Scottish Court of Session Decisions

Lord Ormidale—Although this case is not altogether unattended with difficulty, I have, after full consideration, come to be of opinion that the judgment of the Sheriff-Substitute affirming that of the trustee in Barr's sequestration is well founded.

By minute of agreement between the appellant Kelman and the bankrupt Barr, dated 22d January 1877, Kelman sold to Barr the house property in question at the price of £2800. It was stipulated by the agreement that the purchaser's entry “to the property shall be at May 1877;” and the minute also bears that as Kelman “only holds at present a verbal offer of the property, it is hereby expressly declared that in the event of his not being able to purchase it from the present proprietor, or in the event of it being found that the title is defective, this missive shall be void and null.”

It appears to me that the contingencies thus referred to, and the purchaser's term of entry, must be held to have had reference to the same date, viz., May 1877. The entry of Barr to the property in question was, I have no doubt, fixed to be, in the words of the minute of agreement, “at May 1877, ” because the important term of Whitsunday—important as an entry and removal term from house property in Glasgow—occurs about the end of that month. And the declaration in the minute that the transaction shall be void and null in the event of its being found that the vendor had not got the property at all, or that the title to it was found to be defective, must also, I think, be referable to the same thing, for otherwise the period within which he would have to acquire the property and establish a good title to it, so as to give the purchaser Barr the requisite entry, would be left quite indefinite—a view of the matter which cannot, I think, be reasonably entertained, especially bearing in mind that the appellant Kelman had from the 22d of January to the end of May to make the necessary preparations, and that, as was admitted on the part of the appellant at the debate, the known object of Barr was to sell again at a profit; but of course it was impossible for him to sell without previously obtaining right to the property under a good title. It is indisputable, however, that the appellant's title was, when the time of settlement arrived at the end of May 1877, “defective, ” that is, imperfect and incomplete, for it consisted of a simple missive merely by a person of the name of Tait, which that individual refused to implement and resisted an action for its implement on various grounds till November 1877, five or six months after the time when the transaction between the appellant and the respondent ought to have been closed.

I must hold therefore, having regard as well to the express stipulations of the minute of agreement as to the object of the parties in entering into it, that time was of the essence of the contract in the sense that the appellant was bound to be ready to give entry to or possession of the property with a good title by the end of May 1877. Without such entry the purchaser Barr could neither sell again or do anything, however necessary or urgent it might be in the protection of or otherwise in regard to the property or the collection of rents due by the tenants in the occupation of it. And if this be so, there can be no doubt, I think, that the appellant, who as the vendor of the property was not then in a position to fulfil or implement his part of the contract, and he could not call upon the respondent, as in the place of Barr the purchaser, to implement the counterpart—that is to say, to pay the price subject to the condition that if he did not he would be liable in £720 of damages. On the contrary, it appears to me that the respondent, as trustee on Barr's sequestrated estate, was entitled not only to decline, as he did, to go on with the transaction, but also that he was entitled to take up that position without subjecting the sequestrated estate in damages, seeing that neither he nor Barr committed any breach of contract. The breach was on the part of the appellant, who when he called on the respondent to adopt the contract neither offered nor had it in his power to offer implement of it. He did not, and could not, in return for the price, offer entry or possession of the property with a good title. And that the word “entry” as used in the minute of agreement must be held to mean legal possession under a good title is clear from the case of Tilley v. Thomas, November 4, 5, 11, 1867, L.R. 3 Chan. App. 61, where the observations of the Lords Justice Cairns and Rolt are valuable, not only as to that, but also as to other features of the present case.

In the language therefore of Mr Erskine (Institutes, b. iii. t. 3, s. 86)—“No party in a mutual contract, where the obligations on the parties are the causes of one another, can demand performance from the other if he himself either cannot or will not perform the counterpart, for the mutual obligations are considered as conditional.” And the case of Hunter v. Carsewell, January 17, 1822, 1 S. (2d ed.) 235, founded on by the Sheriff-Substitute, is at once a good illustration of this rule, and an apt precedent for the present case.

For these reasons, I am of opinion that the judgment of the Sheriff-Substitute appealed against is right, and that the appeal ought accordingly to be dismissed.

Lord Gifford—I concur in the result arrived at by Lord Ormidale, and I merely wish to add that I rest my opinion upon the special circumstances of this case, and do not want to interfere with the ordinary rule that an incompleteness in a bargain does not necessarily void it. In a mere question of completing a title when the party selling has the substantial right to the subject a delay of a few days will not void the bargain.

With this precaution, I agree with your Lordship that the Sheriff-Substitute is right.

Lord Justice-Clerk—I concur in the result arrived at, and that very clearly. I also agree with Lord Gifford that when a sale is made with entry at a certain date, the mere fact that the title is not completed at that date will not necessarily render the sale void.

But this is a totally different case. Here the purchaser bought for the purpose of speculating—and I may remark that there are some things in the case which do not make the action a favourable one—and then found that his own title could not be obtained. I think in these circumstances the second purchaser is clearly not bound.