Pursuing the consideration of the points arising upon contracts made through the medium of agents, and having disposed of most of those which relate to the liability of the principal upon them, the next in order is that which regards his power to take advantage of them. Now, where the agent (a), when he makes the contract, states who his principal is, and states that he is contracting on the behalf of that principal; or where (though there may be no express statement to that effect) the circumstances of the transaction can be shown to have been so completely within the knowledge of the parties to it that there can be no doubt that it was understood at the time that the person who actually made the contract made it as an agent, and intended to make it on behalf of his principal; in such cases there can of course be no doubt of the principal's right to take advantage of it, and enforce it to the fullest extent. It is, in *truth, as if he had put his own hand to it. In such cases, therefore, there can be no difficulty. But the cases in which difficulties arise, are those in which the agent, being really only the substitute for another, nevertheless contracts in his own name as if he were himself the principal.1
(a) Seignior v. Wolmer, Godb. 360.
1 George v. Clagett, 7 T. R. 359; Purchell v. Salter, 1 Q. B. (41 E. C.L. R.) 197; Sims v. Bond, 5 B. & Ad. (27 E. C. L. R.) 393; Lime Rock Bank v.
Now, in such a case, the principal may adopt and enforce the contract (b), but his right to do so is subject to a qualification which has been dictated by common sense and public convenience, namely, that, on declaring himself, he stands in the place of the agent who made it; so that the other contracting party enjoys the same rights against him which he would have enjoyed against the agent who made it, had that agent really been the principal. For instance, if I buy a parcel of goods from A., who sells them to me in his own name, though he is really only the factor of B., whose property the goods are, B. may, if he think proper, declare himself the principal, and require me to pay the price to him; but if the factor owed me money which I could have set off against the price had the factor sued me for it, I have the right of setting it off against B., in like manner as I might have done against the factor. And the good sense and justice of this is obvious; for it may be exceedingly inconvenient, indeed ruinous to me, to pay *in hard cash; and my knowledge that I should have this set-off may have been my only in(b) Cooke v. Seeley, 17 L. J. (Ex.) 286; 2 Ex. 746, S. C.; Spurr v. Cass, L R. 5 Q. B. 656; 39 L. J. (Q. B.) 249.
Plimpton, 17 Pick. 159; Leeds v. Marine Ins. Co., 6 Wheat. 570; Violett v. Powell, 10 B. Mon. 347; Parker v. Donaldson, 2 W. & S. 21.
As the lecturer has elsewhere expressed it, " in every case in which the agent sues in his own name, two consequences, it must be remembered, follow: 1. That the defendant may avail himself of those defences which would be good as against the agent who is the plaintiff on the record : Gibson v. Winter, 5 B. & Ad. (27 E. C. L. R.) 96; Wilkinson v. Lindo, 7 M. & W. 83. 2. That he may avail himself of those which would be good as against the principal for whose use the action is brought: Welstead v. Levy, 1 M. & Rob. 138: Meg-ginson v. Harper, 4 Tyr. 94; Rex v. Hardwick, 11 East, 578; Harrison v. Vallance, 1 Bing. (8 E. C. L R.) 45; Smith v. Lyon, 3 Camp. 465." Note to Thomson v. Davenport, 2 Sra. L. C. 398.-r.
Huntington v. Knox, 7 Cush. 371; Doe v. Thompson, 22 N. H. 217.-S.
Haverhill Ins. Co. v. Newhall, 1 Allen, 130; Quigley v. De Haas, 82 Pa. St. 267; Bryson v. Lucas, 84 N. C. 680. 448 ducement to buy; and if I were deprived of it, I should be led into a trap-induced to purchase upon one ground, and forced to pay upon a different one.
The general rule, that a principal may declare himself, and take advantage of his agent's contract made without naming him, and this qualification of it (to prevent the injustice of which it might otherwise be made the instrument), are both very clearly laid down in the judgment in Sims v. Bond (c) : - "It is a well established rule of law," said the L. C. Justice, delivering the judgment of the Court in that case, "that where a contract not under seal is made by an agent in his own name for an undisclosed principal, either the agent or the principal may sue upon it1 - the defendant, in the latter case, being entitled to be placed in the same situation at the time of disclosure as if the agent had been the contracting party."2 This rule is most frequently acted upon in sales by factors, agents, or partners, in which cases either the nominal or the real contractor may sue, but it may be equally applied to other cases. Thus, in George v. Clagett (d),3 the case was this: the
(c) 5 B. & Ad. (27 E. C. L. R.) 393; Ramazotti v. Bowring, 29 L. J. (Ch.) 30.
(d) 7 T. R. 359; 2 Smith L. C. 118, 8th ed.; Isberg v. Bowden, 22 L. J. (Ex.) 322; 8 Ex. 852.
1 Unless, indeed, the defendant relied on the plaintiff's character as agent, and would not have contracted with him as a principal if he had known him so to be: Schraalz v. Avery, 3 Eng. L. & Eq. R. 391.-R.
2 If, however, the defendant either knew, or had the reasonable means of knowing that he was dealing, not with an agent, but with a principal, the latter part of the rule, as thus expressed, obviously loses its application : Baring v. Corrie, 2 B. &. Ald. 137; so, if the purchaser knew that the seller was not the owner of the goods, but a factor-in such case, he can have no set-off against the latter, whether the suit be brought in the name of the principal or in his own name : Parker v. Donaldson, 2 W. & S. 9; for in neither of these cases is the purchaser deceived.-r.
3 And see the note to that case in 2 Sm. L. C. 118.-R.
29 449 plaintiff, a clothier, employed Rich and Heapy as his factors, who, besides acting as factors, bought and *sold great quantities of woollen cloths on their own account, and carried on all their business at one warehouse. Rich and Heapy became largely indebted to the defendants on a bill of exchange, and afterwards the latter purchased woollen cloths of them to an amount greater than the debt on the bill. Part of the cloths really belonged to the plaintiff, but the defendants did not know it, and on his suing the defendants for the price of his cloth so bought by them from Rich and Heapy, the defendants were considered to be entitled to set off the debt of Rich and Heapy to them. "By the statute of set-off (e)," said Hoboyd, J., in the very similar case of Carr v. Hinchliff (f), "when there are mutual debts between a plaintiff and a defendant, the latter may set off the debt due to him against that which is claimed. The statute gives him a right to say, that the debt claimed is paid by that which is clue to him, and that it operates as an extinguishment of the debt. And now, by analogy to the defence given by the statute, a defendant is also entitled to say that his debt is extinguished by another debt due to him from any person who may be identified with the plaintiff." Even where the defendant was aware that he was dealing with an agent, a factor, but the latter was accustomed to sell in his own name when he had any claim against the owner of the *goods for advances, and the purchaser, in buying the goods in question, bond fide believed that the factor sold them for the purpose.of satisfying such a claim, it was decided that the purchaser was entitled to set off the payments made by him to the factor. This was the case of Warner v. M'Kay (g), where the Court treated the question as being, whether the defendant had a right to consider that he had paid the factors for those goods. The only-doubt arose from the defendant being apprised that the goods belonged to the plaintiffs. But as the factors were accustomed to sell in their own names, and did sell these goods in their own names, and the jury having found that the defendant believed that they had authority to sell, and was not bound to inquire further, the Court supported a verdict for the defendant. But if the purchaser knew all along that he was dealing with an agent, he cannot set off, in an action by the principal for the price of goods bought by him of the agent, a debt due from the agent to himself; for that would be treating the agent and the principal as one, where they are not identified, and creating instead of preventing the injustice which the law thus seeks, by allowing a set-off of this kind, to prevent (h). The real *grounds on which the before-mentioned cases have been decided, were stated by the Court of Exchequer, in Is-berg v. Bowden (i), to be "that when a principal permits an agent to sell as apparent principal, and afterwards intervenes, the buyer is entitled to be placed in the same situation at the time of the disclosure of the real principal as if the agent had been the real contracting party, and is entitled to the same defence, whether it be by common law or by statute, by payment or by set-off, as he was entitled to at that time against the agent, the apparent principal." The principle, however, of George v. Clagett applies only to what may be said to be the proximate motive of dealing with the factor. Thus, it was held, that in the event of the lat-ter's bankruptcy, the defendant would not be allowed to set-off against the principal's claim, all claims arising out of mutual dealings of which defendant might have availed himself, under ss. 31, 39, of the now repealed statute, 32 & 33 Vict., c. 71 (Bankruptcy Act, 1869). The contingency of the bankruptcy and the mode of settling accounts with the trustee *:could not be considered to have been contemplated when the contract was made with the agent (k). It seems sufficiently connected with these propositions, to add here, that where the principal does not intervene, but allows the agent to sue in his own name, two consequences follow: 1st, that the defendant may avail himself of all defences which would be good against the agent, who is by the supposition the plaintiff on the record (/); 2ndly, that he may avail himself of those which would be good against the principal for whose sole use the action has been brought (m).