Scottish Court of Session Decisions

In November 1902 Mrs Annie Holmes or Anderson, with the consent and concurrence of her husband Harry Carnegie Anderson, raised an action against John Croall & Sons, Limited, Edinburgh. The action concluded for payment of the sum of £136, 15s., as damages for the defenders' failure to deliver to the pursuer a mare which had been purchased for her by her husband at a sale by the defenders as auctioneers at the Edinburgh Race Meeting at Musselburgh on 3rd October 1902.

A proof was led which disclosed the following circumstances:—On 3rd October 1902 at the Edinburgh Race Meeting there was a “selling race” in connection with which the defenders acted as auctioneers. Under the rules of racing the winner in such a race must be offered for sale by auction immediataly after the race. It is also the practice at such races for owners of other horses which have run in the race to put them up for sale if they so desire after the winner has been sold. Sometimes these horses are noted on the racing card as to be sold, and sometimes the owner brings forward his horse for sale without previous notice. The officials of the race meeting have no responsibility in connection with such “outside” horses. The auctioneer receives a commission of 5 per cent. on their sale, and it is his duty to receive the price and grant the purchaser a delivery order. On the present occasion after the auctioneer had sold the winner and two other horses which had been named as for sale on the racing card, he saw “Ethel May,” a mare which had run in the race, standing close to the ring in charge of a stable boy. The stable boy had rightly brought the mare back to the paddock after the race until the weighing out was done and the result of the race declared. But he had failed to hear the cry of “All right,” which was the customary intimation given that the winner had passed the scales, and that the horses which were not to be sold were to be taken out of the paddock. The auctioneer, seeing the mare still standing there, concluded that she was for sale, asked the stable boy for her name, and on getting it ordered the boy to lead her round. The boy thinking that the auctioneer had authority from his master did as he was bid. The auctioneer put up the mare, and knocked her down to the pursuer, who was the highest bidder, for £36, 15s. The pursuer at once paid the price at the office of the clerk of the course, and received a delivery order from him. The clerk of the course deponed that in taking the money and giving the delivery order he had acted not in his official capacity but to oblige the auctioneers. Within twenty minutes after the sale the trainer of the mare “Ethel May,” who had been informed of the sale, ran up and told the auctioneer that she had been sold without authority. When on the same day delivery of the mare was demanded at the trainer's stables on behalf of the purchaser, delivery was refused on the ground that she had been sold by mistake. Next day the pursuer called at the offices of the defenders, and was told that the mare had been sold without the authority of the owner. This explanation was repeated in a letter written by the defenders to the pursuer's agents dated 9th October 1902. A tender of repayment of the price was made, but was refused by the pursuer. The trainer of “Ethel May” deponed that he had purchased the mare on behalf of the owner on 25th May 1902 at the price of 105 guineas, and that she was sold in May 1903 for seventy guineas.

The pursuer pleaded—“1. The defenders having, as agents for an undisclosed principal, exposed for sale the mare referred to, and the said mare having been purchased by the pursuer, the defenders are personally liable to implement the contract with the pursuer, or to make reparation for the breach thereof. 2. The defenders having entered into said contract without the authority of the owner of the mare sold, fall to be regarded as warranting their authority to sell, and are accordingly personally liable as contracting parties. 3. The defenders having wrongfully and illegally failed to implement the said contract, and the pursuer having suffered loss, injury, and damage in consequence of the defenders' breach of contract, the pursuer is entitled to decree as concluded for, with expenses.”

The defenders pleaded—“2. The defenders (1) not being the exposers of the horse for sale, (2) not having contracted with the pursuer in reference to the said horse, and (3) the name of the owner having been fully disclosed, are entitled to absolvitor. 3. The defenders having, in the circumstances condescended on, neither expressly nor impliedly warranted their authority to sell

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the horse in question, are not bound to implement the sale alleged by the pursuer, and, separatim, not having withheld delivery of the said horse from the pursuer, are entitled to be assoilzied.”

On 12th June 1903 the Lord Ordinary ( Stormonth Darling) decerned against the defenders for payment to the pursuer of the sum of £26, 5s. sterling in full of the conclusions of the summons.

Note.—“The pursuer here seeks damages for loss of bargain. He was present at the Musselburgh Races held on 3rd October 1902 when a mare called ‘Ethel May,’ described as the property of ‘J. Cast,’ ran second for the Carberry Selling Handicap. After the race the winner and two other horses, which had been named as for sale on the card, were sold by auction; and then the defenders, who acted as auctioneers at the meeting, put up ‘Ethel May’ for sale, and knocked her down to the pursuer for thirty-five guineas. The pursuer at once paid the price at the office of the Clerk of the Course, and obtained a delivery-order for the mare, but delivery was refused at the trainer's stables on the ground that she had been sold by mistake. Next day he called at the office of the defenders in Edinburgh and again demanded delivery, but was told that the mare had. been sold without the authority of the owner, and this explanation was repeated in letters on the 6th and 9th, accompanied with a tender of repayment of the price, which in the meantime had been handed by the clerk of the course to the defenders. The pursuer, however, refused to accept repayment, and insisted on delivery or damages, asserting that the mare was worth much more than he had paid for her.

He now sues the auctioneers for damages on alternative grounds—(1) That they, having sold the mare as agents for an undisclosed principal, are liable on the contract as if they had been themselves the sellers; and (2) that having sold without authority, they are liable on the ground that a person who so acts, even in good faith, and induces another to deal with him as an agent, is held to warrant the authority which he professes to have.

On the first of these grounds I am against the pursuer. The principal was not undisclosed, for the owner was correctly said to be ‘J. Cast,’ which was the racing name, and known by the pursuer to be the racing name, of a certain Mr M'Lauchlan, of Glasgow, now deceased.

But, on the second ground, I have come to be of opinion that the pursuer is entitled to succeed. At first sight it seemed to me a little hard that auctioneers, acting in good faith and without negligence except of a very venial kind, should incur this responsibility to a disappointed purchaser, especially when the mistake was so soon discovered and explained. The circumstances which led to the mistake were of the simplest character. The stable-boy in charge of the mare rightly brought her back to the paddock after the race, until the weighing-out was done and the result of the race declared. Then he ought to have led her away. But instead of that he kept her in the paddock while the winner and the other two horses were being sold, and the auctioneer, seeing a horse standing close to the ring, and jumping to the conclusion that she was intended for sale, asked the lad for her name, and on getting it told him to lead her round, which he, believing the auctioneer to have authority from his master, the trainer proceeded to do. In all this there was nothing but a misunderstanding between the lad and the auctioneer, betraying, perhaps, some haste and want of caution on the part of the latter, but nothing worse. Plainly on these facts it is impossible to represent that the mistake, so far as the lad contributed to it, in any way bound the owner, and indeed the defenders are barred from maintaining any such argument by the letters which they wrote before the action was raised.

While I own that my first impression was rather unfavourable to the pursuer's demand, I cannot resist the authority of a whole series of English cases on a branch of commercial law in which there is no difference between the law of England and the law of Scotland. The authority of some of these cases was recently recognised by the Second Division, in circumstances no doubt very different from the present, in the case of Salvesen & Company, January 16, 1903, 40 S.L.R. 305. And the principle which the cases embody, as explained in the leading case of Collen v. Wright, 1857, 8 E. and B. 657, is that ‘a person professing to contract as agent for another, impliedly, if not expressly, undertakes to or promises the person who enters into such contract, upon the faith of the professed agent being duly authorised, that the authority which he professes to have does in point of fact exist.’ That this rule extends to cases of innocent misrepresentation is amply shown by such cases as in re National Coffee Palace Company, 24 Ch. Div. 367, and Firbank's Executors v. Humphreys, 18 Q.B. Div. 54. In the latter of these two cases Lord Lindley (then L.J.) said—‘Speaking generally, an action for damages will not lie against a person who honestly makes a misrepresentation which misleads another. But to this general rule there is at least one well-established exception, viz., where an agent assumes an authority which he does not possess and induces another to deal with him upon the faith that he has the authority which he assumes.’

I may add that both Collen v. Wright and Firbank's case were recently recognised by the House of Lords in the case of Starkey v. Bank of England [1903], A.C. 114, as good law.

Now, an auctioneer is, in law, nothing but an agent for the seller down to the fall of the hammer. Indeed, the only respect in which he differs from some other commercial agents is that he is obviously and confessedly nothing else. Accordingly he never can be made liable on the contract as a principal, except in the single case of his acting for an undisclosed principal. But with respect to the undertaking or

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warranty of authority which all agents are held to give I see no reason why he should receive exceptional treatment.

If so, the only remaining question is as to the measure of damages. Here also the rule in England is fixed by authority. In the case of the National Coffee Palace Company Lord Esher quotes two cases ( Spedding v. Nevell, 1869, L.R., 4 C.P.212, and Godwin v. Francis, 1870, L.R., 5 C.P. 295) where the plaintiff was the intended purchaser, and says that in these, as well as in others, the measure of damages was what the plaintiff actually lost by losing the particular contract which was to have been made by the alleged principal if the defendant had had the authority he professed to have; in other words, what the plaintiff would have gained by the contract which the defendant warranted should be made.’ Now, what would the pursuer here have gained if the contract had been made with authority and therefore had been enforceable? He would have become owner of a mare worth more than he paid for her. It is not easy to say how much more, for his own witnesses admit that the value of a racehorse is a very uncertain quantity. But we know that seven months later the mare fetched seventy guineas by auction at York, not having raced or done anything remarkable in the interval. That seems to me the safest guide to value in the evidence, and I see that it was adopted as the test in Godwin's case with regard to the sale of a landed estate. Something must come off for the cost of keep and transit, for I suppose it may be assumed that York at the beginning of a racing season was a better market than Musselburgh at the end of one. But I think I shall not be far wrong if I assess the damages, both for loss of bargain and for any trouble and outlay to which the pursuer was put before the action was raised, at twenty-five guineas. That is the sum for which I shall give decree with expenses; besides which the defenders undertake, through their counsel, to return the price of thirty-five guineas paid by the pursuer, he, on the other hand, being bound to return the delivery-order.”

The defenders reclaimed, and argued—There was no responsibility in the present case on the part of the auctioneer. His duties were purely ministerial. The sale was conducted by a racing club under its own rules. The name of the owner of the horse was disclosed. It was on the racing card, and the matter must be looked at just as if the owner had brought the horse into the ring himself. If there was any fault it was on the part of the owner acting through his servant. Further, the auctioneer did not receive the money for the horse. It was collected by the clerk of the course, and the delivery-order was given out by him. The auctioneer had committed no actionable wrong. The mistake made by him did not amount to that. If an auctioneer assumed no exceptional liability, he had no responsibility beyond the fair performance of his duty, which was confined to ascertaining and announcing the highest bidder for goods or property put up for competition—Opinion of Lord Young in Walker v. Linton, October 24, 1892, 20 R. (J.C.) 4, 30 S.L.R. 40; Mainprice v. Westley, 1865, 34 L.J., Q.B. 229. The cases founded on by the Lord Ordinary did not apply, as the auctioneer had not in the present case done anything to assume the authority of an agent. In any case there was no damage done to the pursuer by the mistake. It was an innocent mistake, and had been discovered within half-an-hourand communicated to the purchaser on the same day. No damages were therefore due. If the defenders were found liable in damages, they had nothing to say against the amount awarded.

Argued for the pursuers and respondents—In the present case the only person with whom the purchaser was brought into contact was the auctioneer. The name of the owner in the racing card was an assumed name and a purchaser had no means of identifying him. The defenders were on the horns of a dilemma. If the principal was held to be disclosed, the auctioneers had not his authority to sell, and if the principal was held to be undisclosed they were liable as agents for an undisclosed principal. An auctioneer was presumably an agent, and was liable as such— Ferrier v. Dods, Feb. 23, 1865, 3 Macph. 561, opinion of Lord Justice-Clerk Moncreiff, 564. The question was not one of blameworthiness or wrong; it was a question of warranty. No doubt the horse here was sold on account of an innocent misunderstanding between the stable boy and the auctioneer, but an agent warranted his authority to sell, and if it afterwards appeared that he had no such authority he would be liable in damages to a purchaser, however innocent the mistake might be. It was the duty of an auctioneer before selling to make quite certain that he had authority to sell the thing put up for auction. There were no circumstances proved to suggest that the auctioneer was entitled to assume that a horse standing near the ring was to be sold. The cases quoted by the Lord Ordinary showed that an agent, contracting as such with another, guarantees that the authority which he professes to have in point of fact exists.

At advising—