Reckitt v Barnett, Pembroke and Slater
| Jurisdiction | UK Non-devolved |
| Judge | Lord Chancellor,Viscount Dunedin,Viscount Sumner,Lord Carson,Lord Warrington of Clyffe |
| Judgment Date | 12 November 1928 |
| Judgment citation (vLex) | [1928] UKHL J1112-2 |
| Date | 12 November 1928 |
| Court | House of Lords |
[1928] UKHL J1112-2
Lord Chancellor.
Viscount Dunedin.
Viscount Sumner.
Lord Carson.
Lord Warrington of Clyffe.
House of Lords
After hearing Counsel, as well on Monday the 15th, as on Tuesday the 16th, days of October last, upon the Petition and Appeal of Sir Harold James Reckitt, Baronet, of No. 30, Rutland Court, Knightsbridge, in the County of London, 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 19th of March 1928, 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 Petitioner 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 Barnett, Pembroke and Slater, 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 19th day of March 1928, complained of in the said Appeal, be, and the same is hereby, Reversed, and that the Judgment of the Honourable Mr. Justice Rowlatt, of the 11th day of November 1927, 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 Appellant the Costs incurred by him in the Court of Appeal, and also the Costs incurred by him, 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 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 is one of that unfortunate class of cases in which the Courts have to decide which of two innocent parties is to suffer for the fraud of a third party.
For many years past the Appellant, Sir Harold Reckitt, appears to have known and trusted a solicitor, originally known as Woodhouse, but who later succeeded to the title of Lord Terrington, by which name I shall refer to him in this Judgment. In the year 1915 the Appellant was going to France to assist in Red Cross work and gave to Lord Terrington a Power of Attorney dated the 9th February, 1915, to enable the latter to manage the Appellant's affairs while he was in France. Lord Terrington lodged this Power of Attorney with the Appellant's bank in order that he might draw cheques upon the Appellant's account, but upon the 31st July, 1915, the Bank wrote to Lord Terrington pointing out that the Power of Attorney did not in their view authorise the drawing of such cheques and suggesting that the Appellant should write to them stating that he wished the Power to cover the drawing of cheques upon them by Lord Terrington "without restriction." In response to that letter Lord Terrington obtained for the Bank a letter addressed to the Bank and signed by the Appellant in these terms:—
"Dear Sirs,
Referring to the Power of Attorney which I have given in favour of Mr. H. James Selborne Woodhouse and which you have inspected, please note that I wish the Power to cover the drawing of cheques upon you by Mr. Woodhouse without restriction."
This letter was dated the 17th August, 1915, and ever since that date it has remained in the possession of the Bank. In December, 1925, the Appellant went to India and again desired Lord Terrington to act as his Attorney. A further Power was prepared and executed, but apparently was never used and it is common ground between the parties that this case must be decided on the footing that it is governed by the authority conferred by the documents of 1915.
The Respondents are a firm of motor-car dealers from whom Lord Terrington had bought a Daimler motor-car some time before the transaction giving rise to the present dispute, and with whom he had an account for garage and for incidental supplies for that car. The Respondents had never dealt with the Appellant and knew nothing of him.
On the 4th January, 1926, an arrangement was made between the Respondents and Lord Terrington for the purchase by the latter of a Rolls-Royce car on hire-purchase terms under which the Respondents took the Daimler car in part payment of the purchase price, and Lord Terrington agreed to pay £350 down, and thereafter to pay £2,000 by monthly instalments of £175 each. By the agreement Lord Terrington undertook to retain the car in his own possession; it was provided that if Lord Terrington made default in any monthly payment, or if he died, or had a Receiving Order made against him, or made any arrangement or composition with his creditors, the Respondents should have the right to re-take possession of the car; when all the instalments had been paid Lord Terrington had the option of purchasing the car for 10s., and it was expressly provided that the agreement was personal to Lord Terrington and not assignable by him. The agreement was obviously drawn up on the footing that Lord Terrington and no one else was interested in the transaction, and it is common ground that the transaction was one made by Lord Terrington personally as principal, and that the Respondents always so regarded it.
On the 5th February, 1926, Lord Terrington drew and issued to the Respondents a cheque for £200, of which £175 was the first monthly instalment of hire under the agreement and £25 was on account of the running account for garage and petrol for the Daimler car for the preceding eight months. The cheque was made payable to the Respondents or Order and was signed "Sir Harold J. Reckitt, Bart., by Terrington his Attorney." All the signature except the word "Terrington" was affixed by a rubber stamp, the word "Terrington" being written in ink by Lord Terrington. The cheque was endorsed and paid in by the Respondents to their own banking account and was duly honoured by the Appellant's Bank. The Respondents made no enquiry as to the authority of Lord Terrington to draw a cheque on the Appellant's banking account. They appear not to have noticed the rubber stamp impress and to have treated the cheque as if drawn by Lord Terrington on his own account.
On the 9th June, 1926, the Respondents agreed with Lord Terrington to cancel the hire purchase agreement and to take back the Rolls-Royce car, and to pay him £100; and this transaction was duly carried out on the same day. Early in July the Appellant ascertained that frauds had been committed by Lord Terrington; and this action was commenced to recover from the Respondents the £200 which they had received as the proceeds of the cheque.
The Action was tried before Mr. Justice Rowlatt and the Appellant recovered judgment, but the Court of Appeal by a majority (Mr. Justice Russell, as he then was, dissenting) reversed the decision of the Trial Judge; from that reversal this Appeal is brought.
It is common ground that nothing turns upon the fact that the cheque was a negotiable instrument, since the Respondents were the original payees. It is common ground also that the fact that the Respondents made no enquiries as to Lord Terrington's authority and that they overlooked the form of the signature makes no difference in their position; they had on the cheque plain notice that they were receiving the Appellant's money, and they can be in no better position than if they had then asked to see and had been shown the authority under which Lord Terrington was acting. Nor is there in this case any question of ostensible authority or any holding out by the Appellant of Lord Terrington, since the Respondents do not profess to have acted upon any such holding out. It is a simple case of receipt by the Respondents of the Appellant's money with the knowledge that it was the Appellant's money in payment of Lord Terrington's debt. In order to succeed the Respondents must show that Lord Terrington had in fact authority to use the Appellant's money in payment of his, Lord Terrington's, private debts.
I assume for the purpose of my judgment that the letter of the 17th August must be treated as a general extension of the Power of Attorney and not merely as an instruction to the Bank. The question then is whether the Power of Attorney plus the letter didgive Lord Terrington authority to use the Appellant's money for the purpose of paying his private debts. This is purely a question of construction. It is plain that the letter has to be read in conjunction with the Power of Attorney to which it expressly refers; when so read it seems to me that the whole authority is expressly limited to acting for the Appellant and in the management of his affairs; and I cannot construe the addition of the words "without restriction" as entitling Lord Terrington when he is drawing cheques on the Appellant's account to do so for any other purpose except for the discharge of the Appellant's debts or in the conduct of his business.
My Lords, reliance was placed before your Lordships on the case of ( Hambro v. Burnand 1904, 2 K.B., page 10). In my judgment that case is plainly distinguishable. In that case Mr. Burnand had been given a Power of Attorney to enable him to underwrite at Lloyd's certain risks for his principals; it was expressly found that the risks which he did in fact underwrite were those which it was in the ordinary course of the business of an underwriter at Lloyd's to underwrite. Burnand in fact underwrote the particular risks in question in the action in order to assist a Company in which he was financially interested. In these circumstances the Court of Appeal held that the act...
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