Case No.:

AC-APP-15-1962

Court:

Court of Appeal

Issue No.:

1962

Principles

·  Agency—Irrevocable authority—” Authority coupled with an interest “—Power given as security

Defendant’s employer owed him £S.552, payable May 5, 1960. Needing the money before April z 1960, defendant borrowed £S. from Khalafalla and wrote a post-dated cheque to Khalafalla for that amount. To secure payment defendant made an agreement with plaintiff whereby plaintiff wrote a cheque to Khalafalla for the amount of defendant’s debt to Khalafalla and defendant gave written authority to plaintiff to recover the £S.552 owed by defendant’s employer on May , 1960. Before repayment to Khalafalla, defendant attempted to revoke by telegrams to defendant’s employer and plaintiff the authority given to plaintiff.
Held: Where by agreement and for sufficient consideration authority is given in order to secure a debt to the donee that authority “coupled with an interest is irrevocable.

Judgment

                                              (COURT OF APPEAL) *

                       ZEIDAN BIREIMA v. ABDEL MONEIM YOUNIS

                                               AC-APP-15-1962

Advocate: Abdel Rahman Yousif ... for plaintiff-appellant

Mohamed Yousif Mudawi P.J. July 3, 1962 (HC-CS-241-1960): —On May 17, 1960, plaintiff, Zeidan Bireima, an employee of Khartoum Municipal Council, instituted these proceedings against defendant, .a school master of Khartoum and father-in-law of plaintiff, for the recovery of £S.552

My learned brother, Judge Osman El Tayeb, framed the following admissions and issues:

Admissions

1. Defendant had the sum of £S. due to him as a gratuity from the Khartoum Municipal Council.

2. On April 19, 1960, an agreement was made between plaintiff and defendant and in pursuance of that, defendant executed a document authorizing plaintiff to recover from the Council the above sum and in consideration, plaintiff drew a cheque for an equal sum (payable to a third party by name Mustafa Khalafalla. The cheque was payable on May 10, 1960.

3. On April 29, 1960, defendant left for Cairo; soon thereafter defendant ommunicated with the Council and cancelled the authority he gave to plaintiff for the receipt of the money Issues

i. Does the said authority constitute a contract of agency, assignment, debt and transfer of a right to money? (Open issue)

2. In any case is defendant entitled to cancel it? (Defendant)

3. Is plaintiff entitled to recover the amount claimed?

The evidence adduced by plaintiff and to a certain extent supported by defendant’s admissions shows clearly that defendant, Abdel Moneim Younis, had in 1960 planned to go to Egypt and he therefore wanted to raise a fund for the trip. He was at the time entitled to receive the amount of £S. as gratuity from Khartoum Municipal Council. But that amount was payable on May 5, 1960, and defendant was scheduled to leave for Cairo on April 29, 1960. However the difficulty was solved by a normal market place device. A certain Mustafa Khalafalla agreed to supply the needed amount, i.e., £S. The repayment of this money by defendant was to be secured by plaintiff who instantly drew a cheque for the benefit of the said Mustafa Khalafalla for the amount of £S.S payable on May 10, 1960. In consideration of this guarantee given by plaintiff, defendant gave plaintiff an authority to receive the money due from the Municipal Council. Defendant also executed a cheque for the same amount to be paid to Mustafa Khalafalla on May xo, 1960. This deal being completed, defendant took the train on April 29, 1960, on a happy journey to United Arab Republic. However, at the Egyptian frontier defendant underwent a change of heart and mind and sent a telegram and a host of letters to plaintiff and Council purporting to revoke the authority he gave to plaintiff, the Municipal Council considered the authority as revoked and refused to pay the money to plaintiff. It was presumably paid later to defendant. Plaintiff then made some arrangement with Mustafa Khalafalla, an arrangement that has no direct bearing on this case, to postpone the enforcement of the security.

In the opinion of this court the facts set out above reveal a contract of agency in which plaintiff has an interest; that is, the authority to receive the money due from the Council was given as a security for the guarantee plaintiff gave to Mustafa Khalafalla for the benefit of defendant. The plaintiff, so to speak, incurred a liability and bestowed a benefit on defendant, and, as a price for this; the authority was conferred upon him. In short, the authority given to plaintiff is an authority coupled with an interest and as such it cannot be revoked.

In Smart v. Sanders (1848) C.B. 895, 917, cited in Powell, Agency 313 (1952), Wilde C.J. stated:

“Where ‘an agreement entered into on a sufficient consideration, whereby an authority is given for the purpose of securing some benefit, to the donee of the authority, such an authority is irrevocable. This is what is usually meant by an authority coupled with an interest and which is commonly said to be irrevocable. But we think this doctrine applies only to cases where the authority is given for the purpose of being a security or as part of a security.”

[See also Bowstead, Agency 301—303 (12th ed. 1959); Hanbury, Agency 86—87 (1952); Mechem, Agency 175—180 (4th ed. 1952).]

In view of the above it is decided that the authority given to plaintiff is irrevocable and hence judgment is given for plaintiff with costs.

M. A. Hassib, Acting Chief Justice. December ‘3, 1962: —This appeal in my opinion is hopeless. The appeal raises two points:

(1) The facts arrived at by the court are against the weight of evidence and

(2) The court was wrong in finding that the transaction amounted to a contract of agency coupled with interest.

I do not agree that the facts found by the court are not sufficiently proved. There is sufficient evidence in support of the facts found by the court, which were partly admitted by the appellant himself.

The learned Province Judge has come to the conclusion that the facts proved revealed a contract of agency in which the plaintiff (agent) had an interest and thus it cannot be revoked by the appellant.

This inference is supported by the authority in Smart v. Sanders cited by the learned Province Judge.

The classical statement of the rule that is given by Wilde C.J. in Smart v. Sanders, supra, cited in Powell, Agency 313 (1952), is as follows:

“Where an agreement is entered into on a sufficient consideration, whereby an authority is given for the purpose of securing some benefit to the donee of the authority, such an authority is irrevocable. This is what is usually meant by an authority coupled with an interest and which is commonly said to be irrevoc2ble. But we think this doctrine applies only to cases where the authority is given for the purpose of being a security or . . . as part of the security, not to cases where the authority is given independently and the interest of the donee of the authority arises afterwards and incidentally only.”

In the present case the plaintiff was given the authority for valuable consideration as a security in respect of a liability of the principal to the agent. He in fact guaranteed to the third party (Mustafa Khalafalla) the payment of the loan advanced by the latter to the appellant.

The allegation by the appellant’s advocate that the transaction was but an assignment of a chose in action therefore has no support in law.

The rule was applied in a similar transaction in Alley . Hotson (1815 4 Camp. 325, cited in Powell, Agency 314 (i where the principal became bankrupt:

P owed A money. Before going abroad P gave A a power of attorney and sent an order to T to send A the proceeds of sale of certain goods which P had previously consigned to 1. T sent the proceeds to A, but before A received them P committed an act of bankruptcy.

“Held: A could still apply the proceeds in satisfaction of P’s debt to him.”

The word “irrevocable” is used in this sense to express the rule that in these cases the agents’ authority cannot be terminated by the act of the principal without the agents’ consent or by the principal’s death or bankruptcy or insanity, and where the principal purports to terminate the authority by his own act it has been held that an injunction can be obtained to restrain revocation. Revocation is therefore null and void. If the agent has incurred a personal liability as had happened in this case he is entitled to be indemnified against the liability he has incurred: Read v. Anderson (1885) 13 Q.B.D. 779, cited in Powell, Agency 315, fl. 8 (1952).

Babiker Awadalla J. December 15. 1962: —l agrees that this appeal is hopeless

* Court: M. A. Hassib J. and B. Awadalla J,