Scottish Court of Session Decisions

By lease dated 17th October 1888 John Dewar, draper in Perth, let certain premises situated at 36 High Street, Perth, to James Alexander, grocer, from the date thereof to Whitsunday 1889, and for five years thereafter. The lease bound Alexander to carry on in the premises the business of a grocer and wine and spirit merchant, and for no other purpose. It contained the following clause—“But excluding assignees and sub-tenants, legal or conventional, except such as may be approved by the first party,” viz., the lessor, … “Declaring always, as it is hereby expressly stipulated and declared, that the said subjects are so let to be used and occupied allenarly for carrying on therein the business of grocer and wine and spirit merchant, and the second party and his foresaids shall accordingly be bound, as they hereby bind and oblige themselves, regularly to keep the said premises open, and to carry on the said business therein…. And the second party hereby agrees and binds and obliges himself and his foresaids to carry on in the premises hereby let the foresaid business of grocer and wine and spirit merchant in a lawful and proper manner, and to use and employ the said premises for no other business or purpose whatever.”

In September 1891 Alexander found himself in difficulties, and granted a trust-deed for behoof of creditors, whereby he did “assign, dispone, convey, and make over to and in favour of James Ainslie, wine merchant, Leith, … all and whole the heritable and moveable, and real and personal estates, and property of every description presently belonging to me,” with power to said trustee “to sell and also to carry on any business formerly carried on by me for such time as he thinks necessary, and generally to do everything regarding said trust-estate which I could have done before granting hereof.”

Alexander then went to reside and carry on business in Leith.

Ainslie entered into possession of the shop in High Street, Perth, and carried on business there for more than two months without any objection being made by the landlord.

In December 1891 Dewar's agent, Mr James C. Dow, wrote to Ainslie's agent—“It is over nine weeks since Mr Alexander left the shop and town, and the business has, we assume, been carried on by his trustee under the trust-deed for behoof of his creditors… . Mr Dewar of course does not recognise the trustee in any way, and he directs me to remind you that assignees, legal or conventional, are excluded by the lease as tenants, so that the lease has been forfeited. He is resolved that the present state of matters shall no longer continue, and his interests as landlord are daily suffering. He instructs me to ask that the trustee now formally give up the shop, hand him the key, and clear out of the premises, so that he may let the place to a new tenant.”

In February 1892 Dewar brought an action of removing in the Sheriff Court at Perth against Ainslie. Alexander was afterwards sisted as a defender.

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The pursuer pleaded—“The lease of the shop in question, excluding assignees and sub-tenants, legal or conventional, except those approved of by the pursuer, the defender, whose only title to possess said shop can be that of an assignee under the trust-deed in his favour, and being therefore excluded by the lease, decree of ejection should pass against him as craved.”

The defender pleaded—“(3) There having been no breach of the terms of the lease granted in favour of James Alexander, the present action is uncalled for, and the same ought to be dismissed with expenses.”

Upon 24th March 1892 the Sheriff-Substitute ( Grahame) allowed both parties a proof of their respective averments.

Upon 28th June 1892 the defender lodged a minute, in which it was stated “that the case has been settled by the parties, and that the pursuer is therefore not entitled to proceed any further in it, and craves proof of the fact of the settlement. The terms of the settlement are as follows—‘Mr Ainslie proposes that the business be advertised for sale (apply to himself and apply to Mr Dewar), Mr Dewar to select his own tenant, and the sum offered for tenant's fixtures and goodwill to be divided, half to Mr Dewar and half to Mr Ainslie; the stock to be taken by the incoming tenant at mutual valuation, and possession to be given immediately: Cases to be withdrawn, each side bearing its own costs: Proportion of rent from Whity. (15 May) to entry of new tenant to be paid by trustee.” In answer the pursuer denied that the case had been settled as stated in the minute.

A condescendence of res noviter was lodged by the defender, in which he stated that the agreement set forth in the minute was come to upon 24th May 1892 at a meeting between the parties, at which their agents were also present

The pursuer answered—“Explained that pursuer's agent Mr James C. Dow, solicitor, as arranged, sent a draft minute of agreement, giving effect in detailed form to said heads of proposed agreement, for revisal to defender Ainslie's agent, who returned it with alterations which were not agreed to by the pursuer, who maintained that said alterations were not in terms of proposed settlement, and had been objected to all along by him. The pursuer then broke off negotiations, no settlement of the present action being effected, no deed being signed, and the parties being at hopeless variance with each other.”

The defender pleaded—“(2) The arrangement above narrated having been deliberately made by the parties for a settlement of the present action, the pursuer is not entitled to resile from the new arrangement, and the defenders are entitled to have the action withdrawn or dismissed, neither party being found entitled to expenses up to the date of new arrangement.”

The pursuer pleaded—“(2) The settlement founded upon not being embodied in a probative writ or completed document, and being informal, is not binding upon pursuer, and is not a settlement of the present action. (3) No settlement of the present action having been come to in respect of said agreement, the condescendence of res noviter should be dismissed, with expenses.”

A proof was allowed.

The pursuer, Dewar, deponed—“On the 24th or 25th May I had a meeting in Mr Dow's office, when there were present, Mr Ainslie, Mr Dempster (Ainslie's agent), Mr Honey, Mr Dow, and myself. I had a conversation regarding the case with the view to a settlement, after a little. (Shown memorandum No. 27 of process)—Mr Dow (the pursuer's agent) wrote this as a proposition by Mr Ainslie embodying a settlement of the disputes. It was written by Mr Dow on behalf of Mr Ainslie as a proposition made by him. It was read over at the meeting. I asked for a little delay for its consideration, and an adjourned meeting of the same party was fixed for two hours later. I met the same parties, with the exception of Mr Honey. I gave my assent to the proposition in No. 27 as it stood there. I do not consent to a settlement as it now stands. I consented to a settlement as it stands here at the second meeting on that day, but I don't do so now. Cross.—I said that I would agree to the condition of this memorandum only as the basis of a settlement. I did not for a moment consider this memorandum as a settlement itself. At the meeting Mr Ainslie distinctly asked that the memorandum should be signed, and Mr Dow objected to its being signed. Subsequently at a quarter to four o'clock the proposal to sign was made. Mr Dow said there must be a formal agreement drawn up, and there was no objection, so far as I can recollect. Mr Dow afterwards submitted to me a draft agreement between myself and Mr Ainslie, No. 28 of process. This draft, as written out by Mr Dow, embodied to my mind the terms of settlement. I instructed Mr Dow to send it to Messrs R. & J. Robertson & Dempster, and he sent it. He got back the draft from them, and came and submitted it to me with certain alterations. From a perusal of these alterations, I objected to them in the whole.”

Mr Dow deponed—“The object of that meeting (24th May) was to arrange a settlement of the matters in dispute between the parties. With that object I sent for Mr Dewar to meet Mr Ainslie. There was some discussion about a proposition made by Mr Ainslie, and he, or one of them, asked me to put it in writing to see how it looked. (Shown No. 27)—I did so, and it was then read over. Mr Dewar said he wished a little time to consult his friends as to Mr Ainslie's suggestion as contained in the writing, perhaps either then or at a subsequent meeting. Mr Dewar returned before four o'clock and met Mr Ainslie and Mr Dempster. He then indicated that the proposal would be accepted, that he agreed in principle to what Mr Ainslie suggested, and that the case would be taken out of Court on that

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footing. I perhaps must explain that there was a suggestion by somebody to sign it, but I would not allow that. I said you must put it into practical shape. They all acquieseed. They were so satisfied they were prepared to sign it as a settlement, but I would not allow it—I do not say because it was informal, but it required an agreement to carry it out. If an agreement had been written out carrying out the principles there laid down, I believe the action would have been settled. Cross.—At that meeting Mr Ainslie asked Mr Dewar if he had any terms to offer for a settlement. There was a lot of conversation, and a basis of settlement was practically arrived at in the end. Mr Ainslie asked me to put those conditions in the form of a memorandum. (Shown No. 27 of process)—This is one of what I wrote. I think it was Mr Ainslie that suggested that the memorandum should be signed. It may have been Mr Dewar, but I rather think it was Mr Ainslie. I recommended that it should not be signed. I said I would write out a draft agreement, and send it to Mr Dempster on behalf of Mr Ainslie.”

Ainslie, the defender, deponed—“Mr Dow asked me if he would put it down, and I agreed. After being taken down in writing, it was read over, and I said it was what I meant. Mr Dewar was asked if he agreed, and he got time to consider it till four o'clock. He came back in an hour. I did so, and Mr Dempster came back and saw Mr Dewar and Mr Dow, who said Mr Dewar will consider this and will agree to it. We were not five minutes in the office, and instructions were then given for the draft agreement to be drawn up. I asked Mr Dow for a copy of the memorandum, and he gave it to me. That memorandum contained a proposition on my part to settle the action, and it was agreed to by Mr Dewar after consideration.”

Upon 27th September 1892 the Sheriff-Substitute found “that the settlement as alleged to have been agreed on by the parties on the 24th day of May 1892 in terms of the memorandum, No. 27 of process, is proved; further, that the defender declares his willingness to abide by the conditions of the said agreement, and to have a formal deed of settlement adjusted in terms thereof: Finds that the pursuer is not entitled to resile from the said agreement of settlement, and that both parties are bound thereby.” He therefore dismissed the action.

“ Note.—… The circumstance that the terms of the agreement had not been reduced to a formal deed did not imply in either party a right to resile from the agreement under the memorandum, and assuming that in the course of the adjustment of the formal deed the defender proposed to insert conditions inconsistent with or not embraced in the terms of the memorandum, the pursuer did not thereby become entitled to resile from the original agreement. The defender still declares his adherence to his obligations under the memorandum, and his willingness to have a formal deed adjusted in terms thereof. To the fulfilment of these conditions it appears to me that both parties are still bound, and that the case must therefore be considered as settled, and the defender be held entitled to have it dismissed.” …

The pursuer appealed to the Sheriff ( Jameson), who upon 18th October 1892 found, inter alia—“(2) That on said 24th of May there was not a consensus in idem placitum with regard to an essential element in any agreement for the settlement of the present action, viz., the selection of a new tenant for the premises in question, the pursuer's understanding being that he should have the absolute choice of a new tenant, and the defender's understanding being that the pursuer should only have a choice in the case of there being two equally good men offering the same price for the fittings and stock; (3) That when the parties came to adjust a minute of agreement the defender's agents made alterations thereon giving effect to the aforesaid understanding on the part of the defender, at all events to the effect of limiting the pursuer's absolute choice of a tenant, and that the pursuer thereupon broke off the negotiations: Finds, in point of law, that there is no concluded contract between the parties for the settlement of this action, and that the pursuer was entitled to break off negotiations, and is now entitled to have the present action proceeded with,” &c., and remitted the cause to the Sheriff-Substitute for further procedure.

Upon 5th November the Sheriff-Substitute found “that the said assignation to the defender Ainslie of Alexander's lease not having been granted with the pursuer's approval, as required under the lease, and the pursuer's acquiescence in Ainslie's possession of the premises for the purpose of winding-up the estate not having been such as to imply his approval of him as tenant under the lease, and which in the absence of such approval cannot be held to have been assigned, the defender Ainslie has no title in a question with the pursuer to the tenancy and occupation of the premises in question: Finds further, that the defender Alexander, by the assignation of his lease, having given up the tenancy and possession of the premises in question to the defender Ainslie, he is to be held as having abandoned his rights of tenancy under the lease, and is not entitled to object to the pursuer obtaining the warrant of ejection against the defender Ainslie, which he now asks: Therefore grants summary warrant of ejection against the defender as craved, &c.

“ Note.—In holding that the defender Ainslie is not entitled to retain the tenancy of the premises which were originally let by the pursuer to the defender Alexander, I have given effect to the view expressed by the learned Sheriff-Principal in the note to his interlocutor dated 18th October last.

The exclusion in Alexander's lease of the power to assign without the landlord's approval of the assignation is quite clear, and Alexander, in granting the assignation of the tenancy of the premises in question to the defender Ainslie was going beyond

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his powers. Under the lease no right of tenancy could be carried by assignation without the pursuer's approval, which it is not alleged he then gave. It is no doubt admitted by him that he consented to the defender Ainslie taking possession of the premises and carrying on the business there for behoof of Alexander's creditors; but this did not imply any consent to the assignation of the tenant's right under the lease, and not having consented to the assignation thereof, he is entitled to refuse Ainslie the right of a tenant under the lease. The permission given to Ainslie to occupy the premises for the purpose of Alexander's estate being realised was voluntary, and does not entitle Ainslie to retain possession now that that permission has been withdrawn. Ainslie, not being a tenant, is just in the position of a squatter, and the pursuer is entitled to eject him. As regards Alexander, I think that he cannot be held to have now any real interest under the lease, the tenancy and possession of the premises in question having been assigned by him to Ainslie for the purpose of realising and winding-up the insolvent's estate. For that purpose the premises have been occupied for upwards of a year by Ainslie, and though under the trust-deed it cannot be held that the rights of Alexander, as tenant under the lease, were legally assigned, he must, I think, under the circumstances be held in a question with his landlord to have abandoned the tenancy, and therefore not now to have any interest entitling him to object to the ejection of Ainslie from the shop and premises in question.”

The defender Ainslie appealed, and argued—Upon the evidence there was a concluded bargain between the parties to put an end to the case in the Sheriff Court upon the terms agreed to in the memorandum. It was not necessary that this memorandum should be put into the form of a deed for it to have the effect of settling the case so that the pursuer could not resile on the ground that it was not a completed agreement. There is no doubt locus pœnitentice if the bargain is not complete, but it is a matter of construction in the circumstances of each case whether there is a final agreement, and if locus pœnitentice is here sought for, it must be on the ground that the memorandum was not signed at the time it was drawn up because it was desired to suspend the engagement; that was not the intention. A signed and tested deed was not necessary—Bell's Prins. sec. 25. Nor could the pursuer resile on the ground that there was not consensus in idem placitum, because the difficulty referred to by him was merely a case of dispute about the meaning of the words of the agreement, and that was not sufficient— Powell v. Smith, April 26, 1872, L.R., 14 Eq. 85; Pollock on Contracts, p. 430. This memorandum, although it was in writing, could be proved to have been accepted by parole evidence— Thomson v. Fraser, October 30, 1868, 7 Macph. 39; Love v. Marshall, June 12, 1872, 10 Macph. 795. Upon the merits of the case, the landlord was not entitled to turn out Ainslie. He was not an assignee, but merely a manager for the bankrupt's creditors. It was admitted that bankruptcy did not bring the lease to an end; the bankrupt was therefore entitled to put in a manager although he could not assign the lease—Bell's Comm. i. 76, and case quoted in note, Durham & Henderson v. Livingstone, 1773, M. 15,238; Rankine on Leases, 529, 530; Dobie v. Marquis of Lothian, March 2, 1864, 2 Macph. 788. The tenant had not left the country; he was in Leith, and could come back to Perth if required.

The respondent argued—A binding settlement was not entered into, and the pursuer was entitled to resile from the conditions stated in the memorandum. It was plain from Mr Dow's evidence that he would not allow his client to sign until the matter was put into a practical shape. There was therefore a suspensive condition imported into the memorandum, and as that suspensive condition was never carried out by the defender the pursuer was not bound. In the second place, the pursuer was entitled to resile because there was not consensus in idem placitum. One of the most important conditions in the compromise was that the landlord should have the choice of a tenant, but it appeared that each party took a different view of that section's meaning, so that they were not agreed on what they were really arranging. The pursuer was entitled to remove Ainslie because he was an assignee in the sense of the lease, and not merely a manager for the tenant. It was a covert assignation when the tenant had really left the district, and that was not allowed under such a lease as the one here— Munro v. Miller, December 11, 1811, F.C.; Watson v. Douglas, December 13, 1811, F.C.; Assignees of Sydserf v. Todd, March 8, 1814, F.C.; Lyon v. Irvine, February 13, 1874, 1 R. 512; Hatten & Clay v. M'Luckie, December 21, 1865, 4 Macph. 263. One thing was decisive on the question whether Ainslie was a manager or an assignee, that he was bound to account for his actings to the creditors as well as to the bankrupt.

At advising—