Sheffield Corporation v Barclay

1904. Dec. 1, 2, 8. Danckwerts, K.C., and Eldon Bankes, K.C. (H. T. Waddy with them), for the appellants. Where a transfer which on the face of it was perfectly regular was presented to the appellants, they had no option but to register it. It was a statutory duty. There was no duty on the part of the corporation to know the signatures of the parties to the instrument. A bank is bound to recognise the signature of its own customer; but there is no obligation on the part of a corporate body to verify the writing of all possible transferors and transferees. The stock was registered at the request of the respondents. A long series of authorities establishes that such a request implies an indemnity from the consequences of acceding to the request. The first case was Fletcher v. Harcot^F2 - a case of illegal imprisonment. That case was approved in Betts v. Gibbins^F3, and in Toplis v. Grane^F4 Tindal C.J. expressed the law to be that where an act has been done by the plaintiff under the express direction of the defendant which injures third parties, the plaintiff is entitled to an indemnity. Dugdale v. Lovering^F5, where the cases are cited, is to this effect. Humphrys v. Pratt^F6 in this House gave a right of indemnity to the sheriff for the wrongful seizure of goods. Richardson v. Williamson^F7 and Firbank's Executors v. Humphreys^F8 were cases in which directors were held personally liable to indemnify for loss occasioned by their implied representations. In Balkis Consolidated Co. v. Tomkinson^F9 a company was estopped from denying the ownership of shares for which it had itself issued the certificates. There Lord Field expressly approved the decision in Simm v. Anglo-American Telegraph Co.^F10 that there is no duty upon a company to inquire of a registered holder whether the signature is genuine. Simm's Case^F10 is precisely parallel with the present. Persons demanded to be registered as transferees and the company assented, but there was no estoppel against the company from denying the validity of the transfer: see per Bramwell L.J.^F11 Full effect to the doctrine of implied representation or warranty was given in Starkey v. Bank of England.^F12 The right is correlative with a duty incumbent on the person who seeks to enforce the right. This distinguishes the present appeal from Collins v. Evans^F13 and Childers v. Wooler^F14, cases of wrongful execution by the sheriff, who was innocently misled by the defendants, but had to act on his own responsibility. It was held that the sheriff was not entitled to damages against the defendants. So in Low v. Bouverie^F15, where it was held to be no duty of a trustee to answer the questions of a stranger with respect to the trust funds: see per Bowen L.J.^F16

[They also referred to Mellor v. Knox.^F17]

The appellants are not barred by the Statute of Limitations, because they could not bring their action until the forgery was established.

Haldane, K.C., and F. R. Y. Radcliffe, K.C., for the respondents. The respondents gave no warranty: they merely requested the corporation to discharge a statutory duty. No right to indemnity from damage accruing from the inaccuracy of statements honestly made has ever been established, though precisely similar events to those here must have happened many times. There was no relation of principal and agent or transferor and transferee such as existed in Starkey v. Bank of England.^F18 Simm v. Anglo-American Telegraph Co.^F19 is the only case at all like the present and is distinguishable, as it was held that the transferee under the forged transfer had not relied on any act of the company and had equal means of knowledge of the true facts: see Collins v. Evans.^F20 Here the corporation alone had any means of knowledge: they kept the register not only for the benefit of transferees, but for public purposes generally. They owe a duty to persons seeking to be registered; the respondents owed none to them beyond the production of the instrument. The law as to indemnity, express or implied, is stated by Bowen L.J. in Birmingham and District Land Co. v. London and North Western Ry. Co.^F21 The right arises “by express contract if it is given in terms by the contract between the two parties” - which is not the case here: “by implied contract if the true inference to be drawn from the facts is that the parties intended such indemnity, even if they did not express themselves to that effect, or if there is a state of circumstances to which the law attaches a legal or equitable duty to indemnify.” These conditions are not fulfilled in the present case. As to the character and effect of registration, see Blackburn J. in In re Bahia and San Francisco Ry. Co.^F22: “If they” (the company) “have been deceived and the statement is not perfectly true, they may not be guilty of negligence, but the company and no one else have power to inquire into the matter: and it was the intention of the Legislature that these certificates should be documents on which buyers might safely act.” This was followed by Hart v. Frontino, &c., Co.^F23, per Bramwell B. The same principles were enforced in Balkis Consolidated Co. v. Tomlinson^F24, per Lord Macnaghten's and Lord Field's judgments. See also In re Ottos Kopje Diamond Mines^F25; Dixon v. Kennaway & Co.^F26 If the appellants are right a trustee would be liable for ever if he forwarded a forged transfer to be registered: Low v. Bouverie.^F27

Bankes, K.C., in reply. It is not denied that it is the corporation's duty to keep a correct register and issue correct certificates. In discharge of that duty the money was paid to Honnywill. But there can be no duty to register a forged transfer. The request made by the respondents for the certificate was the foundation of the action. The corporation gave no warranty against forgery, and all the cases of warranty relied upon by the respondents were warranty of authority and are inapplicable.