Freely Available British and Irish Public Legal Information
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
United Kingdom House of Lords Decisions
You are here: BAILII >> Databases >> United Kingdom House of Lords Decisions >> M'Master & Co. v. Cox, M'Euen, & Co. [1920] UKHL 70 (03 December 1920)
URL: http://www.bailii.org/uk/cases/UKHL/1920/58SLR0070.html
Cite as: 58 ScotLR 70, [1920] UKHL 70
[New search] [Printable PDF version] [Help]
SCOTTISH_SLR_House_of_Lords
Page: 70↓
House of Lords.
(Before the
v.
(In the Court of Session, May 25, 1920, 57 S.L.R. 504.)
Subject_Contract — Sale — Impossibility of Performance — Supervenient Legislation — Jute (Export) Order 1917.
Facts:
By contracts dated 1st and 2nd November 1917 a firm of jute manufacturers contracted to sell to a firm of merchants certain quantities of jute goods, one-half to be delivered in January and the remainder in February 1918, delivery to be f.o.b. Dundee. On the passing of the Jute (Export) Order, dated 27th November 1917, the sellers wrote the buyers asking for a guarantee that the goods would not be exported from the United Kingdom, or if the goods were for export for the necessary permit from the War Office. Application was made for a permit but it was refused. The buyers then cancelled the contracts.
In an action of damages at the instance of the sellers for breach of contract, held ( reversing the judgment of the Second Division, diss. Lord Dundas) that the Jute (Export) Order and the refusal of the permit had not the effect of voiding the contract, there being no contractual terms, express or implied, as to the market in which the goods were to be disposed of, and that accordingly the buyers were in breach of contract in refusing to take delivery.
This case is reported ante ut supra.
The pursuers appealed to the House of Lords.
At delivering judgment—
Page: 71↓
Much discussion has arisen as to the meaning and effect of this contract, and many contentions no longer persevered in have been put forward at the various stages of this litigation by those who at different times represented the interests of the respondents. It was at one time strenuously contended that the language used in this contract made it plain to those who were experienced in such matters that the purchasers under it intended to export the jute. The importance of this attitude cannot be understood until one considers the terms of the Jute (Export) Order, which was issued by the Army Council on the 23rd November 1917.
That Order was as follows:—“On any sale of any article or material manufactured or to be manufactured wholly or partly from jute, it shall be the duty of the vendor either to obtain from the purchaser a guarantee in writing that such article or material will not be exported from the United Kingdom, or if it is the intention of the purchaser that such article or material shall be exported from the United Kingdom, to obtain a permit issued by or on behalf of the Director of Raw Materials authorising the sale or manufacture, as the case may be, of such article or material as aforesaid”; and “no person shall sell or deliver any article or material of the description aforesaid for exportation from the United Kingdom without a permit issued by or on behalf of the Director of Raw Materials.” When this prohibition became effective the defenders were much concerned to show that the pursuers knew at the time of sale, and were affected by the knowledge, that the jute was intended for export. The various contentions put forward with this object have not survived the argument.
Indeed, the issues which have arisen in the course of the litigation have been very much limited as the debate has proceeded in your Lordships' House. I do not myself in my experience either on the Bench or at the Bar remember an occasion on which there has been a swifter and more complete transformation of all the issues which have been treated as important and relevant in the Inferior Courts. Two Judges of the appellate tribunal in Scotland decided this matter in favour of the respondents, and Mr Sandeman in almost the first sentence of his argument to-day made a complete jettison of the whole ground upon which the judgments of these learned Judges were based. I do not in any way call in question his judiciousness in adopting this course, but he has of course involved himself in a somewhat difficult situation and your Lordships in some slight embarrassment. He has founded himself, and has founded himself only, upon an argument which I have satisfied myself was not appropriately raised in the pleadings, and which was only dealt with in the argument below in the most perfunctory and fugitive manner. I find on page 507, vol. 57, of the Scottish Law Reporter one solitary reference to the contention which is now the only tabula in naufragio—“In the present case the pursuers sought to adject to the contract a novel condition which they were not entitled to adject, namely, that the defenders should give a guarantee that the goods would not be exported. Further, this could he regarded as a contract with deliveries in January and February,” and so forth. Those four lines contain the only memorial of the only argument which the respondents now desire to bring forward.
I ought not to pass from this immediate subject without placing on record my own view that the two judgments which Mr Sandeman abandoned in his argument would not have afforded him any support or sustenance had he attempted to recommend their conclusions in this House. I have myself no doubt that the learned Judges who delivered those judgments were under a misapprehension when they founded themselves upon the authorities upon which they relied.
I have the good fortune to find myself in almost complete agreement with the judgment delivered by Lord Dundas, and that degree of agreement relieves me from the duty of discussing this matter with the detail I should otherwise have thought necessary. I will therefore merely indicate the two grounds which have led me without any doubt to the conclusion that this appeal must succeed.
I found myself in the first place upon the actual scope and content of this agreement. When I examine the agreement what do I find? I find that it is one in which a vendor has undertaken to supply a certain article to a purchaser. He is not concerned to ask, and he does not ask, in what market the purchaser proposes to dispose of that which he buys. I have already pointed out that every attempt to show that the vendor was affected with any knowledge that the purchaser intended to dispose of these goods in a foreign market has failed. If it was the wish of the purchaser to procure for himself an opportunity of resiling from the contract in case a certain possible market should be denied to him, it was for him to introduce some condition into this contract which would have secured him the protection desired in the contingency indicated. We are dealing here with a contract in which there is an undertaking to sell, and there is nothing further. I am clearly of opinion that the buyer under that contract cannot be heard to say that he is entitled to resile from the contract upon the ground that a market which appeared to be open to him at the time the contract was made has since been denied to him by superior authority. On this broad ground I hold that this appeal must succeed, and that the defenders have no cause of complaint and no justification for evading liability under their contract.
I do not consider that the point taken by Mr Sandeman at this late stage of the litigation is open to him, having regard to the
Page: 72↓
I should desire, however, to base the decision which I have reached upon the broader ground already indicated, that this was a sale without any condition by a seller to a purchaser, and that on the terms of this agreement the pursuers were entitled to treat themselves as completely disinterested in all questions affecting the purchaser alone, such as a consideration of the markets, which might be open to that purchaser at the moment when he disposed of that which he bought.
I move your Lordships that this appeal be allowed.
Then a new point has been raised, to which reference has been made by Mr Condie Sandeman. That was a statement that in accordance with the Jute (Export) Order 1917 the appellants would “require a guarantee in writing that all goods on order will not be exported from the United Kingdom, and if such goods are for export, a permit.” Well, I do not think we can possibly at this stage of the case, in consequence of that general notice with reference to all contracts to which that Export Order was applicable, hold that they committed a breach of contract by sending out that notice. If I rightly followed the argument suggested, that was the point that was put. I think it would be very wrong indeed at this stage of the case to come to any such conclusion. The point ought to have been raised in the Courts below, and might have been elucidated by evidence. We have nothing except a mere reference of the shortest nature in a very casual way to this point, and for my own part I certainly should decline to act upon it as a reason for supporting a judgment which fails upon the grounds which are really contested. So far as I can appreciate the point, I do not think it is a good one, but in the absence of all necessary materials which would have been before us if the point had been really taken, it seems to me quite impossible for us to act upon it as a sufficient ground for supporting the judgment given by the majority upon a perfectly different ground.
Now the duties of the respondents under this contract were only two, namely, to accept the goods and pay the price; and nothing that the Government did with respect to preventing goods going abroad, or imposing conditions on their going abroad, interfered with either of those duties. That I think was the fallacy in the judgment of the Court below, and therefore although Mr Sandeman certainly executed the happy despatch with the judgments in his favour, I do not blame him, because I think he could not have supported them.
But then he started another argument. Now one looks in vain for any real treatment of that argument in the Courts below. First, I look at the pleadings. Mr Sandeman tried to make out that I could find it in the pleas. Well, perhaps I can; but if I do I find it with the same sort of skill that a person has to exercise in making out a complicated anagram or solving a double acrostic, and the meaning of pleas is to state in clear language the legal proposition on which the party means to found. It is obvious also that the argument, although it seems to have been mentioned—because in the first place I would certainly take Mr Dykes' word, and in the second place there is the quotation which was read by the noble and learned Lord on the Woolsack—although it seems to have been mentioned in the Inner House it does not really
Page: 73↓
It is quite clear to my mind that there was no contract ever entered into between the parties here to sell these goods for export. The purchaser had a perfect right when he got them to export them, but that was a right that sprang from his ownership of them, and not from any stipulation in the contract at all.
I quite agree with what my noble and learned friend who has just preceded me has said with reference to this new point that has been raised. I do not think there is anything in it, and therefore the matter may be put aside.
In my opinion these contracts for sale of jute goods were complete contracts as and from the 1st and 2nd of November 1917. The Order issued by the Government department three weeks later, namely, on the 23rd November, would a priori appear to be an ex post facto declaration, and unless there is inside of that Government Order a clear application to existing and unfulfilled contracts, it might be impracticable and would be highly against principle to make such an application.
The finding of the learned Lord Ordinary is not controverted in the Inner House, to the effect that under these contracts the buyer who might be able to dispose of the goods in the home market was perfectly free to insist upon their fulfilment, and the seller was bound to deliver. This must mean that notwithstanding the Departmental order the contracts still remained binding on the seller. I agree that it was so, but the contracts remained binding not on one party but on both.
That I am not putting this matter too high I venture to quote the judgment of Lord Salvesen to this effec—“I agree with the Lord Ordinary,” he says, “that under the contract as originally framed the defenders could have demanded delivery f.o.b. Dundee, and that the pursuers could not have refused to deliver to them on the ground that the defenders proposed to sell them in the home market.” It is therefore clear that in both Houses of the Court of Session the conclusion was come to that there was a binding contract so far as the seller was concerned; the buyer was perfectly free to hold the seller bound, and yet curiously enough the buyer, under the judgment of the Second Division, seems to have had a certain recourse at law under which he could assert his own freedom from the contract under which the seller was bound. It arises in this way. I read again from the judgment of Lord Salvesen—“By the contract,” says he, “the defenders had complete freedom of disposal of the goods contracted for, and the continued existence of that freedom till the contract was performed must therefore have been in their contemplation as the very foundation of the contract at the time they entered into it.”
On the construction of the contract of the 1st and 2nd November I do not find that it is restricted to goods for exportation, agreeing in that with the learned Lord Ordinary. And if there was a restriction in freedom of disposal of the goods, I agree with all your Lordships that that restriction had no operation in the annulment of the contract entered into, but was only operative on the liberty of action of the buyer as and when he became owner of the goods sold. How freedom to dispose in one particular manner of goods contracted for can give, not both parties to the contract but one party to it, the right of declaring the contract at an end, passes my comprehension.
In the course of legislation many restrictions may be laid upon the possessors of goods or the owners of property, but why the consequence should be that there is thereby annulled, or permitted to be annulled, all current contracts at the time of that legislation, unless the legislation expressly bears that that result shall happen—that I cannot understand. If the supervenient legislation forbids the execution of contracts as between the parties, then, of course, these contracts fall; otherwise the presumption is all to enable the commercial business of the country to proceed without interruption.
All these points of view were jettisoned in the argument at your Lordships' bar for the respondents, and the circular letter to which my Lord Dunedin has referred as issued by these merchants in Dundee was founded upon. Upon that subject I go a little further than my noble and learned friend. I agree with him that the circular letter does not apply to the present contract,
Page: 74↓
But I go thus further. Supposing the circular letter had referred to the existing contract, in my opinion that circular was a proper circular to issue, and I do not think that a circular so issued can be viewed in the light of a demand by the sellers for the adjection of a new term to the bargain. That adjection is not demanded by one party to the contract; the adjection was made by the law itself. It does not affect the contracts, their existence, or their continuance; it affects merely the rights of the persons coming into possession of the goods under any current contract. That and that alone was the meaning of the circular letter. If the contract had stood the circular letter would, in my opinion, have been equally justified; as it was it so turns out that it did not apply to these particular contracts with which the House has had to deal.
Their Lordships ordered that the interlocutor appealed from be reversed, that the interlocutor of the Lord Ordinary be restored, and that the respondents do pay to the appellants their costs here and in the Court of Session.
Counsel for the Appellants— Mackay, K.C.—Gentles. Agents— Hill & M'Gregor, Dundee— Douglas & Miller, W.S., Edinburgh— James, Mellor, & Coleman, London.
Counsel for the Respondents— Sandeman, K.C.— D. Oswald Dykes. Agents— Guild & Shepherd, W.S., Edinburgh— Waltons & Company, London.