The defendant auctioneers were employed by the plaintiff to sell some goods. The payment was to be percentage commission with a minimum of andpound;20, certain fixed amounts and ‘all out of pocket’ expenses, particularly advertising. The sale triggered the minimum commission and the auctioneers’ bill included that plus the gross cost of the advertisements. In fact the auctioneers had received a discount on this cost. They included the gross sum in the bill in the honest but mistaken belief that there was a custom which entitled them to do this, the point being that if the client had ordered the advertisements directly, no discount would have been given. The bill was paid in full. When, later, the plaintiff discovered that there had been a discount he sued, not only for the amount of the discount, but also for the entire andpound;20 commission.
Held: He succeeded in the first claim but not the second. The defendants were not entitled to charge more thatn they had been called upon to pay, but the discounts were received without fraud, and the recovery of expenses was only ancillary to the main item and purpose of the contract, so the commission itself remained payable.
Kennedy J: ‘With regard to the andpound;20 claim, I agree with my Lord that this is not one of the cases in which it would be just to deprive the agent of his agreed remuneration as well as of his secret profit. I feel it is difficult to lay down any definite rule upon the subject with confidence, but I would venture to suggest the following: that where the agent’s remuneration is to be paid for the performance of several inseparable duties, if the agent is unfaithful in the performance of any one of those duties by reason of his receiving a secret profit in connection with it – and I here use that word ‘unfaithful’ as including a breach of obligation without moral turpitude – it may be that he will forfeit his remuneration, just as in certain cases a captain of a ship might be held in the Admiralty Court to forfeit his wages as a result of misconduct in any branch of his duty as a captain; but where the several duties to be performed are separable, as to my mind they are in the present case, the receipt of a secret profit in connection with one of those duties would not, in the absence of fraud, involve the loss of the remuneration which has been fairly earned in the proper discharge of the other duties. Here the auctioneers were employed for a certain commission to act faithfully as auctioneers. If they had improperly by connivance sold to a purchaser at a lower price than they could fairly have got they would clearly not have been able to recover their commission. There is nothing of this kind in the present case. But by the special terms of their contract they undertook, in addition to their duty as auctioneers, that if the plaintiff would pay them their out of pocket expenses they would truly account to the plaintiff for those expenses. And it seems to me that it would be wrong to say that because the defendants failed in the performance of their duty properly to account for the out of pocket expenses, therefore they are not to have their commission, although they performed all their duty as auctioneers faithfully.’
Judges:
Lord Alverstone CJ, Kennedy J
Citations:
[1905] 1 KB 1, [1905] 1 LJKB 68, [1905] 92 LT 20, [1905] 21 TLR 5, [1905] 49 Sol Jo 15
Jurisdiction:
England and Wales
Cited by:
Cited – Stewart Chartering Ltd v Owners of the ship ‘the Peppy’; Stewart Offshore Services (Jersey) Ltd v Silan Maritime Co and Another AdCt 15-Apr-1997
ComC Admiralty action in rem – dishonest withholding of freight paid – meaning of dishonesty – objective and subjective considerations – reimbursement of commission – Admiralty action in rem – entitlement to . .
Cited – Stubbs v Slater 1910
A deposit by guarantors who had agreed ‘to assign to [the Bank] their certificates of shares in [PPL] by way of deposit’, together with endorsed transfers in blank, would create an equitable mortgage with an implied power of sale. Neville J . .
Cited – Imageview Management Ltd v Jack CA 13-Feb-2009
The appellant company acted for the respondent footballer in placing him with a football club. The respondent said that he had also taken a payment from the club, nominally for arranging a work permit. The respondent said this was improper. The . .
Lists of cited by and citing cases may be incomplete.
Agency
Updated: 23 March 2022; Ref: scu.282637