ing. The assignee might well now think that he had an assignment of $1,000. The facts, however, were that the owner and charterer were jointly interested in the venture, although the charter was otherwise drawn; $500 therefore, and not $1,000, was the amount due from the charterer to the owner. The assignee, having relied on the charter-party, claimed that the charterer was estopped from denying liability for the whole $1,000. He urged that he was misled by a document executed by the charterer, and by the fact that when he gave notice of his assignment the charterer continued the misrepresentation by his silence.

Separate the grounds: First, the charter-party was misleading. Yes, but that was a contract between two persons who perfectly understood one another. It was a chose in action, and a transfer of the debt evidenced by it would carry with it all the equities; the assignee knew this, and knew that there might be equities; he made no inquiries; no estoppel, therefore, thus far. Secondly, when notice of the assignment was given to the charterer, was he bound to state, without question put to him, that there were equities? The House of Lords replied in the negative - the charterer was not bound to assume or imagine that a fraud had been practiced upon the assignee; he might well have taken it that he had satisfied himself as to the true position of the matter; he was not aware of the assignee's ignorance.2

Proctor v. Bennis. This was also a case of standing-by. It was claimed that a patentee was estopped from setting up his patent as against persons who had purchased an infringing machine. And it was suggested by Cotton, L. J., as a reason against estoppel, that the patentee had no reason to suppose that the purchaser was unaware of the patentee's rights. Not distinguishing between estoppel by passive assistance and estoppel by personal misrepresentation, Mr. Bigelow says of this point: 4

"Can it be necessary to an estoppel under the law of the scienter that the party to be estopped should also know that the other party is acting

1 Unless it was intended to be of ambulatory character. See ch. XXIV.

"See upon the same line, Smith v. Hughes (1871), L. R. 6 Q. B. 597; 40

L. J. Q. B. 221; Potts v. Temperance (1892), 23 Ont. 73.

3 (1887) 36 Ch. D. 740; 57 L. J. Ch. 11. 4 On Estoppel (5th ed.), p. 610, n. 2.

.

in ignorance? So it appears to have been supposed by Lord Justice Cotton in Proctor v. Bennis. An auctioneer makes a false representation scienter; must a buyer show that the auctioneer knew that the buyer was ignorant of the facts?"

The auctioneer case is totally different; it is one of personal misrepresentation; the auctioneer himself makes the representation; and the only requisite for estoppel is that position should have been changed upon the faith of the representation. In the patent case there was no misrepresentation by the estoppel-denier, and the question involved is, Under what circumstances is it "my duty to be active?" And the answer is, When I see another person falling into mistake; and I see no mistake unless I have reason to believe that the other party does not understand his situation.

It must be observed, too, that Lord Justice Cotton did not suggest that an estoppel-denier must "know that the other party is acting in ignorance." He said:

"In my opinion it must be taken that they (the purchasers of the machine) did know it; but if they did not I cannot find anything from which we ought to draw the conclusion that the plaintiff had reason to suppose that they did not."1

The case involves two of the three points under consideration, namely: (1) That the estoppel-asserter must be unaware of the estoppel-denier's right; and (2) That the estoppel-denier must have had reasonable ground for believing in the other party's ignorance.

Summarizing, let it be observed that fraud or bad faith is not essential to estoppel, although it is a necessary ingredient in misrepresentation by passivity. There is not in such cases a real exception to the general rule that for estoppel "no fraud need have been intended." Upon the other hand, however, it would be quite correct to say (in such cases) that there "must have been knowledge actual or virtual of the facts," and that the estoppel "grows out of a fraudulent purpose and a fraudulent result." Reconciliation of the conflicting dicta is accomplished by classification.

1 Mr. Justice Fry, in another case (Willmott v. Barber (1880), 15 Ch. D. 96; 42 L. J. Ch. 792), puts the point more strongly: "Fourthly, the defendant, the possessor of the legal right, must know of the plaintiff's mistaken belief of his rights. If he does not there is nothing which calls upon him to assert his own right."

Were this language to be taken absolutely, it would be only in the very rarest of cases that a by-stander could be estopped. He could always urge that he attributed the purchaser's action to rash stupidity or reckless aggression, and not to ignorance.

PERSONAL MISREPRESENTATION.

1

It was unfortunate that the leading case of estoppel in pais (Pickard v. Sears) was a case of misrepresentation assisted by passivity; for, that fact being overlooked, the rule there laid down has been taken to be of general application. It is this:

"The rule of law is clear that where one by his words or conduct wilfully causes another to believe the existence of a certain state of things, and induces him to act on that belief so as to alter his own previous position, the former is concluded from averring against the latter a different state of things as existing at the same time."

The word "wilfully," or some other word indicative of a desire to mislead-indicative of fraud, was there necessary; for the case, as we say, was one of passivity (in which fraud is necessary to the fact of misrepresentation, although not to the law of estoppel); but that the word was out of place in cases of personal misrepresentation became apparent upon the first occasion in which the rule was applied to an instance of that kind. Unfortunately, however, in that case the word itself was qualified, or rather almost eliminated from the general definition, instead of being left to its operation in the class of cases to which it had been applied and to which it properly belonged. This was said:

"By the term 'wilfully,' however, in that rule we must understand, if not that the party represents that to be true which he knows to be untrue, at least that he means his representation to be acted upon, and that it is acted upon accordingly."3

1 (1837) 6 A. & E. 469.

2 It is not here asserted that the rule was not intended to be of general application. No doubt its language ("by his words or conduct") covers cases of both active and passive misrepresentation. Two years afterwards, however, the same court had to deal with another case of passive misrepresentation (Gregg v. Wells (1839), 10 A. & E. 97; 8 L. J. Q. B. 193), and the language there used was carefully confined to that class of cases, and was intended to supersede the expression in Pickard v. Sears. Lord Denman (the same judge whose language is quoted from in the earlier case) said in the later: "Pickard v. Sears was in my mind at the time of the trial and the

principle of that case may be stated even more broadly"-also more narrowly-"than it is there laid down. A party who negligently or culpably stands by and allows another to contract on the faith of an understanding of a fact which he can contradict cannot afterwards dispute that fact in an action against the person whom he has himself assisted in deceiving." Estoppel by passive assistance must be based on culpability. Nothing is predicated of other sorts of estoppel.

3 Freeman v. Cooke (1848), 2 Ex. 654; 18 L. J. Ex. 114. And see Howard v. Hudson (1853), 2 El. & B. 1; 22 L. J. Q. B. 341; Continental Bank v. National Bank (1872), 50 N. Y. 575.

This language perfectly fits the case in which it was used (one of personal misrepresentation); and the only objection to it is that it assumes to alter a rule which had been formulated in view of another class of cases (misrepresentation assisted by passivity) in order to make it suitable for the one in hand. For, as the writer sees it, both rules were correct. In the case of misrepresentation assisted by passivity, the misrepresentation must from its nature (but for no other reason) be wilful; whereas, in cases of personal misrepresentation (which may be either honest or dishonest), it is sufficient that it was intended to be acted upon.

In these cases of personal misrepresentation, then, we get away altogether from any question of fraudulent intent in the misrepresentation. And the question is merely, Did he intend what he said or did to be acted upon? or, as we shall hereafter more accurately put it, Had he reasonable ground for anticipating a change of position in consequence of what he said or did?1

"Even where a representation is made in the most entire good faith, if it be made in order to induce another to act upon it, or under circumstances in which the party making it may reasonably suppose it will be acted upon, then prima facie the party making the representation is bound by it, as between himself and those whom he has misled."2

ACTIVELY ASSISTED MISREPRESENTATION.

Cases of passive misrepresentation have already been dealt with; and it has been shown that the bad faith which appears in them is a requisite of the existence of the alleged misrepresentation and not of any rule of estoppel. Personal misrepresentation has just been disposed of. There remains to be dealt with those cases in which estoppel is claimed because of active assistance rendered by the estoppel-denier.

For example, cases in which a railway company or a warehouseman has issued delivery orders for goods which were never received, and some third person has advanced money

1 Post, ch. XII

2 Per Shadwell, V. C., in West v. Jones (1851), 1 Sim. N. S. 207; 20 L. J. Ch. 362. And see per Parke B., in Freeman v. Cooke (1848), 2 Ex. 662; 18 L. J. Ex. 114; Mangles v. Dixon (1852), 3 H. L. C. 734; Low v. Bou

verie (1891), 3 Ch. 111; 60 L. J. Ch. 654; Horn v. Cole (1868), 51 N. H. 297; Blair v. Wait (1877), 69 N. Y. 113; Anderson v. Hubbles (1883), 93 Ind. 576; Clark v. Dillman (1896), 108 Mich. 625; 66 N. W. R. 570.

upon the representation of the holder of the orders (assisted by the documents) that he was the owner of the goods. Or a company has issued a certificate that A. was the owner of certain shares, although he was not; and upon the representation. of A., assisted by the certificate, he has sold the shares to an innocent purchaser. Or a mortgagee has given up the deeds. to the mortgagor, who, thus equipped, has mortgaged the land as though he were the unincumbered owner of it.3 In all such it is clear that for estoppel "no fraud need have been intended" on the part of the person to be estopped. He is frequently not even aware that a misrepresentation has been made.

Indeed the law may with confidence be said to be that if the assistance has been rendered, not only is the question of fraud immaterial, but that such excuses as oversight, or mistake, or even that the assistance was the result of deception practiced upon him, will not avail the estoppel-denier. A few cases from various departments of the law will be useful here..

Mortgages.- A mortgagor will be estopped as against an assignee of the mortgage from alleging that the whole con-sideration expressed in it has not been advanced to him, if in the deed and by indorsement upon it he has acknowledged receipt of the money. In such a case Fry, L. J., said:

66

That the plaintiffs (the mortgagees) were in a moral point of view excusable for these acts is beyond doubt; and that they were deceived by those whom they trusted, and as such are objects of sympathy, is equally clear. But they were inexact and careless, and placed in the hands of Bates, or Astley, the means of deceiving other persons, and these are in the view of a court of equity demerits."4

Certificate of Shares.- So also a company will be estopped by its certificate of ownership of shares, although the seal may have been fraudulently affixed by the secretary of the company, and the signature of a director forged. The company has sufficiently, although innocently, assisted in the misrepresentation.5

1 Coventry v. Great Eastern (1883), 11 Q. B. D. 776; 52 L. J. Q. B. 694; Henderson v. Williams (1895), 1 Q. B. 521; 64 L. J. Q. B. 308; Saderquist v. Ontario (1887), 14 Ont. 586; Fourth National v. Compress (1882), 11 Mo. App. 333. But see Second National v. Wallbridge (1869), 19 Ohio St. 419.

2 Infra.

3 Infra

4 Bickerton v. Walker (1885), 31 Ch. D. 151; 55 L. J. Ch. 227. See cases cited with this one in ch. IV. 5 Shaw v. Port Philip (1884), 13 Q. B. D. 103; 53 L. J. Q. B. 369. Dis-tinguish Evans v. Bank of Ireland (1855), 5 H. L. C. 388, and Merchants v. Bank of England (1887), 21 Q. B. D. 160; 57 L. J. Q. B. 418, as pointed out. in the latter case.