6 Corporations and the ultra viresrule. Where the
employer is a corporation there are further difficulties
as regards the corporation’s vicarious liability, because
the act which the employee does when he causes injury
may be beyond the corporation’s powers, or ultra vires,
i.e. beyond the scope of what its constitution says it can
do, though little if anything would be beyond the scope
of a company which had adopted the ‘one line objects
clause’ approach as a general commercial company (see
further, Chapter 6). This constitution may, as we have
seen, be a statute or a charter, as with a professional
body, such as the Institute of Chartered Secretaries and
Administrators, or the objects clause of the memoran-
dum in the case of a registered company. It is necessary,
therefore, to distinguish between those acts of employ-
ees which are within the company’s powers (intra vires)
and those which are outside its powers (ultra vires).
(a)Intra vires activities. If an employee of a corporation
injures someone by negligence while acting in the course
of his employment in an intra viresactivity, then the
corporation is liable. Although it has been said that any
wrongful act committed on behalf of a corporation must
be ultra viressince the corporation has no authority in
its constitution to commit wrongful acts, this view has
not been accepted by the courts. Therefore, a corpora-
tion can have liability in law without capacity in law.
A corporation is liable, therefore, under the rule of
vicarious liability, for injuries caused by its employees
on intra viresactivities. Thus, a bus company which is,
obviously, authorised by its memorandum to run buses,
will be liable if an employee injures a pedestrian while
driving a bus along its routes.
(b)Ultra vires activities. A corporation will not be liable
if one of its employees gets involved in an act which is
ultra viresthe corporation unless he has express author-
ityfrom management to do the act.Part 4Business resources
498
called Morrisey, who had been employed by the defend-
ants for a few weeks only, though they had no grounds
to suspect that he was dishonest. The claimant sued the
defendants for damages for the tort of conversion. The
county court judge held that the act of Morrisey, who
had removed the stole by wrapping it around his body,
was beyond the scope of his employment.
The Court of Appeal, however, decided that the de-
fendants were liable to the claimant because Morrisey
had been entrusted with the stole in the course of his
employment.
Comment.
(i)The above rule applies only in circumstances where
the employee is entrusted with, or put in charge of, the
goods by his employer.
The mere fact that the employee’s employment gives
him the opportunity to steal goods is not enough. Thus,
in Leesh River Tea CovBritish India Steam Navigation
Co(1966) a person employed to unload tea from a ship
stole a brass cover plate from the hold of the ship while
he was unloading the tea and the court decided that he
was not acting in the course of his employment on the
grounds that his job had nothing to do with the cover
plate.
Perhaps if the plate had been stolen by someone
who was sent to clean it, then that person would have
been acting within the course of employment and his
employer might well have been liable.
(ii)The fraudulent or criminal act must be committed
as part of the employment, that is as an act within the
scope of employment. In Heasmansv Clarity Cleaning
(1987) the Court of Appeal decided that the defendants
were not liable when their employee, who was sent to
the claimant’s premises to clean phones, made unau-
thorised calls on them to the value of £1,400. He was
employed to clean phones not to usethem.Poultonv London & South Western
Railway Co(1867)
The claimant was arrested by a station master for non-
payment of carriage in respect of his horse. The defend-
ants, who were the employers of the station master, had
power to detain passengers for non-payment of their
own fare, but for no other reason. The court decided that,
since there was no express authorisation of the arrest by
the defendants, the station master was acting outside
the scope of his employment and the defendants were
not liable for the wrongful arrest.
Comment.
(i)A contrast is provided by CampbellvPaddington
Borough Council(1911). The members of the Council
had passed a resolution authorising the erection of a
stand in Burwood Place, London in order that members
of the Council could view the funeral procession of King
Edward VII passing along the Edgware Road. The claimant,
who had premises in Burwood Place, often let them so
that people could view public processions passing along
the Edgware Road. The Council’s stand obstructed the
view of the funeral procession from the claimant’s house
and she could not let the premises for that purpose. The
court decided that the Council was liable. The fact that