Chapman v Smethurst
| Jurisdiction | England & Wales |
| Date | 1909 |
| Year | 1909 |
| Court | Court of Appeal |
Promissory Note - Company - Signature by Managing Director - Personal Liability.
A promissory note was signed by the managing director of a company in the following form:- “Six months after demand I promise to pay to Mrs. M. Chapman the sum of 300l. for value received together with six per cent. interest per annum. J. H. Smethurst's Laundry and Dye Works, Limited. J. H. Smethurst, Managing Director.” In an action upon the note against the managing director:—
Held, that the note was the note of the company, and that the defendant was not personally liable.
APPEAL of the defendant from a decision of Channell J. reported ante, p. 73.
The defendant had previously to 1893 carried on a laundry business. In that year he converted the business into a company, taking himself practically the whole of the ordinary shares and being one of the two directors. The company had power under its memorandum and articles to borrow money on promissory notes. In September, 1900, the defendant and his co-director borrowed 300l. for the company from the plaintiff for the purpose of improving the company's premises, and a promissory note was given to the plaintiff which was in the following terms:—
“Six months after demand I promise to pay to Mrs. M. Chapman the sum of 300l. for value received together with six per cent. interest per annum.
“J. H. Smethurst's Laundry and Dye Works, Limited.
“J. H. Smethurst, Managing Director.”
The words “J. H. Smethurst's Laundry and Dye Works, Limited” and the words “managing director” were stamped on the note by means of rubber stamps. The body of the note and the actual signature “J. H. Smethurst” were in writing. The money borrowed was applied to the company's purposes, and the interest was from time to time paid by the company's cheques. The plaintiff sued the defendant as being personally liable upon the note. Channell J. held (see ante, p. 76) that the defendant was personally liable and gave judgment for the plaintiff. The defendant appealed.
Henlé, for the defendant.
Barnard Lailey, for the plaintiff.
[The arguments were the same as in the Court below. The following additional cases were referred to by the Court: Aggs v. NicholsonF1; Okell v. Charles.F2]
VAUGHAN WILLIAMS L.J. I am of opinion that this appeal must succeed. I think that any one reading this promissory note would at once say that it was one which made the company liable. Above the signature of the defendant is the rubber stamp signature of the company; it is the very...
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