Inquire as to the validity of the stock, and were of course

Informed that the stock was valid. The jMaster of the

Rolls (Lord Esher) said: "The secretary was held out by

the defendants as a person to answer such questions as

those put to him in the interest of the plaintiffs, and if he

had answered them falsely on behalf of the defendants, he

being then authorized by them to give answers for them,

It may well be that they would l)e liable. But although

what the secretary stated related to matters about which

he was authorized to give answers, he did not make the

statements for the defendant but for himself. ... I know

of no case where the employer has been held liable when

his servant has made statements not for his employer, but

in his own interest." ^ It has been thought that the United

States Supreme Court has held the same docti'ine, but the

case in question may well be distinguished on the ground

that the third i)arty w^as l)uying the stock of the agent, and

had therefore no right to rely on his representation whore

his interest was clearly adverse to that of his princii)al.''^

But it is clear that the tendency of that court is to follow

the Euglish doctrine.^

1 British Mutual Banking Co. V. Chavnwood Forest Ky , l. R. 18 q.

B. Div. 714, 716-717.

2 Moores V. Citizens' Nat. Hk., Ill u. S. 156. Cf Bank of New York,

&c. I'. American Dock & Trust Co., 143 N. Y. .559.

8 Friedlander V. Texas, &o. Ry., 130 u. S. 416.

TOKTS AND FKAUDS OF AGENT. 205

A considerable number of American courts have answered

the question in the affirmative. The leading New York case^

presents an exhaustive examination of the whole subject,

after an argument by an array of eminent counsel rarely

united in one proceeding, and in an opinion by Noah Davis,

J., of singular ability and lucidity. The result is embodied

In the doctrine that where the principal authorizes an act

which necessarily involves in the doing of it a representa-

tion as to some extrinsic fact, that he assumes the risk that

the representation will be true. " He knows that the person

he authorizes to act for him, on condition of an extrinsic

fact, wliich in its nature must be peculiarly within the

knowledge of that person, cannot execute the power with-

out as res gestae making the representation that the fact

exists. With this knowledge he trusts him to do the act,

and consequently to make the representation which, if true,

Is of course binding on the principal. But the doctrine

claimed is that he reserves the right to repudiate the act

If the representation be false. So he does as between him-

self and the agent, but not as to an innocent third party

who is deceived by it. The latter may answer, you entrusted

your agent with means effectually to deceive me by doing

an act which in all respects compared with the authority you

gave, and which act represented that an extrinsic fact known

to your agent or yourself, but unknown to me, existed, and

you have thus enabled your agent, by falsehood, to deceive

me, and must bear the consequences. The very power you

gave, since it could not be executed without a representa-

tion, has led me into this position, and therefore you are

estopped in justice to deny his" authority in this case. By

this I do not mean to argue that the principal authorizes

the false representation. He only, in fact, authorizes the

act which involves a representation, which, from his con-

fidence in his agent, he assumes will be true ; but it may

be false, and the risk that it may, he takes, because he gives

the confidence and credit which enables its falsity to prove