5 & 6 Vict. c. 39.

The foregoing two statutes apply to mercantile transactions only.

40 & 41 Vict.

c. 39.

interest that was possessed by the person making the deposit or pledge (y), and if any person accepts a deposit or pledge knowing that the person is a factor or agent, he only acquires such interest as was possessed by the factor or agent at the time of the deposit or pledge (z).

By the 5 & 6 Vict. c. 39 it is provided (a), that any agent intrusted with the possession of goods or of the documents of title to goods shall be deemed and taken to be the true owner of such goods and documents so far as to give validity to any contract or agreement by way of pledge, lien, or security bond 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 and good against the owner of such goods and all 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.

The provisions of these statutes have been held to apply, not generally, but to mercantile transactions. only (b). It was also held that where a vendor had been left by his vendee in possession of documents of title to goods, he could not under the before-mentioned Acts confer a good title upon a bonâ fide pledgee (c).

It has, however, now been provided by the 40 & 41

(y) 6 & 7 Geo. 4, c. 94, s. 3.

(z) Sect. 5.

(a) Sect. I.

(b) Wood v. Rowcliffe, 6 Hare, 191; Monk v. Whittenbury, 2 B. & A. 484.

(c) Johnson v. Crédit Lyonnais Co., Johnson v. Blumenthal, L. R. 3 C. P. D. 32; 47 L. J. C. P. 241.

Vict. c. 39 (d), that where any goods have been sold, and the vendor or any person on his behalf continues or is in possession of the documents of title thereto, any sale, pledge, or other disposition of the goods or documents made by such vendor, or any person or agent intrusted by him with the goods or documents so continuing or being in possession, shall be as valid and effectual as if such vendor or person were an agent or person intrusted by the vendee with the goods or documents within the meaning of the two previous Acts, provided that the person to whom the sale, pledge, or other disposition is made has not notice that the goods have been previously sold.

factor or agent

existed.

Barrow.

But for this provision to apply the relation of For the foreThus in a recent to apply, the going provision factor or agent must clearly exist. case, Barrow was a leather merchant in London, and position of Bonnell a tanner in Canada, and Barrow agreed to pay must have so much per pound for every hide tanned by Bonnell in the mode of the country, and the hides were to be City Bank v. sent to Bonnell, who was to procure freight and send them back. Barrow sent out a large number of hides which were duly tanned, and freight was procured for them, but in the meantime Bonnell had obtained from the Toronto Bank advances on his own account on bills, and hypothecated the hides to the bankers as security for such advances, engaging to hand over to them the bills of lading if his bills of exchange were not duly honoured. They were not duly honoured, and the bankers (who had acted in entire ignorance of the transaction between Barrow and Bonnell) claimed to retain the bills of lading and the hides until their demands were satisfied. It was held that, under the circumstances of the case, Bonnell could not claim to be Barrow's factor or agent entitled to pledge Barrow's goods, and that consequently the bankers could not set

(d) Sect. 3.

Further provisions of 40 & 41 Vict. c. 39.

Power of sell

ing or pledging exists not

up any title to the goods as derived from him against the real owners (e).

With regard to the possession of a vendee, the 40 & 41 Vict. c. 39 (f) also provides that where any goods have been sold or contracted to be sold, and the vendee or any person on his behalf obtains the possession of the documents of title thereto from the vendor or his agent, any sale, pledge, or disposition of such goods or documents by such vendee so in possession, or by any other person or agent intrusted by the vendee with the documents within the meaning of the two previous Acts, shall be as valid and effectual as if such vendee or other person were an agent or person intrusted by the vendor with the documents within the meaning of the previous Acts, provided that the person to whom the sale, pledge, or other disposition is made has no notice of any lien or other right of the vendor in respect of the goods.

Notwithstanding that the authority of such agent may be revoked if he still continue in possession of the withstanding goods or documents of title thereto, he can give a good person has no title either by sale or pledge to persons taking without notice of such revocation (g).

notice.

George v.
Clagett.

The case of George v. Clagett (h) is an important decision on the principle of set-off with regard to factors. It decides that if goods are bought of a factor, the buyer not knowing that he is but a factor, and the principal sues, the buyer may set off against him any claim he might have set off against the factor had the action been brought by him; but if he knew he was a factor at the time, then he cannot. Also if the buyer had clearly the means of knowing that the

(e) City Bank v. Barrow, L. R. 5 App. Cas. 664; 43 L. T. 393. (f) Sect. 4.

(g) Sect. 2.

(h) 2 S. L. C. 118; 7 T. R. 359.

person with whom he contracted was only a factor, and ought to have availed himself of his means of knowledge, he is considered in the same position as if he had actually known (i).

George v.

It has also been decided, somewhat extending the Extension of case of George v. Clagett, but yet strictly within its Clagett. principle, that though the buyer knew at the time of buying of the person being a factor, yet he is entitled to this benefit of set-off if he honestly believed that the factor was entitled to sell and was selling to repay himself advances made for his principal (k).

partner.

partner.

A partnership may be either actual or nominal; Partnership. actual where two or more persons agree to combine Actual money, labour, or skill, in a common undertaking, sharing profit and loss; and nominal where a person Nominal allows his name to be held out to the world as a partner without having any real interest in the concern (1). An actual partnership, again, may be divided into the ordinary partnership where a person has an interest and his name appears; and a dormant partnership, Dormant where a person, though having an interest, does not partner. appear to the world as a partner. To deal with the simplest matter first, a nominal partner is not always liable; he is only liable where he has held himself out to the person seeking to charge him, and induced him to believe him to be a partner (m).

In the case last cited below, Parke, J., in considering whether or not a person was liable as a nominal partner, said: "If it could be proved that the de

(i) Baring v. Corrie, 2 B. & A. 137; Borries v. Imperial Ottoman Bank, L. R. 9 C. P. 38; 43 L. J. C. P. 3; see also 2 S. L. C. 121. (k) Warner v. McKay, 1 M. & W. 595. See further, on set-off generally, post, pp. 242-244.

(1) Waugh v. Carver, 2 Hen. Blackstone, 235; 1 S. L. C. 908, and notes. As to the partnership contract, see also Smith v. Anderson, L. R. 15 Ch. D. 273; 50 L. J. Ch. 39; 29 W. R. 21; Jennings v. Hammond, L. R. 9 Q. B. D. 225; 51 L. J. Q. B. 493.

(m) Dickenson v. Valpy, 10 B. & C. 140.

When nominal partner

liable..

What will constitute a

between the

parties themselves, and as

regards third parties.

which losses

to be borne.

fendant had held himself out to be a partner, not 'to the world,' for that is a loose expression, but to the plaintiff himself, or under such circumstances of publicity as to satisfy a jury that the plaintiff knew of it and believed him to be a partner, he would be liable to the plaintiff in all transactions in which he engaged, and gave credit to the defendant upon the faith of his being a partner. The defendant would be bound by an indirect representation to the plaintiff arising from his conduct, as much as if he had stated to him directly and in express terms that he was a partner, and the plaintiff had acted upon that statement." If, however, a person had express notice that the person he is seeking to charge was only nominally a partner, then it seems (n)-though this point is not absolutely beyond doubt (0)—that he cannot be charged.

There

With regard to what will be sufficient to constitute partnership as an ordinary partnership, the rule is that to constitute persons partners amongst themselves they must share in profits and losses (p). Any agreement to share the profits and losses of a business entitles each party as against the other to the general rights of a partner, Proportion in including an interest in the goodwill; and the agreement has this legal effect notwithstanding a stipulation that the parties shall not be partners (q). is no positive rule of law that losses are to be borne between partners in the same proportion in which they enjoy profits; but where partners have provided for the division of profits in certain proportions and have made no provision as to the losses, it is a fair inference that they intended to bear losses in a like proportion (r). With respect to third persons, it was formerly held that if they shared in the profits in any way, whether for

(n) Alderson v. Pope, 1 Camp. 404, n.

(o) See Young v. Axtell, cited in Waugh v. Carver, 1 S. L. C. 918. (p) Waugh v. Carver, i S. L. C. 908; 2 Hen. Blackstone, 235. (q) Pawsey v. Armstrong, L. R. 18 Ch. D. 698; 50 L. J. Ch. 683. (r) In re Albion Life Assurance Society, L. R. 16 Ch. D. 83; 29 W. R. 109; 43 L. T. 524.