City Bank of Sydney v McLaughlin [1909] HCA 78

City Bank of Sydney v McLaughlin [1909] HCA 78 - HCA 1909 case summary — Zoe

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that by means of such advances she discharged the plaintiff' debts and obligations. They also alleged that the plaintiff had accepted the benefit of the advances, and had adopted and ratified - his wife's action in obtaining them. 333 They further alleged, and it is admitted, that at the date of | the execution of the power of attorney a sum of £1,537 5s. stood Za at the credit of the plaintiff's current account, that sums amount- _ ing to £4,743 1s. 4d. were subsequently credited to it, and that the bank paid cheques drawn by Mrs. McLaughlin upon the - account to the amount of £6,230 10s. 7d. There was conse- quently, when she ceased to operate on the account, a credit balance of about £50. But the appellants alleged that the account was at the time of suit in debit to the extent of £2,000 and upwards, for which they claimed to retain the mort- gage and the title deeds as security. It is convenient to state at this point that after the date of the plaintiff's return to sanity, which is said to have been in March 1903, (but the date seems doubtful), he himself operated upon the account, and that the alleged debit balance is due to his operations after allowing for _ the credit balance of £50. 'The defendants counterclaimed asking for an account, and for an order that the plaintiff might pay them the proper amount pay- able to them under the circumstances. The validity of the power of attorney was the subject of discus- sion in this Court in the case of McLaughlin v: Daily Telegraph Newspaper Co. Ltd. (1), and it was agreed that the findings of - fact made by this Court in that case should be accepted as bind- ing in the present case. It follows that the deed of mortgage purporting to have been executed by Mrs. McLaughlin as attorney for her husband is void as a conveyance. But it does not follow from anything decided in that case that the contract made by her to give security by deposit of deeds for advances made to her for the benefit of her alleged principal is so absolutely void as to be incapable of affirmance. At the trial the defendants endeavoured to establish that the disbursements represented by the payments made by them upon Mrs. McLaughlin's cheques drawn on the current account, and (1) 1C.L.R., 243.

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election or assent. pects: Consequently we have, in such a case as the present, to see Crry Bayk whether the respondent directly or indirectly has so conducted °F pes himself as to have assented to and adopted the actual application MeLavanns. of the money which was made in his name, and therefore, in fot, msalas to have "paid" his obligations: Belshuw v. Bush (1); Kemp v. Balls (2); Keighley, Maxsted & Co. v. Durant (3). Unless there is something in the nature of adoption, the attempted payment is not really a payment, for the debtor might refuse to accept it, and insist on paying his debts himself, leaving the first person to get back his money as best he could. Whether he did so conduct himself or not depends on the facts. Express assent is not necessary. Conduct, active or passive, may establish it. Silence, where there is a duty to speak, may be excellent evidence of assent. The next element in Lord Selborne's proposition is that the 'payment must be of a legitimate demand which he was in some way bound to meet. It is necessary at this point to remember that, in case of a company borrowing in fact, but ultra vires, the original transaction cannot be adopted simpliciter, that is, the obligation to recoup cannot be rested on mere ratification in toto of the original borrowing. In the case of an individual it can, and whether the ultimate use of the money be legitimate or illegitimate, whether it be applied to paying debts or to making gifts, is immaterial if the principal ratifies the original borrowing as a distinct and independent transaction. But where he does not do that, and where the lender has, as here, in consequence of the admissions made, to rely not simply on ratification or adoption of the original borrowing, but on the nature of the application of the money which is acquiesced in, then if it is applied for some other person's use in some way in which the principal is under no obligation to apply it, the case does not come within the equitable doctrine of the Blackburn Case (4), because he has had no benefit in law. The third requirement is that whatever benefit the principal

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adoption of the withdrawal of the £2,100 from his banking H. ©. oF A. account, and the satisfaction therewith of the claim of the trust 18%. estate to restoration. Crry Bank But it is quite another question whether the sum so with- 0" S¥PS#¥ drawn was an advance by the bank. As Street J. points out, the MeLavenzin. account was in credit when that withdrawal took place, and in tsaacs 3. my opinion it cannot be properly said that it was an advance by the bank, or, in other words, that it was the bank's money which satisfied the respondent's obligation to the trust estate. Iam of opinion that the £2,100 must be eliminated entirely from con- sideration in this branch. Mr. Owen admitted that beyond all question the account was then in credit, so that further inquiry as to that was not to be thought of. I have already said that, in view of the bank's admission in the course of the case, it cannot rely upon ratification of the original transaction of borrowing - that is, of the original mort- gage covering all future advances. No such case is made by the statement of claim. Paragraph 7, read with the other para- graphs, is manifestly directed to such ratification and adoption as the law would imply from the acceptance of the benefits referred to. There is in paragraph 11 a statement of the balance of the account down to the time of action, but it is assumed that the plaintiffs personal acts had no effect other than altering the ultimate balance due. No case is rested on any security given by the plaintiff himself, or any adoption ab initio of his wife's borrowings, or even of any claim of banker's general lien on the deed for subsequent amounts advanced to him, and such a claim would obviously depend on the circumstances in which the plain- tiff allowed the deeds to remain in the bank. It was admitted in argument before us, though it does not very clearly appear from the accounts in evidence, that up to that time the total credits were £1,537 1s. 3d. plus £4,743 1s. 9d., that is £6,280 2s. 9d., and the total debits were £6,230 10s. 7d., and therefore that when the plaintiff resumed banking operations he was in credit about £50, that is according to the bank's view. Unless, there- fore, he subsequently expressly or impliedly allowed a general banker's lien to arise, a point not suggested or fought, there is.

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Court

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Before

Source

Judgment (167 paragraphs)

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