Wolpert v Uitzigt Properties (Pty) Ltd and Others

• Jurisdiction: South Africa
• Judge: Claassen J
• Judgment Date: 16 February 1959
• Court: Witwatersrand Local Division

Claassen, J.:

This is an action for provisional sentence on four promissory notes, each for a sum of £1,500. There was no opposition by the second and third defendants and when the matter came to Court on the C 18th November, 1958, STEYN, A.J., granted judgment against these two defendants. The case against the first defendant was postponed for argument until the 6th January, 1959.

At the time the promissory notes were made the second and third defendants were directors of the first defendant, but had ceased to be such by the time this action was instituted.

D Each note was made payable to the third defendant and endorsed by him. The second defendant also endorsed each note as surety and co-principal debtor. The maker of each note purports to be the first defendant and the signature that appears on the notes, is the rubber stamp of the first defendant namely 'Uitzigt Properties (Pty.) Ltd.' and immediately E below that 'T. McAlpine' and below that name the word 'Director'.

The notes were discounted by the plaintiff through the instrumentality of his duly authorised agent, one Jankelson who made an affidavit in these proceedings. It seems probable that the moneys paid by the plaintiff were advanced as loans.

F On behalf of the first defendant affidavits were filed by W. Lowenthal (a present director of the first defendant) and his son Norman Lowenthal who has been an alternate director to his father since the 24th September, 1958.

On behalf of the plaintiff affidavits were filed by the said Jankelson G and T. McAlpine. The notes became payable. They were duly presented but dishonoured.

The minute book of the first defendant and its articles of association were produced at the hearing and form part of the record of the proceedings.

H The main defence to the action is that the notes were not signed by the first defendant.

It appears from the affidavit of N. Lowenthal (confirmed by the articles) that art. 22 reads:

'A resolution in writing signed by all directors shall be as valid and effectual as if it had been passed at a meeting of directors duly called and constituted.'

In his affidavit Norman Lowenthal includes copies of three resolutions (annexures 'C', 'D' and 'F' taken from the minute book) which deal with the authority of the directors. According to Norman

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Lowenthal all these resolutions were signed pursuant to art. 22, but he alleges that they are invalid because not one of them has been signed by all the directors, as required by the article in question.

It was common cause that if these resolutions were in fact signed in pursuance of art. 22, then each one was invalid. If however they were passed at meetings of directors duly called, then they were binding resolutions.

A The resolution relied on by the plaintiff is annexure 'D' and it reads as follows:

'Resolved

That Eric John Hepker and/or Tom McAlpine and/or William Lowenthal, be, and they are hereby authorised and empowered, to sign all bills, cheques B and promissory notes, and other negotiable documents, for and on behalf of this company and further that the above signatories sign for and on behalf of the Company, as sureties and co-principal debtors, and it was further resolved that the above is to be retrospective, as from 1st November, 1955.

Dated at Johannesburg this 2nd day of May 1956.

Signed - E. J. Hepker

Signed - T. McAlpine.'

C It will be seen that only two out of three directors signed this resolution. If this resolution had been passed at a duly held meeting of the board of directors, then there could have been no question but that judgment must be recorded against the first defendant.

D In his affidavit McAlpine states that although the resolutions referred to were drawn in the form of directors' resolutions for signature nevertheless they were passed at properly constituted board meetings and they were not resolutions in terms of art. 22.

Can this be accepted as a fact established on a balance of probabilities? Where the alleged maker's signature is denied the onus E rests on the plaintiff to prove that fact on a balance of probabilities (Inglestone v Pereira, 1939 W.L.D. 55).

The following factors militate against the plaintiff:

(i)

N. Lowenthal, was an alternate director to his father since 24th September, 1958, but he had prior thereto assisted his father in F operating various company affairs but he did not say for how long. He also says he had been personally present at meetings held from about June to September, 1957, between Jankelson, Hepker and McAlpine. With that background he alleges that these resolutions were directors' resolutions in terms of art. 22, but that they had not been signed by all the directors. Mr. Morris, G for the plaintiff, has argued that Mr. Lowenthal has no personal knowledge and that his statement is merely an inference. Neither Lowenthal nor McAlpine has been cross-examined. It can therefore not be said that on a balance of probability McAlpine's version is to be accepted.

(ii)

In form the resolutions appear to be directors' resolutions not passed at a board meeting.

(iii)

H On paging through the minute book one finds that these resolutions are preceded by a list of minutes of meetings of directors. These are headed: 'Minutes of a meeting of the board of directors . . .' Then in the next line one finds the word 'present' followed by the names of the directors present.

The resolutions in question are not so headed, nor is there recorded

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the names of the directors who were present. One would be justified in concluding that in the minute book there is a difference between the recording of minutes of a meeting and of a directors' resolution in terms of art. 22. For these reasons I am unable to find on a balance of A probabilities that annexure 'D' was duly passed at a meeting of directors. I, therefore, cannot find that McAlpine, as a single director, was duly authorised to make promissory notes on behalf of the first defendant.

In the affidavit of Jankelson it was contended that the first defendant was estopped from denying that McAlpine had been given due authority. This was based on two statements:

(a) '. . . the said McAlpine was allowed to utilise the rubber stamp of defendant's Company . . .' B

No facts or circumstances were set out showing that the first defendant had 'allowed' McAlpine to utilise the stamp mentioned. McAlpine who must C have a knowledge of all the relevant facts said nothing about it.

(b) 'Promissory notes which I had previously discounted for defendant Company had been signed either by the said McAlpine alone, or by the said McAlpine and the said Hepker together on behalf of the defendant Company.'

D There was a dispute between counsel as to the meaning of this statement, but assuming in favour of the plaintiff that his statement meant that Jankelson had discounted promissory notes some of which had been signed by McAlpine alone, then one finds that there is no indication what number had been signed in this way, nor in what amounts. Again one would E have expected McAlpine to have dealt with this question in his affidavit. Again he was silent. The other director W. Lowenthal stated in his affidavit:

'I have personally searched the Company's files and records, where paid promissory notes issued or endorsed by the Company are usually kept, and F have not been able to find any promissory note, having been paid, issued to the said Jankelson or to the plaintiff or to any transaction relating to either the said Jankelson or the plaintiff which bears the signature of McAlpine alone.'

The file was produced. No such promissory note could be found.

I do not wish to refer to all the arguments. In my opinion Mr. Festenstein, for the first defendant dealt successfully with Mr. G Jankelson's allegations and Mr. Morris did not rely on estoppel but on actual authority.

I cannot therefore find that the first defendant is estopped as was alleged.

H I must now deal with the most difficult aspect of the case, the legal arguments based on the following statements in Jankelson's affidavit. He said:

'I have no knowledge, nor has the plaintiff any such knowledge of the terms of the articles of association of the defendant Company and neither of us has any knowledge of the resolutions of the defendant Company . . .

I have no knowledge of the internal workings of the defendant Company, but have at all times assumed that everything had been properly

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done to authorise the said McAlpine to sign promissory notes on its behalf.'

Mr. Morris has contended that the plaintiff is entitled to judgment because this case falls within the rule of The Royal British Bank v Turquand (1856) 6 E & B 327, which has been approved in The A Mineworkers' Union v Prinsloo, 1948 (3) SA 831 (AD). The head-note in this case reads:

'South African Law has adopted the 'rule in Royal British Bank v Turquand,' viz. that a person dealing with a corporation is bound by the terms of the statutes or constitution governing its contractual power, but that the necessary acts of internal management of the corporation B are presumed to have been performed. The rule is not limited to trading organisations but is applied to corporations generally, including registered trade unions, which in South Africa though not in England, are bodies corporate...