Pegatraju Krishna Rao vs Yanati Subba Reddi (died) and Others

Venkataramana Rao, J.—The plaintiff was the proprietor of Sree Scetharama and Co., which carried on its business at Nellore between

1923 and 1925. Defendants 1 to 3 were carrying on business at Ananthapuram under the name of Sree Lakshmi prasanna Venkateswara Rice

Mills. The suit is to recover a sum of Rs. 1,900 in respect of articles supplied to the defendant firm by the plaintiff firm. The plea of the defendant is

one of discharge by payment to the fourth defendant who was according to them acting as the agent of the plaintiff.

The main question in this case is whether the fourth defendant had authority to receive any moneys on behalf of the plaintiff and payments made

to him would be a valid discharge of the obligation of the defendants 1 to 3. The plaintiff''s contention is that under the terms of Ex. A, a letter

written by the fourth defendant to the plaintiff on the 22nd December 1923, he was only appointed as a commission agent to canvass orders for

them on payment of certain percentage of commission on the value of goods supplied. It appears that even before December 1923 he was acting

on behalf of the plaintiff''s firm and Ex. D-l shows that he was canvassing orders from the defendants 1 to 3 and receiving payments for the value of

goods supplied on the part of the plaintiff. The amount now sought to be recovered from the defendants was in respect of goods supplied between

the 21st and the 28th July, 1924 on orders given through the 4th defendant. Misunderstandings having arisen between the 4th defendant and the

plaintiff, the fourth defendant wrote a letter Ex. H dated 26th July, 1924 stating that he would no longer be an agent to which the plaintiff replied on

the 15th January, 1925 that he was bound to act according to the terms of Ex. A for a period of three years provided therein. Subsequent to the

exchange of these two letters the fourth defendant appears to have received between the 22nd February and the 25th February, 1925 a sum of

Rs. 10,88-0-6 in two instalments from the firm of defendants 1 to 3 and on the 7th March, 1925 the fourth defendant wrote a letter to the plaintiff

stating that he had realised a sum of Rs. 10,88-0-6 from the defendants and this suit is filed on the 21st July, 1927 over two years from the date of

Ex. V.

The learned District Munsif who tried the suit decreed the plaintiff''s claim holding that the payment to the fourth defendant is not a valid

discharge and not binding on the plaintiff firm. The learned Subordinate Judge reversed his decision and dismissed the plaintiff''s suit being of

opinion that the fourth defendant had authority to receive the payments.

It is contended by Mr. Raghava Rao on behalf of the plaintiff that the fourth defendant was only a broker and under the terms of Ex. A. he had

no authority to receive any payment and that any collections he might have made from third parties must be treated to have been done on special

authorization from the plaintiff. '' He relied on Bowstead on Agency P. 95 where the learned Author says:

A broker has no implied authority as such - to receive payment of the price of goods sold by him, when the principal is disclosed : Linck v. Jantson

(1886) 2 T.L.R. 206.

He further contended generally that an agent to sell goods will have no authority to receive payment and relied on Hals-bury''s Laws of England

Vol. I page 218, Hailsham Edn., and on Butwick v. Grant (1924) 2 K.B. 483. In my opinion the position of the fourth defendant, having regard to

the circumstances of this case, cannot be viewed merely as that of a broker. He was not only canvassing orders for the firm but was also making

collections on behalf of the plaintiff. Bowstead at p. 81 of his book observes that where a person is a traveller for the sale of goods on behalf of a

firm he would have implied authority to receive payment in money for the goods sold by him and the authority he relies on is Howard v. Chapman

(1831) 4 C. & P. 508 : 172 E.R. 803. The position occupied by the agent in that case was exactly analogous to the position occupied by the

fourth defendant in this case. If Howard v. Chapman (1831) 4 C. & P. 508 : 172 E.R. 803 can be taken to have laid down correct law, the fourth

defendant must be deemed to have had implied authority for receiving payment from the firm of defendants 1 to 3. And in Butwick v. Grant (1924)

2 K.B. 483 the decision on Howard v. Chapman (1831) 4 C. & P. 508 : 172 E.R. 803 was distinguished on the ground that:

The agent was the traveller of the plaintiff. (p. 488).

In this case even assuming that the fourth defendant in virtue of Ex. A was not authorised to receive any payment there was no distinct

prohibition against the fourth defendant receiving moneys and it would be open to the plaintiffs to confer such authority on him either expressly or

such confirment may be implied. Again if the plaintiff put him forward as the person having authority to receive such payments, it is immaterial

whether under the law he would have such implied authority or not. In this case it will be seen that even before the date of Ex. A there were

business relations with the firm of defendants 1 to 3 through the fourth defendant and he was receiving payments on behalf of the plaintiff. Ex. A

does not seem to have altered the course of such dealings and further he appeared to have collected a sum of Rs. 100 at least once subsequent to

the date of Ex. A. Again Exs. I to III. are letters written by the plaintiff to the fourth defendant asking him to collect and send moneys from the

constituents at Bezwada and Tenali and the learned Subordinate Judge rightly observes:

If it were a single transaction or two, one can understand it, but we have a number of transactions in Ex. D showing that Seshagiri Rao collected

even from the defendants 1 to 3, and where you have similar conduct as shown by Exs. I to III, the only possible conclusion is that, generally

speaking, the plaintiff put forward the fourth defendant as entitled to collect on his behalf, and the defendants 1 to 3 were therefore perfectly

justified in treating Seshagiri Rao as duly authorised to make the collections.

In my opinion, the learned Judge''s conclusion is correct. As pointed out by Sankey, J., in Butwick v. Grant (1924) 2 K.B. 483 :

In an action by the seller of goods against the buyer for the price it would be open to the buyer who had paid the seller''s agent to show, and in the

absence of any reason to the contrary he would be entitled to succeed on showing, either that the agent had actual authority to receive payment, or

that he had ostensible authority to receive payment, or that he had a customary authority by reason of the fact that the payment was made to him in

the ordinary course of business of agencies of the kind in question.

Even though the fourth defendant may not have had actual authority he must be deemed to have had ostensible authority. Further Exs. IV and

IV-a, printed receipt forms of the plaintiff firm, seem to indicate that the agent was authorised to receive payments. The payment made by

defendants 1 to 3 as evidenced by Exs. IV and IV-a must be deemed to be a valid discharge of the debt due to the plaintiff to the extent of a sum

of Rs. 1,088-0-6. Deducting this sum, there must be a decree for the balance in favour of the plaintiff. The defendants will have counter-interest on

the two payments evidenced by Exs. IV and IV-a from the dates of payment with interest on the principal sum due at the contract rate up to the

date of plaint and thereafter at six per cent. I therefore modify the decree of the lower court and I award costs on the amount allowed here. I

award each party to bear his or their own costs in the courts below.

Leave refused.