T-2952-80
C.P. Ships (Plaintiff)
v.
Les Industries Lyon Corduroys Ltée (Defendant)
Trial Division, Addy J.—Montreal, November 2;
Ottawa, November 19, 1982.
Maritime law — Contracts — Bill of lading — Claim for
payment of freight charges — Plaintiff transported goods by
ship for defendant from Montreal to Durban, South Africa —
Bill of lading named third party as agent of plaintiff —
Defendant paid agreed upon freight charge to third party in
belief that latter was authorized to receive payment on plain
tiff's behalf — Third party failed to pay money over to
plaintiff and went bankrupt — Action allowed — Debtor who
pays third party does so at own peril — Defendant failed to
fulfil onus of proof that third party actually authorized to
receive payment, that plaintiff represented third party as
having such authority or induced defendant into belief that
such was case, or that there existed trade custom to effect that,
in particular circumstances, both creditor and debtor would
normally expect payment to be made to third party.
CASE JUDICIALLY CONSIDERED
REFERRED TO:
Owners of Vessel "Chastine Maersk", A/S DIS Svend-
borg & DIS AF 1912 A/S v. Trans-Mar Trading Co.
Ltd., Federal Court, T-1357-74, judgment dated Novem-
ber 6, 1974.
COUNSEL:
Line Gosselin-Després for plaintiff.
Jacob H. Woloshen for defendant.
SOLICITORS:
Langlois, Drouin & Associés, Quebec City,
for plaintiff.
Woloshen & Axelrod, Montreal, for defend
ant.
The following are the reasons for judgment
rendered in English by
ADDY J.: The plaintiff, on one of its ships,
transported goods shipped by the defendant from
Montreal to Durban, South Africa. The agreed-
upon freight, amounting to $2,840, was paid by
the defendant to Ketra Overseas Transport
Canada Ltd. (hereinafter referred to as "Ketra")
apparently under the belief that the latter was an
agent of the plaintiff and authorized to receive
payment on its behalf.
Ketra subsequently went into bankruptcy with
out paying the plaintiff and the latter now sues the
defendant for the full amount of the freight.
The plaintiff called no witnesses. The defendant
called its president as its only witness. The follow
ing exhibits were filed (they are listed chronologi
cally):
1. Invoice from Ketra to defendant dated
December 31, 1979, in the amount of $2,865
(showing $2,840 for freight and $25 for hand
ling and documentation);
2. Invoice from plaintiff to Ketra dated January
16, 1980, for $2,840 being the agreed amount of
the freight;
3. Bill of lading, dated January 19, 1980;
4. Defendant's cancelled cheque dated January
24, 1980, payable to Ketra;
5. Letter from plaintiff's solicitors of April 1,
1980, addressed to defendant requesting pay
ment of the freight.
The bill of lading describes the plaintiff as the
carrier and the defendant as the shipper. Ketra is
mentioned in the space reserved for instructions
and is described therein as "agent".
The president of the defendant testified that he,
at all times, believed that Ketra was for all pur
poses the agent of the plaintiff and that Ketra was
authorized to receive payment on the latter's
behalf. He also stated that the extra $25 (i.e., the
difference between $2,865 and $2,840) was a small
handling fee and the fee for the paper work that
Ketra was to carry out on the defendant's behalf
as, at that time, the defendant had no experience
in the shipment of goods by sea. He also stated
that Ketra told him it would be receiving its fee
from the carrier. He, however, did not testify that
Ketra's representative told him that Ketra was
authorized to receive payment on behalf of the
plaintiff. He apparently assumed this.
The bill of lading contained the notation,
"freight prepaid", but, of course, all parties were
fully aware on January 19, 1980, that the freight
had not actually been paid as the defendant's
cheque was not issued until January 24, 1980. In
any event, "freight prepaid" as distinguished from
"freight paid in advance", does not mean that it
has actually been paid at the time of the issuing of
the bill of lading but signifies merely that the
carrier must look for payment to the shipper and
not to the consignee of the goods. (See the
unreported case of Owners of Vessel "Chastine
Maersk", A/S DIS Svendborg & DIS AF 1912
A/S v. Trans-Mar Trading Co. Ltd.')
The bill of lading indicates clearly that the
contract was between the plaintiff as carrier and
the defendant as shipper. Normally, the payment
must be made to the carrier as the other party to
the contract and the person who has actually
supplied the services. There is nothing in the bill of
lading to indicate that Ketra was authorized to
receive payment on behalf of the plaintiff nor was
there any other evidence that the plaintiff had so
authorized Ketra to act. The invoice from the
plaintiff to Ketra is for the full amount of $2,840
and not for an amount less a deduction for com
mission. The invoice was sent before the bill of
lading was made. One might just as easily con
clude from those facts that Ketra was being billed
as the defendant's agent who had negotiated to
deal on its behalf rather than as the agent of the
plaintiff, especially in view of the fact that Ketra
had been requested by the defendant to make
arrangements for shipping its goods and that it
was Ketra who found the carrier.
Where a debtor, instead of paying his creditor,
chooses to pay a third party, he does so at his peril.
Where the money is not turned over to the credi
tor, the onus is then on the debtor to establish
either:
(1) that the creditor actually authorized the
third party to receive the money on his behalf,
or
(2) that the creditor held the third party out as
being so authorized, or
' T-1357-74, November 6, 1974 (F.C.T.D.).
(3) that the creditor by his conduct or otherwise
induced the debtor to come to that conclusion,
or
(4) that a custom of the trade exists to the effect
that in that particular trade and in those par
ticular circumstances, both the creditor and the
debtor normally would expect the payment to be
made to the third party.
No such facts have been established in the case at
bar.
Even where it is established that a person who is
an agent of the principal, has acted on his behalf
and is entitled to remuneration for his services, this
does not mean that the agent is necessarily author
ized to receive the payments which are due to the
principal from the other party to the contract.
I must, therefore, conclude that the payment
made by the defendant to Ketra did not constitute
payment to the plaintiff.
In view of the above, the plaintiff will be entitled
to judgment in the amount of $2,840 plus costs.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.