ON REHEARING.
Bising, 0.The argument of counsel for defendant in error in support of the petition for rehearing in this case' assumes that we have “inadvertently fallen into a mis*41take as to what was the matter in issue- or question directly involved in the suit ” in the circuit court, in that we hold that the answers in said suit set up two separate defenses.
It is conceded in the argument that the answers were so framed that the determination of that case might be based upon proof that Norwood was duly authorized by the complainant to collect the note, or upon proof that complainant was, by her conduct,, estopped from denying, as against Barnes, that Norwood was not so authorized; but it is denied that two separate defenses are set up in the answer, and it is claimed that the matter which we have treated as separate defenses is but separate statements of facts upon which defendant' would rely in evidence to disprove the cause of action, and that the denial in the answer raised the only issue, and that issue was whether Norwood’s “agency extended to receiving payment of the principal sum due upon the note.”
It is true that the issue raised by the denial related directly to the question of Norwood’s agency, but it is equally true that the answer set up new matter constituting a defense,' which new matter could not be given in evidence under the denial. The argument of counsel is based upon the claim that the question of agency was the only question directly in issue in the circuit court, and, if this claim is not well made, the argument falls for want of a foundation. The denial put the complainant to proof as to the extent of Norwood’s authority as her agent. The new matter admitted the material allegations of the bill, and set up facts which would defeat a recovery. Pom. Rem. & Rem. Rights, § 613. It is certainly illogical to say that facts which would establish a defense, based upon an admission that Norwood was not authorized to receive the payment of the note, would also establish the fact that he was so authorized.
The defense set up by the new matter is not founded upon the agency of Norwood, but upon the principles of *42estoppel by conduct. The rights of third parties in such cases “do not depend upon the actual title or authority of the party with whom they have directly dealt, but they are derived from the act of the real owner (or principal), which precludes him from disputing, as against them, the existence of the title or power which he caused or allowed to appear to be vested in the party” with whom the dealing was had. Bigelow, Estop. 434; Ewell’s Evans, Ag. 193, *13'T. “A principal is responsible, either when he has given to an agent sufficient authority, or when he justifies a party dealing with his agent in believing that he has given to the agent his authority.” Kasson v. Noltner, 43 Wis. 646, 650; Johnson v. Jones, 4 Barb. 369, 373.
The matter of estoppel, as to Barnes, was as directly in issue as was the question of authority; and the facts necessary to establish the defense of estoppel must necessarily be entirely different from the facts necessary to establish the defense under the denial. The rule as to the conclusiveness of a judgment in a former trial “is applicable either to an entire cause, or to particular facts in issue in a former adjudication.” Wells, Bes Adj. § 4.
The opinion as rendered is based upon the proposition that the judgment in the circuit court could only be made conclusive in this case upon questions of fact upon which the judgment was necessarily based, and that it appeared from the record that it could have been based upon either of two different sets of facts, and that the record did not disclose upon what facts the judgment was based. “It is also a universal rule that a judgment concludes the parties only as to the grounds covered by it, and the facts necessary to uphold it.” Spencer v. Dearth, 43 Vt. 98, 104.
The main question in the circuit court was whether Barnes had wrongfully paid the note to Norwood, and under the pleadings the determination of this question depended upon two issues of fact raised therein, the de*43termination of either of which in favor of Barnes would authorize the judgment rendered. While, as argued by counsel, the determination "of the issue of fact that Nor-wood was duly authorized to collect the note from Barnes might be conclusive of that fact in a suit against Clayton for wrongfully releasing the deed of trust, it seems clear that a judgment, based upon a determination of the issue of fact that complainant was estopped by her conduct from denying, as against Barnes, that Norwood had such authority, could not be of any weight in a suit against Clayton, for the reason that the facts which might be deemed sufficient to create an estoppel as to Barnes might not exist as to Clayton.'
The main question in this case is whether Clayton negligently, and in violation of his duty to the plaintiff, released the deed ©f trust. The main question presented in the circuit court might have been determined, under the pleadings, without passing upon any question of fact necessary to the determination of the question presented in this case. “As we understand the rule in respect to the conclusiveness of the verdict and judgment in a former trial between the same parties, when the judgment is used in pleading as a technical estoppel, or is relied on by way of evidence as conclusive per se, it must appear, by the record of the prior suit, that the particular controversy sought to' he concluded was necessarily tried and determined; that is, if the record of the former trial shows that the verdict could not have been rendered without deciding the particular matter, it will be considered as having settled that matter as to all future actions between the parties.” Packet Co. v. Sickles, 5 Wall. 580, 592.
It is asked, in the argument we are considering, how the fact that Barnes would not have paid the note to Norwood, if Norwood had not presented the deed of release to him, could have in any manner entered into or affected .the defense on the ground of estoppel. In the *44opinion rendered we say: “What Barnes believed in'relation to Norwood’s authority in the premises was not a material fact in the case, unless he was led to such belief by the conduct of the complainant; and the fact that Clayton executed the release deed because he had confidence that Norwood had authority to demand it is not material, unless the conduct of the complainant induced such confidence.”
It is conceded in the argument that the true ground of estoppel is here stated; that is, as stated by counsel, that “no act or conduct of Clayton could operate to create it in favor of Barnes against complainant, and none of Barnes in Clayton’s favor against her.” It is then urged by counsel that the act of Clayton in executing the release is not a fact or circumstance which can be taken into consideration in determining the question of estoppel between the complainant and Barnes; that Barnes had no right to rely upon such fact or circumstance, because the question of estoppel depends solely upon the complainant’s previous acts and conduct towards him, and the relations previously existing between complainant and Barnes with respect to Norwood’s agency and authority. The estoppel pleaded in the circuit court, if created at all, was created by reason of Barnes’ belief that Norwood was authorized to collect the .note, which belief must have been induced by the conduct of the complainant.
The acts of the complainant in placing the note in Nor-wood’s possession, in authorizing him to collect the interest thereon, and to act for her in negotiations for extensions of the time of payment thereof, might have induced Barnes to believe that Norwood was rightfully in possession of the release, and the possession of the release might have been the fact which induced Barnes to believe that Norwood was authorized to receive payment of the note. It was not the act of Clayton in executing the release that induced Barnes to believe that Norwood *45had authority to receive payment of the note, but it was the conduct of complainant that tended to induce him to believe that Norwood had authority to demand such release; and its possession by Norwood would greatly strengthen the evidence of such fact, and might, with the other facts, be sufficient to establish the belief in Nor-wood’s authority to receive payment of the note. It was not the execution of the release, but the fact that Nor-wood had the release, that aided in inducing the belief upon which the estoppel is founded.
If the release had been executed by Clayton upon request of complainant, with directions not to deliver to either Norwood or Barnes, and Norwood had wrongfully obtained possession of it without fault or negligence of Clayton, and had used it as he did use the one he did obtain from Clayton, the facts of the supposed case would be equally as strong to create an estoppel as the facts in the actual case, but no act of Clayton would enter into such an estoppel.
If Barnes knew that the release had been wrongfully obtained, no estoppel could be established. That he did not know that it was wrongfully obtained, and that the acts of complainant induced him to believe that it was rightfully obtained,' are the facts upon which the estoppel must be based; and in this view it seems to us that “the production of the release deed by Norwood was an important circumstance bearing upon Barnes’ mind to justify payment.”
The rehearing should be denied.
Stallcup, C., concurs.
Pee Cueiam.Por the reasons stated in the foregoing opinion the rehearing is denied.
Elliott, J., not sitting, having tried the case below.
Rehearing Denied.