Scottish Court of Session Decisions

Michael Dawson was the proprietor of a property in Argyle Street, Glasgow, which he had purchased in 1892 for the sum of £14,600. The property was subject to bonds for £9500, £3900, and £2500, the last bond, which was postponed to the other two, being in favour of Mr Dawson's wife. The property was greatly out of repair when Mr Dawson bought it, and he accordingly made extensive alterations and repairs, with the view of enhancing its value as a letting or selling subject. These repairs were executed by Mr Matthew Henderson, whose account amounted to £349, 6s. 6d. Mr Dawson having failed to pay this account, Mr Henderson raised an action against him for the amount on 16th October 1893, and on the same day recorded a notice of inhibition.

Previous to this date Mr Dawson had been negotiating for the sale of the subjects, and on the 14th October 1893 he had completed a bargain for a sale of the subjects to a Mr Lawson at the price of £16,000. In these circumstances Mrs Dawson wrote the following letter to Mr Henderson, with the object of inducing him to refrain from executing the inhibition:—“Langside, 24/10/93. Dear Sir,—Having a bond for £2500 over the Argyle Street property, it is, and always has been, my intention to see you paid as scon as the money is handed over to me, although I hope you will receive payment from my husband's estate, or at least, that the deficiency I may have to make up will not be very great. I have instructed Messrs Caldwell & Fyfe to retain sufficient money to settle your account.” On the same date Mrs Dawson wrote a letter to her husband's agents, Messrs Wilson, Caldwell, & Fyfe, containing the following instructions: — “Please retain from the £2500 due to me on 11th November sufficient money to settle the balance owing to Mr Henderson.”

Mr Henderson accordingly instructed his agents not to proceed with the action or

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inhibition. The price of the property was paid over in January 1894, and Mrs Dawson received payment of £2378, being the balance remaining after payment of the prior bondholders, certain unpaid taxes, and other expenses.

Mr Dawson had in the meantime been sequestrated, and Mr Henderson lodged a claim. He also called upon Mrs Dawson to pay his account, and on her refusal to do so, on 24th January 1894 raised an action against her, concluding for payment of the sum of £349, 6s. 6d., being the amount of his account, and offered to assign to her his claim on Mr Dawson's sequestrated estate.

The pursuer averred that the defender had the real interest in the property, the value of which had been enhanced by the alterations and repairs; that, induced by her letter of the 24th October, he had withdrawn his inhibition; and that by that letter, and other correspondence and communings, the defender had undertaken to pay his account. He maintained that she was not entitled to resile from her undertaking, especially as she had induced him to give up his inhibition and action, which had facilitated the sale of the subjects.

He pleaded—“(2) The work executed by the pursuer having been ordered by the defender's husband for her behoof and on her instructions, et separatim, being in rem versum of her separate estate, she is liable for the expense of same. (3) The defender having entered into an arrangement with the pursuer, as condescended on, under which she became liable to him for the debt sued for, the pursuer is entitled to decree. (4) The pursuer having withdrawn the inhibition and proceedings which he had taken at the request of the defender, and on the faith of the said arrangement, the defender is barred thereby, and by her actings in the premises, from pleading the alleged invalidity of the letters.”

The defender averred that she had been in no way benefited by the transaction; that the price of the subjects had not been enhanced by the alterations made by the pursuer; and that she had not received the full value of her bond.

She pleaded—“(3) On a sound construction, the said letters of 24th October do not import any obligation on the defender; alternatively, they import an obligation only to make up any deficiency ascertained after discussion of Mr Dawson's estate. (6) The said letters having been written by the defender, and the alleged agreement having been entered into by her during her marriage, and under the influence of her husband, with reference to a debt already due by her husband, and not being in rem versum of her, the said arrangement is void and null.”

Proof was allowed. In addition to the facts already narrated, it appeared that the letter of 24th October 1893 had been written by Mrs Dawson on the suggestion of her husband's agent, who advised her that the inhibition, of which Henderson had given notice, might create some difficulty in carrying out the sale of the property.

Mrs Dawson stated that she wrote the letter in the belief that the inhibition would prevent the sale being carried through, and that, if she had known that it could not have this effect, she would not have written it.

On 16th February 1895 the Lord Ordinary (Low) decerned against the defender in terms of the conclusions of the summons.

“ Opinion.—The sum sued for in this action is the amount due to the pursuer for alterations made by him upon a property belonging to Mr Dawson, and upon Mr Dawson's instructions.

Mr Dawson is bankrupt, and the pursuer avers that Mrs Dawson became bound to pay his account, and that the obligation is enforceable because it was truly in rem versum of her.

Mrs Dawson's interest in the property was that she held a postponed bond over it for £2500. The property had been bought by Mr Dawson at the price of £14,600. The burdens upon it were — 1st, a bond for £9500; 2nd, a bond for £3900; and 3rd, Mrs Dawson's bond for £2500. Those bonds together amounted to £1300 more than the price which Mr Dawson had paid for the property. The purchase had been made after the property had been several times unsuccessfully exposed for sale, and there was no reason to believe that the price paid by Mr Dawson was below the market value. It was, therefore, Mrs Dawson who was wholly or mainly interested in the reversion of the property beyond what was required to pay the two prior bonds.

It is said, and, I think, is the fact, that the alterations materially increased the value of the property, and conduced in the first instance to an advantageous lease being obtained for certain of the premises, and finally to an advantageous sale of the whole property. The price (£16,000) ultimately obtained for the property was not sufficient, after settling with the prior bondholders, for the capital sum due to them and arrears of interest, and paying expenses, to pay the full amount in Mrs Dawson's bond (the deficiency being apparently between one and two hundred pounds); but if the alterations had not been made, there is evidence that the property would not have been sold at so large a price as was actually obtained.

The first question is, whether Mrs Dawson ever came under an obligation to pay the pursuer's account ? …

The pursuer … maintains that Mrs Dawson came under a direct obligation to pay his account in October 1893. In that month a Mr Lawson made an offer to purchase the property at the price of £16,000. After some negotiations Mr Dawson accepted the offer, and a contract of sale was concluded on 14th October. Prior to that date the pursuer had instructed his Edinburgh agents, Messrs Ronald & Ritchie, to recover the amount of his account from Mr Dawson. On the 11th October Messrs Ronald & Ritchie accordingly wrote to Mr Dawson asking him to make payment before the end of the week then current. On the 13th of October

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Messrs Ronald & Ritchie saw Mr Fyfe, writer in Glasgow (who acted both for Mr' Lawson and Mr Dawson in the sale of the property), and Mr Fyfe asked them to delay taking proceedings as he hoped that arrangements would be made for paying the pursuer's account. On the 14th Messrs Ronald & Ritchie wrote to Mr Fyfe intimating that unless the debt was paid ‘or a sufficient guarantee given for its payment on Monday first’ (that is, the 16th October), an action would be raised and inhibition used. Mr Cargill (of Messrs Ronald & Ritchie) says that when that letter was written he had not heard it suggested that Mrs Dawson should give a guarantee, and he had not a guarantee by her in his mind when he wrote the letter. The debt was not paid, nor was any guarantee given on the 16th October, and accordingly Messrs Ronald & Ritchie signeted a summons against Mr Dawson, and recorded a notice of inhibition. The inhibition, therefore, was not used until after the contract of sale of the property was concluded, but although it could not have prevented the sale being carried out, it might quite probably, if it had not been withdrawn, have caused delay and trouble as well as some expense.

On the 24th October Mrs Dawson wrote, and sent to the pursuer the letter quoted in the third article of the condescendence, and upon the same day she sent to Mr Fyfe the mandate also quoted in that article.

These documents were written by Mrs Dawson unwillingly and upon the suggestion of Mr Fyfe. The latter advised Mrs Dawson to grant the letter, because he feared that the inhibition might create difficulties in carrying out the sale, and he was aware that Mrs Dawson was the party truly interested in having the sale carried out. He was further informed that Mrs Dawson, in any case, intended to devote any money which she might recover under her bond to enable her husband to settle with his creditors.

Mrs Dawson, on the other hand, says—and I see no reason to doubt her statement—that her belief was that if the inhibition was not withdrawn the sale would be stopped, and that if she had known that the inhibition would not prevent the sale being completed, she would not have written the letter to the pursuer.

The pursuer, on his part, withdrew the inhibition, and allowed his action against Mr Dawson to drop upon the faith of Mrs Dawson's letter. I do not think that either the pursuer or his agents knew when the letter was granted that the contract of sale had been completed before the notice of inhibition.

It was argued for Mrs Dawson that her letter did not import an obligation, because it only stated her intention to see the pursuer paid. I do not think that that is an argument which can be sustained. The question is one of intention, and it seems to me that there can be no doubt from the terms of the letter that Mrs Dawson's intention was to bind herself, in the event of the money in her bond being handed over to her, to pay the pursuer's account in so far as he did not receive payment from her husband's estate.

Mrs Dawson, when examined as a witness, admitted that she intended to bind herself to pay the money, but she said that she only undertook to do so if she received the full amount in her bond, and that as she had not received the full amount she was not bound.

Now, of course, Mrs Dawson's evidence cannot be taken as modifying or controlling an obligation which she undertook in writing, but only as a statement of the construction which she puts upon her letter, and the question is, whether the letter is capable of bearing that construction.

Mrs Dawson commences the letter by stating that she has a bond for £2500 over the property, and she goes on to express her intention of seeing the pursuer paid ‘as soon as the money is handed over to me;’ and the question is, whether the full sum in the bond, not having been handed over to her, but only a sum substantially smaller, she is under any obligation to the pursuer?

It seems to me that the letter must be construed in the light of the circumstances in which it was written. Now, it was written in contemplation of and with reference to the sale of the property for £16,000, which had been arranged. That price was apparently sufficient to pay Mrs Dawson the full amount of her bond, but she has not in fact obtained the full amount, because, as I understand, the expenses of the sale have been large, certain accounts for which there was a lien over the title-deeds have had to be paid, and there were arrears of interest due to the prior bondholders. But, nevertheless, the sale in reference to which the letter was written has been carried out, and Mrs Dawson has obtained payment of her money in so far as the price was sufficient to yield it after payment of prior claims. I think that was just the position of matters contemplated in the letter. The money, upon receipt of which she bound herself to pay the pursuer's account, was in my opinion the money which she should receive in respect of her bond in the event of the sale of the property, which had been arranged, being carried out.

I am therefore of opinion that unless Mrs Dawson is entitled to plead the inability of a married woman to grant a personal obligation, she is bound to pay the pursuer's account.

This brings me to the question whether the obligation to pay the pursuer's account was in rem versum. It was contended for Mrs Dawson that the debt was the proper debt of her husband, and that she did no more than become cautioner for him. I do not think that the obligation which she undertook was a cautionary obligation at all. It was, in my opinion, an independent obligation, the cause of granting being peculiar to Mrs Dawson herself. She undertook liability for the debt in consideration of the withdrawal by the pursuer of the inhibition,

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which she feared might prevent her getting the benefit as postponed bondholder of the sale of the property which had been arranged. I think that that was an obligation in rem versum of Mrs Dawson, because the object of the obligation was to secure to her the payment of the money in the bond, which was her separate estate, which she would obtain if the sale of the property was allowed to proceed, and which she might not obtain if the sale was prevented by the pursuer's diligence.

But it was said that Mrs Dawson did not as matter of fact get the benefit in consideration of which she granted the letter, and that the obligation did not turn out to be in fact in rem versum of her. She granted the letter in consideration of an inibition which she understood would absolutely stop the sale of the property, if it was allowed to stand, being withdrawn, whereas as matter of fact the inhibition could not have stopped the sale, although a trifling amount of expense might have been incurred in getting it discharged. As matters turned out, therefore, she undertook to pay her husband's debt for no consideration, or for an altogether inadequate consideration.

I think that the answer to that argument is that Mrs Dawson was not induced to grant the letter by any representations of the pursuer, nor was she misled in any way by the pursuer. The latter did not know that the contract of sale had been completed before the inhibition was used, and he did not ask Mrs Dawson to guarantee the debt. All that he knew was that Mrs Dawson's obligation was offered to him if he would withdraw the inhibition, and he did withdraw it.

Then it was argued that the obligation was truly undertaken for behoof of Mr Dawson, in respect that the desire of Mrs Dawson was to obtain payment of the money in order that she might employ it in helping her husband to settle with his creditors. I do not doubt that that was Mrs Dawson's intention as to the application of the money, but she was at liberty to apply her money as she chose, and her intention of using it for paying certain creditors of her husband did not make it the less her separate estate, nor did it make the obligation which she granted to the pursuer the less an obligation in regard to her separate estate.”

The defender reclaimed, and argued—(1) The letter did not constitute a binding obligation. Prima facie there were no words of de presenti obligation in it, but merely an expression of an intention to pay subject to a condition, the condition being that the defender received payment in full of the sum in her bond. The pursuer's own agents did not consider it an explicit obligation, and the evidence of the defender's other letters might be legitimately brought in to show that she did not intend to bind herself unconditionally. (2) Even if the letter did constitute a binding obligation, as a married woman the defender was not bound. It was in reality a cautionary obligation undertaken by her on her husband's behalf, and did not apply to her own estate. (3) If held to be a direct obligation, it was not in rem versum of her estate, i.e., was not applied to the advantage of it, which was the true meaning of the expression. The defender had gained no advantage by the removal of the inhibition, for the sale had been concluded before it was laid on. She got no consideration for undertaking the obligation, and therefore it was void— Ewing v. Lady Strathmore's Trustees, March 5, 1831, 9 S. 558; Jackson v. Macdiarmid, March 1, 1892, 19 R. 528; Deans v. Allan, 1703, M. 5985. In Biggart v. City of Glasgow Bank, January 15, 1879, 6 R. 470, there was some consideration, while here there was none. (4) If regarded as an unconditional promise to pay, this was nothing more nor less than a promissory-note, and as such should have been stamped, and could not be after stamped— Thomson v. Bell, October 26, 1894, 22 R. p. 16.

Argued for the pursuer — (1) There were words of present intention in the letter, and it constituted a direct obligation, and the pursuer had understood it as such, and had in consequence of it withdrawn his inhibition. (2) Even as a married woman the defender was still liable, for the transaction was clearly in rem versum of her estate. To bring in that doctrine it was unnecessary that the transaction should result in benefit if it was entered into under the belief and with the intention that it should operate for the benefit of her estate — Biggart v. City of Glasgow Bank; Burnet v. British Linen Bank, February 9, 1888, 25 S.L.R. 356. (4) As regarded stamping, this was clearly not a promissory-note, for no sum was mentioned in it, and it therefore could not have been stamped with an ad valorem stamp?

At advising—