C. P.]

NAOROJI V. THE CHARTERED BANK OF INDIA, AUSTRALIA, AND CHINA.

common law or revenue side of the said Court of Exchequer or relating to any other matter or thing usually transacted out of court, although the said courts have no jurisdiction therein, in like manner as if the judge transacting such business had been a judge of the court to which the same by law belongs.

The rule was obtained upon the ground (inter alia) that Willes, J., being a judge of the Court of Common Pleas, had no jurisdiction to make the present order, the action being in the Queen's Bench, for that the 10th section of 30 & 31 Vict. c. 142, only authorised it to be made by "a judge of the court in which the action is brought."

McIntyre now appeared in support of the order of the judge, and he contended that the learned judge had power to make the order, and that the statutes of the 11 Geo. 4 & 1 Will. 4, c. 70, s. 4, and the 1 & 2 Vict. c. 45, s. 1, gave him ample powers for

the purpose.

Denman, Q. C. and Thesiger appeared in support of the rule, and contended that the learned judge had no power to make the order, and that the statutes of the 11 Geo. 4 & 1 Will. 4, c. 70, and the 1 Vict. c. 45, do not apply.

[C. P.

This action was brought to recover from the defendants the proceeds of certain bills of exchange received by them on account of the plaintiffs, under the circumstances set out in a special case, of which the material parts were these :-

The plaintiffs are merchants, who, up to the month of June 1866, carried on business in London, having a branch establishment at Bombay.

The course of the plaintiffs' business necessitated the drawing of a large number of bills of exchange by the plaintiffs on certain native firms at Bombay aforesaid, which said bills were transmitted to Bombay for acceptance, and the proceeds of which, as they respectively became due, were collected there on behalf of the plaintiffs, and were remitted to England for the plaintiffs.

The plaintiffs were accustomed to hand such bills in batches, as they were drawn, to Messrs. R. H. Hunter and Company, agents of the plaintiffs in London, to be transmitted to Bombay, and collected there.

In handing these bills to the said Messrs. Hunter and Co. the plaintiffs gave no directions, and expressed no wishes as to the persons through whom or the means whereby they should be transmitted COCKBURN, C. J.-I think this rule ought to be to and collected at Bombay; Messrs. Hunter and discharged, except that, instead of the cause being Co. invariably employed the defendants for that purremitted to Newtown, it should be sent to the neigh- pose, and the plaintiffs were fully aware that they bouring court of Oswestry. As to the first objection, did so, and did not at any time make any objection namely, that the power under the 10th section of the thereto. The defendants remitted the proceeds of 30 & 31 Vict. c. 142 is limited to a judge of the the bills which they had collected, by their Bombay court in which the action is brought, I cannot at all branch remitting to the defendants drafts drawn take that view of the question. The Legislature, by that branch in plaintiffs' favour on the City in passing that Act, must be taken to have been Bank, and by the defendants, on receipt of such aware of the previous legislation, which gives a drafts, handing them, together with a letter from judge of one court a power to act for the others. If the defendants, to Messrs. Hunter and Co., who this power did not exist, it would be exceedingly in- delivered the drafts, together with a copy of the convenient, and without any reason whatever, espe- letter, to the plaintiffs. Messrs. Hunter and Co. cially when the judges are upon their circuits. I generally delivered the drafts and the copy of the see no reason why a judge should not have the power letter on the day on which they received them, contended for; but, on the contrary, every reason but if they received the drafts and letter late in the why he should have it, and I believe the statutes day, the delivery of the drafts and copy sometimes cited fully give it to him. did not take place till the following morning. No objection was made by Messrs. Hunter and Co. or by the plaintiffs to the Bombay branch remitting Rule discharged-Cause to be remitted to the the proceeds to the defendants instead of direct to Oswestry County Court.

BLACKBURN, and HANNEN, JJ., concurred.

Monday, May 4.

Messrs. Hunter and Co.

On the 18th May 1866 Messrs. Hunter and Co. handed to the defendants eleven bills of exchange drawn by the plaintiffs on different firms in India; "which," as they said in a letter of that date to the defendants' manager, we shall feel obliged by your forwarding by to-day's mail for collection under the following arrangement, as agreed to

66

NAOROJI AND ANOTHER V. THE CHARTERED BANK between yourselves and us, viz., that on the money

OF INDIA, AUSTRALIA, AND CHINA.

Mutual credit-Employment of bank to collect payment
B. L. C. A. 1849, sect. 171-B. A. 1861, sect. 197.
The employment of a bank by the drawer to collect the
payment of bills of exchange is sufficient to create a
credit by the drawer to the bank within the meaning
of the mutual credit clause of the B. L. C. A. 1849.
The plaintiffs, a firm of merchants in London, employed
the defendants to collect the payment of their drafts
upon their customers at Bombay; before the bills were
paid to the defendants' bank, the plaintiffs executed a
deed of inspectorship under the B. A. 1861, to which
the defendants were parties in respect of a large sum
due from the plaintiffs to the defendants:
Held, that notwithstanding the power of the plaintiffs
to have revoked their authority to the defendants before
payment took place, these circumstances created a
mutual credit between the parties; and that the
defendants had a right to set-off the amount of the
sums paid them on the plaintiffs' drafts against the
debt of the plaintiffs to them."

for these bills being paid to your Bombay branch, the manager of your branch shall at once telegraph you to that effect, when you will thereupon pay the amount received here to us on account of Messrs. Dadabhai Naoroji, and Co. in cash, less" commission, discount, and brokerage. This was answered the following day by the defendants' manager, who acknowledged the receipt of the drafts," all of which," he said, "we forwarded for collection by

yesterday's mail to our agent, to whom also we communicated your instructions regarding them." On the 4th June 1866 Messrs. Hunter and Co. handed to the defendants a further batch of fourteen bills drawn by the plaintiffs upon the same arrange ment, and again on the 18th June a further batch of four bills, all of which were forwarded to Bombay by the defendants in the same way.

There never was any arrangement between Messrs. Hunter and Co. and the plaintiffs that the former should hold the drafts delivered to them by the defendants as a security, and they never claimed so to hold them. Messrs. Hunter and Co. acted for the plaintiffs as insurance brokers and otherwise,

The defendants have actually collected and actually received certain sums of money amounting in the whole to 32487. Os. 9d. sterling in respect of eleven of the drafts forwarded as above stated, but they have received nothing whatever in respect of the remaining twenty bills, which were either refused acceptance or dishonoured at maturity, and it is to recover the proceeds of those eleven bills, amounting to 32481. Os. 9d. that this action was brought.

C. P.] NAOROJI AND ANOTHER v. THE Chartered Bank of IndIA, AUSTRALIA, AND CHINA. [C. P. but the plaintiffs never were indebted to Messrs. | the plaintiffs to make the condition of mutual Hunter and Co., except occasionally upon the credits between the parties according to the statute. account current between them, the balance of which The plaintiffs had power under the inspectorshipwas sometimes against the plaintiffs to the amount deed to prevent the authority they had given to the of from 500l. to 1000l. defendant from resulting in a debt; they might have stopped them from collecting any of the bills; and if the power given by the bankrupt to the other person may or may not result in a debt according to the will of the bankrupt, it cannot be said to be a credit within the meaning of this section. A servant is not in a position to be said to have credit from his master, when he is sent to a bank to cash a cheque, and bring the money to his master. The case of Easum v. Cato, 5 B. & Ald. 861, went so far as to decide that a credit, the tendency of Payment was received at Bombay by the defen- which is to result in a debt, is within the mutual dants' branch upon three of these bills before the credit clause, and that it is not necessary that 29th June 1866, upon one of them on the 16th July, it should absolutely end in a debt; but it is and upon the remaining seven after the 19th July. nowhere held sufficient to be included in that On the 29th June 1866 the plaintiff's firm stopped clause, if it be optional on the part of the bankrupt payment, and on that day executed an inspectorship- to stop the credit. The effect of Young v. The Bank deed to which the defendants are parties, and it is of Bengal, 1 Moore, P. C. Cas. 150, establishes my admitted that the said deed is a valid and binding contention. Parke, B. comments upon this case in deed under the 192nd section of the B. A. 1861. his judgment in Alsager v. Currie, 12 M. & W. 758; The said deed was on the 19th July duly registered" another reason " for the decision of the Privy in accordance with the provisions of the statute. Council, he says, "is that it was the duty of the At the time when the plaintiffs' firm stopped pay-assignees in that case to redeem the paper immement as above mentioned, the defendants were and still are the indorsees and holders for value of six several bills of exchange drawn upon and accepted by the plaintiffs' firm, and divers sums of money were at the commencement of this suit and still are due and unpaid to the defendants in respect of the said six bills, amounting in the whole to 83357. 1s. 8d. The question for the opinion of the court is, whether, under the circumstances above stated, the defendants are entitled to retain the whole or any part of the said sum of 32481. Os. 9d., the proceeds of the said eleven bills of exchange collected on behalf of the plaintiffs, as a set-off or otherwise against the said sum of 83357. 1s. 8d. due to the defendants on the said six bills of exchange held by them.

If the court shall be of opinion that the defendants are not so entitled, judgment is to be entered up for the plaintiffs for such sum as the court shall direct, together with costs of suit.

If the court shall be of opinion that the defendants are so entitled, then judgment is to be entered up for the defendants, with costs of suit.

Watkin Williams (with him McCleod) argued for the plaintiffs.-By the 197th section of the B. A. 1861, the execution of this inspectorship-deed by the plaintiffs had the same effect as an act of bankruptcy with regard to the 171st section of the B. L. C. A. 1849. The latter section is: "Where there has been mutual credit given by the bankrupt and any other person, or where there are mutual debts between the bankrupt and any other person, the court shall state the account between them, and one debt or demand may be set against another, notwithstanding any prior act of bankruptcy committed by such bankrupt before the credit given to or the debt contracted by him; and what shall appear due on either side on the balance of such account, and no more, shall be claimed or paid on either side respectively, and every debt or demand hereby made proveable against the estate of the bankrupt may also be set off in manner aforesaid against such estate, provided that the person claiming the benefit of such set-off had not, when such credit was given, notice of an act of bankruptcy by such bankrupt committed." Upon the circumstances of this case, there were certainly no mutual debts between the plaintiffs and the defendants, and the credit was only by the defendants to the plaintiffs; there was no giving of credit by

diately; and if they had done so, no debt whatever
would have been due in respect of the loan." Lord
Brougham said in Young v. The Bank of Bengal,
p. 165, "In none of those cases (which were held to
be mutual credits) was there any uncertainty as to
the party said to receive the credit becoming sooner
or later a debtor in præsenti to the other; in none of
them did the existence of the relation of debtor and
creditor depend upon the pleasure of one party; in
all of them the party said to have given the credit had
placed the other party in a situation which he himself
could not alter-had given him funds of which he
could not dispossess him, or, which is the same
thing, a power over funds which he could not
revoke. The case is materially different where
one of the parties has actually become indebted
to the other, and can only cease to be so by paying
the debt; but the other has only acquired a
power which may end in making him debtor or not,
according as the donor of the power pleases. A. is
indebted to B., and B. is neither actually indebted
to A. nor under any liability which must needs end
in his being A.'s debtor, but has only been intrusted
with a power over A.'s funds, to be executed at any
future time if A. pleases; but if A. thinks proper,
never to be executed at all. Admitting that, in the
event of A. never revoking the power, a debt will
arise, the existence of that debt is defeasible; the
only certainty is that A., in order to revoke the
power, must do an act wholly unconnected with
giving B. any credit, viz., discharge a debt due to
B." Alsager v. Currie does not qualify the applica-
tion of this rule to the circumstances of this case.
[BOVILL, C. J.-You ask us to overrule Olive v.
Smith, 5 Taunt. 56; and Rose v. Hart, 8 Taunt. 499.]
The former has been overruled, and the latter raised
the question whether a deposit of goods could be
taken as a credit; it is an authority for saying that
cannot be so, but it is beside the present question:
(See Sm. L. Cas. vol. ii. 267.) It cannot be said
upon these cases that the employment of the plain-
tiffs of the bank in London to send out the drafts
and to collect the money on the bills, was a giving
of credit to the bank; the bank was no party to the
bills, and there was nothing in the transaction to
necessarily result in a debt to the plaintiffs. The
plaintiffs might have prevented such a result at any
time, and there would have been no such result if
the Bombay Bank had stopped payment; the defen-
dants were never intrusted with these bills in a
sense to bring them within the principle of set-off,

C. P.]

NAOROJI V. THE CHARTERED BANK for the plaintiffs might have withdrawn them before maturity. I do not dispute that the bank gave us credit on the other bills, and trusted us at the time of the stoppage. [BYLES, J.-It seems to me to be a mutual credit and trust between the parties. And there can be no doubt at all of the right of the bank to set-off the first three bills paid to them.]

The Court stopped Brown, Q. C. (with him Cohen) at the commencement of the argument for the defendants.

BOVILL, C. J.-In this case I am of opinion that the defendants are entitled to judgment. It is admitted that there were debts due from the plaintiffs to the defendants, or at all events credit was allowed to the plaintiffs by the defendants at the time of the execution of the inspectorship-deed by the plaintiffs; the only question is, whether credit was given by the plaintiffs to the bank. The plaintiffs employed the bank to receive the payment of bills drawn by them, and from the nature of that employment, it it were carried out, a debt must result. At the time of the execution of the deed, which was the same for this purpose as an act of bankruptcy, there was an authority to the bank from the plaintiffs to receive payment of their bills, and from that authority a debt would necessarily arise. Rose v. Hart is, as it seems to me, an authority exactly in point, and it has not been overruled nor shaken by any decision since; the judgment seems to have been given after consultation between the judges, and the language of the judgment had been carefully sifted. Although it has been ably argued by Mr. Williams that the case of Young v. The Bank of Bengal is more nearly applicable to the present case, yet I find that Lord Brougham there said, "There is nothing inconsistent with what has now been advanced in the decision, in the language used by the Court of Common Pleas in the case of Rose v. Hart, where the former case of Olive v. Smith was reconsidered, and a material qualification added to the generality of the doctrine which had there been laid down." Not only is the decision of the case of Rose v. Hart important to the present question, but also the language of the judgment is material: "Something more (8 Taunt. 506) is certainly meant here by mutual credits than the words "mutual debts" import, and yet upon the final settlement it is enacted merely that one debt shall be set against another. We think this shows that the Legislature meant such credits only as must in their nature terminate in debts, as where a debt is due from one party, and credit given by him to the other for a sum of money payable at a future day, and which will then become a debt. Or where there

OF INDIA, AUSTRALIA, AND CHINA.
[C. P.
company's paper for the reimbursement of the
bank, rendering to the insolvent any surplus; but
in the ordinary course of proceeding this was
debt would
no state of things from which a
arise. I look upon this as an illustration
of a kind of fourth proposition, which may be added
to the three mentioned in Rose v. Hart. The dis-
tinction between it and the present case is manifest,
for here the bank would receive the money due upon
the bills without any further proceedings on the
plaintiffs' part, and the authority to the bank would
in the natural course result in a debt from the bank
to the plaintiffs. Again, in Young v. The Bank of
Bengal, Lord Brougham said, as to the deposit with
the power to sell being a credit (1 Moo. P. C. Cas.
164): "If it was a credit, we may further observe
that it was so only to the extent of the surplus;
so far as regarded the moneys, to secure which the
deposit was made, that deposit was only in præsenti
a bailment, and even in futuro a payment, of Palmer
and Co.'s debt to the bank." Here the deposit of the
bills was never intended for the payment of a debt,
and that case is not applicable to the present. Upon
the view I take, it is not necessary for me to add
anything further; this case seems to me to be dis-
tinctly within the second proposition laid down in
Rose v. Hart, and not to be affected by the decision
of the Privy Council in Young v. The Bank of Bengal.
Upon the authority too of Alsager v. Currie, I am of
opinion that our judgment should be for the de-
fendants.

for

BYLES, J.-I am of the same opinion. By the last Bankruptcy Act this deed has the effect of an adjudication in bankruptcy, and the question is whether at the execution of the deed there existed a mutual credit between the parties; it is not necessary that there should be at the moment a reciprocal engagement of reliance. In 2 Geo. 2, c. 22, cross debts are spoken of as mutual debts, and are provided for only; but in subsequent statutes the words used are "mutual credits," which mean such power or authority as will, if left to itself, naturally terminate in a debt, and I have no hesitation in including the present circumstances in that definition. The only doubt which I have entertained during the hearing of the arguments for the plaintiffs was with respect to the case of Young v. The Bank of Bengal, which Parke, B. said in Alsager v. Currie, no doubt overruled the decision in Olive v. Smith; this, however, is clearly distinguishable from Young v. The Bank of Bengal, and our decision for the defendants seems to me to agree with all the authori ties on the subject.

KEATING, J.-I am of the same opinion. It seems to me that a mutual credit had been entered into between the parties, with the object on both sides that it should result in mutual debts, and this was so at the time of the execution of the deed, which for this purpose was an act of bankruptcy.

is a debt on one side, and a delivery of property with directions to turn it into money on the other, in such case the credit given by the delivery of the property must in its nature terminate in a debt, the balance will be taken on the two debts, and the words of the statute will in all respects be complied with." The latter of these two conditions of cir- M. SMITH, J.-I am of the same opinion. The quescumstances seems to me to be exactly like the pre- tion is, whether at the execution of the deed there sent case. The judgment proceeds then to put a existed a credit on the bank's part by the plaintiffs third proposition, which is held not to be a mutual within the meaning of the words used in the credit, and that is said to govern the case in discus- B. L. C. A. 1849, sect. 171, and I agree with the sion; "but where there is a mere deposit of pro- rest of the court that there was such a credit. perty, without any authority to turn it into money, Assuming that the original credit was revocable by no debt can ever arise out of it, and therefore it is the plaintiffs, still the credit was not revoked; not a credit within the meaning of the statute." The there was time for the plaintiffs to consider whether case of Young v. The Bank of Bengal may be said to they should withdraw their authority to the defendcome between the second and third of these pro-ants; they did not do so, the Act therefore gives positions; there a deposit of company's paper was made by the insolvent with the bank as a collateral security for sums borrowed, together with a written agreement authorising the bank, in default of repayment of the loan by a given day, to sell the

the defendants the benefit of the set-off. The object of the Legislature seems to have been that where mutual dealings take place between merchants, although in no way connected with each other, the credits which will end in cross debts should be the

C. P.]

THE CONSERVATORS OF THE RIVER THAMES v. HALL AND ANOTHER.

ground of set-off. I consider that our judgment is
in concert with the authorities generally.
Judgment for defendants.
Attorneys for plaintiffs: Freshfields.
Attorneys for defendants: Oliverson and Co.

THE CONSERVATORS OF THE RIVER THAMES v.
HALL AND ANOTHER.

Liability of shipowner-Compulsory employment of
pilot-Merchant Shipping Act 1854-Thames Con-
servancy Act 1857.

The 96th section of the Thames Conservancy Act 1857, by which "the owner of every vessel navigating the River Thames shall be and he is hereby made answerable for all trespasses, damages, spoil, or mischief, that shall be done by such vessel, or by any of the boatmen or other persons belonging to or employed in or about the same, by any means whatsoever, to any of the property or effects of the conservators," does not overrule the provision of the Merchant Shipping Act 1854, which exempts owners from liability for damage caused by acts of a pilot, when the employment of the pilot is compulsory.

The defendants' vessel, whilst in compulsory charge of a pilot, ran against, and caused considerable damage to a dredger of the plaintiffs:

Held, on a special case stated in an action by the conservators against the owners of the vessel, that the defendants were exempted from liability.

The plaintiffs at the time of the collision were and are the Conservators of the River Thames incorporated under the Conservancy Act 1857.

[C. P.

came into collision with the said dredger of the plaintiffs, and thereby damage, spoil, and mischief was done by the defendants' said vessel to the said dredger of the plaintiffs to the amount of 1201.

The question for the opinion of the court was whether the defendants were liable to the plaintiffs for the damage done by the said collision, or whether the defendants' vessel, being compulsorily in charge of a pilot, they were exonerated from liability by virtue of the provisions of the Merchant Shipping Act 1854.

If the court should be of opinion that the defendants were liable, then judgment was to be entered up for the plaintiffs for 1201., and costs of suit.

If the court should be of opinion in the negative, then judgment of nolle prosequi, with costs of defence, was to be entered up for the defendants.

The following were the plaintiff's points on the argument of the case:-1. That the facts disclosed by the special case show a right of action by the plaintiffs against the defendants under and by virtue of the provision of the 96th section of the Thames Conservancy Act 1857. 2. That the provisions of the Merchant Shipping Act 1854 did not, nor did the provisions of any other Act, exempt the defendants from such liability. 3. That even if the provisions of the Merchant Shipping Act 1854 are to be considered as unrepealed by the 96th or other sections of the Thames Conservancy Act 1857, the liability of the defendants to an action, by virtue of the provisions of such other statute, still remained. 4. That if the provisions of the Merchant Shipping Act 1854 would have operated, if unrepealed, to This was an action brought by the plaintiffs exempt the defendants from liability under the proagainst the defendants for the recovery of 1207. for visions of the Thames Conservancy Act 1857, the the damage, spoil and mischief done in the River provisions of the Merchant Shipping Act 1854 were, Thames to a dredger of the plaintiffs by the col-in that respect, repealed by the Thames Conservancy lision hereinafter mentioned between a vessel of the Act 1857, subsequently passed. 5. That the 96th defendants, called the Galicia, and the said dredger, and subsequent sections of the Thames Conservancy on the 24th Jan. 1867, and by the consent of the Act 1857 rendered the defendants, as the owners of parties, and by order, the following case had been the vessel, the Galicia, liable for the injury to the stated for the opinion of the court, without any dredger occasioned by the Galicia itself, without pleadings: :regard to the persons by whom the injury may have been occasioned, or even if not occasioned by any persons whomsoever. 6. That the provisions of the 96th section of the Thames Conservancy Act 1857 rendered the defendants, as owners of the Galicia, liable for the injury to the dredger, the same having been occasioned by persons belonging to, and then employed in and about the said vessel, the Galicia. 7. That the 96th section of the Thames Conservancy Act 1857, rendered the defendants as owners of the said vessel, the Galicia, liable for the injuries to the dredger through the default of the pilot, he having been a person then belonging to and employed in and about the said vessel, the Galicia, within the meaning of the Act. But if not, still the defendants would be liable, the injury having been caused by the boatmen and other persons belonging to, and then employed in and about the defendants' said vessel in carrying out the orders of the pilot. 8. That the 96th section of the Thames Convervancy Act 1857 applies, even although there may have been no fault or incapacity on the part of any person whatever, and the provisions of the 388th section of the Merchant Shipping Act 1854, do not apply to cases where a right of action for loss or damage is conferred by statute irrespective altogether of any personal fault or incapacity. 9. That the facts stated in the special case show a right of action in the plaintiffs at common law not taken away by any of the provisions of the Merchant Shipping Act 1854.

The defendants, at the time of the collision, were the owners of a vessel called the Galicia, within the true intent and meaning of the 96th section of the Thames Conservancy Act 1857.

At the time of the said collision the defendants' said vessel, the Galicia, was navigating the River Thames, and within the London pilotage district, was compulsorily in charge of a licensed pilot within the meaning of the Merchant Shipping Act 1854.

At the time of the said collision a certain dredger, then part of the property and effects of the conservators, within the true intent and meaning of the said last-mentioned section, was then lawfully lying moored in the River Thames, off Margaretness Point, and was then lawfully employed by the plaintiffs in and about their lawful and necessary business and duties as the Conservators of the River Thames.

Without any default whatever on the part of the plaintiffs or their servants, or any person or persons having the management of or in any way employed about the said dredger, or of the said dredger, the defendants' said vessel, the Galicia, while being steered, directed, and managed by the said pilot, and by and through the fault of the pilot and of his wrongful orders to the boatmen and other persons belonging to and then employed in and about the defendants' said vessel, and by the obedience of such boatmen and other persons to those orders, ran upon, against, and into the said dredger of the plaintiffs, and the defendants' said vessel thereby

The following were the defendants' points of argument:-1. That the damage in question having been occasioned by the fault of the pilot, the defendants are free from liability by virtue of sect. 388 of the