[promissory note – Berkeley Estate – misrepresentation – land sales – Tuggerah - auctioneer]

Lyons v. Isler

Supreme Court of New South Wales

Dowling C.J., 10 March 1841

Source: Sydney Herald, 13 March 1841[1]

SUPREME COURT. – Civil Side.

            Wednesday. – Before the Chief Justice, with Messrs. Lord and McKenzie, Assessors.

            Lyons v. Isler. – This was an action brought to recover £82 9s. 6d., with interest, being the amount of a promissory note, payable at six months after date, made the 27th May, 1840. The consideration alleged to have been given for the said note was a portion of the Berkley Estate, situate at Tuggerah Beach. The defendant pleaded that he had been induced to purchase by a fraudulent misdescription of the property at the time of sale, as the land did not correspond with the land described at the sale. The defendant’s witnesses proved that the land was far inferior to that described in the hand-bills circulated at the time in the plaintiff’s sale room. Mr. Foster, for the plaintiff, submitted that the defendant had entirely failed to make out a good legal defence, as it had been proved that there was a contract in existence, and it was for the defendant to have produced it in Court; and if the plaintiff had the said contract, then the defendant might have given him notice to produce it, and on his failing to put it before the Court, it would then have been competent for the defendant to prove its contents by secondary evidence. He also denied that any fraud had been practised on the defendant, as the property had been described not by the plaintiff but by the owner’s (Mr. Peek’s) agent, and called witnesses to prove that a conveyance had been prepared for the defendant at his own special request, which was executed by Mr. Peek, the vendor, on the 27th August, 1840. It was also given in evidence, that the terms of sale were, that the purchasers were to pay by good bills at three, six, nine and twelve months, and that in August the plaintiff guaranteed the payments by giving his own bill at six months, receiving as security all the notes made by the purchasers. Mr. Hadden, the Surveyor, proved that the Berkley estate, instead of being within three hours’ sail of Sydney, was at least five hours; run by the steamer, and that after the vessel landed her passengers they had to travel twenty-five miles before they reached the land which had been described as the Berkley Estate, and that although at the sale it was represented as lying on the main road connecting Sydney with Maitland, Newcastle, &c., -- no traces of any such road were to be found on the estate; and also, that although the land was represented as being well watered, it turned out that it was principally salt water; and that, although the soil was represented as being of a rich alluvial description, it was of the poorest description, and that the flourishing town of East Gosford, was merely a paltry inn then in process of erection, and a bark hut, which was inhabited by Mr. Wells, acting as surveyor for the proprietor. In putting the case to the assessors, his Honour instructed them, that in point of law, the plaintiff had, by mixing himself up with the transaction, rendered himself liable, provided they, the assessors, should be of opinion, the description given by the the plaintiff was substantially false; he also instructed them that it was not necessary for the defendant to produce the contract, and that it was necessary, in order to protect the public in such sales as the present, that where even the auctioneer mixed himself up with the vendor, as has been done in the present case, that the former should be held responsible.

Dowling C.J., Burton and Stephen JJ,  16 June 1841

Source: Sydney Herald, 17 June 1841 [2]

SUPREME COURT – Wednesday

            New Trial Motions – Sittings after Term.

            Before the Chief Justice, Mr. Justice burton, and Mr. Justice Stephen.

            This was an action of assumpsit on a promissory note for £82 9s. 6d., made by the defendant in favor of the plaintiff, dated the 7th May, 1840, payable three months after date.

            The defence was that the note was made through fraud and covin on the part of the plaintiff. It appeared upon the trial before the Chief Justice, that the note was given as part of the purchase money of some land at Brisbane Water, sold by auction by the plaintiff to the defendant in May last. The defendant signed the sale book at the time of sale, and paid the deposit. The plaintiff at the sale dwelt upon the advantages of the land, and by his recommendation several parties who had never seen the land were induced to purchase; but finding upon a subsequent examination of the land, that in several particulars it did not correspond with the description, they generally resisted payment of the notes upon this ground.

            The defendant upon the trial gave evidence of the falseness of the plaintiff’s representation with respect to the nature, the situation, and the advantages of the land; the plaintiff gave contradictory evidence upon these points. The defendant had paid one of the notes which were passed by him for the purchase, and a conveyance to the defendant had been executed by the owner of the land, but it had not been accepted by the defendant after its execution. The plaintiff received a del credere commission upon the sale; and had passed his notes to the owner of the land for the amount of the sale.

            The Assessors found a verdict for the defendant; and the plaintiff, upon several grounds, sought to set it aside.

            Mr. Foster and Mr. Darvall now moved for the plaintiff; and relied upon the non-production, by the defendant, of the book of sale, or of any other written evidence of the contract of sale; and cited Mills and Oddy; 6 Carrington and P. 728; 3 Nev. and Man. 729, 449. The defendant should have shown, by the production of the contract, what that contract was, before he could rely upon its non-fulfilment.

            The Solicitor-General and Mr. Broadhurst, for the defendant, contended that it was not necessary to produce the conditions of sale, for it did not appear in evidence that they contained any description of the property sold; and the defendant had given evidence of the description by the production of a map of the property referred to by the plaintiff at the sale; and had also proved a receipt given by the plaintiff for certain promissory notes made by the defendant in consideration of the sale, from which receipt it was plain that the note in suit was only given upon that consideration.

            The Court decided that the contract in this case not being the gist of the action, the receipt sufficiently showed the consideration of the note.

            Mr. Foster and Mr. Darvall then contended that the learned Judge had misdirected the Assessors, and that the plaintiff having paid over the purchase money to the owner of the property, was clearly entitled in law to recover the amount of the note in suit, even though the description of the property were inaccurate, and thought the plaintiff acted upon a del credere commission ; for it had appeared that the first note was paid by the defendant that a conveyance had been made out, and that the title was not objected to; it was therefore too late for the defendant to attempt resisting payment of the note: the defendant had made no wilful misrepresentation of the property : he had merely done his duty in praising it. 1 Chit. Plea. p. 38 – The contract was completed in every thing, and the defendant was therefore bound to pay the note.

            The Solicitor-General and Mr. Broadhurst argued that in this case the plaintiff was not merely an agent, but was exactly in the position of his principle, against whom the defendant could resist this action: if the plaintiff have paid over the money he has paid it prematurely : but he has not paid it, he has only given his notes to the owner for the amount of the sale, before it was due from the defendant. The plaintiff has adopted the misrepresentations of the owner, he has circulated them upon his own authority, and is therefore liable for their accuracy. 1 Bin. n. c. 370, 4 Bing, n. c. 463, 1 Chit. on Con., last edit., 680.

Mr. Foster in reply contended that the cases cited for the defendant did not apply, and that the plaintiff, was entitled to recover in this action, as he only acted according to the instructions of his principal, for which he was not to be responsible. The plaintiff as an auctioneer was only to retain the money till the title was made out; the title was proved to have been made out, and therefore the plaintiff was bound to pay over the money to the owner, and was entitled to recover it from the defendant. Under a del credere commission the Auctioneer merely guarantees the solvency of the buyer, and in fact in this colony the custom of Auctioneers is to pay the owners immediately after the sale, the Auctioneers taking the purchasers bills themselves, and deducting the discount from the amount paid to the owners of the property sold.

            The learned Judges delivered their judgment [se]riatim.

            Mr. Justice burton said, that in his opinion, the defendant was entitled to retain his verdict, for that an auctioneer is generally a mere agent; in this case the plaintiff had made himself a principal, and therefore was liable to have the same defence set up against him as could be set up against the owner of the property sold; the plaintiff has clothed himself with the character of a trustee; if he have paid over the money he has paid it prematurely, for he cannot protect himself by his own wrong. It must be taken that the representations were false and fraudulent, and in this case it was immaterial whether the plaintiff was or was not cognizant of the fraud.

            Mr. Justice Stephen said this was not the ordinary sale by auction. The plaintiff ought to have taken the bills in the owner’s name, and have then endorsed them over to the owner; but instead of acting thus, he has chosen to take them in his own name, and the misrepresentations at the sale being taken as proved, the verdict should stand.

            The Chief Justice said that he concurred with his learned brothers, and that in his opinion the plaintiff stood in the shoes of the owner of the property which was the consideration of the note in s it, and that having stipulated for that consideration, he was liable upon its failure to the defence which had been relied upon against him. In consequence of the great transfer of property by auction in this colony, it was proper that the law should be known, and settled, and that if auctioneers acted as the plaintiff had acted, they should be liable for it. If the defendant resisted payment of the note within a reasonable time, that was enough, for he had not accepted the conveyance. The question was, whether the representations were made by the plaintiff in collusion with others; the assessors had found that they were so made, and that they were false, and therefore the verdict should stand.

            Mr. Foster and Mr. Darvall for the plaintiff; the Solicitor-General, Mr. Windeyer and Mr. Broadhurst, for the defendant.

Notes