In the former case the right of set-off which might be asserted

against the agent may be asserted against the undisclosed

principal ; in the latter case it may not.* But the doctrine

Is equally applicable to contracts other than those for the sale

of goods.^

The doctrines under this head resolve themselves into a

general doctrine of estoppel. When the principal by his

conduct leads third persons to believe that the agent is the

principal, the real principal is estopped from asserting against

such third persons any claims to their prejudice. Thus if the

third person has paid the agent,^ or has a right of set-off

against him,' the principal cannot enforce his claim to the

^ Darrow i\ Home Produce Co., supra; ante, В§ 123.

2 Post, В§ 197.

8 Rabone v. Williams, 7 T. R. 360 n. ; George v. Clagett, 7 T. R. 359 ;

IMontagu v. Forwood, 1893, L. R. 2 Q. B. 350 ; Gardner c. Allen, 6 Ala.

187; Peel r. Shepherd, 58 Ga. 3G5; Taintor v. Prendergast, 3 Plill

(N. Y.), 72.

* Bernshouse r. Abbott, 45 N. J. L. 531.

^ INIontagu v. Forwood, supra.

^ Coates r. Lewes, 1 Camp. 44i ; Ramazotti v. Bowring, 7 C. B. n. s.

851.

в– ^ Borries v. Imperial Ottoman Bank, L. R. 9 C. P. 38; Montagu v.

Forwood, 1893, 2 Q. B. 350; Stebbins v. Walker, 46 Mich. 5.

174 rRINCU'AI- AND THIRD rAUTV.

prejudice of such paymeut or right of set-off. ^ But if before

such payment is made or such right of set-off accrues the

third person has received notice that tlic agent was not in

fact tlie principal, then he has not been misled and cannot

elaim an estoppel.^ The state of the third person's niiud is

the important inquiry. Did he or did he not know that the

aiient was not the real principal ? It seems that mere means

of knowledge will not be equivalent to notice.^ But if the

third person knew that the agent was contracting as agent,

although he did not know whose ageut, he caunot claim an

estoppel against the priucipal.-^ And it is even held that if

the agent is one who commonly contracts for undisclosed

principals, though also for himself, the third person cannot

assume that the agent is contracting for himself, and would

not therefore be entitled to a set-off as against the undisclosed

principal.^

Where an agent contracting as principal sells his principal's

goods and also his own in one contract, the principal cannot

sever the contract and maintain a separate suit for the value

of his own goods.^

Payment, or an allowance by way of set-off, to an agent

who iias a lien on the goods of his undisclosed principal, is

binding on the principal.'^

§ 131. Second exception. — Estoppel.

Analogous to the doctrine of the preceding section is the

rule that where the principal invests his agent with the

1 Pollacck c. Scholl, 51 X. Y. App. Div. 319.

- Mildred v. Maspons, S App. Cas. 874; Kaltenbach v. Lewis, 10 App.

Cas. 617; Henderson v. McNally, 48 N. Y. App. Div. 134; Rice, &c. Co.

V. Bank, 185 111. 422; Belfield v. National Supply Co., 189 Pa. St. 189.

8 Borries v. Imperial Ottoman Bank, L. R. 9 C. P. 38.

4 Ilsley V. Merriam, 7 Cush. (Mas.s.) 242; Evans v. Wain, 71 Pa. St.

G9 ; Seraenza v. Brinsley, 18 C. B. n. s. 467.

6 Baxter v. Sherman, 73 Minn. 434; Miller v. Lea, 35 ]\Id. 396; Cooke

jj. Eshelby, 12 App. Cas. 271. See criticism on this doctrine in 3 Law Q.

Rev. 358; and see Hogan v. Shorb, 24 Wend. (N. Y.) 458, 462, and

Wright V. Cabot, 89 N. Y. 570.

6 Roosevelt v. Doherty, 129 Mass. 301.

' Warner v. M'Kay, 1 M. & W. 591 ; Hudson v. Granger, 5 B. & A. 27.

CONTRACT FOR UNDISCLOSED PRINCIPAL. 175

indicia of ownership of goods, and lluis holds out the agent as

owner, he is estopped as against those who (hjal with the

agent as owner to set up liis own claim or title. ^ So, in any

case, where the principal has, by representing the agent to be

the principal, or by standing by and allowing innocent third

persons to deal with the agent as principal, induced such

innocent third persons to change their legal relations in such

a way as to make it incciuitable for the principal to claim the

rights of an undisclosed principal, he will l)e estopped from

maintaining an action in his own namc.^ Perhaps this ex-

ception is only an extension of the previous one. In that the

})rincipal is estopped to press his rights to the extent that the

third person would be injured ; in this it is assumed that he

cannot press his rights at all without injury to the third

person.

§ 132. Third exception. — Exclusive credit to agent.

Where the third person has clearly expressed his intention

to deal with the agent as principal, or where he has dealt with

the agent on terms of trust and confidence, or the nature of

the contract is fiduciary, the undisclosed principal cannot

claim the benefits of the contract. " Every man has a right

to elect what parties he will deal with. . . . And as a man's

right to refuse to enter into a contract is absolute, he is not

obliged to submit the validity of his reasons to a court or

jury."^ The intention to deal only with the agent maybe

found in the recitals of the written contract,^ or the negotia-

tions attending an oral one.^ In the first case the question

would be one of construction for the court ; in the latter, of

fact for the jury. The intention may be further inferred from

the executory nature of the contract, or where it is fiduciary,

1 Posit, В§ 170.

2 Ferrand v. Rischoffsheim, 4 C. B. N. s. 710, 716; Stebbins v. 'Walker,

46 Mich. 5; Pollock on Cont. (6th ed.) 98.

8 Winchester r. Howard, 97 Mass. 303 ; Humble v. Hunter, 12 Q. B.

810. Cf. Boston Ice Co. v. Potter, 123 Mass. 28.

* Humble v. Hunter, supra.

^ Winchester v. Howard, supra.

176 rUINCIPAL AND TIllKK PARTY.

or for personal skill or service.^ But in the latter case it

would seem that if the agent has personally discharged the

trust or performed the service, his undisclosed princii)al may

recover the com[)ensation.-

§ 133. Fourth exception. — Varying written instrument.

Where in a written instrument the agent has rei)rescnted

himself in express terms or recitals as tiie real and only

principal, the undisclosed principal cannot maintain an action