Mayor, Company, of, Borough of Salford v Lever
| Jurisdiction | England & Wales |
| Date | 1890 |
| Year | 1890 |
| Court | Court of Appeal |
Principal and Agent - Fraud - Bribe paid to Agent by Third Person contracting to supply Goods to Principal - Amount of Bribe added to Price of Goods - Remedies of Principal against Agent and Third Person.
Where an agent, who has been bribed so to do, induces his principal to enter into a contract with the person who has paid the bribe, and the contract is disadvantageous to the principal, the principal has two distinct and cumulative remedies: he may recover from the agent the amount of the bribe which he has received, and he may also recover from the agent and the person who has paid the bribe, jointly or severally, damages for any loss which he has sustained by reason of his having entered into the contract, without allowing any deduction in respect of what he has recovered from the agent under the former head, and it is immaterial whether the principal sues the agent or the third person first.
The plaintiffs were proprietors of gasworks, and it was the duty of their manager to examine tenders for the supply of coal and advise the plaintiffs thereon. The defendant, a coal merchant, submitted to the plaintiffs tenders for the supply of coal. Before submitting the tenders, and with the view of procuring the manager's recommendation of them, the defendant corruptly agreed to pay to the manager a secret commission or bribe of 1s. per ton, and, in order to recoup himself for the commission so promised, he inserted in the tenders prices which were in excess by 1s. per ton of the prices which he would otherwise have asked. The manager, being induced thereto by the promise of the commission, advised the plaintiffs to accept the defendant's tenders, which they accordingly did. The defendant delivered the coals to the plaintiffs, and was paid the prices named in the tenders. He also paid to the manager a considerable portion of the commission which he had promised. The manager received similar bribes from various other contractors, who in like manner obtained from the plaintiffs prices in excess of what they would otherwise have asked. The plaintiffs, upon discovery of the frauds, entered into an agreement with their manager that he should assist them, by giving the necessary information and evidence, to bring actions against the contractors (including the defendant) for the recovery of damages for the loss sustained by the plaintiffs in consequence of the frauds, that he should guarantee that the damages recovered in such actions should amount to a certain specified sum, that by way of security for the due performance of the guarantee he should deposit in a certain bank securities to the value of the sum guaranteed, that any sums recovered in such actions should be taken in part satisfaction of the guarantee, and that upon receipt by the plaintiffs of the full guaranteed sum they should give the manager a complete discharge. The manager duly deposited the securities in the bank. After the agreement had been entered into and the securities deposited, the plaintiffs brought an action against the defendant to recover the additional 1s. per ton paid to him for the coal supplied. It was contended by the defendant that the plaintiffs' cause of action was for a tort in respect of which the defendant and the manager were joint wrongdoers, and that the agreement between the plaintiffs and the manager, coupled with the deposit of the securities by the latter, amounted to a discharge of the manager by way of accord and satisfaction, and consequently operated to discharge the defendant also:—
Held, by the Court of Appeal (affirming the judgment of the Queen's Bench Division), that the facts relied on afforded no defence to the action.
APPEAL by the defendant against the refusal by the Queen's Bench Division (Denman, Charles, and Vaughan Williams, JJ.), of his motion for a new trial.F1
The plaintiffs were the proprietors of the gasworks in their borough. From 1875 to 1887 one Samuel Hunter was employed by them as the manager of their gasworks, and in that capacity it was his duty to examine tenders for the supply of coals for the purpose of the gasworks and to report and advise the plaintiffs thereon. The defendant, who was a coal merchant, submitted to the plaintiffs between the years 1875 and 1878 several tenders for the supply of coal. Before submitting the tenders, and with the view of inducing Hunter to advise the plaintiffs to accept them, the defendant corruptly agreed to pay to Hunter a secret commission or bribe of 1s. per ton on the quantity of coal tendered for, and, in order to recoup himself for the commission so promised to Hunter, he inserted in the tenders prices which were in excess of the prices at which he would otherwise have tendered by 1s. per ton. Thereupon, Hunter being induced thereto by the promise of the commission, advised the plaintiffs to accept the defendant's tenders, which they accordingly did. The coal was delivered to the plaintiffs under the contracts so obtained, and the total prices paid by the plaintiffs to the defendant under these contracts exceeded by a sum of 2329l. the prices which (but for the payment of the commission) the defendant would have received. Of the commission promised to Hunter the defendant paid him altogether about 1500l. During his tenure of office as the plaintiffs' manager Hunter received similar bribes from many other coal merchants, as well as the defendant, and those contractors, for the purpose of covering those bribes, inserted in their tenders and obtained from the plaintiffs prices in excess (by the amount of the bribes) of the prices which they would otherwise have received; but there was no evidence that the total amounts of the bribes paid to Hunter, or of the excess prices obtained by the various contractors (including the defendant), exceeded the sum of 10,000l.
On August 6, 1889, the plaintiffs, who had in the meantime discovered the frauds which had been committed upon them, and had commenced an action against Hunter in the Chancery Division (to which J. G. Hawkins, one of the contractors, was also made a defendant), to recover from him the amount of the bribes which he had received, entered into a written agreement with Hunter, the provisions of which are fully stated in the former report.F2 This agreement was not under the seal of the corporation.
The effect of the agreement was shortly this — that Hunter should assist the plaintiffs, by giving them the necessary information and evidence, to bring actions against the contractors (including the present defendant) to recover the bribes paid to him, or promised to him by the contractors. The actions were to be brought at his instance, and he was to pay the costs of them. Hunter was to guarantee that the sums recovered in those actions should amount in the whole to 10,000l., and, as a security for the performance of the guarantee, he was to deposit in a bank in joint names securities to the value of 10,000l., and any sums recovered in the actions were to be taken in part satisfaction of the guarantee. At any time prior to December 31, 1889, the plaintiffs were at Hunter's request to discontinue the actions against the contractors, and thereupon the sum of 10,000l. was to be payable to the plaintiffs, together with such costs of the actions as they could not recover from any other person. On the receipt by the corporation of the 10,000l., together with such costs and expenses, the corporation were to give Hunter a full and complete discharge, and in the meantime the action which they had commenced in the Chancery Division was to be stayed.
In pursuance of this agreement, Hunter lodged with the bank securities to the value of 10,000l. The corporation brought actions against some...
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