1929-12-12 — Page 2

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THE HONGKONG TELEGRAPH.

LIMITED COMPANY

MEETING.

IMPORTANT JUDGMENT GIVEN

- BY PUISNE JUDGE.

FRAUD RECALLED.

An important judgment in volving the liability of a Limited Company for the acts of its ser

delivered by vants, was Honour the Paisne Judge, Justice Wood, yesterday,

His

Mr.

THURSDAY,

Loan Not Crolled,

On March 21, 1929, Wong Taz- on applied to the firm for a further temporary loan to the company, re- quiring $700. The manager of the firm acceded to this request. Wong Tsz-on received this money and gave to the manager a document aÿ 1 which I have classified memorandum and have admitted in evidence (though objection was raised to its admission as an un- stamped receipt). This document bears the signature of Wong Taz- a chop of the company on and (which chop has been shown to have been in used in the bona fide money transactions of the com-

The Wing Hung Cheong, Cali-pany). This sum was not. credited the to the company in lia books on the sued fornia Merchants,

for the date on which the money was re- Kong "Ah Co., Ltd. sum of $700.00 alleged to ceived. However, on April 6, after have been lent to the Company, his suspention, Wong Taz-on, was which amount was admittedly invited to make corrections in hid handed to one Wong Taz-on who accounts and he made a series of was, at the time, an assistant entries under this latter date one manager of the defendant Com of which recorded the receipt of pany and who was recently pro-thle sum on March 21. This sum em-has, in fact, never been applied to Becuted and convicted of bezzling a large sum of money of the use of the company. No other officer of the company was privy to the defendant Company.

the loan. In framing charges of Mr. J. M. Hall, of Messrs. Lyson embezzlement against Wong Tsz- and Hall, appeared for the plain-on no reference was made to thia tiff Arm and Mr. P. M. Hodgson, sum by the prosecuting company. of Messrs, Ts'o and Hodgson, re- On this transaction the firm here presented the defendant Company.sues the company for money lent.

Mr. Justice Wood delivered the following judgment for the defen- dant Company:

Acted in "Gend Faith, ".

It does not appear that the com

at any time required to The plaintiff is a Chinese firm-pany The Wing Hing Cheong (herein borrow money for its own purposes. difficulties have followed after called the firm) and the de- Many fendant is a registered limited com- from Wong Taz-on's dishonesty. pany-the. "Kong Ah Company The general manager has stated in the his evidence that the just debts of Limited hereinafter called company). At all material times the company will in fact be paid. the parties were trading in neigh-The firm has acted throughout in bouring premises. The company good faith. It is suggested for the was incorporated on December 29, firm that a precedent will be found (1924, 1926. It was a private company. in "Chan Shau-nam v. The Wing

Firm" Lung Previously to this date, a firm Cheong

D. 1). It has been styled the Kong Ah-had been in H.K.L.R..

was agreed that the affairs of the com- existence and the company formed to take over its business, pans, and of other similar com- At present, the company having ex-nunies, frequently also are

con.

· DECEMBER 12,

929.

MILLINERY

Special

Sale of

LADIES' HATS

MANY DIFFERENT -

STYL

ALL BELOW

COST PRICE

ELITE

STYLES

A. P. C. Building

LEARANCES

perienced financial difficulties, steps ducted in all respects like the con- these limits are not being exceed-

the

WAB

are in progress to replace the com-cerns of a partnership.

The plaintiff firm claims to sue. pany by a new firm under the original name. Among the proceed on the authority of that case. moters of the company-of whom in that case a Chinese firm

fraudulent there were eight-was a person held bound by named Wong Tsz-on. He was one of borrowing of its manager, who was three prospective shareholders who in sule charge of its chop. The signed the Merporundum of As-Court there recognised a commercial sociation. Under the Articles of custom by which managers of local

Arst Chinese truding firms were Asaggiation he became the Secretary of the Company and was powered by virtue of their positions empowered to sign cheques and a borrow money for the exigencies demand drafts for the Company. of their firm's business. I do noi He also became a Director of the desire to dissent from this judg- Company and was further appointment. It becomes necessary there Yore to consider whether the pre ed an Assistant Manager.

sent can maybe distinguished from the earlier case."

At all material times he was holding these positions in the com- pany. Among his duties, he kept

em.

In my opinion a distinction is not to be found in the reintive positions

ed.

Agent's Powers.

Persons dealing with the agent of a company are entitled to assume that he has all such powers as ho purports to exercise, provided, and powers as, according to the con- provided only, that they are such stitution of the company, the parli- cular agent can have,

com-

'The memorandum and Articles of Association of a registered com- pany are public notice of their con- tents. The law relative to panica is deemed to be known by all who enter into relations with them. Enquiries which by law were here incumbent upon the plaintiff i firm would have disclosed the fol

the account books of the company. the two agents. In the earlier The articles of the company pro-case the agent was a general man-lowing facts: A power to borrow vided for the appointment of (a) ager. liere, he was secretary, as in possessed by the company" (Me- a managing director, and/or (b) sistant manager and a

a general manager. Wong Tsz-on both cases the agent held a chop

Crucial Question.

at any material time was not hold-arid was substantially unsupervised, ing either of these offlees. The general manager. (Liu Wing-yuk) has attended these proceedings and has given, evidence for the

pany,

com-

director. morundum of Association, clause 3D). Apart from this express power an emergency power in directors to borrow for the purposes ofu trading company is recognised 10 Eq. casca "at, by the general law (an in "Gibbs and West's case P, 319: Sir R. Malins, V. C. also "In re. Hamiltons Windsor Iron Work: ex-parte, "Pitman and Ed- wurds," 12 Ch. D. 707; and other

The crucial question is whether, the fact that in the previous cast the principal was a firm while hero it is a registered company, involves new considerations.

$20,000 Embezzlement, On or about April 6, 1929, "cer-

Provided a proper authorisation tain defalcations were traced to is established in the agent, the cases).

No Delegation Power. Wong Tsz-on. He was, on that principles of liability in an oral day, suspended from his various contract are the sume for companies

Such power

to borrow (unless functions. Subsequently, he was and for private persons (Compánica prosecuted for embezzlement Ordinance, 1911, Ordinance No. 68 otherwise provided) vests in the body of directors collectively and the sum involved in the charges of 1911, section 78 (1) (3). amounting. 10 about $20,000. The plaintiff firm has not alleged not in an individual director ("In He pleaded guilty, was convicted, any express authority but attempts re. "Cunningham and Co. Ltd. v Fand sentenced to imprisonment; to derive an implied authority from "Simpson's, Claim," 3887-30 Cit.,

The facts leading up to this ease the position which the agent was | D. 532). are the following: The manager allowed by the company to occupy-

years

By the Articles of Association of

the power to manage the affairs of the business of the company is 45- signed to Mr. Llu Wing-yuk, the without power general manager,

As secretary of the company, the fraudulent agent had no power to borrow for the compuny

of the firm had been acquainted an imposing conjunction of the of the defendant company (Art, 6, 1) with Wong Taz-on for over two fices, secretary, assistant manager as a neighbouring trader, and director-arguing further that, He was aware that Wong Tsz-on by the possession of the chop, the was exercising a certain authority agent was able to do acts of the in the affairs of the company, but class to which the borrowing of of delegation. he did not inform himself of Wong money belonged. It is also right. Taz-on's exact position in the com-ly submitted that the dishonesty of pany. On June 2, 1929, Wong the company's agent is irrelevant Tez-on invited a loan of $1,000 from to the issue, whether his authority the firm as a temporary accommoda- was or was not exceeded. (C. F. tion to his company. This loan "Lloyd v Grace Smith & Co.," 1912, was made through Wong Taz-on's A. C. 716). hand and was duly repaid on de- The difficulty which the case for mand by Wang Tsz-on. It appears the plaintiff must meet is this: that this sum was never in fact That the agent of a company, (in credited to the company by Wong contrast to the agent of a partner Tsz-on in its books. Wong Tsz-on, ship) possesses mima facie an au- In respect of this loan, issued a thority of a limited kind, and any memorandum similar in character person transacting with such an to the document referred to in the agent proceeds at his own risk if

he does not assure himself that the ground of estoppel. present case.

SALESMAN ŞAM

(WHOOPIE! ALL SET FOR THE ||WELL, C'MON, HELP ME PACK NORTHLAND! UP WHERE THERE THIS BOX ON "TH' MOTOR CYCLE

THEN I'M OFF- TELL Hieg AIN'T NO GRASE, BUT THE

·I SAID GOOD BYE - ESKIMOS JUST "TH SAME!

WHERE'S GUZZ, RED?

* ૯૯,1

HOWDY

DUNNO!

Thus, the plaintiff would have discovered that neither as an in- dividual director nor yet as assis Lant manager, with delegated powers from the general manager. nor yet as a secretary, had the fraudulent agent any authority under the constitution of the com- puny to borrow money in its name.

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Agents-REISS, MASSEY & CO., LTD.

+

EXCHANGE BUILDING..../...... Tel.- C, § 673.

Now Being Exhibited at-

WHITEAWAY, LAIDLAW & Co., Ld.

FURNISHING DEPARTMENT,

AND AT

THE HONGKONG ELECTRIC CO.

SHOWROOM.

In my opinion, for the above rea-legul argument on both sides. Bons, this claim fails. I give judg-Very many authorities have been Judgment for Defendant. The same considerations apply to ment for the defendant company considered, but it has seemed to me

tage in this case of full and ableliny reasoas at any greater length. any claims based by the plaintiff on with costs. I have had the advan-to serve no useful purpose to state

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