F. & M. Khoury V. Najib Teymani Trading Under The Name & Ors (1940)
LawGlobal Hub Judgment Report – West African Court of Appeal
Appeal in the case of two consolidated interpleader proceedings–Question of validity of previous Letter of Hypothecation granted by Defendant to 1st Respondents—Subsequent Bill of Sale granted to 2nd Respondents.
Held : The Letter of Hypothecation was a valid document and is construed as meaning that the goods, or proceeds of such goods, if and when realised, shall be distributed Inv rata amongst all the creditors of therdefendant, that is, in a similar way to the distribution of a bankrupt’s goods under the English Bankruptcy Laws.
- The document in question is not a Bill of Sale under the Bills of Sale Act, 1854.
- The said document is unaffected by the Bill of Sale subsequently given to the 2nd respondents, who must rank pro rata and parr passe with all the other creditors (not necessarily only judgment creditors).
- The appellant may not raise in his supplementary grounds of appeal a completely new point of fact which was not raised in the Court below and which, if it had been raised there, could and would have been investigated there.
The T4.510141114 (15 A.C. 223).
Karunaratne v. Ferdisandus (1902 A.C. 405)
North Staffordshire Railway v. Edge (1920 A.C. 254) followed on the last point. The facts are fully set out in the judgment.
R. E. Phipps (with him A. G. Heward-Mills) for Appellants. J. H. Coussey for 1st Respondents.
F. Dove (with him C. C. Lokko) for 2nd Respondents.
The following joint judgment was delivered :—
K. INGDON, C.J., NIGERIA, PETRIDES, C.J., GOLD COAST
AND GRAHAM PAUL, C.J., SIERRA LEONE.
This is an appeal against a judgment of the Divisional Court = two consolidated interpleader proceedings. These interpleader
proceedings were taken in respect of the execution done by attachment under a writ of fi. fa. of moveable properties by F. & M. Khoury, the appellant , upon the judgment obtained by them in their suit against one Najib Teymani.
The first interpleader proceedings were taken by Messrs. James CoHedge and L. W. Young, trading as Adolphus Beer & Company, who are the first claimants-respondents in this appeal. The second interpleader proceedings were taken by Messrs. A. G. Leventis & Company, the second claimants-respondents in this appeal.
The facts of the case are simple enough and not materially in dispute. The questions of law involved are very much simpler than the extraordinary length of the arguments submitted to this Court would suggest. These questions of law relate to the competition between the attachment • by writ of execution of Messrs. Khoury on the one hand and documents granted by the judgment-debtor to Beer & Company and to Leventis & Company, respectively, on the other hand. Beer & Company and Leventis & Company accept the judgment of the Court below as it stands neither of them has appealed against it ; and there is no controversy in this appeal between them.
The goods in question were by the judgment of the Court below handed over to the Chief Registrar of the Court as Receiver, and the goods or the proceeds of the sale of them by the Receiver are the subject of these proceedings.
At the time when the goods were attached under Messrs, Khoury’s writ of execution they were, as to part, in the premises of Teymani and, as to part, in the premises of Messrs. Khoury whc directed the Sheriff to attach all the goods of Teymani in his premises and in their own, which was done.
The attachment by Messrs. Khoury was begun on 14th September, 1939, and against that attachment Beer & Company set up Exhibit ” A ” a “Letter of Hypothecation ” granted in their favour under seal by Teymani on 23rd March, 1939. The effect of that document is the most important issue in the case and may be first dealt with. It is in the following terms :—
” THE STAR STORES,4285 fn
” General Merchants.
” P.O. Box 585,
” 27th March,
” JAMES COLLEGE & L. W. YOUNG
” Trading in partnership as
” Adolphus Peer and Company.
” DEAR SIRS,
” In consideration of your continuing my account with you and your granting or continuing to grant me further facilities, I here-I– hypothecate to you as security, without prejudice to other creditors,
all amount due now from me to you or may from time to time at any tm,,,t,
hereafter owe to you, and for any liability to you ; all imported goods and Khoury merchandise in my stores at Accra, Kumasi, Suhum, Koforidua, Saltpondv.
and Ho in the Gold Coast and the value of which I estimate to be not less Teymani,
than £20,000.etc. & ors.
” Until payment and satisfaction of all liabilities as aforesaid, IIChoury
undertake to hold the said goods and merchandise and the proceeds from Ternenia
same when sold in trust for you and on demand to deliver to you or your etc. & ors. order the said goods and merchandise as specified above and on demand to
pay to you the proceeds thereof as and when the goods and merchandise (C°ns°1i-
are disposed of in the ordinary course of business and if required to dated)
warehouse the said goods and merchandise in your name and under your
control or as you may direct and to pay the usual proper storage charges. Petrides and
” This is to be a continuing security notwithstanding any settlement Graham
of account or otherwise and it is to be in addition to and without prejudice Paul, C.JJ. to any security which you may now or hereafter hold from me or on my
account over the said goods and Merchandise for the above purpose. I give you the power for sale at such time or times and in such manner as you may think proper without prejudice to other creditors to whom I owe.
” I undertake to keep the goods and merchandise fully insured against fire and other risks and to hold the policy in trust on your account and •in case of loss to collect and pay the insurance money to you.
” Yours faithfully,
” (Sgd.) N. TEYMANI (LS).”
” Witness :
(Sgd.) M. CANTARZIS,
” P.O. Box 51, Accra.”
The Court below has held that Exhibit ” A ” was a valid document and has construed it ” as meaning that the goods, or proceeds of such goods, if and when realised, shall be distributed pro rata amongst all the creditors of the said Najib Teymani, that is, in a similar way to the distribution of a bankrupt’s goods under the English Bankruptcy Lawsi’ The appellants attack that construction, and also the validity of Exhibit ” A.”
Although Exhibit ” A ” might have been more definitely and clearly expressed, there can be no doubt that the construction placed upon it by the Court below is the only possible construction. Moreover the effect of that construction in. this –case has so clearly avoided undue preference among creditors that the Court would be justified in being astute to secure such a construction. It is quite true that Beer & Company’s local attorney and their solicitor at first tried to put a different construction on Exhibit ” A ” (e.g. in Exhibits ” D ” and ” J “) but that fact could not alter the meaning or effect of the doCument granted by Teymani.
The validity of Exhibit ” A ” is also attacked by the appellants in their grounds of appeal. The main basis of attack is that Exhibit ” A ” is a Bill of Sale within the nieaning of the Bills of Sale Act, 1854 ; that under section 70 of the Courts
Ordinance that Act applies to the Gold Coast Colony’; and that
Te.under that Act Exhibit ” A ” is invalid for lackregistration.
etc. & ors. There is a simple and complete answer to that *point. Accepting
Khourythe construction placed- upon it by the Court below it is obvious
Teymani,that Exhibit A ” is within the exceptions specified in- the 1854
etc- & ors- Act, being an ” Assignment for the benefit of the creditors of the
(Consoli-person making or giving the same” (section 7. of the. Act) ; and
. that it is therefore not a Bill of Sale under the Bills of Sale Act, Kingd°n,1854. The applical5ility of that Act to the Gold Coast, in this
Grahamconnection, does not therefore arise.
Paul, C.jj.That disposes of the main contention of the appellants as
regards Exhibit ” A ” ; and it. may be noted parenthetically that when Exhibit ” A ” was tendered in evidence in the Court below no objection was taken by appellants’ Counsel to it being received in evidence on the ground that it was invalid for non-registration or on any other ground.
As from the date of Exhibit ” A ” it follows that the goc ds covered by Exhibit ” A ” were properly assigned to Beer & Company as Trustees in trust for all the creditors of Teymani. including Beer & Co., in security for payment of their debts. From 23rd March, 1939, the goc ds were held by Teymani in trust for Beer & Company who were themselves trustees for all creditors under Exhibit ” A,” and any dealing by Teymani with these goods, except in the ordinary course of business, was by virtue o Exhibit ” A ” a breach of trust. It cannot be suggested that the granting to another creditc r of a Bill of Sale affecting these goods, or the pledging of any of these goods to another creditor, came within the description of ” the ordinary course of business.” •
On 15th June, 1939, however Teymani did grant to Leventis & Company a Bill of Sale (Exhibit ” L ‘) and it is this Bill of Sale on which Leventis & Company found. In regard to that Bill of Sale the learned Judge found that there was now owing to Leventis & Company the sum of £478 lls. ld. The learned Judge further found, and quite rightly, in regard to Exhibit ” L that it was later in date than Exhibit ” A ” so that the latter has priority ” over it.” Taking that finding, which is indisputable along with the !earned Judge’s construction of Exhibit ” A already quoted, it is clear that Exhibit ” L ” cannot affect Exhibit ” A ” so as to prejudice other creditors by giving Leventis & Company a preference over other creditors. It is clear that Leventis & Company must rank pro rata and pari passu with the other creditors of Teymani, and the learned Judge (on his ovo.: findings as to Exhibit A ” and Exhibit ” L “) was wrong to give Leventis & Company a preference in respect of Exhibit ” L ” ova which he has rightly held that Exhibit ” A ” has priority.
It is also necessary to refer to the pledging of goods coverth’.. by Exhibits ” 01 ” and ” 02 ” and ” P1 ” and ” P2 ” by TeymarL to Messrs. Khoury. That was a pledging by Teymani of good.s