DARLEY ,BUTLER & CO. v. SAHEED et al

078-NLR-NLR-V-25-DARLEY-,BUTLER-&-CO.-v.-SAHEED-et-al.pdf

( 363 )
Present: Ennis A.C.J. and Porter J.BARLEY, BUTLER & CO. v. SAHEED et <d.173—D. C. Colombo, 4,168.
Insurance—C. i, /. and c. contract—Indent for goods from abroad—Nopolicy of insurance tendered to indentor—Is defendant’ bound toaccept the goods ?
The commercial traveller of a foreign firm saw the defendantsand entered into a bargain with them for the purchase of certaingoods at a price agreed upon. Thereafter, the defendants enteredinto a c. i. f. and c. contract with the plaintiff company, wherebythe plaintiffs agreed to indent for these goods from the foreign firmfor the defendants. The goods duly arrived in Colombo and weretendered to the defendants, but no policy of insurance was tendered.
Held, that the defendants were bound to accept the goods, eventhough no policy of insurance was tendered.
“ There is no reason why the plaintiffs should be regarded asother than agents of the defendants for the purpose of acceptinga policy of insurance, and even if they had not accepted a policyof insurance under a c. i. f. contract of sale, the defendants wouldhave to indemnify them, if, in the exercise of their discretion theyaccepted the goods as their agents.”
Hayley do Kenny v. Kudhoos1 distinguished.
T I 1HE facts are set out on the judgment of the District Judge
I (A. St. V. Jayewardene, Esq.):—
The indent contract entered into by these parties is contained in thedocument I) 1, and on this indent the defendants ordered, through theplaintiffs, seven pieces of flowered art silk and two varieties of crepegeorgette—six and four pieces of each. The goods arrived in Colomboin two shipments, and the defendants took delivery of what arrived bythe first shipment, viz., the seven pieces of flowered art silk and onepiece each out of the crepe georgette. The balance of the goods, con-sisting of eight pieces of crepe georgette* arrived later, but the defendantsrefused to take delivery of these. Subsequently the eight pieces weresold, and after giving defendants credit for the price realized by thesale, the plaintiffs claim the balance of the price which includes, besidesthe cost of the goods, the charges for freight, insurance, and commission,the goods having been purchased on c. i. f. terms. To this claim thedefendants raised various defences which wvre embodied in the issuesframed, but at the end of the. trial their counsel abandoned all thesedefences except the one which is contained in the fifth issue, which is asfollows :—
Did the plaintiffs duly tender to defendants the proper policy ofinsurance and the other necessary shipping documents in respect of thegoods indented for ?
1 (1922) 24 N. L. K. 267.
1923.
27—xxv.
12(60)29
1923.
Darley,Builer isCo. v.Saheed
( 354 )
As corrollaries to issue 5, the plaintiffs’ counsel suggested, and 1adopted, two issues marked 5 (6) and 5 (c), which are as follows :—-
(6) Were the plaintiffs bound to tender any policy of insurance orany other shipping document ?
5 (c) And even if they were so bound, can the defendants disclaimliability to pay the amount claimed in the plaint ?
Mi*. Hay ley’s contention for the plaintiffs is that the contract betweenthe parties was a contract of agency, and that if the plaintiffs failed toinsure the goods as defendants’ agents, the defendants could onlyrecover such damages as might result to them by such failure, and thatthe defendants were not entitled to reject the goods which ltad arrivedsafely and had been offered to them ; this they could do only if theparties were vendors and purchasers on a c. i. f. contract. All theterms of the contract* he urged, should be read together, and that, as bythe indent in question, the defendants had expressly agreed to takedelivery of such of the goods as are delivered from the vessel or vesselsin which they are shipped; the absence of a poTicy of insurance or ofthe other shipping documents would not justify their refusal to takedelivery of goods arriving at Colombo. He also contended that thedefendants had waived their right to have a policy of insurance tenderedto them, both by the course of business obtaining between the partiesand by the defendants’ conduct after the landing of the goods whenthey acknowledged their liability to pay for the goods. All thequestions involved in the case were ably argued by counsel on bothsides. It is well-established law that in an ordinary c. i. f. contractthe vendor is bound to tender a policy of insurance with the shippingdocuments ; he cannot withhold the documents and tender the goods. .
To decide the main question whether the indent contract D 1 createda contract of agency oi of sale, it is necessary to consider its terms, andin order to properly appreciate the terms, it is necessary to understandb 3v indent contracts are entered into, and how business is transactedunder them. In some cases the local merchant approaches the com-mission agent to ascertain whether, he could obtain the goods herequires from a foreign country. The commission agent communicatesthe offer to the manufacturer or supplier by cable or by letter ; if thelatter express his readiness to supply the good3, and the parties agreeupon the price, an indent contract is entered into c. i. f. or f. o. b.,and the commission agent also stipulates for a commission. Li othercases the manufacturer’s travelling agent arranges all the preliminaries,t.e.? the goods and their price, and then the contract is entered intobetween the indentor and the commission agent.
The commission agent then orders the goods referred to in the indent-according to the terms of the contract. The goods are shipped andinsured by the manufacturer or supplier who obtains a bill of ladingand a policy of insurance which, with an invoice and a bill of exchangewhich includes the cost of the goods, charges for insurance, and freight,are sent to a local bank which is to deliver the shipping documents onacceptance or payment of tlio bill. If the indentor pays the amountdue from him at once, either by giving a promissory note or in cash,tlie bill of lading or a disposal order is given to liim to enable him to payduty and remove the goods from the Customs. If the goods are notpaid for, the commission agent proceeds to warehouse the goods et therisk and expense of the indentor, and to act under the terms of “thecontract. In these cases the commission agent does not benefit orsuffer by the fa1.! or rise in prices. He is only entitled to the commission
( 355 )
agreed upon. There are also cases where the commission agent buys
the goods for himself and sells them to the local trader. In such caseshe stands to gain or lose according to the variations in price.
In the present case the goods -were selected and the prices fixedbetween the manufacturer’s travelling agent and the defendants. Themanufacturers were E. Cambefort Sc Co. of Lyons, and the defendantswere fully aware of this fact. Thereafter, the defendants entered intothe indent contract with the plaintiffs to import the goods they hadarranged to purchase. The order was forwarded by the plaintiffs toMessrs. Cambefort & Co. at Lyons, who executed it, and sent the goodsto Colombo. All this has been clearly proved. The plaintiffs say thata bill of lading and a policy of insurance were sent for these goods, butthese documents are not now forthcoming and are said to be lost. Ihave no doubt that a bill of lading and a policy of insurance must havebeen sent out to the defendants, but, however that may be, it has notbeen proved that a policy of insurance wad ever tendered to the defend-ants. The policies of insurance produced in respect of a large numberof other indent contracts, of which X 4 is a sample, show that the manu-facturers or suppliers effect the insurance and obtain the policy, andthat the plaintiffs have nothing to do with the insurance of the goods.In doing so the manufacturers are not acting as the agents of the plain-tiffs, for they are the vendors to the plaintiffs. The policy is endorsedby them and sent to a bank in Ceylon to be delivered on payment forthe goods. This I find is the usual procedure, and was the procedurefollowed in executing the order on indent D 1. In this case, I alsofind that the plaintiffs were not to receive anything more than thecommission stipulated for, and they would not be benefited or sufferif the prices fell or rose. But Mr. Koch contended, relying on somestatements made in cross-examination by Mr. Foucar, who was at thetime this indent contract was entered into, manager of the plaintiffs’import department, that in cases where the price is fixed the plaintiffstake the risk of the rise- or fall in prices, but Mr. Foucar was therereferring to orders which plaintiffs booked for themselves. Mr. Foucar,it is clear from his cross-examination, was speaking of three classes ofcontracts. First, where a limit is fixed and the plaintiffs have to buyat the best possible or lowest possible price; second, where the priceis fixed after communication with the manufacturers (as in this case)or shippers; and third, where the price is fixed, but plaintiffs bookthe order for themselves and are in reality vendors to the indentora.The third class of case is very rare, and it is only in such cases that theplaintiffs take the risk of the rise or fall in prices. But, in the secondclass of case, the prices being fixed by the manufacturers or suppliers,the latter take all the risks, and the plaintiffs do not gain or lose by thevariation in price. Mr. Foucar’s evidence, it may be, is not very.clear,but that is due to the nature of the cross-examination. Mr. Koch’scontention is not in my opinion borne out by Mr. Foucar’s evidenceor the facts of this case. What I have said with regard to the policy ofinsurance applies to the bill of lading, see X 5. To come to the terms ofthis indent now, they are as follows :—
The undersigned agree with Darley, Butler & Co. to indent for
goods through them to be imported on his/their account andrisk, and to accept delivery of such goods as are deliveredfrom the vessel or vessels by which they are shipped, or shall befound in the packages in ordinary marketable condition, orslxall not have been seized by the Customs authorities.
Any special dates for shipment to be stated in indent*
1998.
Darby,Butler <fc
Co. ti.SaJieed
1923.
Darley,Butler dtGo. v.Sakeed
( 356 )
C. i. f. o. means cost, insurance, freight, and all commission in*
eluded, goods delivered into lighters, Colombo Harbour.
F. o. b. c. means free on board steamer at port of shipment with
all commission included*
For goods purchased at first cost or f. o. b. 1 per cent, is to be
charged by Darley & Butler, London, or the purchasing agent,and commission in Colombo according to terms agreed uponby Parley, Butler & Co., packing, freight, and all other chargesin addition as customary. For goods purchased on c. i. f.terms the prices sh311 include London commission, and com-mission will be charged by Darley, Butler & Co. in Colomboas may be agreed upon.
Payment to be made in cash or approved promissory note or
notes at the option of Parley, Butler & Co., interest to becharged at the bank rate of interest.
If for any reason delivery shall not be taken, the goods shall be
detained at the risk of the indentor, who shall pay ware-house rent, fire insurance, and all other customary charges,with interest added at 12 per cent, per annum, and shall not beentitled to compensation for fehort deliveries or for any defector damage, or Darley, Butler & Co. shall be free to either resellthe goods on their own or indentor’s account, and claim onindentor for any loss sustained, together with the additionalpayment of interest upon the value of the goods at 12 per cent,per annum from d&te on which delivery ought to have beentaken.
If the .shipment or execution of any particular indent is to be
suspended or delayed,, notice has to be given by the indentorin writing. Suspension or delay can only be agreed to, pro-vided the shipper elects to execute the balance of the orderat the rate booked, and should the shipper refuse to suspendor delay shipments, the indentor will be held to his originalcontract.
Indents can only be considered cancelled after notice has been
given by the indentor in wilting, and such cancellation hasbeen agreed to by the manufacturer or his agent. In caseswhere compensation is demanded by the shipper for cancel-lation, the expenses to be borne by the indentor.
All indents taken by travellers are at indentor’s risk, and all
claims arising therefrom owing to wrong execution can onlybe settled on full credit being received from the manufacturersor their agents, and Darley, Butler & Co. shall not be heldliable for any non-settlement of claim on the part of themanufacturer. 11
(11)If any dispute should arise as to the quality or condition of the
goods or any dispute whatsoever, it is agreed to refer same toarbitration of two merchants, one to be named by Darley,Butler & Co., as representing the manufacturers or suppliersof the goods, and one by the indentor, with power to the saidarbitrator, in case they shall disagree, to appoint an umpire,and the decree of such arbitrators or umpire, as the case maybe, shall bo final and conclusive. If by mutual consent onearbitrator only has been appointed, his award shall also befinal. In the event of neglect or refusal of either party toname an arbitrator within fourteen days, the other to appointboth.
( 357 )
Should the goods from any unavoidable cause, Such as strikes ofoperatives, dock labourers, carriers, seamen, accidents torailways or other conveyances, breakdown of machinery, war,or any force majeure, be shipped later than shipment datescontiacted for, there shall be no right to cancel the indents orany portion thereof, nor shall there be any claim for loss ofmarket by reason of such late shipments.
1928.
Dartey,Sutler drCo. tr.Saheed
Then follow in writing the description of the goods ordered and theirprices and the terms, “ Price per yard nett, c. i, /. and c., Colombo, usualterms” The clauses which I have marked (1) to (12) are in’print, andolause (1) dearly creates a contract of agency between the parties; and Ican see no term in any of the subsequent clauses, nor has defendants*counsel pointed out any which alters the position of the plaintiffs fromthat of agents to that of vendors.
Clause (11), the arbitration clause, is very significant, and emphasizesthe position of the plaintiffs as mere agents. By it the parties agree torefer notr only disputes as to quality or condition, of the goods, but anydispute whatsoever whioh would necessarily include the failure to insurethe goods and obtain a proper policy, and any such dispute is not to beregarded as one between the defendants and the plaintiffs but betweenthe defendants and the manufacturers and suppliers whom the plaintiffsare to represent. This is a clear indication that in such a matter thepersonal liability of the plaintiffs is excluded, and that the plaintiffswould not be personally liable for not taking out a policy of insurance orobtaining a bill of lading. But defendants’ counsel relies on the rule Oflaw that a commission agent who imports goods for another becomes inlaw a vendor for otherwise there would be no vendor to pass theproperty in the goods to the purchaser, as there is no privity of contractbetween the manufacturer or supplier of the goods who is generally notknown to the purchaser. See Ireland v. LivingstonArmstrong v.Stokes,* and the local case of Majeed v. Weiss.3 This rule does notappear to me to be an absolute one, and when there is a contractbetween the parties, their rights and obligations must be decided by aconsideration of the terms of the contract especially, where as here, thecommission agent is not resident in a foreign country, bur resides in thesame place as the purchaser. Mr. Koch basing his argument on theleading case of Ireland v. Livingston {supra) further contends thatgranting that the contract is one of agency, still at certain stages of thetransaction, the commission agent becomes a vendor especially for thepurpose of passing the property in the goods, and as such vendor it ishis duty to obtain the necessary shipping documents, the bill of lading,and a policy of insurance. He also relies on Hayley & Kenny v. AbdulKudhoos (supra) which was recently decided by the.Supreme Court, andpurports to follow Ireland v. Livingston (supra).
Now in Ireland v. Livingston (supra) the facts were that the defendantentered into a contract with the plaintiff, Ireland, who was at Mauritiusto ship him 500 tons of sugar at 265. 9d. to cover freight and insurance, -” 50 tons more or less of no moment.” The plaintiff could onlyprocure at the price mentioned about 400 tons, which he shipped to thedefendant who refused to accept the cargo. Lord Blackburn (thenBlackburn J.), in the course of his judgment advising the House of
> (1872) L. R. 5 H, L, 385.
*L.R.7 Q. B. 508.
3 (1021) 22 N. L. R. 440.
( 358 )
Lords, considered the position of a commission agent in two sets ofcircumstances :—■
Where the consignor or commission agent is a person who has con-
tracted to supply goods at an agreed price c. f. and i. andcharged no commission: Each party takes upon himself therisk of the rise or fall in price, and there is no contract ofagency, and the parties are vendor and purchaser.
Where the consignor or commission agent does not bind himself
absolutely to supply the goods, but merely accepts an. orderby which he binds himself to use due diligence to fulfil theorder ; In such a case he is bound to get the goods as cheaplyas he reasonably can, and the sum inserted in the invoicerepresents the actual cost and charges at which the goods areto be forwarded by the consignor with the addition of commis-sion. The fixing of a maximum limit shows that the order isof this nature. The limit fixed may be* made to include cost,freight, and insurance.
In the latter case, said Lord Blackburn: “It is quite true tliat theagent who in thus executing an order, ships goods to his principal, is incontemplation of law a vendor to him. The persons who supplygoods to a commission merchant sell them to him- and not to his un-known foreign correspondent, and the commission merchant lias noauthority to pledge the credit of his correspondent for them. Thereis no moro privity between the person supplying the goods to the com-mission agent and the foreign correspondent than there is between thebrickmaker who supplied bricks to a person building a house and theowner of that house. The property in the brick passes from thebrickmaker to the builder and when they are built into the wall to theowner of that wall, and just so the property in the goods pass from thecountry producer to the commission merchant and then when thegoods ore shipped from the commission merchant to his consignee.And the legal effect of the transaction between the commission merchantand the consignee, who has given him the order, is a contract of salepassing the property from one to the other, and consequently the com-mission merchant is a vendor and has the right of one as to stoppage intransitu.“ I, therefore, perfectly agree with the opinion expressed by
Baron Martin in the Court below that the present is a contract betweenvendor and vendee, but I think he falls into a fallacy when he concludestherefrom that it is not a contract as between* principal and agent*My opinion is, for the reasons I have indicated, that when the orderwas accepted by the plaintiffs there was a contract of agency by whichthe plaintiffs undertook to use reasonable skill and diligence to pro-cure the goods ordered at or below the limit given, to be followed upby a transfer of the property at the actual cost, with the addition of thecommission, but that this superadded sale is not in any way inconsistentwith the contract of agency existing between the parties, by virtue ofwhich the plaintiffs were under the obligation to make reasonableexertions to procure the goods ordered as much below the limit as theycould.”
Lord Blackburn does not consider the case we have here where theprice is fixed so as to include cost, insurance, freight, and commission,and the price is fixed not as a limit, but as the price at which the manu-facturer or supplier undertakes to sell the goods c. i. £., and the com-mission agent, who is in the same place as the principal, is not affectedby the rise or fall in prices and is not benefited by it. He earns hiscommission and that alone. He does not ship the goods, he does not
1928.
( 359 )
affect the insurance, and does not therefore obtain the bilf’of lading orthe policy of insurance. All that is done by the shipper, the manu-facturer, or supplier. So that the facts on which the observations ofLord Blackburn are based are not the same as the facts we have to dealwith in this case. However, in respect of the second set of facts con-sidered by him, Lord Blackburn says that the commission agent becomes. a vendor in contemplation of law at two stages : First, when the agentexecuting en order ships goods to his principal; and second, for thepurpose of exercising the right to stoppage in transitu.
This view did not commend itself to the House of Lords, and LordChelmsford, who delivered the main judgment, said : “ I would prefacewhat I hav#to say by stating my opinion that the question is to beregarded as one between principal and agent, though the plaintiffsmight in some respects be looked upon as vendors to the defendants,so as to give them a right of stoppage in transitu. But the transactionbegan as a contract of agency, and in that light I am disposed to con-sider it.” A similar question arose in another case (Cassaboglou v. Gibbl)which Mr. Hayley cited, where the facts were as follows :■—The plaintiff,a merchant in London, gave orders to the defendants, commissionagents in Hong Kong, to purchase for him a quantity of a certain kindof opium. The defendants upon such orders purchased and shippedto the plaintiff opium which they erroneously supposed to be of thedescription ordered, but which was really of an inferior quality. Theplaintiff sought to recover from the defendants the difference betweenthe value of the opium ordered and that of the opium actually shippedby the defendant, on the ground that the relation between the defend-ants as commission agents and himself was that of vendor and vendeeof the opivnr, but the Court held that the relation of the parties wasthat of principal and agent, and that the true measure of damages wasnot the difference between the value of the goods ordered and that ofthose shipped, but the loss actually sustained by the plaintiff, in conse-quence of the opium not being of the description ordered. I find thatthe case went before the Court of Appeal, see (1883) 11 Q. B. D. 797, andLord Esher (then Brett M.R.) and Fry L. J. commented on and explainedthe judgment of Lord Blackburn in Ireland v. Livingston (supra).Lord Esher said: “ Mr. Pollard cited, however, in support of hiscontention, the authority of Lord Blackburn in his Work on Sales, atpage 214, and the case of Ireland v. Livingston (supra), and on a questionrelating to agency he could not have cited a higher authority, but LordBlackburn has not said that as long as the contract of principal andagent is executory, the principal can sue the agent and make him pay asthough the contract were that of vendor and purchaser. He hasconsidered tne point with reference to two matters, one with regard tothe theory of passing the property in the goods, and the other as to thepower of stopping the goods in transitu, and as to those two matters,he has said with reference to the first of them, that if tk-t foreign com-mission agent has purchased the goods which he was ordered to ‘purchaseand has put them on board consigned to his principal, by that appro-priation the property in the goods passed from the conitoission agent tothe principal as if such agent were a vendor. Then, as regards thepower to stop in transitu Lord Blackburn has said that if the commis-sion agent abroad is bound to pay for the goods to the foreign seller ofwhom he bought them and, if after he has shipped them to his principal,such agent has not been paid, and his principal is insolvent, so that theforeign seller could only have the agent to look to for payment, theCourts have held that such agent may stop the goods in transitu as if1 (1882) L. B. 9 Q. B. D. 220
Barley,Butler*Co. v.Sahetd
Idas.
Darley,Butler do
(Jo. v.
Saheed
( 360 )
he were a vendor, or in the position of a vendor. And that that is howit is understood as pointed out in Benjamin on Sales, 2nd ed., p. 689,Where it is said ‘stoppage in transitu is so highly favoured on accountof its intrinsic justice, that it has been extended by the Courts to quasivendors, to persons in a position similar to that of vendors.* But it isonly said that the commission agent is to be as if he was a vendor whohas bought for his principal the goods which were ordered was not theease here
“ It is obvious to my mind that the contract of principal and agent isnever turned into a contract of vendor and puchaser for the purpose ofsettling the damages for the breach of duty of the agent.”
Fry L. J. said : “ Was the contract of principal and agent merged intothat of vendor and purchaser ? This must be a question of fact, andas a matter of fact there was no such contract. It is said, however,that there must be such a contract inferred for two reasons : First,because otherwise the property in the goods would not pass to theEnglish merchant for whom the agent abroad bought them. In myjudgment the property would, pass. If the article was specific it wouldpass by the purchase, and if not specific, but was appropriated by theagent for his principal, it would pass by virtue of the appropriation.The other reason for inferring the relation of vendor and purchaser wassaid to be because the foreign agent who has bought for his principalhas the right of stoppage in transitu, but that, in my opinion, is noreason for such inference. Since the leading case on the subject.,namely, that of I/ickbarrow v. Mason1 the person who stops goodsin transitu must be a consignor, but there are numerous cases inwhich the right has been allowed of stopping in transitu without therelationship existing of vendor and purchaser,” and referring to Irelandv. Livingston (supra) he observed: “ No doubt in that case LordBlackburn uses strong language, and says that ‘the legal effect of thetransaction is a contract of sale passing the property from the one tothe other, and consequently the commission merchant is a vendor andhas the right of one as to stoppage in transitu,* but by the legal effectof the transaction he means the legal effect of an analogous contract tothat of a contract of purchase and sale. It is important also to observethat Lord Chelmsford in that case puts the matter so as to exclude theexistence of any contract of purchase and sale. He says : ‘ I wouldpreface what I have to say by stating my opinion that the question isto be regarded as one between principal and agent, though the plaintiffsmight in some respects be looked upon as vendors to the defendants,so as to give them a right of stoppage in transituTherefore in such aease as the present, there is, in fact, no contract of vendor and purchaser,Benjamin on Sales, 6th ed, p. 812, referring to these two cases,gays : “ The dictum of Lord Blackburn was explained by the Court ofAppeal, in Cassaboglou v, Gibb.2 Both Brett M. R. and Fry L.J. statedthe contract between a commission agent and his foreign principal tobe not one of seller and buyer ab initio, but a contract analogous theretoplacing the commission agent after shipment of the goods in the posi-tion of a quasi vendor for certain purposes. Accordingly they heldthat upon breach of an executory contract by a commission agent tosupply his correspondent with goods of a specific description, thedamages were to be assessed as between principal and agent and not asbetween seller and buyer.” Viewed in the light of these observations,the judgment of Lord Blackburn is not a strong authority, if an autho-rity at all, for the propositions in support of which Mr. Koch has invoked
*Sm. L. C., 8th ed„ 763.
*(1888) 11 Q- B. D. 797.
( 301 )
it, and in the ease of a commission agent shipping goods the relation ofvendor and purchaser need not necessarily arise at any stage of thetransactions prior to shipment. For, according to the opinion ofFry L.J.: ** If the article was specific, it (the property) would pass bythe purchase, and if not specific, but was appropriated by the agent forhis principal if would pass by such appropriation ” and it is necessaryto constitute the agent a vendor for the purpose. This would bespecially so in a case where the agent residing in the same place as theprincipal purchases goods in a foreign country, as has happened in thiscase. I find that indent contracts very similar to those in use in Ceylonare in common use in India, at Bombay, Calcutta, and Madras, and Ithink, it will be of interest and importance to ascertain how they havebeen oonstrued there. I have come across three cases in which the ques-tion involved here has been discussed. The first case I would refer to,the earliest in date, is MokamedaUy EbraMm Pirhhan v. Sckeller Dasogne<& Co.1 The indent in that case was addressed to the defendants by theplaintiff and the first clause was as follows :—** I hereby request you toinstruct your agents to purchase for me (if possible) the under-mentionedgoods on my account and risk upon the terms stated below.1’ Amongthe other clauses which are similar to those to be found in the indentD 1 was one which required the goods to be insured on the best termspossible: “ You are to he free of all responsibilities as regards thisinsurance.” There was no express reference to c. i. f. terms, hut themode of payment was “ draft at 30 days’ sight with documents attached.On one of these indents the plaintiff ordered some zinc. The order wasaccepted through the defendants, by a firm in France, hut was notexecuted within the stipulated time, and the manufacturers in Franceasked for an extension of time or for the cancellation of the indent.The plaintiff, when the time for fulfilment of the contract hacj expiredwrote to the defendants informing them that he would buy similar goodsat Bombay on the defendant’s account and did so, and brought thataction to recover the difference in the price as damages. The defend*ants pleaded that they were merely agepts for the plaintiff and deniedliability. The plaintiff, on the other hand, contended that the indent •and certain other documents constituted a contract of sale by thedefendants on behalf of the manufacturers of zinc in France. TheCourt held that the contract was one of agency, and that the actioncould not be maintained. Sargent C. J., delivering the judgment of theCourt, referred to the judgment of Lord Blackburn in Ireland v. Living-ston lsupra), and said that: “ That case came in succession before theCourt of Queen’s Bench, the Exchequer Chamber, and the House ofLords. The defendant was a merchant carrying on business in Liver-pool, and instructed the plaintiffs, commission agents at Mauritius, topurchase for him 500tons of sugar to cover cost, freight, and insurance 50tons more or less of no moment * if it enables you to get a suitable vessel.”The plaintiffs were unable to execute the orders at the maximum pricefixed, except to the extent of 393 tons, and having shipped these toEngland, drew bills against the shipment which were refused acceptanceby the defendant,, on the ground that a shipment of less than 500 wasnot a compliance with the order, and he was, therefore, not obliged toaccept the sugar, or honour the draft. An examination of the judgmentsof the twelve Judges, who took part at some stage or other in the action,shows that, with the exception of Baron Martin, the transactionbetween the parties was regarded by the Judges as one between principaland agent, and was construed as such, and this was*the view finallyadopted by the House of Lords in deciding the case for the plaintiffs,
1 (1389) 13 Bom. 470.
1923.
Barley,Butler dsCo. v.Saheed
1923.
Barley,
Butler cC?Co. v.Sahted
( 302 )
I3kron Martin* however, who had been a member of the Exchequer Cliai n -ber, and was also summoned to give his opinion in the House of Lords,held the relationsliip of the parties to be one of vendor and vendee, andconstrued the instructions on that assumption in favour of the defend-ants. Mr. Justice Blackburn* in delivering his opinion in the House ofLords* whilst agreeing with the majority of the Judges, made the follow-ing remarks which were much relied on by Counsel for the plaintiff.”He then cited the passage from the judgment of Lord Blackburn which Ihave already cited and continued : “ These remarks of Mr. Justice Black-burn, which were doubtless open to misconstruction* were afterwards thesubject of discussion in Cassaboglou v. Gibb (supra), where the plaintiff,a merchant in London* sought to make the defendants, commissionagents in Hong Kong* liable as vendors for the difference between themarket value of the opium ordered by the plaintiff and that actuallysent. But the Court held that the plaintiff could not treat the defend-ants as vendors, but only as agent who would be liable only for theactual loss sustained by the plaintiff through their negligence, andwhich was admittedly less than whal the plaintiff claimed. BrettM.R. says : ‘ Lord Blackburn ha? not Said that as long as the contractof principal and agent is executory* the principal can sue the agent, andmake’him pay as though the contract were that of vendor and purchaser.He has considered the point, with reference to two matters only; onewith regard to the theory of-passing the property of the goods and theother as to the power of stopping the goods in transitu.* The sameview was taken by Lord Justice Fry. This must be regarded as aconclusive authority that the relationship between the parties continue®throughout, except for certain special purposes, to be one of principaland agent.11 That case clearly holds that the relationship between theparties to an indent contract continues through, except for certainspecial purposes, ‘to be one of principal and agent. In the next casePaul Beier v. Chotatol Jwards1 also, the construction of an indentcontract was involved. But the Court Tefused to decide whether thecontract between the parties was one of agency or of sale* as the terms ofthe contract were equivocal. The contract in one of its clauses referredto the parties as sellers and buyers, and no commission was providedfor. The case was decided on the trade customs prevailing in Bombay.The last Indian case I shall refer to is the case of Meredith v. AbdullaSahib,* and is the most important of the three. In that case the indentwas in the usual form. It was addressed to Messrs. J. H. Elliott & Co.,Ltd., whose liquidator the plaintiff was, and began thus : “ Dear Sirs,I/we hereby request you to purchase and 6liip for rae/us, if possible, theUhder-mentioned goods on my/our account and risk upon the termsstated below.” The goods were purchased on c. i. f. and c. terms,and were shipped on board a German vessel, but, owing to the outbreakof war and transhipment at various portr, they arrived at Madras abouttwo years after they had been shipped. The defendants refused to payfor and take delivery of the goods as the contract of affreightment wasdissolved by war and the plaintiff could not tender them valid shippingdocuments, viz., a bill of lading. The Courtheld that, although in a casebetween an ordinary vendor and purchaser, the purchaser would havebeen entitled toreject the goods according to the judgment of the EnglishCourt of Appeal in Amhold Karberg db Co. v. Blythe Green Jourdain dbCo.,* still in that case as the contract created by the indent was one ofagency and the goods were imported on account and risk of the defend-ant, the latter was not entitled to refuse to take delivery of the goods.
1 (1904) 30 Bom. 1.2 (1918) 11 Mad. 1060.
3 (1916) IK. B. 495′.
( 363 )
Wallis C.J., in the course of his judgment, said: “ Now, it is well settledthat where goods are purchased in this way from a commission agentunder a c- i. f. contract, though the agent is regarded for some purposesas a principal just as any other vendor under a c. i. f. contract, yet therelation of principal and agent still subsists. Ireland v. Livingston(supra), in which Blackburn J. (as he then wan), gave his well-knownexplanation of the nature of a c. i. f. contract when advising the Houseof Lords, was a case of this kind and was disposed of by the House ofLords on a principle of the law of agency, viz., that, as the error arosefrom the principal’s indistinctness of expression, he must bear the loss.The first case in which such an agent was assimilated to a vendor wasFdse v. Wray,1 where he was showed to exercise the right of stoppagein transitu in respect of goods which he had bought and paid for,and the true principal would appear to be that the assimilation is onlyto be carried so far as is necessary to give business efficacy to thetransaction. This I gather to have been the view of Brett M.R.and Fry L.J. in Cassaboglou v. Gibb (supra) where Lord Blackburn’sobservations in Ireland v, Livingston (supra) were considered. Other*wise the rolation remains one of principal and egent as held in the lastmentioned case in assessing damages.” Then, after referring to the caseof Arnhold Karberg & Co. v. Blythe Green Jourdain & Co. (supra)9 whichhe distinguished from the ca6e before him, he continued : “ In this casethere is the express stipulation that the goods are to be purchased andsupplied on the buyer’s account and risk. The whole transactionbe’ng thus at the risk of the buyer, I see no reason for reb’eving himfrom the risk of what has happened. Even, if the word ‘risk ’ werenot mentioned in the contract, I think a special contract throwing thisrisk on the buyer could be inferred from the fact that the goods were tobe purchased and shipped ‘ on account of ’ the buyer pursuant to theprinciple embodied in section 222 of the Indian Contract Act that—
“ ‘ The employer of an agent is bound to indemnify him against theconsequences of all lawful acts done by 6uch agent in theexercise of the authority conferred upon him.*
“ To throw these goods on the agent’s hands and leave them to bearthe loss which has arisen by reason of the outbreak of war while thegoods were in transit appears to be entirely opposed to, and inconsistentwith, the general principles of the law of agency.”
I need hardly say that section 222 of the Indian Contract Act declaresthe common law on the point. Spencer J. agreed with the Chief Justice,and, in the course of his judgment, gave certain grounds for holdingthat the contract was of one agency, which apply with peculiar forceto this case.
That case is, as I said, of importance and has a special bearing in thecase before me. For although under the contract goods were purchasedon c. L f. terms, the commission agent was relieved of the necessity oftendering the shipping documents, and the purchaser was held bound totake delivery of goods that had arrived without such documents, as thecontract between the parties was a contract of agency.
Lastly, I .come to the local case’ of Hayley & Kenny v. Kudhoos (supra)recently decided by the Supreme Court. Mr. Koch relies very stronglyon that case. There J^he plaintiffs who were commission agents suedthe indentor on an indent contract which was beaded 11 Indent forc. i. f. import business,” and’the terms of the indent-are not mate-rially different from those of the indent in this case. In the plaint theyalleged that the plaintiffs had sold and the defendant had bought
1 (2802) 3 East 93.
1923.
Varley,Butler <C*<’o. y.Saheed
25/28
1928.
Barley,Butler &Co. v.
Sdheed
(364 )
12J tons of galvanizod plain shoots at £.73. 4s. per ton c. i. f. and c.,for which the defendant had agreed to pay on arrival. This the defend-ants failed to dp, and the plaintiffs sold the goods in terms of the contractand claimed the difference between the contract price and the pricerealized at the sale. The defence was the same as the one raised here,that the plaintiff failed to tender a proper policy of insurance which isan essential requirement of a c. i. f. contract.
The plaintiffs contended there just as the plaintiffs are doing here,that the indent created a contract of agency,, and that the defendant isnot entitled to repudiate the contract, and that his right is to recoverany damages sustained by him by the plaintiffs’ failure to insure thegoods or tender a proper policy of insurance. The Supreme Court(De Sampayo and Schneider JJ.) held that the plaintiffs were to allintents and purposes in the position of vendors, and so bound to tender aproper policy of insurance, and as they had failed to do so they couldnot maintain the action. Mr. Hayley has attempted to distinguishthat case from the present one on various grounds. The SupremeCourt adopted the reasoning of Lord Blackburn in Ireland v. Livingston(supra), and gave three grounds for holding that the commission agents,the plaintiffs were in the position of vendors to the indentor, thedefendant. The grounds are—
1st—That the goods had been ordered at a fixed price, and theplaintiffs would again if they could procure the goods at a lessprice and would suffer loss if they had to pay a higher price.Thus the gain or loss would be the plaintiffs own. This isinconsistent with the essence of a contract of agency asexplained by Lord Blackburn.
2nd,—The consignors in England were unknown to the defendant,and unless the plaintiffs are treated as vendors to the defend-ants there would be no one to pass the property in the goods.
3rd.—The plaintiffs themselves took up the position of vendors, forthey alleged in the plaint that they had sold, and the defendanthad bought the goods in question.
The last ground has no application to the present case. For theplaint is carefully worded, and avoids all reference to selling andbuying. This, however, was the main ground of decision, as TheirLordships thought that the allegation that the plaintiffs sold and thedefendant bought concluded all controversy on the question.
The first ground* too, has no application to the facts of this case asfound by me. The rise or fall in price would not affect the plaintiffs.The gain or loss is borne by the manufacturer or supplier, and the plain-tiffs are entitled to their commission and that alone. Then remainsthe second or the general ground that as the consignors in Europe werewholly unknown to the defendants, the plaintiffs must, u to all intentsand purposes” be regarded as the vendors to the defendants, as otherwisethere would be no one from whom the property in the goods could passto the defendants, and that, being vendors, the plaintiffs were bound toobserve the obligations of a c. i. f. contract. To my mind, if I maysay so respectfully, the proposition is stated too broadly. The case ofCassaboglou v, Gibb (supra), winch explained Lord Blackburn’s observa-tions in Ireland v, Livingston (supra), does not appear to have been citedat the argument, and the attention of the Court had also not been invitedto the Indian case I have referred to. As pointed out by’Xord Esher inCassaboglou v, Gibb (sttpra) the commission agent is treated by LordBlackburn as being in a position analogous to that of a quasi vendor for
( 365 )
certain purposes after he had put tlio goods purchased on board con-signed to his principal. By that appropriation tho property in thogoods passed from the commission agent to the principal, as i f such agentwere a vendor. Lord Chelmsford in Ireland v. Livingston (supra) andFry L.J. in Cassaboglou v. Gibb (supra) did not consider it necessary totreat a commission agent as-a vendor even for this purpose. SargentC,J, in MohomedaUy Mbrahim Pirkhan v. Scheller Dasogne da Co. (sypra)was of opinion that in an indent contract the relationship betweeh theparties continued throughout, except for certain special purposes, to boone of principal and agent, and in Meredith v. Abdulla Sahib (supra) alsoin the case of an indent contract, the Court thought that the assimi-lation is only to be carried as far as is necessary to give “ businessefficacy ” to the transaction. In view of these authorities, can it be saidgenerally that “ to allintents and purposes ” the commission agents is inthe position of a vendor ? It was perhaps unnecessary to state thoproposition more definitely for the purpose of that case, as the decisionreally turned on the third ground, which, in the opinion of the SupremeCourt, was conclusive.
1923.
Parley,Bxttler <£•Co. v.Sabred
Then comes the’question which forms the crux of tho present case.Is it necessary that for the purpose of effecting t he insurance of the goodsand entering into a contract of affreightment that the commission agentshould be treated as a vendor, who would be bound to obtain a policy ofinsurance and a bill of lading ? As will be seen from the decision citedabove, the question so far as it relates to a policy of insurance is notcovered by any direct authority apart from the local case. But asregard the bill of lading the Madras case, Meredith v. Abdtdla Sahib(supra), shows that that under a c. i. f. contract the indentor is bound totake delivery of the goods which have arrived, although a valid bill oflading cannot be tendered, as the contract is one of agency.
It is also apparent from the authorities that Courts have beenreluctant to regard the commission agent as a vendor except when itbecomes absolutely necessary to do so. A policy of insurance i& notnecessary to pass the property in the goods, and forms no part Of thecontract of sale. It is an extraneous precaution taken after the saleof the goods and the property in them has passed* and the “ businessefficacy ” of the sale transaction would not be effected if, for the purposeof insuring the goods, the commission agent be regarded as the agentof the purchaser. The same may be said of the bill of lading. I findtherefore on the facts of tins case and on the authorities that the assimi-lation of the commission agent to the position of a vendor need riot beextended to cover the insuring of the goods or tho entering into a Con-tract of affreightment. Tho commission agent should for the purposeof obtaining these shipping documents be treated as the purchaser’sagent. The plaintiffs were, therefore, acting as the agents of thedefendants in the matter of the insurance of the goods and of tho billof lading, and the defendants are not entitled to repudiate the contractif the plaintiffs have failed in their duty to obtain and tender thesedocuments, and the defendants’ only right is to recover any damagessustained by them owing to the plaintiffs’ breach of duty.
The second ground urged by Mr. Hayley winch prevents the defend-ants from disclaiming their liability to pay for the goods is that evenif the indent be construed as containing an ordinary c. i. f. contractbetween a vendor and purchaser, property so called, its express termscompel them to take delivery of such goods as arrive safely in Colombo,irrespective of whether a policy of insurance or a bill of lading is tenderedor not. In short it is open to the seller to treat the indent as “an-arrival contract.” He relies on the following words of the first clause
1928.
Darley,Butter <b
Co. v.Saheed
( 36G )
of the indent: “ to be imported on their account and risk, and to acceptdelivery of such goods as are delivered from the vessel or vessels bywhich they are shipped. … ”
This agreement in clause (1) seems to me to be absolute and unqualifiedand the very foundation of the contract between the parties. It isintended to protect the plaintiffs against the breach of any duty re*quired by the contract to be performed by them, provided the goodsarrive safely at their destination. Under an ordinary c. i. f. contracteven when the goods arrive safely, the purchaser is not bound to-takedelivery unless the shipping documents are tendered to him (ClientCo., Ltd. v. Brekke do Horlid1). The words of clause (1) in my opinionrelieve the commision agent of the necessity of tendering the shippingdocuments upon the safe arrival of the goods in Colombo; Such aprovision seems particularly necessary and reasonable when one remem-bers that the bills of lading and the policies of insurance are obtainednot by the plaintiffs or their agents, but by the manufacturers or thesuppliers who ship the goods. That the terms of c. i. f. contract maybe varied by the insertion of “ arrival terms ” is clear from the judgmentof the Court of Appeal in re Denbig Coroan do Co. and R. Atcherley do Co.*The agreement that the purchaser should take delivery of such goodsas are delivered from the ship being unqualified, and being subject tono condition, Mr. Hayley contends that the buyer or indentor should bekept to its terms. Mr. Koch’s answer to this contention is that theagreement is quite consistent with all the terms of a c. i. f. contractbeing in force, and does not vary them in any way. I failed to appreciateMr. Koch’s argument on this aspect of the case. If his argument, sofar as I can understand it, is sound, one must read the words “ exceptin the case of c. i. f. contract ” after the word “ shipped,” and anagreement which stands unqualified in the contract must be taken assubject to a condition which would rob it of almost all its effect. Icannot see any justification for qualifying the agreement as would be theresult if Mr. Koch’s argument is accepted. But the facts and circum-stances of the execution of the indent order require that the undertakingshould be treated as an absolute one. In the case I have alreadyreferred to, one of the terms of the contract was “ Payment cash againstdocuments or delivery order,” and the seller was held to be relieved ofIlia liability to tender a bill of lading. Therefore, even if the relation ofvendor and purchaser .has been created between the parties, the expressagreement or undertaking binds the purchaser to accept delivery of thegoods if they arrive safely whether the seller is prepared to tender theshipping documents or not.
Lastly, there remains the question of waiver, Mr. Hayley contendsthat tho defendants has waived his right to demand a policy of insuranceon two grounds :—
First, that during a long course of dealing between the parties, whichextended over several years, the defendants never asked for a policy ofinsurance when they paid for or took delivery of goods. Therefore theyhave lost their right to demand the tender of a policy of insurance.. Itis however not correct to say that the defendants never asked for apolicy, for Mr. Foucar says that the defendants did ask for insurancepolicies during the war. The contracts being o. i. f., the defendantswere always paying for the insurance of the goods, and they were entitledto have what they were paying for. They may have presumed that theplaintiffs were fulfilling their part of the contract and insuring the goodsand obtaining the necessary policies to be tendered to them if and when
■t (1013) 1. K. B. 531.2 (1921) 00 L. J. K. B. 836.
( 367 )
a demand was made. Dealing with the question of waiver in the caseof a c. i. f. contract, Rowlatt J. said in Orient Co., Ltd. v, Brekke &Horlid (supra) that: “ even if it could be made out that he had waivedthe actual tender of a policy, that alone would not help the seller. Whathad to be shown is that he waived the insurance itself.*’ If that be thecorrect law, I do not think that even if the defendants had omitted todemand the tender of a policy on previous .occasions, it could be saidthat they had waived a right which they had always stipulated for andpaid for. It is clear the defendants had never waived the insuranceitself.
The second ground urged in support of this plea is that after thearrival of the goods, the defendant promised to pay for them, asked fortime to pay, and also entered into negotiations to give plaintiffs amortgage bond in respect of his entire indebtedness ‘to the plaintiffswhich included the amounts due for these goods. If there had been aconcluded compromise and a bond granted, matters might have beendifferent-. But the negotiations for the mortgage fed through. Thebond was never signed. There is no proof that when the defendant-promised to pay or asked for time, or entered into negotiations to give abond they were aware that the plaintiffs were unable to give them thenecessary shipping documents. If, knowing that the plaintiffs werenot in a position to tender these documents, they had acted as they havedone, I have no doubt there would have been a waiver. But the defend-ants might have presumed, as they were entitled to presume, that theplaintiffs had performed their part of the contract and would be readyto deliver to them a policy and a’ bill of lading whenever demanded. Innot demanding the documents when they made the promise to pay, orto give a mortgage, they had acted as they had ordinarily done, andwithout any knowledge that the documents were not available fordelivery to them. Waiver, like acquiescence,pre-supposesthat thepersonsought to be bound is fully cognizant of the facts when he does the act bywhich he is to be affected When a pro-note is given or a bill accepted,and even payment made, the buyer might still refuse to meet the note orbill or recover the money paid, if the proper shipping documents are nottendered. The grounds urged do not in my opinion constitute a waiverby the defendants of their right to have the shipping documents tenderedif they are in law entitled to such Lender.
My decision on the issues therefore is tliat the plaintiffs did not tenderto the defendants aproper policy of insurance or a bill of lading in respectof the goods intended for, that the plaintiffs* failure to do so onlyamounted to a breach of duty on their part as agents of the defendants,and that the defendants would in law be entitled to recover anydamages sustained by the plaintiffs’ failure to tender these documents.The defendants were not entitled on that account to reject, the goodswhich had arrived safely and which were offered to them. They wereobliged to accept delivery of the goods and pay for them. Even if theplaintiffs are treated as vendors bound to obtain a bill of lading and toinsure the goods, the defendants are not entitled to refuse to takodelivery of the goods owing to the absence of the shipping documents, asthey had expressly agreed—“ to accept delivery of such goods as aredelivered from the vessel or vessels by which they are shipped.”
As the defendants have failed on the issues that were pressed. I givejudgment for the plaintiffs as prayed for with costs. –
Samarawickreme, for the defendants, appellants.
Hayley (with, him H. E, Garvin), for the plaintiffs, respondents.
1928.
Darley,Butler <6Co. v.Saheed
1923.
Darley,Butler ds
Co. v.Saheed
( 368 )
November 1, 1923. Ennis A.C.J.—
In this case the plaintiffs claimed Rs. 2,202’20 damages for breachof contraot by the defendants on their refusal to accept and pay forcertain goods indented for by them. Certain issues were framedin the Court below, but in the end they were limited to one, namely,the 5th issue : “Did the plaintiff duly tender to the defendantsthe proper policy of insurance and the other necessary shippingdocuments in respect of the goods indented for ? And the second-ary issues arising out of that issue were : “ Were the plaintiffs boundto tend©T any policy of insurance or any other shipping documents.And if so, can the defendants disclaim liability to pay the amountclaimed in the plaint ? ” A long legal argument appears to havebeen addicssed to the learned District Judge in the Court below-,covoring much the same ground as the argument found in the caseof Hayley Kenny v. Kudhoos.1 The learned Judge, however;held that the facts in the present case were not altogether the sameas the facts in the case of Hayley & Kenny v. Kudhoos (supra).He held that the contract in this case was in form a contract ofagency; and that the undertaking of the defendants to acceptdele very ,of the goods as they were delivered from the vessel orvessels in which they were shipped distinguished this case from theprior one. In my opinion the learned Judge is right. We havebeen referred to a number of cases, namely, Manbre Saccharine Co.,Ltd. v. Corn Product’s Co., Ltd.,2 WilsonHolgate & Co., Ltd. v. BelgianGrain & Produce Co.,3 and Orient Co., Ltd. v. Brehke & Horlid4in support of the proposition that, where there is a c. i. f. contractof sale, delivery of the goods is not perfected unless accompaniedby delivery of a pelicy of insurance. There seems to be abundantauthority in support of that proposition. But it is to be observedthat the proposition relates to the case of a c.i. f. contract for thesale of goods. Now the present contract, unquestionably in formis a contract of agency and not a contract of sale. Moreover, it isnot exclusively a c. i. f. contract. It is said to be a c. i. f. and c.contract, namely, that the price fixed was to include not only cost,insurance, and freight, but also commission. In the case of Hayley<& Kenny v. Kudhoos (supra) the Court was in the” presence of asimilar contract in this respect. But in that case it appears thatthe plaintiffs in their plaint admitted that they had sold the goodsand assorted that the defendants bought tlisni, so that, notwith-standing the form of the contract, it was held that it was in fact acontract of sale between the plaintiffs and the defendants. It hasbeen strongly urged upon us that we should make the same findingin this case, not because the plaint is set out in similar terms to theplaint in Hayley & Kenny v. Kudhoos (supra), but because it is urgedthat the fixing of the price shows that the plaintiffs were in fact to
(1022) 21 X. L. 7?. 267.3 (1020) 2 K. B. 1.
(1010) 1 K. 13. 10S.’ (1013) I K. Ji. 531.
1923,.8S
C.J.X.
iyataxAi
abriesh
( 369 )
make what profit they could out of that figure, and that there wasnothing in the nature of a commission, notwithstanding the terms ofthe contract. Such a contention is arguable. But, in my opinion,this case goes further. The terms of the indent are not only that thedefendants are to accept delivery of the goods as they are deliveredfrom the vessels, but also that in the event “ of any dispute what-ever ” the parties agreed to refer the dispute to arbitration, theplaintiffs are to appoint one arbitrator on behalf of the suppliersof the goods, and the defendants to appoint the other arbitrator ;in other words this arbitration clause indicates an arbitration of anydispute between the supplier and the defendants, rather thanbetween the plaintiffs and the defendants. I need not go into all thecases which have been cited, as they have been fully dealt with inthe judgment under appeal. It is sufficient to cite the Indian caseof Meredith v. Abdulla Sahib1 to show that there is authorityfor not extending the proposition expressed by Lord Blackburn inthe case of Ireland v. Livingston (supra) that a contract of agencybecomes at some time, in the course of its activity, a contract ofsale. The later cases all seem to indicate that the proposition in.Ireland v. Livingston2 has but a limited application, and that acontract of agency remains throughout a contract of agency, butthat for certain purposes it is assimilated to a contract of sale. I seeno reason why in this case it should be in any way assimilated to acontract of sale. It appears from the evidence that the commercialtraveller of the foreign firm himself saw the defendants and enteredinto a bargain with them, and the matter was subsequently putinto the hands of the plaintiffs for intermediary purposes. Thatbeing so, the defendants were well aware of the foreign seller, andmust have been aware that the plaintiffs themselves would not takeout policies of insurance. It appears to have been taken for grantedby the plaintiffs that there was a policy of insurance which theycould not at the trial lay their hands on, one witness saying thathad there been no policy of insurance, there would have beenendless correspondence on the matter. There is no reason in thisconnection why the plaintiffs should be regarded as other thanagents of the defendants for the purpose of accepting a policy ofinsurance, and even if they had not accepted a policy of insuranceander a o. i. f. contract of sale, the defendants would have tojdemnify them, if, in the exercise of their discretion, they acceptedthe goods as their agents. In the circumstances, I would dismissthe appeal with costs.
Porter J.—I agree.
Appeal dismissed.
1 (1918) 41 Mad. 1060.28-xxv.
9 (1872)L.B.5 H.L. 395.
12(60)29>
1928.
Ennis
A.O.J.
Darley,Butler drCo. v.Saheed