Watteau v. Fenwick
1 Q.B. 346
WATTEAU
v.
FENWICK.
[346] Principal and Agent—Liability of Principal—Undisclosed Principal—Unauthorized Acts of Agent.
The defendants, a firm of brewers, who were the owners of the business of a beerhouse, appointed a manager of the business; the licence was always taken out in the name of the manager, whose name also appeared over the door. By the agreement between the defendants and their manager, the latter was forbidden to purchase certain articles for the purpose of the business, which were to be supplied by the defendants; but the manager, in contravention of his instructions, ordered such articles from the plaintiff for use in the business; the plaintiff supplied the goods and gave credit for them to the manager only. Subsequently, upon discovering that the defendants were the real owners of the business, the plaintiff sued them for the value of the goods:—
Held, that the plaintiff was entitled to maintain the action, for the defendants, as the real principals, were liable for all acts of their agent which were within the authority usually conferred upon an agent of his particular character, although he had never been held out by the defendants as their agent, and although the authority actually given to him by them had been exceeded.
APPEAL from the decision of the county court judge of Middlesborough.
From the evidence it appeared that one Humble had carried on business at a beerhouse called the Victoria Hotel, at Stockton-on-Tees, which business he had transferred to the defendants, a firm of brewers, some years before the present action. After the transfer of the business, Humble remained as defendants' manager; but the licence was always taken out in Humble's name, and his name was painted over the door. Under the terms of the agreement made between Humble and the defendants, the former had no authority to buy any goods for the business except bottled ales and mineral waters; all other goods required were to be supplied by the defendants themselves. The action was brought to recover the price of goods delivered at the Victoria Hotel over some years, for which it was admitted that the plaintiff gave credit to Humble only: they consisted of cigars, bovril, and other articles. The learned judge allowed the claim for the cigars and bovril only, and gave judgment for the plaintiff for £2212s. 6d. The defendants appealed.
[347] 1892. Nov. 19. Finlay, Q.C. (Scott Fox, with him), for the defendants. The decision of the county court judge was wrong. The liability of a principal for the acts of his agent, done contrary to his secret instructions, depends upon his holding him out as his agent—that is, upon the agent being clothed with an apparent authority to act for his principal. Where, therefore, a man carries on business in his own name through a manager, he holds out his own credit, and would be liable for goods supplied even where the manager exceeded his authority. But where, as in the present case, there is no holding out by the principal, but the business is carried on in the agent's name and the goods are supplied on his credit, a person wishing to go behind the agent and make the principal liable must shew an agency in fact.
[LORD COLERIDGE, C.J. Cannot you, in such a case, sue the undisclosed principal on discovering him?]
Only where the act done by the agent is within the scope of his agency; not where there has been an excess of authority. Where anyone has been held out by the principal as his agent, there is a contract with the principal by estoppel, however much the agent may have exceeded his authority; where there has been no holding out, proof must be given of an agency in fact in order to make the principal liable.
Boydell Houghton, for the plaintiff. The defendants are liable in the present action. They are in fact undisclosed principals, who instead of carrying on the business in their own names employed a manager to carry it on for them, and clothed him with authority to do what was necessary to carry on the business. The case depends upon the same principles as Edmunds v. Bushell[1], where the manager of a business which was carried on in his own name with the addition "and Co." accepted a bill of exchange, notwithstanding a stipulation in the agreement with his principal that he should not accept bills; and the Court held that the principal was liable to an indorsee who took the bill without any knowledge of the relations between the principal and agent. In that case there was no holding out of the manager as an agent; it was the simple case of an agent being allowed to act as the ostensible principal without any [348] disclosure to the world of there being anyone behind him. Here the defendants have so conducted themselves as to enable their agent to hold himself out to the world as the proprietor of their business, and they are clearly undisclosed principals: Ramazotti v. Bowring[1] All that the plaintiff has to do, therefore, in order to charge the principals, is to shew that the goods supplied were such as were ordinarily used in the business—that is to say, that they were within the reasonable scope of the agent's authority.
[He also cited Yorkshire Banking Co. v. Beatson.[2]]
Finlay, Q.C., in reply, cited Summers v. Solomon.[3]
Cur. adv. vult.
Dec. 12. LORD COLERIDGE, C.J. The judgment which I am about to read has been written by my brother Wills, and I entirely concur in, it.
WILLS, J. The plaintiff sues the defendants for the price of cigars supplied to the Victoria Hotel, Stockton-upon-Tees. The house was kept, not by the defendants, but by a person named Humble, whose name was over the door. The plaintiff gave credit to Humble, and to him alone, and had never heard of the defendants. The business, however, was really the defendants', and they had put Humble into it to manage it for them, and had forbidden him to buy cigars on credit. The cigars, however, were such as would usually be supplied to and dealt in at such an establishment. The learned county court judge held that the defendants were liable. I am of opinion that he was right.
There seems to be less of direct authority on the subject than one would expect. But I think that the Lord Chief Justice during the argument laid down the correct principle, viz., once it is established that the defendant was the real principal, the ordinary doctrine as to principal and agent applies—that the principal is liable for all the acts of the agent which are within the authority usually confided to an agent of that [349] character, notwithstanding limitations, as between the principal and the agent, put upon that authority. It is said that it is only so where there has been a holding out of authority—which cannot be said of a case where the person supplying the goods knew nothing of the existence of a principal. But I do not think so. Otherwise, in every case of undisclosed principal, or at least in every case where the fact of there being a principal was undisclosed, the secret limitation of authority would prevail and defeat the action of the person dealing with the agent and then discovering that he was an agent and had a principal.
But in the case of a dormant partner it is clear law that no limitation of authority as between the dormant and active partner will avail the dormant partner as to things within the ordinary authority of a partner. The law of partnership is, on such a question, nothing but a branch of the general law of principal and agent, and it appears to me to be undisputed and conclusive on the point now under discussion.
The principle laid down by the Lord Chief Justice, and acted upon by the learned county court judge, appears to be identical with that enunciated in the judgments of Cockburn, C.J., and Mellor, J., in Edmunds v. Bushell[1], the circumstances of which case, though not identical with those of the present, come very near to them. There was no holding out, as the plaintiff knew nothing of the defendant. I appreciate the distinction drawn by Mr. Finlay in his argument, but the principle laid down in the judgments referred to, if correct, abundantly covers the present case. I cannot find that any doubt has ever been expressed that it is correct, and I think it is right, and that very mischievous consequences would often result if that principle were not upheld.
In my opinion this appeal ought to be dismissed with costs.
Appeal dismissed.
Solicitors for plaintiff: Belfrage & Co., for Bainbridge & Barnley, Middlesborough.
Solicitors for defendants: Johnson, Weatherall, & Sturt, for Marshall, Sunderland.
----------
[1] Law Rep. 1 Q.B. 97.
----------
[1] 7 C.B. (N.S.) 851.
[2] 4 C. P. D. 204; 5 C. P. D. 109.
[3] 7 E. & B. 879.
