036-NLR-NLR-V-36-ASSEN-CUITY-v.-BROOKE-BOND-LTD.pdf

170
Assert Cutty v. Brooke Bond Ltd.
defendant alleged that the tea delivered on P2 was found on examinationnot to correspond to sample, that he had rejected the same and that theplaintiff was liable to repay the sum of Rs. 675.
The learned District Judge awarded plaintiff a sum of Rs. 1,311.69 andcosts and dismissed the defendant’s claim in reconvention.
Hayley, K.C. (with him Gratiaen), for defendant, appellants.—The saleon all three contracts was by sample. The tea delivered under contractP5 was very much below sample and the appellants were justified inrejecting it. (Section 15, Sale of Goods Ordinance, No. 11 of 1896.)Further, when the rejection of the tea was communicated to the respond-ent’s agent he acquiesced by asking the appellants to give back the tea.Where the buyer has refused to accept the goods he is not bound to returnthem to the seller. Therefore the fact that the rejected tea was lying atthe store of the appellants does not amount to an acceptance by them. Thelearned District Judge was wrong in awarding him any sum whatsoeveron the tea delivered under contract P5.
The sum of Rs. 874.69 paid by the appellants and refunded to themby the respondent is reclaimed by the respondent on the ground thatthere was a failure of consideration. The question of consideration doesnot arise here as the refund of the sum of Rs. 874.69 was outside anycontract for the sale of goods and must therefore be governed by theCommon law. There was adequate cause for the refund, for the respond-ent paid the money hoping that the threatened prosecution would beabandoned. Further, a person paying money which in law he is notbound to pay and in circumstances implying that he is paying it voluntarilycannot recover it. (Maskell v. Homer.')
The bulk of the tea delivered under contract P 2 did not correspondto sample. Out of 33 bags only 8 were up to sample. The appellantshave paid for the lot at contract price and are therefore entitled to a refundas there has been a breach of warranty of quality.
H. V. Perera (with him D. W. Fernando and J. L. M. Fernando), forplaintiff, respondent.—The appellants although they refused to acceptthe tea on contract P 5 retained the tea in their store and refused toallow the respondent to take it away. This is an act “ inconsistent withthe ownership of the seller”, and in these circumstances the appellantsare deemed to have accepted the tea. (Section 34, Sale of GoodsOrdinance ; Chapman v. Morton').
The consideration for the refund of Rs. 874.69 was the return of thetea delivered under P 1. The appellants have failed to return the teaand the respondent is therefore entitled to reclaim that sum.
There is no breach of warranty of quality as regards the tea deliveredunder P 2. Even though the bulk did not correspond with sample thetea was not' unmerchantable. More than one year has .elapsed since thedelivery under contract P 2 and no claim can be maintained for a refundof the purchase price in view of the provisions of section 9 of thePrescription Ordinance. (Horsfall v. Martin*.) 1
1 (1925) 3 K. B. WG.2 12 A/- lt 534.
L. B. 70.
MACDONELL CJ".—Assen Cutty v. Brooke Bond Ltd.
171
Hay ley, K.C., in reply.—The term merchantable in contracts for thesale of goods means “ reasonably fit for the particular purpose for whichit is bought”. (Jones v. Just1; Randall v. News on) The tea here wasbought for the purpose of export and the tea delivered under thesecontracts was not fit for that purpose.
Section 9 of Ordinance No. 22 of 1871 contemplates cases of goods soldand delivered and not as here cases of breach of warranty of quality.The section that applies to this claim in reconvention is section 8. Thedifference between these two sections is discussed in a number of cases.See Campbell & Co. v. Wijesekera3; Markar v. Hassen *; Robson v.Aitken Spence & Co."; K. P. V. Louis de Silva v. A. P. Don Louis9;Rodrigo v. Jinasena & Co.'.
Cut. adv. vult.
April 24, 1934. Macdonell C.J.—
In this case the plaintiff sued for the recovery of Rs. 1,174.77 for teasold and delivered to the defendants on September 24, 1930, and for therefund of a certain Rs. 874.69 paid by them to the defendants onSeptember 25, 1930, and the defendants claim in reconvention Rs. 675.04,being portion of a certain Rs. 897.40 which the defendants paid to theplaintiff on September 20, 1930, for tea sold ami delivered to them onthat date.
The plaintiff’s business was to sell tea and the business of the defendantcompany was to buy tea for export. On September 13, 1930, the defend-ants on a contract P 1 bought from the plaintiff through a broker 4,000 lb.of tea dust in chests, at 25 cents a pound, and on September 16, 1930,the plaintiff did deliver 3,994 lb. to the defendants in 40 chests. Thishad been a sale by sample, and on delivery the defendants examined2 out of the 40 chests, found them equal to sample and accepted the 40chests delivered to them. They forthwith paid to the plaintiff Rs. 874.69,the agreed-on price. On September 18, 1930, the defendants agreed onP2 to purchase from the plaintiff 3,500 lb. of broken pekoe at 28 centsa pound. This also was a sale by sample. On September 20, the plaintiffdelivered to the defendants 3,604 lb. in 33 bags. On delivery the defend-ants opened 8 of the 33 bags, found them up to sample, accepted thedelivery and paid the plaintiff the agreed-on price, Rs. 897.40 ; it is aportion, Rs. 675.04, of this sum which the defendants claim in reconven-tion. On the same September 20, 1930, the defendants on contract P 5agreed to buy 5,000 lb. of tea dust from the plaintiff at 26 cents perpound. This also was a sale by sample. On September 24, 1930, theplaintiff-delivered .5,140 lb. of tea dust , in 54 chests. The price of thisconsignment was Rs. 1,174.77 and plaintiff claims payment of it. Thedefendants examined 8 of these on delivery and found that the contentswere above 'sample. This made them suspicious. They examined theother chests delivered under this contract P 5 and found the contentsquite inferior to the sample. Later on they made a further examinationof the chests delivered on contract P1 and of the bags delivered oncontract P2 and found that those contents also were very much below
i L. R. 3 Q. B. 197.*2 N. L. R. 219.
*2 Q. B. D. 102.*13 N. L. R. 11.
* 21 N. L. R. at 43r>.« 4 S. C. C. 89.
– 32 N. L. R. 322.
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MACDONELL CJT-—Asaen Cutty v. Brooke Bond Ltd.
sample. The defendants communicated with the Criminal InvestigationDepartment suggesting a prosecution for fraud, and next day, September25, they interviewed one Meeran, a clerk of plaintiff, and one Seyadi AliCutty, who describes himself as attorney for the plaintiff, complained ofthe worthless character of the tea delivered under each of the three-deliveries, stated that they were moving the Criminal InvestigationDepartment to institute a prosecution, and also that they rejected thetea delivered under P 5. Seyadi Ali Cutty then asked defendants togive him back that delivery of tea. This was a clear refusal by buyerto accept, acquiesced in by the vendor, plaintiff. The defendants’representatives then went again to the Criminal Investigation Depart-ment, leaving Meeran, the plaintiff’s clerk in their office, and on theirreturn about midday one of them found on his desk an uncrossed chequefor Rs. 874.69 which the defendants at once cashed. This was theamount previously paid by the defendants on P 1 and is the sum of whichplaintiff claims the return. It would appear that the defendants hadasked for a return of this Rs. 874.69, paid by them on the delivery P 1,and that one of the plaintiff’s representatives had said earlier in themorning that he would let the defendants have “ some money ”. Laterin the day, according to one witness for the defendants, Meeran’s attentionwas specially drawn to the quality of the tea on delivery P 2, and he saidhe would send a cheque refunding payment on that delivery, but no suchcheque was sent.
The remaining facts are these. The defendants did not return to theplaintiff anyone of the three consignments of tea delivered on P 1, P 2,or P 5. They received “ advice ” from the Criminal InvestigationDepartment not to do so lest it be tampered with before the prosecutionof the plaintiff, and when plaintiff asked for a return of the tea delivered,the defendants refused. The defendant’s manager says that acting onadvice from the Criminal Investigation Department he did not returnthe tea delivered on P 1 and P 2, and that on the same advice he did notallow plaintiff to take back the tea delivered on P 5; we may take it thenthat there were refusals to deliver these consignments or any of them.This was unfortunate, at least with regard to the tea delivered on P 5acceptance of which had been refused with the acquiescence of theplaintiff. The defendants having refused acceptance of that tea werenot bound to return it to the plaintiff, the seller (Ordinance No. 11 of 1896,' 'section 35), but "they were bound not to put obstacles in the way of theseller retaking possession. If "'the Criminalrtnvestigation Departmentwanted to detain the tea for the purposes of a prosecution, it was for thatdepartment to take such action as might be necessary, not to get someoneelse to shoulder its responsibility. Most of defendants’ difficulties in thiscase arise from their refusal to let plaintiff retake possession of the teadelivered to them by the plaintiff.
The plaintiff prosecuted certain members of the defendants’ firm forextortion under section 372 of the Penal Code, also in another case undersections 333 and 486 of the Penal Code, but when the cases came up fortrial the complainant’s lawyer said he was not ready and asked for anadjournment which was refused, the accused in each case being thereupondischarged.
MACDONELL CJ.—Assen Cutty v. Brooke Bond Ltd.
173
A criminal prosecution was instituted by the Criminal InvestigationDepartment against Seyadi Ali Cutty and he was convicted by theMagistrate, but the conviction was set aside by the Supreme Court onthe ground that it was not proved that he personally had knowledge ofthe fraud. In the meanwhile, on November 12, 1930, the plaintiff hadcommenced the present action.
The evidence in the case with regard to the tea delivered on P 1 wasthat it was “ very inferior", “ not to be recommended for sale", andthat “ it might be described as rubbishy tea With regard to thatdelivered on P 2, the evidence was that 8 bags agreed with sample andthat the remaining 25 bags could have been sold in the market at a purelynominal price and that tea of that description is not sold in the marketat all. With regard to the tea delivered on P 5, the evidence was that itcould have been sold possibly at 5 or 6 cents a pound and that it wasvery difficult to find a market for it at all. The witness as to the qualityof the tea said in answer to the Court, “ The samples of tea I examinedwere of baggy quality ”, and he had previously explained that by “ baggy ”it meant tea with a musty flavour caused by damp or age of the tea.From this evidence it is clear that plaintiff on these contracts of sale bysample failed to comply with section 15 of the Sale of Goods Ordinance,No. 11 of 1896—
** (2) In the case of a contract for sale by sample—
There is an implied condition that the bulk shall correspond withthe sample in quality ….
(c) There is an implied condition that the goods shall be free fromany defect, rendering them unmerchantable, which wouldnot be apparent on reasonable examination of the sample ”.
It could not be denied that the bulk of the goods delivered did notcorrespond with the sample, but it was argued that though they mighthave had a defect “ not apparent on reasonable examination of thesample ” still this did not “ render them unmerchantable ”, since on theevidence they could be sold though at a very low price. This does notseem to be a correct apprehension of the word “ unmerchantable Jonesv. Just1 was a case where hemp damaged by sea water when sold by thebuyer fetched 75 per cent, of the price which similar hemp would havefetched if undamaged (owing to a fortuitous rise in prices the amount itsold at was not far short of the invoice price), yet it was held to have beenproperly left to the Jury to say if the hemp, after such damage, wasmerchantable. “ If the subject-matter be merely the commercial articleor commodity, the undertaking is that the thing offered or deliveredshall answer that description, that is to say, shall be that article, saleableor merchantable. If the subject-matter be an article or commodity tobe used for a particular purpose, the thing offered or delivered mustanswer that description—that is to say, it must be that article or com-modity and reasonably fit for the particular purpose.”—per Esher M.R.in Randall v. Newson *. Here the particular purpose was that the teashould be exported, or at least that it should be sold as broken pekoe oras tea dust, and on the evidence it was clearly not fit for either of those* L. R. 3 Q. B. 197.'3 2 Q. B. D. 102.
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MACDONELL C.J.—Assert Cutty v. Brooke Bond Ltd.
purposes. Saleability at a very reduced figure does not make an articlemerchantable, and the wording of issues 2 and 13, “ Was such and suchtea unmerchantable and of no commercial value ? ” was ambiguousand quite possibly misled the Court below.
The plaintiff, as has been said, sued the defendants for Rs. 1,174.77,the price of the tea delivered on P 5, and for the return of the Rs. 874.69repaid by him to the defendants on P 1 on the ground that this refundhad been obtained from him by coercion and threats. The District Judgegave him Rs. 437 on his claim on P 5; that is to say, he declined to givethe plaintiff the contract price but went into the question of what the teawas actually worth and gave plaintiff judgment on a quantum meruit.The evidence was ample to enable him to decide the whole question ofvalue, and the amount of his finding, Rs. 437, is not challenged by defend-ants. He also ordered defendants to refund the Rs. 874.69 on P 1 notbecause it had been obtained by coercion or threats but because in theabsence of the return of the tea delivered on P 1, there was no considera-tion for this refund.
First as to the claim on P 5.
This delivery on P 5, save for the 8 chests found to be above sample, hadbeen rejected by defendants on September 25, 1930, the day after it wasdelivered to them, and the plaintiff’s representative by asking for returnof the goods had acquiesced in the rejection. But we were invited to saythat in spite of these facts there had been an acceptance by defendants anaccordance with section 34 of the Ordinance No. 11 of 1896.“ The buyer is
deemed to have accepted the goods when he intimates to the seller that hehas accepted them or when the goods have been delivered to him, and hedoes any act in relation to them which is inconsistent with the ownershipof the seller, or when after the lapse of a reasonable time he retains thegoods without intimating to the seller that he has rejected themHere, there had been words by the defendants, the buyers, consistentwith a rejection but they had followed up these words by an act, refusal toallow plaintiff, the seller, to retake possession of the goods and this was“ an act in relation to ” the goods, “ inconsistent with the ownership ofthe seller”; consequently, it was argued, there had been an acceptanceby the defendants, the buyers, within section 34. I think, as was saidby my brother Garvin in the course of the argument, that the act incon-sistent with the ownership of the seller must be done while there is still asubsisting contract between the parties and before anything has been done,such as a rejection of the goods by the buyer, to put an end to the contract.Consider the section as a whole. It shows how, when goods are tenderedon a contract of sale, there can be an acceptance of them, and it saysthere is acceptance, explicity, if the buyer does accept, or implicitly, ifthe buyer (1) does an act inconsistent with the vendor’s ownership, or(2) retains the goods and does not within a reasonable time intimate thathe has rejected them, since from such act (1) or omission (2), acceptanceis a necessary implication. But the assounption underlying the wholesection is that for it to apply there must be a contract still subsisting.Test the argument yet further. If the facts are as in the present case,namely, delivery, and an acceptance and receipt sufficient to satisfy therequirements of section 4 and to make the contract enforceable, and then
MACDONELL C.J.—Assert Cutty v. Brooke Bond Ltd.
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a definite rejection of the goods by the buyer acquiesced in by the vendor,then the contract is at an end. We will suppose—an illustration put inthe argument on this appeal—that the vendor as in this case leaves thegoods in the custody of the buyer but that he says he will send for themin a day or two and that the buyer receives a call from a friend urgently inneed of similar goods and that he, the buyer, most improperly allows Hiefriend to take possession of the goods and, let us say, remove them. He,as also the friend, is liable, but for a conversion of the goods. But it wasargued to us that the vendor has a choice of remedies, for the conversion,or on the original contract of sale. Suppose the same facts, namely,delivery of goods on a contract, rejection by the buyer, goods left tem-porarily in the buyer’s possession, and later in the day the buyer intimatesto the vendor that he has changed his mind and will accept the goodsafter all. Could he retain them without getting the vendor’s consent?Clearly not, for the original contract was put an end to by his rejectionearlier in the day, and if he now become the buyer of the goods, this willbe by virtue of a new contract, his now offer to accept now agreed to bythe vendor. And suppose that the price of similar goods has risen in themeantime and the vendor’s reply to the buyer is that he may have thegoods but at the now higher price, could the buyer claim to have them at.the price named in the original contract ? If not, then on the argumentput to us he would be bound to take the goods because he had done an act" inconsistent with the ownership of the seller ”, original contract, yet ata higher price, new contract. An argument which necessitates theseadmission must be regarded with doubt.
The only case cited to us in support of it was Chapman v. Morton the purport of which was that where a buyer had used words capable ofmeaning that he rejected the goods but had gone on to negotiate withthe seller about the quality of the goods and had finally advertised thegoods for sale, it was rightly left to the Jury to say whether there had beena rejection or an acceptance. It is to be noted that learned Counsel hadto go back to 1843 to find a case in support of his argument, a case toowhich does not seem to have been followed. It is far earlier than theSale of Goods Act or our own Ordinance No. 11 of 1896, and if it is infavour of the argument he put to us, I must respectfully decline to follow it.
The reason for this argument, pressed upon us with much ingenuityand at great length, was this. The trial Judge had given plaintiff on P 5not the contract price Rs. 1,174.77 but what the goods were worth,Rs. 437 in accordance with the evidence as to their value. If, however,the refusal by defendants, to allow plaintiff to retake the tea of P 5 was an“ act inconsistent with the owemship of the seller ”, and so an acceptanceof the goods within section 34, it would have been the duty of the trialJudge to give judgment for the plaintiff for the whole amount of thatdelivery, leaving the defendants to counter-claim in reduction on a breachof warranty which they would be too late now in doing since it would,be argued that such a claim as prescribed under Ordinance No. 22 of 1871.
I did not understand that the defendants in this appeal contested thedecision of the learned trial Judge as to P 5, namely, that plaintiff wasentitled on it to Rs. 437. Then this part of the judgment below must stand.
1 11 M. & W. 634, 163 B. R. 917.
176MACDONELL O&.—fassen Cutty v. Brooke Bbndv Ltd.
There is next to cons^ier> the decision as to the- Rs. 874.69 paii bydefendants on P 1, refunded to them by plaintiff and now reclaimed byplaintiff as having been'^obtained by coercion and threats. The learnedtrial Judge does not accept the plaintiff's account of how this amountcame to be repaid to defendants, but he says “I can find no other con-sideration for this return except the promise to return the tea. As thistea was not returned the consideration for the cheque has wholly failedand the plaintiff is entitled to its return ”. With all respect, this con-clusion dose not seem to follow. First of all, plaintiff put his case onextortion and not on failure of consideration at all. Further, I amdoubtful if consideration enters into the question. Sales of goods withus are regulated by Ordinance No. 11 of 1896 which is identical with theEnglish Sale of Goods Act, then in sales of goods consideration is anessential. But this refund of Rs. 874.69 was outside any contract forthe sale of goods. The contract of sale P 1, in which the price of the teadelivered was the sum of Rs. 874.69, was at an end ; there had beendelivery of the goods the subject of the contract, acceptance of them,and payment for them. If the plaintiff’s contention had been that hepaid the Rs. 874.69 to rescind that contract, and regain possession of thetea he had delivered, then the transaction would be under the Ordinanceand its validity could be tested by the presence or absence of considera-tion, but this is not the plaintiff’s contention either in his plaint or in hisevidence. Then the transaction falls outside the Ordinance altogetherand is one to be ruled according to the Common law, and we must inquire,not if there was consideration for this repayment but if there was anadequate causa, and in doing so we remind ourselves that the notion ofconsideration is that of an act or forbearance capable of being estimatedin terms of money while that of causa involves a purpose. Was a promisemade or an act done serio et deliberato animo—Vinnius III. 14.2, section 11, .quoted by Lee (3rd ed.) p. 432 ? If it was, and if the promise made or actdone is capable of legal consequences, then there is causa. Now herethere was no doubt whatever of the “ serious and deliberate intent ” ;plaintiff paid the money hoping that he would thereby get some advantage—the abandonment of the threatened prosecution, or the saving of hisown repute as a trader, or possibly that there would at least be no troubleover the delivery on P 2—and there was unquestioned causa for thepayment.
During the argument, it was suggested that this refund of theRs. 874.69 by the plaintiff was not a “ voluntary ” payment but there isnothing in the evidence to show that it was not voluntary. Maskell v.Homer1 was cited to us. In this case Lord Reading C.J. said at p. 118,“ If a person with knowledge of the facts pays money which he is not inlaw bound to pay, and in circumstances implying that he is paying itvoluntarily to close the transaction, he cannot recover it ”. The refundhere seems a clear instance of a voluntary payment with full knowledgeof the circumstances, and it cannot be recovered. The decision that thispayment of the Rs. 874.69 must be refunded by the defendants is not wellfounded and must be set aside. i
i (1916) 3 K. B. 106.
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M^ACpONELL, C.J.—Assert Cliffy v. Brooke Bond Ltd.
*'*1■—■
If the plaintiff had been content to ask for the value of the tea deliveredon P 1, or had asked for it in the alternafcive'to his claim for a refund ofthe Rs. 874.69, then it might have been possible to give him something,a quantum meruit, on that delivery P 1, but he did not make any suchclaim, and I do not see how we could adjudicate on such a claim now.There is no finding in the judgment that I can discover as to the value ofthe tea delivered on P 1, and there is also the difficulty that the claimwas not made either in the pleadings or in the issues, as also the questionof prescription.
There remains that part of the judgment affecting the delivery on P 2.Here the defendants accepted the goods and paid for them the contractprice Rs. 897.40. They claim in reconvention Rs. 675.04, that is,Rs. 897,40 less Rs. 222.36 the value of the contract price of the 8 bagsout of the 33 up to sample. On the issues framed as to the delivery onP 2 it was found that the 33 bags were not equal to sample—this shouldread “ 25 bags were not equal to sample ”, the defendants themselvesadmit that 8 of the bags were equal to sample and that they are liable topay for them—and it was also found that “ 25 of the said bags wereunmerchantable and of no commercial value ” ; I have remarked on thewording of this issue above. The judgment says as follows:—“Withregard to the claim in reconvention I have already stated that the defend-ant company is not entitled to reject the tea and the claim made on thatbasis must fail. Counsel for defendants …. asked me to treatthe claim in reconvention as one for damages but I do not think I wouldbe justified in doing so as different considerations would apply if a claimfor damages had been made. Further, it is not clear whether a claim fordamages is not prescribed”. The defendants were certainly unable tosay they “ rejected ” the tea for they had accepted it within section 34and had paid for it, but their claim in reconvention, rightly apprehended,is for a breach of warranty of quality, and this point is clearly raised andanswered in their favour in the issue, that the tea delivered was not equalto sample. If so, the remedy, if any, of defendants is damages but theissue, breach of warranty, was certainly before the Court for decision,though not expressed in those words. It is not easy to understand thejudgment where it says that the defendants’ claim in reconventioncannot be treated as “ one for damages ” since different considerationswould apply if a claim for damages had been made”. The claim inreconvention as to this delivery P 2 may be wrongly expressed in that-itavers a rejection of that delivery, but the essential point, breach ofwarranty of quality, can be collected from it and is sufficiently raised inthe issues, and therefor was before the Court of trial. All the facts of thematter were gone into exhaustively and it is difficult to see what otherevidence could have been produced by either side or what “ differentconsiderations would apply ” if the claim were treated as one for damages.In dealing with the delivery P 5 whereon the plaintiff claimed Rs. 1,174.77and was awarded Rs. 437, the judgment says, “ as the plaintiff wasdeprived of his property by the wrongful action of the defendant companyit should pay him the value of that property”. That means that theCourt went into the figures of the case, estimated the value of plaintiff’sproperty detained by the defendants, and awarded to plaintiff not the36/15
/178MACDONEL.L C.J.—Aseen Cutty v. Brooke Bond Ltd.
contract price but the value, quantum meruit, as damages. The defend-ants’ claim in reconvention on delivery P 2 is the converse of this. Theyhave paid the contract price and now ask for a refund of the differencebetween that contract price and the value—if you will, as damages.The evidence adduced was sufficient to enable the Court to estimate thevalue of the delivery P 5 and seems equally sufficient to have enabled itto estimate the value of the delivery P 2. As the plaintiff was entitledto, and recovered quantum meruit on P 5, by parity of reason defendantsare entitled to a refund based on quantum meruit of what they paidon P 2.
The gist of their claim was breach of warranty, and the breach ofwarranty having been found proved the only question really argued tous was that the claim in reconvention not having been brought within ayear from when it accrued was prescribed under Ordinance No. 22 of 1871,section 9, “ No action shall be maintainable for or in respect of any goodssold and delivered …. unless the same shall be brought withinone year after the debt shall have become due ”.
It was argued to us for the defendants that section 9 deals with executedcontracts only—goods have been sold and delivered, work and labourhave been done, wages have been earned—and that it is on those executedfacts that action is brought, which action must by the section be broughtwithin one year after by such executed facts a debt has become due, butthat section 9 does not deal with contracts other than executed contracts,even though the contract in issue may arise out of an executed contractsuch as one of goods sold and delivered. This argument for the defend-ants seems correct, see per Ennis J. in Campbell & Co. v. Wijesekera —
“ With reference to the meaning of the term ‘ goods sold anddelivered I would refer to section 4 of the Sale of Goods Ordinance,No. 11 of 1896. (That Ordinance was enacted long after the LimitationOrdinance, but is referred to by way of illustration.) That sectionprovides that a contract for the sale of goods shall not be enforceableby action unless the buyer has accepted part of the goods sold ; or haspaid the price of a part of it ; or unless the contract has been reducedto writing and signed by the party to be charged. It would seem then,that a contract for goods sold and delivered applies rather to an un-written contract, which can be enforced by an action owing to the goodshaving been delivered, rather than to the contract made in writing andsigned by the parties. In the circumstances I would hold that this isnot a case of goods sold for which an action lies owing to the fact ofdelivery, but rather a case where the action is brought on the writtencontract, i.e., it is not the action which is concisely known as one forthe price of goods sold and delivered. I would accordingly regardsection 7 of the Ordinance No. 22 of 1871 as a special enactment over-ruling section 9. ”
In applying these dicta to the present case I would lay stress on thewords “ this is not a case of goods sold for which an action lies owing tothe fact of delivery ” for here the claim in reconvention lies not because 1
1 21 N. L. R. at p. 43-5.
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of a delivery but because there has been a breach of warranty in deliveringgoods not up to sample. The distinction is put also by Bonser C.J. inMarkar v. Hassen',—
“ I read section 8 as providing that the period of prescription applyingto the actio venditi in general is to be three years, and section 9 asproviding that in the particular case of a sale of movables where therehas been a delivery to the buyer of the thing sold the period is to bereduced to one year ”,—
and this dictum seems to hold good now, even after the enactment ofOrdinance No. 11 of 1896. If further authority is needed, we can remindourselves that the Prescription Ordinance, No. 22 of 1871, was passedwhile the distinction between forms of actions still existed, and while itdid, no one could possibly sue for goods sold and delivered where the factsof his case showed a breach of warranty; see Bullen & Leake’s Precedentsof Pleading, 1868, p. 38, p. 267. This was an unwritten contract, evenif made by means of broker’s notes—see jRobson v. Aitken Spence & Co*and cases there cited. Again referring to Campbell & Co. v. Wijesekera and the extract quoted therein at page 434 from Pretty v. Solly *; asbetween the sections of the Prescription Ordinance—8, unwritten contracts,and 9, goods sold and delivered—the latter section is the particular enact-ment and so “ operative ” while the former section is the general enact-ment and so “must be taken to affect only the other parts of the statuteto which it may properly apply ”. Section 9, the particular enactment,operates in the case of contracts for and in respect of goods sold “forwhich an action lies owing to the fact of delivery section 8 operates inthe case of unwritten contracts (as section 7 in the case of written con-tracts) for or in respect of goods sold for which an action lies otherwisethan owing to the fact of delivery—as here, where it arises because thegoods delivered were not according to sample. On the whole questionsee K. P. V. Louis de Silva v. A. P. Don Louis6, a Full Bench decision, wherethe actual point decided was that a claim for rent on a written lease isprescribable under section 7 as being a written contract and not undersection 8, even though rent is specifically named in section 8; perCayley C.J.: —
“ It was argued that as the 8th section speaks of ‘ rent ’, the 7thsection must apply to agreements other than to pay rent under a lease.We think, however, that the converse is the case and that the word4 rent ’ in the 8th section means, rent payable under obligations otherthan such as are mentioned in the 7th section, for instance, rent for useand occupation simply without express agreement, rent due in respectof a monthly tenancy and such like. The 7th section deals withactions on written obligations, sections 8 with actions on unwrittenobligations; and the word ‘ rent ’ when used in section 8 must, wethink, upon the principle noscitur a sociis be taken to mean rent payableotherwise than under a written contract. ”
3 21 N. L. R. 431.
* 26 Beav. 60S, 53 E. R. p. 1032.
» 2 N. L. R. at p. 219.a 13 N. L. R. 11.
• 4 S. C. C. 89.
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GARVIN S.P.J.—Assen Cutty v. Brooke Bond Ltd.
Commenting on that judgment in Rodrigo v. Jinasena & Co.,Maartensz J. said,—
“ The ratio decidendi …. applies to the argument ofappellant's Counsel in this appeal that, as section 9 specially mentionsactions for goods sold and delivered, section 7 must apply to agree-ments other than agreements for the sale of goods. This decision ofthe Full Court does not appear to have been cited in the case of Horsfallv. Martin (4 N. L. R. 70), where Moncrieff J. held that section 9 ofthe Ordinance applied to all actions for goods sold and deliveredirrespective of the nature of the agreement ”,
and he over-ruled the argument for the appellant. Adapting the lastsentence of this so that it shall read “ it is argued that section 9 of theOrdinance applies to all actions for goods sold and delivered irrespectiveof the nature of the agreement or of the claim thereunder ”, I would respect-fully adopt the decision of Maartensz J. The claim in reconvention ofthe defendants will then be governed by section 8 of the Ordinance No. 22of 1871 and capable therefore of being brought within three years andso not prescribed.
If by any chance I am wrong and this claim in reconvention is really one" for loss, injury, or damage ”, then it will be governed by section 10 ofthe Ordinance which allows, two years for bringing such action, and againwill have been in time.
I have had the advantage of seeing my brother Garvin’s judgment andagree with his calculations as to what must be deducted from the amountclaimed by defendants in reconvention. Their appeal on that claimmust be allowed, but only for Rs. 512.38.
In the result then the judgment below must be reversed as to the orderthat defendants do refund to plaintiff the Rs. 874.69 on P 1, and as tothe claim in reconvention on P 2, but for a sum of Rs. 512.38 only; thejudgment below awarding plaintiff Rs. 437 on P 5 will stand. Thedefendants having substantially succeeded in this ppeal must have thecosts of the same. Deducting Rs. 437 from Rs. 512.38 leaves Rs. 75.38,and judgment must be entered for defendants for this sum. I agree thatdefendants be given half the costs incurred by them in the proceedingsbelow.
Garvin S.P.J.—
This is an appeal by the defendant from a decree which awards theplaintiff a sum of Rs. 1,311.69 and costs while dismissing the defendant’sclaim in reconvention. It is common ground that the parties entered intothree contracts for the sale and purchase of tea as follows: —
On September 13, 1930, plaintiff agreed to sell to the defendant
lb. of G. B. dust at 25 cents per lb.
On September 18, 1930, plaintiff agreed to sell to the defendant
3,600 lb. B. B. broken pekoe at 28 cents per lb.
On September 25, 1930, plaintiff agreed to sell to the defendant
lb. G. B. dust at 26 cents per lb.
> 32 .V. L. R. 322.
GARVIN SPJ.—Assert Cutty v. Brooke Bond Ltd.
181
These contracts have for convenience been referred to in the course ofthe argument as the contracts P 1, P 2, and P 5, respectively, for the reasonthat the terms of each contract are set out in the brokers notes producedand marked P 1, P 2, and P 5, respectively. The plaintiff's claim relatesto the contracts P 5 and P 1—while the defendant's claim in reconventionis based on the contract P 2.
In respect of the contract P 5 the plaintiff pleaded that he had in termsthereof delivered to the defendant 5,140 lb. of tea and became entitled toreceive the sum of Rs. 1,174.77 which the defendant failed and neglectedto pay. He further pleaded that he duly delivered the tea in terms ofthe contract P 1 and received the sum of Rs. 874.69 being the pricethereof but that later the defendant compelled him " by coercion andthreat to’ pay the defendant the said sum of Rs. 874.69, on the groundthat the tea dust supplied was not sufficiently good". He accordinglyprayed for judgment for that amount as well.
The defence to the claim based on contract P 5 was that the bulk of thetea supplied when examined was found not to correspond with thesample, was unmerchantable and of no commercial value, and was accord-ingly rejected. As regards the plaintiff’s claim to be paid the sum ofRs. 874.69 alleged to have been obtained from him “ by coercion andthreat" the defendant alleged that about a week after the deliveries oncontract P 1 had been made and accepted and the price paid, they dis-covered on examination of the bulk that it was not equal to sample andwas in fact unmerchantable, that “they rejected the same”, that theplaintiff became liable to repay to them the sum of Rs. 874.69 paid tohim, and that the plaintiff acknowledged his liability to do so and dulyrepaid them.
In reconvention, the defendant alleged that, as in the case of the teadelivered on contract P 1, so also in the case of the tea delivered on con-tract P 2 they found after payment that the bulk did not correspond withthe sample, that they “ rejected the same" and that the plaintiff wasliable to repay them the sum of Rs. 897.40 (less Rs. 222.36 being thevalue of the contents of 8 bags which were up to sample). They accord-ingly prayed for judgment for the sum of Rs. 675.04.
The learned District Judge found with reference to the plaintiff’s claimbased on the contract P 5 that the tea had been rightly rejected as beinginferior to sample, but he proceeded to award the plaintiff judgment forthe sum of Rs. 437, being the value of the tea computed at 6 cents per lb.,as damages on the basis that the tea had been wrongfully detained by thedefendant.
The District Judge also allowed the claim for the repayment of the sumof Rs. 874.69 not upon the ground that the money had been obtained bythe defendant “ by coercion and threat ” but upon the grouund that therewas no consideration for the payment.
The claim in reconvention was dismissed upon the short ground thatthere had been a complete acceptance and payment and that the subse-quent discovery at a later date that the bulk was inferior to sample didnot entitle the defendant to "reject” the tea'which they had acceptedor to maintain a claim on that footing. He further refused to entertainthe defendant's application that he should in the alternative be awarded
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GARVIN S.P.J.—Assen Cutty v. Brooke Bond Ltd.
damages as for breach of warranty giving as his reason that “ differentconsiderations would apply if a claim for damages had been made’* andthat “ it is not clear that a claim for damages is not prescribed
The grounds upon which this appel was pressed upon as by Counselfor the appellant are:
(1) that having found that the tea delivered in fulfilment of contractP 5 had been rightly rejected the learned District Judge shouldhave dismissed the action so far as it related to that claim; thathe was wrong in permitting the plaintiff to recover damages onthe basis that the tea had been wrongfully detained in theabsence of any reference to such an alternative claim in thepleadings; and, alternatively, that if he was right in so doingin view of the circumstances that the material issues of fact hadbeen raised and that all material facts were before him, then hewas wrong in refusing the defendant’s prayer that his claim inreconvention should be regarded as a claim for damages forbreach of warranty,
<2) that having rejected the plaintiff’s plea that the sum of Rs. 874.69was extorted from him by “ coercion and threat ” the DistrictJudge was wrong in holding that the plaintiff was entitled to berepaid that amount on the ground that there was no considera-tion for the payment to the defendant; that the sum ofRs. 874.69 was a voluntary payment made by the plaintiff whenit was discovered that the bulk of the tea delivered by him onP 1 was inferior to sample and in recognition of his liability tothe defendant,
(3) that his claim in reconvention was well founded but that if theDistrict Judge was right in holding that it was not sustainableas formulated in the pleadings he should in the circumstanceshave awarded the defendant damages as for a breach of warranty.
The only witness called in support of the plaintiff’s case was his witnessSeyadi Ali Cutty. Several witnesses gave evidence for the defence andof these the principal were W. R. N. Philps and H. Broome. The mainissue of fact in the case related to the plaintiff’s allegation that the sum ofRs. 874.69 had been extorted from him “ by coercion and threat ”. Whendealing with this issue, the learned District Judge observes, “ In theabsence of Mr. Moser and Meeran I do not see how any coercion can beestablished even if the witness (Seyadi Ali Cutty) is to be believed. I donot, however, believe him where his evidence is in conflict with that ofMr. Philps or Mr. Broome ”. A perusal of the evidence reveals amplegrounds for the refusal by any Court to act on the evidence of Seyadi AliCutty. There is, therefore, no difficulty in ascertaining the facts materialto the decision of the points at which the parties were at issue.
In discharge of his obligations under the contract P 1 the plaintiff onSeptember 16, 1930, delivered at the defendants’ stores 3,994 lb. of tea.In accordance with the usual practice the storekeeper opened a fewchests, drew samples, and sent them to the office to be compared with thesale sample. The comparison showed that it was equal to sample. Thetea was accordingly accepted and a cheque for Rs. 874.69 was drawn andhanded over in payment of the price.
GARVIN S.P.J.—Assen Cutty v. Brooke Bond Ltd.
183
Similarly, delivery was made on September 20, 1930, under contract P 2.The same procedure was gone through and in due course a cheque forKs. 897.40 was drawn and handed over in payment.
On September 24 the plaintiff made a delivery of tea in fulfilment ofthe contract P 5. Eight chests were opened in the usual course at thestores and samples drawn and forwarded to the office. Mr. Philps whocompared these with the sale sample found them superior to the sample.This evidently was very unusual, for Mr. Philps says his suspicions werearoused and he caused four other samples to be drawn and sent to him.These on examination proved to be greatly inferior. He then caused allthe tea delivered by the plaintiff on the contracts P 5 and P 1 to beexamined and found it to be so inferior as to merit the description" rubbish ”.
A serious view was taken of the matter. The defendants’ lawyers wereconsulted and the matter reported to the police. Mr. Philps saw AssistantSuperintendent Guneratne and made an appointment with him for 9.30the following morning. Before he left the office to keep his appointmenton the 25th, the broker who put through these contracts and Meeran, theplaintiff’s representative, arrived. Mr. Philps told Meeran what he haddiscovered and what he said was interpreted by the broker Moser. Healso said that the matter would be placed in the hands of the police. Theevidence shows that Mr. Philps took Meeran up to his office, showed himthe tea on liquor, and told him it was inferior to sample and that he wouldplace the matter in the hands of the police.
It was not suggested that the tea was not the inferior substance whichit was proved to be by the evidence of Mr. Philps and Mr. Waldock.Meeran, the plaintiff’s representative, was made fully aware of everymaterial circumstance. There is no doubt that Mr. Philps rejected thetea delivered on the contract P 5. Equally there is no doubt that theplaintiff’s representative acquiesced in the rejection. It is also provedby the evidence of Mr. Philps and Mr. Broome that the plaintiff’s repre-sentative was asked what he proposed to do about the payment made onthe contract P 1. It was intimated to him that he was expected to repaythe money and that, if he did not, action would be taken to recover themoney. Meeran said he would go into the matter and see what he coulddo. He went away—it is thought to the store—and then sent word bythe broker Moser that he would let them have a cheque. Mr. Broomeappears to have said that he wanted an uncrossed cheque.
Mr. Philps and Mr. Broome then went to keep their appointment withAssistant Superintendent Guneratne and on their return Mr. Broomefound a cheque for Bs. 874.69 on his desk. Mr. Broome consulted thedefendants’ lawyers and Mr. Guneratne as to whether he should acceptthe cheque. On their advice he did so, presented it, and obtained pay-ment. He also wrote to the plaintiff the letter P 9 dated September 25,1930, acknowledging receipt of the cheque and adding " the repayment ofthis money will not preclude the right to bring against you any civil orcriminal action ”. It was not until they returned from the Police Stationthat it was first discovered that the delivery of tea made on the contractP 2 was also inferior to sample. Later that afternoon about 4 p.m.Meercan came to the defendants’ office and asked for a delivery order for
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GARVIN S.P.J.—Assen Cutty v. Brooke Bond Ltd.
the tea in. respect of which Rs. 874.69 had been repaid. He was told byMr. Broome that they had been in communication with Assistant Super-intendent Guneratne of the Criminal Investigation Department who hadinformed them that the tea should not be handed over. Meeran was alsotold that the tea delivered on contract P 2 was found to be inferior tosample. He said he would send a cheque for the amount paid nextmorning. No cheque arrived. It was in these circumstances the learnedDistrict Judge, having found that the tea delivered on the contract P 5had been properly rejected, proceeded to award the plaintiff as damagesfor, what he held to be the unlawful detention of the tea, a lesser sumwhich he found to be the actual value of the tea delivered.
Counsel for the respondent sought to meet the plea that the Judgeshould on his finding have dismissed the claim, made on the footing thatthe tea had been accepted, by seeking to support the judgment upon theground that the Judge’s finding that there had been no acceptance waswrong. The unlawful detention of the tea by the defendant, it was urged,was an act inconsistent with the ownership of the plaintiff and musttherefore be deemed to be an acceptance of the tea.
When a seller delivers goods in terms of a contract of sale it is the dutyof the buyer to accept and pay for the goods if they are the kind andquality contracted for. If having the right to do so he rejects the goods,
" he is not bound to return them to the seller, but it is sufficient if heintimates to the seller that he refuses to accept them ”—section 35 ofOrdinance No. 11 of 1896.
Certain rules are also laid down for ascertaining whether there has beenan acceptance. They are as follows: —
Section 34.“ The buyer is deemed to have accepted the goods when
he intimates to the seller that he has accepted them, or when the goodshave been delivered to him and he does any act in relation to themwhich is inconsistent with the ownership of the seller, or when afterthe lapse of a reasonable time, he retains the goods without intimatingto the seller that he has rejected them.”
These sections read together do not justify the assumption that mayact done by the buyer in relation to the goods delivered no matter howslight a trespass it may involve upon the rights of the seller as owner, and,irrespective of the stage of the transaction at which it may be done, must ■be deemed to be an acceptance. Indeed, an act done by the buyer inrelation to the goods inconsistent with the ownership of the seller evenbefore the intimation to the seller that the buyer refuses to accept is notnecessarily such an act as is required by this section to be deemed anacceptance. For example—“ A resale is not necessarily an acceptance;for the facts may show that no such determination of an election (i.e.,election to accept or reject) can be presumed, as where the buyer resellsbefore he has had an opportunity of examining the goods, and the sub-buyerhas not taken the goods ”—Benjamin on Sale, p. 860; Wallis v.Pratt.
In the case before us the defendant retained the goods after rejectionin the honest though mistaken belief that, having been instructed as
1 {1911) A. c. 394.
GARVIN S.P.J.—Assert Cutty v. Brooke Bond Ltd.
185
they thought by the police to retain them for the purpose of productionas evidence in the criminal proceedings the nin contemplation, they wererequired by law to do so. Moreover, the plaintiff was made fully awarethrough his representative of all these circumstances which are whollyinconsistent with an election to accept the goods which in the exercise oftheir undoubted right to do so they had previously refused to accept. Abuyer is entitled during a period reasonably sufficient for the examinationto elect whether he will accept or reject them. If during that period hedoes an act in relation to the goods inconsistent with the right of theseller he is deemed to have accepted the goods. But where his electionhas been determined by a rejection of the goods, he becomes a bailee ofthe goods.
Upon the rejection of the goods the defendant therefore became in lawa bailee of the goods. The act complained of was an act done during theexistence of that relationship and in so far as they had no legal right torefuse to permit the bailor, i.e., the plaintiff, to remove the goods the plaintiffhas his remedy. The contention that there was here no acceptance buta definite rejection of the goods to which the plaintiff assented is in myjudgment sound, and the District Judge has so found. The plaintiff’saction to the extent to which it was based on the averment that the teadelivered on P 5 was accepted therefore failed.
It remain still to consider whether the Judge’s order allowing theplaintiff damages as for wrongful detention of the goods should be sus-tained. While it is true that the plaintiff did not in the pleadings includean alternative claim based on tort, the other averments substantiallyraised every issue of fact material to such a claim. Further, the issuesupon which the parties went to trial specifically raised every question offact material to such a claim and the evidence, it is not denied, has dis-closed every relevant fact and circumstance. It has not been suggestedthat any defence was possible to such a claim had it been specificallypleaded or that the defendant has suffered any prejudice. Such being thecircumstances, an order which has the effect of finally determining therespective rights of the parties in accordance with the actual facts andcircumstances of this transaction should not be disturbed upon the soleground that the claim was not formulated in the pleadings. The secondof the three points taken in appeal has reference to the repayment by theplaintiff of the sum of Rs. 874.69 being the amount paid to him by thedefendant for the tea delivered on contract P 1. The plaintiff’s case wasthat he was compelled to pay this amount to the defendant “ by coercionand threat ”. He told a long and detailed story of how he was compelledto pay this amount to release Meeran and himself when Philps and Broomethreatened to assault them and hand them over to the police. Thisstory was categorically denied and the District Judge has rightly rejectedthe evidence adduced by the plaintiff. Havng done so, he dealt withcertain other questions and later in his judgment returns to the matter ofthis payment as follows : —
“ I have stated earlier that I do not accept the plaintiff’s account of
the return of the cheque for Rs. 874.69. What then was the considera-tion for the return of the cheque ? I think the plaintiff in agreeing to
receive the tea and return the cheque was hoping that when the cheque-
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GARVIN S-P-J.—•Assert Cutty v. Brooke Bond Ltd.
was returned the defendant company would drop the proposed criminalproceedings but his motive is immaterial and in view of the terms ofP 9 I can find no other consideration for this return except the returnof the tea. As this tea was not returned the consideration for thecheque wholly failed and the plaintiff is entitled to its return. ”
The plaintiff’s case was that this money was obtained from him by thecoercion and threats of which he spoke and not for consideration. Itnever was his defence that the money was paid for a consideration whichfailed.
The plea upon which he based this claim having been shown to be false,there remains only the evidence of Mr. Philps and Mr. Broome as to thecircumstances under which this payment was made. That evidenceestablishes that this was a voluntary payment made by the plaintiff withfull knowledge of all the circumstances. The right of a person to retainmoney so paid does not depend upon proof of consideration. Money paidby a person who was not bound to do so is not always and in every caserecoverable by action. The special circumstances, namely, those ofcompulsion, pleaded by the plaintiff having failed, this remains a volun-tary payment made with full knowledge of the circumstances and is nottherefore recoverable. (Maskell v. Hocmer.)
Assuming, as the District Judge appears to have done, that the plaintiffupon payment became entitled to claim the return of the inferior teadelivered by him, his remedy was not an action to recover the repaymentof this money on the false plea that it had been obtained from him bycompulsion.
The judgment of the District Judge on this point must therefore bereversed and the claim dismissed.
Lastly, there is the defendant’s contention that his claim in reconventionshould not have been dismissed and alternatively that it should have beentreated as a claim for damages for breach of warranty and judgmententered in his favour for the amount of those damages. The defendant’sclaim in reconvention relates to the tea delivered on the contract P 2.The company averred that on the representation that the tea deliveredon September 20 was up to sample, they paid the plaintiff the priceRs. 897.40, that on September 25 it was discovered that 25 out of 33 bagsdelivered contained tea which was inferior to sample and unmerchantable,and claimed that by reason of the breach by the plaintiff of the conditionof the contract as to quality the defendant lawfully rejected the sameand became entitled to be paid the sum of Rs. 897.40 (less Rs. 222.36 thevalue of the 8 bags of good tea).
There are indications in the answer that, as the evidence shows, the*' rejection ” referred to was made five days after samples had beendrawn, compared with the sale sample and the price paid. The learnedDistrict Judge has found that there was an acceptance of the tea onSeptember 25, and that conclusion is supported by the evidence in thecase. The defendant company had ample opportunity to examine everypart of this delivery if they desired to do so. They made such examinationas they deemed sufficient, accepted, and paid for the tea. It is urged,however, that notwithstanding a prior acceptance where the plaintiff was
i (1915) 3 K. B. 106.
GARVIN SPJ.—Assert Cutty v. Brooke Bond Ltd.
187
shown to have committed a breach of the condition that the goods shouldcorrespond with the sample the defendants still had the right to reject thegoods and repudiate the contract. A buyer would ordinarily be entitledto refuse to accept goods for breach of a condition of the sale and in somecases to repudiate the contract. But when a contract has been com-pletely performed by delivery on the part of the seller and acceptanceand payment on the part of the buyer the stage at which the goods mighthave been rejected has passed. Having exercised his election to acceptor reject by accepting the goods, the buyer’s remedy for breach of acondition as to quality is in damages.
The case is governed by section 11 (3) of the Sale of Goods Ordinance,No. 11 of 1896, which is as follows: —
’’Where a contract of sale is not severable, and the buyer hasaccepted the goods or part thereof, or where the contract is for specificgoods, the property in which has passed to the buyer, the breach of anycondition to be fulfilled by the seller can only be treated as a breach ofwarranty, and not as a ground for rejecting the goods and treating thecontract as repudiated, unless there be a term of the contract, expressedor implied, to that effect.”
In such a case the remedy of the buyer is provided for by section 51 (1)of the Ordinance—
“Where there is a breach of warranty by the seller, or where thebuyer elects, or is compelled, to treat any breach of a condition on thepart of the seller as a breach of warranty, the buyer is not by reason onlyof such breach of warranty entitled to reject the goods; but he may—
Set up against the seller the breach of warranty in diminution or
extinction of the price; or
Maintain an action against the seller for damages for the breachof warranty.”
Inasmuch as the defendant accepted the goods he was compelled totreat the breach of the conditions as to quality as a breach of warrantyand his remedy was to sue for his damages. The District Judge wastherefore right in holding that his claim in reconvention as formulated inhis answer failed.
Whether the District Judge was right in refusing to treat the claim as aclaim for damages for breach of warranty has now to be considered. Ithas been strongly pressed upon us that inasmuch as the Judge treatedthe plaintiff’s claim on the contract P 5, which failed as such, as a claimfor damages for wrongful detention, he should similarly have treated thedefendant’s claim for a refund of the,money paid on contract P 5 as anaction for breach of warranty. All the considerations set out earlierwhich appeared to me to afford sufficient reason for supporting theJudge’s decision to treat the plaintiff’s claim on P 5 as a claim for damagesapply with even greater force to the case of the defendant’s claim inreconvention. Moreover, in the case of the defendant’s claim a formalapplication was made to the District Judge to treat it as a claim fordamages for breach of warranty before the conclusion of the trial. Hadit been allowed it would have enabled the plaintiff to adduce any evidenceor make any submission in support of any further defence he may have
188
GARVIN SPJ.—Assert Cutty v. Brooke Bond Ltd.
desired to advance. But it is manifest that no defence was possible andCounsel in appeal was unable to indicate any respect in which the allow-ance of the defendant’s application could have prejudiced him, nor whatfurther defence there could be to such a claim. The only objection urgedwas that the defendant’s claim was barred by the lapse of one year fromthe time the cause of action arose. Had the defendant’s prayer that hisclaim should be regarded as one for damages been granted, this pleamight well have been considered as a defence to the claim. There is noreason therefore why the defendant’s application should not have beenallowed. Proceeding then upon the footing that the District Judgeshould have treated the claim in reconvention as a claim for breach ofwarranty, the defendants would be entitled to relief if his claim is notstatute barred. The point as the District Judge observes is not free of■difficulty.
The question is whether a claim for damages arising from a breach of acondition as to the quality of goods delivered upon a contract of sale isbarred after the lapse of one year under section 9 of Ordinance No. 22 of1871 or whether the period of limitation is the longer period of 3 yearsprescribed by section 8 or the still longer period of 6 years which is theperiod of limitation in cases falling within section 7.
In this case the contracts pleaded were admitted. There was nodispute as to the contracts or the terms of the contracts. The only-evidence adduced consisted of the broker’s bought notes P 1, P 2, and P 5.Presumably the corresponding sold notes were forwarded to the seller.However that may be, broker’s bought and sold notes are not ordinarilyregarded as the contract but are a memorandum that a contract has beenmade—Robson v. Aitken Spence Such notes are evidence of the con-tract but are not necessarily a contract in writing. The contract mayhave been made verbally and it must on the evidence before us be takenthat there is here no written contract. Section 7 of the PrescriptionOrdinance deals with written contracts and cannot therefore be invoked.
In so far therefore as this is an action upon an unwritten contract itwould appear to come directly within section 8 which prescribes the periodof limitation for actions on unwritten contracts. But a difficulty iscreated by section 9 which is as follows: —
“No action shall be maintainable for or in respect of any goods soldand delivered, or for any shop bill or book debt, or for work and labourdone, or for the wages of artisans, labourers, or servants, unless thesame shall be brought within one year after the debt shall have becomedue. ”
The submission for the appellant is that section 9 excepts from the termsof section 8 all actions whether for the price thereof or for damages inrespect of contracts for the sale of goods where the goods sold had beendelivered to the buyer. On the other hand it was argued that section 9has reference only to actions for the price of goods sold and delivered.
The sections of the Prescription Ordinance relating to limitations ofactions are the sections numbered 6 to 11. In each of these sections theactions specified therein are grouped together and a period of limitationfixed for each group. Although these groups were presumably intended
» (1909) 13 N. L. B. 11.
GARVIN S.P.J.—Assen Cutty v. Brooke Bond Ltd.
189
to be mutually exclusive, the language employed does not invariablyenable one to say with certainty under which section a particular actionfalls. An instance of such a difficulty is the case of an action for rentwhich is specially mentioned in section 8 as one which is barred in 3 yearsfrom the time the cause of action arose. It was urged, however, in Louisde Silva v. A. P. Don Louis that an action for rent due on a lease cameunder section 7 as rent due on a written contract and as such was notbarred until after the lapse of 6 years from the time the cause of actionarose. The ratio decidendi of that decision would seem to be that section 7which dealt with actions on written contracts when read conformablywith section 8 which dealt with actions for rent and other actions onunwritten contracts lead to the conclusion that the actions for rentmentioned in section 8 were actions on unwritten agreements and notactions for rent payable under a written agreement.
In Rodrigo v. Jinasena & Co./ Maartensz A.J. referred to the abovecase and expressed the opinion that on the same principle an action upona written agreement to recover the value of materials supplied was notbarred in 1 year under section 9 and that the case fell Within the provisionsof section 7.
One case cited in the course of argument, Horsfall v. Martin", decidesspecifically that an action for recovery of money due for goods sold anddelivered falls under section 9 and is barred in one year. MoncreifT J.perhaps travelled further in his judgment than was necessary for thedecision of the point immediately before him but he undoubtedly doeshold that any action “for or in respect of goods sold and delivered”whether it be upon an unwritten or even on a written contract areexcluded from the operation of sections 8 and 7 respectively by the pro-visions of section 9.
To the extent to which that learned Judge held that an action for or inrespect of goods sold and delivered fell under section 9 to the exclusionof section 7 when the action was based on a written contract his judgmentis in conflict with the principle of the decision in Louis de Silva v. A. P.Don Louis (supra) which is a judgment of the Full Court. In Dawbarnv. Ryall*, Lascelles C.J. says, with reference to this judgment of Mon-creiff J., “ the reasoning of this decision is not easily reconciled with thedecision of the Full Court in K. P. Louis de Silva v. A. P. G. Don Louis-*.
The decision in Horsfall v. Martin (supra) can no longer be regarded asauthority for the proposition that an action for or in respect of goods soldand delivered based upon a written contract comes within the operationof section 9 to the exclusion of section 7. But it does not appear to havebeen considered or dissented from in so far as it has reference to actionsin respect of .goods sold and delivered upon an unwritten contract. Theprinciple of K. P. Louis de Silva v. A, P. G. Don Louis (supra) which isthat such actions when based on written contracts come within theoperation of section 7 cannot be relied on. to exclude from the operationof section 9 all actions for or in respect of goods sold and delivered basedon unwritten contracts or agreements. To do so would be to give noeffect whatever to section 9 since all such actions must be based either
i 4 s. c. O. 89.* (1931) 82 N. L. R. 322.
» (1900) 4 N. L. R, 70.
* (1914) 17 N. L. R. 872.
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GARVIN S.P.J.—Assert Cutty v. Brooke Bond Ltd.
upon a written or an unwritten contract whether express or implied. Theactions for goods sold and delivered contemplated by section 9‘ in so faras they are not based on written contracts are embraced by the generalwords of section 8—“ or upon any unwritten promise, contract, bargainor agreement”. But if we read these two sections, as I think we must,so as to give a distinct interpretation to each of these sections we aredriven to the conclusion that the object of the legislature was to excludefrom section 8 the actions for which special provision is made by section 9.Thus, it only remains to ascertain what actions, though they may be actionson unwritten contracts, are by section 9 excluded from the operation ofsection 8.
The words “ action for goods sold and delivered ”, if taken literally,suggest that the action contemplated is one for the return or recovery ofgoods sold and delivered. But the phrase is not infrequently employedto indicate an action for the recovery of the price of goods sold anddelivered. In Schedule II. No. 33 of the Civil Procedure Code, variousforms of plaints are set out and the forms (10) and (11) are entitledrespectively “ For goods sold at a fixed price ” and “ For goods sold at areasonable price ”. In each case the claim is for the price or value of thegoods sold. This, it would seem, is the sense in which the phrase is usedin section 9. Actions for the recovery of the price of goods, sold anddelivered would clearly be barred in the time prescribed in section 9. Itwas submitted however that the words “ or in respect of ” were employedby the draftsman with the intention of extending the meaning of theprovision so as to include claims for damages in cases in which the goodssold had been delivered but not claims for damages upon the contractwhere the goods had not been delivered by the sellers. Such a distinctionwould be highly artificial and based on no principle. In my view theywere inserted merely for the purpose of making it clear that the. wordsaction for goods sold and delivered ” were not to be taken literally butas meaning actions for the recovery of the price or value of goods sold anddelivered and in that sense “in respect of” goods sold and delivered.This view is reinforced by a consideration of other parts of section 9 andin particular its concluding words—“ unless the same (i.e., the action)shall be brought within one year after the debt shall have become due”.The period of prescription in most of the other sections commences torun from the time when “ the cause of action shall have arisen ” or “ shallhave accrued ”. In this single instance it runs from the time “ the debtshall heme become due The term “ debt ” does not ordinarily includea claim for unliquidated damages and the implication is that this shortterm of one year was prescribed as a bar to action for “ debt ” asdistinguished from other actions on unwritten contracts. The word “ debt ”affords a key to the interpretation of the section. The other classes ofactions contemplated namely, “for any shop bill, book debts, or forwork and labour done or for the wages of artisans, labourers, or servants ”may all legitimately be described as action for the recovery of debts.Upon a true construction of section 9 its operation must in my opinionbe limited to the recovery of debts due in respect of the matter specifiedtherein, and it is only such actions that are excluded from the operationof section 8. A claim for damages for breach of warranty of goods
terera v. Peiris.
191
delivered upon an unwritten contract o£ sale is not an action “ for or inrespect of goods sold and delivered ” within the meaning of section 9 andis not therefore barred until after the lapse of three years after the causeof action shall have arisen.
Since the defendant's claim for damages is not barred by time the onlyremaining question is what amount is payable as damages. The defend-ant claimed Rs. 897.40 less Rs. 222.36 being the value of 8 bags of teafound to be up to sample. But the balance sum of Rs. 675.04 has. stillfurther to be reduced by the market value of the inferior tea retained bythe defendant. The learned District Judge has assessed the value of thetea at 6 cents but we have not been told the weight of the 25 bags of badtea There is no difficulty, however, in arriving at this figure. Thequantity of tea delivered on this contract amounted to 3,604 lb. and atthe contract price 28 cents per lb. was of the value of Rs. 1,009.12. Fromthis Rs. 111.72 has to be deducted for duty and cess leaving Rs. 897.40.as the nett price which was paid by the defendant. The nett price paidper lb. of tea is therefore cents 24..9. The sum of Rs. 222.36 representsthe nett value of 893 lb. of tea and the balance still in the hands of thedefendants for which they must pay the market price is 2,711 lb. Thisquantity of tea at the market price of 6 cents per lb. is of the value ofRs. 162.66 which must be deducted from the defendant’s claim ofRs. 675.04. The defendant is therefore entitled in respect of his claim inreconvention to be awarded Rs. 512.38 as damages.
In the result therefore the plaintiff fails save in respect of the sum ofRs. 437 awarded him by the District Judge for the wrongful detention ofthe tea delivered on the contract P 1. As against this must be set thesum of Rs. 512.38 being the damages payable to the defendant in respectof his claim in reconvention.
The judgment under appeal will therefore be set aside and judgmententered for the defendant for the sum of Rs. 75.38. The defendant isentitled to the costs of this appeal and the plaintiff will also pay him halfthe costs incurred by him in the Court below.
Judgment varied.