John Grieve (Waddel's Trustee) - Dr. Lushingto - Robertso - Sandford v. Thomas Wilson - Campbel - Wilson [1833] UKHL 6_WS_543

UKHL
John Grieve (Waddel's Trustee) - Dr. Lushingto - Robertso - Sandford v. Thomas Wilson - Campbel - Wilson
[1833] UKHL 6_WS_543 · 1833-08-19
Circumstances in which it was held (affirming the judgment of the Court below) that an obligation to pay a debt was not founded on such error as was sufficient to set it aside.In 1807 Robert Waddel granted an heritable bond and disposition in security for 600 l . to James Wilson over Liltycockee and Longridgemuir, in virtue of which Wilson was infeft; and having died, the right to it was acquired by the respondent. Waddel thereafter granted heritable bonds in favour of other creditors, which were followed by infeftment. And subsequently he executed a trust deed in the appellant's favour, for behoof of creditors, under which he was infeft. Wilson's bond contained a clause of sale in the usual terms, and in virtue thereof he took steps to bring the property to sale. The appellant attended the meeting fixed for the sale, and protested against it, and in consequence of the arrangement contained in the following letter it was adjourned:—Liltycockee and others contained in his bond to you for 600 l . sterling, and agreed to take the payment of your said bond out of the price of Mr. Waddel's lands when the same shall be sold by me, in virtue of a trust deed executed by Mr. Waddel in my favour for behoof of his creditors in general, I hereby bind myself as trustee foresaid to pay to you the said sum of 600 l . out of the first of the price of any part of Mr. Waddel's lands that shall obtain soonest a purchaser; and till the recovery of such price I agree and bind myself as trustee foresaid to pay you the interest due to you at the regular terms according to your bond. I shall likewise pay you at Martinmas next the expenses you have hitherto incurred in offering the said lands for sale, &c.; and farther, in case you shall be desirous of receiving your money before the lands can be sold, I promise to do what I can to obtain it for you upon a transference of your security. I am,” &c.
“1st September 1820:—Sir, In consideration of your having adjourned the sale of Mr. Robert Waddel's lands of

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The appellant having been urged by the respondent for a partial payment, wrote to the agent of the latter as follows:—
“You may please send me your client's bond and infeftment, &c.; and if the agent to whom I shall show it shall be satisfied with the title, and your client be willing to bear the expense of an assignation, I can now obtain you payment of the whole debt; or if any unexpected obstacle arise to prevent this, I shall pay from 150 l . to 200 l . to account upon receiving a proper acknowledgment, with an obligation to assign the security to that extent, if required, at your client's expense; provided, on seeing your client's title, I shall find myself in safety to do this.”

The titles were transmitted to the appellant by the

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“From a perusal of these writings you will find Mr. Wilson's title to the bond complete, and with the validity of which I presume you will be satisfied. After examining the papers, I wish you to write me what the neat expense of the proposed assignation will be, and to say if you will cause R. Waddel bear a part. I have no objections that Mr. Wilson be at the expense of the assignation and the stamps for the infeftment, but I do really think it would be exceedingly hard to ask more.”

The appellant wrote in answer to the respondent's agent:—

also decline making any payment to account from my own funds till the defect has been obviated.”“Having put into the hands of the agent for the gentlemen from whom I proposed to obtain money, upon an assignation to the security held by your client Mr. Wilson over the lands of Liltycockee and Longridgemuir, the title deeds of that security, he observes that sasine given upon the bond by Robert Waddel to James Wilson is informal. The person mentioned in the instrument as bailie having been absent when the infeftment was taken, an attempt has been made to supply this defect by the following words written at the bottom of the deed; “Robert Waddel of Burnhead in my prasince, and bailie in absince of H. Smith.” This marking is not referred to in the doquet of the notary, nor is it authenticated as the handwriting of Robert Waddel; for which and other reasons the agent alluded to considers the instrument to be irregular, and that in fact there is nothing more than a personal security to come in competition with the other creditors of the granter of the bond. He therefore declines advancing the money, and for the same reason I must

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The interest had hitherto been paid by the appellant; but after the defect was discovered the payment was qualified by a declaration, that it should not invalidate any legal objection to the respondent's titles.The respondent then brought an action against the appellant for payment of the sum contained in the bond under deduction of the sum paid to account; and the appellant raised a counter action for reduction of the instrument of sasine, and the letter of obligation, and for repetition of the sum paid to account, on the ground that “the foresaid letter of obligation was granted by the said John Grieve, trustee foresaid, upon the understanding that the said Thomas Wilson held a valid and preferable heritable security over the lands before mentioned; that the said Thomas Wilson represented to the said John Grieve and made him believe that he held such valid preferable heritable security; and it was only upon this understanding that the said John Grieve agreed to come under and did grant the foresaid letter of obligation. That as the said Thomas Wilson did not at the time hold a valid heritable security to the said subjects, and as the writs bearing to constitute the said heritable security are null and void, and as the said letter of obligation was granted in consequence of misrepresentation, and from a misunderstanding of the true state of the fact, and as there is therefore an error in substantialibus, the said letter of obligation is null and void.”The Lord Ordinary reported the question both as to the validity of the sasine and the letter of obligation to

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nothing by desisting from the sale, since the purchaser would not have paid the price until he got a sufficient title, which Mr. Wilson could not have given him; or, at least, if the bond without the sasine could be held to constitute a sufficient mandate to sell, which the Lord Ordinary inclines to think it did, still Mr. Wilson would have had no preference over the other creditors of Mr. Waddel, and therefore, losing nothing by the delay of the sale, is not entitled to insist for payment in virtue of his letter. The case, being complex and uncommon, appears to the Lord Ordinary to be proper for being laid at once before the Court.”
“As it is admitted that Hume Smith, who is said to have acted as bailie in the body of the instrument of sasine, to which alone the notary's doquet applies, was not so much as present, and the sasine is recorded in the register of sasines as a false instrument, no notice being taken in the register of the addition at the foot of the pages of the sasine said to have been made by Robert Waddel, the Lord Ordinary is clearly of opinion that the sasine is null and void, and therefore, if the letter by the trustee Mr. Grieve to Mr. Wilson, 1st September 1820, and the proceedings following thereon had been out of the way, the Lord Ordinary could have had no hesitation in reducing the infeftment, and finding that it conferred on Mr. Wilson no right of preference to payment in competition with Mr. Waddel's other creditors; and, indeed, the Lord Ordinary has no difficulty of being of that opinion in so far as any right of preference is constituted by the infeftment. His only doubt arises from that letter which was granted by Mr. Grieve, as trustee for the creditors, binding himself quâ trustee to pay Mr. Wilson in full in consideration of his postponing the sale of the lands in his bond and sasine, which he had then regularly brought into the market, and to allow the sale of these parts of Mr. Waddel's estate to be included in the sale of the rest. Mr. Grieve indeed says, that when he gave this letter he had not seen Mr. Wilson's bond and sasine; but this was his own fault, since they were lying on the table in the room, as the warrant under which the lands were to be sold. On the other hand it may be said that Mr. Wilson lost

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The Court sustained the reasons of reduction as to the sasine, but remitted the other point to the Lord Ordinary. Thereafter his Lordship on 28th November 1826, issued this note:—points; but the Lord Ordinary has to regret that they have deferred to him the task of giving his single judgment on the point which he referred to their united wisdom. They (25th November 1825) confirmed his opinion of the sasine; their Lordships, have found it void and null, they reduced it, and remitted the other points of the cause to him to be disposed of. In obedience then to this remit, he has attentively reconsidered the cases for both parties with the whole proceedings. He looks upon it as a point of law well understood, that where two contracting parties are in error about the essentials of a contract it must be void and null; and the Lord Ordinary felt all the difficulty arising out of the fact, that Mr. Wilson and Mr. Grieve both were satisfied that Mr. Wilson had an infeftment affording him a preference for payment of his full debt of 600 l .; whereas it has been decided that the sasine is void and null, so that it may be thought that there was an error in both parties relative to the subject of the contract, which may render it void. But there are other considerations which must be kept in view: had parties entertained the idea that Mr. Waddel's estate and funds were insufficient for payment of his debts, then it might well be admitted that no other idea could have actuated Mr. Grieve, when he obliged himself to pay Mr. Wilson's debt in full, than that he had a right of preference to full payment. But this is not the truth; for Mr. Grieve's idea was, that Mr. Waddel's estate was worth considerably more than his debts, as is proved by the protest taken against the sale when about to be made by Mr. Wilson. He there gives, as one of the reasons of his protest,—“Because the trust estate conveyed to the said John Grieve as trustee aforesaid is greatly more than sufficient to pay all the debts of the said Robert Waddel.” Mr. Grieve's reason, therefore, for preventing the sale and obliging himself to pay Mr. Wilson's debt in full no way arose from the idea alone of the latter having a preferable security for his money; because whether he had a preference or not was of no importance, seeing there was a fund sufficient to pay all Waddel's debts. Mr. Grieve's idea probably was, that if Mr. Wilson sold the lands and paid himself, the commission due to the trustee might pro tanto be diminished. But whatever were his motives, the Lord Ordinary cannot hold that there was an essential error in the subject matter of the contract. Mr. Wilson had a mandate to sell, which would have been good had there been no sasine. If the warrant had been broad enough he might have sold Mr. Waddel's whole estate, and had he raised a price sufficient to pay all the debts of that person, he might have handed it over to the trustee Mr. Grieve, and called on him to denude, which he must have done. It was to prevent a sale that Mr. Grieve, in the full belief that there were exuberant funds to pay all the debts, granted the letter which gives rise to this question, and consequently the Lord Ordinary cannot hold that the letter was granted on the sole ground that Mr. Grieve believed Mr. Wilson's heritable bond and infeftment to be entitled to a preference to the claims of his co-creditors. The Lord Ordinary feels the force of the question put by Mr. Wilson, and which no man can now answer: viz. “who can tell whether, if I had been permitted then to sell, the land would not have yielded the expected price?” There can be no answer to this, except from presumption; which is, that the expected price would have been obtained, since the trustee thought that Mr. Waddel's estate would after paying his debts leave a reversion; and the conclusion from that is, that Mr. Wilson would have got full payment. To all this it is no answer that the lands sold afterwards at the distance of years for less. Time and circumstances operate changes, of which Mr. Grieve must be held to have taken his chance. Neither is the Lord Ordinary moved with the idea that the obligation was granted by Mr. Grieve quâ trustee. If it was an obligation that he was entitled to give quâ trustee, it will bind his constituents; if not, he must perform it personally. Mr. Wilson was entitled to trust that Mr. Grieve knew his own powers, and to rely on his unqualified obligation. As the Court have done the Lord Ordinary the honour to defer back to him the decision of this part of the cause, he has thought it incumbent on him to explain his views.”“The Lord Ordinary formerly made avizandum with this case to the Court, and ordered memorials to be prepared for their Lordships, on account of the difficulty arising out of the effect of Mr. Grieve's letter to Mr. Wilson, 1st September 1820, obliging himself quâ trustee unconditionally to pay to Mr. Wilson the full amount of his debt “out of the first of the price of any part of Mr. Waddel's lands that shall obtain soonest a purchaser,” and the event of the sales having proved that there was not sufficiency of funds to pay his debt in full with those due to the other creditors. Mr. Wilson pleaded also on his heritable bond and infeftment entitling him to full payment; but on this right of preference the Lord Ordinary, having no doubt, expressed his decided opinion that the sasine was null, and bestowed no right of preference independently of the letter, and he hoped that the Court would have decided both

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His Lordship at the same time pronounced this interlocutor:—

discussing this point relative to the effect of Mr. Grieve s obligatory letter to him, that is, since the 25th day of November 1825, but to no other expenses, and remits to the auditor of Court to tax the same.”
“For the reasons expressed in the prefixed note repels the defences in the action at Thomas Wilson's instance against John Grieve, and decerns against the said John Grieve for payment to said pursuer of 300 l ., with the legal interest thereof since the term of Whitsunday 1822; assoilzies him of course from all the other conclusions of the action of reduction at the instance of the said John Grieve against him, except from that which has been already decided by the Court, namely, that the sasine in favour of the said Thomas Wilson is void and null; finds Mr. Wilson entitled to the expenses of

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Against this interlocutor, to which the Court adhered, Mr. Grieve appealed.Appellant .—The Court of Session, in pronouncing the judgment appealed against, proceeded upon an erroneous view of the right existing in the person of the respondent, and this error is a prominent feature in the reasons assigned by the Lord Ordinary in support of his judgment. It was considered that the respondent had, at the time when the transaction took place between him and the appellant, a power of sale which might have been used for the payment of his debt notwithstanding the trust deed in favour of the appellant, and that this right was given up in consequence of the obligation to pay the amount of his bond from the proceeds of the estate when sold by the trustee.But this is an assumption of the whole case: it is assumed, in the first place, that the respondent was entitled to sell the lands, and, in the second, that the proceeds would have been sufficient to liquidate his debt as well as that of all the other creditors, heritable and personal. But the power of sale did not exist, and even the mandate to sell was unavailing in competition with the appellant's infeftment. Neither does the respondent venture to assert that a larger price could have been obtained for the lands if they had oeen then sold than what they actually brought. There are, therefore, no relevant reasons stated for eliding the plea of the

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Respondent .—The obligatory letter bears to have been granted not on the faith of the infeftment on the heritable bond being valid, but in consideration of the respondent “having adjourned the sale of Mr. Robert Waddel's lands of Liltycockee and others contained in his bond, and agreed to take payment of his said bond out of the price of Mr. Waddel's lands, when the same should be sold by the appellant in virtue of his trust deed.” Had the appellant deemed the validity of the infeftment at all material he had a full opportunity of ascertaining the fact, and he was bound, and indeed must be presumed, to have examined it, if he conceived that the transaction into which he was entering was in any respect dependent on its validity. But that transaction was altogether independent of the infeftment, and there was evidently no error in substantialibus of the contract. To constitute an error in substantialibus, so as to entitle a party to insist on his contract being rescinded, it must have been an error regarding the nature and essence of the thing gained or acquired. But this cannot be alleged in the present case, because all that the appellant was desirous to procure was an abandonment of the sale; and the sale having been abandoned by the respondent, he obtained all the benefit for which he stipulated, and for which he agreed to make payment

Footnote

* Authorities .—Bell, vol. ii. p. 335; Steven and others v. Fleming , Feb. 19, 1811, Fac. Col.; Erskine, b. 3. tit. 3. s. 40.

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And even if infeftment had been necessary, the respondent's sasine would have completely answered his purpose had the sale been permitted to take effect; for the articles of roup declared “that the purchaser shall be understood to have satisfied himself with the sufficiency of the said progress and title deeds previous to the roup, and shall not be entitled to quarrel the same thereafter upon any ground whatever.”Nay, the respondent could have taken a new infeftment before a sale of the lands was effected, and thereby secured to himself full payment by a preference over all the personal creditors for whom the appellant acted, had the appellant not rendered it unnecessary for him to do so by granting the obligatory letter. The previous infeftment upon the trust deed in the appellant's favour was no bar to the respondent taking a new infeftment to this effect; for that deed conveyed the lands to the appellant for the payment of the truster's creditors in general, but without specifying either their names or the amount of their debts; in consequence of which it could not have made the debts of these creditors real burdens on the lands, although it had been intended to do so. The respondent, however, gave up that benefit

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Lord Lyndhurst .—I move your Lordships, in the case of Grieve v. Wilson , that the judgment be affirmed.Lord Wynford .—My Lords, I was in hopes that I should have heard stated by my noble and learned friend the grounds on which he moves the affirmance of the judgment. This case was argued a considerable time ago. I applied my mind at that time, and I have since applied my mind, to the consideration of this case. Every time I have taken up the papers it has so happened I have come to the same conclusion, that this judgment ought not to be affirmed, but to be reversed. My Lords, the facts not having been stated to your Lordships, I will take the liberty of stating them. This is a case in which proceedings were had for the purpose of setting aside an agreement, which I will read to your Lordships. The agreement is contained in a letter, which bears date on the 1st of September 1820. (His Lordship then read the letter quoted, p. 543.) Your Lordships perceive, therefore, this is an agreement, the consideration for which is the adjourning the sale of certain lands, in consideration of which he undertakes to pay 600 l . out of

Footnote

* Authorities .—Bell's Com., vol. i. p. 586–7–8, 4th ed.; Erskine, b. ii. tit. 3, sec. 50, Bell's Com., vol. i. p. 588; Stenhouse v. Innes , Feb. 21, 1765; Mor. 10264; Broughton v. Gordon , June 20, 1739; Mor. 10247 and 10248; Chalmers v. Mackenzie of Redcastle's Creditors , Jan. 27, 1792; Bell, 404; Douglass of Dornoch's Creditors (not rep., vide Bell's Com., vol. i. p. 588, note 2, sec. 4); Bell, vol. ii. p. 584 and 582, and Com. p. 641, Macadam's case; Wight, p. 282, Campbell v. Speirs , Feb. 14, 1790; Mor. 8652 (affirmed); Anderson v. Matheson , Dec. 14, 818, Fac. Col.; Erskine, b. ii. tit. 3, sec. 50.

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“The Lord Ordinary formerly made avizandum with this case to the Court, and ordered memorials to be prepared for their Lordships, on account of the difficulty arising out of the effect of Mr. Grieve's letter to Mr. Wilson, 1st September 1820, obliging himself quâ trustee unconditionally to pay Mr. Wilson the full amount of his debt out of the first of the price of any part of Mr. Waddel's lands that shall obtain soonest a purchaser, and the event of the sales having proved that there was not sufficiency of funds to pay his debt in full, with those due to the other creditors. Mr. Wilson pleaded also on his heritable bond and infeftment entitling him to full payment; but on this right of preference the Lord Ordinary; having no doubt, expressed his decided opinion that the sasine was null, and bestowed no right,”—

so that your Lordships see these parties

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“Those who err in the substantiate of what is done contract not.”

It does not mean that there must be an error in every part; it is abundantly sufficient if there be a sound, important, and material error. Now, I submit to your Lordships, whether the parties in this case did not act entirely in error in a material part; if they were in error in a material part, that is enough. Is not that the case with respect to this instrument? In consequence of this error, this instrument was of no use whatever to the persons concerned. It has been said, it might have been of use if the sale had proceeded immediately, though he could not have had the proceeds of that sale until the creditors had been satisfied; and that, if the trustee had thought fit to proceed immediately, the estate might have produced enough to have satisfied all. Now it is extraordinary that should be stated, when we consider that this instrument was executed only in the month of September 1819. In a very few months after this attempts were made to sell different parts of this property, but no sales could be made; there is, therefore, no pretence, in my opinion, for saying that. Is it just then

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Lord Chancellor .—My Lords, it is now a considerable time since this case was first heard before your Lordships. I had proposed more than once to have moved your Lordships to proceed to judgment, but it was delayed by different circumstances. It was the first case I heard after I had the honour of a seat in your

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The House of Lords ordered and adjudged, That the said petition and appeal be and is hereby dismissed this House, and that the interlocutors therein complained of be and the same are hereby affirmed.Solicitors: Spottiswoode and Robertson— Alliston and Lock, Solicitors.