1. This is an appeal by the defendants from the judgment and decree of the learned Additional Subordinate Judge of Saharanpur affirming the decree of the City Munsif in a suit for recovery of dividends on certain shares with interest. The plaintiff claimed a decree for Rs. 1050 principal and Rs. 34 interest against the defendant company. Messrs. Bhagwan Das & Co., owned seven shares in the Cooperative Company Ltd. Lala Nemidas is the banking and managing proprietor of the plaintiff firm. Dr. Brijbehari Lal is the Managing Director of the defendant company. The financial year of the defendant company begins with 1st April and ends with 31st March of the following year.
2. On or about 13th April 1925, Lala Nemidas intimated to the defendant company that he was desirous of selling his seven shares. He constituted the defendant company as his agent for selling the same. The company could have refused to take up this business and could well have asked the plaintiff to sell the shares without the mediation of the Co-operative Company Ltd., or its Managing Director. The company, however, agreed to act for the plaintiff and to negotiate and complete the sale. The plaintiff alleges that he authorized the sale of the shares only but not the dividends on the shares which had accrued due for the financial year ending with 31st March 1925. The plaintiff avers that the defendant was cognizant of these terms and had agreed to sell the shares upon those terms. The powers of the Managing Director of the defendant company are not clear from the papers on the record. Neither the Articles nor the Memorandum of Association has been produced in this case.
3. In the negotiation between the parties, Dr. Brijbehari Lal represented the defendant company. He does not appear to have ever been approached in his personal capacity. Indeed, the identity of Dr. Brijbehari Lal with the Co-operative Company Ltd., has not been denied in the course of the suit. The two are indissolubly connected and intermixed. This identity has not been either repudiated or even controverted by the defendant in the Courts below. The shares in question have been purchased by the minor sons of Dr. Brijbehari Lal. This matter, however, was studiously withheld from the plaintiff. Where a company with a limited liability undertakes to sell the shares belonging to one of its shareholders, the position of its Managing Director in negotiating and completing the sale is clearly one of a fiduciary character. Utmost good faith should be expected and should be insisted upon in transactions of this description. If any advantage was obtained by the Managing Director as the fruit of the sale, whether the purchase was made in his name, or in the name of his minor sons the benefit must go to the owner of the shares. The suit, however, is not directed against Dr. Brijbehari Lal and no decree has been passed against him.
4. On the 22nd April 1925, the defendant sent to the plaintiff a cheque for Rs. 2,800 as the price of the seven shares sold. The dividend of the shares had not been declared by that time. The dividend was declared on 'the 20th July 1925. It may be noticed here that although the transaction was between business people, the entire contract between the parties was not reduced to writing. The terms of the negotiations which ultimately matured into the contract had to be collected partly from the depositions of Babu Nemidas and partly from certain letters which are on the file. Babu Nemidas was positive that he had authorized the sale of the shares but not the dividends thereon. He has been believed by the Courts below. The letters referred to above are corroborative.
5. On the 10th July 1925 Dr. Brijbehari Lal wrote to the plaintiff as follows:
With reference to your letter No. 6909, dated the 8th July 1925 we beg to inform you that no dividend has been declared and the matter of the dividend will be decided by the company in its general meeting to be held on the 20th instant. If any dividend is declared to the year 1924 to 1925 then it will be sent for you.
6. After purchasing the share3 in the names of his minor sons, Dr. Brijbahari Lal appears to have been very active and sedulous in devising means and projects with a view to appropriate the dividend himself and to deprive the plaintiff of the same. The first step taken was to ignore the letter dated the 10th July 1925. When the plaintiff asked for the payment of the dividend, he was told that the matter was to be determined by a reference to the Registrar of the Joint Stock Companies. It is difficult to understand how the Registrar of Joint Stock Companies could be treated as an arbitrator in the matter between the plaintiff and the defendant as regards the claims to the dividend on the shares sold. The next step taken was to refer the matter to a general meeting of the shareholders. The plaintiff had already sold his shares and was no longer a shareholder. Behind his back, a resolution was passed that the purchaser and not Babu Nemidas was entitled to the dividends in controversy. This resolution of the share-holders could not override the contract between the parties.
7. Lastly, it was urged that the shares were sold unconditionally on the 13th April 1925 without any reservation in favour of Lala Nemidas as regards the right to the dividends. This document dated the 13th April 1925 was not a formal instrument and did not contain the terms of the entire contract. There was nothing to preclude the plaintiff from showing that some additional supplementary agreement had been arrived at contemporaneously with the principal one, the terms of some of which were set out in the letter dated the 13th April 1925.
8. The point was vigorously argued that it was not within the competence of the trial Court to let in oral evidence deviating from the terms contained in the letter above mentioned. It was contended that the statement of Babu Nemidas that there was a contract to sell the shares but not the dividend sought to have been ruled out as inadmissible in evidence. Where there is a document in writing which does not contain the entire agreement between the parties but embodies only some of the conditions, oral evidence to prove certain other terms which had been agreed upon and which are not inconsistent with the written instrument is clearly admissible in evidence. The trial Court therefore was justified in admitting evidence to prove the terms of the original contract and the oral evidence so admitted was not in contravention of Section 91, Evidence Act.
9. The concurrent findings of the Courts below are against the defendant-appellant. It has been definitely found that the plaintiff authorized the sale of the shares but not the dividends of the same which had already fallen due. It is contended, however, that as a matter of law, the sale of the shares necessarily involves the sale of the dividends which had already fallen due. This appears to us to be too wide a proposition which lacks the support of either principle or authority.
10. Both in this country, and at the Stock Exchange, the price of shares is subject to constant fluctuation. In this rise and fall, one of the determining factors in fixing the price of the shares is that dividend is taken into account and treated as an integral part of the shares sold. There can, however, be no legal bar to a contract to sell the shares only to the exclusion of the dividends which had already become payable. We have no doubt that ordinarily and in the absence of a contract to the contrary, a purchaser of shares is entitled to all the dividends, which may have been declared after the date of the purchase. The general rule, however, may be modified by a special stipulation. In Black v. Homer sham  Ex. D. 24 the facts were that on 1st August certain shares of a company were sold by auction and a deposit was paid. The transfers were signed on 29th August. The conditions of sale were silent as to the dividends. On 24th August a dividend was declared in respect of a period antecedent to the sale by auction. It was held that the dividend belonged to the purchaser. Kelly, C.B., was of opinion that the completion of the sale had relation back to the time when the contract was trade, which vested from the moment the right to that share in the purchaser. Clearby, C.B., also took the same view, but his opinion was founded principally upon this reason that the value of the shares invariably fell immediately after the payment of the dividend:
The purchaser bought at the value before dividend, and if he does not receive it he will be paying so much more for his share than he bargained for.
11. Dr. Brijbehari Lal had bargained for the purchase of the shares to the exclusion of the dividends due thereon. There is nothing in law to preclude a share-holder from selling the shares only and reserving the dividends to himself. Where shares are sold no matter whether by private treaty or by public sale and it is definitely understood that the shares and not the dividends on the shares are the subject of bargain, the purchaser cannot deprive the original owner of his right to the dividend of a period anterior to the sale, even though the dividend may have been declared subsequent to the date of the purchase.
12. The defendant company therefore had no right either to withhold the payment of the dividend from the plaintiff or to pay the same to the purchaser. We are clearly of opinion that the plaintiff's claim was rightly decreed. We dismiss this appeal with costs including in this Court-fees on the higher scale.