005-NLR-NLR-V-13-ROBSON-v.-AITKEN-,-SPENCE-&-CO.pdf
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Present; The Hon. Sir Joseph T. Hutchinson, Chief Justice, Nov.26,1909and Mr. Justice Middleton.
Sought and sold notes—Evidence of acontract—Parol evidence to prove
a different agreement—Evidence Ordinance, ss. 91 and 92.
Parol evidence may be given to show that a broker’s boughtand sold notes do not constitute the record of a concluded agree*ment, and do not contain the real agreement come to.
PPEAL from a judgment of the District Judge of Colombo
(H. A. Loos, Esq.). The facts and arguments are fully setout in the judgments of the Supreme Court.
Bawa (with him Wadsworth), for plaintiff, appellant.
Van Langenberg (with him Hayley), for the defendants,respondents.
Sampayo, K.C. (with him S. Obeyesekere), for the added defend-ants, respondents.
The following authorities were cited at the argument: Reuterv. Sala,1 Tancred v. Steel Go. of Scotland,2 Juggemanth Sen Buxv. Ram Dyal,3 Ralli v. Garamalh Fazel,4 Boustead v. Vanderspar*Thomson v. Gardiner,6 Sive Wright v. Archibald,7 Durga Prosadv. Bhajam Lai,8 Halbert v. Lewis.9
November 25, 1909. Hutchinson C.J.—
This is an appeal by the plaintiff against the dismissal of theaction. The four original defendants, carrying on business inpartnership as “ Aitken, Spence & Co., ” were agents for a shippingcompany, and used a considerable quantity of mattress fibre for“ dunnage,” i.e., for packing with coconut-oil casks in a ship’shold. They used to get a certain quantity of it from local makersand traders free, that is, they had the use of it as dunnage,carrying it freight free or otherwise; the rest they had to buy, and
1 (1879) L. R. 4. C. P. D. 239.8 (1906) 8 N. L. R. 318.
1 (1890) 15 A. C. 125.8 (1876) 1 C. P. D. 771.
HOBSON v. AITKEN, SPENCE & CO.
D. C., Colombo, 24,144.
A
Cur. adv. vult.
8 (1883) 9 Cal. 791.
* (1890) 14 Bom. 102.
(1815) 20 L. J. Q. B. 529.
(1904) 8. C. W. N. 489.
9 (1901) 1 Ch. 344.
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Nov. 25,1909 for this last they had for some years before 1905 been in the habit’Hutohxksonof making contracts for a year’s supply in advance, to be takenC-J-. ‘ when they wanted it. The contract which they made for 1904 wasRobson v. made in December, 1003, with J. A. Martinus; this is the contractAitkenreferred to in D 2 and D 3, from which it appears that the buyers
Spencecou& take as much of the fibre as they required up to 10,000 cwt.; and
their contracts with other sellers in previous years had been to the likeeffect. In October, 1904, they wanted to arrange for the supply for1905, and Burns and Armitage, who were employed in their ShippingDepartment, consulted F. W; Waldock about it. He was a memberof the firm of Keel and Waldock, brokers, added as defendantsin this case after the original defendants had filed their answer,through whom the previous year’s contract with Martinus had beenmade. Burns had had the working of the previous contracts andknew their terms, and he explained the terms to Waldock; theywere, as he says, ” that whoever took the contract should supplyall the fibre we should require; that we should bind ourselves tobuy all that we require to buy from him; but that we received otherfibre free of freight, and that we reserve to ourselves the right totake other dunnage. ” Armitage was present at all or most ofBurns’s interviews with Waldock; he said that he also told thebroker to make certain that the terms on the next contract were thesame as the existing one, viz., ” that we were to take from thecontractor all the fibre that we had to purchase, and that we hadthe option of shipping all fibre free of freight or on which freighthad been paid, and also the option of taking yarn shipped fromAlleppy. ” At one of his interviews with Burns the broker wantedto know what quantity should be named in the contract; Burnssaid that he did not see the necessity for it, but that 10,000 cwt.was the quantity stated-in the previous contract.
W. Waldock then made a contract with the plaintiff, and hedeclared that it was in the terms which he had been instructed byBurns and Armitage to make, and that he fully explained all thoseterms to the plaintiff, except one small matter about harbour dues,which he had been instructed was to be one of the terms, but whichhe forgot, and that the plaintiff knew beforehand, i.e., beforeWaldock had spoken to him, what the terms were to be, and that heagreed to them.
The contract, however, was not reduced into writing, if it wassuch as the • broker asserts. But he sent to the parties bought andsold notes, these are the documents P 5 and Dl. That which wassent to the plaintiff was as follows: ” We beg to confirm salemade by us this day on your account to Messrs. Aitken, Spence & Co.about 10,000 cwt., more or less, cleaned Ceylon mattress fibre, wellballotted, at Rs. 2.10 per cwt. f. o. b., as per sample tendered.Ship’s weight to be accepted. Delivery as required from time to timefrom January 1 to December 31, 1905. Brokerage, 10 cents per cwt.”
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D 1 sent to the defendant waa in identical terms, only substituting Nov. 25,1909the defendants’ names for the plaintiff’s and “ purchase from HutchinsonMessrs. George Bobson & Cot ” for “ sale to Aitken, Spence & Co. ” C.J.These notes, if they constituted the contract, would bind the defend-v
ants to buy “ about 10,000 cwt. more or less, ” no mention beingAitken,
made in them of the terms that the defendants were to buy fromSpence
the plaintiff all that they required to buy, and that they were to beentitled to take as much as they wanted up to about 10,000 cwt.
On receipt of D 1 Armitage informed Waldock the next day thatthe contract authorized by him had not been carried out, and theycould not accept this contract. Waldock assured him that theplaintiff fully understood all the terms of the contract, but said thathe would see the plaintiff again about it, and lie says (and the Judgebelieves him) that he did see the plaintiff about it the same day,and then went back and reported to Armitage- Armitage says thatwhat Waldock then told him was that he had cancelled the contractand made a verbal one on the terms of the pre-existing (Martinus’s)contract; but Waldock’s account of his interview with the plaintiffis that he merely asked him again if he understood the position, theterms; whether he was fully aware. of the terms; and that theplaintiff replied that he was;- and he says that he went back andtold Armitage that everything was all right. Waldock says, andI have no doubt that it is the fact, that he himself thought that“ more or less ” in the bought and sold notes meant “ up to ”; andbe adds that they all understod that and that was the intentionof all the parties.
The previous year’s contract with Martinus was evidenced bytwo documents: (1) A bought note, D. 2, in the same form as theone in the present case; and (2) a memorandum of the same date,
D 3, setting out the terms of the contract in detail and showingthat the buyers were to have the option of taking any quantity asrequired up to 10,000 cwt- There was no such memorandum in thepresent case.
As it turned out, chiefly in consequence of a contract made bythe shipping company in England for the supply of fibre fordunnage free, the defendants did not require to buy, and did not take. from the plaintiff, any fibre in 1905, except a few small quantitiesamounting to a little more than 600 cwt. And the plaintiff in thisaction alleges the contract to be that which is shown by the boughtand sold notes, and claims from the defendants, or, in the alternative,from the brokers, damages for its breach. If the bought and soldnotes are the contract, and if oral evidence is not admissible toprove that they are not, the plaintiff must succeed.
The Evidence Ordinance enacts in sections 91 and 92 that when theterms of a contract have been reduced, by or by the” consent of theparties, to the form of a document, no evidence shall be given inproof of the terms of the contract except the document itself (or
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Nov.26,1909 secondary evidence of the document where that is admissible);
Hutchinson an^when the terms of such contract have been so proved by
J. the document, no evidence of any oral agreement or statementRobson v* shall be admitted, as between the parties or their representativesAitken,in interest, for the purpose of contradicting, varying, adding to,
Spenceor subsfcracting from its terms. And there are provisions allowing
oral proof of, amongst other things, any separate oral agreementas to any matter on which the document is silent, and which is notinconsistent with it. The defendants have therefore to prove thatthe terms of this contract were not reduced to the form of a docu-ment, or, in other -words, that the bought and sold notes are not thecontract, but are only evidence of a contract, and may be supple-mented by oral evidence to prove the full terms of the contract.
What are these notes? They are in form and substance inform-ation given by the broker to his principal of what he has done on hisbehalf; to the buyer that the broker has bought for him, and to theseller that he has sold for him, so much at such a price. They arenot a contract, but a memorandum that a■ contract has been made.This is the ruling of the Privy Council in Durga Prosad v. BhajanLai,1 They are evidence of the contract; but oral evidence ofit is also admissible except in cases where . some law requireswritten evidence, as would be the case under the Sale of Goods Act,where there had been no part performance as there was here. Oralevidence being therefore admissible as to the terms of this contract,and the notes being regarded as merely a piece of evidence like anyother, the only question is as to their value; and that depends onthe circumstances of each case. If, for example, the notes agreeand are delivered and accepted without objection, the acceptancewithout objection is strong evidence of mutual assent to their terms.See Ameer Ali on the Indian Law of Evidence, p. 465; Encyclopediaof the Laws of England, II,, 382.
The bought note delivered to the defendants was not acceptedby them without objection. They objected to it at once, and soinformed the broker, who as their agent at once informed* the plaintiffand received his assurance that he fully understood what the fullterms of the contract were as they had been explained to him bythe broker when the contract was made. And the correspondencebetween the plaintiff and the defendants in 1905 shows unmistak-ably that he knew the contract to be that which the defendants andthe broker say that it was* There are several letters from whichthis appears; it is enough to refer to the plaintiff’s letters D 5 ofMarch 18; P 28 of May 13, and P 29 of August 11. The DistrictJudge has so found, and the evidence amply proves that he was right.
The appeal, therefore, fails as against Aitken, Spence & Co. Thereremains the claim against the brokers, which is founded on anexpress or implied warranty by them that they were authorized
{1904) 8 C. W, N, 489.
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by Aitken, Spence & Co. to make on their behalf the contract which Js7ov. 25,1909as said to be cohtained in the sold note which Waldock delivered to Hutchinsonthe plaintiff. But .there, again, the evidence proves that he never C.J.made any such representation to them, but that he represented to Robaonv.them that he was authorized to make a contract in the terms of that Aitken,which the defendants allege, and which he did in fact make.Spence
I therefore am of opinion that the decree of the District Courtwas right, and that the appeal should be dismissed with costs.
Middleton J.—
This was an action for the recovery of Bs. 8,644.55, claimed asdamages for a breach of a contract as alleged by’ the plaintiff, bywhich defendants bound themselves to buy 10,000 cwt. of mattressfibre at Bs. 2.10 delivered f.o.b., well ballotted, from the plaintiff,between January 1 and December 31, 1905.
The action was originally brought against the defendants alone,but subsequently, by order of the Court, the added defendants weremade parties to the action- The plaintiff pleaded that the contractin question was contained in a memorandum No. 1,064, datedNovember 14, 1904, issued in duplicate, and signed by the addeddefendants as agents and brokers for the contracting parties, to theplaintiff and defendants respectively, and now marked in this actionrespectively P 5 and D 1: that between the months of Januaryand June the defendants purchased from the plaintiff and paid for606 cwt. 2 qr. and 12 lb: of fibre, and in the month of July, 1905,informed the plaintiff they would not buy any more of the said fibre.
The denfendants denied the authority of the added defendants toenter into the contract, as pleaded by the plaintiff, which they allegedwas signed by them without their authority, and denyingany breach, alleged that their authority to the added defendantswas to arrange a contract with the plaintiff for the supply duringthe year 1905 of such quantities of fibre as they might require fromtime to time, for dunnage for the purpose of storing cargo on theBueknall line of steamers; that upon receiving D 1 they immediatelyinformed the added defendants they repudiated it- as not carryingout their instructions, and that thereafter it was verbally agreedbetween the plaintiff and defendants through the added defendantsthat plaintiff should supply to the defendants such quantities offibre during the year 1905 as defendants might require for thepurpose of such dunnage; the defendants reserving for themselvesthe right to accept any fibre for the purposes of duunage withoutfreight from any shipper, and only agreeing to purchase from theplaintiff any fibre they might require for dunnage in excess of thequantity which they might accept for shipping.
The defendants further pleaded that it was on the terms of suchverbal agreement they accepted and paid for the fibre delivered bythe plaintiff as set out in his plaint, and that this quantity, with the
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Nov. 2$,2909 exception of 40 cwt. 3 qr. 19 lb. purchased in error in January, 1905,Middlbton 76 cwt. purchased in March, 1905, owing to plaintiff’s failure toJ* supply the same, was all they required for dunnage as aforesaid, andjtob*mv. that in terms of the said agreement the defendants were not boundAitken,to accept any quantity in excess of such quantity.
Spence ^he added defendants admitted instructions from the defendantsin the terms alleged by them, with the exception that the quantityof fibre required to be purchased was subsequently estimated at10,000 cwt. They pleaded that the plaintiff agreed to the proposalsformulated in accordance with such instructions, and added defend-ants drew up the note in writing, No. 1,064, dated November 14,1904, that upon receipt of D 1 the defendants objected to the formof it as not containing the whole contract intended fcb be effectedthat the added defendants assured the defendants that plaintiff hadaccepted their terms and that the note was subject thereto, and thatthey had further referred -to the plaintiff, who confirmed the saidterms. It was further pleaded by the added defendants that the.defendants and plaintiff subsequently personally arranged betweenthemselves for the supply of fibre on .the above terms, but this pleawas afterwards withdrawn.
[His Lordship then set out the issues, and continued.]
The Acting District Judge held that the main issue in the casein which I agree with him, was whether the written memorandumNo. 1,064, dated November 14, 1904 (P 5), constituted the contractentered into between the plaintiff and the defendants, and if not,what was the contract? Upon that issue he found that the docu-ment P 5 did not contain the terms of the contract, and held thatthe defendants were entitled to establish what the terms of thecontract were, under the provisions of section 92 of ” The EvidenceOrdnance, 1895-
Upon a full review of the evidence he found that the defendantsdid not authorize the making of the contract put forward by theplaintiff, and we intimated to counsel engaged in the- case during theargument that we were in accord with the learned Judge’s findingon this point. The learned Judge further found that the plaintiffwas aware that the actual contract entered into between the partieswas that set out by the defendants and added defendants, and gavejudgment for the defendants, dismissing the plaintiff’s action. Withthe findings of . the District Judge on the facts I see no reason todisagree.
In order to be able to apply section 91 of the Evidence Ordinanceof 1895, which is relied on here by the appellant, to exclude allevidence of any terms of the contract other than those contained inthe document P 5 itself, which he relies on alone, it was necessaryto ascertain what in fact constituted the contract between the parties.The cross-examination of the plaintiff and documents shown to him
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Middxoeton
J.
Robson v.Aitken,Spence
supplied a strong ground for the belief that the terms of the contract Nov. 26,1909
were not reduced into the form of the document P 5, but wereto be found in certain oral arrangements come to between theplaintiff and the agent of both parties, F. W. Waldock, before thebought and sold notes were sent out, and that those documentspurported to be memoranda in writing, but not the contract itself.
This belief is converted into a certainty by the evidence of thebrokers, Burns and Armitage, and I have no hesitation in agreeingwith the conclusion the District Judge arrived at on the evidence thatP 5 was not intended to contain the terms of the contract.
The evidence relied on by the District Judge was unobjectionable,on the ground that parol evidence may be admitted to show thatthe writing which purports to be a note or memorandum of thecontract is not the record of a concluded agreement or does notcontain the real agreement come to (Pym v.. Campbell 1 followed inPattle v. Homibrook2 and Rogers v. Hadley 3). Here the brokerapparently had the authority of the parties to make an oralcontract and to sign a memorandum of it, and there is nothingin the English Law to prevent a contract being substitutedverbally, though bought .and sold notes are exchanged (14 Bombay,p. 102, per Erie and Pullen J.J., in Bivewright v. Archibald, 20 L. J. J.
Q. B. 529). And Ameer Ali, Law of Evidence, p. 715, 3rd edition.states that the Privy Council in disposing of the appeal in DurgaProsad v. Bhajan Lai/ a report of which case I cannot find, heldthat bought and sold notes do not constitute a contract of Bale,but are mere evidence, which may be looked to for the purpose ofascertaining whether there was a contract, and what the terms ofthe contract were.
The broker had not the authority of the defendants to make thecontract in the sense attributed to the bought and sold notes by theplaintiff, but the defendants’ objection to the note was stated, andthe broker communicated with, and ascertained from,- the plaintiffthat he fully understood the terms upon which the contract hadbeen made, and that he did so with regard to free dunnage is, Ithink, apparent from the evidence in the record, as the DistrictJudge finds. Interpreted by the light of- the verbal terms agreedupon by the broker, the quantity of fibre mentioned in the note P 5amount to no more than an estimate, a very wide one, of whatmight be required under the circumstances of the contract duringthe year (Tattered v. Steel Co. of Scotland 5).
If the contract was as the plaintiff contends it is, it seems sur-prising that he was not constantly tendering portions of the 10,000cwt. to be delivered during the year to the defendants at proportionalperiods of time, but we find no evidence of this in the record, but
* (1856) 6 E. and B. 370.3 (1863) 2 H. and C. 227.
3 (1897) 1 Ch. 26.* (1904) 8 C. W. N. 489-492.
* (1890) 15 A. C. 125:
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Robson v.A it ken,Spence
Nov. 26,1909 merely anxiety on the part of the plaintiff that defendants shouldMiddleto,that was. i’eqwed by each ship of the Bucknall hne, and
j. 1 complains , of their” not–doing so on two occasions- I do not think
either that the evidence would justify us in holding that the contractwas ratified by the defendants in the sense attributed to it by theplaintiff.
In my opinion the plaintiff is not entitled to succeed on his appealas against the defendants. As regards the added defendants, Ithink it is clear they made the contract for the defendants as theirdeclared agents in the terms it has been found that the defendantscontend for, and I cannot see hiow they can be liable to the plaintiffon the contract if the defendants are not. As regards a breachof warranty or deceit on the part of the added defendants, there isno evidence cf either- I would dismiss the appeal with costs, andaffirm the decision of the District Judge.
Appeal dismissed.