Scottish Court of Session Decisions

This case came up on appeal from the Sheriff. Certain premises at Silvermills were let on a five years' lease by the pursuer Clark to the defender Stewart; the pursuer further, in another clause of the lease, “lets to the said John Stewart junior a portion to the extent of eleven horse-power of the steam-power of the engine to be erected by the said Martin Clark upon the said subjects; and, until the said new engine is erected, he binds himself to furnish the said John Stewart junior with power to the extent of five horse from the present engine for the use of the works to be carried on by the said John Stewart junior, and obliges himself to supply the said steam-power to the said John Stewart junior and his foresaids during the currency of this tack, each week-day for the usual working time of ten hours, except Saturdays, when the same shall be supplied for six ordinary working hours, and except at such times as it may be necessary to repair the said engine, and the said Martin Clark shall supply and put up the main shaft and driving pulley in connection with the said engine, and shall keep the said engine and shaft and pulley in good working order during the currency of this lease at his own expense.” The defender got access to the premises in March 1870, and commenced business on April 20. but he asserted that Clark was unable to supply him with steam-power, as he was bound under the contract to do, and, in consequence, before Whitsunday he took down his machinery. The pursuer averred that he had fulfilled his contract, and had the larger engine ready, and sent notice of the fact to the defender on July 26th 1870. The claim made was in all for £26, 4s. as the rent due for the steam till November 11th 1870, with a reservation of any claims for future payments under the lease. The Sheriff-Substitute ( Campbell) allowed joint probation, and thereafter, on consideration of the closed record, proof, and productions, and whole process, and having heard counsel for the parties, appointed the case to be put to the roll, adding in his note—“The Sheriff-Substitute would desire to hear the parties as to whether the pursuer is entitled to sue on the contract just as if he had been allowed by the defender to fulfil it by supplying the power. Or whether he is only entitled to sue the defender for the damage he has sustained by the defender's refusal to take the power. It might also be well to consider whether, if the pursuer is entitled to sue for the contract price of the power which the defender refused to receive, and which was consequently not manufactured by the pursuer, the defender is not entitled to insist that the cost of producing or manufacturing such steam ought to be deducted from the price or rent charged for it. A remit to a man of skill might settle the question as to the cost of production of the steam power. Would not such cost, if deducted from the price or rent charged, furnish something like an approximation to the sum to which the pursuer is entitled?”

On 28th July 1871 the Sheriff-Substitute pronounced an interlocutor finding for the pursuer, and remitting to Mr Slight, an engineer, to inspect and report on the minimum cost of the production of the steam-power which by the contract was to be furnished. The finding on the point was as follows:—“Finds that the pursuer is further entitled to payment for 5-horse steam-power at the said rate, from 20th May to 26th July, both inclusive, and for 11-horse steam-power at the said rate, from 27th July down to 11th November 1870. but subject to deduction of the minimum cost which he would have been compelled to incur had he produced or manufactured the steam power charged for, and which he would have required to supply had the defender received the same as he bound himself to do under his agreement in the lease aforesaid.” And in the note appended it is added—

Note.—After a careful consideration of the authorities, the Sheriff-Substitute has come to be of opinion that the present case falls under the principle upon which the case of Calterns v. Tennent was decided in the House of Lords. Where there are contained in the same instrument a lease of premises at one rent, and an undertaking to supply steam power at another and separate rent or price, these are to be regarded as distinct obligations, the first a proper lease, the second a mere

Page: 153↓

ordinary contract. Whether this contract is to be regarded as a contract of sale or of location seems to be rather a matter of metaphysical speculation than of practical importance. It may be said that steam power is as much an article of manufacture as beer or broadcloth, and that the contract here was truly a contract to sell and deliver so much steam power. On the other hand, it may be argued that this contract is analogous to the hiring of the labour of one's horses or servants for a given time. But whether it be a contract of sale or location, it is at all events not a lease, but a mere personal contract, to be enforced in the ordinary method, and protected by the ordinary sanctions.

“On the proof, in spite of some contradictory evidence, the Sheriff-Substitute is satisfied that, the pursuer did, during the first nineteen days of May, furnish, and the defender did receive, the five-horse steam power charged for, and the defender has judicially admitted this in his minute of defence; and for payment of the steam-power so let or sold and delivered there can be no doubt that the pursuer is entitled to decree; and for that the defender has been found liable accordingly. But what is the extent and nature of the pursuer's remedy in so far as relates to the time during which the defender has refused or failed to receive the steampower in terms of the agreement between the parties? Looking to the mode of enforcing such agreement, the Sheriff-Substitute thinks that the pursuer is entitled to the maximum of profit which' he could have realised by the execution of the contract; and, in order to determine what that amounts to in this case, he has made the foregoing remit, with the view of ascertaining the minimum cost at which the pursuer could have produced, the steampower had the defender received the same as it was his duty to do; and this cost being deducted from the rent or price charged for the steam-power under the agreement, will give the amount of profit which the pursuer would have realised had the agreement been fully carried out. This seems to be the principle given effect to in the case of Downie, Bell, Mitchell v. The Edinburgh and Leith Shipping Co,, March 6, 1834, 12 Shaw, 528. See also Boswell v. Kelborne & Morrell, Moore's Privy Council Reports, vol. xv., p. 309; and Morrison v. Boswell, March 4, 1806, F.C. and Paton's Appeal Cases, vol. v., p. 649. The same principle appears to be recognised in the cases of Emmons v. Elderton, Clarke's House of Lords Reports, vol. i., p. 645; and Beckham v. Drake, ibidem, vol. ii., p. 606.

On these authorities, as well as on general principle, as indicated in the Note to his previous interlocutor of 30th June 1871, the Sheriff-Substitute is of opinion that, while the pursuer is entitled to be indemnified for all loss he can possibly sustain by the defender's breach of the contract between the parties, the pursuer is not entitled to make profit by such breach, so as to draw payment for the price or hire of steam-power which he has never had occasion to produce, owing to the defender's declinature to receive it.”

Mr Slight, the engineer, reported, and subsequently decree in terms of his report for £13, 18s. 4d. was given against the defender, and certain objections to the report were repelled.

The Sheriff-Principal (Davidson) dismissed the appeal taken to him.

The Court of Session allowed before answer a proof of the minimum cost at which the steampower could have been produced by the pursuer at the time. This proof was taken on 4th November.

For the appellant it was argued, that steam has a certain commercial value, and this is usually put at £10 per each horse-power. That an “indicator” is invaluable in showing what is the actual horse-power, and, indeed, is the only means of arriving at it. Without such an arrangement the nominal horse-power can be ascertained only by a calculation based on the size of the boiler. That the evidence of various owners of steam-mills of different power supported this view of the matter.

The pursuer argued, on the other hand, that all such questions are matters of circumstances. A man may know as to his own mills, but it does not follow therefore that he knows equally well as to those of others. The importance of an “indicator” had been greatly magnified. The pursuer from his trade of a wood turner could provide a much cheaper fuel than coal, a fuel now being used in place of coal, and this production of steam-power was an advantage to him, of which he was entitled to reap the benefit.

At advising—