S A Joseph and Rickard Ltd v Lindley [1905] HCA 52

280 HIGH COURT

H.C. or A. Second question answered in

1905. except as to amount above £100 SS

Aoeneon of both parties in the Supre Hoax and on appeal to be paid o a estate eaclusive of the £1000 p

O'Connor J.

Administrator's costs to have p Costs already paid to be repaid.

Solicitors for appellant, Speed & Durston. Solicitors for respondent, Northmore, Lukin & Hale.

(HIGH COURT OF AUSTRALIA. ]

S. A. JOSEPH AND RICKARD LTD. . . APPE

PLAINTIFFS, AND

LINDLEY AND OTHERS DEFENDANTS,

ON APPEAL FROM THE SUPREME _COURT OF NEW SOUTH WALES.

H.C. or A. Principal and agent—Representative committee of combine—Liability to a

1905. Delegation with assent of principals—Intention of parties. —— Practice Verdict for plaintiff by consent—Verdict set aside where upon doo Sypyey, and admitted facts defendant entitled to judgment. Nov. 27, 2% 7 a 25 28; 'A number of persons formed a combine for the purpose of controll

local market for imported maize, and agreed to be bound by cert

(Sere A committee was appointed to carry out the executive and financial w0 O'Connor JJ. the combine in connection with the sale and disposal of the maize at

distribution of the proceeds of sales amongst the members, and to tically as directors of the combine, The members bound themselves b ment with the committee to complete a contract of sale to the commit the amount of maize which they respectively undertook to supply,

deliver the maize at the order of the committee to the various purch

OF AUSTRALIA.

'one of the rules the committee were required to delegate the executive and financial work to some firm to be approved by them, and in pursuance of this a certain firm, with the knowledge and consent of the members at a general meeting, entered into an agreement with the committee to take over all financial responsibility imposed upon the committee by the rules, to carry outall the administrative work of the combine, to render a complete statement, "© to members upon final completion, to issue all orders to purchasers, to collect

and receive all payments from buyers, and to hold the proceeds in trust until distributed, and to distribute all moneys due to members in accordance with the rules. The objects of the combine having been completed, the appellants, who were members of the combine, brought an action against the committee to recover the balance due to them out of the proceeds of the sales of their

maize.

Held, that the intention of the parties, as shown by the terms of the agreement made between the members of the combine and the committee, was that all the pecuniary liabilities originally imposed upon the committee were to be transferred to the firm to whom the authority of the committee was delegated, and that when that firm, with the knowledge and consent of the members, and in the terms of the agreement approved by them, accepted financial responsibility, the liability of the committee to account for the proceeds of the sales came to an end.

Grain's Case, 1 Ch. D., 307, at p. 315, and Harman's Case, 1 Ch. D., applied.

Where a party to an action, after evidence has been taken, consents to an adverse verdict, with leave reserved to move to have the verdict set aside and judgment entered for him, all disputed questions of fact must be taken as found against him, and the verdict must stand unless it appears from admitted facts and from documentary evidence as to which there is no dispute, that he is incontrovertibly entitled to judgment.

Decision of the Supreme Court, May 30th, 1905, affirmed.

Appear from a decision of the Supreme Court of New South Wales. The following statement of the facts is taken from the udgment of Grifith C.J. "© In 1903 a number of persons, amongst whom were the ap- 'ellants and the respondents, agreed together to form a maize "ombine, that is, an association for the purpose of providing for whe control of the local market for large quantities of maize to he mported, and for the sale of the maize on a common account, so "hat the various members of the combine should receive an ""werage price for the quantity they contributed to the common tock. For the purpose of carrying out that object certain rules

H.C. or A.

1905. a)

8. AL JosePH AND Rickarp Lrp.

v. Linpey.

H. C. or A. 1905. Ee S. A.

JOSEPH AND

RICKARD Lrp. v » Linpiery.

HIGH COURT

were drawn up called the rules of the combine. By these as originally drawn up on the 15th July, 1903, it was p amongst other things, that a committee should be appointe manage the affairs of the combine. The duties of the comm were, speaking generally, to fix the selling price of the mai: determine all questions that might arise between the membi to the quality of the maize supplied by them, and to m necessary arrangements for the sale and disposal of the n for the distribution of the proceeds of the sales amo members. The committee were also to appoint a secretary combine, and to open a trust account in a bank, into wi moneys received on account of sales were to be paid. provided that all cheques drawn upon this fund should be by two members of the committee, and countersigned by secretary. a At that time, therefore, it was contemplated that the ¢ mittee should act practically as directors of the combine, should have all the moneys of the combine entirely under control. ; On 22nd July, however, these rules were amended by p viding, amongst other things, a rule which stood as z That rule was in these words: "The committee may, subj the confirmation of a general meeting, delegate the execu and financial work to any firm or firms on terms to be arrat by the committee, but the remuneration must not exceed 0 cent. (17%) on the total proceeds of the maize, less the duty, the control of the combine. In the event of the exe and financial work being delegated to any firm or firms, rules 11, 17, and 18 shall be deemed null and void, and in ru the word committee shall be deemed to be substituted for word secretary." On 27th July the rules were again alt sion in rule 30 that "the committee may - delegate" was amended so as to read "the committee shall. delegate"; so that the provision then was: "The 'shall, subject to the confirmation of a general meeting, the executive and financial work to any firm or firms, on to be arranged by the committee." Another material circumstance was that a formal agreem

and the prov

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~ was signed on 22nd July, the same day as that on which it was 'provided that this delegation of authority might be made by the committee, and therefore some time before the adoption of the rule which made that delegation imperative. That agreement was in these terms: "In consideration of a combination being formed to control shipments of maize, we the undersigned hereby agree and bind ourselves severally to complete (when called upon to do so) a contract of sale to the committee about to be formed for the amount of the maize respectively set opposite our names, in terms of the attached form of sale initialled by John Russell for purposes of identification. And we further agree to conform to the rules adopted by the members, and to any further rules subsequently adopted in general meeting of members." The form of agreement referred to was:

"Tagree to sellto . . . all the maize as follows: . . . "For the price per bushel that the said . . . may realise for all the maize amounting to about . . . bushels, now under

their control after deducting all expenses and allowances to be made by them as already agreed.

" And I agree to deliver any or all of such maize to the order ofthe said . . . as they (or he) may require after it shall have been sold by them. Payment to be made to me as soon as practicable after the sale.

"The said . . . or the survivors of them their or his assigns may have the benefit of or enforce this agreement.

"We confirm this agreement."

Accordingly the appellants on 29th July, after the rule had been altered, signed an agreement in that form as to about "800 tons of maize. After the rules were altered negotiations were entered into with various firms with a view to delegating 'the work in accordance with the altered rule 30, and on 3rd August a general meeting of the members of the combine, as it was called, was held, at which a draft agreement with W. & A. -MeArthur, Ltd., was submitted to the meeting, the representatives of the appellants being present. A motion was put and carried that the agreement as read be accepted for the administrative work of the combine to be carried out by the firm mentioned. In accordance with that resolution the agreement was signed and the

H. C. or A. 1905. Se S.A.

JosEPH AND

RickaRD Lr. v Lispiey.

H.C. or A. 1905. aa 8. A.

JosePH aND

RicKaRD Lrp. v. Lipuy.

HIGH COURT

work handed over to W. & A. McArthur Ltd. The agreem far as is material, was as follows :— " ARGENTINE Maize COMBINE. "Terms of agreement for the working of same between M W. & A. McArthur Ltd. and the committee of the said com "The said firm of W. & A. McArthur Ltd. agree to und the administrative work required under the scheme ad the said combine. The said administrative work to includ clerical work and bookkeeping necessary for the successful y ing of the said combine, and the rendering of a complete sta to members of the said combine upon final completion. "The said W. & A. McArthur Ltd. agree to hold in

of the said combine. "The said W. & A. McArthur Ltd. further agree to a financial responsibilities imposed by the said rules of the combine." a Later, the objects of the combine having come to an end, |

dation, claimed the proceeds of the sale of their maize accordi to the price fixed by the committee. They claimed it first fr the committee, who are the respondents in this appeal, and | 4

That firm, when the appellants made their claim for the bala of proceeds due to them, claimed to be entitled to a se respect of other transactions between the appellants and th selves. The appellants therefore renewed their claim against t committee, and brought an action against them for the recovel of £637 odd, which represented the balance due to them al certain admitted payments. . The declaration contained special counts upon a contract by respondents to account for the proceeds of the sales, as agents the appellants, and an indebitatus count for money had received, &c. The respondents pleaded denying the contr alleged, and setting up in effect a rescission of that contract,

$ CLR.) OF AUSTRALIA.

that other persons, i.e, W. & A. McArthur Ltd. had undertaken the liabilities originally undertaken by the respondents, and that the appellants had accepted the liability of that firm in substitu- tion for that of the respondents.

'At the trial, with the assent of counsel for the respondents, a verdict was directed for the appellants for the amount claimed, leave being reserved to the respondents to move the Full Court to set aside the verdict and have a verdict entered for them.

The Full Court, on 30th May, 1905, on the motion of the respondents, set aside the verdict, and directed a verdict to be entered for them.

From this decision the present appeal was brought.

Dr. Cullen K.C. (with him A .G. M. Pitt), for the appellants, A verdict having been found for the appellants, all questions of fact must be taken to have been found in their favour. Assum- ing that there were facts to go to the jury, it cannot now be con- tended that the verdict was unreasonable, and on no other ground canit be setaside. The respondents, by consenting to the verdict, must be taken to have abandoned all questions of fact in favour of the appellants: National Fire and Marine Insurance Co. of New Zealand v. Australian Joint Stock Bank (1); Daniel v. _ Metropolitan Railway Co. (2). The question was whether the liability of W. & A. McArthur Ltd. had been accepted by the appellants in substitution for that of the committee. That was a question of fact for the jury, and the onus was on the respon- dents to establish it. They cannot succeed now unless they can show that the whole question was one of the construction of documents as to which there was no dispute, or of admitted facts. 'The question turned not only upon the construction of documents but also upon extrinsic evidence as to the conduct of the parties. It could not therefore have been taken from the jury.

But on the documents themselves it does not appear that the committee were freed of all liability. They still retained important functions. The agreement for delegating the work cannot be construed as a release of the committee simply because the appel-

Jants consented to it. The maize was really sold to the committee,

(1) 1LN.S.W. L.R., 466. (2) L.R. 5 H.L., 45. VOL. IIL. 20

H.C. or A. 1905. = S. A.

JOSEPH AND

Rickard Lrp. v. Lrispiey.

H.C. or A. 1905. —, S.A.

JOSEPH AND

RickaRD Lr. v. Linprey.

HIGH COURT

and each member was entitled to have the price of it paid hi them. The committee had no power to transfer their lial others. They made others liable as well as themselves w consent of the appellants, but there is no evidence that further was ever agreed to by the members. Delegation does necessarily imply a cessation of liability on the part of the who delegates : Huth v. Clarke (1). The agreement for del the work was made with the committee only ; it was not an ment of agency with the members directly, in substituti the original agreement between the members and the com mi Even if the documents are capable of that construction, not conclusive on the point, and cannot be looked at except light of the conduct of the parties. The contract on which respondents rely must therefore be an implied contract, inference from facts and documents, and on that the findin,

the jury is conclusive.

Gordon K.C. (with him Garland), for the respondents. trial there were no disputed facts, and all the documents w before the Court. His Honor, on the admitted facts, di a verdict for the plaintiffs, stating that his rulings were to be sidered formal. It was clearly therefore a matter of law, fact. Even on the evidence as to conduct of the parties, the on possible inference is that the appellants treated the delegatior a substitution of W. & A. McArthur Ltd. for the commits far as the liability to account for the proceeds was concern But, looking at the documents alone, the only possible const tion is that the arrangement made with W. & A. McArthur ; put an end to the liability of the committee to account to members. The committee were compelled to make the tion. The arrangement with W. & A. McArthur Ltd. substance an agreement with the members of the combine. 1 delegates became agents of the combine, not of the com Privity of contract was immediately established, and, so fi responsibility for the proceeds of sales was concerned, the mittee dropped out altogether. Otherwise it could not bes they had " handed it over," as the rules required them todo. °

(1) 25 Q.B.D., 391.

3 CLR.) OF AUSTRALIA.

acceptance of all financial responsibility by the delegates, with the assent of the principals, is sufficient to discharge the original agents. [He referred to Story on Agency, p. 201; Anson on *< Contracts, 5th ed., p. 347; and De Bussche v. Alt(1)]. It cannot be contended that the committee may be sued for money which they » had no power toreceive. The duties which the committee retained were such as they could conveniently perform without retaining the functions transferred to W. & A. McArthur Ltd.; their reten- ~ tion of them is not inconsistent with the cessation of financial » responsibility. There was no sale of the maize to the committee - inthe ordinary sense. The gist of the contract was to bind the members of the combine to carry out sales made by the com- _ mittee. The appellants have not made any claim upon a con- . tract of sale.. They sue upon an alleged undertaking by the - eommittee to sell for them, and account for the proceeds, the ordinary claim for an account from agents. The respondents' answer is that the committee were only the agents of the appellants for certain specified purposes, and that, by the consent of the appellants, other persons have become clothed with the responsibility of carrying out certain of those purposes, including _ the receipt of and accounting for proceeds of sales, and that to that extent the respondents are divested of their original re- _ sponsibility, and cannot be sued. National Fire and Marine ~ Insurance Oo. of New Zealand v. Australian Joint Stock Bank (2), is not in point, because in that case there were disputed _ questions of fact, whereas here there are none. On the plaintiffs' own evidence and the documents, the jury should have been directed, as a matter of law, to find a verdict for the defendants.

p Dr. Cullen in reply. The respondents cannot rely upon oral _ evidence to help out their construction of the documents. They must support their pleas by the documents alone. [He referred

to Morrell vy. Frith (3), and Moore v. Garwood (4)]. If it is : necessary to go outside the documents in order to discover the _ intention of the parties, the question becomes one for the jury, and, there being a verdict, it will not be disturbed unless un-

(1) 8 Ch. D., 286, at p. 310. (3) 3M. & W., 402. (2) LN.S.W. LLR., 466. (4) 4 Exch., 631, at p. 684.

H. C. of A.

1905. —

S. A. JoOsEPH AND RickaRD

Lr. v LinDLey.

H.C. oF A. 1905. —— S.A.

JOSEPH AND

RICKARD Lr.

v 'Lixpiey.

Noy. 29.

HIGH COURT

reasonable. There is here no single document establis! contract, but there are various documents which requir evidence to connect them, and there is also evidence th t parties did not treat W. & A. McArthur Ltd. as the only p liable to the combine, but looked to the committee to se the duties imposed upon them, and which they had dele, were properly carried out. [He referred to Powell & Thom Evan Jones & Co. (1).

GrirritH C.J. For the purposes of this appeal this may be regarded as an action by principals against their ag for not accounting to them for the proceeds of property of principals sold by the agents ; and the defence as a plea that agents were discharged from that obligation to account by principals accepting, voluntarily or otherwise, the liability of persons in substitution for the original liability of the agents.

The question arises in this way. [His Honor then stated # facts, as already set out, and proceeded.] The question is whe under these circumstances, the appellants are entitled to su members of the committee, or whether their right of actior against W. & A. McArthur Ltd. 4

If all the parties concerned were solvent, it may be that difficulty would ever have arisen, but, as things stand at prese it appears that W. & A. McArthur Ltd. have a claim agamst appellants in respect of which they claim to be entitled to a off. And, as the appellants are in voluntary liquidation, and | liquidator is making a claim against the committee, it is necessary to decide whether there is a right of set-off or whether the claim of W. & A. McArthur Ltd. could be made | subject of set-off in an action of this kind or not. The a1 question for our consideration is whether the appellants | entitled to recover against the respondents.

Now, the facts are all either in writing or recorded in documents about which there is no dispute. At the trial, the assent of counsel for the respondents, a verdict was d for the plaintiffs, the appellants, leave being reserved to | defendants to move the Court to set aside the verdict and om

(1) (1995) 1 K.B., 11.

3CLR] OF AUSTRALIA. {

averdict for them. It is clear that, under these circumstances,

the respondents cannot have judgment entered for them, unless it

_ appears from the documents and the admitted facts that they

"are incontrovertibly entitled to judgment. So far, therefore, as there are any controverted matters of fact, or evidence of such

facts which might have been left to the jury, they must, for the purposes of this inquiry, be altogether disregarded. The respond- ents can only call to their aid the admitted facts.

Tt appears to me that the question is almost entirely one of ~ construction of documents. The case may be described in almost ' the same words as were used by James L.J. in Grain's case (1), a "case against an insurance company, a case of so-called novation. He said: "They were an unincorporated body of persons, but although they were in point of law and in point of fact not absolutely a corporation, it is quite clear, as between all the parties to these deeds of settlement, it was their intention to make themselves for all practical purposes as like a corporation

asin the then state of law was possible to be done by a mere contract. It was intended that they should not be a partnership _ of the particular individuals existing at that time, but that they should be a body of persons with continuous and perpetual suc- cession (until dissolved according to the terms of the constitution of their own body) as between themselves, and as between them and all persons having dealings and transactions with them. The same principle was the basis of all the arrangements. Nobody effecting a policy of insurance with such a society as this ever intended to be left, or ever thought he was left, or that _ his executors would be left after his death, to the necessity of _ bringing an action against the survivors of the individuals who ppened to constitute the particular body of persons on the day which his policy was signed. The intention was that it should be a bargain with a quasi corporation, and a liability - against the quasi corporation and against the persons who at the time when the policy ripened into a debitum would be the _ persons to provide for it." I refer to that case to show that the general intention of the parties to a transaction of this kind is to be regarded. Now, from one point of view, although the parties (1) 1 Ch. D., 307, at p. 320.

H. C. or A. 1905. = SA

JosePH AND

RickaRD Lrp. ». Linpiey.

Griffith C.J.

H. C. oF A. 1905. =——

aE JosEPH AND RICKARD Lrp. v. Lisptey.

Griffith. C.J.

HIGH COURT

treated this arrangement as a contract of sale made with tl mittee, on the other hand it was plainly intended to be to ; extent a contract of agency, by which each member entrust committee with the work of selling the maize on their j taking to account to the members for the proceeds. The qu must be regarded according to the intention of the revealed by the whole of the documents. So far as the n of sale appears in the contract, that does not appear to ine important. If there were a contract of sale and no mo would clearly be implied an obligation on the part of chasers to pay the price. But that is no reason why an ag ment should not be made between the vendor and pr \ to the sources to which the vendor shall look for paym And, if the vendor chooses to stipulate that he will look, n the purchaser, but to the purchaser's agent for the proceeds the sale, there is no objection to such an agreement. If sells goods to another on the terms that the purchaser shall pay for them till he has sold them, the purchaser to sell H through an agent appointed with the approval of the ven¢ and the latter to look to the agent for the money, he camn bring an action for the price against the purchaser.

That may or may not be the present case. It is ne therefore to regard the case from another point of view, of agency. Asa general rule, no doubt, in contracts of a maxim delegatus non potest delegare applies. As was state Thesiger LJ. in Bussche vy. Alt (1), the maxim "applies so prevent an agent from establishing the relationship of prine and agent between his own principal and a third person; maxim when analyzed merely imports that an agent cannot, out authority from his principal, devolve upon another obligal to the principal which he has himself undertaken to p fulfil; and that, inasmuch as confidence in the particular pers employed is at the root of the contract of agency, such auth cannot be implied as an ordinary incident in the contract. the exigencies of business do from time to time render nece the carrying out of the instructions of a principal by a pers other than the agent originally instructed for the purpose,

(1) 8 Ch. D., 286, at p. 310, 311.

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% where that is the case, the reason of the thing requires that the Fe should be relaxed, so as, on the one hand, to enable the * agent to appoint what has been termed a 'sub-agent' or 'substi- tute' (the latter of which designations, although it does not ' exactly denote the legal relationship of the parties, we adopt for want of a better, and for the sake of brevity); and, on the other hand, to constitute, in the interests and for the protection of the principal, a direct privity of contract between him and such substitute. And we are of opinion that an authority to the eftect referred to may and should be implied where, from the conduct of the parties to the original contract of agency, the usage of trade, or the nature of the particular business which is the subject of the agency, it may reasonably be presumed that the parties to the contract of agency originally intended that such authority should exist, or where, in the course of the employment, unforeseen emergencies arise which impose upon the agent the necessity of employing a substitute, and that when such authority exists, and is duly exercised, privity of contract arises between the principal and the substitute, and the latter becomes as responsible to the former for the due discharge of the duties which his employment casts upon him, as if he had been appointed agent by the principal himself." He then goes on to say that the law is accurately stated in Story on Agency, p. 201, in the passage referred to by Mr. Gordon. Of course, he was dealing there with the methods by which an authority to sell may be delegated. If the original document creating the agency creates at the same time a power in the agent to appoint a sub-agent, the maxim has no application. The first step, therefore, is to consider the docu- ment in which the respondents were constituted the agents of the appellants. By that document they were not only authorized, but were required, to delegate certain of their duties as agents, and this delegation was carried out with the approval of the principals. What then is to be inferred from this, as to the position in which the principals would be with regard to their agents? The consequences of the delegation were to be that the committee should no longer have the handling of the money arising from the sales. It was to be taken out of their hands and given over to the control of the sub-agents. Was it intended by

H.C. or A. 1905. = S.A. JOSEPH AND Rickard Lrp. v. Linpiey.

Griffith ©.3.

H. C. or A. 1905. — S.A. JosEPH AND RICKARD Lap.

v. Linpiey.

Griffith O.J.

HIGH COURT

this that there should be a power in the committee to privity of contract between the principals and the sub- if it was so intended, was it also the intention of the p the arrangement that the delegates should be liable di the principals? It is not, however, necessary to say would be inferred from these facts alone. For by the te the agreement made between the respondents and W, McArthur Ltd., with the approval of the members of the con this was expressly provided. The contract, so far as is mat was as follows: [His Honor read the material portion of th tract, as already set out; and proceeded:] W. & A. MeA Ltd. therefore undertake, by this agreement, that they receive the moneys arising from the sales, and hold them int instead of the original agents, the committee, and that they i of the committee will distribute them in the proper prop amongst the members. They further agree to accept a financial responsibilities imposed by the rules of the comb In my opinion, on the proper construction of that contr W. & A. McArthur Ltd. entered into a direct agreement with members of the combine that they would discharge the du which the committee had originally undertaken to di including that of accounting for the money to the mem the combine. I think, therefore, that the appellants could hi sued W. & A. McArthur Ltd. for the money. q

It is contended, however, by Dr. Cullen, that though this be so, still it does not follow that the original right of against the committee is destroyed. That is a matter of struction. What is the intention of the parties? Is it that # committee should be deprived of all control of the money, a yet should remain responsible to the members for its due d tribution, that they should guarantee the payment of it? seems to me quite inconsistent with the fact that they were merely authorized but required to hand over their duties, that they did so with the sanction of the members. therefore the members of the combine required the committe delegate the responsibilities to some one else selected by thet surely it must be taken primé facie that it was not intend that the committee should nevertheless guarantee the perfon

L.R.] OF AUSTRALIA.

ane of the duties imposed upon the delegates, having been "Teprived of the means of protecting themselves. There is mother case, Harman's Case (1), in which a provision very "imilar to the agreement in this case had to be construed. An 'nsurance company had been formed and registered under the "ame of the Anglo-Australian &c., Company, and afterwards "esolutions were passed by the company for the amalgamation of he company with another, upon the terms of a deed afterwards "nade. By that deed it was witnessed that, as from the 19th pril, 1858, the company and its business should be transferred "o and united and amalgamated with the British Provident "jociety, upon the following terms :—First, that the business and 'roperty, effects, liabilities and engagements of the company and "ts policies and grants of annuities should be transferred to and "'indertaken by the British Provident Society, and it should not "e necessary to endorse the policies or grants of the company by ron behalf of the British Provident Society, or to issue new "olicies or grants. Then followed other provisions dealing with "he various changes necessitated by the transfer. The question 'rose whether the effect of the arrangement was not only to vansfer liability to the new company, but also to discharge the sability of the old company which had originally undertaken it. vord Cairns L.C. said (2), after referring to the agreement: Now to this agreement Mr. Harman was a party, and his policy 's among those enumerated in the schedule. Therefore, incor- vorating the schedule with the agreement, it amounts to this, hat there is an agreement to which in substance Mr. Harman is party, or at all events by which he is bound, that the particular solicy issued to him by the Anglo-Australian Company is trans- erred to and is and shall be undertaken by the British Pro- 'dent Society, and that it shall not be necessary for his safety hat it should be endorsed, or that a new policy should be sranted, but that he may have it endorsed or have a new policy ranted, if he is so minded. _ "IT think it cannot admit of any reasonable doubt that, if you ead the provision as to this particular specific policy into the yneral words of the deed, this is an agreement to which no (1) 1 Ch. D., 326. (2) 1 Ch. D., 326, at p. 331.

H. C. oF A.

1905. ~

S.A. JOSEPH AND RicKaRD Lr.

v Linpiey.

Griffith C.J.

H.C. or A.

1905. ~ S.A. JOSEPH AND RIcKARD Lrp. v Liypey.

Griffith ©.J.

AIGH COURT

meaning can be given, unless it means that the burthen to that time lay upon the shoulders of the Anglo-Austra pany is shifted from them, and placed for the future enti solely upon the British Provident Society, and in this a ment Mr. Harman is a concurring party." "And," he adds other agreement would have been simply absurd. It wo been absurd and incredible to suppose that the sharehol Anglo-Australian Company were to be transferred to and be shareholders in the British Provident Society, with all these tr ferred liabilities taken over, and yet that they were at the time to remain liable for exactly the same amount of mo in the old company, and that the old company was to cont for the purpose of enforcing any such liability. A provii indeed found inserted at the end of the deed, that it is to cont company, but that it is only for the benefit of the British P Society, namely, for the purpose of realizing the assets wh to be transferred to the British Provident Society." So present case the committee continued in existence for the pm specified in the deed, and in order to perform the various th stipulated for in the deed. In Grain's Cuse (1), it was out that the real question was the construction of docum and not strictly a question of novation of contract. The eonel sion at which I have arrived after consideration of all tl documents is that, by the agreement made between the of the combine and the committee, to which, when drawn up, the parties agreed, all the pecuniary liabilities were to bet ferred to W. & A. McArthur Ltd., and that when they a that the liability of the committee was discharged. That on the face of the documents.

I think therefore that the respondents have established th were discharged from any pecuniary liability to which they originally subject, and that the judgment of the Supreme © was right and should be affirmed.

Barron J. I am of the same opinion, and I agree with the Chief Justice in the reasons which he has given judgment.

(1) 1 Ch. D., 307.

CLR.) OF AUSTRALIA.

O'Connor J. Talso am of the same opinion. If the construc- tion of the documents depended on any question of fact, I agree "with Dr. Cullen, that the verdict of the jury would have to be taken in his favour. But the question is one not of fact, but entirely of construction of documents. The principal document is the agreement between W. & A. McArthur Ltd. and the com- mittee of the combine, adopted on the 3rd August. There is no doubt that at one time there had existed the liability on the part of the committee to the combine, which it isnow sought to impose on them by this action. But the sole question for us is whether that liability has not been removed by the agreement to which I have referred.

That depends on the view which we take of the agreement, in connection with the other documents which regulate the rights of the parties to the combine. The agreement with W. & A. 'McArthur Ltd. provides for their taking over all the administra- _ tive work in connection with the operations of the combine. But it

Specifically mentions certain work in the 3rd paragraph: "The said Messrs. W. & A. McArthur Ltd. agree to hold in trust all the contracts of sale made by members of the combine, to issue all orders to purchasers, to collect and receive all payment from buyers, to be held in trust until distributed and to distribute all moneys due to members or in accordance with the said rules of the said combine." They agree in that paragraph directly to account, or, to put it shortly, to carry out the distribution of the moneys of the combine. Then there follows this paragraph: "The said W. & A. McArthur Ltd. also agree to accept all financial responsibilities imposed by the said rules of the said combine." Now, we are dealing only with financial responsibilities of the combine to its members. The only such responsibilities are selling the maize supplied by the members, and the distribution of its proceeds upon a certain principle. The committee of the combine have agreed to carry out these duties, and in order to give some appreciable meaning to the words of the agreement with W. & A. McArthur Ltd., an addition must be made to their literal meaning, as urged on behalf of the respondents, namely, that all the responsibilities incurred to the members of the combine by the committee are by the agreement taken over by

H. C. or A.

1905.

——s

8. A.

JosEPH AND

RicKaRD

Lro.

v.

Linviey.

O'Connor J.

H. ©. or A. 1905. eS)

S$. A. JOSEPH AND RickarD Lip.

v Lispiey.

O'Connor J.

HIGH COURT

W. & A. McArthur Ltd. who are thereby to that « substituted for the committee. Having regard, there what the original agreement with the combine was, it very difficult to give any meaning to this agreement, this, that W. & A. McArthur Ltd. take over, not o1 responsibility for the distribution, but also the legal responsi of standing in the place of the committee with regard the members of the combine. That construction app me the only reasonable one that can be given to the docm having regard to the nature and purposes of the combine it and the position of the committee in its affairs. The com! an association for the temporary purposes declared at the of the first contract. They were thus stated: "In consid of a combine being formed to control shipments of maize. method by which the members proposed to ensure this obj by making it the basis of the agreement that every member sho undertake to complete a contract of sale of the maize to the e mittee. The object was not merely to transfer the property, a ordinary cases of sale, but to ensure that the combine shoul the control of the maize of each member by having in its han contract which vested in the combine the property in the mai It was for that purpose only that the contract was made. we look at the other rules of the combine this object b more plain, as it is apparent that the combine was m co-operative agency for selling the maize of the combine, the d tribution of proceeds being made on the principle that each mer ber should get back a share of the whole amount, proportion to the quantity of maize which he had supplied. The dul of the committee was apparently to fix the selling price make certain deductions on account of selling expenses. function of the committee was thus to stand between the c as a whole and its individual members in the sale of maize distribution of its proceeds. Itis quite evident that the commit soon found that it was necessary to place the management of financial operations in the hands of some large business firm. As was pointed out by my learned brother the Chief Justi the effect of rule 30, as amended, is to take away from the cou mittee any possible opportunity of protecting 'hemi

SCR] OF AUSTRALIA. regard to the payments which had to be made to the members of the combine. For, though they retained control over the selling of the maize, they had not any power to receive the proceeds of the sales. It would seem very hard on them that the contract . should be construed in such a way as to keep them still liable to see to the payment of the members after they have given up control of the fund out of which the payments are to be made, "I think that, if we have regard to the whole scope and purpose "of the combine, and the position of the committee in connection "with the agreement made with W. & A. McArthur Ltd., providing as it does that all the duties formerly carried out by the com- "mittee should in future be carried out by W. & A. McArthur Ltd, and if we remember that under the agreement all the "financial responsibilities are to be taken over by that firm, and "that the appellants themselves are parties to this arrangement, it seems very difficult to hold that the appellants did not consent that all these responsibilities should be handed over to W. & A. » McArthur Ltd., whether by novation or by reason of the creation sof privity of contract between the principals and sub-agents. On this view the case of De Bussche y. Alt (1), seems to be of ~ very small moment. Under these circumstances I think that the learned judges of

-the Supreme Court were right in the view which they took of - the case, and that the appeal should be dismissed.

Appeal dismissed, with costs.

Solicitors, for the appellants, Minter, Simpson & Co. Solicitors, for the respondents, Allen, Allen, &: Hemsley.

b CA W. , (1) $ Ch. D., 286.

H.C. or A. 1905. ——

8. A. JosErH AND RickarD Lrp. v Lrypey.

O'Connor J.