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Tortious liability of Company and Director

Liability of Company

Although companies are seldom created to do what is wrong, and can seldom be said to have in fact authorized the wrongful acts of their directors or servants, it is plain that the ordinary principles of agency apply to companies; and on these principles, companies are liable for the negligence of their servants, and for torts committed by them in the course of their employment; and it never has been admitted, as a sufficient reason for non-liability on the part of the company, that it did not in fact authorize the very act complained of. All that is necessary to charge the company is that the act complained of should be intra vires, and not ultra vires, and should be committed for the company by its agent or servant in the course of the business to which it is his duty to attend, or as it is sometimes expressed, in the course and as part of his employment.

Upon this principle it has been held that the Bank of England is liable for a wrongful detention of bank-notes by its servants1); that a banking company is liable for the loss of securities entrusted to it and carelessly kept2); that a company is liable for a wrongful seizure of goods made by its servants for non-payment of tolls; for wrongful assaults3) and arrests if made by persons authorized to act for the company in removing persons or giving them into custody.4); for negligence in laying down gas-pipes5); for reckless driving6) ; for the infringement of a patent by its servants contrary to the orders of its directors 7); and for the publication of a libel by transmitting it by telegraph; or dictating it to a, copying clerk. Moreover, in such cases, as those now in question, it is not necessary, in order to fasten liability on the company to prove any formal appointment of the agent by the company. It is, however, essential in order that a company may be liable for the wrongful acts of its servants that those acts should be such as the company could have authorized and that they should have been authorized or ratified by the company, or have been done by the servants in the course of their employment, and not when acting in matters to which it is not their duty to attend. A company was not held liable for injuries committed by a dog kept in a yard, there being no evidence to show that the savage nature of the dog was known to any one who had charge of it, nor to the company's manager, nor, in fact, to anyone whose knowledge could be considered as the knowledge of the company, although it was proved to be known to one or two of its servants.

Personal liability of Directors

Directors are personally responsible for any torts which they may themselves commit or direct others to commit, although it may be for the benefit of their company. In a case where a company had been formed, and registered under a name calculated to deceive, for the fraudulent purpose of obtaining the benefit of another trader's name and reputation, the directors, who were the seven signatories and sole shareholders of the company, were held liable for the fraud, and an injunction was granted to restrain them from allowing the company to remain registered under that name.8) It was held in a case in which a company infringed a patent, that the directors were personally liable for the costs of a suit to restrain the infringement.9) But it would be contrary to principle to hold directors personally responsible for the negligent or other acts of other, servants of the company, unless the directors are themselves personally implicated in such act.

Yarborough v. Banh of England
Johnston's claim
Butler v. M. & S.
Moore v. M.
Scott v. Mayor of Manchester
Green v. London General Omnibus Co.
7) , 9)
Betts v. De Vitre
La Societe A.L. v. Panhard L. & Co., (1901) 2 Ch. 513

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