S.Moty Et Al. V. Kaylayan Chetty

1931 Present: Drieberg and Akbar JJ.

S. MOTY et al. v. KAYLAYAN CHETTY

160-D. C. Jaffna, 26,026.

Principal and agent-Authority to purchase goods-Holding out-Restriction of authority-Notice.

An act done by an agent in the course of his employment, on behalf of the principal and within the apparent scope of his authority, binds the principal, unless the agent was, in fact, not authorized to do the particular act and the person dealing with him had notice that in doing such act he was exceeding his authority.

APPEAL from a judgment of the District Judge of Jaffna.

H. V. Perera, for first defendant, appellant.

F. A. Hayley, K.C. (with him Nadarajah and Chelvanayagam), for plaintiff, respondent.

August 17, 1931. AKBAR J.-

In this action the plaintiff sued three defendants for the recovery of a sum of Rs. 2,906.65, being the value of goods supplied by him to the three defendants for the use of their shop at Chavakachcheri. The appellant in his answer denied that the other two defendants were his

partners and stated that he was not liable as the latter had no authority to pledge his credit. The parties went to trial on the following issues:-

(1) Did plaintiff supply goods to the boutique of S. V. S. K. Kaylayan Chetty at Chavakachcheri ?

(2) Are the second and third defendants partners of the S. V. S. K. firm ?

(3) Even if the second and third defendants are not partners, is first defendant liable for goods supplied to second and third defendants ?

The District Judge held against the first defendant in a long judgment, the purport of which seems to be that, although the second and third defendants were not partners, yet the first defendant was liable, because he held out the second and third defendants as agents, who were authorized to buy goods. It is argued by Mr. Perera for the appellant that the evidence falls short of this finding. The Kanakkapillai of the plaintiff's firm stated in evidence that his firm supplied goods to the boutique at Chavakachcheri which admittedly belonged to the first defendant, at the request of the first defendant. If this evidence is believed then, of course, there will be an end to the case for the appellant. Unfortunately, the District Judge has not held on this ground. It must, therefore, be assumed that he did not believe the statement of the Kanakkapillai. Now it is admitted by the first defendant that this boutique at Chavakachcheri belonged to him and that the second and third defendants were employees under him. But he added that although this was the arrangement for the first few months, the second and third defendants complained to him that the profits were not enough and asked him for his permission to purchase their supplies direct from outside sellers without getting them through the Jaffna branch of the first defendant's business. He stated further that he gave them this permission, but with the reservation that they were to pay cash. He allowed, therefore, the second and third defendants more liberty than was usually accorded to employees, because they had to manage the whole business and this business was to be carried on under his Vilasam, which was exhibited on a signboard over the shop. The accounts were to be looked into at the end of three years and the profits were then to to divided. Mr. Perera argued that the second and third defendants were not authorized to pledge the first defendant's credit when making these purchases as they were only to make cash purchases. The plaintiff put in evidence three documents, namely, P 12, P 13, and P 14, which are three promissory notes signed by the second defendant, but backed by the first defendant and his son. These are all notes negotiated in Colombo and the evidence points to the fact that they were moneys needed for the purchase of supplies for the Chavakachcheri boutique. So that on the first defendant's own admission, the second and the

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