International Paper Company v Spicer [1906] HCA 75; (1906) 4 CLR 739 (3 December 1906)

International Paper Company Defendants, Appellants; and Spicer and Others Plaintiffs, Respondents.

This is an appeal from an order of the Supreme Court of New South Wales setting aside a nonsuit and granting a new trial in an action brought by the respondents against the appellants to recover damages for breach of contract. This contract, which was dated 29th December 1903, is described by Darley C.J. in his judgment as "an agreement by which the defendants agreed that they would to the satisfaction of the plaintiffs perform and carry out the terms and conditions of a certain agreement made between the plaintiffs and the Australian Newspaper Company, and would deliver to the said company paper at the price of 1¼d. per pound less 5 per cent. discount." The contract was alleged to have been made by a joint stock company in New South Wales called Carmichael, Wilson & Co. (Limited), as agents for the defendants. The defendants pleaded non assumpsit, and it was therefore necessary for the plaintiffs to prove that the contract was made by Carmichael, Wilson & Co. with the authority of the defendants. The learned Judge who presided at the trial rejected certain evidence tendered for that purpose, and upon the evidence that was admitted held that there was no case to go to the jury, and nonsuited the plaintiffs. The learned Judges of the Full Court were of the contrary opinion.

The contract purports to be made between the International Paper Company of the first part and the respondents of the second part. As I have said, it was necessary for the plaintiffs in the action to prove that Carmichael, Wilson & Co. were the agents of the defendants for the purpose of making this contract. Now such an agency may, generally speaking, be proved either by showing that actual authority was given by the alleged principal to the alleged agent to make the specific contract; or by showing an actual general authority to make contracts of that kind; or by evidence of conduct on the part of the alleged principal of such a nature as to induce the person contracting with the agent to infer that he was an agent for that purpose. The rule of law was thus stated by Pollock C.B. in the case of Reynell v. Lewis[1]:—"This agency may be created by the immediate act of the party, that is, by really giving the authority to the agent, or representing to him that he is to have it, or by constituting that relation to which the law attaches agency; or it may be created by the representation of the defendant to the plaintiff, that the party making the contract is the agent of the defendant, or that such relation exists as to constitute him such; and if the plaintiff really makes the contract on the faith of the defendant's representation, the defendant is bound; he is estopped from disputing the truth of it with respect to that contract; and the representation of an authority is, quoad hoc, precisely the same as a real authority given by the defendant to the supposed agent. This representation may be made directly to the plaintiff, or made publicly so that it may be inferred to have reached him, and may be made by words or conduct. Upon none of these propositions is there, we apprehend, the slightest doubt."

The same rule was stated by the same learned Judge in Smith v. M'Guire[2], in these words:—"I think that questions of this kind, whether arising on a charter-party, a bill of exchange, or any other commercial instrument, or on a verbal contract, should be decided on this principle—Has the party who is charged with liability under the instrument or contract authorized and permitted the person, who has professed to act as his agent, to act in such a manner and to such an extent that, from what has occurred publicly, the public in general would have a right to reasonably conclude, and persons dealing with him would naturally draw the inference, that he was a general agent? If so, in my judgment, the principal is bound, although, as between him and the agent, he takes care on every occasion to give special instructions; and I think it makes no difference whatever, whether the agent acts as if he were the principal, or proposes to act as agent, as by signing A.B. agent for C.D." In cases where the authority is sought to be proved by evidence of what is called "holding out," it very rarely, I might almost say never, can happen that the principal himself has made the representation by direct communication to the other party, for, if he did, that would be evidence of actual authority. Where a person tells another that a certain person is his agent, that is sufficient proof of the agency as to all matters to which the statement relates. But where the communication is not made directly the questions to be considered are those suggested by Erle C.J. in Ramazotti v. Bowring[3]. In that case the question was whether a person, not the owner of goods, had been held out by the true owner of the goods as being the owner. Although ostensible ownership is not the same thing as ostensible agency, still the principle applicable is identical where the question is one of authority to be proved by conduct. Erle C.J. said[4]:—"The proper questions, under the circumstances, would have been whether Ramazotti so conducted himself as to enable Nixon to hold himself out to be the true owner of the goods, whether Nixon did so hold himself out, and whether the defendants in dealing with Nixon believed him to be the owner." I think, therefore, that the questions to be answered in this case, substituting agency for ownership, would be, whether the International Paper Company so conducted themselves as to enable Carmichael, Wilson & Co. to hold themselves out to be their agents for the purpose of making such contracts as that sued upon; whether Carmichael, Wilson & Co. did so hold themselves out; and whether the plaintiffs in dealing with them believed them to be such agents.

These being the principles of law relating to the subject, I proceed to deal with the facts. The plaintiffs endeavoured to establish the authority of Carmichael, Wilson & Co. by proving that some months before the date of the contract in question that company were holding themselves out as agents for the defendants for the purpose of making contracts of this kind. They first of all tendered evidence of a contract made with the plaintiffs themselves. That was a contract for the supply of a comparatively small quantity of paper, but the order was given to Carmichael, Wilson & Co. as agents for the defendants, and was executed by the defendants, and the plaintiffs paid the defendants the agreed price, and received from them invoices coming from New York direct. Evidence was tendered to prove that the defendants received the price through a special banking account which Carmichael, Wilson & Co. kept in Australia for the defendants' benefit, but the evidence was rejected. That fact, if proved, would have been some evidence, in my opinion, that the defendants were aware that Carmichael, Wilson & Co. were holding themselves out to be their agents for the purpose of making such contracts. That evidence ought therefore, in my opinion, to have been received, though, perhaps, it would not have gone very far towards enabling the plaintiffs to succeed in this action.

Evidence was then tendered to prove that about six months before the contract sued upon Carmichael, Wilson & Co. as agents for the defendants had entered into a contract with the Brisbane Newspaper Company, which publishes several important papers in Queensland, for the supply of paper by deliveries extending over three years. The document tendered was an offer in this form:—"The Manager, Brisbane Newspaper Company, Limited. Dear Sir. We hereby offer to conclude a contract for the supply of news printing paper to be used in the production of your publications on the following terms and conditions:" (which were then set out); (Signed) "International Paper Company. Managers Australasian Division Carmichael, Wilson & Co. Limited. J. A. Wilson," and accepted by the Brisbane Newspaper Company, Limited.

It was proposed to prove that this contract was afterwards performed by the defendants, and that there was nothing to suggest that they signified their approval of it otherwise than by performing it in ordinary course as a contract made for them by their agents. It was further proposed to show that the defendants sent paper, accompanied by invoices, from New York in respect of this transaction, which was described in those invoices as a contract, and that some of the correspondence was written on forms with printed headings on which the largest words were:—"International Paper Company of New York, Head Australasian Office, 24 Bond Street, Sydney," with, in the margin, "Australasian Division, Carmichael, Wilson & Company Limited," 24 Bond Street being Carmichael, Wilson & Co.'s address. This, it was urged, was some evidence that the defendants knew that Carmichael, Wilson & Co. were holding themselves out as their agents. It was also proposed to prove that the defendants had received the price of the paper supplied under that contract. Now that, in my opinion, was evidence that tended to establish, first, that Carmichael, Wilson & Co. held themselves out as agents for the defendants, and, secondly, that the defendants were aware of that fact, and took the benefit of the contract made by their ostensible agents. That was, of course, only one instance, and perhaps would not of itself go very far, but I think that evidence of the transaction was admissible.

Another piece of evidence tendered was a contract made about the same time by the same Carmichael, Wilson & Co. who signed it "International Paper Company of New York, Managers Australasian Division, Carmichael, Wilson & Company Limited, Bond Street, Sydney," with Messrs. Wilson and Mackinnon, proprietors of the Melbourne Argus and other papers in Australia, for deliveries of paper extending over twelve months, and it was sought to show that this contract, having been made by the alleged agents, had been performed by the defendants, that invoices relating to the transaction were sent from the defendants' New York office with the paper, some of which bore printed headings indicating that the paper was supplied by the defendants under the contract made by Carmichael, Wilson & Co. And it was also sought to show that the price paid for the paper was received by the defendants. In my opinion, that evidence also was admissible as evidence that the defendants on their part knew that Carmichael, Wilson & Co. were holding themselves out as their agents to make contracts of that sort. It is true that the evidence that the defendants performed these contracts with the Brisbane Newspaper Co. and Wilson & Mackinnon relates to a period subsequent to the making of the contract now in question. But the material point is whether they were admissible as evidence that the defendants, when they were made, allowed Carmichael, Wilson & Co. to hold themselves out as having authority to make such contracts. That fact may be proved by evidence of matters subsequent. In my opinion, therefore, all this evidence was wrongly rejected, and I think that, if it had been received, there would have been evidence to go to the jury on which they could have found that the defendants had authorized Carmichael, Wilson & Co. to make the contract in question.

All this evidence having been rejected, the plaintiffs were driven to rely upon another piece of evidence. It appeared that, during the course of some interlocutory proceedings taken by the defendants, an affidavit was filed on their behalf, in which was set out what was said to be a copy of the agreement by which the only actual authority was given to Carmichael, Wilson & Co. by the defendants. It was a document dated in 1903, more than two years before the contract sued upon, and before the actual incorporation of Carmichael, Wilson & Co. From the document it appeared that a joint stock company was to be formed with that name, who were to act as the defendants' agents in Australasia. They were to do their utmost in the interests of their principals, to receive a commission on what they did, and to perform a number of other duties to which it is not necessary to refer in particular. The agreement stipulated, in the 9th clause, that all contracts should be made in the name of the defendants, to whom all contracts should be submitted for approval. It was contended for the defendants that in the face of that stipulation no room was left for any speculation as to what was the actual authority of Carmichael, Wilson & Co., or as to how far the defendants had held them out as their agents, because we now know what actual authority they had. It appears to me, however, that in view of the other evidence tendered, and, in my opinion, wrongly rejected, the jury might properly have been told that they might disregard any secret limitations of the authority given to the agents, if they came to the conclusion that the principals knew that the agents were acting as if they had unlimited authority. The words relied on are:—"To whom all contracts shall be submitted for approval." The best that can be said in favour of the defendants' contention in this respect is that the plaintiffs have no greater rights than if they had known the exact terms of this document. I do not think that that is a sound view to take of the position, but, assuming it to be so, how does the matter stand? Those words are at best ambiguous. They may mean either that the agents are not to have authority to enter into contracts at all, but only to submit offers to their principals, or that they may make provisional contracts binding the principals unless they think fit to notify that they will not perform them. The case of Ireland v. Livingston[5] is authority for the proposition that where the words of such an authority are ambiguous they must be construed in favour of the party who has acted upon them according to a reasonable construction of the language used. If that is the case in the interpretation of a contract as between principal and agent, it is so a fortiori as between the principal and a third party who has dealt with the agent; because, even if the plaintiffs had no greater rights than those given by the document, they are at any rate entitled to the benefit of any reasonable construction that is open on the language used. Further, it is quite consistent with such a restriction having been inserted in the document in 1901 that two years afterwards the course of dealing between the principals and the agents had altered, and that the defendants no longer insisted upon contracts being submitted for their approval before being completed. There is a third answer, that if this document means that every transaction entered into in the name of the principals by the agents is to be submitted to the principals for approval, then if the principals, having notice, or being informed, that such a contract has been entered into by their agents in their name, do not within a reasonable time inform the person with whom the agents have made the contract whether they approve or disapprove the contract, the jury may infer from their silence that they assented to it. The authority being in this view only conditional, the condition is to be taken to have been performed. I think that the passage read by Cohen J. from Story on Agency is ample authority for that proposition; so also is the case of Prince v. Clark[6]. I think, therefore, that this document of 1901 was, of itself, sufficient evidence to prevent the case from being withdrawn from the jury.

Evidence was also tendered and rejected to the effect that when the time had arrived for the delivery of the paper in accordance with the contract, Carmichael, Wilson & Co. communicated with the plaintiffs' manager on the subject of the paper, and informed him, in substance, that it was on its way to Australia, that is, in effect, that the principals were performing the contract. In my opinion, it is a fair inference from the document of 1901 that however limited the authority of the agents, and even assuming that they had not authority to make absolute contracts, they at least had authority to tell a person with whom a provisional contract had been made whether his offer had been accepted by their principals or not. And if they say that an offer has been accepted, that is some evidence of a statement made by the principals' authority, from which it may be inferred that the principals have ratified the action of their agents.

There was still another piece of evidence tendered and rejected. It appeared that Carmichael, Wilson & Co. showed the plaintiffs' manager a book of advertisements containing a number of pictures of the places at which the defendants carried on operations, with a list of their agents in different parts of the world, Carmichael, Wilson & Co. being described as the "sales agents" of the defendants in Australasia. In my opinion, the document of 1901 was primâ facie evidence of the agents' authority to publish an advertisement of that kind, that is, to represent themselves to the world in general and the plaintiffs in particular as the "sales agents" for the defendants, whatever that may mean. The book ought therefore to have been admitted in evidence.

The agreement of 1901 was made with the persons who afterwards formed the company of Carmichael, Wilson & Co., but before that company was formed. It was not, therefore, evidence of the authority of that company at that date, but if it was acted on afterwards, as was in fact shown, it was evidence of authority given after the formation of the company. There is no necessity that such authority should be given in express terms, it may be given in any way in which persons may express their intention.

For these reasons I think that the rule nisi for a new trial was properly made absolute.

Another incidental point was made for the respondents. The order of the Supreme Court says nothing as to the costs of the first trial, and by rule 159 of the Supreme Court it is provided that:—"Where a new trial is granted (except on the ground that the verdict was against evidence) without mention of costs, each party shall bear his own costs of the first trial." So that as the order stands, even if the plaintiffs succeed at the second trial, they cannot get their costs of the first trial. It was suggested that the Supreme Court made the order because they were of opinion that they had no jurisdiction to award costs of the first trial. If that were so, of course this Court would have jurisdiction to review the decision, and indeed it would be our duty to do so if we thought the order was wrong. But when the Court appealed from has a discretion, it is not the practice of a Court of Appeal to review their decision on a matter of mere discretion. It does not appear distinctly that the Court thought that they had no jurisdiction to award these costs. It appears that in a later case they said they had no jurisdiction to do so, but it does not appear that the point was brought to their notice in this case. Under these circumstances I do not think it would be proper for us to interfere with the order of the Supreme Court refusing to make any order as to costs.

The judgment of His Honor the Chief Justice represents the conclusions at which we have arrived in conference, and therefore I do not propose to add anything to what he has said beyond expressing my concurrence in it.

In this case the firm of James Spicer & Sons sue the International Paper Company for breach of an agreement which is substantially for the sale of paper so as to enable the plaintiffs to carry out a prior contract between them and the Australian Newspaper Company Limited.

The agreement sued upon is dated 29th December 1903. It was made in the name of the defendants Carmichael, Wilson & Co. Limited purporting to be the defendants' agent in that behalf, and is signed "International Paper Company Australasian Division, Carmichael, Wilson & Co. Limited J. A. Wilson." Mr. J. A. Wilson was a director of Carmichael, Wilson & Co. Limited.

The defendant company failed to perform the agreement and contends that it is not binding upon them.

At the trial before Pring J. in September 1903, the learned Judge nonsuited the plaintiffs on the ground that there was no evidence proper to be submitted to a jury of authority in Carmichael, Wilson & Co. Limited to make a contract immediately binding upon the defendant company, and no evidence of any subsequent approval of this agreement on the part of the defendant company. His Honor excluded certain evidence tendered consisting partly of other transactions which Carmichael, Wilson & Co. Limited had previously entered into for the sale of paper as agent of the defendants, and partly of a book of advertisements.

The Full Court set aside the nonsuit and ordered a new trial, holding that there was sufficient evidence for the jury to act upon in the testimony actually admitted, and one of the learned Judges further held that evidence of the prior transactions had been wrongly rejected.

The plaintiffs' case is put alternatively; they first say that the International Paper Company of New York impliedly authorized Carmichael, Wilson & Co. Limited of Sydney to act as its general agent for the sale of paper, and as a proof of that fact they offer in evidence the previous transactions and documents excluded at the trial; the second position of the plaintiffs rests on a document which has been called the authority of 15th October 1901, made between the defendant company and Messrs. Carmichael and Wilson, as individuals, before the incorporation of Carmichael, Wilson & Co. Limited, which did not take place till 8th February 1902. It is in proof however that the defendant company appointed Carmichael, Wilson & Co. Limited to act upon the terms of the authority of 15th October 1901. This document recites the intention of Carmichael and Wilson to form a limited company for the purpose of undertaking agency business in connection with the sale of paper and products of a like nature, such company to establish offices in Sydney, Melbourne, Brisbane and Auckland, and to be the sole representatives of the Paper Company for the sale of its products in Australasia. It also states that the Paper Company has agreed to employ "the said Agents" for the exclusive sale of the products of the Paper Company in Australasia upon the terms and conditions thereinafter mentioned. "Agents" by clause 22 included the intended company of Carmichael, Wilson & Company Limited. The document provided for the formation of the intended company by its present name, that the agents should be the sole and exclusive representatives of the Paper Company for the sale in Australasia of its products and other similar products which it might furnish for sale, that the agents should use their best efforts to dispose of the Paper Company's products in the most judicious and advantageous way so as to produce the best results for the Paper Company; that they would not sell any competing or conflicting product, and that they would procure and transmit to the principals information as to newspapers and paper dealers in Australasia.

The Paper Company was to regulate and control prices and the extent of sales and deliveries in Australasia during the term of the contract, but was bound to make its prices as low as it considered market conditions would allow so as to enable the agents to dispose of the products, and was bound also to use its best efforts to supply the agents promptly with such quantities of paper as might be required for the trade.

The agents guaranteed and were to be responsible for the amounts due on sales. The Paper Company promised that the paper should be of the best quality of its kind.

The payment which the agents were to receive for their services and undertakings and certain expenses, was a commission equal to certain percentages mentioned in the net selling price of paper mentioned in Australasia. Then came clause 9, which the defendants submit as one complete answer to the plaintiffs' claim. It begins in these words:—"All transactions shall be made in the name of the International Paper Company to whom all contracts shall be submitted for approval." It provides that all forms used by the agents in the transactions of their business as agents of the Paper Company shall be as far as possible in the name of the International Company, that all invoices shall, as far as possible, be made out by the International Paper Company direct, and the moneys collected by the agents immediately deposited by them to the credit of the International Company in the Union Bank of Sydney to be drawn on by the Paper Company by drafts from New York or otherwise as it may determine. A second banking account called a current account is provided for, to be fed by the Paper Company, and out of which, when authorized by the Paper Company by power of attorney, the agents may draw for their common expenses.

A fidelity bond is stipulated for, and provision is made for monthly statements of account and periodical auditing. The duration of the agreement is ten years unless sooner terminated as provided.

One of the causes justifying a termination of the agreement is contained in clause 14, and seems to me of considerable importance in construing the document. That clause provides:—"In case the agents shall fail to sell on or before February first One thousand nine hundred and three at least ten thousand tons of paper for delivery prior to the first day of February One thousand nine hundred and four or shall fail in any year thereafter to make sales and deliveries of at least ten thousand tons per year the Paper Company shall have the right forthwith upon written notice to absolutely terminate this contract and upon such notice all rights of the agents therein and thereunder shall be at an end except as to any commissions actually earned or any disbursements which may be payable by the Paper Company."

If, therefore, during the year which included 29th December 1903 the agent failed "to make sales and deliveries of at least ten thousand tons" the Paper Company had the right forthwith on written notice to absolutely terminate the contract, and put an end to all rights of the agents except commission actually earned and disbursements to be recouped.

The plaintiffs as their alternative proof of authority rely upon this document, and say that it conferred power on Carmichael, Wilson & Company Limited to make the agreement of December 1903 either as binding the defendant company without more, the provision requiring it to be submitted to the defendants being treated as a matter merely between principal and agent, or if the contention cannot be put so high, then that submission to and approval by the defendants may be inferred from the circumstances. That inference, it is argued, may arise either from the absence of any communication of dissent, or from the notification of Carmichael, Wilson & Company in March 1904 that some of the paper was on the way.

The third ground upon which the plaintiffs rest their claim is that, even if they fail as to actual authority, they ought to succeed because the agents were held out as having general authority to contract and without reference to their principals, and the express limitation contained in clause 9 was never in fact brought to plaintiffs' knowledge.

The defendants' answer, as I gather it, is this:—They say the authority of October 1901 is expressly limited by the requirement of submitting every contract to the defendant company for their affirmative approval, and without proof of the fulfilment of this condition no contractual relation can be created by the agents. They say that any person dealing with the agents must take the risk of there being the requisite authority, and that the principals are sufficiently protected so far as actual authority is concerned by clause 9.

Then they contend that the prior transaction and other evidence excluded are perfectly consistent with strict adherence on the part of the agents to the authority of 15th October 1901, and, as the plaintiff has not shown affirmatively that these transactions were specifically approved by the defendants and such approval communicated to the other contracting parties, they afford no evidence of any authority outside the document of 15th October 1901.

They also say that there is no evidence of holding out, for the reasons just mentioned, and further that whatever was done by the defendants in furtherance of these transactions was done after 29th December 1903, and consequently was no ground for raising an estoppel in favor of the plaintiffs.

Lastly, it was urged for the defendants that upon the evidence it appeared that the agreement was made expressly subject to a stipulation that it was to be confirmed from New York by letter, and that, this condition remaining unfulfilled, no contractual obligation was ever created.

As this case will stand for re-trial before a jury, I shall abstain from any observation with regard to the weight which ought to be attached to any evidence upon the facts in controversy. That is for another tribunal to consider, and possibly upon a different body of testimony.

But it is necessary to examine the case in relation to the propositions of law which the parties have laid before the Court.

Taking the defendants' last argument first, that is to say, as to the special stipulation for confirmation by letter from New York, I do not see how it can be acceded to. The evidence of Mr. Wilson, which is relied on to sustain it, is on this point contradicted by Mr. Gates, and therefore, whatever its effect might be if ascertained to be true, it is not yet established. But still more, even if the conversation as deposed to by Wilson really took place, the further question arises, namely, was it anything more than a promise by him to get a letter from headquarters to satisfy Gates that Carmichael, Wilson & Company Limited really had the authority they asserted they had. In other words, not desiring for obvious reasons to disclose all the contents of their agreement with their principals, they are willing to substitute an equally satisfactory proof of authority in the shape of a confirmatory letter.

If the defendants cannot ride off on this point, then there remain the questions of general authority, and the agreement of 15th October 1901, and estoppel by holding out.

With respect to the evidence of general authority beyond the written agreement of 1901, I agree with the observations that have fallen from the learned Chief Justice. In view of the possible submission of the issues of fact to a jury hereafter, I shall not do more than point out certain features from which a jury would be at liberty to form its own conclusions, and which therefore justify the Court in holding that the evidence was properly admissible and the nonsuit wrong.

The documents relating to prior contracts were produced as, and purport to be, the complete records of the transactions they refer to; they show that the defendant company have supplied the goods and received payment for them, and, so far as appears up to the present, without either questioning or supplementing the authority of the agents or signifying approval of the contracts that had been made.

The headings of some of the documents and the references in others, together with the other circumstances just mentioned, appear to me to make it impossible to withdraw them from consideration, or to say that no honest jury, if so minded, could reasonably draw the necessary conclusions in favour of the plaintiffs; whether such conclusions are the proper conclusions to draw is a matter entirely for the jury, and with respect to that I offer no opinion and make no suggestion.

I pass from that to the authority of October 1901, the contents of which have been already referred to. I do not agree with the defendants' view of the meaning and effect of clause 9. They construe the provision as to submitting contracts for approval as if it were contained in some short and simple authority to receive offers and possibly to negotiate in order to get the best offer available, but always leaving it to the absolute and unquestionable will of the principals to say "yes" or "no" or nothing at all without being considered unreasonable.

Can it be supposed that the agreement of 15th October 1901 is to be so construed? Is it a reasonable interpretation of that document to say that Carmichael, Wilson & Company Limited were bound to look for orders, to canvass Australasia, to use their best efforts to dispose of goods, to incur expense, to abstain from selling competing goods, to effect sales, tentatively at all events to communicate the fact of these transactions, and yet, although their remuneration and even the continuance of the agreement might depend on the reply, the principals were not expected to answer unless they chose. If less than 10,000 tons of paper were sold and delivered in the year severe consequences might follow to the agents at the option of the principals. rest content without one, and remain in doubt whether their commission were earned or not, or it may be, whether the minimum of effective business had been attained? Very difficult and unfair situations in which the principals' silence might place the agents can easily be suggested, if no duty on the part of the principals is to be implied to inform them of their approval or disapproval. The provision that "all contracts shall be submitted for approval" cannot be read apart from the rest of the agreement, and reading it in conjunction with all the other terms and by the light of the whole situation, I am of opinion that there existed an implied duty or promise on the part of the Paper Company to communicate to Carmichael, Wilson & Company Limited, within a reasonable time, their disapproval of any proposed contract at the peril of having its silence construed into consent.

And if that is the effect of the provision with relation to Carmichael, Wilson & Company Limited, it follows that any other person desiring to enter into a contract with the International Paper Company through Carmichael, Wilson & Company Limited and reading the authority, would conclude that in the case of non-approval such a notification would without delay be made to Carmichael, Wilson & Company Limited, and that he would, either on application to that company or spontaneously from that company, be in his turn informed of the fact.

"Submitted for approval" means submitted by Carmichael Wilson & Company Limited and not by the purchaser. The answer would be of course to Carmichael, Wilson & Company Limited and not to the purchaser. How, then, can the purchaser know his position? Either he must, in the absence of any notification within a reasonable time, assume that approval is given, or he must ascertain as best he can from Carmichael, Wilson & Company Limited what has been done. It seems to me there is no other course reasonably open to a business man.

In this case, having regard to the fact that the plaintiffs were known to be under contract to the Australian Newspaper Co., there was even more reason for expecting some distinct and timely communication if the defendants were not going to stand by the arrangement. It was not the case of a person for the first time proposing a purchase and receiving no answer. Whether the arrangement of 29th December 1903 could in strictness be called a contract or not, at all events it was a dealing between parties which might be thought as between business men to raise a reasonable expectation of an answer. In Lucy v. Mouflet[7], Pollock C.B., says:—"Now though it is true that if a stranger were to write and say to a person, If I do not hear I will send goods, the omission to reply would be no evidence of a contract, yet it is different where two persons are actually engaged in dealing or under contract with each other. Then, if a proposal is made to which assent might be reasonably expected amongst men of business, and no answer is sent to it, acquiescence may be presumed." In Sutton & Co. v. Ciceri & Co.[8] it was considered by Lord Watson that reticence in mercantile correspondence may under some circumstances be irrebutably assumed to be equivalent to admission. Consequently, putting the best possible interpretation on the words for the defendants, namely, that without actual approval there was no contract, it is still open for the jury, in my opinion, under the circumstances of this case, to find as a fact that there was approval. The construction of these words, however, is not necessarily so favourable for the defendants as that. Taken together with the rest of the agreement they appear to me to be at least ambiguous and to be reasonably capable of meaning that they are only inserted for the protection of the principals if they choose to avail themselves of the power. I think, looking at the document as a whole, according to well established rules of construction (see North Eastern Railway Co. v. Lord Hastings[9]), that this is their true signification. But looking at them as merely ambiguous how does it stand? The learned Chief Justice referred to Ireland v. Livingston[10], as an authority for the legal point in such a case. The Privy Council has acted upon the same principle in United Insurance Co. v. Cotton—of which the only report of the judgment, so far as I know, is found in the South Australian Law Reports[11]. Referring to certain instructions to an agent their Lordships intimate their opinion as to their meaning, and then proceed to say:—"Of course a more limited construction may be put upon it. Their Lordships merely desire to indicate that the wider construction is one which might, in their estimation, be reasonably put upon it by the person to whom it is addressed." Applying that principle to the present case, the error of a nonsuit is still more evident.

If words are susceptible of only one plain and unambiguous meaning, that must be the meaning attributed to them, and no different interpretation can be substituted merely because the parties may have thought differently and acted accordingly. For this the case already quoted of North Eastern Railway Co. v. Lord Hastings[12] is a decisive authority. But where the words admit of more than one construction, that which the parties themselves have by their conduct adopted may be very important in determining the interpretation which, in the event of a subsequent dispute, the Court will place upon them: Forbes v. Watt[13].

In this view I am not sure that the various prior transactions are not, by reason of the apparent absence of specific approval, some evidence that both the parties to the agreement have construed and regarded the expression "submitted for approval" as meaning that, in the absence of notice to the contrary, approval is to be assumed, and therefore that is an interpretation which a reasonable business man might fairly place upon it.

I should not omit to mention the contention on behalf of the defendants that there was no evidence of Carmichael, Wilson & Company Limited ever having in fact forwarded the agreement of 29th December 1903 to the defendants for approval, and consequently no inference could be drawn from the defendants' silence. I think that is sufficiently answered by the presumption that Carmichael, Wilson & Company Limited did fully inform the defendants of the whole of the circumstances of the agreement, because that was at once their duty to their principals, the advancement of their own interests, and the honest and natural course to pursue towards the plaintiffs. No circumstance appears that repels that presumption, but on the contrary the non-production at the trial of the document signed by Gates, and which was asked for both upon subpœna duces tecum and notice to produce, is a circumstance which a jury might be asked to regard as supporting the primâ facie impression.

On the question of holding out I do not wish to add anything to what has already been said except to refer to Farquharson Brothers & Co. v. King & Co.[14]. Lord Lindley there says:—"It was pointed out by Parke J., afterwards Lord Wensleydale, in Dickinson v. Valpy210 B. & C., at p. 140., that holding out to the world is a loose expression; the holding out must be to the particular individual who says he relied on it, or under such circumstances of publicity as to justify the inference that he knew of it and acted upon it."

As to the case of Watteau v. Fenwick[16], it is not necessary for the purpose of to-day to say more about it than that I am at present not prepared to assent to it. Its correctness I observe is questioned in Lindley on Partnership, 7th ed., p. 146.

[1] [1846] EngR 1141; 15 M. & W., 517, at p. 527.

[2] [1858] EngR 788; 3 H. & N., 554, at p. 560.

[3] [1859] EngR 1038; 7 C.B.N.S., 851.

[4] [1859] EngR 1038; 7 C.B.N.S., 851, at p. 856.

[5] L.R., 5 H.L., 395.

[6] [1823] EngR 321; 1 B. & C., 186.

[7] [1860] EngR 400; 5 H. & N., 229, at p. 233.

[8] 15 App. Cas., 144.

[9] (1900) A.C., 260.

[10] L.R. 5 H.L., 395.

[11] 19 S.A.L.R., 124, at p. 127.

[12] (1900) A.C., 260.

[13] L.R. 2 H.L., Sc. 214.

[14] (1902) A.C. 325, at p. 341.

[15] 10 B. & C., at p. 140.

[16] (1893) 1 Q.B., 346.

High Court of Australia

International Paper Company v Spicer [1906] HCA 75; (1906) 4 CLR 739 (3 December 1906)

HIGH COURT OF AUSTRALIA