Scottish Court of Session Decisions

Lord President.—This is an appeal from the Sheriff of Lanarkshire in which the pursuers who are piano merchants, sue the defender, who is resident in Glasgow, and pray for an order upon the defender to deliver to the pursuers a certain piano hired by the pursuers to the defender on or about 26th November 1902, and now in his possession. The case is not, I think, either free from difficulty or satisfactory for your Lordships' determination. I find considerable difficulty in understanding the pleadings as they are, and still more in arriving at the meaning of the precise form of questions which have been put to the witnesses. The action is laid with the prayer which I have quoted, and sets forth in the condescendence a mere agreement to hire a piano at the rate of 15s. per month. Then follows the statement that whereas for a certain time the 15s. were paid further payments were not duly made, and that those payments not having been made the pursuers are entitled to redelivery of the piano. The defence proponed to this demand is that the piano is the property of the defender in virtue of a contract of sale entered into on the said 26th of November and verbally concluded between Mr Grant, one of the partners of the pursuers' firm, and the defender, by which contract the piano was sold to the defender for £26, payment being conditioned to be made by instalments. The averment as to the instalments is certainly in a peculiar form, because it is said that the piano was to be paid by instalments extending over a period of years, the purchaser to pay as often and by as large sums as he possibly could—15s. per month being talked about as a sum that would be acceptable. The learned Sheriff-substitute, before whom the case depended, assoilzied the defender from the conclusions of the action, pronouncing a finding that the pursuers sold to the defender, on the date specified in the petition, a piano at the price of £26, payable by instalments at the rate of 15s. per month, his view being that, that sale having been truly effected, the pursuers had mistaken their remedy, their true remedy being, not of course to sue for re-delivery of the piano, which was not theirs, but to sue for the instalments remaining unpaid. The Sheriff, on appeal, recalled that interlocutor, and pronounced a set of detailed findings, all of which I need not read, but the crucial one of which I think is this:—“Finds that in these circumstances it is not proved either that there was a sale or a hire-purchase contract, there being no mutual agreement to transfer the property, and possession having been given by the pursuers upon a supposed hire-purchase contract to the terms of which the defender did not agree: Finds therefore that the defender has no title of possession.” In other words, the view to which the Sheriff came was that although the defender had not proved the contract which the Sheriff-substitute held proved, the pursuers on their part had not proved that upon 26th November they had made out a hire-purchase contract, so that in law there was no consensus in idem—no contract at all—and that consequently the only title to the piano being in the original proprietors of the instrument, the pursuers, they were entitled to delivery.

Now, your Lordships will notice that in detailing the Sheriff's judgment I have used the words as he used them, “hire-purchase contract,” and the whole endeavour of the pursuers in the proof was to make out that the true bargain upon 26th November was a hire-purchase bargain. A hire-purchase bargain is not perhaps a term actually known to the law as a term of art, but it is a form of contract which has become common enough in modern times, and it was judicially inquired into and noticed in the case of Helby v. Mathews . It is a form of bargain by which the sellers of these instruments who wish to push their sales have tried to get round the doctrine of common law, uncomfortable to them, that you cannot give a person a moveable, and at the same time hold that moveable in security of the debt which that other person may owe, or in security of the contract in respect of which the moveable is transferred. I am not by any means suggesting that the proceeding is not a perfectly proper one. It was held to be quite legal in the case before the House of Lords, and although perhaps there might be something said upon whether the old view of the common law was not one which was more conducive to advantageous dealing between citizens, I do not think these considerations are for a Court of law so long as the form of contract is a perfectly legal form. The particular class of bargain which these pursuers admittedly wished to enter into on that date is shewn by the form No. 11 of process, which is the hire-purchase form in ordinary use by the pursuers' firm, and which was the form which after that date they made several efforts to induce either the defender or the defender's wife to sign, which they refused to do. I ask your Lordships' attention to this for the reason that here we have the first peculiarity of the case as regards the position of the pleadings to which I alluded in my opening remarks. The form No. 11 of process is a form of agreement by which the person signing it agrees to hire from Muirhead & Turnbull such and such a piano, of the value of so much, to pay to them the sum of so much “on signing this agreement (in consideration of the option of purchase herein given) and for which credit will only be given in the event of the purchase being effected as herein provided; and for the use thereof the sum of             per month, the first payment to be made upon              .” Then there are certain stipulations for taking care of the piano and allowing persons to inspect it and so on, and a provision that the one party is to return the piano if he allows one monthly payment to run into arrears. He is also bound to pay its full value if it should be damaged or destroyed, and then it goes on,—“Declaring, that at any time during the hiring (subject to the conditions aforesaid) the said Muirhead & Turnbull shall be bound on demand to sell said pianoforte to me at the price of £26 sterling, in which case I shall receive credit for all payments previously made under this agreement. I shall be at liberty to return the said instrument after I have paid hire for a period of three months, and in that case I shall only be liable for hire up to date of return, but not for less than three months' hire in any case. Notwithstanding of anything herein contained, I shall have no right of property in said pianoforte until after a sale in terms of the foregoing obligation, and this is declared to be a suspensive condition.”

I call your Lordships' attention to that because I think your Lordships will see that it truly does not square with the pursuers' condescendence at all. The pursuers' condescendence simply narrrates a naked agreement of hire, and when we called the attention of Mr Lees to that fact his answer was that the hire-purchase agreement of his clients was truly a hire and not a sale. That it is a hire I have no doubt, but it is a hire and something more. It is a bilateral contract which gives the person the option to convert the hire into a sale. The great difference which seems to me to lie between that agreement and an ordinary naked hiring arrangement, which had no term in it to shew that it was a bargain of hire for a certain time—what would in the case of other subjects have been a lease—is that the latter could at any moment have been put an end to. If, for example, you hired a piano at will, you could at any moment put an end to that contract, whereas it is perfectly clear that, under an agreement such as I have read, the person who gets the piano, although it is still truly a hiring agreement, has his creditor under an obligation that if he does certain things the transaction will be turned into a sale, and if he chooses to pay the balance he becomes proprietor. That is truly in its essence a perfectly different agreement from the agreement which we should gather from reading the condescendence. So much for the pleadings of the pursuers. The pleadings of the defender are really not much better, because though he says that there was a sale, and a sale with a superadded condition that the price should not be paid at once in cash, but should be paid in instalments, when he goes on to say what the instalments are, he sets forth in the paragraph I have read what I do not say is impossible, but what is so unlikely that it is difficult to believe a piano merchant would ever enter into such a bargain. In cases which are begun in the inferior Courts—however much your Lordships may deplore the irregular pleadings—this Court has never been in use to deprive litigants of justice because their procurators have written their pleadings badly, and accordingly I do not think your Lordships should dispose of this case upon the pleadings either of the one side or the other. To dispose of it on the strict view of pleadings would result in turning the case out of Court altogether, finding neither party entitled to expenses, and pronouncing no operative order. But I do not think your Lordships can do that, and therefore I propose to examine what is the position of affairs as it would have been if the pleadings had been rectified.

There is one thing which is not a matter of pleading. Your Lordships cannot change the actual form of the action. The action is one for delivery and nothing else. We cannot turn it into a petitory action for money. Now, it is certain that the piano is in the place where it is, that is to say in the custody of the defender, in consequence of an arrangement come to between the pursuers and the defender. The defender did not get hold of the piano by any trick or subterfuge. He did not borrow it or steal it, or get it by some false pretence. The pursuers are coming here to invert the present possession. I make that observation because I think something might turn upon the onus. We have therefore to inquire and come to the best conclusion we can as to what was the bargain made between these two people. Now, the description of the bargain is given by three witnesses. It is given by the pursuers or the person who is the manager of the pursuing firm, and it is given by the defender and by the defender's wife. The crucial part of it is contained in a very few sentences, and here I find the justification for the other observation I made as to the way in which the witnesses have been examined. The one thing that is not asked either on the one side or the other is what the people said; and yet of course it is on what the people said that the whole question depends. But your Lordships must take the evidence and see what it comes to. Mr Grant, the pursuers' manager, says that there were present at the interview the defender, his wife, and himself, and then he goes on—turning his evidence into oratio directa—as follows:—“We sell pianos for cash, the full sum being paid in cash, and we sell on the hire-purchase system, and also let out on hire. I offered defender an instrument at the value of £26, payable 15s. per month.” Now, I agree that, if that evidence is taken fairly to Mr Grant, it means that he had in his mind to let out this instrument upon his own hire-purchase system. Your Lordships see that he details three methods in which he conducts his business:—Selling pianos for cash, the whole sum being paid down; hire purchase; and mere hire.

Now, the offer which he details is an offer of the piano for £26, payable 15s. per month. This cannot be the first of his methods of business, because it is not a sum in cash; and it cannot be the third, because it is not a mere hire, and therefore it is the middle kind according to his views.

At the same time Mr Grant—and I think it right, in fairness to Mr Grant, to say that I see no reason to suppose that he was anything but perfectly honest and upright in the evidence he has given—says in cross-examination,—“I cannot say that I made it clear to defender that it was a trial hire.” Now, the defender says that Grant called and stated he would “be pleased to let me have a piano. I left it with himself, because I was no judge. After discussing terms I agreed to purchase the piano in dispute at the price of £26. I told him I was unable in the meantime to pay the full value, and that he would require to take it by the instalment principle. He said that was all right.” The defender's wife's view is substantially the same. She says, “He, Grant, said he would get the piano by paying 15s. every month, and if it was paid in three years there would be a good discount. My husband and I were present on that occasion. Nothing was said about a hire contract.” Now, of course, if the matter really was as to what in their inmost hearts people thought, I think that, taking these people as honest people on both one side and the other, what they thought would lead me to the conclusion at which the Sheriff has arrived, namely, that Grant thought he was selling on the hire-purchase system, and the other person thought he was buying upon some instalment plan. But commercial contracts cannot be arranged by what people think in their inmost minds. Commercial contracts are made according to what people say, and accordingly I come to the conclusion that what was said here was, in the words of Mr Grant himself, that he offered the defender an instrument of the value of £26, payable 15s. per month, and that the defender accepted that offer, namely, to buy a piano at £26, but payable on the instalment principle at the rate of 15s. a month. In other words, I think the finding of the Sheriff-substitute which I read is a true finding in fact, because I think that was the meaning of Grant's words which the defender was entitled to accept according to their ordinary meaning. Grant could have made it clear if he had liked that his meaning was not the ordinary meaning of these words, but that their meaning was that he really wanted a hire-purchase agreement by producing the hire-purchase agreement on the spot. But he admits himself that he did nothing of the sort, and that as matter of fact the hire-purchase agreement was never put before the defender till long after, when certain of the instalments had been paid. Mr Lees made an attempt to shew that really the defender proved the pursuers' case by saying that he used the words that he would require to get it on the instalment principle, and Mr Lees argued that the instalment principle really meant the hire-purchase system. I do not think it is possible to arrive at that result. In the first place, if a man says “I will take a thing on the instalment principle,” I do not think that in ordinary language he does anything more than say “I will take it by paying up instalments.” When you have a word like instalment principle you can only give it a meaning by one of two methods. It has either the ordinary meaning of the English language, or you can shew by appropriate evidence that instalment principle means a certain sort of arrangement. I think you can only do that by shewing that a certain custom is so well known that it has become part of the general law merchant—and nobody suggests that that is the case here—or you can shew that a particular custom has been so generally accepted in a particular trade that it has become an implied part of every bargain made in ordinary course of that trade. But in order to do that you must have appropriate averments and appropriate proof. Mr Lees said that everybody in Glasgow knew about it. But I should say that the knowledge of it in Glasgow is of a fluctuating character, and there is no better illustration of that than by comparing the agreement in the case quoted to us, Murdoch & Company v. Greig, with the agreement in the present case. They both represent the laudable efforts of instrument makers to sell their instruments and at the same time get security for their debts. But, as your Lordships will remember, Lord President Inglis held in the case of Murdoch that it was a sale out and out, but a sale under suspensive conditions, whereas I agree with Mr Lees that the agreement sought to be brought forward in this case is an agreement which will square with the agreement in Helby's case, with the option of a sale if certain conditions were fulfilled. All that accentuates the fact that by merely using the words instalment principle you cannot bring in the very peculiar and very particular stipulations of the agreement I have read to your Lordships.

That is my view of the case, and the result is that in this case the petition falls to be dismissed. I do not mean, to say that in some ways it is a very satisfactory result, but I do not think the Court ever does much good by speculating upon the particular moral results of a judgment between two parties. The plain lesson to be derived I hope from the judgment is this, that when parties wish to bind persons to a contract with unusual stipulations they must bring that contract clearly to their knowledge, and that, on the other hand, if they use words which are capable of ordinary interpretation, they must expect the persons who hear them to take them up in their ordinary significance.

Lord Adam.—I concur.

Lord M'Laren.—I am of the same opinion. As regards the pursuer's right to have his piano returned, which was the object of the action in the Sheriff Court, three different views have been taken. There is the view of the Sheriff Court petition, viz., that the piano was given to the defender on a contract of hiring, because neither in the prayer nor in the condescendence is there any reference made to the hire-purchase system, or any indication given that this alleged contract of hiring might in certain circumstances or conditions be converted into a contract of sale. The second view is the view which the pursuer supports by his evidence, and the theory he puts forward—I do not say the legal effect of his evidence—but the theory he advances in his evidence, is that the piano was delivered on what he calls a hire-purchase contract, and in explanation of what is meant by that the form No. 11 of process is tabled. The general effect of that form (in cases where it is the basis of the contract) is that the piano is let on hire at so much a month with the condition that the contract is converted into one of purchase by paying up the agreed-on price less the amount of the instalments already paid. Then the third view of the pursuer's claim is that taken by the Sheriff, which is that no contract was ever entered into, because the parties were not agreed as to the terms upon which the piano was given over, and consequently, that the piano being the pursuer's property but in the custody of the defender, must be delivered. The defender again has only one contention, and perhaps it is an advantage to him that he is consistent throughout. He says that the piano was sold to him on credit, and that while he has not been able to pay the price, this does not give the vendor any right to have the instrument returned. That is an intelligible contention, and if consistent with the facts, is, I think, sound in law. With regard to the Sheriff's ground of decision I am unable to agree with it, and for this reason. The ordinary case, what we may call the typical case of parties being remitted to their original rights in consequence of no effective contract being entered into is the case of ambiguity. Buchanan v. Duke of Hamilton, a case in the House of Lords between landlord and tenant, is an instance of that kind. There were two offers. One party honestly believed that possession was given upon the faith of the two offers taken together, while the other party contended that it was only the second offer which was meant to be effective, and that the first had been impliedly withdrawn. The ambiguity did not arise upon the words of either instrument, but upon the time and manner in which the two offers were made. The much more common case is where the words of a contract are ambiguous, and it is impossible for the Court to say that each party is not honestly entitled to put his own meaning upon it. But I see no ambiguity in this case. There is here really nothing but a question of evidence. What are we to spell out of statements not entirely consistent regarding the terms upon which the piano was delivered? Now, the pursuer's statement is different from that put forward in the record. But I agree with your Lordship that the pursuer's statement as noted in the evidence is capable, in the absence of any specification of the words used, of being read with the defender's statement, which is that this was a sale on credit, the price being payable in instalments. It is true that the pursuer states that he has three modes of doing business, but there is nothing to shew that his customers had such a knowledge of his business that they knew all the different methods in which he was prepared to deal. There is no reason to suppose that in this case the defender knew anything more about the pursuer's conduct of business than what he was told at the time. The pursuer's statement is that he offered the piano on a month's trial, the instrument being of the value of £26 payable by monthly instalments of 15s. each. It may be that the pursuer had in his mind that this was to be a hire-purchase contract, but he does not say that he told the defender that there was to be an option. On the other hand, and here I agree with the Sheriff-substitute in thinking this an important point, he never put into the defender's hands one of the printed forms applicable to the hire-purchase system. Against that you have the statement of the defender and his wife that they said they were unable to pay the piano at once, and that it would have to be on the instalment principle. I agree with your Lordship that that means a sale upon credit. The result of the evidence, which is not quite consistent, but as it seems to me not absolutely contradictory, is that there is nothing proved but a contract of sale with deferred payment, and I think the result which I should arrive at upon the parole evidence is confirmed by the proceedings which the pursuer thought it necessary to take, because evidently he was not very sure of his rights, and he ineffectually attempted to get the defender to sign a hire-purchase form.

The result is that I think we must return to the judgment of the Sheriff-substitute, and while one feels that the result is not altogether an equitable one, because the defender meantime retains the piano while he does not seem to be in a position immediately to pay for it, yet that result I think is due entirely to the pursuer's loose mode of doing business in that he did not take care to confine his purchaser to the contract which he says he intended to make.

Lord Kinnear.—I have found this a question of very great difficulty on the facts, but once the facts are ascertained there is not much difficulty in applying the law to them. But as to the facts themselves I have had very great doubts, arising mainly from the circumstance pointed out by the Lord President in his opinion that the evidence before us is taken in such a way as to leave material points not only unexplained but unexpressed. The appropriate and perfectly simple method of proving a verbal contract by parole is to put the parties into the witness-box and make them depone to the words of agreement that passed between them when the bargain was made. Nothing can be simpler than to prove a contract of sale or contract of hiring by proving the verbal offer and acceptance in the terms which were used by the people making the bargain at the time. Unfortunately neither party has thought it necessary to prove either what was said by themselves or by the other party to the contract, and therefore we are left to gather as best we can the intention of the contracting parties from indirect expressions as to the conclusion at which each had arrived in his own mind, because we are not informed what they said to one another when they were making their bargain. But then I agree with your Lordship that after proof has been led and closed, and the Judges in the Sheriff Court have applied their minds to it, it would be out of the question to throw out the case either because of defects in the pleadings, which are unfortunately very observable in the present case, or because of defects in the conduct of the case. We must take it as it stands and make the best of it, and although my difficulty has been very considerable I have come to the same conclusion and for the same reason as the Lord President has expressed.