Scottish Court of Session Decisions

On 20th May 1873 an action, was raised at the instance of George Vair Turnbull, merchant in Leith, against Hugh M'Lean & Co., coal merchants, Glasgow. The summons concluded for payment of (1) £113, 8s. 5d., and (2) £1261, 7s. 6d.—in all £1374, 15s. 11d., under deduction of £484, 0s. 11d., the balance of an account due by the pursuers to the defenders.

There was also a counter action raised on May 27, 1873, by Messrs M'Lean, and concluding for a sum of £680, 0s. 7d.

The Lord Ordinary, on 24th June 1873, conjoined the two actions.

On 21st February 1872 Hugh M'Lean & Company made an offer to Turnbull, Salvesen, & Company, merchants in Leith (of which firm the pursuer and Christian Salvesen, merchant, Leith, were the only partners) in the following terms—“Sold to Messrs Turnbull, Salvesen, & Coy., Leith, Five thousand tons Clelland Ell coal as per sample, at the price of Nine shillings and eightpence per ton f.o.b. Granton, or if shipped at other ports the excess dues to be added, or if less than the Granton dues, to be deducted from said price.” On 23d February 1872 Turnbull, Salvesen, & Company accepted the offer formally, but added the following condition. “We also stipulate the forfeiture of threepence per ton for all coals which are sent to us and not addressed to ourselves. We do not expect that you have any objection, as in a previous letter you intimated to us that addressing the waggons to your good selves should be discontinued.” On 26th February 1872 the defenders wrote to the pursuer inter alia,—“We cannot agree to the forfeiture of threepence per ton on coal not addressed to you. We are quite willing, however, to address the coal to you provided it does not interfere with our getting the shipping allowance of fourpence per ton. If you guarantee us this, we shall address them all to you.” The next letter was also from the defenders,—“ Glasgow, 4th March 1872.—Dear Sirs,—According to verbal arrangement with your Mr Turnbull, we confirm having sold to you Ten thousand tons Wishaw Main coals at Nine shillings and threepence per ton f.o.b. Granton. Delivery in equal quantities per month during the course of the present year. Please reply confirming. To this letter the following reply was sent:— Leith, 5th March 1872.—Dear

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Sirs,—We are in receipt of your favor dated yesterday, and now beg to confirm having purchased from you Ten thousand tons (10,000) Wishaw Main coal at Nine shillings and threepence per ton (9/3) f.o.b. Granton. If we should require any to be shipped at other places, the excess dues to be added, or if less than the Granton dues, to be deducted from above-named price. The coals to be of good quality and equal to the best Wishaw Main coal, well screened and fresh drawn, and the trucks to be addressed to us in order that we may recover the export drawback for our benefit.” The two following letters followed:—“ Glasgow, 6 th March 1872.—Dear Sirs,—In your written acceptance of our offer of 10,000 tons of coal you omit to confirm regarding the time of delivery. We suppose, however, you know that delivery end of year and equal monthly quantities was the arrangement.”—“ Leith, 9th March 1872.—Dear Sirs,—In reply to the last part of your favour of the 6th inst. we beg to add to the purchase terms contained in our respects of the 6th inst. that delivery will be taken during the course of the present year as much as possible in equal monthly quantities.”

On 15th April 1872 the firm of Turnbull, Salvesen, & Company was dissolved, and it was arranged between the firm and its individual partners, on the one part, and the defenders, on the other part, that the first-mentioned contract for 6000 tons Ell coal should, to the extent of 1657 tons 17 cwt., belong to the pursuer George Vair Turnbull, as an individual, and that the second contract for 10,000 tons Main coal should, to the extent of 4277 tons, belong to the pursuer as an individual; and the defenders to that extent became liable to the pursuer as an individual to implement to him the said contracts. This arrangement was confirmed by the correspondence produced.

It was maintained to be in accordance with usage in the trade generally for Turnbull, Salvesen, & Co., upon finding vessels to export the coal, to make the defenders aware of this, and state the lay-days available for loading the respective vessels; and that thereiore the defenders should have forwarded the coals so that the vessels might be loaded within the laydays, always subject to the understanding that no more than the stipulated monthly quantities or thereabouts should be demanded.

The defenders denied any agreement beyond what was contained in their contract. The pursuer on 28th September 1872 telegraphed, and on the same day wrote, to the defenders, stating that a vessel, the “Ernst August” was at Granton ready to be loaded, and that her lay-days commenced on 28th September, so that she had only eight days to load, and urging the defenders to push forward the coals. The coals, however, were not sent forward; and on 6th October 1872 the pursuer again wrote to them, repeating that the vessel's lay-days expired on the Monday thereafter, and that if she were not then loaded he would claim from them any demurrage that might be incurred. The quantity demanded was, it was averred, a reasonable proportion of the monthly quantity due. With reference to Turnbull's claims, M'Lean & Company wrote as follows:—“Regarding the ‘Ernst August,’ we have done the very best we could for you, and cannot hold ourselves liable in this or any other case for demurrage. We have to pay demurrage daily on vessels which we have chartered ourselves, and we never expect to receive a farthing from the coalmasters we buy the coals from.” The defenders denied liability to forward coals for this vessel within her lay-days, and said they had not reasonable notice. The demurrage which became due and was paid to the master by Mr Turnbull was £22, 2s. 5d., the vessel being detained until October 11th.

Subsequently demurrage had to be paid, and was paid, by Mr Turnbull for several other vessels, the sums being respectively £37, 10s., £18, and £3, and the dates October 31, November 8, and November 15. On 27th November 1872 the pursuer requested the defenders to forward to Granton for shipment per “Isis” 220 tons, and per “Auguste” 220 tons of the coals, to complete the defenders' quantity for the month of November, informing them of the lay-days of the “Isis” and of the time the coal required to make up the cargo would require to be at Granton. No coals, however, were forwarded. It was admitted that the defenders in the beginning of December 1872 had ceased altogether to forward coals under the contracts. This was, the pursuer averred, a gross breach of contract; but the defenders stated on record that at the beginning of December there was a sum of upwards of £800 past due to them for coals delivered under the contracts, which the pursuer refused either to pay or grant his acceptance for. The defenders in consequence stopped further deliveries, and for this sum raised the counter-action against the pursuer. The pursuer asserted that there remained still to be delivered 1151 tons 6 cwts. of the Main coal, and 698 tons 4 cwts. of the Ell coal, to be delivered, and that he had to purchase at the greatly increased prices to which coal had risen in the interim, whereby he sustained loss and damage upon the said Main coal to the amount in all of £1261, 7s. 6d. The defenders denied this, and stated that when they stopped delivery the quantity of coal delivered subsequent to the emendation of 6th October, and either actually received by the pursuer or lying at the termini addressed to him, amounted to about 2300 tons. The sum of £113, 8s. 5d. sued for was made up of the demurrage payments and of a further disputed account for £32, 16s. for wood sold to the defenders, who alleged that this had been paid. The defenders in the beginning of October 1872 encountered great difficulty in fulfilling their contract, and besought the pursuer to agree to an alteration of the terms thereof. The stipulations proposed were expressed in the following letter, addressed by the defenders to the pursuer on 6th October 1872:—“ Glasgow, 6 th October 1872.—Dear Sir,—As we find it impossible to carry out our engagements with you, whereby we are bound to deliver to you before the end of the current year 4277 tons best Wishaw Main coal, fresh drawn, at 9s. 3d. per ton, f.o.b. Granton, and 1657 ¹⁷ tons best Wishaw Ell coal, fresh drawn, at 9s. 8d. per ton, f.o.b. Granton, on which contracts we have still to deliver you about 3000 tons of the contract for Main coal, and about 600 tons of the contract for Ell coal, we beg to make the following proposal, namely—that as our difficulty chiefly consists in the delivering of the Main coal, we shall give you in exchange for fifteen hundred tons of this contract, that quantity (1500 tons) of best Wishaw Clelland Ell coal, at eleven shillings and eightpencesterling (11s. 8d.) per ton, f.o.b. Granton, or the corresponding price at any other shipping port, and we further undertake to deliver the balance

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of about 1500 tons of Main coal and the balance of about 600 tons of Ell coal at the prices and on the conditions already arranged. We further agree to give you delivery of the above mentioned quantities, namely—1500 tons Ell coal at 11s. 8d. p. ton, f.o.b. Granton; 600 tons Ell coal at 9s. 8d. p. ton, f.o.b. Granton; 1500 tons Main coal at 9s. 3d. p. ton, f.o.b. Granton—between this and 31st December next in the following proportions, viz.—Twelve hundred tons before 31st October current, 1200 tons before 30th November next, and the balance of about 1200 tons before 31st December next; and failing our doing so, we hereby authorise you to purchase, at our expense, at the rates current at the ends of each month, any quantities which may then be short delivered.—Yours truly, Hugh M'Lean & Co.”

The pursuer replied on 8th October 1872 agreeing to this proposal.

Messrs M'Lean delivered coal under the agreement of October 6th during all that month and at the close of it sent to Mr Turnbull a draft at thirty days for £500. This was accepted by him, and returned to them. A balance of some £200 was left outstanding. At the end of November an account of over £800 (inclusive of the balance of £200) was again rendered to Mr Turnbull, but a similar draft for £600 was refused by him, and returned unaccepted. The coals lying at Leith and Granton were stopped by Messrs M'Lean in transitu. The M'Leans averred that all the coal due for November had either been delivered or was lying addressed to Turnbull at the Leith and Granton termini, and that delivery orders had been duly sent to Turnbull. When their draft was refused, they intimated to Turnbull that unless their account was paid at once they would hold the contract at an end and stop all further deliveries. In their action against Turnbull the M'Leans sued for the price of the whole coals delivered to him, less the quantities stopped in transitu, and the balance formed the £680, 0s. 7d., the amount concluded for as owing at 31st December 1872. Turnbull denied that there was any arrangement as to monthly settlements, while the M'Leans contended that the usual practice of the trade was that coals should be paid for either in cash on delivery or by bill at thirty days from the time when they are delivered for shipment; and further, that they are held as delivered f.o.b. when delivered at the terminis and a delivery order lodged in the buyer's hands. At first, under this contract, the accounts were rendered at irregular intervals; but after October 6th the M'Leans rendered a monthly account.

In the first action the pursuer, Mr Turnbull, pleaded:—(1) That the defenders having been bound to send forward the coals for shipment on board the vessels within their lay-days, and having wrongfully failed to do so, were bound to pay him the demurrage which he incurred in consequence. (2) That he was entitled to decree for the account for wood which was owing, and which the M'Leans refused to pay. (3) That the defenders, in breach of contract, failed to deliver the coals contracted for to the extent condescended on, and that he was therefore entitled to the damages claimed.

The defenders pleaded:—(1) The statements of the pursuer are not relevant or sufficient to support the conclusions of the action. (2) The defenders are entitled to absolvitor, in respect:—1. The statements of the pursuer are unfounded in fact. 2. The defenders are not indebted or resting owing any sum to the pursuer, who is on the contrary largely indebted to the defenders. (3) The pursuers having wrongfully and in breach and violation of the said contract refused to pay the past due price of coals delivered to him, the defenders were entitled to stop further deliveries of coals.

The M'Leans in the action at their instance pleaded that they were entitled to decree for the balance of the price of coals delivered by them to Turnbull under the contracts, while Mr Turnbull pleaded that he should be assoilzied, in respect that the M'Leans were owing him under the same contracts sums greatly in excess of that claimed by them.

The Lord Ordinary pronounced the following interlocutor;—

“ Edinburgh, 22 d November 1873—The Lord Ordinary having heard the counsel for the parties, and considered the closed records, proof, and joint minute for the parties in the conjoined actions: Finds that Hugh M'Lean & Company were not bound, under their contracts condescended on, to deliver the coals therein mentioned so that the same should be shipped on board the vessels specified in the summons at the instance of George Vair Turnbull within their lay-days, and that they were not bound to pay the demurrage which he paid in respect of the detention of the said vessels: Finds that Hugh M'Lean & Company wrongfully failed, in breach of their said contracts with George Vair Turnbull, to deliver to him the coals contracted for to the extent of 1269 tons 6 cwt. of Main coal, and 428 tons 4 cwt. of Ell coal, to his loss, injury, and damage: Finds that the said loss, injury, and damage amount to the sum of £860; Finds that the said George Vair Turnbull is not entitled to the abatement of £51, 14s. 9d. made in the account libelled on in the summons at his instance from the price of the coals delivered under the said contract: Finds that the sum due by George Vair Turnbull to Hugh M'Lean & Company for coals delivered under the said contract amounts, after deducting the sum due by them to him for wood to £571, 18s. 9d. as at 27th May 1873, being the date of the summons in their action: Therefore decerns in favour of the said George Vair Turnbull under the conclusions of the action at his instance for the said sum of £860, but under deduction of the said sum of £571, 18s. 9d. and of interest thereon at the rate of 5 per cent. per annum from 27 th May 1873 to this date: Finds the said George Vair Turnbull entitled to expenses in the conjoined actions (subject to modification); allows an account,” &c.

Note.—Mr Turnbull seeks to recover from the defenders M'Lean & Company, in the action at his instance— First, The sum of £80, 12s. 5d., being the amount of demurrage paid by him on four vessels which were detained beyond their lay-days, in consequence, as he alleges, of the wrongful failure of the defenders to forward coals which they had contracted for, so that the same might be shipped on board these vessels within their laydays: Second, The sum of £1261, 7s. 6d., as the loss, injury, and damage sustained by him by the defenders having, in breach of their contract, failed, as he alleges, to deliver 1151 tons 6 cwt. of Main coal, and 698 tons 4 cwt. of Ell coal: Third, The sum of £51, 14s. 9d., being a forfeit of 3d. per ton due by the defenders under their contracts on 4139 tons 11 cwt. of coal which they had not addressed

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to him: And Fourth, The sum of £ 32, 16s. for wood sold and delivered to the defenders.

Messrs M'Lean & Company, in the action at their instance, conclude for payment of £680, 0s. 7d. as the balance due to them for coal supplied under their contracts to Mr Turnbull, after crediting him with all sums paid to account, and with £41, 14s. 7d. on account of the price of the wood bought from him, with interest on said sum of £680, 0s. 7d. from 31st December 1872.

During the course of the proof Mr Turnbull abandoned his claim for the sum of £51, 14s. 9d. and as M'Lean & Company admitted that they were indebted to him for wood in a larger sum than £32, 16s., and credited him in their action with £41, 14s. 7d. for wood. There remain only three questions on which the parties are at issue in the conjoined actions, namely, Mr Turnbull's claims on account of the demurrage payments, and for damages for nondelivery of part of the coal contracted for, and M'Lean & Company's claim for the price of the coal which they supplied to Mr Turnbull before they stopped the deliveries.

Mr Turnbull's claim for repayment of the demurrage is maintained on the ground that the coals sold to him by M'Lean & Company were purchased for foreign export, and that it was understood and agreed, and was according to the course of dealing between them, and the custom and usage of the trade, that M'Lean & Company should, on receiving notice of the vessels on which the coals were to be shipped, and of the lay-days of each vessel, forward the coals so that the vessels might be loaded within the lay-days, always subject to the understanding that no more than the stipulated monthly quantities should be demanded The Lord Ordinary is of opinion that it is not proved that there was any such understanding, agreement, or course of dealing between the parties, or any such custom or usage of trade. There was no stipulation to that effect in the contracts of February and March 1872, and by these contracts, and the agreement entered into by the letters of 6th and 8th October 1872, which made certain alterations on the original contracts, M'Lean & Company were bound to deliver, free on board at Granton or other port, the balance of the coals between 6th October and 31st December 1872 in the following proportions, viz., 1200 tons before 31st October current, 1200 tons before 30th November next, and the balance of about 1200 tons before 31st December next; ‘and failing our doing so, we hereby authorise you to purchase at our expense, at the rates current at the end of each month, any quantities which may then be short delivered.’ There is no obligation in the contracts as to the delivery of the coals into the vessels. On the contrary, the obligation is that M'Lean & Company should deliver the specified quantities before 31st October and 30th November, and the balance before 31st December, and in the event of their failing to do so, Mr Turnbull's remedy was to purchase at their expense at the end of each of these months the coals then short delivered.

The claim on account of demurrage paid to the master of the ‘Ernest August’ is for £22, 2s. 5d., while £16 only were paid, the difference of £6, 2s. 5d. being charged on account of loss sustained through M'Lean & Company not having shipped the full quantity in that vessel, and Mr Turnbull having been obliged to supply that deficiency. The coals for the ‘Ernest August’ were sent in October, and it is admitted in the joint minute for the parties that the deliveries of coal by M'Lean & Company in the month of October amounted to 1197 tons 19 cwt., or within 2 tons 1 cwt. of the 1200 tons which fell to be delivered before the last day of that month. There are no grounds therefore on which this sum of £6, 2s. 5d. can be claimed by Mr Turnbull.

The Lord Ordinary is of opinion that M'Lean and Company committed a breach of their contracts in stopping the delivery of 244 tons 12 cwt. or thereby of the coals, which on Mr Turnbull's orders they had sent in November to Leith and Granton, and in refusing to deliver in November these coals, and the balance of the October and November deliveries, amounting to 15 tons 2 cwts., and also in refusing to deliver the remainder of the coals due under the contracts which they were bound to deliver before 31st December 1872. There is no stipulation in the contract of October, or in the previous contracts, with reference to the time when payment of the price of the coals should be made. But as the obligation in the contract of 6th and 8th October is to deliver 1200 tons in each of the months of October and November, and the remainder in December, the Lord Ordinary considers that the right to demand payment of the price for each month's deliveries only arose when the whole quantity for each month had been delivered. Until such delivery should be made the contract for any particular month would not be implemented, and the price for that month's quantity would not be payable.

Now, on 29th November, when M'Lean & Company demanded payment of £600, or a bill at thirty days for that amount, from Mr Turnbull, on account of the small unpaid balance of the October account and of the coal supplied in November, the November quantity of 1200 tons had not been delivered to Mr Turnbull, but only 942 tons 7 cwt. had been delivered. No doubt 244 tons 12 cwt. of coals were either at Leith or Grantou, or on the way from the pits to Mr Turnbull. But these had not been delivered in terms of the contract, and when Mr Turnbull refused to accept a bill for £600 to account of the November supplies and the unpaid balance of the October account, M'Lean & Company stopped the delivery of these 244 tons 12 cwt., and refused to make any further deliveries under the contract. In so doing the Lord Ordinary considers that M'Lean & Company acted wrongfully, and in breach of their contract. Not only was Mr Turnbull not indebted to them in that amount for coal delivered in terms of the contract but the contract for the November supply of 1200 tons not having been implemented, M'Lean & Company were not then entitled to demand any payment on account of that month's supplies. Mr Turnbull's refusal to accept that bill was not a sufficient ground for M'Lean & Company's refusal to continue the deliveries in terms of the contract. M'Lean & Company were, the Lord Ordinary thinks, in no better position when Mr Turnbull on or about the 23d December, upon being again applied to, refused to pay so small a sum as £250 to account. No doubt Mr Turnbull endeavoured to set off his claims on account of demurrage against the balance which he considered to be due for the coal delivered to him, and offered on 9th December payment of £409, 16s. 10d., as the balance due after deducting these and other claims objected to, amounting to £168, 3s. 6d., demanding at the same

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time a letter guaranteeing that the deliveries would be continued in terms of the contract. Mr Turnbull was wrong in this attempt to set off these claims against the contract prices. But that did not, the Lord Ordinary thinks, alter the position in which M'Lean & Company stood with reference to their failure to deliver the full quantity of 1200 tons in November in terms of their contracts, and it did not warrant their refusal and failure to deliver before 31st December the remainder of the coals contracted for;

The quantity of coal short delivered on 30th November was 259 tons 14 cwt., and the entire quantity not delivered in December was 1269 tons 6 cwt. of Main coal, and 428 tons 4 cwt. of Ell coal. The Lord Ordinary has, after full consideration of the proof, assessed the loss, injury, and damage which Mr Turnbull sustained in consequence of M'Lean & Company's wrongful failure to deliver these coals in terms of their contract at £860.

The parties have by their joint minute agreed that the sum due as at the date of their summons to M'Lean & Company under the conclusions of their action, and after crediting Mr Turnbull with the price of the wood supplied by him, amounted to £571, 18s. 9d. This sum, with the interest thereof from the date of M'Lean & Company's summons to the date of the prefixed interlocutor, will fall to be deducted from the damages, amounting to £860.

As regards the question of expenses, the Lord Ordinary considers that Mr Turnbull is only entitled to expenses subject to modification, in consequence of his having insisted in his claims for repayment of the demurrage, and of the abatement of £51, 14s. 9d. on account of 4139 tons 11 cwt. of coal not addressed to him.”

Against this interlocutor M'Lean & Co. reclaimed.

Argued for reclaimers—On the facts of the case we are entitled to decree.

Argued for respondents—[counsel divided the argument into three heads, 1 and 2 on the facts, and] 3. Our clients never were in breach of contract. But even supposing they were so, did that justify the rescinding of the contract? We maintain it did not. It is only where two things are simultaneous and reciprocal, or where one proceeds directly from the other, that the failure to implement the one does rescind the other. [ Lord Justice-Clerk—Then you had no right of retention.] That is so: What they intimated in their letter of 29th November was quite clear—“We shall hold the contract at an end.” In one case ( Withers v. Reynolds) there was an obligation to deliver straw at so much per month, to be paid on delivery. For some months the purchaser did not pay, and then he said he would not pay, except always in future one month in arrear; this practically was an announcement that he would not in future fulfil his contract and ground a rescision. Here we have no refusal to pay in future for coal—Mr Turnbull only said he would not pay the past amount unless this demurrage claim were settled. [ Lord Justice-Clerk—If he did so unreasonable a thing as keep £800 because he claimed £80, was it unreasonable of the other side to suppose he would do so in future?] I think it was ( Johannsohn v. Young). [ Lord Neaves—Is it not the case that when parties dispute about an insulated matter, that will not ground a rescisión of a contract, but when the dispute is about the essential grounds of a contract, then it will?] ( Simpson). The deduction to be drawn is that though there be a clear breach as to a separable part of the contract, if there be any other remedy adequate without rescinding the contract that must be adopted. Here the remedy was to sue for the price. [ Lord Neaves—Are you bound to go on with a contract for 12 months if every month be refuses to pay a shilling, although never saying he would not do so in future?] I think so, but of course there might be such a series of breaches as to lead to the irresistible conclusion of non-intention to fulfil in the future. [ Lord Justice-Clerk—All your cases relate to a question in dispute; this is not so, for you refused to settle though the disputed matter were reserved.] [ Lord Benholme—You claim say £600 for demurrage, and say I owe you £800 and I will not pay till you admit my claim. Now that is something more than a set off. The refusal is to pay a larger sum.] There was no intimation here, and there is no inference to be drawn as to the future—the question was only as to the past. [ Lord Benholme—Do you say that wherever the breach can be remedied by an action at law, the contract cannot be rescinded?] I do not think the general law goes quite that length. The Judges seem to have distinguished between those contracts which are separable, as in a case where they extend over several months, and contracts settled off-hand, as in a sale over a counter; Parsons on Contracts; Bell's Comm.

Reclaimer's Authorities— Withers v. Reynolds, 2 Barnes, and Ad. 882; Bell's Comm. (M'Laren) i. 454; Simpson, L. R., Q.B. 14, 26 Nov. 1872; Bell's Illustr. 79; Barclay & Co. v. Anderston Foundry Co., 18 D. 1190, 3 July 1856.

Respondent's Authorities— Johannsohn v. Young, 32 L. J., Q. B., 385, 24 June 1863; Parsons on Contracts, vol. 2, 678, 679.

At advising—