1. This appeal arises out of a suit for recovery of the price of jute supplied by the plaintiffs to the defendants. The jute, while it was in the custody of the defendants in their godowns, caught fire and was burnt, and the question is whether the plaintiffs or the defendants are to bear the loss. The determination of that question depends upon whether or not property in the goods had passed to the defendants, before they were destroyed by fire.
2. The plaintiff and the defendants carried on business in jute at Chandpur, where there are many big firms who deal in jute. The plaintiffs, who are called 'Fariahs' in the locality used, to purchase loose jute from dealers (beparis) and supply it to the defendants' firm.
3. The plaintiffs in their plaint set up an express contract with the defendants, the terms whereof are stated to be as follows:
That the plaintiffs would purchase loose jute for the defendants during the jute season, and that the latter would take the said jute from the plaintiffs upon weigh-ment, and would pay the price of the same according to the market-rate. The defendants would advance money from time to time for purchase of jute, and would pay the price of jute after the close of the karbar after deducting the amounts so advanced. The plaintiffs would buy jute and store the same in the godowns of the defendants and under their care, and report to the defendants the goods stored on the very day they are stored. The plaintiffs would have no right to the goods so stored, nor would they be entitled to remove them from the godowns of the defendants, and that having once stored the goods in the godowns of the defendants, the plaintiffs would retain no other right or interest in them than the right to receive the price of the said goods, and that the ownership in the goods would pass to the defendants.
4. It is further stated in the plaint that this has been the local usage and practice observed at Chandpur, and the business of the defendants' firm ever since the establishment of their jute office at Chandpur had been carried on in accordance with the usage. The plaintiffs state that the price of jute supplied by them to the defendants was Rs. 84,747-7-0 including that of the jute burnt, and deducting the amount advanced (Rs. 68,408-5-6) they claim Rs. 18,585-8-0, being the balance due together with interest thereon.
5. The defendants denied that there was any express contract and also denied the usage set up in the plaint. They stated that the plaintiffs purchased jute after taking advances from the defendants, and having no godown of their own, stored it in the defendants' godowns at their own risk, that after the goods had been selected and weighed they were sold to the defendants, and the price set off against the advance taken, and the goods which were rejected by the defendants were removed and sold by the plaintiffs to other persons. That according to the usage and practice observed in the dealings with the plaintiffs, the ownership in the jute which had not been selected and weighed, had not passed to the defendants, and the plaintiffs must, therefore, bear the loss of their own goods, destroyed by fire.
6. The Court below held that ownership of the goods did not pass to the defendants and accordingly dismissed the suit. The plaintiffs have appealed to this Court.
7. As to the contract alleged by the plaintiffs, the Court below has held that it has not been satisfactorily proved. The only evidence on the point is that of the plaintiff Abdul Aziz and Mukunda. On the other hand, the defendant No. 1 Sarat swore that there was no contract, and the defendant No. 2 Ramani Mohan who was examined after remand by this Court also denied it. We have considered the evidence on the point, and agree with the Court below in holding that the agreement set up by the plaintiffs has not been satisfactorily proved.
8. The transactions between the parties should, therefore, be held to be governed by the local usage of trade which prevails at Chandpur
9. The plaintiffs have examined a number of witnesses, some of whom are very respectable, and the Court below has set out the material portions of the depositions of some of the witnessps in its judgment.
10. The mode of dealing between the 'Fariahs' and the Jute Companies at Chandpur appears from the evidence of Mr. Mackertich (the Manager of Messrs. Landale and Clark) to be as follows: The fariahs purchase jute at their own risk and store it in the import godowns of the Companies (sometimes called the fariahs' godowns), where all sorts of jute, good, bad and indifferent, are mingled together out of which the Company makes its selection for purchase. The fariahs report only the quantity, but not the quality, and they are accustomed to over-report the quantity in order to get larger advances from the firms. On measurement the quantity is generally found to be short. Before the Company purchases the jute from the import godown (Fariahs' godowns) they select, approve and then weigh the goods. If there be moist goods, they are dried and sometimes sold to the Company, who has the option to reject moist jute, and bad and rotten stuff. The Company does not pay for rejected goods and the fariahs have a right to sell, and do sell, rejected goods to other firms. Prom the import godowns the goods are taken after weigh-ment to the selecting godowns where they are assorted. The price is settled after weigh-ment, and the Company's purchase is complete after the price is settled, which may be done a week after. After the weigh-ment in the import godown, it is taken that the goods are sold to the Company. The Company does not pay for the quantity found to be short, and the fariahs suffer the loss if any portion of the goods before weigh-ment be stolen from the import godown. 'The Company has got a lien on the fariahs' goods so long as their advances are not paid off, and the property in the goods remains with the fariahs so long as the weigh-ment is not made by the Company.'
11. Plaintiffs' witness No. 7, Kailash Chandra Ghosh, the book-keeper of Messrs. C.C. Betts and Co., in his examination-in-chief says: 'The goods are weighed when the Company takes them. After this weigh-ment the Company becomes their owner. Before the weigh-ment the goods are under their care only and on their trust,' and Jagadish Chandra Gangulia, sub-agent of Messrs. Jardine Skinner and Co., says: If any loss takes place after the goods are stored and before they are purchased by the Companies the loss is borne by fariahs.''
12. The plaintiff Abdul Aziz himself says that at Chandpur it is the rule of sale of goods that the bundles of jute are first counted, then weighed and then the price is settled per maund. He, however, says: 'Our transactions with the defendants were not in accordance with this rule. Our mode of transaction is noted in the plaint.' But the contract or usage set up in the plaint has not, as we have seen, been proved, and the evidence of the plaintiffs' own witnesses establishes the fact that according to the usage of trade at Chandpur the sale is not complete until the goods are examined, selected and weighed by the Company.
13. The provisions of the Indian Contract Act relating to sale of goods which have any bearing on the case, are sections 79 to 81 and also Sections 82 and 83. Section 79 says that where there is a contract for the sale of a thing which has yet to be ascertained, the ownership of the thing is not transferred to the buyer until it is ascertained. Section SO provides that where by a contract for the sale of goods, the seller is to do anything to them for the purpose of putting them into a state in which the buyer is to take them, the sale is not complete until such thing has been done, and Section 81 lays down that where anything remains to be done to the goods by the seller for the purpose of ascertaining the amount of the price, the sale is not complete until this has been done. The distinction between a case where the seller is to do something to the goods, and a case where nothing remains to be done by the seller is pointed out in the two illustrations to the section. In illustration (a), which is taken from the case of Simmons v. Swift (1826) 5 B. & C. 857 : 8 Dowl. & Ry. 693 : 5 L.J. (O.S.) K.B. 10 : 29 R.R. 438 : 108 E.R. 319, the stack of bark is to be weighed and delivered by the seller, part of it is weighed and delivered to the buyer: the ownership of the residue is not transferred to the buyer until it has been weighed pursuant to the contract. In illustration (b), which is taken from the case of Turley v. Bates (1863) 2 H. & C. 200 : 33 L.J. Ex. 43 : 10 Jur. (N.S.) 368 : 10 L.T.(N.S.) 35 : 12 W.R. 438 : 133 R.R. 639, the contract is to sell a heap of clay (as a whole) at a certain price per ton, the seller is to load the clay in his own carts and to weigh each load at a certain weighing machine. Here nothing remains to be done by the seller, the sale is complete and the ownership of the heap of clay is transferred at once, Referring to the cases on the point, and to the rule that property does not pass where anything remains to be done to the goods for the purpose of ascertaining the price, Channel, B., observed in Turley v. Bates (1863) 2 H. & C. 200 : 33 L.J. Ex. 43 : 10 Jur. (N.S.) 368 : 10 L.T.(N.S.) 35 : 12 W.R. 438 : 133 R.R. 639, : 'From a consideration of these cases, it appears that the principle involved in the rule above quoted is, that something remains to be done by the seller. It is, therefore, very doubtful,...whether the present case comes within the principle of the rule. But, however that may be, it is clear that this rule does not apply if the parties have made it sufficiently clear whether or not they intend that the property shall pass at once, and that their intention must be looked at in every case.'
14. Similarly in the case of Shoshi Mohun Pal Chowdhry v. Nobo Kristo Poddar 4 C. 801, there was a contract for the sale of 975 maunds of rice, being the contents of a certain gola at a certain rate, the buyer to remove the whole of the rice after weighing on or before a certain date. The assignee from the buyer took delivery of a portion but refused to take delivery of the residue on the ground that it was of inferior quality. The gola was accidentally burnt and the rice destroyed. It was held that the sale was complete and the ownership with the risk of loss in the rice sold passed to the buyer. With reference to the contention that the sale was not complete because the rice remained to be weighed, the learned Judges observed that so far as the vendor was concerned nothing remained to be done on his part to the rice sold, 'for the purpose of ascertaining the amount of the price,' and that the rice was to be weighed for the satisfaction of the purchaser.
15. It will be seen that in both the cases cited above Turley v. Bates (1863) 2 H. & C. 200 : 33 L.J. Ex. 43 : 10 Jur. (N.S.) 368 : 10 L.T.(N.S.) 35 : 12 W.R. 438 : 133 R.R. 639 and Shoshi Mohan Pal Chowdhry v. Nobo Kristo Poddar 4 C. 801, the contract was for the sale of the whole of the goods, in the first case for the entire heap of clay and in the second for the entire contents of the gola, the rate was fixed, and the buyer was to weigh the goods apparently for his own satisfaction. Nothing, therefore, remained to be done by the seller, an 1 the parties obviously intended that the ownership of the goods should pass forthwith.
16. In the case of Martineau v. Kitching (1872) 7 Q.B. 436 : 41 L.J.Q.B. 227 : 26 L.T. 836 : 20 W.R. 769. Cockburn, C.J., observed: 'I take it now to be perfectly clear, especially after the case of Turley v. Bates (1863) 2 H. & C. 200 : 33 L.J. Ex. 43 : 10 Jur. (N.S.) 368 : 10 L.T.(N.S.) 35 : 12 W.R. 438 : 133 R.R. 639, that the real question in all these cases is, whether the parties did intend that the property should pass.'
17. The learned Chief Justice further observed as follows: 'We are dealing with the case of a specific chattel. I agree to sell to a man a specific thing--say a stack of hay, or a stack of corn?--I agree to sell him that specific thing, and lie agrees to buy it; the price undoubtedly remains an element of the contract, but we agree, instead of fixing upon a precise sum, that the sum shall be ascertained by a subsequent measurement. What is there to prevent the parties from agreeing that the property shall pass from one to the other, although the price is afterwards to be ascertained by measurement? I take it that is the bread substantial distinction. If, with a view to the appropriation of the thing, the measurement is to be made as well as the price ascertained, the passing of the property being a question of intention between the parties, it did not pass because the parties did not intend it to pass. But if you can gather from the whole circumstances of the transaction that they intended that the property should pass, and the price should afterwards be ascertained, what is there in principle, what is there in common sense or practical convenience which should prevent that intention from having effect?'
18. See also Blackburn on Sales, 3rd Edition, pages 184 to 186.
19. It is clear, therefore, that when nothing remains to be done to the goods by the seller for the purpose of ascertaining the price, then prima facie the property in them passes although they have not been weighed by the buyer.
20. It would be otherwise, however, in England if the parties intended that property in the goods should not pass until the goods had been weighed.
21. In our opinion the Indian Law is the same and the provisions of Section 81 do not exclude the question of intention which is laid down in the English cases as the determining factor.
22. We are also of opinion that the contract in the present case being in the first instance a contract for the sale of unascertained goods, what remained to be dope by the buyer to the goods appropriated to the contract by the seller was not merely for the purpose of ascertaining the price, but was also for the purpose of placing the buyers in a position to say whether and to what extent they would for their part accept the goods offered to them. The following observations are relevant in either view of the case, so far as they show on the one hand the actual intention of the parties and on the other the precise position of the buyer after the jute was placed in the fariahs' godowns.
23. As we have already said, the plaintiffs' own witnesses prove that according to the usage of trade at Chandpur ownership of the jute does not pass to the buyer until it is examined, tested and weighed, and the transactions of the parties having been carried on in accordance with that usage, it is clear that when the contract with which we have to deal was made, the parties did not intend that the property in the jute should pass until it had been tested and weighed.
24. Upon the question of weigh-ment, it was contended that the weigh-ment was only for the satisfaction of the buyer and that the latter could not by delay in weighing the goods prevent the transfer of ownership to him, and as the evidence shows that the Company is bound to accept all 'passable' goods stored in the import godowns, it is urged that the ownership passes to the buyer subject only to his right to reject bad goods.
25. It appears, however, from the plaint itself that the defendants were to take the jute from the plaintiffs 'upon weigh-ment' and the evidence shows that the fariahs and the Company have both got 'Tally Books', both enter the weights in their respective books when the goods are weighed, and it is after the weigh-ment that the Company removes the goods from the store godown to another godown. It is not, therefore, altogether clear, although this particular point need not be pressed, that the seller had nothing to do in connection with the weighing of the jute.
26. Then, again, there is the question of selection. The evidence shows that jute, good and bad, is stored in the import godown, and the Company selects good jute, and has the option of rejecting bad jute. Some stress was laid on behalf of the appellants upon the fact that the Company is bound to purchase all 'passable' goods stored in the import godown, and although they have the right to reject wet jute, there is some evidence to show that they are bound to purchase such jute when dried. But it is clear that the Company has the option to reject bad jute altogether, and even if the Company is bound to purchase wet jute when dried, the fariahs have to dry it. The seller, therefore, in such a case has to do something to the goods to make them marketable.
27. Then the fact that the fariahs are not entitled to remove the goods nor to sell the same to other persons, once the goods are stored in the import godowns, is relied on. It is contended that the fact that the Company has a lien because they make advances for purchasing jute, cannot prevent the fariahs from selling it to other persons subject to the lien, and the fact that they cannot sell the jute to others shows that ownership passes to the Company. If, however, the usage of the trade is that the fariahs are not entitled to sell the goods to persons other than the Company who advance moneys for purchasing jute, or remove the goods from the godowns, the fact that the fariahs are not entitled to sell them to others, under those circumstances, does not show that the property in the jute passes to the Company. The position seems to be that the buyer has a right to the custody of the jute as security for his advances, and that in addition while the seller has no right to sell to others, the buyer is under a corresponding obligation to buy as much of the jute as is of the requisite standard.
28. It may further be observed that the plaintiff Abdul Aziz refers to the store godown as 'my godown' and the godown to which the goods are removed after weighment as the 'defendants' own godown,' although both godowns belong to the defendants. Mukunda Saha, the plaintiff in the analogous case, says with reference to entries of goods sold (bikri) in his books of account that, the goods not weighed and goods the price of which was not settled, were not entered as 'bikri.' This shows that the plaintiff themselves recognized that the sale was not complete until the goods had been tested and weighed and the price settled.
29. Lastly, the fact that the jute was insured by the defendants as their own is relied upon as strong evidence of the transfer of ownership. It appears that two insurances were effected, one for Rs. 10,000 and another for Rs. 20,000. An application was made for effecting a third insurance to the extent of Rs. 40,000 but the application arrived late at the insurance office, the jute having been burnt in the meantime. The application for insurance, and the policies were not produced. The letter written by the defendant No. 3, who was the agent of the Insurance Company for effecting the third insurance, however, speaks of the jute as 'belonging to the defendants' and under the circumstances it may be taken that the first two insurances were also effected on the jute as belonging to the defendants. But the defendants had an interest in the goods, and the insurance appears to have been intended for protection of their own interest in the jute, not for the protection of the seller's interest which they were not bound to insure. The insurance did not cover the entire quantity of the jute which was burnt.
30. The defendants, therefore, were entitled to apply the whole of the amount which they received under the policies of insurance to indemnify themselves against the loss which they themselves had actually sustained, and were not bound to apply any portion of it to the benefit of the plaintiffs.
31. It appears from the evidence that several jute firms at Chandpur bore the loss when jute was destroyed by fire, but Mr. Mackertich says: 'there is no one system or one rule at Chandpur by which all the Companies should bear the loss in case the goods stored in the fariahs' godowns are burnt. Each firm has got its own system.'
32. It appears that in most of the cases spoken to by the witnesses, the jute was fully insured. It cannot be said, therefore, that any usage has been established to show that the loss is borne by the Company in cases where the jute is not insured to the full extent.
33. We are of opinion that the decree of the Court below is correct, and the appeal shall be dismissed with costs.
Appeals NOS. 171 and 183 of 1912.
34. These two appeals arise out of two cross-suits, one by the plaintiff Mukunda Chandra Saha (a fariah), and the other by the firm of Jogendra Krishna Roy and Sarat Chandra Shome. The claim of the former is analogous to that of the plaintiff in the above case, and the claim of the latter is for recovery of the balance of the advances made by the latter to the former. The questions involved in them are similar to those in the above case, and our judgment in the above case will govern these appeals also. These appeals, therefore, should also be dismissed with costs. We allow one Pleader's fee for both the appeals.