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Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Johnson & Reay v. Nicoll & Son [1881] ScotLR 18_268 (25 January 1881)
URL: http://www.bailii.org/scot/cases/ScotCS/1881/18SLR0268.html
Cite as: [1881] ScotLR 18_268, [1881] SLR 18_268
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SCOTTISH_SLR_Court_of_Session
Page: 268↓
Court of Session Inner House Second Division.
v.
Facts:
Where manufacturers who were under contract to supply goods of a certain stipulated quality, offered in implement of their contract goods of the stipulated quality, but not of their own manufacture, and the buyers declined to receive them— held, following The West Stockton Iron Company v. Nielson & Maxwell (July 3, 1880, supra, vol. xvii., p. 719, 7 R. 1055), that the tender of those goods was implement of the contract, and that the buyers were in breach of the contract in refusing to receive them.
On 13th June 1878, correspondence regarding the sale of iron plates having previously passed between the parties, Messrs Johnson & Reay, iron manufacturers, Stockton-on-Tees, sold to Nicoll & Son, iron merchants, Dundee, 750 tons iron ship-plates. The contract-note, which was written on paper having upon it the heading “J, & R. Brand, a Crown, Moor—Johnson & Reay, iron manufacturers,” was in these terms:—
“The Moor Ironworks,
Stockton-on-Tees, 13th June 1878.
Sold to Messrs Nicoll & Son, Dundee, per Messrs John E. Swan & Brothers, Limited, ship-plates as under, viz.:—
Quantity.—Seven hundred and fifty (750) tons.
Quality.—‘Crown,’ to pass Lloyds’ survey.
Price per ton of 2240 lbs.—Six pounds (£6).
Not less than a truck-load to be specified at a time.
Terms of payment.—Cash, less 2
per cent. on 10th of month following delivery. 1 2 Rate of delivery.—Over next three or four months, in about equal monthly quantities.
Place of delivery.—Free on trucks at our works. Buyers to have the option of taking delivery of the whole, or a portion of contract, f.o.b. Stockton or Middlesbro', we charging nett cost, in any case not exceeding 2s. Gd. per ton.
For Johnson & Reay,
F. W. Stoker.
In the case of strikes or combinations of workmen, or accidents causing the stoppage of the works, the supplies of iron now contracted for may be suspended during their continuance. This clause applies to buyers and sellers.”
The sale was confirmed by Nicoll & Son by letter of 19th June. On the same date there was another contract between the parties, who had been for sometime dealing with each other in iron. This contract, however, is of no importance to the present case.
On 9th July 1878 Johnson & Reay sold to Nicoll & Son 300 tons ship-plates, also “Crown,” to pass Lloyds’ survey, the delivery to be in equal monthly quantities to extend over three or four months. There was in this contract the same strike clause as that in the June contract, quoted supra.
Under neither contract were the deliveries made in the time contemplated by the contract-notes. The parties were at issue as to whether this was the fault of Nicoll & Son in not specifying for iron in due time, or of Johnson & Reay in not being in a position to supply sufficient quantities of iron as required under the contracts.
In May 1879 a portion of the iron under the June contract was still undelivered, and none of the iron under the July contract had been delivered. On 21st May Johnson & Reay wrote this letter to Nicoll & Son:—“We beg to inform you that in consequence of our inability to secure sufficient specifications to keep our works going, we have been compelled to close them for the present, and have therefore made arrangements with some of our friends to manufacture for us the iron which we are under contract to deliver to you. In deference to your wishes from time to time, by reason of your being unable to accede to our repeated requests for specifications, in accordance with the terms of your contracts with us, the delivery of the iron sold to you has been deferred, and it is now very considerably in arrear. Having regard, therefore, to the arrangements we have made with the firms who are manufacturing the iron for us, and to prevent complications with them, we must ask you to be good enough to let us have specifications for the quantity due, about 1000 tons plates and 298 tons angles, without delay, and continue to specify in accordance with the terms of your contracts.”
On the 29th the solicitors of Johnson & Reay wrote on their behalf requiring immediate specifications. The answer was this letter from Nicoll & Son:—“2d June 1879.—We enclose specifications of plates, which you will please be very particular in rolling exact to size, both in length, breadth, and thickness and quality, so that there be none rejected, each plate to be distinctly [J. & R., a crown, Moor] branded. Please have all ready by end of the week, when we will advise you where to ship them. Also say approximate weight.”
Thereafter Johnson & Reay took up the position that they were entitled to supply iron of crown quality to pass Lloyds’ survey, whether made by themselves or other firms; Nicoll & Son, on the other band, contending that they were entitled to iron made by Johnson & Reay at their “Moor” ironworks.
In November 1879 Johnson & Reay raised this action concluding for £104, 17s. 4d. damages for breach by Nicoll & Son on the June contract, and £375 on the July contract. The amount of damage claimed was, as they alleged, the difference between the contract prices and the market prices, so far as undelivered as at the date when the pursuers declined to allow the defenders the further indulgence in point of time for the due implement of the contracts which the defenders were desirous of obtaining.
Page: 269↓
They pleaded—“(1) The defenders having wrongfully, and in breach of said contracts, failed to supply said specifications, and having thus prevented the completion by the pursuers of said contracts, are liable in damages as concluded for, with expenses.”
The defenders denied that the contract had been broken through their fault, and pleaded—“(2) There having been no undue delay on the part of the defenders in ordering the iron under the contracts of June and July 1878, and any delay that did take place having been caused through the pursuers' fault and breach of faith with the defenders, the latter are not responsible therefor. (3) The defenders being ready in June 1879 to take delivery of the whole iron under said two contracts, and being still ready and willing to do so, are entitled to absolvitor.”
There was a farther question between the parties relating to a contract alleged by the pursuers and denied by the defenders to have been completed between the parties in October 1878. This question turned on a matter of fact, and need not be further referred to.
The Lord Ordinary allowed a proof, in which the defenders produced letters written in 1878 stating that they objected to take under their contracts any iron of the West Stockton Iron Company's manufacture, which was that offered by the pursuers, on the ground that it was of inferior quality to that produced by the pursuers at their own works. They also led evidence, reference to which is made in the opinion of Lord Craighill, tending to show that the iron of the West Stockton Company, though of crown quality, and capable of passing Lloyds’ survey, was inferior to that supplied from pursuers' own works.
The Lord Ordinary on 12th November 1880 issued this interlocutor—“Decerns and ordains the defenders to pay to the pursuers the sum of £400, being the damages caused to the pursuers by the defenders' breach of the contracts of 13th June and 19th July 1878.” … He added this note:—
“ Note.—The contracts of June and July 1878.—These contracts were open in May 1879. On the 21st of that month the pursuers intimated to the defenders that they had closed their works, and that they would supply the iron from other manufacturers. The defenders on 2d June insisted that the pursuers should deliver iron of their own manufacture, and refused to take any other. The question thus comes to be, which of the parties took the just view of the contracts.
The decision of the Court in the case of the West Stockton Company, 7th July 1880, seems to the Lord Ordinary to rule the question. He cannot distinguish it from the present case, and he is therefore of opinion that the defenders are in the wrong.
It seems to the Lord Ordinary that the damages should be settled by reference to the market prices which obtained at the date of the breach. On this footing they may, he thinks, be fairly estimated at £400.” … .
The pursuers having reclaimed against the part of the Lord Ordinary's interlocutor dealing with the alleged contract of October, in which he assoilzied the defenders, the defenders took advantage of the reclaiming-note to contend that they ought to be assoilzied from the whole conclusions of the summons, inasmuch as the iron offered by the pursuers was not that stipulated for, albeit iron of crown quality fit to pass Lloyds’ survey. They relied, in distinguishing the case from that of the West Stockton Iron Company v. Nielson & Maxwell (July 3, 1880, 7 R. 1055, 17 Scot. Law Rep. 719), on the evidence led by them as to the superior quality of pursuers' iron, whereas in the Stockton case the parties admitted that the iron offered was as good as that supplied by the sellers from their own works; on the fact that the iron referred to in the contract-notes was to be “J. & R., crown brand, Moor,” as shown by the heading of the contract-note; on the fact that it appeared from the West Stockton case that the sellers there were both manufacturers and dealers, while the pursuers here were manufacturers only; and on the fact that while everything tended to show in that case that iron of a certain quality only was wished, and the parties had been brought together by brokers, the circumstance that the defenders here had ordered their iron from the sole agents of the pursuers, and the terms of their letter, showed that they bad selected the pursuers for their superior make of iron. In any view the Lord Ordinary had allowed excessive damages.
At advising—
Page: 270↓
That the point in controversy may be the more clearly presented, the statement given by the defenders in their answer to the condescendence should be brought into view. The defenders there explain that “in June 1879, at the request of the pursuers, they sent four new specifications for the plates still undelivered, but the pursuers returned these, and declined to give further implement of the contracts. The pursuers at this time wished to substitute the iron of another company for the iron contracted for; but the defenders declined to consent to this, and stated that they were ready to take delivery of the brand of iron contracted for. The pursuers, however, wrongously declined to supply their own iron in terms of the contract.”
Thus, there is sharply raised the question, whether the articles contracted for were as matter of contract to be articles of the pursuers' manufacture? The quality of what was offered by the pursuers was not in June 1879, when the parties came into controversy on this subject, and is not on the record, the subject of objection. The fact that the plates and angles were to be manufactured by another company, and nothing else, was the cause of rejection. The defenders, no doubt, at the proof, took up the question of comparative quality, and tried to show that iron of the pursuers' manufacture was better than that of other makers; but this obviously was an afterthought, and at anyrate it has not, I think, been established.
Assuming, then, that the iron which was to be supplied while the pursuers' works were closed was of the stipulated quality, were the defenders entitled to reject what was offered merely because it was to be manufactured at the works of another maker? I do not lose sight of the consideration that the articles sold by the pursuers to the defenders were articles to be manufactured after the defenders' specifications had been sent in, and so could not be supplied after the close of the pursuers' works from surplus stock; nor of the consideration that presumably it was intended on the one side, and expected on the other, that as the pursuers were manufacturers, what had been sold could be made at their works. The supplies to be furnished would, if the thing could be accomplished, naturally be turned out from those works. But neither intention nor expectation, but the terms of the concluded contract, must be taken to furnish the rule by which the question in dispute is to be determined.
Turning, then, to the contract, I find, in the first place, that nothing is said as to the place of manufacture. “Ship plates as under” is the thing sold. And this is the more noticeable because there is a specification of quality which does not refer, and has no relation, to the place where, or the persons by whom, the goods were to be manufactured. All that is said is “Quality crown, to pass Lloyds’ surveyor.” Now, the plates which were rejected were to be of crown quality. They were to have the crown upon them, and the makers’ initials, as required by Lloyds’ rules, were also to be a part of the brand. What more could be required so far as the terms of the contract were concerned, there being no specialty in the manufacture of the pursuers distinguishing their products from those of other makers. To read the contract as the defenders desire, I may add, would be not to further but to impede the execution. An article of the stipulated quality was the thing to be delivered and received, and to introduce as an implied condition that even though the quality was unexceptionable it might be rejected because made at other works than those of the sellers, is to put in the power of the buyer an unstipulated option of rejecting the very article which according to description had been purchased. This result, no doubt, must have been allowed if the subject of contract had been said to be an article to be made by the pursuers. A bargain is a bargain, and a specified condition, reasonable or unreasonable, expedient or inexpedient in itself, must, if insisted on, be observed. But there is here, as I read the contract, no such condition. The description of the article contains neither directly nor by implication any reference to the maker.
But negative evidence is not all that is furnished by the contract. For, in the second place, there is in the “strike clause” of the contract what appears to me to be almost positive proof that the article manufactured by another maker might be supplied. By that clause it is provided that “in the case of strikes, or combinations of workmen, or accidents causing the stoppage of the works, the supplies of iron now contracted for may be suspended during their continuance. This clause applies to buyers and sellers.” Here we have, as I think, two things made clear. The one is that the works of the pursuers are to be looked upon as the place at which in ordinary circumstances the iron is to be manufactured. The other is that when these works were stopped supplies manufactured at another place might be furnished; for the clause does not say that on this occurrence there must be a suspension of delivery. The option to suspend is given, but suspension is not made obligatory. The defenders, indeed, read the concluding words—“this clause applies to buyers and sellers” as if it conferred an option not merely on the sellers to suspend, but on the buyer to refuse, delivery. This, however, is a misreading of this provision. What is meant by the declaration is, that when there is a stoppage in the works of the seller, he shall have the option to suspend delivery; and when there is a stoppage in the works of the buyer, the latter is to have the option to refuse delivery. Thus the two parties are made equal.
All this being so, the true result appears to me to be, that the pursuers were entitled to offer, and the defenders were bound to accept, iron of
Page: 271↓
The decision in the West Stockton case (July 3, 1880, 7 R. 1055) appears to me to be an authority on the present occasion. The circumstances are all but identical; and I adopt the grounds of judgment presented in the opinions of the Lord Justice-Clerk and Lord Gifford.
There is left for consideration only the amount of damage, and as to this I think that cause has not been shown why the sum awarded by the Lord Ordinary should be reduced. The principle on which he assessed the damage has not been objected to by the defenders. Their case upon this point, as presented at the discussion upon the reclaiming-note, is, that even assuming that they were bound to accept iron manufactured elsewhere than at the pursuers' works, they ought to have been allowed from June 1879, when the final demand for specifications was made, the three or four months provided by the contracts for specification and delivery. But this contention is excluded by their previous delay, and besides is inconsistent with their pleading upon the record. In their third plea-in-law they set forth that in June 1879, the date taken by the Lord Ordinary to be the date of the breach, they were ready to take delivery of the whole iron under the said two contracts, and in so saying they cut away the ground on which the argument for reduction of damage has been maintained.
Entertaining those views, my opinion is that the interlocutor of the Lord Ordinary ought to be affirmed, and judgment accordingly be pronounced.
The Court adhered.
Counsel for Pursuers— Macdonald, Q. C.— J. A. Reid. Agents— Finlay & Wilson, S.S.C.
Counsel for Defenders—Dean of Faculty ( Fraser, Q.C.)— Asher— W. C. Smith. Agent— J. Smith Clark, S.S.C.