Scottish Court of Session Decisions

This was an action at the instance of Jemima Russell, Stonehaven, against

Page: 700↓

Frederick Charles Loosley Farrell, and against J. & A. Edmond, advocates, Aberdeen, for any right or interest they might have.

The pursuer concluded for reduction of a discharge, dated 16th November 1898, of a decree which she obtained in the Sheriff Court of Kincardine in 1885.

The decree was pronounced in an action which she raised in 1885 against the present defender Farrell, concluding for damages for reduction, and for inlying expenses and aliment. The aliment decerned for was for six years, and the total sum in the decree, including damages and expenses, was £72, 1s. 6d., besides dues of extract. No money had ever been paid under the decree except the sum of £45, which was paid in November 1898 for the discharge now under reduction.

The pursuer pleaded—“(1) The pretended discharge referred to having been obtained by false and fraudulent misrepresentations and wilful concealment of material facts as to the defender Farrell's means, and having been granted under essential error induced by such false and fraudulent misrepresentations and concealment, it ought to be reduced.”

The representation alleged to have been made by the defenders was— “(1) That the debtor was insolvent, and absolutely without the means wherewith to settle the claim;” and (2) “that any sum to be paid would have to be as an act of grace by his friends or relatives.”

The pursuer averred that “at the time the foresaid representations were made by the defenders J. & A. Edmond about the defender Farrell being impecunious, they knew the latter had received, as he de facto had received and possessed, about £700, being a portion of £1865, which fell to the said defender ab intestato on the death of his aunt; that money was in the hands of the defenders J. & A. Edmond for the defender Farrell at the time they negotiated for and obtained the discharge now under reduction; that “those facts were suppressed by the defenders acting collusively and in concert; that they knew, as is the fact, that the pursuer and her agent had at the time no knowledge of them, and had no means of ascertaining them from any source;” that the discharge was accordingly obtained in ignorance on the part of the pursuer and her agent of the fact that the defender Farrell was solvent, and had at the time the means wherewith to pay the whole debt; and that it was obtained under that essential error of believing and assuming the defender Farrell's absolute want of means induced by false and fraudulent representations and wilful concealment as aforesaid.

The pursuer also averred that in 1894 she had made efforts to obtain a settlement, but the defender represented that he was unable to pay. A letter written by the defender Farrell was produced in support of this averment, in which he stated that he had no means; that he was unable to obtain employment owing to his defective hearing and eyesight, and that he was indebted to friends for his maintenance.

The defenders admitted that early in 1896 an aunt of the defender Farrell died leaving considerable moveable estate; that in 1897, after litigation, the share falling to him was ascertained to be about £600, but that this was reduced by legal and other expenses to not more than £350, which was all he possessed in 1898, and was inadequate for his support.

For the representations and concealment founded on the pursuer referred to and produced a correspondence which passed between the law-agents of the respective parties during the months of September, October, and November 1898. It was admitted at the bar that there were not in 1898 any verbal negotiations between the parties or their agents, and that there were no representations by the defender or his agents other than those contained in the correspondence.

On 28th September 1898 the defenders J. & A. Edmond wrote offering £25 for a full settlement. The pursuer's agent replied that the debt with expenses was now £145, and offered to advise acceptance of one-half of that sum for a settlement. In answer the defenders’ agents stated that they had communicated with their clients, and that it was ‘impossible to offer anything like the sum you name,’ but that they would advise an increase of their offer to £35 if that would lead to a settlement. The pursuer's agent having pointed out that this sum would not cover costs, the defenders’ agents on 8th November replied— “We are asked to write you that £45 will be paid, but that no more can be given. Seeing that Mr Farrell is blind and deaf and utterly unable to do anything of any kind for a living, we trust your clients will see your way to accept this sum.” They added that Mr Farrel had recently had an accident, and had been unable to do anything since. On 9th November the pursuer's agent replied as follows “I have your letter of 8th instant. I assume that you put it thus :—Mr Farrell is absolutely helpless in his prospect of earning anything, and that he is equally impecunious, and has no hope or expectation, near or remote. In that view, and on the faith of your word for it, you can send me your cheque for £50 in settlement of the claim.” … On 14th November Messrs Edmond wrote to the pursuer's agent:—“We have communicated your letter of the 9th, but we are not authorised to increase the amount to £50. We are told that it is more than really can be afforded. You must not rely on us, because we cannot be responsible in the matter. If you will take the £45 we shall send it on at once on hearing from you, either by telegram or letter.” On 15th November the pursuer's agent telegraphed to Messrs Edmond “Send the forty-five,” and on the same day Messrs Edmond wrote to the pursuer's agent enclosing a cheque for £45, as in full of all claims under the decree or in any way connected with the said claim. On the same day the pursuer's agent wrote confirming his telegram, and further, as

Page: 701↓

follows:—“I rely on the assurance expressed in my letter of 9th current. As I read your letter of yesterday you acquiesce or your client does so.”

On 16th November 1898 the pursuer's law-agent wrote to Messrs Edmond:—“I have your letter of 15th instant enclosing your cheque on the North of Scotland Bank (West End Branch), Aberdeen, for £45 sterling in settlement of principal, interest, and expenses due to the pursuer Jemima Russell, sometime residing at Mill of Garvock and county of Kincardine, under or by virtue of decree dated 13th August and 23rd December 1885 against the defender Frederick Charles Loosley Farrell, sometime residing at Davo House, in the parish of Garvock; and the said decree is accordingly discharged. The discharge thus given is in respect (as mentioned in recent negotiation and correspondence on the subject) that the present and prospective circumstances of the defender are stated to be such as to make it absolutely impossible for him to pay any higher sum than is now acknowledged for a settlement as in full of all claims.” This letter bore a penny stamp.

In reply to this letter the Messrs Edmond on 17th November wrote as follows:—“We have your letter of yesterday. As we wrote you on Monday, we could give you no assurance of any kind, and would not think of doing so in any other person's matters, so that the discharge is granted without any personal responsibility of any kind on our part.”

The defenders pleaded—“(2) The pursuer's averments being irrelevant and insufficient in law to support the conclusions of the summons, the action should be dismissed.”

They also pleaded (1) that the pursuer was not entitled to insist in the action, in respect that she had not repaid or consigned the sum of £45 paid for the discharge, but they ultimately intimated from the bar that they did not desire to found upon this defence.

On 12th February 1900 the Lord Ordinary ( Pearson) pronounced an interlocutor allowing a proof before answer.

Opinion.—[ After summarising the averments and the correspondence]—“Now, I confess was disposed at first to allow much weight to the warnings contained in Messrs Edmond's letters, and to hold that the pursuer ought at once to have returned the money and recalled the discharge when she saw that they repudiated the condition which she sought to impose. But a careful examination of the averments and of the correspondence has convinced me that this view could not be adopted at this stage without the risk of doing injustice. Be it remembered that according to the pursuer's distinct averment, the defender was, during these negotiations, possessed of about £700, which was actually in the hands of Messrs Edmond for his behoof. It appears to me a question of some delicacy how far, if that be so, the Messrs Edmond were justified in answering the pursuer's agent as they did, and withdrawing from responsibility. The latter had, of course, no power to impose his own assumptions of fact upon the other party to the negotiations. But he was entitled to make them aware of the assumptions on which be was proceeding, and, in one view, his statement of those assumptions was no more than a pointed and rather peremptory way of asking questions on the subject. It may be that he did not obtain the warranty which he desired that his assumptions of fact were well founded. But they were (as I read the correspondence) transmitted to and not repudiated by Messrs Edmond's clients; and Messrs Edmond's statement that they (as distinct from their clients) did not undertake any responsibility as to the facts does not cover the whole ground. It does not involve a statement that their clients also declined to commit themselves—a statement which might have amounted to notice that the £45 was to be accepted without any guarantee or representation at all as to how the facts stood in the matter of the defender's ability to pay. On the contrary, they transmit statements as from their clients to the pursuer (as in their letters of 14th November); and as they were the only channel of communication open to the pursuer, the fact that in the later letters they show anxiety to separate off their personal responsibility from that of their clients, rather emphasises the liability of the latter for what the letters conveyed to the pursuer either explicitly or as matter of just and reasonable inference. It is because I think that in one possible view of the case the defender, or those who obtained the discharge in his interest, are committed to the truth of the assumption, on which the pursuer was proceeding, and which indeed is set out expressly on the face of the discharge, that, in my opinion, the surrounding circumstances ought to be cleared up by a proof.

The question whether the discharge (which is really operative only as a receipt for money) requires a reduction was not argued, and I am not to be taken as expressing any opinion upon that.

The defenders' first plea-in-law is, that the pursuer, not having repaid or consigned the £45, is not entitled to insist in the action. This plea, which touches questions of considerable importance, was but slenderly argued on either side. I do not feel bound to sustain it as excluding the pursuer's right to insist. A plea founded on restitutio in integrum may avail a defender at the earlier stage of a reduction founded on similar grounds to the present; for if restitutio in integrum be shown to be impossible, the remedy of reduction may be barred. But in this case it seems sufficient at this stage to say that restitutio in integrum may be imposed on the pursuer as a condition of obtaining decree.”

The defenders reclaimed, and argued— The pursuer based her case upon misrepresentation and concealment, and essential error induced thereby. There was here no misrepresentation on the part of either Farrell or his law-agents. It was not even suggested that Farrell himself

Page: 702↓

made any representation whatever. All that the pursuer had to found upon in the way of misrepresentation was a suggestion made by her own law-agent, and at once repudiated by the Messrs Edmond. He was told not to rely upon any such representation as he suggested, but nevertheless he asked for and accepted payment of the money offered. He must in these circumstances be held to have accepted the payment made in settlement without any such assurance. There was no duty of disclosure here, and therefore the pursuer could not obtain a reduction upon the ground of concealment. The pursuer could have no case unless it was the duty of a person negotiating for a settlement to make a full disclosure of his client's pecuniary position. No such duty was incumbent upon him. The inquiry which the pursuer demanded involved an investigation into the whole state of Farrell's affairs—his assets and his liabilities, his ability to earn a livelihood and what was required for his support. A person who had accepted a part payment in settlement of a debt was not entitled to have that settlement set aside upon proof (1) that he had agreed to it upon a statement by the other party that he could not pay more than was offered, and (2) that upon a full investigation into the debtor's affairs it would appear that he might have been able to pay more. That was really all that the pursuer proposed to prove here.

Argued for the pursuer—The pursuer here had abandoned all hope of obtaining payment of her debt in 1894 upon the assurance given by the defender that he was utterly impecunious. Negotiations were reopened by his law-agents when they knew that an inheritance had opened to him. No intimation of the change was given to the pursuer, but, on the contrary, her suppositions as to Farrell's financial position were strengthened by what his agents said in the letters. As to the alleged repudiation, they only repudiated the suggested assurance as for themselves but not for their client. They said that they were informed £50 was more than could be afforded. It might be that there was no absolute duty of disclosure here, but a statement was made which was, in the circumstances, at least such an inadequate statement of the real facts as to amount to a misrepresentation. There was here also essential error induced by the conduct of the defender Farrell and his law-agents. There was a case for inquiry, and the Lord Ordinary's interlocutor should be affirmed.