(Court OF APPEAL)*

AHMED OSMAN ALLOUB v. ALI HASSAN EL MUTAASHI

AC-REV-523-1964

 Principles

·  Sale of goods-Novation-Not applicable in cases of sale of goods where seller must pass property in the goods to buyer himself not through third person

·  Sale of Goods-Goods in possession of third party- sale of Goods Act 1893,s,29(3)- Third party must inform buyer that he is holding the goods on his behalf Sale of Goods –Unascertained goods-property does not pass until the goods or ascertained goods-property does not pass until the goods are ascertained

·  Third party must inform buyer that he is holding the goods on his behalf Sale of Goods –Unascertained goods-property does not pass until the goods or ascertained goods-property does not pass until the goods are ascertained

Applicant, seller made an agreement of salll3 of 194sacks of dura fitarita with respondent buyer who paid the whole sum of the dura , but received only 74 sacks from applicant who failed to deliver the balance. Respondent
Claimed recovery of the price of the 120 sacks not delivered Applicant contended that he had been released  from his obligation under the sale agreement by novation to a third party who acknowledged possession and respondent accepted to take delivery form him. District Judge rejected applicant’s contention and decided that applicant failed to discharge his obligation and that respondent was entitled to succeed . Province Judge confirmed the Court’s decision.
Held: Decision of the District Judge confirmed by Province Judge is confirmed because:
(i)                  applicant who is a seller, cannot discharge his obligation to transfer property the goods to the buyer, respondent, to a third person by way of novation, which usually is not applicable in cases of sale of goods where  transfer of property must be done by direct act of seller, especially where price is paid to him.

(ii)                As the goods are in possession of third person it is the duty of such person to inform the buyer that he  is holding the goods on his  behalf, under sale  of goods act 1899, s, 29 (3). No such acknowledge is proved in this case, but only the third person agreed to sell and deliver the dura to the seller respondent.

(iii)               As the goods are not available, they are unascertained goods , therefore property in the goods cannot pass to the buyer, applicant.

Judgment

Sale of goods-Novation-Not applicable in cases of sale of goods where seller must pass property in the goods to buyer himself not through third person

Sale of Goods-Goods in possession of third party- sale of Goods Act 1893,s,29(3)-

Third party must inform buyer that he is holding the goods on his behalf

Sale of Goods –Unascertained goods-property does not pass until the goods or ascertained goods-property does not pass until the goods are ascertained

Applicant, seller made an agreement of salll3 of 194sacks of dura fitarita with respondent buyer who paid the whole sum of the dura , but received only 74 sacks from applicant who failed to deliver the balance. Respondent
 

Advocates: Sir EL Kharim Ali Omer………………for applicant

                   Mohammed Yousif Mohamed…………for respondent

Osman El Tayeb J. June 14.1965:-This is an application for revision form the order of His Honour Hashim Mohamed Abu EL Gasim, Province Judge, Kassala Circuit, dated September 9.1964,dismissing summarily similar application to him form the judgment and decree of District Judge Gedarif, dated July 1.1964, passed against application ordering him to pay  to respondent the sum of Łs.190.000m/ms and costs.

Respondent, as plaintiff, claimed from applicant, as defendant, the recovery of the sum of Łs.192.000m/ms, being the price of 120 sacks of dura fitraita, paid by him to applicant, for failure of the latter to deliver he was released from his obligation to deliver that amount by bringing in a third person, by name Ahmed Hassan Eisa, who admitted having in his possession that amount of dura for applicant and respondent accepted to receive it from him.

It happened that on or about January 20.1964 at El Gedarif an agreement of sale of 194 sacks of dura fitraita at the price of 32pot . per two sacks, was made by the parties , applicants the seller and respondent the buyer. Respondent paid the whole price in full. He received at the time 74 sacks. As to the delivery of the 120 sacks  which is the matter in dispute in the case, we have to consider the facts in light of the submissions of the learned counsel on both sides in order to find whether respondent or that he had released himself therefrom.

Some time before this agreement , applicant agreed with Ahmed Hassan Eisa to buy from him 120 sacks of dura fitratia at the price of 31 pot .per two sacks and paid to him part of the value amounting Łs.150.000m/ms and the balance that was to be paid after delivery was Łs.160.000m/ms As to how this amount was directed  to be delivered to respondent, the evidence goes as follows; Applicant said that he told respondent that he had 74 sacks ready for delivery, and 120 sacks not ready he said “he asked me about its whereabouts, I told him that it was with Ahmed Hassan Eisa. He requested me to go to meet him to accept its delivery to him . and thereafter to pay the price.” Applicant continued “W e met Ahmed  Hassan Eisa I informed him that I sold the 120 sacks to plaintiff and that I am leaving them to him.” He added that Ahmed agreed, and respondent applicant told him that 120 sacks were with Ahmed Hassan Eisa ad that they went to Ahmed  and applicant told him to deliver those 120 sacks to him.

The applicant’s contention is that he has been released from his obligation under the agreement buy novation or that the dura being in the possession of third person who acknowledged such possession and on which respondent accepted to take delivery from that third person .

The learned District Judge and the learned Province rejected the two contentions, and  decided that applicant was under an obligation to deliver that amount of dura, and he failed to discharge that obligation and respondent was entitled to succeed. I find myself in agreement with conclusions they reached.

In my opinion the concept of novation, which is simply the substitution of a new contract for the original one in which a third party undertakes the obligations of one of the parties towards the other and thereby this other releases that other party form his obligations and accepts the undertaking of the third party, does not usually apply in cases of contracts of sale of goods. Writing about novation, chitty. Contacts (22nd ed,1961) $ 946m ,says “ Most if not all of the instances of it in English law have arisen either out of the amalgamation of companies , e.g., insurance companies, or of changes in partnership firms , the questions being whether as a matter of fact the assured or the party contract g with the firm accepted the new company or the new firm as their debtor in the place of the old company or the old firm.” On the other hand a contract of sale of goods is “ a contract whereby the seller transfers or agrees to transfer the property in the goods to the buyer, for a price, it is the duty of the seller , especially when the price was paid to him to transfer the property in the goods to the buyer and it seems to me , that this can only be done by a direct Act on the part of the seller, with reference to the goods sold. I do not think it is possible for the seller to entrust this duty to a third person in such a way as would render him unanswerable , as it is suggested by way of ovation. The passing of property in the goods sold is the transfer of possession of the goods. I do not think I need discuss the evidence in order to find whether there was novation in this case.

I come to the second point of the submission of advocate for applicant, in which he is relying on the applicability of the rule in the English Sale of Goods Act’s, 29(3) . It is alleged that Ahmed Hassan Eisa has acknowledged to the buyer, respondent, that he was holding the dura on his behalf. Form the summary of the evidence hereinbefore stated ,it appears that all that took place between the three was that Ahmed confirmed or acknowledged that he agreed to sell to applicant 120 sacks to dura fitarita, and that applicant instructed him to deliver them to respondent. Ahmed had not objected ad told respondent that he would deliver that amount to him within a few days. In these circumstances, I cannot see how it can be said that  Ahmed  acknowledged to respondent that he was holding the dura sold on his behalf. To my mind there was an expression of willingness on the part of Ahmed to deliver the dura to respondent, when it be available or ready for delivery. Respondent said in his evidence that at first he was made to understand that amount of dura was stored in Ahmed’s house, but I the meeting with  Ahmed and afterwards when he requested Ahmed  to give him the goods, he discovered that , that Ahmed had only agreed to sell to applicant dura that was not in store and not ready for delivery.

This brings me to the other and last important point that the goods sold in this case were unascertained goods; 120 sacks of dura fitarita, they were goods sold by description only. In such a case the property in the goods does not pass by agreement to sell.

In the English case of Laurie v. Dudin (1962) 1 K.B.22.where the contract was for the sale of 200quarters of maize from a bulk held by a warehouseman, it was held that the giving of delivery order by the seller to the buyer who handed it to the warehouseman and accepted by the latter was not sufficient without move  to pas the property in the 200 quarters to plaintiff before severance form the bulk. The goods were not ascertained and so the buyers were not ht owners thereof by virtue of the contract of sale. That is deferent form our present case in that there the buyer was claiming delivery from the warehouseman, when the seller stopped delivery , in the present the buyer is claiming

The repayment of the price, in lieu of delivery form the seller, as he failed to deliver and that failure was attributed to the seller. The contention of the seller is that he is not be considered as having failed to deliver , since he brought the buyer face to face with the third person, who acknowledged to the buyer the holding of the goods for him, and so the property in the goods passed to the buyer, and if he had any claim it must be against that third person. As I said before there was no such an a acknowledgment. Since the goods were unascertained and as in the English case cited above, the property in the goods could not pas to buyer.

In conclusion, it must be held that applicant has failed to deliver the dura he sold to respondent, neither physically nor constructively. Applicant has not put respondent in such relationship with the goods or with the third person as would have amounted to transfer to the repayment of the price.

Application n is dismissed with const.

Hassan Abdel Rahim P.J June 14.1965:-I concur.

* Court: Osman El Tabeb .J.  and Hassan Abdel Rahim P.J.