Kenny Ma Zu Min t/a Wah Tong and Co v. Mabellee Co (A Firm)
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IN THE SUPREME COURT OF HONG KONG ORIGINAL JURISDICTION ACTION NO. 2134 OF 1971 ----------------- BETWEEN
----------------- Coram : Briggs J in Court ------------------------ J U D G M E N T ------------------------ 1. The Plaintiff is a dealer in precious stones. The Defendant, Floral Arts Ltd. is a Limited Company and the sole owner of a firm, called Mabellee Company. Mabellee Company carries on business at room 331 in the Hong Kong Hotel. Its business is that of selling jewellery, including costume jewellery, small articles of silver ware and objets d’art from South East Asia. 2. Mabellee does not deal in unset stones: no jewellery is made or even repaired there. When such work is required to be done, it is sent out to other jewellers. 3. Mabellee is not a large concern. In mid-1971 the staff consisted of a shop manager and three shop assistants. At the relevant time the shop manager or supervisor was one Anthony Wong. 4. Leung Kyin Shing, the Managing Director of the Defendant Company gave evidence and said that Mr. Wong was employed as the supervisor of the shop at a monthly wage of $2,000. He was not entitled to commission on sales made. His duties were to sell to the public, supervise the other members of the staff and generally to manage the business carried on. He had no authority to make purchases on behalf of his employers. If suppliers came to the shop and displayed goods which he, Mr. Wong, thought would be readily saleable he should refer the matter to Mr. Leung. For all the buying for the shop was done by Mr. Leung. 5. In effect, as Mr. Leung said, Mr. Wong had no authorityto purchase on behalf of the Company but he could recommend purchases to Mr. Leung. 6. Mr. Wong’s duties were therefore of a Limited nature. He had however in his possession a rubber stamp bearing the legend “Mabelle above the address of the shop promises and its telephone number. 7. Mr. Leung employed Mr. Wong in June 1971. He said that he came with excellent references. After about two months Mr. Leung became aware that something was wrong. His suspicions crystallised after a stock check in mid-August, when certain goods were found to be missing. Mr. Wong was peremptorily dismissed on September 10, 1971. Later he was arrested, pleaded guilty to various offences involving the obtaining of goods dishonestly. He is still serving his sentence. 8. The Plaintiff as I have said is a dealer in stones. His method of business is personally to solicit business from various jewellery shops. When he wishes to make a sale, he said he would approach a salesman in a shop and ask him if he requires any stones. If the answer is affirmative he said the manager or proprietor of the shop would contact him or he, the Plaintiff, would contact the manager or proprietor. He instanced three methods of payment: sometimes payment is in cash, sometimes by post dated check and some sales are credit sales. However cash sales are rare: about 5% of his total sales: 90% of all sales are effected by a post dated check: the other 5% of sales are credit sales. 9. When effecting one of the rare credit sales the normal practice of the Plaintiff is to allow a period of 60 days. This he said is customary in the trade. He would make out an invoice in triplicate. The original would be signed by the purchaser and chopped with the chop of the firm or company. This would be retained by the Plaintiff together with the third copy. The second copy would be left with the purchaser. Such a transaction said the Plaintiff, would take place in the shop or if the purchase was a special deal, in the office of the purchasing firm or company. 10. The Plaintiff first went to Mabellee in June 1971 when he asked to see ‘the manager’ who was not available. Eventually he metMr. Wong who told him that he was the manager. In cross-examination the Plaintiff said that he was told by one of the salesgirls in the shop that Mr. Wong was the manager. He said he asked Mr. Wong whowas the proprietor and was told that that was an unnecessary question. It is for comment that Mr. Wong in his evidence denied that this question was asked of him. 11. However the Plaintiff said he did not think that this was an important matter. He was satisfied with what Mr. Wong told him, he was satisfied that Mr. Wong was the manager. And he dealt with him as such. He also presumed that Mr. Wong had the authority to purchase stones on behalf of his firm or company. 12. On July 10, 1971 the Plaintiff sold to Mr. Wong a packet of diamonds weighing 46.18 carats for $400 per carat. The price was therefore $18,472. It was a credit sale. Mr. Wong signed the original invoice and stamped it with the chop of Mabellee. This was retained by the Plaintiff. The actual transaction took place in the office and no one was present except the Plaintiff and. Mr. Wong. 13. It was orally agreed between the parties that 60 days credit would be given. No security was asked for and none was given. The Plaintiff said however that he asked to be paid by a post dated check. Mr. Wong replied that he had not enough money available for this and added that he would not give the Plaintiff a post dated check of the Company since if it were to be dishonoured later “it would be troublesome”. Despite this the Plaintiff accepted the baresignature of Mr. Wong and the firm’s chop on the invoice as sufficient. He must have been very eager indeed to make a sale. 14. The Plaintiff said he thought he was dealing with Mabellee that Mabellee was the purchaser, Mr. Wong being that firm’s agent. 15. There is no doubt at all that Mr. Wong had no authority to purchase the diamonds from the Plaintiff for his Company. He admitted that he bought them for himself and not for his employers. And in due course he pleaded guilty to having obtained them dishonestly from the Plaintiff by falsely representing that he was purchasing them on behalf of Mabellee. 16. The Plaintiff’s case is that the Defendant held out Mr. Wong as their agent, not only as their agent to act as the manager of their shop, but as their agent to make purchases on their behalf. 17. Mr. Eddis relied upon the fact that Mr. Wong was the manager and had been so introduced by one of the salesgirls. With respect the Defendant, Mr. Wong’s principal is not responsible for what a salesgirl in his employment may say: such words are not a representation by the principal. In any event the Plaintiff made it perfectly clear that it was what Mr. Wong himself told him that impressed him and that it was on his, Mr. Wong’s representation, that he acted. 18. The Plaintiff also relied upon the fact that Mr. Wong had in his possession a chop of the firm and used it. It was suggested that to allow an employee who is the apparent manager of a shop to hold the chop of a company constitutes or is evidence ofholding out. I cannot agree. It might be evidence that that person is an employee of the firm whose chop he holds but it cannot be evidence that such a person has authority to make purchases for the firm. 19. In this connection I was referred to the case of Chan Shau Nam v. The Wing Chong Lung Fun(1). In that case there was a partnership of two partners. The manager, a Mr. Wu was given the fullest powers of carrying on the business, which was that ofpaper merchants. Mr. Wu borrowed $1,000 from the Plaintiff. The loan was made on the firm’s premises and the promissory note was chopped with the firm’s chop. Mr. Wu told the Plaintiff that the money was for the business of the firm. It was not. Mr. Wu used it for his own purposes. The partners were ignorant of the whole transaction. The Plaintiff sued the firm and it was held that they were estopped from denying Mr. Wu’s authority to borrow money on behalf of the firm. The Judge found as a fact that “local Chinese firms very frequently raise money by loan for the purpose of the business”: and that the partners had held out Mr. Wu as their “general agent for all reasonable business purposes - which would include the raising of money by a loan”. It was on these findings of facts that he held that the firm was liable. 20. The facts of that case are very different from those in the present case. It cannot be said that if a person is appointed the manager of a jewellery shop and works in that shop, and if he is also in possession of his employer’s chop, that that is holding him out as having the authority to pledgethe credit of his employer’s. 21. The Plaintiff made it clear that he presumed that Mr. Wong had the authority he claimed to have. And he made no enquiries whether he had authority to make purchases on his firm’s behalf. The fact that the Plaintiff had found that the person who is in charge of a shop did possess such an authority in other instances is neither here nor there. No mercantile custom has been relied upon to the effect that the manager ofa jewellery shop in Hong Kong has authority to pledge the credit of his employer’s. There is no evidence that the powers of the managers of jewellery shops in Hong Kong include the authority to purchase gems on behalf of their firms. That may be so where the manager is also the proprietor or where the manager is expressly vested with such authority. In my view the Plaintiff in this case took a risk and an unjustifiable risk, in the circumstances. Thiswas the first transaction with Mr. Wong except for an abortive sale of two sapphires, the unsatisfactory features of which night well have put him on his guard. 22. Mr. Eddis relied on a passage in Halsbury’s Laws of England (3rd Eddition at page 239) which reads as follows:- “…… one who provides an authorised agent with the indicia of an authority in excess of his actual authority cannot as against persons who have, in dealingwith his bona fide, altered their position on the faith of such indicia, deny thathe had the larger authority”. 23. But what are the indicia in this case: merely Mr. Wong’s presence as the obvious manager of the shop. The position of buyer for the firm is completely different from this. There was nothing at the Mabellee premises to indicate that Mr. Wong had any authority to buy. Nothing at all. That was presumed by the Plaintiff because he had found that to be so on other occasions when he was dealing with businesses of the same nature. 24. In brief I can find no evidence here that Mabellee the principal held out Mr. Wong as their agent having the authority to make purchases for the Company. 25. There must be judgment for the Defendant with costs.
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