situation of the agent since the payment to him, before such notice. The mere fact, that the agent has passed such money in account with his principal, or that he has made a rest in his accounts, without any new credit being given to the principal, will not of itself be sufficient to entitle the agent to retain the money, when the party entitled to recall it, demands it. But if a new credit has been given to the principal since the payment, or if bills have been accepted, or if advances have been made, on the footing of it, the payment cannot be recalled."

Cur. adv. vult.

The judgment of the Court was now delivered by

It

COCKBURN C. J. This is an action brought against the defendant, in whose name an insurance had been effected on a foreign vessel, called The Butjadingen, to recover back a sum of money paid by the plaintiff as one of the insurers, in ignorance of a certain fact the effect of which had been to make the insurance voidable, namely the omission of the defendant to communicate at the time of procuring the policy, (which was a time policy), information he had received that the vessel had got on shore and had sustained material damage. was admitted on the part of the defendant that all question as to the validity of the policy was concluded by the decision of the Court of Exchequer in the case of Russell v. Thornton (a), and that, if the insurance had been effected by the defendant as principal, the amount paid by the plaintiff would have been recoverable back from him in this action. The defence rested on the fact that the defendant, in effecting the insurance in the name of him(a) 4 H. & N. 788; affirmed on error, 6 Id. 140.

1861.

HOLLAND

V.

RUSSELL.

1861.

HOLLAND

V.

RUSSELL.

self and those whom it might concern, had in reality acted only as the agent of the foreign owners, not being himself interested in the ship, and that, having received the payments on the insurance as their agent, he had either transmitted the amount or expended it by their direction, or had given them credit for it in an account finally settled between him and them, prior to any notice of objection by the plaintiff to his parting with the

money.

It appeared that the defendant, having received on the policy, which was effected for 11,000l., sums amounting to 8000l., had transmitted that amount to his principals; minus two sums, one of 6071. 3s. 10d., and the other of 6087. 10s. 11d. The former of these two sums he had allowed in account with his principals in respect of a claim of his own against them for disbursements and commission; the latter he had retained by their authority, to defray the expenses of the suit against Thornton for the amount underwritten for on the policy by the latter. Under these circumstances it was contended that principle that an agent account of his principal principal without notice

the case came within the
having received money on
and paid it over to the
to the contrary, is absolved from responsibility to
the party from whom he received it; and that the
defendant, having received the money as agent and
paid it to, or on account of his principals, or allowed
it conclusively in account with them, without any notice
of revocation, could not be called upon to refund. To
this it was answered on the part of the plaintiff that,
the policy having been effected in the name of the de-
fendant, the payment must be taken to have been made
to him as principal. With reference to this point, we

are of opinion that the plaintiff fails upon the facts. Not only is it clear that the defendant was acting solely as agent, but (the Court having power to draw inferences of fact) we are of opinion that the plaintiff was aware that the defendant was acting as agent for the foreign owners, and as such, made to him the payment of the money he now seeks to recover back. It is, therefore, unnecessary to consider the proposition contended for on behalf of the defendant, that the mere fact of the defendant having been an agent would have been sufficient to raise this defence, even if the plaintiff had not known him to be such at the time the payment was made.

Secondly, it was contended for the plaintiff that, although the jury have negatived any intentional fraud on the part of the defendant, yet as the suppression of a material fact whereby the policy became vitiated was throughout known to the defendant, the receipt of the money and the transmission of it to his principals could not be held to be other than a fraud in law, and that the defendant must be considered as in the same position as though he had received notice not to pay over the money on the ground that the policy had been found to be open to the exception now taken. To this contention we think a sufficient answer is afforded by the combined facts, first, that the proceedings of the defendant were throughout bonâ fide-he having been led to believe that the representation of the master as to the damage the ship had sustained was exaggerated, and also that, as the damage would be made good under a prior insurance, its existence need not be communicated on the proposal for the new policy; and, secondly, that the effect of the concealment complained of was not to

1861.

HOLLAND

V.

RUSSELL.

1861.

HOLLAND

V.

RUSSELL.

make the policy void, but voidable only. Under these
circumstances the defendant, receiving the money for
his principals, not only without any notice that excep-
tion would be taken to the policy, but, further, with a
full belief that none would be taken, did no more than
discharge his duty in handing over the money.
We see
no reason, therefore, to exclude him from the benefit of
the rule that an agent receiving money on account of
his principal and paying it over to the principal, without
notice to the contrary, is protected against any claim
which the party from whom it was received would have
had if the money had still remained in his hands. When
money so paid to an agent has once been bonâ fide
parted with, without notice, the liability of the agent
ceases, and the claim of the party paying it can be en-
forced only against the principal to whom the money has
been handed over.

The arguments we have thus far been considering have reference to the entire amount received by the defendant. But, it was further contended on behalf of the plaintiff that, even if the foregoing rule should be held to protect the defendant as to the amount which he had actually transmitted to his principals, the two sums of 6071.3s.10d. and 6087. 10s. 11d.—the first of which he had retained to satisfy his own claim on his principals, the second to meet the expences of the action against Thornton-stood on a different footing, and that, as to these sums, the defendant, not having actually parted with them, was still liable to the plaintiff.

As to the first of these sums we were pressed on the argument with the authority of the cases of Buller v. Harrison (a), and Cox v. Prentice (b), in which it was (b) 3 Mau. & S. 344.

(a) Cowp. 565.

held that an agent having merely carried money received by him to the credit of the principal in a debtor and creditor account, although he had transmitted such account to the principal, still remained liable to the party by whom the money had been paid and who on sufficient cause demanded its repayment. While we fully recognise the authority of these cases, we are of opinion that the present case stands on a different footing. In those cases, the account being still open between the parties, the position of the agent was not prejudiced by having to refund the money. In the present case the defendant, having a claim against his principals, transmits to them an account made up to the end of the year, in which giving them credit for the amount received on this policy, he debits them with the amount of his claim, and strikes a balance which proves to be in their favour. With this balance he credits them in a further account for the ensuing year, which account was afterwards transmitted to them in

due course. Both accounts were adopted and agreed to by the principals. The account thus became a settled account between the parties; and the transaction is in effect the same as though the agent had paid over the whole amount to the principals and had received back the amount of his claim. He cannot, any more than he could in the case lastly put, call upon the principals to pay over again; and he ought, therefore, to be equally held free from liability to the opposite party.

The question as to the sum of 6087.10s. 11d, expended in the prosecution of the action against Thornton appears to us free from difficulty. This sum, which it may be assumed would otherwise have been transmitted to the principals, was by their assent and desire retained for the purpose

1861.

HOLLAND

V.

RUSSELL