Jones (R E.) Ltd v Waring & Gillow Ltd
| Jurisdiction | England & Wales |
| Judge | The Lord Chancellor,Lord Atkinson,Lord Shaw,Lord Sumner,Lord Carson |
| Judgment Date | 18 June 1926 |
| Court | House of Lords |
| Date | 18 June 1926 |
[1926] UKHL J0618-2
House of Lords
Lord Chancellor.
Lord Atkinson.
Lord Shaw.
Lord Sumner.
Lord Carson.
After hearing Counsel, as well on Friday the 12th, as on Monday the 15th, Tuesday the 16th, Thursday the 18th and Friday the 19th, days of February last, upon the Petition and Appeal of R. E. Jones, Limited, whose Registered Office is at the Mackworth Hotel, High Street, in the County Borough of Swansea, praying, That the matter of the Order set forth in the Schedule thereto, namely, an Order of His Majesty's Court of Appeal, of the 20th of February 1925, might be reviewed before His Majesty the King, in His Court of Parliament, and that the said Order might be reversed, varied, or altered, or that the Petitioners might have such other relief in the premises as to His Majesty the King, in His Court of Parliament, might seem meet; as also upon the printed Case of Waring and Gillow, Limited, lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:
It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of His Majesty the King assembled, That the said Order of His Majesty's Court of Appeal, of the 20th day of February 1925, complained of in the said Appeal, be, and the same is hereby, Reversed, and that the judgment of the Rt. Honourable Lord Darling, of the 11th day of December 1924, thereby set aside, be, and the same is hereby, Restored: And it is further Ordered, That the Respondents do pay, or cause to be paid, to the said Appellants the Costs incurred by them in the Court of Appeal and also the Costs incurred by them in respect of the said Appeal to this House, the amount of such last-mentioned Costs to be certified by the Clerk of the Parliaments: And it is further Ordered, That the Respondents do repay, or cause to be repaid, to the Appellants the sum of five hundred and sixty-one pounds ten shillings, being the amount paid by the Appellants to the Respondents for their Costs as certified by the Taxing Master under the said Order of the Court of Appeal: And it is also further Ordered, That the Cause be, and the same is hereby, remitted back to the King's Bench Division of the High Court of Justice, to do therein as shall be just and consistent with this Judgment.
My Lords,
This action arose out of circumstances which are fortunately unusual. A man named Bodenham obtained from the respondents, Messrs. Waring and Gillow, Limited, furniture and other goods of the value of about £13,800 upon the terms of a hire-purchase agreement dated the 29th November 1919, by which he agreed to pay £5,000 down and afterwards a monthly sum until the whole purchase money was paid. He gave his cheque for the £5,000, but it was dishonoured; and the respondents sued him upon the cheque and re-took possession of the furniture. Bodenham, being without means, called at the London office of the appellants, Messrs. R. E. Jones, Limited, and told them that he represented a firm of motor manufacturers bearing the name of International Motors who had the control of a car called the "Roma" car; he produced an illustrated prospectus and specification of the car, and offered on behalf of International Motors to appoint the appellants agents for the sale of the car in South Wales and the south-west of England. There was at that time a large demand for cars, and after a short negotiation the appellants accepted the proposal. Bodenham then put before the appellants a form of agency agreement to be signed by International Motors and the appellants, one term of the agreement being that the appellants should purchase not less than 500 "Roma" cars and should upon the execution of the agreement deposit with International Motors the sum of £5,000, being £10 per car upon the 500 cars. The appellants demurred to paying this large sum to Bodenham or to International Motors (whom they did not know), and Bodenham then told them (to quote the statement of Counsel for the plaintiffs at the trial, which was accepted by the defendants as correct) "that the people who were financing the thing and who were the principals behind him in the matter were Messrs. Waring and Gillow, the well-known Oxford Street firm," and that if the agency agreement were signed the deposit of £5,000 might be paid to them. This statement satisfied the appellants, who knew Messrs. Waring and Gillow as a firm of high standing; and they signed the agreement (which was dated the 31st December 1919) and handed to Bodenham two cheques payable to the order of the respondents, one being a cheque for £2,000 dated the 31st December 1919 and the other a cheque for £3,000 post-dated the 14th January 1920. Bodenham then called on the respondents, to whom he had previously stated that he expected large payments under some valuable contracts, and handed the two cheques to them as a payment of his deposit of £5,000 under the hire-purchase agreement. The respondents' chief accountant noticed that the cheques were signed by one director only of the appellant company, although the form of cheque was adapted for signature by two directors and the secretary, and also that one of the cheques was postdated; and in a telephone conversation between the representatives of the appellants and the respondents, in which nothing was said about the purpose of the payment, it was arranged that the two imperfect cheques should be returned to the appellants and a fresh cheque for £5,000 duly signed and posted to the respondents. This was accordingly done, and the respondents cashed the cheque for ?5,000 and on the faith of this payment restored to Bodenham the furniture which they had seized and let him have some more. On the 15th January, the appellants not having heard from Bodenham about the cars, their secretary called upon the respondents, and thereupon the whole fraud was exposed. There was no firm called International Motors and no "Roma" car; and the statements made by Bodenham to the appellants as to the car and as to the connection of the respondents with it were a tissue of lies, concocted by Bodenham with a view to getting £5,000 paid to the respondents and representing it to be the deposit under his hire-purchase agreement. The respondents then again took possession of the furniture, and Bodenham has since been sentenced to a term of imprisonment for another fraud.
On the 26th March 1920 the appellants commenced this action against the respondents, claiming repayment of the £5,000 as money had and received by the defendants for the use of the plaintiffs, or alternatively as money paid for a consideration which had failed or as money paid under a mistake of fact. They also claimed damages for negligence, but this claim has not been pressed. The action was tried by Lord Darling, sitting as an additional Judge of the King's Bench Division, who gave judgment for the plaintiffs; but on appeal to the Court of Appeal the judgment was set aside and judgment given for the defendants. The plaintiffs have now appealed to this House.
To the above statement of facts it is only necessary to add that no moral blame of any kind is to be imputed either to the appellants or to the respondents. They are both innocent parties; and the only question to be determined is one of law, namely, which of these two innocent parties is to suffer for Bodenham's fraud?
My Lords, the ground upon which the plaintiffs (the appellants) have rested their case before your Lordships is, that they are entitled to recover the ?5,000 as money paid under a mistake of fact; and I apprehend that, but for the special defences raised by the defendants, to which I will refer later, there could be no doubt as to their right to succeed on this ground. The plaintiffs were told by Bodenham that he represented a firm called International Motors which was about to be formed into a company, that the firm had control of a car called the "Roma" car which he described as an existing car, and that the defendants were financing the firm and were the principals behind him and behind International Motors in the matter. Believing these statements to be true, the plaintiffs entered into an agreement which bound them to pay a deposit of £5,000 on 500 Roma cars; and still believing them to be true, and that the respondents as the nominees of International Motors could give a good receipt for the £5,000, they paid that sum to the respondents. In fact the statements were untrue from beginning to end; and the money was, therefore, paid under a mistake of fact induced by the false statements of a third party and, apart from special circumstances, could be recovered. As to the general principle, it is sufficient to refer to the well known case of ( Kelly v. Solari 1841, 9 M. & W. 54) and to the more recent decisions in ( Colonial Bank v. Exchange Bank of Yarmouth 1885, L.R. 11 A.C. 84) and Kerrison v. Glyn Mills & Co. ( 1911, 17 Commercial Cases 41).
My Lords, it was contended on behalf of the respondents that they were "holders in due course" of the cheque for £5,000 within the meaning of section 21 (2) of the Bills of Exchange Act, 1882, and entitled on that ground to retain the proceeds of the cheque. I do not think that the expression "holder in due course" includes the original payee of a cheque. It is true that under the definition clause in the Act (section 2) the word "holder" includes the payee of a bill unless the context otherwise requires; but it appears from section 29 (1) that a "holder in due course" is a person to whom a bill has been "negotiated," and from section 31 that a bill is negotiated by being transferred from one person to another and (if payable to order) by endorsement and delivery. In view of these definitions it is difficult to see how the original payee of a cheque can be a "holder in due...
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