Scotch practice.

When both parties are in fault.

Stipulated damages.

In Scotland this distinction does not appear to have been observed; but the practice seems to have been to take as the criterion of damage either the highest price which might have been got for the goods at any time after the date of the sale, or the average value between the stipulated time of delivery and that of raising the action. A list of the more important decisions bearing on this subject is given below (a).

As to damages arising from loss of profits, see cases noted below (b).

If the loss arises from the fault of both parties under a contract of sale, the general rule was that it must be borne equally by both (c). Latterly, however, it has been laid down that there is no fixed rule as to the particular time at which the difference in the price of goods ought to be taken for the purpose of fixing the amount of damage sustained by non-delivery in breach of contract, but that each case must be regulated by its own circumstances, and determined by the verdict of a jury (d).

Sometimes damages are stipulated in the contract, as exigible in the event of its non-fulfilment. If this be so, no inquiry into the actual damage seems competent (e). If, however, the obligation be merely fortified by a penalty, that is held the limit within which the jury may assess damages (ƒ).

Delict.

II. OBLIGATIONS ARISING FROM DELICT AND QUASI DELICT.

A delict is an offence committed with an injurious, fraudulent, or criminal purpose. Such an act involves all who are concerned in its commission in criminal penalties; but independently of these, it also subjects them in civil damages.

(a) Morrin, 1806, M. Damage App. 1, aff. 5 Paton 649; Shirra, Dec. 11 1807, F. C.; Robison and Co., 1808, 15 F. C. 74; Anderson, 1809, 15 F. C. 206; Dunlop, 1815, 18 F. C. 382; Bell v. Leighton, 1819, 2 Mur. 74; Strachan v. Paton, 1824, 3 S. 259, N. E. 184, aff. 3 W. and S. 19; Roberts, 1825, 4 Mur. 3; Watt v. Mitchell, 1839, 1 D. 1157; Dickson v. Henderson, 1849, 12 D. 306.

(b) Watson v. Kidston, 1 D. 1254

A quasi delict may be defined to be that gross negligence or Quasi delict. imprudence, less than actual fraud or malice, in the doing of something, either obligatory or lawful, by reason of which another is injured in person, property, feelings, or character. This also involves all concerned in liability for reparation.

agency.

In order to understand in what manner firms and companies Doctrines of incur liability for delict or quasi delict committed by their members or agents, it is necessary to advert again to the doctrines of agency. A principal becomes liable for the delict or quasi delict of his agent, when-1st, he has authorized it to be done, either expressly or by implication; 2d, when he has adopted it, either during or after completion; 3d, when it has been done by the agent in the course of and as part of his employment.

But, on the other hand, the principal is not liable when he has neither ordered nor authorized the thing to be done, and especially when he has forbidden it; nor, again, is he liable for the act of his agent done maliciously, and not in the course of his employment or as part of his business.

to companies.

These rules, by which the liability of principals for the acts of Application their agents is determined, are equally applicable to companies and firms; it being borne in mind that the company or firm is the principal, and that the agents are either the partners or some other persons employed by the society to act on its behalf.

Some illustration will now be given of the application of these rules; and as it is quite the same whether the principal be an individual or the quasi person of a company, they will be taken indifferently from cases of both kinds.

by member of

If an agent receive money or goods on behalf of his principal, Embezzlement or in the course of the business in which he represents his company. principal, and embezzles or misapplies it, he renders the principal liable. A solicitor who was employed to recover the contents of a bill from a debtor, put it into the hands of a messenger to execute diligence, and to receive and remit the money. The messenger got the money, but failed to remit. The solicitor was found liable for it to his client (a). The same result would have followed if in this case the principal had been a company of solicitors instead of an individual, and the delict had been committed by one of their own number as

(a) Brown v. Forsyth, 1790, Hume 318.

Money obtained in course of

business.

Ignorance of partners does not avoid liability.

Money must

have been

line of the com

agent for the firm. So, in the English case of Willet v. Chambers (a), a partner of a firm of solicitors having received money from a client to invest on mortgage, and misapplied it, the firm was found liable to the client. So, also, where one of a firm of solicitors fraudulently obtained money out of the Court of Chancery, but entirely without the knowledge of his partners, and handed it over to the client, the firm was found liable (b).

In like manner, when a firm has, in the ordinary course of its business, received money or property belonging to others, if any one of the partners misapplies it while in the custody of the firm, the firm is liable.

In Sadler v. Lee (c), the members of a banking company were authorized to sell out stock standing in the name of a customer. One of the partners did so, and the firm received the proceeds of the sale. Another partner afterwards misapplied them. The company was found liable.

It in no wise lessens the liability of the firm, that the money which was afterwards misapplied was originally placed in the custody of the firm by a fraud of one of the partners of which the others were ignorant, or even that they knew nothing of the money having ever been in their custody. If the funds were placed to the credit of the firm by its partner or known agent, the firm was bound to know that it had received such funds, and was bound to see that they were properly applied (d).

But in all such cases it is essential to ground liability against received in the the firm, that the money or goods shall have been received by the pany business. partner or agent, or placed by him in the custody of the firm, while engaged in the business of the firm. In other words, the act which raises the liability must have been done within the limits of his agency, express or implied. If this is not so, then no liability is incurred by the partnership, and the maxim applies, Culpa tenet auctores suos. Thus, if money were to be entrusted to the partner or agent of a concern, in order to be laid out on security, and it

(a) 2 Cowp. 814, 3 Ross L. C. 476. (b) Brydges v. Branfill, 12 Sim. 369.

(c) 6 Beav. 324. See also Devaynes v. Noble, 1 Mer. 575; Vulliamy v. Noble, 3 Mer. 593; Blair v. Bromley, 2 Ph.

354; ex parte Biddulph, 3 De G. and Sm. 587; Devaynes v. Noble, 1 Mer. 611 and 624.

(d) Keating v. Marsh, 1 M. and A. 582, 2 Cl. and Fin. 250; Stone v. Marsh, 6 B. and C. 551.

formed no part of the business of the concern to carry out transactions of this kind, the firm would not be liable if the partner afterwards should embezzle or otherwise misapply the money (a).

partners.

It sometimes happens that a partner enters into transactions on Private acts of his own account, and not as agent for his firm. If, in such circumstances, he commit a fraudulent act, such as misapplication of funds, he does not bind the firm; nor does it make any difference in a case of this kind, that but for his connection with the firm he would not have been in a position to commit the delict (b). In like manner, the mere fact of a partner being a trustee will not render the firm liable, if he employs the trust funds in the business of the firm, or even in payment of its debts (c). It might be argued, indeed, that the knowledge of the partner who was trustee must be held to be the knowledge of the firm; and this would be no doubt sound law, if the act was done in the line of the company's business. But in the supposed case it is not so. If, however, the firm can in any way be connected with the fraud,-if it can be shown, for instance, that the other partners know, or ought to know, that trust funds are being employed for the purposes of the firm, liability at once attaches (d). Even though the firm is not Identification liable for trust funds applied to its purposes by the fraud of one of its partners, yet if these funds can be identified in the custody of the firm, the beneficiary will be entitled to recover his own (e).

of funds.

Execution of

order intended

for another

firm.

If, within the limits of the company business, one or more partners execute an order which they know was intended for a third party, they by so doing render the firm liable in the consequences (ƒ). But to create company liability in such a case, it is necessary that the order has been de facto executed by the company, and not by one of the partners as an individual. If one or more partners induce any one to contract with the Concealment firm under fraudulent pretences or misrepresentation, the firm is sentation of

(a) Harman v. Johnson, 2 E. and B. 61. See also Slater v. Henderson, 1822, 1 S. 229; Sims v. Brutton, 5 Ex. 802. (b) Bishop v. Countess of Jersey, 2 Drew 143; ex parte Eyre, 2 M. D. and D. 66.

(c) Ex parte Heaton, Buck 386; ex parte Apsey, 3 Bro. C. C. 265. See Cochrane, 17 D.322; Laird, 1855, 17 D. 984.

(d) M'Farlane v. Donaldson, 1835, 13 S. 725; Smith v. Jamieson, 5 T. R. 601; ex parte Poulson, De Gex 79.

(e) Lewin on Trusts 581; Lindley 250.

(f) Dickson v. Dickson and Co., 1830, 8 S. 933; ibid. 1815, 1 Mur. 55 and 58.

or misrepre

in relation to

contract.

important facts liable (a). Concealment of truth in such a case is as much a ground of liability as an assertion of falsehood; and therefore, where a shipping company contracted to carry goods, and concealed from the shippers that their vessel was under detention for payment of duties, they were found liable to the shippers for loss in consequence of detention (b).

False representations to

induce one to become a partner.

In the English case of Rapp v. Latham (c), Parry and Latham were in partnership as wine merchants. Rapp contracted with them to purchase and sell wine for him on commission as they got opportunity. Parry, the active partner, obtained large advances from Rapp, which he represented were laid out in this way, and certain sums were paid him as the proceeds of the supposed sales. After a time it turned out that no purchase or sale had ever been made by the firm, and that the whole of Parry's representations were a tissue of falsehoods. The firm was held liable.

Fraudulent representations, however, only bind the firm when made within the limits of the implied agency; and no one is entitled to take the word of a partner as to special powers having been conferred upon him, without making proper inquiries on the subject, either by seeing the partnership contract, or ascertaining the fact from the other partners (d).

False Representations made to induce a Person to become a

Partner.

It forms no part of the implied agency of a partner to induce others to join the firm or company. If such a power exist, it must be specially conferred. In most private partnerships it is not competent for one partner or any number less than the whole to assume a new partner, or to assign shares in favour of a third party, without the consent of all the others. The question can therefore hardly ever arise in a private partnership, whether the firm is liable for the fraudulent representations of a member which have induced a third party to enter the concern.

(a) Gibb v. Wathen and Co., 1829, 5 Mur. 60.

(b) Paul v. Old Shipping Co., 1816, 1 Mur. 64 and 70.

(c) 2 B. and A. 795. See also Blair v. Bromley, 2 Ph. 354; Lovel v. Hicks, 2 Y. and C. Ex. 46.

(d) See antea, pp. 198 et seq.