The Nature of Ministerial Receipt

Abstract

Abstract In Holland v Russell1 the defendant, as agent for a foreign owner, entered into a policy of insurance of a ship. At the time he made the contract, the defendant was in possession of a letter from the ship’s captain informing him of an injury to the ship which he failed to disclose to the underwriters, though it was found as a fact that he had no fraudulent intention to deceive. The failure to disclose, however, meant that the contract of insurance was voidable. The ship was subsequently lost and the plaintiff, one of the underwriters, paid out on the policy to the defendant, who then passed the money on to his principal. The underwriter’s subsequent restitutionary claim against the defendant for money paid under a mistake of fact failed. The Court of Queen’s Bench (Cockburn CJ, Wightman and Blackburn JJ) held that when money so paid to an agent has once been bona fide parted with without notice, the liability of the agent ceases and the claim can only be brought against the principal. This chapter is concerned with the question why in certain circumstances such a defence will defeat an otherwise valid restitutionary claim. The reasons are not self-evident, particularly when it is considered that there is no comparable defence in the law of torts. Various explanations have traditionally been put forward. It is sometimes said that the receipt of the agent is the receipt of the principal, so that by the receipt the agent is not enriched. Elsewhere it is thought to be an early manifestation of the defence of change of position. Another explanation focuses on the fact that in receiving the benefit from the plaintiff and paying it over to his principal, the agent is merely performing his duty to his principal. A fourth looks to the agent’s assumption of responsibility and justifies the immunity on the basis that the agent undertakes no liability to anyone other than his principal.

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