Mitchell v. Bristol & Powell

By the Court, Nelson, J. It is settled that where goods are sold on a del credere commission by a factor, in an action by the principal to recover the value of them, the buyer, who knew nothing of the principal, may set off any demand he may have on such factor, on the ground that he dealt with him as principal, George v. Clagett, 7 T. R. 359; and from two cases given in the notes to the above case, to wit, Rabone, jun. v. Williams and Bayley v. Morley, the one decided by Lord Mansfield and the other by Lord Kenyon, it would seem that, in all cases where a factor deals for his principal, but conceals him and delivers the goods in his own name, the person contracting with him has a right to consider him, to all intents and purposes as the principal; and if the real principal bring the action for the goods, as he may, the purchaser may set off any claim he may have against the factor, in answer to the demand of the principal. See also Stracey v. Deey, note c. in George v. Clagett. These cases are cited by Chambre, J. in Houghton v. Matthews, 3 Bos. & Pul. 490, with approbation, and the principle of them is correctly stated, to wit, that where a party, being only an agent, acts ostensibly as the real and sole owner, (as in case of a factor concealing his principal, or an acting partner liis partners,) the buyer of the goods may, in an action by the principal in the one case and by the firm in the other, set off a debt due to him from the factor or acting partner respectively, upon the ground that the parties by their conduct having enabled their agent to gain credit as the sole owner, and the buyer having contracted with him bona fide in that character, they cannot recover against him without allowing the same advantages and equities in his defence that he would have had against their agent. In these cases it is held that it makes no difference whether the sale by the agent is under a del credere commission or not; the reason and law is the same in both cases. Opinion of Lord Alvanley, Ch. J., 3 Bos. & Pul. 495. Testing this case by [496] these principles, it is clear that if this suit had been brought by the plaintiff to recover of the defendants the value of the oil sold, for which this note was given, they might have shewn the payment made on the 7th April to his agent, in bar, or set off any demand which they had against him. The note, however, upon which this suit is brought, was delivered to the principal before due, and before the payment made to D. Mitchell upon it. In equity, it belonged to the plaintiff while in the hands of his agent, and the legal title passed to him on the delivery. He was a bona fide holder for a valuable consideration before the note became due, and it was the folly of the defendants to pay it to any one without requiring its production. The fact of D. Mitchell not having the note in his possession should have put any prudent man, the least acquainted with business, upon his guard, and induced him to have withheld payment till the note was forthcoming, and then the plaintiff, instead of a person having no interest in it, would have received the money. If, at the time this note passed into the hands of the plaintiff, there had been an existing debt, due from his agent to the defendants, it might be a question whether, within the above cases, they would not have been entitled to set off such debt, upon the principles there established. That is not this case. Here the plaintiff came fairly by the note, and the only defence to it has arisen out of the negligence and inattention of the defendants to their rights, for which the plaintiff cannot be held responsible upon any just or legal principles. New trial denied.