become intrusted with goods within the meaning of the Factors Act, 1842, he may substitute such lastmentioned goods in lieu of the goods pledged by the person for whom he was guarantor. And so, where certain bankers at the request of J. L. advanced money to S. L., and having a lien on certain goods in their possession in respect thereof, it was agreed between the bankers and J. L. that, in consideration of the delivery of those goods to J. L., the latter should deliver to the bankers certain other goods intrusted to J. L. by the plaintiff, his principal, to be held as a lien by the bankers in place of the other goods and also in respect of any future advances to be made to S. L., and which J. L. requested the bankers to make; which agreement was carried out, and further advances made to S. L. in pursuance of such request: it was held, that the bankers having no notice of the plaintiff's title, the transaction was protected by the 5 & 6 Vict., c. 39, s. 2 (g).

Protection to bond fide loans made without notice of agent's mala fides; but no protection to pledges for agent's antecedent debts.

The Act is to be deemed and construed to give validity to such contracts, and to protect such loans and advances only as are made bona fide, and without notice that the agent making such contract has not authority to make the same, or is acting malá fide in respect thereof

(g) Sheppard v. Union Bank of London, 31 L. J. Ex. 154, 7 H. & N.

661.

against the owner of such goods and merchandise; and nothing therein contained is to be construed to extend to or protect any lien or pledge in respect of any antecedent debt, owing from any agent to any person with or to whom such lien or pledge shall be given; nor to authorise any agent intrusted as aforesaid to deviate from the express orders or authority of the owner; but that, for the purpose of protecting all such bond fide loans and advances (though made with notice of such agent not being the owner, but without any notice of the agents acting without authority), and to no further or other intent or purpose, such contract as aforesaid is to be binding on the owner, and all other persons inter ested in such goods (h).

A contract with an agent under the Factors' Act, 1842, for the pledge of goods, will be valid as against the principal, though the person dealing with the agent knows him to be only an agent in respect of the goods pledged; provided that the person so dealing acts bona fide, and without notice that the agent is acting malâ fide and beyond his authority.

To deprive the pledgee of the protection of the Act, he must be fixed with knowledge that the agent is so acting as above stated; and no mere suspicion will amount to notice, nor will the knowledge that the agent has power to sell the goods constitute notice that he has not power to pledge them (i).

And where a banian or agent was entrusted by his principals with a bill of lading for a particular purpose,

(h) 5 & 6 Vic. c. 39, s. 3; and see 6 Geo. 4, c. 94, s. 3, ante, p. 49. (i) Navulshaw v. Brownrigg, 2 De G. M. & G. 441, 1 Sim. N. S. 573.

and he pledged the same malâ fide, without the consent of his principals, to a native banker for advances made to himself; it was held, that in order to invalidate a pledge so made, under the 3rd section of the Factors' Act, 1842, it was necessary that the court, or jury, should find, that the lender had notice of the agent's malâ fides, or want of authority to pledge the goods (k).

To establish such notice it is sufficient to show, that the circumstances attending the transaction were such as, that a reasonable man of business applying his understanding to them would certainly know that the agent had not authority to make the pledge, even if the agent were not also acting malâ fide towards his principals (1).

But where H., a speculator in cotton, in July, 1864, requested W. to purchase for him, in W.'s name, 400 bales of Egyptian cotton for delivery in the September following, W. assented, employing for the purpose (with the knowledge of H.), as his broker, C., who knew that W. was acting as agent, and W. became liable on a series of contracts, the first of which was due on the 9th of September. The price of cotton falling, C. refused to take up the contracts unless he was secured from loss, and W. applied to H., who on the 8th of September promised to give some security, and on the 26th of September deposited with W., and W. deposited with C., with unconditional power of sale, a bill of

(k) Gobin Sein v. Ryan, 15 Moo. P. C. 230, 8 Jur. N. S. 313; and see Douglas v. Ewing, 6 Ir. C. L. R. 395.

(1) Ibid.

lading of a cargo of Surat cotton, of which H. was the consignee from the plaintiffs, a firm at Bombay, as their factor; but H. was not known either to W. or to C. to be other than the true owner. On the same day C. made a first payment on account of W.'s indebtedness under the contracts, and he continued to make other payments, W. not advancing anything. In October, H. stopped payment, and the proceeds of the cargo of Surat cotton were then claimed by the plaintiffs: it was held, that the deposit of the bill of lading by H. was not made in respect of an antecedent debt of H. to W. within the meaning of the Factors' Act, and that, having been made by H. in respect of an advance by C. on behalf of W. within the meaning of the same Acts, it was binding on the plaintiffs (m).

The Act (n) does not apply to pledges for antecedent liabilities (whether they may or may not have ripened into debts) where no actual advance is made at the time of the pledge. Therefore, where H., a factor, pledged goods of his principal to G., first to secure the payment of an acceptance of H. in G.'s hands, not then due, which had been given to protect G.'s liability on a contract as H.'s broker; secondly, to repay to G. his loss on a resale of goods which G. had purchased for H. in his own name; it was held that the transaction was not protected by the above-mentioned statute, and semble, that both liabilities were antecedent debts (0).

(m) Jewan v. Whitworth, L. R. 2 Eq. 692.

(n) 5 & 6 Vict. c. 39.

(0) Macnee v. Gorst, L. R. 4 Eq. 315.

What are documents of title within the meaning of the statute.

Any bill of lading, India warrant, dock warrant, warehouse-keeper's certificate, warrant, or order for the delivery of goods, or any other document used in the ordinary course of business as proof of the possession or control of goods, or authorising or purporting to authorise, either by indorsement or by delivery, the possessor of such document to transfer or receive goods thereby represented, shall be deemed and taken to be a document of title within the meaning of this Act (p).

It has been held that certificates of railway stock are not "goods" within the meaning of the statute (q).

When agent to be deemed intrusted.

Any agent intrusted as aforesaid, and possessed of any such document of title, whether derived immediately from the owner of such goods, or obtained by reason of such agent's having been intrusted with the possession of the goods, or of any other document of title thereto, is to be deemed and taken to have been intrusted with the possession of the goods represented by such document of title as aforesaid (r).

What are to be deemed pledges.

All contracts, pledging, or giving a lien upon such locuments of title as aforesaid, are to be deemed and

(p) 5 & 6 Vic. c. 39, s. 4.

(q) Freeman v. Appleyard, 32 L. J. Ex. 175.

(r) Section 4; and see Hayman v. Flewker, Wood v. Rowcliffe, Lamb v. Attenborough, ante, p. 56 to 59; and Baines v. Swainson, ante, p. 51.