ERROLL MACKAY Vs. MAHARAJA DHIRAJ KAMESHWAR SINGH

JUDGEMENT

(1.) The questions in this appeal are whether respondent 1, who was substituted for his father as defendant on the latter's death, is responsible in damages, and if so, in what sum to the appellant, who was plaintiff in the action. The claim was on a contract dated 9 November 1919, for the sale of 200 maunds of new crop Java indigo seed at Rs. 22 a maund excluding bags, f.o.r. Purnea, railway station, delivery to be made in April 1920, the plaintiff paying (as in fact he did) on the date of the contract Rs. 1,000 as earnest money. The first question is whether that contract was made, as it purported to be made, by one Hervey (who was on the plaint joined as a defendant in the suit, but was dismissed from it on 12 March 1924) as agent for the defendant, who will be hereafter referred to under the description of respondent, which term will be applied equally both to the original and the substituted defendant. Hervey was at the date of the contract manager of the respondent's factory at Kajah; it was denied that he had actual or implied authority to make the contract. Their Lordships are of opinion that this contention is not now open to the respondent, since it involves a question of fact which has now been concluded by the concurrent findings of two Courts: that Hervey had authority has been held first by the Subordinate Judge of Purnea and then by the Judges of the High Court of Patna. There was ample evidence before the Courts that Hervey had made in the past for respondent similar contracts, which had been duly carried out, and also that that it was in the ordinary course of an employment such as his to make such contracts for his employer, No question of law was involved. Indeed, the argument on behalf of the respondent on this aspect of the case seems to have been that the actual contract, made as it was before the extent of the then next succeeding indigo crop on the Kajah estate could be foreseen (because the crop is not harvested until between February and April), was speculative and improvident from the standpoint of his employee's interest rather than that it was unauthorized as against outside dealers. Their Lordships are of opinion that the contract must now be held to be a valid contract binding the respondent.

(2.) The respondent failed to make any deliveries either by the e April, 1920 or at all. The question then is, what are the damages, that is, at what date are they to be estimated and on what basis. Hervey had left the respondent's service in December 1919, and was succeeded by C. J. Berrill. The appellant wrote on 3rd May 1920 to Berrill pressing for delivery, and again on 10 May 1920 to the "Manager Kajah Concern." On 2 June, 1920 he received a reply requesting him to send a copy of the contract he had stated had been entered into but by letters of 1 June and 11 June 1920 he was informed that the contract was unauthorized and invalid and was offered a refund of the deposit of Rupees 1,000; and the same repudiation was reiterated on 1 July 1920. The Subordinate Judge at Purnea found that the contract was finally repudiated on 1 June 1920 and accordingly treating that as the date of breach assessed the damages on the basis of a market price then ruling of Rs. 60 per maund. On appeal the Judges of the High Court at Patna held that the date of the breach was 30 April 1920 by which date the contract, according to its terms, ought to have been completed by full delivery. Their Lordships are of opinion that this was the correct date of breach: there is no evidence that the contract time was varied or extended: all that happened was that the appellant wrote pressing for delivery after that date, but the respondent never acknowledged any obligation to deliver, or did anything but repudiate the contract.

(3.) Their Lordships accordingly pronounce against the appellant's claim that the proper date was either 1st July 1920, or 11 June 1920, or 1 June 1920. On the basis of the date of 30 April 1920, it is now necessary to consider how the damages are to be estimated. If there was an available market for the goods at the date of breach the damages must be based on the difference between that market price and the contract price: a contract of resale becomes immaterial, because if there was a market, the law presumes that the buyer can minimize his damages by procuring substituted goods in the market, so that he is thus in the same position, apart from the difference in price, as if the seller had not made default. Hence the difference of price, if the market price exceeds the contract price, is the sole damage in general re-coverable. The Subordinate Judge had proceeded on the basis of there being an available market, but at the wrong date. The Judges of the High Court on appeal held there was no market price which could be relevant to consider unless there was a market at Purnea, and the Judges accordingly remanded the case to the Subordinate Judge to find what was the market price for Java indigo seed at Purnea or its neighbouring districts on 30 April 1920. The Subordinate Judge had evidence before him that dealings in the Purnea District in Java indigo seed were controlled by the market at Cawnpore, but as Cawnpore was 300 or 400 miles away from Purnea, he, following the direction from the High Court, rejected evidence which was tendered by the appellant relative to the market at Cawnpore, and refused to allow proof of the prevailing rate at Cawnpore, the appellant having given evidence that there was no recognized market for the seed at Purnea. He found however that the market price at Purnea was Rs. 15 per maund, on evidence led for the respondent of two transactions between the respondent as landlord and certain growers as his tenants.