Starkey v Bank of England
| Jurisdiction | UK Non-devolved |
| Year | 1903 |
| Court | House of Lords |
| Date | 1903 |
Principal and Agent - Bank of England - Transfer of Stock - Power of Attorney - Implied Warranty of Authority - Innocent Misrepresentation - Forged Power - Liability of Agent.
The principle of Collen v. Wright, (
A broker applied to the Bank of England for a power of attorney for the sale of Consols believing himself to be instructed by the stockholder, and bonâ fide induced the bank to transfer the Consols to a purchaser upon a power of attorney to which the stockholder's signature was forged:—
Held, that the broker must be taken to have given an implied warranty that he had authority, and that he was therefore liable to indemnify the bank against the claim of the stockholder for restitution.
IN December, 1897, a sum of Consols was standing in the joint names of F. W. Oliver and his brother Edgar in trust for others. F. W. Oliver wrote to a firm of stockbrokers of which the appellant was a member, inclosing an application to the Bank of England to issue a power of attorney from F. W. and Edgar Oliver to the appellant and his partner to transfer the Consols, and requesting the brokers to lodge the application with the bank. The appellant having lodged it, the bank issued to the brokers a power of attorney to sell and transfer, and sent notices to F. W. and Edgar Oliver at the addresses given in the application that a power had been applied for. No notice reached Edgar Oliver. The brokers forwarded the power to F. W. Oliver, who returned it to the brokers executed by him, and purporting to be executed by Edgar. The brokers, believing that all was right, sold the Consols, and the power was lodged at the bank by the appellant, who afterwards signed the “demand to act” indorsed on the power and executed the transfer to the purchaser. A similar transaction afterwards took place with regard to a transfer of bank stock. After F. W. Oliver's death in 1899 it was discovered that the signatures of Edgar Oliver to the powers of attorney were forgeries and that he knew nothing of the transactions. Edgar Oliver having brought an action against the bank for restitution the appellant was made a third party upon a claim of indemnity by the bank. The action was tried before Kekewich J., whose judgment declared that the transfers were invalid, and ordered the bank to place equivalent amounts of Consols and bank stock in the name of Edgar Oliver in the bank books and to pay him a sum equal to the dividends which had accrued since the transfers; and also ordered the appellant to indemnify the bank by similar transfers and payment to the bank.F1 This decision was affirmed by the Court of Appeal.F2
March 6, 9. Upjohn, K.C., and Rufus Isaacs, K.C. (Stewart-Smith; K.C., and Stamp with them), for the appellant, contended that no action lies for an innocent misrepresentation, nor even for a false statement made through carelessness but in the honest belief that it was true though without reasonable ground: Derry v. PeekF3; that the exception from this absolute rule established by Collen v. WrightF4 applies only to transactions resulting in contract; that there was no decision in favour of the contrary view; that dicta of Lord Esher M.R. in Firbank's Executors v. HumphreysF5 were unsound; and that they and any similar dicta elsewhere as well as Collen v. WrightF4 might be, and if necessary should be, overruled in this House. They also carefully examined the authorities and developed the arguments which are clearly and fully set forth in the reports of the decisions...
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...had already issued all the stock it was authorised to and the stock issued to the creditor was therefore invalid. Similarly in Starkey v Bank of England [1903] AC 114 a broker who applied to the Bank for the transfer of Consols to a purchaser on the authority of a power of attorney issued b......
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