TUDAWE v. KEPPITIGALA RUBBER ESTATE CO

111-NLR-NLR-V-30-TUDAWE-v.-KEPPITIGALA-RUBBER-ESTATE-CO.pdf


( 389 )
Present: Lyall Grant and Akbar JJ.
TUDAWE v. KEPPITIGALA RUBBER ESTATE CO.416—D. G. Colombo, 24,740.
Broker—Offer to obtain a purchaser for land—Failure of negotiations—
No contract of sale—Right to commission.
Where the plaintiff, a broker, obtained from a prospectivebuyer an offer for the purchase of an estate belonging to thedefendant, company at a certain price, subject to the paymentof brokerage,—
Held, that the plaintiff was not entitled to his commission till thepurchase was concluded by a binding contract.
T
HIS was an action brought by the plaintiff, a licensed broker,for the recovery of his commission for having arranged a
sale of a rubber estate belonging to the defendant company.
The parties went to trial on the following issues :—
Did the plaintiff introduce to the defendant one EbrahiniLebbe as the purchaser of Beddawella estate ?
Did the defendant accept such purchaser and agree to paythe plaintiff brokerage at the rate of 2£ per cent, on thepurchase price ?
Was the refusal of the purchaser to complete the purchasedue to the act and conduct of the defendant ?
The learned District Judge dismissed the plaintiff’s action on theground that he was not entitled to recover in the absence of abinding agreement.
De Zoysa, K.C. (with Groos Da Brera), for plaintiff, appellant.—The local authorities make it clear that no binding contract is-necessary in order to enable the broker to recover his commission.A broker has merely to introduce a willing buyer and if the selleraccepts him the broker has nothing more to do {Perera v. Soysd1).It is the duty of the seller to get the buyer to enter into a bindingagreement. If the seller has been negligent the broker should notsuffer. There has been delay on the part of the seller in gettingthe deeds ready. This gave the buyer an opportunity of backingout of the agreement.
H. T*. Perera (with Ameresekere), for defendant, respondent.—It is the duty of the broker to get a buyer who is not merelywilling to buy, but who will complete the contract (Fernando v.Perera Hamine3). The sale should be completed and the purchaseprice paid before the broker can ask for his commission. Thedocuments produced show conclusively that the broker expectedto be paid a percentage of the proceeds of sale. The sale has fallen1 13 AT. L. R. 86.* 21 N. L. R. 79.
1029
30/28(390 ')
1929
Tudatve
v.
KtppiligalaRubberEstate Co.
through owing to no fault of the seller. The English authorities"show that there should be a contract binding in law. A contraryrule will enable a broker to act in collusion with a buyer in orderto help the former to earn a commission.
Counsel cited Holder and Partners v.Manx Isle Steamship Co.,Ltd.1
April 30,1929. Lyall Grant J.—
The facts in this case are fully set forth and the authoritiesexamined at length in the judgment of my brother Akbar whichI have had the advantage of reading.
I agree with him that the contract between the plaintiff and thedefendant was that the defendants were to pay the plaintiff’sbrokerage when they received payment from Ibrahim Lebbe andthat this payment was due on the completion of the title. (Seedocuments P 21 and P 2.) That condition was not fulfilled andplaintiff is therefore not entitled to recover on the contract.
It was argued on the authority of a dictum of Bonser C.J. inSimpson and Co. v. Soyza2 and of Perera v. Soysa3 that where abroker has introduced the parties and they have come to an agree-ment in consequence of that introduction, and where the brokerhas done all in his power to bring about a completed contract he isentitled to commission or at any rate to a quantum meruit.
These cases were fully considered by Bertram C.J. in Dissanayake-v. Rajapalcse* and he arrives at the conclusion that it is only whenthe principal by his own act or default absolutely refused to performor rendered himself incapable of performing his part of the contractthat a right to quantum meruit arises.
In the present case it is common ground that there was no bindingagreement between the defendants and Ibrahim Lebbe. Therewas nothing more than a nudum pactum, and unless the plaintiffcan establish in his favour that it is sufficient for him to bring theparties into such a relation in order to establish his right of action,it seems to me that his claim must fail.
According to his contract, if I read it correctly, he would becomeentitled to brokerage only on the completion of the sale by the.payment of the purchase money.
No doubt according to all established principles he would becomeentitled to a quantum meruit if a binding contract had been enteredinto between buyer and seller and non-completion of that contractwere due to the default of the defendants.
The English cases do not seem definitely to establish more thanthis, though some of them appear to indicate that if there is such acontract which is not completed owing to the default of the other
1 [1923) L. R. I, K. B. 110.
1 4 N. L. R. 90.
3 13 N. L. R. 85.
* 20 JV. L. R. 353.
( 391)
party, and where the defendant in consequence of such default isentitled to a remedy against the other party, then he may be liableto the broker.
I can find no case where a broker has been held entitled to hiscommission or to a quantum meruit in the absence of such a bindingcontract.
Assuming however that the plaintiff can get over this difficulty,there remains the question of whether the defendants were indefault, ft is clear from the authorities that they would have beenin default if they had been unable to give a good title, or if theirconduct otherwise had been such as to justify a breach of contracton the part of Ibrahim Lebbe. No objection has been taken to thetitle, and on the evidence I am not prepared to disagree with thelearned District Judge in finding that there was not such delay ontheir part as would justify a breach of the contract.
It is however difficult to get away from the fact that there wasno binding agreement between the defendants and Ibrahim Lebbe.There was consensus in idem, but by the terms of his contract theplaintiff undertook to obtain more than this. He undertook toobtain a completed contract. He cannot therefore sue on thecontract, and he can only obtain a quantum meruit if the defendantsentered into a binding agreement which they failed to carry out.The defendants never entered into such an agreement, and insuch circumstances it is difficult to see how the question of deafaultcan arise.
I agree that the plaintiff’s appeal must fail, and it is dismissedwith costs.
Akbar J.—
The appeal is by the plaintiff in this case, a licensed broker, whosued the defendant company for commission due to him in havingarranged a sale of the defendant company’s rubber estate atKadugannawa.
The plaintiff alleged two causes of action in the plaint: firstly,that the contract between him and the defendant was an agreementto pay commission at the rate of 2£ per cent, on the purchase pricein the event of plaintiff’s finding a buyer, and that the defendanthaving accepted the purchaser introduced by him, and havingconfirmed this acceptance by placing his purchaser in possession,became liable to pay the commission. As an alternative cause ofact ion the plaintiff claimed the commission above mentioned forhaving done his part of the contract, and that if the sale fell throughit. was due to the delay and default on the part of the defendant togive a valid and effectual title to the purchaser introduced by theplaintiff.
1929
Lyai.lGbast J.
Tudmn
v.
Keppiliji'ilaRubberEstate (’o.
( 392 )
1929
Axbar J.
Tudawe
v.
KeppitigalaRubberEstate Co.
The parties went to trial on the four following issytes :—
Did' the plaintiff introduce to the defendant one Ebrahim
Lebbe as the purchaser of Beddawella estate 1
Did the defendant accept such purchaser and agree to pay
the plaintiff brokerage at the rate of 2£ per cent, on thepurchase price 1
Was the refusal of the purchaser (Ebrahim Lebbe) to complete
the purchase due to the act and conduct of the defendant ?. (4) If so, is the plaintiff entitled to claim the sum of Rs. 8,750and interest as commission or compensation ?
It<*s clear from letters marked D 1 to D 9 that the plaintiffwas not employed by the defendant company to find a purchaser Tbut that the offer came from the plaintiff (see letter P 21) onbehalf of his “ client. ” The letters that followed (PI, P 2, P 3,.P 4, and P 5) make this clear, particularly P 2, wherein theplaintiff stated that he held the would-be purchaser’s “ confirmedletter ” and that the purchaser was “ prapared to pay the wholeamount in cash at the completion of the title. ”
These letters also show that the plaintiff knew that the estatebelonged to a company incorporated in England and that the offerhad to be communicated to the directors in London, who alone hadthe power to accept the offer.
The letters P 5, P 6, P 7, P 22, D 14, D 15, D 16, D 19, D 20,D 21, D 22, D 23, D 24, D 30, D 36, D 37, D 54, and D 57indicate the history of the transactions that took place subsequently,till the draft deed of transfer was completed and the title lookedinto. The original suggestion (see P 5 and P 6) was that thepurchaser should enter into possession of the estate on November1, but in P 7 the plaintiff stated that his principal was willing to-take over the estate on November 1 or as early as possible afterthe completion of the deeds. P 22, D 14, and D 15 show what the .parties agreed to do finally, the transfer was to be ante-dated toNovember 1, but the possession of the estate was not to be givenoyer until the purchase price was paid. In the meantime the estatewas to be managed by the defendant’s agents on behalf of thepurchaser until the transfer was completed and the purchase moneypaid, whereupon the purchaser was to be placed in possession.On the completion of the transfer all necessary adjustments wereto be made and the purchaser was to get the benefit of the estatecroj) harvested from November 1 in consideration of the purchaserpaying 7 per cent, on the purchase money from November 1 untilthe completion of the transfer and the payment of the purchasemoney. The letter P 22, the terms of which were accepted byD14 and D15, further stated that this was the customary procedurein all cases of this sort.
( 393 )
All these elaborate precautionary measures are necessary,according to the law of Ceylon, for the transfer of immovableproperty, and it will be convenient here to state the law on the point.Under section 2 of Ordinance No. 7 of 1840, no contract or agreementfor effecting a sale of immovable property nor any Contract oragreement for the future sale of any immovable property is to beof- any force or avail in law unless such contract or agreement is ina notarially attested document. The utmost extent to which theSupreme Court has gone in giving effect to an agreement to sell landwhich is not notarially executed is to be found in Nagoor Pitche v.Usoof,1 where it was held that party who advanced money on suchan informal agreement was entitled to a refund only if the otherparty refused or was incapable of completing the transaction.This is a Full Bench case and binding in Ceylon, but in the later caseof Peris v. Vieyra2 the Supreme Court followed the decision ofthe Privy Council in Mayson v. CloueP and held that if, accordingto the terms of the agreement, the payment was by way of depositin the nature of an earnest or arrha, then it was liable to forfeitureon the repudiation of the contract by the payer, but that when themoney was paid in part payment of the purchase price, the payerwas entitled to recover the money so paid even though the defaultwas on his part in carrying *out the terms of the agreement. Owingto the stringency of the provisions of section 2 of the local FraudsOrdinance, which goes beyond the corresponding section of theEnglish Statute of Frauds, it is a well recognized fact that nocontract to buy land, even though it may be in writing, is of forceor avail in law and that therefore parties to such a contract mayresile from it at the last moment. That is why solicitors in Ceylon,when arranging a sale of land, take every precaution, keeping inmind this contingency.
The series of letters which I have quoted above shows that thesolicitors of the defendant and the would-be purchaser, EbrahimLebbe, had this contingency in mind. That is why by lettersI) 21 and D 22 the defendant made it quite clear that their“ Superintendent was to remain in full charge of the estate until thehanding over is completed, after the payment of the purchase price,the buyer’s conductor having no say in the working of the property.”And that is why, I take it, that Ebrahim Lebbe coolly ignored therequest of the defendant contained in letter D 24 that he shouldprovide the defendant with an advance of Rs. 1,500 for the paymentof wages, &c., which was to be duly accounted for at the finalsettlement. That the fears of the defendant’s solicitors werejustified is shown by the subsequent events that took place in thistransaction.
1 (1917) 20 N. L. R. 1.s (1926) 28 N. L. R. 278.
3 (1924) A. C. 980.
1929
Akbab J.
Tudatoe
v.
Keppitigala• er
Estate Co.
( 394 )
1929
Akbar J.
Tudawe
teppitigalaRubberEstate Co.
The other letters produced by both parties and put in evidencein this case show that between October 4, 1926, and February 1,1927, the solicitors of the defendant and the prospective purchaser,Ebrahim Lebbe, were busily engaged in looking into the title of thedefendant, in scrutinizing the many deeds of the various lots of landwhich constituted the estate and in preparing the draft transferwhich had to be annexed to the special power of attorney fortransmission to England for the signatures of the Directors. Theseletters show that the various steps were taken with the approvalo? Ebrahim’s solicitors and that part of the delay, if there was anythat was not inevitable, was due to the illness of one of the membersof Ebrahim’s firm of solicitors. (See letters D 30, D 33, D 34,D 35, D 41, D 42, D 43, D 44, D 46, D 47, and D 48.)
It is true that by letter P 11 dated April 12, 1927, EbrahimLebbe’s solicitors wrote asking the defendants’ solicitors to cableto England at the purchaser’s expense inquiring when the power ofattorney was posted, but letters P 8 and the ones quoted aboveby me show that the defendants themselves were equally anxiousto expedite matters and that the delay in getting the papers readywas unavoidable in the circumstances as the defendants areacompany incorporated in England and they had to send out aspecial power of attorney to Ceylon for the transfer.
In any event, on April 19,1927, the necessary papers were receivedin Ceylon and the date for the signature of the deeds was fixed forMay 2 (see letters D 51 and D 59), but as appears fromD 60 to D 65 Ebrahim Lebbe backed out of the transactionwithout any warning on the very day on which the transactionwas to have been completed because he had seen some bad omensand did not therefore like to purchase the property. The factsthat I have narrated also show that the statement in the plaint thatEbrahim Lebbe was put in possession of the estate on November 1is nbt true.
To come now to the main question at issue, the crucial letter-containing the terms of this contract of brokerage is the letterP 21, which is as follows
No. 13, Norris road,Colombo, September 17/18, 192G.
The Manager,
Estate Department,
Messrs. Harrisons & Crosfield, Ltd-.
Colombo.
Beddawala Estate.
Sir,—With reference to my previous correspondence, I havepleasure to offer you on behalf of my client Rs. 350,000 (RupeesThree hundred and Fifty thousand) for the outright purchase of theabove estate.
( 395 )
My client wishes to inform you that this offer holds good up to. the 30th instant only. Please let me have your reply before thedate.
This offer is subject to per cent, brokerage.
Yours faithfully,
D. A. de S. TlJDAWE.
1929
Akbar J..
Tudaue
v.
KepfitigalaRubberEstate Co.
Here we have an offer on behalf of Ebrahim Lebbe of Rs. 350,000“ for an outright purchase ” of the estate. The letter further statesthat the offer Is subject to 2£ per cent, brokerage. Before I go onto discuss the point at issue as to the exact meaning of this offer andthe law on the subject, it will be interesting to see how the partiesthemselves interpreted this letter at the time.
By letter P 1 the defendant wished to know the name of theplaintiff’s principal and when and how he was prepared to pay thepurchase money before the offer was cabled to the directors inLondon. Obviously this information was required by the defend-ant’s agents in Ceylon to enable them to judge if the prospectivepurchaser was a man who was likely to stand by his offer. If hewas not such a person, I take it that the defendants’ agentswould not have troubled to cable to England. The reply is in 'P 2, which is an important letter. After stating the name ofthe purchaser and that he was the owner of certain properties, theplaintiff went oh to say “ I hold his confirmed letter and he isprepared to pay the whole amount in cash at the completion oftitle.” The expressions “outright purchase” and “completionof title ” can, I think, only mean when a legal transfer on a notarial' •document had been made by the defendants to the satisfaction of 'the purchaser. It was this offer that was accepted by P 5. Thequestion that has to be decided in this case is whether by P 5the defendants agreed to pay the commission of 2 per cent, whenEbrahim Lebbe had purchased the estate “ at the completion of'title ” or whether the obligation arose on the receipt of P 5:
A similar expression occurs in letter P 7. By P .9 datedDecember 22, 1926, the plaintiff wrote asking for his commissionas “ my business with regard to the sale of the above is over onNovember 1. ”
What took place on this letter is seen in letters D 31, D 32,and D 35 and the evidence of Mr. Leslie de Saram (recorded atpage 36 of the record), who explained to the plaintiff that he wasnot entitled to his commission till the deeds were signed. Theplaintiff then wrote letter P 12 on May 12, 1927, afte^ EbrahimLebbe had backed out of his offer, and again repeated that theestate was given over to the purchaser on November 1, 1926, and
( 396 )
1929
Akbah J.
Tudauie
v.
KeppitigalaRubberEstate Co.
he added that Ebrahim Lebhe was willing to pay the full amounton November 1. Then followed letters P 13, D 64, P 14,P 15, P 16, P 17, P 18, P 19, and P 20, which are'explained by Mr. Leslie de Saram in his evidence at pages 38and 39.
In my opinion the letters and conduct of the parties clearly showthat the obligations was only to pay the commission on the comple-tion of a legally binding contract between Ebrahim Lebbe and thedefendant company. The offer was to pay Rs. 350,000 for anoutright purchase and this was subject to a brokerage of 2| percent.; this can only mean that the defendant was liable to pay thecommission on the payment of the purchase price.
The plaintiff in issues 3 and 4 has raised the question whetherthe refusal of Ebrahim Lebbe to complete the purchase was due tothe act and conduct of the defendant, and if so, whether the plaintiffwas entitled to claim this commission.
It will be seen that issue 3 is vague and general in its terms.What the particular acts of default were are not set out in theissue, but general allegations have been made by Counsel at the barthat the defendants had unnecessarily delayed the negotiations byinsisting on a special power of attorney to which was to be attachedthe exact transfer which was to be signed by the attorneys. Thiswas necessitated by the particular facts of the case, viz., by thefacts that the owner of the estate was an English company, and forthe protection of the shareholders it is obvious that a general powerof attorney to sell is inadvisable and undesirable. It is also usefulto remember in this connection that the plaintiff was not employedby the defendant to introduce a purchaser. It was also urged'thatthe defendant should have insisted on a notarially attested agree-ment from Ebrahim Lebbe to buy, so as to safeguard the interestsof the broker, but that was not the contract on letters P 21and P 5, and even an agreement to sell would have required aspecial power of attorney from England.
The short answer to issue 3 is that Ebrahim Lebbe. did notcomplain about the delay, nor did he back out of his offer for thisreason. His reason was that it was due to bad omens, or, in otherwords, he insisted on his legal right to back out of an undertakingwhich did not bind him, as the rubber market was falling at the time,It remains now to discuss the law on the subject. There are fourlocal decisions on the question of brokers’ commission. In .thefirst case, Simpson & Co. v. Soysa,1 the defendant requested theplaintiff to raise him a loan of Rs. 10,000 on the mortgage of hisproperty and promised him a commission of 2 per cent. The
* (1900) 4 N. L. R. 90. .
( 397 )
plaintiff found a lender who was willing to lend the money, hut asthe deeds were not satisfactory the lender declined to go any furtherwith the negotiations. In the course of his judgment Bonser C.J.states that if an agent does all that he is expected to do accordingto the terms of his contract and finds a person able' and willing tolend the money, then the agent has earned his commission and itdoes not matter what happens afterwards, whether the lender- capriciously refuses to complete the,bargain or the bargain fallsthrough from some other cause. If this is correct law, Bonser C. J.should have entered judgment for the plaintiff, but he went on tosay that if the would-be lender was unable to lend the money owingto the fact that the defendant was unable to make out a good titleto the property, the plaintiff was entitled to the commission asthe failure of the loan was due to the fault of the defendant. Heproceeded to state that the difficulty in the case seemed to be thatthere was neither a binding contract entered into with the lender,
' in which case the condition of the title would be immaterial, norwas there evidence that the title was in fact defective. He sentthe case back for a decision on the latter point and directed thetrial Judge to enter judgment for the defendant if the title was agood one, but that if it were otherwise, judgment was to be enteredfor the plaintiff. •
The principle which I can deduce from this case is the one statedby Ennis A.C.J. in the last of the four cases, Fernando v. PereraHamine,1 namely, that the broker is only entitled, to his commissionin a negotiation that has fallen through if he can prove a directdefault on part of the vendor or a binding agreement between thevendor and the vendee, binding the latter to buy the property.Ennis A.C.J. further stated that thi£ seemed to be the principle ofour own cases and the English cases. This principle was statedand approved by Wood Renton C.J. in Perera v. Soysa2 as beingthe rule approved in a variety of English cases, but in applyingthe principle to the particular case he interpreted the words “ acomplete and binding contract ” to mean nothing more than thatthe broker should bring the vendor into contract with a purchaser' who was ready and willing to pay the price indicated by the vendor •and that the broker’s connection with the sale Came to an end afterhe had done this. Wood Renton C.J. further stated that this wasthe effect of Bonser C.J.’s decision in the case of Simpson <b Co. v.Soyza.3 This is, therefore, a direct authority in favour of thebroker in this case. But in the later case of Dissanayalce v. Raja-pdkse4 Bertram C.J. stated as follows:—“ There are certainexpressions, both in our cases and in the English reports, that seemto suggest that a commission agent has the right to sue for what in
i (1919) 21 N. L. R. 79.3 (1900) 4 N.L. R. 90.
3 (1910) 13 N. L. R. 85.‘ (1918)) 20 N. L. R. 353.
1929
Ailbajb J.
Tudawe
v.-
Keppitigala■RubberEstate Go.
( 308 )
1929
AkbabJ.
Tudawe
v.
KeppitigalaRubberEstate Go.
English law is called a quantum meruit even in the cases in whichtiie sale or loan goes off simply because the title to the propertyproves to be defective, whether the defect is due to the principal ornot. Thus the principle as laid down by Wood Renton C.J. inPerera v. Soy'sa (supra) was as follows:—“ Whenever the agentwho is employed to negotiate such a bargain has introduced to hisprincipal a person who is able and willing to enter into the contractso that nothing further remains for the agent to^do, he is entitledto his commission although the negotiations afterwards fell throughin consequence of circumstances over which the agent has nocontrol” (see also the dicta of Bonser C.J. in Simpson <fe Co. v.Soyza (supra).
It appears to me, as at present advised, that these statements ofthe law go beyond the recognized English authorities which-arebased upon the principle laid down in Smith’s leading cases, viz.,that it is only when the principal has, by his own act or default,absolutely refused or rendered himself incapable of performing hispart of the contract that the right to sue on a quantum meruitarises.
There is no doubt that the right of the commission agent to sueon a quantum meruit may be made dependent upon a special con-dition. This was so in the cases of Beale v. Bond,1 Bull v. Price?and Chapman v. Wise.3 I have given this long extract to showthat there is a conflict of authorities in Ceylon, the later cases beingin favour of the defendant. As the Counsel for the appellant hasurged that the opinion of the later Judges was obiter, it will beinteresting to examine some of the English authorities.
All the authorities which I have examined are clear on one point,namely, that if there is an express contract the terms of the contractmust be examined, and if the terms are clear no terms can beintroduced by way of implication. (See French <fc Co. v. Leeston .Shipping Go.*)
As McCardie J.. stated in Howard Houlder and Partners, Ltd. v.Manx Isles Steamship Co., Ltd 3: “ It is a settled rule for theconstruction of commission notes and the like documents whichrefer to the remuneration of an agent, that a plaintiff cannot recoverunless he shows that the conditions of the written bargain have beenfulfilled. If he proves fulfilment he recovers. If not, he fails.There appears to be no halfway house, and it matters not that theplaintiff proves expenditure of time, money, or skill. ” This is theonly question in this case, for no question of a quantum meruitarises either on an implied contract (see Lindley L.J.’s remarks in’ (1901) 84 L. T. 313.8 (1904) 91 L. T. 11.
' (1831) 7 Bingham 237.* (1922) 1 A. C. 451.
* (1923) L. R. 1, K. B. 110.
( 399 )•
Lott. v. Outhwaite1) or on a contract which has been broken by .the
default of the defendant (see Bertram C. J.’s remarks in Dissanayakev. Bajapakse (supra)).
As explained in the note of Cutter v. Powell,2 an application forcompensation on a quantum, meruit is an action for work and labourdone independently of the contract and the agent can only sue forthis remuneration if the special contract has been rescinded byconsent of the principal and agent or if the carrying out of theagent's contract ha§ been rendered impossible by the act or defaultof his principal (see Prickett v. Badger3}. As I have already statedin my opinion there was here an express contract in which there wasno condition to pay for a quantum meruit. In fact there was nocontract here engaging the plaintiff to seek out a purchaser onbahalf of the defendant company, nor is the breaking off of thecontract to buy attributable to the defendant company; it w§sbroken off owing to the whim ’of Ebrahim Lebbe.
1929
AX BAR J.
TudaiCe
v.
KeppitigalttRubberEstate Co.
The only question, therefore, in this case is whether the agreementto pay brokerage on P 21 and P 5 was fulfilled by the mereintroduction of Ebrahim Lebbe by the plaintiff and the acceptanceof his offer, or whether the commission was payable on the com-pletion of the purchase. No evidence has been led on customregarding such contracts, and it is significant that the plaintiff hasnot called Ebrahim Lebbe, and plaintiff’s Counsel objected to apostponement to enable defendant to call him as a witness. As Ihave already indicated, the contract is clear to my mind as pointingto the obligation to pay only in the event of the completion of thepurchase. Even according to the authoritative English decisions, •there must be a binding contract between the defendant and theperson introduced by the plaintiff before the agent is entitled tohis commission, unless, of course, the terms of the contract are clearthat the broker is to be entitled to his commission for any less workdone by him. It must be so by the very nature of a broker’s businessbecause he has the chance of making very large sums of. moneywith comparatively little exertion on his part, and he must take therough with the smooth in his calling. The plaintiff is here claimingRs. 8,750 with interest, but had to admit that his total income forthe last 8 years was only Rs. 4,000 or Rs. 5,000. That he dearlyrecognized that he had not earned his commission oh November 1is proved by his own evidence as-recorded at pages 20 and 21 of therecord showing the interest he took to force Ebrahim Lebbe tohand over the cheque to Mr. de Vos, but even here his evidence isshown up in luridMight, because Mr. de Vos flatly contradicts theevidence that Ebrahim Lebbe took any cheque for the purchaseamount to him (see page 43).
1 (1893) 10 T. L. R. 76.* Smith's Leading Cases 1.
» (1856) 1 C. B. (N. S.) 296. .
(• 400 )
1929
Akbab J.
Tvdawe 4v.
KeppitigalaRubberEstate Co.
In Oreen and another v. Lucas1 the defendant employed theplaintiff, to borrow money upon leasehold security and agreed to payhim a commission of 2 per cent. Upon examination of the leaseit was discovered that the lease instead of being a lease for 99 yearsabsolutely contained a proviso for re-entry under certain conditionswhich constituted a substantial deterioration of its value, whereuponthe would-be lenders, who were introduced by the plaintiff, refusedto make the advance. It was held that the plaintiffs were entitledto their commission.. But this case is different to the one in appeal,in .that there was a distinct employment of the plaintiffs by thedefendant. Further, the Lord Chancellor in his judgment statesas follows :—“ I do not scan narrowly the amount of deteriorationto the property ; suffice to say, it amounts to a substantial deteriora-tion, and probably it was a sufficient reason to justify the company(the would-be lenders) in their refusal to complete the loan. Eitherit was a sufficient reason to justify the company in refusing to go on-with the loan, or it was not. If they were not justified, the defend-ant ought to have proceeded against them, and if they werejustified, then the failure of the loan was owing to the defendant’sown default or the failure of the security he had proposed. ” Thetwo alternatives are clearly stated, there must be a binding contracton which the defendant can sue the would-be lenders, or there wasno contract owing to the default of the defendant.
Kelly C.B. stated: “I agree with the dilemma put by the Chancellor.If the company (the would-be lenders) are justified in their refusalto complete the loan, it is because of the defendant’s default inproposing a security that failed, and if they are not justified, thedefendant has his remedy against them. ”
Bramwell B. was of the opinion that the contract with the plaintiffwas to procure a lender and not the money, and that the contractwas completed, as Tar as the plaintiff were concerned, when theyhad -procured a person who was ready and willing to lend themoney. Blackburn J. agree with Bramwell B. on the meaning ofthe word “ procure ”, but added that the contract was to procurea person who was willing and ready to lend on the leaseholds andthat as the leasehold was defective the contract failed through thefailure of the security.
In the case before me there was no binding contract betweenEbrahim Lebbe and the defendant, and the failure of these twoparties to contract was due to the default of Ebrahim Lebbe and notto that of the defendant.
In Fisher v. Drewett2 there was a contract to “ procure ” a loan onthe security of house property, and the plaintiff procured a partytrilling to lend, but the negotiations went off as the defendant failedto show sufficient title. The Three Judges interpreted this contract
1 (187$) 33 L. T. $841 (1878) 48 L. J. C. L. 32
( 401 )
to mean nothing more than a contract to introduce a willing party, 1929and that the plaintiff was entitled to his commission as he had-T
procured a party who was willing to lend and that the contract to —!—
' lend had fallen through owing to the default of the defendant in Tud£wefurnishing a further abstract of title, “ a default which would have Keppitigalarendered him liable in an action for non-completion ” (see the E^tat^Co.judgment of Thesiger L.J.). This case is entirely different to theone before me, because, as I have said, P 21 was not an offer toprocure or introduce but an offer to buy, and the reason why therewas no binding contract to buy was due to the default of EbrahimLebbe.
In Harris v. Petherich1 the defendants agreed with the plaintiffto remunerate him “ in the event of their taking into partnership ”one Mowat, introduced by the plaintiff. The defendants afterwardsactually entered into a written agreement with Mowat by whichit was agreed that they should enter into partnership as, and from,a specified future date when a formal deed of partnership was to beexecuted. This agreement recognized and adopted the agreementbetween the plaintiff and the defendants. No partnership deed wasever executed, nor did Mowat ever act as a partner. The trialactually ended in a non-suit. Denman J., in setting aside the non-suit, stated as follows:—“It appears to me that what took place.after May 19 is good evidence to go to the jury, that what wascontemplated by this letter had been done, i.e., that the defendantshad so taken Mowat into partnership as to be dealing with him as apartner as between the defendants and the plaintiff ….
I think there is good evidence of a taking into partnership withinthe meaning of this letter and therefore that there was a case whichought to have gone to the jury …. There is a furtherelement in the case which has been relied on. It has been con-tended that there is evidence that the defendants prevented thepartnership.
“ As in all cases of agreement for commission the plaintiff is•entitled to his commission if he does every thing that he contractedto dp ; but I should hesitate to say that it is an immaterial questionin all cases whether or not the defendant is at all in fault. Inthis case Mowat was called as a witness and said in effect that the•defendants had always up'to that time refused to take him intopartnership . …. ” The case was sent back for retrial on
these two points. It will be seen that in this case there was actuallya binding contract between the defendants and the personintroduced by the plaintiff.
In the case of Lookwood v. Lewick2 there was a binding contractbetween the defendant and the person introduced by the plaintiff,and further, default on the part of the defendant. In Green and» {1878) 39 L. T. 543* 29 L. J. C. P.'340
( 402 )
1929
Akbatj J.
Tudawe
v.
KeppiligalaRubberEstate do.
another v. Mules,1 Prickett v. Badger (supra) was distinguished,,and judgment went against the plaintiff because he was held strictlyto his contract in spite of the fact that he had expended time andlabour in his undertaking. Knight, Frank, and Rutley v. Gordonand others2 is a case much more in point here. A printed leafletwas issued containing the terms of business of the plaintiff, andyet in spite of this Mr. Justice Acton held that the commission wasonly earned after completion of the sale and payment of the purchaseprice. The facts in that case were even stronger than the oneshere, because as a result of the efforts of the plaintiff a purchaserwas found who agree to buy the property and actually deposited£5,000. The defendants pleaded that this purchaser failed tocomplete the purchase and the property was sold subsequently toanother purchaser, and they paid the plaintiffs’ commission onthe £5,000 into Court. In the course of his judgment Acton J.held that not only could the plaintiffs not succeed in their claim forcommission, but that they failed in their claim for damages as for abreach of contract. The contract of sale was not followed by acompletion of the sale and payment of the purchase price, and thedefault in completing the sale was not on the part of the defendants.
Even on the plaintiffs’ Counsel’s contention that the plaintiffswere entitled to their commission once they had introduced apurchaser who was ready, willing, and able to buy, the trial Judgeheld that the evidence did not satisfy him that the purchaserintroduced by the plaintiffs answered to that description.
In this case before me Ebrahim Lebbe was not willing, ready, andable to purchase at the proper time, viz., on the date agreed upon(May 2,1927). As this case involves a question of some importance',I have set forth my reasons at length, and the conclusion to whichI have come is that the plaintiff cannot succeed in this actionon P 21. and P 5 in the absence of a binding contract betweenEbrahim Lebbe and the defendants or proof of default on the partof the defendants. I would dismiss the appeal with costs.
Appeal dismissed.
1 30 L. J. C. P. (A7. S.) 343.
(1923) 39 T. L. R. 399.