107-NLR-NLR-V-50-PEIRIS-Appellant-and-DE-MEL-Respondent.pdf
NAGALINGAM J.—Peiris v. de Mel
40 d
1948Present:Soertsz S.P.J. and Nagalingam J.PEIRIS, Appellant, and DE MEL, RespondentS. C. 212—D. C. Colombo, 13,701
Broker—Contracting as ’principal—Right to sue on brokering contract—
Memorandum—Sale of Goods Ordinance.
The existence of two independent parties is a sine qua non beforea broker can conclude a transaction, although thebroker need not disclosethe identity of one party to the other. Where, therefore, the brokerconstitutes himself the other contracting party to. the transaction, heis not entitled to sue on the footing of a brokering contract.
Held further: The Sale of Goods Ordinance does not apply to abrokering contract and the absence of a note or memorandum doesnot invalidate such a contract.
.^APPEAL from a judgment of the District Judge, Colombo.
N.E. Weerasooria, K.C., with N. M. de Silva and Sam. Wijesinha,for defendant appellant.
E. F. N. Gratiaen, K.G., with D. W. Fernando, for plaintiffrespondent.
Cur. adv. vult.
March 11, 1948. Nagalingam J.—
This is an appeal from a judgment and decree of the District Court ofColombo dated October 8, 1947, condemning the defendant appellantto pay a sum of Rs. 20,022 02 to the plaintiff.
The plaintiff, a private limited company, was carrying on business as »firm of brokers. Its case was that the defendant had employed it to buyand sell rubber coupons on his behalf and that on the transactions nego-tiated byit for him there wasdue to it the sum for which judgment has nowbeen entered in its favour. Reliance was placed by the plaintiff uponcertain usage of the Colombo rubber market to show, inter alia, that ithad the right to maintain an action in its own name for recovery ofmoneys in respect of those transactions notwithstanding that it mayhave acted only as a broker.
The main defence of the defendant was that he did not employ the plain-tiff company as a broker but that he entered into wagering contracts withit in its capacity as principal to gamble on the rise and fall of the rubbercoupon market, the transactions being, however, disguised as ordinarybrokers’ contracts but under a definite agreement that he was neither totake nor give delivery of coupons and that he was only to pay or receive“ differences ”. The wagering nature of the transactions apart, thedefendant also took up a second line of defence that the plaintiff company,though ostensibly and outwardly acting as brokers, was in fact and inreality the other party to the contracts alleged to have been put through
18—L.
1J. N. A 89752-1.044 (6/49)
410
N'AGALX'N'GAM J.—Peiria v. de Mel
by it on behalf of the defendant and was therefore guilty of breach of faithin regard to its employment as a broker and hence was disentitled torelief.
The trial Judge rejecting the defendant’s plea that the contracts werewagers entered into between him and the plaintiff qua principal has heldthat the plaintiff company was in fact employed by the defendant in itscapacity as a broker to buy and sell rubber coupons for him.
Counsel for the appellant while contesting the soundness of this findingcontends that the trial Judge has not appreciated the second of thedefences set out above, namely,' whether though the plaintiff may havebeen employed as a broker it did not in fact act as principal, and if so,whether it could recover ; for he urges that there has been no discussionof the evidence from this angle nor have the authorities bearing upon thisaspect of the case cited at the hearing been referred to in the judgment.
As the learned Judge has chosen to believe the plaintiff company’smanaging director in preference to the defendant, I do not think it possibleto take a view different from that taken by the trial Court in regard to thefirst defence set up, nor is it necessary in view of the conclusion I havereached on the second defence put forward. As the latter defence doesnot appear to have received consideration in the lower Court, it becomesnecessary to examine the evidence in support somewhat in detail.- Theappellant relies mainly upon the testimony of Austin de Mel, the plaintiffcompany’s managing director, which, it is urged, conclusively establishesthat though the plaintiff company may not have acted as principals inentering into wagering contracts with the defendant as alleged by him,nevertheless the plaintiff company put through the transactions thesubject of this action as principals, disguising its character of principal,however, under the mantle of a broker.
The plaintiff company appears to have commenced business in 1939,and as it has been urged by counsel appearing for it that there was achange in the nature of its activities after August, 1940, it would beconvenient to consider the evidence according as those activities arereferable to the period before or after August, 1940.
Firstly, then with regard to the period before August, 1940 : Theplaintiff company’s managing director says that the plaintiff firm waslike a coupon exchange bank which, his evidence discloses, is a com-pendious term adopted by him to indicate that the plaintiff firm itselfbought all rubber coupons which its customers desired it to dispose forthem and that the firm also itself sold rubber coupons to clients who weredesirous of having coupons purchased for them. The reason for pursuingthis notion of a coupon exchange bank, the witness explained, was witha view to “ holding the client ”.
I think it would be best to let the witness narrate in his own wordsthe meaning of the term “ holding the client ” as well as what the systemwas that was followed by him in running the coupon exchange bank, and Xshall for this purpose quote two passages from his evidence :—
(a) Q. You say your main interests are brokering ; what are theother interests ?
25'AGAX.IN'GAjVI J.— Peiris v. de Mel
411
A. Holding the client, keeping the client. What I mean is if aman phones us two or three times and we asked him towait till we find, a buyer he will never ring us up again.If a man says he has 20,000 lbs. to sell (and asks) “Will youtake it ? ” I say “Yes ”, and then somebody phones andasks “ Have you got 20,000 lbs. to sell ? ”. I would say“ Yes ” and so on. If he wants only 19,500 lbs., I give it tohim. That is what I mean by holding a client.
Q.You are functioning as a party to the contract ?
A. No, that is following a system of convenient trading from acommission point of view even though it be illegal.
Q. You put your name down as the other party to the contract ?
A. That is the practice among the brokers at Colombo with afew exceptions.
(6) Q. Your case in the morning was, that Austin de Mel, Ltd., wasput in as purchaser or seller merely temporarily ?
A. Yes.
Q. That is, whatever Austin de Mel, Ltd., bought, it immediatelysold back ?
A. Not immediately. When it was convenient for them they soldback.
Q. And how long would that convenience take ?
A. A day or may be even two.
Q. Sold back at different prices ?
A. Very nearly the same price, at times slightly lower, at timesslightly higher.
Q. But sometimes Austin de Mel, Ltd., appear as seller withouthaving bought ?
A. Most often we appear as buyer. If a buyer came along andI had no ready seller I sold a quantity myself because Iknow ….
Q. May you have sold without having bought ?
A. I may have sold in the hope of buying it from elsewhere.
Q. And if you have sold you would then buy thereafter to coverthe contract ?
A. Yes.
Q. And also at different prices ?
A. May be the same price, may be slightly different.
These passages apart from others of a like character, to be found in thevery lengthy cross-examination of this witness, make it abundantly clearthat the plaintiff company did not wait to negotiate a transaction onlyafter it was able to secure two principals who were willing to contractwith each other, but what it really did was to constitute itself the othercontracting party to the transaction immediately the negotiation of a trans-action was placed in its hands by a client in the hope that it would be ableto pass on the contract sooner or later to another client who would thenbe substituted in its place as the other contracting party.
In August, 1940, the firm appears to have been legally advised that thecourse of business pursued by it was not quite proper. The managingdirector’s evidence, however, is illuminating as to the method adopted by
412
NAG ALIN GAM J.—Peiris v. de Mel
him to discontinue the practice and in particular what it was that he infact discontinued. This leads one to a consideration of the nature of thebusiness activities of the firm after August, 1940. It would be best tolet Austin de Mel speak once again and to this end I shall extract threemore passages from his evidence.
(i) Q. After August, 1940, if a client phone up to sell a quantity ofcoupons and you had nobody to buy, how would it hold him ?
A. I am not going to give out business secrets.
(Court : You must, there is no secrecy).
If there are hundred people selling and another hundredbuying, instead of putting down A selling and Austin de Mel(Ltd.) buying 20,000 lbs. and Austin de Mel selling and Bbuying 19,500 lbs., I would say A selling and B buying 19,500lbs. and A selling 500 lbs. That means that the man issatisfied because he gets his 20,000 lbs. This can go onad infinitum to satisfy the law' ….
Q. After the legal advice I put it to you that you sometimes hadblanks and thereafter entered the blanks with names likeOriel de Mel ?
A. I may have done that. I leave a blank and then find a clientor go out of my way and find a client. If a clientdoes not come I ring up some other client who is alwayswilling to oblige and say, “ Will you take this ? ” and hesays “ All right ”.
In regard to contract 2123 (P 23) of July 29, 1941, one of the itemsincluded in the claim of the plaintiff company and alleged to have beenput through by it between the firm of Muller & Cooray as sellers and thedefendant as buyer of 10,000 lbs. of rubber coupons, after the witness hadadmitted that the entry in his rubber coupon register was incorrect in morethan one particular and that he had included this item in a set off state-ment sent to the defendant even before Muller & Cooray had deliveredthe coupons, his evidence was :—
(ii) Q. Why did you set off something before it was delivered ?
A. We do not wait till delivery by one person to deliver to anotherperson. We run it on the lines of a coupon exchange.
In regard to another contract 1140 (P 21) of May 16, 1941, in respectof which too a set off statement had been sent before delivery of couponsby the seller (H. A. Rodrigo) to the defendant, the witness said :—
(iii.) As far as I and the defendant were concerned it was utterlyimmaterial what H. A. Rodrigo did in respect of the contract.When H. A. Rodrigo delivered the coupons, I took them anddealt with them as I liked …. When I entered intothese contracts there was the mental reservation that it didnot matter what the other side did so long as T performed it.
These passages disclose very clearly that even after legal advice wasreceived by the plaintiff company the system of business, though attemp-ted to be camouflaged, continued to be carried on on identically the same
NAG ALIN GAM J.—Peiris v. de Mel
413
lines as prior to the receipt of the advice. While prior to the advice thename of Austin de Mel, Ltd., used to be put down immediately as the othercontracting party, after the advice the name of Austin deMel, Ltd., didnot appear in the document as that of the other contracting party, butthe column or space for the insertion of the name of the other contractingparty was left blank till the plaintiff company secured the other contrac-ting party either in the ordinary course of its business or after it wentout of its way to find an obliging client. The mere delay or suspensionin the insertion of the name of the other contracting party did not reflectany change in the mode of transaction of business between the plaintiffcompany and its clients, for the plaintiff company continued to holdits clients by taking over the contracts immediately they were offeredto it as before ; so that even after the date of the legal advice it cannotbe said that whenever it purported to negotiate a transaction for one ofits clients, it had at the time of the transaction a principal in existenceon the other side as the other contracting party. Before the legal advicethe plaintiff company in its own name carried over any contract in respectof which it was unable to find at the end of the day a buyer or seller,but after the legal advice it is impossible not to resist the inferencethat the name of an obliging client, more often than not in the shapeof an obliging brother of the company’s managing director, was utilisedfor the purpose. It is however unnecessary to decide the point whetherthe obliging client or brother was only a dummy or whether' they did infact themselves figure as real parties to the contract. It certainly wouldhave been possible to answer this question with little effort if whathas been termed the " position ledger ” alleged to have been kept by theplaintiff company had been produced. The managing director stoutlydenied the existence or knowledge of any such book. He would have theCourt believe that his knowledge of a position ledger was derived fromwhat he had heard of the activities of speculators but he was grievouslycontradicted by his assistant, one Samaraweera, now himself director ofthe plaintiff company, who affirmatively stated that, he had kept theposition ledger and that it had been kept for the private information ofAustin de Mel himself. The trial judge dismisses all the emphasis laidby the defendant on the non-production of this book by observing thatthe facts merely lend themselves to the supposition that the plaintiffcompany was itself speculating on the activities of the market. But Ithink the larger criticism levelled on behalf on the defendant is entitled toprevail to the full. Defendant’s counsel contends that the production ofthe book would have disclosed not only what it was intended to reveal toAustin de Mel himself, namely, the position of the firm in regard to thetransactions undertaken by it on behalf of its clients which at the end ofthe day remained unnegotiated by it and the manner in which thoseunnegotiated transactions were subsequently squared up, but also thatnot merely up to August, 1940, but even right down to the dates of thedisputed transactions the plaintiff company was in the first instancethe other party to the contracts.
On behalf of the defendant it was also urged that the discrepancynoticed in certain instances between the entries in the documents of con-tracts and the register is attributable to the attempt to close up a whole
1*J. S’. A 89752 (S/49)
414
NAGALINGAM ,T.—Peiris v. de Mel
series of unnegotiated transactions. I think there is a great deal of forcein this contention. The plaintiff company’s managing director himself fullwell realised that to a broker who was interested only in the commissionin respect of the transactions negotiated by him between two principalcontracting parties a position ledger would be a meaningless document andsuch document, if produced, would hardly enable him to effect a recon-ciliation between his evidence and the entries therein.
The suppression of the document, for that is the only view one can takeof the Judge’s finding on this point, has also another important bearing onthe case. The contract forms and the rubber coupon register produced bythe plaintiff company are of no assistance in gauging the real nature of thecourse of plaintiff company’s business, for they are written up only afterthe stage had been reached of negotiation between two of its clients by theplaintiff company of any particular transaction, and if one went only bythese documents in the absence of the position ledger it would be possibleto argue, as has in fact been argued, that the plaintiff company putthrough the transactions in each case in the first instance with a thirdcontracting party and not with itself and not that the transactionswere concluded after the subsequent “ finding ” of the third party-—anargument in the very teeth of the specific evidence given by themanaging director himself.
The position, therefore, appears to be that Austin de Mel even afterAugust, 1940, regarded his firm as a coupon exchange bank in spite of thelegal advice received and that the plaintiff company took over itselfwhatever business was offered to it by its clients and subsequentlynegotiated and adjusted the transactions among such clients as wereavailable. That the plaintiff company could have brought together thetwo parties to a contract of buying or selling in the first instance isextremely doubtful inasmuch as the course of business followed by it didnot lend itself to the concluding of such a contract between two principals•without the intervention of the plaintiff company itself as a party to thecontract, for by so doing it could not have avoided the loss of customwhich it was determined to prevent at all costs.
Reduced to legal formula the plaintiff company’s course of businessbetween a buyer X and a seller Y would be as follows :—
(а)X buys from the plaintiff company (first contract).
(б)Plaintiff company buys from Y to fulfil contract (a) (second contract).
Later plaintiff company drops out by purporting to arrange a
contract whereunder X buys from Y (third contract).
This last contract (c) is the one that is reduced to writing. In this illus-tration, it would be noticed, the contract of purchase from the plaintiffcompany is set out earlier than the contract of purchase by it and this hasbeen done with the purpose of drawing attention to the evidence of theplaintiff company’s manager that even without owning any goods hewould sell in the hope of buying thereafter. It is manifest that the plain-tiff company does not negotiate a purchase or sale between two principalsin existence at the time it purports to conclude the contract of purchasewith the one or the contract of sale with the other. In other words, theplaintiff always contracts with a principal in esse and on the footing
NAG AXIN' GAM JPeiris v. de Mel
415
of a principal in posse, the special characteristic of a trader or merchantdistinguishing the latter from a broker. A trader buys in the expectationof selling later to a third party or, to put it differently, in the expectation of“ finding ” a buyer thereafter, the price at •which he sells being immaterial,as it may be that he has sometimes to sell even at a loss.
The questions that arise for determination in this state of facts is■whether the plaintiff company did or did not act as the other contractingparty in regard to the various contracts sued upon, and if so, whether itcould recover.
On the facts disclosed it is not possible to take any other view in law ofthe part played by the plaintiff company in these transactions but that itwas acting as a principal, especially when one bears in mind the reference tothe fact that the plaintiff company was functioning as a coupon exchangebank, taken in conjunction with the mental reservation spoken to by theplaintiff’s managing director that it did not matter what the other partyto the contract did so long as the company itself performed the contract.It has been argued that where a broker intimates, say, to a buyer that hehas purchased on his behalf, though in fact at the moment of such inti-mation no such purchase has been made from a third party, it would besufficient that the broker is able to arrange a transaction later with aclient “ found ” later. To my mind, it is clear that the character of abroker is completely altered by his adopting such a course of business. Itis the essential function of a broker to bring two parties together. It isquite permissible for a broker when a client places an order with him, sayfor the purchase of goods, to say that he would try and negotiate the pur-chase, and then when he has found a seller who would be willing to enterinto the contract with the purchaser on the latter’s terms, to intimate thathe has made the purchase, for then it is that he could be said to haveconcluded the contract. But that it was not the procedure adopted bythe plaintiff company is clear. The plaintiff company, on the otherhand, even before it found a seller who would be willing to sell the goodsrequired by the purchaser, adopted the course of intimating to thepurchaser that it had made the purchase, thus constituting itself theother contracting party.
While the existence of two independent parties is a sine qua non beforea broker can conclude a transaction, it is not necessary that he shoulddisclose the indentity of the purchaser or seller to the other party. Thenon-disclosure of the identity of a buyer or seller would not detract fromthe essential character of a broker nor would the fact that a broker bythe usage of a particular market is entitled to sue a defaulting client tendto take away the character of a broker who acts as such.
Blackburn J. in Robinson v. Mollet1 described the duty of a brokeras one that required the broker to establish privity of contract between twoprincipals and Grove J. in the same case defined “ brokers ” as persons whowere to negotiate a binding contract between sellers and buyers. It wouldbe noticed that the plaintiff company in this case never purported to do soat the time it took over the contract from the buyers or sellers. In factthe plaintiff company’s managing director’s evidence shows that the
1 {1874) 33 L.T. 544.
416
1ST AG-AIDIN’ GAM J .—Peiris v. de Mel
purchase price paid by a buyer may not necessarily be the same- asthat paid to the seller, or the firm, according to him, sometimes arrangedthe transactions at slightly varying prices.
An attempt was made to show that according to the custom of theColombo rubber coupon market a broker could in the first instance takeover the contract himself and thereafter pass it on to some other party.Though the plaintiff in his plaint set out various usages as obtaining inthe Colombo market in regard to rubber coupons, he did not plead theexistence of such usage. The plaintiff company’s managing director,however, did refer to the existence of such a practice and that passagein his evidence has been quoted in extract («.). The members of twoleading firms of brokers, however, emphatically denied the existence ofsuch a practice. Mr. Muller of the firm of Muller & Cooray said, “ I wouldnot put through a contract unless there was a buyer and seller. Muller &Cooray are a firm of brokers. We are not a firm of dealers.” Mr. Gibsonof Somervilles’ was still more emphatic. In answer to the question,“ Would you regard Somerville as a kind of coupon exchange where youbought all the coupons you could in the hope of selling them to peoplewho wanted them? ” he said, “ It is wrong, it is not the practice of theBrokers’ Association.” and in answer to the further question “ Why doyou consider it wrong? ” he replied, “We claim to he brokers and notdealers.”
I do not therefore think that the existence of such a practice, muchless a usage or custom, has been established in this case. In fact it wouldhave been surprising, for, otherwise, a broker, to use the language of thewitness Gibson, would himself become a dealer and the character of agencywhich alone entitles him to commission he would have completelyshed.
The circumstances which may transmute the character of a brokerfrom an agent into a principal and the legal consequences that flowfrom a broker acting in reality as a principal are clearly deducible fromthe principles laid down in the case of Robinson v. Mollet (supra) andArmstrong v. Jackson A The former case was one decided by the Houseof Lords. The plaintiff, a broker, was commissioned by the defendanton two separate dates to buy for him 50 tons and 200 tons of tallow.In execution of the first order the plaintiffs purchased from a jobber150 tons intending to appropriate 50 out of that to the defendant’s order.In execution of the second order, the plaintiff purchased from two separatejobbers 150 tons and 200 tons respectively, intending to appropriatethe entirety of 150 tons of one jobber and 50 out of the other jobber’scontract. The defendant defaulted and the plaintiff instituted theaction for the recovery of the amount incurred by him in executing thetwo orders of the defendant. The defence was that the plaintiff havingfailed to enter into binding contracts on behalf of the defendant for thequantity of tallow ordered by him by the plaintiff having entered intocontracts for larger quantities than were warranted by the order placedwith him, the plaintiff was not entitled to recover. The question waswhether the character of the broker was intrinsically altered by his having
(1917) 2 K. B. 822.
XAG A LEST GAM J.—Peiris v. de Mel
417
purchased a larger quantity than he was commissioned to buy. Usageof the tallow market that a broker could do so was relied upon, and LordChelmsford who delivered the opinion of the house said :•—•
“ Now, the effect of this custom is to change the character of a brokerwho is an agent to buy for his employer into that of a principal to sell tohim ” ;
and the noble Lord later continued :—
“ But the usage is of such a peculiar character and is so completelyat variance with the relation between the parties converting a brokeremployed to buy into a principal selling for himself and thereby givinghim an interest wholly opposed to his duty, that I think no person whois ignorant of such a usage can be held to have agreed to submit to itsconditions merely by employing the services of a broker to whom theusage is known to perform the ordinary and customary duties belongingto such employment.”
It is needless to consider what the effect of the knowledge on thepart of the defendant of the existence of such a practice as alleged bythe plaintiff company to exist would be, for on the evidence given, itis obvious that there was no such recognized practice in the Colombomarket. I do not, however, wish to be understood as saying that ifsuch usuage had been proved then it would be binding upon thedefendant, for the usage must he a reasonable one, and to my mindit. is wholly unreasonable to admit of a usage which converts an agentinto a principal with the result that his interest would be in conflictwith his duty.
In the second of the cases cited above the facts were not dissimilarto those in the case before us. There a medical man employed a brokerto purchase shares for him ; the broker pretending to execute themandate to buy, sold his own shares and on an action by the brokerto recover the sums due to him in regard to the transaction the defendantclaimed rescission of the contract on the ground that the broker hadbeen guilty of a breach of duty in regard to his employment. McCardie J.made use of the following language in enunciating the legal principle :—
“ It is obvious that the defendant gravely failed in his duty to theplaintiff. He was instructed to buy shares but he never carried outhis mandate. A broker who is employed to buy shares cannot sellhis own shares unless he makes a full and accurate disclosure of thefact to his principal and the principal with a full knowledge gives hisassent to the changed position of the broker. The rule is one notmerely of law but of obvious morality. As was said by Bord Cairnsin ParJcer v. McKenna (1874) L. R. 10 Ch. 96, 118, * no man can in this■Court acting as an agent be allowed to put himself into a position inwhich his interest and his duty will be in conflict.’ * Now a broker whosecretly sells his own share is in a wholly false position. As vendor itis to his interest to sell his shares at the highest price. As broker it ishis clear duty to the principal to buy at the lowest price and to giveunbiassed and independent advice (if such be asked) as to the timewhen and the price at which shares shall be bought or whether theyshall be bought at all. The law has ever required a high measure of
418
SOERTSZ S.P.J.—Peiria v. de Mel
good faith, from an agent. He departs from good faith when he secretlysell his own property to the principal …. it matters not thatthe broker sells at the market price or that he acts without intent todefraud. See Bentley v. Graven (1853) 18 Beven 75. The prohibitionof the law is absolute.”
It is not pretended in the present case that the plaintiff companymade any disclosure to the defendant that it was selling the shares held,by it or that it was itself purchasing the shares offered to it by thedefendant. Having regard to the principle set out above, it must followthat the plaintiff company which is shown to have acted in its capacityas a principal and not as broker cannot enforce any rights under thosecontracts on the footing that they were brokering contracts ; and thatwas their case.
In this view of the matter issues 2 (a) and 2 (6) should have beenanswered in the negative. As the answers to these issues dispose ofthe plaintiff’s case it is hardly necessary to consider at length two-other arguments put forward on behalf of the defendant. One is inregard to the capacity of the plaintiff to maintain the action as a-firm of brokers. I see no reason to differ from the view taken by the-trial Court that the plaintiff company though itself not licensed as afirm of brokers can enter into valid brokering contracts provided theperson acting on its behalf is duly licensed. The other is that theabsence of notes or memoranda under the hand of the defendantevidencing the alleged contracts is fatal to the plaintiff’s action. HacLthe contracts between the plaintiff company and the defendant beenstraight contracts for the purchase and sale by one to the other or viceversa, the contention would have been entitled to prevail. But thetransactions between the parties as is now proved were brokering contracts,,though the plaintiff may have violated the terms of his employment.It is therefore not possible to apply the provisions of the Sale of Goods-Ordinance to these contracts and I agree with the trial Judge that there-is no merit in this contention.
In the result the plaintiff’s action fails and I would therefore allow theappeal and dismiss the action with costs both in this Court and in theCourt below.
Soertsz S.P.J.—
I agree to make the order proposed by my brother, but I should wishto add a few words to say that, after a careful consideration of theevidence in the case, I find myself in agreement with the view of thetrial Judge that, although Austin de Mel was lacking in candour inrespect of one or two matters that arose for consideration, he was, onthe whole, a much more reliable witness than the defendant. Theimpression I have gathered of the defendant is that he is one of thoseunscrupulous persons whose business morality may be summed up inthe words, “ heads I win, tails you lose ”. With the trial Judge, Ihave no hesitation in rejecting his evidence that he and the plaintiffin the transactions in question here between them, were engagedunmistakably in wagering with each other. The defendant was un-doubtedly gambling. The plaintiffs could not but have known that,.
Karunasena v. Cooray
419
but that did not make them parties to the gambles. The evidence, asI understand it, shows that the plaintiffs were carrying on business notonly as brokers but also as traders in respect, inter alia, of rubber coupons,and that, as between them and the defendant, the transactions with whichwe are concerned were, really, purchase and sale transactions between twoprincipals, the plaintiffs selling to the defendant from what Austin deMel called “ the Ceylon Exchange Bank ” and buying from his andothers in order not only to replenish their coffers but also “ to hold theirclients But for some reason best known to the plaintiffs and theirlegal advisers, this action was brought on the footing that thesetransactions were brokering contracts with certain peculiar featuresengrafted on them by local custom. The pleadings, the issues andAustin de Mel’s evidence leave one in no doubt whatever in regard tothat. The question, then, is whether these contracts sued upon werebrokering contracts as understood in a proper view of the law relatingto brokerage. Austin de Mel’s evidence furnishes but one answer tothat question and with that answer my brother has dealt so fully in hisjudgment, that it is quite unnecessary for me to add to it. The resultis that, although, in fact, the amount sued for is due from the defendantto the plaintiffs, the plaintiffs cannot recover it as they seek to do, thatis to say, as the sum due to them on brokering contracts. Quite clearly,there were not such contracts despite the studied attempt by theplaintiff's to give them that appearance.
Appeal allowed.