A CHEESE CONTRACT

Evening Star, Issue 14522, 25 November 1910, Page 5

A CHEESE CONTRACT

AN IMPORTANT JUDGMENT. | In Chambers this morning His Honor Mr Justice Wil'ianw delivered judgment in the case of the Seaward Downs Dairy Factory Company, Ltd. v. Lovell and Christmas, London, in which plaintiffs claimed that they had not been paid tho ttotal amount that, under a contract of rale, they were entitled to be paid. The ease was argued in the Supreme Court, Dunedin, on June £8 and 29 and September 10 and 16, Mr Solomon, K.C., and Mr Downie Stewart for plaintiffs; Mr Hosting, K.C., and Mr \V. C. MacUregor for defendants. The plaintiff's sold to the defendants, through the defendants' agent, Mr Batger, their output of cheese for the Bummer of 1908-09. < His Honor said, inter alia, that in 1908 Mr Batger waj the agent of the defendants in Southland for the purchase of cheese, »nd purchased the output of cheese from other factories besides that of tho plaintiffs. Before the transaction in question Mr Batger had informed Mr M'Coll, the chairman of directors of the plaintiff company, that he was agent for Lovell and Christmas, and showed him letters to that effect. The - usual time for the completion of sales of summer cheese is at tho end of September or the beginning of October. Mr Batger. however, approached Mr M'Coll on the 4th. September with respect to the purchase of tho output for Lovell and Christmas. Mr M'Coll wanted to know what price he would give, and Mr Batger said f.o.b., Bluff. Mr M'Coll said it w is no use talking of that price, but if Mr Batger thought he could spring anything on it he would get the directors together. Mr Batger then asked Mr M'Coll to get the directors together and ring him up next morning. This was accordingly done. ' The directors were at one end of the telephono and Mr Batger at the other. Mr Batger offered s|d on trucks. Mr M'Coll says: " I said we wanted 6d on trucks. He said he would not give it. We explained to him that it was early in the season, and we were not in a hurry. I said if wo accepted sj[d would he give us the same price as other factories should he buy from them. Finally it was arranged that the company would sccept 5Jd subject to the above conditions." The plaintiffs delivered and the defendants received tho entire output of cheese of the plaintiffs, and tho plaintiffs were paid therefor at tho rate of sgd per lb. The plaintiffs, however, claimed that by virtue of the condition contained in the last paragraph of Mr Batger's letter they were entitled to more by reason of Mr Batger, on* behalf of tho defendants, having agreed to purchase the output of cheese of the Woodlands factory at a higher rate. The defendants alleged that whatever the effect of the condition might be they were not bound by it. Tho first question, therefore, to be determined was whether, looking at the terms of the contract, and at what took place between the plaintiffs, Mr Batger and the defendants were bound by the condition. His Honor went on to say : " I think there can be no doubt that Batger purported to enter into the contract on behalf of the defendants. He may have exceeded his authority in so doing, but it was competent for the defendants to affirm the contract he had made. If they have affirmed it either expressly or by implication they cannot now say that Batger exceeded his authority, or that they are not bound by the contract. The contract note, and the letter aeco-apanying it, formed one contract only. There was not one contract by Batger, a 6 agent for the defendants, to purchase according to the terms of the contract note, and another by Batger not acting or purporting to act as agent for tho defendants, but on his own private account, to put tho company on the same footing in the eveat of his giving more to the other firms named. It is true that the letter is not in direct term 6 expressed to be written on behalf of the defendants, but it refers to what had taken place before, and to the contract note which it enclosed. The letter is a part of one transaction. There was one contract for the sale of the output, and the condition at the end of Batger's letter was a term of that contract. It was contended that the defendants were foreign principals, that the contract was not with them, but with Batger, and that they themselves could not take advantage of or be bound by the contract. The case of Gadd v. Houghton {1 Ex. Div., 357) shows that where an agent for a foreign principal expresses in the contract that he contracts "on account of," or "as agent for," a named foreign principal, the agent is not liable on the contract. In such a case the foreign principal would be liable, if he had previously authorised the agent to contract on his behalf, or if he had subsequently ratified the contract. In the present case the defendants in their statement of defence admit that there was in agreement entered into between the plaintiffs and the defendants by Batger, * purporting to act as their agent for the purchase of the output of cheese. The defendants say, however, that Batger was not their agent to buy the output at a higher rate per lb than sgd f.0.b., but that they afterwards ratified the agreement contained in the contract note to buy at s£d per lb on trucks at Edendale. The defendants further say that Batger had no authority to bind them by the condition, 'liie defendants, therefore, admit that there was a contract of purchase and sale entered into between themselves and the plaintiffs, but deny that the condition was part of the contract, or that Batger purported to be acting on their behalf when he wrote the letter containing the condition. That Batger purported to contract on behalf of tho -• defendants in making the condition a term of the contract is, 1 think, plain for the reasons I have already given. Whether or not the ostensible authority originally given by the defendants to Batger included an authority to enter into a contract with such a condition, the defendants, if they have ratified such a contract, are bound by it. The question, therefore, is whether the acts of the defendants amounted to a ratification. His Honor reviewed at length the correspondence between the parties, and the transactions between Mr Batger and the Woodlands Dairy Factory, and laids The general rule is, I think, clear that the adoption by a principal of part of a transaction entered into by an agent operates as a ratification of the whole (' Bowstead on Agency.' page 55, and cases there cited). If an agent purchases goods on behalf of his principal at a price exceeding the limit, and the principal objects to the contract, and disposes of some of the goods as his own, lie is deemed to have ratified the contract iCornwall v. Wilson. 1 Yes. Sent. 510). One question between the plaintiffs and Hntgcr was whether the condition contained in his letter was a part of the contract which he purported to enter into on behalf of the defendants, or whether it was an independent stipulation made on his own behalf without any reference to the defendants—in other words, what was the meaning of the contract? There was also the further question whether, if the condition formed Eart of the contract, any higher price had een in fact given to the Woodlands Company. The effect of the" letter of the 25th November is that shipments may be made by the plaintiffs and received by the defendants without affecting tho determination of these questions one way or the other. The question as to whether the defendants had previously authorised Batger to enter into the contract had not been discussed between tho plaintiffs and Batger, and the letter.of the 25th November did not touch that question. Whether the condition was a part of the contract which Batger, on behalf of Lovell and Christmas, purported to enter into with the plaintiffs depends entirely upon the construction of the documents and upon what took place between Batger and the plaintiffs. As I have already said, I think the condition was a part of that contract. It was clearly on the faith of that condition that the plaintiffs agreed to supply the goods, and that they would not have sold them had it not been for that condition. Although it may have been ultra vires on Batger's part to enter into a contract embodying any such condition, yet, if the defendants, after having been made fully aware of the facts, accept and deal with as their own the goods purchased under the contract, the defendants have ratified Jha contract >&4 are. bound hx. the condi-

ftion. The further question then arises whether the plaintiffs are entitled by virtue of the condition to any further payment. As I have already held, Batger, in making the condition, was speaking not for himself but for Lovell and Christmas. Ho was not giving his personal undertaking, but was purporting to contract on behalf of tho defendants. The meaning of the condition, therefore, is that in the event of Lovell and Christmas giving Wyndham, Mataura Island, or Woodlands more they will put the plaintiffs on the eame footing. The question then is whether the defendants have given any of these factories more within the meaning of tho condition. As a fact, they have not given any of them more, but if the defendants have entered into a contract by which they were bound to give more to any of the factories named the obligation to put tho plaintiffs on tho same footing would,'in my opinion, arise under the condition. Did, then, what took place bo- , twecn Batger and, the Woodlands Company and his letter and the contract note sent with it constitute a contract by which the defendants were bound? After going into tho facts of the matter, His Honor went on to say:—lt is clear at any rate that there was no contract which could have been enforced by or against the Woodlands Company or tho defendants or Batger before Batger wrote tho letter of the Bth September and signed the contract note. It is clear also that Batger was never, in fact, authorised by tho defendants to enter into a contract on the terms of theso two documents —that is to say, a contract which embodied tho condition contained in tho letter. The condition was far wider than the condition contained in the letter which Batger had written to the Seaward Downs Company. In the latter it was only to give a higher price if the defendants gavo a higher price; that is to say, that if the defendants later on authorised a higher price to bo given, and it was given, Batger would givo the same price to the Seaward Downs Company. In the former, however, the condition was to give the highest price that anyone elso in tho future might give to any other factory. Such a condition the evidence shows to have been out of tho usual course of business. That it was in excess of Batger's authority is shown by the very letter itself. In it ho informs tho Woodlands Company that ho had that morning received a cable i instructing hint not to exceed 5Jd, on trucks, in future. 'The condition purported to bind the defendants, if other persons gavo more than 5Jd, on trucks, to give the same, although tho defendants had instructed him not to go beyond s|d. The Woodlands Company were therefore made awaro that Batger was not authorised to enter into a contract with them beyond 5Jd, when ho purported to enter into a contract for sJ<l, and for any higher sum that anyone else might givo to other factories. In my opinion, they h;id notice that Batger was exceeding his authority, and that the defendants therefore were not bound by tliis contract unless they afterwards ratified it. This they might have done, iis they have ratified the contract made by Batger with the plaintiffs, but they never did ratify it. Even, therefore, if Batger was held out under his general authority as having power to bind the defendants to a condition of this kind, the Woodlands Company had notice that he was acting in exoess of his authority. I think that, as the defendants had not paid or contracted to pay any of the factories named in the condition in Batger's letter to the plaintiffs more than s|d per i lb, they are not under any obligation to pay the plaintiffs any greater amount, and J that the defendants are entitled to judg- j ment. Costs were allowed.