L. R. 9 Q. B. 301. In the Exchequer Chamber, Lord Coleridge, who delivered the principal opinion, now said: 'There can be no doubt that a different set of principles altogether applies where an agent of a corporation or a joint-stock company, at any rate in carrying on its business, does something of which the company takes advantage, or by which it profits or may profit, and it turns out that the act of the agent is fraudulent.' (See Houldsworth v. Glasgow Bank, 5 App. Cas. 317, 324, 329.) And the case was considered to be in accord with Barwick v. English Joint-Stock Bank, supra. See Mackay v. Commercial Bank, L. R. 5 P. C. 394, 412.

The House of Lords had held in Western Bank v. Addie, L. R. 1 H. L. Scotch, 145, in a suit to rescind a contract for the purchase of shares and for restitution in integrum or in the alternative for damages, that in the absence of evidence of fraud on the part of the defendants, the action could not be maintained, though the defendants' agent had been guilty of fraud in securing the contract. The Lord Chancellor (Chelmsford) declared that an action for deceit could not be maintained against the company in such a case; the remedy was against him who committed the fraud. And Lord Cranworth said that an attentive consideration of the cases had convinced him that the true principle was that corporate bodies could be made responsible for the frauds of their agents to the extent to which the principals had profited from the fraud, but that they could not be sued as wrong-doers by imputing to them the misconduct of those whom they had employed.

Later in Swire v. Francis, 3 App. Cas. 106, another question arose in the Privy Council, of the defendants' lia

bility for their agent's fraud committed in the course of his business, that is, in the course of a transaction within his authority as an agent. The defendants were innocent, and derived no actual benefit from the transaction, though the agent's act was professedly and ostensibly for their benefit; but they were held liable on the principle of Barwick v. English Joint-Stock Bank and Mackay v. Commercial Bank, supra. About the same time the Court of Appeal reached a contrary conclusion on a similar case. Weir v. Bell, 3 Ex. D. 238, Cotten, L. J., dissenting. And this-the non-liability to damages, of an innocent principal who had derived no benefit from his agent's fraud - is now the prevailing doctrine in England with regard to the one case of buying into a company by the purchase of shares from it. Houldsworth v. Glasgow Bank, 5 App. Cas. 317 (House of Lords, A. D. 1880), where the law is well explained.

See

See especially pp. 329, 330, Lord Selborne. Whether the broader dicta in Barwick v. English Joint-Stock Bank, and in some of the other cases, are to prevail, making the principal liable in damages in other cases, though he was innocent and received no benefit from the agent's fraud in the course of his employment, is expressly left an open question in Houldsworth v. Glasgow Bank. pp. 339-341, Lord Blackburn. (In this connection may be noticed the decision in Miles v. McIlwraith, 8 App. Cas. 120, in the Privy Council, where an innocent principal was held not liable to certain penalties of statute incurred if at all by the fraud of his agents. But the court held that there had been no transaction on behalf of the principal.)

It is thought however by a learned writer that, with the exception of the

one case of buying into a company (supra, Houldsworth v. Glasgow Bank), the prevailing rule in England is that laid down in Barwick v. English Joint-Stock Bank, denying any distinction, in cases of agency, between fraud and trespass, and holding the principal liable regardless of benefit received. F. Pollock in April No., 1885, of Law Quarterly Review, p. 218. But see Weir v. Bell, 3 Ex. D. 238, 244, Lord Bramwell, where however the old but unfortunate distinction in regard to wilful wrongs of a servant is repeated.

It is equally clear in this country, that the principal is liable in damages where he has derived a benefit from his agent's fraud. Jeffrey v. Bigelow, 13 Wend. 518; Bennett v. Judson, 21 N. Y. 238; Allerton v. Allerton, 50 N. Y. 670; Craig v. Ward, 3 Keyes, 393; Elwell v. Chamberlin, 31 N. Y. 619; Chester v. Dickerson, 52 Barb. 349; Davis v. Bemis, 40 N. Y. 453, note; Durst v. Burton, 47 N. Y. 167; s. c. 2 Lans. 137; Sandford v. Handy, 23 Wend. 260; Locke v. Stearns, 1 Met. 560; Cook v. Castner, 9 Cush. 266; White v. Sawyer, 16 Gray, 586. Nor according to several of these cases is the principal's liability limited to the benefit received, but extends to the amount of damage done. Jeffrey v. Bigelow; White v. Sawyer. These cases are therefore inconsistent with the view sometimes suggested, that the action against the principal when innocent may be treated as an action for money had and received. Barwick v. English Joint-Stock Bank, L. R. 2 Ex. 259; Mackay v. Commercial Bank, L. R. 5 P. C. 394, 414.

It would seem to follow that the principal would be held liable for the fraud of his agent in the course of his employment though he had derived

no benefit whatever from the transaction; and this view is strengthened by the fact that our courts, adopting language of Lord Holt in the nisi prius case of Hern v. Nichols, 1 Salk. 289, commonly rest the liability of the principal on the ground that he has held the agent out as a person entitled to confidence. Sandford v. Handy, 23 Wend. 260; Davis v. Bemis, 40 N. Y. 453, note; Locke v. Stearns, 1 Met. 560. But see Kennedy v. McKay, 43 N. J. 288. This view however appears to have lost ground in recent times in England, otherwise there could not have been that hesitancy and refusal to hold an innocent principal liable which the cases above cited show. But in Weir v. Bell, 3 Ex. D. 238, 245, supra, Bramwell, L. J., reasserts, or rather restates, apparently in stronger terms, the old doctrine of Hern v. Nichols, supra. The learned Lord Justice there says that the true ground is that every person who authorizes another to act for him in making a contract undertakes for the absence of fraud in that person in the execution of his authority; though he holds to the doctrine that liability for damages in deceit broadly is based on moral fraud. He considered the defendant, a director, as not the true principal of the agent.

While however it appears to be a just interpretation of the situation to say that one who holds another out as having authority to act for him holds that person out as an honest man, it is probably contrary to the fact in nearly every case to say that he has intended to warrant the honesty of his agent. If inquired of in advance, the principal would in most cases probably say that he intended nothing of the kind, though he would doubtless say that he believed his agent an honest man. If this is the true interpreta

tion, the principal ought not to be liable in damages, apart from advantage derived, unless he was himself guilty of fraud or of negligence in holding out his agent as honest, in the absence of strong public policy to the contrary. To go further is virtually to say that when a man's business is such as to demand the employment of help, he ought to be held to a stricter accountability than he would be held to if he could do the business alone. Nothing short of urgent public policy should be sufficient to extend a doctrine of this kind beyond its recognized bounds; to extend to new cases the rule that one man may be held liable for another man's wrongs can be justified only by the strongest reasons. It may not yet be too late to urge the point.

The directors of a company-to pass on― are not agents of each other so as to bind each other by fraudulent acts not authorized or participated in by those whom it is sought to bind. Thus a director is not liable merely because he is a director, for the fraudulent issuance of a prospectus by his co-directors, or by any other agent of the company. Cargill v. Bower, 10 Ch. D. 502.

Knowledge of Plaintiff. But the plaintiff's right to relief, or the defendant's right of defence, based on misrepresentation depends upon his ignorance of the true state of facts and his belief in the representation made. In other words, if such party knew or under the circumstances ought to have known that the representation was false, his case or defence will fail. Pasley v. Freeman, 3 T. R. 51; s. c. Bigelow's L. C. Torts, 1; Salem Rub

ber Co. v. Adams, 23 Pick. 256; Ely v. Stewart, 2 Md. 408; Camberwell Building Soc. v. Holloway, 13 Ch. D. 754; Delaine Co. v. James, 94 U. S. 207.

The only difficulty in the situation is to determine when the plaintiff ought to have known the facts. The rule cannot here be always applied that applies to the converse case of knowledge on the part of the one who made the misrepresentation, to wit, that he is supposed to know all facts within his special means of knowledge, for the plaintiff notwithstanding his means of knowledge may well have been prevented from availing himself of the same by the very misrepresentation in question; it is well settled that the plaintiff need not inquire in the face of a plain representation of fact, though the truth thereof might easily be ascertained. Negligence is no bar to relief. Redgrave v. Hurd, 20 Ch. D. 1, 13, Jessel, M. R.; David v. Park, 103 Mass. 501; Keller v. Equitable Ins. Co., 28 Ind. 170; Parham v. Randolph, 4 How. (Miss.) 435; Kiefer v. Rogers, 19 Minn. 32; Holland v. Anderson, 38 Mo. 55; Mead v. Bunn, 32 N. Y. 275, 280; McClellan v. Scott, 24 Wis. 81, 87; Webster v. Bailey, 31 Mich. 36; Matlock v. Todd, 19 Ind. 130; Phelps v. White, 7 L. R. Ir. 160; Stanley v. McGauran, 11 L. R. Ir. 314.

Doubtless when the means of ascertaining the truth were directly before the plaintiff's eyes, it may require strong evidence to convince the court that he relied upon the defendant's statements or acts and refrained from making inspection. See e. g. Salem Rubber Co. v. Adams, 23 Pick. 256,

the language in which appears however to be rather too strong against the plaintiff, in the light of the later cases. It seems clear that the plaintiff may rest satisfied with the defendant's representations however easily he might have tested their truth.

Where however the opposite party has said or done nothing having a tendency to prevent inquiry, as where he has remained silent, the failure to inquire will be fatal to relief in ordinary cases. Thus the fact that a married woman did not read a mortgage executed by her upon her separate estate to secure a debt of her husband will not entitle her to relief against the instrument in the absence of fraud. Thacher v. Churchill, 118 Mass 108. See also on the failure to read an instrument, Hardy v. Brier, 91 Ind. 91; Watts v. Burnett, 56 Ala. 341; Rogers v. Place, 35 Ind. 577; Bacon v. Markley, 46 Ind. 116; Hawkins v. Hawkins, 50 Cal. 558; Craig v. Hobbs, 44 Ind. 363; Watson v. Planters' Bank, 22 La. An. 14; Miller v. Sawbridge, 29 Minn. 442. So too it is no defence to a bill to set aside for fraud a conveyance made on exchange for other property that the plaintiff's property was encumbered, if the plaintiff did nothing to conceal the fact of the incumbrance, and was

under no duty to disclose the same. Knowlton v. Amy, 47 Mich. 204.

But there are cases in which a man cannot justify himself in being silent, as where he stands in a relation of confidence towards the party dealing with him. Infra, §§ 308 et seq.

In cases of the sale of personalty, the rule of caveat emptor requires the buyer to investigate all questions about which no actual representation has been made by the vendor, unless indeed there is an implied warranty in the case, such as that of the title of a vendor in possession, or that an article is suitable for the purpose for which it is expressly sold.

There is no implied warranty of title in the sale of realty, or of the fitness of the estate for the purpose for which it is sold or leased. Keats v. Cadogan, 10 C. B. 591. There must either be a warranty or an actual misrepresentation to justify relief to the vendor, unless there has been a prior written contract of sale. See In re Gloag, 23 Ch. D. 320, infra; Camberwell Building Soc. v. Holloway, 13 Ch. D. 754. And even where there has been the one or the other in a previous contract for the sale of the land, with an agreement that error or misstatement by the vendor shall entitle the purchaser to compensation,

there has been considerable doubt whether the law requires the purchaser to make all investigation before the completion of the contract by conveyance, or permits him to claim compensation on discovering error or misstatement afterwards. Vice-Chancellor Malins has more than once insisted, against decisions by Jessel, M. R., and other judges, that the investigation of title must be made before conveyance. Manson v. Thacker, 7 Ch. D. 620; Besley v. Besley, 9 Ch. D. 103; Allen v. Richardson, 13 Ch. D. 524. But this cuts short the natural import of the agreement, and the contrary view has prevailed. In re Turner, 13 Ch. D. 132; Palmer v. Johnson, 13 Q. B. D. 351; s. c. 12 Q. B. D. 32; Cann v. Cann, 3 Sim. 447; Bos v. Helsham, L. R. 2 Ex. 72; Phelps v. White, 7 L. R. Ir. 160, 165.

Indeed in the case last cited it is held that taking a conveyance with knowledge of error in the description of the land is not evidence of substituted performance of the prior contract of sale where there is a clause providing for compensation. See In re Gloag, 23 Ch. D. 320, to the same effect. On the other hand it is laid down that if the prior contract of sale, providing for a good title, contains no stipulation in regard to possession, and the purchaser takes possession before completion of the contract, with knowledge of defects which the vendor cannot remove, the taking possession is a waiver of the right to require the removal of the defects or to repudiate the contract. If the defects are removable by the vendor, taking possession is no waiver. In re Gloag, 23 Ch. D. 320. And if the prior contract for sale is silent concerning the title to be made, then, though the presumption is that a good title is to be made, this presumption may be rebutted by

evidence that the purchaser had notice, before such contract was executed, of defects in the vendor's title. Ib. But compare Camberwell Building Soc. v. Holloway, 13 Ch. D. 754, Jessel, M. R., denying Madeley v. Booth, 2 DeG. & S. 718, 722. These were cases in which the contract itself, being silent as to the title to be made, showed on its face, in the particulars and conditions of sale, the defect.

In like manner if in a contract of sale it has been declared that the purchaser shall assume and admit that everything (if anything were necessary) was done and performed,' he cannot afterwards maintain an action against the vendor based on a discovery that the vendor's title was defective. Such a clause does not merely mean that the purchaser shall not require the vendor to prove that everything has been done; the purchaser cannot avail himself of facts which he himself has discovered. Best v. Hamand, 12 Ch. D. 1 (C. A.). Baggalay, L. J., here alluded to the settled distinction between cases in which the vendor is not bound to produce evidence of a fact, - there of course the purchaser might do so, and cases in which the fact is to be accepted without question. Hume v. Bentley, 5 DeG. & S. 520; Waddell v. Wolfe, L. R. 9 Q. B. 515.

It is however laid down by the same court that a condition of sale is bad as misleading, first if it requires the purchaser to assume what the vendor knows is false, or secondly if it declares that the state of the title is not accurately known, when in fact it is known to the vendor. In re Banister, 12 Ch. D. 131 (C. A.).

Again mere knowledge that fraud is being perpetrated on one will not bar relief if one were unable to prevent the result. Where e. g. a corpo