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DURITY ALPHA (PROPRIETARY) LIMTED Appellant
and
W A
VAGG Respondent
Case No 498/89
IN THE SUPREME COURT OF SOUTH AFRICA APPELLATE DIVISION
In the matter between:
DURITY ALPHA (PROPRIETARY) LIMITED Appellant
and
W A
VAGG Respondent
CORAM: HOEXTER, SMALBERGER, MILNE, STEYN et KUMLEBEN, JJA
HEARD: 26 February 1991 DELIVERED: 21 March 1991
JUDGMENT
HOEXTER, JA
2
HOEXTER, JA,
In the magistrate's court for the district of
Durban the appellant company ("Durity") issued a summons against the respondent,
Mr
William Armour Vagg ("Vagg"), for payment of Rl 883,99 together with interest
thereon and costs. Vagg resisted the action and the
magistrate gave judgment for
Vagg with costs. Against the judgment of the magistrate Durity appealed
unsuccessfully to the Natal
Provincial Division ("the court a quo"). Subject to
the condition that Durity should bear the costs of a further appeal irrespective
of the result, the court a quo granted Durity leave to appeal to this
court.
On the 23rd December 1985 a company called Natal Ironmongers (Pty)
Limited ("the seller") was incorporated. The seller began trading
on the 7th
January 1986. Vagg was the sole director of a company known as Tongaat Builders
(Pty) Limited
3
("the debtor"). During March 1986 the debtor bought goods from the seller and
thereby became indebted to the seller in the sum of
R1 883,99.
Durity carries
on business as "builders merchants". On the 15th November 1982 Vagg signeda deed
of suretyship ("the suretyship").
In terms of the suretyship Vagg bound himself
in favour of each of a number of companies ("the creditors") as surety for and
co-principal
debtor in solidum with the debtor for the payment of any sum of
money which might then or thereafter become owing by the debtor to
the
creditors. The creditors were listed in a schedule incorporated in the
suretyship, and Durity was one of them.
On the 2nd July 1986 the Durban and
Coast Local Division granted an order provisionally winding up the debtor. In
due course the order
was made final. In December 1986 Durity instituted its
action against Vagg. In its summons Durity relied upon the suretyship signed
by
Vagg. From the further
4
pleadings filed it appeared that Durity averred that when the
debtor
incurred its. indebtedness of R1 883,99 to the seller the
latter was acting as the agent for an undisclosed principal in
the person
of Durity; and that, in suing Vagg, Durity -
" has elected to make itself known as it is in law
entitled to do."
At the trial Vagg appeared in person. The plea to
Durity's summons was also drawn up by Vagg. The plea is not
ideally clear
but it makes plain that Vagg challenged Durity's
contention that when the
debtor bought goods from the seller the
latter was acting as the agent of
Durity as the undisclosed
principal. Durity was represented by an attorney at
the trial.
Three witnesses were called on Durity's behalf: Mr B C
Warner,
Durity's financial manager; Mr A M Latter, the seller's
managing
director; and Mr H F W Hirsch, Durity's credit manager. Vagg
was
the sole witness for the defendant. A full exposition of
the pleadings in the
action together with an analysis of the
evidence given by Durity's witnesses
is to be found in the
5
judgment of the court a quo, delivered by BROOME, J and concurred
in by
ALEXANDER, J, which has been reported: Durity Alpha (Pty)
Ltd v Vagg 1989(4)
SA 1066 (N). In passing I point out a
typographical error in the reported
judgment: the date on which
the document, exh F, was signed (see the report
at 1067C-D) was
the 27th May 1987. The fact that the judgment of the court
a
quo has been reported renders here unnecessary, save in the
respects
later to be indicated, any recapitulation of the facts.
Following upon his review of the facts BROOME, J (see
1069 H-I) proceeded to consider whether Durity had succeeded
in
establishing a case -
"....within the ambit of the two agreements it relied upon, suretyship and agency."
The learned judge dealt at once with an argument by counsel who
appeared for Vagg in the court a quo to the effect (see 1070A)
that Durity's reliance upon the suretyship was precluded by the
provisions of sec 6 of the General Law Amendment Act 50 of 1956
6
as amended. BROOME, J upheld the argument (see 1070A/1072B);
and this
conclusion, so observed the learned judge at 1072B-C,
made it unnecessary for
him -
"....to examine the somewhat curious arrangement whereby Ironmongers are said to carry on a retail business as agents for plaintiff."
Before us the finding of the court a quo that Durity
was not entitled to invoke the suretyship was vigorously attacked
by Mr
Gordon who appeared for Durity; while from Mr Magid, who
had not appeared in
the court a quo but who argued the case for
Vagg before us, there was but
faint support for it. It seems
to me, with respect, that the court a quo erred in its conclusion
that the provisions of sec 6 of Act 50 of 1956 precluded Durity's
reliance upon the suretyship. I prefer to say nothing further
in this regard because in my view it is clear, in any case, that
Durity failed to discharge the onus of proving that at the time
when the debtor incurred its indebtedness of R1 883,99 Durity had
authorised the seller to act as its agent. The sufficiency or
7
otherwise of the meagre and imprecise evidence adduced on behalf of Durity in
regard to this critical issue in the case was the matter
chiefly debated during
argument in this court.
The cornerstone of Durity's claim against Vagg was
the agreement embodied in exh G, and more particularly the fact that clause 3
thereof
"recorded" the appointment of the seller as Durity's agent "from the
effective date". As the author of exh G seems to have appreciated,
this was an
essential ingredient of Durity's cause of action: where at the time when he
contracts with the third party the "agent"
does not have authority from the
"undisclosed principal" to contract on the latter's behalf, there is no room for
any subsequent
ratification by the "undisclosed principal". See: Keighley,
Maxsted & Co v Durant 1901 A C 240 (HL); Louwrens v Clulee 1911 TPD
192 at
195; Dawson v I M & J F van Rooyen 1914 NPD 481 at 484/5.
Under cross-examination Warner was asked whether there could be found any documentary evidence that the contract
8
reflected in exh G had existed before the 15th July 1986.
Warner responded by saying:-
"....the basis on which the Durity Alpha Group works is that all operations conducted by the group are under agency and undisclosed principal agreements, and there are numerous other companies with prior agency agreements. So it is natural for us to continue in the way we have in the past, and it was always the intention of the management of the company that Natal Ironmongers would operate on the agency basis, but that the agreement was not recorded in writing until July 1986." (Emphasis provided.)
The witness Latter,
was asked whether the agency agreement was
evidenced in the minutes of
meetings of the seller's board of
directors. His answer was:-
"Not as far as I know."
Exh G was signed twice by the same person. According to Warner the signatory in question was one Trusler, who was not only the managing director of Durity but also a director of the seller. Ex facie exh G Trusler signed first on behalf of Durity and then again on behalf of the seller. In each case the following words appear beneath his signature:-
9
"....who warrants that he is duly authorised hereby (sic)".
Trusler was not called as a witness.
In regard to exh G and its probative value in the case the following questions suggest themselves: (1) Was there proper proof of its contents? If so: (2) Did it constitute a valid contract despite the fact that its signatory purported to represent both contracting parties? And if so: (3) Does exh G in the contextual setting of the evidence as a whole establish that at the effective date Durity appointed the seller as its agent and that the seller accepted such appointment?
Exh G is a private document. That it was duly executed requires proof that it was signed by the person by whom it purports to have been signed. Although Trusler himself was not called as a witness, I shall assume that the evidence of Warner provided acceptable proof that exh G was in fact signed by Trusler.
10
The question whether a person may, as the
representative of another, contract with himself, either in his
personal
capacity or as the representative of a third party, is
discussed by Professor
J C de Wet in Joubert, LAWSA, vol 1 paras
107 and 108. I quote hereunder the introductory words of
each
paragraph:-
"107. Contracts concluded by a representative with himself
As a contract is a juristic act for which
expressions of a common
intention by at least
two persons are required, one person cannot
as
representative of another cohclude a
contract with himself. Where
a
representative purports to conclude a
contract with himself the
purported contract
is simply a nullity. In our case law there
is however
no clear authority for this
obvious proposition
108. Double representation
As pointed out in the
preceding paragraph a
person cannot as representative of another
conclude
a contract with himself. For the
same reason he cannot conclude a contract
on
behalf of one person with himself as
representative of another
person "
11
In Joel Melamed and Hurwitz v Cleveland Estates (Pty) Ltd; Joel Melamed and
Hurwitz v Vomer Investments (Pty) Ltd 1984(3) SA
155(A), and despite the
views thus expressed by Professor De Wet, it was for purposes of that appeal
assumed by this court (per CORBETT,
JA at 164E-F) -
" that it was legally competent for Melamed, in
his capacity as managing director of TMC, to make a contract with himself, in his other capacity as partner in the firm of Melamed and Hurwitz, in terms whereof the latter was appointed as conveyancer for all the erven in the townships."
For purposes of the present appeal I am
likewise prepared to assume, without deciding the issue, that it was legally
competent for
Trusler to have represented both Durity and the seller when exh G
was concluded.
Upon that supposition I proceed to consider whether Durity
discharged the onus of proving that at the effective date (whether it be
regarded as the 1st December 1985 (see exh G) or the 7th January 1986 (see exh
F) ) the seller was the agent of Durity.
12
In the instant case exh G purports to constitute an express contract. And although it was only signed on the 15th July 1986 it records (see clauses 3.1 and 3.2 quoted in the reported judgment of the court a quo at 1069E-F) the appointment of the seller as Durity's agent from a much earlier date. That, however, is not the end of the matter. The situation is complicated by two important attendant features. The first factor arises from the evidence of Warner and Latter. The fact that the seller was a subsidiary of Durity cannot alter the fact that the seller was a persona legis which could only act through its directors or through a manager duly appointed by its directors to act on its behalf. In response to the allegation contained in Vagg's plea (see 1067 I-J) that exh G -
" was backdated to 15 December 1985."
Durity replicated (see 1068C-D) as follows:-
"1.1 The plaintiff denies that the agreement appointing Natal Ironmongers (Pty) Ltd ('the company') as agent for the plaintiff was entered into on 15 July 1986.
13
1.2 The agreement referred to was concluded at the time the company was registered. 1.3 The plaintiff only formalised the agreement in writing on 15 July 1986."
At the trial, however, Durity led no evidence
in support of the
above-quoted averments in its replication. There is not
a
tittle of evidence to establish that at the date of registration
of the
seller there existed an express contract embodying the
terms set forth in
clauses 3.1 and 3.2 of exh G. The effect
of the testimony of Latter, who was
the seller's managing
director, was that the seller had in its possession no
minute or
other documentary evidence to show that prior to the execution
of
exh G the seller had accepted an appointment as Durity's agent.
And
Warner's evidence points to the conclusion that, although at
the time when the seller commenced trading the management of
Durity might have intended that the seller should act as
Durity's agent, untii the signature of exh G such intention
was never manifested in words. . In the result, Durity's
14
assertion that in March 1986 the seller was its agent, must hinge on some or
other proof that at that time there existed between Durity
and the seller a
tacit contract in terms whereof the seller was Durity's agent.
Now in order
to determine whether a tacit contract has come into existence the court must
examine the conduct of the parties concerned
and the relevant surrounding
circumstances. It is in this connection that the second complicating factor in
the present case emerges.
For the reasons which follow I consider that there is
here no evidence of the conduct of the parties from which the existence of
a
tacit contract may safely be inferred.
When Latter was pointedly questioned by the magistrate
in regard to the relationship between the
seller and Durity, his
non-committal response (see 1069B) was:-
"They ( i e Durity) are our holding company. I don't know the technicalities."
Furthermore, although exh G reflects a bilateral contract,
15
Trusler signed it on behalf of both parties. Acting in two
different
representative capacities, Trusler in effect concluded
a contract with
himself. In the Joel Melamed and Hurwitz case
(supra) the cause of action cm the main claim (see 162G-H) was
based on an
allegation that an individual, acting in two
different representative
capacities, had concluded a contract
with himself. In favour of the appellant
in that case this
court was prepared to assume that where but a single
individual
was involved a tacit contract might be inferred from the
conduct
of that one person alone. This court stressed, however, that in
such a situation the evidence of the single person concerned
required
close examination. The following remarks of CORBETT,
JA (at 165 G-I) are pertinent to the facts of the instant case:-
"In the cases concerning tacit contracts which have hitherto come before our Courts, there have always been at least two persons involved; and in order to decide whether a tacit contract arose the Court has had regard to the conduct of both parties and the circumstances of the case generally. The general approach is an objective one. The subjective views of one or other of the persons involved as to the effect of his actions
16
would not normally be relevant (cf Spes Bona Bank case supra at 985B-H). I shall assume, in appellant's favour, that where there is only one person involved (as in this case) a tacit contract may be inferred from his conduct and the general circumstances, but in such a case the Court should, in my view, carefully scrutinize his evidence in order to distinguish between statements of fact capable of objective assessment and subjective views as to the matter in issue."
For purposes of the present appeal there may be
assumed, in favour of Durity, the propriety of inferring the
existence of
a tacit contract from the evidence of Trusler alone.
His evidence however,
indispensable on this crucial issue, was
not adduced. It follows that the
failure to call him as a
witness was fatal to Durity's claim against Vagg;
and that the
magistrate achieved the correct result in giving judgment
for
Vagg.
17
The appeal is dismissed with costs, including the costs of the application for leave to appeal.
G G HOEXTER, JA
SMALBERGER, JA )
KUMLEBEN, JA )
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