1. This second appeal arises out of a suit brought by the plaintiff-respondent firm against the Secretary of State for India in Council as representing the North-Western Railway and against the Agent of the B.B. & C.I. Ry. Co. Ltd. (which defendants will in this judgment be called 'the Railway Company') for the value of sacks of wheat which the plaintiff alleged to have been wrongly delivered by the railway company concerned to a person not entitled to them at Bombay.
2. The facts of the case, so far as they are necessary for deciding the present appeal are as follows: The goods were consigned from Saharanpur on the 13th May 1921, and reached Bombay on the 29th May 1921. They were unloaded on the 30th May 1921, and delivered on the 31st May, 1921 to the Prince of Wales Flour Mills. The railway receipt at Saharanpur was handed over to the plaintiff, the plaintiff himself being entered both as consignor and consignee. Without endorsing the same he sent it by post to one Shiv Ram Narain. Shiv Ram Narain endorsed to the Prince of Wales Flour Mills which firm took delivery. On the same day, but after delivery of the goods, the plaintiff gave notice to the railway company not to deliver the goods to Shiv Narain or any one else but himself. The sole question, with which we are concerned in this appeal, is whether the railway company acted illegally in making the goods over to the Prince of Wales Flour Mills.
3. This is a remarkable case. On the facts, as stated, the railway company had a simple reply, and it was as follows:
The plaintiff by sending the railway receipt to Shiv Ram Narain appointed him as his agent for taking delivery of the goods by implication. We delivered the goods to the Prince of Wales Flour Mills, who was appointed sub-agent of the plaintiff's agent by endorsement of Shiv Ram Narain to the Prince of Wales Flour Mills on the receipt.
4. This defence was not raised in the written statement in the trial Court, and as it has not been considered in the judgment of either of the two Courts, we may presume that it was not raised in argument in either of those two Courts. Nor indeed is it taken in any ground of the memorandum of appeal before us. Ground 4, would have been a statement of this plea but for the insertion in that ground of the words 'a document of title'. The insertion of these words must mean that if the railway receipt had not been a document of title, Shiv Ram Narain would not have been an agent. The plea, therefore, does not raise a defence of mere agency. The plea was for the first time put forward in argument in our Court.
5. It would appear to us that the omission of the railway company to take this simple plea was due to misapprehension by their legal advisers of the law. Apparently there was an idea that the condition in the railway receipt that delivery would only be given to an agent appointed by endorsement on the railway receipt, debarred the railway company from pleading that Shiv Ram Narain was, in fact and in the eyes of the law, a duly appointed agent of the plaintiff. The condition in the railway receipt could not affect the provisions of the Contract Act. Shiv Ram Narain was clearly appointed an agent for biking delivery of the goods by the act of the plaintiff in sending him the railway receipt even without endorsement. The railway company could take advantage of the fact that Shiv Ram Narain was the plaintiff's agent, notwithstanding the rule that they would not recognize an agent appointed otherwise than by endorsement on the railway receipt. This rule remained a mere threat until it was acted on by the plaintiff or by the Railway Company. In order to take any advantage of the rule, the plaintiff was bound to show that he had been induced by the rule to believe that the railway company would not treat Shiv Ram Narain as his agent and had altered his conduct by reason of such inducement. In other words, the plaintiff could only rely on the rule in the railway receipt as an estoppel. It does not appear that he even pleaded such an estoppel much less that he furnished evidence to prove such an estoppel. But he was under no obligation to do either, until the railway company took the plea that Shiv Ram Narain got the goods as his (the plaintiff's) agent. For this reason, we are not prepared to entertain this plea, which has been advanced for the first time in argument in this Court.
6. Instead of taking this obvious and simple plea, which should have disposed of the case quickly and easily, the railway company took up various untenable pleas. Their main plea was in effect that a railway receipt, even though unendorsed, is it document of title in the hands of the person to whom it is sent. The lower appellate Court was perfectly correct in holding that this would be a dangerous view to take, and that it was impossible to take it, in the absence of evidence to show a mercantile custom, that an unendorsed railway receipt is used in the ordinary course of business as proof of the possession or control of goods' see Sections 4 and 137, T.P. Act and the Privy Council decision, Ram Das Vithaldas v. S. Amerchand & Go. A.I.R. 1916 P.C. 7. Even assuming that the unendorsed railway receipt was a document of title there is no authority for holding that possession of it by a certain person justifies another person in regarding the possessor as a duly appointed agent. Under Ss 1.08 and 178, Contract Act a document of title is a negotiable instrument to the extent that the possessor of it can give a valid title of the goods represented thereby to a vendee or a pledgee. The principle underlying these sections is that a bona fide transferee for value may rely on delivery of a document of title as proof that the person delivering it is entitled to transfer the goods represented by the document. The principle cannot operate in favour of a mere agent in any way.
7. Another plea taken up was that the plaintiff was estopped from denying that Shiv Ram Narain was his agent by sending Shiv Ram Narain the railway receipt When a person's act has a certain legal effect, it is desperate to plead that act operates by estoppel. The act operated directly of itself and not indirectly by misleading the railway company. Moreover the railway company, up till the time of the delivery of the goods, were not aware that the plaintiff had given Shiv Ram Narain the railway receipt, The mere fact that Shiv Ram Narain endorsed the railway receipt to his sub-agent was no proof that he had got the railway receipt from the plaintiff.
8. The plea of contributory negligence was not advanced in this Court, and though admitted by the trial Court, was obviously irrelevant and untenable.
9. For the above reasons we are constrained to uphold the decision of the lower appellate Court though on different grounds. If the case had been properly pleaded, it is probable that the railway company would have been successful. At any rate we wish to make it clear that if a person gives a railway receipt to another person, the inference is that the appoints that other person his agent to take delivery of the goods from the railway company, and the fact that in the rules printed on the railway receipt the railway Company state that it will not recognize an agent appointed otherwise than by endorsement, will not prevent the railway company from pleading that other person was in fact an agent and entitled to receive the goods. The rule, however, may operate as an estoppel if the consignor has acted on the belief that the railway company would not recognize as his agent the person to whom the railway receipt has merely been sent without endorsement.
10. For the above reasons we dismiss this appeal with costs.