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Present : De Sampayo and Schneider JJ.
SITHAMBAHAM CHETTY v. THE KEI^NI VALLEY
RUBBER CO., LTD.
'39—D. C. Colombo, 727.
Principal and agent—Authority of superintendent r of estate to borrowmoney on behalf of the estate.
The superintendent of to estate as such has no authority toborrow money on bdhalf of his' employer, or to pledge bis credit,even for the purposes – of the estate, unless such • authority isexpressly given, or can be implied from the – recognized course ofdealing with third parties.
Tub facts" appear from the judgment.
Hayley, for defendant company, appellant.
R. L. Pereira (with him M. W H. de Silva), for plaintiff, respondent.
September 7, 1922. Db Sampayo J.—-
The plaintiff is a Chetty trader of Sea street, Colombo, having abranch establishment at Yatiyantota. The defendant is theValley Rubber Co. and proprietor of Hathmathe estate,situated at Ruwanwella. At the time of the transactions, on accountof which this action is brought, the superintendent of the estate,under the defendant company, was one E. H. Grigson, who hassince been dismissed from his employment.
The plaintiff alleged in his plaint that at the request of thedefendant company he agreed to advance to and on account of thedefendant company such sums of money as the defendant companymight from time to time require, which sums the defendant companyundertook to repay to the plaintiff, together with a commission of18 per cent, per annum. But, as a matter of fact, there was no suchagreement, express or implied. The allegation is purely imaginary,and, except in, connection with the present action, the parties nevercame in contact with each other. The plaintiff goes on to say thatin pursuance of the alleged agreement, the plaintiff between October 1,1920, and February 28, 1921, advanced to the defendant companyvarious sums of money, which with the agreed commission or interest,and after deducting certain sums paid on account, amounts toRs. 6,929.10, and which accordingly is claimed in this action.
.. The plaintiff’s case is that in the months of October, November,and December, 1920, he'paid on cash orders of the superintendentvarious sums, which, after crediting the defendant with certain
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SUhambdramQheUy v. ThejKelani Valley- Rubber Co.,Ltd.
sums paid on account, amount to Rs, 3,803.02, and that he hadfurther to get from the defendant- a sum of Rs. 3,425, being theamount of a cheque issued to the plaintiff by Grigson, and dishonouredon presentment. The plaintiff's representative at ■ Yatiyantota wasone Krishnupillai, and he was also the plaintiff’s principal witnessin this case. He was obliged to admit that the cheque for Rs. 3,425includes Rs. 2,000 which was a private debt of the superintendent,and although he attempted to explain that the balance Rs. 1,425was represented by cash orders on account of the ..estate, be was notable to do so satisfactorily, and finally plaintiff’s counsel admittedthat the plaintiff’s claim in respect of the amount of the chequecould not be supported. That part of the claim being disallowed,the District Judge lias given the plaintiff judgment for the othersum of Rs. 3,303.92. But the improper, and what must becharacterized as the dishonest, inclusion of Rs. 3,425 in the ciaunasrainst the defendant company has a serious effect on the bonafidee of the plaintiff in respect of the whole action.
The case turns upon the question whether Grigson had thedefendant company’s authority to borrow money. The superin-tendent of an estate as such has no authority to borrow money on.behalf of his employer or to pledge his credit, even for the purposesof the estate, unless such authority is expressly given or can beimplied from the recognized course of dealing with third parties.In the present case Grigson was regularly supplied by the defendantcompany with all the funds necessary for the estate, and wasprohibited from obtaining money elsewhere. The plaintiff, or hisagent Krishnanillai, was well aware of Grigson being supplied withmoneys by his employers, and, in the circumstances, • he knowinglyundertook a certain risk in lending money to Grigson. Moreover,Grigson was in the habit of borrowing money from the plaintiff onhis own private account, and dishonestly paid plaintiff such moneyby means of estate cheques. The agreement to pay 18 per cent,commission or interest, which is pleaded in the plaint, was, doubtless,one made by Grigson in connection with his private transactions.The defendant company was financially sound, and plaintiff could notpossibly have imagined that the company would raise money at sucha rate of interest as 18 per cent. As a matter of fact, though the cashorders sent by Grigson to plaintiff were to pay parties to whom moneywas due from the estate, Grigson from time to time misappropriatedthe moneys obtained from the plaintiff. The amount of suchmisappropriations cannot now be ascertained. The plaintiff wasaware of Grigson’s conduct, and it cannot possibly be held thatthe plaintiff thought that Grigson had the defendant company’sauthority to borrow money. The District Judge rightly holds thatthe plaintiff connived at Grigson's dishonesty. Grigson himself* inconnection with the plaintiff’s claim frankly admitted to his employerthat the whole amount claimed was due by him, and none of it was
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due by the defendant company, and that the Chetty was well awareof it. He repeated this admission in the course of his evidence inthis case. All this was surely sufficient to put the plaintiff out ofCourt. But the District Judge has purported to' go upon someevidence of Mr. F. H. Bayard, the Managing Director of the defend-ant company, which I think the District Judge has misconstrued.Mr. Bayard in cross-examination says that it is the custom for asuperintendent to cash cheques and pay a small commission, thathe may also obtain on cash orders to the extent of his credit in thebank for a limited period, such as for a month, and that the cashorders in question represent moneys “ due from' the estate. ” Fromthese statements the District J'tidge draws the conclusion thatGrigson had authority to borrow the money on these cash orders,and that the defendant company was liable to the plaintiff. Itis obvious, however, that Mr. Bayard was referring to the ordinaryand necessary practice on estates in remote districts, whereby thesuperintendent gets cash for immediate requirements by the issueof cheques, or cash orders, to local traders on payment of a smallcommission. As Mr. Bayard said, an estate cannot be run unlessthe superintendent had such limited authority. Mr. Bayardmentioned one month as the limit of time, because I think thesuperintendent sends his requisition for funds once a month. If therequisition includes, as it should, the cash orders already issued, thesuperintendent would be able to pay for these orders within a month,and Mr. Bayard added that if necessary the superintendent may sendan. intermediate requisition. When Mr. Bayard said that the cashorders in question represented moneys due from the estate, it is clearthat what he meant was that on the face of them the orders were topay parties to whom, in the first instance, the moneys were due, butas the superintendent received moneys on his requisitions for allthese purposes, it is impossible to hold that Mr. Bayard meant thatthe estate owed these moneys to the plaintiff.
In my opinion the judgment of the District Judge is based on awrong reading of Mr. Bayard’s evidence, and is against the clearresult of all the other evidence in the case. I would set aside thejudgment, and dismiss the plaintiff’s action, with costs, in bothCourts.
Schneider J.—I agree.
SithatubaramChetty v. TheKeJani ValleyRubber Co.,Ltd.
SITHAMBARAM CHETTY v. THE KELANI VALLEY RUBBER CO. LTD