v. Bigelow, 13 Wend. 518, is often referred to. The facts in this case, in brief, were that one Stevens, an agent of the defendants, had sold to the plaintiff sheep infected with the scab, which fact was at the time known to the agent, but not to the defendants. The fact of the disease was known to one Hunt, who at the sale was a partner of the defendants, to whom he had before the action assigned all his interest. In an action on the case for fraud the defendants were held liable, both for the loss of the sheep sold by their agent, and of others that had become infected by them. Much was said in the opinion of the court to the effect that, Hunt being a partner, his knowledge was notice to his copartners, the defendants; also that Stevens was a general agent in relation to the sale; and the doctrine of Lord Holt, supra, of trust and confidence reposed in the agent, was adopted. Hunt's connection with the case does not appear to be important; for as partner he was only a general agent of the firm, and there was no evidence that he had in fact communicated his information to the defendants.

The leading case in Massachusetts is Locke v. Stearns, 1 Met. 560. This was trespass upon the case in the nature of deceit. One of the defendants, who were partners, had sold divers quantities of meal as linseed meal, when in fact it was a mixture of linseed and teilseed meal; the latter being inferior in quality to the former. The judge charged the jury that if one of the defendants sold the meal to the plaintiff, knowing that teilseed meal was inferior in quality and value to linseed meal, this knowledge would bind all the defendants; and the charge was sustained. After mentioning that the de

ceit was resorted to for the defendants' benefit, the ground taken in Hern v. Nichols was again referred to with approval. And it was also said to be a general rule that one partner is liable for damages sustained by the deceit or other fraudulent act of his copartner, done within the scope of his authority; citing Rapp v. Latham, 2 Barn. & Ald. 795, and Willet v. Chambers, 2 Cowp. 814.

The case of Bennett v. Judson, 21 N. Y. 238, though holding a similar doctrine, marks a departure from the above cases in the ground of liability. That was an action for fraud in the sale of land by the defendant's agent. "There is no evidence," said Comstock, C. J., delivering the judgment of the court, "that the defendant authorized or knew of the alleged fraud committed by his agent Davis in negotiating the exchange of lands. Nevertheless, he cannot enjoy the fruits of the bargain without adopting all the instrumentalities employed by the agent in bringing it to a consummation. If an agent defrauds the person with whom he is dealing, the principal, not having authorized or participated in the wrong, may no doubt rescind when he discovers the fraud, on the terms of making complete restitution. But so long as he retains the benefits of the dealing he cannot claim immunity on the ground that the fraud was committed by his agent, and not by himself."

This ground, as we have stated, was suggested in Locke v. Stearns, supra; and had it not been for the ruling that the defendant in Jeffrey v. Bigelow, supra, was liable for the loss of other sheep than those sold by him, that case would also have been covered by the rule in Bennett v. Judson. A rule similar to that in Jeffrey v. Bigelow, in not confining the liability of the prin

cipal to the profit derived by him, was declared in White v. Sawyer, 16 Gray, 586. "No question is made by the defendant's counsel," said the court, "of the correctness of the doctrine that a principal is liable for the false representations of his agent, although personally innocent of the fraud. It is settled by the clear weight of authority." The point was therefore not considered in the case. And the same is true, so far as appears from the opinion, of the other point, extending the damages beyond the profit derived.

All of the other American cases are like Judson v. Bennett; the defendant being held liable where he has received a benefit from the act of his agent. In none of them is it suggested that his liability is to be pushed beyond this point. See 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; Graves v. Spier, 58 Barb. 387; Hunter v. Hudson River Iron Co., 20 Barb. 493; Sharp v. New York, 40 Barb. 257; Davis v. Bemis, 40 N. Y. 453, note; Durst v. Burton, 2 Lans. 137; s. c. 47 N. Y. 167; Sandford v. Handy, 23 Wend. 260. In Cook v. Castner, 9 Cush. 266, the action was in assumpsit to recover the consideration paid in a transaction brought about by the fraudulent representations of one of the defendants, who were partners. Here, of course, the measure of damages is plain; and this is doubtless the proper form of action for such cases.

But while most of these cases were decided upon the ground taken in Judson v. Bennett, some of them also refer to the doctrine of Hern v. Nichols. See Davis v. Bemis and Sandford v. Handy, supra. Mr. Justice Nelson, in Sandford v. Handy, after quoting the

language of Lord Holt, says that the agent is "held out as fit to be trusted, and his fidelity and good conduct in the matter thereby recommended. Attorney-General v. Siddon, 1 Tyrwh. 46, Bayley, B.; Smith's Mer. Law, 70; Story's Comm. Agency, § 465. And where one of two innocent persons must suffer by the fraudulent act of a third, the one who enables such third person to commit the fraud must bear the loss." The first part of this language seems to be only another way of putting the doctrine of. Hern v. Nichols. The trust and confidence reposed in the agent is manifested by holding him out as such.

Let us now turn to the English cases. The question has there more frequently arisen as to the liability of corporations for misrepresentations of their directors or other managers. In Dodgson's Case, 3 De Gex & S. 85, the plaintiff had been induced to purchase shares in a failing concern by the fraud of the directors, and brought suit in equity to have his name taken off the list of contributories in winding-up proceedings. But the Vice-Chancellor held that the fraud of the directors could not affect the general body of shareholders, i.e., the company. This case was followed by Vice-Chancellor Parker, in Bernard's Case, 5 De Gex & S. 289, who there said: "Dodgson's Case shows that the directors cannot be the agents of the company to commit a fraud; and, therefore, even if Mr. Bernard had been induced to take shares by the misrepresentaton of the directors, that was no reason why he should not be a contributory." In Brockwell's Case, 4 Drewry, 205, ViceChancellor Kindersley held the contrary on similar facts; but this case was soon after overruled by the Lord

575. "Clearly," said the Lord Chancellor, "there was fraud, and gross fraud, on the part of the directors, and I have no doubt that Mixer was induced by fraud to take his shares. I think, however, that it was a fraud on the part of the directors which cannot be attributed to the company."

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These, being cases of rescission, are, it is true, explainable on the ground of laches and change of position, or participation in the profits of the corporation or company. In Dodgson's Case the shares were purchased in 1846, and the claim to be relieved was not made until in 1849, though the plaintiff had received no dividends. In Bernard's Case, the complainant had received dividends on his shares for several years. In Mixer's Case the Lord Chancellor said: Supposing it to have been a fraud on the part of the company, I do not think that the appellant is now entitled to avail himself of it and rescind the contract. [See Parbury's Case, 3 De Gex & S. 43]. It is a settled rule that a contract obtained by fraud is not void, but that the party defrauded has a right to avoid it if he does so while matters can be replaced in their former position. In each case we must look to see whether the contract has been acted upon. If it has been acted upon by the party defrauded, so that others who are interested cannot be restored to their former rights, the contract cannot be rescinded, and nothing remains to the party defrauded but a reparation in damages." See also Nicol's Case, 3 De Gex & J. 387, where, apart from considerations of the above character (which prevented recovery), the Lord Chancellor and Lord Justice Turner were at variance as to whether the

the course of the business. See further, Parbury's Case, 3 De Gex & S. 43; Bell's Case, 22 Beav. 35; Holt's Case, ib. 53; Burnes v. Pennell, 2 H. L. Cas. 497; Deposit Life Assur. Co. v. Ayscough, 6 El. & B. 761; Barrett's Case, 3 De Gex, J. & S. 30.

However, these cases clearly establish the principle that a party to a joint-stock company, or other association, can neither maintain a bill in equity against the company to be relieved from liability, nor defend an action on his subscription, by alleging the false representations of the company or its agents, unless, first, he repudiates the contract promptly before the rights and interests of others have been affected by his action; or unless, secondly, all the other members of the company interested united in the false statements. As to this last point, see the suggestion of Bruce, V. C.: "If it were established that the only other persons interested in these affairs were the persons who made the alleged misrepresentations, the case might be different." Parbury's Case. The first qualification deserves a passing notice. Bell's Case, 22 Beav. 35, illustrates it. There the objects of the company, into membership of which the plaintiff had been drawn by false representations of the directors, had at the time totally failed, and the company had become insolvent, and practically at an end; and it was held that the plaintiff was not liable as a contributory. The Master of the Rolls observed that the doctrine of Parbury's Case was this: that where certain persons set on foot a project, and by fraudulent representations induce others to become shareholders, and incur liabilities, there, as between those who are equally innocent

shareholders, all are liable to contribute towards payment of the debts of the concern. Their rights lay against those who had made the misrepresentations. But no authority could be found making parties liable to contribute in cases such as this. See also Ayre's Case, 25 Beav. 513, where, through false statements, a person having taken shares in a company insolvent at the time, and, upon discovering the fact, having repudiated his shares, was held not to be a contributory.

But if the person claiming relief purchased his shares from a third person, and not from the company, he will be bound to contribute, though he were induced to make the purchase by the false representations of the company. (Nor in such case, clearly, would he have a right of action for deceit against the company. Peck v. Gurney, 43 Law J. Ch. 19, in the House of Lords. See Ayre's Case, supra: Duranty's Case, 26 Beav. 268.) And this would doubtless be true, though the vendor of the shares were also guilty of fraudulent representations, unless the vendee had repudiated and rescinded the sale. Ibid.

The opinion of the Court of Chancery (with the exception of that of the Vice-Chancellor in Brockwell's Case, supra, which, as has been stated, was overruled) is uniform in these cases that the company or corporation cannot be made liable to an action for the unauthorized fraudulent representations of its agents; and that the latter are not authorized by their mere position to make false statements concerning the condition of their principals. Of course, if the company subsequently ratify the misrepresentations at a meeting of the shareholders, the fraud will then be fixed on them: Nicol's Case, supra; New Brunswick Ry. v. Cony beare, 9

H. L. Cas. 711; but even then the party defrauded will not be able to escape liability to contribute in winding up if the rights of others, innocent persons, have intervened or been affected by his action, or if he have participated in any benefits of the concern. His remedy is by an action of deceit against the agent, or the company, or both. It is worthy of notice, also, that in one of the above cases (Mixer's Case) the ruling that the company are not liable for the false representations made by its agents without express authority was made in appeal in chancery; which gives the decision the same authority as the decisions of the Exchequer Chamber at law.

The decision of the Vice-Chancellor in Brockwell's Case was based principally upon language of the Lord Chancellor and of Lord St. Leonards in National Exchange Co. v. Drew, 2

Macq. 103, 125, 139. That was a Scotch case, - an action to recover the amount of a loan. The facts, in short, were that the defendants had been induced by the false representations of the plaintiff's manager to buy shares in the plaintiff's enterprise upon a loan of money by the plaintiffs for the purpose; the object being to bolster and raise up the shares of the company in the market. The shares became valueless; and the company sued to recover the amount of the loan. Judgment was given for the defendants.

Although this case contains expressions to the effect that such companies are bound by the false representations of their agents, made in the course of their business, it is to be observed, as stated by Lord Brougham and Lord St. Leonards, that the company had the benefit of the fraud of their manager. It appears, also, that the defendants