Skip to content


Harry Meredith, the Liquidator Appointed for the Purpose of Winding Up of the Firm of J.H. Elliot and Co. Ltd. of Birmingham Vs. V.K. Abdul Sahib and ors. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai
Decided On
Reported in(1918)35MLJ184
AppellantHarry Meredith, the Liquidator Appointed for the Purpose of Winding Up of the Firm of J.H. Elliot an
RespondentV.K. Abdul Sahib and ors.
Cases ReferredIreland v. Livingstone I.L.R.
Excerpt:
.....mentioned. clear condition in contract that purchasers would have to definitely deposit balance amount by date stipulated in contract for sale show that time was essence of contract. - what i understand the court of appeal to have decided was that tender by the vendors after the goods had been shipped of shipping documents including bills of lading which represent the goods was a good tender and performance by the vendor in a c. 3. now it is well settled that, where goods are purchased in this way from a commission agent under a c. (as he then was) gave his well-known explanation of the nature of a c......into an arrangement with the owners of the ship which was sheltering at caglian to obtain and tranship the goods, and in this way the national bank obtained possession of the goods on payment of the charges incurred in releasing and forwarding them. this was the system resorted to in a very large number of cases, and was apparently the only means by which the goods could have been recovered and forwarded to their destination on behalf of the plaintiffs. the defendants at first expressed their willingness to take goods at the invoice price, but afterwards repudiated all liability, and the plaintiffs in the exercise of powers reserved to them in the contract, sold the goods and now seek to recover shortfall of rs. 3/259-0-3. the particulars have not been questioned and i am of opinion.....
Judgment:

John Wallis, C.J.

1. This is an appeal by the plaintiff from the judgment of Mr. Justice Coutts Trotter dismissing a suit brought by the plaintiff as liquidator of Messrs. J.H. Elliott & Co., Ltd., to recover damages for breach of certain contracts made with the defendants by which Elliott and Co. undertook to purchase and ship certain goods ' on account and risk of the defendants ', and did ship them under c. i. f. c. i. contracts on board a German ship. War broke out while the goods were still in transit, and the contracts of affreightment between the shippers and the German ship-owners were thereupon dissolved, with the result that, if these were ordinary c. i. f. contracts between vendors and vendees, then, as held by the learned judge in accordance with the decision of the Court of Appeal in England in Arnold Karberg and Go. v. Blythe Green Jourdain & Co. (1916) 1 K.B. 495 the tender of the shipping documents including these bills of lading which had been dissolved as contracts of affreightment was not such a tender as the defendants were bound to accept under the c. i. f. contract and the goods were thrown on to the vendor's hands. The only serious attempt to distinguish that case at the trial was on the ground that in the present case the bills of lading had been indorsed over to the defendants before the outbreak of war. As observed by the learned judge that fact is not proved. On the contrary the Captain's copies which have been filed are to order of the shippers, and the fact that the National Bank on behalf of the plaintiff was able to recover the goods goes to show that there never was any such endorsement. Even, if there were, I agree with the learned judge that would not make any difference. What I understand the Court of Appeal to have decided was that tender by the vendors after the goods had been shipped of shipping documents including bills of lading which represent the goods was a good tender and performance by the vendor in a c. i. f. contract, but that he did not so perform his contract by delivering bills of lading which as contracts between the shippers and the ship-owner had become dissolved owing to the outbreak of the war.

2. No serious attempt seems to have been made at the trial to distinguish the present case on the more substantial ground that under the contract the goods, as pleaded in the plaint, were to be purchased and shipped on account and risk of the defendants and, consequently, the learned judge has not dealt with that aspect of the case. As however the question arises on the pleadings and is purely one of law, and as cases of this kind are of infrequent occurrence in our courts we have allowed it to be taken before us.

3. Now it is well settled that, where goods are purchased in this way from a commission agent under a c. i. f. contract, though the agent is regarded for some purposes as a principal and as any other vendor under a c. i. f. contract, yet the relation of principal and agent still subsists. Ireland v. Livingston (1872) L.R. 5 H.L. 396 in which Blackburn, J. (as he then was) gave his well-known explanation of the nature of a c. i. f. contract, when advising the House of Lords, was a case of this kind, and was disposed of by the House of Lords on a principle of the law' of agency, viz., that, as the error arose from the principal's indistinctness of expression, he must bear the loss. The first case in which such an agent was assimilated to a vendor was in Feise v. Wray (1802) 3 East. 39 where he was allowed to exercise the right of stoppage in transit in respect of goods which he had bought and paid for; and the true principle would appear to be that the assimilation is only to be carried so far as is necessary to give business efficacy to the transaction This I gather to have been the view of Brett, M.R. and Fry, L.J., in Cassaboglou v. Gibb (1882) 11 Q.B.D. 797 where Lord Blackburn's observations in Ireland v. Livingstone (1872) L.E. 5 H.L. 395 were considered. Otherwise, the relation remains one of principal and agent, as held in the last mentioned case, in assessing damages; and the agent remains accountable, as held in Williamson v. Barbour (1877) 9 Ch. D.529 which has recently been applied to similar cases in this Court.

4. Now, whereas in the present case, an agent is requested by his principals in the terms of the indents, Exhibit A. series, 'to purchase for us the undermentioned goods on our account and risk' and does so, it appears altogether opposed to the principle of the law of agency to throw upon him the risk of the outbreak of war, while the goods are in transit on board a foreign ship, dissolving the contract of affreightment between the shipper and ship-owner and making it impossible for him to do what, according to the recent decision, a vendor under a c. i. f. contract is bound to do viz. in the absence of a special contract to tender among the shipping documents bills of lading which are still valid contracts and will be enforceable by the vendee against the shipowner, It was contended in that case that under the particular contract it was the duty of the buyers to take up and pay for the documents when tendered because the events that had happened consequent upon the war were at their risk. That, as observed by Swinfen Eady, L.J. at the beginning of his judgment, was dependent entirely upon the true construction of the particular contract, In that case the court were of opinion that it did not throw this risk upon the buyer.' In this case there is the express stipulation that the goods are to be purchased and supplied on the buyer's account and risk. The whole transaction being thus at the risk of the buyer, I can see no reason for relieving him from the risk of what has happened, even, if the word risk were not mentioned in the contract. I think a special contract throwing this risk on the buyer could be inferred from the fact that the goods were to be purchased and shipped on account of the buyer, pursuant to the principle embodied in Section 222 of the Indian Contract Act that the employer of an agent is bound to indemnify him against the consequences of all lawful acts done by such agent in the exercise of the authority conferred upon him'. To throw these goods on the agent's hands and leave them to bear the loss which has arisen by reason of the outbreak of war while the goods were in transit appears to be entirely opposed to and inconsistent with the general principles of the law of agency.

5. The cause of action is stated in the plaint to have arisen on the 10th and 7th August 1914 when the defendants refused to accept the drafts, on 23rd June 1914 when the defendants we're informed the goods had arrived, and on the 29th August 1916 when the goods were resold. On June 1st 1916 the National Bank of India, who held the shipping documents for the plaintiffs, entered into the agreement Exhibit J with Messrs. Graham and Co., therein called the Representatives who had been chosen with the sanction of the British Government to enter into an arrangement with the owners of the ship which was sheltering at Caglian to obtain and tranship the goods, and in this way the National Bank obtained possession of the goods on payment of the charges incurred in releasing and forwarding them. This was the system resorted to in a very large number of cases, and was apparently the only means by which the goods could have been recovered and forwarded to their destination on behalf of the plaintiffs. The defendants at first expressed their willingness to take goods at the invoice price, but afterwards repudiated all liability, and the plaintiffs in the exercise of powers reserved to them in the contract, sold the goods and now seek to recover shortfall of Rs. 3/259-0-3. The particulars have not been questioned and I am of opinion that the plaintiffs are entitled to recover them, and that the appeal must be allowed and suit decreed with costs throughout.

Spencer, J.

6. I am also of opinion that in the case we are dealing with, there was a contract of agency and that this is sufficient to distinguish it from the cases in Arnold Karberg & Co. v. Blythe Green Jourdain and Co. (1916) 1 K B. 495 and Madhoram Hurdeo Das v. G.C. Sett I.L.R. (1917) C. 28 which had to do merely with contracts between buyers and sellers.

7. I think that we must dispose of this appeal upon a consideration of the nature of the contract existing between the parties as it appears from the documentary evidence before us, and my grounds for thinking that Messrs. J.H. Elliot and Co. Ltd., were agents or brokers for the respondents are (1) that in the indents, Exhibits A, B. and C, the respondents requested Elliot and Co. 'to purchase and ship for us, if possible, the undermentioned goods on our account and risk'; (2) that there is a column in the indent providing for agent's commission and another column for the mark to be placed in the goods which was to be the mark of the respondent's firm; (3) that in two out of three indents the price of the goods is not stated (4) that the bills of lading, Exhibit H series show that the real shippers were Messrs. Voller and Trummer, apparently a German firm carrying on business at Gothemburg in Sweden.

8. As in Ireland v. Livingstone I.L.R. (1872) H.L.P. 395 I think that this transaction began as a contract of agency, although for certain purposes the agents may have been in the position of vendors when shipping goods to their principals. Therefore, although the contract of affreightment became impossible of performance owing to the goods being in an enemy ship at the outbreak of war and was thus dissolved, the contract of agency did not thereby come to an end, and this being so, as between the parties to this suit the loss must fall upon the defendants both under the special terms of their contract and under Section 222 of the Contract Act rather than upon the innocent agents who honestly executed the orders of their principals. I agree the appeal should be allowed with costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //