025; Ilubburd V. Tonbrook, 124 Pa. St. 291 ; Schendel V. Stevenson, 153

]\Iass. 351; Watteau v. Fenwick, 1893, 1 Q. B. .'VIO; Levitt r. Ilamblet,

1901, 1 K. B. 53.

^ Watteau v. Fenwick, supra. See the suggestion in IJyington v. Simp-

son (134 Mass. 109), that the liability of an undisclosed princii)al lesls

upon considerations similar to those which fix a master's liability for the

torts of his servant, — considerations which, ia this case, escape the doc-

trines of estoppel as to the fact of the agency, although, apparently, not

as to its extent.

CONTRACT FOR UNDISCLOSKD rillNClPAL. 107

limitation of authority would prevail and defeat the action

of the person dealing with the agent and then discovering

that he was an agent and had a principal." ^ It api)ears,

therefore, first, that an undisclosed principal is liable upon

a contract made by his agent because the agent's act is the

act of the principal or the agent's name has been adopted

by the principal for the purpose of the contract, and, second,

that having fictionally established the privity in this fashion,

the law goes on to ap{)ly the usual doctrines of ageucy in

ord':'r to determine the extent of the agent's authority. It

Is obvious, however, that this is all sheer assumption and

that there can be in such a case no real basis for estoppel.

To the general rule of liability there are, however, certain

well defined exceptions or qualifications which must now be

noticed.

§ 125. First exception. — State of accounts.

The right of the third person to proceed against the un-

disclosed principal is subject to the state of accounts between

the principal and agent. The exact nature and extent of

this exception is, however, involved in some uncertainty.

(1) Origin of the doctrine. The leading case on this sub-

ject is Thomson v. Bavenport^^ where the dictum was pro-

nounced that, " if a person sells goods (supposing at the

time of the contract he is dealing with a principal), but

afterwards discovers that the person with whom he has

been dealing is not the principal in the transaction, but

agent for a third person, though he may in the meantime

have debited the agent with it, he may afterward recover

the amount from the real principal ; subject, however, to

this qualification, that the state of the account between the

principal and the agent is not altered to the prejudice of

the principal." This dictum was said to be too broad in

Heald V. Kemoorthy^ and the doctrine was there declared

1 AVatteau V. Fenwick, supra, per Wills, j. See criticism in 9 Law q.

Rev. 111.

- 9 Barn. & Cress. 78, 86; 2 Smith's Leading Cases.

3 10 Ex. 739.

168 RiiiNCirAi. And tiiikd takty.

tube that, "if the conduct of the seller [the tliinl person]

would make it unjust for him to call upon the buyer for

the money; as, for example, where the jjrincipal is induced

by the conduct of the seller to pay his agent the money on

the faith that the agent and seller have come to a settle-

ment on the matter, or if any representation to that effect