Scottish Court of Session Decisions

In August 1883 Crawford Noble junior, the owner of a steam-trawler called the “Lightning” of Aberdeen, entered into a verbal agreement with William Watson, a shipmaster, by which he agreed for the sum of £100 to sell him seven sixty-fourth shares of the vessel. Watson paid the money and obtained from Noble's agent a receipt therefor, which was as follows:—“Received of William Watson the sum of £100 on behalf of Crawford Noble junior, for a share in the steam-trawler ‘Lightning.’” At the date of the sale the vessel was already mortgaged to a bank to her full value. On the 25th October 1883 they entered into a minute of agreement by which (1) Noble, in consideration of the sum of £100 paid to him by Watson, agreed, but so long only as Watson fulfilled the obligations undertaken by him in the second place, to “hold seven sixty-fourth shares of the vessel in trust for payment to the second party (Watson), during the continuation of the agreement, of one-ninth share of the net profits earned by the ‘Lightning,’ without prejudice to Noble's power to sell her or mortgage or dispose of her on repayment of the £100;” (2) Watson agreed to take entire command of the vessel, to conduct the trawling operations, &c., and to be sober and attentive to his duties as captain, “and in the event of his at any time becoming intoxicated or in any way failing to fulfil the obligations hereby undertaken by him, the first party (Noble), shall be entitled to dismiss him from his employment as captain, and in that event he shall forfeit all claim to repayment of the £100, and shall also forfeit his right to any share of the vessel or of the profits thereof.”

Watson entered on his duties as captain on the 14th of August. In consequence, however, of his drunken behaviour Noble dismissed him from his employment.

Watson raised this action against Noble for repetition of the £100, and averred that he had frequently applied to the latter for a bill of sale of the shares of the vessel for which the sum was paid, but the defender had refused to give it to him. He reserved all claims competent to him for damages in respect of the defender's failure to implement his engagement.

The defender averred that through the pursuer's drunkenness and neglect of duty he caused him serious loss and damage, and in particular on 6th December damage was done to the extent of £57 to the nets of a fishing-boat, for which the defender was held responsible, and a trawl-net and gear were lost on the 15th December. He also stated that the pursuer, besides having forfeited the sum of £100 in terms of the agreement, was liable to him in damages for loss and injury caused by culpable neglect of duty, and he reserved right to raise action therefor.

The pursuer pleaded—“The pursuer having paid to the defender the sum sued for, for a specific purpose, and the defender having refused to implement his part, is liable in repetition, and decree should pass against him for the principal sum, interest, and expenses as prayed for.”

The Sheriff-Substitute ( Brown) found, after a proof, that the pursuer was entitled to damages

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for breach of contract, and assessed the amount at £40.

“ Note.—.. . As I look upon the case, the receipt, the verbal and the subsequent written agreement, all form part of one transaction, and are to be taken in synthesis in considering on what terms the pursuer became captain of the ‘Lightning;’ and I think upon the evidence it is not doubtful that the agreement was, that on an instant payment of £100 the pursuer was to receive the command and acquire a share in the vessel, but was to forfeit both on certain conditions, which are set forth in the minute of agreement. My view upon the evidence further is that these conditions are not qualified, for notwithstanding the stringency of the contract I am unable to hold that for a single act of violation of its spirit, not shown to be followed by actual loss, the defender was entitled to get rid of the pursuer, and put the £100 he had deposited in part for a share of the ship into his own pocket. The case of the pursuer, therefore, really comes to be one of damages for a breach of contract, and not, as he has put it, a claim for repetition under the receipt, for, as I have already pointed out, he cannot so lay his action without ignoring the agreement, which he certainly cannot do. It then comes to be a difficult question, What is the damage which the pursuer has proved? I am quite clear that the £100 is not the measure of the damage, for what has to be assessed is the value of his interest in the vessel and of his command at the time he was dismissed. The pursuer himself has succeeded in excluding evidence as to the subsequent history of the vessel, and according to the view I have ultimately come to take of the case that presents an element of some embarrassment. But although the details of the loss are not in evidence, it is quite clear that the ‘Lightning’ since the pursuer's dismissal has been a losing concern, and that both the value of the master's position and his interest have been considerably depreciated. The materials are not abundant for forming a judgment, but dealing in a somewhat rough way with such evidence as there is, and particularly having reference to the uncontradicted evidence of the defender as to the deterioration in the vessel, I think justice between the parties will be done by awarding damages to the pursuer to the extent of £40,” &c.

On appeal the Sheriff ( Guthrie Smith) found that under the agreement between the parties the pursuer was liable to dismissal, and agreed to forfeit £100 “which he had paid as the consideration for his receiving the command of the trawler and a certain share of the profit in the event of his at any time becoming intoxicated or failing to fulfil the obligations undertaken by him; (2) that this condition was not observed by him on more than one occasion; that thereby his dismissal was justified and the forfeiture incurred: Therefore assoilzies the defender from the conclusion of the action, &c.

“ Note.—In this case the agreement between the parties is in writing, and no evidence of the terms of their arrangement is in my opinion admissible except the document itself. In effect it provides that, in consideration of his paying to the defender £100, the pursuer was to be appointed captain of the trawler ‘Lightning,’ and be treated as owner of a ninth share in the division of the profits, without, however, acquiring any property right in the vessel. On the other hand, the pursuer bound himself to keep sober, and to submit to dismissal as well as the forfeiture of his £100 ‘in the event of his at any time becoming intoxicated, or in any way failing to fulfil the obligations hereby undertaken by him.’ This was a very stringent clause, but I assume there were good reasons for it, as the defender says there were, and it is a perfectly lawful stipulation. The defender might well desire both to protect himself and to provide a stimulus to the pursuer to abstain from drinking. On the other hand, it furnishes the other party to the contract with a potent lever which might easily be used by an unscrupulous person in an unfair manner. Lord Stowell once observed ‘that in a mode of life particularly exposed to severe peril and exertion, and therefore admitting in seasons of repose something of indulgence and refreshment, proof of a single act of intemperance committed in port is no conclusive proof of disability for general maritime employment.’ ( The Exeter, 2 Rob. 261.) And although since the time of that eminent judge the standard of sobriety has been greatly raised among all classes of society—especially amongst seafaring men, to whom the care of valuable lives and property is entrusted—I have no doubt whatever that the clause in question ought to be construed in the spirit of the sentiment here expressed. The intoxication meant is a recurrence to his former habits, which but for his promises of amendment, would have prevented him from even obtaining the employment. The defender could not be permitted to take advantage of some isolated act of forgetfulness on the part of the pursuer from which no evil resulted. He must act on reasonable grounds and produce sufficient evidence that the pursuer, on whom the whole success of the adventure depended, was really no longer to be depended on, and so had incurred the forfeiture. But even reading the clause in this sense, and as favourably as I can for the pursuer, I think the evidence adduced for the defender is sufficient to justify his action. I do not attach importance to the loss of the trawling gear off the Isle of May, although that was a serious matter, and I am not satisfied that it was not preventible. But, in my opinion, if the agreement is to receive effect at all, there is no getting over the fact sworn to by some of the crew—namely, that the pursuer, in his own words, ‘got on the spree at Leith,’ with the result that the trawler was lying idle in port while she might have been fishing. The manager of the trawler states that when he went up to Leith in November 1883 he found the craft in port, the captain drunk, dismissed him, and took him back at the solicitation of his wife. It is also proved that owing to the incapacity of the pursuer the trawler on one occasion put to sea under charge of the engineer and fouled some fishermen's nets, for which £35 of damages had afterwards to be paid. If these failures in duty entitled the defender to interfere for his own protection, as I think they did, by revoking the pursuer's appointment, I cannot see how under the agreement the dismissal did not carry the loss of the £100 with it.”

The pursuer appealed, and argued—This was not an action of damages at all, but one for repetition of a sum of money paid for the purchase of shares of a vessel which the seller had

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refused to transfer to the purchaser. To give effect to what was a penal clause in the agreement would be to deprive the purchaser of what he had admittedly paid for.

The defender replied—The forfeiting clause in the agreement fell to be given effect to. It was expressly inserted in the agreement to meet the possibility of the pursuer's returning to habits which were well known. The Court could not reduce the sum unless it was shown to be an exorbitant one.— Forrest & Barr v. Henderson, &c., Nov. 26th 1869, 8 Macph. 187; Craig v. M'Beath, July 3, 1863, 1 Macph. 1020.