Grant v Norway

 

(1851) 10 CB 665, 138 ER 263

 

20 LJCP 93, 15 Jur 296

 

COURT OF COMMON PLEAS

JERVIS CJ, CRESSWELL and WILLIAMS JJ

1851 – February 20

 

 

Bill of lading – Master’s signature acknowledging shipment of goods – Liability of shipowner

 

The master of a ship signing a bill of lading for goods which have never been shipped, is not to be considered as the agent of the owner in that behalf, so as to make the latter responsible to one who has made advances upon the faith of bills of lading so signed.

 

Followed: Coleman v Riches (1855) 16 CB 118; Thorman v Burt (1886) 5 Asp MLC 563; Cox v Bruce (1886) 18 QBD 147.

Referred to: Parsons v New Zealand Shipping Company, [1901] 1 KB 566.

Approved: Whitechurch, Limited v Cavanagh [1902] AC 117.

See: Hambro v Burnand [1903] 2 KB 422; [1904] 2 KB 10; Compania Naviera Vasconzada v Churchill [1906] 1 KB 246.

Adopted: Russo‑Chinese Bank v Li Yau Sam [1910] AC 184.

Referred to: Lloyd v Grace [1911] 2 KB 508; [1912] AC 716.

 

Note: The principle established by this case came to be referred to as the rule in Grant v Norway. In English and Scots law the Bills of Lading Act 1855 s 3 reversed its effect to a limited extent regarding the person who actually signed the bill of lading – not usually the shipowner or carrier. Later, for English and Scots law the rule in Grant v Norway was reversed by the carriage of Goods by Sea Act 1992, in cases where the Carriage of Goods by Sea Act 1971 and the Hague-Visby Rules do not apply as a matter of law, i.e. by virtue of the force of the Act, rather than as a matter of contract, or by the force of a foreign law. Where the 1971 Act applies as a matter of law, art III, r 4 of the Hague-Visby Rules reverses the effect of this case as regards those matters mentioned in art III, r 3, where the bill of lading has been transferred to a third party acting in good faith.

 

 

GRANT AND OTHERS v NORWAY AND OTHERS

 

This was an action upon the case by the indorsees of a bill of lading, against the owners of a vessel, to recover the amount of advances made by the former upon the bills of lading, the goods never having in fact been shipped.

 

The declaration stated, that, on the 17th of April, 1846, the defendants were possessed of a certain ship or vessel called the Belle, lying in the river Hooghley, at Bengal, being then bound for London, for the carriage of goods and merchandise, to be shipped on board, for freight to be therefor paid to the defendants; that thereupon the defendants gave to Messrs Biale, Koch, & Co, being merchants and traders then in credit and carrying on business in Calcutta, a bill of lading, signed by the master of the said ship, who was then and there the [666] servant and agent of the defendants in that behalf, and purporting to state, in the name of the said master, that Biale, Koch, & Co had shipped, in good order, in the said ship, twelve bales of silk, marked and numbered as in the margin of the said bill of lading, and that the same were to be delivered in good condition, &c, unto order or assigns, to wit, to the order of Biale, Koch, & Co, he or they paying freight at £5 per ton, &c; that, in the margin of the said bill of lading were certain marks and numbers, purporting to relate to the said goods; that, by the custom of merchants, bills of lading are commonly pledged and deposited by the holders with others as a security for the payment of money, as the defendants well knew; that the defendants, by such delivery of the said bill of lading, enabled Biale, Koch, & Co to deposit the said bill of lading with other persons as a security for the payment of money, and that, in fact, Biale, Koch, & Co afterwards indorsed the said bill of lading to, and deposited the same with, the plaintiffs as a security for the payment of a large sum of money, to wit, the sum of £1684, being the amount of an unpaid bill of exchange of which the plaintiffs, at the request of Biale, Koch, & Co, their became and were the indorsees and bona fide holders for value, and of which Biale, Koch, & Co were the drawers, and which bill of exchange, bearing date the 18th of April, 1846, was by them the said Biale, Koch, & Co drawn upon Messrs Johnson, Cole, & Co, London, and whereby they requested the drawees, at ten months’ date, to pay to them the said drawers, or order, the said sum of £1684, and to place the same, with or without advice, to account of shipments of silk per Belle, and rice per Castle Eden, and the said Biale, Koch, & Co then indorsed the said bill of exchange to the plaintiffs; that the plaintiffs were induced by Biale, Koch, & Co to [667] become the indorsees and holders of the said bill of exchange, and to give value for the same to the amount of £1684, by the deposit of the said bill of lading, but for which they would not have given value nor become indorsees and holders thereof; that the plaintiffs, confiding in the truth of the said bill of lading, and believing, by reason of its contents, that the goods therein described had been and were shipped on board the said ship, deliverable under the said bill of lading to the order of Biale, Koch, & Co, consented to, and did, give value for the said bill of exchange; that, if true, the goods mentioned in the bill of lading would have been, according to the custom of merchants, deliverable to the plaintiffs as holders thereof; that the said ship sailed, and arrived in London on, &c, but did not convey or deliver the said supposed goods; that the said goods in the said bill of lading mentioned never were shipped in and upon the said ship; that the said bill of exchange was afterwards, when the same became due, duly presented for payment to the drawees, and dishonoured, and that the plaintiffs were still holders thereof for value, and unable to procure payment of the said bill of exchange, and the money for securing the payment of which the said bill of lading was so deposited, still remained due, and the plaintiff’s were unable to procure payment thereof; and that, by reason of the premises, and of the misconduct of the defendants as aforesaid, the plaintiffs had lost and been deprived of the said money for the securing the payment of which the said bill of lading was so deposited, to wit, the said sum of £1684 in the said bill of exchange mentioned, – to the plaintiffs’ damage, &c.

 

Pleas, – first, not guilty, – secondly, that the said ship was not bound, as in the declaration mentioned, for the carriage of goods, &c, for freight, &c. as in the decla‑ [668] ration mentioned, – thirdly, that the said bill of lading was not signed by the master of the said ship, in manner and form as in the declaration mentioned, – fourthly, that the said master was not the servant or agent of the defendants in that behalf, to manner and form as in the declaration mentioned, – fifthly, that the defendants did not enable the said persons in the declaration mentioned, to deposit the said bill of lading. with other persons as a security for the payment of money, in manner and form as in the declaration alleged, – sixthly, that the defendants did not deliver to the said persons in the declaration mentioned the said bill of lading therein mentioned, in manner and form as in the declaration alleged.

 

Upon these pleas the plaintiffs joined issue.

 

At the trial, before Wilde CJ, at the sittings at Guildhall after Trinity term, 1849, the jury found a verdict for the plaintiffs on the issues joined upon the second and third pleas: and, as to the residue of the issues, a special verdict was found, stating in substance as follows:

 

The plaintiffs, during the year 1846, and thence hitherto, had carried on business as merchants, at Calcutta, under the firm of Gladstone & Co.

 

During the month of April, 1846, the defendants were possessed of, and owners of, the Belle, then lying in the river Hooghley, at Calcutta, bound for London, by charter‑party for the conveyance of goods for freight; Henry Tillman being the master appointed by the defendants.

 

On the 17th of April, in that year, Henry Tillman, being such master, and professing to act as such, signed and delivered to Biale, Koch, & Co, in the declaration mentioned, being merchants and traders then in credit and carrying on business in Calcutta, a bill of lading, [669] in the usual form, as follows, and numbered in the margin:

 

“Shipped, by the grace of God, in good order and well conditioned, upon the good ship Belle, whereof is master for this present voyage Henry Tillman, and now riding at anchor in the Hooghley, and bound for London, twelve bales of silk, numbered as in the margin, to be delivered in the like good order at London, the act of God, the Queen’s enemies, &c, excepted, unto order or assigns, he or they paying freight £5 per ton, &c. In witness whereof the said master bath affirmed to three bills of lading, all of this tenor and date, the one of which being accomplished, the other two to stand void. Dated this 17th day of April, 1846. Contents unknown.”

(Signed) ‘H. TILLMAN’.”

 

The bill of lading was indorsed “Biale, Koch, & Co.”

 

By the custom of merchants, bills of lading are commonly pledged and deposited by the holders with others as a security for the payment of money.

 

By such delivery of the said bill of lading, Biale, Koch, & Co were enabled to pledge and deposit the said bill of lading with other persons as a security for the payment of money: and, on the 18th of April, 1846, the plaintiffs purchased from Biale, Koch, & Co, who then indorsed and delivered to the plaintiffs for full value, the bill of exchange for £1684 in the declaration mentioned, upon the terms that the payment of the amount of the bill of exchange should be secured by the deposit of the said bill of lading, which they also indorsed to the plaintiffs, and deposited with them for that purpose.

 

The bill of exchange was drawn by Biale, Koch, & Co, and requested the drawees to pay £1684 at ten months, to the drawers, or order, and to place the same, with or [670] without advice, to account of shipments of raw silk per Belle, and rice per Castle Eden.

 

The bill was accepted, payable at No 6 Great Winchester Street, “on delivery of the shipping documents against which this bill is drawn.”

 

The plaintiffs were induced by Biale, Koch, & Co to give value for, and to become the indorsees of, the bill of exchange, by the deposit of the bill of lading. If true, and if the goods had really been shipped, the bill of lading would have been air available security to the plaintiffs, of the value of £780, and the goods deliverable to them as holders of the bill of lading.

 

The vessel sailed, and arrived in London: but the goods were never shipped; and the contents of the bill of lading were untrue.

 

The bill of exchange, of which the plaintiffs were still holders, had been presented for payment, and was still due, and also the £1684, for securing the payment of which to the extent of £780, the bill of lading was deposited.

 

The goods to be shipped on board at Calcutta, were to be shipped in pursuance of a charter‑party entered into in London, on the 24th of September, 1845, between the defendants and Biale, Koch, & Co; and the vessel was lying in the Hooghley, and bound for London, as before mentioned, in pursuance of the charter‑party, and in the course of the voyage therein mentioned.

 

The case was argued in the last term, before Jervis CJ, Cresswell, and Williams JJ.

 

Crowder (with whom were Channell, Serjt, and Bovill), for the plaintiffs. The defendants are liable for the act of the master in signing bills of lading importing that goods had been shipped, and thus inducing the plaintiffs to part with their money, which but for his act they would not have done. The master is the general [671] agent of the owner to conduct the business of the ship: part of that business, and a most material and responsible part is, the signing of bills of lading. In Abbott on Shipping (part ii, ch iv, § 1, 8th ed, p 167) it is said:

 

“The great trust reposed in the master by the owners, and the great authority which the law has vested in him, require on his part, and for his own sake, no less than for the interest of his employers, the utmost fidelity and attention. For, if any injury or loss happen to the ship or cargo by reason of his negligence or misconduct, he is personally responsible for it; and, although the merchant may elect to sue the owners, they will have a remedy against him to make good the damages which they may be compelled to pay. So, if he make any particular engagement or warranty, without a sufficient authority from his owners, although the owners may be answerable to the persons with whom he contracts, by reason of the general power belonging to his situation and character, he is in like manner responsible to the owners for the injury sustained by them in consequence of his acting beyond, or in violation of, the particular authority given to him.”

 

Again, the same learned writer says (part ii, ch ii, § 5):

 

“The great responsibility which the laws of commercial nations cast upon the owners for the acts of the master, has appeared to many persons, at first view, to be a great hardship: but, laying aside all consideration of the opportunities of fraud and collusion which would otherwise be afforded, it should always be remembered that the master is elected and appointed by the owners; and, by their appointment of him to a place of trust and confidence, they hold him forth to the public as a person worthy of trust and confidence; and, if the merchants whom he deceives could not have redress against those who appointed him, they would often have [672] just reason to complain that they had sustained an irreparable injury through the negligence or mistake of the owners, as the master is seldom of ability to make good a loss of any considerable amount.”

 

Thus, all the dealings and the misdeeds of the master, while acting in that capacity, are cast by law upon his owners. Pothier lays it down that,

 

“when a merchant has appointed any person to the management of a commercial concern, or to the command of a vessel, and, in like manner, when the farmers of the King’s revenue have appointed any person to the direction of a particular department; in all the engagements which such manager contracts for the affairs committed to his charge, although he contracts in his own name, he obliges himself as principal, and, at the same time, he obliges his employer as an accessory debtor; for, the employer is considered as having consented beforehand, by the commission which he has given, to all the engagements which the manager might contract for the business to which he was appointed, and to have rendered himself answerable for them.”(a)

___

(a) Evans’s Translation of the Treatise on Obligations or Contracts, vol i, part ii, c 6, art Ii ** , § I, p 300.

__

 

So, in Story on Agency (3rd ed, ch vi, § 116, p 133), it is said:

 

“The master of a ship has various incidental powers, resulting from his official capacity, which have been long recognised in the maritime law, and are not now open to judicial controversy. Thus, for example, he has an incidental authority to make all contracts belonging to the ordinary employment of the ship; as, for example, to let the ship on a charter‑party, and to take shipments on freight, if such is the usual employment of the ship, but not otherwise; to hire seamen for the voyage; to contract for necessary repairs and equipments for the voyage; and to hypothecate the ship in foreign ports for moneys advanced to supply the [673] necessities of the ship, if they cannot otherwise be supplied. In these cases, and in others of the like nature, he often enters (as he may well do) into the contracts in his own name; and he may thus become personally liable, as well as his principal, to fulfil the same; for, he is treated, not as an ordinary agent, but as, in some sort, and to some extent, clothed with the character of a special employer or owner of the ship, and representing, not merely the absolute owner (dominus navis), but also the temporary owner, or charterer for the voyage (exercitor navis). In short, our law treats him as having a special property in the ship, and entitled to the possession of it, and not as having the mere charge of it as a servant. On this account, he may bring an action of trespass for a violation of that possession; and, where the freight has been earned under a contract to which he is a party, or under a bill of lading signed by himself, he may bring a suit for the freight due on the delivery of the goods.”

 

Again, in § 119 it is said:

 

“The master is ordinarily intrusted with the authority of shipping the officers and crew; of superintending the ordinary outfits, equipments, repairs, and other preparations of the vessel for the voyage, of lading and unlading the cargo; and, in cases of a general ship, of receiving goods on board on freight, and of signing bills of lading for the same. These are such usual incidents of his official character, that notice of a positive prohibition would seem indispensable, in order to affect third persons with his want of due authority to do the acts.”

 

And in § 127 he further says:

 

“If a person is held out to third persons, or to the public at large, by the principal, as having a general authority to act for and to bind him in a particular business or employment, it would be the height of injustice, and lead to the grossest frauds, to allow him to set up his own secret and private instructions to the agent, limiting that authority; and thus to defeat his acts and transactions under [674] the agency, when the party dealing with him bad, and could have, no notice of such instructions. In such cases, good faith requires that the principal should be held bound by the acts of the agent, within the scope of his general authority; for, he has held him out to the public as competent to do the acts, and to bind him thereby. The maxim of natural justice here applies with its full force, that he who, without intentional fraud, has enabled any person to do an act which must be injurious to himself or to another innocent party, shall himself suffer the injury, rather than the innocent party who has placed confidence in him.”

 

[Jervis CJ. If the master’s authority is, to sign bills of lading only upon receiving the goods on board, the owner does not hold him out as his agent until he receives the goods.]

 

[Cresswell, J. If, as you say, the authority of the master is not a special authority, but a general authority which is conferred upon him by law, the extent of that authority must be known to all persons who take bills of lading.]

 

It is not contended that the master has a general authority to give bills of lading without receiving the goods.

 

[Cresswell J. Here, the apparent authority of the master seems to have been more limited than his real authority.]

 

The negotiability of bills of lading has long since been established: Lickbarrow v Mason (1787) 2 TR 63, 100 ER 35.

 

[Jervis CJ. In that case, Buller J, intimates, that, in a case like the present, the master would be liable.

 

“A bill of lading,” he says, “is an acknowledgment by the captain of having received the goods on board his ship: therefore, it would be a fraud in the captain to sign such a bill of lading, if he had not received the goods on board; and the consignee would be entitled to his action against the captain for the fraud.”]

 

It would be hard indeed upon the indorsee of the bill of lading, who has no means of knowing [675] whether the master has received the goods, but takes it upon the faith of his signature, to hold that he has no remedy against the owner. Such a doctrine will go very far to destroy the negotiability of these instruments. If the owner’s authority to the master is limited to goods actually received on board, the owner would not be responsible for any wrongful act by the master. Suppose the master receives six bales of silk, and signs a bill of lading for twelve, – is the owner responsible for the six, and not for the others?

 

[Jervis CJ. That is the very point which we have before us.]

 

In Howard v Tucker (1831) 1 B & Ad 712, 109 ER 951, goods being shipped in India for London, on account of a person there, the bill of lading was forwarded to him, and he indorsed it over for value: the bill of lading, signed by the captain, stated the freight to have been paid in Bengal, but it was found, after the above transfer, that the freight had never been paid, through the default of the shippers: it was held, that the shipowners, who detained the goods, could not claim payment of the freight from the assignees of the bill of lading. In giving judgment, the court say:

 

“The point contended for, is, that an owner having given a bill of lading, by which freight appears to have been paid before the ship’s departure from India, is still not estopped, as against the assignee of such bill, from claiming freight when the vessel arrives here. We think such a position cannot be supported, and that, if we were to sanction it, a door would be opened to many frauds.”

 

It is impossible to distinguish that case in principle from the present, without drawing some such line as that suggested by the lord chief justice, viz. that the master is only the agent of the owner to sign bills of lading when he receives the goods, – a position for which, it is submitted, there is no authority. In Berkley v Watling (1837) 7 Ad & El 29, 112 ER 382, 2 Nev & P KB 178, a declaration [676] in assumpsit stated that the defendants Wading and Nave were owners of a ship; that, in consideration that the plaintiff at their request shipped goods on board to be delivered to him, Wading and Nave promised to deliver; assigning for breach, non-delivery. Nave pleaded separately, and traversed the shipment. On the trial, the plaintiff produced a bill of lading, signed by the captain of the ship, transmitted to the plaintiff by Watling, stating the goods to be shipped by Watling, to be delivered to the plaintiff or his assigns. Proof also was given to shew that the plaintiff held the bill for value. Watling was the managing owner. It was held, that Nave might produce evidence that the goods were not shipped in fact, and was not estopped by the bill of lading, supposing such estoppel to exist in general, inasmuch as the plaintiff could support his issue only by making Watling his agent, and, if Watling was so, the plaintiff was cognisant, through him, of the fact.

 

[Jervis CJ. The point now under discussion was incidentally mentioned by Littledale J and my brother Patteson in that case.]

 

Bates v Todd (1831) 1 Mood & R 106, 174 ER 36, shews that a bill of lading is not conclusive as between the shippers of the goods and the owners of the ship; but that the owners may shew that less goods than those specified in the bill of lading were shipped, the master, who signed the bill of lading being misled by the fraud of the agent of the shippers. In Ewbank v Nutting (1849) 7 CB 797, 137 ER 316, it was held that trover lies against a ship‑owner for a sale by the master, of goods, at a place short of their port of destination, under circumstances not inconsistent with the general scope of the authority conferred upon the master by the owner. The effect of a bill of lading was a good deal considered in the case of Jenkyns v [677] Usborne (1844) 7 Man & G 678, 135 ER 273, 8 Scott NR 505. Tindal CJ, there says (7 Man & G 678, 8 Scott NR 505):

 

“The actual holder of an indorsed bill of lading may undoubtedly by indorsement transfer a greater right than he himself has. It is at variance with the general principles of law, that a man should be allowed to transfer to another a right which he himself has not: but the exception is founded on the nature of the instrument in question, which, being, like a bill of exchange, a negotiable instrument, for the general convenience of commerce, has been allowed to have an effect at variance with the ordinary principles of law. But this operation of a bill of lading, being derived from its negotiable quality, appears to us to be confined to the case where the person who transfers the right is himself in possession of the bill of lading, so as to be in a situation to transfer the instrument itself which is the symbol of the property itself.”

 

[Williams J. The authority of that case is, merely to deny to a delivery order the qualities which are stated to belong to a bill of lading.]

 

The negotiability of a bill of lading is certainly more restricted than that of a bill of exchange.

 

[Cresswell J. The proper phrase is, that the property in the goods passes by indorsement of the bill of lading: Thompson v Dominy (1845) 14 M & W 403, 153 ER 532.]

 

Take the ordinary case of an authority to draw, accept, or indorse bills of exchange. In Boulton v Arlsden (1697) 3 Salk 234, 91 ER ** , sub nom Bolton v Hillersden (1697) 1 Ld Raym 224, 91 ER 1046, it was held

 

“that a note under the hand of an apprentice shall bind his master, where he is allowed to deliver out notes, though the money is never applied to the master’s use.”

 

[Cresswell J. That means, rather, the allowing an apprentice to acknowledge the receipt of money.]

 

In Prescott v Flinn (1832) 9 Bing 19, 131 ER 521, 2 Moo & S 18, from the fact that the defendants’ confidential clerk had been accustomed to draw cheques for them, that, in one in‑ [678] stance, at least, they had authorised him to indorse, and, in two other instances, had received money obtained by his indorsing in their name, a jury was held warranted in inferring that the clerk had a general authority to indorse. The general doctrine is also considered in Llewellyn v Winckworth () 13 M & W 598, and Alexander v Mackenzie () 6 CB 766.

 

[Cresswell J. The distinction between that class of cases and this is, that, where a clerk or other person accepts or indorses for his employers, if he is acting within the scope of his authority, the employers are in the same position as if they had them­ selves accepted or indorsed.]

 

The master of a ship, assuming that he has special directions from his owners as to the form of the bills of lading, being clothed with an apparent authority as master, which enables him to impose upon third persons, his owners are clearly responsible for his acts, whether of negligence or of fraud. In Hern v Nichols () 1 Salk 289, in an action on the case for a deceit, the plaintiff set forth that he bought several parcels of ____ silk for ____ silk, whereas it was another kind of silk, and that the defendant, well knowing this deceit, sold it to him for silk: on the trial, upon not guilty, it appeared that there was no actual deceit in the defendant, who was the merchant, but that it was his factor beyond sea; and the doubt was, if this deceit could charge the merchant. But Holt CJ, was of opinion

 

“that the merchant was answerable for the deceit of his factor, though not criminaliter, yet civiliter; for, seeing somebody must be a loser by this deceit, it is more reason that he that employs and puts a trust and confidence in the deceiver should be a loser, than a stranger.”

 

[Cresswell J. There, the factor entered into a contract with the plaintiff for his employer. Here, you are a step further off: You say, [679] your agent, with whom I made no contract, has enabled a man with whom I did contract, to cheat me.]

 

This is a question between a stranger and a man in whom the defendants put their confidence and trust. In Pickering v Busk (1812) 15 East 38, 104 ER 758, where a purchaser of hemp lying at wharfs in London had, at the time of his purchase, the hemp transferred in the wharfinger’s books into the name of the broker who effected the purchase for him, and whose ordinary business it was to buy and sell hemp, – this was held to give the broker an implied authority to sell it, and that his sale and receipt of the money bound his unknown principal. Whitehead v Tuckett (1812) 15 East 400, 104 ER 896, is to the same effect. The general principle pervading all these cases is, that he who places a man in a position which enables him, acting as his general agent,, to obtain a false credit, is himself liable.

 

[Cresswell J. Suppose this were not the case of an indorsee of a bill of lading, but that of the owner of the goods, who really sent them by a carrier for the purpose of their being shipped, and the master gives a receipt to the owner of the goods, but the carrier fails to deliver them: in that case, the owner would be induced by the captain’s receipt to abstain from pursuing the thief: but, is the indorsee of the bill of lading, under the circumstances supposed, in the same position as the original owner of the goods?]

 

He certainly is not in a worse position. The true principle upon which the decision of this case will turn, is that put by Lord Denman, in Trueman v Loder () 11 Ad & El 589, 593, 3 Per & Dav 267.

 

“Here,” says his lordship, “is the case of one exclusively an agent for another, and in that light only regarded by the customer. Having full authority so to represent himself, he forms the design in his own mind, to divert one of his numerous contracts from its expected destination, to some purpose [680] of his own. But that design cannot operate to oust the opposite party of those rights against the principal which both the principal and agent had by their conduct concurred in persuading him that he possessed.”

 

Here, the captain has an unlimited authority to sign bills of lading for goods received. If he exceeds his authority, or deceives third persons, it is but just that the owner should be responsible.

 

Butt (with whom was Cleasby), contra. Upon the facts stated in this special verdict, the defendants are clearly not liable to the plaintiffs for the consequences of the master’s improvident act in signing bills of lading when he had not actually received the goods on board. The master of the ship is not, as is contended on the other side, the general agent of his owners. He is their agent only to a special and limited extent. His authority is to be gathered from the nature of his employment. He is to receive goods on board the ship, to give bills of lading for goods so received, to make contracts for freight, and to take due and proper care of the goods whilst on board. It is not his duty, neither has he any authority, to sign bills of lading for goods which have never been shipped. In no case is a principal bound by the acts of his agent not within the scope of his authority. Story, in his treatise on the Law of Agency, after speaking of the liability of the principal for tort or negligence of the agent, says, in § 456,

 

“But, although the principal is thus liable for the torts and negligences of his agent, yet we are to understand the doctrine with its just limitations, that the tort or negligence occurs in the course of the agency: for, the principal is not liable for the torts or negligences of his agent in any matters beyond the scope of the agency, unless he has expressly authorised them to be done, or he has subsequently adopted them for his own use or benefit.”

 

[Cresswell J. Mr Crowder says, [681] true it is that it is well known that the captain’s real authority is, to sign bills of lading only for goods that are actually put on board the ship: but, he says, there is an apparent authority to sign all bills of lading without restriction. Try that by the test of a partner’s authority to sign bills of exchange for the purpose of the trade. One draws or accepts a bill in fraud of his partner, – what answer does this afford. to a bona fide holder for value?]

 

The similitude between bills of lading and bills of exchange, is not very perfect: if they were in all respects analogous, the argument on the other side would be much more formidable. But there is a manifest distinction between cases of contract and tort: the indorsement of a bill of exchange transfers the contract; not so the indorsement of a bill of lading; the contract between the shipper and the owner remains unassignable. In Story on Agency, § 119, it is said the master is ordinarily intrusted with the authority,

 

“in cases of a general ship, of receiving goods on board on freight, and of signing bills of lading for the same.”

 

Most of the authorities are collected in the case of Wilde v Gibson (1848) 1 HLC 605, 9 ER 897, where the House of Lords resolved, amongst other points, that, to set aside a purchase, perfected by conveyance and payment of the purchase‑money, for fraudulent concealment by the vendor of a defect in the title, where there was no warranty or statement that there was no defect, proof of concealment by the vendor’s agent is not sufficient, there must be proof of direct personal knowledge and concealment by the principal. Lord Campbell, in the course of the argument of that case, observes (ibid 615):

 

“In an action upon contract, the representation of an agent is the representation of the principal; but, in an action on the case, for deceit, the misrepresentation or [682] concealment must be proved against the principal.”

 

And in giving his judgment, his lordship further enlarges upon that distinction (1 HLC at p 633). Howard v Tucker (1831) 1 B & Ad 712, 109 ER 951, is distinguishable from this case. There, the captain received the goods, and signed a bill of lading purporting that freight had been paid in Bengal, – which he clearly had authority to do. That being so, it was not competent to the owner to detain the goods, as against the assignee of the bill of lading, for freight.

 

[Cresswell J. Had the captain authority to give a bill of lading acknowledging that freight had been paid, when in fact it had not?]

 

[Jervis CJ. The case of Howard v Tucker does not seem to have undergone much discussion.]

 

In Ewbank v Nutting (1849) 7 CB 797, 137 ER 316, the goods were sold by the captain without necessity: there could be no doubt, therefore, that the owner was liable. The extent of the liability of the principal for the acts of his agent, is much discussed in Cornfoot v Fowke () 6 M & W 358, Fuller v Wilson () 3 QB 58, 1009, 2 Gal & Dav 460, 3 Gal & Dav 570), Hoens v Heyworth () 10 M & W 147, Taylor v Ashton () 11 M & W 401, and Evans v Collins () 5 QB 804, 820, Dav & Mer 72, 669, – all of which cases are commented upon in the notes to Pasley v Freemav, in Smith’s Leading Cases (vol ii, pp 70‑71 b). In Jarmain v Hooper () 6 Man & G 827, 7 Scott NR 663, in trespass quare domum fregit against the sheriff and A., the sheriff justified under a fi fa issued against the goods of the plaintiff by A: to this plea the plaintiff replied, that the fi fa did not issue against the goods of the plaintiff. It appeared that A had obtained judgment against Joseph Jarmain, who was the son of the plaintiff, and thereupon issued a fi fa against Joseph Jarmain, with- [683] out any further description, under which the goods of Joseph Jarmain the elder were taken: and it was held, that the writ afforded no justification to the sheriff; and that A was also liable in trespass, notwithstanding he was not proved to have in any way interfered, beyond giving instructions to the attorney to sue Joseph Jarmain, the son. In giving the judgment of the court in that case, Tindal CJ, says (6 Man & Gr 849, 7 Scott NR 680):

 

“As to the defendant Heenan, the only question in his case is, whether he is bound by the act of his attorney, in giving the directions to the sheriff to take the goods of the plaintiff. That the plaintiff in the original action is liable in trespass, if the sheriff by his own order takes the goods of a stranger in execution, is clear law, – 2 Roll Abr, 553, l, 5, 10. And it appears to us that the direction given by the attorney is a direction given by an agent within the scope of his authority, and binds the principal. The attorney has the general conduct of the cause; he is the only person with whom the sheriff has communication: and, in taking a step essentially necessary for the benefit of the client, that is, for the obtaining the fruit of his judgment, we think he cannot be held to have acted beyond his authority, though he has miscarried in its execution. And, when it is argued that be cannot be his agent in giving false information, the answer is, that, if his agent to do the particular act, the client must stand to the consequences if he acts inadvertently or ignorantly.”

 

Here, however, the captain was not acting within the scope of his authority in signing bills of lading for goods which he had never received: the act done by him was as distinct front his authority as if he had committed an assault or any other crime. That the consignee could acquire no property in the goods under a bill of lading so signed, is clear from the cases of Osey v Gardner (1816) Holt 405, 171 ER 286, and Begbie [684] v Clarke () Cooke & Al 150, KB Ireland. The transaction was there treated as a mere fraud. In no case is the master or the principal responsible for the act of his servant or agent, where the act done is not done fairly within the scope of the authority conferred upon him: McManus v Crickett (1800) 1 East 106, 102 ER 43; Croft v Alison (1821) 4 B & Ald 590, 106 ER 1052; Hutchinson v York, Newcastle, and Berwick Pailway Co () 5 Ex 343; Wigmore v Jay () 5 Ex 354. With respect to the suggestion that the owner, who appoints the captain, thereby places him in a position to impose upon the world, ‑ the obvious answer is, that he appoints him in the expectation that he will do his duty, and nothing else.

 

Crowder, in reply. The master of a ship is especially classed amongst those who are said to be general agents: his authority is not limited; and, from the very nature of his duties, he must often act upon his own discretion. In Smith’s Mercantile Law, in treating of the authority of an agent to bind his principal to third persons, the learned author says (4th ed, p 116):

 

“In solving all questions on this subject, the general rule is, that the extent of the agent’s authority is (as between his principal and third parties) to be measured by the extent of his usual employment; for, he who accredits another by employing him, must abide by the effects of that credit, and will be bound by contracts made with innocent third persons, in the seeming course of that employment, and on the faith of that credit, whether the employer intended to authorise them or not; since, where one of two innocent persons must suffer by the fraud of a, third, he who enabled that third person to commit the fraud should be the sufferer.”

 

Again (page 118), –

 

“A general agent is a person [685] whom a man puts in his place to transact all his business of a particular kind: thus, a man usually retains a factor to buy and sell all goods, and a broker to negotiate all contracts of a certain description, an attorney to transact all his legal business, a master to perform all things relating to the usual employment of his ship, and so in other instances.”

 

It is difficult to conceive a man acting more apparently within the scope of his authority, than a master in giving bills of lading. It is true, his real authority and duty are, to sign bills of lading only upon receiving the goods: but he is still acting within the scope of his authority, if he, whether fraudulently or mistakenly, signs bills of lading before the goods are sent on board. Lord Campbell’s dictum in Wilde v Gibson, as a general proposition, is not accurate: it is inconsistent with Lord Holt’s doctrine in Boulton v Arlsden () 3 Salk 234, 1 Lord Raym 224, and with that of Parke B in Cornfoot v Fowke () 6 M & W 358. There are many cases where the principal is responsible for the misconduct of his agent. Thus, in Ellis v Turner (1800) 8 TR 531, 101 ER 1529, the owners of vessels on the navigation between Hull and Gainsborough had given public notice that they would not be answerable for losses in any case, except the loss were occasioned by the want of care in the master, nor even in such case beyond £10 per cent [10%] unless extra freight were paid. The master of one of the ships took on board the plaintiff’s goods, to be carried from Hull to Stockwith (an intermediate place between Hull and Gainsborough), and delivered at Stockwith. The vessel passed by Stockwith without delivering the plaintiff’s goods there, and sunk before her arrival at Gainsborough, without any want of care in the master: and it was held, that the owner of the vessel was responsible to the plaintiff for the whole loss, [686] in an action on the contract. Lord Kenyon said:

 

“Perhaps, as between the defendants and their servant, the master of the vessel, this was misconduct in the latter; but, as between the defendants and third persons, the former are answerable upon their contract. The maxim applies here, respondeat superior.”

 

So here, as between the master and the owners, the former may have been guilty of a breach of duty; but still they are responsible to innocent third parties. After stating the facts of that case, his Lordship proceeds:

 

“As the vessel reached Stockwith in safety, and might have delivered the plaintiff’s goods there, I think that this action may be maintained; for, though the loss happened in consequence of the misconduct of the defendants’ servant, the superiors (the defendants) are answerable for it in this action. The defendants are responsible for the acts of their servant in those things that respect his duty under them, though they are not answerable for his misconduct in those things that do not respect his duty to them; as, if he were to commit an assault upon a third person in the course of his voyage.”

 

Jarmain v Hooper () 6 M & G 827, 7 Scott NR 663, is also a distinct authority in favour of the liability of the principal for the act, though not strictly authorised, of the agent. Osey v Gardner (1816) Holt NP 405, 171 ER 286, and Begbie v Clarke () Cooke & Alcock 150 have no application whatever to the present case.

 

Cur adv vult.

 

JERVIS CJ now delivered the judgment of the court:

 

This case was argued before my brothers Cresswell and Williams and myself. It arises upon a special verdict, and presents a question of considerable import‑ [687] ance, both to those who take bills of lading on the faith of their representing property which passes by the transfer of them, and to the shipowner, whom it is attempted to bind by all bills of lading which his captain may think fit to sign. The point presented by the several pleas is substantially one and the same, viz, whether the master of a ship, signing a bill of lading for goods which have never been shipped, is to be considered as the agent of the owner in that behalf, so as to make the latter responsible. The authority of the master of a ship is very large, and extends to all acts that are usual and necessary for the use and enjoyment of the ship; but is subject to several well‑known limitations. He may make contracts for the hire of the ship, but cannot vary that which the owner has made. He may take up money in foreign ports, and, under certain circumstances, at home, for necessary disbursements, and for repairs, and bind the owners for repayment; but his authority is limited by the necessity of the case, and he cannot make them responsible for money not actually necessary for those purposes, although he may pretend that it is. He may make contracts to carry goods on freight, but cannot bind his owners by a contract to carry freight free. So, with regard to goods put on board, he may sign a bill of lading, and acknowledge the nature and quality and conditions of the goods. Constant usage shews that masters have that general authority; and, if a more limited one is given, a party not informed of it is not affected by such limitation.

 

“The master is a general agent to perform all things relating to the usual employment of his ship: and the authority of such an agent to perform all things usual in the line of business in which he is employed, cannot be limited by any private order or direction not known to the party dealing with him” (a).

___

(a) Smith’s Mercantile Law, p 59.

___

 

[688]

Is it then, usual, in the management of a ship carrying goods on freight, for the master to give a bill of lading for goods not put on board? for, all parties concerned have a right to assume that an agent has authority to do all which is usual. The very nature of a bill of lading shews that it ought not to be signed until goods are on board; for, it begins by describing them as shipped. It was not contended that such a course is usual. In Lickbarrow v Mason (1787) 2 TR 63, 100 ER 35, Buller J says (2 TR at p 75):

 

“A bill of lading is an acknowledgment by the captain, of having received the goods on board his ship: therefore, it would be a fraud in the captain to sign such a bill of lading, if he had not received the goods on board; and the consignee would be entitled to his action against the captain for the fraud.”

 

It is not contended that the captain had any real authority to sign bills of lading, unless the goods had been shipped: nor can we discover any ground upon which a party taking a bill of lading by indorsement, would be justified in assuming that he had authority to sign such bills, whether the goods were on board or not.

 

If, then, from the usage of trade, and the general practice of ship‑masters, it is generally known that the master derives no such authority from his position as master, the case may be considered as if the party taking the bill of lading had notice of an express limitation of the authority; and, in that case, undoubtedly, he could not claim to bind the owner by a bill of lading signed, when the goods therein mentioned were never shipped. It would resemble the case of goods or money taken up by the master under pretence that they were wanted for the ship, when in fact they were not; or a bill of exchange accepted or indorsed per procuration, when no such agency existed: Alexander v Mackenzie () 6 CB 766. The [689] words “per procuration” give notice to all persons that the agent is acting under a special and limited authority; and therefore the party taking such a bill has to establish the existence of the authority; it is not enough to shew that other bills similarly accepted or indorsed have been paid, although such evidence, if the acceptance were general, by an agent in the name of the principal, would be evidence of a general authority to accept in the name of the principal. So, here, the general usage gives notice to all people that the authority of the captain to give bills of lading, is limited to such goods as have been put on board; and a party taking a bill of lading, either originally, or by indorsement, for goods which have never been put on board, is bound to shew some particular authority given to the master to sign it.

 

There is little to be found in the books on this subject. It was discussed in Berkley v Watling (1837) 7 Ad & El 29, 112 ER 382, 2 Nev & P KB 178. That case was decided on another point: but Littledale J, stated, that, in his opinion, a bill of lading is not conclusive upon the ship‑owner.

 

For these reasons, we are of opinion that the issues should be entered for the defendants, and that the defendants are entitled to judgment.

 

Judgment for the defendants.

 

***