Scottish Court of Session Decisions

This was a suspension of a charge upon a bill for £88, 7s. 6d., drawn by the respondents Messrs Tillyard & Howlett, and accepted by the complainer, Mr Cameron, shoemaker, Inverness. The question involved was whether a traveller of the name of Dungan, who was employed by the respondents, was authorised as their agent to accept bills in payment of accounts due to them. It appeared that on 3d December 1869 Dungan called on Cameron, who at that time owed to the respondents two sums, one of £50 odd, and the other of £88 odd. Cameron paid the first sum by a bill in favour of Dungan, which he retired at maturity; and in payment of the second sum he granted the bill, the charge upon which was now sought to be suspended, and which was payable on 6th April 1870. On 13th March the complainer informed Dungan that it would be inconvenient to retire this last bill at maturity. He alleged that “Mr Dungan thereupon offered to renew the bill to an amount to suit the complainer's convenience, and it was arranged between him and

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the said Thomas Dungan, as the representative and agent of the respondents, that he should grant another acceptance to Mr Dungan for £58, 10s., to become due on 4th June 1870, which Mr Dungan, as agent foresaid, undertook to endorse and discount and remit towards payment of the bill for £88, 7s. 6d. The complainer accordingly granted a bill for the sum of £58, 10s. to the said Thomas Dungan, and received from him an acknowledgment in the following terms:— ‘Inverness, March 15th 1870.— Received from Mr Duncan Cameron, his acceptance for £58, 10s, due 4th June 1870, and for which I am to remit him proceeds towards payment of bill of Messrs Tillyard & Howlett, due 6th April 1870. (Signed) Thomas Dungan.’”

Dungan discounted this bill and, after obtaining payment, absconded. The complainer paid the difference between the amount of the original bill and the one granted on 15th March, and in these circumstances brought the present suspension of a charge on the original bill of 3d December for the whole debt.

The Lord Ordinary on the Bills passed the note on caution; and thereafter the Lord Ordinary ( Gifford) ordered a proof, the import of which will appear from the following interlocutor and note pronounced by his Lordship:—

“ Edinburgh, 20th December 1870.— The Lord Ordinary having heard parties' procurators, and having considered the record, proof adduced, and whole process, suspends simpliciter the charge complained of, and whole grounds and warrants thereof, and decerns: Finds the suspender entitled to expenses; and remits the account thereof, when lodged, to the auditor of Court to tax and to report.

Note.— The bill for £88, 7s. 6d. charged on is an ordinary trade bill by the suspender to the respondents for goods sold and delivered. It was granted upon 3d December 1869, and was payable on 3/6th April 1870. The amount of said bill was undoubtedly and admittedly due by the suspender to the respondents at the time the bill was granted.

The defence against payment of the bill is, that the respondents’ traveller, Thomas Dungan, agreed to give the suspender delay in payment of a part of the said bill, and with this view took from the suspender the bill No. 20 of process for £58, 10s., dated 1st March 1870, at three months, granting at same time the receipt and obligation No. 8 of process. The suspender has paid to the respondents the sum of £29, 17s. 6d., being the difference between the two bills; and he duly paid and retired, when due, the bill for £58, 10s., thus paying in full the bill charged on for £88, 7s. 6d. The suspender's plea is, that the respondents’ traveller, Thomas Dungan, had their implied authority to take the bill for £58,10s., and to give the delay sought by the suspender, and that he cannot be required to pay to the respondents the sum of £58, 10s., for this would be to pay the same sum twice over.

The respondents' case is, that their traveller, Thomas Dungan, acted without authority and beyond his powers in giving the suspender time, and taking the bill for £58, 10s., which is a bill in Dungan's own name; that the respondents are not bound thereby, but that the suspender must look to Dungan alone as an individual for relief from the bill of £58, 10s.

In the Bill Chamber the Lord Ordinary ( Lord Kinloch) refused the note of suspension, on the ground that a commercial traveller, in a position like that of Dungan, had no power to take a bill in his own name, and bind his principals by a transaction such as that relied on by the suspender. This interlocutor, however, was altered by the Second Division, and the case remitted, with instructions to pass the note upon caution, which was accordingly done.

The present Lord Ordinary understands that the Inner House Judges were of opinion that inquiry into the whole circumstances was necessary in order to determine how far the respondents were bound by the actings of their traveller. Such inquiry has now been made; and the Lord Ordinary is of opinion that, in the whole circumstances, the suspender was warranted in transacting with Thomas Dungan as he did, and in relying upon the implied authority which Dungan held from the respondents. He is therefore of opinion that the loss which has arisen from Dungan's fraud must fall on the respondents and not on the suspender.

While the Lord Ordinary, however, has formed this opinion, he feels that the case upon the evidence is a very narrow one; and it is not without difficulty and hesitation that he has pronounced the present judgment in favour of the suspender. The grounds upon which the Lord Ordinary has proceeded are shortly the following:—

(1) Thomas Dungan held no written or express authority from the respondents, and no limitation or restriction of his powers was ever intimated to the suspender. He was simply the respondents' traveller, and the nature and extent of his authority must be gathered from the character of his employment, and from his recognised actings and dealings in the course thereof. It appears from the evidence of Mr Tillyard himself, that even as between the firm and their traveller Thomas Dungan, nothing was ever said about the extent of his authority, or what he was to have power to do as their traveller. Such a case is a favourable one for the suspender, for it entitles him at least to the benefit of any doubt which might arise. The respondents themselves put their traveller, so to speak, in the position of announcing his own powers to the customers. There was no letter of introduction to the customers announcing or bearing upon its face the authority given, or the purposes for which the traveller was appointed.

(2) It is proved that the suspenders' whole dealings with the respondents were through their traveller, the said Thomas Dungan, excepting when the suspender had occasion to write the respondents direct. The whole correspondence, so far as extant, is produced in process, and it refers chiefly to the period of credit and to applications for time. All orders were given through the traveller— all payments, whether by bill or cash, were made to him; and it appears that it was only when the traveller could not himself be applied to that correspondence took place with the principals. The correspondence will be immediately adverted to.

(3) It is proved that the whole bills ever granted by the suspender for goods received from the respondents were handed by the suspender to Thomas Dungan, and were, when so signed and delivered, blank in the drawer's name. This is not seriously disputed by the respondents, and indeed it is expressly admitted by them on record (answer 2), that Dungan was entitled to take bills from the respondents' customers with the respondents' name blank as drawers.’ The suspender expressly depones that the whole bills in process, including the bill for £58, 10s., and the previous

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bill for £50, both of which now bear Thomas Dungan's name as drawer, were blank in the drawer's name when signed and delivered by the suspender. The suspender is corroborated in this, and the Lord Ordinary thinks it must be held to be a fact in the case.

It is no doubt true that the respondents qualify their admission as to the traveller's power to take bills blank in the drawer's name, with the explanation, that ‘such bills were so expressed as to exclude an individual drawer.’ The meaning of this is, that the body of the bill was expressed ‘our order,’ and not ‘my order.’ The Lord Ordinary thinks that this is very narrow ground to go upon in the absence of any express intimation to the suspender. He thinks it would be very hard to hold that the suspender, who admittedly was entitled to grant Dungan bills blank in the drawer's name, was only entitled to do so when they bore ‘our order,’ but was not entitled to do so, and did it at his own risk, when they bore ‘my order.’ If this had been expressly intimated to the suspender, of course it would have been the bargain, but the Lord Ordinary cannot hold that a condition so peculiar is to be inferred from the circumstances proved. The suspender says that as the bills were always blank in the drawer's name he merely looked to the sum and currency, and this is most natural. If it was intended that he should only sign bills with the word ‘our’ in them, surely the respondents were bound to tell him so. It is plain that an authority to Dungan to take bills blank in the respondents' name, virtually made Dungan master of the bills, for if he intended to commit a fraud he might easily fill in a firm as drawers, or add I ‘and Coy.’ to his own name.

(4) The Lord Ordinary thinks it sufficiently proved that Dungan had implied authority to give time to the suspender. Perhaps this is one of the powers which, without any proof, would be held implied in a trade like that of the respondents, at least where the traveller had power to discharge accounts and take either bills or cash. At all events very little proof will establish such a power, and there seems to be enough in the present case.

In May 1869, being long previous to the transaction in dispute, the suspender wrote the respondents for delay in payment of a bill then nearly due. Thomas Dungan came round on his ordinary journey and gave the delay asked, by taking from the suspender post-dated cheques, which were handed to the respondents and cashed when due. The respondents seem to have written the suspender before they knew of the arrangement made with Dungan complaining of the delay, but on being informed that Dungan had given the delay, they at once acquiesced and apologised for the terms of their former letter. The Lord Ordinary cannot read this otherwise than as a distinct recognition by the respondents of Dungan's power to give time. The terms of the letters between the suspender and respondents, of 8th, 29th, and 31st May, and 2d June 1869, are very material, as showing a recognition of large powers in Thomas Dungan.

Now it is very material to observe that the delay granted by Thomas Dungan, by the transaction in dispute, when he took the new bill for £58, 10s., due 4th June 1870, as in part payment of the bill for £88, 7s. 6d. which fell due 6th April 1870, was a delay granted just as that of May 1869 had been, after a direct application by letter to the respondents themselves. The letter asking delay is dated 23d February 1870. To this letter no written answer was returned, for the respondents' allegation of an answer in statement 5 has not been proved. The answer was given just as in May 1869 by Dungan coming personally, and giving the delay, though not to the extent sought. If therefore the bill for £58, 10s. had been filled in with the respondents' own name as drawers, or even if it had been blank in the drawers’ name, but with the word ‘our’ in it, the respondents could scarcely have maintained that they were not bound by the transaction, and not bound to recognise the delay so agreed to by Dungan.

(5.) This brings the case to the real point of any difficulty. The bill of £58, 10s. was filled in by Dungan in his own name, discounted by him, and the proceeds embezzled and applied for his own use.

The Lord Ordinary has already remarked that a power to Dungan to take bills blank in the drawer's name (and this power is admitted), implied great confidence in Dungan, and even without any farther proof, he thinks it would be very strict to hold that he had only power to take such bills when the word ‘our’ was in them, but not when the word ‘my’ was used.

In point of fact, however, it seems to be proved that previous to the transaction in dispute, Dungan had taken from the suspender a bill for a former account in his own name, drawn with the word ‘my’ in it, and that the granting of this bill came or ought to have come to the knowledge of the respondents. The bill now referred to is No. 6 of process, for £50, dated 3d Dec. 1869, and was duly retired by the suspender. Is is quite true that in Dungan's weekly statement this bill is not entered, but the account is represented as having been settled in cash, and only one bill by the suspender, being that for £88, 7s. Gd., was sent on by Dungan. But then, of the same date with that weekly statement, the suspender wrote the respondents a letter, clearly implying that he had granted two bills to Duggan and not one merely, as reported by Dungan; and this might have put the respondents on their inquiry. Not only so, but on 23d Feb. 1870, a fortnight before the £50 bill became due, the suspender wrote the respondents, asking the respondents for delay in payment of this very bill of £50 which Dungan had drawn and discounted in his own name. Surely this was enough to put the respondents upon their inquiry. At all events the suspender could hardly be called on to do more. As already observed, the Lord Ordinary holds it proved that no answer was sent by the respondents to this letter.

(6) Taking into view the whole circumstances, the Lord Ordinary thinks there was enough to warrant the suspender in giving to Dungan, as the respondents' traveller, the bill for £58, 10s., blank in the drawer's name; and that this bill having been duly retired, the respondents are bound to give credit therefor as to account of the bill charged on. It was maintained that the terms of Dungan's acknowledgment of 15th March 1870 were such as to show that the transaction was an individual transaction of Thomas Dungan, and not one in which he represented himself as acting for his constituents. The Lord Ordinary cannot so read the document. No doubt it bears Dungan's individual signature, but it refers to a trade-bill due to the respondents; and it appears a very

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violent construction to hold that it was written in any other character than as the respondents' traveller.

(7) The Lord Ordinary has only further to add, that when a loss has arisen through the fraud of a third party, and the question is, which of two innocent parties are to suffer thereby, there is an equitable principle which, other circumstances being equal, lays the loss on the party who appointed the wrong-doer, or placed him in a position which enabled him to commit the fraud. Dungan was selected and appointed, not by the suspender, but by the respondents. They were satisfied that he was honest and trustworthy, and they reposed in him certainly a large amount of confidence. They have been deceived. If they can show that he exceeded his actual and presumed powers, and that the suspender should have known this, they may succeed in making the suspender bear the loss. But if the question is doubtful; if the respondents have left it ambiguous; or if in the circumstances the suspender was fairly excusable in doing what he did, it is more equitable that the respondents should suffer than that the loss should he thrown on the suspender, who had nothing to do with Dungaree appointment, and who was not called upon to inquire regarding his character or honesty.”

The respondents reclaimed.

Gordon and Thoms for them.

Millar, Q.C., and Rhind, in answer.

At advising—