Scottish Court of Session Decisions

William Todd, hotel proprietor, Wheat Sheaf Hotel, Patna, pursuer, brought an action against Peter M'Carroll, defender, concluding for £500 for breach of contract.

The contract between the parties was constituted by the following offer and acceptance:—“3 Overton Road,

Johnstone, 24 th Sept.,1915.

Messrs R. B. M'Caig & Mitchell,

Accountants, 124 St Vincent Street, Glasgow.

Dear Sirs—I hereby offer you the sum of One thousand two hundred pounds stg. (£1200) for the goodwill, fittings, fixtures, and all working utensils, including the gas plant and fittings but not including the household furniture and plenishing, of the licensed business known as the ‘Wheat Sheaf Hotel,’ Patna, belonging to Mr William Todd, together with the property in which said business is carried on.

I also offer to take over the stock on the premises at mutual valuation and pay for same in cash on obtaining possession.

Three hundred pounds stg. (£300) of the purchase price to be consigned in bank in our joint names on the acceptance of this offer and pending a transfer of the license to me; the deposit-receipt to be endorsed in your favour on my obtaining the license. Should I not obtain the license you are to endorse said deposit-receipt and return it to me. The balance of the purchase price to be paid when I obtain entry to the premises.

I also undertake to pay a proportion of the rates, taxes, and license duty from the date of my entry to the premises.

This offer is on condition that I obtain a transfer of the license for the premises at the Court to be held next month (and will use my best endeavours to obtain same), or at the Appeal Court to follow thereon, also a good and proper title to the property, including searches brought down till date.

In event of my not obtaining a transfer of the licence this offer to be null and void.—Yours truly, “Adopted as holograph,

“ Peter M'Carroll.

Glasgow, October 1 st, 1915.—We hereby accept the above offer.

R. B. M'Caig & Mitchell.

1/10/15’

The feu-disposition, which was the pursuer's title to the heritable subjects, contained the following reservation:—“But these presents are granted with and under the reservations following, viz.—Reserving to the said Duke of Portland and his heirs and successors the whole metals and coal, limestone, freestone, and minerals and fossils of every description within the piece of ground before disponed; with full power to him and his foresaids or any person authorised by him or them, but without entering upon the surface of the said feu, to work, win, dig, and take away the same; declaring, as it is hereby expressly provided and declared, that the said William Todd and his foresaids shall have no claim whatever for any damage that may be done or caused to the piece of ground hereby disponed and buildings erected or to be erected thereon by any of the operations in time past or to come of the said Duke of Portland or his predecessors, or heirs and successors and tenants, in working and removing or draining the metals, coal, stone, minerals, and others hereby reserved or in the neighbourhood of the piece of ground hereby disponed, or which may arise from or through the setting or crushing of any waste or other excavation presently existing or which may hereafter exist within or in the neighbourhood of the piece of ground hereby disponed, all loss, risk, or damage in any of the events foresaid being to be borne and sustained by the said William Todd and his foresaids themselves.”

The defender pleaded, inter alia—“2. Esto that the contract in question is valid, the pursuer being unable to give a valid title to the defender of the whole subjects purchased by him thereunder, and free from building restrictions, and in particular to the mines and minerals connected therewith, the defender is entitled to decree of absolvitor.”

The facts of the case appear from the opinion of the Lord Ordinary ( Dewar), who on 6th February assoilzied the defender from the conclusion of the action.

Opinion.—“This is an action of damages for breach of contract. The pursuer is the owner and licensee of the Wheat Sheaf Hotel, Patna, and he states on record that he was anxious to retire from business, and in September 1915 he advertised the property and business for sale. The defender made an offer of £1200 for ‘the goodwill, fittings, fixtures, and all working utensils, including gas plant and fittings, of the licensed business known as the Wheat Sheaf Hotel, Patna, belonging to (the pursuer), together with the property in which the said business is carried on.’ This offer was accepted by the pursuer.

The defender now declines to implement the said contract, and the pursuer sues for £500 in name of damages.

“The defender admits the contract, but he pleads, inter alia, that he is entitled to resile therefrom on the ground that the pursuer is unable to give a valid title to the property. It appears from the pursuer's titles, which are produced, that the whole mines and minerals are reserved from the property right, and the superior has right to extract the whole metals and minerals without liability for damage by subsidence to the ground or buildings erected thereon, and the property is also subject to building restrictions. It is not disputed that the defender was unaware of these defects in the title when he entered into the contract.

In these circumstances I am of opinion that the defender's plea is well founded. It appears to be settled that when a contract rests on missives of sale, and there is a restriction in the titles which was unknown to the purchaser, he is entitled to resile on the ground that the seller of land fails to perform his part of the contract if the title is subject to restrictions which he is unable to remove— Robertson v. Rutherford, 1841, 4 D. 121; Whyte v. Lee, 1879, 6 R. 699,

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16 S. L.R. 376; Smith v. Soeder, 1895, 23 R. 60, 33 S. L.R. 44. The pursuer argued that that rule only applied where the seller had offered to sell the property and not when he merely accepts an offer. I do not think that it signifies which side the offer comes from. It is the contract which matters, and by his contract the pursuer undertook to sell the property a centro ad cœlum, and he is admittedly unable to do so. In Whyte's case I observe the purchaser was also the offerer. He offered to purchase Eildon Lodge, a villa in Edinburgh, and this offer was accepted. After an action had been brought for implement by the seller it appeared that his title was subject to a reservation of minerals in favour of the superior, and it was held that the purchaser was not bound to take the property, although there was a declaration that the superior should have no power to work the minerals without the vassal's written consent. This appears to be a much stronger case for the purchaser, because the superior is entitled to work the minerals—and they are more likely to be worked in Patna (which is a mining district) than in Edinburgh—without the vassal's consent and without liability for damages.

I accordingly sustain the second plea-in-law for the defender and grant decree of absolvitor with expenses.”

The pursuer reclaimed, and in argument the authorities referred to by the Lord Ordinary were cited.