Bartleet & Company v. Ebrahim Lebbe Marikar.
1938Present: Poyser S.PJ. and Wijeyewardene A.J.
BARTLEET & COMPANY v. EBRAHIM LEBBE MARIKAR142—D. C. Colombo, 3£34
Contract—Broker employed for purchase of .rubber in London—Purchaser’s
intention to speculate—Failure to take delivery of rubber—Sale at loss—
Bond to pay amount of loss—Not a wagering contract.
The plaintiffs, as brokers, purchased rubber for the defendant on theLondon market under a contract entered into by the later in the follow-ing terms : —“ As arranged please buy seven hundred tons rubber o'nLondon, June-December, 1929 at the rate of one hundred tons each monthat the current market rate. Also I allow you to have the selling as well ”.
The plaintiff carried out these terms of,the contract but the rubberthat could have been delivered each month was sold at a loss. Thedefendant had no intention of taking delivery, his object being to specu-late on the differences in the prices. The defendant paid the loss forsome months and defaulted later- He then entered into a bond to paythe loss due from him, upon which the plaintiff instituted the presentaction.
Held, that the contract was not a wagering contract and that the bondwas enforceable.
Woodward et al. v. Wolfe (1936, 3 A.E.R. 529) followed.
Held, further, failure on the part of the plaintiffs to comply with therequirements of section 7 of the Business Names Registration Ordinance,No. 6 of 1918, subsequent to the institution of the action does not affecthis right to enforce the contract, which must be determined as at thetime at which the action was instituted.
Jamal Mohideen v. M'eera Saibo (22 N.L.R. 268) followed.
HIS was an action instituted by the plaintiffs to recover a sum ofRs. 101,771 on a mortgage bond executed.by the defendant. The
defendant pleaded that the bond was'given for an illegal consideration
348 POYSER S-PJ.—Bartleet & Company v. Bbrakim Lebbe Marikar.
and was not enforceable. The plea was based on the ground that theliability arose out of certain wagering contracts in respect of the purchaseand sale of rubber. The learned District Judge held that the contractswere npt wagering contracts and gave judgment for the plaintiffs.
H. V. Perera, K.C. (with him E. F. N. Gratiaen and U. A. Jay asundere),for first defendant, appellant.—Three points can be taken on behalf ofthe defendant.
The plaintiffs are partners. One of them died after the institution ofthe action and before date of judgment. The provisions of section 7 ofthe Registration of Business Names Ordinance, No. 6 of 1918, were notcomplied with, and section 9 would therefore be applicable. Undersection 7, notice of the death should have been given to the Registrar ofBusiness Names within fourteen days in the prescribed manner.
1/WiJEYEWARDENE J.—There is a distinction between “enforceable”and ■“ maintainable ”.]
The general principle is that rights must be determined as at thedate of the action. See Jamal Mohideen & Co. v. Meera Saibo et al.
It must be admitted that the default was subsequent to the contractin question and the institution of the action, but that case did not dealwith the position resulting from a default occurring during the pendencyof an action.
The procedure followed in the commission proceedings in London wasirregular and the evidence recorded there should not have been admitted.The Commissioner administered the oath to himself. This was improper.The oath should have been taken before somebody else and theCommissioner should then have subscribed his name.
To come to the main point, the contract in question cannot be enforcedas it is a wagering contract. The principles governing wagering contractsare stated in Tarrant et al. v. Marikar It is the substantial agreementwhich must be taken into consideration although the form of it may speakof a different agreement. As indicated by D 13-D 16, plaintiffs wereacting as principals and not as brokers. One cannot be a principal in lawand a broker in fact. On the face of the contract, plaintiffs have madethemselves the principals. Parol evidence, therefore, is not admissibleto show that they are in the position of agents—Formby Brothers v.Formby’. Nor can the contract be adopted subsequently by a thirdparty—Smith’s Leading Cases (13th ed.), p. 376. There was no privityof contract between the defendants and Yuille & Company; this is thebest test and is conclusive—Brandt & Co. v. Morris & Co., Limited;illustration (3) of bought and sold notes in Benjamin on Sale (7thed.), p. 293.
The contract in question is essentially a wagering contract. To paydifferences and not to give or take delivery of rubber was clearly theintention behind the contract—Kong Yoo Lone & Co. v. Lowjee Nanjee (aPrivy Council) decision*; The UniversalStockExchange,Limitedv.David.
(Strachan*; In re Gieve’; Smith’sLeading Cases(13th ed.,p. 266).
» (1920) 22 N. L. R. 26S.* (2917) 2 K.B. 794.
2 (1934) 36 N. L. R. 145.*-(1901) 29 I.L. R. Calc. 461.
• (1910) 102 h. T. R. (N. S.) 116.6 (1896) A. C. 166.
» (1899) L. R. 1 Q. B. 794.
POYSER SJP.J.—Bartleet & Company v. Ebrahim Lebbe Marikar.349
F. A. Hayley, K.C. (with him F. C. W. VanGeyzel), for plaintiffs,respondents.—Certain important English decisions were not consideredin Tarrant et al. v. Marikar (supra). The facts of the present case are verysimilar to those in Woodward et al. v. Wolfe1. The whole argument forthe appellants has been based on a false conception of the actual trans-action. The Chapter in Benjamin on Sale which has been referred to isnot applicable. It has nothing to do with agents. It deals merely withformation of contracts. A broker’s note in itself does not constitute acontract. Benjamin himself says so.
This was an action, pure and simple, for indemnity, not for the price ofgoods. Defendant, by his letter P 4, ordered plaintiffs to buy goods inEngland and to sell them. This case is precisely similar to Woodward etal. v. Wolfe (supra). In that case too the same argument was putforward as was urged in the present case.
[Poyser J.—There is is no need for further argument.]
H. V. Perera,° K.C., in reply.—This case can be distinguished fromWoodward et al. v. Wolfe (supra). Regarding the contract betweenplaintiffs and Yuille & Company, we were not consulted at all, and thereis nothing to suggest that we could have had any say in it.
Cur. adv. vult.
October 7, 1938. Poyser S.P.J.—
In this action the plaintiffs obtained judgment against the defendanton the mortgage bond P 1. The bond in question was admittedlyexecuted by the first defendant, but the latter in his defence alleged thatit was executed on account of gambling transactions between himself andthe plaintiffs. The District Judge has in a judgment which deals withevery point raised in the lower Court come to the conclusion that thetransactions between the plaintiffs and the defendant were not wageringcontracts and consequently entered judgment for the plaintiffs as prayed.
The material facts are as follows:—The plaintiffs are brokers carryingon business in the Fort. The defendant employed the plaintiffs as hisagents for the purchase of rubber on the London Market. The contractswhich are material for the purposes of this case commence with thecontract D 13 which was entered into on May 16, 1929, and by that andsubsequent contracts the plaintiffs bought on behalf of the defendant andfor his account 700 tons of rubber to be delivered on the London Marketbetween the months of June and December, 1929.
The plaintiffs duly carried out their terms of the contract, but therubber that could have been delivered each month was sold at a loss.The defendant paid such losses to the plaintiffs for the months of June toOctober but did not however pay the amount due to the plaintiffs for themonths of November and December, and it is in regard to such non-payment that the bond P 1 was executed and that this action was brought.
On appeal the following points were taken : firstly, that the commissionproceedings in London were irregular. It should be stated that a com-mission was issued to England on February 26, 1936, for the examinationof certain witnesses. Such commission was duly carried out and returned
i (2930) :i A. B. li. 529.
350 POYSER S.P.J.—Bartleet & Company v. Ebrahim Lebbe Ma.rik.aT.
on July 7, 1936, and the evidence recorded on such commission was readat the trial. It was argued that it was improperly read and that thecommission was irregularly carried out as the Commissioner had-administered to himself the oath he was required to take by the terms ofhis commission and further that it did not appear that he had subscribedthe oath of office as he was required to do. The District Judge in aseparate order dated June 28, 1937, rejected this argument. I think hewas perfectly correct in so doing. He points out that there were nospecial directions in regard to the mode of taking the oath and in theabsence of such directions the Commissioner was entitled to administerthe oath to himself. In regard to the argument that he did not subscribethe oath of office, the District Judge considered thlt he must presumethat the Commissioner duly carried out the instructions he had received.
I entirely agree with the reasons for which this argument was rejected.
A further point was taken that the provisions of the Registration ofBusiness Names Ordinance, No. 6 of 1918, were not complied with. Thegrounds for this argument were that Mr. Boys, one of the partners of theplaintiff firm, died in July, 1936, but the plaintiff firm did not complywith the provisions of section 7 of the Ordinance within the statutoryperiod of fourteen days. They actually did not inform the Registrar ofBusiness Names in regard to the decease of Mr. Boys till November 20,1936 (P 67), and having given such information they were told (P 68)by. the Registrar-General- that their certificate of registration need notfor the present be altered. There may or may not be substance in thisargument, but the fact remains that when the action was instituted, andthat is the material date, there was no infringement by the plaintiffs ofany of the provisions of that Ordinance.
It has already been held by this Court in the case of Jamal Mohideen& Company v. Meera Saibo et al.l, that for the purposes of this Ordinancethe plaintiffs’ rights are to be determined as they existed at the date ofthe institution of the action. The argument, on this point therefore fails.
The principal point to be decided in the case was whether the contractsentered into between the plaintiffs and the defendant were wageringcontracts and as such unenforceable. If they were wagering contracts,the principles enunciated in the local case of Tarrant v. Marikar1, wouldno doubt be applicable and the plaintiffs would not be entitled to succeed.On the other hand, if such contracts were not wagering contracts, theplaintiffs, the execution of the bond in question being admitted, mustsucceed.
The District Judge’s findings of fact, and there is abundant evidenceboth oral and documentary to support such findings, are briefly asfollows: that the material contracts commencing with D 13 were enteredinto in consequence of conversations between the defendant and aMr. Perera who was at the time in the plaintiff’s office. The contractsprovided, and for this purpose one must consider the form of the contract,that the plaintiffs bought on, the order of the defendant, rubber to bedelivered in London or Liverpool, at any time or times, at seller’s option,during the months of October to December, 1929. The contract wasi 22 K. I,. R. 268.2 36 N. L. R. 145.
POYSER S.PJ.—Bart lee t & Company v. Ebrahim Lebbe Marikar. 351
made under and subject to the Constitution, By-laws and Buies of theRubber Trade Association of London. As previously stated, the defend-ant did not take delivery of any of the rubber he purchased but suchrubber was sold in accordance with the above by-laws and rules andsuch sales resulted in heavy- losses to the defendant.
In regard to whether these contracts between the plaintiffs and thedefendant were wagering contracts, the defendant gave evidence to theeffect that he dealt with the plaintiffs as principals and that there was noquestion of taking the rubber he purchased. It was a pure speculation,gambling in differences between him and the plaintiffs. Mr. Parsons,who gave evidence for the plaintiff firm, on the other hand, stated thatthey were not concerned with whether the defendant intended to speculateor not; that they acted merely as his brokers for the purchase and sale of700 tons of rubber and that their position was purely that of brokers.As regards its being a wagering contract, they had no interest in the priceat which the rubber was eventually sold and their only interest in thecontracts was their brokerage.
The District Judge has entirely accepted the evidence called on behalfof the plaintiffs and there is no doubt that he is correct, for the docu-mentary evidence, as stated before, amply supports his finding. I needonly refer to one of such documents, namely P 4, which is as follows: —
Dear Sirs, As arranged please buy 700 (seven hundred) tons rubber onLondon, June-December, 1929, at the rate of 100 (one hundred) tonseach month, at the current market rate and also I allow you to havethe selling as well. Signed : E. L. Ebrahim Lebbe Marikar ”.
The statement by the defendant in this letter that he allowed theplaintiffs to have the selling as well as the buying of the rubber clearlyindicates what the relationship between the parties was.
In regard to the argument on behalf of the appellant that the plaintiffswere acting as principals, the form of the contract D 13, in my opinion,does not negative the argument that the plaintiffs were only acting asbrokers. It does not establish th°at the plaintiffs acted as principals.What it does establish is that they made themselves liable to the defendanton this contract, and by executing the contract in this form, they assumedthe obligation of principals and could not escape liability, assuming thatdifferences had been due to the defendant, by parol proof that they wereonly acting as brokers.
The course of business is clearly indicated by the evidence that wastaken on commission. The plaintiffs on receiving instructions to purchaserubber for the defendant cabled to their London agents and entered intoa contract with them to purchase the rubber they were instructed to.When their agents had carried out these instructions, they completedthe contract with the defendant, charging him the same price as theywere charged by their London agents and at the same time adding ontheir commission which was all they would make out of the transaction.It appears from the evidence which was taken on commission, that if aperson buys rubber, as the defendant did, he can have it delivered to himin a certain month or he may resell it through the person he purchasedit from or through anybody else and it is no concern of the broker 'how hedisposes of his contract.
352 POYSER S.P.J.—Bartleet & Company v. Ebrahim Lebbe Marikar.
Those being the facts, were the contract D 13 and the subsequent contractswagering contracts and unenforceable?
.1 think for the purposes of this appeal it may be accepted that thedefendant had no intention of taking delivery of this rubber. He intendedto speculate in differences and he hoped to sell it at a greater "price thanhe paid for it. Assuming that to be so, that does not necessarily makethese contracts unenforceable.'
The first and one of the most important cases in regard to wageringcontracts is the case of The Universal Stock Exchange v. David StrachanIn that case Cave J. in the summing-up to the jury stated the law to beas follows : that if a man goes to a broker and directs him to buy or sellso much stock as the case may be, there may be in the eyes of the purchasera gaming transaction or there may not. If the purchaser means to sellthe stock before settling day, there may be a gaming transaction so faras he is concerned but it is. not necessarily a gaming transaction so far asthe broker is concerned and in order to be a gaming transaction such asthe law will not enforce it must be a gaming transaction in the intentionof both the parties to it. This summing-up was approved of by the Houseof Lords and it is still sound law.
As regards the present case, there is one authority, a recent case, whichis directly in point and which in my opinion cannot be distinguished fromthis case. I refer to the case of Woodward and another v. Wolfe Thatwas a case in which a person gambled on cotton futures and to do so hehad to buy or sell cotton futures through members of the LiverpoolCotton Association. It was held that the true relationship between theparties was that of principal and broker and that there was no gaming orwagering contract between them. The following passages in the judgmentof Hilbery J. are peculiarly applicable to this case: —
“ It was urged before, me on behalf of the defendant that, as therewas a contract made by the plaintiffs directly with the defendant ofpurchase and sale as principals, and as there was an express under-standing that there should be no question of deliveries on either sidebut only an eventual payment of differences, the claim was one inrespect of gaming and wagering contracts and was therefore unenforce-able in law. Reliance was placed upon the decision in Ironmonger &Co. v. Dyne, and it was contended that that case established thatonce it was shown that, notwithstanding the forms of contract betweenthe parties, the intention was that no deliveries were to be made andthat nothing was to happen except payment of differences, the contractswere gaming and wagering contracts. But Ironmonger & Co. v. Dyne(supra) was a case in which foreign bankers whose business it was to buyand sell foreign currency were the contracting parties on the one side.I cannot find from an examination of that case that they acted in anyway as brokers in the transactions. In the fullest sense of the wordthey were principals in the transactions with, the defendant in that case.In such circumstances the Court of Appeal decided that the test appliedby Cave J. in Universal Stock Exchange, Ltd. v. Strachan (supra) at page167, i.e., whether the bargains were real ones for purchase and delivery» (1896) A. C. 166.2 (1936) 3 All Etiglatid Laic Itep. 529.
WIJEYEWARDENE AJ.—Bartleet & Company v. Ebrahim Lebbe Marikkar. 353
or whether they were simply gambling transactions intended to end isthe payment of differences, was the correct test for resolving thequestion whether the contracts in question were or were not gamingand wagering contracts. But the plaintiffs in the case before me didin fact act in every transaction as brokers. They made a genuinecontract in the market binding them in respect of that and- exactly thatwhich the defendant was buying or selling” ….
“They (the plaintiffs) acted for the defendant to enable him togamble and they acted in the capacity of brokers in the market inwhich the defendant wished to gamble in the only way in which thedefendant could gamble in that market. If all that the plaintiffs haddone was to pass a form of contract made directly between themselvesand the defendant with an existing arrangement that only difference;should be paid, the matter might well be concluded on the principle ofthe decision in Universal Stock Exchange, Ltd. v. Strachan (supra). It isnot, however, what took place here. The plaintiffs made contracts on themarket for the defendant to give effect to his orders. Those contractsI am satisfied in the evidence bound him and they have, I am satisfied,
had to meet their obligations under them ”
It is clear, therefore, adopting the judgment in that case, as I think weought to, that the plaintiffs must succeed, for it is abundantly clear thatthey only acted as brokers on behalf of the defendant and in no sense didthey enter into a gaming contract. The only consideration for theircontract was their commission.
In my opinion the District Judge came to a correct conclusion and theappeal will be dismissed with costs.
The plaintiffs-respondents instituted this action for. the recovery ofRs. 101,771 with interest from the first defendant, due on a mortgagebond P 1 of March 27, 1930, executed by him. The second and tliirddefendants were made parties to the action as they were puisne encum-brancers in respect of the property hypothecated by the bond. TheDistrict Judge entered judgment for the plaintiffs and the first defendantappeals from that judgment.
The appellant admitted the execution- of the bond but pleading effectthat the bond was given for an illegal consideration and was thereforeunenforceable. This plea was put forward on the ground that theliability arose out of certain wagering contracts in respect of the purchaseand sale of rubber made by the appellant with the respondents as princi-pals. There were other pleas raised in the course of the proceedings andI shall deal with them later.
The respondents, are a leading firm of brokers in Colombo who putthrough a large number of contracts for their clients for the purchase andsale of rubber. They do their business not only in Colombo but arrangefor similar purchases in London and elsewhere. For their business inLondon they employ the firm of George White Yuille & Co. as their,regular agent.
354 WIJEYEWARDENE A.J.—Bartleet & Company v. Ebrahim Lebbe Marikar.
The appellant is an owner o£ rubber estates and has been a dealer inrubber.
After an interview with Mr. Perera, the Ceylonese broker then employedin the plaintiff’s firm, the appellant wrote P4 of May 15, 1929, to therespondents. P 4 reads : —
“ Messrs. Bartleet & Co.,
As arranged please buy 700 (seven hundred) tons rubber on London,June-December, 1929, at the rate 100 (one hundred) tons, each monthat the current market rate. Also I allow you to have the selling aswell.
(Sgd.) P. L. Ebrahim Lebbe MarikarOn receipt of P 4, the respondents immediately telegraphed theirLondon Agent, Yuille & Co., “ to buy for our account delivery in equal-monthly lots 700 tons June-December delivery this year ”. In replyYuille & Co. forwarded to the respondents eleven contracts which showedthat they had bought on account of the respondents the requisite quantityof rubber “ to be ready for delivery in warehouse in London and/orLiverpool any time or times at seller’s option ” during the months inquestion. Oh receiving telegraphic information about these contractsfrom Yuille & Co., the respondents wrote on May 16, 1929, severalletters (of which D 13 is ope) to the appellant in the following terms: —
“ We have this day bought by your order and for your account from
ourselvesLondon Plantation Rubber atper
lbto be ready for delivery in warehouse in London
and/or Liverpool . . .
Brokerage, i per cent.
(Sgd.) Bartleet & Co.,Brokers.
The sale prices of rubber given in D 13 and similar documents addressedto the appellant are exactly the prices mentioned in the correspondingrelative documents received by the respondents from Yuille & Co., asmay be seen by a comparison of D 13 with A. B. Y. 15.
In respect of these dealings with Yuille & Co., the respondents chargedthe appellant brokerage, though in Colombo contracts brokerage waspayable by sellers and not buyers. This is the usual course of businessof the respondents in dealing with foreign buyers and sellers and appearsto be due to the peculiar situation, created by these contracts. Mr. P. J.Parsons, one of the partners of the respondent’s firm says : —
“ The reason (for charging brokerage from the appellant) is becausewe had to guarantee him to Yuille & Co. Yuille & Co. had never heardof him. We are responsible to Yuille & Co. They only recognized us.They did not want to know him and the only- firm or person theyrecognized in connection with this contract is ourselves. So that inthis case we act-as principals so far as they are concerned ”.
WIJEYEWARDENE AX—Bartleet & Company v. Ebrahim Lebbe Marikar. 355
The respondents did not give any specific instructions to Yuille & Co.as to the disposal of the rubber when tendered and therefore Yuille & Co.sold the rubber when it was tendered as there was a general arrangementthat in the absence of specific instructions they should sell any rubberbought by them for the respondents. This arrangement is in consonancewith the course of business of Yuille & Co., as stated by Mr. Chapman.Yuille & Co. informed the respondents about these sales from time totime (vide A. B. Y. 17 to A. B. Y. 118). In communicating this inform-ation to the appellant the respondents wrote letters similar to D 12which reads: —
“ E. L. Ebrahim Marikar, Esq.,
We have this day sold by your order and for your account to our-selves …. tons plantation rubber …. at . . . .
per lbto be ready for delivery in-warehouse in London
Brokerage, 1 per cent.
(Sgd.) per pro Bartleet & Co ”.
The sale prices mentioned in the documents addressed to the appellantare the sahie as the prices in the relative documents received by therespondents from Yuille & Co.
In consequence of a falling market these transactions resulted in lossesand Yuille & Co. sent to the respondents accounts from time to timeshowing the amount due on these transactions. The respondents wroteto the appellant showing the amount payable by him and for this purposethey adopted the figures given in the advices from London. D 25 is oneof such documents sent to the appellant. It gives the purchase price Ofthe rubber and its selling price. The amount due is made up by addingto the difference between the purchase price and selling price, the amountsdue on account of brokerage, interest and incidental expenses.
It was understood that the appellant would make payment immediatelyafter the account was rendered to him (vide P 25). Though the appellantat times delayed in making payment he met all the bills due except thosein respect of losses incurred on sale of Forward Delivery Rubber forNovember and December, 1929. His attention was drawn to it by P 28to which he replied by P 29 stating that he was making arrangements tosettle the amount due by the end of December, 1929. It was ultimatelyagreed that the appellant should give a bond for the payment of theamount due and P 1 was executed by the appellant in March, 1930. Hepaid for some months the interest provided under the bond and thenmade default. The evidence does not show whether he stopped thepayments because he was unable to meet his commitments or becausethe thought occurred to him that it would be against public policy tomake payments on a bond given for making good the losses incurred bythe respondents. On the other hand there is evidence to show that therespondents have settled all the amounts due to Yuille & Co. and theappellant was aware of the fact at the time that such payments weremade.
The defence of the appellant that the .consideration for the bond isillegal is based on the ground that the respondents did not act as brokers
356 WIJEYEWARDENE A.J.—Bartleet & Cdmpany v. Ebrahim Lebbe Marikar.
in respect of the contracts in question but as principals. In order toappreciate this contention, it is best to consider the case as presented bythe learned Counsel for the appellant. Up to 1926 the appellant’stransactions in rubber have been what are referred to as “spot sales".About that time there was a boom in rubber and he began to enter intoforward contracts without any intention of taking delivery or givingdelivery of any rubber bought or sold by him. If the market was againsthim he paid the difference between the market price and the contractprice. Even when the market was favourable there was no delivery buthe got a cheque for the difference. He negotiated a number of suchcontracts through the respondents as brokers. About May, 1929,. hearranged to enter into such forward contracts in London in respect ofwhich the sum now claimed on the bond became due from him. Withregard to the circumstances which' led to the making of these contracts,he says:■
“In May, 1929, orife Mr. Perera, a broker in plaintiff’s firm came andspoke to me. He wanted me to buy rubber. He said he could supplyany amount of rubber. I consented to buy rubber. It was arrangedthat Mr. Perera should buy rubber for me at the London Market. Ido not know from whom he arranged to obtain the rubber for me. Hecame and spoke to me on behalf of Bartleet & Co. It was arranged tobuy 100 tons of rubber every month totalling up to 700 tons at theLondon Market price. There was no delivery (to be made). It wasBartleet & Co. who sold that rubber to me. At the end of each monththey would send to me an account of the profit or loss. There was tobe no delivery. The arrangement was that I should pay the differencewhen the market was against me and that I should be paid the differencewhen the market was in my favour”.
He says he regarded the respondents as principals on the contracts inquestion and he relies on the documents D 12 and D 13 as establishingthis fact as these documents refer to a sale to him by respondents and apurchase by the respondents. There was no delivery under the contractsand the respondents, he says, should have been well aware that he did notintend to take delivery in London and that he could not make arrange-ments to receive such delivery. He defines the contracts made by therespondents with Yuille & Co. as independent wagering contracts by therespondents as principals in order to indemnify themselves against anylosses that may be incurred by them in respect of the wagering contractsmade by them with him. The evidence with regard to his transactionsprior to 1929 may have been of some assistance to the appellant inproving the probability of his statement with regard to the contracts inquestion in the present case, if such evidence indicated a regular system ofbusiness for the payment of differences without delivery of the goods.Though the appellant made a general statement in his evidence-in-chiefthat there was not a single contract of his- between 1926 and 1929, inwhich the ordinary obligations of the seller to deliver and of the purchaserto take delivery were enforced, he had to admit in cross-examination thata number of contracts about which he was cross-examined in detail werein fact ordinary contracts for the purchase and sale of rubber. Moreoverhe made the very significant, admission that even in the case of forward
WUKYKWARDENS A.J.—Bartleet & Company v. Ebrahim Lebbe Marikar. 357
contracts put through locally in which there was. no delivery but only aneventual payment of differences, the respondents never acted as sellers orpurchasers but only as brokers. The evidence of the appellant as to theconversation between him and Mr. Perera, the Ceylonese broker, standsuncorroborated and is certainly in conflict with P 4. He could havecalled Mr. Perera to support him but he did not choose to do so. Whileit is not necessary to question the veracity of the appellant I do not thinkit prudent to accept his testimony on any material particular unless itis supported by some other evidence, in view of the scant regard shownby him for accuracy with regard to various matters on which he wasexamined.
I do not think that D 12 and D i3 could be construed as indicatingthat the respondents acted as principals and not'as brokers as such aconstruction would be in conflict with all the facts of the case. Theappellant was charged for the rubber purchased by him at the same rateat which the respondents secured the rubber in London and when therubber was sold in London he was given credit at the same rate at whichsuch resale took place. Moreover the documents sent to him by therespondents showed that they were charging him brokerage and incidentalexpenses. Those facts disprove the contention that they acted asprincipals with regard to these contracts with him and it is inconceivable'that he could ever have been under the impression that they intended toact as principals notwithstanding the clear .instructions given in hisorder P 4. Mr. Parsons has given evidence denying that the plaintiffsacted in any capacity other than as brokers in these contracts. I see noreason for rejecting this evidence. The true position appears to be thatin order to give effect to P 4, the respondents were compelled to purchasethe rubber through Yuille & Co. in the manner adopted by them in viewof the fact that Yuille & Co., and those for whom they acted were notprepared to enter into contracts with the appellant who was unknown tothem. The respondents acted in the only way it was open to them to actfor the purpose of carrying out the order of the appellant to them as hisbrokers.
The present case is clearly distinguishable from Tarrant v. Marikar',where the plaintiffs entered into certain contracts with the defendant forthe sale of rubber to him. The plaintiffs claimed a sum of money on abond given to them by the defendant on account of moneys that becamedue to them in these contracts. The Court held on the evidence before itthat the contracts were not genuine bargains for the sale and purchase ofrubber but were wagering transactions intended to end only, in thepayment of differences. The plaintiffs in that case admitted they werethe principals in the contracts. Garvin and Akbar JJ. held that as thecontracts were wagering contracts to the knowledge of both the partiesthe plaintiff who was one of the parties to the contract could not enforcea claim on a bond the consideration for which was a sum due by the otherparty- to the wagering contracts. The case of Woodward and another v.Wolfe", appears to be more in point. The plaintiffs in that case weremembers of the Liverpool Cotton Association. Only thg members of theAssociation were permitted to enter into transactions for the purchase1 (1934) 36 N. L. R. 146.- (1936) 3 All England Reports 528.
358 WIJEYEWARDENE AJ.—Bartleet & Company v. Ebrahim Lebbe Marikar.
and sale of cotton futures on the Liverpool market and such transactionswere governed by the regulations and usages of the association. Thedefendant who was not a member of the association requested theplaintiffs to deal in cotton future on his behalf. The plaintiff thereuponmade purchases from other members of the association and according tothe regulations made contracts on specified forms by which they boundthemselves, as purchasers, and then filled in other specified forms underwhich they sold the particular lots of cotton to the defendant at the sameprice at which they were bought, in addition to their brokerage. Dupli-cates or counterfoils of the sale notes in the form of bought notes from thedefendant to the plaintiffs were sent at the same time for signature andreturn by the defendant. The plaintiffs sued the defendant for moneydue on account of differences, interest and brokerage and were met bythe plea that “ as these were contracts made by the plaintiffs directlywith the defendant for purchase and sale as principals, and as there wasan express understanding that there should be no question of deliverieson either side, but only an eventual payment of differences, the claim wasone in respect of gaming and wagering contracts and was thereforeunenforceable in law Hilbery J. rejected the plea and held that theplaintiffs acted in fact as brokers and merely allowed the defendant inform to buy from or sell to them and that therefore they could recoverthe amount claimed.
I hold that the respondents acted as the brokers of the appellant inrespect of these contracts and they are therefore entitled to make thepresent claim on the bond.
The appellant has also questioned the rights of the plaintiffs to enforcetheir claim on the ground that they had not complied with the provisionsof section 7 of the Registration of Business Names Ordinance, No. 6 of1918. This contention is based on the following facts:—The thirdplaintiff died some time after the institution of the present action. Theplaintiff firm thereupon wrote to the Registrar-General inquiring whether“ the terms of registration should be altered ” and received in reply P 68from the Registrar-General intimating to them that the name of the thirdplaintiff could be allowed to remain in the Certificate of Registration “ tillhis successor or successors are duly appointed ”. Though the referenceto “successor or successors duly appointed” in P 68 is not clear yet thedocument may well be regarded as embodying an order by the Registrar-General extending the time for making the necessary application undersection 7. As the question arises whether an application under section 7for an-extension of time should not have been made within fourteen days- after the death of the third plaintiff I would consider the soundness ofthe objection on other grounds. Section 9 of the Ordinance is therelevant section which refers to proceedings instituted by persons whohave failed to comply with the provisions of the Ordinance. This sectionreads: “ Where any firm or person by this Ordinance required to furnisha statement of particulars or of any change in particulars shall have madedefault in so doing, then the rights of the defaulter under or arising out'of. any contract made or entered into by, or on behalf of such defaulter inrelation to business, in respect of the carrying on of which particulars
Matale Police v. Murugesu.
were required to be furnished, shall not be enforceable at any time whilehe is in default, by action or other legal proceedings either in the businessname or otherwise
In Jamal Mohideen & Co. v. Meera SaibuBertram C.J. consideredthe scope of this section and after comparing it with section 8 of theRegistration of Business Names Act, 1916, reached the decision that thesection should be restricted to transactions entered into by a person orfirm while such person or firm was actually in default. He further held
that the words “ the rights of that defaultershall not be
enforceable by action ” meant that “ the defaulter shall not be entitledto bring an action to enforce his rights ” and that therefore this sectionshould be construed in accordance with the general principle that alitigant’s rights in an action are his rights at the date of the institution.In the present case the alleged default occurred after the institution ofthe action and long after the execution of P 1. I hold therefore that thisobjection fails.
The Counsel for the appellant further contended that the order of theDistrict Judge admitting the evidence taken on Commission was erroneous.For the reasons given by the learned District Judge in his order ofJune 26, 1937, I hold that this evidence has been properlyadmitted.
I dismiss the appeal with costs.
BARTLEET & COMPANY v. EBRAHIM LEBBE MARIKAR