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P. Ananthachari Vs. Ratnam and Sarathi and anr. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai
Decided On
Judge
Reported inAIR1923Mad713; 75Ind.Cas.161; (1923)45MLJ83
AppellantP. Ananthachari
RespondentRatnam and Sarathi and anr.
Cases ReferredBurn v. Carvitho
Excerpt:
.....no arrangements had in fact been made in accordance with what had been agreed to by paying the bank, discharging its lien and putting the plaintiffs in possession of the yellow metal. 655, seem to me to establish clearly this proposition that, where there are funds in the bands of an agent belonging to his principal and when his principal gives a 'mandate to the agent to deliver them in extinguishment of an obligation of the principal to a third party and when that mandate is communicated to the creditor, then there arises on the part of the agent an obligation on which apparently he can be sued both in law and equity--in law as on a contract and in equity as upon an implied assignment of such funds as there may be in his hands to satisfy pro tanto with those funds which he had in..........tracing as messrs. ratnam & sarathy and, secondly, an english limited company known as messrs. alfred mumford & co., ltd., who are now in liquidation and are represented by their liquidator and official receiver mr. phillips. the history of this matter, which i need only deal with very briefly, is this; that on the 5th of february 1920, messrs. p. rungachariar & co., signed an indent to messrs. ratnam & sarathy in the following terms: 'we authorise you to instruct messrs... to purchase and ship the goods specified below on our risk and account and subject to the conditions overleaf,' and then follows the description of the goods and the price; and the terms of payment were draft at 60 d-s documents against payment. in fact, messrs. ratnam & sarathy were acting for messrs. alfrea.....
Judgment:

Coutts-Trotter, J.

1. This is an interesting action which is brought by a gentleman called Ananthachari, who is the proprietor of a firm trading under the name of Messrs. P. Rungachariar & Co., and the defendants are, first, a firm tracing as Messrs. Ratnam & Sarathy and, secondly, an English Limited Company known as Messrs. Alfred Mumford & Co., Ltd., who are now in liquidation and are represented by their Liquidator and Official Receiver Mr. Phillips. The history of this matter, which I need only deal with very briefly, is this; that on the 5th of February 1920, Messrs. P. Rungachariar & Co., signed an indent to Messrs. Ratnam & Sarathy in the following terms: 'We authorise you to instruct Messrs... to purchase and ship the goods specified below on our risk and account and subject to the conditions overleaf,' and then follows the description of the goods and the price; and the terms of payment were Draft at 60 D-S documents against payment. In fact, Messrs. Ratnam & Sarathy were acting for Messrs. Alfrea Mumford & Co., Ltd. They had communicated with them and on the 19th February 1920 they intimated to the plaintiffs that their principals, that is, Messrs. Alfred Mumford & Co., Ltd., had confirmed the same by wire subject to confirmation by mail, and on the 4th March there came an intimation of the confirmation by mail. On the 28th September 1920 there came a letter from Messrs. Ratnam & Sarathy to the plaintiffs in the following terms: 'We are in receipt of invoice for 462-10-0 towards your order 808 which we beg to enclose herewith and request you to accep the draft when presented by the Bank. Then, on the 30th September, the plaintiffs reiterate the allegation which they had previously made that the goods were late shipped, a dispute with the merits of which I am not now concerned; and that was followed, on the 19th November, by an intimation of the plaintiffs that they would allow the bill to be met with a reduction of 62-10-0 leaving the amount due as 400 together with the clearance charges. That proposal had been made apparently by Messrs. Ratnam & Sarathy and it was accepted by the plaintiffs in the letter of the 19th November 1920 with the proviso that, in return for this concession of waiving the contention of late shipment, another contract under another indent should be cancelled. On the 22nd November 1920 Messrs. Ratnam and Sarathy write to the plaintiffs enclosing, apparently, a letter to the National Bank of India authorising them, that is, the Bank, to take 400 net at the current rate of exchange towards the bill together with charges and thereupon they would have a right to delivery from the Bank of the copper sheets to be delivered under the contract. That was not done and I had the explanation of the plaintiff's witness which seems to make it quite clear that, instead of that proposal, a different arrangement was substituted, namely, that Messrs. Ratnam & Sarathy should themselves withdraw the draft and that, meanwhile, the plaintiffs should remit a sum of 400 direct to their principals Messrs. Alfred Mumford & Co., Ltd., in London That arrangement seems to have been made to gratify the desire of the plaintiffs, the postal exchange being a little more profitable to them than the Bank exchange, to avail themselves of that and to make a few hundred rupees by remitting the money direct to London. No doubt it see ned an excellant scheme at the time but had most unfortunate results and it directly led to this litigation. On the 8th December 400 was remitted by postal money-order by the plaintiffs to London, and on 20th December Messrs. Ratnam & Sarathy acknowledge receipt of a sum of Rs. 500 towards clearing charges and commission. Then, on the 13th January 1931, Messrs. Alfred Mumord & Co., Ltd. write from London to the plaintiffs as follows: 'Your favour of the 15th December is to hand and the money-Orders that you advised for the total sum of 400 arrived here to-day. As this money has still to be paid to the National Bank to release the documents, we are making the necessary arrangements. 'We agree that the 2 1/2 tons of yellow metal (which I referred to) is cancelled.' Then follows a cablegram which was received on the 15th January from Messrs. Alfred Mumford & Co., Ltd., to Messrs. Ratnam & Sarathy, and it is in these terms: '400 arrived this morning. Have you sufficient to pay the National Bank of India, Ltd., about 350 obtain delivery to save our remittance--Mumford.' And that was followed up by a letter dated the 20th January once more from Messrs. Alfred Mumford & Co., Ltd., to their agents Messrs. Ratnam & Sarathy which runs as follows: ' 400 P. Rungachariar & Co., we got this cash and wired you to know if you had sufficient cash of ours to hand some 350 or so to the Bank to get the goods. This should save us paying either the Bank or you which is unnecessary while you have funds of ours as we understand at present. We make the balance with you as enclosed statement which please look into and let us know.' That cablegram is acknowledged by Messrs. Ratnam & Sarathy on the 20th when they say that they will look into the matter and see how the accounts between them and their principals stand. Then, on the 27th January, the plaintiffs complain that no arrangements had in fact been made in accordance with what had been agreed to by paying the Bank, discharging its lien and putting the plaintiffs in possession of the yellow metal. Then, on the 1st February, a new attitude is taken up by Messrs. Ratnam & Sarathy. They insist that there was another consignment of goods totally distinct from those in suit as to which the plaintiffs were indebted to them. Again the Cuntention was apparently late shipment, and in this case the plaintiffs were not willing to forego that objection nor, so far as I know from the correspondence, was any proposal made that they should. But the attitude taken by Messrs. Ratnam & Sarathy was that if the bills in respect of these further consignments were met, that would provide them with funds to discharge the bills held by the Bank in respect of the suit goods and that, therefore, they would not release the goods which are the subject-matter of this contract until the later consignment of goods was paid for to put them in funds; and they communicated what they had done in that matter to their principals Messrs. Alfred Mumford & Co., Ltd., by their letter of 20th February 1921. Then follows a long letter from the plaintiff, dated the 17th February 1921, in which he argues his case and protests that the arrangement about the suit consignment of yellow metal stood alone and independent, that they were bound to retire the bills and put the plaintiffs in a position to get the metal without making or attempting to make terms as to any other goods, the subject of distinct contracts and coming by other ships. The plaintiff wrote on the 3rd March 1921 to Messrs. Alfred Mumford & Co., Ltd., as follows: 'We are simply surprised at your continued silence with reference to our request to you to instruct the National Bank of India, Limited, Madras, to deliver us the 2 1/2 tons of copper sheets shipped per sections Gamaria towards the bill of which, payment has been remitted to you by postal money-order months before. When remitting to you the sum of 400 towards the payment of the above bills we expected you to instruct the National Bank of India, Limited, Madras, by cable for effecting delivery of the above said 2 1/2 tons of copper sheets. But it is most unfortunate that we have heard nothing from you except the acknowledging of the said 400 and a promise to instruct the National Bank of India, Limited, Madras, at the earliest opportunity to deliver us the 2 1/2 tons of copper sheets. We herewith enclose a copy of the cable sent to you on 28th February 1921.'

2. Then, on the 10th March 1921, Messrs. Alfred Mumford & Co', Ltd., write as follows: 'At the time we received your cash we telegraphed Messrs. Rathnam & Sarathy to deliver the goods to you arranging payment with the National Bank of India, who held the goods. We are writing letters from this firm. As we understood it the copper had already been handed over to you. Have you paid our other draft for yellow metal?' Then, on the 17th March, there comesa further complaint from the plaintiffs, in which, I think, there is nothing new, addressed again to Messrs. Alfred Mumford & Co., Ltd., and on the 29th that complaint is reiterated once more. Shortly afterwards, apparently somewhere in March, towards the end of March, Messrs. Alfred Mumford & Co., Ltd., went into voluntary liquidation and no no one knows what any claim upon them direct is likely to be worth.

3. Now, in these circumstances, the plaintiffs sue the two defendants in the alternative. They cannot get relief direct against both of them because the liability of the principal and agent is alternative. Morel v. Westmoreland (1904) A.C. 11 : 73 L.J.K. B. 93 : 89 L.T. 702 : 52 W.R. 353 : 20 T.L.R. 38 . (I am told by the learned Counsel for the defendant that the liquidation was in January, and, if it be so, I do not think that it really affects anything that I have to decide in this case). As against the first defendant Messrs. Ratnam & Sarathy, the case is put in this way. It is said that the effect of the telegram of the 15th January, and the letters of the 20th January, constitute a mandate to Messrs. Rathnam & Sarathy to pay out of the funds in their hands moneys to enure to the benefit of the plaintiffs because they were to be used to withdraw the bills at the National Bank and put the plaintiffs into possession of the goods which they had bought and which they had paid for. That was unquestionably communicated to the plaintiffs. It is really, I think almost sufficiently, conveyed by Messrs. Alfred Mumford & Co.'s letter of the 13th January 1921 to the plaintiffs and I have evidence which I believe on the part of the plaintiffs that it was also conveyed to them by Messrs. Rathnam & Sarathy and that the fact that the mandate was given was the basis of the future transactions between the parties. The cases of Walker v. Rostron (1842) 9 M. & W. 411 : 11 L.J. Ex. 173 : 60 R. R. 770 : 152 E. R 174 and Crowfoot v. Gurney (1832) 9 Bing. 372 : 2 M. & So. 473 : 2 L.J.C. P. 21 : 35 R. R. 557 : 131 E.R. 655, seem to me to establish clearly this proposition that, where there are funds in the bands of an agent belonging to his principal and when his principal gives a 'mandate to the agent to deliver them in extinguishment of an obligation of the principal to a third party and when that mandate is communicated to the creditor, then there arises on the part of the agent an obligation on which apparently he can be sued both in law and equity--in law as on a contract and in equity as upon an implied assignment of such funds as there may be in his hands to satisfy pro tanto with those funds which he had in his hands the claim of the creditor. Now the trouble was that in this case it was not possible to prove that at the time when the suit was brought there were funds in his hands sufficient to meet this claim or any substantial part of it, certainly not sufficient funds to be able to withdraw the bills from the Bank and give the plaintiffs delivery of their goods; and I, therefore, think that any cause of action based upon a contract as against the first defendant was bound to fail because in a legal claim, in my opinion, it must be shown that the fund which it is sought to attach was actually in existence in the hands of the right person at the date of the writ. But with regard to the equitable remedy I do not feel that that' difficulty exists. I am prepared to treat this plaint as in effect a request for the Court to direct an ascertainment of what funds belonging to the principal are in the hands of the agent as at the date of the ascertainment of rights, for I am not asked to do that except for a very subsidiary purpose because it is abundantly clear that the second defendant, namely, Messrs. Alfred Mumford & Co., Ltd., and their liquidator have no sort of answer to this suit whatever. They took the plaintiffs' money 400 and have had the benefit of it on an Undertaking given by them that they would utilise that money by making such arrangements with the National Bank by making up any balance of the actual bills as would enable the National Bank to give delivery to the plaintiffs and so discharge the plaintiffs' claim. That they totally failed to do. It is not for me to enquire whether it was they that failed or their Madras representatives that failed, but the fact remains that the plaintiffs have parted with their money and have got nothing for it up to date. In these circumstances, I am prepared, at the suggestion of the parties, to hold Messrs. Alfred Mumford & Co., Ltd., directly responsible to the plaintiffs for this sum of 400 and it has been agreed between the parties, to save the laborious enquiry that might follow as to the rate of exchange prevailing at the material times, to accept that liability as now standing at Rs. 5,000 which I think is a very reasonable proposition and very reasonably accepted. I must, therefore, give judgment against Messrs. Alfred Mumford & Co., Ltd., for the sum of Rs. 5,000 but in accordance with the equitable doctrine which has been discussed I must further hold that there is created a charge on such funds as was found to be in the hands of Messrs. Rathnam & Sarathy belonging to Messrs. Alfred Mumford & Co., Ltd., and thus enable the plaintiffs to execute that charge on the funds in the possession of Messrs. Ratnam & Sarathy which I am told exceeds the sum of Rs. 5,000, which is the amount of my judgment against Messrs. Alfred Mumford & Co., Ltd.

4. Now, I am told that the first defendant's, Messrs. Ratnam & Sarathy's, difficulty in handing over the money is this Pressure has been put upon them by the liquidator of the Company forbidding them at their peril to part with this money. That case is met, in my judgment, by what was decided in Walker v. Rostron (1842) 9 M. & W. 411 : 11 L.J. Ex. 173 : 60 R. R. 770 : 152 E. R 174 because in that case what Rostron did was to hold the person in the position of the claimant (here, the plaintiff), at bay in obedience to the pressure put upon him by the Assignee in Bankruptcy of the debtor, the principal, and the Court held that he was wrong and that he was bound to pay the person in favour of whom a charge had been created, he being in the position of the first defendant in this case, it preference to discharging the claims of the Assignee in Bankruptcy. But the matter does not stop there, because there is an even stronger case of Burn v. Carvitho (1839) 4 My. & Cr. 690 : L.J. (N.S.) Ch. 65 : 3 Jur. 1141 : 48 R.R. 213 : 419 R. 255. There the matter had gone so far that the Court of Common Law dealing with it purely as a legal claim had decided, even as for as the Exchequer Chamber,in favour of the Assignee in Bankruptcy. But when an appeal was filed in Equity, the Common Law Courts having expressed themselves as not dealing with the equitable claim so that it was not necessary to pass an injunction against the plaintiff against proceeding with his legal remedy, the Court of Equity held, and it was confirmed by the Lord Chancellor, that the equitable claim prevailed and that the person in the position of the plaintiff here was entitled to enforce his equitable charge to the neglect of the legal rights of those creditors in law of the principal. I am clearly of opinion that in these proceedings I am not entitled to hear the National Bank. They are not parties to this suit and they are not sought to be added. But I am further of opinion that even if they were entitled to be heard the equitable claim of the plaintiffs must inevitably prevail over any supposed legal claim either of the Bank or of the liquidator of Messrs. Alfred Mumford & Co., Ltd.

5. There will be judgment in the way I have outlined. There will be judgment against Messrs. Alfred Mumford & Co. Ltd., for Rs. 5,000 for moneys had and received to the plaintiffs' use on a consideration which has failed and there will be a declaration that the moneys belonging to Messrs. Alfred Mumford & Co., Ltd. In the hands of Messrs. Rathnam & Sarathy are subject to an equitable charge in favour of the plaintiffs. By agreement of parties there will be no costs.


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