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Factor'i case where the point arose, Lord Tenterden was

Act*

of opinion, that the pledgee would not be within the protection of the statute, if he had even good reason to suspect that the party pledging was not the true owner. "Although there may be no evidence of direct communication, yet, if the circumstances are such that a reasonable man and a man of business applying his understanding to them would know that the goods did not belong to the broker who pledged them, the defendant is not entitled to retain them " (a). It seems that delay on the part of the principal in making known that he was owner, to a pledgee who has taken the goods without notice, cannot be construed as a confirmation or adoption of the pledge (a), unless it appear that the consequence of the delay has been an alteration in the defendant's situation for the worse, or in the plaintiff's for the better (b).

Right of By the 2nd section of the Act, a person en

pledgee . ,

without no- trusted with, and in possession of, a bill of lading or other document (of the species enumerated in the act), is to be deemed the true owner of the goods described therein, so far as to give validity to any contract made by him for the sale or disposi- Factor's tion of the goods, or the deposit or pledge thereof as a security for any money or negotiable instrument, if the buyer, transferee, or pledgee has not notice, by the document or otherwise, that such person is not the actual and bona fide owner of the goods.

(z) Evans v. Trueman, 1 M. & Rob. 10; reported also in Paley, Pr. & A. 229. See the observations of Lord Tenterden, C.J.

(a) Robertson v. Kensington, Lloyd & Welsby, Merc. Ca. 187. See 5 Man. & Ryl. 387.

(6) Lloyd & Welsby, 192, per Lord Tenterden, C. J.

tice.

It has been decided upon this section, that the "negotiable instruments," mentioned as a security, include only such as pass by indorsement and delivery, and not East Tndia warrants or other documents of that nature (c).

By the 3rd section, any person taking goods in Right of deposit or pledge from the party in possession, pre-fxTsting without notice that he is not the owner thereof, for outnoTicef a pre-existing debt, shall acquire such right, title, or interest, and no further or other than was possessed or might have been enforced by the party making the deposit or pledge.

Under this section, then, the disponee or pledgee acquires no further right than the party possessed who made the deposit or pledge (d); so that, to

(c) Taylor v. Trueman, 1 M. & Malk. 453; S. C. Lloyd & Welsby, Merc. Ca. 184; Taylor v. Kymer, 3 B. & Ad. 320. [It is singular that in the admirable abridgement of this act given in Lord Tenterden's Treatise on Shipping, and which has generally been followed with little variation, the clause in this section on which these cases are decided (viz. "as a security for any "money or negotiable instrument") is wholly omitted. See Leg. Exam. vol. iv. p. 339, 340.]

(rf) See 3 B. & Ad. 337.

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enable the owner to sue for the goods in trover, a tender to the pledgee, of the amount only that was due to the factor, is necessary. And such tender is necessary only when the defendant has kept the goods in his hands, and not where he has sold them before demand (e), although the measure of damages, in the action of trover, may be only the balance after deducting the amount of the factor's claim (/).

Rigiu of By the 5th section (g), any person may accept

with notice, any goods, or any such document as aforesaid, on deposit or pledge from any factor or agent, notwithstanding he shall have notice that the party is a factor or agent; but in such case he shall acquire such right, title, or interest, and no further or other than was possessed by the factor or agent at the time of the deposit or pledge.

Upon this section it has been decided, that, to bring the case within the meaning of the Act, the transaction must be a bond fide deposit or pledge,

(e) Taylor v. Trueman, 1 M. & Malk. 455, 457; S. C. Lloyd & Welsby's Merc. Ca. 184.

(/) 1 M. & Malk, 456, 457.

(g) The 4th section is merely in confirmation of the common law. It provides that any person may purchase goods from, and pay the price to, an agent entrusted with the possession of the goods, or to whom they may be consigned, even with notice that he is agent, provided the party has not notice at the time that the agent is not authorized to sell or to receive the price. Vid. supra, p. 278.

and that therefore a sale, made by an agent Factor's fraudulently as against his principal, transfers no right to the purchaser (A). The pledgee acquires what right a right and interest in every respect similar wpiedgee. to that possessed by the agent at the time of the deposit, whether such right was absolute or contingent. Thus, where, at the time of the pledge, the broker's claim was founded on a right to indemnity against liabilities which he was under from having given his acceptance to bills drawn by the principal, it was held, that, as the broker's right would have become absolute, in the event of the acceptances not having been taken up when due, so the pledgee's right would have become absolute on the same event (?); but as the broker's claim would have been discharged on the principal's releasing him from his liabilities, so the pledgee's right, being dependent on the same condition, was likewise discharged(k). In order to give the factor a lien transferable to the pawnee under the statute, it is necessary that the general balance of account should be in favour of the factor;

(h) Thompson v. Farmer, 1 M. & Malk. 48.

(j) In Blandy v. Allan, Dan. & Lloyd's Merc. Ca. 22, Best, C. J., expressed an opinion that the pledge could transfer no right whatever, unless the factor's lien was absolute at. the time. But Fletcher v. Heath seems to overrule the opinion: the right is equally transferable, though only conditional or contingent at the time, i. e. such, that subsequent circumstances may render it enforceable.

(k) Fletcher v. Heath, 7 B. & C. 517. See Dan. & Lloyd,

Factor's therefore, where there were distinct accounts be

Act.

tween the principal and the factor, and a balance was due to the latter on that particular account to which the goods pledged belonged, but the general balance was in favour of the principal, it was held, that the accounts could not be separated, that the factor therefore had no lien, and that the principal might recover in trover against the pawnee (/).

when troe It is further provided (m), that the Act shall not

owner may

recover. prevent the true owner of the goods from recovering the price from the buyer, subject to any right of set-off on the part of the buyer against the factor or agent; nor from recovering the goods deposited or pledged, upon repayment of the money, or restoration of the negotiable instrument, advanced on the security thereof to the factor or agent, and upon payment of such further money, or restoration of such other negotiable instrument (if any), as may have been advanced by the factor or agent to the owner, or on payment of money equal to the amount of such instrument; nor from recovering from any person any balance remaining in his hands, as the produce of the sale of the goods after deducting the money or negotiable instrument advanced on the security thereof.

(I) Robertson v. Kensington, 5 Man. & Ry. 381; S. C. Lloyd & Welsby Merc. Ca. 187. (m) 6 Geo. IV. c. 94, s. 6.

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