Scottish Court of Session Decisions

This was an action at the instance of Angus Buchanan, sometime farmer, Drimnatorran, Strontian, now farmer at Kilvaree, near Connel, in the county of Argyle, against Sir Rodney Stuart Riddell of Ardnamurchan and Sunart. The pursuer concluded for payment of £183, 7s., being a balance still unpaid of the sum which was found by arbiters and an oversman to be the value of the stock and others handed over by the pursuer to the defender upon quitting possession of the farm of Drimnatorran, which was the property of the defender.

In defence the defender claimed that he was entitled to retain the sum sued for as discount in respect that by custom binding upon the parties he was entitled either to six months' credit or discount at the rate of 2 1 2 per cent.

By lease dated 7th and 23rd May 1889, entered into between the defender and the pursuer, the defender let to the pursuer the farms and grazings of Drimnatorran and Ariundle, on the estate of Suinart in the county of Argyle, for the space of fifteen years from and after the term of Whitsunday 1887, with a break in favour of both parties at the end of the fifth and tenth years respectively. The pursuer entered into the farms, and continued therein down to the second break at Whitsunday 1897, of which he took advantage.

By the lease it was stipulated, inter alia, as follows:—“Further, as the said tenant at his entry took over the regular sheep stock and crop on the said farms at a valuation of arbiters and oversman, it is hereby provided and declared that the proprietor or incoming tenant shall, at the termination hereof, whether at the natural expiry or at either of the breaks, be bound to take over not exceeding 4000 of said stock of sheep if the tenant takes advantage of the first break, and the average stock of sheep of the previous three years [altered by minute appended to the lease to “the average stock of sheep of the previous five years”] if the tenant takes advantage of the second break or at the end of the lease, and also at the termination of the lease, at whatever term that may be, the crop, horses, farm implements, sheep dipping-machine, and utensils, and pay for the same according to the valuation of arbiters, one to be appointed by the tenant and another by the proprietor or incoming tenant, and an oversman mutually chosen in case said arbiters shall differ in opinion.” The lease contained no provision as to six months credit or discount being allowed.

When the pursuer entered into possession of the farms he took over the sheep stock and others at valuation. With reference to this valuation the parties entered into a contract of submission dated 24th June 1887, which contained, inter alia, the following clause:—“With power also to the said arbiters and oversman respectively to decern against the said second party for payment of such sum as they or he may determine to be due and resting owing by him to the said Sir Rodney Stuart Riddell as the value of said sheep stock, crop, threshing-mill, and moveables, payable said sum immediately on delivery of the said stock, &c., or in the option of the said second party six months after delivery of said stock, &c., and in the event of the said second party making

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immediate payment he shall be entitled to discount on the sum paid at the rate of 2 1 2 per cent.” …

In terms of this agreement, the pursuer having made prompt payment for the stock and others taken over by him, was allowed discount at the rate of 2 1 2 per cent. on the sum in the valuation.

Between the date of the pursuer's entry in 1887 and the date of the lease the pursuer possessed upon missives which provided for the taking over of the sheep stock at valuation, but contained no stipulation as to discount.

After the expiry of the lease at Whitsunday 1897 the parties entered into a minute of agreement dated 28th May 1897, whereby they nominated arbiters and an oversman to value the stock and others in terms of the lease. The arbiters were appointed “to value the said average sheep stock,” &c. The oversman was appointed “to fix and determine the price and value of the said average sheep stock, crop, horses, implements, and others aforesaid in the event of the said arbiters differing in opinion, and to settle all questions that may arise in regard to the valuation.”

The minute of agreement also provided as follows:—“( Third) It is hereby specially provided and agreed that although the said sheep stock are counted, marked, and valued, and the said crop, horses, implements, and others are valued, yet the same shall not be held as delivered, and the property therein shall not pass from the first party until the price thereof is paid. ( Lastly) Both parties bind and oblige themselves respectively that the decision of the said arbiters or oversman shall be final, and to abide thereby.” …

The valuation took place on 28th and 29th May 1897. The amount of the valuation as finally fixed was £7846 odds, and the defender made payment of the whole of this sum with the exception of £183 odds which he claimed to retain as discount.

Thereupon the pursuer raised the present action.

The defender averred as follows:—(Referring to the valuation which took place at the pursuer's entry in 1887)—“(Stat. 2) On the adjustment of the draft submission for the valuation of said subjects the pursuer asked the defender's agent to insert a special clause relating to discounts. He said he thought a clause bearing on the matter should be inserted as he was entitled to get from the defender the usual six months' credit before payment for the sheep stock and others upon valuation, or alternatively an allowance of 6d. per £ on the price if payment should be made by him as at the date of valuation and delivery. He explained to defender's agents that these terms were embodied in the bargain, as they were in accordance with the local custom of the district of Argyleshire, where said farms are situated, when stock, crop, and implements were taken over with a farm. The defender's agents upon inquiry found that pursuer's statement was accurate in point of fact; and as the arbiters and oversman were given power to decern for the amount due upon their valuation, a special clause was inserted in the draft contract of submission providing for effect being given to said custom.”

He further averred as follows—(Referring to the valuation at the ish of the lease)—“(Stat. 7) The defender … has implemented his whole obligations under said lease and minute of reference. The present dispute relates to the retention by him of the foresaid sum of £183 (odds). It has been retained in respect of the local custom of the district. By the said custom, in the case of a written lease whereby either the landlord or the tenant is bound to take over and pay for the stock or other moveables at a valuation, the party so taking over the stock, &c., is, in the absence of express stipulation to the contrary, entitled to six months' credit from the date when the stock is delivered after valuation, or in his option is entitled to a discount of sixpence per £ if he pays as at the date of valuation and delivery of the stock, &c. The said custom was well known to both parties, and they had it in view when they entered into the said lease. In accordance with said custom the pursuer claimed and was conceded by the defender the right to said discount upon his purchasing stock from the defender in 1887. The defender upon a repurchase claims the same right, which the pursuer now refuses to recognise. The difference between the parties falls within the reference clause contained in the minute of agreement above quoted and should be determined in terms thereof. The defender has offered to refer the matter in dispute but the pursuer has refused to do so.”

The part of the averment which is printed in italics was added by way of amendment when the case was before the Second Division on the reclaiming-note.

The defender also averred that the oversman did not issue his decision till the middle of June 1897, that his award did not fix the sum payable by the defender but only fixed the price per score, and that prompt payments were made by the defender as pursuer's claims were intimated, the stock delivered in July being paid for on 13th and 16th July, the crop claimed for on 1st September being paid for on 7th September, and the stock delivered in November being paid for on 7th December, but under deduction from each payment of the discount claimed.

The defender pleaded, inter alia—“(2) The present action being excluded by the clause of reference in said agreement should be dismissed. (3) On a sound construction of the lease founded on, the defender was only bound to take over the stock and others on the same terms as the pursuer had done at his entry, and the pursuer having received discount, the defender is also entitled thereto. (4) The defender being entitled to said discounts in respect of local usage and custom, decree of absolvitor should be pronounced.”

After hearing counsel in the procedure roll the Lord Ordinary ( Stormonth Darling) on 2nd June 1899 repelled the defences and decerned against the defender.

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Opinion.—“The question here is, whether the defender is entitled to retain discount at the rate of 2 1 2 per cent. on the sum of £7346, 18s. 1d., which was due by him to the pursuer as the value of the sheep stock, crop, and implements, &c., which he took over on the termination of the pursuer's lease of the farm of Drimnatorran at the term of Whitsunday 1897. The defender's demand is by no means inequitable, because it is admitted that the pursuer was allowed a similar deduction when he entered to the farm ten years before. But I apprehend that the question is one not of equity but of contract.

The stock and other articles were made the subject of arbitration in the usual way. The provision of the lease as modified by subsequent agreement was that the defender should be bound to take over the average stock of sheep of the previous five years, and to pay for the same according to the valuation of arbiters. Accordingly the contract of submission dated 28th May 1897 appointed two arbiters ‘to value the said average sheep stock, crop, horses, implements, and others aforesaid, as at the said term’ ( i.e., the term of Whitsunday 1897). The contract further nominated an oversman ‘to fix and determine the price and value of the said average sheep stock, crop, horses, implements, and others aforesaid in the event of the said arbiters differing in opinion, and to settle all questions that may arise in regard to the valuation.’

Now, the first defence with which I have to deal is that the question now raised ought to be referred to the oversman; and that depends on whether it can properly be described as a question arising ‘in regard to the valuation.’ I do not think it can. The arbiters having agreed on certain points, but having differed on the valuation of the average sheep stock, what the oversman had to do was to value that stock as at the term of Whitsunday 1897, and he has done so. If the parties had differed as to the numbers of the average stock he might have had to settle that question also, under the general clause which I have quoted. But no such question arose, and therefore it seems to me that he was functus when he fixed the value of the stock as at the appointed term. The question whether the landlord was bound to make immediate payment of the value so fixed or was entitled to six months' credit, was one in no way affecting the valuation of the stock, which would have been exactly the same in either case.

The only other defence is that the defender ought to be allowed a proof of the local usage and custom which he avers in Statements 2 and 7. These two statements are not quite consistent, because the one speaks of the right to discount arising when payment is made ‘at the date of valuation and delivery,’ and the other speaks of the right arising on ‘earlier payment’ ( i.e., earlier than the period of six months from the date of valuation and delivery). But I take it that the first of these is intended as the ruling averment. I may observe in passing that although the payments made by the landlord were not immediate in the strict sense of the word, I should not be disposed to raise any difficulty on that score. The principal payments were made on 13th and 16th July, within three weeks of the rendering of the account, and the comparatively small payment in December was made in respect of stragglers and other sheep which were delivered long after the date of the valuation.

Now, I agree that the allegations of local custom have sometimes been admitted to proof as affecting the terms of a written lease. But when this has been done, two conditions, I think, have always been present—(1) that the alleged custom was not inconsistent with the terms of the contract as reduced to writing, and (2) that the omission of any express stipulation might reasonably be ascribed to the parties having contracted with tacit regard to the custom as regulating their rights.

It seems to me that probably neither of these conditions is present here, and certainly not the second. With regard to the first, the contract of submission contains a stipulation that although the sheep stock and other articles are valued ‘yet the same shall not be held as delivered, and the property therein shall not pass from the first party ( i.e., from the tenant) until the price thereof is paid.’ Now, when it is kept in view that during the six months after valuation the sheep would have to be clipped and the wool probably sold, this clause looks very like a stipulation for immediate payment as a matter of right. Then with regard to the second condition, how is it possible to assume that the parties held the alleged custom to be binding without express stipulation, when we find that on the only previous occasion when they had to consider the matter they dealt on the footing that an express stipulation was necessary? The clause contained in the contract of submission of 24th June 1887 is set out by the defender himself in statement 3, and it is of the most express and unequivocal kind. No doubt he avers that the pursuer induced him to agree to this clause by representing that it was in accordance with local custom, but the fact remains that both parties thought it necessary to have an express bargain on the subject. No amount of proof that it was common so to bargain would help the defender's case. Nothing but clear evidence that it was customary to allow the option of credit or discount without express bargain would do him any good, and I apprehend that the value even of such evidence as that would be entirely taken away by the circumstance that he and the pursuer had formerly acted on a different view. Roughly speaking, it seems no doubt fair to say that the pursuer ought to allow at outgoing the same advantage that he received when he entered the farm. But it must be remembered that the primary right of a seller is to receive payment on delivery, and that any time given or discount allowed is of the nature of a concession. All that can be said, I take it, is that

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the landlord made the concession by express paction when he was the seller, and that he omitted to stipulate for the same concession from the tenant when their positions were reversed. I must therefore repel the defences and give decree as concluded for.”

The defender reclaimed, and argued—There was here a relevant averment of a custom in conformity with which the landlord was entitled to the discount claimed by him. It was not proposed to prove anything inconsistent with the terms of the lease, but merely to supplement it by proof of custom as to a matter upon which it was silent. That was competent—Bell's Comm. i. 465 (7th ed.); Dickson on Evidence, ii. 1093. Proof of custom for this purpose was not confined to the case of mercantile contracts, but was admissible in the case of leases also— Maclaine v. Stewart, December 16, 1898, 36 S.L.R. 233, per Lord Moncreiff, at page 237; Hamilton v. Reid's Trustees, January 15, 1824, 2 S. 611; Officer v. Nicolson, February 13, 1807, Hume 827. The arbiters' award merely fixed the sum upon which the deduction claimed fell to be made, and it was no more conclusive against the landlord's claim than a contract fixing a certain price would be against a similar claim by the buyer. See Bell's Comm., loc. cit., and Dickson on Evidence, ii. 1094. The tenant here had received the benefit of the custom alleged at his entry, and he was not now entitled to refuse the same benefit to the landlord at his waygoing.

The argument for the pursuer and respondent sufficiently appears from the opinions of the Judges. Counsel for him referred to the following authorities: Maclaine v. Stewart, cit.; Gordon v. Thomson, June 14, 1831, 9 S. 735; Alexander v. Gillon, January 22, 1847, 9 D. 524.