[COURT OF APPEAL.]

DICKSON AND OTHERS v. REUTER'S TELEGRAM COMPANY, LIMITED.

Telegraph Company - Representation of Accuracy of Message - Privity of Contract - Negligence - Liability for Mistake in delivering Message.

The defendants, a telegram company, through the negligence of their servants, delivered to the plaintiffs a message which was not intended for them. The plaintiffs, who reasonably supposed that the message came from their agents and was intended for them, acted upon it and thereby incurred a loss:-

Held, affirming the decision of the Common Pleas Division, that the plaintiffs could not maintain any action against the defendants upon the ground of their negligence, or of an implied representation by them that the message was sent by the plaintiffs' agents.

APPEAL from the judgment of the Common Pleas Division in favour of the defendants on demurrer to the statement of claim, which alleged that the plaintiffs were merchants at Valparaiso, and were a branch house of the firm of Dickson, Robinson, & Co., of Liverpool; the defendants were a telegraph company, having their chief offices in London, and agencies in Liverpool and in various parts of the world, including South America. The

defendants had a system of forwarding in one "packed" telegram the messages of several senders, each message being distinguished and headed by a registered cipher known to the defendants and their agents and also to the senders, which messages, on receipt of the packed telegrams by the defendants' agents, were transmitted to the proper recipients. Previous to December, 1874, Dickson, Robinson, & Co. were in the habit of sending messages to the plaintiffs through the defendants' company, and were instructed by the defendants to head the messages by a registered cipher word indicating that the messages were intended for the plaintiffs. On the 26th of December, 1874, the plaintiffs received at Valparaiso a telegraphic message, which they understood, and reasonably understood, to be a direction from Dickson, Robinson, & Co. to ship barley to England; but the message was not in fact intended for the plaintiffs. The mis-delivery was caused by the negligence of the defendants or their agents. On receiving the telegram the plaintiffs proceeded to execute the supposed order and shipped large quantities of barley to England. Owing to a fall in the market for barley, the plaintiffs, by reason of the shipments, sustained a serious loss, and they now claimed that the defendants' company should reimburse them for that loss.

The facts are fully stated in 2 C. P. D. 62, where the proceedings in the Common Pleas Division are reported.

Nov. 2, 3. Herschell, Q.C. (Benjamin, Q.C., and W. H. Butlerwith him), for the plaintiffs. The question is, whether the statement of claim shews any cause of action. No doubt the case is novel, but if in the progress of mercantile dealing new cases arise, the Court will evolve the principle of law necessary to meet the exigencies of them, as was done in Collen v. Wright (1). This action can be supported on two grounds: first, the defendants warranted to the plaintiffs that they had been employed to deliver this message to the plaintiffs, and the defendants are liable for a breach of warranty, in analogy to the case of Collen v. Wright. (1), where the agent represented that he was acting for a principal; secondly, the defendants are carrying on the business of delivering

(1) 7 E. & B. 301; 26 L. J. (Q.B.) 147: in Ex. Ch. 8 E. & B. 647; 27 L. J. (Q.B.) 215.

telegraphic messages, and they are liable to any one dealing with them who is injured through their negligence in carrying on that business. In Playford v. United Kingdom Telegraph Co. (1) the action was brought for a mere error in the delivery of a message, and negligence was not alleged; in the present case negligence is charged, and on demurrer it is admitted that there was negligence.

The defendants warranted that the message was correct, or at least that their agents would take every precaution to avoid mistake. In Collen v. Wright (2) it was held that the plaintiff could sue an agent, because by purporting to act as agent he warranted that he was an agent; here the defendants, by delivering the message to the plaintiffs, warranted that they had authority to deliver the message. The general rule is that the representation must be false to the knowledge of the party making it in order to maintain an action on it. Upon this general rule an exception has been engrafted by Collen v. Wright (2), that a person representing himself to be an agent impliedly contracts that he has the authority of his alleged principal. The defendants, in effect, warranted that they had the authority of Dickson, Robinson, & Co. to deliver the message, and they warranted that the message was sent by them; it therefore falls within the principle of the exception, which has been established by Collen v. Wright. (2)

On the other point, as to negligence, if a person carrying on a business acts negligently in conducting that business, he is liable to any person dealing with him who is injured by his negligent act. The defendants, in carrying on their business, negligently delivered a message, which they knew might be mischievous if they delivered it to the wrong person. The telegram was supposed by the plaintiffs to be received, not from a stranger, but from persons who were in the habit of dealing with the defendants in the course of their business by means of a cipher, and it was the duty of the defendants to use the cipher with due care. This they failed to do, and therefore they are liable to compensate the plaintiffs for the injury sustained by them.

If the defendants are not liable in the present action very serious consequences will ensue. A telegraph company may

(1) Law Rep. 4 Q. B. 706.

(2) 7 E. & B. 301; 26 L. J. (Q.B.) 147: in Ex. Ch. 8 E. & B. 647; 27 L. J. (Q.B.) 215.

deliver a message to a person for whom it is not intended, and may with impunity cause very great injury to the person who receives it and is induced to act upon it. The consequence will be that telegraph companies will become careless in the conduct of their business, and very great public detriment will be sustained.

A great analogy exists between the liability of a common carrier and a telegraph company: Sedgwick on Damages, 6th ed. p. 443; New York and Washington Printing Telegraph Company v. Dryburgh (1). A carrier is bound to deliver safely the goods intrusted to him, and a telegraph company are equally bound to transmit to the proper recipients the messages which they undertake to send along their lines.

Watkin Williams, Q.C. (H. D. Greene with him), for the defendants. Collen v. Wright (2) forms no exception to the general rule that no action will lie for an innocent misrepresentation; the principle of that decision is that a person who, by representing himself to be an agent, invites another to enter into a negotiation with him, shall be held liable for the consequences if that representation turns out to be untrue. The law does not imply any warranty by a telegraph company that the messages sent by them are correct; and from the nature of the business it is plain that the company do not warrant that those whom they employ shall not commit mistakes; their servants and agents may often be ignorant of the real meaning of a message, and they have no power of ascertaining in what sense the words are to be understood by the intended recipient. It may be true that negligence on the part of the telegraph company was not charged in Playford v. United Kingdom Telegraph Company (3); but it is a fallacy to contend that this circumstance rendered that decision inapplicable, for negligence involves the omission of a duty, and here the defendants did not owe to the plaintiffs any duty, for no relation existed between them, and a duty can only be created either by law or by contract.

Herschell, Q.C., did not reply.

(1) 35 Penns. Rep. 298.

(2) 7 E. & B. 301; 26 L. J. (Q.B.) 147: in Ex. Ch. 8 E. & B. 647; 27 L. J. (Q.B.) 215.

(3) Law Rep. 4 Q. B. 706.

BRAMWELL, L.J. I am of opinion that this judgment must be affirmed.

The general rule of law is clear that no action is maintainable for a mere statement, although untrue, and although acted on to the damage of the person to whom it is made, unless that statement is false to the knowledge of the person making it. This general rule is admitted by the plaintiffs' counsel, and prim‰ facie includes the present case. But then it is urged that the decision in Collen v. Wright (1) has shewn that there is an exception to that general rule, and it is contended that this case comes within the principle of that exception. I do not think that Collen v. Wright (1), properly understood, shews that there is an exception to that general rule. Collen v. Wright (1) establishes a separate and independent rule, which, without using language rigorously accurate, may be thus stated: if a person requests and, by asserting that he is clothed with the necessary authority, induces another to enter into a negotiation with himself and a transaction with the person whose authority he represents that he has, in that case there is a contract by him that he has the authority of the person with whom he requests the other to enter into the transaction. That seems to me to be the substance of the decision in Collen v. Wright (1). If so, it appears to me that it does not apply to the facts before us, because in the present case I do not find any request by the defendants to the plaintiffs to do anything. The defendants are simply the deliverers of what they say is a message from certain persons to the plaintiffs. No contract exists: no promise is made by the defendants, nor does any consideration move from the plaintiffs. It appears to me, therefore, that there is a distinction between this case and Collen v. Wright (1), and consequently we cannot have recourse to that case to take this out of the general rule to which I have referred.

But then it is argued that this is a case of misfeasance, that is, a case of negligence. Now the defendants' counsel made a remark which seemed to me very just, namely, that before any person can complain of negligence he must make out a duty to take care; and that that duty to take care can only arise in one of two ways,

(1) 7 E. & B. 301; 26 L. J. (Q.B.) 147: in Ex. Ch. 8 E. & B. 647; 27 L. J. (Q.B.) 215.

namely, either by contract or by the law imposing it. That it does not arise by contract in this case is shewn by the observations which I have already made for the purpose of pointing out that there is no contract between the plaintiffs and the defendants. Does that duty arise by law? If it did arise by law, the consequence would be that the general rule which has been admitted to exist is inaccurate, and that it ought to be laid down in these terms, that no action will lie against a man for misrepresentation of facts whereby damage has been occasioned to another person, unless that misrepresentation is fraudulent or careless. But it is never laid down that the exemption from liability for an innocent misrepresentation is taken away by carelessness. It seems to me therefore, that that point also fails the plaintiffs.

Further, the defendants did not guarantee that the message was authentic, and so far as they were concerned it might not be true. The action is not maintainable upon the ground of an implied warranty that the message was correct.

Another point raised was that the mistake was committed in the ordinary business of the defendants. I hardly know how that was made a separate ground of argument. Inaccuracy in a telegram is more likely to mislead than inaccuracy in a verbal statement: and the delivery of a telegraphic message is a more formal matter than the communication of a message by word of mouth. I cannot however see any distinction in principle between them.

It has been argued that if this action be not maintainable the consequences will be mischievous. I am not of that opinion. If it were held that a person is liable for a negligent misrepresentation, however bon‰ fide made, a great check would be put upon many very useful and honest communications, owing to a fear of being charged, and perhaps untruly charged, with negligence. I do not think the rule upon which we are acting unreasonable either in itself or in its application to a telegraph company. It is to be recollected that a telegraph company are generally under some liability to the sender of the message, and if they are careless in delivering it and thereby occasion damage to him, he may maintain an action against them; and (apart from the natural desire to carry on their business properly so as to gain customers) the

existence of this liability is a kind of security for the proper delivery of the messages intrusted to the telegraph company.

I wish further to say that I do not see any analogy between the liability of a common carrier and that of a telegraph company. A carrier is liable both to the person who employs him and also to the owner of the goods: but the plaintiffs did not employ the defendants, and they are not the owners of the message. Possibly some analogy may exist between the present facts and a case where a carrier has delivered goods to a person, for whom they were not intended, and who has in consequence suffered some los or inconvenience; but I do not think that under such circumstances an action would be maintainable against the carrier; for the person to whom the goods were delivered might have refused to receive them, and when he took them in he accepted the risk flowing from a possible mistake of the carrier.

In no point of view is the present action maintainable.

BRETT, L.J. Upon consideration of the nature of the business of a telegraph company, it seems to me plain that all that they undertake to do is to deliver a message from the person who employs them, and that they perform the part of mere messengers; prim‰ facie, therefore, their only contract is with the person who employs them to send and deliver a message. In the present case the plaintiffs did not send the message, and therefore the defendants have made no contract with them. The defendants have in effect made a representation which is false in fact, but which they did not know to be false at the time of making it. If the case for the plaintiffs be simply that there was a misrepresentation upon which they have reasonably acted to their detriment, it must fail, owing to the general rule that no erroneous statement is actionable unless it be intentionally false. This seems to be admitted by the plaintiffs' counsel; it is urged, however, that Collen v. Wright (1) has introduced an exception to that rule; but after the argument of the defendants' counsel I have come to the conclusion that the decision in that case was founded upon a different and independent rule, which may be stated to be, that

(1) 7 E. & B. 301; 26 L. J. (Q. B.) 147: in Ex. Ch. 8 E. & B. 647; 27 L. J. (Q.B.) 215.

where a person either expressly or by his conduct invites another to negotiate with him upon the assertion that he is filling a certain character, and a contract is entered into upon that footing, he is liable to an action if he does not fill that character; but the liability arises not from the misrepresentation alone, but from the invitation to act and from the acting in consequence of that invitation. Therefore the decision in Collen v. Wright (1) does not establish an exception to the rule that an innocent misrepresentation does not form the ground of an action. Now the telegraph company, being mere messengers, did not either expressly or impliedly invite the plaintiffs to act with them in any character, and the present facts do not fall within the principle of that case.

It was further suggested that the defendants are liable by reason of negligence; but when the argument for the plaintiffs as to negligence is examined, it is found to be based upon the doctrine, that where a person has been led by the negligence of another to act under the belief of a certain state of facts and in consequence has suffered detriment, the person guilty of negligence is liable to make good that loss; but this doctrine properly applies to cases of estoppel; and the facts before us do not allow the plaintiffs to rely upon the defendants' negligence as a ground of estoppel: Swan v. North British Australasian Company. (2)

I cannot see that any liability rests upon the defendants, and therefore I think that the judgment of the Common Pleas Division should be affirmed.

COTTON, L.J. I also am of opinion that the judgment of the Common Pleas Division should be affirmed.

The authority most relied on by the plaintiffs' counsel was Collen v. Wright. (1) Now it is quite clear that the decision in that case went upon the ground that the testator of the defendants by his conduct impliedly warranted that he had the authority which he professed to have; and this is plain from the language of Willes, J., in delivering the judgment of the Exchequer Chamber. (3) Now the principle of that case cannot apply here. The

(1) 7 E. & B. 301; 26 L. J. (Q.B.) 147: in Ex. Ch. 8 E. & B. 647; 27 L. J. (Q.B.) 215.

(2) 2 H. & C. 175; 32 L. J. (Ex.) 273.

(3) 8 E. & B. 647, at pp. 657, 658; 27 L. J (Q.B.) 215, at pp. 217, 218.

defendants did not enter into a contract with the plaintiffs, nor did they represent that they had any authority to act as agents for the plaintiffs' Liverpool house: they simply delivered the message and left the plaintiffs to act or not to act upon it, as they pleased; therefore it cannot be said that in consequence of a request by the defendants the plaintiffs undertook any liability or were induced in any way to act upon the message. There being no contract between the parties to the present suit, Collen v. Wright (1) is distinguishable.

It was further contended for the plaintiffs that the defendants were liable by reason of their negligence. It was admitted that misrepresentation alone would not have supported an action; but it was contended that, owing to the nature of the business carried on by the defendants, they were bound to warrant the accuracy of the message, or at least to guarantee that every precaution had been taken by their agents to avoid mistake, and that the message was sent by the persons by whom it purported to be sent. I cannot concur in this argument. A person comes into a telegraph office and writes out a message to be forwarded by the company; how can the company ascertain whether the person in whose name the message is sent has really authorized its transmission? It is impossible to suppose that the company in the ordinary course of their business warrant that the message comes from a particular person; for they would thereby make a representation, the truth of which in many cases they cannot ascertain.

Solicitors for plaintiffs: G. L. P. Eyre & Co. agents for Garnett, Tarbet, & Tinne, Liverpool.

Solicitors for defendants: Johnsons, Upton, & Budd.

(1) 7 E. & B. 301; 26 L. J. (Q.B.) 147: in Ex. Ch. 8 E. & B. 647; 27 L. J. (Q.B.) 215.