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(Pegatraju) Krishna Rao Vs. (Yenati) Subbareddi and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Reported inAIR1936Mad379
Appellant(Pegatraju) Krishna Rao
Respondent(Yenati) Subbareddi and ors.
Cases ReferredButwick v. Grant
Excerpt:
.....by the seller of goods against the buyer for the price it would be open to the buyer who had paid the seller's agent to show, and in the absence of any reason to the contrary he would be entitled to succeed on showing, either that the agent had actual authority to receive payment, or that he bad ostensible authority to receive payment, or that he had a customary authority by reason of the fact that the payment was made to him in the ordinary course of the business of agencies of the kind in question......his decision and dismissed the plaintiff's suit being of opinion that defendant 4 had authority to receive payments.3. it is contended by mr. raghava rao on behalf of the plaintiff that defendant 4 was only a broker and under the terms of ex. a he had no authority to receive any payments and that any collections he might have made from third parties must be treated to have been done on special authorisation from the plaintiff. he relied on bowstead on agency, p. 95, where the learned author says : 'a broker has no implied authority as such to receive payment of the price of goods sold by him when the principal is disclosed linck v jameson (1886) 2 tlr 208.' he further contended generally that an agent to sell goods will have no authority to receive payment and relied on halsbury's laws.....
Judgment:

Venkataramana Rao, J.

1. The plaintiff was the proprietor of Sree Seetharama & Co., which carried on its business at Nellore between 1923 and 1925. Defendants 1 to 3 were carrying on business at Ananthapuram under the name of Sree Lakshmiprasanna Venkateswara Rice Mills. The suit is to recover a sum of Rs. 1,900, in respect of articles supplied to the defendant firm by the plaintiff firm. The plea of the defendant is one of discharge by payment to defendant 4 who was according to them acting as the agent of the plaintiff. The main question in this case is whether defendant 4 had authority to receive any moneys on behalf of the plaintiff and payments made to him would be a valid discharge of the obligation of defendants 1 to 3. The plaintiff's contention is that under the terms of Ex. A, a letter written by defendant 4 to the plaintiff on 22nd December 1923 he was only appointed as a commission agent to canvass orders for them on payment of certain percentage of commission on the value of goods supplied. It appears that even before December 1923 he was acting on behalf of the plaintiff firm and Ex. D-l shows that he was canvassing orders from defendants 1 to 3 and receiving payments for the value of goods supplied on the part of the plaintiff.

2. The amount now sought to be recovered from the defendants was in respect of goods supplied between 21st and 28th July 1924 on orders given through defendant 4. Misunderstandings having arisen between defendant 4 and the plaintiff, defendant 4 wrote a letter Ex. H, dated 26th July 1924, stating that he would no longer be an agent to which the plaintiff replied on 15th January 1925 that he was bound to act according to the terms of Ex. A for a period of three years provided therein. Subsequent to the exchange of these two letters defendant 4 appears to have received between 22nd February 1925 and 25th February 1925 a sum of Rs. 1,088-0-6 in two instalments from the firm of defendant 1 to 3, and on 7th March 1925 defendant 4 wrote a letter to the plaintiff stating that he had realised a sum of Rs. 1,088-0-6 from the defendants and this suit is filed on 21st July 1927, over two years from the date of Ex. 5. The learned District Munsif who tried the suit decreed the plaintiff's claim holding that the payment to defendant 4 is not a valid discharge and not binding on the plaintiff firm. The learned Subordinate Judge reversed his decision and dismissed the plaintiff's suit being of opinion that defendant 4 had authority to receive payments.

3. It is contended by Mr. Raghava Rao on behalf of the plaintiff that defendant 4 was only a broker and under the terms of Ex. A he had no authority to receive any payments and that any collections he might have made from third parties must be treated to have been done on special authorisation from the plaintiff. He relied on Bowstead on Agency, p. 95, where the learned author says : 'A broker has no implied authority as such to receive payment of the price of goods sold by him when the principal is disclosed Linck v Jameson (1886) 2 TLR 208.' He further contended generally that an agent to sell goods will have no authority to receive payment and relied on Halsbury's Laws of England, Vol. 18, p. 218, and on Butwick v. Grant (1924) 2KB 483. In my opinion the position of defendant 4, having regard to the circumstances of this case, cannot be viewed merely as that of a broker. He was not only canvassing orders for the firm but was also making collections on behalf of the plaintiff. Bowstead, at p. 81 of his book, observes that where a person is a traveller for the sale of goods on behalf of a firm he would have implied authority to receive payment in money for the goods sold by him and the authority he relies on is Howard v. Chapman (1831) 4 C&P; 508. The position occupied by the agent in that case was exactly analogous to the position occupied by defendant 4 in this case. If Howard v. Chapman (1831) 4 C&P; 508 can be taken to have laid down correct law. defendant 4 must be deemed to have had implied authority for receiving payment from the firm of defendants 1 to 3. And in Butwick v. Grant (1924) 2KB 483 the decision in Howard v. Chapman (1831) 4 C&P; 508 was distinguished on the ground that 'the agent was the traveller of the plaintiff' (p. 488).

4. In this ease even assuming that defendant 4 in virtue of Ex. A was not authorised to receive any payment there was no distinct prohibition against defendant 4 receiving moneys and it would be open to the plaintiff to confer such authority on him either expressly or such conferment may be implied. Again if the plaintiff put him forward as the person having authority to receive such payments it is immaterial whether under the law he would have such implied authority or not. In this case it will be seen that even before the date of Ex. A there were business relations with the firm of defendants 1 to 3 through defendant 4 and he was receiving payments on behalf of the plaintiff. Ex. A does not seem to have altered the course of such dealings and further he appeared to have collected a sum of Rs 100 at least once subsequent to the date of Ex. A. Again Exs. 1 to 3 are letters written by the plaintiff to defendant 4 asking him to collect and send moneys from the constituents at Bezwada and Tenali and the learned Subordinate Judge rightly observes:

If it were a single transaction or two, one can understand it, but we have a number of transactions in Ex. D showing that Seshagiri Rao collected even from the defendants 1 to 3, and where you have similar conduct, as shown by Ex. 1 to 3, the only possible conclusion is that, generally speaking, the plaintiff put forward defendant 4 as entitled to collect on his behalf, and defendants 1 to 3 were therefore perfectly justified in treating Seshagiri Rao as duly authorised to make the collections.

5. In my opinion, the learned Judge's conclusion is correct. As pointed out by Sankey J., in Butwick v. Grant (1924) 2KB 483 :

In an action by the seller of goods against the buyer for the price it would be open to the buyer who had paid the seller's agent to show, and in the absence of any reason to the contrary he would be entitled to succeed on showing, either that the agent had actual authority to receive payment, or that he bad ostensible authority to receive payment, or that he had a customary authority by reason of the fact that the payment was made to him in the ordinary course of the business of agencies of the kind in question.

6. Even though defendant 4 may not have had actual authority he must be deemed to have had ostensible authority. Further Exs. 4 and 4a, printed receipt forms of the plaintiff firm, seem to indicate that the agent was authorised to receive payments. The payments made by defendants 1 to 3, as evidenced by Exs. 4 and 4a, must he deemed to be a valid discharge of the debt due to the plaintiff to the extent of a sum of Rs. 1,088-0-6. Deducting this sum there must be a decree for the balance in favour of the plaintiff. The defendants will have counter interest on the two payments evidenced by Exs. 4 and 4a, from the dates of payment with interest on the principal sum due at the contract rate up to the date of plaint and thereafter at six per cent. I therefore modify the decree of the lower Court and I award costs on the amount allowed here. I award each party to bear his or their own costs in the Courts below.


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