, unless the mas-
ter, if by due diligence he can, obtain sailing instructions before
the ship leaves the place of rendezvous ; for the value of convoy,
in a great measure, arises from its taking the ships under control,
as well as protection ; but that control cannot commence till sailing
instructions have been obtained, nor can it be enforced, otherwise
than by their means, (c) Moreover, the meaning of the warranty is
that the ship shall not only depart with convoy, but keejJ loith it
during the whole voyage, except in cases of absolute impossibility,
such as being driven by a tempest to some foreign port, where no
convoy can be had. {d)

4. Neutral Property. — In war time it is also usual to warrant the
subject of insurance to be neutral property^ which only means that
it is neutral at the commencement of the risk, not that it shall con-
tinue so during the rest of the vo3^age. (e) Indeed, if the ship for-
feit her neutrality by the misconduct of those on board, the war-
ranty will have been brDken as to her ; (/) for when a ship is war-

(2/) Abbott, 353, 8th ed. Smith v. Redshaw, Park, 510. De Garay v. Claggett,
ibid. 511. Manning v. Gist, Marsh. 269. Audley y. Duff, 2 B. <fe P. 111.

(2) See remarks of Heath, J. Audley v. Duff, ubi supra.

(a) D'Eguino v. Bewicke, 2 H. BI. 551. Lethulier's case, Sal. 443. Gordon v.
Morlej^ Str. 1265.

(6) Abbott, 353, 8th ed.

(J) Jeffrey v. Legendra, 3 Lev. 320 ; Carth. 216 ; Sal. 443 ; 1 Show. 320 ; 4 Mod. 58

(t) Eden v. Parkinson, Dougl. 732. Tyson v. Gurney, 3 T. R. 477.

(/) Garrels v. Kensington, 8 T. R. 230. See Carruthers v. Gray, 3 Camp. 142.
15 East, 35, as to goods.

MARITIME INSURANCE. 457

The Policy — its Form and Construction.

ranted neutral^ that means, first, that she sliall belong to the subject
of a neutral state ; and, secondly, that she shall be navigated ac-
cording to the law of nations, and the particular treaties subsisting
between the country to which she belongs and the belligerents:
and, therefore, if by such a treaty it have been agreed that those
ships only shall be considered neutral which are furnished with
particular documents, whoever warrants her neutrality must take
care that she have those documents on board; {g) but it is not ne-
cessary that she should be navigated in conformity to the ex 'parte
ordinance of one of the belligerents in which her own nation has
not concurred. (A) The sentence of a foreign Court of Admiralty,
or other court having jurisdiction over questions of prize, and ad-
judging the vessel to be good prize, on a ground within their juris-
diction, will, if such ground falsify the warranty^ ii) be conclusive
evidence that it has been broken ; and that, though it appear on
the face of such sentence that the court arrived at its conclusion
through rules of evidence established by particular ordinances of
its own country, and inadmissible on general principles, {j) But
if the ground of condemnation be stated obscurely, (JS) or the sen-
tence adjudge the ship prize, not because she was enemy's property,
but for reasons leading to a contrary conclusion ; (l) or if it appear
that it was founded solely on the violation of an ex parte ordinance
to which the neutral state had not assented ; {m) in such cases the
sentence is not conclusive evidence of a breach of the warranty.

5. Freedom from Seizure in Port of Discharge. — A clause is some-
times inserted to exempt the underwriters from responsibility in

{g) Rich V. Parker, 7 T. R. 705. Baring v. Christie, 5 East, 398. Collectanea
Juridica, vol. i. p. 33.

(/<) Pollard V. Bell, 8 T. R. 434. Bird v. Appleton, 8 T. R. 562. Price v. Bell, 1
East, 663. Collectanea Juridica, vol. i. p. 33.

{i) Baring v. Clagget, 3 B. <fe P. 201. Lothian v. Henderson, 3 B. <fe P. 499.
Bolton V. Gladstone, 5 East, 155. Siffken ■». Lee, 2 K Rep. 489. Garrels v. Kensing-
ton, 8 T. R. 230.

{j) Bolton V. Gladstone, 2 Taunt. 85. Baring v. R. E. A. Compy., 6 East, 99.
Geyer v. Aguilar, 7 T. R. 081.

{k) Bernard! v. Motteaux, Dougl. 574. Fisher v. Ogle, 1 Camp. 418. Dalgleish
I'. Hodson, 7 Bingh. 495.

(I) Calvert v. Bovil, 7 T. R. 523. Dalgleish v. Hodson, uhi supra.

(m) Bird v. Appleton, 8 T. R. 502.

458 MERCANTILE CONTRACTS.

The Policy — its Form and Construction.

case of confiscation^ seizure^ or capture in joort. The principal diffi-
culties wliicli arise on it, respect the question, When is a seizure, pro-
perly speaking, in port f These cases will greatly depend upon their
own peculiar circumstances. A disposition lias been evinced to
liold the word port to include any place where the vessel was in-
tended to be discharged ; {n) but if a vessel, when seized, be neither
within the caput portus, nor within that part of the haven where
ships usually unload, the underwriter is not discharged by this
warranty, (o) Whether the vessel was at her port of discharge or
not, is a question entirely for the jury, {p) It has been ruled, that
where this warranty is inserted, the underwriters are discharged, if
the insured deviate from the usual course of the voyage in order to
avoid the excepted peril, {q) This doctrine appears hard on the
insured, who, if there were no warranty, would be entitled to re-
cover, (r)*

(m) Jarman v. Cope, 2 Camp. 615 ; 13 East, 394. Dalgleish v. Brooke, 15 East,
295, ■which seems at variance with Brown v. Tierney, 1 Taunt. 517. Maydhew v.
Scott, 3 Camp. 205. Oom v. Taylor, ibid. 20-4. See Cockey v. Atkinson, 2 B. <fe A.
460.

(o) Keyser v. Scott, 4 Taunt. 660. Levy v. Yaughan, 4 Taunt. 887. Mellish v.
Stainforth, 3 Taunt. 499.

(p) Kersey v. Scott, 4 Taunt. 660. Reyner v. Peai'son, 4 Taunt. 662. Levin v.
Newnham, 4 Taunt. 722.

{q) O'Reilly v. R. E. A. Co., 4 Camp. 246.

(r) O'Reilly v. Gonne, 4 Camp. 249.

* In the United States a clause is frequently inserted in the policy, " that the as-
surers shall not be liable for any charge, damage, or loss which may arise in conse-
quence of seizure or detention for or on account of illicit trade, or trade in articles
contraband of war." A seizure or detention, to come within this exception, must be
for a legal and justifiable cause. It must be bona fide, -and upon a reasonable ground.
If there has not been an actual illicit or contraband trade, there must be at least a
well-founded suspicion of it, a probable cause to impute guilt, and justify further pro-
ceedings and inquiries; and this is what the law terms a legal and justifiable cause
for the seizure or detention. Carrington v. Merchants' Ins. Co., 8 Pet. 495, 516.
"Where barratry is also insured against, and the vessel is lost through the barratrous
act of the master, in attempting an illicit trade by smuggling a few articles in hia
possession, the insurers are liable, notwithstanding this clause against illicit trade.
The illicit trade must be carried on by the assured himself, or with his knowledge
or assent. He is not affected by the acts of the master or mariners. American Ina.
Co. V. Dunham, 15 AVend. 9 ; S. C. 12 Wend. 463.

MARITIME INSURANCE. 459

The Policy — its Form and Construction.

Implied Warranties. — The implied warranties are,

1. Not to deviate.

2. Seaworthiness.

8. That the insured will use reasonable diligence to guard
against the risks covered by the policy, (s)

1. Kot to deviate/^ — A deviation from the proper course and

(s) See Pipon v. Cope, 1 Camp. 434, and the editor's note, Law v. Ilollingsworth,
7 T. R. 160. Bell v. Carstairs, 14 East, 374; see post, p. 345, n.

* A deviation is defined in 1 Phill. on Ins. 480, to be " the increasing or varj-ing
the risks insured against, without necessity or reasonable cause." He does not class
"not to deviate" among implied warranties. ''A deriation is essentially different
from a breach of warranty, which is the violation of an expressed or implied engage-
ment on the part of the assured, whereas tlie superinducing of additional and extra
ordinary risks, or the change of the risks insured against, is not a violation of any
agreement, express or implied." 1 Phill. on Ins. 484. " The true reason why a devi-
ation discharges the insurer is not the increase of the risk, but that the party con-
tracting has voluntarily substituted another voj-age for that which was insured.
This change of the voyage determines the contract from the time it happens."
Stetson V. Massachusetts Mut. Fire Ins. Co., 4 Mass. 288. "If, for example," says Mr.
Phillips, " the vessel unnecessarily delaj's, or goes out of the usual course of the V03'-
age, she is not after that time exposed to the identical sea perils to wliich she would
have been exposed had she pursued the voyage expeditiously in the usual course."
1 Phill. 485. See also Keeler v. Firemen's Ins. Co., 3 Hill, 250, 257. Maryland Ins.
Co. V. Leroy, 7 Cranch, 26 ; 2 C. R. 402.

It is said in 1 Phill. 571, that " in river navigation, as in that of the ocean, the
underwriters are answerable for the perils enumerated only as far as the navigation
is conducted iu the usual course." Citing Gazzan v. Ohio Ins. Co., 1 Wright, 202,
Jolly V. Ohio Ins. Co., 1 Wright, 539. In this case, where a steamboat was lost in
ascending the Mississippi river, by attempting to run through a chute or cut-off, it
was said by Lane, J., " The proof is, that navigators pass their craft through this cut-
off or chute at high water, to cut off. the distance and gain time. Such deviations
are always at the risk of the navigators. It is obvious that there is less danger of
grounding in the main channel of the river than elsewhere ; and if the pilot or cap-
tain, for his own gain or convenience, depart from this channel, as the gain is his, if
he succeed, the loss is his, if he fail. This is not the case of error in judgment in an
emergency, for which the navigator might not be responsible, but one of voluntary
deviation, and a consequent voluntary taking, by the navigator, of the risk."

It would seem difficult to sustain the doctrine here contended for ; and the course
of navigation it would require is certainly not that which is ordinarily pursued on
the Mississippi river. And in the case of Keeler v. Firemen's Ins. Co., 3 Ilill, 256, it
is said, " It is moreover quite difficult to perceive how deviation can be predicated

460 MERCANTILE CONTRACTS.

The Policy — its Form and Construction.

track of the voyage insured, {t) discharges the underwriter, not ai
initio^ huifrom the time of the deviation; so that he is liable for any
damage which had previously accrued, {u) but is freed from subse-
quent responsibility. A deviation happens, where there is a wilful
and unnecessary departure from the due course of the voyage, for

{t) As to this, see ante, under the liead Voyage Inmred.
(«) Green v. Young, 2 Raym. 840 ; Sal. 444.

of river navigation in almost any case, and especially under such a policy as this.
It is a policy on time, covering all and any adventures to and fro in the whole region
of the coasting trade, from Albany round to Boston, and thence to the Chesapeake
Bay, at the pleasure of the owners. That the vessel could be said to deviate by pur-
suing any track witiiin these limits, it would, I apprehend, be difficult to show. A
deviation proper is always relative to the geographic line fixed by the policy. But
if this had tied up her course from Albany to Georgetown or Alexandria, she being
in the Potomac, crowding sail for her port of destination, though so unskilfully as to
go in the wrong channel — one that was never taken before for such a purpose — yet
BO long as she kept the general course of the river, slie had not, I apprehend, deviated
■within the sense of the law."

It was also said that it was not material to the decision of that case to inquire
"whether there may not be a deviation, in such a case, by delay or other acts,
wlierebj' the party can be said to have voluntarily substituted another voyage for
that described." That there maybe a deviation in river navigation by such acts has
been held in several cases. Tiius, a steamboat insured for six months to navigate
the Mississippi, against the perils of the river, «fcc., took in tow a brig, and it was
held to be a deviation, there being nothing in the policy which expressly authorized
it. Hermann v. Western M. tfe F. Ins. Co., 15 Curry's La. Rep. 516. Natchez Ins,
Co. V. Stanton, 2 Sra. &, Marsh, 340. See also Stewart v. Tenn. F. <fe M. Ins. Co., 1
Humph. 242.

As to an intention to deviate not carried out, see Marino Ins. Co. of Alexandria v.
Tucker, 3 Cranch, 557, 1 C. R. 561 ; Ilobart v. Norton, 8 Pick. 159; 1 Piiill. on Ins.
556. Unnecessary delay during the course of the voyage. Coffin v. Newburyport
Mar. Ins. Co., 9 Mass. 436. Usage to stop or go out of the way, Oliver v. Marj--
land Ins, Co., 7 Cranch, 487, 2 C, R. 580; Columbian Ins. Co. v. Catlett, 12 Wheat.
883, G C. R. 341. Liberty to touch at a port, Maryland Ins. Co. v. Leroy, 7 Cranch,
26, 3 C. R. 402. Deviation from a mistake of the master. Brazier v. Clap, 5 Mass. 1 ;
from necessity, 7 Cranch, 26, where it is said that a deviation from necessity "must
be strictly commensurate with the vis major producing it;" to avoid capture, Robin-
Bon V. Marine Ins. Co., 2 John. 89; Post u Phoenix Ins. Co., 10 John. 79; stress of
weather, Suydam v. Marine Ins., 2 John. 138. No stoppage on the high seas for the
purpose of saving life is or can be deemed a deviation from the voyage, so as to dis-
charge the insurance on ship or cargo, but any further stoppage for the purpose of
saving property, is a deviation from the voyage, and discharges the underwriters
Bond V. The Cora, 2 AVash. C. C. 80. The Henry Eubank, 1 Sumn. 424,

MARITIME mSURANCE. 4QI

The Policy — its Form and Construction.

any, even the sliortest, time. Thus, if the master touch at a port
for a purpose unconnected with the voyage ; {v) or at a port not in
the course of the voyage, though only a few leagues out of the way ;
or one at which it is not usual to touch, although the ship must pass
it ; (iv) or stay an unusual time ; (x) or if, when there are several
tracks, he select one in particular foi a purpose foreign to the voy-
age, instead of that which is safest and most eligible ; (?/) or having
liberty to touch at one port, touch at another, (2) or touch at the
port mentioned in his liberty, but for an unauthorized purpose ; (a)
all these are deviations ; and, though there is no objection to a
policy on part of a voyage, {b) yet, if a policy be on the whole voy-
age, a deviation, which happened even before the making of the
policy, will be fatal, (c) In determining whether there have been
a deviation, regard is always to be paid to the object of the voyage,
and the usage of trade with respect to such voyages, (d) Thus, if
it be usual to stop long at a port, or to go out of the way, the un-
derwriter is considered as understanding that usage, (e) But, as
has been frequently observed, no usage can be set up against the
express language of a policy ; and the policy often, in express
terms, grants liberty to the insured to perform acts which, but for

[v) Hammond v. Reid, 4 B. &. A. 72. Solly v. Whitmore, 5 B. <k A. 45.

{w) Fox V. Black, Bea. 315. Townson v. Gwyon, ibid. Salisbury v. Townson,
Park, 454.

{x) Williams v. Shee, 3 Camp. 469. Redman v. London, 3 Camp. 503. Unreason-
able would, perhaps, be a more correct expression than unusual. In the case of a
seeking ship, a reasonable time for the purposes of the adventure, to be determined
by the state of thing; at the port where the ship happens to be, must be allowed.
That state of things n.ay render the time of the detention unusual, jct it will not
discharge the underwriters, unless it be also unreasonable. Phillips v. Irving, 7 M.
& Gr. 325. In the i^rosecution of an ordinary voy.age, an unusual stay would be im-
reasonable.

(y) Middlewood v. Blakes, 1 T. R. 1G2,

(z) Elliot V. Wilson, 7 Bro. P. C. 459 ; 4 Bro. P. C. 470, Tomlin's ed.

(a) Bottomley v. Bovill, 5 B. & C. 210. Langhorn v. AUnutt, 4 Taunt. 511. See
Inglis V. Vaux, 3 Camp. 437.

(b) Taylor v. Wilson, 15 East, 324. Driscol v. Pasmore, 1 B. & P. 200.

(d) Comyns' Dig. Merchant, E. 9. Stewart v. Bell, 5 B. & A. 238. Delauy «
Stoddart, 1 T. R. 22. Salvador v. Hopkins, 3 Burr. 1706.

(e) Bond v Gonsales, Salk. 445, cited 1 Burr. 348.

462 MERCANTILE CONTRACTS.

The Policy — its Form and Construction.

that liberty, would amount to deviations ; (/) but care must be
taken not to exceed the liberty ; {g) and even an expressed liberty
is construed with reference to the main object of the voyage. Thus,
under a liberty to touch and stay at any port or ports whatever,
the stay must be for some purpose connected with the furtherance
of the adventure, (li) Where a ship was insured from Lisbon to
England, with liberty to call at any one port in Portugal, it was
held that this must mean some port in the course of the voyage to
England ; {i) and, as we have seen that a voyage to A. B. and C.
means a voyage to them in the order mentioned in the policy, so
where liberty is given to touch at several specified ports, they must,
if more than one is visited, be taken in the order named in the
]3olicy. [j ) Nor must the stay at any of them be unreasonable ; (Jc)
but wlien a ship has liberty to touch at a port, she has also liberty
to trade there, provided that no extra delay be thereby occasioned. {I)
If the vessel, in time of war, cruise for a prize, (m) that is a devia-
tion, unless she have express liberty to do so, A liberty to chase is
different from one to cruise for prizes : and a liberty to chase, cap-
ture, and man, will not justify a lying in wait nine days for a
prize, (n) nor a delay for the purpose of bringing her, when cap-
tured, into port : in order to that, there should be a liberty to con-
voy prizes, (o) A liberty to cruise for six weeks, means for six
weeks successively, {p )

(/) Vide Barclay v. Sterling, 5 M. & S. 6. Leathly v. Hunter, 1 Tyrwh. 859 ; Y
Bingh. 517. Mellish v. Andrews, 16 East, 312 ; 2 M & S. 27 ; 5 Taunt. 496.

(<7) See Hamilton v. Sheddon, 3 M. & W. 49.

(/t) Langhorn v. Allnutt, 4 Taunt. 511. See Jarratt v. Ward, 1 Camp. 263. "Wil-
liams V. Shee, 3 Camp. 463, 504. Bottomley v. Bovill, 5 B. & C. 210. Hamilton v.
Sheddon, 3 M. & W. 49.

(i) Hogg V. Horner, Marsh. 197 ; but see, for qualifications of this doctrine, Met-
calf V. Parry, 4 Camp. 123. Bragg v. Anderson, 4 Taxint. 229.

(J) Gardner v. Senhouse, 3 Taunt. 16. Vide ante, 429.

{k) Williams v. Shee, 3 Camp. 469, 504. Phillips v. Irving, 7 M. &, Gr. 325.

{I) Raine v. Bell, 9 East, 195. Laroche v. Oswin, 12 East, 131.

(w) Cock V. Townsend, Beawes, 316; Paik, 448. See Phelps v. Auldjo, 2 Camp.
350. Jolly V. Walker, Beawes, 316. Parr v. Anderson, 6 East^ 202.

(n) Hibbert v. Halliday, 2 Taunt. 428.

(o) Lawrence v. Sydebotham, 6 East, 45.

( p) Syers v. Briggs, Dougl. 509.

MARITIME INSURANCE. 4G3

The Policy — its Form and Construction.

An unreasonable delay in sailing to the port or place at which,
the risk is to commence, is in the nature of a deviation, and dis-
charges the underwriter, {q)

But the policy will not be avoided by a mere intention to de
viate, never carried into effect ; {r) and there are circumstances
under which an actual deviation will be excused ; these are, where
the deviation is occasioned by necessity, or some imperative obli-
gation, ex. gr., to take in provisions to save the crew from starving,
or jDrocure repairs for the safety of the ship ; for there is a liberty
implied in every policy to do that which is necessary for the
preservation of the vessel and the lives of those on board
her. (.s) The ordinary occasions by which a deviation is justified,
are —

'' To join convoy^ for it may be a measure of necessary prudence ;
and a captain, unless expressly prohibited, may always do when in-
sured what it would be necessary to do if uninsured, (t) 'Stress of
weather, (u) Want of repairs, (v) ^ The approach of an enemy, {iv)
^' Succoring distress, {x) JjCisily ^ Muiiyiy^ desertion, sickness of the crew,
or any other inevitable accident ; {y) for instance, when the vessel
was carried out of her course by a King's ship, (z) But, though
necessity ^^^ill justify a deviation, yet it is plain, on principles of
common sense as well as law, that such necessity must not have
been occasioned by the insured's own fault, (a) and that the voyage

(q) Mount v. Laikin, 8 Bingli. 108. Palmer v. Marshall, 8 Bingh. V9. See Free-
inan v. Taylor, 8 Bingh. 124. So of too long a stay at a port where she has liberty
to stay. Hamilton v. Sheddon, 8 M. & W. 49.

(r) Kewley v. Ryan, 2 H. Bl. 343. Foster v. Wilmer, 2 Str. 1249. Heselton v.
Allnutt, 1 M. & S. 46. See Hare v. Travis, 1 B. & G. 14.

(.s) Vide Urquhart v. Barnard, 1 Taunt. 450. Lavabre v. "Wilson, Dougl. 284.

(t) D'Aguilar v. Tobin, 1 Holt, 185. See Warwick v. Scott, 4 Camp. 62.

(u) Delany v. Stoddart, 1 T. R. 22. Smith v. M'Neil, 2 Dow. 588, 544."

{v) Motteaux v. L. A. Compy., 1 Atk. 547. See O'Reilly v. Gonne, 4 Camp.
249.

(w) O'Reilly v. Gonne, ubi supra.

(x) Per Lawrence, J., 6 East, 54.

(y) DriscoU v Bovill, 1 B. <fe P. 313. DriseoU v. Pasraore, 200. Elton v. Brogden,
2 Str. 1264. See Warwick v. Scott, 4 Camp. 62. Woolf v. Claggett, 3 Esp. 258.

(z) Scott V. Thompson, 1 K R. 181.

(a) Phelps V. Auldjo, 2 Camp. 350. Forshaw v. Chabert, 3 B. <fe B. 158. Wooli,
V Claggett, 3 Esp. 258.

464 MERCANTILE COXTRACTS.

The Policy — its Form and Construction.

of necessity must be pursued iu the sliortest and most expeditious
manner, {h)

2. Seaworthiness. — It is a condition implied in every policy, that
the ship shall be seaworthy when the voyage commences ; (c) this con-
dition does not attach till her sailing, and therefore if she be in-
sured at and from a port, she is protected while in the port, though
in want of repairs, {d) " The rule of law is, that the assured is
bound to have the ship seaworthy at the commencement of the
voyage. He is bound, therefore, to have her properly equipped
with sails (e) and anchors, (/) with a sufficient crew, {g) and a master
of competent skill and ability to navigate her when she sails at the
commencement of the voyage, and if she sail from a port where
there is an establishment of pilots, and the nature of the naviga-
tion require one, the master must take a pilot on board, iji) Sea-
worthiness is a term which always refers to the service in which the
ship is engaged ; therefore, a vessel may be seaworthy if designed
for one service, which would not be so if designed for another. (^)
Although the general rule is, that if the ship be not seaworthy at

{b) Lavabre v. "Wilson, Dougl. 277.

(c) See Watts v. Morris, 1 Dowl. 32. Douglas v. Scougall, 4 Do-w. 269. "Wilkie
V. Geddes, 3 Dow. 57. Rich v. Parker. 7 T. R. 705. Shore v. Bental, 7 B. & C. 798.
"Wedderburne v. Bell, 1 Camp. 1.

{d) Annen v. Woodman, 3 Taunt. 299.

(e) "Wedderburne v. Bell, 1 Camp. 1.

(/) Wilkie V. Geddes, 3 Dow. 57.

(^) Shore V. Bental, 7 B. & C. 798, n. Forshaw v. Chabert, 3 B. & B. 158. The
omission in the case of English seamen to bind them by an agreement pursuant to 5
&. 6 "Wm. 4, c. 19, has been held not to render the ship unseaworthy, Raymond v.
Smith, 7 M. & Gr. 457.

(/i) The provisions of the legislature respecting pilots are so minute that it is con-
sidered better to refer the reader to Abbott on Shipping, for a full account of them,
than to attempt any abridgment. See 6 Geo. 4, c. 126, s. 56. See on the question in
what cases the warranty would be broken by not having a pilot, Phillips v. Head-
lam, 2 B. <fe Ad. 380. Law v. HoUingsworth, 7 T. R. 160. But Law v. HoUingsworth
cannot now be relied on as authoritj', per Park, B., in delivering judgment, Dixon v.
Sadler, 5 M. & W. 405, and see the report of the same case in error, 8 M. <& "W. 900,
where L. C. J. Tindal suggests that the decision in Law v. HoUingsworth may per-
haps be sustained on the ground of an implied warranty to comply with the express
provisions of a statute.

(i) Hucks V. Thornton, 1 Holt, 30.

MARITIME INSURANCE. 4(55

The Policy — its Form and Construction.

the commencement of the voyage, the policy will be avoided, yet
there appears to be an exception in cases where the unseawor-
thiness results from a mistake or accident, which is remedied as
soon as it is discovered, and before any loss has been occasioned by

it. or

(j) "Weir V. Aberdeen, 2 B. & A. 320.

* The case of Weir v. Aberdeen, here cited by the author, was referred to by Mr.
Justice Story, in McLanahan v. Universal Ins. Co., 1 Pet. 184, who, however, gave no
opinion on the point, merely observing that it was an important doctrine, and well
worthy of discussion, when it should come directly in judgment. The same case was
also referred to in Paddock v. Franklin Ins. Co., 11 Pick. 234, and it is there said that
the circumstance in Weir v. Aberdeen, "that the insurance was at and from the port,
80 that the policy attached and the risk commenced before sailing, was not expressly
relied upon, or made the avowed ground of the decision ; but such was the fact, and
would seem to reconcile it with the course of decisions ;" and that a similar case had
occurred in Pennsylvania. Garrigues v. Coxe, 1 Binn. 592,

In the case of Paddock v. Franklin Ins. Co., " it was considered as the well settled
rule of law, tliat if the vessel is not seaworthy at the commencement of the voyage,
the policy never attaches ; there is no insurable subject on which it can act; the par-
ties stand towards each other as if no such contract had been made ; and all the
consequences follow, which must follow from treating such a contract as a nullity.
The insurer can claim no premium : the assured can claim no loss. Of course it is
entirely immaterial, whether the peril, by means of which the vessel was lost, was
caused or increased by the defect in which the imputed unseaworthiness consists, or
whether it proceeded from a cause wholly distinct." Copeland v. New England
Marine Ins. Co., 2 Mete. 432, 437.

In the case of Copeland v. New England Marine Ins. Co., 2 Mete. 439, after refer-
ring to the cases of Paddock v, Franklin Ins. Co., 11 Pick. 234, Hazard v. New Eng
land Marine Ins, Co., 1 Sumn. 218, and the same case, 8 Pet. 557, it is said, "Upon
these principles and authorities, we consider it a rule of the law of insurance, as
settled here, that in addition to the implied warranty, which applies to the state of
the vessel at the commencement of the voyage, and must be strictly complied with
as a condition precedent, it is the duty of the assured, from time to time, during the
voyage, to repair and keep her in a suitable condition for the service in which she is
engaged ; and if they fail to do so, and a loss happens, which is attributable to that
cause, the assured, and not the underwriters, must sustain it. And altJiough there
are some recent English cases which seem to wear a different aspect, or leave the
point in doubt, yet, upon a full consideration and comparison, we are inclined to
think they are not opposed to this doctrine." Citing Law v. HoUingsworth, 7 T. R.
160 ; Busk v. Royal Ex. Assu. Co., 2 B. & Aid. 73 ; Walker v. Maitland, 5 B. <fe Aid.
171 ; Bishop v. Pentland, 7 B. & C. 219; Shore v. Bentall, 7 B. & C, 798, note; Phil-
lips V. Headlam, 2 Barn, & Adolph. 380 ; HoUingsworth v. Bi'odrick, 7 Adolph. <is
Ellis, 40 ; and Dixon v. Sadler, 5 Mees. & Welsh. 405.
80

466 MERCANTILE CONTKACTS.

The Policy — its Form and Construction.

Nor does the warranty of seaworthiness apply to any period,
except the commencement of the voyage, and, therefore, if she
become unseawortby during the course of it, the warranty does

The distinction will be noticed, "between unseaworthiness at the beginning,
which is a breach of warranty, and a defect arising on the voyage, which is not
repaired, through the fault of the owner, and for which the owner is responsible if
the loss is from that cause. But the owner, or his agents, must know of the defect,
or there is no fault." And thus, if a vessel, in the course of her voyage, put into a
port where repairs can be made, and afterwards sail therefrom with a defect in her
bottom, produced during the voyage by the perils of the seas, and which causes her
to founder, the insurers are liable for the loss unless the captain had reasonable
cause to suspect the existence of the defect when the vessel was in such port, or had
reasonable cause to believe that she could not proceed safely home without having
the same repaired. Starbuck v. New England Marine Ins. Co., 19 Pick. 198. See
also Deblois v. Ocean Ins. Co., 16 Pick. 303. American Ins. Co. v. Ogden, 15 Wend.
636, S. C. 20 Wend. 287.

When an event happens after the voyage has commenced, rendering a vessel
unseaworthy, a difficulty may occur in determining whetlier the neglect of the
master to restore her to the proper state is of that character for which the owners
are responsible, or is covered by the rule that the insurers are liable for a loss of
which any of the risks insured against is the immediate cause, though the neglect of
the master or crew may have been the remote. This difficulty appears to have been
felt in the case above cited, 2 Mete. 432, 443. The judge who delivered the opinion
of the majority of tlie Court in that case, after referring to Dixon v. Sadler, 6 Mees.
& Welsh. 405, and the opinion of Mr. Baron Parke, who stated it as the result of the
modern cases, and as the opinion of the Court, "that the absence, from any cause to
which the owner was not privy, of the master or any part of the crew, or of the
pilot who maj' be considered as the temporary master, after tliey had been on board,
must be on the same footing as the absence, from a similar cause, of any part of the
necessary stores or equipments originally put on board; the great principle estab-
lished by the more recent decisions is, that if the vessel, crew, and equipments be
originally sufficient, the assured has done all that he contracted to do, and is not
responsible for the subsequent deficiency occasioned by any neglect or misconduct
of the master or crew ;" proceeds to say, " If this is to be taken as limited to the
cases where the master, officers, and crew act in their own proper sphere, as practi-
cally managing and conducting the navigation, and where the master does not stand
in the relation of representative and agent of the owners, we think it not inconsis-
tent with the general principle, leaving the owner still bound by the acts of the
master, so far as by law and the usage of navigation he is the representative of the
owners, executing their express or implied orders, and doing all such acts as an
owner himself might and would do, if present."

In this case, 2 Mete. 432, the master becoming incompetent from insanity, it was
held to be the duty of the mate to take command of the vessel, and that he had a
right to resort to all lawful means to establish himself in the command ; but it waa
'urther held, that if, from want of judgment, or even culpable negligence, he omita

MARITIME IISrSURANCK 467

The Policy — its Form and Construction.

not apply. Unseaworthiness for want of a particular description
of crew, is indeed an exception to this rule, since one crew may
be necessary at one part of the voyage and another at another. It

60 to do, and the vessel sails under the master's command, and is stranded, the
underwriters are not discharged.

In the same case, 2 Mete. 445, it is said, that "by the established rules of the
maritime law, as adopted by all commercial agents, certainly by England and the
United States, a vessel sent on a voyage to sea is not only to have a competent
master, but a competent mate, whose duties and powers are as distinctly defined and
well established as those of the master." — "He must be competently skilled in
theoretic and practical navigation and general seamanship, for the duty of taking
command in case of exigency. And a vessel cannot be deemed seaworthy which has
not on board some person capable of navigating her beside the master." 2 Mete.
446. And it was also held, that a vessel which is insured on a voyage out and
home, and which departs with officers and a crew competent for the voyage, does
not become unseaworthy by reason of the master's becoming incompetent at the
foreign port to command the vessel ; and if the vessel sails from such port under his
command, and is lost on the homeward passage, the underwriters are not dis-
charged, although the loss may have been caused by the master's incapacity. This
decision was on the ground that on the master's becoming incompetent, the mate
was de facto master, and therefore in this respect the vessel was not unseaworthy.
But the rule that there must be on board the vessel a mate, or some person other
than the master, of competent skill in navigation, would of course apply only to
long or foreign voyages, and not to the coasting trade. In relation to which it has
been considered doubtful whether it is necessary that even the master should be a
scientific navigator, capable of making an observation to find the latitude. Tread-
well V. Union Ins. Co., 6 Cow. 270. See also as to the point that seaworthiness
refers to the service in which the vessel is engaged, McLanahan v. Universal Ins.
Co., 1 Pet. 184, where it is said, 'What is a competent crew for the voj^age ; at
■what time such crew should be on board ; what is proper pilot ground ; what is the
course and usage of trade in relation to the master and crew being on board when
the ship breaks ground for the voyage ; are questions of fact dependent upon
nautical testimony; and are incapable of being solved by a court, without assuming
to itself the province of a jury, and judicially relying on its own skill in maritime
affairs;" and Paddock v. Franklin Ins. Co., 11 Pick. 232.

If the vessel was seaworthy when the policy attached and the risk commenced,
the legal presumption is, that she so continued. Martin v. Fishing Ins. Co., 20 Pick.
389, 396. And where a vessel has sailed, apparently in a seaworthy condition, and
has never been heard from, as such an event is of rare occurrence, and the extraor-
dinar}' perils and dangers to which she is exposed are very great, the law, in the
absence of other proof, will presume that the loss was occasioned by some of those
perils. 11 Pick. 237.

Where the unseaworthiness of a vessel is relied on, either as a ground of defence
to avoid a recovery for a loss, or to establish a claim for a return of premium, the
burthen of proof is on the party affirming the unseaworthiness, the presumption of

468 MERCA^'TILE CONTRACTS.

The Policj- — its Form and Construction.

is obvious, for instance, that the necessity for a pilot can only be
an occasional one. (^•) But, generally speaking, it is sufficient if
the vessel be seaworthy at the commencement of the voyage, nor
is the obligation of the assured as to her seaworthiness more exten-
sive in the case of a time policy. (/)

In a case in which the underwriters were held responsible for
the loss of the ship occasioned by the wilful (but not barratrous)
act of the master and crew in throwing overboard the ballast,
" the great principle (said Parke, B., delivering judgment) estab-
lished by the more recent decisions, is, that if the vessel, crew and
equipments be originally sufficient, the assured has done all that
he contracted to do, and is not responsible for the subsequent de-
ficiency occasioned by any neglect or misconduct of the master or
crew ; and this principle prevents many nice and difficult inquiries,
and causes a more complete indemnity, which is the object of the
contract of insurance." This judgment was afterwards affirmed in
the Exchequer Chamber. (?>z) This implied warranty, however,

(i) HoUingsworth v. Brodrick, T Ad. & E. 40.
{I) Dixon V. Sadler, 5 M. & W. 405.
(m) 8 M. &. W. 895.

law being that the vessel was seaworthy. Taylor v. Lowell, 3 Mass. 347; 11 Pick.
237. See, however, Tidmarsh v. Washington F. & M. Ins. Co., 4 Mason, 441, and 2
Phill. on Ins. 757.

But where the proof shows, in point of fact, that the vessel sprung a leak by the
starting of a butt or other internal defect, without any accident or stress of weather,
but by the ordinary pressure of the cargo, and the action of the wind and sea, the
ordinary presumption of seaworthiness is rebutted. 11 Pick. 237. Talcot v. Com.
Ins. Co., 2 John. 124; id. 130. See Potter v. Suffolk Ins. Co., 2 Sumn, 197.

As to the distinction referred to in the text, where the insurance is at and from
a port, see Taylor v. Lowell, 3 Mass. 331 ; Merchants' Ins. Co. v. Clapp, 11 Pick. 56,
65, where it is said, " The implied warranty is the same in an insurance on gooda
and freight, as it is in an insurance upon the vessel. It is, that the vessel shall be
in a navigable state at the time she sails. This is a reasonable construction of the
implied warranty, but it woiild be most unreasonable to extend it back to the time
when the vessel is in port. Many repairs may be made during the lading of the
cargo ; and to require the vessel to be completely repaired, before she could take on
board any part of her cargo, would occasion much unnecessary delay and expense,
and could be of no possible benefit, that I can conceive, to the underwriter." See
also 11 Pick. 234; Deblois v. Ocean Ins. Co., 16 Pick. 303; Garrigues v. Coxe, 1 Bin.
592.

MARITIME IXSURAXCE. 4(59

The Policy — its Form and Construction.

may be, and sometimes is, dispensed witli by an admission of the
fact of seaworthiness, or an agreement on the part of the under-
writers in the policy, that the ship shall be considered to be sea-
worth}^, and in the absence of fraud thej^ will be liable, though
the vessel sink from unseaworthiness the day after the policy was
effected. (?i)

8. The insured impliedly warrants that he will guard with
reasonable diligence against the risks covered by the policy, so that
a loss shall not happen through his own default and negligence ; (0)
thus, he must take care in case of a policy on ship, that she be
documented according to her national character for every ship
must have some national character, and the underwriters will not
be liable, if a loss happen from the default of the insured in being
unprovided with those documents which are required by the
general law of nations, or by particular treaties ; (^j) thus, as the
carrying of simulated papers is an offence against the law of
nations, if a ship carry them, and be condemned on that ground,
the warranty of documentation is infringed, and the underwriters
are not liable ; {q) but, as in the case of express warranty of neu-
tral property, so in the cases now under consideration, disobedience
to the mere ex parte ordinance of a foreign state, does not vitiate
the policy, (r) There is this difference between an express warranty
of the ship's national character, and that which we are now con-
sidering, viz., that, in the case of an express warranty, if the ship be
not properly documented at the time of sailing, the underwriters
are discharged ; (s) whereas a breach of the implied warranty does

(n) Parfitt v. Thompson. 13 M. &, W. 392.

(o) Pipon V. Cope, 1 Camp. 434, et notam. Law v. Hollingsworth, 7 T. R. 160.
Bell V. Carstairs, 14 East, 374. In Dixon v. Sadler, 8 M. & W. 895, Tindal, C. J.,
suggested that there might be an implied warranty to navigate according to the
express provisions of a statute, and that Law v. Hollingsworth might be sustainable
on that ground.

{p) Bell V. Carstairs, 14 East, 374. See Xonuen v. Kettlewell, 16 East^
186.

iq) Oswell I'. Vigne, 15 East, 70. Flindt v. Scott, 5 Taunt. 674.

(r) Xonnen v. Reid, 16 East, 176. See Le Cheminant v. Pearson, 4 Taunt. 367
Sawell V. R. E. A. Co., 4 Taunt. 859.

{i) Rich V. Parker, 7 T. R. 705.

470 MERCANTILE CONTRACTS.

The Policy — its Form and Construction.

not discliarge the uuderwriter, unless a loss actually happen in
consequence, (t)

The obligation to have the ship projDcrly documented may be
waived, as, for instance, by a liberty to carry simulated papers, (w)
Nor is any warranty of documentation implied in an insurance
upon goods, {v) unless they belong to the owner of the ship, for
then there is. (tf)*

(t) See Bell v. Carstairs, 14 East, 374, per Ld. Ellenborough, and Price v. Bell, 1
"East, 663. It has been sometimes said, as in Bell v. Carstairs, ubi supra, that there
was 710 warranty of docnmentatioii ; but that, I t.hink, annylo cbe understood to mean
no express warranty ; for it seems clear that the cases support the opinion in Mr.
Campbell's notes to Pipon v. Cope, 1 Camp. 434, that the insured impliedly warrants
to guard the insurer with reasonable diligence against the risks insured ; and that,
if a loss happen in consequence of insufficient documentation, that liiplied warranty
will be broken, and the breach a defence. Perhaps the nature of the implied war-
ranty under which these cases fall, would be more correctly expressed by saying
that the insured warrants that a loss shall not happen through his own default. Thus
in Hollingsworth v. Brodrick, 1 Ad. & E. 40, we find Lord Denman saying, " I own I
feel a doubt whether, if it were distinctly averred that a ship had, by gross negli-
gence, been brought, during the voyage, to a condition in which she would not be
insurable, that might not be a defence. It is certainly a new and perhaps a danger-
ous one, but I think, if it were clearly made out, the assured could not say that the
loss was by perils insured against."

(m) Bell V. Bromfield, 15 East, 364. Simeon v. Bazett, 2 M. & S. 94.

(v) Dawson v. Atty, 7 East, 367. Carruthers v. Gray, 15 East, 35; 3 Camp. 142.

(to) Bell V. Carstairs, 14 East, 374. Horneyer v. Lushington, 3 Camp. 85.

* In the learned treatise on Marine Insurance by Mr. J. Duer, it is said, " It is
probably not to be doubted that a policy of insurance, as a mercantile instrument,
may, by express words, be rendered negotiable in the same sense as a bill of ex-
change or a bill of lading ; that is, so as to vest in the holder the right of maintain-
ing an action in his own name for the recovery of a loss; subject, indeed, to every
legal defence that may arise from the nature or terms of the contract; but dis-
charged of all eqxiities, such as a right of set-off, subsisting alone between the
original parties." 2 J. Duer, 51. But the opinion of the Court in the case of Jessel
V. The Williamsburgh Ins. Co., 3 Hill, 88, appears to be inconsistent with this idea.
" We know of no principle," say the Court in that case, " upon which the assignee
of a policy of insurance can be allowed to sue upon it in his own name. The
general rule applicable to personal contracts is, that, if assigned, the action for a
breach must be brought in the name of the assignor, except where the defendant
has expressly promised the assignee to respond to him. In Granger v. The Ploward
Ins. Co., 5 Wend. 200, 202, the point now raised was discussed, and, we think,
decided against the present plaintiff. The argument that the policy in question

MARITIME INSURANCE. 47]

The Policy — its Form and Construction.

It was supposed that the underwriter might be exempt from a
loss of goods stowed on deck, upon the above ground, that such
loss had happened by the merdiani's own default. However, the Q.

originally contemplated an assignment, would be equally cogent in all cases, for
aught we see, of a promise in form to one and his ass i gnu ; and yet it is settled that
the latter words do not impart a negotiable qualitj- to the promise, so as to enable
the assignee to sue upon it in his own name. Skinner v. Somes, 14 Mass. R. 107, 108."
The case of Jessel v. Williamsburgh Ins. Co. was an action on a fire policy, and the
underwriters had given their written assent to the assignment. See post, "Fire In-
surance," note.

A policy of insurance is a personal contract of indemnit}', not an incident to the
subject insured; and it does not pass with a transfer of the property. If the assured
parts with his interest in the subject insured, the contract from that time is dissolved.
But the transfer of the property may be accompanied by an assignment of the
policy, which then, it is held, inures to the benefit of the purchaser. Powell v.
Innes, 11 Mees. & Wels. 10. Carroll v. Boston Marine Ins. Co., 8 Mass. 515. Gordon
V. Mass. F. <k M. Ins. Co., 2 Pick. 249, 258.

In the usual form of policies, there are clauses restricting both a transfer of the
interest in the subject insured, and an assignment of the policy. As to the effect
and construction of which, see Lazarus v. Commonwealth Ins. Co., 5 Pick. 76. S. C.
19 Pick. 81. Smith v. Saratoga M. F. Ins. Co., 1 Hill, 497.

Indepeudent of these clauses, it seems generally admitted, that marine policies
are assignable in equity, like other personal contracts or choses in action ; and that
the consent or knowledge of the underwriters is not required to render the assign-
ment valid. Spring v. South Carolina Ins. Co., 8 Wheat. 2G8 ; 5 C. R. 434. Wake-
field v. Martin, 3 Mass. 558. 2 J. Duer, 57, 58. Ellis on Ins. 76. 1 Phill. on Ins
34, Z6. Delaney v. Stoddart, 1 T. R. 23.

But where the property insured is absolutely sold or transferred, although an
assignment of the policy is made at the same time, it seems somewhat difficult to
understand how a contract to indemnify the vendor, can be changed into one to
indemnify the vendee, without the consent of the underwriters. It is said, that " an
averment that the party originally assured was interested at the time of the loss, is
indispensable ; and when the property has been sold or transferred, can only be
supported by evidence that he agreed to keep the policy alive, as a trustee for the
purchaser, of which agreement, the assignment and delivery over of the policy, are
sufficient evidence. 2 J. Duer, 54, note (a). Powell v. Innes, 11 Mees. & Wels. 10.
The question, whether the agreement, thus proved, supports the averment, might,
perhaps, deserve inquiry. The agreement, it would seem, ought rather to have been
that the vendor, in respect of the insurance, agreed to hold the property as trustee
of the purchaser.

It is said that an assignment of a marine policy "may accompany, and be an
incident to, a transfer of the property insured ; or be a separate and independent
act." 2 J. Duer, 57. The same writer seems inclined to limit the application of the
clause restricting an assignment of the policy, to cases where it is accompanied by a
transfer of the property. "When an assignment, or pledge of the policy, is of such

472 MERCANTILE CONTRACTS.

Results of Contract.

B. has decided that the mere unexphaiaed fact of their being so
stowed, is not, in se, conclusive of such a default, (x)

Section IV. — Results of Contract.

Havino- now finished the consideration of the form and con-
struction of the contract, we proceed to inquire respecting its re-
suit: this will, of course, be either the safety or the loss of the
thing insured. In case of its safety, little matter for discussion
ariscl In case of loss by any of the perils insured against, the
first consideration is, whether the loss be a total or a, partial one;
for, as insurance is a contract of indemnity, the insured, if he have
suffered only a partial loss, will be entitled only to a partial pay-
ment from the insurer. We will, therefore, now inquire respect
ing the distinction between these two classes of loss, and what is,
properly speaking, a total loss, what only a. partial one.

Total Loss. — A total loss is of two sorts: it is either totalizer se,
or such as may be rendered total by abandonment, which is a relin-
quishment of whatever may be saved to the insurer. The object
of an abandonment is to prevent the insured from reaping an undue
benefit from the policy, which is a contract of indemnity, and under
which, therefore, he must not retain any part of the subject matter
insured if he call on the underwriter to settle with him for a total
loss of it.

{x) Milward v. Hibbert, 3 Q. B. 120.

a character as not at all to affect the insurable interest originally meant to be
covered, nor to work any change in the control or disposition of the property in-
sured, it cannot possibly affect the interest of the underwriters ; and therefore,
although embraced by the words of the clause, is not within its reasonable pur-
view." 2 J. Duer, 65.

And it has been held that the reasons which induce the insurance companies to
insert clauses in their policies restraining an assignment, have no existence or appli-
cation after the risks have ceased, and the assignment is made of a right to recover
for a loss wh-ch had occurred. Brichta v. N. Y. Lafayette Ins. Co., 2 Hall, 372. 2
J. Duer, 65.

MARITIME INSURANCE. 473

Results of Contract.

A total loss of the former description takes place, when no part
of the subject matter of insurance exists in the hands, or for the ben-
efit, of the insured, or in such a state as to be fit for any useful pur-
pose. Thus, the loss will be total ^^er 5e, not merely if the ship insured
be consumed by fire, or destroyed by perils of the sea, or by some
other means cease to exist in specie ; but also in case of seizure, de-
tention, barratry, and so forth, if the dominion of the seizors con-
tinue, the loss is total without abandonment, {yf^ And, though it

(2/) MuUett V. Shedden, 13 East, 304. Mellish v. Andrews, 15 East, 13. Bondrett
V. Hentigg, 1 Holt, 149. Dixon v. Reid, 5 B. & A. 597.

* It appears to be an established doctrine in the United States, that an abandon-
ment once rightfully made, is conclusive between the parties, and the rights flowing
from it are not divested by any subsequent events, which change the situation of the
property, and make that which was a total loss at the time of abandonment, a par-
tial loss only. And the right of abandonment is to be decided by the actual facts at
the time of the abandonment, and not merely by the information of the assured ;
and, consequently', if the facts do not then warrant it, no prior or subsequent events
will give it any greater efficacy. The rule in the English courts is different ; there
it has been held, that if an abandonment be rightfully made, it is not absolute, but
may be controlled by subsequent events ; so that if the loss has ceased to be total at
any time before action brought, the abandonment becomes inoperative. Peele v.
Merchants' Ins. Co., 3 Mason, 36. Bradlie v. Maryland Ins. Co., 12 Pet 378, 397.
Rhinelander v. Ins. Co. of Pennsylvania, 4 Cranch, 29 ; 2 C. R. 13. Marshall v. Dela-
ware Ins. Co., 4 Cranoh, 202 ; 2 C. R. 84. Pezant v. National Ins. Co., 15 Wend. 460
The right of abandonment as to a ship was considered in a case just cited, Peele v.
Merchants' Ins. Co., by Judge Story, and after an elaborate examination into the
English and American cases on the subject, he says, "If there be anj- general princi-
ple that pervades and governs tliem, it seems to be this, that the riglit to abandon
exists, whenever from the circumstances of the case, the ship, for all the useful pur-
poses of a ship for the voyage, is, for the present, gone from the control of the own-
er, and the time when she will be restored to him in a state to resume the voyage is
uncertain or unreasonably distant, or the risk and expense are disproportioned to
the expected benefit and object of the voyage. In such a case, the law deems the
ship, though having a phj-sical existence, as ceasing to exist for purposes of utility,
and therefore subjects her to be treated as lost. 3 Mason, 65. See also American
Ins. Co. V. Ogden, 15 "Wend. 538; S. C. 20 Wend. 287. Cincinnati Ins. Co. v. Bake-
well, 4 B. Monroe, 541.

In the case of Mareardier v. The Chesapeake Ins. Co., 8 Cranch, 39, 3 C. R. 20, it
is said by the same learned judge, in delivering the opinion of the Court, "It seems
now clear that a technical total loss may arise from the mere deterioration of a cargo
by any of the perils insured against, if the deterioration be ascertained at an inter-
mediate port of necessit}-, short of the port of destination. In such case, although

474 MERCANTILE CONTRACTS.

Results of Contract.

has been said that a loss by perils of the sea cannot be total if the
thing exist in specie, yet, that must be taken only to mean, if it
exist for any useful purpose ; for if a ship be so battered as to he

the ship be in a capacity to perform the voyage, yet if the voyage be not worth pur
Buing, or the thing insured be so damaged and spoiled as to be of little or no value,
the insured has no right to abandon the projected adventure, and throw upon tho
underwriter the unprofitable and disastrous subject of insurance." See also Colum
Man Ins. Co. v. Catlett, 12 Wheat. 383 ; 6 C. R. 541.

It has been said, that there can be no abandonment on the groimd of a technical
total loss, after the ship has completed the voyage for which she was insured, however
great may have been the injury which she sustained during its progress ; and so, if
the goods insured specifically remain, and are actually landed at the port of delivery,
however damaged in the voyag; the injury will amount to but a partial loss; unlesa
they be rendered of no value, and altogether useless, for then the loss is total. Pezani
V. The National lus. Co., 15 Wend. 453, 458. Parage v. Dale, 3 John. Cas. 156. Mar
shall Ins. 486. But it is said by Mr. Phillips, after referring to the case of Parage v.
Dale, that " there appears to be no reason why the ship may not be abandoned at
the port of destination, if she arrives there in a disabled state, not capable of being
repaired or not worth repairing." He cites Ralston v. Union Ins. Co., 4 Bingh. 386,
and Peters v. Phoenix Ins. Co., 3 Serg. &, Rawle, 25, and quotes the remark of Mr.
Justice Yates in the last case, that "if the vessel received her death wound during
the voyage insured, it was of no moment when the loss was ascertained, although
siibsequently to her arrival at the port of destination." See, however, the comments
on the same cases, 15 Wend. 459, 500.

It is a general rule in the United States, that if the ship or goods insured be
damaged to more than half of the value, by any peril insured against, the assured may
abandon and recover for a total loss. This rule, it seems, is not practised upon in
England; the expense of repairs is one ground of abandonment in the courts there,
but they have adopted no specific proportion. 2 Phil, on Ins. 2*71, 273, 2d edit. 3
Kent. Com. 329.

In respect to the mode of ascertaining the value of the ship, and of course whether
she is injured to the amount of half her value, the true basis of the calculation is the
value of the ship at the time of the disaster ; and that, if after the damage is or might
be repaired, the ship is not, or would not be worth, at the place of the repairs, dou-
ble the cost of the repairs, it is to be treated as a technical total loss. The valua-
tion of the vessel in the policy, or the value at the home port, or in the general
market of other ports, constitutes no ingredient in ascertaining whether the injury
by the disaster is more than one-half the value of the vessel or not. For the like
reason, the ordinary deduction in cases of a partial loss of one-third new for old,
from the repairs, is equally inapplicable to cases of a technical total loss, by any
injury exceeding one-half the value of the vessel. Bradlie v. Maryland Ins. Co., 12
Pet. 3*78. Patapsco Ins. Co. v. Southgate, 5 Pet. 604. Peele v. Merchants' Ins. Co.,
3 Mason, 27.

But in New York and Massachusetts, it has been held, in contradiction to the
opinion of the Supreme Court of the United States, as above stated, that the valua

MARITBIE INSURANCE. 475

Results of Contract

rather a congeries of planks, than a ship ; (s) or if the cargo be so
damaged as to exist only in the shape of a nuisance ; (a) in such
cases the loss is total without abandonment.

It was indeed decided by the Court of Common Pleas, that,
where the property continues to exist and be of some value under
its original denomination, but is sold on account of the impossibility

(2) Cambridge v. Anderson, 2 B. <fe C. 691 ; 1 R. & M. 60. Sed vide Bell v. Nixon,
1 Holt, 423, 425, Martin v. Crockatt, 14 East, 465.

(a) Djson v. Rowcroft, 3 B. & P. 474. Cologaa v. L. A, Comp., 5 M. & S. 447.

tion of the vessel in the policy is to be taken as the true value, and that the deduc-
tion of one-third new for old is to be made from the estimated amount of repairs, as
in cases of a partial loss. American Ins. Co. v. Ogden, 20 Wend. 297. Deblois v.
Ocean Ins. Co., 16 Pick. 312. Orrok v. Commonwealth Ins. Co., 21 Pick. 456. Hall
V. Ocean Ins. Co., 21 Pick. 472.

An abandonment must be on sufficient ground, and the accident occasioning it
described with certainty, so as to enable the underwriter to determine whether he
is bound to accept. The true cause must be stated, and when the assured relies on'
matter which was not a justifiable cause, he is bound by it, and cannot avail himself
of a subsequent accident without making a new abandonment. Suj'dam v. Marine
Ins. Co., 1 John. 181.

The same case of necessity which justifies a sale by the master will, in general,
authorize an abandonment, as to which, see ante, note, page 239. As to the option
to abandon ; Smith v. Manufacturers' Ins. Co., 7 Mete. 448. Gracie v. N. Y. Ins. Co.,
8 John. 244. As to the necessity of abandonment before a recovery for a total loss,
in all cases, unless tlie loss is in fact total ; 7 Mete. 448. Pierce v. Ocean Ins. Co.,
18 Pick. 91. As to abandonment after a vessel is repaired and pursuing her voy-
age, which it seems will not be allowed, whatever has been the cost of the repairs ;
Dickey v. N T Ins. Co., 4 Cow. 244, S. C. 3 Wend. 658. Depau v. Ocean Ins. Co., 5
Cow. 63. Humphreys v. Union Ins. Co., 3 Mason, 429. As to whether the inability
of the master to obtain funds to make repairs will justify an abandonment; Ameri-
can Ins. Co. V. Ogden, 15 Wend. 532, S. C. 20 Wend. 287. As to when an abandon-
ment has been made within a reasonable time, which, it seems, is a question for the
jury; Chesapeake Ins. Co. v. Stark, 6 Cranch, 268, 2 C. R. 367. Maryland Ins. Co. v.
Ruden, 6 Cranch, 338, 2 C. R. 392. Livingston v. Maryland Ins. Co., 7 Cranch, 506,
2 C. R. 589. As to form of notice of abandonment; 6 Cranch, 268, 2 C. R. 367. 12
Wheat. 383, 6 C. R. 548. Patapsco Ins. Co. v. Southgate, 5 Pet. 604. As to accept-
ance of abandonment ; Peele v. Merchants' In.s. Co., 3 Mason, 27. Cincinnati Ins.
Co. V. Bakewell, 4 B. Monroe, 541. Peele v. Suffolk Ins. Co., 7 Pick. 254. Bell v. Smith,
2 John. 98. Revocation or waiver; Columbian Ins. Co. v. Ashby, 4 Pet. 139. Ogden
V. Firemen's Ins. Co., 10 John. 177; 12 John. 25. Effect of abandonment; 6 Pet.
622. 4 B. Monroe, 541. Comegys v. Vasse, 1 Pet. 193, 213. As to freight; Ham-
mond V. Essex F. & M. Ins. Co., 4 Mason, 196.

476 MERCANTILE CONTRACTS.

Results of Contract.

of preserving it up to the termination of the voyage, the insured, if
they desire to treat the loss as total, must abandon. (Z))* That de«
cision was, however, reversed in the Exchequer Chamber, and the
rule laid down in the judgment there delivered is as follows : " If
goods once damaged by the perils of the sea, and necessarily landed
before the termination of the voyage, are, by reason of the damage,
in such a state, though the species be not utterly destroyed, that they
cannot with safety be reshipped into the same or any other vessel ;
if it be certain that, before the termination of the original voyage,
the species itself would disappear, and the goods assume a new
form, losing all their original character ; or if, though imperishable,
they are in the hands of strangers, not under the control of the as-
sured ; if, by any circumstances over which he has no control, they
can never, or within no assignable period, be brought to their orig-
inal destination, the circumstances of their existing in specie at that
forced termination of the risk is of no importance. The loss is, in
its nature, total to him who has no means of recovering his goods,

{b) Roux V. Salvador, 1 Bingli. N. C. 526 ; 3 Bingh. N. C. 266. See, however,
Doyle V. Dallas, 1 M. & Rob. 48. Gardner v. Salvador, 1 M. & Rob. 117. In Barr v.
Gibson, 3 M. & W. 390, the Court of Exchequer took a distinction between the loss
of a ship which would render her incapable of being conveyed as such, and a loss
which would be total within the meaning of a policy, saying that the loss consisted
in its loss for beneficial purposes.

* In the recent case of Knight v. Faith, 15 Ad. & Ell. N. S. 649, the necessity of
abandonment in cases of constructive total loss was affirmed, and a general miscon-
ception of the doctrine established in Roux v. Salvador pointed out. The Court dis-
pensed with the notice of abandonment in that case, on the ground that by the vir-
tual destruction of the subject matter, there was an absolute total loss, and not a mere
constructive loss. Lord Abinger, in his judgment, referring to the cases in wiiich the
party may elect to consider the loss as total, j^i'oceeds : "As the thing insured, or
a portion of it, still exists, and is vested in him, the very principle of the indemnity re-
quires that he should make a cession of all his right to the recovery of it." " There is
reason to apprehend," says Lord Campbell, in the case of Knight v. Faith, " that great
frauds have been committed in distant parts under pi-etence that ships insured have
received an injury which renders it '.mprudent to repair them ; and such frauds
would be much facilitated, if the owners were not required to make any communi-
cation to the insurer until they came upon him peremptorily to demand payment of
the full sum subscribed in the policy." The case of American Insurance Company
V. Francia, 9 Barr's Pa. Rep. 490, is in accordance with this decision. Contra, Mu-
tual Safety Ins. Co. v. Cohen, 3 Gill. 459.

MARITIME INSURANCE 477

Results of Contract.

whether his inability arise from their annihilation, or from any
other insuperable obstacle."

Even where a total loss has occurred, by the sale of the goods,
a question may possibly arise, whether the assured have not, by
electing to take the proceeds instead of making his claim on the
underwriters, forfeited his claim to recover a total loss, if he have
thereby altered the position of the facts, so as to affect the interests
of the underwriter, (c)

When the loss is not total per se, the right to abandon depends
on its amount. The doctrine formerly held on this subject was, as
succinctly stated in 2 Wms. Saund. 203, c. note 19, that, when the
voyage was lost, or the expense of pursuing it exceeded the benefit
arising from it, and, therefore, it was not worth pursuing, in such
case the insured might abandon. But this doctrine is narrowed by
late decisions ; {d) and it does not seem possible to imagine a case
in which the loss of the voyage, independently of some great jeo-
pardy affecting the subject matter of insurance, would entitle the
assured to abandon. At the same time, the property may be
in jeopardy, which, though a partial preservation, realization, re-
covery, or recapture of it may possibly take place, will yet, by
rendering it improbable that there should be any effectual restitu-
tion, give the insured a right to abandon, (e)

In cases in which the law requires an abandonment^ not "only

{d) Anderson v. Wallis, 2 M. & S. 240. Falkner v. Riteliie, ibid. 293. Naylor v.
Taylor, 9 B. & C. 718. Thornley v. Hebson, 2 B. <fe A. 513. Bainbridge v. Neilson,
East, 329. Brotherston v. Barber, 5 M. & S. 419.

(e) Holds\P'orth v. Wise, 7 B. & C. 794. Benson v. Chapman, 6 M. & Gr. 792.
Parry v. Aberdein, 9 B. <fe C. 411. M'lver v. Henderson, 4 M. & S. 576. Cologan v.
L. A. Compy., 5 M. & S. 447. Dixon v. Reid, 5 B. <fe A. 597. Gernon v. R. E. A.
Compy., 6 Taunt. 883. Idle v. R. E. A. Compy., 8 Taunt. 755 ; 3 B. tfe B. 151, n. a.
Reade v. Benham, 3 B. & B. 147. Meabourne v. Leckie, 4 D <k R. 207. Cambridge
V. Anderton, 2 B. <fe C. 691. Robertson v. Clarke, 1 Bingh. 445. Robertson v. Carru-
tliers, 2 Stark. 571. Vide Smith v. Robertson, 2 Dow. 474. Doyle v. Dallas, 1 M. &
Rob. 48. Gardner v. Salvador, ibid. 116. Robertson v. Clarke, 1 Bingh. 445. Read
V. Bonham, 3 B. <fe B. 147. See Cambridge v. Anderton, 2 B. & C. 691. Gernon v.
R. E. A. Compy., 6 Taunt. 383 ; 2 Marsh. 88. Freeman v. E. I. Compy., 5 B. <fe A.
617. See Morris v. Robinson, 3 B. & C. 196. Hudson v. Harrison, 3 B. <& B. 97. Un
derwood v, Robertson, 4 Camp. 138.

478 MERCANTILE COISTTRACTS.

Results of Contract. *

the thing insured or part of it is supposed to exist in specie, but
there is a prospect, however remote, of its arriving at its destina-
tion, or at least of its value being in some way affected by the
measures that may be adopted for the recovery or preservation of

it."(/)

In Young v. Turing^ {g) in which notice of abandonment had
been given, the ship was cast away upon the Goodwin Sands, but
might have been refitted ; the Lord Chief Justice of the Common
Pleas told the jury that they were to say, whether, imder all the
circumstances attending the ship (among which was her national
character), a man of prudence and discretion uninsured would have
repaired her or not; that, if he would, the loss was partial; if he
would not, total And that, in determining this question, they
were to take as the value of the ship her real value, not the sum at
which she was valued in the policy. This direction was uj)held by
the Exchequer Chamber, and in a similar case has received the
sanction of the House of Lords, (h)

AVhen the insured are entitled to abandon, and think proper
(for they are in no case obliged) to do so, they must give notice of
abandonment within a reasonable time ; (^) since it would be unjust
to allow them to take the chance of making the best of the accident
for themselves, and only abandon to the underwriter when they
found that did not answer ; therefore a delay from September 6 to
October 14 has been deemed too long, {j) So where the ship was
surveyed at Kinsale on December 14, notice of abandonment given
in London on January 6 was held too late, the ordinary course of
communication being four or five days, (k) However, it is sufficient
if notice be given in a reasonable time after the insured have
received intelligence of the loss, and had an opportunity of ascer-

(/) Per cur. in Rdux v. Salvador, 3 Bingh. K C. 287. And see Mellish v. An-
drews, 15 East, 13. MuUett v. Shedden, 13 East, 304.

{(/) Young V. Turing, 2 M. & Gr. 593. See also Manning v. Irving, 1 C. B. 168,
and in error, 2 C. B. 784.

(A) Irving v. Manning, Dom. Proc. 1847.

(i) Mitchell V. Edie, 1 T. R. 608. Hunt v. R. E. A. Compy., 5 M. & S. 47. Mellish
V. Andrews, 15 East, 13. Alwood v. Hencliall, Park, 72.

( j) Barker v. Blakes, 9 East, 283.

(A-) Aldridge v. Bell, 1 Stark. 498. See Kelly v. Walton, 2 Camp. 155.

MARITIME IXSURAIVCR 479

Results of Contract.

taining the extent of damage. {I) A notice in two days seems in
one case to have been thought clearly sufficient, (m)

An abandonment cannot be partial : it must be of the whole
thing insured. (71) It must also be unconditional, at least, unless the
underwriter think proper to accept a conditional one. (0) It must
be express too, and positive; a request to the underwriter to give
directions for the disposition of the effects insured, and to settle for
a total loss, is not sufficient, (jy) But the underwriter may waive an
informality in the notice of abandonment by his acquiescence, and,
it has been thought, even by lying by, and making no objection to
it. (5') The abandonment may be by parol, (r)

The effect of an abandonment is to divest the property of the
thing abandoned out of the insured, and vest it in the insurer, for
whom the former becomes a trustee. (.?) So completely has it this
effect, that, where a ship is abandoned, the right to freight which
she may subsequently earn passes to the insurer, though such
freight may be the subject of another insurance with other under-
writers; {t) the abandonment operating like a sale or assignment of
the ship, which transfers the freight as an incident, {u) But the in-
surers, of course, only receive the balance which may remain, after
deducting the necessary expenses incurred in the preservation of
the property abandoned to them, (v)

(/) Read v. Bonham, 3 B. & B. U1. Gernon v. R. E. A. Co., 1 Holt, i1 ; 6 Taunt. 383.

(?«) Anderson v. Wallis, 2 M. & S. 241. (n) Park, 229; Marsh. 600.

(0) M'Masters v. Slioolbred, 1 Esp. 23Y.

(p) Parmeter v. Todliunter, 1 Camp. 541. Da Costa v. Xewnham, 2 T. R. 407.
Havelock v. Rockwood, 8 T. R. 277. Lockyer v. Offlej', 1 T. R. 252. Thelluson v.
Fletcher, 1 Esp. 73.

{q) Hudson v. Harrison, 3 B. (fe B. 97. See Da Costa v. Newnham, 2 T. R. 407.
Hagedorn v. Whitmore, 1 Stark. 157.

(r) Read v. Bonhara, 3 B. & B. 149. See, however, Lord Ellenborough's remarks
as to the propriety of using writing, and inserting the word abandon. Parmeter v.
Todhunter, 1 Camp. 541.

(s) Randall v. Cochran, 1 Ves. sen. 98. Leatham v. Terry, 3 B. .fc P. 479. Tliomp-
son V. Roweroft, 4 East, 34.

{t) Case V. Davidson, 5 M. <fe S. 79 ; 2 B. & B. 379. Thompson v. Roweroft, 4
East, 34. Sharp v. Gladstone, 7 East, 24.

(?() Kerswill v. Bishop, 2 Tyrwh. 602 ; 2 C. & J. 259. Chinnery v. Blackburne, 1
H. Bl. 117. See Benson v. Chapman, 6 M. & Or. 792.

(v) Sharp v. Gladstone, 7 East, 24.

480 MERCANTILE CONTRACTS.

Results of Contract.

The history of the law of abandonment, both in our own and
foreign countries, will be found learned!}^ discussed in the judgment
of Lord Abinger, in the great case of Roux v. Salvador, {id)

It ought to be observed here, before quitting the head of total loss,
that there may be a total loss of an integral portion of the cargo.
As where the insurance was on several hogsheads of sugar, and
each, hogshead was separately valued and insured, a loss of one of
them was held to be a total loss of that hogshead, {x) On the other
hand, where a part of each hogshead was saved, the jury having
stated their opinion that the loss was an average, the court held
them right in so doing, (y) The distinction between these two
classes of cases is explained in Hills v. London Assurance Corpora-
tion, (2) where a loss of wheat pumped out with water in foul
weather, was held only an average.

Partial Loss. — The term partial loss needs no explanation : it is,
bowever, proper to remark, that a loss which was once total, may
by matter ex j^ost facto become a partial one. Thus, if a ship be
captured, the loss is total, and, no doubt, if she continue in the
power of the enemy up to the time of bringing the action, the
insured may recover for a total loss. But if she escape, or be re-
captured, so as to be still of value, that which was once a total loss
becomes a partial one. (a) So, when there is a policy on freight,
and the ship is detained under an embargo, the loss is prima facie
total ; yet, if the embargo be taken' off, and she afterwards earn
freight, it becomes partial, il)

With, respect to the mode in which the sum to be paid by the
underwriter, on account of a partial loss, is calculated; if the
damage was suffered by the ship, and has been repaired by the
owner, he will not be allowed the full cost of repairing, but one-
third is deducted in consideration of the benefit which he derives

(w) 3 Bingh. K C. 282-290.
(x) Davy v. Milford, 15 East^ 599.
(y) Hedburgh v. Pearson, V Taunt. 154 ; 2 Marsh. 432.
(z) Hills v. London A. Co., 5 M. & W. 569.

(a) 2 Wms. Saunds. 203, b. n. 19. Bainbridge v. Nelson, 10 East, 329. Brothers-
ton V. Barber, 5 M. & S. 418. Patterson v. Ritchie, 4 M. & S. 393.

(6) Macarthy v. Abel, 5 East, 388. Everth v. Smith, 2 M. & S. 2*78.

MARITIME IXSURAXCE 4S1

Results of Contract.

from new materials in lieu of old:(c) if by tlie goods, the mode
adopted is, to ascertain the difference between the gross proceeds
of the goods, on their arrival at their destined port, and what would
have been their gross proceeds had they not been injured. Then,
as what would have been their gross proceeds if sound, is to their
gross proceeds when damaged, so is their original value to a fourth
quantity, which fourth quantity, being subtracted from the original
value, will give the sum to be paid by the underwriters, {d) Thus,
suppose the original value was 100/. ; that the cargo, had it arrived
safe at the end of its voyage, would have fetched 200Z., but in its
damaged state will fetch only loOZ. ; then as 200 : 150 : : 100 : to
the sum required, which will, therefore, amount to 75/. ; subtracting
751. from 100/. the original value, we obtain 25/. the estimated loss,
whicli must be made good by the underwriter. The reason for
adopting the original value as the basis of this calculation is, that
the insurance is a contract of indemnity, and the assured ought not
to be allowed to make a profit by it, which he would do if he were
to receive any more than he originally paid. The mode of ascer-
taining the original value of the goods in the case of an open policy,
is, to take the invoice price at the loading port, and add to that the
premium of insurance and commission ; (e) these being both charges
to which the insured has actually been put, on account of the
goods, in order to send them on the voj'age : whether a payment
on the shipment of the goods can be added to the value, is a ques-
tion as yet undecided. (/) "When the policy is a valued one, the
parties have themselves agreed on the original value of the-goods,
and the standard is therefore adopted which they have fixed in the
policy, (g) If the policy be on freight, and open, which is un-
common, the usage is to calculate the loss upon the gToss, not on
the net value. (A)

(c) Poingdestre v. R. E. A. Compj*., 1 R. <feM. STS. See Da Costa v. Xe-waliara, 2
T. R. 407. See the qualificatioa in Pirie v. Steele, 2 M. & Rob. 49, -whicli excludes tha
new for the old deduction in cases of loss occurring during the ship's first voyage.

((/) Usher v. Noble, 12 East, 639. Johnson v. Sheddon, 2 East^ 581. Lewis v.
Rucker, 2 Burr. 1167. Hurry v. R. E. A. Corapy., 3 B. <fe P. 308.

(e) Langhorn v. AUnutt, 4 Taunt. 511.

(/) Winter v. Haldimand, 2 B. <fe Ad. 649.

ig) Lewis v. Rucker, 2 Burr. 1167. See 12 East, 647.

(A) Palmer v. Blackburn, 1 Bingli. 61.

482 MERCAIvTILE COXTRACTS.

Results of Contract.

Generally speaking, where property which, has been partially
deteriorated, is afterwards totally lost to the insured, and the pre-
vious deterioration thus become a matter of perfect indifference to
his interest, he cannot make it the ground of a claim upon the un-
derwriter; for of what consequence is the intermediate condition
of the thing, if he be never to receive it again ? But there may be
cases in which, though a prior damage be followed by a total loss,
the assured may, nevertheless, have rights or claims in respect of
that prior loss, which may not be extinguished by the subsequent
total loss.* Actual disbursements, for repairs in fact made in con-
sequence of injuries by perils of the seas, previous to the happening
of the total loss, are of this description ; unless, indeed, they are
more properly to be considered as covered by that authority with
which the assured is usually invested by the policy, of "suing,
laboring, and travelling, &c., for, in, and about the defence, safe-
guard, and recovery of the property insured," in which case, the
amount of such disbursements might more properly be recovered as
money paid for the underwriter under the direction and allowance
of this provision of the policy, than as a substantive average loss,
to be added cumulatively to the amount of the total loss which is
afterwards incurred. For such disbursements the underwriter is
liable over and above the amount of his subscription. ({)f

(i) Livie v. Janson, 12 East, 648. Le Cheminant v. Pearson, 4 Taunt. 367. Vide
tamen De Haux v. Salvador, 4 Ad. <fe E. 420.

* This doctrine was considered in Knight v. Faith, 15 Ad. & Ell. N. S. 649. In
that case there was no actual total loss, but a constructive total loss, for which,
however, the underwriters were not responsible, in consequence of the failure of the
assured to give notice of abandonment. The underwriters were held liable for a
partial loss, from which the subsequent loss resulted. Lord Campbell thus stated
the principle. "The insurers on a ship, if they pay a total loss, certainly are
not liable in respect of any prior partial loss which has not been repaired ; and if a
total loss occurs, from which they are exempt, they are not liable for any prior
partial loss, which in that event does not prove prejudicial to the assured. In the
case before the Court, the partial loss caused an actual prejudice to the assured,
and therefore was not merged in a final loss, for which the insured were not liable
to pay.

•j- "Where a vessel during her voj^age puts into a port of necessity', and is re-
paired, and afterwards proceeds on her voj-age, and is totally lost, the insured ie

MARITIME INSURANCE. 483

Procsedings after a Loss.

Section Y. — Proceedings after a Loss.

Adjustment— When a loss has taken place, unless the under-
writer can deny his liability to make it good, he usually proceeds
to adjustment^ which is the settling and ascertaining the amount
which the assured, after allowances and deductions are made, is
entitled to receive under the policy, and fixing the proportion
which each underwriter is liable to pay: it operates as an ad-
mission of all the facts necessary to constitute the underwriter
responsible, (/) but it is not conclusive upon him ; and, though it
is incumbent on an underwriter who has once adrntted his liability
by an adjustment, to make out a strong case, yet until actual pay-
ment of the money, he may avail himself of any defence which the
law or facts will furnish, ik)

If the underwriter contests his liability, he either relies upon
the absence of some of the above-mentioned requisites to a contract
of insurance ; by alleging, for instance, that the insured is an alien
enemy, or that there is no legal subject matter of insurance, ex. gr.^
that the policy is a wager policy, or a contract of reassurance ; or
he insists that the risk never began, as, for instance, that the ship

(j) Voller V. Griffiths, S. N. P. 983. Rodgers v. Naylor, Park, 194. Christian v.
Coombe, 2 Esp. 489. Shepherd v. Chewter, 1 Camp. 274.

[k) Herbert v. Champion, 1 Camp. 124. De Garron v. Galbraith, Peake, Add. Ca.
3*7. Note by Mr. Campbell to Shepherd v Chewter cited ante.

entitled to recover the partial loss arising from the repairs, and general averag-e
consequent thereon, in addition to the total loss. Saltus v. Comm. Ins. Co., 10
John. 487.

The deduction of one-third new for old is, it seems, to be made, though the vessel
be new, and on her first voyage. Dunham v. Commercial Ins. Co., 11 John. 315.
Nichols V. Maine F. & M. Ins. Co., 11 Mass. 253. Peele v. Merchants' Ins. Co., 3
Mason, 73. And the rule of one-third new for old has been held to be applicable to
insurances on steamboats navigating the Western rivers. Wallace v. Ohio Ins. Co., 4
Ohio, 234. In adjusting a partial loss on a ship which has been repaired, the pro-
ceeds of the old materials not used in the repairs, are first to be deducted from the
gross expenses of the repairs, and then the deduction of one-third new for old is to
be made from the balance. Eager v. Atlas Ins. Co., 14 Pick. 141. B3-rnes v. National
Ins. Co , 1 Cow. 265

484 MERCANTILE CONTRACTS.

Proceedings after a Loss.

cleared out and sailed on a voyage different from that insured; or
that he has been discharged by a breach of warranty, ex. gr.^ by a
deviation ; or he contends that the policy is vitiated by fraud, mis-
representation, or concealment on the part of the insured. All
these grounds of defence have been already treated of, except the
last, on which we will now say a few words.

It is essential that in all contracts of insurance the strictest good
faith should be observed ; for fraud, concealment, or misrepresen-
tation of any material circumstance, avoids the whole contract : thus,
if the underwriter assures a ship as on her voyage, which he pri-
vately knows to be arrived, the policy is void, and the assured may
bring an action against him to recover back the premium. {V) So,
if the assured or his agent conceal or misrepresent any material fact,
relating to the property insured, the policy is void, and the insurer
not liable, {m) When this takes place the policy is vacated ah initio,
and the underwriters may use it as a defence, though the loss have
arisen from a cause wholly unconnected with the circumstance con-
cealed or misrepresented, {n) A misrepresentation of a material fact
vitiates the policy, whether the party assert a thing he knows to be
false, or does not know to be true, (o) The misrepresentation will
be of a material fact, if it consist of an assertion that the ship was
safe on a particular day, will sail at a particular time, {p) or will sail
in company, and carry a certain force, {q) A misrepresentation
made to the first underwriter in a material point, is considered as a
misrepresentation to every one of the underwriters, for they are all
supposed to follow the first, (r) But a misrepresentation made to

{l) Carter v. Boehm, 3 Burr. 1909. And an action on the case lies against an in-
surer for misrepresentation. Pontifex v. Bignold, 3 M. &, Gr. 63.

(m) Carter v. Boehm, 1 Blackst. 594; 3 Burr. 1905. Middlewood v. Blakes, 7
T. R. 162. Willes v. Glover, 1 N. R. 14. Roberts v. Fonnereau, Park, 176. Da Costa
V. Scandret, 2 P. Wms. 170. Hodgson v. Richardson, 1 Bl. 4G3. Fitzherbert v. Mather
1 T. R. 12.

(n) Per Lee, C. J., Leaman v. Fonnereau, Str. 1183.

(o) Macdoual v. Fraser, Doug. 260. Charaud v. Angerstein, Peake, 43. Duffel v
Wilson, 1 Camp. 401.

(p) Supra, last note. Roberts v. Fonnereau, Park, 285.

{q) Edwards v. Footner, 1 Camp. 530.

(r) Pawson v. Watson, Cowp. 785. Barber v. Fletcher, Dougl. S06. Marsden »
Reid, 3 East, 573.

MARITIME INSURANCE. 435

Proceedings after a Loss.

any underwriter other than the first, is not to be considered as
made to subsequent underwriters ; (s) and the rule concerning the
effect of a misrepresentation to the first is founded, it is said, more
upon precedent than reason, {t) and must be received with great
quahfication. {u)

If a representation be substantially true, that is sufficient, and in
this respect it differs from a warranty, which must be literalhj com-
plied with. Thus, where it was represented xhat the ship would
carry twelve guns and twenty men, and she really carried nine
guns and six swivels, and sixteen men and eleven boys, a force
equal in amount to that represented, the polic}'- was not avoided, (v)
Moreover, if the party who effects the ^^olicy do not make his asser-
tion positively, but only as a matter of expectation and belief, it
will be sufficient if he really believe it. (zf)*

(s) Bell V. Carstairs, 2 Camp. 543. Brine v. Featlierstone, 4 Taunt. 869.

(t) Per Heath, J., in Brine v. Featherstone.

(?<) Per Lord Ellenborough, in Forrester v. Pigoii, 1 M & S. 13.

(«^) Pawson V. Watson, Cowp. "IBS. Bize v. Fletcher, Doiigl. 275. Konnen v. Reid,
16 East, 1Y6. Von Tungein v. Dubois, 2 Camp. 151.

('(») Barber v. Fletcher, Dougl. 292. Bize v. Fletcher, Dougl. 275. Hubbard v.
Glover. 3 Camp. 313. Bowden v. Vaughan, 10 East, 415. Brine v. Featlierstone, 4
Taunt. 869. Driscol v. Passraore, 1 B. & P. 200. Weston v. Ernes, 1 Taunt. 115.

* The general principles in relation to fraud, misrepresentation, or concealment of
material facts, in obtaining an insurance, laid down in tiie text, have been recognized
and acted on in the United States. Hodgson v. Marine Ins. Co. of Alexandria, 5
Cranch, 100 ; 2 C. R. 195. Livingston v. Maryland Ins. Co., 6 Cranch, 274 ; 2 C. R. 370.
S. C 7 Cranch, 506 ; 2 C. R. 589. Maryland Ins. Co. y. Ruden, 6 Cranch, 338 ; 2 C. R.
392. Buck V. Chesapeake Ins. Co., 1 Pet. 151. M'Lanahan v. Universal Ins. Co., 1 Pet.
170. Hazard v. New England Ins. Co., 8 Pet. 557. Locke v. Nortli American Ins. Co.,
13 Mass. 60. Green v. Merchants' Ins. Co., 10 Pick. 402. Firemen's Ins. Co. v. Waldcn.
12 John. 513. Irving v. Sea Ins. Co., 22 Wend. 380.

Where an insurance was effected after a loss had happened, though unknown to
the insured, the master having omitted to communicate information to tlie owner,
and having expressed his intention not to write to the owner, and taken measures to
prevent the fact of thu loss being known, for the avowed purpose of enabling the
owner to effect insurance, in consequence of which inforinatior. of the loss had not
reached the parties at the time' the policy was underwritten, it was held that the
owner having acted in good faith, was not precluded from a recovery on account of
the fraudulent misconduct of the mastei*. General Interest Ins. Co. v. Ruggles, 12
Wiieat 408 ; S. C. 4 Mas.Mi, 74. This case has been commented on and disapproved

486 MERCANTILE CONTRACTS.

Proceedings after a Loss.

As to concealment^ it is as fatal to the policy as misrepresenta-
tion ; for insurance is a contract founded on speculation, and a
knowledge of all tlie facts is necessary to enable the underwriter to
calculate and form a just estimate of the risk ; nor is it an excuse
that the concealment was attributable to the fraud or neglect of an
agent, {x) or that the account concealed was false, {y) or in no way
referred to the subsequent cause of loss, (2) or was not concealed with
a fraudulent design ; (a) nor does it matter whether it was known
as a report or as a matter of positive intelligence, {b) But the con-
cealment which vitiates a policy must be of a fact material to a just
estimate of the risk ; (c) and, therefore, the main question respecting
concealment almost always is, whether the fact concealed be a mate-
rial one. Of this description have been held to be, — intelligence
that the vessel about to be insured, or a ship like her, has been

{x) Fitzherbert v. Mather, 1 T. R. 12.

{y) See 3 Taunt. 87 ; 14 East, 494.

(2) 2 Str. 1183.

{a) 3 Burr. 1905; 1 T. R. 12.

\h) Durrell v. Bederley, 1 Holt, 238. Gibbs, C. J.

by Mr. J. Duer in his treatise on Insiirance ; he considers Judge Story as having
affirmed to the general principle that when the assured acts -with entire good faith,
his contract is not liable to be affected by the fraud or negligence of an agent, whose
duty is limited to the mere communication of intelligence; but insists that the
Supreme Court of the United States placed their decision on different grounds ; and
argues with much ability and ingenuity against the principle above stated. 2 J.
Duer on Ins. 415-427. "It is admitted by all," says the same learned author, "that
the actual or virtual concealment of material facts by an agent who is employed to
procure or effect the insurance, is just as noxious as that of his principal." 2 J. Duer,
415. As to facts which need not be communicated, which the insurer is supposed to
know, see Buck v. Chesapeake Ins. Co., 1 Pet. 151 ; 8 Pet. 557. Delonguemere v
N. Y. Fire Ins. Co., 10 John. 120. Alsop v. Commercial Ins. Co., 1 Sumn. 451. Green
V. Merchants' Ins. Co., 10 Pick. 402 ; 2 J. Duer, 474. As to the disclosure of the
nature of the interest of the insured, in relation to which there is some conflict in the
authorities, see 2 J. Duer, 448-459, who says that, "Judging from the authorities alone,
it seems the most probable conclusion, that, by the actual law, with the exception of
the few cases in which the interest must be specified in the policy, the special nature
of the interest of the assured need not be disclosed, unless in reply to the inquirie*
of the underwriter. "Where the underwriter omits to inquire, he assumes the risk.

MARITDIE INSURANCE. 487

Proceedings after a Loss.

lost, or wliich. induced the owner to fear that she may be so ; id)
information respecting the time or manner of her sailing which is
material to the probability of her safety, such, for instance, as would
show her to be a missing ship, or out of time, or that she had
encountered bad weather, or that another ship, which sailed after
her, had arrived first ; (e) intelligence that she had been met with
in a leaky state, (/) or had from some other cause sustained damage
before the commencement of the risk; {g) or that she is in danger
of an attack, as if a man were to insure a ship, knowing that
enemies were lying in wait for her. (A) A merchant resident at
Sidney shipped goods by the ship C. for England, and, by another
ship that sailed after the ship C, wrote to an agent in England,
desiring him, if he received that letter before the C. arrived, to
wait for thirty days, in order to give every chance of her arrival,
and then effect an insurance on the goods ; the letter was received,
and the agent, having waited more than thirty days, employed a
broker to effect an insurance, and handed the letter to him; the
broker told the underwriter when the C. sailed, and when the
letter ordering the insurance was written, but he did not state
when it was received, nor the order to wait thirty days after the
receipt of it before effecting an insurance. The C. never arrived.
In an action on the policy, no fraud was imputed to the plaintiff,
but several underwriters were called, who stated that in their
opinion the matters not communicated were material; and the
jury, being of opinion that a material part of the letter had been
concealed, found a verdict for the defendant. It was held that the
evidence of the underwriters was properly received ; {i) and that,

{d) Da Costa v. Scandret, 2 P. Wms. 170. See 1 Show. 324. Fitzherbert v.
Mather, 1 T. R. 12. Gladstone v. King, 1 M. & S. 35.

(e) Macintosh v. Marshal, 11 M. <fe W. 116. Kirby v. Smith, 1 B. & A. 672.
M'Andrew v. Bell, 1 Esp. 373. Webster v. Foster, 1 Esp. 407. Willis v. Glover, 1 K
R. 14. Bridges v. Hunter 1 M. & S. 15. Sawtell v. Loudon, 5 Taunt. 359. Elton v.
Larkins, 8 Bingh. 198. Elkin v. Janson, 13 M. & W. 655.

(/) Lynch v. Hamilton, 3 Taunt. 37. Lynch v. Dunsford, 14 East, 494. See West-
bury V. Aberdein, 2 M. & W. 267, where another ship arrived before her, which had
parted from her in a storm.

{g) Gladstone v. King, 1 M. & S. 35.

{h) Carter v. Boehm, 3 Burr. 1905; Bl. 503. Beckwaite v. Walgrovc, cited 3
Taunt. 41. Durrell v. Bederley, 1 Holt, 283.

(i) It has been considered that this evidence was impr; perly admitted, for that

488 3IERCANTILE CONTRACTS.

Proceedings after a Loss.

even had it not been so, the jury would have been bound to find
that the uucommunicated part of the letter was material, and the
policy consequently void, {j)

But the rule respecting concealment is confined to matters
v/hicli lie within the private knowledge of the insured. He need
not mention what the underwriter knows, or ought to know, —
scientia utrimque par pares facit contrahentes. He need not men-
tion general topics of speculation, — such as the difficulty of -the
voyage, the nature of the season, the probability of lightning, hur-
ricanes, and earthquakes, of danger from the ruptures of states,
from war, and the various operations of war. Men argue differ
ently from natural phenomena and political appearances, — they
have different capacities, different degrees of knowledge, Jvud dif-
ferent modes of thinking; but the means of information are open
alike to all, each professes to act from his own skill and sagacity,
and therefore neither need communicate to the other the result of
his individual judgment. QS) The insured need not communicate
the usage of trade, for the underwriter is supposed to know it ; (J)
nor a fact which the underwriter may learn by the exercise of
proper diligence, for instance, as it would seem, facts contained in
the printed English list at Lloyd's ; (m) but the announcement of a
material fact in the foreign list at Lloyd's will not dispense with
a communication from the insured, {n) And though a London
underwriter may prima facie be taken to know matters contained
in the shipping list at Lloyd's, yet if the insured make a misrepre-
sentation which may induce him to neglect looking at the list, the
policy is avoided, at all events unless the insured be able to show
that he really did acquire a knowledge of the truth before sub-

the question of materiality was for the jury. Campbell v. Eickards, 2 Nev. A Mann.
546 ; 5 B. & Ad. 840.

(j) Eickards v. Murdock, 10 B. & C. 52T. See Campbell v. Rickards, 2 ]S"ev. &
Mann. 546 ; 5 B. & Ad. 840.

{k) Carter v. Boehm, 3 Burr. 1905.

(l) Noble V. Kennoway, Dougl. 510. Vallance v. Dewar, 1 Camp. 503. Ougier v.
Jennings, ibid. 505. Grant v. Paxton, 1 Taunt. 463, Moxon v. Atkins, 3 Camp. 200.
Stewart v. Bell, 5 B. & A. 238. Blanche v. Fletcher, Dougl. 238.

(m) Friere v. Woodhouse, 1 Holt, 5Y2. Qucere, whether this case be not shaken bv
Ellon V. Larkms.

{n) riton V. Larkins, 8 Bingh. 198.

MARITIME INSURANCE. 480

Proceedings after a Loss.

scribing the policy, (o) Tlie insured is not bound to communicate
matter which forms an ingredient in a warranty, such, for instance,
as that of seaworthiness ; thus, where the assured received a letter
mentioning that the ship had been surveyed at Trinidad, on ac-
count of lier had character ; but the survey which accompanied the
letter, gave the ship a good character ; the concealment of this did
not vacate the policy ; for the insured impliedly warranted the ship
to be seaworthy, and it did not appear either that she was, or that
he had reason to think that she was otherwise, {p) If, after the
broker has been instructed to effect a policy, his principal receive
further intelligence, but the policy is effected before the principal
can communicate it to the broker, the policy is valid, if the prin-
cipal and broker appear to have acted with due diligence, {q) And,
in every case, the question, whether the non-communication of a
fact vacate the policy, depends, as has been before said, upon the
further question, whether that fact was a material one. (r) Thus, in
some cases, the time of the ship's sailing has been held immate-
rial ; (s) nor need the insured state to the underwriter general cir-
cumstances connected with the history and capabilities of the ship,
ex. gr., her age, where she was built, what was her construction,
whether clinker built, or not, whether copper-bottomed, when,
how, and where repaired, &c. : circumstances of this nature would
no doubt have weight in guiding the judgment of the underwriter ;
but it is not essential to the fairness of the contract, that the insured
should, in the first instance, disclose them ; it is sufficient if he
answer truly when it is demanded of him. (t)-

Return of Premium.^ — If the underwriter should succeed in es-

(o) Mackintosh v. Marshall, 11 M. & W. 116.

(/>) Haywood v. Rodgers, 4 East, 490. Shoolbred v. Nutt, Park, 346.

(5') Wake v. Atty, 4 Taunt. 493.

(r) See Littledale v. Dixon, 1 N. R. 151. Beckwith v. Sydebotham, 1 Camp. 116.
Weir V. Aberdeen, 2 B. <fe A. 320. Taylor v. Wilson, 15 East, 324; 2 Dowl. 367.
Boyd V. Dubois, 3 Camp. 133. Bell v. Bell, 2 Camp. 4Y9.

(s) Fort V. Lee, 3 Taunt. 381. Foley v. Maline, 5 Taunt. 430; 1 Marsh. 117.
Sed vide Bridges v. Hunter, 1 M. & S. 15. Kirby v. Smith, 1 B. & A. 672.

(t) See Haywood v. Rodgers, 4 East, 590. Freeland v. Glover, 7 East, 457. See
Long V. Duff, 2 B. <fe P. 209.

* The decisions in the Ui ted States on this subject appear to have been in ac-

490 MERCAKTILE CONTRACTS.

Proceedings after a Loss.

tablisliing a defence against his liability upon the policy, a question
immediately arises whether the insured be entitled to a return of
;premium^ and, if so, whether to a return of all or part. On this
subject the parties sometimes enter into an agreement, and, if they
do, the terms of that must, of course, be observed, (w) and will
regulate the amount of the sum to be returned and the circum-
stances under which it is returnable, {v) If there be no express
stipulation, the question of return or no return is regulated by two
main principles, — First. Where the risk has not been run, the pre-
mium shall be returned, for the underwriter receives it for running

(m) Audley v. Duff, 2 B. & P. IIL

{v) See Kellner v. Le Mesurier, 4 East. 396. Leevia v. Cormac, 4 Taunt. 483.
Dalgleish v. Brooke, 15 East, 295. Aguilar v. Eodgers, 7 T. R. 421. Simmonds v.
Bo3'del], Dougl. 255. Horncastle v. Ha^yorth, 2 Marsh. Ins. 674. Langhorn v. Alnutt,
4 Taunt. 611, which last two cases seem at variance. Long v. Allen, Park, 589, where
the decision turned on the usage of trade.

cordance with the principles laid down in the text. As to the return of premium
where no risk has been run, see Ecbers v. United Ins. Co., 16 John. 128. "Wadding-
ton V. United Ins. Co., 17 John. 23. Taylor v. Lowell, 3 Mass. 343. As to where the
vessel was unseaworthy. Commonwealth Ins. Co. v. Whitney, 1 Mete. 21. For short
interest, Finney v. Warren Ins. Co., 1 Mete. 16, 19. Murray v. Columbian Ins. Co.,
11 John. 302. When the risk is entire, and has once commenced, Hendricks v.
Comm. Ins. Co., 8 John. 1. Homer v. Dorr, 10 Mass. 28. In case of fraud, Hoyt v.
Gillman, 8 Mass. 336. Waters v. Allen, 5 Hill, 421. In this case it was said by
Bronson, Judge, in delivering the opinion of the Court, to be a safe rule, "that
where the insured sues for a loss, and fails on the ground that the contract is void
by reason of his own fraud in procuring it, or where he sues for a return of premium,
and is obliged to show his own fraud in making title to the money, then he shall
not have a return ; but when the contract is valid, and the insured can make title to
a return of premium, without showing his own fraud, then he may recover, although,
but for his own fault, the peril insured against might have been run." 5 Hill, 426.
And it was held, that where the policy divides the voyage into distinct risks, affix-
ing a separate premium to each, and immediately after the first risk has commenced,
the vessel is destroyed by tlie fraudulent act of the insured, whereby the other risks
are not incurred, the premium paid for the latter may be recovered back.

And the same learned judge expressed the opinion, that though one procure an
insurance on a vessel with intent to destroy it, in order to charge the underwriter,
the policy will, nevertheless, attach ; and if a loss afterwards happen without the
fault of the assured, he may recover against the underwriter. "The mere intent to
do wrong, rarely, if ever, constitutes a crime or a fault of which the law will take
cognizance." 5 Hill, 424.

MARITIME INSURANCE. 491

Proceedings after a Loss.

the risk, and, if ke do not run ttie risk, he ought not to retain it. {w)
Thus, if the policy were on goods, and no goods are put on board
the ship, the premium must be returned ; (x) and on this ground
rests the return of premium for short interest, which occurs when
part only of the goods embraced by the policy is put on board, in
which case, a portion of the premium corresponding to the defici-
ency must be returned, (y) So, where profits are the subject of in-
surance, there may be a return of premium for short profits, (z)
But, if it be a valued policy, and all the goods intended were put
on board, the insured will not be entitled to a return on the ground
that they were not of the value specified, (a)

A question lately occurred in the Court of Exchequer with re-
gard to the return for short interest, which does not appear to have
ever before arisen in our courts. Insurances had been effected on
the 12th of April, to the amount of 14,150/., and on the 13th, to
the amount of 22,300/. It turned out, that the whole value was
30,333/. 10s., so that there was 6116/. 10s. short interest. The courl
held, that there must be a return by the underwriters on the 13th,
the amount of over-insurance to be ascertained by taking all the
policies into account, but no return to be made by the underwriters
on the 12th. {!>)

Secondly. — When the risk embraced by the policy is entire, and
has once commenced, there can be no return of the premium, or of
any part of it ; (c) thus, even if the insurance be for twelve months
at a certain rate per month, and the risk ceases at the end of two
months, there can be no apportionment or return of premium ; (c/)

(w) Routh V. Thompson, 11 East, 428. Oom v. Bruce, 12 East, 225. Hen tig v.
Stanniforth, 5 M. & S. 122 ; 4 Camp. 2'70. Siffkin v. Alnutt, 1 M. & S. 39. Feize v.
Parkinson, 4 Taunt. 640. Penson v. Lee, 2 B. & P. 330. Vide Hagedorn v. Oliver-
eon, 2 M. & S. 491. MacCuUock v. R. E. A. Co., 3 Camp. 406. Lowry v. Bordieu,
Dougl. 46*7.

(a;) Martin v. Sitwell, 1 Show. 156.

(y) Eyre v. Glover, 16 East, 218 Horneyer v. Lushington, 15 East, 46 ; 3 Camp. 90.

\z) S. C.

(a) 4 Bro. P. C. 450, 464.

\b) Fisk V. Masterman, 8 M. &, W. 165.

(d) Loraine v. Thomlinson, Dougl. 564.

492 MERCANTILE COXTRACTS.

Pi'oceedings after a Loss.

for the whole risk attached, the underwriter would have been
obliged to settle for a total loss, had such a one taken place within
the two months, and the specification of a certain sum per month
is only a mode of computing the gross amount of premium.
Again, if a ship insured from A. to B. sail in an unseaworthy con-
dition, the underwriter's risk never commences ; (e) and the pre-
mium, as we have seen, must be returned. But if a vessel be in-
sured at and from A. to B., and sail in an unseaworthy condition, no
portion of the premium is returnable ; for the risk attached, while
she remained at A., before she sailed, and if she had been lost
while there, a total loss would have been payable. (/) So again,
if the ship deviate the underwriter is discharged ; yet, inasmuch as
the risk once attached, and as he might have been subjected to a
total loss, had she perished before she had reached the point of de-
viation, no portion of the premium is returnable, {g)

We have seen that there can be no return of premium where
the risk is entire, and has once commenced. But if the insurance
be, in effect, on two or more voyages, and one or more have not
commenced, there shall be an apportionment and return of pre-
mium, in respect of those voyages that have not commenced ; for,
in such a case, the risk is not entire, nor is the underwriter for a
single moment liable to make good any loss incurred during the
latter voyages. (A) The usual mode of showing that the risk is to
be considered as thus divided, is by proving a usage of trade to
that effect, of which usage the underwriter must, of course, be pre-
sumed cognizant, (i) Thus, where the insurance was from London
to Halifax, warranted to depart with convoy from Portsmouth ; the
ship not having departed with convoy from Portsmouth, and the
jury having found a usage to return part of the premium in such
a case ; the court thought that the contract was for an insurance
from London to Halifax ; which contract, in case of the ship's not
departing from Portsmouth with convoy was to be reduced to an
insurance from London to Portsmouth ; that, as she had not de-

(e) Penson v. Lee, 2 B. & P. 330

(/) Annen v. Woodman, 3 Taunt. 299. Meyer v. Gregson, Park, 588.

{g) Tait v. Levi, 14 East, 481. Moses v. Pratt, 4 Camp. 297.

(A) Stevenson v. Snow, 3 Burr. 1237.

(j) Long V. Allen, Marsli. 370. Stevenson v Snow, ^cbi supra.

MARITIME INSUllANCE. 493

Proceedings after a Loss.

parted from Portsmoutli with convoy, the contract had been so re-
duced, and, consequently, that there must be a part-return of the
premium for the risk never incurred, viz., that from Portsmouth to
Halifax, {j)

It remains to observe, that, even where the risk never com-
menced, yet, if the assured or his agent have been guilty of fraud,
for instance, if he knew that the ship was lost when he insured
her, there can be no return of premium, (k) The same rule holds,
if the insurance be illegal, and the voyage have been performed
(unless the parties could not have known of the illegality, {l) or
believed that the risk would be legal, and took the usual effective
steps to make it so), (m) for in pari delicto potior est conditio p)ossiden-
tis. {n) But this maxim does not apply where the return of pre-
mium is claimed before the voyage has commenced : for then, the
contract being still executory, there is a locus pcenitentice^ and either
party has a right to rescind it, since, by doing so, he prevents the
commission of that which the law forbids. (0) However, the party
seeking to rescind must formally renounce the contract, and give
notice to the underwriter that he has done so, before he can bring
an action to recover back the premium, (p)

When the insured is compelled to sue the underwriter, the form
of action he adopts is generally assumpsit. If, indeed, the insurer
be the Royal Exchange or London Assurance Company, the defen-
dant being a corporation, and the policy a deed, the action must be
one of debt or covenant, .to which a general plea is given by stat.
11 Geo. 1, c. 30, s. 43.

When several actions are brought on a policy against several
underwriters, the court will make a rule for staying the proceed-

(_;') Stevenson v. Snow, uhi supra.

(^•) Wilson V. Duckett, 3 Burr. 1361. Tyler v. Home, Park, 329. Chapman v
Fraser, ibid.

(l) Oom V. Bruce, 12 East, 225.

{m) Hentig v. Stanniforth, 5 M. & S. 122.

(n) "Wilson v. R. E. A. Comp., 2 Camp. 623. Cowie v. Barber, 4 M. & S. 16,
Toulmin v. Andei'son, 1 Taunt. 227. Lowry v. Bordieu, Dougl. 451. Andre% v
Fletcher, 3 T. R. 266.

' (0) See per Bullar, J., Lowry v. Bordieu ; and see 3 Taunt. 283. Hed vide Palyart
V. Leckie, 6 M. & S. 290, and the remarks of Abbott, J., there.

(p) Palyart v. Leckie, 6 M. & S. 290.

494 MERCANTILE COKTRACTS.

Proceedings after a Loss.

ings in all the actions except one, on the defendants' undertaking
to be bound bj the verdict in that action, and consenting to other
reasonable terms, (q) But though all the defendants are bound to
abide by the verdict in that single action, the plaintiff is not so ; (r)
however, if he proceed in a second action without leave of the
court, he will not be allowed the benefit of the terms imposed on
the defendants by the consolidation rule. And if he have effected
several insurances declaring the same value in each, he is bound
by that sum, and cannot receive beyond that extent ; (s) though,
where he declares different values, viz. 6000?. on one policy, and
8000/. on another, he will be permitted to recover 6000/. subscribed
upon the former policy, though he had already recovered GOOOl.
upon the latter. (;!)

(q) For the history of, and practice on this subject, see Tidd, 9th ed. 614. See
Hollingsworth v. Brodrick, 4 Ad. & E. 646. The court may grant a new trial in the
first action, Cohen v. Bulkeley, 5 Taunt. 165, but they are unwilling to do so. Fos-
ter V. Steele, 3 Bingh. N. C. 892. Doyle v. Anderson, 1 Ad. & E. 635.

(r) Dojle V. Douglass, 4 B. <fe Ad. 545. Long v. Douglass, ibid. Doyle v. Alver,
ibid. 896. As to the case of diffei'ent policies on the same ship, see M'Gregor v. Hora-
fall, and M'Gregor v. Smith, 3 M. & W. 320.

(s) Irving v. Richardson, 1 M. & Rob. 153,

(i) Bousfield v. Barnes, 4 Camp. 228.

CHAPTER V.

INSURANCE "UPON LIVES.

Insukance upon a life, is a contract bj wTiich the insurer in con-
sideration of a certain premium, either in a gross sum or bj an-
nual payments, undertakes to pay to the person for whose benefit
the insurance is made, a certain sum of money or annuity, on the
death of the person whose life is insured. If the insurance be for
the whole life, he undertakes to make the payment ivhenever the
death happens ; if otherwise, he undertakes to make it, in case the
death should happen ivithin a certain period^ for which period the
insurance is said to be made. The utility of this contract is ob-
vious. A creditor is enabled thereby to secure his debt ; an annui-
tant, the continuance of his income after the grantor's decease;
a father, a provision for his family, available in case of his own
death. In case of marriage it supplies a substitute for the funds
which it would otherwise be necessary to invest as a provision for
the wife and children in case of survivorship, and enables the hus-
band to invest his capital profitably in the mean while. However,
as an unlimited power of effecting insurances of this description
would give rise to a species of gambling, it is enacted by stat. 14,
Geo. 8, c. 48, " That no insurance shall be made by any person or
persons, bodies politic or corporate, on the life or lives of any person
or persons, or on any other event or events whatsoever, (a) wherein
the person or persons for whose use, benefit, or on whose account
such policies shall be made, shall have no interest, or by way of
gaming or wagering : and that every insurance made contrary to

(a) Perhaps it might not be very easy to say to what description of wagers, par-
ticularly if written, this statute is inapplicable. See Paterson v. Powell, 9 Bingh.
320. Roebuck v. Hammerton, Cowp. 737. Bed vide Good v. Elliott, 3 T. Pu 693, and
Morgan v. Pebrer, 3 Bingh. N. C. 457.

490 MERCANTILE COXTRACTS.

Insurance upon Lives.

the true intent and meaning hereof, shall be null and void to all
intents and purposes whatsoever." (i)

" That it shall not be lawful to make any policy or policies on
the life or lives of any person or persons, or other event or events,
without inserting in such policy or policies the person or persons'
name or names interested therein, or for whose use, benefit, or on
whose account such policy was so made or underwrote, (c)

" That in all cases where the insured hath interest in such life
or lives, event or events, no greater sum shall be recovered or re-
ceived from the insurer or insurers, than the amount or value of
the interest of the insured in such life or lives, or other event or
events." (ri)

Marine insurances are exempted from the operation of this
act. (e)

This act does not prohibit individuals from effecting insurances
upon their own lives, provided that be done bonafide^ but it seems
that a man would not be allowed to evade the statute by procuring
another, in whose life he had no legal interest, to insure it with his
money and for his benefit, though ostensibly for the advantage of
the party insuring. (/)'•"

A creditor has an insurable interest in the life of his debtor, {g)
provided the debt be not an illegal one ; (A) and a trustee may in-
sure in respect of the interest of which he is trustee. (/) But, as
insurance is a contract of indemnity, the insured can found no

ib) Sect. 1. (c) Sect. 2. {d) Sect. 3. (e) Sect. 4.

(/) Wainwright v. Bland, 1 M. & "VV. 32 ; 1 M. & Rob. 481.
(jg) Anderson v. Edie, Pai-k, 640. See also as to interest, Henson v. Blackwell, 4
Hare, 434.

(A) Dwj-er v. Edie, Park, 639.

{i) Tidswell v. Angerstein, Peake, 151.

* An insurance on a life is a legal and valid contract by our laws. But the as-
sured must have an interest in the life insured, otherwise it would be a mere wager
policy, and contrar}^ to the general policy of our laws and void. Lord v. Dall, 12
Mass. 115.

A single woman dependent on her brother for her support and education, has a
sufficient interest in his life to entitle her to insure it. And such an insurance will
avail for her benefit, although he was engaged in an unlawful and immoral traffic,
she being ignorant of any intended violation of the law by him. S. C. 12 Mass. 115.

INSURANCE UPOX LIVES. 497

Insurance upon Lives.

claim upon his policy, if the debt or other interest, in respect of
which he made it, be satisfied aliunde. {Ic)

When a life policy has been assigned, it is not necessary that
the assignee should have any interest or have paid any considera-
tion for the assignment, for he stands upon the rights of the party
who effected the insurance, and stat. 14 Geo. 3, c. 48, only applies
to the original parties, not to the assignees. Q)

Lord Tenterden has expressed a strong opinion, that the word
"interest," in the statute above cited, means a, 2^ecuniari/ interest] {m)
and in the same case it was held, that a father had not such an in-
terest in his son's life as would entitle him to insure it. But Lord
Kenyon was of opinion that a wife, making an assurance on her
husband's life, need not prove she was interested therein, for that it
must be presumed, (n)

(^•) Godsall V. Boldero, 9 East, 72. Ux parte Andrews, 1 Madd. 5li. But it may
be conjectured from the case of Holland v. Smith, which was decided at Kisi Prius
by Lord Ellenborough, 6 Esp. 11, that his Lordship was of opinion that if A. insure
the life of B. his debtor, and afterwards the debt is paid off, B. may, by continuing
to pay the premium, keep the policy alive for his own benefit. In that case, O'Hara
being indebted in 501. to Kendrick, the latter insured his (O'H.'s) life to that amount.
The debt was paid off, and O'llara's executor sued Kendrick's executor for the
amount of the policy which had been afterwards paid by the insurance office, and
having proved that O'Hara had regularly repaid to Kendrick the amount of tlie pre-
miums paid by the latter to the office, he was lield entitled to recover, his Lordship
saj'ing that it must be taken that O'Hara meant to keep the policy alive for his own
benefit. It seems, however, clear from Godsall v. Boldero, that Kendrick's executor
could not have recovered against the office ; and, as O'Hara's executor must have
sued in the name of Kendrick's executor, it would be strange if his rights should be
more extensive. It is to be observed, that the question as to the i-ights of either
executor against the office is by no means involved in the decision of Holland v.
Smith, since it was there only necessary to determine that Kendrick's executor, who
had actually received the loOl. from the office, had no right to retain it against
O'Hara's executor, but must be considered to have received it as the latter's agent.
See Henson v. Blackwell, 4 Hare, 434.

(l) Ashley v. Ashley, 3 Simon's Rep. 149. There are, indeed, some cases in which
the insurers, — as the condition upon Avhich they allow an assignee some advantage
he would not otherwise have had, — impose on him the necessity of proving that he
is an assignee for value ; as, for instance, where they allow a policy, which would,
as against the insured, be avoided by his suicide, to be good in favor of an assignee
for value to the extent of his interest. See Cook v. Black, 1 Hare, 390.

(m) Halford v. Kymer, 10 B. & C. 724.

(n) Reed v. R. E. A. Compy., Peake, Add. Ca. 70.
32

498 JIERCANTILE CONTRACTS.

Insurance upon Lives.

Before the policy is effected, it is usual for the person whose
life is insured to subscribe a declaration concerning his age, health,
and other circumstances ; (o) this declaration is recited and incor-
porated by reference in the policy, at the end of which a proviso is
ordinarily inserted, declaring the policy to be void, in case the in-
sured should die upon the seas, or go beyond the limits of Europe,
without leave obtained, commit suicide,* or die by the hands of
justice, {p) or if the age of the assured exceed years, or

he be afflicted with any disease which tends to the shortening of
life, or, in case the declaration should contain any averment which
is not true. These are the usual conditions, but they are sometimes
varied to suit the objects of different insurers. In construing them,
it has been held that the condition which avoids the policy in case
of any untrue averment contained in the declaration is to be taken
literally, and that where it is inserted, the insurance becomes void,

(o) Tlie following is an example of the ordinary subjects of this declaration : —

1. Name of life to be assured.

2. Present residence and occupation.

3. Place and date of birth.

4. If he has had the small or cow-pox.

5. If at any time afflicted with gout, rupture, insanity, liver complaint, fits, or
convulsions.

6. If he has had symptoms of consumption, spitting of blood, asthma, or any
disease of lungs or cliest.

7. If now, and ordinarily enjoying good health.

8. If aware of any disorder or circumstance tending to shorten life, or to make
an assurance more than usually hazardous.

9. If in the army or navy.

10. Nanie and residence of ordinary medical attendant to be referred to. (See
Huckman v. Fernie, 3 M. & W. 505.)

11. Name and residence of friend for same purpose.

12. If the policy be for another person's benefit, that other person's name, re-
sidence, and occupation.

(jd) The provisions respecting suicide, or death by the hands of justice, are sel-
dom or never inserted, except where a man insures his own life.

* A provision in a life policy, that it is to be deemed void in case the assured shall
"die hy his own hand," imports a death by suicide: i. e., an act of criminal self-destruc-
tion. Accordingly, in an action on such policy, the underwriters will be liable
though it appear that the assured drowned himself, provided the act was done in a
fit of insanity. Breasted v. Farmers' Loan <fe Trust Co., 4 Hill, 73.

INSURANCE UPON LIVES. 499

Insurance upon Lives.

if any statement be in fact untrue, although the party makin"- it is
not apprised of its untruth ; {q) and so it will be void, if the person
whose life is insured, have had any of the complaints which the
declaration states he has not had, notwithstanding it may have been
an attack of so mitigated a character as could not have a tendency
to shorten life, (r) A condition that the person is in good health is
understood to mean that he is in re asonably good health, not that
he is free from the seeds of disorder. Such a condition has been
held to be complied with, though the party whose life was insured,
was troubled with spasms, cramps, and violent fits of the gout. (5)
Nor is it to be concluded, that a disease is one tending to shorten
life within the meaning of the policy, from the single fact that the
party afterwards dies of it, if it be not a disorder necessarily hav-
ing that tendency, {t) As to the provisions inserted in policies by
the insured on their own lives, (w) respecting death by duelling or
the sentence of the law, those are superfluous, for the policy would
be unavailable to the representatives of the insured in case of such
a death, even if they were not inserted ; and if a man insuring his
own life were to introduce a contrary provision, it would be void,
as being against public policy, {v)

The condition respecting death by suicide, or, as it is sometimes
expressed, " by his own hands," would likewise be superfluous, if
its meaning were confined to acts of felonious self-destruction ; but
in the recent case of Borradaile v. Hunter^ (w) which arose on a
policy containing a proviso in the latter form, the jury having
found that the assured " voluntarily threw himself from the bridge
into the water, with the intention of destroying life, but at the time
of committing the act he was not capable of judging between right

(q) Duckett v. Williams, 2 C. & M. 348 ; 4 Tjrwh. 240.

(r) Geach v. Ingall, 14 M. & W. 95.

(s) Willis V. Pole, Marsh 669. Ross v. Bradshaw, 1 Bl. 312.

{t) Watson V. Mainwaring, 4 Taunt. 763.

(m) a warranty that the life insured had not been afflicted with, nor is subject to
fits, is not broken by his having accidentally' had an epileptic fit in consequence of
an accident. Chattock v. Shaw, 1 M. &, Rob. 498.

(i') Amicable Assurance Society v. Bolland, revei'sing judgment of M. R., 4 Bligh,
194, Selw. N. P. 1043. See too the observations of Ld. Abinger, C. B., in W'aiu-
Wright V. Bland, 1 M. & Rob. 486.

(w) 5 M. & Gr. 639.

500 MERCANTILE CONTRACTS.

Insurance upon Lives.

and wrong," three judges of the Court of Common Pleas held the
policy to have been avoided : Tindal, C. J., however, expressed his
opinion that, regarding the context, the condition was limited to
cases of felonious suicide. He considered it quite clear that such
would have been its operation, if the words used had been " shall
die by suicide ;" and, in this construction, Erskine, J., seems to
have concurred. In the more recent case of Schwabe v. Clift^ {x)
which arose upon a policy containing these words, Cresswell, J., at
nisi jprius, told the jury that, in his opinion, " it must appear that
the deceased was a responsible moral agent at the time of his death,
in order to make the act committed by him amount to suicide ;"
and, if they thought he could not " at the time distinguish and un-
derstand the nature and quality of the act he was doing," they should
find a verdict for the plaintiff, which they did. Upon a bill of ex-
ceptions to this ruling, (?/) four of the judges in Cam. Scacc. held,
that these words included all cases of voluntary self-destruction ;
and that, if the deceased voluntarily killed himself, it is immaterial
whether he was at the time sane or not. From this decision, how-
ever. Pollock, C. B., and Wightman, J., dissented ; the question,
therefore, cannot be deemed to admit of no doubt.

The payment of the stipulated premium in the stipulated man-
ner is an invariable condition ; if it be broken, a subsequent receipt
of the premium by the insurance company's agent will not set up
the policy ; (2) the agent not being authorized to bind the company
by a fresh agreement to insure, though possibly a payment to an
agent having such authority, might be evidence of such an agree-
ment.

If there be no warranty or condition on the part of the insured,
the insurer is subject to all risks, unless he (a) can show a fraudu-
lent concealment or misrepresentation, (h) or a non-communication
of material facts known to the assured, (c) either of which will avoid

{z) 2 Cr. & K. 134. (y) Clift v. Schwabe, 2 Car. & K. Addendum,

(z) Acey V. Fernie, 1 M. & "W. 151.

(a) See Elkin v. Janson, 13 M. & "W. 655. Geach v. Ingall, 14 M. & W. 95.

(6) Stackpole v. Simon, Park, 648.

(c) Williams v. Duckett, 6 Car. & P. 4. Per Ld. Lyndhurst, C. B. Morrison v.
Muspratt, 4 Bing. 60. Huguenin v. Rayley 6 Taunt. 186. Geach v. Ingall, 14 M. 4
W. 95.

IJsSURANCE UPON LIVES. 501

Insurance upon Lives.

the policy.'^ It is the duty of the insured to disclose all materia,!
facts within his knowledge ; and, if the fact suppressed be material,
it signifies not whether the party did or did not believe it to be so,
its materiality being a question for the jury; (d) and a verbal mis-
representation vitiates the policy, although it be expressly stipu-
lated by its terms that it shall be void on untrue answers being
given to certain written inquiries, (e) It has been held, that a bill
in Equity will lie to have a fraudulent policy delivered up, but
that the Equity is better if the bill be filed during the continuance
of the life assured. (/) But semble, that no such bill would lie on
the ground of there being no insurable interest, (g) "Where one
person insures the life of another, the party whose life is insured,
if applied to for information, is, in giving it, impliedly the agent of
the party insuring ; who is, therefore, bound by his statements, and
must suffer if they be false, though he himself was not acquainted
with the life insured, (h) But it seems that he is only the agent of
the insured for the particular purpose of answering questions, and,
therefore, that his concealment of a mortal disease known to him-
self, but the existence of which was not involved in the inquiries
of the company, would not avoid the policy, if the existence of such
disease were unknown to the party insured, (j) It seems too that,

{d) Lindeman v. Des^orough, 8 B. & C. 586. Geach v. Ingal, iibl sup.

(e) "W"ainwright v. Bland, 1 M. & W. 32. As to the question, who is your usitai
medical attendant ? and the answer proper to be given to it, see Huckman v. Fernie,
3 M. <fe W. 505.

(/) Fenn v. Craig, 3 Y. & Coll. 216.

{()) Desborough v. Curlewis, 3 Y. <& Coll. 175.

(Ji) Everett v. Desborough, 5 Bingh. 503. See Aveson v. Lord Kinnaird, 6 East,
188. Swete v. Fairlie, 6 Carr. & P. 1. Williaias v. Duckett, cited ibid. 3. Von Lin-
denau v. Desborough, 3 Carr. and P. 353. Majnard v. PJiodes 5 D. & R. 266 ; 1 C.
& P. 360.

{i) Huckman v. Fernie, 3 M. &, "W. 505. Rawlins v. Desborough, 2 M. & Rob
328.

* The general principle was considered and affirmed in Vose v. Eagle Life and
Health Insurance Company, 6 Cush. Rep. 42, that if, in the representation on which
a life insurance is effected, a material fact is untruly stated or concealed, the policy
will be void, though no specific questions are asked respecting such fact, and tliough
such statement or concealment is the result of accident or negligence, and not design ■
provided a general question is put Avhich would elicit the fact.

502 MERCANTILE CONTRACTS.

Insurance upon Lives.

though the person whose life is insured have been afflicted with a
disease tending to shorten life, still if that disease was of such a
nature that he himself could not be conscious of what happened to
him while suffering under it (as in some cases of mental derange-
ment), his non-communication thereof would not vitiate the policy. (J)

U ) Swete V. Fairlie, ubi supra.

CHAPTEE VI.

INSURANCE AGAINST FIRE.*

By this contract, the insurer, in consideration of a certain pre-
mium, paid, either in gross, or at stated intervals, undertakes to
indemnify" the assured against damage to his property by fire, du-

* It is to be regretted that the author has not given more consideration to the
contract of insurance against fire, which has become one of great importance, not
only to mercantile men, but to the community generally. To supplj- this defect, we
have collected, under their appropriate lieads, the most important American decisions
relating to this subject.

1. As to the interest of the insured. — Any property liable to be injured by fire,
whether attached to land, as houses, buildings, (fee, or personal, as merchandise, fur-
niture, <fec., may be the subject matter of this contract. The insured must have an
interest in the property at the time of insuring, and at the time the loss happens. la
England, where at one time wager policies in marine insurances were allowed, the
courts refused to admit the same principle as to fire policies. Ellis on Ins. 21. Sad-
dlers' Co. V. Badcock, 2 Atk. 554-. Gilbert v. K American Fire Ins. Co., 23 "Wend. 43.
But as different persons may have different and distinct interests in the same pro-
perty, the interest of each may be insured. Thus, a mortgagor and mortgagee may
both insure the same building, or a general owner and a factor or commission mer-
chant, having a special property or interest for charges or commissions, the same
goods. Traders' Ins. Co. v. Robert, 9 Wend. 404. Columbian Ins. Co. v. Lawrence,
2 Pet. 25, 47, S. C, 10 Pet. 507. Carpenter v. Providence "Washington Ins. Co., 16
Pet. 495, 501, 505. Any actual interest, legal or equitable, is insurable. An interest
held under an executoiy contract, gives to the person claiming under it, while the
contract subsists, a substantial interest in the property, which may be insured. 2
Pet. 25, 46.

2. As to the parties. — Any person competent to make other contracts may make
this. Insurances are usually made by incorporated companies, but there is nothing
to prevent individuals from doing the same. As in the contract of marine insurance,
so in this, it may be effected by an agent. The insurance companies, of course, act
by their officers or agents. Care should be taken that the mode prescribed by their
charters be pursued ; otherwise the act may not be obligatory upon the company.
Head v. Providence Ins. Co., 2 Cranch. 127, 1 C. R. 371. Furnishing an agent with
policies already executed by the officei's of a company, and ready to be delivered to
any one who might wish to contract, after his name, the subject insured, extent of

504 MERCANTILE CONTRACTS.

Insurance against Fire.

ring a limited period of time, (a) It is necessary that the insured
should have an interest in the property protected, (b) and in case
of loss, he will only be able to recover to the extent of that inter

(a) A great variety of forms are adopted by the different insurance offices in fram-
ing their Jire policies. Some are indeed so worded that it is very difficult to deter-
mine who are the parties to be sued by the insured in case of loss, or even whether
any action whatever be maintainable upon the policy. See Andrews v. Ellison, 6
B. M. 199. — Alchorne v. Saville, ibid. 199, i?i nota. Gurney v. Rowlins, 2 M. <fe "W.
87.

(i) Stat. 14 Geo. 3, c. 48, cited in last chapter.

the risk, and date of the transaction had been inserted in the contract, have been
held to confer full authority upon the agent, so far as third persons ai'e concerned ;
and the company cannot, in such case, discharge themselves by setting up j^rivate
instructions, unknown to the p^rty who enters into a contract. Lightbody v. North
American Ins. Co., 23 Wend. 18, 23.

3. As to the contract. The ■policy, how cotistrued. — As stated by the author to be
the practice in England, so in this country, the different insurance companies have
adopted forms of fire policies different in some respects, though it is believed that
the most important clauses and conditions are alike in most of the forms in common
use. There seems to be no reason why the contract of fire insurance should not re-
ceive the same liberal construction which it is said by the author should be given to
that of marine insurance. And although the Superior Court of New York, (Savage,
'C. J.) in Fowler v. JStna Fire Ins. Co., 6 Cow. 677, a case in which the effect of a descrip-
tion of tlie property in a fire policy was involved, said, "This is not a case in which
equities should be considered. It is a sort of gambling — a speculating upon chances
— and the parties must be held strictly and literally to their contract ;" the same
court, in The Jefferson Ins. Co. v. Cotheal, 7 "Wend. 82, speaking of a fii-e policy, say,
"The contract of the pai'ties must have its fair and legitimate construction ;" and in
the case of McLaughlin v. "Washington Co. Mut. Ins. Co., 23 "Wend. 527, that the
clause in a fire policy requiring an account of loss to be furnished, " has alwaj's been
construed with great liberalit}'."

In relation to the construction of this contract, and particularly of the usual
clauses in fire policies, upon a proper observance of which so many important inter-
ests depend, it may not be out of place to insert some of the remarks of Mr. Justice
Story, in a case above cited, 16 Pet. 510, as to the clauses in fire policies respecting
notice of prior and subsequent policies, which may well apply to other clauses.
"The public, too," he says, "have an interest in maintaining the validity of these
clauses, and giving them full effect and operation. They have a tendency to keep
premiums down to the lowest rates, and to uphold institutions of this sort, so essen-
tial, in the present state of our country, for the protection of the vast interests em-
barked Ml manufactures, and on consignments of goods in ware^iouses. If these
clauses are to be construed with a close and scrutinizing jealousy, when they may be
complied with in all cases by ordinary good faith, and ordinary diligence on the

INSURANCE AGAINST FIRE. 505

Insurance against Fire.

est ; and there is this peculiarity incidental to the contract of in-
surance against fire, viz., that it is not assignable, (c) except with
the consent of the insurer.

Dart of the insured, the effect will be to discourage the establishment of fire insurance
companies, or to restrict their operations to cases where the parties and tlie premises
are within the personal observation and knowledge of the underwriters. Such a
course would necessarily have a tendency to enhance premiums, and to make it diffi-
ctdt to obtain insurances when the parties live', or the property is situate, at a dis-
tance from the place where the insurance is sought. But be these considerations as
they may, we see no reason why, as these clauses are a known part of the stipula-
tions of the polic}', they ought not to receive a fair and reasonable interpretation,
according to their terms and obvious import."

4. Representation and concealment. — The contract of insurance is one in which the
underwriters generally act on the representation of the assured ; and fair dealing re-
quires that he should state every thing which might influence and probably would
influence the mind of the underwriter, in forming or declining the contract. A mis
representation which is material to the risk, avoids the policy. Marshall, C. J.,
Columbian Ins. Co, v. Lawrence, 2 Pet. 49. It is said by Chancellor "Walworth, that,
after an examination of various learned treatises, which he enumerates, on the subject
of marine, fire, and life insurances, he finds them to concur in saying, that "misrepre-
sentation, in reference to insurance contracts, is a false affirmation as to some fact,
material to the risk ; which affirmation is made by the assured, or his agent, either
from a mistake as to the fact represented, or with a design to deceive the insurer."
Alston V. Mechanics' Mutual Ins. Co. of Troy, 4 Hill, 334. In the same opinion, he
says, that Marshall, a writer of very considei'able authority on the law of insurance,
speaks of two diff"erent kinds of representation, one of which he calls an affirmative,
and the other a promissory representation ; 1 Marshall, 450 ; and that it is said by
Ellis, that " a representation in insurance is in the nature of a collateral contract."
Ellis on Ins. 29. But the learned Chancellor denies that there is any distinction, or
that there is such a term known to the law of insurance as a promissory representation,
rendering the contract void, for the non-performance of a stipulation in the nature
of a collateral executory agreement, which the parties did not think proper to make
a part of the written contract. He says, " that a statement as to a future fact or
event, which is in its very nature contingent, and which the insurer knows the party
could not have intended to state as a known fact, but as an intention or expectation
merel}', if honestly made, and not with an intent to deceive, is not a collateral con-
tract or a promissory representation, which the assured is bound to see performed to
render his policy valid. But if the underwriter considers the statement material to
the risk, and is unwilling to insure at the contemplated premium without binding
the assured to the performance of it, as a condition precedent to his liability, he
should make it a part of the contract stated in the polic}'." 4 Hill, 340. And in
accordance with this opinion, in that case, where the insured, on applying for insur-

506 MERCANTILE CONTRACTS.

Insurance against Fire.

A misrepresentation or concealment of material facts, is as fatal
to this as to any other contract of insurance. To use the words of
Mr. J. Bayley, {d) " In all insurances, whether on ships, houses, or

{<!) In Lindenau v. Desborough, 8 B. & C. 586.

ance upon a building against fire, promised the underwriters, verbally, that if they
accepted the risk he would discontinue the use of a fireplace in the basement, and
use a stove instead thereof, but after obtaining the policy, omitted to perform his
promise, in consequence of which the building was burned — it was held, unani-
mously, by the Court of Errors of New York, reversing the opinion of the Supreme
Court, 1 Hill, 510, that the failure to comply with such promise was no defence to
an action on the policy. See also Bryant v. Ocean Ins. Co., 22 Pick. 200 ; Whitney
V. Haven, 13 Mass. 172; Allegre v. Maryland Ins. Co., 2 Gill & John, 136.

It should be observed, that Mr. J. Duer, in his treatise on Insurance, recently pub-
lished, adopts the distinction made by Mr. Marshall, of affirmative and promissory/ re-
presentations, and controverts the opinion of Chancellor Walworth, above referred
to. The distinction, he says, is clearly deducible from the cases, and " is sustained
by an irresistible weight of authority." 2 J. Duer, 657, 721, note 2; 749, note 6.
He cites, among other cases, Steel v. Lacy, 3 Taunt. 285 ; Feise v. Parkinson, 4 Taiint.
639; Edwards v. Footner, 1 Camp. 530; Driscol v. Passraore, 1 Bos. & Pull. 200;
Murray v. Alsop, 3 John Cas. 47 ; Bowden v. Vaughan, 10 East, 415.

" Generally speaking, insurances against fire are made in the confidence that the
assured will use all the precautions to avoid the calamity insured against, which
would be suggested by his interest. The extent of this interest must alwaj-s influ-
ence the underwriter in taking or rejecting the risk, and in estimating the premium.
So far as it may influence him in these respects, it ought to be communicated to him.
Underwriters do not rely so much upon tlie principles as on the interest of the as-
sured: and it would seem, therefore, to be always material that they should know
how far this interest is engaged in guarding the property from loss." Marshall, C.
J., Columbian Ins. Co. v. Lawrence, 2 Pet. 49. And in this case, where an offer for
insurance described the property as belonging to the insured, and stated it afterwards
to be their stone mill, and the proof showed that the^' held only one-half of one-third,
under a lease for three lives, renewable for ever, and one-half of the other two-thirds
as mortgagees ; and that the other moiety was held under a contract, the terms of
which had not been complied with, and which, if complied with, would give them a
title to two-thirds of that moiety only as mortgagees ; it was held that there was a
misrepresentation ; that a precarious title, depending for its continuance on events
which might or might not happen, was not such a title as that described in the offer
for insurance, construing the words of that offer as they are fairly to be understood ;
and that the question of the materiality of the misrepresentation should have been
submitted to the jury. This case came before the Supreme Court, 10 Pet. 507, and
the principles above stated were reaffirmed. But the decisions in Massachusetts and
New York appear to be somewhat in conflict with this case. While it is admitted,
&s said by Nelson, J., in Tyler v. -^tna Fire Ins Co, 12 Wend. 513, that the naturt

IXSURANCE AGAINST FIRE. 507

Insurance against Fire.

lives, tlie underwriter should be informed of every material circum-
stance within the knowledge of the insured, and the proper ques-
tion is, whether any particular circumstance was in fact material,
not whether the party believed it to be so." (e)

(e) Accord. Bufe v. Turner, 2 Marsh. 46 ; 6 Taunt. 338.

and extent of the interest of tlie insured may, in some instances, be material fticts in
making up an estimate of the risk and rate of premium, and upon general principles
a disclosure would seem to be required ; yet, it is added, "generally they cannot be
60 material as to justify a conclusion that they would have varied the premium."
And after examining the circumstances of the cases in those states in wliich a con-
cealment or misrepresentation in relation to the interest of the assured have been
held not to be material, it would seem scarcely possible to imagine a case in which
it would be so considered. Thus, in the case of Fletcher v. Commonwealth Ins. Co.,
18 Pick. 419, where an insurance was obtained on a building, without disclosing the
fact tliat it stood on the land of another person, under an agreement tei'minable at
the pleasure of such person, upon six months' notice, it was held that there was not
a concealment of a material fact. In Strong v. The Manufacturers' Ins. Co., 10 Pick.
40, the assured, in his application for an insurance on a house, stated it to be his own
property, but no inquiry was made by the insurei's as to the state of his title. The
house, in fact, had been mortgaged, and the equity of redemption had been seized in
execution. It was held that these circumstances were not material to the risk, and
that the statement in the application was not a misrepresentation. And in the ^tna
Fire Ins. Co. v. Tyler, 16 Wend. 385, S. C. 12 Wend. 501, it was held that a party in
possession of a dwelling-house, under a valid subsisting contract of purchase, although
he has not paid the whole consideration money, has an insurable interest ; and if he
applies for insurance, representing the house as fiis, and it is described in the policy
as his dwellinff-house, he is not guilty of a misrepresentation or breach of warranty, so
as to avoid the policy. See also Curry v. The Commonwealth Ins. Co., 10 Pick. 535.
lu 1 Phillips on Ins. 285, it is said, "The cases, on the whole, favor the doctrine
that the insured needs not to state that his interest in the building insured against
fire is a qualified or conditional one, unless inquiries are made on the subject. If
such inquiries are put, or if he voluntarily makes any such representation, his state-
ments must be true, or the policy will be void."

5. Description of the insured — The same effect, it seems, will be given to the
phrase "whom it may concern," -when inserted in a fire policy, that it has in a ma-
rine. Thus, where a policy insured two individuals by name, and then the words
"or whom it may concern" were added, and a clause was inserted in the policy that
the loss, if any occurred, should be paid to the individuals na.'ied, it was held that
an action might be maintained in their names, and that they were entitled to recover
the whole sum insured, although it appeared they were owners of but one-half of
the building insured, and that the other lialf belonged to a third person, not joined
as plaintiff. Jefferson Ins. Co. v. Cotheal, 7 Wend. 72.

6. Description of the Property. — In some insurance companies, and particularlj

508 ' MERCANTILE CONTRACTS.

Insurance against Fire.

It is necessary to be extremely accurate in describing the nature
of the property intended to be insured, in order that it may not fall
without the scope of the policy. For where a policy was effected

those on the imitual principle, inttrrogatories are propounded to the applicants for
insurance in relation to the condition, situation, value, and risk of the property to
be insured, to which -written answers are embodied in the application ; and these are
referred to in tlie body of the poliej-, and a proviso is inserted, that if the represen-
tations thus made do not contain a full and true exposition of all the facts and cir-
cumstances, in regard to the condition, situation, value, and risk of the property in-
sured, so far as the same are known to the applicants, and are material to the risk,
the policy shall be void.

It has been held, that the application for insurance, and representations made wnd
referred to as above stated, are legally embodied and adopted as part of the con-
tract, to the same effect as if they were recited and set forth at large in the policy.
But being termed representations in the policy, they are rather to be regaraed as
having the legal effect of representations than of warranties, though partaking in
some measure of the character of both. "They are like representations, in requir-
ing that the facts stated shall be substantially true and correct, and so far as they
are executorj', that they shall be substantially complied with ; but not like warran-
ties, in reqiiiring an exact and literal compliance. It is enough, therefore, if these
statements, relied on as the basis of the contract, are made in good faith and with-
out intent to deceive ; that they are substantially true and correct, as to existing cir-
cumstances, and substantially complied with, so far as they are executory and regard
the future." Houghton v. Manufacturers' Mutual Fire Ins. Co., 8 Mete. 114. And
thus, in this case, where among other answers in relation to the risk of fire, it was
stated that "no watch is kept in or about the buildings, but the mill is examined
thirty minutes after work," it was held that this representation of the usual practice
amounted to a condition or stipulation that it should be continued ; although it was
said, "an occasional omission, owing to accident, or to the negligence of subordinate
persons, servants, or workmen, not sanctioned nor permitted by the assured, or by
their superintendent, manager, or agent, might not be a breach or non-compliance."
8 Mete. 124.

But in the case of Burritt v. Saratoga Co. Mut. Fire Ins. Co., 5 Hill, 188, while it
is said by the Court (Bronson, J.) that "an express warranty is always part of the
contract, and a reference in the policy to a survey, or other paper, will not make
such paper a part of the contract, so as to change what would otherwise be a mere
representation into a warranty" — citing Jefferson Ins. Co. v. Cotheal, Y Wend. 72 ;
Snyder v. Farmers' Ins. Co., 13 "Wend. 92, S. C. 16 "Wend. 481. Delonguemere v.
Tradesmen's Ins. Co., 2 Hall, 589. 1 Marsh on Ins. 346, 350, 451. 1 Phil. Ins. 346, 347
— it is insisted that "these cases adnrit, what no one could well denj", tliat the policy
may so speak of another writing as to make it a part of the contract, although not
actually embodied in the policy." Citing Routedge v. Burrell, 1 H. Black, 254.
Worsley v. "Wood, 6T. R. 710. Roberts v. Chenango Ins. Co., 3 Hill, 501. And in
that case, the policy not only referring to the written application "for a more parti-
cular description" of the property insured, but " as forming a part of this policy," it

MAEITIME INSURANCK 509

Insurance against Fire.

on "stock in trade, household furniture, Unen^ wearing apparel,
and jDlate," the person insured not being a linen draper, this was
held not to protect linen subsequently purchased on speculation,

was held to be thus made part and parcel of the contract, and that the two instru-
ments must be read in the same manner as though they had been actually moulded
into one. And one of the conditions annexed to the policy being, that "if any per-
son insui'ing any property in this company, shall make any misrepresentation or con-
cealment in the application, d'c, such insurance shall be void and of no effect," it was
eaid, " Here the parties have, by their contract, placed a misrepresentation or con-
cealment, in relation to particular facts, iipon the same footing as a waiTanty. They
have agreed that misrepresentation or concealment shaJ avoid the policy, and we
have nothing to do with the inquiry, whether the fact misrepresented or concealed
was material to the risk." "Any concealment in the application avoids the policy."
5 Hill, 193. Accordingly, the application requiring the applicant for an insurance on
a building to state its "relative situation as to other buildings — distance from each, if
less than ten rods," and the insured having described five buildings which stood
within the specified distance, omitted to mention several others standing within the
same distance, it was held that the omission, however innocent, was fatal to the
policj', and this whether material to the risk or not.

It frequently occurs that in policies a description is given of the house or build-
ing insured, and questions have arisen in several cases as to the eff'ect of such de-
scription. In Catlin v. Springfield Fire Ins. Co., 1 Sumn. 434, the house was described
as " at present occupied as a dwelling-house, but to be occupied hereafter as a tavern,
and privileged as such." These words were held not to be a warranty that the
house should be so occupied, but a mere representation of the intention to occupy it
as a tavern, and to secure for it the privileges of the policy as such.

But in the case of Fowler v. The ^tna Fire Ins. Co., 6 Cow. 673, it was held that
the description of the property insured in a policy against loss by fire, is a warranty
that the property is as described; and if untrue in substance, tlie policy is void,
though the misdescription arise from mistake, and there be no fraud. Thus, where
a policy of this kind described the subject insured as the stock in trade of the in-
sured, contained in a two-story frame house Jilled iti with brick, and the house was
not so filled in, the policy was held to be void.

And in the case of "Wood v. Hartford Fire Ins. Co., 13 Conn. 533, it appears to
have been the opinion of the Court, that any statement or description, or any un-
dertaking on the part of the insured, on the face of the policy, which relates to tlie
risk, is a warranty. And whether this is declared to be a warranty, or is ascertained
to be such by construction, is immaterial ; in either ease it is an express warranty
and a condition precedent, And thus, in that case, where property was described in
the policy as "a paper-mill, which tlie insured owned at W., together with the ma-
chinery, wheels, gearing, <tc. ;" it was held that this description related to the risk,
and was consequently a warranty : this was considered evident, from the fact that
the paper-mills were enumerated in the memorandum of special rates. It was also
held, that if the property was not a paper-mill at the time of the loss, the warranty
was not kept, and the plaintiffs could not recover, although the change may hava

510 MERCANTILE CONTRACTS.

Insurance against Fire.

the word linen in the policy being taken to mean honsehold linen,
or linen used by way of apparel. (/) The insurance of an inn
keeper's ^Hnterest in the inn and offices''' does not cover the loss of

(/) Watchorne v. Langford, 3 Camp. 422.

diminished the hazard, and been effected without their knowledge or against their
•will. But, in this case, when the use of the paper-i.il] was discontinued, and a pair
of millstones added for grinding grain, the only change made being the removal of
the rag-cutter and duster, and the sviletitution of the grindstones, to be moved by
the same gearing and by the power of the same water-wheel — all the rest remaining
as it was, capable at any time of being emploj-ed in making paper — it was further
held, that the property was still, to all intents and purposes, a paper-mill, ready for
use, and that the warranty was duly kept.

7. Particular clauses. As to prior or subsequent insurances on the same property. —
Where the clause as to prior insurances, provided that "in case the insured shall
have alread}' any other insurance on the property hereby insured, not notified to this
corporation, and mentioned or indorsed upon this policy, then tliis insurance shall be
void and of no effect;" it lias been held that, at law, mere parol notice of another
insurance on the same property, is not sufficient; and that it was necessary in case
of any such prior policy, that the same should not only be notified to the company,
but should be mentioned in or indorsed upon the policy. "It can never be properly
said that the stipulation in the policy is complied with, when there has been no such
mention or indorsement as it positivelj' requires; and without which it declares that
the polic}' shall henceforth be void and of no effect." Carpenter v. Providence Wash-
ington Ins. Co., 16 Pet. 495. Tlie plaintiff in this case afterwards filed a bill in
equity, but the question whether a notice, not mentioned in or indorsed upon the
policy, would there be sufiicient, was not decided. 4 How. S. C. 185.

Where the clause as to subsequent insurances provided that "in case the insured
or the assigns of the insured shall hereafter make any other insurance on the same
property, and shall not with all reasonable diligence give notice thereof to this com-
pany, and have the same indorsed on this instrument, or otherwise acknowledged and
approved by them in writing, this policj' should cease and be of no further effect;"
and another insurance was effected, and at the same time a written notice was for-
warded to the secretary of the company, and, on the next day, the insured received
a letter from the secretary in these words, " I have received your notice of additional
insurance ;" it was held in an action upon the policy, that the letter imported both
an acknowledgment and an approval in meriting, within the meaning of the condition
as to further insurance, and that the plaintiff was therefore entitled to recover.
Potter V. The Ontario and Livingston Mut. Ins. Co., 5 Hill, 147. In this case it was
further held, that^ "making further insurance d;d not work a forfeiture of the policy,
unless the plaintiff neglected to give notice with all reasonable diligence, and there
is no pretence of any such neglect. On receiving notice, it was for the defendants
to say whether the contract should terminate or not; and until they made the elec-
tion, the policy continued in force. The policy was in full force at the time the lost
bajipened and the cause of action accrued." 5 Hill, 151.

INSURANCE AGAINST FIRE. 5U

Insurance against Fire.

profits sustained between the time of the destruction of the inn by
fire and its restoration. Such profits are, indeed, insurable, but
they must be insured qita profits, (g) If a building be described as

(g) In re Wright, 1 Ad. & E. 261.

If nothing is said in the policy as to the manner of notification, it may be by
parol. Thus, where it was provided in the policy that in case the assured had al
ready made any other insurance on the same property, not notified to the corporation,
the policy should be void ; and the conditions annexed further provided that all ap
plications for insurance should be in writing, d'c, but were silent as to notices; it was
held, that there was nothing requiring notice of a prior insurance to be inserted in
the application, and that a parol notice was therefore sufficient. McEwen v. Mont
gomery Co. Mut. Ins. Co., 5 Hill, 101. And it was further held in this case, that such
notice was binding on the company, tho:igh given to one of their travelling agents,
and though it never reached the company ; it appearing that the business of the
agent was to solicit insurances, make surveys, and receive applications, and that he
was notified while actually engaged in preparing an application for the policy in
question.

It appears to have been considered by the Supreme Court of Massachusetts, that
where a policy had been effected in one office, containing the usual clause against
double insurances, and afterwards a policy is effected in another office, containing
the same clause, and no notice is given to either company, that the second policy,
being wholly nugatory and of no effect, cannot be set up to defeat the first. Jack-
son V. Mass. Mutual Fire Ins. Co., 23 Pick. 418. And see also Stacey v. Franklin Fire
Ins. Co., 2 Watts & Serj. 544. But in a case before cited from 16 Peters, 495, the
Supreme Court of the United States seems to entertain a contrary opinion. In that
case, to avoid the consequences of a failure to give notice of a prior insurance on
the same property, it was insisted that such prior insurance had been procured by a
misrepresentation of material facts, was therefore null and void, and that no n'otice
of such prior insurance need be given ; but the Court, expressing a doubt whether
a party to a policy can be allowed to set up his own misrepresentations to avoid the
obligations deducible from his own contract, decided, that because a policy is pro-
cured by misrepresentations of material facts, it is not therefore to be treated, in the
sense of the law, as utterly void af) initio. It is merely voidable, and maj^ be avoided
by the underwriters upon due juof of the facts; but until so avoided, it naust be
treated, for all practical purposes, as a subsisting policy. And that notice of avoid-
able policy must be given to the underwriters ; for such a case falls within the words
and the meaning of the stipulations in the i^olicy. It is a prior policy, and it has a
legal existence until avoided. 16 Pet. 509. And the Court proceed to say, " Indeed,
we are not prepared to say that the Court might not have gone further, and have
held that a policy — existing in the hands of the insured, and not utterly void u[)on
its very face, without any reference whatever to any inti'insic facts — sliould Iiave
been notified to the underwriters; even although by proofs, affotdfd by sucli ex-
trinsic facts, it might be held in its very origin and concoction a nullity." 16 Pet
510.

512 MERCANTILE CONTRACIS.

Insurance against Fire.

of one class, instead of another, when a larger premium would
have been required for that other, the policy becomes completely
void, {h)

(/t) Newcaslle Fire Ins. Company v. M'Morran, 3 Dow. 255. See Doe d. Pitt v.
Laming, 4 Camp. 73. Dobson v. Sotheby, M. & M. 90. Eisks are commonlydivided
by the insurance offices into three classes: 1st. Common Lis-urances ; 2dly. Hazard-
ous ; 3dly. Doubly Hazardous. There are, besides, a few cases of what is called Ex-
traordinary Risl", ex. gr., those of sugar refineries : these are generally excluded from
tho table of premiums, and made subjects of special agreement. Cash, and securities
for cash, are, I believe, seldom insurable on any terms.

This question has recently come up before the Supreme Court of Massachusetts
again, and the Court, on re-examination, has adhered tc the doctrine before pro-
pounded. Clark V. New England Mutual Fire Insurance Company, 6 Cush. Rep. 342.
The case in 16 Peters, 509, is examined, and shown to be inconsistent with the deci-
sion of Judge Story in the same case on the Circuit, in 1 Story Rep. 57.

It has been already observed, that persons holding different interests in the same
property may severally insure, and it appears to be settled, that no notice of a prior
or subsequent insurance on the same property made by a third person on account of
a distinct interest need be given. Tyler v. Mtna. Fire Ins. Co., 12 Wend. 507, 515 ; S.
C. 16 Wend. 385. Jackson v. Massachusetts Mut. Fire Ins. Co., 23 Pick. 418. And
where the clause provided that notice should be given by persons insuring property,
" of any other insurance made on their behalf on the same," it was held to mean one
that should be effected at the instance and upon the authority of the assured ; and
that an insurance on his account by another without his knowledge, authority, or
subsequent recognition, would not be embraced under such a clause. Franklin Ins.
Co. V. Drake, 2 B. Monroe, 47.

But where a party has an interest, whether legal or equitable, in another policy
on the same subject matter insured, it seems that notice should be given. There ap-
pears, however, to be some conflict of opinion on the question, whether a mortgagor,
who having an insurance on the property mortgaged assigns it to the mortgagee, is
still so far interested in the policy assigned as to require him, in obtaining another
insurance on the same property, to give notice of the one assigned to his mortgagee.
It appears to have been considered by the Supreme Court of the United States, 16
Peters, 500, 502, that where the policy is assigned as a collateral security, the mort-
gagor still retains such an interest in it that he must give notice of its existence.
But see Traders' Ins. Co. v. Roberts, 9 Wend. 404, 474; S. C. 17 Wend. 631, 640; 23
Pick. 418.

There is another clause usually added in relation to the effect of prior or subse-
quent insuratices. This clause is generally to this effect, that "in case of any other
insurance upon the property hereby insured, the insured shall not, in case of loss or
damage, be entitled to demand or recover on this policy any greater portion of the
loss or damage sustained, than the amount hereby insured shall bear to the whole
amount insured upon said property."

The effect and object of this clause, and also the law as to a double insurance.

INSUKANCE AGAINST FIRE. 513

Insurance against Fire.

But, thougli the most appropriate phrase be not employed, yet,
if the description of the property be substantially correct, and a
more accurate statement would not have varied the premium, the
error is not material, {i)

(i) R. & M. 92. See Doe d. Pitt v. Laming, 4 Camp. 73.

were considered and stated by Cowen, J., in a recent case. "A man may insure the
same subject against fire in several offices, to any amount, due notice being given to
each, and the fact noted on the respective policies. The effect is, that each office
then stands in the relation of co-surety with the other, according to the several
amounts for which they undertook, just as if they had all underwritten the same
policy. The several policies are considered as one. Stopping here, therefore, the
insured may sue and recover on one or more of them to the extent of his entire loss,
if the sums subscribed will cover it; and those who pay the loss may compel con-
tribution for the payment from the others, in the proportion that each of the sums
subscribed by them bears to the whole amount of subscriptions. To avoid this cir-
cuity, the clause in question was introduced. By this, the double office of recovery
and contribution is performed in a single action ; the defendant being allowed to re-
coupe the same amount which he must formerly have recovered over against those
who stood by his side." — "The clause in question Avas probably intended to substi-
tute proportional abatement for contribution, in all those cases in which the latter
would otherwise have been required by the common law ; and is perhaps sufficient
to answer that end." Howard Ins. Co. v. Scribner, 5 Hill, 29-8, 301.

But, say the Court in the same case, 5 Hill, 302, none of the numerous books cited
show that the right to contribution has ever been supposed to arise without the
subject matter insured being exactly the same in each policy. It is not enough that
the insured be the same person. He may take policies on different things, or different
risks pertaining to the s.ame thing, or in different interests in respect to the same
thing. In each case the demand for a loss against one insurer is in no way affected
by the subscription of another. Citinrf Godin v. Lond. Assu. Co., 1 Burr. 489, 495;
1 "W. Bl. 103, 105, S. C. ; Park on Ins. 375. And it was accordingly held, in an action
on a policy containing the clause above stated, and insuring $1000 on fixtures and
$3000 on sfocl; though it appeared that the plaintiff had procured another policy
insuring $5000 on the stock and fixtures, as one parcel, that it was not a double in-
Bm'ance, and that the underwriter was liable to the same extent as if the latter policy
had never existed.

In the case of Harris v. Ohio Ins. Co., 5 Ohio, 461, the clause was in this form:
"Persons insuring property at this office must give notice of any other insui-ance
made on their behalf on the same, and cause such other insurances to be indorsed on
the policy ; in which case, each office shall be liable to the payment of a rateable pro
poi'tiou of any loss or damage which may be sustained. And unless such notice is
given, the insured will not be entitled to recover, in case of loss." It was held that
this clause extended to a case of subsequent as well as previous insurance. This de-
cision was followed in Stacy v. Franklin Fire Ins. Co., 2 Watts & Serj. 506, 544. The
33

514 MERCANTILE CONTRACTS.

Insurance against Fire.

And where goods were described as in the dwelling-house of the
insured, and it turned out that the insured had but one room as a
lodger, in which the goods were, it was held that they were correctly

case of Harris v. Ohio Ins. Co., was decided against the plaintiff for a failure to give
notice of a subsequent insurance, but in the conclusion of the opinion of the Court, it
is said, "An objection is stated, that the plea does not sufficiently show the second
insurance was a double insurance, the one being upon the goods, and the other on
the store and goods. The rule is correct, that to constitute a double insurance, the
same risks must be covered by the same policj^, for the benefit of the same person.
An insurance against one -peril does not diminish the ownei-'s interest as to other
pei'ils. If property be insured to its value against capture, the owner has the same
amount of honorable interest against the perils of the sea. (Phil, on Ins. 326; 11
Johns. 238; 5 Serg. & Rawle, 513.) But where the second policy insures the same
risks, for the benefit of the same person, it falls within Mansfield's definition,
(1 Burr. 489,) and is, to any extent, a double insurance. The plea in the present case,
shows the goods are protected by the second policy from perils by fire ; it is, there-
fore, a double insurance of the same risks." This case was referred to in the case of
the Howard Ins. Co. v. Scribner, 5 Hill, 303, and it is said of it, that it " did not raise
the question of contribution or abatement The first policy was declared void, be-
cause notice of the second was not given. It comes out in the course of the opinion
that one was on ffoods and the other on store and goods, but the latter might have
been for separate sums on each."

8. Clause as to increase of risk, in use of huilding. — To policies of fire insurance,
conditions are generalh^ annexed and referred to in the policy ; but whether so re-
ferred to by express words or not, if annexed to and delivered with the policy, they
are to be deemed prima facie a part of it. Roberts v. Chenango Co. Mut. Ins. Co.,
3 Hill, 501. These conditions usually denominate certain goods not hazardous, and
certain trades and goods, <fec., hazardous, and in some forms, certain others extra-
hazardous, and a clause is generally inserted in the policy, providing against using
the building insured for carrying on any trade, <fec., or storing any goods, Ac, deno-
minated in the conditions to be hazardous or extra-hazardous, unless provided for or
agreed to by the company. In some conditions annexed to policies, there is also a
memorandum, to the effect that certain buildings used for certain trades, &c., will be
insured at special rates of premium.

Where the clause in the policy provided, that in case the building " siiould be
appropriated, applied, or used to or for the purpose of carrying on or exercising
therein any trade, business, or vocation denominated hazardous, extra-hazardous, or
specified in the memorandum of special rates, Ac.," the policy should be of no effect,
BO long as the building should be so appropriated, applied or used ; and the memo-
randum specified "houses building or repairing;" it was held, that these words,
taken in connection with the policy, must be understood in reference to the carrying
on the track of house-building or house-repairing in or about the building insured,
and that they did not apply to repairs upon the building itself; and that the fact
that the building was undergoing repairs at the time of its destruction by fire, did
ttot prevent a recovery. To give the clause that effect, say the Court, would "cut off

INSURANCE AGAINST FIRE. 515

Insurance against Fire.

described within a condition, that "the liouscs, bnihlings, and otlier
places where goods are deposited and kept, shall be truly and ac-
curately described ;" such a condition relating to the construction

all right of making repairs, however proper and necessary ; a construction that should
not be admitted, except upon the most clear and explicit terms." Grant v. Howard
Ins. Co. of New York, 5 Hill, 10.

It may, however, be remarked, that the words used in the conditions annexed m
some of the forms of policies, would scarcely bear the construction given in tiiis
case; and it would, perhaps, be the safer plan to have the privilege of repairing in
dorsed on the policy'.

The enumeration of certain trades or kinds of business, as prohibited on the
ground of being hazardous, is an admission that all other kinds are lawful under tlie
contract. Therefore, the trade or business of a grocer not being mentioned in the
conditions, was held not to be prohibited. And not being prohibited, the ordinary
incidents of that business, the right to keep a grocery store and conduct it in the
usual manner, by keeping on hand for retail articles usually kept in such stores, were
allowable, although some of the articles were those denominated hazardous; the
keeping them for such purpose not being a using or appropriating the building for
the purpose of storing those articles within the meaning of the policy. And thus,
where oil and spirituous liquors were denominated hazardous in the conditions, the
keeping them by a grocer in quantities in the cellar, from which the stock in the
store was from time to time replenished for the purpose of selling out by retail, was
held not to be a storing, prohibited by the policy. N. Y. Equitable Ins. Co. v. Lang-
don, 6 Wend. 623.

And in this case, it was said by the Judge, Sutherland, in delivering the opinion
of the Court, that the word storing, as used in the policy, means "a keeping for safe
custody-, to be delivered out in the same condition, substantially, as when received ;
and applies only where the storing or safe keepmg is the sole or principal object of
the deposit, and not where it is merely incidental, and the keeping is only for the
purpose of eonsumption." 6 Wend. 628.

In the case of Duncan v. Sun Fire Ins. Co., 6 Wend. 488, where the question was
whether, under the peculiar form of the conditions, gunpowder was among the articles
denominated extra-hazardous, and privileged in the policy, and it was so decided to
be, the point was also raised, whether the buildings being in the possession of
tenants, the use of them for storing an article prohibited, without the knowledge or
agenc}- of the insured, prevented his recovery on thfe policy. And in relation to
this point, it was said, by tlie Court, Savage, C. J., " Whether the powder was there
with tlie knowledge or agency of the plaintiff, seems to me not very material. The
absence of agency or knowledge, on the part of the plaintiff, excuses him from any
imputation of fraud, or an intention to violate his contract. The policies say nothing
about the knowledge or agency of the plaintiff in storing articles therein prohibited,
but the contract is in substance, that if the building shall be used for storing articles
not privileged to be there, then, so long as they shall be so used, the policies shall
cease and be of no force or effect. The plaintiff could not be supposed to know what
urticles were deposited in all these buildings, they being let to different persin;s,

51G MERCANTILE CONTRACTS.

Insurance aaiainst Fire.

of the house, not to the interest of the parties in it. (j) And where
the policy was effected on premises " lohere no fire is kept and nc
hazardous goods deposited^'' these words were held to mean hahitu-

(j) Friedlander v. L. A. Compy., 1 M. & Rob. 171.

but -whether he knew that there was powder in the stores or not, if the buildings
were used in a manner prohibited by the policy, the liability of the defendants
ceased." 6 Wend. 493.

9. As to increase of risk, by addition to, alteration of building, etc. — Whether the
risk is materially increased by an addition to, or alteration of a building, or othei
circumstance, where the clause in the policy or the conditions annexed, as is some-
times the case, provide generally against a material increase of the risk, is a question
to be submitted to the jury as a matter of fact. Grant v. Howard Ins. Co. of New
York, 5 Hill, 10. Stebbings v. Globe Ins. Co., 2 Hall, 632. Stetson v. Massachusetts
Mut. Fire Ins. Co., 4 Mass. 330. Jefferson Ins. Co. v. Cotheal, 7 Wend. 72. In this
last case, where an insurance was effected upon a steam saw-mill, and subsequent to
the policy being underwritten, the boiler, which was placed on the outside of the
mill, was inclosed by a frame building and covered over with a roof, it was held,
that evidence of the opinions of underwriters who had not seen the premises, and had
no particular science in the construction of such buildings, was not admissible to
show that the risk was materially increased by such additional building ; whether
the risk was thereby increased not being a matter of skill or science, but simply a
question of fact, which the jurors were as competent to decide as the witnesses.

10. Clause as to preliminary proofs, notice, account of loss, <i:c. — This clause, it is
said, has always been construed Avitli great liberality, as the party must necessarily
often make out the account under embarrassment arising from loss of books, bills of
parcels, <fec. The clause requires only reasonable information to be given, so that
the company may be enabled to form some estimate of their rights and duties, before
they are obliged to pay. McLaughlin v. Washington Co. Mut. Ins. Co., 23 Wend.
525, 527. Lawrence v. Ocean Ins. Co., 11 John. 240, 260. In the usual form of this
clause there is nothing which makes it necessary for the insured to state the nature
of his interest in the affidavit, which forms a part of the preliminary proofs. Gilbert
V. N. American Fire Ins. Co., 23 Wend. 43.

In a recent case, where the objection was taken that the certificate required by
this clause, was not given by the magistrate or notary public 7}iost contiguous to the
place of fire, and it appeared that the certificate was given by a magistrate who re-
sided three or four blocks north of the place of the fire, and kept his office two or
three blocks south, usually passing it several times daily; that another magistrate
lived directly across the street from the fire, but whether nearer than the office of
the former was not stated, and that a notary public resided within a block and a
half of the place ; Nelson, Chief Justice, after remarking that the office or place of
business of the magistrate should be regarded in ascertaining the magistrate most
contiguous, within the meaning of the conditions, further says, "It seems the
residence of a notary happens to be a few feet nearer the fire than the office of the
judge, and we are asked to go into a nice calculation of distances, and settle the

INSURANCE AGAINST FIRE. 517

Insurance against Fire.

ally kept and hahitualhj deposited, so that the policy Avas not vitiated
by bringing a tar barrel and lighting a fire, in order to effect re-
pairs, in consequence of which the loss occurred, {k) A subsequent

{k) Dodson v. Sothebj-, M. & M. 90.

point upon the laws of mensuration. De minimis, etc., is a sufficient answer to this
objection. The spirit of the condition requires no such matliematical precision from
the assured. Its object is completely secured by the proximity of the certifj'ing
magistrate." Turley v. North American Fire Ins. Co., 25 Wend. 347, 378. The con-
cluding part of the opinion of the Court in this case in relation to that part of the
certificate of the magisti-ate, as to his acquaintance vMh the character and circumstances
of the insured, and the duties of the officers of insurance companies in reference to the
prelhninary proofs, is worthy of attention and should be inserted. "As to the form
of the certificate. It is said that the magistrate does not certifj- that he is acquainted
with the character and circumstances of the assured, &c. Tlie certificate is not as
particular in this respect as is required by the terms of the condition ; and yet it is
as full as may be practicable in many cases. The magistrate * most contiguous' may
not always be personally acquainted with the character of the claimant, and must
rely upon inquiry, and proof produced, as in this case, for the requisite knowledge.
I prefer, however, placing the answer to the objection here, mainl}-, upon the refusal
of the agent to .show the preliminary proofs to the party when asking to see them
with a view to their correction. It appears that he was repeatedly called upon for
that purpose, and as often refused sight of them. It is true he had before trans-
mitted written objections to tliese proofs ; but they were quite indefinite in respect
to the certificate, and did not advise as to the particulars in which it fell shoi't. No
copy had been kept by the assured, and it was important, therefore, to examine the
original with a view to a correction. Indeed, the agent when thus directly called
upon, in fair dealing, should not only have produced the papers, but pointed out the
particulars in respect to which he considered them deficient. So liberal is the
practice of the offices in England, saj's Mr. Ellis, (Ellis on Ins. 62,) that upon appli-
cation after the fire, they usuall}^ furnish the assured with the necessary information
for proving the loss. It certainl}' becomes all at least to tlirow no embarrassments
m the way; and surelj" there should be no contrivance to mislead the claimant when
he is honestly endeavoring to comply with the conditions." 25 AVend. 378.

But in some other cases, this clause has been construed more strictly, and a com-
pliance with its terms is required as a condition precedent. Tlius, in Ledbetter v.
./Etna Ins. Co., 13 Maine, 265, where it appeared, that the plaintiff had applied,
successively, to the two nearest magistrates, who declined giving the certificate, but
for what cause or reason was not shown, and he then applied to a third, who was
the next nearest, and obtained the certificate relied on, which was in due form ; it
was held, that the certificate of the nearest magistrate was a condition precedent,
which the plaintiff was bound to procure, and without which he could not recover
Worsley v. "Wood, 6 T. R. 710, was cited, and relied on as an analogous case.

The law is well settled, that if there be a formal defect in the preliminary proo^
which could have been supplied had an objection been made by the underwriters t*

518 MERCANTILE CONTRACTS.

Insurance asrainst Fire.

change in the nature of the business, carried on upon the premises,
in the absence of fraud and any express condition to the contrary,
during the period covered by the policy, will not avoid it. (I)

{I) Pim V. Reed, 6 M. & Gr. 1.

payment on that ground, for instance, if they do not call for a document, or mak*
objection on the ground of its absence or imperfection, tut put their refusal upon
other grounds, the production of such further preliminary proof will be considered
as waived. McMasters v. Westchester Mut. Ins. Co., 25 Wend. 319, 382. ^tna Fire
Ins. Co. V. Tyler, 16 Wend. 401. It is, however, said by Chancellor Walworth, in
the last ease, that the Supreme Court of the United States thought differently on this
question when the case of The Columbian Ins. Co. v. Lawrence, 3 Pet. 25, was first
before that Court. And in that case the Court do say, "We mow of no principle or
usage which requires underwriters to specify their objections, or which justifies the
inference that any objection is waived. AVe know of no principle by which this
preliminary proof should be separated from the other proofs which were required to
sustain the claim, or its insufficiency be remarked to the assured." But it is observed
by Chancellor Walworth, that the subsequent liistory of that case shows the good
sense of the rule above stated. Immediately after the reversal of the judgment,
partly on account of a defect in the certificate, a new one was procured, and after-
wards, when the case again came before the Court, the delay, which was for more
than five years, was held under the circumstances not to be unreasonable, the non-
production sooner of the proper certificate having been occasioned not by any laches
properly imputable to the insured, but by the omission of the company to give notice
of tlie defect, and cf the mistaken confidence placed by the party in the company
itself. "If the companj-," say the Court, "had contemplated the objection, it would
have been but ordinary fair dealing to have apprised the plaintiff of it; for it is now
obvious that the defect might have been immediately supplied." 10 Pet. 507, 514
See also Cornell i'. Leroy, 9 Wend. 163. Daws v. North River Ins. Co., T Cow. 462.
Heath et als. v. Franklin Insurance Company, 1 Cush. Rep. 258.

The particular account of the loss or damage required to be given by the insured,
as a part of the preliminary proofs, has been held to mean a particular account of
the articles lost or damaged, and not to refer to the manner and cause of the loss.
Catlin V. Springfield Ins. Co., 1 Sumn. 434.

11. Asuignment of policy or interest. — It is said by the author, page 50.5, that
"there is this peculiarity incidental to the contract of insurance against fire, viz.,
that it is not assignable, except with the consent of the insurer." It is said \>y
Chancellor Kent, 3 Kent's Com. 375, that "fire policies usually contain a prohibition
against the assignment of them, without the previous consent of the company. But
without this clause, they are assignable in equity, like any other chose in action ;
though, to render the assignment of any value to the assignee, an interest in the
subject matter of the insurance must be assigned also, for the assignment only covers
such interest as the assured had at the time of the assignment." In the recent case
of Wilson V. Hiil, 3 Mete. 68, it is said by tlie Court, Shaw, C. J., "An insurance of
buildings against loss by fire, although in popular language it ma}- be called an in-

IXSURAXCE AGAINST FIRE. 510

Insurance against Fire.

Every warranty or condition inserted in the policy, or incor-
porated into it by reference from tlie printed proposals (whicli are
considered parcel of the contract), must be strictly and literally

Burance of the estate, is in effect a contract of indemnity, 'with an owner, or other
person having an interest in the preservation of the buildings, as mortgagee, tenant,
or otherwise, to indemnify him against any loss which he may sustain, in ease they
are destroyed or damaged by fire. If, therefore, the assured has whollj' parted with
his interest, before they are burnt, and they are afterwards burnt, the underwriter
incurs no obligation to pay anybody'. The contract was to indemnify the assured;
if he has sustained no damage, the contract is not broker^ If, indeed, on a transfer
of tlie estate, the vendor assigns his policy to the purchaser, and tliis is made knowa
to the insurer, and is assented to bj^ him, it constitutes a new and original promise
to the assignee, to indemnify' him in like manner, whilst he retains an interest in the
estate; and the exemption of the insurer from further liability to the vendor, and
the premium already paid for insurance for a term not yet expired, are a good con-
eideration for such promise, and constitute a new and valid contract between the
insurer and the assignee. But such undertaking will be binding, not because the
policy is in any way incident to the estate, or runs with the land, but in consequence
of the new contract." Citing Lynch v. Dalzell, 3 Bro. P. C. 1st ed. 497. The Saddlers'
Co. V. Badcock, 2 Atk. 554. Marshall on Ins., 3d ed. 800-807. Carroll v. Boston
Marine Ins. Co., 8 Mass. 515. JStna Fire Ins. Co. v. Tyler, 16 Wend. 397.

"These considerations, however, do not apply to a case where the assured, after
ii loss, assigns his right to recover that loss : it would stand on the same footing as
the assignment of a debt, or right to recover money actually due, which, like the
assignment of any other chose in action, would give the assignee an equitable in-
terest, and a right to recover in the name of the assignor, subject to set-off and all
other equities." 3 Mete. 69. And even where the policy contains a clause avoiding
it, in case of assignment without consent, it has been held that such clause has no
application to an assignment made after the loss has occurred. Brichta v. X. Y.
Lafayette Ins. Co., 2 Hall, 372. 2 J. Duer on Ins. 65.

The opinion expressed in the case of Davis v. Hill, 3 Mete. 68, as to the effect of a
transfer of the property insured before a loss has occurred, was confirmed by the
opinion of the Supreme Court of the United States, in the case of Carpenter v. Provi-
dence Washington Ins. Co., 16 Peters, 495, 502. But the doctrine laid down in the
former opinion, in relation to the assignment of a policy of insurance, and its result
on the rights of the parties, does not appear to have been followed in the latter case,
or in the remarks made by Mr. Justice Story in delivering the opinion of the Court
After adverting to the distinction between an insurance of the interest of a mortgagor
and mortgagee, Mr. Justice Story, in the case last cited, 16 Pet. 501, proceeds to say,
" If, then, a mortgagor procures a policy on the property against fire, and he after-
wards assigns the policy to the mortgagee, with the consent of the underwriters,
(if that is required by the contract to give it validity,) as collateral security, that
assignment operates solely as an equitable transfer of the polic}-, so as to enable the
mortgagee to recover the amount due in case of loss; but it does not displace the in-
terest of the mortgagor in the premises insured. On the contrary, the insurance ii

520 MERCANTILE COXTRACIS.

Insurance against Fire.

observed. Thus, where it was stipulated in the proposals, that loss
money should not be payable till the insured should have produced
a certificate of character from the minister of the parish, it was held

still his insurance, and on his property, and for his account. And so essential is this,
that if the mortgagor should transfer the property to a third person, without the
consent of the underwriters, so as to divest all his interest therein, and then a loss
should occur, no recovery can be had therefor against the underwriters, because the
assured has ceased to have any interest therein, and the purchaser has no right or
interest in the policy."

The apparent conflict between these remarks and those before cited, from 3
Metcalf, 68, may perhaps be reconciled, if it can be considered that a different result
would follow the transfer of the policy, in the case of a mortgagor and mortgagee,
from that in the case of a vendor or vendee. See also Traders' Ins. Co. v. Robert, 9
Wend. 404, 474; S. C. 17 Wend. 631.

In several cases in New York, the question has arisen as to the right of the
assignee of a fire policy to sue in his own name. Tliis has been permitted in some
cases, and indeed required, but only on the ground that it was so provided by an ex-
press provision in the charter of the company. Independent of any such provision,
it appears to have been considered and held, that the assignee of a fire policy stood,
in this respect, on the same footing as the assignee of any other personal contract.
Granger v. Howard Ins. Co., 5 Wend. 200. Ferris v. N. American Fire Ins. Co., 1 Hill,
71. Jessel V. Williamsburgh Ins. Co., 3 Hill, 88. Smith v. Saratoga Co. Mut. Fire Ins.
Co., 1 Hill, 497. Now, if, on the assignment of the policy with the consent of the
underwriters, it becomes a new contract upon a new consideration, as is said in Davis
V. Hill, 3 Mete. 69, it would seem that the action not only might, but ought to be
brought in the name of the assignee.

Indeed, if tto principles can be considered settled, as stated in some of the
authorities before cited — 1. That there cannot be a valid and effectual assignment
of a fire policy, before loss, unless it be accompanied by a transfer of an interest in
the property insured ; and, 2. That in no case can such assignment be made without
notice to, and the consent of the underwriters, whether such consent be required by
the policy or not — it would seem to follow that difterent considerations would apply,
in the case of such assignment, from those applicable to the assignment of an
ordinary personal contract. A fire policy is admitted to be a personal contract of
indemnity : when assigned, is it an assignment of the riglit to recover the loss or
damac-e which may be ^istained by uie assiynor, on the breach of such contract of
indemnity ? or is it a transfer to the assignee of tlie same right of indemmty as to the
interest in the property insured, acquired b}' liim at tlie time of the assignment, as was
before held by the assignor? If it be the latter, it may well be said to be a new
contract, necessarily requiring the assent of the insurers, on the breach of which the
assignee would be entitled to sue in his own name ; and that no disposition of the
interest in the property, whether legal or equitable, retained by the assignor at the
time of the assignment, could affect the rights of the assignee.

In relation to the clause usually inserted in fire policies, restrictive of an assign-
meutj it was held, in the case of Smith v. Saratoga Co. Mut. Fire Ins. Co., 1 Hill, 497,

INSURANCE AGAINST FIRE. 521

Insurance against Fire.

that he could not recover, even though the minister should have
wrongfully refused to grant such certificate ; for that if a man un-
dertakes for the act of a stranger, he must see it done, (m) A con-

(m) "Worsley v. "Wood, 6 T. R. 710. See also Salvia v. James, 6 East, 571. Rout-
ledge V. Burrell, 1 H. Bl. 254. Oldman v. Bewicke, 2 H, Bl. 577, n. Tarleton v.
Staniforth, 5 T. R. 695 ; 1 B. & P. 471. Levy v. Baillie, V Bingh. 349.

that where the clause "was in this form — "The interest of the assured in this policy
is not assignable, without the consent of said company in writing ; and in case of any
transfer or termination of the interest of the assured, either by sale or otherwise,
without such consent, tliis policy shall, thenceforth be void and of no effect" — an as-
signment of the policy, without consent, was equally fatal as an assignment or sale
of the subject insured — that tlie clause does not merely nullify the assignment, but
operates on the policy. The insurance, in this case, was made by a mutual insurance
company ; and after they had notice of the assignment, assessments were made and
collected on the premium note, and when the case again came before the Court, 3
Hill, 508, it was contended that, by these acts, the company waived the forfeiture,
and affirmed the continuance of the policy ; but it was said by Bronson, J., that this
doctrine only applied where the act rendered the contract voidable, and that the
parties having " in the strongest terms declared that the policy shall immediatel}",
and without any act on the part of the company, become absolutely void, it is
difficult to see how any thing short of a new creation could impart vitality to this
dead body."

12. Re-insurance. — There is no difference, in principle, between the insurance
against loss by fire or the perils of the sea. Re-insurance is a valid contract at the
common law, and there is no principle of public policy which forbids an insurer to
seek an indemnity by means of a re-insurance, either in whole or in part, on the
same risk. The risk which he has assumed in relation to the subject, is an insurable
interest. Re-insurance is not a wager, but a contract of indemnity. W. Y. Bowery
Fire Ins. Co. v. New York Fire Ins. Co., 17 Wend. 359, 362.

In this case it was held, that under the general powers conferred by a charter to
make contracts of insurance, and all kinds of insurance, an insurance company is
authorized to make re-insurance, which operates not upon the risk, but upon the
property covered by the original policy.

And it was also held, that an underwriter obtaining a policy of re-insurance is
bound to communicate such infoi-mation as he possesses in reference to the character
of the party assured ; and if he omit to do so, whether from misapprehension of the
probable effect of such communication, when made, or from design, and the infor-
mation be material to the risk, or to the amount of the premium to be charged, the
policy of re-insurance will be void.

13. As to the loss. — In their ordinary form, fire policies are what are termed open
policies, and not valued, though it is said they are not invariabl}^ so. 2 Phil, on Ins.
40. In the case of Borden v. Ilingham Mut. Ins. Co., 18 Pick. 523, where, under the
terms of the charter of the company, it was important to fix tlie value of the pro
pert}', and it was agreed on fairly and inserted in the policy, there being no sugges-

522 MERCANTILE CONTRACTS.

Insurance arrainst Fire.

dition that notice shall be given of any change in the business
carried on upon the premises, does not render it necessary to give
notice of a temporary and gratuitous permission given to a friend

tion of fraud, concealment, or gambling, tlie plaintiff was allowed to recover, accord-
ing to such agreed value, although it appeared by the proof in the case to exceed the
real value of his interest.

It is usually provided in the policy, that the insurers are to make good the loss
or damage, to be estimated according to the true and actual value of the property at
the time the loss happens. This is settled on the principle of particular average, and
the estimated loss is paid without abandonment of what has been paid. 3 Kent's
Com. 375. But it is also provided, that the amount to be paid is not to exceed the
sum insured. And it has been held that where there has been a partial loss or injury
to the property insured, which is paid by the insurers, and afterwards the property ia
entirely destroyed, and its actual value at the time of its destruction was equal to,
or exceeded the sum insured, still the amount paid on the partial loss or injury is to
be deducted, and the insured can only recover the residue. And where, in the same
policy, one sum was insured on one building, and another on another, and both
losses were upon the same building, the insurer was held liable for only the differ-
ence between the sum paid and the sum insured on that building alone. Curry v.
Commonwealth Ins. Co., 10 Pick. 535. The provision in this case was, that the in-
surer "should not be liable for more than the sum insured, in any case whatever,"
which is somew^jat stronger than that contained in other forms of policies. And it
should be observed, that the difference of the rule in this respect between fire and
marine policies, seems to be founded on tlie insertion in the former of the restriction
above noticed.

"Tiie policy, in terms, refers to the true and actual value of the property at the
time of the loss, and makes that value the standard by which to estimate the loss or
damage which the insurer is bound to satisfy, and the insured is entitled to claim.
This agreement cannot be otherwise understood, than as binding the parties to the
intrinsic value of the property at the time of its destruction, as the rule by which the
indemnity is to be measured, without reference or regard to any special or adventi-
tious circimistances which may enhance or diminish the relative value or importance
of it to the insured. It is the true and actual value of the tenement itself at the
time, independently of its location or the insecurity of the title, or terms by which
it is held, that the insurers agree to make good to the present proprietor, in case
the loss or damage by fire happens during the continuance of his ownership, and
within the term of the insurance. It is of no importance whether the tenement
stands upon freehold or upon leasehold ground, or whether the lease is :bout expir-
ing or has the full time to run when the fire occurs, or whether it is renewable or
not The condition of the policy is satisfied, if the title and ownership are in the
insured at the time of the insurance and at the time of the loss, and the measure of
his indemnity as the amount of his interest in the tenement when destroyed by fire,
notwithstanding that the whole interest would have expired the very next day, of
Boon after the loss occurred." Laurent v. Chatham Fire Ins. Co., 1 Hall, 41, 50,
Jones, C. J. But the learned judge was not prepared to say (it not being material

IXSURANCE AGAINST FIRE. 523

Insurance against Fire.

to dry some bark there. (?i) On the construction of a condition as
to giving sucli notice, see Pirn v. Reed : and that a mill sliall ivorlc
hy day only, see Maycdl v. Mitford. (o)

(n) Shaw v. Eobberds, 6 Ad. k, E. 75.

(o) Maj'all V. Mitford, 6 Ad. <fe K 670 ; and see Whitehead v. Price, 2 C. M. <fc E.
447.

to the decision of that ease) "whether there may not be incidents and special cir-
cumstances so intimately connected with the premises, or so pcrmanontl}^ attached
to them, as to effect their intrinsic value, or the insurable interest of tlie party who
effects the insurance upon them."

And in that case, wliere a building erected upon a lot of land in the city of New
York, by the plaintiff, who had leased the same for a term which was to expire on
the 1st of September, 1827, was insured to the amount of $800, the lessee had the
power of renewing the lease on its expiration, or of removing the building from the
premises, at his option. The building, if suffered to remain, was worth about $1000,
but if removed, not more than $200. It was destroyed by fire on the 15th of August,
1827, at which time the lessee had given the lessor no notice of anj- intention to re-
new the lease. It was held, nevertheless, as the building at the time of its destruc-
tion was worth $1000 as it stood upon tlie premises, that the plaintiff was entitled
to recover the full amount of his insurance upon it. See also 3 Kent's Cora. 375.

Where an insurance is made by a mortgagor on his own account, he will be en-
titled to recover the full amount of the loss, not exceeding the insurance, notwith-
standing the mortgage or other incurnbran-ce on the premises, since the whole loss ia
his own, and lie remains personally liable to the mortgagee or other incumbrancer
for the full amount of the debt or incumbrance. Carpenter v. Providence Washing-
ton Ins. Co., 16 Pet. 495, 501. Strong v. Manufacturers' Ins. Co., 10 Pick. 40.

But where a mortgagee insures his interest, it is but an insurance of his debt ; if
the premises are destroj-ed by fire before payment or extinguishment of the mort-
gage, tiic underwriters are bound to pay the amount of the debt to the mortgagee^
if it does not exceed the insr.rance. "But, then, upon such payment, tlie under-
writers are entitled to an assignment of the debt from the mortgagee, and may reco-
ver the same amount from the mortgagor, either at law or equity, aceoi-ding to cir-
cumstances ; for the payment of the insurance by the underwriters does not in such
a case discharge the mortgagor from the debt, but only changes the creditor." IG
Peters, JOl.

[Since the former edition of tliis work, the doctrine stated in the last paragraph
has been elaborately reviewed and repudiated by the Supreme Court of Massachu-
setts. King V. State Mutual Fire Insurance Company, 7 Cush. Pep. 1. C. J. Shaw,
speaking for the Court, uses this language: "We are inclined to the opinion, both
upon principle and authority, that wlien a mortgagee causes insurance to be made
for his own benefit, pa^'ing the premium from his own fund, in case a loss occurs be-
fore his debt is paid, he has a right to receive the total loss for his own benefit; that
ne is not bound to account to the mortgagor for Jiny part of the money so recovered,
as a part of the mortgage debt ; it is not a payment in whole or in part; but he has

524 MERCANTILE CONTRACTS.

Insurance against Fire.

The insurance being against fire, a loss by fire must of course
happen, in order to give the insured a claim upon the policy.
Where the register of a sugar house was kept shut by mistake, so

still a right to recover his debt of the mortgagor. And so, on the other hand, when
the debt is thus paid by the debtor, the money is not, in law or equity, the money
of the insurer who has thus paid the loss, or money paid to his use." .... "What
is there inequitable on the part of the mortgagee, towards either party, in holding
both sums ? They are both due ujjon valid contracts with him, made upon adequate
considerations paid by himself. There is nothing inequitable to the debtor, for he
pays no more than he originally received, in money loaned ; nor to the undei'writer,
for he has only paid upon a risk voluntarily taken, for which he was paid by the
mortgagee a full and satisfactory equivalent." The Court examined the cases of
Robert v. Traders' Ins. Co., 17 Wend. 631 ; Tyler v. ^tna Ins. Co., 16 Wend. 385;
and Carpenter v. Providence Washington Ins. Co., 10 Peters, 495; but did not con-
sider them as establishing an opposite doctrine. See also Dobson v. Land, 8 Hare,
216.]

This principle of equitable subrogation, or substitiition of the underwriters in the
place of the assured, will apply to other cases ; so that where the assured has any
claim to indemnity for his loss against a third person, who is primarily liable for the
same, if the assured discharges such third person from his liability before the pay-
ment of the loss by the underwriters, he discharges his claim against them for such
loss, pro tanto. Or, if he obtains payment from such third person afterwards, it is in
the nature of salvage, which he holds as trustee for the underwriters, who had paid
his loss, ^tna Fire Ins. Co. v. Tyler, 16 Wend. 385, 397.

Under a fire policy, as usually made, the assured recovers the whole amount of a
pai'tial loss, if it does not exceed the amount insured, though the amount insured
may be less than the value of the property insured. 2 Phil!, on Ins. 29. It is stated
as a general princij^le, that a loss under a policy against fire, is to be paid without
contribution. Wells v. Boston Ins. Co., 6 Pick. 186.

A claim has been allowed the insured against the insurers, for a saci'ifice made
by the insured for the preservation of the property endangered by a fire ; and in
this case the principle of contribution was applied. The loss not being covered by
the policy, was held to be a subject of general average, to which the insurer and the
insured should contribute in ^^roportlon to the amount which they respectively had
at risk. AVells v. Boston Ins. Co., 6 P'ck. 182.

In Trull V. Roxbury Mutual Fire Ins. Co., 3 Cush. 263, C. J. Shaw states the dis-
tinction between contract of fire and marine insurance, in the mode of adjustment
and satisfaction. " In fire policies, the assured recover the whole loss, if within the
amount insured, without regard to the proportion between the amount insured and
the value of the property at risk ; whereas iu marine policies, the insurer pays only
Buch a proportion of the actual loss, as the sum insured bears to the value of the
property at risk. For instance, on fire policies, if the sum insured be $2000 on pro-
perty worth 810,000, and the assured sustains an actual loss on the whole, he reeo
vers the whole $2000. But in a like case on a marine policy, he would recover one

INSURANCE AGAINST FIRE. 505

Insurance acrainst Fire.

that the sugar was overheated and spoiled, this was held not to be
a loss hy fire, but by mismanagement, (p) The policy usually nar-
rows the liability of the insurer still further, by declaring that " no
loss or damage by fire, happening by any invasion, foreign enemy,
or any military and usurped power, will be made good by the in-
surers." The words usurped power are understood to refer to the
power of rebels or invaders, not of a common mob ; and, therefore,
when a mob at Norwich burnt down the insured's malting-house,
he was held entitled to recover ; (^) nor would the fact that the
insured had previously recovered from the insurer, bar his action
against the hundred, or against the party who had committed the
injury, for he might sue as a trustee for the insurer, (r) But the
introduction of the words civil commotion into the above exception,
will exempt the insurer from liability for the tumultuous act of
rioters. (5)

A loss by mere negligence, so that there be no fraud, is covered
by a policy, {tf

{p) Austin V. Drew, 6 Taunt. 436; 4 Camp. 360; Holt, 126.

(5') Drinkwater v. London Ins. Co., 2 Wils. 363.

(r) Clark v. Blj'thing, 2 B. <fe C. 254. Mason v. Sainsbury, Marsh. Ins. TQe.
Yates V. Whyte, 4 Bingh. N. C. 2*72. Wliite v. Dobinson, 14 Sim. 273 ; but see Hen-
eon V. Blackwell, 4 Hare, 434.

(s) Langdale v. Mason, Park, 657 ; Marsh. 689.

(<) Shaw V. Robberds, 6 Ad. & E. 75. HoUingsworth v. Brodrick, 7 Ad. & E. 40.

fifth only, or 8*00, being the proportion which the sum insured bears to the value
at risk; the assured himself bearing the other four-fifths of the risk. Tlie result is,
that every settlement of a loss by fire is in the nature of the adjustment of the partial
loss, although it may amount to the whole sum insured. It is the payment of the
whole actual loss sustained, on the whole property at risk, not exceeding the sum in-
sured, without regard to any apportionment between the sum insured and the
property at risk, or to any abandonment, or technical or constructive total loss, or
salvage. Liscom v. Boston M. F. Ins. Co., 4 Mete. 206. Holmes v. Charlestown M. F.
Ins. Co., 10 Mete. 211."

* This point was considered by tlie Supreme Court of Massachusetts in Chandler
V. Worcester M. F. Ins. Co., 3 Cush. 328. The Judge below ruled out evidence by the
defendants to prove gross negligence and gross misconduct of the plaintiff^ as the
cause of the destruction of the building, it being admitted that no fraudulent design
to burn the building was imputed. The S. C. granted a new trial, holding that this
evidence was improperly excluded. C. J. Shaw said, that independently of circum-
stances, it would be difficult by any definitive or abstract rule of law, to designate

52G MERCANTILE CONTRACTS.

Insurance against Fire.

In order to deter evil disposed persons from wilfully setting
their own premises on fire for the purpose of obtaining the insu-
rance money, stat. 14 Geo. 3, c. 78, enables the ofiices, at tlie re-
quest of any person interested in a building burnt down or dam-
aged, or upon any suspicion of fraud, to cause the insurance money
to be laid out in repairs, unless the party insured, within sixty daj^s
after his claim has been adjusted, give security that the money
shall be so expended ; or unless the money be at that time disposed
of to the satisfaction of all parties. This section only applies to
places within the bills of mortality, or specially named in the act.
In consequence thereof it has been held that a covenant to insure
such premises runs with the land, since, as the landlord may insist
on the insurance money being laid out in repairs, the covenant,
with the aid of the statute, amounts to a covenant to repair, (w)

(m) Vernon v. Smith, 5 B. <fe A 1.

■what degree of negligence ■would amoxint to such gross misconduct as ■v\'ould defeat
the right of the assured to recover. Suppose the premises insured should take fire,
and the flame begin to kindle on a small spot, which a cup of -n-ater would put out,
and the assured has the ■water at hand, but neglects to put it on. This is mere non-
feasance; j'et no one ■would doubt that it is culpable negligence, in violation of the
maxim, Sic ?.''"'e tuo itt alienum non laedas. The doctrine of the civil la^n that crassa
negligentia ■was of itself proof of fraud, or equivalent to fraudulent purpose or design,
was no doubt founded on the consideration, that although such negligence consists in
doing nothing, and is therefore a nonfeasance, yet the doing of nothing, when the
slightest care or attention would prevent a great injur\', manifests a willingness,
differing little in character from a fraudulent and criminal purpose, to commit such
injury."

CHAPTER VII.

BOTTO^MET Al^D EESPONDENTIA.

Bottomry is an agreement entered into bj the owner of a ship, or
his agent, whereby, in consideration of a sum of money advanced
for the use of the ship, the borrower undertakes to repay the same
with interest, if the ship terminate her voyage successfully, and
binds or hypothecates the ship for the performance of his contract.
The instrument by which this is effected is sometimes in the shape
of a deed poll, and is then called a Bottomry Bill ; sometimes in
that of a bond ; (a) but, whatever be its form, the contract should
be clearly set out in it. Bills of Exchange drawn by the master
on the owner, though accompanied with a verbal engagement that
the ship shall be liable, cannot be considered instruments of hypo-
thecation, (b)

If the loan be not upon the vessel, but on the goods or mer-
chandise laden on board of her, it is called Respondentia.

There are two main differences between these contracts and a
common loan.

1st. The Risk. — The lender's principal must be at hazard during
the voyage. The lender of the money is, as we shall immediately
see, entitled to receive a recompense far beyond the legal rate of
interest : this recompense is \evj properly called in the civil law
pericuU pretium, and no person can be entitled to it who does not
take upon himself the perils of the voyage. But it is not neces-
sary that his doing so should be declared expressly, and in terms,
though this is often done : it is sufficient that the fact can be col-
lected from the language of the instrument considered in all its
parts. Hence, where the words were, " I bind myself, my ship,
and tackle, to pay the sum borrowed, with twelve per cent, bot*

(a) See the forms of both, Appendix to Abbott on Shipping
(6) 3 V. <fe B. 135; 19 Ves. jun. 4U; 2 Rose, 103, 229.

528 MERCANTILE C0NTKACT3.

Bottomry and Respondentia.

tomry premium, in eight days after my arrival at the port of Lon-
don," the Court were of opinion, that the words, " my arrival,"
must be understood to mean, my arrival with the ship, or the ship's
arrival, (c) But a total loss of the ship, within the meaning of the
bottomry bond, cannot happen, if it exist in specie, although ever
BO much injured, {d)

2dly. The Amount of Interest. — Upon a lottomry or respondentia
contract, it is competent to the lender to receive any interest what-
ever, (e)

The terms hottomry and respondentia are also applied to contracts
for the repayment of money borrowed, not on the ship and goods
only, but on the mere hazard of the voyage itself; as, where a man
lends a merchant 1000?. to be employed in a beneficial trade, on
condition to be repaid with extraordinary interest in case such a
voyage be safely performed, which kind of agreement is called by
some writers fcenus naitticujn, and by others usiira maritima : but
by stat. 19 Geo. 2, c. 37, money lent on bottomry or respondentia,
on vessels belonging to his Majesty^s sv.hjects, bound to or from the
East Indies, must be lent only upon the ship or merchandise, with
benefit of salvage to the lender ; (/) a previous statute, 7 Geo. 1, c.
21, having made void all contracts by his Majesty's subjects on the
loan of money by way of bottomry, on any ship in the service of
foreigners^ bound to the East Indies.

This contract is generally entered into, either by the owner, or
the master, acting under an implied authority, as his agent. If it
be made by the owners themselves, in this country, before the com-
mencement of the voyage, the lender has not the same convenient
and advantageous remedy by suit in the admiralty against the ship,
as he has in the case of hypothecation for necessaries by the master
m a foreign port ; and, if the contract refer to a British ship, of

(c) Simonds v. Hodgson, 3 B. <fe Ad. 50, reversing decision in 6 Bingh. 114; and
see The Emancipation, 1 "W. Rob. A. R. 124.

(d) Thompson v. R. E. A. Compy., 1 M. & S. 30.

(e) 2 Bl. Comm. 457.

(/) This statute also prevents the borrower from recovering more on an insurance
than the value of his interest, after deducting the sum borrowed ; and subjects him
to repayment of any part -which he has not laid out upon the ship or goods, even in
case of a loss.

BOTTOMRY AND RESPONDENTIA. 529

Bottomry and Respondentia.

•whicli it purports to be an assignment, compliance with the provi-
sions of the Eegistry Act seems necessary to its validity, (g)
Neither does there seem to be any mode by which a person who
advances money at respondentia, on goods laden and to be laden
on board a ship on an outward and homeward voj^age, can entitle
himself to resort for payment of his debt to the specific goods that
may be brought back. (A)

The authority of the master to hypothecate the ship and freight,
in case of necessity, at a foreign port, is indisputable ; {i) and his
hypothecation of the freight or cargo is also justifiable, if neces-
sary, (j) The advantage of allowing the master to take up money
on bottomry, consists in its enabling him to ]3rocure assistance
when no other resource is at hand, and the adventure would be
frustrated if assistance were not afforded. Such being the reason
for permitting him to borrow money on these terms, it follows, that
he has no right to do so where he can obtain the money ui^on better
terms, ex. gr., on the personal credit of the OAvner ; {k) or when he
is at the owner's place of residence, and the means of communica-
tion with him are open, for then he has the owner to resort to. (l)
And, with us, all England would, at least before the commence-
ment of the voyage, be considered the owner's residence for this
purpose ; and so, perhaps, would Ireland since the Union, (m)
though before that period it was otherwise, {n) It follows, also,
that the master ought not to take up money on bottomry, even for
a necessary purpose, if it can be procured on more moderate terms.

^^ Necessity,^'' to use the expressions of Lord Stowell, "is the

{g) Abbott, 153, 8th ed. Johnson v. Shippen, 2 Ld. Raym. 983.

{h) Abbott, 153, 8th ed. ; 2 Bl. Comm. 458. Busk v. Fearon, 4 East, 319. Glover
V. Black, 3 Burr. 1394.

(i) Moor, 918 ; Hob. 11 ; Abb. 156, 8th ed.

Ij) The Gratitudine, 3 Rob. A. R. 240. The Jacob, 4 Rob. A. R. 245. The Lord
Cochrane, 2 W. Rob. A. R. 320.

(^•) Heathorn v. Darling, re The Eliza, 1 Moore, P. C. 5.

{I) Abbott, 154, 8th ed. ; Molloy, b. 2, c. 11, s. 11. Lister v. Baxter, 2 Stra. 695,
See The Rhadamanthe, 1 Dodson, 201. The Barbara, 4 Rob. A. R. 1. The Jenny, 2
W. Rob. A. R. 5. The Lochiel, 2 W. Rob. A. R. 44. La Ysabel, 1 Dodson, 273. The
Trident, 1 W. Rob. A. R. 29, -where the master was allowed to borrow on bottomry
ftt Plymouth, the owner, -who lived in Scotland, being dead, insolvent.

(m) Abbott, uhi supra. The Rhadamanthe, 1 Dods. 201.

(n) Menetone v. Gibbons, 3 T. R. 2G7.
34

530 MERCANTILE COXTRACTS.

Bottomr}' and Respondentia.

vital principle of hypothecation, and the Court of Admiralty will
consider every circumstance, will go into the whole history of the
voyage, in order to determine whether there be that necessity, with-
out which an instrument of hj-pothecation is void." (o)

When the master, finding it absolutely necessary for the pur-
poses of the voyage to obtain money, and being unable to obtain
it in any other manner, executes an instrument of hypothecation,
the effect of his contract is to give the creditor, not indeed a
property in the ship hypothecated, but a privilege or claim upon it,
to be carried into effect by legal process, {p) And where the in-
terest reserved exceeded, as it almost always did, the then legal
rate of five per cent., the ov/ner could not before the recent acts,
however it may now be, have been made personally responsible,
and the lender's remedy was against the master or the ship ; {q)
though, it would seem, that, if the lender contented himself Avith
five per cent., the master might have pledged both the ship itself
and the personal credit of the owner, {r)

No person is entitled to make advances on bottomry, who, at
the time of making them, is a debtor to the vessel ; (5) but it is no
objection to the validity of a bottomry bond, that it is given to the
consignee of the cargo ; the necessity for borrowing, and the fair-
ness of the transaction, being established, {t) The money, how-
ever, must have been originally advanced upon the credit of the
ship : if it be originally advanced on that of the owner, and such
a bond be afterwards given, in consequence of doubt arising as to
his responsibility, even before the ship leaves the place of advance,
the bond will be invalid, {it) But if a portion only of the money

(o) Tlie Hersey, 3 Hagg. A. R. 404 ; S. C. ?. Moore P. C. 79. Scares v. Rann, in rf
The Prince of Saxe-Coburg, 3 Moore P. C. 1.

{p) Abbott, 154, Sth ed.

{q) Abbott, 158, Sth ed.

(r) IbiiL Sampson v. Bragington, 1 Ves. 443.

(s) The Hebe, 2 "W. Rob. A. R. 146.

{t) Tlie Alexander Tate, 1 Dods. 2Y8 ; and see Tlie Lord Cochrane, 2 W. Rob. A
R. 320, in which a bottomry bond on the ship, freight, and cargo, given for ad-
vances made by persons acting in the capacity of the ship's agents, was upheld against
the consignees of the cargo.

(m) The Augusta, 1 Dods. 283. See Weston v. Foster, 2 Bingh. K C. 693. The
Tartar, 2 Hagg. 1. See also The Vibilia, 1 W. Rob. A. R. 1. The Lochiel, 2 W.
Rob. A. R. 35. Gore v. Gardner, 3 Moore P. C. T9.

BOTTOMRY AXD RESPONDENTIA. 531

Bottomry and Respondentia.

secured have been thus previously advanced, and the rest of the
sum be subsequently lent on the security of the ship, the bond is
not void in toto, but only to the extent of the previous advance, {v)
It is clear that the master cannot hypothecate the ship for any debt
of his own ; though, if she really were in a state of want, and the
money bona fide advanced to relieve her, his subsequent misappli-
cation of it would not prejudice the lender's remedy, (iv)

Where the ship has been hypothecated by the master in a for-
eign country, the lender has, as we have seen, a privilege or claim
against the ship itself, of which he may avail himself as follows : —
Upon the arrival of the ship in this country, if the loan be not re-
paid within the time prescribed, the agent of the lender applies to
the Court of Admiralty, with the instrument of contract, and a
proper affidavit of the facts, and obtains a warrant to arrest the
ship, and cite all persons interested to appear before the court if
they think proper to do so. If, in the course of the proceedings, it
becomes necessary to sell the ship, the court decrees a sale to be
made under the direction of its own commLssioners, and afterwards
distributes the proceeds among the different claimants, as justice
requires ; and this may be done if the owners or persons interested
in the ship do not appear at the time appointed by the court, other-
wise their absence or default would occasion a failure of justice, (x)
As to the mode of distributing the proceeds among the several >
claimants, it is worthy of observation, that if securities of this sort /
are given at different periods of a voyage, and the value of the/
ship is insufficient to discharge them all, the last, in point of date,/
is entitled to priority of payment ; becouse the last loan furnishes"
the means of preserving the ship, and, without it, the former
lenders would have entirely lost their security, (y) In order, how
ever, that this rule may apply, the security last in date must have
arisen out of the destitute situation of the master, and his inability
to obtain the necessary supplies for his vessel, on the personal
credit of himself or his emploj^ers. (2)

(v) Smith V. Gould, re The Prince George, 4 Moore P. C. 21.

(w) Abbott, 160, 161, 8th ed.

(a;) Abbott, 162, 8th ed.

(y) Abbott, 163, 8th. ed. Tlie Rhadamanthe, Dods. 20-1.

(a) Abbott, 164, 8th ed. The Rhadamanthe, ubi supra.

CHAPTER VIII.

COKTEACTS OF IIIEING AND SEE VICE.

The greater part of tlie law respecting the relation of master and
servant, lias been treated of in the First Book, under the head of
Principal and Agent; for every servant is, in executing the duties
required from him by his contract of service, his master's agent.
The present chapter will, therefore, only contain a few remarks on
the contract by which this relation is created.

Where the hiring is under a special agreement, the terms of that
agreement must of course be observed. If there be no special
agreement, but the hiring is a general one, without mention of
time, it is considered to be for a year certain. If the servant con-
tinue in employment beyond that year, a contract for a second year
is implied, and so on. (a) Indeed, in case of menial or domestic
servants the contract is, by general custom, dissoluble by a month's
warning, or payment of a month's wages, ih) And though a hiring
in general words is, prima facie^ presumed to be for a year, even
though the master and servant may have thought that they could
separate within the year ; (c) and, though the circumstances of the
servant's leaving in the middle of a year, {d) or having previously
served for a shorter time than a year, (e) will not prevent the usual
interpretation from taking place; yet this presumption arising from
the use of general words is capable of being rebutted ; (/) thus, a

(a) Beeston v. Collyer, 4 Blngh. 309. Williams v. Byrne, T Ad. & E. I'ZY, case of
a newspaper reporter. Huttman v. Bullnois, 2 G. & P. 510. Rex v. Hensingbam,
Cald. 206. Rex y. Croscombe, Burr. S. C. 256. Turner v. Robinson, 6 B. & Ad. 789.
Faweett v. Casb, 5 B. & Ad. 904.

{b) See Beeston v. Collyer. Robinson v. Hindman, 3 Esp. 235 ; 6 T. R. 326. Now
Ian V. Ablett, 5 Tyrwb. 709 ; 2 C. M. & R. 64.

Id) Rex V. Korfield, 5 T. R. 506.

(e) Rex V. Long Whatton, 5 T. R. 447. Rex v. Hales, 5 T. R. 668.

(/) Rex V. Christ's Parish, 3 B. & C. 459. Rex v. St. Matthew, 3 T. R. 449. Rex

COXTRACre OF HIRING AND SERVICE. 533

Contracts of Hiring and Service.

general hiring a.t loeeldy ivages is but a weekly hiring, if there be no
other circumstance whence the intended duration of the contract
can be collected, ( 5^) ex. gr., a hiring at so much per tveeJc, "for so
long a time as the master shall want a servant," or "for so long a
time as the master and servant shall agree," are weekly hirings. {h)
But, if there be any circumstance to show that a yearly hiring was
intended, a reservation of wages payable at shorter intervals will
not control it; (i) as, where the contract was to serve "for four shil-
lings and ninepence a week," or, "at the rate of four shillings a
week," the parties having liberty of parting at a month's notice
from either, this was held to be a hiring for a year, for the mention
of a month showed that the stipulation for a weekly payment of
wages was not intended to limit the duration of the contract, (y)
But an indefinite hiring by piece-work, or a hiring to do a certain
quantity of work, cannot be considered a yearly hiring, {k)

It follows, from what is above stated, that if the master dismiss
his servant (hired generally) without cause, the latter will have
a right to wages up to the expiration of the year ; (Z) while, on
the other hand, if the servant quit his master causelessly, he
will be entitled to no wages, {m) Nor will he be so, if dismissed

V. Great Bowden, 7 B. & C. 249. Rex v. Stokesley, 6 T. R. 151. Baxter v. Nurse, 6
M. & Gr. 935.

((j) Per BuUer, J., 2 T. R. 433. Rex v. Pucklecliureb, 5 East, 3S2. Rex v. Clare,
Burr. 819. Rex v. Dodderhill, 3 M. & S. 243.

{h) R:x V. Elstack, Cald. 489. Rex v. Mitcham, 12 East, 351. See Rex v. Odi-
ham, 2 T. R. 622. Rex v. Dodderhill, 3 M. & S. 243. Rex v. Lambeth, 3 M. & S. 315.
Rex V. Hanbury, 2 East, 423.

(i) See Rex v. Seaton, Cald. 440.

(j) Rex V. Hampreston, 5 T. R. 205. See Rex v. Great Yarmouth, 5 M. & S.
114. Rex V. Birdbrooke, 4 T. R. 245. Rex v. Bradrich, Burr. S. C. C62. Rex v.
Sandhurst, 1 B. & C. 557. Rex v. Pershore, 8 B. <fe C. 679. Reg. v. Pilkington, 5 Q.
B. 662.

(k) Rex V. St. Peter's, Burr. S. C. 513. Rex v. Woodhurst, 1 B. & A. 325. Rex v.
"Wrington, Burr. S. C. 280.

(/) See Gandall v. Pontigny, 4 Camp. 375; 1 Stark. 198. Arehard v. Ilornor, 3 C.
<fe P. 349. Eardley v. Price, 2 N. R. 333, secus ia a case of special agreement provid-
ing a certain notice, see Huntley v. Harman, 11 Ad. & E. 798.

(m) Lamburn v. Cruden, 2 M. & Gr. 253. Huttman v. Boulnois, 2 C. & P. 510;
Com. Dig. Justices, B. 63. Ridgway v. Hungerford Market Compy., 3 Ad & E. 171.
Giraud v. Richmond, 2 C. B. 835. In Lamburn v. Cruden, the Court held, that it
should be left to the jury to say whether there was a new contract to pay for the
portion of time which the servant staj'cd over the year.

534 MERCANTILE CONTTRACTS.

Contracts cf Hiring and Service.

before the espiration of his term of service for misconduct, (n)
The master will be justified in taking this step by any exhibi-
tion of moral turpitude (o) on the part of the servant, ex. gr.^ an
assault on a maid-servant, or the persuasion of an apprentice to
elope ; by a refusal to obey his lawful orders, (73) or the servant's
unwarrantable absence from his duty, {q) even though involuntary,
as if he subject himself to imprisonment, (r) Though it is other-
wise where the absence is warrantable, as, if it be for the purpose
of having a severe hurt remedied, (5) going to a statute to be hired
for the ensuing year, [t) or looking for another service, {u) And a
mere temporary absence without leave, involving no immoral pur-
pose, appears not to be a sufficient ground for his dismissal, espe-
cially if the masters business be not seriously impeded, {v) Where
a clerk employed to make entries in the minute-book of a company,
entered a protest against a summons for the appointment of a suc-
cessor to himself, it was held that a jury were justified in finding
this to be a sufiicient cause for his dismissal, (^y) It was further
held in that case, and the doctrine has been since confirmed, (x)
that a master who has discharged his servant for an insufficient
cause, is not precluded from afterwards justifying that dismissal by
alleging any sufficient cause that may have been in existence. In
a subsequent case some doubt seems to have been entertained,
whether the misconduct must not have been known to the master

(n) Turner v. Robinson, 6 C. <fe P. 15; 5 B. <fe Ad. 789. Atkin v. Acton, 4 Carr. &
P. 208. Callo V. Brounceker, ibid. 513. See M. & M. 489.

(o) Atkin V. Acton, 4 C. & P. 208. Turner v. Robinson, 6 C. <t P. 15 ; 5 B. & Ad.
"789. Rex v. Brampton, Cald. 11. Rex v. Welford, Cald. 57. Trotman v. Dunn, 4
Camp. 211.

{p) Spain V. Arnott, 2 S^wk. 256.

{q) Robinson v. Hindman, 3 Esp. 235. Turner v. Mason, 14 M. <fe "W. 112. In the
last case the fact of a domestic servant absenting herself for a night, to visit a dying
parent, in defiance of the master's prohibition, was held to justify dismissal.

(r) Rex V. Barton, 2 M. & S. 329.

(s) Rex V. Sharrington, 2 Bott's Poor Laws, by Const. 525. Rex v. Winterdatt
Cald. 298. Chandler v. Grieves, 2 H. Bl. 606.

{t) Rex V. Islip, 1 Str. 423. Rex v. Polesworth, 2 B. <fe A. 483.

(w) Rex V. Potter Heigh.am, Burr. S. C. 690.

{v) Fillieul v. Armstrong, 7 Ad. & E. 557 ; sed vide Turner v. Mason, 14 M. & W
112.

(iv) Ridgway v. Ilungerford Market Company, 3 Ad & E. 171.

Ix) Baillie v. Kell, 4 Bingh. N. C. 63S

CONTRACTS OF HIRING AND SERVICE. 535

Contracts of Hiring and Service.

at the time of the discharge, (?/) It would be strange, liowever, ad-
mitting that the master cannot relj on an offence which he has not
at first put forward, that the servant should be allowed to rely on
his own. concealment of it. Where a clerk claimed to be a part-
ner, and to transact business as sucn, his master was held justified
in immediately dismissing him from his service. (2)

The master is not liable to the servant in respect of damage
sustained by the latter in the execution of his orders, but not aris-
ing from any wilful misbehavior on the master's part, (a)

By stat. 1 & 2 Wm. 4, c. 37, in contracts of hiring made with
artificers, workmen, laborers, or other persons employed in the
trades, specified in section 19 of that act, the wages must be made
payable in the current coin of this realm, and not otherwise. The pay-
ment of such wages in any other mode is declared invalid. Nor is
the employer allowed to set off goods supplied to the artificer against
the wages due to him. ih) Obedience to this act is enforced by pen-
alties. A payment in bank-notes with the artificer's consent is le-
galized by a proviso in section 8.

By stat. 55 Geo. 8, c. 154, a memorandum or agreement for the
hire of any laborer, artificer, manufacturer, or menial servant, is
exempt from stamp-duty.

A great number of statutes have at various times been passed,
pointing out modes for the arrangement of disputes occurring be-
tween masters in particular trades and their servants or workmen,
the minute provisions of which it would be impossible, consistently
with the plan of this Treatise, to enumerate : the reader will find
them collected in the last edition of Burn's Justice, under the head
Servants. There is a general statute on this subject, viz., 5 Geo. 4,
c. 96, entitled An Act to consolidate and amend the laws relative to the
arbitration of disputes between masters and luorkmen ; (c) the second
section of which enumerates the causes of dispute intended to be

(y) Cussons v. Skinner, 11 M. & W. 161, which turned, however, a good deal on
the form of the plea ; and Mercer v. Whall, 5 Q. B. 447, to which the same remark is
applicable.

(z) Amor v. Fearon, 9 Ad. & E. 548.

(o) Priestley v. Fowler, 3 M. <fe W. 1.

(b) But deductions for the use of frames supplied by the master and employed in
the work, are legal, Chawner v. Cummings, 15 L. J. Q. B. 161.

536 MERCANTILE CONTRACTS.

Contracts of Hiring and Service.

embraced by its enactments, which apply to most comphaints rela-
tive to the price of labor, hours of work, and quality of materials.
The third section points out the mode of decision, which is either
by the summary award of a justice, if the parties can agree to it ; or
if not, by two arbitrators, one chosen by each party, out of a num-
ber of not less than four, nor more than six, to be named by the
justice upon application to him by one of the parties. The other
sections provide for the appointment of new arbitrators, in case of
the neglect or refusal of those first named ; the mode of investiga-
tion ; the powers with which the arbitrators are to be invested for
the purpose of procuring evidence ; the course to be adopted where
they disagree, and the enforcement of the award when made. It
contains, besides, several provisions applicable to peculiar circum-
stances.

CHAPTER IX.

CONTEACTS WITH SEAMEN.

Sect. 1. Nature and form of contract.
,2., Duties and rights cf seamen.

3. Wages^ hoiu lost or forfeited.

4. Remedies of seamen for their wages.

The contract under which seamen in the merchant service are
engaged, deserves a separate consideration on account of the pecu-
liarities which distinguish it from other contracts of hiring and
service.

This subject is now regulated altogether by stat. 7 & 8 Vict. c.
112, (a) which repeals stat. 5 & 6 W. 4, c. 19, the act previously in
force, except so far as it repeals former acts or relates to the main-
tenance of the Register Office thereby established. It recites " that
the prosperity, strength, and safety of this United Kingdom, and
of her Majesty's dominions, do greatly depend on a large, constant,
and ready supply of seamen, and it is therefore expedient to pro-
mote the increase of the number of seamen, and to afford them all
due encouragement and protection, and that it is also expedient to
keep a register of seamen." The act itself is set out at large in
the Appendix. Its provisions, so far as they relate to the contract
between mariners and their employers, may be most aptly con-
sidered under the following heads : —

1. Nature and form of contract.

2. Duties and rights of seamen under it.
8. Wages, how lost or forfeited.

4. Their remedies for the recovery of them.

(a) See the stat. 8 & 9 Viet. c. IIG, which requires persons employed to procure
merchant seamen to be licensed.

538 MERCANTILE CO^TTRACTS.

Nature and Form of Contract.

Section I. — Nature and Form of Contract,

The second section of 7 & 8 Vict,, c. 112, enacts,
" That it shall not be lawful for any master of any ship, of whatever
tonnage or description, belonging to any subject of her Majesty, proceed-
ing to parts beyond the seas, or of any British registered ship of the
burden of eighty tons or upwards employed in any of the fisheries of
the United Kingdom, or in proceeding coastwise, or otherwise, from one
part of the United Kingdom to another, to carry to sea any seaman as
one of his crew or complement (apprentices excepted) unless the master
of such ship shall have first made and entered into an agreement in writ-
in"- with such seaman, specifying what wages such seaman is to be paid,
the quantity of provisions he is to receive, the capacity in which he is to
act or serve, and the nature of the voyage in which the ship is to be
employed, so that such seaman may have some means of judging of the
period for which he is likely to be engaged ; and that such agreement
shall be properly dated, and shall be signed by such master in the first
instance, and by the seamen respectively at the port or place where they
shall be shipped ; and that the signature of each of the parties thereto
shall be duly attested by one witness at the least, and that the master
shall cause the agreement to be read over and explained to every such
seaman in the presence of such witness, before such seaman shall execute
the same ; and it shall not be lawful for the master of any ship to carry
to sea any seaman, being a subject of her Majesty, until he shall also have
first obtained from every such seaman or other person his register ticket,
(to be procured as hereinafter mentioned), which ticket the said master is
hereby required to retain (except in the cases hereinafter provided) until
the service of such seaman shall have terminated, and at the termination
of such service the said master shall return the register ticket to him."

Sect. 3 enacts,

" That in the case of any ships of whatever tonnage or description,
belonging to any subject or subjects of her Majesty, and proceeding to
parts beyond the seas, (except as hereinafter provided,) the agreement
shall be in the form set forth in Schedule (A.) to this act annexed, and
shall contain the several particulars therein mentioned or required ; and
the master shall within twenty-four hours after the ship's arrival at her
final port of destination in this United Kingdom, deliver or cause to be
delivered to the collector or comptroller of the customs at and for such

CONTRACTS WITH SEA:\IEX. 539

Nature and Form of Contract.

port every agreement so made as aforesaid, or a true copy thereof, and of
every indorsement thereon ; the agreement, or copy thereof, in cither
case, to be certified as such by such master or owner, and also by the
mate or next officer (if any) of such ship or vessel, each of whom is
hereby required to sign such certificate in the presence of one attesting
witness at the least ; and if the original agreement be delivered to such
collector or comptroller he shall retain the same until all the wages to
which the agreement relates shall be paid or satisfied, and then he shall
transmit such original agreement to the registrar of seamen ; and no such
ship shall be cleared inwards by the tide surveyor or other officer, until
the master shall produce and show a certificate from such collector or
comptroller (which he is hereby required to give) to the effect that he has
delivered his agreement, or an attested copy thereof, as aforesaid ; and the
tide-waiters left on board shall be maintained at the expense of the master
or owner until such certificate shall be produced and shown, or until it
shall be proved to the satisfaction of the tide-surveyor or other officer that
such agreement or agreements, or such copy thereof, has or have been so
delivered as aforesaid ; and in the case of any ship employed in fishing
on the coasts of the United Kingdom, or proceeding from one part of the
United Kingdom to another, or proceeding to any of the islands of Jersey,
Guernsey, Alderney, Sark, and Man, or to any place on the continent of
Europe between the river Elbe inclusive and Brest, the agreement shall
be in the form set forth in Schedule (B.) to this act annexed, and shall
contain the several particulars therein mentioned or required ; and every
such agreement shall not extend beyond the thirtieth of June and the
thirty-first of December in each year, or on arrival in any port of the
United Kingdom after the same respective dates ; and the owner or
master of every such ship as last aforesaid shall, within twenty -one days
next after the thirtieth day of June and the thirty -first day of December
in each year, transmit or deliver, or cause to be transmitted or delivered,
to the collector or comptroller of the customs of any port of the United
Kingdom, every agreement made within the six months next preceding
such thirtieth day of June and thirty-first day of December respectively,
or a true copy thereof, and of every indorsement thereon, certified as
aforesaid ; and such collectors and comptrollers respectively shall, and are
hereby required to give a receipt (specifying the nature of the document)
for every agreement or other document, or such copy thereof, to the
master, owner, or person so delivering the same ; and no master or owner,
after the expiration of the said twenty-one days, shall be entitled to or
receive a transire or any other customs document necessary for the con-

540 MERCANTILE CONTRACTS.

Nature and Form of Contract.

duct of the business of the ship, until he shall produce and show such
receipt, or shall prove to the satisfaction of the officer that every such
agreement, or such copy thereof as aforesaid, has been duly delivered as
aforesaid ; and the owner or master of every ship under the burden of
eighty tons, employed as last aforesaid, who is not required by this act to
enter into any written agreement with his crew, shall, before employing
any seaman or other person in the service of his ship, receive from every
such seaman or other person his register ticket, and shall retain the same
until the service of such seaman or other person shall have expired, and
at the expiration of such service the master shall return the register ticket
to the person entitled thereto."

And by sect. 4,

" That if any master or owner shall carry out to sea any seaman (ap-
prentices excepted) without having first entered into the required agree-
ment with such seaman, [b) or if any master shall not obtain from any
seaman or other person, being a subject of her Majesty, his register ticket
according to the provisions of this act, he shall in either and every of such
cases forfeit and pay the sum of ten pounds for and in respect of every
such seaman ; and if any master or owner shall neglect to cause such
agreement to be read over and explained to such seaman before the sign-
ing or execution thereof by such seaman, the said master or owner shall
for each neglect forfeit and pay the sum of five pounds for every such
seaman ; and if any master or owner shall neglect or omit to deliver or
cause to be delivered to such collector or comptroller any such agreement
or such copy thereof as aforesaid, or shall not deliver up any register
ticket to the person entitled to it at tne expiration of his service, or other-
wise, as required by this act, he shall for every such neglect, omission, or
offence, forfeit and pay the sum of ten pounds, or if any master or owner
shall deliver or cause to be delivered a fiilse copy of the agreement, he
shall for every such offence forfeit and pay the sum of twenty pounds."

By sect. 5,

" That no seaman, by reason of any agreement, shall forfeit his lien
upon the ship, nor be deprived of any remedy for the recovery of hia
wages to which he would otherwise be entitled against any person or per-
sons whatever ; and no agreement contrary to or inconsistent with this
act, nor any clause, contract, or engagement whereby any seaman shall

(h) But the omission does not render the ship unseaworthy, oi- the voyage illegal.
It is simply for the protection of tb« seamen. Redmond v. Smith, 1 M. & Gr. 457.

CONTRACTS WITH SEAMEN. 54]

Nature and Form of Contract.

consent or promise to forego or give up any right or claim to wages in
the case of freight earned by a sh-ip subsequently lost, or any right or
claim to salvage or reward for salvage services or such proportion of sal-
vage or reward for salvage services as shall or may be due to him by
decree or award, or otherwise, shall be valid or binding on such seaman ;
and eveiy copy of an agreement so certified and delivered as aforesaid
shall, in all cases, be received and taken as evidence of the contents of
the agreement for and on behalf of the seaman ; and no seaman shall in
any case be required to produce such agreement, or such copy as afore-
said, or to give notice for the production thereof; but in case the agree-
ment shall not be produced and proved, he shall be at liberty to prove
the contents or purport thereof, or to establish his claim by other evi-
dence, according to the nature of the case."

It was decided under the former acts (c) that, thougli an agree-
ment contrary to their provisions was void, yet it was not avoided
in consequence of its containing stipulations in addition to those
given in the act, if not contrary to them in letter or spirit. Indeed
the acts themselves, by invalidating certain clauses tending to de-
prive the seaman of advantages, it was thought impliedly recog-
nized the power of introducing others not having a tyrannical or
unreasonable operation. In construing all contracts made by sea-
men, however, the courts follow out the politic inclination of the
Legislature to protect and favor that deserving class of laborers.
And it has been expressly stated in the Court of Admiralty (c?)
that the tribunal will bear in mind the general ignorance and im-
providence of seamen, and their inability to appreciate the meaning
and effect of a long and multifarious instrument. The master will
not be allowed to obtain any advantage from the use of general or
ambiguous terms, such, for instance, as "to New South Wales or else-
wlierer (e) It was held, under the former acts, that where a written
agreement has been made, it was the only evidence of the contract,
and that no new term could be introduced by parol. (/)

c) The Minerva, 1 Hagg. 347. The George Home, ibid. 377, ad finem.

(d) 1 Hagg. 347. And see also 8 <& 9 Vict. c. 116.

(e) The Minerva, ubi supra. The George Home, tihi supra. The Westmoreland,
1 W. Rob. 206. The EHza, 1 Hagg. 182. The Countess of Harcourt, ibid. 248.

(/) Wliite V. "Wilson, 2 B. <fe P. 116. The Isabella, 2 Rob. 241. Elswcrth v
Woolmore. Abbott on Shipping, 616, 8th ed.

542 MERCANTILE CONTRACTS.

Duties and Rights of Seamen under the Contract.

Section II. — Duties and Rights of Seamen imder the Contract.

The first duty of the seamen under the contract is, of course, to
join and work the ship on board of which he has engaged to serve, {g)
and the due performance of his contract in this respect is enforced
by 7 & 8 Vict. c. 112, sect. 6, viz. :

*' That in case a seaman, whether before the commencement or during
the progress of any voyage, shall at any time neglect or refuse to join the
ship on board of which he shall have engaged to serve, or shall refuse to
proceed to sea in such ship, or shall absent himself therefrom without
leave, or shall desert, it shall be lawful for any justice of the peace in and
for any of her Majesty's dominions, or the territories under the govern-
ment of the East hidia Company, where or near to the place where such
ship shall happen to be,- or where such seaman shall be found, and such
justice is hereby required, upon complaint made upon oath by the master,
mate, or owner, or his agent, to issue his warrant, and cause such seaman
to be apprehended, and brought before him ; and in case such seaman shall
not give reason to the satisfaction of such justice for his neglect, refusal, or
absence, as the case may be, or in case of desertion, it shall be lawful for
any such justice, upon due proof of such neglect, refusal, absence, or deser
tion, to commit such seaman to prison or to the house of correction, there
to be imprisoned, with or without hard labor, at the discretion of such
justice, for a period not exceeding thirty days ; or it shall be lawful for
the said justice, if he shall so think fit, at the request of the master, mate,
or owner, or his agent, instead of committing such seaman, to cause him
to be conveyed on board the ship, or to be delivered to the master, mate,
or owner, or his agent, for the purpose of being so conveyed and proceed-
ing on the voyage, and also to award to the master or owner such costs
incurred in the apprehension of the seaman as to such justice shall seem
reasonable, not exceeding in any case the sum of forty shillings, which
shall be chargeable against and may be deducted from the wages of such
seaman ; and whenever any seaman shall be committed to prison or to
any house of correction, the justice shall cause his register ticket to be de-
livered to the governor or keeper of such prison or house of correction,
who shall retain the same during the period of the seaman's imprisonment,
and at the expiration of such period shall return the register ticket to the

{g) Sec Kenno v. Bennett, 3 Q. B. 168.

COXTRACTS WITH SEAMEN. 543

Duties and Rights of Seameu under the Contract.

seaman ; and whenever a seaman shall be sentenced to death or transpor-
tation, the officer having the custody of such seaman shall transmit his re-
gister ticket to the registrar of seamen."

The next duty of a seaman under tliis contract is to exert him-
self to the utmost in the service of the ship ; and therefore any prom-
ise of extra pay as an inducement to extraordinary exertion, is
nudum pactum^ and void, (/i) On the other hand, he will have a
right to liis full wages, although prevented, by a hurt received in
the performance of his duty, or by sickness, from performing his
service; {i) and if he remain with the ship, he has a right to wages,
during an embargo, provided that she afterwards perform her voy-
age, and earn freight, (y) And 7 & 8 Yict. c. 112, sect. 49, con-
tains a provision for the payment of wages due to seamen left be-
hind under a certificate of their not being in a condition to proqeed
on the voyage. A seaman entering or impressed into the King's
service, does not forfeit the wages or prize money which he had
previously earned, or incur any other forfeiture whatever, but will
have a right to a rateable portion of wages up to the time of quit-
ting the merchant vessel, which right is liable to be defeated, in the
same way as if he had remained on board, ex. gr. by capture. (Jc) It
appears also, that if he die during his voyage, his representatives
may claim pro rata. (T)

With respect to the time for the payment of the wages, (m) it is
enacted, by stat. 7 & 8 Vict. c. 112, sect. 11, as follows:

" That the master or owner of every ship shall and is hereby required
to pay to every seaman his wages within the respective periods following ;
(that is to say,) if the ship shall be emploj'^ed in coasting, the wages shall

{h) Harris v. "Watson, Peake, 72. Stilk v. Myrick, 2 Camp. 31*7. See Tliompson
». Havelock, 1 Camp. 527. But see Clutterbuek v. Coffin, 3 M. & Gr. 842.

(i) Abbott, 619, 8th ed. Chandler v. Grieves, 2 H. Bl. 606, n. a.

{j ) Beale v. Thompson, 3 B. <fe B. 405 ; 4 East, 546. Johnson v. Broderick, 4 East,
566.

(/-•) "Wiggins V. Ingleton, 2 Lord Raj-m. 1211. Clements v. Mayborn, Abbott, 621,
8th ed. Paul v. Eden, ibid. Anon. 2 Camp. 320, n. Stat. 5 »& 6 "Wm. 4, c. 19, s. 40.

(0 Armstrong v. Smith, 1 N. R. 299. Cutter v. Powell, 6 T. R. 320.

(?h) The statute 8 & 9 Viet. c. 116, s. 7, prohibits any advance of wages until the
ship's articles have been signed, and then only in money until they have been signed
on board six hours. Every payment must be to the seaman himself, and paymenta
contrary to the Act are void.

544 MERCANTILE CONTRACTS.

Duties and Rights of Seamea under the Contract.

be paid within two days after the termination of the agreement, or at the
time when any such seaman shall be discharged, whichever shall first
happen ; and if the ship shall be employed otherwise than coasting, then
the wages shall be paid at the latest within three days after the cargo shall
have been delivered, or within seven days after the seaman's discharge,
whichever shall first ha'ppen ; and in all cases the seaman shall, at the time
of his discharge, be entitled to be paid, on account, a sum equal to one-
fourth part of the balance due to him : and in case the master or owner
shall neglect or refuse to make payment in manner aforesaid, he shall for
every such neglect or refusal forfeit and pay to the seaman the amount of
two days' pay (to be recovered as wages) for each day, not exceeding ten
days, during which payment shall, without sufficient cause, be delayed be-
yond the respective periods aforesaid : provided always, that nothing in
this clause contained shall extend to the cases of ships employed in the
Southern Whale Fishery, or on voyages for which seamen, by the terms
of their agreement, are wholly compensated by shares in the profits of the
adventure."

By sect. 12,

" That every such payment of wages to a seaman shall be valid and
effectual in law, notwithstanding any bill of sale or assignment which may
have been of such wages, or of any attachment or incumbrance thereon,
and that no assignment or sale of wages or salvage made prior to the
accruing thereof, nor any power of attorney expressed to be irrevocable
for the receipt of any such wages or salvage, shall be valid or binding upon
the party making the same, and any attachment to be issued from any
court whatever shall not prevent the payment of wages to any seaman ;
and if during the voyage the allowance of provisions which a seaman
agreed to receive shall be reduced one-third of the quantity or less, he
shall receive four pence per day, and if the reduction be more than one-
third, he shall receive eight pence per day, during the period such respec-
tive deductions may be made, and such pecuniary allowance shall be made
to liim in addition to, and be recoverable as wages."

The following section, 7 & 8 Vict. c. 112, sect. 51, applies to
the case of a seaman quitting a merchant ship and entering the
King's service :

" That when any seaman shall quit any such ship or vessel as afore-
said, in order to enter into her Majesty's naval service, and shall thereupon
be actually received into such service, not having previously committed

CONTRACTS WITH SEAilEN. 545

Duties and Rights of Seamen under the Contract.

any act amounting to and treated by the master as desertion, he shall be
entitled, immediately upon such entry, to have his register ticket and all
his clothes and effects on board such ship or vessel delivered to him, and
to receive from the master the proportionate amount of his wages up to
the period of such entry, to be paid either in money or by a bill on the
owner ; all which register ticket, clothes, effects, money, or bill, such
master is hereby required to deliver and pay to him accordingly, under a
penalty of twenty pounds for any refusal or neglect, to be recovered with
full costs of suit by such seaman ; but in case the master shall have no
means of ascertaining the balance, he shall make out and deliver to such
seaman a certificate of the period of his service, and the rate of wages he
is entitled to, producing at the same time tc the commanding or other
officer of her Majesty's vessel the agreement with the seaman ; and every
such master, upon the delivery of such register ticket, clothes, and effects,
and the settlement of such wages in manner herein mentioned, shall re-
ceive from the officer in command of the vessel into which the seaman
shall have entered a certificate of such entry, indorsed on the agreement,
and signed by the said officer, which such officer is hereby required to
give."

Tlie owner or master is bound during the voyage to keep a
proper supply of medicine, suitable to the accidents and disease3
likely to occur during the voyage, and, in certain cases, to provide
a surgeon.

The enactment (?^) is as follows :

" That every ship navigating between the United Kingdom and any
place out of the same, shall have and keep constantly on board a sufficient
supply of medicines and medicaments suitable to accidents and diseases
arising on sea voyages, in accordance with the scale which shall from time
to time, or at any time, be issued by the lord high admiral, or by the com-
missioners for executing the office of lord high admiral, and published in
the London Gazette; and every ship (except those bound to European
ports or to ports in the Mediterranean Sea) shall also have on board a
sufficient quantity of lime or lemon juice, sugar, and vinegar, the lime or
lemon juice, sugar, and vinegar to be served out to the crew, whenever
they shall have been consuming salt provisions for ten days ; the lime or
lemon juice and sugar daily, after the rate of half an ounce each per day,
and the vinegar weekly, at the rate of half a pint per week, to each per*

in) 1 <fe8 Vict. c. 112, 8, 18.
35

546 MERCANTILE CONTRACTS.

Duties and Rights of Seamen under the Contract.

son, SO long as the consumption of salt provisions De continued ; and in
case any default shall be made in providing and keeping such medicineS;
medicaments, and lime or lemon juice, sugar, and vinegar, the owner of
the ship shall incur a penalty of twenty pounds for each and every default ;
and in case of default of serving out such lime or lemon juice, sugar, or
vinegar as aforesaid, the master shall incur a penalty of five pounds for
each and every default ; and in case the master or any seaman shall re-
ceive any hurt or injury in the service of the ship, the expense of providing
the necessary surgical and medical advice, with attendance and medicines,
and for his subsistence until he shall have been cured, or shall have been
brought back to some port of the United Kingdom, shall, together with the
costs of his conveyance to the United Kingdom, be defrayed by the said
owner of the ship without any deduction whatever on that account from
the wages of such master or seaman ; and, if paid by any officer or other
person on behalf of her Majesty, the amount with full costs of suit shall
be recovered as a debt due to her Majesty ; and every ship having one
hundred persons or upwards on board, and every ship the voyage of which
shall be deemed, under the provisions of the act passed in the sixth year
of the reign of her present Majesty, intituled ' An act for regulating the
carriage of passengers in merchant vessels,' to exceed twelve weeks, hav-
ing fifty persons or upwards on board, shall have on board, as one of her
complement, some person duly authorized by law to practise in this king-
dom as a physician, surgeon, or apothecary ; (o) and in case of every de-
fault, the owner shall incur a penalty not exceeding one hundred pounds."

On his discharge, the seaman is, by 7 & 8 Yict, c. 112, s. 13,
entitled to a certificate, specifying the period of service, and time
and place of discharge, and the master's refusal to give it, if with-
out reasonable cause, subjects him to a penalty of 61. And, if the
ship be sold at a foreign port, the seamen are, by sect. 17, entitled
either to be provided with employment in a British vessel home-
ward bound, or to be provided by the master with a passage and
subsistence home, or else to have a sufficient sum for that purpose
deposited with the British Consul.

To prevent the improper leaving of seamen behind, or forcing
them on shore, the same statute enacts as follows: (i?)

(o) This provision as to carrying a medical man is repealed as to ships carrying
passengers to the east coast of North America, by stat. 8 tfe 9 Vict. o. 14.
(p) Sects. 46, 47, 48.

CONTRACTS WITH SEAMEN.

547

Duties and Rights of Seamen under the Contract.

" And whereas great mischiefs have arisen from masters of merchant
ships leaving seamen in foreign parts, who have been thus reduced to dis-
tress, and thereby tempted to become pirates or otherwise misconduct
themselves, and it is expedient to amend and enlarge the law in this be-
half; be it therefore enacted, That if any master of a ship belonging to
any subject of her Majesty shall discharge any person belonging to his
ship or crew at any of her Majesty's colonies or plantations, without the
previous sanction in writing (to be indorsed on the agreement) of the
governor or other officer holding the chief authority there, or of the secre-
tary or other officer duly appointed by the government there in that be-
half, or in the absence of such functionaries, then of the chief officer of
customs resident at or near such port or place, or shall discharge any such
person at any other place abroad without the like previous sanction, to be
so indorsed on the agreement by her Majesty's minister, consul, or vice
consul there, or in the absence of any such functionary, then of two re-
spectable merchants resident there, such master shall be guilty of a misde-
meanor ; or if any master of any such ship shall abandon or leave behind
at any such colony or plantation any person belonging to his ship or crew,
on the plea or pretence of unfitness or inability to proceed ui^on the voy-
age, or of desertion or disappearance from the ship, without a previous cer-
tificate in writing (to be indorsed on the agreement) of the governor, sec-
retary, or other officer as aforesaid, or in the absence of such functionary,
then of the chief officer of customs resident at or near such port or place,
certifying such unfitness, inability, desertion, or disappearance, or shall
abandon or leave behind any person belonging to his ship or crew at any
other place abroad, on shore or at sea, upon such plea or pretence, with-
out the like previous certificate of her Majesty's minister, consul, or vice
consul there, or in the absence of any such functionary, then of two respect-
able merchants, if there be any such at or within a reasonable distance
from the place where the ship shall then be, such master shall be guilty
of a misdemeanor ; or if any master of any such ship, in case any person
belonging to his ship or crew shall desert from the said ship at any place
abroad, shall neglect to notify the same in writing to one of such function-
aries as aforesaid, if there be any such resident at or near the place, and
in their absence, if it be out of her Majesty's dominions, then to two re-
spectable merchants, if there be such at or near the place, within twenty-
four hours of such desertion, such master shall be guilty of a misdemeanor ;
and the said functionaries are hereby authorized and required, and the said
merchants are authorized, to examine into the grounds of such proposed
discharge, or into the plea or pretence of such unfitness, inability, deser

548 MERCANTILE CONTRACTS.

"Wages, how Lost or Forfeited.

tion, or disappearance as aforesaid, in a summary way, upon oath (which
oath they are respectively authorized to administer), and to grant or re-
fuse such sanction or certificate according to the circumstances, and as it
shall appear to them to be just.

" And be it enacted, That if the master of any ship belonging to any
of her Majesty's subjects, or the mate or other officer of such ship, shall
wrongfully force on shore and leave behind, or shall otherwise wilfully
and wrongfully leave behind on shore, or at sea, in or out of her Majesty's
dominions, any person belonging to his ship or crew, before the comple-
tion of the voyage for which such person was engaged, or the return of
the ship to the United Kingdom, such master, mate, or other officer, shall
be guilty of a misdemeanor ; and every misdemeanor mentioned or cre-
ated by this act shall and may be prosecuted by information at the suit
of her Majesty's attorney general, or by indictment or other legal pro-
ceeding in any court having criminal jurisdiction in her Majesty's domin-
ions at home or abroad ; and the offence may be laid and charged in the
said information, indictment, or other legal proceeding, to have been com-
mitted in the county or place where the offender shall happen to be, who,
being convicted thereof, shall be liable to fine or imprisonment, or both,
as to the court before whom he is tried shall seem meet : and every court
is hereby authorized to issue a commission or commissions for the exami-
nation of any witness or witnesses who may be absent or out of the
jurisdiction of the court ; and at the trial, the depositions taken under
such commission or commissions, if such witness or witnesses shall be
then absent, shall be received in evidence.

" And be it enacted. That if any master shall, contrary to the provi-
sions of this act, discharge, abandon, or leave behind any seaman or other
person belonging to the ship or crew, with or without his consent, it shall
be incumbent on such master, in any information, indictment, or other
proceeding against him, to produce or prove such sanction or respective
certificate as aforesaid, or prove the impracticability of obtaining such
certificate."

Section" III. — Wages, hoiu lost or forfeited.

The wages of seamen, whether hired by the voyage or the
month, are sometimes lost, and sometimes forfeited. Freight is said
Lo be the mother of loages ; {q) and if, during the voyage, a total loss
or capture of the ship take place, the seamen, except when stat.

(y) There are some exceptions to this doctrine. See The Neptune, 1 Hagg. 227.

CONTRACTS WITH SEAMEN. 54&

Wages, how Lost or Forfeited.

7 & 8 Yict, c. 112, s. 18, protects them, lose their wages. (?■) But
if there be an outward and a homeward voyage, they will be enti-
tled to wages for the former, if the ship were lost durmg the hatter;
unless the two were by agreement consolidated into one ; (.s) for
then no freight would have been earned. So if there be several
cargoes and several voyages, they have a right to wages up to the
conclusion of the last. If the ship go out empty to look for freight
and return without procuring any, the seamen are entitled to their
wages, (i) And, if money have been advanced to the owner in
part of freight, they have a right to wages j^^o rata out of that,
although the vessel have been wrecked before the termination of
the voyage, {u) If, in case of a wreck, the cargo be saved, and the
merchant pay part of the freight in respect thereof, the seamen
seem both on principle and authority entitled to part of their
wages, (f) Indeed it was before the late statute questioned whether
their right to this part could be prevented from accruing by an
express stipulation in the contract of hiring, and, though it was at
last settled that in a court of common law at least it might be
so, (w) yet the late statute expressly invalidates any clause or stipu-
lation of that nature, (a;)* And it was held, where by great labor
they had saved part of the ship, that they were entitled to wages
out of the produce, {y) But it is said, that if the ship were not
seaworthy, and the voyage discontinued on that account, the sea-
men's remedy is not for wages, but by a special action for the

(r) Abbott, 619, 8th ed. Appleby v. Dods, 8 East, 300. Abernethy v. Landale,
Dougl. 539; 1 Sid. 179. Ilernaman v. Bawden. 3 Burr. 1844.

(s) Anon., 1 Ld. Raym. 639 ; 12 Mod. 408 ; 2 Magens, 113. See Appleby v. Dods,
8 East, 300. Jesse v. Roy, 4 Tyrwh. 626; 1 C. M. & R. 316. The Juliana, 2 Doda.
604.

(t) The Neptune, Clarke, A. R. 22Y; Abb. 485.

(m) Anon., 2 Shower, 283. See Saunders v. Drew, 3 B. & Ad. 445.

(y) Abbott, 631, 8th ed.

(w) Jesse V. Roy, 4 Tyrwh. 626; 1 C. M. & R. 316. See The Juliana, 2 Dods.
504.

(x) 1 & 8 Vict. c. 112, s. 5.

(y) The Neptune, 1 Hagg. 227. The Reliance, 2 W. Rob. 120.

* As to the genei-al effeet of stipulations in shipping articles upon the wages of
seamen, see opinion of J. Story in Brown v. Lull, 2 Sumn. 444.

550 MERCANTILE CONTRACTS.

Wages, how Lost or Forfeited.

breach of contract, (z) They seem entitled to their wages, subject,
perhaps, to a deduction for salvage, in case of capture and recap-
ture, (a)

The statute 7 & 8 Yict. c. 112, s. 17, enacts, that, in all cases
of wreck or loss of the ship, every surviving seaman shall be en-
titled to his wages up to the period of the wreck or loss of the
ship, whether such ship shall or shall not have previously earned
freight, provided the seaman shall produce a certificate from the
master or chief surviving ofl&cer of the ship, that he had exerted
himself to the utmost to save the ship, stores, and cargo.

According to the doctrine of the common law, [h) which has
been affirmed and extended by many enactments of the Legisla-
ture, (c) desertion from the ship forfeits the seaman's wages. The
statutory provision now in force upon this subject is 7 & 8 Vict. c.
112, s. 9, which enacts as follows :

" That any seaman or other person who shall desert the ship to which
he shall belong shall forfeit to the owner thereof all his clothes and effects
which he may leave on board, and he shall also forfeit all wages and
emoluments to which he might otherwise be entitled ; and in case of any
seaman deserting abroad he shall likewise forfeit all wages and emolu-
ments whatever which shall be or become due, or be agreed to be paid to
him from or by the owner or master of any other ship in the service
whereof such seaman may have engaged for the voyage back to the United
Kingdom ; and that all wages and portions of wages and emoluments
which shall in any case whatever become forfeited for desertion shall be
applied, in the first instance, in or towards the reimbursement of the ex-

(z) Eaken v. Thorn. 5 Esp. 6.

(a) Bergstrom v. Mills, 3 Esp. 36. Sed vide Chandler v. Meade, cited 2 Ld. Raym.
1211. See The Friends, 4 Rob. 143. And Beale v. Thompson, 4 East, 546.

(b) The Baltic Merchant, 1 Edw. 86 ; Molloj^ b. 2, c. 3, s. 10. Bulmer, 1 Hagg..
163. See The Eliza, ibid. 182. Countess of Harcourt, ibid. 248. The Pearl, 5 Rob.
224. Neave v. Pratt, 2 N. R. 408. As to -what constitutes a desertion, see the West-
moreland, 1 W. Rob. 206.

(c) 11 & 12 Wm. 3, c. 1, s. IT ; 2 Geo. 2, c. 36, s. 3, made perpetual by 2 Geo. 3,
c. 31 ; 31 Geo. 3, c. 39, ss. 3, 4, relating to the coasting trade. 37 Geo. 3, c. 73, s.
1, relating to West India Traders. 4 Geo. 4, c. 25, s. 9. These acts -were repealed
by the 5 & 6 Wm. 4, c. 19, and are only mentioned historicallj'. The application of
the common law as to desertion is not excluded by them. The Westmoreland, 1 W
Rob. 206. The Two Sisters, 2 W. Rob. 125.

CONTRACTS WITH SEAMEX. 551

Wages, how Lost or Forfeited.

pensGs occasioned by such desertion to the owner or master of the ship
from which the seaman shall have deserted, and the remainder shall be
paid to the Seaman's Hospital Society ; and the master shall, in case of
desertion in the United Kingdom, deliver up the register ticket of such
seaman or other person to the collector or comptroller of the customs at
the port : provided always, that every desertion be entered in the log
book at the time, (d) and certified by the signatures of the master and
the mate, or the master and one other credible witness ; and that the ab
sence of a seaman from his ship for any time within twenty-four hours
immediately preceding the sailing of the ship from any port, whether
before the commencement or during the progress of any voyage, wilfully
and knowingly, without permission, or the wilful absence of a seaman
from his ship at or for any time without permission, and under circum-
stances showing an intention to abandon the same, and not return thereto,
shall be deemed a desertion of and from the same ship; and in case any
seaman shall desert in parts beyond the seas, and the master of the ship
shall engage a substitute at a higher rate of wages than that stipulated in
the agreement to be paid to the seaman so deserting, the owner or master
of the ship shall be entitled to recover from the deserter, by summary
proceeding, in the same manner as penalties are by this act made recov-
erable, (so flir as the name can be applied.) any excess of wages or portion
thereof, which such owner or master shall pay to such substitute beyond
the amount which would have been payable to the deserter in case he had
duly performed his service pursuant to his agreement: provided always,
that no seaman shall be imprisoned longer than three calendar months for
nonpayment of any such excess of wages."

A forfeiture of wages may, of course, be waived by the party
entitled to take advantage of it. (e) It was held, before the late
act, that quitting the ship with leave of the master, and refusing
to return when ordered, is desertion ; (/) but, quitting the ship,
and refusing to proceed on a voyage not designated by the articles,
is not so]{g) nor is a man a deserter who has been compelled to
quit the ship by inhuman treatment, or by want of provisions, (h)

{d) As to the necessity for this, in order to -work a forfeiture of wages, see The
Two Sisters, ubi sup.

(e) Miller v. Brant, 2 Camp. 690.

(/) The Bulmer, 1 Hagg. 163. The Pearl. 5 Rob. 224.

{g) The Eliza, 1 Hagg. 182. The Countess of Harcourt, ibid. 168.

{h) The Castile, 1 Hagg. 59.

552 MERCANTILE CONTRACTS.

"Wages, how Lost or Forfeited.

or dismissed without lawful cause, (i) So merely quitting the ship
without leave and going on shore for a temporary purpose, e. g. to
obtain legal advice as to the effect of the articles, does not consti-
tute desertion, {j) The 5 & 6 Wm. 4, c. 19, s. 9, enacted that an
absence from the ship for any time within the space of twenty-four
hours immediately preceding her sailing, Avithout permission from
the master, or for any period, however short, under circumstances
plainly showing that it was not his intention to return, should be
deemed an absolute desertion. But this section was held not to
apply to a desertion after the ship's arrival at her port of discharge,
that case being provided for by section 7. (Ic)

Tem'porary alsence from duty without leave and wilful, after the
ship has left her first port of clearance, is by the same act (7 & 8
Vict. c. 112, ss. 7, 8,) punished as follows :

" And be it enacted, That if any seaman during the time or period
specified for his service shall wilfully and without leave absent himself
from the ship, or otherwise from his duty, he shall (in all cases not of de-
sertion, or not treated as such by the master) forfeit out of his wages the
amount of two days' pay, and for every twenty -four hours of such absence
the amount of six days' pay, oi*, at the option of the master, the amount
of such expenses as shall have been necessarily incurred in hiring a substi-
tute ; and in case any seaman while he shall belong to the ship shall with-
out sufficient cause neglect or refuse to perform such his duty as shall be
reasonably required of him by the master or other person in command of
the ship, he shall be subject to a like forfeiture in respect of every such
offence, and of every twenty-four hours' continuance thereof; and in case
any such seaman, after the ship's arrival at her port of delivery, and be-
fore her cargo shall be discharged, shall quit the ship, without a previous
discharge or leave from the master, he shall forfeit one month's pay out
of his wages: provided always, that no such forfeiture shall be incurred
unless the fact of the seaman's absence, neglect, or refusal shall be duly
entered in the ship's log book, the truth of which entry it shall be incum-
bent on the owner or master, in all cases of dispute, to substantiate by the
evidence of the mate or some other credible witness.

" And be it enacted, That in all cases where the seaman shall have con-

(i) Limland v. Stevens, 3 Esp. 2G9. Sigard v. Roberts, 3 Esp. '72.
{j) The Westmoreland, 1 W. Rob. 216.
\k) M'Donald v. Jopling, 4 M. & W. 285.

CONTRACTS WITH SEAMEX. 553

Remedies of SoMman for his Wages.

tracted for wages by the voyage, or by the run, or by the share, and not by
the month or other stated period of time, the amount of forfeitures to be
incurred by seamen under this act shall be ascertained in manner follow-
ing : (that is to say,) if the whole time spent in the voyage agreed upon
shall exceed one calendar month, the forfeiture of one month's pay ex-
pressed in this act shall be accounted and taken to be a forfeiture of a sum
of money bearing the same proportion to the whole wages or share as a cal-
endar month shall bear to the whole time spent in the voyage ; and in like
manner a forfeiture of six days' pay, or less, shall be accounted and taken,
to be a forfeiture of a sum bearing the same proportion to the whole wages
or share as the six days or other period shall bear to the whole time spent
in the voyage ; and if the whole time spent in the voyage shall not exceed
the period for which the pay is forfeited, the forfeiture shall be accounted
and taken to be a forfeiture of the whole wages or share ; and the master
or owner is hereby authorized to deduct the amount of all forfeitures out
of the wages or share of any seaman incurring the same."(^)

Neglect or refusal to assist the master in his defence against
pirates, forfeits the wages; {m) and so, it seems, does a justifiable
discharge for gross misconduct, (n) And if the cargo be embezzled
or injured bj the fraud or negligence of the seamen, the owner has
a right (as the agreement given in the schedule to the act states) to
deduct a compensation from the wages of those whose misconduct
has produced the injury ; (0) but he has no right to make any de-
duction on that account from the wages of the innocent, (p)

Section IT. — Remedies of Seaman for his Wages.

It only remains to state the remedies which the law has pro-
vided for the recovery of seamen's wages. If the hiring be on the
usual terms, and made by words, or by writing only, and not by
deed, the seamen, or any one or more of them, and every officer,

{I) ^Jid Bce, on tlie corresponding sections in the former statute, Frontine v. Frost,
3 B. & P, 302. McDonald v. Jopling, 4 M. & W. 285. The Two Sisters, 2 W. Rolx
VA.

(w) 22 & 23 Car. 2, c. 11, s. V.

(n) Robiaet v. The Ship Exeter, Rob. 261. The Blake, 1 W. Rob. '73.

(o) Molloy, b. 2, c. 3, s. 9; 2 Shower, 167 ; 1 Ld. Raym. 650.

(;>) Thompson v. Collins, 1 N. R. 347.

554 MERCANTILE CONTRACTS.

Remedies of Seaman for his Wages.

except the master, may sue in the Court of Admiralty, and may,
by the process of that court, arrest the ship as a security for their
demand, or cite the masters or owners personally to answer them ;
(q) and that not only for the wages earned during the voyage, but
for those earned in fitting the ship out, if the owners will not after-
wards despatch it ; (r) the same remedy is, generally speaking, open
to foreign seamen, whose claim is founded on the maritime law. {s)
And, where the seamen thus proceed against the ship, their claim
is preferred to all other charges on her, since to their labor alone is
her preservation and existence attributable. (;!)

If the agreement be by deed, or contain special terms, the sea-
man's remedy is by action in the courts of common law ; (w) which
remedy is also open to him in cases where the Admiralty has juris-
diction, and it is the only one to which the master can have re-
course, (v) if he fail to reimburse himself, as he may, out of the
ship's freight and earnings. But whether the party sue in the
Court of Admiralty, or at law, the suit must be commenced within
six years, except in case of disability, (iv) The seaman has a right
to sue either the master or the owners ; and whenever it becomes
necessary to produce the agreement in court, it lies on them, not
upon him, to do so. {x)

By 7 & 8 Vict. c. 112, s. 14 :

{q) Abbott, 656, 8th ed., citing as to the seamen, "Winch. 8. AUeson v. Marsh, 2
Vent. 181. Anon., 3 Mod. 379. Benns v. Parr, 2 Ld. Raym. 1206. The Boatswain,
King V. Ragg, 2 Str. 858 ; 1 Barnard, 297. The Carpenter, Wheeler v. Tliompson, 1
Str. 'TOT. The Surgeon, Sayer, 136. The Mate, Bayley v. Grant, 1 Ld. Raym. 632 ;
Salk. 33. Read v. Chapman, 2 Str. 937.

(r) Wells V. Osman, 2 Ld. Raym. 1044 ; 6 Mod. 238. Mills v. Gregory, Sayer,
127. But see, as to the jurisdiction of the Court of Admiralty in such a case. The
City of London, 1 W. Rob. 88.

(s) Abbott, 657, 8th ed. The Golubchick, 1 W. Rob. 143.

{t) The Favorite, 2 Rob. 232.

{u) See Abbott, 656, 663, 8th ed.; 2 Dodson's A. R. p. 12. Opy v. Child, Salk.
31. Day v. Searle, Abbott, 660, 8th ed. How v. Napier, 4 Burr. 1944. Vide Abbott,
663, 8th ed., and Menetone v. Gibbons, 3 T. R. 267, and Buck v. Attwood, 2 Str. 761.
The Mona, 1 W. Rob. 137. The Riby Grove, 1 W. Rob. 52.

{v) Read v. Chapman, 2 Str. 937. Favorite, 2 Rob. 233. Ragg v. King, 2 Str.
858. Clay v. Sudgrave, Sal. 33; 1 Ld. Rfiym. 576; 12 Mod. 405 ; Carth. 618; but
lee 7 <fe 8 Vict. c. 112, s. 16, post, p. 555.

(u)) Stat. 4 Anne, c. 16, s. 17, 18, 19 ; 21 Jac. 1, c. 16, ss. 3, 7.

{x) Bowman v. Manzleman, 2 Camp. 315. Stat. 7 & 8 Vict. c. 112, s. 6.

CONTRACTS WITH SEAMEN. 555

Remedies of Seaman for his Wages.

" And be it enacted, That if three days after the termination of the
stipulated service, or if three days after a seaman shall have been dis
charged, he shall be desirous of proceeding on another voyage, and in order
thereto, or for any other sufficient reason, shall require immediate payment
of any amount of wages, not exceeding twenty pounds, due to him, it shall
be lawful for any justice of the peace, in and for any part of her Majesty's
dominions or the territories under the government of the East India Com
pany, where or near to the port or place where such service shall have
terminated, or such seaman shall have been discharged, or the party or
parties liable shall be or reside, on application from such seaman, and on
satisfactory proof that he would be prevented from employment or incur
serious loss or inconvenience by delay, to summon such party or parties
before him, and if it shall appear to the satisfaction of such justice that
there is no reasonable cause for delay, to order payment to be made forth-
with, and in defiult of immediate compliance with such order, such party
or parties shall forfeit and pay to such seaman, in addition to his wages,
the sum of five pounds."

And by sects. 15 and 16, it is enacted,

" That in all cases of wages, not exceeding twenty pounds, which shall
be due and payable to any seaman, it shall be lawful for any justice of the
peace in and for any part of her Majesty's dominions, or the territories
under the government of the East India Company, where or near to the
place where the ship shall have ended her voyage, cleared at the custom
house, or discharged her cargo, or where or near to the place where the
party or either of the parties upon whom the claim is made shall be or
reside, upon complaint on oath made to such justice by such seaman, or
on his behalf, to summon such party or parties to appear before him to
answer such complaint ; and upon the appearance of such party or parties,
or, in default thereof, on due proof of him or them having been so sum-
moned, such justice is hereby empowered to examine the parties and their
respective witnesses (if there be any), upon oath, touching the complaint
and the amount of wages due, and to inspect any agreement or copy
thereof, if produced, and make such order for payment of the said wages,
not exceeding twenty pounds, with the costs incurred by the seaman in
prosecuting such claim, as shall to such justice appear reasonable and just;
and in case such order shall not be obeyed within two days next after the
making thereof, it shall be lawfui for such justice to issue his warrant to
levy the amount of the wages awarded to be due, by distress and sale of
the goods and chattels of the party on whom such order for payment shall

556 MERCANTILE CONTRACTS

Remedies of Seaman for his Wages.

be made, rendering to such party the overplus (if any shall remain of the
produce of the sale), after deducting thereout all the costs, charges, and
expenses incurred by the seaman in the making and prosecuting of the
complaint, as well as the costs and charges of the distress and levy ; or to
cause the amount of the said wages, costs, charges, and expenses, to be
levied on the ship in respect of the service on board which the wages are
claimed, or on the tackle and apparel thereof: and if such ship shall not
be within the jurisdiction of such justice, or such levy cannot be made, or
shall prove insufficient, then he is hereby empowered to cause the party
upon whom the order shall be made to be apprehended, and committed to
the common gaol of the district or county, there to remain without bail
until payment shall be made of the amount of the wages so awarded, and
of all costs and expenses attending the recovery thereof; and the award
and decision of such justice as aforesaid shall be final and conclusive.

" That all the rights, liens, privileges, and remedies (save such reme-
dies as are against a master himself), which by this act, or by any law,
statute, custom, or usage, belong to any seaman or mariner, not being a
master mariner, in respect to the recovery of his wages, shall, in the case
of the bankruptcy or insolvency of the owner of the ship, also belong and
be extended to masters of ships or master mariners, in respect to the re-
covery of wages due to them from the owner of any ship belonging to any
of her Majesty's subjects ; and that no suit or proceeding for the recovery
of wages shall, unless they exceed twenty pounds, be instituted against
the ship, or the master or owner thereof, either in any Court of Admiralty
or Vice-Admiralty, or any court of record in her Majesty's dominions or
the territories under the government of the East India Company, unless
the owner of the ship shall be bankrupt or insolvent, or the ship shall bo
under arrest or sold by the authority of any Admiralty or Vice-Admiralty
Court, or unless any magistrate acting under the authority of this act shall
refer the case to be adjudged by any such court or courts, or unless neither
the owner nor master shall be or reside at or near the port or place where
the service shall have terminated, or where any seaman shall have been
discharged or put on shore." (y)

(y) See, on the construction of the sections 15 and 16 in the former act, 5 & 6 Wm.
4 c. 19, which gave a summary "emedy for wages under 20/., The King William, 2
W. Rob. 231. The language of those sections differed materially from tlie provisions
abovs set forth.

CHAPTER X.

APPKE»TICESHIP.

The contract of apprenticeship is, as its name denotes, (a) a bargain
for instruction {b) to be bestowed by one person upon another, who,
in return, agrees to give up his whole time and services to his in-
structor, and frequently also to bestow upon him a pecuniary re-
muneration. The relation which it creates is one of very ancient
origin, and the reciprocal rights and duties which it involves greatly
resemble those of parent and child, for the master is entitled to the
whole produce of the labor of his apprentice, (c) and may, in case
of disobedience by the latter to his lawful commands, or upon the
detection of any immorality in his behavior, administer to him, if
an infant, reasonable and wholesome corporal chastisement, such as
a father may inflict upon his child, or a schoolmaster upon his pu-
pil : the right to do so issuing in each case out of the patria potestas,
the delegation of which has been, in all ages, allowed for the sake
of the good government and education of young persons, {d) The
state of the apprentice, however, differs from that of a schoolboy in
this material particular, viz., that an apprenticeship being, at com-
mon law, looked upon as a contract between the master and the

(a) From Apprendre.

{b) See Rex v. Crediton, 2 B. <fe Ad. 493. Rex v. Igtham, 4 Ad. & E. 93*7.
{c) See Anon., 12 Mod. 415. Puckington v. Chepton Beauchamp, Str. 582. Bar-
ber V. Dennis, 1 Salk. 98. Foster v. Stewart, 3 M. <fe S. 191. Sed vide Carson v. Watts,
3 Dougl. 350.

{d) Bl. Comm. 428. Penn v. "Ward, 5 Tyrwh. 979 ; 2 C. M. & R 338. Th«
principle was well known t«. the ancients.

Dii majornm umbris tenueni et sine pondere terram
Spirantes que crocos ct in urna perpetuum ver.
Qui prseceptorem sancti voluere parentis
Esse loco.
The master cannot delegate this power, 9 Co. 76.

558 MERCANTILE CONTRACTS.

Apprenticeship.

apprentice, it could not have been created without the intervention
of the latter, (e) In the case of parish apprentices, this mutual con-
sent is now, however, dispensed with, and the whole subject regu-
lated by statutes, which will be found collected in the various trea-
tises on poor laws. (/)*

The contract of apprenticeship is one of those bj which a per-
son under age is permitted by law to bind himself, upon that gene-
ral ground adverted to by Lord Mansfield in Drury v. Drury, (g)
viz., that "if an agreement be for the benefit of an infant, it shall
bind him." (h) He may indeed elect to avoid the agreement at his
full age, (i) or even while under age if it be manifestly for his benefit
so to do. {j)

The Stat, 5 Eliz. c, 4, created many regulations and restrictions
respecting the mode of binding and the qualifications of appren-
tices, which being found extremely inconvenient in practice, it was,
by 54 Geo. 3, c. 96, enacted that any person may take or become an
apprentice, though not according to the provisions of that act, pro-
vided that the statute shall not prej udice the customs or by-laws of

(e) Rex V. Arnesby, 3 B. <fe A. 584. Rex v. Cromford, 8 East, 25.

(/) See Burn's Justice, tit. Apprentices and Poor, and see a summary of them,
Arclib. Poor Laws, p. 55. See also 4 <fe 5 Wm. 4, c. 76, s. 61 ; and as to apprentices to
the sea service, the Merchants' Seamen's Acts, 5 <fe 6 Wm. 4, c. 19, ss. 26 to 37 in-
clusiYe, and 7 & 8 Vict. 112, ss. 32 to 43, inclusive, and ss. 45, 43,

{(;) 5 Bro. P. C. 570.

(h) Accord. Rex v. St. Petrox, 4 T. R. 196. Rex v. St. Mary's, 1 Bott, 705. Rex
V. Arundle, 5 M. & S. 257. See Maddon v. "White, 2 T. R. 159. Rex v. Weddington,
1 Bott, 636.

(i) Ex parte Davis, 5 T. R. 715.

{j) Rex V. Great Wigton, 3 B, <fe C, 484, See Rex v. Gwinnear, 1 Ad. & E, 152,

* A fatlier has no authority to bind his son as apprentice without his consent.
The King v. Arnesby, 3 B. & A. 584. Lewin on Settlements, 251-2. And indentures
of apprenticeship, executed by the father without the concurrence of his son, are not
only voidable, but void. Pierce v. Mossenbury, 4 Leigh's Rep, 493. But the child
may bind himself without the concurrence of the father. The King v. Mount Sorrel,
3 M. & S. 497. The King v. Great Wigston, 3 Barn. <fe Cress. 484. It has been held
in Massachusetts, that under the provisions of their Revised Statutes, c. 80, s. 3, an
Instrument purporting to be an indenture of apprenticeship, and signed by the minor,
will not be binding upon him, unless it contains words expressing his consent thereto.
Harper v. Gilbert, 5 Cush. R. 417.

APPRENTICESHIP. 559

Apprenticesliip.

any corporation or company, {k) The contract of binding must
also, by the statute of Elizabeth, have been by deed indented, {I)
And though 54 Geo. 3, c. 96, has now dispensed with that for-
mality, still, even under it, a writing is required, and a mere parol
binding would not constitute an apprenticeship.

The binding, is, however, even now usually effected by deed, (m)
containing covenants by the master and apprentice for the faithful
discharge of their respective duties to each other. These covenants,
whether entered into by the infant and master, or by the master
and some other person, are independent, and the performance of
neither side is a condition precedent to that of the other, (n) An
infant may, as has been seen, bind himself an apprentice, yet no
action will lie against him upon any covenants contained in the in-
strument by which he does so. (0) The master is not, however,
without remedy for the misbehavior of his infant apprentice, since
he may, as we have seen, correct him personally if he do amiss,
taking care to use due moderation in the infliction of the punish-
ment. He may also complain of him before justices of peace, {p)
or maintain an action against any adult person who has covenanted
for the good behavior of the inft^nt in the deed of apprenticeship, (q)
and the liability of such a person continues, though the infan
should, on coming of age, elect to avoid the deed, (r)

The apprentice, on his part, is entitled to have the covenants in
the indentures duly performed towards him. (.s) And, even inde-

(k) See now 5 & 6 "Wm. 4, c. 1Q, s. 14, the Municipal Corporation Act.

(l) See Smith v. Birch, 1 Bott, 628. Castor v. Aickles, Salk. 68.

(m) See the ordinary printed form in Burn's Justice, Apprentices, and see Rex v.
Harrington, 6 Nev. & Mann. 165. By the custom of some towns, indentures of Ap-
prenticeship should be enrolled. See Com. Dig. London, n. 2. Barber v. Dennis, 6
Mod. 69. Rex v. Marshall, 2 T. R. 2. Rex v. Mayor of Cambridge, 2 Chitt. 144.

(«) Winstone v. Linn. 1 B. & C. 460. H ighes v. Humphries, 6 B. & C. 680. Wise
V. "Wilson, 1 Car. & K. 662.

(0) Gilbert!'. Fletcher, Cro. Car. 179; 1 Bott, 624.

(p) 5 Eliz. c. 4, 8. 35. 20 Geo. 2 c. 199, and 6 Geo. 3, e. 25. 32 Geo. 3, c. 57 ;
33 Geo. 3, c. 55. 5 & 6 Vict. c. Y. See Burn's Justice, tit. Apprentices.

{q) Whitley v. Loftus, 8 Mod. IdO. Elwes v. Vaughan, 1 Lutw. 386. Branch v.
Ewington, Dougl. 518. Every slight absence is not a breach of the covenant against
tthsenting. Wright v. Gibbon, 3 C. & P. 583.

(r) Cuming v. Hill, 3 B. <fe A. 59.

(«) As to whether the law would imply a covenant to employ the apprentice, see
ispdin V. Austin, 5 Q. B. 671. Dunn v. Sayles, ibid. 685.

5G0 MERCANTILE CONTRACTS.

Apprenticeship.

pendentlj of the instrument of apprenticeship, the master may be
sued, or, in a gross case of misconduct, even indicted, for ill usage
and neglect of him. (t) It would be murder in him were he to suffer
an apprentice of tender years to perish for want of food.

There are a number of statutory enactments which will be found
collected in Burn's Justice, giving a summary power to justices of
the peace in quarrels between masters and apprentices.

The apprenticeship may be determined by consent of parties ;
provided, if the apprentice be under age, that the dissolution be for
his advantage, (u) and provided the indentures, if any, be got rid
of; (v) or by an infant's election at his full age ; or by the master's
bankruptcy ; (to) or by the death of the master or apprentice ; or
by the intervention of the court of quarter sessions ; or, in some
cases of one, and in some others of two, justices, (x) upon complaint,
founded on just grounds, (y) of either the master or apprentice, (z)
It was long thought that whenever jurisdiction is given by the
Legislature to discharge an apprentice, the power of ordering a pro-
portionable restitution of the apprentice fee was incident to it. (a)
But the contrary has been determined upon the construction of the
statute 5 Eliz, c. 4, s. 35, in the late case of Uast v. Pell, {b)

(t) Rex V. Ridley, 2 Camp. 650. Rex v. Friend, R. & R. C. C. 20. See 1 Leach, 137

(m) Rex V. Weddington, Burr. S. C. 766.

(v) Rex V. Bow, 4 M. & S. 383.

(w) 6 Geo. 4, c. 16, a. 49, part of the apprentice fee is returnable; but see as to an
attorney's clerk, Ux parte Prideaux, 3 M. & Cr. 327.

(a:) See 5 Eliz. c. 4, s. 35, and 54 Geo. 3, c. 96, s. 3, and Hawksworth and Hillary's
case, 1 Wms. Saund. 316, et notas. See as to the application of the act in case of de-
fault by the master. Rex v. Collingbourne, 8 Ld. Raym. 1410 ; Str. 663. Coventry v.
Windall, Brownl. 67 ; 1 Bott, 569. Rex v. Amis, 1 Bott, 574. Rex v. Eastman, ibid.
575. la case of the apprentice's default. Rex v. Hales Owen, 1 Str. 99 ; 1 Bott, 572.
Anon., 1 Botl, 570; Skinn. 98. As to the jm-isdiction of the sessions. Rex v. Johnson,
Salk. 67. Rex v. Gill, 1 Str. 143. Ditton's case, 1 Salk. 290. Of one justice, Reg. v.
Daniel, 6 Mod. 182; 2 Raym. 1117. See stat. 20 Geo. 2, c. 19, and 4 Geo. 4, c. 29,
which confers jurisdiction on two justices, where the premium was not more than 25^.
Finlay v. Jowle, 12 East, 248. See stat 5 & 6 Vict. c. 7, explanatory of the former
acts. And see on the whole subject, Burn's Justice, tit. Apprentices,

{y) 1 Wms. Saund. 313, n. 2.

{z) Hawksworth and Hillary's case, 1 "Wms. Saund. 313, a.

(a) 1 Wms. Saimd. 313, in notis. Rex v. Vandeleer, 1 Str. 69. Rex v. Amis, 1
Bott, 574.

(i) East v. Pell, 4 M. &, W. 665.

APPRENTICESHIP. 5G1

Apprenticeship.

It is necessary, before leaving this subject, to say a few words
upon wliat is called the assignmeyit of an apprentice. A master
cannot assign his apprentice without the consent of the latter, (c)
And though, by the consent of all parties, the services of the ap-
prentice may be transferred, yet, in the generality of cases, this
operates as an agreement between the master and the transferee,
that the apprentice shall, with his own consent, perform his con-
tract to the former, by doing service to the latter, {d) By ihe cus-
tom of London, indeed, an assignment^ properly so called, of an
apprentice, may be made bv one freeman to another, (e) so as to
transfer the benefit of the covenants to the assio;nee.

(c) Coventry v. Woodhall, Hob. 134. Baxter v. Burfield, 2 Str. 12G6. An award
that an apprentice shall be assigned was in one case held void. Home v. Blake, 2
Str. 1267.

(d) See Austin v. Eccles, 1 Lord Raym, 683 ; 1 Bott, 580.
(c) Com. Dig. London, Keble, 255

CHAPTER XI.

G^UA3^A^srTIES.

Sect. 1. Nature and form of contract.

2. Surety^ how far liable.

3. Surety^ how discharged.

4. Surety^ how indemnified.

5. Representations in the nature of guaranties.

Section 1. — Nature and Form of Contract, (a)

A GUAKANTY is a promise to answer for the payment of some
debt, or the performance of some duty, in case of the failure of an-
other iicrson, who is himself, in the first instance, liable to such
payment of a performance. (/^)*

((t) As (lispnfoa nrc froquontl}' occasioned by the iimrt.ificial wording of guaran-
ties, tlic followini^ general form, ■which ma}' be safely adopted in anj' case, may, it is
thought, bo useful.

" London, tho of 18 — .

"In coTisidcration that Mr. C. D. will at m}^ request (or 'has at my request') —
[hero state the coim deration for whieh the guarantii is given^ I do hereby guarantee to
him, tho said Mr. C. D., \licre stale the siun or thing giiaranteed.'\ This guaranty is to
continue in force for tho period of [state the period if agreed o»] and no longer.

"Witness my hand, A. B."

(li) Fell on Guaranties, p. 1. A mere offer to guarantee is insufficient imtil ac-
cepted. M'lvor V. Richardson, 1 M. cfe S. 557. Mozley v. Tinkler, 1 C. M. A R. 692-
5 Tyrwh. 420. Symmons v. Want, 2 St.ark 371. Gaunt v. Hill, 1 Stark. 10. Sco
Coleman v. Upcot, 5 Vin. 527. Bird v. Blosse, 2 Vent. 861. Hodgson v. Hutchinson,
5 Yin. 522. On the question whether a dd ercdcre contract be a guarant}' M-ithin tho
Statute of Frauds, sco ante, Book 1, c. 5.

* Definition of Oitarantg. — Guaranty is substantially the same word as warranty.
They arc both derived from the French verb, garantir, to undertake, and are used
in the old law books as convertible terms. See Burril's Law Dictionary.

What constitutes a Ouarantg. — With the growth of connncrce, the law upon the

GUARANTIES. 503

Nature and Form of Contract..

By Stat. 29 Car. 2, c. 3, s. 4, "No action shall be brought, to
charge the defendant upon any special promise, to answer for the
debt, default, or miscarriage of another person, unless the agree-

subject of guaranty has expanded into an extensive title, involving numerous points
of practical interest., upon which there prevails great diversity of judicial opinion.
The more general and important of these points we propose to bring under a brief
review. The first inquiry' which can occasion any embarrassment, is as to what con-
stitutes a guaranty, or, iu other words, when an undertaking to answer for the debt
or duty of another is original, and when collateral. Where credit is given primarily
and exclusively to one person with his consent, although the consideration of such
credit ma}' inure wholly to the benefit of another, the party thus lending his name
is not a guarantor, but an original debtor. Birkmyr v. Darnell, Sidk. 27. Matson
V. Wharam, 2 T. R. 80. Forth v. Stanton, 1 Wms. Saunders, 211. According to
these authorities, there must be an exclusive liability on the part of the person mak-
ing the promise, unless some portion of the consideration inures to his benefit, or
unless there is some foundation for the liability independent of the promise, in order
to withdraw the case from the operation of the Statute of Frauds. The great weight
of American authority may be cited in favor of the rule thus laid down. Rogers v.
Kueeland, 13 Wend. ll-t. Tileseston v. Nettleton, 6 Pick. 509. Ware v. Stephenson,
10 Leigh. 145. Taylor v. Drake, 4 Shobh. 437. Randle v. Harris, 6 Yerg. 508. The
principle of the exception is illustrated b}? the docti'ine of the recent cases, in which
the del credere contract of a factor has been decided not to be within the Statute. It
seems at one time to have been supposed in Englaird, that if the contract of agency
under a del credere commission was looked upon as a guaranty, it would fall witliin the
purview of the 4th sect, of the Statute of Frauds, and be obligatory only when evi-
denced by an agreement in writing, subscribed b^' the party to be charged, and ex-
pressing an adequate consideration. This difilculty was suggested by Serg. Best in
Gall V. Comber, 7 Taunt 558, as a conclusive reason for adhering to the doctrine of
Lord Mansfield, denying to the agent the character of a surety', and constituting him
the principal debtor. It has, however, since been settled by the Court of Exchequer
in England, in accordance with the weight of American authorit}-, that the factor's
contract under a del credere conmiission, although subsidiary to that of the principal
debtor, is, in its nature, an original undertaking, and therefore not witliin the pnv-
view of the Statute. Couturier v. llastie, IG R L. <fe E. R. 562. Wolff i'. Koppel, 5
Hill N. Y. R. 458 ; S. C. 2 Denio, 368. Swan v. Nesmitli, 7 Tick. 220. 2 Duer on
Insurance, 838. Baron Parke, delivering the opinion of the Court of Exchequer, thus
states the principle of the modern rule. " If the factors in this case had for a per
centage guaranteed the debt owing by vendee, being totally unconnected with the
sale, they would not be liable without a note in writing signed by them ; but being
the agents to negotiate the sale, the commission is paid in respect of that employ-
ment A higher reward is paid in consideration of their taking greater care in sales
to their customers, and precluding all question whether the loss arose from nogli-
genee or not, and also from assuming a greater share of responsibilitj' than ordinsuy
agents, namelj', responsibility for the solvency and performance of their contracts by
thoir vendees. This is the main object (f the reward being given them, and though

564 MERCANTILE CONTRACTS.

Nature and Porm of Contract

ment upon which such action shall be brought, or some memoran-
dum or note thereof, shall be in writing, signed bj the party to be
charged therewith, or some other person thereunto by him lawfully

it may terminate in a liability to pay the debt of another, that is not the immediate
object for wliich the consideration is given ; and the case resembles in this respect
those of Williams v. Leper, 8 Burr. 1886, and Castling v. Aubert, 2 East, 325." In
the language of Judge Cowen in Wolff v. Koppel, " The contract of the factor has an
immediate respect to his own duty or obligation. The debt of another comes inci-
dentally as a measure of damages."

Mr. Hare, in his note to BirkmjT v. Darnell, 1 Smith's LeaCJng Cases, 322, suggests
that there may be cases in which a verbal contract will be binding, notwithstanding
the continuing liability of the party enjoying the Avhole benefit of the consideration ;
in other words, that where the contract is one strictly of suretyship and not of gua-
ranty, it is not embraced by tlie Statute. " If," says he, " the party who intervenes
in a contract for the benefit of another, has assumed to be the paymaster, and has
thus made himself directly and unconditionall}-, although jointly, answerable for the
debt, the Statute would seem to be inapplicable ; but if his engagement be merely to
pay if the other does not, that is, if it be one of guaranty, and not merely of surety-
ship, it will be within the direct terms of the Statute, and must be expressed in writ-
ing." It is conceded, however, by the annotator, that this distinction has been over-
looked in most of the adjudged cases.

A question has arisen whether a promise by one to indemnify another against
a liability assumed by him, at the request of the promisor, for the debt or default
of a third person, is within the Statute. Upon this question a discrepancy is to be
observed between the later and earlier English and American cases. In Thomas v.
Cook, 8 Barn. & Cress. '728, 15 E. C. L. R. 333, Bayley, J., and Park, J., the only
judges present, said, that a promise to indemnify does not fall within either the
words or the policy of the Statute. In the subsequent case of Green v. Cresswell, 10
Ad. (feEU. 453, 3*7 E. C. L. R. 142, where the plaintiff became bail for a stranger, in con-
sideration of defendant's request, and also the defendant's verbal promise to indem-
nify him against the consequences of such undertaking, C. J. Denman, delivering
the judgment of the Court, declared, that the reasoning in the preceding case, in sup-
port of the doctrine there laid down, did not appear satisfactory, and that if taken
in its full extent it would repeal the Statute of Frauds. " For every promise to be-
come answerable for the debt or default of another, may be shaped as an indemnity ;
but even in that shape, we cannot see why it may not be within the words of the
Statute. Within the mischief of the Statute it most certainly falls."

The doctrine of Thomas v. Cook has been followed in several American courts.
Thus, in Holmes v. Knight, 10 N. H. 175, where the defendant requested the plain-
tiff to become surety for a third person charg'ed witli an offence, and made a verbal
promise to indemnify him, it was held not to be witliin the Statute. The principle
seems also to have been recognized by C. J. Shaw in Chapin v. Lapham, 20 Pick.
467 ; but the point was not necessary to the decision of the cause, for the original
debtor being a minor, the whole credit was in effect given to the defendant. Hia
promise was not collateral.

GUARANTIES. 565

Nature and Form of Contract.

authorized." This section prevents a verhal guaranty from bind-
ing ; though, it is to be observed, that if money have been paid in
pursuance of it, that money cannot be recovered back : (c) and,

In New York, it was held in the early cases, that a promise by one person to in-
demnify another for becoming a guarantor for a third, was not within the Statute of
Frauds. Chapin v. Merrill, 4 Wend. 6o7. Harrison v. Sawtel, 10 John. R. 242. These
decisions were shaken by the case of Caiville v. Crane, 5 Hill, 483. The Court there
held, a verbal contract, by which the defendant, in consideration that the plaintiff at
his request would sell and deliver goods to a third person, undertook that he would
indorse their note at six months for the price, to be within the Statute, disapproving
of the decision in Bashnell v. Beaven, 1 Bingh. N. C. 103, 27 E. C. L. 320, where an
undertaking by the defendant, not that himself, but that another, shoidd guarantee
the debt, was held not to be within the Statute. J. Cowen, delivering the opinion of
the Court, commented on the case of Chapin v. Merrill, cited above, and intimated
that a liberal construction of the Statute might be made to reach it ; and in the con-
clusion of his opinion, declared that such a construction was due to the Statute, on the
ground that it was intended to prevent fraud and perjury. The views thus taken
have been confirmed b}- the late case of Kinsley v. Balcombe, 4 Barb. S. C. R. 131,
in which it was held that the promise to indemnify one man for assuming the debt
of another, was in effect a direct and immediate assumption of the debt, and conse-
quently invalid, unless made in writing.

Co)istruction of Guaranty. — Questions frequently arise, growing out of the form
of a guaranty. Thus, a letter of credit is a guaranty. Letters of credit usually con-
tain a request that some one will advance money or sell goods to a third person, and
an undertaking on the part of the writer that the debt which may be contracted by
the third person, in pursuance of the request, shall be duly paid. These letters have
been divided into two classes — general and«pecial. They are general when addressed
to any and all persons, without naming any one in particular. They are sj^ecial
when addressed to a particular individual or firm, by name. When the letter is ad-
dressed to all persons, it is in effect a request made to each and every one of them,
and any individual may accept and act upon the proposition contained in it ; and on
his doing so, that which was before indefinite and at large, becomes definite and
fixed: a contract immediately springs up between the person making the advance
and the writer of the letter, and it is thenceforward the same thing, in legal effect,
as though the name of the former had been inserted in the letter in the beginning.
Bronson, J., Birckhead v. Brown, 5 Hill, 642. Citing Watson's Ex'rs v. McLaren, 19
Wend. 557 ; S. C. 26 Wend. 425. Boyce v. Edwards, 4 Wheat. 111. Adams v. Jones,
12 Pet. 207. Lawrason v. Mason, 3 Cranch, 492. Bradley v. Carj-, 8 Greenl. 234.
Russell V. Wiggins, 2 Story's R. 213. Carnegie v. Morrison, 2 Mete. 381.

When the letter is special, or, in other words, addressed to a particular individual,
he alone has the right to act upon and acquire rights under it. If any one else at-
tempts to accept and act upon the proposition contained in the letter, he comes in
as a mere volunteer , and he cannot, by thus thrusting himself forward, create any

500 ilERCA^TILE CO^TRACT>.

Xatnre and Form of Contract.

thongli no action can be brought upon a guaranty which does not
satisfy the provisions of the Statute, yet the Court will enforce it
against an attorney who has undertaken to pay Lis client's debt

legal obligation on the part of the ■writer. There han been no commnnication, and
is no privity of contract between them. Bronson, J., Birckhead r. Brown, 5 Hill,
643. Citing Bobbin.? v. Bingham, 4 John. 476. Walsh v. Bailey, 10 John. 180. See
also Taylor i». Wetmore, 10 Ohio, 490. Bleeker v. Hyde, 3 il'Lean, 279.

Bnt in some caaes it ia a difficult qtieation to determine, whether there exist? that
privity of contract which seems to be required ; and upon the construction of letters
of credit, in this particular, the authorities are in conflict. Russell v. Wiggins, 2
Story, 213. Carnegie v. Morrison, 2 Mete, 381. Birckhead v. Brown, .5 Hill, .534.

Questions also arise upon ^a,Tant\e» as to the extent of the undertaking which
they import; whether a guaranty is limited to a particular transaction, or is a con-
tinuing guaranty ; whether it covers only one credit or advance, or whether it em-
braces a succession of credits or advances, which may be either cumulative or a re-
newal of thf/sc first given or made. It is in most canes a nice and difficult question to
determine whether the guaranty is a continuing one or not. The intent of the party,
to be derived from the words, is the only ture guide ; and therefore very little aid is
t<t be derived from the adjudged cases, as they tuiTi upon the peculiar j)hraseology
of the guaranty. Nelson, J., Whitney v. Groot, 24 Wend. 84. Douglas v. Reynolds, 7
Peters, 113. White v. Reed, l.*; Conn. 457. Lawrence v. McCalmont, 2 How. S. C. R.
426. Rogers v. Warner, 8 Johns. 119. Fellows v. Prentiss, 3 Denio, 512. Boj'ce v.
Ewart, 1 Rice, 126. There is s'^me conflict of authority as to whether the ordinary
maxim, that the words of an instrument are U) be taken mf^t strongly against tho
party using them, should apj»ly to a guaranty. It has been held in some cases that
where the guarantor desires to confine his liability to any specific transaction, he must
expressly say so. Other authorities have intimated that the contract of guaranty
stands upon the ordinary footing of an engagement as surety, and is to be construed
$lricU»»imi jurit. Tlje cases of Mason v. Britchard, 12 East, 227 ; Drummond v. Prest-
man, 12 Wheat, 515; Mayer v. Isaac, 6 Mees. A W. 610, favor the former doctrine,
Crcmer v. Higginson, 1 Mason, 836 ; Nicholson v. Paget, 1 Cromp. <fe Mees. 48, the
latter, Tlie most reasonable rule seems to be that laid down by the Supreme Court
of the Unit<jd States, viz., that a guaranty is a mercantile instrument, and as such
should receive a liberal interpretation. By a reasonable interpretation, is not meant
that the words should be forced out of their natural meaning, but simjdy that they
should receive a fair and liberal construction, so as to atinin the object for which
the instrument was designed, and is to be apf<li(;d. J/awrence v. McCalmont, 2 IIow.
H, C. R. 449, Bell v. Bruen, 1 IIow. H. C. R. 169. A guaranty is thus conHtrued ac-
cording i/j what may be fairly inferred t<j have been the understanding of the parties,
without any strict technical nicety; Ijna v. jyuiU, 10 Pet-^irs, 482; neither enlarging
the words beyond their natural import in favor of the creditor, nor restricting them
in aid of the surety. Musscy v. Raynor, 22 I'iek, 228, Sec also Walrath v. Thomp-
son, 4 Hill, 200. Curtis v. Dennis, 7 Met. 510, Guaranties, however, like other
commercial contract.*, are ttj be construed with reference to the usages of trade. Smith
V. Dann, 6 Hill, 543,

GrARA>-TIE?. 5^

yaruTc and Fona of Oo::tr^.:.

and costs, by yirtue of tiieir summarjr jorisdiction over iheir own
officers ; ^f ) and, if a party admit that he has made a binding
guaranty, by paying money into court on a count charging him

(d) Erans r. Dnncombe, 1 Tvrwli. 2?S : 1 C. i J. STi. Senior r. Butt, HiL T
1827. K. R and Payne r. Johnson, Trin. T. IT ST. Exdi. ther« cited. ikreGreaTes

eited 5 Do-wl. 1ST.

C'ynsidiratiyn cj G-r. 'a . : : — A guaranty may be eiUier of a prior debt or previously
eubsiiting contract, or :: ni.-.y be for the discharge or performance of some debt or con
tract incurred or entered into contemporaneous ■with or subsequent to the euarantv,
and tipon the faith thereof In the first case, there must be a consideration inde
pendent of the original debt or contract ; in the .atter, the giving the credit or making
the contract is a sufficient consideration, and no other is required. 1 ATms. Sannd.
211. Leonard r. Vredenburgh, S John. 2S. "Verplanck, S^n., McLaren r. "Watson, 26
Vend. 435.

A valuable consideration, however small or nominal, if given or stipulated for in
good faith, is, in the absence of fraud, sufficient to support an action on anv parol
contract ; and this is equally true as to contracts of guaranty. Thus, in a case of
guaranty by -writing, not under seal, -where one dollar \ras expressed as the consider-
ation, the Court said, '• The guarantor ackno^s-ledged the receipt of the one dollar,
and is no^ estopped to deny it. If she has not received it, she \rould nov be en-
titled to recover it. A stipulation in consideration of one dollar is just as effectual
and valuable a consideration as a larger srmi stipulated for or paid." Lawrence r.
McCalmont, 2 How. S^ C. 426, 452. Dutchman r. Tooth, 5 Bingh. X C 5T7 ; S5 E.
C. R 23o. Haigh r. Brooks, 10 Ad. «fc EIL 309 ; ST R C. R. lOS. Oakley r. Boor-
man, 21 "Wend. 5SS. Train v. Gold, 5 Pick. SSO. An important distinction is to be
observed between those cases in which the guaranty is contemporaneous with, and
those in which it is subsequent to, the principal debt. In the case of Leonard t»
Vredenburgh, S Johns. 2S, Chancellor Kent divided the cases on this subject into
three distinct classes. " 1. Cases in which the guaranty or promise is collateral to
the principal contract, but is made at the same time, and becomes an essential ground
of the credit given to the principal or direct debtor. Here, as we have already seen
is not, nor need be any other consideration than that moving between the creditor
dnd original debtor. 2. Cases in which the collateral tmdertaking is subsequent to
the creation of the debt, and was not the inducement to it, though the subsistinc lia-
bility is the ground of the promise, without any distinct and unconnected induce-
ment. There must be some further consideration shown, having an immediate re-
spect to such liability ; for the consideration for the original debt -will not attach to
this subsequent promise. 3. A third class of cases is, when the promise to pav the
debt of another arises out of some new and original consideration of benefit or harm,
moving between the newly contracting parties. The first two classes of cases are
within the Statute of Frauds, but the last is not 1 Saimd. 211, note 2." This das-
eification has been frequently referred to, and substantially adopted in several sub-
sequent cases. Farley v. Cleveland, 4 Cow. 432. Hilton v. Dinsmore, 21 ilaine, 4U\
Grold r. Philips, 10 Johns. 412. Slingerland r. Morse, 7 John. 463, note to 3d ed.

568 MERCANTILE CONTRACTS.

Nature and Form of Contract.

with it, that renders proof of a written instrument unnecessary ; (e)
but it is otherwise, if he do an act, which merely admits that an
agreement was made, without admitting that such a one was made
as would be binding under the Statute. (/)

(e) Middleton v. Brewer, Peake, 15. See Prec. in Clianc. 208, 253, 3*74:. And see
Whiteburch v. Bevis, 2 Bro. Cha. Ca. 564, as to what amounts to such an admission
in equity.

(/) Rondeau v. Wjatt, 2 H. Bl. 63.

Meech v. Smith, Y "Wend. 318. Packard v. Richardson, IT Mass. 139. Brown v. Cur-
tiss, 2 Comst. 225. Durham v. Manrow, ib. 533. Johnson v. Gilbert, 4 Hill, 128.

As to the first class of cases, it seems to be well settled that tliey are within the
Statute. In De Wolf v. Rabaud, 1 Pet. 499, a doubt is expressed, whether by the
true intent of the Statute it was to extend to such cases ; and in Townsley v. Sumrall,
2 Pet. 182, it is stated, that "in cases not absolutely closed by authority, this Com-t
has already expressed a strong inclination not to extend the operation of the Statute
of Frauds, so as to embrace original and distinct promises, made by different persons
at the same time, upon the same general consideration." But in the former case it
was admitted, that the point had "been closed within very narrow limits by the
course of authorities, and seems scarcely open for general examination." In Purley
II. Spring, 12 Mass. 296, Parker, C. J., expressed an opinion that this class of cases was
not within the Statute, and seemed to be inclined to adopt the distinction referred
to in the text, between a promise to answer for a past, and a promise to answer
for a future debt, default, or miscarriage of a third person. But this opinion has
been expressly overruled in the same court. Cahill v. Bigelow, 18 Pick. 369. And
Bee also note 12 Mass. 300, Rand's ed. Rogers v. Kneeland, 13 Wend. 114.

The second class of cases defined by Chancellor Kent, is admitted by all to be
within the very words of the Statute. But to distinguish cases under that class from
those under the third — to determine whether a verbal promise, in which the debt,
default, or miscarriage of another person is involved, be within the Statute of Frauds,
and void, or be an original and independent contract, and valid — is often a very nice
and difficult question ; it is one for the determination of which there is no satisfac-
tory general rule, and in the decision of which, in cases analogous as to their circum-
stances, there is a direct conflict.

It will be observed that Chancellor Kent, in support of his conclusion that the
third class of cases, where the promise is founded on a new and original considera-
tion, does not come within the Statute of Frauds, cites 1 Saund. 211, note 2; and the
author in the text refers to a note in the same learned work as controverting that
idea. The note referred to by the author was added in an edition of the work pub-
lislioi subsequently to the case of Leonard v. Vredenburgh, and is cited by Williams,
J., in Clancy v. Pigott, 2 Ad. & Ell. 473, 29 E. C. R. 149, from the 5th edition. In
the second American, from the third London edition of Williams' Saimders, the opin-
ion of Chancellor Kent appears to be fully sustained; and the opinion of a judge so
eminent, supported by an authority so highly esteemed, might well justify those

GUARANTIES. 5^9

Nature and Form of Contract.

It has been held that the Statute applies, although the action be
not brought upon the parol agreement, provided the effect of allow-
ing it to be maintained would be to charge the defendant thereby, {g)

{g) See Carrington v. Roots, 2 M. & W. 248. Sykes v. Dixon, 9 Ad. <fe E. G93.
Sed vide Cresswell v. "Wood, 10 Ad. & E. 460. Eastwood v. Kenyon, 11 Ad. & E.
438.

•who hare followed the rule, although on a critical examination of the cases cited
by Sergeant Williams in its support, there be good reason to doubt its correctness.

The rule on this subject, as laid down in the recent editions of Williams' Saun-
ders, was cited by the counsel for the defendant, in the case of Butcher v. Stewart^
11 Mees. & Welsby, 810, and admitted by the counsel for the plaintiff to be correct.
Tlie rule, as there stated, is this — " Whether each particular case comes within this
clause of the Statute or not, depends not on the consideration for the promise, but
on the fact of the original party remaining liable, coupled with the absence of any
liability on the part of the defendant or his jjroperty, except such as arises from his
express promise. A reference was also made to this rule by counsel in the case of
Green v. Cresswell, 10 Ad. & Ellis, 460, 3Y E. C. R. 145; and Lord Denham, in the
conclusion of his opinion in that case, says, "There does not appear any objection to
the test laid down in the note to 1 Williams' Saunders, 211, C, and it is decisive io
favor of the objection. Tlie original party remained liable, and the defendant in
curred no liability except from his promise."

The reader will observe, that in the rule just quoted there is an important exccp
tion, not noticed by the author in his reference to it, which appears to be this —
that where there is a liability on the part of the defendant or his property, other
than his verbal promise, to pay the debt to which the promise relates, then the fact
that the original party still remains liable constitutes no objection. But here should
be noticed an important qualification, which appears to be established by the case
of Thomas v. Williams, 10 B. & C. 664, 21 E. C. R. 143, to the exception above stated ;
that in such cases the verbal promise cannot be sustained, on account of a liability
on the part of the defendant or his property-, if the debt to which the promise relates
exceeds the amount of such liability ; the promise must not exceed the consideration.
In that case the defendant, an auctioneer, was proceeding to sell the goods of a ten-
ant, who was indebted to the plaintiff, his landlord, for rent then due, and also for
rent to become due at a future time ; the plaintiff demanded security for his rent,
and threatened a distress ; and the auctioneer, in consideration of his not distraining,
and permitting the sale to proceed, verbally promised to pay the rent then due, and
also that to become due. The plaintiff did not disti-ain, and the sale proceeded. The
Court said that the plaintiff could not distrain for the rent not due ; the defendant,
by paying all that was then due, might have proceeded to sell the goods ; and if that
sum were paid or secured, the plaintiff sustained no loss or detriment by the sale of
the goods. "So that the promise to pay the accruing rent exceeded the considera-
tion, and cannot be sustained on the ground on which the cases referred to are to bo
sustained, but is nothing more than a promise to pay money that would become
duo from a third person, and is within the words of the Statute, and the mischief in-

MERCANTILE CONTRACTS.

Nature and Form of Contract.

But wlien a person sued upon his acceptance, pleaded that it waa
for the plaintiff's own accommodation, he was allowed to show that
it was discounted to raise money which the plaintiff had undertaken
to pay pursuant to a verbal guaranty. (A)

(h) Cresswell v. Wood, 10 Ad. & E. 460.

tended to be remedied thereby. And as to so much, therefore, the promise is void by
statute." And the promise being void in part, was held, on the authority of the
cases of Lexington v. Clark, 2 Vent. 223, and Chater v. Becket, 1 T. R. 201, to be
void altogether.

In some of the cases in the United States the decision would have been the same,
whether the test stated by Chancellor Kent, or that which seems now to be recognized
in England, had been applied. Farley v. Cleveland, 4 Cow. 432. Gould v. Philips,
10 John. 412. Olmsted v. Greenly, 18 John. 12.

Other cases would appear to be in conflict with the English rule. Slingerland v.
Morse, 7 John. 463. Myers v. Morse, 15 John. 425. Allen v. Thompson, 10 New
Ilamp. 32. Hilton v. Dinsmore, 21 Maine, 410. Russell v. Babcock, 14 Maine, 138.
Mercein v. Andrews, 10 "Wend. 461. Randle v. Harris, 6 Yerg. 508.

In the cases in Massachusetts, a difference is to be noted from those in New York
and some of the other states. While the latter hold that a new and original consid-
eration, whether of benefit to the promisor or of harm to the promisee, will be suf-
ficient to sustain the parol promise, the former seem only to allow such a considera-
tion as shall be of benefit to the promisor. Thas, in the recent case of Nelson v.
Boynton, 3 Mete. 396, where, in consideration of the plaintiff's discontinuing a suit
and discharging an attachment on the property of the original debtor, the defendant
made a verbal promise to pay the debt, the Court held that it was within the Statute.
And in this case the Court lay down, as the rule to be derived from the decisions,
" that cases are not considered as coming within the Statute, when the party promis-
ing has for his object a benefit which he did not before enjoy, accruing immediately
to himself; but where the object of the promisee is to obtain a release of the person
or property of the debtor, or other forbearance or benefit to him, it is within the
Statute." A rule on this subject is also laid down in a late case in Indiana. In the
case of Chandler v. Davidson, 6 Blackf 367, the Court say, " There are, no doubt, cases
in which a verbal promise to pay the amount of another person's debt, is an original
promise, and not within the Statute of Frauds. They are cases, however, in which
a new consideration passes, at the time of the promise, between the newly contract-
ing parties, of such a character that it would support a promise to the plaintiff for
the payment of the same sum of money, without reference to any debt from another."
Both these rules approximate more nearly to that which seems to be the test now
applied in England, than the rule laid down by Chancellor Kent in Leonard v. Vre-
denburgh. The rule laid lown in Nelson v. Boynton seems to be sanctioned by the
recent cases of Barker v. Bucklin, 2 Denio, 45 ; Kingsley v. Balcombe, 4 Barb. S. C
R.131.

In the United States some of the State courts have followed the rule of Wain «

GUARANTIES. 57 1

Nature and Form of Contract.

As conformity to the provisions of tlie Statute is tlius requisite,
it will be proper to consider them separately.

No action shall he brought^ to charge the defendant^ ujwn any

Warlters on this point, and have held that the consideration must be expressed in th«
writing. New York, Sears v. Brink, 3 John. 210 ; New Hampshire, Neilson v. San
borne, 2 N. H. 413 ; Maryland, Wyman v. Gray, 7 Har. <fe Johns. 400; South Caro
lina, Stephens v. "Wynn, 2 Nott & M'Cord, 372, note ; Georgia, Henderson v. Johnson,

6 Georg. 390. Others have held that the term agreement is to be construed accord-
ing to its popular signification, instead of its legal one, and only require that the
pro7nise should be set forth in writing. Massachusetts, Packard v. Richardson, 17
Mass. 122 ; Connecticut, Stage v. Wilcox, 6 Conn. 81 ; New Jersey, Buckley v. Beards-
ley, 2 South, 570; North Carolina, Gardner v. King, 2 Ired. L. 297; and Tj-ler v.
Givens, Riley's L. C. 56, probably overruling Stephens v. "Winn, before cited, in South
Carolina. In some of the states, Virginia, Tennessee, Alabama, Mississippi, and per-
haps others, the Statute has been so changed as to read " unless the promise or agree-
ment, <fec." The introduction of the word promise would seem to prevent the appli-
cation of the English rule in those states, as the reasoning on which that rule is
founded does not apply. Violet v. Patton, 5 Cranch, 142 ; 2 C. R. 214. And it has
been so decided in Tennessee. Taylor v. Ross, 3 Yerg. 330. S. P. Pearce v. Wren, 4
Sm. & M. 91. Colgin v. Henley, 6 Leigh. R. 80.

Acceptance of Guaranti/. — When the guaranty is prospective and to attach upon
future transactions, and the guarantor is uninformed as to whether his guaranty has
been accepted and acted upon or not, it is the settled doctrine in the courts of the
United States, that notice of the acceptance must be given within a reasonable time.
Lee V. Dick, 10 Peters, 482. Russell v. Clark, 7 Cranch, 69, 92. Edmonstone v.
Drake, 5 Peters, 624. Douglas w. Reynolds, 7 Peters, 113. Adam?;. Jones, 12 Peters,
207. Wilds V. Savage, 1 Story, 22. Cremer v. Higginson, 1 Mass. 336. This rule
seems to have been followed in most of the State courts. Norton v. Eastman, 4
Greenl. 521. Babcock v. Bryant, 12 Picker, 122. Mussey v. Raynor, 22 Pick. 223.
Taylor v. Wetmore, 10 Ohio, 490. Kay v. Allen, 9 Barr, 320. Kincheloe v. Holmes,

7 B. Monr. 5. Sollee v. Mengg, 1 Bai. 620.

In the case of White v. Reed, 15 Conn. 457, it is said, that as a general rule, a
guarantor, especially a party giving a letter of guaranty, is entitled to notice of its
acceptance ; yet this is far from being a universal rule, applicable to all cases : there
are many exceptions to it ; as, where there is an acknowledgment of liability and a
promise to pay, which is sufiicient evidence of notice, if it did not supersede the ne-
cessity of giving ; and in case of a guaranty of a pre-existing debt, where the gua-
ranty appears upon the evidence of debt itself; so, where the guaranty and the ac-
ceptance of it are simultaneous, and parts of the same transaction. See also New
Haven Co. Bank v. Mitchell, 15 Conn. 206.

In the case of Train v. Jones, 11 Vermt. 444, it is said that notice of acceptance,
in cases of guaranty, to take effect upon future credit, is required by the American
cases, but that it is not necessary where the guarantor is standing by when the credit
is given, or otherwise advertised of the fact. E.\-pres3 notice is not required of what
is already known.

572 MERCANTILE CONTRACTS.

Nature and Form of Contract.

special promise to answer for the debt, default, or miscarriage of an<
other.

In order that a contract may fall witliin these terms, it is es-

And ill the same ease it is said by the Court, that the cases requiring notice of the
acceptance of a guaranty do not " seem to rest upon the most satisfactory reasons."
In New York, the courts not only entertain, but act on such an opinion, and hold
that notice of the acceptance of a guaranty need not be given, unless where it is re-
quired by the terms of the contract. In Douglas v. Howland, 24: "Wend. 85, it is said
that the cases requiring notice have no foundation in English jurisprudence, where
the adjudications are numerous and clear the other way. Citing Hai-ris v. Ferrand,
Hardr. 36, 42. Com. Dig. tit. Plead. C. 75. Warrington v. Furbor, 8 East, 242.
Swynyard v. Bowers, 5 Maule <fc Selw. 621 ; Saund. 33. Philips v. Astling, 2 Taunt.
206. "The guarantor," say the Court, " by inquiring of his principal, with whom he
is presumed to be on intimate terms, may inform himself perfectly wliether the gua-
ranty were accepted, the conditions fulfilled, and payment made. When that can
be done, the cases all hold that notice is not necessary, even as a preliminary to the
bi-inging of an action, much less to found a right of action. The only exception is
the well known one of collateral parties to bills of exchange and promissory notes."
See also Whitney v. Groot, 24 Wend. 82. Smith v. Dann, 6 Hill, 543. Curtis v.
Brown, 2 Barb. S. C. R. 51. Union Bank v. Coster, 3 Comst. 203.

The omission of notice does not imply injury to the guarantor as a matter of
course. The guarantor must show that he has suffered damage by the neglect to
make demand upon the principal debtor, and to give notice, and then he is dis-
charged only to the extent of the damage suffered. Rhett v. Poe, 2 How. 457.
Bushnell v. Church, 15 Conn. 406. Wildes v. Savage, 1 Storj'-, 22. Gibbs v. Cannon,
9 Serg. & Raw, 195. Salisbury v. Hale, 12 Pick. 424. Contra. Lewis v. Brewster, 2
M'Lean, 21. Foote v. Brown, ib. 369.

Notice of Default. — In the case of Douglas v. Reynolds, 7 Peters, 113, the question
arose, as to whether a demand of the debt guaranteed, and notice of non-payment,
was necessar}"- to charge the guarantor. The Court said, that "by the very terms of
the guaranty, as well as by the general principles of law, the guarantors are only
collaterally liable upon failure of the principal debtor to pay the debt. A demand
upon him, and a failure on his part to perform his engagements, are indispensable to
constitute a casus foederis. The creditors are not bound to institute any legal pro-
ceedings against the debtor, but they are required to use reasonable diligence to
make demand and to give notice of the non-payment. The guarantors are not to
be held to any length of indulgence which the creditors may choose, but have a
right to insist that the risk of their responsibility shall be fixed, and terminated
within a reasonable time after the debt has become due."

The doctrine thus laid down has not met with general approbation. In Douglas
V. Howland, 24 Wend. 35, it was held that notice of default was in no ease necessaiy.
The liability of the guarantor was deemed commensurate with that of the principal,
and both must take notice at their peril. In Train v. Jones, 11 Verm. 444, the rule
was thus laid down : "An absolute guaranty that the debt of a third person shall be
paid, or that he shall pay it, imposes the same obligation upon the guarantor. The

GUARANTIES. 573

Kature and Form of Contract.

scntial tliat it sliould be for the payment or performance of some-
thing /or iL-hidi cmother i:serson is liable ; since, if no other person be
liable, the contract is not "to answer for the debt, default, or miscar-
riage of anotherJ^ For instance, where A., in consideration that B.
would not sue J. S., promised to pay the money due from J. S., this
was held to be within the Statute ; (i) for J. S. was liable to the pay-
ment of his debt, before and after A.'s promise, which, therefore,
was, strictly, "to answer for the debt of J. S^ But where it was
agreed, between A., his creditors, and one J. S., that J. S, should
pay the creditors ten shillings in the pound, to be received by them
in full satisfaction, and that they should assign their debts to J. S. ;
this contract was held not within the Statute, because J. S. had not
contracted to pay the debts of A., but to purchase them from A.'s
creditors, and would, after such purchase, have a right to use the
names of the creditors, in order to recover the debts from A. {j)
So, where the defendant, in consideration that the plaintiff would
discharge out of custody a person whom he had taken on a ca. sa.,
promised to pay the debt on a certain day, or render that person,
the Court held the promise not within the Statute, because the debt
was gone by the discharge of the debtor out of custody. [Ic)

(i) Rothery v. Curry, B. N. V. 281. Accord. Kirkham v. Marter, 2 B. <fc A. 613.
Fish V. Hutchinson, 2 Wils. 94. Winckworth v. Mills, 2 Esp. 484. Thomson v. Bond,
1 Camp. 4. JEx parte Adney, Cowp. 460. French v. French, 2 M. & Gr. 644.

{j) Anstey v. Marden, 1 K R. 124. Stephens v. Squire, 5 Mod. 205. See Read v
Nash, 1 AVils. 305. Sed qucere whether that case be now law ; and see 1 Wms. Saund.
211, b. n. 1. Harris v. Huntbach, 1 Burr. 373. Castling v. Aubert, 2 East, 325.
Thomas v. Cook, 8 B. & C. 728. Adams v. Dansey, 6 Bingh. 506. Howes v. Martin,
1 Esp. 162. In Thomas v. Cook, it was laid down generally that a promise to hidem-
nify was not within the Statute ; that is, however, overruled by Green v. Cresswell,
10 Ad. & E. 453.

{k) Goodman v. Chase, 1 B. <& A. 297. Butcher v. Steuart, 11 M. <fe W. 857.
Browning v. Stallard, 5 Taunt. 450. And see Bird v. Gammon, 3 Bingh. K C. 883,
which was decided on the same ground. The civilians recognized a distinction of
this sort under the terms Uxpromissio and Adprojnissio.

creditor is not bound to use diligence, or give notice of non-payment. This is in
accordance with the long established rule of the common law. If I undertake for
the act of a third person, I am not entitled to notice of his default before suit
brought ; but if I undertake directly for your act or success, I am entitled to notice
of j'our failure, for this is a fact peculiarly iviihin your knoioledge." See also Pecks v.

574 MERCANTILE CONTRACTS.

Nature and Form of Contract.

If C. be A.'s debtor, and B.'s creditor, an agreement bj B. to
pay bis debt to A., in discharge of C.'s liability, is not within the
Statute, (^) But, qucere, if the debt from B. to C. had been contin-
gent at the time of making such agreement. (?/^)

A promise to pay another man's debt out of that other man's
own funds, when they shall come to the hands of the person pro-
mising, is not within the Statute, {n)

The Court of Queen's Bench has decided in Eastwood v.
Kenyon^ (o) that if A. promise B. that he, A., will pay to C. a debt
due to C. from B,, that promi&e is not within the fourth section of
the Statute of Frauds, and, consequently, need not be reduced to
writing. The Court further stated its opinion that the Statute ap-
plies only to promises (p) made to the person to whom another is

(l) Wilson V. Coupland, 5 B. & A. 228.

(?«) See Perkins v. Moravia, 1 C. <fe P. ol6. There seems no rational distinction
between the two cases.

(n) Andrews v. Smith 2 C. M. & R. 627. See Walker v. Rostron, 9 M. & W.
411.

(o) 11 Ad. & E. 438.

(jo) The soundness of this doctrine may possibly be thought to admit of soma
question. It may be, probably, guessed that the framers of the Statute of Frauds
never contemplated the occurrence of cases other than those of promises to the per-
son to whom the other is answerable : still such cases fall within the words of the
Statute read in their ordinary sense. The amount of the liability of the person pro-
mising is just the same, and the contract can scarce be said to be less complex; it
may be even more so, for instance, if A. promise B. that he Avill pay the debt dae or
to become duo from C. to D., here is a case in which the promise, not being made to
the person to whom C. is answerable, would, according to the text, be sufficient with-
out writing; and yet it is even more complex than an ordinary guaranty, for it in-
troduces one more person into the arrangement, and the time for its performance
will be as long delayed, so that, whether we regard the nature of the transaction or
the length of time that is to precede its accomplishment, it seems to stand in quite
as much need as an ordinary guaranty does of some written memorial for the pur-
pose of preventing fraud or perjury in the future statement of its terms. Indeed it
would not be difficult to put cases in which these sort of promises would become in
effect guarantiss properly so called ; for, suppose the promise made to the debtor or
the stranger as a trustee for the creditor, or suppose the debtor or the stranger were
to assign the benefit of it to the creditor, in these cases it would become in effect
and substance a guaranty, with this only difference, that, if an action were corn-
Barney, 13 Verm. 93. Bushnell v. Church, 15 Conn. 406. Hammond v. Gilmore, 14
Conn. 479. An instructive examination of the whole doctrine may be found in vol.
2 A, S, C, part 1, and^os^

GUARANTIES. 575

Nature and Form of Contract.

answerable, and this opinion has been since confirmed and acted
upon by the Court of Exchequer, {q)

A distinction was once taken, between a promise to pay for
goods, &c., for another, hefo7'e and aftei- delivery ; (r) but this is over-
ruled, and it is now clear that, if the person for whose use the
goods are furnished is liable at all, any promise by a third person,
on sufficient consideration, to pay that debt, must be in writing, (s)
In a word, the question by which it must be tested, whether a
contract be or be not within the Statute, is, What is ike promise f
Is it a promise to answer for the debt, default, or miscarriage of
another, for which that other remains liable ? If so, it must be in
writing. {()

menced upon it, the contractee must be the plaintiff upon the record, a character
which equity would not allow him to decline on receiving a proper indemnity. For
these reasons it may be doubted whether Eastwood v. Kenyon has finally established
(to its full extent) the doctrine in the text, especially since, in construing other parts
of the same section of the Statute of Frauds, a disposition has been shown rather to
extend than to confine the effect of the expression used by the Legislature. See
Carrington v. Roots, 2 M. & "W. 248. Sykes v. Dixon, 9 Ad. & E. 693. Qmere, how-
ever, how far these cases are consistent with Cresswell v. Wood, 10 Ad. & E. 460.
I have only further to observe, that the opinion expressed by the Court in Eastwood
V. Kenyon, may, perhaps, be thought to diverge somewhat in principle from the de-
cision in the prior case of Green v. Cresswell, 10 Ad. & E. 453. In that case, Reay
having arrested Hadley, the plaintiff Green became bail at the request of the defen-
dant Cresswell, who promised to indemnify him. It was held that this promise
ought to be in writing. This case does not indeed raise the precise point above dis-
cussed, for Hadley certainly had a duty to perform to Green, his bail, and made de-
fault in its performance. Still, Iladley's primary liability was to Reay, and the
Court, in giving judgment, approves of Sergeant "Williams' test, which would in-
clude such a case as Eastwood v. Kenj'on. In making these observations, however,
it is intended only to suggest the possibility of a discussion which may hereafter
arise, not to impugn the proposition cited from Eastwood v. Ken3'on, which indeed
must ultimately be sustained if the meaning of the words, promise to answer for the
debt, default, or miscarriage of another, be taken, as they well may, to refer to a pro-
mise to become a substitute to every intent for that other — to answer to the same call
to which he would have answered under pain of the same liability. [See also the
American cases of Conkey v. Hoj^kins, 17 Johns. Rep. 113; Johnson v. Gilbert, 4
Hill, 178 ; Preble v. Baldwin, 6 Cush. 553, in which the doctrine of Eastwood v.
Kenyon is approved. — Am. Ed.]

{q) Hargreaves v. Parsons, 13 M. & W. 561.

(r) Cowp. 228. Jones v. Cooper.

(s) Matson v. Whearam, 2 T. R. 80. Anderson v. Hayman, 1 H. Bl. 120. Lirkmyr
V. Darnell, 1 Salk. 27 ; 2 Ld. Raym. ] 085.

(t) 1 Wms. Saund. 211 to 211 c. Bushnell v. Beaven, 1 Bing. N. C. 103.

576 MERCAXTILE CONTRACTS.

Nature and Form of Contract.

The reader must, however, be apprised, that it has been thought
to follow from some of the decisions, {u) that a man may bind him-
self to pay another's debt, by a parol jDromise, founded on a new
consideration. This idea has been controverted, and the cases cited
in the margin explained, and reconciled to the rule as above stated,
in an elaborate note, 1 Wms. Saund. 211, c. n. 1, where it is con-
tended, that the nature of the consideration cannot affect the terms
of the promise itself, unless, as in Goodman v. Chase, it be an ex-
tinguishment of the liability of the original party ; and, indeed, in
Edwards v. Kelly ^ above cited, the judges all professed to decide,
on the ground, that the promise there was not to pay the debt of
another.

"Where A. has been concerned in inducing a tradesman to de-
liver goods to B., it often becomes a question, whether the goods
must be looked upon as actually sold to A., though delivered to B.,
or whether they must be considered as sold to B., A. becoming a
surety for the price : in the former case, A. would be liable as a
principal, and the contract would not fall within the Statute ; in the
latter, A. would be liable only as surety, and only on a written
guaranty. To decide this question. To luhom vxis credit given f is,
generally speaking, {v) the j^rovince of a jury, who are to take into
their consideration all the circumstances of the case, {id) If, upon
notice given to the plaintiff" to produce his books, it appear that the
credit was not originally given to A., that is strong, though not
conclusive evidence that he is but a surety, (x)

It has been laid down, that a parol promise to pay the debt of
another, and also do some other thing, is void altogether , {y) this
seems, however, to hold good in those cases only in which the

(m) Holditch V. Milne, 3 Esp. 86. Williams v. Leaper, 2 Wilson, 308. 3 Burr.
1886, recognized in Castling v. Aubert, 2 East, 325. Edwards v. Kelly, 6 M. & S. 204.
Bampton v. Paulen, 4 Bing. 264. See, however, Thomas v. Williams, 10 B. & C. 664.
See Starkie on Ev., 2d ed. vol. ii. 347 ; and Clancy v. Pigott, 2 Ad. & E. 473.

{v) See a case in which it arose on the record, Taylor v. Hilary, 1 C. M. & R. 741.

\w) Keate v. Temple, 1 B. & P. 158. Darnall v. Tratt, 2 C. <fe P. 82. Storr v. Scott,
6 C. & P. 241. Simpson v. Penton, 2 C & M. 430 ; 4 Tyrwh. 315. Andrews v. Smith
2 C. M. &, R. 627.

{x) Keate v. Temple, uhi supra. Croft v. Smalwood, 1 Esp. 121.

{y) Chater v. Beckett, 7 T. R. 201. Thomas v. Williams, 10 B. <fe C. 664. See
Head v. Baldrj-, 2 Nev. &, P. 217 ; 6 Ad. <Ss E. 459.

GtJAKANTlES. 577

Nature and Form of Contract.

parts of the contract are so blended together that they cannot be
separated. (2)

Unless the agreement, &c. — The term agreement comprehends
contracting parties^ a consideratio7i, and a promise ; all these must,
therefore, appear in the writing, (a) It is, however, sufficient if the
consideration can be gathered from the whole tenor of the writing ;
not that a mere conjecture^ however j3lausible, would be sufficient to
satisfy the Statute, but there must be a well-grounded inference to
be necessarily collected from the terms of the memorandum ; (IS) and
there is a material difference in this respect between prospective and
retrospective agreements ; the former being much more easily sup-
portable : thus, where the instrument was as follows . —

" To Mr John Kewhury.
" SlE,

" I, the undersigned, do hereby agree to bind myself to be se-
curity to you for S. Corcoran, late in the employ of J. Pearson, of
London Wall, for whatever you may intrust him with while in
your employ, to the amount of 50?., in case of any default to make
the same good.

" 11th March, 1828. W. Armsteong."

It was objected that no consideration for Armstrong's promise
appeared upon this guaranty ; but the Court held otherwise ; and
Tindal, C, J., said, " The words are all prospective; it may fairly be
implied that Corcoran had left one service, and that the guaranty
was given in consideration of his being taken into another." (c) So
where the guaranty was, " I guarantee the payment of any goods

(2) Wood V. Benson, 2 Tyrwh. 97 ; 2 C. & J. 94.

(a) Wain v. Warlters, 5 East, 10. Jenkins v. Eeynolds, 3 B. & B. 14. Saunders v.
Wakefield, 4 B. & A. 595; 1 Wms. Saund. 211, in notis.

(b) See the judgment of Tindal, C. J., in Hawes v. Armstrong, 1 Bing. K C. 766.
And of Patterson, J., in James v. Williams, 5 B. <fe Ad. 1109. And see Tomlinson v.
Gill, 6 Ad. <fe E. 564; Eaikes v. Todd, 8 Ad. & R 846; Bentham v. Cooper, 5 M. &
W. 621 ; Jarvis v. Wilkins, 7 M. & W. 410, "where the following guaranty was held
good:

"I undertake to pay 6^. 4s. for a suit ordered by T. W. *

(Signed) "& W. W."

578 aiERCANTILE COXTRACTS.

Xature and Form of Contract.

which A. shall deliver to B.," this was held sufficient, {d) Here,
too, the agreement was prospective, it contemplated a future delivery
of goods to B. But where the instrument was —

^^ Messrs. Wain & Co.^
" I will engage to pay you, by half-past four this day, fifty-six
pounds, and expenses, on bill, that amount, on Hall,

John Warlters."

This was held insufficient, (e) Here the agreement was clearly

{d) Stapp V. Lill, 1 Camp. 242 ; 9 East, 348. Accord. Russell v. Moseley, 3 B. <fe
B. 211. Morris v. Stacey, Holt, N. P. C. 153. Ryde v. Curtis, 8 D. & R. 62. Emmott
V. Kears, 5 Bing. N. C. 560. Kennaway v Treleavan, 5 M. & "W. 498, and in next
note. Ex parte Gardom, 15 Ves. 287. Combe v. "Woolf, 8 Bingh. 156. In Boehm
V. Campbell, 8 Taunt. 679, and Pace v. March, 1 Bingh. 216, the Court held the
agreements prospective and good within the Statute: that construction, however,
seems unsustainable, and those two cases are not at present to be relied on. See
Morley v. Boothby, 3 Bingh. 107.

{e) "Wain v. Warlters, 5 East, 40. Accord. Saunders v. Wakefield, 4 B. <& A. 595.
Jenkins v. Eeynolds, 3 B. & B. 14. Morley v. Boothby, 3 Bing. 107. Allnutt v
Ashenden, 5 M. & Gr. 392. Lyon v. Lamb, Append, to Fell on Guaranties. Whit-
comb V. Lees, 5 Bingh. 34. Cole v. Dyer, 1 C. & J. 461 ; 1 Tyrwh. 307. Wood v.
Benson, 2 C. & J. 94; 2 Tyrwh. 98. Bushnell v. Beavan, 1 Bingh. N. C. 103. Hawes
V. Armstrong, 1 Bingh. N. C. 761. Ellis v. Levi, ibid. 767, in notis. James v. Wil-
liams, 5 B. & Ad. 1109. Clancy v. Piggott, 2 Ad. & E. 473. Price v. Richardson, 15
M. & W. 537, and post, sec. 2. Raikes v. Todd, 8 Ad. & E. 846, where the instrument
was, " I undertake to secure to you the payment of any sum you have advanced, or
may hereafter advance, to D. on his account with you, commencing 1st November,
1831, not exceeding 2,000/." It will be observed that this guaranty is partly for past
advances, and it was on that ground Mr. J. Patterson rested his opinion of its insuf-
ficiency. See, however, the observation of Baron Parke, in Kennaway v. Treleavan,
5 M. & W. 500, where his Lordship seems to think that there can be no objection to a
guaranty for past as well as future defaults in consideration of a future employment.
In that case the guaranty was, " I hereby guarantee to you the sum of 250/., in case
Mr. P. sho%dd make default in the capacity of agent and traveller to you^ Baron Parke
said, that perhaps the parties only contemplated such sums as P. should receive in
future, but, even if its effect were to oblige the defendant to make good sums he had
alread}' received and neglected to account for, his Lordship did not see why he should
not be liable for those sums also, the consideration being the futtire employment of P.
It is obvious that, in such a case, the objection, if any, to the guaranty-, is not that
the consideration does not appear, but that the consideration which does appear is
inadequate, a sort of modification of the doctrine of nudum pactmn which the courts
seem now to regard with disfavor. In the recent case of Johnson v. Nicholls, 1 C. B,
251, the following guaranty was held to be an available security for the past as well

GUARANTIES. 5-79

Nature and Form of Contract.

retrospective, Warlters engaging to guaranty a debt already con-
tracted on the bill. Yet, even where the agreement is retrospective,
still if it refer to a p)asi consideration, which it, however, states to
have been moved hy an antecedent request from the guarantor, there
it will be sufficient ; (/) for such a consideration would be suffi-
cient at common law to support a promise, and the Statute of
Frauds has made no alteration whatever with regard to the suffi-
ciency of the consideration, but only requires that it should be in
writing, (g)

Where the guaranty was in consideration that the plaintiff
would withdraw " the promissory note,''^ the Court of King's Bench
held that it was stated with sufficient certainty, and that parol
evidence was admissible to show that a note withdrawn by him was
the thing meant by the agreement, {h) And where it was, " In con-
sideration of your being in advance to L. and Sons in the sum of
10,000/. for the purchase of cotton, I do hereby give my guaranty
for that amount on their behalf," the Exchequer Chamber held that
the contract might be shown by evidence to apply to future ad-
vances, and would be in that case valid, ii)

Though the parties' promise and the consideration must appear,
the amount of the debt guaranteed need not be mentioned, (/c)

as the future debt. "As you are about to enter upon transactions in business with
Messrs. Claridge, Brothers, and NichoUs, with whom j-ou have already had dealings,
in the course of which they may from time to time become largely indebted to you :
in consideration of your danger thereby, I agree to be responsible to you for, and
guarantee j'ou the payment of, any sums of money which that firm — whether it may
consist of the same members as at present or others — now is, or may at any time be
indebted to you, so that I am not called on to pay more than the sum of 2,000/." The
Court held that the bona fide continuance of the dealings formed a good considera-
tion for the payment of the antecedent debt, and that they could not enter into the
question of its inadequacy. See also Chapman v. Sutton, 2 C. B. 634. Boyd v.
Moyle, ibid. 644. See Hitchcock v. Coker, 6 Ad. & E. 438. Brooks v. Haigh, 10 Ad.
& E. 323.

(/) Payne v. Wilson, Y B. & C. 423. Stead v. Liddard, 1 Bingh. 196. Coe v.
Duffield, 7 B. M. 252.

{g) See Eann v. Hughes, 7 Bro. P. C. 556 ; 7 T. R. 350, n. a. Reech v. Kennegal
I Ves. 126. Hawkes v. Saunders, Cowp. 289.

{h) Shortrede v. Cheek, 1 Ad. & E. 57.

(i) Brookes v. Haigh, 10 Ad. & E. 4S8.

(A;) Bateraan v. Phillips, 15 East, 272.

580 MERCANTILE CONTRACTS.

Nature and Form of Contract.

Or some 'memorandum or note thereof^ &c. — Under this, as well aa
under the 17th section, the contract may be collected from several
distinct papers, provided they can be sufficiently connected without
oral testimony ; (Z) and as the writing is necessary to evidence the
contract, not to constitute it, the memorandum need not have been
delivered to the party relying on it ; therefore, a letter from a man
to his own agent, or to any one else, setting out the agreement, is
sufficient, (m)

Signed by the party to he charged^ or some other person thereunto
by him lawfully authorized. — See the remarks upon the corresponding
words in the 17th section, p)ost^ Ch. XII. Contracts of Sale.

It has been laid down that a signature by the party, as a witness,
to the instrument containing or referring to the agreement, is suf-
ficient, if, when he signed, he was aware of the contents, (n) It is
immaterial at what part of the instrument the signature is placed,
whether at the beginning or end. (o) It is sufficient if it be signed
by the party to be charged^ though it be not signed by the other con-
tracting party, {p) for (to use the words of the L. C. J. in Laythoarp
V. Bryant, (q) "it is not the signature of both parties that makes the
agreement. The agreement is, in fact, made before any signature."
Botli parties must, it is true, have concurred in making the agree-
ment, but the Statute only requires that one, viz., the party to be
charged, should sign the document that is to evidence it.

It is, in some cases, necessary that a guaranty should be stamped.

{I) Tawney v. Crowther, 1 Bro. C. C. 161, 318. Clinan v. Cook, Sch. & Lef. 22.
Brodie v. St. Paul, 1 Ves. jun. 326. Kain v. Old, 2 B. & C. 627. See Evans' Statutes,
vol. i. p. 32Y, and post, Chapter XII, Co?itracts of Sale.

{m) Per Lord Hardwicke, 3 Atk. 503; 2 Cha. R. 147; 1 Vern. 110. Bateman v.
Phillips, 15 East, 272. Longfellow v. Williams, Peake's Add. Ca. 225. See Dobell v.
Hutchinson, 3 Ad. & E. 355.

(«) 1 Wils. 118 ; 1 Ves. 6 ; 3 Atk. 502. Coles v. Trecothick, 9 Ves. 251, per Lord
Eldon ; sed vide Gosbell v. Archer, 2 Ad. & E. 500. See on this subject, post, Chapter
XIL s. 2.

(o) Ogilvie V. Foljambe, 3 Meriv. 62. Selby v. Selby, ibid. 6. Knight v. Crockford,
1 Esp. 190. Right V. Price, Dougl. 241.

(p) Laythoarp v. Bryant, 2 Bingh. N. C. 735. See 3 Bro. C. C. 161, 318 ; Str. 236
1 P. Wms. 618. Hutton v. Gray 2 Ch. Ca. 164. Seton v. Slade, 7 Ves. 265. Knighl
y. Crockford, 1 Esp. 190.

(q) 2 Bingh. N. C. 744.

GUARANTIES. 581

Surety, how far liable.

Stat. 55 Geo. 3, c. 184, imposes a duty on agreements the subject
matter whereof is of the value of 20^. or upwards : to this there
are, however, exceptions, particularly of agreements for the sale of
goods. Contracts of guaranty are within both provisions : where
the principal contract would require a stamp, so does the guaranty,
and vice versa, (r)

Section VI. — Surety, hoxo far liable.

The extent of the surety's liability depends, of course, on the
peculiar construction of each guaranty. A contract to gaurantee
the payment of " any debt A. B. may contract in his business as
jeweler, not exceeding one hundred pounds, after this date," is a
contract which renders the guarantor answerable for any debts, not
exceeding 100/., which A. B. may, from time to time, contract in the
way of his business, (s) Such a contract is called a continuing gua-
ranty. Disputes frequently arise, whether an instrument fall within
this description or not. (f) The best rule on the subject seems to

(r) "Warrington v. Furbor, 8 East, 242. Watkins v. Vince, 2 Stark. 368. Martin
V. Wright, 6 Q. B. 916.

(s)* Merle v. "Wells, 2 Camp. 413. Accord. Mason v. Pritchard, 12 East, 227. Bas-
tow vi Bennett, 3 Camp. 220; Hargreave v. Smee, 6 Bingh. 244; Simpson v. Manley,
2 C. <fe J. 9.4; 2 Tyrwh. 86. Allen v. Kinning, 9 Bingh. 618. Mayer v. Isaac, 6 M. &
W. 605.

{t) For instances in which the guaranty has been confined to a single transaction,
vide Melville v. Hayden, 3 B. & A. 593 ; Kay v. Groves, 6 Bingh. 276 ; Nicholson v.
Paget^ 1 C. & M. 48 ; in which last case, the Court expressed itselt averse to extend-
ing the rule of construction against guarantors. In Hargreave v. Smee, howevei',
the Court thought that the ordinary rule verba fortius acciphmtur contra proferentem
applied to these as to other instruments. In Mayer v. Isaac, Alderson, B., said, that,
if obliged to choose, he should prefer the strict construction. The decisions run very
close, ex. gr., Nicholson v. Paget, 1 C. <fe M. 48; 3 Tyrwh. 164. "I hereby agree to be
answerable for the payment of 5Ql. for F. L., in case F. L. does Hot pay for the gin, c&c,
he receives from you." Held not a continuing guaranty. Mayer v. Isaac, 6 M. & "W.
605. "In consideration of your supplying G. with china and earthenware, I guarantee
the payment of any bills you may draw on him c: accoicnt thereof to the amount of
200/." Held a continuing guaranty.

"Messrs. Allnutt and Arbouin, 50, Mark Lane,

" Sirs : — / hereby guarantee Mr. John Jennings' account with you for wine and
spirits to the amount of lOOL \ " F. Anhenden.

" Sittingbourne, April 14, 1838."
Held not to be a continuing guaranty, Allnutt v. Ashenden, 5 M. & Gr. 392. See
also Hitchcock v. Humfrey, 5 M. & Gr. 558. Martin v. "Wright, 6 Q. B. 917.

582 MERCANTILE CONTRACTS.

Surety, how discharged.

be that laid down by Lord Ellenborough, in Merle v. Wells^ viz., that
" if a party mean to confine bis liability to a single dealing, be should
take care to say so."

In Simpson v. Manley^ (u) it was held by the Court of Exche-
quer, that the words, "If you give A. credit we will be responsi-
ble," were not equivalent to saying, "K you give him the credit
ZLsual in your trade,^^ viz., that of grocers. In Comhe v. Woolfe, {v)
the guaranty was : —

''Messrs. 0. D. & Co.

"I hereby guarantee and engage to see you paid for any porter
you may send Mr. A. B. of this town, until you receive notice to
the contrary from me. L. W."

The custom of the plaintiffs was to give sis months' credit, and
then sometimes to take a bill at two ; having given A. B. eleven
months' credit, it was held, that they thereby discharged the
surety.

A person who guarantees the due payment of a bill, becomes
liable for interest if it be not paid at maturity, {id)

Sectiox III. — Surety^ hoio discharged.

If the creditor discharge the principal, or enter into any agree-
ment with him, by which the surety's situation is altered for the
worse, or which could render a proceeding against the surety a
fraud upon the principal, he discharges the surety :'^ for instance,

(m) 2 Tjr-wh. 86; 2 C. <!: J. 94. Vide Samuel v. Howard, 3 Merir. ST 2, and Howell
». Jones, 4 Tjrwh. 548 ; 1 C. M. & R. 97.
(i') 8 Bingh. 156.
(w) Ackermann v. Ehrensperger, 16 M. (fc W 99,

* A surety can only be charged where the case is brought within the very terms
of his contract, and the Court will not go into an inquiry whether the surety has
been injured by a departure from those terms. Birckhead v. Brown, 5 Hill, 634,
640. Edmonstone v. Drake, 5 Pet 524, 639. Thus a guaranty of a note, to be made
payable at a particular bank, cannot be applied to a note, corresponding in other
respects with the guaranty, but payable generally ; and the fact that the note was
deposited in the particular bank before maturity, was held to make no difference.
Dobbin v. Bradley, IT Wend. 422. So, a guaranty of drafts to be drawn at sixty

GUARANTIES. 533

Surety, how discharged.

if he agree to give time to the principal :* for then, if he forbear
proceeding during the time given, he wrongs the surety by pro-
longing his responsibility ; while, on the other hand, if he proceed
against the suretj^, he gives him a remedy over against the princi-
pal, and thus exposes the latter to proceedings, contrary to the
faith of his agreement, (x) So, if he substitute a new agreement
instead of that for the performance of which the surety was re-
sponsible. (?/) But the surety will not be discharged by mere for-
bearance, (z) unless, indeed, there be some stipulation in the
guaranty binding the party guaranteed to use due diligence against
the principal, (a) nor by acceptance of a collateral security, {h) nor
if he himself have agreed to the indulgence given the principal, (c)
or have subsequently assented to it. {d) And, even where the
creditor has altogether released and discharged the principal, still,

(r) Combe v. Woolfe, ubi supra. Howell v. Jones, 4 Tjrwh. 548 ; 1 C. M. <fe R.
9Y. Jones v. Lewis, 4 B. <fe C. 506. Hawkshaw v. Perkins, 2 Swanst. 539. Eees v.
Berrington, 2 Ves. jun. 540. Low v. E. L Compj., 4 Ves. jun. 824. Nisbet v. Smith,
2 Bro. C. C. 579. IIx parte Smith, 3 Bro. C. C. 1. IJx parte Gifford, 6 Ves. 805.
Boultbee v. Stubbs, 18 Ves. 20. Ux parte Glendinning, Buck, 5l1. Kearsley v. Cole,
16 M. & W. 128. See the notes to Jones v. Lewis.

(y) Whitcher v. Hall, 5 B. & C. 269. Eyre v. Bartrop, 3 Madd. 221. Bonser v.
Cox, 6 Beav. 110.

(z) Orme v. Young, Holt, 84. Goring v. Edmonds, 6 Bingh. 94. Muskett v.
Rogers, 5 Bingh. N". C. 728.

(a) HoU V. Hadley, 2 Ad. & R 758. See Muskett v. Rogers, 5 Bingh. K C. 728.

(6) Twopenny v. Young, 3 B. & C. 208. Bell v. Banks, 3 M. & Gr. 238.

{d) Smith V. Winter, 4 M. & W. 454.

days' sight, will not cover drafts drawn at ninety days. Birckhead v. Brown, 5 Hill,
634. Nor will a guaranty of a credit to be given until the 1st of January, 1840,
cover one given until the twenty-fifth of December, 1839. "Wal wrath v. Thompson.
4 Hill, 200. A variance of even three days will be fatal ; but where the guaranty
■was of a credit for three months, and the note taken from the person to whom it
was given, was for three months, not excluding the days of grace, it was held suffi-
cient, the guaranty as well as the note being considered as having been made with
reference to the usage. Smith v. Dann, 6 Hill, 543.

* That an extension of the time of papnent will discharge a guarantor, where it
would' have that effect on an ordinary contract of suretyship, was settled in Massa-
chusetts, in Chace et ah. v. Brooks, 5 Cush. R. 43.

584 MERCANTILE CONTRACTS,

Surety, bow discharged.

if the surety have expressly consented to remain liable, his liability
will continue, (e)

"Where a surety has entered into a bond for payment in default
of the principal debtor, and by parol agreement, time has been
given to the principal debtor, the surety is compelled to resort to
a Court of Equity; because, by the rules of law, a parol agree-
ment cannot be pleaded in discharge of an instrument under
seal. (/)

If the creditor omit to perform any condition, express or im-
plied, imposed upon him by the guaranty, the surety will, of
course, not be liable, (g) And fraud — for instance, the concealment
of some material part of the principal's original contract from the
surety — vitiates and avoids his engagement, (h) " The principle to
be drawn from the cases," said Tindal, C. J., delivering the judg-
ment of the Court in Stone v. Compton^ {i) " we take to be this,
that if with the knowledge or assent of the creditor any material part
of the transaction between the creditor and his debtor is misrepre-
sented to the surety, the misrepresentation being such that but for
the same having taken place, either the suretyship would not have
been entered into at all, or, being entered into, the extent of the
surety's liability might be thereby increased, the securiij so given
is voidable at law on the ground of fraud." It is said by Mr.
Starkie to have been decided that a continuing guaranty is counter-
mandable by jDarol. (/) And the executor, it seems, is not liable,
in respect of advances made after the testator's death, which oper-
ates as a revocation, (Jz)

(e) Cowper v. Smith, 4 M. & "VV. 519.

(/) Per Tindal, C. J., ia Combe v. "Woolfe. See Davey v. Prendergrass, 5 B. (fe A.
187. Prendergrass i». Davey, 6 Madd. 124. Rees v. Berrington, 2 Ves. jun. 540. See
Trent. Nav. Compj'. v. Ilarley, 10 East, 34. Bulteel v. Jarrold, 8 Price, 467.

{fj) Glyn V. Hertel, 8 Taunt. 208. Bacon v. Cbesney, 1 Stark. N. P. C. 192, per
Lord Ellenborough. HoU v. Hadley, 5 Bingh. 54. Evans v. "Whyle, 5 Bingb. 485.
Bulkley v. Lord, 2 Stark. 406. Elwortby v. Maunder, 5 Bingh. 295.

(A) Pidcock V. Bishop, B. & C. 605. See also Railton v. Mathews, 10 C. <fc Fin,
934.

(i) Stone v. Compton, 5 Bingb. N. C. 182.

(_/) Starkie on Evidence, 2d ed. vol. ii. p. 371, n. n. Brocklebank v. Moore. See
Goss V. Lord Nugent, 5 B. <fe Ad. 58.

{k) Potts V. Ward, 1 Marsh. 366. See Cooper v. Johnson, 2 B. & A. 394. Kin
guel V. Knapman, Cro. Eliz. 10. Joyner v. Vyner, L. Raym. 415.

GUARANTIES. 585

Surety, how indemnified.

It has been decided that if a guaranty has been altered, while
in the creditor's hands, in a material particular, without the consent
of the guarantor, it becomes void. {!)

Section IY. — Surety, how indemnified.

As soon as the surety's obligation to pay is become absolute,
he has a right to apply to equity to be exonerated by his princi-
pal, (m) .But this he cannot do, till he is under actual liability, (n)

After he has paid the debt of his principal, or any part of it, he
may obtain reimbursement at law, (o) and may sue toties quoties as
often as he is compelled to make a payment on account of it, [p)
and has a right in equity to have any fund, which was charged
with the principal debt, applied for his indemnification, {rj) Nay,
it appears that, if the surety be under a disability, which prevents
him from obtaining, in his own person, the benefit of securities
which have been set apart for the creditor, equity will restrain the
creditor from proceeding against the surety till he has resorted to
those securities ; (?■) though such circumstances would furnish no
defence at law. (s) And where the principal has assigned his
effects to a trustee for his creditors, a creditor who has a guaranty

(I) Davidson v. Cooper, 11 M. & W. "778 ; 13 M. & W. 343.

(wi) Per L. C. in Nisbet v. Smith, 2 Bro. C. C. 579, per M. R. in Lee v. Rook, Mos.
818. See Ranelagh v. Hayes, 1 Ves. 190. Antrobus v. Davidson, 3 Meriv. 578. Cox
V. Tyson, 1 T. & R. 395.

{n) See Cock v. Ravie, 6 Ves. 283.

(o) Warrington v. Furbor, 8 East, 242. And this he may do notwithstanding he
has executed a composition deed between the principal and his creditors including
the debt, but containing a reserve of remedies against sureties, under which he has
been afterwards compelled to pay the debt. Kearsley v. Cole, 16 M. <fc W. 128.

(jo) Davies v. Humphreys, 6 M. & W. 153.

((j) See Wright i;. Morley, 11 Ves. 12. Harrison v. Glossop, Coop. 61. See Ex
parte Rusliforth, 10 Ves. 409. In re Westzinthus, 5 B. <fe Ad. 835. See for the quali-
fication of this doctrine in case of a bond, Copis v. Middleton, 1 Turn. 224- See
Robinson v. Wilson, 2 Madd. 435. Dowbiggan v. Bourne, Young, 111.

(r) Wright v. Nutt, 3 Bro. C. C. 326 ; 1 11. Bl. 137. Cottin v. Blane, 2 Anst. 544.
Wright V. Simpson, 1 Ves. 728.

(s) FoUiott V. Ogden, 1 H. BI. 124. At least in the absence of express words to
«,hat effect, see Gwynne v. Burnell, 6 Bingh. IST. C. 453.

586 MERCANTILE CONTRACTS.

Surety, liow indemnified.

will be forced, even at law, to apply ia discharge thereof a rateable
part of any payment he may receive from the trustee, {t)

As the surety has a right to reimbursement from his principal,
in toio, so he has from his co-sureties jp?'o tanto ; this latter right is
called the right to contribution, and is recognized both in law and
equity, with this distinction, that, at law, a surety is, in every case,
entitled to contribution from his co-sureties, in proportion to their
number, without regard to the insolvency of any one of them,
which equity, on the contrary, regards. Thus, if A. B. and C. be
co-sureties, A. having paid the debt, would be entitled to recover,
at law, a third only from B., though C. may have become insol-
vent ; {u) whereas, m equity, he will be entitled to one half, {v)
But, both in law and equity, if he have been reimbursed in part,
the contribution must be calculated by the residue, (iv) And, it i?
said, that, where one surety becomes so at the instance of another,
that other cannot call on him for contribution, {x)

"We have seen that the surety's right to reimbursement from his
principal accrues toties quoties as often as he is compelled to make a
payment. With regard to his right to contribution, it is different ;
for until one has paid more than his proportion either of the whole
debt or of the part which remains due from his principal, it is not
clear that he ever will be entitled to demand any thing from the
other, and, before that, he has no equity to receive a contribution,
and consequently no right of action, which is founded on the equity
to receive it. Thus, if the surety, more than six years before the
action, have paid a portion of the debt, and the principal has paid

(<) Bardwell v. Lydall, 7 Bing. 489. And see Raikes v. Todd, 1 P. & D. 138 ; 8 Ad.
& E. 846.

(m) Cowell V. Edwards, 2 B. & P. 268. Browne v. Lee, 6 B. <fe C. 689.

{v) Peter v. Rich, 1 Cha. Rep. 19. Holt v. Harrison, 1 Cha. Ca. 246. Layer v
Nelson, 1 Vern. 456. The decree of Hadrian proceeded on this principle, " Ex epis-
tola Divi Hadriani compellitur creditor a singulis qui modo solvendo sunt litis con-
testatffi tempore partes petere. Iileoqite si qiiis ex fidejussoribus eo tempore solvendo non
sit hoc ecBteros onerat!' Inst. 1. 3, tit. 21.

{w) Knight V. Hughes, 3 C. & P. 467 ; M. & M. 247. Roach v. Thompson, ibid.
487. Swain v. Wall, 1 Cha. Rep. 80.

{x) Turner v. Davies, 2 Esp. 478. See Thomas v. Cook, 8 B. <fe C. 728. In Turner
V. Davies, the surety who induced the other to join, had taken a bill of sale from the
principal for his own security.

GUARANTIES. 587

Representations in the Nature of Guaranties.

the residue within six years, the Statute of Limitations will not run
from the payment by the surety, but from the payment of the re-
sidue by the principal, for, until the latter date, it does not appear
that the surety has paid more than his share. The practical ad-
vantage of this rule is considerable, as it would tend to a multipli-
city of suits and to a great inconvenience if each surety might sue
the others for a rateable proportion of what he has paid, the instant
he had paid any part of the debt. But whenever it appears that
one has paid more than his proportion of what the sureties can ever
be called upon to pay, then, and not till then, it is also clear that
such part ought to be repaid by the others, and the action will lie
for it. {y)

The right to contribution equally exists whether the sureties were
engaged jointly or severally, in one instrument, or in several in-
struments, and whether they knew of each other's engagements or
not ; for, in all these cases alike, a payment by one is a benefit to
all. (2) But any surety may, of course, by using words to that
effect, so modify his contract, that he will be liable only on the de-
fault of previous sureties, who will then be entitled to no contribu-
tion from him. (a)

Section Y, — Representatioiis in the Nature of Guaranties.

This chapter would be hardly complete if we were to take no
notice of certain representations which have very much the same
effect as guaranties, and for some time materially interfered with
the operation of the 4th section of the Statute of Frauds. In con-
sequence of the case of Pasley v. Freer^mn^ (5)* (where such an

{y) Per curiam, p. 169, of Davies v. Humphreys, 6 M. & "W".

{z) Deering v. "Winchelsea, 2 B. <fe P. 270. See the judgment in Craythorne v.
Swinburne, 14 Ves. 160.

(a) Craythorne v. Swinburne, 14 Ves. 160.
lb) 3 T. R. 51.

* It is said in Kidney v. Stoddard, Y Mete. 255, "From the time of the judgment
in the great case of Pasley v. Freeman, 3 T. R. 51, to the present day, through the
long line of decisions both in England and America, the principle of that case, though
with some statute modifications, remains unshaken and imimpaired." See also Pat-
ron «. Gurnev. 17 Mass. 182. Lang v. Lee, 3 Rand. 410. Upton v. Vail, 6 Jolin. Rep.

588 MERCANTILE CONTRACTS.

Representations in the Nature of Guaranties.

action was decided to be maintainable,) it became the practice to
bring actions in wliicli parties were charged, not strictly as guaran-
tees for others, in which case the Statute of Frauds would have
applied, and the guaranty must have been in writing, but as hav-
ing made wilfully false representations as to the credit of others,
whom the plaintiffs were thereby induced to trust, and so com-
mitted a tortious act, for which they were liable to the party de-
ceived in damages. Now these representations might have been
made the ground of an action, although not in writing, for they did
not amount to guaranties, but were of the same description as the
false representations spoken of hereafter in the chapter on Sales ;
and yet it very often happened, that the same evidence which would
have proved a parol guaranty, would also prove such representa-
tion of solvency as has just been described. The 4th section of the
Statute of Frauds being thus frequently evaded, it was, in order to
remedy the mischief, enacted in stat, 9 Geo. 4, c. 14, commonly
called Lord Tenterden's Act, " that no action shall be brought to
charge any person by reason of any representation or assurance,
made or given concerning or relating to the conduct, credit, ability,
trade, or dealings, of any other person, to the intent or purpose that
such other person may obtain credit, money, or goods upon, (c) un-
less such representation or assurance be made in writing, signed by
the party to be charged therewith." The effect of this section was
elaborately discussed in the great case of Lyde v. Barnard^ {cD
where the Barons were equally divided, Lord Abinger and Gurney,
B., holding that a representation of the solvency of a fund belong-

181. Boyd's Ex'rs v. Browne, 6 Barr Pa. R. 310. Russell v. Clark's Ex'rs, 7
Cranch Rep. 69. 2 Smith's L. Cases (Hare v. WaUace), 65, 146. 2 Kent. Com. 489.
The act referred to by the author in this section, has been adopted in Massachusetts,
Vermont, and Virginia. It is settled by the highest American authority, that the
simple fact of making representations which turn out not to be true, unconnected
with any fraudulent design, is not sufficient to sustain an action. There must be
actual fraud in the defendant, or an intention to deceive the plaintiff by false repre-
sentations. Lord et ah. v. Goddard, 13 How. S. C. R. 198, where the autliorities,
English and American, are reviewed by counsel in argument. See also State Bank
V. Hamilton, 2 Ind. Rep. 457.

GUARANTIES. 539

Representations in the Nature of Guaranties.

ing to A,, in order tliat a tliird party might advance money on the
security thereof, was a representation within the meaning of this
act. Parke, B., and Alderson, B., holding the reverse, unless, in-
deed, it should appear that the representation, though concerning
the state of the fund, had partly reference to A.'s own personal sol-
vency.

This question has been since touched on in Swann v. Phillips^ (e)
where the leaning of the opinion of the Court of Queen's Bench
seems to have been in favor of the opinion of Lord Abinger and
Baron Gurney.

Where the defendant has received the proceeds of goods ob-
tained by his debtor from the plaintiff by means of a misrepresen-
tation by the defendant falling within this Statute, though assump-
sit may possibly lie to recover back the money, still, if the whole
case rests on the misrepresentation, the Statute applies, and it must
be shown to have been in writing. (/)

The act applies to a representation made by one partner con-
cerning the credit of the firm, {g)

(e) Swann v. Thillips, 8 Ad. & E. 457.
(/) Haslock V. Fergusson, 7 Ad. & E. 86.
(^) Devaux v Steinkeller 6 Bingh, N C, 84

CHAPTER XII

OONTEACTS OF SALE.

Sect. 1. Ability of vendor to sell.

2. Form and requisites of contract.

3. Duties of vendor.

4. Duties of vendee.

5. Effect of illegality.

Sale is a transmutation of property (a) from one man to another iu
consideration of a money price. It differs from Barter or Exchange
in this resjpect, viz., that Exchange is, correctly speaking, a transmu-
tation of property from one man to another, for a consideration not
given in money, but in some other sort of commodity.

There appears to have been a great contest among the Eoman
jurists on the question, whether Sale and Exchange were not in
reality the same contract, and whether the 2^'^^iiu'^'n, which they all
admitted to be the true criterion of a sale, might not be paid in any
thing as well as money. The history of the dispute is curious : —

^^Pretium in numerata pecunia consistere debet. Nam in cceteris rebus
an pretium esse posset valde qucerebatur ; veluti, an homo, ant fundus,
aut toga p)retium alterius rex esse p)Osset. Et Sabinus et Cassias etiara
in alia re reputabant pretium posse consistere, unde illud est quod vulgo
dicebatur, permutatione rerum emtionem et venditionem contrahi, earn

(a) A recovery in trespass or trover for chattels, follo'wedby satisfaction, appears
to operate as a sale, for solutlo pretii empilonis loco habetur ; otherwise, if not followed
by satisfaction. See the authorities collected in a learned note to Holmes v. Wilson,
10 Ad. & E. 503. Cooper v. Shepherd, 3 C. B. 267. And see per Maule, J., Hearne v.
Turner, 2 C. B. 540, and Sergeant Manning's note, 6 M. & Gr. 64:0. But a vesting
order and possession taken b}' the assignee will not prevent the operation of a writ
previously delivered to the sheriff. Woodland v. Fuller, 11 Ad. & E. 859. [The
American authorities are collated and discussed in American Law Magazine, April,
1844, and in a note, vol. 2, Kent's Commentaries, p. 467.]

CONTRACTS OF SALE. 591

Contracts of Sale.

que speciem eyntionis et vendltionis vetustissimam esse. Argumento que
utehantur Groeco poeta Homer o qui aliquam partem exercitus Acliivorum
vinum sibi comparasse ait per mutatis quibusdam rebus — his verbis:

l!irjeg (5' ek ArjfxvoLo "rrapeoraaav, olvov dyovoat,
'Evt9£V dp olvi^ovTO Kapr]fcon6o)vreg 'A;^aiot,
'AA/loi [lev xc-Xkco, dXXoi 6' ald(j)VL otdi^pco,
'AAAoi 6e pivolg, dXXoi d' avrolai (ioeoaiv^
'AAAoi (J' dvdpanodeoot,,

Advecta ^ Lemno tunc vinafuere carinis,
Inde capillati sibi vina parare Pelasgi^
jEre viicante allii, nitido pars altera ferro,
Pars buhulis tergis^ ipsis plerique juvencis,
Pars quoque mancipiis.

" Sed ^ Proculi sententia dicentis Permutationem propriam esse
speciem contractus a Yenditione separatayn merito proivaluit cum et
ipse aliis Homericis versibus adjuvabatur et validioribus rationibus
arguinentabatury (b)

With regard to the meaning of sale, it may be added that it
Beems prima facie to imply an entire disposition, as, in case of land,
of the fee simple, (c)*

(6) Inst. b. 3, tit. 24. The English law regards these contracts as entirely dis-
tinct, and the omission of one of the parties for any period of time to deliver the
goods bartered for, will not enable the other to maintain an action for goods sold
and delivered. Harrison v. Luke, 14 M. 139.

* It is sometimes difficult to determine whether a contract is one of sale or bail-
ment. The distinction generally taken by the text writers, is between an obligation
to restore the specific thing, and the duty of returning others equal in value. In the
first case, it is a bailment ; in the latter, it becomes a debt. A different doctrine was
at one time ruled in New York. See Seymour v. Brown, 19 Johns. Rep. 44. In that
case, a quantity of wheat had been sent to a niller to be exchanged for flour at the
rate of a barrel of flour for every five bushels '.f wheat. There was no evidence of
an understanding that the wheat delivered was to be kept separate and returned in
flour. The miller mixed the wheat with the mass of other wheat in the mill, of the
same quality, belonging to himself and others. The mill, with its entire contents,
was destroyed by fire before the delivery of the flour. The court held that there
had been no sale of the wheat, and as no laches was imputed to the miller, that he
vTas not responsible for the loss. This case has been overruled by the later decisions

592 MERCA^rriLE CONTRACTS.

Contracta of Sale.

In considering this subject, we will touch successively upon the
following topics : —

1. The ability of the vendor to sell.

2. The form and requisites of the contract of sale.

3. The duties it imposes on the vendor.

4. Those which it imposes on the vendee.

5. The effect of illegality upon the contract.

of Hood V. West, 1 Cow. 152 ; Smith v. Clark, 21 Vend. 85 ; and Norton v. "Wood-
rup, 2 Comst 153. It is also inconsistent with the case of Ewing v. French, 1 Black
Ind. Eep. 353.

In Slaughter v. Green, 1 Eand. 3, the Court of Appeals of Virginia considered the
question under a state of facts very similar to those of Seymour v. Brown. "Wheat
had been delivered at a mill to be ground, upon an agreement that the miller
should return to the farmer a given quantity of flour for so many bushels of
wheat. The wheat being consumed by an accidental fire, the Court held that
the miller was not responsible for the loss ; that he stood in the relation of a
bailee and not a purchaser; and that this construction of the contract would not
be affected by an understanding that the miller was not boimd to return flour made
from that identical wheat, but flour of a certain quantity made from any wheat in
the mill. Judge Eoane, delivering the opinion of the Court, says, that where wheat
is delivered at a mill for the purpose of being converted into flour for the use of the
bailee, the transaction does not lose its character of a bailment because, for general
convenience, there is an agreement, by common usage or otherwise, among the cus-
tomers of a mill, that all the wheat delivered shoiild be put into a common stock and
return made to each out of the common mass of floiu-. A condition of this character,
imposing no hardship on the bailee, and to which there is an assent of all parties,
cannot convert a bailment into a sale, or an exchange of wheat for flour. The pro-
perty in the wheat is not conveyed to the millers, when they cannot sell the wheat
in specie without violating their contract, which is to grind it into flour ; nor even
seU the flour itself without violating their agreement to return it to the several
bailors. That is a curious kind of ownership in which the party has no absolute
power over the subject either in its original state or after it has been manufactured.
The miller, in this case, has the absolute ownership of nothing but the excess of
flour which may remain after returning the stipulated quantity to the several farmers.
Upon the general subject of the distinction between bailment and sale, the following
authorities may be consulted, yiz. : Collins v. Forbes, 3 T. R. 316. Barker v. Roberts,
8 Greenl. 101. Bufi'um v. Merry, 3 Mass. 478. Holbrook v. Armstrong, 3 Fairf. 31.
Pierce v. Shenck, 3 Hill, 28. Dykers v. Allen, 1 Hill, 497. King ti.' Humphrey, 10
Barr R. 217.

C0XTRACT3 OF SALR 593

Ability of Vendor to sell.

Sectiox I. — Ability of Vendor to sell.^

Where a man has in himself the property of goods, the generai
rule is, that he may dispose of them hy sale to whomever and
however he pleases ; provided that judgment have not been ob-
tained against him, and the writ of execution actually delivered to
the sheriff, for then the goods are bound to answer the debt from
the time of delivering the writ to the sheriff, as they formerly were
from its teste, id) Even in that case, as the property remains in
him, he may dispose of them, subject to the sheriff's right to seize
by virtue of the execution, and a valid sale may be made of them
in marTcet overt, even after the delivery of the writ to the sheriff, (e)

Where a man has not in himself the 'property of goods, but only
the possession, as, if he be a thief or finder, he nevertheless may
make a valid sale, so that the buyer will be secure of his purchase ;

((f) Stat. 29 Car. 2, c. 3 ; 2 Bl. Comm. 446. See "Woodland v. Fuller, 11 Ad. <fc E.
859.

{e) Per Ld. Hardwicke. LoTrthall v. Tonkins, Barnard, 42 ; S. C. Eq. Ca. Ab. 381.
Samuel v. Duke, 3 M. <fc "W. 622. So a pawnor retains liis property and the right to
sell, subject to the pawnee's power to do so. Franklin v. Xeate, 13 M. & "W. 481.

* Some elementary writers on this subject have a division imder the head of the
things sold, which it is said must have an actual or potential existence. The expecta-
tion of the existence of the thing must be founded on a right in esse, for a mere pos-
sibility or contingency, not coupled with any interest in or growing out of property,
cannot be the subject of a sale. Thus a sale may be made of the wool that shall
grow on the sheep then owned by the seller, but not of the wool of the sheep he
may thereafter buy. 2 Kent. Com. 468 ; Story on Cont 303, 304.

If the article intended to be sold has no existence, there can be no contract of
sale. And even though ;he subject of the contract be known to both parties to be
liable to a contingency, which may destroy it immediately, yet if the contingency
has already happened, it will be void. As if a horse be sold, which both parties be
lieved to be alive, but which was, in fact, dead, the contract is void. Allen v. Ham-
mond, 11 Pet. 63. 2 Kent Com. 468.

In the case of the brig Sarah Ann, 2 Sumn. 211, it is said by Judge Story, that he
knows of "no principle of law, that establishes, that a sale of personal goods is in-
valid, because they are not in the possession of the rightful owner, but are withheld
by a wrong-doer. The sale is not, under such circumstances, the sale of a right of
action ; but it is a sale of the thing itself, and good to pass the title against every
person, not holding the same under a bona fide title, for a valuable consideration
without notice ; and a fortiori against a wrong-doer."
38

594 MERCANTILE CONTRACTS.

Ability of Vendor to sell.

provided that such sale be made in market overt^ during the usual
market hours.* This market overt, in the country, is only held on
special days provided for particular places by charter or prescrip-
tion ; but in the city of London, every day, except Sunday, is mar-
ket day : the market place, or spot of ground set apart by custom
for the sale of particular goods, is, also, in the country, the only
market overt ; but, in London, every shop in which goods are ex-
posed publicly to sale is viarket overt, but for such things only as
the owner professes to trade in. (/)

{/) Case of Market Overt, 5 Rep. 83, b. ; L'Evesque de "Worcester's case, Moore,

* It is a general rule of law, that a sale by a person -who has no right to sell, is
not valid against the rightful owner ; and it has been frequently held in the United
States, tiiat the English law of markets overt had not been adopted. "Wheelwright
V. Depej-ster, 1 John. 4*78. Dame v. Baldwin, 8 Mass. 518. "Ventress v. Smith, 10
Pet. 161. It seems, therefore, that in this country a sale of stolen goods can in no
case be valid ; and further, that a bona fide purchaser of stolen goods, who after-
wards, without any notice of the felony, sells them as his own, is liable to the owner
of the goods, in an action of trover, for such conversion thereof to his own use.
Thus in the case of Hoffman v. Carow, 22 "Wend. 285, S. C. 20 "Wend. 21, where goods
had been stolen from the plaintiff in New York, and forwarded by the thief to the
defendants, auctioneers in Baltimore, to be sold at auction ; and the goods had been
sold and the proceeds paid over to the thief by the defendants, without any notic<
of the felony, and before either the arrest or conviction of the thief; it was held,
that the defendants were liable in trover to the plaintiff for the value of the goods.

The general principle, that no man can be divested of his property without his
own consent or by operation of law, and, consequently, that even the honest pur-
chaser under a defective title cannot hold against the true owner, is strongly illus-
trated in the case of Saltus v. Everett, 20 Wend. 26Y, S. C. 15 "Wend. 474. Goods
were shipped at New Orleans, and a bill of lading taken for their delivery to con-
signees in New York ; the vessel put into Norfolk in distress, part of the goods were
sold by the master to pay charges, and the rest were shipped by him on another
vessel, and a bill of lading taken for their delivery to his own order in New York;
and by his order they were delivered, not to the original consignees, but to a differ-
ent mercantile house, from whom the defendants purchased them in good faith, at
the full market value, without any notice of the claim of the plaintiff, to whom the
goods belonged when shipped from New Orleans. It was contended that the defen-
dants, purchasing for a fair price, in the usual course of trade, from persons holding
the usual evidence of such proj^erty (a bill of lading indorsed to them), and in ac-
tual possession of the goods, should be protected; but the Supreme Court and Court
of Errors of New York both unanimously decided that the plaintiff was entitled to
recover, in an action of trover, the value of the goods thus purchased by the defen-
dants.

CONTRACTS OF SALE. 595

Ability of Vendor to sell.

There are some cases in wliich even a sale in market overt will
not secure the purchaser : as, if the goods were the property of the
King, or if the buyer knew they were not the seller's, or was guilty
of any other fraud in the transaction ; nor do the privileges of a
market overt embrace sales made in a covert place within its limits,
as in a back room or warehouse, or in a shop whose windows are
closed up ; (^) nor sales between sunsetting and sunrising, (A) nor
cases in which the treaty for sale was begun out of market overt ; {i)
neither does the rule respecting sales in market overt extend to
gifts (y) or pawns (/c) there; and, notwithstanding any intervening
sales, if the original vendor, who sold without having the property,
come again into possession of the goods, the original owner's right
to them will revive. (/) And although, in general, a sale in market
overt will secure the purchaser, though the goods purchased have
been stolen, yet stat. 7 & 8 Geo. 4, c. 29, s. 57, {m) enacts, that if
any person guilty of any such felony or misdemeanor as is before
mentioned in that act, in stealing, taking^, obtaininsf, or convertino-,
or in knowingly receiving, any chattel, money, valuable security,
or other property whatsoever, shall be indicted by, or in behalf of
the owner, his executor, or administrator, and convicted, in such
case the property shall he restored to the owner, or his representative,
and the Court shall have power to award writs of restitution, or to
order restitution in a summary manner. But this does not extend
to charge a person who purchased the goods in market overt after
the felony, and disposed of them again before the conviction, {n)

360, S. C. Poph. 84, Comyn's Di. Market ; Bl. Comm. 449. "Wilkinson v. King, 2
Camp. 336. Lyons v. De Pass, 11 Ad. & E. 326, which see, on the question, What is a
shop ? withiQ the custom.

(ff) 2 List 713; 5 Kep. 836; Poph. 84; 2 Rolls, Ab. tit. Market Overt, 50, p. 122.

(h) 2 List. 714.

(i) 2 Inst. 713.

(j) 2 Inst. 713.

(k) Hartop v. Hoare, Str. 1187; 1 Wils. 8; 3 Atk. 44. Packer v. Gillies, 2 Camp
336.

(l) 2 Bl. Comm. 450.

(m) 21 Hen. 8, c. 11, was the corresponding statute, but only extended to felonies
See Parker v. Patrick, 5 T. R. 175. And see on the present act. Peer v. Humphrey, 4
Nev. & M. 480 ; 2 Ad. & E. 495. A person whose goods have been stolen may re-
cover them by action from an innocent vendee, though he has taken no steps te
prosecute the thief White v. Spettigue, 13 M. & W. 603.

(n) llorwood v. Smith, 2 T. R. 750.

59G MERCANTILE CONTRACTS.

Form and Requisites of a Contract of Sale.

Moreover, the statute provides " that if it shall appear, before any
award or order made, that any valuable security shall have been
hona fide paid or discharged by some person or body corporate lia-
ble to the payment thereof, or, being a negotiable instrument, shall
have been bona fide taken or received by transfer or delivery for a
just and valuable consideration, without any notice or cause to sus-
pect the same had been stolen, taken, obtained, or converted as
aforesaid : in such case the Court shall not award or order the restitu-
tion of such security." There are some very peculiar provisions
with respect to the sale of horses in marhei overt, enacted by stat. 2
P. & M. c. 7, and 31 Eliz. c. 12.

There are some cases in which a valid sale may be made by
virtue of a power conferred by law on the vendor not being the
owner of the goods sold. Thus, a sheriff may sell according to
the exigency of writ of execution, and if that writ be afterwards
set aside, the vendee does not seem liable to return the goods, pro-
vided he have acted bona fide, (o) But the vendee under an invalid
distress warrant, issued upon a conviction, has been thought not to
be similarly protected, (p)

An agent or a person in possession of certain documents gene«
rally used as symbols of property, is, in many cases, able to make
a valid sale of the goods of another by the provisions of the Fac-
tor's Acts, which are set out at length and commented upon in a
preceding chapter, {q)

Negotiable instruments are also an exception to the general rule,
that a valid sale cannot be made, except in market overt, of property
to which the vendor has no right: the nature of these, and their
transferability, has already been discussed in Book II., Cap. lY., to
which the reader is referred.

Section II. — Form and Requisites of a Contract of Sale.

A sale of goods must either be by deed or parol. A sale by
deed is not, at present, very usual, except in cases where the thing

(o) Manning's case, 8 Co. 191. Doe v. Thorn, 1 M. & S. 425; and the cases cited
in Lock V. Selwood.

{p) Lock V. Selwood, 1 Q. B. 736.
{q) Ante, B. 1, c. 5, s. 4.

CONTRACTS OF SALE 597

Form and Requisites of a Contract of Sale.

sold is of some importance, as where the vendor wishes to convey
his entire property to the vendee, or where the sheriff sells under
an execution. "When such a deed, which is denominated a hill of
sale, is executed, the property in the goods conveyed by it passes
out of the vendor into the vendee, by its delivery, (r)

A 2^(^'>''^T' sale of goods might, according to the common law,
have been in every instance effected, either by an agreement to be
completed in 2^')'cesenti, coupled with tender, imrt payment, or a de-
livery of part of the goods by way o^ earnest; or, by an agreement
to be completd infuturo. (s) Thus, if A. agree to pay so much for
goods, and B., the owner, had agreed to take it, this was an agree-
ment to be completed in p)i'<xsenti, since, by its terms, it contemplated
an immediate performance on both sides; and, if no more had
passed, but the parties had separated, this agreement would have
become void and unavailable ; {t) such separation being equivalent
to a mutual consent to rescind it.* But, if B. had tendered the

(r) Noy's Max. c. 42 ; Com. Dig. Biens, D. 3. Carr v. Burdiss, 1 C. M. & R. '782;
5 Tyrw. 316. Brighton Railway Co. v. Faircloiigli, 2 M. & Gr. 674 Gale v. Burnell,
1 Q. B. 850.

(s) Com. Dig. Agreement, B. 3, and the other authorities cited by Holroyd, J., in
Tarling v. Baxter, S B. & C. 362. Sheppard's Touchstone, 224. See Dunmore v. Tay-
lor, Peake, 41, et notas.

{t) Lutw. 252; Dyer, fol. 40, pi. 203; 14 Hen. 8, c. 22 ; 2 Bl. Comm. 447.

* This, however, must be understood only as applicable to cases where, from cir-
cumstances, such a condition as to nullity may be fairly implied. Long on Sales, 43.
"When the terras of sale are agreed on, and the bargain is struck, and every thing
that the seller has to do with the goods is complete, the contract of sale becomes
absolute as between the parties, without actual payment or delivery, and the property
and the risk of accident to the goods vest in the buyer." 2 Kent Com. 492. "Inde-
pendently of the statute, any words importing a bargain, whereby the owner of a
chattel signifies his willingness and consent to sell, and whereby another person shall
signify his willingness and consent to buy it, in prcesenti, for a specified price, would
be a sale and transfer of the right to the chattel." De Fouclear v. Shottenkirk, 3
John. 173. "It is not the delivery or tender of the property, nor the payment or
tender of the purchase money, which constitute a sale. The sale is good and com-
plete so soon as both parties have agreed to the terms; that is, so soon as the vendee-
says, 'I will pay the price demanded,' and the vendor says, 'I will receive it,' the
rights of both are instantly fixed." Potter v. Coward, Meigs R. 26. See also Willis
V. Willis, 6 Dana, 48. Hurlburt v. Simpson, 3 Ired. L. 233. The distinction is be-
tween the right of properti/, which the vendee acquires by the contract of sale as
above stated, and the right of possessioji, which he does not acquire until he pays oi

598 MERCA^TTILE C0^TRACT3.

Form and Requisites of a Contract of Sale.

goods, or A. the price, {u) or B. had received any part of the price,
though but a penny, or A. any, even the very smallest portion of
the goDds, (f) both would have been bound to their bargain ; though
B. would in no case have had a right to the remainder of the price,
until he was himself ready to deliver the goods to A., and A. no
right to the possession of the goods, till he was ready to pay the
whole of the price to B. {iv)

It was quite clear, that, after a payment or tender of the entire
price, the property of the goods became vested in the vendee, so
that he might, if the vendor had refused to deliver them, have
maintained trover, and would have had to bear the loss, had he of
his own will permitted them to remain in the vendor's hands, and
they had there been accidentally destroyed, {x) But it does not
seem so clear, whether the effect of part payment or earnest be to
bind the bargain, and alter the property, or merely to bind the bar-
gain, (y) In Langford v. Tiler^ (2) the rule was said to be, " After
earnest given, the vendor cannot sell the goods to another without
default in the vendee, and therefore, if the vendee do not come and
pay for, and take away, the goods, the vendor ought to go and re-
quest him; and then if he do not come and pay for, and take
away, the goods, in convenient time, the agreement is dissolved,

(m) 2 Comm. 447 ; Sheppard's Touchstone, 225.

{v) 2 Bl. 448 ; K"oy, c. 42. See Hinde v. "Whitehouse, 7 East, 558 ; Sheppard's
Touchstone, 224.

(m) Hob. 41 ; 2 Bl. Conam. 448. Peeters v. Opie, 2 Saund. 352, b. in notis. See
Bach V. Owen, 5 T. R. 409. Rawson v. Johnson, 1 East, 203. There is one case in
■which it -was laid down by Mr. J. Bayley, that a vendor who had sold goods on ready
money terms, and whose servant by mistahe delivered them without receiving the
money, might after a demand and refusal bring trover. Bishop v. Shillito, 2 B. »fe A.
329. See Brandt v. Bowlby, 2 B. <t Ad. 932.

{x) Sheppard's Touch. 225 ; 2 BL Comm. 448. See Tarling v. Baxter, 6 B. (t C.
360. Hinde v. Whitehouse, 7 East, 558.

(«/) See Key's Max. 88. Sheppard's Touch. 224. Bach v. Owen, 5 T. R. 409 B.
N. P. 50.

{£) Salk. 113.

tenders the price, unless by the terms of the contract it be otherwise provided.
And the vesting of the property casts the risk of accident to the goods upon the
vendee. Tarling v. Baxter, 6 B. <fc C. 360 ; 13 E. C. R. 199. Crawford v. Smith, 7
Dana, 59.

CONTRACTS OF SALE. 50£

Form and Requisites of a Contract of Sale.

and the vendor is at liberty to sell them to any other person."
This rule, which certainl}'' is the most convenient, seems to have
been approved by Lord Ellenborongh, in Ilinde v. Whitehouse ; (ci)
and his Lordship appears to have considered all the authorities as
reconcilable, and to have understood the effect of them to be, that,
after earnest, and before the payment of the whole price, the pro-
perty is in the vendee, subject only to the vendor's lien^ but that
the vendor ma}^, upon finding the vendee delay to accomplish his
bargain, go to him and request him to do so, and if he, after that,
delay for an unreasonable time, may treat such further delay as
equivalent to a consent to rescind the sale, and the property will
thereupon become revested in himself And so it has been thought
e converse might the vendor's unreasonable delay to deliver the
goods when he had stipulated to do so, perhaps entitle the vendee
to rescind, (i)

The Court of Queen's Bench has, however, decided, in a late
case, (c) that where the property has once passed to the vendee, his
failure to pay the price at the appointed time does not entitle the
vendor to rescind the contract. That case does not seem to decide
what would be the consequences of an express refusal.

In Martindale v. Smith, (d) oats standing on the defendant's pre-
mises were sold by him to the plaintiff under the following con-
tract : —

Aj^ril 23, 1838.

Sold to Mr. John Martindale, of Cottenham, six oat-stacks for
85Z.

John Smith gives John Martindale liberty to let the stacks
stand, if he thinks fit, until the middle of August next ; and John
Martindale is to pay to John Smith for the stacks in twelve weeks
from the date hereof.

Signed by the parties.

The plaintiff did not pay at the appointed time. He afterwards
tendered payment, which was refused by the defendant, who sold

(rt) 1 East, 558.

(6) See Barber v. Taylor, 5 M. & W. 527.

Id) 1 Q. B. 397.

600 MERCA^'TILE CONTRACTS.

Form and Requisites of a Contract of Siile.

tlie oats, on which the plaintiff brought trover against him, and waa
held entitled to recover.

The Court, having cited with approbation the rule of the civil
law as stated by Pothier, viz., that a purchaser's delay in paying
the price does not give the vendor a right to require a dissolution
of the contract, goes on to say, the vendor's right to detain the
thincr sold against the purchaser, must be considered as a right of
lien till the price is paid, not a right to rescind the bargain.

Even when goods are actually delivered to the vendee, the
delivery may be on condition, a breach of which revests the pro-
perty .in the vendor, and entitles him to recover back the goods in
trover, (e)*

(e) Bishop v. Sliillito, 2 B. <t A. 329. Brandt v. Bowlby, 2 B. & Ad. 932.

* If a vendor rely on the promise of the vendee to perform the conditions of the
Bale, and deliver the goods absolutely, the right of property will be changed, although
the conditions be never performed. Harris v. Smith, 3 Serg. & Rawle, 20. And so
where the ownei* of a chattel delivers it to another, and takes his promise in writing
to return it on a day specified, or pay a sum of money therefor, the property in the
chattel passes from the former to the latter. The security vested in the contract.
Dearborn v. Turner, 4 Shep. 17. See also Hurd v. West, 7 Cow. 752.

On a sale it may be agreed between vendor and vendee, that possession shall pass,
but not the title, until payment is made ; this will be good as to them, but not as to
creditors or third persons ; it will, however, be sufficient if the vendor retain, with
the title, either the exclusive or joint possession. Rose v. Story, 1 Burr. 190. And
it is said by Pirsons, C. J., in Hussey v. Thornton, 4 ilass. 407, that as to creditors
whose demands originated while the goods were in the possession of such a vendee,
60 that it might be fairl}' presumed that a false credit was given him, or as to bona
fide purchasers for a valuable consideration, such a condition would not avail the
vendor. See also Ward v. Shaw, 7 Wend. 405. Haggerty v. Palmer, 6 John. Ch. R.
437. But in the case of Tibbets v. Towle, 3 Fairf. 341, the Court say that in condi-
tional sales no property passes but subject to tlie condition, and held that a subse-
quent purchaser, bona fide, for a valuable consideration without notice, could not
hold the property against the prior title of the vendor. And in the case of Gamb-
ling V. Read, Meigs R. 281, the decision of the Court was to the same effect. The
condition may be precedent, as that no title or property shall pass until the price is
paid, or some other act be done, in which case it is rather a contract for a sale than
an actual sale, and when possession of the article is given, the parties stand in the
situation of bailor a d bailee rather than that of vendor and vendee; or the condi-
tion may be subsequent, as that the title shall determine, or the property revest in
the vendor, on the failure to pay the price, or to do some other act. The nature of
the condition may make an important difference in reference to the rights of third

C0XTRACT3 OF SALE. 601

Form and Requisites of a Contract of Sale.

The delivery of tlie goods wbicli is to pass the propert}^ may be,
of course, to an agent of the vendee ; and, if the goods are in the
hands of a third person as agent for the vendor, a notice given to
and assented to by him will render him the agent of the vendee for
this purpose. (/) To use the words of Parke, B., delivering the
judgment of the Exchequer in Bryar.s v. Kix, " If the intention of
the parties to pass the property, whether absolute or special, in cer-
tain ascertained chattels is established, and they are placed in the
hands of a depositary, no matter whether that 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 depositary assents, it is enough,
and it matters not by Avhat documents this is effected." {g)

An agreement to be completed in futuro may be such, on ac-
count of the postponement cither of the payment of the price, or of
the delivery of the goods, or of both : in all these cases the rule is,
that, if nothing remains to he done on the jiart of the seller, as between
him and the buyer, before the goods 2^UTchased are to he delivered, the
property in the goods immediately passes to the buyer, and that in the
price to the seller, (/i) But that if any act remains to he done on the
part of the seller, then the prop)erty does not pass until that act has been

(/) Bryans v. Nix, 4 M. <t T^T. VVo. Evans v. Xicbol, 3 M. tfe Gr. 6U. Jenkyns v.
Usborne, 7 M. & Gr. 678.

{g) 4 M. & W. "791 ; and see Anderson v. Clark, 2 Bingb. 20, explained by Parke,
B., in the same judgment

(/;) Per Holroyd, J., in Tarling v. Baxter, 6 B. i C. 364. JIartindale v. Smith, 1
G. & D. 1 ; 1 Q. B. 397. See B. N. P. 50. Phillimore v. Barry, 1 Camp. 513. El-
more V. Stone, 1 Taunt. 458. Fragano v. Long, 4 B. «fe C. 219. Alexander v. Gard-
ner, 1 Bingb. X. C. GTl. Tansley v. Turner, 2 Biugb. X. C. 151.

persons. And thus in the case of Strong v. Taylor, 2 Hill, 826, wbere payment of
the price was a condition precedent, the Court held that no interest in the property
passed, save ■what rested in contract, an interest -which could not be subject of levy
and sale ; and on the contrary, the Court conceded, that " vrbere a party takes and
is possessed of an interest in the property, liable to be divested on his failure to com-
ply -with a condition subsequent, such interest may be seized and sold on execution,
and the purchaser, on comj^lying with the condition, would acquire an absolute
title." See also Fairbank v. Phelps, 22 Pick. 535. Reed v. Upton, 10 Pick. 522
Barrett v. Pritchard, 2 Pick. 512.

602 MERCANTILE CONTRACTS.

Form and Requisites of a Contract of Sale.

done, (i)* Thus, where there was a bargain for the sale of hay,
which was not paid for till a future period, and not to be cut till
paid for, it was held that the property nevertlieless passed to the

(i) Hanson v. Meyer, 6 East, 614. Zagury v. Furnell, 2 Camp. 2-40. "Withers v.
Lyss, 4 Camp. 237. Wallace v. Breeds, 13 East, 522. Simmons v. Swift, 5 B. <fe C.
857. Gillett v. Hill, 2 C. <fe M. 530; 4 Tyrwh. 290, ubi, per Bayley, B., "The cases
may be divided into two classes, one in which, though a bargain and sale of the spe-
cific goods has taken place, yet as something remains to be done to them by the seller,
the property remains in him till that is done, and does not pass to the vendee so as
to enable him to maintain trover. The other case, where the bargain is for a certain
quantity of goods, ex a larger quantity, and the vendor has a power to select what
part he chooses to deliver, there, before a division takes place by the vendoi-, no in-
dividuality is ascertained in the part sold, so as to sustain an action of trover by the
vendee." See also Swanwick v. Sothern, 9 Ad. &, E. 895, where the distinction is
drawn between a weighing necessary to ascertain the price and one for the mere sat
isfaction of the buyer.

* The general principle is, that where any operation of weight, measurement,
counting, or the like, remains to be performed, in order to ascertain the price, the
quantity, or the particular commodity to be delivered, and to put it in a deliverable
state, the contract is incomplete until such operation is performed. See Crofoot v.
Bennett, 2 Coms. 258. But where the goods or commodities are actually delivered,
that shows the intent of the parties to complete the sale by the delivery, and the
weighing, or measuring, or counting afterwards, would not be considered as any
part of the contract of sale, but would be taken to refer to the adjustment of the
final settlement as to the price. The sale would be as complete as a sale upon credit
before the actual payment of the price. Maeomber v. Parker, 13 Pick. 183. And
in the case of sales, where the property to be sold is in a state ready for delivery,
and the payment of money, or giving security therefor, is not a condition precedent
to the transfer, it may well be the understanding of the parties that the sale is per-
fected, and the interest passes immediately to the vendee, although the weight or
measure of the articles sold remains yet to be ascertained. Such a case presents a
question of the intention of the parties to the contract. The party afiirming the sale
must satisfy the jury that it was intended to be an absolute transfer, and all that re-
mains to be done was mei'ely for the purpose of ascertaining the price of the articles
sold, at the rate agreed upon. Riddell v. Varnum, 20 Pick. 283. See also Crawford
V. Smith, 7 Dana, 59. When the thing to be done is necessary to ascertain the price,
and the sale is for cash, it makes no difference whether that thing is to be done by
the vendor or vendee, and an actual delivery to the vendee for such purpose will not
pass the property till payment is made. Thus where the owner of cattle agreed to
sell them to a butcher at a certain price, to be determined by the weight of the quar-
ters after the cattle should be slaughtered, and delivered them to the butcher to
slaughter, and when slaughtered to take them to market, weigh them, and pay for
the cattle according to the weight of the quarters, it was held that the right o pro-

CONTRACTS OF SALE. GOJ

Form and Requisites of a Contract of Sale.

vendee, and that the hay having, before the day of payment, been
accidentally destroyed, the loss must fall njDon him, (/) So the
property in a chattel does not pass by a contract of sale, even
though the value be paid, unless it be in existence at the time of
the contract ; (Jc) though it (or rather its materials) may be from
time to time appropriated, while in the course of making, by spe-
cial circumstances evidencing such an intention, {I) or by acceptance
or part payment after its completion, {m) So a grant of goods
which do not at the time belong to the grantor, but which he ex-
pects to acquire, will pass no property in them. {?i) And where the
goods sold are part of a larger stock, and a separation is necessary
previous to deliver}^, no property passes till the separation is com-

(J) Tarling v. Baxter, 6 B. & C. 360. Ace. Martindale v. Smith, 1 G. & D. 1 ; 1 Q,
B. 397. Cum emtio et venditio contracta sit, periculum rei venditce statim ad emtorem
pertinet, tametsi adhuc ea res emtori tradita non sit. Inst., 1. 3, c. 24.

{k) Mucklow V. Mangles, 1 Taunt. 318; Noy's Max. 42; Hob. 442. Goode v.
Langley, 1 B. & G. 26. Atkinson v. Bell, 8 B. & C. 277. Laidler v. Burlinson, 2 M.
& W. 602. Tripp v. Armitage, 4 M. & W. 687.

(/) Woods V. Russell, 5 B. & A. 942. Clark v. Spence, 4 Ad. & E. 448. Goss v.
Quinuon, 3 M. & Gr. 825. Vide tamen Laidler v. Burlinson, ubi supra.

('/«) Elliot V. Pybus, 10 Bingh. 512. See Tripp v. Armitage, 4 M. & W. 687, where
A. agreed to build a house, make window frames, and fix them, they having been
approved of by a survej'or. Held, that the property in them did not pass before
fixing, for that the surveyor's approbation did not amount to an acceptance of
them.

(n) Lunn v. Thornton, 1 C. B. 379. Gale v. Burnell, 7 Q. B. 850.

(o) "White V. Wilkes, 5 Taunt. 176. Austen v. Craven, 4 Taunt. 644. Shepley v.
Davis, 5 Taunt. 617. Busk v. Davis, 2 M. & S. 397, (and qumre whether Whitehouse
V. Frost, 12 East, 614, be law.) Bryans v. Nix, 4 M. & W. 775.

perty in the cattle did not pass by such delivery. Ward v. Shaw, 7 Wend. 404. See
also Andrew v. Dieterich, 14 Wend. 31. Where goods are sold by weight, :neasure,
or a price to be ascertained for the distinct pieces or parcels, as soon as any quan-
tity is weighed or measured, or any pieces or parcels severed, and the price for them
ascertained, the property in them passes, though the title to the other remains in
the vendor. Crawford v. Smith, 7 Dana, 59. Rugg v. Minnett, 11 East, 210.

As to the application of the general rule, that while any act is to be done to
ascertain the vaiue, v^uantity, quality, or identity, the right of property does not
pass, in relation to which there is some conflict in the cases, see Pleasants v. Pen-
dleton, 6 Rand. 473. Woods v. McGee, 7 Ohio, 2 pt. 127. Downer v. Thompson,
2 Hill, 137 ; S. C. 6 Hill, 208. Outwater v. Dodge, 7 Cow. 85. Davies v. Hill, 3 New
H. 382.

604 MERCANTILE CONTRACTS,

Form and Requisites of a Contract of Sale.

plete; (o) to i.se the words of Bailey, J., in Rhodes v. Thivaites, {p)
" where a man sells part of a large parcel of goods, and it is at his
option to select part for the vendee, he cannot maintain any action
for goods bargained and sold until he has made that selection.
But, as soon as he appropriates part for the benefit of the vendee,
the property of the article sold passes to the vendee, {q) although
the vendor is not bound to part Avith the possession until he is paid
the price."

As soon as the property has passed to the vendee, it remains,
as was before stated, at his risk, a doctrine strongly exemplified by
a late case in which Irish butters were shipped for a person in
London ; " payment, bill at two months from the date of landing."
The butter having been lost by shipwreck, it was held that the
object of the above stipulation was merely to fix the time of pay-
ment, not to make the landing of the goods a condition precedent,
and that the vendor, having waited a reasonable time, might re-
cover the price from the vendee in an action for goods bargained
and sold, (r)

This seems to have been precisely the rule of the Roman law. —
Vino miitato periculum emptorera special^ quamvis ante diem preth
solvendi vel conditione emptionis impleta id evenerit ; quod si mille
amphoras, certo pretio, corpore non demonstrato, vini vendidit, nullum
emptoris interea p)ericulum erit. (s)

Such was the common law respecting sales of personal property ;
and such is still the law respecting sales of goods under tlie value of
10?., with this addition, that no action can be maintained on any
agreement for the sale of them, that is not to be performed within
the space of one year from the making thereof, unless the agree-
ment be in writing, and signed by the party to be charged therewith,
or some other person thereunto by him lawfully authorized, [t)

On this provision it has been decided, that an agreement is valid,
though not in writing, if it possibly could be performed within the

(p) G B & C. 392.

{q) Sparkes v. Marshall, 2 Bing. F. C. '761.

(r) Alexander v. Gardner, 1 Bingli. N. C. 671. See Fragano v. Long, 4 B. <Sc C. 219
Richardson v. Dunn, 2 Q B. 218.
(s) Frag. Vat. Ex. Empt. et Vend.
(<) 29 Car. 2, c. 3, s. 4.

CONTEACTS OF SALE. 605

Form and Requisites of a Contract of Sale.

year, {ic) Thus, a contract to deliver goods at the return of a par-
ticular ship, would not be within the meaning of this section, for
the ship might possibly return within a year, and though it should,
in point of fact, remain abroad for five years, that would make no
difference.

It was hinted in two cases, (v) and has been at last decided, that
this section of the Statute of Frauds does not require an agreement
to be in writing, one part of which is to be performed within a year
and the other not. {iv)"

With respect to contracts for the sale of goods of the value of lOZ.

(u) Anon., Sal. 280. Peter t. Compton, Skinn. 353. Fenton v. Emblers, 3 Burr.
1281. Wells V. Horton, 4 Bingli. 40.

(y) Boydell v. Drummond, 11 East, 142. Bracegirdle v. Heald, 1 B. and A. 722.

(to) Donnellan v. Read, 3 B. & Ad. 899. Hoby v. Roebuck, T Taunt. 157 ; 2 Marsh.
433, ace. Yet, in some of the older cases, ex gr., Peter v. Compton, the contrary
Beems to have been assumed; and see Birch v. E. of Liverpool, 9 B. & C. 392, which
■was not cited in Donnellan v. Read. The word agreement, in the same section, haa
been frequently construed to mean all that is to be done on both sides, a meaning
which Donnellan v. Read denies to it. See "Wain v. Warlters, 5 East, 10. Saunders
V. Wakefield, 4 B. <fe A. 595. Jenkins v. Reynolds, 3 B. & B. 14. See further on this
section of the statute, Chapter on Guaranties, ante.

* In order to bring a parol agreement within this clause of the Statute, it must
either have been expressly stipulated by the parties, or must appear to have been so
understood by them, that the agreement was not to be performed within a year.
And this stipulation or understanding is to be absolute and certain, and not to de-
pend on any contingency. An agreement by pai-ol is not within the Statute, when,
by the happening of any contingency, it might be performed within a year. Tims, a
parol contract to support a person for a certain number of j^ears, is not within the
Statute ; for if he die within one year, having been supported under the contract
until his death, the contract will have been fully performed. Peters v. Westborough,
19 Pick. 364. Moore v. Fox, 10 John. 244. Blake v. Cole, 22 Pick. 97. Lockwood v.
Barnes, 3 Hill, 128, note (a). But there is no reported case which decides that a con-
tract which cannot be performed within a year, except upon a contingency which
neither party, nor both together, can hasten or retard, such as the death of one of
them or a third person, is not within the Statute. The possibility of perlbrmance
in the adjudications rests upon human effort or volition, not upon providential in-
terference. Tolley V. Green, 2 Sand. C. R. 91. Although the performance is to begin,
and does, in fact, commence within the year, yet if the contract is not to be com-
pletely executed within that period, the case is within the Statute. Part per
formance within the year will not render the contract valid. Lockwood v. Barnes^
3 Hill, 128. And see note (&) to that case, and Herrin v. Butters, 20 Maine, 119.

t)0(> MERCANTILE CONTRACTS

Form and Requisites of a Contract of Sale.

and upivards^ they, besides being within the section of the Statute
of Frauds just commented upon, are also governed by the seven-
teenth section, which enacts that " no contftict for the sale of any
goods, wares, and merchandises, for the price of 101. or upwards,
shall be allowed to be good, except the buyer shall accept part of
the goods so sold, and actually receive the same, or give something
in earnest to bind the bargain, or in part of payment, or that some
note or memorandum in writing of the said bargain fee made and
signed by the parties to be charged by such contract, or their agents
thereunto lawfully authorized."

We will detain the reader for a short time to consider, one by
one, the parts of this important section; which, as has been re-
marked by Mr. J. Bosanquet, (x) is stronger than the fourth, for the
fourth section does not avoid contracts not signed as the Statute
directs, but only enacts that 7io action shall be brought upon them.
{See ante, Chapter on Guaranties, sect. 1.) The seventeenth section
is stronger, and avoids contracts not made as the Statute pre-
scribes.

No contract for the sale of any goods, wares, and merchandises. — ■
A distinction was formerly taken between cases in which the thing
contracted for was in existence and capable of delivery at the time
of the contract, and cases in which it was necessary that something
should be done in order to render it capable of delivery : the for-
mer cases were universally allowed to be within the act ; but the
decisions on the question whether the latter were so, were not very
consistent, (j)* However, by stat. 9 Geo. 4, c, 14, s. 7, (a) it is

{x) 2 Bingh. N. C. 74Y.

(y) See Rondeau j;."Wyatt, 2 H. Bl. 63. Garbutt v. Watson, 5 B. <fe A. 613. Smith
V. Surman, 9 B. & C. 561. Cooper v. Elston, 7 T. R. 14. Alexander v. Comber, 1 H.
Bl, 20. Clayton v. Andrews, 4 Burr. 2101. Groves v. Buck, 3 M. & S. 178. Watts
V. Friend, 10 B. & C. 446. Pinner v. Arnold, 2 C. M. <fe R. 613.

(a) See Elliott v. Pybus, 10 Bingh. 512, remarks of Tindal, C. J., on this stat.

* In this country, a number of the states have never adopted the seventeenth
section of the English Statute of Frauds ar.d none, it is believed, the supplemental j^
act of Geo. 4, cited by the author.

In the case of Bennet v. Hull, 10 John. 364, it was decided that the Statute ap-
plied to executory, as well as other contracts, and the cases of Rondeau v. Wyatt, 2

CONTRACTS OF SALE. 607

Form and Requisites of a Contract of Sale.

enacted, that the seventeenth section of the Statute of Frauds shall
extend to all contracts for the sale of goods to the value of lOZ.
sterling and upwards, notwithstanding the goods may be intended
to be delivered at some future time, or may not, at the time of such
contract, be actually made, procured or provided, or fit or ready for
delivery, or some act may be requisite for the making or completing
thereof, or rendering the same fit for delivery. It has been doubted
whether a sale of stock be within this section of the Statute of

H. Bl. 63, and Cooper v. Elston, 7 T. R. 14, were recognized as containing a just and
Bound construction of the Statute. See Crookshank v. Burrell, 18 John. 58. In this
case it is said that "the distinction taken by Lord Loughborough, in Rondeau v.
Wyatt, and by the judges who gave opinions seriatim, in Cooper v. Elston, vas be-
tween a contract for a thing existing in solido, and an agreement for a thing not yet
made, to be delivered at a future day. The contract, in the latter case, they con-
sidered not to be a contract for the sale and purchase of goods, but a contract for
work and labor merely. However refined this distinction may be, it is well settled,
and it is now too late to question it." Sewall v. Fitch, 8 Cow. 215. Spencer v. Cone,
1 Mete. 283. "When the contract is a contract of sale, either of an article then ex-
isting, or of articles which the vendor usually has for sale in the course of his busi-
ness, the Statute applies to the contract, as well where it is to be executed at a future
time, as where it is to be executed immediately. But where it is an agreement with
a workman, to put materials together and construct an article for the employer,
whether at an agreed price or not — though in common parlance it maj' be called a
purchase and sale of the' article, to be completed in futaro, it is not a sale until au
actual or constructive delivery and acceptance ; and the remedy for not accepting is
on the agreement." Mixer v. Ilowarth, 21 Pick. 207.

In the case of Clayton v. Andrews, 4 Burr. 2101, it was held that a contract for
the sale of unthreshed wheat, to be delivered at a future day, was not within the
Statute ; but this case is considered to be overruled by the cases of Garbutt v. Watson,
6 B. and Aid. 613, 7 E. C. R. 209, and Smith v. Surman, 9 B. <fe C. 549, 17 E. C. R. 443.
And in the case of Downes v. Ross, 23 Wend. 270, it was decided, in accordance with
the doctrine of those cases, that a contract for the sale of seven hundred bushels of
wheat, two hundred and fifty of the quantity being then in a granary, and the residue
unthreshed, but which the vendor agreed to get ready and deliver, together with the
wheat in the granary, after giving it a second cleaning, in six days at a specified
place, payment to be made on delivery, was within the Statute of Frauds. But see
Eichleberger v. McCailey, 5 Har. &. J. 213.

In the case of Gai diner v. Joy, 9 Mete. 177, it was held that, where A. asked B.

y^what he would take £jr candles, B. said he would take twenty-one cents per pound ;

'^L said he would take one hundred boxes ; B. said the candles were not manufactured,
but he would manufacture and deliver them in the course of the summer; it was a

contract for the sale of goods within the Statute of Frauds.

608 MERCANTILE CONTRACTS.

Form and Requisites of a Contract of Sale.

Frauds, {h) A contract for sliares in a canal navigation, or similar
public undertaking, is not so ; (c) nor is a contract to procure goods
and carry them, {d) It appears certain that sales by auction are,
though that was once doubted, (e)

Except the buyer shall accept part of the goods so sold, and actually
receive the same. — In consequence of these words, there has, ever
since the act, been a great struggle to determine what is a part-
performance, a delivery, an acceptance, or a part-payment. Upon
these points, the inclination of the courts is, to give the words of
the Statute full effect, and not to allow unnecessarily of construc-
tive deliveries and. acceptances. Indeed, "if goods be ponderous
and incapable of being handed over from one to another, there
need not be an actual delivery, but it may be done by that which.
is tantamount ; (/) for instance, by the delivery of the key of the
warehouse in which goods are lodged, or of some other indicia of
property," such as the bill of lading; {g) or there may be a delivery
by the vendee's dealing, and the vendor's suffering him to deal,
with goods as with his own property. (A)

A few examples may assist the reader in determining what will,
and what will not, amount to a delivery and acceptance within the
meaning of this section.*

(b) Pickering v. Appleby, 2 P. Wms. 301 ; Free. Cha. 533 ; Ca. temp. King, 41.
Scmble, not. Pawle v. Gunn, 4 Bingh. N. C. 445.

(c) Latham v. Barber, 6 T. R. 67. Bancroft v. Albrecht, 12 Sim. 1S9. Bowlby v.
Bell, 3 C. B. 284. See also Knight v. Barber, 16 M. & W. 66.

(d) Cobbold V. Caston, 1 Bingh. 399.

(e) Simon j;. Motives, Bl. 599. Hinde v. "Whitehouse, 7 East, 558. Heymau v.
Neale, 2 Camp. 33 ; 12 Ves. jun. 466. Kenworthy v. Scholfield, 2 B. & C. 945. Shelton
V. Livius, 2 Tj-rwh. 420 ; 2 C. «fe J. 411. Bird v. Boulter, 4 B. A Ad. 443.

(/) Per Lord EUenborough, Chaplain v. Rogers. See Searle v. Keeves, 2 Esp. 598 ;
1 Atk. 171. Peckerly v. Appleby, Com. 354. Colt v. Nethersoll, 2 P. Wms. 308.
Zwinger v. Samuda, 7 Taunt. 265. Lucas v. Dorien, 7 Taunt. 278.

{g) Mitchell v. Ede, 11 Ad. & E. 888.

(/t) Chaplin v. Rodgers, 1 East, 192. Simon v. Motivos, 3 Burr. 1921. Anderson
V. Scott, and Hodgson v. Le Bret, 1 Camp. 233, et notas.

* The recent cases tend to establish a more stringent rule as to the circumstances
Bufficient to establish such a delivery and acceptance as will dispense -with the re
quisitions of the Statute. They -were reviewed in Shindler v. Houston, 1 Comst. Rep.
261. The judges, in that case, expressed the opinion that words alone coidd not

CONTRACTS OF SALK 600

Form and Requisites of a Contract of Sale.

Where a hogshead of wine in the warehouse of the London
Dock Company was verbally sold, and a delivery order given to the
vendee, the acceptance of the delivery order by the vendee was
held to be no acceptance of the wine : {%) " there could not," said the
Court, "be any actual acceptance by the vendee, until the Dock
Company accepted the order for delivery, and thereby assented to
hold the wine as the agents of the vendee." (/) A transfer of a
horse, by order of the vendee, from the vendor's sale stable into
another of his stables, has been held sufficient. (Z;) But where a
horse was sold by verbal contract, no time fixed for the payment
of the price, and the horse was to remain with the vendor's for
twenty days without any charge to the vendee, at the expiration
of which time it was sent to grass by the direction of the vendee,
and, at his desire, entered as the horse of one of the vendors ; it
was held that there was no acceptance (Z) of the horse by the
vendee. Acceptance of a sample which is to be accounted part of
the commodity sold is sufficient, (?n) though accejotance of one which
is to be no part thereof is not so. (?i) There cannot, it has been
laid down, be such an actual acceptance as the Statute contemplates,

(i) Bentall v. Burn, 3 B. <fe 0. 423. Farina v. Home, 16 M. tfe W. 119. See Howe
I'. Palmer, 3 B. & A. 321. Baldey v. Parker, 2 B. & C. 37. Talver v. "West, Holt, N.
P. C. 1*78. Thompson v. Maceroni, 3 B. & C. 1 ; but qumre, if this case were decided
with any view to the Statute of Frauds.

(.j) See Gosling v. Birnie, V Bingh. 339. Bryans v. Nix, 4 M. & "W. ^lo. Gillett
V. Hill, 4 Tyrwh. 290, 2 C. <fe M. 530, where the acceptance of the delivery order by
the agent was held such an attornment by him to the vendee, as to preclude him
from afterwards saying that he had not so much property in his hands as was com-
prised in the order, or that he had not appropriated so much to the vendee. See
HoU V. Griffin, 10 Bingh. 246.

(Jc) Elmore v. Stone, 1 Taunt. 458.

{I) Carter v. Toussaint, 5 B. <fe A. 855. See Tempest v. Fitzgerald, 3 B. & A. 680.
Howe V. Palmer, 3 B. <fe A. 321. Hanson «. Armitage, 5 B. & A. 557. Phillips v. Bis-
tolli, 2 B. & C. 511. Price i^.Lee, 1 B. <fe C. .156. Maberley v. Sheppard, 10 Bingh.
99. Bill V. Bament, 9 M. & W. 37.

{m) Hinde v. Whitehouse, 7 East, 558. Klinitz v. Surry, 5 Esp. 267.

(w) Talver v. "West, Holt, K P. C. 178.

produce tliis effect; but that, superadded to the language of the contract, there must
be some act of the parties, amounting to a transfer of possession, and an acceptance
thereof by the buyer ; and that the case of cumbrous articles furnished no exception
to the rule.
S9

510 IklERCANTILE CONTRACTS.

Form and Requisites of a Contract of Sale.

SO long as the buyer continues to have a right to object to the
quantum or quality of the goods, (o)* or the seller retains his lien
for the price upon the property accepted, (p) Delivery to an agent

(o) Acebal v. Levy, 10 Bingh. S76. Howe v. Psimer, ubi supra. Hanson v. Ar-
mitage, 5 B. «& A. 55Y. Kent v. Huskisson, 3 B. & P. 233. Astey v. Emery, 4 M. &
S. 262. See Coleman v. Gibson, 1 M. & Rob. 1 69. From -which case it appears that
thouo-h, if the bulk do not correspond with the order, the mere delivery does not
satisfy the Statute, provided the vendee within a reasonable time signifies his disap-
proval, vet that if he delay for an unreasonable time it does so. The expressions of
Baron Alderson regarding the acceptance necessary to support a plea of accord and
satisfaction apply to this point also. " Every receipt is not an acceptance, but if the
party accept the thing, though but for a moment, for that for which the other pays
it, he cannot by his subsequent dissatisfaction get rid of the effect of it." Hardman
V. Bellhouse, 9 M. & W. 600. See also Xorman v. Phillips, 14 M. & W. 277. Curtis
y. Pugh, 16 L. J, Q. B. 199.

(p) Baldey v. Parker, 2 B. <fe C. 37. Carter v. Toussaint, 5 B. «fe A. 855. Tempest
V. Fitzgerald, 3 B. & A. 680. Smith v. Surnam, 9 B. <& C. 561. See Maberley v
Sheppard, 10 Bingh. 99.

* The law has been ruled differently bj' the Court of Queen's Bench in Morton v.
Tibbett, 15 Ad. & E. N". S. 428, where all the previous cases are elaborately reviewed
by Lord Campbell. He says: " The difference between the cases on this subject may
be accounted for by the exact words of the I7th section of the Statute of Frauds not
having been always had in recollection. Judges, as well as counsel, have supposed
that to dispense with a written memorandum of the bargain, there must first have
been a receipt of the goods by the buyer, and after that, an actual acceptance of the
same. Hence, perhaps, has arisen the notion that there must have been such an ac-
ceptance as would preclude the buyer from questioning the quantity or qualit}' of
the goods, or in any way disputing that the contract has been fully performed b}'
the vendor." He then quotes the act to show that it does not warrant this con-
struction, and proceeds : " It is remarkable that, notwithstanding the importance of
having a written memorandum of the bargain, the legislature appears to have been
willing that this might be dispensed with, where by mutual consent there has been
part performance. Hence the payment of any sum in earnest to bind the bargain,
or in part payment, is sufficient. This act on the part of the buyer, if acceded to by
the vendor, is sufficient. The same effect is given to the corresponding act by the
vendor, of delivering part of the goods sold to the buyer, if the buyer shall accept
such part and actually receive the same. As part payment, however minute the sum
may be, is sufficient, so part deliver}^, however minute the portion may be, is suffi-
cient. This shows conclusively that the condition imposed was not the complete ful-
filment of the contract to the satisfaction of the buyer. In truth, the effect of
fulfilling the condition is merely to waive written evidence of the contract, and allow
it to be established by parol, as before the Statute was passed. The question may
then arise whether it has been performed either on the one side or the other. The

CONTLACTS OF SALE. Gil

Form and Requisites of a Contract of Sale.

or carrier, appointed by tlie vendee, or by wliom he has been in the
habit of receiving goods from the vendor, is sufficient ; {(j) but not
to a carrier selected by the vendors, (r) Where two classes of
goods are jointly ordered, acceptance of one is an acceptance of
both. (5)

It is decided that one person in possession of another's goods
may become the purchaser of them by parol, and may do subse-
quent acts without any Avriting between the parties which may ,
amount to an acceptance, and the effect of such acts necessarily to
be proved by parol evidence must be submitted to a jury, {t)

It appears to have been thought by some of the judges of the
Court of Exchequer, in the case of Boulter v. Arnott, that the accejjt-
ance necessary to satisfy the 17th section of the Statute of Frauds,
is different from such a one as will enable the vendor to maintain *
an action for goods sold and delivered, (u) This proposition seems,
however, to be doubtful, {v) and scarcely consistent with the opinion

(j) Hart V. Sattley, 3 Camp. 528. See Dutton v. Solomonson, 3 B. & P. 588.
Dawes v. Peck, 8 T. R. 330. But see also Norman v. Phillips, ^lhi supra. The vendor
himself may be the vendee's agent for this purpose. Elmore v. Stone, 1 Taunt. 458.
See Mitchell v. Ede, 11 Ad. & E. 889, which turned not on the Statute of Frauds, but
on the conflicting claims of two vendees.

(r) Coats V. Chaplin, 3 Q. B. 483.

(s) Elliott V. Thomas, 3 M. & W. 170. Vide tamen Lord Ellenborough's ruling ie
Hodgson V. Le Bret, 1 Camp. 233.

{t) Edan v. Dudfield, 1 Q. B 302. And see as to the acts necessary to evidence
such an acceptance, Lillj-white v. Devenmx, 15 M. & W. 285.

(m) Boulter v. Arnott, 3 Tyrwh. 269 • 1 C. <t M. 333 ; and see, per Patteson, J.,
Curtis V. Pugh, 16 L. J. Q. B. 200.

(y) In reason, it is very hard to see the difference between a delitiery and the sort
of transfer required by the Statute of Frauds. If the Statute had used merely the
word accept, it would have been easy to understand how there might be au acceptance

acceptance is to be something which is to precede, or at any rate to be contempora-
neous with, the actual receipt, of the goods, and is not to be a subsequent act after
the goods have been actuall}^ received, weighed, measured, and examined. As the
act of parliament expressly makes the acceptance and actual receipt of any part of
tlie goods sold sufficient, it must be open to the buyer to object, at all events, to the
quantity and quality of the residue ; and, even where there is a sale by sample, that
the residue offered does not correspond with the sample." This decision shows that
the-views expressed by Mr. Smith, in note (n) on this page, must be received with
great qualification.

612 MERCANTILE CONTRACTS.

Form and Requisites of a Contract of Sale.

tbat there can be no acceptance witliiu the Statute till the vendor's

of the property in goods without any delivery of tlie possession ; but the Statute goes
on to require that the vendee should not onl}' accept but actually receive. And it is
submitted that it is scarce possible to conceive a delivery without an actual receipt, or
an actual receipt without a delivery.

If the matter were res Integra, it might be said that the delivery required to sus-
tain an action for goods sold and delivered, meant a delivery of the property, not of
the possession ; or that the acceptance and actual receipt required by the Statute was
of the property, not of the possession. But the former proposition cannot be main-
tained consistently with Boulter v. Arnott, or Goodall v. Skelton, nor can the latter
consistently with Baldey v. Parker, 2 B. <fe C. 37. Carter v. Toussaint, 5 B. <fe A. 855.
Tempest v. Fitzgerald, 3 B. <Sr A. 680.

In Boulter v. Arnott, 3 Tyrwh. 269, 1 C. & M. 333, the goods had been packed up
by the vendor in boxes furnished by the purchaser, who requested the seller to keep
them for him. But, as tliere had not been a complete delivery of the possession, the
Court held that the action for goods sold and delivered did not lie. Goodall v. Skelton,
2 H. Bl. 316, is still a stronger case, for there the Court asserted the necessity of an
actual delivery of the possession, in order to the action for goods sold and delivered.
Yet the property in that case had passed, for earnest had been paid.

In Baldey v. Parker, 2 B. <fe C. 37, it is distinctly laid down by the Court, that the
Statute of Frauds requires a transfer of the possession. The L. C. J. Abbott, having
read the exception in the Statute of Frauds, says, " It would be difficult to find words
more distinctly denoting an actual transfer of the article from the seller, and an
actual taking possession of it by the buyer." This opinion is fully supported by the
judgments of the rest of that Court, one of the very strongest Westminster Hall has
ever seen, and it is borne out by Carter v. Toussaint, and Tempest v. Fitzgerald ; to
which last case Mr. Justice Coleridge, in one of those learned and judicious notes by
which he has illustrated without incumbering the text of Blackstone, refers in sup-
port of his proposition, that " the tenor of modern decisions is to give the words of
the Statute their fullest effect, and not to allow (so far as is possible) of any construc-
tive deliveries or acceptances."

It may, therefore, be safely laid down, that, on one hand, there must be a delivery
of the possession, in order to sustain a count for goods sold and delivered ; and, on
the other hand, that there must be an acceptance of the possession in order to satisfy
the Statute of Frauds.

This being so, it would seem to follow, almost as a matter of course, that, where
a transfer of all the goods sold is relied on to satisfy the Statute, it must be a transfer
of precisely the same sort as would be required in order to maintain a count for
goods sold and delivered. Opposed to this, however, is tlie opinion — not, as shall be
presently shown, the decision — of the Court of Exchequer in Boulter v. Arnott
That case was decided on the ground that there had been no actual delivery, and
therefore that the count for goods sold and delivered must fail. But Lord Lyndhurst
expressly said, "Had there been a count for goods bargained and sold, the plaintiff
might have recovered." And Baron Baj-ley, after expressing his opinion that the
possession had not passed, added, " Whether the acts of marking or packing for the
vendee in his presence amount to an acceptance by him under sect. 17 of the Statute
ff Frauds, is quite another question."

CONTRACTS OF SALE. QU

Form and Requisites of a Contract of Sale.

lien is determined. An acceptance after action brought will not

If these dicta can be supported, the doctrine above contended for, viz., of the iden-
tity of the species of transfer necessary to maintain the count with that required to
satisfy the Statute, falls to the ground. It is respectfully submitted that they cannot
be so.

In the first place, they were altogether unnecessary to tlie decision in Boulter v.
Arnott, which was, that assumpsit for goods sold and delivered would not lie, not
that assumpsit for goods bargained and sold would. For the same reason they are
not supported by anything in Goodall v. Skelton, where, indeed, the point could by
no possibility have arisen, the property having passed by the earnest.

In the second place, they are inconsistent witli the doctrine, resulting, as it is sub-
mitted, from Tempest v. Fitzgerald, Carter v. Toussaint, and Baldey v. Parker, namely,
that there can be no acceptance within the Statute of goods over which the vendor's
lien for the price continues to exist.

Tliirdl}', they are inconsistent with the expressions of the Court in several cases
in which the species of transfer necessary to satisfy the Statute and that necessary
to maintain the count have been spoken of as identical. See in Thompson v. Mace-
roni, 3 B. <fe C. 1, and the judgment in Maberley v. Sheppard, 10 Bingli. 99. It is
true that in Anderson v. Scott, 1 Camp. 2.35, Lord Ellenborough ruled that there had
been an acceptance of goods to satisfy the Statute of Frauds, yet not such a delivery of
them as to satisfy the vendor's contract to deliver ; but it is obvious, on a minute's re-
flection, that this has no bearing on the present question, for it is quite consistent
with the vendee's having had a right to bring trover for the goods, which presup-
poses him in legal possession of them.

It is submitted, therefore, that the dicta in Boulter v. Arnott cannot be sustained,
and that, where the Statute of Frauds is to be satisfied by a delivery of all the goods,
that delivery must be such as would enable the vendor to sue for goods sold and de-
livered. It is, however, necessary to mention that there is a very late decision of the
Coui"t of Queen's Bench, which appears at first sight difficult to reconcile with this
proposition, but which, upon consideration, will appear perfectly consistent with it
The decision referred to is Dodsley v. Varle}', 12 Ad. & E. 632.

It was an action of assumpsit for goods bargained and sold : the goods were wools
bought of the plaintiff by the defendant through his agent Burford. The facts were,
that the wool was bought while at the plaintiff's; tlie price was agreed upon, but it
would have to be weighed; it was then removed to the warehouse of a third person,
where Burford collected the wools he had purchased for the defendant from various
persons, and to which place the defendant sent sheeting for the packing up of the wools.
There it was weighed, together with the other wools, and packed, but not paid for.
It was the usual course for the wool to remain at this place till paid for. The question
was, whether these facts were sufficient to satisfy the Statute of Frauds, and tlie
Court held that they were so.

" It was argued," says the L. C. J., " that, because by the coiirse of dealing he was
not to remove the wool to a distance before paj'raent of the price, the property had
not passed to him, or that the plaintiff retained such a lien as was inconsistent with
the notion of an actual delivery. AVe think that, upon this evidence, the place to
which the wools were removed maybe considered as the defendant's warehouse, and

614 MERCANTILE CONTRACTS.

Form and Requisites of a Contract of Sale.

satisfy the Statute, so as to enable the vendor to recover in thai
action, {lu)

that he was in achtal possession of it as soon as it was weighed and packed ; that it
was thenceforward at his risk, and, if burnt, must have been paid for by him. Con-
sistently with this, however, the plaintiff had not what is commonly called a lien
determinable on the loss of possession, but a special interest, sometimes, but impro-
perly, called a lien, growing out of his original ownership independent of the actual
possession, and consistent with the property being in the defendant. This he re-
tained in respect of the term agreed on, that the goods should not be removed to
their ultimate place of destination before payment. But this lien is consistent, as we
have said, with the possession having passed to the buyer, so that there may have
been a delivery to and an actual receipt by him."

It would appear clear that this case was decided on the ground, that, Burford
being the defendant's agent, a delivery to him was a delivery to the defendant, but
that he was the defendant's agent for the transmission of the goods, and that they
remained subject, while in his hands, to a liability to which it was competent to the
parties to subject them by agreement, that; namely, of being stopped in transitu if
the price should not be fortlicoming at the stipulated time, viz., the moment of their
leaving Burford's warehouse for the purpose of prosecuting their journey to the
defendant. See Wilmshurst v. Bowker, 2 M. & Gr. 792. Assuming this to have been
the ground, Dodsley v. Yarley is in no wise opposed to the doctrine here contended
for, but, on the contrary, supports it by assuming, as the judgment does throughout,
that a transfer of the actual possession was necessary.

{w) In Fricker v. Thomlinson, 1 M. <fe Gr. 773, Mr. Justice Maule, speaking of
Elliott V. Thomas, 3 M. & W. 170, says: "The case in the Exchequer decided that the
Statute of Frauds only altered the evidence of the contract, and did not, like the
statute of Anne, make the contract itself void; and, if that be so, a memorandum
of the contract after action brought would be sufficient ; and why then should not an
acceptance of the goods after action brought be admissible in evidence ?" Bill v.
Bament, 9 M. &. W. 37, has, however, decided that a memorandum after action
brought is insufficient, and it is conceived that an acceptance of part of the goods
would be so also. With regard to Elliott v. Thomas, it would be difficult to find any
thing there in support of the contrary opinion; in that case, the objection that the
17th section of the Statute of Frauds ought to have been pleaded was given up by
consent. Eastwood v. Kenyon, 11 Ad. & E. 438, turned on the fourth section, as did
Buttermere v. Hayes, 5 M. & W. 456, on the authority of which it was decided. In
the latter case, however, the Court intimated their opinion that under the 17th
section the absence of a writing would be a defence under the general issue, and
referred to Johnson v. Dodgson, 2 M. & "W. 657, where an opinion to that effect is
expressed. Baron Parke saying, "Suppose it were a declaration for an estate bar-
gained and sold, would it not be competent to the defendant under the general issue
to show that there had been no convej'ance »" to which the L. C. B. adds, " When
by law you cannot make a particular contract except in writing, to deny the writing
is to deny the contract." This seems as if the Court relied upon the invalidity of
the contract rather than on the deficiency of evidence. And in Leafe v. Tuton, 10
M. it W. 3 :3, which has finally decided that non assumpsit is the proper plea in cases

CONTRACTS OF SALE. Glo

Form and Requisites of a Contract of Sale.

Or give something, in earnest to hind the bargain, or in j^art pay-
ment. — If a purchaser of goods draw the edge of a shilling over
the hand of the vendor, and return the money into his own pocket,
which in the North of England is callfd striking a bargain, that
will not be sufficient, ix)

Or that some note or memorandum in loriting of the bargain be
made.^ — A mere offer in writing made by one side, and not as-
under the I7tli section, it is expressly laid down that the plea of the Statute of
Frauds is nothing but an argumentative denial of the contract, or of the facts from
which it is implied b}^ law.

The truth is, that there is a marked difference, as poiirted out by Mr. J. Bosan-
quet in Laythoarp v. Br^-ant, 2 Bing. N. C. 744, between the effect of the 4th and
that of the 17th section. The former enacts, that no action shall be brought, etc.; the
latter, that no contract shall be good. It seems clear that under the former section,
the writing is required to evidence the contract, not to constitute it, and equally
clear from the express enactment that the writing must exist before the action
brought. It is clear that under the latter section, unless the statutable requisites be
observed, there is no available contract at all, and of course nothing iq^on which an
action can be brought. In neither case, therefore, can a writing after action brouo-ht
be made available in that action for the purpose of satisfying the Statute.

(x) Blenkinsop v. Clayton, 7 Taunt. 597. So a contemporaneous agreement that
a smaller debt due from the vendor shall go in part ^Jayraent of the goods when
delivered, is not within this provision. Walker v. Kusse}-, IG M. & "W. 302.

* What memorandum will be sufficient under, this clause of the Statute, was dis-
cussed by the Supreme Court of the United States in the late case of Salmon Falls
Manufacturing Company v. Goddard, 14 How. S. C. R. 446. The question arose
under the Statute of Massachusetts, which pursues in this clause the exact lano-uace
of the Statute of 29 Charles 2d. The paper was in the following form:

"Sept. 19th.— W. W. Goddard, 12 mos.

300 bales S. F. drills, 7^

100 cases blue " 8f

' Credit to commence when ship sails: not after Dec. 1st: delivered free of charge
for truckage.

R. M. M.
W. W. G.
"The blues, if color is satisfactory to purchaser."
The majority of the Court held that this memorandum was a sufficient compliance
with the Statute to enable the Salmon Falls Manufacturing Company to recover the
price of the goods described from Goddard, although they had never been accepted
by him. The word "bargain," it was said in the Statute, meant the terms uj^on
which the respective parties have contracted; these terms must be stated in the note

616 MERCANTILE CONTRACTS.

Form and Requisites of a Contract of Sale.

sented to by the other, is not enough to satisfy these words, as
where A. wrote to B. that he woald buy his mare for twenty
guineas if warranted sound and quiet in harness^ to which B. writes
that he will send her, and warrant her sovmd and quiet in double
harness, this is no contract, the proposal of A. never having been
completely accepted. "The parties," said Parke, B., "never have
contracted in writing ad idem, {y) It is sufficient if the contract
can be collected from several different documents, provided they
be sufiiciently connected in sense. (2) But this connection must
appear from the documents themselves, and not be introduced by
*■-' p^^\ evidence, (a) The wo'fd hargain, used in this section, does
not render so strict a statement of the transaction necessary as the
word agreement, used in the fourth, of ni.;tters within that sec-
tion. (J)) But the note must express the names of hath the contracting

(y) Jordan v. Norton, 4 M. &, W. 155. Accord. Ilutcliinson v. Bowker, 5 M. & "W.

535.

{£) riuUiraore v. Bari-y, 1 Camp. 513. Jackson v. Lowe, 1 Bingli. 9. Saunderson
V. Jackson, 2 B. & P. 238. Allen v. Bennet, 3 Taunt. 1C9. Vide Cooper v. Smith, 15
East, 103. Richards v. Porter, 6 B. & C. 437. See ante, Guaranties.

(a) Boj-dell v. Drummond, 11 East, 142.

(6) Per Lord Ellenborough, Egerton v. Mathews, 6 East, 307.

or memorandum with reasonable certainty, so that they can be understood by the
writing itself, without having recourse to parol proof. The memorandum, however,
like other mercantile contracts, is subject to explanation by reference to the usage
and custom of trade. It was, therefore, competent to show by parol proof, that "VV.
M. M. signed for the firm of Jlason and Lawrence; that the latter were the agents
of the plaintiffs, a manufacturing company ; and that the figures 7i and 8| meant so
many cents per yard. It was further held that the bill of parcels might be referred
to for the purpose of explaining any obscurity in the written memorandum, inas-
much as it had been received and acquiesced in by the buyer. Mr. Justice Curtis
(with whom concurred Cati'on, Justice) delivered a dissenting opinion, in which he
maintained that the instrument in question did not show who was tlie vendor, and
who the purchaser of the goods, and that as tliese facts lay at the basis of the con-
tract, extraneous evidence was not admissible to supjjly the deficienc3\ He cited
Champion v. Plumer, 1 B. & P. N. R. 252. Sherburn v. Shaw, 1 N. H. R. 157.
Bailey v. Ogden, 3 Johns R. 348. He further contended that under the laAV of Eng-
land and Massachusetts, unless the memorandum signed contains a reference to some
other paper, no paper not signed by the party to be charged can be connected with
the memorandum or used to supply any defect therein: in support of which he
eited Morton et ah. v. Dean, 13 Met R. 385.

CONTEACTS OF SALE. 61?

Form and Requisites of a Contract of Sale.

'parties^ and, as it seems, the 'price^ (c) if any specific price Avas
agreed on, for, if no price be named, the parties must, it seems, be
understood to have agreed that such a sum shall be paid as the
article is reasonably worth, {d ) The contract, though it must be
evidenced in writing, may be rescinded by parol, and it was even
once held that a substitution of other days for those on which the
goods were to be delivered, might be made and evidenced by pa-
rol, (e) a notion which, however, after having been much reflected ^f
on, has at length been altogether overturned ; and the rule now is
that though the contract may be altogether rescinded by parol, yet
it cannot be altered in that manner, for the alteration creates a new
contract, which it would be necessary to prove partly by parol
evidence. (/)

And signed by the parties to be charged. — The appearance of the
vendor's name printed in a bill of parcels is, it seems, a suf&cient
signature to bind him. (g) If the note commences with "/, A. B.,

(c) Elmore v. Kingseote, 5 B. & C. 583. Kain v. Old, 2 B. ik C. 627. Champion
V. Plunimer, 1 N. & R. 252. See Laythoarp v. Bryant, 2 Bingh. N. C, decided on the
4th section. Acebal v. Levy, 10 Bingh. 383. Ashcroft v. Morrin, 4 M. & Gr. 450,
■where order for goods, on moderate terms, was held sufficient.

(c?) Hoadley v. M'Laine, 10 Bingh. 482.

(e) Cuff V. Penn, 1 M. & B. 21. See "Warren v. Stagg, cited in Litler v. Hollands,
8 T. R. 591. Thresh v. Rake, 1 Esp. 53. Alexander v. Gardner, 1 Bingh. K C. 672 ;
but see the remarks of the Court in Goss v. Lord Nugent, 5 B. & Ad. 67, and see
Snowball v. Verain, Bunb. 175. In Stowell v. Robinson, 3 Bingh. N. C. 928, the C.
P. decided that the time in a contract to convey lands cannot be altered by parol ;
nor can any other provision. Harvey v. Grabham, 5 Ad. & E. 61. See Marshall v.
Lynn, 6 M. & W. 109, and Stead v. Dawber, 2 P. & D. 447, 10 Ad. & E. 57, where
Cuff i;. .Penn was finally overruled.

(/) Goss V. Lord Nugent, 5 B. <fe Ad. 67. Stowell v. Robinson, 3 Bingh, N. C.
928. Harvey v. Grabham, 5 Ad. <fe E. 61. Stead v. Dawber, 10 Ad. & E. 57. Mar-
ehall V. Lynn, 6 M. <fe W. 109.

(g) Saunderson «. Jackson, 2 B. <fe P. 238. Schneider?;. Norris, 2 M. & S. 286,
per Lord Eldon, C. J., 2 B. A P. 239. In Johnson v. Dodgson, 2 M. & W. 653, the
following note was held sufficient:

Leeds, 19 October, 1836,

Sold John Dodgson [the defendant)

27 pockets Playsted, 1836, Sussex at 103s.

The bulk to answer the sample.
4 pockets Seline Beckley's at 95s.
Samples and Invoice to be sent per Roclcingham Coach.
Payment in Banker's at 2 months.
Signed for Johnson, Johnson & Co. (the plaintiffs) D. Morse.

(518 MERCANTILE CONTRACTS.

Form and Requisites of a Contract of Sale.

agree io sell,'^ that is a sufficient signature by A. B., (A) thougli it ia
otherwise where a signature at the end of the instrument was
manifestly intended, in order to its completion, as where it con-
cluded, " As witness our hands." {i) And, as the Statute only
requires the signature of the parties to he charged^ a memorandum
signed by the vendor has been held sufficient to bind him, thougli
it was not signed by the vendee; against vrhom, therefore, the
contract could not have been enforced, {j)

It has been said by Lord Eldon, (/c) that " where a party prin-
cipal, or person to be bound, signs as, what he cannot be, a wit
ness, he cannot be understood to sign otherwise than as principal :"
in that case the signature was as follows —

Witness, Evan Phillij)s, for Mr. Smith, agent for the Seller.

But, where the purchaser affixed his signature to an agreement
for the sale of lands, and underneath was written. Witness, Joseph
Newman, in the usual place for a witness's signature, Joseph New-
man being the clerk of the auctioneer employed to sell the pre-
mises, it was urged that Newman must be taken to have signed as
agent for the vendor, and it was attempted to show a ratification
of his agency ; but the Court were of opinion that he signed simply
as a witness, and Lord Denman, C. J., said he thought Lord Eldon's
remark open to much observation. (Z)

Or their agents thereunto laufulhj authorized. — The authority

need not be in writing ; (to) and a subsequent recognition by the

principal is sufficient evidence of its having been given. (?i) But

"~^ it has been held, that one of the contracting parties cannot be the

agent of the other for this purpose, (o) This decision seems to be

{h) Knight v. Crockford, 1 Esp. 190, Eyre, C. J.

(j) Hubert v. Treherne, 3 M. & Gr. Y43.

{j) Allen V. Bennet, 3 Taunt. 169. See Rowe v. Osborne, 1 Stark. 140, and see
Laytlioarp v. Bryant, 2 Bing. N. C. 735, decided on the 4th section.

{Ic) In Coles V. Trecothick, 9 Yes. 251.

{I) Gosbell V. Archer, 2 Ad. & E. 500. See Bult v. Morrell, 12 Ad. & E. 745.

(m) Rucker v. Cammeyer, 1 Esp. 105. Chapman v. Pai'tridge, 5 Esp. 256.

(ji) Maclean v. Dunn, 4 Bingh. 722. Kinnitz v. Surry, Paley, 5th ed. Soarues v
Spencer, 1 D. & R. 32.

(o) "Wright V Dannah, 2 Camp. 203. Farebrother v. Simmons, 5 B. <fe A. 333
Cooper -v. Smith, 15 East, 103. Rayner v. Linthoi-n, 1 R. <& M. 323. See ante. Book
1, c. 5 s. 1.

CONTRACTS OF SALE G19

Form and Requisites of a Contract of Sale.

somewhat regretted ; and though, it has been held that an auction-
eer's signature of the defendant's name, by his authority is insuffi-
cient to entitle the auctioneer to sue upon the contract in his own
name, yet it is settled, that a signature by the auctioneer's clerk i?
sufficient for that purpose, {p)

But, though the auctioneer, suing in his own name on the con-
tract of sale, cannot avail himself of his character of agent for
the defendant, yet, in other cases, he is looked on as the lawfully
authorized agent of both parties, (q) the seller communicating his
authority by giving him directions to sell ; and the buyer, to whom
the conditions of sale, pasted on the auctioneer's box, are sufficient
notice of the terms thereof, (?■) by bidding aloud. And, if the
auctioneer or auctioneer's clerk (5) write down the purchaser's name
in the sale book opposite the lot for which he is the highest bidder,
that is a sufficient signature within the Statute, and binds the pur-
chaser, (t) who perhaps may, at any time before such entry, retract
his authority, as he certainly may before the fall of the hammer, (u)
But, if the signature be on a mere catalogue of the articles, neither
connected with, nor referring to, the conditions of the sale, it will
not be a memorandum of a sale on those conditions, unless it can
be connected with them by some other written document, (v)

Though, prima facie, the auctioneer is the agent of both parties,
yet he is not necessarily and ex vi termini ; thus, where P. bought
goods at an auction, having previously agreed with their owner

(jo) Bird v. Boulter, 4 B. & Ad. 443.

{q) See Bird v. Boulter, ubi supra. Hinde v. Whitehouse, T East, 558. Emerson
V. Heelis, 2 Taunt. 38. Shelton v. Livius, 2 Tyrwli. 436, 437 ; 2 C. & J. 411. Simon v.
Motivos, Bl. 599.

(r) Mesnard v. Aldridge, 3 Esp. 271.

(«) Bird V. Boulter, supra. Where this is done by the clerk, he does not, it would
seem, act as a mere automaton in the auctioneer's hand, but as a distinct agent
authorized by the parties to make entries. In that case the signature by the clerk
takes place contemporaneously with the sale, when it could not conveniently be per-
formed by the auctioneer, who is otherwise engaged. Generally speaking, the clerk
of an agent has no authority to sign for the principal. See Gosbell v. Archer, 2 Ad.
&, E. 500.

{t) Emerson v. Heelis, 2 Taunt. 38. Hinde v. Whitehouse, 7 East, 558. Bird v.
Boulter, 4 B. <fe Ad. 443. Shelton v. Livius, 2 Tyrwh. 436 , 2 C. & J. 411.

{u) Payne v. Cave, 3 T. R. 148.

(y) Phillimore v. Barrj-, 1 Camp. 513.

320 MERCANTILE CONTRACTS.

Form and Requisites of a Contract cf Sale.

that he was not to pay cash, but to set off a debt due to himself
against the price, he was held to have a right to do so, though the
conditions of the sale required payment in cash, for the previous
agreement between himself and the seller rebutted the presumption
of the auctioneer's authority to bind him to those conditions, {w)

A broke)' also is the agent of both parties within this section, (cc)
The mode in which he binds his principals, inter se, is by the de-
livery of bought and sold notes, which notes constitute the bargain,
and are the proper evidence thereof, (y) provided always, that they
correspond, (z) It was once held that the entry which the broker
makes in his book was the original contract, and the bought and
sold notes merely copies of it. (a) But that doctrine seems to be
overruled ; {h) and it seems settled that the bought and sold notes,
though generally copied from the entry, are the contract ; though
if there were no bought and sold notes, the entry, if signed, would
perhaps be suf&cient (c) to bind the parties. And it has been made

(w) Bartlett v. Purnell, 4 Ad. & E. 792.

{x) See a7ite, B. 1, c. 3, p. 141, et seq. Simon v. Motivos, 1 Bl. 599. Rueker v.
Cammeyer, 1 Esp. 105. Hinde v. "Whitehouse, 7 East, 588. But in general the
broker is such agent, with a limited special authority only to sign a contract con-
taining the terms verbally agreed upon ; and if he omit a material term in drawing
it up, a party, who has not recognized or adopted the contract as drawn up, will not
be bouni. Pitts v. Beckett, 13 M. A W. 743.

(?/) Thornton v. Meux, 1 M. &, M. 43. Cumming v. Roebuck, 1 Holt, 172. Goom
V. Afflalo, 6 B. & C. 117. Short v. Spackman, 2 B. <fe Ad. 962. Hinde v. Whitehouse,
7 East, 558. Blagden v. Bradbear, 12 Ves. 466, 472. Buckmaster v. Harrop, 13 Ves.
456. Dickenson v. Lilwall, 1 Stark. 128.

{£) Thornton v. Meux, uhi supra. Grant v. Fletcher, 5 B. & C. 436. Thornton v.
Kempster, 1 Marsh. 55. Cumming v. Roebuck, ubi supra.

(a) Heyman v. Geale, 2 Camp. 337.

(6) Thornton v. Meux, ubi supra. Cumming v. Roebuck, 1 Holt, 172. Goom v.
Afflalo, 6 B. & C. 117. See Short v. Spackman, 2 B. <fe Ad. 962. Hawes v. Foster
and another, 1 M. & Rob. 368. At the first trial of this cause, it was ruled that the
bought and sold notes were the contract, and it was held sufficient for the vendee to
produce the bought note, leaving it to the vendor to produce the sold note, if he relied
on a variance between the two. At the second trial it was left to the jury as a
question of fact, whether, according to the usage of trade in the city, the bought
and sold notes or the broker's book constituted the contract, the Chief Justice still
retaining his opinion as expressed at the former trial upon the point of law. The
jury found the bought and sold notes to be the contract.

CONTRACTS OF SALE. 621

Form and Requisites of a Contract of Sale.

a question whether if the bought and sold notes vary in a materia]
point, the broker's book may not be had recourse to. (cl)

The bought and sold notes being the contract, it has been con-
sidered to follow, that, if they do not correspond, the intended
contract will not be effected ; (e) and that, if they be altered in any
material point, without the consent of the party sought to be
charged, it will, as against him, be avoided. (/) But a mistake in
both notes as to the seller's name, was considered not to vitiate the
contract, if it were not shown that any one was prejudiced there-
by; (g) and it has been held that a vendee was bouna by a note,
signed by him, and delivered to the vendor by the broker, though
containing a provision not to be found in the note sent to the ven-
dee, (h)

Where the vendee desired the vendor's agent to enter a note of
the contract in the vendor's book, it was held, that this did not
authorize him to bind the vendee by his signature to such entry, so
as to satisfy the Statute. (^)

"We have now discussed the form and requisites of a contract of
sale. Next in order is the consideration of the duties it imposes,
first, on the vendor, and secondly, on the vendee, on which we now
enter, premising, generally, that neither the vendor nor vendee can
excuse himself from performing his side of the contract, by break-
ing a condition, which it is incumbent on himself to fulfil, although
it may have been stipulated, or even enacted, that the sale on breach
of such condition shall be null and void, for that means void at the
election of the other -party, {j)

(d) Thornton v. Charles, 9 M. & AV. 802.

(e) Thornton v. Kempster, 1 Marsh. 355. Thornton v. Meux, 1 M. & M. 43. Grant
V. Fletcher, 5 B. & C. 436. Gregson v. Ruck, 4 Q. B. 1^1. Gumming v. Roebuck, Holt»
172, per Gibbs, C. J. Cowie v. Remfry, 10 Jur. 789.

(/) Powell V. Divett, 15 East, 29.

{g) Mitchell v. Lapage, Holt, 253.

(A) Rowe V. Osborne, 1 Stark. 140. See Allen v. Bennett, 3 Taunt. 169.

(j) Graham v. Musson, 6 Bingh. N. C. 603. Graham v. Fretwell, 3 M. &, Gr. 368.

ij) Malins V. Freeman, 4 Bingh. K C. 395. Holme v. Guppy, 3 M. &, "W. 387.

622 MERCANTILE COa'TRACTS.

Duties of Vendor.

Section III. — Duties of Vendor.

The duties of the vendor are, to deliver the goods at the time
and in the manner stipulated for in the contract, and to comply
with any warranty, expressed or implied therein, on his i3art.

Delivery of Goods.* — The vendor must deliver the goods as soon
as the vendee has performed all conditions precedent on his part, {k)
and may, if he refuse to do so, be sued either specially for non-per-
formance of his contract, or in trover for the goods themselves.

(k) See Wilmsliurst t^. Bowker, 5 Bingh. X. C. 541 ; 2 M. & Gr. V92; 3 S. C. N. E.
272.

* The mere handing over goods under the expectation of immediate paj-menl^
does not constitute absolute delivery. The vendee after such delivery holds the
goods in trust for the vendor until payment is made or waived. Tiius upon a sale
of merchandise for cash to be paid on delivery, the defendant offered the plaintiffs
servant who made the delivery, a note of the plaintiff which had become payable
for nearly the amount, and cash for the residue, which the plaintiff declining to re-
ceive, the defendant refused to give up the goods or pay the money, and it was held
that no title passed, and that the plaintiff could maintain replevin for the goods.
Levin v. Smith, 1 Denio, 571.

"Where, under a contract for the sale of chattels, a delivery of a portion of the
property sold was made to the purchaser, under an agreement that a note should be
given for the tvhole quantity upon the delivery of the residue at a future day, the de-
livery of the first parcel was held to be conditional, and that on the delivery of the
residue and the refusal of the purchaser to give the note and to deliver up the first
parcel on demand, an action of replevin for the wrongful detention might be sus-
tained. Russell V. Minor, 22 Wend. 659. See also Acker v. Campbell, 23 Wend. 872.
Haggerty v. Palmer, 6 John. Ch. R. 437.

Where an order is given for a certain quantity of goods and a larger quantity is
delivered to the carrier, and is intended as a mere compliance with the order, and
not sent for the purpose of charging the defendant with the excess, the vendee can-
not refuse to receive the goods on that account, and in case of refusal is liable.
Downer v. Thompson, 6 HilL, 208. "An over performance of the contract could only
be beneficial to the defendant. If the rule is to be a rigid one that no more shall le
delivei-ed than is contracted for, then the least overplus must vitiate the delivery.
But if some latitude is to be allowed for the sake of abundant caution, as I think
there should be, who is to decide how much excess there may be without vitiating
the delivery? It seems to me that this is a question for the jury to decide, under all
.he varying circumstances of each case." Ilopkins, Sen., 6 Hill, 211.

CONTRACTS OF SALE. 023

Duties of Vendor.

Goods are delivered when they are placed in the vendee's power,
so that he may immediately remove them, and cannot be rightfully
prevented from so doing ; (J) thus, if the goods be in a stranger's
close, and that stranger have licensed the vendee to take them, that
is a delivery^ for the license is irrevocable, (m)

If it be generally mentioned, that the vendor shall send the
goods, that means loithin a reasonable time ; and what time is under
the circumstances reasonable, is a question of evidence, {n) And if
the goods be beyond sea, he ought to send the bill of lading in a
reasonable time, in order that the vendee may have it in his power
to go to market, (o) It was once considered that whether time of
delivery be specified, or left at large, the delivery should be made
at a reasonable hour in order to discharge the vendor's duty ; but it
has since been held, that an actual tender of the goods to the pur-
chaser, if he be at his warehouse, at any hour of the last day which
will allow him time before midnight to examine, weigh, and receive
them, in the absence of any special custom, Avill be good ; but that
the purchaser is not bound to remain at his warehouse after a rea-
sonable time before sunset to allow of the examination, (p)

In the absence of special stipulation, the condition precedent
upon the vendee's part, is readiness to pay the price, (q) And of this
readiness to pay, a demand of the goods, even though made by a
servant, is, prima faciei evidence, (r) If the e"oods were to be paid

(l) Wood V. Tassel, 6 Q. B. 234.

(?«) Salter v. AVollams, 2 M. & Gr. 650. "Wood v. Manley, 11 Ad. <fe E. 34. And
.Bee Wood v. Leadbitter, 13 M. & W. 838.

(»i) Ellis V. Thompson, 3 M. & W. 445.

(o) Barber v. Ta3-lor, 5 M. & W. 533, where a refusal to deliver it was held to en-
title the vendee to rescind.

(p) Startup V. M'Donald, 2 M. & Gr. 395, but reversed in Cam. Scacc, 6 M. & Gr.
593.

(q) Rawson v. Johnson, 1 East, 203. See Peeters v. Opie, 2 Wms. Saund. 352, a.
in notis, and Jackson v. Jacob, 3 Bingh. K C. 869. And see Bordenave v. Gregory,
5 East, 107, as to a transfer of stock. In one case the bankruptcy and insolvency of
the vendee and the insufficiency of his assets were considered circumstances from
which the jury had a right to infer that the vendee and his assigns had not teen
ready and willinrj. Lawrence v. Knowles, 5 Bingh. IST. C. 399.

(r) Squier v. Hunt, 3 Pr'ce, 68. Wilkes v. Atkinson, 1 Marsh. 412. See Peetera
V. Opie, in notis. Levy v. L Herbert, 7 Taunt. 314; 1 Moore, 51.

624 MERCANTILE CONTRACTS.

Duties of Vendor.

for by a bill, the vendee ought to tender one ; (5) but tlie word hil^
will not be lield to mean ci'pp'oved hill, {t)

If an cq-fproved hill be stipulated for, that means a bill to which
no reasonable objection can be made, (w)

There are some cases, indeed, in which the vendor may be
obliged to deliver up the goods, without payment, or tender of the
price : these are,

First^ where, by special agreement between the parties, the day
of payment is to be subsequent to that of delivery ; in other words,
where the goods are sold on credit. Yet, even in such case, though
the vendee has a right to possession {v) without payment or tender
of the price, yet that right is not indefeasible, and will be defeated,
if he become insolvent before he has actually taken possession, {lo)

(s) Hodgson V. Davies, 2 Camp. 530. On the effect of paj'ment by bill, vide post,
Chap. XIII., on Contracts of Debt, and see Bunney v. Poyntz, 4 B. <& Ad. 568. Miles
V. Gorton, 4 Tyrwh. 295 ; 2 C. <fe M. 504. See Horncastle v. Farren, 3 B. <fe A. 497.

(0 Ibid.

(m) Ibid. See Adam v. Richards, 2 H. Bl. 573. Thursby v. Helbot, 3 Mod. 273.
See as to the mode of pleading where the bill has been rejected, Hardman v. Bell-
house, 9 M. (fe "W. 596. The refusal to give the bill does not entitle the vendor to sue
at once for goods sold and delivered ; but he must proceed on the special contract,
Paul V. Dod, 2 C. B. 800.

[v) Shepp. Touchstone, 224. Vide Kew v. Swain, 1 Dans. & Lloj'd, 193. Craw-
shay V. Homfra}', 4 B. & A. 50. In the judgment of the Court in Martindale v. Smith,
is a passage which at first seems at variance with this ; biit I think it refers to the
vendor's right to retain possession after the expiration of the time of credit, if the
goods be in his hands and the price still un^^aid, a right which seems to have been
doubted in Bloxam v. Sanders.

{lo) Bloxam v. Sanders, 4 B. <fe C. 941. Dixon v. Yates, 5 B. <fe Ad. 313. Miles v.
Gorton, 4 Tyrwh. 295 ; 2 C. & M. 504. Townley v. Crump, 4 Ad. & E. 58, and Book
4, cap. 1, in Stoppage in Transitu. The doctrine that a vendor of goods who has not
let them out of his possession, may retain them on the vendee's bankruptcy, which
is so reasonable in itself, and which seemed so fully established by Dixon v. Yates,
has been supposed to be reflected on in Gibson v. Carruthers, 8 M. & W. 321. That
was an action brought by the assignees of Harris against Carruthers, upon a contract
with Harris to sell him 2000 quarters of Odessa linseed, to be shipped on board the
vendee's vessels at Odessa ; the declaration stated that the vendee, before his bank-
ruptcy, sent a vessel to Odessa, which arrived there in a reasonable time, and after
the bankruptcy, but that the defendant would not ship the linseed or hand the plain-
tiffs (of whose title they had notice) bills of lading.

The plea stated that the plaintiffs did not, within a reasonable time, adopt the
bankrujjt's contract.

The plea was held insufficient by three Barons, Lord Abinger, C. B., dissentiente.

CONTRACTS OF SALE. 025

Duties of Vendor.

And, in one case, where goods were to be paid for hy a hanker''s draft
at two months (which is a sale at two months' credit), but hy the ex-
press terms of the contract, the draft was to be remitted, on receipt of

The judgment of the majority of the Court appears to have proceeded mainly on
the ground that the bankruptcy transferred to the assignees the right to insist oa
the performance of the contract by the defendant, without themselves doing moi-e
than the bankrupt whom they represented must have done; and that, therefore,
tlie plea, which was framed on the supposition that they were bound to give express
notice, within a reasonable time after the bankruptcy, of their adoption of the con-
tract, was bad.

If this be so, no doubt the plea was bad. It may, perhaps, hereafter be made a
question whether it be consistent with reason or justice, or with the law as laid down
in Lawrence v. Knowles, to hold that the vendor shall be bound to send the goods at
his own expense beyond seas to await the exercise of the assignees' option whether
they will accept the contract or not. It may, perhaps, be doubted whether the as-
signees do take the contract in the same plight as the bankrupt had it, inasmuch as
they have an option which he had not; and whether it is quite just that they should
have the benefit of this option, without the corresponding obligation of signifying
how they have exercised it.

This question, however, though important to the soundness of the decision, does
not affect the doctrine of stoppage in transitu. The observations bearing upon that
were elicited by an argument used by the defendant's counsel, who contended that
the declaration itself showed a sufficient defence, since it showed bankruptcy of the
vendee and notice thereof to the vendor, which, by analogy to the doctrine of stop-
page in transitu, would entitle him to decline to ship the goods.

It is readily admitted that this argument ought not to have pi-evailed, because it
did not appear on the record that the vendor intended to exercise the right of stop
page in transitu, or any right of lien analogous to it : nor, indeed, that there was
any subject matter on which he could have exercised such i-ight.

But this argument it was which elicited the observations which have been thought
not quite consistent with Dixon v. Yates, or with the doctrine of a vendor's lien as
established by that case.

" The doctrine of stoppage in transitu," said Baron Parke, " applies only to the
case of goods sold and delivered, for the delivery to a carrier or middle man is a de-
livery to the party. And, in cases of bankruptcy or insolvency, the law, founded on
an equitable principle, permits the unpaid vendor, at any time before the arrival of
the goods at their place of destination or the vendee's actual possession, to resume
possession, and put himself in the same position as if he had not parted with it;
whether it enables him also to rescind the contract, is a point yet unsettled, and
which I need not now discuss."

"But this privilege in cases of bankruptcy or insolvency, for it belongs to both
alike, has never yet been extended further than to allow the resumption of possession after
the contract was complete by delivery, and to undo, as it were, the delivery. There
is no trace of any authority for saying, that bankruptcy or insolvency excuses the party
contracting with the bankrupt from performing any other unexecuted part of his con-
tract."
40

626 MERCANTILE CONTRACTS.

Duties of Vendor.

tlte invoice and hill of lading^ the vendee having failed to remit a
banker's draft accordingly, was held not to be entitled to the pos-
session of the goods, and consequently to have no right to maintain
trover, {x) In this case, it will be observed, that, though the sale

In Dixon v. Yates, 5 B. <fe Ad. 313, the plaintiffs bought of Yates certain rums,
■which were in his own bonded vaults, and paid for them; they then resold a part to
Collard for two acceptances, one of which CoUard dishonored, and the other was
taken up by the plaintiffs. They afterwards, on the 81st of August, bought other
rums from Yates, at two months, and resold part to Collard for acceptance at three
and four months. These were likewise dishonored, the first on the 16th of Novem-
ber, tlie second at its maturity. On the 18th of November, the plaintiffs gave no-
tice to Yates to deliver the rums to no one but themselves. On the 19th, they de-
manded them verbally, and on the 21st, in writing.

There were other circumstances relied upon to show an actual delivery to Col-
lard, but which the Court held not to have amounted to one, and which, appearing
unimportant to the present question, are omitted.

The Court held that the plaintiffs were entitled to judgment.
The following passage occurs in the judgment of Mr. J. Parke.
"The plaintiffs parted with the property in the goods they sold to Collard, but
he did not take actual possession. There was no delivery order, nor was the rum de-
livered to him. The whole quantity sold to him in June and August was paid for
by bills, three of which were dishonored before the plaintiffs demanded the posses
sion, and one bill afterwards, and Collard had become generally insolvent before the
demand was made. It is said that Collard is entitled to the property in the goods,
but the plaintiffs were vendors retaining the possession, and every vendor has a lien
till he is paid. It is true that tlieir lien was suspended as long as the bills were run-
ning, but it revived as soon as they were dishonored. On the 18th of November,
Collard had dishonored these bills, and had become insolvent, and was known to be
so. The lien of the vendors then revived. If they had parted with the actual posses-
sion, and the goods had remained in the hands of a carrier, they would have been entitlea
to Stop the^n in ira?isitn, U7d€ss the sub-purchasers from Collard had taken actual possession,
and not having parted with the possession at all, they have a right to retain it under the
same circumstances."

It is inferred from these observations in Dixon v. Yates, that it could not have
been the intention of Baron Parke, in Gibson v. Carruthers, to shake the doctrine
which has been generally considered as settled by the former case, viz., that where
the circumstances are such that the vendor might stop goods, if in the hands of a
carrier, there he may retain them if in his own hands. And this is submitted with
the greater confidence, because, if the observations of the learned Baron in Gibson
V. Carruthers should be understood as not impugning the above proposition, they
will still have a very distinct bearing upon the case then before the Court, inasmuch
as in Gibson v. Carrutliers the linseed had never been specifically ascertained, and
there was, therefore, in truth, notiiing either to be detained or stopped in transitu.
The contract was wholly unexecuted upon both sides, and the only real question waa
that raised by the plea.

(x) Wilmshurst v. Bowker, 5 Bingh. N. C. 5il. But see this case on writ of

C0XTRACT3 OF SALE. G27

Duties of Vendor.

was upon credit, the -vendee's right to the possession of the goods
was hindered from accruing by the express stipulation of the par-
ties, who made the delivery of the goods dependent upon that of
the draft.

Secondly^ where the vendor has done that which amounts to a
delivery of the goods, {y) ex. gr., has made a symbolical transfer of
property, which is, by its nature, (z) unfit to be delivered other-
wise, as, for instance, by giving up to the vendee the key of the
warehouse where it is deposited, (a) or giving a delivery order to
the wharfinger in whose possession it is, to which order the wharf-
inger has signified his assent, {h) or where he has done any act
which would determine his right to stop in transitu, (c) But it
must be observed, that the converse of this last proposition is not

error, *? M. & Gv. 882, where the Court held that from these circumstances tbf jury
miglit have inferred that the delivery of the banker's draft was a condition /rece-
dent to the vesting of the propertj', but that the Court could not draw such an infer-
ence; and on the bare statement of these facts, the plaintiff was entitled to the pos-
session. And see Barber v. Taylor, 5 M. &, W. 52Y. Dodsley v. Varlej^, 12 Ad. &
E. 632.

{y) Slubey v. He3'ward, 2 II. Bl. 504. Hammond v. Anderson, 1 X. R. 69. Green
V. Ilaythorne, 1 Stark, 447. See Swanwick v. Sothern, 9 Ad. <fe E. 895, ubi per cur.,
"The cases establish that whenever any thing remains to be done that is essential
to the completion of the contract, a s_ymbolical deliver}^ by transfer in the wharf-
inger's books will not defeat the right of stoppage in transitu as between buyer and
seller. Hanson v. Meyer, Shepley v. Davis, Busk v. Davis, abundantly show this.
Therefore, if part of a bulk be sold, so that weighing or separation is necessary to
ascertain the identity or individuality of the article, or, if the whole of a commodity be
sold, but weighing is necessary to ascertain the price because the qicality is unknown, the
weighing or measuring must precede tiie delivery, and the symbolical deliverv, with-
out such weighing or measuring, will not be sufficient. Bat zvhere the identity of the
goods arid the quantity are known, tJie tcei ghiiig or measuring can only be for the satisfac-
tion of the buyer, as was held in Hammond v. Anderson, and in such case the transfer
in the books of the wharfinger is sufficients^

{z) Mauton v. Moore, 7 T. R. 67. See Hibbert v. Carter, 1 T. R. 745. Lempriere
V. Pasley, 2 T. R. 485. Zwinger v. Samuda, 7 Taunt. 265. Lucas v. Dorien, 7 Taunt
278.

(a) Ellis V. Hunt, 3 T. R. 464. Copland v. Stein, 8 T. R. 199. See Spears v. Tra-
vers, 4 Camp. 251. Greave v. Hepke, 2 B. & A. 131.

(b) Lucas V. Dorien, 7 Taunt. 278. Hawes v. Watson, 2 B. & C. 540. Ilarman v.
Anderson, 2 Camp. 243. See Stoveld v. Hughes, 14 East^ 308. Stonard v Duukin, 2
Camp. 344. Gumming v. Brown, 9 East, 506. And see Swanwick v. Sothern, nbi
supra. Also Lackington v. Atherton, 7 M. & Gr. 360.

628 MERCANTILE COKTRACTS.

Duties of Vendor.

true, for many acts will be sufficient to devest the vendor's lien for
Lis price, wliicli will not be sufficient to binder birn from stopping
the goods in transitu^ if tbe vendee should become insolvent. For
instance, delivery of goods to an agent of the vendee appointed to
convey them to him, deprives the vendor of his lien for the price,
but not of his right to stop the goods in transitu^ in case of the ven-
dee's failure before they have reached him. {d) A delivery of part
of the goods, where there is no intention of separating that part
from the whole, devests both the lien and the right to stop in tran-
situ :{e) but it is otherwise where there is such an intention, (/)
though it has been said, ihoX, irrima facie ^ a delivery of part imports"
an intention to deliver the whole, {g) The vendor's lien cannot be
determined by a second sale of the same goods, for the ordinary
rule of law is that the second vendee of a chattel cannot stand in a
better situation than his own immediate vendor, (A) Where the
goods are in the vendor's own warehouse, he does not lose his lien
by giving a delivery order; (z) nay, even a charge made by the ven-
dor against the vendee for warehouse rent does not destroy his lien,
at all events not where the charge is pursuant to the terms of the
original contract of sale, for then the rent is only, as it were, an
additional price, (y) But it would, perhaps, be otherwise if the
charge for warehouse rent were founded on a subsequent distinct
contract, for that might have the effisct of making the seller's ware-
house that of the buyer. (^•)

{(1) See a learned note by Mr. Starkie, Law of Evidence, 2d ed. p. 892.

(e) Slubey v. Heyward, 2 H. Bl. 504.

(/) Bunney v. Poj-ntz, 4 B. & Ad. 570. Simmons v. Swift, 5 B. ck C. 857. Dixon
V. Yates, 5 B. & Ad. 313. Miles v. Gorton, 4 Tyrwh. 295; 2 C. & M. 504. Tanner
V. Scovell, 14 M. & W. 28.

{g) Per Taunton, J., in Betts and another v. Gibbins, 4 N. <fe M. 77 ; 2 Ad. <fe E.
73. Sed qucere. Pollock, C. B., in Tanner v. Scovell, uhi sup., with reference to this
dictum says, " I may observe, that Taunton, J., in the case of Betts v. Gibbins, made
an observation which is very justly questioned by Mr. Smith in his book on Mercan-
tile Law, viz.: — 'That partial delivery is a delivery of the whole, unless circum-
stances show that it is not so meant.' Mr. Smith appends a qucere to that dictum,
with very great reason." — G. M. D.

(//) Dixon V. Yates, 5 B. & Ad. 313. See Small v. Moates, 9 Bingh. 574.

{%) Townley v. Crump, 4 Ad. <fe E. 58 ; 2 C. & M. 504.

{j) Miles V. Gorton, 4 Tyrwh. 295 ; 2 C. & M. 504.

(^-) Hurry v. Mangles, 1 Camp. 452. See Winks v. Hassall, 9 B. <fe C. 372.

CONTRACTS OF SALE. 029

Duties of Vendor

The vendor may, of course, avoid the sale, by showing fraud
m the vendee, ex. gr.^ that he deterred others from bidding by his
representations. (0*

{l) Fuller V. Abraham, 3 B. & B. 116. See Noble v. Adams, 7 Taunt. 59. Earl
of Bristol V. Welmore, 1 B. & C. 514. Gladstone v. Hadwen, 1 M. & S. 617.

* Wlien a sale is procured by fraud, no title passes to the vendee. Root v. French,
13 "Wend. 570. The vendor still retains his legal right in the goods, unless, after dis-
covering the fraud, he assent to and ratify the act of sale, positively, or by such
delay in reclaiming the goods as would authorize a jury to infer assent. Either will,
m connection with the original transaction, be deemed equivalent to a subsequent
independent act of sale. Ash v. Putnam, 1 Hill, 302. Gary v. Hotailing, 1 Hill, 311.
Buflington v. Gerrish, 15 Mass. 156.

A purchase of goods with a preconceived design not to pay for them, is such a
fraud as will avoid the sale. Bigelow v. Heaton, 6 Hill, 44. Ash v. Putnam, 1 Hill,
302. Bristol v. AVilsmore, 1 B. & C. 514; 8 E. C. R. 146.

A sale and delivery of goods, procured through a false representation of the ven-
dee in regard to his solvency and credit, passes no title as between the parties ; and
the vendor may maintain either trover or replevin in the deti.net, or trespass or re-
plevin in the cejyit, at his election. The general and absolute ownership still remains
in the vendor; and not only the original interference with the property on the part
of the vendee, but any subsequent acts of ownership on his part, may be considered
as an unlawful or tortious taking. Gary v. Hotailing, 1 Hill, 311. Olmstead v. Ho-
tailing, 1 Hill, 317.

But a third person may acquire a good title from a fraudulent vendee, by giving
him value for the propertj^, or incurring some responsibility upon the ci-edlt of it,
without notice of the fraud. Mowrey v. Walsh, 8 Cow. 238. Root v. French, 13
"Wend. 570. Rowley v. Bigelow, 12 Pick. 307. In the last case the rule and the rea-
son for it is thus stated. " We take the rule to be well settled, that where there is
a contract of sale, and an actual delivery pursuant to it, a title to the property passes,
but voidable and defeasible as between the vendor and vendee, if obtained by false
and fraudulent representation. The vendor therefore can reclaim his property as
against the vendee, or any other person claiming under him and standing upon his
title, but not against a bona fide purchaser, without notice of the fraud. The ground
of the exception in favor of the latter is, that he purchased of one having possession
under a contract of sale, and with a title to the propertj', though defeasible and
voidable on the ground of fraud ; but as the second purchaser takes witliout fraud
and without notice of the fraud of the first purchaser, lie takes a title free from the
taint of fraud." This principle is commented on very freely in the case of Ash Vt
Putnam, 1 Hill, 306, 307. It is stated to be an exception to the general rule, "that
a person who has no title to property, can convey none." It is admitted to liava
been establihed in Mowrey v. Walsh, but it is said, that if the matter were rex nova,
how it would now be treated, might perhaps admit of doubt. And in that case it was
decided, that the sheriff, who, in virtue of an execution against a fraudulent vendee
of goods and without notice of the fraud, seizes and sells them to bona fide pur-

630 MERCANTILE CONTRACTS.

Duties of Vendor.

2dly. Compliance loith Warranties. — The vendor must strictly
comply with any ivarranty he may have given. Sach warranty
may be either implied or expressed.

Implied Warranties. — "Where the dealing is in a particular
branch of trade, the parties are presumed to contract according to
its custom ; and, therefore, if the custom be, to declare at the time
of sale, whether the goods be sea-damaged, in the absence of such
declaration, a warranty will be implied, that they are not so. (m)
If the article were bespoke to answer a particular purpose, a war-
ranty is implied that it will answer such purpose, (n) and in every
contract to furnish manufactured goods, a warranty is implied that
they shall be of a merchantable quality, (o)* But though the sale

{m) Jones v. Bowden, 4 Taunt. 847.

(n) Jones v. Bright, 5 Bingh. 633. Brown v. Edgington, 2 M. & Gr. 2*79. Shep-
herd V. Pybus, 3 M. & Gr. 8G8. Okell v. Smith, 1 Stark. 107. See Gray v. Cox, 4 B.
&. C. 108.

(o) Laing v. Fidgeon, 6 Taunt. 108. Ilelcome v. Hewson, 2 Camp. 391. Cooper v,
Twibell, 3 Camp. 226. Gardner v. Gray, 4 Camp. 144. Bridge v. "Wain, 1 Stark. 504

chasers, is not within the exception established by Mowrey v. "Walsh, but is liable in
trespass at the suit of the vendor. No opinion was given on the question whether
the purchasers from the sheriff would be protected, as to which see BufBngton v.
Gerrish, 15 Mass. 156.

See also as to the above exception, George v. Kimball, 24 Pick. 241. Hoffman v.
Noble, 6 Mete. 68, 74. The general doctrine has been recognized in the cases of "Wil-
liams V. Given, 6 Gratt. 208. Thompson v. Lee, 3 "Watts <fe Serg. 479. Robinson v.
Dauchey, 3 Barb. Sup. Ct. Rept. 20 ; 1 Sumn. 309.

The principle was fully discussed by the Court of Common Pleas in "White v. Gar-
den, 10 C. B. R. ; 70 E. C. L. R. 919. It was there lield that a contract for the sale
of goods obtained by fraud of the purchaser, was void only at the election of the
vendor, and ^lat it was too late to declare such election after the goods had passed
into the hands of a bona fide purchaser. Upon any other rule a vendor who does
not choose to avail himself of means of inquiry, would by thus trusting the vendee,
be giving him unlimited means of defrauding the rest of the world. Talfuurd, J., ob-
served: "There is a very obvious distinction between the cases of goods obtained by
felony, and fraud and false pretences ; in the one case, the owner of the goods has no
intention to part with his property; in the other, he has. A contract for the sale
of goods, though obtained by fraud, is perfectly good if the party defrauded thinks
fit to ratify it." S. P. Stevenson v. Newnham, 16 L. AE. R. 401. Load v. Green, 15
M. & "W 216.

* "It is to be regretted," says Chancellor Kent, after a learned investigation into
the subject, "that the rule (whatever it may be) concerning the application of im-

CONTRACTS OF SALE. 631

Duties of Vendor.

of an existing chattel^ as being of a particular description, implies a
contract that it is of that description, yet in such case no contract
is, in the absence of fraud, implied of the good quality or condition

plied warranties in the sale of personal property, is not more certain and stable." 2
Kent Com. 479, note (a). He evidently disapproves of the tendency of the recent
English cases on this subject, towards the doctrine of the civil law, that on the sale
of an article there is an implied warranty that it is merchantable ov fit for the purpose
intended. In the recent case of Moses v. Mead, 1 Denio, 378, in the Supreme Court
of New York, Bronson, C. J., comments very r'^rongly on the disposition recently
shown by English judges " to imply warranties wliere none were actually made."
"I feel no disposition," says the Chief Justice, "to follow them in their new zeal for
the civil law, for the reason that it is not our law, and the further reason, that oxir
law in relation to sales is the best. The civil law implies a warranty where none
was in fact made. The common law leaves men to make their own bargains. If the
purchaser wants an undertaking that the goods are sound or merchantable, he asks
for it ; and then the vendor decides for himself whether he will make such a con-
tract, or let it alone." — " When there is neither fraud nor express warranty on the
sale of a chattel, the buyer takes the risk of its qualitj^ and condition. No warranty
of any kind can be implied fi-om the fact that a sound price was paid."

But a distinction is recognized in the case of Moses v. Mead, which had been de-
fined in the case of Howard v. Hoey, 23 Wend. 350, between an executed and an
executory contract for the sale of goods. "Where the contract is executory, or, in
other words, to deliver an article not defined at the time, on a future day, whether
the vendor have an article of the kind on hand, or it is afterwards to be procured or
manufactured, the promisee cannot be compelled to put up satisfied with an inferior
commodity. The contract always carries an obligation that it shall be at least
merchantable — at least of medium quality or goodness. If it come short of this, it
may be returned, after the vendee has had a reasonable time to imspect it." 23 Wend.
351.' In respect to executory sales, or, more properly speaking, agreements to
make sales of indeterminate things, "there is always a warranty or promise implied
that the indeterminate thing to be delivered should at least not have any remark-
able defect; though the rule of the common law is clearly otherwise in respect to
what is properly denominated a sale. The Statute of Frauds extends to both classes
of contracts; but the reason of that has no application to the question of warranty."
23 Wend 353.

It appears also to be settled that, on a sale by sample, a warranty is implied, that
the bulk of the article corresponds in quality with the sample exhibited. Bradford
V. Manly, 13 Mass. 139. Bouekins v. Bevan, 3 Eawle, 37. Moses n. Mead, 1 Denio, 386.
But the mere exhibition of samples at the time of sale, is not itself evidence of an
agreement to sell by sample; it is for a jury to say, under the circumstances of the
case, whether the sale was intended by the parties as a sale by sample. Waring v.
Mason, 18 Wend. 425.

In the sale of provisions for domestic use, the vendor is bound to know that they
are sound and wholesome, at his peril. This is a principle not only salutary, but
necessary to the preservation of health and life. Van Bracklin v. Fonda, 12 John,

632 MERCANTILE CONTRACTS.

Duties of Vendor

of the chattel so sold, and therefore where the chattel sold was a
ship, (;)) and the vendor covenanted that he had power to make
the sale, no contract was implied that she was seaworthy, and the
Court of Exchequer considered that the property in her might pass
by the sale, though she was cast aground in such a manner as to be
totally lost within the meaning of a policy. ISTor will the law im-
ply a warranty, where the parties have expressly contracted, as to
the nature and quality of the thing to be sold ; thus, though we
have just seen that if A. contract with B. for manufactured goods,
^the law will imply a warranty that they shall be merchantable ;
yet no such warranty can be implied if A. purchase the goods by
sample, {q) " I agree," said Baron Parke, in Chanter v. HojjJcms, (r)
"with the authority of Jones v. Bright, that if an order is given for
an undescrihed and unascertained thing, and stated to be for a par-
ticular purpose, which the manufacturer supplies, he cannot sue for
the price, unless it do answer the purpose for which it was sup-
plied. Suppose a party offered to sell me a horse of such a descrip-
tion as should suit my carriage, he could not fix on me a liability
to pay for it, unless it were a horse fit for the purpose it was wanted
for ; but, if I describe it as a particular bay horse, in that case the
contract is performed by his sending that horse." In Chanter v.
Ho'pkins the order was, " send me your patent hopper and appara-
tus to fit up my brewing copper with your smoke-consuming fur-
nace." It was held that the defendant, who had sent one of his
patent machines in compliance with the order, did not impliedly
warrant that it would suit the brewery. The notion, that a war-

{•p) Barr v. Gibson, 3 M. k W. 390.

{q) Parkinson v. Lee, 2 East, 314. See Budd v. Fairmaner, 8 Bingli. 48.
\f) 4 M. <fe "W. 406. OUivant v. Bayley, 5 Q. B. 288. Parsons v. Sexton, 16 L. J.
C. P. 181.

468. 3 Black. Com. 166. 2 Kent Com. 479. Osgood v. Lewis, 2 Harr. and Gill, 495.
But there is a very plain distinction between selling provisions "for domestic
use," and selling them as articles of merchandise, which the buj-er does not intend to
consume, but to sell again. "When provisions are not sold for immediate consump-
tion, there is no more reason of implying a warranty of soundness than there is in
.•elation to sales of other articles of merchandise. Moses v. Mead, 1 Denio, 378
Emerson v. Brigham, 10 Mass. 197 ; 3 Monroe, 835.

CONTRACTS OF SALE. 633

Duties of Vendor.

ranty might be implied from the amount of the price given has
long been exploded, (.s)

Express Warranties.^ — Every affirmation, at the time of sale of
personal chattels^ is a warranty provided it appear to have heen so ^
intended, (t) But a warranty after the sale is void for want of con-
sideration, (w) If the vendor affirm at the time of sale that the
goods are his, that amounts to a warranty of his title ; (i;)f but no

(s) Baglehole v. Walters, 3 Camp. 154. Where the terms of the contract are am-
biguous, th'e amount of the price may sometimes, perhaps, furnish a clue to their
true meaning. Allen v. Cameron, 1 C. <fe M. 832.

(i!) See 3 T. R. 59, per Buller, J. See Helyear v. Hawke, 5 Esp. 12. Richardson
V. Brown, 1 Bingh. 344. Dunlop v. Waugh, Peake, 1 23. Button v. Corder, 7 Taunt.
405. Liddard v. Kain, 2 Bingh. 183. Shepherd v. Kain, 5 B. & A. 240. Freeman
V. Baker, 2 Nev. & Mann. 446. Powell v. Horton, 2 Bing. N. C. 668. Power v. Bar-
liam, 4 Ad. & E. 473.

(m) 3 Bl. Comm. 166 ; Finch, L. 189.

(y) Medina v. Stoughton, 1 Salk. 210 ; 3 T. R. 57, 58, per Buller, J. ; 2 Bl. Comm.
45 ; Cro. Jac. 474 ; 1 Roll. Ab. 90. It does not seem quite clear whether the war-
ranty of title be express or implied.

* It is well settled that where there is a particular exj^ress warranty iu a con-
tract for the sale of goods, the law will not extend that warranty by implication.
The maxim " expressum facit cessare taciturn" applies to such cases. If this were not
60, it would be necessary for the parties to every agreement to provide in terms that
they are to be understood not to be bound by anything which is not expressly set
down, which would be manifestly inconvenient. Dickson v. Zisinia, 10 C. B. R. 601.
Owens V. Dunbar, 12 Irish Law R. 304.

j- In this country it is generally stated in some of the cases and authorities, that
in the sale of personal property, the law implies a warranty of title. Swett v. Col-
gate, 20 John. 196, 202, note (a). Dorsey v. Jackman, 1 Serg. & Rawle, 42. Pajme v.
Rodden, 4 Bibb, 404. Russell v. Richards, 1 Fairf. 433. Story on Contracts 333, § 35.
Thus, in the case of Coolidge i;. Brigham, 1 Mete. 551, it is said: "In contracts of sale
a warranty of title is implied. The vendor is always undei'stood to affirm that the
property he sells is his own. And this implied affirmation renders him responsible
if the title proves defective. This responsibility the vendor incurs, although the sale
may be made in good faith, and in ignorance of the defect of his title. This rule of
law is well established, and does not trench unreasonably upon the rule of the com-
mon law, caveat emptor." But it would seem from other cases and authorities, that
this principle only applies to sales of goods or chattels, in the possession of the
vendor. Thus, it is laid down by Ciianeellor Kent, 2 Kent Com. 478, tliat, "in every
sale of a chattel, if the possession be at the time in another, and there be no covenant
or warranty of title, the rule of caveat emptor applies, and the party buys at his peril.

634 MERCANTILE CONTRACTS.

Duties of Vendor.

oral allegation previously to a sale bj written contract can possibly
operate as a warranty, for the writing is the only evidence of the
contract, {w)

Where the vendor has bound himself by a warranty, either ex-
press or implied, the vendee may, as shall presently be explained
more at length, use the breach of that warranty as evidence, in re-
duction of the vendor's claim for compensation, or may bring an
action thereon against him. {x) But he cannot, if he have received
the article, return it, and recover the price as money paid on a con-
sideration which has failed, unless there have been a condition in
the contract authorizing such return, or the vendor have received
back the chattel, and thereby consented to rescind the contract, or
been guilty of a fraud, which destroys the contract altogether.
The vendee cannot, by his own act alone, unless in the excepted
cases above mentioned, revest the property in the seller, and recover
the price when paid, on the ground of total failure of consideration ;
and it follows, that he cannot, by the same means, protect himself
from payment of the price, on the same ground, {y)

{w) Pickering v. Dowsing, 4 Taunt. ^t1^. Meyer v. Everth, 4 Camp. 22. Kain v.
Old, 2 B. <fe C. 627. See Allen v. Pink, 4 M. & "W, 140, "where a paper was signed by
the vendor and given to the vendee, containing, "Bought of G. Pink, a horse for the
sum of 7/. 2.S. 6(/." Held, that this was an informal receipt, and that evidence might,
nevertheless, be given of a contemporaneous warranty.

(a;) Street v. Bla}-^, 2 B. & Ad. 456. Accord. Gompertz v. Denton, 1 C. <fe M. 207 ;
3 Tyrwh. 232. See Weston v. Downes, 1 Dougl. 23. Towers v. Barratt, 1 T. R. 133.
Payne v. Whale, 7 East, 274. Power v. Wells, Dough 24, n. Emanuel v. Dane, 3
Camp. 299. Parsons v. Sexton, 16 L. J. C. P. 181.

(y) Street ;;. Blay, ubi supra. In the case of a horse, the keep of which would
create additional expense, between the breach of warranty and the trial, the vendee

But if the seller has possession of the article, and he sells it as his own, and not aa
agent for another, and for a fair price, he is understood to warrant the title. A fair
price implies a warranty of title." And in Gookin v. Graham, 5 Humph. 484, it is
said, that "in a sale of personal property, there is alwaj^s an implied warranty of
title, unless it be purchased under such circumstances as clearly to show that the
vendee intended to i-isk the title, as if the vendor be not in possession, but ine same
be adversely in another." See also Andres v. Lee, 1 Dev. & Batt. 318. Trigg v.
Fairs, 5 Humph, 343. In this last case it was held, that the warranty of title
implied by law in a sale of a chattel, in the possession of the vendor, is not excluded
where the sale is by deed or bill of sale, containing no covenant whatever, but
merely convej'ing the title.

COXTRACTS OF SALE. 635

Duties of Vendor.

It must, however, be mentioned, that there is a late decision in
the Court of Common Pleas, in which a distinction appears to be>/
drawn between a hreach of warranty and a total failure of consider-
ation by the delivery of an entirely different and worthless article
instead of that contracted for, in which latter case, that Court
seems to have held that the consideration money might be re-
covered back again. (2)

It is to be observed, that though the vendee of a specific chattel,
delivered with a warranty, has no right to return it, the same reason
does not apply to cases of executory contracts, where an article, for
instance, is ordered from a manufacturer, who engages that it shall
be of a certain quality, or fit for a certain purpose, and the article
sent as such is never completely accepted by the party ordering it.
In this and similar cases, the latter may return it as soon as he
discovers the defect, provided he has done nothing more in the
mean time than was necessary to give it a fair trial ; (a) nor would
the purchaser of a commodity to be afterwards delivered according
to sample be precluded from returning the bulk, if not in accord-
ance with the sample, within a reasonable time for examination
and comparison.^ But in no case can a purchaser return a
chattel where he has done more than is consistent with the purpose
of trial, ex. gr., where he has resold it at a profit, and delayed his
offer to return it till it has come for a second time into his pos-
session. (i)f

ought, as sooa as the unsoundness is discovered, to tender him back to the vendor^
and if he refuses to take him back, sell him as soon after as possible for the best
price that can be procured. Chesterman v. Lamp, 2 Ad. & E. 129, and see the au
thorities there cited.

(z) Young V. Cole, 3 Bingh. K C. 724.

(a) Okell V. Smith, 1 Stark. lOY. See Oxendale v. Wethe^all, 9 B. & C. 386. Curtis
V. Pugh, 16 L. J. Q. B. 199. Jordan v. Norton, case of a horse, 4 M. tfe W. 155.

(6) Street v. B\a.j, ubi supra. See Shipton v. Casson, 5 B. & C. 878. Coleman v.

* The principle of Street v. Blay was extended in Da-wson v. Collis, 10 C. B. R.
523, so far as to overrule the proposition in the text. The judges all expressed the
opinion, that on the sale of a specific article, the buyer has no right to repudiate the
article if it does not correspond with the sample, but that his proper remedy is to
bring a cross action on the warranty, or to set up the breach in reduction of
damages. The doctrine of this case is inconsistent with Magee v. Billingsbj-, 3 Alah
679; Waring v. JJason, 18 Wend. 425; Shields v. Pettee, 2 Sand. Sup. Ct. R. 262.

+ The principles decided in the case of Sti'eet v. Blay, 2 B. it Adol. 456, 22 E. C

636 MERCANTILE CONTRACTS.

Duties of Vendor.

It has been laid down by some writers of authority, that a future
event cannot be warranted, as, that a horse shall be sound two
years hence ; (c) this doctrine is, however, overruled, (d) It is also
laid down by the older books, that defects apparent at the time of
a bargain are not included in a warranty, however general, because
they can form no subject of deceit and fraud, hand enira decipiiur
qui scit se decipi^ and, originall}^, the mode of proceeding on a breach
of w^arranty was by an action of deceit grounded on a supposed
fraud. A party, therefore, who should buy a horse, knowing it to
be blind of both eyes, could not sue for that defect on a general
warranty of soundness : thus, where the horse had a splint, which
was known to both parties ; in an action on a warranty of sound-
ness, wind and limb, it was held that the proper direction to the
jury would be, to consider whether the horse was at the time of the
bargain sound, wind and limb, saving tJiose inanifesi defects con-
templated hy the parties, (e) At a new trial of the same cause, it
appeared, that some splints cause lameness, and others not; and
the Court then thought, that, as the consequence of a splint cannot
be apparent at the time of sale, like the loss of an eye, or any
visible blemish or defect, the vendor must have meant to warrant
that this was not such a splint as would occasion subsequent un-
soundness : and the horse having gone lame in consequence of it,
the vendee was held entitled to recover. (/)

Gibson, 1 M. &. Rob. 169. Campbell v. Flemyng, 1 Ad. <fe E. 40. See a distinction
taken in Young v. Cole, 3 Bingli. N. C. 742, between a breach of warranty and a total
failure of consideration owing to the articles turning out wholly worthless. That
case, however, may be supported on other grounds.

{d) See Liddard v. Kain, 2 Bingh. 183. Eden v. Parkinson, Dougl. VOS. And
see a learned note by Mr. Justice Coleridge, in his edition of the Commentaries,
vol. iii. 166.

(e) Margetson v. Wright, Y Bingh. 603. See 3 Bl. Comm. 166. Bayley v. Merrell,
Cro. Jac. 387. Dyer v. Hargrave, 10 Ves. 507.
. (/) Margetson v. Wright, 8 Bingh. 454.

R. 122, to which frequent reference is made above by the author, appear to have
been recognized and adopted in this country. See Voorhees v. Earl, 2 Hill, 288, ?91.
Thornton v. Wynn, 12 Wheat. 183 ; 6 C. R. 508. Allen v. Anderson, S Humph. 581.
Lightburn v. Cooper, 1 Dana, 273. Kimball v. Cunninghum, 4 Mass. 502. As to return
of goods, in case of fraud, see Mason v. Bovett, 1 Denio, 69.

CONTRACTS OF SALE. 637

Duties of Vendor.

A warranty, like any otlier contract, may, of course, be limited
and moulded according to tlie intention of the jDarties ; thus, it may
be confined in any point of duration, as, where a board was fixed
upon the wall of a repository, containing certain rules, one of which
was, that warranties given with horses sold by auction there should
remain in force only till twelve the next day, and then terminate,
unless a surgeon's certificate of the horse's unsoundness were in the
mean time given, it was held that this regulation was binding
upon purchasers, {g)

We have seen that every affirmation at the time of sale of a
personal chattel is a warranty, provided it opjoear to have been so in-
tended, and provided the contract be not written and the affirmation
merely oral.* Where, however, the article is sold by description

{g) Bywater v. Richardson, 1 Ad. & E. 508.

* In this country there appears to be a conflict in the authorities in determining
when an affirmation at the time of sale is a warranty, and whether and when words
of description in a bill of sale, bill of parcels, invoice or receipt are to be considered
a warranty.

In relation to the first point, some of the cases appear to rely on the strength of
the affirmation or representation, without reference to the intention of the parties.
Thus in the case of Morrill v. Wallace, 9 New H. Ill, the Court, after stating, as the
result of some of the cases, that even if the party might not have supposed that he
was making himself liable upon a warranty, but intended to make an affirmation or
assertion, which the other should receive as fact, or intended to utter what was
equivalent to a promise, and not express an opinion or belief about the matter, such
assertion, affirmation, or promise, amounts to a warranty as to that fact; and citings
Whitney v. Sutton, 10 Wend. 411; Oneida Man. So. v. Lawrence, 4 Cow. 440;
Roberts v. Morgan, 2 Cow. 438, say, "We think this latter the better opinion, and
that the matter does not depend upon the question whether it was a representation
or not, or whether the vendor intended to be bound by a warranty or not, nor upon
any particular words, but upon the question whether the vendor made any assertion
or affirmation respecting the kind, quality, or condition of the article, or whether
there was merely an expression of judgment, opinion, or belief. If the vendor made
an assertion of that nature, upon which he intended the vendee should rely, and
upon which he did rely, that is sufficient."

Other cases proceed on the intention of the parties. In the case of McFarland v.
Newman, 9 Watts, 55, Gibson, C. J., comments on and disapproves the tendency of
modern English decisions to change the old rule of the common law in relation to
warranty of soundness, and particularly the case of Wood v. Smith. 4 Carr. <fe Payne,
45, 19 E. C. R. 267, and saj's, "Though to constitute a warranty requires no particolar
form of words, the naked averment of a fact is neither a warranty itself, nor evi*

638 MERCAXTILE CONTRACTS.

Duties of Vendor.

merely^ and the allegations of the vendor, whether oral or contained
in a written document, {h) do not amount to a warranty, but merely
to representations, which afterwards turn out not to be consistent

{h) As in Budd v. Fairmaner, 8 Bingli. 48, where a receipt -was produced contain
ing as follows :

"Received from Mr. Budd, 10/. for a gray four-year old colt, warranted sound in
every respect."

Held that the warranty was confined to soundness, and the age mere matter of
description. See Dickinson v. Gap. cited Budd v. Fairmaner, 8 Bingh. 50. Freemaa
V. Baker, 2 Nev. <fe Mann. 446 ; 5 B. & Ad. 797. Power v. Barliara, 4 Ad. &, E. 473.
In Power v. Barham, the vendor of pictures gave the following bill of parcels :

"Mr. N. Power,

" Bought of J. Barham,
J Four pictures. Views in Venice, Canaletti, 160/.

Settled. J. Baeh.\m."

This document was held to justify the jury in finding that the pictures were war-
ranted to be by Canaletti. In Gwillim v. Daniel, 2 C. M. <fe R. 61, agreement that
A. should sell and B. buy "all the naphtha that A. might make from the 1st of June
for two years, say from 1000 to 1200 gallons a month." The words in italics were
held only a representation.

"I should consider it a matter of favor if your brothers will join, and I will see
that they cotiie to no harm." Held a guaranty-, not a representation. Jones v. "Wil-
liams, 7 M. &. W. 493.

dence of it In connection with other circumstances, it certainly may be taken into
consideration, but the jury must be satisfied from the whole that the vendor actu-
ally, and not constructively, consented to be bound for the truth of his representa-
tion. Should he have used expressions fairly importing a willingness to be thus
bound, it would furnish a reason to infer that he had intentionally induced the ven-
dee to treat on that basis ; but a naked affirmation is not to be dealt with as a war-
ranty, merely because the vendee had gratuitously relied on it ; for not to have
exacted a direct engagement, had he desired to buy on the vendor's judgment, must
be accounted an instance of folly." In the case of House v. Fort, 4 Blackf 293, the
Court below had instructed the jury "that any positive affirmation of soundness
maiie at the time of the contract, and before the exchange, amounts to a warranty."
But the S'lnreme Court say: "This instruction is not correct. An oral aflSrmation
of the soundne'^s of a horse, which was exposed to the purchaser's inspection, cannot
be considered as a warranty, unless where it is so intended at the time by the par-
ties; and that intention must be shown to the satisfaction of the jury. The mere
affirmation of soundness, in a case like this, is not per se a warranty. To give it the
eff'ect of a warranty, there must be evidence to show that the parties intended it to
have that eff'ect." Citing, 20 John. 196; 8 Cow. 25; 2 Har. & Gill. 49.5. And the
Court further said, that it is not sufficient that the vendee understood the affirmation
to be a warranty, it must have been so understood by both parties. See also Baird
V. Matthews, 6 Dana, 129. Foggart v. Blackweller, 4 Ired. L. 238.

CONTRACTS OF SALE. 63S

Duties of Vendor.

with fact, yet if such representations were made honestly, according
to his belief at the time, no action lies against him ; [i) but it is
otherwise if he knew that he was representing a falsehood : (J) in

(i) Ormrod v. Huth, 14 M. & W. 651.

(_;■) Dunlop v. Waugh, Peake, 123. Jeudwine v. Slade, 2 Esp. 572. Pickering v.
Dowson, 8 Taunt. 779. Kain v. Old, 2 B. & C. 627. Dobell v. Stevens, 3 B. & C. 623.
Fletcher v. Bowsher, 2 Stark. 561.

In the case of Winsor v. Lombard, 18 Pick. 60, it is stated as a rule of law, "that
iSj)on a sale of goods by a written memorandum or bill of parcels, the vendor under-
takes, in the nature of warranting, that the thing sold and delivered is that which
is described ; this rule applies whether the description be more or less particular and
exact in enumerating the qualities of the goods sold." Hogins v. Plympton, 11 Pick.
99. Hastings v. Lovering, 2 Pick. 214. Li this case, the words in a sale note, ' Sold
A. 2000 gallons prime quality winter oil," were held to amount to a warranty that
the article sold agreed with the description. See also Osgood v. Lewis, 2 Har. <k
Gill. 495. Borrekins v. Bevan, 3 Rawle, 23. Morrill v. Wallace, 9 Now H. 114.

But in the case of Baird v. Matthews, 6 Dana, 129, where on a sale a receipt was
given in the usual form, of $2926 in full for 616 bbls. superfine flour, it was held to
be no warranty that the flour was superfine. "It proves," say the Court, "that the
article was sold as superfine flour, and authorizes the inference that it was repre-
sented or affirmed to be such, before and at the time of sale, but for a misrepresen-
tation of the quality of the thing sold, the vendor cannot be made responsible,
unless he knew the representation to be false. ' And in the cases of Seixas v. Wood,
2 Caines, 48, and Swett v. Colgate, 20 Johns. 196, where there was a description in
the advertisement, invoice, and bill of parcels, in the one case of an article as brazi-
letto, which was in fact peachumwood, in the other of an article as barilla, which was
in fact kelp, it was held that there was no warranty. " The principle established
was, that, to maintain an action for selling one article for another, there must be
either a warranty or fraud." 20 John. 203.

In the case of Borrekins v. Bevan, 3 Rawle, 23, Rodgers, J., in delivering the
opinion of the Court, says, that Chandelor v. Lopus, Cro. Jae. 4, (the case of the
Bezoar stone,) must be abandoned, and that the same may be said of Seixas v. Wood,
and Swett v. Colgate, and that "in all sales, there is an implied warranty tliat the
article corresponds in specie with the commodity sold, unless there are some facts
and circumstances existing in the cases, of which the jury, under the direction of
the Court, are to judge, which clearly show that the purchaser took upon himself
the risk of determining not only the quality of goods, but the kind he purchased, or
where he may waive his right." And in the case of McFarland v. Newman, 9 Watts,
55, 58, the Court sa}' they do not touch the case of Borrekins v. Bevan, in which it
was held "thaJt a warranty arises, that the article is specifically that as which it is
sold."

In the recent case of Henshaw v. Robins, 9 Mete. 83, where an article was sold
and described in a bill of parcels as indigo, which was in fact not indigo, but a sub-
stance composed of Prussian blue, chromate of iron, and potash, and worthless for

640 MERCAIsTILE CONTRACTS.

Duties of Vendee.

sucli case the vendee may maintain an action for the deceit, in which
he must allege a scienter, and show that the description was false
within the knowledge of the seller. Qc)

Section IV. — Duties of Vendee.

The duties incumbent on the vendee, are Ji^-st, to accept the
goods ; and secondly, to pay for them.

If he refuse to accept them, the vendor, having performed all
conditions precedent on his part, {I) may sue him, either specially
upon his contract, (m) or (if the property have passed to the ven-
dee) for goods bargained and sold ; in which latter form of action
he will recover his entire price, while, in the special form, he will
recover but the amount of damage actually sustained by him. {n)

If the goods are to be delivered at a stipulated price, the ven-

ih) See judgment of Tindal, C. J., in Budd v. Fairmaner, 8 Bingh. 53, and Free-
man V. Baker, 2 Nev. & Mann. 446, 5 B. <fe Ad. 797 ; but see Ormrod v. Huth, vhi
sup., and under some circumstances the vendor may be proceeded against criminally
for obtaining money under false pretences. Regina v. Kenrick, 6 Q. B. 49.

{I) See the question, what amounts to a condition precedent, discussed Alexander
V. Gardner, 1 Bing. K C. 671. Fragano v. Long, 4 B. & C. 219, ante, sect. 2. Gower
V. Von Dedalzen, 3 Bingh. K C. 7 17.

(>») See Boorman v. Nash, 9 B. & C. 145. Greaves v. Ashlin, 3 Camp. 426. Boyce
V. Warburton, 2 Camp. 480. Spaeth v. Hare, 9 M. «fe W. 326.

(m) Hankey v. Smith, Peake, 42, et notas ; but see Dunlop v. Grote, 2 Car. &, K.
153. The measure of this damage is the difference between the market price and
the contract price, on the day of tendering the goods for acceptance. Philpotts v.
Evans, 5 M. & "W. 475. As to the measure of damages for not accepting stock, see
Hecksher v. Gregory, 4 East, 607. Bordenave v. Gregory, 5 East, 107 ; for not
replacing it. Shepherd v. Johnson, 2 East, 211. M'Arthur v. Lord Seaforth, 2 Taunt
257 ; and see 7 G. 2, c. 8, s. 11. Tate v. "Wellings, 3 T. R. 531.

any purpose, but no fraud was imputable to the vendor, who was ignorant of the
ti'ue character of the article sold ; it was held, that the description in the bill of
parcels was a warranty that the article was that which it was thus described to be.
And that this rule applies, though the goods are examined by the purchaser, at or
before the sale, if they are so prepared, and present such an appearance as to deceive
skilful dealers. This decision was made on the general principle, " that the descrip-
tion contained in a bill of parcels of goods sold is evidence of the terms of the con-
tract of sale, and so imports a warranty that the goods are the goods described, and
that they substantially agree with the terms of the description."

CONTRACTS OF SALE. (-,4 ]

Duties of Vendee.

dor, before suing for the price, must tender them there, unless, in-
deed, the vendee have refused, or put it out of his own power, to
complete his contract. If there be no stipulated place, it is the
vendee's business to fetch them. (0) Where the goods are to be
forwarded by a carrier, the vendor must enter them so that the
carrier may be responsible for their value if lost, (p)

If the goods were to be of a particular description, they must
be such as correspond with that description, (q) ex. gr., with the
sample, if they were sold by sample, (r) in which case the vendee
has a right to inspect and compare before accepting them, and may,
if prevented from doing so, rescind the contract. (5) But he must
exercise the right within a reasonable time, and without dealing
with the property as his own, which would amount to an accept-
ance, {t) In order to prevent the danger arising from variance be-
tween the article and the description given of it in the conditions
of sale, it is usual in sales by auction of important matters, such as
real property, to insert a clause, that mistakes in description shall
nor vitiate the sale, but only entitle the vendee to a compensation.
But even this clause will not help if there be variance in any essen-
tial particular, (u) It is said, that if a purchaser order several

(o) Glazebrook v. Woodrow, 8 T. R. 366. Jones v. Berkely, Dougl. 687. See
Rawson v. Jolinson, 1 East, 203. Callonel v. Briggs, 3 Sal. 112.

(p) Clark V. Hutchins, 14 East, 475.

(g) Tye v. Finmore, 3 Camp. 462, where it was held that in a case of written
contract, it is not enough that there be a correspondence with the sample, if there
be a variance from the written description. Hay don v. Hay ward, 1 Camp. 180.
Ellis V. Hamlin, 3 Taunt. 52. See Flight v. Booth, I Bingh. N. C. 370 ; Robinson v.
Musgrove, 2 M. & Rob. 92 ; Dykes v. Blake, 4 Bingh. K C. 463, and Dobell v. Hutch-
inson, 3 Ad. & E. 355, for an exposition of this doctrine as applied to sales of real
property ; the question in such cases is, Was the part of the contract which the ven
dor has broken a condition precedent ?

(r) Hibbert v. Shee, 1 Camp. 113.

(s) Lorymer v. Smith, 1 B. & C. 1. Isherwood v. Whitmore, 10 M. <$r "W". 757;
11 M. k W. 347. Toulmin v. Hedley, 2 Car. k K. 157. Every receipt is not an
acceptance. Alderson, B., in Hardman v. Bellhouse, 9 M. & W. 600. See, however
as to goods not sold by sample, Petit v. Mitchell, 4 M. & Gr. 819, where the defend-
ant was held not entitled to measure goods sold by auction, before payment of the
price.

(0 Chapman v. Morton, II M. & W. 534. See also Curtis v. Pugh, 16 L. J. Q. B.
199.

(m) Dobell V. Hutchinson, 3 Ad. & E. 355. Flight v. Booth, 1 Bingh. N. C. 370.
41

642 MERCANTILE CONTRACTS.

Duties of Vendee.

things at the same time, he may consider the contract as entire, and
object to receive some of them without the rest ; {v) but that, if he
accept one singly, he severs the contract, and cannot object to re-
ceiving another singly, (tf) "Where different lots are bought by
the same person at the same auction, the purchase of each is a dis-
tinct contract, (a;)*

As fraud vitiates every contract, it will be a sufficient excuse
for the vendee's non-performance of his, that the vendor was guilty
of fraud, as, by employing puffers at an auction to enhance the
price, without giving notice of his intention to do so ; {y) though
possibly there might be a difference, if the intent were not to en-
hance the price generally, but only to prevent the goods from going
off at an undervalue. (2) And it is clear that the employment of

{v) Champion v. Short, 1 Camp. 53. Neal v. Viney, 1 Camp. 411. See Chambers
V. Griffith, 1 Esp. 150 ; but quccre if that case be law ; and see James v. Shire, 1 Stark.
426. Poole V. Shergold, 2 Bro. C. C. 118 ; 1 Cox, 2*73. See on this subject Symonds
V. Carr, 1 Camp. 361. Hort v. Dixon, Selw. N. P. 8th ed. 109. It is clear that where
there is a joint order of several things, acceptance of one is an acceptance of all
within the Statute of Frauds. Elliott v. Thomas, 3 M. & W. 170.

(w) Gilb. Ev. 191. 4. Bragg v. Cole, 6 Moore, 114. See Walker v. Dixon, 2 Stark.
281 ; but said to have been reversed in bank, in note to Stark, on Evidence, vol. ii.
p. 872. Boon v. Eyre, 1 H. Bl. 254.

(a;) Roots v. Lord Dormer, 4 B. <fe Ad. 77. Poole v. Shergold, and James v. Shire,
uhi supra,

(y) Howard v. Castle, 6 T. R. 642. Bexwell v. Christie, Cowp. 695 ; 3 Ves. jun.
625. Wheeler v. Collyer, 1 M. & M. 123. Crowder v. Austen, 8 Bingh. 368. Thor-
nett V. Haines, 15 M. & W. 367.

{z) Smith V. Clark, 12 Ves. 477. See Woodward v. Miller, 2 Coll. 279.

* In the case of Mills v. Hunt, 17 Wend. 333, it was held, that when the purchase
is made at an auction sale of goods, at one and the same time, and from tiie same
vendor, although the articles purchased are numerous, and are struck off separately
at separate and distinct prices, the whole constitutes but one entire contract; and
the prices of the different articles fixed on are but part and parcel of it. "There
is," say the Court, " no legal or sensible distinction in this respect between a public
and private sale, and the same rule of construction should be applied to each." 17
Wend. 336. This decision has been followed in Pennsylvania, CofFman v. Hampton,
2 Watts & Serg. 377, 390 ; Tompkins v. Haas, 2 Barr, 74. This decision, however,
though placed upon the authority of the English cases, as well as upon principle,
was made without any reference to the case of Roots v. Lord Dormer, cited by the
author, and which seems to sustain his position. As to when a contract is entire,
sec Chirke u Baker, 5 Mete. 452.

CONTRACTS OF SALE. C43

Duties of Vendee.

any one to bid vitiates a sale advertised to be xvithoid reserve, {a)
So, if the vendor fraudulently conceal what he ought to communi-
cate, or give a false description of the goods, ex, gr.^ by calling
them the property of a gentleman deceased, and sold by order of
his executor, (p) And, though an article be sold ivith all faults,
yet, artifice used by the vendor to disguise, vitiates the sale ; (c)
but it is not so clear, whether his knowledge of the faults will, if
he use no artifice, have that effect, {d) It seems that if the vendee
knew a misdescription to be such, he cannot avoid the sale on ac-
count of it. (e) And, though a vendee who has been imposed upon,
has, in every case, a right to repudiate the contract ; and may, if
he have paid his money, recover it back from the seller ; yet he
must elect to avoid the contract as soon as he discovers the fraud :
if he lie by, and treat the property as his own, he %s'ill be consid-
ered as having elected to confirm the transaction, and that even
though he subsequently has discovered a new incident in the fraud,
for that does not give him a new right to rescind, but merely
strengthens the evidence of the vendor's dishonesty. (/) It was
once said, {g) that the vendor cannot maintain an action on his con-

(a) Meadows v. Tanner, 5 IMadd. 34.

(6) Bexwell v. Christie, Cowp. 395. Early v. Garrett, 9 B. <fe C. 928. Ilill v.
Gray, 1 Stark. 434. Duke of Norfolk v. Wortlij-, 1 Camp. 340. Schneider v. Heath,
3 Camp. 606. Baglehole v. Walters, 3 Camp. 154. Pickering v. Dowson, 4 Taunt
'J'ZQ. Jones v. Bowden, ibid. 847. Eegina v. Kenriek, 5 Q. B. 49.

{(1) Ibid. Mellish v. Motteux, Peake, 115. By water v. Richardson, 1 Ad. & Ell.
SOS. Barber v. Morris, 1 M. & Rob. 62.

(e) Dyer v. Hargrave, 10 Ves. jun. 505. See Barber v. Morris, 1 M. ct Rob. 62.

(/) Campbell v. Fleming, 1 Ad. & E. 40.

{g) Bryan v. Lewis, R. &, M. 38G. See Maegregor v. Lowe, R. & M. 57 ; and the
remarks of Abbott, C. J., in Lorymer v. Smith, 1 B. & C. 3. The Court will, if pos-
sible, construe a contract so as to hinder it from bearing the construction of a wager,
ex. gr., where the bought and sold note was "Sold for J. S. to A. B., about 32 tons,
more or less, of Riga Rhine Hemp, on the arrival per Fanny and Almira, at 82^. 10s.
per ton." This was construed to mean that the hemp should be sold if it arrived, not
to import an engagement that it should arrive. Boyd v. Siffkin, 2 Camp. 326.
Hawes v. Humble, cited, ibid. Hayward v. Scougall, 2 Camp. 56. But where the
contract was for hemp "to be shipped on or before the 31st August, Old St^de," this
was held to import an undertaking that the hemp should be shipped. Splidt v.
Heath, 2 Camp. 57, n. In Alewyn v. Prior, R. & M. 406. Agreement for the "deJivery
of goods 011 arrival to be delivered with all convenient speed, but not to exceed a
given day," the arrival in time is a condition precedent, and if they do not arri co ia

C44 MERCANTILE CONTRACTS.

Duties of Vendee.

' •ferret to sell and deliver, at a future day, goods wliic^ at the time
of, so contracting he had not in his possession, had not contracted
to buy, and had no expectation of receiving by consignment ; such
a transaction amounting to a wager on the price. This doctrine is,
however, overruled. (A)

if the goods have been delivered, and the vendee, .after that,
neglect to pay the price, the vendor may recover it in an action for
goods sold and delivered ; nay, there are instances in which he has
been allowed to waive the tort and recover in this form of action,
against one who had wrongfully and fraudulently gained possession
of them, {i) But he cannot recover in assumpsit, before the time
of credit, if there be one, has expired : although the fraud of the
defendant be such as would entitle him to rescind the contract, and
bring trover for the goods immediately, (j)

It sometimes happens that there is such a difference between
the goods delivered and their description in the bargain, as would
have justified the vendee in refusing to receive them; notwith-
standing which, he has taken therri into his possession, and made
use of them. In such a case, it has been thought that his conduct
would be taken to amount to a confession that the vendor had per-
formed his contract, and that he would be obliged to pay the whole

time •without default of the vendor the contract is null. See the cases cited in the
note, ibid. In Lovatt v. Hamilton, 5 M. & V- 639, the contract was, "Respected
friends, we have this day sold you 50 tons of palm oil to arrive per Mansfield, at 32Z.
per ton, casks to be returned and paid -for. In case of non-arrival, or the vessel's not
having so much in after delivery of foi'mer contracts, this contract to be void." The
Mansfield was loaded abroad with 315 tons of oil, but transhipped j^art bona fide, and
arrived with 235 tons, of which 228 were required for former contracts. Held, that
the arrival of the oil in the Ilansfield was a condition precedent^ and that the vendee
was not entitled to the part transhipped. 2. That the contract for 50 tons was
entire, and that the vendee was not entitled to the seveu that did arrive per Mans-
field. To the same effect are Stockdale v. Dunlop, 6 M. <k "W. 224, and Johnson v.
Macdonald, 9 M. & W. 600.

{h) Hibblewhite v. M'Morine, 5 M. & W. 462. M'Callan v. Mortimer, 9 M. &
W. 62,

(i) Hill V. Perrott, 3 Taunt. 274, Biddle v. Levy, 1 Stark. 20, per Gibbs, C. J
Sed vide B. N. P. 130. Lee v. Shore, 1 B. <fe C. 94. Lucas v. Godwin; 3 Bingh,
N, C. 12.1.

(j) Ferguson v. Carrington, 9 B. & C. 59. Shutt v. Smith, 4 Tyrwh. 1019. Se«~
De Symonds v. Minchwick, 1 Esp. 430. Read v. Hutchinson, 3 Camp. 352.

CONTRACTS OF SALE. ^45

Duties of Vendee.

price stipulated, {k) And, indeed, it has been lield, that where the
vendee had expressly stipulated that they should be returned, if y
not approved of, his keeping them for an unreasonable time pre- ^ /
eluded him from doing so. (Z) But there are some cases in which v
it would be impossible, or very diflicult, to return the goods; for
instance, where they consist of bricks and timbers put together in
the shape of a building ; or the breach of contract may not have
been discovered till the articles have been received and used by the
vendee. In such a case, it was formerly thought that the vendor
ought to recover the whole price, and the vendee to bring a cross
action for the breach of contract, (m) It now, however, is agreed,
that the vendee may, in the action by the vendor, give evidence of
the breach of contract, and that the vendor shall not recover more
than the value of the benefit which the vendee has actually derived:
and therefore, where there has been no benefit derived, shall re-
cover nothing at all. (72) And this rule holds, even when the
vendee's complaint is, that the vendor has not complied with an
express warranty, (0) as, for instance, that a horse is sound : in
which case, it is clear, that no acceptance of the goods can amount

(k) Grimaldi v. White, 4 Esp. 95. Fisher v. Samuda, 1 Camp. 190. Groning v.
Mendham, 1 Stark. 257. Hunt v. Silk, 5 East, 449. Sed qucere, for it seems mere
evidence by admission; et vide Allen v. Cameron, 1 C. <fe M. 832. See Campbell v.
Fleming, 1 Ad. & E. 40, and Fachardson v. Dunn, 2 Q. B. 223, wliere silence for a week
was held an assent to a shipment of p. smaller quantity tlian that mentioned in the
order.

(l) Beverley v. Lincoln Gas Light Co., 6. Ad. & E. 829. Bianchi v. Nash, 1 M. &
W. 545. See Chapman v. Morton, 11 M. & W. 534, and Campbell v. Fleming, 1 Ad.
& E. 40.

(m) Broom v. Davis, 7 East, 47 9, in nota.

(n) See Farnsworth v. Garrard, 1 Camp. 38. Basten v. Butter, 7 East, 479. Okel
V. Smith, ] Stark. 107. Allen v. Cameron, 1 C. & M. 832. Chappel v. Hiokes, 2 C. A
M. 214, 4 Tyrwh. 44. Cousins v. Padden, 4 Dowl. 492. Grounsel v. tamb, 1 M. & W
352. The action of the vendor ought to be indtbitatis assiimpsH for the labor he has
performed, not on the special contract, ibid. In Thornton v. Place, 1 M. & Hob. 218,
Mr. J. Parke said that wliere work agreed to be done according to a speeificatioa
varied from that specification, the plaintiff could not recover either the specified
price or the actual value, but must recover the specified price subject to a deductioa
of the sum which it v/ould take to alter the work so as to make it correspond with
the specification. a

(o) Street v. Blay, 1B.& Ad. 456. Cormae v. Gilles, 7 East, 480. King v. Boston,
*l East, 481 n. Poulton v. Lattimore, 9 B. & C. 259.

64G MERCANTILE CONTRACTS.

Illegality of Contract an Excuse for Non-performance by either Party.

to a conclusive recognition that the vendor has performed his con-
tract (though a presumption to that effect may arise from long
silence on the part of the vendee), {p) and that a cross action may,
the vendee please, be brought upon the warranty, {q)

A question has sometimes arisen, whether a vendee, who has
refused to accept goods on the ground that they do not correspond
with the order or sample, can justify selling them as the vendor's
agent in order to avoid the expense of export, (r) It is a dangerous
course to pursue, and never ought to be resorted to without necessity.

Where goods are sold without an express stipulation as to
price, (s) the vendor has a right to receive as much as they are, on
a reasonable estimation, worth ; even although the contract may be
one which it was necessary to reduce to writing, in order to satisfy
the Statute of Frauds ; (t) and, in the absence of proof as to their
value, it is presumed that they were of the lowest price of goods
of that description ; unless the vendee have himself suppressed the
means of ascertaining the truth, for then a contrary presumption
arises, {u)

For information respecting the onode of payment, the reader is
referred to the next chapter.

Section Y. — Illegality of Contract an Excuse for Non-performance

hy either Party.

Either party may, of course, excuse himself from the per-
formance of his contract, by showing that it is illegal;* as, where

(p) Fielder v. Starkin, 1 11. Bl. 17. See Hopkins v. Appleby, 1 Stark. 477. Prosser
V. Hooker, 1 Moore, 106. Pateshall v. Tranter, 3 Ad. &, E. 103.

{q) Buchanan v. Parnshaw, 2 T. R. 745. Street v. Blay, 2 B. <fe Ad. 456. Pateshall
V. Tranter, 3 Ad. <fe K 103.

(r) Chapman v. Morton, 1 1 M. & W. 534.

(s) But -where there has been a sale hy parol, at a fixed price, the plaintiff cannot,
by producing a written agreement, silent as to price, recover on a quaiitum valebat.
Elmore v. Kingscote, 5 B. & C. 583. Acebal v. Levy.

{t) Hoadley v. M'Laine, 10 Bingh. 482. See Acebal v. Levy, ibid. 382.

(^<) Clunnes v. Pezzy, 1 Camp. 8, et notas. Armory v. Delamirie, 1 Str. 505 ; 1 Smith
L. C. 151, 2d ed.

. * Craig V. The State of Missouri, 4 Pet. 410. Bartle v Coleman, 4 Pet. 184. Hal«
V. Henderson, 4 Humph. 199. Wherler v. Russell, 17 Mass. 257.

COXTRACTS OF SALE. 647

Illegality of Contract an Excuse for Non-performance bj' either Part}'.

the goods were drugs, sold to a brewer to be used in his brewery, (v)
or bricks under the statutable size, {lu) or libellous and obscene
prints, {x) or dress furnished for the express purpose of prostitu -C
tion ; (?/) nor is it an excuse that the parties thought they were ac. ''J^-l
legally. (2) A distinction has lately been drawn between cases in >
which the contract violates a law designed for the protection of the
public, and those in which it violates a law merely designed for the
protection of the revenue; and it has been said, that in the former
cases only is the contract void, (a) But this distinction seems to
be now repudiated. " It may be safely laid down," says Parke, B.,
delivering judgment in Cojoe v. Rovjlands, {h) " notwithstanding-
some dicta apparently to the contrary, that, if i\e contract be ren-
dered illegal, it can make no difference in point of law whether
the statute which makes it so has in view the protection of the
revenue or any other object. The sole question is, whether the
statute means to prohibit the contract." The true rule is that laid
down by Lord Tenterden, in Wethend v. Jones, (c) Ilis Lordship
there says, " where a contract, which a party seeks to enforce, is,
expressly, or by implication, {d) forbidden by the statute, or com-
mon law, no court will lend its assistance to give it effect ; and
there are numerous cases in the books, in which an action on the
contract has failed, because either the consideration for the promise,
or the act to be done, was illegal, as being against the express pro-
visions of the law, or contrary to justice, morality, and sound
policy, (e) But where the consideration and the matter to he performed

(y) Langton v. Hughes, 1 M. & S. 593.

(w) Law V. Hodgson, 11 East, 300.

(x) Fores v. Johnes, 4 Esp. 98.

(y) Bowry v. Bennett, 1 Camp. 348.

(z) Wilkinson v. Loudonsack, 3 M. & S. 117.

{a) Brown v. Duncan, 10 B. & C. 93. See Hodgson v. Temple, 5 Taunt. 181.
Johnson v. Hudson, 11 East, 180.

(6) 2 C. M. tfe R. 157.

{d) Ex. ^r., where a statute without saj-ing that a contract shall be void, inflicts a
penalty on the maker; for a penalty implies a prohibition. See judgment of Tiudal,
C. J, in De Begnis v. Armistead, 10 Bingh. 107.

(e) See most of the cases collected in Selw. N. P. 8th ed. p. 65. Starkio on Evi-
dence, 2d ed. p. 885. See in addition to the cases there cited De Begnis v. Armistead,
10 Bingh. 107. Stephens v. Robinson, 2Tyrwh. 2S0; 2 C. & J. 209. Little v. Poole,

648 MERCANTILE CONTRACTS.

Illegality of Contract an Excuse for Non-performance by either Party.

are both legal, we are not aware that a plaintiff has ever been pre-
vented from recovering, by an infringement of the laiv not contem-
.sii^l&c? hy the contract, in the i^erformance of something to be done on
^f^tlv^wf;" and therefore, in that case, a rectifier having, contrary
to Stat. 6 Geo. 4, c. 8. ss. 115, 117, sold spirits, without a permit
expressing their true strength, was allowed to maintain an action
for the price. (/)

By stat, 29 Car. 2, c. 7, {g) " no tradesman, workman, laborer, or
other person whatever, shall do or execute any worldly labor, work,
or business of their ordinary calling, except works of necessity and
charity, or publicly cry, show forth, or expose to sale any wares,
merchandises, fruit, herbs, goods or chattels upon the Lord's day."
It has been held since this act, that the sale of a horse on Sunday,
not being within the plaintiff's ordinary calling, is not void, {h)
contra where it is so ; {i) the statute prohibiting only work done in
a man's ordinary calling, {j) It has been said, too, that a contract
of sale is not void against a person ignorant that the vendor was
exercising his ordinary calling ; {k) but this is questionable, {l) And
where a heifer was sold on Sunday, and the vendee retained, and
on a subsequent day promised to pay for it, he was held liable upon
his subsequent promise, (m) There is an exception in the act, in

9 B. <fe C. 192, and R. v. Kilderby, 1 "Wms. Saund. 309, a, in notis. Ex parte Daniel,
14 Ves. 192. Duvergier v. Fellowes, 10 B. <t C. 826. Forster v. Taj-lor, 5 B. & Ad.
887, in which the Court attempts to reconcile the cases by supposing tliat in the cases
in -which the contract was held not to be avoided, the revenue regulations violated
were meant to attach to the plaintiff personally, and to affect him with a penalty in
order to secure the license duty, but in no way to prohibit the contract; and see
Smith V. Mawhood, 14 M. &. W. 452.

(/) See Pellecat v. Angell, 2 C. M. & R. 311.

Ig) See 27 Hen. G, c. 5; 3 Car. 1, c. 1.

(A) Drury v. Defontaine. 1 Taunt. 131. See Scarfe v. Morgan, 4 M. & W. 270.

(i) Ibid. Fennell v. Ridler, 5 B. & C. 426. See, too, Simpson v. Nicholls, 8 M. <&
W. 240, and the form of plea there.

(j) R. V. Whitnash, 7 B. & C. 596. Peate v. Dickin, 3 Dowl. 173 ; 5 Tyrwh. 116;
1 C. M. & R. 422. Norton v. Powell, 4 M. & Gr. 42.

(^•) Bloxam v. Williams, 3 B. & C. 232.

(l) Vide Smith v. Sparrow, 4 Bingh. 84.

(wi) "Williams v. Paul, 6 Bingh. 653. Sed vide Simpson v. Nicholls, 3 M. & "\V. 240.
In Scarfe v. Morgan, 4 M. &, W. 270, a distinction was pointed out between the effect
of the act on contracts executed and executory. Vide tamen Fergusson v. Norman, 6
Bingh. N. C. 76. And see further, Norton v. Powell, 4 M. <fe Gr. 42.

CONTRACTS OF SALE. G40

Illegality of Contract an Excuse for Non-performance by eitlier Party.

favor of sales of meat in inns, cook-shops, and victualling-houses,
for such as cannot otherwise be provided, and of crying q^viw^Atig.-
milk, before nine in the morning, and after four in the ai t d^/^^'-lf'i)
Mackerel also may be sold on Sundays, before and after uiTme
service, (o) And the act appears to apply only to persons ejusdem
generis with those mentioned in it, {p)

By Stat. 7 Geo. 2, c. 8, entitled An act to prevent the infamous
practice of stock-jobbing, and made perpetual by 10 Geo. 2, c. 8, all
contracts upon which any premium shall be given, for liberty to
put upon, deliver, receive, accept, or refuse any public or joint
stock, or other public securities whatsoever, and all wagers and
contracts in the nature of wagers, and all contracts in the nature
of putts and refusals, relating to the present or future value thereof,
shall be null and void to all intents and purposes : and all premiums
or sums of money paid on such contracts or wagers may be sued
for within six months after the making the contract or wager, and
recovered with double costs of suit, (q)

And all contracts for the buying, selling, assigning, or transfer-
ring any such stock or securities, which the person contracting is
not at the time of contract possessed of or entitled to, are void to
all intents and purposes. (?•)

But nothing in this act extends to prevent any person from
lending money on such stock or securities, or to hinder any con-
tract from being made, for the re-delivering, assigning, or transfer-
ring the same, upon repayment of the sum lent with interest, (s)

This act (breaches of the provisions of which are punishable
by heavy penalties) is considered remedial rather than penal ; {t) it
applies only to gambling in the British Funds, (u) Time bargains

(n) See further on this act, Chitty's Collection of Statutes, 29 Car. 2, c. Y, innotis;
and see also as to the qualifications under which a baker's business may be conducted
on Sunday, stat. 5 & 6 Wm. 4, c. 37.

(o) Stat. 10 & 11 Wm. 3, c. 24.

(p) Per Parke, J., Peate v. Dickin, 3 Dowl. 1*73, 1 C. M. & R. 422. R. v. Whitnash, .
7 B. & C. 596.

(q) Sect. 1.

(r) Sect. 8. '*

(s) Sect. 11. \

(0 Billing V. Flight, 6 Taunt. 419 ; 2 Marsh. 124.

tu) Henderson v. Bise, 3 Stark. 158. Wells v. Porter, 2 Bing. N. C. 722. Oakley
;. Uiijby. ibid. 732. Elsworth v. Cole, 2 M. <t W. 31. Morgan v. Pcbrer, 3 Bingh,

G50 MERCANTILE COXTRACTS.

Illegality of Contract an Excuse for Non-pt.rformance by either I'aity.

in the foreign funds might, it was once thought, be invalid within
lie rainciple laid down in Bryan v. Levjis^{v) and above stated:
theyW by t/.however, been held not to be so ; (iv) and the doctrine
itselp4r*"overruled by Hihblewhite v. iriforine {x) and Morthner v.
J/' Callan^ (y) in which last case the Court of Exchequer expressed
its opinion that it is not necessary that the party selling even Bri-
tish stock should be actually possessed of it at the time of contracting
the sale, provided the intention was that there should be a real lojia
fide delivery of the stock sold, not a mere wager on the price. This
case was afterwards carried to the Exchequer Chamber, where the
iudges thouo-ht that there was a substantial distinction between an

JO O

executory contract to transfer stock, of which the intended vendor
was not possessed, and a contract to j)ay for the same stock after it
had been actually transferred in pursuance of such executory agree-
ment ; the latter contract they conceived to be, at all events, legal,
being supported by a new consideration, namely, the actual trans-
fer, and being conformable to the general policy of the act, which
is studiously framed with the view of securing an actual transfer. (2)
Omnium is within the act. (a) The provisions do not apply to
cases where the person agreeing to transfer is actually possessed of
the stock, and, therefore, not to a loan of stock, with an undertak-
ing to replace it ; (h) a person who has omnium potentially in pos-
session may contract to sell it. (c) And it would seem, from a late
decision of the Exchequer, that the act does not apply to any case
in which the stock has actually been transferred, {d)

A sale may be illegal for contravening those enactments of the

N. C. 457. Robson v. Fellows, 3 Bingh. N. C. 392. Sed vide Rossum v. Taylor,
Cliitty's Statutes, 1st ed. 1032, n. b. The act does not apply to railway shares,
Hewitt V. Price, 4 M. & Gr. 355.

(v) R. & M. 386.

(m) Wells V. Porter, 2 Bingh. Is". C. 22. Elsworth v. Cole, 2 M. «fe "W. 31. Mor-
gan V. Pebrer, 3 Bingh. N. C. 457.

(x) 5 M. & W. 462.

(y) 7 M. & W. 20. In error, 9 M. & W. 640 ; and on motion, 6 M. & W. 76

{z) M'Callan v. Mortimer, 9 M. & W. 641.

(a) Brown v. Turner, 2 Esp. 631 ; 7 T. R. 630.

(b) Saunders v. Kentish, 8 T. R. 165. Child v. Marley, 8 T. R. 610. Lightfoot v.
Creed, 2 B. Moore, 265. See Maddock v. Rumball, 8 East, 304.

Id) Mortimer v. M'Callan, 7 M. & W. 20.

CONTRACTS OF SALE. 651

Illegality of Contract an Excuse for Non-performance by either Part}'.

Legislature which aim at the establishment of uniformity of weights
and measures, (e) By stat. 5 Geo. 4, c. 74, the operation of v^Iuicd.
was, by 6 Geo, 4, c. 12, postponed to January 1, 1826, ■ ^ 'jlpi??erikl
standard yard, pound, gallon, and bushel for heaped measui*.?, were
fixed, and the principle laid down on which they might be renewed
if lost or destroyed. Models and copies of these and their parts
and multiples were to be deposited at the Chamberlain's office,
Westminster, and sent to London, Edinburgh, Dublin, and other
cities and places. The magistrates were to procure them for the
use of their respective counties, and all contracts were to be gov-
erned by these standards, unless express agreement were made to
the contrary ; and if it were, unless the proportion of the local or
special measure to the standard was specified in the agreement, such
agreement should be null and void. (/)

These statutes were amended by 4 & 5 Wm. 4, c. 49, which,
after continuing in force from 13th August, 1834, to 9th Septem-
ber, 1835, was repealed by stat. 5 & 6 Wm. 4, c, 63. That act
recites 5 Geo. 4, c. 7, and 6 Geo. 4, c. 42, and in sect. 3, repeals so
much of them as requires weights and measures to be copies in
shape of those deposited in the Exchequer, or allows the use of
weights and measures not in conformity with the imperial standard,
or allows goods to be bought or sold by any weights or measures
established by local custom, or founded on special agreement : the
doubt raised in Watts v. Friend is thus put an end to.

Sect. 4, provides for stamping and verifying weights and meas-
ures corresponding in length, weight, and capacity, though differing
in shape from those deposited at the Exchequer.

Sect. 6, abolishes all local and customary measures, and inflicts
a penalty on persons using them.

JSecis. 7 and 8, abolish the heaped measure, and allow the use of
the bushel instead.

(e) See R. v. Major, 4 T. R. 750. Tyson v. Thomas, 1 M'Clel. & Y. 119. Hospital
of St. Cross V. Howard de Walden, 6 T. R. 338. Noble v. Durrell, 3 T. R. 271. AYatts
V. Friend, 10 B. <fe C 446.

(/) See Watts v. Friend, 10 B. & C. 448, in which it was contended that a sale, by
the Winchester measure, formerly the standard of the kingdom (R. v. Major, 4 T. R.
750), was still legal, the Court appeared to think otherwise; but the point was not
decided.

652 MERCANTILE CONTRACTS.

Illegality of Contract an Excuse for Non-performance by either Party.

Sect. 9, directs that coals be sold by weight, and not by meas-

Ac\ •^.'■'/ enacts that avoirdupois weight shall alone be used, ex-
cept m the sale of gold, silver, platina, and precious stones, which
may be sold by troy ; and drugs, which may be sold retail by apo-
thecaries' weight.

Sect. 11, enacts that the stone shall contain fourteen pounds, the
hundred-weight eight stones, and the ton twenty hundred-weight.

By Sect. 12, the contents of weights and measures are to be
stamped on them.

Sect. 13, prohibits weights made of lead or pewter, except
when cased with brass, copper, or iron, and stamped and marked
cased.

There are many other sections which provide for the ascertain-
ment of certain rents and tolls, the mode of providing copies of the
standard weights and measures, the appointment of officers to be
called inspectors of weights and measures, their powers, duties, re-
muneration, &c.

CHAPTER XIII.

CONTRACTS OF DEBT

Sect. 1. Definition of contract.

2. Duty of debtor.

3. Duty of creditor.

Section 1. — Definition of Contract.

A CONTRACT cf debt is defined by Sir TV. Blackstone, to be that
■wliereby a chose in action, or right to a certain sum of money, is
mutually acquired and lost ; and he remarks, that it may arise from
any of the other contracts ; as, in case of sale, if the price be not
paid in ready money, the vendee becomes indebted for its amount
to the vendor, and the vendor has the property in this price, as a
chose in action, by means of this contract of debt. Any contract,
in short, whereby a determinate sum of money becomes due to any "^
person, and is not paid, but remains in action merely, is a contract
of debt; {of' and, as the consideration of this contract, therefore,

(a) BI. Comm. 465. Sums whicli are paid to the credit of a customer with a
banker, though usually called deposits, are in truth loans by the customer to the
banker. Sims v. Bond, 5 B. & Ad. 389. Carr v. Carr, 1 Meriv, 548, n. Devaynes v.
Noble, ibid. 568. Foley v. Hill, 1 Phill. 899. Pott v. Clegg, 16 M. & "W. 321. A
common evidence of loan is what is called an I. 0. TJ. It requires no stamp, and is
prima facie evidence of a loan from the party who signs to him who produces it.
Douglas V. Holme, 12 Ad. & E. 641. Curtis v. Richards, 1 M. & Gr. 46.

* A general depositor of money in an insofveat bank, is a general creditor, and
entitled to no preference over bill holders and other creditors. In the matter of
The Franklin Bank, 1 Paige, 249. It was decided in Pott v. Clegg, cited by the au-
thor, that the relation between a banker and a customer who deposits money in hii
bank, is the ordinary relation of debtor and creditor, with the superadded obligation
on the part of the banker, arising out of the custom of trade, to honor the drafts cf

354 MERCANTILE CONTRACTS.

Duty of Debtor.

will illustrate all those of which I have previously treated, it has
beent^Hl^rved for the last chapter.

Section II, — Duty of Debtor.

The parties to this contract are called debtor and creditor ; the
debtor's duty under it, is, to tender payment at the proper time,
i. e., generally speaking, before demand made, (5) or action brought
against him; (c) but if, as in the case cf a bill, there be a day spe-
cially fixed for payment, then at that day ; (d) in the proper mode,
and to the proper amount : the creditor's, to receive it, and make
him a proper acquittance. AYe will consider these in order.

Mode of Payment, (e)* — Where the creditor has himself chalked

(6) Tyler v. Bland, 9 M. <fe "W. 338. Cotton v. Goodwin, 1 M. & W. 147.

(d) Poole V. Tumbridge, 2 M. <k W. 223. In cases of sale, in calculating the time
of credit, the day of sale is excluded, and semhle, that months mean calendar months,
as well in a case of open credit as in one of close credit, i. e. credit by bill. Webb v.
Fairmaner, 3 M. & W. 473. Hart v. Middleton, 2 Car, & K. 19.

(e) By the civil law payment by whomever made liberated the debtor — " Nee inter-
est creditori quis solvat, utrum is qui debet an alius pro eo : liberatur enim et tdio sol-
vente sine sciente, sive ignoraiUe debitore, solutio vet invito eo fiatP

Under the Roman law there was a ceremony called Acceptilafio, bj" which the
creditor acknowledged himself paid, and which operated between him and his debtor
like what we call an estoppel. — " Est acccptilatio imaginaria solutio — Quod enim ex verho-
rum obligatione Titio debetur, id, si vclit Tttius remittere, poterit sic fieri ut patietur hcec
verba debitorem diecere — Quod ego tibi promisi habcs ne acceptum?

Et Titius responderit —

Habeo.

Quo gencre {ut d'lximus) tanfum ece solvuntur obligationes quce ex verbis consistunt,
non etiam catercc. Consentaneicm enim visum est verbis factam obligationem aliis posse
verbis dissolvi." Inst. 3, 30.

However, though this sort of sham payment was applicable only to the case of a

his customer ; and, consequentlj', that if money is permitted to remain in the bank-
er's hands for six years, without any payment by him of the principal or allowance
of interest, the Statute of Limitations will be a bar to its recovery. There are Ameri-
can decisions which go far to sustain the doctrine, that no action can be maintained
for a deposit, without actual demand or something equivalent thereto, until which
time the Statute of Limitations does not begin to run. Downes v. Phoenix Bank of
Zharleston, 6 Hill, 297. Watson v. Phoenix Bank, 8 Mete. 217.

* When the parties have agreed on a particular thing as a medium of payment,

CONTRACTS OF DEBT. 055

Duty of Debtor.

out the mode of payment, it will be sufficient to follow liis direc-
tions ; thus, where he desires that the bill or note may be remitted
by the post, if it be lost, the loss will fall on him. (/) But delivery

debt due by express contract, an acute person, called Gallus Aquilius, invented a
mode A turning all duties into debts by express contract, and then paying them ofT
in tht imaginary mode above described. In order to effect this, he made the parties
first agree to substitute for the duty an express contract to pay money, and then
that contract was itself got rid of by the mock payment called an Acceptilatio. The
agrefiment which formed the basis of this transaction was called, in honor to its in-
ventor, the Aquiliaiia Stipulatio : — "per quam contingit ut omnium rerum obligatio in
ftipulatum dediocatur, et ea per acceptilationem tollatur."
(/) Warwick v. Noakes, Peake, 67.

whether it be lands, goods, or labor, and the agreement has been carried into execu-
tion, it is the same thing in legal effect as though the like sura iiad been paid in
money. It is so even as a question of pleading. Gregory v. Mack, 3 Hill, 384.

A payment in counterfeit bank-bills is a nullity, and will not discharge tlie debt,
though both parties suppose them to be genuine. Thomas v. Todd, 6 Hill, 340.
Young V. Adams, 6 Mass. 182.

A person giving a security in payment, or procuring it to be discounted, vouches
for its genuineness. But this rule does not extend to the case where the party, when
receiving or discounting the paper, is presumed, from his relation to it, to have the
means of correct knowledge as to its genuineness, or where it has been kept for an
unreasonable time without notice to the other party of its spurious character. Bank
of St Albans v. Farmers' and Mechanics' Bank, 10 Vermt 141. In this case it was
held that the amount of a forged check paid by a bank to an innocent holder could
not he recovered back. And so, in the case of The Bank of the United States r-. The
Bank of Georgia, 10 Wheat. 333, 6 C. R. 120, it was held, that, in general, a payment
received in forged paper, or in any base coin, is not good ; and if there be no negli-
gence in the party, he may recover back the consideration paid for it, or sue upon
his original demand; but this principle does not apply to a payment made bona fide
to a bank, in its own notes, which are received as cash, and afterwards discovered
to be forged. See also Gloucester Bank v. Salem Bank, 17 Mass. 33, and Pindall's
Ex'ors V. North W. Bank, 7 Leigh. 617.

"Bank-notes constitute a part of the common currency of the country, and ordi-
narily pass as money. When received as payment, the receipt is always given for
them as money. They are as good a tender as money, unless specially objected to ;
and as Lord Mansfield observed, in Miller v. Race, 1 Bur. Rep. 457, they are not, like
bills of exchange, considered as mere securities or documents for debts." 10 Wheat
333; 6 C. R. 128. See also Bayard v. Shunk, 1 Watts <fe Serg. 95; Crutchfield v. Ro-
bins, 5 Humph. 15 ; Graham v. The State, 5 Humph. 40 ; Id. 140; Phillips v. Blake,
1 Mete. 156, 158.

A payment in current bank-notes discharges the debt, although, in consequence
of th<* previous failure of the bank, of which both parties were ignorant, the notes
«rer« <)f no -K^-lue aX the 'iime of payment Baj-ard v. Shunk, 1 Watts & Serg. 92.

656 MERCANTILE CONTRACTS.

Duty of Debtor.

to a bellman in the street, was, in one case, held not to be a suffi-
cient putting into the post, (g) If the creditor and debtor meet and
balance their account, by deducting the debt out of some other de-

(ff) Hawkins v. Rutt, Peake, 186. This ease, however, is said to be controverted
by a late decision, of which I have been unable to procui-e a note : possibly the bell-
man, in Hawkins v. Rutt, was not employed by government. See Pack v. Alexan-
der, 3 M. <fe Scott, 189 ; and Skilbeck v. Garbett, 7 Q. B. 846.

Scruggs V. Gap, 8 Yerg. 175. Edmonds v. Digges, 1 Grattan, 359. Lowry v. Mur-
rell, 2 Port. 280. Camidge v. Allenby, 6 B. & C. 373 ; 13 E. C. R. 201. And see also
Young V. Adams, 6 Mass. 182, 185.

But in New York the contrary has been held. Ontario Bank v. Lightbody, 11
"Wend. 9; S. C. 13 "Wend. 101. Thomas v. Todd, 6 Hill, 340. See also Johnson v.
Titus, 2 Hill, 607. And in Maine, Frontier Bank v. Morse, 22 Maine, 88 ; Vermont,
Wainwright v. Webster, 11 Vermt. 576; and New Hampshire, Fogg v. Sawyer, 9
New H. 365.

A promissory note is payment of an account when it is received for and in dis-
charge of such account. Sheehy v. Mandeville, 6 Cranch, 253. In Peters i;. Beverley,
10 Pet. 532, 567, it is said, "The law on this subject is well settled, and the princi-
ple well and succinctly laid down in the case of James v. Hackly, 16 Johns. 277. It
is, say the Court, a settled doctrine, that the acceptance of a negotiable note for an
antecedent debt, will not extinguish such debt, unless it is expressly agreed that it is
received as payment. It is unnecessary in the present case to carry the principle so
far as to say there must be an express agreement for that purpose, in order to oper-
ate as payment : but the evidence must certainly be so clear and satisfactory as to
leave no reasonable doubt that such was the intention of the parties. And tlie rule
to this extent is settled by tiie most unquestionable authority. 11 John. 513; 14
John. 404; 2 Gill & John. 493; 7 Harr. & John. 92." See also Bank of the United
States V. Daniel, 12 Pet. 57, and Arnold v. Camp, 12 John. 409.

But it appears to be now settled in New York, that even an express agreement
will not in such case be sufficient. In Frisbie v. Larned, 21 "Wend. 450, after decid-
ing that the acceptance of the note of a third person in payment, was prima facie
an accord and satisfaction, and extinguished the debt, the Court, Cowen, J., proceed
to say, " The case is different from that where a party gives his own note for his own
debt, which is receipted as in full. There, on default of payment, the creditor has
his election to go back to the original cause of action, on surrendering the note to
be cancelled. The note in such case is not even prima facie satisfaction. But it is
othei'wise of a note against a third person, transferred by the debtor, or a note pro-
cured from a third person as surety, and accepted as satisfaction." Citivg New York
State Bank v. Fletcher, 6 "Wend. 85 ; Booth v. Smith, 3 "Wend. 66 ; Kearslake v. Mor-
gan, 5 T. R. 513; "VViseman v. Lyman, 7 Mass. 286, 290, &c. The opinion here ex-
pressed was fully confirmed and acted on in the cases of Cole v. Sackett, 1 Hill, 516
and "Waydell v. Luer, 5 Hill, 448, in which it was held, that the promissory note of
a debtor given for a precedent simple contract demand will not operate as a pay-
ment so as to preclude the creditor from suing on the original consideration, though

CONTRACTS OF DEBT. 657

Duty of Debtor.

mand by the debtor against the creditor, such a transaction is equi-
valent to actual payment ; (A) and so in an agreement that goods
furnished by the debtor shall go in satisfaction of the debt, (i) In
the absence of directions from the creditor there must, to constitute
a legal tender of the debt, be an actual production and offer of the
sum due, unless the creditor dispense with it by a declaration that
he will not accept it ; {j) and this tender must be of money^ if be-
yond 405., in gold, (^) or in what has been rendered by act of par-
liament equivalent to money for that purpose, viz., notes of the
Bank of England, payable to bearer on demand, which are a legal
tender for any sum ahove Jive pounds, except at the Bank itself, and
its branches. (1) But although, strictly speaking, a legal tender
must be made in money, if required, yet a tender of country bank-
notes, if not objected to on that account, will be sufl&cient. (m) The

(A) Owens v. Denton, 5 Tyrw. SCO ; 1 C. M. <& R. 713. In such a case the balance
struck constitutes a new demand, and the Statute of Limitations ruus from that time
only. Ashley v. James, 11 M. & W. 542.

(i) Hooper v. Stephens, 4 Ad. <fe E. 71. Hart v. Nash, 2 C. M. & R. 337.

{j) Thomas v. Evans, 10 East, 101. Dickinson v. Shee, 4 Esp. 67. Glascott v.
Day, 5 Esp. 48. Holland v. Phillips, 6 Esp. 46. See French v. Brook, 1 Bingh. N. C
253. See Turner v. Crossley, 3 M. <fe W. 43.

(k) 56 Geo. 3, c. 68.

(/) Stat. 3 & 4 Wm. 4, c. 6, s. 98 ; this act took effect from 1st August, 1834, and
is continued by 7 <fe 8 Vict. c. 32.

(?n) Polglass V. Oliver, 2 Tyi-wh. 92, 2 C. <fe J. 15, where the other cases on that
subject are all cited.

given under an express agreement that it was to be received in full satisfaction and
discharge. And that the giving of a promissory note by one of several partners or
joint debtors for a demand antecedently due from all, will Diot extingiu'sh their lia-
bility, though the creditor expressly accept the note in satisfaction.

In the recent case of Marston v. Boynton, 6 Mete. 130, it is said, " In Massachu-
setts it is held that the acceptance of a negotiable note is prima facie evidence of
payment ; but it is so held because such is the presumed intention and understand-
ing of the parties. But it is open to proof that it was not so intended and imder-
stood; and then it is not evidence of payment" See also Butts v. Dean, 2 Mete. 76 ;
Ilsley V. Jewett^ 2 Mete. 168, 173. As to a note not negotiable, Howland v. Coffin,
9 Pick. 51.

It is probable that the weight of authority is in favor of the rule as laid down in
Peters v. Beverley, 10 Pet. 597, and quoted above. See the cases collected in Chitty
on Contracts, 6th Am. edition, 767.
42

658 MERCANTILE CONTRACTS.

Duty of Debtor.

tender of a larger sum than the sum due is legal ; (?z) but a tender
of a larger sum, requiring change, is not so ; (o) nor is a tender good
if accompanied by a condition, (p) as that a document shall be
given up to be cancelled, or a receipt in full, or even a stamped re-
ceipt (q) given, or that it shall be received as all thai is due, (?•) or, it
seems, with a protestation against the creditor's right to receive. (5)
And it is a general rule, that a tender shall not be in terms which
would compel the creditor to make an admission : thus, — " I tender
you 24:1. in payment of rent due at Lady-day last," is a bad ten-
der, {t) But, '•' / am come ivith the amount of your hill,''^ accompanied
by the production of the money, has been held sufficient, {u)

Some of these cases are not very easily reconcilable inter sc, if
the particular facts only be looked at. The principle, however,
that a tender must be unconditional, is recognized in all of them. The
observations of the Court of Queen's Bench, in Hemvood v. Oliver^
seem certainly more in accordance with that which the understanding
of a man of business, unembarrassed with legal distinctions, would
suo-o-est, than some of the decisions at nisi prius above referred to.
" The defendant," says Mr. J. Patteson, " who makes a tender, al-
ways means that the amount tendered, though less than the plain-
tiff's bill, is all he is entitled to in respect of it. How, then, would
the plaintiff preclude himself from recovering more, by accepting
an offer of part accompanied by expressions which are employed in
every tender? — Expressio eorum quce tacite insunt nihil operaiurJ^
At the same time it must be observed, that in the very case then
before the Court, if the creditor had accepted the money offered in

(n) Dean v. James, 4 B. & Ad. 546. "Wade's case, 5 Rep. 114; Noy, 'Z^ Beavans
V. Rees, 5 K & "W. 306.

(o) Robinson v. Cook, 6 Taunt. 336. "Watkins v. Robb, 2 Esp. "711. Betterbee v.
Davis, 3 Camp. 70.

(jo) Mitchell v. King, 6 Car. & P. 23Y. Evans v. Judkins, 4 Camp. 166. Free v.
Kingston, ibid Huxham v. Smith, 2 Camp. 19. Glascott v. Da}-, 5 Esp. 48. See
Hough V. May, 4 Ad. & E. 954. Sed vide Cole v. Blake, Peake, 179.

{q) Sed vide Richardson v. Jackson, 8 M. & W. 298. Laing v. Meader, 1 C. & P
5.57

(r) Sutton V. Hawkins, 8 C. <fe P. 259. Cheminant v. Thornton, 2 C. tfc P. 50.
Strong V. Harvey, 3 Bingh. 304; 11 Bell, 72.

(s) Simmons y. Wilmot, 3 Esp. 91 ; but see Manning v. Lunn, 2 Car. & K. 13.

(t) Marquis of Hastings v. Thurley, 675, see Griffith v. Hodges, 1 C. & P. 419.

{u) Henwood v. Oliver, 1 Q. B. 409.

CONTRACTS OF DEBT. 659

Duty of Debtor.

the terms then used, " I am come with the amount of your bill,"
he would have found it difficult, afterwards, to persuade a jury
that he had not admitted it to be truly what it was called, " the
amount of his bill." It is true he might have guarded himself by
saying, " I am willing to take it, but my claim on account of my
bill is larger;" but to require him to do that, would be to shift the
onus of keeping clear of words implying an admission from the
debtor to the creditor.

However, if the creditor refuse to receive the money, on some
other account, ex. gr.^ on the ground that more is due to him, and
do not object to the informality of the tender, that will, in general,
cure such informality ; {v) but though an informal offer of the
money may be thus available, yet there must be an offer, {yd) A
tender to an authorized agent is a tender .o his principal; {x) and a
tender to one of several joint creditors is a tender to all. (?/)

It has been questioned, whether there can be a good tender of
jpart of a debt so as to protect the debtor from an action for that
part, if it turn out that more was due, and the creditor objected
to the tender of the part upon that ground. The decisions in the
Queen's Bench and Exchequer seem to be at variance on this
point. (2) Perhaps the true distinction may be found to be be-
tween a demand severable into parts, and an entire demand,
such as that in Cotton v. Godwin^ where the debt was a promissory
note.

Although, as we have seen, there can be no legal tender^ except
of cash or its equivalent, yet payment («) is often, by mutual consent,
made in a bill or note, the taking of which amounts to an agree-
ment to give the debtor credit for the time it has to run, and sus-

(y) See Wright v. Read, 3 T. R. 554. Lockyer v. Jones, Peake, 180. Black v.
Smith, Peake, 88. Cole v. Blake, Peake, 179. But see Iluxhara v. Suiith, Glascott v.
Day, supra. Read v. Goldi-ing, 2 M. & S. 86, Richai'dsou v. Jackson, 8 M. & W.
298.

{w) Thomas v. Evans, 10 East, 101. Dickinson v. Shee, 4 Esp. 67. See Douglas
»>. Patrick, 3 T. R. 685.

{x) Goodland v. Blewith, 1 Camp. 477. Kirton v. Braithwaite, 1 M. tt W. 310.

(y) Douglas v. Patrick, 3 T. R. 683.

(z) See Brandon v. Newington, 3 Q. B. 915. Tyler v. Bland, 9 il. <fe W. 338.
Cotton V. Godwin, 7 M. & W. 147.

(a) Maillard v. The Duke of Argyle, 6 M. & Gr. 40.

6G0 MERCANTILE CONTRACTS.

Duty of Debtor.

pend the creditor's remedy in the mean while (Z*) (except in cases
where the debt is also secured by a specialty) ; (c) or is otherwise of
higher degree than simple contract, as, for instance, if it be due on
account of rent, {d) Still a bill or note may, by mutual agreement,
operate as immediate payment ; (e) and the transferable note of the
debt or himself may be taken in discharge of a liquidated debt of
a greater amount. (/) It is, however, in general, no satisfaction of
any debt or demand, for which it has been given, {g) but onlyprma
facie evidence of payment, rendering it necessary that the creditor
should account for it, (Ji) before he can be entitled to recover the
consideration, (i) Yet, although, generally speaking, it is no satis-
faction, it will operate as such if the debtor's liability upon it be
discharged by its loss, or by the holder's laches or folly, as if he

(i) Stedman v. Gooch, 1 Esp. 3. Kearslake v. Morgan, 5 T. R. 513. Dangerfield
V. Wilby, 4 Esp. 159. Davy v. Phelps, 3 M. & Gr. 300.

(c) Drake v. Mitchell, 3 East, 251. Curtis v. Rush, 2 V. & B. 419 ; B. N. P. 182.
Worthington v. Wigley, 3 Bingh. N. C. 454. But in Baker v. AValker, 14 M. & W.
465, the Court held, that a note payable at a future day, which did not appear to be
transferable, given for and on account of a judgment debt, was good, because the
inference was, that the creditor agreed to suspend his remedy, which was a sufficient
consideration.

(d) Davis V. Gyde, 2 Ad. & E. 623.

(e) Sard v. Rhodes, 1 M. & W. 153.
(/) Sibree v. Tripp, 15 M. & W. 23.

{g) Puckford v. Maxwell, 6 T. R. 52. Owenson v. Morse, IT. R, 64. Tapley v.
Martens, 8 T. R. 451. Constable v. Andrews, 2 C. <& M. 208. Tarleton v. Alhusen,
2 Ad. & E. 32. Hough v. May, 4 Ad. & E. 954. Goodwin v. Coates, 1 M. & Rob.
221. Where Parke, J., held, at N. P., that a vendor taking from vendee the note of
a third party, payable two months after date, and not indorsed by the vendee, was
not bound to present it before suing for the price, for that it was the duty of tha
maker to pay it withoiit demand, and, therefore, that of the vendee to see it paid.
Scd vide Mercer v. Cheese, 4 M. & Gr. 804.

(//) Per Pollock, C. B., Griffiths v. Owen, 13 M. & W. 64.

(i) This was thought to be so, even in pleading ; for when to a declaration for
goods, labor, and an account stated, the defendant pleaded, that the plaintiff drew
for and on account of part of his demand a bill, which defendant accepted; tla
court of C. P. seemed to think the plea sufficient, and, that if the bill had not been
indorsed over, the plaintiff ought to reply that fact. Mercer v. Cheese, 4 M. <fe Gr.
804. In a more recent case, however, Price v. Price, 16 M. & W. 233, the Court of
Exchequer held such a plea to be bad, and that it was incumbent on the party
pleading such a plea either to show that the instrument was not due, or that the
plaintiff had negotiated it.

CONTRACTS OF DEBT. 661

Duty of Debtor.

alter it so as to discbarge the parties thereto; (j/') unless, indeed,
the debtor being himself the maker or acceptor, could have no
remedy over on it against any other party, and consequently can- ^
not be damnified by the alteration ; (^) or if the creditor agree to
receive it as cash and take upon himself the risk of its being
paid, (J) or if it were transferred to him by way of sale, {m) unless
the party giving it knew at the time that it was of no value, for that
is fraud ; (?i) upon discovery of which the holder may, if the instru-
ment were given in payment for goods, disaffirm the contract of
sale, and sue for them in trover, (o)

If the creditor negotiate the bill or note for value, and without
rendering himself liable, it will operate as payment, though dis-
honored. Therefore, in Bunneij v. Poyntz^^iS) where the agent of
a vendor took the notes of the vendee and another for the price,
discounted them with his banker, and indorsed them, but the ven-
dor, his employer, did not indorse them, the Court held that the
vendor must be considered as having received payment for his
goods, and could not retain them, though his agent afterwards be-
came bankrupt, and the notes were dishonored.

But if the creditor negotiate the bill or note so as to render
himself personally liable upon it, in that case it will not operate as
payment if dishonored. Thus, in Miles v. Gorton^ (q) where the
vendee of some hops accepted a bill for the price, which the ven-
dor drew, and afterwards indorsed and negotiated, it was held,

(j) Bayley on Bills, 5th ed. 365. Alderson v. Langdale, 3 B. & Ad. 660. Bridges
V. Berry, 3 Taunt. 130. Bishop v. Rowe, 3 M. & S. 362. See Slomau v. Cox, 5
Tyrwh. 175 ; 1 C. M. & R. 471.

(k) Atkinson v. Hawdon, 2 Ad. & E. 626.

(Z) Read v. Hutchinson, 3 Camp. 352. Sard v. Rhodes, 1 M. <fe W. 153. See
Owenson v. Moi'se, supra. Camidge v. Allenby, 6 B. <fe C. 373. Ward v. Evans, 2
Ld. Raym. 930. Brown v. Kewley, 2 B. & P. 518. Clerk v. Mundell, 12 Mod. 303;
1 Sal. 124 Anon., 12 Mod. 408. Anon,, ibid. 570.

(m) Fydell v. Clarke, 1 Esp. 447. Ux parte Shuttleworlh, 3 Ves. 368. Bank of
England v. Xewman, B. N. P. 277. Kv parte Isbester, 1 Rose, 23.

(w) See Fenn v. Harrison, 3 T. R. 767.

(o) Hawes v. Ramsbottom, 1 R. <fe M. 414. Bishop v. Shillito, 2 B. cfe A. 329.
Read v. Hutchinson, 3 Camp. 352. Earl of Bristol v. Wilsmore, 1 B. ife C. 514. Kilby
V. Wilson, 1 R. & M. 178.

ip) 4:B. & Ad. 568.

(q) 4 Tyrwh. 293 ; 2 C. ife M. 5 )4. See Tarleton v. Alhusen. 2 Ad. & E. 32.

662 MERCANTILE CONTRACTS.

Duty of Debtor.

that on the vendee becoming bankrupt, and the bill being dishon-
ored, the vendor's lien on the hops revived. The reason of this
distinction appears to be, that in the former case the vendor has
obtained value for the instrument, which value he cannot be com-
pelled to refund, and would, therefore, be paid twice, if permitted
to recover the price of the goods. But, in the latter case, he is, as
an indorser, compellable to refund the value he has received. And
I conceive, that, on the same principle, if, instead of indorsing the
instrument, he were to give it in payment for other goods, inasmuch
as, on its dishonor, his liability for those second goods would re-
vive, so also would his right to sue for the price of his own goods
if delivered, or to retain them, if in his possession, if not delivered.
However, in this latter case, that viz. of Miles v. Gorton, till he has
actually taken up the bill, or paid for the other goods, it is uncer-
tain whether the bill will prove valuable to him or not; and it
seems, therefore, that he ought not to be allowed to sue for the
price of his own goods till that uncertainty has been determined,
though if he have them in his hands he may retain his lien on
them, as in Miles v. Gorton. In Tarleton v. Alhusen, (r) the doctrine
just laid down was carried a step further, and it was held, that
when the vendor took a bill, and indorsed it to B. & Co., who sued
the acceptor, and obtained judgment, but did not sue out execu-
tion, and the vendor afterwards took up the bill, he was not to be
considered paid for his goods, upon the principle laid down before
in this Book, Ch. I., viz., that judgment is not per se a satisfliction.

In one case, payment by the delivery to the bankrupt of his
own dishonored acceptance, was held sufficient, (s) but that seems
to have proceeded on the ground that the bankrupt's conduct
amounted to an assent to receive it as cash, otherwise it would be
difficult to reconcile the case with Hough v. Ma?j. {t)

If payment is to be made by a bill payable at a certain period,
the creditor cannot, even if the bill be not delivered according to
aoreement, commence an action on the consideration, till the expi-
ration of that period, though he may sue in the mean time upon
the special contract, and complain of the non-delivery of the bill

(r) 2 Ad. & E. 32.

((«) Mayer v. Nias, 1 Bingh. 311.

It) 4 Ad. & E. 954.

CONTRACTS OF DEBT GG3

Duty of Debtor.

in conformity thereto ; (u) and where goods were sold, at six months'
credit, payment then to be made by a bill at two or three months,
this was considered in eflfect a nine months' credit, (v)

It has been decided that a tenant may pay rent due to the supe-
rior lord, if threatened with distress by him, and treat it as a pay-
ment of the rent due to his own landlord, (w)

2dl3'. Amount of Payment. — Interest. — The amount of the sum
due to the creditor, is frequentl}'', between the time of contract and
that of payment, increased by the addition of Interest."^

Interest is, and always was, payable where there has been a
contract to that eflfect, express, or to be implied from c'rcumstances,
the usage of trade, or the mode of dealing between the parties ; (x)
and also upon a bond, bill, or promissory note, (y)

(m) Helps V. Wintei'bottom, 2 B. tfe Ad. 431. See Dutton v. Solomonson, 3 B. &
P. 582. Mussen v. Price, 4 East, 147. Brook v. White, 1 K R. 330. Price v. Nixon,

5 Taunt. 338. Day v. Picton, 10 B. <fe C. 120. Paul v. Dod, 2 C. B. 800.

(y) Helps V. Winterbottora, ubi supra, Parke, J., dubitante.

{w) See Sapsford v. Fletcher, 4 T. R. 511. Taylor v. Zamira, 6 Taunt. 524. See
Cannan v. Wood, 2 M. & W. 465.

{x) Eddowes v. Hopkins, Dougl. 376. Marshall v. Poole, 13 East, 98. Porter v.
Palsgrave, 2 Camp. 472. Beecher v. Jones, 2 Camp. 428. Boj'ce v. Warburton, 2
Camp. 480. Robinson v. Bland, 2 Burr. 1077. Arnott v. Redfern, 3 Bingh. 353.
Nichol V. Thompson, 1 Camp. 52. Bruce v. Hunter, 1 Camp. 467. Moore i'. Vough-
ton, 1 Stark. 487.

(y) Vernon v. Cholmondeley, Bunb. 119. Doman v. Dibdin, 1 R. <fe M. 381.
Francis v. Wilson, 1 R. <fe M. 105. Farquhar v. Morris, 7 T. R. 124. Sed vide Hogan
V. Page, 1 B. <fe P. 337. See Parker «. Hutchinson, 3 Ves. 183. Upton v. Lord Fer-
rers, 5 Ves. 803. When goods were to be paid for by bill, interest may be recovered
on the price from the time when the bill would have been due. Farr v. Ward, 8 M.

6 W. 25. And where, after the sale of a carriage, the vendee wrote as follows :
"The document you have sent me appears to be in the nature of a bill, and being
payable to your order is good in the market, just what I wished to avoid, the docu-
ment I have wished to give you was simply my promissory note ;" this was held
evidence sufficient to entitle the jury to give interest as part of the price. Davis v.
Smyth, 8 M. & W. 399.

* The general rule is, that interest is to be paid according to the law of the place
where the contract is made, unless the paj'ment was to be made elsewhere, and then
it is to be according to the law of the place where the contract was to be performed-
2 Kent's Com. 460, note. Boyce v. Edwards, 4 Pet. 111.

Rule of calculation where there have been partial payments. — The correct rule, in

6G4 MERCAXTILE COIs^TRACTS.

Duty of Debtor.

Ill most other cases, there was a considerable dispute upon the
question of interest, and the leaning of the courts seemed on the
whole against allowing it. (z) However, bj stat. 3 & 4 W. 4, cap.
42, it is enacted, that upon all debts or sums certain, payable at a
certain time, or otherwise, the jury, on the trial of any issue or in-
quisition of damages, may, if they thinh fit, allow interest to the
creditor, at a rate not exceeding the current rate of interest, from
the time when such debts or sums certain were payable, if such
debts or sums be payable by virtue of some written instrument at
a certain time; or, if payable otherwise, then from the time when
the 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 term of payment,
provided that interest shall be payable in all cases in which it is
now payable by law. (a) And that the jury, on the trial of any
issue or inquisition, may, if they think fit, give damages in the
nature of interest, over and above the value of the goods at the
time of the conversion or seizure, in all actions of trover or trespass

(z) See Gordon v. Swan, 12 East, 419. Iliggins v. Sargent, 2 B. <fc C. 348. Arnott
V. Redfern, 3 Bingh. 353. De Ilavilland v. Bowerbank, 1 Camp. 50. Calton v.
Bragg, 15 East, 223. Trelawney v. Thomas, 1 H. Bl. 303. De Bernales v. Fuller, 2
Camp. 426. Kieliol v. Thompson, 1 Camp. 52. De Bernales v. Wood, 3 Camp. 258.
Blackmore v. Flemyng, V T. R. 446. Hilhouse v. Davis, 1 M. & S. 169. Page v. New-
man, 9 B. & C. 378. Foster v. Weston, 6 Bingh. 709. Edwards v Verc, 2 Nev. &
Mann. 123 ; 5 B. <fe Ad. 287. Fruhling v. Sehroeder, 2 Bingh. N. C. 77.

(a) Sect. 28. See on the construction of this section, Attwood v. Taylor, 1 M. &
Gr. 279.

general, is, that the creditor shall calculate interest whenever a payment is made.
To this interest the payment is first to be applied ; and if it exceed the interest due,
the balance is to be applied to diminisli the principal. If the payment falls short
of the interest, the balance of interest is not to be added to the principal, so as to
produce interest. This rule is equally applicable, whether the debt be one which
expressly draws interest, or on which interest is given in the name of damages.
Story V. Livingston, 13 Pet. 371. Ciiitir/ Smith v. Sliaw, 2 Wash. C. C. 167 ; 3 Cowen,
note a, 87. See, also, Jackson v. State of Connecticut, 1 John. Ch. R. 17 ; Jones v.
Ward, 10 Yerg. 170. The mercantile usage differs from the practice of the courts.
It is to compute interest upon the various payments up to the time of settlement,
and deduct this amount from the sum of principal and interest calculated thereon to
the same time. All the American decisions on the subject of interest are collated in
the American Leading Cases, vol. i. p. 511.

CONTRACTS OF DEBT. 665

Duty of Debtor.

de honis asportatis, and over and above the money recoverable in
all actions or policies of insurance. {jS) And where a writ of error
has been sued out in any action personal, and judgment given for
the defendant thereon, interest shall be allowed by the Court of
Error for such time as execution has been delayed by such writ of
error, (c)

By sect. 17 of the Aholiiion of Arrest Act, ^1 & 2 Vict. cap. 110,)
all judgment debts carry interest at four jper cent, for which, as
well as for the principal, execution may issue.

With respect to Compound Interest, i. e., interest on a balance
of account, debiting the debtor with former intercat, it is allowable
where there is a contract to that effect, either express or to be col-
lected from circumstances, as where the parties had been in the
habit of dealing on those terms, (cZ) or a banker's customer knew it
to be the practice of the house, (e) but not otherwise. (/)*

Usury. ^ — Immediately connected with the subject of interest is

(6) Sect. 29.

(d) Bruce v. Hunter, 3 Camp. 467. Newal v. Jones, M. & M. 449. See 4 Madd.
64, n.

(e) Moore v. Voughton, 1 Star. 48*7.
(/) Dawes v. Pinner, 2 Camp. 586, n.

* Compound interest has not been allowed generally in the United States, and
this, although the contract contains a stipulation to pay interest annuall3^ Ferry v.
Ferry, 2 Cush. R. 92. Hastings v. Wiswall, 8 Mass. 455. Doe v. Warren, 7 Greenl.
48. See also Childers v. Deane, 4 Rand. 406. Rhodes v. Blythe, 2 B. Monr. 336.
Van Benschooten v. Lawrence, 6 J. C. R. 313. Contra, Pierce v. Rowe, 1 N. H. 179.

f The law of usury has been discussed with the utmost fullness and learning in
the American courts. It is impossible, in the brief compass of a single note, to do
more than state some of the elementarj' doctrines upon the subject. In Lloyd v.
Scott, 4 Pet. Rep. 223, it is said, that " the requisites to form an usurious transaction
are three: 1. A loan, either express or implied. 2. An understanding that the
money lent shall or may be returned. 3. That a greater rate of interest than is
allowed by the statute shall be paid. The intent with which the act is done is an
important ingredient to constitute this offence. An ignorance of the law will not
protect a party from the penalties of usury, whtre it is committed ; but where there
was no intention to evade the law, and tlie facts which amount to usurj', whether
the}' appear upon the face of the contract or by otlier proof, can be shown to have
been the result of mistake or accident, no penalty attaches." The bona fide sale of
a note, bond, or other security, at a greater discount than would amount to legal

QQQ MERCANTILE CONTRACTS.

Duty of Debtor.

that of usury, the law concerning which, so far as it remains in
force, is regulated by stat. 12 Ann. stat. 2, c, 16, which enacts, that
no person shall take either directly or indirectly, for loan of any
moneys, wares, merchandises, or commodities, above the value of
51 for the forbearance of lOOZ. for a year, and so after that rate,
&c. ; and that all bonds, contracts, and assurances, for the payment

interest, is not per se a loan, and therefore usurious. Nichols v. Fearson ct al., 1
Peters' Rep. 103. Rice v. Mather, 3 Wend. 62. Munn v. Commission Co., 15 Johns.
Rep. 44. Cram v. Hendrick, T "Wend. 569. But where a note is made, not upon a
valuable consideration, but for the purpose of raising money by having it discounted
at a rate exceeding legal interest, there the usury enters into its concoction, and the
note is void. S. C. Dunham v. Dey, 1 3 J. R. 40.

So strong was the language of the English statute, that in Floyer v. Edwards,
Cowp. Rep. 112, Lord Mansfield declared, that "if the transaction was in real truth
a loan of mon£y, the wit of man cannot find a shift to take it out of the statute." A
sale of bonds, notes, stock, or even goods, wares, and merchandise, if resorted to for
the purpose of disguising and concealing a loan of money, will be usurious and void.
The sale of depreciated stock, at or beyond its par value, is an artifice which has
been frequently resorted to for the purpose of covering an usurious loan.

Among the cases in which this subject is most elaborately examined, the student
is particularly referred to Stribling v. Bank of the Valley, 5 Rand. 132 ; Campbell v.
Shields, 6 Leigh. 517 ; Bank of the U. S. v. Waggener et al, 9 Peters, 378; Rapelye
V. Anderson, 4 Hill, 472.

Although tlie interest reserved must be greater than is allowed by the statute, it
is immaterial what shape tlie usurious gain assumes. It may be money, property,
or the use of real or personal estate. Pollard v. Baj'lor, 4 Henn. & Munf. 223.
Shanks v. Kennedy, 1 A. K. Mars. 65. Hamm v. Alen, 1 Bibb, 333.

But an agreement to pay a certain sum, exceeding the lawful rate of interest,
provided the principal is not paid by a day certain, is not usurious. The borrower
may avoid payment of the sum stated, by punctual paj^ment of the principal; and
hence the former sum is considered as a penaltj'. And if a loan is to be returned at
a fixed day, with more than the legal rate of interest, depending upon a casualty
which hazards both principal and interest, the contract is not usurious ; but it is
otherwise where interest only is hazarded. Lloyd v. Scott, 4 Peters' S. C. R. 203.
Colton V. Dunham, 2 Paige's Rep. 267.

It is well settled that a charge for exchange, unless used as a cover for usury, is
valid. Andrews v. Pond, 13 Peters, 65. Buckingham et ah. v. McLean, 13 How. S.
C. Rep. 150. Creed v. Commercial Bank, 11 Ohio Rep. 489. Pilcher, assignee, <fec.,
V. The Banks, 7 B. Monr. 648. The reason why the addition of the current rate of
exchange to the legal rate of interest does not constitute usury, is that the former is
a just and lawful compensation for receiving payment at a place where the money
is expected to be less valuable, than at the place where it is advanced and lent.

The student will find the various American statutes on the subject of usury, and
the decisions of the different states, collected in the treatise of Blydenburgh on Usury.

CONTRACTS OF DEBT. 667

Duty of Debtor.

of more, shall be void, and that any person receiving more shall
forfeit the treble value of the loan, {g)

Usury, within the meaning of this act, is constituted either by
a direct loan and receipt of interest at more than live per cent., or
some device for the purpose of concealing such a loan, which
really existed. (//) A loan of stock was usurious, if it was to be
repaid, at the option of the lender, by replacing the stock, or by
the produce with five per cent, interest, {i) So if the discounter
of a bill stipulated for a premium to be paid to the agent employed
by the holder to discount it, such premium making, with the dis-
count, more than five per cent, (y) So, too, a sum taken under
the name of commission might, in reality, be a mere cloak for
usury, (/v) So might a contract for an annuity, by which the prin-
cipal of the grantee is never put in jeopardy, {l) though, generally
speaking, annuity transactions are not within the usury laws, {m)
In all cases of this sort, the bona fides of the transaction was the
point in question, and so it continues to be in cases to which the
recent acts do not extend. Thus, where a note was discounted at
five per cent, by the lender of a sum of money, who also took a
mortgage of land as a collateral security, the transaction being
found by the jury to be bona fide, was held valid; although the
recent acts do not extend to loans secured by mortgages of real
property, {n) A fresh contract, made in continuation of a former v.
usurious one, was void ; (o) unless, indeedj it left out the part which

(g) In declaring for the penalty given by this statute, the precise day of the
usurious contract must be stated in the declaration, and proved as laid. See Fox v.
Keeling, 2 Ad. cfe E. 670. See further on this Act the elaborate notes to Ferrall v.
Shaen, 1 Wms. Saund. 295.

(h) Barclay v. "VValmeslej', 4 East, 55. See Parker v. Ramsbottom, 3 B. <fe C. 257.
Meago V. Simmons, M. & M. 121. Gilpin v. Enderby, 5 B. & A. 954.

(i) White V. Wright, 3 B. & C. 272. • Chippendale v. Thurston, M. & M. 411. See
Parker v. Ramsbottom, 3 B. <fe C. 257, and see 17 Ves. 44. Maddoek u. Rumball, 8
East, 304, -where the transaction was upheld.

(j) Meago V. Simmons, M. & M. 121. See Solarte v. Melvil, 7 B. <fe C. 430.

{k) Carstairs v. Stein, 4. M. & S. 192. See Doe v. Gooch, 3 B. <fe A. 664.

{l) Fereday v. Wightwick, 1 R. & M. 50. See Ferguson v. Sprang, 1 Ad. & E. 576,

(?n) Flight V. Chaplin, 2 B. <fe Ad. 112.

(») Doe d. Haughton v. King, II M. <fe W. 3?,d.

(o) Preston v. Jackson, 2 Stark. 237.

668 MERCANTILE CONTRACTS.

Duty of Debtor.

made the former one usurious, {p) or was made with a party not
privy to the former usury, {q) But, if an usurious contract wa3
made in continuation of a legal one, the former contract remained
good, though the latter was void, (r) The usury laws have, how-
ever, by a series of legislative enactments, been rendered of com-
paratively little importance. We have already considered the
exemption of certain bills and notes from the usury laws, by stat.
3 & 4 Wm. 4, c. 98, and 1 Victoria, cap. 81, is) and the qualification
of the statute of Anne, by stat. 5 & 6 Wm. 4, cap. 41. {i)

The provisions of these acts have been since extended by stat.
2 & 3 Yict. c. 87, which enacts, that no bill or note not having more
than twelve months to run, nor any contract for the loan or forhearance
of money ^ above the sum of 101, shall he affected by the usury laws, (u)

From this statute are, however, excepted loans by pawnbrokers,
and loans upon the security of "a?z?/ lands, tenements, or heredita-
ments, or any estate or interest therein^ (v) The act was to remain in
force till 1842, but its operation has from time to time been extended
to January 1st, 1851, by stats. 3 & 4 Vict. cap. 83 ; 4 & 5 Vict, c
54 ; 6 & 7 Vict. c. 45 ; and 8 & 9 Vict. c. 102.

Appropriation of Payments.'^ — There is another subject con-

{p) Barnes v. Hedley, 2 Tannt. 184. Wright v. Wheeler, 1 Camp. 165.

{q) Cuthbert v. Haley, 8 T. R. 890. Pickering v. Banks, Forrest, 72.

(r) Parker v. Ramsbottom, 3 B. ife C. 257. See Gray v. Fowler, 1 II. Bl. 462.

(s) See on this strangely worded act, Vallance v. Siddell, 6 Ad. <fc E. 932.

{i) Seei ante, cap. 1.

(m) See Pennell v. Attenborough, 4 Q. B. 867.

{v) See as to this, Bell v. Coleman, 2 C. B. 268

* The doctrine on this subject was reviewed in the case of Smith v. Loyd, 11
Leigh. 512, Judge Allen delivering the opinion of the Court. "As to the application
•of payments where no specific appropriation was made by the parties, and where it
does not appear upon what claim the money was received, generally speaking, the
debtor has the right to make the application. If he fails to do so, the creditor having
different debts, may make the application as he chooses. But where neither party
makes the application, and the question is referred to the Court, upon what principle
is the adjustment to be made ? According to the civil law, tlie presumable intention of
the debtor was resorted to as the rule to determine the application ; and in the absence
of any express declaration by either, the inquiry was, what application would be
most beneficial to the debtor? In England the question seems to be still unsettled,
The leading cases are reviewed by the Master of the Rolls in Clayton's case, 1 Meri

CONTRACTS OF DEBT. 6G9

Duty of Debtor.

nected with payment, which this seems the proper place for con-
sidering, viz., the Appropriation of the debtor's payments.

It frequently happens that a party who pays money is indebted

vale, 605, and he remarks, that " the cases set up two conflicting rules, the presumed
intention of the debtor, -which in some instances at least is to govern, and the ex post
facto election of the creditor, which in other instances is to prevail ;" and concludes
that he would be much embarrassed were the point to be decided in that case. The
question has arisen several times in the Supreme Court of the United States. In
Field V. Holland, 6 Cranch, 2Y, it is said : " If the application is made by neither party,
it becomes the duty of the Court, and is to be exercised with a sound discretion. It
cannot be conceded that this application is to be made in the manner most advanta-
geous to the debtor. If neither party avail himself of his power, and it devolve3
upon the Court, it would seem that an equitable application should be made. And
it being equitable that the whole debt should be paid, it cannot be inequitable to
extinguish first those debts for which the security is most precarious." And in
accordance with those principles, the application was made in a manner most advan-
tageous to the creditor. In the United States v. Kirkpatrick, 9 "Wheaton, 737, the
Court said : "If both parties omit, the law will apply the payments according to its
own notions of justice." And in that case, they were so applied as to operate benefi-
cially to the sureties of the debtor, and against the creditor. The same proposition
is laid down by Justice Story in U. States v. Wardwell, 5 Mason, 82. "The point has
not yet been decided in Virginia. In the absence of any express authority, I incline
to the opinion that the position taken by the Supreme Court is, upon the whole,
the best. No general rule, applicable to every case, could be adopted and adhered
to without producing great hardship. Men keep their accounts loosely ; scarcely any
case occurs which does not vary in some material circumstance from every other case.
Justice to creditor or debtor would frequently require exceptions to any specific rule
that might be adopted ; and these exceptions would multiply with the ever- varying
dealings of individuals, until at length the rule itself, and the particular cases in which
it could apply, would become exceptions." S. P. Stamford Bank v. Benedict, 15 Conn.
437. Chester v. Wheelwright, ibid. 562. Stone v. Seymour et al, 15 "Wend. 19
Gwinn v. Whittaker, 1 Harr. & J. 754. Briggs v. Williams, 2 Verm. 283. Newmarcb
V. Clay, 14 East. 239.

In Glass v. Stinson, 3 Sumn. 98, Mr. Justice Story, carrying out the suggestions of
Justice Cowen, in Pattison v. Hull, 9 Cowen Rep. 747, held that the riglit of the cre-
ditor to elect to what debt he would appropriate an indefinite payment must be
restricted to those cases alone in which it is a matter of entire indifference to the
debtor how the payment is applied, and where a consent that the creditor may exer-
cise his discretion, can be fairly presumed. Such was the doctrine of the Roman law,
sustained, as Judge Storj' thought, by a great weight of common law authorit}'. This
case was reviewed by C. J. Gibson, in a long and eloquent opinion in Logan v. Mason,
6 Watts & Serg. 1, in which he contends that this provision of the Roman law has
never been incorporated in the common law, and has no claim to such adoption
either by reason of authority or considerations of justice and expediencj*. In
Bower v. Marris, 1 Craig <fe Pliilb. 360, Lord Cottenham observed, tliat without

570 MERCANTILE CONTRACTS.

Duty of Debtor.

m several ways to the party who receives it from him ; in such
cases it becomes a question, to the reduction of which of his debts
the payrdent must be applied. The rule is, that the party paying
has power to make the application at the time of payment, {w) which
he may do either -by express words, or a conduct indicative of his
intention ; {x) but that if he neglect to make it, the party receiving
may, (y) and is not bound to make an immediate application ; (z)
and, though it was once said that, perhaps, he ought to make
one within a reasonable time, (a) it seems now pretty well estab-
lished that he may make it at any time before the matter comes to
the consideration of a jury, {b) There are two old cases in which
it is laid down, that if principal and interest are both due, a general
payment shall be ascribed first to the interest, (c)

When there is an account current between the parties, ex. gr., a

(w) Per Bayley, J., Mayfield v. Wadsley, 3 B. & C. 357.

{z) Clayton's case, 1 Meriv. 572. Newmarch v. Clay, 14 East, 239. Shaw v. Pic-
ton, 4 B. & C. 715. Taylor D. Kyraer, 3 B. & Ad. 320. Marryatts v. White, 2 Stark. 101.

{if) Goddard v. Cox, 2 Str. 1194. Plomer v. Long, 1 Stark. 153. Marryatts v.
White, 2 Stark. 101. Mathews «;. Walwyn, 4 Ves. 118. Peters v. Anderson, 5 Tauct.
596. Hall V. Wood, 14 East, 243, n. Kirby v. Duke of Marlborough, 2 M. & S. 18.
Bosanquet v. Wray, 6 Taunt. 597. Bodenhain v. Purchas, 2 B. & A. 39. The follow-
ing rule may be useful in ascertaining the intention with which any particular pay-
ment was made and received, and the mode in which it ought to be applied: "Where
a creditor receives, without objection, what is offered by his debtor, solviturin modmn
solventis. Where the creditor objects, recipitur in modum recij)ie7itis." Per Tindal, C.
J, Webb V. Weatherby, 1 Bingh. N. C. 502.

(z) Siinson v. Ingham, 2 B. & C. 56. See Cox v. Troy, 5 B. & A. 474.

(a) Viile Simson v. Ingham, per Best, J.

(6) Philpott V. Jones, 4 Nev. & Mann. 16 ; 2 Ad. & E. 42.

doubt, the general rules upon this subject were derived from the civil law. The
general doctrine and its grounds and principles are very elaborately discussed by
Chancellor Wythe, in Hill v. Gregory, Wythe's Rep. 81. The rule of the common
law, as established by the principal cases, is, that the ownership of the money deter-
mines the right of appropriation. See A. L. Cases, vol. 1, p. 308, also a very acute
criticism upon the rule by the learned editor of Wythe's Reports, p. 435. See also
Donally ?;. Wilson, 5 Leigh. 329. Vance v. Monroe, 4. Gratt. 52. Ross v. McLauchlin, 7
Gratt. 87. In Virginia it has been held that the debtor's right to direct the appropria-
tion, extends so far, that if he requires it to be confined to the principal of an interest-
bearing debt, to the exclusion of the interest, the creditor is bound to give the pay-
ment that direction. Pindall's Ex. v. Bank of Marietta, 10 Leigh. 481. Miller v. Tre-
villian, 2 Robins. Rep. 1.

CONTRACTS OF DEBT. C71

Dutv of Debtor.

banking account, the law, in the absence of any other specific
arrangement between them, presumes that thej intended to apply
the first item on the credit side to the first item on the debit side,
and so on. {cl) " The civil law/' said the Lord Chief Justice, in
Mills V. Fowkes^ " it is said, applies the payment to the more bur-
densome of two debts, where one is more burdensome than the
other, but I do not think that such is the rule of our law. Accord-
ing to the law of England the debtor may in the first instance
appropriate the payment — solvitur in modum solventis : if he omits
to do so,. the creditor may make the application — recipitur in modum
recipientis : but if neither make any appropriation, the law appro-
priates the payment to the earlier debt." (e) And accordingly, in
that case it was held, that, the debtor having made no appropriation
at the time of payment, the creditor had a right to a23propriate a
payment made generally to a debt barred by the Statute of Limita-
tions. (/) Nay, in one case it was decided that an attorney, who
had done work for a corporation without a retainer under seal,
might appropriate a general payment to the work so done ; though
the Court held at the same time that he could not have recovered
payment in an action, {g) Where there are distinct demands, one
against a firm, and the other against one only of the partners, if the
money paid be the money of the partners, and be not specifically
appropriated by the payer, the creditor must not, and the law will
not, apply it to the demand upon the individual, for that would be
to pay the debt of one with the money of others. (A) And though
where prior demands are equitable, and subsequent ones legal, the
creditor may apply a general payment to the former ; (i) yet, if the
prior ones be legal, and the subsequent equitable, the courts will
not allow a general payment to be appropriated, at the time of trial,
to the latter, {j) Nor will ^n appropriation be allowed, which

{d) Clayton's case, 1 Meriv. 572. Bodenham v. Purclias, 2 B. & A. 39. See Dawe
V. Holdsworth, Peake, &4, et notas. Wilson v. Hirst, 4 B. & A. YeY. But see Ileani-
ker V. Wigg, 4 Q. B. 792.

(e) Per Tindal, C. J., in Mills v. Fowkes, 5 Bingh. K C. 455.

(/) Accord. Williams v. Griffiths, 5 M. & W. 300.

{g) Arnold v. Mayor of Poole, 4 M. & Gr. 806.

(/;) Thompson v. Brown, M. & M. 40.

(i) Bosanquet v. ^Yray, 6 Taunt. 597 ; 2 Marsh. 519. Sed vide Birch v. Tebbutt,
2 Stark. 74.

(i) Goddard - Hodges, S Tyrwh. 213 ; 1 C. & M. 33.

672 MERCANTILE CONTRACTS.

Duty of Creditor.

would deprive the party paying of a benefit, sucli as the taxation
of costs, and therefore an attorney cannot apply a general payment
to the taxable items of his bill only, {k) If some of the demands be
illegal, a general payment will be applied to the legal demands, (Z)
but where an act of parliament does not render a particular species
of contract illegal, but only prohibits th^ enforcement of it by action,

. there a creditor may appropriate a general payment to a demand
arising out of sucli a contract, (w) Where the same broker sold
goods of A. and goods of B. to the payer, a general payment, if in-

-^ sufficient to discharge both debts, must be applied proportionably
to them both, (n) An intention on the part of the debtor to appro-
priate to a particular debt, is perhaps more easily presumed, in
favor of a surety, where there are any circumstances which can be

^ considered indicative thereof; (o) but, in the absence of such
circumstances, the law, it seems, will not apply a payment in his
favor, (^j)

Section III. — Duty of Creditor.

The duty of the creditor is, to receive the payment, if tendered
at the proper time, and give a proper acquittance. The consequence
of his refusing payment when tendered, will be, that, if he after-
wards commence an action for the amount, the tender, accompanied
by a payment of the sum tendered into court, will be a good de-
fence, unless the creditor can prove a prior or subsequent demand
and refusal, {q) Such a tender, moreover, will prevent interest
from afterwards running against the debtor, (r)

As to Acquittance. — It seems doubtful whether the debtor had,

(yt) James v. Child, 2 Tyrwh. 735.

{I) Ribbans v Crickett, 1 B. & P. 264. Wright v Laing, 3 B. <fe C. 165.

{m) Philpott V. Jones, 4 Ner. & Mann. 16 ; 2 Ad. & E. 44. Cruickshank v. Rose,
1 M. & Rob. 100.

(n) Favence v. Bennett, 11 East, 86.

(o) Marryatts v. White, 2 Stark. 101.

(p) Plomer v. Long, 1 Stark. 153. See Kirby v. Duke of Marlborough, 2 M. & &
18.

(?) Spybey v. Hide, 1 Camp. 181. Rivers v. Griffiths, 5 B. & A. 630. Coore v
Callaway, 1 Esp. 115.

(r) Dent v. Dunn, 8 Camp. 296. See Hume v Peploe, 8 East, 168 ; 4 Leon, 209

COXTRACTS OF DEBT. G7c

Duty of Creditor.

at common law, a right to demand a receipt on payment, excepting
from the King's receiver. (5) However, by stat. 43 Geo. 3, cap. 126,
s. 5, he is empowered to tender a blank receipt, at the time of pay-
ment, which the creditor is bound to fill up, and pay the amount of
the stamp, under penalty of ten pounds, Q)

A receipt; though strong, is not conclusive evidence of pay-
ment, (a) unless it be by deed, for then the law admits no evidence to
the contrary, (y)* A receipt in full of all demands, is an admission
of great weight, and it has even been said, that in the absence of mis-
take, it is conclusive ; (tv) but this doctrine seems incapable of being
supported, and we may venture to assume that it must, like other
matters not amounting to estoppel, be used as evidence to be sub-
mitted to the jury, and capable of being rebutted, (x) A receipt for
less than 51. does not require a stamp ; (?/) other receipts do, and
cannot be stamped after they have been written, (2) except within
fourteen days, on payment of the duty, and 5?. ; or one calendar
month, on payment of the duty, and 10/. (a)

(«) See Cole v. Blake, Peake, 179 ; Bunb. 348 ; Fitz. Damage, 15 ; Bro. Ab. Traite
d^Exchequer, *l ; Bro. Ab. tit. Faits, pi. 8 ; Fortescue, 145.

{t) See, however, the observation of Parke, B., in Piichardson v. Jackson, 8 M. &
W. 298.

(m) Strattan v. Rastall, 2 T. R. 366. Lampon v. Corke, 5 B. <fe A. 606. Skaife v.
Jackson, 3 B. & C. 421. Greaves v. Key, 3 B. <fe Ad. 313.

(«) Gilb. L. Ev. 142.

('(o) Alner v. George, 1 Camp. 392. See Bristow v. Eastman, 1 Esp. 1*73.

(x) Benson v. Bennett, 1 Camp. 394, n. Lampon v. Corke, ubi supra; B. K P. 56.
Farrar v. Hutchinson, 9 Ad. & K 641.

(3/) 3 & 4 Wm. 4, c. 23.

{z) 23 Geo. 3, c. 49, s. 14.

(a) 55 Geo. 3, c. 55, s. 11.

* It has been held in Tennessee, that a receipt, whether under seal or not, may be
explained by parol evidence. Jones v. Ward, 10 Yerg. 160.
43

BOOK THE FOURTH.

OF MERCANTILE REMEDIES,

OF MERCANTILE REMEDIES.

It is proposed to treat, in this Book, of Mercantile Remedies: that
is, omitting all consideration of those universal ones, bj action at
law and suit in equity, which are open to merchants in common
with the rest of her Majesty's subjects ; to speak of such as are, from
their very nature, exclusively, or almost exclusively, appropriated
to that class of the community with whom we are, in this Treatise,
chiefly concerned

CHAPTER I.

STOPPAGE IN TKATiTSITU.

Sect. 1. Riglit to stop in transitu — what

2. Who possesses it.

8. How long it continues.

4. How defeated.

5. Sow exercised.

Section 1. — Right to stop in Transitu — ivhat.

The first subject which we shall place under this head, is that of
Stoppage in Transitu ; which is, indeed, a measure, rather of preven-
tion, than of cure ; but yet, sufficiently entitled to the epithet reme-
dial, to justify its present collocation.

When goods are consigned on credit by one merchant to another,
it sometimes happens, that the consignee becomes bankrupt or in-

678 MERCANTILE REMEDIES.

Right to stop in Transitu — what.

solvent, (a) wliile the goods are on their way to him, and before
they are delivered. In such case, as it would be hard that the goods
of the consignor should be applied in payment of the debts of the

(a) In Wilmshurst v. Bowker, 2 M. & Gr. 792, the L. C. J. says: "The ordinary
right of countermanding the actual delivery of goods shipped to a consignee is limited
to the cases in which the bankruptcy or insolvency of the consignee has taken place.
The law as to this point is very clearly laid down by Lord Stowell, in the case of
The Constitution, 3 Rob. .Ad. R. 321, and in many cases in the Common Law
Reports." In Wilmshurst v. Bowker, the goods were to be paid for by a banker's
draft at two months, to be remitted on receipt of the invoice and bill of lading; and
the Court held, that, on failure to remit such draft, the vendor might countermand
the delivery of the goods (which had been shipped) by the special terms of the contract,
though it was admitted that the property had passed to the vendees. It was not,
therefore, necessary expressly to determine any thing with regard to the general
right to stop ill transitu. Wilmshurst v. Bowker has since been reversed in Cam.
Scacc. 1 M. & Gr. 882. I believe that if the Avord insolvency is to be understood in its
technical sense, merchants have very generally acted as if the right to stop the goods
was not postponed till its occurrence. Insolvency, however, is a word which has
been sometimes construed by the courts to bear a much larger meaning. In Biddle-
combe v. Bond, 4 Ad. &, E. 332, it was held in a contract to mean a general inability
to pay debts. The law of stoppage in transitu is as old, it must be recollected, as
1670, on the 21st of March, in which j'ear, Wiseman v. Vandeput was decided; so
that, if insolvency is to be taken in a technical sense, the law of stoppage iti transitu
has been varying with the varied enactments of the legislature regarding it. If by
insolvency be imderstood, as in Biddlecombe v. Bond, a general inability to pay debts,
of which probably the failure to pay one just and admitted debt would be satisfac-
tory prima facie evidence, the meaning of the term would be more stable, and the
state of the law more convenient. In some of the reported cases, it seems to have
been assumed that stoppage of payment amounts for this purpose to insolvency. In
Vertue v. Jewell, 1 Camp. 31, the terms are " stopped payment :" it is true that the
vendees there became bankrupt, but not till after the stoppage in transitu had taken
place. In Newsom v. Thornton, 6 East, 17, the notice was given to the carrier before
the bankruptcy of the vendee, but after he had stopped payment ; and Lord Ellen-
borough, in his judgment, rests the right to stop on the " insolvency" of the consignee.
If the cases were gone through with this object, it is believed that similar observa-
tions might be made on many of them. See among others, Dixon v. Yates, 5 B. & Ad.
313, and ante, note. It is submitted, therefore, that the term insolvency (when used
trith reference to this branch of the law) is satisfied by general inability to pay, evi-
denced by stoppage of payment. It might be conjectured, from the judgment in
Wilmshurst v. Bowker, that whenever a particular mode of paj-ment has been stipu-
lated for by the contract, which would in its nature precede the delivery of the goods,
a default to comply with such stipulation entitles the vendor to withdraw tlie pos-
session of the goods from the carrier, though the property may have vested. This
might, 0^ course, happen without even a stoppage of paj-raent on the part of the ven-
dees. But upon a writ of error, the Court of Exchequer Chamber unanimously over-

STOPPAGE IX TRANSITU. 679

liight to stop in Transitu — what.

consignee, the former is allowed by law to resume possession of
them, if he can succeed in doing so while they are on their way.
This resumption is called stoppage in transitu^ and was first allowed
by equity, (6)* as it is now also by common law, where, on account

ruled the decision of the Court of Common Pleas, considering that the mere failure
of the vendee to comply with a condition subsequent, the sending of a banker's draft
for the price, gave the vendors no right to stop the goods in transitu in the hands of
the carriers, after the property had vested in the vendees.

(6) Viz., in "Wiseman v. Vandeput, 2 Vern. 203. Snee v. Prescott, 1 Atk. 24G.
D'Aquila v. Lambert, 2 Eden, 75; Ambl, 399. There is an analogous proceeding in
the civil law called Revendicatio.

* "The right of stoppage in transitu is nothing more than extension of the right
of lien, which, by the common law, the vendor has upon the goods for the price, ori-
ginally allowed in equity, and subsequently adopted as a rule of law. By a bargain
and sale without delivery, the property vests in the vendee ; but where, by the terms
of sale, the price is to be paid on delivery, the vendor has a right to retain the goods
till payment is made; and this right is strictly a lien — a right to detain and hold the
goods of another, as security for the payment of some debt, or performance of some
duty. But, when the vendor and vendee are at some distance from each other, and
the goods are on their way from the vendor to the vendee, or to the place appointed
by him for their delivery, if the vendee become insolvent, and the vendor can repos-
sess himself of the goods, before they have reached the hands of the vendee or the
place of destination, he has a right so to do, and thereby regain his lien. This, how-
ever, does not rescind the contract, but only restores the vendor's lien ; and it can
only take place when the property has vested in the vendee." Rowley v. Bigelow,
12 Pick. 313. This, it will be seen, is in accordance with the opinion of Mr. Justice
Bayley, cited in the text. " This right may be exercised at any time before the goods
reach their ultimate destination, and come to the possession of the consignees. And
the consignors have the rigl.t to judge for themselves of the danger of such insol-
vency, and take measures \>^ guard against it by stopping the goods in transitu, should
the insolvency occur before the goods come to the possession of the consignees. The
effect of such stoppage is not to rescind the contract or to revest the general property
in the vendors, but to reinstate them in their lien and right to hold the goods in
security for the price." Stanton v. Eager, 16 Pick. 474. " The vendee or his assignees,
may recover the goods, on payment of the price; and the vendor may sue for, and
recover the price, notwithstanding he had actually stopped the goods in transitu —
provided ho be ready to deliver them upon paj'ment. If he has been paid in part, he
may stop the goods for the balance due him ; and the part payment only diminishes
the lien pro tanto on the goods detained." 2 Kent Com. 541. Newhall v. Vargas, 13
Maine, 93; S. C. 15 Maine, 814. See also Jordan v. James, 5 Ohio, 88. Howatt v.
Davis, 5 Munf. 34. Hanse v. Judson, 4 Dana, 10.

The nature and extent of the vendor's lien, out of which the doctrine of stoppage
VI transitu arises, and the distinction between that constructive delivery which vests

680 MERCANTILE REMEDIES.

Right to stop in Transitu — what.

of its remedial nature, it is regarded with considerable favor.
Whether its effect be or be not to dissolve the contract of sale
between the consignor and consignee of the goods stopped, is a
question which has been frequently discussed, (c) particularly in
Olay V. Harrison ; {d) Lord Kenyon was of opinion that it did not
rescind the sale, but was " an equitable lien, adopted by the law for
the purposes of substantial justice ;" an opinion which certainly con-
sists best with the decisions which have taken place, that payment
of part of the price, or acceptance of a bill for the whole of it, by the
vendee, will hot defeat the vendor's right to stop in transitu, if the
vendee become insolvent before the remainder of the price has been
liquidated, or the bill taken up, (e) and that the vendor is not, when
he stops in transitu, obliged to tender back a bill he has received on
account of the price. (/)

Mr. Justice Bayley, in a modern case, {g) has given a description
of the nature of a vendor's lien for his price, wide enough to include
the right of stoppage in transitu, and seemingly opposed to the idea
that the exercise of that right operates as a recision of the contract
of sale. "The vendor's right," said his Lordship, "in respect of
the price, is not a mere lien, which he will forfeit if he parts
with the possession, but grows out of his original ownership and
dominion. If the seller has dispatched the goods to the buyer, and
insolvency occurs, he has a right, in virtue of his original owner-
ship, to stop them in transitu — Why ? Because the property is
vested in the buyer, so as to subject him to the risk of any accident,
but he has not an indefeasible right to \h.Q possession ; and his insol-

(c) In Stephens v. Wilkinson, 2 B. <k Ad. 320. In Edwards v. Brewer, 2 M. & W.
375, and Gibson ». Oarruthers, 8 M. & W. 321, the Court adverted to it as undeter-
mined. And see Wilmshurst v. Bowker, 5 Bingh. N. C. 541. In Bell's Comm. it is
treated as a recision (3d ed.), 1. 2, p. 2, c. 1.

id) 10 B. & C. 99.

(«) Hodgson V. Loy, 7 T. R. 440. Feise v. Wray, 3 East, 93.

(/) Edwards v. Brewer, 2 M. & W. 375.

{g) Bloxam v. Saunders, 4 B. <fe C. 941. See Wilmshurst v. Bowker, 5 Bingh. N.
C. 541.

the property in the vendee, and that actual delivery which defeats the right of iht
vendor to hold the goods as a security for the price, are very clearly explained by C.
J. Shaw in Arnold v. Delano, 4 Cush Rep. 33.

STOPPAGE IN" TRANSITU. QSl

Right to stop in Transitu — what.

vency, without payment of the price, defeats that right. And if
this be the case, after he has dispatched the goods, and while they
are in transitu ; a fortiori, is it, where he has never parted with the
goods, and when no transitus lias begun. The buyer, or those who
stand in his place, may still obtain the right of possession, if they
will pay or tender the price, or they may still act upon their right
oi projiertij, if anything unwarrantable is done to that right. If,
for instance, the original vendor sell when he ought not, they may
bring a special action against him for the injury they sustain by
such wrongful sale, and recover damages to the extent of that
injury, but they can maintain no action in which the right ot pro-
ferty and right of possession are both requisite, unless they have
both those rights." (A) In Edwards v. Brewer, too, Parke, B., says,
" the effect is the same, as if the consignor had not delivered them
on board ship. Then, if so, he has a right to retain them till pay-
ment of the whole price."

In Wenfworth v. Outhwaite, (i) the question was discussed in the
Exchequer. Lord Abinger expressed his opinion to be, that the
contract of sale would be rescinded, the other Barons, Parke,
Alderson, and Eolfe, stating their inclination to be to the contrary.
The point, however, is not involved in the decision. The decision
in Martindale v. Smith {j) seems to have considerable bearing on
the question, and to favor the opinion of the three Barons.

Although the vendee may have become insolvent, still if the
state of his accounts with, the vendor be such that the vendor is
upon the whole, indebted to the vendee, he cannot stop in transitu
goods of less value consigned to the vendee, on account of the
balance; for the delivery of them to the vendee's representatives
can, in that case, be productive of no injustice: and if the balance
against him be occasioned by the vendee's being under acceptances
for his accommodation, he cannot stop in transitu until the bills are
paid, ih)

(A) Accord. Milgate v. Kebble, 3 M. & Gr. 100, wliere it was held that the vendee
could not maintain trover against the vendor for taking the goods away, the
plaintiff not being in actual possession, and the price which was to be paid hcfort
removal, unpaid.

(i) 10 M. & W. 451.

(i) 1 Q. B. 389.

{k) Vertue v. Jewell, 4 Camp. 31.

682 MERCANTILE REMEDIES.

Who possesses it. — How long it continues.

Section II. — ^V7lo possesses it.

The person who stops goods in transitu must not be a mere
surety for their price, one, for instance, who has, at the request of
the vendee, accepted bills drawn by the vendor, for their purchase
money. (J) But a person abroad, who, in pursuance of orders sent
him by a British merchant, purchases goods, on his own credit, of
others whose names are unknown to the merchant, and charges a
commission on the price, is a consignor, so as to entitle him to stop
the goods in transitu^ if the merchant fail while they are on their
passage ; for he stands in the light of a vendor, and the British
merchant o?his vendee: (m) and so is a person who consigns goods
to be sold on the joint account of himself and the consignee. (?i)

Section III. — How long it continues.

The period during which the right to stop the goods continues,
is, as we have seen, co-extensive with that of their transit from the
vendor to the purchaser. Hence, in cases where the propriety of a
resumption of this sort is questioned, the point disputed generally
is, whether at the time of seizure by the vendor, the transit of the
goods had or had not determined. Such cases always mainly de-
pend upon their own peculiar circumstances, but the general rule to
be collected from all the decisions is, that goods are to be deemed
in transitu^ so long as they remain in the possession of the carrier,
as such, whether by water or land, (o) even though such carrier
may have been appointed by the consignee himself; {lo) and also
while they are in any place of deposit connected with the trans-

{l) Siffken v. Wray, 6 East, 371. See Sweet v. Pym, 1 East, 4.

(jm) Faise v. "Wray, 3 East, 93.

(jf.) Newsora v. Thornton, 6 East, 17. As to the authority of an agent to stop
goods in transitu, and the effect of a ratification, NichoUs v. Le Feuvre, 2 Bing. K C.
81. Whitehead v. Anderson, 9 M. & W. 518.

(o) IMills V. Ball, 2 B. & P. 457.

(/)) Hoist V. Pownal, 1 Esp. 240. Northey v. Field, 2 Esp. 613. Hodgson v. Loy
7 T. R. 440. Jackson v. Nicliol, 5 Bingh. N. C. 508.

STOPPAGE m TRANSITU. G83

How long it continues.

mission and delivery of them, (q) and until they arrive at the actual
or constructive possession of the consignee.* Thus, if goods be
landed at a seaport town, and there deposited with a wharfinger

(q) Stokes v. La Riviere, cited in Bothlingk v. Inglis, 3 East, 381. Smith v. Goss,

1 Camp. 282. Coates v. Railton, 6 B. <fe G. 422. Nicholls v. Le Feuvre, 2 Bingh.
K C. 81. Jackson v. Kichol, 5 Bingh. K C. 508. James v. Griffin, 1 M. & A7. 20.
Edwards v. Brewer, 2 M. <fe W. 375. James v. Griffin igain came before the court in

2 M. & W. 622, where it appeared that the goods were landed at the warehouse of a
wharfinger, which the bankrupt used as his own for the purpose of storing such
goods. But the bankrupt, though he allowed them to be landed there, did not
intend to take possession of them. It was held by three Barons, Abinger, C. B.
dissent., that evidence of his intention was admissible, though it had not been com-
municated to the wharfinger, and that his intention not to take possession of the
goods prevented the determination of the transit. See Whitehead v. Anderson, 9 M.
& W. 518.

* "The law appears to be well settled that the right of stoppage in transitu exists
so long as the goods remain in the hands of a middleman on the way to the place of
their destination, and that the right terminates whenever the goods are or have been
either actuallj^ or constructively delivered to the vendee ; a delivery to a general
agent of the vendee is of course tantamount to a delivery to himself. The time
during which the right exists, therefore, is during the whole period of the transit
from the vendor to the purchaser, or the place of ultimate destination, as designated
to the vendor by the buyer; and this transit continues so long as the goods remain
in the possession of the middleman, whether he be the carrier either b}" land or by
water, or the keeper of a warehouse or place of deposit connected with the trans-
mission and deliveiy of the goods." Walworth, Chancellor, Covell v. Hitchcock, 23
-Wend. 613. "Goods may be stopped so long as the ti-ansit continues, whether by
land or water, from the consignor to the consignee, and whether they are in the
hands of the carrier, a warehousekeeper, wharfinger, or any other middleman con-
nected with the transportation. The right of stojipage ceases when the goods have
reached their place of destination, and have come to the actual or constructive pos-
session of the consignee. It was once said by Lord Kenyon, that the goods must
have come to the corjjoral touch of the consignee ; but he afterwards Avished that
the expression had never been used: and it is now full^^ settled that a constructive
possession is sufficient. It is enough that the goods have reached the place of de-
livery, and the consignee has exercised some act of ownership over them." Bronson,
C. J., Mottram v. Ilej'er, 1 Denio, 487. And it was held where the consignee received
the bill of lading, paid the freight, and entered the goods at the custom house,
although they were taken to the public store and remained tliere, the duties being
unpaid, until the bankruptcy of the consignee and demand of the agent of the con-
signors, that the transitus had ended and there was no right to stop the goods. This
ease was distinguished from that of Noi-they ?;. Field, 2 Esp. 613, by tlie facts that
the freight was paid, and the goods entered at the custom house by the consignee.
See also Ilause v. Judson, 4 Dana, 12.

684 MERCANTILE REMEDIES.

How long it continues. .

appointed by tTie consignee to forward them thence by land to his
own residence, they are subject to the consignor's right of stoppage,
while in the hands of the wharfinger, (r) But (s) the transitus is
completely at an end when the goods arrive at an agent's who is to
keep them till he receives the further orders of the vendee. If a
consignee be in the habit of using the warehouse of a carrier,
packer, wharfinger, or other such person, as his own, for instance,
by making it the repository of his goods, and disposing of thern
there, the transit will be considered at an end when they have ar-
rived at such warehouse, {t) In cases, however, where the right of
stoppage 171 transitu is to be defeated by a constructive possession
through the medium of the carrier, acts of dominion exercised by
the vendee over the goods while in the carrier's hands, (as, for in-
stance, by taking samples,) will not have the effect of creating such
a constructive possession, unless they be accompanied by such cir-
cumstances as denote that the carrier was intended to keep, and
assented to keep, the goods in the nature of an iigentfor custochj.{u)
Nay, if, after goods are sold, they remain in the vendor's own
warehouse, and he receives warehouse rent as such and not as quasi
parcel of the price, that operates as a delivery to the purchaser, and
puts an end to the right to stop in transitu : {v) and it has been
decided, that where part of the goods sold by one entire contract is
taken possession of by the vendee, without any intention on the
vendor's part of retaining the rest, but as a step towards and in
progress of the delivery of the whole ; that is to be deemed a taking
possession of the whole ; {uS) though it is otherwise if there were

(r) Mills V. Ball, 2 B. & P. 457. *

(s) By Lord Ellenborough in Dixon v. Baldwin ; and Parke, B., in "Wentworth v.
Outhwaite, 10 M. & W. 450.

(t) Ricliardson v. Goss, 3 B. & P. 119. Scott v. Petit. 3 B. & P. 469. Foster v.
Frarapton, 6 B. & C. 107. Allen v. Gripper, 2 Tyrwh. 217; 2 C. & J. 218. Went-
worth V. Outhwaite, 10 M. & W. 436. Dodson v. Wentworth, 4 M. & Gr. 1080. Rose
V. Pickford, 8 Taunt. 83. See James v. Griffin, 2 M. & "W. 622, and the judgment in
Whitehead v. Anderson, 9 M. & W. 534.

(m) Whitehead v. Anderson, 9 M. & W. 518.

(ii) Hurry v. Mangles, 1 Camp. 452. See Miles v. Gordon, and see Lord EUenbo-
rough's remarks in Stoveld v. Hughes, 14 East, 308.

(?t)) Hammond v. Anderson, 1 N. R. 69, and see Slubey v. Hey ward, 2 H. Bl. 504,
and the remarks on them in Hahson v. Meyer, 6 East, 614. Jones v. Jones, 8 M. &
W. 431.

STOPPAGE IX TRANSITU. GS5

How defeated.

such an intention, {x) But it lias been said that, iDvima fucie^ a de-
livery of part imports an intention to deliver the whole, {y) And
if the vendee charter a ship to convey the goods, not to himself,
but to a foreign port, on a commercial speculation for his own
benefit, a delivery on board that ship is, in point of law, a delivery
to the vendee himself, and a determination of the transit ; (z) for, as
between him and the seller, the goods have arrived at the end of
their journe}^, and their voyage on board the chartered vessel is a
new one under the direction of the purchaser.

Section IV, — How defeated.

It has been already observed, that the delivery of goods to a
carrier named by the vendee, though a delivery to the vendee himself,
for many purposes, is not such a one as to put an end to the right
to stop them in transitu; and it has been thought that the vendee,
when a particular place of delivery has been appointed, cannot
anticipate the regular determination of the transit, by going to meet
the goods upon their journey, (a)* This, however, as a general
rule, has been much questioned. " If," said Baron Parke, in White-
head V. Anderson, {b) " the vendee take them out of the possession

(x) Bunney v. Poyntz, i B. & Ad. 568. Dixon v. Yates, 5 B. & Ad. 313. Tanner
V. Scovell, 14 M. <fe W. 28.

(3/) Per Taunton, J., Betts v. Gibbons, 2 Ad. & E. 56, sed qiucre. And in Tannei" v.
Scovell, 14 M. & W. 28, the Court of Exchequer dissented from the dictum of Taun-
ton, J., and approved of this quaere. See p. 3*7, G. M. D.

{£) Fowler v. M'Taggart, cited 7 T. R. 442, 1 East, 522, and 3 East, 388. Jones v.
Jones, 8 M. & W. 431.

(a) Hoist V. Pownal, 1 Esp. 240, Lord Kenyon. Sed vide the observations of Lord
Alvanley, in Mills v. Ball, 2 B. & P. 461, and those of Chambre, J., in Oppenheim v.
Russell, 3 B. & P. 54. See, too, Foster v. Frampton, 6 B. & C. 107.

(6) 9 M. & W. 533.

* It is said, 2 Kent Com. 547, that the better opinion now is, that if the vendee
intercepts the goods on their passage to him, and takes the possession as owner, the
delivery is complete, and the right of stoppage is gone. The same is said in Jordan
V. James, 5 Ohio, 88. As to the doctrine in the text in relation to the effect of an
attachment, see Buckley v. Furniss, 15 Wend. 137; IS'aylor v. Dennie, 8 Pick. 198;
Hause v. Judson, 4 Dana, 13 : of a sale, lUsley v. Stubbs, 9 Mass. 65 : of the negotia-
tion of a bill of lading, Conard v. Atlantic Ins. Co., 1 Pet. 386 ; Stubbs v. Lund. 7
Mass. 457.

686 MERCANTILE REMEDIES.

How defeated.

of the carrier into his own before their arrival, with or without the
consent of the carrier, there seems no doubt that the transitus is at
an end," But, at all events, whatever may be the effect of the re-
ceipt of goods by the vendee before the regular determination of
the transit, it seems clear that the vendor's right to stop them
cannot be taken away by the vendee's making a demand of them,
while on their journey, with which the carrier, whether rightly or
wrongly, refuses to comply, (c) Kor will the vendor's right be de-
feated by the exercise of any claim against the consignee, such, for
instance, as process of foreign attachment at the suit of a creditor
of the vendee, {d) or the carrier's claim of a general lien for the
balance due to him by the vendee, (e) or (generally speaking) by his
vendee's selling them again to a third party, the ordinary rule of
law being that the second vendee of a chattel cannot stand in a
better situation than his vendor. (/) We have, however, seen that
the negotiation of a bill of lading will defeat the vendor's right to
stop in transitu ; and the Factor's Acts, as we have also seen, (^7)
profess to confer similar efl&cacy on the transfer of the instruments
which are therein enumerated. (A)

It must, however, be observed, that the negotiation of a bill of
lading or other instrument by way of pledge defeats only the legal
right to stop in transitu, for, in equity, the vendor may, by giving
notice to the pledgee, resume his former interest in the goods, sub-
ject to the pledgee's claim, and will be entitled to the residue of
their proceeds after the pledgee's demand has been satisfied out of
them, or to the goods themselves, if it be satisfied aliunde, {i) not-
withstanding the pledgee may have other demands against the
consignee. The indorsement, therefore, of a bill of lading as a
pledge for a specific sum, though it transfers the property in the
goods, will only bar the right of the consignor to stop in transitu
to that extent, and in a court of equity he may recover from the

(e) Butler v. Woolcot, 2 N R. 64. Nicholls v. Le Feuvre, 2 Bingh. N. C. 81.
(/) Dixon V. Yates, 5 B. A: Adol. 313.
((/) Ante, b. i. cap. 5, p. ITS to 187.

(A) See Zwinger v. Samuda, Holt, K P. C. 395; but see the case in banc, 7 Taunt.
265. See Haw<-s v. Watson, 2 B. & C. 540.
{i) In re Westzinthus, 5 B. & Ad. 81*7.

STOPPAGE IN TRANSITU. 687

How exercised.

indorsee the difference between the sum for which the pledge was
made and the sum realized by their sale, although the indorsee has
other claims upon the consignee, (j)

Section Y. — Hoio exercised.

A consignor who is desirous, and who has a right to stop his
goods in transitu^ is not obliged to make an actual seizure of them
while upon their road ; it is sufficient to give notice to the carrier
in whose hands they are, on the delivery of which notice it becomes
that person's duty to retain the goods, so that if he afterwards, by
mistake, deliver them to the vendee, the vendor may bring trover
foi*' them, (k) even against the vendee's assignees, if he himself have
become bankrupt ; and the carrier, who, after the receipt of such a
notice, delivers the goods to the vendee, is guilty of a tortious act,
for which he may, of course, be held responsible. (/)

This Notice must, however, that it may be effectual, be given to
the person who has the immediate custody of the goods ; if given
to a principal whose servant has such custody, it must be given at
such a time, and under such circumstances, that tlie principal, by
the exercise of reasonable diligence, may communicate it to his ser-
vant, {m)

(j) Spalding v. Paiding, 6 Beav. 376.
(k) Litt V. Cowley, 7 Taunt. 169.

{I) Stokes V. De la Riviere, (Lord Mansfield,) cited in Bothlingk v. Inglis, 3 F/.iat»
881. Hunter v. Beale, (Lord Mansfield,) cited 3 T. R. 466.
(»«) Whitehead v. Anderson, 9 M. & W. 518.

CHAPTER IL

LIEK.

Sect. 1. Lien — what.

2. How acquired.

3. How lost.

Section I. — Lien — lohat.

A LIEN is a right to retain property, until a debt dne to the person
retaining has been satisfied, (a) It is not incompatible with a right
on the part of the person claiming it to sue for the same debt ; but
he is allowed to do so, retaining his lien as a collateral security, {b)
There are two species of liens known to the law, viz., Particular imdi
General. Particular liens are where persons claim to retain the
goods in respect of which the debt arises, and these are favored by
the law. General liens are claimed in respect of a general balance
of account, and these are to be taken strictly, (c)* "Where a lien

(a) 2 East, 235 ; 2 Eose, 35Y. In Sunbolf v. Alford, 3 M. <fe "W. 248, an innkeeper
eet np a claim of lien on his guest's person, ■which was, however, negatived by the
Court without hesitation, as was his claim of a right to take the guest's coat from his
person and detain it.

(6) Hughes V. Lennj-, 5 M. & W. 183.

* In the case of McFarland v. Wheeler, 26 Wend. 46Y, where the definition and
distinction stated in the text were referred to, as having been adopted in our Ameri-
can decisions and text books, it was also expressed as the opinion of the Court, "that
when goods or other articles subject to a particular lien are delivered in part, those
retained may be held to secure the payment for all tlie labor, skill, or ex]')ense laid
out upon the whole, under one and the same contract, between the same parties, thus

LIEN. 689

How acquired.

exists, it is available, although the debt for which the party retain-
ing claims to hold the goods be of more than six years' standing,
and the remedy by action at law barred, in consequence, by the
Statute of Limitations, {d) The goods, while they continue in the
possession of the person entitled to a lien, cannot be seized in exe '
cution for the real owner's debt, (e)

Section II. — Hoiu acquired.

The doctrine of lien originated in certain principles of the com-
mon law, by which a party who was compelled to receive the goods
of another was also entitled to retain them for his indemnity ; thus
carriers and innkeepers had, by the common law, alien on the goods

(d) Spears v. Hartley, 3 Esp. 81. Higgins v. Scott, 2 B. <fe Ad. 413. Ee Broom
head, 16 L. J. Q. B. 355.

(e) Legg V. Evans, 6 M. & "W. 36.

constituting one debt. 26 "Wend. 480. See same case 10 "Wend. 318. Schmidt v.
Blood, 9 Wend. 268.

In the case Ex parte John S. Foster, 2 Story, 143, 144, Judge Story, referring to
the remark of Lord Tenterden, that the word lien, in its proper sense in the law of
England, imports that the party is in possession of the thing which he claims to de-
tain ; and that where there is no possession, actual or constructive, there can be no
lien, — says that this is generally, perhaps universally, true, at the common law, inde-
pendently of statuable provisions, or of special contract "But in the maritime law
liens are recognized, independently of possession, actual or constructive ; such as in
cases of seamen's wages, and bottomry bonds and liens by material men ujion foreign
ships. But in such cases, there is no pretence of a vested lien, until the labor or ser-
vice is complete, or the voyage ended, and the contract become absolute. Until that
period, it is merely inchoate, and conditional, and imperfect. In equity, also, liens
exist independent of possession, either actual or constructive; as, for example, the
lien of a vendor on the land for the unpaid purchase money. But it has been long
the established doctrine in equity, that a lieu is not, in strictness, either a, jus in re, or
a jus ad rem ; that is, it is not a property in the thing itself, nor does it constitute a
right of action for the thing. It more properly constitutes a charge upon the thing.
It is, therefore, at most, a simple right to possess and retain property, until some
charge attaching to it is paid or discharged; or a mere right to maintain a suit in
rem to enforce payment of the charge. Mr. Justice Buller, speaking of liens at the
common law, is equally expressive. He says : " Liens are aot founded on property,
but they necessarily suppose the property to be in some other person, and not in him
who sets up the right. They are qualified rights." Lickbarrow v. Mason, 6 East^
note, p. 21, 24. Conard v. Atlantic Ins. Co., 1 Pet. 386, 441, 442.
44

C90 MERCANTILE REMEDIES.

How acquired.

v intrusted to their charge ; (/) the rescuer of goods from perils of
the sea has, as we have already remarked, on grounds of public
, policy, a lien at common law for salvage ; and it is a principle that
I where an individual has bestowed labor and skill in the alteration
I and improvement of the properties of the subject delivered to him,
-f he has a lien on it for his charge : thus a miller and a shipwright {g)
have each a lien ; so has a trainer, for the expense of keeping
w and training a race-horse, (A) for he has, by his instruction, wrought
an essential improvement in the animal's character and capabilities.
And, if the owner of a stallion receive a mare for the purpose of
being covered, he has a lien on her for his charge, for she will be
•^ rendered more valuable by proving in foal, (i) But here the rule
.: appears to stop, and not to include cases wherein expense has been
bestowed upon the object claimed to be retained, without producing
' any alteration in it : {j) thus, it has been decided that a livery-stable
keeper has no lien for the keep of a horse, {k) nor agister of a horse
or cow {I) for its agistment. Such is the description of a lien at
common law. Whenever one of any other kind is sought to be
established, the claim to it is not deduced from principles of com-
mon law, but founded upon the agreement of the parties, either

(/) Skinner v. Upsha-w, Ld. Rayra. 752.

{fj) Ex parte Oclienden, 1 Atk. 235. Franklin v. Hosier, 4 B. <ii A. 3il. See Ex
parte Bland, 2 Rose, 91.

ill) Bevan v. Waters, M. &, M. 236. See, however, the observations of Parke, B.,
in that case, in Jackson v. Cummins, 5 M. & W. 350, 351.

(i) Scarfe v. Morgan, 4 M. tfe W. 270.

{j) Stone V. Lingwood, 1 Str. 651 : and see 8 C. & P. 6; sedvide 1 H. BI. 85.

{k) Wallace v. Woodgate, R. &, M. 293. Judson v. Etheridge, 1 C. & M. 743. But
see Taylor v. James, 2 RoUe's Abr, 92 ; M. pi. 3. Lenton v. Cook, B. N. P. 45. See
Sanderson v. Bell, 2 C. & M. 304. 4 Tyrwh. 244, uhi, per Baylej', B.:

" The two cases, Wallace v. Woodgate and Bevan v. Waters, in one of which the
right of lien was allowed, and in the other not, seem to me to point out the true dis-
tinction. In the case of the livery-stable keeper, who does nothing to the horse ex-
cept supplying him with hay and oats, there is no lien, but where work is done by
training a horse, there Is a right of lien. In the case of a livery-stable keeper who
dressed a horse, if the claim for dressing could be separated, in that respect there
might be some right of lien, but if an entire claim, compounded of feeding and dress-
ing, is set up, it must attach for both ; the trainer probably claimed for nothing but
training, and so his claim was allowed."
{I) Jackson v. Cummins, 5 M. &, W. 342.

i^ 691

How acquired.

expressed or to be inferred from usage, (m) and will fail, if some
such contract be not shown to have existed, (/z)*

(m) See Najlor v. Mangles, 1 Esp. 109. Kirkman v. Showcross, 6 T. R. 14.

(7i) Pratt V. Vizard, 5 B. & Ad, 808. See also Ogle v. Storey, 4 B. & Ad. 735, and
qucere, if that case be law. See Harrington v. Price, 3 B. & Ad, 170, Cumpson v.
Haigh, 2 Bingh. K C. 449.

* Most of the principles mentioned in the preceding part of this section were re-
cognized in the case of Grinnell v. Cook, 3 Hill, 485, and Wentworth v. Day, 3 Mete.
352. In the first case it was held that the lien of an innkeeper on property intrusted
to his charge only existed where the party owning the property was a guest ; and
that where horses had been sent to an inn to be kept by a person not a guest, the
innkeeper had no lien on them for his charge of keeping. In such case he stands in
the same situation as a livery-stable keeper. This point was decided in the same
way by Parke, B., in Binns v. Pigot, 9 Carr. & P. 208 ; 38 E. C. R. 82. But in tlie case
of Mason v. Thompson, 9 Pick. 280, a different opinion appears to have been held.
If a horse is brought to an inn by a wrong-doer or a thief, the lien of the innkeeper,
if he had no notice of the wrong, and act honestly, will prevail against the claim of
the ti'ue owner. Black v. Brennan, 5 Dana, 312; 3 Hill, 490,

The law has been sometimes laid down in elementary treatises, that a common
carrier who, without any knowledge or suspicion of wrong, receives goods from a
wrong-doer or thief, may detain them against the true owner, until his freight or
hire for carriage has been paid. The point was so ruled in England at an early
period, in the case of the Exeter carrier, cited by C. J. Holt, in Yorke ■». Greenaugh,
2 Ld, Ray. 866, and was incidentally recognized by the Supreme Court of Pennsyl-
vania, in King v. Richards, 6 Whart. 418. It has not been expressly adjudicated in
England since the Nisi Prius case referred to, and would not, it is supposed, be now
acknowledged. It has been decidedly repudiated in several recent American cases.
Fitch V. Newberry, 1 Dougl. (Michigan) R. 1. Buskirk v. Purin, 2 Hall, 561. Robin'
son V. Baker, 5 Gushing Rep. 137. "There is no reason," says Fletcher, J., in the last
case, " why the common carrier should be exempt from the universal rule of law,
that no man's property shall be taken from him without his consent, express or im-
plied. Why should not the principle of caveat emptor apply to him? The reason,
and the only reason given, is, that he is obliged to receive goods to carry, and should
therefore have a riglit to detain the goods for his paj'. But he is not bound to re-
ceive goods from a wrong-doer. He is bound only to receive goods from one who
may rightfully deliver them to him, and he can look to the title, as well as persons
in other pursuits in life. Nor is a carrier bound to receive goods unless the freight
is first jiaid to him ; and he may in all cases secure the payment of the carriage in
advance." The case of the innkeeper, who has a lien for keeping a stolen horse, has
been distinguished from that of the carrier upon this ground : — It is equally for the n 4-'^
benefit of tlie owner to have his horse fed by the innkeeper, in whose custody he is
placed, whether left by liimself, or agent, or a thief; in either case food is necessary
for the preservation of the horse, and the innkeeper confers a benefit upon tlie owner
by feeding him. But it cannot be said tliat a carrier confers a benefit on the owiiei

■ ,■ i . , !- ■.'''" >•

692 MERCANTILE REMEDIES.

How acquired.

By Special Agreement. — With, respect to liens by express agree-
ment, little need be said ; the question, whether one have or have
not been created, depends upon the special terms of each individual
contract. Where the intention of the parties to create one is plain,
there can be no doubt of their legal right to carry it into effect, (o)

(o) See Small v. Moats, 9 Bingh. 574. Ward v. Bell, 1 C. & M. 848.

of goods, by carrying them to a place "where perhaps he never designed and does
not wish them to go. «

The fiuder of lost property on land, has no right to salvage at common law ; but
if the owner offer a reward either to a particular jjerson, or generally to any one who
will return it to him, it is a valid contract. And if on the offer of the finder to
restore the property, the owner refuses to pay the reward, the finder has a lien for it
on the property, and may retain the possession until the reward is paid or tendered.
Wentworth v. Tmy, 3 Mete. 352.

A mere creditor happening to have in his possession specific articles belonging to
his debtor, has no lien upon them. Allen v. Megguire, 15 Mass. 490. Jarvis v. Rogers,
15 Mass. 389, 414.

To create a lien on a chattel, the party claiming it must show the just possession
of the thing claimed ; and no person can acquire a lien, founded upon his own ille-
gal or fraudulent act or breach of duty ; nor can a lien arise where, from the nature
of the contract between the parties, it would be inconsistent with the express terms
or the clear intent of the contract : for example, if the goods were deposited in the
possession of the party, for a particular purpose, inconsistent with the notion of a
lien, as, to hold them or the proceeds for the owner or a third person. Randall v
Brown, 4 How. S. C. 424.

" Originally the remedy by retainer seems to have been only co-extensive with
the workman's obligation to receive the goods ; a limitation of it which would, per-
haps, be inconsistent with its existence here, for we have no instance of a mechanic
being compelled to do jobs for another. But even the more recent British decisions
have extended it to the case of every bailee who has, by his labor or still, conferred
value on the thing bailed to him. Chapman v. Allen, Cro. Car. 2Y1. Jackson v. Cum-
mins, 5 Mees. & Wels. 349. But as an exclusive right to the possession of the thing
is the basis of such a lien, it exists not in favor of a journeyman or day laborer,
whose possession is that of his employer, and who has no other security for his wages
than the employer's personal responsibility on the contract of hiring." Mclntyre o.
Carver, 2 "Watts & Serg. 392, 395, Gibson, C. J. But it was held in this case, that
where one contracts to build a house for another, and matei'ial is delivered to him
for the purpose, although he is not the absolute owner of the material delivered, he
has power, by virtue of his contract with the owner, to employ whom he would to
work it up, and thus give room for a specific lien on it, which would be available
against both himself and his employer. And the lien of a mechanic who had, under
such circumstances, received lumber from a master-builder and worked it up into
panel doors, was sustained.

LIEX. 693

How acquired.

and, as they can deal as thej please with their own property, they
may, of course, frame their contract so as to exclude the right of
lien, as well as to create or to extend it ; and this may be done,
either by direct words, or the insertion of some stipulation incom-
patible with the existence of a right of lien, (p) or a similar usage
of trade, consistent with, and incorporated by implication into, the
contract, (q) Indeed, it once was thought, that wherever there was
an agreement for the payment of a fixed sum, the right of lien must
be taken to have been abandoned. (?•) But this doctrine, which
seems unreasonable, has been overturned ; and the rule now is,
that the mere existence of a special agreement will not, of itself,
exclude the right of lien, but that, if any of its terms be inconsis-
tent with such, right, it will do so. (s)* Thus, an agreement, stipu-
lating for payment in a particular manner and out of a particular
fund, might possibly be held inconsistent with the right of lien, (t)
Thus, too, it is remarked by Baron Parke, in his judgment in Jack-
son V. CumminSj (u) that, even if a lien could have been claimed at

(p) Owenson v. Morse, V T. R. 64. Boardman v. Sill, 1 Camp. 410, n. "Walker v.
Birch, 6 T. R. 258. "Wej-mouth v. Boyer, 1 Ves. jun. 416. See Lucas v. Nockells, 10
Bingh. loY. Crawsliaw v. Ilomfray, 4 B. & A. 50.

(q) Raitt v. Mitchell, 4 Camp. 146.

(r) Brennan v. Currint, Say. R. 224 ; B. N. P. 45. Collins v. Ongley, there cited.

(.s) Chase v. "Westmore, 5 M. & S. 180. Hutton v. Bragg, 2 Marsh. 345, 349; 1
Taunt. 25.

(t) See Pinnock v. Harrison, 3 M. & W. 532.

(m) 5 M. &. W. 350, 351.

* It may not be amiss to remark here, that liens are sometimes recognized and
protected in a court of equity which a court of law would not regai-d. For while at
law the general rule seems to be that a grant or assignment is not valid, unless the
thing which is the subject of it has an existence actual or potential, at the time of
euch grant or assignment, and that a mere possibility is not assignable, yet in equity,
t has been stated, by an eminent judge, to be a clear result from all the authorities,
ihat whenever the parties, by their contract, intend to create a positive lien or
charge, either upon real or upon personal property, whether then owned by the as-
signor or contractor, or not, or if personal property, whether it is then in esse or not,
it attaches in equity as a lien or charge upon the particular property, as soon as the
assignor or contractor acquires a title thereto against the latter, and all persons as-
serting a claim thereto, under him, either voluiitaril}-, or with notice, or iu bank-
ruptcy. Story, J., in Mitchell v. Winslow, 2 Story R. 630, 638, 644, and cases Hior*
eited.

694 MERCANTILE REMEDIES.

How acquired.

common law in respect of agistment generally, it would be excluded
in a case of agistment of milcli cows, by a necessary implication
arising from th.e nature of the subject matter, since the owner must
have possession of tliem during the time of milking, which estab-
lishes that it was not intended the agister should have the entire
control. His Lordship observes, that a similar implication would
arise in the case of a livery -stable keeper, since it must be his in-
tention that the owner of the horse should take him out ; and that
even in such a case as Sevan v. Waters, there might be a distinction
between the situation of the trainer of a horse for ordinary pur-
poses, and the trainer of a race-horse, which, according to usage,
may be taken away to run for various plates during his tia-ning.

By Usager — As to liens resulting fi'om usage, these depend upon
implied, as those last mentioned upon express contract, (y) The
usage whence such an agreement may be implied, is either the com-
mon usage of trade, or that of the parties themselves, in their pre-
vious dealings with each other. (?y) Of this description are most
general liens, none of which existed at common law, but all depend
upon the agreement of the parties themselves, either expressed, or

(ii) Eushforth v. Iladfield, 6 East, 519 ; 7 East, 224. Kirkmaa v. Shawcross, 6 T.
R. 14. Barnett v. Brandao, 6 M. & Gr. 630.

{to) Holderness v. CoUinson, 7 B. & C. 212, per curiam. Ex parte Ockenden, 1 Atk.
236. Kirkman v. Showcross, 6 T. R. 14.

* Most of the liens mentioned by the author under this head have been recog-
nized and enforced in the United States. As to the lien of a banker, see Bank of
Metropolis v. New England Bank, 1 How. S. C. 238 ; Neponset Bank v. Leland, 5
Mete. 259; Bank of Metropolis v. New England Bank, 6 How. 212; Lawrence v.
Stonington Bank, 6 Conn. R. 521. Tliat bankers possess a genei'al lien, which will be
judicially noticed, was established in England in tlie recent case of Brandao v. Bar-
nett, 3 Man. Grang. & S. 530. Of a factor Brandor v. Phillips, 2 How. S. C. 121 ;
Brown v. McGran, 14 Pet. 495 ; Holly v. Iluggeford, 8 Pick. 73 ; Everett v. Saltus, 15
Wend. 478; Kollock v. Jackson, 5 Georg. Rep. 153; Farnum v. Bontelle, 13 Mete.
159. A purchasing factor has, it seems, the same lien as a selling. Bryce v. Brooks,
26 "Wend. 367 ; S. C. 21 Wend. 14. Stevens v. Robins, 12 Mass. 180. A warehouse-
man has a specific not a general lien ; but he ma}' deliver a part and retain tha
residue for the price chargeable on all the goods received_by him under the sama
bailment, provided the ownership of the whole is in the same person. Steinman v
Wilkins, 7 Watts & Serg. 466.

LIEX. 695

How acquired.

to be inferred from their previous dealings, or from the usage of
trade and the decisions of the courts of law thereon, (a:) It has
been settled, that an attorney has a lien for his general balance, on
papers of his clients, which come to his hands in the course of his
professional employment, {y) So a banker, who has advanced
money to a customer, has a lien for his general balance, (2) upon
securities belonging to such customer, which come into his hands,
but not on muniments, pledged for a specific sum, (a) or left casually
at his shop, after his own refusal to advance money on them, {b) or
negotiable instruments, belonging to a third person, left in the
banker's hands by his customer, (c) So it has been determined that
calico printers, (c?) dyers, (e) and wharfingers, (/) have liens for their
general balance, but not fullers, {g) However, notwithstanding these
decisions, it does not appear certain that the right of lien may not,
even with respect to some of the above trades, be hereafter con-
tested, for the Court has remarked with respect to wharfingers, that
there may be a usage in one place varying from that which prevails
in another ; (Ji) the party, therefore, claiming to retain goods for a
general balance, should, in almost every instance, be prepared with

{x) See Leuckhart v. Cooper, 3 Bingh. N. C. 99, in which defendant claimed a lien
by the custom of London, which the C. P., however, held to be iinroasonable.

{y) Stevenson v. Blakelock, 1 M. &. S. 535. If he be the town-clerk of a corpora-
tion, or steward of a manor, he will have a lien for work done in his professional,
though not for work done in his official capacity. King v. "Williams, 5 Ad. & E. 423.
Worrall v. Johnson, 2 Jac. <fe "Walk. 214.

(2) Davis V. Bowsher, 5 T. R. 488. Bolton v. Puller, 1 B. & P. 539. Giles v. Per-
kins, 9 East, 12. See Bosanquet v. Dudman, 1 Stark, 1. Barnett v. Brandao, 6 M. &
Gr. 630.

(a) Vanderzee v. Willis, 3 Bro. C. C. 21.

(i) Lucas V. Dorien, 7 Taunt. 278.

(J) Weldon v. Gould, 3 Esp. 268.

(e) Saville v. Burchard, 4 Esp. 53. See also 6 East, 623. Yet in other cases the
evidence has been insufficient to establish it. Green v. Farmer, 4 Burr. 2214. Close
V, "Waterhouse, 6 East, 523, n. Bennett v. Johnson, 2 Chitty, 455.

(/) Naylor v. Mangles, 1 Esp. 109. Spears v. Ilartly, 3 Esp. 81. The lien of
wharfingers was said by Lord Kenyon, in Naylor v. Mangles, to have been proved so
often that it was a settled point.

(r/) Rose v. Hart, 8 Taunt. 499. 2 B. Moore, 547.

(//) Holderness v. Collinson, 7 B. & C. 212.

tJ96 MERCANTILE REMEDIES.

How acquired.

evidence of the usage applicable to his own case. It is, however,
established too well for dispute, that a factor has a lien upon all
goods in his hands, for the balance of his general account ; (i) and
even on the price of those with the possession of which he has
parted. Thus where A. consigned goods to B., a factor, to whom
he owed more than their value, and B. sold them to C, to whom he
was himself indebted, the factor having become bankrupt, it was
decided that he had a lien on the whole price due from C, which
must consequently be placed to the credit of his assignees, in
winding up his account with C, and that A. was not entitled to any
portion of it.(y) But a factor has not a lien for debts, which
accrued before his character as such commenced, {k) Policy brokers
have also a general lien, and may avail themselves of it to obtain
payment of the balance due to them from their employer, though
merely an agent, if he did not disclose his principal ; (1) but not if
they know, or there is enough to indicate to them his representa-
tive character, {m) Whether carriers have, by the usage of trade, a
general lien, is a matter which has been of late years a good deal
disputed : {n) the prevailing opinion seems to be that they have.
But the master of a ship has no lien on the vessel, or her freight,
either for his wages or disbursements on her account, (o)

(i) Honghton i'. Matthews, 3 B. & P. 485. Krugei- v. Wilcox, Ambler, 252. Gar-
dener V. Coleman, cited 1 Burr. -IQ-t ; 6 East, 28, n. Man v. Shifner, 2 East, 523.

(_/) Hudson V. Granger, 5 B. & A. 27. See Drinkwater v. Goodwin, Cowp. 251,
and ante, book i. c. 5.

{k) Houghton v. Matthews, 3 B. & P. 485. See Walker v. Birch, 6 T. R. 258, per
Lawrence, J. Olive v. Smith, 5 Taunt. 56. Weldon v. Gould, 3 Esp. 268.

(1) Mann v. Forester, 4 Camp. 60. Westwood v. Bell, ibid. 349. Bell v. Jutting,
1 Moore, 155.

(»i) Maans v. Henderson, 1 East, 335. Snook v. Davidson, 2 Camp. 218. See,
however, Man v. Shifner, 2 East, 523, 529, where a broker employed by a factor to
insure was held to have a lien on the policy, to the extent of the factor's balance
against his principal : this was on the ground that the factor had a lien, and that the
broker raicht be considered his servant to retain the goods. See Maccombie v. Da-
vies 1 East, 5. Therefore the right of a sub-agent to retain against the principal can
never extend bej-ond that of the immediate agent. Solly v. Rathbone, 2 M. & S. 298.'
Bee Jackson v. Clarke, 1 Y. A J. 216.

{n) Rushforth v. Iladfield, 6 East, 519 ; 1 East, 244. Aspinall v. Pickford, 3 B. &
P. 44, n. a.

(o) Hussey v. Christie, 9 East, 426; 13 Ves. 594. Smith v. Plummer, 1 B. & A.
575 Atkinson v. Cotes worth, 3 B. & C. 647.

LIEN. G07

How lost.

Section III. — How lost.^

As a lien is a right to retain possession, it follows of course that
where there is no possession there can be no lien, {p) It also fol-
lows that where the possession of the goods has once been aban-

i'p) Hutton V Bragg, 1 Taunt. 14. Kruger v. Wilcox, Ambl. 25-1 ; 1 Burr. 494.
Sweet V. Pym, 1 East, 4. The peculiarity, in this respect, of a vendor's lien, if it can
properly be so called, for his price, has been treated of in the last chapter.

* In MacFarland v. "Wheeler, 26 Wend. 473, it is said, that "the very definition
of the word lien as the right to retain, indicates that it must cease when the posses-
sion is relinquished. This principle, so clearly founded in reason and so congruous
to public utility and the convenience of trade, is supported by the uniform testimony
of the decisions." Accordingly, it was held, in that case, where the owners of a saw-
mill permitted boards sawed by them at a stipulated price, to be removed from their
mill yard to the bank of a canal, at the distance of half a mile from tlie mill, that they
had lost their lien in respect to third persons ; although it was expressly stipulated
between the parties that the lien should continue notwithstanding tlie removal. But
it appears to have been considered, that had the boards, after their removal, been
placed under the control of a third person with notice of the lien, the claim of the
mill-owners would have been protected.

And although it is stated, generally, that a lien is forfeited by deliver}-, yet a de-
livery procured by a fraud is not within the rule. And thus, if a common carrier be
induced to deliver goods to the consignee, by a false and fraudulent promise of the
latter that he will pay the freight as soon as they are received, the delivery will not
amount to a waiver of the carrier's lien, but he may disaffirm and sue the consignee
in replevin. Bigelow v. Heaton, 6 Hill, 43.

The doctrine stated in the text, that a lien cannot be set up to defeat a claim for
the goods, if the party, when a demand was made, put his riglit to detain on a differ-
ent ground, was recognized in Everett v. Coffin, 6 Wend. 608, and Saltus v, Everett,
20 Wend. 267, S. C. 15 Wend. 475. But in the first case it was said, that " it will be
found that wherever this doctrine has been applied, the defendant not merely omit-
ted to assert his lien, but put his right distinctly upon some other ground." See
White V. Garner, 2 Bingh. 23.

In the case of Chandler v. Belden, 18 John. 155, it was held, that the right to re-
tain goods for the freight grows out of the usage of trade, and does not exist where
the parties have, by their agreemeni, regulated the time and manner of paying the
freight, especially where the cargo is to be delivered before the time fixed for the
payment. See further as to waiver of lien by taking a security for payment, Bryce
V. Brooks, 26 Wend. 367 ; S. C. 21 Wend. 14. As to loss of lien, see also Holly v
Iluggeford, 8 Pick. 23. Legg v. Willard, 17 Pick. 140. Townsend v. Newell, 14
Pick. 332. Jordon v. James, 5 Ohio, 88. Partridge v. Dartmouth College, 5 New
Earn. 286.

698 MERCAT^fTILE REMEDIES.

How lost.

doned, tlie lien is gone ; but, when tlie master of a ship, in obedi-
ence to revenue regulations, lands goods at a particular wharf or
dock, he does not thereby lose his lien on them for the freight ; {q)
and, where they are not required to be landed at any particular
dock, the common practice is to land them at a public wharf, and
direct the wharfinger not to part with them till the charges upon
them are paid : (?-) in this case the wharfinger is the shipmaster's
agent, and the goods remain in the constructive possession of the
latter. But otherwise, the rule concerning possession is so strict,
that if a party having a lien on goods, cause them to be taken in
execution at his own suit, and purchase them, he so alters the na-
ture of the possession, that his lien is destroyed, though the goods
may have never left his premises. (5) And if, when the goods are
demanded from him, he claim to retain them on some different
ground, and make no mention of his lien, he will be considered as
having waived it, and the owner of the goods may sue him, with-
out tendering a satisfaction for the debt which created his lien, (t)
For it is to be remembered, that, in all cases, the owner of the
goods, on tendering such satisfaction, has a right to his property ;
and if the creditor refuse, after sucli tender, to restore it, he does so
at his peril, for if the tender were sufiicient in amount, he is a
wrong-doef, and answerable for his misconduct in an action. Nor,
indeed, is an actual tender, strictly so called, necessary if the person
in whose possession the goods are have signified his refusal to ac-
cept the amount really due. {11) Moreover, the possession must be
lawful: a creditor cannot tortiously seize upon his debtor's goods,
and then claim to retain them by virtue of a lien ; (y) so, if he

{q) "Wilson v. Kymer, 1 M. & S. 15Y.

(r) Abbott on Shipping, 377, 8th ed.

(s) Jacobs V. Latour, 5 Bingh. 130.

{t) Boardman v. Sill, 1 Campb. 410, n., and see Knight v. Harrison, 2 Saund. on
PI. and Evidence, 641, and Thompson v. Trail, 6 B. & C. 36. Jones v. Tarleton, 9
M. &, W. 675. Dirks v. Richards, 4 M. & Gr. 574. Caunce v. Spanlon, 7 M. <fe Gr.
903.

(m) Jones V. Tarleton, 9 M. & W. 657.

(v) Taylor v. Robinson, 2 Moore, 730. See Nicholls v. Glent, 8 Price, 547. So it
■would seem from the judgment in Saund erson v. Bell, 2 C. & M. 304, 4 Tyrwh. 244,
that if he claim a lien of too large a description, the whole retainer becomes tortious,
though he really possess one of a narrower description. But Scarfe v. Morgan, 4 M.
&. "W. 270, is contrary to this notion.

LIEN. 699

How lost.

abuse the goods, as, for instance, by pledging tliem, his lien is for
feited. {to)

A right of lien is not, however, determined by an alteration in
the property of the goods over which it is exercised, (x) Thus,
where the lading of a ship belongs to the charterer, and such lading
is subject to the ship-owner's lien for the freight reserved by the
charter-party, such lading, if it be sold by the charterer after it is
put on board, will pass to the purchaser, subject to the lien which
the ship-owner had before the sale, {y)

If a security is taken for the debt for which the party has a
lien upon the j)roperty of the debtor, such security being payable
at a distant day, the lien is gone, (z) So, too, if the parties come to
a new arrangement and agree that the debt shall be paid in a par-
ticular manner. But a mere right of set-off to an amount equal
to that for which the lien is claimed does not destroy it, for in that
case there are two parties having mutual claims on one another,
with this difference, that one has a security, and the other has
not, and in the absence of special agreement to that effect, it
would be obviously unjust to deprive the former of his advan-
tage, (a)

(?y) Scott V. Newington, 1 M. <fe Rob. 252. Jones v. Cliffe, 3 Tyrwh. 511 ; 1 C. <fc
M. 640.

(x) Small V. Moats, 9 Bingli. 574. Dixon v. Yates, 5 B. <fe Ad. 313.

(y) 9 Bingh. 592.

{z) Hewison v. Guthrie, 2 Bingh. K C. 755. Or if the creditor execute a composi-
tion deed which includes a release of the original debt. Cowper v. Green, 1 M. A
W. 633. Buck v. Shippam, 1 Phillips, 694.

(a) See Pinnock v. Harrison, 3 M. <fe "W. 532, judgment of Alderson, _B.

GENERAL INDEX

TO THE ORIGINAL WORK.

ABAXDOXilEXT, See Maritime Insurance, 410.
ACCEPTANCE,

of Bills of Exchange, 297. See Bills of Exchange.

Supra Protest, 803.

of goods ■w^ithin meaning of Statute of Frauds, 608. See Sale.
ACCOiBIODATIOX BILL,

presentment of, when, 311-315.

notice to drawer o^ when dispensed with, 330, 331.
A.CCOUXT,

between partners, cannot be had at law, TO.

how taken in equity, 71, 72.

under builder's hand, to be produced on registry of a ship, 234i
iCTS,

of God, carrier not responsible for, 361, 387. See Carriers.
ADJUSTiflEXT,

what, 483.

Iiow far binding, 484, 485.
ADiURALTT,

court of) its jurisdiction between part owners of ships, 249.

in suits for seamen's wages, 554-556.

in suits for master's wages, 656.
ADMISSION,

by agent binds principal, 189.

renders a verbal guaranty binding, when, 565-568.
ADYAXCES,

by agent, when to be repaid, 167. See Principal and Agent,
AFFREIGHTMENT,

Contract of, by Charter-party.

charter-party, what, 369, 370.
need not be by deed, 370.

702 INDEX TO THE

AFFREIGHTMENT— coniiwwi.

may be made by whom, 370.

its usual contents, 370-3'72.

time of sailing material, 371.

description of ship's burthen, not couclusiy^e, ib.

clause respecting detnurrage, how construed, 372-374.

possession of ship, when hela to pass to merchant under charter-party, 375
Contract for Conveyance in a General Skip

what, 376.

its terms usually contained in bill of lading, ib.

bill of lading commonly made out in parts, ib.

its form, ib.

a negotiable instrument, 077

how negotiated, 377, 378.

the property in the goods passed by its negotiation, 379.

but not tne right to sue on the contract, 380.

right to stop in transitu, may be defeated thereb}'', 379.

provided that the assignee have acted bona fide, ib.

negotiation of bill of lading by factor, its effect, 380.
Duties of Master and Owner under a Contract of Affreightment.

with respect to the preparation for the voyage, 381.

with respect to the commencement and course of voyage, 382-384.

with respect to the completion of voyage, 385, 386.

their liabilities, wherein narrowed by bill of lading, 387.

wherein by legislative enactment, 388, 389.

amount of liability of owners, how restricted by statute, ih.
Puties of Merchant under Contract of Affreightment.

must lade in due time and manner, 389.

and pay the charges due on his commodities, 390.

primage, what, ib.

average, what, ib.

freight, denotes the price of carriage, 891.

is not due unless the carriage be performed, ib.

consequences of this rule, 392.

freight is not forfeited by a necessary interruption of the voyage, fS.

due in some cases, though the carriage be net completed, ib.

amount, how calculated, 393, 394.

remedies of owner for the freight, 394.

has a lien for it on the goods carried, ib.

may sue on charter-partj', ib.

may sue on, consignee or indorsee of the bill of lading, in what cases, 395, 396,

stranger to the contract, may become chargeable with, or entitled to freights
how, 396, 897.

part payment of freight may be claimed when, 397-401.
Ovneral Average, 401-403. See Average.
Salvage, 404. See Salvage.
Dissohition of Contracts of Affreightment,

may be by consent of parties, 408.

ORIGINAL WORK. 703

AFFRElGB.T^^l'E^T— continued

or a declaration of government rendering them illegal, 403.

not by an embargo, ib.

except ill certain cases, ib.

by a prohibition to export the cargo, ib.

unless the prohibition be that of a foreign government, ib.

voyage to a blockaded port rendered illegal by the notification of thfl

blockade, 409.
unless there be no intention of breaking iie blockade, ib.
AGENCY. See Principal and Agent.
AGENT. See Principal and Agent.
AGREEMENT.

construction of the word, when used in Statute of Frauds, 576, 577.

comprehends Parties, Consideration, and Promise, 577.

difference between the effect of Statute on Prosjiective and Retrospective Agrefr-

mente, 577-579.
may be collected from distinct papers, if connected in sense, 580
from letters to third parties, 580.
ALIEN,

friend, his rights, 39.
enemy, his rights, 40.

enemy, cannot insure, 412. See Maritime Insurance.
except by royal license, ib.
ALTERATION,

of bill or note, effect of, 340. See Bill of Exchange.
APPOINTMENT,

of agent, how made, 149. See Principal and Agent,
when may be by parol, ib.
when must be in writing, ib.
when by deed, ib.
APPRENTICESHIP,

necessity of, abolished, 558.
Contracts of ,

their nature and form, 557, 558.
rights and duties of apprentice, 559, 560.
of master, ib.

contract how dissolved, 56C
assignment of apprentice, 56L
APPROPRIATION,
of Payments,

may be made by debtor at the time of payment, 670.
afterwards by creditor, ib.

when there is an account current, how made, 670, 67i.
cases in which the creditor cannot appropriate, 671, 372.
APPROVED BILL,

meaning of those words, 624,
ARBITRATION,

between master and servant, 535, 536. See Hiring and Servief.

704 IXDEX TO THE

ARTICLES,

of partnership, 62. See Partnership.
ASSIGNMENT,

of apprentice, 561.
AT AND FROM,

construction of those words in policies, 428. See Maritime Insurant
AUCTION,

sale by, within Statute of Frauds, 608. See Sale.
AUCTIONEER,

his authority as agent of both parties, 619. See Sale,
AUTHORITY,

of agent, 147. ^ee Principal and AgerU.
AVERAGE,

general, 401.

particular, 390.

exemption from, in policies, 448.

iiANK-NOTE, 285. See Bills of Exchange.
BANKS,

different classes of, 281-283.
power of, to issue bills and notes, ib.
mode of charging members of joint stock, 284, 285.
regulations of joint stock, formed since May 6th, 1844, 129.
BARGAIN, 602, 603. See Sale.
BARRATRY,

perils by, 440, 441. See Perils, Maritime Insurance,
BILL OF LADING, 376. See Affreightment.
BILL OF SALE,

of ship, 242. See Shipping.
of goods, passes property on delivery, 597.
BILLS OF EXCHANGE AND PROMISSORY NOTES.
1. Their Definition, Requisites, and Form.
bill, what, 262.
note, -what, 263.
check, what, ib.
bank-note, ib.
their legal effect, 264, 265.
Requisites.

must be an order or promise, 266, 267.
for pajTiient of money, 267.
in a certain sum, ib..
unconditionally, 267, 268.
effect of fraudulent insertion of words, 271.
Inland Bill or Note.
form of, 272.

ORIGINAL WORK. 705

BILLS OF EXCHANGE AND PROMISSORY NOTES— con ^wwed
Amount, 273.
Stamp, 273, 274.

must be affixed before instrument is made, 273.

exception, ib.

when not requisite, ib.

duty not enhanced by reservation of interest, 274.

■what notes may be reissued without further stamping, .
Date, not essential, ib.

consequence of omission, ib.

post-dating, when penal, ib.
Time for Payment,

month, signification of, 275.
Place of Payment, ib.

may be ejsecified, ib.

consequence of naming it in memorandum, ib.
Designation of Payee.

consequence of mistake in name, ib.

how designated to render bill transferable, 276.

fictitious payees, consequence of, 276, 277.

payee must not be uncertain, 277.

consequence of leaving blank for payee's name, ib.
Name of Maker or Drawer,

must be written by himself or agent, ib.

must not be uncertain, ib.

may be written before instrument is complete, ib,

bills of joint stock companies, how drawn, 278.

bills of joint stock banks, how drawn, ib.
Name of Drawee.

bill may be addressed to di-awer himself, ib.

but is rather a note than bill, ib.

may be addressed to a house, ib.
Foreign, Bill,
form of, ib.
drawn in sets, 279.
stamp, when necessary to it, ib.
2. Parties to Bill or Note,
must be competent, 280.
infant, ib.

feme covert, 280, 281.

banking corporations and partnerships, 281.
Bank of England, 282.
banks of six or fewer than six persons, ib.
banks of more than six, 282-284.
joint and several parties, 286, 287.
3 Transfer of Bills and Notes.

bills and notes excepted from the rule that choses in action are not tran*
ferable, 288.

706 IXDEX TO THE

BILLS OF EXCHAiVGE AND PROMISSORY NOTES— con^mwci

when transferable by delivery, 288.

when by indorsement, ib.

how, if for less than five pounds, ib.

Indorsement,

in full or blank, 289.

restrictive, 290. \

cannot be for part unless residue be paid, ih.

consequence of omitting words of transfer, ib.
Indorsement by whom made.

by representatives of holder, 291.

by assignee of bankrupt, when, ib.

by husband, ib.
liability of person transferring in auter droit, ib.
transfer by thief or finder, 292.
Time of Transfer.

either before or after bill is due, ib.

consequence of taking it overdue or dishonored, 292, 2S3.

in what cases negotiable after it has been paid, 294.

legal effect of indorsement, ib.

of transfer by delivery, 295.

meaning of term indorsement, 296.
4. Acceptance,

when necessarj', 297.

may be made, when, ib.

how, on a foreign bill, ib.

how, on an inland bill, ib.

how, on Irish or Scotch bills, ib.

no particular form requisite, ib.

nor signature, ib.

what words amount to acceptance, 298.

what acts may amount to acceptance, 299.

acceptance may be absolute or conditional, ib.

conditional acceptance may be refused, ib.

consequences of taking it, ib.

acceptance varying from tenor of bills, may be refused, 300.

consequences of taking it, ib.

acceptance once complete and issued irrevocable, ib.

before issued revocable, ib.

acceptance admits drawer's ability, ib.

if made after sight of bill, admits his signature, ib.

but not the ability or signature of indorser, ib.

though his name was on the bill when accepted, ib.

admits drawer's ability to indorse if bill were payable to his order, 300,

301.
its effect when drawer is fictitious, 301.

if bill be drawn and indorsed by procuration, admits procuration to draw, ib.
but not procuration to indorse, ib.

ORIGIKAL WORK. 707

BILLS OF EXCIIAXGE AND PROMISSORY 'NOTES— contmued.
Acceptance for Honor,

what, SOL

inures to whose benefit, ib.

if no name be specified, is considered to be for the honor of drawer, 16.

several on the same bill allowed, ib.

may be by drawee, ib.

holder not bound to take it, ib.

what must be done to charge acceptor for honor, 302.
Acceptance sicpi-a Protest,

what, 303.

necessity for protest, ib.
Acceptor for Honor, his remedy, ib
Second Acceptance, not allowed for honor, ib.

will inure as a guaranty, ib.
' Presentment,

necessity for, 303, 304.
when excused, 305, 306.
To whom made, 314.
where made, 315, 316.

presentment for acceptance, when made, 316, 317.
for payment, when made, 318, 319.
days of grace, what, 320.
when allowed, ib.

number of days of grace, in different countries, 320, 321.
how computed, 321.
Usance, signification of, ib.
how computed, ib.

presentment must be at a seasonable time of day, ib.
what time seasonable, ib.
6 Notice,

in case of dishonor, must be given to persons whom holder intends tc

charge, 321, 322.
neglect to give notice of non-acceptance discharges prior parties, 322.
though bill required no acceptance, ib.

except against holders for value without notice of the dishonor, ib.
notice does not mean mere knowledge, ib.
may be proved by admissions or inference, ib.
notice must come from whom, 323.
no peculiar form of notice, ib.
its requisites, 323-327.
Protest,

necessary in case of dishonor of foreign bill, 327

copy of should be sent with notice, ib.

when dispensed with on a foreign bill, ib.

not requisite for inland bill ib.

nor notbig, though usual, i ■

nature of protest, ib.

708 INDEX TO THE

BILLS OF EXCHAXQE AND PROMISSORY ^OTEB—contimced.

in England must be stamped, 328.

"where to be made, ib.
Time at which notice must he given, 328-330.

day of dishonor not too soon, 328.

each party has a day to give notice, 329.

day of public rest excluded, ib.

and days made holy by a man's peculiar creed, ih.

banker presenting for a customer has the Bame time as if he wese a
holder, ib.

customer has a further time, ib.

when residence of previous parties is unknown, what notice sufficient,
329, 330.

time not enlarged by premature notice to the party transmitting
notice, 330.
notice need not be in writing, ib.
may be sent to counting-house, ib.
transmission of it by post sufficient, ib.
though it be not received, ib.
letter, how to be directed, ib.

if no post, may be sent by the ordinary conveyance, 330, 331
Notice, how dispensed with.

by part payment with full knowledge of the facts, 33L

when drawer has no effects in drawee's hand, 332.

danger of relying on this excuse, ib.

liability of a party discharged by want of notice cannot be revived, 333,

consequence of notice, ib.
t. Payment,

to whom made, 334.

in case of forgery, drawee, if he accept, must pay bona fide holder for

value, ib.
if he pay without accepting, cannot recover his money, ib.
at least unless he give notice the same day, ib.
will have no remedy against the party whose name is forged, ib.
unless that party have been guilty of negligence, ib.
must ascei'tain the sufficiency of procurations, 335.
should not pay before the bill or note is due, ib.
Payment supra Protest, what, ib.
Payment how enforced, 335, 336.

proceedings stayed on what terms, 336.

party paying becomes a holder, ib.

as on a transfer from whom, ib.
What recoverable.

in general, principal, interest, and expenses, ib.

interest, from what time it runs, 336, 33Y.

computed up to what time, 337.

exjienses of noting and postage, how recovered, ib.

re-exchange, ib.

ORIGINAL WORK. 709

BILLS OF EXCHANGE AND PROMISSORY Is OTES— continued.
8. Resistance against Payment.

defendant either denies bis original liability, or contends tliat it is deter

mined, 337.
Grounds for denying his original liability, 337, 338.
Defect hi holder's title, 338.
Insufficiency of Consideration.

consideration prima facie presumed, ib.

but presumption may be rebutted, ib.

want of consideration, when a defence in toto, 339.

when pro tanto, ib.

duress, ib.

fraud, ib.

bill lost or stolen, ib.

defence founded on insufficiency of consideration, how rebutted, 339-
342.

effect of taking bill overdue, 342.
Illegality of Consideration,

examples of, 342-344.

though but in part, vitiates the instrument in toto, 344.

but does not render the good part of the consideration irrecoverable, ib.

vitiates substituted instrument, if the first be renewed, ib.

unless the illegal part of the consideration be excluded, ib.

in what cases it formerly vitiated the instrument in the hands of a bona
fide holder for value, ib.

present state of the law on that subject, 344, 345.

what bills exempt from the usury laws, 345.

illegal transfer of good bill or note, its consequence, 346.
Grounds for contending that defendant's liability is determined.
Suspension,

by renewal, 346, 347.

verbal promise to renew, when a defence, 347.

written agreement to renew, effect of, ib.
Extinguishment.

extinguishment not equivalent to satisfaction, ib.

does not protect third parties, ib.
Satisfaction,

by payment or its equivalent, 348.

exonerates all parties, 349.

effect of taking defendant in execution, ib. '

satisfaction may be pro tanto, ib.

material alteration of bill or note when issued, a satisfaction, 349, 350,

except against parties consenting, 350.

renders a new stamp necessary, ib.

unless it were to correct a mistake, ib.

what alterations material, ib.

alteration before issue with consent of parties, does not vitiate, 351.

when bill or note is considered issued, ib.

710 INDEX TO THE

BILLS OF EXCHANGE AND PROMISSORY IsOTIB— continued.
cancellation by mistake no satisfaction, 351.
Discharge^
what, ib.

by ■waiver, 352. ■
express waiver, ib.
implied waiver, ib.
by indulgence to principal, 353.
maker and acceptors considered principals, ib.
indorsees, their sureties, ib.

discharged by indulgence to makers or acceptors, zb.
unless they consent to it, ib.
not discharged by mere forbearance, ib.
nor by holders taking a collateral security, ib.
subsequent indorser discharged by indulgence to prior one, ib.
but prior indorser not discharged by indulgence to subsequent one, 354
semble, that accommodation acceptor and maker are not sureties, ib.
drawer not discharged by indulgence to accommodation acceptor, ib.
semble, that joint maker cannot be looked on as a surety, 354, 355.
9. Remedy on Lost Bills and Notes.

no remedy at law, if finder's transferee could gain a title, 355. «

nor action for the consideration, ib.

loss of half a note, consequence of, 355, 356.

if bill or note were destroyed or lost, while unindorsed, or having none but

special indorsements, action perhaps lies, 357.
unless defendant would have remedy over, ib.
in such a case after judgment by default, court will refer, ib.
consequence of losing bill overdue, ib.
loser of bill or note may enforce payment in equity, 358.
stat. 9 ife 10 Wm. 4, c. 17, s. 3, its construction, ib.
BLANK,

left in bill or note for payee's name, consequence of, 277.
BLOCKADE,

voyage with intention to violate it, illegal, 409.

voyage to a blockaded port, without intent to violate the blockade, legal, ih
BOND,

in restraint of trade, generally \oid, 88.
in partial restraint, when good, ib.
on registry of ship, 234, 235. See Shipping.
BOOK,

of registry, 235. See Shipping.
BOTTOMRY,
what, 527.

difference between bottomry and respondentia, ib.
differences between loans on bottomry and common loans, ib.
in the risk, 527, 528.
in the amount of interest, 528.

difference between the remedy on a loan to the owner, and on one to the mas-
ter, 528, 529.

ORIGINAL WORK 711

BOTTOMRY— continued.

authority of mastei* to hypothecate, 529.

its advantages, ib.

may be exercised, ia what cases, 530

remedy of lender, 531.

■where there are several creditors, the last preferred, ib.
BOUGHT AND SOLD NOTES,

what, 620, 621.

must correspond, 621. See Sale.
BRITISH,

what ships properly so called, 230. See Shipping.

what seamen, 230, 231.
BROKER, 150-152. See Principal and Agent.

the agent of both parties in contracting sales, 620.

binds his principals inter se, how, ib

Insurance Broker, his character, 413.
BY-LAWS. See Corporation.

CAPTURE,

of a ship, title acquired by, 238.

its effect in divesting owner's property at common law, 40*7.

how altered by statute, 40*7, 408.

rule in case of the capture and recapture of an ally's ship, 408.
CARRIERS.

common carriers, what, 359, 360.

their duties, 360, 361.

are answerable for every loss, save by the act of God and the King's
enemies, 361.

formerly were accustomed to limit their responsibility by notices, 362.

contents of notice, ib.

effect of it, 362.

only exonerated them from loss occurring without misfeasance on their
part, ib.

unless the employer had misbehaved, ib.

law respecting land carriers now regulated by stat. 11 Geo. 4, and 1 Wm. 4 «■ 68
364, 365.

effect of that statute, 366.

who is the proper person to sue in case of loss, ib.

booking-office-keepers, when liable, 367.

remuneration of carriers, ib.
CHARTER,

of incorporation, powers of crown in granting it, 109

how forfeited, 145, 146.
CHARTER-PARTY, 369-375. See Affreightment.
CHECK,

what, 263.

712 INDEX TO THE

CHECK — continued.

consequence of writing banker's name across it, 334.

See further, Bills of Exchange.
CIRCULAE,

to announce dissolution of partnership, when proper, 56, 87.
CLERGY,

their incapacity to trade, 41.
COLLECTOR,

of customs, his authority in registering ships, 233. See Shipping.
COMPANY, 101. See Joint Stock Company.
COMPOUND INTEREST, 665. See Interest.
COMPTROLLER,

of customs, his authority in registering ships, 233. See Shipping.
CONCEALMENT,

of a material fact avoids policy, 486, 500-502. See Insurance.
CONSIDERATION,

for bill or note prima facie presumed, 338.

want of, a defence, when, 338, 339.

illegality of, 342-358. See Illegality.

See further. Bill of Exchange.
CONSIGNTIE,

when liable for freight, 395. See Affreightment.
CONSOLIDATION RULE,

what, 494.
CONTRIBUTION,^

right of surety to, 586. See Guaranty.
CONVOY,

what, 455.

nature of warranty, to depart with convoy, 455, 456.
CORPORATION,

Municipal. See Custom.

aggregate, what, 140.

how created, 141.

trading corporation may differ from others in its powers of contracting, 14i

corporation may do some small acts without deed, ib.

liable in equity to expenses of its own formation, 145.

may make by-laws, ih.

how dissolved, 145, 146.

its debts, generally speaking, extinguished on dissolution, 146.

crown may extend the individual liability of its members, ib.
COUNTING HOUSE,

notice of dishonor sent there sufficient, 330.
COURT,

of admiralty. See Admiralty.

foreign prize courts, rule concerning their competency, 457.
COVENANT,

not to sue one partner no discharge 'to others, 97.
CREDIT. See Debt.

ORIGINAL WORK. 713

CUSTOMS,

of corporate towns restraining trade, 41, 42.

DATE,

of bill or note, 2'74, 2Y5.

of policy of insurance, 446, 447. See Policy of Insurance.
DEBT,

Contract of Debt, what, 653.
Duty of Debtor,

must tender payment before action brought, 651.

payment, how to be made, ib.

where creditor has chalked out mode, it is sufficient to adopt it, 655.

in the absence of directions from creditor, what tender legal, 657-659.

payment by bill or note, effect of, 659.

suspends creditor's remedy, ib.

generally speaking, no satisfaction, unless the instrument be paid, 060.

will operate as a satisfaction, though instrument be not paid, when, 660-6)65;

amount of payment, when increased by interest, 663-665.

what interest legal, 665.

payments, how appropriated, 66S-6'72. See Appropriation.
Duty of Creditor,

to receive payment, when tendered, 672.

consequence of his refusal, ib.

to give a proper acquittance, 672, 673.

receipt may be tendered to him at time of payment, 673.

penalty for not filling it up, ib.

effect of receipt in evidence, ib.

when it requires a stamp, ih.
DEBTOR. ^eeDebt.
DECLARATION,

of interest, when requisite, 426.
does not require underwriters' consent, ib.
but ought to be communicated to them, 427.
071 Registry of Ships, its contents, 234.
DEED,

requisite in general to bind corporations, 141, 142.
when dispensed with, 143.
of Inspection. See Note.
of sale. See Bill of Sale
DEL CREDERE,

what, 163
DELAY,

when in the nature of a deviation, 401.
DELIVERY,

of goods, constructive takes place, when, 60S, 609.
to agent, binds jjrincipal, 601.

714 IM)EX TO THE

DEMURRAGE,

■what, 371.

clause respecting it in charter-party, how construed, 372.
DESERTION,

forfeiture of seamen's wages by, 550-553. See Seamen.
DEVIATION,

its effect on policy, 459, 460. See Maritime Insurance.
DISCHARGE,

of liability on bill or note, what amounts to, 351-353.

of servants for misconduct, 534.
DISMISSAL,

of servant, when justifiable, ih.
DISPUTES,

between master and servant, when to be settled by arbitration, 536.
DISSOLUTION,

of corporations, 145, 146. See Corporation.

of partnership, 53. See Partnership.
DISTRESS,

privilege against, of goods bailed to a trader, 225
DOCUMENTATION,

implied warranty of, in policy, 470,
DORMANT PARTNER. See Partnership.

EARNEST. ^e&Sale.
EMBARGO,

effect of, on contracts of affreightment, 408.
ENEMIES,

See Aliens.

perils by, 436, 437. See Perils.

carrier not responsible for loss occasioned by, 361. See Carrier,
EXCHANGE,

what, 590.

how it differs from a sale, ih.
EXECUTOR,

of a deceased partner, his liabilities, 89.

when liable personally on bill or note, 291.
EXTINGUISHMENT,

of remedy on bill or note, 347.

FACTOR,

See Principal and Agent, 150, 178, et »eq,
FEME COVERT,

cannot trade, 40.

except by custom of London, 41.

may be an agent, 149.

ORIGINAL WORK. 715

FIRE,

perils by. See Perils.
FIRE INSURANCE,

nature of, 503.

insured must have an interest in the subject matter of insurance, 504.

Policy of, not assignable, 505.

avoided by misrepresentation or concealment, 506, 507.
description of property in, 508-518.

"warranties contained in it must be strictly complied "with, 519-523.
liability of insurer, its extent, 524-526.
FIRM. See Partnership.
FIXTURES,

for mercantile purposes, how privileged, 225.
FORBEARANCE,

to sue principal does not discharge surety, 583.
FORFEITURE,

of seamen's "wages, 549-553. See Seamen.

of unregistered vessel, 231. See Shipping.
FORGERY,

of bill or note, 334,
FRANCHISES OF CORPORATION. See Corporation.
FRAUD,

of agent, principal "when answerable for, 195.
FREIGHT,

See Affreightment, 869.

meaning of word in policy, 426.

must be insured eo nomine, ib.

is the mother of wages, 548.
FURNITURE,

meaning of word in policy, 426.

GAMING,

when a defence to action on bill or note, 343.
GAMING POLICY. See Inmrance.
GENERAL AVERAGE,

meaning of the term, 401.

cannot be unless the whole adventure has been in jeopard}-, ih.

the damage to be made good may consist either in loss or expense incurred, b

must have been incurred voluntarily, ib.

what objects contribute to make good the damage, 402.

amount of contribution, how calculated, ib.

antiquity of, ib.
GENERAL SHIP,

what, 3*76.
GOODS,

meaning of, in policy, 426. '

716 INDEX TO THE

GOODWILL,

recognized as a valuable interest, 252.

except where the profits of the business arise from personal skill, ib.

Bale of goodwill does not preclude seller from setting up the same kind of biisi

ness in the same neighborhood, ib.
by conveyance of a shop the goodwill passes, ib.
sale of stocJc and goodwill requires stamp, 252, 253.
GRACE,

days of, 319, 320. See Bill of Exchange.
GUARANTIES.

Nature and Form of Guaranty.
guaranty, what, 562.
must be in writing, 564.
but money paid in pursuance of a verbal guaranty is liot recoverable back,

565.
verbal guaranty sometimes enforced against attorney, 566.
may be rendered binding by an admission, 567, 568.
effect of the Statute of Frauds on guaranties considered, 569-580.
Stamp, when requisite, 580, 581.
Surety, how far liable.

continuing guaranty, what, 581, 582.
Surety, how discharged.

by discharge or indulgence to principal, 582, 583.
by substituting a new agreement with principal, 583.
not by mere forbearance, ib.
or by indulgence to which he has consented, ib.

effect on suretyship by deed, of an indulgence to principal by parol, 58-1.
continuing guaranty, how countermandable, ib.
countermanded by death of surety, ib.
by alteration of guaranty, 684, 585.
Surety, how indemnifed.

may apply to equity to be exonerated, 585.
may sue at law for reimbursement, ib.
has a right to the benefit of securities, ib.
may sue his co-sureties for contribution, 586.

difference between times of suit for reimbursement and for co7itribution, ib
distinction between the right to contribution at law and in equit}', ib.
contribution, how calculated, ib.
when not claimable, 586, 587.

right to contribution not affected by the form of contract, 587.
Jiejtresentations in the Nature of Guaranties, 587-589.

H.
HIRING AND SERVICE,
contract of, 532.

general hiring construed to be for a year, ib.
determinable in case of menial servant by a month's warning, ib.
in other cases, servant, if unjustly dismissed, is entitled to a year's wages, 53S.

ORIGINAL WORK. 71-7

mRING AND SEliYICE— continued.

if he quit causelessly, or be justly dismissed, to none, 533.

■what misconduct justifies master in dismissing him, 534.

payment of wages, ■when it must be in cash, 535.

agreement for hiring exempt from stamp duty, ib.

disputes bet-ween master and servant, ho-w decided by arbitration 535, 536.

ILLEGALITY,

a defence to action on bill or note, 342-344.

though but in part, vitiates the instrument in toto, 344.

vitiates substituted instrument, if first be rene^wed, ib.

unless the illegal part be excluded, ib.

See further, Bill of Uj;chanc/e.

effect of illegality on a sale, 646-652. See Sale.

on a partnership, 50, 51. See Partnership.

on insurance. See hisurance.
INDORSEE. See Indorsement.
INDORSEMENT,

of bill or note, 288. See Bill of Exchange.

of bill of lading, 3T'7. See Bill of Lading.
INDULGENCE,

to one party to bill or note, ■when it discharges other parties, 358.

to principal discharges surety, 582.

unless he have consented, 583.
INFANT,

cannot trade, 40.

may be an agent, 149.

may avoid partnership, 49.

consequence of his not doing so at his full age, ib.
INLAND BILL, 2*72. See Bill of Exchange.
INSTRUCTIONS,

of agent, how construed, 153. See Principal and Agent
INSTRUMENT,

negotiable. See Negotiable Instruments.
INSURANCE,

See Maritime Insurance, Fire Insurance, Life Insurance.

agent, when bound to make, 162. See Principal and Agent.
INTENTION,

to deviate, does not discharge underwriter, 463.
INTEREST,

on bill or note, how computed, 336, 33*7.

of money, when payable at common law, 663.

when by stat. 3 & 4 W. 4, c. 42, 664.

what amount legal, ib.

compound interest, payable, when, 665.

interest on bottomry or respondentia loan, 628. See Bottomry.

^jg INDEX TO THE

INTEREST — continued.

Interest on Subject Matter of Insurance.

when and what requisite. In Maritime Insuranxx, 414-41 »
in Life Insurance, 495, 496.
in Fire Insurance, 504.

nature of, need not be expressed in policy, 42'7.
declaration of, 426. See Declaration of Interest.
INTEREST OR NO INTEREST,
meaning of, in policy, 414.

JETTISON,

perils by, 438. See Perils.
JOINT STOCK COMPANIES,
what, 101.

differ from other partnerships in their regulations, ib
different classes of, 102.
how formed, 103.
deed, its usual contents, ib.
transferability of shares under, 104, 105.
act of parliament, usual contents of, 106-108.
new mode of creating companies by patent described, 108.
enactments of 1 Vict. 0,73—109-112.

1 &8 Vict. 0. 110—112-128.
7 & 8 Vict. c. 113— banks, 129.
how dissolved, 129, 130.
rights and liabilities of members of, ititcr se, &.C., 130-132.

mode of making and enforcing calls, 132, 133.

forfeiture of shares by non-payment, 133, 134.

to third persons, 134-139.

acts establishing, how construed, 134, 135.

liability of members, when it commences, 135.

power of directors to bind company, 136, 137.

by bill, 137, 138.

power of mere shareholders to bind company, 139.
JUS ACCEFSCENDI, 222-224:. &ee Mercantile Property.

as to ships, 248.
JUSTICES,

of the peace, their power in claims for seamen's wages, 5oo, 5o6. bee beamed

their power in disputes with workmen, 536.

LASCARS,

may serve in British ship within Company's charter, 231.

ORIGIISrAL WORK. 719

LIBERTY,

to deviate, 461, 462. See Maritime Insurance.
care must be taken not to exceed it, 462.
LICENSE,

requisite to enable alien enemy to trade with tins countrj-, 40.
LIEN,

■what, 688.

difference between general and particular liens, ib.

How acquired.

persons compelled to receive goods have a lien at common law for their in-

demnit}'-, 689.
salvor has a lien for salvage, 690.

persons who by their labor have improved the things delivered to them, ib.
persons who have bestowed expense without producing alteration have not, ib.
liens may be created by express or implied agreement, 690, 691.
may be prevented from arising either by express or implied contract, 691-694.
liens may result from the usage of trade, 693.
depend upon implied agreement, 694.
general liens, of this description, 694, 695.
who possess them, 695, 696.
Row lost.

by abandoning possession, 697, 698.
> by taking the goods claimed in execution, 698.
•^ by claiming to retain them on another ground, ib.
'^ by the owner's tendering satisfaction, ib.

by abusing the goods, 699.
*^ by change of property, ib.
\b by giving credit, ib.
LIFE INSURANCE,
nature of, 495.

insured must have an interest in the life, 496.
nature of interest required, 496, 497.

Declaration, subscribed by the party whose life is insured, 498.
its contents, ib.

is incorporated by reference into policy, ib.
construction of its conditions, 498-500.

policy avoided by concealment or misrepresentation, 500, 501.
LIGHTERS,

underwriter when responsible for loss of goods transhipped into them, 432.
LLOYD'S,

usage of, not binding on non-subscribers, 421.
LOSS,

of bill or note, rules concerning, 355-358. See Bill of Exchange.
In case of insurance, 472. See Insurance.
LOST OR NOT LOST,

meaning of, in policy, 433. See Maritime Insurance.

720 INDEX TO THE

MAEITIME INSURANCE.

what, 410-412.

Parties to Contract of Insurance.

at common law any person might have been an insurer, 412.
monopoly of Royal Exchange and London Assurance companies, ih.
its abolition, ih.
alien enemies cannot insure, ib.
unless by royal license, ih.

English subject, when looked on as an enemy, 413.
occupation of a neutral territory by enemies, its effect^ ib.
brokers, their character, ib.
Subject Matter of Insurance,

must, generally speaking, be one in which the insured is interested, 414
common law, effect of the words interest or no interest, ib.
in what case the insured need not have an interest, ib.
wager policy, what, ih.

insurable interest, what constitutes, 415, 416.
insurance of seamen's wages illegal, 417.
reassurance illegal, ib.
exceptions, ib.

illegal voyage, or goods employed in illegal commerce, uninsurable, 418
trading with an enemy, generally illegal, ib.
unless by royal license, ib.

infirmity in any part of an integral voyage vitiates the whole, ib.
The Policy,

difference between the effect of the printed and the written part, 419.

parol evidence cannot be received to control meaning of, ih.

iisage admitted to explain it, 420.

usage of Lloyd's not binding on non-subscribers, 421.

open policy, what, ib.

valued polic}', what, ib.

must not be used as a cover for wagering, 422.

form of policy on ship and goods, 422-424.

Principal Parts of Policy.

Name of Imured, ita insertion, how far requisite, 424.

name of ship, effect of misdescription, how obviated, 42a.
Subject of Insurance, must be accurately described, ib.

freight, what may be described as, 426.

must be insured eo nomine, ih.

furniture what insurable as, ib.

goods, what insurable as, ib.

profits may be insured generally, ib.

nature of interest need not be expressed, ih.

declaration of interest, what and when requisite, ib.

does not reqiiire underwriter's assent, ib.

but ought to be communicated to him, 427.

ORIGIXAL WORK. -r21

MARITIME INSURANCE— coH^mMetZ.
Voyage insured,

must be accurately described, 427, 423.

effect of omissions, 428.

effect of words at and from, 428, 429.

effect of naming several ports of destination, 430.

effect of misdescription of voyage, ib.

insurance to an island or district protects the ship to her first port

there, 431.
protects goods to the port of delivery, ib.
duration of risk on ship, ib.
effect of words " in good safety," ib.
duration of risk on goods, 432.
goods must be landed with reasonable expedition, ib.
are protected after a transhipment into lighters, ib.
unless the insured interfere, ib.
Perils insured against.

meaning of words lost or not lost, 433, 434.

perils of the sea, 434-436.

fire, 436.

enemies, 436, 437,

pirates, rovers, and thieves, 437, 438.

jettison, 438.

arrests, restraints, and detainments of kings, princes, and people,

438-440.
barratry, 440-442.
other perils, 442.
General Observations respecting Perils.

underwriters not liable for loss naturally incidental to the thing

insured, 442, 443.
in. some cases the loss falls not on the underwriter, but the ship-
owner, 443.
in policies on freight, underwriter is not liable while the goods

exist, though they be sold or left behind, ib.
loss is properly ascribed to the peril which was its immediate

cause, ib.
where two causes equally contribute, may be ascribed to either,

443-445.
Date and Subscription of Policy, 446, 447.
Memorandum, 448.
its effect, ib.

effect of word stranded, 449-451.
Stamp,

must be impressed when policy is effected, 451, 452.
exception in case of policies of mutual insurance, 452.
what alterations may be made without a fresh stamp, 452, 453.
stamp duty, amount of, 453.
Warranties,

722 IXDEK TO THE

MARrriME mSJJRANCE— continued.
what, ib.

must be literally complied -with, 453
distinction in this respect between warranties and representationa

ib.
warranties are either express or implied, ib.
Express Warranties.
Of time of sailing.
effect of warranty to sail on a particular day, 454.
to depart or sail from a place, 454, 455.
Of safety of ship on a particidar day.

its effect, 455.
2o depart with convoy.
convoy, what, 455, 456.
master must obtain sailing instructions, 456.
must keep with convoy dui-ing the vo^'age, ib.
Of netdral property.
its effect, 456, 457.

sentence of a foreign court when conclusive evidence of breach
of warranty, 457.
Of freedom from seizure in port of discharge.
vessel when considered in port, 458.
deviation to avoid seizure, its effect, ib.
Implied Warranties.
Not to deviate.

deviation discharges underwriter from losses subsequent to it,

459, 460.
but not ab initio, 460.
what acts amount to deviations, 460, 461.
liberty to deviate, how construed, 461, 462.
unreasonable delay in sailing is in the nature of a deviation,

463.
an intention to deviate does not discharge the vmderwriter, ib.
deviation, if necessary, may be justified, ib,
as if to join convoy, ib.
or if occasioned by stress of weather, ib.
or the approach of enemies, ib.
or succoring distress, ib.
or mutiny, desertion, or sickness, ib.

'but the necessity must not arise from the insured's fault, ib.
Seaworthiness,

not requisite till time of sailing, 464.

warranty, when satisfied, 466.

only applies to commencement of voyage, 468.

effect of unseaworthiness occasioned by mistake or accident,

465.
effect of admission of, 469.
That a loss shall not happen by the insured's own default.

ORIGINAL WORK. 723

MARITIME INSURANCE— coH/<«i<fc?.

documentation a branch of this -warranty, 4G9.

difference between implied and express warranties of docu.

mentation, ib.
warranty of documentation may be waived by liberty to carry

simulated papers, 470.
is not implied in an insurance of goods, ib.
unless they belong to the shipowner, ib.
Result of Contract of Insurance

Safety or loss of the thing insured, 472.
Loss is either total or partial, ib.
Total loss,

is either total per se, or rendered total by abandonment, ib.
Loss, total per se, when, 473-478.

may Be rendered total by abandonment, 475, 476.
notice of abandonment must be given within what time, 478, 479.
abandonment cannot be partial, 479.
nor conditional, except by underwriter's consent, ib.
abandonment must be express and positive, ib.
informality in it may be waived, ib.
may be so by parol, ib.
effect of an abandonment, ib.
total loss of part, 480.
Partial loss.

loss pritna facte total may become partial, ib.
amount of partial loss, how calculated, 480, 481.
Fartial Zo.ss followed by a total one, no ground of claim, 482.
exception, ib.
Proceedings after a loss.

Where the tmderwriter admits his liability, ib.
adjustment, what, 483.
how far binding, ib.
Where underwriter contests his liability.

grounds of defence enumerated, 483, 484.
Afisrepresentation of a material fact avoids the policj-, 484.
what facts are material, ib.
misrepresentation to the first underwriter avoids the policy as to

the rest, ib.
contra if to any other underwriter, 484, 485.
representation need only be substantially true, 485.
Concealment of a material fact avoids policy, 486.
what facts are material, 486, 487.

qualific:>tions of the rule respecting concealment, 488, 489
Return of premium,

claimable when the risk has not been run, 490.

return for short interest, what, 491.

when an entire risk has commenced, no return clamable, 491, 492

apportionment of premium, when allowed, ib.

724 INDEX TO THE

MARITIME mSURANCE—co7itinued.

no return allowed when the insured has committed fraud, 493.

or if the insurance were illegal, and the voyage have been per

foi-med, ib.
contra when the voyage has not commenced, ib.
but notice of rescinding contract must be given, ib.
action against underwriter, usual form of, ib.
consolidation rule, what, 493, 494.
binding on the defendant, 494.
but not on the plaintiff, ib.
MARKET OVERT,

sale, 594, 595. See Sale.
MASTER AND SERVANT, 532. See Hiring and Service.
MASTER OF SHIP,

his powers and duties, 172, 173.
his liability for contracts, 370.
his remedy for wages, 553, 554.
when he may sell ship, 241.
what is requisite on changing him, 235.
his authority to hypothecate, 529. See Bottomry,

hia duties under contracts of affreightment, 380-389. See Affreightment.
MEASURES. See Weights and Measures.
MEMORANDUM,

of bargain, 615, 616. See Sale.
in policy, 448. See Maritime Insurance.
to bill or note, as to place of payment, 275.
MERCANTILE PROPERTY.
Incidents of, 221.

transferable under the bankrupt laws, ib.
exempted from ihajus accrcscendi, 222.
real property only exempted in equity, 223.
chattel property, whether both at law and in equity, 223, 224.
real property of a firm considered personal in equity, 224.
unless there be an agreement to the contrary, ib.
privilege of goods delivered to a trader in the way of his trade from distresa^

224, 225.
removability of mercantile fixtures, 225.
MERCHANT,

his duties under contract of affreightment, 389, 390. See Affreightrtwni.
MISCONDUCT,

of servants, justifies dismissal, when, 534.
MISREPRESENTATION,

of a material fact, avoids maritime policy, 484.
life policy, 500, 501.
fire policy, 506, 507.
MONTH,

signification of in bill or note, 275.
MORTGAGE,

of ships, 246. See Shipping.

ORIGINAL WORK. 725

NAME,

of each contracting party must be exj^ressed in a memorandum of a bargain, 016
617. See Sale.

of insured, how described in policy, 424. See Maritime Insurance.

of ship, how described there, 425.
NAVIGATION ACT. See Shipping.
NECESSITY,

justifies deviation, 463. See Deviation.
NEGLIGENCE,

whether it invalidates transfer of negotiable instruments, 292.

of agent. See Principal and Agent.
NEGOTIABLE INSTRUMENT,

transfer of, passes the property, 255.

except in case of fraud, ib.

what bills and notes are negotiable, 256.

may cease to be so, how, 256, 257.

bill of lading nogotiable, 377.
NT;UTRAL PROPERTY,

warranty of, in policy, 457. See Warranties, Maritime Insurance.
NONFEASANCE,

agent not liable for, to third parties, 216, 217.
NOTE,

in writing of bargain, what it must contain, 616, 617.
NOTICE,

by carrier to limit his responsibility, 362. See Carriers.

of dishonor, 322, 327. See Bill of Exchange.
NOTING,

of bill or note, what, 328.

unnecessary on inland bills, 327.

expenses o^ whether recoverable, 337.

OFFICERS. See Public Officers.

OPEN POLICY. See Maritime Insurance.

OWNER,

of ships. See Shipping.

his duties under contracts of affreightment, 380-389. See Affreightment.

PAPERS,

of ship simulated vitiate policy, when, 469.
liberty to carry, 470.

726 INDEX TO THE

PARTIAL LOSS,

occurs when, 480-482.

amount of, how calculated, 480, 481.
PARTICULAR AVERAGE,

what, 390.

exemption from in memorandum to policy, 448.
PARTNERS. See Partnership.
PARTNERSHIP,

1. What, 43.

communit}- of profit constitutes it, 44.

such profit must be taken as a principal, 46.

partnership governed by same principle as other contracts, 47, 4S

attempt to contract partnership by infant, 49.

hj feme covert, ib.

alien enem}', 50.

illegal partnership, ib.

nominal partner, what, 51.

his liability to strangers, ib.

what a holding himself out as a partner, 52.

what not, ib.

2. Partnership, how formed, ib.

must be by intervention of all parties, ib.

exception, 52.

need not be by writing, ib.

3. How dissolved, 53.

As between the partners themselves, ib.
where a term was prefixed, ib.
where no tei'm was prefixed, 54.
entire firm dissolved, 54, 55.
As to strangers, 56.

4. Jiiffhts and Liabilities of Partners inter se, 56.

As to their interest in the joint stock, ib.

are joint tenants thereof, ib.

subject to rule jus accrescendi inter mercatores locum no?i habtt, ib.

and in equity to the state of accounts, 56, 57.

what constitutes the joint stock, 58, 59.

as to their conduct towards each other, 60.

strict fidelity required, ib.

one must not profit at the expense of the rest, ib.

or place himself under a temptation to do so, 61.

breach of faith, ground of equity to dissolve firm, ib.

this done with reluctance, ib.

articles of partnership, 62.

as far as they go, must be acted on, 62, 63.

how construed, 63.

their usual contents, 64-68.

rights of partners, inter se, how enforced, 68.

at law, 68-70.

ORIGII^AL WOllK. 727

PARTNERSHIP— co«(!»it<eJ.
in equity, 70-73.

5, Mights of third Persons against Partners, 73.

each partner agent for the rest, to wliat extent, ib.

his authority not restrainable by private arrangement, 74.

cannot bind the rest by deed, unless authorized by deed, 75.

not, though partnersliip articles were under seal, 75, 76.

such a deed binds himself, 76.

may bind firm by release, ib.

can only bind them to contracts respecting the partnership business, ib.

"what contracts are of that description, 71-80.

may bind them by negotiable instruments, 80, 81.

in ■what manner, 81.

not^ unless purposes of firm require the circulation of such instruments, 82.

or unless usual, ib.

how, if it be a farming or mining concern, ib.

he to -whom firm is bound, must have dealt bona fide, 82, 83.

taking partnership security for separate demand, a badge of fraud, 84.

its effect, ib.

contra, if no separate demand, ib.

as in case of discount, ih.

transfer of partnership security may be fraudulent, pro tanto, ib.

other instances in which firm is bound by act of partner, 85.

when answerable for his tort, ib.

for breach of re venue laws, ib.

sometimes even criminally, 86.

liability of partner for engagements of the rest, commences, when, ib.

ends, when, ib.

not prolonged by a wrongful user of his name, 87.

notice of dissolution, how given, ib,

in Gazette, when sufficient, ib.

by circulars, when proper, ib.

by other means, ib.

in case of dormant partners, what sufficient, 87, 88.

liability of a retired partner on contract previous to dissolution, 88, 89.

representative of deceased partner discharged at law, 89.

not in equity, ib.

joint securities, when construed joint and several against him, 91-94.

liability of late partner, or his representative, reduced by payments mado

since dissolution, 94.
not discharged by an agreement with the other partners, 95,
unless creditor of firm consent, ib.
such consent, when binding, 96.
firm, when discharged by act of one partner, 97.
payment by one, payment by all, ib.
release to one, release to all, ib.
covenant not to sue one, no release, ib.

6. Rights of Partners against third Persons, 97.

728 INDEX TO THE

PARTWEE&BIP— continued.

on loan of partnership money by a single partner, 98.
sale of partnership goods by single partner, ib.
guaranty given to one for benefit of all, ib.
■when considered to be so given, ib.
effect of change in firm on partnership securities, 99.
liabilities to firm may be released by one partner, ib.
satisfied by payment to one, ib.
suspended by indulgence by one, 100.

cannot be enforced, if enforcement would be unconscientious in one, ib.
partner may hold shipping in the name of the firm, 242.
PART-OWNERS,

of ships. See Shipping.
vPAYEE, . ■

of bill or note, 27 5-277. See Bill of Exchange.
PAYMENT,

bow to be made, 654. See Debt.
in bill or note, effect of, 659.
in goods, 657.

appropriation of, 668-672. See Appropriation of Payments.
of bill or note, 334. See Bill of Exchange,
supra protest, 335.

to agent, is payment to principal, 190.
by one partner is payment by all, 97.
PERILS,

comprised in policy of insurance, 433, 434. See Insurance.
PILOT,

master and owner, when not liable for acts of, 388.
PIRATES,

perils by, 437, 438. See Perils.
PLEDGE,

by factor of principal's goods, invalid at common law, 178.
when valid by statute, ib.
POLICY,

of insurance. See Insurance.
POST,

notice of dishonor sent by post, sufficient, 322.
remittance of money or bill by post, when sufficient, 654, 663.
POST-DATING,

bill or note, consequence of, 274.
POSTMASTER GENERAL,

his exemption from liability, 211, 212.
PREMIUM,

return of, when allowed, 489, 490.

return of, for short interest, 441. See Maritime Insurance.
PRESENTMENT,

of bill or note, 303-321. See Bill of Exchange.
PRICE,

if fixed, must be expressed in memorandum of bargam, 617.

ORIGINAL WORK. 729

PRICE — continued.

not otherwise, 617.

for -what agent should sell, 162, 163.
PRBIAGE,

■what, 390.
PRINCIPAL AND AGENT.

1. Definition and character of Agent.

agent, what, 147.

appointed by whom, ib.

cannot delegate his agency, 148.

but may sometimes employ assistants, ib.

who may be agents, 149.

{eine covert, ib.

infant, ib.

appointed, how, ib.

by bare words, ib.

appointment may be inferred from the conduct of principal, iSi.

when it must be in writing, ib.

when by deed, 149, 150.

factors and brokers, distinction between, 150.

statutory enactments, concerning brokers, 150-152.

2. Rights of Principal against Agent.

depend on agent's instructions, 1 53.

in the absence of specific instructions, agent must pursue the usual cours3 o.

business, ib.
is bound to have sufficient skill for that purpose, 154.
is responsible for those whom he employs under him, ib.
loss resulting from his exceeding his authority, falls on himself, 155.
but if gain result it belongs to his employer, ib.
excess cured by subsequent recognition, 155, 156.
strict good faith required from him, 156.
agent employed to sell, must not become the purchaser, ib.
except under peculiar circumstances, 156, 157.
cannot dispute the title of his principal, 157.
must keep a clear account, ib.

principal entitled to all increase made from his own property, 158.
ex. gr., to interest made on his own money, ib.
unless the agent be a stakeholder, ib.

agent charged with all payments actually made to him, ib.
or losses incurred through his own negligence, ib.
or the imposition of a forger, ib.
but not for losses incurred without his default, 159.
exception, ib.

principal may recover the balance due to him in assumpsit, IGO, 161.
may obtain an account by bill in equity, 161.
or sue agent at law for its refusal, ib.
Duties of an Agent employed to sell.
must keep the goods carefull}', ib.
must insii/e them, in what cases, 162.

730 INDEX TO THE

PRINCIPAL AND AGE^T—co?itmued.

must sell for the price limited by his instructions, 162.

if none limited, for what the goods are worth, 163.

not upon credit, ib.

unless that be usual, ib.

del credere commission, what, ib.

once thought to create original liability, ib.

but now only a suretyship, ib.
Duties of Agent employed to purchxse.

if he transgresses them, principal may refuse the goods, 16i.

must do so in a reasonable time, ib.
Difference between Principal's rights against a remunerated and an unremun«-
rated Agent.

former may be compelled to commence his task, 165.

latter cannot, ib.

but is liable for misconduct in performing it, ib,

though less skill is required than if he were paid, ib.

unless he act in a public or professional character, ib

embezzlements by, how punished, ib.

3. Rights of Agent against Principal.

to receive his commission, 166.

amount thereof, how fixed, ib.

how he may be deprived of it, 166, 167.

may charge principal with advances, if made according to the course of

business, 167.
not otherwise, ib.

unless rendered necessary by circumstances, 108.
and not occasioned by his own misconduct, ib.
when entitled to indemnity from his principal, 168, 169.

4. Rights of third Persons against Principal.

agent's authority to bind principal to third person, either express or in
ferred, 170, 171.

when inferred is measured by the extent of his usual employment, 171.

and continues till its determination is made known, ib.

general agent, what, 172.

powers of, cannot be limited by private orders, 173.

contra of particidar agent, ib.

principal, by his subsequent assent, confirms the invalid act of agent, 174.

but must confirm it wholly or not at all, ib.

authority of agents strictly construed, ib.

if given to two, not executable by one, ib.

if given to three, jointly and severally, not executable by two, ib.

court search the instrument for the principal's intention, 174, 175.

agent's authority includes permission to use the necessary or usual means of
accomplishing the object in view, l7o.

agent employed to get a bill discounted may indorse it, unless expreosly re-
stricted, ib.

policy brokers may adjust loss, ib.

in case of unforeseen contingency, 176, 177.

ORIGINAL WORK. 73I

PRINCIPAL AKD AGENT— cond^iMeJ.

agent to execute a deed, how he must sign, 177.

agent employed to draw, accept or indorse, how he laust act, 177, 178.

agent's power to bind principal by a disposition of his goods, how it stood

at common law, 178.
how it stands under the Factor's Act, 6 Geo. 4, c. 94, and 5 <fe 6 Vict. c. 39,

178-187.
agent employed to purchase, purchasing in principal's name, binds him, 187
vendor knowing agent's character, and electing to give him credit, is bound

by his election, ib.
undisclosed principal may be charged when discovered, 187, 188.
except in certain cases, 188.
principal cannot by a premature settlement with agent deprive vendor of

his election, ib.
agent's representation binds principal, when, ib.
his suppression or misrepresentation, ib.
his admission, 189.
paj-ment to an agent in the course of his employment, is paj-ment to princi

pal, 190.
distinction between payments to brokers and factors, ib.
agent writing off money due to him from debtor, does not discharge the

latter against principal, ib.
qualification of this rule, 190, 191.

debtor not exonerated by payment to factor after express notice, 191.
unless principal be indebted to factor on the balance of account, ib.
debtor on a security must see that the agent he pays is in possession of it, ib
delivery to agent a delivery to principal, 192.
principal responsible for agent's wrongs, if committed in the negligent execu

tion of his orders, 192, 193.
but not if wilful or malicious, 194.
responsible for his fraud, 195, 196.
not in general criminally responsible for him, 196.
when his authority to commit criminal act may be presumed, 196, 197.
authority of agent how determined, 197-202.
C Jiiffhts of Principal against third Parties.

principal may adopt agent's contract, though unauthorized, 202.

must adopt it altogether, ib.

difference between his right to adopt a contract, and a bare act, ib.

his right to adopt contracts made for him by an agent dealing in his cwn

name subject to the contractee's rights against agent, 203, 204.
difference between right to set off a debt due from a broker, and one from a

factor, 204.
payment or delivery by agent is payment or delivery by principal, 205.
principal may recover money paid by an agent, without sufficient considera-
tion, ib.
may sometimes recover where agent could not, 205-207.
may avail himself of agent's evidence, 207.
6, Hiffhts of Agent against third Parties.

732 IXDEX TO THE

PRINCIPAL AOT) AGE^T— continued.

agent may sue on contracts, in the subject of wliich he had a special pro

perty, 208.
or for his master's property, transferred by him under circumstances which

give a right to recover it, ib.
or for torts done to it when in his possession, ib.
may sometimes sue for his own benefit, ib.

may sue on contract mada by him in his own name for undisclosed princi-
pal, 209.
right to sue on contracts made as agent, when in fact principal, ib
v. Rights of third Parties against Agent.

agent contracting as such for a known principal, incurs no liability, ib,

exception in the case of the master of a ship, 210.

contracting for an unnamed principal is prima facie liable, ib.

Tesponsibility of British agent for foreign principal, ib.

of agent contracting for irresponsible principal, ib.

exception in favor of public ofiicers, 211, 212.

agent will be liable where he has expressly bound himself, 212.

difficulty of ascertaining where this is intended, 213.

person acting as agent without authority, when liable, ib.

agent exceeding his authority, liable for a resulting loss to third persons, ib,

when liable for money paid to him for his principal under circumstances

which would entitle some one to recover it, 214-216.
liable to third parties for torts committed in his master's service, 216
but not a mere nonfeasance, 216, 217.
PRINCIPAL AND SURETY. See Guaranty.
PRIVILEGES,

of British ship, 228. See Shipping.
PRIZES,

cruising for, without liberty, a deviation, 462.
liberty to convoy, when requisite, ib.
PROFITS,

insurable, 426.
PROPERTY,

in goods passes to vendee, when, 596-600. See Sale.
in ships, 238. See Shipping.
PROTEST. See Bills of Exchange.
PUBLIC OFFICERS,

Of Government, their exemptions from liability for their subordinates, 211, 212
of banks, 283, 284.

REASSURANCE,
illegal, 417.

except in certain cases, ih.
what must be expressed in policy in those cases, ib.

ORIGINAL WORK. 733

RECAPTURE,

of a British vessel entitles owner to have her again on payment of salvage, 407

of an ally's vessel entitles the owner in like manner, 407, 40S.

unless his government act on a less liberal principle towards British property
408.
RECEIPT,

may be tendered on payment, 673.

penalty for not signing, ib.

effect of, in evidence, ib.

when it requires a stamp, ib.
RECOGNITION,

of agent's authority cures previous excess, 174.
RE-EXCHANGE,

when recoverable, 327.
REGISTRY,

of ships, 231, 232. See Shipping.
REIMBURSEMENT,

how obtained by surety, 585. See Guaranty.
RELEASE,

by one partner binds firm, 76.

to one partner discharges firm, 97.
RENEWAL,

of bill or note, 346.
REPRESENTATIONS,

of agent bind principal, 195, 196. i

distinction between representations and warranties, in sales, 637-640.

in insurances, 453.

substantial compliance with, sufficient, ib.

Representations in the Nature of Guaranties,

by Lord Tenterden's act must be in writing, 588.
construction of that statute, 588, 589.
RESPONDENTIA, 527. See Bottemry.
RESTRAINT,

of trade generally, illegal, 38.

partially, when suffered, ib.
RETURN,

of premium, when allowed, 489-491.

S.
SALE,

Contract of,

how it differs from exchange, 590.
1. Ability of Vendor to sell,

when he has the property of the goods, 593.

when he has not the property, ib.

market overt, what, 594.

sale in, when unavailable to seciu'c purchaser, 595.

sale by agent in fraud of his principal, when valid, 596.

734 IXDEX TO THE

3ALE — continued.

sale of negotiable instrument, ib.
2. Form and Requisites of Contract of Sale.
may be either by deed or parol, ib.
if by deed, property passes on the delivery, 597.
if by parol, is to take effect either in prctsenti or infuturo, ib.
mode of contracting a sale to take effect in prcesenti at common law

597, 598.
effect of tender, part-payment, and earnest in binding bargain, 598.
their effect in passing the property, 598-601.

agreement to be completed infaturo passes the property when, 601-604.
sale not to be completed within the year must be contracted in writing,

604.
parol agreements which possibly may be performed within the year

valid, 604, 605.
so if one part is to be performed within the year, 605.
sales of goods of the value of 10^. and upwards must be contracted in

the mode prescribed by seventeenth section of the Statute of Frauds,

605, 606.
what articles are goods within the meaning of that act, 607, 608.
what amounts to an acceptance, 608-614.
what amounts to earnest, 615.

note or memorandum in writing, what it must contain, 615, 616.
"memorandum of the bargain," not so strictly construed as "memoran-
dum of the agreement," 616.
but must express names of contracting parties, ib.
and price, if one be fixed, G17.
but not otherwise, ib.
what a sufficient signature, 617, 618.
signature of party to be charged only required, 618.
signature by agent, when sufficient, ib.
agent maj' be authorized by parol, ib.
must not be the other contracting party, ib.
nor an agent who sues in his own name on the contract, 619.
auctioneer the agent of both parties, ib.
his authority, how executed, ib.
how long revocable, 619, 620.
broker the agent of both parties, 620.

binds his principals by delivery of bought and sold notes, 620, 621.
bought and sold notes constitute the contract, 621.
must correspond, ib.
the entry in broker's book may be sufficient, if there be no bought and

sold notes, ib.
8. Duties of the Vendor.

To deliver Goods on the Vendee's performance of conditions prece-
dent, 622.
readiness to pay price, a condition precedent, 623, 624.
dispensed with in case of credit given, 624.

ORIGINAL WORK. 735

SALE — continued.

or constructive delivery, 625-627.
To comphj with Warranties, 630.
Implied warranties, ib.

cannot arise where there is an express agreement, 632.
or be implied from amount of price, ib.
Express warranties, what amounts to one, 633.
no oral allegation previously to a sale by written contract is a war

ranty, 633, 634.
vendee's remedy on breach of warranty, 634.
cannot return article, if he have received it, ib,
except in certain cases, ib.
future event may be warranted, 636.
warranty cannot be against an obvious defect, ib.

differs from untrue representations not actionable unless wilful, 638-640
4. Duties of Vendee.

To accept the goods and pay tlte Price, 640.
form of action for non-acceptance, ib.

conditions which vendee must perfoi-m before suing, 640, 641.
must tender the goods, when, 641.
must enter them when sent by carrier, how, ib.
must allow vendee to inspect them, when, ib.
vendee is excused from accepting by vendor's fraud, 642.
by his employing puffers at an auction, ib.
contract, amounting to wager, vendor's rights upon, 644.
form of action in case of non-payment, ib.

breach of contract, by the vendor, in what cases a defence, 644, 645.
value of goods, how estimated in the absence of agreement, 646.
6 Illegality of Contract an Excuse for Non-performance by either Party, ib.

distinction between breaches of laws for the protection of the public and

breaches of laws for the protection of the revenue, 647, 648.
Bale when illegal, because contracted on Sunday, 648.
when illegal because a stock-jobbing contract, 649.

when illegal on account of the use of improper weights and measurea,
650-652.
SAMPLE,

sale by, 641. See Sale.
SALVAGE,

what, 404, 405.

Fratn Perils of the Sea.

amount of salvor's compensation, how ascertained, 406.
how recovered, 407.
From Enemies.

owner of the recovered property, his rights at common law, ib.
by statute, ib.

amount of salvage on recapture, 408.
SATISFACTION,

of bill or note, what amounts to, 347.

736 INDEX TO THE

SEA,

perils of, 434-436. See Perils.
SEAMEN,

when considered British, 230.
Contracts with.

nature and form of contract, 538-541.
duties of seamen under it, 542, 543.
rights of seamen under it, 543-548.
•wages how lost, 548-553.
how forfeited, ib.

remedies of seamen for them, 553-556.
SEAWORTHINESS,

warranty of, 464-466. See Warranty.
SENTENCE,

of foreign court, its effect in falsifying warranties, 467 See Court.
SERVANT.

See Hiring and Service.
SERVICE. See Hiring and Service.
SET-OFF,

right to set-off against principal debt due by agent, when it exists, 203, 204.
SHIPPING.

Tlie privileges of a British Ship, 228.

1. What Ships are British, 230.

ship in order to be British must be navigated as one, ib.

and registered, ib.

when navigated as a British ship, ib,

what seamen considered British, ib.

ships trading between places in America may be navigated by British

negroes, ib.
ship within the Company's charter by Lascars, 231.
due proportion of British seamen, when excused, ib.
penalty for excess of foreign seamen, ib.

penalty for goods illegally imported, exported, or carried coastwise, ib.
ship not to be allowed to depart from British port, unless duly navigated, ib,

2. Registry of Ships.

unregistered vessel exercising the privileges of a British vessel forfeited, ib

what ships entitled to registry, ib.

on what events a registered ship ceases to be British, 232.

ship, where to be registered, 232, 233.

by whom, 233.

what must be done by owners to obtain registry, ib.

declaration, what to be subscribed, 234.

by whom, if ship belong to corporation, ib.

bond, what to be given, ib.

account under builder's hand to oe produced, ib.

in case of the registry of a prize ship, what necessary, 235

certificate of registry, its contents, ib.

certificate, loss of, how repaired, ib.

certificate, remedy for detention of, ib.

ORIGINAL WORK. 737

SHIPPING — continued.

registry entered in a book, 233.
what to be done on change of master, ib.
registry de novo, when required, 236, 237.
registry when dispensed with, 237.

only necessary to confer the privileges of a British ship, 233.
3, Title to a British Ship.
Hoio acquired.

by building her, ib.
by capture and condemnation, ib.

rules respecting the competency of condemning courts, 238, 239.
How transmitted.

under bankrupt or insolvent law, 239.
by conveyance from the master, ib.
when master has a right to dispose of ship, 239-241.
by conveyance from the owner, 241.
conveyance regulated by 8 & 9 Vict. c. 89, 241-246.
property in ship divided into sixtj'-four parts, 241.
no one can be registered owner of less than one sixty-fourth, ib.
rules concerning other fractional parts, 241, 242.
partners may hold shares in the name of firm, 242.
cannot be more than thirty-two owners, ib.

provision for equitable right of minors, heirs, legatees, creditors, and
others, ib.
Mode of Conveyance.
by bill of sale, ib.
which must recite certificate, ib.
but is not void for a mistake in recital, 242, 243.
must be produced to collector and comptroller of ship's port, 243.
must be entered in book of registry, ib.
and indorsed on the certificate of registry, ib.
becomes effectual against the vendors and all others, ib.
except subsequent purchasers, from time of entry in book, ib.
rival vendees and mortgagees of the same property take precedence accord-
ing to the time when the indorsement is made on certificate, ib.
thirty days allowed to each transferee to produce certificate, 244.
if ship at sea, thirty days reckoned from her return to her port, ib.
further time may be granted, i6.

how indorsement maybe procured during ship's absence from her port, .4o.
production of bill of sale or power of attorney, when dispensed with, 246.

on what conditions, i6. ,. t o<a oaT

mortgagee of ship, how far the property in it is transferred to him, 246. 247.
preferred to assignees of mortgagor in case of bankruptcy, 248.
4, Mights of Part-ow7UTrs, tb.

part-owners of a ship may be joint-tenants, ib.

but are usually tenants in common, ib. , , . ., ■,._.

the majority cannot employ her against the consent of the minonty. without
indemnifying them, ib.
47

788

INDEX TO THE

SHIPPING — continued.

indemnity enforced by Court of Admiralty, 248.
may take ship from minority upon indemnifying them, 249.
m case of an equal division, either half may apply to court, ib.
adjustment of ship's accounts, how obtained, ib.
part-owners resemble partners, ib.

and are, generally speaking, all liable for ship's necessary expensea, 249, 260.
are not in reality partners, 250.
differences between part-owners and partners, 251.
SHORT INTEREST,

return of premium for, 491. See Premium.
SIGNATURE,

of vendor or vendee, what a sufficient one, 618. See bale.
of guaranty, 564. See Guaranty.
SMALL DEBTOR'S ACT, See note on Insolvency.
STAKEHOLDER,

not responsible for interest made with tlie deposit, 158.

STAMP,

for receipt, when necessary, 673. See Receipt.

to guaranty, when requisite, 580, 581. See Guaranty.

to policy, 451, 452. See Policy of Insurance.

on bill or note, 273, 274. See Bill of Exchange.
STOPPAGE IN TRANSITU,

right of, what, 677-680.

whether its effect be to rescind sale, 680, 681.

who possesses it, 682.

how long it continues, 682-685.

how defeated, 685-687.

how exercised, 687.
STRANDING,

what in policy, 448^51.
SUB-AGENTS,

chief agent responsible for, 154.
SURETY. See Guaranty.
SURVIVORSHIP. See Jus Accrescent
SUSPENSION,

of remedy on bill or note, 346.

TENDER,

what a legal tender, 657.

must be in money or its equivalent, ib.

Bank of England notes, when equivalent to cash, ib.

tender of country bank-notes good unless objected to ih.

tender of a larger sum legal, 658.

unless change be required, ib.

tender subject to a condition bad, ib.

ORIGINAL WORK. 7,'{{)

TEKDER— continued.

informal tender, how cured, 659.

tender to an agent sufficient, ib.

ov to one of several joint creditors, ib.
TITLE,

of principal not disputable by agent, 157.

to British ships, 238. See Shipping.
TORTS,

of agent, principal ■when liable for, 192, 19S.
TOTAL LOSS,

when it occurs, 4'7S.
TRADING,

with an enemy illegal, 418,

except by royal license, ib.
TRADER,

in general, who may be, 37.

who disqualified, 40, 41.
TRANSFER,

of bill or note, 288. See Bill of Exchange.

of negotiable instruments passes the property, ib,
TRANSITUS. See Stoppage in Transitu.

TJ.

UNDERWRITER. See Insurance.
USAGE,

of trade admissible to explain teim.s of policy, 420,

of Lloyd's not binding on non-subscribers, 421.
USANCE,

signification of, 321.
USURY,

what constitutes usury, 665-668.

penalty for, 667.

avoids contracts, 666.

invalidates bill or note, when, 344, 345.

VALUED POLICY, 421. See Polici/ of Insurance.
VENDEES. See Sale.

of property in shipping, their priority against each other, 243. See Shipping,
VENDOR. See^aZe.
VOYAGE,

description of, in policy, 427, 428. See Maritime Insurance.

WAGER POLICY,

meaning of term, 414.
generally illegal, 415.

740 INDEX TO THE ORIGINAL WORK

\TAGES,

of seamen, 548. See Seamen. •

not insurable, 417.

of servants, 532. See Hiring and Service.
WARRANTY,

in policy, 453. See Insurance.

on sale, 630-640. See Sale.
WEIGHTS AND MEASURES,

statutory provisions concerning, 650-652.
\\^OiIAN,

married, cannot trade, 40.

exceptions, 41.

married, may be an agent* 149.

INDEX

TO NOTES OF THE AMERICAN EDITORS.

AFFREIGHTMENT.

Authority of master to sell ship or cargo limited to cases of necessity, 239, 240.
Not confined to cases arising in a foreign port, or port of another state, 240.
Deliverance of the vessel after a sale not sufficient to disprove the necessity

of, ib.
What evidence will be required of a purchaser at such sale to establish his

title, 240.
Charter-party, definition of, 370.
Kot confined to the hire of a ship to a merchant, ib.

Not required to be in writing, 3Y0, 3*71.

Demurrage, what, 371, 372.

How much allowed on wrongful seizure, or detention of vessel without circum-
stances of aggravation, 372.

What detention embraced by a covenant to pay, ib.

At what time consignee is bound to receive goods where a charter-party allows
a certain number of lay days for unloading, 373.

When a general owner is responsible for the conduct of the master and mar
iners, and when a general freighter, 375.

Bill of lading, effect of indorsement of by a consignee to a bona fide purchaser
for a valuable consideration, 378.

Indorsement of a bill of lading by the consignee will not transfer the property
without delivery of the goods, ib.

Modified enunciation of the law on the above point, 379.

Warranty of seaworthiness, what included under, 381.

Goods are prima facie supposed to be shipped to be put under deck, ib.

Master must take all possible care of the cargo, 383.

What degree of necessity is required to constitute master agent for all con-
cerned, ib.

Right of the master ceases on the arrival of the ship at her port of de»-
tination, 384.

Merchant has lien on ship for value of his goods sold, ib.

742 INDEX TO NOTES

AFFRElGWTMENT—coyitinued.

Master is not bound in general to deliver goods to consignee personallj^ 385.

Ride as to carriers engaged in inland navigation, ib.

No distinction as to liability of master and o-svners between foreign and inland
voyage, 386.

Wliere freight is to be repaid, 391.

What -will entitle the ship-owner to freight, 392.

In what cases full freight is due notwithstanding the non-arrival of the
goods, 393.

When the consignor will be responsible for freight, 395.

Duty of master to procure another vessel and forward cargo where his own hac
been disabled, 398, 399.

In what cases freight pro rata itlneris is due.
AGENT. See Frhicipal and Agent.
APPLICATION OF PAYMENTS. See Payment.
APPRENTICESHIP.

Indenture of, executed by father, without concurrence of child, not only void-
able, but void, 558.
AVERAGE, GENERAL.

When allowed, 403-405.

On total loss of the ship occasioned by voluntary stranding, if the cargo is
saved, 404.

When wages of the crew are subject to contribution, ib.

Where the jettison is of deck load, owner not entitled to benefit of general
average, 405.

How the value of the goods thrown overboard is to be ascertained on a general
average, ib.

Lien of the master upon cargo, to enforce contribution to, ib.
BAILMENT.

Distinction between contract of bailment and of sale, 591, 592.
BANKS.

Liability of for acts of notary, 154.

After receiving their own notes cannot dispute their genuineness, 655.
BANKRUPT AND INSOLVENT LAWS.

Effect of upon contracts made previous to their existence, or with citizens of
another state, 352.
BILLS OF EXCHANGE AND PROMISSORY NOTES.

Considered as simple contracts, 262.

Effect of adding seal to, ib.

Character of promissory notes in various states, ib.

Period at which promissory notes and inland bills wei'e rendered negotiable, 264.

Distinction between indorsements which will render a party responsible, aa
maker or as guarantor, 265.

Question as to whether certificate of deposit is a negotiable instrument, 267.

Note or bill payable out of a particular fund not payable unconditional Ij", 268

So of a bill drawn by one government upon another, ib.

As to bill or note clogged with unusual conditions, 269.

Bills of exchange drawn between the several states, foreign, 2*71.

Note not valid in Louisiana where amount expi'essed in figures only, 273.

OF THE AMERICAN EDITORS. 743

BILLS OF EXCnANGE AND PROMISSORY NOTES— con^inwcci
"Words "for value received" not essential, 272.
Not essential to bill of exchange that it should be negotiable, 275.
Whether a note paj'able to maker's own order is a promissory note under

statute of Anne, 27 G.
When action can be maintained upon one of a set of exchange without producing

the rest, 279.
How a person may become a party to a bill of exchange by jirocuration, 280.
Nature of the contract of indorsement, 287.
Indorser may incur greater liability than drawer, ib.
Whether an indorsement may be made "without putting the name of the party

on the paper, 288.
Rights of a bona fide holder where the indoi'sement is in blank, 289.
"Equities, subject to which an overdue note is taken, 293, 294.
Indorsers of accommodation paper not co-sureties, 295.
Transfer of bank-note by delivery is a warranty of its genuineness, ib.
Whether there is an implied warranty of value upon the transfer of bank-
notes, ib.
Diversity between English and American doctrine as to a promise to accept a

non-existing bill of exchange, 298.
Present inclination of the courts, 299.
Rights and duties of an acceptor supra protest, 301, 302.
When presentment for acceptance is unnecessary, 303.
On the loss or destruction of a bill, demand not good, unless indemnity tendered

to both maker and indorser, 304.
Where there are several makers of a note, what demand is sufficient to charge

indorser, ib.
Conflict of authority whether presentment by the clerk of the notary ia

sufficient, 804, 305.
Distinction taken in Kentucky between the clerk and the deputy of the

notary, 305.
American rule as to the pkce where presentment is to be made to charge

maker, 305, 30G.
Rule different where it is sought to cliarge indorser, 306.
Allowance in the United States of days of grace, ib.
The fourth of July treated as a holiday, ib.

Question whether daj's of grace are allowable on bills payable at sight, ib.
Protest unnecessary on inland bills or promissoj-y notes, 30G, 307.
Advantages of the practise, 307.
Whether protest should be under notai'ial seal, ib.
Protest must state distinctly the presentment of the bill, ib.
How far protest of foreign bill is evidence of dishonor, ib.
Who may give notice of dishonor, 308.
In the case of joint indorsers not being partners, notice of dishonc r must be

given to each, ib.
Where the notice must be given, ib.
Various cases upon this subject, 308, 309.
When a notice at either of several places is sufficient, 308.

744 ■ INDEX TO NOTES

BILLS OF EXCHANGE AND PROMISSORY l^OTES—coyitmued.

Exception to the general rule that notice must be personal where holder and

indorser live in the same town, 309.
No prescribed form of notice, ib.
Effect of mistake in the description of a note, 309.
Whether the statement that a note "has been protested for non-paj'ment" and

the indorser "looked to for payment of the same" is sufficiently full, 310.
Cases upon the subject of due diligence in giving notice, ib.
It is not necessary that the notice should be actually received, 310, 311.
Due diligence required of the United States as well as of individuals, 311.
Holder not required to give notice to the drawer where the drawing waa

fraudulent, ib.
Rule where the drawer has no effects in the hands of the drawee nor expectation

of an}', 312.
Notice must be given to indorser, although he becomes executor of the maker

before maturity of the note, ib.
Or although, from some circumstance, holder is unable to make demand upor

maker, ib.
Partial assignment of maker's property to indemnify indorser does not dispensf

with notice, 313.
But otherwise where the assignment is of all liis effects, ib.
Notice necessary unless the assignment has imposed upon the indorser the

obligation of taking up the note, 313, 314.
As to what time the formal protest may be drawn up when the fact, recorded on

protest, has taken place, 328.
When promise to pay by an indorser, who is discharged by the laches of the

holder, will be binding, 331.
Cases establishing that an accommodation drawer or indorser is entitled to

notice, 332.
Bill of exchange, or promissory note, always imports prima facie a con

sideration, 338.
Title of indorsee in negotiable note found in circulation after it is due, ib.
Conflict of opinion as to the manner in which a creditor will hold a negotiable

instrument taken as a collateral security for an existing debt, 341.
Whether taking higher security for same debt extinguishes the lower one

347-349.
Payment of bill before maturity will not protect acceptor from claim of eubse

quent bona fide purchaser before maturit}', 349.
Conflict of authority as to effect of new promise in reviving negotiability ol a

note barred by a discharge in bankruptcy, 352.
What agreement to give time will be sufficient to discharge indorser, 353.
The English and American law on the subject of lost bills, 356.
CASHIER OF BANK. See Principal and Agent
CERTIFICATE OF DEPOSIT. ^e& Bills of Exchange.
CHECK.

Definition of, 263.

Whether it must be payable to bearer or on demand, ib.

Measure of diligence required in the presentation cf ehecks, ib.

OF THE AilERIC/VX EDITORS. 745

CHECK — continued.

Distinction between checks and bills of exchaneie, 2G3.
COMMERCIAL LAW.

Importance of a uniform sj'stera, 33.

Decisions of the State courts upon, not binding on Federal tribunals, 203.
COMMON CARRIERS.

Only liable for ordinary neglect in transporting slaves, 359.

Not responsible for injury to traveller occasioned by his own want of ordinary

care, ib.
When liable as such for the transportation of specie or bank-bills, 360.
Money taken for personal use is part of traveller's baggage, ib.
Limitations upon their obligation to receive passengers, 361.
Cases considering "what constitutes an act of God excusing carrier," ib.
Conflict of American authorities as to the validity of stipulations by carriers

limiting their responsibility, 363.
Common law rule as to delay did not extend to time of delivery, 3S'2.
Common carriers by water allowed to restrict their general liability, 386.
Act of Congress allowing this limitation, ib.

Question as to whether a general notice by carrier of intention to assume a
limited responsibility, brought to knowledge of bailor, will have same effect as
a special contract, 364.
Responsibilities of common carrier not varied by reservation in bill of lading
of privilege of transhipment, 367.
CONSIDERATION.

Adequacy of, not inquired into, 88.

An exception, to the common law rule, that a seal imports a consideration,
exists where the condition is in restraint of trade, ib.
CONTRACTS.

By what law to be governed, 19.
CORPORATIONS.

Capacity of, to contract beyond the limits of the sovereignty creating them,

140, 141.
Effects of a foreign corporation liable to attachment b}'^ foreign creditor, 141.
Corporations created bj- charter not required to act by a common seal, 142-144.
Extent to which trading corporations are generally affected by those legal and

equitable considerations which affect the rights of natural persons, 144.
An action by an individual stockholder against a director not maintainable,
the director being the agent of the corporation, 145.
CUSTOMS. See Usage.

EVIDENCE. See Affreightment, Maritime Insurance.
FIXTURES.

Antiquity of the rule as to fixtures in favor of trade, 226, 211.
Test to determine whether a fixture falls within the exception or not, 226.
Not material that building to be removed has been occupied as a residence, 227.
GOODWILL.

Unsettled state of the law as to, 253.

Whether the goodwill of a mercantile establishment survives on the death ol

one partner, or belongs to the partnership assets, ib.
Question, is the subscription list of a newspaper a part of the goodwill, 253, 254

746 INDEX TO NOTES

GUARANTIES.

Definition of guaranty, 562.

Wliat constitutes a guaranty, 562, 563.

Contract of a dd credere factor not -witliiii the jjurview of ihe Statute of Frauds

663, 564.
Discrepancy between the later and earlier English and American cases upon the

question, whether a promise by one to indemnify another against a liability

assumed by him, at promisor's request, for the debt of a third person, is

within Statute of Frauds, 564, 565.
Ccmstruction of guaranty, 565.
Letter of credit, a guaranty, ib.

Letters of credit are of two kinds, general and special, ib.
When general, ib.
When special, ib.

Any one may accept and act upon a general letter of credit, ib.
When the letter is special, he alone to whom it is addressed has the right to act

upon and acquire rights under it, ib.
To determine whether a guaranty is a continuing one or not, the intent of the

parties the only sure guide, 566.
Conflict of authority as to whether the maxim, that the words of an instrument

are to be taken most strongly against the party using them, should apply to

a guaranty, ib.
Guaranties are to be construed with reference to the xisages of trade, ib.
Consideration of guaranty.
To support a guaranty of a prior debt there must be a consideration independent

of the original debt, 567.
The giving credit or the making the contract, a sufficient consideration to

suppoi't the guaranty of a contemporaneous or subsequent debt, ib.
A valuable consideration, however small, if given in good faith, is sufficient to

support an action on a guaranty, ib.
Distinction between cases in which the guaranty is contemporaneous with, and

those in which it is subsequent to, the principal debt, ib.

1. When the guaranty is collateral to the principal contract, but is made at the
same time, and becomes an essential ground of the credit given to the
principal debtor, this class not within the Statute of Frauds, 567, 568.

2. Cases in which the collateral undertaking is subsequent to the creation of
the debt, and not the inducement to it, though the subsisting liability is the
ground of the promise, without any distinct and unconnected inducement.
This class also is within the Statute, ib.

3. When the promise to pay the debt of another arises out of some new and
original consideration moving between the newly contracting parties, this
class not within the Statute, ib.

Quayre, is the third class not within the Statute, 568-570.
Authoi'ities on the construction of the term agreement, 570, 571.
Acceptance of guaranty, 571.
When notice of acceptance necessary, ib.
Rule in New York, 572.

Omission of notice does not imply injury to the guarantor as a matter of
course, ib.

OF THE AMERICAN EDITORS, 741

GUARANTIES— conduiMf J.
Kotice of default, 572.
When, if ever, necessary, 572, 573.
In Massachusetts, settled that an extension of the time of payment will discliarge

a guarantor, where it would have that effect on an ordiiiar}-^ contract of

suretj'ship, 583,
INSURANCE, FIRE.

Any species of property liable to be injured, or any amount of interest, may be

insured, 503.
"What parties competent to form the contract, \b.
Liberal construction to be given to policy, 504.
Conflict of aiithority as to a distinction between affirmatory and promissory

representations, 505.
And also as to the obligations upon the insured to communicate the nature of big

interest in the policy, where it is a limited or conditional one, 506, 507,
Questions arising concerning the description of the property, 507, 508.
Whether answei's to interrogatories, referred to in the policy, and attached to it,

are to be treated as representations or warranties, 508, 509,
Construction of clause requiring notice to be given where there is a double

insurance, 510.
Where no notice is given of prior insurance on obtaining second, and the latter

is thus rendered void, there is a conflict of authority as to whether it can be

set up to defeat the first, 511.
Construction of clause relating to the amount to be recovered in case of double

insurance, 512-514.
Decisions on the clause as to inci'ease of risk in use of the building, 514, 515.
As to increase of risk from alteration of building, 51G.
Where certificate is to be given by notary public most contiguous to place of

fire, what will be sufiicient, 516, 517.
At what stage of the proceedings insurers can object to formal defect in pre

liminary proof, 517, 518.
Assignment of fire policy before loss not valid imless some interest in the

property go with it, 518, 519.
Nor available, without notice to or consent of underwriters, 520.
Re-insurance valid, 521,

Duty of first underwriter, on application for, ih.

Principle upon which amount of loss is ascertained and paid, 521, 522,
Questions arising upon insurance of mortgaged property, mortgagor, mortgagee,

and underwriters, 523, 524,
Distinction between contract of fire and marine insurance in the mode of adjust-
ment and satisfaction, 524, 525.
Evidence admissible to prove gross negligence and gross misconduct of the

plaintiff as the cause of the destruction of the building, 625, 526.
INSURANCE, LIFE.

Assured must have an interest in life insured, 496.

What will amount to it, ib.

What is death by suicide, 498.

Consequence if, in the representation on which a life insurance is effected, a

material fact is untruly stated or concealed, 501.

748 IXDEX TO XOTES

CN'SUEAXCE, MARITIME.

Whether the contract of insurance must be in ■writing, 410.

Equity will decree the specific execution of a valid agreement for insurance, or
an action for damages may be maintained, on the non-performance thereof, at
law, 411.

The part owner of a vessel has no authority, as such, to insure for the other
o^wnei-s, 413.

Validity of wager policies, 414.

"What interest will support an insurance, 416.

Contract for reassurance allowed in the United States, 41Y.

What is a double insurance, and principles applicable thereto, 4lY, 418.

How far a contract of insurance is afifeeted by a subsequent illegality in the
voyage, 419.

Policy of insurance valid, although the uame of the assured is left blank, 424.

Meaning of the phrase, in a policy, " whom it may concern," 424, 425.

Meaning of an insurance upon a ship for a certain voyage, 427.

What is embraced by a policy on goods to be shipped between two certain
days, 428.

What is embraced by the exception, "perils of the sea," and dangers of
" the river," 434.

More comprehensive than "the act of God," or "the public enemies," ib.

But this exception does not exclude responsibility for negligence, 435.

Policy covers the loss occasioned by the explosion of the boiler of a steam-
boat, ib.

If, after tlie commencement of the voyage insured, a war breaks out between
the country to which the property belongs and a foreign countr}-, the policy
is not vacated, 436.

Conflict of authority as to the meaning of the word "thieves," in a policy, 437.

What is embraced xmder the clause against "arrests, restraints, and detain-
ments," 438.

Whether fraud is essential to constitute "barratry" of master or mariners, 440.

Insurers not responsible for the destruction of a vessel by worms, in the Pacific
Ocean, unless mentioned in the policy, 442.

K^egligence of master and crew no defence to the insurer, where the loss
happens from an enumerated peril, and there is also a clause against
barratry, 444.

Insurers responsible for amount of damage done to another vessel b\' a collision
with the vessel insured, and which the owners of the latter have been com-
pelled to pay, 445.

Kor is it material that the collision was the result of negligence in the master
or crew of the vessel insured, ib.

Doctrine modified bj' recent decision, ib.

Legal efi'ect of the memorandum, 448.

Whether the insurer will bo responsible where the commodity specifically
remains, although of no value, ib.

What will amount to a deviation, 459.

When it can be predicated of river navigation, ib.

Authorities on various points connected with, 4G0.

What is included under a warranty of seaworthiness, 465, 466.

OF THE AMERICAX EDITORS. 749

IN'SUEAXCE, MARITIME— coni!i«7<f J.

"Whether it embraces defects arising in the course of the voN-age, 46G.

It seems that in this case they must be brought to the notice of tlie owner, and

an opportmiity be lost of repairing the vessel, or he will not be respon-
sible, ib.
The owner of the vessel is required, under this warranty, to have some one on

board capable of navigating her, besides the master, 467.
A policy of insurance being a personal contract of indemnitj', does not pass as

an incident upon the transfer of the vessel, 471.
Is assignable in equity, but whether it may be rendered negotiable so as to vest

a right of action in the assignee, in his own name, is not settled, 470, 471.
Consent of the underwriters is not necessary to render an assignment valid,

unless there is a clause to that effect in the policj', 471, 472.
Abandonment, whether, when once made, it is affected by any subsequent

events, 473.
When the right to abandon exists, 473, 4*74.
Eule in the United States as to the amount of damage which will give a I'lght to

abandon, 474.
In ascertaining this amount, principle upon which the value of the ship is to be

estimated, 26.
Authorities upon various questions connected with abandonment, 475.
The right of abandonment in cases of consti'uctive total loss confirmed, 476.
The propriety of requiring notice of abandonment, ib.
The insurers on a ship, if they pay a total loss, are not liable for any prior

partial loss which has not been repaired, 482.
If a total loss occurs, from which they are exempt, they are not liable for any

prior partial loss which in that event does not prove prejudicial to the

assured, ib.
Rule as to the deduction of one-third new for old is applicable to steam-
boats, 4S2, 483.
Effect, upon a policy, of fraud, concealment, or misrepresentation, 485.
"Whether the concealment of a material fact, b}' an agent, from his principal,

will vitiate a policy negotiated in good faith by the latter, 4SG.
"When the insured is entitled to a return of premium, although but for his own

fault the peril insured against might have been run, 490.
INTEREST.

By what law the rate of is to be determined, 663.
How calculated where there have been partial payments, 663, 664.
Compound interest not generally allowed in the United States, 660.
JOINT STOCK COMPANIES.

The English law formerly recognized no distinction in unincorporated partner-
ships growing out of the number of partners and extent of objects undertaken,

101, 102.
Provisions, similar to those passed in England, are to be found in few, if any, of

our states, 102.
Test by which to determine whether a subscriber to, is liable to third persons as

a partner, 136.
LA"W MERCHANT.
How expanded, 24.

750 INDEX TO NOTES

LAW MERCHANT— coH<»i«eJ.

History of, 24.
LIEN.

May exist under tlie maritime law, or in equity, independent of possession, 68ft,

Conflict of decisions as to whether an innkeeper has a lien for his charges i?
keeping a horse not belonging to a guest, 691.

If a stolen horse, he being ignorant of the theft, ib.'

"Whether carrier has a lien against the rightful owner, ib.

Lien cannot be acquired by any wrongful act, 692.

Growth of the doctrine in modern times, ib.

Authorities as to various classes of liens, 694.

EflPect of the loss of possession upon the right of lien, 697
MEMORANDUM.

What memorandum will be suflBeient under the Statute of Frauds, 615, 616.

May be explained by reference to the usage and custom of trade, 616.
PARTNERSHIP.

Necessity and importance of the relation, 43.

Principles on which mutual responsibility of partners depend, 44, 45.

Limited partnerships, where allowed, 45.

Suggestions as to their expediency, 46, 47.

Difference between partnerships i7iter se, and as to third persons, 48-50.

As to those i?iter se, the intention of the parties is the key, 48.

As to third personS; what interest in the profits will create a partnership, ib.

The true criterion of liability furnished by the general law of contracts, 50.

Dissolved by seizure of the interest of one partner on execution for separate
debt, 54.

How it may be continued after tlie death of one partner, 55.

Interest of one partner may be sold upon an execution at law, for his separate
debt, and possession given to the purchaser, 57.

The law unsettled as to the mode in which the separate creditor of one partner
may make his execution available against his debtors' interest in the partner-
ship assets, 57, 58.

"Whether a court will enjoin a sale until the value of the interest can be ascer-
tained by an account, 58, 59.

Real estate, purchased with the funds, and used in the business of a partnership,
treated in equity as personalt}-, between the partners themselves, or their
creditors, 59.

Its character as between the heirs and personal representatives of a deceased
partner, 60.

Rule of the civil Jaw as to apportionment of profits in the absence of stipu-
lation, ib.

When one partner is entitled to compensation from his copartner, 61.

Form of deed of partnership, 62-66.

Propriety of inserting in it a stipulation as to the mode of dividing the partner-
ship assets on a dissolution, 67.

Remedies between partners, 68.

Action of account lies only in the case of a mercantile partnership, 70.

Whether a court of equity will decree the specific execution of a contract to form
a partnership, 7L

OF THE AMERICAN EDITORS. 751

PARTNERSHIP— coni!«tM«J.

Distinction between general and special partnerships, 73, 74.

Authority of dormant partners, 74.

Modern doctrine as to power of one partner to bind his co-partner by deed,
75, 76.

Conflict of authorities as to the right of one partner to make a general assign-
ment of the partnership effects for the benefit of creditors, 79, 80.

A transfer of all the effects of a firm for the payment of its debts is a virtual
dissolution of the partnership, 80.

Real estate of a firm belongs to the partners as tenants in common, ib.

One partner has no right to make accommodation indorsements or guaranties in
the name of the firm, 83.

Efi'ects of a dissolution upon the rights of the partners, 88.

As to the acknowledgment of a debt by one partner after dissolution, 88, 89.

Respective rights of the joint and several creditors of a partnership, 89-94.

Obligation of creditor to sue surviving partner, 95.

One partner cannot apply assets of the firm to payment of his separate debt^
nor will ignorance by the creditor of the fraud affect the rights of his co-
partner, 97.

The maxim, "Jus accrescendi inter mercatores locum non habet," applies to partner-
ship chattels, 223.
PAYMENT.

Payment in counterfeit bills a nullity, 655.

Exception where payment is made bo7ia fide to a bank in its forged bills, ib.

Whether a payment in current bank-notes, which are genuine, but -worthless,
both parties being ignorant of the fact at the time, will be good, ib.

When the acceptance of a promissory note is to be considered a payment of a
precedent debt, 656.

Present rule in New York, 656, 657.

Payments, application of rule where the duty devolves on the court, 668.

Whether the creditor has a right to apply an indefinite payment in the manner
least beneficial to his debtor, 668, 669.
PRINCIPAL AND AGENT.

Agency is a personal trust and confidence, and is sometimes thus expressed : —
delegata potesias non potest delegari, 148.

Powers, requiring the exercise of discretion, cannot be delegated by a corpora-
tion to its directors, ib.

Agent maybe appointed to make a contract respecting real estate bj parol, 149.

Classes of commercial agents, 151.

Leading distinctions between factors and brokers, ib.

Ordinary duties of cashiers of banks, 152.

Authority of, ib.

No right to allow any violati )n of the established rules or usages of the bank, ib.

Rule of responsibility and measure of damages applicable to commercial
agents, 154.

Liability of banks acting as agents for the collection of commercial paper,
154, 155.

Whether responsible for neglect of notary in making presentment, or giving
notice of dishonor, 155.

752 INDEX TO NOTES

PRINCIPAL ANT) AGEWr—contimied

"When a subsequent ratification will render principal liable for the acts of an

unauthorized agent, 156.
Eule applicable to corporations, ib.

Limitation where act of agent is unlawful and directly injurious, ib.
Principal not liable for a wilful trespass committed by his servant, because

approved by his general agent^ ib.
Duties of agent towards his principal, 159.
Consequences of the breach of any of his obligations to the prejuflice of his

principal, ib.
When agent justified in disobeying instructions, ib.
To what extent is the maxim, " ipiorantia legis neminem excusat," applif-flble to

the duties of an agent, 160.
Agent not allowed to derive any personal benefit from the exercise of his agency

to the prejudice of the principal, ib.
Agent, when the agency has closed, is bound to render an account thereof to his

principal, ib.
Qualification of the agent's liability to render an account, ib.
Efi"ect of the agent's neglecting to keep proper accounts, 161.
The law attributes to his account a prima facie credit, ib.
As to liability of agent under a del credere commission, 163, 164.
When the principal can recover property in the hands of a factor, upon his death

or insolvency, 165, 166.
Eights and liabilities of factors upon consignments, with or without instruc-
tions, 168, 169.
Distinction between cases of joint and several authority, 175.
Exception in the case of public agencies, and in commercial transactions, ib.
Implied authority connected with either general or special agencies, 176.
Notice to the pledgee that the goods were transmitted to the consignee with

directions to sell simply, does not vitiate the pledge, 180, 181.
Limitation of the rule, that if the vendor treat the agent as the principal

debtor, knowing the relation, he cannot afterwards resort to the prin-
cipal, 187.
Restrictions upon the general responsibility of the master for acts of his

servant, 192, 193.
Extent of the master's liability for the acts of his servant done in disregard of

the general orders or special command of the master, 194, 195.
Effect upon the authority of an agent on death of principal, 197-200.
Rule where the agency is coiipled with an interest in the subject thereof, 198.
Qucere, as to the doctrine where third persons deal with the agent in ignorance

of the implied revocation, 199.
An agent contracting on behalf of his principal, and in ignorance of his death,

not personally responsible, 200.
Effect of notice given by principal to purchaser to pay him and not agent, 202.
Conflict of authority as to responsibility of an agent contracting for a foreign

principal, 211.
Difference in extent of the liability of public and private agents, 212.
Exemption of principal from responsibility does not carry with it that of the

agent, 213.

OF THE AilEPJCAX EDITORS. 753

PRIXCIPAL AM) AGE^T—contlniieJ.

Liability of an agent who has paid over money wrongfulU- to his princiiJal, 216.
Principal alone is responsible, for omission or neglect of duty of agent, to third

persons, 217.
SALE.

Distinction between contract of bailment and of sale, 591, 592.

What may be the subject of sale, 593.

Possession of the thing by the rightful owner is not essential to the validity of

a sale, 594.
English law of market overt does not prevail in this coimtry, and the title of

the purchaser depends upon that of the vendor, ib.
Illustration of this principle, ib.
Fraud will vitiate a contract of sale, although possession has been delivered, as

between the parties, 597.
But a purchaser, for a valuable consideration, and without notice, from a

fraudulent vendee, acquires a good title, ib.
Distinction between what is necessary on a contract of sale to vest tlie right of

propert}^ and to give the right of possession, ib.
On a contract of sale the right of property will be changed by an absolute

delivery, unless the parties expressly state that the title shall not pass until

payment be made, 600.
Consideration of the general rule, that while anything remains to be done to

ascertain the value, quantity, or quality of the thing sold, the right of

property does not pass, 602.
The mere transfer of possession where the vendee does not comply with

a condition to be performed contemporaneousl}-, does not amount to a

delivery, 622.
Construction of the clause in the Statute of Frauds, requiring an agreement, not

to be performed within one j-ear from the time of the making thereof, to be in

writing, 605.
Distinction taken under the Statute of Frauds, between a contract for a thing

existing in solido, and an agreement for a thing not yet made, to be delivered

on a future day, 607
TTie mere handing over goods under tlie expectation of immediate payment, does

not constitute absolute delivery, 622.
Vendee cannot refuse to receive a larger quantity of goods, which is intended as

a mere compliance with his order, and not sent for the purpose of charging

him with the excess, ib.
When a sale is procured by fraud no title passes to the vendee, 629.
Purchase of goods with a preconceived design not to pay for them, will avoid the

sale, ib.
A sale and delivery, procured through a false representation of the vendee in re-
gard to his solvenc} and credit, passes no title as between the parties ; and

vendor's remedies thereon, ib.
Contract for sale of goods obtained by fraud is voidable at the instance of the

party defrauded, 630.
Authorities disapproving the tendency of modern decisions towards the doctrine

of the civil law as to the implied warranty of the quality of an article

sold, 631.
48

754 INT)EX TO NOTES

SALE — continued.

Distinction as to implied -warranty of quality, between an executed and executory

contract for the sale of goods, 631.
Warranty implied on a sale by sample, ib.
"Warranty implied on a sale of provisions for domestic use, ib.
But otherwise when they are sold as articles of merchandise, 632.
Where there is a particular express warranty, the law will not extend that war-
ranty by implication, 633.
The rule that a warranty of title is implied on the sale of personal property,
only applies where the possession is in the vendor at the time of sale,
633, 634.
Consideration of the doctrine as to when an affirmation at the time of sale, f
bill of parcels, an invoice, or words of description in a bill of sale, will amount
to a warranty, 637-640.
Held that a purchase made at an auction sale of goods, at one and the same
time, and from the same vendor, although the articles purchased are nxime-
rous, and are struck off separately at separate and distinct times, constitute
but one entire contract, 642.
SfflPPING.

Reference to Acts of Congress relating to American shipping, 228.

British navigation laws substantially repealed, 229, 230.

Bill of sale of ship valid without enrolment, 23S.

Object of latter, ib.

Authority of master to sell the ship or cargo, 239, 240. See Affreightment.

Effect of the Registry acts of P92 and of 1850 respective!}', 242, 243.

Liability of mortgagee of a shij whether in or out of possession, 246, 247.

As to the power of a Court of Admiralty to decree a sale of the vessel, on the disc

agreement of the owners about a particular vo3'age, 249.
One part owner is agent for the other jm-t owners, in all that concerns the

repairs and necessaries of the ship, 250.
Master agent for them all, ib.
Responsibility of part owners for torts, ib.

One part owner can only dispose of his own interest in the vessel, 251.
Creditors of both part owners entitled to no priority of payment out of the ves
sel over the separate creditors of either, ib.
STOPPAGE EST TRANSITU.
Nature of the right, 679.
Does not rescind the contract of sale, ib.
How long it continues, 683.
SURETY.

Can only be charged when the case is brought within the very terms of his con-
tract, and court will not go into an inquiry whether the surety has been
injured by a departure from those terms, 582, 583.
TRADE MARKS.

Recognition of property in, 254.
What will amount to an invasion of, ib.

When and on whose behalf Courts of Equity will interfere, ib.
TRADE, RESTRAINT OF.
Contracts in, 38-40.

OF THE MIERICAN EDITORS. 755

TRADE, RESTRAINT OF— continued.

Difference between general and partial restraints, 38-40.

"What is a reasonable restraint, 39.
USAGE.

Principles upon which evidence of, is admitted, 29-31.

Distinctions between particular usages of trade and customs of merchants, 31.

The existence of a particular usage a question of fact, ib.

Proposition, that no usage inconsistent with the rules of law can be established,
must be received with qualification, 32.

How far admissible, to explain what is doubtful, but never to contradict what
is plain, ib.
USURY.

What necessary to constitute, 665.

General principles as to, 665, 666.

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