[*328] *In an action for goods sold to the defendant by [*329] the owner's factor, the defendant set off a debt *due to him from the factor upon another account, alleging that the plaintiff had not appeared at all in the transaction, and that credit had been given by the factors and not by the plaintiff. Lord Mansfield delivered his opinion as follows: Where a factor, dealing for a principal, but concealing that principal, delivers goods in his own

now pull off the mask and claim payment of debts supposed to be due to Ross alone, without allowing the party the same advantages and equities in his defence that he would have had in actions brought by Ross. Verdict for defendant. The same principle is acted upon in actions against partners. Thus, to an action against two partners upon a bill of exchange, drawn upon and accepted by Saunders, Brothers, & Co. London, the defendants pleaded in abatement that there were other partners who ought to have been joined. On the issue raised by this plea, Lord Tenterden left it to the jury to say whether the plaintiffs had reason to suppose that the two defendants constituted the firm in question at the time when the contract was made, and the answer being in the affirmative, a verdict was taken for the plaintiffs. The case was subsequently brought before the court, and it was there decided that the direction was right-that the question was, with whom was the contract made-that where the transaction was with a firm in which there were secret partners, the existence of whom became known to the party dealing after the contract and before payment, he had his choice to sue either those only with whom he contracted, or the whole firm-and that the case of Dubois v. Ludert, 5 Taunt. 609, in which the contrary had been held, was not good law. De Mautort v. Saunders, 1 B. & C. 398. In the case of Ex parte Norfolk, 19 Ves. 455, Lord Eldon stated, that such had been the practice in bankruptcy for the last thirty years" It has,” said he, “been taken as unquestionable that if I deal with A., he cannot with reference to that transaction, say there is a contract between him and B., of whom I know nothing; thus compelling one to be a joint creditor of those two, whose joint property may be scarcely anything, and not the sole creditor of the only man I knew. I have said in this place, following a series of precedents, that the joint creditors may elect that a man purchasing from, or selling to A., not knowing of any partner, may consider A. as the sole vendor or vendee. He may, finding that B. has taken a share of the profits, elect to go against him also, but he cannot be compelled certainly."+ | A part owner of a vessel who orders supplies on his own account, without mentioning any co-part-owners, cannot plead in abatement that there are co-part-owners, who ought to have been joined, the plaintiff being ignorant that there were other part-owners. Baldney v. Ritchie, 1 Stark. 338.||

name, the person contracting with him has a right to consider him to all intents and purposes as the principal. And though the real principal may appear, and bring an action. upon that contract against the purchaser of the goods, yet the purchaser may set off any claim he may have against the factor in answer to the demand of the principal. This has been long settled.(i) On a later occasion this opinion was made the ground of a judgment by which the law is established upon this head. This was in the case of George against Clagett. The plaintiff, a clothier, employed certain persons as his factors under a del credere commission, who, besides acting as factors, bought and sold great quantities of woollen cloths on their own account; and all their business was carried on at one warehouse. The defendants being at that time the holders of a bill accepted by the factors, which they had re

ceived in the course of trade, bought *cloths of the [*330] factors at twelve months' credit, which were taken out of one general mass in the factor's warehouse. The bills of parcels of the whole were made out in the factors' names, and the buyers did not know that any part of the goods belonged to the plaintiff. The factors having failed, the defendants received notice from the plaintiff that part of the goods bought were his property; and the question was whether the defendants were entitled to set off their demand against the factors on the bill of exchange, on the ground that the defendant dealt with them as principals;

(i) 7 T. R. 360,(a). Rabone, jun. v. Williams, Middlesex Sittings after Mich. 1785. In Bayley v. Morley, London Sittings after Mich. 1788, Lord Kenyon recognized the law of this case, id. ib. || But "if the agent appointed to collect a debt, is indebted to the debtor, the latter cannot offset, against the debt due from him to the principal, claims against the agent. It cannot be contested. No man ever thought, that a person who employs an agent to collect his debts, by this agrees to take on his hands the debts owing by his agent to his debtors, instead of looking to the original debtors themselves." Marshall, C. J. Wilson v. Codman's Ex'rs., 3 Cranch, 204.||

and upon the authority of the case just referred to it was determined that they were.(k)

But circumstances which show collusion between the factor and buyer, as the insolvency of the factor known to the buyer, would defeat the right he would otherwise have.(1) This right depends upon the ignorance of the contracting party as to the real character of the person with whom he deals; and therefore has been held not to enable a person, effecting a policy of insurance by the direction of one whom he knew to be an agent, to withhold the money recovered upon the policy, on account [*331] of a debt due to him from the *agent; and it was thought a sufficient intimation of the agent's character that he, in a time of war, being an English subject, described the ship as neutral.(m) And although the buyer, at the time of making the contract of sale with a factor, be not apprized of his representative character; yet if at any time before the contract be completed by the delivery of all the goods, and even after the delivery of part, he come to the knowledge of the principal, he cannot avail himself of a set-off against the factor. But he might in this case be discharged by paying the factor, if not prevented by notice from the principal.(n) The mere general knowledge, however, of the seller being a factor is not suf ficient to deprive the buyer of the privilege of set-off, without express knowledge that he acts as agent in that particu

(k) 7 T. R. 359. The fact of the factor having a del credere commission does not appear to have weighed in the judgment, though mentioned in the case. And see Wright v. Snell, 5 Barn. & Ald. 350; Carr v. Hinchliff, 4 Barn. & Cr. 547.||

(1) Escot v. Milward, 7 T. R. 361,(b).

(m) Maans v. Henderson, 1 East, 335. If the insurer knows that a policy, though in the name of a broker is in fact effected on account of another, a set-off of a debt due from the broker, cannot be made in a suit by him on that policy, though it be carried on in his own name. Gordon v. Church, 2 Caines' Rep. 299. But the premium note may be deducted, whether given by the agent or principal. Hurlbert v. The Pacific Ins. Co., 2 Sumn. 471; and see Leeds v. The Marine Ins. Co., 6 Wheat. 565.|| (n) Moore v. Clementson, 2 Campb. N. P. C. 24.

lar instance, because a man who is in the habit of selling for others may likewise sell goods of his own.(o)

The case of Baring v. Corrie, which has been already alluded to,(8) strikingly illustrates the principle and limits of the doctrine now under consideration. The question was, whether the purchaser had a right to set off against the claim of the vendor, a debt of the broker, by whom the sale had been effected. *And it was [*332] said by Bayley, J., that upon this three questions arose: "1st, Did the plaintiffs (the vendors) enable Coles & Co. to appear as proprietors of the goods and to practise a fraud upon the defendants (the purchasers)? 2dly, Did Coles & Co. actually practise a fraud? and 3dly, Did the defendants use due care and diligence to avoid such fraud ?" ----in other words, were the purchasers misled into a belief that they were dealing with Coles & Co. as principals, and if they were misled, was it by the fault of the principals in enabling the brokers so to mislead them, or by their own fault in not instituting proper inquiries-all which questions being answered against the defendants, the plaintiffs had judgment.(9)

It will be seen, on reference to the report of that case, that much stress was laid on the difference of character of broker and factor. "The distinction," says Abbott, C. J., "between a broker and a factor is not merely nominal, for they differ in many important particulars. A factor is a person to whom goods are conveyed for sale by a merchant residing abroad, or at a distance from the place of sale, and he usually sells in his own name without disclosing that of his principal: the latter therefore, with full knowledge of those *circumstances, trusts him with the [*333] actual possession of the goods, and gives him au

(0) Ibid.

(8) Ante, p. 288.+

(9) + 2 B. & Ald. 137. The facts being somewhat long and special, and the case itself important, it has been thought advisable to retain in this edition the report given in the appendix to the last edition; see Appendix.↓ And see ante, p. 13, n. A.; post, p. 334, n. 10.||

thority to sell in his own name. But the broker is in a different situation, he is not trusted with the possession of the goods, and he ought not to sell in his own name. The principal, therefore, who trusts a broker, has a right to expect that he will not sell in his own name. In all the cases cited the factor was in actual possession of the goods, and the purchasers could not know whether they belonged to him or not; and at all events they knew that he had a right to sell the goods. But the case of a broker is quite distinguishable. The plaintiffs in this case have only reposed the usual confidence which every merchant must place in his broker, and if the defendants should succeed, it would not be safe for any merchant ever hereafter to employ a broker: for the latter might, by delivering to the buyer a false note, defeat the rights of his principal altogether."+

To these the following case may be added, as falling under the same principle. The defendant was a person whose business it was to receive money for cattle sold in Smithfield from the purchaser. To an action brought by the owner of cattle sold for the money so received by the defendant, the latter claimed to set off a debt due from the salesman to himself. Evidence was offered to prove, that

by the universal custom of the market, the defen[*334] dant was considered as the *debtor of the salesman, and not of the owner, with whom he had no connection. But Lord Kenyon refused the evidence, declaring no custom could deprive the plaintiff of that which by the law of the land he was entitled to receive; and laid particular stress upon the defendant's knowledge, that he received the money for the use of another; which he said distinguished the case from that of a banker receiving money from a factor whose principal he had never heard of.(p)

And so it is in the case of an underwriter-he cannot, as we have seen, set off a debt from the broker against the

(p) Peak's Ni. Pr. Cas. 177.