posed attempt to steal, it was held impossible for the company to be responsible for the act when the charge turned out to be unfounded. So where a foreman porter in charge of a station gave a person into custody on suspicion of stealing the company's goods, it was held that he had acted not within the ordinary course of his business, nor for the company's benefit, but from a sense of duty which he imagined was cast on everyone to give people in charge on suspicion; and that therefore the company could not be coupled with him in his L. R. 5 C. P. wrongful act: Edwards v. London & North Western Ry. Co. In these two cases the authority to arrest would have been assumed if the facts had disclosed a proper case for the exercise of the clerk's discretion in the discharge of his duty to protect the property committed to his care.

445.

but duty will be assumed to

include certain acts for

master's bene

fit.

L. R. 3 C. P. 422.

Generally, liability depends on connection

between the

and the tort

committed.

In Whatman v. Pearson, a workman, in violation of his instructions, left his horse and cart unattended in the street before his door when he went home to his midday dinner. The horse ran away and injured the plaintiff; it was held that he was acting within the scope of his employment, because he had been guilty of negligence in the care of the horse entrusted to him.

These three cases cover the whole ground of what may be called the pure master and servant cases. The first two turn on the implied authority to take all steps necessary to proservant's work tect property committed to the servant's care, the third on the presumed command to do the work properly and without negligence: but in all three there is a connection between the tortious act and the work undertaken by the servant: in other words, the tort flows directly out of the employment. If the tort does not flow out of the employment, then the master is not liable.

For example, if a porter in carrying a passenger's luggage injures somebody standing on the platform, the injury flows immediately from the usual occupation of the porter, and the company would be liable. But suppose a booking clerk carries the luggage and injures somebody in the same way,

50 L. T. 367. the several

[i.e. supposing

duties strictly

duties are not

then the injury would not flow immediately from the occupation for which the clerk was employed, and the company would not be liable.* (See Milner v. Great Northern Ry. Co.) If then I am to be liable for the tort of my servant, the preliminary inquiry must always be, what have I engaged the servant to do? If, to take a homely example, my housemaid so negligently lights my fire that my neighbour's house is burnt, I am without doubt liable: but if the same injury were to result from the act of my coachman, I should, done was within without doubt also, not be liable.

So in cases of principal and agent, the inquiry is practically the same; for what general purposes does the agency or employment exist, and what acts can be presumed to be authorized in consequence?

proved. If the kept quite discompany knows

tinct, and the

of this, then there is evidence to go to the jury that what was

the scope of employment.]

Petrie v. Lamont, which we have already noticed on page 48, Car: & M. 96. is a good illustration of this; the inquiry was whether one partner in a firm was so much the agent of the other partners, or of the firm, as to involve them in the consequences of a tort which he had himself committed. It was held that he was not.

But from the relation of principal and agent there has Fraud: arisen a large class of cases where fraud has been committed by the agent, a question which hardly arises out of the relation of master and servant. These cases are usually fraudulent misrepresentations made by bank managers, or false statements in prospectuses issued by the secretary of a company; and it becomes necessary to inquire how far the principal can be made liable for this fraud.

lent misrepresentation by

e.g., fraudu

In Mackay v. Bank of New Brunswick, it was part of the L. R. 5 P. C. manager's duty to obtain the acceptance of bills in which 394. the bank were interested: he fraudulently sent a telegram, without the knowledge of the directors, making a representation to A., which, by omitting a material fact, induced A. to accept a bill. It was clearly within the scope of his duty, and the bank was held liable in an action of deceit. On this

bank manager.

point the case somewhat conflicts with some dicta as to the liability of corporations in the House of Lords in the Western Bank of Scotland v. Addie, but the general law as to the liability of a principal was laid down as follows:-"It is seldom possible to prove that the fraudulent act complained of was committed by the express authority of the principal, or that he gave his agent general authority to commit wrongs or frauds. Indeed it may be generally assumed that, in mercantile transactions, principals do not authorize their agents to act wrongfully, and consequently that frauds are beyond the scope of the agent's authority in the narrowest sense of which the expression admits. But, for obvious reasons, a wider construction has been put on the words, and principals have been held liable for frauds when they were unauthorized either particularly or generally: at the same time it is not easy to define with precision the extent to which this liability has been carried." The best definition was said to be found in the case of Barwick v. English Joint Stock Bank. In that case the plaintiff was induced to continue supplying oats to a customer of the bank, a contractor with the Government, on a guarantee from its manager to the effect that the customer's cheque in the plaintiff's favour, in payment for oats supplied, should be paid on receipt of the Government money in priority to any other payment "except to this bank." The fact that the customer was largely indebted to the bank was concealed. Practically, therefore, the plaintiff was induced to advance money to the customer on a guarantee which turned out to be worthless, and which the manager must have known to be worthless when he gave it. The judgment of the Exchequer Chamber was delivered by Mr. Justice Willes. "With respect," he said, to the question whether a principal is answerable for the act of his agent in the course of his master's business and for his master's benefit, no sensible distinction can be drawn between the case of fraud and the case of any other wrong. The general rule is, that the master is answerable for every such wrong of the

servant or agent as is committed in the course of the service and for the master's benefit, though no express command or privity of the master be proved. The principle is acted upon every day in running-down cases. It has been applied also to direct trespass to goods, as in the case of holding the owners of ships liable for the act of masters abroad, improperly selling the cargo: Ewbank v. Nutting. It has been 7 C. B. 797. held applicable to actions of false imprisonment (in the cases

we have already considered). "It has been acted upon where [ante, p. 59-] persons employed by the owners of boats to navigate them

and to take fares, have committed an infringement of a ferry,

Questioned by

Bramwell,

or such like wrong: Huzzey v. Field. In all the cases it may 2 C. M. & R. be said, as it was said here, that the master has not authorized 432. the act. It is true he has not authorized the particular act, but he has put the agent in his place to do that class of acts, and he must be answerable for the manner in which the agent has conducted himself in doing the business which it was the act of his master to place him in." The decision has never been questioned; but the arguments on which it was based L.J., were severely criticised by Bramwell, L.J., in Weir v. Bell. 3 Ex: D. 238. Willes, J., declared that no sensible distinction could be drawn between the case of fraud and the case of any other wrong; but, as Bramwell, L.J., pointed out, there is a very obvious distinction, for fraud is always wilful. The principle of all because fraud the cases cited by Willes, J., was that the act complained of wilful; was within the scope of the servant's authority or employment. In none of them was there any wilful disregard of that authority.

An explanation of Barwick's case has, however, been suggested, based on the fact that the principal had benefited by his agent's fraud.

In Udell v. Atherton the plaintiff had paid twice the real value of a log of mahogany, being induced to do so by false statements of the defendant's agent, and he brought an action of deceit against the principal. It was clear that if the fraud had been discovered before the log had been cut, the contract

is always

[ante, p. 64.] but liability

fraud is only to extent of

benefit.

7 H. & N. 172.

F

[ante, p. 63]

L. R. 2 Ex: 259.

L. R. 5 P. C. 394.

3 Ex: D. 238.

L. R. 9 Q. B.

301.

could have been rescinded, because the principal could not hold the price and ignore the statements on which it was founded. But with regard to the action of deceit, the Court was equally divided: Pollock, C.B., and Wilde, B., holding that it would lie against the principal, Martin and Bramwell, BB., holding that it would not. The plaintiff having been nonsuited at the trial, the rule nisi for setting aside the nonsuit was consequently discharged. "In an action upon the contract," said Martin, B., "the representation of the agent is the representation of the principal, but in an action on the case for deceit, the misrepresentation or concealment must be proved against the principal."

In Mackay's case, however, it was expressly held that an action of deceit would lie, wherein the fraud of the agent would be correctly stated, for the purposes of pleading, as the fraud of the principal.

In the case, therefore, in consequence of this difference of opinion, the principal who had benefited by his agent's fraud was held not liable to refund the benefit he had received, but only to rescission of the contract induced by the fraud; this, however, the plaintiff unfortunately could not avail himself of, as the log of mahogany had been cut up.

But both in Barwick's case and Mackay's case the principal had profited, and was held liable to refund in consequence; this rule "has been so much approved and followed, that it has become part of the law, and it is undoubtedly a most useful and convenient rule that principals should be responsible for damages occasioned by the fraud of their agents acting within the scope of their authority, at least to the extent of the gains of the principal, especially now that so much of the world's business is carried on by corporations."

The importance of the inquiry whether the principal has benefited by the fraud was dwelt on by Cockburn, C.J., in Weir v. Bell; and by Lord Coleridge, C.J., in Swift v. Jewsbury. The decision of the Court that the principal was not liable, said Lord Coleridge, did "not at all conflict with