Hasmani v National Bank of India Limited (Civ. App. No. 18 of 1938) [1938] EACA 99 (1 January 1938)

## COURT OF APPEAL FOR EASTERN AFRICA

### Before Sir Joseph Sheridan, C. J. (Kenva): WhitLey, C. J. (Uganda); and BARTLEY, J. (Tanganyika).

## HUSSEINALI DHARAMSI HASMANI, Appellant (Original defendant) $\boldsymbol{y}.$

# THE NATIONAL BANK OF INDIA LIMITED by their Attorney Thomas Shearer, Respondents (Original Plaintiffs)

#### Civ. App. No. 18 of 1938

Appeal from decision of Theeman, Ag. J. (Tanganyika).

Principal and Agent-Fraud of agent-Fraudulent bill of exchange signed per pro-Liability of principal-Money had and received -Bills of Exchange Ordinance, 1931 (Tanganyika), sec. 25-Indian Contract Act, 1872, sec. 238.

One E. appellant's attorney empowered *inter alia* to draw, accept and indorse bills of exchange in satisfaction or on account of any debt or claim due or payable to or by the appellant but with no power to sign any accommodation bills and further empowered to operate and overdraw on appellant's account with the respondent bank, drew a bill of exchange *per pro* the appellant and discounted it with the respondents. The bill was drawn against forged shipping documents in respect of non-existent goods, and the proceeds of the bill were credited to appellant's account and used to meet a previous outstanding bill and also in payment of current expenses of the When the bill was dishonoured the respondents debited business. the appellant with the amount due on it and the account showed a large debit balance against the appellant. On these facts the respondents sued the appellant (i) on the bill of exchange for its value plus interest and protest charges; (ii) on the balance of account. They also alleged that the appellant received the proceeds of the bill to the use of the respondents. Judgment was given for the appellant on the claim on the bill with costs of that issue (if any) and for the respondents on the claims for the balance of account and for money had and received. The appellant appealed against the two findings against him and the respondents by cross-objection appealed against the dismissal of their claim on the bill itself.

$Held$ (29-11-38). (1) That the appellant was liable on the bill notwithstanding the fraud of his agent.

(2) That the respondents were entitled to judgment on the claim on the balance of account and that the proceeds of the bill were had and received by the appellant for the use of the respondents.

Appeal dismissed, cross-objection appeal allowed.

The following statement of facts is taken from the judgment of Bartley, J.

The appellant in this case was for some years a large exporter of tropical products. On the 27th February, 1932, he constituted<br>his son Esmail his lawful attorney. The power of attorney gave the agent authority inter alia "... to draw accept or endorse bills of exchange, . . . in satisfaction or on account of any debt or claim due or payable to or by me but with no power to sign any accommodation bills or to stand security for anyone and to use all lawful ways and means thereto as fully and effectually to all intents and purposes as I might or could do if personally present and did the same in my proper person, it being my intent and desire that all matters and things respecting the same shall be under the full management and direction of the said attorney".

On the 29th March, 1932, the appellant signed what has been termed a mandate authorizing his son to operate on his account with the respondent bank and on the 14th July, 1934, the mandate was altered to include authority to overdraw the account.

It is not denied that since September, 1935, the attorney has been obtaining money from the respondents by discounting bills with them drawn by the attorney per pro the appellant on Corrie McColl and Sons, Limited, London, by the use of forged bills of lading. The proceeds of each bill were credited to the appellant's account in the bank and were utilized by the attorney to meet the preceding bill.

On the 2nd February, 1937, the attorney following his usual practice, discounted a bill for £50,000 with the respondents in order to meet the previous bill drawn on Corrie McColl and Sons. Ltd., for £57,000. Some days after the proceeds of this bill had been credited to the appellant's account in the respondent bank, and had been transmitted to London to meet the former bill, the bank discovered the fraud. On the 19th February, 1937, the respondent debited the appellant's account with the £50,000. As a result of this debit the appellant's account, at the date of the filing of the suit, showed a debit balance of Sh. 1,054,269/14. On these facts the respondent sued the appellant (i) on the bill of exchange for its value plus interest and protest charges; (ii) on the balance of account-The respondents also alleged that the appellant received the products of the bill to the use of the respondents.

The Acting Judge, who tried the case, decided that the respondents could not recover on the bill of exchange but that they were entitled to judgment on the balance of account and also on the ground that the appellant received the proceeds of the bill to the use of the respondents.

It was against these two latter decisions that this appeal was made. The respondents contended that not only were they entitled to judgment on those two grounds but also on the claim under the bill.

Vellani with Dharsee for the appellant.

*Morrison* with Bown for the respondents.

Sir Joseph Sheridan, C. J.—The facts in this case are sufficiently set out in the judgment of the learned trial judge which judgment I may say has been of great assistance to this Court in the hearing of the appeal. Mr. Morrison for the respondents has submitted that he is entitled to succeed on any one of three grounds which he set out as follows:-

> (i) on the bill of exchange duly drawn under the power of attorney;

- (ii) on a claim in respect of a simple overdraft authorized by the defendant; - (iii) on a claim for money had and received to the use of the respondent.

For reasons which I shall proceed to set out I am of the opinion that all three of his submissions are correct.

As to the first point the bill of exchange in question was drawn by the defendant's attorney and discounted by the bank, the proceeds being paid into the defendant's account. The bill was subsequently dishonoured. The documents presented to the bank in support of the bill, it is common ground, were fraudulent, referring to nonexistent goods It has been argued for the appellant that an examination of the power of attorney will show that the act of the attorney in drawing the bill was unauthorized inasmuch as there were no goods to support the bill. The power of attorney recites inter alia that the attorney had power "to draw accept or endorse bills of exchange ... in satisfaction or on account of any debt or claim due or payable to or by me but with no power to sign any accommodation bills ...". It was argued on these words that there was no debt due to the principal and that consequently the transaction was outside the powers given to the attorney. It is admitted that the bill was drawn as part of a systematic course of fraud which the attorney had been carrying on successfully for nearly two years. On the occasion relating to this bill, the fraud came to light and the respondent bank brought an action for the recovery of the amount of the bill. The learned trial judge held against the respondent in so far as the action on the bill was concerned, holding that the act of the attorney in drawing the bill in the circumstances was ultra vires the power and also that on the issues 2 and 4 reading respectively "whether the bill in suit was presented for payment, dishonoured by non-payment and protested on $8-5-37$ and if so was it (a) presented duly or within a reasonable time $(b)$ dishonoured by nonpayment $(c)$ protested within the time prescribed by the Bills of Exchange Ordinance, 1931, section 51 (4)" and "whether the protest satisfies the requirements of the Bills of Exchange Ordinance, 1931, section 51 (7)" there was no evidence. In so holding I am not in agreement with the learned Judge for a reference to exhibit $15^*$ will show that the requisite provisions of the Bills of Exchange Ordinance were complied with. As for the question as to whether the act of drawing the bill was within the powers granted to the attorney it is necessary to consider the provisions of section 238 of the Indian Contract Act. It provides that "Misrepresentations made or frauds committed by agents acting in the course of their business for their principals have the same effect on agreements made by such agents as if such misrepresentations or frauds had been made or committed by the principals; but misrepresentations made or frauds committed by agents in matters which do not fall within their authority do not affect their principals". In the notes to this section on p. 659 of the Indian Contract Act (Pollock and Mulla, 6th Ed.) it is stated that the accordance of this section with the modern common law is well shown in a recent judgment delivered by the Judicial Committee by


<sup>\*</sup> Exhibit 15 was the bill sued on.—Ed.

Lord Lindley. The note proceeds to quote the judgment as follows: -"The law upon this subject cannot be better expressed than it was by the Acting Chief Justice (of New South Wales) in this case. He said: "Although the particular act which gives the cause of action may not be authorized, still if the act is done in the course of employment which is authorized then the master is liable for the act of his This doctrine has been approved and acted upon by this servant". Board in Mackay v. Commercial Bank of New Brunswick (1874, 5) P. C. 394) and Swire v. Francis (3 A. C. 106)". In the case of Barwick v. English Joint Stock Bank (2 Ex. 259) Willes J., at p. 265, said: "But with respect to the question whether a principal is answerable for the act of his agent in the course of his master's business and for his master's benefit no sensible distinction can be drawn between the case of fraud and any other wrong. The general rule is that the master is answerable for every such wrong of the servant or agent as is committed in the course of the service and for the master's benefit though no express command or privity of the master be proved ... It is true he has not authorized the particular act but he has put the agent in his place to do that class of acts and he must be answerable for the manner in which the agent has conducted himself in doing the business which it was the act of his master to place him in". This case as the note proceeds to state is the leading case on the subject and was distinctly approved by Lord Selbourne in Houldsworth v. City of Glasgow Bank (5 A. C. 326). In Morison v. London County and Westminster Bank, Ltd. (1914 3 K. B. D. 356) at 367 and 368 Lord Reading in referring to section 25 of the Bills of Exchange Act (sec. 25 of the local Ordinance) said: "I agree with Lord Coleridge J. that this section is declaratory of the common law, but it does not in my judgment extend beyond it or alter it". (Section 25 reads: "A signature by procuration operates as notice that the agent has but a limited authority to sign, and the principal is only bound by such signature if the agent in so signing was acting within the actual limits of his authority). Now as against any argument that the act to make the master liable must be for his benefit, I will quote and adopt the following passage from the notes already referred to at p. 660 reading: "The words and 'for the master's benefit' which occur in the judgment were applicable to the case before the Court, but must not be taken as restricting the scope of the rule, though there was for some time considerable authority for that reading. If the act belongs to an authorized class, it is not material whether the agent intends the principal's benefit or not nor whether the principal in fact derives any benefit". I should like here to quote from the judgment of Lord Loreburn in the case of Lloyd v. Grace Smith and Co. (1912 A. C. 716) at p. 725 which seems to be conclusive on the point: "I have only to say, as to the authority of Barwick v. English Joint Stock Bank (supra) that I entirely agree with the opinion about to be delivered by Lord Macnaghten. If the agent commits the fraud purporting to act in the course of business such as he was authorized, or held out as authorized to transact on account of his principal, then the latter may be held liable for it. And if the whole judgment of Willes, J. be looked at instead of one sentence alone, he does not say otherwise". I am consequently of the opinion that the respondent in the present case is entitled to succeed in the suit on the bill.

As for the alternative claim on the overdraft, this part of the case is founded on the mandate to overdraw which is attached to the plaint. When the bill of exchange was dishonoured, the effect was to show the account to be overdrawn as stated.

As for the further alternative claim for money had and received. I am in agreement with the learned trial Judge that the money was received by him on the proceeds of the discounted bill being paid into his account. Mr. Vellani for the appellant stated that the frauds started in September, 1935, and the bill of exchange was discounted in February, 1937. The appellant was in Dar es Salaam when the transaction took place and had himself operated on the account between September, 1935, and January, 1936. The learned Judge puts the matter succinctly when he says: "As to the third part of the plaintiff's claim, i.e. for the amount of the proceeds of the bill of exchange as money received to the use of the plaintiffs, it follows from the above that it must be held that the monies were so received. The money was paid into account and it has not been shown that the withdrawals were otherwise than for the defendant's benefit. Here again it must be stressed that there is no evidence or suggestion that Esmail the attorney received a single penny of the amount for himself". (And in this respect the case is distinguishable from the case of Marsh v. Keatinge (131 E. R. 1094) where the proceeds of a fraud found their way into the pocket of a fraudulent partner and nevertheless his co-partners were held liable). The learned trial Judge continues: "That the proceeds of the bill of exchange went to pay off in part the amount of a previous bill of exchange is not to my mind material here as the proceeds of the latter bill of exchange went to pay off a previous bill of exchange and so on, and since the defendant has been held to have had the benefit of the first transaction the last transaction which paid off his indebtedness must be taken to be for his benefit also".

I would dismiss the appeal with costs and on the cross-appeal on which the respondent has succeeded, I would also allow costs (if any have been incurred) and certify for two counsel.

Whitley, C. J.—The facts are so clearly summarized in the judgment of the learned trial Judge that I do not propose to recapitulate them. The respondent bank framed their claim in three alternative ways. Firstly they sued on the bill of exchange which they had discounted and which had not been met. Secondly they claimed the resultant balance of account as between themselves and the appellant. Thirdly they claimed the proceeds of the bill as money had and received to their use. The learned trial Judge decided the claims under the second and third heads in their favour but held that the claim under the first head failed. He agreed with the submission that if they succeeded on any one of the three alternative claims they were entitled to judgment. The appellant appeals against the two findings against him and the bank by their cross-objection appeal against the dismissal of their claim on the bill itself.

It will be convenient to consider their cross-objection first inasmuch as the fraudulent act of the appellant's son Esmail in inducing the bank to discount the bill by producing to them forged shipping documents goes to the whole root of the action. The learned trial Judge took the view, and rightly I think, that the claim under this head must depend upon whether the agent Esmail in signing the bill per pro the appellant and in presenting it to the bank for discounting was acting within the actual limits of his authority as contemplated by section 25 of the Bills of Exchange Ordinance, 1931 (Tanganyika). Unless he was so acting the principal cannot be liable.

It was urged by Mr. Morrison on behalf of the bank that the power of attorney which we have to consider here has already been considered and construed by this Court in the case of Banque du Congo Belge v. H. D. Hasmani and Juma Khaki (Civ. Apps. Nos. 17 and 19 of 1937), and that upon the construction therein we should hold that this Court has decided that Esmail Hasmani, when he drew the bill the subject matter of this suit, was acting within the scope of his authority. It appears, however, from the judgments in those consolidated appeals that the facts there were not on all fours with those in the present case. The power of attorney was the same but the suit was on a promissory note and there were also other grounds upon which the two cases might be distinguished. Accordingly, it would I think be safe to arrive at our conclusions here independently of the decision in that case.

The learned trial Judge also considered that he was not bound by that case and he decided against the bank on the ground that however widely the power of attorney may be construed it cannot be said that a fraudulent act by an agent is an act within the scope of his authority. It seems to me, with respect, that he there stated the law rather too widely. The law here which is in accordance with the modern common law of England is thus stated in section 238 of the Indian Contract Act:-

"Misrepresentations made, or frauds committed, by agents acting in the course of their business for their principals, have the same effect on agreement made by such agents as if such misrepresentations or frauds had been made or committed by their principals; but misrepresentations made, or frauds committed, by agents, in matters which do not fall within their authority, do not affect their principals.

It is now well established that although the particular act which gives the cause of action may not be authorized, still, if the act is done in the course of employment which is authorized, then the master is liable for the act of his servant: Citizens Life Assurance Co. v. Brown (1904 A. C. 423) at 427. Furthermore a principal is liable for the fraud of his agent within the scope of his authority whether the fraud is committed for the benefit of the principal or for the benefit of the agent: Lloyd v. Grace Smith and Co. (1912 A. C. 716). If the act belongs to an authorized class, it is not material whether the agent intends the principal's benefit or not, nor whether the principal in fact derives any benefit. At this stage it is thus unnecessary to consider who in fact did derive the benefit from the proceeds of the fraudulently drawn bill, provided that Esmail Hasmani was acting within the scope of his authority.

Applying these principles to the present case, it seems to me that the test which should be applied is this. Supposing that the shipping documents had been genuine and that the goods purporting to have been sold had in fact been sold, would the drawing of the bill then have been within the actual limits of the agent's authority. Clearly it would. The power of attorney gives power to draw bills in satisfaction or on account of any debt or claim due or payable to or by the principal. In addition the agent held the mandate authorizing him to operate and overdraw on the principal's accounts at the bank. Since 1935 the agent had been carrying through transactions with the bank in every way identical with the one under consideration. In every case the bills had been duly met and apart from what I shall say later on the subject of the judge's finding of negligence there would seem to have been no reason why the bank should suspect that there was anything wrong. From their point of view his operations were fully covered by the authority given to him by the power of attorney and the mandate. By these two documents the appellant who had gained the confidence of the bank by building up a substantial business and engaging with them in a series of mutually profitable transactions extending over a long period, put his son in a position *vis-à-vis* the bank of carrying on the business with all the powers of his father himself with the one exception that he could not sign accommodation bills or stand security for anyone. There can be no suggestion that the present transaction fell under either of those exceptions.

It was further argued by Mr. Vellani for the appellant that in fact no debt of the appellant existed to satisfy which the agent could properly draw a bill under the power of attorney but the effect of the cases to which I have just referred is clearly to show that if the agent has authority to draw a bill to pay for existing goods the fact that the goods to which the shipping documents purported to refer were non-existent will not relieve the principal of liability. On this. point the case of *Woods v. Thiedemann* (158 E. R. 973) has some slight bearing. These bills were drawn against non-existent goods on forged bills of lading and it was held by Pollock C. B. that the words "bill of lading" did not necessarily import a genuine bill but might include a document purporting to represent a cargo which was in fact non-existent.

The learned trial Judge found that there was some negligence on the part of the bank but it was never pleaded nor argued that such negligence was available to the appellant as a defence to the claim on the bill if the drawing of it fell within the actual limits of the agent's powers. I am accordingly of the opinion that the crossobjection should succeed.

I now turn to the first of the alternative claims, that on the overdraft. It is common ground that the drawing of the bill in this case was the culminating transaction in a series of frauds which commenced in July, 1935, and continued until, as the result of the failure to meet this bill, they were brought to light in February, 1937. In each case bills were drawn against forged shipping documents in respect of non-existent goods and the proceeds of the bills were credited to the appellant's account and used to meet the previous outstanding bill and also in payment of the current liabilities of the business. The appellant in his evidence denied any knowledge of these transactions but the learned trial Judge who saw him in the witness

box for two days found himself unable to accept this plea of ignorance. The reasons which he gives for disbelieving the appellant seem to me sound and convincing. In particular he refers to the fact that on the 30th June, 1935, the appellant signed a certificate of correctness as to his balance of account with the bank showing a debit balance of over 645,000 shillings. By the 31st December, 1935, this had been converted into a credit balance of over 33,000 shillings. During the period between those dates he himself signed a large number of cheques and his son Esmail who was living with him drew a number of these bills against non-existent goods.

The position as regards the banking account seems to be this. Whenever a bill was discounted the proceeds were credited to the appellant. In drawing those bills, as I have already indicated, Esmail Hasmani was acting within the limits of his authority as agent. When the proceeds of the bill in this suit were credited the result was that a substantial credit balance was created. Against that balance Esmail drew a number of cheques, all as far as can be gathered from the evidence being used for the purposes of the business. In doing that he was clearly acting within his powers under the mandate. When the bill was not met and the bank thereupon properly debited the appellant with the amount due on it the effect was to place the appellant's account in debit to the amount of roughly a million shillings. He thus became overdrawn to that extent. The mandate gave power to overdraw as well as to operate so that even up to this point the agent had from the bank's point of view been acting within the limits of his authority. I can see no reason why the appellant, as principal, having drawn out from the bank more than he had paid in should not be liable to the bank for the balance and I think that the learned trial Judge was right in so holding.

I come lastly to the second alternative claim, i.e. for money had and received to the use of the bank. The law on this point is stated in Bowstead on Agency, Article 103, as follows: -

"Where by any wrongful or unauthorized act of an agent. the money or property of a third person comes to the hands of the principal, or is applied for his benefit, the principal is liable jointly and severally with the agent to restore the amount or value of such money or property".

It is contended on behalf of the appellant that he can only be made liable to the extent to which it is proved that he benefited and that there should be an enquiry to ascertain the amount, but reference to the cases of Reid v. Rigby (1894 2 Q. B. D. 40) and Marsh v. Keatinge (131 E. R. 1094) and to the comments upon the latter case in the judgments in Jacobs v. Morris (1902, 1 Ch. D. 816) shows that if the proceeds of the agent's wrongful act come into the hands of the principal he is liable whether he in fact benefited or not. In the present case the proceeds of the bill were undoubtedly credited to the principal's account at the bank. Prima facie that would appear to indicate that they came into his hands. He was in Dar es Salaam at the time. He had the means of knowing that the money was there and he could have drawn it all out. He has not shown that the fraudulent agent used any of this money for his own purposes and all the evidence tends to show that the cheques drawn by the agent in February after the discounting of the bill were all used for the purposes of the appellant's business. It seems to me that the bank have sufficiently established that the proceeds of the bill came into the hands of the appellant and that accordingly they are entitled to recover the amount claimed as money had and received.

I would dismiss the appeal with costs and allow the crossobjections with costs (if any). I would also certify for two counsel.

Bartley, J.—With regard to the claim on the bill of exchange the acting Judge in arriving at his decision relied on section 25 of the Bills of Exchange Ordinance, 1931, which reads:-

" $\Lambda$ signature by procuration operates as notice that the agent has but a limited authority to sign, and the principal is only bound if the agent in so signing was acting within the actual limits of his authority."

The acting Judge writes: "In my opinion however widely the power of attorney may be construed it cannot be said that a fraudulent act is an act within the scope of his authority. It is obviously an abuse of his powers."

Section 25 of the Bills of Exchange Ordinance, 1931, is identical with section 25 of the Bills of Exchange Act, 1882 (45 and 46 Vic. C. 61) of which Lord Reading in Morrison v. London County and Westminster Bank, Lid. (1914, 3 K. B. D. at p. 367) said that the section is declaratory of English common law but does not extend beyond it or alter it. Section 238 of the Indian Contract Act which is in force in this Territory is also declaratory of the modern common law on this subject.

In the judgment delivered in the Judicial Committee by Lord Lindley in Citizens Life Assurance Co. v. Brown (1904 A. C. 423, 427) it is stated: "The law upon this point cannot be better expressed than it was by the Acting Chief Justice (of New South Wales) in this case. He said 'Although the particular act which gives the cause of action may not be authorized, still if the act is done in the course of employment which is authorized then the master is liable for the act of his servant'. This doctrine has been approved and acted upon by this Board in Mackay v. Commercial Bank of New Brunswick (1874, 5) P. C. 394): Swire v. Francis (3 A. C. 106)",

In Barwick v. English Joint Stock Bank (1867, 2 Ex. 259) Willes, J., in delivering the judgment of the Exchequer Chamber said: "In all these cases it may be said as it is said here, that the master has not authorized the act. It is true he has not authorized the particular act, but he has put the agent in his place to do that class of acts, and he must be answerable for the manner in which the agent has conducted himself in doing the business which it was the act of the master to place him in.

In Husseinali Dharamsi Hasmani v. Banque du Congo Belge (Civ. App. No. 17 of 1937) this Appeal Court had under consideration exactly the same circumstances as in this part of this case. In that case the learned Chief Justice of Zanzibar in dealing with this same power of attorney held that getting bills discounted was one of the medium powers enjoyed by Esmail under the power of attorney and that the fact that the bills of lading were false which was not known

to the plaintiffs at the time of discounting cannot affect the rights of the plaintiff. Wilson, J., in dealing with the similar transactions in that case said, "In the present case the agent undoubtedly had authority under the power of attorney to draw bills of exchange against the debt which would have been due to appellant from Corrie McColl and Sons, Ltd., on foot of the produce alleged to have been shipped on the bills of lading handed to the bank with the bills of exchange which they discounted, and he also had authority to endorse the bills, for that was a necessary though subsidiary act in this ordinary business method of collecting the debt which would have been due to the appellant on produce shipped to the London brokers.

It has been argued that the bills of lading were in fact forgeries and that no goods were ever shipped and that therefore the drawees of the bills of exchange never owed the appellant anything and consequently that as no debt existed against which the agent could under the power of attorney properly draw bills he was exceeding his authority. Those may well be the facts; though they are not directly proved by the evidence offered in this case, but the respondents had of course no notice of the forgeries or the non-shipment. Woods $v$ . Thiedemann (158 E. R. 973) would seem to be sufficient authority for saying that there was no duty on the respondents to go and assure themselves by looking at the actual goods that the bill of lading was a genuine one."

Permission has been given for an appeal to the Privy Council in that case, nevertheless I can say that I am in agreement with the decisions quoted. In my view the agent acted within the limits of his actual authority in drawing and discounting the bills. The trial judge in answering the issues held that there was no evidence as to whether the bill in the suit was presented for payment, dishonoured by nonpayment and protested. He also held that there was no evidence as to whether the protest satisfied the requirements of the Bills of Exchange Ordinance, 1931. In coming to these conclusions the acting Judge obviously overlooked Exhibit 15 which is satisfactory evidence on all those points.

In my view the respondents were entitled to succeed on the claim on the bill of exchange.

With regard to the claims on the overdraft and on the proceeds of the bill being money had and received by the appellant to the use of the respondents, in my view the decision of the acting Judge should be upheld. The acting Judge held that the appellant received the proceeds of the bill. The evidence proves that the proceeds of all the fraudulent transactions were paid into the appellant's account and there is no evidence that any money was ever used by the agent for his own benefit. The obvious conclusion to be drawn from the evidence is that the proceeds of all the fraudulent transactions went to the benefit of the appellant's business.

With regard to the claim for money had and received to the use of the respondents the appellant relied on his ignorance. In my view the appellant had the means of knowledge. When the fraudulent transactions commenced in September, 1935, the appellant was in Dar es Salaam living with his son. He was actually operating on the account up to the 4th January, 1936. Between the 30th June, 1935, and the 31st December, 1935, during which period the appellant was in Dar es Salaam the bills discounted with the respondents by the agent amounted to £166,180/2/7. On the 30th June, 1935, the appellant's account showed a debit balance of Sh. 645,860/39. On the 31st December, 1935, the account showed a credit balance of Sh. 33,571/21. During that period the appellant drew 24 cheques on an unexplained No. 2 account and 22 cheques on his ordinary account.

On the 2nd February, 1937, when the bill in suit was discounted. the appellant was again in Dar es Salaam. The position therefore is different from that in Jacobs v. Morris (1902 1 Ch. D. 816) where Jacobs, the principal, was in Australia at the time when his agent lodged money obtained without authority in his principal's account in London. In Jacobs v. Morris (supra) the agent used the money in his own benefit.

In Marsh v. Keatinge (131 E. R. 1094) Park, J., in delivering the opinion of the Judges said, "there is no principle of law upon which they (the principals) can succeed in protecting themselves for responsibility, in a case wherein, if actual knowledge was necessary, they might have acquired it by using the ordinary diligence which their calling requires." In this case the means of knowledge was certainly there. In any event in this case it has been held that the appellant got the benefit of the proceeds of the bill. It was argued that the transaction in this case did not amount to an overdrawing of the account. The transactions resulted in an overdraft and the agent was authorized to overdraw.

I would dismiss the appeal with costs and would allow costs on the cross-appeal (if any have been incurred). I would also certify for two counsel.