Scottish Court of Session Decisions

On 28th August 1908 Stewart Cole, C.A., London, trustee under an assignment for behoof of creditors dated 25th January 1908, granted in his favour by R. Knowles Spencer and Maurice Spencer, carrying on business there as oil and seed merchants and commission agents under the firm name of Knowles Spencer & Son, with consent and concurrence of the said R. Knowles Spencer and Maurice Spencer, brought an action against C. H. Handasyde & Company, Dean Oil Works, Dalkeith, and the said C. H. Handasyde, the only known partner thereof, in which they sought payment of (1) the sum of £83, 1s. 2d.; (2) the sum of £2500; and (3) the sum of £148, 6s. 8d., which sums he alleged to be due under certain contracts for the delivery of black grease entered into by Knowles Spencer & Son (the sellers) prior to their granting the assignment in his (the pursuer's) favour.

At the date of the assignment two of the contracts were fulfilled, the sums due thereunder being the sums first and third concluded for. No question was raised by the defenders as to the title of the pursuer to sue for payment of these sums. They objected however to his title to sue for the sum second concluded for, being £2500 damages for breach of the second contract, which was unfulfilled at the date of the assignment, and maintained that the contract was one involving delectus personæ and therefore unassignable.

The contract in question was as follows:—

17th June 1907.

“We [ i.e., Knowles Spencer & Son] confirm having sold to you this day—

Quantity.—Two hundred and fifty to three hundred (250/300) tons.

Goods.—Black grease from cotton oil mucilage.

Quality.—Usual good merchantable.

Price.—Fifteen pounds fifteen shillings per ton, on basis of 95 per cent. fatty matter soluble in carbon bisulphide, any excess or deficiency of 95 per cent. to be paid or allowed for, minimum F.M. 88 per cent.

Packages.—Good strong iron-bound barrels, seller's option to deliver in pipes at 7/6 per ton less.

Delivery.—January to December 1908, as and when ready, f.o.b., London and/or Bristol, seller's option.

Terms.—Cash in fourteen days from shipment, less 2 1 2 per cent. discount. The goods to be sampled by an independent sampler prior to shipment. Analysis to be made by Dr Watson Gray of Liverpool, whose decision shall be final. Sampling and analysis fees to be divided between buyers and sellers.

Each delivery to stand as a separate contract.

Should strikes of workmen, fire, or other exceptional causes suspend or partially

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suspend deliveries, such may be postponed until such interruption is removed.

Any dispute arising from this contract is to be settled by arbitration in London in the usual way as soon as it may arise.”

On receipt of the contract note Handasyde & Co. wrote to Knowles Spencer & Son, as follows:— 18th June 1907.

Yours of 17th inst. received with contract note for 250/300 tons black grease, for 1908, which appears in order. Please note, however, that all the grease is to be soft and seedy as sample in our possession.…”

With regard to this contract the defenders averred—“(Ans. 4)—The contract with Knowles Spencer & Son is referred to for its terms. Messrs Knowles Spencer & Son were skilled in their trade, which is one requiring considerable technical knowledge. The pursuer had no contract with the defenders. He has no such knowledge of the business, and in conversation with the defenders admitted that he did not even know what black grease was. …”

They pleaded, inter alia—“(2) So far as the contracts were unfulfilled at the date of the trust deed, the pursuer has no title to sue.”

On July 20, 1909, the Lord Ordinary ( Mackenzie), after a proof, the import of which appears from his opinion ( infra), sustained the defenders' plea of no title to sue, and dismissed the second conclusion of the summons.

Opinion.—“Proof has been taken in regard to two questions in this case—(1) whether the executorial contract in question was assignable to the pursuer or not, and (2) whether it was cancelled in the knowledge or with the authority of the pursuer by Knowles Spencer & Son on 28th January 1908.

To take first the question of the assignability of the contract. The law is that if the execution of a contract involves delectus personæ the trustee and creditors are not entitled to take it up. As Lord Neaves says in Anderson v. Hamilton & Company, 2 R. 355, at p. 363—‘Where it is of the essence of the contract that the thing to be done requires special skill, genius, art, or even strict personal supervision, such a contract cannot be taken up by a trustee and creditors. … If the trustee of the insolvent party can arrange to take up the contract and carry it out as efficiently as the bankrupt could have done, well and good.’ The test applied in the English case of Jaeger's Company v. Walker & Son, 77 L.T. 180, was whether the agreement was a ‘personal’ one, i.e., one requiring a certain amount of skill, knowledge, or supervision. The decision of such a question depends on the true meaning and effect of the particular contract, as Lord Macnaghten points out in Tolhurst, A. C. 1903, 414. Lord Kincairney, who was the Lord Ordinary in Grierson, Oldham & Company, 22 R. 812, after reviewing the authorities, reached the conclusion that it was not competent for a party to a contract of the character of that libelled to substitute for himself as contractor some other person. The Lord Justice-Clerk in Grierson's case refers to Boulton v. Jones in 2 H. and N. 564, and says—‘It is thus authoritatively decided that an assignee of a business cannot have effectually assigned to him the rights of the assignor in mutual contracts, so as to give the assignee a title to sue for enforcement of the obligations undertaken by the other party to the contract.’ It was maintained that the law so stated means that no executorial contract can be assigned. This, however, could not be what was meant. Bramwell, B., in Boulton v. Jones, states the principle as it is stated by Lindley, Lopes, and Chitty, LJJ., in Jaeger's case—‘When a contract is made in which the personality of the contracting party is or may be of importance, as a contract with a man to write a book or the like, or where there might be a set off, no other person can interpose and adopt the contract.’ This is the law as stated by Lord Neaves in Anderson's case. It may be that in Boulton's case, as in Robson & Sharpe, 2 Barn and Ad. 303, the evidence of delectus personæ was slight, but the true question in each case is whether the agreement was personal or not. The House of Lords in Tolhurst's case recognised that the contract then under consideration was one capable of being assigned, and in the International Fibre Syndicate, 2 F. 636, affd. 3 F. (H.L.) 32, it was stated that contracts involving delectus personæ are not assignable. There was no suggestion that unless there was delectus personæ the contract could not be assigned.

The question therefore which I have to consider is whether there was such delectus personæ in regard to the contract of June 17, 1907, that it could not be assigned.

I assume for the purpose of the present case that Mr Cole is in as good a position as if he were a trustee in bankruptcy. It is he who tenders performance of the contract, and therefore it is not open to him to appeal to such decisions as that in the British Waggon Company, 5 QBD 149, in which the original contracting party was tendered to fulfil the contract. Mr Cole is not tendering Mr Knowles Spencer as the party who is to fulfil the contract. He is himself offering to perform the contract, and the case must be taken upon that footing. …

The important clauses in the contract note were:—Quality—Usual good merchantable. Price—Fifteen pounds fifteen shillings per ton, on basis of 95 per cent. fatty matter soluble in carbon bisulphide, any excess or deficiency of 95 per cent. to be paid or allowed for. Minimum fatty matter 88 per cent. Delivery—January to December 1908, as and when ready, f.o.b. Bristol. Terms—Cash in 14 days from shipment, less 2 1 2 per cent. discount. The goods to be sampled by an independent sampler prior to shipment. Analysis to be made by Dr Watson Gray of Liverpool, whose decision shall be final. Sampling and analysis fees to be divided between buyers and sellers. Each delivery to stand as a separate contract. Any dispute arising

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from this contract is to be settled by arbitration in London in the usual way as soon as it may arise.

On receipt of the contract note Handasyde & Company wrote to Knowles Spencer & Son on 18th June, acknowledging receipt of the contract note and said the same appeared to be in order. They added, ‘Please note, however, that all the grease is to be soft and seedy as sample in our possession.’

The sample in the defenders' possession must refer to a type sample which Knowles Spencer & Son had sent them, and there seems no reason to doubt that this refers to the sample which had been sent on 31st May. Knowles Spencer & Son made no objection to the condition attached by the defenders, and must be held to have acquiesced in this as being a term of the contract. Under the contract Knowles Spencer & Son occupied the position of merchants, not brokers.

From the evidence it appears that black grease is a bye-product in the process of manufacturing cotton oil. When the cotton seed is crushed the result is a dark brown crude oil. That is treated with caustic alkalies to draw off the clear oil, and there is left a mucilage or initial bye-product. The mucilage is treated with sulphuric acid in order to produce the second stage of the bye-product, which is black grease. Mr Handasyde has carried on business as an oil refiner and distiller of black grease for thirty-eight years. His works are at Dalkeith and Paisley. He is the only refiner of black grease in Scotland, and there are very few in England. The principal places of production of black grease are London, Hull, and Bristol. There is only a comparatively small production in Scotland. All the witnesses agree that the quality of the black grease varies very largely. The defenders' business is by distilling the black grease to separate it into its main constituent elements of stearine and pitch. Stearine is the valuable product, and the amount obtained depends upon the proportion of fatty matter in the black grease that is soluble in carbon bisulphide. The proportion of fatty matter is not, however, the only important matter. I think the evidence of the defender and his witnesses shows clearly that two samples of black grease that contain the same quantity of fatty matter on analysis may be of different values for distilling purposes. They may be of different quality, and though the language used by the different witnesses is different in describing the indications of good quality, they concur in saying that an expert judges by the feel and look of the grease. Dr Watson Gray, the analyst, says a buyer may be better off with 88 per cent. of fat than with 90 per cent. if the grease with 90 per cent. is thick bad grease. The expression “soft and seedy,” used by Mr Handasyde in his letter of 18th June is, according to Dr Watson Gray, a known expression in the trade, though some of the witnesses were not acquainted with it, and the evidence is conflicting as to what these expressions represent.

The defender bought his black grease from manufacturers, and from manufacturers only, with one exception. He had no dealings with brokers, either on the Baltic Exchange in London or elsewhere. The one exception was Mr Knowles Spencer, who had been a manufacturer, and who had introduced himself to Mr Handasyde as a merchant in this line by writing on 27th July 1905.

Mr Knowles Spencer had technical knowledge and skill as regards black grease. It is plain that the brokers in the trade, to judge from Mr Bayley, profess and have none. The defender says he did business with Mr Knowles Spencer because he had this knowledge and skill, and that he relied on his exercising it on his behalf. It is admitted that the pursuer Mr Cole has no technical knowledge of black grease.

The position taken up by Mr Knowles Spencer in the witness-box was that he covered himself by making a contract with manufacturers in terms similar to the contract he made with the defenders; that if was not his business to see that the deliveries of black grease extending over 1908 corresponded with the type sample sent by him to the defenders; and that this was the business of the original sellers. I do not think Mr Knowles Spencer can take up this position, and that for two reasons—(1) because Knowles Spencer & Co. were under the contract in the position of principals, not agents; it was they who were bound to the defenders; and (2) because Mr Knowles Spencer admitted that he never said anything about the type sample to the sellers. Nor did he disclose to Mr Handasyde the name of his seller. As he explains it was not his interest to do so. Mr Knowles Spencer's view is that it was nobody's business to see that the deliveries corresponded with the sample, or at all events that he had no responsibility.

In my opinion the contract of 17th June was a contract on a type sample for future delivery, and there was a duty on Mr Knowles Spencer to see that the bulk corresponded with the sample. If this is so, this duty obviously could not be performed by Mr Cole, the trustee. The only reply that counsel for the pursuer made to this view of the case was that Mr Handasyde made no such case in the witness-box. I may say that Mr Handasyde did not make a good witness. He seemed unable to grasp the points that were put to him, and certainly did not appreciate what were the good and bad points in his case. I have no reason to doubt that he was honest in his evidence. Some of his answers can certainly be turned against him, as, for example, when he said that in examining samples Mr Knowles Spencer did so for his own protection, and that he (Handasyde) was doing so for his. At a later stage, however, he added that Mr Knowles Spencer was always to protect him, and I think the letters show that Mr Knowles Spencer

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regarded that he had a duty to protect Mr Handasyde.

The question I have to decide is whether there was delectus personæ as regards the contract of 17th June 1907. In my opinion there was, for the reasons already stated. In this view of the case it is not necessary to discuss in detail the evidence which was led after the case was originally heard in regard to the custom as regards other contracts between the parties. I may, however, state my opinion generally as regards the points raised. As already explained the contracts were either ‘spot,’ for delivery within a definite short period (Mr Knowles Spencer put it at fourteen days usually), or ‘forward’ contracts, in which case the consignments were delivered as and when the black grease was manufactured. The samples fall substantially under the three categories put to and admitted by Mr Handasyde in cross-examination, viz.—(1) Samples sent for a bid before the contract was made; these were open samples taken by the seller. In the case of ‘spot’ contracts the sample was from bulk, and in the case of ‘forward’ contracts the sample was a type sample. (2) Samples from bulk after the contract had been made and prior to delivery; these were also open; were taken generally by an independent sampler, though sometimes by the seller; and were sent for the purpose of avoiding questions whether the bulk was up to the contract conditions. I think these samples were only sent when the contract expressly so provided, e.g. in the contract of 17th May 1906; there was no such stipulation in the contract in question. And (3) samples taken in terms of the contract after the contract was made and prior to the delivery of each instalment; these were sealed and were invariably taken by an independent sampler in conformity with instructions, of which a copy is produced, sent by Mr Handasyde. It is not proved that Mr Knowles Spencer actually supervised the drawing of the samples. His experience would, however, be of use in the selection of a sampler, and also in taking measures to secure that the sampler took his samples with proper care. In the particular contract in question I think he by its terms undertook a duty to see that the deliveries corresponded as regards quality with the sample he had sent Mr Handasyde. The important point here is that analysis alone, according to Dr Watson Gray's evidence, would not show whether the black grease tendered was up to contract. Mr Knowles Spencer must be taken to have known what Mr Handasyde meant by ‘soft and seedy,’ and it was only by the look and feel of the grease that it could be ascertained whether a particular parcel answered this description. This was not a contract in which samples of the class second above referred to were sent, which would be examined by Mr Handasyde, and therefore the answer is not open to the pursuer that Mr Handasyde did not rely on Mr Knowles Spencer seeing that the deliveries corresponded with the sample.

It cannot be left out of view that Mr Knowles Spencer's knowledge was of some importance as regards the casks in which the consignments were sent. The letters show there were complaints by Mr Handasyde as regards these. Mr Knowles Spencer cannot take up the position that he fulfilled his duty by merely calling in an independent cooper. The point was made by the defender that it was of importance to him to have a man of Mr Knowles Spencer's skill and knowledge to deal with if a dispute arose as to quality, because the matter might be settled without recourse to arbitration. The settlement of a dispute does not depend so much on technical knowledge as on temperament, but Mr Knowles Spencer admits that his knowledge and skill would be of use in settling a dispute before proceeding to arbitration. This element, therefore, cannot be left out of sight. I should also notice an argument for the defender that it was of importance for him to have a man of skill to select the source from which the black grease was to be got. This, however, does not seem to me to bear on the question of delectus personæ as regards the execution of a contract in such terms as the present. So far as regards this point, grease from any manufacturer which satisfied the terms of the contract would be a good delivery.

For the reasons already stated, I am of opinion that there was delectus personæ as regards this particular contract.

The pursuer, however, contends that before the date of the assignation Mr Knowles Spencer had made a covering contract with Messrs Robinson & Company of Bristol for the delivery of their whole make during the year 1908, in terms, as regards quality and proportion of fatty matter, which were practically the same as that he had made with the defender; that even assuming the defender relied on the skill and knowledge of Mr Knowles Spencer, this had been exercised before he divested himself of his estate; and that, accordingly, all that Mr Cole, as his trustee, had to do was to make delivery to Mr Handasyde of the parcels as and when they were tendered by Messrs Robinson. I cannot find that the pursuer was under any obligation to deliver to Mr Handasyde the grease under Robinson's contract. Mr Cole indeed says he was not. ‘I would have been quite entitled to substitute another make if it had suited me. I see no reason why I should not have bought it on the market. As long as I get good merchantable grease in the market I could have fulfilled the contract.’ The result of this reasoning would be to hold that Mr Handasyde, who had contracted with a man of skill, is bound by his contract to accept delivery of what is tendered by the pursuer, who, as he admits, has no technical knowledge of the subject-matter of the contract. Mr Cole could form no opinion on the question whether the deliveries were ‘soft and seedy as sample in our possession.’ What the result would have been if Mr Cole had written to Mr Handasyde, stating that the contract with him was covered by a contract with Messrs

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Robinson, and undertaking to deliver the grease tendered by Messrs Robinson and no other, it is not necessary to consider. This was never done. Again, it is not necessary to decide what the result would have been if Mr Cole had tendered Mr Knowles Spencer to fulfil his contract. He did not do so. What he offered was to fulfil the contract himself. It is quite consistent with the position taken up by Mr Cole that there is no mention on record of the name of Messrs Robinson. The conclusion which I reach is that the contract was not assignable, and that the pursuer has no title to sue. … [ His Lordship then dealt with the question of cancellation, on which the case is not reported.]

The pursuer reclaimed, and argued—The contract was assignable, for there was no delectus personæ involved. To make a contract non-assignable there must be reliance on the personal skill of the other contracting party, and that was absent here. A mere preference for a particular individual was not enough. The contract did not involve (as the respondents contended) such work as could only be performed by an expert. What it stipulated for was delivery of grease of a certain quality which should comply with a certain analysis, and such delivery could quite well be made by the trustee. This was not a contract of service as the Lord Ordinary seemed to think, but a contract of sale, and there was no stipulation that the sellers were to be the sole judge of the quality of the grease. [Counsel for the reclaimer was proceeding to deal with the evidence when the Court called on counsel for the respondents.]

Argued for respondents—The contract involved delectus personæ, for its fulfilment depended on the proper selection of a peculiar kind of grease. For this selection the respondents relied on the knowledge and skill of the assignor. That was what he was paid for. It was enough to infer delectus personæ that there was skill relied on however slight, and the respondents could not be expected to rely on the assignee, who had not even slight skill in regard to the selection of grease. The evidence showed that the respondents had relied on Mr Knowles Spencer's personal skill and knowledge. Reference was made to the following authorities— Anderson v. Hamilton & Company, January 22, 1875, 2 R. 355, 12 S.L.R. 267; Grierson, Oldham, & Company, Limited v. Forbes, Maxwell, & Company, Limited, June 27, 1895, 22 R. 812, 32 S.L.R. 601; International Fibre Syndicate, Limited v. Dawson, February 20, 1900, 2 F. 636, 37 S.L.R. 451, affd. May 9, 1901, 3 F. (H.L.) 32, 38 S.L.R. 578; Asphaltic Limestone Concrete Company Limited v. Glasgow Corporation, 1907 S.C. 463, 44 S.L.R. 327; Robson and Sharpe v. Drummond, (1831) 2 B. & A. 303; Boulton v. Jones, (1857) 2 H. & N. 564; British Waggon Company v. Lea & Company, (1880) L.R., 5 QBD 149, per Cockburn, C.J., at p. 153; Jaeger's Sanitary Woollen System Company, Limited v. Walker & Sons, (1897) 77 L.T.R. 180; Tolhurst v. Associated Portland Cement Manufacturers, (1900) [1903] AC 414.