COURT ASKED TO DECIDE WHO SHOULD SUFFER.

Star (Christchurch), Issue 18684, 13 February 1929, Page 9

COURT ASKED TO DECIDE WHO SHOULD SUFFER.

INTERESTING POINT IN A CIVIL ACTION. A question of which of two innocent parties should suffer because of fraud alleged to have been committed by a third party was involved in a civil action heard in the Magistrate’s Court to-day before Mr H. A. Young, S.M. N. S. Anderson, trading as the Builders’ Timber Company (Mr Goodman) claimed from C. R. Henshall, builder (Mr K. M. Gresson) the sum of £7l 2s 3d for goods supplied. It was admitted that the defendant had paid the whole of the amount claimed to a man named A. M’Donald, employed as a canvasser by the plaintiff. The question before the Court was which of the two parties should seek to recover the money from M’Donald.

Mr Goodman said that timber was supplied by the Builders’ Timber Company to the defendant, the order being obtained by a man called M’Donald, a canvasser employed on a commission basis. Mr Goodman explained in detail the items in the claim and stated that evidence would be given that payment was made to M’Donald, who did not pay the money over to Anderson. Further accounts for the full amount were sent to the defendant, who made no effort to inform Anderson of the payments he had made to M’Donald.

About August 1, Henshall informed plaintiff’s firm that he had paid certain amounts to M’Donald. Anderson informed Henshall that M’Donald had no authority to collect accounts for him. Later Mr Barnett, Anderson’s assistant, saw M’Donald, who made a statement in writing that he had not received any cash from Henshall. When Henshall was informed of this statement he produced receipts signed by M’Donald in pencil. The Magistrate asked if proceedings had been taken against M’Donald. Mr Goodman: No.

The Magistrate: Does he admit signing the receipts and getting the monej' ? Mr Goodman: Yes. Does he admit he had no right to collect the money?—Yes. Well, why was he not proceeded against? Mr Goodman said there were always certain difficulties irl regard to private prosecutions. If Anderson lost the case it would be for him to prosecute M’Donald, but if Henshall lost he should take the proceedings. The case had been dragging on since August last.

“ It is a case of two innocent parties coming before the Court and one of them has got to suffer,” Mr Goodman added. The Magistrate: If it is possible to get the money out of M’Donald these proceedings could be avoided. Mr Gresson said it was assumed that the money could not be got out of M’Donald. As far as the defendant was concerned he had paid the money to M’Donald. Mr Goodman: Inquiries have been made, and it seems pretty hopeless trying to get anything out of M’Donald. The Magistrate (to Mr Gresson) : Do you admit that the goods were supplied? Mr Gresson: Yes, and our sole plea is payment for them. Norman Smith Anderson, the plaintiff, gave evidence along the lines of Mr Goodman’s opening. During his evidence Mr Gresson remarked that the defendant had never received any account from Anderson except per M’Donald. For the defence, Mr K. M. Gresson said that the defendant had paid M’Donald as the accredited agent of the plaintiff’s firm. The money was paid to him following the telephoned order. “ I submit,” said counsel, “ that when there is such a fraud as this, the party to permit the fraud must suffer. Had the plaintiff submitted an account rendered to Henshall, the fraud would have been immediately apparent. The plaintiff says that such accounts were sent, but, if they were, they never reached Henshall. The plaintiff had introduced M’Donald to Henshall as their accredited agent.” Clyde Rolf Henshall, the defendant, said that he had got the goods, paid M’Donald and got a receipt in <;ach case. (Receipt produced.) M’Donald had said that, if witness settled up with him at the time, he could have an extra discount of 5 per cent. Witness seized upon the offer. Mr Goodman contended that M’Donald was not authorised to take payment on behalf of the plaintiff company. The onus was on the defendant to make sure that M’Donaid had the authority.

After hearing further legal argument, the Magistrate reserved his decision.