Walter Salis Schwabe K.C., C.J.
1. This appeal is from the judgment of the City Civil Court in favour of the plaintiff for the return of Rs. 1000 deposited on a contract for sale by the defendant to the plaintiff of sugar and for Rs. 800 damages for breach of that contract. So far as the facts are concerned, the learned Judge has accepted the evidence of the plaintiff and disbelieved the evidence given on behalf of the defendant. If the determination of this case turned on a question of fact, I should want to hear further arguments on the facts for, as at present advised, I am not inclined to agree with some of the findings of fact of the learned Judge. In all cases where there is an appeal on questions of fact, it has been found that it is a good working rule that the appellate tribunal will not lightly interfere with the findings of fact of the court below and this rule applies most strongly where there has been a conflict of oral testimony and the judge has had the advantage of seeing the witnesses and of observing their demeanour, but there in my view the application of the rule should stop, and it is a rule which should not be pressed too far, for there are many cases where there has been a conflict of evidence in the court below in which the court of appeal is bound to give effect to its own view if it differs from that of the judge; as for instance, where the probabilities of the case are so strongly against the view of the judge that the court of appeal disagrees with it, or where there are documents consistent with the evidence for the appellant and inconsistent with the evidence for the respondent and in the view of the court of appeal, they are irreconcilable with the finding of the judge. The demeanour of witnesses is not invariably a safe guide to the truth of their evidence. In this case, however, most of the evidence on which there was a conflict was in my view irrelevant, and the matter fails to be decided on the proper interpretation of the contract, coupled with facts which are common to both sides.
2. The contract was for the sale of 1,300 bags of sugar at an agreed price to be shipped by a named steamer sailing from Singapore. On the date of the contract, October 22nd, I9l8, owing to war the arrival of documents was uncertain, and it became the practice in Madras for sales to be made upon what were called delivery telegrams which were telegrams stating that the goods had been shipped and they to some extent took the place of bills of lading, and by arrangement between merchants passed from hand to hand by endorsement, their production being treated as evidence of the right to the goods. They differed from bills of lading in that they could not in law be treated as negotiable instruments because negotiability cannot be given by agreement of the parties or otherwise than by a long established custom of merchants or by statute. What happened in this case was that a delivery telegram for a larger quantity of sugar than that sold under the contract was received by the defendant. He lodged that telegram with Messrs Binny & Co., agents of the ship, and the ship carrying the sugar having arrived at Madras, he obtained from Binny & Co., a delivery order to himself for the contract quantity, and tendered it to the plaintiff. The plaintiff with that document could have got his goods, he was in fact acting for merchants in Ceylon and the goods would have to be forwarded there, and as the goods were transit goods for export, a rebate of duty would be required from the Customs authorities. I have no doubt on the evidence that such rebate could have been obtained from the Customs authorities without the least difficulty, I am also equally satisfied that the plaintiff did not want the goods though I do not think that is a relevant consideration. He went to Binny & Co., with the delivery order and objected to the delivery order being made out to the defendant 'or order', and on his request Binny & Co., struck out the words 'order'. In my judgment this did not affect the validity or the operation of the delivery order in any way, for a delivery order is not negotiable, though it too passes from hand to hand as though it were negotiable, but the law is that the holder of it does not obtain title to the goods comprised in the delivery order until the ware-house man (in this case Binny & Co., as representing the ship) has attorned to the holder of the delivery order in the sense of intimating expressly or impliedly that he holds the goods to his order.
3. The question to be decided is whether, on the true construction of the contract it was a condition that the purchaser should be entitled to receive from the vendor a delivery telegram, that is to say, whether the failure to hand to him that particular form of document covering these goods alone would entitle him to reject the goods.
4. The contract is in Guzeratti and we have before us a translation by the court interpreter and also the translation by him of each word in the contract, The full translation is as follows: 'To Salt Abkary Company-Baroda Shop - Written by Sait Adam Haji Peer Mahomed Isaac. To wit, (we) have this day made sale upon delivery telegram to you through the broker Jesep Mahomed, of goods of the steamer 'Fuitala', coming from Sri Singapore (viz.,) Sugar Java, white such as it may come in the steamer, bags 1,300 (in letters thirteen hundred bags) at the rate of Rs. 29-15-06 (in letters Rupees twentynine and fiften and a half anna, per one bag. Expenses thereof such as, harbour dues, boat rent, custom charges all are on your head On account of advance of the aforesaid goods Rs. 1000 (in letters Rupees one thousand) have been received through the aforesaid broker. Regarding the remaining rupees in full relating to the account, after receiving delivery telegram (and) on coming of the steamer, on our giving you intimation, you have to make repayment in full of the rupees thereof and on making sale (endorsement) on the delivery telegram and on obtaining signature, (you) have to take it away. Regarding slack bags which may be in the goods if you will give intimation to us before storage takes place, we shall weigh and give the slack bags (to you when Binny Company people will make survey and give to us, and you have to take delivery in the same manner in which the customs people would give delivery, of the goods to us - if you will give intimation of slack bags after storage charges have become due, we will not weigh and give. And in such manner as Binny and Company people would give delivery of the bags, in the same manner you have to take (them) without objection; according to the above condition, you have to take delivery of the goods - without raising objection (or) dispute of any kind whatsoever. Therein if you will raise objection (or) dispute of any kind, the advance paid becomes null and void-whatever loss would arise in the said goods, you are responsible for the same. In consequence of the aforesaid steamer not coming this contract is (stands) cancelled'.
5. The delivery telegram is mentioned twice. It is stated that the sale is made upon the delivery telegram and it is further stated that after receipt of the telegram and after the arrival of the ship, payment is to be made and the vendor is to endorse the telegram and then in the words of the translation '(you) have to take it away'. I he actual words literally translated are 'and on obtaining signature have to take away'. This may mean and probably does mean that the vendor is to endorse the telegram to the purchaser and the purchaser is to take the goods away.
6. It was clearly contemplated by the contract that the delivery telegram would be handed by the vendor to the purchaser. In this case that was impossible because the telegram included other goods and the course pursued by the vendor under such circumstances, namely, lodging the telegram with the ship's agent and obtaining delivery orders for different parts of the goods included in the same telegram was an ordinary business solution of the difficulty. But that is immaterial if the contract required the handing of a separate telegram to the purchaser as a condition. The question is a very difficult one; but I have with great hesitation and regret come to the conclusion that it was a term of the contract, that the delivery telegram should be endorsed over, and an essential term. This requirement of a delivery telegram was a novel and ephemeral plan arising out of emergency caused by war, but it was the only form of delivery stipulated for in the contract and it not having been endorsed and handed over, it follows that the plaintiff had in law the right to reject the goods. In my 'judgment there was no justification for the award of damages of Rs. 800 to the plaintiff. Such damages if suffered were not recoverable for remoteness.
7. The result is that the appeal must be allowed and the judgment reversed in so far as it awards damages to the plaintiff and the judgment must be reduced to Rs. 1000 and costs of suit.
8. The appellant having had to come to this Court to obtain that result, he is entitled to the costs of the appeal except in so far as they have been increased by his claim to have the whole judgment set aside, I think the justice of the case will be met by awarding him 12 of the costs of appeal.
9. The decision of this appeal really turns upon the question whether the provision in Ex, B, the written contract between the parties, to endorse and deliver to the buyer, the plaintiff, a delivery telegram for the sugar sold, is an essential part of the contract the breach of which would justify a recession of the whole contract or whether it is only a collateral agreement the breach of which will only give rise to a claim for compensation flowing from it. In other words the question is whether that provision is a condition of the contract or only a term in it which does not go to the root of the contract. If the former view is adopted as the lower court has done plaintiff was justified in cancelling the contract as he did and. in claiming damages as it is not denied that no proper offer was made to him of a delivery telegram duly endorsed at any time. I am inclined to adopt that view.
10. The terms of the contract as translated are set out by the learned Chief justice and do not require repetition, and my Lord has also explained what exactly a delivery telegram is. Though a delivery telegram could not well be treated in law as a negotiable instrument like a bill of lading whose negotiability the courts have recognised, the evidence in this case is that it was treated in practice in Madras by the common consent of merchants and shippers during the war as equivalent to a bill of lading in all particulars. It was taken as passing the ownership of goods by mere endorsements so that the indorse could have direct recourse to the shippers or their agents without an attornment by them and without being required to go through the original consignee. The parties there, fore evidently attached importance to the delivery telegram and we have the admission of the defendant's agent in Madras who acted for him in making this contract as D.W. 1 that the provisions for the indorsement of delivery telegram was stipulated for by the plaintiff and was entered in the contract at his instance.
11. In construing mercantile contracts we must assume that any clause in it was inserted by the parties to some good purpose and with some definite meaning as merchants are not in the habit of inserting in their contracts stipulations to which they do not attach some value and importance. See Remfry on Sales of Goods page 34.
12. Turning now to Ex. 13 we and at the very beginning of it mention made of the sale being 'upon delivery telegram' and the matter is again reiterated when the covenant for payment is stated, the words being 'Regarding the remaining rupees in full relating to the account after receiving delivery telegram (and) on coining of the steamer on (our) giving you intimation you have to make payment in full of the rupees thereof and on making sale (endorsement) on the delivery telegram and on obtaining signature (you) have to take it away. The word 'it' seems to me to refer to the delivery telegram and not to the goods. However that may be when the parties took so much care to have it stated clearly in their contract that a delivery telegram should be indorsed and handed over it seems to me, difficult to treat it merely as an unessential or collateral part of the contract.
13. The mode of delivery provided for by the vendor in Ex. B is to indorse and deliver the delivery telegram. Once he does that the vendee becomes bound to pay the price and cannot insist on the goods being delivered to him in specie by the vendor. A covenant as to delivery is as much an essential part of a contract of sale of goods as a covenant for payment of price or any other condition in the contract. Is there any reason why we should treat such a covenant in this case as not part of the contract? I do not think there is. So far as the vendor is concerned there can be no doubt that it is a very essential term of the contract for him as it relieves him from the duty of delivering the goods. Why should it be treated as any the less essential so far as the vendee is concerned. If the covenant was intended purely for the benefit of the vendor he may possibly waive it and give delivery of the actual goods. But as I have already pointed out the covenant was added to the contract at the instance of the vendee as he considered it essential for the purpose of his business to do so. He was therefore entitled in my view to insist on the performance of the covenant before payment just as much as the vendor was entitled to take advantage of it on his side. In my opinion the case is one to which Section 54 of the Contract Act applied; the plaintiff was not bound to take the goods by means of a delivery order as the vendor proposed, and pay for it.
14. In this connection reference may be made to the recent decision of McCardie J in Manbre Saccharine Co. v. Corn Products Co (1918) 1 K.B. 198 that under c.i.f. contract where the vendor is bound to tender to the vendee a proper policy of insurance that obligation is not performed by the vendor guaranteeing to hold the purchaser covered by insurance in accordance with the terms of a policy of insurance in the vendor's possession. It seems to me the covenant in this case to give a delivery telegram indorsed stands on much the same footing as the delivery of an insurance policy in a c.i.f. contract as the performance of the bargain is to be fulfilled in each case by delivery of documents and not by actual physical delivery of the goods. The vendor is entitled to what he has stipulated for and cannot be compelled to take something else in substitution for it however effective a substitute it might be. The authorities for this position are discussed by the learned judge and I heed not recapitulate them.
15. The same principle is illustrated by a still mere recent case in Wilson Holgate and Co. v. Belgian Grain and Produce Co. (1920) 2 K.B . . 1 where Bailhache J has discussed the question, again in connection with a c.i.f. contract and has held that the seller could not perform his obligation to deliver an insurance policy by tendering instead a broker's cover note or a certificate of insurance. In his judgment the learned Judge observes on page 9 that 'he (the vendee) cannot be compelled to take a document which is something like that which he has agreed to take. He is entitled to have a document of the very kind he has agreed to take, or at least one which does not differ from it in any material respect'. A delivery order is different from a delivery telegram as the former requires an attornment by the warehouseman to pass the ownership of the goods to the vendee. See Benjamin on sales 5th Edition page 742; whereas the latter was accepted in Madras as passing the goods by mere endorsement.
16. Now if I am right in thinking that the indorsement and delivery of a delivery telegram by the defendant was a condition of the contract it is clear that condition was not fulfilled by him and the plaintiff was entitled to treat the contract as broken and claim damages in spite of the defendant's offer to deliver a delivery order of the goods.
17. The next question is as to the measure of damages. Now Section 73 of the Contract Act states the law on the point in this country, ft is clear that plaintiff will be entitled to be refunded the Rs. 1000 advanced by him. But as regards the Rs. 800 decreed to him as compensation for the loss of the commission he would have got if the contract had been performed, plaintiff will been titled to it only if he can bring himself under the latter part of the 1st clause in Section 73. Under the former part such damages will be too remote. To apply the latter part it has not been shown that the parties, that is, not only the plaintiff but the defendant also, knew when the contract was made that such a loss as the loss of commission was likely to result from the breach. There is no evidence to show that defendant had notice of any such special loss and the claim for it therefore fails under the latter part also. I agree with the learned Chief justice that plaintiff's claim for Ks. 800 as damages must be disallowed.
18. On my view the appeal fails in part and is allowed in part the decree of the lower Court being modified by substituting Rs. 1,000 for Rs. 1,800 in it. I agree to the order proposed by the learned Chief Justice as to the costs of the suit and of this appeal.
19. I would add in conclusion that I also entirely agree with the learned Chief Justice in his observation regarding the duty of an appellate court in a first appeal where the appeal is open on facts, in considering the evidence.