Kwok Wing v. Maytex Trading Co. (A Firm)
Read the full judgment text of CACV 60/1976 on BabelCite. This Court of Appeal judgment.
1. This appeal concerns eight dishonoured cheques. The plaintiff, now the respondent, Maytex Trading Company, sued the Texfarm Garments Factory Limited as first defendant and Kwok Wing as the second defendant. Judgment was given against both defendants. Kwok Wing now appeals.
Cited by 2 cases
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CACV000060/1976
Coram: Briggs, C.J., Huggins & Pickering, JJ.A. Date of Judgment: 22nd March, 1977. ----------------- JUDGMENT ----------------- 1. This appeal concerns eight dishonoured cheques. The plaintiff, now the respondent, Maytex Trading Company, sued the Texfarm Garments Factory Limited as first defendant and Kwok Wing as the second defendant. Judgment was given against both defendants. Kwok Wing now appeals. 2. The eight cheques were all drawn in favour of the plaintiff and were signed by the appellant. Each cheque has the name of the first defendant "Texfarm Garment Factory Limited" printed on its face and the number of the account is that of the Company's account. Each cheque was signed by Kwok Wing, the appellant, and surrounding his signature is the impression of a rubber stamp with the words "Texfarm Garments Factory Limited" (sic) above the signature and with a dotted line, and the word "Director" below the signature. The cheques were given in payment for goods supplied to the Texfarm Garment Factory Limited by the plaintiff. 3. There is no doubt in my mind that any ordinary business man looking at the cheques would conclude that they were the cheques of the Company and not the personal cheques of the appellant. The court below, however, relying largely on section 26(1) of the Bills of Exchange Ordinance and the case of Cheung Yiu Wing v. Blooming Textile Company Ltd. (1) found that the appellant was personally liable on the cheques and gave judgment against him. 4. In reaching his judgment the judge remarked that "Any person who puts his name to a cheque is, ipso facto, a drawer of the cheque unless he brings himself within section 26(1). Mr. Kwok has failed to do that and must therefore be one of the drawers." 5. Section 26(1) of the Bills of Exchange Ordinance reads as follows:-
6. Mr. Zimmern who appeared for the appellant, and who argued his case with his customary clarity, stated that the signature of Mr. Kwok on the cheques was not put there by Mr. Kwok as agent of the company. All he was doing was completing the composite signature of the company. This composite signature consisted of the impression of the rubber stamp together with his signature as Director. It was the Company which was signing and not Mr. Kwok personally. 7. As authority for this proposition, Mr. Zimmern quoted section 33 of the Companies Ordinance which is in the following terms:-
8. The leading case appears to be Chapman. v. Smethurst(2). That case dealt with a promissory note which was signed by the defendant. Above his signature was the impression of a rubber stamp which was used by the company of which the defendant was the managing director. The Court quoted the section of the Companies Act, which was then in force, and which was in terms identical to section 33 of the Companies Ordinance, and held that on the facts, the promissory note was the note of the company, and that the defendant only signed as part of the composite signature of the company. In effect, the company's signature consisted of its official stamp which was vouched for by the signature of its managing director. 9. The section which is equivalent to our section 26(1) of the Bills of Exchange Ordinance was not referred to in that case. The court in effect held that the managing director did not sign as the drawer of the cheque. He merely authenticated the official stamp of his company. The company was the drawer. 10. Many other cases were quoted in favour of this argument but I do not think it is necessary to go into them. 11. Despite Mr. Litton's very persuasive arguments I do not think that section 26(1) of the Bills of Exchange Ordinance applies to this case. Mr. Kwok did sign the cheques which, in Mr. Litton's words, means that he gave an unconditional order to the bank to pay out the amounts stated on the face of the cheques. Looking at the cheques themselves I think that they show that the intention of the parties was clearly that that unconditional order was not given by Mr. Kwok it was given by the company. 12. The case of Cheung Yiu Wing v. Blooming Textile Company Ltd.(1) was relied upon by the respondent. It was recognized in Chapman v. Smethurst(2) that in the words of Vaughan Williams, L.J.:-
13. The truth of those words became apparent at the hearing of this appeal when many cases with facts closely similar were cited to us. We were also referred to a lengthy passage in Cowen on Law of Negotiable Instruments in South Africa. 14. Each case will depend on its own facts. In the words of Cowen at page 157 of the work quoted above:-
15. In the Blooming Textiles Case(1) the facts were similar to but different from the facts of this appeal. In that case the cheques had the name of the company printed in two places. One, in large letters across the top of the cheque and, two, in smaller letters under the space intended to be used for the amount of the cheque in figures. Two directors signed the cheques but there were no words qualifying those signatures. They merely signed their names under the printed name of their company. The cheques were made out by a mechanical process which impressed the name of the company and the amount of the cheque in the place provided. It was held that the directors were personally liable since there was nothing to show that they had signed in a representative capacity. 16. The whole of that case was concerned with the question whether the directors had signed in a representative capacity. 17. The argument that Mr. Zimmern has advanced in this case is not referred to in that judgment. The position of the name of the company vis a vis the signature of the directors was such as to preclude a finding that they formed part of the composite signature of the company. In addition, both the names of the company were printed as part of the cheque. No rubber stamp or similar device was used and there were no qualifying words such as 'directors' written under the signatures of the two directors. 18. The distinction between these facts and the facts of the present case is narrow, but it is a valid distinction. 19. In the event, the appeal must be allowed and judgment must be entered for the appellant. The appellant is to have his costs here and in the court below.
Representation: Zimmern, Q.C. & R. Mayne (P.H. Sin & Co.) for appellant. Litton, Q.C. & R. Wong (Fairbairn, Kwok & Wang) for respondent. (1) (1975) H.K.L.R. 388. (2) (1909) 1 K.B. 927.
----------------- Coram: Briggs, C.J., Huggins and Pickering, JJ.A. Date of Judgment: 22nd March 1977. ----------------- JUDGMENT ----------------- Huggins, J.A.: The question raised here is whether the servant of a company who acts on behalf of the company in the execution of a document must, if he signs his name, necessarily do so not only as such servant but also as agent. There can be no doubt that if he executes by signing his name "for and on behalf of" the company he does so as an agent, but it is said that it is possible for him to place his signature on a document in such a way that he does not himself execute it at all. Thus in the present case the Appellant impressed on eight cheques a rubber stamp bearing the name of the company on one line, a row of dots on a second line and the word "Director" immediately below that. The row of dots was clearly intended to receive the signature of the director authorized to effect execution by the company, and in fact the Appellant did sign each cheque on that line. In the court below the learned judge, taking the view that the Appellant was intending to sign as agent of the company, felt himself bound by precedent to hold that there was no sufficient indication of the agency (see s.26 of the Bills of Exchange Ordinance), with the inevitable result that the Appellant was adjudged to be personally liable. Mr. Zimmern submits that the premiss was false and that the Appellant, on the evidence, was not intending to sign as agent of the company but merely to authenticate the impression of the rubber stamp, that impression and his signature together being what has been described as a "composite signature". 2. The learned judge no doubt thought he was upon solid ground because his earlier decision in Blooming Textiles Ltd. v Sun Sang Garment Factory Ltd. was upheld by the Full Court: see 1975 H.K.L.R. 388. However, that case is distinguishable. As I understood it the main argument there was that the appellant director had signed in a representative capacity, and it was sought to satisfy the court that he had, in the language of s.26, added words to his signature indicating that he signed for or on behalf of the company. The Full Court held on the evidence that he had added nothing to his signature. If the appellant's signature had been part of a "composite signature", s.26 would have been irrelevant. It is true that there was some suggestion that a "composite signature" was formed by the signature of the directors together with the barely legible impression of the company's name at the beginning of the line on which the amount of the cheque was stated, but, rightly or wrongly, it appeared to me that the positions of the signature and of the impression were such that it could not seriously be contended that they formed a "composite signature" and I did not refer to the argument in my judgment. I expressly left it open whether the impression of the company's name could be a signature of the company as a drawer. 3. There is direct authority for the conclusion which Mr. Zimmern invites me to reach and it is to be found in Nicolaides v Henwood, Son Soutter & Co. 1938 T.P.D. 390, where a similar rubber stamp was used. Solomon, J. said at p.394:
I think that correctly states the position and it is supported by Schaffer v Tubby, Smith & Co. 1924 1 D.L.R. 468. It is not necessary to refer in detail to all the other cases which have been cited to us, but I ought to mention the leading case of Leadbitter v Farrow (1816) 5 M. & S. 345, where Lord Ellenborough said at p.349:
That passage must be read in the light of the facts of the case and in my view it does not cover a signature as a mere authenticator as distinct from a signature as drawer. In Chapman v Smethurst 1909 1 K.B. 927 it was held that there was a "composite signature" although the name of the company and the words "Managing Director" were apparently impressed with different rubber stamps, but the case was argued on the basis that the promissory note there in question was not a joint, or a joint and several, promissory note but was the note of one party only. As Denning, L.J. pointed out in Lazarus Estates Ltd. v Beasley 1956 1 Q.B. 702, 710
For my part I cannot see why in theory it should not do so, although there are obviously serious practical difficulties which would make the practice undesirable. Wessels, J. said in Israelstam v Pillimer 1911 T.P.D. 781, 787:
4. One of the cheques in the present case is different from the others in that the signature of the Appellant appears a second time - to authenticate an alteration - and it there appears without the rubber stamp of the company. It is suggested that this, at least, has the effect of indicating that when the Appellant signed his name in the position normally reserved for the signature of the drawer he did so as a drawer and not merely as an authenticator. There is a degree of logic in the argument but I am not persuaded that such an inference is inevitable. Failure to authenticate an alteration may result in dishonour, but will not do so in every case. Strictly the alteration here should have been authenticated by the "composite signature", but it is difficult to believe that if the bank had paid the cheque to the Respondent the defendant company could successfully have sued the bank on the ground that the second signature of the company was incomplete: the Appellant signed in both places as authenticator. 5. For these reasons I would allow the appeal and enter judgment for the Appellant with costs here and below. 22nd March 1977. Representation:
Coram: Briggs, C.J., Huggins & Pickering, JJ.A. Date of Judgment: 22nd March, 1977. ----------------- JUDGMENT ----------------- Pickering, J.A.: The defendants in the original action gave the plaintiff eight cheques totalling in value almost half a million dollars. All were dishonoured and the plaintiff sued both the first defendant company and Mr. Kwok Wing, the second defendant and obtained judgment first against the company and subsequently against Mr. Kwok Wing who now appeals. 2. All the cheques were drawn in favour of the plaintiff firm and signed by Mr. Kwok Wing. Surrounding his signature on each cheque is the impression of a rubber chop with the words "Texfarm Garments Fty. Ltd." above the signature and below it a dotted line and the word "Director". In the bottom left hand corner of each cheque are printed the words "Texfarm Garments Fty. Ltd." and an account number. 3. In finding Mr. Kwok Wing personally liable upon the cheques the learned judge in the court below relied upon section 26(1) of the Bills of Exchange Ordinance, Cap. 19 and upon the case of Blooming Textiles Ltd. v. Sun Sang Garment Factory Ltd.(1) Section 26(1) of the Bills of Exchange Ordinance reads:-
4. It was the contention of Mr. Zimmern, for the Appellant, that the rubber stamp and the signature of Mr. Kwok Wing represented the composite signature of the company, that Mr. Kwok's signature was subscribed not as a drawer of the cheque but for the purpose of breathing life into the rubber stamp impression and that therefore section 26 of the Bills of Exchange Ordinance had no application. The matter was governed, Mr. Zimmern argued, by section 33 of the Companies Ordinance, Cap.32 which reads:-
5. Mr. Litton for the plaintiff firm urged that there was nothing in the Companies Ordinance to suggest that a company's signature could not be wholly constituted by a rubber stamp whilst acknowledging that Lord Denning Mr. R. in the case of Lazarus Estates Ltd. v. Beasley (2) had observed that whilst it had been held in the Court of Appeal in England that a private person could sign a document by impressing upon it a rubber stamp containing his own facsimile signature, it had never been held that a company could sign by its printed name affixed with a rubber stamp. As it seems to me such signature can only be regarded as inadequate containing, as it does, nothing to validate or authenticate the stamp which might well have been placed upon the cheque by the office boy. The commercial risks inherent in the view that a rubber stamp of itself can constitute the signature of a limited company are self-evident and militate strongly against such view. If however it be correct that the rubber stamp cannot of itself constitute the signature of the company, where, in the present case, as Mr. Zimmern rhetorically asks, is the signature of the company if that of Mr. Kwok Wing is held to be his own personal signature? Plainly in that event there is no signature of the company but that such signature existed upon the cheques has been acknowledged by the judgment given against the company. 6. For this reason alone I would allow the appeal but the matter is not without authority in other jurisdictions. In Chapman v. Smethurst(3) a promissory note signed "J.H. Smethurst's Laundry and Dye Works, Limited. J.H. Smethurst, Managing Director" was held to be the note of the company and not of Smethurst. The learned judge in the court below declined to follow that case partly upon the ground that in argument in the Chapman case no mention had been made of section 26(1) of the Bills of Exchange Act of 1882 but, for the reasons I have given, it does not appear to me that section 26(1) of our Bills of Exchange Ordinance, which is in identical terms, has any application. Again in Britannia Electric Lamp Works Limited v. D. Mandler and Company, Limited, and D. Mandler(4) a similar signature in the middle of a rubber impression was held not to be that of the person so signing but of the company. A somewhat similar result was arrived at in the case of Newborne v. Sensolid (Great Britain) Limited(5). 7. In South Africa a signature in precisely similar form to that in the present case was held to be that not of the individual but of the company in Nicolaides v. Henwood, Son, Soutter & Co.(6) In Australia in the case of the Electrical Equipment of Australia Limited v. Peters & Another(7) the rubber stamp bearing the company's name was followed by the signatures of a director and the secretary of the company without the words "Director" and "Secretary" appearing: the signature was nonetheless held to be a composite signature. In Canada in Schaffer v. Tubby, Smith & Co.(8) promissory notes impressed with the rubber stamp of the company followed by the signature of the President of the company and the contraction "Pres" and also by that of the secretary of the company and the contraction "Secy" was held to be a composite signature. In India in the case of Sreelel v. Lister Antiseptic Co.(9) a very similar result was arrived at. 8. All the above cases were quoted by Mr. Zimmern in addition to paragraphs 156 and 324 of the Second Restatement of American Law and all appear to support the original case of Chapman v. Smethurst.(3) 9. Mr. Litton, for the plaintiff firm, argued that when Mr. Kwok Wing signed the cheques he undoubtedly gave an unconditional order in writing to the bank to pay the respective amounts in the cheques to the payee, for the limited company, being inanimate, could not by itself do that. The effect of section 26(1) of the Bills of Exchange Ordinance, the argument continued, was that the mere addition of the word "Director" to the signature of Mr. Kwok did not exempt him from personal liability. I would agree that in signing Mr. Kwok gave an unconditional order in writing to the bank to pay but in the circumstances of the signatures that order was not the order of Mr. Kwok but the order of the company, the effect of Mr. Kwok's signature being merely to complete the signature of the company. Moreover, the mere addition of the word "Director" did not fail to exempt Mr. Kwok from personal liability as contemplated by section 26(1) because that section applies only where a person signs a bill as drawer, endorser or acceptor and Mr. Kwok was not signing as drawer but merely completing the signature of the company which was the drawer. The case of Dutton v. Marsh(10) is no authority to the contrary for in that case the directors of a joint-stock company signed their names to a promissory note, "We the Directors of the Isle of Man Slate Co. Ltd., do promise to pay J.D. $1,600 with interest at 6% until paid for value received". At one corner of the note the company's seal was affixed. It occasions me no surprise that the directors were held personally liable for the very tenor of the note "We the Directors" clearly points to personal obligation. Mr. Litton was on slightly firmer ground in his reference to the case of Cheung Yiu Wing v. Blooming Textile Co. Ltd.(11) where the directors were held personally liable. That case stands very much on its own facts however having regard to the form of the cheque there employed. In that case the name of the company appeared in large letters across the top of the cheque form and in smaller letters underneath the box intended for the amount to be written in figures. On the face of it the name of the company bore far less relation to the signature of the directors than in the present case where the signature is physically a component part of the company's order to its bankers. 10. It must be conceded that the view for which Mr. Litton contends is not without some authority notably in the Ontario case of Alliston Creamery(12) and the South African case of Moon & Co. Ltd. v. Eureka Store(13) but the mainstream of authority is in the opposite direction. 11. For the reasons I have given it does not appear to me that section 26(1) of the Bills of Exchange Ordinance assists the plaintiff and I consider that the learned judge was in error in saying that any person who puts his name to a cheque is, ipso facto, a drawer unless he brings himself within that section. 12. There is merit also, though by itself it could not be conclusive, in the consideration that the decision in the court below would appear to render Hong Kong out of line with the generally accepted interpretation of such a signature as that with which we are concerned and there is much to be said for international commercial comity. 13. I would allow the appeal. Representation: A. Zimmern, Q.C. & R. Mayne (P.H. Sin & Co.) for appellant H. Litton, Q.C. & R. Wong (Fairbairn, Kwok & Wang) for respondent. (1) [1975] H.K.L.R. 388. (2) [1956] 1 Q.B. 703 @ 710 (3) [1909] 1 K.B. 927 (4) [1939] 2 K.B. 129 (5) [1954] 1 Q.B. 45 (6) [1938] T.P.D. 390 (7) [1957] (S.R.) N.S.W. 361 (8) [1924] 1 D.L.R. 468 (9) [1925] A.I.R. 1062 (10) [1871] Q.B. 361 (11) [1975] H.K.L.R. 388 (12) [1962] 34 D.L.R. (2nd) 189 (13) [1949] 4 S.A. 40 (T) |
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