Page images
[ocr errors]

general Acts, had power to accept a bill which was directed to the Mid. Wales Railway Co., and accepted in the following form :

"Accepted by order of the Board of Directors and payable at the Agra and Masterman's Bank, John Wade, Secretary.—In the course of the argument, Byles, J., said : “ All the cases where “corporations have been decided to be capable of accepting bills,

seem to resolve themselves into two classes; 1st, where express "power is given ; 2nd, where the corporation may be said to “have been incorporated for 'the very purpose ;” and in the Judgment of the Court, Erle, C. J., said, “It has been perfectly “established, that a corporation constituted for a specific purpose, “ cannot be bound by a contract which is not connected there“ with. This being a corporation constituted for making a railway cannot be bound by a bill of exchange. It is alto

gether contrary, to the principles of the law of bills of exchange, “ that the bill can be valid or not, according as the consideration “ between the original parties was good or bad, or in the case of corporations, whether or not it was accepted for the pur

poses for which the corporation was constituted. No case

can be found as to the acceptance of a bill of exchange, where “the bill has been enforced, subject to the question whether " the original consideration was valid.” Byles, J., said, “is a corporation created by statute. But even if it were, a “common law corporation, there is authority for saying it could “not accept a bill of exchange. There are only three cases in “ which it has been held that a corporation can do so. First, “the Bank of England created especially for banking purposes; "second, the East India Company whose authority is ratified by "two statutes; third, the case of the Highgate Archway Company "where express power is given.' With these exceptions, there “is no authority for saying, that a common law corporation can “accept a bill of exchange, and there is more difficulty in saying " that a statutable one can.” Keating, J., said, “It is said that “it seems absurd, that a Railway Company which as carriers “must buy, &c., must not pay by a bill of exchange. But it is “an entirely different thing to say, that a company shall be

" This


5 Taunt., 792.

If a corporation is authorized to raise money on promissory notes for a parti. cular purpose, semble, that evi

dence may be received to impeach the notes, by showing they were issued for another purpose.

“ liable to parties who supply goods, and to say that they may "be liable on negotiable instruments, which may pass into the " hands of third parties, and be void or not, according as the

purposes for which they were issued were ultra vires or not;'' “and Montague Smith, J., said, "The first object in the constitu“tion of a Railway Company is to make a railway, though it is "true, they may and practically always do become carriers. “Corporations for the purposes of trade have the power of issuing "bills of exchange, but this doctrine only applies where the pri

mary object is trade, buying and selling:" and he then goes on to quote with approbation a passage from Smith's Mercantile Law :1 A trading corporation, it has been considered, may differ from others as to its powers of contracting, and its remedies on contracts relating to the purposes for which it was formed. Thus such a corporation may, in some cases, bind itself by promissory notes and bills of exchange, and it was even held that the Bank of England, might, without deed, appoint an agent for such a purpose. But a corporation will not have these extraordinary powers, unless the nature of the business in which it is engaged, raises a necessary implication of their existence."

Unless the deed of settlement, or articles of association, provide for the giving of bills or notes, or the business to be carried on necessarily requires it, the company cannot be bound by such instruments.2

A Mining Company, a Cemetery Company, an Alkali Works Company, a Waterworks Company, have been held not authorized to negotiate negotiable instruments, their business being such as not necessarily to require it.

The expression in the section, “except in cases in which under the law for the time being in force they are so empowered,” as already remarked, shows that it was not intended by the Act, to in any way alter any privileges or rights enjoyed by corporations, and therefore where any particular charter authorizes the transacting of such business, the continuation of it will be lawful. And where there is no such express provision, the general test will be, was the entering into such a contract, a necessary or usual course, for carrying on the business of the corporation.

P. 84.

i See 9th ed., by Dowdeswell,

Peruvian Railway Co. v,

Thames & Mersey Insurance Co.,
L. R. 2 Ch. 617.
3 Broughton

Waterworks Co., 3 B. & A. 1.



The section simply lays down that any person, in which word person, any company or association, or body of individuals whether incorporated or not is included,' who is capable of contracting may make, &c., negotiable instruments, and therefore it is surmised, the strict rule of English law, that it must be a trading company, will not of necessity, be followed.

There is no distinction in the section between any of the different classes of negotiable instruments, and as a cheque is defined to be bill of exchange, the rights and liabilities of corporations to make, &c., these instruments will come within the same category, as their rights with regards to promissory notes and bills of exchange.

The Contract Act, provides that extraordinary partnerships, with limited liability, incorporated partnerships and Joint Stock Companies shall be regulated by the law for the time being in force, relating thereto. This is now Act VI of 1882. Though a corporation cannot make itself liable on an indorsement of a bill, it may make an indorsement such as will transfer the property in the bill to the indorsee. *

217. Every person capable of binding himself or of being bound, as mentioned in section twenty-six, may so bind himself or be bound by a duly authorized agent acting in his name.

A general authority to transact business and to receive and discharge debts' does not confer upon an agent the power of accepting or indorsing bills of exchange so as to bind his principal.

An authority to draw bills of exchange does not of itself import an authority to indorse.'

The first clause simply enunciates the general rule of law, that what a man may do himself, he may employ another to do for him.' Agent is defined and any one may be an agent, between


i General Clauses Act I of
1868, s. 2, cl. (3).

2 Sec. 6.
3 Sec. 266.

4 Smith v. Johnson, 3 H. &
N. 222; S. C. 27 L. J. (Ex.) 363.

5 Davidson v.

Stanley, 2 M. & Gr. 721, see infra.

6 Robinson v. Yarrow, 7 Taunt., 455. 9 Contract Act, Sec. 183. a Ib., Sec. 182.

a principal and third persons.' Therefore infants, married women,? or persons laboring under disabilities, which would debar them from contracting on their own account, may be agents. Lord Coke says, "Few persons are disabled to be private attorneys, for monks, infants, femes covert, excommunicated, villains and aliens, may be attorneys."'3

Duly authorized. The authority may be express or implied." Express.--When it is given by words spoken or written.

Implied. When it is to be inferred from the circumstances of the case.“

No particular form of appointment is necessary, to enable an agent to draw, accept or indorse bills, so as to charge his principal. He may be specially appointed for this purpose, or may derive his power from some general or implied authority. Where the authority is express, it requires very clear words to give an agent power to make, accept or indorse negotiable instruments.?

Acting in his name.—Mr. Pollock' says, that modern decisions show, that when an agent is in a position to accept bills, so as to bind his principal, the principal is liable though the agent signs, not in the principal's name but in his own, or in any other name. It is the same as if the principal had written a wrong name with his own hand. 9

Implied agency. A case recently decided in the Madras High Court, establishes, that persons other than those who are parties to a negotiable instrument, may be joined in a suit with those who are alleged to have been acting as agents. Innes, J., said, “A promissory note is evidence of a debt; and I conceive a

i Contract Act, Sec. 184.

9 Prestwick v. Marshall, 7 Bing. 565; Prince v. Brunatte, i Bing. N. C. 435; Lindus v. Bradwell, 5 C. B. 563; S. C. 17 L. J. (C. P.) 123 3 Co. Litt., 52 (a).

A Contract Act, Sec. 186, (App). Contract Act, Sec.

Sec. 187, (App).

• Byles on Bills, 13th ed., p. 32; Chitty on Bills by Russell, ith ed., p. 26; Sm. Merc. Law by Dowdeswell, 9th ed., p. 120.

7 Esdaile v. Lanauze, 1 Y. & C. 394; Attwood v. Munnings, 7 B. & C. 278; S. C. I Moo. & R. 78; Fearn v. Filica, 7 M. & Gr. 513; S. C. 14 L. J. (C. P.) 15.

Pollock's Principles of Contract, 2nd ed., p. 22.

9 Edmunds v. Bushell, L. R. 1 Q. B. 97; S. C. 35 L. J. (Q. B.) 21; see however Leadbitter v. Farrow, 5 M & S. 345; and Chitty on Bills by Russell, rith ed., p. 33.

suit on a promissory note made by a Hindoo father, would well lie against sons joined in the suit with the father, on allegation that the debt was incurred for proper family purposes ;” and Kindersley, J., said, “ There are cases in which the Hindu law allows a suit to be brought on a promissory note, against the son or representative of the maker."

Bovill, C. J., said, “The only ground upon which a man can be “ held responsible as the acceptor of a bill, signed by another “ in his name, is that he has authorized or adopted the signature

as his, or has so conducted himself as to be estopped from "disputing it.

If it were made to appear, that there “ had been a regular course of mercantile business, in which bills “had been accepted by a clerk or agent, whose signature had “ been acted upon as the signature of his principal, there would “ be evidence, and almost conclusive evidence against the latter, " that the acceptance was written by his authority.”!

A dictum of James, L. J., is reported to be as follows: “ It is the law of this country and it always has been the law of this country, that nobody is liable upon a bill of exchange, unless his name, or the name of some partnership or body of persons of which he is one, appears on the face or back of the bill.”3 But Innes, J., in the case above quoted expressly dissented from the correctness of such a proposition.*

The second Clause of the section is taken word for word from Byles on Bills5 This is an exception to the general law of contract under which an agent having authority to carry on a business has authority to do every lawful thing necessary for the purpose, or usually done in the course of conducting of such business., But an authority to draw, accept or indorse, may however be implied. Thus, where B. was the defendant's agent in L., to

carry on defendant's business there, and carried on the business under the name of B. and Co., and had authority from the defendant to draw cheques for the purposes of the business, but none to


1 Ramasawmy Mudaliyar v.

4 R. A. 20 of 1881, Chellathamal, Ř. A. 20 of 1881, 13th ed., p. 33; Davidson v. (M. H. C).

Stanley, 2 M. & Gr. 721; Hogg v. 9 Morris v. Bethell, L. R. 5 C. Snaith, i Taunt. 347.

o Contract Act, Sec. 188, (App). 3 Miles, in re, L. R., 9 Ch. at

P. at p. 50.

p. 463.

« PreviousContinue »