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Scottish Court of Session Decisions |
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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Moncrieff v. Seivwright [1896] ScotLR 33_456 (11 March 1896) URL: http://www.bailii.org/scot/cases/ScotCS/1896/33SLR0456.html Cite as: [1896] SLR 33_456, [1896] ScotLR 33_456 |
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Page: 456↓
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Averments in an action for implement of the sale of a business of which the Court allowed a proof before answer, reversing the judgment of the Lord Ordinary, who held that the alleged contract could not be proved by parole, in respect that it provided for the transfer of leasehold rights, and was, moreover, an innominate contract containing stipulations of an unusual character.
This was an action at the instance of Hugh Moncrieff, writer in Glasgow, against John Seivwright, Berlin wool and fancy goods merchant, Aberdeen. The summons concluded for declarator that the defender had “contracted and agreed to sell to the pursuer the business of a dealer in cabinet and leather goods, electro plate, cutlery, clocks, toys, games, fancy goods and general furnishings, now or lately carried on by the defender at the Trinity Hall warehouse and showrooms, 151 Union Street, Aberdeen, all as hereinafter described, viz.—( a) The
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tenant's rights in and to the premises situated at 151 Union Street aforesaid as described in the lease thereof … ( d) all the stock-in-trade, fittings, furnishings, chattels, business books, hook debts (which the defender guarantees), and effects (cash in hand and at bankers excepted), which belonged to the defender in connection with the said business, and that in the condition in which the same stood as at 10th August 1895; ( e) the goodwill of the said business, and the exclusive right to the pursuer, or any company that may be formed to work the business, to carry on the business in continuation of or in succession to the defender, and to use the defender's name in a subsidiary manner to such an extent as may be necessary to make the change clearly known, and that on the following conditions and stipulations, viz.—(1) That the defender should pay and discharge all the debts and liabilities of the said business, and that on or before the last instalment of the price should be paid to him; (2) that the whole stock-in-trade agreed to be sold should “be valued by arbitration;” (3) that the pursuer should pay the whole expense of any deed or deeds required for vesting in the pursuer or the said company the subjects and others contracted to be sold, and giving them the full benefit of said contract, which deed or deeds the defender should be bound to execute if and when called on; (4) the entry to said subjects and others should be held to be as on the 10th day of August 1895, from and after which date the pursuer should pay, and thereby relieve the defender of all rents, taxes, and other burdens or proportions thereof payable in respect of the said leasehold subjects, and relieve the defender of all obligations of every kind prestable against the tenant under said leases; (5) that the defender should be bound not in any way to oppose in business the pursuer or any company which might be formed to work the said business, or engage in Aberdeen in any business similar to the business so sold, but should, on the contrary, help the success of the said business in every way in his power.” The pursuer averred—“(Cond. 4) Following upon said negotiations, the defender on or about 2nd April 1895 offered to sell to the pursuer the said business as carried on by him at 151 Union Street, with the stock, fittings, goodwill, leasehold rights and effects belonging thereto, the pursuer to pay the defender for the stock at the valuation of two men mutually chosen by them, and cost price for fittings and furniture, and the sum of £4000 for goodwill. Further negotiations took place between the parties as to the terms and conditions of the defender's offer, but ultimately the offer was declined by the pursuer on or about 16th April on the ground that the sum of £4000 asked for the goodwill was excessive. (Cond. 5) On 11th May thereafter the defender again approached the pursuer on the subject, and offered to take £3250 for the goodwill. The pursuer declined to pay this sum, but indicated that he was prepared to consider the defender's offer if the price to be paid for the goodwill was reduced to £1500. The defender immediately amended his offer by reducing the price demanded to this sum. (Cond. 6) The pursuer proceeded to arrange for the formation of a company to take over from him and work the said business, and by the 16th July he had succeeded in finding parties prepared to subscribe the capital necessary for that purpose, and the company was in a position to be formed immediately. Further negotiations had meantime been proceeding with the defender as to the details of the terms of his offer, and on 17th July a meeting took place between the pursuer and others interested in the proposed company, and the defender, when the whole matter was discussed in connection with the correspondence and verbal negotiations which had passed previously, and at that meeting the contract and agreement for the sale of the said business by the defender to the pursuer was concluded in the terms and on the conditions and stipulations set forth in the declaratory conclusions of the summons.”
The defender admitted that negotiations had taken place, but denied that a completed contract had been concluded. He averred (Ans. 6)—“It was throughout the understanding of parties that the contract should be reduced to writing;” and (Ans. 7) “In particular the parties to the said agreement failed to agree upon (1) the terms of payment of the price of the business, fittings, &c.; (2) the expenses connected with the transfer; and (3) the limitations under which the defender should continue to carry on his former business.… They have failed to come to terms upon this matter, and until the terms of the contract are finally reduced to writing, the defender claims his right to resile.”
He pleaded, inter alia—“(2) The pursuer's averments are irrelevant and insufficient to support the conclusions of the action. (7) The pursuer's averments can only be proved by defender's writ or oath.
In the leases to the defender of the business premises in question sub-tenants and assignees, unless with the written consent of the proprietor, were excluded. The defender carried on a second business in Aberdeen, which the pursuer averred was distinct from that which he proposed to sell. The defender denied that the two businesses were distinct.
On 4th February 1896 the Lord Ordinary (
Low ) sustained the second plea-in-law for the defender and dismissed the action.
Opinion.—“This is an action for declarator that the pursuer and the defender entered into a contract, in the terms set forth in the summons, for the sale to the pursuer of a business carried on by the defender at No. 151 Union Street, Aberdeen.
The subjects of the alleged sale for which the price was to be paid consisted of (1) ‘the tenant's right in and to the premises’ at 151 Union Street, and in Trinity Hall Buildings, Union Street, ‘as described’ in three separate leases; (2) the stock-in-trade and fittings; and (3) the goodwill of the business. The price of the stock-in-trade and fittings was to be fixed by valuation,
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The pursuer avers that the contract was concluded at a meeting upon 17th July 1895 between him and certain persons interested in a company which he proposed to form to work the business, and the defender. It is admitted that the alleged contract was not put in writing, and the pursuer proposes to prove its terms by the evidence of those who were present at the meeting.
I am of opinion that the pursuer cannot prove the part of the contract in regard to the leases by parole evidence. In the summons the agreement is said to be for a sale of ‘the tenant's rights in and to the premises,’ and in article 4 of the condescendence what the defender offered to sell to the pursuer is described as the business ‘with the stock, fittings, goodwill, leasehold rights, and effects belonging thereto.’
That appears to me to be an alleged contract for the transfer or assignation of leases, because if the pursuer agreed to buy the tenant's right under the leases he must have contemplated getting a title to these rights, which he could only get by being put into the tenant's place by an assignation of the leases. And I do not think that a contract for an assignation of a lease can be proved by parole any more than a contract for the constitution of a lease. No doubt if the leases were for a year or under, parole evidence would be competent, hut I understand that the leases here were for a period of years.
The pursuer's counsel, however, stated at the bar that in the leases assignees and sub-tenants were excluded, and that therefore the defender was not in a position to give the pursuer any right to the leases except with the landlord's consent. He therefore argued that an agreement that the defender should sell to the pursuer his tenant's right could amount to no more than this, that the pursuer on his part became bound to relieve the defender of liability for rent, and that the defender became bound to do his best to induce the landlord to accept the pursuer as tenant. The case of Kinninmont, 20 R. 128, was cited as an authority, to the effect that such a contract could be proved by parole.
It is sufficient, in my opinion, to say that such a contract as was held to be proved in the case of Kinninmont is not averred in this case. What is averred is an absolute and unconditional sale of the tenant's rights to the premises. That appears to me to be a contract for the assignation of leases made real by possession, which can only be proved by writing.
That is enough for the decision of the case, because if the pursuer cannot prove a material part of the contract he cannot prove the contract. I may say, however, that looking to the character of the remainder of the contract, I think that it is at least doubtful whether it could be proved without writing. The contract, although it is properly enough described as one for the sale of a business, is really a congeries of contracts, some of which are innominate contracts of an unusual character. There is, for example, the stipulation that the price shall not be paid until, and (apparently) unless, a company is formed to carry on the business. Then there is the stipulation that the defender is not to carry on any business in Aberdeen ‘similar’ to the business sold. Now, the defender carries on two businesses in Aberdeen, one only of which he is alleged to have sold. It is obvious, therefore, that an agreement limiting the business which the defender is to continue to carry on is of great moment to him, and that a slight variation in the terms of the agreement might make all the difference as to his power to engage in trade. In such circumstances I doubt very much whether, apart from the branch of it relating to the leases, the alleged agreement is one which can be proved by parole.”
The pursuer reclaimed, and argued—The pursuer was entitled to a proof prout de jure (1) The constitution or transfer of a lease could not be proved except by probative writ, but as the leases in this case excluded sub-tenants and assignees, the contract here alleged was merely an arrangement of the same nature as the bargain in Kinninmont v. Paxton, November 29, 1892, 20 R. 128, which it had been held did not require probative writ, and that case was conclusive of the present. Moreover, this was really a bargain for the sale of a business, and the arrangement as to the leases was merely a subordinate part of it. It would be an extension of the rule as to the proof of bargains relating to heritage, to say that such a contract as this fell under it, and the rule should not be extended as it was now anomalous. (2) There was no rule in the law of Scotland that innominate contracts as such must be proved by writ or oath. The rule was that when the stipulations alleged were of an unusual and extraordinary character writ or oath was required— Forbes v. Caird, July 20, 1877, 4 R. 1141, per Lord Deas at page 1142, approved in Downie v. Black, December 5, 1885, 13 R. 271. This contract was not of such an unusual character as to come under the rule. The stipulations here alleged were simply those provided for in every contract for the sale of a business with a view to its being taken over by a company, and this was specially true of the stipulation limiting the defender from carrying on similar business.
Argued for the respondents—This was a contract relating to heritage, and as such could only be proved by a probative writ. But apart from that it was an innominate contract of such an unusual and extraordinary character that it should not be allowed to be proved otherwise than by writ or oath— Edmonston v. Edmonston, June 7, 1861, 23 D. 995; Johnston v. Goodlet, July 16, 1868, 6 Macph. 1067.
The Court (without delivering any opinions) recalled the interlocutor reclaimed
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Counsel for the Pursuer— Aitken. Agents— Webster, Will, & Ritchie, S.S.C.
Counsel for the Defender— Abel. Agents— Morton, Smart, & Macdonald, W.S.
