Scottish Court of Session Decisions

This was an action at the instance of David Ireland & Son, coal exporters, Dundee, against the Rosewell Gas Coal Company, Limited, carrying on business as coal-masters at Lassodie Mill Colliery, in which the pursuers concluded for payment of the sum of £134, 8s. as damages for breach of contract alleged to be due in respect of the non-delivery of 672 tons of coal agreed to be delivered to the pursuers in September 1898.

The pursuers averred a contract for the delivery of a certain quantity of coals to them by the defenders in nearly equal portions per month between 15th April and the end of August 1898, and produced and referred to a sale-note embodying the provisions of the contract. They also averred short delivery, and a subsequent verbal agreement to deliver in September a balance of coals which should have been delivered in August.

The defence was (1) that there was in fact no agreement to deliver in September, and (2) that the alleged agreement involved a displacement or variation of a previous written agreement, and that it could therefore only be proved scripto.

The Lord Ordinary ( Kyllachy) before answer allowed a proof habili modo. Proof was led accordingly, parole evidence as to the subsequent verbal agreement being admitted under reservation of all questions as to its effect. From the proof it appeared that in March 1898 the pursuers entered into a contract with the defenders for the purchase of coals upon certain terms which it was admitted were correctly stated in a certain sale-note sent by the defenders to the pursuers immediately after the conclusion of the negotiations between the parties, and accepted by the pursuers without comment. This sale-note so far as material to the present question was as follows:—“ Quantity.—We hereby confirm having sold to you five thousand five hundred tons of Lassodie Mill Screened Coal, to be shipped, being 15th April 1898 to end of August 1898 ensuing, in as nearly as possible equal portions per month; the shipments to be as may be mutually arranged. The contract for any quantity of which delivery is not taken within the month stipulated, may, in our option, be cancelled, but under reservation of our claim for the damages suffered. Place of Loading.— … Burntisland or Methil. … Price.— … Seven shillings … with rebate of 3d. (threepence) to Cronstadt and St Petersburg.” …

The quantities of coal delivered under the contract and the dates of delivery were as follows:—May 5, per “Mars,” 1250 tons, 18 cwt.; June 11, per “Folda,” 968 tons, 18 cwt.; July 23, per “Cumbrian,” 1136 tons, 9 cwt.; August 20, per “Eol,” 761 tons, 9 cwt.; August 29, per “Concurrent,” 710 tons, 13 cwt.

The pursuers got as much coal as they had asked for up to the beginning of August, but after that date they wanted to get more than the defenders were willing to supply. On 22nd July the pursuers asked the defenders to book the “Eol” for 1000 tons, ready Methil, 4th August. The defenders replied that they could not undertake this, and said that as they were just finishing “Cumbrian” the pursuers could not expect to get a further similar quantity so early. They offered later to give the “Eol” 400 tons. Afterwards they wrote saying that the reason why they could not supply the coals for the “Eol” was because they did not have them. On 13th August the pursuers proposed to take 250 tons of the “Eol's” quantity in the “Kurland.” At this time they wanted from 1000 to 1200 tons for the “Eol.” On this same day they wrote “You must

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arrange to give us balance contract at once.” In reply the defenders telegraphed “Cannot give any for ‘Kurland’ and cannot increase for ‘Eol.’” On 15th August the pursuers asked the defenders to book the “Concurrent” for 800 tons, ready Methil 20th August. This was the last shipment asked for by the pursuers in August.

On 16th August Mr Ireland and the defenders' representative had an interview. The evidence as to what took place was conflicting, but the nature of what was held by the Court to have been arranged between the parties sufficiently appears from the Lord Ordinary's opinion quoted infra.

On 23rd August the defenders' representative, Mr Monteith, who had throughout carried on all the negotiations with the pursuers, wrote to the defenders, “Our next shipment is 700 tons ex Ireland's contract, which will leave 700 tons to complete this contract.”

The pursuers did not intimate any claims for balances short delivered in any particular month, nor did they at any time before the end of August buy in against the contract.

In his evidence Mr Monteith deponed that all along the arrangement had been mutual between the parties as to quantities, and that the pursuers always tried to get more than the defenders were able to give. He also deponed that in his view the pursuers were entitled in the end of August 1898 to demand delivery of 680 tons of coal, but that the defenders could have supplied that amount if it had been asked for in August. He admitted that at the meeting of 16th August he indicated the defenders had difficulty in supplying coals, but explained that the position might have been different at the end of the month.

On 7th September the pursuers asked the defenders to book the “Eol” due Methil 20th-21st September for 675 tons, being the balance of the 5500 tons still undelivered. The defenders refused to execute this order upon the ground that the contract expired upon 31st August. The pursuers bought in 672 tons against the contract at 10s. 9d. per ton, and thereafter raised the present action for the difference between the contract price at 6s. 9d. per ton (being 7s. less 3d. rebate) and the buying-in price. It was admitted that assuming the pursuers to be entitled to damages for breach of contract at all the amount claimed was the proper sum due.

On 29th December 1899 the Lord Ordinary pronounced the following interlocutor:— “The Lord Ordinary ( Kyllachy) having considered the cause, decerns against the defenders in terms of the conclusions of the summons: Finds the pursuers entitled to expenses,” &c.

Opinion.— [ After stating the nature of the case, and his opinion upon the reliability of the evidence led by each of the parties]—“But I require to decide whether the defenders' objection to the competency of parole evidence is well founded, and that involves two points—(1) whether what the defenders call the original agreement was an agreement in writing— that is to say (if the point is to have any relevancy), an agreement constituted by writing;(2)whether the verbal agreement on which the pursuers found involved a displacement or variation of that original agreement. There is also, perhaps, involved(3)the further question whether there is ground for the defenders' contention that a variation of a written agreement respecting the sale of moveables requires (although ex hypothesi well constituted) to be proved scripto. It is of course enough for the pursuers if any of those questions receives a negative answer. As, however, the case may go further, I shall state my view upon each.

In the first place, the only ground on which it is said that there was here an original written agreement is that a certain contract for the sale of coals made verbally between the parties in March 1898 was ‘confirmed’ by a letter recording its terms addressed next day by the sellers to the purchasers. It seems to be thought that such a contrAct —although made verbally and not requiring writing, and as to which there was no agreement that it was to remain open until reduced to writing—is yet to be held as a written contrAct —that is to say, a contract constituted by writing. I must acknowledge that I am not acquainted with such a doctrine. No authority for it was cited, and unless bound by authority I cannot assent to it. It may very well be desired to preserve a written record of the terms of a verbal agreement, and a note of its terms may, by arrangement or otherwise, be furnished by one of the parties to the other. But the contract is, I apprehend, binding from the moment that it is verbally made. At least it is so unless there is an agreement otherwise, and of such agreement there is no evidence here. I therefore hold that there was here no written contract in any relevant sense of these words.

In the next place, even if the contract of March 1898 was a written contract, I am not satisfied that the arrangement made on 16th August between Mr Ireland and Mr Monteith (the arrangement on which the pursuers found) effected or involved any displacement of the terms of the written contract. The transaction of 16th August came in substance, I think, only to this. The contract expiring in the end of August, and the pursuers desiring in August delivery of the balance of the contract quantity, the defenders, through Mr Monteith, said in effect—‘Without prejudice to our contract or our respective rights under it, I undertake and agree that if you allow the contract to expire without asking further deliveries, the defenders will in the month of September deliver you on the same terms the balance of your contract quantity.’ The pursuers acceded—that is to say, they allowed the contract to expire without pressing their demand, which while the contract lasted they might have made; and they now seek fulfilment of Mr Monteith's undertaking, which it is not

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disputed was within his authority. In doing so, they do not, in my opinion, demand any displacement or variation of the original contract.

As to the third point, I do not require or propose to decide anything as to the possibility of varying the terms of a written contract by a mere verbal agreement, however proved. But I am not, as at present advised, prepared to assent to the proposition that a verbal agreement relating to the sale of moveables followed by rei interventus requires to be proved scripto, even where it involves a displacement or variation of an existing written agreement. A verbal agreement, even where it relates to moveables, may require rei interventus to make it effectual—that is to say, to bar locus pænitentiæ. But the mode of proof of the agreement is, in my opinion, a different matter, and that is the point to which the defenders' plea-in-law is directed.

I am therefore of opinion that the parole evidence of what passed on 16th August was competent evidence, and that the pursuers have proved their case, and are entitled to decree in terms of the summons.”

The defenders reclaimed, and argued— An agreement to alter a written contract could only be proved scripto, or by proof of facts and circumstances which necessarily implied acquiescence in the alterations alleged— Sutherland v. Montrose Shipbuilding Company, February 3, 1860, 22 D. 665; Kirkpatrick v. Allanshaw Coal Company, December 17, 1880, 8 R. 327; Bargaddie Coal Company v. Wark, March 15, 1859, 3 Macq. 467; Carron Company v. Henderson's Trustees, July 15, 1896, 23 R. 1042. The contract here was in writing. There was no evidence of a previous verbal contract. In his condescendence the pursuer founded upon the sale-note as a written contract, and did not aver any previous verbal contract. But apart from this, as regards the present question, there was no justification for the distinction taken by the Lord Ordinary between the contract and the evidence of the contract. When a contract originally verbal was afterwards embodied in writing, the rule with regard to proof of alleged alterations applied. The ratio of the rule was that better evidence was not to be contradicted by worse—Dickson on Evidence, section 1015. In this view it made no difference whether there was a previous verbal contract or not. In almost all cases there was first of all a verbal agreement between the parties, and if the reasoning of the Lord Ordinary was sound, then in the case of nearly all contracts relating to moveables the rule would not apply unless there was a special agreement that the contract should be reduced to writing. This was certainly not the law. On the contrary, the rule was that when there was a written document embodying all the terms of the contract that was the contract, and it did not matter whether there was a previous verbal agreement or not— Clark v. Clark's Trustees, November 30, 1860, 23 D. 74. In this case the defenders at the date of the alleged alteration were under no obligation to deliver any more coal. Under such a contract as the present the defenders were only bound to supply coals when they were asked to do so, and when a ship was provided to take them, and they were not bound to make up short deliveries in one month by delivering more than the proper monthly quantity in a subsequent month— Ireland & Son v. Merryton Coal Company, July 13, 1894, 21 R. 989. Formal cancellation of the contract as regards the amount short delivered in any one month was not necessary. The defenders delivered all the coal that was demanded of them up to the end of July. In August they delivered more than the proper monthly quantity. There was therefore no reason here for their having agreed to the alleged extension of time. The facts and circumstances in this case therefore, rather than otherwise, led to the inference that no such alteration upon the contract as was alleged had been agreed to by the defenders. No doubt the pursuers might have proved a verbal agreement upon 16th August to supply coals in September upon the same terms as expressed in the written contract, but this was not the case averred by the pursuers upon record.

The argument for the pursuers and respondents sufficiently appears from the opinions of the judges. They pointed out that the sellers had not exercised their option of cancelling the contract as regards any quantity not taken within the month stipulated, and that they admitted their objection to deliver the whole balance of 680 tons in August.