Citation Codes

Equivalent Citations

citation codes

Case Number

Appeal from Original Civil Jurisdiction No. 35 of 1911

Attorney(S)

Mr. Sinha (with him Messrs S.R Das and N. Sarkar) for the Respondents.
Mr. Knight (with him Mr. Pugh) for the Defendants-Appellants.

Judges

Jenkins, C.J
Woodroffe, J.

See more information ...

Smart Summary

Structured Summary of the Opinion (Jenkins, C.J.)

Factual and Procedural Background

The litigation arose from an alleged breach of a contract for the sale of 750 tons of white cane Java sugar. The terms of the contract were set out in a bought note (Exhibit A) dated 28 February 1910 and signed by M.C. Misry on behalf of the defendants' firm. Shipments were to be made equally during August–December, price Rs. 7-14-9 per bazar maund ex-jetty or docks, and the contract contained a clause allowing the sellers to resell goods and hold buyers responsible if buyers failed to take delivery.

Facts relevant to the dispute: the plaintiffs notified the defendants of the August shipment (150 tons) expected around 14–15 September. On arrival, delivery was taken of 25 tons on 6 October, but no further delivery was taken. On 8 November the plaintiffs sold the remaining 125 tons and claimed that the sale was made under the contract's resale power; they demanded the difference between contract price and resale proceeds plus interest and charges (total claimed Rs. 2,745-12-6). The defendants resisted, and the suit was brought.

At trial before Harington, J., three issues were framed: (1) whether the suit lay under Order XXX, (2) whether manager Misry had authority, and (3) whether there could be a resale of unascertained goods. Harington, J., decided the first two in plaintiffs' favour and the third against them, but directed an inquiry as to damages. The defendants appealed; the objection of want of jurisdiction (issue 1) was abandoned on appeal.

Legal Issues Presented

Whether the contract signed by the manager Misry was within his authority under the power-of-attorney executed by the defendant firm (i.e., whether the contract was authorized).
Whether the sellers could treat the goods as subject to the contract so that a resale by the sellers would furnish the proper measure of damages (i.e., whether there could be a resale of unascertained goods and whether resale proceeds could measure damages).
Whether, given the pleadings and evidence, a reference as to damages should have been directed when the judge rejected the plaintiffs' contention that resale proceeds furnished the measure of damages.

Arguments of the Parties

Plaintiffs' Arguments

The plaintiffs contended that they validly exercised the contractual power of resale in selling the remaining 125 tons on 8 November, and that the difference between the contract price and the resale price (plus interest and charges) was recoverable from the defendants (claiming Rs. 2,745-12-6 in all).
The plaintiffs relied on the Full Bench decision in Moll Schutte & Co. v. Luchmi Chand to support the proposition that resale proceeds could be the measure of damages where a vendor has made the goods the subject-matter of the contract.
At one point plaintiffs' counsel suggested the due date might have been postponed (the trial judge treated 20 October as the day of breach), apparently to address the absence of evidence of damage on the original due date (21 September).

Defendants' Arguments

The defendants contended the contract was unauthorized because it was signed by Misry, their agent, and that the transaction was either beyond the scope of his authority or amounted to a prohibited speculation under the power-of-attorney.
They argued that the contract did not conform to the manner in which business was carried on by the defendant at Singapore and complained that a commission for examination of the defendant should have been issued (to establish this point), though a request for a commission was not pursued at the hearing.
The defendants disputed that resale proceeds could be the measure of damages because the goods were unascertained and not appropriated to the contract; they argued that, since the plaintiffs could not show ascertainment/appropriation, resale could not furnish the measure of damages and that the trial judge should have dismissed the suit rather than directing an enquiry as to damages.
On appeal it was also urged that Order XLI, rule 33 empowered the court to give effect to the defendants' contention regarding the resale even though no cross-appeal had been filed.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Moll Schutte & Co. v. Luchmi Chand (Full Bench decision)	Illustration of a situation where vendors had appropriated goods to a contract (or had done all in their power to do so), and where resale proceeds were treated as the measure of damages.	The court contrasted the facts of that case with the present: in Moll Schutte the goods had been appropriated and the vendors had shipped and consigned the specific goods to fulfill the contract; here the sugar remained bulk goods and had not been appropriated or ascertained for the contract. On that basis the court held the Full Bench decision did not apply to the present facts and affirmed the trial judge's interpretation limiting the operation of the resale clause.

Court's Reasoning and Analysis

Authority of agent (Misry):

The court agreed with Harington, J., that Misry had been acting under a broad power-of-attorney authorizing him to "direct, superintend, manage, and control and carry on in Calcutta ... the business of general merchants" in the name of the defendant firm. That power conferred wide authority, and the express prohibition it contained (against speculation in specified items) did not clearly extend to the transaction in suit.
The court rejected the defendants' contention that the transaction was outside the agent's authority because it was not conducted "as now carried on by me in Singapur and elsewhere." The phrase was read as descriptive of the general character of the business, not as an instrument-limiting clause. The lack of pursuit of a commission for examination at the hearing undermined the defendants' complaint on this point.

Resale clause and measure of damages:

The court examined whether the contractual resale clause could operate where goods remained in bulk and had not been appropriated or ascertained as the subject-matter of the contract. It held that the clause would operate if goods had been ascertained or appropriated for the contract, but it would be going beyond the true meaning of the words to apply the clause to goods that had not even been appropriated.
The court distinguished the present case from Moll Schutte & Co. where goods had been appropriated (shipped and consigned to fulfil the contract). In contrast, here the sugar remained unascertained in bulk and was not appropriated by the vendors for the agreement until after the resale; accordingly, there was nothing to which the power of resale could attach so as to make resale proceeds the measure of damages.

Pleadings, due date and reference as to damages:

The court emphasised that the plaintiffs' pleadings and the issues as framed relied on the resale as the basis for damages; the plaintiffs had refused to amend their plaint to claim damages on the basis of the market price at the due date, and the trial court had supported that refusal. Given this, the court found it was improper to direct a reference as to damages on a basis at variance with the plaintiffs' pleaded case.
The original contractual due date was 21 September. There was no evidence of damage on that date; to meet that difficulty the plaintiffs suggested postponement of the due date, and the trial judge treated 20 October as the day of breach, but postponement was neither pleaded nor made the subject of an issue. No agreement or clear indication of postponement was proved; plaintiff's counsel could only point to the late taking of delivery of 25 tons as a possible inference, which the court found insufficient.
On these grounds the court concluded that directing a reference as to damages was inconsistent with the case made by the plaintiffs and with the mode in which the case had been conducted.

Holding and Implications

Holding:

APPEAL ALLOWED; the suit is dismissed with costs throughout.

The court affirmed Harington, J.'s view on the scope of Misry's authority and on the interpretation of the resale clause (that it could not operate in respect of goods that had not been appropriated or ascertained). However, the appellate court held that the trial judge's direction for a reference as to damages should not have been granted because it was inconsistent with the plaintiffs' pleaded case and with the absence of any pleaded or proved postponement of the due date.

Implications:

Direct effect: The plaintiffs' suit is dismissed and the defendants succeed on appeal; the defendants are entitled to costs throughout.
On precedent: The court distinguished the Full Bench decision in Moll Schutte & Co. v. Luchmi Chand on the facts and applied a conventional construction of the resale clause; the opinion does not purport to establish a new general rule beyond that interpretation and application to these facts.

Additional notes from the opinion: Woodroffe, J. agreed with the result. Attorneys for the parties are noted in the opinion.

Show full summary ...

M.S.E Angullia & Co. v. E.D Sasoon & Co.

Jenkins, C.J:— This litigation has been occasioned by the alleged breach of a contract for the sale of sugar. The terms of the contract are set forth in the bought note, Ex. A to the plaint.

This document is dated the 28th February, 1910 and is signed by M.C Misry on behalf of the Defendants' firm.

By it the Defendants' firm purports to buy from the Plaintiff 750 tons of white cane Java sugar, the shipments to be made during August, September, October, November, December, equally. The price was Rs. 7-14-9 per bazar maund ex-jetty or docks. Delivery was to be taken by the buyer ex-jetty or dock within 3 days and it was expressly provided as follows:—

“The goods to be at the buyer's risk and peril from the time of landing of the sugar until they be removed from jetty, dock, ghat or godown, and should the buyers fail to take delivery of the sugar the sellers will have the option of reselling the same in the open market by private sale or by public auction and hold the buyers responsible for all consequences.”

On the 14th September the Plaintiffs wrote to the Defendants' firms in reference to 150 tons of sugar on board the S.S Okora, being the August shipment under the contract, and gave notice of the expected arrival of the steamer on or about that day. The steamer arrived on the 15th, and on the 6th of October delivery was taken of 25 tons under the contract, but beyond this no delivery was taken.

On the 8th of November the Plaintiffs sold the balance of 125 tons, and it is their case that this was done in exercise of the power of resale vested in them by the contract. On this footing they demanded from the Defendants' firm a sum of Rs. 2,341-14-9 as representing the difference between the contract price and the amount realised on the resale; and further sums for interest and charges, which brought the whole of their demand up to Rs. 2,745-12-6.

The claim was resisted by the Defendants' firm, and so this suit was brought.

The case came for trial before Harington, J., and the three following issues were raised: (1) whether the suit lies under Or. XXX, (2) whether the manager Misry had authority and (3) there could be no resale of unascertained goods. The learned Judge decided the first and second issues in the Plaintiffs' favour, and on the third against them. He, however, directed an enquiry as to damages.

From this decree the Defendants' firm have appealed. The objection of want of jurisdiction embodied in the first issue has been abandoned, and the points made before us are these.

First, it is said that the contract was unauthorized, and, secondly, that as the Judge decided against the Plaintiffs' contention that the price on the resale furnished the measure of damages, he should have dismissed the suit and not directed a reference.

For the Respondent it has been contended that the Judge was in error in deciding adversely to his contention as to the resale, and though no cross-appeal or cross-objections have been filed, it is urged that Or. XLI, r. 33 empowers the Court to give effect to the Defendants' contention as to the resale.

First, I will deal with the Defendants' contention that the contract was unauthorized.

I do not propose to deal with this at length for I am in complete agreement with Harington, J., on this point.

True it is that the contract was signed not by the Defendant but by Misry, his agent; but Misry was acting under a power-of-attorney which authorized him to direct, superintend, manage, and control and carry on in Calcutta in the name of Mr. S.E Angullia & Co. the business of general merchants as then carried on by the Defendant in Singapur and elsewhere. For that purpose the widest powers were vested in Misry, followed no doubt by the gratification that nothing therein contained should be deemed to authorize the attorney to speculate in gunnies, opium, shares or exchange.

It is urged that the transaction in suit was a speculation and so in contravention of the power-of-attorney.

But even if it was a speculation—and this is a view that has not been established—it is outside the terms of the express prohibition on speculation.

But then it is said the transaction is not in accord with the manner in which business was carried on by the Defendant at Singapur, and in this connection the Defendant complains that a commission for his examination should have been issued, as this would have enabled him to prove this point. In my opinion there is no force in this contention, and I am confirmed in this view by the feet that at the hearing the request for a commission was not advanced.

And I think there was very good reason for this. The words “as now carried on by me in Singapur and elsewhere,” are merely descriptive of the general character of the business and were not intended to limit the articles in which business was to be done or to define the terms on which it was to be conducted. It is not suggested that the agent could not purchase sugar, or that a forward contract could not be made; the objection when analysed is as to the prudence of the transaction and its mere imprudence would not render it unauthorized. Then it is contended that as the Plaintiffs claim the damages as formulated in the plaint and the issues rests on the resale the Court should not have directed a reference as to damages on a totally different basis. I think this contention is entitled to great weight, and all the more in view of the feet that the Plaintiffs when challenged by the Defendant refused to amend their plaint so as to make a case of damages on the difference between the contract price and the market price at due date and was supported in this refusal by the Court. And there is yet another circumstance which lends strength to the Defendants' contention.

The due date under the contract is the 21st September, and there is no evidence of damage on that date, on the contrary, the evidence, such as it is, points the other way.

To evade this difficulty it is suggested that the due date was postponed, and in fact the learned Judge treats the 20th October as the day of breach.

But postponement was not pleaded, nor as it made the subject of an issue.

Nor does the matter rest there, for Mr. Sinha, when challenged, could not point to any agreement, or clear indication, the Full Bench that the property in the that the due date should be postponed all he could contend was that it might be inferred from the fact that late delivery was taken of 25 tons.

In my opinion it would be wrong in view of the case made by pleadings and issues, and of the mode in which the Plaintiffs' case was conducted, to hold that there was a postponement of the due date or to direct a reference as to damages.

But then the Plaintiffs claim that they were entitled to have the damages estimated on the footing of the resale. Harington, J., decided this against the Plaintiffs, holding there was nothing to which the power of resale under the contract could attach. For the Plaintiffs it was contended that the learned Judge in so deciding failed to follow the decision of the Full Bench in Moll Schutte & Co. v. Luchmi Chand.

But when the essential facts of that case and the present are contrasted, they present significant differences.

In Moll Schutte & Co.'s case, the Plaintiffs sold to the Defendants under an Indent Contract 10 cases of tobacco to be shipped by steamer to Calcutta. The Plaintiffs ordered ten cases only of tobacco and caused them to be shipped and consigned to themselves for the purpose of fulfilling this contract.

The goods duly arrived but the Defendant refused to pay for and take delivery of the goods on the ground that they were not the goods contracted for.

The goods were tendered to the Defendants, and were in accordance with the contract. Now, to use the phraseology of the Contract Act, the goods had been appropriated but possibly not ascertained, I say possibly not ascertained, because it seems to have been thought by goods had not passed (see sec. 83).

The position then was that the vendors had done all in their power to make the specific goods the subject-matter of the contract.

Now in this case it is otherwise; here there was neither ascertainment nor even appropriation. The sugar was in bulk, and the vendors had not even appropriated the goods for the purposes of the agreement. That condition of affairs continued until after the resale.

Can it be then said that there even were goods to which the power of resale applied so as to make the result of that resale the measure of damages? Now the answer to this depends on the construction of the agreement between the parties as did the decision in Moll Schutte's & Co.'s case turn on the construction of the agreement there under consideration.

Neither in that case, nor in this, was any general principle or rule of law involved.

What then is the scope of his power of resale the words of which I have already read? The goods would have come within its operation if they had been ascertained or even if they had been appropriated for the purpose of the agreement. But in my opinion it would be going beyond the true meaning of the words to extend the operation of the clause to goods which had not even been appropriated and thus had in no sense become the subject-matter of the contract.

I do not say that a clause could not have been so framed as to have this extended operation: there would be nothing illegal in it. But I do hold that the clause as it has actually been framed cannot have this operation.

This is the view taken by Harington, J., and he too arrived at this conclusion by the same process of reasoning. I think he used the word “ascertained” not in the technical sense in which it is employed in the Contract Act but in the sense of appropriated, for I feel very sure the learned Judge had no intention of disregarding the Full Bench decision.

The result then is that while I agree with the view of the learned Judge as to the scope of Misry's authority and the interpretation of the power of resale, I think, for reasons I have already stated, that a reference as to damages should not have been granted, as this was opposed to the Plaintiffs' own case.

The appeal must therefore be allowed and the suit dismissed with costs throughout.

Woodroffe, J.:— I agree.

Messrs Pugh & Co., Attorneys for the Defendants-Appellants.

Mr. N.C Bose, Attorney for the Plaintiffs-Respondents.

A.K.G

Appeal allowed.

M.S.E Angullia & Co. v. E.D Sasoon & Co.

Structured Summary of the Opinion (Jenkins, C.J.)

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Plaintiffs' Arguments

Defendants' Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

M.S.E Angullia & Co. v. E.D Sasoon & Co.

Comments