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R.K. Motishaw and Co. Vs. the Mercantile Bank of India - Court Judgment

LegalCrystal Citation
Decided On
Reported inAIR1916Bom144; (1917)ILR41Bom566
AppellantR.K. Motishaw and Co.
RespondentThe Mercantile Bank of India
bill of exchange - drawer of the bill, an alien--bill drawn against goods consigned from an enemy port by an enemy steamer--shipping documents signed by an alien--acceptance of the bill by a british subject--acceptance unqualified and unconditional--war breaking out after acceptance--the enemy steamer arriving at bombay before the outbreak of war but subsequently harbouring in a neutral port to evade capture without discharging cargo--the royal proclamation dated 5th august warning persons not to obtain goodsfrom the german empire--bill dishonoured by non-payment on due date--shiping documents tendered by the holder of the bill--proclamation dated 12th december 1914 authorising british subjects to obtain goods from an enemy steamer in neutral port--the negotiable instruments act (xxvi of..........goods referred to in the bill of lading on c.i.f. c. i. terms. they admit the presentation of the bill for payment on due date but submit that war having broken out in the meantime and in view of the royal proclamation issued on the 5th august 1914 and the ordinances and orders issued by the british and indian governments, the defendants were precluded from accepting the shipping documents tendered, against which the payment of the bill was asked for, and that consequently it became impossible for the plaintiffs to perform their part of the contract subject to which the defendants accepted the bill of exchange.3. the proclamation relied upon was published in simla on the 10th of august 1914 and in bombay on the 13th of august. it warns all persons not to obtain from the german empire.....

Basil Scott, Kt., C.J.

1. The plaintiffs are a British Bank carrying on business in Bombay. The defendants are a firm of merchants, British subjects, carrying on business also in Bombay. On the 24th June 1914, George Alberti, a German, resident in Hamburgh, drew a bill of exchange upon the defendants in favour of the plaintiffs for 65-0-6 payable at thirty days' sight to the order of the plaintiffs--value received--which the drawees were to place to the account of the drawer as advised. The bill purported to be drawn upon the defendants against 50 bales of goods bearing a certain mark per S.S. Lichtenfels, a German steamer. The plaintiffs allege, and it is not disputed, that the bill was purchased by them in London for its full value and sent out to the plaintiffs in Bombay. It was presented to the defendants' for acceptance with the shipping documents relating to the bales of goods mentioned in the bill. It was accepted on the 20th July 1914 payable at the office of the plaintiffs in Bombay. The bill, therefore, would fall due for payment on the 22nd August. The S.S. Lichtenfels reached Bombay just before the outbreak of war and in order to evade capture left Bombay and took shelter in the neutral port of Marmagoa where she has since been lying. The bill was presented for payment on the due date with the shipping documents for the 50 bales attached but was dishonoured by non-payment. This suit was filed on the 30th September 1915, and it has been alleged in the plaint that the British Government had made arrangements by which consignees of cargo per S.S. Lichtenfels can obtain delivery, and the plaintiffs averred their readiness and willingness to hand over the documents against payment of the amount due under the bill.

2. The defence is contained in paragraph 4 of the written statement. It is to the following effect--that the documents consist of an invoice signed by an alien enemy, a bill of lading signed by the Captain of a German steamer with a blank endorsement thereon by an alien enemy, and an open policy of insurance of the North China Insurance Company countersigned by a German firm; and the defendants submit that the acceptance was a qualified acceptance subject to the condition that the documents should be tendered to the defendants by the plaintiffs and that the defendants should be put in a position to get the delivery of the goods referred to in the bill of lading on C.I.F. c. I. terms. They admit the presentation of the bill for payment on due date but submit that war having broken out in the meantime and in view of the Royal Proclamation issued on the 5th August 1914 and the Ordinances and Orders issued by the British and Indian Governments, the defendants were precluded from accepting the shipping documents tendered, against which the payment of the bill was asked for, and that consequently it became impossible for the plaintiffs to perform their part of the contract subject to which the defendants accepted the bill of exchange.

3. The Proclamation relied upon was published in Simla on the 10th of August 1914 and in Bombay on the 13th of August. It warns all persons not to obtain from the German Empire any goods, wares or merchandise, or obtain the same from any person resident, carrying on business, or being therein; nor to trade in any goods, wares or merchandise coming from the said Empire, or from any person resident, carrying on business, or being therein; nor to enter into any new commercial, financial, or other contract with or for the benefit of any person resident, carrying on business, or being in the said Empire. By a Proclamation, dated the 12th December 1914, all British subjects residing or carrying on business in British India were authorised to make payments for the purpose of obtaining their cargoes in neutral ports to the agents of shipowners resident in an enemy country. At the time of suit, therefore, the plaintiffs were in a position to tender documents to the defendants under which the latter would be able to get delivery of the goods referred to therein.

4. The plaintiffs contend that the defendants' acceptance was unconditional and that, as the shipping documents for the goods mentioned in the bill of exchange were tendered at the time of presentation for payment, they are entitled to payment according to the terms of the bill and the acceptance.

5. They rely upon the cases of Robinson v. Reynolds (1841) 2 Q.B. 196, Thiedemann v. Goldschmidt (1859) 1 D.F. & J. 4 and Leather v. Simpson I.L.R. (1871) Eq. 398, all cases of bills drawn against bills of lading found to be forged and presented by indorsees for value. It is doubtful whether these cases can be used in favour of a, party to a negotiable instrument. The plaintiffs here are the payees for whose protection the bill of exchange was drawn.

6. The law applicable to the case is contained in Sections 32 and 43 of the Negotiable Instruments Act. Section 32 provides: 'In the absence of a contract to the contrary, the maker of a promissory note and the acceptor before maturity of a bill of exchange are bound to pay the amount thereof at maturity according to the apparent tenor of the note or acceptance respectively, and the acceptor of a bill of exchange at or after maturity is bound to pay the amount thereof to the holder on demand'; and Section 43 provides: 'A negotiable instrument made, drawn, accepted, indorsed or transferred without consideration, or for a consideration which fails, creates no obligation of payment between the parties to the transaction.'

7. The drawee's acceptance here may be regarded from two points of view. The plaintiffs say it is an unqualified and absolute acceptance as the acceptor has added no qualifying words. The acceptor says it is qualified being drawn on him against goods and he need not pay till he is put in a position to receive the goods.

8. From either point of view the plaintiffs are entitled to succeed. If the acceptance was unqualified the defendants were bound to pay on due date, as Beaman J. said 'they accepted unconditionally the obligation to repay the moneys advanced really on their account by the Bank to Alberti before the war broke out,'--if the acceptance was qualified they were bound to pay 'at or after maturity' when the money was demanded after the Proclamation of December whereunder consignees were permitted to take delivery of goods from enemy ships in neutral ports. Time is not of the essence' and the claim of the plaintiffs may be enforced so long as it is not barred by limitation: see Smith v. Vertue (1860) 30 L.J. 56.

9. It was contended on the authority of Mirabita v. Imperial Ottoman Bank (1878) 3 Ex. D. 164 that the property had not passed to the defendants who would not be entitled to claim the goods from the S.S. Lichtenfels as owners. But it is stated by Cotton L.J. in the case cited that 'if the bill of lading has been dealt with only to secure the contract price, there is neither principle nor authority for holding that in such a case the goods shipped for the purpose of completing the contract do not on payment or tender by the purchaser of the contract price vest in him.' That is precisely the case here. The vendor dealt with the plaintiffs and drew the bill of exchange in their favour only to secure the contract price which was to be treated in the defendants' accounts as paid to the vendor: therefore on payment to the plaintiffs the defendants can claim the goods.

10. The fact that by the declaration of war the German ship-owner's contract became void is not conclusive of the case as it was in Esposito v. Bowden (1857) 27 L.J. 17, followed in the recent case of Arnhold, Karberg & Co. v. Blythe & Co. (1915) 60 SJ 156. The contract here was between the British acceptor and the British payee subject possibly to a condition which might be fulfilled after due date. All that was necessary for the fulfillment of the condition alleged was a license to take delivery from the enemy ship. That license was conferred by the Proclamation of the 12th December 1914. The Proclamation is not retrospectively operative for the purpose of validating a contract rendered invalid by the war, but operates to permit performance before it is too late of the condition alleged. The consideration for the acceptance therefore did not fail.

11. As soon as the last-mentioned Proclamation was notified the plaintiffs were, to use the terms of the 4th issue, in a position to make a valid tender of the documents relating to the goods. There must be a decree for the plaintiffs. The plaintiffs' suit was only filed, however, on the 30th September 1915. We think that a fair order regarding interest on 'the amount of the bill of exchange sued on will be that it should only run from that date though it must not be inferred from this that the plaintiffs would not, in our opinion, be entitled to succeed but for the Proclamation of December. Subject to this variation, we affirm the decree and dismiss the appeal with costs.

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