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THE DOCTRINE of CARLISLE and CUMBERLAND BANKING CO. V

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THE DOCTRINE of CARLISLE and CUMBERLAND BANKING CO. V 661 THE DOCTRINE OF CARLISLE AND CUMBERLAND BANKING CO. v. BRAGG.* The facts of this well known case. are that Bragg was induced by the fraud of Rigg to, sign a guarantee of the latter's debts upon;. the representation that it was an insurance paper. On an occasion when Rigg and the defendant had been drinking together, Rigg produced a paper purporting to relate to insurance, and asked Bragg to sign it, explaining that a similar paper which Bragg had signed on a previous day had become wet and blurred by the rain. The defendant signed without reading it. In an action brought by the Bank an the guarantee,-Bragg pleaded non est factum. The jury found that the defendant did not know that the document was a guarantee, and that he was negligent in signing. The Court of Appeal held that, in contemplation of law, Bragg had never signed the instrument, and that his negligence did not estop him from setting up the plea of anon est factum. Before this decision there was a strong current of long recognized authority for the proposition that a person who negligently executes an instrument is estopped as against third parties who acquired rights under it.' Thoroughgood's Case is the first decision.. Lord Coke held that if a deed be explained in wards other than the truth it shall not bind the unlettered layman who is deceived.3 Skinner reports a case where the court commented on a defendant's liability under a carelessly signed lease; "being able to read it was his own folly, otherwise if he had been unlettered."3a Sheppard declares that if a party who can read seals a deed without reading it, or if illiterate or blind, without requiring it to be read over to him, then although the deed be contrary to his mind, it is good and unavoid- able.4 Thus, in the absence of negligence the illiteracy of the person *This article was submitted in the competition for the Carswell Essay Prize in Dalhousie Law School and was given first place by the Faculty. 1 [ 1911;7 1 K.B. 489. 'The embryo of this idea appears in Bracton, who said that a man could get rid of his deeds by showing various matters, such as fraud, mis- take, duress but added the qualification that there must be nothing like negligence on his part. Bracton: Record Commissioners' edition vol. vi. 126, cited, Merchants Staple v. Bank of England (1888), 2.1 Q.B.D. 160, per Wills J., at p. 167. Fleta, writing at the close of the twelfth century, stated that a deed executed under a mistake as to its contents and without negli- gence was not binding, see Holdsworth, . History of English Law, vol. viii, 50. '2 -Co. Rep. 9a. 'Anonymous, Skin. 159; 90 E.R. 74. Sheppard's Touchstone,, 56. 44-C.B .R .-VOL. VI1I. 662 - The Canadian Bar Review. [No. IX. deceived is immaterial . This doctrine, wholesome though old, re- appears in Hunter v. Walters, where James, L.J ., said : To my mind it is almost ludicrous to contend and it would be most injurious to hold that, a man executing a deed and signing a receipt as a matter 'of form should be able to say it is a mere nullity . Many a trustee has endeavoured in vain in this court to escape-by saying I executed it as a matter of form. But these trustees have been made most painfully to learn that the instrument they have so signed will, with the consequences, follow them and cause them to suffer for their negligence. This principle, applying to deeds, the Court in Foster v. Mac- kinnon held applicable to all written instruments.° The Court of Appeal reviewed the matter in Howatson v. Webb .-, Farwell, L.J., thought "that the question raised by Mellish, L.J ., in Hunter v. Walters will some day have to be determined, viz., whether the old cases on misrepresentation as to the contents of a deed were not based on the illiterate character of the person to whom the deed was read over ; . and whether at the present time an educated person who is not blind is not estopped from availing himself of the plea of non est faction. against a person who innocently acts upon the faith of the deed being valid." Hovatson. v. lFebb stood as a strong authority for the proposition that a man who executes a deed without inquiring into the character will be bound by it." Carlisle v. Bragg negatived the doctrine that the negligent act of the defendant in executing excluded the plea of yon est factunz and showed that the rule is general and not subject to limitation except in respect of negotiable instruments . For leaving the safe ground of precedent the Court of Appeal gave as reasons that the negligence was not the proximate cause of the injury to the bank, that the document was not a negotiable instrument, and that Bragg was under no duty to use care as to the documents which he signed. Disapproval by text-writers has been outspoken and emphatic .° '(1871) 7 Oh. App. 75 . e (1869), L.R. 4 C.P. 704. 7 [19081 1 Ch. 1, at p. 3: " Unless, of course, something remains to complete the fraud, as in Swan's case (1863), 2 H. S C. 175. See article : Anson, The Doctrine of Carlisle and Cumberlalid Banking Co. v. Bragg, (1912) . 28 Law O. Rev. 190; Annotation, Falconbridge, [19231 4 D.L.R. 1 ; Salmond and \vinfield on Contracts, 182-4. 'See Anson : Doctrine of Carlisle and Cumberland Banking Co v. Bragg, supra ; Anson on Contracts, 17th ed., 167-169; Anson on Contracts, 3rd American ed., by Arthur Corbin, 205, where the learned editor agrees that the decision fully deserves the drastic criticism given it by Sir Wm. Anson ; Beven on Negligence, 4th ed.. 1538-1539. Pollock on Contracts, 9th ed.. 503 ; Kerr on Fraud and Mistake. 6th ed., 150-151. Salmond and Win- field on Contracts, 182-184; Benjamin on Sale, 6th ed., 124 ; contra, Spencer Bower on Actionable Misrepresentation, 2nd ed., 313-314 ; Spencer Bower ôn Estoppel by Representation, 83. Nov., 1930] Carlisle and Cumberland Banking Co. v. Bragg. 663 The decision of Carlisle v. Bragg, however, has run the gauntlet of judicial criticism with singular immunity. The Canadian Courts have accepted Carlisle v. Bragg with an unquestioning faith which is reflective of doubtful credit. The Courts of several provinces have followed it, some in decisions which the Supreme Court of Canada has affirmed, with the result that the -principle must be taken to be well established. Few attempts have been made to distinguish it, and the rule has received approval by way of obiter in a considerable number of cases where the facts made its application unnecessary. The Canadian cases which have considered, Carlisle v. Brag, exclude in large part, on their particular facts, the strict operation of the principle that negligence in the execution of documents, does not estop a defendant from availing himself of non est factum . An examination of the decisions shows that they fall into four groups : (a) Cases in which the illiteracy of the defendant gave rise to a non est factum. (b) Cases in which the defendant, . though illiterate and not negligent, failed to show a non est factum . (c) Cases in which the defendant was not negligent. (d) Cases in which the defendant, though negligent, was not estopped for the reasons given by the Court of Appeal. It is in this group of cases that the doc- trine of Carlisle v. Bragg has attained full bloom. All' four classes are reducible to the type that C- is brought by the fraud of A into contractual relations with 8 which neither C nor B contemplated . In all four, assisted misrepresentation occurr- ed, by which the defendant, negligently or otherwise, executed at the request of a third party an instrument the contents of which he did not know, -but under which others subsequently acquired rights, or changed their positions. In alh four the plaintiff alleges that he was misled by some falsity,, and that his opponent ought to be precluded from showing the facts.10 The bulk of the decisions which deal with Carlisle v. Bragg are concerned with illiterate persons who signed instruments under a fraudulently produced misapprehension of their contents. In Wat- kins v. Hanauch, 1-1- a pedlar engaged in selling- goods of Wâtkins Co., secured the defendant's signature to a guarantee by alleging that it was an application for the renewal of a license. .In Rawleigh' v. DumoulinI2 a pedlar of Rawleigh & Co., obtained a guarantee from the defendant under the guise of a letter of reference. In Watkins '° EwArt on Estoppel, chap. 25 ; article . Ewart, Estoppel by Negligence (1899)), 15 Law Q. Rev. 38'4.. '1 119261 4 D.U.R. 93 (Sask.) . --12 119267 4 D.L.R. 141 ; 119261 Can. S.CR. 551. 664 The Canadian Bar Review . [No. IX. v. jansen'-3 the defendants signed a guarantee for future advances but information was purposely withheld that the document covered past indebtedness. The defendants in all three cases could neither read nor write English. The recent Ontario case of Royal Bank v. lVannamaker" dealt with a sales agreement for an automobile. After paying the purchase price, the defendant learned that among the papers which he had signed was a note payable personally to the agent, who had taken advantage of his customer's illiteracy. The note later came into the hands of an innocent holder.
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