Scottish Court of Session Decisions

In September 1885 W. J. Young applied for a patent for improvements in commodes or closets for indoor use. The application was accepted in March 1886. This was an action by him against Andrew Dougans for £1000 as damages for breach by the defender of an alleged contract of joint-adventure for obtaining the patent and working the same under the name “Young's Patent Earth Closet Company,” under which the pursuer should contribute the invention and the defender as an equivalent the capital necessary for the proper conduct of the business, the profits being equally divided.

The defence was that negotiations took place but no concluded agreement was ever come to, and, in particular, no time of endurance ever mentioned; that the defender had during the negotiations made certain experiments, but in April 1886 had decided not to proceed further with the proposed joint-adventure, and intimated that intention to the pursuer; that he was willing to bear the expense of these and the pursuer's expenses pending the negotiations and in connection with showing commodes at an exhibition in Edinburgh, and had already borne great part thereof.

He pleaded—“(3) There being no concluded contract of joint-adventure between the parties the action should be dismissed with expenses. (4) Separatim—No term of endurance having been specified, the alleged partnership was terminable at will, and the defender was therefore entitled to withdraw from the same.”

It appeared from the documents put in evidence that between April and July 1885 there was correspondence in which it was still a moot point whether there was to be a sale to the defender of the invention, or a joint-adventure, or any arrangement at all. On 7th July 1885 the pursuer wrote—“On considering your alternate proposals about the working of my commode, permit me to put the following questions:—A joint-venture, what does it mean, will it be necessary to value my patent? If so how much value do you put on it?… Please explain what position I shall occupy in carrying out this proposal?… I shall be glad to receive written replies.” Scroll reply by the defender.—“Joint-venture means fair division of profits, value of patent; any undertaking to provide capital for proper working of business would be sufficient.… Position in carrying out proposal of joint-venture—have no fixed idea on this. Have you any? Above hurriedly written at fireside. You can alter or amend for my perusal. I send your letter containing queries for your guidance.” Letter, pursuer to defender, 6th August 1885.—“I am willing to go on with you in a joint-venture with my commode on the terms you name, viz., You to provide all funds for the proper conduct of the business to enable us to execute orders, print circulars, advertise, exhibit, appoint agents throughout the United Kingdom and Ireland, and otherwise bring the article prominently before the public, all of which is to be held as equivalent to my patent. Profits to be equally divided between us. The name of company to be ‘Young's Patent Dry Closet Company.’ A set of books to be kept for the company. Commodes at first to be contracted for. My position, I think, should be bookkeeper and manager under your surveillance.” Letter, pursuer to defender, 8th August 1885.—“Considering the stage of our negotiations, also of my finances, I think it proper to let you know that I am urgently in need of £100. This has arisen partly from my being ill the whole of last summer, and partly from business not paying, and possibly from my being too much taken up with this patent and outlays

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connected therewith. Will you give me your name for this sum on the security of my share of the patent? I hope that you will see your way to do so, as I want to get clear of a few troublesome accounts before joining you in this adventure. As I said yesterday, if you deal generously with me now, I am willing to put the whole patent on the same terms. Rather unexpectedly I am called upon to pay some £50 beginning of next week.” Letter, defender to pursuer, 10th August 1855.—“Your favour of 8th inst. to hand. In reply I cannot agree to your request. I will be willing to carry out all I have promised to do in putting your commode before the trade and provide funds, &c., for doing so, but I would not be warranted in its present stage complying with yours now replied to.” Letter, Mr Young to Mr Dougans, 11th August 1885.—“Yours received. As arranged I hope to see yon on Thursday afternoon. I hope that Mr C. Bennet is not now so busy, and that he will be able to give you probable cost, also Mr Clerk, and that we will get arrangements complete for my sake.”

Then followed correspondence with regard to the preparation of the commodes as samples, and with a view to ascertain what would be the cost of manufacturing them. Letter, pursuer to defender, 20th February 1886.—“I have been expecting a letter from you every day this last week, saying whether you are now satisfied with the commode and patent. Surely we are losing time, especially in view of the Exhibition. Your immediate attention will oblige.” And on the 23d he wrote asking that agents be appointed and commodes made for sale, and offering to give his whole time for a year at a reasonable salary.

Then followed a large mass of correspondence with complaints by the pursuer as to the delay in manufacturing the commodes for the market. Letter, Mr Dougans to Mr Young, 10th April 1886.—“When you first named your closets to me both my sons were with me, and I had the desire then to push it in the form so often talked over with you, but this secession of those who could have wrought it under my direction has so completely changed my personal position that I am compelled to say it is quite out of my power to take further active steps in promoting their sale. I daresay from former letters you are prepared for this decision, one, I can assure you, very reluctantly come to. I trust therefore that you will be able to arrange with a more suitable party, one who could devote his whole time and means to pushing what I still think a decided want in Scotland.”

The pursuer was unsuccessful in inducing the defender to withdraw from this attitude, and on 14th July 1886 this action was brought.

After a proof the Lord Ordinary ( Lee) pronounced this interlocutor:—“Finds that the defender in the month of August 1885 entered into a joint-adventure with the pursuer, whereby, in consideration of his obtaining an equal share in a private ‘commode,’ upon a plan designed by the pursuer, the defender agreed to join him in putting the said ‘commode’ before the trade, and to provide funds, &c., for doing so: Finds that the defender wrongfully failed to implement his part of said agreement of joint-adventure, and on 18th April 1886 wrongfully and in breach of said agreement withdrew from the same, to the loss and damage of the pursuer: Assesses the damage at the sum of £100 sterling, for which sum decerns against the defender in terms of the conclusions of the summons,” &c.

“ Opinion.—1. I think it proved by the correspondence (brought to a point in the pursuer's letter of 6th August 1885), and by the proceedings which followed, that the defender agreed to enter into a joint-adventure with the pursuer with regard to a ‘commode’ upon a plan designed by him, and for which he obtained acceptance of a provisional specification; and it appears to me that the terms of the adventure are sufficiently and satisfactorily explained. The defender's letter of 10th August 1885 contains an acknowledgment that he had promised to join the pursuer in putting the ‘commode’ before the trade, and to provide funds, &c., for doing so. His subsequent actings confirm this view, and in my opinion the defender's attempt now to represent this agreement as having been subject to conditions which were not fulfilled is not supported by the evidence. He had sufficient opportunities of considering these matters before he agreed to join the pursuer in the adventure. His letters show that to the end he professed to consider the ‘commode’ a ‘good thing,’ deserving of success; and that he broke off from the pursuer, not on account of any failure on the pursuer's part to fulfil his part of the agreement, but on account of want of time to attend to the matter. Even in his letter of 10th April 1886 the defender speaks of the pursuer's ‘commode’ as being ‘a decided want in Scotland.’ The evidence adduced by the defender against the character of the pursuer's invention is inconsistent with the opinion expressed by him at the time, and gives a more serious and disagreeable aspect to the defender's case than it otherwise would have had. I am not satisfied that the objections spoken to by Dr Russell and Mr Cooper affect the value of the pursuer's principle. The ground of these objections is not well explained. It rather appears that these may have arisen from some defect in the construction of the particular specimens which were examined.

“The defender may no doubt be able to show that he had a sufficient ground for putting an end to the joint-adventure. That is a separate question. But he was not entitled to keep the pursuer bound to him from August 1885 to April 1886, and then to break off merely because it did not suit his convenience to go on. I think that there was a concluded agreement by which he acquired right to an equal share of the pursuer's patent, and became bound to join the pursuer in working it, at least to the extent of giving it a fair trial in the market.

“2. As to the alleged breach of agreement, there is no question that by the letter of 10th April the defender announced his resolution not to go on. The question is, whether his breaking off at that time was wrongful, or was done under circumstances which entitled him to put an end to the joint-adventure? It is not doubtful that circumstances may arise in the course of carrying on a joint-adventure which justify one of the adventurers in refusing to go farther. In the case of Miller v. Walker, 3 R. 242, which was cited by the pursuer's counsel, the rule was stated by the Lord President as follows:—‘The general rule is that one of two joint-adventurers is entitled to put an end to the joint-adventure if

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it comes to be attended with greater risk than when the contract was entered into, or if there be no reasonable belief that profit will be made for either party.’ In applying that rule to the present case, it is necessary to keep in view that, though the agreement was for no definite period of time, it was for a definite purpose, and contemplated a reasonable endeavour on the part of the defender, jointly with the pursuer, to place the article in the market.

“I am of opinion that at the time when he broke off, the defender had not made a sufficient endeavour to fulfil his part of the agreement, and that nothing had occurred to justify him in putting an end to the adventure. He knew all along that the pursuer had not the means himself of pushing his invention, or even of presenting it in the market. He acknowledges, in the letter by which he announced his withdrawal, that the article was what he called ‘a decided want in Scotland.’ He had frequently been applied to by the pursuer to arrange and carry out some course of action; and the correspondence, particularly after December 1885, affords proof of the defender's dilatory conduct and his unwillingness (notwithstanding inquiries about the article) to concur in the expenses necessary to put the article before the trade. Prior to December 1885 some delay appears to have been caused by a suggestion of the pursuer's to get up a company upon a more comprehensive basis, including the public closet and a contract for disposing of the sewage of the town of Greenock But this proposed scheme was dropped, and there is no satisfactory explanation of the defender's failure to concur in any joint action for the promotion of the object of getting the private commode into the market.

“I am of opinion, on the evidence, that the defender has wrongfully failed to implement his part of the agreement, and wrongfully broke off from it on 10th April.

“With regard to the damages, I am of opinion that the defender is responsible for his share of the liabilities incurred after 6th August in connection with the joint-adventure, and also the loss caused to the pursuer by his breach of agreement. The Exhibition expenses were, I think, clearly incurred upon his responsibility, and the pursuer must have lost by the break-down of the arrangement to which he trusted for about eight months for getting his closets introduced to public notice and put into the market. A breakdown at that stage was obviously a very serious matter to him. It seems to have destroyed the prospects of success almost entirely.

“Holding, as I do, that the defender has been in the wrong in maintaining that there was no concluded agreement, and in acting as he did, I think that the damages sustained by the pursuer cannot be estimated below £100.

“I shall find accordingly, and with expenses.”

The defender reclaimed, and argued—The action as laid was one of breach of contract, and therefore under it the pursuer was not entitled to recover the share of disbursements connected with the joint-adventure. The defender, however, was willing to concede that this point should be waived in order that the accounting might be settled in this action. (1) On a sound construction of the letters which passed between the parties there was no concluded contract. Nothing was positively settled as regards it; not even the price or the mechanism of the “commode.” It amounts to no more than an agreement on the defender's part to pay the expense necessarily to be defrayed in finding out by experiments whether it would become a valuable subject in the market, with a view ultimately to its becoming the subject of a completed joint-adventure between the parties. But (2) assuming that there was a concluded contract between the parties, it was not one which the Court could enforce. It contained no termini habiles, and it was thus just a mere partnership-at-will, dissoluble at the will of either of them— Allan v. Gilchrist, March 10, 1875, 2 R. 587; M'Arthur v. Lawson, July 19, 1877, 4 R. 1134; Traill v. Dewar, March 8, 1881, 8 R. 583. The Lord Ordinary had relied on the dicta of the Lord President in Miller v. Walker, December 10, 1875, 3 R. 242, as establishing the proposition that unless either party to a joint-adventure could show a change of circumstances, e.g., improvement, risk, or loss, he could not withdraw, and he held that the defender had not made sufficient endeavour to fulfil his contract. But to apply such a rule here was an unjust straining of the dicta. Before that case was decided it was settled that joint-adventure was just nothing more nor less than limited partnership to which the general rules of partnership applied—Lindsay on Partnership, 55; Bell's Com. (M'Laren's ed.), 535 (5th ed.) 649. That being so, assuming there was a completed contract the ordinary rules of partnership must apply, and the defender was entitled to withdraw.

The pursuer supported the interlocutor of the Lord Ordinary, and cited Reade v. Bentley, January 22, 1858, 4 H. and J. Rep. 656.

At advising—