Trench and Another v Edyvean (C.A. 1/1934.) [1937] EACA 94 (1 January 1937)

### COURT OF APPEAL FOR EASTERN ARRICA.

# Before ABRAHAMS, C. J., Ag. P. (Uganda), SIR JOSEPH SHERIDAN, C. J. (Tanganyika), and LUCIE-SMITH, Ag. C. J. (Kenva).

## MRS. D. A. TRENCH & ANOTHER (Appellants) (Original $Defendants)$

#### $\overline{\mathbf{v}}$

### E. P. EDYVEAN (Respondent) (Original Plaintiff).

### C. A. $1/1934$ .

Partnership—Farming business in Kenya—Agreement entered into between one partner and respondent without knowledge of the other two partners whereby respondent lent money-Whether other partners bound by the agreement—Whether there is implied authority in any one partner to borrow money if necessary for or usually done in carrying on such a business-Whether lender is entitled in equity to recover monies advanced. if these monies were used in discharge of partnership debts-whether respondent fought case solely on the agreement-Whether any evidence of necessity or evidence whether usual to borrow for purposes of carrying on partnership business of farming in Kenya—Indian Contract Act ss. 65 and 251—Indian Evidence Act ss. 91 and 92.

- $Held$ (21-3-34).—(1) That the trial judge erred in holding that the borrowing partner, Potts, had an implied authority to bind the other two partners, as there was no evidence to show that borrowing money was necessary for or usually done in carrying on the business of a farming partnership in Kenya, and as there was no evidence in this case that partnership necessity required the partner who borrowed to borrow Sh. 5,000. In any event, in this case, a reference to the other two partners would have been likely to result in funds being at once forthcoming from the other two partners. - $Held$ also.-(2) That in this case there was no warrant for holding that a farming partnership in Kenya cannot be carried on without a power to borrow. - $Held$ also.-(3) That, if respondent did advance money and if these moneys were used in discharge of partnership debts, the lender (respondent) would be entitled in equity to repayment; but that, in this case, he did not fight his case on that ground and his appeal must be limited to the terms of the action brought.

$W. A.$ Shaw for appellants.

Digby Green for respondent.

This was an appeal from a judgment of the Supreme Court of Kenva. The facts are sufficiently set out in the judgment of the Chief Justice of Kenya (Sir Jacob Barth).

Judgment of Chief Justice of Kenya: "The plaintiff in this action is seeking to recover principal and interest remaining due under an agreement (Exhibit 1) in respect of an alleged loan of . Sh. 5,000 to the defendants.

The plaintiff went to the farm in the Trans Nzoia apparently managed by B. H. Potts as a pupil. Mr. Potts suggested that it would be better if he put some money in and got interest. The money was advanced in small amounts and by 29th June. 1929, the plaintiff states £150 had been advanced and by February, 1930, the sum of Sh. 5,000 had been advanced. On the 29th June, 1929, the agreement (Exhibit 1) was entered into. It purported to be between the plaintiff and Potts, Mrs. Trench and Mrs. Manley who are described in the agreement as "owners". It was executed by Potts and the plaintiff only. The agreement recites that the plaintiff had lent the owners Sh. 5,000 and then sets out the method of repayment by handing over to the plaintiff one-quarter of the crop on the owners' farm reaped during the year 1929. The owners were to transport the plaintiff's share of the crop to Kitale for not more than Sh. 1 per bag. Paragraph 6 of the agreement sets out that in the event of the quarter share realizing less than Sh. 4,000 the owners would make good the shortfall by the 31st December, 1930, by a cash payment with interest at 8 per cent. In the event of the sale of the farm before the delivery of the quarter share of the crop the plaintiff was to receive Sh. 5,000 with interest at 20 per cent from 29th June, 1929.

The defendant Potts who has left the country has not been served. Appearance has been entered by the other two defendants.

It is necessary to trace the history of the two defendants before the court with the farm. Mrs. Trench in her evidence said that she and her sister Mrs. Manley came to the Trans Nzoia in October, 1924. Their maiden name was Fidler. They bought the farm, Seboti, and arranged for Potts to manage it, giving him a third share. Mrs. Manley was married in December, 1925, and Mrs. Trench in November, 1927. Their respective husbands had farms of their own in the Trans Nzoia to which their wives went. After the marriages Mrs. Trench said they retained onethird interest in Seboti and gave Potts two-thirds interest. $\overline{N}$ <sub>0</sub> formal deed of partnership was drawn but it was assumed Potts was a partner as he had originally one-third share. The business relations between these parties were vague-no accounts were kept and no balance sheet was drawn and there were no profits. The ladies bought the original implements but at least after their marriages they took no active interest and retained one-third share in the land only for Potts' wife.

Mrs. Trench said she was ignorant of the K. F. A. a/c or that it was in the name of Potts, Manley & Trench. Mrs. Potts left the farm in February, 1929, and Potts left it in June, 1930,

appointing Capt. Humphries as his attorney. In the Official Gazette for 29th April, 1930, a notice of dissolution of the partnership stated to have been hitherto existing between the defendants carrying on farming operations in the Trans Nzoia. District was published. The partnership was advertized as being dissolved as from the 28th February, 1930, Potts taking over the assets and liabilities in connexion with the partnership. The notice is dated 23rd April, 1930. No mention of the plaintiff's claim was made when Messrs. Lavington and Martin were asked to draw up a list of debts for which Mrs. Trench and Mrs. Manley might be liable. Mrs. Trench said that Potts asked if they minded giving the plaintiff one-quarter of the crop as he had been doing work on the farm helping to manage it. She said they had no objection—it was his crop. The agreement with the plaintiff was not mentioned to her and no authority was given to Potts for him to sign it on behalf of Mrs. Trench and Mrs. Manley.

On cross-examination Mrs. Trench said that they would have been entitled to one-third share of any profits. She also testified to a partnership banking account for Seboti farm. There was also a name board up on the farm: "Potts & Fiddler". At the dissolution of the partnership according to Mrs. Trench she and Mrs. Manley were called on to pay claims. "Potts paid some, we settled his overdraft. I don't know if it were a farm overdraft or a personal one". That evidence shows the very loose business relations which existed.

Mr. Roberts gave evidence relating to the K. F. A. $a/c$ . That account first stood in the names of Potts and Fidler from November, 1927, to August, 1929. The next stage was an account in the name of B. H. Potts with a note "firm of Potts, Manley and Trench". That covered the period 21st February, 1930-August, 1930. A further account opens on 1st September, 1930, with a credit balance of Sh. 572/56, B. H. Potts, firm Potts. Manley and Trench. The last account in the fifth ledger was a credit of Sh. 73/50 in the name of Potts alone. That started 1st September, 1931.

On the evidence I find that up to the date of dissolution a partnership existed between the defendants and that during the relevant time Potts was acting on behalf of the partnership. It has been proved to my satisfaction that the plaintiff did advance moneys to Potts for the partnership. Of these sums the plaintiff has received Sh. 263/11 from Kirkwood & Co., on fortyfive bags of maize and Sh. 1,359/51 from Capt. Humphries on behalf of Potts, that apparently being the balance with the K. F. A. after crediting the account with the value of the shares held by the partnership. It has been explained by the plaintiff that on the representation of Potts be did not deliver more than forty-five bags of his share of the crop to Messrs. Kirkwood

because Potts said the K. F. A. price was better. The plaintiff thereupon left the balance of his share to be sold through that agency.

It is I think certain that Mrs. Trench and Mrs. Manley knew nothing about Exhibit 1 and Potts was not specifically authorized by them to enter into that agreement. At the same time there was undoubtedly a partnership existing between Potts and the ladies until the dissolution in April, 1930. The questions. for decision are: Was Potts authorized to borrow money for the farming venture, and does Exhibit 1 bind Mrs. Manley and Mrs. Trench. In my judgment in a farming partnership the power to borrow from time to time is essential, the business cannot well be carried on without such a power, and therefore there was an undoubted implied power in Potts to borrow for the purposes of the business. With regard to Exhibit 1 Potts acted as the agents for the partners and in my view his act binds all the members of the partnership.

I give judgment for the plaintiff for an account to be taken of the disposal of the 1929 crop and of the sums advanced by the plaintiff. Exhibit 2 includes some items, such as messing, which cannot well form part of a claim for money lent to the partnerslip. The account to be taken by the District Registrar, Eldoret.

The plaintiff to have the costs of the suit.

The decree should be a preliminary decree under O. XVIII, r.15. The account should be taken in the ordinary way with the materials at the District Registrar's disposal. Before final decree the case to be set down for mention when any objection to the account can be taken.

In view of the absence of accounts the District Registrar is at liberty to take such oral evidence as he deems necessary on dath."

Consequent on the above judgment, the District Registrar. Supreme Court, Eldoret, duly took accounts and submitted a report. That report came on for hearing before Horne J. who, after hearing parties advocates' submissions on the report, delivered the following judgment.

Judgment of Horne, J.—"The learned Chief Justice found that there was an implied power in Potts to borrow money for the purposes of the business, that in signing the agreement; Exhibit 1. Potts acted as agent of the partners and the partners are bound thereby, that the items for messing could not form part of the claim for money lent to the partnership and gave judgment for the plaintiff for an account to be taken of the disposal of the 1929 crop and of the sums advanced by the plaintiff and the costs of the suit. $\mathcal{L} \rightarrow \mathcal{L} \cup \mathcal{L}$

A preliminary decree was drawn up and was signed by the learned Chief Justice ordering the Registrar at Eldoret to take an account and certify the amount found due. After a lengthy hearing of the parties on the accounts the District Registrar made a report certifying a sum of Sh. $3,366/05$ as having been advanced by the plaintiff. The suit was then fixed to be mentioned and further argument was submitted as to the accounts and as to the meaning of the judgment given by the learned . Chief Justice.

As to the accounts it has now been found that the sum advanced to the partnership was Sh. 2,750/05 and that the onequarter share of the crop did not reach the value of Sh. $4,000$ . As to the other arguments the learned Chief Justice having found that the second and third defendants were bound by the act of Potts in signing Exhibit 1, I am bound to say that there has been no failure of consideration. The one-quarter share of the crop turns out to be Sh. $3,840/56$ . The shortfall is Sh. $159/44$ plus 8 per cent interest from 30th December, 1930, to 11th July, 1932, the date of filing suit. The defendants must have credit for cost of transport of one quarter share less 45 bags taken by plaintiff i.e. 491 less 45 equals Sh. 441. There is a further credit to defendants of Sh. 1,359.50 cash paid on 4th February, 1932 and for Sh. 351.45 for 45 bags which plaintiff took delivery. The total credits therefore are Sh. 2,151.95. The plaintiff is entitled to Sh. 4,000 under the agreement plus the interest on the shortfall from 21st December, 1932 to 11th July-Sh. 32.28 equals Sh. 4,032.28 less Sh. 2,151.95 equals Sh. 1,880.38.

Judgment for plaintiff for Sh. 1,880.38 and costs."

Against these judgments the defendants, Mrs. Trench and Mrs. Manley, appealed to the Court of Appeal for Eastern Africa.

Parties' advocates submitted lengthy written arguments, the gist of which is given below.

W. A. SHAW, for Appellant, argued: (1) Against judgment of Barth, $C. J.$ —(a) Having found that the agreement was a binding agreement, the trial judge erred in giving judment otherwise than in accordance with the terms thereof. The plaintiff relied chtirely on the agreement and never relied at the hearing on the alternative cause of action. The agreement disclosed a cause of action different from an ordinary loan. Plaintiff agreed to provide Sh. 5,000. The appellants showed that only Sh. 2,750.05 was ever advanced by respondent. Sections 91 and 92, Indian Evidence Act. It is an established rule in the Courts of India to require proof that consideration was actually received in all cases on contract and even a contract under seal does not import consideration. If there was a breach of the agreement and if appellants were bound by the agreement, which I deny, respondent's claim could only be in damages. (b) The trial Judge erred in finding that, in a farming partnership, the power to borrow from time to time is essential. No evidence to show that the business could not be carried on without this power and no provision of law whereby the trial Judge was entitled to take judicial notice of such implied borrowing powers. Section 251, Indian Contract Act. No evidence that it is in usual course of a farming partnership business in Kenya to borrow money. Not necessary for Potts to borrow from respondent. The appellants were easily available and had means and Potts could have approached them had money for the partnership business been required. Potts allowed respondent to put money into the business to give himself an interest in it as added inducement to him in his work. Potts signed the agreement not for the partnership but for him-(c) The trial Judge erred in finding that Potts acted as self. agent for the partners and that Potts' act bound all the partners. Proved at hearing that appellants knew nothing about transaction between Potts and respondent. No express authority to act for appellants and the agreement itself does not purport to have been executed on behalf of a partnership. $(d)$ The trial Judge erred in giving judgment for plaintiff for accounts and for costs of cuit. Respondent closed his case based on the agreement and never during the hearing asked for accounts to be taken. Respondent failed to prove performance of his part of the agreement. It was established at the hearing that respondent had not advanced the full Sh. 5,000. He also erred in awarding costs before result of taking of accounts as known. He referred to various Indian cases cited on pages 489, 490, 535, 536 and 562 of Woodroffe & Ameer Ali's Law of Evidence in British India, 4th Edition and to section 65. Indian Contract Act and to Brettel v. Williams, 4 Exch., p. 630 and Wheatley v. Smithers, 1907. 2 K. B. D. 684 regarding implied power to borrow for a partnership business.

(2) Against judgment of Horne, $J_{\bullet}$ (a) Horne J. erred in considering himself bound, as a result of Barth, C. J.'s judgment, to hold that there had been no failure of consideration in regard to the agreement. (b) Having found that respondent had only advanced Sh. 2.750 to the partnership, he should have held that there had been failure of consideration. $(c)$ It baying been established that respondent had not in fact advanced Sh. 5,000 he should have found that nothing was due by appellants to respondent.

Diaby Green, for Respondents, argued: (1) Supporting Barth, C. J.'s judgment.—(a) Section 251 Indian Contract Act relevant. English Partnership Act, section 5. Halsbury's Laws of England (1912). Vol. 22, page 27, para. 46 as to implied power of a partner. Bond v. Gibson (1808), 1 Camp. 187. English & Empire Digest, Vol. 36, page 362, para, 392. Nature of a farming business in Kenya makes it essential to have borrowing powers. Where one partner borrows money on the credit of partnership and applies it to his own purposes no defence to action by lender that plaintiff omitted to communicate with other partners. Okell v. Eaton & Okell (1874) 31 L. T. 330. (b) Preliminary judgment of Barth, C. J. in accordance with evidence and within claims in plaint. Other evidence in support of claim apart from the agreement. The loan was for farm purposes and the evidence regarding application of the loan bore this out. Variation of contract without knowledge of co-partner. English and Empire Digest, Vol. 36, page 364, para. 405, case of *Leiden v. Lawrence* (1863) 2 New Rep. 283. Alternatively, Potts received Sh. 5,000 for partnership and applied difference between that and Sh. 2,750 for his own purposes. See Okell v. Okell & Eaton. At the worst, respondent entitled to recover money lent to partnership. Lindley on Partnership, 8th Edition, pp. 234 and 235. Lindley on Companies (6th Ed.), pp. 292 et seq. Ex parte Chippendale (The German Mining Co.'s case), 22 L. J., Ch. 926; Blackburn Building Society v. Cunliffe Brooks & Co., 22 Ch., Div. 61 and 9 App. Cases 857 and 29 Ch., Div. 902; Baroness Wenlock v. River Dee Co., 19 Q. B. D. 155 and 36, Ch. Div. 674; Bannatyne v. D. & C. MacIver (1906), 1 K. B. D. 103; Reid v. Rigby & Co. (1874), 2 Q. B. D. 40. (c) On question of costs, trial Judge satisfied that a substantial sum was lent for partnership purposes after deducting items such as messing; and only a question of amount.

(2) Supporting Horne, J.'s judgment.—(a) Horne, J. bound by judgment of Barth, C. J. (b) Potts accepted Sh. 2,750 as good consideration for the agreement and bound his co-partners. (c) At the worst, respondent is entitled to recover money lent to partnership.

W. A. SHAW replied: Green has overlooked the qualification in Halsbury's "Laws of England" viz. "when such borrowing is in the usual course of such a business."

ABRAHAMS, C. J., Ag. P. (Uganda).—In my opinion the appel-... lants are entitled to succeed. The learned Chief Justice was wrong in holding that Potts had an implied authority to bind Mrs. Manley and Mrs. Trench by Exhibit 1. He says: "In my judgment in a farming partnership the power to borrow from time to time is essential, the business cannot well be carried on without such a power, and therefore there was an undoubted implied power in Potts to borrow for the purposes of the business". Now by section 251 of the Indian Contract Act, which at the time of this case governed the law relating to partnership in Kenya, there is an implied authority in any partner to borrow money if it is necessary for or usually done in carrying on the business of such a partnership as that of which he is a member. As to necessity, an aspect of the matter with which the learned Chief Justice did not deal, there is nothing to show that partnership necessity required Potts to raise 5,000 shillings or indeed any sum. If anything the evidence points the other way. Mrs. Trench and Mrs. Manley were admittedly well-to-do and there

is no reason for presuming that if the partnership were in financial difficulties a reference to them or either of them would have been in vain. Moreover, the respondent in giving evidence said that Potts suggested he (respondent) would be more interested in the farm if he had some money invested in it from which he might make some profit for his work. This gives some ground for believing that the money was borrowed for the purpose of utility and not actual necessity.

As to the finding of the learned Chief Justice that a farming partnership cannot be carried on without a power to borrow I can see no warrant for such a proposition. There was no evidence given as to the practice of Kenya farmers in general or in relation to a particular kind of farm, in respect to the satisfaction of their financial requirements or indeed as to the nature of their financial circumstances. The only argument the respondent can advance in support of the finding of the learned Chief Justice is a paraphrase of that finding, and in the absence of evidence to establish that finding I am of the opinion that the learned Chief Justice ought to have held that there was no implied authority in Potts to bind the appellants by the agreement formulated in Exhibit 1. The appellants are in my opinion entitled to succeed on this ground, but I regard it as desirable that this court should come to a conclusion also on the appellant's contention that the respondent's claim in the court below should have been dismissed on the ground of partial failure of consideration.

By the agreement formulated in Exhibit 1, wherein it was stated that the respondent had advanced Sh. 5,000 to Potts and the appellants, it was agreed that one-quarter of the crops reaped on the farm in 1929 should be handed over to the respondent and in the event of that amount realizing less than Sh. 4,000 it was agreed that the shortfall should be made good to respondent by a cash payment with interest. At the trial it was demonstrated by respondent that there had been a variation of the agreement to this extent at least that nothing had been paid by respondent at the time of the execution of the agreement, but he alleged that the money had been advanced to Potts from time to time in (to use his own expression) "driblets". The learned Chief Justice after holding that Potts had authority to bind the appellants gave judgment for the plaintiff (respondent) for an account to be taken of the disposal of the 1929 crop. and of the sums advanced by the plaintiff. He also awarded costs of the suit to the plaintiff. An account was duly taken of the sums advanced and of the crop and it was found that the amount advanced was Sh. $2.750/05$ and that the quarter share of the crop realized Sh. 3,840/56. The case then came before Horne J. for final disposal when the meaning of the judgment of the learned Chief Justice was canvassed. It was argued for the appellants that there had been failure of consideration on the

part of the respondent demonstrated by the state of the accounts. Horne J. held that the learned Chief Justice having found that the appellants were bound by the act of Potts in signing Exhibit I he was bound to say that there had been no failure of consideration. After giving the appellants credit for various sums he gave judgment for the respondent for Sh. $1.880/38$ which produced the remarkable result of putting the respondent in the same position as he would have been had he advanced the full sum of Sh. $5,000$ . Whether the learned Chief Justice intended in his judgment to hold that there had been no failure of consideration, or whether he intended to leave the matter to be determined on discovery of the state of accounts is in my opinion immaterial as there was obviously failure of consideration. Personally I am of opinion that the latter alternative is implied by his order for "an account of the sums advanced" by plaintiff", and that he awarded costs in error.

It has been submitted in the written arguments of the respondent that there had been no failure of consideration because Potts accepted the Sh. $2,750/05$ found to have been the total advanced as good consideration for Exhibit 1. This was never put forward in the pleadings or at any stage of the hearing and there is nothing in the record to support it. The respondent's case as set out in his pleadings was that he had advanced Sh. $5,000$ and he fought his case on that contention. The submission is a pure assertion and a most improbable one at that.

It is also argued alternatively that Potts received Sh. 5,000 for the partnership and used for his own purposes the difference between that sum and the Sh. $2.750/05$ respondent was found at the examination of accounts to have advanced. There is not the slightest foundation for this argument, and the submission was never made during the case.

What I might call a last despairing contention has been made in the written arguments of the respondent that at least he is entilted to receive repayment of the moneys he lent to the partnership and that this claim was embodied in the plaint. I am unable to find this claim in the plaint. But if respondent did advance moneys to Potts and these moneys were used in discharge of partnership debts there is good authority for holding that he would be entitled in equity to repayment. However, he certainly did not fight his case on that ground but on Exhibit 1 and in this appeal he must be limited to the terms of the action brought. Whether if he brought an action against the appellants hereafter founded on the equitable doctrine I have mentioned above, he would succeed I am not concerned to discuss.

I would allow this appeal against both judgments with costs in this court and in the court below in respect to both judgments. 1 would, however, make no order as to the costs of the applica-. tion for leave to appeal out of time.

SIR JOSEPH SHERIDAN, C. J.-Although we have not had the advantage of hearing counsel in this appeal the written arguments submitted for our consideration have been of much assistance in ascertaining the matters falling for our decision. The first point for determination is whether the learned Chief Justice of Kenya was correct in holding that the first defendant. Potts, was impliedly authorized by the two appellants to borrow the money which is the subject matter of the action. He said towards the conclusion of his judgment: "In my judgment in a farming partnership the power to borrow from time to time is esesntial. the business cannot well be carried on without such a power and therefore there was an undoubted implied power in Potts to borrow for the purpose of the business. With regard to Exhibit 1 Potts acted as the agent for the partners and in my view his act binds all the members of the partnership". Section 251 of the Indian Contract Act is applicable to the facts of this case, it provides that: "Each partner who does any act necessary for, or usually done, in carrying on the business of such a partnership as that of which he is a member binds his co-partners to the same extent as if he were their agent duly appointed for that purpose". There is an exception to the section, but, as counsel for the appellants submitted, it does not affect this case. On the first point therefore it has to be found that the money borrowed by Potts was either necessary for, or usually done, in carrying on the business before the respondent can succeed. As to whether the borrowing for the purposes of carrying on the business of farming in Kenya is usual there is no evidence on the record and in the absence of evidence I am unable to agree that the assertion can be accepted. I am not prepared to assent to a finding that it is usual to borrow money for the purpose of carrying on farming unless either the finding is supported by evidence or the fact is so notorious as that judicial notice may be taken of it. Here there is no evidence nor, so far as I am aware, is there such a custom as would justify the courts in dispensing with proof. I will now consider whether it was necessary within the meaning of the section to borrow the money. No application for money was ever made to the appellants who were easily accessible and persons who could have supplied money to the amount concerned in this action; nor were they informed of the transaction after it took place. According to the respondent he was induced by Potts to invest the money in the farm. At page 8 of the record he says: "Potts first suggested that I should be more interested in farm if I had some money invested in it from which I might make some profit for my work. He suggested I should lend a sum of money for running of the farm". If this were the reason for paying the money to Potts it would seem that the agreement which was entered into Exhibit 1 was more—or at least as much—for the benefit of the respondent as the farm. Of course it may be that Potts really required the money for the farm and put the proposal to the

respondent in this attractive manner. However it be, before the appellants as co-partners can be bound by what Potts did it has to be proved that the money was necessary for the carrying on of the farm. The case was fought on the issue as to whether the borrowing of the money was an act necessary for, or usually done in carrying on the business of the farm and the respondent cannot be allowed at this stage to argue an issue not raised in the court below, viz. that even though the money may have been borrowed without authority the lender has an equitable claim for its repayment against the partnerships firm. $\cdot$ I am not indicating here that such a claim could be made out, but only that it is not a matter falling for our consideration in the present appeal. To allow such an issue to be raised would be to allow the respondent to make out a new case. I am of opinion that the appellants are not bound by the act of Potts for the reason that the evidence does not support a finding that what he did was necessary for the carrying on of the farm. A decision to this effect disposes of the appeal in favour of the appellants, but $\alpha$ as the question of the construction of the document Exhibit 1 and the failure of consideration in connection with it was raised I propose to consider the point. Assuming therefore that the transaction fell within the provisions of section 251 of the Contract Act and so bound the appellants was there a failure of consideration by reason of which the appellants must succeed? Exhibit 1 inter alia provided that: "In consideration of the sum of Sh. 5,000 now lent and advanced by Mr. Edvvean to the Owners (the receipt whereof the Owners do and each of them doth hereby acknowledge) it is hereby agreed as follows— $(1)$ The Owners will hand over and deliver to Mr. Edyvean one-quarter $\left(\frac{1}{4}\right)$ of all and any crops that may be reaped on the Owners farm... during the year 1929... (6) In the event of the said quarter share realizing less than the sum of Sh. 4,000 the Owners will upon due proof thereof, make good to Mr. Edyvean the about of such shortfall, by a cash payment to be made not later than the 31st day of December, 1930, together with interest at the rate of 8 per cent per annum. Provided that such shortfall shall be calculated on the basis of the current market price of such crops ruling at the time when Mr. Edyvean disposes of the same". If the learned Chief Justice had found that there had been failure of consideration that finding would have disposed of the appeal but it seems to me that his judgment left the question of consideration open. It may be, however, that Horne J., when he subsequently concluded the case by deciding the question of accounts, considered that the learned Chief Justice had found that there was no failure of consideration. He said in his judgment: "As to the other arguments the learned Chief Justice having found that the second and third defendants were bound by the act of Potts in signing Exhibit 1, I am bound to say that there was no failure of consideration". Was there failure of consideration? From the arguments of counsel for the

appellants at page 6 of his reply to respondent's arguments it seems clear that there was a failure of consideration disentitling the respondent from suing under the agreement Exhibit 1 (and it was on Exhibit 1 that the case was fought). Mr. Shaw submits: "All respondent advanced to the partnership was He had to advance Sh. 5,000. Therefore the Sh. $2,750/05$ . extent of his default was Sh. 5,000 less Sh. $2.750/05=$ Sh. $2.249/95$ . Before he could claim Sh. 4,000 due to him. under Exhibit 1 he still had to advance Sh. 2,249/95. As found by Mr. Justice Horne he got back Sh. $2,151/95$ . Add the extent of his default, Sh. $2,249/95 =$ Sh. $4,401/90$ . Subtract what he had to get under Exhibit 1, Sh. 4,000. Making a difference of Sh. 401/90 overpayment to respondent on accounts between the parties as far as their respective obligations under Exhibit 1 were carried out". These figures appear to me to be correct and I adopt them. I would allow this appeal with costs and set aside both judgments of the Supreme Court with costs to the appellants. In respect of the application for leave to appeal out of time I would make no order as to costs.

LUCIE-SMITH, Ag. C. J.-I concur in the judgment of the learned Chief Justice of Tanganyika.