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ΠΑΓΚΥΠΡΙΟΣ ΔΙΚΗΓΟΡΙΚΟΣ ΣΥΛΛΟΓΟΣ
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(V17) 1 CLR 21
1941 April 24
[CREAN C.J., AND GRIFFITH WILLIAMS, J.]
THE OTTOMAN BANK LTD.,
Appellants,
v.
MIKIS GEORGHIADES,
Respondent.
(Civil Appeal No. 3692.)
Contract-Agency-Contract Law, 1930, section 202-Negligence.
In June, 1938, the respondent shipped a barrel of perishable goods to a merchant firm in Hamburg, and sent the shipping documents to the appellants with instructions, inter alia, that the documents were to be handed over to the buyers on payment of the invoiced price, and that in the event of the buyers refusing to take up the documents the goods were to be forwarded to a firm in Liverpool. The appellants instructed a Hamburg bank to act as their agents, and forwarded the documents to them as well as the instructions they received from time to time from the respondent. There was delay occasioned by the buyers being unable to obtain an Exchange Permit for importation and payment of the goods, and, as it happened, they never succeeded in obtaining it. The goods arrived in Hamburg prior to 10th August, 1938, and on the respondent's instructions were warehoused. After much correspondence between the respondent and the appellants relating to the goods during the latter part of 1938, the respondent complained in December, 1938, that the goods should have been forwarded to Liverpool. It appeared however that the respondent was still in communication with the buyers, who had never refused to accept the goods, and who were writing to him as late as March, 1939, that they were still trying to get the permit. Finally in July, 1939, the respondent asked the appellants to arrange for the goods to be sent back to Cyprus. These instructions were communicated to the Hamburg bank, but, owing to the outbreak of war, it proved impossible to carry them out. The respondent sued the appellants for negligence, in that they or their agents the Hamburg bank failed to carry out his instructions and forward the goods to Liverpool on the buyers failing to accept and pay for them.
Held: The appellants having duly communicated all instructions received from the respondent to the Hamburg bank were not negligent. The Hamburg bank was the agent of the respondent under section 202 of the Contract Law, 1930, and not a sub-agent, and, consequently, the appellants could not be held liable for any negligence on its part. There was no evidence of negligence on the part of the Hamburg bank.
Appeal from the District Court of Nicosia.
J. Clerides for the appellants.
G. N. Rossides for the respondent.
The judgment of the Court was delivered by:-
CREAN, C.J.: This is an appeal from the decision of the District Judge of Nicosia by which judgment was given in favour of the respondent for £133. 11s. and costs.
The action was brought by Mikis Georghiades, advocate and merchant of Nicosia, against the Ottoman Bank of Nicosia for £137. 16s. for compensation or damages, for loss sustained by him in consequence of the Ottoman Bank's failure to carry out his instructions given to them as his agent.
The District Judge gave judgment in favour of Mr. Georghiades for the above amount and the Ottoman Bank now appeals from that decision.
The facts of the case are: The Ottoman Bank, the appellants herein received a letter from Mr. Georghiades, the respondent, on the 29th of June, 1938, enclosing certain documents concerning the shipment of a wooden barrel of perishable goods to Hamburg, and an invoice for £137. 16s. This letter sets out what the enclosed documents are, and it ends with these words:-
"I hereby authorize you to allow Messrs. Gottschalk & Co., Bugenhaven str. 5 of Hamburg 1, to take a few bundles, say 4-5 bundles, from the whole lot as samples and if they find them suitable to pay the whole value of the invoice cash against documents.
The samples Messrs. Gottschalk & Co. will take must be returned after inspection, and the barrel must be carefully closed.
(Sgd.) M. N. GEORHIADES.
P.S.-In the event of the drawees refusing to take up the documents please have the goods forwarded to the Eastern Trading Co., 31 North John Str., Liverpool, under advice.
(Intld) M. G."
All the documents relating to this shipment were forwarded by the Ottoman Bank to the Commerz und Privat Bank in Hamburg, and the precise instructions given by the respondent as to these goods set out in the above letter, were in turn given by the Ottoman Bank to the Commerz und Privat Bank.
The goods arrived in Hamburg as is shewn by a cable from the Commerz und Privat Bank to the Ottoman Bank in reply to a cable from them inquiring about the goods. The replying cable from Commerz und Privat Bank in effect says that the steamer has arrived, that Gottschalk & Co., the consignees, want to sell the goods in transit. The cable ends up by saying: "Shall we store in the meantime, please cable immediately".
In reference to this cable the respondent wrote a note to the Ottoman Bank, on the 3rd August, 1938, and as this note is of the utmost importance in deciding this case it is set out in full, and is as follows:-
"Please wire to your Hamburg Correspondents by N.L.T. that they may put the goods in transit and that delivery must be made only against cash payment, other terms and conditions remaining unaltered".
And in compliance with those instructions the Ottoman Bank sent the following cable:-
"You may put goods in transit, but delivery must be made only against cash payment, other terms and conditions unaltered".
A letter from the Bank in Hamburg was also sent to the Ottoman Bank saying that the goods had arrived in port, and as the authorities do not grant any Exchange Permits for Cyprus the goods must be sold in transit, and also that the goods must be stored at once owing to their perishable nature.
From a letter of the 10th August, 1938, from the Bank in Hamburg to the Ottoman Bank it is shewn that the goods were warehoused, and the information is given that Gottschalk & Co. to whom the goods were consigned and who were given permission to take 4 or 5 bundles as samples had taken 85 bundles. The respondent protested against this taking of samples and the Ottoman Bank informed the Bank in Hamburg of such protest who replied that they were taken without their consent and asked for instructions as to what they were to do in the matter.
Following this the respondent instructed the Ottoman Bank to collect the value of the samples taken which instructions were forwarded to the Bank in Hamburg who denied any responsibility for Gottschalk & Co. taking more samples than they authorized them to take. At the same time the respondent informed the Ottoman Bank that he held them responsible for neglect of his instructions contained in his letter of the 29th June where he tells them that in case the goods are not accepted by Gottschalk & Co. they should be forwarded to the Eastern Trading Co., Liverpool. This complaint of the respondent was forwarded by the Ottoman Bank to the Hamburg Bank on the 7th December, 1938, and in reply to it they say very truly that Gottschalk & Co. have never refused to take up the documents of shipment, but were still endeavouring to obtain an Exchange Permit required for the importation and payment of the goods. They further say that they have not been able to gather from the correspondence that negotiations between Gottschalk & Co. and the respondent had ever been broken off. Another remark in this same letter appears to us to be full of meaning and one which shews appreciation of a vital matter in this transaction, and that is, where they say, that if the respondent had been under the impression that the negotiations with Gottschalk & Co. would come to nothing, a written order addressed to them by him to forward the goods to Liverpool would have been sufficient, and on receipt of that specific direction they could have forwarded the goods to Liverpool.
The correspondence between the respondent, the Ottoman Bank, and the Bank in Hamburg up to the 7th December, 1938, the date of this letter, shews quite clearly that no definite instructions had been given by the respondent to re-forward the goods to Liverpool. After that the correspondence continued, and as late even as the 10th March, 1939, Gottschalk & Co. were writing to the respondent informing him that they were still trying to get the necessary permit for the goods.
In all this correspondence Mr. Georghiades, the respondent, repeats that his instructions to the Ottoman Bank were contained in his letter of the 29th June, 1938, and particularly refers to that part of the instructions as to re-forwarding the goods to Liverpool in case Gottschalk & Co. refuse to take up the documents.
On the 19th of July, 1939, he asked the Ottoman Bank to arrange to have the goods sent back to Cyprus. He sent £5 to the Bank on account of the expenses of it on being asked to do so on the 20th July, 1939, and the Ottoman Bank told him that his instructions had been communicated to the Bank in Hamburg.
This communication was written to the Commerz und Privat Bank on the 2nd August, 1939, and they replied on the 1st September, 1939, agreeing to effect the shipment when a steamer left Hamburg for Cyprus. On the 12th September, 1939, they wrote again, saying that the goods had been removed from the warehouse to be shipped for Cyprus but as they found that this could not be done for an indefinite time owing to the actual situation, they re-stored the goods, and gave all particulars of the storing and insurance of the goods to the Ottoman Bank.
War having broken out between Great Britain and Germany it was probably quite impossible to have the goods sent back to Cyprus, and so they are presumably still in store, and if they were, as described, perishable goods, it is not likely they are of any value to-day.
From the evidence produced before the Court below it is clear that there were only two points of real importance to be considered in giving a decision in this case. In the first place it had to be decided whether the Ottoman Bank failed to carry out the instructions given to them by the respondent by his letter of the 29th June, 1938. In other words were they guilty of any negligence or did they commit any breach of duty in the way they carried out the instructions, which is a question of fact.
In the second place, if the Bank at Hamburg failed to carry out the instructions which were forwarded to them, or were guilty of any breach of duty by which the respondent suffered, are the Ottoman Bank liable for the failure or breach by the Bank in Hamburg. This appears to be entirely a question of Law.
This is one of the few cases in which the Court of Appeal is almost in as good a position to decide as the Court below; as nearly the entire evidence in the case is contained in the correspondence produced. And from this same correspondence it can be decided by this Court if what occurred in the transaction amounted to, and had the effect of bringing the Bank in Hamburg into contractual relationship with the respondent and so constituting them his sub-agent.
On this point as to whether or not what happened in this case had the effect of making the Bank in Hamburg sub-agents of the respondent we think the judgment of Thesiger, L. J., in De Bussche v. Alt (1878 8 Ch. D. p. 310) is of great assistance and throws a good deal of light on the subject particularly where His Lordship says:-
"As a general rule, no doubt, the maxim 'Delegatus non potest delegare' applies so as to prevent an agent from establishing the relationship of principal and agent between his own principal and a third person; but this maxim when analyzed merely imports that an agent cannot, without authority from his principal, devolve upon another obligations to the principal which he has himself undertaken to personally fulfil; and that, inasmuch as confidence in the particular person employed is at the root of the contract of agency, such authority cannot be implied as an ordinary incident in the contract. But the exigencies of business do from time to time render necessary the carrying out of the instructions of a principal by a person other than the agent originally instructed for the purpose, and where that is the case, the reason of the thing requires that the rule should be relaxed, so as, on the one hand, to enable the agent to appoint what has been termed a 'sub-agent' or 'substitute' (the latter of which designations, although it does not exactly denote the legal relationship of the parties, we adopt for want of a better, and for the sake of brevity); and, on the other hand, to constitute, in the interests and for the protection of the principal, a direct privity of contract between him and such substitute. And we are of opinion that an authority to the effect referred to may and should be implied where, from the conduct of the parties to the original contract of agency, the usage of trade, or the nature of the particular business which is the subject of the agency, it may reasonably be presumed that the parties to the contract of agency originally intended that such authority should exist, or where, in the course of the employment, unforeseen emergencies arise which impose upon the agent the necessity of employing a substitute; and that when such authority exists, and is duly exercised, privity of contract arises between the principal and the substitute, and the latter becomes responsible to the former for the due discharge of the duties which his employment casts upon him, as if he bad been appointed agent by the principal himself"
The evidence produced in the Court below shewed that the Ottoman Bank had no branch in Hamburg, therefore the exigencies of business made it necessary for them to appoint a sub-agent or substitute in Hamburg to carry out the instructions given to them by the respondent. The correspondence produced shewed that they did appoint the Commerz und Privat Bank of Hamburg, and it is argued by counsel for the appellant by doing so they constituted, in the interests and for the protection of the principal, a direct contractual relationship between the respondent and the Commerz and Privat Bank of Hamburg.
In our view the above judgment is a strong authority in favour of appellant; for, it may be said that an authority such as was given to the Commerz und Privat Bank in this case should be implied from the conduct of the parties to the original contract of agency, the usage of trade and the nature of the particular business. In this case we think it is only reasonable to presume that the parties to the contract of agency originally intended that such authority should exist. But, if the respondent did not know on the 29th June, 1938, the date of his original instructions, that it would be necessary for the Ottoman Bank to employ another Bank to deal with the shipping documents concerning these goods, he certainly must have known on the 3rd August, 1938, for, on that date he gave instructions to the Ottoman Bank to wire their Hamburg correspondent and in the circumstances must have known that correspondent was the Commerz und Privat Bank of Hamburg.
It is remarked by the learned trial judge that the opinion and observations of Lord Cottenham in the case of Mackersy v. Ramsays (8 English Reports, p. 628) are applicable in this case. In that case the facts were:-
"Mackersy employed Ramsays, Bonars & Co., bankers in Edinburgh, to obtain for him payment of a bill drawn on a person resident in Calcutta. Ramsays & Co. accepted the employment, and wrote promising to credit him with the money when received. Ramsays & Co. transmitted the Bill in the usual course of business to Coutts & Co., of London, and by them it was forwarded to India, where it was duly paid. Ramsays & Co. wrote to Mackersy announcing the fact of its payment, but never actually credited, him in their books with the amount. The house in India failed"; and it was held "that Ramsays & Co. were the agent of Mackersy to obtain payment of the bill; that payment having been actually made, they became ipso facto liable to him for the amount received; and that he could not be called on to suffer any loss occasioned by the conduct of their sub-agents as between whom and himself no privity existed". [26]
But we think the above case must be distinguished from this; because, Mackersy, the plaintiff, did not even know of the existence of the person appointed by their agents Ramsays & Co. to collect the money due to them on the bills sent to Ramsays & Co. for collection. And from the time the bills were sent for collection Mackersy never interfered, therefore it could not be argued in that case, as it has been in this, that there was an implied authority to name another person to act for the principal in the business.
In the argument for the appellant section 202 of the Cyprus Contract Law of 1930 has been relied on to a certain extent. The wording of that section is:-
"202. Where an agent, holding an express or implied authority to name another person to act for the principal in the business of the agency, has named another person accordingly, such person is not a sub-agent, but an agent of the principal for such part of the business of the agency as is entrusted to him".
It is said that as the respondent knew that the Commerz und Privat Bank were acting for the Ottoman Bank and never made any comment on that fact, or objected in any way, the only inference to be drawn from the conduct of the respondent is that he impliedly gave authority to the Ottoman Bank to employ the Commerz und Privat Bank to act for him in the business of the agency. In our opinion that argument of the appellant is sound, and the respondent must be taken to have given his implied authority to the delegation to Commerz und Privat Bank of power to carry through this transaction, particularly as this business had to be carried out in Hamburg where the respondent knew the Ottoman Bank had no branch and that they must nominate some one to carry out what was necessary for the completion of the business.
From the correspondence which is the greater part of the evidence produced in the case we think it is established that the Commerz und Privat Bank acted in this transaction as the sub-agent of the respondent Wand if there were any liability arising out of a breach of duty in regard to the agency the action for such breach would have been against them and not the Ottoman Bank.
Now we have to deal with the question of fact, and that is, whether or not there was any breach of duty by the Ottoman Bank or the Commerz und Privat Bank in carrying out the instructions given to them by the respondent, concerning the disposal of the goods in question.
All the letters and cables concerning the transaction have been put in evidence and from a perusal of them it is clear beyond doubt that the Ottoman Bank communicated the instructions given to them with meticulous care and accuracy to the Commerz und Privat Bank in Hamburg, and almost invariably conveyed those instructions in the very same words in which they received them from the respondent.
And as to the Commerz und Privat Bank, it is perfectly plain from their letters that no agent could have used more care in trying to carry this transaction to a satisfactory conclusion than they did. Even after the outbreak of war when the most of people would have given up the matter as hopeless, they took steps to have the goods re-stored and sent to the Ottoman Bank on12th September, 1939, all the particulars as to such storing and the insurance of the goods so that in the event of a speedy termination of the war, the goods could be located and dealt with immediately.
So far as we can see, there was a total absence of any negligence or carelessness by the Ottoman Bank or by the Commerz und Privat Bank. But, on the contrary we would say that they carried out the instructions given to them with extreme care and promptitude, and if the shipment of these goods to Germany for sale to Gottschalk & Co. results in a loss to the respondent it is not the fault of either of the above banks.
In our opinion the reason why the goods were not forwarded from Hamburg to Liverpool was because the respondent did not give specific instructions to do so. In his note of the 3rd August he asks that a wire be sent to the Commerz und Privat Bank telling them to put the goods in store which was in reply to a wire informing him that Gottschalk & Co. want to sell the goods in transit. But in this same note he says that other terms and conditions are to remain unaltered. One of the other terms was to forward the goods to Liverpool in the event of the drawees refusing to take up the documents. We suppose the "drawees" referred to are Gottschalk & Co., and there is no evidence they ever refused to take up the documents. It seems to us that these two orders to the agents are quite contradictory, one orders the goods to be put in transit, and the other orders hem to be forwarded to Liverpool in certain eventualities which had not come to pass.
As a merchant Mr. Georghiades had evidently made up his mind to allow delay in the forwarding of the goods to Liverpool and for the very good reason that he had ample grounds for believing that Gottschalk & Co. would ultimately get over the difficulty about the permit, and so be in a position to accept the goods. On the other hand, as an advocate he was being excessively cautious, and evidently was trying to keep himself safe from loss no matter what happened, that is, by saying that the other terms of contract are unaltered. That attitude, in our opinion, was an unreasonable and an impossible one; for, he cannot have the other terms and conditions of the contract unaltered when he has himself given orders to alter one of them.
It is unfortunate for Mr. Georghiades, the respondent, if he has lost these goods; but, on the documentary evidence before us, which is in effect the whole of the evidence, it would be impossible to find any fault with the way the Ottoman Bank and Commerz und Privat Bank have acted in this matter, or to say that there was any act or omission of theirs which gave a cause of action against them.
The appeal is allowed with costs both here and in the Court below.