McLaughlin v Daily Telegraph Newspaper Co Ltd (No 2) [1904] HCA 51; (1904) 1 CLR 243 (27 April 1904)

HIGH COURT OF AUSTRALIA

H C of A

On appeal from the Supreme Court of New South Wales.

27 April 1904

Griffith, C.J., Barton and O'Connor, JJ.

Gordon K.C., Knox and Watt appeared for the appellant in both cases.

Lingen and Sheppard for the respondents, the Daily Telegraph Newspaper Company, Limited.

Wise K.C., Attorney-General for New South Wales, and Lingen, for the respondents, the Vale of Clwydd Coal Mining Company, Limited.

Watt, for appellant,

Gordon K.C., for the appellant.

Knox followed.

Wise K.C., for respondents, the Vale of Clwydd Coal Mining Co.

Lingen, for the respondents in both cases, followed.

Sheppard, for the respondents, the Vale of Clywdd Coal Mining Company, Limited, followed.

Gordon K.C., in reply.

Lingen,

April 27th

Griffith, C.J.

McLaughlin v. Daily Telegraph Newspaper.

This is a suit brought by the plaintiff for the rectification of defendants' share register by entering his name as a holder of 118 shares of which he was formerly the holder, and by registering him as the holder of certain other shares to which he would, if he had remained the registered holder of the 118, have been entitled in respect of his ownership of them. The plaintiff also claimed dividends withheld from him in respect of all the shares since his name was omitted from the register. Defendants are a joint stock company, registered in New South Wales under the Companies Act 1899, and the suit is brought under the provisions of sec. 232 of that Act. The obligation of the company to its members with respect to shares is a duty against a breach of which relief may be had in a Court of Equity, just as in the case of stock (see Sloman v. Bank of England, [1845] EngR 569; 14 Sim., 475). The plaintiff is entitled to say to the company?to adopt the words of Shadwell, V.C. (p. 487)?"You are bound by law to be my bookkeeper in respect of my stock, and to show me the true account of it, and if I can show that on a given day stock stood in my name, and now show that it does not stand in my name, and I have not authorized the transfer of it, you are responsible to me?that is to say, you must make the account stand as it ought to have stood." (See also Barton v. L. and N.W. Railway Co., 38 Ch. D., 144, per Cotton, L.J., at p. 149, and per Bowen, L.J., at p. 153; and Barton v. North Staffordshire Railway Co., ib., p. 458). This language, which was used of Government stock, is equally applicable to stock in a joint stock company, and, in our judgment, is also equally applicable to shares. The plaintiff, then, having established that he was, before the transfers to be directly mentioned, registered in defendants' register as the holder of the 118 shares in question, the onus is cast on the defendants to show that the change in the register has been made by plaintiff's authority. This onus they attempt to discharge by saying that they omitted the plaintiff's name from the register, and registered other persons in his place, in good faith in pursuance of transfers executed by his duly-authorized agent, acting under a power of attorney executed by the plaintiff, and produced to them as the plaintiff's deed. The plaintiff replies that the power of attorney, though executed by him in fact, was executed at a time when he was of unsound mind. The defendants do not dispute that at the time when it was executed he was, in one sense, of unsound mind, although the degree of unsoundness is in controversy. But they contend that his insanity is, in any view that may be taken of its degree, immaterial, and that the power of attorney is binding upon him, even if his mind was so unsound at the time of execution that he did not understand what he was doing. The case was very well and fully argued before us, and a great number of authorities were referred to, from which some rules appear to have been clearly established, while other questions appear to be still open for judicial decision.

For the plaintiff it was contended that a person of unsound mind is incapable of appointing an agent, or of executing a deed, and that such an appointment or deed is absolutely void. The defendants contend that this doctrine, if still true in any sense, is not applicable to the case of a power of attorney, at any rate as regards persons who have in good faith dealt with the apparent agent without notice of the unsoundness of mind of the principal. It is necessary, therefore, to examine the cases in detail.

In Tarbuck v. Bispham [1836] EngR 213; (2 M. & W., 2), and Stead v. Thornton [1832] EngR 355; (3 B. & Ad., 357 (n)), it was laid down generally that a lunatic is not competent to appoint an agent. In both cases, however, the person as against whom the question of incapacity was raised appears to have known of the incapacity. In Drew v. Nunn (4 Q.B.D., 661), the defendant who had, while sane, authorized his wife to act as his agent, became insane, and the question was whether the authority was revoked by the insanity. Brett, L.J., held that the insanity, assuming it to be such as to be apparent to anyone with whom he might attempt to enter into a contract, put an end to the agent's authority, and that, if there were no more in the case, the defendant would not be liable on contracts made by his pretended agent, but that the agent would be liable for breach of the implied warranty of authority. Bramwell, L.J., expressed the opinion that in order to annul the authority of an agent, insanity must amount to dementia, but doubted whether partial derangement would have that effect. Cotton, L.J., refrained from expressing any opinion on this point. But all the Lords Justices held that plaintiff having, while of sound mind, held out his wife as his agent, had entered into a contractual representation with persons who acted on the faith of the holding out, and that he was bound by this representation until the persons dealing with the agent had notice of revocation of the authority. These were the only English authorities cited to us directly bearing on this point. On the question of the capacity of a person of unsound mind to execute a power of attorney, the case of Dexter v. Hall [1872] USSC 45; (15 Wall., 9), decided by the Supreme Court of the United States in 1872, was cited. In that case one Hall, alleged to have been at the time a lunatic, executed a power of attorney authorizing his brother-in-law to sell land. The land was sold, and conveyed under the power to persons who afterwards conveyed to the defendant. After the death of Hall, his representatives brought an action of ejectment to recover possession of the land. The case was tried with a jury in a Circuit Court of the United States, and evidence was offered on both sides on the question of the sanity of the alleged lunatic. The Circuit Court directed the jury that, if at the time Hall executed the power of attorney he was insane, and his insanity was general, the instrument was a nullity, and no title could be transferred under it, and that in that case the plaintiff was entitled to a verdict; that it mattered not, if such were the case, what consideration might have been paid by the attorney, or with what good faith the parties might have purchased; that the instrument in such case was no more to be regarded as an act of Hall than if he were dead at the time of its execution. The jury found for the plaintiff, thus finding that Hall was insane. The Supreme Court held that the direction was right. The Court, in their judgment, delivered by Strong, J., carefully examined the early English cases, citing the comments of Lord Coke on Beverley's Case (4 Rep., 123b)?"There is a great difference between an estate made in person and by an attorney, for if an idiot or non compos mentis makes a feoffment in fee or in person and dies, his heir within age, he shall not be in ward, or if he dies without heir the land shall not escheat, but, if the feoffment be made by letter of attorney, although the feoffor shall never avoid it, yet after his death as to all others, in judgment of law the estate is void, and therefore in such case if the heir be within age he shall be in ward, or if he dies without heir the land shall escheat." They also referred in detail to Thompson v. Leach (Carthew, 435), and Ball v. Mannin [1829] EngR 165; (1 D. & Cl., 380), decided by the House of Lords in 1829, and came to the conclusion that it was the settled law of England, which they avowedly followed, that, while the feoffment of an idiot or lunatic is only voidable, his deed, and especially his power of attorney, is wholly void. In Ball v. Mannin the question was whether a deed to lease the uses of the land upon a fine and recovery, which was executed by one J. S. Ball, alleged to be a lunatic, was void. The person entitled to the land if the deed was void brought ejectment against the person entitled under it. The Judge directed the jury that the question for them to try was whether "the said Ball was a person of sound mind or not, and that, to constitute such unsoundness of mind as should avoid a deed at law, the person executing such a deed must be incapable of understanding and acting in the ordinary affairs of life; that it was not necessary that he should be without any glimmering of reason, but that it was sufficient if he was incapable of understanding his own ordinary concerns, and that, as one test of such incapacity, the jury were at liberty to consider whether he was capable of understanding what he did by making the deed in question, when its general purport was generally explained to him." The House of Lords held that the direction was right. In this case no consideration had been given by the persons claiming the land. On the other hand, the question of knowledge of the insanity by the persons who induced the lunatic to execute the deed was not treated as material. In this case, as well as in that of Dexter v. Hall, the fact of insanity seems to have been regarded as the only material question. In Jenkins v. Morris (14 Ch. D., 674), a person alleged to be of unsound mind had executed a lease. After his death his legal representative contended that the lease should be set aside, and an issue was directed to try the question "whether the lessor was or was not of sound mind, and capable of managing his affairs at the date of the lease." Evidence was offered on both sides, and Lindley, J., before whom the issue was tried, told the jury that the question for them to try was a practical question?whether the lessor was so insane as to be incompetent to manage his affairs in the sense of disposing of his property?even of property believed by him to be full of sulphur. (This was the peculiar delusion on which the allegation of unsoundness of mind was mainly based). A new trial, on the ground of misdirection, was refused by Hall, V.C., and the Court of Appeal (Jessel, M.R., Baggallay, L.J., and Bramwell, L.J.) In this case also, the validity or invalidity of the deed was treated as being dependent upon the mental condition of the person by whom it was executed. No question of knowledge or want of knowledge of his condition on the part of the lessee was raised.

In addition to these cases may be mentioned Howard v. Digby [1834] EngR 135; (2 Cl. & Fin., 634), decided by the House of Lords in 1834, to which we have been referred by counsel since the close of the argument. Lord Brougham, L.C., in the course of his opinion (at p. 661 of the report), said:?"The law on this point, at least, is as clear both in Equity and in Lunacy and at common law, as that a man's eldest legitimate son is his heir to freehold land. A lunatic cannot bind himself by bond or by bill; a lunatic cannot release a debt by specialty; cannot be a cognisor in a statute, merchant staple, a judgment, warrant of attorney, or any other security, I admit; but that a lunatic cannot receive payment of a debt, cannot receive moneys worth, and thereby make himself, his executors, and administrators, that is, his assets, liable in discharge for what he has received, I hear to-day for the first time;" and, again (at p. 663): "These cases ... all show that a lunatic, whose silence would be no consent, whose acquiescence would not be a waiver, whose obligation by a bond would not bind him, may nevertheless, by receiving the property of another, and using it for his own benefit, or, as in this case, by receiving clothes, or the value in payment for millinery, or repairs of articles of dress, so far bind himself to the person who pays for the goods as to enable the latter to set off the money so paid for the lunatic against a claim in our Courts in pari materia."

There is no doubt that a person of unsound mind may, in some cases, be held liable upon a quasi-contract, or obligation implied by law, as for necessaries supplied to himself or his wife. (See Baxter v. Earl of Portsmouth, [1826] EngR 754; 5 B. & C., 170.) But no case was cited to us in which a deed executed by a person of unsound mind, in the sense that he was incapable of understanding what he was doing when he executed it, has been held valid. On the other hand, the proposition that a power of attorney executed by a person of unsound mind is void is still contained in the text books as one of the propositions as to which the law is settled. The doctrine mentioned by Lord Coke, which precluded a man, under some circumstances, from alleging his own insanity, appears to have been a mere rule of pleading. It has long been discredited, and, indeed, it seems never to have been applicable in cases in which the question could be raised by the plea of non est factum (Sugden on Powers, 179, cited in Dexter v. Hall, at p. 24).

So far the authorities appear to favour the plaintiff's contention. We now come to another class of cases relied upon by the defendants, as either over-ruling or materially qualifying the doctrines apparently established by the cases already referred to.

It was contended that the invalidity of a deed could not be set up in a Court of Equity as against a purchaser for value without notice, and some cases were mentioned in which that defence was held good when the deed was impeached on the ground of the insanity of the person by whom it was executed. But, on examination it will be found that in every instance the case made by the plaintiff?indeed, the only case which would have entitled him to invoke the aid of the Court of Chancery?assumed that the legal estate was in the defendant, i.e., that the deed sought to be impeached was not void but merely voidable. If the deed had been void, the remedy would have been at law. It is not clear, however, that the doctrine of purchase for value without notice has any application in a suit for specific relief such as the present. Of the other cases cited for the defendants the most important are Molton v. Camroux [1848] EngR 611; (2 Ex., 487, 4 id., 17) and Imperial Loan Co. v. Stone (1892, 1 Q.B., 599). The latter case was an action on a promissory note signed by the defendant as a surety. The jury found that the defendant was insane when he signed it, but could not agree on the question whether the plaintiff's agent, who was present when the note was signed, was aware of the incapacity. It was held by the Court of Appeal that the defendant was not entitled to judgment. This case has sometimes been regarded as an extension of the doctrine of Molton v. Camroux, which had laid down that an executed contract of which a lunatic, a party to it, had received the benefit, could not be impeached if the other party had no notice of the insanity. The principle of the decision seems, however, to be the same in both cases, which, in our judgment, establish that a contract made by a person actually of unsound, but apparently of sound, mind with another who deals with him directly, and who has no knowledge of the unsoundness of mind, is as valid as if the unsoundness of mind had not existed. If the man dealing with the person of unsound mind is aware of his insanity, the contract is voidable at the option of the latter, but the party who takes advantage of the other cannot himself set up the incapacity. In this respect the matter is treated on the same footing as cases of fraud inducing a contract. There is, indeed, authority for saying that the equitable doctrines governing the validity or invalidity of a contract made with an insane person are only a particular instance of the general doctrines relating to fraudulent contracts. In the cases last mentioned no unfairness of dealing could be imputed to the persons who sought to take advantage of the contract, which was, in fact, made, in each case, with an apparently sane person. The principle appears to be that the validity of a contract made with an apparently sane person is to be determined by the application of the same rules as are applied in ordinary cases. As pointed out by Bramwell, L.J., in Drew v. Nunn, insanity is not a privilege but a misfortune. But, on the other hand, it does not impose any additional disability, so that any circumstance which would avoid a contract or transaction between sane persons is, in our opinion, equally applicable to contracts between persons of whom one is insane. Contracts made between persons apparently sane may be either void or voidable. If a person intending to make a contract with respect to a particular subject matter, or to sign a document of a particular character, is induced by false representation to make such a contract, or to sign such a document, intending to do so, the contract is voidable as against the party who is guilty of the fraud, but is valid as regards an innocent third party who acts, to his prejudice, on the faith of the validity of the contract or document. On the other hand, if a party is induced to make a contract, or to sign a document, by a misrepresentation as to the nature of the contract or document, that is to say if, although he in fact appears to make the contract, he has no intention of doing any such thing, or if he signs the document not intending to sign such a document, but in either case to do something else, the contract or document is void and not merely voidable, even as regards innocent third parties, unless some negligence or default can be imputed to him. Of this distinction, Thorogood's Case (2 Rep., 9b.), Foster v. McKinnon (L.R. 4 C.P., 704), Lewis v. Clay (14 T.L.R., 149), and Cundy v. Lindsay (3 A.C., 459), afford good illustrations. In Thorogood's Case the party was induced to execute a deed, but from illiteracy or ignorance did not know it to be a deed. In Foster v. M'Kinnon a man was induced to endorse a bill of exchange under the belief, fraudulently induced, that he was signing a guarantee. In Lewis v. Clay the defendant was induced by fraudulent representations to sign two promissory notes, and also a letter authorizing the person guilty of the fraud to receive the proceeds. In Cundy v. Lindsay the party was fraudulently induced to think that he was making a contract with an entirely different person. In each case the contract or document was held absolutely void, even as against innocent third parties. Lord Cairns, L.C., in Cundy v. Lindsay pointed out that in such cases the Court is called upon to discharge the disagreeable duty of determining, as between two innocent parties, upon which of them the consequences of a fraud practised upon both must fall. Mr. Sheppard attempted, very ingeniously, to distinguish these cases on the ground that in each of them the person who was induced to make the contract, or sign the document, was so induced by actual fraudulent misrepresentation as to the nature of the contract or document itself, and that, as it is impossible for a misrepresentation to operate upon the mind of a person who has no sound mind, there can be no inducement in such a case. But the real ground of the distinction appears to be, not that the contract or signature is induced by an active fraudulent misrepresentation as to the nature of the act, but that the mind of the actor does not accompany the act. (See per Lord Cairns, L.C., 3 A.C., at p. 465). Thus a signature to a promissory note obtained by a conjuror with innocent intent from a person who supposed he was signing his name?say to a photograph or visiting card?would no more bind him than if the signature had been obtained with fraudulent intent. The question, it is true, could never arise for decision unless a fraudulent use were sought to be made of the signature. Such a use might be made either by the person who fraudulently obtained the signature, or by a person who became possessed of a signature innocently obtained. In either case it would be equally void so far as regards creating a contractual obligation.

If, however, any negligence or breach of duty can be imputed to a person who so gives his signature, he will be bound as regards innocent third persons who have acted to their prejudice on the faith of it.

We think that these considerations are equally applicable to the case of a person of unsound mind, and that, if such a person is induced by another to go through the form of making a contract or signing a document without understanding what he is doing, he is not bound by his contract or signature, unless, indeed, the person who so induces him believes him to be of sound mind. If he does, there is an exception, and the doctrine of Molton v. Camroux and Imperial Loan Co. v. Stone applies. If he does not, the doctrine has no application.

Whether this exception applies to the case of a deed or power of attorney seems to be still open to doubt. It is settled law that there are two classes of cases in which a simple contract or quasicontract made by a person of unsound mind is valid. First, the case of obligations implied by law, such as an obligation to pay for necessaries supplied to himself or family. This liability stands on the ground of public policy. Secondly, contracts made by a person of unsound mind with another person who is not aware of his incapacity. In this case, also, public policy seems to be the foundation of the doctrine (Elliott v. Ince, 7 D., M. & G., 475, at p. 487). Deeds and powers of attorney executed by a person of unsound mind may, perhaps, stand on a different footing. So far as powers of attorney are concerned, it is useful to refer to the case last cited, in which Lord Cranworth, L.C., points out that the doctrine of Molton v. Camroux has no application in a case in which there is no contract for value, but merely a dealing by a lunatic with his own property without any consideration passing from others, which, in one sense, is the case when he merely executes a power of attorney not coupled with an interest. And, in view of the express decisions referred to in the first part of this judgment, there is certainly some difficulty in extending the doctrine of Molton v. Camroux, and Imperial Loan Company v. Stone to the case of a power of attorney or any other appointment of an agent. Nor, so far as we are aware, have they ever been so extended. In the view, however, which we take of the facts of this case, it is not necessary to decide this question. For the furthest extent to which they could be carried in such a case would seem to be that if the agent, being directly appointed, has no knowledge of the unsoundness of mind of his principal, the appointment is good as between principal and agent, and, possibly, as between the principal and an innocent third party dealing with the agent. In such a case it would seem that the agent would, at any rate, be entitled to an indemnity from his principal for any act done under the authority. But if the agent knows of his principal's incapacity?that is to say, knows that the alleged principal does not intend to appoint him as his agent?the doctrine of Molton v. Camroux and Imperial Loan Company v. Stone can have no application as between them. In the course of the argument, the case was put of a man induced to sign a power of attorney by a representation that it was a will drawn in pursuance of his instructions. We cannot but think that such a power of attorney would be absolutely void, in the absence, that is, of negligence or default on the part of the person who signs it. We are, therefore, compelled to the conclusion that the question whether a power of attorney given by a person of unsound mind is void or voidable (assuming that it is not necessarily void) is to be determined on the same principles as in the case of a power of attorney given by a sane person, and that, if it is shown that the insane person did not know what he was doing, i.e., that he did not intend to execute a power of attorney, and the person who procured the execution was aware of the fact, it is absolutely void. In such a case any person setting up the authority must be bound by the ordinary rule that it is for the party alleging agency to prove it; and in the case supposed he can no more prove it than if the power of attorney had been a forgery, as in the case of Oliver v. Bank of England (1902, 1 Ch., 610).

It is said, however, that in such a case the power of attorney may be supported against any person who honestly acts on the faith of its validity, either on the ground that the signature on the face of the document operates as a contractual representation of its validity, or on the ground that some blame can under such circumstances be imputed to the insane person for signing it. Both these arguments, however, appear to be answered by the cases of Foster v. M'Kinnon and Lewis v. Clay, in each of which a sane person was held to be not bound, either by way of contract or estoppel, by a document which he had been induced to sign by a fraudulent representation as to its nature. If, as we think, the ground of these decisions is the absence of intention to execute such a document as that actually executed, the principle is equally applicable to the case of a document executed by a lunatic without any intention to execute it. Otherwise, as already pointed out, a person of unsound mind would have less protection than a sane person.

Regarding the present case from this point of view, it becomes necessary to make a careful examination of the evidence in order to see under which branch of the law the case falls. It was agreed that the evidence taken in this case and that taken in the Vale of Clwydd Company's Case should be read as applicable to both cases. Now, although when a cause has been heard by a Judge on vivâ voce evidence, a Court of appeal is naturally reluctant to differ from him on a question of fact, yet the Court must bear in mind that it is required to re-hear the cause, and to form its own conclusions upon the evidence. (See Coghlan v. Cumberland, 1898, 1 Ch., 704). The difficulty which the Court of appeal feels is greater when there is a conflict of evidence, or when the weight to be attached to uncontradicted testimony depends to some extent upon the demeanor of witnesses, than when the facts are not contradicted, and the main question is as to the proper inference to be drawn from them, or when the case is substantially one of circumstantial evidence. In the present case we regard what may be called the circumstantial evidence as more cogent in its effect than the direct testimony of the witnesses upon the point directly in issue. Upon a careful consideration of the evidence we have arrived at the following conclusions of fact:?In October, 1900, the plaintiff was of unsound mind in such a degree that he was incapable of managing his affairs in the sense of disposing of his property (see Jenkins v. Morris, 14 Ch. D., 674); this being his general condition, although he had occasional more lucid intervals, in which he might have been able, to a greater or less extent, to understand what he was doing. It is not disputed, however, that when it is once established that a person is of unsound mind the burden of making out that a particular transaction took place during a lucid interval is cast upon the person alleging the fact (Hall v. Warren 9 Ves., 610). And, in our opinion, the defendants have not discharged themselves of this burden. We find further that in October, 1900, those interested in the plaintiff's affairs, particularly his wife and his managing clerk, had considered the probability that his estate would have to be administered by the Supreme Court in its Lunacy jurisdiction, and that they desired to avoid, if possible, the necessity for a declaration of lunacy and the appointment of a committee. It was then suggested?by whom does not appear, and with a motive which in one sense was laudable enough?that if the plaintiff could be persuaded to sign a power of attorney purporting to give his wife complete control of his affairs, the desired result would be attained. A power of attorney?that now in question?was accordingly prepared in his own office (he is a solicitor), by which the most full and ample powers were expressed to be given to his wife. While this was being done, Dr. Lamrock, his medical adviser, was consulted as to whether it would hurt him to "sign a document," to which he replied, "No, if it did not upset him." Dr. Lamrock at first thought it improper that a man in the plaintiff's condition should be asked to do such a thing, but was advised by plaintiff's managing clerk that it would be legal. Thereupon he told the plaintiff that he had better do what was wanted and "sign his name." Plaintiff had previously told him that he would not sign his name at all. We infer from this evidence that someone, probably the plaintiff's wife, had once or oftener asked him to sign his name, and that he was unwilling to do so. Finally, the power of attorney, having been prepared, was taken in a closed envelope to plaintiff's wife, who on the following day or the day after gave it to the plaintiff's son, with a request that he should try to induce his father to sign it. There is not in the whole of the evidence any suggestion that the power of attorney was ever read to the plaintiff, or its contents brought to his mind. His managing clerk, by whom it was prepared, was not allowed to see him, and the agent chosen to induce the signature was his son, a lad of 17, who only knew that the document, which up to that time he had not seen, and which he never read, was one purporting to give authority to carry on the plaintiff's business. To our minds this evidence points irresistibly to the conclusion that those by whom the power of attorney was prepared thought (having perhaps been so advised), that it was immaterial whether the plaintiff did or did not understand the nature of the document which he was to sign, but that his signature would be equally effectual in either case, and that they thereupon waited, not for a lucid interval in which he would be capable of understanding what he was doing, but for an occasion on which he would be sufficiently tractable to be induced to sign his name to anything put before him. This occasion was found on 24th October. We see no reason to doubt the substantial accuracy of the account given of the events of that day by the witness J. Harley McLaughlin. On the following day the plaintiff's medical adviser asked him if he had signed "the paper," to which the plaintiff replied that he had. There is no evidence to show that he retained any recollection of having done anything more than sign "a paper," or that he had any knowledge until some time afterwards?when does not exactly appear?of having appointed his wife to be his agent.

To counter-balance the evidence the effect of which we have briefly stated, we find nothing except a suggestion that the plaintiff's wife might have asked him when sufficiently sane to understand her, to appoint her his agent to dispose of his property. But the suggestion is not supported by evidence, and in our opinion the evidence tends strongly to negative it. We feel ourselves, therefore, compelled reluctantly to come to the conclusion that when the plaintiff executed the power of attorney on 24th October, 1900, he had no knowledge of what he was doing, except that he knew that he was signing his name, which, under the circumstances, was, as described by Dr. Lamrock, a mere mechanical act. And we think it necessarily follows from all the circumstances of the case that his wife and his managing clerk were aware of the actual facts. The case therefore appears to us to fall within the class of cases in which a man signs his name to a document without any intention to execute such a document, and not under the class in which a man executes a document, intending to execute it, but induced to do so by false representations as to a collateral matter.

It is not alleged that after the plaintiff's restoration to reason his conduct was such as to afford any evidence of ratification of the acts of his self-constituted agent, either by acquiescence or otherwise. On the other hand, it is admitted that before his recovery the proceeds of the shares were applied for his benefit, partly in the maintenance of himself and his family. It was suggested that this fact operated, in some undefined way, as a bar to the suit. If, however, it does not operate by way of estoppel or acquiescence, it is difficult to see how it can affect the plaintiff's rights as against the defendants.

It follows that the defendants have failed to discharge the burden cast upon them of showing that they removed the plaintiff's name from the share register by his authority, and that he is entitled, as against them, to the specific relief claimed. It would, however, be an eminently unsatisfactory result of this litigation if he were able to recover the shares themselves, and also to retain the benefits which were conferred on him, although without his consent or knowledge, by the application of the proceeds of the shares. His counsel have expressly offered to give the defendants the benefit of these proceeds. And, on consideration, we think that the Court may, notwithstanding the limited relief that can be given in this suit, owing to the absence of parties, make such a decree as will do, so far as it can now be done, complete justice. If any obstacle exists, it is, in our opinion, one of form and not of substance, and is, we think, removed by the plaintiff's offer, as we will proceed to show. It seems clear that the defendants, being called upon to restore the plaintiff's name to the register, would be entitled to indemnity from the plaintiff's agent for any loss which they may sustain by reason of her implied warranty of the validity of the power of attorney (Starkey v. Bank of England, 1903 A.C., 114); and the amount of the indemnity would not, upon the facts now before us, be less than the amount realised by the sale of the shares. On the other hand, it seems that, under the circumstances of this case, the agent, who acted throughout honestly, but under bad advice, would be entitled, on the doctrine as to which the German Mining Co.'s Case (4 DeG., M. & G., 14), is the leading anthority, to stand in the place of the persons to whom the proceeds of the shares were paid, and who were either creditors in respect of existing debts contracted during the plaintiff's sanity, or creditors for debts contracted in respect of necessaries for which he was liable under his implied authority. If they, or she in their name, sued him in respect of these debts, he could not, without ratifying her action, plead payment. She, therefore, suing in their name, would be entitled to recover from him the full amount so expended, i.e., as we are told, the full amount of the proceeds of the sale of the shares, being the whole or part of the sum that she would be liable to pay to the defendants. The liability is, then, in substance a liability of the plaintiff, and although it is not a direct liability to the defendants, it is one of which they could indirectly, and by a circuitous course, obtain the benefit. The plaintiff's offer, we think, enables the Court to dispense with this circuity of action (whether it could do so without that offer or not), and so to do complete justice between the parties, so far as is now possible.

For these reasons, we think that the decree appealed from must be reversed, and instead thereof there must be a declaration that the transfers of the shares in question by Ada Amanda McLaughlin, assuming to act as plaintiff's agent under the power of attorney, were invalid, and a direction that the defendants rectify their register by inserting the name of the plaintiff as the holder of 118 original shares and 39 new shares, and pay the plaintiff a sum equal to all the dividends which have been declared on the 157 shares since the removal of the plaintiff's name, together with a sum equal to the proceeds of any fractional part of a new share to which he was entitled, and which was sold by defendants. The defendants must pay the plaintiff's costs up to and inclusive of the hearing. The plaintiff's submission to indemnify the defendants, to the extent of all moneys received by his pretended attorney as the proceeds of the shares in question, against any loss which they may sustain, or any liability which they may incur to other persons by reason of obedience to the decree, must be embodied in the decree. The cause will be remitted to the Supreme Court for the execution of this judgment. The respondents must pay the costs of the appeal.

Judgment was then delivered in

Griffith, C.J.

McLaughlin v. The Vale of Clwydd Coal Mining Co. Ltd.

The material facts in this case are not distinguishable from those in the former case. For the reasons given in that case we think that the decree appealed from must be reversed, and instead thereof there must be a declaration that the transfers of the shares in question by Ada Amanda McLaughlin, assuming to act as the plaintiff's agent under the power of attorney, were invalid, and a further declaration that the plaintiff is entitled to have the share register rectified by inserting his name as the holder of the shares, with a direction that the defendants rectify the register accordingly, and pay to the plaintiff a sum equal to all the dividends which have been declared on the shares since the removal of the plaintiff's name. The defendants must pay the plaintiff's costs up to and inclusive of the hearing. A submission by the plaintiff to indemnify the defendants, to the extent of all moneys received by his pretended agent as the proceeds of the shares in question, against any loss which they may sustain, or any liability which they may incur to other persons by reason of obedience to the decree, must be embodied in the decree.

The cause will be remitted to the Supreme Court for the execution of this judgment. The respondents must pay the costs of the appeal.

Solicitor, for appellant, W. Morgan.

Solicitors, for Daily Telegraph Newspaper Co., Ltd., Laurence & Laurence.

Solicitor, for Vale of Clwydd Coal Mining Co., Ltd., Mark Mitchell.