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Decisions of the Superior Courts of New South Wales, 1788-1899

Walker v. Flint (1844) NSW Sel Cas (Dowling) 495; [1844] NSWSupC 14

bill of exchange - trusts - appeals

Supreme Court of New South Wales

Dowling C.J., Burton and Stephen JJ, 12 July 1844

Source: Dowling, Select Cases, New Series, Vol. 3, S.R.N.S.W. 2/3469, p. 47[1] 

Where a member of a partnership was engaged to sell cattle and to use the proceeds thereof to retire certain bills of exchange; held that the engagement did not amount to a trust but was merely a collateral security in respect of the bills, and any remedy for breach of the engagement lay in damages at common law.*

This was an appeal to the full Court from a decree pronounced after long litigation in the respondent's favour on the 16th of December last by the primary Judge sitting in equity under the local ordinance 4 Vic. No. 22 (1840), s. 20.

The appeal came on for hearing on the 29th of January and was continued on the 2nd, 3rd, 8th, 9th and 13th of February last. Having been argued at great length by Mr Solicitor General a'Beckett, Mr Donnelly and Mr Fisher for the appellants, and by Mr Windeyer, Mr Gordon and Mr Broadhurst for the respondents, the Court took time to advise upon its judgment.

The Court (delivered by Burton J. on behalf of Dowling C.J. who was absent from indisposition.) The multifarious duties of the Judges in other branches of the extensive jurisdiction of the Supreme Court have compelled them to delay thus long the decision of this important case. At various intervals they have had it under their anxious consideration, and after mature deliberation they have arrived at the conclusion which it is now my province to announce.

The primary Judge had held that the paper writing bearing the dates 9th March and 12th March 1840 amounted to a trust, accepted by Archibald Walker on behalf of the firm of William Walker and Company in which he was a partner to sell so much of the cattle therein specified as was sufficient to retire the bills endorsed by William Walker and Company, for the amount of the respondent and W.A. Dutton and accordingly made a decree against all the members of the firm, including William Walker who, though a party to the bill, was out of the jurisdiction and had not appeared. If the decree were assailable on this ground only, we apprehend it might have been corrected by striking out the name of William Walker and letting it stand effective against Thomas and Archibald Walker, see Darwent v. Walton (1742) [ Darwent v. Walton (1742) 2 Atk. 510, 26 E.R. 707]. But it was sought to be impeached in the petition of appeal on much higher grounds, going vitally to the character in which the defendants were sought to be made chargeable. The main grounds were, first, that the paper writing relied upon as creating a trust, really amounted to no more than a collateral security, to be enforced at the option of the respondents and secondly, that supposing it to be a trust, accepted by Archibald Walker, his partners were not bound by it nor answerable for his acts or defaults.

There were numerous grounds of objection taken to the frame of the bill, to the inconsistency of the decree with the prayers and to the failure of evidence necessary to support the case alleged for relief. It is now unnecessary to adjudicate upon these in detail, for the whole case turns upon the two points already mentioned. To these the Judges have applied their minds almost exclusively as governing their determination. A majority of the Court, namely their Honours Burton and Stephen JJ, are of opinion that the paper writing relied upon by the plaintiff below did not create a trust and amounted to no more than collateral security for the endorsement by the firm of Mr Walker and Company of Flint and Dulton's notes in favour of Sobbins as the price of the cattle.

Entertaining, as I do, unfeigned respect for the opinion of my learned brethren, I am bound to say that my mind is not clearly convinced of the soundness of the conclusion at which they have arrived. Looking at all the writings of the dates 9th and 12th March 1840 on the same sheet of paper, I still think that though that of the 9th March did not alone amount to a trust, the letter of the 12th March "requesting William Walker and Company to give Mr Darlot instructions how to dispose of the herd, and remit them the proceeds until by such remittances their endorsement was covered", did, if accepted by William Walker and Company, amount to a trust. It is clear that Archibald Walker accepted something on the part of the firm by acting upon this request and I cannot arrive at any other conclusion than that he accepted a trust to sell by the hands of Darlot so much of the cattle as would realize sufficient to cover the endorsements of William Walker and Company on Flint and Dutton's notes. That it was so interpreted by Archibald Walker himself is clear in his letter to Mr Darlot of the 8th of March 1841, five weeks before the first note became due. As my learned brethren, however, take a different view of the matter, their opinion must govern the decision of the case.

Taking it to be clear that Mr Flint really imagined, when on the eve of quitting the Colony, that he had given William Walker and Company sufficient power and authority as trustees to sell a sufficient number of the cattle and appropriate the proceeds to retire their endorsements when at maturity and that such was his intention, the difficulty which my learned brethren feel is in finding out any expression of such intention. The paper writing relied upon contained no words of trust to sell the cattle to meet the bills at maturity. The obvious import of the first letter of the 9th of March 1840 was to give Walker and Company a collateral security, in the event of their being obliged as endorsers of the bills to take them up in consideration of 2½ per cent, and for that purpose placing the cattle at their unreserved disposal, but subject to such instructions from Flint and Dutton as they might give to Darlot for remitting proceeds as they arose. The material alteration in the letter of the 12th of March, requested that William Walker and Company should give the instructions to Darlot as to how to dispose of the herd until the encumbrances covered the endorsements. But still the power thus given could only be evidenced as a collateral security in the event of the Walkers being obliged to take up the notes. Until then, any power they might have over the cattle could not take effect for non constat that Darlot, as one of the makers of the notes, might (if Flint did not) take them up at maturity and the Walkers never become liable on their endorsements. The endorsements having been given to Sobbins for his satisfaction, he could naturally look to the makers and only on their default could the Walkers become liable. Only then could the Walkers' security over the cattle come into operation. Viewing the matter in this light, whatever might be Mr Flint's uncompassed intentions, my learned brethren think this could not be regarded as a specific or even an implied trust to sell for the purpose of retiring the notes at maturity, but only as a collateral security to protect the Walkers from liability on their endorsement.

This being the main point on which the whole equity of the bill turns, the opinion of the majority of the Court thus entertained, would be sufficient authority for allowing the appeal. There is, however, another point on which I, as the primary Judge, concur, after more mature consideration, with my learned brethren in thinking that the present decree is erroneous. Taking it to be clear that the paper writing amounted to a trust, with all its consequences, still the question remains whether Archibald Walker, who alone acted in the matter by accepting it, without the knowledge or privity of his partners, could bind the firm of which he was a member. The way in which the bill is founded has raised no small difficulty by mixing up three parties in different characters. First, there is William, Thomas and Archibald as a company as general agents for the ship Alfred endorsing the notes. Two of these are agents under a power of attorney and then all three are sought to be charged as trustees. The mixing up of the parties in this way has created the difficulty (perhaps not undesignedly). Now the only one of these three who has accepted what is called the trust is Archibald Walker, and the question is whether, as mere partner, he could accept such a trust to bind himself and his partners? As partner he had authority to enter into all contracts relating properly to the trade and business of the partnership, or to act as agent for the others in the way of their business, but he could not bind his partners, without their privity and consent, by undertaking as a trustee the management of a mining, farming or other speculation quite foreign from the trade and business for which the partnership was formed. This, if a trust at all, would impose upon the partnership of the merchant's business being carried on at Sydney, the burden of managing and looking after the herd of cattle said to be in a remote province of the Colony.

The trust is accepted by Archibald Walker alone, and there is no proof of the acceptance or resignation of it by his partners. Doubtless Archibald was competent to bind his partners by endorsing the name of the firm of William Walker and Company on the notes, but his relation of partner gave him no implied authority to involve his partners in the responsibility of a trust inconsistent with the ordinary business of the partnership, unless they gave their consent, or adopted it after it was accepted. The primary Judge was led into the error of assuming that because the endorsing of the notes by Archibald Walker in the name of the firm was a partnership transaction in the way of trade it necessarily drew with it all the consequences growing out of or ancillary to it, without reference to the incapacity of a partner to bind his partners by an engagement foreign to the business of the partnership and distinguishing this case from the general principle that trustees shall be responsible only for their own several acts and doings. In consideration I must acknowledge that this was not a correct view of the case, and that William and Thomas Walker could not be bound by the acceptance of this as a trust by Archibald Walker, they being in no way privy to it.

Upon other points arising in the case it is unnecessary to give any opinion. If Mr Flint had intended this to be a trust, he should have been more specific in the terms of it and taken effectual steps to put the trustee into such a position of responsibility, that if he was guilty of a breach equity might have afforded him an adequate remedy. The utmost that the Court can now regard this, is, that if there being any breach of duty as an agent, for which if a proper case were made out, the common law would afford a remedy by action for damages. Although the Court feels constrained to reverse the decree pronounced, we cannot forbear observing that Mr Archibald Walker appears to have greatly neglected the interests of Mr Flint in not bestirring himself to look after the cattle when he must have understood from Mr Flint, on the very eve of his departing for England, that he realize enough to meet the bills at maturity, when probably his position as Mr Flint's agent had shewn him that such a step was desirable.

In the grievous loss which Mr Flint will have sustained the Court cannot but feel sympathy, but, owing to his own mismanagement and want of care in plainly setting down in writing and saying what he intended and meant, all this protracted and expensive litigation has arisen. Looking at the case in all its bearings, the Court cannot by any means say, however, that it was free from doubt and difficulty, and being of opinion that it was a fair cause for consideration, we think the decree pronounced by the primary Judge must be reversed and the bill dismissed as against all the defendants without costs on either side, both as to the suit and as to this appeal.

Note

[1] This decision went on appeal to the Privy Council, Flint v. Walker (1845, 1847) 5 Moo. P.C. 179, 13 E.R. 459 which is also online in brief form.

Published by the Division of Law, Macquarie University