Scottish Court of Session Decisions

The Lord Provost, Magistrates, and Council of the city of Glasgow, acting under the Glasgow Corporation Gas Acts 1869 to 1892 had various gasworks in Glasgow, where they produced considerable quantities of coke as one of the residuals of gas manufacture, and they were in the habit of selling the coke.

On 2nd December 1892 David Ireland & Son, coal exporters, Dundee, wrote to the Corporation—“We have a chance of introducing your coke to a new market, but our buyers are desirous of seeing a sample first. Please therefore send a small box or bag addressed to us, c/o Messrs James Currie & Company, Leith.”

On 5th December the Corporation sent as requested a box of coke to the address given, and in accordance with Ireland & Sons' instructions this box was forwarded to their agents at Hamburg, by whom it was handed to Mr Drude, the prospective foreign purchaser. The sample was not examined by Ireland & Son before being sent abroad. Ireland & Son having thereafter been informed by their agents at Hamburg that the sample had found favour with the buyer, some further correspondence took place between them and the Corporation with reference to the price of the coke. On 21st December Ireland & Son

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wrote to the Corporation —“We confirm telegrams of date regarding cargo of about 900 tons coke, and enclose booking order. We are sorry you cannot meet us by entering at 5s. 3d. als., as at 5s. 6d. we barely clear expenses. This order is the result of the sample box sent recently, and in order to make a beginning we are willing to pass the cargo at cost. You must, however, allow us 2d. per ton for cash on shipment instead of the usual penny.” The booking order was in the following terms : —“Please book the ‘Venus’ s.s. for 900 tons of your best coke. Vessel is expected at Grangemouth about 27th curt.” On 22nd December David Ireland & Son again wrote to the Corporation—” Referring to ours of y'day with order for ‘Venus,’ we to-day have instructions from our friends to be particularly careful about quality of the cargo as on this future business depends. Please give particular orders to load the coke as clean as possible. On 30th December the coke was forwarded to Grangemouth, where it was shipped for Hamburg. On its arrival at that port on 5th January it was rejected by Mr Drude, the foreign buyer, as disconform to sample. On 7th January 1893 Messrs Ireland & Son wrote to the Corporation — “We have yours of y'day with invoice for coke per ‘Venus.’ The receiver refuses to take delivery of the cargo, alleging that it is not up to sample; we are, however, meantime denying responsibility. We hope you have not sent anything inferior.” To this letter William Foulis replied on 9th January as follows:—“In reply to your favour of 7th inst., the coke sent for shipment per ‘Venus’ was of our usual quality, and in every respect similar to sample. We have nothing else to send.”

Various letters thereafter passed between the parties. Messrs Ireland & Son, on the one hand, maintained that the sale was by sample, and that if the cargo was found (as alleged by the buyer of the coke in Hamburg) to be disconform, they were not liable in the price. On behalf of the Corporation it was maintained that the coke despatched was of the usual quality, and was conform to sample. It also appeared from these letters that the buyer of the coke in Hamburg had raised an action in the German Courts against Messrs Ireland & Son in order to recover the price payable by them therefor on the ground that the coke was disconform to sample.

On 13th June 1894 the Lord Provost, Magistrates, & Council of Glasgow raised an action against Messrs David Ireland & Sons for the sum of £240, 3s. 5d., as the price of the coke.

The pursuers pleaded, inter alia—“(1) The defenders having purchased from the pursuers and taken delivery of the coke, the price of which is now sued for, and having failed to pay the price thereof, the pursuers are entitled to decree therefor.”

The defenders pleaded, inter alia—“(1) The action should be sisted to await the issue of the litigation in Germany regarding said coke; (2) the said cargo not having been conform to sample by which it was sold, the defenders are not bound to pay the price.”

On 12th December the Lord Ordinary ( Kyllachy) allowed parties a proof of their averments, reserving in the meantime the averments of parties with respect to the conformity or disconformity of the cargo of coke to the alleged sample.

The result of the proof was to establish the facts above narrated.

On 6th March 1895 the Lord Ordinary decerned against the defenders in terms of the conclusions of the summons.

“ Opinion.—In this case there has been a full production of the correspondence and such parole proof as seemed necessary to exhaust the case. The two questions involved are (1) whether the sale of the coke was a sale by sample; and (2) whether, assuming disconformity to sample, the rejection was timeous. It was agreed, as recorded in the interlocutor allowing proof, that if those questions are both answered in the affirmative, the matter of conformity or disconformity to sample should be left over to await the issue of the German suit.

I have come to the conclusion that the sale was not a sale by sample, that is to say, that the contract of sale contained no warranty that the cargo of coke should be conform to the sample forwarded to the pursuers in response to the defenders' letter of 2nd December 1892. The sale may have been induced by that sample; and the defenders, if the facts admit, may have redress on the ground of fraudulent misrepresentation. But the sale was not, in my opinion, a sale by sample, and that is the only case which I have at present to consider.

The distinction between a sale by sample and a sale induced by sample is founded on obvious grounds, and is well established—see Bell's Com. 1470, and cases cited on the note. It is true that in this case the sale was not made by contract note, but by letters, or letters and telegrams, passing in the course of correspondence; and that no doubt makes it proper that the correspondence should be read as a whole. But so reading it, I fail to see that the sample of 2nd December was imported into the contract. The parties had no verbal communication. There was nothing in their opening letters to connect the proposed cargo with the sample which had been sent some weeks before. That sample is only mentioned in the letter of 21st December, by which the bargain was closed; and it is not, in my opinion, so mentioned as to make it enter into the contract. The letter first accepts the pursuers' terms, and encloses booking order, and then it goes on to say, by way apparently of explanation, that ‘the order is the result of the sample box sent recently, and in order to make a beginning we are willing to pass the cargo at cost.’ The defenders' letter of 22nd December confirms this view. In it the defenders say :—‘Referring to ours of yesterday, with order for ‘Venus,’ we to-day have instructions from

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our friends to be particularly careful about quality of the cargo, as on this future business depends. Please give particular orders to load the coke as clean as possible.’

If this be so it is not necessary to consider the question of timeous rejection; but it is perhaps right to say that if the sale had been one by sample I should have had difficulty in holding that the defenders were bound to have made the necessary comparison with the sample at the port of shipment, and to have rejected there and then. The question of timeousness is always a question of circumstances, and I doubt whether, in the circumstances of this case, an examination at Grangemouth could be held to have been within the contemplation of the contract. As I have said, however, it is not necessary to decide that question. The defence being rested exclusively on disconformity to sample, fails, if I am right, at the outset, and I must therefore give the pursuers decree in terms of the summons.”

The defenders reclaimed, and argued—(1) The sale was one by sample. The order was distinctly stated to be the result of the sample, and this was clear from the whole correspondence between the parties. (2) Assuming that the sale was by sample, the goods had been timeously rejected. The purchaser abroad had possession of the sample, and rejected the coke whenever he compared it with the sample.

Argued for the pursuers—(1) The Lord Ordinary's interlocutor was right. The contract was contained in the booking order, and there was no reference to this sample in the order. Therefore the sale was not one by sample— Meyer v. Everth, 1814, 4 Campbell's Reps. 22; Gardiner v. Gray, 1815, 4 Campbell's Reps. 144. (2) Assuming the sale to have been one by sample, the coke had not been timeously rejected. The defenders in this case had never formally rescinded the contract— Couston v. Chapman, 1872, L.R. 2 Sc. App. 250. In order that the rejection should be timeous the defenders ought to have examined and rejected the coke at Grange—mouth— Pini & Company v. Smith & Company, May 29, 1895, 32 S.L.R. 474.

At advising—