APPEAL ALLOWED

Hokitika Guardian, 16 June 1933, Page 2

APPEAL ALLOWED

CLAIIM FOR BROKERAGE, f POWERS OF A 'MANAGER. AUCKLAND, June 15. A judgment given by Mr E. C. Cutten,. S.MJj an a civil claim .last February iwcis /reversed by the- Chief Justice, Sir Michael Myers, in the .Supreme Court yesterday. 'His Honour said he was unable to see upon what principle of 'law it could be claimed that the appellant was liable. The appellant, who was the defendant in the lower Qavcrt, was the Aladdin Products, Limited (Mr Barrowclough). .Premium Investments Limited, the /respondent' (Mr Dickson), had sued Aladdin Products to recover £7O, which it was alleged Aladdin products had agreed to pay the plaintiff for brokerage in connection with the formation of A'-addin Products. ’Mr Cutten decided that Premium Investments was entitled to recover the £7O. His Honour said one of the questions seemed to be whether the director of a company could hove implied authority to bind the company to an agreement to pay something for which there was no consideration. Mr Barrowclough said that prior to itg incorporation there could have been no obligation on the comapuy to pay anything. The grounds of the appeal were that, if D. L. Ewen, manager of Aladdin Products and a director did purport to bind the company there was no consideration for the contract, and. secondly, he had no authority to bind the company.

Mr Dickson said he thought hj could satisfy His ’Honou r that his client did do a certain amount of work fo” Aladdin Products [after ; . its incorporation. Ewen was jpan held out by this company as its mouthpiece and it wo,? therefore liable. His Honour: A manager has no authority to give away the company’s money in satisfaction of his own liabilities, and that is what he has done in this case.

(Mr Dickson ; No, sir. He agreed to pay out brokerage for work do-ne since the incorporation of the company. After hearing argument His Honour said be had no doubt that the judgment of the Court below a s against this appellant could nofc stand and that the appeal must be allowed. The pro. position that liability could attach to the appellant, appeared to be contrary to the principles of law as he understood them.

“Judgment against the appellant would, in my opinion, involve the assumption that a director of a company may bind the company to pay the money of its shareholders to a third person without- any consideration to the company,” fi aid Hi s Honour. “The agreement here upon which Mr Dickson’s client relies and which claimed the support of the learned magistrate wa.s. as I view it, an agreement made by M T Fwen, purporting to bind the company to pay money in discharge of a debt for which the company was not irranon-| sible and for which Mr Ewen was. The apnea] must be allowed, with £7 7s costs, and the usual costs in the Court below.”