SANSONI, J.—Thedohanamoorthy v. Nadarajah
Present: Sansoni, J., and H. N. G. Fernando, J.
A. TKEDCHANAMOORTHY and another, Appellants,and A. NADARAJAH, Respondent
S. G. 233/61—D. C: Jaffna, 925jM
Partnership—Liability of a person for “ holding out ” as a partner—Proof.
A person cannot be liable on a contract, on the ground that he held himselfout as a partner, unless he did so before the contract was entered into. Norepresentations made subsequent to the making of the contract can be relevantto the question of holding out.
Appeal from a judgment of the District Court, JaflEna.
S. Sharvananda, with V. Nanayakkara, for the 2nd and 3rd Defendan tsAppellants.
V. Arulambalam, for the Plaintiff-Respondent.
Cur. adv. vuU.
October 29, 1963. Sansoni, J.—
The Plaintiff has sued four Defendants on two causes of action, allegingthat they were carrying on business in partnership under the name, firmand style of “ Northern Cargo Despatch Company ” and/or held them-selves out as partners in the said business. On the first cause of actionhe pleaded that the Defendants as such partners in or about April 1957requested him to transport certain goods and he accordingly transportedthem between 12th April 1957 and 1st May 1957, and he claimed thata balance sum of Rs. 3,191/80 was due on this account. On the secondcause of action he pleaded that the Defendants as partners borroweda sum of Rs. 59/81 on or about 30th April 1957.
S.4NS0NI, J.—Thedohanamoorthy v. Nadarajah
The 1st Defendant in his answer admitted that he engaged the Plain-tiff to transport the goods in question, but be pleaded that the Plaintiffwas only entitled to Rs. 2,182. He denied the other allegations containedin the plaint. The 2nd. 3rd and 4th Defendants in their respective answersdenied the Plaintiff’s allegations and asked that the Plaintiff’s actionbe dismissed with costs.
The main issues on which the parties went to trial are recorded asfollows :—
(a) Were the Defendants carrying on business as partners in
or about April 1957 ?
Did the Defendants hold out to the Plaintiff as partnersin transport business ?
Did the Defendants as such partners request the Plaintiff to
transport for them by lorry gypsum and gunny bags fromthe Customs to the Cement Factory, Kankesanturai, agreeingto pay at the rates referred to in paragraph 2 of the amendedplaint ?
After trial the learned District Judge answered the issues as follows :—
(a) No, but the 1st, 2nd and 3rd Defendants conducted them-
selves in such a way that the Plaintiff believed that theywere carrying on business in partnership under the nameand style of “ Northern Cargo Despatch Company
,(6) The 1st, 2nd and 3rd Defendants by their conduct held outto the Plait tiff that they were carrying on business in partner-ship under the name and style of “ Northern Cargo DespatchCompany
Yes—but only the 1st, 2nd and 3rd Defendants and Dot the 4th
He dismissed the Plaintiff’s action against the 4th Defendant withcosts. He gave judgment for the Plaintiff on the first cause of actionagainst the 1st, 2nd and 3rd Defendants jointly and severally for a sumof Rs. 2,753/80 and costs, and rejected the claim on the second causeof action.
I need not deal in this judgment with the second cause of action since *there is no appeal by the Plaintiff. The question that arises on thisappeal is whether .the 2nd and 3rd Defendants held themselves out aspartners of the 1st Defendant or allowed the 1st Defendant to do that,so as to.make themselves partners by estoppel.
The Plaintiff attempted to prove that there was a partnership betweenthe four Defendants by producing a certificate of registration of a busi-ness described as the Northern Cargo Despatch Co. dated the’ 16thFebruary 1955, where the names of the 2nd, 3rd and 4th Defendantsand three others appeared as partners. But the 1st Defendant produceda notice of cessation of business dated 24th January 1956 given by these
SANSONI, J.—Thedohanamoorthy v. Nadarajah
‘Same six persons, and in view of this notice the certificate of registration *of the partners was worthless. Further, the plaintiff came to know ofthis certificate only about October 1959, so that it could not have operatedas a representation in 1957. An equally irrelevant document producedhy the Plaintiff is an application made by the four Defendants on 20thJuly 1957 for registration of a business called the Northern Cargo Des-patch Company. This again was made long after the time this trans-action took place. The business was never in fact registered in spite•of the application. The learned Judge has found that the Plaintiffwhen he came to know of these two documents thought that the fourDefendants were partners of the particular firm and that be could file-a case against them all, and he properly rejected them.
In order to fix the four Defendants with liability the Plaintiff also-eaid that all four of them saw him in April 1957 and asked him to cany•out the transport work. The position of the 1st Defendant was thathe did request the Plaintiff to dp the work, but that the 2nd and 3rdDefendants were his employees and not his partners. The learnedJudge held that the 2nd and 3rd Defendants were not partners of the1st Defendant. But in view of their admission that they were employeesof the 1st Defendant who were prefert with him when the Plaintiff wasasked to do the work, he has made the 2nd and 3rd Defendants liableon the ground that the Plaintiff w ould have believed that he was workingTor the Northern Cargo Despftch Company of which the 1st, 2nd and3rd Defendants were partners.
Although the Plaintiff said that all four Defendants were present andAsked him to do the work, the learned Judge has disbelieved him whenhe said that the 4th Defendant was also present. He accordingly dis-missed the action against the 4th Defendant. The rejection of the Plain-tiff’s evidenct on this vital matter requires that bisevidei ce on other pointsAlso should be carefully tested, for his credibility cannot be rated high.I cannot accept the learned Judge’s view that because the 2nd and 3rdDefendants were employees of the 1st Defendant who accompanied.him when the contract was made, that was sufficient to make the Plain-Tiff believe that all three were partners. Nowhere has the learned Judgefound that any representation was made by words to the Plaintiff thatthe 2nd and 3rd 'Defendants were partners of the 1st Defendant. Itwas the Plaintiff’s fault if he assumed that two persons, who might well.have been only employees of the 1st Defendant, were his partners.
Two further reasons given by the learned Judge for finding that therewas cause for the plaintiff to believe that the 1st, 2nd and 3rd Defendantswere partners are, firstly, that the 1st, 2nd and 3rd Defendants weretogether when an order -was given by the 1st Defendant to the Manager•of the Vivekananda Press—after the contract was entered into—to printcertain forms for the Northern Cargo Despatch Company at the timewhen the Plaintiff also was present ; and secondly, that the 2nd and3rd Defendants assisted the 1st Defendant when the Plaintiff was carryingout the transport work in question. Now it must not be overlooked
The Queen v- Sumanasena
that the first cause of action is based on a contract said to have beenentered into between the Plaintiff and the Defendants. It is settled-law that no representations made subsequent to the making of the con-tract can be relevant to the question of holding out. 4 person cannotbe liable on a contract, on the ground that he held himself out as a partner,unless he did so before the contract was entered into—see Baird v.Planque 1. It follows that what happened when the order was given to-the printers, and when the work was being carried out by the Plaintiff,,is irrelevant on the first cause of action.
It is significant that the Plaintiff sent a letter of demand only to the'1st Defendant. He also wrote himself to the 1st Defendant askingfor payment. No such letter was written by him or at his instance to*the other Defendants. This also seems to indicate that the Plaintiff’splea that he was led to believe that the 2nd and 3rd Defendants werepartners of the 1st Defendant is an afterthought, and that he regaided.his contract as beirg with the 1st Defendant alone. It is probable thatit was only after he obtained the certificate of registration of 1955 and-the application for registration of July 1957 that he wrongly thoughthe was entitled in law to make the 2nd, 3rd and 4th Defendants liable-as partners of+he 1st Defendant.
I cannot a ccept the learned Judge’s fine ing that the 2nd and 3rd.Defendants are liable as partners of the 1st Defendant. I would set-aside the judgment in so far as it affects the 2nd and 3rd Defendants-and dis niss the Plaintiff’s action against them with costs in both Courts..
H. N. G. Fernando, J.—I agree.
Judgment affecting the 2nd and 3rd defendants set aside_
A. THEDCHANAMOORTHY and another, Appellants, and A. NADARAJAH, Respondent