McLaughlin v Daily Telegraph Newspaper Co Ltd (No 2)

[1904] HCA 51

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[ ] McLAUGHLIN

DAILY TELEGRAPH NEWSPAPER

RESPONDENTS No. 2). CO. LTD.,

DEFENDANTS McLAUGHLIN

VALE OF CLWYDD COAL MINING

RESPONDENTS (No.2). CO. LTD.,

DEFENDANTS Lunatic - Principal and agent-Power of attorney made by lunatic-Effect of

signature-Representation of agency-Estoppel--Transfer of shares under void power ofattorney-Companies - Act 1899, sec. 232-Suit for rectification of share register-Liability of Company-Liability of lunatic to make restitution-lie- hearing-Grounds for reversing Judye's finding.

A power of attorney executed by a lunatic who does not understand what he is doing, such want of understanding being known to the person who procures its execution, is void.

M., being insane and incapable of managing his affairs, but having lucid intervals, executed a power of attorney giving his wife absolute power to dispose of his real and personal estate. Acting under the power of attorney, the wife sold and transferred certain shares held by M. in the defendant companies, who had no notice of the insanity, to third persons who also had no notice. M., on recovering his sanity, brought suits against the defendants in Equity to compel them to rectify their registers by entering his name as holder of a number of shares equal to the number

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sold, and also as holder of certain other shares to which he would, if he had re-

mained the registered holder of the original shares, have been entitled in respect of them. Both suits were dismissed by the Chief Judge in Equity, who was of opinion, upon the evidence, that M. sufficiently understood the nature of the power of attorney when he signed it, and was of opinion, further, that, whether he did or not, he was bound by the acts of the attorney.

On appeal, the Court found, on the evidence, that M., who had previously

McLAUGHLIN refused to sign any document, did not, when he executed the power of attorney,

know that it was a power of attorney, and that this fact was known to the attorney when she procured its execution.

Held, that the power of attorney was absolutely void. (No. 2).

Held, further, that it was immaterial whether the defendants had or had not notice of the insanity.

Held, therefore, that the transfers were invalid, and the plaintiff was entitled to the relief prayed.

Molton v. Camroux, (2 Ex., 487; + id., 17), Drew v. Num, (14 Q.B.D., 661), Imperial Loan Co. v. Stone, (1892, 1 Q.B., 599), considered and distinguished.

The liability of a lunatic to make restitution to the extent of the benefit received by him considered.

An appeal from the decision of the Chief Judge in Equity is a rehearing, and in dealing with his findings on questions of fact the Court will reconsider the materials that were before the Judge, applying the rules laid down in Coghlan V. Cumberland, (1898) 1 Ch., 704.

Decisions of A. H. Simpson, C.J. in Equity, [1904] 4 S.R. (N.S.W.), 84,

APPEALS from decisions of A. H. Simpson, C.J. in Equity. The appellant, on 24th October, 1900, signed a power of attorney in favour of his wife, authorizing her (inter alia) to sell and dispose of all his real and personal estate, and to sign, and also, if necessary, to seal and deliver all transfers and instru- ments whatsoever which to the said attorney should seem ex- pedient for that purpose, and stating that receipts, when given in the appellant's name or in the name of his said attorney, should exonerate the persons paying the same from seeing to the appli- cation thereof. Acting under this power of attorney, the attorney sold 118 shares in the Daily Telegraph Newspaper Company, Limited, on 15th and 26th November, and on 5th December, 1900, and about the same time she also sold 1540 shares in the

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Vale of Clwydd Coal Mining Company, Limited, which at the H. respective dates of the various transfers were then standing in the name of the appellant. The transfers were registered by the defendant companies.

The appellant, on 7th August, 1902, was declared to be of unsound mind and incapable of managing his own affairs, under sec. 102 of the Lunucy Act 1898, and a committee of his estate McLAUGHLIN was duly appointed. On 10th March, 1903, a declaration was made under sec. 104 of the Lunucy Act that the appellant had recovered his sanity and was capable of managing his affairs.

Later the appellant brought suits in Equity for the purpose of compelling the defendant companies, the present respondents, to rectify their respective registers, by entering the appellant as the holder of a similar number of shares, and to pay to him the dividends which he would have been entitled to receive, if his name had not been removed from the respective registers. The statement of claim charged that the appellant became insane in August, 1900, and that he was, to the knowledge of his wife, insane at the time he executed the power of attorney, and that the defendants respectively had notice of such insanity. It was not, however, alleged that the sales of shares were at an under-value or that the transferees had notice of the insanity. By virtue of a special resolution of the defendants, the Daily Telegraph Newspaper Company, Limited, providing for the increase of capital by the issue of new shares, of which a certain proportion were to be offered at par to the existing shareholders in proportion to the number of shares already held by them, the holders of the 118 shares in that company formerly standing in the name of the appellant were entitled to 39 of the fresh issue at par, which shares had in fact been issued to the various trans- ferees in proportion to their respective holdings. The appellant prayed that those defendants should be ordered to issue to him at par the 39 new shares of which he had been deprived by the transfers. Since the said transfers the shares in both defendant companies had increased very considerably in value, and large dividends had been paid on them.

The only defences raised in the pleadings that it is necessary to state for the purposes of this report were: that the transfers

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OF were signed by Ada Amanda McLaughlin, the duly authorized

attorney of the appellant, and were presented to the defendants, and that they were bound to act upon them that the appellant did in fact execute the power of attorney, and that Ada A. McLaughlin had authority to transfer the said shares, and, if she Co. LTD.

had not such authority, the appellant, by executing the power of

McLAUGHLIN attorney, put it in her power to make the said transfer, and

was estopped from denying that she had authority, inasmuch as the power of attorney purported to be duly signed by the appellant in his own name: that the defendants had no notice of (No. 2).

the appellant's insanity, and the dividends upon the shares were paid to the registered holders of the shares. In the case against the Vale of Clwydd Co. the further defence was set up that the proceeds of the sale of the shares were received by Ada A: McLaughlin, and spent with other moneys in payment of the appellant's debts, and for the maintenance and benefit of himself and family. The appellant replied that he was of unsound mind at the date of the alleged execution of the power of attorney, and unable to understand the effect of the deed when he was induced to sign it, that the defendants were aware of the insanity at the dates of the transfers, and that Ada A. McLaughlin had no power or authority to transfer.

The appellant by his counsel at the trial offered to pay to the defendant companies respectively the market value of the shares at the respective dates at which they were transferred from him to the respective transferees, adopting as the market value the prices at which they were respectively sold.

The two cases were heard separately before the Chief Judge in Equity, in November, 1903, but judgment was reserved in the first until the second had been argued, and both judgments were delivered on 11th December, 1903. His Honor held, upon the evidence, that the plaintiff had failed to show that he did not understand the nature of the power of attorney when he executed it. His Honor was also of opinion that the plaintiff would be bound by the acts of his attorney, even if he had not understood what he was doing when he signed the power. Both suits were accordingly dismissed with costs, (1904) 4 S.R. (N.S.W.), 84.

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Gordon, K.C., Knox and Watt appeared for the appellant in H.C. OF both cases.

Lingen and Sheppurd for the respondents, the Daily Telegraph Newspaper Company, Limited.

Wise, K.C., Attorney-General for New South Wales, and McLAUGHLIN Lingen, for the respondents, the Vale of Clwydd Coal Mining Company, Limited.

Watt, for appellant, was proceeding to read the pleadings, &. [GRIFFITH, C.J.-Is it not unusual for junior counsel to begin.] [Gordon, K.C.-I was following the ordinary practice in Equity appeals.

[GRIFFITH, C.J.-It would be better as a matter of practice to have a short opening from the leading counsel.]

At the beginning of the argument the Court expressed a wish to have the cases argued separately; and the first case was pro- ceeded with, but at a later stage, on its appearing that both practically involved the same question, it was agreed that the evidence in each case should be taken as applicable to both, and the argument proceeded on that basis, the two cases being dealt "with together.

Gordon, K.C., for the appellant. The question resolves itself into four divisions-(1) does the evidence establish that the plaintiff was SO insane as to be incapable of making a valid contract at the time of the execution of the power of attorney (2) did Ada McLaughlin, the attorney, know of this incapacity when she obtained the plaintiff's signature; (3) had the defen- dants actual or constructive notice of the insanity; and (4) is it not, as a matter of law, immaterial whether the defendants had such notice or not. We do not dispute the authority of The Imperial Loan Co. Ltd. v. Stone, (1892) 1 Q.B., 599, which was relied upon by A. H. Simpson, C.J. in Equity, in his judgment, but we; contend that it has no application to this case, because the agent was never in fact appointed. It is the validity of the appointment of the agent that is in issue here, and that depends

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upon the capacity of the lunatic to execute the deed, and the

knowledge of the donee at the time.

First, as to the fact of insanity. Jenkins v. Morris, L.R., 14 Ch. D., 674, decided that the mere existence of delusions was not sufficient to establish incapacity, but that it was a question for the jury whether the delusions affected the capacity to contract.

Mc LAUGHLIN The delusions proved must be such as to show general insanity.

In that case the lunatic thought his land was full of sulphur, and sold it, but the jury found that he fully understood the nature of the transaction in which he engaged. This case was (No. 2).

relied upon by the defendants, but it only applies to the particular facts there proved.

[GRIFFITH, C.J.-That case is not against you. It merely defines what you have to establish by evidence in order to show that the plaintiff was incapable of executing a valid power of attorney.]

In Drew v. Nunn, 4 Q.B.D., 661, also relied upon by the defendants, Brumwell, B., at p. 669, defines the degree of insanity that would incapacitate a person from making a contract, within the meaning of the decision in Jenkins v. Morris. I contend that, taking those definitions as the test, such a state of mind was clearly proved to have existed in the plaintiff here.

[GRIFFITH, C.J.-The Court would prefer that the question of law should be argued before they address their minds to the evidence.]

A lunatic cannot appoint an agent, and any document purport- ing to be an appointment is altogether a nullity (Tarbuck V. Bisphum, 2 M. &W., 2, judgment of Parke, B., at p. 8; Stead V. Thornton, cited in note to Stephens v. Badcock, 3 B. &Ad., 354); Story on Agency, par. 6, p. 5 in ch. ii., enumerates those who are capable of contracting, and says that "idiots, lunatics," &., are wholly incapable. Drew v. Nunn (supra), decided that, where a man has appointed an attorney while sane, and insanity super- venes, the authority of the agent is absolutely determined This applies it fortiori to the case of the appointment of an agent by a man who is insane at the time. The liability in Drew v. Nunn was based upon a ground altogether different from anything appearing in this case, viz., upon the holding out by the principal

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during his sanity. There can be no holding out here. If a man H. C. OF cannot appoint an agent owing to unsoundness of mind, he is for the same reason incapable of holding out that he has appointed one. Phillips on Law of Lunacy, 1858 ed., p. 27, says a person non compos mentis cannot appoint an agent. Sec. 47 of 44 &45 Vic., C. 41, was passed after Drew v. Nunn, and merely modifies the law as laid down in that case to the extent that supervening lunacy does not invalidate a power of attorney until the donee has notice of the lunacy. In Derter v. Hall, 15 Wall. (U.S.A.), 9, Strong, J., of the Supreme Court, in giving judgment for the Court, dealt with this very point, and reviewed all the important English cases and authorities on the subject from a very early date, and followed them, holding that the power of attorney of a lunatic was void ab initio, and not merely voidable. Holt, C.J., in Thomson v. Leach (3 Salk., 300; 3 Mad., 296), said in his judg- ment, that the letter of attorney or bond of a lunatic is void, but his feoffment, owing to the solemnity of the act, was only voidable. The rule seems to be stronger in favour of the person executing a power of attorney than in the case of other contracts, for in Zouch V. Parsons (3 Burr., 1805), it was held that the power of attorney of an infant was void, notwithstanding that, as a general rule, contracts of infants are not void, but voidable.

[O'CONNOR, J.-The doctrine to be gathered from these cases would go SO far as to make the contracts of a lunatic absolutely void, irrespective altogether of the question of notice to the contractee. Is that the English rule of law ?]

There seems to be some distinction drawn in the cases, based upon the rules of pleading. Where the person setting up the lunacy could plead non est factum, he could give evidence of lunacy to avoid the contract, but where, in order to set up that defence, he would have had to plead it specially, the plea of lunacy was held to be a bad plea on the ground that no person can be allowed to stultify himself by his pleading.

[GRIFFITH, C.J.-Is there any distinction between contracts from which the lunatic gets a benefit and contracts from which he does not, as there is in the case of contracts by infants ]

If there is such a distinction, it is in our favour, for there was no consideration for the execution of the power of attorney.

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Bull v. Mannin, 1 D. &Cl., 380, at p. 382, it was admitted on

both sides that, if lunacy was proved, the deed was inoperative and void. In Elliott v. Ince, 5 W.R., 465; 7 DeG.M. &G., 472; Molton v. Camroux, 2 Ex., 487; 4 Ex. 17, which is relied upon by defendants, is distinguishable. It has no application where there is no contract for value. Dealings of sale and purchase

McLAUGHLIN with a person apparently sane, who subsequently turns out to

have been insane, are not on the same footing as mere dispositions of property not of the nature of a contract, such as powers of attorney; Simpson on Infants, at p. 6, 10, says that an infant or (No. 2).

lunatic cannot appoint an attorney or agent, and in effect that the deed of a lunatic is always void, although there are exceptions to the rule that contracts of infants are void. The signature of an imbecile to a formal consent is of no effect, because an imbecile is not competent to give consent; Brangun v. Gorges, 7 Ir.' R., Eq., 221. [On this point he also cited Yates v. Boen, 2 Str., 1104, and Bensell v. Chancellor, 5 Wheat., 371.]

On the authority of these cases I contend that there never was a valid appointment of an agent at all. From very early. days there is a consensus of opinion that a lunatic's appointment is void, and though Dexter v. Hull (supra), the only case actually deciding the point, is a decision of an American Court, yet it deals with all the English cases, and they all point clearly in this direction. The rule is particularly recognized in Drew v. Nunn (supra). Notice is altogether immaterial. In Tarbuck V', Bispham (supra) the decision was based upon the absolute in- competence of a lunatic, not upon notice, otherwise there would have been no need to consider the validity of the deed. There was no question of notice in Stead v. Thornton, and Stephens V. Badcock; and in Drew v. Nunn, the Court did not suggest that the principle of Tarbuck v. Bisphane was in any way limited by notice.

If a lunatic cannot appoint an attorney, owing to mental cin- capacity, and :his power of attorney is therefore void, he must also be incapable of inaking a representation by means of the document which is itself void. The fact; therefore, that the power of attorney appeared to the defendants to have been duly executed cannot be treated as a representation by the lunatic that

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it was SO. He is not responsible for the signing of it, and he H. cannot be made liable by the subsequent use of his signature.

Molton v. Camroux (supra) and Imperial Loan Co. v. Stone, (1892), 1 Q.B., 599, do not touch the question of agency at all. The general rule is that it lies on the person asserting the agency to prove its existence. The defendants say in effect- We admit that there was no agency in fact, but we believed that the McLAUGHLAN attorney was the agent, because we saw the power of attorney and did not know of the lunacy of the alleged principal." The two cases last mentioned do not help them.

[O'CONNOR, J.-In those cases there seems to be a departure from the old rule that a lunatic cannot make a contract at all, by engrafting upon the rule a qualification that in cases of that kind the contract is binding on the lunatic unless the contractee has adinetice of the lunacy.]

The Court only decided that where a person contracts in fact with a lunatic, and does not know of the lunacy, the contract cannot be avoided. That might possibly apply to the transaction between the donor and the donee of the power of attorney, but it cannot be extended SO as to say that, where there is no valid appointment of an agent at all owing to the lunacy, yet the lunatic is bound by the acts of the pretended agent. If there is no authority there can be no contract.

[ GRIFFITH, C.J.-Can the defendants say that they dealt with the lunatic at all ? ]

[O'CONNOR, J., referred to Evans on Principal and Agent, 1st ed. (1878), p. 10, citing Bevan v. McDonald.]

The person claiming to be an agent is an absolute insurer of authority. The remedy of third persons contracting with him, if he proves to have had no authority, is an action for breach of warranty of authority, but the alleged principal is not bound in any way. Molton v. Camroux and Imp. Loan Co. v. Stone are only applicable to cases of bargain and sale, fair and bona fule dealings between principals in the ordinary course of business. They do not cut down the general laws of agency. It is a well established principle of law that any person who is sued on a con- tract that purports to have been made by his agent can defend by disputing the agency. It cannot be contended that a lunatic is the

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only alleged principal who cannot avail himself of this defence.

The defendants therefore must rest their case upon a representation or holding out by the lunatic, and I contend that a lunatic can make neither.

[He then addressed himself to the evidence]. Knox followed. The reason for holding a lunatic's contract void is that he has no mind, and therefore does not understand the nature of his act. He is incapable of knowing what he is doing (Shelford on Lunacy, sec. 3, cap. 6, p. 336, and judgment of (No. 2.)

Bush, J., in Ball v. Mannin [supra]). His case is analogous to those cases where, for various reasons other than lunacy, a man signing a contract does not know what he is signing: In those cases the contract is void and does not operate even as a representation. It was argued in the Court below that, assuming the power of attorney was void, it was a representation by the plaintiff which, when communicated to the defendants, estopped him from denying the authority of the donee. But a man cannot do indirectly what he is incapable of doing directly. It is just as if the signature were obtained from him by a misrepresentation as to the nature of the document. In such cases there can be no estoppel by representation; the document has no legal effect whatever, because the mind of the person signing was never alive to what he was doing. The cause of the ignorance is immaterial. In Lewis v. Clay, (14 T.L.R., 149), the defendant had signed a promissory note and an authority to receive the proceeds thereof in total ignorance of the real nature of the documents. This ignorance was produced by misrepresentation. It was held, in an action upon the note, that the defendant was not estopped from setting up his ignorance even against a holder in due course without notice. The note was absolutely void, and the defendant could not be made liable upon it on any ground of holding out or representation. The case is distinguishable from that of a docu- ment signed by a person who has knowledge of its nature, but has been induced to sign it by misrepresentation as to a collateral matter. That would be merely voidable. The power of attorney in this case was signed under circumstances analogous to those under which the promissory note was signed, that is, in total

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ignorance of its nature. By analogy, therefore, it should be treated as void and inoperative, not only as a contract, but also as a representation. [He cited, also, on this point, Foster V. Mackinnon, L.R., 4 C.P., 704]. There was a second answer by defendants to our contention, viz., that they had acted as they were entitled and bound to do by the articles of association that they had agreed, by the articles, to act upon the plaintiff`s McLAUGHLIN power of attorney, and that this arrangement had been made while the plaintiff was sane. But the articles speak only of the "duly appointed" attorney, and therefore this answer is met by our main contention that there never was a duly appointed attorney. Moreover, the directors were not bound to register the transfer, they might have inquired and verified the agency. There is nothing, therefore, to distinguish this case from that of any other person dealing with an alleged agent. He takes the risk of there being no authority in fact.

[He then addressed himself to the evidence.] Wise, K.C., for respondents, the Vale of Clwydd Coal Mining Co.

I assume for the purpose of my argument that the Judge below was wrong in his finding as to the insanity, but was right in holding that the defendants had no notice of it, and contend that, even so, the defendants were justified in acting upon the power of attorney. It is admitted by the plaintiff that Imperial Loan Co. Ltd. v. Stone (supra) rightly decided that, where a contract is made by a lunatic, it is binding upon him as against third parties, unless they knew of the lunacy at the time of the contract. The contract to be looked at in this case is the contract made between the plaintiff and the defendants when the plaintiff took the shares in the companies. At that time the plaintiff was sane. It is an implied term of that contract that the plaintiff has the right to transfer his shares, and what he can do himself he can do by attorney. The company therefore undertook to recognise a transfer by the plaintiff or his attorney, taking upon itself the performance of a ministerial duty from which it derived no advantage. The company is bound to recognise a transfer signed by the plaintiff or his attorney. If, after becoming insane, he had presented to them transfers signed by himself while insane,

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they would have been entitled and bound to act upon them, if

they had no notice of the insanity. There can be no difference

McLAUGHLIN when the transfer is signed and presented by an attorney.

[GRIFFITH, C.J.-If he is the "duly appointed" attorney.] Plaintiff was sane when the original contract was made, i.e., NEWSPAPER

when he took the shares, and the defendants are entitled to act upon the assumption that he has continued to be sane.

[GRIFFITH, C.J.-The representation of sanity is made at the time of making the contract. A representation that a member of a company is sane when he becomes a member is not a (No. 2).

representation that he will SO continue for ever.]

It is a reason for assuming that plaintiff will be sane when- ever he directs a transfer, unless we have notice to the contrary Drew v. Nunn (supra).

[GRIFFITH, C.J.-Are you not bringing in a contract with which we have no concern ! The plaintiff complains now that you transferred without his authority, and you answer that you had his authority under the power of attorney.]

We have to look further back, to the contract made when the shares were taken. Defendants then undertook to transfer when required.

Drew v. Nunn (supra) and Imperial Loan Co. v. Stone (supra) introduced a new rule based upon the necessities of business. It is clear from those cases that if the transfer had been presented by plaintiff himself, signed by himself, we should have been pro- tected in honoring it. So also in Welton v. Camroux. There can be no difference in principle between dealings with plaintiff direct and dealings with him through an agent.

[O'CONNOR, J.-If this power of attorney had been executed by plaintiff during sanity, and placed with defendants, then on the authority of these cases, his supervening insanity would not have revoked it as against the defendants, but that is not the case here.]

Every man who has once been sane is presumed to continue sane until the contrary is proved (Taylor on Evidence, Presumptions of Immutability.") Making that presumption, defendants were bound to recognise the order of plaintiff's agent; In re Whitley Partners, 32 Ch. D., 337. This rule is founded upon practical

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convenience. Molton v. Camroux (supra) was not mentioned in Dexter v. Hall (supra). The validity of a power of attorney of a lunatic is not impeached by the mere fact of the lunacy Ex parte McLAUGHLIN Bradbury, 4 Deac., 202; 1 Mont. &C., 625; Stokes' edl of Jarman on Conveyancing, 8th. vol.

[GRIFFITH, C.J.-Lunatic may mean either a man wholly incap- able or partially SO. In that case it was held that the inquisition McLAUGHLIN of lunacy was not conclusive as to the man's capacity, and from other circumstances the Court took the view that he was sane.]

The case is referred to in Stokes on Powers of Attorney in con- nection with Molton v. Camroux. The authorities show that the contract of a man apparently sane cannot be avoided.

[O'CONNOR, J.-Is there not a difference between the presump- tion to be drawn by a person dealing directly with the lunatic and that to be drawn by a third person from the, power of attorney ?]

Personal communication between the contracting parties makes no difference to the legal effect of the contract. (Starkey v. Bank of England, 1903 A.C., 114). The knowledge of the person deal- ing with the lunatic is the test. (Campbell v. Hooper, 3 Sm. &G., 153; 24 L.J., Ch., 644). If the transaction is bona fide, and in the ordinary course of business, then the person dealing with the lunatic without notice is protected. If a person dealt with the assumed agent of a person apparently sane at his peril, the whole utility of the doctrine of agency would be gone. The Court should give weight to considerations of expediency, and have regard to the effect of a decision upon business dealings (Sheffield Corporation v. Barclay, 1903, 2 K.B., 593).

[Knox referred to Powell v. London and Provincial Bank:, 1893, 1 Ch., 610.]

The purchase by a lunatic at exorbitant prices was held good in Niell v. Morley, 9 Ves., 478. The principle applicable in this case is an extension of the equitable doctrine that a bonu fude purchaser for value without notice is always protected. It does not rest upon representation, because a lunatic cannot represent. It is well illustrated in Imperial Loan Co. v. Stone (supra). It is not estoppel by conduct, although it resembles it. The equitable doctrine I have stated is the only principle reconcilable with

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Drew v. Nunn. If it is not adopted, there is no conceivable

principle upon which the deed executed by a lunatic can ever be McLAUGHLIN

held not to be void, since the doctrines of estoppel and represen- tation have no application. This power of attorney would have to be treated as a forgery, absolutely void, and Drew v. Nunn would be wrongly decided. But if the efficacy of the contract depends upon the knowledge of the person dealing with the lunatic, we have a rational principle reconcilable with Drew V. Nunn (supra), Imperial Loun Co. v. Stone (supra), and Molton V*. Camroux (supra). All those cases regard the knowledge of (No. 2).

the contractor as material, but if the contract was in itself void his knowledge or ignorance could not affect the question, and would be quite immaterial. The cases dealing with forgery, such as Lewis v. Clay, are therefore no guide here, because a forgery is always void, whereas the lunatic's contract is not necessarily SO. Another way of stating the principle for which I contend is that a lunatic cannot deny his own signature where a contract has been bonit fide made and executed, by a third party, upon the faith of it.

[O'CONNOR, J.--Do not the cases go to show that a lunatic is only prevented from denying his signature where there has been something in his own conduct to mislead the other, just as may be the case in questions of forgery ?]

If the circumstances are such as to justify a belief that the contractor was sane, the contract is good. In this case it may be that the appointment was void as between the donor and donee, but as soon as it was acted upon by others ignorant of the insanity it ceased to be void; Ward v. Duncombe (1893), A.C., 369. The circumstances here justified the defendants in believing that the power of attorney was properly executed. The document was properly signed and attested, a letter was written by the clerk in plaintiff's office, giving the illness of the plaintiff as the reason of its execution, and the defendants had no reason what- ever to suspect that plaintiff was insane. It was therefore a "fair and bond fide" transaction. Those are the words used in Molton v. Cumroux. They would be quite inappropriate if estoppel had been the basis of the decision. It is enough that the defendants were ignorant (Richardson v. Dubois, L.R., 5 Q.B., 51.

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Anon. case cited in Ex parte McDonald, 1 Buck., 405; Vickers V. Hertz, L.R., 2 H.L. (Sc.), 113.) Both parties may be quite innocent, and yet one of them suffers; Scholefield v. Earl of Londesborough (1896), A.C., 514; Young v. Grote, 4 Bing., 253.

[BARTON, J.-Where there is direct dealing between the parties, the fact that the transaction is usual and fair as between them may be evidence that the alleged lunatic knew what he was doing. Might not some principle like that explain the Molton v. Camroux class of cases ?

The cases cited on the effect of forgery and misrepresentation have no application to the case of a lunatic.

[He then addressed the Court upon the evidence in the Vale of Clwydd Co.'s case.

Lingen, for the respondents in both cases, followed. I admit that it is impossible to find a general principle of common law that will explain Molton v. Camroux, but the plaintiff here is proceeding in Equity, and must be subject to its principles. Equity will not allow a lunatic in certain cases to deny his rep- resentations. The principle is that ignorance of the lunacy and bona fides in the transaction is an answer to the plea of lunacy. The ignorance can only arise from an express or implied repre- sentation by the lunatic. Here there is an apparently sane act, the signing of a formal and regular document, and the defendants in ignorance acted upon the quasi-representation thus made by the lunatic. The knowledge of the agent does not affect us. We are in the position of purchasers for value without notice. There is no case in Equity to support the plaintiff's contention, and if there was any such doctrine at common law as that a lunatic's contract was void, that was upset by the decision in Molton V. Camrowx (supra).

[GRIFFITH, C.J.-On your argument a lunatic is in a worse position than a defrauded sane man.

Lunacy has been treated on a special ground in Law and in Equity, and the latter presumes a man to be sane as against a bond fide contractee, if there is nothing to indicate the lunacy. Lunacy does not make a contract a nullity, whereas forgery does. The same rules therefore cannot apply to both. The reason of

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this is that it is SO easy to feign lunacy, and none but an expert

can detect the deception. To allow the plea of lunacy in all cases would open the door to frand. It is, therefore, no answer unless there was also notice of the lunacy. In Equity, persons acting bona fide without notice on what they believe to be the instruction of those whom they are bound to obey, are protected; Leslie V.

McLAUGHLIN Buillie, 2 Y. and Coll. C.C., 91. The cases cited for the plaintiff are

cases in which the persons sued are assignees dealing of their own free will and able to inquire. The defendants here were performing a ministerial office in obedience to an order good on the (No. 2).

face of it. Inquiry would not help them, because nobody can with certainty tell lunacy in a legal sense from sanity. The cases of infancy or insolvency are different, for they can be definitely ascertained. Bramwell, B., in Drew v. Nunn (supra), said that lunacy was not a privilege, but a misfortune, and innocent persons were not to suffer by reason of it. The same rule applies to persons acting on fraudulent orders; Budcock v. Lawson, 4 Q.B.D., 394; Union Credit Bank v. Mersey Dock's and Harbour Board, 1899, 2 Q.B., 205.

[GRIFFITH, C.J.-Molton v. Camroux would be exactly analo- gous if the plaintiff had gone in person and presented the transfers like a sane person.]

Seeing the lunatic would be of no value to a person who was not an expert; knowledge is the test of liability. Defendants have nothing to do with the relations between the attorney and the lunatic; (Story's Equity Jurisprudence (1853), par. 226). Unless they have taken advantage of the lunatic and are practically guilty of fraud they are protected.

[GRIFFITH, C.J.-Getting a lunatic to sign a document which he does not and cannot understand is in the nature of fraud.]

In Campbell V Hooper (3 Sm. &G., 153), the lunacy was taken for granted, but it was held not to affect the rights of a mortgagee, and both parties, in that case, acted through agents. Equity will only interfere to set aside a contract where there has been fraud on the part of the defendant, and the original position can be restored (Hassard v. Smith, 6 I.R., Eq., 429; Niell v. Morley, 9 Ves., 478; Price v. Berrington, 7 Hare, 394; 3 McN. &G., 486; Greenslade v. Dare, 20 Beav., 284; Bassett v. Nosworthy, White and

1 CLR 259

Tudor's Leading Cases in Equity, vol. II., p. 1). In a proceeding under this section of the Companies Act the Court is bound to give weight to every equitable consideration (Ex parte Parker, McLAUGHLIN L.R., 2 Ch., 685; Buckley on Companies Acts, 8th ed., p. 28). The plaintiff here has received the benefit of the transfer, the proceeds having been devoted to payment of his debts and expenses. The principle upon which the Court of Equity will act in granting McLAUGHLIN relief is that where the lunatic's estate is practically unchanged he is not entitled to relief, but where he has suffered by the trans- action he will be relieved (Pope on Lunacy, 2nd ed., pp- 252,254). Molton v. Camroux is inconsistent with Dexter v. Hall (supra), and was not cited in the arguinent or dealt with in the judgment. The words used in the former case "apparently sane" must mean "apparently" to the promisor, not to those immediately sur- rounding the lunatic, because the Judges in all the cases have dealt only with the state of mind of the defendant, treating the notoriety of lunacy in the neighbourhood as immaterial. Public policy and common sense require that the equitable doctrine as to a bond fule purchaser for value should be applied to the contracts of lunatics.

[GRIFFITH, C.J.-That doctrine might be applicable if this suit were against the purchasers of the shares. Some of the cases seems to go as far as that, e.g., Swan v. North British Aus- tralasian Company, 2 H. &C., 175. Here the question is-

Has the company done its duty to the plaintiff?? ]

Lindley on Companies, in dealing with Ex parte Swan, 7 C.B. N.S., 400, and Swan v. North British Australusiun Co. (supra), says that if the negligence of the person applying for rectifi- cation of the register is the cause of the state of things which he seeks to have rectified, a mandamus will not be granted. But Equity will not relieve, even where there is no negligence, if the party seeking relief has had the benefit of the transaction. Courts of Equity are not bound to follow the rule of Courts of Law; Ex parte Parker (supra).

[GRIFFITH, C.J.- do not understand the appellant to be making any contention based merely upon common law, and not in accordance with equitable principles.]

We contend that he is, that we are in the position of purchasers

1 CLR 260

for value without notice. There is no direct authority covering

our case, but at any rate there is none against us. There are cases having some analogy to this, where there is no estoppel, but both parties are innocent. and the equitable doctrine has been applied and no relief granted. (Jones v. Powles, 3 My. &Keen, 581; Bassett v. Nosworthy, supra). Valentini v. Canali, 24 Q.B.D., 166, was a case under the Infants Relief Act, and it was there held that where the infant had had the benefit of the money paid, it was contrary to natural justice that he should recover it. The same rule is applicable here. No. 2).

[GRIFFITH, C.J.-Could not the Court order the appellant to repay the money arising from the sale ? ]

The transferees are not parties to this suit, and the course adopted in Starkey v. Bank of England (supra) could not be adopted here, as there is no way of bringing in third parties. We have parted with the shares bona fide, and the lunatic has received the benefit. His incapacity is therefore immaterial.

[GRIFFITH, C.J.-The enjoyment of the proceeds only operates as a ratification. How can a lunatic ratify

[BARTON, J.-Ratification is based upon the voluntary accept- ance of the benefit.]

The lunatic here is in no better position than in Molton V. Camroux. The money has been expended in necessaries, as in Baxter v. Earl of Portsmouth (1826), 5 B. &C., 170. Lewis V. Clay, 14 T.L.R., 149, is no stronger than Foster v. Mackinnon (supra), and the latter case was not even mentioned in Imperial Loan Co. v. Stone (supra). In Tarbuck v. Bispham, 2 M. &W., 2, the defendants knew that they were acting with the professed agent of a lunatic, whereas here the defendants had no notice of the lunacy.

[GRIFFITH, C.J.-Story on Agency seems to treat it as doubtful whether the doctrine you contend for would afford a good answer to a bill for relief in Equity.]

In Ball v. Mannin, 1 D. &Cl., 380, there was no suggestion that any of the parties were ignorant of the lunacy. In all the cases cited in which the defence of lunacy was upheld, there was notice of lunacy or suspected lunacy, either to the defendants or to the persons from whom they purchased. In Dexter v. Hall

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(supru) the point as to ignorance on the part of the purchaser and fair value paid was never raised, and the lunacy was notorious. The purchaser may have known it. Moreover it Mc follows cases that are treated as doubtful in Molton v. Camrour (supra).

[GRIFFITH, C.J.-Cundy v. Lindsay, 3 A.C., 459, was a case between two innocent parties, and the House of Lords followed the rule of law that, if there was areal contract to begin with, the subsequent dealings could not be questioned. But the question here is whether there was a contract at all.]

We say there was, because the lunatic cannot dispute his writing as against us, whether he understood it or not.

As to the fact of lunacy, the Judge below has found on the evi- dence that the appellant understood the nature of the power of attorney, and, where that is SO, the Court of appeal will not reverse his finding unless they are absolutely satisfied that he was wrong. (Colonial Securities v. Massey, 1896, 1 Q.B., 38).

[GRIFFITH, C.J.-Every Equity appeal is a rehearing. We must act on the principle that, if we are satisfied that the finding was wrong, we must reverse it. In cases of appeal against the verdict of a jury the reasons for a reversal must be stronger. The verdict must be demonstrably wrong.]

We admit that appellant was subject to insane delusions, but not that he was SO insane as to be unable to understand the document. A lunatic in an asylum and in bonds may be capable of executing a document (Selby v. Jackson, 6 Beav., 192).

O'CONNOR, J.-Assuming it is proved that appellant was generally insane, with lucid intervals, is not the onus of proof shifted to those who are seeking to substantiate the documents. Is it not upon them to show that the documents were executed during a lucid interval

[Gordon, K.C., referred to Hall v. Warren, 9 Ves., 610.] Yes, but still the plaintiff has to establish his case (Greenslade V. Dare, 20 Beav., 285), and, as he has to prove fraud on the part of the donee, the onus rests on him still.

[GRIFFITH, C.J.-You contend that it is not fraud to get a lunatic to sign a document of which he did not know the nature.]

1 CLR 262

Sheppard, for the respondents, the Vale of Clywd Coal Mining Company, Limited, followed. A lunatic cannot execute a power of attorney, but whatever obligation he can undertake for himself he can undertake by his agent. Having no mind, he cannot enter into a contract, nor can he represent a person to be his agent. For the same reason he cannot have a representation made to him. His

McLAUGHLIN case, therefore, cannot be brought into the same class as Lewis V.

Clay (supra), and others in which the decision turns upon mis- representations made to the person signing a document. In law, a lunatic is as a dead man, but in fact he is allowed to go at (No. 2).

large amongst men, and enter into relations with them, his lunacy being often unsuspected. Owing to this, complications arise, and the law has endeavoured to deal with them by modifi- cation of the doctrine of absolute incapacity. He is therefore made liable to all the disabilities of a sane man, but treated as one of weak intellect, and only made liable where no advantage has been taken of his insanity. He is protected against dishonest and unconscionable bargains. It was a canon of the civil law that all his contracts were void, but the necessities of modern business have caused modifications of the rule. Molton v. Camroux (supra), is an attempt to harmonise the old rule with inodern requirements. His contracts are therefore voidable and not void, and that is in his favour (Pope on Lunacy, 243, 244), since he can affirm those which are profitable, and have the burdensome disallowed. In Dexter v. Hall (15 Wall., U.S.A., 9), the American Courts went back to the old authorities, and adopted the old rule that is no longer rigidly applied in England.

[GRIFFITH, C.J.-Do you admit this proposition, that a lunatic has a qualified capacity to contract, but the validity or invalidity of his contract depends on the question whether it was induced by fraud or not ?]

No. I admit that a lunatic, as a general rule, cannot contract, with the modification that as he is amongst us in society, if the interest of society requires it, he must be bound by his contracts in certain circumstances.

[GRIFFITH, C.J.-Again, do you admit that generally speaking it is fraud to induce a lunatic to make a contract if the person inducing him to make it knows him to be a lunatic ?]

1 CLR 263

Yes, with the qualification that I have stated. [GRIFFITH, C.J.-Then is this fraud one which goes to the substance of the contract, making it void ab initio, or is it only Mc like a misrepresentation on a collateral matter, which does not make it void against innocent third persons ?]

Much depends upon the degree of lunacy. If it is of a minor degree and the lunatic has some understanding, the contract would McLAUGHLIN be good or bad, according to whether the person dealing with him had taken advantage of the lunacy or not. If the lunacy is com- plete, and there is no capacity at all, then another test must be applied. No representation can operate on such a mind, and consequently the rule as to misrepresentation can have no application. Any person dealing with such a lunatic, knowing of the lunacy, is prima facie guilty of fraud, and the Court avoids the contract. But, if there is no knowledge of the lunacy, then Molton v. Camroux applies, if the contract is fair and proper, and good consideration has been received by the lunatic. Ignor- ance of the nature of a contract is not sufficient of itself to avoid it; Foster v. MacKinnon (supra), Thorogood's Case (2 Rep., 9 b.), and Lewis v. Clay (supra), are special exceptions. The only difference between the case of contracts of sane men and insane men in this respect is that fraud is more easily proved in the case of the latter than of the former, but without fraud neither can be avoided. The contract of agency is on the same footing as others.

[O'CONNOR, J.-You admit that direct dealings with the lunatic by a person who has knowledge of the lunacy are void. Suppose that the lunatic deals.with such a person who by means of the dealings obtains the lunatic's signature to a document. How can a third person who deals with that person on the strength of the fraudulently obtained signature be in a better position than the person who actually dealt with the lunatic ?

In this way, that the lunatic must not be in a better position than a sane man, and a sane man cannot deny the agency if he has given it owing to a misrepresentation.

[GRIFFITH, C.J.-He is only bound when the misrepresentation is as to a collateral matter.]

Pollock on Contracts, 4th ed., p. 87, says that the latest opinion

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is that a lunatic's contract is voidable at his option if his state be

known to the other party. The power of attorney is on the same footing as a contract with the lunatic himself. It is a contractual representation to everybody who acts on the faith of it, and everybody SO acting is practically dealing with the principal; Drew v. Nunn (supra) has established an exception to the

McLAUGHLIN general rule as to lunatics' contracts, and has decided that a

lunatic's power of attorney may be safely acted upon by any person who does not know of the lunacy, even though the donee may have known of it. The power of attorney, as a represen- (No. 2).

tation of the agency, continues until notice of the lunacy, and the lunatic's remedy, if he has any, is against the donee (Horwood V. Simpson, 2 Vern., 186). In Dexter v. Hall (supra) it was not shown that the heirs ever received the proceeds of the sale; consequently the equitable principle of Molton v. Camroux and other cases did not come in. [He referred also to Domat, Civil Law, p. 466, par. 1129]. As to the facts: The evidence does not establish general insanity, but recurrent delusions, leaving the patient capable of transacting business in the intervals. The fact of signing shows that he was not suffering at the moment from delusion, because the medical evidence was to the effect that he could not be induced to sign anything while the delusions were active. There was no evidence of intent to defraud.

Gordon, K.C., in reply. As to the facts, there was no need to prove intent to defraud. The motives of those who induced the lunatic to sign are immaterial if they were aware of the lunacy. The whole of the evidence shows clearly that the appellant was too insane to understand the nature of his act, the medical evidence being that the act of signing must have been purely mechanical. There was no evidence even that the document was read over to him. General insanity was proved, and the defendants failed to discharge the onus thereby cast upon them of proving that the document was signed during a lucid interval (Hall v. Warren, supra).

As to the law, the defendant's argument as to the contract made when the shares were taken has no application. We say that we

1 CLR 265

were on the register, and defendants wrongfully removed us. H. C. OF They say that they did SO in accordance with our request, and we reply that the alleged request was not ours at all (Sloman V. Bank of England, 14 Sim., 475). It is the duty of the company to keep the register accurately, and if it is incorrect they will be ordered to rectify it, the onus being on them to justify the removal of the name (Lindley on Companies, 3rd ed., p. 147). The principles upon which mandamus will be granted are the same as those upon which a Court of Equity will act in granting relief. If the applicant for relief has not been guilty of negligence or of any conduct conducing to the fraud, the Court will relieve him (Ex parte Swan, 7 C.B.N.S., 400; Swan v. North British Aus- tralasian Co., 2 H. &C., 175). The appellant here could have pleaded "non est factum" to an action on the deed, as he had no consenting mind. There is no distinction between the principle of this case and that of Lewis v. Clay (supra). The power of attorney is void ab initio. The distinction between void and voidable contracts in this connection is shown in Union Credit Bank v. Mersey Docks and Harbour Board, (1899) 2 Q.B., 205. Thompson v. Leuch (3 Salk., 300; 3 Mad., 296) was not touched by Molton v. Camroux. Campbell v. Hooper (3 Sm. &G., 153), decided only that a plaintiff who sets up lunacy must either fail in obtaining relief or give up the money that he received as con- sideration. In that case he actually had the money. The defendants can only escape from their difficulty by alleging estoppel by representation. But there can be no representation except by a person who is capable of intending, and does intend, to represent (Swan v. North British Australasian Co., supra). In Allen v. City Bank, an unreported case in the Supreme Court of New South Wales, a cheque was held to be altogether void because the maker believed himself to be drawing a cheque for a different amount. The letter in Lewis v. Clay (supra), did not operate as a representation, although signed by the defendant himself. In Niell v. Morley (9 Ves., 478) there was contradictory evidence, and the Judge found in fact that the lunatic attended at the sale as a sane person, thus bringing the case into line with Molton V. Camroux (supra). In Greenslade v. Dare, 20 Beav., at p. 238, the Court of Equity held merely that the proper remedy was at law,

1 CLR 266

by action of ejectment, and that it had no jurisdiction to grant

such relief. Ex parte Bradbury (Mont. &Ch., 625 4 Deac., 202), decided only that the finding of a commission in lunacy was not conclusive, if the sanity came in issue in other proceedings.

Lingen, on the question of the proceeds having been applied in purchase of necessaries for the lunatic, referred to Pope on Lunacy, p. 257; Nelson v. Duncombe (9 Beav., 211).

Cur. adv. vult. (No. 2).

McLAUGHLIN v. DAILY TELEGRAPH NEWSPAPER. April 27th.

GRIFFITH, C.J. This is a suit brought by the plaintiff for the rectification of defendants' share register by entering his name as a holder of 118 shares of which he was formerly the holder, and by registering him as the holder of certain other shares to which he would, if he had remained the registered holder of the 118, have been entitled in respect of his ownership of them. The plaintiff also claimed dividends withheld from him in respect of all the shares since his name was omitted from the register. Defendants are a joint stock company, registered in New South Wales under the Companies Act 1899, and the suit is brought under the provisions of sec. 232 of that Act. The obligation of the company to its members with respect to shares is a duty against a breach of which relief may be had in a Court of Equity, just as in the case of stock (see Sloman v. Bank of England, 14 Sim., 486). The plaintiff is entitled to say to the company-to adopt the words of Shadwell, V.C. (p. 487)-" You are bound by law to be my hookkeeper in respect of my stock, and to show me the true account of it, and if I can show that on a given day stock stood in my name, and now show that it does not stand in my name, and I have not authorized the transfer of it, you are responsible to me-that is to say, you must make the account stand as it ought to have stood." (See also Barton v. L. and N.W. Railway Co., 38 Ch. D., 144, per Cotton, L.J., at p. 149, and per Bowen, L.J., at p. 153: and Barton v. North Staffordshire Railway Co., ib., p. 458). This language, which was used of Govern- ment stock, is equally applicable to stock in a joint stock company,

1 CLR 267

and, in our judgment, is also equally applicable to shares. The H. plaintiff, then, having established that he was, before the transfers to be directly mentioned, registered in defendants' register as the holder of the 118 shares in question, the onus is cast on the defendants to show that the change in the register has been made by plaintiff's authority. This onus they attempt to discharge by saying that they omitted the plaintiff's name from the register, and registered other persons in his place, in good faith in pursuance of transfers executed by his duly-authorized agent, acting under a power of attorney executed by the plaintiff, and produced to them as the plaintiff's deed. The plaintiff replies that the power of attorney, though executed by him in fact, was executed at a time when he was of unsound mind. The defend- ants do not dispute that at the time when it was executed he was, in one sense, of unsound mind, although the degree of unsoundness is in controversy. But they contend that his insanity is, in any view that may be taken of its degree, imina- terial, and that the power of attorney is binding upon him, even if his mind was SO unsound at the time of execution that he did not understand what he was doing. The case was very well and fully argued before us, and a great number of authorities were referred to, from which some rules appear to have been clearly established, while other questions appear to be still open for judicial decision.

For the plaintiff it was contended that a person of unsound mind is incapable of appointing an agent, or of executing a deed, and that such an appointment or deed is absolutely void. The defendants contend that this doctrine, if still true in any sense, is not applicable to the case of a power of attorney, at any rate as regards persons who have in good faith dealt with the apparent agent without notice of the unsoundness of mind of the principal. It is necessary, therefore, to examine the cases in detail.

In Turbuck v. Bispham (2 M. &W., 2), and Stead v. Thornton (3 B. &Ad., 357 (n) ), it was laid down generally that a lunatic is not competent to appoint an agent. In both cases, however, the person as against whom the question of incapacity was raised appears to have known of the incapacity. In Drew v. Nunn (4 Q.B.D., 661), the defendant who had, while sane, authorized his

1 CLR 268

OF A. wife to act as his agent, became insane, and the question was

whether the authority was revoked by the insanity. Brett, L.J., held that the insanity, assuming it to be such as to be apparent to anyone with whom he might attempt to enter into a contract, put an end to the agent's authority, and that, if there were no more in the case, the defendant would not be liable on contracts made by his pretended agent, but that the agent would be liable for breach of the implied warranty of authority. Bramwell, L.J., expressed the opinion that in order to annul the authority of an agent, insanity must amount to dementia, but doubted whether (No. 2).

partial derangement would have that effect. Cotton, L.J., re- frained from expressing any opinion on this point. But all the Lords Justices held that plaintiff having, while of sound mind, held out his wife as his agent, had entered into a contractual representation with persons who acted on the faith of the holding out, and that he was bound by this representation until the persons dealing with the agent had notice of revocation of the authority. These were the only English authorities cited to us directly bearing on this point. On the question of the capacity of a person of unsound mind to execute a power of attorney, the case of Dexter v. Hall (15 Wall., 9), decided by the Supreme Court of the United States in 1872, was cited. In that case one Hall, alleged to have been at the time a lunatic, executed a power of attorney authorizing his brother-in-law to sell land. The land was sold, and conveyed under the power to persons who after- wards conveyed to the defendant. After the death of Hall, his representatives brought an action of ejectment to recover posses- sion of the land. The case was tried with a jury in a Circuit Court of the United States, and evidence was offered on both sides on the question of the sanity of the alleged lunatic. The Circuit Court directed the jury that, if at the time Hall executed the power of attorney he was insane, and his insanity was general, the instrument was a nullity, and no title could be transferred under it, and that in that case the plaintiff was entitled to a verdict: that it mattered not, if such were the case, what con- sideration might have been paid by the attorney, or with what good faith the parties might have purchased; that the instru- ment in such case was no more to be regarded as an act

1 CLR 269

of Hall than if he were dead at the time of its execution. The jury found for the plaintiff, thus finding that Hall was insane. The Supreme Court held that the direction was right. 1cLAUGHLIN The Court, in their judgment, delivered by Strong, J., care- fully examined the early English cases, citing the comments of Lord Coke on Beverley's Case (4 Rep., 123b)-" There is a great difference between an estate made in person and by an attor- ney, for if an idiot or non compos mentis makes a feoffment in fee or in person and dies, his heir within age, he shall not be in ward, or if he dies without heir the land shall not escheat, Co. but, if the feoffment be made by letter of attorney, although the feoffor shall never avoid it, yet after his death as to all others, in judgment of law the estate is void, and therefore in such case if the heir be within age he shall be in ward, or if he dies without heir the land shall escheat." They also referred in detail to Thompson v. Leach (Carthew, 435), and Ball v. Mannin (1 D. &Cl., 380), decided by the House of Lords in 1829, and came to the conclusion that it was the settled law of England, which they avowedly followed, that, while the feoffment of an idiot or lunatic is only voidable, his deed, and especially his power of attorney, is wholly void. In Ball v. Mannin the question was whether a deed to lease the uses of the land upon a fine and recovery, which was executed by one J. S. Ball, alleged to be a lunatic, was void. The person entitled to the land if the deed was void brought ejectment against the person entitled under it. The Judge directed the jury that the question for them to try was whether 'the said Ball was a person of sound mind or not, and that, to constitute such unsoundness of mind as should avoid a deed at law, the person executing such a deed must be incapable of understanding and acting in the ordinary affairs of life; that it was not necessary that he should be without any glimmering of reason, but that it was sufficient if he was incapable of under- standing his own ordinary concerns, and that, as one test of such incapacity, the jury were at liberty to consider whether he was capable of understanding what he did by making the deed in question, when its general purport was generally explained to him." The House of Lords held that the direction was right. In this case no consideration had been given by the persons

1 CLR 270

OF A. claiming the land. On the other hand, the question of know-

ledge of the insanity by the persons who induced the lunatic to execute the deed was not treated as material. In this case, as well as in that of Dexter v. Hall, the fact of insanity seems to have been regarded as the only material question. In Jenkins V. Morris (14 Ch. D., 674), a person alleged to be of unsound mind had executed a lease. After his death his legal representative contended that the lease should be set aside, and an issue was directed to try the question whether the lessor was or was not of sound mind, and capable of managing his affairs at the date of (No. 2).

the lease." Evidence was offered on both sides, and Lindley, J., before whom the issue was tried, told the jury that the question for them to try was a practical question-whether the lessor was

SO insane as to be incompetent to manage his affairs in the sense of disposing of his property-even of property believed by him to be full of sulphur. (This was the peculiar delusion on which the allegation of unsoundness of mind was mainly based). A new trial, on the ground of misdirection, was refused by Hall, V.C., and the Court of Appeal (Jessel, M.R., Buggallay, L.J., and Brumwell, L.J.) In this case also, the validity or invalidity of the deed was treated as being dependent upon the mental con- dition of the person by whom it was executed. No question of knowledge or want of knowledge of his condition on the part of the lessee was raised.

In addition to these cases may be mentioned Howard v. Digby (2 Cl. &Fin., 634), decided by the House of Lords in 1834, to which we have been referred by counsel since the close of the argument. Lord Brougham, L.C., in the course of his opinion (at p. 661 of the report), said :- The law on this point, at least, is as clear both in Equity and in Lunacy and at common law, as that a man's eldest legitimate son is his heir to freehold land. A lunatic cannot bind himself by bond or by bill; a lunatic cannot release a debt by specialty; cannot be a cognisor in a statute, merchant staple, a judgment, warrant of attorney, or any other security, I admit; but that a lunatic cannot receive payment of a debt, cannot receive moneys worth, and thereby make himself, his executors, and administrators, that is, his assets, liable in dis- charge for what he has received, I hear to-day for the first time;'

1 CLR 271

and, again (at p. 663): "These cases

all show that a lunatic, whose silence would be no consent, whose acquiescence would not be a waiver, whose obligation by a bond would not McLAUGHLIN bind him, may nevertheless, by receiving the property of another, and using it for his own benefit, or, as in this case, by receiving clothes, or the value in payment for millinery, or repairs of articles of dress, SO far bind himself to the person who pays for McLAUGHLIN the goods as to enable the latter to set off the money SO paid for the lunatic against a claim in our Courts in pari materia."

There is no doubt that a person of unsound mind may, in some cases, be held liable upon a quasi-contract, or obligation implied by law, as for necessaries supplied to himself or his wife. (See Baxter v. Earl of Portsmouth, 5 B. &C., 170.) But no case was cited to us in which a deed executed by a person of unsound mind, in the sense that he was incapable of understanding what he was doing when he executed it, has been held valid. On the other hand, the proposition that a power of attorney executed by a person of unsound mind is void is still contained in the text books as one of the propositions as to which the law is settled. The doctrine mentioned by Lord Coke, which precluded a man, under some circumstances, from alleging his own insanity, appears to have been a mere rule of pleading. It has long been discredited, and, indeed, it seems never to have been applicable in cases in which the question could be raised by the plea of non est factum (Sugden on Powers, 179, cited in Dexter v. Hall, at p. 24).

So far the authorities appear to favour the plaintiff's conten- tion. We now come to another class of cases relied upon by the defendants, as either over-ruling or materially qualifying the doctrines apparently established by the cases already referred to.

It was contended that the invalidity of a deed could not be set up in a Court of Equity as against a purchaser for value without notice, and some cases were mentioned in which that defence was held good when the deed was impeached on the ground of the insanity. of the person by whom it was executed. But, on examination it will be found that in every instance the case made by the plaintiff-indeed, the only case which would have entitled him to invoke the aid of the Court of Chancery- assumed that the legal estate was in the defendant, i.e., that the

1 CLR 272

deed sought to be impeached was not void but merely voidable,

If the deed had been void, the remedy would have been at law. It is not clear, however, that the doctrine of purchase for value without notice has any application in a suit for specific relief such as the present. Of the other cases cited for the defendants the most important are Molton v. Camroux (2 Ex., 487, 4 id., 17) and

McLAUGHLIN Imperial Loan Co. v. Stone (1892, Q.B., 599). The latter case was

an action on a promissory note signed by the defendant as a surety. The jury found that the defendant was insane when he signed it, but could not agree on the question whether the plaintiff's agent, (No. 2).

who was present when the note was signed, was aware of the incapacity. It was held by the Court of Appeal that the defendant was not entitled to judgment. This case has sometimes been regarded as an extension of the doctrine of Molton V. Camroux, which had laid down that an executed contract of which a lunatic, a party to it, had received the benefit, could not be impeached if the other party had no notice of the insanity. The principle of the decision seems, however, to be the same in both cases, which, in our judgment, establish that a contract made by a person actually of unsound, but apparently of sound, mind with another who deals with him directly, and who has no knowledge of the unsoundness of mind, is as valid as if the unsoundness of mind had not existed. If the man dealing with the person of unsound mind is aware of his insanity, the contract is voidable at the option of the latter, but the party who takes advantage of the other cannot himself set up the incapacity. In this respect the matter is treated on the same footing as cases of fraud inducing a contract. There is, indeed, authority for saying that the equitable doctrines governing the validity or invalidity of a contract made with an insane person are only a particular instance of the general doctrines relating to fraudulent contracts. In the cases last mentioned no unfairness of dealing could be imputed to the persons who sought to take advantage of the contract, which was, in fact, made, in each case, with an apparently sane person. The principle appears to be that the validity of a contract made with an apparently sane person is to be determined by the application of the same rules as are applied in ordinary cases. As pointed out by Bramwell, L.J., in Drew v. Nunn,

1 CLR 273

insanity is not a privilege but a misfortune. But, on the other H. hand, it does not impose any additional disability, SO that any circumstance which would avoid a contract or transaction between McLAUGHLIN sane persons is, in our opinion, equally applicable to contracts between persons of whom one is insane. Contracts made between TELEGRAPH persons apparently sane may be either void or voidable. If a Co. person intending to make a contract with respect to a particular McLAUGHLIN subject matter, or to sign a document of a particular character, is induced by false representation to make such a contract, or to sign such a document, intending to do SO, the contract is voidable as against the party who is guilty of the fraud, but is valid as regards an innocent third party who acts, to his prejudice, on the faith of the validity of the contract or document. On the other hand, if a party is induced to make a contract, or to sign a document, by a misrepresentation as to the nature of the contract or document, that is to say if, although he in fact appears to make the contract, he has no intention of doing any such thing, or if he signs the document not intending to sign such a document, but in either case to do something else, the contract or document is void and not merely voidable, even as regards innocent third parties, unless some negligence or default can be imputed to him. Of this distinction, Thorogood's Case (2 Rep., 9b.), Foster V. McKinnon (L.R. 4 C.P., 704), Lewis v. Clay (14 T.L.R., 149), and Cundy v. Lindsay (3 A.C., 459), afford good illustrations. In Thorogood's Case the party was induced to execute a deed, but from illiteracy or ignorance did not know it to be a deed. In Foster v. M'Kinnon a man was induced to endorse a bill of exchange under the belief, fraudulently induced, that he was signing a guarantee. In Lewis v. Clay the defendant was induced by fraudulent representations to sign two promissory notes, and also a letter authorizing the person guilty of the fraud to receive the proceeds. In Cundy v. Lindsay the party was fraudulently induced to think that he was making a contract with an entirely different person. In each case the contract or document was held absolutely void, even as against innocent third parties. Lord Cairns, L.C., in Cundy v. Lindsay pointed out that in such cases the Court is called upon to discharge the disagreeable duty of determining, as between two innocent parties, upon which of them

1 CLR 274

the consequences of a fraud practised upon both must fall.

Sheppard attempted, very ingeniously, to distinguish these cases on the ground that in each of them the person who was induced to make the contract, or sign the document, was SO induced by actual fraudulent misrepresentation as to the nature of the con- tract or document itself, and that, as it is impossible for a

McLAUGHLIN misrepresentation to operate upon the mind of a person who has

no sound mind, there can be no inducement in such a case. But the real ground of the distinction appears to be, not that the contract or signature is induced by an active fraudulent mis- (No. 2).

representation as to the nature of the act, but that the mind of the actor does not accompany the act. (See per Lord Cairns, L.C., 3 A.C., at p. 465). Thus a signature to a promissory note obtained by a conjuror with innocent intent from a person who supposed he was signing his name-say to a photograph or visiting card-would no more bind him than if the signature had been obtained with fraudulent intent. The question, it is true, could never arise for decision unless a fraudulent use were sought to be made of the signature. Such a use might be made either by the person who fraudulently obtained the signature, or by a person who became possessed of a signature innocently obtained. In either case it would be equally void SO far as regards creating a contractual obligation.

If, however, any negligence or breach of duty can be imputed to a person who SQ gives his signature, he will be bound as regards innocent third persons who have acted to their prejudice on the faith of it.

We think that these considerations are equally applicable to the case of a person of unsound mind, and that, if such a person is induced by another to go through the form of making a con- tract or signing a document without understanding what he is doing, he is not bound by his contract or signature, unless, indeed, the person who SO induces him believes him to be of sound mind. If he does, there is an exception, and the doctrine of Molton V. Camrour and Imperial Loun Co. v. Stone applies. If he does not, the doctrine has no application.

Whether this exception applies to the case of a deed or power of attorney seems to be still open to doubt. It is settled law that

1 CLR 275

there are two classes of cases in which a simple contract or quasi- contract made by a person of unsound mind is valid. First, the case of obligations implied by law, such as an obligation to pay McLAUGHLIN for necessaries supplied to himself or family. This liability stands on the ground of public policy. Secondly, contracts made by a per- son of unsound mind with another person who is not aware of his incapacity. In this case, also, public policy seems to be the founda- McLAUGHLIN tion of the doctrine (Elliott v. Ince, 7 1)., M. &G., 475, at p. 487). Deeds and powers of attorney executed by a person of unsound mind may, perhaps, stand on a different footing. So far as powers of attorney are concerned, it is useful to refer to the case last cited, in which Lord Cranworth, L.C., points out that the doctrine of Molton v. Camroux has no application in a case in which there is no contract for value, but merely a dealing by a lunatic with his own property without any consideration passing from others, which, in one sense, is the case when he merely executes a power of attorney not coupled with an interest. And, in view of the express decisions referred to in the first part of this judgment, there is certainly some difficulty in extending the doctrine of Molton v. Cumroux, and Imperial Loun Company v. Stone to the case of a power of attorney or any other appointment of an agent. Nor, SO far as we are aware, have they ever been SO extended. In the view, however, which we take of the facts of this case, it is not necessary to decide this question. For the furthest extent to which they could be carried in such a case would seem to be that if the agent, being directly appointed, has no knowledge of the unsoundness of mind of his principal, the appointment is good as between principal and agent, and, possibly, as between the principal and an innocent third party dealing with the agent. In such a case it would seem that the agent would, at any rate, be entitled to an indemnity from his principal for any act done under the authority. But if the agent knows of his principal's incapacity-that is to say, knows that the alleged principal does not intend to appoint him as his agent- the doctrine of Molton v. Camroux and Imperial Loan Company V. Stone can have no application as between them. In the course of the argument, the case was put of a man induced to sign a power of attorney by a representation that it was a will drawn

1 CLR 276

in pursuance of his instructions. We cannot but think that such

a power of attorney would be absolutely void, in the absence, that is, of negligence or default on the part of the person who signs it. We are, therefore, compelled to the conclusion that the question whether a power of attorney given by a person of unsound mind is void or voidable (assuming that it is not necessarily void) is to be determined on the same principles as in the case of a power of attorney given by a sane person, and that, if it is shown that the insane person did not know what he was doing, i.e., that he did not intend to execute a power of attorney, (No. 2.)

and the person who procured the execution was aware of the fact, it is absolutely void. In such it case any person setting up the authority must be bound by the ordinary rule that it is for the party alleging agency to prove it; and in the case supposed he can no more prove it than if the power of attorney had been a forgery, as in the case of Oliver v. Bank of England (1902, 1 Ch., 610).

It is said, however, that in such a case the power of attorney may be supported against any person who honestly acts on the faith of its validity, either on the ground that the signature on the face of the document operates as a contractual representation of its validity, or on the ground that some blame can under such circumstances be imputed to the insane person for signing it. Both these arguments, however, appear to be answered by the cases of Foster v. M'Kinnon and Lewis v. Clay, in each of which a sane person was held to be not bound, either by way of contract or estoppel, by a document which he had been induced to sign by a fraudulent representation as to its nature. If, as we think, the ground of these decisions is the absence of intention to execute such a document as that actually executed, the principle is equally applicable to the case of a document executed by a lunatic without any intention to execute it. Otherwise, as already pointed out, a person of unsound mind would have less protection than a sane person.

Regarding the present case from this point of view, it becomes necessary to make a careful examination of the evidence in order to see under which branch of the law the case falls. It was agreed that the evidence taken in this case and that taken in the

1 CLR 277

Vale of Clwydd Company's Case should be read as applicable to H. both cases. Now, although when a cause has been heard by Judge on vivil voce evidence, a Court of appeal is naturally Mc reluctant to differ from him on a question of fact, yet the Court must bear in mind that it is required to re-hear the cause, and to form its own conclusions upon the evidence. (See Coghlan V. Cumberland, 1898, 1 Ch., 704). The difficulty which the Court McLAUGHLIN of appeal feels is greater when there is a conflict of evidence, or when the weight to be attached to uncontradicted testimony depends to some extent upon the demeanor of witnesses, than when the facts are not contradicted, and the main question is as to the proper inference to be drawn from them, or when the case is substantially one of circumstantial evidence. In the present case we regard what may be called the circumstantial evidence as more cogent in its effect than the direct testimony of the witnesses upon the point directly in issue. Upon a careful consideration of the evidence we have arrived at the following conclusions of fact:-In October, 1900, the plaintiff was of unsound mind in such a degree that he was incapable of managing his affairs in the sense of disposing of his property (see Jenkins V. Morris, 14 Ch. D., 674); this being his general condition, although he had occasional more lucid intervals, in which he might have been able, to a greater or less extent, to understand what he was doing. It is not disputed, however, that when it is once established that a person is of unsound mind the burden of making out that a particular transaction took place during a lucid interval is cast upon the person alleging the fact (Hall v. Warren 9 Ves., 610). And, in our opinion, the defendants have not discharged themselves of this burden. We find further that in October, 1900, those interested in the plaintiff's affairs, particularly his wife and his managing clerk, had considered the probability that his estate would have to be administered by the Supreme Court in its Lunacy jurisdiction, and that they desired to avoid, if possible, the necessity for a declaration of lunacy and the appointment of a committee. It was then suggested-by whom does not appear, and with a motive which in one sense was laud- able enough-that if the plaintiff could be persuaded to sign a power of attorney purporting to give his wife complete control

1 CLR 278

of his affairs, the desired result would be attained. A power

of attorney--that now in question was accordingly prepared in his own office (he is a solicitor), by which the most full and ample powers were expressed to be given to his wife. While

TELEGRAPH this was being done, Dr. Lamrock, his medical adviser, was

consulted as to whether it would hurt him to "sign a document,"

McLAUGHLIN to which he replied, " No, if it did not upset him." Dr. Lamrock

at first thought it improper that a man in the plaintiff's condition should be asked to do such a thing, but was advised by plain- tiff's managing clerk that it would be legal. Thereupon he told (No. 2).

the plaintiff that he had better do what was wanted and "sign his name." Plaintiff had previously told him that he would not sign his name at all. We infer from this evidence that some- one, probably the plaintiff"s wife, had once or oftener asked him to sign his name, and that he was unwilling to do SO. Finally, the power of attorney, having been prepared, was taken in a closed envelope to plaintiff's wife, who on the following day or the day after gave it to the plaintiff's son, with a request that he should try to induce his father to sign it. There is not in the whole of the evidence any suggestion that the power of attorney was ever read to the plaintiff; or its contents brought to his mind. His managing clerk, by whom it was prepared, was not allowed to see him, and the agent chosen to induce the signature was his son, a lad of 17, who only knew that the document, which up to that time he had not seen, and which he never read, was one purporting to give authority to carry on the plaintiff's business. To our minds this evidence points irresistibly to the conclusion that those by whom the power of attorney was prepared thought (having perhaps been SO advised), that it was immaterial whether the plaintiff did or did not understand the nature of the document which he was to sign, but that his signature would be equally effectual in either case, and that they thereupon waited, not for a lucid interval in which he would be capable of understanding what he was doing, but for an occasion on which he would be sufficiently tractable to be induced to sign his name to anything put before him. This occasion was found on 24th October. We see no reason to doubt the substantial accuracy of the account given of the events of

1 CLR 279

that day by the witness J. Harley McLaughlin. On the following day the plaintiff's medical adviser asked him if he had signed "the paper," to which the plaintiff replied that he had. There is McLAUGHLIN no evidence to show that he retained any recollection of having done anything more than sign " a paper," or that he had any knowledge until some time afterwards--when does not exactly appear-of having appointed his wife to be his agent.

To counter-balance the evidence the effect of which we have briefly stated, we find nothing except a suggestion that the plaintiff's wife might have asked him when sufficiently sane to understand her, to appoint her his agent to dispose of his property. But the suggestion is not supported by evidence, and in our opinion the evidence tends strongly to negative it. We feel our- selves, therefore, compelled reluctantly to come to the conclusion that when the plaintiff executed the power of attorney on 24th October, 1900, he had no knowledge of what he was doing, except that he knew that he was signing his name, which, under the circumstances, was, as described by Dr. Lamrock, a mere mechanical act. And we think it necessarily follows from all the circumstances of the case that his wife and his managing clerk were aware of the actual facts. The case therefore appears to us to fall within the class of cases in which a man signs his name to a document without any intention to execute such a document, and not under the class in which a man executes a document, intending to execute it, but induced to do SO by false representa- tions as to a collateral matter.

It is not alleged that after the plaintiff's restoration to reason his conduct was such as to afford any evidence of ratification of the acts of his self-constituted agent, either by acquiescence or otherwise. On the other hand, it is admitted that before his recovery the proceeds of the shares were applied for his benefit, partly in the maintenance of himself and his family. It was suggested that this fact operated, in some undefined way, as a bar to the suit. If, however, it does not operate by way of estoppel or acquiescence, it is difficult to see how it can affect the plaintiff's rights as against the defendants.

It follows that the defendants have failed to discharge the burden cast upon them of showing that they removed the plain-

1 CLR 280

titt's name from the share register by his authority, and that he

is entitled, as against them, to the specific relief claimed. It

McLAUGHLIN would, however, be an eminently unsatisfactory result of this

litigation if he were able to recover the shares themselves, and

TELEGRAPH also to retain the benefits which were conferred on him, although

without his consent or knowledge, by the application of the pro- ceeds of the shares. His counsel have expressly offered to give the defendants the benefit of these proceeds. And, on considera- tion, we think that the Court may, notwithstanding the limited relief that can be given in this suit, owing to the absence of (No. 2).

parties, make such a decree as will do, SO far as it can now be done, complete justice. If any obstacle exists, it is, in our opinion, one of form and not of substance, and is, we think, removed by the plaintiff's offer, as we will proceed to show. It seems clear that the defendants, being called upon to restore the plaintiff's name to the register, would be entitled to indemnity from the plaintiff's agent for any loss which they may sustain by reason of her implied warranty of the validity of the power of attorney (Starkey v. Bank of England, 1903 A.C., 114); and the amount of the indemnity would not, upon the facts now before us, be less than the amount realised by the sale of the shares. On the other hand, it seems that, under the circumstances of this case, the agent, who acted throughout honestly, but under bad advice, would be entitled, on the doctrine as to which the German Mining Co.'s Case (4 DeG., M. &G., 14), is the leading anthority, to stand in the place of the persons to whom the proceeds of the shares were paid, and who were either creditors in respect of existing debts contracted during the plaintiff"s sanity, or creditors for debts contracted in respect of necessaries for which he was liable under his implied authority. If they, or she in their name, sued him in respect of these debts, he could not, without ratifying her action, plead payment. She, therefore, suing in their name, would be entitled to recover from him the full amount SO expended, i.e., as we are told, the full amount of the proceeds of the sale of the shares, being the whole or part of the sum that she would be liable to pay to the defendants. The liability is, then, in substance a liability of the plaintiff, and although it is not a direct liability to the defendants, it is one of which they could indirectly, and by a

1 CLR 281

circuitous course, obtain the benefit. The plaintiff's offer, we think, enables the Court to dispense with this circuity of action (whether it could do SO without that offer or not), and SO to do complete McLAUGHLIN justice between the parties, SO far as is now possible.

For these reasons, we think that the decree appealed from must be reversed, and instead thereof there must be a declaration that the transfers of the shares in question by Ada Amanda McLaughlin, assuming to act as plaintiff's agent under the power of attorney, were invalid, and a direction that the defendants rectify their register by inserting the name of the plaintiff as the holder of 118 original shares and 39 new shares, and pay the plaintiff a sum equal to all the dividends which have been declared on the 157 shares since the removal of the plaintiff's name, together with sum equal to the proceeds of any fractional part of a new share to which he was entitled, and which was sold by defendants. The defendants must pay the plaintiff's costs up to and inclusive of the hearing. The plaintiff's submission to indemnify the defend- ants, to the extent of all moneys received by his pretended attorney as the proceeds of the shares in question, against any loss which they may sustain, or any liability which they may incur to other persons by reason of obedience to the decree, must be embodied in the decree. The cause will be remitted to the Supreme Court for the execution of this judgment. The respondents must pay the costs of the appeal.

Judgment was then delivered in

McLAUGHLIN v. THE VALE OF CLWYDD COAL MINING Co. LTD

GRIFFITH, C.J. The material facts in this case are not dis- tinguishable from those in the former case. For the reasons given in that case we think that the decree appealed from must be reversed, and instead thereof there must be a declaration that the transfers of the shares in question by Ada Amanda McLaughlin, assuming to act as the plaintiff's agent under the power of attorney, were invalid, and a further declaration that the plain- tiff is entitled to have the share register rectified by inserting his name as the holder of the shares, with a direction that the

1 CLR 282

defendants rectify the register accordingly, and pay to the plain-

tiff a sum equal to all the dividends which have been declared on the shares since the removal of the plaintiff's name. The defen- dants must pay the plaintiff's costs up to and inclusive of the hearing. A submission by the plaintiff to indemnify the defend- ants, to the extent of all moneys received by his pretended

McLAUGHLIN agent as the proceeds of the shares in question, against any loss

which they may sustain, or any liability which they may incur to other persons by reason of obedience to the decree, must be embodied in the decree. (No. 2).

The cause will be remitted to the Supreme Court for the execution of this judgment. The respondents must pay the costs of the appeal.

Lingen for the respondents, Daily Telegraph Newspaper Co., Ltd., then applied for a stay of proceedings pending appeal to the Privy Council. The Court has inherent power to stay proceedings.

[GRIFFITH, C.J.-Is there any case in which a stay of execution has been granted where there is no appeal as of right

Hodgkinson v. Travers, 1 B. &C., 257, and Howarth V. Walker (1903), 3 S.R. (N.S.W.), 235, are cases where this has been done.

[GRIFFITH, C.J.-In the last mentioned case the Privy Council had granted leave to appeal.]

This is a question of great importance, and is a case of novelty. The Court below came to a different conclusion.

[GRIFFITH, C.J.-It may be that the Privy Council will say it is only a question of fact. This is a Court of final resort. The Constitution says that its judgment shall be final and conclusive in such appeals as this.]

[BARTON, J., referred to the judgment of Stephen, A.C.J., in Howarth v. Walker (supru).]

We are willing to submit to any terms the Court may impose. Sheppard for respondents, the Vale of Clwydd Coal Mining Co., followed. This is not a final appeal, because we have the right to apply to the Privy Council for special leave. That right is a limitation upon the statement in the Constitution that this shall be a Court of final appeal.

1 CLR 283

GRIFFITH, C.J. There is no doubt that the Court has power to stay execution of its judgments, but in this case the Constitu- tion has provided that the Court's decision shall be final and McLAUGHLIN conclusive. It is true that the Judicial Committee may give leave to appeal from our judgment. Under the system of appeals from State Courts to the Privy Council the appeal lay as of right, Co. but it is absolutely unheard of to stay proceedings upon the McLAUGHLIN judgment of a Court from which there is no appeal as of right. To stay execution because the Court doubted whether it had given a proper judgment would be unworthy of a Court of appeal. The applications must be refused.

Solicitor, for appellant, W. Morgan. Solicitors, for Daily Telegraph Newspaper Co., Ltd., Laurence &Laurence.

Solicitor, for Vale of Clwydd Coal Mining Co., Ltd., Mark Mitchell. Connection

[HIGH COURT OF AUSTRALIA.] DELOHERY

PERMANENT TRUSTEE CO. OF NEW

RESPONDENTS.

SOUTH WALES Prescription-Ancient lights-Enjoyment for twenty years and

tion of lost grant-Rebutting evidence-Lairs of England introduced into New South Wales by first colonists-Laws and Statutes of England capable of being applied in New South Wales-9 Geo. IV., C. 83, sec. 24.

At the time of the passing of the Act 9 Geo. IV., c. 83, the English law of prescription as to ancient lights was a law which could be applied in New South Wales within the meaning of sec. 24 of that Statute, and, therefore, became part of the law of that colony by virtue of that section, even if it had not been brought with them to the colony by the first settlers.