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Judgment
The suit was heard in the Original Court by Sir Charles Arnold White, C.J. who held that the Defendants did not contract to supply sleepers for
the purpose of enabling the Plaintiff to carry out his contract with the Railway Company in accordance with the particular specification, hut that the
re must ho attributed to the Defendants the knowledge that the sleepers wore intended to be used for railway purposes, and that before they could
he so used the railway authorities would satisfy themselves that their quality came up to the usual standard insisted upon by railway companies in
regard to sleepers. He was of opinion that it was a term of the Defendants'' contract with Chinnappa Iyer, and afterwards with the Plaintiff that the
passing"" by the Defendants was to be final, that the sleepers had been so passed, and that the Plaintiff could not, go behind the passing, and
therefore he dismissed the suit. In view of there being an appeal however the learned Chief Justice proceeded to deal with the facts, and found that
there had been a breach of the implied warranty that the sleepers should be fit for the purpose, namely, for use as railway sleepers, and assessed
the damages for breach of such warranty.
The material portions of his judgment were as follows:
The Defendants, whilst denying that they are under any liability in respect of the alleged breach of warranty, rely upon the stipulation contained in
the contracts made on their behalf fey Messrs. Arbuthnot with Mr Chinnapa Iyer in the first instance, and afterwards with the Plaintiff, that the
''passing'' by the Defendants is to be final. Messrs. Arbuthnot''s letter of April 25th (B) to Mr, Chinnappa Iyer, contains the stipulation ''subject to
the usual terms, i.e., their (viz., the Defendants'') passing is final.'' In their letter of May 23rd (F) to Mr Chinnappa Iyer Messrs. Arbuthnot say ''the
passing of...the Bombay-Burmah Trading Corporation, Limited, is as usual final as regards both measurement and quality which please take note.
''This stipulation was clearly a term of the contract between Mr. Chinnappa Iyer and the Defendants. It was equally clearly a term of the contract
between the Plaintiff and the Defendant. The Defendants'' letter of June 23rd (N) and the Plaintiff''s letter of June 27th (O) leave no doubt as to
this.
With regard to this part of the case the first question for consideration is, was there in fact a, ''passing'' of the sleepers by the Defendants within the
moaning of the word as used in the contract? If there was, the second question is, is the Plaintiff entitled to go behind the ''passing''? Mr. Napier
contended that there was no ''passing, in fact, since the Railway''s specification was the basis of the contract and the officers who passed the
sleepers on behalf of the Defendants did not inspect and pass with reference to the terms of the specification. I have already said that in my
judgment the particular specification (exhibit A) was not the basis of the contract, but that there must be attributed to the Defendants the
knowledge that the railway authorities would not accept sleepers which did not come up to the usual railway standard. One cannot attribute
knowledge of this fact to the Defendants for one purpose and at the same time assume for another purpose that they were ignorant of the fact. I
think it must be taken that the ''passing'' was with reference to railway requirements. The sleepers were ''passed'' by Mr. Pyne and Mr.
MacGeorge who were respectively the Superintendents of the Defendants'' (sic)ill at Moulmein and the Manager of the Moulmein branch of the
Defendants'' business. These two witnesses described the process of selection and inspection and final ''passing''. Mr. Pyne stated that he had at
one time been engaged continuously cutting sleepers for six years. Mr. MacGeorge did not profess to have any special knowledge in the matter of
sleepers. In connection with the inspection and the passing both witnesses admitted that they only regarded themselves as acting on behalf and in
the interests of the Defendants. They did not profess to have acted in any sense as arbitrators or referees. In answer to me Mr. MacGeorge said
''We only did what we considered necessary in the interests of our firm. We did not think we were acting on behalf of the buyers. We should have
acted in precisely the same way if the contract had contained no such special provision.'' And in answer to me, Mr. Pyne said ''I inspected from the
point of view of passing the goods in the ordinary course of business as fit, to be sent out.'' With regard to the quality Mr. MacGeorge said ''I
thought the sleepers sent off were good merchantable sleepers for ordinary use as railway sleepers.'' Mr. Pyne said ''I passed them as good
serviceable sleepers.'' It is not suggested that there was any want of good faith on the part of these two witnesses. The Plaintiff''s case as regards
this matter is not put higher than that these witnesses had no special knowledge of the requirements of Railway Companies with regard to sleepers,
and that the ''passing'' was of a somewhat perfunctory character. On the evidence I am satisfied that these two witnesses exercised an honest
judgment, when they passed the sleepers, and in my opinion the fact that they only purported to act on behalf of the Defendants, does not make
the passing any the less a ''passing'' within the meaning of the contract. I hold that there was a passing in fact within the meaning of the contract.
The next question is can the Plaintiff go behind the passing for the purpose of showing that the sleepers were not fit for the purpose for which they
were ordered. In my opinion he cannot. I do not think the case falls within the principle of the authorities-of which The Secretary of State for India
v. Aratheon ILR (1879) Mad. 178 is an illustration-cases where the party who contracts to supply the goods agrees that the approval of the
purchaser or of a third party shall he a condition precedent; to his right to recover under the contract. No question of the fulfilment or non-fulfilment
of a condition precedent arises in this case No doubt purchaser leaves it absolutely to the vendor to say whether the goods the vendor supplies are
in accordance with the contract. Contracts in which it is left to the buyer to say whether the goods supplied are or are not in accordance with the
contract are common enough, but I confess I have never come across a contract in which it was provided that the decision by the seller should be
final; and counsel have not been able to call my attention to any case in which a contract of this hind has come before the Courts. But if a party
chooses to tie himself hand and foot in this manner the Courts cannot untie him. Why should they? Mr. Napier on behalf of the Plaintiff had to
concede that, assuming the goods were passed within the moaning of the contract, I could not give effect to his contention without reading the
contract as if the provision as to passing found no place therein. I cannot make a new contract for the parties in this way, There is no suggestion of
over-reaching or the taking of an unfair advantage, by the Defendants. Mr. Chinnappa Iyer and the Plaintiff are both competent and experienced
men of business. In fact the Plaintiff from the way he gave his evidence, struck me as a particularly shrewd and capable person. It was not seriously
contended on behalf of the Plaintiff that the contract was one to which Section 28 of the Contract Act applied. The contract cannot be said to have
been in any way against public policy. It is no doubt a well established rule of law that a person cannot be a judge in his own cause, but I see no
reason why the parties to a contract should not contract themselves out of this rule if they so choose. It must be presumed that the Plaintiff thought
it worth his while to agree to this unusual condition, and it may very well be that, as a matter of business, it was worth his while. Neither he nor Mr.
Chinnappa Iyer had had any business experience in the matter of sleepers, and it may be that the Plaintiff was content to abide by the Defendants''
''passing'' in consideration of a lower price being fixed for the goods in question than would otherwise have been the case. At any rate a Court of
law would find itself in all sorts of difficulties if, with a view to cancelling stipulation of this character it attempted to investigate the motives which
prompted a party to accept the stipulation as part and parcel of the contract.
After referring to the observations of Cookbukn, C.J., in Standard v. Lee (1863) 82 L.J.Q.B., 78 (77, 78), the judgment continued.
I am of opinion that the ''passing'' by the Defendants of the goods in question in this case is binding on the Plaintiff and he cannot go behind it. This
being my view, I must of course dismiss the suit, but as the case may go further, it seems desirable that I should deal with the Plaintiff''s case for
damages for the alleged breach of warranty.
As regards this part of the case, I am of opinion that the goods were ordered for a specified purpose for which goods of the denomination
mentioned in the order are usually sold within the meaning of the Contract Act, and that, consequently there was an implied warranty by the seller
that the goods supplied were fit for that purpose. The word ''sleepers'' itself indicates the purpose for which the timber was to be used, quite as
clearly as the word ''coatings'' in the case of Drummond v. Van Ingen and Co. (1887) 12 A.C., 284 (293), per Lord Herschell.
On the question of whether the evidence established that there had been a breach of the implied warranty, the learned Chief Justice came to the
conclusion on a consideration of the evidence that ""the Plaintiff had proved a breach of the implied warranty as regards the rejected sleepers""; and
that there was a, breach of warranty as regarded 850 sleepers. An appeal by the Plaintiff came before an Appellate Bench of the High Court
(Sankaran-Nair and Abdur Rahim, JJ.) which came to the conclusion, differing from the Original Court, that the specification contained in the
circular of the Madras Railway Company was the basis of the contract between the Plaintiff and the Defendants; and that the ''passing'' of the
sleepers by the Defendants'' agents had not been a ''passing'' with reference to the specified standard of quality, and that therefore the Defendants
were not protected by the ''passing'' that had taken place. As to the latter point they said:
We have next to consider how the stipulation as to the passing of the sleepers by the Defendant corporation affects their liability. We think that
what was intended by the parties was that if the Defendants through competent persons bond fide-exercised their judgment and skill in
manufacturing the sleepers wanted by the Plaintiff having in regard'' the purpose for which sleepers are ordinarily required and the standard of
quality mentioned in the specification, which as we have said is the ordinary standard of a good sleeper, they would not he liable if, in the opinion of
the Railway Company or of the Court, if the matter went so far, the sleepers supplied were not in fact in accordance with the specification. But if
the articles turned out by the Defendants are in fact neither suitable for such purpose nor of the requisite quality, and the Defendants wish to bring
themselves within the exemption, they must satisfy the Court, that in manufacturing and selecting the sleepers for the purpose of the contract they
had in regard not merely the use to which they were intended to be put but also the specified standard of quality. If the Defendants manufactured
them in accordance with what they thought might serve the purpose designated by the word ''sleeper'' but made no attempt whatever to conform to
the stipulated quality they cannot be held to have exonerated themselves. It is not shown-indeed the facts of the case negative the idea-that the
Defendants in manufacturing the sleepers had ever in view the standard set out in exhibit A, and they therefore cannot be said to have passed them
within the meaning of the contract. In fact neither Mr. Pyne who was employed to cut the sleepers and to pass them, nor Mr. George who helped
him generally in the work, was furnished with a copy of the specification. Even if Arbuthnot and Co. failed to supply the Defendants with such a
specification, which however has not been proved, it would, of course, avail the Defendants nothing. It is however said that Mr. Pyne did in fact
pass the sleepers as good serviceable sleepers,''but'' good serviceable'' sleepers are not the same thing as ''good sleepers. ''The Defendants never
purported to supply good sleepers at all. We must therefore hold that the Defendants are not protected by the clause as to passing.
The Plaintiff has contended that he is entitled to succeed also on another ground, that even if the parties did not contract on the basis of the
specification, Arbuthnot and Co. knew that the sleepers were required in order to carry out the Plaintiff''s contract with the Railway Company,
under which he was under an obligation to supply sleepers of the specified standard, and as this knowledge must be imputed to the Defendants, the
latter are to be taken to have warranted that the sleepers supplied by them should be such as were required by the Plaintiff''s contract with the
Railway Company. There can be no doubt upon the evidence that Arbuthnot and Co. fully knew that the sleepers were required for the purpose of
the Plaintiff''s contract with the Railway Company. In fact having regard to their own letters it is impossible to escape the conclusion that Arbuthnot
and Co. not only had such knowledge but that they exercised a voice in the decision of the Railway Company as to whoso tender they should
accept, so that the business might ultimately come into the hands of the Defendants. Their object apparently was that the Defendants should have
the supplying of the sleepers without undergoing the risk of any rejections by the Railway Company, which risk they wanted should be taken by an
intermediary. But we have been referred to no authority in support of the proposition which the Plaintiff''s contention involves, that because the
agent of a manufacturer knew that the goods for the supply of which ho has obtained an older for his principal was required to fulfil a contract
which the buyer had entered into with a third person, therefore the manufacturer must be held to have warranted that the goods supplied by him
should be such as to enable the buyer to fulfil his contract with the third person. We think we should not be justified in extending the doctrine of
implied warranty so far unless we found a clear autherity for it.
As we, however, hold that the Defendants expressly warranted that the sleepers supplied by them should be of the quality described in the
specification and there has been a breach of such warranty, and the Defendants failed to protect themselves by acting in terms of the stipulation as
to passing, they must be liable for whatever damages the Plaintiff has suffered.
In the result the Appellate Court held that the Plaintiff had proved, as to 850 sleepers, that they were not in accordance with the contract, and
assessed the damages at Rs. 11,913-4-6.
On this appeal by the Defendants.
Martelli, K.C., and D.C. Leek for the Appellants contended that the Appellants did not contract with Chinnappa Iyer that the sleepers to be
supplied by them should be in accordance with the specification of the Madras Railway Company, nor did they, when they agreed to the transfer
of Chinnappa Iyer''s contract to the Respondent, agree or make any contract that the sleepers should be in accordance with such specification. On
the contrary, it was one of the forms of the Appellants'' contract with Chinnappa Iyer, and also of their agreement with the Respondent when
assenting to the transfer of the contract to him, that the passing of the sleepers by the Appellants at Moulmein or Rangoon should be final as
regards both measurement and quality, and the sleepers had been duly passed under the terms of the contract, and such passing was final and
binding on the Respondent. It was, therefore, submitted that the judgment of the Original Court was correct, and should be restored.
DeGruyther, K.C., and Kenworthy Brown for the Respondent contended that the sleepers delivered by the Appellants had been rightly rejected
because they were not in accordance with the specification contained in the Madras Railway Company''s circular which formed the basis of the
contract between the Appellants and the Respondent; that both Courts in India had concurred in holding on the evidence, and apart from the said
specification, that the sleepers rejected wore not of such a quality as to be suitable for railway sleepers; and that the alleged ''passing'' of the
sleepers by the agents of the Appellants at Moulmein was not binding on the Respondent, the defence set up that the representatives of the
Appellants at the ports of shipment were to be the sole judges as to whether the sleepers satisfied the terms of the contract as regards both
measurement and quality, and that this decision was final, not having been established in the evidence. Reference was made to Brown v. Edgington
(1841) 10 L.J.C.P., 66, Drummond v. Van Ingen and Co. (1887) 12 A.C., 284 (295) and Jones v. Just (1868) 3 Q.B., 197.
Martelli, K.C., replied.
1911, July 11th.- The judgment of their Lordships was delivered by
Lord Atkinson, J.
This is an appeal from a judgment and decree of the High Court of Judicature at Madras, dated the 21st December 1908, made in the exercise
of its appellate jurisdiction, whereby the judgment and decree of the Chief Justice of the same Court made in the exercise of its ordinary jurisdiction
were reversed, and judgment entered for the Respondent the Plaintiff in the suit, for the sum of Rs. 11,913-4-6 damages for the breach of contract
for the sale and delivery to the Plaintiff of 1,500 teakwood railway sleepers.
The facts of the case are not complicated, and as far as it is necessary to set them out are as follows:
A person named M. Chinnappa Aiyar, of 209, Thambu Chetty Street, Madras, in the month of May 1905, entered into a contract with the
Madras Railway Company for the sale to them of 1,500 teakwood sleepers of the dimensions 12'' by 12"" by 7"", deliverable in two instalments of
750 each.
The Company had advertised for tenders for 3,000 teak sleepers on a specification which set forth that the sleepers should be of the
dimensions above mentioned, and should be of the following description:
Each teak sleeper to be delivered at the Terminal Buildings Yard at Royapuram must be straight, sound, and well seasoned, sawn uniformly square
and to correct dimensions throughout its length, and be free from holes, shakes, cracks, sap, and other imperfections. The sleepers so delivered at
Royapuram will be inspected by an Engineer deputed by the Chief Engineer, whose decision as to those to be accepted or rejected will be final.
The sleepers which may be condemned as not complying with this specification will not be paid for, and they must be removed from our yard at
your own cost within seven days of your receiving notice to do so.
The price to be paid was apparently Rs. 210 per ton.
The Appellants are large timber merchants, part of whose business it is to manufacture and supply teak sleepers. Their duly accredited agents
at Madras are Messrs. Arbuthnot and Co., one of the members of which firm is Mr. F.S. Arbuthnot. Aiyar, before tendering to the Railway
Company for this contract, entered into negotiations with F.S. Arbuthnot in reference to the terms upon which they would supply him with sleepers
to enable him to carry out any contract which he might make with the Railway Company for the supply of any portion of the sleepers required. This
cannot be disputed. It is practically admitted; and, from the following letter, signed by F.S. Arbuthnot and addressed to the Appellants'' manager at
Rangoon, coupled with the evidence which he gave at the trial hereafter referred to, it would rather look as if he regarded the Appellants as the real
contractors, and Aiyar and a firm of King and Co. moroly as intermediaries. The letter is exhibit D, and runs as follows:
.
Madras,
22nd May 1905.
Dear Sir,
***
Sleepers.- With reference to your telegram of 20th April for 3,000 sleepers 12 ft. by 12 in by 7 in at Rs. 170 landed Madras, we have just heard
unofficially that we have secured the business- 1,500 through King and 1,500 through another dealer. This sale will he advised definitely next week
when we receive written confirmation from the buyers.
Ultimately Aiyar entered into a contract with the Appellants through Arbuthnot and Co. for the sale to him of 1,500 sleepers 12 by 12"" by 7
at the rate of Rs. 170 per ton (Rs. 40 per ton less than the price to be paid by the Railway Company), landed at Madras, to be shipped from
Moulmein or Rangoon at Appellants'' option. The contract is contained in the letters which passed between the parties. It never was embodied in a
formal instrument. Much controversy arose as to whether Aiyar had, during his negotiations with Arbuthnot and Co., over given to F.S. Arbuthnot,
who appears to have been the member of the firm in charge of this transaction, a copy of the specification of the Company on which he had
tendered, thus making it the basis of his contract with them. The Chief Justice, the Trial Judge, was of opinion that the Respondent had failed to
establish that Aiyar had done this. The Court of Appeal thought the contrary. A copy of the specification in the form of a letter (marked exhibit A),
signed by the Chief Engineer of the Company, and addressed to Messrs. Arbuthnot and Co., was, on search, subsequently found amongst the
papers of Mr. F.S. Arbuthnot. This gentleman stated on his examination (page 118, Record) that he knew nothing about this letter till after the suit
was instituted. He admits it bears his signature, as well as those of Mr. Young and M. Arbuthnot (members of the firm), and also of a Mr. Peebles.
All letters, he states, came to him in the ordinary course of business, and this letter after having been initialled was sent down to be placed among
the records of the office. He adds: ""My firm did not tender. king and Co. did not tender. They procured the 1,500 through my firm. I knew they
(the sleepers) were required for the Madras Railway. I think it is probable I was told they were for the purpose of the contract for 3,000 with the
Madras Railway. I expect I added 1,500 and 1,500 together. ""Lower down on the same page, he states that their firm considered they had the
control of the Madras Railway contract, that they had power to select the person who was to have the order, that Chinnappa Aiyar unlike King
and Co. (who would not take sleepers from Moulmein) had not been doing business with them regularly and that they had only selected him
because they had been asked by one Dubash of the Import Department to give him a chance. Their Lordships think it unnecessary to decide this
point as to the alleged delivery of the copy specification to F.S. Arbuthnot by Aiyar for these reasons:- First, because they concur in the opinion
expressed by the Court of Appeal at page 166, line 29, of the Record that ""the evidence shows that exhibit A (the copy specification) merely
contains an enumeration of the qualities of a good sleeper usually insisted on by railway authorities,"" and secondly, because the Appellants, having
through their agents been fully informed of the purpose for which Aiyar purchased these sleepers from them, must be taken to have impliedly
warranted that they were reasonably fit for that purpose, and thirdly, because they think that a sleeper whose qualities are inferior to those ""of a
good sleeper, as usually insisted upon by railway authorities,"" cannot well be considered to be a sleeper of the dimensions specified reasonably fit
for use by the Madras Railway Company. The point therefore becomes, in their Lordships'' view, irrelevant. One of the letters forming the written
contract with Aiyar, namely, that dated the 23rd May 1905, written by Arbuthnot and addressed to Aiyar contains the following paragraph:
The passing of our Moulmein or Rangoon friends, the Bombay-Burma Trading Corporation, Limited, is as usual final as regards both measurement
and quality, which please take note.
In their Lordships'' view the defence of the Appellants to the claim made against them will ultimately be found to rest upon this paragraph, the
rights it confers, and the manner in which those rights have been exercised. The first question is as to its true construction. What does it mean? It
cannot mean that the Appellants were entitled to deliver under the contract any kind of sleeper they chose. It must have contemplated that there
was some standard with which these sleepers should be compared. That standard must at the lowest have been the standard setup expressly or
impliedly, by the contract between the parties; that was the specification, or at the least the requirement that the sleepers were reasonably fit, as
sleepers of the dimensions described for use by the Madras Railway Company. So that the right conferred upon the Appellants amounted merely
to the right to determine by and through the skilled and experienced persons whom they should necessarily employ for the purpose, acting honestly
and impartially according to the best of their judgment whether the goods supplied were in conformity with the requirements of the contract under
which they were so supplied.
So much as to the contract entered into between the Appellants and Chinnappa Aiyar. Some short time after that event, and before any sleepers
had been delivered, Aiyar, finding himself unable to pay the deposit stipulated for in his contract, with the consent of the Appellants, and of the
Railway Company, transferred to the Respondent the benefit of his contracts with both Companies and procured the latter to be accepted in both
in his stead.
A formal agreement was drawn up between the Respondent and the Railway Company, and was duly executed by both. It is dated the 19th of
June 1905, and the description of the sleepers to be supplied contained in it differs from that contained in exhibit A in this, that the words ""from
teakwood"" are inserted in the agreement after the word ""sawn."" In other respects the descriptions were identical.
There was much controversy on the point as to whether, whatever the precise contract between the Appellant and Aiyar may have been, new
terms were not, on the occasion of this transfer, added to it, and the stipulation made then, if not before, that the sleepers supplied should conform
to the specification of the Railway Company.
The question turns upon the two letters following, dated respectively the 16th and 21st June 1905, and three paragraphs from a letter of
Arbuthnot and Co., dated the 23rd of the same month, coupled with the evidence of F.S. Arbuthnot on the point at page 119, line 12 of the
Record. The letters are as follows:
Madras, 16th June 1905.
Mr. Aga Mahomed Khaleel Shirazi,
36-37, Ungappa Naick Street,
Madras.
Dear Sir,
We are in receipt of your letter of to-day''s date enclosing original letter from M. Chinnappa Aiyar from which we note that he has transferred to
you his contract with Madras Railway for 1,500 sleepers 12'' X 12"" X 7"", for which he has contracted with us at Rs. 170 per ton, landed Madras.
To this we agree, on condition that you send us by return your cheque for the deposit due, Rs. 8,925 all other terms and conditions as mentioned
in our various letters to M. Chinnappa Aiyar. You ask us to allow interest on the deposit, but this is only granted to our two very large contractors,
and on account of the troubles which M. Chinnappa Aiyar has given us over this contract we are not disposed to make an exception in his favour.
As, however, the contract is now transferred to you, as a special case we agree to allow you interest on the deposit at the rate of 5 percent. per
annum, but on the condition only that each shipment of sleepers arriving for you is paid for in full immediately on arrival.
Yours faithfully,
Per pro. Arbuthnot and Co.,
(Signed) F.S. Arbuthnot,
Agents, B.B.T.C. (Ltd.),
36-37, Ungappa Naick Street,
Madras, 21st June 1905.
To
Messrs. Arbuthnot and Co.,
Agents, B.B.T.C, Limited,
Madras.
Dear Sirs,
In your letter of the 16th instant you said that the terms and conditions are as mentioned in your letters with Mr. M. Chinnappa Aiyar. On my
enquiry he said that the conditions are this (i.e.) the teak sleepers of 750, 12'' X 12""x7"" should be delivered in the month of October and the
remainder of 750 in March next. The same should be taken delivery within a month, if it exceeds a month, an interest of 9 percent, should be
charged. The teak sleepers must be delivered as per railway specification which was sent to you by Mr. M. Chinnappa Aiyar, an interest of 5
percent, must he allowed on deposit money. On those conditions I herein enclose you a cheque on Chartered Bank of India, Australia and China,
for Rs. 8,926 (eight thousand nine hundred and twenty-five). An early reply with the receipt is solicited.
I am, Sirs,
Yours faithfully,
(Signed) Mahomed Khaleel Shirazi.
Madras, 23rd Juue 1905.
Mr. Aga Mahomed Khaleel Shirazi,
36-37, Ungappa Naick Street,
Madras.
Dear Sir,
We are in receipt of your letter of 21st instant enclosing a cheque on the Chartered Bank of India, Australia and China, for Rs. 8,925 which has
been placed to the credit of your account as a deposit against the order of M. Chinnapa Aiyar (now transferred to you) for 1,600 sleepers 12'' x
12"" X 7"" at Rs. 17O per ton landed Madras.
As regards the terms of delivery M. Chinnappa Aiyar is under a misapprehension. We have never undertaken to deliver 750 sleepers in
September and 750 in March next, nor could we under any circumstance bind ourselves to deliver the sleepers precisely in the months specified by
you. We have however informed our friends of the delivery which would suit you best.
As regards other terms, the passing of our friends the Bombay-Burma Trading Corporation, Limited, either at Rangoon or Moulmein (whichever
port shipment may be made from) is as usual final as regards both measurement and quality. No exception is over made to this rule.
Mr. Arbuthnot''s evidence is in substance, to the effect that he considered the third paragraph of this letter of the 23rd of June a contradiction
of the statement contained in the letter to which it was a reply as to the obligation to deliver sleepers according to the railway specification, but not
as a contradiction of Aiyar''s allegation that the specification had been sent to him. The evidence of this gentleman on this point cannot be regarded
as satisfactory; but having regard to the view which their Lordships have taken as to the true nature of the implied warranty to be imported into the
written contract, the point so much discussed is, they think, as already stated, irrelevant. There is not and cannot be any pretence for the suggestion
that the sleepers supplied were in fact either in conformity with the specification, or were reasonably fit, to be used as sleepers of the specified
dimensions by the Madras Railway Company.
Of the 748 sleepers delivered by the Appellants on the 8th of September no leas than 593 were rejected by that Company, and of the 600
delivered on the 9th of December 1905 no less than 513 were rejected, and as to the balance of the 1,500 the contract was rescinded by mutual
consent.
The real defence, therefore, of the Appellants is rested upon the alleged fact that the sleepers delivered were passed by the two expert persons
they employed for the purpose in the impartial and honest exercise of their judgment.
On examining the evidence of these witnesses, James MeGeorge and William Pyne, however, it clearly appears that they did not correctly
appreciate the position in which they had been placed, or the true nature of the task they were appointed, to perform. They were in truth
constituted judges or arbitrators to decide upon a matter in which the interests of the two contracting parties were in conflict. They were the
employes of one of these parties. That would render their task all the mere delicate and difficult, and would make it all the more incumbent upon
them to take care to avoid even the appearance of injustice to the Respondent. Well, in the first place Mr. MeGeorge had scarcely had skill and
experience sufficient for the work he was put to do. And in addition neither he nor his colleague was ever supplied with the materials necessary to
enable him to do it. He never saw the specification ""A."" He said he did not think he ever saw a ""Railway contract for sleepers. ""Pyne, the other
witness, who was both skilled and experienced, was left in the same state of ignorance as to the contract. He never saw the specification, nor does
he appear to have over been informed what were the terms of the Respondent''s contract with the Appellants. At the bottom of page 130 he says,
Masters informed me as to dimensions and time for delivery. We had logs in stock. I had simply to go round and make suitable logs."" At foot of
page 131 he is reported as having said ""I applied the same process of examining them as I did to them in ordinary course of business. ""And in reply
to questions put to him by the Chief Justice he further deposed, ""When I approached inspection I did so from point of view of passing goods in the
ordinary routine of business as fit to be sent out. ""The Chief Justice finds that these men acted honestly according to the best of their skill and
judgment. That may be so, but that is not the point. The point is that they never approached the question they had to determine, namely, the
conformity of the goods supplied with the contract under which they wore supplied. They never applied their minds to this. They merely
determined that the sleepers were fit to be sent out as the manufacture of their employers There was not, therefore, any ''passing'' of the sleepers
within the meaning of the contract, and the contention of the Appellants on this appeal that there was such a ''passing'' in their Lordships'' view
entirely fails.
They accordingly think that the decision appealed from was right and that this appeal, should he dismissed, and they will ""humbly advise His
Majesty accordingly.
The Appellants must pay the costs of the appeal.