against the company, that the delict was done in the course of, and as part of, the obligation undertaken (a).

exception

The second exception is when, in the course and as a part of Second carrying out the directions of his principal, the agent has committed a delict whereby some of the public have been injured. Thus, where a man desired his servants to remove wood growing on his own property, and in doing so they applied fire, whereby wood growing on the property of another was destroyed, he was found liable (b). So, when a man employed another to deliver wood, which he did by his servant, and in doing so a shed belonging to a third party was thrown down, the master was found liable (c). So, when a party entrusts a servant with the charge of a conveyance, and in consequence of his culpable negligence one of the public is killed or injured, the principal is liable (d). So, when a company, in consequence of the culpable negligence of their servant, fail to give due warning to one of the public to keep out of the way of danger, they are held liable (e).

contract.

In all these and similar cases, where not the person contracted Implied with but the public is injured, the liability of the principal, whether a company or an individual, arises, it would appear, from that implied contract or obligation which every one is held to make with the public, whereby when he does or orders anything to be done, he undertakes that it shall be done with due regard to the safety and interests of the lieges.

mistake.

It is often difficult to determine whether the act causing the Innocent injury or loss amounted to innocent mistake or delict; but under whatever category it may fall, the result is the same as to the company liability, so as it was done in the course and as a part of the employment for which the agent was retained. Firms or companies of carriers, seamen, and innkeepers incur Edict nautæ,

(a) Linwood v. Hawthorn, 1817, 19 F. C. 327; aff. 1821, 1 S. App. 20. See also M'Laren v. Rae, 1827, 4 Mur. 384; Miller v. Harvie, 1827, 4 Mur. 388; Dalrymple v. M'Gill, Hume 387; Thorburn v. Ellis, 1811, 16 F. C. 246; Waldie v. Roxburgh, 1822, 1 S. 367, aff. 1 W. and S. 1.

(b) Keith v. Keir, 1812, 16 F. C. 679; Hill v. Merricks, 1813, Hume 397.

(c) Anderson v. Brownlee, 1822, 1 S. 442.

(d) Baird v. Hamilton, 1826, 4 S. 797; M'Laren v. Rae, 1827, 4 Mur. 384; Elder v. Croall, 1849, 11 D. 216.

(e) Hunter v. The Edinburgh and Glasgow Canal Company, 1836, 14 S. 17; Fraser v. Dunlop, 1822, 1 S. 243.

caupones, stabularii.

Culpa lata equiparetur dolo.

Presumption of negligence.

Collaborateurs.

liabilities under the edict nautæ, caupones, stabularii. In these cases, as is well known, it is enough to create liability that goods have been abstracted, although the delict have been committed by persons for whom they are otherwise no way responsible (a).

There is a large class of cases in which companies, like individuals, incur liability either to the public or to those with whom they have specially contracted, not on the ground of actual delict, but from such a degree of negligence as in law equiparetur dolo. In such cases it is important to observe, that whether the ground of liability be negligence on the part of the members of the company, or of those for whom it is responsible, it is necessary that negligence really exist, there being no presumption of negligence juris et de jure, as in the case of nautæ, caupones, et stabularii.

There is, however, a presumption of negligence, arising from the mere fact of the damage, loss, or injury being proved to have arisen in the course of the company business; and when this has been established, the onus of showing that it was a damnum fatale, and that all due care and skill had been used, will lie on the company (b).

At one period it seemed to have been taken to be law in Scotland, that a company incurred liability for reparation when one of their servants or workmen was injured by the carelessness, ignorance, or culpa of another also in their employment (c). In this matter the law of Scotland has now been assimilated to that of England, or rather, perhaps, the effects of its own principles have come to be better understood; and it is now settled, that a company is not liable for injuries sustained by one of its servants through the fault of a collaborateur, provided the injury did not arise in consequence of failure on the part of the company to do something which by contract, express or implied, between them and the injured party they were bound to do (d).

(a) Cockburn v. Richardson, 1820, 1 Bell 474, n. 6; Williamson v. White, 1810, 15 F. C. 712.

(b) Anderson v. Pyper and Co., 1820, 2 Mur. 261-271; Jones and Co. v. Ross, 1830,8 S. 495; Rae v. Kay, 1832, 10 S. 303; Edin. and Glas. Union Canal Co. v. Johnston, 1832, 10 S. 505; Lyon v. Lamb, 1838, 16 S. 1188; Finlay v. Thompson, 1842, 4 D. 776; Weston v.

Corporation of Tailors, 1839, 1 D. 1218.

(c) Sword v. Cameron, 1839, 1 D. 493; Dixon v. Ranken, 1852, 14 D.420; Gray v. Brassey, 1852, 15 D. 135; O'Byrne v. Burn, 1854, 16 D. 1025; M Naughton v. Caledonian Ra. Co., 1857, 19 D. 271.

(d) Reid v. Bartonshill Coal Co., as revd. 1858, 20 D. (House of Lords) 13, 3 Macq. 266, 30 Jur. 957.

CHAPTER XIV.

EXTINCTION OF COMPANY OBLIGATIONS.

OBLIGATIONS may be extinguished in some one or other of the modes following:

1. Actual fulfilment ;-payment, performance, or satisfaction to the creditor; 2. Virtual fulfilment ;-compensation, novation, or confusion; 3. Release ;-discharge by the creditor, or by operation of law; 4. Presumed abandonment or satisfaction, including prescription and limitation.

companies.

These modes of extinction apply to company or partnership Application to obligations as well as to those incurred by individuals; but their application to the former class of obligations is often attended by peculiarities arising out of the contract of copartnery which require attention. We shall consider them in their order.

I. ACTUAL FULFILMENT.

When the obligation is one ad factum præstandum, and it is Performance. performed by one of the partners, such performance will release

the company quoad the creditor; but if it has caused outlay, liability, or loss to the partner, it will in general entitle him to indemnity against the firm.

In like manner, payment of a company debt made by a partner Payment. extinguishes the obligation in so far as the creditor is concerned, but founds a claim of indemnity at the instance of the partner against the firm, either at common law, or by reason of his having taken an assignation from the creditor whose claim he has paid. The obligation against the company is thus not extinguished, but

Payment by a stranger.

Indefinite payments.

Creditor's right of election.

Continuous

open accounts.

English law.

transferred from the original obligee to the partner, minus the latter's share of contribution (a).

If, again, a stranger, being either an individual or a firm, pay a debt due by a company, the party paying on obtaining an assignation from the creditor comes exactly in his place, and may recover against the company. And this holds good even where a new firm, having succeeded an old in consequence of a change of partners, pays a debt due by the old firm, and so becomes assignee of the original creditor. Here the new firm becomes creditor of the old, and may recover against all who were its partners prior at least to the contraction of the debt (b).

Application of Indefinite Payments.

Where a partner makes an indefinite payment from the monies of the firm to a stranger who is creditor both of the firm and of himself as an individual, he will be held to have made such payment on behalf of the firm (c). This is a consequence of the common principles of agency (d).

When a payment is made by a debtor, the law generally gives him the right of designating the debt to which he wishes it to be applied; but if he makes the payment indefinitely, the right of appropriating it among the debts as he may see fit is conceded to the creditor (e).

The case is somewhat different when there is a continuous open account between two parties extending over a tract of time, towards which indefinite payments have from time to time been made. Here it would seem equitable to apply the indefinite payments towards extinction of the various items of debt in the order of their dates, beginning at the earliest of the series, without regard to the wishes either of debtor or creditor when they happen to differ as to the mode of application. This, which appears to have been always the law of England, and has now been found to be that of Scotland also (f), produces, when applied to the case of (a) See Bell's Prin. s. 558; M'Intyre v. Miller, 13 M. and W. 725.

(b) Lucas v. Wilkinson, 1 H. and N. 420; M'Intyre v. Miller, 13 M. and W. 725.

(c) Thompson v. Brown, M. and M. 40. (d) Bell's Prin. 559.

(e) Ersk. iii. 4, 2.

(f) Per Lord Cowan in Lang v. Brown, 1859, 22 D. 113.

firms and companies, consequences of considerable importance, which we shall have to examine somewhat in detail. When so applied, the doctrine in question is known as 'the rule in Clayton's case, that having been the first instance of its application to partnership questions.

Clayton's case (a) was that of a banking company consisting of five partners. One of them, Devaynes, died; and the business was carried on by the surviving partners until they became bankrupt. Clayton, a customer, had an open account with the concern, which was current both during the lifetime of Devaynes and after his death. At Devaynes' death the company were due Clayton a balance of £1713. Subsequently the company both received and paid out monies on Clayton's behalf; and the account current between them was treated not as two separate accounts, one ending on Devaynes' death, and the other beginning from that time, but as being throughout continuous and unbroken. When the bankruptcy took place, it appeared that the company had, after Devaynes' death, and before their bankruptcy, made payments on Clayton's account, which were more than sufficient to extinguish. the balance of £1713, but that he had made deposits during the same period to an extent that left a still larger balance in his favour. In these circumstances, Clayton contended that he was entitled to impute the indefinite payments which the bank had made on his account subsequent to Devaynes' death, in extinction of the lastmentioned balance, and proceed against Devaynes' estate for the old balance of £1713. But the Court held that the whole course of dealing both before and after Devaynes' death must be treated as one account, and that the various payments made by the bank must be applied in the order of their dates towards extinction or reduction of the balance due Clayton at each of these dates respectively; so that the balance of £1713 which was due at Devaynes' death having been extinguished by payments made subsequent to that event, Clayton could only claim in the bankruptcy for the new balance which had subsequently arisen.

Subsequently many cases occurred where the companies were Extension

(a) Devaynes v. Noble, 1 Mer. 572, 3 Ross Le. Ca. 654, Bell's Illus. 336. In Scotland the rule in Clayton's case

is sometimes termed the rule in De-
vaynes' case.

of rule.