A remarkable variation from the usual course of business obtains in the case of insurance brokers. By these persons subscriptions to a policy of assurance are almost always procured; to them the underwriters look for the premium of insurance, and to them the assured pay the premiums. This is clearly explained in the following extract from the judgment of Bayley, J., in Power v. Butcher (n) :-"According to the ordinary course of trade between the assured, the broker, and the underwriter, the assured do not, in the first instance, pay the premium to the broker, nor does the latter pay it to the underwriter. But, as between the assured and the underwriter, the premiums are considered as paid. The underwriter, to whom in most instances the assured are unknown, looks to the broker for payment, and he to the assured. The latter pay the premiums to the broker only, and he is a middle man between the assured and the underwriter; but he is not solely agent
(i) Kemble v. Atkins, supra.
(k) Sievewright v. Archibald, 20 L. J. (Q. B.) 529; 17 Q. B. (79 E. C. L. R.) 104, S. C; Humfrey v. Dale, 27 L. J. (Q. B.) 390, in Exch. Ch.
(l) Hinde v. Whitehouse, 7 East, 558; Goom v. Aflalo, 6 B. & C. (13 E. C. L. R.) 117.
(m) See Benjamin on Sales, 255, 3rd edit.
(n) 10 B. & C. (21 E. C. L. R.) 339.
-he is a principal to receive the money from the assured, and to pay it to the underwriter."
As to the mode in which, in the event of a loss, the payment is made to the assured, the brokers usually settle and adjust the loss, and receive the payment. It is a frequent custom to make *settlements in account between the broker and the underwriter; and it is clear that if the assured have known, or ought, in the common course of things, to have known of such a custom, they will be bound by it although money has not been actually paid by the underwriter; such a settlement in account with the broker by the underwriter discharging the latter as between himself and the assured. This was decided in Stewart v. Aberdein (o); but the Court added, in delivering its judgment, "It must not be considered, that, by this decision, the Court means to overrule any case deciding that where a principal employs an agent to receive money, and pay it over to him, the agent does not thereby acquire any authority to pay a demand of his own upon the debtor, by a set-off in account with him (p). But the Court is of opinion that, where an insurance broker or other mercantile agent has been employed to receive money for another, in the general course of his business, and where the known general course of business is for the agent to keep a running account with the principal, and to credit him with sums which he may have received by *credits in account with the debtors, with whom he also keeps running accounts, and not merely with moneys actually received, the rule laid down in those cases cannot properly be applied; but it must be understood that where an account is bond fide settled according to that known usage, the original debtor is discharged, and the agent becomes the debtor, according to the meaning and intention and with the authority of the principal." But the necessity of this knowledge in the principal in. order to render such a settlement in account equivalent to a settlement according to the express authority of the principal, has been strongly illustrated in a later case, in which even a usage at Lloyd's to this effect was held insufficient to give authority to the agent where there was proof that the principal was ignorant of it(q).
(o) 4M. &W.211.
(p) Underwood v. Nicholls, 25 L. J. (C. P.) 79; 17 C. B. (84 E. C. L. E.) 239; Guardians of Bedford Union v. Pattison, 26 L. J. (Ex.) 115; 1H.&N. 523, in Ex. Ch.; Ex parte Barkworth v. Harrison, 27 L. J. (Bptcy.) 5; Sweeting v. Pearcc, 29 L. J. (C. P.) 265; Perry v. Hall, 29 L. J. Ch. 677; Catterall v Hindle, L. R. 1 C. P. 186, 2 C. P. 368 (Ex. Ch.) 35 L. J. (C. P.) 161.
These few propositions, it is hoped, will enable you more readily to understand those cases of the law of principal and agent, where the latter is a broker, and where the general rules do not, therefore, seem directly applicable without reference to these peculiarities.
A factor is an agent employed to sell goods or merchandise, consigned or delivered to him by or for his principal, for a compensation, commonly called factorage or commission. Hence he is often called *a commission agent or commission merchant (r). He "is an agent but an agent of a particular kind.1 He is an agent entrusted with the possession of goods for the purpose of sale" (s). Since then the usual course of his employment is to sell, if he does sell, though contrary to the instructions, whether implied or express, of his principal the true owner, the sale is binding on the latter, provided of course that the purchaser acts bond fide, and is ignorant that the factor is in fact unauthorized to sell (t). This is in accordance with "the general principle of law, that, where the true owner has clothed any one with apparent authority to act as his agent, he is bound to those who deal with the apparent agent on the assumption that he really is an agent with that authority, to the same extent as if the apparent authority was real" (u). This is really the same principle which we have already been discussing in the last lecture, when we were considering the liability of a principal for the unauthorized acts of a general agent within the scope of his usual employment (x).
(q) Sweeting v. Pearce, supra; 30 L. J. (C. P.) 110, S. C. in Ex. Ch. (r) See Story on Agency, s. 34.
(s) Per Cotton, L. J., in Stevens v. Biller, 25 Ch. Div. 31, 37; 53 L. J. (Ch.) 249, 252.
1 Factors are to be treated as special owners of the property consigned to them. They may sue in their own names for the price of goods sold-may receive payments-and give receipts, unless notice to the contrary has been given by their principals : Graham v. Duckwall, 8 Bush, 12.-s.