Vaitalingham v. Holland-Colombo Trading Society.
1932Present: Akbar J. and Jayewardene A.J.
VAITALINGHAM v. HOLLAND-COLOMBO TRADING
185—D. C. (Inty.) Colombo, 41,358.
Contract—Sale of goods—Agreement to indent for goods—Terms of indent—Exemption from liability to damages.
The defendant agreed to order and import for the plaintiff certaingoods on account and risk of the plaintiff on the terms stated in anindent, and the plaintiff agreed to take delivery of the goods which maybe delivered from the vessel on arrival and to pay the defendant theprice mentioned together with his commission, the freight, and theother charges.
Clause 10 of the indent was as follows : —
“ If the goods are not ready for shipment on the terms herein contained,I/we shall be at liberty to cancel or allow later shipment but on noaccount shall I/we be entitled to compensation for late delivery or non-delivery from this or any other cause whatsoever.”
Held, that the defendant was not protected from liability by clause 10' of the indent, if he failed to deliver goods which had arrived in termsof the indent.
N this action the plaintiff sued the defendant to recover a sum ofRs. 1,501.28 as damages by reason of defendant’s failure to deliver
894 barrels of cement in terms of an indent entered into between theparties.
The defendant denied his liability and pleaded that it was expresslyagreed under the indent that the plaintiff should not be entitled tocompensation for non-delivery of the cement from any cause whatsoever.
The learned District Judge held that the action was maintainable.
H. V. Perera (with him E. F. N. Gratiaen), for defendant-appellant.—The plaintiff cannot maintain this action for non-delivery of the goods.Clause 10 of the indent stipulates that the plaintiff shall on no accountbe entitled to compensation for late delivery or non-delivery £rom theparticular cause specified or from “any other cause whatsoever33. Thewords “ any other cause whatsoever ” have been interpreted to excludelimitation or qualification (Duck v. Bates ’). The *words exclude theprinciple of eiusdem generis, and embrace any cause which the defendantconsiders a reasonable ground for refusal to deliver. Under clause 10the defendant is constituted the sole judge as to the sufficiency of the/iveason for non-delivery (Sun Insurance v. Hart “).
The learned District Judge has erred in restricting the scope of clause10 to cases where the defendant is unable to deliver. In contracts of“ sales to arrive ”, the seller is in any event not liable for non-deliveryif the goods do not arrive by vessel (Benjamin on Sale, 7th ed., p. 608).
(1884) 53 L. J. Q. B. 338, p. 30d.
2 (1889) 58 L. •/. P. S. 69.
170 JAYEWARDIpNE A.J.—Vaitalingham v. Holland-Colombo Trading Society.
[Jayewardejje A.J.—Is not the contract between the parties acontract, of agency rather than of sale ? j
It is submitted that the contract is really one in terms of which theplaintiff agrees to purchase the goods iri terms of his indent, while"the defendant merely agrees to be bound by the purchase price mentionedin the indent if and when he chooses to sell the goods to the plaintiff(vide “ The Queen v. Demers ” ’). There is nothing in the documentto indicate that the defendant has entered into an unequivocal agree-ment to sell. He is therefore under no legal obligation to deliver thegoods in terms of the indent, and clause 10 would appear to have beeninserted in order to place the matter beyond doubt.
Even if the contract is one of agency, there is nothing to prevent aprincipal from contracting himself out of his normal rights (“ Griffithsv. Earl of Dudley ”2).
N. Nadarajah, for plaintiff-respondent.—The words “ any causewhatsoever ”, should be interpreted “ eiusdem generis ”, with the .causes set out in clause 10 of the indent. The “ eiusdem generis ” ruleis applicable to contracts as well as statutes. (Chitty on Contracts.p. 104, 16 C. B. N. S. 678.)
Even if the words are wide enough, they are unreasonable and ambi-guous and therefore an interpretation favourable to the respondentshould be given. (Carver, pp. 180 and 111; Kearley and Tonge v. Peter3).An ambiguous phrase is no protection.
'In any case the words cannot be held to cover the default or fraudof the appellant.
The words “ any ^cause whatsoever ” have been considered in thefollowing cases. (Elderlie Steamship Co. v. Borthwick *; .Nelson Linev. Nelson & Son5; Borthwick v. Elderlie Steamship Company °.)
The position taken up by the appellant, that the indent containsan agreement to buy without a corresponding obligation to sell, cannotbe supported. It is submitted that the indent is a c.i.f. & c. contractcreating a contract of agency as has been held in the following cases.Darley Butler v. Saheed7; Gorden v. Rodrigo8; 41 Madras 1,060; 13Bombay 470. There may be a contract of sale in order to pass property,but that does not alter the real nature of the contract. (16*72) L. R. 5H. L. 395. If the contract is one of agency, then the appellant cannotseek to escape liability by claiming that there is no obligation on him.Once he accepts the indent and orders the goods, he cannot seek tofree himself from the position of agent. The case of Queen v. Demers3was considered in the local case (Attorney-General v. Abram Saibo10).
June 24, 1932. Jayewardene A.J.—
The plaintiff sued the defendant to recover a sum of ^Rs. 1,501.28,being damages alleged to have been sustained by the plaintrff'by reasonof the defendant’s failure to deliver to him 894 barrels of cement in
» (1000) A. C. 103.
(1882) 9 Q. B. D. 357.
24 N. L. R. at p. 82.
-« (1905) A. C. 93 at. p. 95.3 '(1908) A. C. 16.
« (1904) 1 K. B.319.7 25 N. L. R. 353.s 30 N. L. R. 417: ''9 (1900) A. C. 103.
™ 18 N. L. R. 417.
JAYEWARDENE AJ.—Vaitalingham v. Holland-Colombo Trading Society. 171
terms of an indent No. S 5,176, entered into between the parties. Thedefendant denied his liability to pay any damages at all, and pleadedinter alia that it was expressly agreed under the indent that the plaintiffshould not be entitled to compensation from the defendant for non-delivery of the 1,200 barrels mentioned in the said indent or any partthereof from any cause whatsoever7~~Ten issues were framed at thetrial but it was agreed that the Court should first try as a preliminaryissue of law only the first issue, whether the plaintiff can maintain thisaction in view of the condition in clause 10 of the contract that he shouldon no account be entitled to compensation for the non-delivery of thecement “ on any cause whatsoever ”. The learned District Judge has heldthat the action was maintainable, and the defendant has appealed.
The important question arises whether the defendant is an agentof the plaintiff or whether he is in the position of a vendor of the goods.The indent is on a printed form apparently supplied by the defendant.The defendant' undertook by it to order and import for the plaintiffcertain goods on account and risk of the plaintiff on the terms statedin the indent -yand the plaintiff agreed to take delivery of the goods asmay be delivered from the vessel on arrival and to pay to the defendantthe price mentioned together with the defendant’s commission (notfixed) and all freight dues, customs duties, and all usual charges. Thereare 23 printed clauses in the contract. At the foot of the documentthere is a typewritten description of the goods as follows :— '
1,200 barrels “ ENCI ” cement, each barrel weighing gross 180 kilosnett 170 kilos.
Price : 9/6d. per barrel, c.i.f. & c. Colombo.
Payment: 60 days P/N and indent @ 6% for my account.
Packing: In strong barrels as supplied before.
Shipment: March 500 barrels.
April 350 barrels.
May 350 barrels.
The legal position arising out of c.i.f. (costs, insurance, and freight)contracts was considered by Blackburn J. in Ireland v. Livingstone 1 : —
“ It is also very common for a consignor to be an agent who …
merely accepts an order, by which he binds himself to use due diligenceto fulfil the order …. The contract of agency is precisely thesame as if the order had been to procure goods at or below a certainprice, and then ship them to the person ordering them, the freightbeing in no ways an element in the limit …. The agent, there-fore, as is obvious, does not take upon himself any part of the risk orprofit which may arise from the rise and fall of prices, and is entitled,to charge commission because there is a contract of agency ….It is quite true that the agent who, in thus executing an order,ships goods to his principal is, in contemplation of law, a vendor tohim …. The legal effect of, the transaction between thecommission merchant and the consignee who has given him the
» (IS72) L. R. 5 H. L. 395 at 407.
172 JAYEWARDENE A.J,^-Vaitalingham v. Holland-Colombo Trading Society.
order is a contract of sale passing the property from one to the other ;and, consequently, the commission merchant is a vendor, and has theright of one as to stoppage in transitu.
“ My opinion is, for the reasons I have indicated, that when the orderwas accepted by the plaintiffs (commission merchants) there was acontract of agency, by which the plaintiffs undertook to use reasonableskill and diligence to procure the goods ordered at or below the limitgiven, to be followed up by a transfer of the property at the actualcost, with the addition of the commission; but that this superadded■ sale is not in any way inconsistent with the contract of agency existingbetween the parties, by virtue of which the plaintiffs were under theobligation to make reasonable exertions to procure the goods orderedas much below the limit as they could
In Cassaboglou v. Gibb 1 the Court of Appeal explained the dictum ofLord Blackburn that the legal effect of the transaction is a contract ofsale. – Both Brett M.R. and Fry L.J. stated the contract, between acommission agent and his foreign principal to be not one of seller andbuyer ab initio, but a contract analogous thereto, placing the commissionag§nt after shipment of the goods in the position of a quasi-vendor forcertain purposes. Accordingly they held that upon breach of anexecutory contract by a commission agent to supply his correspondentwith goods of a specific description, the damages were to be assessedas between principal and agent, and not as between seller and buyer.
The commission agent is in the position of a seller with regard to hisprincipal for some purposes only, e.gso far as regards the passingof the property in the goods to the principal, and as regards stoppage intransitu by the agent; but that in other respects the contract remainsone of agency.
In Mohamed Ally v. Schiller Dosogne & Co. Sargent C.J. of Bombayreviewed the English cases and regarded the latter case as a conclusiveauthority that the relationship between the parties continues throughout,except for certain special purposes, to be one of principal and agent. InPaul Beier v. Chotalal laverdas “ which was ultimately decided on appealin the light of the custom of trade in Bombay, Russel C.J. held thatthe indent, which is like the present one created a relationship betweenthe parties not of vendor and purchaser but of principal and agents.
Lord Blackburn also held in Robinson v. Mollett4 that though theremay be no privity between the manufacturer and the person abroadto whom the manufacturer has sent goods through an agent still it isperfectly consistent to hold that the relationship between the agentand indentor is that of principal and agent. In Harry Meredith v.Abdulla Sahib ®, certain commission agents, Elliott & Co., entered intoa contract with the defendants under which they undertook to purchaseand ship certain goods “ on account and risk ” of the defendants, anddid ship under a c.i.f. contract on board a German ship. Owing tothe outbreak of war during their transit, the goods did not arrive at
(1883) 11 Q. B. D. 797.;» (1904) 30 Bom. 1.
(1889) 13 Bom. .479.* (1874) L. R. 7 H. L. 802-810. –
•' (1918) 41 Mad. 1060.
JAYEWARDENE A.J.—Vaitalingham v. Holland-Colombo Trading Society. 173
their destination, Madras, until long after due time. On defendantsrefusal to accept the goods, they were sold by the plaintiff, the liquidatorof Elliot & Co., who sued the defendants for damages for breach ofcontract; the defendants denied the liability. Wallis C.J. said,“ Now it is well settled that, where goods are purchased in this way froma commission agent under a c.i.f. contract, though the agent is regardedfor some purposes as a principal just as any other vendor under a c.i.f.contract, yet the relation of principal and agent still subsists. Irelandv. Livingstone (supra) in which Blackburn J. (as he then was) gave hiswell known explanation of a c.i.f. contract when advising the Houseof Lords on a principle of the law of agency, viz., that, as the errorarose from the principal’s indistinctness of expression, he must bearthe loss. The first case in which such an agent was assimilated to avendor was Feise v. Wray'1, where he was allowed to exercise the rightof stoppage in transitu in respect of goods which he had bought andpaid for ; and the true principle would appear to be that the assimilationis only to be carried so far as is necessary to give business efficacy tothe transaction. This I gather to have been the view of Brett M.R.and Fry L.J. in Casaboglou v. Gibb (supra) where Lord Blackburn’sobservations in Ireland v. Livingstone (supra) were considered. Other-wise the relation remains one of principal and agent as held in the lastmentioned case in assessing damages ; and the agent remains accountableas held in Williamson v. Barbours which has recently been applied tosimilar cases in this Court
In the local case of Darley Butler v. Saheed3, the. defendants enteredinto a c.i.f. & c. (commission) contract with the plaintiff wherebythe plaintiff agreed to indent from a foreign firm for the defendants.The goods arrived in Colombo and were tendered to the defendants,but no policy of insurance was tendered. It was held that the defendantswere bound to accept the goods, and that as the plaintiffs should be regardedas agents of the defendants for the purpose of accepting a policy ofinsurance, the defendants must indemnify them if, in the exercise oftheir discretion, they accepted the goods as their agents- A. St. V.Jayewardene J. then (District Judge of Colombo) in a learned judgmentexamined all the authorities and also the indent in question, and heldthat the first clause created a contract of agency between the parties.The present indent is similar in its wording, and the first clause is almostidentical in both. The goods are to be imported on the indentor’s accquntand risk, and he undertakes to take delivery of such goods as are deliveredfrom the vessel. In appeal the Supreme Court did not go into all thecases which had been cited, as they had been fully dealt with in thejudgment under appeal, but it held that the contract was unquestionablyin form a contract of agency and not a contract of sale, and that a contractremains throughout a contract of agency although for certain purposesit is assimilated to a contract of sale. As I have already observed aconsideration of the contract between the parties in this case affordssufficient grounds for thinking that the defendant was an agent forthe plaintiff. The goods were to be ordered and imported on the
i (180$) 3 Bast 93.- (1877) 9 Ch. D. 529.
(1923) 25 .V. L. U. 353.
174 JAYEWARDENE A.J.—Vaitalingham v. Holland-Colombo Trading Society
plaintiff’s account and risk. The plaintiff was to take delivery fromthe vessel on arrival and pay the price with commission and all freight,dues, and other customary charges. ' -The goods were to be insured inthe plaintiff’s interests and he was to pay the premiums. Under clause15, should the defendant not choose to exercise his right to sell as providedfor in the preceding clause, the goods were to be detained at the plaintiff’srisk, and the plaintiff had to pay warehouse rent, fire insurance, andall other customary mercantile charges with interest. The terms ofthe indent D 1 seem to my mind to indicate clearly that the defendantwas only an agent of the plaintiff in respect of these goods.
Clause 10 of the indent contains the words which have given rise tothe issue which is now discussed, and runs as far as in material as follows :
“ If the goods are not ready for shipment on the terms herein contained,I/we shall be at liberty to cancel or allow later shipment but on noaccount shall I/we be entitled to compensation for late delivery or non-delivery from this or any other cause whatsoever ”. The clause proceedsto state at length what is proof of shipment and contains provisions asregards prevention or delay of shipment in case of war, siege, riots,strikes, lockouts and other contingencies. It was argued for thedefendant that the indent was so drawn up that the commission agent;was always protected and that when he obtained the goods, he was todeliver the goods only “ if he felt inclined to do so, ” and that the words“ any other cause whatsoever ” in clause 10 protected him in all cases.It was argued for the plaintiff that those words should be construed asbeing “ eiusdem generis ” with the cause mentioned. It is a well knowncanon of construction, that, where a particular enumeration is followedby such words as “ or other ”, the latter expression ought, if not enlargedby the context, to be limited to matters eiusdem generis with thosespecially enumerated. The canon is attended with no difficulty, exceptin its application. Whether it applies ^at all, and if so, what effect shouldbe given to it, must in every case depend on the-precise terms, subjectmatter and context of the clause under construction. Sun Fire Officev. Hart The words “ any place or places of entertainment whatso-ever ” were construed in Duck v. Bates Fry L.J. thought that thewords “ any place ” and the word “ whatsoever ” exclude any limitationor qualification and declare affirmatively that the genus of the placedescribed is to prevail in its utmost generality, but the majority of the!Court (Brett M.R. and Bowen L.J.), held that by a place of enter-tainment the Legislature meant a place assigned generally and habituallyas a place of dramatic entertainment, a public or a quasi-public placeof amusement where profit is made, and that a performance in a hospitalfor the delectation of the nurses, officials and persons who were conduct-ing the ordinary business of the hospital and their families was not apublic but a domestic performance and did not come within the purviewof the Act.
In Borthwick v. Elderslie Steamship Co.,3 Lord Alverstone in con-struing a bill of lading held, and his judgment was affirmed in the Houseof Lords4, that regard must be paid to the position of the words “or
i (1889) 58 L. J. P. C. 09.•a (1904) 1 K. B. 319.
*(1884) S3 L. J. Q. B. 338.*(1905) A. C. 95.
JAYEWARDENE A.J.—Vaitalingham v. Holland-Colombo Trading Society. 175
from any other cause whatsoever ”, and that the language could notbe regarded as framed with a view to exclude once and for all anyliability for loss or damage occasioned by unseaworthiness of the ship.He read the clause as protecting the shipowners from all liability for lossor damage arising from failure or breakdown of machinery, insulation orother appliances, and that the words “from any. other cause whatsoever,*'must be construed as relating to matters eiusdem generis with such.failure as a breakdown, and Lord- Halsbury L.C. observed in the Housuof Lords, “ one rule of construction which must prevail is that you mustgive effect to every part of a document if you can, you must read it aswhole
In Nelson Lineld Ltd. v. James Nelson1 Lord Loreburn L.C., remarkedthat the parties to an agreement may contract themselves out of theirduties, but, unless they prove such a contract, the duties remain ; andsuch a contract is not proved by producing language which may meanthat and may mean something different. As Lord MacNaghten saidin Elderslie v. Borthwick (supra) “ an ambiguous document is no pro-tection He knew of only one standard of construction. “ What dothe words mean on a fair reading of the whole document ? ”
The learned District Judge has carefully considered the effect of thewords “ on no account shall I be entitled to compensation for latedelivery or non-delivery from this or any other cause whatsoever ” inrelation to the context. His reasons are, in my view, sound. In PaulBeier v. Chotalal Iaverdas (supra) the indent contained a clause statingthat the indentor could not claim any damages for total or partial non-delivery. The clause ran as follows: —
“ It shall be optional for you to execute the whole or any part of thisorder ; and if through the failure of the manufacturers or strikes oraccidents of whatever nature, the goods or any portion thereof arenot shipped or delivered at the stipulated time; or if you should haveto reject the goods, or any portion thereof, on account of late or baddelivery, this indent, or such portion thereof remaining unexecuted orunshipped^ may be considered cancelled, and we/I shall not be entitledto claim any damages for such total or partial non-delivery, notwith-standing your having previously advised us/me of having placed theorder or any part thereof The possible causes fpr non-delivery arethere precisely stated. Although not stated clearly in the indent,' yeton a proper reading of its terms in relation to its context the commissionagent may not, in my opinion, capriciously or because prices have risenand merely for gain, refuse to deliver the goods which have alreadyarrived on the indentor’s order. I do not think that it can reasonablybe contended that the commission agent Was in all cases protectedand that the indentor was entirely at his mercy or that he was liableto take delivery but the commission agent had only undertaken to puthimself in possession of the goods and to deliver them if he felt inclinedto do so. The Queen v. Demers2 was cited as a case where such artagreement was upheld. There the respondents undertook to printcertain public documents at certain specified rates but there was nothingin the contract imposing any obligation on the Crown, the other partyi (19p8) A. C. 16.2 (1900) A. C. 103.
• DALTON J.—De Silva v. Odiris.
to1 the contract to give to the respondents all or any of the printingwork referred to in the contract, nor was there anything to prevent theGovernment from giving the whole or any of the work to any otherprinter. The Privy Council held that the Government was bound topayfor all workgiven to therespondentonthe footingof the contract,
butthe contractimposed noobligationonthe Crownto pay the re- •
spondents for work not given to them for execution. In my view thatcase hardly resembles the present one, where the defendant wishes torepudiate the contract after the goods ordered by the plaintiff hadactually arrived. To use the words of Brett L.J. in Johnson v. Raylton“ It seems to be more consonant with the ordinary, simplicity of fairmercantile business and more in accordance with legal principles ”,to say that an importing firm is bound in law to deliver .goods whichhave arrived on the order of an indentor. It is not necessary to considerthequestion whether the contract bytheaddition •’of this condition
hasnot changedits intrinsiccharacterandbecome soone-sided as to
degenerate into injustice.
For the reasons I. have stated, I am of opinion that the decision of thelearned District Judge on the first issue is correct, and I would dismissthe appeal with costs.
Akbar J.—I agree.