The ceptance on the 15th, it was discounted on the 17th. plaintiffs had only given delivery on the 13th of eight of the casks, and of three upon the 15th. It does not appear to me, without laying any stress on the question of the days of grace, that the defendants on the 17th of March had any reason at all to believe that the sellers of the goods, whoever they might be, had no longer any claim upon any one except the broker. The fact is the defendants trusted their own broker. They made a mistake and must pay for it. The language of Lord Ellenborough in Kymer v. Suwercropp () is consistent with this view of the law, and it is one which has since been adopted in Heald v. Kenworthy(). Up to the 17th of March I see nothing accordingly which relieves the defendants from responsibility. Did the delay beyond that date and the failure of the brokers do so? If there was any reason to believe that in consequence of the delay the defendants' position towards their agents had been injuriously affected, then the defendants would to that extent be discharged. But I see no evidence that it was so. The defendants accordingly in my judg ment remain liable for the price of the goods, and judgment must be given for the plaintiffs with costs. Judgment for the plaintiffs. Solicitors for plaintiffs: Field, Roscoe & Co., for Bateson. Solicitors for defendants: Clark & Son, for Dunning & Kay. (1) 1 Camp., 109. (2) 10 Exch., 739; 24 L. J. (Ex.), 76. See 26 Eng. R., 48 note; 23 id., 1866, the firm of Ruger Brothers had 152 note. The case of Schaefer v. Henekel, referred to in note 23 Eng. R., 152, is reported 75 N. Y., 378, and 7 Abb. N. C., 1; and see note, page 12. In an action by a principal to recover the price of goods sold for him by an agent or factor who did not disclose his principal, the purchaser may set off a debt due to him from such agent or factor, unless he knew at the time that his vendor was acting as an agent or factor, or unless circumstances were brought to his knowledge which would necessarily put him on inquiry in regard thereto. Mere public rumor or knowledge possessed by others in regard to that fact, will not deprive him of his right of set-off: Pratt v. Collins, 20 Hun, 126. For several years prior to July 13, About been carrying on business in New Whaley Bridge Printing Co. v. Green. Thereafter, and on August 16, the defendant charged the amount due on the said note to the account so kept by the intestate, and offered to pay over the balance of the account to him. In this action brought by him to recover the full amount of the deposit; held, that the bank was entitled to set off the amount due on the said note against the said account. On April 30, 1869, the firm of Ruger Brothers obtained a discharge in bankruptcy. Held, that the firm was thereby relieved from all liability to the persons for whom the said moneys had been collected, and that it could not therefore be claimed that the moneys so deposited with the defendant belonged to such persons, and not to the said firm: Falkland v. St. Nicholas Nat. Bank, 21 Hun, 450. In this action, brought to recover,a triangular strip of land, it appeared that the plaintiff had, in 1856, contracted, by a sealed instrument, to convey about twenty-five acres of land (including the strip in question), part of 1879 a larger tract of fifty acres, to one Nehemiah Shannon, who agreed to pay a mortgage covering the whole fifty acres as a part of the purchase-money. Thereafter, the mortgage was con veyed to Shannon's wife, who foreclosed it by advertisement, and bought in a part of the fifty acres for the full amount due; the part so purchased being substantially that covered by the contract, except that it was claimed that the description did not include the strip in question. Upon the trial, evidence was received against the plaintiff's objection and exception, to show that Nehemiah made the contract as the agent for and in behalf of his wife, who thereafter entered into possession of the premises with him, and that the amount due upon the contract had been fully paid to the plaintiff. Held, that the evidence was properly admitted. That plaintiff could not recover the land: Curley v. Pitts, 24 Hun, 571, distinguishing Briggs v. Partridge, 64 N. Y., 364. [5 Queen's Bench Division, 109.] *WHALEY BRIDGE CALICO PRINTING COMPANY V. [109 GREEN AND SMITH. Company-Promoter-Fiduciary Relation-Secret Profit made by Promoter-Right of Company to Enforce Agreement made in favor of Promoter. G. had purchased certain calico printing works for the sum of £15,000. G. and S. associated themselves together as promotors of a company formed for the purchase of the works from G., and for the purposes of the negotiations for such purchase a contract, which the jury found to be a sham contract, was entered into between them for the pretended sale of the works by G. to S. for £20,000. The company was ultimately formed, its directors being nominees of G. and S., and the works were conveyed by G. and S. to the company for £20,000. It was agreed between G. and S. that G. should pay the sum of £3,000 out of the purchase-money to S., but this agreement was not communicated to the directors of the company when the sale to the company was effected: Held, by Bowen, J., on further consideration, that S., as a promoter of the company, was not entitled to secure any profit to himself out of the formation of the company without the knowledge of the directors, and that such being the case the company were entitled to treat the agreement made between G. and S. as made by S. on their behalf, and to enforce it against G., and that consequently they could recover from G. so much of the £3,000 which he had agreed to pay to S. as remained unpaid. THIS was a case reserved for further consideration by Bowen, J. The facts and arguments sufficiently appear 1879 Whaley Bridge Printing Co. v. Green. from the judgment. The case was argued on further consideration by Russell, Q.C., Herschell, Q.C., and French, for the plaintiffs. Ambrose, Q.C., and Gouldthorp, for the defendants. The following authorities were referred to: MacKay's Case ('); Bagnall v. Carlton ('); Phosphate Sewage Company v. Hartmont (); Craig v. Phillips (); Erlanger v. New Sombrero Phosphate Company (†). Jan. 12. BowEN, J.: This is an action brought by the Whaley Bridge Calico Printing Company, Limited, against Robert Ellis Green, the vendor to the company of certain 110] works and premises. John Smith, a defendant joined in the suit, did not appear to *defend, and the present question arises wholly between the defendant Green and the company. In or about May, 1876, the defendant Green purchased certain calico printing works and premises situate at Whaley Bridge, near Buxton, for the sum of £15,000. The defendant John Smith was the manager in Mr. Green's employment at the time, and various negotiations took place between Green and Smith as to the working of the premises for Green himself, and as to their resale to some company. Ultimately, on the 13th of October, 1876, the plaintiff company was incorporated for the purpose of purchasing and working these works, and on the 2d of February, 1877, the premises were conveyed to the company by Smith and Green for the sum of £20,000, Green having previously purported to sell the premises to Smith for £20,000 by a contract of the 19th of September, which the jury found was a sham contract, and which (if a sham contract) was obviously intended to be used for the purpose of the negotiations with the company. The immediate question in the present case turns upon the following findings of the jury : 1. That Green was a promoter of the company from the 29th of August. 2. That before the 2d of February the board of directors knew that Green had previously purchased the property for £15,000 only. 3. That at the date of the incorporation of the company there was an agreement between Smith and Green that Smith (4) 3 Ch. D., 722. (1) 2 Ch. D., 1. (2) 6 Ch. D., 371; 22 Eng. R., 708. (3) 5 Ch. D., 394; 22 Eng. R., 157. (5) 3 App. Cas., 1218; 24 Eng. R., 774. Whaley Bridge Printing Co. v. Green. 1879 should have £3,000 out of the purchase-money paid by the plaintiff company. It was agreed that the court should have power to draw all further inferences of fact. The first claim put forward on behalf of the plaintiff company was to have refunded to them the £5,000 the difference between the £20,000 purchase-money, and the price at which Green himself had bought. This claim, in my opinion, cannot be sustained. The company bought with their eyes open as to the price. They knew Green had in fact given only £15,000 for the works. A fraud was no doubt practised upon them in respect of the contract of the 19th of September, assuming the find- [111 ing of the jury to be correct, for it is clear that Green and Smith induced the company to suppose that there was a genuine contract of sale for £20,000, under which Smith had become the purchaser. In reality, this contract was a mere sham, and Green, by the agreement referred to in the last finding of the jury, had arranged with Smith to pay him back £3,000 out of the £20,000 purchase-money. It is true that the property in question appears upon the evidence to be fully worth £20,000, but this does not prevent the use made of the sham contract from having been fraudulent. In any action for deceit based on this ground a jury might perhaps have assessed at £3,000 the damages recoverable by the company against Smith and Green, should the jury have thought that this sham contract induced the company to give £3,000 more than they otherwise need have done. The plaintiffs, however, have not asked for damages to be assessed in this manner. What they desire is to enforce against Green the secret agreement to pay over £3,000 to Smith, upon the ground that they are entitled to treat this contract with Smith as made for the profit of the plaintiff company and not for Smith. The relief afforded by equity to companies against promoters, who have sought improperly to make concealed profits out of the promotion, is only an instance of the more general principle upon which equity prevents the abuse of undue influence and of fiduciary relations. The term promoter is a term not of law, but of business, usefully summing up in a single word a number of business operations familiar to the commercial world by which a company is generally brought into existence. In every case the relief granted must depend on the establishment of such relations between the promoter and the birth, formation and floating of the company, as render it contrary to good faith that the 1879 Whaley Bridge Printing Co. v. Green. promoter should derive a secret profit from the promotion. A man who carries about an advertising board in one sense promotes a company, but in order to see whether relief is obtainable by the company what is to be looked to is not a word or name, but the acts and the relations of the parties. In the present instance, Green and Smith agreed to, and did bring out the present company for the purpose of purchasing the chemical works and premises on their own terms. 112] The board of directors *consisted of their nominees, and in order to make the purchase run more smoothly a sham contract of purchase was on the 19th of September flashed before the eyes of the directors as if it were a real contract by both Smith and Green. The relation in which Smith by these acts placed himself towards the company is one in which equity will not allow him to retain any secret advantage for himself. He had a perfect right to agree with Green that he should be remunerated to the extent of £3,000 provided such agreement was made with the knowledge and assent of the company. But the company have a clear right to treat all profit made by Smith out of such a transaction as profit belonging to them, and it was hardly disputed, and in my opinion cannot be successfully denied, that if Green had actually paid the £3,000 to Smith, Smith might be compelled to pay over to the company the clear profit left after deducting what he had expended in the promotion. But it is said that the contract cannot be enforced against Green so far as it remains still unexecuted, that there is no instance. which can be found in the books in which a company has been allowed to recover for its own benefit on a similar unexecuted contract, and that as Smith could not enforce against Green a contract based on an illegal consideration, so neither can the company. This objection seems to me unfounded. There is, in the first place, nothing illegal in the contract that Smith should receive £3,000 out of the sale, provided it was not to be kept secret from the company when the company was induced to negotiate for the purchase. It is said, indeed, that the agreement for the £3,000 was anterior in date to the beginning of the promotion of this particular company. This may have been so; but the agreement, as the jury have found, was continued and applied to the formation of this particular company. As soon as Smith and Green formed the company and nominated its board, it became their duty, in my opinion, to inform the company of this private arrangement between them. Thereupon the company might either, at its option, decline the proposed purchase or accept it, claiming |