Sec 279

A principal is not liable for collusive contracts fraudulently concocted by his agent with third parties.5 Thus, in a case before the English court of appeal, in 1881, it appeared that a contract entered into by a local board, provided that payment for the work executed thereunder, i. e., the making of a reservoir, should be made by instalments upon the certificates of a certain engineer. After several payments had been made, it was discovered that the reservoir would not hold water, and further payment was refused. The contractor on this state of facts brought an action against the board for 10671. 11s. 6d., the balance due under the contract, which was stayed, however, on the board executing an agreement with the contractor undertaking to pay the sum of 800l. at the expiration of six months. The agreement was assigned by the contractor to a bank with whom he had an account, and to whom he was indebted to an amount exceeding 8007. Notice of the assignment was given by the bank to the board, and at the expiration of the six months the bank brought an action against the board to recover the amount secured by the agreement, when for the first time the board denied their liability on the ground that they had discovered that the contractor and the engineer had conspired together to give false certificates; and that, therefore, the agreement was one which had been obtained by fraud. It was held by the court of appeal that the defence that the agreement had been obtained by the fraud and collusion of the contractor was a good answer to the action brought against the defendants. It was further ruled that there was no obligation on the part of the defendants to give notice to the bank of the discovery of the fraud until steps were taken to enforce the agreement.1 Nor, as we have seen, is a principal liable in deceit for his agent's unauthorized independent fraudulent statements in effecting a sale.2 But a party.who knowingly combines to defraud another by a false statement is liable to such other in an action for deceit, although it was not intended specifically to defraud the party injured, but only any one of a class on whom the fraud might operate.3 It is no defence to such a Agency must be established by proof aliunde.

Principal not liable for collusive acts of agent, nor in deceit for agent's independent fraud.

1 Wh. on Agency, sec 540-1; Cherry v. Bank, L. R. 3 P. C. 24; Cullen v. Thomson, 4 Macq. 424; Eaglesfield v. Londonderry, L. R. 4 Ch. D. 693; Swift v. Winterbotham, L. R. 8 Q. B. 244; 28 L. T. N. S. 339; Noyes v. Loring, 55 Me. 408; Bartlett v. Tucker, 104 Mass. 336; People v. Johnson, 12 Johns. 292; Morgan v. Skiddy, 62 N. Y. 319; McCurdy v. Rogers, 21 Wis. 197.

2 See cases cited in Wh. on Agency, sec 478.

3 Fairlie v. Hastings, 10 Ves. 126; Mussey v. Beecher, 3 Cush. 517; Haney v. Donnelly, 12 Gray, 361; Fitch v. Chapman, 10 Conn. 8; Hill v. R. R., 63 N. Y. 101; Williams v. Davis, 69 Penn. St. 21; Grim v. Bonnall, 78 Penn. St. 152; Rosenstock v. Toomay, 32 Md. 169; Royal v. Sprinkle, 1 Jones, L. 505; Grandy v. Ferebee, 68 N. C. 356; Francis v. Edwards, 77 N. C. 271; Wilcoxen Co. v. Bohanan, 53 Ga. 219; Reynolds v. Ferree, 86 111. 570; Sypher v. Savory, 39 Iowa, 258.

4 East Line R. R. v. Garrett, 52 Tex. 133.

5 Wh. on Agency, sec 122, 460.

1 Wakefield Banking Co: v. Norman-ton, 44 L. T. Rep. (N. S.) 697. That collusive settlements by architect are void, see infra, sec 594, and see infra, sec 402.

2 Udell v. Atherton, 7 H. & N. 172; West Bank of Scotland v. Addie, L. R. 1 Sc. Ap. 145; Kennedy v. McKay, 43 N. J. L. 288, cited supra, sec 270.

3 Supra, sec 232. In Eaton v. Avery, 83 N. Y. 31, F., a member of a partnership, made statements he knew to be false to M., the representative of a mercantile agency. The object was through the mercantile agency to obtain credit from third parties whom it was intended to defraud. The statement in question was communicated to V., being one of the class designed by F. to be affected by the false statement, and V., on faith of the statement, sold goods to the partnership. It was held that V. could maintain an action for deceit against F.

That for mere expression of opinion an action for deceit cannot be maintained, see Randall v. Farnum, 52 Vt. 539.

That the plaintiff's ignorance and simplicity may be considered in detersuit that there is a warranty on which the defendant might he held liable.1 Nor is it a defence that the fraud operates through a chain of intervening agencies, conscious or unconscious. Wherever there is a fraudulent intention to injure either an individual or a class of individuals, the party injured may sue the party injuring, no matter how numerous may have been the intermediate agencies through which the fraud worked.2 mining the question of causal relation under such circumstances see supra, sec 245; Nolte v. Reichelm, 96 111. 425.

1 Supra, sec 218, 263; Carter v. Glass, 44 Mich. 154.

2 Eaton v. Avery, 83 N. Y. 31; supra, sec 242.