Scottish Court of Session Decisions

In October 1882 James Fearn, innkeeper, Brechin, purchased the property then known as the Prince of Wales Hotel, Brechin, from Charles D. Talo, who had owned and conducted it for several years. The offer and acceptance were contained in a duly attested missive of sale in the following terms—“Charles D. Talo. Sir—I hereby offer to purchase your property of the Prince of Wales Hotel, River Street, Brechin, with dwelling-houses adjoining, all as lately offered by you to public roup on the 12th day of September last, on the following conditions, viz.—1. I agree to all the conditions of the articles of roup signed by you on said 12th day of September, on the understanding that all the grates, gasfittings, gasaliers and brackets, and all the shelving in the

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shop and cellars, both of wood and stone, are included in the purchase by me, as well as the boilers and fittings in the washing-houses. 2. I will take by valuation of neutral men, and pay the price at my entry, the poultry houses and clothes poles in the garden. 3. On these conditions I offer the price of £1375 stg., payable in terms of said articles of roup, viz., £300 within 14 days after this date, and the balance at 11th November next, when my entry is to take place.—Your obedt. servt., James Fearn.”

“ Brechin, 4 th Octr. 1892.—I accept the foregoing offer.— Charles D. Talo”.

The articles of roup referred to in the missive could not be found, but it was admitted they were drawn up in the form in ordinary use in Brechin. The following was the material clause—“And it is hereby expressly provided and declared that the purchaser and offerers, by offering at the public sale, shall be held to have satisfied themselves as to the sufficiency and validity of the title-deeds and of the exposer's right to the said subjects, as also as to the rental, value, and extent of the said subjects, the amount of feu-duty, and the whole burdens and servitudes affecting the same, and shall not have right to object to the same or any of them thereafter, or to require further titles, or searches for incumbrances, upon any ground whatever, nor to require the exposer to settle with the superior for any composition or other payment which may be due in respect of his implied entry or otherwise, nor to retain any part of the price on the allegation or pretext of any error, defect, invalidity, informality, or deficiency of the said title-deeds or others, or on account of any misunderstanding, error, or alleged deficiency in rental, value, or extent, or under-statement of the said feu-duty and burdens, or existence of burdens thereon, or any other ground whatever, it being expressly declared that the said subjects are not exposed by description, measurement, or contents, but tantun et tale as they stand in the person of the exposer.”

Mr Fearn employed Messrs Gordon & Craig, solicitors, Brechin, who received the whole title-deeds and prepared and caused to be recorded a disposition in his favour, without having a search for incumbrances made. They paid the balance of the price to the seller's agent on 11th November 1882, £300 having been paid by Fearn himself on 24th October 1882. They charged and were paid the usual ad valorem fees on the transaction.

Fearn discovered early in 1892 that at the time of the purchase the heritable subjects were burdened with a bond and disposition in security for £300, granted by Charles D. Talo in favour of Alexander Bell Kydd, dated the 17th and recorded the 23rd day of December 1872. In 1873 the trustees of William Hunter acquired right to the said security, and in May 1892 they demanded payment from Fearn of the principal sum with interest from Whitsunday 1883, and thereafter commenced proceedings to bring the property to a sale. Fearn then intimated a claim against the seller Mr Talo, under the warrandice in his disposition, but found that he was in such reduced circumstances that it would be useless to take any proceedings against him.

In the present action Fearn sought to have Gordon & Craig decerned and ordained to disburden the subjects belonging to him of the bond in question on the ground of breach of professional duty and negligence, in respect that they failed to obtain an unburdened title before paying the price, and neglected to have the records searched in order to ascertain whether there were any incumbrances affecting the property.

The pursuer stated that he employed the defenders to complete his title to the subjects and to pay the price to the seller, and that the existence of the incumbrance was apparent on the face of the record.

The defenders answered that they were only employed to prepare the disposition, the terms of the transaction having been already arranged by the pursuer. They explained that in Brechin the practice with reference to purchases of heritable property was for the seller to stipulate and the buyer to agree that no search should be given. They averred that the seller's agent assured the pursuer at the time of the sale that there were no burdens over the property, and that he accepted that assurance, and told the defenders that, and that he had agreed to dispense with a search.

Proof was led on 14th December 1892.

The pursuer Fearn deponed—“I don't remember seeing the articles of roup of the property at that time. I was not told what was in them. They were not read over to me. At the time I entered into this transaction there was nothing said as to the title that I was to get to the property. (Q) Or about what encumbrances there were over the property?—(A) There was no word of encumbrances at all. … I called for Messrs Gordon & Craig about that same time to ask them to attend to the completion of my title. It was Mr Craig whom I saw on that occasion. I told him I had bought the property, and asked him if he would make up my title, and he was quite agreeable to do it. When I went to him I had not the missive of sale or a copy of it with me. I did not tell him what was in it; he said he would get all that from Mr Whitson. (Q) Did you have any conversation with Mr Craig at that time as to the burdens or bonds that were over the property that you had bought?—(A) They were never spoken about at all. I did not say to Mr Craig at that time or at any time that Mr Whitson had assured me there were no burdens over the property. (Q) Or did you say that you had accepted Mr Whitson's assurance that there were no bonds?—(A) It was never brought up at all; it was never asked. (Q) Did you tell Mr Craig that you had agreed to dispense with a search for encumbrances?—(A) In ever heard tell of a search till this affair broke out

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we never had any talk about that. I did not know there was such a thing… . Cross.—I saw Mr Talo about the property in Brechin once or twice. (Q) Did he not say anything about taking over the property subject to the bond?—(A) He never mentioned about a bond. (Q) Did you not think of asking whether the property was bonded?—(A) I thought if it had been bonded I would have been told. I did not ask if the property was bonded, because I thought it would be clear, or else he would tell me… . By the Court.—When I went to Messrs Gordon & Craig in connection with making up my title I told Mr Craig that I had bought Talo's property, and that I had been recommended to them (Messrs Gordon & Craig) to make up my title. Mr Craig said he would be very glad to do it. That was all that passed so far as I remember. He arranged to see Mr Whitson about getting the titles; he said he would see Mr Whitson and get everything.”

The defender Craig deponed—“I understood that our duties in connection with the transaction were simply to prepare a conveyance and see that the titles were got. (Q) Were you told by Mr Gordon, your partner, what you were expected to do?—(A) In the first place he merely handed me the letters which he got from the pursuer, and asked me to apply for the titles and prepare the conveyance. I did not see pursuer thereafter on the subject. So far as I am aware, I did not see the pursuer before the settlement of the price of the property. The bargain between the pursuer and Talo had been concluded about three weeks before our services were asked. I was informed that £300 had been paid to account of the price. On writing to Mr Whitson I received the whole of the titles from him. They included certain articles of roup and relative missives. I think I must have looked at them. I don't remember whether the articles of roup contained any stipulation as to the state of the titles and searches. In Brechin the usual practice is to dispense with searches in connection with such transactions. It is the exception in Brechin to stipulate for searches. I would not consider myself justified in granting a search or searching myself for a purchaser unless expressly authorised by him. … I think a 40 years' search in 1882 would have cost nearly £10. I think the cost is £5 now. We would have charged ad valorem fees for drawing the conveyance whether there was a search or not; that is the invariable practice… . Cross.—(Q) When you paid over the balance of the price did you know whether the property was burdened or not?—(A) I thought it was free, but I did not actually know. The pursuer had evidently accepted Mr Whitson's assurance. I understood that he had been assured by Mr Whitson that the property was free. It is very common for one agent to give an assurance to another; and in this instance the purchaser had been in direct contact with the seller. By the Court.—I understood that the pursuer had been satisfied. Cross (continued).—assumed I was not to make any search of the record. (Q) Did you apply your mind to the question whether it would be prudent to get a search?—(A) No. (Q) Did you discuss the matter with your client?—(A) I cannot say that I ever saw the pursuer to discuss it with him. (Q) Did you take any means to satisfy yourself that the property was unburdened?—(A) No. I fancy the titles that I had shewed the way the thing stood.”

The seller's agent William Whitson deponed—“So far as I recollect, I did not read over the articles of roup to him (the pursuer) or explain what was in them. At the meeting when the bargain was completed in my office I don't think there was anybody present but the pursuer and Talo and myself. (Q) So far as you recollect, was anything said at that meeting about the bond affecting the property?—(A) I have no recollection whatever of that. (Q) Did you give any assurance to the pursuer with regard to the encumbrances affecting the property?—(A) No, to the best of my recollection. I was never asked about it as far as I recollect. I am sure I did not say to the pursuer that there were no burdens over the property. I knew there were three bonds upon it. (Q) Is it the case that the pursuer accepted an assurance from you that there were no bonds?—(A) I have no recollection of giving such an assurance.”

The Lord Ordinary ( Kyllachy) pronounced this interlocutor:—“The Lord Ordinary … decerns and ordains the defenders to disburden the heritable subjects in question in terms of the first conclusion of the summons, and that within one month from the date hereof, and continues the cause: Finds the pursuer entitled to expenses, &c.

“ Opinion.—Mr Dickson has said all that can be said on behalf of the defenders, and I am far from doubting that this is a very hard case, inasmuch as the defenders must suffer from what was perhaps a comparatively venial breach of professional duty upon their part. I think it probable that the truth of the matter was that they never doubted Mr Whitson—that is, that they never supposed that Mr Whitson would sell a property without disclosing the burdens, and the whole burdens, upon it.

But what I have to do is to try the law, which I think in such cases is quite settled, and it is this, that a law-agent is bound when employed to carry through the conveyancing connected with the purchase of heritable subjects, to see that his client gets a good and unburdened title. That is admitted, and cannot be disputed to be the ordinary rule of law, and therefore really the only question which has been argued here is as to whether there has not been in the relations of the parties some waiver of the right which the client thus had at common law, and upon that matter all I can say is that I am not satisfied upon the evidence that the pursuer here waived his rights either as against the seller or as against his agent. It has been suggested that upon the just construction of these articles of roup the client waived his right

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to obtain a substantial title and unburdened subject. I do not so read the articles. I cannot doubt that if it turned out that the seller had no title at all, or if it turned out that the property was burdened with one or more bonds, the purchaser would have had relief as against the seller. Further, I can find nothing in the evidence to support the view that the purchaser, either for the sake of economy or for any other reason, absolved the law-agent whom he employed from the duty of seeing that the subjects were not burdened. It is quite true that in the articles of roup he had waived his right to demand searches from the seller, but that merely meant that he waived his right to have such searches at the seller's expense, leaving it entirely open how he should protect himself against the existence of burdens, and upon that matter his agent was bound to advise him. If his agent had put the matter before him and had told him the danger of taking these things for granted, and the pursuer had had his eyes open, and resolved to take his risk rather than be at the necessary expense, the agent would have been free, but failing such a dispensation from the client, and a dispensation obtained in full knowledge of the risk run, the agent must, I think, be liable according to the ordinary rule.

As to the precise remedy which the pursuer seeks, I do not doubt that it is here rightly stated, and that the defenders having been responsible and bound to purge the burden in question, must now be decerned to disburden the property, and must produce a good discharge such as the pursuer can put on record. I therefore see no good reason why I should not pronounce decree in terms of the first conclusion of the summons, and in the meantime continue the cause in order to see whether the defenders perform this obligation, or whether it will be necessary to proceed under the alternative conclusions.”

The defenders reclaimed, and argued—This bargain was completed under the conditions in the articles of roup which bound the purchaser to take the property as it stood. The Lord Ordinary was wrong in reading the articles as merely exempting the seller from exhibiting a search, but laying the duty of searching the record on the buyer's agent unless he had special instructions from his client to dispense with a search. The agent was entitled on seeing such a clause in the articles, to assume that the purchaser had satisfied himself as to the title. The question was, what was the agent employed to do? Here the client completed the purchase and employed the agent only to execute a conveyance in proper form and to see it put on record; in these circumstances the client must be held to have represented that he had made inquiries and was reasonably satisfied as to burdens, &c. To hold an agent bound under such a limited employment to give advice to his client as to the sufficiency of the titles on pain of liability if anything turned out to be wrong, would be a great extension of a law-agent's liability. The following authorities were referred to— Graham v. Hunter's Trustees, 1831, 9 S. 543; Campbell v. Clason, 1838, 1 D. 270— rev. H. of L., May 30, 1845, 17 Jurist, 500; Donald's Trustees v. Yeats, 1839, 1 D. 1249; Wallace v. Fisher & Watt, November 4, 1870, 9 Macph. 75; Stirling v. M'Kenzie, Gardner, & Alexander, December 7, 1886, 14 R. 170; Currors v. Walker's Trustees, January 25, 1889, 16 R. 355.

Argued for pursuer—The defenders were bound to see that the pursuer got a good property title free of burdens. The defence that they were only employed to prepare a disposition was disproved; but if it were not, the cases showed that where the employment was merely to carry out a conveyance, the agent was bound to ascertain by a search whether the property was free of incumbrances. This case fell far short of any case where the agent had been held to have properly dispensed with a search. In Fea v. Macfarlane, June 4, 1887, 24 S.L.R. 628, the agent explained the meaning and use of a search to the client, and it was deliberately resolved upon by the different parties not to go to the expense of a search. If the burden had been discovered at the time, the purchaser could not have been forced to take the property; notwithstanding the clause in the articles of roup, he would have got relief on the ground of essential error or fraud. The literal meaning of such a clause must be subjected to interpretation, it could not be said that the buyer was bound to carry through the contract if there were no title at all.

At advising—