A MINING JUDGMENT.

Evening Star, Issue 11894, 23 May 1903, Page 8

A MINING JUDGMENT.

THE FOLEY'S EXTENDED CASE. AFFECTING THE LIABILITIES OF EXPERTS. The following is the full text of the judgment delivered yesterday by Mr Justice Williams in the case of Foley's Extended Dredging Company v. Cutten Bros, and William Faithful, a claim for £I,OOO damages, in which Mr Solomon and Mr Woodhouse appeared for the company, Mr Hosking for Cutten Bros., and Mr Chapman and Mr W. C. MacGregor for William Faithful : " The statement of claim in the present case, though it sets out a contract between the promoters of the plaintiff company and Cutten Bros., does not directly a.lege, nor would the facts set out in it, if proved, establish any contract between the plaintiff company and Cutten Bros. The only paragraph which could be relied on as tending to show that such a contract may huve existed is paragraph 8, but the facts there set out are plainly insufficient to establish its existence. Under the old system the statement of claim, so far as the plaintiffs relied on a contract, would have been demurrable. The cause of action alleged in the statement of claim is simp.y an action for deceit aga.nst each of tie defendants, based primarily on an allegation that each of them had "stated facts which they knew to be untrue. This allegation, so far as it relates to Cutten Bros., was withdrawn, and it was admitted that they had not personally been guilty of deceit. It stood, however, as against Faithful, and as it was alleged that he was the servant of Cutten Bros., and was acting in their business when he made the statement, Cutten Bros., though personally innoctnt, were charged.in an action for deceit as being responsible for the fraud of Faithful. At the hearing the plaintiffs stated that they intended to rely on a right of action against Cutten Bros, as well as on the action for deceit, and evidence was submitted as to what took place between the parties on the 19th and 20ih of October, 1900, m order to establish a contract as well as evidence to support the allegations set out in the statement of claim. It was not made quite clear at the hearing what the exact contract was upon which the plaintiff relied. It has, however, been made clear on the argument of the present motion that the alleged contract arises out of the transactions of the 19th and 20th of October. The statement of claim may be therefore taken as alleging three causes of action. First, against Cutten Bros., on a contract; secondly, against. Faithful in tort for deceit} thirdly, against Cutten Bros., Faithful's employers, in tort for the deceit of Faithful At the hearing six questions were put to the jury, which it was then supposed would, whtn answered, find all or nearly all the facts essential to enable the Court to pronounce judgment. If any ad ditional facts were required to be found it was left to the Court on further consideration to find them, and the question of damages was also left to the Court. The jury answered all the questions but the first, as to which they disagreed. The Court took their answers to the five questions, and, without the consent of the plaintiff, discharged the jury, leaving the first question unanswered. Now, the first question had nothing to do with the second cause of action. So far as the action against Faithful was concerned the evidence bearing upon the first question was inadmissible, and the question itself was irrelevant. And in the action in tort against Cutten Bros. it was necessary, before, they could be made liable, to establish the present liability of Faithful. It would be only if the liability of Faithful were established that the first question would become relevant as against Cutten Bros, as evidencing to some extent the relations that existed between Faithful and themselves. If, therefore, the answers of the jury to the five questions are sufficient to enable the Court to exonerate Faithful, or if the Court with these answers, and looking at the rest of the evidence, can exonerate Faithful, then the action against Faithful fails, and with it the cause of action in tort against Cutten Bros. In such a case the Court can discharge the jury without the consent of parties, give judgment for the defendant on the cause of action in tort, and leave the p'aintiff at liberty to go to jtrial again on the issue of contract if the* first question on which the jury disagreed turns out to be material to that issue. That is the exact derision in Marsh v. Isaacs (45, L.J.C.P., 505). There as here there were distinct causes of action. An action on a contract is an entirely distinct cause of action from an action for deceit, and raises an entirely distinct issue. A pla ; ntiff cannot by setting out a lot of facts, and by not distinguishing his causes of action, turn two distinct causes of action into one. The jury found first that Faithful was not instructed to do more than ascertain the suitability of the cla ; m to be worked bv means of a sluice box dredge; secondly, that he honestly believed the matters he communicated to the Cuttens in his letter of the 15th of October—that is, he believed that an inspection of the + >ra had been made with the results therein stated.' Thirdly, that the ordinary meaning of his letter was that he had either by himself or his servants made such inspection and obstained such results. Fourthly, that be did not write the letter with the express intention of conveying the above meaning, but he did write the letter negligently without considering the meaning that the words would be likely to convey. That is, that having been instructed to report only on the suitability of the claim to be worked by a particular kind of dredge, he added to his report particulars of the gold-bear-ing qualities of the claim, and stated them in such a way as to lead persons reading the report to believe that he had ascertained them either by himself or his servants. He, however, honestly believed in the truth of these particulars, and his stating them in such a way as would lead people to believe he had ascertained them for himself was not done with the intention of conveying that meaning, but was done negligently without considering the meaning his words would be likely to convey. I think these findings exonerate Faithful. The exact case Is put bv Lori Rmmwell in Deny v. Peek (14 A.C*, at p. 347). He there says: 'The alleged untrue statement is that the company have the right to use steam or mechanical power instead of horses, and that a saving would be thereby effected. Now, this is certainly untrue, because it is stated as an absolute right when in truth it was conditional on the approval of the Board r.f Trade and the sanction and consent of two local boards; and a conditional right is not the same as an absolute right. It is also-certain that the defendants knew what the truth was and therefore knew what they said was untrue. But it does not follow that the statement was fraudulently made. There are various kinds of untruth There is an absolute untruth, an untruth m itself that no addition or qualification can make true; as if a man says a thing he saw was black when it was white, as he remembers and knows. So as to knowing the truth. A man may know it, and vet it may not be present to his mind at the moment of speaking.* So Lord Justice Howen in Augus v. Clifford (1891, 2, Ch p. 471), speaking of the direction to juries in the common law action for deceit, says: + T - ni direction time out of mind was this: Did he know that the statement was false, was he conscious when he made it till T, false -' or ' ? not ' did °e make it without knowing whether it was false and without caring? Not caring i n that context did not mean not taking care • it meant indifference to the truth, the moral obliquity which consists in a wilful dfe regard of the importance of truth ' These observat.ons, made by two as high authorities on the question of common law as it is possible,, to find, more than cover the present case. Faithful's statement was by no means a direct, and absolute statement like the statements complained of in th P above cases. It was merely an indirect mad ™«™*J. expressed in such a ESS Z 5 inference would prow C dra ™ from jt In «*» to erT able the plaint.ff to succeed in tort either as against Faithful or as against Cntten Bros it; must be found that there lZ moral obliquity on Faithful's part The jury have as far as possible negatived the existence of any moral obliquity. Nor t*W the finding of the mrJ in coninnc-

tion with the rest of the evidence am I able to find that moral obliquity existed. Both the defendants are therefore entitled to judgment on the issue in tort as for deceit whatever happens to the claim against Cutten Bros, for breach of contract. As I have said, the statement of claim is not on its face a claim in contract, but in tort only, and is framed so as to charge Cutten Bros, with personal fraud as weU as Faithful. In that view it was quite proper to set out the whole connection of Cutten Bros, with the transaction from the very beginning, and so as to Ret out the alleged contract between the promoters and Cutten Bros. 'of the 20 th August. But when the charge of personal fraud against Cutten Bros, was abandoned the existence or non-existence of the contract between the promoters and Cutten Bros, became irrelevant to the charge of fraud. So, also, unless it was alleged or appeared that the company had somehow adopted or had become entitled as against Cutten Bros, to the benefit of the contract entered into by the promoters, the existence or non-existence of that contract was irrelevant to the consideration of whether Cutten Bros., after the formation of the company, had entered into some other contract with the company. As the statement of claim does not allege a contract with the company, the question is whether the evidence discloses such a contract. If it does the statement of claim would be treated as amendi d, or, if necessary, actually amended in accordance with the proof. The defendants contend that there is no evidence of any contract or that if there is some evidence the answer of the jury to the second question shows that the jury did not believe surh evidence. Taking the whole of the evidence given on behalf of the plaintiff company as tru a and uncontradicted, I do not think any contract is shown to have existed between the company and Cutten Bros. No doubt there is abundant evidence of the existence of a contract made on the 20th August between Mr Neill and the other promoters of the company with Cutten Bros that Faithful should inspect and report on the claim with reference to its gold-producing qualities. But. as was said by Kay. J., in re Dale and Plant, Limited (61, L.T., 206), it is settled by a series of decisions that it is impossible for a company to ratify anything that is done or any contract that is made before it comes into existence. Faithful's report, which, according to the plaintiff's contention, was made in pursuance of that contract, was received by Cutten Bros, and communicated to Mr Neil, and he had made a copy of it before the company was formed on the 19th of October. It was on the strength of that report that the promoters registered the company. If there had not been the inspection they had bargained for, and the report was misleading, the contract was broken, and a right of action had then and there aicrued to the promoters. If, on the other hand, Cutten Bros had performed their contract by causing Faithful to impect, and had communicated his report to the promoters, the promoters would have become liable to pay Cutten Bros, the amount said to have been stipulated for. That was the state of things on the afternoon of the 19th of October, whin, after the company had been registered, it is alleged that Mr Fred. Cutten attended a meeting of the directors of the company at which Messrs Neill, Ferguson, Bithune, Curtis, Guthrie, and Sidey were present, and produced and read the report. Mr Cutten was asked to let them have the report for publication. He said he would send a copy, and the next day he accordingly sent a copy to the secretary of the lompany. All the above gentlemen who were present with Mr Cutten had been the promoters of the company. They had all become aware of the contents of the report before the company were registered. Messrs Cutten Bros, had not then been appointed engineers of the' company, but Mr Fred. Cutten attended the meeting in his profes--8 onal capacity, and was aware that the company were about to act on the strength of the report Mr Cutten denied having been present at the meeting of the 19th, but in considering whether there is any evidence of a contract, I of course assume the testimony of the plaintiff's witnesses to be correct. I see in the above circumstances no evidence whatever of any contract with the company. The company became under no obligation to pay for the report If any such obligation existed it was the obligation of the persons who as promoters had contracted to pay for it. That obligation was not transferred from them to the company. The liabilities and the rights in respect of the report were the rights and liabilities of the promoters only. The persons who as promoters had contracted for the report, and who were entitled to it, asked that the report be forwarded to the company. As directors only they had no right to ask anything of the kind. The highest it can hs put is that these gentlemen in their douhle capacity of being as promoters entitled to the report, and, being as directors de*irous of procuring it for the company, ask.d .Mr Cutten to let the company have it, and he acceded to their request" and forwarded a copy to the company. There wa* no intention on the part of Cutten Bros, to contract with the company, and there was no consideration to pass from the company so as to enable the company to treat the statements in the report as" a promise or warranty. In order that these statements may render Cutten Bros, liable or bind them, it must appear either that there was fraud or that there was an estoppel. Fraud has been expressly negatived. Cutten Bros, might in some circumstances be estopped from denying the truth of the statements in the report, but an action cannot be founded on an estoppel. The claim of the plaintiff! company here is based not on the truth of the statements in the report, but on their falsehood. The distinction is pointed out in the case of Low v. Bouverie (1891, 3, Ch. 82). Taking the above view, it becomes unnecessary to decide whether the finding of the jury on the second question submitted to them could be taken when they had left the first question unanswered. I think, however, that it could. The questions put to the jury were called issues, but they were not issues in any legal sense. They were simply questions put to the jury with a view of determining* as far as possible all questions of fact in dispute which appeared to be relevant to the inquiry so as to enable the Court to give judgment upon the facts and the law. If, on consideration, any question turns out not to be relevant to the inquiry-, and to have no effect whichever way it is answered, or, if it i.<not answered at all, I see no reason why the jury should be called upon to answer it. Nor, if they cannot agree on an answer to that particular question, ran I see why the Court could not act upon their answers to the other questions if such answers enable the Court to pronounce judgment. For the above reasons lam of opinion that all the defendants are entitled to judgment. Costs to each defendant (Cutten Bros, being one defendant) as per scale on claim for £I,OOO, £l2 12s a dav to each defendant for five extra davs £8 8s to Cutten Bros, for second counsVl.' Disbursements and witnesses' expenses to bo fixed by the registrar."