Lysaght Bros and Co Ltd v Falk [1905] HCA 7

Lysaght Bros and Co Ltd v Falk [1905] HCA 7 - HCA 1905 case summary — Zoe

[57]

ited by the immediate act of the party, that is, by really the authority to the agent, or representing to him that he Jo lave it, or by constituting that relation to which the law tigches agency; or it may be created by the representation of defendant to the plaintiff, that the party making the contract isthe agent of the defendant, or that such relation exists as to stitute him such ; and if the plaintiff really makes the contract nthe faith of the defendant's representation, the defendant is found; he is estopped from disputing the truth of it with respeet that contract; and the representation of an authority is, quoad we, precisely the same as areal authority given by the defendant the supposed agent." A little further on he says: " Upon none ofthese propositions is there, we apprehend, the slightest doubt." Clearly, therefore, by the denial of the contract all these matters re put im issue, I will again summarise what the plaintiff must we, He must prove that the person with whom he dealt was the agent of the defendant, and that, in making the contract, the agent was acting as the agent of the defendant. Let me give an illustration of the difference. It is not enough that a man should le the agent of another to enable him to make any contract on his behalf; he must make it as his agent. For example: suppose the ease of a person authorized to sign a promissory note, per proc, and he makes a promissory note in payment of his own private debt and gives it to his ownereditor. Clearly that is not within his authority. 'The promissory note is not the note of his Principal, because the person taking it knows that the agent is tot acting for his principal, but for himself. Again, the master ofa ship is agent for the shipowner, and may sign a bill of lading on behalf of the owner for goods, but if the master were to sign Fill of lading for goods not put on board the ship, he would tot be acting for the owner ; and although he had authority to bills of lading, a contract made by him in such a way is the contract of his principal. That was decided in the case of Grant v. Norway (1). In the present case the respondent, as tiff, undertook to prove that the alleged agent, in making thecontract, was acting for the appellants and on their behalf. It has never been disputed that an agent who is not acting for

[58]

his prineipal but for his own benefit is acting beyond the soy of his authority. In the present ease the appellants song give evidence under the plea of non assumpsit to prove factewhih if established to the satisfaction of the jury, would have own tus the alleged contract was not made in any sense for the appelly benefit, but for the joint benefit of the agent and the respond According to all the statements of the law of agency that ha been brought under our notice, a contract made under those examstances is not within the authority of theagent. Tn thecaued Howard v. Braithwaite (1), decided by Eldon LC, i question was as to the authority of the agent by whom theq tract had been made, The Lord Chancellor said (2): "Whe aman is a general, or a special, agent, and, admitting the di ence of the principle governing the question, how much further one can bind the principal than the other can, it is impossi supposing a special agent can bind beyond his authority, to em tend, that if he made at the time a declaration that he had authority, the principal can be bound. So in the ease of a genenl agent as an auctioneer, he may at the auction state, what limit tions are imposed on his general power of agency." That is an instance of a case where an agent tells the other party that heis acting beyond the scope of his authority. But the principle is the same. It is manifestly unimportant whether the agent tell the person with whom he is dealing that he has no authority to make the contract, or whether the circumstances under whieh he makes it are, to the knowledge of the other party, such as show that he had no such authority. In either case the agent: acting beyond the scope of his authority, and the other person knows it. The rule was put very plainly by Lord Ksher MR, in The British Mutual Banking Co. v. Charnwood Forest Rail way Co. (3). That was an action against a company to recov damages for fraudulent misrepresentations, alleged to have been made by an agent of the company when acting within the seopeat his authority. Lord Hsker said (4): "'The rule has often beet expressed in the terms, that to bind the prineipal the agent must acting 'for the benefit' of the principal. This, in my opinion,

[59]

rent to saying that he must be acting 'for' the principal, if there is authority to do the act it does not matter if the inipal is benefited by it. I know of no case where the tmployer has been held liable when his servant has made state- not for his employer, but in his own interest." 'The same principle applies here. If the agent has acted in his awn interest, he does not bind his employer. But there is an exception to this rule in the case of a person dealing bond fide with the agent without knowledge of the limitation of his suthority. 'That is based upon the principle of estoppel; but there ean be no estoppel if the person dealing with the agent knows the actual facts, and knows that the agent is acting in his own interests and not in the interests of his employer. That is 'nanifest from the case of Hambro v. Burnand (1). The head- note of that case is: " Where an agent, in contracting on behalf of his principal, has acted within the terms of a written authority ven to him by the principal, but the existence of which was tut known to the other party to the contract, the principal can- 'ut, if the other party has acted bond. fide, repudiate liability on the contract on the ground that the agent, in making it, acted in his own interests, and not in those of his principal." 'The point ofthat is that the other party was acting bond fide. The pro- sition assumes that the agent, when acting in his own interests, as acting outside his authority, but, the other person not know- ing that, the principle to which I have referred applies, and the principal is estopped from denying the authority of the agent. All that it is necessary to read from the judgment in that case is the passage quoted from the judgment of the Privy Council "ilivered by Lord MacNughten in Bryant, Powis, and Bryant, Timitedv. Quebee Bunk (2). Collins M.R. said (3): "'The passage tlerred to is as follows: ' Whenever the very act of the agent is authorized by the terms of the power, that is whenever, by com- 'paring the act done by the agent with the words of the power, the act is in itself warranted by the terms used, such act is binding tm the constituent, as to all persons dealing in good faith with the agent; such persons are not bound to inquire into facts aliwnde.

[70]

H.C. or A. was refused, is reported to have merely said (1): "Yoy JS, hhave pleaded the fraud." I cannot help thinking that unig tyr the old system of pleading, a plea setting out the fats alleys) Bros. C0. in this ease would have been held to be bad on special deny : pig, a8 being equivalent to the general issue. The learned Chie Justice has now favoured us with written reasons forthe devin Grimih CJ. He says: "It would have been most unjust to a plaintiff comin into Court to prove as a matter of fact that the contract had b entered into, and so negative a plea of non assumpsit, i defendant were at liberty to say, 'I admit that there was a contract, my plea of non assumpsit does not avail me, but I induced to enter into the contract by fraud or misrepresentation' Well, if I may respectfully say so, I agree entirely with every word of that. We had occasion during the last few weeks make use of almost the same words in reference toa ease came before us in Hobart. Nothing could be more unfair tha to charge a party with fraud wil in this case we are dealing with a specific rule of pleading. the respondent has undertaken to prove is that the agen making the contract was acting as the agent of the principal, the appellants are entitled to negative that by any evidence wi will show that he was not so acting. The fallacy of the reasoning of the learned Chief Justice is that he assumes that the appellants: say in this case, "We admit that there was in fact a contract It seems to me on these pleadings that the appellants deny th there ever was a contract made by them, and that therefore itis not a question of confession and avoidance, but of denial. Objection was taken at the trial to the admission of this evidence, and it was rejected, and the appellants' counsel then: for leave to amend by pleading the matter of fraud spill For the reasons given I do not think that the amendment ms necessary, but, if it was, I think I ought to say that, in mj opinion, it was an amendment which, following the words oft Common Law Procedure Act 1899, sec. 260, the Court required to make "for the purpose of determining the real que tion in controversy between the parties." Tt is said that ™ matter is not open to us to consider on the appeal. It is

[82]

ity ofthe certificate. Tvegard that case as in principle identical sdutho present, assuming the evidence which was tendered by the indants to be before the Court, that is to say, evidence applic- shleto the plea which they endeavoured to have placed on the file, which in my opinion is only another way of stating the general . These authorities clearly state what is the law to be applied tosuch cases, but do not specifically touch the question of pleading, yt so faras they show this, that an action brought under cireumstances is bad at the root, because the evidence fexlered in support of the plaintiff's case fails to prove the con- ret Put in another way, it may be stated thus: if there is an satire absence of authority, which is the case here, if the proof tendered is borne out by the evidence, a plea setting up such a kfenee is not in confession and avoidance, but a traverse. The le which deals with the matter is one of the rules of 'Trinity 'Term 1853, now called r. 67 of the Supreme Court. The rule jsasfollows. [His Honor read the rule and continued.) 'Then 'examples are given. Those examples refer to matters which are in their essence instances of confession and avoidance. 'The rule worides that fraud must be specially pleaded, but the matter lich must be so pleaded is matter in confession and avoidance, an] we are consequently brought back to the question which is atthe root of the matter, viz., whether the evidence applicable to thereal defence of the appellants is matter in confession and 'woidance, Now, the evidence, as it has been put before us, goes tothe question whether there was any authority in the agent to ake the contract, or at least, whether, supposing there was 'tuthority, there was a genuine exercise of that authority on Wwhalf of the appellants. It can never be that a party is pre- Yented from giving that evidence under a plea which puts in 'sue the authority of the agent to make the particular contract, mhich isa traverse, merely because there is a rule which says that matters in confession and avoidance shall be specially Headed. Iwill here read a passage from Stephen on Pleading Which deals with this subject. It is at pages 161, 162 of the 6th td,as follows : - " On the subject of the general issues, it remains tnly to remark, that other pleas are ordinarily distinguished from them by the appellation of s, ecial pleas; and when resort is had

At a glance

Court

Decision date

Before

Source

Judgment (113 paragraphs)

Cited By (6)