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L13N0RA v. SLEEMAX.
1). (’., Colombo, 10,551.
Principal and agent—Promissory note granted to principal—Money duethereon paid to agent—Fraudulent endorsement of note by his agent icthird party—Liability of principal for damage caused to maker.
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A, having made a promissory note in favour of B, paid to his agent Cthe money due thereon. C, without returning the note to B, dishonestlyendorsed it to D, who obtained judgment against A and recovered fromhim the amount of the note.
Held, that B was bound to make good to A the loss he had suffered.
ri^HE plaint averred that the first defendant (A. F. Sleeman) wasJ_ a merchant carrying on business in Colombo, and the second•defendant (A. F. Anandappa) was the duly appointed agent andmanager of the business of the first defendant; that on the 12thNovember, 1895, the plaintiff granted a promissory note to the firstdefendant for Rs. 3,000, payable on demand, for money borrowedand received from him through his agent, the second defendant;that on the 15th November, 1895, the plaintiff paid the seconddefendant the amount due on the note, but the second defendantfailed to return the said note to the plaintiff, alleging that it had beenmislaid; that on or about the 12th November. 1895, the seconddefendant, without the plaintiff’s knowledge, endorsed the noteand delivered it to one Cadirasen Chetty; that on or about the1st July, 1897, the endorsee sued the plaintiff thereon and obtained
Ido i.July, 17.
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payment of 11s. 3,363 in satisfaction; and that by reason of thepremises aforesaid, the defendants were jointly and severallyliable to pay to the plaintiff the said Rs. 3,368.
The first- defendant and second defendant, filing separate answers,admitted that the second defendant was agent of the first defendant,but they denied that the second defendant, as such agent, receivedfrom plaintiff the umount due on the note, or that he endorsed thenqte without plaintiff’s knowledge.
The District Judge found that plaintiff did in fact pay to thesecond defendant the amount due on the note, and that the seconddefendant endorsed it over to Cadirasen Chetty without plaintiff'sconsent or knowledge. As regards the law of the case, theDistrict Judge held as follows: “ If a man puts another in his place“ and gives him power to do things, in the course of which fraud“ may be committed, and a fraud is in fact committed on an“ innocent man, the man who let loose on society the fraudulent" man cannot complain if his agent has defrauded a man dealing“ innocently with him as such agent.” He entered judgment forplaintiff as against the first defendant, and as second defendantwas an insolvent, he dismissed the action against him withoutcosts.
The first defendant appealed.
Bampayo (with Bawa), for appellant.—The first defendant was
not responsible for the act of the second defendant in this matter.
In retaining the note and endorsing it, the second defendant did
not act for the first defendant, who did not authorize him to do so.
nor receive any benefit from the act. The money received fromthe Chetty was not brought to account in the first defendant’sbooks. To make a principal liable for his. agent’s acts, it must beshown that such ■ acts were for his benefit. (British MutualBanking Company v. Chamwood Forest Railway Company,IS Q■ B. D. ili (1887); Evan's Principal and Agent, p. 566.)There is no proof that the first defendant took any benefit. Thesecond defendant denies having received any money from plaintiffin payment of the note, and plaintiff holds no receipt, nor did heget back the note after the alleged payment.
Wendt (with Fan Langenberg), for plaintiff, respondent, arguedou the facts of the case.
17th July, 1901. Lawkie, A.C.J.—
I think the District Judge has found correctly for plaintiff onthe facts and law. His judgment is affirmed.
Browne, A.J., concurred.
LENORA v. SLEEMAN