NIPPON YUSEN KAISHA Vs. RAMJIBAN SEROWGEE

JUDGEMENT

(1.) The appellants in this appeal, a Japanese ship-owning company, have been held liable to pay to the respondents, who are brokers and merchants at Calcutta, damages representing the value of certain consignments of jute gunny bags. Before explaining the issues in the case, it will be convenient to state in briefest possible outline the material facts and documents. On 4 May 1926, the respondents entered into three contracts with three mills respectively for the purchase of a total quantity of 250 bales. On the same day they sold the same quantity of 250 bales to a company called the International Export Company, Ltd., carrying on business in Calcutta, who will be referred to as the Export Company. The conditions of all the contracts were identical, the form used being the ordinary form approved by the Indian Jute Manufacturers Association. This is the form under which the entire export business in gunnies in Calcutta is conducted. Cls. 3 and 4 of the terms and conditions are material : 3. Payments to be made in cash in exchange for Delivery order on sellers or for Railway receipts or for Dock receipts or Mates' receipts (which Dock's receipts or Mates' receipts are to be handed by a Dock or ship's officer to the seller's representatives.) 4. The buyers hereby acknowledge that so long as such Railway receipts or Mates' receipts (whether in sellers' or buyers' name) are in possession of the sellers, the lien of the sellers as unpaid vendors subsists both on such Railway receipts or Dock's or Mates' receipts and the goods they represent until payment in full. The contracts stipulated for delivery free alongside export vessel in the port of Calcutta. The Export Company in due course had engaged freight from the appellants. The terms of the engagement are taken as evidenced by a document called a shipping order from the appellants' Calcutta branch to the ship's commanding officer. It was there stipulated that the goods should be sent alongside on notice, that freight was payable in Calcutta and that the receipt of cargo issued by the ship (that is the Mate's receipt) must be exchanged for bill of lading. On 4 May 1926, the Export Company gave shipping instructions to the respondents, which they passed on in the same terms to the three mills. On 17 and 18 May 1926, two of the mills sent alongside certain parcels to the Moji Maru, and the remaining quantities were sent to the Hokata Maru. These two vessels were owned by the appellants, who received the parcels in accordance with the shipping engagement between themselves and the Export Company, and issued Mate's receipts as presented to them for signature by the mills; these receipts were in the following terms:

(2.) Received on board ... for conveyance to Kobe from the Export Company the under- mentioned goods subject to the terms and conditions of the Company's Bills of Lading. These receipts were severally delivered to the mills' sircars, who had tendered with the goods a request to the steamer in the following terms: Please receive on board from the above mills the undernoted goods, shipping documents for which have been taken out in the name of Messrs. International Export Co. Ltd., and hand the Mate's receipt to our sircar.

(3.) In three cases on the same day as the Mate's receipts were severally given and in one case on the following day, the appellants issued the respective bills of lading describing the goods as shipped by the Export Company and deliverable to order at Kobe, without the Mate's receipts being given in exchange, but a letter of guarantee or indemnity was in each case taken from the Export Company by the appellants. At these several dates the respondents were not themselves in possession of the Mate's receipts which they obtained from the mills a few days later against payment. When they thus obtained the Mate's receipts they tendered them to the Export Company, who defaulted in payment. Thereupon the respondents on 27th May 1926, gave notice in writing to the appellants that they had an unsatisfied lien or claim for the price and were entitled to retain the relative Mate's receipts, and that bills of lading must not be issued by the appellants until Mate's receipts were surrendered to them. By that time however the Export Company, having the bills of lading in their possession, had resold the goods to purchasers in Japan and had drawn bills of exchange for the price on the purchasers. These bills of exchange they had discounted with a bank (sometimes referred to in the proceedings as the Taiwan Bank, but in fact the International Banking Corporation, a subsidiary of the National City Bank of New York), and had endorsed to them by way of security the bills of lading. On 12 June 1926, the respondents as they could get no satisfaction from the Export Company and as the appellants replied that they had passed bills of lading on the shipper's (that is, the Export Company's) own letter of guarantee and referred the respondents to the shippers, issued their writ, claiming payment of the price from the Export Company and damages from the appellants. In due course the vessels, the Moji Maru, having sailed on 19 and the Hokata Maru on 4 June 1926, proceeded to their destination, and the goods were delivered at Kobe on presentation of the bills of lading. An application which had been made by the respondents for an injunction and interim receivership of the goods while the ships were still at sea had been ordered to stand over till the trial. At the trial, which took place in July 1929, the Export Company did not appear and judgment went against them. But the Judge, Buckland J. dismissed the suit as against the appellants. He held that the appellants could not be held liable to the respondents for issuing the bills of lading without having the Mate's receipts unless they had received notice of the respondents' lien or claim before they did so. For this purpose the written notice of 27 May 1926 was too late. He rejected the respondents' evidence that oral notice had been given on 14 May 1926. "Admittedly," he held on the evidence, "it was a common practice" at the port of Calcutta to issue bills of lading without Mate's receipt. He curtly negatived the contention that the respondents had a special property in the goods which was violated by the delivery at Kobe to the bill of lading holders, so that the respondents were entitled to damages as in trespass or conversion