1. The plaintiffs who are the appellants sued the defendants for a sum of Rs. 663 as due on Arat accounts for business done by them as agents for the defendants.
2. It is common ground that the plaintiffs were employed by the defendants as agents for buying various goods.
3. The dispute has arisen between them because a fire broke out after some goods had been bought for the defendants by the plaintiffs, and practically the question is whether the plaintiffs or the defendants are to bear the loss. The decision of the lower Court is that it is the plaintiffs who must bear the loss, and it is against that decision that the plaintiffs appeal.
4. It appears to me that both the Courts below have fallen into error in their conception of the agent's position. Both take the view that there is a time at which the property in the goods bought by the agent for the principal vests in the agent. The learned Judge speaks of the plaintiffs as commission agents who re-sell the goods to the defendants. This view, the learned pleader for the respondents, admits, goes too far.
5. The error is probably duo to the fact that the plaintiffs made allegations about a representative of the defendants being present at the time of purchase and about the methods of delivery to the defendants. Connected with the latter allegation was an answer elicited from plaintiffs' witness about property passing to the defendants when the goods were put in sacks provided by the defendants. The question must have been put in the belief that the matters referred to in Section 18 of Sale of Goods Act had something to do with the relation between the parties.
6. It appears to me that those allegations in the plaint have nothing to do with the question, and that the failure of the plaintiffs to prove their allegations does their case no harm. They were admittedly employed as agents and it is contrary to the whole idea of the relation between agent and principal to hold that property passes to the agent as against the principal. An attempt has been made to support such a view by reference to the case of Ireland v. Livingstone (1872) 5 H.L. 395 but that was a case of a merchant in one country and a commission agent in another, and the passage to which reference is made must be read with due regard to the words of limitation which it contains.
7. Apart, however, from the law as contained in the Contract Act, I think that the defendants are bound by the statement contained in the fourth paragraph of their written statement. They deliberately charged the plaintiffs with telling a false story about the fire, with a view to taking advantage of a rising market and selling goods which belonged to the defendants. It is said that this statement was made to meet the hypothetical case that the property in the goods had passed to the defendants, but in my opinion it is impossible to put that construction on the paragraph.
8. Lastly an attempt was made to justify the decision of the lower Courts on the ground that the plaintiffs were guilty of negligence. It appears however that the plaintiffs were not guilty of any act or omission which could be regarded as negligent.
9. In my judgment the Courts below were wrong and the appeal must be allowed, and the suit decreed in full with costs in all Courts.
10. I agree and wish to add only a few words. The contract in the present case essentially one of agency and the findings of the Courts below as to purchase of the goods by the plaintiffs to the order of the defendants clearly show that in the present case they acted as commission agents on behalf of the latter. The views of the respective liabilities of the parties taken by the Courts below are to my mind wrong, the Court of first instance having laid too much stress upon the stray statement of a witness for the plaintiffs about the property in the goods passing to the defendants when the goods are put into sacks supplied by the latter, and the lower Appellate Court having introduced into its consideration a theory of re-sale by the plaintiffs to the defendants after making the purchase to the order of the latter. The former is an opinion on a question of legal, liability which should not form the basis of the Court's decision and the latter is based upon a misconception of the relations between the parties. In support of the latter view reliance has bean placed upon a dictum of Lord Blackburn in Ireland v. Livingstone (1872) 5 H.L. 395 which is in these words:
It is quite true that the agent who in thus executing an order, ships goods to his principal is in contemplation of law a vendor to him. The persons who supply goods to a commission merchant sell them to him, and not to his unknown foreign correspondent, and the commission merchant has no authority to pledge the credit of his correspondent, for them....and just so does the property in the goods pass from the country producer to the commission merchant, and then, when the goods are shipped, from the commission merchant to his consignee. And the legal effect of the transaction between the commission merchant and the consignee, who has given him the order, is a contract of sale passing the property from the one to the other; and consequently the commission merchant is a vendor, and has the right of one as to stoppage in transitu.
11. These observations define the relations between the commission agent and his foreign correspondent and proceed upon an appreciation of the difficulty which would exist in establishing any privity of contract between the foreign correspondent and the original vendors. In his work on contract on sale Lord Blackburn reviews the cases of Feise v. Wray (1802) 3 East 93, Siffken v. Wray (1805) 6 East 371 and Tucker v. Humphrey (1828) 4 Bing. 516, and says that the same conclusion follows from them in respect of a factor acting for a foreign correspondent and purchasing goods in his own name. In Turner v. Liverpool Docks (1851) 6 Ex. 543 it was assumed that the relation of vendor and purchaser existed between the foreign commission merchant and his principal in England. Story in his work on Agency in like manner treats a factor in a foreign country who purchases goods on his own credit for his principal and ships them to the latter as one having the rights and remedies and being in the same predicament as a vendor of the goods. This dictum of Lord Blackburn was explained in the case of Cassaboqlou v. Gibbs (1883) 11 Q.B.D. 797. In that case Brett, M.R., observed as follows:
Lord Blackburn has not said that as long as the contract of principal and agent is executory the principal can sue the agent and make him pay as though the contract were that of vendor and purchaser. He has considered the point with reference to two matters, one with regard to the theory of passing the property in the goods, and the other as to the power of stopping the goods in transitu, and as to these two matters, he has said with reference to the first of them, that if a foreign commission agent has purchased the goods which he was ordered to purchase, and has put them on board consigned to his principal, by the appropriation the property in the goods passed from the commission agent to the principal as if such agent were a vendor. Then as regards the power to stop in transitu Lord Blackburn has said that if the commission agent abroad is bound to pay for the goods to the foreign seller of whom he bought them, and after he has shipped them to his principal such agent has not been paid, and if his principal is insolvent, so that the foreign Seller could only have the agent to look to for payment, the Courts have held that such agent may stop the goods in transitu as if he were a vendor or in the position of a vendor.
12. These observations make it clear that even in the case of foreign correspondent, the contract remains a contract of agency, and only for certain purposes he was to be treated as a vendor or as one in the position of a vendor. In this connection the remarks of Fry, L. J., in that case are worth quoting, as they clearly summarise the position. He observed as follows:
Now as to the first of these grounds, was there such a contract (meaning such a contract as created the relation between a vendor and a purchaser)? Was the contract of principal and agent merged into that of vendor and purchaser? This must be a question of fact, and as a matter of fact there was no such contract. It is said....for two reasons, first, because otherwise the property in the goods would not pass to the English merchant for whom the agent abroad bought them. In my judgment the property would pass, If the article was specific it would pass by the purchase, and if not specific, but was appropriated by the agent for his principal, it would pass by virtue of the appropriation. The other reason for inferring the relation of vendor and purchaser was said to be because the foreign agent who has bought for his principal has the right of stoppage in transitu, but that, in my opinion, is no reason for such inference.
13. After dealing with the cases of Lickbarrow v. Mason (1787) 2 T.L.R. 63 and other cases where the right to stop in transitu has been allowed without the relationship of vendor and purchaser, existing, and where it was held that even an agent, who puts the goods on board is able to exercise that right being in the same condition as if he had been an ordinary unpaid vendor, Fry L. J., referred to the case of Ireland v. Livingstone (1872) 5 H.L. 395 and observed as follows:- Then in the case of Ireland v. Livingstone (1872) 5 H.L. 395 Cleasby, B., says that there was 'there not a mere contract between vendor and purchaser although after the goods were shipped, a relation like that of vendor and vendee might arise.' No doubt in that case Lord Blackburn uses stronger language, and says that the legal effect of the transaction is a contract of sale passing the property from the one to the other, and consequently the commission merchant is a vendor and has the right of one as to stoppage in transitu; but by the legal effect of the transaction, he means the legal effect of an analogous contract to that of a contract of purchase and sale. It is important also to observe that Lord Chelmsford in that case puts the matter so as to exclude the existence of any contract of purchase and sale. He says:
I would preface what I have to say by stating my opinion that the question is to be regarded as one between principal and agent though the plaintiffs might in some respects be looked upon as vendors to the defendants, so as to give them a right of stoppage in transitu.
14. Therefore, in such a case as the present there is in fact no contract of a vendor and purchaser.