Scottish Court of Session Decisions

Donaldson Brothers, steamship agents in Glasgow, having a contract with an American firm to carry for them to Baltimore by their steamship “Concordia,” which was announced to sail from Glasgow about 15th October 1881, a quantity of iron lying at Barrow, entered into a contract of affreightment, by charter-party dated 10th October 1881, with James Little & Co., steamship owners in Glasgow, by which it was agreed that Little & Co. should furnish to them certain steamships, thereafter to be named, which should with all convenient speed proceed to Barrow-in-Furness, and there load 1014 tons pigiron and blooms, and being so loaded should therewith proceed to Queen's Dock, Glasgow, and deliver the same to Donaldson & Co., on being paid freight at the rate of 4s. 3d. per ton for pigiron, and 4s. 6d. per ton for blooms—the first steamer to be alongside in the Queen's Dock on Wednesday 12th October, or Thursday 13th October, and the last not later than Friday 14th October, “unforeseen circumstances excepted.” Not having at the time sufficient steamers of their own at command to carry the amount of cargo specified, Little & Co., by charter-party dated 10th October, entered into a contract of affreightment with James Hay & Sons, steamship owners in Glasgow, that the latter should charter to them a steamer or steamers, which should proceed with all convenient speed to Barrow, and there load 600/700 tons of said iron and blooms, and being so loaded should proceed to Queen's Dock, Glasgow, and there deliver the same. By this charter-party it was stipulated that the steamers were to be loaded at Barrow not later than Thursday 13th October, “unforeseen circumstances excepted.”

Little & Co. furnished two steamers of their own for the execution of the contract—the “Ariadne” and the “Larry Bane.” Hay & Sons furnished to Little & Co. two steamers of theirs, the “Jasper” and the “Palermo.” The latter steamer was substituted for the “Pearl,” which they had at first intimated their intention of sending. The “Ariadne” and “Jasper” duly arrived at Queen's Dock from Barrow, and discharged their cargo on 14th October. The “Concordia” on 15th October, the day of sailing, left the Queen's Dock, and proceeded to the Tail of the Bank, where she was detained by her owners, Donaldson Brothers, waiting the arrival of the rest of her cargo from Barrow, the fact of her detention having been intimated to Little & Co. on the 17th. The “Larry Bane” had left Glasgow for Barrow to take in cargo on 10th October; she met with very stormy weather between Glasgow and Barrow, and did not reach the latter port till 16th October. She did not return to the Clyde till the 19th. She then, by Donaldson Brothers' instructions, under reservation of all claims, discharged her cargo into the “Concordia” at the Tail of the Bank instead of at Queen's Dock. The “Palermo” left Glasgow on the 11th October, and proceeded first with a cargo of coals (which she had been previously under a contract to carry) to Dublin, and thereafter to Barrow, which she reached on the 17th, leaving for Glasgow with a cargo of pig-iron on the 18th, where she at length arrived only on the 26th. The “Concordia” had sailed for Baltimore on the 22d with the amount of cargo which had been carried by the “Ariadne,” the “Jasper,” and the “Larry Bane.” On the same day Donaldson Brothers had made a claim on Little & Co. for six days' demurrage of the “Concordia,” at £50 a-day. On the 25th they instructed Little & Co. to order the “Palermo” to Liverpool with her cargo, they paying freight as to Queen's Dock, under reservation of all questions. Little & Co. intimated this claim and instructions to Hay & Sons, who refused to order the “Palermo” to Liverpool except on withdrawal of all claims of demurrage and all other claims on account of delay, and on receipt of direct instructions and a fresh charter from Little & Co. The parties failed to come to an arrangement in this matter, and the “Palermo” accordingly proceeded to Queen's Dock as per charter-party. It appeared from the evidence of the “Palermo's” officers, and from her log-book, that owing to stormy weather she had not been able to reach Dublin till the evening of the 14th, having been storm-stayed for a day and a-half in Lamlash Bay, leaving there on the 16th and reaching Barrow the same day. She left Barrow on the 18th, the same day as the “Larry Bane” and had proceeded on her voyage to Glasgow nearly as far north as the Mull of Galloway, when on the 19th she was driven back by a violent storm to the Isle of Man, and took refuge in Port Erin there, whence, owing to the continuance of the storm, she did not sail till the 25th, arriving at Queen's Dock early in the morning of 26th. It appeared from the evidence of several witnesses that an average passage from Barrow to Glasgow would be from twenty to twenty-four hours. That of the “Larry Bane” on this occasion was less than twenty-four hours. It appeared that she took a course nearer inshore than the “Palermo.” The witnesses who had been on board the “Larry Bane” spoke to having encountered a “strong breeze” only on the way from Barrow to Glasgow. The log of the “Palermo” described the weather from the 18th to the 26th as having been extremely stormy.

Little & Co. raised an action against Donaldson Brothers in the Sheriff Court at Glasgow, concluding for £194, 7s. 6d. freight due under the contract. Donaldson Brothers averred in defence that they had suffered damage from breach of contract by Little & Co, by the delay in the arrival of the vessels at Glasgow, to the extent of £847, 9s. 3d., and pleaded that they were entitled to set off this sum against the freight sued for. They also raised a counter action against Little & Sons for damages for breach of contract, concluding for £625, 19s. 8d., being the said sum of £847, 9s. 3d., less amount of freight due under the charter. Little & Co. thereupon raised an action of relief against Hay & Sons, pleading that the loss alleged to have been sustained by Donaldson Brothers was caused by their fault. Hay & Sons pleaded that they had contracted only with Little & Co., that Donaldson's alleged damage being as regarded them consequential only, they could not be liable therefor, and that they had fulfilled their contract with Little & Co.

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The Sheriff-Substitute ( Lees) conjoined the three actions. After proof he found, in conformity with the above-stated facts, and further, “that the ‘Palermo,’ one of the two steamers sent by Hay & Sons, … was not despatched at a time which allowed any reasonable prospect of its complying with the terms of the contract: Finds that it did not do so, and thereby caused Donaldson Brothers to suffer loss to the extent of £343, 6s. 2d: Finds that Donaldson Brothers are liable to Little & Co. in respect of freight to the extent of £194, 7s. 9d: Finds in law (1) that Little & Co. having by their breach of contract caused loss to Donaldson Brothers to the extent aforesaid, are bound to compensate them to that extent, under deduction of the sum payable for freight; and (2) that the breach of contract by Little & Co. having been caused by the fault of Hay & Sons, the latter are liable in relief to them of the damages and expenses, so far as judicially incurred, payable by Little & Company to Donaldson Brothers: Repels the pleas of parties so far as inconsistent herewith: Decerns against Little & Company for payment to Donaldson Brothers of the sum of £148, 18s. 5d., with the legal interest thereon from the date hereof till payment: Finds Little & Company liable to them in their expenses in both actions: Finds James Hay & Sons liable to James Little & Company in payment of the sum of £343, 6s. 2d., and relative interest, and of their expenses,” &c.

“ Note.—I think it is plain that there was here a breach of contract. Four vessels were named, and the last was to be alongside the Queen's Dock not later than Friday 14th October, ‘unforeseen circumstances excepted,’ but it was not till Monday the 17th, or Tuesday the 18th, that any distinct notice, or perhaps any notice at all, was given that the ‘Palermo’ had been substituted for the ‘Pearl.’ It is not, however, necessary to lay much stress on this, and it is fair to say that apparently the substitution was intended for the charterers’ benefit.

But it was a bargain of which time was of the essence, and the restriction as to time was written by Little & Company themselves. They also knew that the goods were for transhipment, and therefore that it was important that they should be delivered in terms of the contract. The ‘Jasper’ and the ‘Ariadne’ started duly and returned timeously. The ‘Larry Bane’ started in good time, and though there seems to have been some delay at Barrow, I think the evidence establishes that her non-arrival till Wednesday the 19th was due to stress of weather.

But as regards the ‘Palermo’ the case is different. Whilst the other vessels started timeously and went straight to their destination, she started on the Tuesday on a circular voyage by Dublin; and when it is remembered how far she had to go, how many times she had to load and unload, how many tides she had to catch, and what the period of the year was, all that one can say is that for her to be back within the stipulated time was not impossible. If everything happened in the most fortunate manner, it was just within the bounds of possibility that she might return in time.

Now, where the time within which a matter can be done is uncertain, and the contract provides a day as the latest possible which will suffice for the implement of the contract, I do not think it is justifiable, on any reasonable attempt to implement the contract, to make that day the earliest on which the contract can possibly be implemented. No doubt it may be that even if the ‘Palermo’ had started for Barrow direct on the Tuesday she might not have returned within the time stipulated. Still she would presumably have returned as soon as the ‘Larry Bane,’ and the iron could have gone in the ‘Concordia’ to America. But the point is, that as regards the ‘Palermo’ Little & Company never made any reasonable attempt to implement their contract, and they did not implement it, and the circumstances which prevented their doing so were what was to be expected, and not unforeseen.…

There remains for disposal the action for relief brought by Little & Company against Hay & Sons. In it Little & Company ask for relief of the sum in which they are found liable to Donaldson Brothers, and of their costs, judicial and extra-judicial, and of the like costs of the action for freight raised by them against Donaldson Brothers. Now, Hay & Sons are in no way liable in relief to Little & Company unless they knew the circumstances of the contract that Little & Company had entered into, and were similarly bound. Mr Hay says—‘I knew the cargo was to come for ward to Donaldson Brothers' steamer, but at the same time we did not know that they had any arrangement with Little & Company, nor the date when the steamer was to sail.’ But it is not clear that Mr Hay knew this at the time the charterparty, or rather the contract of carriage (for no ship is chartered), between his firm and Little & Company was signed. It would rather appear that they did not know that Little & Company were limited as to time. I have some doubts whether this tallies with circumstances as they have otherwise come out. But under their contract with Little & Company they were to be loaded at Barrow not later than Thursday 13th October. Now, as regards both contracts, the charterers seem to have been pretty sharp in the way they dealt with the other party. In Hay & Sons' contract the proviso that the ships were to be loaded at Barrow not later than Thursday 13th October, was put on without their consent, and it was plainly at the time, and as has turned out, a most important proviso. They, however, acquiesced in it, guarding themselves by a qualification, ‘unforeseen circumstances excepted.’ What the effect of this claim might have been if Little & Company had been informed when the contract was made that one of Hay & Sons' vessels had to go to Dublin and would not start till Tuesday, I am not prepared to say. But the point is the same one already dealt with—Was it a reasonable attempt to implement the contract for the ‘Palermo’ to sail under the circumstances it did on the Tuesday morning? and, as before, I say I do not think it was. Indeed, the case against Hay & Sons is much worse than against Little & Company, for the latter did not know the ‘Palermo’ was going to try to do what it could not do, but the former did; and I confess that, unless they had for the time forgotten about the Dublin undertaking, the matter is a mystery to me; for, so far as I can see, the ‘Palermo’ could hardly possibly have fulfilled the contract, and still less been able to be at Barrow on Thursday morning, as specified in the memorandum.

If, then, the breach of contract committed by

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Little & Company was due to the fault of Hay & Sons, as they were informed that the iron was for transhipment, they must, especially in the light of the letters of Little & Company's agents, relieve Little & Company of the damage they have to pay Donaldson Brothers, and the cost of trying to escape such payment judicially incurred, but not those attending the action for freight up to the date of closing the record, that being the date at which it ceased to be a separate action.” …

Hay & Sons and Little & Company appealed to the Court of Session.

Argued for Hay & Sons—They could not be liable to Donaldson Brothers for breach of a contract which they never had made with them, and, even assuming liability to them under contract, they could not be liable in damages or demurrage for detention of the “Concordia,” for when they contracted with Little & Company they had no knowledge of the iron being required for transshipment to America. The cargo was not refused to the “Palermo” at Barrow, or even given under protest, but was given without saying anything. In short, they had nothing whatever to do with the contract between Little & Donaldson. The untimeous arrival of the “Palermo” was caused by stress of weather, and was covered by the exception of “unforeseen circumstances” in the charter-party. They could not be liable in damages to Donaldson under a contract between them and Little which was incommensurate with their own contract with Little, under which alone they could incur liability. In any view, the damage alleged—loss of market in America—was too remote to found a valid claim. There was no deviation in the “Palermo's” voyage to Dublin, because this voyage under the charter began only at Barrow.

Authorities—Smith's Leading Cases, ii., 569; Hadley v. Baxendale, ibi cit.; Vicars v. Wilcox, ib. 553; Die Elbinger Actien-Gesellschaft für Fabrication von Eisenbahnmateriel v. Armstrong, L.R., 9 Q.B. 473; Hydraulic Engineering Company v. M'Haffie & Company, 27 Weekly Rep. 221; Addison on Contracts, 721, 724; Barker v. M'Andrew, 34 L.J., C.B. 191.

Argued for Little & Company—The argument of Hay & Sons on the facts, and on the remoteness of the alleged loss as to delay of “Palermo,” cleared them of liability for damages for breach of contract. They were in an impartial position between the other two litigants, and were only there to see that if liability was found against them it should be passed on to Hay & Sons, who were the real wrongdoers, for the liability of Hay to them was exactly commensurate with the loss of Donaldson Brothers. There was no principle applicable in the circumstances on which a part only of the damage could be laid on Hay.

Argued for Donaldson Brothers—The onus was on Little & Company, with whom alone they had contracted, to show how the “Palermo” failed to reach Glasgow as soon as the “Larry Bane,” which left on the same day to make the same voyage; and this they had failed to do. The damage from demurrage and loss of market was directly caused by fault of Little & Co. in not having the whole cargo there in time. In sailing for Dublin so late as the 11th the “Palermo” made it impossible for her to reach Barrow in time, and therefore there was deviation from her charter.

Authorities—Bell's Comm., i. 478–79–80; Ovington v. M' Vicar, May 12, 1864, 2 Macph. 1066; Anderson v. North British Railway Company, February 18, 1875, 2 R. 443; Fisher, Renwick, & Company v. Connal, Cotton, & Company, June 13, 1882, ante, vol. xix., p. 698.

In the Court of Session Donaldson Brothers did not insist in their claim of damages in respect of the “Larry Bane.”

At advising—