Scottish Court of Session Decisions

Lord Sands's OPINION.—The unusual course which these cases have taken recalls to my mind, over a waste of fifty years, a passage in that quondam school classic, Collier's English History, where the account of the Wars of the Roses is introduced with the statement: “A cloud at first no bigger than a man's hand had long been gathering round the throne of the Lancastrians.” A cloud which at first seemed no bigger than a man's hand has gathered round the case of the pursuers, Messrs Blackater. They sued as the registered owners of the steamship “Ashton” of Grimsby. The defenders in their defences admitted this description. It came out incidentally in the proof, during the examination of Mr T. E. Blackater, that this was a mistake. The registered owners are the Cadeby Steamship Co., and it was on behalf of the owners that the boilers, the condition of which has given rise to these proceedings, were ordered. I have no doubt that the mistake was an innocent one. The framers of the summons were under the impression that the pursuers, Messrs Blackater, were the owners of the ship, and Mr A. F. Blackater himself when he saw the record did not appreciate the importance of the matter, which appeared to him to be merely formal and technical. The limited Company is intimately related to his firm, and he is himself its sole director. The defenders, Messrs Craig, admitted on the record as it stood before amendment that the pursuers were the registered owners, simply taking their word for it without troubling to examine the register. When it transpired in the course of the proof that Messrs Blackater were not the registered owners, the matter appeared to me to be treated just as one of those little awkwardnesses with which counsel twit or annoy one another without any suggestion that it is irremediable or decisive. The proof went on for a number of days as if nothing had happened. The pursuers' counsel did not, I think, advert to the matter during the hearing on evidence, and it was only when the defenders' counsel mentioned it that I recognised that the cloud was growing and indicated that I felt there was a difficulty, though I was still under the impression that it was a difficulty which might, before I could satisfactorily dispose of the case on its merits, have to be obviated, not that it was a difficulty that could not be obviated. It was not until some time after I had made avizandum that the pursuers came forward with a proposed amendment. This was not opposed, and it led to a short supplementary proof.

I have now come, though not without anxiety, to the conclusion that the mistake which was made is irremediable, and that the pursuers, Messrs Blackater, cannot succeed in this litigation. Another view may, however, be taken by a Court of review. There has been a very long inquiry in this case. In view of this, and of the weight that is attached to the opinion of the Judge who has tried a case, particularly a case like the present where there are considerations of credibility and practical demonstrations by witnesses in relation to models and plans, I think it proper that the opinion I had formed upon the case when I first made avizandum should be placed upon record. I could not, perhaps, in any event avoid an expression of opinion as to success in the proof, as this enters into the question of expenses.

I shall accordingly now incorporate the opinion which I prepared as soon as I had an opportunity of perusing the evidence and before the new difficulty had developed. [His Lordship then dealt with the merits, and, on the evidence, held it proved that the defects in the boilers of which Blackaters complained were due to faults of construction for which Craigs were responsible. His opinion then proceeded]—

Ante Diluvium sic scriptum. The position of the actions has, however, been altered by the amendment, the supplementary proof, and the argument thereon, and I am unable to take the course above indicated. It appears that the relations of parties are as follows. The Cadeby Steamship Co. are the registered owners of the “Ashton,” and the boilers were ordered on their behalf. The sole director of the Company is Mr A. F. Blackater, and, as an individual, he has the management of the ship on behalf of the Company. He is a member of the firm of Messrs A. F. & J. C. Blackater, and in his capacity as manager of the vessel he corresponds in his firm's name. This is how the firm came to be parties to the contract for the supply of the boilers. The firm have no direct pecuniary interest in the action or in the claims or liabilities implicated therewith. The interest to sue or defend is in the Cadeby Steamship Co., who are not parties to either action.

I take it to be in accordance with our law and practice that a party who desires to enforce a contract, or recover damages for the breach of it, must sue in his own name. The rule is thus stated by Lord Shand in Levy v. Thomsons, 10 R. 1134, at p. 1137: “In the ordinary case, even although a contract has been entered into by an agent for a principal, proceedings to enforce it must be taken by the principal, who must sue in his own name.”

No doubt, where an agent has entered into a contract for an undisclosed principal, he may be sued, and as a counterpart he may sue, in his own name—(Mackay, 128; Maclaren, 220). But in such a case the action, so far as the other party to the contract is concerned, is the agent's own action. If the agent's action be one of implement, it is for implement to the agent; if it be one of damages, it is for damages suffered by the agent. In order to recover damages the agent must instruct damage suffered by himself. In the present case the contract was made by the defenders with the pursuers, who were acting as the agents for an undisclosed principal. These agents sue for damages for breach of that contract. But the damages which they have instructed are not damages suffered by themselves, but damages suffered by their undis closed principal. I take it that, if the pursuers had ordered the boilers on their own behalf and, without knowledge on either side of any defect, had resold them, in order to instruct a claim of damages against the defenders, it would have been necessary for them to instruct, not merely that the boilers had proved to be defective and had caused trouble and expense to the purchasers, but that the purchasers had enforced, or were in a position to enforce, damages against them. If they were unable to do so, if the purchasers made no claim against them, they could have no claim of damages against the makers of the boilers. I am unable to hold here that the pursuers are in any better position.

I confess I reach this result with reluctance and distaste. There is no substance in the difficulty. The circumstance that the title to the ship was in the limited Company does not prejudice the defenders in the least. Nor does it make any difference either to the pursuers or to the principals behind them, who are really very much the same parties under a different legal persona. The matter could be rectified in a moment without prejudice to anybody by the Company sisting itself as pursuer. The whole of the real merits of the case would then stand exactly where they were before the point emerged. But, unfortunately, our procedure does not admit of this solution, or, apparently, of any solution short of rendering the whole of these proceedings and the exhaustive inquiry abortive. I was referred to the case of Symington, 21 R. 434, not as being exactly in point, but as illustrative of the inexorable character of an analogous technical rule. In that case an action failed because the pursuer sued as an assignee, and the assignation was formally executed one day later than the date of the summons. In such a case, if there was anything in the date as affecting diligence, or otherwise, it would be proper that the action should be allowed to proceed only upon the footing that the service of the summons was to be treated as not earlier than the date of the assignation. But this will not suffice. There may have been a long litigation and an expensive proof. It must all go for nothing. The whole expense must be thrown away. Everything must be begun over again. There must be a new summons, new defences, a new making up of a process, a new print, a new enrolment in the adjustment roll, and so forth. In no other sphere of human activity would the like be contemplated, except perhaps in the domain of sport, where rigid enforcement of arbitrary penalties, disproportionate to the mistake, is sometimes thought to add zest to the game.

I have not overlooked a case to which I was not referred (Larsen v. Ireland & Son, 20 R. 228), which seems the case most favourable to the pursuers' contention. I do not think, however, that the case goes far enough to save the pursuers here. It can hardly be taken, I think, to lay down a general rule in regard to an agent's title to sue inconsistent with the rule formulated by Lord Shand in the dictum I have quoted above. The position of a master of a ship, particularly a master in a foreign port, is special, and in that case the master was part owner, which the pursuers here are not, at all events in any juridical sense.

I now turn to the other branch of the conjoined actions—the claim of Messrs Craig as pursuers against Messrs Blackater as defenders for payment of the contract price. Similar considerations seem to apply here, but it was argued by the Dean of Faculty that, even if the action in which his clients are pursuers fails upon the ground that they are only agents of the buyers, they are entitled to prevail in the action for the balance of the contract price in which they are defenders, in respect that the pursuers are seeking to enforce a contract which they have failed to implement. Any defence, it was argued, which would have been open to the undisclosed principals must be open to the agents when it is sought to enforce a contract against them. This proposition is well-founded in the general case. If the defenders here had refused to accept delivery of the boilers as being disconform to contract, and the pursuers had sought to enforce the contract, any defence open to the principals would have been available to the defenders. But the defenders did not reject the boilers. Delivery was accepted, and, in these circumstances, the remedies of the buyers are measured by the provisions of the Sale of Goods Act, 1893, section 53. These remedies are either to—“(a) set up against the seller the breach of warranty in diminution or extinction of the price; or (b) maintain an action against the seller for damages for the breach of warranty.” This must be read along with the provision in section 11,—“(2) In Scotland, failure by the seller to perform any material part of a contract of sale is a breach of contract, which entitles the buyer either within a reasonable time after delivery to reject the goods and treat the contract as repudiated, or to retain the goods and treat the failure to perform such material part as a breach which may give rise to a claim for compensation or damages.” It is not clear, on the terms of the statute, whether (a) and (b) of section 53 (1) are differentiated otherwise than as pointing to two different modes of procedure. In this connexion it has to be kept in view that the statute was framed with English procedure primarily in view. There is one aspect in which every claim to pay less than the contract price may be regarded as a claim of damages. There is another aspect in which a distinction may be drawn between a claim of damages in the popular sense and a claim to make a deduction, in respect that, owing to some breach of condition or misdescription, the article was really worth less at the date of delivery than if it had been an article in conformity in all respects with the contract. In the present case, however, the defence is laid upon damages that emerged, not on quanti minoris; and there are no materials for determining “diminution” of value as at the date of delivery.

In the other branch of the conjoined actions I have been obliged to hold that the claim of the pursuers to damages in that branch fails, and, accordingly, as they took delivery of the boilers, I do not find that under the statute any remedy is open to them as defenders in this branch of the action against the demand for payment of the price. This does not appear to me really to impinge upon the Dean of Faculty's principle that any answer must be open to the defenders in this branch which would have been open to their principals. Here, the defence of damages would have been open to the principals, and, accordingly, the defence of damages is open also to the agents, the present defenders, but it must be damages suffered by the party propounding the defence, not damages suffered by some other party. As I have already pointed out, if the defenders, having bought as principals, had immediately, before any defects manifested themselves, resold the boilers under a contract which precluded the purchasers from having any recourse, the defenders could not have pled the damages suffered by the third party, the purchasers, in answer to an action for payment of the price.

I am pressed by the consideration that in suing for the balance of the price the pursuers are seeking to enforce fulfilment by the defenders of a contract which, in my view, they have not themselves fulfilled. But statute law has no such elastic virility as the common law, and it seems to me that the matter is governed by statute, which specifically prescribes, and, in doing so, limits, the rights of a buyer who accepts delivery of goods.

I shall sustain the first plea in law for the defenders in the action at the instance of Messrs Blackater, and the third plea in law for the pursuers in the action at the instance of Messrs Craig; dismiss the conclusions of the former action; and, under the conclusions of the latter action, I shall decern against the defenders Messrs Blackater for payment to the pursuers, Messrs Craig, of the sum of £1800, the sum adjusted by the parties as the amount of the unpaid balance of purchase price, with interest at 5 per cent from the date of citation. I shall find the Messrs Craig entitled to expenses in both actions up to the date of conjunction and in the conjoined action, except the expenses of the proof, in respect of which no award of expenses is made, but I shall exclude from this exception the expenses of the additional proof upon 15th July.

Messrs Blackater reclaimed, and the case was heard before the Second Division on 23rd and 24th January 1923.

Argued for the reclaimers:—The Lord Ordinary had found that a breach of the contract had taken place, and the only question now in issue was whether the reclaimers had a title to sue for damages. They submitted that they had. They had averred and proved a mandate. Further, they were entitled to sue and defend as agents for the owners of the ship. Two courses were open to the respondents when they discovered the true position of the reclaimers. They might have abandoned their own action and proceeded against the real principals, in which case they would have been entitled to plead no title in Blackaters to sue the counteraction. They had, however, chosen the alternative course, and proceeded with their action against Blackaters. As they had prosecuted that action to decree, they must be held to have elected to treat Blackaters as their debtors in the contract, and they could not now be heard to say that Blackaters had no title to sue a counter-action founded on the same contract. The position of the latter as the result of the course which Craigs had adopted was, in principle, indistinguishable from that of an agent contracting for an undisclosed principal. In that case the agent was, in contemplation of law, the principal, and his right to sue and liability to be sued were reciprocal. Even where the language of the contract left the agent's position ambiguous, the presumption was in favour of his title to sue. It was not a valid objection to Blackaters' action that they had suffered no patrimonial loss. They had not only a title, but also an interest to sue. They had a title as parties to a contract on which they had been already sued, and an interest to maintain the counter-action as representing the owners of the vessel who had in fact been damnified by the respondents' breach of contract. An agent might be barred from suing, if it was shown that his principal objected to the action. But the fact that an agent was litigating merely in a representative capacity was, in the absence of such objection, per se sufficient to found a claim for damages. The reclaimers' title to sue for damages could not have been challenged for want of interest had their principals remained undisclosed, and it could not be regarded as open to objection merely because the real sufferers from the breach of contract were now known. The case of Levy & Co. v. Thomsons, referred to by the Lord Ordinary, was distinguishable, for there the principal had been disclosed from the beginning, and Lord Shand's dictum fell to be read in the light of that fact. In Kerr v. Clyde Shipping Co., as also in Robertson v. Anderson, the question at issue was whether a mercantile company could sue by a descriptive name, and the dicta of the Lord Ordinary (Jeffrey) in Kerr regarding an agent's title to sue supported the reclaimers. Symington v. Campbell and Westville Shipping Co. v. Abram Steamship Co. were cases of a vendor and his assignee, and therefore not in point. The cases of Blumer & Co. v. Scott & Sons and Tinnevelly Sugar Refining Co. v. Mirrlees, Watson, & Yaryan Co. were distinguishable. In the former the pursuers did not act in any sense as agents for the purchaser of the ship, while in the latter the so-called agent never had a principal, and never acted in a representative capacity. In any event, if wrong in the contentions already stated, the reclaimers relied on the provisions of C. A. S., 1913, B. i. 1.

Argued for the respondents;—The judgment of the Lord Ordinary was right. The reclaimers had not established their counterclaim against the demand by the respondents for the balance of the contract price, and their title to maintain their counter-action for damages failed, since they had not, as matter of fact, suffered any loss. In the latter action they had not proved an express, or even an implied, mandate. The case of Larsen, on which they relied, had never been followed. Their main contention, however, was that an agent acting purely in a representative capacity was entitled to sue for damages sustained by his principal. In support of this contention they had cited passages from Story and Bowstead. An examination of the cases referred to by the former of these writers did not establish the proposition now maintained, while the early English decisions cited by Bowstead were concerned apparently with technical points of English practice, and they could not be accepted as authority binding a Scottish Court on the question whether an agent had a title to sue when he had not been personally damnified. In Robertson v. Wait,

Joseph v. Knox, and Agacio v. Forbes, where in similar circumstances an agent's claim had been sustained, the English Courts had proceeded on the ground that, quoad damages, the agent had a title to maintain action as a trustee for his principal. The doctrine of implied trust adumbrated in these decisions had, however, never been applied in Scotland in cases of agent and principal. It received no support from the passages bearing on an agent's title to sue in Mackay, or from the cases which that author cited, and, if pressed to its logical conclusion, would result in this that, where the principal had assigned his rights under the contract to a third party, the agent would still be entitled to claim in respect of damages. The cases of Sargent v. Morris and Short v. Spackman were distinguishable, for there the agent clearly had a substantial interest to sue. Meier & Co. v. Küchenmeister had no bearing on the point now under consideration, while Elbinger dealt with a foreign principal, and neither that case nor Brandt & Co. v. Morris & Co. raised the precise question of an agent's right to recover damages. Symington v. Campbell had been cited to the Lord Ordinary and accepted by him as illustrating the principle that hardship per se was not sufficient to found a title to sue. Westville Shipping Co. v. Abram Steamship Co. was similar to Symington. Kerr v. Clyde Shipping Co. merely showed that the addition of the agent's name would not cure a defective title. Edinburgh United Breweries v. Molleson had been cited to the Lord Ordinary to show what the right of recovery was. The soundness of the decision in W. & S. Pollock & Co. v. Macrae was not disputed. Bickerton v. Burrell, if in point, directly contradicted the views expressed by Story in the passages quoted. The cases of Blumer & Co. and Tinnevelly Sugar Refining Co. supported the respondents.

At advising on 9th February 1923,—

Lord Justice-Clerk (Alness).—[After the narrative quoted supra]—In that state of matters the Lord Ordinary has granted Craigs a decree against Blackaters for £1800 sterling—the adjusted balance of the contract price of the boilers—while, in the action by Blackaters against Craigs for damages in respect of breach of contract, he has felt constrained to sustain Craigs' plea of “no title to sue,” and has dismissed the action. On the facts the Lord Ordinary is of opinion that the boilers supplied to Blackaters were faulty in construction, and that damages are due by Craigs for breach of contract; but in law he has felt disabled from giving effect to this view, and from awarding to Blackaters the damages for which Craigs are liable. The Lord Ordinary has reached this result with obvious reluctance, and indeed aversion. From his opinion I think it is clear that he regards the conclusion to which he has been driven as an affront alike to common sense and equity. That, in any event, is my view; and the idea that a long and expensive proof should be thrown away, that parties should anew lead evidence on the complicated and lengthy topics which have already been fully investigated, that Craigs should be entitled to put the balance of the contract price in their pocket, but that Blackaters, the other party to the contract, should be disentitled to recover damages for its proved breach—and all because Mr Blackater sued in name of his firm instead of in the name of his company—seems to me to be quite intolerable. I am of opinion that the resources of our jurisprudence have not been exhausted, and that the result which the Lord Ordinary desired to reach, but conceived himself precluded from reaching, can be attained without outraging any legal principle and without traversing any judicial decision.

Blackaters maintain, in the first place, that they are entitled to sue the action which the Lord Ordinary had dismissed, in virtue of the mandate which is contained in article 66 of the articles of association of the Cadeby Steamship Co. to which I have already referred. Here unfortunately the facts fail them; for the authority to sue conferred by that article is distinctly conferred, not on Blackaters as a firm, but on Mr A. F. Blackater as manager of the company. It is not therefore necessary to consider in detail the case of Larsen to which the Lord Ordinary refers, but I do not desire to be held as adopting in their entirety the views which he has expressed regarding its ambit and application.

But Blackaters further maintain that, when a contract is made by an agent for an undisclosed principal and the principal is afterwards disclosed, the other party to the contract can elect to sue either principal or agent, but that, if he sues one of the two and follows the suit to judgment, he must be taken to have made a deliberate election, and must treat his adversary as not only liable under the contract, but also as in right of it and entitled to sue upon it. In other words, applying the doctrine to this particular case, Blackaters maintain that, when the Cadeby Steamship Co. was disclosed as principal, Craigs could then have said, “We were misled; we will begin proceedings anew”—a course well within their rights, although probably unnecessary—but that they are not entitled to enforce Blackaters' liability under the contract, and at the same time deny them the right to recover under it. This would appear to be common sense as well as rudimentary law.

What is to be said against it? Mr Robertson, as I understood his argument, admitted that Blackaters have a title to sue, but he maintained that they could not recover damages because they had themselves sustained none. But if Blackaters sue, it must surely be in their principal's interest. Though they have suffered no damage, they represent a person who has. Why should they not enforce their principal's right? That is precisely what they are endeavouring to do. They do not propose to put a penny in their own pocket. They sue, so they aver, for and on behalf of the Cadeby Co., and that averment, be it observed, Craigs deny. Why should Blackaters not have an opportunity of proving their statements, and of recovering damages for their principal on whose behalf they claim to act? It is true Blackaters found on no assignation, and it is also true that, in my opinion, they can claim to possess no mandate under the articles of association. But why should not the representational capacity in which they claim to act, if proved in fact, yield the same result in law? I cannot see that any legal principle is infringed by giving effect to their claim. The representational capacity in which Blackaters defend the action against them by Craigs provokes no comment by the latter; but when it is, as I think, logically contended that the same representational capacity should avail Blackaters in their action against Craigs, the doctrine becomes an offence to the latter.

The view which I have indicated supra is not lacking in support from authority. In Sargent v. Morris Mr Justice Bayley (at pp. 280–1) says, “Now I take the rule to be this:—If an agent acts for me and on my behalf, but in his own name, then, inasmuch as he is the person with whom the contract is made, it is no answer to an action in his name to say that he is merely an agent, unless you can also show that he is prohibited from carrying on that action by the person on whose behalf the contract was made. In such cases, however, you may bring your action, either in the name of the party by whom the contract was made, or of the party for whom the contract was made.” It is true that the action in that case failed, but it failed because the plaintiff was not a party to the contract, and was not even proved to have made advances upon it at the time of the shipment of the goods to which the contract related. Here the facts are otherwise. Again, in Joseph v. Knox, it was held that, where a person shipped goods in an English port as agent for the owner of the goods resident abroad, and paid the freight, he could maintain an action in his own name for non-delivery of the goods. Lord Ellenborough, in giving judgment, said (at p. 321) “I am of opinion that this action well lies. There is a privity of contract established between these parties by means of the bill of lading. That states that the goods were shipped by the plaintiffs, and that the freight for them was paid by the plaintiffs in London. To the plaintiffs, therefore, from whom the consideration moves, and to whom the promise is made, the defendant is liable for the nondelivery of the goods. After such a bill of lading has been signed by his agent, he cannot say to the shippers they have no interest in the goods and are not damnified by his breach of contract. I think the plaintiffs are entitled to recover the value of the goods, and they will hold the sum recovered as trustees for the real owner.” Again in Agacio v. Forbes the plaintiff Agacio as agent was allowed to sue. Lord Chelmsford, in giving judgment, says (at p. 170), “The contract was clearly entered into with Agacio, the plaintiff, himself, although the benefit of it would result to the firm.” The plea that the firm should necessarily be conjoined as plaintiffs in the action was rejected by the Court. Moreover in the case of Elbinger, Mr Justice Blackburn says (at p. 317):—“A man cannot make a contract in such a way as to take the benefit, unless also he take the responsibility of it.” And Mr Justice Lush says (at p. 318): “He cannot be a party so as to be able to sue, and yet not a party so as to be liable on it.” And Story in his great work on Agency (sec. 396) sums up the matter thus: “As the agent acts in his own name, without disclosing any other principal, it follows, as an irresistible inference, that the other contracting party binds himself personally to the agent. This, indeed, would seem justly to follow from the reciprocity of obligation on the other side; for (as we have already seen) the agent is in every such case undeniably bound by his personal promise to the other party. Hence it is, that if an agent sells the goods of his principal in his own name, and as if he were owner, he is entitled to sue the buyer for the price in his own name, although the principal may also sue. And, on the other hand, if he buys goods in his own name, as purchaser, he may maintain action on the contract against the seller, whether it be for a delivery thereof, if wrongfully withheld, or upon any warranty on the same, in the same manner as if he were the only party in interest.” Again, in Addison on Contracts (11th ed.), at p. 345, I find the law thus stated: “Inasmuch as the agent is the person with whom the contract is made, it is no answer to an action in his name to say that he is merely an agent, unless it can be also shown that he is prohibited from carrying on that action by the person in whose behalf it was made. In such cases the action may be brought either in the name of the person by whom, or of the party for whom, the contract was made.”

Mr Robertson, however, relied on two Scottish decisions, which in his view, negatived the doctrine of the English cases to which I have referred—a doctrine which, he maintained, was alien to the law of Scotland. The first of these cases was the Tinnevelly Sugar Refining Co., and the second was Blumer & Co. The first of these cases need not delay us long. There it was held that the pursuer had no title to sue, inasmuch as, at the date of the contract entered into by the alleged agent, the company was not in existence. There was therefore no principal. The case is entirely unhelpful in the solution of the problem now before the Court. The case of Blumer requires a fuller examination. It was there held that one of the pursuers in an action of damages for breach of contract had no title to sue, in respect that he was not a party to the contract, and had no jus quœsitum to sue upon it. But here Blackaters were parties to the contract, and they base their claim on that fact. I cannot therefore see that that case assists the contention of Craigs, or is in any way inimical to the doctrine of the English decisions to which I have referred.

I accordingly propose that the interlocutor reclaimed against should be recalled, and that the case be remitted back for the assessment of the damages due in the action by Blackaters against Craigs.

Lord Ormidale.—In September 1917 a contract was concluded between Messrs Craig & Co. and Messrs Blackater, whereby the former sold to the latter a set of two boilers, the price to be £5900 payable by instalments. We now know, what was not known to the sellers at the date of the contract,

that these boilers were for the s.s. “Ashton,” and that the contract was made by the Messrs Blackater for and on behalf of the Cadeby Steamship Co.

Delivery of the boilers was made in June 1919. They did not give satisfaction, and, the Messrs Blackater having declined to make further payments to account of the price, Messrs Craig & Co. in March 1921 raised an action against them for the balance. The defenders pleaded that the pursuers were in breach of their contract, and specifically averred many defects in the boilers, and detailed damages arising therefrom far exceeding in amount the balance of the price for which they were sued. Thereafter, in June 1921, Messrs Blackater, suing in their own name as shipowners, raised an action against Messrs Craig & Co. concluding for £9897, 11s. 5d. as the loss and damage they had suffered in consequence of the latter's breach of contract. The averments as to the damage were similar to those specified in their defences to the first action.

On 24th February 1922 the two actions were conjoined and a proof allowed. Up to this time the names of the principals for whom Messrs Blackater were acting when they entered into the contract were still undisclosed, but in the course of the proof it appeared that the s.s. “Ashton” belonged to the Cadeby Steamship Co. At the close of the proof the Lord Ordinary made avizandum; but, before he had issued his judgment, on the motion of the parties the records in both actions were allowed to be amended. The amendments contained, inter alia, a direct challenge of the title of the Messrs Blackater to sue the second action. The case was again taken to avizandum. The Lord Ordinary thereafter issued an interlocutor in which he sustained the third plea in law for the pursuers in the first action—that the defenders in that action had not suffered any loss through the pursuers' breach of contract—and the defenders' first plea in the second action—that Messrs Blackater had no title to sue. In the first action he decerned against the defenders for payment of the unpaid purchase price, and he dismissed the second action. In a carefully considered opinion, he expresses the view that Messrs Craig & Co. were in breach of contract in respect of the defects alleged by Messrs Blackater, and he clearly regards the conclusion he has been constrained to reach as inequitable.

It is obvious enough that, if the judgment of the Lord Ordinary falls to be sustained, a difficulty may be placed in the way of the Cadeby Steamship Co. recovering in any other process the damages to which, according to the Lord Ordinary's opinion, they are undoubtedly entitled. In my opinion, however, the Lord Ordinary is in error in reaching the conclusion he came to. It appears to me that, when it became patent that the Messrs Blackater had entered into the contract merely as authorised agents and the name of their principal was disclosed, Messrs Craig were entitled to follow one or other of two courses—either to continue to treat Messrs Blackater as the party liable to them under the contract to all intents and purposes, or to abandon their action against Messrs Blackater and take proceedings against the Cadeby Steamship Co. The logical sequence of that would, no doubt, have been the replacement in the second action of the Messrs Blackater by the Cadeby Steamship Co. All this could easily have been arranged, and the proof already led made available. That would probably have been the proper course to follow.

But I cannot think that it was open to Messrs Craig & Co. at once, as it were, to approbate and reprobate the fact of the disclosure of the principal, ignoring it to the effect of forcing the price of the boilers from Messrs Blackater, as the parties liable therefor under the contract, but calling it in aid to disentitle the Messrs Blackater from stating any counter-claim otherwise competent to them under the identical contract. To do so would have been to violate the principle underlying the rule of law according to which, in the case where an agent contracts for a principal who is afterwards disclosed, the other party to the contract may sue either principal or agent but cannot sue both. Here Messrs Craig & Co. have elected, for their own purposes, to treat and sue the Messrs Blackater as principals, and consequently the latter are, as principals, entitled to counter-claim. Further, the counter-claim of damages as made by the Messrs Blackater is, in my opinion, competent. No doubt, they have suffered no personal loss by the breach of the contract. The same would be true if the principal had not been disclosed, and that is, in effect, the position here, because of the election made by Messrs Craig & Co. to treat the Messrs Blackater as the parties bound by the contract; and I see no reason why, if they are to be saddled with the obligations of debtors under the contract, they should not also enjoy the rights of creditors thereunder. In neither case is their interest a personal one.

There is little, if any, direct authority on this particular point. Story (Agency, section 396) enunciates the principle very definitely in accordance with Messrs Blackater's contention, although the cases referred to by him do not appear to have a direct bearing upon it. The cases referred to by counsel, however, indicate that in England the Courts have held that plaintiffs who have acted merely as agents, though they may have no personal interest in the recovery of the moneys sued for, are nevertheless entitled to decree therefor. I mention two of them. The rubric in Joseph v. Knox is as follows:—“A person who ships goods in an English port, as the agent of the owner of the goods resident abroad, and pays the freight for them, may maintain an action in his own name for not delivering them according to the bill of lading.” Lord Ellenborough says (at p. 322): “I think the plaintiffs are entitled to recover the value of the goods, and they will hold the sum recovered as trustees for the real owner.” In Robertson v. Wait, where the circumstances were not very dissimilar, Baron Parke delivered an opinion to the same effect. On the other hand, no authority against the view has been cited, for I cannot regard as such Blumer & Co. v. Scott & Sons . In that case the action, in so far as at the instance of the purchasers of the ship, was dismissed in respect that they had no contract with the engineers who had supplied the boilers, and no jus guœsitum in the contract between the shipbuilders and the engineers. The passage in the Lord President's opinion on which Mr Graham Robertson so strongly founded as negativing the principle of “representational” damages is somewhat obscure, but it does not, as I read it, warrant the interpretation which I understood him to put upon it. From the report of the case it is clear that Blumer & Co. were not, in any sense, acting as agents for the purchasers of the ship. No assistance can be got from Tinnevelly Sugar Refining Co. v. Mirrlees . The so-called principal was not only undisclosed but non-existent at the date the contract was entered into, and Darley & Butler, who negotiated it, could not therefore at that date have acted as his agents, and clearly had no title to claim “representational” damage.

I have not found it necessary to examine the argument founded on the alleged mandate, but I should not have been able to give effect to it.

Lord Anderson.—The Lord Ordinary has, in effect, found that these cases have got into a cul-de-sac of procedure, with the result that the Court is powerless to do justice between the litigants. The Lord Ordinary's considered opinion is that Messrs Craig were in breach of contract, and that they are thereby liable in damages, but he has held himself debarred from giving practical effect to this view. And, as matters stand, it is more than likely that Messrs Craig will be able to evade this legal liability. They hold a decree against Messrs Blackater, to which the latter, apart from the claim made in the counter action, have no answer. If this decree is obtempered, Messrs Blackater will, it is assumed, claim and obtain relief from their principals, the Cadeby Steamship Co. If the latter company thereafter take proceedings against Messrs Craig to recover damages for breach of contract, Messrs Craig will be in a position to maintain with much force the contention that the contract has been performed, the goods having been delivered and accepted and the contract price paid in full, and that the suggested action for damages is thus too late. It would be regrettable if so untoward a result were unavoidable. I am of opinion that it may be avoided, and that the Lord Ordinary has wrongly held that his hands are hopelessly tied.

The rights and obligations of agents, principals, and third parties, with reference to contracts made by agents, are well settled and are not recondite. If A contracts as an agent for a disclosed principal, A cannot competently sue or be sued with reference to the contract. Again, if A contracts for an undisclosed principal, A may sue and is liable to be sued as a principal, the third party having no knowledge that he is anything but a principal. If, however, A contracts for an undisclosed principal who is subsequently disclosed to the third party, the latter may sue either agent or principal. He cannot, however, sue both. If an action is raised against the third party he may insist that it be at the instance of the disclosed principal. All this is elementary; the difficulty of applying these principles to the present case arises from its unusual facts.

When the two actions were raised the principals were undisclosed. It was only during the course of the proof in the conjoined actions that it was casually divulged that the Cadeby Steamship Co. were the principals in the contract. When this fact became known to Messrs Craig they were, in my opinion, put to their election. They had to determine whether or not they would proceed to decree against Messrs Blackater or against their true debtors the Cadeby Co. There was no necessity for commencing proceedings de novo and so rendering useless the procedure which had taken place. There would have been no difficulty, by our procedure, in substituting the one party for the other in both actions. This could have been done by joint minute, which would have provided that the procedure which had taken place would have been made available in the new lis. But no proposal to this effect was made by Messrs Craig. They elected to continue the action in which they were pursuers against the agents, but in the counter-action they declined to submit themselves to a decree for damages in respect of their breach of contract. They thus prevented the application of the principle of compensation or set-off to the counter-claims. This is plainly inequitable; it is, moreover, a result which is against all legal principle and which is supported by no decided case. If the principals had remained undisclosed, Messrs Blackater's title to sue for damages for breach of contract could not have been challenged. Their title would then have been good, because they were understood to be principals. Why should it be otherwise when they have been treated as if they were principals? It seems to me to be in accordance with sound principle that Messrs Craig, suing Messrs Blackater as their debtors in a contract, must submit to any counter-claim in respect of the same contract as to which they are debtors. It is urged that Messrs Blackater are not the true creditors under the contract in respect of the claim of damages. That is doubtless true, but neither are they true debtors under the contract in respect of the price. If Messrs Blackater are to be saddled with the liability of the contract as quasi principals they are surely entitled to maintain, in order to diminish or wipe out this liability, any claims under the contract which are open to the true principals. Their pleadings show that they have no claims as individuals under the contract against Messrs Craig, and that they are claiming damages on behalf of their principals. Messrs Craig are thus certiorated that, if decree for damages passes against them, they thereby obtain a complete discharge of their contractual obligations both as regards principals and agents. I have said that all this seems in accordance with the general principles which apply to this branch of the law. The only case which seems to lend any support to the Lord Ordinary's interlocutor is that of Blumer & Co. As the debate developed I understood Mr Robertson to pin his faith to this decision, and in effect to concede that, if it failed him, he could adduce no other authority in support of the Lord Ordinary's judgment. That case, in my opinion, does not support the respondents' contention, and the difference between it and the present case is obvious. In Blumer a purchaser of a ship sued for damages an engineer who had a contract with the seller of the ship but not with the purchaser. It was held that the purchaser could not sue for breach of a contract to which he was not a party. In the present case Messrs Blackater are parties to the contract with Messrs Craig on which they are now suing.

I am of opinion, therefore, that the interlocutor of the Lord Ordinary should be recalled, and the case sent back to him for the purpose of assessing damages in the counter-action.

Lord Hunter (read by Lord Ormidale).—In these conjoined actions the Lord Ordinary has given effect to what he himself describes as an extremely technical plea raised by one of the parties under very peculiar circumstances. On 11th March 1921 A. F. Craig & Co., engineers and boilermakers, Paisley, raised an action against A. F. & J. C. Blackater, shipowners, Glasgow, for payment of £2412, This sum represented the final instalment of the price of two Inglis' type marine boilers supplied under contract between the pursuers and defenders. These boilers were to be fitted into the s.s. “Ashton” which, according to the original allegations of the pursuers, was said to belong to the defenders. In answer to this claim Messrs Blackater alleged that the pursuers had failed to implement, and were in breach of, their contract, in respect that the boilers supplied were from the beginning, and still are, unserviceable, and in material respects disconform to contract and unmerchantable from bad workmanship. Details of these defects were duly set forth in the defences to the original action. The damages arising from the alleged breach of contract were said to be greatly in excess of the amount sued for. On 8th June 1921 Messrs Blackater raised a counter-action against A. F. Craig & Co., concluding for payment of £9897, 11s. 5d. as loss and damage sustained by the pursuers in consequence of the defenders' alleged breach of contract. The two actions to which I have referred were conjoined on 24th February 1922 and proof was allowed, Messrs Blackater of consent of parties being appointed to lead. Proof was duly led at great length. In the course of the proof it came out incidentally that the Cadeby Steamship Co., and not Messrs Blackater, were the registered owners of the s.s. “Ashton.” As I understand the situation, importance was first attached to this circumstance by counsel for A. F. Craig & Co. after counsel for Messrs Blackater had addressed the Lord Ordinary.

Some time after the Lord Ordinary had made avizandum, the records in the actions were allowed to be amended, and a short supplementary proof was led. This proof was directed to establishing the relation between Messrs Blackater and the Cadeby Steamship Co. It appears that Mr A. F. Blackater, who is one of the partners of the firm of Messrs Blackater, is the sole director of the Cadeby Steamship Co. He was also appointed the manager of the company in terms of the memorandum and articles of association. His firm, in fact, act as managing owners, part of the work being done by Mr A. F. Blackater and part by his brother, Mr J. C. Blackater.

The Lord Ordinary has granted decree in favour of A. F. Craig & Co. for the amount for which they sue, and has also sustained their third plea in law that the defenders Messrs Blackater have not suffered damage through the pursuers' breach of contract. In the action by Messrs Blackater he has sustained the first plea in law for the defenders that the pursuers have no title to sue. At the same time he has held, on the evidence adduced before him, that A. F. Craig & Co. were in breach of contract, inasmuch as they failed to deliver boilers reasonably fit for the purpose for which they were supplied. If the view of the Lord Ordinary is sound, the expense incurred in connexion with proof as to the character of the boilers supplied by A. F. Craig & Co. will be thrown away, and it is at least problematical whether that Company will not entirely escape from the consequences of what the Lord Ordinary holds to have been a material breach of contract. After A. F. Craig & Co. have received payment in full from Messrs Blackater for the boilers, it is difficult to see how a different person, i.e., the Cadeby Steamship Co., can maintain an action for damages. Would the answer to such a claim not be that the only parties to the contract, so far as Craig & Co. are concerned, are Messrs Blackater, who had failed to establish any set-off against the price for which they had been held liable?

The ground upon which the Lord Ordinary has proceeded is that the damages for which Messrs Blackater sue have not been sustained by them but by the Cadeby Steamship Co., their undisclosed principal. He points out, as I think quite rightly, that “if the pursuers [Messrs Blackater] had ordered the boilers on their own behalf and, without knowledge on either side of any defect, had resold them, in order to instruct a claim of damages against the defenders [A. F. Craig & Co.], it would have been necessary for them to instruct, not merely that the boilers had proved to be defective and had caused trouble and expense to the purchasers, but that the purchasers had enforced, or were in a position to enforce, damages against them.” According to his view the Messrs Blackater are in no better position. In this I am unable to agree. When A. F. Craig & Co. discovered in the course of the proof that the real purchaser of the boilers from them was the Cadeby Steamship Co., they were probably entitled to discontinue proceedings against Messrs Blackater and to direct their action against the Cadeby Steamship Co. This course would have availed them nothing. That company could have been substituted for Messrs Blackater in both actions. On the evidence that had been led, and without the addition of any new evidence, A. F. Craig & Co. would have got decree in their action against the Cadeby Company, and that company would have obtained such an award of damage as the Lord Ordinary might have thought fit in the counter-action. But as Craig & Co. chose to continue their action against the agents after they ascertained who the undisclosed principal was, they were bound to allow these agents to plead any breach of the contract that they had committed. Liability to be sued on the contract was accompanied by the right to plead as a counterpart the pursuers' failure to implement the contract. The fact that recovery of such damages is made in a representative capacity, or as quasi trustees for the undisclosed principals, does not constitute an effective plea of no title to sue. It is quite different from an attempt to recover from a party to a contract damages that have arisen out of the non-fulfilment of a different contract.

A great number of cases were cited to us in the course of the debate. It is unnecessary to refer to most of these cases. They were illustrative, in the main, of the well-recognised rule that, where an agent makes a contract in his own name and without disclosing the name of the person for whom he acts, he may sue or be sued as though he were the principal. As the argument for parties neared its end, counsel for Messrs Blackater relied principally upon a passage in Story on Agency, sec. 396, and Joseph v. Knox, while counsel for A. F. Craig & Co. relied on the decisions of Blumer & Co. v. Scott & Sons and Tinnevelly Sugar Refining Co. v. Mirrlees, Watson, & Yaryan Co. I propose to examine briefly these different authorities.

In the section from Story's work to which I have referred occurs this passage: “If an agent sells the goods of his principal in his own name, and as if he were owner, he is entitled to sue the buyer for the price in his own name, although the principal may also sue. And, on the other hand, if he buys goods in his own name, as purchaser, he may maintain action on the contract against the seller, whether it be for a delivery thereof, if wrongfully withheld, or upon any warranty on the same, in the same manner as if he were the only party in interest.” It was argued that the English decisions, to which reference is made in the footnotes, do not on examination bear out the proposition in the text. This criticism is probably well founded, and I have not had an opportunity of examining the American decisions also quoted. At the same time the expression of opinion of so eminent a writer, particularly when he is enunciating a point of principle, is entitled to great respect.

In Joseph v. Knox it was decided that an agent who had effected a sale on behalf of an undisclosed principal was entitled to recover as trustee for the latter. The principle of this decision appears to me to cover the case of an agent for an undisclosed principal recovering damages for breach of the contract that has been effected, and this right is not weakened where the other party to the contract has deliberately elected, on ascertaining the name of the principal, to sue the agent as liable under the contract.

So far as the two cases cited against this view are concerned, the Tinnevelly case may be easily disposed of. In that case a company sought to sue on a contract made before it had come into existence. The party who had effected the contract could not therefore be the agent of a principal who did not exist, and the plea of no title to sue was sustained against the company.

The case of Blumer & Co. requires to be more carefully considered. According to the rubric of that case “a firm of shipbuilders sold an unfinished steamship, undertaking to complete it according to specification, with engines to be supplied and fitted in by one of two engineers named, to the satisfaction of the buyer, delivery to be made at a day named, failing which £10 to be paid as liquidate damages for each day's delay, ‘delays of engineers excepted.’ The shipbuilders subsequently completed a contract in their own name with one of the engineers named, to have the engines delivered in Sunderland and completed on board the vessel to their own satisfaction at a date specified. The engineers were previously informed of the sale of the vessel.” There was considerable delay in the delivery of the engines. An action was brought against the engineers by the shipbuilders and the purchasers from them concluding for (1) payment of damages to the shipbuilders, and (2) payment of damages in respect of loss sustained by the purchasers of the ship, with an alternative conclusion for payment of the whole amount of the damages to the shipbuilders. It was held that the action could be maintained only so far as the first conclusion for payment of damages to the shipbuilders was concerned. In that case it was pointed out by the Lord President that there were two quite distinct contracts, one between the engineers and the shipbuilders, and a second and different contract between the purchasers and the shipbuilders. To the latter contract the engineers were no parties and therefore could not be sued by the purchasers. It may be observed that the shipbuilders were given an opportunity to amend their summons so as to allege that they were entitled to be relieved of loss incurred by them to the purchasers, but they did not avail themselves of the opportunity afforded them. As Lord Ardmillan said (at p. 386) the shipbuilders “do not seek relief; and naturally so, for they have protected themselves against liability to Ellis & Son [the purchasers] for damage caused by ‘delays of engineers.’” The decision does not appear to me to be any authority for the position taken up in the present case by Craig & Co.

In my opinion the interlocutor of the Lord Ordinary ought to be recalled, and the case remitted to him to assess the damages arising from Craig & Co.'s breach of contract.