Scottish Court of Session Decisions

On 22nd March 1894 Thin & Sinclair, merchants, Liverpool, raised an action against Archibald Arrol & Sons, brewers, and Thomas Kennedy & Son, Algerian merchants and esparto brokers, Glasgow, concluding for payment of £10,500.

The pursuers averred—“(Cond. 1) For some years prior to November 1889 the defenders—at least the defenders Arrol & Sons—had been in the habit of making large advances to Mr T. A. Barber, Oran. Mr Barber's principal business was in esparto grass, which he shipped to the United Kingdom. His agents in Glasgow were Messrs T. Kennedy & Son, one of the partners of which firm was married to a daughter of the late Mr Archibald Arrol, the senior partner of the firm of Messrs Arrol, and the business was in fact financed by Arrol & Sons. (Cond. 2) Mr Arrol died some time prior to November 1889, and the defenders became anxious to cease financing Barber, and to secure payment of the debt due to them. The debt due by Barber to the defenders amounted at Mr Arrol's death to not less than £10,000, and the defenders were unable to obtain payment of this sum from Barber. It was therefore in the autumn of 1889 arranged between the defenders and Barber that the latter should approach the pursuers with the view of inducing them to make cash advances to him with reference to his esparto business, and so enabling the business to be carried on, and the defenders to get their debt satisfactorily paid off. Accordingly Barber, in

Page: 188↓

the beginning of November 1889, called upon the pursuers in Liverpool, and asked them to finance him to the extent of £5000 or £6000. He explained that he was indebted to the defenders, and stated that they were willing to agree to allow the amount of their debt to stand over for a period of years, so far as it was not covered by the then stock of esparto grass held by Barber, and represented by a stock list which he showed to the pursuers. The pursuers being disposed to entertain Barber's proposal, wrote him the following letter:—

‘Thomas A. Barber, Esq.,

Oran.

8th Nov. 1889.

Dear Sir,—We now beg to put in writing the terms on which we are willing to enter into business relations with you. It shall be agreed that the present stock of grass held by you at Oran and elsewhere, as represented by the stock list in the hands of Messrs T. Kennedy & Son of Glasgow, and dated 31st October 1889, shall be sold through Messrs Thomas Kennedy & Son, and the proceeds of the sales credited to your account with Messrs Thomas Kennedy & Son and Messrs A. Arrol & Sons. An agreement in writing must be given us by these firms undertaking that if the proceeds of the sales of the stock do not produce sufficient to pay off your indebtedness to them they will wait for a minimum period of seven years for the balance. Further, that Messrs Arrol give us an undertaking by a legal document drawn up in Glasgow to the satisfaction of our solicitors, and containing the foregoing agreement, that they will not for a minimum period of seven years foreclose the mortgage which they hold on your property in Oran and/or Tlelat so long as the agreement lasts, or in any way dispose of it unless they have the purchaser bound to fulfil the same obligations, and agree and undertake not to hold any grass that may be purchased by you with our money against any of your obligations to them. We are willing to give you an open credit for £5000 to £6000, and any bills you may draw on us or our bankers in addition to this amount must be against bill of lading. We would prefer that you draw one-half the bills on us, and one-half on our bankers. In consideration of this it is agreed that we charge a commission of 2 % (two per cent.) on the amount you draw on us or our bankers. Regarding the sale of the grass, it is agreed upon that Messrs Kennedy & Son act for you in Scotland under whatever agreement you may come to with them; and it is agreed and understood that we sell your grass for this district, and charge you one per cent. for so doing, and we are to have option of selling to any other district except Scotland. Full particulars must be sent to us from Oran weekly regarding your purchases, and a weekly list of the stock in hand and up country. Messrs Kennedy & Son are to advise us regularly of any sales they make. Any shipments of grass made by you to the United Kingdom must be made to us. Marine and fire insurance to be effected by us. Telegrams, porterage and travelling expenses, and all monies out of pocket on your account, to be charged to your account. We not to be responsible for any payments for sales made, except for sales made by ourselves. It is further agreed by you that none of the money we advance to you shall be used for any other purpose whatever except for the purchase of grass; but any other business which you may propose to us from time to time shall receive our best consideration. Kindly acknowledge the receipt of this in writing, and agreeing to its contents. Thin & Sinclair.” (Cond. 3) Barber went to Glasgow and saw the defenders on the 9th November. The defenders agreed to the terms of the pursuers' letter in all respects, and authorised Barber to write saying this, which he did on the 9th November. The defenders, it is believed and averred, saw the letter he wrote at the time. (Cond. 4) In compliance with the conditions laid down by the pursuers, the defenders sent them an undertaking, dated 19th November 1889, in the following terms:—“Messrs Thin & Sinclair, Liverpool. With reference to your letter of the 8th instant to Mr Thomas A. Barber, Oran, we, Messrs Archibald Arrol & Sons, merchants, Glasgow, and Thomas Kennedy & Son, merchants, Glasgow, agree— First, That for the amount that shall continue to be owing by Mr Barber to us, Messrs Archibald Arrol & Sons and Thomas Kennedy & Son, of his existing debt or debts to us or either (whether on open account or on the mortgage or mortgages held by us, Archibald Arrol & Sons), after crediting the proceeds of the stock of grass in Oran and elsewhere, as represented by the stock lists referred to in your letter, we, or either of us, shall not take legal steps against Mr Barber within seven years from this date to enforce payment by him of the balance, but you shall be bound to agree to Mr Barber himself selling the farm or vineyard included in one of his mortgages to us, Archibald Arrol & Sons. Second, That during the subsistence of the agreement or arrangement between you and Mr Barber, but not exceeding a period of seven years, we shall not, without your previous consent in writing, sell or foreclose the mortgage or mortgages held by us, Messrs Archibald Arrol & Sons, over any of the property, whether in Oran and/or Tlelat or La Senia contained in our mortgages. Third, That we shall not hold any grass which may be purchased by Mr Barber with your money against any of Mr Barber's obligations. Fourth, This agreement is subject to the arrangement embodied in your letter to Mr Barber being acted on, and shall only be binding on us during the subsistence of that arrangement, and the agreement to be binding upon the parties for the time being comprising our said firms. Archd. Arrol & Sons. Thos. Kennedy & Son.” (Cond. 5) By the said letters the defenders, inter alia, agreed to allow the balance of Barber's debt to them to stand over for a period of seven years, and represented to the pursuers that the defenders would wait for payment of said balance for that period, that the pursuers might rely on them doing

Page: 189↓

so, and might enter into the proposed arrangement for financing Barber, and make cash advances to him as proposed, on the footing that the defenders would let their said claim stand over for seven years. On the faith of the undertaking and representations so given and made by the defenders, the pursuers agreed to finance Barber as proposed, and proceeded to make advances to him, with the result that the latter is at this date largely in their debt. It has turned out that Barber is not able to discharge this debt, and the pursuers believe and aver that by their transactions with him on the faith of said undertaking and representations of the defenders, the pursuers are losers to the amount of about £10,500, conform to statement herewith produced. (Cond. 6) It has recently come to the pursuers' knowledge that in breach of the good faith and terms of the bargain between them, Barber and the defenders, at the very time when, as the pursuers understood, the defenders were agreeing to wait for seven years for the said balance of their debt, the latter were taking legal steps to enforce payment of said balance within the said period. In particular, on the said 9th November 1889 Barber was constrained by the defenders to enter into an agreement with them, which is set forth in letters by him to them of date 9th November 1889, whereby ( a) Barber's obligations to the defenders were considerably increased; ( b) he came under legal obligation to pay the whole balance of said debt within seven years; ( c) Kennedy & Son were relieved of their obligations in connection with their transactions with Barber by the latter; ( d) provision was made for payment of part of the defenders' indebtedness through Barber taking over debts unconnected with the stock in the stock list, and paying the amount thereof at an early date; ( e) Barber was taken bound to pay off his whole debt to the defenders at the rate of £4000 per annum, beginning the first payment on 31st January 1890; ( f) he was further taken bound to grant bills to the defenders for £10,000 sterling; ( g) he was taken bound to pay rent for stores at Tlelat and Oran then occupied by him, and which were mortgaged by him to the defenders, at the rate of not less than £1200 per annum. The defenders fraudulently concealed said agreement of 9th November 1889 between them and Barber from the pursuers lest the pursuers should refuse to carry out the foresaid arrangement for financing Barber. If the pursuers had been informed or become aware of the said agreement, they would have declined to have any transactions with Barber. The whole object of the pursuers requiring the defenders to wait for their debt, viz., to secure that Barber should be free to carry on his business without pressure from the defenders, was defeated by said agreement. Following upon said agreement between the defenders and Barber, the defenders — at least the defenders Arrol & Sons — with the full knowledge and approval of the other defenders, in breach of their undertaking to the pursuers, and of the good faith of the contract, took bills from Barber for said £10,000, and at once pressed him for payment of money. Moreover, the defenders, in fraud and in breach of their said undertaking to the pursuers, continued from time to time to harass Barber for payment of the balance due by him to the defenders. The result was, that from the outset Barber was seriously embarrassed for funds; they frequently cabled him to pay sums; they passed drafts on him; they treated the agreement with him as legally binding, and enforceable at any time; and they refused to renew bills. By these means, since November 1889, the defenders had forced payment from Barber of about £10,000 to account of their debt over and above the proceeds of said stock. In consequence of the pressure brought by the defenders to bear on Barber as aforesaid, he was obliged to use the funds supplied to him by the pursuers in making remittances to the defenders to account of the balance due to them. In consequence of the defenders' said actings, Barber's business seriously suffered, and the pursuers' position as his financiers was most prejudicially affected. Their claim against Barber for advances made to him, amounting, as above stated, to upwards of £10,000, has in consequence become irrecoverable from him, whereas but for the defenders' actings in breach of their agreement the pursuers would have been kept safe, and would have recovered full payment from Barber. (Cond. 7) It has further recently come to the pursuers' knowledge that Barber, with the knowledge and approval of the defenders, fraudulently understated the amount of his indebtedness to the defenders, and so induced the pursuers to give him credit. He represented the amount at £12,000 to £14,000, while it very largely exceeded that sum. The pursuers' advances to Barber considerably exceeded, as the defenders well know, the sum they had come under obligation to give him. If the pursuers had been informed or become aware of the true amount of Barber's indebtedness to the defenders, they would never have entered into the said agreement to finance him. (Cond. 8) So soon as the pursuers learned of the agreement of 9th November 1889, and of the actings of the defenders, they communicated with them, and required them to relieve them of the loss they had sustained, but the defenders have declined to do so, and this action is rendered necessary.”

The pursuers pleaded—“(1) The pursuers having been induced to finance the said T. A. Barber, and having made advances to him as condescended on, in consequence of the fraudulent concealment and misrepresentations of the defenders as to material facts, are entitled to recover the amount of the loss thereby sustained by them. (2) The defenders having acted in bad faith and in contravention and breach of the undertaking condescended on, to the loss, injury, and damage of the pursuers, the defenders are liable to the pursuers in reparation. (3) The pursuers having suffered loss and damage to the amount sued for in consequence of the defenders' breach of undertaking,

Page: 190↓

decree should be granted as craved with expenses.”

The defenders pleaded—“(1) The pursuers' averments are irrelevant, and insufficient to support the conclusions of the summons. (2) The pursuers averments being unfounded in fact, the defenders ought to be assoilzied. (3) The defenders not having acted in breach of the conditions contained in their said letter, ought to be assoilzied.”

A proof before answer was allowed by the Lord Ordinary ( Wellwood), whose decision was affirmed by the First Division.

The import of the proof, so far as necessary to an understanding of the case, may be gathered from the opinion of the Lord Ordinary and of the Lord President.

On 5th May 1890 the Lord Ordinary ( Kyllachy) assoilzied the defenders.

Opinion.—“The pursuers in this case are merchants in Liverpool, who from 1889 until recently financed upon certain terms the business of a certain Mr Barber, who is or was a shipper of esparto from Oran, in Algeria, to the United Kingdom. The result of the business has it appears been unsatisfactory, the pursuers being—including interest and commission—over £10,000 in advance, and Barber's ability to pay being apparently doubtful. The object of the action is to recover from the defenders, who are merchants in Glasgow, damages equivalent to the amount thus lost or likely to be so, and the ground of the demand is twofold—(1) That the defenders, who had up to November 1889 been Barber's correspondents, and were at that time his creditors to a large amount, made or were parties to the making of misrepresentations as to the amount of Barber's indebtedness, by which misrepresentations the pursuers were induced to undertake Barber's business; (2) that the defenders having, in connection with what I may call the transfer of Barber's agency to the pursuers, come under certain obligations with respect to the non-enforcement of the debt due to them, violated those obligations by entering into a certain private agreement with Barber, and acting under that agreement in a certain manner.

To take first the case of alleged misrepresentation. It appears that in November 1889 the defenders had desired to be relieved of making further advances to Barber, and the latter had applied to the pursuers to take their place. At that time the pecuniary position as between the defenders and Barber was shortly this. He was due them in all about £35,000, made up thus——(1) £9250 of ordinary trade bills drawn between him and the defender Kennedy; £10,000 accommodation bills drawn between the defenders Arrol & Kennedy for Barber's accommodation; (3) £16,000 odds, being balance of cash advance account due by Barber to Arrol. As against this total indebtedness there had been bought and was about to be shipped to Messrs Kennedy for sale on their account, and that of Messrs Arrol, esparto valued at the time at £14,579. There was also a mortgage or mortgages for £12,000 held by Messrs Arrol over certain stores at Oran and a certain vineyard in Algeria, both belonging to Barber, and on which it is said he had expended about £27,000. There were also some other assets belonging or Barber, including debts due up country, wine crop of vineyard, &c., which assets were expected shortly to be realised.

In these circumstances the case made by the pursuers upon record is this—That ‘Barber, with the knowledge and approval of the defenders, fraudulently understated the amount of his indebtedness to the defenders, and so induced the pursuers to give him credit. He represented the amount as £12,000 to £14,000, while it very largely exceeded that sum.’ There is here, it will be observed, no word of direct representation by the defenders. The representation is said to have been made by Barber. Further, it is not, I think, disputed—at least it is not capable of dispute—that the indebtedness of £12,000 to £14,000 meant, and must have meant, indebtedness after deducting the value of the stocks in hand. It is common ground that the gross indebtedness was known, and known all along, very largely to exceed that sum.

Now, I may say at once that I think there are strong grounds for believing that Barber did, in his communications with the pursuers, understate the amount of his indebtedness to the defenders. He was not himself examined, and the statements in his letters on which the pursuers found are not in themselves evidence of the facts stated. But the pursuer Mr Thin was examined, and I see no reason to doubt his statement that Barber represented to him in Liverpool that, after crediting the estimated value (£14,579) of the stocks of esparto which he (Barber) had in hand, his indebtedness to the defenders did not exceed £12,000, thus making his total indebtedness (which, as I have already explained, was really about £35,000) not more than about £26,000. In other words, Mr Thin depones that Barber understated his total indebtedness, as we now know it, by about £10,000, and Barber's letters to the defenders are at least evidence to the effect that he contemporaneously told the defenders that he had made this understatement, having, as he said, overlooked altogether the £10,000 bills drawn between Arrol & Kennedy for his (Barber's) accommodation. This being so, I should be disposed to hold that as against Barber the alleged misrepresentation was sufficiently proved; and if nothing further had taken place I should have been further disposed to hold that the defenders, learning of this misrepresentation, and not promptly repudiating it, exposed themselves to the charge (to whatever effect in point of law) of knowing and approving of Barber's action.

The fact, however, is that more did take place. The pursuers did not rest satisfied with Barber's statements, but, as it now appears, put themselves into direct communication with the defenders. Their confidential clerk Mr Jones was sent to Glasgow to obtain direct information, inter alia, as to Barber's indebtedness; and the

Page: 191↓

result in the end was, that after a good deal of negotiation a certain agreement between the pursuers and the defenders was adjusted and executed. That is the agreement to which I have already referred, and which is printed in the record. It is dated 19th November 1889, and expressed certain concessions which the defenders agreed to make with a view to relieving Barber from immediate pressure in connection with the defenders' claims against him.

In these circumstances it is obvious that the representations made at an earlier stage by Barber cease to be of importance, at all events as affording any substantive ground of action as against the defenders. Whether true or false, they were not, as it now appears, the representations on which the pursuers ultimately relied. And accordingly the case now made by the pursuers is not the case made on record, but a different case, viz., that the defenders Messrs Arrol & Kennedy made directly misrepresentations to the pursuers—misrepresentations involving not the suppression of the £10,000 bills (which it is now admitted that they disclosed), but the suppression of a larger item, viz., the £16,000 of Arrol's cash advances. What the pursuers now say is that when Mr Jones went down to Glasgow, he was told about the bills—both the bills for £10,000 and those for £9250—but was told of nothing else; and that the gross indebtedness was thus represented to him as being only £19,250, and the indebtedness after crediting the £14,579 of stocks as being only £4670. In other words, the pursuers' case now is, that having been first told by Barber that the indebtedness (not covered by stocks) was from £12,000 to £14,000, they were subsequently told by the defender that it was only £4670, and that accepting that latter statement without remark or further inquiry, they proceeded to negotiate the agreement from the results of which they now seek relief.

Now, it must be admitted that this is a view of the facts which at the outset involves serious difficulties. It is not intelligible, to begin with, that the pursuers getting from Barber and the defenders information so different should not have been startled by the difference. It is still less intelligible that if they believed or came to believe that Barber's indebtedness to the defenders (that is to say, his indebtedness uncovered by stocks) was only £4670, they should have stated on record, and Mr Thin should have repeated in evidence, that their belief throughout was that the amount was £12,000 to £14,000. On the other hand, looking at the matter from the defenders' standpoint, it is not intelligible why they (the defenders) should have sought to reduce the indebtedness below what they knew to be Barber's figure; or why, if they wished to support his deception, they should have proceeded to do so by disclosing the £10,000 bills which he had suppressed, and suppressing the £16,000 cash account which so far as they knew he had disclosed. All this, it must be acknowledged, is difficult, and the difficulty is not solved by the suggestion-made, I think, rather late in the day—that the £12,000 to £14,000 was reached by deducting from the total indebtedness only the stocks of dry grass actually at Oran and ready for shipment, these stocks being, as it appears, valued at £8354. In the first place, the discrepancy is by this process only reduced—not removed. But in the next place it is, I think, quite impossible to read the pursuer Mr Thin's evidence as coming to anything else than that Barber represented the indebtedness as being about £12,000 after the whole stocks (valued in the slip at £14,579) had been realised and credited. He was undoubtedly examined on that footing, and I understood him so to affirm; and nothing else, I may observe further, is consistent with Barber's statement in his letters to the defenders (a statement on which the pursuers found) that the extent of his (Barber's) suppression was £10,000, viz., the amount of the accommodation bills. That Barber, in his communications with the pursuers put the gross indebtedness at about £26,000, and the net indebtedness at about £12,000, is not, I think, reasonably disputable. What the pursuers have to explain, as I have already said, is how they should have subsequently received and accepted without remark a statement by which the gross indebtedness was reduced to £19,250. and the net indebtedness to £4670.

The issue, however, now is, whether the defenders being appealed to as to the amount of Barber's indebtedness, did fraudulently represent the total amount as £19,250, made up of the two sets of bills—concealing altogether the existence of the £16,000 due to the Messrs Arrol on cash account. That they did so is affirmed by the witness Jones, the pursuers' clerk, and he is said to be corroborated (1) by the memorandum which there seems to be no doubt that he made at the time, and (2) by the absence in the defenders' letters to Barber of any definite repudiation of his (Barber's) concealment of the £10,000 bills, or any definite statement that the cash account for £16,000 had been brought under Jones' notice. On the other hand, there is the emphatic testimony of the two Messrs Arrol and Mr Kennedy, that at their meeting with Mr Jones at Glasgow the £16,000 was expressly mentioned; that the passbook showing its amount was exhibited; and that the whole negotiation between them and Jones proceeded on the assumption that the deficiency (that is to say, the deficiency not covered by stock and for which seven years' delay in enforcement was asked) amounted not to £4670 but to about £20,000. What I have to decide is, which of those two accounts of what passed at Glasgow is to be believed.

I have come to the conclusion that upon the issue of fact thus raised I must find for the defenders. There are undoubtedly difficulties on both sides. But I am convinced that more passed between the defenders and Jones than Jones recorded or now remembers; and also that more passed between Jones and the pursuer Thin than either of them now remembers.

Page: 192↓

It is, I admit, quite probable that neither of them realised that the total indebtedness was £35,000. On the other hand, I cannot believe that either of them thought that it only amounted to £19,250. If I were to conjecture, I think it probable that there was some confusion about the mortgage debt. Mr Jones may have supposed that the £16,000 debt was a separate mortgage debt connected with Barber's properties, and, so supposing, may have paid no particular attention to its amount. Mr Thin again, knowing its existence and amount, may have assumed that it was inclusive, and not exclusive, of the £10,000 bills. And so the misunderstanding may have arisen. All this, however, is only conjecture. What I am unable to hold proved is that the £16,000 debt was, as the pursuers say, wholly suppressed. On that matter I do not see my way to reject the testimony of the Messrs Arrol and Mr Kennedy. There are points in their conduct which may be open to animadversion. I do not, I confess, understand why they should have received without protest Barber's scarcely-veiled suggestion that they should suppress the £10,000 accommodation bills. Still the fact is certain that they did not suppress them; and on the only question with which we are here concerned, the question, viz., whether they suppressed the £16,000 cash advance, it appears to me that in addition to the considerations of probability to which I have already referred, there are several corroborations of their story to be gathered from the pursuers' letters and Mr Thin's evidence.

In the first place, I do not think that either Mr Thin or his counsel succeeded in explaining away the passage in his letter to Barbour of 23rd June 1892, in which he speaks of a sum of ‘£16,000’ as owing to Messrs Arrol on mortgage.

In the second place, in connection with that letter there must be read the passages in the same correspondence (and other passages) in which the £19,250, so often mentioned, is always described as ‘due on open account’ in contradistinction, as it appears to me, to the sum due or supposed to be ‘due on mortgage.’

In the third place, and lastly, I am not able to reconcile the pursuers' case as now presented with the attitude in the correspondence which immediately preceded the raising of the action. Beyond all doubt the pursuers knew, not later than October 1893, all that they know now. In particular, they had by that time fully before them the existence of the cash account due to the Messrs Arrol over and above the £10,000 of bills. (See letters of 11th and 12th October 1893). But knowing then at latest of the cash account in question, the fact is incontestable that they made no complaint and no suggestion that its existence had been concealed from them in 1889. On the contrary, while they do complain of concealment, their complaint relates exclusively to the concealment of the agreement between Barber and the defenders of 7th November 1889. Moreover, even when the action came into Court, there was, as I have already pointed out, nothing in their summons or in their record to indicate that they were in possession, or thought that they were in possession, of a ground of action such as they now urge.

On the whole, while I do not doubt that the pursuers were more or less deceived, or sought to be deceived, by Barber, they have failed to satisfy me that they have any similar ground of complaint against the defenders.

If I am right in this, it is unnecessary to consider the further questions which would arise if it were proved that the defenders fraudulently misrepresented the amount of Barber's indebtedness. I may say, however, that I did not, as I thought, have a sufficient answer to the defenders' argument, to the effect that the terms of the agreement of 19th November between the pursuers and the defenders, and the course of the negotiations which preceded it, are inconsistent with their suggestion that the supposed smallness of Barber's in debtedness to the defenders was the inducing cause of the pursuers' acceptance of Barber's agency. Neither did I hear from the pursuers what I thought a sufficient argument for the proposition on which their claim of damage is rested, viz., that the measure of the damage due to them (supposing their case otherwise to be established) is the whole loss which they have sustained upon their four years' transactions with Barber. I do not say more at present than that that seems to me a difficult proposition.

It remains, however, to consider the pursuers' second ground of action, viz., the defenders' alleged breach of contract—first, by entering into their agreement with Barber of 9th November 1889; and second, by pressing the latter for payment under that agreement. This matter has bulked largely in the proof and argument, but, in the view I take, I may deal with it shortly. The agreement of 19th November 1889 between the pursuers and the defenders, said to have been broken by the defenders, involved, as I read it, three points—(1) That the defenders should not for seven years take legal steps to enforce payment of the balance due by Barber after realisation of all existing stocks; (2) that during the same period the defenders should not sell or foreclose their mortgage or mortgages; (3) that they should not hold any grass purchased with the pursuers' money (that is to say, any grass so purchased and sent to them for sale) as against any of Barber's obligations. Now, I can find no evidence that the defenders did any of the things that were thus forbidden. They took no action or diligence against Barber. They did not sell or foreclose, or attempt to sell or foreclose their mortgages. They did not retain or attempt to retain as against Barber's obligations any grass which came into their possession. And this being so, I am of opinion that, taking the terms of the agreement as the measure of the defenders' obligation, no breach of contract has been committed.

What the pursuers appear to assume is, that because the defenders agreed to take no legal steps for seven years, they were

Page: 193↓

debarred from accepting from Barber an undertaking to pay them off at the rate of £4000 a-year, and were not at liberty to press Barber from time to time for fulfilment of that undertaking, or indeed for any payment at all. I am not, I confess, able to discover in the agreement of 19th November any warrant for that assumption. It may have been understood (it is admitted to have been so understood although the agreement does not express it) that no payment should be made to the defenders out of the price of grass purchased with the pursuers' money except in so far as such price represented profits. But it was, as I read the evidence, quite contemplated in November 1889 that between the profits of his vineyard and the profits of his esparto business (including the rents of his stores) Barber would or might be in a position to pay £4000 a-year to the defenders without trenching on the pursuers' money. And in point of fact it has not, in my opinion, been proved that the defenders have since 1889 either asked or received any payments from Barber which they had reason to know were made out of the pursuers' money. They received in all to account of their indebtedness £3171 of principal and £3469 of interest, &c., the last payment of principal being made in June 1892, and the last payment of interest in June 1893, and there is certainly no proof (indeed, it is admitted that upon the materials available the point is incapable of proof) that Barber did not, between his vineyard, his stores, and his business, earn profits at least equal to those payments. In any case, the defenders say that they so believed, and give their grounds for so believing, and I am unable to say that those grounds are displaced by the proof. Some confusion was, I think, introduced into the proof by the pursuers' failure to realise that a good deal of the correspondence between the defenders and Barber, on which they (the pursuers) found, had reference not to repayment of the defenders' original indebtedness, but to repayment of two sums of £500 and £1000 advanced by the defenders in November 1889 and March 1892 after the date of the agreement of 19th November 1839. Altogether, even if I felt called upon to go beyond the terms of the written agreement, and to follow the parties into the ethical questions into which the proof in this part of the case largely diverged, I doubt whether I should, upon the materials before me, see my way to a different conclusion than that which I have reached in point of law.”

The pursuers reclaimed, and argued—The ground of action was that Mr Thin was induced to enter into this transaction with Barber by fraudulent misrepresentation on the part of Arrol & Sons. The amount to which the pursuers were entitled was consequently the sum due by Barber to the pursuers when the account between them was closed, viz., £10,500.

Argued for the defenders—As regards the question of damages, £6000 being the sum advanced by the pursuers to Barber on the strength of the alleged misrepresentation, was the very utmost which the pursuers could claim.

On the facts both parties submitted an elaborate argument protracted for several days, which need not here be recapitulated.

At advising—