Scottish Court of Session Decisions

Robert Milne, with consent and concurrence of the Great North of Scotland Railway Company, brought this action against Alexander Souter, for “payment to the pursuer of the sum of £200 sterling, being the amount of deposit and calls on an

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allotment of twenty shares, of £10 each, of the said Banff, Macduff, and Turriff Extension Railway Company, for which the defender is liable to relieve the pursuer in terms of the letter of guarantee after mentioned, and interest thereon, at the rate of £4 per cent. per annum on the said deposit and calls on the said shares, from and after the 4th day of June 1860 to the 4th day of June 1862, and from that date till the date of citation hereon at the rate of £5 per cent., and from and after the date of citation at the rate of £6 per cent. till payment.”

The pursuer alleged that, in order to enable the “Banff, Macduff, and Turriff Extension Railway Company,”—now merged in the Great North of Scotland Railway Company—to raise funds for the purpose of extending the line to the present terminus, the defender and others addressed to the pursuer a letter of guarantee in the following terms:—“Sir,—Provided you obtain from the Directors of the Banff, Macduff, and Turriff Extension Railway an allotment of four hundred shares, of ten pounds each, in the said undertaking, and provided you pay the calls thereon, already made or to be made, we, the parties subscribing … do hereby severally become bound to guarantee you against any loss on such shares by your not being able to dispose of them at or above par within two years after the line shall have been opened for traffic, it being hereby agreed that we shall only be bound to guarantee you as aforesaid rateably to the extent of the sums written opposite to our subscriptions hereto, and provided that the whole amounts of which we are to relieve you shall be expended on that portion of the line extending from the Macduff cross-roads to the terminus; it being provided that no claim shall be made upon us for payment of any portion of the advances which may be made by you in virtue of said allotment until the line shall have been opened for traffic for two years, and farther, that we or any of us shall have it in our power at any time to relieve ourselves of this guarantee by offering to pay and paying you the amount you may have advanced on the said shares at the time, or the proportion thereof effeiring to the said respective subscriptions, together with interest at four per cent. thereon from the date of opening the line for traffic as aforesaid, in which event you shall be bound to assign or transfer to us or such of us as shall have made the said repayment, the shares or share in respect whereof such repayments have been so made to you, and providing that you are not to be at liberty to dispose of said allotted shares at a discount without first offering them to us severally in proportion to our said subsciptions, and. failing our acceptance, to the trustees of the Right Honourable James Earl of Fife, and farther, providing that you may hold the said shares, or dispose of the same for your own behoof on your relieving us of this guarantee, and also that you shall have power to assign the said shares in whole or in part along with this guarantee, or a relative proportion thereof, such assignee or assignees being bound in every respect by the conditions hereof. In witness whereof, &c.”

The pursuer alleged that, in fulfillment of the condition in the letter of guarantee, he applied for and obtained an allotment of 400 shares, and paid calls thereon, and farther alleged, “the pursuer has not been able to dispose of the said shares guaranteed as aforesaid at or above par, either within two years after the line was open for traffic or since, the same not having been saleable at or above par in the share-market. The pursuer has sustained loss on the said shares to the extent of the calls paid thereon by him, with interest; and the defender is liable, under the letter of guarantee, in relief of so much of said loss as is concluded for.”

The defender pleaded, inter alia, (1) The pursuer's averments are not relevant or sufficient in law to support the conclusions of the action; and, separatim. the pursuer's averments being insufficient in specification, the action ought to be dismissed. (2) The action, as laid, cannot be maintained, having regard to the terms of the letter of guarantee libelled. In particular, the action cannot be maintained against the defender as an individual obligant therein for the whole loss upon twenty of the 400 shares alleged to have been allotted to the pursuer.