Strachan v Blackbeard and Son

• Jurisdiction: South Africa
• Judge: Lord De Villiers CJ, Innes J and Solomon J
• Judgment Date: 16 November 1910
• Citation: 1910 AD 282
• Court: Appellate Division

Lord De Villiers, C.J.:

This is an appeal against a judgment of the Circuit Court for Kokstad, in an action to recover the sum of £50 alleged to have been advanced by the plaintiffs to one McLeod, as the agent of the defendant. The defence was that McLeod had no authority to borrow money in the name and on behalf of the defendant. The Court held that, although McLeod had no express authority, the defendant had by his conduct previous to the advance held out one McGregor as his agent, to obtain advances on his behalf, and that, as the advances now in question had been so made to McGregor, the defendant was liable to repay the amount to the plaintiffs. Judgment was accordingly given for the plaintiffs, and against that judgment the defendant now appeals.

The defendant was a native agent, who had engaged McLeod as runner to recruit natives for work in the Johannesburg mines. The agreement was that the defendant was to advance all the money required by McLeod to meet expenses connected with the recruiting, and McLeod was not to get money from anyone else. As to McGregor, he had not been employed by the defendant, but was engaged as sub-agent by McLeod, and the Court below found that the defendant knew of McGregor's appointment, and must be taken to have approved of it. The Court further held that the employment of McLeod did not ostensibly invest him with the power of borrowing money on behalf of his principal, but that, as the defendant had by his conduct held out McGregor as his agent, with such power, he was liable to the lenders just as though he had originally given McLeod a power of substitution. The question, then, to be decided is: whether the evidence justifies the finding that before the advances were made the plaintiff had been led by the defendant's

Lord De Villiers, C.J.

conduct to believe that McGregor was authorised to borrow money on the defendant's behalf. I had occasion in the case of Faure v Louw (1 C.S.C., p. 3) to review the authorities bearing, upon the question now under consideration, and I will not repeat the observations which I then made. In that case the general agent of the defendant had for years been in the habit of signing and endorsing bills for the defendant for business purposes, and it was held that, as the defendant's acquiescence in this course of dealing had led the plaintiff to believe that the agent had the requisite authority, the plaintiff, as a bona fide holder of bills so signed, was entitled to recover thereon. The agent had, to the knowledge of the then defendant, signed the bills on behalf of the defendant, who was consequently estopped when sued by a person who had been led by the defendant's conduct to believe that the requisite authority existed, from denying that the authority did in fact exist. It is impossible, however, to apply the doctrine of estoppel to a case in which an agent in borrowing money has never purported to act on behalf of his principal. If the principal has paid debts incurred by an agent in the agent's own name, he does not thereby lead anyone to suppose that the agent has authority to borrow money in the name and on behalf of the principal. The learned Judge referred to certain remarks made by me in Liquidators Union Bank v Beit (9 Juta, 123), in the course of which I observed that "an authority to make promissory notes, or accept bills, or sign guarantees, or do any other act on behalf of another person may often be implied from the conduct of a person in whose name or on whose behalf the act purported to be done," but where the act does not purport to he done in the name and on behalf of the principal, no such authority can be implied. In the present case the evidence wholly fails to satisfy me that, before the advances now in question were made, either McLeod or McGregor ever led the plaintiffs to believe that the defendant would be personally liable for the amounts borrowed by McGregor., The advances made to McLeod and McGregor appear in their names in the ledger kept by the plaintiffs, and not in the name of the defendant. A rough counter book was put

Lord De Villiers, C.J.

in by consent of parties, in which certain advances made to McGregor appear as being made for the defendant, but, in the final entry, which fixes the sum of £50 as being due, McLeod is entered as the sole, debtor. In support, however, of the view that the defendant had held McGregor out as his agent to borrow the money, the learned Judge refers to a letter written by McLeod to the defendant on May 10, 1909, and the defendant's answer thereto. In the former letter McLeod says: "I asked you to place £100 to McGregor's, and £100 to Swan's credit. Up to Saturday these amounts have not arrived. Is it already sent?, I want, you to send each of I them £100, as I find that they had already borrowed from traders nearly that amount to make advances. Kindly advise when this is done." The answer was as follows: "On the 7th inst. £100 were sent to Blackbeard and Son for McGregor, and £100 to Standard Bank, St. John's, for credit of J. C. Swan, and both amounts debited to you. And, again, as requested in yours of the 10th, I have sent to-day £100 for Swan's credit at St. John's, but, as your instructions re £100 for McGregor are vague, I am enclosing the cheque direct to you, payable to yourself, and you can then endorse it to whom you please." That correspondence, even if it had been shown to the plaintiffs, could not have led them into the belief that McGregor was authorised to borrow money in the name, and on behalf of, the defendant, but there is nothing to show that its contents were made known to the plaintiffs. The only circumstance from which such an authority could possibly have been inferred is the fact that the defendant had, on March 17, paid £100 to the credit of the plaintiffs, and on May 7, £100. The credit slips given by the Standard Bank on these dates show that the amounts had been paid by the defendant into the bank to the credit of the...