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TMI Blog1950 (3) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... purported to conclude a contract for the sale of the property and the communicated the same to the respondent by a letter of even date. The respondent, however, entered into an agreement on 9th June, 1943, with a nominee of the said persons for the sale of the property for ₹ 1,05,000 and eventually executed a conveyance in their favour on 8th December 1943. 3. Thereupon the appellant brought the suit alleging that the contract concluded by him with the purchasers for ₹ 1,10,000 on the 2nd June, 1943, was binding on the respondent and claimed that he was entitled to the payment of ₹ 6,000 as remuneration in accordance with the terms of his employment as he had done all that he was required to do on behalf of the respondent. In the alternative he claimed the same sum as damages for breach of contract. In defence to the suit the respondent pleaded, inter alia, that the appellant had no authority to conclude a binding contract for sale with any one, that the purchasers refused to complete the transaction alleging that they had been induced by the fraudulent misrepresentation of the appellant to agree to a price of ₹ 1,10,000, that the subsequent sale was effec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake place between the persons introduced by the plaintiff and the defendant, and as that sale, in the view also of the learned Judges, was the "direct result of the plaintiff's negotiations", they held that the appellant was entitled to commission but only on the price mentioned in the sale deed, namely, ₹ 1,05,000 which, they found was the price actually received by the respondent. As to why the respondent accepted a reduced price, Harries C.J., who delivered the judgment of the Court, observed : All that is known is that persons who undoubtedly made a firm offer of ₹ 1,10,000 for this property eventually bought it for ₹ 5,000 less. I strongly suspect that the price was reduced at the defendant's instance but I cannot find it as a fact. In support of their view that the appellant was not entitled to any commission above that payable on a purchase price of ₹ 1,05,000 the learned Judges relied on the decision of the House of Lords in Luxor (Eastbourne) Ltd. v. Cooper [1941] A.C. 108, where it was held that, in a contract to pay commission upon the completion of the transaction which the agent was asked to bring about, there was no room fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he transaction. As stated already, the first of these interpretations was rejected by the learned trial Judge as well as by the Appellate Bench, but it was pressed upon us by Mr. Setalvad on behalf of the appellant. We are unable to accept that view. The contract specifies only the price required by the respondent but does not furnish the broker with other terms such as those relating to the payment of the price, the investigation and approval of title, the execution of the conveyance, the parties who are to join in such conveyance, the costs incidental thereto and so on. In fact, the agreement of sale dated the 9th June, 1943, entered into by the respondent with the purchasers contains detailed stipulations on all these and other matters. Mr. Setalvad laid stress on the statement in the commission note that the sale was to be free from encumbrances and that a "good title" would be made out, but this is no more than a general indication of the matter of the bargain proposed and is perfectly consistent with all understanding that further details will be subject to negotiation between the respondent and the purchaser when found. 8. As pointed out by Kekewich J. in Chadburn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e agent carried the transaction to completion. 10. In the present case, however, it is not necessary to decide whether or not the commission note imports such an understanding, for a sale was in fact concluded with the purchasers introduced by the appellant who has thus, in any view, earned his commission, both the trial Judge and the Appellate Bench having found that the appellant's efforts were the effective cause of that sale. The only question is whether the commission is payable on the basis of ₹ 1,10,000 for which the appellant brought a firm other from the purchasers, or on the basis of ₹ 1,05,000 which is the price mentioned in the conveyance. 11. As already stated, the Appellate Bench based their decision on the ruling in the Luxor case. The learned Judges reasoned thus : "In that case the principal had refused to sell in circumstances which afforded no reasonable excuse. Nevertheless, the House of Lords, reversing the Court of Appeal, held that no commission was payable. It appears to me that the principle is applicable to this case. Though the agent introduced a purchaser ready and willing to buy for ₹ 1,10,000 the sale for some reason took ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red in the lower court as well as his costs of the appeal in that court. M.C. Mahajan, J. 13. This is an appeal by special leave from a judgment and decree of the High Court at Calcutta, dated 5th January 1948. By that judgment the High Court varied the judgment and decree of Gentle J. dated 11th June 1945 made in exercise of his original jurisdiction, decreeing the plaintiff's suit for recovery of a sum of ₹ 6,000. 14. The appellant is a broker by profession residing at No. 81/1 Phear Lane, Calcutta, and carries on the business of a house agent. The respondent, Animendra Kissen Mitter, resides in No. 20B, Nilmony Mitter Street, Calcutta. 15. The appellant was employed by the respondent to negotiate the sale of the respondent's premises, No. 27, Amratolla Street, Calcutta, on certain terms and conditions on commission and the question raised by this appeal is whether the appellant is entitled to his commission under the circumstances hereinafter mentioned. 16. The facts are substantially admitted. By a letter dated 5th May, 1943, the appellant was employed by the respondent for arranging a sale of the premises above mentioned. This letter is in the following term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to you of the said offer. I accordingly confirm the offer made by you for the sale of the above premises for rupees one lakh and ten thousand only. The draft agreement for sale will be sent to you in the usual course. A copy of the letter of Messrs. Kishori Lal Mahawar and Ram Kumar Mahor accepting your offer is enclosed herewith." 20. The letter was received by Mitter on 3rd June 1943, two days before the termination of the plaintiff's authority. The respondent made no reply and kept silent. He did not question the agent's authority in effecting a binding contract of sale with the purchasers. He did not repudiate the transaction nor did he expressly ratify it. It was the plaintiff's case that he had accepted the purchasers' offer after getting express instructions from the respondent. That case, however, was not accepted in the two courts below. 21. On 3rd June, 1943, the solicitor for the purchasers wrote to the solicitor for the agent that as the offer of his client for the purchase of 27, Amratolla Street had already been accepted and acceptance communicated to him, the title deeds should be sent so that a conveyance may be prepared. At his respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eived a firm offer of ₹ 1,10,000 for this property could not have parted with it for ₹ 5000 less except on the basis of some arrangement between himself and the purchasers under which both of them shared the commission instead of paying it to the broker. It was to the advantage of both of them. 23. On 14th August, 1943, the appellant filed the suit out of which this appeal arises for recovery of ₹ 6,000, brokerage payable under the commission note. He also claimed relief by way of damages in the alternative. The defendant resisted the suit and denied the appellant's claim. Gentle J. who heard the suit, gave judgment for the plaintiff and passed a decree for a sum of ₹ 6,000, with interest and costs in his favour. He held that on a true construction of the commission note the appellant's authority was to find a purchasers, namely, a man ready, able and willing to buy at a price acceptable to the respondent and that the appellant had accomplished this when he introduced to the respondent the purchasers and that he had done all that was required of him. It was held that the appellant had no authority to conclude a contract of sale and no binding contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 6,000, because he had done all that he had promised to do for the respondent, viz., he had secured a purchaser for ₹ 1,10,000, who was ready, able and willing to buy the property and that if by reason of his own caprice or in collusion with the purchasers, the respondent did not sell the property for ₹ 1,10,000 but chose to receive instead ₹ 1,05,000, the plaintiff could not be made to suffer. (3) That on the evidence it should have been held that the sale was made for a price of ₹ 1,10,000 and that the amount entered in the sale deed was fictitious. 26. The first thing to see is what the parties have expressed in the commission note and what is the true effect of the language employed in it, read in the light of the material facts. As pointed out by Viscount Simon, Lord Chancellor, in Luxor (Eastbourne), Ltd. v. Cooper [1941] A.C. 108, contracts with commission agents do not follow a single pattern and the primary necessity in each instance is to ascertain with precision what are the express terms of the particular contract under discussion. I have very carefully considered the terms of this contract in the light of the material circumstances an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re a buyer firmly unless he is bound by an offer and an acceptance. Otherwise, he is entitled to withdraw the offer at any time before acceptance and it cannot in this situation be said that a buyer has been secured firmly. The word "secure" has not the same meaning as the word "find" or "procure". It gives an idea of safety and certainty. If a buyer is ensured he, is said to be secured and no buyer can be said to be ensured till he is bound by his offer and that cannot happen unless it stands accepted. The agent could only secure a buyer in the strict sense of the term if he had authority to enter into a binding contract. The word "buyer" when used in a strict sense also means "a person who has actually made the purchase". The authority given to an agent to secure a buyer therefore gives him authority to enter into a binding contract of sale with him. Without such an authority it was not possible to secure a buyer. I am further supported in this view by the language employed in the document in respect of the payment of the commission. When the price secured was ₹ 1,10,000, the broker was entitled to 25 per cent of the excess. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as that he knew nothing about this and said that because his son asked him to sign the deed he did sign it and that was all that he knew. When faced with the sale deed, he said that he did not know what his son had told him as to what was written in the deed. He added that he did not know what consideration was paid to him for the sale. He further professed not to know whether the sale price went into his banking account or was even entered in the account books. After a great deal of prevarication he was made to accept the document of 5th May, 1943, and its terms. He admitted that on 3rd June he had a conversation with the purchasers and was informed by them that they had entered into a bargain with the broker and that the broker had deceived them about the commission and therefore they would not but the house. He admitted that he got the letter sent by the plaintiff, but gave no explanation as to why he sent no reply to that letter. With great difficulty he was made to accept his signature on the postal acknowledgment about the receipt of the letter sent by the broker to him informing him of the concluded bargain made with the purchasers, and he had to admit that he got that lette ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons as to the absolute disposal, and none as to the title of the property, and mentioning none of those special stipulations which it might be proper to insert in conditions in reference to the title, that is sufficient authority to the agent to sign a contract for the sale of the property for the price stated in the instructions, without making any provisions whatsoever as to title. In considering whether the instructions of October, 1872, were a sufficient authority to the agent for that purpose, I cannot help expressing an opinion that such an authority to an agent on the part of a vendor would be highly imprudent as the purchaser would then he entitled to require, on completion, attested copies of all documents of title, and the expense of them would swallow up, to a great extent, the purchase money. This estate agent must have known that if this property had been offered for sale by public auction there would have been conditions to guard the vendor against being subject to certain expenses, and to prevent the contract becoming abortive by reason of a purchaser requiring a strictly marketable title. Could he suppose that he was invested with authority to sign a contract withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to purchase them, which was reduced to writing. It appeared from the evidence that the offer was to be submitted by Mr. Newman to his client the defendant, and the plaintiff was to return the next day for an answer. Newman saw the defendant, who gave him instructions to withdraw five of the houses, and fixed the price, but did not, according to the evidence given in court, give instructions to Newman to enter into a binding contract. Later on the plaintiff called on Messrs. Pinder, Simpson and Newman and two letters were exchanged between them, which were letters of offer and acceptance for the twenty-nine houses at Grays. The offer and acceptance were forwarded by the defendant to the estate agents. The defendant on receiving this offer wrote a letter saving inter alia :- "I think you were, as you usually are, a little premature in actually entering into what might be a binding contract. It is always best to have an offer and acceptance subject to a formal contract being entered into...". 36. To this Newman replied :- "The offer for the above was accepted under your definite instructions and is a very good get out for you." 37. Kekewich J., who decided t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accept or refuse." 38. In this case there was no written document between the principal and the agent. From the correspondence it was inferred that the principal had asked the agent to find a purchaser or to negotiate a sale and it was held that within these words an authority to sell could not be spelt out. Not only is the language of the document with which we are concerned different, but the evidence in the case particularly about the conduct of the parties is materially different. The observations made by the learned Judge must be taken to be limited to the facts found by him. The expressions "find a purchaser", "procure a purchaser", "negotiate a sale" standing by themselves may not be sufficient to confer authority on the agent to enter into a binding contract on behalf of the principal; but as I have indicated above, the words in the present case are such as by necessary implication conferred authority on the agent for making a binding contract. 39. The next case is Durga Charan Mitra v. Rajendra Narain Sinha 36 C.L.J. 467, a Bench decision of the Calcutta High Court. The document considered in that case bears considerable resemblance wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Judges made the following observations :- "To my mind there is a substantial difference between those expressions. Authorizing a man to sell means an authority to conclude a sale; authorizing him to find a purchaser means less than that - it means to find a man willing to become a purchaser, not to find him and also make him a purchaser." 42. In Saunders v. Dence 52 L.T. 644, Field J. distinguished Hamer v. Sharp 19 Eq. 108, saying that 'all that Hall, V.C., in that case decided, as I understand it, was that if you go to an estate agent, and tell him you have a property to sell, and that you want a purchaser, and you tell him what you have made up your mind shall be the price, and to a certain extent what shall be the conditions, and you instruct him to try and find a purchaser, that is not sufficient, under those circumstances, to authorize the agent to make a contract without any conditions whatever with regard to the title. 43. I have been unable to find any case in which it has been held that instructions given by A.B. to sell for him his house, and an agreement to pay so much on the purchase prices accepted, are not an authority to make a binding contrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the plaintiff had authority to enter into a binding contract on behalf of the defendant and he entered into such a contract and thereby earned the commission which he has claimed in the suit and he is entitled to a decree in the sum of ₹ 6,000 which the trial Judge had given to him, with all costs throughout. 47. Conceding for the sake of argument that the construction that I have placed on the agreement entered into between the principal and the agent is not the correct one, the question arises whether in that event the decision under appeal can be maintained. I am inclined to the opinion that even on the construction placed by the trial Judge on the commission note the view taken by him was the correct one and the court of appeal arrived at a wrong conclusion by giving too much importance to certain obiter observations of Lord Russell of Killowen and Lord Romer in Luxor (Eastbourne) Ltd. v. Cooper [1941] A.C. 108. In this very case it was pointed out by Viscount Simon L.C. that there were at least three different classes of cases in which the question of a right to commission could arise. He states the first of them in these terms :- "There is the class in whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e found a purchaser, even though the negotiations are conducted and concluded by the principal himself; and also where there is a failure to complete the sale in consequence of a defect in title and no fault on the part of the brokers." 52. In my judgment therefore, Gentle J. was right when he held on the interpretation placed by him on the document that the plaintiff had earned his commission in full inasmuch as he had secured a buyer who was ready, able and willing to buy the property for ₹ 1,10,000. 53. As I have indicated above, if the word "buyer" is to be construed in a strict sense, then it must be held that the broker had authority to secure a buyer of that type and he could only do so by making a binding contract with him. On the other hand, if the word is taken to mean a potential buyer, such a buyer having been secured, the agent was entitled to the commission that had been promised to him. 54. It is now convenient to consider the case of Luxor (Eastbourne) Ltd. v. Cooper [1941] A.C. 108 in some detail because certain observations made by Lord Russell of Killowen and Lord Romer are the basis of the decision of the learned Chief Justice. In this ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the view expressed by the Court of Appeal in Trollope & Sons v. Martyn Brothers [1934] 2 K.B. 436. Then it was said that as the question of these commission contracts was discussed at a great length, that furnished an excuse for stating briefly conclusions which his Lordship's mind, free as it was from the fetter of previous decisions, reached. In dealing with the subject the following observations were made :- "I can find no safe ground on which to base the introduction of any such implied term. Implied terms, as we all know, can only be justified under the compulsion of some necessity. No such compulsion or necessity exists in the case under consideration. The agent is promised a commission if he introduces a purchaser at a specified or minimum price. The owner is desirous of selling. The chances are largely in favour of the deal going through, if a purchaser is introduced. The agent takes the risk in the hope of a substantial remuneration for comparatively small exertion. In the case of the plaintiff his contract was made on September 23, 1935; his client's offer was made on October 2, 1935. A sum of Pounds 10,000 (the equivalent of the remuneration of a year' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a binding contract to purchase, is it an implied terms of the contract of agency that, after the agent has introduced a person who is ready, willing and able to purchase at a price assented to by the principal, the principal shall enter into a contract with that person to sell at the agreed price subject only to the qualification that he may refuse to do so if he has just cause or reasonable excuse for his refusal ? This qualification must plainly be added, for the respondent does not contend, and no one could successfully contend, that the obligation of the principal to enter into a contract is an unconditional one." 59. The learned Chief Justice relying on the last part of the above quotation reached the conclusion that in the present case as the duty of the agent was to secure a purchaser, it could not be held that the purchaser had been secured till the contract of sale was concluded by the vendor with him and that the actual sale having been concluded for a sum of ₹ 1,05,000, the plaintiff could only get his remuneration on the basis of the price for which the sale was made and not on the basis of the offer the plaintiff had secured. It seems to me that when Lor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act, the house is withdrawn from the market, the agent cannot say that he has earned his commission." 62. In a later case, E.H. Bennett v. Millet (1948) 2 All E.R. 929, the same learned Judge had to deal with a case where the contract was in these terms :- "We confirm that in the event of our introducing a purchaser who is able and willing to complete the transaction, our commission will be in accordance with the recognized scale... ". 63. The plaintiffs introduced a prospective purchaser, whom the court found to have been at all times able and willing to purchase, but the defendant refused to complete. It was argued by the defendant that the qualification of the word "purchaser" in the plaintiffs' letter was otiose and therefore should be struck out and the plaintiffs had not performed the contract until they had introduced a person who actually completed the purchase. It was held that the expression "a purchaser who is able and willing to complete the transaction" meant not a person who did, in fact, ultimately purchase the property, but one who prepared to purchase it at the seller's price, and, as the estate agents had found such a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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