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Barnett, Hoares, & Co v The South London Tramways Company 18 QBD 1887
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Court of Appeal 10 May 1887
Lord Esher, MR Fry and Lope, LJJ
Principal and Agent - Authority - Secretary of Company, Representation by.
The tramway company employed contractors to execute certain works. By the contract the defendants had a right to retain a certain percentage of the amounts for which their engineer from time to time certified on account of the price of the works, until after the completion of the same. The contractors applied to the plaintiffs for an advance upon the security of retention moneys under the contract. The defendants' secretary, in answer to inquiries made by the plaintiffs, erroneously represented to them that there was a certain amount of retention money in the defendants' hands which would be payable after the completion of the works, whereas in fact it was not so. The plaintiffs thereupon advanced money to the contractors on the security of an assignment of the retention money. There was no evidence to show that the secretary had authority to make the representations which he had made:-
Held
That it was not within the scope of a secretary's authority to make such representations, and, therefore, in an action by the plaintiffs as assignees of the retention money, the defendants were not estopped from denying that such money was due.
APPEAL from the judgment of Field, J., at the trial. The action was brought by the plaintiffs as equitable assignees of certain retention moneys alleged to be due under a contract for the construction of a tramway. The facts were as follows:-
The tramway company had entered into a contract with Green & Burleigh, contractors, for the construction of a portion of their line. By such contract the defendants had a right to retain a certain percentage of the amounts for which their engineer from time to time certified on account of the contract price of the works, until the expiration of a period of six months ending March 21, 1884, during which period the contractors were to maintain the line. The contractors during the progress of the works being in want of money applied to the plaintiffs, who were bankers, for an advance of £2000 and by way of security handed them a letter purporting to assign to them retention moneys under the contract to the amount of £2000. The plaintiffs wrote to the defendants' secretary giving notice of the proposed transaction. The secretary wrote back saying: "We note that Messrs. Green & Burleigh have charged their retention moneys now in our hands to the amount of £2000 which we hold to your order payable on 21st March next." The plaintiffs wrote again to the defendants' secretary, acknowledging receipt of his letter, and saying: "May we assume that this sum of £2000 is absolutely free from any existing or possible claims on the part of your company or any one else?" The secretary answered them, saying: "The moneys we hold of Green & Burleigh represent retention moneys on contract, and, beyond the possible claim of the company upon the contractors to keep up their works for six months after the expiring of their contracts, there is no further charge on the same." The plaintiffs thereupon advanced £2000 to Green & Burleigh upon the security of the assignment of the retention moneys. On March 21, 1884, the plaintiffs, not having been paid by the contractors, demanded payment of the retention moneys assigned to them from the defendants. Except with regard to a balance of £675 which the defendants admitted to be due from them under the contract and had paid to the plaintiffs, the defendants denied their liability. It appeared that the statements of the secretary with regard to the existence of retention moneys in the hands of the defendants to a greater extent were made in error, the defendants having really paid to the contractors the rest of the money which they were entitled to retain. There was no evidence of any express authority given to the secretary to make such representations, nor as to the nature or scope of his employment or functions. The learned judge held that the secretary had no authority to make the representations, which were not, therefore, binding on the company, and the defendants were, therefore, not liable beyond the amount of the balance actually due from them to the contractors.
Lord Esher MR
The question in this case is whether, upon the mere fact that the person making these representations was the secretary of the company, and, in the absence of evidence of any express authority or of any course of business from which authority might be inferred, we ought to hold that the secretary was a person upon whose statements the plaintiffs were entitled to rely as having authority thereby to bind the defendants. I am content to give my judgment in the same terms as I employed in Newlands v National Employers' Accident Association 54 LJ QBD 428. A secretary is a mere servant; his position is that he is to do what he is told, and no person can assume that he has any authority to represent anything at all; nor can any one assume that statements made by him are necessarily to be accepted as trustworthy without further inquiry, any more than in the case of a merchant it can be assumed that one who is only a clerk has authority to make representations to induce persons to enter into contracts. For these reasons I think the appeal must be dismissed.
Fry LJ
I have come to the same conclusion. I see no reason why the secretary should be held to have had authority to make these representations so as to bind the company by way of estoppel. No evidence was given of the existence of such authority. It is suggested that the Court will take cognizance of the nature of the office of a secretary, and that such an authority is ordinarily incidental thereto. I do not think that is so.
Lopes LJ
In this case we are asked to infer from the mere fact that a person was the secretary of a tramway company that he had authority to make representations with regard to the financial situation and relations of the company, although there was no evidence whatever of any express authority nor any evidence that the making of such representations was within the scope of his duty. It seems to me that it would be most unreasonable to make the inference which we are asked to make.
Appeal dismissed.

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