up'- a plea that would not save the payee from a charge of forgery, for it is not true. If you allow your mortgagor to have the deeds and thus to pose as unincumbered owner, the reason given for your postponement is that "a second mortgagee who has the title deeds without notice of any prior incumbrance shall be preferred;"2 a proposition which, as we shall see, holds good only where, according to the principles of estoppel, it ought to do so, and in other cases is falsified. If you intrust your negotiable securities to a broker who transfers them in defiance of your instructions, it is said that you lose because "the law merchant validates in the interest of commerce a transaction which the common law would declare void; " and that "the ordinary rules of the common law are made to bend;"5 whereas the ordinary rules of estoppel are quite sufficient for the case. If you permit your agent to have an apparent authority larger than the real, it is said that you are responsible for the agent's acts because "the authority of the agent to perform all things usual in the line of business in which he is employed cannot be limited by any private order or direction not known to the party dealing with him; "7 whereas the truth is that you can limit him as much as you like, but that if, notwithstanding such limitation, you allow him to act as though there were none, you are estopped from setting it up. And if you execute a document which does not reflect your true agreement, it is said that one sort of fraud upon you will render the document void, whereas another will render it voidable only a bit of lochomachy that will not stand investigation.8

COMMON CHARACTERISTICS ESTOPPEL.

Gathering all such cases together, we find that they have this strong common characteristic, that there has always been

1 Montagu v. Perkins (1853), 22 L. J. C. P. 187.

2 Goodtitle v. Morgan (1787), 1 T. R. 762; Layard v. Maud (1867), L. R. 4 Eq. 397, 406; 36 L. J. Ch. 669; Hunter v. Walters (1871), L. R. 11 Eq. 316; 41 L. J. Ch. 175; Spencer v. Clark (1878), 9 Ch. D. 142; 47 L. J. Ch. 692; Lloyd v. Jones (1885), 29 Ch. D. 229; 54 L. J. Ch. 931.

3 See post, ch. XIX.

4 Swan v. N. B. A. (1862), 7 H. & N. 634: 31 L. J. Ex. 436.

5 Per Byles, J., in Swan v. N. B. A. (1863), 2 H. & C. 185; 32 L J. Ex. 273. 6 See post, ch. XXIV.

7 Smith's Mer. Law (8th ed.), p. 575; and see post, ch. XXVI 8 See ch. XXV.

some fraud perpetrated by which one of two innocent persons has to suffer (the property of one innocent person has been fraudulently transferred to another; the obligation of one innocent person has been fraudulently passed on to, or created in favor of, another), and the question is, Who is to suffer? To this, in all such cases, the law of estoppel replies: There is a duty to observe "an appropriate measure of prudence to avoid causing harm to others;" and if, in breach of this duty, one person has assisted the misrepresentation of anothersupplied that which has made it credible - he ought to be estopped as against the person to whom the harm has been caused.

EGOISM AND ALTRUISM.

Coming now to the departments of the law in which the application of the principle in hand has been denied, let it be observed that there are two views which may be taken with reference to the conduct of affairs: the egoistic and the altruistic. According to the former I may do as I please with my own, and others may look after themselves. Acting upon this view I shall draw my checks as I please; leave my title deeds and negotiable instruments with whom I choose; allow my agent to misrepresent his authority as he thinks fit; stand by as an indifferent spectator while other people assume to sell my property; and if any one is injured I shall tell him to pursue the one who defrauded him with such civil or criminal process as is appropriate.

Following the other view-the altruistic-I shall have a care that I am not made an accomplice, or even an unwitting instrument, in frauds upon others; I shall refuse to give opportunity or occasion for misrepresentation; and, profiting by experience of recurring rascalities, I shall so use my own liberties as not unnecessarily to expose others to the machinations of the defrauder.

This altruistic view as cognizable by law is necessarily the outcome of a highly developed state of society. In earlier stages the idea would not only be unfamiliar, but would be opposed to all the analogies of the time.' It has emerged (as have

1 It is hard to realize the total absence, in earlier periods, of ideas which now seem to be obvious.

To

the question, Why did not Augustus introduce the representative system when the Roman state became too

other ideas) from observation of the injuries worked by its disregard. But the induction is not yet complete, and although in the future some finished and detailed code of conduct as applied to the transactions and affairs of business and commerce may be formulated, the authorities as yet provide none such. For the present we must be content when (as is not always the case) the broad law of reasonable care for the interests of others is held to be incumbent upon us.

THE ALTRUISTIC VIEW ADVOCATED.

Speaking generally, the view advocated in this work is the altruistic. The principles which obtain with reference to physical relations ought, it is believed, to regulate business intercourse; and the language of Sir Frederick Pollock above quoted1 should be imported into the law of estoppel:

"The whole modern law of negligence, with its many developments, enforces the duty of fellow-citizens to observe, in varying circumstances, an appropriate measure of prudence to avoid causing harm to one another."

In the realm of torts it is plainly seen that if the owner of hay (in a highly combustible condition) will unnecessarily stack it against a neighbor's barn (although on his own land), he ought to be liable if it cause the barn to burn. But it is by no means so clearly recognized that if the maker of a blank note (a highly "negotiable" document) will so carelessly deal with it that it is fraudulently made use of to filch money from a third person's pocket, the maker ought to stand the loss. It is an accepted principle in torts that

"One who enters on the doing of anything attended with risk to the persons or property of others is held answerable for the use of a certain measure of caution to guard against the risk." 3

large for direct participation in government? Prof. Seeley makes answer: "You might as well ask, Why did not Augustus discover America?" "Introduction to Political Science," p. 164.

1 Ante, p. 30.

2 Vaughan v. Menlove (1837), 3 Bing. N. C. 468. And see the principles laid down by Cockburn, C. J., in Vaughan v. Taff Vale Ry. Co. (1860), 5 H. & N. 685; 29 L. J. Ex. 247; and by Bramwell, L. J., in Powell

v. Fall (1880), 5 Q. B. D. 600; 49 L. J. Q. B. 428.

3 Dean v. McCarty (1846), 2 U. C. Q. B. 448; Buchanan v. Young (1873), 23 U. C. C. P. 101; Gilson v. North Grey Ry. Co. (1872), 33 U. C. Q. B. 128; Furlong v. Carroll (1882), 7 Ont. App. 145; Booth v. Moffatt (1896), 11 Man. 25; Owen v. Burgess (1896), id. 75; Citizens v. Lepitre (1898), 29 S. C. Can. 1; Makins v. Piggott (1898), 29 S. C. Can. 188.

But it is alleged that a company owes no duty to anybody to take care of its seal, so as to prevent the fraudulent execution of documents which may ruin other people.1

VARIOUS CASES OF DUTY.

A complete list of cases in which it has been held that there is a duty of carefulness not to offer obvious opportunities for the commission of fraud will not be attempted here. Representatives of the various classes may be met with in their appropriate places throughout the work. A somewhat comprehensive summary, however, will be instructive, and will much assist the argument in favor of the altruistic view of business conduct:

1. Ostensible Ownership.- Such view has been widely ac cepted in cases which the present writer classes under the title "Ostensible Ownership."

(a) An owner of property may not stand by and permit an innocent person to be deluded into purchasing property to which the vendor has no title.

"When I saw the mistake into which he had fallen, it was my duty to be active and to state my adverse title."2

"To create an estoppel by silence there must be not only the opportunity but the apparent duty to speak. The party keeping silent must know that someone is relying thereon, and is either acting or about to act, as he would not if the truth were known to him." 3

"In Pickard v. Sears it was held that he who stands by and sees another alter his position, on the faith of a fact which he can contradict, cannot afterwards take advantage of that alteration; but the rule was corrected in Freeman v. Cooke, when it was said that if a man stands by and allows another to act without objecting, when from the usage of trade or otherwise there is a duty to speak, his silence would preclude him as much as if he proposed the act himself."4

(b) A railway company issued, by mistake, two delivery orders for the same goods, and then refused delivery to an innocent transferee of the second of them. It was a mistake, and they owed no duty of infallibility to the purchaser, they said, but Brett, M. R., told them,

"It is true that there can be no negligence unless there be a duty, but here the documents have a certain mercantile meaning attached to them,

1 See infra.

v. Sanborn, 24 N. H. 499; George v.

2 Ramsden v. Dyson (1866), L. R. 1 Cutting, 46 N. H. 465; Norris v. MorH. L. 141.

3 Allen v. Shaw (1881), 61 N. H. 97, citing Viele v. Judson, 82 N. Y. 32; Taylor v. Ely, 25 Conn. 250; Marshall v. Pierce, 12 N. H. 127; Batchelder

rison, 45 N. H. 499; Stevens v. Dermett, 51 N. H. 324; Big. Estop. 497503.

4 Polak v. Everett (1876), 1 Q. B. D. 673; 45 L. J. Q. B. 369.

and therefore the defendants owed a duty to merchants and persons likely to deal with the documents."1

(c) For the same reason, a company owes a duty of carefulness in issuing certificates as to the ownership of shares, and will be estopped if they are made use of to support misrepresentation. They are intended "to be acted upon by purchasers of shares in the market." 3

(d) So also with reference to bills of lading; representations in them are to be taken as having been

"made to any one who, in the course of business, might think fit to make advances on the faith of them." 4

And there is therefore a duty of carefulness with regard to the assertions which they contain towards persons to whom they may be offered in support of representations of ownership of goods.5

6

(e) So also with reference to warehouse receipts, and other such documents.7

2. Ostensible Agency. The remarks just made with reference to indicia of ownership are equally applicable to indicia of agency. Every one must observe such reasonable precautions as will prevent his complicity in misrepresentation as to the authority of his ostensible agents. It is upon this ground that the reasonableness of the Factors Acts can be upheld; and that the appearance of larger powers than those really conferred will often work estoppel.9

3. Lulling into Security. It will be observed that of the instances above referred to, some are cases in which active misrepresentation is forbidden, but some also are cases in which activity is imposed as a requisite of reasonable social conduct. It is in such instances, of course, that the altruistic theory finds its highest development; calling as it does, upon every one to throw off his cynicism and indifference, and to exercise (actively if need be) "an appropriate measure of prudence to avoid caus

1 Coventry v. Great Eastern Ry. Co. (1883), 11 Q. B. D. 776; 52 L. J. Q. B. 694.

2 Re Bahia (1868), L. R. 3 Q. B. 584; 37 L. J. Q. B. 166; and see cases cited with this one in ch. XXII.

3 Per Lord Herschell in Balkis v. Tomkinson (1893), A. C. 403; 63 L. J. Q. B. 134.

4 Armour v. Michigan (1875), 65 N. Y. 111, 122.

5 See ch. XXII.

6 Holton v. Sanson (1862), 11 U. C. C. P. 606. And see ch. XXII.

7 Prospectuses and company reports, for example. See ch. X. 8 See ch. XXVI. 9 See ch. XXIII