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The Secretary of State for India in Council Vs. Augustus John Arathoon - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai
Decided On
Judge
Reported in(1882)ILR5Mad173
AppellantThe Secretary of State for India in Council
RespondentAugustus John Arathoon
Cases ReferredEllis v. Hopper
Excerpt:
.....case against the contention of the plaintiff. 710 in that, in the former it is in the power of the party to the contract who has to be satisfied to decline to admit that he is satisfied and so to free himself from liability to the obligations he would otherwise be under to fulfil his part of the contract. the accidental death insurance company the matter of which the directors were to be satisfied was the evidence of a death. that was a kind of evidence of the satisfactory character of which anybody might judge, and was not therefore peculiarly within the capacity of the directors, and upon that ground alone it might well have been questioned why the contract should be construed to mean that they might refuse any evidence of the death, however satisfactory to others. if we take the other..........case was distinguishable from the cases of building contracts, in which the certificate of a third party is a condition precedent to the right to recover. he thought that colonel kerrich being one of the contracting parties, his judgment could not be regarded as conclusive, and that it was open to the plaintiff to question the reasonableness of the refusal to accept delivery and to show that his tender ought to have been accepted.2. the clause in the contract is as follows:the timber shall be of unexceptionable quality, and shall be liable to be rejected if not approved of by the said lieutenant-colonel d'oyly kerrich, e. a., or such other person as shall, during the said term, hold the office of superintendent, gun carriage factory.3. in the next paragraph of the contract are the.....
Judgment:

Innes, Officiating C.J.

1. The learned Judge considered that the question for decision was, Did the timber which the plaintiff tendered answer the description stipulated for? Referring to the specific clause in the contract whereby plaintiff agrees to submit to the judgment of Colonel Kerrich (the Superintendent of the Gun Carriage Factory), he was of opinion that the case was distinguishable from the cases of building contracts, in which the certificate of a third party is a condition precedent to the right to recover. He thought that Colonel Kerrich being one of the contracting parties, his judgment could not be regarded as conclusive, and that it was open to the plaintiff to question the reasonableness of the refusal to accept delivery and to show that his tender ought to have been accepted.

2. The clause in the contract is as follows:

The timber shall be of unexceptionable quality, and shall be liable to be rejected if not approved of by the said Lieutenant-Colonel D'Oyly Kerrich, E. A., or such other person as shall, during the said term, hold the office of Superintendent, Gun Carriage Factory.

3. In the next paragraph of the contract are the following words:

And further, in consideration of the agreement so entered into as aforesaid by the contractor A. Arathoon, the Secretary of State for himself and his successors doth on his and their part agree to pay or cause to be paid for all such approved timber as shall be supplied by the contractor, &c.;, &c.;

4. The timber tendered was not approved by Colonel Kerrich, and if this clause is to be construed strictly plaintiff must fail as to his claim to damages.

5. The learned Judge being of opinion that it was open to plaintiff to question the reasonableness of the refusal to accept the delivery, went into the evidence-as to the quality of the timber tendered.

* * * *

6. (His Lordship, upon the assumption that it was open to the plaintiff to question the reasonableness of the Superintendent's decision, then considered the evidence as to the quality of the timber, and came to the conclusion that the plaintiff had not proved that the timber was of the quality required, and proceeded as follows : )

But I am of opinion that it was not open to plaintiff to question the reasonableness of Colonel Kerrich's disapproval.

7. The rule of the Civil Law that a condition the happening of which is at the will of the party making it is null and void as being destructive of the contract (Dig. XLV, Tit. I, 108)* probably relates to where the promisor is not bound to exercise a discretion, as a promise by one to give 'if I am so minded,' for sales and other contracts on a condition the happening of which was entirely subject to the result of a mental process of discrimination on the part of one party were undoubtedly recognized as valid (see XVIII, Dig., Tit. I, de contra-henda- emtione; see also Pothier, Part I, C.I, Article III, Section 7). At all events it is not a rule of the Indian Law of Contracts, and it may be doubted if it is a. rule of the English law.

8. Andrews v. Belfield 2 C.B. 779 is a very strong case against the contention of the plaintiff. In that case the purchaser made his acceptance of a carriage which he ordered to be built dependent on his approval of it as regards workmanship, convenience, and taste. It was held that the vendor was bound by the condition. Hotham v. The East India Company Dougl. 27. I.T.R. 638 may also be noticed as a case in which the condition was recognized as a valid condition. The exact point in that case, however, did not arise, as plaintiff's case was that the defendants, in whose entire control the performance of the condition rested, had prevented the performance of it, and that plaintiffs should therefore be allowed to recover as though it had been fulfilled, and it was so held.

9. Faulkner v. Lowe 2 Ex. 595 which is quoted in the notes to Section 31 in Cunningham and Shephard's Commentary on the Indian Contract Act as an authority for the rule of the English law that the event upon which the promise is to be performed must not be one within the control of the promisor, has been doubted in Aulton v. Atkins 18 C.B. 249.

10. In Grafton v. The Eastern Counties Railway Company 8 Ex. 699 the defendant pleaded that no part of the coke was to the satisfaction of the defendants' inspecting officer for the time being, as it had been stipulated that it should be. It was observed by the plaintiff that 'upon the defendants' construction of this contract they have themselves an absolute power of discretion in the matter,' upon which MARTIN, B., remarked: 'Parties, therefore, ought to be careful how they enter into contracts containing stipulations giving such powers; 'and it was decided per curiam that the clause in question is a condition precedent to the plaintiff's right of action and is binding upon him. As was observed by Crompton, J., in Braunstein v. The Accidental Death Insurance Company 31 L.J. Q.B. 17 the question is still, as stated by Ashhurst, J. in Hotham v. The East India Company. What was the intention of the parties?

11. The judgment in Braunstein v. The Accidental Death Insurance Company proceeded upon the ground that in that particular case it could not have been the intention of the parties to leave it to the, arbitrary discretion of the Directors to say what evidence of a death would be sufficient. But BLACKBURN, J., says in that very case: 'I quite admit that parties may make what they please a condition precedent, but it must be shown that they so intended. No doubt they might have stipulated that no money should be payable under a policy unless the Directors should obtain any evidence they choose to ask for. But it would require very distinct language and much stronger than any used here, to show that the parties so intended. Here also is an express provision for reference to arbitration which would be quite idle if there were a general clause compelling the party injured to furnish any evidence the Directors should require.'

12. Cases in which one of the parties is to do some thing to the satisfaction of the other party or of the agent of the other party, as in the present case, are no doubt distinguishable from cases where the approval is to be that of some third person, as the architect in building contracts, Morgan v. Birnie 9 Bing. 672 and Clarke v. Watson 18 C.B. N.S. 278 148 or as in Worsley v. Wood 6 T.R. 710 in that, in the former it is in the power of the party to the contract who has to be satisfied to decline to admit that he is satisfied and so to free himself from liability to the obligations he would otherwise be under to fulfil his part of the contract. But this only Tenders it in such contracts the more necessary to ascertain whether the parties really intended that one of the parties should have this discretion, and that is what it is necessary to see here.

13. In the case of Braunstein v. The Accidental Death Insurance Company the matter of which the Directors were to be satisfied was the evidence of a death. That was a kind of evidence of the satisfactory character of which anybody might judge, and was not therefore peculiarly within the capacity of the Directors, and upon that ground alone it might well have been questioned why the contract should be construed to mean that they might refuse any evidence of the death, however satisfactory to others. But in the present case the knowledge of the quality of wood required was peculiarly confined to the officer of the Factory, and there is nothing, therefore, unreasonable in supposing that it was intended that an ordnance officer should be the sole judge of the fitness of the wood offered. If we take the other view, then, in England, in such a case it would be open to a jury to act upon such evidence as that of the cabinet-maker and other witnesses in this case who have not been in the habit of seeing and judging of the best quality of wood, and to award damages against the defendant for not accepting wood which, in the opinion of those peculiarly fitted to judge, was not suited to the work required.

14. Further, there seems to be no difference in principle between such a condition and the common every day contract to purchase goods sent on approval. In such a case it is understood that if not approved the goods will be returned, and there is no purchase; but if the goods are left beyond a reasonable time the approval is regarded as having been signified, and the sale is complete.

15. There is no allegation in this case that defendant failed to exercise a judgment in regard to the suitability of the wood. Had this been so, the case would have to be decided on the principle of Hotham v. The East India Company, in which the defendants wilfully prevented the fulfilment of the condition. In the present case there is no allegation that, the disapproval was other than a genuine disapproval of the class of wood tendered, and, as the approval was a valid condition precedent and that condition was not fulfilled, the defendant cannot be held liable for not accepting the wood offered.

16. He was entitled to deduct the amount now claimed from the deposit.

17. The decree of the learned Judge must, therefore, be reversed and the plaintiff's suit dismissed with costs.

Muttusami Ayyar, J.

18. after stating the facts, proceeded as follows:

Without venturing, however, to differ from the learned Judge--who had the witnesses before him--as to the weight due to the evidence, I must still hold that Colonel Kerrich's approval is a condition precedent to the acceptance of the timber tendered for delivery. That it is so upon the construction of the contract there is no room to doubt, but it is argued that Colonel Kerrich is a party to the contract, and that the acceptance of the timber ought not to be made to depend upon his approval. It is not strictly accurate to say that Colonel Kerrich is a contracting party, for he is the agent of such party. Taking it, however, that whether he is the one or other it would make no difference in the decision of the question, I fail to see on principle why he should not also be at the same time an expert in whose judgment the plaintiff had confidence.

19. It is said that if his approval is a condition precedent to his obligation to take delivery, there is no obligation at all in so far as he is concerned. This view, it seems to me, is erroneous. Having regard to the definition of a right by the jurists of modern Germany, I may say that a contract is a transaction permitted by law whereby two or more parties constitute their concurrent will, with the intention of founding a duty; into a dominant: will as between themselves regarding some matter in which they are interested. In dealing with this subject, it is important to distinguish between the act of constituting the concurrent -into the dominant will and the contents of that will. Referring to it an eminent German jurist (Windscheid's Pandecten Law, Section 93) says that where a party to be bound by the declaration of his will annexes to such declaration a condition that he will be bound when he wills it, he is not bound at all. The reason is this. The declaration of the will is then contradictory in itself, as it says, I mean to hind myself and to impose a duty on myself, and yet I do not now bind myself or undertake the duty. But it is otherwise, he adds, when the condition annexed is some act of the party bound, different from the declaration that his individual will is to be subordinated to the dominant will. In the one case the vital energy of the obligation is destroyed at once, while in the other the date on which that energy is to pass into a living obligation is postponed. He next proceeds to illustrate his meaning and states : if one says, 'I will that this shall be when I should will that it shall be,' he merely plays with words; but if, on the other hand, he says that this shall be when I will that should be, he says something very reasonable. Taking this as a guide, the question as it seems to me is this, whether it is the subordination of the [180] individual to the concurrent will or something else that is the object-matter of the condition. If the former, there is no obligation at all, but if the latter, it finds a place among the contents of the obligation, and relates to the date on which it is to become operative. The object-matter of the clause in regard to Colonel Kerrich's approval is not his arbitrary choice whether or not he will accept the timber, but it is an undertaking to judge of its quality and suitability to ordnance purposes as an expert, and to be guided by that judgment in accepting or rejecting the timber. The demand made by the plaintiff that the sample logs be tested, the compliance with that demand, and the tabulation of the results of the test for future reference, seem to point to a mutual belief that the quality of the timber is to be judged of in a scientific manner as the basis of Colonel Kerrich's approval or disapproval. I need hardly add that the principle laid down in Aleyn v. Belchier White and Tudor, Vol. I, p. 377 that a power of appointment ought to be exercised bond fide for the end for which it is given is one of the first principles which apply to all powers, whether created by contract, or will, or law, and whether their object-matter is the nomination of an heir to a fund left by a testator, the sanctioning by a sapinda of an adoption to be made by a Hindu widow, or any power to be exercised by one contracting party over the other. If the power is exercised bond fide and for the end for which it is given, an error of judgment, which, from the nature of the case, is a risk originally contemplated by the party bound and agreed to be submitted to, can be no valid defence. If, on the other hand, it is not exercised bond fide, or exercised for a collateral or sinister purpose, it is a fraud upon power and a ground of relief. The stipulation in this case regarding Colonel Kerrich's approval constitutes his opinion as an expert into a pre-appointed measure of the suitability of the timber to ordnance purposes.

20. The learned Judge distinguishes this contract from building contracts. The expert is no doubt in the one case an interested party, while in the other he is a third party; but the expert's opinion is binding in the latter not because he is a third party, but because he is the person in whose judgment the other party chooses to confide. Here I may refer to the principle laid down by Lord Campbell in the leading case of Dimes v. The Grand Junction Canal Company 3 H.L. 794 and which may, at first sight, seem to favour the plaintiff's contention, viz., that no man is to be a judge in his own cause. This rule certainly applies in the case of persons constituted judges without the option of the parties. In Banger v. The Great Western Railway Company 5 H.L. 72 the principle was held not to apply to avoid the award of a referee, to whom, though necessarily interested in the result, the parties had contracted to submit their differences, though ordinarily it is contrary to reason that an arbitrator or umpire should be the sole and uncontrolled judge in his own cause. Again in Ellis v. Hopper 3 H. & N. 767 in which one of the conditions of a race was that all disputes should be settled by the stewards, whose decision should be final, and one of the stewards had betted against the defendant's mare, Baron Bramwell said: 'the question put by my brother Watson in the course of the argument seems to be decisive, viz., is there any implied condition that the appointed arbitrators of judges shall be without power if one of them becomes interested in the event of the race? If none exists, then, is there any general proposition of law that whenever a dispute is referred to one or several persons, his or their power shall cease if any of them becomes interested in the event? I know of no such rule. When parties agree to refer a matter, they may, if they please, insert a condition to that effect; but if they do not, why should we make such a condition for them?' My judgment proceeds on the ground that there was no implied condition that the being interested should take away the power to act. The result is that where there is contract, it is the intention of the parties that governs, and that there is no general proposition of law that one of the contracting parties should not refer a matter to the judgment of the other by reason of the other being interested.

21. On these grounds and upon the authority of the cases cited by the Officiating Chief Justice, I am also of opinion that the judgment appealed against should be reversed and the suit dismissed with all costs.

* Nillla promissio potest consistere, quaex voluntate promittent is statum capit.


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