1. This is an appeal by the Plaintiffs against the judgment of my learned brother Mr. Justice Pearson.
2. The learned Judge disposed of several of the Defendants' contentions in favour of the plaintiffs, but he decided that the clause in the contract ' F.O.B. New York ' was a condition and inasmuch as it had not been performed, he dismissed the Plaintiffs' suits.
3. The material facts are as follows:-The Defendants carried on business in Calcutta, the Plaintiffs in New York and Messrs. A. Stein & Co., in Chicago. The Defendants placed an order with the Plaintiffs through their agent in Calcutta. Messrs. Muller and Phipps.
4. The order is as follows:
Please ship the following goods on our account and risk drawing on us against the invoice amount at 60 days' sight: documents on payment. We agree to accept and pay your draft on or before maturity interest as usual. Buying Commission 2.'
'Ship to 58/1, Canning Street, Calcutta, Invoice to Messrs. S. Rohomotollah & Co.
'Draw on Messrs. S. Rohomotollah & Co.
'Through any Bank.
' Insurance at 10 per cent over invoice amount W.P.A., with risk of Pilferage and Breakage, War risk extra.
' All orders subject to confirmation by New York shippers.
' Two copies of documents to Calcutta Office.
5. There is a clause on the face of the document as follows:-'This order is given Subject to war conditions and to such regulations governing purchase and shipment as may be established by the United States or other Governments, and you are free of responsibility if unable to export the goods.
6. Then the documents proceed as follows:-'Messrs. A Stein & Co., 1143 W. Congress Street, Chicago I11. 100 gross Paris Garters Style No. 1500.
Assorted colours but white to be omitted.
'10 gross Dandy Pad Garters with Satin pad. Assorted colours but white to be omitted. File at manufacturers' best prevailing prices. F.O.B. New York.
7. The plaintiffs acknowledged the order by a letter, dated the 12th December 1919 addressed to the Defendants as follows:
' We thank you for this indent and give herewith copy of our order as placed with the manufacturers for acceptance. If there is any delay in shipping we will promptly advise you.
' Manufacturers acknowledge under date of December 20th, for shipment from five to six months at price of 37 dollars 20 cents per gross Paris.
' 100 gross Paris Garters 1500.'
' This confirms Muller and Phipps' (India) Ltd., Calcutta, Cable order.'
' Note-We are not to be liable for loss or damage resulting from any delay or failure to deliver the goods ordered, caused by any action of the supplier, or by delay in transportation, strikes car-shortage, freight blockages, accidents, transfers by Bail roads or steamship Companies or other conditions over which we have no control.
8. And the document contains a copy of the order as follows for consignee from Messrs. A. Stein & Co.
Ship to Messrs. Sheikh Rohomotollah & Co., addressed 58-61, Canning Street, Calcutta, India.
' Indent No. Cable 37, dated 9th December 1919.
' Manufacturers Deliver F.O.B. New York.
' Ship via direct steamer.
9. The goods were ready and packed for shipment on the 23rd June 1920. There was at that time much difficulty in getting the goods in New York. There appears to have been great congestion of goods for export at New York and the Railway Companies of Chicago would not accept deliveries of goods for conveyance to New York.
10. Messrs. A Stein & Co, were complaining to the Plaintiffs of the congestion in their shipping department and explaining that they could not hold up orders indefinitely awaiting shipping instructions.
11. The Plaintiffs gave instructions to Messrs. Stein & Co. to ship via Montreal and the Canadian Pac. Railway. These instructions were received by Messrs. Stein & Co. on the 17th of July 1920, and the goods were handed to the Railway on the 21st of July 1920.
12. Payment for the goods was made by the Plaintiffs to Messrs. Stein & Co. on the 14th and 17th of August 1920. The goods were shipped at Montreal on 20th September 1920. In due course they arrived in Calcutta and the Plaintiffs or their agents presented a draft to the Defendants.
13. The Defendants refused to accept the draft or the goods. The Plaintiffs sold the goods, and, as the market price had fallen, the result was a loss of Rs. 8,063.
14. This sum the Plaintiffs claimed in the suit, alleging that the Defendants were bound to identify the Plaintiffs against the loss, which they had incurred. The Plaintiffs in the alternative based their case on a breach of the contract and claimed the said sum as the difference between the contract price and the market price. Several defences were raised but, as already stated, the one, which succeed-ed, was that the clause 'F.O.B. New York' was a condition of the contract that it had not been performed and that the defendants were entitled to refuse to accept the draft and the goods.
15. This was the only point argued in the Court of Appeal.
16. The first ground, on which the learned Counsel for the Plaintiffs relied, was that there was no express direction to the Plaintiffs to ship from New York. The argument was that the phrase 'F.O.B. New York' referred to the price only; that the plaintiffs had to obtain the best; prevailing price, which was to be an inclusive price F.O.B. New York, and that the Plaintiffs carried out the Defendants' instructions in this respect.
17. I am unable to accept this argument. It is contrary to the natural meaning of the clauses in the document, which contained the defendants' instructions and which has been called the ' indent.'
18. The instructions were to ship the goods on account of the Defendants and at their risk.
19. The phrase ' F.O.B. New York ' is the only direction as to the place or mode of shipment.
20. The phrase follows immediately after the clause ' Fill at Manufacturers ' best prevailing prices,' but 'F.O.B. New York' is printed in a separate line and as a separate sentence.
21. In my judgment the indent did contain express instructions to thip at New York.
22. The second point urged by the learned Counsel for the Plaintiffs was that there was a doubt as to the meaning of the instructions contained in the ' indent,' that the instructions were susceptible of two different meanings, that the Plaintiffs had bona fide adopted one of them and had acted upon it, and consequently the Defendants could not repudiate the Plaintiffs' act as unauthorised.
23. Reliance was placed upon the judgment of Lord Chelmsford in the House of Lords in Ireland v. Levingstone.
24. It was argued that the Plaintiffs were directed to ship the goods 'soonest.' which means as soon as possible, and that as they could not ship them at New York without great delay, the Plaintiffs were entitled to ship the goods at Montreal with a view to exporting the goods as soon as possible.
25. Again I. am unable to accept this argument. In my judgment the clause 'F.O.B. New York' contains the directions as to shipment, and the instructions were that the Plaintiffs were to ship the goods as soon as possible at New York. In my opinion the language used in the indent is not susceptible of the meaning which the Plaintiffs seek to place upon it.
26. The third point urged by the learned Counsel for the Plaintiffs was that as the Plaintiffs were prevented from shipping at New York by the congestion at New York and the embargo placed by the Railway Companies on consignments from Chicago to New York, the Plaintiffs were bound to do the best they could and ship the goods as soon as possible at another port: and that they adopted the best possible course by arranging for the goods to be sent via Montreal.
27. It was argued that an emergency had arisen within the meaning of Section 189 of the Indian Contract Act, and that the Plaintiffs had authority to ship the goods at Montreal, as it was an act which a man of ordinary prudence would have done in his own case under similar circumstances.
28. This argument cannot succeed; for in my opinion, it cannot reasonably be said that such an emergency had arisen as authorised the Plaintiffs to act contrary to the express instructions of the Defendants.
29. It was not suggested that the Plaintiffs were unable to communicate with the Defendants and obtain their instructions as to the course to be adopted in view of the difficulty which had arisen with regard to the shipment of the goods at New York. The Plaintiffs had agents in Calcutta: there was nothing to prevent the Plaintiffs cabling or communicating otherwise with their agents or with the Defendants and obtaining the instructions of the Defendants.
30. It was not as if a sudden emergency bad arisen, the evidence shows that the congesation at New York extended over some months and it must have been well-known to the Plaintiffs that there would be a difficulty in shipping at New York when the consignment was ready.
31. Even when the consignment was ready for shipment and when Messrs. Stein & Co. were asking for shipping instructions, the Plaintiffs could have communicated with the Defendants and obtained their instructions.
32. In my judgment it was obviously the duty of the Plaintiffs, having regard to the difficulty as to the shipment at New York,] to communicate either directly, or through their agents in Calcutta, with the Defendants and obtain their instructions.
33. This they did not do, but they acted without instructions and thereby took the risk of the goods being rejected by the Defendants.
34. The fourth point urged on behalf of the Plaintiffs was, in my opinion, the most important one.
35. It was argued that the contract was one between principals and agents, that the clause 'F.O.B. New York,' was not a condition which went to the root of the contract, that the Plaintiffs bad substantially carried out the instructions contained in the indent, and that the failure to ship the goods at New York was merely a breach of the contract which sounded in damages and did not entitle the Defendants to refuse to accept the documents or the goods.
36. It was not disputed that if the contract were treated as a contract between the Plaintiff's as vendors and the Defendants as vendees, the breach of the provision to ship at New York would entitle the Defendants to reject the goods.
37. It was argued on behalf of the Defendants that the contract in this case was one between vendor and purchaser and reliance was placed upon the opinion of Blackburn, J. in Ireland v. Levingstone (1871) L.R. 5 H.L. 395
38. The learned Judge pointed out that although the legal effect of the transaction between a commission merchant, such as the Plaintiffs, and the consignee who has given him the order, is a contract of sale passing the property from one to the other there was also a contract of agency between the parties.
39. This being the nature of the contract, the question which arises is whether the parties intended that shipment at New York should be a condition precedent to the Defendants' liability under the contract to indemnify the Plaintiffs, or whether it was a stipulation, the breach of which would merely give rise to a claim for damages or compensation for any loss sustained by the Defendants by reason of such breach.
40. The contract was a mercantile contract and it must be assumed that the parties, being mercantile men, did not insert the stipulation as to shipment at New York, unless some value or importance was attached thereto, and having regard to the nature of the contract and the specific instructions contained therein that the shipment was to be at New York, in my judgment this stipulation must be regarded as one which went to the root of the contract and which must be performed before the plaintiffs could claim indemnity from the Defendants.
41. No information was forthcoming as to whether the shipment at Montreal instead of at New York would have involved the Defendants in the payment of a higher freight or a higher rate of insurance, if they had accepted the goods.
42. But in my judgment it would not be right for the Court to reject the Defendants' contention by reason of the absence of such evidence: in my opinion it is immaterial to enquire into such a question when once the conclusion is arrived at that the stipulation that the shipment should be at New York was of the essence of the contract and was one which the Plaintiffs were bound to perform before they could claim indemnity from the Defendants.
43. No doubt 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.
44. As I have come to the conclusion that the shipment of the goods at Montreal instead of at New York was not in the exercise of any authority conferred upon the Plaintiffs by the Defendants, and, as the stipulation as to the shipment was in my opinion of the essence of the contract, it follows that the Plaintiffs were not entitled to be indemnified by the Defendants. The Plaintiffs' claim for damages based upon the difference between the contract price and the market price fails for the same reasons.
45. The result, therefore, is that this appeal must be dismissed with costs.
46. I agree. I think that the stipulation ' F.O.B. New York ' was an essential part of the order. It has been contended before us that even if that be and even if there be no sufficient excuse on the part of the agent for varying the port of shipment, nevertheless the agent has part performed the duties which he undertook by the contract of agency and, therefore, the stipulation as to port of shipment cannot be regarded as something which disentitles him altogether to his indemnity, but must be regarded as something which at the worst entitles the principal to make some deduction corresponding to the amount of damage which he has suffered. I desire to point out that as I read the case of Ireland v. Levingstone (1871) L.R. 5 H.L. 395 it is a conclusive authority against such a contention. The contract there as here had to be regarded, particularly in its early stages, as a contract of agency. The contract in that case was ambiguous and much difference of opinion took place as to whether the instructions required that there should be not less than 450 tons, that there should be one ship, one port and one bulk. On that question the learned Judges differed, but I do not understand that any learned Judge took the view that if the Defendants' view was right as to the meaning of his order he could possibly be held bound to accept a cargo by two ships if he had really stipulated for one, to accept a cargo of less than 450 tons if he had really stipulated in such a way as to require 450 tons in any event, or if there was any other material discrepancy between the order and the performance in an essential particular. It appears to me that these contracts have to be looked at not merely as contracts involving the general principle of indemnity but as contracts with respect to which there is a particular arrangement between the parties as to the time when and the conditions upon which the agent shall get both his indemnity and his commission. I cannot help feeling that men of business would never employ the services of a commission merchant abroad if they were told that so long as the commission merchant did his best for them, they were obliged to take goods even if they were contrary to the conditions of the contract. For those reasons it does not seem to me that the result in this case is different, even when the agency feature of the contract is considered, from what it would have been if it had been a mere contract of sale between the parties.
47. I agree, therefore, that the appeal should fail.