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Madhoram Hurdeodass Vs. G.C. Sett and anr. - Court Judgment

LegalCrystal Citation
CourtKolkata
Decided On
Judge
Reported in40Ind.Cas.383
AppellantMadhoram Hurdeodass
RespondentG.C. Sett and anr.
Cases Referred and Tomplin Steamship Co. v. Anglo
Excerpt:
contract act (ix of 1872), section 66 - performance rendered impossible by outbreak of war--rights and liabilities of parties--contract of affreightment with alien enemy before war, whether subsits after outbreak of war--c.i.f. contract, incidents of--executory contract, dissolution of--estoppel--vendor and purchaser. - sanderson, c.j.1. this is an appeal by the defendants madhoram hurdeo dass against the decision of chaudhuri, j., whereby he gave judgment for the plaintiffs for rs. 2,500 as damages for breach of contract and costs.2. the contract was contained in a letter written by the defendants to the plaintiff, and dated 2nd february 1914, as follows:calcutta, 2nd february 1914.messes. g.c. sett & b.r. sett,dear sirs, calcutta.we beg to enter as having sold you through broker p.n. mookerjee 150 tons basic steel bars with usual 10 per cent. 2nd class extras at 5-7-6 per ton c.i.f. i.e., free hooghly. shipment in three monthly lots commencing june, i.e., june, july, august 1914. delivery to be completed within three days from the date of the landing of the goods. terms 45 days credit from the date of.....
Judgment:

Sanderson, C.J.

1. This is an appeal by the defendants Madhoram Hurdeo Dass against the decision of Chaudhuri, J., whereby he gave judgment for the plaintiffs for Rs. 2,500 as damages for breach of contract and costs.

2. The contract was contained in a letter written by the defendants to the plaintiff, and dated 2nd February 1914, as follows:

Calcutta, 2nd February 1914.

Messes. G.C. Sett & B.R. Sett,

Dear Sirs, Calcutta.We beg to enter as having sold you through Broker P.N. Mookerjee 150 tons Basic Steel bars with usual 10 per cent. 2nd class extras at 5-7-6 per ton C.I.F. i.e., free Hooghly. Shipment in three monthly lots commencing June, i.e., June, July, August 1914. Delivery to be completed within three days from the date of the landing of the goods. Terms 45 days credit from the date of the delivery of the goods, failing which due date will be calculated from the due date of the delivery, i.e., three days of the landing of the goods.

This sale is made on the basis of the existing terms and conditions in the contracts for this class of goods as are current in the market. Interest at the rate of 8 per cent. per annum to be charged on any money unpaid after the due date and rebate for payments before the due date will be allowed at the same rates. You have the option to have the goods weighed so as to arrive at the actual weighment and in that case you shall have to notify us, so that we may make necessary arrangements to have our man present. But in any case, claim, for weighment will not be entertained, if made alter three days after the arrival of the goods in your godowns from the jetty, and the invoice weight shall be accepted by you as the correct one.

Pteace confirm.

Yours faithfully

Mauhoram Huedeodass.

3. The July consignment was shipped by the Belgo-Asiatic Trading Company, from whom the defendants had bought the goods, on the 2nd July 1914 at Antwerp on board the ss. 'Steinturn' which was a German vessel. Some of the goods were made in Belgium, others were made in Germany as appears from the invoices in respect of the goods. Neither the Bill of Lading nor the Policy of Insurance was produced in Court, but it was assumed for the purpose of the appeal by both sides that the Bill of Lading was made out in the name of the defendants and that the contingency which happened, viz., the capture and condemnation of the ship and the consequent expenses were not covered by the Policy of Insurance.

4. At the time of the declaration of war against Germany, namely on the 4th Augnst 1914, the 'Steinturn' was at sea, and at sometime subsequently, which has not been proved, she was captured by a British ship and taken to Colombo. The 'Steinturn' was condemned by the Prize Court but the cargo in question was released, and inasmuch as the ship was carrying a general cargo consigned to Madras, Calcutta and Chittagong, it was ordered on the 19th November 1914 by the Prize Court that in the event of the Crown in the exercise of its power under a previous order, dated 2nd September 1914, consigning the said cargo to Madras and Calcutta--the Crown be authorised to recover against all cargo released and delivered at Madras and Calcutta in respect of freight Rs. 15-50 per ton and in respect of agency charges such reasonable expenses as might be incurred.

5. Consequently the consignment in question was carried in the 'Steinturn' under the above mentioned order and arrangement to Calcutta and arrived there on or about the 2nd January 1915. The freight for the carriage from Colombo to Calcutta was Rs. 818-140 as is shewn from the bill dated the 23rd February 1915, in addition there were Rs. 82 for charges in respect of release from the Prize Court and other expenses in consequence of the capture of the 'Steinturn' and the conveyance of the cargo from Colombo to Calcutta.

6. The course of events may be taken from the learned Judge's summary of what he describes as the undisputed facts of the case as follows:

That the plaintiffs failed to pay the price of the June shipment and a suit had to be instituted against them which was decreed on the 26th January 1915: That copies of three invoices were sent to the plaintiffs by the defendant firm of the goods per ss. Steinturn. In or about the end of September 1914, the defendant firm asked: the plaintiffs to keep themselves in readiness to pay for the goods in cash against shipping documents on arrival of the steamer. See their letter dated 24/30th September 1914, Apparently there was a mistake in the invoice as regards the weight, and the plaintiffs called upon the defendants to correct it, but the defendants stated that they were not liable to make any corrections. On the 2nd January 1915 the defendant firm intimated to the plaintiffs that the vessel had arrived in Port and requested them to take delivery of the goods by paying for them as early as possible. The cause of late arrival was the seizure of the steamer at Colombo.

By an order dated 25th August 1914 on the application of the Grown, the steamer was handed over by the Colombo Prize Court, to the custody of the principal Collector of Customs, and the following undertaking and decree was entered on record, namely, 'the Solicitor General on behalf of the Crown undertakes that the Crown will restore the ship to its present place, whenever it is called upon to do so by this Court, if the Government of Ceylon on behalf of the Crown are allowed to take charge of the ship, and moves that the Crown be allowed to take charge of the ship, on these terms. It is ordered and decreed that the application be allowed and that the Marshal be directed to let the Government of Ceylon have possession of the ship, after the cargo, goods, wares and merchandise have been warehoused. It is further directed that the Marshal shall require from any person taking over the ship on behalf of the Government an authority to do so signed by His Excellency the Governor or by the Colonial Secretary.' The President of the Prize Court appears to have made an order on the 19th November 1914 that inasmuch as the steamer contained general cargo sent to Madras, Calcutta and Chittagong, it was for the interest of all persons concerned that the cargo entitled to release, which was consigned to Calcutta, should be delivered at Calcutta; it was further ordered that in the event of the Crown in the exercise of its powers conveying the said cargo to Calcutta, the Crown was authorised to recover against all cargo released and delivered certain expenses, namely.

In respect of freight Rs. 15,50 per ton weight or measure. In resepct of agency charges, such reasouable expenses as may be incurred.

And that the steamer was not to depart from Colombo until after the expiration of three weeks from the date of that order.

7. On the 2nd September 1914 the Prize Court on hearing the Attorney-General made the following order, that the Marshal be authorized for the purpose of warehousing the cargo to put the cargo in the hands of the Crown, the Attorney-General undertaking on behalf of the Crown that in the event of the cargo or any part of it being removed out of the jurisdiction of this Court, it was to be brought back within the jurisdiction upon the order of the Court. What happened was that Messrs, Graham & Co., merchants of Calcutta, were employed as agents on behalf of the Crown to give delivery of the goods consigned to Calcutta to the consignees. Graham & Co., thereupon, Communicated with the defendant firm in respect of the July shipment of the goods which had come out in that steamer, and these goods arrived, as stated above, on the 2nd January. The defendant firm had to pay certain charges for freight and commission to Messrs. Graham & Co. for these goods. The defendants allege that by the said letter dated 23rd February 1915, they gave particulars of the costs and charges incurred by them in respect of the consignment, including therein the charges occasioned by the seizure and release. That prior to that date and after the arrival of the goods in Calcutta some correspondence ensued. The defendant firm wrote to the plaintiffs on the 4th January 1915, that unless the plaintiff firm immediately sent the price of the goods of the June shipment which had already been delivered to them, as also the price of the goods per ss. 'Steinturn', they would be compelled to re-sell the goods on the plaintiffs' account. The plaintiffs Wrote on the same date that they were prepared to pay for and take delivery of all the goods with the exception of 22 pieces of Basic Steel bars, the weight of which had been incorrectly stated in the invoice. They said that if they (defendants) failed to make over the Bill of Lading for the goods they would not be liable for any wharf rent, if incurred. On the 8th January the plaintiffs said that they were prepared to pay the full price of the three lots which had come per ss. 'Steiniurn' on the defendant firm handing over to them the Bills of Lading and other documents. They offered to pay the necessary charges for obtaining delivery of the goods from the jetties, and asked for information as to the exact amount payable by them. There was no reply to this letter. On the 19th January they offered Rs. 4,370 as being the price of the goods including the usual charges. On the 27th January Charu Chandra Bose, Attorney for the defendants, wrote to the plaintiffs' Attorneys the following letter: 'As arranged my clients are now ready to deliver the' goods denlanded by you on receipt of the price, godown rent and charges.' It will be noticed this letter was written the day after the decree above referred to. It was a consent decree and the defendants say that terms arranged between the parties were that the goods of the July shipment would be taken delivery of by the plaintiffs after payment of all dues, that Nepal Chunder on behalf of the plaintiffs agreed to pay all costs in respect of the July shipment, freight, etc , that is to say, the extra freight and other charges incurred in respect of the consignment. This arrangement is entirely denied by the plaintiffs. No reply was sent by the plaintiffs to that letter until the 4th February 1915, when they said that nothing had been arranged as suggested by the defendants. They said that the defendants were not entitled to godown rent, and refused to pay same. They complained that the defendants had not specified what charges they were claiming, and expressed their readiness and willingness to pay the price of the goods and the duty, landing and proper charges in respect thereof as were usual in the case of delivery ex-jetty. On the 4th February the defendants' Attorney said that if the goods were not taken delivery of within three days, the defendants would re-sell on the plaintiffs' account. Apparently these two letters crossed each other. On the 9th February the defendant firm said that the price and charges to be paid were mentioned in their bills sent to the plaintiffs. Over and above that, the plaintiffs would have to pay godown rent and cartage for the removal of the goods and unless the plaintiffs took delivery of the goods within three days, the defendants would re-sell the goods on the plaintiffs' account and risk. On the 12th January the plaintiffs denied that any bills had been submitted to them for payment and refused to pay godown rent and other incidental charges. Nothing further was done by the plaintiffs until the 8th March, when their Attorneys wrote a letter to the defendants' Attorney asking for a statement of the charges the defendants claimed in respect of the said goods and if they found the same reasonable and proper, they would ask the plaintiffs to take delivery. On the 10th March they were informed that the defendants had sold the goods to a third person.

8. The action was brought for breach of contract caused by the failure of the defendants to make over the Bill of Lading or to deliver the goods, and the main point which was urged in this appeal was not taken by the defendants until the trial, when the learned Judge allowed the defendants to amend their defence as follows:

With further reference to paragraph 3 of the plaint herein the defendant firm state that the goods forming the July shipment referred to in the said paragraph were shipped from Antwerp on or about the 2nd day of July 1914 per ss. 'Steinturn'. On the outbreak of war between His Britannic Majesty's Government and the German Empire on the 4th day of August 1914 the said steamer, which was on the high seas, became liable to seizure by the naval forces of His Majesty's Government and as a matter of fact the said steamer was captured, seized and detained by His Majesty's Government at or near Colombo and was subsequently condemned with all the cargo on board by the Colombo Prize Court. The defendant firm submit that on such condemnation of the said steamer and of the cargo therein including the said goods, the contract with the plaintiffs became impossible of performance.

9. It is clear from the order of the Prize Court that though the ship was condemned, the cargo in question was not condemned. It was, however, argued that although the cargo was eventually released the outbreak of war rendered the performance of the contract of 2nd February 1914 impossible or at all events it rendered the contract of affreightment, which was an implied part of the contract, unlawful and consequently by reason of the provision of Section 56 of the Indian Contract Act, 1872, the contract was void.

10. This defence necessitated an examination of the terms of the contract.

11. After some discussion during the argument it appeared that there was little, if any, material difference between the interpretations placed upon the contract by the learned Counsel appearing for the plaintiffs and defendants; and both argued the case on the assumption that the contract was an ordinary C.I.F contract, with this variation that the payment specified in the contract was not to be made as usual against the documents and was not to be made in this case until 43 days after the landing of the goods, that having regard to the special terms of this contract it was not the duty of the defendants to hand over the documents relating to the goods as soon as the documents arrived but that they were entitled to retain them until the goods arrived, when it would be the duty of the defendants to hand over the documents to the plaintiffs for the purpose of taking delivery or for the defendants to take delivery themselves in the first instance and that payment would become due 48. days after the landing of the goods.

12. The question, therefore, arises what were the incidents of the defendants' undertaking in such a contract: The variation of the terms as to the time of payment does not in my judgment alter the nature of the contract as C.I.F. contract.

13. Taking the well-known incidents of such a contract the defendants' had, firstly, to ship at the port of shipment goods of the description contained in the contract, secondly, to procure a contract of affreightment under which the goods would be delivered in the Hooghly; thirdly, to arrange for an insurance upon the terms current in the trade which would be available for the benefit of the buyers; fourthly, to make out an invoice; and finally, to tender these documents and by reason of the special terms of this contract, to tender such documents upon the arrival of the goods.

14. It may be assumed for the purpose of this case that the goods were of the description contained in the contract and that a contract of affreightment was procured under which in ordinary circumstances the goods would have been delivered in the Hooghly and that a sufficient insurance was arranged.

15. But it was argued on behalf of the defendants that although the goods eventually arrived and were capable of physical delivery in the Hooghly, they did not so arrive under the contract of affreightment procured by them in pursuance of their contract of 2nd February 1914 with the plaintiffs, that the original contract of affreightment of which the Bill of Lading was evidence came to an end as soon as war broke out, that though the goods were in fact carried by the 'Steinturn' to the Hooghly, they were carried by her, after she had been condemned by the Prize Court in Ceylon and under an arrangement made in pursuance of an order of that Court, by which further freight and expenses became charged upon the cargo, and that inasmuch as the defendants could not deliver the goods under the original contract of affreightment the performance of their contract was impossible.

16. In my judgment this contention should be adopted: It was an implied part of the contract of 2nd February 1914 that the defendants should procure a contract of affreightment, under which the goods would be delivered in the Hooghly. That contract of affreightment was procured, and it was represented by the Bill of Lading in the name of the defendants.

17. But the operation of war on such a contract of affreightment made before, but which remained unexecuted at the time war was declared, made the further execution, so far as the defendants, British subjects, were concerned, unlawful, it being a contract with an alien enemy, and the contract of affreightment thereby became dissolved. Esposito v. Bowden (1857) 7 El. & Bl. 763 at p. 783 : 27 L.J.Q.B. 17 : 3 Jur. (N.S.) 1205 : 5 W.R. 732 : 29 L.T. (O.S.) 295 : 119 E.R. 1430 : 110 R.R. 822.

18. Further the capture of ss. 'Steinturn' prevented the delivery of the goods under the contract of affreightment procured by the defendants in pursuance of their, contract with the plaintiffs, and the goods could not be delivered in the Hooghly except by the payment of further freight, and expenses which by the order of the Prize Court in Ceylon had become charged on the goods.

19. The Bill of Lading which under a C.I.F. contract is tendered by the seller to the buyer would be such as would procure delivery of the goods from the ship. In this case the Bill of Lading, if tendered by the defendants, would not by itself have enabled the plaintiffs to obtain delivery of the goods from the ship. Something more would have been necessary to enable the plaintiffs to get delivery, viz., the authority of the agents of the Crown, which authority could only be obtained by the payment of the freight from Colombo to the Hooghly and certain other charges.

20. For these reasons it appears to me that the contract between the plaintiffs and the defendants included the performance of an act (viz., the procuring the contract of affreightment under which the goods would be delivered in the Hooghly), which after the contract was made became impossible by reason of the outbreak of the war, within the meaning of Section 56 of the Indian Contract Act and consequently the contract of 2nd February 1914 was void.

21. I think also that the procuring of (he further execution of the contract of affreightment, which was an implied part of the contract of 2nd February 1914, became unlawful by reason of an event which the defendants could not prevent, viz., the outbreak of war and consequently the contract of 2nd February 1914 became void by reason of the provisions of Section 56.

22. The learned Counsel for the plaintiffs pressed us with the argument that the property in the goods had not passed to the plaintiffs, by reason of the fact that no appropriation of these goods, to which the plaintiffs assented, to the contract in question had taken place until August or September 1915, i.e., after the capture and condemnation of the ss. 'Steinturn' and that the plaintiffs' contract, therefore, was not affected by the fact that the goods had been carried in a German vessel at the outbreak of war.

23. I do not think it is necessary to express any opinion on this point, for in my judgment it is immaterial to the question whether the performance of an integral part of the contract between the plaintiffs and the defendants was rendered impossible or unlawful by the outbreak of war.

24. It was further urged that the contract of affreightment did not relate to the goods, the subject-matter of the contract of 2nd February 1914. This point, as far as I understand, was not raised at the trial, and I think there cau be no doubt that the contract of affreightment did in fact relate to the goods the subject-matter of the contract.

25. But then it was said, even if that be so in point of fact, it cannot be said in law that the contract of affreightment was in pursuance of the contract between the plaintiffs and the defendants until something is done which binds the plaintiffs, such as assent by the plaintiffs.

26. Having regard to what I consider is the material question in this case, as intimated already, I cannot agree to the last proposition. I think the assent of the plaintiffs was immaterial and it was merely a question of fact whether the contract of affreightment did really relate to the subject-matter of the contract of 2nd February 1914 and having regard to the date of the invoice, the description and quantities of the goods contained therein, there can be no doubt that in point of fact the contract of affreightment related to the subject-matter of the contract of 2nd February 1914.

27. As already stated, the defendants did not take up the position now relied upon until the trial of the action, and the defendants on the 2nd January 1915 had called on the plaintiffs to take delivery. It was contended that the defendants by reason of such action were estopped from relying on the above-mentioned defence.

28. The plaintiffs were not able to point to any respect in which they had altered their position by reason of the alleged representation of the defendants that they were in a position to give delivery in accordance with the contract, and I do not think that the defendants are estopped from taking the defence upon which they now rely. That defence, for the reasons given above, is, in my judgment, a good one, and, therefore, this appeal should be allowed, and judgment entered for the defendants with costs in this Court and in the Court of first instance.

29. Any extra costs necessitated by the amendment of the defence or costs thrown away by reason thereof to be paid by the defendants to the plaintiffs.

30. Money in Court to be paid out to the defendants.

Mookerjee, J.

31. This is an appeal by the defendants in a suit for damages for breach of contract. On the 2nd February 1914, the defendants agreed to sell to the plaintiffs 150 tons Basic Steel bars to be shipped in June, July and August 1914 in equal proportions. The terms of the contract were set out as follows in a letter addressed by the defendants to the plaintiffs:

We beg to enter as having sold you, through broker, P.N. Mookerjee, 150 tons Basic Steel bars, with usual 10 per cent, second class extra, at 5-7-6. per ton, C.I.F., i.e., free Hooghly. Shipment in three monthly lots, commencing June, i.e., June, July and August 1914. Delivery to be completed within three days from the date of the landing of the goods. Terms 45 days credit from the date of the delivery of the goods, failing which, due date will be calculated from the due date of the delivery, i.e., three days from the landing of the goods. This sale is made on the basis of the existing terms and conditions in the contracts for this class of goods as are current in the market. Interest at the rate of 8 per cent, per annum to be charged on any money unpaid after the due date, and rebate for payments before the due date will be allowed at the same rate. You have the option to have the goods weighed so as to arrive at the actual weighment, and in that case you shall have to notify us, so that we may make necessary arrangements to have our man present. But, in any case, claim for weighment will not be entertained, if made after three days after the arrival of the goods in your godowns from the jetty, and the invoice weight shall be accepted by you as the correct one. Please confirm.

32. On the 14th February 1914, the plaintiffs supplied the specifications; and on the 19th February, the defendants sent out an order to the Belgo Asiatic Trading Co. of Brussels for supply of the goods, which were partly of Belgian and partly of German manufacture. The June shipment was received by the defendants in due course and was delivered to the plaintiffs. We are now concerned with the July shipment. The goods were shipped from Antwerp on the the 2nd July 1914 in ss. 'Steinturn' a German steamer which was on the high seas when war broke out between England and Germany on the 4th August 1914, The hip was captured by the naval forces of His Majesty as an enemy ship, and was brought before the Ceylon Court of Admiralty. On the 25th August 1914, the ship was condemned as lawful prize, but the cargo was released. On the 19th November 1914, the Prize Court ordered that, in the event of the Crown conveying the cargo to destination, the Crown be authorised to recover against all cargo released and delivered at Calcutta the following expenses, namely Rs. 15'50 in respect of freight per ton weight or measure, and such reasonable expenses as may be incurred in respect of agency charges. The Government of Ceylon took possession of the cargo on behalf of the Crown, and Graham & Co. were employed to act as their agents. The goods arrived in Calcutta on the 2nd January 1915 and the defendants took delivery on payment of freight and agency charges to Graham & Co. Meanwhile, the defendants had, on the 30th September 1914, intimated to the plaintiffs that they had received invoices for the goods (copies whereof were enclosed); no mention, however, was made of the seizure of the ship; indeed, there is nothing to show that either party was, at that date, aware of what had happened. On arrival of the goods in Calcutta, there was some controversy between the parties as to whether the plaintiffs or the defendants were liable to bear the charges imposed by the Prize Court. The plaintiffs denied their liability in this respect, with the result that the defendants disposed of the goods in the market. On the 18th March 1915, the plaintiffs instituted the present action for the recovery of Rs. 3,563-14-6 as damages for failure of the defendants to deliver the goods in terms of the contract. The defendants resisted the claim substantially on the ground that the contract became void when war broke out on the 4th August 2914. Mr. Justice Chaudhuri has overruled this contention and has given the plaintiffs a decree for damages, which he has assessed at Rs. 2,500. On the persent appeal, the defendants have reiterated the ground which they urged unsuccessfully in the Court below to enable them to escape from liability under the contract. The solution of the question raised clearly depends upon the nature of the contra and the effect thereon of well-establish, legal principles.

33. The agreement between the parties constitutes what is known as a C.I.F. or C.F.I. (cost, freight and insurance) contract, subject to an important variation. The rights and liabilities of the parties to a C.I.F. contract were formulated by Hamilton, J., in Biddell Brothers v. Clemens Horst Company (1911) 1 K.B. 214 : 80 L.J.K.B. 584 in the following terms, which were approved by Kennedy, L.J., in his celebrated dissentient judgment in the Court of Appeal Biddell Brothers v. Clemens Horst Company (1911) 1 K.B. 934 at p. 954 : 16 C.M. Cas. 197 : 80 L.J.K.B. 584 which was upheld by the House of Lords and characterised by Lord Loreburn, L.C., as a remarkable judgment illuminating the whole field of controversy, Clemens Horst and Company v. Biddell Brothers (1912) A.C. 18 at p. 22 : 81 L.J.K.B. 42 : 105 L.T. 563 : 56 S.J. 50 : 28 T.L.R. 42 : 17 Com. Cas. 55 : 12 Asp. M.C. 80: 'A seller under a contract of sale containing such terms has, firstly, to ship at the port of shipment goods of the description contained in the contract; secondly, to procure a contract of affreightment under which the goods will be delivered at the destination contemplated by the contract; thirdly, to arrange for an insurance upon the terms current in the trade Which will be available for the benefit of the buyer; fourthly, to make out an invoice as described by Blackburn, J. in Ireland v. Livingstone (1872) 5 H.L. 395 : 41 L.J.Q.B. 201 : 27 L.T. 79 or in some similar form; and finally, to tender these documents to the buyer, so that he may know what freight he has to pay and obtain delivery of the goods, if they arrive, or recover for their loss if they are lost on the voyage. Such terms constitute an agreement that the delivery of the goods, provided they are in conformity with the contract, shall be delivery on board ship at the port of shipment. It follows that, against tender of these documents, the Bill of Lading, Invoice and Policy of Insurance, which completes delivery in accordance with that agreement the buyer must be ready and willing to pay the price.' See also Houlder v. Public Works Commissioners (1908) A.C. 276 at p. 296 : 77 L.J.P.C. 58 : 98 L.T. 684 : 11 Asp. M.C. 61. In the case before us, there was this departure from the normal incidents of a C.I.F. contract that the payment was to be made, not against the documents, but forty-eight days after the goods had been landed. It follows accordingly that the defendants were under no obligation to hand over the documents to the plaintiffs immediately on receipt thereof; they could tender the documents on arrival of the goods or might take delivery themselves and make over the goods to the plaintiffs. The defendants argue that, in these circumstances, the contract became void on the 4th August 1914, inasmuch as, on that date, one essential element thereof, namely, the contract of affreightment, bacame unlawful by reason of the outbreak of the war and consequently void. This contention raises the question of the effect of the outbreak of war on an executory contract made with an alien enemy before the war. Such a contract is avoided or dissolved by the outbreak of war, if it enures to the aid of the enemy Furtado v. Rogers {1802) 3 Bos. & Pul. 191 : 127 B.R. 105 : 6 R.R. 752 or if it is in its nature incapable of suspension Oriswold v. Waddington 15 Jhonson 57 : 16 Jhonson 438. A contract is deemed in its nature incapable of suspension if its proper performance necessitates intercourse with the enemy during the war Esposito v. Bowden (1857) 7 El. & Bl. 763 at p. 783 : 27 L.J.Q.B. 17 : 3 Jur. (N.S.) 1205 : 5 W.R. 732 : 29 L.T. (O.S.) 295 : 119 E.R. 1430 : 110 R.R. 822. The William Bagaley v. United State 5 Wallace 397 at p. 407 : 18 Law. Ed. 583 or where time is of the essence of the contract, or the parties cannot, on conclusion of peace, be made equal [New York Life Insurance Co. v. Statham 93 U.S. 24 19 Am. Rep. 512; Janson v. Briefontein Consolidated Mines Limited (1902) A.C. 484 : 71 L.J.K.B. 857 : 87 L.T. 372 : 18 T.L.R. 796 : 7 Com. Cas. 268. The principle which underlies this doctrine is best stated in the words of Lord Tenterden quoted by Willes, J. in Esposito v. Bowden (1857) 7 El. & Bl. 763 at p. 783 : 27 L.J.Q.B. 17 : 3 Jur. (N.S.) 1205 : 5 W.R. 732 : 29 L.T. (O.S.) 295 : 119 E.R. 1430 : 110 R.R. 822: 'Another general rule of law furnishes a dissolution of these contracts' (i.e., for the carriage of goods in merchant ships) by matter extrinsic. If an agreement be made to do an act lawful at the time of such agreement, but afterwards, and. before the performance of the act, the performance be rendered unlawful by the Government of the country, the agreement is absolutely dissolved. If, therefore, before the commencement of a voyage, war or hostilities should take place between the State to which the ship or cargo belongs and that to which they are destined, or commerce between them be wholly prohibited, the contract for conveyance is at an end, the merchant must unload his goods, and the owners find another employment for their ship, and probably the same principles would apply to the same events happening after the commencement and before the completion of the voyage.' Chancellor Kent adopts the same conclusion, for the reason that war, making performance unlawful or impossible either before or after its commencement, dissolves the contract of affreightment. 'The contract of affreightment may be dissolved without execution, not only by the act of the parties, but in many cases, by the act of the law. If the voyage becomes unlawful or impossible to be performed, or if it be broken up, either before or after it has actually commenced, by war or interdiction of commerce with the place of destination, the contract is dissolved. There is no difference in principle between a complete interdiction of commerce, which prevents the entry of the vessel, or a partial one, in relation to the merchandise on board, which prevents it being landed. The contract of affreightment in respect to the goods is dissolved, for the shipper cannot demand the delivery of the goods if the landing of them would expose the vessel to seizures And if the voyage be broken up by capture on the passage, so as to cause a complete defeasance of the undertaking, the contract is dissolved, notwithstanding a subsequent re capture.' (Commentaries, Volume III, page 248. See also Volume I, page 66 The contrary rule seems to have been formulated in the French Code de Commerce, Sections 276, 277). This was recognised in Avery v. Bowden (1855) 5 El. & Bl. 714 : 25 L.J.Q.B. 49 : 1 Jur. (N.S) 1167 : 4 W.R. 93 : 27 L.T. (O.S.) (sic) : (sic) E.R. 647 : 103 R.R. 695 on appeal 6 El. & Bl. 953 : 26 L.J.Q.B. 3 : 3 Jur. (N.S.) 238 : 5 W.R. 45 : 28 L.T. (O.S.) 145 : 119 : E.R. 1119 : 106 R.R. 882, which shews that a contract of affreightment may at once become void by the declaration of war. See note to Clemontson v. Blessing (1855) 11 Ex. 135 : 3 W.R. 510 : 105 R.R. 451 : 156 E.R. 775.

34. The doctrine that a contract entered into before war is dissolved by the outbreak of war, when its performance would involve trading with the enemy', has been recognised in the recent cases of Duncan Fox and Co. v. Schrempft and Bonke (1915) 1 K.B. 365 : 84 L.J.K.B. 730 : on appeal (1915) 3 K.B. 355 : 84 L.J.K.B. 2206; Arnhold Karberg & Co. v. Blythe; Green Jourdain & Co. (1915) 2 K.B. 386 : 84 L.J.K.B. 1673 : on appeal (1916) 1 K.B 495 : 85 L.J.K.B. 665 and The Parcheni 1 Trehern P.C. 579 and an instructive application is furnished by the decision in Nissim Isaac Bekhor v. Sultanalli Shustary 28 Ind. Cas. 433 : 40 B. 11 : 17 Bom. L.R. 249 which further adopts the view taken in Groom v. Barber (1915) 1 K.B. 316 : 84 L.J.K.B. 318 that the seller is not bound, in a C.I.F. contract, to provide the purchaser with a policy covering war risks. The decision in In re Weiss & Co.; Weiss & Co. Ld. v. Credit Colonial et Commercial, Antwerp (1916) 1 K.B. 346 : 85 L.J.K.B. 553 is not in conflict with the principle already enunciated, and is clearly distinguishable on the ground that the goods had been captured by the enemy before tender of the documents. I see no escape from the position, in the case before us, that the contract of affreightment was dissolved on the date of the outbreak of the war as the sellers could not thereafter insist on its performance by an alien enemy. In this view, the conclusion is inevitable that the contract for supply of goods also became void on that date.

35. The plaintiffs contend, however, that no question of the complete execution of the contract of affreightment properly arises in this case, inasmuch as the goods were in fact ultimately brought to their destination by ss. 'Steinturn'. This argument is obviously fallacious. The substance of the matter is that the goods were not and could not be carried to the port of destination under the original contract of afferightment. This is manifest from the proceedings in the Prize Court. The ship and cargo were seized, and although the ship alone was condemned while the cargo was released, the release was conditional on the payment of freight and charges as determined by the Prize Court. That the cargo was properly released is clear from the decision in In re Cargo, Ex. ss. Rappenfels 30 Ind. Cas. 174 : 42 C. 334, as the property in the cargo had at the time of capture vested in the consignees, British subjects [see the observations of Kennedy, L.J. in Biddell Brothers v. Clemens Horst Co. (1911) 1 K.B. 934 at p. 954 : 16 C.M. Cas. 197 : 80 L.J.K.B. 584; but it is equally clear that the Prize Court and the Prize Court alone had jurisdiction to determine the question of freight and the conditions whereon the cargo should be released [The Corsican Prince (1916) P. 195 : 1 Treheyn P.C. 178]. As explained by Sir Samuel Evans, the Prize Court deals with such claims in accordance with the Law of Nations and upon equitable principles freed from contracts, which almost always cease to have effect upon capture or seizure, by reason of the non-appearance or non-completion of the contract of affreightment; it may, indeed, discard the contract rate altogether even as a basis for assessment or calculation [The Twilling Riget 5 C. Rob. 82 : 1 E.P.C. 430, It is further indisputable that where the ship is condemned but the goods, released, the Crown is entitled to impose the payment of freight as a condition of their release and has a lien on them till it is paid [The Fortuna (1802) 4 C. Rob. 278 : 1 E.P.C. 392, The Diana (1803) 5 C. Rob. 67 : 1 E.P.C. 424, The Vrow Anna Caiharina (1806) 6 C. Rob. 269 : 1 E.P.C. 552, The Vrow Henrietta 5 C. Rob. 75 : 1 E.P.C. 427 The Roland 1 Trehern P.C. 188, The Parchim 1 Treheyn P.C. 579]. Consequently, the fact that the goods were brought to Calcutta ultimately by ss. 'Steitrtum' is of no assistance to the plaintiffs: it was essentially a new voyage under new conditions; it was in no sense a continuation of the original voyage in fulfilment of the contract of affreightment, in the language of Chancellor Kent, that voyage was broken up by capture so as to cause a complete defeasance of the under-taking. The original Bills of Lading would be of no avail whatever, unless the consignee complied with the, conditions imposed by the Prize Court; they would be useful for identification of the consignee in whose favour the Prize Court had decided to release the goods, but they had ceased to be operative legal documents, and delivery on their basis could not be claimed as a matter of right. 1 hold accordingly that the contract of affreightment and therewith the C.I.F. contract of sale became void on the 4th August 1914. Consequently, the rights and liabilities of the parties thereafter must be determined with reference to the second paragraph of Section 56 of the Indian Contract Act. That paragraph, so far as it applies to the present case, provides that a contract to do an act which, after the contract is made, becomes unlawful by reason of some event which the promisor could not prevent, becomes void when the act becomes unlawful. As pointed out in Karl Ettlinger v. Chagandas & Co. 33 Ind. Cas. 205 : 17 Bom. L.R. 1087 : 40 B. 301 this provision deals with a case where the act to be done was at the time the contract was made lawful but a legal prohibition has supervened before the performance of the contract. In such a case, the contract becomes void, and no question of damages for breach thereof arises. The plain language of Section 56 thus renders unnecessary a discussion of the refined distinctions observed in English Law in cases of impossibility of performance, as illustrated by the recent decisions in Horlock v. Beal (1916) 1 A.C. 486 and Tomplin Steamship Co. v. Anglo-Mexican Petroleum Co. (1916) App. Cas. 397. From this standpoint, the correspondence between the parties as to the delivery of the goods is of no assistance to the plaintiffs. The defendants no doubt, at one stage, offered to deliver the goods to the plaintiffs on certain terms, on the assumption that the contract was then in full operation. The proposed terms, however, were not accepted; there was thus no new agreement, nor did the principle of estoppel become applicable, as the plaintiffs are not shown to have altered their position in any manner by reliance on the conduct of the defendants. The claim of the plaintiffs is thus based on an alleged breach of an agreement which had become void long before the date when the breach is said to have taken place. In my opinion, such a claim cannot be sustained.

36. On these grounds, I agree that this appeal must be allowed and the suit dismissed with costs.


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