087-NLR-NLR-V-24-HAYLEY-KENNY-v.-KUDHOOS.pdf
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Present: Be Sampayo and Schneider JJ.HAYLEY & KENNY t>. KUDHOOS.302—D. C. Colombo* 3,120.Insurance—C.i.f. Contract-—Indent for goods from England—No separatepolicy of insurance—Arrival of goods—Tender of goods, but nopolicy of insurance—Is defendant bound to accept goods!
The plaintiffs anddefendantentered intoA c.i.f. contract,
whereby the plaintiffsagreed toindent forcertain goods from
England for the defendant. Thegoods dulyarrived in Colombo,
and- were tenderedto ' the defendant,butno policy ofinsurance
was tendered. The. defendant failed to take delivery, but didnot state the absence of a policy of insurance as a ground of"refusal.
Held, that the defendant was not bound to accept the goodB.
In accordance with the ordinary incidents of a c.i.f. contract,'the plaintiffswerebound- to effect aseparate insuranceover" the
goods ordered by thedefendant,and tenderto him the policy
of insurance before they sought to enforce the contract against him.
The tenderof acertificate of insuranceinstead of apolicy of
insurance isnota compliance withtherequirementsof c.i.f.
contract.
1922;
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1888.
Hayley tbKenny v.Kudhooe
f |1HE facts are set out in the judgment.
Drieberg, K.C. (with him Hayley), for plaintiffs, appellants.
Samaravxckreme (with him F. H. B. Koch and Canakeratne), fordefendant, respondent.
Gut. adv. vult.
December 21, 1922^ Dm Sampayo d-—
I'his case involves a question as to the rights and obligationsarising out of a contract entered into by the defendant with theplaintiffs, Messrs. Hayley & Kenny, on April 19, 1920. The plaintiffs. are a firm of merchants, and part of their business is to indentfor goods from England and elsewhere in Europe on the orders oflocal traders. The defendant is a hardware merchant, carrying on-business in the Pettah of . Colombo. The contract is contained inthe document marked A, which is in the printed indent form ofthe plaintiffs, with the description of the goods .and certain otherparticulars written at the bottom. As much of the argument onthe appeal related to the construction of this document, it is con-venient to quote it in full. It is as follows: -—
Inbent fob c.i.f. Impobt Business.
I /we, theundersigned, I.L. Abdul Kudhoos, hereby request
Messrs. Hayley & Kenny to order and import for my/our accountand risk the whole or any part of the goods mentioned herein-after at the prices and on the terms noted below.
Price to include cost, freight, and insurance, but duty and .ah
landing and Customs charges to be- paid by the indentor. Pay-ment cash in Colombo in Ceylon 'currency on presentation ofshippingdocuments, orshould such documentsbedelayed,
paymentto be made on the day . goods arriveinColombo.
Messrs.Hayley & Kennyare not responsible . forlosssustained
through the late arrival of documents.
For goods sold in sterling currency the current rate of exchange
on the day of payment will be taken.
Should I/we fai/ to pay for the goods as arranged above, Messrs.
Hayley A Kenny may land, clear, and store the goods at my/ourexpense and risk, and may at any time thereafter and withoutonly special notice to me/us sell the goods on my /our accountand risk, either.by auction or by private sale, and I/we agree tomake good tb them immediately any loss and expenses incurredthereby, and also to pay them – in addition 3 per cent, re salecommission and j per cent, re sale brokerage.
Messrs. Hayley & Kenny are not responsible for late or non-
shipment of goods in consequence of war, accidents, or lossduring sea and/or land transport, ice blockades, quarantines,strikes, bankruptcy, fire at manufacturer's works, breakdownof machinery, or other causes of force, majeure.
1988.
( 260 )
I/we agree that we will not make any claim for late shipment ifsame be only two weeks after the specified time. The dateof the bill of lading will be accepted by me/us as conclusiveevidence of' the date of shipment without ,further proof beingrequired. If goods were readv for shipment within contracttime,were shut out or have to wait for the steamer, such
goods to be shipped by the first available steamer, and I/weagree to accept them without making a' claim. Should thegoods be shipped before the time stipulated, I/we agree to payfor them as arranged above, but with an allowance for interestat the rate of 6 per cent, per annum for the time shipped tooearly.
The weight of the goods as specified in the shipper’s invoice
shall be accepted by me/us as the correct weight thereof, andthe goods shall be paid for on that basis, any loss in weight beingborne by me/us.
Messrs. Hayley 4. Kenny or their agents are to' effect marine
insurance F. P. A. on the said goods with some good InsuranceCo., the solvency of which they shall, however, not be deemedto guarantee for the full invoice value of the said goods (unlessotherwise agreed inwriting),otherwise all goodsshallbe at
my/our sole risk from the time when same shall be put onboard ship at theport from which shipmentisfirstmade,
and Messrs. Hayley A Kenny shall be in no way responsibletherefor:
All complaints regarding the goods to be made in writing within. seven days from' arrival of the goods.
Each shipment and/or separate item under this order to be
separate contract.
Messrs. Hayley & Kenny are not responsibleforanyerrors
caused by mutilated or incorrectly interpreted telegrams.
Disputes of whatevernature -arising out of thiscontractto be
referred to the arbitration of two gentlemen from the list ofsurveyors and arbitrators nominated by the Ceylon Chamberof Commerce, one to be chosen by each party, whose decisionI/we agree to accept as binding and final, but should the twoarbitrators be unable to .agree, they shall refer the case to anumpire, .whosedecision shall befinalandbinding uponboth
parties. If bymutualagreementonlyonearbitrator is chosen,
his decision shall be final and binding upon both parties.
In case I/we fail to nominate an arbitrator within three days fromthe time, I/we have been requested by Messrs. Hayley A Kennyin writing to do so,. Messrs. Hayley A ‘ Kenny are -at libertyto nominate an arbitrator for me/us, and I/we agree to accepthis decision on my /our behalf.
Arbitrator’s fees areto beborne bythepartyagainst whomthe
derision is given.
The acceptance of this order shall be made known to me/us byMessrs. Hayley A .Kenny within …. days from thedate hpreof, failing which, this order shall be- deemed cancelled.•Notice of acceptance shall be taken as sufficient if sent by postto my /our place of business.
Messrs. Hayley A Kenny shall be entitled to receive from me/usa commission of …. . per cent. 1 on the full invoice- amount, whilsttheirEuropeanor otherrepresentativeshave
to find their remuneration on the selling prices .of the goods,
Db BampayoJ.
Hayley <tKenny e.Kudhoog
( 270 )
m
Pb SasspayoJ.
HayleyKenny v.
Kudnoos
We hereby bind ourselves jointly and severally to perform the■ several conditions and covenants hereinbefore contained.
Anything written in the vernacular, except a plain signature, shallvbe null and Void.
I/we undertake to give Messrs. Hayley A Kenny full instructionsas to get-up, stamping, marking, packing, Ac., of the goods,immediately after acceptance of the order, but should I/we faitto do- so, Messrs.. Hayley k Kenny are at liberty to use theirrn discretion in these matters.
(Sgd.) I. Li. Abdul Kudboos.
From William Tell Brand.
112} Twelve and a half tons galvanized plain sheets, sizes as belowat seventy-three pounds four shillings.
j£73. 4s. per ton c.i.f., Ac.
8 tons 8 X 8 = 26 gauge.
4 tons 2 x 8 = 26 do.
} ton 2} x 8 = 26 do.
12}
Shipment : As soon as possible.
Terms: Payment in cash before delivery, or at seller's option byapproved pro-notes at 90 days’ sight at ruling rate of bank,interest. -’'
]
Mark :
(Sgd.)- T. Mubugesu.
Accepted 20/4/20.
Per pro Hayley A Kenny,.
(Sgd.) —-
The plaintiffs allege that the -goods arrived at Colombo on orabout October 13, 1920, and were duly tendered to the defendant,and that the defendant in breach of – his contract failed to takedelivery of and.pay for the same, and they claim Bs. 7,332.57 beingsthe difference between the contract price and the amount realizedwhen they were sold by auction at the defendant’s risk, togetherwith a certain sum as interest.. The defendant pleaded, inter aha,that the plaintiffs could not and did not tender an effective policyof insurance covering the galvanized sheets ordered by him, andhe was, therefore not bound to accept the goods. The DistrictJudge upheld this ground of defence, and dismissed the actionwith costs, and the plaintiffs have appealed.
It is admitted that no policy of insurance was tendered to thedefendant, and that the insurance which the plaintiffs effectedcovered not alone the goods. in question, but also other goods
( 271 )
ordered by others on separate indents. The law is clear that in1803.
the ease of c.i.f. contracts a policy of insurance must be delivered^j^Avn
by the vendor together with the ordinary shipping documents. J-
Mambre Saccharine Co., Ltd., v. Com Products Co., Ltd.,1 and Wilson jjayley
Holgate & Co. v. Belgian Grain & Produce Company.2 The first of
these cases shows that the purchaser is entitled to have delivered
to him a policy of insurance which covers only the goods mentioned
in the bills of lading and invoices. But it is contended on behalf
of the plaintiffs that the indent constituted a contract of agency,
and not a contract of puurchase and sale, and that ■ the defendant
could not refuse to accept the goods, but would have only a claim
for damages if the plaintiffs had violated any part' of their duty,
and the judgment of Lord Blackburn in the leading case of Ireland
v. Livingstone 3 is cited in this connection. The indent in this
case no doubt is in form a contract of agency, but it is noticeable
that the order is to supply the goods at a settled price, which is to
cover cost, insurance and freight, and .commission. Thus, if the
plaintiffs were able to procure the goods at a less price, they would
be under no obligation to reduce their claim, nor, if they had to
pav a larger price, would they be able to claim anything more than
the price agreed upon. The gain or loss, as the case may be, would
be the plaintiffs' own, and this is inconsistent with the essence of
a contract of agency, as explained in Ireland v. Livingstone (supra) ^
In this, as in that case, there is no relation between the defendantand the consignor in England, who was wholly unknown to thedefendant, and unless the plaintiffs were considered the vendorsto the defendant, there would be no one from whom the title to thegoods could pass to the defendant. I think that the plaintiffs, toall intents and purposes, are in the position of vendors to thedefendant and are bound to observe the obligations Of a contracton c.i.f. terms. Even if the contract were really one of agency,there is, I think, no difficulty in attaching to the plaintiffs the sameobligations. Any controversy on this head, however, is concludedby the position which the plaintiffs themselves .took up in bringing,the action, for their plaint stated that by the indent in question*■* the plaintiffs sold and the defendant bought 12£ tons of galvanizedplain sheets at £73. 4s. per ton c.i.f. and c. ” I think that inaccordance with the ordinary incidents of a c.i.f. contract, theywere bound to effect a separate insurance over the goods orderedby the defendant, and tender to him the policy of insurance beforethey sought to enforce the contract against him.^
The plaintiffs, however, pressed two points which they contendedrelieved them from that obligation. They sought to establish acustom among merchants in Colombo, according to which themerchant who executes an indent may effect one policy of insuranceover the goods of several parties and likewise retain the policy and
a {1919) 1 K. B. 198.* (1920) 2 K. B. 1.* 41 L. J. Q. B. 205.
( 272 )
1982.
Db SawpayoJ.
Hayley 4Kenny v.Kndhooe
recover on it in case of necessity on behalf of the indentors and notdeliver it unless asked for. The evidence on this point ist 1 think,insufficient to establish a definite invariable custom, even if a localcustom can override the general rule of mercantile law. Thewitnesses called, were Mr. C. G. Simpson, an assistant in the plaintiff'shim, and Mr. K. G. Carolis Silva, a clerk employed by the plaintiffs,and Messrs. Joliffe, Cunningham, and Thalmand, members orassistants of three other films. Mr. Simpson says: “ The policywas in London. We had a certificate of insurance. It is keptwith us in case of a claim on the part of defendant. We wouldhave a claim on the insurance company …. It has neverbeen the practice to give the actual policy to the indentor., ” and inanother passage he says: “ He (the defendant) never at any timeasked for the policy of insurance. ” Mr. Garolis Silva says: “ Thepolicy of insurance or certificate of insurance is usually held in theoffice till it is called for by the buyer. If the goods are damaged,and the buyer wants to make a claim, he asks for the insurancepolicy. If not, he does not ask for it. We have not had claims.Unless asked for we do not tender the policy of insurance. " Thedefendant's counsel objected to any question regarding any custom.The District Judge overruled the objection, and the witness wasasked: *“ As far as you know, is it the custom to surrender thecertificate or policy unless they are asked for ? ” His answer was'* No. " Mr. Joliffe says: “ We have never handed the policy ofinsurance to the buyer. We have never been asked for it ….
As' far as my knowledge is concerned, I should say. that it is not thecustom for firms and importers to. hand over -the insurance policyto the indentor. ” Mr. Cunningham says: “ The insurance policyis very seldom asked for, and we never tender it unless asked for.We very seldom get the actual policy. Our agents in Englandhave a floating insurance, against which they issue a certificate. . . . If the indentor of goods insured with a floatingpolicy asks for the policy, we present him with the certificate. "Mr. Thalmand, who is an assistant of Messrs. Volkart Bros., says:“ I am well acquainted with the method of their' import business…. We never give him (the indentor) the insurance policy
. The indentor has not the right to ask for the policy,but the giving of the certificate would be sufficient compliance with,the request. " The last witness called for the plaintiffs is Mr. C. E.Ekaiiayake, who is a clerk of Messrs. Darley, Butler & Co. Hesays: “ Sometimes we get the actual policies of insurance, sometimescertificates …. I 'Ho not remember a case in which I gavea policy or certificate of insurance! In that case, if he. asked forthe insurance policy, I would give him the certificate.
It seems to me that these witnesses practically speak of thepractice of their respective firms, and not of a general local custom,and there does not appear to be any uniformity in the practice.
( 273 )
As regards the giving of a certificate of insurance, it is clear lawthat the tender of a certificate, instead of a policy of insurance,is not a compliance with the requirements of a c.i.f. contract.Diamond Alkali Export Corporation v. Bourgeois. 1 In answer to thedifficulty tftat the policy effected by the plaintiffs was not .overthe defendant’s goods only, but covered other goods, counsel forthe plaintiffs stated that if a proper policy had been asked for, they^ might have got one from the Insurance Company and given it todefendant. The possibility of this is problematical, and, moreover,the question is not what the plaintiffs might have done, but whatthey did or rather what they did not do before they claimed damagesfrom the defendant..
The other point relied on by the plaintiffs is one of estoppel. Thegalvanized sheets ordered by the defendant were of the “WilliamTell” brand. The plaintiffs’ agents in England in Septemberinformed the plaintiffs that the goods were shipped by thess. “ Dorsetshire, ” and the plaintiffs passed on that informationto the defendant. But it was soon discovered that the plaintiffs’agent had made a mistake, that the galvanized sheets shipped bythe ss. ** Dorsetshire ” were of the ” Sunflower ” brand intendedfor another indentor, and. that the “ William Tell ” sheets werecoming by the ss. “ Makalla. ” The defendant was notified of thisand when the ss-.' “ Makalla ” with the defendant’s goods arrived,they were tendered to the defendant. The defendant took up theposition that the ss. '* Dorsetshire ” shipment had been tenderedto him in execution of his indent, and he refused to accept the ss.” Makalla ” shipment. The plaintiffs contend that the absence ofa policy of insurance not being stated as the ground of refusal; there,was a waiver, and the defendant is estopped from setting up hispresent clefence. It is a well-known rule of law, however, that aparty who gives a wrong reason for his refusal is not thereby deprivedof a justification which in fact existed. Bmithwaite v. ForeignHardwood Company, 2 which has been cited is no real authority tothe contrary. That case was explained in Taylor v. Oakes 3 asdeciding no. more than that “ a buyer cannot justify his refusalof an offer to deliver goods under the contract by proving that ifhe had not refused the goods when delivered would .not have beenin accordance with the contract, ” and as not being intended todecide that if goods are tendered for acceptance .to the buyer andrefused by him for an untenable reason, he is liable for damagesfor his justifiable refusal, because he gave a wrong reason for it.
I think, therefore, that the plaintiffs’ plea of estoppel fails.
In my opinion the appeal should be dismissed, with costs.
Schneider J.—I agree.
Appeal dismissed.
1 {3931) 3 X. B. 443.* {1935) 2 K. B. 543..
a {2922) Times Law Reports, 349:
Ip
1922.
Dk SampayoJ.
Hayley <frKenny e.Kudhooe