surety. surety's contract, or the variance is material, that is, such as to to prejuput the surety in a worse position (which last is a question of dice of law, not of fact) (a). The surety is not the less discharged "even though the original agreement may notwithstanding such variance be substantially performed "(b). An important application of this rule is that "where there is a bond of suretyship for an officer, and by the act of the parties or by Act of Parliament the nature of the office is so changed that the duties are materially altered, so as to affect the peril of the sureties, the bond is avoided" (c). But when the guaranty is for the performance of several and distinct duties, and there is a change in one of them, or if an addition is made to the duties of the principal debtor by a distinct contract, the surety remains liable as to those which are unaltered (d). The following rules rest on the same ground: "The surety is discharged by any contract between the creditor and the principal debtor by which the principal debtor is released, or by any act or omission of the creditor the legal consequence of which is the discharge of the principal debtor" (e). "A contract between the creditor and the principal debtor, by which the creditor makes a composition with, or promises to give time to or not to sue the principal debtor, discharges the surety, unless the surety assents to such contract" (ƒ), or unless in such contract the creditor reserves his rights against the surety (g), in which case the surety's right to be indemnified by the principal debtor continues (h). One reported case constitutes an apparent exception to the general rule, but is really none, as there the nominal giving of time had in substance the effect of accelerating the creditor's remedy (i). (a) Sanderson v. Aston, L. R. 8 Ex. 73. (b) Per Lord Cottenham, Bonar v. Macdonald, 3 H. L. C. 226, 238. (c) Oswald v. Mayor of Berwickon-Tweed, 5 H. L. C. 856; Pybus v. Gibb, 6 E. & B. 902, 911, 26 L. J. Q. B. 41; Mayor of Cambridge v. Dennis, E. B. & E. 660, 27 L. J. Q. B. 474. (d) Harrison v. Seymour, L. R. 1 C. P. 518; Skillett v. Fletcher, L. R. 1 C. P. 217, 224, in Ex. Ch. 2 C. P. 469. (e) I. C. A. s. 134. Kearsley v. Cole, 16 M. & W. 128; Cragoe v. (f) I. C. A. s. 135. Oakeley v. (g) Whether the surety knows of it or not: Webb v. Hewitt, 4 K. & J. 438, 442; and see per Lord Hatherley, 7 Ch. 150. (h) Close v. Close, 4 D. M. G. 176, 185. (i) Hulme v. Coles, 2 Sim. 12. Dealings the matter of the agency on his own "If the creditor does any act which is inconsistent with the rights of the surety, or omits to do any act which his duty to the surety requires him to do, and the eventual remedy of the surety himself against the principal debtor is thereby impaired, the surety is discharged" (a). "A surety is entitled to the benefit of every security which the creditor has against the principal debtor at the time when the contract of suretyship is entered into, whether the surety knows of the existence of such security or not; and if the creditor loses or without the consent of the surety parts with such security, the surety is discharged to the extent of the value of the security" (b). Not only an absolute parting with the security, but any dealing with it such that the surety cannot have the benefit of it in the same condition in which it existed in the creditor's hands, will have this effect (c). B. "If an agent deals on his own account in the business of by agent in the agency without first obtaining the consent of his principal; and acquainting him with all material circumstances which have come to his own knowledge on the subject, the principal may repudiate the transaction" (d): the Indian Act goes on to add, "if the case show either that any material fact has been dishonestly concealed from him by the agent, or that the dealings of the agent have been disadvantageous to him," but these qualifications are not recognized in English law (e). account. "If an agent without the knowledge of his principal deals in the business of the agency on his own account instead of on account of his principal, the principal is entitled to claim from the agent any benefit which may have resulted to him from the transaction" (ƒ). These rules are well known and established and have been (a) I. C. A. s. 139 (=Story, Eq. Jur. § 325 nearly); Watson v. Allcock, 4 D. M. G. 242, supra, p. 156; Burgess v. Eve, 13 Eq. 450; Phillips v. Foxall, L. R. 7 Q. B. 666; Sanderson v. Aston, L. R. 8 Ex. 73. (b) I. C. A. s. 141. Mayhew v. Cricket, 2 Swanst. 185, 191; Wulf v. Jay, L. R. 7 Q. B. 756, 762; Bechervaise v. Lewis, L. R. 7 C. P. 377; securities now subsist notwithstanding payment of the debt for the benefit of a surety who has paid, Merc. Law Amendment Act 1856, 19 & 20 Vict. c. 97, s. 5. And see 2 Wh. & T. L. C. (4th ed.) 1002. (c) Pledge v. Buss, Johns. 663. (d) I. C. A. s. 215. (c) See Story on Agency § 210; Ex parte Lacey, 6 Ves. 626. (f) I. C. A. s. 216. The over and over again asserted in the most general terms. commonest case is that of an agent for sale himself becoming the purchaser, or conversely: "He who undertakes to act for another in any matter shall not in the same matter act for himself. Therefore a trustee for sale shall not gain any advantage by being himself the person to buy." "An agent to sell shall not convert himself into a purchaser unless he can make it perfeetly clear that he furnished his employer with all the knowledge which he himself possessed” (a). "It is an axiom of the law of principal and agent that a broker employed to sell cannot himself become the buyer, nor can a broker employed to buy become himself the seller, without distinct notice to the principal, so that the latter may object if he think proper" (b). The rule is not arbitrary or technical, but rests on the principle that an agent cannot be allowed to put himself in a position in which his interest and his duty are in conflict, and the Court will not consider "whether the principal did or did not suffer any injury in fact by reason of the dealing of the agent; for the safety of mankind requires that no agent shall be able to put his principal to the danger of such an inquiry as that." It is a corollary from the main rule that so long as a contract for sale made by an agent remains executory he cannot re-purchase the property from his own purchaser except for the benefit of his principal (c). A like rule applies to the case of an executor purchasing any part of the assets for himself. But it is put in this somewhat more stringent form, that the burden of proof is on the executor to show that the transaction is a fair one. This brings it very near to the doctrine of Undue Influence, of which in a later chapter. It makes no difference that the legatee from whom the purchase was made was also co-executor (). Another branch of the same principle is to be found in the rules against trustees and limited owners renewing leases or purchasing reversions for themselves (). (a) Whichcote v. Lawrence, 3 Ves. 750; Lowther v. Lowther, 13 Ves. 95, 103; and see Charter v. Trevelyan, 11 Cl. & F. 714, 732. (b) Per Willes, J. in Mollett v. Robinson, L. R. 5 C. P. at p. 655. Cp. Guest v. Smythe, 5 Ch. 551, per Giffard, L. J.; Sharman v. Brandt, L. R. 6 Q. B. 720. (c) Parker v. McKenna, 10 Ch. 96, 118, 124, 125. And see on the subject generally the notes to Fox v. Mackreth in 1 Wh. & T. L. C. (d) Gray v. Warner, 16 Eq. 577. (e) Notes to Keech v. Sandford in 1 Wh. & T. L. C. The last case on the subject is Trumper v. Trumper, 14 Eq. 295, 8 Ch. 870. Nature of remedies applicable. Again "It may be laid down as a general principle that in all cases where a person is either actually or constructively an agent for other persons, all profits and advantages made by him in the business beyond his ordinary compensation are to be for the benefit of his employers" (a). "If a person makes any profit by being employed contrary to his trust, the employer has a right to call back that profit" (b). And it is not enough for an agent who is himself interested in the matter of the agency to tell his principal that he has some interest: he must give full information of all material facts (c). Even this is not all: an agent, or at any rate a professional adviser, cannot keep any benefit which may happen to result to him from his own ignorance or negligence in executing his duty. In such a case he is considered a trustee for the persons who would be entitled to the benefit if he had done his duty properly (). In this class of cases the rule seems to be that the transaction improperly entered into by the agent is voidable so far as the nature of the case admits. Where it cannot be avoided as against third parties, the principal can recover the profit from the agent. But where there are a principal, an agent, and a third party contracting with the principal and cognizant of the agent's employment, and there are dealings between the third party and the agent which give the agent an interest against his duty, there the principal on discovering this has the option of rescinding the contract altogether. Thus when company A. contracted to make a telegraph cable for company B., and a term of the contract was that the work should be approved by C., the engineer of company B., and C. took an undisclosed sub-contract from company A. for doing the same work; and further it appeared that this arrangement was contemplated when the contract was entered into; it was held that company B. might rescind the contract (e). (a) Story on Agency § 211, adop- (b) Masseyv. Davies, 7 Ves. 317,320. observations of the Court thereon, 102. (e) Panama & S. Pacific Telegraph Co. v. India Rubber Co. W. N. 1875, 80. y. The rule as to settlements "in fraud of marital right" was Settlethus given by Lord Langdale (a) :— ments in fraud of marital "If a woman entitled to property enters into a treaty for marriage right. and during the treaty represents to her intended husband that she is so entitled, that upon her marriage he will become entitled jure mariti, and if during the same treaty she clandestinely conveys away the property in such manner as to defeat his marital right and secure to herself the separate use of it, and the concealment continues till the marriage takes place, there can be no doubt but that a fraud is thus practised on the husband and he is entitled to relief” (b). But it does not stop here. "If both the property and the mode of its conveyance, pending the marriage treaty, were concealed from the intended husband as in the case of Goddard v. Snow (c), there is still a fraud practised on the husband. The non-acquisition of property of which he had no notice is no disappointment, but still his legal right to property actually existing is defeated" (d). In order to have such a settlement set aside the husband must Conditions prove (i) That he was the intended husband at the date of the settlement-i.e. that there was then a complete contract to marry which continued until the marriage (e). (ii) That the settlement was not known to him till after the marriage (f). What if the intended husband knows that some disposition has been or is to be made, but not its contents? The doctrine as far as it has gone seems to be that such knowledge makes it the duty of the husband to inform himself, and if he omits inquiry he cannot afterwards complain (g) ; but if he does inquire, and incorrect information is given, this is equivalent to total concealment (h). According to the modern doctrine no difference is made by collateral circumstances, "such as the poverty of the husband--the fact that he has made no settlement upon (a) Cp. on this subject Dav. Conv. vol. 3, pt. 2. 707. (b) England v. Downs, 2 Beav. 522, 528. (c) 1 Russ. 485. See the earlier authorities there discussed. (d) 2 Beav. 529. (e) England v. Downs, supra. Cp. Downes v. Jennings, 32 Beav. 290,294. (f) St. George v. Wake, 1 My. & K. 610, 625. (g) Wrigley v. Swainson, 3 De G. & Sm. 458. (h) Prideaux v. Lonsdale, 4 Giff. 159. The Court of Appeal (1 D. J. S. 433, 438) declined to say anything on this part of the case, affirming the decision on the ground that the settlor herself did not understand the effect of her act. for setting them aside. |