Scottish Court of Session Decisions

Mr Peter Macdonald, wine merchant, Glasgow, was the heritable proprietor of subjects at Portmahomack, near Tain, consisting of the property known as the Royal Hotel. In June and July 1896 he advertised this for sale, and on 6th July an offer was made by Mrs Elizabeth Newall, 3 Steeple Street, Kilbarchan, with the consent of her husband Charles Newall. The offer was accepted by Mr Macdonald, the offer and acceptance being in the following terms:—

“1 and 3 Steeple Street, Kilbarchan, 6 th July 1896.

I hereby offer you the sum of Five hundred and twenty-five pounds (£525) stg. for the property known as the Royal Hotel at Portmahomack, near Tain, in Ross-shire, belonging to Peter MacDonald, Esq., including the goodwill, bar, and cellar fittings, utensils, grates, brackets, and lamps; and agree to take over at mutual valuation the furniture and stock at mutual valuation, paying proportion of licence and taxes from date of entry, all provided I obtain a valid title to the property with searches if I think necessary, and obtain a transfer of the licence. I am prepared to consign in bank upon deposit-receipt in our joint names upon acceptance hereof the sum of £525, which will be indorsed by me when these conditions are fulfilled, and when the vendor (Mr Macdonald) grants a bond at 4 per cent. for the amount of the value of the furniture and stock, and should that be less than £300, he shall be

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bound to make it up to £300 in cash at the settlement.—Yours truly,

“ Elizabeth Newall,

I consent, Charles Newall.

I accept the above, Peter Macdonald.

Walker Gray, witness,

Hugh M'Coll jr., witness.”

6d., Stamp 7 ^th July 1896.

The titles were sent in the beginning of August to Mrs Newall's agents, who pointed out a defect which they claimed should be rectified, and after considerable correspondence between the parties' agents it was agreed that this should be done. The titles disclosed the fact that the whole minerals in and under the property were reserved to the superior, but no objection was taken to this reservation by Mrs New-all's agents. On the 6th November possession of the hotel was given to Mr and Mrs Newall, the licence was transferred, and the stock was valued and taken over, and the price of the hotel, which had previously been consigned, was paid over. The parties being unable to agree as to the terms of the disposition of the subjects which was to be granted, an action was raised by Mr Macdonald on 19th February 1897, craving for declarator that the property sold to the defender Mrs Newall, conform to the missives of 6th July, “does not include the tap-room and stables belonging to the pursuer adjoining the said subjects, and that the defenders should implement their part of the contract by accepting a valid disposition.

The pursuer averred—“(Cond. 5) On the day on which the defenders took possession of the subjects purchased by them, they were quite aware that the subjects bought by them did not include the taproom with flat above, or the stables or the yard behind, and the property included in the sale, being the subjects described in the advertisement, was pointed out to them. They remarked that the tap-room and stables, which belonged to the pursuer, and which adjoined the subjects sold, might be useful to them in connection with the property which they had purchased, and Mrs Newall accordingly offered to lease the said tap-room and stables from the pursuer at a rental of £12 per annum. Her offer therefore is in the following terms:—

‘ Portmahomack, 6th Nov. 1896.

Peter Macdonald, Esq., Glasgow.

Dear Sir,—I hereby agree to rent from you, for the year from Martinmas 1896 to Martinmas 1897, the tap-room off the hotel proper, and the stables adjoining thereto, at a rent of £12 sterling.—Yours truly,

Elizabeth Newall.’

“ The pursuer accepted said offer, and the defenders accordingly got and now hold possession as tenants of the said tap-room and stables. The pursuer retained and retains possession of the flat above the tap-room, and it has been unoccupied all along. The defenders took possession of the subjects described in the advertisement as the whole property purchased by them, and did not claim, and did not get possession as purchasers, of the tap-room or flat above, or stables or yard behind the same.”

He pleaded that the defenders were barred by personal exception and their own actings from insisting in the defences made by them.

The defenders averred that “they took and held possession of the hotel, tap-room, and hotel stables as part of the subjects sold under the missives; that no document of the tenor or effect condescended on (in Cond. 5) was written or subscribed by the defender Mrs Newall or her husband.” They further averred that the subjects, “including the said tap-room, stables, and yard, as and from the time when the pursuer obtained a licence, have been known as the Royal Hotel, Portmahomack,” and that the tap-room and stable had always been used by him in connection with and for the purposes of his business as keeper of the hotel, and were essential for the proper carrying on of the business. The defenders further averred that the pursuer was not in a position to give a title to part of the subjects sold, viz., the minerals.

An action was raised on May 18, 1897, by Mr and Mrs Newall against Mr Macdonald craving for declarator that they were en titled to rescind the contract of sale, and that the defender should be ordained to repay the purchase price.

The pursuers made averments with regard to the tap-room and stable of a similar character to those made in the other action, and averred further that the pursuer refused to give and could not give a valid title to the minerals, which were reserved to the superior, and that the pursuer Mrs Newall would not have taken possession except upon the faith of the defender's giving a valid title to the whole property sold. They maintained that in consequence of the defender's failure to fulfil the conditions of the contract of sale they were entitled to resile.

The defender averred that the subjects sold did not include the minerals, and further “(2) that long before the pursuers took possession of the subjects purchased, viz., on 1st August 1896, the titles were sent to their agents, and were examined by them, and disclosed the fact that the minerals were reserved by the superior; (3) that in the knowledge of the state of the title and in particular of the reservation of minerals to the superior, the pursuers took possession of the property on 6th November 1896, paid the price, obtained a transfer of the hotel licence, and have ever since continued to occupy the property and carry on the business; and (4) that in point of fact during all the period since July 1896 no question ever was raised by the pursuers with regard to the minerals, and the service of this action was absolutely the first intimation of the objection which has been given.” He maintained, accordingly, that the pursuers were barred from insisting in the action.

The two actions were conjoined by the Lord Ordinary, and a proof was allowed.

The proof was directed towards identifying what were the subjects known

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as the Royal Hotel, and the import of it appears in the opinion of the Lord Ordinary. On 26th February 1898 his Lordship pronounced the following interlocutor:—“The Lord Ordinary having considered the conjoined actions (1) in the action at the instance of Peter Macdonald against Elizabeth Newall and another, Finds, declares, and decerns, in terms of the declaratory conclusions of the summons; quoad ultra continues the cause, reserving meantime the question of expenses; (2) assoilzies the defender from the conclusion of the counter action, and decerns: Finds the defender entitled to expenses.”

Opinion.—“The question in this case is whether Mr and Mrs Newall (whom I shall call the defenders) are entitled to resile from a contract of sale whereby they purchased from the pursuer ‘the property known as the Royal Hotel at Portmahomack, near Tain.’ The contract was made by missives dated on 6th July 1896, and the defender has been in possession since November following. The counter actions, which are now before me, were raised respectively on 19th February and 13th March 1897; and the claim to rescind is rested on two grounds—the first of which is that the pursuer is not in a position to give a title to a part of the subject sold, viz., the minerals, which it appears are by the titles of the property reserved to the superior.

“It appears to me that this objection (assuming it to be otherwise good) comes too late. The facts are these—The property was bought, as I have said, on 6th July, and shortly afterwards, in the beginning of August, the titles were in usual course sent for examination to the defenders' agents. The titles disclosed the reservation of the minerals, but the defenders' agents took no objection to that head, being probably satisfied that the reservation was of no practical moment. They did, however, point out a defect in the title of a different kind—a defect which they claimed should be rectified. After some correspondence this claim was conceded, and it was agreed that the title should be rectified in the manner proposed. Thereafter on the 6th November possession of the hotel was given and taken, the defenders urging that as their agents were now satisfied with the title there was no need for further delay. The hotel licence was at the same time transferred, and the stock valued and taken over. The price of the hotel (£525), which had previously been consigned, was also uplifted and paid. In short, although there has been some delay in preparing the disposition, the transaction was, for all practical purposes, concluded in the month of November 1896, and it was not until the defenders had been four months in possession that the objection now in question was at length taken.

In these circumstances it is, in my opinion, impossible to hold otherwise than that the defenders waived any question as to the reservation of the minerals, and accepted, or became bound to accept, as in implement of their purchase, a conveyance of the subjects as they belonged to the seller. It is said that until the disposition was adjusted, objections to the title were still open and must be held as reserved. I doubt if, in the circumstances, that was so; but in any case I do not consider that such reservation could extend beyond defects in the title which were capable of being rectified, and of which rectification could be enforced consistently with the contract.

The second ground of rescission is that the defenders have been refused possession of a certain tap-room and stable, which are adjacent to the hotel, and the former of which is directly connected with it. The defenders contend that these premises fall within their contract. The pursuer contends the contrary, and contends separately that the defenders have here also waived the alleged objection by accepting possession, as in full implement of the contract, of what has been called the hotel proper, and by taking a lease from year to year, at a certain rent, of the alleged adjuncts.

In this matter I am of opinion, in the first place, that extrinsic evidence is competent and necessary to identify the subjects described in the missives as the property “known as the Royal Hotel, Portmahomack.” In particular, I consider that it is competent to inquire what the subjects were which were known to the defenders under that name, and for that purpose to ascertain what were the subjects pointed out or described to them prior to the sale. In the next place, that being so, I hold it proved beyond all doubt (1) that before the sale the defenders were expressly told that the tap-room and stables were to be reserved; (2) that the building which was for sale was at the same time pointed out to them on a plan and also a photograph; (3) that the property was advertised with reference to particulars which were furnished to the defenders, and which described the subjects by boundaries and measurement; (4) that before the purchase the defenders were advised to visit the premises, and are understood to have done so. Further and separately, I hold it proved that the defenders on 6th November accepted possession of what I have called the hotel proper as in full implement of their contract, and executed of the same date the missive of lease quoted on record, by which they became tenants of the tap-room and stables at a rent of £12 a-year.

That is my view of the import of the proof, and I need not, I think, say more as to this second ground of rescission. The defenders got, in my opinion, implement of their contract according to its just construction. But in any view they must be held to have accepted, as in full implement, the subjects of which they got possession as purchasers. The result is that I hold the defenders to be bound by their purchase, and I think it follows that the pursuer must have decree of declarator in terms of the first declaratory conclusion of his summons, and must be assoilzied from the conclusions of the defenders' counter action. The remaining conclusion of the pursuers' action must, it was agreed, await the

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adjustment of the disposition, and accordingly I shall, for that purpose, continue the cause. As to expenses, the pursuer will have expenses in the defenders' action. In his own action the expenses will, in the meantime, be reserved.”

Mr and Mrs Newall reclaimed, and argued—(1) The Lord Ordinary had been wrong in allowing extrinsic evidence to vary the terms of the written contract, which showed clearly the tap-room and stable were included in the subjects. It was incompetent to lead evidence tending to show that it had been pointed out to them when the contract was made that the tap-room and stable were not included— Gregson v. Alsop, July 13, 1897, 24 R. 1081. (2) The seller was not able to give a good title to all the subjects sold, viz., to the minerals, and accordingly the purchasers were not bound to accept the property— Whyte v. Lee, February 22, 1879, 6 R. 699; Robertson v. Rutherfurd, November 27, 1811, 4 D. 121. Unless it were proved they had waived their right to resile they were entitled to do so, and waiver must be very clearly proved in order to bar them. The mere fact of taking possession of the subjects was not sufficient to constitute waiver— Carter v. Lornie, December 20, 1890, 18 R. 353, at 361; Burroughs v. Oakley (1819), 3 Swanston 159.

Counsel for the respondents was not called upon.