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Scottish Court of Session Decisions


You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Fraser v Wright [1838] CS 16_1049b (26 May 1838)
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Cite as: [1838] CS 16_1049b

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SCOTTISH_Court_of_Session_Shaw

Page: 1049

016SS1049b

Fraser

v.

Wright

No. 186

Court of Session

2d Division

May. 26 1838

Jury Cause. R, Lord Justice-Clerk, Lord Glenlee, Lord Medwyn, Lord Meadowbank.

James John Fraser, W.S.,     Pursuer.— Counsel:
D. F. Hope— Robertson.
Thomas Guthrie Wright, W.S. and Others     Defenders.— Counsel:
Sol.-Gen. Rutherfurd— Anderson— Russell.

Subject_Arbitration.— Headnote:

After the acceptance of a submission, but before any important step had been taken in it, the parties bound themselves by a minute, on the requisition of the arbiters, to make payment of the joint expense of the submission, including a remuneration to the arbiters, who were professional accountants, and refused to give out their notes till this was done, not only for their professional services but for the time and trouble bestowed by them in the matters falling under the submission, a third party being to fix the amount thereof in case of difference of opinion; thereafter the submission was proceeded with and a decreet-arbitral was pronounced, but nothing followed upon the above obligation;—Held that the stipulation in question did not imply corruption on the part of the arbiters, so as to vitiate the submission.


Facts:

A Variety of processes, involving a complicated accounting, being in dependence between the pursuer Fraser and Colonel Gordon of Cluny, for whom Fraser had been agent, they, in November, 1831, agreed to enter into a judicial reference of all actions depending between them to Messrs Guthrie Wright and Patrick Cockburn, accountants. In pursuance of this agreement they executed a submission to these gentlemen of all questions arising in the processes so agreed to be referred, and the submission was accepted on the 1st December. The several processes were, of subsequent dates, remitted by the respective Lords Ordinary to Messrs Wright and Cockburn. No mention was made in the submission of remuneration to the arbiters. At some of the earlier meetings (24th March, 3d and 5th April, 1832) communings took place as to the parties becoming bound for such remuneration, and a minute to that effect was drafted by Fraser's clerk, with consent of both parties, which was, however, allowed to lie over without being signed.

On 28th February, 1833, the submission having been in the interim proceeded with, and notes having been issued on several points of the pleadings, the following communication was addressed on the part of the arbiters to Fraser:—“I send you a minute by the parties in the submission and judicial references between Colonel Gordon and you, which the arbiters and referees considered necessary to be signed and given in before they issue their notes in the accounting, and as these notes are now ready to be issued, I will thank you to return the minute signed to-morrow forenoon. Mr Bennett has taken a copy of the minute, and he says that Colonel Gordon is ready to sign it.”

The following minute was on the same day signed by the parties:—“In the submission, &c., considering that the arbiters and judicial referees have already had a great deal of trouble and spent much of their time in considering the claims and pleadings of the parties and making notes thereon, and that they may still have a good deal of trouble before pronouncing their decreet-arbitral or award, and that it is reasonable they should be fully remunerated for their services and indemnified for the time bestowed by them on the business, the parties therefore without prejudice to the legal claims of the arbiters and judicial referees, and notwithstanding of any law or practice to the contrary, hereby agree and bind and oblige themselves, and their heirs, executors, and successors, jointly and severally, to make payment to the clerk to the submission of the joint expenses of the submission and judicial references and of the decreet or decreets-arbitral, or award interim or filial which may follow thereon, including a reasonable and proper remuneration to the arbiters, and judicial referees, not only for their professional services as accountants, but for the time and trouble already bestowed or to be yet bestowed by them in the whole matters falling under the submission and judicial references, and also a fee to any oversman who may be appointed in case of the arbiters and judicial referees differing in opinion, and fees to counsel who may be consulted by the arbiters and judicial referees in case of difficulty in terms of the submission, reserving to the parties severally such claim of relief as may be found due from the one party to the other for the whole or a part of the said expenses, as the same may be determined in the course of the submission or judicial references, or otherwise and in case any difference of opinion or difficulty should occur in regard to the extent of the remuneration to the arbiters and judicial referees or oversmen, it is hereby agreed that the same shall be referred to the Solicitor-General for the time being, who shall have power to fix and modify the same. And the parties hereby consent and agree that the arbiters and judicial referees or oversman shall have power in any decreet-arbitral or award interim or final to be pronounced in the submission or judicial references, to decern against them jointly and severally to make payment to the clerk to the submission of the joint expenses of submission and judicial references, to be fixed and ascertained as aforesaid, reserving relief, to be determined as aforesaid.”

In February, 1834, the arbiters, still proceeding with the submission, and the notes of opinion which had been agreed on by them being, on the whole, favourable to Colonel Gordon, Fraser raised action against Colonel Gordon, Wright, and Cockburn, stating the circumstances as to the submission having been entered into, and setting forth the obligation of February, 1833, as to remuneration to the arbiters, which he alleged had been improperly exacted by them from the parties, and was a corrupt and unlawful stipulation on their (the arbiters') part; and concluding to have it found and declared that the defenders, Wright and Cockburn, had, after acceptance of the submission, stipulated of the parties, and caused them to become bound in terms of the minute above mentioned, and had insisted on such obligation being granted and subscribed by the parties as an indispensable condition of communicating the notes which they had prepared; and to have it farther found and declared that the said minute was a corrupt and unlawful obligation, and that, in exacting it from the parties, the arbiters acted corruptly and unlawfully, and contrary to the duties and obligations inherent in the office of arbiters and judicial referees, as undertaken by them when they accepted the said submission and reference; and, moreover, that, by their misconduct in this matter, they had disqualified themselves from holding the office of arbiters and referees in exercising the functions thereof, whereby the submission and reference had fallen and become inoperative; and, further, that Wright and Cockburn should be interdicted from any longer assuming or exercising these functions. 1

_________________ Footnote _________________

1 The proceedings in the submission went on, notwithstanding of this action, and of a bill of suspension presented by Fraser, which was refused July 5, 1834 (ante, XII. 887). A final decreet-arbitral was pronounced in March, 1836.

In defence, it was pleaded by Colonel Gordon—the defenders, Wright and Cockburn, adopting his defences:—

1. The action is incompetent, in respect that the grounds of action libelled would not, in any case, be sufficient to do more than reduce a decreet-arbitral, of which it could be averred that it had been pronounced from corruption; but it is incompetent to assume and conclude by anticipation, that a corrupt award will be given forth by the arbiters. The remedy of the pursuer lies in reducing any decreet-arbitral which may be pronounced, and for the reduction of which he may be able to libel relevant grounds. Even assuming the obligation libelled on to be questionable, it has never been acted on; there is no certainty that it ever will be acted on, and it is only when it shall have been acted on, that a relevant question can be raised.

2. The obligation libelled on implied no corruption or illegality on the part of the arbiters and referees, in respect that it is not illegal in arbiters to stipulate for remuneration, and that, from the very nature of the present case, it was and must have been the understanding of all parties, that the arbiters should receive a reasonable remuneration for their time and trouble.

3. The obligation libelled on was in no respect illegal, as it did not confer on the arbiters and referees any power to fix the amount of their own remuneration, but only to decern for it, when agreed on by the parties themselves, or when fixed by an impartial third party.

4. Even at common law, a judicial referee is entitled to remuneration, and it is not illegal to give him power to decern for it when its amount shall have been fixed by the parties, or by an umpire.

5. The pursuer is barred, personali exceptione, from quarrelling the obligation in question, in respect that he originally proposed such an obligation, voluntarily signed it, and after he had signed it, carried on the proceedings under the submission and references to which it had relation.

After various procedure, the following issues were sent to be tried:—“Whether, in the year 1831, certain actions at law were in dependence between the pursuer and the defender, Colonel Gordon? And whether, on the day of November of that year, they agreed by a minute, dated 18th and 19th November, 1831, to refer the same, and all other matters then in dispute between them, to the decision of the defenders, Thomas Guthrie Wright and Patrick Cockburn, as arbiters and referees, and did thereafter enter into the submission of which No. 43 of process is a copy?

“Whether, on or about the first day of December, 1831, the said arbiters accepted of the said submission, and proceeded to investigate the mutual claims of the parties? And whether, on or about the 28th day of February, 1833, the said arbiters, or either of them, contrary to their or his duty as arbiters or arbiter, did wrongfully and corruptly exact or require and obtain from the parties to the said submission, or either of them, a writing or obligation, dated 28th February, 1833, of which a copy is contained on pages 3 and 4 of the summons, No. 75 of process?”

These issues having come to be tried, June 19, 1837, the jury, after the examination of one witness, by agreement of the parties, returned a special verdict, embodying, inter alia, the circumstances above stated, narrating the submission, &c., and also the final decreet-arbitral, pronounced in 1836, and concluding in these terms:—“And the jury farther say, that if the Court of Session shall be of opinion that the said arbiters, or either of them, did, in point of law, contrary to their or his duty as arbiters or arbiter, wrongfully and corruptfully exact or require and obtain, from the parties to the said submission, the said writing or obligation, dated 28th February, 1833, then in respect of the matters proven before them, they find for the pursuer. But if the Court shall be of opinion that the said defenders did not, in point of law, contrary to their duty as arbiters or arbiter, wrongfully and corruptly exact or require and obtain, from the parties to the said submission, the said writing or obligation, then in respect of the said matters proven before them, they find for the defenders.”

Upon this verdict it was argued, inter alia, for the pursuer:—The purity of arbitrations is very strictly guarded by the law, and, with reference to the cases decided by the Court, the obligation of February, 1833, was illegal and corrupt. 1 It has been held that an arbiter is not entitled de jure to a honorarium, even in matters referred to him entirely on account of his professional skill, and that he cannot decern therefor; 2 but here, by the minute in question, a reward is exacted for the arbiters' time and trouble as referees. The present is not a question as to motives or personal corruption, but is one of law upon the facts as appearing ex facie of the special verdict. 3 The obligation was wrongfully exacted by the arbiters, who refused to communicate their notes to the parties, as in the discharge of their duty they ought to have done, until the minute was signed; and such compulsitor being equally fatal to the proceeding, as withholding the decreet-arbitral would have been. And the stipulation contained in the minute, which was completed after acceptance of the submission, inferred in itself legal corruption against the arbiters who obtained it; the difference being clear between a stipulation before and after acceptance of the submission, as in the one case the parties are not in the power of the arbiters, while in the other they are.

_________________ Footnote _________________

1 Blair v. Gibb, Jan. 12, 1738, Elchies v. ArbitrationMackenzie v. Clark, Dec. 19, 1828 (ante, VII. 215)—Elliot, Dec. 15, 1789 (M. 668)—Lord Mon-creiff's note in suspension between same parties (ante, XII. 887).

2 Napier v. Lord Elphinstone, Nov. 20, 1746 (M. 5729)— Montgomery v. Strang, June 13, 1798 (M. 631)— Jack v. Cramond, March 6, 1777 ( M. v. Arbitration, App. No. 5)— Macalluw v. Laurie, June 26, 1810 (F.C.), Lord President's Opinion)—Kennedy, Jan. 20, 1819 (F.C.)— Peterson v. Earl of Breadalbane, Feb. 19, 1819, Note to Kennedy, supra.

3 Donaldson v. Manchester Insurance Company, March 2, 1836 (ante, XIV. 601).

For the defenders it was argued:—

The minute in question was not in the circumstances wrongfully exacted, nor was the proceeding such as to imply corruption; particularly as the arbiters were professional accountants, and employed as such, a submission to them implying remuneration. 4

_________________ Footnote _________________

4 Macallum, supra.

Besides, that in terms of the minute, the arbiters were not to fix their remuneration, but an impartial third party. It is admitted that remuneration may be legally stipulated for before acceptance of the submission, but, on principle, there is nothing in the time at which the obligation in the present case was completed, to make it illegal or corrupt, no step of importance having been taken in the submission, and nothing having followed upon the stipulation. In the cases of Jack v. Cramond, 1 Montgomery v. Strang, 2 and Stewart v. Ross, 3 the decreets-arbitral were reduced only in so far as they decerned for a fee to the arbiters, showing that there was held to be no such corruption as to vitiate the submission, or cause the whole proceeding to fall. Supposing the parties had come voluntarily forward and agreed to bind themselves for remuneration to the arbiters, it would not have vitiated the proceeding; but there is no difference in effect between that and what was here done. Such a stipulation as this has no tendency to interfere with the purity of arbiters, but rather to reserve the possible danger of partiality, and put them on an independent footing. Even where there has been no stipulation as to recompense in a reference or submission, if one of the parties have paid the arbiter's fee, he has a claim upon the other for the share advanced for him, from the moral obligation which exists to remunerate arbiters for trouble. 4

_________________ Footnote _________________

1 Supra.

2 Supra.

3 Feb. 21, 1822 (ante, I. 335; or now ed. 313).

4 Jolly v. Young, Dec. 12, 1834 (ante, XIII. 188)— Edinburgh Oil Gas Company v. Baillie, Feb. 6, 1835 (ante, XIII. 414)— Drummaond v. Leslie, March 11, 1835 (ante, XIII. 684).

Lord Justice-Clerk.—This case has been fully and ably argued on both sides, and the Court have taken time to deliberate upon it, considering it to be a case of importance. In regard to the mode in which this special verdict is to be dealt with, I take it to be clear that we cannot travel beyond it, and that we must take the facts as they are found by the Jury, and give effect to them, without attempting to deduce inferences that are not drawn by the Jury, But still we must, in deciding the question of law which is left to the Court in the close of the verdict, take the whole facts that are found on the face of the verdict into consideration. This is not a special case, such as that of Donaldson and Pinkerton, but a special verdict which finds certain facts by which the Court must be guided in their application of the law. If the facts are not ascertained with sufficient precision, it is competent for the Court to direct the Jury to try the case again, in order to remove all ground of doubt. Keeping, then, in view, as we must, the whole facts found by the Jury, we have only to take into consideration the concluding words of the verdict.—“And the Jury further say, that if the Court of Session shall be of opinion that the said arbiters, or either of them, did, in point of law, contrary to their or his duty as arbiters or arbiter, wrongfully and corruptly exact or require, and obtain from the parties to the said submission the said writing or obligation, dated 28th February, 1833, then, in respect of the matters proven before them, they find for the pursuers;” and then the reverse is said as to the defenders Before the pursuer can have the full benefit of the finding in his favour, the Court must be of the entire opinion in point of law that is here put; but it is also possible, that, while the Court is of opinion in point of law, that it was to a certain extent contrary to the duty of arbiters, and wrongful, to exact or require and obtain the obligation in question from the parties, it may not follow that what was done was done corruptly, and there is nothing to preclude our so finding. Now keeping in view every thing that is found on the face of this verdict, as to the depending actions, the judicial references to Messrs Cockburn and Wright, the subsequent submission of the parties to them, referring to and embodying in it the agreement as to the judicial references, and also submitting all actions and claims existing between the parties, and the whole proceedings that are subsequently detailed, I cannot arrive at the conclusion that the writing or obligation that was ultimately demanded by the arbiters and granted by the parties on the 28th February, 1833, was corruptly demanded and obtained, either in a moral or a legal sense of the term corruptly. Although the pursuer distinctly stated by his counuel that he disclaimed all idea of imputing moral or personal corruption to the defender, I can't say that I understand how he can still insist that their conduct was legally corrupt. The terms of the Regulations 1

_________________ Footnote _________________

1 Regulations, anno 1695.

in warranting the reduction of a decreet-arbitral only on the grounds of corruption, bribery, or falsehood, must be viewed as resting upon the plain acceptation of the terms used; and where the Court has found that bribery and corruption were relevantly proved, as in the case of Blair and Gibb, it plainly appears, when the nature of that case is investigated, however succinct the report in Elchies may be, that the Court was satisfied that the conduct of the arbiters was tainted with actual corruption. I cannot hold that case of Blair as affording any precedent for the decision of the present case, as we have clear ground for holding that the arbiters in it had manifestly lent themselves to one of the parties, and had actually previously benefited in regard to debts, as well as by withholding the decree till fees were paid. But when the whole facts here are taken into view, although there had, in December, 1831, been an acceptance of the submission (and which I must hold absorbed the judicial references which are expressly narrated in it), before the matter of remuneration was mentioned, yet nothing material had in fact been done by the arbiters before Mr Cockburn brought the remuneration for the professional trouble of the arbiters forward. That this certainly was stated at one of the earlier meetings, viz., on the 24th March, 3d of April, or 5th of April, 1832, as established by the verdict, was assented to by the parties; and as a draft-minute was prepared by Mr Fraser's agent, and had all along been understood on his part as agreed to, and the completion only neglected by not being regularly signed till the renewed correspondence and transmission of the minute in question by Mr Cockburn, which the parties signed on 28th February, 1833, it seems altogether impossible to hold that it was signed or obtained corruptly, in any sense of the term. Had the fact been established, that before signing the acceptance of the submission, the arbiters, in reference to the magnitude and involved nature of the accounts and transactions submitted to them, professionally insisted on obtaining the obligation in question, there seems little ground for doubting, that, notwithstanding the clear rule of law that arbiters cannot in an ordinary case either claim or sue for their own remuneration, no objection could in law have lain to the proceeding. That is at least the decided opinion of President Blair, even though he dissented from the judgment in the case of M'Callum. He there said, while holding that the arbiters could not prosecute for their fees, “The general rule being so distinct and well-established, it was in the power of parties to avoid its operation, by expressly stipulating the amount of their recompense before accepting of the submission; this expedient had not been adopted, and the case was left to the general rule.” But though Mr Cockburn did not bring forward the subject of remuneration till after the formal acceptance of the submission, yet its having clearly been before any material step of procedure took place, its having been fully relied on as acceded to, and the fact of its having been so understood by the parties, though the formal minute of agreement had been delayed, must be sufficient to demonstrate that the arbiters, in requiring it at last to be completed before issuing their notes, were not actuated by corrupt motives, and therefore it is that I cannot bring myself to affirm that part of the proposition in point of law which is put as the preliminary of the finding of the Jury for the pursuer, I adopt the words of Lord Justice-Clerk Miller, in the case of Jack v. Cramond, 4th March, 1777, as given by Lord Hailes, p. 753.—“I cannot say this was a corrupt bargain, when it does not appear that the arbiters meant to take any undue advantage.” In that case the Court altered, and returned to Lord Hailes' interlocutor (which had allowed the award to subsist in other respects), with this addition, “That the decerniture was illegal, and that it did not appear that the arbiters had acted corruptly or from bad motives.”

Lord Glenlee.—I was disposed to treat this case as if the decreet-arbitral, looking to what was produced before the Jury, was under reduction here. If we were in a reduction of a decreet actually pronounced, I can have no doubt but that we would be bound by a variety of decisions to sustain the defences, the arbiters having decerned for nothing in the way of remuneration to themselves. There is the stronger case of Dunlop, where an arbiter had decerned for an account to his clerk, including a fee to himself; the Court set aside the decreet as ultra vires, in so far as he had decerned in his own favour, but sustained it quoad ultra, as between the parties. I was rather puzzled with the difference which was said to exist as to stipulating before and after acceptance of the submission; and there may be a serious difference, if the submission had proceeded a considerable way, as leading to unfair corruption. Here the question is, was there corruption or not, when it is clear that it was in contemplation to stipulate early in the submission? It must depend on circumstances how far the making such a stipulation after acceptance of the submission is corruption or not. Arbiters engaged in a submission, and finding it difficult, may let it lapse; and I cannot say that the mere circumstance of the stipulation occurring after acceptance, can infer corruption. I am strengthened in this view by seeing what occurred in the case of Baillie v. Pollock, 1 May 19, 1829, and especially what fell from the Lord President, and was concurred in by the majority of the Court, As the arbiters, therefore, have done nothing in consequence of this stipulation, I rather think we are not entitled to deal with them as corrupt. I do not go so far as to say that Fraser was barred from this action, personali exceptione in consequence of his not having objected to the stipulation. Altogether, I am persuaded that there are sufficient grounds for our dismissing the process, in respect the arbiters have not proceeded in any way to enforce the stipulation in question.

_________________ Footnote _________________

1 Ante, VII., 619.

Lord Medwyn.—I understand the duty of the Court to be, in disposing of this special verdict, to say what, in reference to the issue, is the conclusion in law from the facts stated in the verdict as found by the Jury; and I also understand that the Court are not entitled to draw any inference in point of fact which the Jury have not drawn. At the same time I should think that the Court are entitled, from the absence of what has not been found by the Jury, to conclude the non-existence of any fact, although the Jury have not expressly found so. This may in one sense be an inference in fact, but I think it quite a legitimate exercise of the judicial discretion of the Court under a special verdict. It is stated, that at one of the earlier meetings with the parties, Mr Cockburn mentioned that he had looked into the proceedings in those references, and saw from the variety of accounts that they would be attended with a great deal of labour; and it is also said that the arbiters then proceeded with the business of the references and submission. Now I think myself entitled to hold, as the necessary conclusion from this, that before the meeting in question Mr Cockburn had looked into the proceedings, but that he had done nothing more than look into their nature and extent, and that the arbiters did not proceed to the business of the submissions till after the conversation. This is not inference from facts, but the import of the facts stated, and their necessary result. Now, with this explanation, I am to enquire, if in respect of the matters held as proven in this verdict, the arbiters did, in point of law, contrary to their duty, wrongfully and corruptly exact or require and obtain the obligation of 23d February, 1833. The law as to arbitration I hold to be, that while an arbiter, whether professional or not (for I can make no distinction, the office being the same, whatever be the subject of the reference, which only influences the choice as to the arbiters) cannot directly pursue for any remuneration for himself, yet he may on his acceptance of the reference stipulate for it. This is not corrupt. He may refuse to act without an agreement to that effect. This was so laid down by President Blair in the case of M'Callum. Again, though remuneration be not stipulated, if one of the parties acknowledges his liability therefor, which is a moral, though not a legal obligation, and pays what is reasonable, he can recover the half from the other party. Now the facts found are, that the submission was accepted 1st December, 1831; that the first meeting with the parties was on 24th March, 1832; that a meeting took place on 3d April, and another on 5th April; that the claim for Fraser was given in on 18th April, and that for Gordon on 20th April, each accompanied with productions. At one of the meetings a conversation took place as to the remuneration; on 19th April, 1832, Mr Cockburn mentions this to the agents of Gordon, whereupon it was assented to, and a minute was agreed to be put in on 26th April, the agents mentioning that they have their clients' authority to subscribe such a minute; on 23d April Mr Cockburn writes to Mr Jamieson (acting for Fraser) that the proposed minute has not been lodged in the submission; and Mr Jamieson, the same day, in sending a copy thereof to the agent of Colonel Gordon, mentions that Mr Fraser is quite ready to sign it. The above conversation was prior to these last letters. Now the merits of the case were not entered upon at this time, though the submission had been formally accepted, and an order for claims pronounced and a diligence granted. It might be thought that the parties were not legally bound, because no formal minute was given in till February, 1833. But even this would be doubtful; for the understanding of the parties is plain, and such an agreement might be proved by oath, more especially considering the rei interventus by the proceedings in the submission on the faith of it. I hold the minute of February, 1833, not as a stipulation for, or constitution of, an obligation for remuneration then first assented to, but merely as the evidence of the prior undertaking, so as not to leave it to the risk of having to be ascertained by a reference to oath; and if so, is it invalid because it was made after the submission was accepted of, though before any material proceedings took place in the submission, or indeed more than the initiatory steps; and before even the claims and productions founded on were lodged? I cannot proceed on so narrow a ground as this. I cannot hold that it was contrary to the duty of the arbiters, wrongful and corrupt, that the obligation was granted at this period, and not before the formal acceptance of the submission. Had the letter of the clerk to the submission in February, 1833, been the first communication on the subject, it would then have been more akin to the case of Blair and Gibb, mentioned by Elchies. Still, a mere stipulation for remuneration at the sight of the Solicitor-General presents very different features from those in that case. Even if the Court were to find that the arbiters acted wrongfully and corruptly in point of law, for no moral corruption is even insinuated, it will be for the Court to say to what effect it taints the awards, which contain nothing in implement of it; but that is not the point before us.

Lord Meadowbank was absent.

The Court ordered the verdict to be entered “for the defenders.” 1

_________________ Footnote _________________

1 The defender, Mr Cockburn, having died in the course of the proceedings, John Cockburn Christie, curator bonis for his widow and representative, had been sisted in his stead.

Solicitors: J. J, Fraser, W.S.— J. Nairne, W.S.— J. Bennett, W.S.—Agents.

SS 16 SS 1049 1838


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