Scottish Court of Session Decisions

F. W. Trevalion & Company, wine merchants, London, pursuers, brought an action in the Sheriff Court at Glasgow against J. J. Blanche & Company, wine growers and shippers, Glasgow, defenders, to recover the sum of £1750, with interest, the amount of a cheque sent to them by the defenders, which, having been presented to the bank, was returned marked “payment stopped.”

The defenders made the following averments in a statement of facts—“(Stat. 1) The defenders on 31st May 1918 were desirous of obtaining some wine from bond, the output of which at that time was controlled by the Government authorities. (Stat. 2) On said date last mentioned the defenders offered to purchase from the pursuers a wine clearance certificate which they had advertised in Wine and Spirit Gazette newspaper as belonging to them, for sale. The price arranged to be paid for said wine clearance certificate is the amount sued for. (Stat. 3) Pursuers duly sent them on the wine clearance certificate, which, however, did not reach the defenders till the morning of 3rd June 1918, and on this date the defenders sent them their cheque for the £1750, the amount sued for. The authority to clear the wine from bond was not issued to pursuers but to Evans, Marshall, & Company, 62–63 Mark Lane, London, and was not a valid document which would have entitled the defenders to have obtained from bond the quantity of wine stated therein. The pursuers are called upon to produce said wine clearance certificate. The pursuers' statements in answer to the defenders' statement of facts are denied. Explained that the defenders' name which appears on the said wine certificate was adhibited by them with an indiarubber stamp for identification purposes, and that the pursuers had no right in said wine certificate which they could transfer to the defenders so as to enable them to obtain delivery of the quantity of wine from bond mentioned in the said wine certificate which had been issued by the Advisory Committee (Customs and Excise) under the authority of the Commissioners of Customs and Excise to the said Evans, Marshall, & Company for their business purposes and not for that of the defenders. (Stat. 4) The restriction by the Government authorities had been withdrawn

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as regards the supply of wine from bond on the 2nd of June, the day previous to the defenders receiving the wine clearance certificate, in consequence of which it was of no value, even assuming that it was a document which would have entitled the defenders to get delivery of the wine before referred to. (Stat. 5) Owing to the withdrawal of the restrictions, the enforcement of said contract (assuming it is binding upon the defenders, which is denied) would be productive of serious hardship to the defenders, as the said wine clearance certificate was of no use to them, and their purpose in entering into said contract would be entirely defeated.”

The pursuers averred in answers thereto—“( Ans. 3) Admitted that the wine clearance certificate was duly forwarded to the defenders, and that defenders sent pursuers their cheque, dated 3rd June 1918, for the sum of £1750 in payment thereof, and of the rights contained therein. The certificate is herewith produced and referred to for its terms, beyond which no admission is made. Quoad ultra denied. Explained that the pursuers offered and the defenders agreed to purchase the rights contained in said wine clearance certificate, which was duly delivered to and accepted by the defenders, and their name as proprietors thereof stamped on the face thereof. On receipt of said wine clearance the defenders forwarded to the pursuers their cheque in payment, and the transaction was completed. The wine clearance is valid, and would have entitled the defenders to have obtained from bond the quantity of wine stated therein, and the said wine clearance was sold by the pursuers and bought by the defenders in accordance with a well-known and recognised practice in the trade. ( Ans. 4 and 5) The question raised by the defenders as to the value or use to the defenders of the said certificate after the completed purchase of same does not concern the pursuers. At the time the contract was entered into the wine clearance was of great value to the defenders, and no question would have been raised by the defenders as to the validity of the wine clearance but for the withdrawal of the restriction referred to, and no difficulty would have been experienced in obtaining the wine specified therein. In point of fact, immediately on receipt of said wine clearance the defenders sent the same to the bonded storekeeper to clear wine required by them, and it was only after having so used the wine clearance that they discovered the withdrawal of the restriction.”

The pursuers pleaded, inter alia—“(2) The defence stated being irrelevant, decree for the sum sued for should be granted as craved.”

The defenders pleaded, inter alia—“(2) The defenders' obligation to accept delivery of said wine clearance certificate and to pay for same being conditional that it was a necessary document for the purpose which pursuers and defenders contemplated when entering into the transaction, the pursuers are not entitled to decree. (3) Esto that a contract of sale was concluded between the parties, the pursuers being unable to, and not having in point of fact tendered delivery of a certificate valid and legal for use by the defenders, are in breach of the agreement, and are not entitled to sue the defenders for the price. (4) The pretended sale having been entered into, and the offer made by the defenders, under essential error induced by the false and reckless representations of the pursuers, the sale is void or voidable, and ought to be set aside.”

On 20th January 1919 the Sheriff-Substitute ( Craigie) sustained the second plea-in-law for the pursuers and granted decree.

Note.—“In this action the pursuers Messrs F. W. Trevalion & Company are a firm of wine merchants carrying on business in London, and the defenders Messrs J. & J. Blanche & Company are a firm of wine growers and shippers, &c., carrying on business in Glasgow. The pursuers seek £1750 from the defenders, who deny liability for any part of that sum.

In the issue of The Wine and Spirit Gazette, dated 25th May 1918, there appeared an advertisement (among advertisements of a similar kind) in these terms:—‘5000 wine clearance offered at 8s. per gallon on one sheet. 4314 C/o Harper & Company, 39–40 Crutched Friars, London, E.C.3.’ The defenders do not dispute that the advertisement related to the wine authority in process.

This authority is entitled ‘Authority to obtain delivery granted under the Defence of the Realm Acts,’ and authorises Messrs Evans, Marshall, & Company, 5 Mark Lane, E.C.3, to obtain delivery from ship's side or a warehouse during the half year ending 30 th September 1918 of such quantity of wine not exceeding five thousand (5000) gallons as they desire for home consumption. The authority bears to be issued by the Advisory Committee (Customs and Excise) under the authority of the Commissioners of Customs and Excise, and is signed by their secretary.

Noticing that the authority was not in favour of the pursuers, I asked their agent Mr Ballantine how his clients came into possession of it. He answered that the information which he had was that the business of Evans, Marshall, & Company, Mark Lane, was purchased by Edward Young & Company, distillers and wine shippers, of Liverpool and Mark Lane; that the authority was included in this purchase; that Edward Young & Company advertised the authority for sale, and that his clients ( i.e., the pursuers) purchased it at £1250; and that there had been no curtailment of supplies to the customers of Evans, Marshall, & Company. Now what I have just said, if it is consistent with fact, gives at least an explanation why Trevalion & Company—not Evans, Marshall, & Company—are the pursuers in the action. Mr Wilson, the agent for the defenders, was not in a position to say whether the information given by Mr Ballantine to me was consistent wholly or partly with fact. Mr Wilson's attitude was that even if the information supplied by the pursuers to Mr Ballantine was well founded in fact, it did not affect the defence which his clients had set forth on record.

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I now draw attention to the terms of the note which is appended to the authority. The note is couched in these words:—‘ Note.—This authority is granted on condition that the holder thereof (if a dealer) shall, as far as his licensed customers, if any, are concerned, distribute the wine obtained under the authority fairly among them, having regard to the quantity delivered to each in the year 1916. Failure to observe this condition may involve cancellation of the authority and refusal of its renewal in addition to any penalty to which the holder may be liable under the Defence of the Realm regulations.’

The authority was granted under a notice issued by the Commissioners of Customs and Excise dated March 1917. In that notice the Commissioners state that under the Defence of the Realm Acts, from the 2nd April 1917 inclusive, no spirits or wine will be delivered from ship's side or from a warehouse (including a distiller's spirit store) for home consumption on payment of duty, except on production to the proper officer of Customs and Excise at the ship's side or warehouse of an authority granted by an Advisory Committee appointed by the Treasury (Article 1). Article 8 of the notice reads as follows:—‘Every authority will be granted on the express condition that the holder, if a licensed dealer, will, so far as his licensed customers, tied or free, are concerned, distribute the spirits or wine obtained under the authority fairly among them having regard to the quantity delivered to each in the year 1916, so that no trader shall gain an unfair advantage over another, and failure to observe this condition may involve forfeiture of the authority and refusal of its renewal.’ The concluding article (10) of the notice bears—‘Where a dealer who has given up business since the 31st December 1915 has no successor the Committee, on production of satisfactory evidence of the clearance by him of spirits or wine from bond, and of the sale of such spirits or wine in the year 1916, will be prepared to grant an authority to enable any person who purchased the spirits or wine, either to clear spirits or wine himself from bond or to pass on the authority to another dealer who may be willing to supply him. Applications in such cases should be sent to the Committee through the local Customs and Excise officials, giving full particulars and evidence of clearances and purchases.’

Having drawn attention to the contents ( a) of the wine authority in favour of Messrs Evans, Marshall, & Company, and ( b) of the notice under which it was issued, I come now to facts which are admitted by both parties. These facts are (1) that after becoming aware of the advertisement which the pursuers had inserted in the Wine and Spirit Gazette the defenders began negotiations for the purchase of the authority on 29th May 1918; (2) that on 31st May the pursuers wired the defenders ‘Can accept 5000 authority seven shillings,’ and that on the same day the defenders both wired and wrote to the pursuers accepting their offer, and asking them to send forward the authority, on receipt of which they would send their cheque; (3) that on 1st June the pursuers posted the authority to the defenders; (4) that on 3rd June the defenders wrote to the pursuers in these terms—‘We are obliged for yours of 1st inst. enclosing wine clearing authority for 5000 gallons, and enclosed herewith we have pleasure in sending you our cheque’ (the cheque being for £1750, the sum sued for) ‘covering amount of your statement, which kindly return discharged’; (5) that on 4th June the defenders stopped payment of their cheque and wrote to the pursuers—‘You will observe that the clearing restrictions on wine have been withdrawn, and as this arrangement came into operation prior to our cheque being issued we contend that we are entitled to cancel the transaction. Meantime we have asked our bankers to stop payment of the cheque. We take it, however, that you will quite see the reasonableness of the position that we take up, as it would simply mean that you would be asking us to pay for something that is of no value.’ Hence the present action at the instance of the pursuers.

All the facts stated in the preceding paragraph are taken from the telegrams and the letters that passed between the pursuers and the defenders. No oral communings it is admitted took place between them.

The pursuers and the defenders are agreed that in June an Order was issued relating to the delivery of wine. That Order, inter alia, declares—‘On and after the 3rd June 1918 the delivery of wine from ship's side or warehouse for home consumption, on payment of duty, shall be free from any restriction imposed by or under the principal order, and accordingly the principal order shall be revoked in so far as applies to wine, and in sub-clauses (1), (2), (3), and (5) of clause 4 of the principal order, the words “wine or” shall be deleted.’

Before I go to the law applicable to the admitted facts it is perhaps expedient that I should state the position taken up on record by the pursuers on the one side and the defenders on the other.

The pursuers found on the defenders' cheque for £1750, and there is no doubt—at least no doubt is suggested by the defenders—that the pursuers came into possession of the cheque for £1750 without any fraud, actual or constructive, on their part. The position on record of the defenders is that the pursuers could not transfer to them the wine authority, because it was conceived in favour of Evans, Marshall, & Company for their business purposes alone. The position of the defenders is, I assume, that the authority in favour of Evans, Marshall, & Company was not transferable by them to any other firm or person. It is, however, difficult for me to see that the Order can be so read, at least as long as the customers of Evans, Marshall, & Company make no complaint against them. The notice of March 1917, to which I have already referred, may have been intended to stipulate that the authority was not transferable to any other firm by the pursuers, to whom it was granted, but I do not see my way so to read it.

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My information is that such an authority for the delivery of wine as I have to construe was the subject of sale and transfer until the need for such authorities came to an end as from the 3rd of June 1918. My information may either be correct or incorrect, and I quite understand that my information, even if it is correct, does not entitle me to say that in law the authority with which I am dealing was transferable. But it seems to me that those who issued the Order under which the authority was granted, could have used, if that had been their intention, words similar to those used in the Order dated 13th August 1918 (which admittedly does not apply to wine)—‘A person shall not sell or buy, or offer to sell or buy, an authority for the delivery of spirits from bond granted or to be granted by the Commissioners of Customs and Excise’ (Regulation 11).

If I read the correspondence correctly the contract entered into between the pursuers and the defenders was concluded on the 31st May, or at least not later than 1st June.

The contention of the defenders' agent was founded on plea 3, which reads—‘ Esto that a contract of sale was concluded between the parties, the pursuers being unable to, and not having in point of fact tendered delivery of a certificate valid and legal for use by the defenders, are in breach of the agreement and are not entitled to sue the defenders for the price.’

If I understand the argument for the defenders, it comes to this, that although there was a concluded contract ex facie valid in every way for the transference of the authority for the delivery of the 5000 gallons of wine to the defenders, and although the pursuers divested themselves of the authority by posting it on the 1st of June to the defenders, yet as the authority became unnecessary as from the 3rd of June, the day on which the defenders sent their cheque for £1750 to the pursuers, the contract with its obligation to pay the £1750 came to an end.

I have already indicated that in the defences it is not alleged that when the contract for the transfer of the authority was concluded the pursuers knew that it was to be made unnecessary as after the 3rd June. It therefore seems to me that, as the record stands, the fourth plea-in-law for the defenders has no foundation.

It seemed to me that the defenders thought the best foundation for their defence was on the law laid down in the cases which arose on account of the postponement of the coronation of Edward VII in 1902. The defenders cited one of these cases to me— Chandler v. Webster, [1904] 1 KB 493, and I have read the other cases.

I think that the decisions in the Coronation cases amount to this—(1) Where two parties to a contract have based their contract on the continued existence of some particular specified thing, then in the absence of any express or implied warranty that the thing shall exist, the contract is subject to an implied condition that the parties shall be excused in case before breach performance becomes impossible from the perishing of the thing without default of the contractor; but (2) where a room had been let for the purpose of viewing the procession, and by the terms of the contract the price of the room was payable before the time at which the procession was abandoned, the whole price could nevertheless be recovered, the right thereto having accresced before the abandonment of the procession.—See Addison on Contracts (11th ed.) pp. 149–150, and Gloag on Contract, pp. 641–643, where the cases are cited.

It has been said (see Gloag on Contract, p. 643) that the Coronation cases decided in England have extended the principle which one associates with the expression rei interitus further than the Scotch cases, and probably the writer who says so is right. But I think, not without hesitation, that the grounds of decision in the Coronation cases do not apply to the present case. In the Coronation cases the hirer was not put into possession of anything; all his rights were to get the use, e.g., of a room or of a window from which he might view the procession. In this case the defenders got possesssion of what they purchased; and it seems to me, as our law stands, they had to follow the fortunes, good or bad, of the authority which they bought.

Neither party craved a proof on any part of their record.

It seems to me that I should sustain plea 2 for the pursuers and grant decree as craved, with expenses.”

The defenders appealed, and argued—The very basis of the contract in question was an implied condition that the permit should, at the time the contract fell to be performed, be a necessary document in order to obtain a clearance of wine from bond. The Order of 2nd June withdrawing the necessity of such permits brought into existence a completely new set of circumstances which, affecting as they did the basis of the contract, were amply sufficient to excuse the appellants from performance of the contract. Where, as in the present case, an event occurred which was not contemplated by the parties, and which was directly contrary to their intention, then the contract was dissolved. Counsel quoted the following cases:— William Morton & Company v. Muir Bros. & Company, 1907 SC 1211, at p. 1224, 44 S.L.R. 885; Taylor v. Caldwell, (1863) 3 B. & S. 826, per Lord Blackburn at pp. 833 and 839; Baily v. De Crespigny, (1869) L.R., 4 Q.B. 180, per Hannen (J.) at p. 185; Jackson v. Union Marine Insurance Company, (1873) L.R., 8 C.P. 572, and (1874) L.R., 10 C.P. 125; Nickoll & Knight v. Ashton, Edridge, & Company, [1901] 2 KB 126, at p. 132; Krell v. Henry, [1903] 2 KB 740, at pp. 749 and 754 F. A. Tamplin S.S. Company v. Anglo-Mexican Petroleum Products Company, [1916] 2 A.C. 397; Metropolitan Water Board v. Dick, Kerr, & Company, [1918] AC 119, at pp. 135 and 138; Blackburn Bobbin Company v. Allen, [1918] 1 K.B. 540, at p. 542; Gloag on Contract, p. 642. The defenders' contract, moreover, was illegal, and therefore not enforceable. They could only have desired to purchase the permit in order to obtain more

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than 50 per cent. of their supply of liquor in 1916, and this was under the existing Defence of the Realm Regulations a punishable offence. Such permits were issued under the Intoxicating Liquor (Output and Delivery) Order 1917, dated 29th March 1917, and made by the Food Controller under Regulation 2 F of the Defence of the Realm Regulations (1917, No. 270, as amended by 1917, No. 1213, and the Customs Notice, March 1917, as to restriction of deliveries of spirits and wine from bond to 50 per cent. of 1916 deliveries). These permits were not transferable, and accordingly an agreement for the sale of a permit was illegal and not enforceable— Sykes v. Bridges, Routh, & Company, (1919) 35 T.L.R. 464.

Argued for the respondents—The circumstances of the liquor trade were very fluctuating, and this was well known to the defenders. A permit for the clearance of wine from bond was at the date of entering into the present contract an absolute necessity, and the defenders were quite aware that the authorities might vary the restrictions at any time. The defenders ran the ordinary risks attendant on such uncertain and changing conditions. It was only after the defenders' cheque had been posted and the contract thereby made complete that the restrictions had been removed. Accordingly the stopping of the cheque came too late— M'Laren's Trustee v. Argylls Limited, (1915) 2 S.L.T. 241. The sending of the cheque constituted payment, and the contract had thus been actually completed— Leggat Bros. v. Gray, 1908 S.C. 67, 45 S.L.R. 67. The defenders had failed to state upon record that the contract was illegal. An exact precedent was necessary where a party attempted to show that something had been done against public policy— Earl of Caithness v. Sinclair, 1912 S.C. 79, per Lord President Dunedin at p. 84, 49 S.L.R. 29. A wine merchant was entitled, in addition to 50 per cent. of his 1916 supply of liquor, to obtain more from a person who had given up business but had still a portion of his supply to dispose of. The case of Sykes v. Bridges was distinguishable on the facts, a proof having there preceded judgment.

At advising—