Mitchell Reid And Co. v. Buldeo Doss Khettry

1. The facts found in this case are these: That on the 9th June 1886, a contract was entered into between the plaintiffs and the delendant, by which the defendant agreed to buy, or in form acknowledged that he had bought, from the plaintiffs the goods described as follows, namely, "the goods or any part thereof that may be in a merchantable condition hereunder particularly specified, at the price stated below, viz., ex City of Cambridge' or other vessel or vessels," with certain marks and then the numbers "1191/95, 5 bales chrome Orange twist No. 40, 5 lb, bundles horse tickets, each 500 lbs. at 0-9-9. per lb., 50 days G. delivery." Then there are certain conditions below, the most important of which are these: The purchaser agreed to pay for the goods before or on delivery, deducting certain discount, or to grant promissory notes at the option of the sellers, and to take delivery within five days, which seams hardly consistent with what is stated above. There is a further clause expressly authorizing the sellers to resell in case of default. That document has been held to be, and I assume rightly, a document relating to the sale of five specified bales, described not only by their marks, but by the particular numbers on the bales; and that is the footing on which everybody apparently has always treated the case. The learned Judge of the Small Cause Court speaks of the contract being one for ascertained goods. And when he comes to state the subsequent facts, he says: "Five bales had been previously sold, and the defendant took delivery of one bale and paid for it, but refused to take delivery of the remaining four bales." Those are the facts. The suit was brought by the sellers for the price of the four bales refused. The defendant sets up as his defence, to justify his having refused to take delivery of four bales, that the goods in the bales were not according to contract. Apparently the defect objected to was that they did not comply with the term of description "No. 40," and perhaps not in the description "5 lb. bundles." On that subject it is found that there is no evidence on either side; there is no evidence that the goods were according to the description, and none that they were not. Under those circumstances the learned Judge has dismissed the suit subject to a reference of the following questions:

1. Is the defendant (the buyer) entitled to reject the goods under the circumstances stated?

2. Is the defendant entitled to raise the defence raised by him in this suit?

2. It will be convenient to answer the second of these questions first-whether the defendant in this suit is entitled to raise the defence that the goods are not according to the contract. It is said that he is not, because it is contended that the property in the four bales, as well as in the bale which had been delivered to him, had passed to the buyer. To us it seems clear that whether the property in the goods passed to him or not, he is entitled to reject the goods if they are not in accordance with the description in the contract, if that description forms, as it does here, an actual part of the conditions of the contract, and not something collateral to it. Even by the law of England the question of the right to reject does not necessarily always depend upon the question whether the property has passed or not. In this country it appears to us that the intention of the Legislature was to make the two things wholly independent of one another. It appears to us that, under the law in this country, a man is not bound, unless he has altered his position by some conduct of his own, to accept and to pay for goods which are not in accordance with the description of the goods he bargained for. If any statutory authority is necessary for that, we think the general principle laid down in Section 51 of the Contract Act applies to the case:

"When a contract consists of reciprocal promises to be simultaneously performed, no promise need perform his promise unless the promise is ready and willing to perform his reciprocal promise."

That is to say, applying that to this case, we do not think that a man is bound to take, or can be compelled to pay for, goods unless the seller of the goods is ready and willing to deliver to him goods in accordance with the bargain entered into, so that we have no hesitation in answering the second question in the affirmative.

3. The other question which the learned Judge asks us gives rise to more difficulty. The question is: "Is the defendant (the buyer) entitled to reject the goods under the circumstances stated?" In order to make our answer to that question clear it is necessary to state in what sense we understand the question. We understand the question thus: "Is the plaintiff entitled to maintain this suit by reason of the defendant having rejected the goods under the circumstances stated?" If we did not understand it so we should not be able to answer the question.

4. With regard to this the first point discussed was, on whom the burden of proof properly lay in this case, whether upon the plaintiff to show that the bales which he tendered were according to contract, or upon the defendant to show that the bales which he rejected were so far not in accordance with contract as to justify him in rejecting them? We do not think it necessary to answer that question in this case, and for this reason: It appears to us plain on the contract itself, and on the finding as to what has happened since, that the property in the four rejected bales has never passed to the defendant, the buyer. It is said for the plaintiff that the property did pass by reason of the operation of Section 78 of the Contract Act. That section says that, where there is a contract for the sale of ascertained goods, the property in the goods sold passes to the buyer when the whole or part of the price, or when the earnest, is paid, or when the whole or part of the goods is delivered. It is argued here that, when the defendant took delivery of the one bale and paid for it, the effect was to pass the property in the other bales to him of which he did not take delivery.

5. In order to see the meaning of the words in Section 78 with regard to the delivery of part of the goods, it is necessary to go on to Section 92, which deals with the same subject and deals with it more in detail. It says: "A delivery of part of goods, in progress of the delivery of the whole, has the same effect, for the purpose of passing the property in such goods, as a delivery of the whole; but a delivery of part of the goods, with an intention of severing it from the whole, does not operate as a delivery of the remainder." Two of the illustrations in that section may be usefully referred to. Illustration is this: "A sells to B a stack of firewood, to be paid for by B on delivery. After the sale B applies for and obtains from A leave to take away some of the firewood. This has not the legal effect of delivery of the whole." Illustration (c) is this "A sells 50 maunds of rice to B. The rice remains in A's warehouse. After the sale B sells to C 10 maunds of the rice, and A at B's desire sends the 10 maunds to C. This has not the legal effect of a delivery of the whole."

6. Now each of these cases, especially the illustration (b), is somewhat like the present case. But there are circumstances in this case which strengthen very much the inference that there has been no such part delivery as to pass the property in the whole goods. In the first place, when we turn to the contract itself, we find that it is for cash on delivery, and that the price is a separate and distinct price for each bale, because each bale is to contain a certain weight and the price is so much per pound. The only possible construction is that each bale is to be paid for on or before the delivery of that bale; and in accordance with that the price was paid for the bale delivered.

7. There is another point in the contract. It is not an absolute contract for the purchase of 5 bales, but for the purchase "of the goods or any part thereof that may be in a merchantable condition." It seems to us that the purchaser must have an opportunity, in the case of each bale, before he can be required to take delivery of it, to ascertain whether that particular bale is in that condition, showing therefore that the transaction with regard to each bale must be a separate transaction. The result is that, in our judgment, the case does not fall within the words of Section 78, under which it has been sought to bring it; and that the property has never passed to the purchaser except in the one bale delivered and taken.

8. There being no evidence either way as to whether the bales were according to the contract or not, it is impossible to say on the evidence as it stands whether the case was one in which the buyer was justified by the terms of the contract in rejecting the four bales. If it were necessary to decide that question we should have to say on whom the burden lay, and to decide it against that party, whoever he might be. But we think it unnecessary to decide that, because, whether the bales were properly rejected or not, if, as we hold, the property has never passed to the defendant in the four bales of which he refused delivery, this suit cannot lie. This is a suit for the price of the four bales, whereas, if any suit could lie, it would be a suit for damages for refusing to accept the bales, the measure of damages being not the price, but the difference between the contract price and the market; price.

9. Understanding, therefore, the question put by the learned Judge in the sense stated, namely, whether the plaintiffs are entitled to maintain this suit by reason of the defendant having rejected the goods under the circumstances stated, we answer that question in the negative.