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Egged Co-Operative Society Ltd. v. Levi Geffen

Privy Council

Oct 10, 1946

Judgment

Subsequent
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Summary of the Legal Opinion

Factual and Procedural Background

This appeal arises from a dispute about whether a sum of L.P. 500 due under a letter dated 15-3-1940 (Ex. D-2) was paid on 28-11-1941 as part of a cheque for L.P. 1000 handed to the respondent. In 1940 the appellants sought to acquire the majority of shares in Abir Company Ltd.; the respondent, a shareholder, entered into a letter (Ex. D-2) shown to him which promised L.P. 250 on procuring a majority and a further L.P. 250 after completion of dealings with the Cohenstak Brothers, making the total L.P. 500 payable under that letter.

On 7-11-1941 the parties entered memorandum agreement Ex. D-1 under which the appellants agreed to pay the respondent L.P. 201 for his shares and the respondent agreed to perform various services connected with the company and transfer of shares. On 28-11-1941 Dr. Ishayevitz on behalf of the appellants paid the respondent by cheque L.P. 1000, and the respondent signed a draft document prepared by Dr. Ishayevitz described as an agreement (Ex. D-6) which stated that the true consideration for the shares and the undertakings in the 7-11-1941 agreement was L.P. 1000 and that the respondent confirmed receipt of the cheque.

Also on 28-11-1941 the respondent wrote Ex. P-2 (headed "without prejudice") in which he asserted (inter alia) that L.P. 500 was due to him under Ex. D-2. No written answer to that letter was sent.

The respondent sued for L.P. 500 said to be due under Ex. D-2. The appellants' defence was that they were under no legal liability to pay the sum but that they nonetheless paid L.P. 500 to the respondent on 28-11-1941 as if liable. Both the District Court (Tel Aviv) and the Supreme Court of Palestine considered the matter: the District Court (30-6-1943) had one outcome, but the Supreme Court of Palestine (30-11-1943) reversed the District Court and ordered judgment for the respondent for L.P. 500 with costs. The present appeal is from that Supreme Court judgment to Their Lordships.

Legal Issues Presented

Whether the monies due under Ex. D-2 (L.P. 500) were paid on 28-11-1941 as part of the L.P. 1000 cheque given on that date, as the appellants alleged; or whether the L.P. 1000 represented only the price for the respondent's shares and the value of services under the 7-11-1941 agreement (Ex. D-1), as the respondent contended and as expressly stated in Ex. D-6.
Whether oral evidence could be admitted to challenge or vary the effect of Ex. D-6 (a document signed only by one party) and, relatedly, the weight to be given to the written documents versus conflicting verbal evidence about the parties' real intention.

Arguments of the Parties

Appellants' Arguments

The appellants asserted that when the cheque for L.P. 1000 was handed to the respondent on 28-11-1941, the L.P. 500 due under Ex. D-2 was paid and was included in that L.P. 1000 payment.
The appellants alleged that a memorandum was written at the bottom of Ex. D-2 at that interview, in which the respondent purportedly acknowledged receipt of the L.P. 500 as part of the L.P. 1000; they claimed the respondent signed that memorandum, and later obtained Ex. D-2 and obliterated his signature by putting stamps over it.
The appellants raised charges of forgery/fraud connected with the respondent's handling of the memorandum, as part of their defence that the L.P. 500 had been paid.

Respondent's Arguments

The respondent contended that Ex. D-6 (signed on 28-11-1941) made clear that the L.P. 1000 was paid only as consideration for his shares and for his undertakings under the 7-11-1941 agreement, and did not include the L.P. 500 due under Ex. D-2.
The respondent stated in Ex. P-2 on the same date that L.P. 500 was still due under Ex. D-2 and, according to his account, he refused to sign any memorandum at the foot of Ex. D-2 when it was presented to him.
The respondent's case, as accepted by the trial court, was that he had not signed the memorandum and that the L.P. 500 had not been paid as alleged by the appellants.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The court's analysis proceeded in the following sequence, as recorded in the opinion:

Their Lordships accepted the view of the lower courts that the debt under Ex. D-2 (L.P. 500) was legally payable; they saw no reason to differ on that point.
The central factual contest concerned whether the L.P. 500 had been paid on 28-11-1941 as part of the L.P. 1000 cheque, or whether the L.P. 1000 related only to shares and services as Ex. D-6 stated.
The appellants' case at trial relied on oral evidence that a memorandum was written on Ex. D-2 at the interview and that the respondent signed it, and on an allegation that the respondent later obliterated his signature. The trial court found that the forgery allegation had not been proved but held that the respondent had agreed to and pretended to sign the memorandum, and therefore found the L.P. 500 had been paid.
The Supreme Court of Palestine had held that once the charge of forgery failed, the trial court erred in allowing oral evidence to show the real intention of the parties differed from the clear language of Ex. D-6, and that it was not competent to challenge Ex. D-6 by oral evidence.
Their Lordships declined to adopt that absolute rule. They observed that Ex. D-6 had been signed only by one of the parties and noted that no provision of the law of Palestine was cited to make the tender of such oral evidence inadmissible. Thus they were unwilling to hold, as an absolute matter, that oral evidence could not be admitted in such circumstances.
Nevertheless, Their Lordships found that the written documents were far more cogent and outweighed the conflicting and in many respects unsatisfactory verbal evidence. They pointed to Ex. D-6's clear statement that L.P. 1000 was paid as consideration for the respondent's shares and for his undertakings under the 7-11-1941 agreement.
They also relied on Ex. P-2 (the respondent's letter of the same date) which indicated that the respondent, at that time, was disposed to challenge the price paid for his shares but that he clearly viewed the L.P. 500 as still due under Ex. D-2.
Their Lordships reasoned that if the L.P. 1000 were intended to include the L.P. 500 due under Ex. D-2, it would have been straightforward to state this expressly in Ex. D-6 (which had been drafted by Dr. Ishayevitz). They observed that even if the appellants wished to keep their arrangement confidential, Ex. D-6 could have been drafted to include monies payable under the 15-3-1940 agreement without disclosing details of the services.
Their Lordships were unable to accept the trial court's specific finding that the respondent had agreed to sign and pretended to sign the memorandum at the foot of Ex. D-2. They said that once the allegation of fraudulent manipulation of the memorandum signature failed, it followed that the memorandum was not in fact signed by the respondent, and that Dr. Ishayevitz must have been able to see that.
They found it implausible that Dr. Ishayevitz could have been deceived into believing the memorandum had been signed, or that he would have accepted an agreement to sign a document at some later time without immediate signature. They further noted that, if the cheque had been handed over on the condition the respondent sign the memorandum, it was odd that Dr. Ishayevitz did not demand the return of the cheque, attempt to stop payment, or take action after receiving Ex. P-2 which was inconsistent with the claim that the respondent had signed a receipt for the L.P. 500.
On the basis of the foregoing — the relative cogency of the written documents, the content of Ex. D-6 and Ex. P-2, and the implausibility of the appellants' account of events — Their Lordships concluded that the appellants had failed to prove that the monies payable under Ex. D-2 were paid on 11th November 1941 (as the opinion records), as they had alleged.
Because of that finding, Their Lordships did not consider it necessary to determine whether the fraud and forgery allegations at trial were properly open on the pleadings.

Holding and Implications

Appeal dismissed.

Direct effect on the parties:

Their Lordships advised His Majesty that the appeal should be dismissed, thereby leaving in place the Supreme Court of Palestine's order for judgment in favour of the respondent for L.P. 500 (with costs as previously ordered by the Supreme Court).
The appellants were ordered to pay the respondent's costs of the appeal and the respondent's costs in both Courts in Palestine.

Broader implications:

The opinion emphasizes the court's weighing of written documents against oral testimony in assessing parties' intentions and finds the written instruments (Ex. D-6 and Ex. P-2) determinative on the facts of this case. The court did not lay down an absolute rule excluding oral evidence where a document was signed by only one party, and no new legal precedent was expressly created by this decision. The court noted it was unnecessary to consider whether charges of fraud and forgery were properly pleaded.

Show all summary ...

Sir John Beaumont.-

This is an appeal from the judgment of the Supreme Court of Palestine sitting as a Court of appeal dated 30-11-1943, reversing the judgment of the District Court of Tel Aviv dated 30-6-1943, and ordering judgment to be entered for the respondent for L.P. 500 with cost.

[2] In the year 1940, the appellants wished to acquire the majority of the shares in a company called Abir Company Ltd. The respondent was one of the share-holders in that company, and the appellants thought that he could influence other share-holders. Accordingly an agreement was entered into between the appellants and the respondent, the terms of which are to be found in a letter from the appellants to their solicitor, Dr. Ishayevitz, which was admittedly shown to the respondent. The letter is Ex. D-2, and contained the following provision :

"We hereby instruct you in your capacity as our advocate to communicate to Mr. Levi Geffen on our behalf that after we shall have procured the majority of shares in the Abir Company Ltd., either in our name or in the name of a trustee on our behalf, we shall pay him an amount of L. P. 250 for his help in procuring the majority of these shares."

After some other provisions not now material to be stated, the letter continued :

"We shall pay him a further amount of L. P. 250 after completion of all the matters between ourselves and the Cohenstak Brothers who are the owners of the remaining shares in the above company."

It is not now in dispute that the amount which became payable under this letter was L.P.500.

[3] On 7-11-1941, a memorandum of agreement, which is Ex. D-1, was entered into between the parties whereby the appellants agreed to pay the respondent L.P. 201 for his shares in the Abir Company Ltd., and the respondent agreed to perform various services in connection with such company and the transfer of its shares to the appellants.

[4] On 28-11-1941, Dr. Ishayevitz on behalf of the appellants paid to the respondent by cheque the sum of L.P.1000, and the respondent signed a document (the draft of which had been prepared by Dr. Ishayevitz), described as an agreement between himself and the appellants, which is Ex. D-6. In that document the parties confirm that the agreement was in addition to the agreement signed by the parties on 7-11-1941 and that the consideration seated in such last mentioned agreement was a merely formal consideration, and the agreement now being stated then contained the following paragraph :

"The parties hereby confirm that the true consideration for the aforesaid shares and for all the other undertakings of Geffen in the said agreement of 7-11-1941, is L.P. 1000 and Egged shall pay this amount by cheque to the order of Geffen drawn on the Anglo-Palestine Bank, Tel Aviv No. 57353 12951 and Geffen hereby confirms the receipt of this cheque."

[5] On the same date, i.e., 28-11-1941, but after the interview at which the cheque was handed over, the respondent wrote to Dr. Ishayevitz a letter, which is Ex. p-2. The letter was headed "without prejudice", but it was given in evidence by the respondent without objection and he was cross-examined upon it. The said letter contained 3 paras, which are material :

"(1) My rights in Abir Ltd. are 10 per cent. of the value and selling price of the whole business. Therefore I have to receive from Egged 10 per cent. of the sum paid for Abir. Compared to the sum which for example Konstock family received (50 per cent.=L.P. 5600) that means a sum of L.P. 1120.

" (2) In addition to the above sum, there is due to me a further L.P. 500 the sum which you promised to pay me-you and Egged-and bound yourselves to pay in accordance with the letter of 15-3-1940, which was deposited with you as a trustee.

"(3) On the basis of all the promises and according to your request in the office of Dr. Bernard Joseph, Jerusalem, and out of complete confidence, I signed all documents which were handed to me for signature without any dispute or argument and without even examining them, and that was in order to lighten the work of the Egged people and to hurry on the conclusion of the business. Among the other promises you authorised me to make promises to others and that must be carried out."

No written answer was sent to this letter.

[6] In the suit giving rise to this appeal, the respondent sued for L.P. 500 due under the agreement of 15-3-1940 being Ex. D-2. The defence of the appellants was that they were under no liability in law to pay to the plaintiff the amount claimed by him, but that nevertheless the appellants did pay to the respondent on 28-11-1941, the sum of L.P. 500 as if they were liable to do so.

[7] Both the lower Courts held that the debt due under Ex. D-2, was legally payable, and their Lordships see no reason to differ from this view. The only real question calling for decision in this appeal is whether the monies due under Ex. D-2 were paid on 28-11-1941, being included in the L.P. 1000 paid on that date, as the appellants allege; or whether the L.P. 1000 included only the price of the respondent's shares and the value of services to be rendered by him under the agreement of 7-11-1941, as alleged by the respondent and expressly stated in Ex. D-6.

[8] At the trial the appellants' evidence was to the effect that at the interview on 28-11-1941, between Dr. Ishayevitz and the respondent, when the cheque for L.P. 1000 was given, Dr. Ishayevitz wrote at the bottom of Ex. D-2 a memorandum which now appears thereon in the following terms :

"I hereby confirm that I have received from Egged the sum of L.P. 500 mentioned in the contract. I received the amount in the sum of L.P. 1000 referred to in the agreement between me and Egged of this date in consideration for my shares in Abir Ltd."

It was the appellants' case that the respondent signed this memorandum, and that thenceforth Ex. D-2 with the memorandum remained on the file in the office of Dr. Ishayevitz and that at some subsequent date the respondent managed to secure possession of Ex. D-2 and obliterated his signature on the memorandum by putting stamps over it. It may be noted that no fraud or forgery by the respondent was pleaded. The respondent's case was that after reading the memorandum on Ex. D-2 he refused to sign it.

[9] The Trial Court held that the forgery alleged by the appellants had not been proved, but the Court found that the respondent had agreed to sign the said memorandum and pre-tended to sign it. They held therefore that the l. P. 500 sued for had been paid, and dismissed the plaintiff's suit. In appeal the Supreme Court held that once the charge of forgery failed, the Trial Court erred in allowing oral evidence to be adduced to show that the real intention of the parties was different from the plain and unequivocal language of the agreement, Ex. D-6, and that it was not competent for the appellants to challenge this document by oral evidence.

10. Their Lordships are not prepared to go as far as the Supreme Court. The document Ex. D-6 was signed only by one of the parties and is not therefore, a written agreement, and their Lordships have not been referred to any provision in the law of Palestine which would render the evidence tendered at the trial inadmissible. But in their Lordships' view the evidence provided by the written documents far outweighs in cogency the conflicting and in many respects unsatisfactory, verbal evidence tendered at the trial. Exhibit D-6 states in clear terms that the L. P. 1000 was paid as consideration for the respondent's shares in Abir Ltd., and for his other undertakings in the agreement of 7th November 1941. The letter Ex. P-2 written by the respondent on the same date suggests that at that time he was disposed to challenge the price paid for his shares, a position which he has not persisted in, but the letter makes it perfectly plain that the L. P. 500 was, in the respondent's view, still due to him under Ex. D-2. If the L. P. 1000 was to include the L. P. 500 payable under Ex. D-2 it would have been easy to have said so in Ex. D-6 which was drafted by Dr. Ishayevitz. It is suggested that the appellants were anxious that their arrangement with the respondent for securing his services in connection with the acquisition of shares in Abir Ltd. should not be made public. Even if this be so, Ex. D-6 could have been expressed to include any monies payable under the agreement of 15th March 1940, without mentioning the services for which such monies were payable.

[11] Their Lordships are quite unable to appreciate the finding of the Trial Court that the respondent agreed to sign, and pretended to sign, the memorandum at the foot of Ex. D-2. Once the allegation of fraudulent manipulation by the respondent with his signature on the said memorandum failed, it seems to follow that the memorandum was not in fact signed by the respondent, and Dr. Ishayevitz could see this for himself.

[12] It is idle to suggest that Dr. Ishayevitz was deceived by the respondent pretending to execute the memorandum, or that he would have been satisfied to accept an agreement to sign a document which, if it was to be signed at all, should have been signed there and then. Moreover, if the cheque for L.P. 1000 was handed over on the terms that the respondent should sign the memorandum on Ex. D-2 it is strange that Dr. Ishayevitz did not demand the return of the cheque when the respondent refused to sign, and made no attempt to stop payment of the cheque. Nor did he take any action when he received the letter Ex. P-2 written on the same date in which the respondent made a claim wholly inconsistent with the suggestion that he had signed a receipt for the L.P. 500 due under ex. D-2.

[13] In their Lordships' opinion the appellants have failed to prove that the monies payable under Ex. D-2 were paid on 11th November 1941, as alleged, and the respondent's suit is entitled to succeed. On this finding it is unnecessary to consider whether the charges of fraud and forgery set up at the trial were open upon the pleadings. Their Lordships will humbly advise His Majesty that this appeal be dismissed. The appellants must pay the respondent's costs of this appeal and his costs in both the Courts in Palestine.

Appeal dismissed.