050-NLR-NLR-V-48-SUPPARAMANIAM-CHETTIAR-Appellant-and-SAUNDARANAYAGAM-Respondent.pdf
HOWARD C-T.—Suppramaniam ChetUar v. Saundaranayagam.
155
1947Present: Howard CJ. and Wijeyewardene J.
SUPPRAMANIAM CHETTIAR, Appellant, andSAUNDARANAYAGAM, Respondent.
10—D. C. Kandy, 1J01.
Principal and Agent—Secret profit acquired by agent—Agent’s right to su<principal lor commission.
Appeal—Burden of proof—Appellant must show that judgment appealed fromis wrong. ., _
An agent who, without the knowledge or consent of his principal,receives a commission from the third person with whom he deals on hisprincipal’s behalf is not entitled to any commission from his principal.
In appeal the burden lies on the appellant to show that the judgmentappealed from is wrong. If all he can show is nicely balanced calculationswhich lead to the equal possibility of judgment on either the one sideor the other being right, he cannot be said to have succeeded.
^f^PPEAL from a judgment of the District Court, Kandy.
H. V. Perera, K.C. (with him N. E. Weerasooria, K.C., and M. P.Spencer), for the defendant, appellant.
N. Nadarajah, K.C. (with him H. W. Thambiah), for the plaintiff,respondent.
Cur. adv. vult.
March 27, 1947. Howard C.J.—
The defendant appeals from a judgment of the District Court awardingthe plaintiff a stun of Rs. 10,375, which the latter alleged to be due tohim as commission for negotiating the purchase of the Mahakande estate.In his plaint' the plaintiff alleged that the defendant at Matale engagedthe services of the plaintiff to arrange for the purchase of this estate andpromised to pay the plaintiff remuneration at the rate of 2£ per centumon the purchase price on the completion of the purchase by the defendantof the said estate. The plaintiff further alleges that he brought thedefendant and the owner of the estate together and on April 2,1943, the defendant purchased the estate -for the sum of Rs. 415,000.The defendant in his answer denied that he Agreed to pay the plaintiff arjy
i56 HOWARD C.J.—Suppramaniam Chettiar v. Saundaranayagam.
remuneration on the purchase by the defendant of the Mahakande estate.The defendant further alleged that the owner of the estate had requestedMessrs. Keell & Waldock, Brokers of Colombo, to find a purchaser forthe said estate and had undertaken to pay Messrs. Keell & Waldock2£ per cent, commission on the purchase price, and that Messrs. Keell &Waldock had agreed to pay the plaintiff half the said commission if theplaintiff introduced a prospective purchaser to Messrs. Keell & Waldock.In order to earn this commission the plaintiff had requested the defendantto purchase the estate and that any commission on the sale was payableby the vendor and that the plaintiff having received commission fromMessrs. Keell & Waldock was not entitled to recover any commissionfrom the defendant. In finding for the plaintiff the learned District Judgeafter a careful examination of the evidence has held that the defendantagreed to pay the plaintiff 2£ per cent, on the purchase value. Mr. H. V.Perera on behalf of the defendant, whilst conceding that the questionat issue was one of fact, contends that the burden of proving the agreementto pay commission rested on the plaintiff and that there was no evidenceto justify the finding in the plaintiff’s favour.
The plaintiff, who styled himself broker and commission agent, statedin evidence that he did business at Matale and one Marimuttu assistedhim. Previous to the negotiations in regard to the Mahakande estatehe did not know the defendant who was introduced by Marimuttu as apossible purchaser. According to Marimuttu the defendant who' livesat Nawalapitiya came and saw him in the early part of December, 1942,and asked him iftherewasany estateto be sold. Marimuttutold him
that there was anestateat Peradeniya and he should come aftera week’s
time. Marimuttu then communicated with Colonel T. Y. Wright, theowner of the estate, on behalf of the plaintiff. Colonel Wright repliedon December 5,1942(P6), statingthat the estate wasfor sale
and referring the plaintiff to Messrs. Keell & Waldock. The plaintiffthereupon wroteD 8ofDecember7, 1942, to Messrs.Keell &
Waldock and obtained particulars of the estate. Subsequent to thatletter Messrs. Keell & Waldock undertook to pay the plaintiff half oftheir 2£ per cent, commission if he found a purchaser for the estate. Itwould appear that Marimuttu wrote to the defendant op December 10,1942, and arranged that the plaintiff, defendant and himself shouldvisit the estate on December 22, 1942. The defendant acknowledgedthis letter by P 5 dated December 17, 1942. On December 22,1942, the plaintiff, defendant and Marimuttu visited the estate as arranged.On December 23, 1942, the plaintiff says that he wrote the letter P 1to the defendant. P 1 is worded as follows : —
“ C. Saundaranayagam.No. 5, Taralanda road,
Mr. Y. L. Suppramaniam Chettiar,Matale 23rd December, 1942.
No. 75, Gampola road,
Nawalapitiya.
Mahakande Estate.
Dear Sir,—Yesterday after you visited the above estate with meand Mr. A. K. Marimuttu Pillai and our interview with Col. T. Y. Wrightyou in-formed us that you are prepared to purchase same and to do the
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HOWARD CJ.—Suppramaniam Chettiar v. Saundaranayagam.
needful in connection with this matter. I wish to bring to your informationthat if you desire me to negotiate this transaction for you, please notethat you must pay me my usual 2& per cent, commission. If my termsare agreeable kindly send me a letter authorising me to negotiate thistransaction for you and I shall do my best for you. Thanking you for anearly reply.
Yours faithfully,
Sgd. C. Saundaranayagam.”
The plaintiff further states that he received letter P 2 from the defendanton December 25, 1942. This letter which is addressed not to theplaintiff but to Marimuttu is worded as follows : —
“A. K. Marimuthu Pillai, Esqr.,
Manoranjithavasa, No. 5, Taralanda road, Matale.
Mahakande Estate.
Dear Mr. Marimuttu Pillai, Esq.,—I am ready and willing topurchase the above estate on the 4th January, 1943, without fail. Pleaseinform Mr. Savundranayagam to arrange with Messrs. Keell & Waldockof Colombo accordingly. I trust you and Mr. Savundranayagam willdo everything for me in the above matter and oblige.
(Sgd.) in Tamil.
25.12.42. ”
The plaintiff states that after receiving P 2 he took steps to complete thesale. The sale was actually completed in Messrs. Keell & Waldock’soffice on January 8, 1943, when the defendant received D 4 fromMessrs. Keell & Waldock. According to the plaintiff the latter when hehanded the particulars of the estate to the defendant did not tell himthat Messrs. Keell & Waldock had asked him to negotiate the sale andhad further promised him half their commission. According to theplaintiff the defendant acquired this information between December 22,1942, when the estate was inspected and January 8, 1943, when thedeal was completed. After the sale was closed the defendant accordingto the plaintiff said he would pay the commission and a santosam ” inaddition.
It is now necessary to examine the evidence put forward by the plaintiffto support his case that the defendant agreed to pay him commission. _The plaintiff’s story is chiefly remarkable for its inconsistencies. Inexamination-in-chief he says that the agreement to pay is contained inthe letters P 1 and P- 2. There was no previous agreement to pay com-mission. There is also the following passage where he says “ On -thisoccasion (that is to say the occasion when they visited the estate) I didnot talk to the defendant about the commission nor did he talk to meabout the commission. ” Again in cross-examination he says :—
“ At the initial stages there was no mention by the defendant of anycommission being paid to me. On' the day we went to inspect theestate the question of commission was not discussed at all. On the
158 HOWARD CJ.—Suppramaniam Chettiar v. Saundaranayagam,
day we went to inspect the land I had already received a promise fromMessrs. Keell & Waldock that they will pay me hall their commisiion7’
* * * * * *
For the first time I indicated to the defendant that he must pay mea commission in this letter P 1.
But later on in the cross-examination the following passages occur : —
“ When I got the particulars about this estate and told the defendantabout it in Marimuthu’s house somewhere about the second week ofDecember, I did not give the defendant the name of the estate. I gavehim all other particulars. Then the defendant asked me to give himthe name of the estate and asked me not to fear that he would drop usand close the transaction himself. He said he would pay my usual'2b per cent, commission. On that occasion I told the defendant thatmy commission was 2b per cent. He said he was prepared to pay mycommission at 2b per cent. Thereafter we visited the estate on the22nd December, 1942. There is no writing by which the defendanthas agreed to pay me or Marimuttu 2 per cent, commission
Kither on the 6th of January, 1943, or on the 8th of January, 1943,defendant promised me verbally to pay me the commission at 2b percent. Defendant promised to pay this in the building in which Messrs.Keell & Waldock have their offices. XXd. (contd.) : My assistantMarimuttu heard the promise given verbally by the defendant on the6th or 8th January, 1943, that he would pay me 2b per cent, commission.Marimuttu heard defendant promising me 2b per cent, commissionabout the middle of December, 1942. The first time I asked thedefendant in writing to give me commission was when I wrote to himP 1. The defendant’s promise to pay my usual commission of 2b percent, plus a ‘ santosam ’ was made either on the 6th January, 1943,or on the 8th January, 1943.”
It is interesting to discover to what extent the evidence of Marimuttucorroborates that of the plaintiff in regard to the promise to pay com-mission and the occasion or occasions on which such promise was given.In examination-in-chief Marimuttu stated as follows: —
“ After defendant received the purchase note he told us at the officeof Messrs. Keell & Waldock that he had learned that we were gettinga commission from Messrs. Keell & Waldock. Plaintiff said ‘ yes ’.Defendant then told plaintiff that he (defendant) was going to giveplaintiff a commission and also in addition to that a ‘ santhosam ’for getting the estate cheap for him. Defendant promised to give2b per cent, commission on the purchase value. Defendant did notsay how much ‘ santhosam ’ fie was going to give.”
In cross-examination Marimuttu stated : —
“ I will get a share of the claim that is made by the plaintiff if .hesucceeds. On the day of the inspection of the estate, namely, the22nd of December, 1942, defendant said that he was willing to buythe estate. Defendant verbally told us so and confirmed it by letteralso. Defendant by letter P 2 confirmed that verbal statement.The confirmation was sent to… me. When defendant took the parti-culars of the estate from me in December, 1942, he said that he would
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HOWARD CJ.—Suppramaniam Chettiar v. Saundaranayagam.
pay us commission. That was prior to the inspection on the 22ndDecember, 1942. By a writing Messrs. Keell & Waldock agreed topay the plaintiff a half share of their. commission. No writing wastaken from the defendant regarding his promise to pay commissionto the plaintiff. Defendant said, when taking the particulars fromthe plaintiff, that he would pay the commission and that afterinspection of the land, if he was satisfied he would give a writingconfirming that agreement to give the commission. After the inspec-tion defendant said that he would send a writing embodying”the agree-ment to pay commission. He said he would send the writing to bothof us. We were both going to share the commission. Defendant didnot in fact send a writing agreeing to pay a commission. Then theplaintiff wrote a letter to the defendant asking for authority to nego-tiate the sale, and in that letter plaintiff mentioned about the con-mission. Plaintiff wanted a reply sent to him. Defendant sent areply to me. In the letter sent by defendant to me, which was areply to the letter sent by the plaintiff to defendant, he (defendant)did not say that he was willing to pay commission. After I receivedletter P 2 from the defendant we did not take any steps to get a writingfrom the defendant to pay us commission.”
To sum up the evidence in regard to the promise to pay commissionit would appear that both the plaintiff and Marimuttu are agreed thatthe only evidence in writing of such a promise is contained in the documentsP 1 and P 2. They are agreed that a promise was given in Messrs. Keelland Waldock’s office on January 6, 1943, after the purchase price hadbeen agreed. In fact according to the plaintiff and Marimuttu, the de-fendant not only promised to pay the commission but also a santosam.In regard to any promise made prior to P 1 and P 2 the plaintiff first of allsays that there was no prior promise and later in his evidence says thatsuch a promise was . made when the defendant was given particulars ofthe estate by the plaintiff. This information was alleged to have beengiven in Marimuttu’s house about the second week in December.Marimuttu agrees with the second version given by the plaintiff as towhen the first promise was made.
It is necessary to consider how the learned Judge when confronted withthis variety of testimony has reached the conclusion that the plaintiff hasdischarged the burden of proving that the defendant agreed to pay himcommission. He has apparently arrived at this conclusion after a con-sideration of P 1 and P 2. The defendant denies that he ever received P 1.Marimuttu in his evidence in cross-examination states that after the in-spection the defendant said he would send a writing to both the plaintiffand himself embodying the agreement to pay commission. The in-spection took place on December 22. It is. very curious that in spiteof the promise of the defendant that he would send a writing embodyingthe agreement the plaintiff should have thought fit to have written onDecember 23—the very next day—a letter to the defendant informinghim that he must pay commission. Moreover no mention is made in P 1of the promise made after the inspection on the previous day. Thereare other curious features in plaintiff’s and Marimuttu’s evidence in48/17
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HOWARD C.J.—Suppramaniam Chettiar v. Saundaranayagam.
regard to P 1. At an abortive trial before Mr. Nagalingam the plaintiffstated that P 1 was in a book in which he keeps copies of all hisletters. The book was not produced but the plaintiff said he detachedP 1 in order to produce it in Court. At the second trial, however, hesaid that he detached P 1 from the book in December, 1942,when he had no idea he would have to file it in a Court of law. Marimuttuin regard to P 1, in his evidence before Mr. Nagalingam, says that the plain-tiff showed him the letter before it was posted. At the second trial Mari-muttu said that P 1 was shown to him by the plaintiff on December 24,after it had been posted and the plaintiff asked him to keep it. It hasbeen argued on behalf of the plaintiff that P 2 is an answer to P 1 and mustbe taken to be a promise to pay commission. It is difficult to understandthis argument. P 2 is not addressed to the writer of P 1. No re-ference is made in P 2 to P 1 nor is there any mention of the payment ofcommission. In spite of this the learned Judge in his judgment says thatthe letter P 2 clearly implies that the defendant has accepted the termscontained in letter P 1. The learned Judge in coming to this conclusionhas ignored the inconsistencies with which this piece of evidence issurrounded. It is on these two documents alone that he has decided inthe plaintiff’s favour. He does not find that the defendant on any otheroccasion gave any promise to pay commission. Moreover, he has cometo the conclusion that the defendant after he had heard that the plaintiffwas being paid commission by Messrs. Keell & Waldock changed hismind in regard to this promise to pay. At page 93 of the record thefollowing passage occurs in the judgment: —
“ Plaintiff says that somehow or other defendant had learnt onJanuary 6, 1943, when they went to the office of Messrs. Keelland Waldock, that the plaintiff was hoping to get a share of the com-mission from Messrs. Keell & Waldock. To my mind that is whatmade the defendant change his mind and refuse to make any paymentto the plaintiff by way of commission later. ”
This amounts to a finding by the learned Judge that at the time whenP 2 was written the plaintiff without the knowledge of the defendant hadacquired a profit not contemplated by the defendant. The question of anagent receiving secret profits is dealt with in Vol. I., Halsbury’s Laws ofEngland (Hailsham ed.) pp. 251-254 in the following passages :—
“ An agent must not, without the knowledge of his principal, acquireany profit or benefit from his agency other than that contemplated bythe principal at the time of making the contract of agency.”
“ A bribe or secret commission is a profit or benefit received by theagent from the third person with whom the agent is dealing on hisprincipal’s behalf without the knowledge or consent of the principal,or which was not contemplated by the principal at the creation of theagency.”
“ On discovering the receipt of a bribe the principal may instantlydismiss the agent, and, if he has already been dismissed may justifythe dismissal on that ground, even though the bribery was not discovered
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HOWARD C-J.—Suppramaniam Chettiar v. Saundaranayagam.
till after the dismissal. The agent forfeits any commission in respectof the transaction and becomes liable to his principal for the amountof the bribe, if in money, or for the value of the property so receivedby him, such value being measured by the highest value , which theproperty might have fetched whilst in his possession. ”
In Andrews v. Ramsay & Co.', it was held that an agent to sell propertywho has sold the property but received a secret profit from the purchasermust not only account for that profit to his principal but is not entitledto any commission from his principal. At p. 638 Lord Alverstone L.C.J.,stated as follows : —
“ I think, therefore, that the interest of the agents here was adverseto that of the principal. A principal is entitled to have an honestagent, and it is only the honest agent who is entitled to any commission.In my opinion, if an agent directly or indirectly colludes with theother side, and so acts in opposition to the interest of his principal, he isnot entitled to any commission. That is, I think, supported both byauthority and on principle ; ”
Having regard to the principles of law governing the relationship ofprincipal and agent, I am of opinion that the plaintiff having acquiredan interest in Messrs. Keel & Waldock’s commission could not insist onthe defendant fulfilling any promise to pay commission based on thedocuments P 1 and P 2.
Apart from any question arising from the law governing the relation-ship of principal and agent I have come to the conclusion that the evidencedid not justify the learned Judge in coming to the conclusion that thedefendant ever agreed to pay commission to the plaintiff. In coming tothis conclusion I have not been unmindful of the fact that the burden lieson the appellant to show that the judgment appealed from is wrong.That if all he can show is nicely balanced calculations which lead to theequal possibility of judgment on either the one side of the other beingright he cannot be said to have succeeded, vide Naba Kishore Mandal v.Upendrai Kishore Nandal *. In the present case I am of opinion that thecalculations were not nicely balanced making possible a verdict one wayor the other. The learned Judge has formed an erroneous view of thedocuments P I and P 2. The verdict in favour of the plaintiff cannot heallowed to stand. It must be set aside and judgment entered for thedefendant on the plaintiff’s claim together with costs in this Court and theCourt below.
Wijeyewardene J.—I agree.Appeal allowed.
H1903) 2 K. B. 635.
’AJJt. (1922) Privy Council 39.