City Bank of Sydney v McLaughlin [1909] HCA 78

OF AUSTRALIA. 615

(HIGH COURT OF AUSTRALIA.]

THE CITY BANK OF SYDNEY . . . APPELLANTS ; DEFENDANTS, AND McLAUGHLIN . E 4 ' . 4 . RESPONDENT. PLAINTIFF.

ON APPEAL FROM THE SUPREME COURT OF NEW SOUTH WALES.

Principal and Agent—Power of attorney executed by lunatic—Unauthorized act of H.C. oF A. agent—Ratification—Adoption—Money borrowed by wife of lunatic~Depositof 1909. title deeds—Expenditure for husband's benefit—Right of lender to stand in place = ——

of creditor of husband—Banker and customer—Accounts—Contract by lunatic— S¥DNEY, Equitable estoppel. Dec. 9, 10, 13, 14 17.

In October 1900 the plaintiff, who was then insane, executed a power of attorney in favour of bis wife. The wife, purporting to act under the power iffith C.4., of attorney, lodged certain title deeds of property of the plaintiff with the Issacs JJ. defendant bank, at which the plaintiff then had a current account, and in November 1900 executed a mortgage over this property as security for advances to be made by the bank toher. Cheques were drawn on this account by the wife, and with the moneys so obtained she made payments for neces- saries for herself and the plaintiff, and also paid the sum of £2,100 to a trust account, of which the plaintiff was a trustee, in repayment of a sum which the plaintiff had taken out of the trust account and paid into his own private account, and the sum of £1,775 in settlement of claims made against the plaintiff by a client for whom the plaintiff had acted as solicitor. In March 1903 the plaintiff recovered his sanity, and in 1907 brought this euit against the bank seeking to recover the title deeds lodged by his wife, and to set aside the mortgage, upon the ground that the power of attorney was void. The bank in its statement of defence set up the power of attorney as a valid instrument, and further alleged that by means cf advances obtained from the bank the wife discharged the plaintiff's debts and obligations, and that tho plaintiff had accepted the benefit of the advances so made, and had adopted