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Present: Ennis J. and De Sampayo J.
SILVA & NAGENDRA v. HANIFFA.
332—'D. C. Colombo, 52,882.
Indent for goods by defendant through a commission agent from a foreigncompany—Actioninstituted bycommissionagent for damages
for breach of contract.
The defendantdeliveredto the . plaintiffs(commissionagents)
an order for certain goods addressed to a company in Japan.The Japanese companyacceptedtheorder, andgoods were
consigned direct to thedefendant,andthe hill ofexchange was
drawn on the defendant. Thedefendantaccepted the bill, bnt
dishonoured it at maturity. The plaintiffs paid it, sold the goodsby public auction, andinstitutedthisaction aftergiving credit
tor the price realized at the sale.
Held, that the plaintiffshadnot the status to maintain this
action, as they were not the agents of the foreign firm.
T'HE facts are set out in the following judgment of the DistrictJudge: —
The plaintiffs are commission agents. On May 7, 1918, the defend*ant delivered to them an order for certain copper drawn up in theform P 1. This form is headed with the plaintiffs' names, and the
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■order wuaddressedto Otaki tc Co. inTokio.In doe.npurso an
acceptance D 1 arrived from Japan and was delivered to the defendantby the plaintiff. Later the invoice of the goods D 2 was similarlyreceived and handed to defendant. These goods were, consigned to the•defendant at the same time the shippers drew against the defendantfor the value of the goods by a bill of exchange. This bill was acceptedon presentment, butwasdishonouredby the defendantatmaturity.
Thereupon the plaintiffssold the goods by public auction, andare
suing the defendant for the difference between the amount realized bythe sale and the value of the goods with incidental expenses.
The onlyissue todecide is, whether theplaintiffs have the necessary
status for maintaining this action.
The rights of theplaintiffs are entirelygovernedby theclauses and
conditions of P 1.
finderthis thedefendant agreed as follows (omitting unnecessary
“ ShouldI fail topay at maturity suchdraft Iauthorizeyour agents
to dispose offthegoodsby public auction onmyriskin such manner
as may appear best to your agents, and I hereby bind myself to, makegood any loss or deficiency that may arise from such sale and allexpenses, and in such case I agree to accept your account sales as correct,and, if necessary, tothesamebeingUBed by you or. youragents in any
Court against mewithout further proof,and,besides,you or your
agents shall be at liberty to stop all shipments of any goods which I mayhave ordered. "
Then follows certainconditions under which theplaintiffs were
entitled,in case ofany dispute, to cancelthisorder orto submit the
matter to arbitration, the plaintiffs were declared not liable for damagesin caseof delay, and they were also giventheoption incertain circum-
stances of cancelling the order without payment of any compensation.
It appears to methatthepartiesclearly contemplatedthatin case
of default by thedefendantthe plaintiffs should havethenecessary
authority tosue"himin an action likethepresent. I accordingly
give judgmentforthe plaintiffs as prayed for,lessEs.104.72 commission
which is now waived, and costs.
The indent (P 1) was as follows:—
Silva & Nagendra, 16, Eeyzer street, Colombo.
Messrs. G. Otaki & Co.From
Dear Sms,—I/Wb, the undersigned, request you to purchase, your-selves or through your agents, onmy/ouraccount andatmy/ourrisk,
the whole or any part of the under-mentioned goods for shipment to
Ceylon on the conditions statedbelow.Draft atrdays
through the HonkEong& ShanghaiBanking Corporation,Ltd.
For reimbursement I/We authorize you, your agents, to draw onme/us at current rate of exchange in sterling through above bank forinvoice value. Buying commissionat percent.,andI/weagree
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with yon, and as a separate agreement, with your agents to acceptsuch draft or drafts on presentation! and to pay the1 same at maturity.
Should I/we fail to accept ot pay at maturity such draft or draftsI/we hereby authorize you or your agents, whether they hold yourpower or attorney or not, to dispose of the documents or goods by privatesale or public auetion on my /our account and risk, without notice insuch manner as may appear best to you or your agents, and I/wehereby bind myself (ourselves) to make good any loss or deficiencythat may arise from such sale and all expenses, together with usualbrokerage and interest, waiving all claims to any advantage . thereon,and in such case I/we agree to accept your account sales as correct,and consent, if necessary, to the same being used by you or your agentsin any Court' against me/us without further proof, and, besides, you oryour agents shall be at liberty to stop all deliveries or shipments of any goodswhich I/we may have ordered.
In case of any dispute Messrs. Silva & Nagendra or their agents, tohave the option of cancelling this order of submitting the matter beforethe Ceylon Chamber of Commerce or to one or two European merchantsfor arbitration, and his or their derision or that of his or their referee shall bebinding upon both parties, the party in default to pay the cost of thearbitration.
If, owing to any unforeseen circumstances, any delay arising from anycause whatsoever in shipping goods which have been delivered in timeat port of departure, such goods to be accepted as though actuallyshipped within the limit of time stipulated. Should the goods be lateno action for damages or loss of profit to be taken against Messrs. Silva& Nagendra ortheir agents,but indentors tohavetheoptionof
accepting the goods without any allowance or of cancelling the order.
In the event of fire, strikes, accident, trouble with workmen, or thefailure of manufacturer or his agents, Messrs. Silva & Nagendra havethe option of cancelling the order without payment of any compensationwhatever.
No claim for incorrect outturn to be entertained unless made within twenty-one days fromthe date ofsteamer’s arrival,andthen onlyon
absolute proof that suppliers are in fault.All goods to be insured 10
per cent, above invoice value at my/onr cost.
Any writing in the vemaoular, apart from the indentor’s signature,to be null and void.
J.8. Jayawardene, for defendant, appellant.
A. St. V. Jayawardene, for plaintiffs, respondents.
March 10, 1920. Ennis J.—
This action was apparently one for damages for breach of contract.The only question on the appeal is whether the plaintiffs couldmaintain the action. The learned Judge held that they could,and the appeal is from that decision.
It appears that the defendant made an offer to the firm of Otaki& Co. of Tokio in the terms shown in the document P 1, and Otaki& Co. accepted the offer under the document D 1. The goodswere consigned by Otaki & Co. direct to the defendant, and thebill of exchange was drawn on the defendant. The defendantdishonoured the bill. It would seem that the plaintiffs thereuponpaid it and instituted this action, giving credit for the price realizedon a sale of the goods. The plaintiffs do not sue as agents ofOtaki & Co., and there is nothing to show that they are suoh.They appear to rely on the document P 1, showing' that they wereprincipals in the transaction. The whole of the contract, however,was between the defendant and Otaki & Co., and the plaintiffswere not parties to the contract. The plaintiffs, therefore, have nolegal status to maintain the action. This action is very similar tothe case of Rahim v. Davoodbhoy.1
I would accordingly allow the appeal, with costs.
Db Sampayo J.—I agree.
SILVA & NAGENDRA v. HANIFFA