MAARTENSZ J.—Wiblett t>. Cooray.
1938Present: Maartensz and Hearnc JJ.
NIBLETT v. COORAY.
241—D. C. Avissawella, 2,110.
Account stated—How it may be established—Writing not essential exceptunder special circumstances—Acknowledgment of debt to take case outof prescription—Ordinance' No. 7 of 1840, s. 21.
An account stated may be established by express words or by conductshowing that the party to be charged recognized a specific sum as beingdue from himself.
The admission must be in writing and signed by the party chargeable,where an account stated is pleaded as an acknowledgment of debt totake the case out of the operation of the Prescription Ordinance or as apromise to answer for the debt or default of another within the meaningof section 13 of the Ordinance.
^^PPEAL from a judgment of the District Judge of Avissawella.
F. A. Hayley, K.C. (with him C. V. Ranavmke), for defendant, appellant.
H. V. Perera, K.C. (with him E. F. N. Gratiaen), for plaintiff,respondent.
Cur. adv. vult.
April 5, 1938. Maartensz J.—
This was an action to recover from the defendant the sum of Rs. 531.85and Rs. 1,853.12 aggregating Rs. 2,384.97 alleged to be due on two causesof action.
The defendant admitted his liability subject to his claim in reconventionin respect of the sum of Rs. 531.85 claimed upon the first cause of action.
The averment in regard to the second cause of action is a bald state-ment in paragraph 4 of the plaint that “the plaintiff employed thedefendant as Manager of the plaintiff’s depot in Colombo, and upon thetermination of the defendant’s employment there was found to be duefrom defendant to the plaintiff the balance sum of Rs. 1,853.12 asappears from the statement of account herewith filed marked “ B ”and pleaded as part of this plaint, which said" sum of Rs. 1,853.12 or anypart thereof the defendant has failed and neglected to pay though heretodemanded. ” There is no averment as to how and why the defendantbecame liable to pay the sums of money debited to him in the account“ B ”.
MAARTENSZ J.—Niblett i>. Coaray.
The defendant denied that he was the plaintiff’s manager or that heowed the plaintiff any sum of money whatever “ under the said head ”.
In reconvention the defendant claimed Rs. 815.31 as commission andtravelling expenses due to him and Rs. 1,500 as damages for wrongfuldismissal. The latter claim for damages was abandoned. The amountdue according to the exhibit D 12 for travelling expenses and commissionwas reduced to Rs. 410.31.
The plaintiff filed a replication in which he denied that any sum wasdue to the defendant and for the first time averred a ground upon whichthe sum of Rs. 1,853.12 could be legally claimed. The averment is asfollows : “ The plaintiff also joins issue with the defendant upon thedenials contained in paragraph 3 of the answer and states that the sum ofRs. 1,853.12 was in or about the month of January, 1936, found to be dueupon an account stated at Kosgama between the plaintiff and thedefendant.”
The action was tried upon the following issues : —
“ (1) Was the defendant employed as Manager of plaintiff’s ColomboDepot ?
Did defendant as such manager and as plaintiff’s selling agent
become indebted to plaintiff in a sum of Rs. 1,853.12 as set outin account particulars B ?
What amount w&o jtill due to defendant at the end of his employ-
ment by way of travelling allowance and commission ?
Was an account stated between plaintiff and defendant in January,
If so, was the sum of Rs. 1,853.12 found due from defendant to
plaintiff in respect of the items set out in the account particularsmarked B ? ”
It appears from the evidence that from January to March, 1935,the defendant was employed by the plaintiff in Kandy. In Marchplaintiff’s manager, Mr. – Bentley Buckle, appointed the defendant to“ run the Colombo Depot ”. Hie proposal to appoint the defendant“ to run the Colombo Depot.” was made by Mr. Buckle in letter P 1dated March 22. The plaintiff was then not in the Island. He returnedin August, 1935. Mr. Buckle was not in the Island when the case wastried and there is no evidence regarding the terms on which Mr. Buckleappointed the defendant “.to run the Colombo Depot ”.
■ We were invited to infer from the nature of the entries in the account Bwhich is headed “N. J. COORAY CURRENT ACCOUNT” and accord-ing to which the defendant was debited with the value of hides sent tothe Colombo Depot, that the defendant was liable for the hides debitedto him in this account. -In short, that he stood in the position of apurchaser of the hides.
The plaintiff’s evidence on page 38 of the record that “when leatherwas sent' to the defendant for sale the value of the same was in the firstinstance debited against him in his current account ” rather suggests -that the arrangement was that the defendant should stand in the shoesof a buyer of the leather. But Counsel for the defendant pointed out byreference to the consignment dockets P 7 that that was not the case.
MAARTENSZ J.—Niblett v. Cooray.
And it is clear from the plaintiff’s evidence on page 48 of the recordread with the dockets that the defendant was debited with the valuenot of the leather consigned to him but of the leather sold by him.
The sum sued for represents in the main the value of leather sold bythe defendant on credit which he has not recovered. In my opinion,apart from the evidence of the account stated to which I shall presentlyrefer, the evidence for the plaintiff does not establish that the defendantwas by reason of the terms of his employment liable to make good thevalue of leather sold by him on credit and which he has not recovered.
The plaintiff’s right to recover the sum claimed on the second cause ofaction must depend on his establishing that there was a mutual agreementthat the sum of Rs. 1,853.12 was due from defendant to plaintiff,—thusgiving rise to “ an account stated ” and an implied promise on the part ofthe defendant to pay the sum agreed to be due from him.
I do not think there can be any doubt as to the amount. The correct-ness of the balance shown in account B is not disputed. The onlyquestion is whether the defendant agreed to pay this amount.
It was urged that the ledger account was not balanced at the time thedefendant was alleged to have agreed to pay the amount due and thattherefore there was no account stated. There is I think no room for thiscontention for the defendant admitted receiving the letter P 5 datedJanuary 20, 1936, before he met the plaintiff about the dispute.
This letter sets out the exact amounts claimed on the current account(the second cause of action) and the hides account (the first cause ofaction).
The District Judge on the issue as to whether there was an accountstated has found strongly in favour of the plaintiff and has given con-vincing reasons for this finding. He also disbelieved the defendant’sevidence that he was not a manager of the depot and that he was nottold he was considered liable for the value of the hides sold on credit.The appellant’s counsel relied on the fact that the plaintiff took steps torecover the- amounts outstanding, but I do not think that negatives thedefendant’s liability. It would seem that as regards the persons to whomgoods were sold on credit the plaintiff was in law the creditor and theaction had to be brought in the name of the firm. However that may be,it is obvious from the letter P 4 that the plaintiff held the defendantliable for the amounts. In this letter the defendant is requested to bringthe money to pay the proctor’s account.
I can see no reason for dissenting from the District Judge’s findingson the fourth and fifth issues.
“All that is necessary (to give rise to an account stated) is that thedefendant should have shown either by express words or by his conductthat he recognized a specified sum as being due from himself to plaintiff. ”—Laws of England (Halsbury), vol. VII, section 991, page 489.
No doubt in some cases the admission must be in writing and signed bythe party chargeable as when an account stated. is pleaded as anacknowledgment of a debt to take the case out of the operation of theOrdinance No. 22 of 1871 regulating the prescription of actions. (Seesection 13 of the Ordinance) ; or the promise must be in writing to complywith the provisions of section 21 of Ordinance No. 7 of 1840.
HEARNE J.—Niblett v. Cooray.
It was argued that this was such a case as the account stated amountedto a promise by the defendant to be chargeable for the debt of another.I am unable to agree with this argument. The plaintiff never consideredthe persons to whom credit was allowed by the defendant as in fact hisdebtors nor, as I read the plaintiff’s evidence, did the defendant. Thedefendant was held to be liable for the debt ab initio. He did not becomeliable to pay it only if the debtor failed to pay.
In my opinion the appeal fails and must be dismissed with costs.
The plaintiff sued the defendant on a first cause of action for a sum ofRs. 531.85 alleged to be the balance in the hands of the defendant ofmonies advanced to him for the purchase of.hides and the defendantadmitted liability.
On a second cause of action it was alleged that “ on the terminationof the defendant’s employment as manager of the plaintiff’s businessthere was a balance of Rs. 1,853.12 due to the plaintiff ” in accordancewith particulars contained in an account marked B. B is an accountwhich includes items on both sides. It is called the current account ofthe defendant. On the debit side of the account the chief itemsrefer to the sales of leather effected by the defendant on behalf of theplaintiff, that is to say he was debited with the sale price of the leathersold according to particulars supplied by himself. In his judgmentthe Judge says that all the leather sent to the defendant “ was in thefirst instance debited against him in his current account”. Referenceto the ledger P -6 and the account B shows that this is clearly wrongbut the Judge’s error is pardonable. It is in accordance with theevidence given by the plaintiff in his examination-in-chief and the Judgedid not notice that the plaintiff varied this evidence in re-examinationwhen he said “ the defendant’s current account was debited with thevalue of the leather shown to have been sold”. Other items on thedebit side are in respect of alleged shortages in stock, rent, money takenin cash or by cheque, &c. On the other side of the account the defendantis credited with the proceeds of sale brought to account, travellingallowance and commission earned, sums disbursed by the defendant, &c.
The defendant repudiated liability on account B and filed an answer.
. In his replication the plaintiff set up an account stated, an issue wasframed apparently without objection, and the case went to trial.Counsel for the defendant-appellant stated, he was not raising anytechnical objection on the ground that the plaintiff should have appliedfor leave to amend his plaint, so as to include in it the new cause ofaction referred to in the replication.
The Judge took a strong view of the credibility of the parties. He wasas strongly impressed by the honesty of the plaintiff as he was by theunworthiness of the defendant. He held that in an interview betweenthe plaintiff and the defendant, the latter was given the opportunity ofexamining the plaintiff’s books of accounts, that he was asked to formulateany objections he had, and that he admitted his liability. It is to benoted that prior to the interview the defendant had been informed (P 5)of the specific sums which according to the plaintiff represented thedefendant’s indebtedness and there could have been no doubt in the
Rodrigo v. Sylvester.
defendant’s mind as to the amount of the claim nor as to the basis of theclaim, for as the Judge found he was familiar with the accounts in,plaintiff’s books which he had previously inspected “ -from time to timeCounsel for the appellant objected that even if there was a promise to paythe balance shown by the plaintiff’s accounts to be due, it could notsupport the claim on the account stated for the reason that the balancein fact represented the sum due by persons to whom the defendant soldplaintiff’s leather on credit and that the recovery of this sum from thedefendant involved the implication that he was being made liable,in the absence of a written undertaking to pay the debts of third parties.I am unable to accede to this argument. The account stated did nottake the form of a mere acknowledgment of a debt the existence of whichcould be rebutted (Siqueira v. Noronha'). It was an account in whichno reference was made to third parties, “ which contained entries on bothsides and in which the parties who had stated the account agreed thatthe items on one side should be set against the items on the other and thebalance only should be paid”. Now according to the Judge’s findingthe terms on which the defendant was employed by the plaintiff includedthe term that if he sold the plaintiff’s leather on credit he did so at hisown risk. The conditions on which the defendant undertook to sellplaintiff’s leather had not been arranged by ■ the plaintiff. They hadbeen arranged by Mr. Bentley Buckle who was in England at the timeof the trial and was not a witness. Plaintiff could not, therefore, speakto the conditions from his personal knowledge and I doubt very much,although this was contended, that they could be inferred from the mannerin which the accounts were kept. This, however, does not affect thequestion. The defendant had satisfied himself of the justice of the•demands to pay the balance due on the account stated, he hadacknowledged that at the least he was morally bound to pay the balanceand his promise to do so as found by the Judge is evidence to supportthe plaintiff’s claim.
I would dismiss the appeal with costs.
NIBLETT v. COORAY