MARSALL v.SENEVIRATNE

077-NLR-NLR-V-36-MARSALL-v.SENEVIRATNE.pdf


369
Marshall v, f^nevt^ati^e.
: -5 i r—ri
1934Present: Macdonett^J. and'-Drieberg J.
MARSHALL v. SENEVIRATNE.
263—D. C. Colombo, 47,531.
Power of attorney—Authority to recover and receive debt—no right to delegate
authority—Vetter to proctor to recover money—No authority to receive—
Action on mortgage bond—Payment by defendant to proctor—Fraud of
proctor—who should bear the loss ?
Plaintiff, a primary mortgagee, authorized the holder of his power ofattorney to call in from the first defendant, the mortgagor, the moneydue on the mortgage bond and the attorney gave instructions to aproctor to rcover the money.
The proctor, having a client, the fourth defendant, willing to leavemoney with him for investment took from that client certain moneys,not quite sufficient to pay off plaintiff’s mortgage, and induced the firstand second defendants to execute a mortgage bond securing the sameproperties contained in the plaintiff's mortgage, the first and seconddefendants believing that the full amount thereof would be paid overto the plaintiff in discharge of his claim. The proctor later paid to theplaintiff's attorney moneys amounting to half the sum due on the bondbut not any part of the balance and he could not obtain a discharge ofthe plaintiff’s bond.
The proctor became insolvent and it was discovered that he hadembezzled the money paid to him by the fourth defendant. It was inevidence also that the attorney had written a letter to the proctor inthe following terms : “ Should the loan be not repaid by the due date,please take steps to recover it ”.
Held (in an action brought by the plaintiff to recover the balance dueon the mortgage), that the proctor had no authority to receive moneyon behalf of the plaintiff so as to constitute the payment to the proctor,a payment to the plaintiff.
Where a power of attorney authorized a person to ask, demand, suefor, recover, and receive all debts owing to the grantor, the attorneyhas no power to delegate his authority to another.
An authority to delegate may be implied only where the act to be-done was purely ministerial and did not involve any confidence ordiscretion.
Where a party is aware that he is dealing with an agent under a powerof attorney, he acts at his peril in not knowing the extent and limit ofthe agent’s power.
T
HE plaintiff brought this action, through his attorney, on a mortgagebond No. 4,949 of May 24, 1928, executed in his favour by the
first defendant to secure a sum of Rs. 70,000 lent to him. The plaintiffalleged that first defendant had repaid Rs. 35,000 and claimed a sum ofRs. 37,483.36, balance principal and interest. By deed No. 5,079 ofFebruary 21, 1929, first defendant transferred the lands mortgaged tohis wife the second defendant. The first defendant and his wife bybond 1 D 6 executed on October 15 and 23 mortgaged the lands to the-fourth defendant.
The first defendant pleaded that the plaintiff received payment as aresult of the execution by him of the bond 1 D 6 in favour of the fourthdefendant. It was alleged that on the suggestion of de Vos, a proctor36/27
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Marshall v. Seneviratne.
and notary employed by plaintiff’s attorney, the first defendant executedbond 1 D 6 for Rs. 70,000 the arrangement being that de Vos should paythe money to plaintiff’s attorney and his bond to the plaintiff discharged.It was contended on his behalf that de Vos had sufficient authority toreceive the money and that the attorney had power to authorize de Vosto receive payment.
The learned District Judge gave judgment for the plaintiff.
H. V. Perera (with him de Zoysa, K.C., D. W. Fernando, and D. S.Senanayake), for first and second defendants, appellants.—The attorney’sletter to de Vos dated September 24, 1934, authorized de Vos to receivemoney in payment of the amount due on plaintiff’s bond No. 4,949.The words in that letter, “ should this loan not be repaid by due date,please take the necessary steps to recover the principal with interest”tacitly implied an authority to de Vos to receive the money should itbe brought to him. The words, properly interpreted, mean this ; “ themoney has not been repaid to me, Boake, and if by the 25th September itis not repaid to you, de Vos, please take the necessary steps to recoverit and obtain payment of it ”. The first and second defendants author-ized de Vos to raise the money for payment of the amount due underbond No. 4,949 by a mortgage of the property to Mrs. Poulier, thefourth defendant. Poulier’s bond was executed on October 23, 1923,and a sum of Rs. 60,000 was paid by Mrs. Poulier to de Vos on Oct-ober 8. Therefore, on October 23, by executing the Poulier bond thefirst and second defendants released the Rs. 60,000 in de Vos’ hands forpayment to plaintiff. The money in the hands of de Vos operated asa payment to plaintiff by virtue of the authority given to de Vos byBoake, the plaintiff’s attorney, in the letter dated September 24, 1934.
Authority given to a solicitor or proctor to recover a debt gives him;an implied authority to receive payment of that debt (Yates v. Freckleton1).Here de Vos, a proctor, was given authority by the plaintiff’s attorney,Boake, “ to take necessary steps to recover the principal with interestThat authority gives ide Vos the implied authority to receive paymentof the principal and interest. If after payment the money is misappro-priated by de Vos the loss must fall on the plaintiff.
A. E. Keuneman (with him H. E. Garvin), for plaintiff, respondent.—The authority given by the letter of September 24 is merely to takethe necessary steps to recover the debt, i.e., to institute an action for itsrecovery. Such an authority does not give an implied authority toreceive payment of the debt. It may be that if an action is institutedthe proctor authorized to institute the action has implied authorityto receive payment of the debt for the recovery of which the action isinstituted. Here no action has been instituted and there is no evidenceto show that a proxy had been signed by Boake in favour of de Vos.In our Courts a duly signed proxy is necessary before an action can beinstituted by a proctor on behalf of a client. Even if the letter ofSeptember 24 is interpreted to be an authority to receive payment ofthe debt due to the plaintiff, that authority is bad because Boake, thewriter of the letter, was bound by the terms of the power of attorney
i 2 Doug. 623 ; 99 E. R. 394.
MACDONELL. C.J.—Marshall v. Senevifatne.
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in his favour. The power of attorney by the plaintiff in Boake’s favourauthorized only Boake to receive payment of money due to the plaintiff.Boake had therefore no power to delegate his duty to another. Anattorney may be entitled to delegate purely ministerial acts, but hecannot delegate his duties unless expressly authorized by the power ofattorney to do so. Powers of attorney – must be strictly construed,(Bryant, Powis, and Bryant v. La Banque du Peuple1). The first defendantin this case was bound, at his peril, to inquire into Boake’s authoritybefore he paid the money to de Vos. (Bryant, Powis, and Bryant v. LaBanque du Peuple (supra).) He would be in the same position as if thepower of attorney had been perused. (Jonmenjoy Coondoo v. Watson *).
It was argued by the other side that on October 23 when the bond in.favour of Poulier was executed the Rs. 60,000 in the hands of de Vosoperated as a payment to plaintiff. There is no evidence to show thatde Vos had Rs. 60,000 in his hands on that day; the onus of provingthat was on the first and second defendants and they have failed todischarge that onus.
Implied authority to receive the principal due under a mortgage isnot easily presumed. A solicitor who has authority to receive interestfor a mortgagee either by reason of the mortgagee’s conduct or by express:direction has no implied authority to receive the principal debt due onthe mortgage. (Wilkinson v. Candlish3; Kend v. Thomas *; Bonham v,Maycocks.)
H. V. Perera, in reply.—Where there is no express power of delegation,an attorney has an implied power to delegate acts purely ministerial andnot involving the exercise of discretion. Boake was given power “ toask, demand, sue for, recover, and receive all debts . .. .” He
may not be entitled to delegate these powers because they involve*the exercise of discretion, but once he has exercised his discretion and“ asked for ” or “ demanded ” the payment of a debt he is entitled todelegate the purely ministerial act of receiving the debt “asked for” or“ demanded ”. Receiving payment of money is purely a ministerialact. (Hemming v. Hale*.)
All that the defendants were required to prove was the receipt of themoney by de Vos. They had not to go further and prove that at thedate of the execution of the bond the money was in the hands of de Vos.If the plaintiff relied on the fact that at the date of the Poulier bondde Vos did not have the Rs. 60,000 in his hands, then the onus of provingthat fact was on the plaintiff.
Cur. adv. vult.
February 8, 1935. Macdonell C.J.—
This is a case where innocent parties must suffer for the fraud of athird party, and the only question is, which innocent parties.
The gist of. the case is that plaintiff, a primary mortgagee, instructedthe holder of his power of attorney to call in from first defendant, themortgagor, the money due on the mortgage bond; and that the attorneygave instructions to a proctor to recover the money. The proctor having
(1893) A. C. at p. 177.*1 H. A N. 472, 156 B. R. 1287.
*9 A. C. at p. 566.*188 L. T. 736.
5 Ex. 91, 155 B. R. 39.• 7 C. B. (N. S.) 487; 29 L. J. C. P. 137.
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MACDONELL. C.J.—Marshall v. Seneviratne.
a client, fourth defendant, willing to deposit money with him for invest-ment, took from that client moneys not quite sufficient to pay off plaintiff’smortgage and a few days later allowed first and second defendants toexecute a mortgage bond for the same properties contained in the plaintiff'smortgage in favour of fourth defendant for the full amount of plaintiff’smortgage, the first and second defendants believing that the full amountthereof would be paid over to plaintiff, and his claim thereby satisfiedand his bond discharged. The mortgage bond they executed to fourthdefendant was drawn as a primary bond. The proctor later on paidover to plaintiff’s attorney moneys amounting to half the sum due onplaintiff’s bond but not any part of the balance, and did not, since heicould not, obtain a discharge of plaintiff’s mortgage bond. The proctorwent insolvent and then these facts were discovered, also that he hadembezzled large sums due to his clients, fourth defendant among them.The questions that arise are : Was plaintiff’s mortagage bond dischargedby or to the extent of fourth defendant’s payments, and, did the proctorreceive fourth defendant’s money on behalf of the plaintiff, and if he did.Had he power so to receive it that payment to him was payment to theplaintiff ?
After this outline it is well to give the facts in fuller detail. Theplaintiff not being resident in the Island, had invested some money inmortgages here, and in 1928 the first defendant was indebted to him inthe sum of Rs. 70,000 on a mortgage bond No. 4,949 dated May 24, 1928,carrying interest at 7 per cent, but if not paid punctually, then at 10 percent. The plaintiff, by reason of his absence from the Island, had granted^a power of attorney to one Mr. Lyons whom failing by absence or other->wise, to one Mr. Boake whom failing by absence or otherwise, to oneMr. Aikman Smith. In actual fact the attorney who did the necessarywork for the plaintiff seems to have been Mr. Boake throughout; he diedbefore the trial of this action commenced, so we have not the advantageof his evidence. What the power of attorney authorized Mr. Boake to dois matter in dispute in this case and the relevant parts of that power willbe set out later. There seem to have been delays in the payment ofinterest under this bond of 1928, No. 4,949, and on August 20, 1928,Mr. Boake, as plaintiff’s attorney, wrote to Mr. W. A. S. de Vos, at thattime a proctor of the firm of de Vos & Gratiaen, the following letter:“Please take the necessary steps to call in this loan of Rs. 70,000 withinterest. This loan has been a source of anxiety to Mr. Marshall (theplaintiff) and myself for over fifteen months and I cannot allow them anymore grace. ” As bond No. 4,949 was only executed some" three monthsbefore this letter there had evidently been some earlier obligation forwhich this had been substituted. In spite of this letter Mr. Boake, theattorney, did not then call in the loan but allowed the bond to remainand continued to receive from the first defendant, the mortgagor, intereston the bond. Thus on January 8, 1929, the first defendant wrote toMr. Boake enclosing a cheque for Rs. 612.50 “ being half of the amountdue on the attached account for interest Mr. Boake replied by letterof the same date “ I am in receipt of your letter of date with cheque forRs. 612.50 in part payment of the interest due. Please note that thebalance will have to be paid at the default rate ”, and he signed the letter
MACDONELL CJ.—Marshall v. Seneviratne.
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“ per pro George Marshall, W. Boake ”. It is clear then that first defend-ant knew Mr. Boake was the plaintiff's attorney. He says, “ Theinterest due to Mr. Marshall on the bond sued on I paid to Mr. Boakedirect. That was so on every occasion on which interest was paid. Ipaid that to Mr. Boake as attorney of Mr. Marshall. He acknowledgedreceipt direct to me as attorney of Mr. Marshall ”. The next step wasthe attorney Mr. Boake writing to Mr. de Vos on June 25, 1929 :'* I have
just received written instructions from Mr. Marshall that he requiresrepayment of the Rs. 70,000 lent to Mr. E. J. Seneviratne (first defendant),so will you please give Mr. Seneviratne three months’ notice at once thatrepayment is required. I enclose for your information and guidance bondNo. 4,949 which please return at your earlist convenience”. Endorsedon this letter is a draft reply from Mr. de Vos, written by his clerk, stating^that he returns the bond, and it seems clear that save on this occasion thebond always was in the custody of Mr. Boake the attorney and not at anytime in that of Mr. de Vos. Mr. de Vos says in evidence that he did givethree months’ notice to expire on September 25, 1929, and first defendantin his evidence does admit having received a demand before he executedthe bond No. 5,332, that in favour of fourth defendant; presumablythen this will be the three months’ notice Mr. de Vos says he sent to firstdefendant. The three months’ notice was to expire on September 25,and on September 24 Mr. Boake wrote to Mr. de Vos as follows:—“ Remy letter of June 25, should this loan not be repaid by the due date, please:take the necessary steps to recover the principal with interest.” Theinterpretation of this letter is one of the chief matters of dispute in thiscase ; did its terms expressly or impliedly authorize Mr. de Vos to receivepayment from the mortgagor of the debt due? There is sufficientevidence, as has been said, that Mr. de Vos had given the necessary threemonths’ notice on June 25, and that notice would expire on September 25—the day after Mr. Boake’s letter just quoted. But on September 30,five or six days later, it would appear that Mr. Boake sent a memorandumof account to the first defendant as follows: —
" Dr. To Mr. and Mrs. George Marshall, payable to theirattorney, W. Boake.
To interest due on the primary mortgage bond for
quarter ending September 30, 1929.. Rs. 1,225 ”
The first defendant says he does not remember receiving this memo-randum, but on the same day, and therefore apparently too early for himto have received the memorandum, his wife, the second defendant, wroteto Mr. Boake enclosing a cheque for this amount, Rs. 1,225, in payment ofinterest for the 3rd quarter, 1929 ; the first defendant admits this to behis wife’s letter, she would write it as his agent. To this Mr. Boakereplied on October 2 acknowledging the receipt of the cheque “ which ”,he says, “ I accept without prejudice to my rights to sue under the noticealready given you calling up the loan ”, and again he signs himself asattorney for Mr. and Mrs. George Marshall.
The position of the first defendant after the notice of June 25 was this,that he must pay off this bond No. 4,949 either by providing the cash orby getting somebody else to take over the bond and become mortgagee
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MACDONELL. C.J.—Marshall v. Senexhratne.
in place of the plaintiff. (It may here be mentioned that on February 21,1929, the second defendant registered a transfer to her by the first defend-ant of the premises mortgaged. From this point therefore she becamea necessary party to any proceedings.) Mr. de Vos says that he “ thinks "first defendant saw him in connection with the repayment of the principalbefore the expiration of the three months, which must surely mean thatthe first defendant asked Mr. de Vos to help him to raise the money forpaying off the plaintiff, and there is nothing in the first defendant'sevidence to contradict this. Among the clients of Mr. de Vos were thefourth defendant Mrs. Poulier and her husband Mr. J. A. Poulier from whomhe was receiving from time to time moneys for investment. On October 8,1929, Mt. de Vos received a cheque for Rs. 55,000 from Mr. J. A. Poulier,but signed by his wife as his attorney, and on the same day anothercheque for Rs. 5,000 from Mrs. Poulier making Rs. 60,000 in all. Theentry in the ledger says that these amounts were received for investment,but Mr. de Vos says “ Mrs. Poulier paid me the money for a primarymortgage …. The money was given to me to be lent to theSeneviratnes, i.e., first and second defendants, on their bond. I am quitesure of that ”. The learned trial Judge accepted this account of thePoulier loan, and in the absence of other evidence would have had difficultyin doing otherwise. It is necessary to notice however that the evidenceon these important matters, what the first defendant said to Mr. de Vosand what the Pouliers said to him, is scanty. The first defendant sayslittle or nothing as to this, and neither the fourth defendant nor Mr. Pouliergave evidence. There is the curious fact that Mr. de Vos’ ledger (P3)shows that on February 13, 1928, i.e., twenty months before these trans-actions, he received Rs. 60,000 from Mr. J. A. Poulier for investment andthat soon after he paid Rs. 55,000, and a few days later Rs. 5,000 tocertain other parties, but as the two cheques of October 8, 1929, forRs. 55,000 and Rs. 5,000 were produced, this must be, as Mr. de Vos says,a coincidence. To return. First defendant not being able to producethe Rs. 70,000 due to plaintiff on bond No. 4,949, had evidently askedMr. de Vos to find him another mortgagee, someone who would advancethe sum necessary to pay off plaintiff and to whom he would be bound asmortgagor in his place. The fourth defendant had handed Rs. 60,000 toMr. de Vos for investment and had been told that the security would becertain properties of first defendant, and that second defendant his wifewould also execute the bond, clearly in consequence of the registeredtransfer of February 21, 1929. This bond in favour of fourth defendantwas drawn as a primary bond and we may be certain, though there wasno evidence on the point, that the fourth defendant had been told fromthe start that the security for her Rs. 60,000 would be a primary bondover these properties of first defendant. It must also be inferred thatfourth defendant had undertaken to advance another Rs. 10,000 so as tomake up the total loan to Rs. 70,000. Mr. de Vos was her agent to obtainfrom first and second defendants a primary bond over the propertiesnamed therein, which are the same as those in No. 4,949—though, curiouslyenough, set out in a different order—and to pay over to them theRs. 60,000 which she had given to him by the two cheques of October 8.Mr. de Vos was the agent of the first defendant to pay the Rs. 60,000
MACDONELL CJ.—Marshall v. Seneviratne.
375
received by him from fourth defendant, to plaintiff in part payment ofthe debt due on his bond No. 4,949. The two agencies conflicted since,Mr. de Vos says, and his evidence was accepted, that fourth defendantnever knew anything of plaintiff’s bond No. 4,949, or indeed of plaintiffat all. He led the fourth defendant to believe that her money Ks. 60,000would be paid to first defendant and to second defendant—since she. joined in the bond in favour of fourth defendant—he never told heranything of plaintiff and his bond No. 4,949. The statement of Mr. deVos that, as far as he knew, fourth defendant never knew anything ofplaintiff and his bond No. 4,949 is confirmed by the fact that the bond infavour of fourth defendant was drawn as a* primary mortgage, which itcould not be as long as the plaintiffs primary bond No. 4,949 was undis-charged. If the whole transaction had been exactly and honestly carriedthrough, Mr. Boake would have attended with his principal’s bondNo. 4,949; the first and second defendants would have executed a second-ary bond in favour of fourth defendant for Rs. 60,000, the moneyreceived from fourth defendant, her Rs. 60,000, would then have beenhanded over by Mr. de Vos to first and second defendants who wouldthen have handed it to Mr. Boake, who would then have discharged bondNo. 4,949 to the extent of that Rs. 60,000, retaining it as.a primary bondfor the balance of Rs. 10,000. To anticipate matters, fourth defendantdid on January 27, 1930, give Messrs, de Vos & Gratiaen a cheque forthe balance Rs. 10,000. This again would have been paid to the first andsecond defendants and handed over by them to Mr. Boake, who wouldthen have discharged bond No. 4,949 in toto, and fourth defendant’sbond No. 5,332 would have received an indorsement that by dischargeof bond No. 4,949 it had become a primary bond. Nothing of the sortwas done, of course, and Mr. Boake remained as entirely ignorant offourth defendant and the Rs. 60,000 she had paid and her bond No. 5,332,as she remained of his principal the plaintiff and the bond No. 4,949.
To resume the narrative of facts. The Rs. 60,000 had been paidMr. de Vos on October 8, and on October 15 the first defendant and onOctober 23 the second defendant (his wife) executed bond No. 5,332,drawn as a primary bond mortgaging to fourth defendant the sameproperties already mortgaged to plaintiff on bond No. 4,949 for the samesum of Rs. 70,000, the receipt of which they acknowledged in the body ofthe document in the usual manner. The first and second defendantsdeclared themselves to be jointly and severally bound by this bondNo. 5,332. It was attested by Mr. de Vos who states in the attestationclause that “ no consideration passed in his presence ”. This wassuppressio veri as some reference should certainly have been made to thefact that'he had received Rs. 60,000 for the purpose of the mortgage.Both Mr. de Vos and first defendant say that no part of the Rs. 60,000was paid to first' defendant, and their evidence is obviously correct.Mr. de Vos says “ None of the money went either to first defendant orsecond defendant. I kept the money in view of. the instructions I hadfrom Mr. Boake to recover the money. I kept it with a view to payingMr. Boake …. I would not allow that money to get into thehands of Mr. Seneviratne (first defendant) ”, and when asked whetherhe looked on the payment by fourth defendant of the Rs. 60,000 as a
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payment to the first and second defendant, he said “ It was not a paymentto the Seneviratnes at the time it was paid to me … I wouldnot have considered I had authority to pay it to the Seneviratnes at theexecution of the bond until it was registered”; bond No. 5,332 actuallywas registered on November 7, 1929. The first defendant says, “ I didnot get that money ”.
The evidence leaves several things only partially cleared up. Thefourth defendant did not attend the execution of bond No. 5,332, andMr. de Vos says he “ did not produce the bond ” to her, and you areleft wondering what story he told her in explanation of the fact thatthough she had paid him only Rs. 60,000 she yet got a primary bond fora larger sum, Bs. 70,000. She did pay him the balance Rs. 10,000 onJanuary 27, 1930, but she had got bond No. 5,332 for the larger sum threemonths previously. With regard to Mr. Boake and plaintiff’s bondNo. 4,949, Mr. de Vos, after saying that he did not pay any money to firstdefendant or second defendant but that he kept it with a view to payingMr. Boake, says “I paid Mr. Boake Rs. 35,000 in instalments. That lefta balance of Rs. 35,000 in my hands to be paid to Mr. Boake. That wasnever paid ”, and further on he says, “ the balance Rs. 35,000 was usedby me He gives no dates or details, but in P 5 which is an account inthe ledger of Messrs, de Vos & Gratiaen headed J. A. Poulier, there is anentry dated December 21, 1929, “ To cheque, W. Boake, Rs. 1,225 ”.Now this sum was a quarter’s interest on the whole Rs. 70,000, so accordingto this account he had not paid over any portion of the principal debt toMr. Boake before that date, December 21, 1929, but as will be shown laterit is very doubtful if this account can be relied on for any purpose. Thereis no evidence as to why Mr. Boake allowed the bond No. 4,949 to remainoutstanding, but he evidently did so since paragraph 7 of the plaint admitspayment from time to time of sums aggregating Rs. 35,000 (giving creditto first defendant for that amount) and payment of interest on the bondup to and including March 21, 1931. There is not, I think, evidencebefore us that the firm of Messrs, de Vos & Gratiaen went insolvent, butthis fact was assumed throughout the case by both sides. The date of itsinsolvency was November 17, 1931. There is no dispute by any of thedefendants that plaintiff has never received in cash the balance Rs. 35,000claimed by him on his bond No. 4,949.
The position of the first and second defendants is stated in paragraph 3of their answer, as follows :—
“ 3. Further answering to paragraph 7 of the plaint these defendantsstate—
that W. A. S. de Vos of Colombo was at all times material to this
action the agent of the plaintiff for the purpose of collectingsums due and owing from the first defendant to the plaintiffunder the bond No. 4,949 marked letter * A ’ and filed withthe plaint;
that these defendants have paid to the said W. A. S. de Vos as
agent of the plaintiff as aforesaid all sums due and owing asprincipal and interest from the first defendant to the plaintiffunder the said bond No. 4,949, and that no sum whatsoeveris now due to the plaintiff under the said bond.”
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The fourth defendant in her answer adopts the same position in slightlydifferent phraseology. We must analyse the contention. On October 8,the fourth defendant paid and Mr. de Vos received Rs. 60,000 to be lentto first defendant and second defendant on their bond. Mr. de Vosreceived it for that purpose and was under a duty to hold it in his safe-keeping until the first and second defendant had executed a bond for it.Until they had done so he could not hand the money to them for paymentto Mr. Boake, plaintiff’s attorney, still less could he hand it to Mr. Boakedirect. It cannot be argued—indeed was not—that during the intervalbetween fourth defendant handing this money to Mr. de Vos on October 8,and the execution of bond No. 5,332 on October 23, Mr. de Vos washolding it as agent of Mr. Boake or on his behalf. It was not moneyreceived to Mr. Boake’s use. Could he prior to the execution of the bondby first and second defendants have sued for it as such? Clearly not.The bond, a joint and several obligation, was executed on October 23,and it could be argued that from that moment but not sooner theRs. 60,000 was being held by Mr. de Vos as agent for Mr. Boake, plaintiff’sattorney on his behalf, and that therefore there had been payment of thatamount to plaintiff through the hands of Mr. de Vos, agent for his attorneyMr. Boake, and that plaintiff’s bond No. 4,949 was discharged to thatextent. But there is a question of fact to be determined first. Is thereproof that the Rs. 60,000 was still in possession of Mr. de Vos on October23, the date of the execution of the bond No. 5,332?
The first and second defendants over payment to plaintiff of Rs. 60,000on October 23, and beyond doubt the onus was on them to show thatthere was that money available for payment to the plaintiff up to thetime of the execution of bond No. 5,332, and the onus certainly seems tocontinue until the moment after its execution, the moment when itbecame binding. At that moment having executed bond No. 5,332,first and second defendants claim that they had released the Rs. 60,000then in Mr. de Vos’ hands for payment to the plaintiff through his attorneyMr. Boake, and that by so doing they had paid plaintiff Rs. 60,000 on hisbond No. 4,949, but this contention is conditioned by the words “ then inMr. de Vos’ hands they must prove this.
Now for the evidence on this matter we are dependent entirely on thatof Mr. de Vos. He refers to the page 228 in his ledger for 1929—Mr. J. A.Poulier’s account—and says, “ But I wish to state that the bulk of theseentries are all -false. There are a number of cheques entered here as givento Mr. Poulier which are really cheques drawn by me in my favour”.Later on he says, “ I had for some time about this time 1929-1930embezzled a considerable amount of the clients’ money in the firm. Forthat purpose I had to make a large number of false documents and give alarge number of false statements to my clients Now the documentsput in on this point were, first, a certified copy, P 5, page 229, of a ledgerfor 1929, headed, J. A. Poulier. This page shows a number of similarentries, “ To cheque in his favour ” giving the amount, oneentry, “ To cheque, W. Boake, Rs. 1,225 ”—this has been referred toabove—and two entries, each crediting the account with Rs. 3,500, orRs. 7,000 in all. “By cheque of C. M. T. G., Ltd.,” this being a company(as was agreed in argument) in which Mr. de Vos was largely interested,
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and the page is summed up to show a sum of Rs. 61,985 paid out andRs. 7,000 received, balance debit Rs. 54,985. This balance Rs. 54,985is carried over to page 103 of the ledger for 1930, account J. A. Poulier,of which again a certified copy is put in, P 4. Now the account, P 5, onpage 229 of the 1929 ledger, is not linked up with any earlier account. Itdoes not show why J. A. Poulier was entitled to receive this succession ofcheques drawn in his favour, nor does it credit him or the fourth defendant(his wife) with the Rs. 55,000 which he had paid on October 8, or with theRs. 5,000 she had paid the same day. We were urged to say that as theentries in this account “ To cheque in his (Mr. Poulier’s) favour ” fromOctober 4 to October 23 only totalled Rs. 25,260 paid away, we ought toassume that the balance of the Rs. 60,000, namely Rs. 34,740, was inMr. de Vos’ hands up to October 23, and became plaintiff’s money immedi-ately on execution of bond No. 5,332. To this would have to be addedthe Rs. 10,000 paid to Mr. de Vos by fourth defendant on January 27,1930, total Rs. 44,740, which should go in reduction of plaintiff’s claim ashaving been paid to Mr. de Vos his agent to receive the same, wherebyplaintiff would be entitled to judgment in this action for the balanceRs. 25,260 only, but not to anything in excess of that amount. But thequestion is, can any reliance be placed on this page 229, P 5, of the 1929ledger, to establish that the Rs. 60,000 or some definite part thereof wasstill in the hands of Mr. de Vos on October 23. Clearly no reliance can beplaced on it. Mr. de Vos has said, and his evidence was accepted, thatthe entries in this account were mainly false; can we say then that anyparticular item or items of any particular date or dates are to be acceptedas true? Clearly we cannot. The account itself too, unconnected withanything else, starting from no data and containing the two payments infrom a firm that admittedly Mr. de Vos was interested in but not neces-sarily the Pouliers, would in itself require explanation and connectionwith other accounts before it could be accepted. If the first and seconddefendants wish to show that on October 23, 1929, Rs. 60,000 was in thehands of Mr. de Vos available for payment to the plaintiff, then theyshould have produced a reasoned statement from the ledgers of his thenfirm showing that that amount was at the credit of that firm on that day,and so available for payment to the plaintiff. After Mr. de Vos’ evidence,which has been accepted as has been said, it is impossible to assume thatsuch an amount was available. It was for the first and second defendantto show that it was, and they have not done so. Then as to this amountRs. 60,000, the first and second defendants’ case fails.
The Rs. 10,000 paid to Mr. de Vos by the fourth defendant on January27, 1930, is on a different footing. It was paid to Mr. de Vos after bondNo. 5,332 had been executed and was therefore available the momentMr. de Vos received it for payment by him to Mr. Boake, plaintiff’sattorney, and the question then whether the first and second defendantsare entitled to succeed to the extent of this Rs. 10,000 would depend onwhether at the time Mr. de Vos received it he was authorized to receivemoney in payment of the amount due on plaintiff’s bond No. 4,949. Ifhe was so authorised it will be by virtue of the letter of September 24,1929, IDS, written by Mr. Boake to Mr. de Vos, “ Re my letter of June 25,should this loan not be repaid by due date, please take the necessary steps
MACDONELL CJ.—Marshall v. Seneviratne.
379
to recover the principal with interest ”. It was argued for the appellantsthat the words “ should this loan not be repaid by due date ” tacitlyimplied an authority to Mr. de Vos to receive the money should it bebrought him, and that these words, properly interpreted, mean this,
‘ the money has not been repaid to me, Boake, and if by September 25,it is not repaid to you, de Vos, please take the necessary steps to recoverit and obtain payment of it How, it was argued, could Mr. de Vosknow that September 25 had elapsed without Mr. Boake receivingpayment, unless Mr. Boake wrote him yet another letter. We musttake this letter of September 24 as something complete in itself, notneeding a further letter from Mr. Boake to become an effective mandate,and if so it contemplates a receiving of the money by Mr. de Vos andtherefore an implied authority to him to receive it.
Now granting this to be a reasonable interpretation to put on the wordsin the letter “ should this loan not be repaid by due date ”, still the lettermust be examined as a whole, the direction it contains as well as thecondition attached to that direction. First, then, the condition “ shouldthis loan not be repaid by due date”. Due date means, September 25.Up to and including that date, Mr. de Vos would, on the argument for theappellants, have had authority to receive repayment but clearly notafter that date. Once that date had passed without the loan being repaid—which was admittedly what happened, nothing was repaid by thatdate—all the letter authorized him to do v/as to take the necessary stepsto recover the principal with interest. These necessary steps would notinclude demand, for that had already been made by Mr. de Vos’ letter ofJune 25.“ Recover ” means, recover by legal process, consequently the
next step the recipient of the letter, Mr. de Vos, should have taken wouldhave been to send to Mr. Boake as soon as September 25 had expired ablank proxy for execution by Mr. Boake empowering the firm of Messrs,de Vos & Gratiaen to commence action against first defendant for theamount owing, principal and interest. That was the next “ step ”—sections24 and 27 of the Civil Procedure Code—towards the “ recovery ” of thismoney. What other step is contemplated in the letter? Demand hadalready been made, so to say the letter means “ demand again ” would beto make it otiose. I can think of no necessary step for the recovery ofprincipal and interest save taking action, and for this a proxy was neces-sary, that is Mr. de Vos would have- had to apply to Mr. Boake for one.Sections 24 and 27 of the Civil Procedure Code do not make the formin Schedule II. to that Code, the obligatory or sole form of a proxy, butwe may assume that Mr. Boake would contemplate that form of proxyas the one to be used. When a client executes a proxy in this form, heauthorizes the proctor “ to receive and take all moneys that may be paidhim by the defendant in the action and to move for and obtain in hisname any order or orders from the Court for any payment of any sumor sums of money that may be deposited therein ”, but until a proctorreceives such a proxy he has no authority to. receive money due to aclient, unless of course the client has given him that authority aliunde.The only authority the client in this case can be argued to have given tothe proctor to receive the money is the letter of September 24—we arethrown back on that—and I cannot collect from the terms of that letter
380MACDONELL CJ.—Marshall v. Seneviratne.
any authority to receive the money owing, at least after the expirationof September 25, even on the interpretation of the letter most favourableto the appellants’ case.
The course of dealing between the three persons involved—Mr. Boake,Mr. de Vos, and first defendant—tends to the same conclusion. The firstdefendant always paid the interest direct to Mr. Boake, never to Mr. deVos, and Mr. de Vos had never received or apparently claimed to receiveor been tendered, any interest under the bond at any time. The bond waswith Mr. Boake, so application to him was necessary if the receipt of anypayment of principal was to be endorsed thereon. Again, the letter ofSeptember 24 requires recovery of principal and interest and onlyMr. Boake knew what interest was owing; at any rate Mr. de Vos did not,•for none such was ever paid him. Then before he could effectively receivepayment of principal and interest he would have to apply to Mr. Boakefor further information. In other words the letter of September 24, as amandate to receive payment, was not then in itself a complete mandate,yet surely on the argument for the appellants it should be a complete oneif, by virtue of it, payment to Mr. de Vos was to be the equivalent ofpayment to Mr. Boake, plaintiff’s attorney.
It is not proved to me that Mr. Boake’s letter of September 24 was anauthority to Mr. de Vos to receive payment on his behalf from the firstdefendant.
One further remark to finish this aspect of the case. Mr. de Vos saysin his evidence that he did get a proxy from Mr. Boake, but he adds" that is my recollection but I cannot be certain of it ”. He gave nodate or details nor did he refer to any document and there certainly isnothing'in the documents produced, including this letter of September 24,suggesting that Mr. Boake ever did give him a proxy. The judgmentmakes no mention of this part of Mr. de Vos’ evidence. Evidently thelearned District Judge did not take seriously the vague and doubtfulassertion of Mr. de Vos—for it is nothing more—that Mr. Boake did sendor give him a proxy. No argument was addressed to us that Mr. de Vosat any time received a proxy from Mr. Boake.
But even assuming that the letter of September 24 was so worded asto authorize Mr. de Vos to receive the money owing so as to make hisreceipt that of the plaintiff, it still remains necessary to examine thepower of attorney granted by the plaintiff to Mr. Boake, to see whetherunder it Mr. Boake could give that authority to Mr. de Vos. That powerof attorney was the only document under which Mr. Boake could act forthe plaintiff and his power to bind the plaintiff must be found within itand not elsewhere. That power of attorney recites that the grantor hascertain mortgages of real estate in the Island of Ceylon and that it isnecessary to appoint an attorney there for the purpose mentioned,—thatis, for the purpose of these mortgages, and in interpreting a power ofattorney the recitals control the operative portions-:—and then goes on toconfer the following power : —
“ Power in my name and on my behalf to ask, demand, sue for,recover, and receive all debts of whatsoever nature now owing orpayable to me or which may hereafter become owing or payableto me by individuals, firms or companies in the said Island, and on
MACDONELL CJ.—Marshall v. Seneviratne.
381
payment or delivery thereof to give, sign, and execute receipts, releases,and other discharges for the same, and on non-payment to commence,carry on, and prosecute any action or actions, suit or suits, or otherproceedings whatsoever before any court or courts of law in the saidIsland for receiving and compelling the payment thereof: To appearbefore any court or courts of law or justice in the said Island asplaintiffs, defendants, claimants, added party, or in any other capacityand to sign and grant all necessary appointment or appointmentsto any proctor or proctors of the said courts, and to prosecute ordefend any suit or suits or other proceedings brought by or againstme and to proceed to judgment, and to appeal against any judgment,order or decree of any of the said courts and to prosecute such appealbefore the Supreme Court of the said Island and give all necessarysecurities of such appeal. To transfer and assign mortgage bondsor other securities held by me and to sign all necessary deeds in thatbehalf. To purchase at Fiscal’s sale any property sold under anywrit issued in any action instituted on my behalf by my attorneyand to sell the property so purchased and to sign all necessary deedsfor such purposes and generally to do, perform, execute, and prosecuteall other acts, deeds, and things whatsoever which may be necessaryor expedient in relation to the premises as fully and effectually to allintents and purposes as I could or might do if present:And I hereby
declare that the receipt in writing of my attorney acting for the timehereunder for any moneys shall be a sufficient discharge for the sameand shall effectually exonerate the persons paying the same.”
This instrument then empowers the attorney appointed “ to ask,demand, sue for, recover, and receive all debts ” owing to the grantor ;it contemplates that it shall be the attorney who “ receives ” them, itgives him power to do so and, on the principle expressio unius est exclvsioalterius, would seem not to give that power to anyone else. It goes onto give the attorney power to bring and defend actions and to sign andgrant all necessary appointment or appointments to any proctor orproctors. As the power was to operate in the Island and in it only,it may be supposed that in giving the authority to appoint proctors:the grantor had in mind the usual form of proxy, Form 7, Schedule II.,of the Civil Procedure Code, which empowers a proctor to “ receiveand take all moneys ” paid in the action for which he receives the proxy,but the authority of the proctor to receive them would be by virtueof having received the proxy and he would not have such authoritywithout he had first received a proxy. But in this case it is not contendedthat any proxy was given, and there is no proof that any proxy was given,and beyond question none preceded or accompanied the letter of Sept-ember 24. The attorney, Mr. Boake, had no power then to authorizeMr. de Vos to receive moneys due to his principal the plaintiff. Then noreceipt of money by Mr. de Vos could be a receipt by an agent of theplaintiff or a receipt on behalf of the plaintiff. On this ground alsothen the appeal -fails.
Hie first defendant knew that he was dealing with the attorney of aprincipal, that is, with a person possessed of a special or limited authority ^this is proved from the letters, demands for interest, and receipts for
382
MACDONELL. CSS.—Marshall v. Seneviratne.
same, received by him from Mr. Boake in which the latter signs “ per pro ”and describes himself as attorney for another person. Consequentlyfirst defendant was “ bound at his peril to inquire into the extent of theagent’s authority ” (Bryant, Powis, and Bryant v. La Banque du Peupiel) ;he “ was in the same position as if the power of attorney had been perused”by him (Jonmenjoy Coondoo v. Watson*). If then first defendant paidmoneys to Mr. de Vos, or to be accurate, allowed fourth defendant to paymoneys to him on his, first defendant’s behalf, without inquiring whetherMr. de Vos had power from the plaintiff to receive them so as to makereceipt by Mr. de Vos a receipt by or on behalf of the plaintiff, and if itturns out that Mr. de Vos had not in fact that power, then the loss mustfall on first defendant.
“ Powers of attorney are to be construed strictly, that is to say, thatwhere an act purporting to be done under a power of attorney is challengedas being in excess of the authority conferred by the power, it is necessaryto show that on a fair construction of the whole instrument the authorityin question is to be found within the four comers of the instrument,either in express terms or by necessary implication ”—per Lord Macnagh-ten in Bryant, Powis, and Bryant v. La Banque du Peuple (supra), but theauthority given expressly in this power of attorney to receive moneysowing is an authority given to the attorney and not to anyone else, andit is difficult to find in it any other or additional authority “ by necessaryimplication ” to anyone else to receive moneys owing. It was argued forthe appellants that there was an implied authority in this power ofattorney to the attorney named to “ delegate ” the powers conferred onhim, but if so there could only be this implied power to delegate wherethe act to be done was purely ministerial and did not involve confidenceor discretion. Put in full, the argument would be that Mr. Boake by hisletter of September 24 delegated to Mr. de Vos the power to receive themoneys owing. But could it be said that this delegation of authority toa proctor to receive money was delegation of authority to do a purelyministerial act not involving confidence or discretion? The fact that aproctor, a professional man, was employed is surely an argument to thecontrary. The English case cited to us (Hemming v. Hale*) is reallyagainst the appellants. There, a solicitor was employed to carry throughcertain litigation and to receive certain moneys the results of same whichwere then in the hands of the sheriff. He allowed the moneys actuallyto be received from the sheriff by a clerk in his employ who abscondedwith them and it was held that this was a receipt by the solicitor, the agentof the plaintiff, and that the loss must fall upon the plaintiff; the delega-tion to the clerk to receive the money was one to do a purely ministerialact. To make Hemming v. Hale (supra) applicable in favour of theappellant, the facts here would have to be that Mr. de Vos had been inthe employ of the attorney, Mr. Boake.
A number of English cases were cited to us on both sides illustratingthe powers as agent of an attorney, but those cases are apt to mislead,unless the term “ attorney ” is carefully defined. Those cases dealt withthe powers of an attorney, meaning by that term the species of law agent
1 (1893) A. C. at 177.2 9 A. C. at 566.
*7 C. B. (W. S.) 487, 29 L. J. C.^P. 137
MACDONELL CJ.—Marshall v. Seneviratne.
363
now more usually known as a solicitor. The law agent known as asolicitor is in many respects like the proctor with us though there aredifferences; for instance, a proctor to institute action for his client mustfile a proxy from him. In England such a proxy is unknown and asolicitor does not file any document of authority when instituting anaction for a client. But in the main rules applicable to one species of lawagent are applicable to the other. The cases cited to us included Wilkin-son v. CandlishKent v. Thomas *, and a very recent case, Bonham v.Maycock*—all three of which decided the same point, that the law agentknown as a solicitor who receives interest for a mortgagee and hasauthority to receive it either by reason of the mortgagee’s conduct or byexpress direction from him, does not thereby possess any authority toreceive the principal debt due on the mortgage. In the last of thesecases Roche J. quotes from Kent v. Thomas, as follows: —“ In this case hewas the agent of the plaintiff to receive the interest, but as to the princi-pal, Parke B., in Wilkinson v. Candlish, pointed out that an authority toreceive the interest on a mortgage by no means imports an authority toreceive the principal. ” The other case cited to us was Yates v. Freckleton where it was held that though it had formerly been doubted whetherpayment to the attorney was payment to the party, it was now settledthat it was. Attorney in that case means of course that species of lawagent known as an attorney.
These cases then dealt with the authority of a solicitor, though theyusually give him the name of attorney, but to cite them as authoritiesfor what may be done under a power of attorney risks the fallacy of usingthe same term in two different senses. The authority of the law agent,sometimes even now called an attorney but more usually a solicitor, is animplied authority; the law clothes him with certain powers and duties,and when a man employs a solicitor he impliedly authorizes the solicitorto act for him in accordance with those powers and duties and if byexpress instructions he limits those powers in any way, he must showthat the person with whom the solicitor deals knew in what respectthose implied powers were expressly limited, otherwise that person willnot be affected. The authority given by a power of attorney on theother hand is an express authority to be found not by implication butfrom the terms of the power appointing the attorney. Once a person isaware that the man he is dealing with acts under a power of attorney itis at his peril not to know the extent and limits of that power. Applythis to the present case. Even if Yates v. Freckleton (supra) was law withus and the law was that payment to the law agent was in all cases pay-ment to the principal employing him, still if that person employing himwere known by the party paying to be an attorney—that is, an agent actingunder a power of attorney, as are the facts here,—he would not be safe inpaying to the law agent unless the power of attorney allowed the personholding it, expressly or by necessary implication, to delegate to the lawagent the power to receive payment. Here the power of attorney seemsin express terms to confine the power to receive money to the holder ofthat power, at least until a proxy has been given to the law agent and
i 5 Ex. 91; 155 E. R. 39.3 138 L. T. 736.
*1 H. JV. 473; 156 E. R. 1387.*2 Doug. 623 ; 99 E. ft. 394.
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DRIEBEEgG X+—Marshall v. Seneviratne.
^‘-f;f
action has been commenced hy him, <Then the cases cited to us, includingYates v. Freckleton (sup/a), do npt fem to me to be in point in the presentmatter.'
To recapitulate. On the facts, the appellants’ case could only succeedas to the Rs. 10,000 but not as to the Rs. 60,000, for it was not proved thatany part of this sum was available for payment to the plaintiff at the datewhen Mr. de Vos could be deemed the agent of the plaintiff to receive it.The letter of September 24 does not seem to have conferred any authorityon Mr. de Vos to receive moneys on behalf of the plaintiff once at any rateSeptember 25 had passed. But apart from these two aspects of the case,the power of attorney granted to the plaintiff’s agent confines the powersof receiving money, in payment of the mortgage debt owing, to the holderof that power of attorney. Consequently payment to someone else wasnot and could not be payment to the holder of that power, and if so, thennot to the plaintiff either.
I am of opinion that this appeal must be dismissed with costs.
Drieberg J.—
The plaintiff brought this action on a mortgage bond No. 4,949 ofMay 24, 1928, executed in his favour by the first defendant. This bond,by which certain lands were mortgaged, was to secure a sum of Rs. 70,000lent to the first defendant. The plaintiff alleged that the first defendanthad repaid Rs. 35,000 of the principal and had paid all interest due toMarch 31, 1931. He claimed a sum of Rs. 37,483.56 balance principaland interest.
The first defendant by a bond No. 1,692 of October 9, 1928, mortgagedthe same lands to the third defendant. By deed No. 5,079 of February21, 1929, the first defendant transferred these lands to his wife, the seconddefendant. The first defendant and his wife by 1 D 6, executed onOctober 15 and 23, 1929, mortgaged these lands to the fourth defendant.The second, third and fourth defendants have been made parties to thisaction as they have acquired an interest in the property subsequent tothe plaintiff’s mortgage.
By a power executed by the plaintiff in Scotland on June 3, 1929, theplaintiff appointed Reginald Lyons and in his absence from Ceylon orotherwise William Boake and, failing Boake, R. A. Smith, to be hisattorney in Ceylon for certain purposes. This action was brought bythe plaintiff by his attorney Boake who has since died.
The first defendant defends the action on the ground that the plaintiffreceived payment as the result of the execution by him of the bond 1 D 6in favour of the fourth defendant, Mrs. Poulier. He says that on thesuggestion of de Vos, a proctor and notary employed by Boake to recoverthe amount due by him, he executed in favour of Mrs. Poulier the bondI D 6 for Rs. 70,000 the arrangement being that de Vos should pay themoney received from her to Boake and have his bond to the plaintiffdischarged. He says that this money was received by de Vos fromMrs. Poulier with his sanction and that the payment to de Vos was a,payment to Boake. His position is that de Vos had sufficient authorityJrom Boake to receive payment, Boake himself, under the power of
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DRIEBERG J.—MarshallSfeneitfratne.
– – ■ ■■%■>■■■ 1attorney from the plaintiff, having the pbwer to authorize de Vos toreceive payment. It will be necessary to consider later more fully thecircumstances attending the execution of 1 D 6.
On August 20, 1928, by 1 D 2 Boake asked de Vos to call in the loan tothe first defendant; interest was then due from April 1 of that year. OnOctober 3, 1928, by 1 D 4 Boake wrote to de Vos expressing surprise thathe had not carried out his instructions and asked him to do so immediately.On June 25, 1929, by 1 D 4 Boake wrote to de Vos to give the first defend-ant three months’ notice that repayment was required. The bondprovided for this notice if the debtor was not in arrears in payment ofinterest. Boake sent with this letter the bond No. 4,949 for de Vos’“ information and guidance ”, requesting its return at his earliest con-venience. De Vos gave the first defendant notice demanding repaymentand returned the bond to Boake. The time limited for payment by thisnotice was September 25, 1929. On September 24, 1929, Boake wroteto de Vos the letter 1 D 5 as follows:—“Re my letter of the 25th June,should this loan not be repaid by due date please take the necessary stepsto recover the principal with interest ”.
De Vos says that after the demand was made of him the first defendantasked him to raise the money from elesewhere and pay the plaintiff; deVos agreed to do so. He had a client, Mrs. Poulier, whose money heused to invest, .He arranged a loan by Mrs. Poulier of Rs. 70,000 to thefirst defendant and his wife—the first defendant had transferred the landsto his wife in February, 1929—on a mortgage, described as primary, ofthese lands, the money lent by Mrs. Poulier being paid not to the first andsecond defendants but to Boake in discharge of the plaintiff’s mortgage,the mortgage to Mrs. Poulier becoming on the discharge of the plaintiff’sbond a primary mortgage. Mrs. Poulier knew nothing of this arrange-ment beyond the fact that she was lending Rs. 70,000 to the first andsecond defendants on a primary mortgage. She was not told by de Vosof the plaintiff’s mortgage and it would not have affected her conduct ifshe had, for she would have trusted de Vos to do what was necessary tomake her security a primary one. The first and second defendantssigned the bond in favour of Mr. and Mrs. Poulier on October 15 and 23,1929, the first defendant believing that de Vos had received Rs. 70,000from Mrs. Poulier and trusting to de Vos to pay off the plaintiff’s claimwith it.
There can be no doubt regarding the obligations of de Vos toMrs. Poulier and to the first defendant, and of his relations with them.Having arranged for a primary bond in Mrs. Poulier’s favour, it was hisduty to apply, to the discharge of the plaintiff’s bond, "the money she waslending, and he was agent for that purpose. The first defendantsigned the bond 1 D 6 on the understanding that the money he wasentitled to on it should be retained by de Vos and applied to the dischargeof the plaintiff’s bond, and de Vos was his agent for the payment to Bpake.Both parties to 1 D 6 had complete confidence in de Vos, but de Vos, whowas subsequently convicted of criminal misappropriation of clients'money, admitted that at that time he had embezzled considerable money36/28
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DREEBERG J.—Marshall v. Seneviratne.
of clients. There was, however, at that time no reason to suspect thehonesty of de Vos.
Out of such money of Mrs. Poulier as was available to him, de Vos paidto Boake Rs. 35,000. He said he paid it in instalments but we do notknow the dates or amounts of the payments. The plaintiff has given thefirst defendant credit for this in reduction of the principal sum. De Voshad received from Mrs. Poulier Rs. 70,000 for the purpose of the loan tothe first defendant,—I shall deal later with the manner in which themoney was received by de Vos—he admits that he misappropriated thebalance Rs. 35,000.
If the first defendant is to succeed in his defence of payment he mustprove that Boake authorized de Vos to receive the money in the manneradopted, so that a payment by or on account of the first defendant tode Vos would be as complete and effective as a payment to Boake himself,and this would imply that de Vos had the power on receiving payment torelease and discharge the first defendant from liability to the plaintiff.He would further have to show that Boake, in granting such authority tode Vos, was acting within the powers conferred on him by his appointmentfrom the plaintiff. He would also have to prove that when the bond1 D 6 was executed Mrs. Poulier gave de Vos Rs. 70,000 and that de Voshad Rs. 70,000 of Mrs. Poulier’s money available for payment to Boake.
In the power of attorney the plaintiff set out that he held certainmortgages of real property in Ceylon and that it was necessary that heshould appoint an attorney for certain purposes and with certain powers,which are as follows : —
“ Power in my name and on my behalf to ask, demand, sue for,recover, and receive all debts of whatever nature now owing or payableto me or which may hereafter become owing or payable to me by indi-viduals, firms, or companies in the said Island, and on payment ordelivery thereof to give, sign, and execute receipts, releases, and otherdischarges for the same, and on non-payment to commence, carry on,and prosecute any action or actions, suit or suits, or other proceedingswhatsoever before any court or courts of law in the said Island forreceiving and compelling the payment thereof. To appear before anycourt or courts of justice in the said Island as plaintiff, defendant,claimant, added party, or in any other capacity and to sign and grantall necessary appointment or appointments to any proctor or proctorsof the said courts and to prosecute or defend any suit or suits orproceedings brought by or against me and to proceed to judgment, andto appeal against any judgment, order or decree of any of the saidcourts and to prosecute such appeal before the Supreme Court of thesaid Island and give all necessary securities and sign all necessary bondsfor the prosecution of such appeal; to transfer and sign mortgagebonds or other securities held by me and to sign all necessary deeds inthat behalf ; to purchase at Fiscal’s sale any property sold under anywrit issued in any action instituted on my behalf by my attorney andto sell the property so purchased and to sign all necessary deeds for suchpurposes and generally to do, perform, execute, and prosecute all otheracts, deeds, and things whatsoever which may be necessary or expedientin relation to the promises as fully and effectually to all intents and
DRIEBERG J.—Marshall v. Seneviratne.
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purposes as I could or might do if present, and I hereby declare that thereceipts in writing of my attorney acting for the time hereunder for anymoneys shall be a sufficient discharge for the same and shall effectuallyexonerate the person paying the same and no such person shall haveany right to inquire as to the application thereof. ”
In giving his attorney power to appoint a proctor for the purpose of anaction the plaintiff did no doubt authorize his attorney to employ anotherto do that which the attorney could have done himself, for a person caninstitute and carry on an action without a proctor—the power in factgives the attorney power to do so. If a payment was made to a proctorformally appointed by the attorney to institute an action, a question,which is not free from difficulty, would arise if the debtor paid the claimto the proctor in consequence of such action and the proctor failed to paythe money to the attorney. I shall consider later whether the paymentin question can be regarded as made under such circumstances; butputting aside for the moment the case of a proctor formally appointed forthe purpose of an action, I think it is clear that the power does not allowof the attorney appointing someone else to receive payment and give adischarge of a debt due to his principal. There is first the power given toreceive, demand, and recover debts and to sign and execute releases anddischarges for payments. Then follow provisions for the attorney onnon-payment suing for the recovery of debts, and also for the appoint-ment of a proctor ; after provision for appeals and matters arising out ofexecution proceedings there follows the declaration that the receipts ofthe attorney in writing should effectually exonerate any person makingpayment. It is only the attorney who can give a discharge on payment,and if de Vos had that power it could only be the result of a powernecessarily following on his employment by the attorney and implied byhis being so employed.
Such authority as de Vos had must be sought in the letter 1 D 5 whichwas written on the day before September 25, till which the first defendanthad time for payment. Jt was argued that the direction that stepsshould be taken “ should the loan not be repaid by the due date ” showedthat Boake thought of the possibility of direct payment to de Vos as theresult of the demand of repayment Boake by 1 D 4 authorized de Vosto make. There is nothing to be gained by a consideration of. this part ofthe letter, for the question must be determined by the power of attorneygiven to Boake and not by his view of his powers under it. But as it hasbeen pressed I might say that it does not necessarily follow that Boakehad an idea of de Vos receiving the money and releasing the first defendant.Boake apparently knew, when writing on the 24th, that payment had notbeen made and hehave thought that the first defendant who paid
him interest direct might, if the payment was made at the very end of thetime limit, have taken to de Vos a cheque in favour of Boake.
What did Boake mean when in 1 D 5 he asked de Vos to “ take thenecessary steps to recover the principal and interest”? It was con-tended for the plaintiff that what was meant was that de Vos should takesteps to recover the money by action, and if this is so the first step forde Vos to take was to send Boake a proxy for his signature. He wouldalso have needed the bond, which he had returned to Boake with his letter
388nRTBRERG J.—Marshall v. Seneviratne.
1 D 4 of June 25. De Vos said that he had an idea that he got a proxyfrom Boake “ to keep him quiet ”, but he could not be sure of this. Itdoes not, however, matter whether he got one or not. Such a proxywould only operate on its being presented in Court, and this was not done.
It is important to note that if de Vos had filed action he could not havedrawn, without the consent in writing of Boake, any money paid intoCourt by execution or otherwise ; without such consent the order ofpayment would have to be in favour of Boake.
It was argued for the first and second defendants that Boake by 1 D 5gave de Vos authority to recover the money in any way, by which Iunderstand in any way within his province as a proctor and notary. Inmy opinion the letter does not mean this, but what Boake directed wasthat if payment was not made by the 25th de Vos should take steps to fileaction. It is extremely unlikely that he had anything else in mind.
If the contention of the first and second defendants is correct there areother things de Vos might have done; de Vos might, for example, havefound a buyer for the property And 'if the buyer paid the entire price tode Vos, directing him to apply Rs. 70,000 of “it in discharge of the mortgageto the plaintiff, would that be payment to the plaintiff even though de Vosmisappropriated the money? And would it make any difference ifBoake had been told of the proposed sale and authorized de Vos to receivethe money? There is no difference between the money being obtainedby the sale of the property, or by the assignment of the plaintiff’s bond toanother lender, or by a fresh bond to a new lender as is the case here. Tobe able to give such power to de Vos, Boake would need authority underthe power of attorney of completely delegating to someone, other than aproctor appointed for an action, his power of receiving payments andreleasing debts, but Boake had not this power. If he could not delegatethis power, let us say, to a bank or to any person who undertakes thetcollection of debts as a matter of business, he could not. delegate it tode Vos for the reason only that de Vos was a proctor. Proctors areemployed for many purposes, other than the institution of actions, someof which, might be done as well by any man of business.
The appointment of a proctor which the power authorized is for aproceeding in Court; this is clear from the context “ To appear before anycourt or courts of justice …. and to grant all necessary appointmentor appointments to any proctor or proctors of the said courtsThis power of attorney, if not prepared in Ceylon, must have been draftedhvith a knowledge of Ceylon institutions; I have in mind the words. " Fiscal’s sale ” and “ appointment of a proctor ”. Such an appointmentis that provided for by sections 24 and 27 of the Civil Procedure Code forthe purposes of appearances, applications or acts in Court; the form ofthe appointment is No. 7 in Schedule II. of the Code. It is an appointmentfor the purpose of a particular action. I referred to a question whichwould arise if after such an appointment a defendant were to make apayment to the plaintiff’s proctor. The form confers considerable powersand it would allow of the plaintiff’s proctor receiving payment from thedefendant and giving him a discharge. But sections 24 and 27 make noreference to the form, though in some other cases the forms are referredto,—see section 225. though the form of the proxy authorizes the
DR1EBERG J.—Marshall v. Seneviratne,389
appointed proctor to obtain in his name orders of payment for moneydeposited in Court, our Courts do not allow this.
It is not possible to regard the letter 1 D 5 as the appointment of aproctor provided for by the power of attorney and if, as the appellantscontend, it was an authority to de Vos to recover the money by any meansincluding action and release them from liability, Boake had no power togive such authority to de Vos. I have not been able to derive any helpfrom the cases cited at the argument. If Boake was entitled to employa proctor generally to recover the money, questions of the implied author-ity of a proctor, as agent, would arise, but such a general employment isnot authorized.
There remains to be considered whether when the bond 1 D 6 wasexecuted de Vos had Rs. 70,000 of Mrs. Poulier’s money available to himfor payment to Boake. On October 8, 1929, there were paid to theaccount of de Vos & Gratiaen, de Vos’ firm, two cheques (1 D 7 and 1 D 8):one for Rs. 55,000 by Mrs. Poulier as attorney of her husband, and anotherfor Rs. 5,000 by Mrs. Poulier. Another cheque for Rs. 10,000 was paidin by Mrs. Poulier on January 27, 1930; 1 D 6 was signed on October 15and 23, 1929. De Vos said the cheques were received for the loan to thefirst and second defendants. When 1 D 6 was signed by the first andsecond defendants de Vos should have paid Boake at least the Rs. 50,000paid in by Mrs. Poulier on October 8, but was it then available to him ?This is a point on which the burden of proof is on the first and second'defendants and I do not think they have discharged it. We have onlyP 5 which is the account of J. A. Poulier with the firm of de Vos &Gratiaen ; we can take it that this was the account of the money receivedfrom Poulier and his wife. In the account between October 4 andOctober 23, 1929, appear entries of four cheques described as “ to chequein his favour ” amounting to Rs. 25,250; these cheques would havereduced the Rs. 60,000 standing in the account of the Pouliers to Rs. 34,750at the execution of 1 D 6. Whether de Vos had been this sum in hisaccount we do not know, for his bank account is not in evidence. De Vosadmits that for some time before this he had been misappropriatingclients’ moneys, and as regards the Poulier account he confesses to anumber of false entries—cheques drawn in his own favour being shown aspayments to J. A. Poulier. The first and second defendants cannotclaim a .payment of Rs. 60,000 at the time of the execution of 1 D 6 unlessthey showed that de Vos had then in his account that sum of money onwhich he could have drawn. He could only have drawn, so far as theaccount P 5 shows, Rs. 34,750, but in view of de Vos’ evidence of hisconduct at that time I do not think we can assume, without seeing hisbank account, that he had even that sum available for payment; it ispossible that he had not the money then and that the Rs. 35,000 paid toBoake was the money of some other client. Even if de Vos had themoney available at the time of 1 D 6 the defence fails for the reason thatBoake had no power to delegate to de Vos his right of receiving paymentand granting a release.
The case of the first and second defendants is a hard one, but I think ifwe are to consider the question from the point of view of which of the twoinnocent parties should suffer for the fraud of de Vos, they or the plaintiff,
390
GARVIN S.P-T.—Murugiah v. Bastian Fernando.
I think the equities of the case favour the view that the plaintiff shouldnot suffer. We have on the one hand the plaintiff absent from theIsland, trusting for the safety of his interests to the integrity of hisattorney and making provision in the power that his attorney aloneshould have the power of granting release of debts; nothing that hisattorney Boake could have done could have prevented the fraud, and itshappening cannot be attributed, in the least degree, to remissness or wantof vigilance on his part. On the other hand the first defendant hadhitherto made payments to Boake direct, and even after the period ofthree months for payment was over his wife sent direct to Boake onSeptember 30, 1929, a cheque for Rs. 1,225 for interest. It was open tothe first defendant to ask that if he was to sign a bond for Rs. 70,000, theconsideration for which was to be paid by Mrs. Poulier through de Vos toBoake, that the consideration should pass to his satisfaction, and he mightquite reasonably have required that Boake should.be present and that theplaintiff’s bond should be discharged by Boake on his signing 1 D 6. Itis true that de Vos would not have given the first defendant a cheque inhis favour, but if the first defendant had asked that de Vos should givehim a cheque made specially payable to Boake only, it is hard to see howde Vos could have refused to do so if he was in a position to draw a chequefor that amount. A greater degree of vigilance and less trustfulness onthe part of the first defendant could have prevented this fraud.
I agree that the appeal should be dismissed with costs.
Appeal dismissed.
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