—
Agency.
210 Sect.
made by Agent.
When
principal dis-
charged.
Third person not discharged in ordinarycases.
Sub-Sect
3.
Contracts
3.
Settlement imth Agent.
446. Where a principal is indebted to a third person on a contract made by his agent, he is not discharged from his liability to pay the debt by any payment to or settlement with the agent (e), unless such payment or settlement takes place before the existence of the principal is discovered (/), or unless the third person by his conduct leads the principal reasonably to believe that the debt has been paid by the agent (^) or that the third person has elected [h) to look to the agent alone for payment (i), and the principal in consequence alters his position as regards the agent Mere delay, without something more©, on to his prejudice (/c). the part of the creditor, is not sufficient to discharge the principal. 447. Nor is the third person discharged from his liability to the principal by any payment to or settlement with the agent {m), unless such payment or settlement is made in the ordinary course of business, and in accordance with the agent's authority or unless the principal has allowed the express or implied (o) agent to appear as principal in the transaction in respect of which the payment or settlement is made, in which case the third person is discharged by any payment to or settlement with the agent which would have discharged him if the agent had been in fact the principal {p), and is also entitled to setoff {q) any debts due
Irvine v. Watson (1880), 5 Q. B. D. 414; Davison v. Donaldson (1882), 9 HeaU v. Kemuorthij (1855), 10 Exch. 739; Smyth v. Anderson (1849), 7 0. B. 21, per Matjle, J., at p. 42. (/) Armstrong v. Stokes (1872), L. E. 7 Cl. B. 598, doubted in Irvine v. Watson, supra. {g) Wyatt v. Hertford {1802), 3 East, 147; MacClureY. Schemeil {1811), 20 (e)
Q. B. D. 623;
W.
E. 168. See p. 209, ante. (i) Priestley v. Fernie (1865), 3 H. & C. 977; and compare Harvey v. Norton (1840), 4 Jur. 42. {k) Hopkins v. Ware (1869), L. E. 4 Exch. 268 ; Smith v. Ferrand (1827), 7 B. & C. 19. (Z) Davison Y. Do7ialdson, supra; Irvine y. Watson, supra; and conirast HopMns V. Ware, supra. (m) Crossley v. Magniac, [1893] 1 Ch. 594 Linck v. Jameson (1886), 2 T. L. E. 206; Catterail v. Hindle (1867), L. E. 2 C. P. 368. {n) Hogarth v. Wherley (1875), L. E. 10 C. P. 630; Catterail v. Hindle, supra; Legge v. Bijas, Mosley & Co. (1902), 7 Com. Cas. 16. (o) The third person is not discharged by payment, in the absence of express authority, by a negotiable instrument {Williams v. Evans (1866), L. E. 1 Q. B. 352 Hine y. Steamship Insurance Syndicate (1895), 72 L. T. 79), unless justified by usage {Bridges v. Garrett (1870), L. E. 5 C. P. 451). Such usage is a reasonable one and binding on the principal without notice {ibid.). But a settlement of accounts with the agent does not bind the principal {Pearson v. Scott (1878), 9 Ch. D. 198), notwithstanding any usage to that effect, unless the principal hasnotice of it {Siveeting v. Pearce (1861), 9 0. B. (n. s.) 534). See further, on the effect of usage, p. 207, ante. Borries v. Imperial {p) Bamazotti v. Bowring (1859), 7 C. B. (n. s.) 851 Ottoman Bank (1873), L. E. 9 0. P. 38; George v. Clagett (1797), 7 Terni Eep.. 359 and see p. 204, ante. Similarly, where an agent is authorised to retain part of a debt paid to him for his own account, he may settle with the third person as he pleases in respect of such part {Barker v. Greenwood (1836), 2 Y. & C. {h)
Ex. 414). {q) Borries v. Imperial Ottoman Bank, supra Q. B. 350.
Montagu
v.
Forwood, [1893]
2.
