Mar Hear'v. Austin de Mel.
[In the Privy Council.]
1945Present: Viscount Simon, Lord Thankerton andSir John Beaumont.MARIKAR., Appellant, and AUSTIN DE MEL, Respondent.
Privy Council Appeal No. 8 of 1945.
S. C. 40 and 129—D. C. Colombo, 12,458.
Contract■—Agency—Broker'a right to sue in his own name—Usage of market—Suretyship—Wagering contract.
Where a broker contracted with a buyer for the purchase of rubbercoupons from an undisclosed seller and, according to the usage of themarket, the broker was liable to deliver to the buyer the coupons sold
1 (1938) 26 Cr. App. R. 148.
r. N. A 00876 (4/40)
SIR JOHN BEAUMONT.—Marikar v. Austin rie Mel.
whether or not he had. received them from the seller, and the buyer wasliable to pay the contract price direct to the broker if delivery wasaccepted,—
Held, that if the buyer wrongfully refused to accept delivery thebroker could sue in his own name to recover damages for the breach ofcontract.
Held, further, (i.) that as there was nothing in the contract to suggestthat the buyer had first to claim delivery of the coupons from the sellerbefore having recourse to the broker the contract was not one involvingsuretyship ; (ii.) that the contract was not a wagering one.
PPEAL from a judgment and decree of the Supreme Court. Thejudgment of the-Supreme Court is reported in 44 N. L. It. 147.
Sellers, K.C., for the appellant.
W. L. McNair, K.C., for the respondent.
December 19, 1945. [Delivered by Sm John Beaumont.]
This is an appeal from a judgment and decree of the Supreme Courtof the Island of Ceylon dated January 15, 1943, setting aside a judgmentand decree of the District Court of Colombo dated January 16, 1942,and entering judgment in favour of the defendant-respondent for the sumof Rs. 107,055 • 81 with interest and costs.
The appellant instituted this action on October 16, 1940, in theDistrict Court of Colombo, against the respondent for the recovery of thesum of Rs. 56,185*18 being damages sustained by him between April 1,1940, and May 27, 1940, on certain contracts relating to coupons issuedby the Rubber Controller under a Rubber Restriction Scheme in forcein Ceylon during the relevant periods under the Rubber Control Ordinance.The export of rubber without such coupons was prohibited.
The respondent which was a Company doing the business of brokersin Colombo admitted its liability to the appellant in respect of the saidsum, but alleged that on May 15, 1940, the appellant had instructedit to purchase one million coupons each covering the export of a singlepound of rubber, that on the same date it had arranged for the purchaseof the said quantity of coupons on the appellant’s account with an undis-closed principal, and that the appellant had subsequently repudiated thesaid contract without lawful cause. The respondent claimed that theappellant was liable to pay to it damages in respect of the said contract,or to indemnify it against liabilities incurred as his brokers, and, givingcredit in certain sums admittedly due by it to the appellant, claimed inreconvention a sum of Rs. 107,055*81.
At the trial the market price at which the coupons were sold on variousdates was admitted, and the figures were not in dispute. It was agreedthat if the respondent succeeded in establishing its claim in reconventionjudgment would be entered for it for Rs. 107,055*81, and that if therespondent’s claim in reconvention was rejected judgment would beentered for the appellant for Rs. 56,185*18.
The making of the contract of May 15, 1940, on which the respondent’sclaim in reconvention was founded, was denied by the appellant. Atthe trial the learned District Judge disbelieved the evidence of the
SIB JOHN BEAUMONT.—Marihar c. Austin de Mel.
appellant and held that the contract was made as alleged by therespondent. This finding was upheld by the Supreme Court and has notbeen challenged before the Board.
The appellant also denied receiving the bought note embodying thecontract and did not produce it, but its terms were proved from an entryin the respondent’s contract book. That note was in the followingterms :—
** Austin de Mel Ltd.Colombo, May 15, 1940.
“ Rubber Coupon Contract No. R. 6661.
“ Messrs. E. L. Ebrahim Lebbe Marikar, Esq.
“ We have this day bought by your order and for your account fromOur Principals (1,000,000) lbs. of Rubber Coupons at 30£ cts. per couponlb. Delivery 2nd issue 1940. Payment on Delivery.
“ Yours faithfully,
“ for Austin de Mel, Ltd.,
“ (Sd.) Austin C. de Mel,
“ Sold according to Chamber of Commerce
" Conditions of Sales.
“ This Contract shall be subject to any alteration in the Rubber
Control Ordinance or conditions that may be imposed under that
Ordinance, or by further legislation affecting transactions in Rubber
It was admitted by the respondent that the seller was Kathleen de Mel,wife of Austin de Mel, the Managing Director and principal shareholderin the respondent company. The appellant contended that Kathleen deMel was a more alias for the respondent company which had really sold itsown coupons to the appellant. The learned trial judge held that there wasno conflict of interest between Kathleen de Mel and the respondent com-pany and that the respondent company dealt with Mrs. de Mel in theordinary course of business, and this finding was accepted by the appellatecourt. Their Lordships accept this concurrent finding of fact.
A further contention raised by the appellant, which can be disposed ofat the outset was that the contract of May 15, 1940, was a wageringcontract and unenforceable. This claim was rejected by both the lowercourts, and so far as the question is one of fact their Lordships accept thefindings of the lower courts. So far as the matter involves any questionof law, it is clear that if the appellant was entitled to delivery of thecoupons purchased the contract was not a wagering one. There is nothingin the terms of the contract to preclude the appellant from demandingdelivery and he was, in fact, by the letter of the respondent’s proctordated June 11, 1940, offered formal tender of the coupons sold, whichoffer he declined. Their Lordships therefore agree with the lower courtsin holding that the contract was not a wagering one.
SIR JOHN BEAUMONT.— Marikar v. Austin de Mel.
The principal question discussed in the judgments of the lower courts,and the only question which really arises on this appeal, is whether therespondent company is entitled in law to maintain its claim in re conven-tion. In order to determine this question it is necessary to notice thecourse of business and the custom or usage as Regards contracts relatingto rubber coupons in force in the Colombo market when the contract insuit was made. At the outset of the trial the parties, by their Counsel,agreed as noted in the judgment of the learned District Judge that thiscustom or usage was as follows :—
“ The broker’s bought note, or sold note (as the case may be)never discloses the name of the other party to the contract.
“ The broker is, as far as the seller is concerned, liable to acceptdelivery of all coupons tendered, and to pay the full contract price ofthe amount tendered by the seller whether the buyer accepts deliveryor not.
“ The seller may, instead of tendering the coupons, instruct thebroker to negotiate a fresh contract for the purchase of the samequantity of coupons as that covered by the original contract. In sucha case the seller is entitled to receive from, or liable to pay to, thebroker direct the difference between the original contract price andthe new contract price on a stated account.
“ As far as the buyer is concerned, the broker is liable to tenderand deliver the coupons irrespective of whether the seller has tenderedor not. If the buyer accepts delivery he is liable to pay the contractprice direct to the broker. The buyer may, instead of acceptingdelivery of the coupons, direct the broker to sell the tendered couponson his behalf at the market price of the day of tender. In that eventthe difference between the original contract price and the market priceis received from or paid to the broker direct.
“ The buyer and seller have no dealings with each other direct inregard to performance of the contract. Each party is entitled to lookto the broker for performance.”
The District Judge having found all the facts against the appellantnevertheless decreed his suit and dismissed the respondent’s claim in recon-vention upon a point of law. He held that the respondent having enteredinto the contract in suit as agent for Kathleen de Mel could not sue upon it;that to allow an agent for an undisclosed principal to sue in his ownname upon the principal’s contract would be to disregard a well-estab-lished principle in the law of agency ; and that the market usage subjectto which the contract was made could not alter the intrinsic nature of thecontract. The Supreme Court in Appeal took a different view of thelaw,'and gave judgment for the respondent upon its claim in reconvention.Their Lordships entertain no doubt that the view of the Supreme Courtwas right. The fallacy underlying the judgment of the learned DistrictJudge lies in the assumption that the.respondent was suing on a contractmade by his principal. This was not the case ; he was suing in his ownname under a special power conferred upon him by his contract of employ-ment. Under the agreed usage of the market the broker was liableto deliver to the buyer the coupons sold whether or not he had received
Ahamadulewepody v. Uthumleme.105
them from the seller, and the buyer -was liable to pay the contract pricedireot to the broker if delivery was accepted. In the event of the buyeraccepting delivery and refusing payment it is plain that the brokermust have a right to enforce the liability. It follows logically from thisposition that if the buyer wrongfully refuses to accept delivery (as inthin case he did) the broker is the person to recover damages for thebreach of contract. The fact is that the contract in this caseimposed upon the broker obligations far more onerous than wouldnormally rest upon an agent. The broker in making payment to theseller and delivery to the buyer was required to act as a principal, andthese obligations conferred corresponding rights. There is no objectionin law to parties entering into a contract of this nature, and, as theSupreme Court pointed out, the respondent is not to be deprived of hisrights under his particular contract because they would not have arisenunder a normal contract of agency.
A further point taken by Mr. Sellers for the appellant was that on thetrue view of the contract of May 16, 1940, the broker became a suretyfor the due performance of the contract by the seller and the buyer, andthat he could not claim indemnity from the buyer unless he proved thathe had suffered loss, and that he had not done this since he had tenderedno evidence of any payment made to the seller. The answer to thisargument is that the contract is not one involving suretyship ; there isnothing in the contract to suggest that the buyer must first claim deliveryof the coupons from the seller before having recourse to the broker.On the contrary, the last paragraph of the agreed market usage expresslyprovides that the buyer and seller have no dealings with each other direotin regard to the performance of the con trace, and that each party is entitledto look to the broker for performance. This negatives the theory that thebroker was only a surety.
For these reasons, which are substantially those upon which theSupreme Court acted, their Lordships will humbly advise His Majestythat this appeal be dismissed. The appellant must pay the costs of therespondent.
A weal dismissed.
MARIKAR , Appellant , and AUSTIN DE MEL , Respondent