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1871 Supreme(SC) 8
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
MEMBER OF THE JUDICIAL COMMITTEE—THE RIGHT HON. SIR JAMES WILLIAM COLVILE, THE RIGHT HON, THE LORD JUSTICE JAMES, AND THE RIGHT HON. THE LORD JUSTICE MELLISH.
OUKUR PERSHAD BUSTOOREE - Appellant
Versus
MUSSAMUT FOOLCOOMAREE BEBEE - Respondents
On appeal from the High Court of Judicature at Fort William in Bengal.
Decided On : July 1, 1871.
Privy Councillor,- Assessor .—The Right Hon. Sir Lawrence Peel.
A suit against a del credere agent for the price of goods not paid by purchasers is an action for breach of an express collateral contract, attracting a three-year limitation period rather than a general six-year limitation for debts.
Headnote:(A) Act of Limitation of suits, No. XIV of 1859 - Section 1, Clause 9 and Section 1, Clause 16 - Suit for recovery of money from a del credere agent - Nature of liability - Whether a suit against a broker who guarantees the payment of purchasers falls under the limitation for breach of contract (3 years) or the general limitation for debts (6 years) - A broker receiving a del credere commission undertakes a collateral obligation to pay the price of goods if the purchaser fails - Such an action is an action on an express contract, and the sums recoverable are damages for breach of contract - Suit falls within the three-year limitation period provided under Clause 9 of Section 1.
Facts of the case:
A manager of a business firm instituted a suit against a broker to recover a sum alleged to be due on the balance of an account. It was established that the broker had received a del credere commission, which made her liable for all goods sold that were not paid for by the purchasers. The suit was brought after the three-year period had elapsed for the items in the account, but within six years. While a lower court had decreed the amount in favor of the plaintiff, the appellate court dismissed the suit on the grounds of limitation, treating it as a breach of contract.
Findings of Court:
The court found that the broker's liability was based on a collateral undertaking to pay the price of goods in consideration of the commission paid. This engagement constitutes an express contract, and the recovery of the price of goods under such an arrangement is effectively a claim for damages resulting from the breach of that contract.
Issues: Whether a suit for the recovery of money from a del credere agent, based on a guarantee of payment by purchasers, is a suit for breach of contract under Section 1, Clause 9 of the Act of Limitation of suits, No. XIV of 1859, thereby attracting a three-year limitation period.
Ratio Decidendi: The court ruled that when a broker is sued upon a collateral undertaking to pay the price of goods if the purchaser fails, the action is based on an express contract. The sums recoverable under such an undertaking are damages for breach of contract, thus falling within the three-year limitation period specified in Clause 9 of Section 1 of the Act of Limitation of suits, No. XIV of 1859, rather than the general six-year limitation.
Result: Appeal dismissed, with costs.
Legal Category Hierarchy
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commercial law
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agency
- del credere agency
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agency
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practice and procedure
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limitation
- limitation period
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limitation
Judgement
The Appellant, as Manager of the business of the firm of Seeta Ram Salgram, carrying on trade at Zeagunge, in the City of Moorshedabad, instituted the suit, out of which this appeal arose, against the Respondent in July, 1863, in the Court of the Prin-cipal Sudder Ameen of Moorshedabad, to recover the sum of Rs. 16,051 11 10, as due in respect of various sales of Cotton belonging to the Plaintiff, and which the plaint alleged was sold by the Defendant as a del credere Agent; and as to which liability the plaint alleged, that two statements of account had taken place with the Respondents Gomastah, the first on the 1st Assin, 165=September, 1858, and the second of the 15 Kartick, 169= October, 1862, by the latter of which the sum sued for was shown to be due.
The Respondent, by her written statement, denied the Plain tiffs allegations as to there being any del credere contract with the Plaintiff as alleged, or any adjustment of account, or any authority given ho the Gomastah so to adjust. She stated, that the commission which her Firm had always received from the Appellant was. one from Rs. 10 to Rs. 12 8, on each 100 maunds of Cotton, being the commission usually paid for ordinary agency, without liability for the proceeds of sale, while the commission in case of taking a del credere liability was from Rs. 18 12, to Rs. 22 8, per 100
72 14 M.I.A. 134 ( 1871- 1872) Oukur Pershad Bustooree V. Mussamut Foolcoomaree Bebee 173
maunds.
.The cause of action as raised by the plaint, being upon an account stated before the filing of the plaint, limitation was not pleaded to the plaint; but upon the settlement of issues the Plaintiff abandoned that frame of the case, and then stated, that he sought adjustment of the accounts from the Court, and did not 9ue on an account stated; whereupon the-Defendant pleaded limitation, and accordingly the first issue was as to limitation, the,, others being on the merits as to the nature of the contract between the parties and as to the sum remaining due from the Respon-dent to the Appellant. The Plaintiffs Pleader also stated that, "affairs had gone on according to custom; and that there was no written contract between the Mahajun and Aurtidars."
The Appellant examined Witnesses before the Principal Sudder Ameen. The effect of their evidence upon the different sorts of agency, namely, the Puckah or del credere and Kutcha Aurti, or irresponsible agency, was that the commission in the former was about Rs. 12, and the latter Rs. 18 to Rs. 20.
The Respondent also examined Witnesses ; all of whom except one Witness were unconnected with either party, and, speaking from their experience as Dealers and Brokers in the Cotton trade in Zeagunge, deposed that the rate of commission admittedly paid by the Appellant was ordinarily paid for Kutcha Aurti, and that in his transactions with various of the Witnesses as Purchasers, the Appellant was in the habit of receiving payment direct. The Respondent filed receipts to show the practice referred to in her written statement, and decrees obtained by the Appellant in various suits brought by him against Purchasers of Cotton, also extracts from the Respondents account Book for the years from 1264 to 1268, to show that no entries were there made of any liability existing such as the Appellant asserted.
On this evidence, the Principal Sudder Ameen {Degumber Biswas), on the 31st of December, 1864, delivered judgment, and dismissed the Appellants suit with costs. He held that limitation did not bar the suit, as the dealings had been carried on up to the year before the institution of the suit. On the merits, the Principal Sudder Ameen held, that the evidence had wholly disproved the Appellants [@ page
M.I.A. 137] case and established that of the Respondent; that the bringing of suits by the Arrutdar in some instances was quite consistent with the practice of taking receipts from constituents and then suing as alleged by the Respondent, and that the Appellant had w
