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SCOTTISH_HoL_JURY_COURT

Page: 503↓

(1725) Robertson 503

REPORTS OF CASES ON APPEAL FROM SCOTLAND.

Case 113.

Thomas Paterson, Esq. Appellant

v.

Charles Cockburn, Esq. Respondent

11th Jan. 1724– 1725.

Subject_Mutual Contract, South Sea stock. —

At compromising a transaction relative to South sea stock, one of the parties grants an obligation to the other, to pay him a certain sum with this proviso, that whereas the obligee intended to sue two of the directors to make void his own bargain, if he succeeded, the obligor was to be free of his obligation. The obligee having got an abatement by compromise from the directors, the obligor was entitled to a proportional abatement.

In 1720, some transactions took place between the parties, relative to South Sea stock, which was sold by the appellant to the respondent; but every matter relative to the purchase not having been finally arranged, after stock had completely fallen in value, a compromise was made between them, in consequence of which the respondent on the 10th of November 1720, granted the appellant his note, or obligation in the following terms:

“I promise to pay to Thomas Paterson Esq., or his executors, and administrators, 100 l. per annum, to commence from Christmas next, in half yearly payments, till the sum of 1000 l. is paid, provided I continue in any business under the government of the yearly value of 100 l. per annum, otherwise this obligation

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to be void from the time I am displaced from such business; and this obligation to take place and commence again, if at any time I am replaced in business under the government, till the above sum is satisfied. And whereas Mr. Paterson intends to sue Sir John Lambert, and Sir Theodore Jansen to make void a bargain of 6000 l. South Sea stock, he bought of them at 1000 l. per cent; if Mr. Paterson succeeds in making void his bargain with them, then I am discharged from this obligation; if he should not, then this obligation is to be made good by me according the conditions expressed.”

The appellant after the date of this obligation made a transaction with Sir John Lambert, and Sir Theodore Jansen, by which he was freed of 42,000 l. part of the price of said 6000 l. stock, but 18,000 l. which he had paid them at the time of the purchase was retained by them; and no suit was brought by the appellant against them. The respondent conceiving himself to be relieved of his obligation in consequence of this transaction, refused to implement the same.

The appellant thereupon in 1723, brought his action against the respondent before the Court of Session, to compel him to make payment of the arrears of the said annuity, and to pay the same thereafter as it fell due.

The respondent insisted, that the appellant in terms of the obligation entered into by the respondent, should have sued the directors to be rid of his bargain, which was a necessary step to validate the respondent's obligation: at all events the respondent contended, that the appellant should communicate to him an ease on his obligation, proportionate to that granted by the directors to the appellant on his bargain with them.

The cause being argued on these points, the Lord Ordinary on the 24th of December 1723, “found that the appellant's prosecuting the two directors to be free of the 6000 l. capital stock sold to him at 60,000 l. was a condition which he ought to have implemented; but found it relevant to subject the respondent to a share of the sum in his obligation, in proportion to the share of the 6000 l. transacted by the appellant with the directors, that the appellant entered into a transaction with them for a certain sum of money, to be paid by him, to be proved scripto, and assigned the 10th day of February thereafter for that purpose.” And to this interlocutor his lordship adhered on the 20th of the said month of December.

The appellant reclaimed, and after answers for the respondent the Court on the 16th of January 1724, “adhered to the first part of the Lord Ordinary's interlocutor, finding that Mr. Paterson's prosecuting the two directors to be free of 6000 l. capital South Sea stock, sold to him at 60,000 l. was a condition which he ought to have implemented, but with this quality, that he might also have transacted with them; and found that Mr. Cockburn, by the conception of the obligation pursued on, is entitled to a proportional abatement of the sum of 1000 l. pursued for effeiring to the abatement granted by the

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directors to Mr. Paterson, and found the directors giving up the sum of 18,000 l. to the House of Commons, as the sum paid by Mr. Paterson to the directors as the price of the 6000 l. capital-stock, sold by them to Mr. Paterson, is a sufficient proof of the terms of the transaction; and found it probable by writ or witnesses, as also the terms of the said transaction, reserving contra producenda.” And to this interlocutor the Court adhered on the 19th day of February thereafter.

Entered, 3 March 1723–4.

The appeal was brought from “several interlocutory sentences of the Lords of Session of the 24th and 26th of December 1723, and the 16th of January and 19th of February 1724.”

Heads of the Appellant's Argument.

The agreement between the appellant and respondent was, that in case the contract with the directors should be declared void, and the appellant thereby have the money returned, which he had paid upon the contract, then the respondent should have his note delivered up to him. The only event in which the respondent was to have any benefit, was if the agreement was made void, and it was the only one in which he could desire any benefit; for as the appellant's original agreement with him was for 1000 l. per cent., the same price at which he had agreed with the directors, and the appellant had already compounded with the respondent for 1000 l. there could be no handle for any further agreement or composition, unless the appellant should have made void his agreement with the directors, and received back his whole money, the benefit of which he intended to communicate to the appellant.

It can never be imagined, that the appellant, or any man in his right senses, after he had already given so great an ease to the respondent, as to agree to accept of 1000 l. payable in ten years, and that subject to a contingency, in lieu of 10,000 l. would agree to communicate to him the benefit of any transaction he might make with the directors, especially if upon the footing of that transaction, the appellant was to pay more than the sum in any event payable by the respondent: in this case the appellant has paid 3000 l. for every 1000 l. stock, and the sum payable by the respondent, considering the different times at which it is to be paid, and the contingency it is subject to, cannot be valued at more than 5 or 6 hundred pounds. Since then the appellant pays almost six times as much for every 1000 l. stock he bought from the directors, as the appellant in any event is to pay for the like quantity of stock, with what equity or justice can the respondent claim any benefit from this transaction, or insist upon a proportional abatement?

The appellant apprehends he was under no necessity to sue the directors, it was entirely optional to him: he did indeed advise with counsel upon his case, and by their advice the transaction was made whereby the appellant lost the said sum of 18,000 l. it being the opinion of counsel the said agreement would not be voided and set aside. And the appellant believes there are few

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instances, where any South Sea contract has been compounded at a more easy rate, than this with the respondent.

Heads of the Respondents' Argument.

Since the express condition of the obligation was, that in case the appellant prevailed in the suit against the directors, the obligation was to be void, this necessarily implied, that the suit was to be insisted in, and the appellant could not by any voluntary transaction of his, without the consent of, or notice given to the respondent, deprive him of the benefit of that condition; and consequently since the appellant has made such transaction without the consent of, or notice to the respondent, the condition must be looked upon as fulfilled in the respondent's favours.

Upon the supposition, that the appellant might lawfully have compounded with the directors instead of insisting in his suit, then still the respondent ought to have a proportional benefit by that transaction, and since he was to have paid nothing in case the appellant had been relieved entirely of the sum of 60,000 l. now that the appellant is relieved of 42 parts of the 60, the respondent ought likewise to be relieved proportionally of the 1000 l. contained in his obligation. If it were otherwise, then it must follow, that if the appellant had paid only 5 l. to the directors, the respondent must have paid him the whole 1000 l. which the respondent apprehends is highly absurd.

If it be true, as the appellant has himself affirmed, that the 1000 l. stock, with which he would charge the respondent, was a part of the 60001. purchased by him from the directors; and if it be likewise true, as the appellant affirmed by a letter under his own hand to the respondent, that he sold the stock, with which he charges the respondent, at 525 l. per cent., then he gained upon this very 1000 l. stock, 225 l. per cent., since by the transaction with the directors, he paid but 300 l. per cent. for it; and consequently he can have no just demand on this account against the respondent.

Judgment, 11 Jan. 1724–5.

After hearing counsel, It is ordered and adjudged, that the petition and appeal be dismissed, and that the said several interlocutory sentences therein complained of be affirmed.

Counsel: For Appellant, Dun. Forbes. Will. Hamilton.
For Respondent, Ro. Dundas. C. Wearg.

1725