closed in the form of repurchases by Livesey Sons & Co. from Isaac Cooke & Sons. The price of cotton having fallen, the result of this transaction was that a sum of £680 was due from Isaac Cooke & Sons to Livesey Sons & Co. For this sum an action was brought against Isaac Cooke & Sons by Eshelby as trustee in the liquidation of Maximos, who had failed.

The defendants by their defence claimed to set off against the plaintiff's claim money due from Livesey Sous & Co. to the defendants upon a general account.

In answer to the plaintiff's interrogatories whether in the transactions sued on the defendants did not believe that Livesey & Co. were acting as brokers on behalf of principals the defendants said: “We had no belief on the subject. We dealt with Livesey & Co. as principals, not knowing whether they were acting as brokers on behalf of principals, or on their own account as the principals."

At the trial at Liverpool in February, 1884, before BAGGALLAY, L. J., without a jury, it was proved that Livesey & Co. bought and sold both for principals and on their own account, and that Cooke & Sons knew this. BAGGALLAY, L. J., held that the defendants were entitled to the set-off, and gave judgment for them.

The Court of Appeal (BRETT, M. R., LINDLEY and BOWEN, L.JJ.) reversed this decision, and entered judgment for the plaintiff for the amount claimed, on the ground that the defendants were not entitled to the set-off unless they had been induced by the conduct of Maximos the principal to believe, and did in fact believe, that they were dealing with Livesey & Co. as the principals.

Against this decision the defendants appealed.

W. R. Kennedy, Q. C., and T. G. Carver for the appellants.

D. French, Q.C., and Synnott, for the respondents, were not heard. Lord HALSBURY, L. C. My Lords, in this case a merchant in Liverpool effected two sales through his brokers. The brokers effected the sales in their own' names. The appellants, the merchants with whom these contracts were made, knew the brokers to be brokers, and that it was their practice to sell in their own names in transactions in which they were acting only as brokers. They also knew that the brokers were in the habit of buying and selling for themselves. The appellants with commendable candor admit that they are unable to say that they believed the brokers to be principals; they knew they might be either one or the other; they say that they dealt with the brokers as principals, but at the same time they admit that they had no belief one way or the other whether they were dealing with principals or brokers.

It appears to me that the principle upon which this case must be decided has been so long established that in such a state of facts as I have recited the legal result cannot be doubtful. The ground upon which all these cases have been decided is that the agent has been permitted by the principal to hold himself out as the principal, and that

the person dealing with the agent has believed that the agent was the principal, and has acted on that belief. With reference to both those propositions, namely, first, the permission of the real principal to the agent to assume his character, and with reference to the fact whether those dealing with the supposed principal have in fact acted upon the belief induced by the real principal's conduct, various difficult questions of fact have from time to time arisen; but I do not believe that any doubt has ever been thrown upon the law as decided by a great variety of judges for something more than a century. The cases are all collected in the notes to George v. Clagett, 2 Sm. L. C. 8th Ed. 118.

In Baring v. Corrie, 2 B. & Ald. 137, 144, 147, in 1818, Lord Tenterden had before him a very similar case to that which is now before your Lordships, and although in that case the court had to infer what we have here proved by the candid admission of the party, the principle upon which the case was decided is precisely that which appears to me to govern the case now before your Lordships. Lord Tenterden says of the persons who were in that case insisting that they had a right to treat the brokers as principals: "They knew that Coles & Co. acted both as brokers and merchants, and if they meant to deal with them as merchants, and to derive a benefit from so dealing with them, they ought to have inquired whether in this transaction they acted as brokers or not; but they made no inquiry." And Bayley, J., says: "When Coles & Co. stood at least in an equivocal situation, the defendants ought in common honesty, if they bought the goods with a view to cover their own debt, to have asked in what character they sold the goods in question. I therefore cannot think that the defendants believed, when they bought the goods, that Coles & Co. sold them on their own account. And if so, they can have no defence to the present action."

I am therefore of opinion that the judgment of the Court of Appeal was right. The selling in his own name by a broker is only one fact, and by no means a conclusive fact, from which, in the absence of other circumstances, it might be inferred that he was selling his own goods. Upon the facts proved or admitted in this case the fact of selling in the broker's name was neither calculated to induce nor did in fact induce that belief.

I now move your Lordships to affirm the judgment of the Court of Appeal and to dismiss this appeal with costs.

Lord WATSON.1 The only facts which have a material bearing upon the appellants' defence are these. According to the practice of the Liverpool cotton market with which the appellants were familiar, brokers in the position of Livesey Sons & Co. buy and sell both for themselves and for principals; and in the latter case they transact, sometimes in their own name without disclosing their agency, and at

other times in the name of their principal. In their answer to an interrogation by the plaintiff touching their belief that Livesey Sons & Co. were acting on behalf of principals in the two transactions in question, the appellants say: "We had no belief upon the subject. We dealt with Livesey Sons & Co. as principals, not knowing whether they were acting as brokers on behalf of principals or on their own account as the principals."

That is a very candid statement, but I do not think any other answer could have been honestly made by persons who, at the time of the transactions, were cognizant of the practice followed by members of the Liverpool Cotton Association. A sale by a broker in his own name to persons having that knowledge, does not convey to them an assurance that he is selling on his own account; on the contrary it is equivalent to an express intimation that the cotton is either his own property or the property of a principal who has employed him as an agent to sell. A purchaser who is content to buy on these terms cannot, when the real principal comes forward, allege that the broker sold the cotton as his own. If the intending purchaser desires to deal with the broker as a principal and not as an agent in order to secure a right to set-off, he is put upon his inquiry. Should the broker refuse to state whether he is acting for himself or for a principal, the buyer may decline to enter into the transaction. If he chooses to purchase without inquiry, or notwithstanding the broker's refusal to give information, he does so with notice that there may be a principal for whom the broker is acting as agent; and should that ultimately prove to be the fact, he has, in my opinion, no right to set off his indebtedness to the principal against debts owing to him by the agent.

It was argued for the appellants, that in all cases where a broker, having authority to that effect, sells in his own name for an undisclosed principal, the purchaser, at the time when the principal is disclosed, is entitled to be placed in the same position as if the agent had contracted on his own account. That was said to be the rule established by George v. Clagett, Sims v. Bond, 5 B. & Ad. 389, and subsequent cases. It is clear that Livesey Sons & Co. were not mere brokers or middlemen, but were agents within the meaning of these authorities, and if the argument of the appellants were well founded. they would be entitled to prevail in this appeal, because in that case their right of set-off had arisen before the 20th of July, 1883, when they first had notice that Maximos was the principal.

I do not think it necessary to enter into a minute examination of the authorities, which were fully discussed in the arguments addressed to us. The case of George v. Clagett has been commented upon and its principles explained in many subsequent decisions, and notably in Baring v. Corrie, Semenza v. Brinsley, 18 C. B. N. s. 467, and Borries v. Imperial Ottoman Bank, Law Rep. 9 C. P. 38. These decisions appear to me to establish conclusively that, in order to sustain the defence pleaded by the appellants, it is not enough to show that

the agent sold in his own name. It must be shown that he sold the goods as his own, or, in other words, that the circumstances attending the sale were calculated to induce, and did induce, in the mind of the purchaser a reasonable belief that the agent was selling on his own account and not for an undisclosed principal; and it must also be shown that the agent was enabled to appear as the real contracting party by the conduct, or by the authority, express or implied, of the principal. The rule thus explained is intelligible and just; and I agree with Bowen, L. J., that it rests upon the doctrine of estoppel. It would be inconsistent with fair dealing that a latent principal should by his own act or omission lead a purchaser to rely upon a right of set-off against the agent as the real seller, and should nevertheless be permitted to intervene and deprive the purchaser of that right at the very time when it had become necessary for his protection.

I therefore agree with the conclusion of the learned judges of the Court of Appeal, and with the reasoning upon which it is founded. A broker who effects a sale in his own name with an intimation, express or implied, that he is possibly selling as an agent, does not sell the goods as his own, and in such a case the purchaser has no reasonable grounds for believing that the agent is the real party with whom he has contracted.

Lord FITZGERALD.1 I concur with my noble and learned friend in adopting at once the decision and the reasons of the Court of Appeal. I have, however, some hesitation in accepting the view that the deci sions rest on the doctrine of estoppel. Estoppel in pais involves considerations not necessarily applicable to the case before us. There is some danger in professing to state the principle on which a line of decisions rests, and it seems to me to be sufficient to say in the present case that Maximos did not in any way wilfully or otherwise mislead the defendants (Cooke & Sons) or induce them to believe that Livesey & Co. were the owners of the goods or authorized to sell them as their own, or practice any imposition on them. The defendants were not in any way misled.

Order appealed from affirmed; and appeal dismissed with costs.

1 After discussing the facts. - Ed.

2 Acc. Miller v. Lea, 35 Md. 396 (1872), where, at pp. 406-407, ALVEY, J., said: "The buyer must be cautious, and not act regardless of the rights of the principal, though undisclosed, if he has any reasonable grounds to believe that the party with whom he deals is but an agent. Hence, if the character of the seller is equivocal, if he is known to be in the habit of selling sometimes as principal and sometimes as agent, a purchaser who buys with a view of covering his own debts and availing himself of a set-off is bound to inquire in what character he acts in the particular transaction; and if the buyer chooses to make no inquiry, and it should turn out that he has bought of an undisclosed principal, he will be denied the benefit of his set-off.” ED.

SECTION V. (continued).

(B) IN AN ACTION BROUGHT BY THE THIRD PARTY AGAINST THE PRINCIPAL.

NELSON v. POWELL.

KING'S BENCH. 1784.

[3 Doug. 410.]

THIS was an action of assumpsit for goods sold and delivered, tried at Exeter before Mr. Baron HOTHAM. The facts at the trial appeared to be these: The defendant, by one Thomas his broker, bought goods of the plaintiff. The invoices were made out in the broker's name for goods delivered to him, and were all paid for except a balance, for which the plaintiff pressed Thomas, who had not declared his principal. One of the plaintiff's letters to Thomas was sent by him to the defendant, who, having remitted to Thomas sufficient to pay the plaintiff, wrote to the latter and informed him of that fact. After this the plaintiff again called on Thomas to pay the money as due from him; but this not being done, the plaintiff brought the present action. The jury having found a verdict for the plaintiff,

Lawrence now moved for a new trial, on the ground that the credit had been given to Thomas, and that he alone was liable; but Lord MANSFIELD held the principal liable whenever he was known, and The rule was refused.1

THE declaration was for goods sold and delivered.

Plea. That the selling and delivering in the declaration mentioned was, and consisted in, the sales and deliveries hereinafter in this plea mentioned, and not otherwise; and that the sales and deliveries of the said goods to the defendant, and the purchases by the defendant from the plaintiffs, were made by the agency, on behalf of the defendant, of W. V. Taylor, and not otherwise; and the said purchases, and the acceptance from the plaintiffs of the said goods, were made by, and the

1 See Raymond v. Crown & Eagle Mills, 2 Met. 319 (1841). ED.