ORANGE CONSIGNMENT

Evening Post, Volume CXXVI, Issue 74, 24 September 1938, Page 14

ORANGE CONSIGNMENT

IMPORTER'S POSITION

RESERVED JUDGMENT

"The essential element of agency is to' establish privity of contract between a principal and a third party, and it would seem that if the agent fails to do so, either a contract never comes into being or the agent himself becomes a contracting party," said Mr. J. H. Luxford, S.M., in the course of a f reserved judgment delivered recently in the ' Magistrate's Court in a case between Thompson Bros., Ltd., and the New Zealand Trading Corporation, Ltd. Mr. F. C. Spratt appeared for the plaintiff, and Mr, W. E. Leicester for the defendant company. On or about March 26 the plaintiff company, a Wellington fruit merchant, gave an order to the defendant company for certain citrus fruit to be shipped from California. The order was given verbally, but on March 29 a sale note was executed by both parties, the form of which was given by the Magistrate in the judgment. The defendant company was acting as agent for Groat and Co., of Seattle, in the sale of citrus fruit in New Zealand. Conditions of the agency were that the defendant received a certain commission, and that Groat and Co. would not confirm any sales made by the defendant unless letters of credit for the purchase price were established by the buyers in Seattle. When the defendant received the plaintiff's verbal order, the plaintiff made it clear that it would not establish a letter of credit in Seattle, but would pay for the goods when a sight draft accompanied by the usual original documents was presented. The Magistrate assumed ' that the plaintiff was averse from paying for the goods in Seattle before shipment, but preferred to deal on a C.I.F. basis. He was not satisfied that the plaintiff knew at the time of the verbal order that the defendant was acting merely as the agent for Groat and Co. On the same day the defendant cabled the Seattle firm for oranges, grapefruit, and lemons to cover the plaintiff's order and two others. It advised Groat and Co. that a letter of credit would be opened immediately upon acceptance. SUBSTITUTION MADE. The order was accepted, and the defendant established the necessary letter of credit to enable the purchase price to be paid before shipment. Groat and Co. were unable to obtain fruit of the brands and sizes ordered, and supplied other brands and sizes. The defendant did not know of this substitution until Groat and Co.'s letter arrived on May 2, and that letter only showed a substitution of the brand of oranges. On the same day the defendant presented to the plaintiff an invoice for the purchase price, together with a demand draft for the amount thereof, £206 6s 9d. The invoice, how- i ever, charged the oranges at 4.70 dol- • lars instead of 4.40 dollars a case, and : the plaintiff refused to accept the ' draft. This discrepancy was adjusted by a ■ letter written by the defendant to the plaintiff. The letter stated that as a . result of some misarrangement by the ' defendant's shipper, Valencia oranges had been shipped in place of navels, ] and that the defendant was obliged to . pass the higher price on. y On the draft being accepted at the rate of 4.70 dollars per case c.i.f. Auckland, the defendant would forward plaintiff a i cheque for the equivalent of 25 dollars, ; to adjust the account. The plaintiff was asked to keep the matter conn- < dential, as ;the defendant did not wish ; to have other buyers feel they had ' been treated unfairly. -, i-Tlie plaintiff accordingly met. the' ; draft to cover the amount of the in- j voice, and subsequently paid thecharges, amounting to £85 5s 3d, necessary to enable the forwarding agent in ( Auckland to clear the fruit and ship it to Wellington. The. fruit reached the plaintiff's store on the evening of May 5, and was examined on the following day. The plaintiff then discovered that the oranges were not only of a different brand from that ordered, j but of different/sizes, that the grape-fruit-was of inferior quality, and that the lemons were of a different brand. j - PLAINTIFF'S CLAIM. jj The plaintiff" thereupon stated that ] it intended selling the fruit on behalf i of the defendant, to whom it would < look, .for reimbursement of any loss. ' The fruit was sold for £218 16s 6d, and \ the plaintiff claimed £94 13s 2d from c the defendant. This included £21 17s \ 8d for the costs of the sale, which the 1 Magistrate held could not be sustained by the - plaintiff as it represented a selling commission of 10 per cent, to the plaintiff. Counsel agreed at the < hearing that the sole question for con- J sideration was whether the defendant j acted as agent or principal in the - } transaction. If it acted as agent, it , was not liable. < "The sale note on its face is con- < sistent only with the defendant acting ] as agent," said the Magistrate. "The j law is clear, however, that 'where, a person professes to contract as an , agent, whether in writing or verbally, ] and it is shown that he is himself the ] principal, and was acting on his own ] behalf, he is personally liable on the \ contract.' The effect of this statement ■ of the law is this: the Court is entitled ' to look at all the surrounding circum- ] stances, and to determine from them ; whether the person purporting to con- i tract as agent did in fact so contract < or n0t.... ' PRIVITY NOT PROVEN. "In order to establish privity of con- j tract between Groat and Co. and the 1 plaintiff it was necessary for the de- ] fendant to submit the contract to Groat , and Co. for confirmation and completion. But the defendant did not do so. \ It merely ordered in its own name and j paid for a quantity of citrus fruit, in- , eluding the fruit ordered by the plain- i tiff. When this fruit arrived in New ' Zealand the defendant appropriated part of it to the plaintiff's order. ]- "In these circumstances I am unable ■ to see how any privity of contract was ; established between the plaintiff and Groat and Co. The plaintiff was not ' willing to deal upon the terms of •; Groat and Co.'s instructions to the de- ; fendant. . . . The defendant did not at- ', tempt to prove that it was authorised • to make a c.i.f. contract and for the : purchase price to be paid on presenta- i tion of a sight draft; nor that any such ] contract was confirmed by Groat and ■ Co. . . . The letter written by the de- , fendant to the plaintiff is consistent ' only with the defendant being a principal party to the contract." ;

He entered a finding that the defendant contracted as principal in the sale of the fruit, and was liable to the plaintiff in the sum of £72 15s 6d (less £6 5s 8d paid into court). Judgment was entered accordingly, with costs.