AKBAB J.—S. Mooty v. Kaylayan Che tty.
1931Present; Drieberg and Akbar JJ.S. MOTY et al v. KAYLAYAN CHETTY• 160—D. C. Jaffna, 26fi26.
Principal andagent—Authorityto purchasegoods—Holdingout—Restriction
An act done by an agent in tbe course of his employment, on behalfof the principal and within the apparent scope of his authority, binds theprincipal, unless the agent was, in fact, not authorized to do the parti-cular act and the person dealing with him had notice that in doing suchact he was exceeding his authority.
PPEAL from a judgment of the District Judge of Jaffna.
H. V. Perera, for first defendant, appellant.
F. A. Hayley, K.C. (with him Nadarajah and Chelvanayagam), forplaintiff, respondent.
August 17, 1931. Akbar J.—
In this action the plaintiff sued three defendants for the recovery ofa sum of Rs. 2,906.65, being the value of goods supplied by him to thethree defendants for the use of their shop at Chavakachcheri. Theappellant in his answer denied that the other two defendants were his
AKBAR J.—8. Mooty 9. Kaylayan Chetty.
partners and stated that he was not liable as the latter had no authorityto pledge his credit. The parties went to trial on the following issues:—
Did plaintiff supply goods to the boutique of S. V. S. K. Kaylayan.
Chetty at Chavakachcheri ?
Are the second and third defendants partners of the S. V. S. IL
Even if the second and third defendants are not partners, is first
defendant liable for goods supplied to second and third defends
The District Judge held against the first defendant in a longjudgment, the purport of which seems to be that, although the secondand third defendants were not partners, yet the first defendant wasliable, because he held out the second and third defendants as agents,who were authorized to buy goods. It is argued by Mr. Perera for theappellant that the evidence falls short of this finding. The Kanakka-pillai of the plaintiff's firm stated in evidence that his firm suppliedgoods to the boutique at Chavakachcheri which admittedly belonged to*the first defendant, at the request of the first defendant. If this evidence1is believed then, of course, there will be an end to the case for the appellant.Unfortunately, the District Judge has not held on this ground. It must,therefore, be assumed that he did not believe the statement of theKan&kkapillai. Now it is admitted by the first defendant that thisboutique at Chavakachcheri belonged to him and that the second andthird defendants were employees under him. But he added that althoughthis was the arrangement for the first few months, the second and thirddefendants complained to him that the profits were not enough andasked him for his permission to purchase their supplies direct fromoutside sellers without getting them through the Jaffna branch of thefirst defendant's business. He stated further that he gave them thispermission, but with the reservation that they were to pay cash. Heallowed,- therefore, the second and third defendants more liberty thanwas usually accorded to employees, because they had to manage thewhole business and this business was to be carried on under his' Vilasam,which was exhibited on a signboard over the shop. The accounts wereto be looked into at the end of three years and the profits were then toto divided. Mr. Perera argued that the second and third defendantswere not authorized to pledge the first defendant^ credit when makingthese purchases as they were only to make cash purchases. The plaintiffput in evidence three documents, namely, P 12, P .13, and P 14, which- are three promissory notes signed by the second defendant, but backedby the first defendant and bis son. These are all notes negotiated inColombo and the evidence points to the fact that they were moneys’needed for the purchase of supplies for the Chavakachcheri boutique.So that on the first defendant’s own admission, the second and thethird defendants were given authority to carry on the business at Chava-kachcheri under the Vilasam of the first defendant; they were topurchase direct, and the first defendant even helped them to raise moneyfor the purchase of supplies. I cannot see how, in these circumstances,-the first defendant can now plead that his agents, whom he allowed tocarry on the business of cloth merchants at Chavakachcheri, under
AKBAB J.—5. Mooty v. Kaylayan Chetly.
.his Vilasam, were not authorized to enter into the ordinary contracts,which such a business would require to be entered into from time totime for the purchase of the necessary supplies for the carrying on ofthe business. It will be noticed that the third issue is framed in verywide terms and as no objection was taken to that issue, it was competentfor the Court to decide against the first defendant and hold that he wasliable inasmuch as he held out that the second and third defendantshad the necessary authority to make the purchases. Mr. Perera further.argued that inasmuch as the plaintiff had a claim against the appellantfor the sum of Rs. 416 odd in respect of the Colombo branch of the.appellant's business and inasmuch as the plaintiff had refused to supply*ny further goods, this was evidence that the plaintiff supplied thegoods to the Chavakachcheri branch to the second and third defendantspersonally and not on account of the first defendant. But there ishardly any evidence to support his contention. The account P 1 filedwith the plaint shows that the last item of cloth supplied by the plaintiffto the Chavakachcheri branch was on October 13, 1929. The firstdefendant in his evidence stated that it was just before Deepavali, 1929,or October, 1929, that the plaintiff refused to supply goods to his Jaffnabranch. So that the refusal by the plaintiff to supply goods, both tothe Jaffna branch and Chavakachcheri branch, was about the same time,namely, October, 1929. Mr. Perera referred to a letter, I D 3, as support-ing his argument; but that letter is only a request for the payment ofthe balance money due from the Colombo branch and asking for furtherorders for goods. The statement of accounts between the Chavakach-cheri branch and the Jaffna branch of the first defendant’s firm, 1 D 4,supports the argument of Mr. Hayley that there was a gradual fallingoff of cloth supplied by the first defendant from the Jaffna branch tothe Chavakachcheri branch during the years 1928 and 1929, which inturn shows that, when the first defendant stated in his evidence thatby the new arrangement he gave permission to the second and thirddefendants to purchase their supply direct, he must have known thatthe ordinary course of business would undoubtedly require goods beingbought on credit. The secret reservation that the first defendant statedhe made when he authorized the second and third defendants to managehis business at Chavakachcheri cannot bind outside vendors dealing withthe Chavakachcheri branch in good faith. This case, therefore, fallswithin the principle of law stated in Article 80 of Bowetead on Agency,
e., every act done by an agent in the course of his employment onbehalf of the principal and within the apparent scope of his authoritybinds the principal, unless the agent was in fact not authorized to dothe particular act and the person dealing with him had notice that indoing such act he was exceeding his authority. The case cited in thejudgment of the Supreme Court, namely, Velauthanpillai v. HarmanisAppu *, supports this contention. In an action brought in the DistrictCourt of Jaffna, the second and third defendants filed a plaint claimingthe release of the seizure effected on the goods of this same boutique atthe instance of the first defendant in that case, on a judgment, whichthat first defendant had obtained against the appellant. That action
1 7 The Times of Ceylon Law Reports 155.
AKBAR J.—King ». Dharmasiriicardene.
was dismissed as against the second and third defendants in this case-and the goods seized were ordered to be sold. The second and thirddefendants failed in that action, because they could not establish apartnership between them and the appellant, but that decree is evidencethat the goods seized were recognized as the property of the appellantin this case. In my opinion the judgment of the District Judge was-right but not for all the reasons given by him. The appeal must bedismissed with costs.
S. MOTY et al. v. KAYLAYAN CHETTY