Scottish Court of Session Decisions

In December 1901 Robert Mossman Clark, miller, Ninewells Corn Mill, Berwickshire, raised an action against John Alexander Ross Hume, of Ninewells, in which he concluded (1) for declarator that in implement of the provisions of a lease dated 23rd July and 10th August 1896, whereby the defender let to the pursuer for ten years from Martinmas 1896 the corn-mill of Ninewells, with the kiln, dwelling-house, and offices attached, the defender was bound to expend the sum of £680 recovered by him from the Caledonian Insurance Company, or such part of it as might be necessary, in rebuilding the mill, &c., so as to restore the subjects leased to the condition in which they were prior to the occurrence of a fire on 12th July 1901; (2) for decree ordaining him to expend the £680 as above stated; (3) in the event of the defender failing to rebuild within a fixed time, for payment to the pursuer of £680 in order that the pursuer might himself reinstate the subjects damaged by the fire; (4) for payment to the pursuer of £200 as loss occasioned to him by the interruption of his business; or otherwise (5) as alternative to conclusions (2), (3), and (4), for payment to the pursuer of £2000 as damages.

The circumstances leading up to the action were as follows:—By the lease above referred to the defender let to the pursuer for ten years from Martinmas 1896 the corn-mill of Ninewells, with the kiln, dwelling-house, and other houses and offices belonging to the said mill, and also the lands attached thereto, the pursuer binding and obliging himself to maintain the whole mill and machinery, &c., in good tenantable condition during the lease, and leave them so at his removal, all at his own expense. The lease contained the following clause:—“And it is further stipulated that the landlord shall insure against loss by fire the whole mills, kiln, machinery, houses, and offices, in some respectable insurance office for such amount as he may consider necessary,

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the tenant paying one-half of the annual premium at the term of Martinmas yearly when paying his rent; and further, the said Robert Mossman Clark shall be bound to keep at all times insured against loss by fire the whole stock-in-trade, live and dead stock, and agricultural produce on the premises, to the extent of at least one year's rent, and pay the annual premium thereon, and report the receipts regularly to the landlord or his factor at the term of Martinmas yearly, and to assign the policy to the landlord in security of the rent whenever required so to do.”

The tenant was also taken bound to take the thrashing-mill on the premises off the hands of the outgoing tenant at a valuation, it being agreed that the landlord or the incoming tenant should be bound at the expiry of the lease to take the thrashing-mill as it should then exist at a valuation.

A policy of insurance for £1190 was duly effected by the landlord in his own name with the Caledonian Insurance Company, on the buildings of the dwelling-house and corn-mill, on the machinery therein, and on the kiln and offices. This policy was kept up by the defender, and the pursuer regularly paid his one-half of the premium. On 12th July 1901 a fire occurred by which the mill and kiln and the machinery in the mill were burned down. The landlord recovered £680 from the Insurance Company in respect of the damage done, and on 12th August the landlord's agents intimated to the tenant that the landlord did not intend to rebuild the mill, as he had been advised that the insurance policy was purely for the benefit of the landlord. They added that the tenant would be entitled either to abandon the lease or to remain in possession and claim an abatement of rent in respect of the subjects destroyed.

The tenant being dissatisfied with either of these alternatives raised the present action.

The pursuer pleaded, inter alia—“(1) The defender being, on a just construction of the lease referred to, bound, in the event of the subjects of the lease being damaged by fire during the currency thereof, to require the insurance company to reinstate the said subjects, or otherwise being bound to expend the sum recovered from the insurance company, or so much of it as may be necessary, for the purpose of reinstating the said subjects, the pursuer is entitled to decree of declarator in terms of the first conclusion of the summons, and to decree for restoration in terms of the second conclusion, with expenses.”

The defender pleaded, inter alia—“(2) The insurance in question having been effected for the benefit of the defender he is entitled to be assoilzied.”