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LIABILITY OF A MASTER TO THIRD PERSONS FOR THE ACTS OF HIS SERVANTS.
A MASTER is liable to third person for his servant's tortious acts in the course of his employment.
The principle is expressed in the authorities in many ways. For example, it is said, "the master is answerable for the act of his servant, if done by his command, either expressly given or implied" (a); a statement of the law which is open to exception, because, as will be seen, a master may be responsible for acts done contrary to his commands. Sometimes it is said, "the law casts upon the master a liability for the act of his servant in the course of his employment" (b), or the master is "considered as bound to guarantee third persons against all hurt arising from the carelessness of himself, or of those acting under his orders, in the course of his business" (c). Masters, it is also said, are liable for the conduct of their servants when "acting within the scope of their authority or the normal duties of their employment" (d); when "actually engaged on their master's business" (e), or when acting "as their agents" (ƒ), “with their master's authority, and upon their
(a) Blackstone, 1 Com. 417. (b) Willes, J., in Limpus V. General Omnibus Co. (1862), 1 H. & C. 539.
(c) Lord Cranworth, in Bartonshill Coal Co. v. Reid (1858), 3 Macq. 283; Burns v. Poulson (1873), L. R.
8 C. P. 563.
(d) Stevens v. Woodward (1881), 50 L. J. Q. B. 231.
(e) Willes, J., in Patten v. Rea (1857), 2 C. B. N. S. 607. (f) Williams, J., ditto.
business" (g); " for negligences and omissions of duty of their servant, in all cases within the scope of his employment" (h), “in the ordinary course of business ” (i), “in the course of the exercise of their duties" (k), "in the course of the service and for his (the master's) benefit" (l), in the master's business and "within the scope of the probable authority which must be supposed to be given to the servant" (m)," within the scope of the power or confidence reposed in the servant" (n), or "in the particular or general employment of a servant" (o). All of these expressions are somewhat ambiguous, though they have been elucidated in a long series of decisions. They are various modes of expressing the fact that, in the case of masters of servants, the maxim, culpa tenet suos auctores, does not hold good; that there is an exception to the general rule, that no one is responsible for any conduct but his own; and that masters are answerable to third parties or strangers for the acts of their servants when engaged in or about their business (p).
This liability is not confined to acts of negligence, though they are the torts for which masters are most frequently held responsible. The liability extends to all other torts-for example, to fraud-if committed within the scope of a servant's duties.
The rule which is now established is, to quote the words of Willes, J., in Barwick v. The English Joint-Stock Bank (q)— an action against a bank for fraudulent misrepresentation on the part of its manager-" that the master is answerable for every such wrong of the servant or agent as is committed in the course of the service and for the master's benefit, though
(g) Cockburn, C.J., in Patten v. Rea (1857), 2 C. B. N. S. 607.
(h) Story on Agency, s. 423. (1) Edwards v. London and NorthWestern Ry. Co. (1870), L. R. 5 C. P. 445.
(k) Walker v. South-Western Ry. Co. (1870), L. R. 5 C. P. 640.
(7) Willes, J., in Barwick v. English Joint Stock Bank (1867), L.
R. 2 Ex. 259.
(m) Bayley, J., in A.-G. v. Siddon (1830), 1 Tyr. 41.
(n) Mechanics Bank v. The Bank of Columbia, 5 Wheaton, 326.
(0) Mackenzie v. MacLeod (1834), 10 Bing. 385.
(p) See Appendix B. as to reasons for the rule.
(9) (1867). L. R. 2 Ex. 259.
no express command or privity of the master be proved." This statement of the law has not been universally or readily acquiesced in. Several judges have been reluctant to admit that it is true of certain torts, and in particular of fraud. Why should A. be responsible for the false statements of B. which he never in fact authorised, and which may be contrary to his wishes? Fraud without any fraudulent mind in the person who is made answerable for it, seems nonsensical. "I do not understand legal fraud," said Bramwell, L. J., in Weir v. Bell (r); "to my mind it has no more meaning than legal heat or legal cold, legal light or legal shade." It is, however, too late to question the doctrine stated in Burwick v. English Joint-Stock Bank. It is in accordance with a long series of decisions beginning with Hern v. Nichols (s). Mr. Justice Willes's statement of the law has frequently been cited with approval (t); and it has been acted upon more than once by the House of Lords and the Privy Council (u). The doctrine may rest upon a fiction; but if so, it is a fiction in accordance with others which are well recognised—the doctrine, for example, that notice to the agent may be notice to the principal, and that a servant's knowledge may sometimes be treated as the master's (x). It is as easy to admit that A., though morally innocent, is legally guilty of fraud through his servant or agent, as it is to admit that A. has been negligent through his servants, when in point of fact he has not been wanting in prudence, and when they have done in their folly that which he in his wisdom forbade. The rule just stated applies to corporations or companies.
(r) (1877), L. R. 3 Ex. D. 238. (s) (1701), 1 Salk. 289.
(t) Mackay v. Commercial Bank of New Brunswick (1874), L. R. 5 P. C. 394; Swift v. Winterbotham (1873), L. R. 8 Q. B. 244.
(u) Bank of New South Wales v. Ourston (1879), L. R. 4 Ap. 270; and Houldsworth v. City of Glasgow Bank 1930), L. R. 5 Ap. 317.
e) Baldwin v. Cassella (1872), L. R. 7 Ex. 325; Stiles v. Cardiff
It extends to companies or corporations-such as Dock Trusts entrusted by the State with the performance of certain duties, although the revenues are not appropriated to the use of the individual corporators, or to that of the corporation itself (y). Companies have been held responsible for creating a nuisance, such as obstructing a highway (2); for publishing by telegram a libel (a); for wrongful arrests or malicious prosecutions (b); for wrongful detaining bank notes (c); for wrongful assault by their servant (e); for reckless driving (f); and for infringing a patent (g).
There was a reluctance, especially in the Chancery Courts, to impute to companies the frauds of their directors or servants. How could directors, it was asked, be the agents of the company, their employer, to cheat or deceive? In Re North of England Joint-Stock Banking Company, ex parte Bernard (h), Parker, V.-C., said that they could not be the company's agents for that purpose. So in Dodgson's Case (i), Knight-Bruce, V.-C., said, that "whatever fraud there may be, if fraud there be, it is charged against the directors, who cannot be the agents of the body of shareholders to commit a fraud." Similar expressions were used by Page Wood, V.-C., in Re Athenæum Assurance Company (k); Romilly, M.R., in Duranty's Case (1); Lord Chelmsford in Re Hull and London Life Assurance Company (m). In the Western Bank of Scotland v. Addie (n), decided in 1867, Lord Cranworth said, "An attentive consideration of the cases has
(y) Mersey Dock Trustees v. Gibbs (1866), L. R. 1 H. of L. 93.
(z) R. v. Great North of England Ry. Co. (1846), 9 Q. B. 315.
(a) Whitfield v. South-Eastern Ry. Co. (1858), E. B. & E. 115; 27 L. J. Q. B. 229. See also R. v. City of London, cited in note to Whitfield v. South-Eastern Ry. Co.
(b) Edwards v. Midland Ry. Co. (1880), L. R. 6 Q. B. D. 287.
(c) Yarborough v. Bank of England (1812), 16 East, 6.
(e) Eastern Counties Ry. Co. v.
Broom (1851), 6 Ex. 314; Bayley v.
(f) Green v. London General Omnibus Co. (1859), 7 C. B. N. S. 290. (g) Betts v. De Vitre (1868), L. R. 3 Ch. 429.
(h) (1852) 5 De G. & Sm. 283; 21 L. J. Ch. 468.
(i) (1849), 3 De G. & Sm. 85.
(1) (1858) 26 Beav. 268
(m) (1858), 2 De G. & J. 275.
convinced me that the true principle is, that these large corporate bodies, through whose agencies so large a portion of the business of the country is now carried on, may be made responsible for the frauds of those agents to the extent to which the companies have profited from those frauds; but that they cannot be sued as wrong-doers, by imputing to them the misconduct of those whom they have employed."
In Common Law pleading the fraud of the agent was treated by a sort of fiction as the fraud of the principal. Courts of Common Law were therefore more disposed to entertain the view that a company might be sued for its servants' or agents' fraud. Courts of Equity were familiar with the doctrine that a principal, though innocent, might suffer for the fraud of an agent to the extent to which he was benefited thereby (o). They were, therefore, disposed to confine the liability of companies for the fraudulent representations of directors to those cases in which the former were benefited. It is submitted that the words cited above. from the judgment of Willes, J., express the true rule. Strange though it may seem to attribute malice, fraud, or an intention of any kind to a corporation, practical exigencies have required the law to be moulded so as to meet the development of joint-stock enterprise. Not finding a remedy to hand, the Courts have made one (o).
(0) See remarks of Selborne, L. C., in Houldsworth v. City of Glasgow Bank (1880), L. R. 5 Ap. 326; Lord Westbury in Conybeare v. New Brunswick Ry. Co. (1862), 9 H. of L. C. 725; Sir Montague Smith in Mackay v. Commercial Bank of New Brunswick, L. R. 5 P. C. 411. It was once doubtful whether any action for trespass lay against a corporation, Kyd. 1, 223. In trespass, capias and exigent are the proper processes. How, it was argued, could they be employed against a corpora tion? Similarly Holt, C.J., laid it down that a corporation was not indictable, 12 Mod. 559. The conrary is now clear; R
North of England Ry. Co. (1846), 9 Q. B. 314; R. v. Scott (1842), 3 Q. B. 547. Some judges in modern times have adhered to the old doctrine in regard to acts which appeared to imply malice, e.g., Alderson, B., in Stevens v. Midland Counties Ry. Co. (1854), 10 Ex. 352. See, however, Henderson v. Midland Ry. Co. (1871), 20 W. R. 23; Edwards v. Midland Ry. Co. (1881), L. R. 6 Q. B. D. 27; Whitfield v. SouthEastern Ry. Co. (1858), E. B. & E. 122; Green v. London General Omnibus Co. (1859), 7 C. B. N. S. 290. The fact is that the law has been altered, and that various fictions have been resorted to in order to conceal