Judgment:
Lord Chancellor—In this case the pursuer commenced proceedings for the purpose of reducing a certain agreement, dated the month of January 1858, whereby, under certain circumstances which occurred, he found himself, under the clauses of that agreement, displaced from a partnership which had been founded in the year 1855. The agreement purported to be one by which he resigned his place in that partnership, but by which his father, Mr Hugh Tennent, reserved to himself the power of replacing him if he saw fit. The circumstances of the case were of an extremely painful character. The father (Mr H. Tennent) had succeeded to a well-established brewery, the income from which appeared to have been very large in 1855, when the arrangement was made, and it appeared since to have largely increased. In 1855 Mr H. Tennent was minded to make an arrangement of his affairs with reference to the whole of his property, and to make a distribution of it amongst his children. Accordingly, in 1855, he executed a deed by which he, having six children alive, disposed of his property in this manner:—The bulk of it, including the brewery, was given to his two sons, Mr G. R. Tennent, the appellant, and the deceased Mr Charles Tennent. Both the sons had been engaged for some time in the brewery, Gilbert having been invited in 1852 to give up the business of a writer, which he had been carrying on for ten years, and
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enter the brewery. The scheme of the father appears to have been this:—He selected out of his family such members as he thought fit for carrying on the concern, and handed it over to them; a valuation was put upon the whole property, and that valuation became charged upon the property which he was to hand over to his sons. They were to be entitled to two-sixths of the valuation as their own, and the remaining four-sixths were to be paid over to him (Mr H. Tennent) in order that he might be able to do justice to the other members of his family. The valuation was accordingly made, and amounted to £214,000, and that would make a sum of £35,000 which Mr H. Tennent would regard due to each of his children, with the additional advantage to the two sons of being etablished in the brewery business. Until this £214,000 was paid off out of the property of the business, they were only to take 20 per cent. of the profits to themselves for their maintenance and the current expenses of the business. Matters went on smoothly till 1857, and the brewery was extremely prosperous. In the deed of 1855 the father had not only taken care to have some control over the property in which he had so large a stake, but he introduced provisions by which his sons were bound not to embark in another purpose or become security or cautioner for any third person. In the year 1857 Gilbert had become embarrassed in regard to a sum of money which he owed, amounting to upwards of £8000. This was at a time of great commercial panic and disaster and general distrust, and Gilbert saw no mode of raising this sum. In these circumstances, he communicated his position to his brother, Mr Charles Tennent, and on his advice communicated the matter to his father. In truth it appears quite obvious that he had no other means of extricating himself from the difficulty, because, although having an interest in this large concern, he could only at that time receive a very small share of the profits, and therefore without assistance from his father he had no means of avoiding bankruptcy and the destruction of his interest in the concern, which would have involved considerable inconvenience to both his father and his brother copartners. That being the case, a communication took place with his father on the 23d December. On that day the father called in his solicitor Mr Lyon, and the heads of an agreement were suggested, by which Gilbert was to resign his co-equal powers as a larger partner, and his rights to be greatly reduced, but nothing was said of his retiring from the partnership. The next meeting did not take place till the 31st of December, and in the interim a change seemed to come over the mind of his father, though it was right to say that in that time neither Charles nor Mr Lyon appeared to have used any influence they might have possessed over the father to the prejudice of Gilbert. At the second interview the father told Mr Lyon that his distrust of Gilbert had increased, and that his debts were somewhat larger than he had actually stated, and that he must have some more strict measure with reference to Gilbert. The result was that the deed which was signed in January 1858 provided that Gilbert was to retire from the partnership, that his father was to pay his debt; that if he was free from debts the father might replace him in the partnership if he thought fit, that if he did not replace him then Charles was to pay him the £35,000, and that if the father wished to replace him, and if Charles objected, then the latter was to pay him £40,000. All these facts were uncontradicted. Gilbert was undoubtedly under the pressure of debt, which he had no means of discharging except by the assistance of his father. There was no pressure exercised in the shape of persuasion, saving that the father stated the terms upon which alone he was prepared to assist him.
It was said that Charles had assisted to bring Gilbert into the difficulty by advising him to have recourse to his father, but that the assistance of his father was necessary to extricate him from the difficulties of his position, and thus he was under a pressure from which he could not escape. It was contended that the terms which were offered to him were of a harsh character, and were forced upon him; that he would not have possibly assented to them if he had had any person who could have given him advice; that a very very short time was given him to consider its purpose and effect; and that he had only a quarter of an hour to read it. Pressure, influence, the short time afforded him to consider the agreement, and the absence of advice, all these were the elements which, it was contended, showed that this person had been drawn into the execution of an instrument to which he ought not to be held bound. But were these circumstances sufficient to induce the Court to decide that this agreement should not stand? The circumstance that a man wanted money would not invalidate a mortgage or deed if the instrument itself were reasonable and proper. The circumstance that the person from whom the money might be borrowed was not present cannot well have any influence on the Court if the transaction itself is not unreasonable or improper. The fact that a man had no special legal advice upon the subject could not invalidate the instrument if he were not wanting in knowledge of the instrument, and had had an opportunity of judging of its precise effect. As a matter of fact, and as a matter of law, legal advice was not wanted in a case of title where the party was forty years of age. Was there anything flagrantly unreasonable and improper in the agreement? Some might be inclined to think that its terms were harsh; but, even in saying that, it must be remembered that the father avowed his intention, if nothing else occurred, of replacing Gilbert in the business. It was his intention, undoubtedly, to say that the whole property of £214,000 would be endangered by Gilbert continuing in the business, and that he would not allow him to have any opportunity of destroying the property by speculation. This Gilbert perfectly well knew, and he also knew that the consequences of his refusing to accept the terms would be bankruptcy and the loss of all his interest in the concern. He read the instrument effectively, he understood it perfectly, and all he said was that he was reluctant to sign it. He knew its character so well that he protested against it; and a quarter of an hour was quite sufficient to enable a man who had been brought up in a solicitor's office to master its contents. All that a solicitor could have done would have been to advise him not to sign the deed; but if he had not done that, bankruptcy would have taken place. The next point was this—Was the agreement an unrighteous agreement in itself? The father's agreement originally was that he should give each of his children £35,000. He had also placed two of his sons in the business; but he now said to Gilbert that he did not feel that he was any longer entitled to remain in the
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position of a favoured son, and that he must not insist upon his being replaced in the same position as the other children. It must be remembered that a clause in the deed provided that Gilbert was to receive £35,000, and that if his brother objected to his being replaced in the partnership he was to pay him another sum of £5000. Whether or not the father was exercising harshly his prerogative powers, he must say that nothing struck him in the proceedings as so illegal or improper, or exhibiting such an undue degree of parental pressure, as to entitle the party who signed the agreement to ask that he should be relieved from it. It was also alleged that Gilbert had been advised to trust to the honour and integrity of his brother. No doubt he was obliged to trust both his father and brother, because he was absolutely in their power. He struggled hard to get his father to make an absolute engagement to repone him, but the father refused to do more than accept a discretionary engagement. There were undoubtedly some letters of Charles which required explanation as the acts of a brother, but unfortunately he was not here to explain them. In 1859 Charles was unwilling to replace his brother in the partnership, and they also found that in 1863 a change came over the father's mind. He was cruising in his yacht in the Mediterranean, and, from the correspondence which he had with Gilbert, he seemed to have spoken very harshly. There were manifestations of temper on the part of Gilbert which should not wholly be lost sight of. I did not wish to pause on these outbreaks, but it must be evident that when Gilbert pushed his father, an aged man, out of the room, that he had lost habitual control of his temper. The father was under no legal obligation, whatever may have been the moral obligation, to repone him. On the whole circumstances, I do not think the Court can set aside the interlocutor of the Court below, and I therefore move that it should be affirmed, and the appeal dismissed with costs.
Lord Chelmsford said that Gilbert, in the course of the negotiations preceding the deed of 1858, must all along have been aware of the main element in it, that he was to cease to be a partner; and so, though he had only a short time to peruse the actual deed itself, he cannot complain of surprise. Nor was there undue pressure, for he himself explains this part of his pleading to mean simply pressure from debts. On the question of inadequacy of consideration, he would dismiss from all consideration the evidence of Mr Guild as to the average profits, because these were calculated from subsequent years of the firm's career. It was then supposed that the profits would not pay off the debt on the business for eight or ten years. Gilbert, too, was to get £35,000 or £40,000, according to circumstances. Therefore it was impossible to say there was anything in the deed to shock the conscience, and to cause it to be reduced.
Lord Westbury—My Lord, I am very sorry indeed to say that, after many efforts to arrive at an opposite conclusion, I am compelled reluctantly to assent to the opinions of my noble and learned friends. I may sympathise very much with the appellant in his complaints at the bitterness of his father, and of the want of brotherly love and liberality on the part of his brother, but these are not within my province. These are feelings as to his father and brother, who have already gone to their account. But I am obliged to say, I find nothing in their action which renders them amenable to the justice of any human tribunal. It would be quite unpardonable if I went into the facts of this case at any detail, but it may be desirable to make a few observations upon the earliest points of the argument on the part of the appellant. I regret that the case of the appellant was brought forward in the form of two inconsistent propositions. To contend that the deed of 1858 was unreal and not
ex facie that which it expresses itself to be, and at the same time to contend that that deed was obtained by undue pressure or unfair advantages and under circumstances where the appellant had not the aid of proper advice—those two propositions are irreconcileable with one another. If I found anything in the history of the transaction to warrant the conclusion that the deed was not intended to be what it appears to be—that it was framed to be a mere shield to the father and brother against the creditors of the appellant—I should not be deterred by any argument derived from the Scotch statute of 1696 from arriving at the conclusion that it is competent to the Court on the evidence before it to declare that the deed was not a reality, was not intended to have any binding effect, that it had not ceased to be in operation, and that the appellant should be remitted to his former position. But I am convinced that there is no foundation for that representation. The history of the whole conduct of the matter, the history which the appellant gives of his own mind and impressions, and the conclusion he arrived at, forbid any other hypothesis than this, that the father required this to be done, and the brother also thought it necessary to be done, and the appellant himself acceded to that necessity. Well then, the transaction, regarding this as a real transaction, is impugned by the appellant on the ground that he parted with valuable property for an inadequate consideration. It is true that there is an equity which may be extended on gross inadequacy of consideration; but that can only be where the inadequacy is such as to involve the conclusion that the party either did not understand what he was about, or was the victim of some imposition. It is impossible to say that the inadequacy of consideration in this case amounts to anything like proof to warrant either of these conclusions. Two remarks may be made on the subject of inadequacy. The first is an obvious one—that we must deal with the transaction as the matter stood at the end of the year 1857. It would be ridiculous to regard the value of the subject in dealings of that kind by the light derived from subsequent events. The father, Mr Hugh Tennent, had called the appellant Mr Gilbert Tennent to take part in the business in 1855. I wish it had occurred to the father to consider that the appellant, at his request and upon his benefit, and that he might enjoy the repose needed by his age, gave up his business as a writer, in order that he might take active part in the management and administration of this great concern, in which the bulk of his father's property was invested. But the father made that disposition, which I think is evidence that he was an affectionate father, as far as the arrangement of his property was concerned, for his children; and it must be recollected, in looking at the deed of 1855, that in truth the father remained the
dominus of the whole concern, when substantially he parted with a portion of it to his sons to retain the control and management of it.
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They are bound to no terms. The partnership is at will; only the father could at any time interfere and require payment of the debt to him, and put an end to the whole business. The whole of the property which his sons received they received from his bounty. The father also retained an absolute power to himself, by the 5th and 6th clauses of this deed, to charge the property with legacies, to be given by his will to other persons or purposes, not including legacies to his children, which were charged on the property secured to him in the concern. The situation of the appellant, therefore, with regard to his business was an extremely precarious one. The father had the power to withdraw his whole property, and there would have been an end of the business. Well, in the year 1857, the father feels it incumbent upon him to increase his power. We were undoubtedly struck very much with the small amount of the appellant's debts, which threw the father into so much terror at that time, but we should carry back our recollections to what were the feelings of that particular period. There might be legitimate apprehensions existing at that time which we are at this time unable to appreciate. The father in that position, in effect, says to his son, “I require you for a time to retire from the business.” Originally, it appears, he contemplated that the period would certainly arrive when he would restore him to his position, but he departed from that conclusion. He felt it necessary that he should have an uncontrolled discretionary power of restitution. Now, can we sit in judgment on that, and say that the father was not warranted in the conclusions he arrived at ? Certainly not. Well, but was that conclusion carried out in a way to which the son has a right now to complain? If I found it carried out with one speck of imposition on the son, if anything was told him which ought not to have been represented, if anything was withheld which ought to have been communicated, if he was placed in the hands of an adviser who leant more to the father and brother than to him, I should have thought that this family arrangement, where on all sides there ought to be
uberrima fides, ought not to be upheld. But I find nothing of the kind. This discretionary power was placed in the hands of the father freely, willingly, and without undue restraint, and without falsehood. That is the account of the appellant himself. He says there was just one point of difference, whether the power of restoration should be compulsory or discretionary. He tried long and earnestly to prevail on his father to consent to an absolute power of restoration; but the father declined. The appellant submitted and clothed the latter with discretionary power of restoration. Well, that being so, there is nothing whatever that in a court of justice can be complained of by the appellant, unless indeed we find that fraudulent and unjust influence was used by the brother to induce the father not to exercise his power. I am happy to say that on examination of the whole matter I am myself unable to find anything that would fix on Charles any iniquitous dealings to poison the mind of his father, and prevent him from exercising his power of reponement. On the contrary, I think it appears from the letters of the father, written from the Mediterranean, that he himself first suggested to Charles the absolute necessity of dealing with his brother. So there is nothing, therefore, that would warrant us judicially in saying that there was any artifice on the part of Charles to deprive the brother of the benefit he would have derived from the exercise by his father of his discretionary power of reponement. I find nothing of this kind. There is nothing to warrant the conclusion of the appellant that he was actually reponed. He was not treated as a partner, or in any way entitled to participate in the profits of the concern. There is nothing to warrant the conclusion that the deed of 1858 was not carried out to its full limits. On other grounds, therefore, I could wish that another conclusion had been arrived at, particularly when I see that it took only five short years from the date of this agreement to enable the parties to pay to the father the whole of the debt due to him of £214,000. and to realise for Charles' own behalf a sum amounting to very nearly £300,000. I could have wished that natural affection had suggested a different mode of action; yet, as I have already observed, that is not within our province; nor are we called upon to express any opinion on it. Yet, inasmuch as this is an attack on the brother who is gone, containing numerous imputations on him, and also on the memory of the father, who is also gone, I am reluctantly compelled to concur with the suggestion that the appeal should be dismissed; and, in accordance with our established rules, with costs.
Lord Colonsay—My Lords, I do not consider it at all necessary for me to enter into any statement of the facts of this case. They have been very fully stated, and that statement embraced everything which I think important to the views I take. I shall state briefly the grounds upon which my judgment rests. The object of the action is to set aside the deed of agreement of 1858. If that agreement is to receive effect according to its terms the result would be substantially this—First, that from and after January 1858 the appellant ceased to be a partner in the concern, or to have any of the rights given to him by the deed of 1855; secondly, at the end of two years his father, if he thought proper so to do, might repone him in the condition he was in before the end of 1857; thirdly, if the father did not repone him, he was to receive the estimated value of one-sixth of the brewery concern, namely, £35,000; fourthly, if the father did repone him, Charles might displace him, and Gilbert would then be entitled to not £35,000 but £40,000; and this involved the surrender by Gilbert of nearly all he had under the deed of 1845. The father did not repone him, and the appellant brings this action for the reduction of the deed. He has brought the action for the purpose of having it found he is to be reponed into the position he had under the deed of 1855, as if the deed of 1858 had never existed, or the circumstances which led to its execution had never occurred. Now, what are the grounds on which he makes that claim? In the first place, there were various grounds stated in the original record, such as that the deed had not been delivered, and some other grounds of that kind, which are not now insisted upon; but I think there are now substantially two grounds insisted upon by the appellant. First, that his consent was obtained when he was in a state of great distress and difficulty; that advantage was taken of his difficulties; that great pressure was exercised; and that the deed was obtained for a grossly inadequate consideration. His Lordship went on to say that he did not think that the Act of 1696 applied, and also that there was no foundation for the plea of
pactum
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illicitum. Further, he did not think the circumstances warranted reduction of the deed. Gilbert had not surrendered so much as was contended; and, on the other hand, he had his debts paid, and impending bankruptcy averted, and he was also to have a chance of reponement, with an alternative of £35,000 or £40,000. Hugh and Charles had also benefited by the deed. They were to be saved from the creditors of the man who had violated the deed of 1855. It might be the conditions were somewhat hard, but he knew what they were. He wished an absolute right to be reponed, but this would have destroyed the whole object of the deed. His Lordship said that, on the whole, he could not hold that there was undue pressure in the case; and as to the statement that the deed was unreal and not acted on, it was acted on in its most important particulars, and he therefore concurred in the judgment.
