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Scottish Court of Session Decisions |
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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Ritchie v. Cowan & Kinghorn [1901] ScotLR 38_788 (09 July 1901) URL: http://www.bailii.org/scot/cases/ScotCS/1901/38SLR0788.html Cite as: [1901] ScotLR 38_788, [1901] SLR 38_788 |
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Page: 788↓
[Sheriff-Substitute at Glasgow.
A, a creditor, granted a receipt to B, his debtor, in which he acknowledged receipt of a certain sum, “being 10s. per £ in full of my claim against the said B, it being, however, understood that the said B will pay the balance of 10s. per £ whenever he is able to do so.”
In an action brought by B against A for payment of a sum which was due to him in respect of certain iron-broking transactions between them entered into subsequent to the date of the receipt—held that the terms of the receipt imported no legal obligation upon B to pay the balance of his debt, and that con-sequently A was not entitled to set off the sum due to B upon the transactions in question as against the unpaid balance of the debt discharged by the receipt.
This was an action at the instance of James Ritchie, iron and commission merchant, Glasgow, against William B. Cowan & Kinghorn, iron brokers, Glasgow, in which the pursuer craved decree for payment of £1229, 13s. 3d., being the balance which he alleged to be due to him in respect of certain transactions in buying and selling iron warrants which the defenders had carried out as his brokers.
The defenders admitted that they had had transactions with the pursuer, and did not dispute that upon the account sued on taken by itself the balance sued for was due, but they claimed to retain it against a sum which they alleged to be due to them by the pursuer.
With regard to this counter claim the defenders averred that in June 1899 the pursuer, who was then owing them the sum of £3306, 18s., finding himself unable to meet his obligations to the defenders and other brokers, entered into a private arrangement with them, whereby they agreed to accept a payment in cash and bills amounting in cumulo to 10s. per pound on their claims, with an obligation on the pursuer's part to pay the balance of 10s. per £ whenever he was able to do so. and that in consideration of that agreement they then refrained from taking proceedings against the pursuer. The obligation founded on was alleged to be contained in the following document:—“ 7th June 1899.—Received from Mr James Ritchie, 40 St Enoch Square, per Messrs Strang and Weir, writers, the sum of One thousand six hundred and fifty-three pounds nine shillings (£1229, 19s. 3d. in cash, and £423, 9s. in two bills for £211, 14s. 10d. and £211, 14s. l1d. payable on 31st July and 31st December respectively), being 10s. per £ in full of our claim against the said James Ritchie, amounting to £3306, 18s., it being, however, understood that the said James Ritchie will pay the balance of 10s. per £ whenever he is able to do so.—WM. B. Cowan and Kinghorn.”
The defenders further averred—“In March 1900, and after the cash and bills above mentioned had been paid, the pursuer induced the defenders to open again a new account on the agreement that any profits realised thereby were to be applied primo loco towards payment in full to defenders of the still unpaid balance of £1653, 8s. 11d. due to them,” and that as the result of the subsequent transactions between them in pursuance of the said agreement the pursuer was still owing them a sum of £423, 15s. 8d. The pursuer denied that any such agreement had been made as was alleged by the defenders.
The pursuer pleaded—“(1) The defenders being due and resting-owing to the pursuer in the sum sued for, decree should be granted therefor with interest and expenses as craved. (2) The defences are irrelevant,”
Page: 789↓
The defenders pleaded—“(1) The defenders not being due and resting-owing to the pursuer the sum sued for, or any sum, should be assoilzied with expenses.” Proof was allowed and led.
In addition to the parole evidence, to which it is unnecessary to refer, the pursuer produced two letters addressed by his law-agents to those of the defenders with reference to the terms of the receipt and discharge of 7th June 1899:—
“Glasgow, 2nd June 1889.—We have your letter of this date. We cannot accept the form of receipt proposed by you, nor will we do so. We must ask you to sign and send us the receipt which we submitted to you, and which is strictly in accordance with the arrangement we made under which we sent you cheque. What Mr Ritchie declines to do is to give you power to come upon him when you may see fit—the debt must be left one of honour on the part of Mr Ritchie.” …—Yours truly, “ Strang & Weir.”
“Glasgow, 5th June 1899.—“You must take it once for all that Mr Ritchie will not grant an obligation on which you can take action. Your draft letter is of this nature, and is not in the terms we arranged with you per telephone. We stated that we had no objections to Mr Ritchie granting you a letter that he will pay in full when he is in a position to do so, but that it must be an obligation of honour on his part. We are still willing to get such letter signed and delivered to you. We annex form.—Yours truly, … Strang & Weir.”
There was also produced a letter addressed by the pursuer to the defenders, which was in the following terms:—“Glasgow, 7th June 1899.—Dear Sirs.—In respect that you have accepted 10s. per £ in full of your claim against me for £3306, 17s. 11d., I beg to assure you that I will pay up the deficiency as soon as I am able to do so.—Yours truly, James Ritchie.” (Adopted as holograph.)
On 19th March 1901 the Sheriff-Substitute ( Balfour) pronounced an interlocutor, whereby he found, inter alia, with reference to the document of 7th June 1899, that the pursuer was only bound to pay the remainder of the composition if he was able to do so, and that it had not been proved that the pursuer was able to pay the composition; found further, that the new agreement alleged by the defenders had not been proved; and that the defenders had no right to retain the balance sued for, and decerned against them therefor.
The defenders appealed to the Court of Session, and argued—The document of 7th June 1899 constituted a legal obligation enforceable against the pursuer to the full amount of his estate— Fair v. Hunter, November 5, 1861, 24 D. 1; Christie's Trustees v. Muirhead, February 1, 1870, 8 Macph. 461; Broatch v. Dodds, June 11, 1892, 19 R. 855. The question therefore was, whether it was proved that the pursuer was unable to pay? and, on the evidence, it was not. (2) In any view, the defenders were entitled to set off the sums due to the pursuer in respect of the agreement alleged and proved by them.
Argued for the pursuer and respondent—The document in question was a discharge in full of the defender's claim in consideration of the payment of a composition of 10s. per pound. The words founded on by the defenders imported no legal obligation upon the pursuer, but only a debt of honour. Further, it was clear from the correspondence regarding the terms of the discharge that the defenders accepted it on that understanding. It was, therefore, irrelevant to inquire whether the pursuer was able to pay, and the defenders were not entitled to retain the balance due to the pursuer. (2) The agreement alleged by the defenders was not proved.
At advising—
With regard to the first question I have no doubt whatever. It is not necessary to go behind the document to which I have referred, which bears to be a receipt for 10s. in the pound in full payment of the defenders' claim against the pursuer. There can be no doubt that if the receipt had stopped there it would have afforded no ground for the defenders' claim, and therefore if that claim has any foundation it must be in the subsequent words—“it being understood that the said James Ritchie will pay the balance of 10s. per £ whenever he is able to do so.” I am unable to hold that these words constitute any legal obligation enforceable against the pursuer. I think they amount to no more than this—“If you will discharge me in full, if ever I am in such circumstances that I am able to pay you the remainder, I will pay it to you.” It was, in short, an honourable understanding, but it constituted no legal claim. If there were any ambiguity in the terms of the receipt—and I think there is none—the terms of the letters make the matter still clearer; for the pursuer's agents said repeatedly that these were the only terms that their client would agree to. [ His Lord-ship then dealt with the second question, and expressed the opinion that the alleged agreement had not been proved.]
On the whole matter, although I do not altogether agree with the grounds of the Sheriff's judgment, I think he has reached a sound conclusion, and that the pursuer is entitled to decree.
Page: 790↓
Looking to the terms of the receipt itself, it does not in my opinion import an enforceable obligation. It is merely the expression of an honourable intention on the part of the pursuer that when he is in a position to pay the remainder of his debt he will pay it. The defenders may appeal to the pursuer's sense of honour when he is able to pay, but they cannot get any decree to enforce such an appeal from a court of law.
[ His Lordship then dealt with the second question, and expressed the opinion that the alleged agreement had not been proved.]
The Court pronounced this interlocutor—“Recal the interlocutor of the Sheriff-Substitute dated 19th March 1900: Find that prior to March 1900 the pursuer, who is a commission agent, had sundry dealings in iron with the defenders, who are iron brokers, and ultimately the account closed with a debit balance against the pursuer of £3306, 18s: Find that at the same time the pursuer was owing two other iron brokers, Charles Campbell and W. A. Leith & Company,
Page: 791↓
Counsel for the Pursuer and Respondent Dundas, K.C.— D. Anderson. Agent— James Russell, S.S.C.
Counsel for the Defenders and Appellants— Jameson, K.C.— Guy. Agent— John Dobbie, S.S.C.