C. A. 1904 and H. J. Thomas, Cardiff. In consideration of your introducing to us the Law Guarantee and Trust Society for the POWELL & purpose of negotiating a debenture issue in connection with a fleet of steamships, and of such negotiations resulting in EVAN JONES business, we undertake to pay you a commission of 2 per cent. on the amount that may be mutually agreed between us and the said society to be advanced. Yours faithfully, Evan Jones & Co." THOMAS v. & Co. The defendants pleaded by way of defence, in substance, (1.) that no advance had been obtained for them through the instrumentality of the Law Guarantee and Trust Society, and (2.) that a person named Cowperthwaite had been employed by the plaintiffs to obtain the advance required by the defendants, and that the plaintiffs wrongfully allowed Cowperthwaite to receive a commission on the transaction from the Law Guarantee and Trust Society without the knowledge of the defendants, and were in consequence not entitled to claim any commission from the defendants; and the defendants counterclaimed against the plaintiffs and Cowperthwaite, who was joined as a defendant to the counter-claim, the amount of the commission so received by Cowperthwaite. The facts, so far as material to this report (1), appeared to be as follows. In the spring of 1902 the defendants, Evan Jones & Co., who were shipowners carrying on business at Cardiff, were engaged in the formation of a steamship company, afterwards incorporated under the Companies Acts, and called the Field Line, and were desirous of raising money by placing an issue of debentures by the company to the amount of 70,000l., to be secured on the ships of the company. They applied to the plaintiffs, who also carried on business in Cardiff, to obtain for them the amount of money required on (1) It has not been thought necessary to set out in detail the facts and the correspondence in this case, which was very lengthy, such details being only material to the question of fact whether a contract of agency had been created as between Cowperthwaite and Evan Jones & Co. As will be seen from the judgments, the Court held that, independently of any such contract, a fiduciary relation existed between them such as to render Cowperthwaite accountable to Evan Jones & Co. for the commission received by him, and it is on that point that the case is reported. C. A. 1904 THOMAS v. & Co. debentures. For this purpose the plaintiffs applied to one Akenhead, and in May, 1902, he introduced the plaintiffs to Cowperthwaite, who had on previous occasions had business POWELL & transactions with the Law Guarantee and Trust Society. It was arranged between the plaintiffs, Akenhead, and Cowper- EVAN JONES thwaite, that the latter should endeavour to get the Law Guarantee and Trust Society to provide for the defendants, Evan Jones & Co., the amount which it was desired to raise by the issue of debentures, and that Akenhead and Cowperthwaite should have certain shares of any commission which the plaintiffs might receive from the defendants upon the transaction. Subsequently, on July 16, the plaintiffs introduced Cowperthwaite to the representative of the defendants, Evan Jones & Co., and it was arranged that Cowperthwaite should introduce Evan Jones & Co. to the Law Guarantee and Trust Society. A great amount of correspondence and negotiation afterwards took place directly between the defendants, Evan Jones & Co., and Cowperthwaite, with regard to the carrying out of the transaction with the Law Guarantee and Trust Society. On August 7 the agreement or commission note above referred to was signed by the defendants. Cowperthwaite introduced the defendants, Evan Jones & Co., to the Law Guarantee and Trust Society; and, ultimately, the money required was obtained, and the debentures were issued and placed, through their instrumentality. Without the knowledge of either the plaintiffs or the defendants, Evan Jones & Co., it was arranged between Cowperthwaite and the Law Guarantee and Trust Society that the former should receive from the society in respect of the transaction the commission which he had usually received from them on previous transactions in which he had introduced business to them. He had actually received a sum of 1457. in respect of that commission, and it appeared that by agreement with the society he was to be entitled in the future by way of commission to a certain percentage on the annual premiums payable upon a sinking fund policy of insurance which had to be taken out by the Field Line with the Law Guarantee and Trust Society to insure the ultimate payment of the amount of the debentures. C. A. It did not appear that the Law Guarantee and Trust Society were aware of the relations existing between Cowperthwaite POWELL & and Evan Jones & Co. 1904 THOMAS v. & Co. Kennedy J. gave judgment for the plaintiffs on the claim. EVAN JONES With regard to the counter-claim, he appeared to have come to the conclusion on the evidence that the effect of what had taken place was that Cowperthwaite had become the agent for the defendants, Evan Jones & Co., in carrying out the transaction with the Law Guarantee and Trust Society; or that at any rate he stood in a fiduciary relation to the defendants, Evan Jones & Co.; and, under these circumstances, it was improper for him to receive commission, without their knowledge, from the Law Guarantee and Trust Society; and therefore the sum already received by him as such commission must be deemed to be money received for the use of the defendants, Evan Jones & Co. He therefore gave judgment against Cowperthwaite on the counter-claim for that sum, and made a declaration, in substance, that, in respect of any further sums which Cowperthwaite might receive by way of such commission from the Law Guarantee and Trust Society, he would become indebted to Evan Jones & Co. for such sums as and when he should receive the same. The defendants, Evan Jones & Co., had given notice of appeal against the judgment on the claim, but that appeal had been settled. Cowperthwaite appealed against the judgment on the counter-claim, and the defendants, Evan Jones & Co., gave notice of cross-appeal. Buckmaster, K.C., and H. M. Sturges, for Cowperthwaite. Cowperthwaite acted in this transaction as the agent of the plaintiffs, Powell & Thomas. He was merely a sub-agent, and not the agent of Evan Jones & Co., and there was no evidence of any privity of contract between him and them. The evidence shewed that Evan Jones & Co. declined to enter into any agreement rendering them liable to pay commission to Cowperthwaite. It could not therefore be contended that, if Cowperthwaite had not exercised due diligence or regard for the interests of Evan Jones & Co. in carrying out the trans C. A. 1904 THOMAS v. & Co. action, they would have had a right of action against him, which would be the case if he was their agent. Consequently, whatever the position may be as between Powell & Thomas POWELL & and Cowperthwaite with regard to the commission received by Cowperthwaite from the Law Guarantee and Trust Society, EVAN JONES that commission cannot be considered as having been received by him in the capacity of the agent of Evan Jones & Co., and he is therefore not liable to account for it to them: Lockwood v. Abdy (1), New Zealand and Australian Land Co. v. Watson. (2) The doctrine laid down in De Bussche v. Alt (3) only applies to cases where, from the very nature of the transaction, authority to employ a sub-agent is implied. present is not such a case. [They also cited Morison v. Thompson. (4)] The With regard to the cross-appeal, Evan Jones & Co. are not entitled to any declaration beyond that made by the learned judge. It has been held that money received by an agent by way of secret commission must be treated as money received to his principal's use, and that he is therefore a debtor to his principal in respect thereof; but it has also been held that he cannot be regarded as a trustee of such money for his principal, or as having effected the agreement for commission as such a trustee Lister & Co. v. Stubbs. (5) J. Eldon Bankes, K.C., and Holman Gregory, for Evan Jones & Co., were not called upon to argue in support of the judgment as regards the sum already received by Cowperthwaite by way of commission from the Law Guarantee and Trust Society. The declaration made by the learned judge does not go far enough. It will be ineffectual as regards any sums payable in the future by way of commission to Cowperthwaite ; for he will never claim those sums from the Law Guarantee and Trust Society, inasmuch as he would have to hand them over to Evan Jones & Co. It is submitted that there should be a declaration to the effect that Evan Jones & Co. are entitled to any benefit acquired by Cowperthwaite under the (1) (1845) 14 Sim. 437; 65 R. R. 621. (2) (1881) 7 Q. B. D. 374. (3) 8 Ch. D. 286. (4) (1874) L. R. 9 Q. B. 480. C. A. 1904 agreement for commission made by him with the Law Guarantee and Trust Society, as having been made by him as their agent, POWELL & and that they are therefore entitled to have the sums payable under it paid to them as and when they become payable by the society. THOMAS v. EVAN JONES & Co. [COLLINS M.R. It would appear from what was said by Lindley L.J. in Lister & Co. v. Stubbs (1) that such an agreement for commission may be void for illegality.] There could apparently be no question of illegality here, for the Law Guarantee and Trust Society did not know that Cowperthwaite was acting as agent for Evan Jones & Co., and Evan Jones & Co. were guilty of no illegality. It would not be just that the full amount of the premiums, which are presumably swollen by the amount of the commission payable to Cowperthwaite, should continue to be paid, and Evan Jones & Co. should not be able to obtain the benefit of the agreement for commission. [MATHEW L.J. The Law Guarantee and Trust Society is not a party to this action. If Evan Jones & Co. require any declaration of right as against that society, it would seem that such a right must be established in an action to which the society is a party.] Evan Jones & Co. ask at any rate for a declaration that they are entitled to the further sums which become payable, if any, or, alternatively, for a declaration merely that Cowperthwaite was their agent when he made the agreement for the commission. It is submitted that they are entitled to some such declaration to protect them against any assignment by Cowperthwaite of the benefit of that agreement. COLLINS M.R. This is an appeal from the judgment of Kennedy J., and the only question which really now arises is upon the counter-claim of the defendants against Cowperthwaite, who was joined as a defendant to the counter-claim. The question arises in this way. The plaintiffs, Powell & Thomas, were employed by the defendants, Evan Jones & Co., to assist them in finding some person or persons who would (1) 45 Ch. D. 1. |