Scottish Court of Session Decisions

This action was raised at the instance of the North British Railway against Mr Smith Sligo, as sole partner of the Forth Iron Company, for £465, 2s. 8d., the sum alleged to be due to the pursuers in respect of the hire of fifty goods or mineral wagons, let by the pursuers to the Forth Iron Company for the period from 1st August 1865 to

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31st August 1867. The account sued for was made up so as to show the amount payable at the end of each month. The last item in the account was dated 31st August 1867. The present action was not raised until 28th August 1872, about five years thereafter, and the defender, who adjusted and settled his “coal carriage accounts” with the pursuers on 5th May 1871 by a payment of £812, 3s. 9d., pleaded that the pursuers' claims in this action were excluded by the triennial prescription. The Act 1579, cap. 83, provides “that all actions of debt for housemails, men's ordinars, servants' fees, merchants' compts, and other the like debts that are not founded upon written obligations, be pursued within three years, otherwise the creditor shall have no action, except he either prove by writ or by oath of his party.” The pursuers, in answer to the plea of prescription, maintained that the statute did not apply to the debt claimed by them, in respect that—(1) their debt was founded upon a written obligation; and (2) that even if this were not the case, the debt was not one of the nature of those to which the statute applied. An extensive diligence was granted to the defender for the recovery of documents, and after a number of writings had been recovered, the pursuers asked leave to amend the record, in terms of a minute of amendment, to which the Lord Ordinary gave effect by the interlocutor reclaimed against. On the record as thus amended, it was alleged that, on 1st August 1865, when the undertaking of the Edinburgh and Glasgow Railway Company was transferred to the pursuers by Act of Parliament, there was a subsisting arrangement or agreement by which the Forth Iron Company were entitled to the use of wagons belonging to the Railway Company, at the rate of £13 per annum for large wagons, and £10 per annum for small wagons, subject to certain abatements to be deducted monthly from the carriage account. When the action was raised the pursuers were not in possession of the alleged agreement, or any copy of it; but having recovered from the lease book of the Forth Iron Company a document titled “Agreement with the Stirling and Dunfermline Railway Company,” they, in the amendment on the record, referred to this as the only copy of the alleged agreement which they had been able to recover, and founded on this document, and on certain letters and accounts, as constituting the agreement or obligation on which the action was based, as taking the case out of the operation of the statute relied on by the defender.

On 13th August 1873 the Lord Ordinary pronounced the following interlocutor:—The Lord Ordinary having considered the cause, allows the pursuers to amend their condescendence in terms of the minute of amendment, No. 72 of process: Finds that the debt sued for has undergone the triennial prescription introduced by the Act 1579, c. 83, and can only be proved by the writ or oath of the defender: Finds that the pursuers having obtained a full diligence for the recovery of books and documents, have failed to prove the constitution and, separatim, the subsistence of the debt sued for: Therefore sustains the defender's first plea in law, and assoilzies the defender from the conclusions of the action, and decerns: Finds the pursuers liable to the defender in expenses; allows an account thereof to be given in, and remits the same when lodged to the Auditor, to tax and to report.

“ Note.—… . The question raised is, whether the debt sued for can properly be repre sented as ‘founded upon written obligation,’ within the meaning of the Act which introduced the triennial prescription in respect of the writings now referred to. The Lord Ordinary is of opinion that this question must be answered in the negative. It has been held, on the one hand, that a mere order or commission for goods, followed by furnishings, is not an obligation of the nature referred to in the statute, which will save the effect of prescription, Ross v. Shaw. 1784, M. 11,115; Douglas v. Grierson, 1794, M. 11.116. On the other hand, it has been held that the statute will not apply where the pursuer, in claiming his debt, can refer to a written contract containing the terms on which it was incurred, Watson v. Lord Prestonhall, 1711, M. 11, 095, or can produce letters containing the substance of the arrangement under which the debt was contracted, Blackadder v. Milne, &c., 4th March 1851, 13 D. 821. In the latter of these cases, while certain of the Judges rested their opinion on the ground that the claim was not one of the class falling within the statute, a majority of the Court were of opinion that, apart from this, the statute did not apply, because the employment for which remuneration was claimed proceeded on a special letter of instructions received and acted on by the pursuer, which contained all the terms of an obligation or contract. If therefore the pursuers in the present action had been able to refer to any document granted by the Forth Iron Company, or any one on their behalf, containing the terms of the alleged arrangement under which the wagons were said to be let for hire or leased, even though it had not been executed also by or on behalf of the Railway Company, the Lord Ordinary would have held, on the authority of the two last mentioned cases, that the statute did not apply, and that the pursuers were entitled to a proof at large to instruct the actual use of the wagons, and the consequent liability of the defender for the hire, unless he could instruct payment. But the documents referred to as sufficient to take the case out of the statute appear to the Lord Ordinary to fall entirely short of what is required to have that effect. The pursuers have no agreement or obligation granted by the Forth Iron Company, or any one on their behalf. The writings founded on would be important evidence of the terms of the arrangement or agreement between the parties in any action raised before the expiry of three years from the date when the account was incurred, for they would show the footing on which the use of the wagons had gone on. They might further, indeed, be sufficient writ of the defender to instruct the alleged arrangement and constitution of the debt, assuming the plea of prescription to be applicable, although this might be of little avail unless the pursuers were in a position to instruct by writ also that the amount of their claim is still due, for the presumption introduced by the statute is twofold—(1) against the constitution of the debt, and (2) in favour of its having been paid, and both of these presumptions must be overcome by writ or oath where the statute applies. Important, however, as the writings might be as the writ of the defender, they do not of themselves constitute either a written obligation or agreement. The document mainly founded on does not appear to have been signed by any one. It is titled ‘Proposed Heads of Agreement.’ Its first article provides that it shall be in force for five years from 26th June 1854, so that it expired in

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June 1859. It embraces a great number of different matters, all apparently mutually depending on each other, and specifies in the seventh head relating to wagons, thirty large wagons and thirty small wagons as the number to be given and taken on lease, while the number, the hire of which is sued for in the present case, is thirty-five large and fifteen small wagons.

The pursuers no doubt allege that this agreement, though not signed, was acted on; that in so far as regards the wagons, it was from the first arranged that the number of wagons to be hired should be varied from time to time as the trade of the Forth Iron Company required, and that after the period of the agreement had expired it was extended from time to time, and so was in operation during the period embraced in the account sued for. In support of this they refer to various letters in the fragmentary correspondence which has been produced. These letters are not very distinct in themselves. They cannot be regarded as constituting an agreement or obligation separately from the proposed heads of agreement in 1854, and it rather appears to the Lord Ordinary, from the settled account of 30th August 1865, and the letter of Mr Drummond, addressed to Mr Reid, goods manager of the Railway Company, of 22d March 1865, that between 14th March and 2d April 1865, the wagons or trucks had been let at some different rate of charge from that specified in the agreement, and that a new arangement must have been made in respect of the fifty wagons the use of which, it appears from Mr Drummond's letter, was made dependent on the Railway Company granting certain concessions on their rates of carriage. Assuming however that the writings as a whole would be sufficient as evidence, or even as the defender's writ under the statute to instruct the agreement under which the wagons were in use, the Lord Ordinary cannot regard them as a written obligation such as will take the case out of the statute. The distinction between the use of such writings as evidence or writ of the party, as amounting to contract or obligation, has formed the subject of observation in the cases of Barr v. Edinburgh and Glasgow Railway Company, 17th June 1864, 2 Macph. 1850; White v. Caledonian Railway Company, 15th February 1868, 6 Macph. 418; and Walker v. Flint, 20th February 1863, 1 Macph. 417; and referring to these authorities the Lord Ordinary is of opinion that the pursuers have failed to take the case out of the statute by showing that the debt claimed is founded upon a written obligation.

The next question is whether the debt is of the nature of those enumerated in the Act to which the triennial prescription applies. A claim for hire of carriages or wagons is not expressly mentioned in the Act, but the statute does not profess by its terms to enumerate the particular cases to which it applies, for, after a certain enumeration, ‘other the like debts’ are added. It has been observed in previous cases that the effect to be given to these words must often be attended with difficulty,—to what extent must there be likeness as regards the debt sued for to the debts particularly enumerated? It is evident that the extent of such likeness must often strike different minds differently. Perhaps all that can be said is, that if the debt sued for be substantially within the same general class or category as the debts enumerated, the statute should be held to apply. The main characteristic of all these classes of debts appear to be that they are of a kind usually settled between debtor and creditor periodically, and at comparatively short intervals—‘housemails, men's ordinars, servants' fees, and merchants' compts.,’ which primarily refers to shopkeepers’ accounts. Under ‘other the like debts,’ have been included the accounts of tradesmen for their work or wages, accounts of law agents or other professional men for services rendered, and house-rents, although not extending to agricultural subjects, have been held to apply to rents of urban subjects and houses payable half-yearly— Cumming's Trustees v. Simpson and others, 18th February 1825, 3 S. (N. E.) 377, and Rankin v. Black & Sons, July 1873, not yet reported.

The Lord Ordinary is of opinion that an account for the hire of wagons is a debt of the like nature with those enumerated in the statute. It belongs to the class of debts usually settled periodically and at short intervals, in the same way as the rents of houses, hire or wages of servants of all classes, or accounts of shopkeepers, tradesmen, and professional men. If the case were that of a coach-builder suing for an account for furnishings and for the hire of a carriage, it would be difficult to draw a distinction between the carriage hire and other parts of the account, and it would not make any real difference that several carriages were hired, and for a period of time. It appears to the Lord Ordinary that no sound distinction can be drawn between that case and the case of a railway company or wagon company, or other owner of carts or wagons letting out carts or wagons in considerable numbers not under a written contract. The number of wagons cannot afford a good ground of distinction. In the case of Rankin, above referred to, the triennial prescription was applied to a claim for rent of fifty houses per annum.

It was urged by the pursuers that in recent decisions the Court had shown a reluctance to extend the scope of the triennial prescription, and reference was made to the case of Laing v. Anderson &c., 10th November 1871, 10 Macph. 74, and M'Kinlay, therein referred to; and it is true the Court, in these particular cases, refused to extend the effect of the words ‘merchants' compts.’ further than has already been done, and so as to include large mercantile transactions, to which the Court held that the statute was never intended to be applied. The amount of the claim, however was not the determining element, and while it may be of general advantage that care should be taken to avoid giving the statute a wider scope than can be gathered from its terms to be its true intention, it is equally important that it should be applied to every case of that general class for which it was designed, for otherwise debtors in Scotland would be exposed, to their great hardship and wrong, for forty years to claims of a kind which are usually settled shortly after the debt is incurred, and for which frequently vouchers are not preserved. Although, in a particular case, as the result of the creditor's own want of diligence or neglect, he may suffer hardship and loss, yet on the whole less injustice will be done and less hardship sustained by the community by the certain application and enforcement of a known rule of law, limiting the time within which debts like the present can be sued for, than by either allowing fine distinctions on which differences of opinion may readily occur, and which arise out of what are called the special circumstances of particular cases, to determine

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whether the rule shall be applied, or, by unduly narrowing the application of the rule, and leaving the settlement and discharge of a large class of the common transactions of life, which have not been made the subject of written contract or obligation, unprotected by anything short of the long prescription of forty years, which is certainly not in reason the prescription which ought to be applicable to such transactions. It appears to the Lord Ordinary that the present claim is one of the class for which the triennial prescription was introduced and to which it is applicable.

The agreement, as alleged, by the pursuers, refers to abatements ‘to be deducted monthly from the carriage account.” The claim is one of a kind usually settled at short dates, and for which, after payment, vauchers would not necessarily be kept for any length of time, and the Lord Ordinary is of opinion that it would be unsafe to refuse to apply the rule of the statute in a case between a railway company letting out wagons on hire and a trader, which would be applied in other circumstances, such as the Lord Ordinary has already referred to.

Assuming that the statute applies, the only remaining question is whether the plea of prescription has been obviated by the production of the defender's writs. The pursuers must prove in this way the constitution of the prescribed debt and its subsistence. The Lord Ordinary is of opinion that the writings produced are not sufficient for either of these purposes. The pursuers have had a very full diligence, and have exhausted every means for the recovery of writings; and, as the Lord Ordinary understood at the debate, they did not ask for any further diligence, because they did not anticipate that they could make any further recoveries. In these circumstances, the defender appears to be entitled to absolvitor, the pursuers being, of course, entitled to refer the cause to his oath, if they think fit.”

The pursuers reclaimed.

The argument stated for both parties, and authorities cited, are fully stated in the note to the Lord Ordinary's interlocutor, and in the opinions of the Judges on advising.

At advising:—