Ruben and Ladenburg v Great Fingall Consolidated
| Jurisdiction | UK Non-devolved |
| Year | 1906 |
| Court | House of Lords |
| Date | 1906 |
Company - Share Certificate fraudulently issued by Secretary - Forgery - Master and Servant - Scope of Employment - Estoppel.
The appellants advanced in good faith a sum of money to the secretary of the respondent company for his own purposes on the security of a share certificate of the company issued to them by the secretary certifying that the appellants were registered in the company's register of shareholders as transferees of chares. This certificate was, in point of form, in accordance with the company's articles of association, inasmuch as it bore the seal of the company, and appeared to be signed by two of the directors and counter-signed by the secretary. The seal of the company was, however, affixed to it by the secretary fraudulently and without authority, and the signatures of the two directors were forged by him. In an action against the company for damages for refusing to register the appellants as owners of the shares:—
Held that, in the absence of any evidence that the company ever held out the secretary as having authority in this behalf to do anything more than the mere ministerial act of delivering share certificates, when duly made, to the owners of shares, the company were not estopped by the forged certificate from disputing the claim of the appellants, or responsible to them for the wrongful action of their secretary.
THE facts of this appeal are stated in the judgment of Lord Loreburn L.C.
June 14, 15, 18. Isaacs, K.C., and Danckwerts, K.C. (J. D. Crawford with them), for the appellants. The certificate was perfectly regular in form. It was issued by the secretary, whose signature it bore, and there were also the apparent signatures of two directors. There arises from this transaction either a warranty of title or an estoppel against the company. On either alternative the appellants had a good cause of action against the respondents. The principle of In re Bahia and San Francisco Ry. Co.F1 applies. Here, as there, a statement was made on the part of the company by the proper authority and intended to be acted upon. This was held to be an estoppel against the company: see per Cockburn C.J. at p. 594; and Blackburn J. at p. 597. That decision was expressly approved by Lord Herschell in Balkis Consolidated Co. v. Tomkinson.F2 Shaw v. Port Philip Gold Mining Co.F3 was precisely this case — the genuine signature of the secretary and a forged signature of a director. Stephen J. said the secretary's “acts amount to a warranty by them (the company) of the genuineness of the certificate issued by him.” That case was cited without disapproval in Balkis Consolidated Co. v. Tomkinson.F2 The principle expressed by Willes J. in Barwick v. English Joint Stock BankF4 is applicable to the present case. “The general rule,” he said, “is that the master is answerable for every such wrong of the servant or agent as is committed in the course of the service, and for the master's benefit, though no express command or privity of the master be proved.” The learned judge gives a number of illustrations where “the master has not authorized the particular act,” but is still liable. The words “for the master's benefit” do not mean that the master necessarily is benefited, but that the act is one of the class which the servant has to do. Thus a railway servant might give a man into custody because he disliked, not because he suspected him. The company would still be liable to an action for false imprisonment. Willes J. also said: “No sensible distinction can be drawn between the case of fraud and any other wrong.” This doctrine was expressly approved by Lord Selborne in Houldsworth v. City of Glasgow BankF5, and in Mackay v. Commercial Bank of New Brunswick.F6 British Mutual Banking Co. v. Charnwood Forest Ry. Co.F7 was cited against the appellants. In that case a company was held not to be liable for fraudulent statements made by its secretary for his own ends. But there the secretary purported to act beyond the powers of the company itself; and Bowen L.J. asked: “How can a company be made liable for a fraudulent answer given by their officer for his own private ends, by which they could not have been bound if they had actually authorized him to make it and promised to be bound by it?”
[LORD DAVEY referred to Limpus v. London General Omnibus Co.F8]
That was a case of direct disobedience to the master's orders. The Charnwood Forest CaseF9 is distinguishable; but Bowen L.J.'s language, if applied without qualification, would make it unsafe even to deal with an agent, and in Barwicks's CaseF10, which he proposed to follow, the master is said to be bound even by the fraud of his servant. In Hambro v. BurnandF11, in the Court of Appeal, the principal was held responsible for the act of his agent, though the latter acted in his own interest and not in that of his principal. In Dyer v. MundayF12 the master was held by the Court of Appeal liable to damages for an assault on the plaintiff by his servant, though it was a criminal act for which the servant had been convicted and fined.
What was done here amounted to a representation of the genuineness of the documents, and the case is covered by Starkey v. Bank of EnglandF13: see also County of Gloucester Bank v. Rudry Merthyr Steam and House Coal Colliery Co.F14 and Duck v. Tower Galvanizing Co.F15...
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...Ltd v Cannon film Sales Ltd 1987 BCLC 540 Royal British Bank v Turquand (1856) 6 E&B 327 Ruben v Great Fingall Consoli-dated 1906 AC 439 (HL)Rumball v Metropolitan Bank 2 QBD 194S v De Jager 1965 2 SA 616 A S v Makwanyane 1995 (3) SA 391 (CC); 1995 (6) BCLR (CC)S v Manamela 2000 3 SA 1 CCS......
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