Personal Service Laundry Ltd v National Bank Ltd

• Jurisdiction: Ireland
• Court: Supreme Court
• Judgment Date: 01 January 1965
• Date: 01 January 1965

Personal Service Laundry Ltd. v. National Bank Ltd.

PERSONAL SERVICE LAUNDRY LTD.

Plaintiffs

and

THE NATIONAL BANK LTD.

Defendants.

Supreme Court.

Practice - Security for costs - Limited company incorporated in the State - Company insolvent - Action by Company against defendants in High Court - Defendants successful in such action - Appeal by plaintiffs to Supreme Court - Security for costs granted to defendants - Companies (Consolidation) Act, 1908 (8 Edw. 7, c. 69), s. 278.

The plaintiff Company was incorporated in 1950 but was not efficiently managed and by February, 1953, had lost over £700. The nominal capital of the Company was £500 divided into £1 shares of which only three were issued.L. was running the business and held two out of the three shares. L. negotiated for the sale of the business to M. but this transaction was never completed, although M. opened an account with the defendant Bank in the name of the plaintiff Company, ran the business for a considerable time and received and lodged cheques made payable to the Company in the account. L. in the early stages of the negotiations went to London, leaving matters in the hands of her solicitor and auditor. Subsequently, she returned from London and found that M. had received a particular cheque and that the account opened by him in the defendants' Bank in the name of the Company was overdrawn. In an action in the High Court she claimed that the defendants in dealing with the various cheques, received in running the business, in the ordinary course of business in relation to the account opened by M. acquired no title to them and therefore had converted them to their own use. In this claim the Company was unsuccessful before Davitt P. and appealed to the Supreme Court. The defendants then moved by way of motion on notice for security for costs under the provisions of s. 278 of the Companies (Consolidation) Act, 1908, on the ground that the Company was insolvent and if it lost the appeal would not be in a position to pay the defendants' costs.

Held, by the Supreme Court (Kingsmill Moore, Ó Dálaigh ó dálaigh and Maguire JJ.) 1, that security for the costs of the appeal should be given, amounting to the sum of £200;

2, that the defendants had not contributed in any way to the plaintiff Company's insolvent condition and thus were not disentitled to security for costs of the appeal.

Peppard & Co. Ltd. v. Bogoff [1962] I. R. 180. considered.

Motion on Notice by the defendants, the National Bank Ltd., that the plaintiffs, Personal Service Laundry Ltd., do furnish security for the costs of an appeal taken by them from the order and judgment of Davitt, P., dated the 17th December, 1959.

The facts have been summarised in the headnote and appear more fully in the judgment of Davitt P., post.

From the above judgment the plaintiffs appealed to the Supreme Court (1).

The defendants then applied by notice of motion to the Supreme Court (1) for an order that the plaintiffs do give security for the costs of the appeal.

The grounds of the appeal were as follows:—

1, That the learned President of the High Court misdirected himself in law and on the facts in dismissing the said action.

2, That the learned President of the High Court in particular misdirected himself in law and on the facts (a) in not holding that Charles Marno had no authority from the plaintiffs to open or operate an account in the plaintiffs' name in the defendant Bank or to lodge cheques payable to and being the property of the plaintiffs to the said account; and that the defendants had not been appointed as bankers of the plaintiffs' Company in manner required by the Articles of Association of the plaintiffs' Company or at all as the defendants when opening the said account knew or would have known if due

enquiry had been made by them; and that the defendants were not legally entitled to open the said account or to accept cheques payable to the plaintiffs for lodgment to the said account;

(b) In not holding that the said Charles Marno had no authority from the plaintiffs to endorse on their behalf cheques payable to and being the property of the plaintiffs, or by means of such endorsements to obtain payment in cash from the defendant Bank of the amount of any of such cheques or to lodge the amount of any such cheque to an account in the name of the said Charles Marno in the defendant Bank;

(c) In not holding that the said Charles Marno had no authority from the plaintiffs to draw or sign cheques on behalf of the plaintiffs upon the account opened in the plaintiffs' name in the defendant Bank;

(d) In not holding that the said Charles Marno when purporting as managing director of the plaintiffs' Company to endorse cheques payable to and being the property of the plaintiffs and when purporting as such managing director to sign cheques upon the said account opened in the plaintiffs' name in the defendant Bank was not in truth or in fact the managing director of the plaintiffs' Company; and that this fact and the absence of any authority in the said Charles Marno to endorse or sign cheques as aforesaid were at all material times within the knowledge of the manager of the Terenure Branch of the defendant Bank, in which the said account in the plaintiffs' name was opened by the said Charles Marno, or would have been within the knowledge of such manager if due enquiry had been made by him;

(e) In not holding that the purported endorsements, on behalf of the plaintiffs and as their managing director by the said Charles Marno, of cheques payable to and being the property of the plaintiffs and the purported signatures on behalf of the plaintiffs and as their managing director by the said Charles Marno of cheques drawn by him on the said account opened in the plaintiffs' name in the defendant Bank (a) were made and placed on the said cheques contrary to the provisions of the Articles of Association of the plaintiff Company, as the defendants knew or would have known if due enquiry had been made by the defendants; (b) were forgeries, and that the said purported endorsements and signatures were invalid and null and void in law;

(f) In not holding, as a consequence of the findings aforesaid, that the defendants had converted to their own use (a) the said cheques payable to and being the property of the plaintiffs which the said Charles Marno had endorsed without lawful authority and lodged to the said account in the plaintiffs' name in the defendant Bank and the amount whereof had been received by the defendants and paid away by them upon invalid and worthless cheques drawn by the said Charles Marno upon the said account, and (b) cheques payable to and being the property of the plaintiffs which the said Charles Marno endorsed without lawful authority and whereof he obtained payment in cash from the defendants or lodged the proceeds or portion thereof to an account in his own name in the defendant Bank (being account No. 2 opened in his own name in the Terenure Branch of the said Bank by the said Charles Marno); alternatively that the total amount of the cheques referred to in this paragraph was wrongly had and received by the defendants to the use of the plaintiffs; and in not holding that the plaintiffs were entitled either to an order for payment accordingly or for an order for the taking of an account, as sought in the Statement of Claim (with the amendments therein hereinafter prayed for). The learned President of the High Court further or alternatively misdirected himself in law in not granting to the plaintiffs an order for payment of the balance which at the hearing of the action was proved or admitted then to stand to the credit of the said account No. 2 in the name of the said Charles Marno in the Terenure Branch of the defendant Bank and which was admitted to represent portion of the proceeds of cheques payable to and...