Taylor v Smith
[1926] HCA 16(Judgment by: Knox CJ)
Taylor
vSmith
Judges:
Knox CJIsaacs J
Higgins J
Rich J
Starke J
Subject References:
Principal and Agent
Authority to sell land for net sum
Right to retain excess over that sum
Authority in writing to sell for certain sum and to retain excess
Signature obtained by misrepresentation
Principal not able to read without glasses
Non est factum
Action for money had and received
Money paid away by solicitor under mistake of fact
Recovery from payee
Ratification
Judgment date: 10 June 1926
Melbourne
Judgment by:
Knox CJ
The appellant having sued the respondent in the County Court to recover the amount of a dishonoured cheque, the respondent counterclaimed in the action for £387 10s. money had and received by the appellant to his use. This claim arose out of a transaction in which the appellant acted as the respondent's agent in the sale of a property. The purchase-money was £4,500, and commission at the ordinary rate would amount to £112 10s., but the appellant and his sub-agent in fact received £500. The difference between these two sums was the amount claimed by the respondent. The appellant claimed to retain the £ 500 on two grounds, namely, (a) that the respondent had instructed him to sell the property for £4,000 net to the respondent, and that under these instructions the appellant was entitled to retain any amount of purchase-money in excess of £4,000, and (b) that the respondent had agreed in writing that the appellant was to be allowed as bonus or commission any money received from the purchaser in excess of £4,000.
The learned County Court Judge decided that the verbal instructions to sell for £4,000 net gave the appellant no right to retain any sum in excess of the amount of his commission calculated on the usual scale, and on the second ground held that the respondent, not having his glasses with him at the time, could not read the document and signed it without negligence in the belief induced by the appellant's sub-agent, one Colbert, that it was merely a written authority to sell the property, and in ignorance that it contained the alleged agreement. These circumstances, he held, would support a plea of non est factum, and accordingly he gave judgment for the respondent on his counterclaim. The appellant applied for a new trial; this application was refused, and from that refusal he appealed to the Supreme Court. The Supreme Court dismissed the appeal-affirming the decision of the County Court Judge as to the meaning of the instructions to sell for £4,000 net, and holding, as to the other ground, that the Court could not interfere with the finding of fact of the trial Judge, who had seen the witnesses and heard them give their evidence, and that the facts so found were sufficient to support his conclusion of law. It is from this decision that the present appeal is brought.
I agree with the learned Judges of the Supreme Court in their conclusions on both points and in the reasons which they gave in support of their conclusions.
But in this Court Mr. Dixon, for the appellant, put forward contentions which were not raised in the Supreme Court. He said that, even if the agreement relied on by the appellant was not binding on the respondent, the counterclaim must fail because the County Court in this action had no equitable jurisdiction and on the facts proved the amount sued for was not recoverable at common law, or at any rate not in an action for money had and received. He said also that the evidence accepted by the County Court Judge established that the money in question was paid to the appellant by the authority or with the assent of the respondent and, therefore, could not be recovered.
The facts relevant to these contentions may be stated as follows:-On 17th March 1924 appellant and respondent called at the office of Mr. Serle and told him that there was a chance of selling the property and instructed him to get in touch with the sub-agent-Colbert. On 24th March they again called, and appellant told Serle in respondent's presence that the property had been sold for £4,500 and that he had received a cheque for £500 as deposit. Serle drew up a contract, the respondent signed it, and the cheque for £500 was handed to Serle and by him paid into his trust account on the following day. On 27th March respondent signed the transfer, which was read over to him by Serle, the consideration being stated as £4,500. On 12th April Serle received a cheque for £4,000 balance of purchase-money and paid it into his account. On some date, not specified, Serle paid £500 to the appellant and Colbert. The evidence does not show how this payment was made, but presumably it was by cheque drawn by Serle on his trust account. Appellant, in evidence, said: "Of the £500 deposit I got £250 and I paid Colbert another £25 out of £250." I take this to mean that in the division of the £500 Colbert got £275 and the appellant £225. During the period covered by these transactions the respondent was negotiating the purchase of an hotel, and Serle was acting as his solicitor in that matter. This matter was completed by transfer of the licence on 14th April 1924. On 28th April Serle wrote to respondent enclosing an account and asking for payment of £38 15s. 11d. owing to him on the footing of that account and of a further sum for law costs. The account enclosed showed the payment of £500 to Taylor and Colbert as a disbursement by Serle, and the receipt by him of £4,500 as purchase-money. Correspondence followed in which Serle repeated the request for payment of the £38 15s. 11d., but at no time before 19th September 1924 did the respondent complain of or object to the payment by Serle of £500 to appellant and Colbert. Ultimately, in October 1924, the appellant brought this action and recovered judgment for £208 10s., execution being stayed pending the hearing of the counterclaim. There is nothing in the evidence to show why or when Serle paid the £500 to the appellant and Colbert. The facts proved warrant either of two inferences, and, so far as I can see, no other. These are that the money was paid over either because appellant told Serle that it had been agreed that he and Colbert should have any purchase-money in excess of £4,000 and Serle believed him, or because Serle was shown the document signed by the respondent agreeing to that course. Taylor had been a client of Serle for some years and introduced respondent to him. There is no suggestion in the evidence that Serle, before paying the £500, either obtained the respondent's authority to pay it or told him that he intended to do so. Colbert was not called as a witness; appellant said no more than that he and Colbert received the £500 deposit from Serle, and Serle said no more than that he had paid it to appellant and Colbert. There was evidence that at all relevant times respondent knew that the commission payable at ordinary rates on a sale for £ 4,000 would amount to about £100.
The first question for decision is whether in this state of facts the respondent should be held to have authorized or assented to the payment of £500 by Serle out of the purchase money. There is no evidence that the respondent authorized Serle to pay the amount at any time before it was paid; but it is said that by reason of his conduct subsequently he should be taken to have authorized or ratified the payment. It is said that the conduct of the respondent was such as to show that he intended to adopt or recognize the act of Serle in paying the £500 and therefore amounted to ratification of the transaction. The conduct relied on amounts to no more than acquiescence or silence on the part of the respondent; but, in the case of an agent exceeding his authority, ratification may be implied from silence or acquiescence of the principal. But the evidence does not establish that the respondent had full knowledge of all the material circumstances in which the payment was made. He knew no more than that Serle had in fact paid £500 out of the purchase-money to Taylor and Colbert. Being told no more than this, he would be entitled to assume that Serle, who was acting as his solicitor and whose duty it was to protect his interests, had satisfied himself that Taylor and Colbert were legally entitled to the amount paid to them. There is no evidence to show why Serle paid this money. Admittedly he did so without consulting the respondent; and if he performed his duty to the respondent he must have been satisfied that the money was payable either because the respondent had verbally authorized the appellant to retain any purchase-money in excess of £4,000 or because the written agreement was signed by the respondent in circumstances which made it binding on him. In either event he made the payment under a mistake of fact, a material circumstance which is not shown to have been within the knowledge of the respondent. I think, therefore, that the evidence falls short of establishing that the payment was authorized or ratified by the respondent.
The remaining question is whether, assuming the payment to have been made without authority by Serle by cheque drawn on his bank account the amount improperly paid is recoverable at common law in an action for money had and received. I have said that the proper inference to be drawn from the evidence is that Serle paid the amount in question under a mistake of fact. He would, therefore, be entitled to maintain an action for money had and received against the appellant, and the decision in Holt v. Ely(1), in my opinion, shows that his principal, the respondent, could also maintain such an action.
For these reasons I am of opinion that the appeal should be dismissed.