No. 26. Nov. 17, 1875. State Line State Line Company at the time when the bills were discounted, for if it was clearly apparent that, although in debt to the company, Merrow and Company had no other funds to apply to a purpose for which the State Line Company Ross, Skolwere responsible, I am not prepared to say that their being indebted to the field, & Co. v. company would be conclusive against the pursuers' contention. My difficulty is Steamship Co. rather to find any materials on which that result can be arrived at. We do not know whether the debt due to the company arose on shares alone, which were held by Merrow and Company, or on the company's business. The whole matter is left in perfect darkness. At the date when these bills were discounted there were payments made by Merrow and Company on behalf of the company, but I am not able to say that these payments were made from funds provided by the bills. The payments were made out of a general account, and the money was paid into that general account, and that is all that can be said. On these grounds I concur in the result at which the Lord Ordinary has arrived. LORD ORMIDALE.-This is just a case of borrowing money by Merrow and Company, by drawing and accepting bills. The question, then, comes to be whether Merrow and Company, the managers of the State Line Company, had the power of so borrowing money. I doubt whether even the directors themselves had, under the articles of association, power to borrow money in such a way. I rather think they had not. Every presumption is against the idea that the board conferred such a power on their managers, and certainly I cannot find anywhere in the proof evidence of a direct authority. When we look at the proof we find two of the directors concur in saying that Merrow and Company could get, and did get, money from the board whenever they needed it. It has been, however, argued that there was an implied authority. Of that also I am unable to find any evidence. The only witness who speaks to this is Mr Duncan, the auditor, who examined and checked the books of the company, but it does not appear to me to have been part of his duty, beyond the matter of figures, to say whether the business of the company was being properly conducted or not. The point-indeed the only one-upon which I felt some difficulty was as to whether the State Line Company were to be taken as bound by the books of Merrow and Company. As between Merrow and Company and the State Line Company these books are not evidence at all, and the question is how far they are so in a question with Merrow and Company's sub-agents. I do not think they are. I am not able to distinguish Merrow and Company from the pursuers, who are just the hands of Merrow and Company in carrying out their arrangements. As regards the proceeds of the bills, I am unable to find that the company were lucrati; and I agree with your Lordship in the chair in holding that there is a total absence of evidence that the pursuers' moneys were applied for the benefit of the State Line Company. LORD GIFFORD.-I have come to the same result, and to a large extent upon the same grounds. The action as originally laid was in the form of an action by the acceptor of two bills to recover the amount contained in them against the defenders' limited company, who, it is said, were represented by the drawer. An amendment of the summons has, however, now been made, by which all re No. 26. State Line ference to bills is excluded from the conclusions, and the action now reads simply as a petitory action for a sum of money. If, upon any ground disclosed Nov. 17, 1875. Ross, Skol- on record, the pursuers can establish their claim against the defenders for the field, & Co. v. sum sued for, or any part of it, it will be a good action. A difficulty has, Steamship Co. however, been created by the second part of the joint minute, which appears to be an agreement by the parties to narrow the question to the authority of L. T. Merrow and Company, as managers, to draw the bills on behalf of the defenders. It was stated, however, for the pursuers that this was not their intention. I ain not unwilling to consider the question between the parties in its general aspect, and on all the grounds embraced on record, although I cannot quite get over the difficulty caused by a party asking a judgment on one issue as the issue in the cause, and then discarding that issue and raising another. The question is substantially whether the pursuers, who were sub-agents under Merrow and Company for the State Line Steamship Company, are entitled to recover from the limited company advances which they made to the principal agents. Laying aside the mere form of the action and the form in which the bills were drawn, the real question comes to this-Had Merrow and Company power to borrow for the defenders, and power to bind the defenders to repay the loan? I scarcely think it makes any real distinction that Merrow and Company borrowed from the sub-agent and not from a stranger or third party. No doubt the borrowing was made in anticipation of freight to be earned. The freight was looked to as the means of repaying the loan, but the transaction was really £4000 lent by the pursuers, the sub-agents, to Merrow and Company as principal agents. The question is the same as if the pursuers had handed the sum in cash to Merrow and Company, and said that they would keep it out of freight, which, as sub-agents, they expected to collect and receive. But, then, this expectation was not realised, for, before the freights became due, Merrow and Company were displaced from the agency, and consequently the pursuers, as sub-agents, were also displaced, and the defenders uplifted their own freight, and hence the present action. Had, then, Merrow and Company power to contract a simple loan, binding the defenders for repayment, or had they power to impledge freight not yet due? If they had power to do either, the pursuers must prevail. Merrow and Company were the principal agents or managers of the defenders' trading business. I am disposed to think that the appointment was within the articles of association, which gives power to the directors to appoint a manager or managers. Undoubtedly their appointment involved very large powers. But did it include a power to borrow, or a power to impledge unearned freights, so as to bind the State Line Company? The general rule is that a manager has not power to borrow. Such power, when it is meant to be given, must always be specially or expressly conferred, and will very rarely be implied or presumed, and it is not included in the idea of management of such a business as the State Steamship Company. Nor is a power to pledge his principal's pro perty easily presumed in the appointment of a manager. Perhaps, it may be said, a fortiori, that if the manager has not power to borrow on the personal security of the limited company, still less has he power to impledge the freight, the ships, or other property of his employers. The case is quite different from an advance upon goods consigned for sale. In that case the consignor is proprietor of the goods, and can do what he likes with them. Of course, he may pledge his own goods to the consignee who gives him an advance thereon. If, Nov. 17, 1875. indeed, a manager advances money for behoof of his principal, and in course of No. 26. his management he becomes their creditor on account, he will have a right of. action against that principal, whether the money advanced came out of his own Ross, Skolpocket or was borrowed. The difficulty only arises when the money borrowed field, & Co. v. by the agent or manager is not applied for the principal's use, so that the prin- Steamship Co. cipal is not lucratus. I have come to be clearly of opinion that Merrow and Company had no power to borrow so as to bind the State Steamship Company, unless the money borrowed was applied for the company's use in the ordinary course of management. If, on their general account, no balance was due to Merrow and Company, and this turned out to be the case, then it is clear Merrow and Company could not sue their principals for the sums in question, no part of which sums had been applied for the principal's behoof. Now, Merrow and Company, not having any right of action for this sum, have the sub-agents any right of action? If I am right in holding that the terms of their appointment did not confer upon Merrow and Company power to borrow, have their written powers been increased by the course of dealing between them and the defenders? It is sought to establish this, in the first place, by general evidence, and secondly, by Merrow and Company's books. In order to give Merrow and Company larger powers than those contained in their written appointment the claim to larger powers must be brought home to the knowledge of the defenders. An agent cannot enlarge his powers merely by exceeding them, for however long a time. Homologation is the foundation of this part of the pursuers' case, knowledge is essential to homologation, and this knowledge and this homologation must be very clearly proved, in order to override and extend the terms of a written appointment. I think that the pursuers have failed to shew that the State Line Company or their directors knew that Merrow and Company were borrowing money for them. As to Merrow and Company's books, even if these had shewn far more clearly than they do that they were getting advances from the sub-agents, I should hesitate to affirm that the pursuers are entitled to found upon these books in a question with the defenders. No doubt the defenders had a right to look at these books, but that was a check in favour of the defenders. I do not think that if a principal has a right to look at his agent's books, but does not avail himself of that right, the agent can say, "You ought to have looked at my books, and therefore you must be held as authorising all that you might have discovered there." Although, for certain purposes, the agent's books are the books of the principal, the agent can never found upon them against the principal. Were the pursuers, then, in the position of third parties, or were they mere sub-agents of Merrow and Company? I think they were sub-agents, and not entitled to the privilege of third parties to found on Merrow and Company's books in their favour. Merrow and Company could never give the sub-agents larger powers than they had themselves. Nor, in a question between the pursuers and the defenders does it matter what view Merrow and Company took of their It is not a question of good faith; it is a question what the powers of Merrow and Company actually were. Nor will it do for the pursuers to say that they took it for granted that Merrow and Company had such powers. powers. Upon the question of power to borrow I therefore come to the result that Merrow and Company and their sub-agents, the pursuers, could only claim what was actually applied for behoof of the defenders; and if Merrow and Company State Line No. 26. applied the advance to their own purposes, the pursuers have no claim against the defenders. Nov. 17, 1875. State Line But it is said that the sums were applied for behoof of the State Line Comfield, & Co. v. pany. If it were clearly made out that the advance had gone into the pockets Steamship Co. of the State Line Company, it would be difficult to resist the pursuers' claim. But, in the first place, Merrow and Company's books do not establish this. These books have a column for the steamers, and another headed " private." While one of the bills is entered in the steamer column in pencil the proceeds are in both cases put into the private column. Viewing these books as the books of the State Line Company, it is only the steamer column which represents their books. The private column is, in no possible sense, the books of the State Line Company, but are the books of Merrow and Company as individuals; and, as such, these books shew that Merrow and Company, as individuals, received the whole proceeds of the bills. If the money has gone into the pocket of Merrow and Company, the pursuers must shew that it came out of the pocket of Merrow and Company; and the only way to shew that is to shew that Merrow and Company made advances to the State Line Company. But, instead of that, Merrow and Company were greatly indebted to the State Line Company. I do not know that we can distinguish between a debt on business transactions and a debt arising from unpaid calls. If the State Line Company had been asked to repay advances made by Merrow and Company, they would have been entitled to say that a larger sum was due to them by Merrow and Company in the form of unpaid calls. But really we are left very much in the dark. It is No. 27. Nov. 20, 1875. Adams, &c. not proved that Merrow and Company had no funds of the defenders in their hands when they drew the bills. If they had such funds, they were bound to have applied them in the first instance. I do not think, however, that the books of the agent can be read in favour of the sub-agent in a question with the principal. On the short ground that this is an action against the State Line Company for a loan obtained by their agent, and that the agent had no power to borrow, and that it has not been shewn that the sum borrowed was applied for the benefit of the principal, the opposite appearing to be the case, I am of opinion that the defenders should be assoilzied. LORD NEAVES was absent. THIS interlocutor was pronounced:-" Find that the sums sued for do not constitute any debt or obligation against the defenders: Quoad ultra adhere to the interlocutor complained of, and find the reclaimers liable in additional expenses," &c. GIBSON-CRAIG, DALZIEL, & BRODIES, W.S.-WEBSTER & WILL, S.S.C.-Agents. ANDREW GIBSON, Suspender.-Balfour- M'Kechnie. Proof-Writ or Oath-Suspension — Removing - Verbal Lease.-The proprietor of a house and garden in a town obtained a Sheriff Court decree ordaining the tenant to remove at the Whitsunday removing term 1875, being the .expiry of seven months for which he alleged the premises had been let. In a suspension brought by the tenant he alleged-1. a verbal agreement for a lease of five years followed by possession and rei interventus; and 2. an interim agreement for a yearly tenancy. Held that the suspender could only prove the averment as to a five years' lease by writ or oath, but that the aver- No. 27. ment as to a yearly tenancy could be proved prout de jure, and the landlord, in respect of his averments as to a seven months' tenancy, appointed to lead Nov. 20, 1875. in the proof. Gibson v. 1ST DIVISION. THIS was a suspension of a decree of removing, obtained in the Sheriff Court of Aberdeenshire by Andrew Adams and his wife, as proprietors Lord Young. of a cottage and garden at Ruthrieston, against Andrew Gibson, the B. occupant thereof. The Sheriff Court summons, which bore date 23d March 1875, concluded that the defender be decerned to remove from "the dwelling-house of Woodbine Cottage, steading, offices, garden ground, and other premises occupied by him as tenant thereof under the pursuers, and that at the 4th day of June next 1875" (the Whitsunday removing term in Aberdeen), "at which date defenders' right to occupy said subjects expires." The proprietors averred that they were heritable proprietors of Woodbine Cottage and garden, having purchased the same from a Mr Duthie in the beginning of March 1875, with the intention of occupying them on 4th June of that year. They stated that Mr Duthie had told them that the subjects were let to the defender from the end of October 1874 till 4th June 1875, and that, upon the sale being completed, Mr Duthie had informed the defender that he must leave at that date. The defender stated that he was tenant of the subjects under a verbal lease for five years from 4th December 1874, which lease had been followed by possession, and rei interventus, in so far as he had improved and planted the garden, at considerable expense to himself, with the approval of Mr Duthie, the lessor. The pursuers pleaded, inter alia;-(2) To entitle the defender to retain possession of the subjects after the 4th June next, under his alleged lease of five years, he is bound to constitute his lease by written evidence. (3) The defender's averments relative to his expenditure in connection with the garden, made with the view of founding a plea of rei interventus, are irrelevant in the present action; and, in any view, the plea of rei interventus is untenable, as the defender's operations in the garden were carried out after he had received notice to quit. (4) The defender is not entitled to a proof of alleged rei interventus having reference to a verbal lease for more than one year. (5) In any view the defender, supposing rei interventus had taken place, could prove the alleged verbal lease only by the oath of the granter. The defender pleaded;—(1) The said lease is, in the circumstances, at least effectual for one year from said term of entry. On 13th May 1875 the Sheriff-substitute (Comrie Thomson) granted decree of removing as concluded for; and on 27th May the Sheriff (Guthrie Smith) adhered to his Substitute's interlocutor. Gibson, the defender, then, on 2d June, lodged this note of suspension of the decree of removing. The note was passed on caution. In the statement of facts annexed to the note he averred, as he had formerly done in the Sheriff Court, that he had a verbal lease for five years from Duthie, but added (Stat. 2), " In the meantime, and until the said lease for five years was formally completed, the complainer understood and believed, and in point of fact it was the case, that the said subjects were let to him, and he was to occupy and possess the same for at least the period of one year from and after the said 4th of December 1874." The respondents in their answers repeated the statement that Gibson was allowed to occupy the subjects from the end of October 1874 until 4th June 1875. They also explained that the averment of a lease for one year was now made for the first time. The suspender further averred that he had ex K |