an act is not done on the principal's behalf, and he will not usually be bound thereby. To this rule there are two important exceptions, in both of which a principal will be bound by unauthorized pledges of his agent. If the principal has not, in fact, given his agent authority to make a certain pledge, but has nevertheless acted in a manner calculated to induce third persons dealing with the agent, to believe that he has given such authority, he will be as much bound thereby as if the authority had been actually given (a), for when a person so conducts himself that another may reasonably infer the existence of an agreement or licence. . he cannot afterwards gainsay the reasonable inference drawn from his words or conduct (b). Since the passing of the Factors' Acts (c), and within their limits, a principal may, as against third persons, be bound by unauthorized pledges made by factors or agents whom he has intrusted with possession of, or control over the goods. The last of the above Acts extends their operation to vendors and vendees who, by leaving their goods under certain specified circumstances, within the control of other persons, have enabled them to perpetrate frauds upon bona fide purchasers or pawnees. Legislation on this class of exceptions, is indeed little more than a statutory recognition of the equitable doctrine of estoppel by conduct, or estoppel in pais already referred to. Such legislation, like that on Reputed Ownership in Bankruptcy, and Apparent Possession under Bills of Sale, proceeds upon the principle that when the real owner of (a) Freeman v. Cooke, 2 Ex., 654; 18 L.J., 114 Ex. ; 6 D. & L., 187. (b) Cornish v. Abingdon, 4 H. & N., 549; 28 L.J., 262 Ex. Engleback v. Nixon, L.R., 10 C.P., 645; 44 L.J., 396 C.P.; 32 L.T., N.S., 831; 23 W.R., Dig. 20. (c) 4 Geo. 4, cap. 83; 6 Geo. 4, cap. 94; 5 & 6 Vict., cap. 39; 40 & 41 Vict., cap. 39. chattels has so acted as to induce third persons to believe that the disposing power over such chattels is in another, he ought not to be allowed to assert his title to the prejudice of third persons, who have acted upon a belief in the agent's right to deal with the goods, reasonably engendered by the principal's conduct in clothing his agent with ostensible authority to do an act which is afterwards repudiated. The agent contemplated by the Factors' Acts is one "whose employment corresponds to that of some known commercial agent like that class of factors from which the Acts take their name (a); one who, from the nature of his employment, might be taken, primá facie, to have the right to sell" (b). A servant or custodian of furniture, kept and used by him in a dwelling-house (c); a carrier (d), warehouseman (e), or other independent contracting party, is not such an agent. Neither is a partner who happens to have obtained possession of his partner's share certificates, "an agent entrusted," so as to bring a pledge of them for an advance on his private account within the Act (ƒ). But an agent employed to sell pictures on commission, and one to whom goods were sent for the special purpose of preparing the goods for sale, and afterwards transferring them to a particular person, are within the Act (g). An agent's powers as to third persons, will be measured by the apparent scope of his authority, and not by his principal's private communications with him (h). And such (a) Hayman v. Flewker, 13 C.B., N.S., 519. 32 L.J., 132 C.P. (d) Hayman v. Flewker, ut supra. (e) Cole v. North Western Bank, L.R., 9 C.P., 470; 10 C.P., 354 (Ex. Ch.) ; 43 L.J., 194 C.P.; 44 L.J., 233 C.P. (Ex. Ch.); 30 L.T., N.S., 684; 32 L.T., N.S., 733 (Ex. Ch.). (f) Exp. Kenna, re Mortimore, 7 Jur., N.S., 588; 4 L.T., N.S., 164. (h) Edmunds v. Bushell, L.R., 1 Q.B., 97; 35 L.J., Q.B. 20. Exp. Dixon, re Henley, L.R., 4 Ch. D., 133; 46 L.J., 20 Bk.; 35 L.T., N.S., 644; 25 W.R., 105. powers will be construed liberally, according to the usual course of business (a). A factor is one authorized by a merchant, with a salary or allowance for his care, and having, by virtue of this general commission, authority to sell upon credit (b). A broker is a person employed among merchants to make contracts between them; one who for brokage and hire, negotiates and concludes bargains (c). The Factor usually has possession of the goods consigned to him for sale; the broker has not usually possession of such goods, but generally or frequently has them under his control by possession of the documents representing them. The factor, broker, or other agent derives his authority from his principal, and should pursue that authority strictly (d). Therefore, so far back as 1743, it was held that though a sale by the factor bound the principal, a pledge by him did not (e), whether the factor had or had not an unsatisfied lien (f) or other valid claim against him. When giving judgment in Martini v. Coles (g), Lord Ellenborough, C.J., observed that "it would perhaps have been as well if it had been originally decided that where it was equivocal whether a person was authorised to act as principal or factor, a pledge made by him without fraud was valid." But Mr. Justice Bayley subsequently (h) declared that "foreign merchants would have no protection, and so would cease to have any intercourse with this country if the rule were not maintained." Mercantile experience, however, was so directly opposed to the opinion thus (a) Pole v. Leash, 28 Beav. 562. (c) Com. Dig., tit. Merchant (C). (b) Com. Dig., tit. Merchant (B). (e) Paterson v. Pash, 2 Str. 1178. (f) Daubigny v. Duval, 5 T.R., 606; M'Combie v. Davies, 7 East, 5; Gill v. Kymer, 5 Moore, 503; Martini v. Coles, 1 M. & S., 140. (g) 1 M. & S., 140, 146. (h) In Duclos v. Ryland, 5 Moore, 518n, 524. judicially expressed, that within two years afterwards the legislature declared (a), that "the existing law afforded great facility to fraud, caused frequent litigation, and was highly injurious to commerce." These evils the Act essayed to cure by enabling factors to give a better title than their own, and each successive Factors' Act has been a fresh recognition of the same principle. The pawnor within the Factors' Acts may be either (a) A person entrusted with goods, wares, or merchandise for the purpose of consignment () or sale, and by whom such goods shall be shipped in his own name (c). (b) A person in whose name goods, &c., shall be shipped by any other person (d). (c) A consignee of goods, or a drawee or indorsee of the bills of lading which represent them (e). (d) A person entrusted with, and in possession of, a bill of lading, India warrant, dock warrant, warehousekeeper's certificate, wharfinger's certificate, warrant or order for the delivery of goods (ƒ). (e) A person entrusted with the possession of goods for the purpose of consignment or sale, or of documents of title to goods (g). Every such person is deemed and taken to be the true owner of the goods, &c., so entrusted to him as aforesaid (h), or represented by such documents so entrusted (¿), so far as to entitle a consignee of such goods from him (4), (a) In the preamble to the first Factors' Act, 4 Geo. 4, cap. 83. (c) 4 Geo. 4, cap. 83, sec. 1; 6 Geo. 4, cap. 94, sec. 1. (d) Ibid. (e) 4 Geo. 4, cap. 83, sec. 2. (ƒ) 6 Geo. 4, cap. 94, sec. 2. (g) 5 & 6 Vict., cap. 39, sec. 1. 6 Geo. 4, cap. 94, sec. 2, authorized pledges of documents of title to goods-not of the goods themselves. Parke, B., in Phillips v. Huth, 6 M. & W., 597. (h) 6 Geo. 4, cap. 94, sec. 1. (i) 6 Geo. 4, cap. 93, sec. 2. Per or a pawnee of such documents (a), to a lien upon the goods to the extent of advances thereon, whether of money or negotiable instruments, made by a consignee of the said goods to or for the person in whose name the said goods are shipped, or received by such shipper to the use of such consignee(). Under the Acts of 1823 and 1825, the pawnee who took a pledge with express or implied notice that the pawnor was an agent, acquired no greater rights thereto than the factor possessed. He became assignee of the factor's lien or other unsatisfied claim (e), subject to any equities whereby it was affected, such as liabilities on dishonoured bills (d), or on the ultimate balance of all accounts with the principal, irrespective of the state of the particular account in which the pledged goods were entered (e). The restrictions thus imposed on the agent's power to pledge having been found to produce "much litigation and uncertainty," an amending Act (f) was passed in 1842, "to put the law on a clear and certain basis." This Act made valid (g), as against the true owner, contracts for present loans or further advances by way of pledge, lien, or security, bona fide made with agents entrusted as aforesaid, whether with or without notice that the pawnor was only an agent. Transfers or deliveries of goods, documents of title, or negotiable securities, in exchange for such pledges, were made as valid as money payments to the extent of their value (h). This power to pledge has since been made valid after the agency or entrustment has been revoked, provided () 6 Geo. 4, cap. 93, sec. 2. (b) 4 Geo. 4, cap. 83, sec. 1. |