restore to the defendant a business which was worse than worth- CH. XXII. s. 7. less, and that the defendant could not recover against the plaintiff Performance for money lent and goods sold by him to the partnership (r). (Rescission). in reduction There are also cases of partial failure of consideration, in which Evidence of the Courts, in order to prevent unnecessary litigation, permit the partial failure defendant, instead of bringing a cross action, to set up such partial of damages. failure in reduction of damages. And this principle applies, generally, to all cases of contracts either for goods or work; in which the defendant, when sued for the price, may show the insufficiency of the goods, or the incomplete performance of the work, even although a specific price was agreed for (s). The defendant, however, is not bound in such cases to give evidence in reduction of damages, but he may bring a cross action (t) or plead a counter-claim. And as the rule only permits him to prove, in reduction of damages, how much less the subject-matter of the action was worth, by reason of the plaintiff's breach of contract, he was bound before the Judicature Act, if he had any claim for damages beyond that, to bring a cross action to recover them (u), and must now counter-claim for such damages. A person suing a company to obtain rescission of an agreement Rescission to take shares in it must, generally speaking, bring his case under of contract to one of the following heads : take shares in company. (1) Where the misrepresentations are made by the directors or Lynde's case. other the general agents of the company entitled to act, and acting on his behalf. (2) Where the misrepresentations are made by a special agent of the company while acting within the scope of his authority, including the case of a person constituted agent by subsequent adoption of his acts. (3) Where the company can be held affected, before the contract is complete, with the knowledge that it is induced by misrepresentation. (4) Where the contract is made on the basis of certain representations, whether the particulars thereof were known to the company or not, and it turns out that some of them were material and untrue (x). (r) Adam v. Newbigging (1888), 13 App. Cas. 308. (s) See very fully, per Parke, B., delivering the judgment of the Court in Mondel v. Steel (1841), 8 M. & W. 858. (t) Davis v. Hedyes (1871), L. R., Q. B. 687. (u) Mondel v. Steel (1841), 8 M. & W. 858, 872. (x) Lynde v. Anglo-Italian Hemp Spinning Co., [1896] 1 Ch. 178, per Romer, J. By whom made. SECT. 1.-Payment. (a) By whom made. THE general rule as to payment or satisfaction, not by the debtor himself, but by a third person who is not liable as a co-contractor or otherwise, appears to be,-that it is not sufficient to discharge the debtor, unless it be made by such third person as agent for and on account of the debtor, and with his prior authority or subsequent ratification (a), and the debtor can ratify after action brought by placing plea of payment on record. And where payment is made by a third person for the debtor, but without authority from the debtor, the creditor and the person who made the payment may together rescind the transaction at any (a) Fitz. Abr. tit. Barre, p. 166, Simpson v. Eggington (1855), 10 Exch. 845, 847; and see Lucas v. Wilkinson (1856), 1 H. & N. 420; Walter v. James (1871), L. R., 6 Ex. 124; Purcell v. Henderson (1885), 16 L. R., Ir. 213, 223, 224. time before the debtor has affirmed the payment, and may repay the C. XXIII. s. 1. money; and thereupon the payment is at an end, and the debtor Defences becomes again responsible (b). (Payment). (b) To whom Payment made. made. If one of several plaintiffs, or a nominal plaintiff suing for a To whom person beneficially interested, fraudulently, and by collusion with the defendant, give him a release from the debt, the Court will, on summary application, set such release aside (c). And so, if one of two plaintiffs fraudulently give a receipt to the defendant, this fact may be shown upon the trial, in order to destroy its effect (d). So where goods have been sold by a pretended owner, payment to the real owner is a discharge (e). Payment to a general agent, although he be known to be only an To agent, and agent, binds the principal, provided such payment be made in the see ante, p. 252, et seq. ordinary course of business, and before the principal requires payment to himself (ƒ). But where an agent,-e.g., a factor or an auctioneer, has a lien on the proceeds of goods sold by him in his own name; it is no defence to an action by him for the price, that the buyer paid the principal before action brought (g). So payment to the plaintiff's solicitor, who is employed to To solicitor. recover the debt, is as effectual as if made to the plaintiff himself (h); but payment to an agent of the solicitor employed by such solicitor to sue the defendant, is no payment to the plaintiff (i). In an action for goods sold, it appeared that the defendant had paid the debt at the plaintiff's counting-house, to a person sitting there, and apparently entrusted with the conduct of the business; and Lord Tenterden, C. J., ruled that this was a good payment to the plaintiff, although the person to whom the money was paid had not, in fact, any authority to receive it (j). (b) See per Martin, B., Walter v. James (1871), L. R., 6 Ex. 124, 128. (c) Post, s. 4, tit. Release. (d) Farrar v. Hutchinson (1839), 9 A. & E. 641; Skaife v. Jackson (1824), 3 B. & C. 421. (e) Allen v. Hopkins (1844), 13 M. & W. 94. (f) Drinkwater v. Goodwin (1775), Cowp. 251, 255; and see Sanderson v. Bell (1834), 2 C. & M. 304. (g) Drinkwater v. Goodwin (1775), Cowp. 251, 255, 256; Robinson v. Rutter (1855), 4 E. & B. 954. (h) Powel v. Little (1747), 1 W. Bl. 8; Yates v. Freckleton (1781), 2 Dougl. As to payment to plaintiff in fraud of (i) Yates v. Freckleton (1781), 2 Doug. 623. (j) Barrett v. Deere (1828), Moo. & M. 200. And see Wilmott v. Smith (1828), id. 238. C. XXIII. s. 1. Defences (PaymentTo whom). Broker. Must be in the usual course of in money. Where an auctioneer is employed to conduct a sale, his authority to receive payment depends, in the absence of proof of a general authority, upon the conditions of sale (k). Payment to a broker will not, in general, bind his principal (1); but may do so by the custom of trade, or if warranted by the course of dealing between the parties (m). Nor will payment to an agent bind the principal, unless it be made in the usual course of business (n). Thus, if a shopman, business, and who is authorized to receive money over the counter only, receive money elsewhere than in the shop, such payment is not good (0). So an agent cannot, in general, bind his principal by receiving payment otherwise than in money, e.g., by taking a bill of exchange; unless he was expressly authorized so to do, or unless it was To traveller. customary, in like cases, to settle by bill (p). So, although a traveller who receives orders for goods from his employer's customer in the country, is authorised to receive payment for them in money, he has no authority to receive such payment in other goods (q). Nor is the principal affected by a set-off which the vendee may against agent. have against the agent (r), unless this mode of dealing be sanctioned by some known usage (s); or where the agent has been allowed to sell as apparent principal (t). Nor can the debtor discharge his debt to the principal, by writing off a debt due to him, the debtor, from the agent (u). Set-off To wife. To partner. Payment to the wife of the plaintiff will not bind him, unless it be shown that she had authority to receive such payment (x). In general, payment to one of two partners binds both, even after a dissolution of partnership, and although the debtor had notice, before payment, that the partners had appointed a third person to collect the debts duoc to the firm-unless there be something in the notice, which expressly takes away the right of the one partner to receive the money (y). But where money is paid (k) Sykes v. Giles (1839), 5 M. & W. 645, 651. (i) Jackson v. Jacob (1837), 5 Scott, 79, 86; Mynn v. Joliffe (1834), 1 Moo. & Rob. 326. (m) Baring v. Corrie (1818), 2 B. & Al. 137, 147; 20 R. R. 383; Evans on Principal and Agent, 2nd ed., p. 143, tit. Implied Authority of Agent; and see Story on Agency, 9th ed., Ch. VI., Authority of Agent. (n) See Sanderson v. Bell (1834), 2 C. & M. 304. (0) Per Cur., Kaye v. Brett (1850), 5 (p) See Hogarth v. Wherley (1875), 928. (q) Howard v. Chapman (1831), 4 C. & P. 508. (r) Bartlett v. Pentland (1830), 10 B. & C. 760. (s) See Scott v. Irving (1830), 1 B. & Ad. 605; Sweeting v. Pearce (1861), 9 C. B., N. S. 534, Ex. Ch. ; Stewart v. Aberdein (1838), 4 M. & W. 211; Catterall v. Hindle (1867), L. R, 2 C. P. 368, Ex. Ch. (t) See Isberg v. Bowden (1853), 8 Exch. 852, 859. (u) Underwood v. Nicholls (1855), 17 C. B. 239; and see Pearson v. Scott (1878), 9 Ch. D. 198. (x) Offley v. Clay (1840), 2 M. & G. 172; 2 Scott, N. R. 372. (y) Porter v. Taylor (1817), 6 M. & S. 156; 18 R. R. 338. into a bank on the joint account of persons who are not partners, C. XXIII. s. 1. the bankers are not discharged by payment to one of those persons, (Payment). Defences without the authority of the others (z). Into Bank account. To executor, Payment to one of several executors is sufficient (a); and pay- on joint ment to a feme covert executrix, before probate, is good as against her co-executor, although the husband dissent to her administering; provided the debtor was not aware of this when he made the payment (b). So a payment bona fide made, to an executor who had obtained probate of a forged will, was held to discharge the debtor, although the probate was afterwards declared null, and administration was granted to the next-of-kin of the intestate (c). tor. So it appears, that payment to an administrator, where letters or administraof administration have been granted, discharges the debtor, although there be a will (d). vocation of probate. And by the Court of Probate Act, 1857, 20 & 21 Vict. c. 77, Effect of res. 77, where any probate or administration is revoked under that Act, all payments bonâ fide made to any executor or administrator, under such probate or administration, before the revocation thereof, "shall be a legal discharge to the person making the same." Payment of a debt to one of two trustees is a good discharge as To trustee. to both (e). But where trustees or other persons have a joint account with a banker, it is usual to require the authority of all before paying the money. And accordingly it has been held, that a payment by bankers to one of several trustees, of the proceeds of stock sold out under a joint power of attorney from the trustees, does not discharge the bankers as against the other trustees, unless they authorized such payment (ƒ). A payment bonâ fide made to a bankrupt or his order, before To bankrupt. the date of the order of adjudication, and without notice of any prior act of bankruptcy available against him for adjudication (g), will, in all cases, discharge the person making such payment (h). So, payment to the trustee of a bankrupt, and his receipt for the To trustee of bankrupt. money paid, is an effectual discharge to the person paying, not only for the money, but from all responsibility in respect of the application thereof (i). (z) Innes v. Stephenson (1831), 1 Moo. & Rob. 145. (a) Per Lord Hardwicke, C., Can v. Read (1749), 3 Atk. 695; 2 Wms. on Exors., Ch. II. (b) Pemberton v. Chapman (1857), E. B. & E. 156, Ex. Ch. (c) Allen v. Dundas (1789), 3 T. R. 125; 1 R. R. 666. (d) Prosser v. Wagner (1856), 1 C. B., N. S. 289. (e) Husband v. Davis (1851), 10 C. B. 645. (f) Stone v. Marsh (1826), Ry. & M. 364; Husband v. Davis, supra. (g) Ex parte Gilbey (1878), 8 Ch. D. (h) Bankruptcy Act, 1883, s. 49. |