be the cause of the loss, and the sum of money in question, or the security therefor, will be primâ facie the measure of damages sustained. by the principal. The damage must be proximately caused by the act or omission of the agent, but it need not be the direct result of it. Thus,' says Mr. Justice Story,-Story on Agency, § 218,- if an agent knowingly deposit goods in an improper place, and a fire accidentally ensue, by which they are destroyed, he would be responsible for the loss; and so the Master of the Rolls, speaking of trustees, -Caffray v. Derby, 6 Ves. 488, 495,-If the loss had happened by fire, lightning, or any other accident, that would not be *an excuse [*58 for them, if guilty of previous negligence.' In these cases, though the loss is not the immediate consequence of the negligence, but of the fire, still it may be truly said that it would not have occurred except from such negligence: see Williams v. Littlefield, 2 Wend. 362. So, if an agent, in procuring a policy of insurance, should so negligently execute his duty as that the risk (for example, a peril of the seas by which a loss was caused) should not be included, although the loss was directly owing to the peril of the seas, still it was proximately owing to the negligence of the agent, and the principal may accordingly recover. These questions may frequently arise between merchants and insurance brokers or factors. So, in a case where the defendants, in taking out a policy for the plaintiffs, had omitted a liberty to touch at the Canary Islands,' and, having touched there, and being captured, the underwriters refused to pay, on the ground of deviation, Lord Ellenborough held that the plaintiffs were entitled to recover a verdict for the sum insured, deducting the premiums: Mallough v. Barber, 4 Campb. 150. Again, in a case where the defendant, in effecting a policy, had departed from his instructions, and, the vessel being lost, the underwriters, in consequence of the agent's neglect, were not liable, two of the underwriters for 2001. having paid the loss, and a third, for the same sum, having become bankrupt, Gibbs, C. J., held that the plaintiff was entitled to recover the amount directed to be insured, less the 4007. paid, and the 2007. subscribed by the bankrupt underwriter; and the plaintiff accordingly took a verdict for the balance: Park v. Hamond, 4 Campb. 344. In a case in New York,-Perkins v. Washington Insurance Company, 4 Cowen, 645, 664,-where premiums had been paid at Savannah to an agent of underwriters doing business at New York, and a bill was filed against the company to compel the execution of a policy, Mr. *Senator Colden said: Suppose an action had been brought against the Savannah agent for not sending the premium to New York in due time, can there be a doubt that the appellant would have recovered in a court of law, and that the measure of damages would have been the amount which was to have been insured, and for which the premium was paid?' Again, if an agent who is bound to procure insurance for his principal, neglects to procure any, and a loss occurs

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to his principal from a peril ordinarily insured against, the agent will be bound to pay the principal the full amount of the loss occasioned by his negligence. In a case on the Pennsylvania circuit,-Morris v. Summerl, 2 Wash. C. C. R. 203,-the late learned Mr. Justice Washington charged, That, in case a merchant is in the habit of effecting insurance for his correspondents, and is directed to make an insurance, and neglects to do so, he is himself answerable for the losses as an insurer, and entitled to a premium as such; that the amount of loss for which an underwriter who had subscribed the policy would have been answerable, is the only measure of damages against him. If he can excuse himself for not having effected the insurance, he is answerable for nothing: if he cannot excuse himself, he is answerable for the whole." And it appears, that, on exception to this charge, this judgment was affirmed in the Supreme Court of the United States. The same point was laid down in another case by the same able judge,-De Tastett v. Croussillat, 2 Wash. C. C. R. 132,-still more broadly: The law is clear, that, if a foreign merchant who is in the habit of insuring for his correspondents here, receives an order for making an insurance, and neglects to do so, or does so differently from his orders, or in an insufficient manner, he is answerable, not for damages merely, but as if he were himself the underwriter, and he is of course entitled *60] to the premium.'" Here, until the plaintiffs *sue the defendant upon the charter-party, the defendant would have no cause of action, or at all events only for nominal damages. [JERVIS, C. J.Is there any difference in this respect between the case of a contract to effect a policy, and a contract for the delivery of goods? In the latter case, the measure of damages would be the difference between the contract-price and the market-price at the time of the breach of contract.] The principle would no doubt be the same in the two cases; but the result would be worked out differently. [MAULE, J.-Might not the defendant have brought an action against the plaintiffs for not effecting the policy within a reasonable time, although no loss had happened?] Probably he might; but, in that case, the damages would be nominal only. Here, the damages the defendant would be entitled to recover will be, what he loses under the charter-party,-what he is called upon to pay.

Channell, Serjt., in reply.-To sustain this plea, the defendant must make out that the amount which the plaintiffs would recover in this action against him, would necessarily be the same as he would be entitled to recover by a cross-action against them. In Moore, fo. 23, pl. 80,cited 2 Wms. Saund. 150, n., it is laid down, that "a cause of action against a plaintiff will be no bar to an action by him, for avoiding circuity of action, when the recovery in both actions is not equal; as, in waste, it is no bar that the plaintiff covenanted to repair, for, in waste, the plaintiff is entitled to recover treble damages, but the defend

in his action of covenant will only recover single." The question

is, not whether the jury may, but whether they must give an equal amount. [JERVIS, C. J.-Does not the plea state that the two sums are identical?] It does so: but the demurrer does not admit that which is not well pleaded: and, unless that is a necessary consequence, the *defendant cannot be permitted to say it. In Simpson v. Swan, [*61 3 Campb. 291, the factor had voluntarily parted with the money: and the point relied on by the defendant was not the principal point ruled. In Gillett v. Mawman, 1 Taunt. 137, A., being intrusted with goods belonging to B., undertook to get them insured: he afterwards effected an insurance, in his own name, upon property on his premises, but without making any mention of goods held in trust: the premises were destroyed by fire, and A. received the amount of his insurance, but which fell considerably short of his own loss. And Sir J. Mansfield said- As to the set-off, it was proved upon the trial that the plaintiff's own loss much exceeded the sum which he had recovered from the office. The deposit was made in his own name, and, as far as it appeared, in respect of his own property: it was not proved that any of it was paid for goods in trust, or anything received by the plaintiff upon that account. There was no evidence, then, of money had and received to the use of the defendant. The jury, indeed, found that the plaintiff had undertaken to insure. He neglected to fulfil his engagement, in consequence of which the defendant sustained a considerable loss. But this loss cannot be made the subject of a set-off: the defendant must seek his remedy by a distinct action." The doctrine of set-off certainly is not strictly applicable here; but it has a material analogy to the doctrine upon which this plea professes to be founded. The defendant seeks to show that the policy became otherwise than beneficial to him solely in consequence of the negligent conduct of the plaintiffs; and so, he concludes, the damages are equivalent. [MAULE, J.-That may be struck out without materially altering the plea, upon the principle adopted by this court in Brown v. Mallett, 5 C. B. 499 (E. C. L. R. vol. 57.)] Precisely so. Unless it is a conclusion of law from the facts stated in the plea, that the two sums are *equivalent, the plaintiffs are entitled to the judgment of the court. JERVIS, C. J.—I am of opinion that the plaintiffs are entitled to the judgment of the court upon this demurrer and I arrive at that conclusion, because I am of opinion that the defendant has not brought himself within the rule which entitles a party to set up a cross demand by way of defence, in order to avoid the "scandal and absurdity" of a circuity of action. It is not denied that the rule in question is plain and well ascertained, viz. that, to justify a defendant in setting up a demand in avoidance of circuity of action, he must show that the sum which he claims to be entitled to recover back is of necessity the identical sum which the plaintiff is suing for. The only difficulty arises from the application of the rule. I was somewhat struck by a difficulty

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arising from the allegation in the plea that, by and through the negligent and improper conduct of the plaintiffs in effecting the insurance, the insurance became of no use or value, and the defendant thereby sustained damages to the amount of one-third of the freight so insured; and that the plaintiffs thereby became liable to the defendant for the same (being the amount in and by the first count claimed by the plaintiffs to be repaid and returned to them by the defendant), and liable to make good to the defendant such amount as he should have to return to the plaintiffs under the charter-party; and that the sum paid by the defendant to the plaintiffs, or recovered by them under the first count, would be the damages sustained by the defendant by reason of such improper conduct, &c. But I think my Brother Channell has relieved me from that difficulty, by suggesting that that is a mere conclusion drawn from the previous allegations,—not a conclusion of law of necessity. resulting from such previous allegations, but one which a jury *63] *might or might not arrive at. I think, that, unless the judge would be bound to tell the jury that the amount which the defendant claims by his plea is necessarily the same amount as the plaintiffs claim by their declaration, the plea does not bring the case within the rule as to circuity of action. The case differs materially from those which were cited by Mr. Rew, and commented on by my Brother Channell, in which the defendant was entitled to a liquidated and ascertained sum on the failure of the plaintiff to perform a duty. This is a matter which sounds in damages. The plaintiffs had undertaken to effect an insurance for the defendant with third persons: and it may be that in the result the defendant will be entitled to recover from the plaintiffs. precisely the same amount of damages that the plaintiffs will recover in this action but there are various circumstances which might by possibility arise to reduce the damages in that action to a lesser or even to a nominal amount; and, unless the defendant could negative all those possible circumstances, he could not make this a good plea. There is no authority to be found in our books showing that the plaintiffs' remedy can be barred by a plea like this under the circumstances disclosed. A passage has been relied on from the very valuable work of Professor Sedgwick on the Measure of Damages, where that learned author is supposed to assume the law to be so in America. But I think this is not the fair inference from what is there stated. It is not laid down that the broker, if guilty of negligence in effecting the insurance, becomes himself an insurer, and liable to pay the exact amount for which the insurance was or ought to have been effected, less the amount of premium. If so, what is the premium which as matter of law is to be deducted? It clearly must mean that the amount of the loss is the reasonable, not the ascertained legal measure of damages which the party is entitled to. That is, in *effect, the principle *64] upon which the damages would be ascertained here. If the broker

has been guilty of negligence, it is but just and reasonable that the customer should recover against him the amount of the loss, deducting what would be paid for premiums,-in other words, that he should be recompensed to the extent to which he has been damnified by his agent's negligence. But it is not a positive rule of law. If the jury in this case might, as I apprehend they might, award to the defendant a sum either less or more than the amount of the one-third freight which the plaintiffs are seeking to recover, the sum sought to be recovered, and that which is sought to be set against it, clearly are not identical. The rule as to circuity of action, therefore, does not apply, and consequently the plea is a bad one, and the plaintiffs must have judgment.

MAULE, J.-I am of the same opinion. The plaintiffs seek to recover a sum which in a given event the defendant has become liable to pay and the defendant, by way of answer, alleges that the plaintiffs had, by the same contract under which his liability to them arises, undertaken to effect for him an insurance of the same identical amount, and that, by reason of the negligent and improper conduct of the plaintiffs in effecting the insurance, the policy became of no value, and the defendant sustained a loss equal to the sum claimed by the plaintiffs in the action and the plea goes on to allege that the plaintiffs thereby became liable to the defendant for the same (being the amount claimed by the plaintiffs), and liable to make good to the defendant such amount as he should have to return to the plaintiffs under the charter-party, and that the sum recovered by the plaintiffs in this action will be the damages sustained by the defendant by reason of the plaintiffs' improper conduct, and the defendant will be damnified *to that extent. [*65 That, in my opinion, amounts to no more than an allegation that the plaintiffs are under the circumstances stated liable in point of law : and it would not be sustained by proof of other circumstances not alleged in the plea tending to show that the plaintiffs were liable; but it means that the matters of fact stated in the previous part of the plea impose upon the plaintiffs a liability to that extent. The recent cases in this court and in the Exchequer Chamber show that such an allegation will not make a pleading good which would not be good without it: if it amount to a conclusion of law,-a conclusion the court would have drawn from the facts alleged,-the pleading will be good; otherwise, not. This plea, then, must be regarded as amounting simply to this,that the defendant employed the plaintiffs to perform something for him, that they were guilty of negligence in the performance of it, and that thereby the defendant sustained damages to the same amount as that for which they seek to charge him in this action. It is insisted that such a plea would be good, upon the principle as to the avoidance of circuity of action; that is, that, if the plea shows that the defendant would, upon the plaintiffs' recovering against him in this action, be VOL. XV.-9

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