Dar v Thomsen and Others (C.C. 97/1932 (Msa.).) [1934] EACA 25 (1 January 1934)

## ORIGINAL CIVIL.

## Before WEBB, J.

## ALIBHAI ADAMJI DAR (Plaintiff)

A. THOMSEN AND A. EBER AND SOHN (Defendants).

## C. C. $97/1932$ (Msa.).

Principal and Agent—Foreign Principal—Liability of Agent— Indian Contract Act 1872 sec. 230—Presumption—Rebuttal.

Held (15-1-34).-That the presumption raised by section 230 of the Indian Contract Act, that where a contract is made by an agent for the sale or purchase of goods for a merchant resident abroad the agent can personally enforce it and is personally bound by it, is a rebuttable presumption, and such presumption is rebutted when a contrary intention plainly appears from evidence contained in the document itself (as when the foreign principal is made the contracting party and the contract is in his name) or in the surrounding circumstances-Mackinnon, Mackenzie and Co. v. Lang, Moir and Co., (1881, 5 Bom. 584) and Tutika Basavaraju v. Parry (1903, 27 Mad. 315) followed.

Ross for Plaintiff.

Atkinson for defendant Thomsen.

The facts are set out in the judgment.

Ross.—I admit that in England, having regard to recent decisions, there is not a rule of law that an agent who contracts for a foreign principal makes himself personally liable, but an implication may arise from the custom of trade. But English law is fluid: here the law was fixed by the Indian Contract Act 1872, section 230 says: "Such a contract shall be presumed to exist in the following cases . . . "; this raises an irrebuttable presumption. (He referred to Chitty, Contracts (17th Ed.) p. 305; Mahony v. Kekule (139 E. R. 161); Green v. Kopke (ibidem 1484).

Atkinson.—The contract shows that my client was not even an agent, he was merely to transmit an offer.

Even if he was an agent there is only a presumption that he intended to make himself personally liable, which is rebutted by the terms of the contract: Härper and Sons v. Keller Bryant and Co. (84 L. J. K. B. 1696); Universal Steam Navigation Company v. McKelvie and Co. (1923 A. C. 492); Flatau Dick and Co. v. Keeping (36 Comm. Ca. 242).

JUDGMENT.—The contract sued upon is contained in an Indent, dated the 15th April, 1932, and a letter dated the 22nd April, 1932. The Indent (so far as is material) is as follows: -"Indent No. 0033.

To Messrs. A. Eber & Sohn, Hamburg;

Representative: A. Thomsen (in pencil).

Messrs. Alibhai Adamji Dar, Mombasa (in $From$ nencil)."

There follow a number of printed conditions many of which refer to "the Vendors"—then, in print, "Reply: by letter/by -cable"—the words "by letter" being crossed out in pencil. Then follows a space for the order, above which is printed: "Subject to confirmation by the vendors", and in the margin, opposite to the details of the goods ordered, is written in pencil: "To be cabled".

The letter of the 22nd April is on a printed form headed "A. Thomsen, Mombasa", and states: "Dear Sir, we hereby to inform you that your offer No. 0033 for 30 cases Traps has been accepted, not incl. responsibility for errors or misinterpretations in telegrams—Yours faithfully, A. Thomsen'; the number and -details of the order being in type and the signature written.

Subsequently the manufacturer required a certificate that the goods would not be reshipped to any port along the East Coast of Africa. In reply to this demand the plaintiff wrote to the defendant Thomsen: "Your contract is a simple contract to deliver the traps at Aden in accordance with my indent and to this I must hold you and your principals." The plaintiff now sues the two defendants jointly and severally or in the alternative for damages for non-delivery. The defendants Eber and Solin -entered a defence but did not appear at the trial.

For the defendant Thomsen it is said, in the first place, that he was not an agent but merely transmitted an offer to Eber and Sohn and in due course communicated its acceptance to the plaintiff. In my opinion this view is correct. Section 182 of the Indian Contract Act defines an agent as "a person employed to do any act for another or to represent another in dealings with third persons", and the commentary adds: "The essential point about an agent's position is his power of making the principal answerable to third persons". Wolff v. Horncastle (126 E. R. "925) is authority for the proposition that an agent has a right to exercise his discretion for the benefit of his principal. Here none of these characteristics are present: on the face of the order are the words "To be cabled", and the letter indicates that in fact Thomsen had merely transmitted the offer to Eber and : Sohn and is now communicating their acceptance to the plaintiff.

If, however, Thomsen should be regarded as an agent, the further point is made that, having contracted as agent for a named principal, he cannot be made personally liable on the contract. The order is addressed "to Messrs. A. Eber & Sohn"; the printed conditions refer throughout to "the vendors"; Thomsen's name occurs only in the pencilled words "Representative, A. Thomsen"; and the letter signed by him plainly refers back to the order, merely stating the fact that it "has been accepted". In these circumstances it is, I think, clear on the authority of Harper and Sons v. Keller Bryant and Company (84 L. J. K. B. 1696), Miller Gibb and Company v. Smith and Tyrer (1917 2 K. B. 141), Universal Steam Navigation Company v. McKelvie (1923) A. C. 492), and Flatau Dick and Company v. Keeping (30 Comm. Ca. 242), that in England, at all events, the principals and not the agent would be liable. But Mr. Ross says that, admitting that the usage by which an agent who contracts for a foreign principal makes himself personally liable no longer exists in England, section 230 of the Indian Contract Act, 1872, makes the law different in India and here.

That section is as follows: "In the absence of any contract to that effect, an agent cannot personally enforce contracts entered into by him on behalf of his principal, nor is he personally bound? by them. Such a contract shall be presumed to exist in the following cases: (1) where the contract is made by an agent for the sale or purchase of goods for a merchant resident abroad". As I understand it the argument for the plaintiff is put in oneof two ways: either the Act codified and, as it were, petrified the law of England on this point at the stage which it had reached in 1872, or else the words "shall be presumed to exist" give riseto a conclusive presumption which cannot be rebutted.

It appears to me that it is very far from being the case that in 1872 there was a rule of law that an agent contracting on behalf of a foreign principal made himself personally liable, though there are certain dicta which, taken by themselves, might lead one tothat conclusion. In Armstrong v. Stokes (1872 L. R.7 Q. B. 598) BLACKBURN J. said: "The great inconvenience that would result if there were privity of contract established between the foreign. constituents of a commission merchant and the home suppliers. of the goods has led to a course of business, in consequence of which it has been long settled that a foreign constituent does not give the commission merchant any authority to pledge hiscredit", and in Elbinger Action-Gesellschaft v. Claye (1873 L. R. 8 Q. B. 313) the same judge said: "I take it that the usage of trade, established for many years, has been that it is understoodthat the foreign constituent has not authorized the merchant to pledge his credit to the contract, to establish privity between him and the home supplier.'' So also in Thomson v. Davenport (1829.) 9 B. and C. 78) TENTERDEN C. J. said: "There may be another.

case, and that is where a British merchant is buying for a foreigner. According to the universal understanding of merchants the credit is then considered to be given to the British buyer and not to the foreigner."

But in this last case BAYLEY J. stated the rule somewhat less absolutely. He said: "There may be a course of trade by which the seller will be confined to the agent who is buying ... Generally speaking, that is the case where an agent here buys for a house abroad." And in Armstrong v. Stokes BLACKBURN J. qualified the statement which I have quoted, by saying: "This was originally (and in strictness perhaps still is) a question of fact." In Mahony v. Kekule (1884-139 E. R. 161) JERVIS C. J. said: "The question, no doubt, is one of intention to be collected" from the contract. Ordinarily, where an English agent contracts on behalf of a principal residing abroad, the agent is prima facie considered to pledge his own credit ... ", and in Green v. Kopke (1856-139 E. R. 1484) the head-note is "where a contract in writing for the sale of goods is entered into by one who describes: himself as agent, and as making the contract "as agent and on behalf of" his principal, naming him, the party so making the contract is not personally liable. In each case it is a question of intention, to be gathered from the terms of the contract: and. whether the principal be an Englishman residing in this country, or a foreigner residing abroad, makes no difference."

In my opinion the law as it stood in 1872 may be stated in the words used by SANKEY J. in Harper Bros. v. Keller, Bryant and Company (1915-84 L. J. K. B. 1696): "Where an agent in England contracts on behalf of a foreign principal he is presumed to contract personally unless a contrary intention plainly appears from evidence contained in the document itself or in the surrounding circumstances. If there is no such evidence the presumption prevails that the agent has no authority to pleagethe credit of the foreign principal in such a way as to establish privity between such principal and the other party, and that he is personally liable on the contract."

If, therefore, the Act was declaratory of the law in 1872, all that the plaintiff can say is that there was a presumption in favour of the personal liability of the defendant Thomsen, which, in my opinion, is displaced by evidence of a contrary intention contained in the document itself. Turning now to the section of the Indian Contract Act, it seems to me that, if it was the intention of the legislature to create a conclusive presumption of liability against an agent contracting for the sale or purchase of goods for a merchant resident abroad, it used singularly inapt language for the purpose. In common language and, I think, in law, the word "presumed" merely gives rise to an inference, but not to a "necessary inference" which cannot be rebutted. Stabit praesumptio donec probetur in contrarium. (4 Co. Rep.

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7.1 b.) "A presumption is a probable consequence drawn from $7.1$ b.) facts as to the truth of a fact alleged but of which there is no direct proof." (Wills, Circumstantial Evidence, 4 Ed. 8.) In order to construe the section in the sense for which Mr. Ross contends one would have to read the words "shall be presumed to exist" as if they were "shall be deemed to exist".

The effect of this section has been considered by the Courts in India in Mackinnon, Mackenzie and Company v. Lang. Moir and Company (1881-5 Bomb. 584) and in Tutika Basavaraju v. Parry (1903-27 Mad. 315), in both of which cases it was held that the agent was not personally liable. In the latter case the Court said: "We hold that the East India Distilleries Company, Limited, is a corporate company registered abroad and that therefore it must be presumed that the defendants, though agents of that company, are personally liable on the contract. But this presumption of law is one that can be rebutted, and we are constrained to hold that this presumption is rebutted when the foreign principal himself is in writing made the contracting party and the contract is made directly in his name."

I agree with the view expressed in these two cases that section 230 of the Indian Contract Act gives rise only to a rebuttable presumption.

It follows, therefore, that, so far as the defendant Thomsen is concerned, the plaintiff's action fails and must be dismissed. with costs.

I give judgment against Messrs. A. Eber and Sohn with costs and direct an inquiry before the Registrar as to damages. Notice of such inquiry to be served upon them by registered letter sent by Air Mail, and two months' notice to be given.