Scottish Court of Session Decisions

This case has already in one of its stages been reported, March 15, 1879, 6 R. 846, and 16 Scot. Law Rep. 471. Messrs Baines & Tait, iron merchants, London, sued the Compagnie Generale des Mines d'Asphalte, and W. O. Callender, London, John Young, London, and T. S. Lindsay, accountant, Edinburgh, partners thereof, for £296 stg., as alleged balance of commission past due and £4000 damages for breach of contract. The breach alleged was the non-fulfilment of a contract for asphalt work in the town of Jassy, in Roumania, upon the price of which the pursuers alleged they were to receive commission.

The following narrative is taken from the opinion of Lord Gifford:—“The contract under which the commission was claimed was embodied in letters passing between Mr W. O. Callender, one of the partners of the Asphalte Company, and as representing the company, and Mr A. G. Tait, one of the partners of the pursuers' firm. The principal letter embodying the agreement to pay commission, and which is still the binding contract between the parties, is dated 31st December 1872, and is in the following terms:—It is addressed by Mr Callender to Mr Tait.—‘London, 31st December 1872—Messrs Baines & Tait—Dear Sir,—In the event of your being successful in securing for me the contract for the Asphalt Work in the town of Jassy, I agree to pay you a commission of 5 per cent on the same, such commission to be payable from time to time as the payments for work are made to me. Should you prove unsuccessful in obtaining the contract, I agree to pay you One hundred pounds for your expenses in going there.—Yours truly (signed) W. O. Callender. P.S.—I give you full power as to expenses. It is understood that in event of your non-success you receive fifty pounds over and above expenses. (Intd.) W. O. C.’ “The pursuers were successful in securing for the Asphalte Company the contract for asphalting the streets of Jassy. The principal contract with the municipality of Jassy was dated 22d May 1873. It is a complicated document (in French) containing a great variety of provisions and stipulations, but none of the provisions raise any question in the present action or any material question relative to the pursuers' commission excepting the provision in the 4th article by which it is stipulated that the works should be completed by the 1st October 1877, and that only three cases would be admitted as sufficient reason for their non-completion within the stipulated period. The three cases are called in the contract ‘les trois cas suivants de force

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majeure bien justifiée, ravages de guerre, inondations extraordinaires dans le pays, naufrage des vaisseaux chargés de materiel destine a servir pour ces constructions.’ It was arranged that the payment of the contract price for the asphalt work should be made by the municipality of Jassy—one-fourth in cash and three-fourths in bonds of the municipality of Jassy—as the work progressed; and as the contract with the pursuers stipulated that the commission of five per cent should be payable from time to time as the payments for work done were made to the contractors, the Asphalte Company, it naturally followed that the commission due to the pursuers fell to be paid just like the contract price itself—one-fourth in cash and three-fourths in bonds by the town of Jassy. This arrangement, which naturally follows from the terms of the contract, was expressly assented to by both parties. This is admitted upon record, and the pursuer Mr Tait in his evidence says—‘I agreed to take payment of my commission in the same way as Mr Callender, for the company was paid for his work.’

“The Asphalte Company commenced operations under the contract in or about July 1873, and the work went on during the working periods of the succeeding years down till towards the end of 1876. Accounts from time to time were rendered by the company to the present pursuers with the view of showing the amount of the pursuers' commission, and from time to time payments to account were made to the pursuers both in cash and in bonds, but no final settlement ever was come to—the payments of commission were always simply payments to account, whether cash was paid or whether bonds were delivered, or whether, as often happened, bills were granted. The receipts all bore to be ‘on account of commission on Jassy contract.’

In 1875 a dispute arose between the pursuers and the defenders regarding the pursuers' commission, the chief point of difference being whether the commission extended to all descriptions of work under the contract, or whether it was confined to proper asphalt work only. There were also disputes as to expenses and some other matters. These differences led to proceedings in Chancery in 1875, but the whole controversy then arising was ultimately referred to arbitration to Messrs Nash and Henderson, and these arbitrators ultimately on 28th July 1877 pronounced a final award disposing of the matters referred. The leading finding by the arbitrators was that the present pursuers were entitled to their commission of five per cent. only upon the price of the asphalt paving, and not upon the price of other work included in the contract, and they ordained the Asphalte Company to make good to the pursuers their commission—one-fourth in money and three-fourths in bonds of the municipality of Jassy—on so much of the work as was completed in 1876, ‘and also on the said asphalt work remaining to be completed after the end of the year 1876, in money and bonds in the like proportion from time to time as and when payments on account thereof have been or shall be made to the defendant by the municipality of Jassy.’ It is not disputed that this award is binding upon both parties, and will fall to receive effect in any accounting between them.

It appears that on account of the war between Russia and Turkey the asphalt works contemplated in the original contract as to be executed in the year 1877 were suspended, and no work was done that year, or very little. The Danube was blockaded and the railways were taken possession of by the Russian troops, and the Asphalte Company were unable to take the necessary materials for their work to Jassy, and the work came to a standstill till 1878. In 1878, however, negotiations were opened between the municipality of Jassy and the Asphalte Company for resuming and completing the work so far as left undone, and the result was a convention or agreement between the municipality of Jassy and Mr Callender as representing the Asphalte Company, which is dated 26th July 1878.

It is proper to keep in mind that this convention, which I think I may properly describe as a supplementary agreement between the town of Jassy and the Asphalte Company, was entered into and concluded without the knowledge or concurrence of the present pursuers. The present pursuers were no parties to the supplemental convention, or to the negotiations which preceded it. Indeed, it appears that the pursuers did not know either of the convention itself or of the negotiations which preceded it until proof was led in the present action, when the whole arrangements were for the first time disclosed. It is necessary to keep this circumstance in view, as it has led to some difficulty in reference to the form of the present action.

The present action was raised on 9th November 1878, and it concludes, 1st, for a sum of £296 sterling, being an alleged balance of the pursuers' commission on price received in money and bonds up to October 1876; and 2d, for a random sum of £4000 sterling in name of damages for the commission which would have been due to the pursuers as commission on work not executed as at October 1876, and also the commission on the price to be paid to the Asphalte Company for maintaining the works from 1880 to 1895. The action seems to have been raised in ignorance of the supplementary convention of 26th July 1878, and under the impression that the Asphalte Company in breach of contract had refused to recognise the pursuers' claim for commission after the suspension of the works in 1877.

Two main questions have been raised—(1) Whether any and what balance of commission is due to the pursuers upon prices received for work executed down to the end of 1876? and (2) Whether the pursuers have any further claim for commission for price received for works executed under the new or supplemental convention of 26th July 1878? A third question at one time seems to have been mooted—Whether the pursuers are entitled to commission upon sums which the Asphalte Company will receive under the contract for the maintenance of the streets from 1880 to 1895, the execution of which contract has not yet commenced? It was stated at the bar, however, that this last question as to the maintenance contract is no longer in dispute between the parties, the defenders not resisting their obligation to pay commission on the maintenance contract if and when they receive payment of the sums stipulated therein.”

In August 1877, when the accounts were balanced, the defenders had paid the pursuers a

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considerable sum as commission both in cash and bonds of Jassy, but they had received a much larger proportion of cash than one-fourth. The pursuers alleged that this was in consequence of the inability of the defenders to pay in bonds, as they had pledged all they had, and that the defenders paid in money to suit their own convenience. The pursuers had been overpaid in cash in August 1877 £3382, 12s. 7d., and they were entitled to receive bonds of the par value of £3678. They therefore claimed the difference between these two sums, £296, which was the first sum claimed by them in this action. It appeared, however, that the Jassy bonds had never attained to par value, their highest value having been 75 or 80 per cent. The defenders therefore maintained that the pursuers had been fully paid, and could not claim the difference in money between the actual and the par value of the bonds, and they expressed themselves willing to hand over to the pursuers bonds to the par value of £3678 upon receiving £3382, 12s. 7d. in cash.

The second sum claimed was, as already stated, £4000 damages for breach of contract, as the defenders maintained that the contract was at an end, and refused to pay commission after the outbreak of the war. The question came to be, Whether the pursuers were entitled to commission on the work done under the convention of July 1878?—the defenders alleging that the original contract came to an end in October 1877, when the works were stopped by the war; that the pursuers had nothing to do with the convention of July 1878, and were therefore not entitled to commission on work done under it. The convention of 12th July 1878 proceeded upon this narrative—“The undersigned … taking into account the events of the past year 1877, which prevented the completion of the greater part of the works of paving of that year, and wishing that these works be completed in the future, have agreed as follows—(1) All the conditions of the primitive convention which are not contrary to the present convention remain in force. (2) All the works of paving which remained to be completed by the primitive convention of the 22d May 1873, and after the modifications which were made subsequently by the votes of the Communal Council—that is to say, the whole of the works which have remained unexecuted in the 5th campain, and the last one of the concession, will be executed in the campain of the present year and the four subsequent years, in the manner as will be shown below.” As already stated, the pursuers were ignorant of this convention.

Thereafter proof was led before the Lord Ordinary ( Craighill), who subsequently pronounced the following interlocutor:—“The Lord Ordinary having heard parties' procurators on the closed record, productions, and proof, and having considered the debate and whole process—In the first place, and with reference to the conclusion for payment of £296, Finds as matter of fact (1) That by the agreement between the pursuers and the defenders the pursuers became entitled to receive from the defenders, and the defenders became bound to pay to the pursuers, commission at the rate of five per cent. on the proceeds of the contract between the defenders and the municipality of Jassy, referred to on the record, for paving the streets and footways of Jassy with asphalt; (2) That this commission, like the sums under the contract between the defenders and the municipality of Jassy, was to be paid one-fourth in cash and three-fourths in bonds of the municipality, as the work contracted for by the defenders proceeded and the contract price was received; (3) That this condition as to the manner in which the pursuers' commission was to be paid has not been altered, but remains obligatory both on the pursuers and on the defenders; (4) That as at 21st August 1877 there had been paid to the pursuers in cash, beyond the one-fourth of the commission which was to be paid in cash, £3382, 12s. 7d.; and on the other hand, there had been short delivered of the bonds in which the other three-fourths of the pursuers' commission was payable, bonds of the nominal or par value of £3678; (5) That these bonds of the municipality of Jassy were never of par value, and 80 per cent., which is now their full value, is more than could have been obtained for them at the times when the payments which have been made in cash were received by the pursuers from the defenders; (6) That the overpayments in cash and underpayments in bonds (dealing with the bonds still undelivered as of the value of 80 per cent.) has not been the cause of loss to the pursuers; and (7) That accounts between the pursuers and the defenders falling to be settled on the foregoing data, neither the sum of £296 sued for, nor any other sum, was at 21st August 1877, or is now, due by the defenders to the pursuers: Finds as matter of law, the facts upon this part of the case being as above set forth, that the defenders are entitled to be assoilzied from the conclusions for the payment of the £296 sued for; Therefore assoilzies the defenders from that conclusion of the summons, and decerns: In the second place, and with reference to the conclusion for £4000 of damages for alleged breach of the agreement between the pursuers and the defenders in and subsequent to 1877, Finds as matters of fact, so far as regards the construction of the works contracted for—(1) That the contract between the municipality of Jassy and the defenders, referred to on the record, came to an end on 1st October 1877, though the works contracted for were not fully completed; (2) That war as une force majeure was specified in said contract as one of the things the occurrence of which should be an excuse for non-performance of work undertaken; (3) That the war between Russia and Turkey which broke out in the spring of 1877 interfered with the execution of the work remaining to be performed in that the last year of the contract, the consequence being that only a small part of that work was preformed; and (4) That what was not performed became, along with other work, the subject of a new contract concluded between the defenders and the municipality of Jassy in May 1878—the rates contracted for under the old contract being substantially the same as those for the same work under the new contract: Finds as matter of law, the facts being as above set forth, that the pursuers are entitled to commission only on the proceeds of the work actually performed in the season of 1877, and are not entitled either to commission on the proceeds of the work done or to be done under the new contract, or to damages for work contracted for in the old contract

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not having been performed before that contract came to an end: In the third place, and as regards commission on the sums to be received by the defenders for the maintenance of streets or roads and footways in asphalt—Finds it admitted by the defenders that the pursuers are entitled to commission at the rate of five per cent., payable wholly in cash, on the payments to be received by the defenders from 1880 to 1895, under the first of the contracts above mentioned, for the maintenance of streets or roadways and footpaths constructed in asphalt under that contract prior to its expiry on 1st October 1877: Appoints the cause to be enrolled, that these findings may be applied and an interlocutor exhausting the cause be pronounced, reserving in the meantime all questions of expenses.”

The pursuers reclaimed, and argued in regard to the second point—There was here no new contract at all; the convention of July 1878 was merely an agreement as to taking up again the old contract which had, on the best view of it for the defenders, been temporarily put an end to by the war. Here the ravages of war were recognised as an exception in favour of the defenders. They afforded an excuse if the works were not executed at the specified time. It followed, therefore, that the parties had in view the postponement of the works, and that the contract did not come to an end when the works were stopped in 1877. They did not, however, admit that the defenders were entitled to stop the works on account of the war. The country in which they were working was not itself ravaged by war, and it was only in that case that war had been regarded as a force majeure entitling a contractor to put a stop to a contract. They submitted therefore that the defenders were not entitled to stop the works, and that they, the pursuers, were entitled to damages for breach of contract because they did. Alternatively, they submitted that the new convention was merely the old contract in a new shape, and that they were entitled to their commission on the work done under it, as stipulated for in the original contract.

Argued for the respondents on the second point—The contract here on the part of the pursuers was a contract of risk, and the remuneration was very high on that account; they had been paid a large sum for very little work, and would suffer no hardship if they got nothing more. The war here extinguished the contract, for it made it impossible for the contractors to carry out the work and for the municipality of Jassy to pay for it. Though Roumania was not the theatre of war, it was a belligerent, and was occupied by the Russians, and all means of carriage—and chiefly the Danube—were shut off. [Lord Justice-Clerk—You may assume that the war made it impossible to carry on the contract.] The war therefore was one of the risks run by the pursuers, and they must suffer from it. Suppose the contract had not been a paying one, and the contractors had stopped it, the pursuers could not have compelled them to carry it out; they were only to get commission on money actually received. The contract was absolutely brought to an end by the war, for when in an executory contract of this kind circumstances altered so that it would be inequitable to force fulfilment of it, it was brought to an end.— Geiful v. Smith and Another, Jan. 26, 1872, L.R., 7 Q.B. 404; Jackson v. Marine Insurance Co., Dec. 1874, L.R., 10C.P. 125. If, therefore, the first contract was put an end to, there could be no good claim under the second, for it was a thing by itself with which the pursuers had nothing to do. The principle governing such cases as the present was that unless the order given or the contract obtained was the direct result of the introduction no claim arose to the introducer— Moss v. Cunliffe & Dunlop, Mar. 20, 1875, 2 R. 657. There was here no jus quœsitum— Blumer & Co. v. Scott & Son, Jan. 16, 1874, 1 R. 379. A commission agent such as the pursuers here had nothing to do with a contract entered into by the principal on his own account without reference to the agent— Ex parte Maclure, L.R., 5 Chan. App. 737, and M'Intyre v. Belcher there; Rhodo v. Forwood, L.R., 1 App. Ca. 256.