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Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Carson and Another v. M'Kelvie & Co. [1895] ScotLR 32_308 (7 March 1895)
URL: http://www.bailii.org/scot/cases/ScotCS/1895/32SLR0308.html
Cite as: [1895] SLR 32_308, [1895] ScotLR 32_308
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SCOTTISH_SLR_Court_of_Session
Page: 308↓
Court of Session Outer House Second Division.
Lord Low, Ordinary.
v.
Facts:
A coalmaster contracted to supply a coal merchant with the whole output of cannel coal in his colliery at an agreed-on price for a period of twelve months, it being provided that “strikes or other unforeseen circumstances” should exempt the coalmaster from delivery. During the first six months of the contract wages rose considerably, with the result that the contract became unprofitable to the coalmaster, and in the seventh month he gave notice to the miners working in the cannel coal seam that their wages would be reduced by a shilling per ton, which would have brought them below the ordinary rate of wages paid in the district. The men having thereupon ceased work, the coalmaster was unable for several months to deliver coal in terms of his contract, and the merchant was obliged to buy coal elsewhere at more than the contract price.
The coalmaster having sued the merchant for the price of certain coal which had been delivered under the contract, the defender pleaded that he was entitled to compensate the pursuer's claim with the loss which he had sustained in consequence of the pursuer having failed to deliver coal in terms of the contract.
The Court sustained the plea of compensation, holding that the pursuer's failure to fulfil his obligation had not
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been due to a “strike” in the sense of the contract.
Upon 2nd May 1893 James M'Kelvie & Company, coal merchants, Edinburgh, wrote to Robert Forrester, coalmaster, Glasgow, as follows:—“Dear Sir,—Your telegram received, and note your acceptance of our verbal offer of 11s. 9d. per ton, on trucks at your colliery for the output (viz., 5000 tons) of your Roughrigg (Blackbraes) cannel. Delivery as required during the ensuing twelve months. Please acknowledge receipt.” Upon the same day Forrester wrote to M'Kelvie & Company — “Dear Sirs,—I confirm sale to you of 5000 (Five thousand) tons or thereby East Roughrigg Cannel Coal for shipment or land sale. Price 11s. 9d. per ton at the colliery. Terms, nett cash on shipment; land sale, one month.”
Until the month of November 1893 Forrester continued to deliver coal as required, which was settled for monthly down to the end of October, but upon November 13th Forrester wrote to M'Kelvie & Company—“Our cannel coal men struck work this morning, and they may not start work again this week, in which case I will be unable to give you more than what we have at present filled.” M'Kelvie & Company pressed for delivery of the coal under the contract, but Forrester did not deliver any until the men returned to work in the month of February 1894.
Upon 12th March 1894 David Simpson Carson, C.A., trustee acting under a trust-deed for creditors, granted by Forrester in 1885, and Forrester, raised this action against M'Kelvie & Company for payment of £112, 10s., as the price of coal delivered to the defenders in November 1893.
The defenders averred—“On or about 13th November 1893 pursuer locked out the miners who work his cannel coal because these miners refused to work for a lower wage than the rate current at the time. The men, though willing to work at the current rate, remained locked out until 19th February 1894. During this period the pursuer, though repeatedly called upon to deliver cannel coal to the defenders under his contract, failed to deliver any. He was thereby in breach of his contract. Defenders were obliged to buy in cannel coal at a higher rate in order to fulfil the contracts they had made, relying upon the pursuer fulfilling his. The quantity which the defenders found it necessary to buy in was 1000 tons, and the price was 14s. per ton, being 2s. 3d. per ton higher than the price at which the pursuer was bound to deliver. The defenders therefore suffered loss of £112, 10s. through pursuer's breach of contract, and this sum they have deducted from the amount due by them for coals supplied.”
In answer to this averment the pursuers stated that their men “struck work on 13th November, and did not resume till 16th February. During this period the pursuers could not deliver coal, as there was no output, and the strike formed a cause exempting them from making delivery under the contract.”
The defenders pleaded—“(2) Compensation. (3) The pursuers having committed breach of contract, the defenders are entitled to deduct from the sum which would otherwise have been due by them to the pursuers the liquid amount of loss suffered by them through pursuers' failure to implement the said contract according to its terms. (4) The defenders, on a true balance of accounts, being due nothing to pursuers, they ought to be assoilzied with expenses.”
At the proof it appeared that when the contract was made the wages of the cannel coal-workers were at the rate of 3s. 11d. per ton, and that this was the only cannel coal seam in the district. The cannel coal-workers were paid a higher rate of wages per ton than the miners in the other seams on account of the difficulty of working this kind of coal, although the amount earned per week by all the miners in the pit was much the same. In May and June 1893 there was a fall in the rate of wages to the amount in all of 7d. per ton, but in August there was a rise first of 8d., and then of 10d. per ton. After the latter rise the wages of the cannel coal-workers stood at 4s. 10d. per ton, and that rate of wages was still ruling up to the 11th of November. About that time the pursuers posted a notice in the pit-bottom to this effect—“On and after Monday first the wages will be reduced to the extent of 1s. per ton.” The men made no attempt to meet their employers, but left the pit and obtained work elsewhere. This notice applied only to the men working the cannel coal seam, 20 in number, and would have brought their wages per day below what they could earn by working in other pits in the district. In February they returned to work at a reduction of 4d. per ton. No coal was delivered to the defenders between November and February, and in consequence they had to buy 1000 tons of cannel coal at 14s. per ton, to complete their own contracts. The pursuers admitted that after the rise in wages the contract became unprofitable to them.
With regard to the reduction in wages Robert Forrester, manager of the indoor department of the pursuers' business, deponed—“(Q) You posted up a notice that they must accept 1s. a ton less? —(A) But in dealing with workmen with regard to wages as a rule, we ask for a greater reduction than we expect to get. We did not expect to get the whole 1s., but we asked it so as to leave a margin for negotiation.” James Mackay, pursuers' pit-manager, deponed—“The men did not send a deputation to me at that time with regard to the matter. When that reduction was to take effect, all the men lifted their graith, and went away on the 13th of November. I did not have any talk officially with the men about the reduction, but I spoke to some of them privately, though they did not say much to me about it. Work was good at the time, and they just seemed inclined to let the matter stand in the meantime. They walked away with their graith as if they did not care to enter into any negotiations at all. They did not approach me with a
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view to asking me whether I would not make the reduction less.” “ Cross.—(Q) What did you understand was meant by a substantial reduction?—(A) Not 2d. or 3d., but as much as I could get. I was empowered by my masters to fix the amount. (Q) At what rate would you have allowed the men to. work? —(A) I expected to get 6d. off. I made no proposal to reduce the wages in regard to the soft coal. The wages are highest in the case of cannel coal, and the second place is taken by the soft coal.” John Drysdale, miner, deponed—“Then in that month there was a reduction of 1s. per ton intimated. On receiving that notice, all of us lifted our graith and went away. (Q) Were you willing at that time to accept any reduction?—(A) We never went to ask any of it back. Reductions are sometimes intimated at a higher figure than the coalmaster expects to get. If we are willing to take a reduction we go to the coalmaster and see how little he will accept. In this case we did not want to have any reduction at all, and that was why we lifted our graith.” Upon January 9, 1895, the Lord Ordinary (Low) pronounced this interlocutor:—“Sustains the pursuers' pleas in law; repels the defences; and decerns against the defenders in terms of the conclusions of the summons,” &c.
“ Opinion.—… The first question is, what is the meaning of the word ‘strike’ as used in the contract between the pursuers and the defenders? The defenders argued that the word ‘strike’ was only applicable to a case where the men ceased working because their employer refused a demand made by them. If, therefore, the question in dispute was the rate of wages, it was only a strike if the men stopped work because the master refused a rise of wages demanded by them. If the men stopped work because they would not agree to a reduction of wages proposed by the master, it was not a ‘strike’ but a ‘lock-out.’
“I apprehend that the words ‘strike’ and ‘lock-out,’ as used in such cases as this, are phrases which have come to be used as short and convenient terms for expressing a certain condition of matters between master and workmen. I therefore think that the words, when used in a trade contract, must be interpreted according to the meaning which has been put upon them by usage.
“Now, I am not aware of any usage which would limit the word ‘strike’ in the way for which the defenders contend. I think that I am right in saying, that the bulk of the cases which have occurred in recent years of workmen refusing to continue to work have arisen because of a proposal on the employer's part to reduce wages. Yet these cases have been always described as strikes by everyone concerned.
“A ‘lock-out’ I take to be a matter of much rarer occurrence, and to apply to the case of a master turning his men out and refusing to allow them to continue to work, although there may be no dispute between them as to the rate of wages or otherwise.
“I am therefore of opinion that when the pursuers’ miners left their colliery in November 1893 a strike occurred within the meaning of the contract, and the consequent stoppage of deliveries of coal was not a breach of the contract, unless it is established that the ‘strike’ was truly brought about by the pursuers with the fraudulent design of escaping from the contract which they had made.
“In my opinion the evidence negatives such an idea. It was conceded by the defenders' counsel that the pursuers would, in a question with the defenders, have been entitled to refuse to pay their miners a higher rate of wages than that current when the contract was made, and, that if the miners had struck work because a higher rate was not granted, cessation of deliveries under the contract would not have involved a breach. When, therefore, the rate of wages rose in August to 10d. above the rate current when the contract was made, the pursuers would have been entitled to refuse to give that rise, although the result might, and no doubt would, have been that the miners would have struck, and deliveries under the contract would have ceased.
“Now, what the pursuers actually did was to continue deliveries under their contract for nearly three months after the large rise of wages which took place in the month of August. That showed that, as Mr Forrester said, the pursuers were honestly anxious to fulfil their contract, and that they did not run the risk of stopping deliveries by refusing the rise of wages which took place in August although they were entitled to do so. They preferred to carry on as long as they could in the hope that the state of the labour market would again lead to a reduction of wages. By November, however, the loss under the contract was becoming serious, and therefore the pursuers proposed a reduction of wages.
“The amount of the reduction proposed by the pursuers would, if accepted by the men, have brought the rate of wages down to 1d. below that at which it stood when the contract was made. But it seems to me that there is no doubt from the evidence that the amount of the reduction intimated was not intended by the pursuers to be, and was not regarded by the men as, an ultimatum. It was an intimation that the employers had resolved upon a reduction of wages, but it did not shut the door to negotiations as to the amount. Mr Forrester and his manager both said that they would have been satisfied with a reduction of 6d. per ton, and the men were actually re-engaged in February at a reduction of only 4d. per ton, which left the rate of wages considerably higher than when the contract was entered into.
“I am therefore of opinion that in November 1893 there was a strike within the meaning of the contract, and that that strike was not brought about fraudulently or improperly by the pursuers with the object of getting rid of the contract.”
The defenders reclaimed, and argued—(1)
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The pursuers argued — A strike meant that the men working in the pits had refused to go on working. It was absurd to say that a strike under the clause in this contract must be a strike of all the men employed at this pit, because the contract was only about the cannel coal, and plainly indicated that a strike of the cannel coal workmen was the only one contemplated. If the Court found that the men had struck work, and were in fact not working, on account of a difference about wages with their employers, the Court could not go behind that fact and inquire whether the strike arose from the fault of the men or of the master— Letricheux v. Dunlop, cited supra. The action of the employers must be taken to be in bona fide and in protection of their legitimate interests. The masters here had given notice of a reduction of 1s., but they would have taken a smaller one, and in fact did take the men back in February at a reduction of 4d. That showed their bona fides.
At advising—
The contract was immediately acted on, the purchaser of the coal intimating that he required supplies, and receiving supplies from the colliery from May to November. On 20th November the purchaser required delivery of a certain amount of coal, but that delivery was not made, on the allegation of the coalmaster that there was a strike among his miners, and that he was entitled to refuse delivery under the strike clause.
It appears that between the date of the contract and November the wages of the miners had risen considerably, so as to make this an unprofitable contract to the coalmaster. He accordingly applied to the purchaser to relieve him of the contract on the ground that it had turned out to be a very unprofitable contract to him on account of the rise of wages that had taken place, but the purchaser refused to relieve him of the bargain and sent him orders for delivery of coal, which were refused, on the ground that the men would not work the coal except at wages which Forrester was not inclined to give.
It is not disputed that wages had risen since the beginning of the contract, and that Forrester had lost considerably in giving deliveries. He then proceeded to deal with the twenty men who were working at this seam in the pit. He put up a notice that there would be a reduction of one shilling per ton upon their wages. The men refused to accept that reduction—and it is not disputed that this proposed reduction was a reduction upon the similar wages which were being paid to their men by the coalmasters in the surrounding district—and the twenty miners went elsewhere.
I have very little doubt that the fact that he was losing money upon this contract to deliver the whole output of the seam in question induced Forrester to propose the reduction of one shilling. The question we have to consider is whether or not the fact that the men refused to go on working at the reduced wage is a strike, and is to be regarded as a strike or other unforeseen circumstance exempting Forrester under the strike clause in the contract from damages for not delivering the coal when required.
There is no dispute as to the pursuer's failure to deliver coal to the extent of 1000 tons, and it is admitted that he will be responsible as for breach of contract, unless this stoppage of work is a strike or unforeseen circumstance within the meaning of the clause in the contract.
The question arises in an action at the instance of the coalmaster for payment of certain sums in respect of the delivery of coals which were actually delivered, but the defender says he is entitled to set off the difference between the contract price and the price he had to pay to other parties for cannel coal, as reparation for the pursuer's breach of contract in not giving delivery after November.
The Lord Ordinary was of opinion that this was a strike within the meaning of the contract, and that therefore the failure to deliver the coal was not a breach of contract entitling the purchaser to reparation, and accordingly granted decree in terms of the conclusions of the summons.
I am of opinion that there was here no strike or other unforeseen circumstances excusing the coalmaster's failure to answer
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I am satisfied that the pursuer here was in no exceptional circumstances at all. There was no strike of the miners in the neighbourhood, but I think that, prompted by the unfavourable position he was put into under the contract, he determined to ask his men to take lower wages than others were earning elsewhere, so that their refusal might prevent him going on with his contract, and that the refusal of the men to continue work at the lower wages was not a strike or other unforeseen circumstance. The expedient he resorted to was prompted by the loss he had already suffered, and was a device so prompted to get rid of the contract he had entered into, if not permanently, then at least until wages had again fallen, and it will not now serve him to put forward this expedient as showing there was no breach of contract on his part. In my opinion there was a breach of contract, and the defender is entitled to set off the loss he suffered against the claim for payment made upon him.
The Court recalled the Lord Ordinary's interlocutor, and assoilzied the defenders.
Counsel for the Pursuers — W. Campbell— Salvesen. Agents— Webster, Will, & Ritchie, S.S.C.
Counsel for the Defenders— Dundas— Ure C. N. Johnstone. Agents— Richardson & Johnston W.S.