108-NLR-NLR-V-61-KANDIAH-Appellantand-KANDASAMY-Respondent.pdf
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Mandiah v. Kandasamy
Present: Weerasooriya, J., and Sansoni, J.
KA'NDTAH, Appellant, and KANDASAMY, RespondentS. G. 121—D. G. Jaffna, 5896
Partnership—Stipulation by partner to provide a specified sum as capital—Partial
performance of it—Right to share in the profits of the business.
'Plaintiff had agreed to contribute the sum of Be. 25,000 as his amount ofcapital in a partnership business. The partnership agreement did not mentiona date before which the capital had to be paid by the partners ; nor did itcontain any term that a partner who failed to pay his share of the capital infull was not to he entitled to share in the profits of the business.
The capital actually contributed by the plaintiff was only Bs. 13,428 ■ 60.
Meld, that the plaintiff was entitled to share in the profits of the businessnotwithstanding his failure to contribute the fall capital due from him.
jAlpfeaL from a judgment of the District Court, Jaffna.
G. Ranganathan, -with H. G. Keerthisinghe, for 1st defendant-appellant.
S. J. V. Chelvanayakam, Q.C., -with S. Sharvananda and S. Kanaga-ratnam, for plaintiff-respondent.
Cur. adv. mdi.
wh»p;kASOOR1YA, J.—Kctndiah v. Kandasamy
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September 3, 1958. Weerasooriya, J.—
Two questions were argued before us in this appeal. One is a questionof fact and the other a question of law. The question of fact is whatamount of capital was contributed by the plaintiff-respondent under theagreement 1D4. The full amount which the plaintiff-respondent had tocontribute was Bs. 25,000. Although at the commencement of the trialthe plaintiff’s case was that he had contributed the whole of this sum, heappears to hare abandoned that position subsequently. The trial Judgehas found that the capital actually contributed by the plaintiff wasBs. 15,423*60. It would appear that this sum is made up of threeitems, Bs. 8,423*60, Bs. 5,000 and Bs. 2,000. The findings of the trialJudge in regard to the first two of these items were not seriouslychallenged by learned Counsel for the 1st defendant-appellant, and wesee no reason to reject them.
As for the sum of Bs. 2,000, there is no specific finding by the trialJudge that the plaintiff paid this to the 1st defendant-appellant. Theplaintiff led the evidence of one V eerasingham who had invested monieswith the 1st defendant-appellant. The account F15 shows a balance ofBs. 2,149*08 due from the 1st defendant to Veerasingham in August,1948. Veerasingham said that he agreed to a sum of Bs. 2,000 out ofthis amount being paid over by the 1st defendant-appellant to theplaintiff’s brother Paramasivam who had married the daughter ofVeerasingh&m’s brother. Paramasivam, who was also one of theplaintiff’s witnesses, said that the Bs. 2,000 which Veerasingham hadrequested the 1st defendant to pay to Paramasivam “ was invested in.the business ”, but what the business was had not been made dear.Although the plaintiff’s position seems to have been that Paramasivamconsented to this sum being utilised by the 1st defendant in the partner-ship business as part of the plaintiff’s capital contribution, Paramasivamwas not questioned on the point. Moreover, in the letter 1D9 dated the28th July, 1949, the plaintiff himself has stated that the capital investedby him in the business consisted of the two items Bs. 8,423*60 andBs. 5,000. There is no reference to a third item of Bs. 2,000. In thecircumstances I would hold that the sum contributed as capital by theplaintiff is Bs. 13,423*60, and not Bs. 15,423*60 as found by the trialJudge.
The question of law is whether the plaintiff, having failed to con-tribute the Bs. 25,000 which he had agreed on 1D4 to bring in as capital,is entitled to any share at all of the profits." The agreement 1D4 pro-vided for a distribution of the profits (if any) onee in sis months in respectof the period 1st October, 1948, to the 30th September, 1949. Thepresent action was filed on the 12th September, 1949, for an accountingof the profits of the partnership for the first six months ending on the31st March, 1949, and for the recovery of the plaintiff’s share of thoseprofits.
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WEERASOORIYA, J.—Kandiah v. Kandasamy
In Kandasamy v. Kandiah et ail.1 an. earlier appeal was filed in this verycase against a dismissal of the plaintiff’s action on a finding against himin respect of the preliminary issue raised at the first trial whether theagreement 1D4 was illegal and contrary to public policy and thereforeunenforceable. In the judgment delivered^ in appeal it was .held that theobject of the partnership which was brought into existence under 1D4was “ to contribute capital and to share the profits and losses, but not tocarry on the business of selling arrack ” (i.e., at the particular tavernsspecified in the agreement and in respect of which the 1st defendant-appellant and the 2nd defendant alone held the exclusive privilege underthe Excise Ordinance). The order dismissing the plaintiff’s action wasset aside and the case remitted for trial on the other issues.
Relying on these findings learned Counsel for the 1st defendant-appellant strenuously contended before us that the contribution by eachpartner of the foil amount of the capital as provided in 104 was acondition precedent to his right to share in the profits inasmuch as theessence of the agreement was the contribution of capital and the sharingof profits and losses, and not the carrying on of a business.
The question whether, where it is provided under a partnership agree-ment that each partner shall bring in a specified sum as capital, how farthe fulfilment of that obligation by one of them is a condition precedentto his right to call for fulfilment by the others of their obligations isdealt with in Lindley on Partnership (Eleventh Edition) at page 505,where certain rales stated to have been laid down in a note to Pordage v.Cole2 are set out. Learned Counsel for the 1st defendant-appellantconceded that if these rules are regarded as decisive of the point it wouldnot be possible for him to argue that the particular provision in 1D4relating to the contribution of capital is a condition precedent. Hesubmitted however that according to the trend of more recent decisionsthese rales are not to be rigidly adhered to and the test now applied, asstated in Halsbury*s Laws of England (Simonds’ edition), volume 8,page 199, is “ whether the particular stipulation goes to the root of thematter, so that a failure to perform it would render the performance ofthe rest of the contract by the party in default a thing different in sub-stance from what the other party has stipulated for or whether it merelypartially affects it and may be compensated for in damages See alsoPollock on Contracts (Thirteenth Edition), page 211. But even applyingsuch a test it does not appear to me that in regard to the stipulationrequiring the plaintiff to provide as capital a sum of Rs. 25,000, the partialperformance of it to the extent of providing only Rs. 18,423*60 (as heldby me) is rendered a thing different in substance from what the otherparty had stipulated for, and that the failure to contribute the rest ofthe capital may not be compensated for in damages.
In holding that the plaintiff was entitled to share in the profits of thebusiness notwithstanding his failure to contribute the full capital duefrom him the trial Judge pointed out that the agreement D4 does not
1 {1954) 57 N. L. S. 115.
* {1669) 1 Wms. Sound. 320 a.
y-’Isatenna 9. Perumal Chetty
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mention a date before 'which the capital had to be paid by the partnersnor does it contain any term that a partner who failed to pay his shareof the capital was not to be entitled to the profits of the partnership. Iam unable to say that the learned Judge should not hare taken thesematters into consideration.
Subject to the variation as to the amount of capital contributed by theplaintiff, as indicated earlier, the appeal is dismissed with costs.
Sa^jsost, J.—I agree.
Appeal mainly dismissed.