Scottish Court of Session Decisions

The National Benefit Trust, Limited, incorporated under the Companies Acts, 1862 to 1886, and having their registered office at 10 Finsbury Square, London, pursuers, brought an action against Charles Coulter, ironmonger, Broxburn, defender, in which they sought declarator that a valid and binding contract had been concluded between the pursuers and the defender in virtue of pursuers issuing to defender, in reply to his application for a bond, a certificate that he was entitled to receive a bond, and by defender accepting the certificate and making monthly payments thereunder for a period of more than seven years. There was also a conclusion that defender was not entitled to demand repayment of the monthly subscriptions already paid by him, or any part thereof, or any sum in respect thereof, until he had made payment of these monthly subscriptions for a period of thirty years as stipulated in the contract.

The pursuers pleaded—“(1) A valid and binding contract having been concluded between the pursuers and the defender as above condescended on, the pursuers are entitled to decree of declarator as concluded for, with expenses. (2) In the circumstances stated, the defender is barred personali exceptione from disputing the validity of the contract concluded between him and the pursuers.”

The defender pleaded—“(3) Decree of declarator should be refused and the defender assoilzied in respect that no valid and binding contract exists or existed between the parties owing to the absence of consensus in idem, and to there being no termini habiles for the completion of said bond. (4) The defender having only consented to be bound by a bond issued in terms of his said order, and said bond not having been granted and delivered, he is not bound in any way to the pursuers,

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and should be assoilzied. (5) The defender, upon a true construction of said order and certificate, and whether a valid and binding contract existed and exists between the parties or no, being entitled to demand repayment at any time of all instalments paid by him as aforesaid, decree of declarator thereanent should be refused.”

The facts of the case appear from the opinion of the Lord Ordinary ( Mackenzie), who on 19th March 1910 found, declared, and decerned in terms of the conclusions of the summons.

Opinion.—“This is an action at the instance of the National Benefit Trust, Limited, against Charles Coulter, ironmonger, Broxburn, for declarator that a valid and binding contract was concluded between the pursuers and the defender — (1) by the defender delivering to the pursuers a proposal, (2) by the pursuers issuing to the defender a certificate, both in the terms quoted in the conclusions of the summons, and (3) by the defender accepting the certificate and in accordance with the conditions expressed therein making payment to the pursuers of a monthly subscription of 13s. from the 1st of April 1902 to the 1st of November 1909, and that the rights and liabilities of the pursuers and defender are regulated by the terms of the proposal and certificate and the conditions endorsed on the certificate, and in particular, that the defender is not entitled to demand repayment of the monthly subscriptions already paid by him, or of any sum in respect thereof, until he has made payment of these monthly subscriptions for a period of thirty years as stipulated for in the contract.

The first point taken by the defender is that there was no valid and binding contract between him and the pursuers owing to the absence of consensus in idem, and to there being no termini habiles for the completion of a bond.

In April 1902 the defender filled up and sent to the pursuers a proposal form in the following terms:—

To the

National Benefit Trust, Limited,

‘10 Finsbury Square, London, E.C.

Please issue to me a bond for £300, the Monthly Subscription to be 0 Pounds, 13 Shillings, and 0 Pence, payable on the first day of each month for a period of thirty years, to commence from the first day of April 1902. Such Bond to be issued in accordance with your usual conditions.

Full Name, Mr Charles Coulter.

Address, Main Street, Broxburn.

Occupation, Ironmonger.

The first Month's Subscription of 0 Pounds, 13 Shillings, and 0 Pence, I send herewith.

Signature of Applicant: Charles Coulter.

Received the above sum of £0 13s. 0d.

Agent, David Chalmers.

Address, 117 Dalry Road, Edinburgh.

Date, April 1902.’

In answer to this the pursuers issued to the defender a certificate in the following terms:—

‘ The National Benefit Trust, Limited.

Incorporated under the Companies Acts, 1862 to 1886.

Chief Offices: 10 Finsbury Square, London, E.C.

BOND CERTIFICATE, £300.

This is to Certify that Charles Coulter, of Main St, Broxburn, N.B., or other, the holder hereof, is entitled, provided no Subscription is unpaid, to receive BOND No. 42,148 in the above Company, subject to the usual Conditions, a copy of which is endorsed hereon, and that the same can be had upon application and payment of the Stamp Duty payable thereon, all Subscriptions paid in the meantime being subject to the same Conditions.

Subscription: Thirteen Shillings per Month ( see Prospectus). Term: Thirty Years, to date from the First day of April One Thousand Nine Hundred and Two.

Ledger Folio 1 N.B. 118.

S. F. Gandell, Secretary.

Ent ^d. J. Woodfood.’

There were endorsed on the certificate the conditions which are set out in the conclusions of the action.

[These conditions included, inter alia — “2. A register of all bonds or certificates issued will be kept at the registered office of the company, wherein shall be entered the names, addresses, and descriptions of the registered holders, and particulars of the bonds or certificates held by them respectively. 3. The registered holder will be regarded as exclusively entitled to the benefit of this bond, and the company shall not be bound to enter in the register notice of any trust, or to recognise any right in any other person save as herein provided.”]

“The defender admits that he received this certificate, and that he thereafter made payment to the pursuers at the rate of thirteen shillings per month from April 1902 till 1st November 1909.

It appears to me that in these circumstances the certificate must be treated as an acceptance by the pursuers of the proposal made to them by the defender. It may be that on receipt of the certificate the defender might have been entitled to refuse to treat it as an acceptance, on the ground that he had asked the pursuers to issue to him a bond, and that they had not done so but had issued to him a certificate. The defender, however, did not do so, but has paid for more than seven years the subscriptions stipulated for. I am therefore of opinion that he must be held to have done so on the faith of there being a binding contract between himself and the pursuers—the terms of which are contained in the proposal, the certificate, and the conditions endorsed thereon.

The defender's contention was that the parties to the contract, its duration and its terms, could not be ascertained. As regards the parties there can be no doubt. The proposal is addressed to the National Benefit Trust, Limited, and is signed by Charles Coulter. The certificate bears that Charles Coulter is entitled, on certain conditions, to receive a bond of the National Benefit Trust, Limited. The terms of the

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contract appear to me also sufficiently distinct. The request is to issue to the applicant a bond for £300—the monthly subscriptions being 13s., payable each month for a period of thirty years—‘Such bond to be issued in accordance with your usual conditions.’ The reply contained in the bond certificate is that Charles Coulter is entitled to receive bond No. 42,148, subject to the usual conditions which were endorsed on the certificate. ‘All subscriptions paid in the meantime being subject to the same conditions.’ There is also in the certificate an intimation that the bond can be had upon application and payment of the stamp duty payable thereon. The certificate contains a note that the subscription is to be 13s. per month, and that the term is to be thirty years, to date from 1st April 1902.

The applicant was placed on the register of the company as the holder of this certificate in accordance with the terms of article 2 of the conditions referred to. Article 3 provides that the registered holder will be regarded as exclusively entitled to the benefit of this bond. By this I think is meant the registered holder of a certificate as well as of a bond, and that what he is entitled to is the specific bond, No. 42,148, mentioned in the body of the certificate.

I am therefore of opinion that the defender's fourth plea-in-law, which is in these terms—‘… ( quotes, v. sup.) …’ is not well founded. He could have had delivery of bond No. 42,148 at any time upon application and payment of the stamp duty. There is, therefore, in my opinion, a binding contract between the defender and pursuers.

The fifth plea-in-law for the defender is in these terms—‘… ( quotes, v. sup.)…’ This, in my opinion, cannot be maintained in view of the fact that the conditions of the contract contain elaboratestipulations as to the circumstances under which the defender is to be entitled to receive any payment or get any advance from the company. There is no provision which entitles him, under existing circumstanccs, to demand re-payment of the subscriptions already paid, and the terms of the conditions preclude the idea that he has any such right under the contract.

I am of opinion that, although upon certain points there is a difference between the terms of the documents in the present case and those under discussion in Laing v. Provincial Homes Investment Company, Limited, 1909 S.C. 812, 46 S.L.R. 616, there is no room for distinguishing the one case from the other, and that the judgment of Lord Kinnear in Laing's case is applicable to the present. His Lordship says—‘The effect of all this appears to me to be this, that the pursuer made an offer to the company which was capable of being turned into a binding undertaking by the company's acceptance; that the company accepted by issuing a certificate in the terms which I have just mentioned; and that the pursuer, in her turn, accepted that certificate as a conclusion of the contract between them, by proceeding, as she avers that she did after its delivery to her, to make payment of certain monthly subscriptions in accordance with its terms.’ In the present case I consider the granting of the obligation by the company to issue a bond was treated by the defender as an acceptance of the offer contained in the original application. Lord Kinnear then proceeds—‘The effect of the whole contract so constituted appears to me to be this, that the pursuer became bound to make certain monthly payments to the company by way of investment.’ … ‘She could not resile from that obligation or cease from making payments, and in return for that she received an obligation from the company to pay to her a certain sum of money—£312—with compound interest at the rate of 2 1 2 per cent. at the end of the period of thirty years.’

The same conclusions should, I think, be reached on a true construction of the documents in the present case, and accordingly I am of opinion that the pursuers are entitled to have decree in terms of the conclusions of the summons as craved.”

The defender reclaimed, and argued — There was here no consensus in idem, and the acceptance did not meet the offer. The proposal forms, in the company's words, bound them to issue a bond, and it was no answer to defender's offer to issue a bond certificate which did not bind the company to give a bond, and which merely contained a statement that the defender was entitled to receive a bond on certain conditions. Even if there was an obligation to issue a bond, it was only an indefinite future obligation, and if anything happened to the company in the meantime the defender might never get the bond, and would have no liquid document of debt on which he could sue. The conditions in question attached to a bond, and were not binding on defender. The case of Laing v. Provincial Homes Investment Company, Limited, 1909 S.C. 812, 46 S.L.R. 616, was distinguishable from the present, because there the proposal distinctly stated that acceptance would take the form of a certificate, and the conditions were set forth on the back of the proposal form. With receipt of the certificate the proposer became a registered bondholder, while in the present case he was not a registered bondholder. The subsequent payments made by defender would not cure the initial defect in the contract, (1) because there was here no ambiguity which the acts of the parties could be said to explain; (2) because the continued payment of the money was in no way more consistent with pursuers' interpretation of the contract than with defender's, viz., that he was to receive a bond and not merely a certificate. These payments did not constitute either rei interventus or personal bar— Buchanan v. Duke of Hamilton, January 29, 1878, 5 R. 588, 15 S.L.R. 333.

Argued for the pursuers—The issue of a bond certificate constituted a valid contract. The bond certificate stated that the applicant would get his bond the moment

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he paid the stamp duty, and this meant that his rights and liabilities would be exactly the same under the certificate as under the bond. The condition of payment of stamp duty was a “usual condition.” If the company went into liquidation the applicant would be precisely in the same position as with a bond, because the conditions attached to the bond were the same as those attached to the certificate. Payment of stamp duty was not a new term introduced into the contract. If defender wished to raise this point he should have rejected the certificate at the time he got it, on the ground that this was a new condition, but he had gone on paying for seven years. If there was any hiatus between offer and acceptance it had been cured by the payments. The defender had accepted the receipts for the monthly payments as implementing his offer. Defender could not demand back these payments — Sinclair v. Provident Association of London, Limited, March 8, 1894, 31 S.L.R. 501. But if there was no right to repetition, then there was a contract. The present case was ruled by the case of Laing v. Provincial Homes Investment Company, Limited, cit. sup., both as to the terms of the contract and the subsequent payments.