Scottish Court of Session Decisions

60 OASES DECIDED IN THE [FOURTH SERIES.

No. 16.

Nov. 1,1895.

Smith v. Soeder.

2D DIVISION.

Ld. Moncreiff.

Mas CHRISTINA SMITH, Pursuer (Respondent).-Shaw-

W. Campbell.

Louis SOEDER, Defender (Reclaimer).--Zees-A. S. D. Thomson.

Sale of heritage-Urban tenement-Objection to title--Restrictions- Failure of seller to disclose restrictions.-A seller, who acted through an agent, exchanged missives of sale of an urban property with a purchaser "who had not the advice of an agent. After the completion of the sale the purchaser sent the titles to his agent, who informed him that the property was subject to restrictions whereby dwelling-houses only could be built on the site, windows in the back wall of the upper storey were forbidden, and a passage must be left for access to premises at the back. The purchaser then intimated to the seller that he renounced the sale. Held (rev. judgment of Lord Moncreiff) that as the restrictions were not disclosed to the purchaser at the time of the sale, he was entitled, when they came to his knowledge, to renounce.

Sale-Sale by owner of burdened home-Right of bondholder to enforce sale.-Opinion (per Lord Young) that a bondholder cannot enforce implement of a tale made by the owner of the burdened subjects.

Vol. Xxiii.] COURT OF SESSION. &c. 61

No. 16.

Nov. 1,1895.

Smith v. Soeder.

THIS action for implement of a contract of sale of a house was raised in the following circumstances:-

Mrs Christina Smith was owner of a house of one storey and attics, Nos. 5 and 6 Hope Street, Leith, over which she had granted a bond-go for £170 in favour of the Standard Investment Company. The titles of the property contained the following conditions:-

" That the said piece of ground above disponed is feued for the erection of a dwelling-house and for no other purpose whatever, . . . and the said George Smith and his foresaids shall be bound to leave a passage of 3 feet 4 inches in breadth on the north-east portion of the said piece of ground hereby disponed unbuilt upon, and shall also be obliged to make and keep in proper repair a door in the north-east corner, in room and place of the present [door] in the wall, with right and privilege to the said George Smith and his foresaids of free ish and entry to the back of the said dwelling-house built by him on said piece of ground by said passage and doorway, . . . and further, the said George Smith and his foresaids . . . shall not be allowed to have windows in the back wall of the upper storey of said dwelling-house, but only be allowed to use flat lights on the roof at the back thereof."

The Standard Investment Company called up the bond, and instructed their agents, Messrs Duncan Smith & M'Laren, S.S.C., to advertise the property for sale. Louis Soeder, an artist in Edinburgh, applied to Mrs Smith and her agent in reference to the advertisement, and was referred by them to Messrs Duncan Smith & M'Laren, as Mrs Smith had no longer any interest in the property. On 26th January 1894 Soeder handed to Messrs Duncan Smith & M'Laren the following offer:-

" I hereby offer to purchase at the price of £170 the two-storeyed cottage, Nos. 5 and 6 Hope Street, North Leith, and the grates and gasfittings therein, so far as belonging to the proprietor. Entry to be at the term of Whitsunday 1894, when the price will be payable, and the existing searches not to be continued by your clients. Any casualties of superiority now due to be paid by me. This offer to be binding upon me until Tuesday first, at twelve o'clock noon." On 27th January Messrs Duncan Smith & M'Laren replied as follows: -"As authorised by Mrs Smith, the proprietrix of the property, Nos. 5 and 6 Hope Street, North Leith, we now hereby accept your offer, dated 26th inst., of £170 for this property, of which offer copy is hereto annexed."

After exchange of these missives, the titles of the property were sent, on Boeder's instructions, to Mr Marcus J. Brown, S.S.C., who upon 27th February returned them to Messrs Duncan Smith & M'Laren, and stated that his client renounced the sale owing to the restrictions which were found in the titles.

The Standard Investment Company, under an agreement with Mrs Smith, raised this action in her name against Soeder for implement of the sale, and alternatively for damages.

After the summons had been served, the defender called upon the pursuer and offered her £5, provided she would withdraw the sum mons and renounce any claims she might have upon him. The pur suer accepted the sum, and wrote upon the service copy of the sum mons and delivered to the defender this receipt,-

" 6 Hope Street, North Leith,-Received to-day from Mr Louis Soeder the sum of £5 in full of all claims. June 5th 1894. CHRISTINA SMITH."

This receipt was communicated to Messrs Duncan Smith &

62 OASES DECIDED IN THE [FOURTH SERIES.

No. 16.

Nov. 1,1895.

Smith v. Soeder.

M'Laren, who wrote in reply to Mr Brown refusing to recognise the pursuer's right to discharge the summons without the consent of the Standard Investment Company, and declaring that the receipt had been impetrated from the pursuer under false pretences. The defender took this letter to the pursuer, who wrote at the foot of the letter, -

" All claims made against Mr Soeder under the summons referred to herein are given up by me and withdrawn. 6 Hope Street, North Leith. CHRISTINA SMITH. June 26th 1894"; and simultaneously therewith she added to the receipt formerly granted the words " made herein."

The Standard Investment Company proceeded with the action, and the defender pleaded;-(1) In respect of the receipt and discharge above referred to the action is barred, and the said documents are valid and must be given effect to unless reduced. (3) The pursuer being bound and having failed to disclose the restrictions in the titles and the other matters above referred to affecting the subjects, et separatim, the defender having made the offer foresaid under essential error in essentialibus, there is no contract which he can be called upon to implement, and he should be assoilzied, with expenses.

On 21st December 1894 the Lord Ordinary (Wellwood) pronounced this interlocutor:-

" Before answer allows the parties a proof of their averments as to the circumstances in which the receipt referred to in the defender's statement of facts and pursuer's answers thereto was granted, the pursuer to lead in the proof."

After a proof, which established the facts above narrated, the Lord Ordinary, on 15th March 1895, pronounced this interlocutor:-

" Repels the first plea in law for the defender, and appoints the cause to be put to the roll for further procedure." *

* " OPINION.- . . . The defender pleads that the action is barred by certain receipts or discharges granted to him by Mrs SmithWhen, the case was in the Procedure Roll I had considerable hesitation in sending it to proof in regard to the validity of these receipts, because it seemed almost incredible that a sane person of mature years could have granted two such documents without understanding what she was doing. But I must say that having seen and heard Mrs Smith in the witness-box the matter does not in the very least surprise me, because I do not think I ever saw such stupendous confusion of mind. I am quite satisfied that the pursuer is incapable of understanding or transacting business of the very simplest kind. I doubt whether she was capable of understanding what a summons meant, or of understanding any legal expressions, or what articles of roup meant. Her appearance of stupidity and confusion was such that at first I was under the impression that she was acting, but at last I came to the conclusion that it was beyond her powers as an actor to feign such obtuseness. On the other hand the defender, though a foreigner, understands and speaks English excellently, and he appears to be a very clever and a very shrewd man. I do not desire to say anything unnecessarily harsh about the defender. Up to a certain point he was very frank, and my impression is that he was not quite aware of the impropriety of his proceedings. He evidently thought that he had done a smart thing. He was dissatisfied with the bargain he had made, and was desirous of getting rid of it. He knew perfectly well that Mrs Smith had no interest whatever in the subject-matter of this summons. She knew, or had been told often enough ; but he certainly knew that she had no interest in it. But then he also knew-he was sharp enough to see-that this action had been raised not in the name of the Standard Property Investment Company, who were the true owners of the property, and had the only interest in it,

Vol. Xxiii.] COURT OF SESSION, &c. 63

No. 16.

Nov. 1,1895.

Smith v. Soeder.

On 20th June 1895, the Lord Ordinary pronounced this interlocutor: -" Decerns and ordains the defender to implement and fulfil in all . respects his part of the missives of sale libelled, in terms of the first alternative conclusion of the summons, under certification." *

but in the name of Mrs Smith.; and it occurred to him that if he could get a discharge from Mrs Smith of the claims made in the summons that would protect him perhaps altogether, or at all events for a time, from any claims made by the Standard Property Investment Company. . . . He is quite open about it. He says, for instance, in the examination at the end of his evidence,--' I had no definite object except to free myself from the summons, and of course I knew that by freeing myself from the summons that would, as far as that summons was concerned, free me from the claim. I noticed that Mrs Smith was the only person mentioned in the summons. I did not trouble myself at the time with what the effect of what I was doing would be on the Standard Company. I thought I had been badly used. The words " all claims " in the passage referred to referred to the claims in the summons.' Now Mr Soeder knew, or should have known, that Mrs Smith had no claims under the summons at all, and yet he obtained a discharge from her of all claims in the summons, she having none, in respect of a payment of £5. How, if his story is true, ... he by that payment simply bribed Mrs Smith to give him a discharge which she had no right to give or he to take. She had had no trouble in connection with the sale or with the roup-roll. The only trouble she had had was in connection with the premises to be let to her.

" That is the history of the transaction. Having been served with the summons Mr Soeder, without communicating with Mrs Smith's agents, and without even telling his own agent, went direct to Mrs Smith and obtained the discharge, and the question is whether this woman understood what she was about. I do not think she did. She had certainly no right to grant a discharge, and Mr Soeder had no right to take it from her. I repeat that I do not wish to say anything unnecessarily harsh about Mr Soeder. His very openness enables me to hold that these two documents obtained by him from Mrs Smith cannot bar the present action."

* " OPINION.-It may be assumed in favour of the defender that the purchaser of a heritable subject will be entitled to resile from his bargain if the seller seeks to impose, or the titles contain, conditions and restrictions of an unusual character of which the purchaser was ignorant, and which he was not bound to have contemplated. In such a case it may be that a seller is bound to draw the purchaser's attention to conditions of that kind, and if he does not do so, and the purchaser has not had an opportunity of examining the titles for himself, he may be entitled to resile, I do not know that the cases founded on by the defender exactly establish that proposition, because both in the case of Robertson v. Rutherford, 4 D. 121, and White v. Lee, 6 E. 699, the seller was unable to give a good title to the whole of the subjects sold. But undoubtedly the former judgment proceeded to a great extent upon the purchaser's ignorance of the restrictions, some of which were of a very unusual and serious character.

" In the present case, however, I do not think that the restrictions to which the defender objects are so unusual in the case of an urban subject as to entitle the defender, who admittedly has had an opportunity of examining the subjects, and who must have seen, from the structure of the building and the way in which the ground was laid out, evidence of the existence of some at least of the restrictions, to resile from his bargain.

" What the defender purchased was a two-storeyed cottage as it stood. ]Now, the three conditions to which the defender objects are these : Under the feu-contract nothing but dwelling-houses are to be erected on the ground. That is not an unusual condition ; but if it is the case that it has been departed from in the case of other houses in the neighbourhood, the

64 CASES DECIDED IN THE [FOURTH SERIES.

No. 16.

Nov. 1,1895.

Smith v. Soeder.

The defender reclaimed, and argued;-He had not been fairly used in the transaction. The restrictions should have been disclosed to 1 him before the sale, more especially as he had not the advice of an agent. Apart from this the restrictions were of themselves so unusual that he was entitled to relief. The prohibition of windows in the back wall was enough to render the property practically valueless.

Argued for the pursuer;-(1) On the discharge. The defender acted at least irregularly in going to the pursuer without her agents. He went at his own risk, and the onus was on him to shew that the bargain was fair. The Court was strict in criticising any such transaction behind an agent's back.1 (2) On the restrictions. These were of a usual kind. Altius non tollendi was the most important, and it was very familiar in urban property.2

At advising,-

LORD YOUNG .--This is an action for implement of a contract of sale with an alternative conclusion for damages. The defender has two pleas in law on which he grounds Ms defence to the action. The first of these is practically that the pursuer had discharged the bargain, and in support of that he founds upon two receipts which he obtained from the pursuer-one written upon the service copy of the summons in this action, and the other upon a letter. These bear on the face of them that, in consideration of the payment of £5, the pursuer discharges all claims made by her against the defender in the summons.

The other ground of defence is that the subjects sold were by the titles under restrictions of which the defender was ignorant at the time of the sale, and that these restrictions were of such a kind that he was entitled to be relieved of his bargain.

It was contended by the pursuer that these receipts ought not to have effect, because the pursuer did not know what she was doing at the time she granted them, or at least was under essential error as to their meaning

defender should have no difficulty in getting the superior's leave to depart from it. He next objects that the feuar is bound to leave a passage of 3 feet 4 inches to afford a means of access to reserved premises at the back. That passage, I understand, is to be seen by anyone who inspects the house. Thirdly, he objects to the condition that the feuar should not be allowed to have windows in the back wall of the upper storey of the dwelling-house, but will only be allowed to use flat lights on the roof thereof. This also is not an unusual condition, and an inspection of the house should have drawn the defender's attention to its existence.

" It is said that the defender is a foreigner, and that that made it the more incumbent upon the pursuer to explain the existence of the conditions. I have had an opportunity of seeing the defender in the box, and although he is a foreigner he speaks English excellently, and is a man of more than average intelligence, and there is nothing in his manner, appearance, or conversation to lead anyone to suppose that he was not conversant with and able to transact an ordinary piece of business.

" On the whole matter I think there is no necessity for proof, and that the pursuer is entitled to decree in terms of the first declaratory conclusion of the summons, under certification."

1 M'Donagh v. P. & W. MacLellan, June 18, 1816, 13 R. 1000; North British Railway Co. v. Wood, July 2, 1891, 18 E. (H. L.) 27.

2 Robertson v. Rutherford, Nov. 27, 1841, 4 D. 120, 14 Scot. Jur. 51 ; Whyte v. Lees, Feb. 22, 1879, 6 E. 699.

Vol. Xxiii.] COURT OF SESSION, &C. 65

No. 16.

Nov. 1,1895.

Smith v. Soeder.

and effect. The Lord Ordinary allowed parties a proof as to this, and after the proof had been taken, he, by an interlocutor, dated 15th March 1895, repelled the first plea in law for the defender, and appointed the case to be l heard on the plea dealing with the restrictions in the titles to the subjects. After hearing parties on that plea, the Lord Ordinary, by interlocutor of 20th June 1895, ordained the defender to implement the sale in terms of the first alternative conclusion of the summons, under certification that in the event of his failing to do so within one month decree would be pronounced under the alternative conclusion of the summons. This reclaiming note brings up for our consideration both these interlocutors.

I think that the first question which we ought to consider here (because there may be doubt about the other question raised in the ease) is, whether the restrictions on the subject are such that the defender's ignorance of them entitles Mm to be relieved of his bargain. The facts material to this contention lie in small compass.

The purchase took place by missives prepared by the pursuer's man of business. The defender, on the other hand, was without professional assistance at the time when the missives were exchanged and the contract of sale concluded. The missives, which are in the form of an offer and acceptance, are dated, the offer by the defender on 26th January 1894, and the acceptance by the pursuer's man of business, on her behalf, and with her authority, on 27th January 1894, and the contract of sale was completed then as far as it was completed at all. The defender naturally desired that, before implement, the titles should be sent to his man of business to be examined, and they were accordingly sent upon 2d February 1894. The purchaser was not to have entry to the subjects until the Whitsunday term following, and the defender's man of business was not able to attend to the matter at once, but upon 26th February he intimated to the pursuer that the titles contained the restrictions set forth in the feu-contract, that these restrictions were not known to the defender or disclosed to him by the pursuer at the time of his purchase, and that in consequence the defender declined to implement the purchase.

It was the fact that the defender had bought the property under these restrictions, which were known to the pursuer's man of business, but not known to the defender, and in these circumstances is it right to force him to go on with his contract? I think that the professional man who acted for the pursuer ought to have informed this artist, who had no professional assistance on his side, of the restrictions which appeared on the face of the titles. He did not do so, and as the defender informed him of his refusal to go on with the contract whenever he was told of the existence of these restrictions, I think he is entitled to be relieved of his bargain.

That is enough for the decision of the case, but I do not think we can dispose of it altogether without some allusion to the conduct of the purchaser in the matter of obtaining the two receipts. I think he was entitled to go to Mrs Smith and make a true representation of the facts to her,- and it is not said that he did not represent the true state of the facts when he said that he was ignorant of the existence of these restrictions,-and I also think that he was entitled to offer to give her £5 to be free of the bargain, and to take the discharge which she granted on that footing. The Standard

E

66 OASES DECIDED IN THE [FOURTH SERIES.

No. 16.

Nov. 1,1895.

Smith v. Soeder.

Investment Company now interpose and say that the discharge by Mrs Smith is of no avail, because they, in virtue of their bond over the property for its full value, had the real interest in the matter. Now, I think it material to observe that so far as appears on the face of the transactions Mrs Smith is the only person who has an interest in the matter. The Standard Investment Company did not appear in the transaction, and were not in any way parties to it. She was the sole seller-indeed, the Investment Company could not have sold the property by private bargain at all, and she was the only person entitled to give a discharge of the action, raised in her name for implement of the contract. The idea that the holder of a bond over heritable property is entitled to enforce a sale made by the owner of the property, or to recover damages from the buyer on account of his failure to implement the contract, is untenable. Bondholders may sell under the powers of their bonds and of the Act of Parliament applicable to such sales, and will have their remedy for breach of contract on the part of purchasers from them, but there is no such case here.

Of course, if the defender had taken a discharge from Mrs Smith when her state of mind was such that she did not know what she was doing, that discharge would not avail him. But it is not necessary for us to inquire into the pursuer's state of mind or knowledge of the circumstances under which the receipts were granted to enable us to decide this case, because, as I have said, the fact that information was withheld as to the restrictions is enough for the decision. But the Lord Ordinary has stated that he is quite satisfied that the pursuer is incapable of understanding or transacting business of the very simplest kind, and he doubts whether she was capable of understanding what a summons meant, or of understanding any legal expressions, or what articles of roup meant.

I do not agree with that opinion of the Lord Ordinary. The sale bears to be by the pursuer alone, and there is nothing to shew she did not understand what she was doing, or that the estate was sold. If I had formed the same opinion as that entertained by the Lord Ordinary as to her state of mind, I should have had difficulty in dealing with this action, which proceeds entirely in her name, and I should also have had difficulty in giving any effect whatever to a sale effected by a person in such a state of mind. I think, however, that the facts appear sufficiently clear for us to hold that she was a woman capable of effecting a sale of her property and of raising an action in the Court of Session. While I am of that opinion, I think the preferable course will be to decide this action on the ground that the buyer is entitled to be relieved of his bargain because the restrictions in the title were not communicated to him.

LORD TRAYNER and the LORD JUSTICE-CLERK concurred.

THE COURT recalled the Lord Ordinary's interlocutor, and assoilzied the defender.

DUNCAN SMITH & M'LAREN, S.S.C.-MARCUS J. BROWN, S.S.C.-Agents.

23 R 60

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