Scottish Court of Session Decisions

The pursuers, who were waggon builders in England, sued the defender, a coal agent in Edinburgh, for £519, 10s. The circumstances were these:—In the month of October 1863, the defender ordered from the pursuers five waggons, “Ashbury's pattern, equal in every respect,” at the price of £53 each on delivery at Wishaw; and in the month of December 1863, he ordered from the pursuers other five waggons of the same description and upon the same terms. By the terms on which the said orders were given, sixpence per day per waggon was to be charged if the said first five waggons were not delivered by the 1st of November following, and if the said second five waggons were not delivered by the 1st of January following. The said ten waggons were delivered on the following dates— videlicet, two on 1st, and three on 14th December 1863, and three on 14th and two on 31st March 1864. The waggons were ordered subject to a provision contained in a letter from Mr John Pickering, acting for the pursuers, to the defender, dated 12th October 1863, that “in case of any dispute as to material or workmanship, the same shall be submitted to Mr Thompson of Wishaw, who shall decide the case.” While the waggons were in the course of delivery the defender wrote to the pursuers, or to Mr Pickering on their behalf, finding fault with the quality of the iron and the execution of the waggons in other respects, but he did not propose to return them or to have them inspected before being used. The defender commenced to use the said waggons upon their being respectively delivered to him, and has continued to do so. On 5th April 1864, after receiving the last of the waggons and the pursuers' account, amounting to £530, the defender forwarded to the pursuers a cheque for £500, stating—“According to agreement, I shall get the referee-man to examine the waggons, and shall then write you in detail.” In the letter enclosing the said cheque the defender again found fault with the iron and the execution of the waggons in other respects. On 8th April 1864, the defender stopped the cheque, and wrote to the pursuers informing them that he had done so, and that he had got the referee to examine the waggons, who said they were not at all according to bargain, nor near equal value to Ashbury's waggons. Thereafter correspondence and communings took place between the parties and their agents, with a view to a settlement, during the course of which the defender obtained, and through his agent communicated to the pursuers, a letter from the referee containing his report upon the waggons, which bore that £3, 15s. should be deducted from the price of each; but no settlement having been come to by the parties, this action was brought for payment of the contract price of the wagons, under deduction of £10, 10s., as the agreed-on abatement of sixpence per day per waggon for delay in delivery.

Mr Pickering's letter to the defender, before referred to, was in these terms:—

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Wilton-le-Wear, Darlington, October 12, 1863.—Mr M. Burns. Dear Sir,—I shall be glad to make you five or more waggons (Ashbury's pattern, equal in every respect), and guaranteeing the springs for five years, and the wheels for two years, and the general work for twelve months. In case of any dispute as to material or workmanship, the same shall be submitted to Mr Thompson of Wishaw, who shall decide the case. The waggons to be fifty-three pounds each on delivery at Wishaw.—Yours very truly,

(Signed)

J. Pickering.

Please address your acceptance to me at Wilton-le-Wear, Darlington.

P.S.—That sixpence per day per waggon be charged if the waggons are not delivered by the 1 st of November. (Initialed) “J. P.”

The defender pleaded in defence—1. The present action is excluded by the stipulation as to the submission in the contract between the parties, and ought to be dismissed. 2. The waggons furnished to the defender not having been made in terms of the contract, the defender is not liable in the price therein stipulated. 3. The defender having objected to the waggons from time to time as they were delivered, was not bound to pay the rice until the whole had been delivered, and it had been ascertained whether they were in terms of the contract, and what price was to be paid for the whole. 4. The defender having, after due intimation to the pursuers, and with their knowledge, asked Mr Thompson, the referee, to examine the waggons, and no objection being stated to his doing so, the pursuers are now barred from objecting to the defender having so asked the referee, or to the referee having made the examination. 5. The pursuers having homologated the course taken by the defender in getting the referee to examine the waggons, by stating detailed objections to the referee's views, they are barred from insisting in the present action, and are bound to go before the referee and obtain his final award. 6. Generally, the statements of the pursuer, in so far as they do not coincide with those for the defender, being unfounded in fact, and their pleas untenable in law, the defender is entitled to absolvitor, with expenses.

The Lord Ordinary (Barcaple) found that the foresaid reference to Mr Thompson was only a reference of any dispute as to materials or workmanship, and did not comprehend any question as to any construction or effect of the contract between the parties; that the defender having taken delivery of the waggons, and commenced and continued to use the same, he was not entitled to a deduction from the contract-price thereof, in respect of any award by the referee, already obtained, or to be hereafter obtained, as to defects of material or workmanship; that the abatement to which the defender was entitled for delay in delivering the said waggons, amounted to £14, 15s. 6d., and that in the circumstances the pursuers were only entitled to interest from the data when the said cheque was forwarded to them; and subject to this finding, he repelled the defences, adding the following

Note.—The leading defence, and that which was most pressed at the debate, is, that the action is excluded by the reference to Mr Thompson, as a general reference of all questions arising under the contract. The argument of the defender was rested upon the words ‘who shall decide the case,’ as importing a general reference. The Lord Ordinary has no hesitation in holding that these words must be read as limited by the immediately preceding context, which only refers to Mr Thompson any dispute as to material or workmanship. The principle given effect to Calder v. Mackay, 22 D. 741, seems to apply directly to this case.

There was a reference to Mr Thompson of an important kind, of which the defender was entitled to avail himself. But it appears to the Lord Ordinary that he mistook his remedy under it. The question is, whether, after going on for a considerable time to use the waggons, without any special arrangement with the pursuers to that effect, he was entitled to call in Mr Thompson to pronounce upon defects of material or workmanship, with the view of his obtaining a deduction from the price? That is a course not sanctioned by the general law applicable to such contracts; and the Lord Ordinary does not think that it was within the terms of the original agreement between the parties in this case; or that anything has since occurred to entitle the defender to betake himself to it. The reference to Mr Thompson does not appear in any way to extend the legal rights of the defender, as buyer, in the event of the waggons proving not to be conform to contract. It merely affords a summary mode of determining the matter of fact. If the defender was dissatisfied with the waggons when delivered, he ought immediately to have intimated that to the pursuers, and obtained the judgment of Mr Thompson with the view of their being returned as disconform to order.

The defender founds upon the correspondence and communings of the pursuers after the dispute arose as constituting acquiescence in the view which he maintains. But these were proceedings for effecting a settlement of the nature of a compromise which cannot be founded upon as affecting the legal rights of the parties. In the view which the Lord Ordinary takes of the case, the defender had already lost his remedy when that correspondence began.

The Lord Ordinary thinks that the pursuers never having asked payment until they rendered their account for the whole waggons, they are not entitled to interest prior to 5th April 1864, when the defender timeously forwarded the cheque, which he subsequently stopped.”

The defender reclaimed.

Young and Mair were heard for him, and Clark and Lancaster for the pursuers.

The Court adhered.