S.C. 1901. DUFF V. KYLE. and accepted, then the milkman could not, when he brought the daily supply, refuse to deliver it except upon payment of an increased price. To hold that he could do so without previous notice would be to hold that there is no contract, although the order and its acceptance contain all the essentials of a complete contract. Of course, no one ever heard of such an action, for the simple reason that the matter is too trifling to have formed the subject of litigation, and because the damages must be infinitesimal. The principle, however, remains. In its application to similar contracts for large quantities of perishable goods the result may be quite different. If a fishmonger in Wellington should contract with a trawler in Napier to supply to him a ton of fresh fish, delivered daily into the purchaser's carts at the railway-station in Wellington, could it be held that the purchaser could put an end to the contract and leave the fish to decay at the railway-station simply by refraining from sending his carts to take delivery? Could he even do so by telegraphing to the seller, after the fish had been put upon the train and had left Napier, but before their arrival in Wellington, that he would not take delivery? This seems to me to be impossible. If there is a contract for the daily supply of goods, some notice must be necessary before it can be terminated by either party. Certainly it must be required where the contract is for the daily supply of perishable goods to a tradesman who is a retailer of such goods. If in such a case the purchaser puts an end to the contract without notice the goods are thrown upon the hands of the seller, and may probably perish and become valueless. If the seller fails to deliver the goods without notice, he brings the purchaser's business to a standstill. The notice required must be a reasonable notice, having regard to the attendant circumstances. What is a reasonable notice is a question of fact in each case, just as what is a reasonable time is a question of fact under "The Sale of Goods Act, 1895." It is said, however, that, even if there was a contract in this case, reasonable notice was given to terminate it. It seems that a union of farmers had determined to charge their customers 8d. instead of 6d. per gallon from the 1st of May. The respondent says he had an interview with the appellant on the 21st of May, and that they then discussed what the union was likely to do as to the price in connection with the appellant. He goes on to say, "He asked me if I intended to "charge union price. I said, 'Yes.' He said, 'That is 666 666 "fixed at 8d.' I said, 'Yes it is not my fixing, but fixed by the majority.' He said, 'Do you intend to charge me that?' I said, 'I will charge you the same as union "charge.' He said, "All right.' It appears to me that this falls short of a notice to determine a contract. Such a notice must, in my opinion, be clear and specific in its terms, and must indicate when the contract is to terminate; otherwise the party to whom the notice is given cannot know when he is himself free to make other arrangements. This conversation evidently was not intended as a notice to terminate a contract. The respondent based his defence upon the contention that there was no contract. When he refused to deliver the milk he did so because the appellant declined to pay the increased price for milk supplied before this conversation took place. Taking the respondent's version of what passed as being strictly accurate, it amounts at most to an intimation that the respondent intended to charge the appellant more for the milk delivered than he was entitled to charge under the contract. Such an intimation is not a notice to determine a contract: Elder v. Gray(1). That a notice to terminate a contract must be clear and specific in its terms is shown also by Elkington v. The Phoenix Assurance Company(2). Whether upon the ground that the contract was a yearly contract, or upon the ground that it was a contract which could only be determined by a reasonable notice, I think, therefore, that the appeal should be allowed, and that the case should be remitted to the Magistrate to assess the appellant's damages. If a reasonable notice was required to terminate the contract, then I think the evidence establishes that the appellant was entitled to at least a month's notice. Appeal dismissed. Solicitors for the appellant: Skerrett & Wylie (Wellington). Solicitors for the respondent: Findlay, Dalziell, & Ca. (Wellington). (1) 10 N.Z. L.R. 107. (2) 14 N.Z. L.R. 237. S.C. 1901. DUFF V. KYLE VOL. XX-46 C.A. 1901. October 31; [IN THE COURT OF APPEAL.] D. HENDERSON & CO. (LIMITED), (IN LIQUIDATION). November 1. Company-Powers-Sale of Whole Undertaking—Director—Fiduciary Relation-Termination of-Purchase at Sale by Mortgagee of Company's Assets-Setting aside-Acquiescence-Knowledge of Facts-Materiality. 1902. = February 5. The plaintiff company was in May, 1892, in an insolvent condition. Its principal assets were mortgaged to their full value, and it was unable to pay its debts. Meetings of its creditors were held, at which it was resolved to form a new company to take over the property and business of the old one creditors of the plaintiff company to be allowed to take up paid-up shares in the new one to the amount of their claims against the plaintiff company on certain conditions. An offer was made to the directors of the plaintiff company, and the matter was submitted by them to meetings of the shareholders of the plaintiff company. At these meetings two resolutions were passed the first to the effect that the directors be "authorised to sell to the new company, on trust for the creditors of " the plaintiff company, all the assets of the plaintiff company (except book debts, cut timber, and certain specified plant) for the sum of £5 sterling : and the second that the offer "on behalf of the creditors" to pay £5 for all the assets (with the above exceptions) be accepted on condition that the plaintiff company, its directors and shareholders, were collectively and personally released from all claims of creditors of the plaintiff company. It did not appear that the first of these resolutions was communicated to those acting in the matter of the new company. The defendant Daniell, who afterwards joined the promoters of the new company, was a director of the plaintiff company. He was present when the second resolution was passed, but not when the first was passed. The offer which had been made by the promoters of the new company was an offer to purchase on the terms named in the second resolution. The £5 was to be the price for the whole assets (with the above exceptions), subject to the existing mortgage thereon. The whole property and business were handed over to those promoting the new company, but no company was formed, and no conveyance or assignment executed. The business was, however, carried on by them for a period of one year in the name of the proposed new company, the defendant Daniell (who was a shareholder and director of the plaintiff company) and the defendants Chamberlain (who were creditors of the plaintiff company) being active in the management of the business so carried on. The defendant Daniell had joined shortly after the sale. At the end of the year, in May, 1893, the business not having proved successful, the mortgagee sold the whole of the assets by auction, in exercise of his power of sale, and the defendants (Daniell and Chamberlain brothers) became the purchasers. They thereafter carried on the business in partnership on their own account. The plaintiff Burnett was a credtitor of the plaintiff company in May, 1892, who had declined to join in the proposed new company. He was present at the sale in May, 1893, when the defendants purchased. In 1897 the plaintiff company was, on his petition, ordered to be wound up by the District Court of the Wairarapa. The liquidation proceedings were protracted from various causes; but finally, in August, 1900, a resolution was carried at a meeting of creditors of the plaintiff company that the Official Liquidator take proceedings in the Supreme Court to recover the property of the company from the defendants. A meeting of shareholders called on the same day resolved to relinquish all claims on the assets. Some further delay took place in finding funds; but in May, 1901, an order was made by the District Court Judge sanctioning action being taken, and in June, 1901, this action was brought against Daniell and the Chamberlains by the plaintiff company (in liquidation), the Official Liquidator, and Burnett suing on behalf of himself and the other creditors of the plaintiff company. Held by the Court of Appeal, 1. That the sale in May, 1892, to the promoters of the proposed new company was an absolute one, and not in trust for the plaintiff company or its creditors not promoters of the proposed new company. 2. That it was very doubtful whether the sale was one which could be made under the general powers of the company, without liquidation; but 3. That, if it were ultra vires, it did not follow that the purchasers could be treated as trustees, and called on to account not only for the property, but also for profit made by its use. 4. That no claim for the property or for accounts could be maintained against the defendants solely. 5. Semble, That, assuming the sale of May, 1892, to have been ultra vires, the subsequent purchase by the defendants from the mortgagee could not be attacked by the plaintiffs, that purchase not having been made by the defendants while acting as representatives or agents of the plaintiff company, the plaintiff company being for all practical purposes dead, and all parties believing that a valid disposal of its property had been made. Quare, Whether the defendant Daniell could be deemed to have constructive notice that the sale of May, 1892, was ultra vires. 6. That, assuming that the plaintiff Burnett's conduct at the time of the defendants' purchase, in May, 1893, did not bar any right on his part to object to it promptly, his subsequent conduct in standing by for eight years, during which the property, from being valueless at the time of their purchase, had been made profitable by the exertions of the defendants, amounted to acquiescence making it inequitable to ask for the relief sought, and barring any right thereto. The plaintiffs set up as an answer to the defence of acquiescence that the defendants had, before the purchase by them, been in negotiation for certain timber rights, which they afterwards acquired, and the possession of which was essential for the profitable carrying-on of the business, and that the fact of these negotiations was unknown to the plaintiffs. Held, that this was no answer to the defence, it being common knowledge that further timber rights would have to be acquired to make the property profitable, it not appearing that the negotiations had put the defendants in a better position than any other purchaser would have been in, and there being nothing to suggest that knowledge of the negotiations would in any way have affected the conduct of the plaintiffs. THIS was a motion for a decree removed by consent into the Court of Appeal. The facts of the case and the nature of the relief sought will be found stated in the headnote, and more fully in the judgment of the Court of Appeal. C.A. 1901-2. D. HENDER- V. DANIELL.. C.A. 1901-2. SON & Co. V. DANIELL. H. D. Bell, for the plaintiffs: The form of the action is correct, the Liquidator representD. HENDER- ing both the creditors and the company: Buckley on Companies(1); Turquand v. Marshall(2); In re National Funds Assurance Company(3). Persons, whether principals or agents, who are in possession of the property can be directly sued, and the Chamberlains are therefore equally liable with Daniell: De Bussche v. Alt(4); Palmer's Company Law(5); Barnes v. Addy (6). Both Daniell and the Chamberlains are express trustees in virtue of the capacity in which they received the property, Daniell both as a director and as an agent, and the Chamberlains as agents in possession of the property: Soar v. Ashwell(7); In re Lands Allotment Company(8). In that capacity they could not buy, however fair the price, except subject to certain conditions imposed by equity, which are wholly absent. Ex parte Lacey(9) is referred to as a leading case in recent decisions, and was only another illustration of what was held in Keech v. Sandford (10). The question of bona fides has no bearing: In re National Funds Assurance Company(11). Full disclosure must be made: Dunne v. English (12). Here neither the directors, nor the shareholders, nor the creditors were ever called together and informed of what the defendants proposed to do. There must be an absolute discharge from the fiduciary relationship before the transaction. In Lagunas Vitrate Company v. Lagunas Syndicate(13) the whole question of fiduciary relationship, and also laches and acquiescence, was dealt with at length and brought down to date by Rigby, L.J., whose general statement of the law was not dissented from by the other members of the Court. Having purchased from the mortgagee cannot better the defendants' position, there being a fiduciary relationship between them and the mortgagor: Shaw v. Bunny(14): Kennedy v. De Trafford (15). There is no ground for the defence of laches or acquiescence. If Burnett, when the syndicate obtained possession, understood that they were going to carry on for the benefit of the company and the creditors, |